This is a difficult challenge, and unfortunately, there isn’t a step-by-step cookbook available to solve this problem. I’ve culled together advice from several sources to aid in charting your own course to success. Fair warning: This isn’t a process, just a framework for thinking that provides a little orientation. I’ll admit that is a lot easier pulling this information together than applying it; the hard part is involves thinking deeply about your own situation.
Profitability as a Goal is Assumed: The business exists to be profitable. There is no need to state the obvious with a “directional” statement like, “We need to maximize shareholder value.” What information or guidance does this provide to anyone in the organization? The key objective is to determine (specifically) what to do and how to it profitably.
A Customer-Centric View is the Overarching Theme: In order for companies to succeed, they must convince customers to part with their hard-earned money in exchange for something you offer as value. Customers should be delighted in what you offer and in their experiences your company. Your value should be unique – distinctive competence is an oft-used term – and protectable in some way. Furthermore, you must be able to communicate your value proposition clearly to all concerned, from potential customers to your employees.
What is Your Purpose?
Three Key Questions that Help Define and Clarify Your Purpose: In his book Good to Great, Jim Collins discusses what he calls the Hedgehog Concept, which focuses on a single, unifying concept that provides a clarifying advantage, your core competency. Answering three key questions surfaces this clarifying advantage:
- What can we be the best in the world at? This is not simply an intention or a goal to be the best, but driven through an understanding of what you can be the best at.
- What drives our economic engine? Even in a commoditized industry, it is still possible to be profitable, but this requires deep insight into the economics and opportunities available.
- What are we deeply passionate about? Do the things that make you and those around you passionate. In a fantastic TED talk (included in my post, People Don't Buy What You Do...), Simon Sinek argues the companies should transcend simply “filling a need” to being companies who truly believe in something and “…do business with people who believe what you believe.”
- Operational Excellence. An operationally excellent organization delivers a combination of price, quality and ease of purchase to its customers. Companies that excel in this dimension are well organized, valuing stability and predictability that are captured in efficient and effective processes. These organizations tend to be risk-adverse in comparison to product leadership organizations.
- Product Leadership. Product Leadership organizations deliver the best product or services to its customers, period. Companies that excel in this dimension are willing to push the envelope, to explore the boundaries into the realm of the unknown to deliver the best product or service. These organizations don’t just identify the current needs of the market; they look to the future needs of the market and work like crazy to get there first. Product leadership organizations are striving to meet needs that customers do not realize that they have.
- Customer Intimacy. Organizations that are intimate with their customers understand the needs of each and every customer and provide the best total solution for each specific customer. These organizations build bonds with their customers and are not viewed as simply a “vendor,” but as a trusted advisor by their customers. These organizations remain flexible and responsive to changing customer needs, seeking to build a long-term relationship with their customers.
Choose the Right Category of Innovation: Innovation plays an important role in defining your distinctive competence and corporate growth. As the The Innovator's Solution and Disciplined Dreaming point out, one size doesn’t fit all, and the same is true for innovation. Both books categorize innovation (The Innovator’s Solution mentions two categories and Disciplined Dreaming mentions three), so consider where you need to innovate in context with the dimension you’ve chosen to excel in and your current circumstances:
- Disruptive, Breakthrough Innovations. This is the most popularized form of innovation – the game-changing innovations that rewrite the rules of the game. Ford’s assembly line and the iPhone are examples. Everything doesn’t have to be about breakthrough innovations, however.
- Sustaining, High-Value Change. Innovations in this category focus on making existing products or services better. Adding new, compelling features to existing products, providing add-on products to existing products, or improving the efficiency of existing processes are examples.
- Everyday Creativity and Emergent Innovation. People can make small changes in the routine, everyday work that can ultimately add up to big results. I used the term emergent innovation in an article on the advantages of agile development to capture how the collaborative nature of agile development created the opportunity for small-scale innovations to occur. Examples include improving a customer experience on a service call or making a small adjustment to make a product feature a little simpler and easier to use.
How Are You Going to Get There?
Define Your Strategy. Once you’ve decided what your company is all about, you need to determine how it will get there. There is overlap in what I've previously covered because strategic thinking is also involved in setting direction. For example, it’s not a good idea to compete head-to-head with an established incumbent. You need an advantage.
The book Product Strategy for High Technology Companies provides three questions that must be asked in order to have a complete, Core Strategic Vision (CSV):
- Where do we want to go?
- How will we get there?
- Why will we be successful?
An essential point is that goals do not equal strategy. “20 percent growth” is a goal – an ambition for a desired target condition – but not a strategy. Good strategies must define how an organization will proceed, and in the process it should be easy to rule out a variety of other alternative actions because they aren’t applicable to the stated strategy. In the spirit of the book Switch, leaders must script the critical moves.
As Good Strategy Bad Strategy tells us, strategy should be coherent. “…the resource deployments, policies, and maneuvers that are undertaken should be consistent and coordinated. The coordination of action provides the most basic source of leverage or advantage available in strategy.”
One final quote from Good Strategy Bad Strategy puts this all together: “Good strategy is not just ‘what’ you are trying to do. It is also ‘why’ and ‘how’ you are doing it.”
What About Vision Statements and Mission Statements?
I didn’t lead with these, but once you’ve considered what your company is all about – its direction, beliefs and values – and how it will get there, producing both mission and vision statements should be a simple exercise. (It’s the thinking that’s hard!)
The basic definitions of vision and mission statements vary, but mine are as follows:
A vision statement defines an organization’s purpose, but does so by incorporating Simon Sinek’s notion of the organization’s belief, articulating the organization’s values versus measures. A vision statement contains more emotional content than a mission statement and is a longer-term view that describes how an organization contributes to the world.
A mission statement is designed to be internally-facing, defining an organization’s purpose and primary objectives along with key measures.
For some additional information and examples, see my post, Are People Buying What You’re Selling?