EVERY BUSINESS LEADER knows just how precious time can be. As responsibilities increase and technology advances, it can often seem that there are simply never enough hours in the day. Obligations pile up to chair meetings, join conference calls and attend client functions, and all the while there is that ceaseless inbound flood of emails, texts and phone messages expecting urgent attention.
Executives, of course, soon learn that having to deal with all these demands is just a function of the modern business world. As a result, they become used to logging on to inflight wifi, addicted to their smartphones, and are experts in the art of the short-term fix. And that can turn out to be a major problem because, in the midst of all the running around and chasing to hit this month’s sales figures or next quarter’s financial targets, it is very easy to take one’s eye off the ball.
Unwary leaders repeatedly make the mistake of getting too caught up in the day-to-day aspects of the business. Instead, they should remember one of the first principles of good management is to take a step back and look at the big picture.
Being able to see the broader context is a prerequisite for career progress and the long-term viability of a company. And, while it takes time and application to develop the necessary business acumen, a number of tools are available to help.
One of the best known is the SWOT model, which provides a basic framework for analysing a company’s strengths, weaknesses, opportunities and threats, and how to maximise or counteract them as appropriate.
Another is the Boston Consulting Group Matrix. It lets firms study different business units or product lines by placing them in one of four categories: cash cow, pets, question marks or stars. Such models should be used on a regular basis. However, there is an even better way of understanding a business, and that is by taking a detailed look at its competencies – actual and supposed – and determining how they measure up against the highest customer expectations and the best of the competition.
Competencies may relate to anything from production and customer service to investment or research and development, but should be relatively easy to identify. That is because, one way or another, they will provide a benefit for business contacts or consumers, may be hard for competitors to replicate and can be leveraged to drive the organisation forward.
But in a world that is continually shrinking, with new technology and access to information creating a more level playing field, it first makes sense to expand the concept of competencies. Instead of identifying just a few, astute managers should be classifying their companies’ competencies into three distinct groups and then devise ways to improve each of them. The three recommended categories are as follows:
These concern in-house activities which a business must perform well if it is to survive and prosper. They will involve back-office operations, recruitment procedures and order fulfilment. Besides that, they will extend to having proper financial controls, user-friendly information technology systems and a strong sales force. That may seem obvious, but just consider how many major enterprises seem to neglect the ground-level competencies. Banks with no financial discipline and service companies that don’t answer a hotline are merely the top of a list that stretches a long way. Logically, you can regard getting these things right as the price of entry for competing in a certain market. It is not necessary to do them significantly better than your direct rivals, but failing to match the basic expected standards can soon damage a reputation and eat into profitability.
This category includes the features and key proficiencies which set your organisation apart. It is assumed that performing to a high level in these areas is a central plank of your corporate strategy, forming the basis for marketing campaigns, longer-term development and sustainable streams of revenue. Nothing says a core competency must be inventive or exclusive, but it should be a consistent priority. For example, companies such as GE denote training and leadership development as one of their core competencies. They realise it will allow them to drive profitable performance for years and that investment in learning is money well spent. Others, including the world’s leading hotel groups, have made a point of focusing on personalised service and anticipating guest needs. In their sector, willingness to go the extra mile marks out the very best and definitely translates into customer loyalty and repeat visits.
A number of important factors help in identifying distinctive competencies. Firstly, the underlying activity should be valuable enough to allow your company to exploit new opportunities or minimise impending threats quickly. Secondly, it should not be generally available. Thirdly, it helps if the costs involved prevent others from adopting it easily. Of course, costs in this context reflect time, resources and ingenuity, and money. The true test, though, of a distinctive competency is whether there is no obvious substitute or immediately viable alternative.
If looking for examples, one way is to ask what, in particular, has allowed various Fortune 500 companies to achieve their eminence. In the case of Wal-Mart, it is probably its supply-chain management system. Competing retailers also have extensive store networks and similar standards of customer service. But it is Wal-Mart’s supply chain that has enabled it to achieve reduced costs, increased efficiency and tighter control of its business.
Another form of distinctive competency is seen in the collective management style or, perhaps more often, the person of a dominant leader. The words or actions of such an individual can seal deals and inspire markets, keeping a company well ahead of the pack. Every competency counts for something, but the distinctive ones have the greatest impact on customers, employees and shareholder value.
Managers, at any level, with responsibility for instilling competencies and ensuring future success can use the following four steps:
1. Identify the skills, technology and processes your company needs to compete more effectively.
2. Assess carefully and honestly what you must improve in order to enhance profitability and implement new strategies.
3. Decide which core competencies to support with further investment, resources and energy to separate the company from competitors.
4. Build on the distinctive competencies and develop a plan to ensure these elements allow the company to maintain an edge, whatever the overall scale of the business.