Friday, November 19, 2010

Teleopathy: The subtle and vexing condition that is viral in many corporations

When creating a long-term strategic plan in the pursuit of organizational excellence, a company should have a set of goals that optimally serve all of its stakeholder groups. The key word in that sentence is should, and the main problem many groups face is that they don’t change their inward-focused mindsets to match the outward-focused approach that must be the heart of a solid multi-year plan.

More specifically, many companies prioritize the needs and goals of one stakeholder group above all others. When that happens, it nearly always is investors who are given top priority. This is what’s known as teleopathic behavior. Teleopathy is most simply defined as the unbalanced pursuit of objectives, and the needs of others often are sacrificed during that pursuit.

It’s easy to see how this happens in a typical corporate culture. While companies develop long-term strategic plans to guide them toward a prosperous future, they frequently measure their success in short-term increments, such as quarterly or annually.

In good economic times, ink flows black as sales and profits grow, and employees are added to handle increasing demand. Suppliers are called upon to provide more goods, and the community in which a company operates often benefits as dollars course through the local economy. All stakeholders are served, and everybody should be happy.

When sales slow and hard times hit, however, companies often work to keep that quarterly report looking good for its investors to the detriment of the other stakeholders--employees, customers, suppliers and the community as a whole. To maintain shareholder value, companies might downsize their workforce and bargain more sharply with suppliers. They often cut corners on customer service and reduce their investment in the community. All of this occurs in the name of maintaining shareholder value.

The tough decisions described above may be necessary for a company to remain viable when times get tough. If revenues fall and a company starts operating at a loss, tough decisions must be made, of course. That is, even an outward-focused and excellently run company might need to make such tough short-term decisions in the context of its mission for the long term. In this case, the decision process is balanced.

Returning to the behavior of the teleopathic condition, this unbalanced pursuit can be most harmful when it exists whether the company is in good times or bad. With teleopathy, the dominant behavior is inward-focused, short term and narrowly interested only in shareholders. This is a long-term recipe for failure. Problem is, it is wide spread, and it is viral.

One of the greatest consequences of teleopathy is this: when it’s pervasive, organizational excellence is impossible to achieve. Further, this behavior is a symptom of a larger problem – a leadership culture that is indeed inward and short term-focused, which is ultimately doomed to failure.

True value will be realized if and only if goals and strategies are established to optimally serve all stakeholder groups through all economic cycles, through good times and bad. It truly takes discipline and courage. This discipline and courage are grounded in a common vision that truly inspires every employee, from the boiler room to the CEO’s office, to always serve all stakeholders.

It’s a tall order, to be sure, but it’s an achievable one for a company that has a strong, livable vision, a mission that involves all stakeholders, and a strategic plan that takes into account what’s best for all involved.

Thursday, November 11, 2010

Strategic planning, visions, missions, and stuff

In our blog, we focus on organizational excellence in every post. Today we discuss one of the centerpieces of that excellence – core purposes and strategic plans.

When meeting with clients and traveling around, I talk a lot about developing a playbook for an organization or business. A playbook, or a multi-year strategic plan, is an essential tool for any organization that wants to reach its full potential. Before a business can create such a tool, though, there are a couple of absolute gotta-haves that must be in place at the front of the book—a livable vision statement and a mission statement. When properly thought through, written well and used together, these three elements can go a long way toward helping any organization attain true excellence.

Over the years, I have often heard leaders downplay and even pooh-pooh vision and mission statements and multi-year strategic plans. While outfits might do well without such formal playbook-like guidance, I know, deeply, that they probably were all falling short of their best, no matter how well they might have been doing. I wonder how well John Wooden’s UCLA basketball dynasty would have done by just playing street ball. Phil Jackson’s Bulls and Lakers are another fine example of what a unifying set of guidelines—vision, mission and plan—can produce. All businesses and organizations maximize their success probability through such playbook guidance. Of all things, this truism is not rocket science, yet downplaying a playbook or performing a going-through-the-motions creation of a strategic plan persists for so many. This is an organizational and, collectively, societal tragedy.

A vision statement is a forward-looking statement—a picture of the elegantly desirable future—that explains what the organization wants to achieve in a broad sense. Ideally, it’s inspirational and is embraced from the boiler room to the CEO’s corner office. It should energize executives, employees, investors and customers alike.

For example, the American Hospital Association has an elegant vision. It’s a vision of a society of healthy communities, where all individuals reach their highest potential for health. Think about that for a minute. I’ve never worked in a hospital, but this vision inspires even me.

The mission statement is an organization’s brief explanation as to how it is working toward fulfillment of the vision, the very reason for existence. Going back to our friends at the AHA, that organization’s mission is “to advance the health of individuals and communities. The AHA leads, represents and serves hospitals, health systems and other related organizations that are accountable to the community and committed to health improvement.”

Again, good. Note how they don’t mention what they actually do on a day-to-day basis. This is good, and here’s why. Let’s say you and I worked at the American Hospital Association, and there was some issue at hand—an important decision that needed to be made. One of us could step back and ask, “Which option really helps us to advance the health of individuals and communities?” In a practical sense, it might be a silly question to ask if we were trying to decide where to buy copy paper or toilet cleaner. I would argue, though, that at some level, the vision and mission statements are relevant in every decision a company makes.

Now you’re ready for the playbook.

Next comes the multi-year plan part of the playbook. This is where we get into goals and strategies. There are a few ways to ensure the playbook is written so that it will be followed—and ultimately successful.

The playbook should be written in everyday street language that everybody can understand. It should be developed for a finite period of time, and it should be adaptable. The amount of time isn’t altogether relevant; most are three to five years, though organizations in some cultures have 300-year plans. It’s just important to have time attached to each goal so that they don’t get permanently back-burnered.

Most importantly, the number of goals should be closely related to the number of stakeholder groups, and nearly every organization has at least five primary stakeholder groups: investors, customers, employees, suppliers, and the community or communities in which the organization exists. Each also must have the general common good or public interest in mind.

For a strategic plan to be embraced, it must have goals connected to the vision and mission statements, and those goals must provide value to each stakeholder group. They must energize the people of the organization – make them want to excel, to be best in the world.

If it’s a good playbook with benefits for everybody, it’s more likely to be successfully executed—and more likely to get an organization closer to fulfilling its mission and realizing its vision.

The Takeaway? Each individual and organization should want to know, indeed must know, who they are, what they love, where they are going and how to get there. As importantly, they need to know how high is up for them, their true potential.
Organizations that develop and continuously update their playbooks over time, changing them with shifts in society and the marketplace, will see their potential (how high is up for them) and will have fun achieving it. Those who don’t will waddle along, doing at best pretty good, with opportunity costs being incurred all along the way.

Which organization do you want to be?