Q: Do you think most organizations are ill equipped to take these actions, and if
A: There are several related reasons why many firms remain ill equipped to assure shareholder value.
There is too much focus on business unit and functional goals, and not enough emphasis on enterprise goals. In other words, most organizations function as heaps instead of wholes. Managers view the business from their point of view, failing to see the enterprise-wide implications of business issues. This is necessary but not sufficient. Managers must also view their local business or function as part of a larger whole. This holistic view reveals each part of the enterprise as an integral component of an integrated business system, equally focused on delivering superior value to customers and shareholders.
Secondly, firms fail to recognize that integrating the work of support functions with the primary activities of the firm enables the business to function as a harmonious whole. This maximizes its ability to adapt to changing business conditions better and faster than the competition. Hewlett-Packard has been cited as an example of internal resistance to needed strategic and structural change. Their market capitalization has dropped $9 billion during this time period.
Lastly, human resource functions should accept responsibility for strategy implementation, but not strategy formulation. This is dangerous. If the formulated strategy is defective, the last thing we want to do is process it through a well-designed human resource management system. Excite@Home’s stock was trading at $60 a share in 1999. A questionable business plan was implemented, and by August of 2001, the stock had fallen to 47 cents.
Q: I gather from your book that shareholder value assurance is much easier to achieve when "action-based" conversations far outnumber "knowledge-based" conversations. What can organizations do to facilitate this?
A: Organizations must recognize that conversation — speaking and listening — is the manager's tool. Its purpose is to reveal what’s missing that would enable the business to perform at a higher level, and then transform that new idea into effective action to achieve that higher level. Using conversation to create a culture of unbending commitment, “no excuses,” effective actions and extraordinary results is a skill that requires a long-term commitment. There are four ideas to keep in mind.
First, conduct every conversation in the context of shareholder value assurance by using the book as your guide. If the conversation will not lead to an action that increases profitable growth, stop that conversation and begin one that will lead to this result.
Secondly, end conversations with requests for effective action. Make promises in an environment of unbending commitment and “no excuses.”
Thirdly, keep the conversation on the court and out of the stands. Make a story worthy of being told, rather than tell stories. Solve problems, don’t admire them.
Lastly, remember that it is easier to act yourself into a better way of thinking than to think yourself into a better way of acting.
Q: How would you summarize the ideal company with shareholder value assurance?
A: All departments and functions are bond together in an organized pattern. Each function exists not as an independent unit, but as part of a coordinated unit, serving definite purposes in the overall structure. Masterful design links functions to other functions. All functions are mutually interdependent, so the abilities of each contribute to the financial, strategic and cultural integrity of the whole. This organization has a large supply of adaptability and flexibility. It is vital and healthy, growing stronger ever day, increasingly immune from Enronitis.