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Wednesday, 4 January 2012 00:01 - - {{hitsCtrl.values.hits}}
Great ideas need landing gear as well as wings. So, before I would build a wall, I would ask to know what I am walling in or out.
Ideas are everything and the rest is housekeeping. Let us remember that ideas are one thing but to convert it to value is another. This is one main reason why several organisations face the problem of converting boardroom decisions into execution at the sharp end of the business.
Execution
The lack of mechanisms to drive ideas converting them to business value is as important as the ideas themselves. Management by Objectives (MBOs), Key Performance Indicators (KPIs) or Key Result Areas (KRAs) are some of such business mechanisms that help cascade decisions into business concepts, strategies and actions with accountability and ownership.
The problem is that it is the ambitions and desires of the people that fuel these mechanisms such as KPIs, etc. Several organisations struggle with execution, not with the potential of generating ideas.
I recall a great example of such a business idea when I was Director Human Resources at Smithkline Beecham (known currently as GSK). Well, the setting was where our ‘flagship’ brand Panadol was facing mild competition from several producers of generic and branded Paracetamol tablets.
One evening, while the executive management team was enjoying a relaxed informal evening over drinks at the Colombo Rowing Club, the then Director of Manufacturing suddenly sprung a great idea, i.e., ‘to pack 1,000 un-punched, un-blistered Panadol 500 mg tablets per small cylinder and offer to dispensing medical doctors at reduced prices.
The cost saving was the tablet punching with the word ‘Panadol’ on the surface of the tablet and the blister packing. These hygienically packed tablets, complying with GMP and SOPs, would be crushed by dispensing doctors anyway when dispensing medicines to their patients. The cost that we saved was passed as a benefit to these dispensing doctors.
The idea was great, but what was greater was the mechanism incorporating result-oriented methods, communication, action planning and speed with which the idea was converted to a business leveraging benefit with a rupee value attached to it.
This idea was strongly supported by the then Managing Director, Director Marketing, Director HR and National Sales Manager (Pharma) whilst being driven by the Director Manufacturing. The result… success and joy!
Resource-based view of strategy
Strategy development is driven by opportunities afforded by changing environment – Strategy fit (Porter). One may create opportunities by stretching and exploiting capabilities (Hamel and Prahalad). Hence, we must be able to identify and define the capability of our people.
The success of almost all business strategy implementation will undoubtedly depend upon the capability of the people. Building the best car becomes useless if the owners/user is unable to drive, building a very luxurious house becomes useless if the people living within cannot coexist in harmony, converting the house to a home. Likewise, the best ideas and strategy plotting on paper becomes useless if the people in the organisation lack the capability of execution.
In one of my previous articles to the FT, I stated my view of ‘management’ as being a process to achieve goals by mobilising people, allocating resources and a collection of systems and processes that will synchronise to produce the expected result within a stipulated time period. The term ‘management’ denotes various processes and systems that are used in the various departments within an organisational setting.
Strategic capabilities and competencies
Adequacy and suitability of the resources and competences such as:
Activities and processes through an organisation must deploy its resources to gain optimum value. What are the processes that organisations adopt to drive from the decision making point to the implementation on the field? How many organisations pay attention to its importance?
What several organisations focus at doing is:
1. To frame and hand on the walls, beautifully coined ‘Vision’ and ‘Mission’ statements
2. Display company values at strategic locations
3. Build fear and respect into higher positions in the hierarchy
4. Demand teamwork from people without doing anything about it
5. Brainstorm and develop beautifully worded KPIs and meeting minutes without either the resources, guidelines or mechanisms for implementation
6. Train and train people without measuring the net contribution they make to the organisation
7. Hold/conduct meetings and meetings contributing to colossal waste of time and money
8. Holding people accountable without giving them the relevant authority or space to carry out the task, etc.
Dynamic capabilities are abilities to develop and change competences to meet the needs of rapidly changing environments. Hence, we must always bear in mind that ‘distinctive and rarity’ are not value, unless it is value to customers.
Monitoring capability is critical.
Managers must understand in full, the story of value creation in support of designing measurement systems.
Managers must acknowledge that the process lies in the answer to two basic questions:
How should strategy be implemented? Two dimensions:
Breath: Not only financial outcome but the drivers
Casual flow: Linkage between financial and non financial measures. Casual logic
What performance measures capture this broadly defined strategy implementation process?
Management practices
What I believe as the four primary management practices are:
An organisation must give pride of place to these four. Culture, perhaps, is the most important as that is what is portrayed under corporate image to the market.
What I believe as the secondary management practices are:
Laws of system thinking
Intricate interplay
People: The key drivers of business results. The undeveloped potential of the people is the greatest asset of the organisation. So, develop them. We need to make all training significant and remember, the training budget, if properly managed, is as important as the A&P budget.
Strategy: Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations.
In other words, strategy is about:
a. Where is the business trying to get to in the long-term (direction);
b. Which markets should a business compete in and what kinds of activities are involved in such markets (markets; scope)?
c. How can the business perform better than the competition in those markets (advantage)?
d. What resources (skills, assets, finance, relationships, technical competence, facilities) are required in order to be able to compete (resources)?
e. What external, environmental factors affect the businesses’ ability to compete (environment)?
f. What are the values and expectations of those who have power in and around the business (stakeholders)?
Organisational arrangement: The organisational architecture, working arrangements, systems adopted for operational efficiency and output and, the organisation structure.
Customers: Persons who receive or consume products (goods or services) and has the ability to choose between different products and suppliers.
Some people feel that customers are the lifeblood of our businesses. They even say that the customer may be the most important part of a business. There are some of us that would argue that their employees are the lifeblood of their business.
For the record, I could argue for both sides. After all, you need employees of a company to make or do the ‘stuff’ that customers buy. Without customers, you have no one to sell to. Without customers you don’t make money, you can’t keep people employed, and ultimately don’t have a company. Yes, customers are very valuable.
(The writer is the Managing Director and CEO, McQuire Rens Group of Companies. He has held regional responsibilities of two multinational companies of which one was a Fortune 500 company. He carries out consultancy assignments and management training in Dubai, India, Maldives, Singapore, Malaysia and Indonesia. He is a much sought-after business consultant and corporate management trainer in Sri Lanka.)
