Over the years, I’ve had my share of “aha” moments when the solution to some knotty problem has appeared almost magically, when it was most needed. One of the most interesting of such moments occurred while I was working with a client in the marketing communications industry.
Led by a visionary CEO, the company operated in an industry segment that required it to meet tight deadlines and run with a high degree of financial transparency. To meet these demands, company management had systematically acquired the business capabilities needed to position the company as the most innovative player in its industry niche. Considerable effort had also been put into recruiting some of the best young creative talent in the industry. The organization’s commitment to people development was evident in the generous budget set aside each year for staff welfare, training and development. Investment in technology and other infrastructure was equally intense. Within a few years, the company had established itself as the clear leader and was growing rapidly.
Strangely, despite having achieved so much success in such a short time, there was growing unrest within the workforce. Employees, including several senior management staff, appeared resistant to all efforts to streamline operating rules or to introduce more effective performance management practices. The company’s board became increasingly concerned by these developments and I was invited to help investigate what might be wrong.
Several weeks passed without any real progress. Everything seemed to support the conclusion that the company’s progressive staffing policy and disciplined recruitment practices had produced a talented group of creative young people ready to work hard to meet the company’s ambitious vision. Wherever the problem might lie, it didn’t seem to be with the caliber of staff employed. A review of the management team produced a similar outcome. Although the company was pioneering its path through relatively uncharted waters, every effort had been made to attract some of the brightest young managers from within the industry, the large majority of whom shared a common creative heritage with the generality of employees. With the composition of the workforce and the leadership team not considered to be the primary causes of the problem, my attention turned to the organization itself and the work being performed.
Around the same time that I was working on this problem, I began reading ‘The Discipline of Market Leaders‘ by Micheal Treacy and Fred Wiersema. The book’s central message is that no company can succeed by attempting to be all things to all people. Rather, it should focus on trying to find the unique value that it alone can deliver to a carefully selected market.
The authors also suggested that there are three different types of ‘value discipline’ that successful companies can adopt when seeking to attain leadership in their markets. The choice of value discipline is largely determined by the type of value the company’s customers predominantly receive, the sort of product or service it provides, and the organizational culture maintained.
The three ‘value disciplines’ are:
- Operational Excellence – low-cost, reliable and easy to use products
- Product Leadership – leading-edge products
- Customer Intimacy – highly customized solutions and services
The Discipline of Market Leaders turned out to be a fascinating read. The authors give an in-depth description of the philosophy and operation of the three value disciplines, along with a detailed case study illustrating the operations of each one. More importantly, it was clear that the choice of value discipline would play a large role in determining how companies make decisions about serving customers and treating employees. The same choice would also help to identify the right cultural values, employee competencies and conditions of employment required to make a given value discipline work. I had found my smoking gun.
Armed with my new insights, I took a second look at the challenge I’d been working on. First, my client had made certain ‘unconscious’ assumptions about the type of value discipline that it was best suited to. Seen with fresh eyes, it soon became clear that the company had erroneously selected product leadership as its primary value discipline, when in fact its business model required it to adopt operational excellence as its core discipline. Second, by initially emphasizing the hiring of talented ‘creative’ types the company appeared to have committed a basic, but fundamental error. Operational excellence generally requires people who are more process-oriented, and who have a strong drive for results and attention to detail. Think of it in terms of the difference between people who ‘like ideas’ and those who ‘prefer things.’ Third, a whole host of talent management practices were completely misaligned with the company’s true value discipline. Little wonder then, that the problems identified earlier had manifested so quickly.
We eventually used our new understanding of value disciplines to get a handle on the situation. Hiring practices were refined to focus on a different type of talent. The company’s performance management and rewards system was also revamped to encourage team-work over personal effort. Efforts were also made to re-engineer the company’s culture away from the operational autonomy and employee independence that product leadership companies thrive on. In its place, a harder, more bottom-line focused culture was encouraged.
The changes described above took several years to effect and the change process was not without its painful moments. Fortunately, the company was able to surmount those growing pains. It is now an established market leader and serves as a role model for new entrants into the industry.
The concept of ‘value discipline’ or ‘strategic style’ provides a useful strategic tool for anyone seeking to develop an effective talent management strategy. Just remember, business success is heavily dependent on an organization’s talent being managed according to its own prevailing value discipline or strategic style. Benchmarking oneself against others can be helpful, but care must be taken to make sure the companies selected share the same strategic style as yours.
