The 7 foundations of a successful enterprise
I was asked the question ‘what makes a truly successful enterprise’ at a workshop that had strategy development as its purpose. It is a regular question that I get in various forms, and a question that I ask myself from time to time.
The easy answer is the marketing responses: know your customer, understand your markets, select the market niche in which you compete in and dominate it in some way, all of which are correct, but are not the full answer.
The full answer lies in having the right foundations for the enterprise, foundations upon which everything else is built.
Like the foundations of a house, they are rarely visible, and almost never all visible at the same time.
It seems to me that they also create a virtuous circle, and the lack of one impacts on the others in a manner greater that you would expect.
None have anything to do with the tools that are used, particularly all the new digital tools and platforms.
Have a clear, well communicated strategy.
Strategy provides the framework within which enterprises make decisions at all levels that add to the value of the activities being undertaken. It is as much about what you will not do, always a harder choice than what you will do, as it requires the killing of someone’s ‘baby’ idea.
A strategy that is held in the c-suite, no matter how good it is, will be compromised by not being communicated throughout the business as the decision making foundation. Whether you set out to be the low cost supplier, supply only those who fit a certain profile, deliver continuous innovations, whatever it is, make sure everyone understands it.
Execution.
No plan is of any real use until it is used. Execution of the plan is 9 tenths of the game. Relentless focus on the strategy, and execution with the appropriate feedback loops that enable tactical adjustments to be made as new information emerges makes a strategy successful. Without execution, strategy is just a set of potentially good ideas and vague promises.
Business model.
Many managers spend inordinate amounts of time thinking about the structures of their businesses, often missing the key component of the manner in which it delivers value to the key group of customers articulated in the strategy.
20 years ago, the number of potential business models was limited by the physical limits of communication and logistics. While this still applies, the flow of information facilitated by the net has changed the face of business, and has spawned a pile of new business models and ways to reach customers and deliver value. It also seems that business models have trouble cohabiting. Therefore choices need to be made that should be dictated by the strategic priorities.
Talent.
Businesses are just places where people gather to do the work, so the better the people the better the work. You need talented people to get the work done, a business is nothing without people. Taking this one step further, it is really the networks of people that deliver value. ‘Joys law‘ named for Sun Microsystems co-founder Bill Joy holds that ‘no matter who you are, most of the smartest people work somewhere else’. The self-evidence of this statement should encourage management to find ways to include some of these people into their commercial ‘eco-systems’. In a small way, many Australian businesses are doing this already, outsourcing increasingly complex tasks offshore. The initial push is usually cost, but many are finding that quality can be as good as or better than is available locally.
Behaviour.
The way people behave, collectively, becomes labelled ‘culture’. Culture is usually described in the terms first used by Michael Porter 30 years ago, as ‘The way we do things around here‘ which is also a description of the behaviour that prevails. Is it collaborative, congenial, non-discriminatory, a meritocracy? Again, the sort of behaviour you nurture is a key determinant of the culture that evolves, and should make up a key component of individual and group KPI’s.
Leadership.
The behaviour of people is driven by the leadership style of the ‘boss’ and senior group. Together they dictate the terms of the culture, select the appropriate talent for the tight reasons, select and deploy the KPI’s based on the behaviour required to execute the strategy. Falling back on the wisdom of Peter Drucker, again, who said ‘Management is doing things right, leadership is doing the right things‘. It is the leadership that extracts performance from an enterprise beyond the average, the willingness to be held accountable, inspire, and explore.
Timing.
The value of getting the timing right is a wildly underestimated contributor to success. From simple internal matters like making that key presentation to the directors when they have had a series of good results, to major external factors such as recognising the point at which a technology that may have lain dormant for years suddenly has a place. Penicillin, the computer mouse, digital camera, Wireless LAN, touch screen, and thousands of other innovations lay dormant, unused until something changed, creating an impetus for the innovation to be commercialised, often in ways unforeseen by the developers. They are in effect a solution to a problem not yet identified, or sitting outside the sight of incumbents, or simply the wrong time wrong place in some trivial way. A personal example. In the very early eighties I worked for Cerebos in Australia, as a product manager for a number of their brands, Fountain amongst them. I saw an opportunity for a pasta sauce to complement the then very small, but expanding dry pasta market. Fortunately there was an Italian food technologist in the development team who developed a range of very good pasta sauces, which we launched in test market in Victoria. The test failed, for a number of reasons, that had nothing to do with the quality of the products, or the strategic thinking that was behind them. Eighteen months later, Masterfoods launched ‘Alora’ pasta sauces and built a category. In blind tests, when considering a second try, the failed Fountain sauces significantly outperformed the successful Alora products, but their timing was way better than ours.
When you need to inject the wisdom of ‘been there done that‘, give me a call.
