Entries in strategy (4)


The importance of thought leadership

Communication is a critical component of business leadership, and it comes in different forms. There are the direct, immediate messages and conversations associated with marketing and customer engagement, but there is also a more strategic communications component, one commonly referred to as thought leadership. I enjoyed a recent survey and report by Kite Global Advisors that looks at the role of thought leadership and it's growing importance to business.

In attempting to define what thought leadership is, Kite found a common characteristic is long-term orientation. Rather than focusing on driving a sale in the near-term, thought leadership seeks to build a sustained engagement with an audience, to help build relationships with a wider group of stakeholders.

The research identified four primary objectives for this type of communication: brand building, making a difference in the world, engaging the workforce, and supporting marketing strategy. (see graphic, below)

It also raises interesting questions, looking at the kinds of issues being covered and combining that with the view that thought leadership is increasing in importance -- what does this say about the future direction and priorities of business?

-- Bruno Roche


Kasturi Rangan on CSR realities

Despite the widely accepted ideal of companies pursuing "shared value"- creating economic value in ways that also create value for society - Kasturi Rangan and two colleagues argue in a recent HBR piece that research suggests this is not the norm.

Most companies actually practice a multifaceted version of CSR that runs the gamut from pure philanthropy to environmental sustainability to the active pursuit of shared value. Further, well-managed companies seem less interested in totally integrating CSR with their business strategies and goals than in devising a cogent CSR program aligned with the company's purpose and values. But although many companies embrace this broad vision of CSR, they are hampered by poor coordination and a lack of logic connecting their various programs, and must develop coherent CSR strategies. Rangan lists the following practices to create such strategies:

  • Focusing on philanthropy - Programs in this theater are not designed to produce profits or directly improve business performance;
  • Improving operational effectiveness - Programs in this theater function within existing business models to deliver social or environmental benefits in ways that support a company's operations across the value chain, often improving efficiency and effectiveness; and
  • Transforming the business model - Programs in this theater create new forms of business specifically to address social or environmental challenges.

Once a company opts to pursue those three practices, managers can begin the rigorous undertaking of bringing discipline and coherence to the portfolio as a whole by following the four steps:

  • Pruning and aligning programs - The initial step for many firms is to bring coherence to the existing programs in each theater. To do so, they must reduce or eliminate initiatives that do not address an important social or environmental problem in keeping with the company's purpose, identity, and values;
  • Developing metrics to gauge performance - Gauging the success of a theater one program requires measuring its nonfinancial outputs;
  • Coordinating programs across theaters - Forming a coherent portfolio, one whose initiatives are mutually reinforcing and consistent with the firm’s business purpose and values; and
  • Developing an interdisciplinary CSR strategy - Establish a position whose primary responsibility is to integrate initiatives across all three theaters, regularly convening the key players in each theater to ensure ongoing communication and alignment, even if responsibility for individual initiatives remains dispersed.

-- Clara Shen


Deloitte on realigning performance management

A new report from Deloitte highlights the strength of the trend away from traditional performance management systems -- some 89% of companies surveyed have recently changed their process or plan to change it within 18 months.  What's driving this movement?

Interestingly, it's often the desire to align the processes used to manage a company's human capital with its business strategy and culture. Traditional performance management systems do not address some of the biggest challenges companies face today, including employee engagement, retention, and capability development, and in many cases they were making things worse.

Deloitte has recently revamped it's own approach, as detailed in an HBR article this month. The new approach separates compensation decisions from day-to-day performance management, produces better insight through quarterly or per-project “performance snapshots,” and relies on weekly check-ins with managers to keep performance on course.

Image source: Deloitte

-- Segundo Saenz


The importance of culture to corporate strategy

"A company," writes INSEAD graduate Martin Roll, "however big or small, cannot successfully implement corporate strategy without employees who believe in the mission and understand how to achieve it." This positive organizational culture is impactful: in his book, "The Culture Cycle," Harvard Business School Professor Emeritus James L. Heskett argues that the impact of organizational culture on profit can be measured and quantified, asserting that enabling purposeful organizational cultures can improve corporate performance by between 20% and 30% compared to culturally unremarkable competitors.

Organizations most successful in driving and implementing change share three underlying principles through which they embrace the culture, and use it as an enabler in the process:

  • They understand differences in global cultures: Understanding how an employee in Indonesia will react to a new strategic initiative compared to how an employee in Germany is critical in implementing change at the ground level. Adapt strategy to fit with market-level operations.
  • Understanding what culture means to different people: Organizational changes will impact different employee groups in different ways, and the change must be measured carefully.
  • Align change incentives with the culture: It is important that all forms of strategic planning imbibe culture as a factor impacting success, in addition to finance, manpower, and capabilities.

Culture cannot be underestimated in driving change, but it is important to be selective about the aspects of culture that needs infusing with the specific initiative. Any form of change is disruptive to some degree, so it is not necessary to precede every strategy-driven change with a massive transformational exercise in company culture. Aligning a company's strategy with its culture reduces the disruptive nature of the change, but it is still a change. As such, good leaders ensure that culture and strategy work in collaboration for success, but in a balanced and efficient manner.