How ready are you?
Is the down trend over? Time will tell but resources prices are showing some stabilisation: FMG’s latest dividend was 25c compared to 2c a year ago and BHP Chief Executive Andrew McKenzie is reported as saying “There is a strong sense that prices have stopped falling..” so I expect that in Western Australia the light is about to shine.
As things pick up competition won’t lessen, it will change. You are less likely to engage in bloody price wars, instead you’ll see head to head battles surface as firms seek to wrest the best and brightest from competitors. The years of the minerals boom saw the horrors of this competition: the revolving door of staffing and the damaging salaries blow-out. Already some doors are being pushed again. How will your firm stop the good walking out and bring the right talent in? (This is a question you should ask even when times are tough)
Here’s a little human resources secret that too many firms ignore. Not only do your employees have a natural desire to win, they also feel and function better if they can identify with clear organisational objectives and strategy. Align the desire and the objectives and you will attract and retain the people you want.
Get this right and attract and retain the talent you want
As Harvard Business School’s David Collis and Michael Rukstad point out, “most executives cannot articulate the objective, scope, and advantage of their business in a simple statement”. Worse still, asking members of an organisation to write down a simple statement like this often shows up worrying contradictions between the individual versions. This is impactful. Alignment between the statement and individual efforts is a significant factor in staff engagement.
So what should you do? To start: Your firm needs unequivocal definitions in the basic building blocks of:
- Strategy and objectives – expressed in terms of the specific results required and when they are to be achieved.
- Competitive advantage – what your firm can do that is valued by clients and that your competitors cannot do, and that will fuel progress towards your objectives
Getting people in the firm to participate in defining its strategy, objectives and competitive advantage is crucial too. Business history is littered with cases of organisations that succumbed to competitors because of an internal ‘not invented here’ syndrome. But history also shows that bringing staff into the decision making process engages their emotions and makes them much more likely to act in a way that supports the firm: they have made an emotional investment so they want the firm to succeed.
What’s next? Get your business strategy, objectives and competitive advantage crystal clear as follows:
- Define them (with members of your firm)
- Share them (with all members of your firm)
- Do them (with management setting an example daily)
- Check up on them
‘Check up on them’ means regularly checking that the firm’s objectives, strategy and competitive advantage continue to be understood and acted on at all levels. The simplest way is to ask different people, external and internal to your business, to tell you how they understand them, and renew your internal publicity as often as necessary for the right message to get though and to stick in your people’s minds. Authorise your people to do what needs to be done, and give them the skills and resources to do so.
How do you define your firm’s strategy, objectives and competitive advantage?Explore your clients needs and desires and then compare with the way your firm meets them. Don’t limit the exploration to the services sold, but the whole supply chain in your firm: what is adding value to your clients, and what is not as well as what is building, or not building, value for the firm. Looking into the box needs to be done before you seek out of the box solutions.
Unlike mission statements which are often suspiciously similar between organisations, your objectives don’t have to be the same as your competitors’, and your strategy and competitive advantage probably won’t be.
George Stalk and Rob Lachenauer of Boston Consulting Group cite striking examples of different competitive advantage. They include Toyota’s superior manufacturing flexibility; Wal-Mart’s ruthlessly efficient logistics and SouthWest Airlines’ ‘alternative’ flight network. Competitive advantage can be complex and sophisticated, or elegantly simple as Pepsi demonstrated when its competitor Coca-Cola set up its first nationwide network of vending machines. Pepsi waited till Coca-Cola had made a sufficiently large investment in completely standardised machines that were practically impossible to modify. It then set up its own network of vending machines selling its own drinks, but in bigger bottles to win over more customers.
A word if you’re thinking of developing a new or modified competitive advantage. Be aware that you will need to actively invest time and effort in the process. It is essential that the competitive advantage is the cornerstone of your firm’s activities. The tighter the fit between the four fundamental building blocks of an organisation (its activities, its people, its structure and its culture), the better its performance. And that’s the goal- Better Performance. But any significant change, including a change in competitive advantage, can loosen that fit. Knowing this you can make sure that you have strong change management controls in place. Do this and you will see your competition weep with frustration as you power ahead.
Make sure you have strong change management controls
Are competitive advantages like the ones above enough to secure your future? No. They’re necessary, but not sufficient. You’ll still have to pay attention to the basics like cash flow and containing costs. Like everyone else, you’ll still experience the ups and downs but because you have taken heed and honed your competitive advantage, and made sure that your firm strategies and your staff actions align with it, you’ll have a much better chance of weathering any storm. Sure, price pressure will return if you provide the same things as the competition but if you are providing something that your clients value, and that they can’t get elsewhere, you’ll resist better as well. By continuing to maintain and develop your competitive advantage in bad times as well as good, you can stop worrying about basic survival and start figuring out how much market you can win.
My challenge to you today: Review your strategies and operations. Are they creating and supporting a strong competitive advantage? If not take immediate action and leave your competitors behind.
Let me know how you go.
Jennifer is a strategy implementation coach who helps leaders turn their strategies into results.
She assists executives and business owners to achieve goals such as improved profit, productivity, leadership skills, business value. Her services are Business and Executive Coaching, Group Facilitation, Strategic Planning, and advising on Board Governance.
To find out how she can help you, call +61 439 520 182 or email.