Building a Capabilities-Driven Company

Here is an excerpt from an article written by Paul Leinwand and Cesare Mainardi for Talent Management magazine. To check out all the resources and sign up for a free subscription to the TM and/or Chief Learning Officer magazines published by MedfiaTec, please click here.

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Top-performing organizations know what they do best and then focus on opportunities to leverage those capabilities.

Anyone who engages frequently with senior executives on topics such as strategy and how to focus their teams probably detects frustration. Based on years of work serving large organizations, the professionals at management consultancy Booz & Co. determined the frustration comes from a core place — how companies actually develop and execute strategy. In a survey of 1,800 executives on five continents in industries such as automotive, financial services and utilities, the firm set out to uncover how to parse executive frustration.

The survey data was gathered during the first quarter of 2011 and results were dubbed the Coherence Profiler. They demonstrate that executives are disappointed with the effectiveness of their companies’ growth strategies. Fifty-two percent of executives said they do not think their company’s strategy will lead to success; half said setting a clear and differentiating strategy is a significant challenge; even more — 56 percent — said ensuring day-to-day decisions are in line with strategy and allocating resources in a way that really supports strategy are their biggest challenges.

The findings suggest the root of the problem is too many companies grab too hastily for what seems like the next answer to growth. They don’t have a solid framework to decide which opportunities will lead to sustainable success. So, they end up stretched thin, trying to play in too many disparate markets. The vast majority of executives — 81 percent — said growth efforts at their company lead to waste at least some of the time, and 64 percent said they believe their companies are chasing too many conflicting opportunities to achieve growth. In the same vein, 49 percent said their company has no list of strategic priorities.

A Capabilities-Driven Strategy

The solution, based on the track records of top-performing companies, is to develop a clear idea of what the organization does best and how it creates value, and then focus on the opportunities that will best leverage those capabilities. Companies need to make hard choices about differentiation and stick to them. They need to decide how they will add value, for example as an experience provider, a customizer or a value player. And, equally important, they need to determine and invest energy and resources in the distinct set of capabilities that enable that differentiated identity. Sometimes making those kinds of choices seems limiting, but this discipline can pay off. The survey results bear this out: Executives who said their companies have very few — one to three — firm-wide strategic priorities were the most likely to say their companies have above-average profitability and revenue growth, when compared with those who reported having more firm-wide strategic priorities, or no list of priorities at all.

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To read the complete article, please click here.

Paul Leinwand is a partner in Booz & Co.’s global consumer, media and retail practice. Cesare Mainardi is managing director of Booz & Co.’s North American business. They are co-authors of The Essential Advantage: How to Win with a Capabilities-Driven Strategy.

 

Jon R. Katzenbach and Zia Khan on how positive peer pressure can be a powerful ally to change

Here is an excerpt from article written by Jon R. Katzenbach and Zia Khan for the Harvard Business blog. To read the complete article, check out other articles and resources, and/or sign up for a free subscription to Harvard Business Daily Alerts, please visit dailyalert@email.harvardbusiness.org.

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Webster tells us that a peer is “one of equal standing with another” or “one belonging to the same societal group (that is, based on age, grade or status).” On the job, most of us have peers that we enjoy, respect and cultivate. We also have peers that we abhor, ignore, and avoid. Most peer interaction takes place “informally,” as there are no lines on an org chart that connect peers together

You might well ask, So what?

Peer to peer interactions may be the single most neglected lever of change. When enlisted, they are change’s most powerful ally; when resisted, they are its most stubborn foe. Peers in large organizations are invaluable in spreading behavior change across an enterprise. In that respect, they constitute a woefully underused set of resources, mostly accessible within the “informal elements” of our organizations.

Whenever significant numbers of peers interact formally or informally, they constitute a force to be reckoned with. When they share mutual respect, they will listen to, learn from, and secretly support one another in ways that can shape opinions, create resistance, or generate energy. Left unattended, their interactions may or may not be supportive of important enterprise priorities.

Look at high performing organizations like Southwest Airlines, Apple, FedEx or the U.S. Marine Corps, all of which rely heavily on natural, informal networks to keep peer pressures positive. The Marine Corps Gazette receives dozens of “letters to the editor” every month from ardent Marines who want to emphasize what it means to “live our values” versus display them. The Marines take their simple values (honor, courage, commitment) extremely seriously, and when violations occur, the Gazette hears about it — informally but compellingly. Similarly, any regular SWA passenger can attest to the informal networks that flourish among stewards, gate people and baggage handlers — it’s very clear that they take seriously their intent to make passengers feel good.

This is easier said than done — though elite military units, for example, and peak performing enterprises around the world have been at it for decades. In the U.S. Navy, for example, the informal camaraderie among Chief Petty Officers transcends oceans, continents and other geopolitical barriers; most of the time it is a force for wisdom, character and courage. In fact, it is interesting that some of the most powerful “informal” peer networks are found in command and control institutions. Sometimes, a peer network is the best way to work around a formal structure that gets in the way of getting stuff done.

Jon R. Katzenbach is a senior partner at Booz & Co. and founder of the Katzenbach Center at Booz & Company. Zia Khan is vice president of strategy and evaluation at the Rockefeller Foundation and a senior fellow at the Katzenbach Center. The two have collaborated on a new book, Leading Outside the Lines: How to Mobilize the Informal Organization, Energize Your Team, and Get Better Results, published by Jossey-Bass in April 2010. This is the first in a series of blog posts related to the book about the ways managers can lead outside a company’s formal boundaries.