Why does the enterprise exist? This is a profound
question. How does it provide value to customers, employees, owners,
and economies. What are the authentic principles that guide the
achievement of purpose.
In my experience, if a sense of purposefulness is
not felt throughout the enterprise the enterprise will not survive.
The best controls, the most efficient processes will not save
an enterprise that has lost a feeling of it's purpose. Any
other omission can be overcome with a strong sense of purpose.
My trade is process design consulting not strategic
consulting, but good process design depends on having a foundation
of enterprise purpose and guiding principles. Therefor I have
adopted some simple and quick techniques to help my clients formulate
and give voice to their enterprise purpose and authentic principles.
When I walk into an engagement my first instincts
are to absorb, have empathy, of the organizational entity. What
is it's personality, it's principles, it's identity in the economy.
Then I listen to management's statements of purpose and read the
'vision/mission' plaques. It's in the gap between words and actions
that I find my work. Observing enterprise behaviors I can then
'reverse engineer' or derive the operating purpose and principles.
The words say "provide quality products" but the actions
say "ship anything not bolted to the floor at month end".
The gap between words and actions destroys purpose. In
fact this conflict of words and actions is compounded by inconsistencies
in the management chain, across functions, and across geography.
My technique for helping discover purpose and principles
follows four steps 1) develop awareness of the market need 2)
develop ideal statement of purpose and principles 3) derive authentic
statements of purpose and principles 4) bridge the gap. The simple
diagnostic model. One of the interesting features of this approach
is that it can be applied at any level of granularity within the
enterprise. The enterprise itself, organization or function within
the enterprise, or even at the individual level. Try it for yourself!
I'm reminded of when senior management of a multi-billion
dollar division of a large corporation were asked to write down
the purpose and principles of their division. After 30 minutes
of floundering the consultant asked the group to write down the
purpose and principles of McDonald's Restaurants. It took them
less than three minutes, and where remarkably consistent. A statement
of enterprise purpose should be quick and easy, if it's not, or
is inconsistent you are in trouble. If it is not intuitively obvious
in the products, services, and behaviors across the enterprise
you are in trouble.
There are two resistors to this activity 1) we already
did it, read the plaque in the reception area 2) it's not our
job, senior management does that. It is up to the consultant to
address these concerns. Since a sense of purpose is what drives
meaning (and the opportunity for joy) into everyone's daily work,
it is imperative that authentic purpose and principles be tangible
at every level of the enterprise.
As a consultant I don't define purpose and principle, I help the enterprise discover them. Sometime they are not very altruistic. And I am always reminded at some level of my struggle between the capitalist jungle and a collaborative striving for achievement.
Purpose sets the point on the horizon, principles
help me navigate to that point. They go hand in hand.
If it's easy, it's quick. If it's hard, it's healthy
to do. (but don't take more than one day).
The purpose of this step is to develop a picture
of the world as you would like to see it. It should be so clear
that if you walked into this company "you would know it".
A simple technique to develop this is to draw a circle
representing the enterprise. Around the circle are smaller circles
representing all external 'partners'. These represent customers,
vendors, government agencies, competitors, etc.. For each partner,
list what the major interactions are, such as customers sending
orders and receiving products.
To develop a statement of purpose use this picture
and list the enterprise outputs. Next to each output list the
need that is satisfied by that output. Purpose is not defined
by your product but by what need your product satisfies. Understanding
your purpose in terms of the environment's dependency on your
value is more stable that defining your purpose solely by your
product. The buggy whip example is good here. Is your purpose
to produce buggy whips or to provide transportation control devices?
One is out of business the other offers unlimited growth and room
for individual initiative.
To develop a statement of principles use the picture
and list all the attributes of your major outputs. For each attribute
write a sentence describing that attribute. Use these sentences
to develop a statement of principles.
I have always been frustrated with 'principles' statements.
Too many times they are statements in goodness with no real meaning,
fluff. "Our products will be the highest quality at the lowest
cost." The best test I have seen or used for statements of
principles is the 'inverse test'. Phrase the inverse of the principle.
"Our products will be the lowest quality at the highest cost."
If it is not also valid then your principle will not provide guidance
in running of your business. Principles always represent valid
tradeoffs. That is how principles provide guidance. A valid principle
would be "Our products will be of acceptable quality, minimal
functionality, and low price". Walk into any K-Mart and you
will find these products, and yes they fill a need within the
economy. The inverse would be "Our products will be of superior
quality, leading edge functionality, at a price premium".
Again just as valid and filling a need within the economy. You
can see how these principles would have a direct impact on design
and implementation of dynamic enterprise processes. And you can
see the damaging effect of conflicts in principles across organizations
and functions within the enterprise. It is amazing but many organizations
that I have consulted don't know if they are producing Hyundai's
or Mercedes. One function is designing Hyundai's and another function
is building Mercedes. This is very dysfunctional, undermines enterprise
learning, and degenerates to destructive conflict.
The purpose of this step is an honest and authentic
self-assessment. Our actions define who we are, not our words.
The credibility of our ideal purpose and principles lies in
a shared and honest understanding of where we stand today.
This is a tough task, not to do but to decide to do. Is doing
the right thing for the customer the same as doing the right thing
for the people we work with, and for our own self? If not, the
business will become dysfunctional. The other difficulty is in
the word 'shared'. Each of us has a unique viewpoint and understanding
of the world. This is at once a strength and a danger. Many differences
are legitimate and inconsistencies must be resolved, other differences
are viewpoint only and can be valued and leveraged towards achieving
shared purpose.
An exercise that can help. Write your purpose and
principles as they truly are. Look at the behaviors of the enterprise,
how resources are allocated, and how compensation really works
(don't ask personnel, ask someone who was promoted, and someone
who was not promoted). Is quality reinforced or is volume rewarded.
Is customer satisfaction measured or days sales outstanding? Are
functions funded on head count or are they funded on quality and
cost of service in meeting customer needs. Would the purpose statement
read "To make the most money in the shortest amount of time".
Would a principle be "build and exploit market share leverage".
These are too harsh, but usually the existing 'de facto' purposes
and principles are some distance from the well thought out ideal.
You have to start where you are. Observe!
The purpose of this step is to take action. To reduce
the gap between actions and words. How can the organization structure,
budget and compensation systems be changed to support the way
we want the enterprise to be. How can we ensure that 'doing the
right thing' is consistent across the enterprise.
The knowledge developed trying to understand the
spirit of the enterprise will breath life into the creation and
evolution of organizational structure and core processes. You
will know it when you see it.
This is very hard. Our organizations have become
so politically inbred that it is difficult to surface authentic
purpose and principles. It is very threatening, and much easier
to play games with these concepts. Yet it is here that the power
is tapped that transforms the health of the enterprise. If I did
not see and participate in these transformations I would be a
terrible cynic, back to the jungle.