Presentation Title Competitive Advantage Its Not What You Think! - - PowerPoint PPT Presentation

Presentation Title

Subhead Can Be Placed Here

The Leader’s Guide to Sustainable Competitive Advantage

It’s Not What You Think!

ATD Webinar Presented by John R Childress Dec 8, 2016

A little about John R. Childress

• Co-founded an international management

consulting firm

• CEO and President for 23 years, offices in Los

Angeles, New York and London

• Focused on Advising CEOs and Senior Teams on

Leadership, Culture and Execution

• LEVERAGE: The CEO’s Guide to Corporate Culture published in 2013
• FASTBREAK: The CEO’s Guide to Strategy Execution published in 2014
• Major transformation engagements in Nuclear Power, Pipelines,

Retail, Financial Services, Transportation, Energy, Manufacturing, Defence and Aerospace

• Currently, CEO Advisory and Keynote Speeches

John’s Blog: Rethinking . . . http://blog.johnrchildress.com

The Search for Competitive Advantage

§ “Comparative” Advantage:

§ a firm’s ability to produce a good or service at a lower cost than its competitors

§ “Differential” Advantage:

§ when a firm's products or services differ from its competitors and are seen as superior than a competitive offering

Competitive Advantage Can Be Short Lived

British Airways Air France KLM SAS Lufthansa Swiss Air Alitalia Iberia

Is There Such a Thing as Sustainable Competitive Advantage?

“Sustainable” Competitive Advantage

A capability or set of conditions that confers a long-term advantage that is not easily duplicable or overcome by competitors and that provides resilience and/adaptability to external forces of change.

Foundations for a Sustainable Competitive Advantage

• Healthy Corporate Culture (aligned with

Strategy)

• Robust Execution Process (with Governance

and Discipline)

• Leadership Courage

Corporate Culture as a Competitive Advantage

A Healthy Corporate Culture (aligned with the business strategy)

Culture is how employees act when the boss isn’t watching!

~ Herb Kelleher, Southwest Airlines

Corporate Culture is not an initiative, but the enabler of all initiatives. Culture impacts performance, either positively or negatively, by setting our the informal rules on how employees go about their work, how they interact with each other, what they believe about the company and management, and how they treat customers.

Corporate Culture is like the water in an aquarium. If it’s clean, everything works; if it’s foul, the whole aquarium is impacted.

• Global Forces
• Competition
• Regulation
• New

Technology

Strategy New Strategy Structure New Structure Culture Previous Culture

• Pockets of resistance
• Malicious Obedience
• Increase in Meetings
• Cynicism
• Work Around the New

Structure

• Poor policy

implementation

Impact of Corporate Culture on Business

• Bank of America fraud and fines
• BP Deepwater Horizon: 11 deaths,

$61B costs

• Olympus: hid loses and fabricated

financial statements

• UBS: trader fraud and money

laundering

• Chrysler-Daimler merger: destroyed

value

• Korean Airlines: decades of fatal

accidents

• Blackberry: 50% to 2%
• Volkswagen: Diesel falsifications
• Wells Fargo: 2 million fake bank

accounts

• Three Mile Island Nuclear Plant,

accident

• Enron: collapse
• RBS: aggressive risk, expansion,

bailout

• Parmalat: corporate fraud,

bankruptcy

• Lehman Bros: aggressive risk and

bankruptcy

• AIG: risk losses
• HSBC: money laundering
• JP Morgan: London Whale trading

losses

• CitiGroup: rate rigging
• Barclays: Libor

Questions You Should Be Asking About Your Corporate Culture

• Do we have a corporate culture statement the fully describes the

behaviours we expect from all employees? (Netflix Culture Deck)

• Are these behaviours fully described as examples of “real work behaviours”

and not just buzzworks like “teamwork” or “trust”?

• Is corporate culture a part of our company strategy, with specific initiatives,

accountabilities and milestones?

• Do we measure or asses our culture on a periodic basis? Do we act on what

we learn? Do we have a Culture Committee?

• Do we have hiring profiles that are aligned with the behaviours we want in

all employees?

• Do we have a strong Employee On-Boarding process that stresses culture,

has good examples, and that every employee must attend?

Culture as a Sustainable Competitive Advantage

While other companies may copy your strategy, your products and your market reach, no one can copy your corporate culture!

A Robust Execution Process as a Competitive Advantage

“The key isn’t having a strategy, it’s getting it implemented!”

• Jack Welch

“The ability to effectively execute business initiatives may be the best competitive advantage.”

• Larry Bossidy and Ram Charan

Execution: The Discipline of Getting Things Done

Disconnected Initiatives

In the average company, approx. 35% of projects and initiatives not connected to current strategic objectives.

Projects and Initiatives Not connected to Current strategy

35% 65%

• Disconnected initiatives
• Lack of resource alignment
• Slower forward momentum

Disconnected Initiatives

Enterprise Strategy

CEO VP VP VP VP VP

Functional Objectives & Goals

Dir Dir Dir Dir Dir Dir Dir Dir Dir

Danaher Business System

The DBS process system is the soul of Danaher; the system guides planning and execution. ~former CEO Larry Culp

Danaher Execution Process based on Hoshin Kanri Policy Deployment Matrix

Continental Airlines 1994

• Amalgamation of 7 airlines

(and very different cultures) with 40,000 employees

• 10 years of straight losses
• Company facing it’s third

bankruptcy in a decade

• Worst record among the 10

US airlines:

– Baggage complaints – On-time departures and arrivals – Involuntary denied boardings

• 10 CEOs in 10 years

Continental Results

• Continental Airlines returned to

profitability in 1995, the first year after the new strategy was implemented

• 1996: Voted airline of the year,

against 300 global competitors

• Ranked in the top 5 of all global

airlines ever since 1996

• Among the top 4 in all DOT airline

service statistics since 1996

• 16 straight quarters of record

profits

• Share price from $3.30 to $50 in 4

years

• Employee turnover reduced 45%

Marketplace: Fly to Win

• Make efficient use of core assets
• Expand customer mix from

backpacks and flip-flops to suits and briefcases.

• Enhance relationships with

travel agents, corporations, and frequent fliers. Product: Make Reliability a Reality

• Perform in top 50% of the

industry on key service metrics

• Improve image of fleet:

People: Working Together

• Restore employee confidence in

management

• Establish a results-oriented

culture. Financial: Fund the Future

• Secure liquidity
• Restructure the fleet:

Continental Airlines Strategic Breakthroughs

RUN AN AIRLINE WE CAN ALL BE PROUD OF BE PROFITABLE IN 1995

Continental Airlines 1994: Strategy-on-a-Page™ Example

Enterprise Metrics

Working Together Make Reliability a Reality Fly To Win Fund Our Future Restore employee confidence in management Establish a Results-Oriented Culture Improve the Image of the Fleet

Top 50% of Key DOT measures

Rebuild Relationships with Travel Agencies Win Back the Business Flyer Make Efficient Use of Core Assets Restructure the Fleet Secure Liquidity

Breakthrough Objectives

Strategic Initiatives And Accountability Key Performance Indicators

Improve Employee Survey Scores to X% Productivity to $XX/person Top 50% DOT Rankings Upgrade 100% of Fleet by 1996 Reduce Operating Costs to $XXM Business Flyers X% of Total Rank Top 3 Frequent Flyer Programs $$$ Cash Flow Average Flight Capacity to X%

PEOPLE PRODUCT MARKETPLACE FINANCIAL

PEOPLE PRODUCT MARKETPLACE FINANCIAL

Run an Airline We Can All Be Proud Of. Become Profitable in 1995

Ford Motor Co. Strategic Breakthroughs

People: Working Together Globally

• “Tell the Truth”
• One Ford Culture
• Superior Sales and Service

Product: Best-in-Class Vehicles

• Focus on the Blue Oval
• Lead in Quality, Safety, Fuel

Efficiency

• Build cars people want to buy

Marketplace: Global Responsibility

• Operate “Glocally”
• Take a positive stand for the

environment

• Match capacity with business

realities Financial: Fund the Future

• Secure Liquidity
• Grow the business profitably

ONE FORD

ONE PLAN – ONE TEAM – ONE GOAL

Key Requirements for a Robust Execution Process

• Breakthrough Objectives: beyond business as usual
• Avoid initiative overload: Will it make the boat go faster?
• Aligned with the business strategy
• Easy to understand: Visual Roadmaps help
• Driving execution of the Breakthrough Objectives is the No 1

focus of senior team, functional objectives secondary

• Regular governance, monthly if not bi-monthly – not a report
• ut, but a focus on breaking roadblocks and making real progress
• Defined accountabilities – who is responsible for what?
• Sr. Team members accountable, not sponsors
• Shared objectives at the top and shared rewards
• Communicating the roadmaps to all employees and regular

updates

Questions You Should Be Asking About Your Business Execution Capabilities

• On a scale of 1-10, how good are we at delivering and executing?
• Do we have initiative overload? Have we reviewed and eliminated non-

strategic initiatives?

• Do we have a robust strategy and business execution process?
• Is the senior team accountable for execution or another department, like

the Program Office?

• Do we have execution reviews on a monthly or bi-monthly basis?
• Are members of the senior team directly accountable for execution or is

accountability delegated?

• Do we use a visual roadmap to show the entire execution process or is it

managed by individual spreadsheets?

• Do we have a common language about execution, accountability, KPIs, etc?
• Do we have a common set of execution templates or does each function

have their own bespoke?

• Does the senior team have shared objectives around strategy execution?

Leadership Courage

YOU GET THE CULTURE YOU IGNORE!

YOU GET THE CULTURE YOU ACTIVELY SUPPORT

Organizations are shadows of their leaders.

Questions You Should Be Asking About Leadership Courage and Leadership Shadows

• Do executives and managers feel they have the right and responsibility to

challenge behaviours, even if outside their formal function?

• Do executives give each other constructive feedback about leadership

behaviours?

• Do we as a senior team talk about our positive and negative leadership

shadows?

• Have we made an inventory of the behaviours we want to drive out of the

company and replace with better ones?

• Are we role models of appropriate behaviours?
• Do we have a process in place to help repeat offenders?
• Do we enforce the rules of conduct in our meetings or do our meetings lack

discipline and rigor?

• Do we take immediate advantage of “coachable moments” or just walk on

by?

In Summary

The foundation of Sustainable Competitive Advantage rests on three elements:

• Healthy Corporate Culture (aligned with

Strategy)

• Robust Execution Process (with Governance

and Discipline)

• Leadership Courage