The strategy of one of my business units* is in conflict with the strategy in one of my other business units and creating a major cultural problem. Weird insight, but I think I’m relieved. I’ve certainly learned something new.
Perhaps you have read Treacy and Wiersema’s 1995 book, “The Discipline of Market Leaders,” in which they introduced the concept of choosing a primary value proposition and sticking to it. The three value propositions are Customer Intimacy, Product/Process Superiority, and Operational Efficiency. Anyway, the theory is that you have to deliver on all three at a minimum standard necessary to compete, but then you have to select one – and only one – to excel in.
Following Treacy and Wiersema’s instruction (with a lot of Michael Porter and Balanced Scorecard thrown in for focus and tracking), I have kept a very steady hand on the Customer Intimacy throttle the past 10 years. And it’s worked. Our customers reflect our brand back to us as a Customer Intimacy brand. But we have one equipment division that never manages to get out of the chute. It’s fraught with tension and misalignment at every turn. And I haven’t been able to figure out why.
Finally Alan, one of the brothers who owns the company I run brought back some materials from a speaker he’d listened to named Edgar Papke from CDG. CDG’s premise is that for each value proposition there is actually a cultural proposition, and that if you inappropriately align culture and value proposition you’ll end up with lack of effectiveness. The culture for Customer Intimacy is Collaboration – and that’s what our company has. A strong team-based culture that demonstrates and benefits from extensive collaboration. The culture for Operational Efficiency is Control, and the culture for Product Superiority is Competency/Competitiveness. Alan said that it seemed to him that there was value proposition misalignment – and when we started evaluating it, there was. His brother (who is the engineering lead for the troubled division) definitely has a Product/Process Superiority value proposition in mind for that division. Their sister, the Product Manager for the division, has a Customer Intimacy bias. And of course the division shares nearly all its resources with the greater corporation (the division represents about 5% of total revenues), and the management style and philosophy of the corporation is Collaboration, supporting a highly dominant value proposition of Customer Intimacy.
It’s so simple, really, and should have been clear sooner. But of course, it wasn’t. I kept chalking the frustrations up to difficult personalities and perhaps bad product ideas, and therefore didn’t follow my own dictum of “first you solve the process, then you solve the people.”
Anyway, I’m now on a rousing mission to figure out how to achieve two different value propositions while fully cognizant that we can’t expect people to function in two different cultures. Knowing that this is the problem is highly instructive, and while I don’t have the answer yet, at least I’m working on something likely to yield results. I guess it’s time to be conscious about all my business tools. Given that this is a business conflict in the true meaning of the word, maybe I should give Eli Goldratt a nod, dust off my Evaporating Cloud skills, and see if there’s a simple solution in here somewhere.
