Read an Excerpt
Lead Right for your Company's Type
How to Connect your Culture with your Customer Promise
By William E. Schneider AMACOM
Copyright © 2017 William E. Schneider
All rights reserved.
ISBN: 978-0-8144-3800-8
CHAPTER 1
THE FOUR LIVING ENTERPRISES
Determining Your Organization's Type
John Garner, VP Operations for an oil drilling company, was chatting with his drilling supervisor, Frank. Frank mentioned that he had hired a sensitivity consultant to work with his tool-pushers, those who guide the oil drill into the ground. John, curious, asked if he could attend one of the sessions.
The tool-pushers sat in a circle while the consultant asked them each to tell how they felt about the others; obviously uncomfortable, the men said as little as they could. This went on for an hour. Try as he might, John could see no earthly reason for any of it. He knew that when people are operating complicated machinery like drilling rigs, their attention needs to be totally focused on what they are doing, not people's feelings. If their attention wanders from the drill even for an instant, they put themselves and others at risk. So after the meeting, John spoke to Frank. "What were you thinking?" John said, and told Frank to fire the consultant.
Frank was shocked. A friend had recommended the training, which had really helped the employees at a PR firm get along better. But it was worse than useless in an oilfield — and potentially dangerous.
Ideas like this come out of left field all the time due to the one-size-fits-all mentality that dominates too much business thinking today. That approach assumes that what works in one enterprise will work in another. Although it is propounded by many, many consultants and books, this approach does not work.
If you don't know already which type of enterprise yours is, you will by the end of this chapter. This chapter will:
* Describe the four fundamental kinds of enterprises
* Show how the four kinds of enterprises focus attention and make decisions
* Tell you how to determine which is yours
The Four Types of Enterprises
What an enterprise promises its customers determines its type. Customer promise is an enterprise's magnetic north — it guides enterprises to the right culture and leadership practices. These practices are completely different in each of the four enterprise types. Taking the cultural and leadership practices of one type of enterprise and trying to force them on another type pulls an enterprise apart.
But this is just what many business books advise leaders to do. I searched "consensus decision-making" on Amazon books in January 2017 and came up with 153 results. Each of these 153 books is claiming that consensus decision-making is right for every enterprise. But consensus decision-making works only in a customized enterprise — there, decisions should be based on the collective judgments of the team. For example, an architect and client need to make many decisions together to come up with a house that suits the customer. This kind of decision-making would be disastrous at a predictable and dependable enterprise like a utility company or NASA, where decisions often need to be made very quickly and must be based on facts, data, and established procedures.
The customized enterprise promises a unique tailored solution to each customer. It must partner closely with each customer and discuss decisions in detail, which takes highly collaborative leadership and cultural practices. For example, Ogilvy & Mather provides a customized PR campaign for customers. Each customer gets its own carefully built team of people. Leadership is participative and helps team members work together and deliver on the company's customer promise. The customer is always a member of the team.
The predictable and dependable enterprise promises customers reliability, safety, security, or, sometimes, commodities. For example, predictable and dependable enterprises like Pacific Gas & Electric (PG&E) keep tight control with highly structured leadership and cultural practices; consistent, efficient operations; and clear, detailed policies and procedures. Decisions depend on facts and data. Directive, authoritative leadership focuses on attaining operational goals and adhering to role requirements.
The best-in-class enterprise promises superior products and/or services. Best-in-class enterprises like Apple need the most expert people they can find to imagine and innovate products and services. Leaders and cultural practices focus on excellence. Expertise remains center stage. Decisions are based on facts and hard data. This enterprise must constantly innovate, so leaders identify challenges and then challenge others to be the best that they can be. People follow leaders in this enterprise because they believe in being the best.
The enrichment enterprise aims to help people fulfill their potential, have a healthier life, and realize higher-level purposes. For example, Habitat for Humanity helps house less-fortunate people. It keeps its values center stage and focuses on applying them for the betterment of others. Leadership and cultural practices empower customers and employees. Decision-making depends on values, and decisions in this enterprise type are highly subjective. Leaders energize others, continually striving to realize the potential in employees and customers. Enrichment enterprises grow organically.
Leadership, Empowerment, and Culture in the Four Enterprise Types
Leadership is about empowerment — creating the conditions for employees, managers, and fellow leaders to deliver on the enterprise's customer promise. But different types of enterprises must use empowerment in different ways. For example, an electric utility can't empower employees to "follow what they believe in" — that would create chaos and danger. A PR firm has to include the customer on the team and empower the team to consensually come to its best judgment about what the customer's PR campaign should look like.
Culture is about implementation and identity. Culture means how we hire, structure, deploy, compensate, and develop our employees to deliver on our customer promise. Culture is essentially formed by what it takes for your people to fully deliver on your enterprise's customer promise. It is driven by the nature of your business and what it takes for you to succeed in your marketplace.
In short, the four enterprise types are four different worlds and can't practice empowerment or culture the same way. What drives the culture and leadership of the four enterprise types is different, depending upon the kind of customer promise they have. These drivers and how they should be practiced in each type of enterprise are all discussed in detail in the next four chapters, but Figures 1-1a through 1-1c and Figure 1-2 list them all and summarize each type's basic approach to them. Control culture aligns to predictable and dependable type organizations; collaboration to customized organizations; competence to best-in-class and cultivation aligns to enrichment organizations.
Attention and Decision-Making
What an organization pays attention to and how it makes decisions drive the delivery of its customer promise. Each enterprise type is a unique blend of where it puts its attention and how it makes decisions. In Figure 1-3, the vertical axis shows what an enterprise primarily pays attention to. The horizontal axis shows how an enterprise primarily makes decisions. The attention axis has Actuality at one end and Possibility at the other; the decision-making axis has Impersonal at one end and Personal at the other. Customized enterprises and predictable and dependable enterprises are actuality enterprises. Enrichment enterprises and best-in-class enterprises are possibility enterprises. Customized and enrichment are personal enterprises. Predictable and dependable and best-in-class are impersonal enterprises.
Each enterprise is a unique mix of one attention element and one decision-making element. Customized is an actuality-personal enterprise; predictable and dependable is actuality-impersonal; enrichment is possibility-personal; and best-in-class is possibility-impersonal. An enterprise's unique mix of attention and decision-making can include elements from other types. For example, predictable and dependable and best-in-class enterprises both make decisions based on facts and hard data; this means that both make decisions primarily by relying on facts and hard data. It does not mean that they never consider personal matters when they make decisions. Every enterprise's main tendencies are like right- and left-handedness in people: One hand dominates, but we use both hands. Similarly, one way of making decisions dominates an enterprise, but it will use other ways at times.
Attention
John (Skip) Coleman, deputy chief of fire prevention, Toledo (Ohio) Department of Fire and Rescue, once said that of all the advances in firefighting apparatus since motors replaced horses he considered "positive-pressure self-contained breathing apparatus [SCBA] to be the greatest. That along with National Fire Protection Association [NFPA] 1500 and mandatory mask policies developed by the NFPA and OSHA [Occupational Safety and Health Administration] have extended the life expectancy of firefighters by at least ten years over those who fought fires without them." The SCBA was invented by Zodiac Oxygen Systems U.S.
The Toledo Department of Fire and Rescue and Zodiac Oxygen Systems are both in the firefighting business, but what each pays attention to couldn't be more different. Toledo Department of Fire and Rescue firefighters deal with the immediate present: When the bell rings, they spring into action. By contrast, Zodiac Oxygen Systems' workers spend their time on what will make firefighters safe in the future. They envision, design, test, and experiment with new kinds of equipment to make firefighters safer.
At the most fundamental level, every enterprise focuses either on the actual or the possible. Actuality has to do with what is; possibility has to do what might be. The Toledo Department of Fire and Rescue is an actuality enterprise and Zodiac Oxygen Systems is a possibility enterprise.
An actuality enterprise focuses on:
* Concrete, tangible reality
* Immediate customer demand
* Actual experience/actual occurrence
A possibility enterprise focuses on:
* Imagined alternatives
* What might occur in the future
* Innovations/creative options
* Theoretical concepts or frameworks
* Ideals/beliefs
The actuality enterprise lives in immediate experience and reality. The possibility enterprise lives in anticipation and possibility.
Compare our enterprise pairs. The actuality enterprises — customized and predictable and dependable — focus on getting today's job done. A public relations firm offers a customized solution for each customer that increases marketplace exposure — in its current marketplace. It builds a PR campaign that fits who the customer actually is and what her company actually does, today. The customer implements the PR campaign as soon as it is ready. Similarly, a predictable and dependable enterprise provides a product or service today: A fire needs to be put out immediately, emergency room patients have to be treated ASAP, an electric utility has to provide predictable and dependable electricity 24/7.
By contrast, enrichment and best-in-class enterprises, the possibility enterprises, focus on goals that take time to reach — educating children, or creating one-of-a-kind products or services that may take years to design and develop. The next, distinctive smartphone may take ten years to imagine, design, build, and test before it is actually available for sale. Helping children to fulfill their potential is a future-focused endeavor. A scientific theory may take fifty years to be proven or disproven. Inspiration and imagined alternatives fuel these enterprises. Workers engage in explorations that stretch far beyond present reality. For enrichment and best-in-class enterprises, life lies beyond the horizon.
To sum up: Customized and predictable and dependable focus on present needs. Enrichment and best-in-class enterprises focus on future goals.
Decision-Making
Market Point describes itself as a "storytelling firm working with new companies to build engaging brands that inspire." It "partners with" clients and helps them develop "their own stories that inspire and reach into audience's hearts and minds.... We build emotional, intuitive and visceral connections. We collaborate closely with you and work step by step with you to build a PR campaign."
TrendKite's software helps PR agencies build a timely, highly accurate picture of their media coverage. TrendKite promises "deep domain expertise and thorough understanding of the complex PR landscape. Together we are focused on the problems around PR analytics and reporting. We've felt your pain. To relieve it, we are bringing to bear the latest in big data analytics technology and presenting it elegantly."
Market Point and TrendKite are both in the public relations business but make decisions totally differently. Market Point and each customer decide together. They brainstorm ideas, experiment, and interpret the marketplace together. TrendKite bases all of its decision-making on hard data, analytics, dashboards, and quantitative formulas. The essence of its business is to provide verifiable information.
When making decisions, every enterprise emphasizes either impersonal data-based analysis or personal judgment-making. Personal decision-making relies on individuals' and groups' own subjective, values-based judgments. Impersonal decision-making relies on data and detached reasoning. The process is different in each.
The decision process in personal enterprises is:
* People coming to a judgment
* Organic/evolutionary/dynamic
* Participative
* Subjective
* Open-ended
* Emotional
The decision process in impersonal enterprises is:
* Detached reasoning
* Fact and data based
* System, policy, and procedure oriented
* Objective
* Formula oriented
* Law oriented
* Emotionless
A personal process enterprise relies on the minds and hearts of people — their values, beliefs, and mutually arrived-at judgments — to make decisions. An impersonal process enterprise relies on systems, data, facts, formulas, and methods to make decisions.
Customized and enrichment enterprises are personal decision-making enterprises. Decisions in a customized enterprise are made by consensus, and customers are closely involved. Decisions in an enrichment enterprise are made according to values. These two enterprise types are focused on forming judgments and trust their people to make them. Decision-making is quite subjective; mistakes are par for the course. The judgment and wisdom of people carries the enterprise forward.
For example, a PR firm typically operates with teams of very diverse people, puts the customer on the team, and brainstorms and pushes for consensus. An enrichment enterprise centers its decision-making on its values and the extent to which those values are realized. It is belief-driven. An enterprise that provides physical therapy to patients needs to know how well the patient feels. A nonprofit enterprise that finds and provides foster parents relies upon personal judgment to decide whether or not particular foster parents are benefiting the child under their care.
Predictable and dependable and best-in-class enterprises make decisions by prescribing operational systems, formulas, and methods for people to follow. They provide people with ways to get and keep control, emphasizing precedents and requiring objectivity and order. People decide based on facts and hard data, using established policies and procedures.
For example, decisions in a nuclear power plant are based on hard data, gauges, and fact-based reports. Police need reliable information and data to catch lawbreakers. Low-margin grocery stores require constant tracking of inventory, product placement, and customer buying patterns. Low-price retail operations that sell necessities need the same.
(Continues...)
Excerpted from Lead Right for your Company's Type by William E. Schneider. Copyright © 2017 William E. Schneider. Excerpted by permission of AMACOM.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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