A significant measure of an Executive’s value added (not behavioural style) is enabling and migrating their business to compete in the next phase of market evolution. Tomorrow’s industrial landscape, however, is being reshaped in radical and unexpected ways. From pharmaceuticals to farming, from energy to electronics, from digital media to drinks, from logistics to licensing, new “game changing” dynamics are altering traditional views of what competition and value creation are all about. The evolution of the internet, complex ecosystems eclipsing simple linear supply chains, convergence on multiple fronts, ubiquitous digital systems, changing customer expectations, and new regulatory demands are just some of the sources of competitive disruption causing top executives to rethink the most basic questions driving the performance and success of their businesses.
SWOT UNPACKED:
One of the most popular frameworks to help executives assess current competitiveness is a SWOT analysis, but is this a flawed starting point?
- First, conventional SWOT is perceptual – it represents managements’ assumptions about their strengths, weaknesses, opportunities, threats. These may be riddled with all kinds of biases which will be outlined in a future Blog on the concept of “Dominant Logic”
- Second, SWOT may lack a valid competitive and organizational context. SWOT only has meaning in relation to the true nature of challenges the business is facing. When executives list their business strengths, the test is not whether they are accurate but relevant to different competitive tests
As we argued in Blog 1, if the strategic agenda of the business is based on a SWOT which reflects a narrow lens of playing the existing game better there’s a good chance it will miss the altered realities of a new game competitive landscape. As an analytical exercise, the purpose of SWOT is to provide a reality check and audit. That is necessary and laudable. Whether the traditional SWOT evaluation process provides that is questionable.
STRATEGY AS A THINKING SYSTEM:
Strategy is not just a PLANNING PROCESS. It is a THINKING SYSTEM. Herein lies one of HR’s opportunites in the strategic process to widen and deepen that THINKING SYSTEM. Organizational competitiveness is not the same as organizational effectiveness.
As an HR Leader, think forward to facilitating the next “away day” on business strategy. The first exercise; you ask every member of the management team to evaluate the competitiveness of the business. No conferring. Everyone on their own. Score out of 100. What do you imagine the result will be? General unanimity to within a few points? Or a wide disparity of scores? Let’s pursue the wide disparity scenario. How could this be, especially if the management team has been together for some time, understands the business, and is bonded by a strong culture which HR has helped to build? Two possible reasons exist:
- One is that each individual has a different view of what constitutes competitiveness in today’s dynamic, complex world. Therefore their scores are measuring different phenomena,
- Two is that they agree on the key ingredients of competitiveness but have radically different views about how the business is performing on these criteria. And despite strong cultural norms, there has been no healthy internal process by which the management team can validate how competitiveness should be defined, how to measure it, and how they are doing.
Even the first hypothesis has potential problems. If there is substantial agreement on a competitiveness score could the management team have become victims of the famous “Abilene Paradox” and the illusion of “cosmetic agreement”?
A number of opportunities exist for HR Leaders to help business leaders re-examine the business through different lenses and analytics. We said in Blog 1 we would share with you the practical questions that HR can leverage with Business Leaders:-
THE 5 STRATEGIC MIRROR QUESTIONS FOR HR LEADERS:
- What are we competing on? and what are we competing for? More efficiency in today’s game, versus pre-emptively unlocking tomorrow’s new game? What is the balance of our time, focus and energy on these two agendas? Does it need to change?
- Who are our competitors in a game changing, disruptive world? What if they are radically different to textbook economic examples of lookalikes who provide substitutable products and services to existing customers? Rarely does disruption come from traditional competitors.
- How to do early detection and appraisal of unorthodox competitors? Look at their leverageable competencies not their current market offerings (eg, Amazon’s point-in-time global logistics/informatics v initial presence in books)
- What happens when market share is no longer a reliable measure of market influence? Firms like Nokia who were original new game players in mobile phones had impressive shares of manufactured handsets. But that did not translate into influence to alter what mobiles phones could do for users beyond telephony.
- New game market leaders enjoy “nodal power” through their connective position. They are aggregators, convergers, simplifiers, standard setters. Have we considered this?
DEVELOPING LEADERSHIP CAPABILITIES:
A second practical agenda for HR Leaders to consider is their approach to Leadership Development. Is it possible that HR leaders could be unintentional accomplices at the scene of the crime, building leaders and capabilities to play the wrong competitive game better? This is where “best practice” leadership development is very likely “insufficient practice”. How can we develop sophisticated strategic acumen in future leaders? The answer is somewhere very close to where the actual work takes place. It’s not about going on field trips to try to alter perception its about being in managerial positions which force you to adopt a new game intellectual framework. Leverage work to develop your leaders versus going off-site. Create developmental heat in the system. Make development hard work!
Just as important in a digital era is speed – what is the time scale for HR to acquire and implant new competitive game competencies, and the absorption rate of the business to learn and apply them? How can we turbo charge building this capability? Companies usually apply better logic to analysing their key processes than their key competencies.
FINALLY FOR YOUR CONSIDERATION:
Competitive disruption – this typically originates at the perimeter of market systems, not the core. It starts with weak signals, not perfectly packaged power point slides.
Weak signals – These signals require amplification and translation. How do we develop leaders to ‘have their antennae up’ for these weak signals, and with skills to interpret them accurately? It is much easier to see and react to core competition than perimeter competition.
Competitive lens – How can business leaders and HR leaders widen their competitive lens? Narrow views of markets and competitors are toxic.
New scorecard – Do we need a more relevant, not just accurate, competitiveness scorecard especially for a digital world of platforms and standards, not traditional products and services (pass on all tips to anti-trust regulators in Washington and Brussels)?
HR Leaders hold the key – Are our models of strategic acumen and executive development really in tune with the competitive demands of dynamic, complex markets? What is the “next practice” agenda to achieve this?
Audrey and Gordon together deliver Executive Briefing Sessions and Strategy Workshops with CEOs and HR Leaders on New Game Strategy Development and Execution. Message Gordon at [email protected] or Audrey at [email protected].
Gordon Hewitt is one of the world’s most sought-after executive educators and advisors and has been on the faculty at the Ross School of Business, University of Michigan, for over two decades also consults and teaches on top corporate programmes at the Said Business School, University of Oxford. As a consultant, he has extensive experience for over 25 years of working at CEO and Board level with many global corporations.
Audrey McGuckin works with a broad spectrum of clients to solve their toughest and most complex talent and leadership challenges. Her unique background enables her to help clients realize their strategic human capital ambitions in a practical, ‘no nonsense’ way. She has an uncanny ability to interpret business strategies and unbundle these into actionable HR and Talent Strategies that deliver tangible results for her clients.