Merrily Driving
Along!
by
A simple test! Only two questions. If you answer both questions correctly don’t
waste your valuable time reading the rest of this article.
1. Do you understand your company’s
vision and mission? Leaders
at most successful companies clearly understand their organization’s purpose
and generally know where they want to take the business.
2. Do you know the primary element
that drives your organization towards a product, market or customer group, and
that should determine the allocation of scarce resources and indeed the
company’s very structure?
These "Driving Forces"
are the primary elements that bridge the gap between the intention of the
mission and the implementation of a strategic plan.
There are only nine possible driving
forces and your organization can be driven by only one. The driving force is
revealed in the mission statement, whether company leaders know it or not. Of
the hundreds of companies we have worked with, there was not one whose driving
force was not obvious to us from reading the mission statement.
Even so, the leaders of these
companies were often unaware of what was really driving their organizations. In
such cases, companies may become dysfunctional because they try to serve
multiple driving forces. Or they may delude themselves into thinking they are
something they're not.
The nine different driving forces
fall into three categories. Strategies for success are connected with a few
very specific key areas of expertise and core competencies that must be
nurtured and financially supported. If the company does not support them, it is
bound to fail.
In the Product/Market
Category, there are two driving forces:
1) The product- or service-driven strategy. Companies with this
driving force are tied to a certain product concept. Future products will
resemble current and past products, with any variations being simply continued
development of an existing product. Automobile and telephone manufacturers, for
example, have always turned out basically the same products in spite of
technological improvements.
2) The market type/user/customer class-driven strategy. These
businesses are anchored to a class or type of users. They must identify their
preferred market segment, communicate with that segment to understand its
various needs, determine how to fill those needs, and then make or find
products that will do just that. Their destiny is in the consumer's hands. An
example of such a business is a magazine targeted to a specific audience.
The Capabilities
Category includes five driving forces:
3) The production capacity/capability-driven strategy. These
companies have made substantial investments in their production facilities and
must keep running at or near capacity to remain profitable. Their strategy for
success must center around this goal. Hence, they must
pursue any product, customer, or market that can optimize production. Examples
of such companies are print shops, paper mills, hotels, and airlines.
4) The technology-driven strategy.
Companies with this driving force use technology to gain a competitive
advantage. They first create capabilities for developing or acquiring hard
technology (chemistry, patents) or soft technology (software, production
know-how). Once they “discover” the technology, they must look for applications
to fit the technology. For example, Sony brought out the first Beta VCR before
there was any demand for it; the product's existence created the need. Other
examples are DuPont and Polaroid.
5) The sales/marketing method-driven strategy. The capability of
these companies is built around a characteristic selling technique. All
products or services must use this selling technique. Their entire sales force
uses the same mechanism, no matter what's being sold. Door-to-door or party
sales companies such as
6) The distribution method-driven strategy. These companies
establish a unique place or service to attract their customers. Once they have
the customer they will push any product through this distribution channel that
will maximize their revenue while they have their customer’s attention.
Convenience stores, for example, began by selling just gasoline. Their inventory
soon included coffee, pop, and candy. Now they offer full meals, groceries, and
house wares. Other companies with this driving force are big discount and
department stores.
7) The natural resource-driven strategy. Fundamental to the
survival of these companies is access to or pursuit of the natural resources on
which their capabilities depend. Examples are oil, mining, and timber
operations.
The Results-Oriented
Category includes two types of
driving forces:
8) The size/growth-driven strategy. These companies pursue growth
for growth's sake, or for economies of scale, making all decisions to increase
size or growth rates. The results desired here are sales. Corporate
headquarters exist strictly to acquire other companies. An example is Gulf
& Western.
9) The profit/return-driven strategy. These are holding companies
and some forms of conglomerates whose only criterion for entering a marketplace
is profit. Such companies usually have fully autonomous subsidiaries, with few
or no links between them, that are bought and sold based on their level of
profitability.
Can you tell from this list which
of the nine driving forces motivates your company? The answer might surprise
you.
Mission, organizational structure, and resource allocation are the main responsibilities
of leadership. Without a clear understanding of your company's driving force,
you will have difficulty knowing what to emphasize within its structure. On the
other hand, when you do understand what drives the company, you can develop a
structure and allocate funding to support it.
Furthermore, once leaders know the
driving force of their company, they can decide whether to support it or change
it. Yes, even though you can only have one driving force, you can change it,
taking the time and careful planning required to change
the organizational structure along with it.
This kind of fundamental control of your own destiny
means knowing where you are, what you want, and how to sustain or alter the
culture of your organization. Knowledge is power.
In an another
article, we'll talk more about the impact of various driving forces on
organizational structure.