Good-to-Great Strategic Planning

The best potential resource a company can develop is a workforce with a culture of collaboration and personal commitment to exceptional business results.

Monday, January 21, 2013
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In 1995, two Harvard Business School professors published a paper that shook the strategic planning world.

The mavericks argued in the article that it's not enough to know your marketplace in addition to what you do -- and don't do -- well. (In strategic-planning parlance, think SWOT.) What also matters when developing strategy is pinpointing the right resources and putting them to work in a way that places you at the head of the class.

However, when they talked about the right resources, the authors weren't necessarily pointing to that great widget maker you just bought, a zany advertising campaign you're ready to plug in, or the brilliant product developer you hired. Neither are they promoting your expertise -- like knowing where to whack expenses and restructure, nor useful programs like TQM, lean manufacturing, kaizen, etc.

At a minimum, the right resources will meet several criteria. Primarily, they have to 1) be truly unique and hard to get, 2) be durable, or deliver long-lasting value, and 3) be competitively superior enough to drive profitability.

Analysts call advantages like these moats because they protect the business from market threats. the list are the touchy-feely, soft, intangible assets that make up your company culture.

Company culture meets the test. Culture is unique to each business and can drive employees to enthusiastically pursue business goals. We know a culture like this is hard to get because so few companies can brag about having one. It's durable because it supports greater profitability in so many ways and can generate great returns year after year. And it's competitively superior because companies with the right culture stand out from the industry pack.

Other resources besides culture can certainly meet the basic test to be a moat and create strategic advantage. Take Coca-Cola's classic recipe, for example. It meets all the basic criteria. But it's value as a resource is limited without other resources to successfully bring it to market.

That's why the best potential resource a company can develop is a workforce with a culture of collaboration and personal commitment to exceptional business results. A culture like this can make other resources like Coca-Cola's recipe far more valuable than they would be without it.

The proof the Harvard pair cites is from Jim Collins' research published in books like Good to Great, where great companies derive from great cultures tied to the marketplace. If you have employees, the message is that the most important component of strategy for you should be nurturing their commitment to shared success. That means developing leaders and employees who understand the business and who support each other with the initiative to do what it takes to succeed as a business unit. That's all about culture.

Strategic planning defines how we will compete in a marketplace. Focusing on building the resources to compete -- especially a workforce culture of employees actively working to improve business results -- should be at the top of the strategic plan. It's the big differentiator for businesses that excel in their markets.

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So when you think about your business strategy, don't overlook the obvious -- the human resources you employ every day -- and consider how you can invest in them to build a great culture. It's the resource that can give you a major competitive advantage over those whose strategic planning process is . . . well . . . so yesterday.

Trying It On For Fit:

Assess your business unit or work group. Contrast it with the culture of other players in your industry. Do you have a strategic advantage? Is your culture comprised of highly motivated and energized employees actively engaged in improving processes, solving problems and achieving challenging performance goals? What is the market telling you about what you need to be competitive, and how does your culture match up?

If your market suggests you need to produce more efficiently, but employees are afraid to do the things they believe will save time and resources, change the practices that frustrate their innovation and initiative. That's one way to build strategic advantages through culture.

List all the aspects of your unit or group culture which make the organization less competitive. Plan how you will lead to create a culture that supports competitive strengths, including employee innovation and initiative, and then carry it out.

Kevin Herring is the founder of Ascent Management Consulting, as well as a workforce performance turnaround expert, consultant and speaker. Killen Herring is an experienced leader with a background in strategy, operations and financial services.

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