Tag: business strategy

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Culture

Why new leaders need an aspirational culture

Why new leaders need an aspirational culture

New leaders have big mandates. The expectations are sky high. All eyes are on you. One wrong move could spell the end of your career. Or, at the very least, seriously hinder your progress. This is why defining an aspirational culture is a crucial first step for any leader.

Typically, the more senior you are, the more change people expect to see especially if you’ve inherited a problem business. High turnover, decreased sales and dismal profits are all indicators of serious problems in a business.

Before you start defining your aspirational culture, you first need to define the current culture in your organization. In my blog post a few weeks ago, I talked about the need to really get to know the new company’s culture before considering changes and the exact process to do so. 

Once you know where the organization’s culture is at, you can then start thinking about where you’d like the culture to be. Defining your aspirational culture is the prerequisite to creating a roadmap to get to your desired destination.

Most leaders jump straight to putting a new strategy in place. Many don’t even attempt to get to know the organization before designing a new strategy. The problem with this approach is that the culture of the company may not support the new initiatives. Leaders then wonder why the new strategy isn’t working. Or why it’s taking so long to see results.

In today’s blog post, I’m going to talk about why it’s important to define an aspirational culture in order to make transformational changes to your business. Having an aspirational culture is crucial for new leaders, whether you’re a small business owner or the CEO of a larger company.

 

The difference between culture and strategy

Before we go too far into why to define an aspirational culture, it’s important to tackle the distinction between culture and strategy. It’s sometimes difficult to differentiate between the two, so definitions are helpful here.

Strategy is a plan of action or policy designed to achieve a major or overall aim.

Culture is the attitudes and behavior characteristic of a particular social group. 

In other words, strategy is what you do in business to achieve goals and culture is how people work in the business. 

You need both to achieve your goals. You can have a strong strategy but if you don’t have the culture to back it up, the strategy won’t work. In other words, if the people at the organization don’t work in a way that’s in line with the work required for the strategy, the strategy will fail. 

 

Why do you need an aspirational culture?

Now that we’ve got the definitions out of the way and we know that culture beats strategy every single time, we need to talk about why an aspirational culture is important.

An aspirational culture is important to consider before you start thinking about strategy for a number of reasons. This list of reasons is not exhaustive, but it will give you something to think about in your new role. 

 

Know where you are going

When you inherit a team or organization riddled with issues, your first instinct is to immediately implement ideas to make changes. You talk to a few people, call the team meetings, communicate your vision, roll out the new strategy and assign work to each team. Unfortunately, if you don’t tackle the internal processes and the talent you have on the team, you’ll end up watching your team flounder and sputter even under your expert leadership. An aspirational culture will help you define the behaviours you need to change before you take action. 

 

Know how long it will take

When you’ve examined the current culture and have defined your aspirational culture, you can gauge how long it’s going to take to get you to your desired destination. For example, if you’ve got 50% employee turnover year over year, poor leadership behaviours, rampant nepotism and favouritism, those things need to be tackled before aiming to double your revenue.

When you know exactly what behaviours and processes you want to see, and how far you are from there today, you know how long it will take you. This helps you set realistic expectations with your board and your leaders.

 

Know what steps you need to take to transform

When you have an aspirational culture, outlining the path and the steps needed to get there becomes easier. The thing that most leaders don’t realize is that cultural transformation takes time – a lot more time than most people imagine. That doesn’t mean you need to wait to transform the culture before you start implementing a strategy. However, you do need to consider the implications culture change activities have on how well you can achieve your strategy.

 

Know what success looks like

In any goal setting exercise, whether that’s a new strategy, new business goals, or new aspirational culture, knowing what success looks like makes the journey that much easier. Once you know what the prize is, what the desired outcome is, keeping on the straight and narrow path towards it becomes easier. 

Plus when you have an aspirational culture, you know exactly what behaviours and processes are in line with that culture. It makes it a lot easier to say “no” when you’re presented with stuff that just doesn’t fit.

 

Know how to communicate

Did you ever have a boss who never took the time to explain their thought process? A boss who declared edicts that people had to blindly follow as opposed to helping people understand where they were coming from and what they were trying to achieve. 

When you have an aspirational culture before you start executing or trying to change things, it’s much easier to explain your vision to people. You’re able to show people a picture of what “great” looks like. You’re able to communicate your roadmap much more effectively. 

When people are able to envision a future, it makes it a lot easier to digest the magnitude of change.

 

Know how to identify change agents

Which brings me to the next point. When you present your team with your aspirational culture and the path to get there, it’s easy to spot the people who get onboard quickly and with excitement. Those are your change agents. These are the people who fully believe in your vision, who are all in, and who’ll do whatever it takes to get there. 

Change is never a one-person show. You need advocates, change agents and friends in the field in order for change to truly take hold from the grassroots. 

 

Know what talent to attract and retain 

Once you have an aspirational culture, you know exactly the type of people you want in your organization. You can pinpoint the exact skills and expertise you need on your team. You know exactly what type of leaders you need in the organization. 

Without an aspirational culture, you have a general idea of what you’d like to see, but not specifics. For example, glaring poor leadership is obvious, but what about disengaged middle managers? They’re undesirable in a high performing culture and need to be lifted or exited. However, without an aspirational culture, middle managers may not even be on your radar. 

 

Why aspirational culture must come before strategy

We know the difference between culture and strategy now. To reiterate, culture is how you do business while strategy is what you do to achieve goals. 

Let’s put all this into an easy example to illustrate the point. 

Say, you decide you want to lose weight. Conventional wisdom tells you to set a specific, measurable goal, so you say you want to lose 20 lbs. You know that the strategy to achieve this goal is to eat healthy and exercise daily. It’s a simple strategy and you believe you can do it. 

The problem is you’re so busy at your new job that when you get home at night, you’re too tired to cook healthy meals. You end up ordering takeout 4 nights a week complete with sugary drinks and dessert. The lethargy-induced meal has you vegging in front of the TV with chips from your pantry and a cold beer. Weekends are spent entertaining with chips, sweets and more alcohol.

You started this goal with a strategy in place but the culture of your household was takeout, pop, cookies and chips. It doesn’t take long for you to give up on your strategy or go months without seeing results because you’re pushing against a system that’s designed to set you up for failure.

Imagine now instead of jumping to a strategy, you first take stock of where your family is at. You recognize, with full objectivity, that your pantry is full of unhealthy snacks and your meal process (ordering takeout 4 nights a week) adds to the problem. Not to mention, your version of exercise involves trips from the TV to the refrigerator. 

You realize that this is not a good way to live and the extra 20 lbs that you’ve packed on is a direct result of the processes and culture you have in place.

Your new reframed goal is to live a healthy, active lifestyle which you’re confident will lead to shedding the 20 lbs. Now you’re less focused on a tangible number and are instead focusing on core changes you need to make. You’re focusing on behavioural changes you need to make. Now the plan looks different. 

You call a family meeting and explain to everyone where you want to go – living a healthy lifestyle. You show statistics of how people who live a healthy lifestyle have better health with less aches and pains, look better, have more confidence, and live longer. You tell your family that with the increased confidence, you’ll all perform better at work and at school, resulting in increasing your income potential and living a better, more prosperous life.

You start introducing healthy snacks for your TV time, swapping cookies for carrot sticks and hummus. You subscribe to a meal delivery site so you have fresh ingredients and recipes that take less than 20 minutes to prepare instead of takeout. You identify change agents (your partner perhaps) to back you up and reiterate the benefits of a healthy lifestyle to everyone else.

Once you have healthy eating in place, you tackle exercise. You decide to have a picnic with a hike on Saturdays. You go on bike rides together on Sundays. You sign up for a family gym membership near your house and make it a daily thing before dinner.

You slowly see the change taking place in your home. Within a year, not only will you have achieved your goal of being 20 lbs lighter, your family has also benefited from weight loss and increased strength and endurance. You are now a family that lives a healthy lifestyle because you tackled the core culture in your home instead of focusing strictly on the original goal.

This example can easily be translated into the workplace. Focusing less on doubling your revenue and focusing instead on changing the culture will set your company up for long term success in every aspect.

 

To sum it up

The benefits of defining an aspirational culture are far and wide. Your culture facilitates your strategy execution. Without a culture that’s designed to help you achieve your goals, your strategy holds no water. That way is designed to set you up for a prolonged fight at best and outright failure at worst.

Once you have your aspirational culture in place, you won’t need to change your strategy every three years, because your company will be poised to achieve success year over year beyond your wildest expectations. You’ll be able to attract and retain the best talent further accelerating your success and amplifying brand in the marketplace.

As you think about designing your aspirational culture, we’re here to help. Reach out to us to get started today!

Categories
Leadership

The #1 Reason for Stagnant Business Growth

The No1 Reason for Stagnant Business Growth

If you’re leading a company going through a stagnant business growth period, then you know the solution is not simple to solve. A quick google search gives hundreds of possible solutions and almost all of them involve fixing strategy, sales, marketing and product innovation in some way. In this blog post I’m going to give you an alternate solution that you may not have thought to explore.

When I was doing my HR courses back in 2003, my organizational behaviour text book featured Nortel Networks as an exemplary business in leadership, innovation, and market share. Just over 5 years later the company filed for bankruptcy. Mired with issues surrounding accounting irregularities, conflicts of interest, environmental damage, the company declined so stunningly, the fallout is still a cocktail conversation topic over a decade later.

In 2009, Blackberry was at its height of prosperity and pretty much held 100% of the market share for business smartphones (you get bonus points if you remember Research in Motion!). Just 2 years later it started shedding market share to Android and iPhone and by Q4 2016, had a nearly 0% market share. I was a loyal Blackberry user all the way to 2014, but their slow-to-catch-up app store, clunky devices and small screens pushed me and so many others into Android’s and iPhone’s waiting arms.

So what causes companies to struggle or lose momentum? What causes them to decline so spectacularly after seeing such phenomenal results? 

 

Reasons for Stagnant Business Growth – the Experts’ Opinion

There are, of course, many reasons, but I wanted to talk about a few of the ones experts talk about. 

Then I’ll share the one all-encompassing reason that company’s never seem to get right. The ones that do, turn themselves around from the brink of expiration.

 

Inability to respond to market changes

Arguably the number one reason companies fail is because of their inability to respond to changes in the market. Their inability to read their customers and disambiguate passing trends from permanent preference changes. Kodak is one company that was unable to respond to the growing digital trend. A more recent casualty is Toys R Us. They were unable to adapt to customers’ preference or keep up with the likes of Amazon. It will be interesting to see how Toys R Us fares with their restructuring efforts. 

However, even companies that have managed to adapt to shifting markets don’t rely solely on a strategic change to overcome their decline. There are always other things at play. Simply shifting their products or services is not enough. These companies adopt a full shift in their makeup.

 

Poor sales and marketing

Sales and marketing are the bread and butter of a company and if those are broken for too long, there’s almost no chance of a company succeeding. While marketing can sometimes jumpstart stagnant business growth, unless companies look deeper, this isn’t going to sustain long term growth for them. Companies need to change other parts of their organization in order for the marketing changes to be successful, for example, operational practices.

 

Poor leadership

There’s a reason why CEOs get fired and why companies turnaround after hiring a new CEO. Apple is the classic example here. The company had almost gone under before they called Steve Jobs back to take the CEO chair. CEOs make a difference and their leadership makes a difference. A company can have a fantastic product, great marketing, great sales, but without a visionary leader, it won’t be able to keep the top spot for long. Leadership matters but leaders need to be able to infuse the entire organization with their brand of leadership. The behaviours of the rest of the organization must match the leader’s or even the best leaders fail at growing a company. 

 

Poor product

A poor product happens when there’s a misalignment between customer wants and what you are offering them. Basic quality aside, it’s important to give customers what they want and not what you want to give them. This happens very often and I see it in big and small companies, both service-based and physical product-based businesses. Of course, if the quality of your product sucks, you’re not going to grow. But when there are no buyers for your product, it’s time to pivot double time. And in order to get the right product into the hands of your ideal customers, your people need to listen and be innovative. Not just you, the CEO, but your employees too.

 

Stagnant Business Growth – the #1 Reason

The 4 items I listed above are the most commonly cited reasons for stagnant business growth. This is what the experts tell us, this is what Google has in its search results. But the one thing that encompasses all these reasons, the one thing that nobody seems to talk about explicitly, is culture. 

Looking at all the fantastic business turnarounds in economic history, the ones that standout all took a long hard look at their current culture and changed it. Without changing your current culture, the culture you have in place while you’re going through a stagnant business growth period, there is no way you’re going to get out of this period. 

When you look at some of the most successful companies in the world, the ones that really excel have outstanding organizational cultures. Google, Netflix, Shopify, Costco, Microsoft, WestJet. And the companies that are at the top that didn’t adapt their culture, or neglected it, get called out. This harms their brand. Even if the flak doesn’t cause significant damage, it does slow down their growth. Some of the companies that come to mind: Uber, Amazon, Airbnb. People want to do business with companies that treat their employees right. People want to do business with companies that have a strong stance on doing the right thing, whether that’s through philanthropy or great HR practices. 

What CEOs Can Do

I’m partial to HR’s position in a company, of course, but I’m not partial because of my background in HR. I’m partial because I see the results of a strong HR presence in a company and their results. I see leaders like Gary Vaynerchuk, Sundar Pichai, Matt Mullenweg who actively advocate for strong HR practices in their companies and we see their success. These leaders, and others, understand that in order to build great companies, they have to pay attention to the culture they’re creating. 

I’ve said this before and I’ll say it again – culture doesn’t come from words on a wall in the lobby. Culture is defined by the way you do business. How you treat your employees, your customers, your vendors, your partners, your shareholders. It’s the way you speak to them, the way you service them. If all that is lacking or deficient in any way, you’ll see it in your financial results. 

There’s a misconception that HR only has jurisdiction over HR policies and practices. The reality is HR has influence over every single person that walks into the company. They have influence over your operational practices because of the people they bring through the door. If you’re a small business owner that doesn’t have an HR department, then that responsibility falls on you. Even if you have an HR department, you have the ultimate responsibility, an obligation, to focus on company culture. You set the tone for the organization. HR can help, but it starts with the CEO. 

 

Closing words

If your business is experiencing stagnant growth, it’s time to examine your company culture first and foremost. What do you stand for? What does your company stand for? Are your practices and processes in line with those beliefs and values? If not, then which ones are misaligned? Start revising those first. Are your employees embodying those values? If not, then start communicating the values and show them what they look like in real life. As the CEO, that’s your job, not HR’s, not your executive team’s, not your middle managers’ – it’s on you.

If you’re unsure of how to start examining your culture, take a look at this blog post. It’s meant for executives starting a new job, but the cultural assessment process applies here.

If you want to talk about your specific situation, book a call and let’s chat. Give me 30 minutes of your time and I’ll give you at least two things you can do right away to fix your culture. Start taking control of your stagnant business growth and let’s turn it around!

If you found this valuable, please share this with your network using the links below. The more CEOs and business owners that see the significance of company culture, the closer we’ll be to creating awesome workplaces all around.

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HR Strategy

7 Steps to develop an effective HR strategy

Develop an effective HR strategy

Have you ever found yourself wondering why and how some companies have all the luck getting the best people? That’s how Mark felt when he reached out to me last year. As with anything in life, luck has very little to do with finding and keeping the best talent. What does help is an effective HR Strategy. In this blog post, I’m going to give you a step-by-step plan on how to develop an effective HR strategy for your business. 

Mark started a private equity firm three years ago with two partners. They each had their roles defined and their motto was “work hard and play hard”. Within a year, they had grown their small team of three into a team of twenty with analysts and researchers at junior and mid levels. 

That’s when the problems started. The work was grueling and the analysts started dropping one by one, claiming long hours, inadequate pay, and a career-stifling work environment. The one female they had hired quit after only two months claiming she’d “had enough” of the misogyny. Furthermore, the work the team was producing was riddled with errors and the partners were reviewing every piece of work. This was a huge time drain.

So, what went wrong? 

Mark and his partners made the classic mistake of “winging” their talent strategy. Mark said to me, “We knew what we wanted to hire and we went out and got it. We figured the work would be interesting enough for everyone to stay motivated and engaged. The truth is I didn’t expect to oversee every little thing our analysts produce –  we just don’t have the time for it.”

No matter how sexy the company or the work, if leaders don’t prioritize working conditions and employee development, good people will leave. So, when Mark came to me, one of the first things we did was develop an effective HR strategy that would work for his company. 

Before we begin, download out our  HR Strategy Creation Guide. Now, let’s go through the steps.

 

Develop an Effective HR Strategy Step 1: Defining the Business Strategy

 

Before we start working on an HR strategy, we need to examine the business strategy. Your business strategy will have your vision, mission and values, as well as a high level overview of what your business objectives are and how you will achieve them. The good news is that most companies spend a decent amount of time on a business strategy and Mark’s team was no exception. 

Typical business strategic plans are over a 3-5 year period. Lately, more and more companies are shortening their strategic planning process because the external landscape changes too quickly for a long time horizon. Seeing 5 years out into the future is virtually impossible these days. If you don’t have a business strategy, I suggest this resource for steps to develop one.

 

Step 2: Figure out what work needs to be done

 

Before you post that first job, you’ll need to know what work needs to be done over the strategic planning period. This is breaking down your business strategy into key buckets of work. It could be one broad task that encompasses all others, or it could be several buckets. Typically the work that needs to be done centres around revenue generation.

In Mark’s case, they needed to close 5 deals, at least one every year, within the strategy plan period. Everything they did needed to centre around that one strategic objective.

When they initially thought about hiring people, it came from a sense of need, rather than any strategy. The three partners were swamped and needed someone to help them. Their first few employees were referrals from business contacts and friends. The rest of the employees were hired during peak busy times when deal work was in full swing. It was no wonder they didn’t work out. 

Mark, his partners and I sat down and hashed out all the work that was involved in closing a deal, from the deal origination to managing portfolio companies. We ended up with five main buckets of work: business development, research, finance, deal negotiation, and portfolio company operations. Keep in mind these are not roles, but groups of roles.

From there, we move on to breaking down the skills needed for each group of jobs.

 

Step 3: Determine what skills are needed to do the work

 

Once you have your buckets of work defined, it’s time to figure out what skills are attributed to each bucket of work. In Mark’s case, we needed people with sales experience in business development, we needed finance and analysis experience for the research and finance buckets, we needed legal and private equity experience in the deal negotiation bucket, and finally, we needed people with board experience, or specific functional experience for the portfolio company operations bucket.

 

Step 4: Determine which people are needed for the jobs

 

Once you know the broad skills needed on the team, it’s time to group those skills into the people needed for each role. At this point, we’re not looking at headcount yet, we’re simply looking at what sort of person we would hire (i.e. what education, experience and personality) in each of those buckets. Doing this exercise upfront makes going through the following steps easier. 

One interesting thing that emerged during my discussions with Mark was that in some of the roles, experience at Mark’s firm was critical to success in the role. So, for those roles, we decided talent had to be homegrown. Getting external people for those roles would only set them up for failure and wouldn’t benefit the company in any way. “Promoting from within” was then a key component of Mark’s HR strategy and we needed to consider how to make it work.

 

Step 5: Evaluate the existing organization

 

Once you know the broad skills needed on the team, it’s time to evaluate whether you have those skills on the current team. This is an important step to developing an effective HR strategy. You need to know what’s happening inside before you outside for talent. In Mark’s case, we looked at his existing team of 17 people, excluding the partners, and assessed the skills they brought to the table. In most cases, the skills matched the roles they were in. For the ones that didn’t, we needed to have a plan to either train and develop them or exit them out of the organization.

 

Step 6: Do an HR SWOT analysis

 

Once steps 1-5 are completed, you’ll be in a position to complete a SWOT analysis. This resources explain what a SWOT analysis is.

Doing a SWOT for your HR strategy is slightly different from doing it for your business strategy. The main thing you need to remember is the strengths and weaknesses are those of your existing internal talent. And opportunities and threats are of the broader labour market. 

Swot Analysis

In Mark’s company, the main strengths were that they already had some homegrown talent. Their weaknesses were that there was virtually no diversity on the team and the partners wanted to correct that. The opportunities in the marketplace were that there was a program dedicated to private equity at the local university and a ready source of fresh talent to choose from. The threats were the other private equity firms in the financial district of their city that were competing for those same resources and losing talent to those companies was a real possibility they needed to account for.

 

Step 7: Put the Strategy together

 

With the SWOT analysis done, the HR strategy pretty much writes itself. You now know what skills you need on your team to successfully implement your business strategy and you know what your internal strengths and weaknesses are as well as your external threats and opportunities. Here is an example of HR strategic objectives

In Mark’s company, we ended up with the following HR Strategy:

  • Attract, develop and retain top talent to facilitate closing 1 deal a year

With these HR strategic objectives:

  • Develop and implement a diversity and inclusion plan
  • Develop and implement an internal promotion plan to keep good employees for as long as possible
  • Build a partnership with the finance program at the local university to get new talent in
  • Develop a compensation plan that rewards high performers and exits poor performers

 

Conclusion

 

Our 7 steps to develop an effective HR strategy is a requirement for any company. With a strong strategy in place, you have a plan for attracting the talent you need to for your business to be successful. The HR strategy also helps to structure your HR practices in a way that is aligned with your business objectives. Download our HR Strategy Creation Guide before you begin this exercise on your own. It will help you keep your notes and thoughts in one place.

One question many leaders ask is how long it takes to develop an effective HR strategy. Developing an HR strategy doesn’t take long, however, the one key to building an effective HR strategy is ensuring that all decision makers in the company are at the table. So, if you’re an HR professional and are facilitating these discussions, this is a non-negotiable.

I’d love to know if this was helpful. Comment below and tell me if you used these steps to create your company’s HR strategy and if you have any feedback. Is the HR strategy you developed helping you attract and retain the talent that you need to execute on your business strategy?