Many of us learned the profitability U-curve. Its point was that the most efficient low-cost producer and the most effectively differentiated premium-priced players earned all the profits and those in the middle suffered. But neither position is defensible. Eventually, someone will always find a lower-cost way or a new point of differentiation. The only way to sustain a competitive position over time is to get all clear on your core focus and invest in the right things at the right place in the right way at the right time over time, maintaining, simplifying, outsourcing or eliminating the rest.
Core Focus
As described in an earlier article, all organizations design, produce, sell, deliver, and service. The most successful over time understand their core focus and align everything around it to feed their competitive advantage.
Five Priority Levels
- INVEST time and money in the right things at the right place in the right way at the right time over time to build competitive advantage in your core focus.
- MAINTAIN things that are working well enough in support that core focus.
- SIMPLIFY by:
- Automating part or all of things
- Narrowing the scope, geography, or range of things
- Delayer so less people are involved in things
- Relax the standards of things (Top 1% – best in the world; Top 10% – world class; Top 25% – strong; Top 50% – competitive; Top 90% good enough; Bottom 10% minimum viable).
- OUTSOURCE or delegate things that should be done and are best done by others.
- ELIMINATE or delay things that do not need to be done or do not need to be done now.
This is the heart of strategy, creating allocating resources to invest by ruthlessly investing less in the other priority levels.
In general, if your core focus is:
Design, you’ll invest in innovation first. Your CEO will be chief enabling officer, freeing up resources everywhere they can in a principled way to support the most important people and processes in the organization focused on innovation.
Think about how Apple outsources its production and delivery and provides minimal service levels. Don’t get confused by the Apple Stores. They exist purely for marketing purposes – which all organizations must do.
Production, you’ll drive accountability at every level to ensure things get made at the right quality, right cost, and on time. Your CEO will be the chief enforcer leading a hierarchical command & control hierarchy driven by policies and procedures.
Think about how The Coca-Cola Company delivers the exact same tasting Coca-Cola every time all over the world. They’re product design is all about fast-following, waiting for someone else to come up with an idea and either buying their organization outright or reverse-engineering their product.
Delivery, you’ll have a bias to collaborate with others. Your CEO will be the chief enroller, making alliances across a matrix that spreads far beyond their own employees to other organizations in the distribution eco-system with all sorts of shared responsibility.
Think about Amazon is not actually delivering the vast majority of things they sell themselves. They leverage UPS, Federal Express and a whole gaggle of third-party distributors.
Service, your organization needs to ooze customer-centricity from every pore. Your CEO will be the chief customer experience officer, evangelizing guided accountability through a decentralized organization so the people closest to the customer can make key decisions.
Think about how the Ritz-Carleton and other high-end hotels inspire, enable and empower all their people to solve guest problems on the spot.
Enabling Timely Choices
The Marines’ handbook, MDCP1 puts it well, “All actions are the result of decisions or nondecisions. If we fail to make a decision out of lack will, we have willingly surrendered the initiative to our foe. If we consciously postpone taking action for some reason, that is a decision. Thus, as a basis for action, any decision is generally better than no decision.”
It goes on to suggest that “Decisionmaking in execution thus becomes a time-competitive process, and timeliness of decisions becomes essential to generating tempo.”
One of the keys to enabling your people to make time-competitive decisions is to give them clear direction around objectives and intent so they all know the organization’s core focus, resource priorities, and their bounded authority around those decision coupled with their own accountabilities so they know how their decisions and actions fit with the greater whole.
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