28 March 2012
I had an interesting discussion last week regarding whether a company’s strategy should address issues related to organization culture and performance management. My argument was that when an organisation consistently fails to execute over a long period for reasons related to culture among other issues and the company is losing out on business and market share due to this – then yes organisation culture and competence (for example creating an organization that understands its business and customers and executes excellently as a team across boundaries) is indeed a strategic issue.
This discussion got me thinking – should organisation culture and competence be on a company’s strategic agenda or is it an operational matter only? In this context I have two case studies I’d like to share with you as food for thought
1. Making GE “the world's most competitive enterprise”
When Jack Welch joined GE, “The model of business in corporate America in 1980 had not changed in decades. Workers worked, managers managed, and everyone knew their place. Forms and approvals and bureaucracy ruled the day..”. Welch's revolution meant changing GE's old ways of doing things even in daily work life and reinventing the company. He took organisation culture and processes as one of his main strategic action areas. You can read more of what he actually did when creating this change in the innumerable Jack Welch articles on the web though I would personally recommend just reading the book “Jack Welch and the GE Way”.
Welch received some criticism in some areas and I personally do not completely agree with him in all areas for example when he talks about going for the quantum leap in innovation - I believe incremental innovation matters too. Yet I still believe one of the best things he did for GE was to create a competent performance focused company. And I completely agree with his sentiment regarding shareholder value being a result when “…your main constituencies are your employees, your customers and your products”
2. TeliaSonera’s unified brand identity
I talked in my last blog post about Innovation being a buzzword if it did not actually get executed upon. Here’s a case study regarding execution of a very major project – our unified brand identity project at TeliaSonera. The changing of many country brands to a single brand profile, with the same look and feel, from Norway to Nepal – is something that is a challenge. This is even more challenging given how personal a brand can be – a brand is emotive (can be VERY close to the heart in other words!) and our brands span nearly 500 million population across the world (population of the markets that we cover) . Execution of this project required a top-notch project team, 3500 secrecy agreements, strong focus on speed and quality in the execution and above all – excellent and strong leadership from the top. I believe this was a critical success factor and the reason I share this story here–strong and competent leadership is needed from the top for real change to happen in major areas. This project also drove a cultural change in the process – towards a “one-company”.
Culture and Competence – creating Sustainable Competitive Advantage
In my daily role with business strategy it’s as natural as breathing to be aware of what drives sustainable competitive advantage for us at TeliaSonera. For example an Industry leading quality network – both in perception and in actuality – sets the foundation for our value addition to customers and is an asset hard to beat. Many other companies too look to their products and technology as a key asset for sustainable competitive advantage (i.e. winning in the long-term).
I believe that nowadays excellent business competence and a high quality professional culture can also lead to a sustainable competitive advantage. The equation I see before me is the following:
Highly competent workforce combined with team performance culture= more competitive solutions and offerings delivered in a more optimal matter = competitive and attractive customer choices
In today’s world of constant innovation and change and increasingly complex lifestyles, customers have reduced time and patience for anything less than state-of-art solutions to their needs, delivered on time. That’s where I see Culture and Competence becoming a strategic asset going forward in order to build a company that is constantly leading and cutting-edge in its value propositions.
“Behave like a small company” – that’s one of the Jack Welch tenets that I choose to close this post with. Every big company started out as a small entity with some sort of business idea. In order words – they started as a few people resources with intellectual capital, originally just a thought in someone’s head. Then they developed but along the journey some companies lost the culture and ways of working that helped them succeed in the first place. This could have worked in a silo world, where competition and alternative offerings are few. But not today.
I wonder – would GE ever have become one of the world’s most admired companies if its top management had focused only on technology innovation and not innovation and change in organisation culture and competence as a strategic matter? What do you think?