KEEPING A STRATEGIC FOCUS ON ALIGNMENT

It is easy for any team or company to become strategically misaligned. As in the case of G. Hensler, misalignment usually results from a combination of factors. The lure of revenue to support growth and expansion is a powerful force.

The idea becomes bigger is better.

Frequently, misalignment is the result of a single team member or small group that influences a team or company to go in a new direction.

Sometimes very successful companies develop such confidence that its leaders believe they can diversify company product or service strategy to pursue additional markets. Short-term results, while energizing and encouraging, can often mask the realities of longer-term outcomes and consequences. Sometimes, it’s simply the leader’s desire to be more aggressive or competitive, or simply to try something new.

You may note that all of these potential sources of misalignment are the result of human motivation and interaction. It’s all about who we are, what we want to achieve, and the natural desire to participate and contribute.

Alignment is not an easy undertaking.

The term “alignment” isn’t typically used in the business curriculum of colleges and universities, and it doesn’t typically show up in executive and leadership development programs. As a result, it is rarely an articulated outcome or goal used for visioning and strategic planning. Nevertheless, it is one of the most important outcomes.

For most leaders and team members, alignment is not part of their ongoing conversation; this is likely one of the key contributors to their misalignment.

A lack of alignment, and all the challenges and issues it presents, usually becomes part of the dialogue when leaders and members of their companies and teams are forced into it. It’s typically not talked about until it can’t be ignored. Then, it’s a rude awakening.

It often seems sudden, yet we know things don’t ever happen overnight. Still, if you ask members of the team or employees in different parts of the company, they are likely to say that they’ve been dealing with the lack of alignment for some time. They’ve been observing or taking part in the conflict, struggles, and skirmishes caused by it and wondering what it will all lead to. Like a tsunami caused by an undersea earthquake, the plates of the earth’s surface have been slowly shifting for quite some time.

Preceding the tidal wave were tremors that, if someone had been paying attention to them, provided signs of what was to come. We often look past or ignore the signals of misalignment until its waves are upon us.

There are other reasons that companies and teams don’t pay enough attention to alignment.

Here is a short list:

  • Everyone is too busy to stop and talk about it.
  • Although it’s been communicated, we can’t expect that everyone is going to hear it or be in on the communication.
  • Everyone is hard at work on individual goals and objectives and can’t always take the time to communicate to make sure everyone is on the same page.
  • We have a lot of other priorities.
  • People don’t always agree with what is being done or how it is getting done, so misalignments are to be expected.
  • Not everyone agrees on the outcomes.
  • No one, not even the leaders, is willing to truthfully talk about the conflicts.
  • It’s someone else’s responsibility.
  • Not everyone is clear on the vision and strategy.

Unfortunately, one aspect misalignment can never be overlooked.

When it is happening, customers sense it. They can feel the misalignment.

When a company is aligned, customers emotionally experience the satisfaction of being treated in a way that reflects their expectations of getting what they’re paying for. Whether doing business with consumers or in a business-to-business situation, customers know when people act in a manner consistent with, and contributing to, the brand intention and customer satisfaction.

The goal and outcome of alignment is for everyone to act in a manner consistent with the intention delivered through its products or services. Leaders must clearly articulate the intention and communicate it throughout the organization to every person in every corner and in every role. It doesn’t stop there.

Alignment is more challenging than just a matter of communication. In a larger context in a bigger company setting, it requires all the leaders of the organization to lead and manage alignment effectively. This includes ensuring that all goals and outcomes at the organizational, unit, group, team, and individual levels are clearly articulated and contribute in an aligned fashion.

When alignment is present, the day-to-day tasks and actions that people undertake are united and aligned with customer expectations and the longer term objectives and outcomes of the business. They are aligned to the brand intention, mission, or purpose of the business and its shared vision.

It is imperative for any company or team to keep a strategic focus on alignment. And while you may not have started with it in mind, you can always come back to it. Much like Lisa Rissetto and her team at G. Hensler, refocusing on alignment will ultimately reap the benefits of business success and keep your company or team on the right track.

 

Edgar Papke is the co-author of Innovation By Design and author of True Alignment and The Elephant In The Boardroom. He helps leaders and their organizations align to create greater levels of innovation, performance, and fulfillment. He can be reached by email: edgar@edgarpapke.com

ALIGNING THE COMPANY AND THE TEAM

Do you recognize the name G. Hensler? Probably not. But the chance that you own and wear something the company had a hand in manufacturing is, in fact, quite good. If you bought a leather or canvas belt from one of the specialty retailers found in any mall or from a number of other well-known apparel brands, the odds are pretty good it’s a Hensler product.

G. Hensler is a great small company. It is excellent at what it does and leverages its brand intention to deliver customized accessories that lead to the overall success of its branded apparel with retail customers. It is also a story of how easily a fast-growing business, regardless of its size, can become misaligned and go off course. It’s an example of what can happen, and how successful a business can be when its leadership confronts misalignments and realigns.

Recognizing accessories as an integral part of the vertical specialty store formula, George Hensler, the founder of Esprit Accessories, set up shop in San Francisco in 1989 and offered the design and delivery of customized fashion accessories. The product blend consisted of handbags and belts. When George began the business, he invited Lisa Rissetto to join him. A graduate of the Fashion Institute in New York, Lisa brought her expertise in merchandising, a sharp eye for recognizing future trends, strong customer relationships, and a keen ability to see how design and business blend.

Success and alignment in the early years

Together, George and Lisa launched the business and, through hard work and determination, put the startup on a path of rapid growth. Through the first 14 years, they achieved a consistently brisk rate of up to 50 percent per year growth in revenue, and the company consistently generated healthy profits.

In 2004, Lisa bought the business from George. For all practical purposes, the leadership role had already transitioned to her. Based on her effectiveness and the profitable course of the business, they structured a deal in which Lisa became the company’s primary owner and CEO.

The company’s model for success was already steeped in its ability to sell its design and merchandising expertise to its customers and consistently deliver a quality product. It established partnerships with customers who looked to Hensler and its designers for guidance on accessories. In essence, the company’s leadership, brand, team, and customers were aligned.

As Lisa explained,

“Our definition differs from providing pure contract manufacturing. Our customers come to us for our specific market knowledge and design capabilities, and our expertise in manufacturing. We know what the trends are and are able to interpret them according to each individual brand we work with.”

A change in direction

In 2006 and 2007, the company moved forward on a strategy to increase revenue by taking advantage of selling to big box stores. Throughout its early years, its customers consisted of established specialty retail brands, such as Gap Inc., American Eagle Outfitters, Aeropostale, Express, and other popular names.

As Lisa looks back on it, “We saw the opportunity to dramatically increase our revenue by working with the big box discount segment of the market and made a conscious decision to go after it. We didn’t see the misalignment.”

identifying misalignment in your company

Selling to the big box retailers differed from selling to and servicing G.Hensler’s early customers.

Until then, most of G. Hensler’s products were delivered directly to customers. Selling to larger retailers required establishing and managing inventories and taking on new operational capabilities that were unfamiliar to them, all at much lower margins—a significant shift in how the business was run. It was clear that margins would be much slimmer, yet not fully incorporated into the strategy was the inventory aspect.

The definition of partnership with the big box retailers also differed from the company’s relationships with the smaller retailers. At the end of 2006, the company was saddled with inventory from suddenly canceled orders.

This was compounded in 2007, when orders for more than 20 percent of the inventory the company produced against confirmed purchase orders were canceled. This unsold inventory presented a liability that could potentially cripple the company. As Lisa explains it,

“Selling off the excess inventory meant getting back about 10% on every dollar that we invested in that inventory. We took a significant loss in 2007. The only way we survived was through a strong cash position. Without it, the business very likely would not have made it. At that point we knew we had to realign the business. Had we not gotten back to aligning to our brand, the business would continue to be in jeopardy. We intentionally let go of a great deal of revenue. We gave up about half of our revenue and went back to creating 100% of our sales from customized contract manufacturing and leveraging our design element in support of it.”

Confronting misalignment

Along with slashing revenue, Lisa made several other difficult decisions, including eliminating some positions in the company. She refocused the company’s efforts on working with retailers on specific categories and offering designs that leveraged their insight into the seasonally changing market.

They went back to selling their design and merchandising expertise as opposed to supplying a commodity.

“We also had to realign our culture, which meant realigning our staff. Some of the employees couldn’t make the transition and left the company. This was especially true in sales. When we aligned ourselves, we focused with complete clarity on what was in the best interest of the business.”

As the CEO of Hensler, Lisa made some difficult choices when confronting the misalignment within the company.

This led the change necessary to realign her company to its customer and brand intention. The unique recipe of Hensler focuses on a main ingredient of customization, with strong elements of preeminence in design and merchandising expertise. The company also gives its clients a high level of attention. By confronting the company’s misalignments, Lisa put the company back on track and secured its future.

Five years later, the company’s revenue reached its 2007 levels and is once again profitable, growing, and aligned. As a result of the turnaround and success of Hensler, Lisa was able to launch 49 Square Miles, a proprietary wholesale division with its own unique brand that sells high-quality handbags and accessories geared to the high-end specialty store.

 

 

Edgar Papke is the co-author of Innovation By Design and author of True Alignment and The Elephant In The Boardroom. He helps leaders and their organizations align to create greater levels of innovation, performance, and fulfillment. He can be reached by email: edgar@edgarpapke.com

IT’S NOT ONLY ROCK ’N’ ROLL, IS IT?

During the first decade of the new century, which of the following was the top tour attraction in North America?

  • Celine Dion
  • Bruce Springsteen
  • U2
  • The Rolling Stones
  • Dave Matthews Band
  • The Eagles
  • Paul McCartney
  • Kenny Chesney
  • Madonna

In the music industry, community has long been a cornerstone for branding purposes. After all, that is what the legacy of Woodstock is all about.

Building your brand through community is something that the iconic band the Grateful Dead so naturally leveraged and so well communicated through its community-oriented business model. Long after the band ceased to exist, it’s community continues to thrive. The community of “Deadheads” not only still buys its music, it also supports the various collaborations and solo careers of its members. The Deadheads led the way for many artists and bands to market themselves by building community and the free exchange of music and material.

Rather than fighting to protect the sharing of its music, the band and its management encouraged it.

The Grateful Dead’s model is replicated by other music artists, including Phish, yet none has succeeded at it better than the Dave Matthews Band, which is why the Dave Matthews Band finished at the top list.

Building your brand through community

Between 2000 and 2009, loyal fans of the Dave Matthews Band purchased over 11 million tickets. The Dave Matthews Band offers a model of success for other businesses interested in the brand intention of community. In fact, companies eager to engage their current and potential customers are duplicating many aspects of its approach, including open sourcing, crowdsourcing, or immediate access and media sharing.

Early on, the band played for free at universities, colleges, and local events, building a community of followers and fans.

It managed its brand much as the Grateful Dead did. The band has freely allowed fans to record its music. Until the mid-1990s, the members allowed people to record directly by sourcing from its sound system. Much like the Deads, its hardcore fans are willing to travel significant distances to see the band play. As the size of the venues grew, the Dave Matthews Band offered reasonable ticket prices to make attending multiple shows a!ordable and to encourage its community to grow.

In 1998, in response to and in service to the fans and market of the band, a merchandising and ticketing hub and fan club called the Warehouse Fan Association was formed. The company, which is housed in a large business and distribution center in Charlottesville, Virginia, is the creation of the band’s manager Coran Capshaw. The first manager of the Dave Matthews Band, Capshaw had a history with the Grateful Dead and saw the tremendous opportunity to build the band’s brand through community and the then newly burgeoning Internet marketplace.

The Warehouse immediately leveraged the capabilities of Internet-based commerce and created an interface with its customers through which communication could occur directly. Capshaw’s astute business model was designed to eliminate much of the traditional ticketing and merchandising minutia of the music industry.

The Warehouse allowed the band to control the selling of its own merchandise, music, and, most important, the band’s merchandise and ticketing prices, which increased its ability to control and maximize profitability.

building your brand through community dave matthews band

It’s model delivered other benefits.

The community of Dave Matthews Band fans, hungry for more music and merchandise, could now buy directly from the fan association.

Live recordings soon became available through the site, creating additional revenue sources beyond the traditional sale of albums and replacing music that had previously been available through community members at no cost. The company takes preorders, allowing for efficient production and inventory management. Fans can also register for presale ticket offers, most of which are in high demand and subject to lottery distribution.

All of this creates greater levels of business efficiency, increased leveraging of the community brand intention, and profitability.

The model Capshaw built soon attracted other great artists and the company began marketing its fan clubs and merchandise, which resulted in a new entity, Musictoday, which eventually grew to manage over 500 fan clubs for a wide variety of artists. In 2006, Musictoday was purchased by the concert promoter LiveNation. By then, it was grossing over $100 million per year and growing.

In early 2010, LiveNation merged with Ticketmaster Entertainment, which now controls event ticketing on a global scale.

Music is art. Business is art.

Without the art of business, music would not sustain and grow as an industry.

Going forward, the key to the success for the Dave Matthews Band is its ability to create great art and purposefully sustain and grow its community brand intention, although it is now managed through an increasingly complex model. It requires the band’s ability, in direct interface with its customers, to convey the emotional aspect that motivates them.

In other words, the customer should always come first.

Building your brand through your community: Whether a company is a group of eight people or 60,000, the basic principles of brand intention alignment, and the alignment to the customer, is a key to success.

 

 

Edgar Papke is the co-author of Innovation By Design and author of True Alignment and The Elephant In The Boardroom. He helps leaders and their organizations align to create greater levels of innovation, performance, and fulfillment. He can be reached by email: edgar@edgarpapke.com

SUCCESS THROUGH CO-CREATION

“Two heads are better than one.”  — John Heywood

 

The organizations that Thomas Lockwood and I researched were not bound by the limitations of their structure or the defined roles people find themselves in. Rather, they invite inclusion, and bring together diverse groups and parties to collaboratively produce mutually benefitting and jointly valued outcomes. Both internally and externally, they deliberately engage people in the act of co-creation, eventually making it a key attribute of their innovative cultures.

The idea of co-creation is not a new concept. In its first forms, it focused on bringing together broader groups of consumers and customers, thereby enabling the provider of a product or service to generate new ideas. It offered a means of bringing together different parties to produce a mutually benefitting outcome. Over time, this resulted in an increased appreciation of the value of understanding the unique experiences and perspectives of customers.

What followed was the acknowledgment and use of co-creation in innovatively thinking about business strategies, structures, systems, and eventually, organizational cultures. Throughout our book, Innovation By Design, there are examples of how organizations use the pull factor to multiply the engagement of the variety of contributors to their design thinking processes.

THE PHILIPS STORY

One of the powerful examples of what happens when an organization takes the idea of co-creation and expands the process to a broader set of participants and applications is Philips, the Dutch technology company that, through its divisions, now focuses its innovation in the areas of health and wellness technology.

Sean Carney is the chief design officer of Royal Philips and is responsible for building the design thinking capabilities throughout the Philips organization. Philips created a branding for their design thinking process. In the spirit of greater involvement, they call their program the Co-Create process framework.

The framework is an embedded component and competency within the company that is forwarded through a company-wide training program and that is part of Philips University and the Philips Business process framework.

Sean joined Philips in 2011, succeeding Philip’s design leader Stephano Marzano. Sean arrived at a time when the company needed to create a shift in its broader business strategy. Over Marzano’s two decades of influence, and following the pioneering design leadership path set by Robert Blaich, Philips had become a design powerhouse and the envy of the product design world. During Marzano’s tenure, Philips Design operated as an internal service provider to the various divisions of the electronics giant, operating essentially as a design agency within the larger organization.

Now the company needed more: a broader and more integrated use of design thinking that would also influence the company’s business strategy.

Integrating design into strategy and practice

Under Sean’s leadership, design has been integrated as a strategy and a practice throughout Philips, contributing to the transformation of the company from being a consumer electronics product and lighting company, into a focused leader in health technology.

This is a dramatic strategic shift and is coupled with how design thinking is now used in the company and its influence on how the company focuses its innovation capability.

The change in separating health technology and lighting also helped move the company from a financial under-performance in 2011 to a return to delivering higher financial returns. According to the Philips Annual Report, in 2016 the company’s net income more than doubled (to €1.5 billion, or $1.8 billion USD) from the previous year and its income from operations increased from €1.0 billion to €1.9 billion, the equivalent of an increase from approximately $1.2 to $2.27 billion USD.

philips healthcare co-creation

As is often the case, though design thinking is credited with the creation of powerful innovation in products and services, it is also a key contributor to the creation of innovative organizational strategies that result in financial outcomes. As is so often the case with strategies that fall into the realm of human resources and organizational development, and that are difficult to track in terms of ROI and measurable financial value, the results at Philips demonstrate a more-than-significant effect on the financial bottom line.

Design thinking is also a key contributor to organizational transformations that get greater financial results.

Success through co-creation

A key to success in engaging the various groups in the co-creation strategy was recognizing the need to position the training in the Philips Academy, thereby allowing it to be scaled throughout the organization. At that time, HR was building a Philips Academy, and the principles of design thinking fit perfectly into that curriculum. Frans van Houten, the CEO of Philips, who was very intrigued about the use and influence of design thinking, assured that the Academy would receive the proper funding. Design and HR worked together to ensure that design thinking was developed and implemented in the organization properly.

The result was the establishment of a “10%–20%–70%” training model—that is,

  • 10 percent of the design thinking team became moderators and co-create leaders,
  • 20 percent of the team acted as coaches, and
  • 70 percent of the team actively focused on the principle of learning by doing, and co-creating with people internal and external to the company.

Important to the successful and meaningful implementation was that the training was applied on real-life challenges, mainly in the healthcare domain.

The different types of challenges varied in the areas of innovation for business strategy, new value propositions, business transformation, and customer engagements.

Design thinking was used to reframe the challenge of how to compete in the sector and to come up with a shared vision from which both internal groups and external partners and stakeholders could explore possible strategies and value propositions. By working on real-life business challenges, the Co-Create program delivered measurable impact and achieved sustainable change for the organization in the transformation of moving from a product company into a healthcare solutions provider.

 

Edgar Papke is the co-author of Innovation By Design and author of True Alignment and The Elephant In The Boardroom. He helps leaders and their organizations align to create greater levels of innovation, performance, and fulfillment. He can be reached by email: edgar@edgarpapke.com

CREATING A CHANGE IN MINDSET – THE HUNGER PROJECT

In our book, Innovation by Design, Thomas Lockwood and I identified 10 attributes that give remarkable power to the human-centered aspects of design thinking organizations. Curious confrontation, that is, facing differing ideas and mindsets with the desire to investigate and learn, is one of these aspects.

Throughout our research we found this attribute to be consistently present. Though we can safely say that it isn’t 100 percent of the time present in how things get done, it almost always exists when people are applying design thinking to a problem. And, it is especially valuable when design thinking is used to confront differing viewpoints and conflicts.

Creating a change in mindset – The Hunger Project

Some 40 years ago, in the wake of the Bangladesh famine crisis, the founders of the Hunger Project took on one of humankind’s greatest challenges, ending human hunger. It wasn’t long before they came to the realization that the usual charity responses and resolutions wouldn’t work. They recognized that past efforts did not provide the right solutions because the right problems had not been identified. The key question that needed to be answered was not “How do we do what is being done better?” but “What’s missing in the work of ending hunger?

To broaden and deepen their problem-solving capability, and to think more creatively, they engaged the help of a group of experts and consultants. With the help of the group, they began a deeper inquiry and concluded that it wasn’t a matter of throwing money, and more money, at feeding people.

At that time, they concluded that the real problem was the lack of political will.

In Africa, where women were in the role of farmers, they found poor leadership and a lack of government focus on agriculture. When they confronted this issue further and followed their curiosity, they realized that the real problem was a matter of gender relationships. Though women had the primary responsibility for the feeding and care of the communities they lived in, they were the least empowered.

Confronting the truth and continuously acting from a place of curiosity is not easy.

By looking for what was missing, the Hunger Project found the path to strategically reinvent, shifting from the putting of time and energy into education in richer and wealthier countries, to bottom-up development in underdeveloped and impoverished areas of the world.

Each time the organization reinvented itself it required the ability to confront itself, and its stakeholders, to look for what is true.

As John Coonrod, the Hunger Project’s executive vice president, explains:

Learning how to reinvent has been part of our process. We had to stop doing what we thought we were good at and start addressing what was missing. Not knowing what was next can be hard sometimes. We had to accept that we didn’t know what was next always or how to get there. We referred to it as “climbing a mountain in the fog.” We had to shift our resources and get everyone on board. And then we found out that while leadership was on board, we had failed to engage donors. They didn’t understand the change. To do that, we had to educate them and shift their mindset. Instead of calling them “donors,” we started calling them “investors.” What we learned was that in making strategic shifts, we have to include everyone.

curious confrontation mindset helping to improve humanitarian aid

In the 1990s, the Hunger Project once again reinvented itself.

To confront gender issues at the local and individual levels, the strategy shifted to focus on the transformation of gender relations. However, this time they started with a focus on the broad engagement of investors and creating internal and external alignment. As John points out:

At the heart, ending hunger is about unleashing the human spirit and human dignity. The key to ending hunger is knowing who hungry people truly are. If given a chance, they will end their own hunger. It is about people being able to be in charge of their own lives and destiny. To not be denied the most basic of human rights and principles so that they can be able and capable of taking action in their own lives. Awareness creation is the starting point of a staged program of building people’s confidence, leadership, organizations and skills so that they can set and successfully achieve their own goals. We have a range of capabilities and structures to get things done.

In 1990, in response to typical top-down and charitable responses to hunger, which were often too inefficient and inflexible to meet the challenge of hunger, the Hunger Project, together with the Planning Commission of India, pioneered a new, decentralized, holistic, people-centered approach known as Strategic Planning in Action (SPIA).

This methodology turned traditional planning on its head: The Hunger Project would bring all sectors together, identify a critical gap or opportunity for synergy, and then launch catalytic projects, which would reveal new pathways for action.

More than 20,000 communities in Asia, Africa, and Latin America have applied SPIA to empower people to achieve lasting improvements in health, education, nutrition, and family income.

The leadership of the Hunger Project shows the ability to confront the truth about the context that they were operating in and, through being curious, inquire and explore what changes they and the organization needed to go through. They also had to confront the organization’s myriad stakeholders—some of which could be resistant to change—asking them to also face the current realities, investigate and learn about the different viewpoints that emerged, and be open to the new ideas that offered the possibilities for finding the right solution. Each reinvention of the organization reflects a deeper exploration and understanding of the right problem to be solved.

For the Hunger Project, to create such a change in mindset requires the attribute of curious confrontation.

 

Edgar Papke is the co-author of Innovation By Design and author of True Alignment and The Elephant In The Boardroom. He helps leaders and their organizations align to create greater levels of innovation, performance, and fulfillment. He can be reached by email: edgar@edgarpapke.com

DESIGN THINKING AS A CONFRONTATION TOOL

One of the culture keys, and a cornerstone to how people interpret culture, is how disagreement and team conflict are managed. It has a great deal to do with how people feel safe in a culture, including their experience of what is acceptable and safe behavior, and what is considered unacceptable and unsafe. More than at any other moment in time, people learn about the culture they’re in when they experience conflict.

Curious Confrontation:

Facing differing ideas and mindsets with the desire to investigate and learn.

One of the questions that Thomas Lockwood and I asked when researching our book Innovation by Design focused on the influence that the use of design thinking has on how people manage disagreement and conflict. This ended up providing us one of the key attributes consistent across our study group organizations,

We ended up five insights that stood out as being the most significant:

  1. Design thinking provides an effective tool for confronting and managing disagreement and conflict.
  2. Organizations using design thinking have a belief in and positive mindset about curiosity.
  3. People who use design thinking demonstrate better inquiry and listening skills, which is the key to effectively managing disagreement and conflict.
  4. Because design thinking skills can be applied to dealing with disagreement and conflict, confrontation happens in a more timely and healthier manner, thereby avoiding much of the dysfunction and consequences associated with it.
  5. Design thinking is a valued process for confronting disagreements and misalignments among functions, and their leaders, and effectively breaking down unhealthy silos.

One of the greatest challenges any organization or team will face lies in how it effectively manages disagreement and conflict.

The process of design thinking creates a platform for the constructive management of diverse thinking and strategies, and the conflict that often naturally results. Viewing disagreement and conflict as an opportunity is a quality design thinking organizations can engage in. It’s an aspect of creativity and innovation that is natural to any environment in which people are committed to finding and creating the best solutions possible.

team conflict and the benefits of design thinking

Team Conflict, Competition and Creativity

When managed properly as part of an organization’s culture, the commitment to viewing team conflict and disagreement as an opportunity for creativity can be leveraged as a means to drive more innovative solutions to market. When teams compete with one another, it can also add to the speed at which innovation takes place.

A good example of such an environment is at some of the Samsung research and design centers. Here, several design thinking teams are established to work on the same challenges, at the same time. The teams work independently, don’t communicate with one another, and often don’t even know about the work of other teams. Their goal is to use design thinking to discover new products and services needs and solutions within a specific domain. This does not appear to be a case of lack of management coordination, but rather a case of putting more resources into solving a given problem area to increase the probability of success.

In this environment, internal design thinking team competitiveness is encouraged, and it seems quite practical in that corporate culture. This may be one of the reasons Samsung innovation seems to be far outpacing Apple innovation in recent years.

Although internally competing groups and teams—when clearly articulated as part of an organization’s culture and led in a healthy manner—can provide a great benefit, it can also backfire, leading to a lack of information sharing and unwarranted redundancy and duplication. It can also result in a more critical win-lose environment or the bringing to market of products not fully realized. Despite some hiccups along the way, Samsung has used this approach with a great deal of success.

Developing Conflict-Management Skills

As leaders show a willingness to support the teaching of design thinking skills to their employees, they soon become aware of the benefit they get from its use as a team conflict management tool. This includes paying more attention to the development of communication and conflict skills that support its success.

Because design thinking is a way of leading with curiosity, it encourages embracing ambiguity, uncertainty, and confusion. In doing so, people come to understand the value of listening to one another, allowing for the creative process of building one idea upon another. It also feeds the ability of people to move from a reliance on individual creativity and contribution, to behaving more collaboratively and engaging in shared creativity.

It all leads back to the understanding that an openness to listening to one another results in improved levels of inquiry, a necessary element in effectively and resolving conflict.

The skills of listening and seeking understanding are key to empathy, the first step in the design thinking process.

Genuine inquiry and open listening are paramount for users of design thinking to be successful and, as the result of lessened levels of fear, leads to the increased levels of emotional maturity and safety that directly impact how conflict is constructively managed. The result of lesser levels of fear translates into the free expression that leads to the ability of people to engage in the idea generation that feeds the process of co-creation.

When applied to conflicts, design thinking results in greater openness and faster generation of ideas, better feedback loops, and less competition over whose idea is better.

 

Edgar Papke is the co-author of Innovation By Design and author of True Alignment and The Elephant In The Boardroom. He helps leaders and their organizations align to create greater levels of innovation, performance, and fulfillment. He can be reached by email: edgar@edgarpapke.com

COMMUNITY AND BRAND INTENTION

When it comes to the art of business and business success, whether it’s the business-to-consumer or business-to-business marketplace, nothing rings truer than the importance of knowing how to win the customer. If you’re clear on your brand intention and your company or team is aligned with it, you’ll definitely increase your chances to win.

Alignment to brand intention is a characteristic and key ingredient that successful market leaders have in common; it plays a significant role in how they beat the competition.

In my book, True Alignment, I discuss the six brand intentions – community, customization, preeminence, low price, physical wellbeing, and personal actualization — and how they provide a framework for understanding and leveraging what the customer is seeking and aligning a company’s strategies to meet those expectations.

Community

One of the six brand intentions is community. Community defines the brand intention of products or services that invite and deliver membership in a group. It offers relationship, afiliation, and connection.

The customer motivation in the brand intention of community is attention.

Community offers a sense of belonging and inclusion. It satisfies the human need and desire to feel important and have self-worth. Group members are able to receive attention and give it to others.

Business success: A tale of brand loyalty and community

Suppose two young, very creative, and intelligent men get together to develop a new product. It began a few years before they met, when at 21-years old, one man began exploring how to bring an idea to fruition. Two years later, he finds someone interested in collaborating with him to create a start-up company and bring the idea to market. They share a vision for what’s possible and begin building a prototype in a 10- × 15-foot shed.

They work tirelessly and, hoping it will be the beginning of a successful launch into the marketplace, begin seeking people to use their product. Three years later, customers begin to want their product. They find someone willing to sell it for them, develop a logo, move into to a 28- × 80-foot building, and expand their operation to eight people. The two men continue to recruit talented people interested in collaborating to build the business and, over time, the company grows to over $5 billion in annual revenue. Despite many ups and downs and challenges, they find new ways to collaborate with others, solve problems, and to continue to grow.

The resilience of its brand is defined by how it overcomes great challenges, building an identity of boldness and perseverance. Its customers become some of the most loyal brand ambassadors on the planet and the driving force behind the company’s capacity to continually expand and define ways to market and reinvent itself.

The company becomes one of the first to use crowdsourcing to engage its customers to market to others. With little prompting, its customers invite others to join its worldwide following. The company’s diverse community, comprised of people in all walks of life and generations, celebrates its shared passion and loyalty for the product and its brand by gathering in groups a half million strong.

Can you correctly select the brand to which this story applies?

  1. Nike
  2. Harley-Davidson
  3. Facebook
  4. Geico
  5. Budweiser
  6. Microsoft

If you chose Harley-Davidson, you are correct. In 1903, when the company produced its first motorcycles, its inventor William S. Harley was 23 years old and his partner, Arthur Davidson was 22. Their story of business success is familiar in that the company’s founders were young, talented, and started the business in a fashion that many of today’s success stories mirror.

Much like the folklore of the Microsoft garage and the humble beginnings of so many other companies that capture our imaginations, Harley-Davidson started with practically nothing more than a great idea. Over one hundred years later, the company generates over $5 billion in revenue.

business success harley davidson

At the core of their success is exceptional brand loyalty.

The essence of the brand, what makes it so powerful is its incredibly strong brand intention of community. The company’s mission statement has community and inclusion embedded in it:

“We ride with our customers and apply the connection in every market we serve to create superior value for all our stakeholders.”

The company’s market strategies embody and continue to be aligned to its brand intention. Much as it did in its early years when it sold to members of the military, the company pursues selling to groups and communities and leveraging camaraderie and affiliation. After World War II, when motorcycle owners loosely grouped into organized clubs, Harley-Davidson captured the idea of community and built its brand around it. Over the years, despite its quality issues, the brand maintained itself by expanding this platform.

Today, the community continues to expand and the company’s sales continue to grow. The Sturgis and Daytona motorcycle rallies attract well over a half million riders each. While not directly sponsored by Harley-Davidson, their motorcycles enjoy, by far, the greatest representation at the two events. To further the community brand intention, the company hosts toy drives, conducts cell phones for soldier campaigns, and sponsors concerts and an assortment of other events. It encourages participation in the Harley Owners Group (aka HOG), markets to members of the military, offers group rides, and locally connects individuals to fellow riders. The logo the company unveiled over 100 years ago hasn’t changed much, is recognized the world over, and maintains its popularity even as a tattoo, which is a pretty good representation of the power of brand intention.

 

Edgar Papke is the co-author of Innovation By Design and author of True Alignment and The Elephant In The Boardroom. He helps leaders and their organizations align to create greater levels of innovation, performance, and fulfillment. He can be reached by email: edgar@edgarpapke.com

LEADERSHIP, CULTURE AND THE BUSINESS CODE

At the heart of complexity lives simplicity.

Aligning a business, company, or team requires a clear and constant focus, continuous effort, and all the skills necessary to be a great leader today and tomorrow. Members of organizations and teams must be more engaged and committed than ever before. For this, they need as much information and development as their leaders do. Every member of every team or company has a role in ensuring that alignment exists.

The Business Code is a framework for alignment that can be applied to any organization or team, regardless of size. There are four elements to the Business Code: the customer, brand intention, culture, and leadership.

LEADERSHIP AND CULTURE

Among a leader’s many responsibilities, none is as powerful and integral to success as understanding culture. Therefore, the leader’s behavior must be in alignment with the culture’s expectations.

Without this, it is virtually impossible to create and lead an aligned organization or team. As complex as the study of leadership is, the most straightforward definition of leadership is influencing others to act. Leaders are responsible for acting in a manner that clearly conveys how the intention of the business is implemented and ultimately how the customer is treated.

To influence culture, leaders primarily do three things.

  • They role model acceptable behaviors, which define how individual and group success are achieved;
  • They reinforce what is acceptable and unacceptable behavior, and
  • They represent the reputation of the culture.

These basic aspects of aligned leadership are not to be taken lightly. The influence a leader has, formally and informally, can easily be undermined when a leader’s behavior is misaligned.

Aligning natural preferences to group strategies

Another aspect of a leader’s influence that is often overlooked is how well aligned the leader’s natural preference is to the strategies the group is undertaking. The way we behave comes from our psychological makeup and preferences. How we are wired directly impacts how we think strategically, as well as how we relate to the customer experience. This preference guides our beliefs about what, why, and how a product or service is offered and delivered to the customer.

The customer ultimately experiences the preferences of the leader. You don’t have to look hard to find examples. Just consider Henry Ford, Oprah Winfrey, Bill Gates, Indra Nooyi, Richard Branson, Steve Jobs, Warren Buffet, Steve Wynn, Walt Disney, and Mark Zuckerberg. Each demonstrates their personal preference in how they lead, as well as the market strategies and brand intentions they pursue.

STARBUCKS: AN EXAMPLE OF LEADERSHIP AND CULTURE

Consider the example of Howard Schultz, the CEO of Starbucks. Schultz believes that connecting to and caring for people is paramount to success. This not only extends to the strategies for how Starbucks engages its customers; it is also evident in the company’s human resource strategies.

Schultz was born and raised in the Bronx, New York, where his family lived in a housing project. He often refers to his father, who struggled in low-paying jobs and had little money, no health insurance, and no workers’ compensation insurance when he got hurt on the job. In Starbucks, Schultz set out to build a company in which employees would be respected and well cared for. While the company’s main goal was to serve a great cup of coffee and to connect and care for its customers, Schultz said he wanted to build a “company with a soul.”

Schultz’s values and preferences resulted in a set of practices that are uncommon in retail businesses. Employees working at least 20 hours per week receive comprehensive health coverage for themselves and their families, as do unmarried couples. Along with stock option plans, employees are given a great deal of personal responsibility and treated with the respect that Schultz thought his father deserved and hadn’t received. How employees are treated by supervisors and the benefits they receive result in high loyalty and lower turnover.

These innovations come from Schultz’s life experience and personal preferences.

They are evident in the company’s strategies, including, in the early stages of the company’s growth, never to franchise. This decision avoided any possible dilution of, or variations in, the company’s culture and assured consistency in how both customers and employees are treated. In the case of Schultz and Starbucks, the alignment of a leader to the company’s market strategy and culture is apparent. The influence of his leadership on the organization’s performance is difficult to debate, and his reputation as a leader is undeniable. In 2011, he was named Fortune Magazine’s Businessperson of the Year.

 

Edgar Papke is the co-author of Innovation By Design and author of True Alignment and The Elephant In The Boardroom. He helps leaders and their organizations align to create greater levels of innovation, performance, and fulfillment. He can be reached by email: edgar@edgarpapke.com

BACON AND EGGS ANYONE?

Review the following list of twelve of the most influential businesspeople in recent history. Is there any name you’re not familiar with?

  • Bill Gates
  • Oprah Winfrey
  • John D. Rockefeller
  • Henry Ford
  • Mark Zuckerberg
  • Walt Disney
  • Coco Chanel
  • Thomas Edison
  • Warren Bu!et
  • Edward Bernays
  • Steve Jobs
  • J.P. Morgan

The odds are fairly good that Edward Bernays is the only unfamiliar name. Who is he, and why is he included? The answer tells us something about how marketing and advertising reached such a sophisticated level of influence.

The father of spin

The idea that we purchase products to fulfill our desires and that our buying decisions are based on emotions rather than logic is certainly not new. While several versions of how this evolved exist, they all involve Bernays, an Austrian-born immigrant to America, who is considered one of the most influential minds of the last century.

Bernays, who is known as “the father of public relations” and “the father of spin,” pioneered public relations. He provided the foundation for emotional selling and marketing and influenced much of the twentieth century’s economic and political thought.

In the mid-1920s, the Beech-Nut Packing Company saw its revenue from bacon sales lagging and turned to Bernays for help. Before Bernays, the assumption was that people used logic to make decisions. Bernays, however, was influenced by his uncle Sigmund Freud, who believed that people are more motivated by emotion.

Thus, Bernays understood that much of human behavior is driven by instinct and unconscious desires. As a result, he believed that appealing to the public’s emotions would result in greater sales than promoting the dependability and reliability of a product.

bacon and emotional buying

Bringing home the bacon

To sell more bacon, Bernays decided to create an emotional appeal for a heartier breakfast that included bacon. In the mid-1920s, the ideal American breakfast was toast, juice, and coffee. To change people’s thinking, he asked over 4,500 physicians whether they thought a “light” or a “hearty” breakfast was healthiest. The physicians overwhelmingly chose the hearty breakfast. Bernays’ idea of a hearty breakfast included bacon and eggs, so he used this definition when he released the findings of his study.

The news made headlines and within a short time, bacon and eggs became America’s breakfast. Beech-Nut Packing enjoyed a significant increase in bacon sales, and breakfast was redefined. Bacon and eggs, or some variation remains, by far, America’s best-selling breakfast. This includes McDonald’s McMuffin.

Bernays’ contribution remains incredibly powerful. The idea that what we buy is driven by emotion is how products or services are marketed, branded, and sold today. Automobiles sales play on motivating the buyer’s desire for freedom, luxury, pride, and appearance. Clothing and accessories are marketed to reflect sexual prowess, attractiveness, and status. Food marketers promote physical wellbeing, goodness, and, for “foodies,” feeling “in” on the latest trend.

Bernays’ ideas have been advanced, expanded on, and fine-tuned, and emotional selling is still with us. Whenever you hear “doctors recommend” or “more dentists recommend,” you have Eddie Bernays to thank.

 

 

Edgar Papke is the co-author of Innovation By Design and author of True Alignment and The Elephant In The Boardroom. He helps leaders and their organizations align to create greater levels of innovation, performance, and fulfillment. He can be reached by email: edgar@edgarpapke.com

IT’S ALL ABOUT ALIGNMENT

The key strategic imperative of any business is alignment.

Alignment has long been the greatest challenge of leadership. The importance of alignment in business, along with its effect on performance, has only increased over time. Today, to come close to competing and succeeding in the chaotic and rapidly shifting business environment, leaders must create aligned teams and organizations.

For extraordinary companies — those that consistently compete and win in the marketplace — the overriding characteristic that is invariably present and separates them from their competition is alignment. And, because it is so important, the challenge is all the more difficult.

Most leaders, teams, and companies struggle with alignment because they lack an effective and easy-to-apply framework and approach. As a result, they tackle individual aspects of business — such as vision, strategy, processes and systems, and culture — without aligning them.

The Dangers of Misalignment

Most of us are all too familiar with the consequences of misalignment. We get caught up in the conflicts and blame games that result when everyone is not working toward the same outcome. Time and energy is wasted trying to overcome misalignments, which can disrupt and destroy teamwork and eventually bring down entire companies.

The consequences of misalignment are grave. Among others, they include:

  • A lack of focus on results that support the vision and strategy of the team and organization, resulting in poor performance.
  • A lack of a shared and consistent approach to serving the customer, which damages the company’s reputation and brand and creates customer distrust.
  • A lack of the ability to leverage and fully utilize team members’ individual talents and strengths, which decreases motivation and reduces their desire to contribute.
  • A lack of clear expectations resulting in unmet performance requirements, poor accountability, distrust, and potentially divisive conflict.

Misalignment is costly.

Typically, misalignment results in a negative financial impact, which can be obvious or often hidden.

Among the hidden costs are:

  • unmet goals and objectives
  • missed opportunities
  • missed sales
  • unmet promises to the customer, and
  • a myriad other failures that result from dysfunction within a group, team, or company.

One way or another, misalignment results in a failure, or a lack, of execution, which has a negative financial impact on a business.

All too often, leaders find themselves searching for answers to these problems without realizing that misalignment is at the root of them. They instead rely on hit-and-miss approaches and fixes, as well as temporary measures that provide only short-term solutions.

Great leaders and team members actively seek out and confront misalignments.

Aligning a business, company, or team requires a clear and constant focus, continuous effort, and all the skills necessary to be a great leader today and tomorrow.

Leaders need a systemic framework for understanding, assessing, and creating alignment. They and their teams and organizations require an approach that cuts through the complexity and eliminates the noise from multiple priorities, numerous initiatives, and the confusion of choices and options; an approach that provides a clear and simple roadmap to success.

The Business Code

The Business Code, discussed in depth in my book True Alignment, is a framework for alignment that can be applied to any organization or team, regardless of its size. It shows leaders and their companies how to confront and overcome the challenges of misalignment. The code also provides the tools needed to create strategies and initiatives and take actions that result in the alignment required to compete and achieve high levels of performance.

the business code - alignment in business

The outcomes of applying this framework include:

  • Alignment that clearly defines the trusted relationship of the business to the customer, the customer’s expectation, and what the brand
    stands for.
  • Alignment of leadership that is responsible for role modeling, reinforcing, and leading an aligned culture and is committed to the reputation
    and success of the business; leaders who hold themselves and other leaders responsible for their personal alignment to the organization,
    as well as its vision, and its culture.
  • Alignment of goals and strategies across and down through organizations and teams, large and small, demonstrated by the contribution each group and team member makes to the organization’s vision and strategies.
  • Alignment of each individual to the values, beliefs, and expectations of the culture; each member knows how success is created at individual, group, and company-wide levels.
  • Alignment that results in every person being responsible and acting in alignment with the business’s intention, as conveyed through each member’s commitment to the customer.
  • Alignment that contributes to the resilience that great companies and teams demonstrate when confronted with difficult issues and challenges and keeps them from going off course or losing sight of their mission, vision, and intended outcomes.
  • Alignment that is demonstrated through every decision and action taken by every member of the organization or team, how they fit into its culture, and what the company and team have promised to deliver to the customer.

The Business Code starts simply, letting us discover the richness of how business fulfills our needs. It allows us to connect the needs of the customer to our brand’s intention as delivered through the products or services provided. Next, it connects the ways in which we lead and operate our businesses and shows how they can be aligned to become more effective and efficient.

 

Edgar Papke is the co-author of Innovation By Design and author of True Alignment and The Elephant In The Boardroom. He helps leaders and their organizations align to create greater levels of innovation, performance, and fulfillment. He can be reached by email: edgar@edgarpapke.com