DRIVING FORCES, PART
TWO:
WHY DOES IT MATTER?
by
In the process of helping a
high-tech company revamp its organizational structure, we asked its key
players, "What is your company's driving force?"
Their first response was quick and
unanimous: "Oh, we are a very user-focused company." Of course, we
had seen their mission statement, so we had already identified their driving
force -- and it was not user
satisfaction.
What? Not users? Well, let's see,
how about technology? Sure, that's it: "We're very
technology-driven."
Sorry, no dice. For companies with
technology as a driving force, technology development comes first, then comes
finding the market that can use the application. For this company, technology
was important, but not paramount.
OK, said the key players proudly,
we've got it: "Our driving force is service." Nope. Service,
technology, and users were all part of their business objectives, but not their
driving force.
This was not a trick question that
they could not answer. It was stated right there in the mission statement,
which was “…being the preferred provider
of several specific high-tech products. Although service and technology are
certainly important to the success of their business, they are truly product-driven.
Before we discuss how a company's
organization can support its driving force, we need to review the nine driving
forces as described in our last article (If you need a reprint, please contact
us). One of them -- and only one -- is driving your company. Do you know which it is? (Hint: look at your mission
statement!)
1) The product- or service-driven strategy -- selling a product or service that technologically
improves but doesn't change it fundamental characteristics, e.g. automobiles
2) The market type/user/customer class-driven strategy – focusing on a particular type or class of user and
developing or locate products/services that satisfy their needs, e.g. magazines
targeting specific audiences.
3) The production capacity/capability-driven strategy -- maximizing production from
high-investment assets, e.g. paper mills, airplanes.
4) The technology-driven strategy -- finding applications to fit
technology already acquired or developed, e.g. Sony, DuPont
5) The sales/marketing method-driven strategy -- using a unique selling technique with products
that fit the technique, e.g. Amway, Tupperware
6) The distribution method-driven strategy -- establishing a unique distribution channel to sell all
kinds of products, e.g. AM/PM, department stores
7) The natural resource-driven strategy -- maintaining access to specific natural resources
(oil, timber, etc.) in order to extract them.
8) The size/growth-driven strategy -- making investment decisions on
products or subsidiaries strictly related to increase in sales, growth rates, and size.
9) The profit/return-driven strategy -- doing business as a holding
company or conglomerate strictly to make
a profit.
Companies in the same industry can
have different driving forces. Selection of a driving force is a fundamental strategic decision. For example, in the film industry, Kodak has
chosen to be product driven;
So, why all the concern over your
companies driving force? Can’t we just get on with business?
Once a company clearly understands
its driving force, it can then structure its organization to support its
mission and related driving force. Without clear recognition of the driving
force, conflicts can develop relating to resource allocation, priorities and
core competencies.
To illustrate the impact the
driving force has on a company’s organization, a company with product driven strategy could have the
following impacts:
1) Organization structure—focused by
product line
2) Sales strategy—Instill strong
product knowledge in sales staff and employ a strong and aggressive push approach to the market place
3) Market research—Be very conscious
of competitive products and side by side comparisons
4) User sensitivity—Continual search
for new users of current product, or look to satisfy existing user group with
slightly modified products
5) Advertising and promotion—Focus on
product features and benefits
6) Research and development
(R&D)—More emphasis on development than on research; don’t invent new
product for customers, but make changes to close, or widen, technological gaps,
or to reduce complaints
7) Areas of excellence—Product
development, sales skills and service
All areas of operation within a
company are affected by its driving force. Conversely, its driving force can be
either supported or weakened by its organizational structure. Just as an engine
designed to run on solar power will not work with gasoline, an organization
must be designed around the force that actually drives it in order to operate
effectively. That is why it is so important in the strategic planning process
first to identify your company's driving force.
Every organization has just one
driving force. You cannot serve two (or more) masters. This does not mean that
other motivations don't count. As we have seen, users, technology, and service
are all part of the equation for our high-tech client. Companies with various
driving forces all can be user-sensitive, not just those that are user-driven.
And, don’t be deluded by believing
that your company is profit-driven.
Certainly, all companies must make a profit to survive, but profit is the
driving force for only a few companies that exist for no other reason. One must
eat to live, but for most of us, the purpose of life is not eating.
It is not always easy to identify
your company's driving force, even when the mission statement makes it
abundantly clear. People with subjective investments in a company delude
themselves into thinking it's something it's not. However, once the driving
force has been clearly identified, these same people can come together in a
common effort to build an organization that will support the company's true
purpose and enhance its success.