The 4 Key Ingredients Of Great Organizations
December 22, 2009 16 Comments
I’m an avid student of business. One of my ongoing personal goals is to better understand what drives consistent success at large organizations.
Over the years, I’ve read many great theories about how companies perform including Discipline of Market Leaders by Treacy and Wiersema, the 7-S framework from Waterman and Peters, Strategic Intent and Core Competencies by Prahalad and Hamel, Good To Great by Collins, and a number by Michael Porter: Five Forces, Strategic Fit, and Value Chain.
As I discussed in the post Fundamental Flaws In Management Education, the business world has changed. And while all of those models provide valuable insights, they don’t fully capture what makes companies successful today.
In this environment, companies need to evolve into what I call an Aligned Enterprise which I’ve defined as:
An organization that acts cohesively and embraces change in its environment.
I’ve identified 4 key characteristics of an Aligned Enterprise (which I refer to as P.A.C.E.):
- Purposeful leadership. Establishing and maintaining a clear and compelling vision for where the organization is heading and why it’s going in that direction.
- Adaptive design. Infusing the realities of the marketplace (customers, suppliers, technology change, etc.) into the creation and evolution of products, services, and processes.
- Customer-connectedness. Incorporating customer insight, feedback, and participation throughout the entire organization.
Customer-responsiveness. Increasing the magnitude and speed with which an organization learns from, and responds to, customer feedback. - Employee engagement. Building strong commitment from employees through alignment of hiring, on-boarding, training, coaching, communications, and incentive programs.
I’ll write more about Aligned Enterprise in future posts. Before I do, I’d love to hear what you think about the model. Does it resonate with you? Is there anything missing? What examples would you point to?
The bottom line: How well is your organization keeping PACE?
About Bruce Temkin, CCXP
Customer Experience Matters® 
Bruce,
Very nice setup for a much larger post — at least that is what I see. I like your approach, it takes technology and channels (social or otherwise) out of the equation and prepares the organization to do basically — anything it wants as long as it respects the four principles you outline.
I can see a very long series of post dealing with each of those elements above. Intrigued as to where this is going… keep it up!
Esteban
Hi Bruce, we had a course in my MBA program at St Joes University titled “Turning Customer Service into Customer Delight”. The key element of the course was customer satisfaction is really neutral… customer delight strives to have the consumer think you (the brand) are the “only” in the category. Therefore, Customer Responsiveness in my mind is reactive… Customer Delight is pro-active and done properly, anticipatory. I believe you blog paints a great picture of customer delight all of the time.
I like Adaptive Design and in retail, this aligns really well with Category Management. So I would suggest adding something about Category Management here since it pervasive in Consumer Packaged Goods, and moving rapidly through other retail segments as well.
As a side note, I am teaching two a courses in Retail Marketing in Spring 2010 and your blog will be on the required reading list in the syllabus.
All the best!
d
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Esteban: I feel like you’re reading my mind. Thanks for the encouragement.
Domenick: Thanks for your feedback and nice comments. I agree with the goal of customer delight, but my thinking is that it comes from doing all 4 areas — not just from customer-responsiveness. Hopefully my Spring posts will be helpful for your class.
As the challenges and the changes are more complicated and unpredictable, I would like to add ‘Collaboration’. To find answers and approached to these challenges, organizations need to bring people together to address them. Not only cross silo’s/functions, but also from outside.
In these groups you need to have a large variet and diversity of people.
Sounds all very traditional to me – top down command control machine organisations.
Bruce, the comment on collaboration above is a really key element of your Adaptive Design step, in my experience. Hard to work in large organizations to achieve the goals of a customer experience that grows market share, share of wallet, loyalty, and thus profits, without the collaboration of departments and profit centers.
I’d also like to engage in dialogue on customer value vs customer experience. In my career, I’ve found that customer experience really goes through the roof when an organization begins to focus across it’s full range of product and service offerings and operations with optimizing the value of individual customer relationships. And marketing that supports customer value is quite different than what passes for customer-centric and social media marketing today. The best examples there are still focused on what I call “product-centric” marketing to generate a “transaction”. It’s all about how to better reach, better target, etc, without really engaging in a true customer-centric, INTERACTIVE messaging process. That’s where the potential for great growth and susatinable competitive lie, in my experience.
Interesting model, Bruce. I really like the concept of Adaptive Design, which could even qualify as a core competency. I wonder if it’s less about “realities” than emerging customer requirements and/or market trends. And it may be interesting to extend “customer responsiveness” to “customer connectedness” (a mouthful to be sure). Learning from, and connecting with, customers wherever they want to engage.
But in summary, good stuff here! Keep going…
Hi Arnold, Martinking, Bob and Neff: Thanks for joining the conversation about the Aligned Enterprise (AE).
AEs definitely have to work across silos. AEs also need to have an understanding of customer value, so they can make smart choices of where to focus their energies, I think this is a component of Adaptive Design. And I’m thinking about changing “Customer Responsiveness” to “Customer Connectedness” as Neff recommends. AEs need to be more than responsive, they need to link processes (from product development to customer support) with their customers.
Keep the dialogue going!
I think we have to stop talking about “working across silos” and re-engineer the corporation. Internal communications–which is becoming more social, digital and real-time–can be more important in some companies than external communications campaigns. If the people in the company are aligned and communicating actively in support of business strategy, the external communications–marketing, advertising, sales, customer service–extends naturally and cohesively. I wrote about this integration, which we call “Intercomm” this week at: http://www.take5interactive.com Thanks for a great post, and please keep pushing on this idea from your bully pulpit.
Great conversation guys. I wonder if in points 3 & 4 we are really speaking about engagement whether that is customer or employee engagement with the business/brand. Another dimension I have come across recently is the distinction between rational and emotional relationship/engagement with the business/brand. The argument goes that real engagement goes beyond the rational areas of “satisfaction” and “service delivery” to the emotional areas of “belonging” and “fit”. Gallup has a good article entitled the Next Discipline on this topic at http://www.gallup.com/consulting/122906/next-discipline.aspx
Rohn, I’m not sure if you’re suggesting re-engineering the corporation to eliminate silos. In my experience, it’s not only functional silos that are an issue, but business unit or profit center silos. In either case, when you lose silos you often lose functional and business expertise.
However, I have had experience with working successfully across silos. The approach involves making it clear throughout the organization that business results of the corporation count more than functional or business unit results. And not only the internal communication but the internal reward and recognition systems have to be set up to support this.
Bruce, in regards to customer experience and customer value, my work experience has shown that customer experience is an indicating factor, but the key outcome factor has to be the value of customer relationships . . . and how these compare to full potential value or full wallet value, and how they change over time. We have replaced the product P/L’s and the Business Unit P/L’s with corporate financial statements based on customer segment P/L’s across business units. We have been successful in aligning the CFO, COO, CMO and CTO/CIO in implementing new marketing/communication/financial reporting approachs using technology to accomplish this goal.
But the keys to the success of this approach have been (1) developing a methodology for allocating and resolving marketing spending and profit benefit across existing business units, and (2) changing the financial rewards within the organization to be based more on total customer value than individual business unit profitability. As part of this, an organization needs to deal with the gaps that have grown in CEO compensation versus the direct reports. As long as there’s a 10 times increase in compensation at the CEO level versus the direct report level, there will always be strong internal competition among the CEO’s direct reports. And while that sounds in principle like a great way to have the best or strongest person emerge, it actually has the unintended consequence in many organizations of defeating any incentive for the direct reports to collaborate in beating competition, and working together for total customer value versus profitability in their own business unit.
And that, in my experience, is the 500 pound elephant in the room when we discuss internal collaboration at the top of corporations.
Does that experience resonate with anyone else?
great article i wonder if apple is following this leadership approach. They seem to have one of the best business models in the world these days
I wonder, has the business world really changed? Sure we have new tool sets and technologies to deal with, but so it has been throughout time. Does anyone remember:
Ralph Stayer – Johnsonville sausage
Joel Barker – Paradigm Pioneers
Steven Covey – Principle centered leadership
Empowerment
Work re-design
A possible addition to your list might be “buy in”. This can be one of the biggest keys to success. This buy in must be throughout the entire organization. Reward systems and metrics should be in place to support the desired result. We have all seen “Lip” service to the mission statement which undermines the credibility of Purposeful Leadership and creates a business as usual approach.
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