Part II. Your Personal Business Challenge
In the previous section we crafted a corporate (or organization challenge) by taking a stand for an extraordinary future, one that represented a "big game" for your entire organization, and one that would require transforming your organization culture. In this second part, we are going to look at coaching you and your team to design a significant business challenge that will allow hundreds, if not thousands of others to play in that "big game," starting with yourself. Whether your organization's leadership has defined a "big game" or not, this section will allow you to design a significant business challenge that makes a difference. You will find tips and techniques in each chapter of this section for not only formulating it, but also for making it happen.
Marks & Spencer is a venerable English company located on Baker Street in London. It has been delivering superior specialty foods to customers for over a hundred years. Their strategic intention is to be "The future of the food business." Specifically, it is to provide the most aspirational food experiences available anywhere in the world and the most innovative and highest quality products and services by miles. And they actually bend over backwards to deliver on the promise.
The Future of Food? Stand in a Marks & Spencer store and contrast the difference in your mind to a supermarket in the United States and you will feel that you have stepped into a time machine and seen the future of foods. You won't see a big box store like Shaws or glorified warehouse like Costco with aisles stacked with Wonder Bread, canned soup and vegetables, and shrink-wrapped 70% fat-free, three-pound packages of hamburger. Instead, you will see a smartly designed boutique store with superbly packaged, ready-to-eat, prepared foods that dazzle the imagination, displayed as "Meals for 1," "Meals for 2,"and so on.
Aspirational? Marks & Spencer caters to an increasingly upward mobile, professional crowd with gourmet tastes, little time, and a need to economize. Taste one of the Marks & Spencer's mouth watering, ready-to-eat, Italian cannelloni, or French "coc au vin," or Indian "supreme curries," and you will feel as if you have been transported to the cucinas that surround the Roman steps, the café's of Paris; or the bistros of Bombay, and all for about 3½ £'s.
Innovative and high quality? The company is devoted to making people's lives better. It was the first company in England, for example, to provide a fresh food offering at a time when the only way you could buy a chicken was frozen or at the butchers with its guts hanging out of it. However, as time went on, Marks & Spencer began to lose its competitive edge in the marketplace as the one time "game-changer" and "game-grower" to became just another "me too" competitor.
"In a sense," says my client Chris Head," Marks & Spencer is a victim of its own success, for all the competitors saw that it had a good thing going and began to play copycat.1 In so doing, the market share of competitors like Tesco and Wal-Mart ASDA have shot above Marks & Spencer, both in terms of size and market capitalization. At the same time, while Marks & Spencer was a leader in some areas, it was a laggard in others. One of the issues has been efficiency. Marks & Spencer has a gross margin of thirty-five percent and a net margin of six percent. Wal-Mart ASDA has a twenty-seven percent gross margin and a net margin of eight percent. It doesn't take a genius to figure out that Marks & Spencer wasted more money between the thirty-five percent and the six percent than the competition.
One of the core issues Marks & Spencer had that contributed to this was that they saw themselves as "The Future of Foods" as it related only to product, not operations. Another issue had to do with employee attitudes. The problem wasn't that Marks & Spencer was the leader, but that many employees believe it was, which led to a certain complacency and a resistance to change. There was also a "warring tribes syndrome" amongst certain groups within headquarters. This was described by one manager as sitting on the inside of your function and pissing outside.
In coaching Chris, I suggested it was time to reformulate the organization challenge-Marks and Spencer: The Future of Foods-to include food product and food business operations. At the same time, I also suggested to Chris that it was important to have a corporate challenge that captured employee's intellectual and emotional energy. It was important that Marks & Spencer not only have the corporate challenge of being the future of food, but also being the most competitive enterprise in its field. I said, "Chris, you need to make your employees feel that they are in a worldwide war where both winning and losing are distinct possibilities."
I went on to clarify that none of this would happen by just placing a vision statement in the lobby of Marks & Spencer headquarters at Michael House on Baker Street, it would take personalizing the strategic intention for every employee. Top management's job is to get every employee focused on the strategic intention so that his or her efforts are not only cumulative, but have a direction.
We've found that one of the most powerful ways to get everyone focused on the strategic intent is to narrow it down by creating a strategic architecture that spells out the key elements or major challenges to be focused on. From there, each key individual in the company can come up with a significant business challenge that will fulfill on these key elements.
Create a Strategic Architecture that Becomes the Basis of Significant Business Challenges
Let's get back to you and your team. Look at the Impossible Future (the strategic intent) you have conjured up and develop a very clear picture in your mind about what that would look like. For example, "We will be the # 1 market leader," "We will have game changing products," "Our service will tower above the competition." Next begin to think about what the strategic architecture would be that would allow you to design and build it. This involves taking the vision and looking at "where you are now" with respect to it and determining what's missing that, if provided, can make a difference. Then it is a matter of translating "what's missing" into specific key challenges that must be met. The idea is to get the strategic architect eighty percent right, and then iterate.
We do a program called the CollabLab, which creates an innovative solutions environment. In this program, we ask people to stand in the future and imagine that their vision has already been realized and they are being written up in Fortune Magazine. Then we ask them to imagine what they did to get there. What was your leadership style, the method of collaboration, and group culture that was developed? What were the major goals or milestones that were met? What were the difficult facts and circumstances that needed to be overcome? What were the inventive and effective ideas that helped get all the missing pieces in place? What were the specific project challenges that were met in the first year, second, third, and so on?
The insights help people to discover what is missing to achieve the strategic intent and what key elements must be put into place that will provide what's missing. For example, if your strategic intention involves "Being the number one market leader by getting to the future first," the "what's missing" might include a powerful new business model that locks customers in and competitors out for the time being (Home Depot) or you may need a new way to reconfigure your customer interface (Amazon.com). Or it could involve shifting strategic resources with a view to improving the efficiency and effectiveness of your supply chain (Marks & Spender). Or it could involve negotiating a deal with a joint venture partner.
The strategic intent, the strategic architecture and the key elements (which are like stepping-stones to the future) all get included in a Source Document. (See chapter three for more on writing a Source Document.) Once this has been done, your role as a leader is to communicate the message of the Source Document and focus the entire organization's intention and attention on the "key mandates" or "big challenge" for this year, next year, and so on. For example, you might say: "Our key priorities for this year will be a) growth through acquisition, b) innovative new products, and c) Six Sigma quality with an emphasis on customers and cost effectiveness. Let me tell you just how important these priorities are to me and this company…" These key mandates become the basis for creating a line of sight for each individual in the company to create their own significant business challenge. The idea is to reach the strategic intention by creating momentum through an accelerating level of accomplishment.
As mentioned, the leader must coach, guide, and instruct the leaders at various levels of their organization to take their strategic intention and the key elements that make up the strategic architect, identify what's missing, and mobilize people to address the significant leadership and business challenges that will address these. The leader and top team must also make sure that these goals are set in a collaborative way. Every employee throughout the corporation also needs to have goals that give them a way to contribute, as well as a scorecard that directly connects their job to the initiative being pursued in a particular time frame. These goals, which represent doing something different, need to be distinct from the routine "run the business" goals that represent doing the same thing better.
Let's Return to the Marks & Spencer
The Marks & Spencer group took the corporate challenge of "The Future of Foods" and expanded it to include being "the most competitive enterprise in the industry." They wanted to achieve this through an inspired organization. This was broken down into a number of key elements or mandates that made up their strategic architecture.
For example, to spur growth, the decision was made to put Marks & Spencer's fantastic foods within two minutes reach (drive time) of everyone in the UK. This would involve a business challenge of growing the business from 300 to 500 stores in three years, with a new concept called Simply Foods. These smaller stores were to be placed in rail stations and other stores.
A second key element that needed to be focused on, and the one I worked on with Chris Head and his group, was to make sure that in the jump from 300 to 500 stores with different trading formats that there was a net increase in efficiency. This led to something called Project Diamond (a supply chain project), which represented the future of food business operations. It involved a super sophisticated approach to making sure the right foods, in the right quantities, were delivered to the right stores, at the right time. This would make it possible to service a greater number of stores with the same number of employees and thus increase productivity.
Another key element was to make the stores themselves more efficient, which led to something called Project Acorn. As you can see from this example, once you define the corporate challenge or Big Game, it becomes highly important to define the games within the game so that people can begin to see what they need to focus on to make a contribution.
Involve People by Asking Them to Create Significant Business Challenges
In the same way that a leader must allocate financial resources to winning the big game, a leader must also allocate the emotional energy of his organization. Asking key leaders to come up with a "significant business challenge" is opportunity for hundreds of people to become significant players by creating the games within the game.
The distinction "significant business challenge" was invented by an executive I coached (and have mentioned before here), Greg Goff, President of ConocoPhillips International Downstream.2 Greg observed that, while people set goals every year, most of the goals are: (a) not linked to a clearly defined strategic intention, (b) not a real challenge, and (c) didn't make any difference. He also observed that whether or not the goal was realized, in fact, often had more to do with the power of your brand, the richness of your assets and what was happening in the business environment, such as in his business, the rise and fall of the price of oil.
Greg came up with the idea of the significant business challenge to "change the game" of the goal setting process with a view toward creating an inspired high performing organization. He began by asking the following questions: 1) What stretch goals do you have you set that is in service of our strategic intention? 2) Is it a challenge? 3) Will it make a difference? It is amazing how powerful asking these questions can be.
We adapted this into a coaching program-Action Coaching-for key people in Greg's organization, with a view toward not only helping people formulate their significant business challenges, but also to most importantly make them actionable. We added several more questions: Can the person express it clearly and powerfully in emotionally compelling language? Does the person experience a healthy level of excitement and anxiety about it? (We found that, if the person didn't have a healthy level of excitement and anxiety, it was probably, not a significant business challenge.)
Greg uses setting significant business challenges as a way to not only make sure people set stretch goals in the right direction and to hold employees accountable for making a difference, but also whether or not people make a difference in the company has a direct bearing on who gets promoted and who doesn't. One day the managing director from the Swedish business unit office came to Greg and said, "I would like to put Lars up for a promotion in our marketing department." He went on to say that Lars had done a good job keeping their supply and trading business on an even keel.
Greg who knew something about this manager who had been in the present job several years said, "I will support your decision to promote him, if you can tell me one thing he has done to make a difference." The managing director reflected on this and then said, "I can't think of anything." Greg who is tough but fair, said, "Tell him I expect him to make a difference in that new job and I will keep track of how he is doing in it."
The Masterful Coaching Roll Out Process for Translating a Strategic Intent into Significant Business Challenges
In summary, here is an outline of everything we have been talking about in creating significant business challenges:
Start with a strategic intention that stakes out an Impossible Future. Source an extraordinary future for the organization by articulating a strategic intention. (See Part I Introduction for more on this.) For example: To create an inspired, high performing organization in the service of the strategic intention to be the number one market leader, even though this aspiration exceeds our resources. To reach this goal, we need to grow our business through being a game-changer and game-grower. We need to leverage our resources to the hilt and, thereby, eliminate complexity and waste.
Create a strategic architecture that includes the major building blocks. Create a Collaborative Gathering of your top team. Stand in the future with the strategic intention in mind and ask: "Where are we now?" It is important to have the humility to honestly acknowledge difficult facts and circumstances that have to be overcome. "We got to the future first, but have had less growth than competition," "We have great products, but we do not have enough market reach in terms of the number of retail stores." "Our supply chain has some obvious inefficiencies." Then ask: "What's missing that will make a difference? What are the key challenges?" Set three or four key mandates or big challenges that will provide what is missing.
Create line of sight to leaders at all levels with setting personal business challenge. We have found that Masterful Coaching's Action Coaching program for people in groups is an effective vehicle for creating line of sight from the strategic intention, strategic architecture, and key challenges that come out of it to leaders at all levels of the organization. People in groups are coached to set personal leadership and business challenges in the service of the strategic intent and architecture, and are coached to deliver on them over a years time.
Setting Significant Business Challenges When There is No Leader Standing for an Impossible Future
I want to emphasize here that you don't need someone in a high leadership position to declare an Impossible Future in order for you to come up with a significant business challenge. In fact, in smaller engagements we do in companies with both Executive and Action Coaching, this is quite often the case.
In coaching people at various levels of the organization we usually start with two questions: What is your leadership challenge? What is your business challenge? This is a powerful enough inquiry in itself to drive the coaching process, for it calls for people to set goals that are unpredictable and unprecedented.
In many companies we work in, people have already gone through a sophisticated goal setting process, in which case, we ask them to apply the following breakthrough criteria to test the quality of their objectives: 1) Is it a challenge? 2) Will it make a difference? 3) Can you state it in a way that is emotionally compelling? 4) Are you charged up and ready to jump into action?
Empowering People to Design and Realize a Significant Business Challenge
These coaching tips are intended to empower you, whether you are setting your own significant business challenge or coaching others in the roll out process.
Scope the Significant Business Challenge So It is Not Pie in the Sky
You need to empower people to stretch their notion of what's possible and achievable in setting a significant business challenge, while at the same time, making sure the goals aren't pie in the sky. It's not only important to formulate the significant business challenge right, but to have someone standing behind it. A significant business challenge requires someone in the driver's seat who owns it completely and makes it happen regardless of the bumps you hit on the journey to meeting it. At the same time, mastering your significant business challenge will probably require a different way of working than most people in big organizations are used to. Some generic examples are:
· Each manager is asked to generate 10% growth each year, 20% return on equity. (Jeff Immelt for GE Capital)
· Grow your business through a monster acquisition where you go from "niche player," to "biggest and the best." (ConocoPhillips)
· Create a business concept innovation using the Internet that takes you out of the dry gulch of "also rans" to a gusher of opportunity. (Amazon)
· Create an efficient business model and work to get the lowest breakeven costs. (Southwest Air-lowest cost per mile)
· Create an efficient business model with service embellishments without the lowest breakeven costs. (Midwest Express-best care in the air)
· Grow your business organically in retail: One more $ or euro per customer. (ConocoPhillips, Jet Gas Stations, Germany)
· All business processes in manufacturing, marketing and so forth should be running at Six Sigma quality-99 defects out of a million.
· Transform your supply chain into a competitive weapon. (Dell, FedEx)
· Turn procurement into a strategic advantage by partnering with suppliers.
· Create a list of profit boosters and pursue them-the law of increasing returns, competitor lock out, customer lock in, supply chain efficiency
· Come up with one breakthrough product or service each that results in 30% of your income.
· Create a digital dashboard with monthly metrics on key drivers of your business. Manage these key drivers versus get down in the weeds.
Encourage People to Set Challenges that Challenge Orthodoxies
If you are making a request to the people in your organization to come up with significant business challenge that will allow them to make a difference, than you have to accept that pursuing these goals and priorities will cause people to rock the boat. You need to be clear that a real significant business challenge will force the person to challenge orthodoxies as well as come up with new ideas, fresh approaches, and innovative solutions that represent new thinking and new practices. You can be a coach and thinking partner in this process that both pushes the envelope and maintains necessary boundary conditions. You will need the same for yourself.
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Delivering on Your Business Challenge Will Require a Higher Level of Initiative and Intention
Greg Goff is a good example, personifying the difference between being a leader who is out to make a difference and a mere "run the business" manager. He is not reluctant to be contrarian in his thinking and challenge orthodoxies. Finally, once he takes on a challenge, like a major acquisition or divestiture, he operates with a very high level of initiative and a very high level of intention. His searches for inventive and effective solutions and, though he is diplomatic, takes bold and unreasonable action. Further, he acts like there is no tomorrow and, as a result, makes something happen that others would have given up on or wouldn't have accepted as a challenge in the first place. What does this mean for you? It means operating with a much high level of intention and intensity, together with a willingness to bold and unreasonable action.3
Formulating Your Business Challenge
Now it is time for you to start to formulate your business challenge. Begin by looking at the strategic intent that you came up with. Ask what is missing, that if provided, will make a difference in being able to achieve it. Now write down the three to five major elements or challenges that you will need to be focused on in the next few years to accomplish it. (This then becomes the strategic architecture of your strategic intent.)
[Note to designer: leave space to write]
Now write down a significant business challenge for this next year that you will focus on. Use the following questions to help you evaluate your challenge: (a) Is it a challenge? (b) Will it make a difference? (c) Can you express it clearly and powerfully in emotionally compelling language? (d) Do you experience a healthy level of excitement and anxiety about it?
[Note to designer: leave space to write]
The Chapters of this Section
As you think about Your Business Challenge and get ready to act on it; I am sure the following chapters with their teachable points of view and templates for action will enable you to accomplish what you need to accomplish. In chapter seven, Declare Your Strategic Intent, Then Face Reality, you will design a path forward by getting deeply grounded in where you are today. In chapter eight, Get Leaders at all Levels to Formulate a Significant Business Challenge, you will learn how to create line of sight to your strategic goals and milestone. In chapter nine, Blow up Your Business Model Versus Tinker at Its Margins, you will learn how to create a powerful new business model or tweak your existing one to deliver profitable growth on a sustainable basis. In chapter ten, Create and Sustain Customers, will learn the secrets of how to lock customers in and competitors out. Finally, in chapter eleven, From Win/Lose and Win/Win to Transformational Negotiation, you will learn how to transform the relationship to transform the negotiation.