Transforming Tales: Learning From Your Peers

by KPMG Agenda Magazine, 11 January 2012

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topics:
Management

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collaboration finance transformation recency bias transformative technology

The unexamined business isn’t worth leading, as Socrates might have said. So here are some ideas to help you rethink the way your company operates and ramp up your performance

The boss’s indecision is final

A good decision made too late is the wrong decision. Corporate democracy – and a fashionable focus on the detailed mechanics of effective decision-making – has led too many companies to dither when they should act.

Business intelligence gives organizations information more quickly, but people are key to acting on it. When Stephen Elop took over as CEO of phone manufacturer Nokia in September 2010, senior colleagues joked that Chinese rivals could produce a new handset in the time it took the Finnish company to polish another internal PowerPoint presentation.

Honda and Toyota have both slashed the size of their boards to accelerate decision-making.

Moving faster means putting power, and information, in the right hands. Alan Mullally, the Ford CEO credited with one of the most spectacular business transformations of recent times, began by asking senior managers to code their major projects on a traffic-light system, according to their progress. The result was an end to lengthy meetings: instead, he had an instant dashboard giving early warnings of future road-blocks.

Leaner organizations can help, but a system for making decisions that is clearly understood at every level is even more useful. This should promote and reward collaboration and information-sharing, removing the need for complex approval processes that might span multiple time zones.

Julian Birkinshaw, Professor of Strategic and International Management at London Business School and a keen student of entrepreneurship in multinationals, says the most crucial question for larger companies is: “How can we combine being large and powerful with being responsive and flexible?”

The point isn’t to rush decisions. But inside an organization the case for caution can often seem compelling, whereas the opportunity costs of failing to achieve a competitive edge can be hard to quantify.

Millions of customers can’t be wrong

In 1908, hotel magnate César Ritz ran an advert that said: Le client n’a jamais tort (“the customer is never wrong”). In hotels, the quality of customer service is a decisive competitive advantage and Ritz took his slogan seriously.

Many companies pay only lip service to the idea – but that is changing. More than 400 major companies now have a Chief Customer Officer (CCO). The new role reflects seismic shifts in the relationship between customer and company.

Many businesses were slow to realize that just making good products was not enough and that they were as likely to be judged on, for example, the helpfulness of their switchboard staff. Before the internet existed, a disgruntled customer could tell a few friends; now they can share their grievance with millions.

Company culture often insulates leaders from the marketplace: one of the recurring motifs in the TV series “Undercover Boss” is the scene where the CEO recognizes how little they know about their customers.

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