I think the management of strategic initiatives at established for-profit firms is still the classic “Gordian Knot”. This phrase comes from Greek mythology and today means an intractable problem. With so much published on this over the last fifteen or so years, why is this the case?
Synthesizing Customer Value, People Value and Financial Valuation Through Formulas – Yes Formulas Part 2
In Part 2 we will present the notion of Robust Business Strategy (RBS) and how it can synthesize Customer Value and Satisfaction, People Value and Financial Value in the mid to long term to grow the market value of the firm.
Synthesizing Customer Value, People Value and Financial Value Through Formulas – Yes Formulas Part 1
OK, I admit it I love formulas. Formulas are instructive, as they force a laser-like focus as to cause and effect, or at least a parsimonious description of a complex system. They cut to the “have-to-haves” and omit the “nice-to-haves”. The work to achieve the derived resultant from each formula demands facts and not opinions and aspirations. Formulas also can provide a check and balance on faulty thinking. Checking what goes in the numerators and denominators of a simple ratio and how a denominator in another ratio can nullify the numerator of one ratio is a great check and balance and thinking tool.
I have been wanting to write this piece for a long time. As readers of this series know, the articles are about what causes the for-profit firm’s valuation to increase. Here I want to write about how true professionals think and behave. To the extent that firms need and want true professionals as executives or consultants, the article should serve to foster the theme of these articles of increasing firm valuation.
It is now July 2018 and in our current period of tariffs, sanctions, and other global issues, business growth is once again a hot but perhaps a perplexing topic, if only because growth might become constrained. However, the stock market is again approaching all-time highs so why worry about further rounds of profitable revenue growth?
Even “excellent companies” go through periods of problems with sustained business performance. Amazon caught traction in the marketplace after almost going bankrupt in the 1999-2000 time period and became a runaway success and value-creating machine. I have read nowhere in the business press of any current problems with business performance at Amazon. Everything they do seems to become a hit. But I can almost guarantee that Jeff Bezos worries about some aspects of business performance at Amazon. For most for-profit firms, there is always some aspect of business performance that can at least be improved.
Readers of this series know it is about what causes the valuation of for-profit firms to increase. But in this wide-ranging article, I want to describe how business schools and the training of business managers and leaders is a key ingredient in our economy of helping to grow the valuation of for-profit firms. Without ‘good to great’ managers and leaders, who are allowed to actually practice their crafts inside of their firms, our system of free-market capitalism is at stake. Business schools’ role in the training of business managers and leaders has some room for improvement.
I have just finished a brief client engagement this past week whose situation reminds us of what is at the core of your firm’s competitive strategy: the “value stories” that differentiate your firm and your firm’s key strategic initiatives. I was asked to help assess why a venture of three years was not making very many sales. In today’s world, if the value story is not superior and compelling, most of the time your firm or a key initiative is in trouble.
I am asked from time to time how many business people are really strategic in their thoughts and actions. This article will cover the thought part. In my estimation, a relatively few people in business are good strategic thinkers – I think about twenty percent. I am not trying to be inflammatory – only reporting my observations, which could be based on the sample of only the people with whom I have dealt over the last forty years in the field.
I am not against people. I am one of those people and for much of my thirty-five-year career, I have been an employee. I have started my second consulting boutique and look forward to engaging well any employees who would want to work with me. People are a fascinating topic in the context of work and maybe anywhere else for that matter. But at work, we all know people who we can count on, those who we to try to avoid as they seem to be toxic, those who are team players and those who are rank opportunists. I could go on listing the kinds of people we have all worked with.
There have been many articles published on what a new CEO should do in the first ninety days on the job. What can I possibly add to this discussion? I have only been an ad hoc CEO at one client, but I have counseled six CEOs in this process when the board of directors brought in a new CEO from the outside. I was asked to extend the scope of my strategy work and be a coach for this process.