Is it money that makes the mare go?

Inspiration

A brilliant article based on a survey by Martin Dewhurst a director in McKinsey’s London office reveals some  interesting findings of related to common beliefs regarding the financial incentives for motivation.

Financial motivators

Many financial rewards mainly generate short-term boosts of energy, which can have damaging unintended consequences.

Non-financial motivators

Numerous studies have concluded that for people with satisfactory salaries, some non-financial motivators are more effective than extra cash in building long-term employee engagement in most sectors, job functions, and business contexts.

The respondents in the McKinsey Quarterly survey view three noncash motivators—praise from immediate managers, leadership attention (for example, one-on-one conversations), and a chance to lead projects or task forces—as no less or even more effective motivators than the three highest-rated financial incentives: cash bonuses, increased base pay, and stock or stock options.

Which are the top three non-financial motivators?

The survey’s top three non-financial motivators play critical roles in making employees feel that their companies value them, take their well-being seriously, and strive to create opportunities for career growth. These themes recur constantly in most studies on ways to motivate and engage employees.

The HR directors  McKinsey researchers spoke with, for example, emphasized leadership attention as a way to signal the importance of retaining top talent.

You may like to read the full essay at:

https://www.mckinseyquarterly.com/Motivating_people_Getting_beyond_money_2460

My take on the above findings

I  entirely agree with findings of the above survey. However I feel the challenge lies in addressing the organizational culture. The focus has to be on the macro-organization. The culture as well as the leadership must be embedded in the values and philosophy. The people must identify with the core purpose destiny of the organization. It is not easy unless the leadership leads from the front. Here I wish to present once again an inspirational quote:

“Life is not worth living, Without a purpose or meaning” – Buddha

The debate – financial versus non-financial motivators  will therefore become quite meaningless. People will be self motivated and respond to organizational crisis and down-turns beyond all expectations. Their levels of emotional stability too will be very high leading to quality decision making and productivity.

As always I look forward to your critical comments. Thank you.

Jim Reeves sings in praise of Tige

Please listen to the Video song below the lyrics:

(Tige you were faithful faithful to the end
Tige how I miss you you were my best friend)

Three years of Army Service done and I was headin’   home at last.
I got to thinking bout my dog and things long gone and past.
How old Tige pulled me from the creek when I had no pulse or breath,
and how he saved me from the chargin’ bull that gored my Dad to death.

As a kid I’d dream of bears and tremble to my toes
Till old Tige come up to my bed and nudge me with his nose.
Then my fears would melt away and Tige would go lie down,
I’d drift on back to sleep without another sound.

The big bus stopped I got off – it was awful dark and thick with fog.
Then something gently nuzzled me and there stood Tige my dog.
I wondered if my faithful dog had met the bus each day
And all the dreary winter nights since I’d been away.
To have Tige meet me here like this, I was…I was really glad
‘Cause I hadn’t needed Tige so much since the day they’d buried Dad.

Two long miles still lay ahead, but what I didn’t know
A giant Dam was being built where the old road used to go.
I thank the Lord for sending Tige and I followed where he led,
Knowing well without his help that I’d be good as dead.
Tige inched along this way and that, going rough and slow,
And I could hear the water lappin’ at the ledges far below.
Then through the mist I saw a light and mother in her chair,
I reached down to pet old Tige but he wasn’t there.

I’m thankful Mom you had old Tige these three lonely years
I owe my life to him tonight, I couldn’t help my tears.
You say you wrote me bout the Dam, well, God was sure with us
I didn’t get your letter, Mom, but old Tige met the bus.

I hate to tell you son, she said, but now you’ve got to know.
When you left it broke his heart…Tige died three years ago.

http://www.youtube.com/watch?v=JaEGlYFhnRc

Business environmental scanning – a challenge in strategic leadership?

The sustainability and responsiveness of a business strategy has a strong correlation to the quality of environmental scanning. Factual and academic details on the process of environmental scanning are discussed in my previous post “Drawing strategic value from environmental scanning and analysis”

Why the resistance to scanning?

When a new strategy is being developed it has neither shape nor form. As such the team members soon get fatigued collecting information and data in the absence a definite objective. People may start working at cross-purpose. The team is under pressure and inter-personal conflicts and low morale prevails. People get impatient more when the strategy is to implemented soon after.

Leadership and vision revisited

Amazing leadership

(Picture courtesy Tundra swans from tundra swanparadise.com)

It is here that the CEO’s or project leader’s strategic leadership come into play. He drives and leads the scanning effort with enthusiasm and vigor. A tempo of excitement    must be created so that the team interest remains high.  A true vision inspires and   energizes the team and provides a direction to the scanning effort. It is the shared vision   that generates synergy.

Analyze the data

Scanning by itself may not be enough to make sense. The information has to be analyzed in the context of the strategic objectives which may still be in the nascent stages. Good indexing and referencing is important to draw value out of the vast data. Use of statistical techniques is useful to enhance the value of sample surveys. The way to avoid information overload is by canalizing the scanning effort towards the critical success factors (CSFs). This was discussed in the previous post.

Use strategic models and creative processes

Various tools such as PEST analysis, Porters Five Forces model, and value chain analysis may be used for analysis. Brain storm to generate ideas – even outlandish ones must be welcomed. Cross fertilization of ideas will then enable creation of great strategies that are unique and have distinctive competitive advantage.

Conclusion

This article highlights the importance of a vision, leadership and team spirit in the environmental scanning process. The scanning capabilities must be imaginatively structured into the organization so that the strategy remains dynamic and responsive to the changes in the environment.

Your comments and questions are always welcome!

Drawing strategic value from scanning and business environmental analysis

Organizations operate in an environment

Much of the management theory especially strategy is concerned with the way in which organizations cope with change in the business environment. Particularly the way strategies & structures are adjusted in response to environmental changes.

Strategy planning is a rational integrative discipline. Its approach is to gather evidence with which management can reconcile firm’s internal capabilities to the external environment. And then to make decisions to employ the firms resources for competitive advantage.

Scope of environmental scanning

Courtesy monica's WunderBlog

Environmental scanning analyzes information about every sector of the   external environment that can help management to plan for the  organization’s future.

Scanning covers:

(a)    Industry analysis: Comprises the immediate environment the competitors, suppliers, and customers.  The strategic tool most common used is Michael Porters Five Forces Analysis.

(b)   PEST analysis: The remote environment that includes political, economic, social and technology and also regulatory environment. Here the emphasis is on the changes in the demographic factors and the trends.

Does scanning lead to improved performance?

Research evidence indicates positive evidence as given below:

Newgren et al (1984)
Scanning firms significantly outperformed non-scanning firms
(50 US firms, P/E ratios, 1975-1980)

West (1988)
Daft, Sormunen and Parks (1988)
CEOs of high performing firms scanned more frequently, intensely and broadly
(50 SMEs in Texas)

How is scanning conducted?

In the following ways depending upon the resources available to the firm and the CEOs strategic priorities:

(a)    Ad-hoc scanning – short term, infrequent examinations usually initiated by a crisis

(b)   Regular scanning – studies done on a regular schedule (say, once a year)

(c)    Continuous scanning – (also called continuous learning) – continuous structured data collection and processing on a broad range of environmental factors

Methods

There is no single method for scanning the environment. The time and cost may vary greatly from organization to organization. In the 60’s the common sources of data collection about the external environment were personal experiences, journals, reports, books, professional meetings, industrial conferences, colleagues, board members, friends and employees.

70’s onwards formal environment appraisal units were established. A pioneer was General Electric Co which conducted business environment studies in 1967. Coca Cola, Gillette, Whirlpool and AT&T created such units futures research, commercial research, social forecasting and environmental scanning.

Scanning in large companies

In larger companies, managers tend to minimize their role as monitors and emphasize their role of dissemination of information. Flow and circulation of information becomes an important issue in larger organizations, where more complex structures and functional diversification are dominant features.

Scanning in small companies

Managers of smaller companies assume environmental scanning as a personal responsibility and attribute great importance to that activity. The dissemination factor is irrelevant, because in most of the cases there is nobody else to pass the information to.

What are the objectives of environmental analysis?

It is primarily to utilize scarce organizational resources judicially. Identify the trends in environment. Focus on those which seem to be most relevant & critical to the business.

Use scanning resources judiciously

A huge saving in effort and cost can be achieved by in identifying the driving forces in the environment. These forces will be more influential in determining a firm’s performance than others. These forces are called critical success factors (CSFs). It is vital to focus the firms scanning efforts on them.

Strengthen Core Competencies

Effective CSF analysis should benefit later stages of planning. They disclose specific internal capabilities that must be strengthened to a point where they become sources of distinctive competitive competence. These competencies may be designated as critical core competencies (CCCs).

Scanning the Japanese way

One must learn from the Japanese – who have technological information scanning & analysis system that has been extraordinarily effective for Japanese industry. In US there are the intelligence activities of MITI (Japanese Ministry of International Trade & Industry) & JETRO (Japan External Trade Org) but Japanese businesses are the principal surveyors of the technological environment.

Mitsubishi in earlier times is known to have occupied two floors of the  Pan American building in New York and has a small army of people screening      technical magazines and contacting firms for brochures & other material. The firm does their own microfilming.  Thereafter definite indexing & analysis of information is done in Japan. Interesting data is published and circulated freely among various companies.

It is quite evident that the Japanese have made a science of it.

Conclusion

Dedicated scanning and analysis by motivated staff can result in generating vital data. This leads to the formulation of a robust strategy that will be sustainable. It is equally helpful in the implementation of the strategy too. A lot will depend upon the leadership.

Please do add or post your questions. Thank you.

What is the difference between organizational vision and mission

In organizational direction setting exercises with the corporate and fellow professionals some questions that come up quite often are given below:

(a)    What is the difference between the two?

(b)   Why have both – Vision and a Mission

(c)    Is the mission a road map to achieve the vision?

(d)   Can we have more than one mission statement or only one?

In my earlier posts I have shared my views and experience on the power of organizational vision and mission. The key take away of the articles were in terms of the strategic and inspirational value that they provide. They can make “The impossible – possible”.

What better way to share my thoughts on the difference between Vision and Mission   than with  the popular and most loved coffee brand – the Starbucks Corporation.

So lets examine their Vision and Mission statements -

The difference

Your vision is your dream, your aspiration, your “belief to accomplish”. The vision statement is a projection in the future. Note the stretch that is built-in when it reveals its geographic ambition as well as the commitment to earn respect by being a responsible global citizen.

The mission statement describes what business you’re in and who your customer is – how do you intend to satisfy them. As such, it captures the very reason for ‘your being or existence’ – your corporate identity, values and philosophy.

This helps immensely in the setting of objectives and building the overall company strategy.

Why have both?

This depends upon the nature of business, product or industry. Had there been no overseas expansion for Starbucks then one was fine. In this case Starbucks mission emphasis ‘finest quality’ and ‘uncompromising quality’. Therefore two – it need not be a hard and fast rule. Having both

Is the mission a road map to achieve the vision?

Though the mission statement is created independently at times it may have some linkage with the vision as seen in the case of Starbucks global dimension. A mission may or may not flow out of the vision – it is not a ‘road map’ to the vision.

Can we have more than one mission statements?

This depends upon the aspirations and values of the founders or top leadership. Though we do not advise changing the mission frequently as this affects the strategic direction. However when disruptive changes occur in technology or environmental issues assuming great importance then a revision may become inevitable.

Starbucks has done just that and come with two new mission statements. One focused on the ‘human spirit’ and another on their ‘environmental concerns’.

I request all my friends to read this approach critically and enrich topic discussion with your comments. I respect differing views and would love to answer your questions.

Thank you.

Can a Tagline play the role of a Mission statement?

I am sure when you ask organizational members if they can recall the essence of the vision or mission statement of their company – the answer most likely is ‘no’ or ‘not very sure’. But they do remember the tagline very well. A tagline is a common tool to promote brands. However there are several examples of tag lines adding more appeal to a company’s mission statement. In such cases a tagline becomes a punch line which strikingly sums up what a company believes in.

Absolutely – Positively – Overnight!

The original tagline of FedEx used to be “When it absolutely, positively has to be there overnight.” Just the three words absolutely – positively – overnight best described Fred Smith, founder, president and CEO (FedEx) strategy and business model and perhaps served as a mission statement. The tagline had a powerful emotional appeal  to all the stakeholders. Its employees everywhere could imbibe and live the spirit of the mission. Come what may they had to play their own roles to ensure integrity of ‘the three words’. To the customer it became a value proposition.

In 1992 when FedEx decided to expand overseas it changed its tagline to   “The World on Time.” Here the tagline not only drives the brand but also powers  its mission as – speed and efficiency globally.

Can the tagline of KINGFISHER Airlines, Fly the Good Times with KINGFISHER Airlines also serve as its mission statement?

Kingfisher airline tagline

The answer will depend upon whether Kingfisher can build its group strategy and business model on the tagline. After the merger with Deccan a low cost airline it had to create Kingfisher Red, known formerly as Simplifly Deccan and prior to that as Air Deccan, is a low-cost airline. Therefore strategy formulation on its tagline will can pose a challenge as the focus will be difficult to maintain.

Examples of taglines that power the strategy

Wal-Mart – Always low prices

McDonald’s – I’m lovin’ it

Nike – Just do it

Disney – To make people happy

Mission statement aligns better to the company strategy

A mission statement is the bedrock of a company strategy and a tagline can only in exceptional cases irresistibly project  the mission and strategy  of the company.  If the brand tagline focus is on the customers then a mission statement is directed to the customers and employees – in fact to all stakeholders.

Therefore it is best to us these ‘strategy drivers’ in their respective classical context.

Why Do Organization’s need a Mission?

The answer can be found in the following quote:

“Life is not worth living, without a purpose or meaning” – Buddha

Buddha passionately believed that people could lead meaningful lives if they understood its underlying purpose.

An organization too needs to establish a mission and its purpose. The means are bound to follow. If the purpose is noble the means will be honest and ethical. Evolving such a mission will need deep introspection and sometimes may even emerge serendipitously.

In the context of ‘Business Management’ the company mission embodies the strategic decision-makers ‘business philosophy’, and also reveals the image the company seeks to project, and indicates the principal product or service areas, and the primary customers needs the organization attempts to satisfy.

The organizational philosophy reflects basic values, aspirations and philosophical priorities that the strategic decision-makers are committed to emphasize in the management of their firms.

I believe and I have seen it happen when a mission is inspirational it energizes the entire organization. People relate to the mission by ‘Living the mission’ and translating it to achieve the objectives. Work becomes exciting as they all own the mission. A mission statement can also serve as a control mechanism to keep the company “on track” and to keep it from wandering into unrelated businesses. It serves as boundary lines to make decisions. Therefore a mission statement must be neither too narrow (rigid) nor too wide (without clear goals & direction). The mission need not mention

Henry Ford

profitability and such like goals as it may dilute the inspirational purpose. On this a quote by Henry Ford is apt – “A business that makes nothing but money is a poor business”. In another quote he reveals “A business absolutely devoted to service will have only one worry about profits. They will be embarrassingly large”.

The objectives that flow out of the mission must however be specific, quantifiable and measurable and time bound. It may include profitability, market shares, ROIs or other targets. The strategy of an organization is formulated to achieve the objectives.

The mission statement of the highly respected and admired Tata Group best exemplifies what makes a mission statement really great.

J.N. Tata

“In a free enterprise, the community is not just another stakeholder in business but is in fact the very purpose of its existence.” - Jamsetji N. Tata, Founder, Tata Group

Founded by Jamsetji Nusserwanji Tata (JN Tata) in 1868, the Tata group has developed into one of India’s largest business conglomerates.

JRD Tata too continued the spirit of JN Tata’s business philosophy with the

JRD Tata

guiding mission of the Tata group as “No success or achievement in material terms is worthwhile unless it serves the needs or interests of the country and its people”.

A pioneer in several areas, the Tata group has consistently followed the path of innovation, growth and development. Tata is credited with pioneering India’s steel industry, civil aviation and starting the country’s first power plant and  the market leader in several diverse fields . It had the world’s largest integrated tea operation, was Asia’s largest software exporter, and the world’s sixth largest manufacturer of watches (Titan).

All the individuals who headed Tata institutions emphasized the importance of philanthropy and the utilization of wealth to enhance the quality of public life. The core values espoused by the group included integrity, understanding, excellence, unity and responsibility Core Values of the Tata group. The values of the founders are reflected in the mission statement of the group, which lays great emphasis on CSR.

Such mission driven organizations will have departments at all levels conduct themselves in line with the values. Training programs and other strategies too  align themselves to the mission and thereby add value.

We can conclude with conviction that for a mission to be sustainable it has to reflect the values and ideals of the owner or founder or top management. I hope to host another post with a focus on the relationship of a sustainable strategy with a value-based mission.

Looking forward to your responses. Thanks.

Give up All and You Gain All

I happened to read today in The Sunday Newsline Pune edition that a biographical film – Nirgunache Bheti (Marathi) named Tatwamasi in English is made by Nitin and Dr Anitha Kulkarni. The theme of the film is to spread the teachings of Sri Nisargadatta Maharaj. I am eager to see this film as I had come to know of this great being in 1988 through his most famous and widely-translated book, I Am That,  an English translation of his talks in Marathi by Maurice Frydman that had brought him worldwide recognition and followers.

In my first few attempts to read “I AM THAT”I could not go beyond the first few pages. But as years passed by I kept coming back to the book. Each attempt brought newer insights even if I read the same chapters. When I opened the book today the chapter heading was:

“Give up All and You Gain All”.

Wow what a challenge to the beliefs and logic of the current times: competitiveness, strategies and business models that we discuss and teach in business forums and colleges respectively! I thought this would make a perfect heading for today’s blog post.

Another quote of the Maharaj that conveys a simple yet powerful message for all teachers, parents and mentors is –

“All you can teach is understanding. The rest comes on its own”.

Sri Nisargadatta Maharaj was a simple man but his wisdom – immensely profound and transformational.

Cheers

Dilip

Strategic Role of HR in a Turnaround

The EDS turnaround is meant for an educational purpose and to inspire young HR professionals. It highlights the lesson that the key to a successful turnaround strategy is a leadership that recognizes the importance of culture and strategy alignment.

EDS was launched in Dallas Texas in the 1960s by Ross Perot. The strategy was unique as for the first time a company would handle out-sourced computer operations of other companies. Perot created an aggressive competitive culture and typically recruited predominantly ex military combatants having battle experience.

EDS was taken over by GM (1984) and grew by leaps and bounds operating in more than 40 countries and a $14 billion turnover. When it was spun-off in the late 1990s it

EDS logo

had imbibed GMs complacent and bureaucratic culture. For an IT company this became a definite competitive disadvantage. It lost position of market leader to IBM and others despite the high growth rate of the IT industry. Its profitability declined to the lowest levels.

Dick Brown ex-British Cables & Wireless was hired as CEO in 1999 to lead the turnaround. Brown’s turnaround leadership was a success. The company had to reinvent itself for the digital economy. Brown re-strategized and set up tough financial targets. But alongside he gave the highest importance to a massive change effort. He understood that to make the new strategy work an alignment of the organization culture is an imperative.

His statement as it appeared in an article in Fast Company was – “Most business leaders are afraid to talk about culture, they’re far more comfortable with numbers. While I am very numbers focused, you can’t change a business with numbers. Numbers are the end result. You change a business by changing the behavior of its people.”
The cornerstone of his successful culture change initiative was communication and commitment and a culture of sharing and trust. Thus EDS regained its leadership.

Your comments are welcome! (Also please read comments below for the current status of EDS now a HP company)

What Really Is Strategic HR?

I was called upon to review the syllabus for Strategic HR of a new management institute in Pune. The institute is affiliated to a University. I’d like to share some of my thoughts.

My main observation was that almost all the topics prescribed in the

The HR Value Proposition

curriculum were not very different from any HRM program. The attempts made to link HR processes to strategy the approach relied considerably on the functional HR theory. The core and reference books on Strategic HR had strategy and HRM as distinct chapters – not integrated seamlessly. I was surprised why some great books on Strategic HR by Dave Ulrich and Wayne Brockbank and a few others were missed out.

The main issues that arise are how can HR add strategic value to the business? And how can HR professionals who have not experienced the pulls and pressures of the core business be expected to fulfill this role successfully?

HR does attract good talent but unless they are exposed to business realities of the external environment a real transformation will always pose a challenge. Please read a brilliant article by Keith Hammond on “Why We Hate HR” at http://www.fastcompany.com/magazine/97/open_hr.html.

The challenge therefore is how HR can be exposed to the external business environment. The traditional positioning of HR has always been in a staff role and therefore a ‘change’ to the role of a business decision maker and a leader with the responsibilities of ‘line’ will need a bold and innovative approach. In other words HR professionals will need to develop a CEO mindset and think like CEOs.

A fairly clear concept of strategic HR emerges in the article ‘The New Mandate of HR’ by Dave Ulrich that had appeared in the HBR read  http://www.hrequations.co.nz/SHRQ/downloads/ulrich%20new%20mandate.pdf

Like we have an intra-specialization in Finance and Accounting, Marketing and Sales do you have Strategic HR and Core HR in your organizations or there is no classical differentiation? What are the issues and challenges that emerge in your organizations?

I request you to share your experience and insights and enrich this debate. Thank you.