Friday, September 07, 2007

They’re All Important!

I just finished leading a seminar for a hundred-some CEO’s in Perth, Australia. In a four hour seminar, sometimes issues that were discussed at the beginning get conceptually separated from the issues that are discussed at the end. For example, one of the questions I received at the end of the seminar was an interesting one. It went something like this: “You’ve spent a lot of time talking about the importance of executing and monetizing our strategies. Are those issues more important than the issues that you talked about earlier, like innovation and customer care?"My quick answer to that gentleman: No and double no! All are important, and all are intimately intertwined. For one thing, it makes no sense to discuss innovation without talking about whether the innovation matters to customers, matters enough that they will be excited, engaged, and willing to pay for it. If your initiative doesn’t matter to them, then it simply doesn’t matter, period. GE CEO Jeff Immelt has stated that one can no longer even discuss meaningful innovation without discussing and documenting a positive reaction from the customer. But likewise, the coolest ideas about how to serve customers innovatively mean nothing if the organization cannot efficiently translate those insights into profitable action. If your execution stinks, or if you can’t demonstrate how your actions will yield a profitable return on investment, then all you’ve got is a cool idea that you can pontificate about in a pub.. So you see, they're all important. But if you back me against the wall on which element is really and truly the "most" important, remember Peter Drucker’s dictum that the sole purpose of any business organization is to create and grow customers. So if you’re a leader, start with the customer. That’s your foundation. Then obsessively work with your team to figure out how to continually innovate on behalf of the customer—and don't forget to consider tomorrow’s customer, not just today’s. And in the same breath, consider how you as a leader plan to direct--and inspire-- your organization to continually deliver and implement those great ideas in a way that unambiguously yields the kind of high margin financials that reflect healthy growth. That may sound obvious, but in real life, customers are not the starting point and fountainhead in many organizations. Other constituencies or priorities are. Another problem is that when it comes to these four issues of innovation, customers, execution, and profitability, too many organizations compartmentalize responsibilities: for example, one department focuses on innovation, another on customers, another on execution, and another on "the numbers" like profit. Likewise, many leaders themselves focus their attention on the areas that turn them on, and pass off the elements that don’t interest them to others. Wrong! Some functional specialization is inevitable, but in the best organizations, every group and function considers the four issues as an inherent part of their charge. Likewise, each leader considers these four issues as a critical part of his or her responsibilities—regardless of role or rank. So yes, in that particular seminar in Perth, I did spend quite a bit of time on innovation, customers, execution and monetization. Why? Because they’re all important. And they’re all connected when it comes to market leadership and competitive advantage.


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