On Core Competency and Value Propositions
One of the cornerstones of strategic planning is, of course, to analyze core competencies and value propositions (what value you provide that makes your customers come to you and not to your competitors). We take that for granted. But should it be the responsibility of the CEO? Is that his role in the company?
Well, yes and no. It is his responsibility if he or she turns out to be the corporation’s strategic planner too. But the CEO has, and should have, other roles to play beyond strategic planning.
For example, assume in Company A there is someone designated to serve as a strategic planner; that’s her job assignment. Or perhaps there is even a whole department for strategic planning. What then? Granted, it is the CEO’s role to approve their strategic plans and to review the core competency of the company to determine if it is valid.
But then there is also the value proposition offered to the market. Is that correctly articulated? And, does the strategic plan take all of this into account? All these fall into the bailiwick of the CEO. It is part and parcel of his or her role. And what else?
These questions came to mind recently while I was attending a session with Stewart Resnick, the co-owner of Roll International. I had arranged for a group of my clients to visit with him so they would be exposed to a company that practices Adizes.
Stewart has been a client of the Adizes Methodology going back to when his company was dealing with $12 million in sales. That was almost forty years ago. The company’s revenue is now $3.5 billion, and it is still one hundred percent owned by him and his wife, Lynda.
For those of you who do not know Roll International, I am sure you know some of their products, such as Fiji Water and Pom Wonderful. They also control over thirty percent of the world market in pistachios, among other agricultural products, and they own probably one of the largest farms in the world.
Stewart was asked three questions by his visitors: 1) What is the company’s core competency; 2) What is the value proposition that made the company grow so well; 3) What is the source of your success, Stewart?
I admit I was extremely gratified by his answers.
“I watch alignment all the time,” he said. “That is the reason we hardly outsource. Yes, we outsource the dining area and the company restaurant, but we have our own advertising agency, our own PR, and our own consulting arm. And now we are starting our own Corporate University. That way we can control what they do, and ensure that THEY ARE ALL ALIGNED.”
I hope you have read the above paragraph slowly and carefully. The core competency he was referring to was not the raw material resources; or some technological advances that give his company an advantage; or early presence in the market; or even the strength of the brand. Their core competency is the capability to be aligned at all times.
Now why is “alignment” so important?
It is pure Adizes. If you have listened to my lectures or read any of my books, it immediately becomes obvious. That is why my chest exploded with gratification. He was practicing the Adizes Methodology without even attributing it to Adizes. It was as though he owned this concept. I loved it.
Whenever there is a change there are problems. Right?
Why? Because everything in this world is a system, including a company, and a system is by definition composed of subsystems, which again in turn are composed of their subsystems, ad infinitum.
When there is a change, the subsystems do not adjust in a synchronous way. Some subsystems change at a faster rate than others.
For instance, in a young Go-Go company, marketing and sales subsystems change on a dime, mainly because the clients demand it. They had better if they want to keep their clients. But accounting, as a subsystem, changes slowly. And human resources changes even slower.
This creates gaps in the system; gaps that turn into cracks. Those cracks are manifested by what we call “problems.”
So the faster you grow and/or change, the more problems you will have.
In order to have a SUSTAINABLE growth, which Stewart had, you need to be sure that those gaps are closed; that the subsystems are “ALIGNED.”
You make sure your supply is built, and synchronized, with the developing demand. And you, the CEO, see to it that sales do not outpace the capability to deliver and that sales and production do not create problems for finance, which needs to have working capital available to finance the growth.
Growth means change, and change means DISINTEGRATION, by definition. And the faster you grow, the more disintegration and, ergo, the more problems that confront your company.
Now back to the strategic planner. Let him or her think about what and how to capitalize on core competencies of the company. If you as a CEO are also the strategic planner, wearing that hat, then that responsibility falls to you. And if you do not have a marketing department, and you as CEO wear that hat as well, you must think about your company’s value proposition to the market.
But in the CEO “hat,” your role is to continuously integrate the various functions and not let one permanently outpace the other…Not an easy task.
I found a video that describes perfectly, in the form of an analogy, the role of the CEO.
Watch it: http://vimeo.com/62422161
Dr. Ichak Kalderon Adizes