This DATIS Blog was originally written by David Devine, Chairman & CEO of The Devine Group on Thursday, February 6, 2014 and was reposted with permission. Thank you David and The Devine Group.
The basic formula of business success seems so simple:
fn(business planning “What” + Operations Planning “How” + Company Culture “Who”)
At business schools all over the world, this formula is presented and taught to bright, driven students and business professionals, along with a directive: “Follow the formula and the path will lead you to the promised land.”
Well, if the equation is so simple, why do legions of companies struggle or fail?
Inherent to the understanding and operational part of the equation are highly complex sub-components that require constant attention to detail and execution management. In fact, organizations and leaders often fail not because they lack understanding of the strategy, or the “What” component of the equation. Rather, leaders are more likely to struggle with the “How” and “Who” components—specifically with the operational and “people portions” of the formula.
The Five Basic Strategy Types (the “What” component):
Low-Cost Provider – Often the largest provider in an industry that manages its costs through supply chain optimization. Most low-cost providers offer basic customer service only. Organizations like Wal-Mart fall into this category.
Best-Cost Provider – These are often organizations that once competed in the low-cost space and then moved up-market by charging the customer more for the same/similar products as the low-cost provider. The difference is that best-cost providers offer enhanced customer service, their store locations are more desirable and the stores themselves have better ambiance to enhance the customer shopping experience. Think Target.
Broad Differentiator – Organizations that try to appeal to a widespread set of the marketplace with a broad range of products, pricing and service options. Macy’s is a good example of this type of retailer.
Market Niche Based on Lower Cost – Companies that strive to serve a specific, limited market segment with a specific, low-cost product line and limited service. Old Navy is a prime example.
Market Niche Based on Differentiation – Organizations positioned to serve specific market segments based on unique product and/or service lines. Many times, the sales/service is consultative in nature. This strategy type often includes luxury brands like high-end retailer Cartier.
Fact 1: Developing a plan specific to a strategy type tells the organization “what” it’s going to try to do and “who” it intends to serve.
Fact 2: Simply having a strategic plan and a target customer market is only the beginning of providing the organization with insights to the “how.”
The “how” component must also include:
- The operational planning executables of the strategic plan. In other words, developing, planning for and executing the functional know-how/expertise coupled with…
The “who” element:
- Identifying the required culture and then hiring, onboarding, training, retaining & succeeding the employees that must behave in concert with the strategy type and the customer fulfillment model so that the company may thrive.
The fundamental positioning of organizational culture vis-à-vis the company’s strategy type, target marketplace and intricacies of operational execution are some of the most daunting challenges facing today’s management teams. Understanding the fundamental base strategy and its sub rosa culture requirements is often the linchpin of success or failure.
The deployment of contemporary Human Capital Management practices and HR tools are designed to provide today’s business leaders with the knowledge, insight and intelligence to put them on the roadway to the promised land of success.
Chairman & CEO