In our first Did You Know? Series post, we introduced how companies need to embrace a new way of connecting with employees and customers. Its what we call “Business 3.0.” Here we present four management practice Success Skills that are key to surviving and prospering as a Business 3.0 entity—and explore the first in detail. The Did You Know? Series supports the release of our video, “Did You Know? 6.0: Change to Thrive.”
Major areas of opportunity.
Business 3.0 organizations require new ways of working, where all employees thrive and are engaged in an integrated, designed, well-coordinated environment. And, customers are welcomed to help shape and organization’s future. In a 10-year Harvard Business Review study of companies and their total shareholder returns, those that outperformed their industry peers excelled in four main management practices:
- Strategy
- Execution
- Culture
- Organization
Clearly, making the move to a more nimble and adaptive culture is essential. Implementing four new success skills can help your organization gain an edge in the Business 3.0 environment. Let’s explore the first.
Success Skill #1: Deliver a straightforward strategy.
HP: not so inventive?
Many have struggled to find their way in a competitive landscape. For example, Hewlett-Packard, despite being a long-time industry competitor, has been plagued by near-constant market and strategy struggles. This includes purchasing aging, out-of-date companies—and what appears to be an inability to gauge consumer’s needs and respond. Companies need to streamline strategy and make deliberate plans in order to become more agile.
“But [HP] will never come close to reclaiming its former glory unless [leadership] can answer the real question: “ ‘What is HP?’ ” For a decade now the company has sometimes seemed more like a tawdry reality show than one of the world’s great enterprises… Simply put, Hewlett-Packard has lost its way… profits in 2011 were 19% lower than in the previous year.”
—James Bandler, tech.fortune.cnn.com
Southwest: flying forward.
Conversely, Southwest Airlines has a clear vision and a differentiated strategy. Foremost: the airline has a strong grasp on market needs. Its strategy, goals for business success and good management practices engender a relatively happy workforce (staff noted fro their dedication; pilots who are compensated more highly any other airline’s) and a simple operation format: one type of plane. In 2009, 86 million passengers flew Southwest, more than any other airline in the U.S. 113 million flew in 2013. Southwest retains more that 15% of the domestic airline market and is consistently rated highest in customer service.
A good strategy increases odds of success.
The opportunity amid the chaos is huge. Strategy execution can clearly be a competitive advantage, and figures bear this out. For example:
- A recent Balanced Scorecard report at Harvard University revealed that only 10% of employees understand their company’s strategy. Further, even at the companies that made the attempt to implement, 6 in 10 staff didn’t think that important strategic and operational decisions were quickly translated into action.
- In a recent McKinsey Quarterly survey of 2,207 executives, only 28% said the quality of strategic decisions in their companies was generally good. 60% thought that bad decisions were about as frequent as good ones.
- A study of over 400 companies found that 49% of the leaders reported a gap between their organization’s ability to formulate strategy and its ability to deliver results.
The opportunity: with few companies meeting their outlined goals, a good strategy can increase the odds of success by helping managers make the right choices internally and in the marketplace. One of the most effective elements is clear communications, which helps assure that all involved have a tangible idea of the decisions and actions they’re responsible for.
In upcoming third post of the Did You Know? Series, we explore the next Success Skill: “Execution and Process: Innovate and Respond.”