On Management

Dec. 21, 2004
'Shaping' your business: Can you change it, and keep it on the right path?

Continuous change is the only source of sustainable competitive advantage in these topsy-turvy times. Companies need to incorporate change into their strategic planning instead of resisting it. They must constantly evolve to provide the best value to customers -- not just now, but in the future, because "value" is also a constantly shifting target. In a nutshell, that is the premise of my latest book, The Shape-Shifters: Continuous Change for Competitive Advantage. (The title, which was suggested by Tom Peters, is taken from the Star Trek character who can "assume whatever shape is conducive to success in the mission.") Once the need to change is accepted, the question becomes "to what?" Value is the critical measure in deciding that. When people see or hear the word "value," they conjure up different -- sometimes widely varying -- mental pictures. In the book, I define value as a mix of five broadly defined attributes: quality, service, speed, cost, and innovation. And I use a series of simple diagrams to depict value as a "shape." Plot these five attributes on a five-axis graph, connect the dots, and the "shape of value" (SoV) emerges. These shapes help to create a consensus mental picture of value -- specifically, the shape that matches the customers' desired SoV. The key point is this: When your customers' SoV shifts, so must yours. Once you realize that value is situational and constantly changing, you have a starting point to build on. It is also important to understand that SoVs can only be changed in a lasting and effective way by shifting what I call the "shape of the business," which is made up of five dimensions: structure, processes, culture, relationships, and purpose. Trying to shift the SoV without changing some of these dimensions is just "faking it." For example:

  • Excessive inspection can improve outgoing quality, but not for long. The culture and processes that create the quality must shift.
  • Excess inventory and/or staffing can sustain higher service levels for a while, but not cost-effectively.
Try being a low-cost provider without developing good relationships with cost-effective suppliers -- it won't happen. Similarly, trying to foster innovation by simply launching a lot of ideas without the appropriate underlying structure will create a lot of expensive failures. The bottom line is that to shift the "shape of value," you must also shift the "shape of the business" in one or more of four dimensions -- but not the purpose. Purpose must remain a constant. Purpose is the foundation, the underlying reason, the guiding beacon for what the business is all about. It must stand the test of time. By drawing SoV diagrams for customers, suppliers, competitors, and others, it is easy to visualize -- and communicate -- how your company measures up. Overlaying diagrams can expose gaps and call attention to attributes and dimensions where action is needed. The next big question is how to bring about the shifts. The answer is that companies need new organizational structures and cultural models for teams to be responsive and flexible -- to be able to alter their shape rapidly and frequently. In Shape Shifters, I outline 10 steps to bring about successful change. Since no book can "prescribe" solutions that will fit every conceivable situation, my goal was simply to provide ideas and practices to build on. A very important practice is that of creating a shared vision, a mission, and a strategic plan. An effective strategic plan leads to implementation steps, operating plans, goals, and measurements. In the last chapter, I boldly attempted to describe where the new rules, the new directions, and the new insights for business will come from in the future. My conclusion is that they will come from nature. Scientists have been exploring nature for centuries, and most of the natural laws apply to business if we understand the parallels. But that's another book altogether. John Mariotti is president of The Enterprise Group, Knoxville, and author ofThe Shape Shifters: Continuous Change for Competitive Advantage. His e-mail address is: [email protected].

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