Purpose-Profit balanced strategic planning: Jazz and Symphony Orchestra

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While the foundational steps of the “purpose-profit balanced strategic planning process” reflect the basic tenets of an orchestra (as outlined in my earlier blog) – in reality- strategic planning processes vary from organization to organization. For example, the strategic planning process of a start-up firm usually differ from that of an established large firm- very much like how the jazz orchestra differs from the symphonic orchestra. In other words, in classical music, symphonic orchestra is regarded as the highly synchronized ensemble requiring integration and orchestration of various instruments (and musicians), whereas Jazz orchestra is more of an impromptu ensemble of instruments - and jazz musicians usually can knit a piece of music together by taking cues from each other and play their parts as they thought is the best – very much like the strategic planning process of a start up firm. In other words, within the purpose-profit balanced strategic planning process – we have two predominant modes: strategy as jazz and strategy as symphony – as applicable to start up firms and large firms respectively.

Depending upon the stage of the company, the type of your growth strategy and the culture – you as a leader must be asking the following questions to pick the right mode.

• Is your firm in an early start-up stage (or) ready to scale up to the next level?


• Is your strategy is to grow from adjacencies/white spaces (or) from strengthening the core?


• Is your organization’s culture - more of an informal entrepreneurial culture (or) a formal old economy model culture?

By and large - if the answers to the above questions are former- then, you need a Jazz strategy orchestra and if the answers are later – then, you need a Symphony strategy orchestra.

Under the Jazz orchestra mode, you have the flexibility to perform strategic planning in an ad-hoc fashion - formulating the vision, purpose and ideas along with your team members- very much like the musicians of the Jazz orchestra. The "beat" of your jazz orchestra is a continuous execution with constant refinements. You have the opportunity to intertwine creativity, intuition and innovation within every step of the way.

On the other hand, within the symphonic orchestra mode, the strategic planning must follow a disciplined process with leaders acting as orchestrators. With the nature and scale of the business being larger, your plans need to be completed fully before the execution starts. Purpose focused visionary strategists must be engaged at every part of the planning process, but equally important- they need to be complemented with profit focused operational strategists capable of producing operating plans meeting the quarter by quarter metrics. This type of symphonic orchestra type of strategic planning requires a dedicated strategic planning team, disciplined research, more collaboration and delegation among business units - very much like how orchestrators synchronize various instruments of a symphonic orchestra with precise alignment (i.e. clear metrics).

Folks who come from the start-up mode (with innovative culture) sometimes take time to adjust to this large firm format (and/or the formal structure), as they had to “let-go” the generalist working style and learn to play their specialist role within a larger company. And the opposite is also true as specialist type of folks who are good at scaling a business from operational standpoint- often find it difficult to adjust to a start-up mode (e.g. Innovation efforts within large firms), as it needs a person who is capable of wearing multiple hats (or generalists). The pace of an innovation culture might be seen as overly ambitious for these specialists, coming from operational mindset and they sometimes can stifle innovation if you are not careful. While it is possible for one person to exhibit the traits of both an Jazz and symphonic orchestra- it is more of an exception than a norm- and so companies must strive hard to nurture those people who can wear multiple hats.

Bottom-line: Like any other framework or model, these strategic planning modes are available as guidelines to pick and choose from depending upon the answers to the above three questions. However, in the real world, it is sometimes difficult to classify your firm as start-up firm and/or large scale firm as the type of strategy required isn't always absolute and so “doing both” might be the way to go - in the words of Inder Sidhu. Sure enough, Gerald Nanninga, also has an interesting way of classifying strategic planning as Pizza and barbecue sauces as outlined in his blog (http://planninga-from-nanninga.blogspot.com/). In other words, there are situations in which larger firms must learn to adopt the start-up culture (to innovate) - and start-up firms to periodically step back and adopt the discipline and structure of a large firm (to scale). The key is recognizing those situations and picking the right strategic mode (Jazz or symphony) that is most appropriate for the right situation. This is where intuitive leaders play a critical role in discerning the situations — and perhaps this is a great chance for you to exhibit whether you are the “right leader for the right time” as well.

Purpose-Profit orchestrated Strategic planning

Courtesy: Google Images and Wikipedia

Well, we all have heard it multiple times- most purpose statements (vision, mission and values etc.) sound more like the “motherhood and apple-pie” type statements coined by Dilbert’s mission statement generator. With all the pun aside, part of the reason for that perception is that statements by themselves do not mean much unless the organization takes the effort to engage their key stakeholders (customers, co-workers and communities) in formulating their purpose driven strategies. This conversational type - purpose driven strategies that engage, educate, energize, empathize and empower (the 5E’s) the constituents are the ones that make the organization to grow and prosper as they have the “so called” powerful invisible instructions within them - as I had alluded in my earlier blog.

Michael Porter would claim that an organization can sustain its competitive advantage (SCA) only by strategic poisoning – meaning - by occupying a differentiated profitable market position. Prhalad and Hamel would go one step ahead - and say that to achieve SCA enabled strategic positioning, a firm needs core competencies (skills, talents, gifts, product know-how, and intellectual property) and resources ( people, technology, assets etc). According to them, neither the “core competencies” nor the “resources” by themselves provide the SCA, but a careful coordination/Consolidation/intertwining/Integration/orchestration of those entities (i.e. core competencies and resources) in right proportion/sequence that is well customized to the firm’s culture and difficult to be emulated by competitors is the one that provide SCA. In other words, the unique orchestration of the array of activities performed by those entities is what differentiates the organization. Most experts call this the systemic strategic planning - as I had alluded in my earlier blog and further emphasized by Pete Delisi in his unique “organization synergy driven” systemic strategy development process (http://www.org-synergies.com/).

Speaking of this uniquely “orchestrated systemic strategic planning process”; I am reminded of an Orchestra. An orchestra is an instrumental ensemble, of string, brass, woodwind and a percussion sections resembling the strategy ensemble of various core competencies and resource elements. The term orchestration in its specific sense within a symphonic orchestra refers to the way instruments are used to portray the key musical aspects of harmony and melody very much like how strategic orchestration is used within strategic planning to produce purpose and profit focused strategies.

For example, a C major chord made up of the notes C,E and G resembling various core competencies within an organization. If the notes are held out the entire duration of a measure, the composer or orchestrator will have to decide what instruments (or resources) play this chord and in what register (core competency) and sequence (orchestration). Some instruments, including woodwinds and brass are primarily monophonic and can only play one note of the chord at a time. However in a full orchestra there is generally more than one of these instruments, so the orchestrator may choose to outline the chord in its basic form with clarinets or trumpets (resembling specialists within an organization) and make other polyphonic instruments like strings, piano, harp, and pitched percussion to play more than one note at a time very much like generalists focusing on multiple work streams –core businesses strategies and adjacency/white space based innovation. I guess – as leaders, we have a great lesson to learn from the underpinnings of a well orchestrated symphonic orchestra!

Bottom line : This type of a well orchestrated organization indeed performs like a symphonic orchestra united by shared purpose (the master orchestrator), which reinforces teamwork and collaboration very much like how the master orchestrator makes certain instruments to pay one note and others to multiple notes. Purpose orchestrated resources will be more readily relied on to do the right thing, and to guide their co-workers to do the same, once they internalize the purpose orchestrated strategic principles inside their DNA. And, over a period of time, the active coordination and synchronization of core purpose values and core competencies within this symphonic orchestra will indeed unlock creative innovation potential that is buried deep inside the organization.

Purpose driven “Systemic Strategic Planning” Process

Sure enough, even the most talented leaders today, keep tossing and turning over with a dilemma, when it comes to “Purpose First or Profit First” discussions –as I had alluded in one of my previous blogs. Part of the reason - most of the strategy development approaches, in its current form, do not inherently help you to develop the purpose driven strategy you are hoping for – more specifically, the strategic positioning (SP) approach, commonly used for choosing the market entry options and the resource based view (RBV) approach, commonly used for effectively optimizing the resources within a market – are predominantly focused on developing the profit focused strategies only. The need of the hour is a new systemic approach – supporting both the purpose and profit goals - that is measured, iterated and continuously improved based on the organizational learning and environmental changes. Like the original Leavitt Diamond, this purpose driven systemic approach” recognizes the interdependent nature of various portfolio elements of an organization and the need for solving the individual problems within each of the portfolios with a systemic mindset. “Portfolios” in this context include, but not limited to, markets, assets, purposes, product, experiences, processes, core competencies and risks - that help you to assess the current state of affairs within your organization (situation analysis) whereas “themes” are the answers to the key strategy questions that help you to interpret the portfolio analysis outputs within the context of the strategic direction.

The purpose focused opportunities (or problems for that matter) within an organization are deemed systemic when the solution to an opportunity within a certain portfolio is dependent on the solution to the opportunity within other portfolios. For example, the solution to address a product category gap within the product portfolio -by and large - will have a direct dependency on the asset, purpose, capability and investment portfolios - and so it is important to take a holistic view while solving these types of systemic problems. In other words, systemic problems need systemic solutions whereas a local problem (e.g. fixing machinery) needs a local solution.


PURPOSE DRIVEN STRATEGY IS ALL ABOUT ASKING THE RIGHT QUESTIONS

Purpose driven Strategy, in its essence is coming up with the right set of those interlinked questions as I had outlined in one of my Academy of Business Strategy blogs (http://theacademyofbusinessstrategy-businessanalytics.com/2010/05/15/02/) - first for developing the 10 year strategy within the context of the purpose statements and then solving for the near term profit challenges in the form of an annual strategy, and finally connecting those planning processes (10 year strategy & the annual strategy) with an iterative measurable end-to-end strategic planning process. At the end of the day - it all boils down to coming up with the right set of purpose/profit balanced questions.

The logical questions for the10 year strategy are -

1. What do you aspire to be? (vision/mission focused)
2. What are your values?
3. What are your 10 year Big Hairy Audacious Goals (BHAG)?
4. What are your core portfolios & competencies?
5. How do you sustain, transform (repurpose, reinvent & rediscover) and out-grow your competition as per the aspiration? ( Purpose model and Purpose Portfolios focused)

Similarly, the logical questions for the annual strategy are -

1. How do you keep the current operations going in the best optimal fashion?
2. Where do you compete?
3. Why and When do you compete?
4. How do you stack up (in terms of cost structures, waste and idle capacity) compared to your competitors?
5. How do we win? ( i.e. ideas in the form of capabilities, competencies and cost savings)

Interestingly enough, the 10 year strategy is more purpose focused and the annual strategy is heavily profit focused, but they are all iterated on a continual basis as outlined in the “Purpose-Profit balanced iterative strategic planning process” diagram at the top of the page. The trick is to have these ten answers that are consistent with one another and actually reinforce and feed from one another. So where do you start? Most organizations start at the top with some kind of purpose workshops to finalize their purpose statements. While, it is a good place to start – in most cases, the conversations go in circle and do not produce actionable results – as most organizations do not have a clear idea of what purpose means within the current context of their daily operations. Granted, most of the senior leaders can verbalize it – but, in most cases, it is a lip service and so it is difficult to create a meaningful purpose driven 10 year strategic plan. That said, most of you immediately jump in to the annual strategic plan (Where to play and How to win) - but end up with a strategy that might be effective but it might not be the direction you would actually want to go. The best answer is the balanced iterative approach — think a little bit about purpose focused 10 year strategy, then a little bit about the profit focused near term strategy (Where to Play and How to Win), then back to the long term plan to check and modify, then down to the portfolios of capabilities, competencies and management systems to check whether it is really doable, then back up again to modify accordingly.

Bottom line: While it may sound a bit difficult to comprehend this process in the beginning- iterating between purpose and profit actually makes the strategy development process much easier and practical. Developing your strategy in relatively smaller and iterative chunks and improvising the answers to these ten questions will get you the purpose driven profitable strategy. In addition, regular refinement of this iterative process with standardized templates and knowledge management best practices will make your organization to move from good to great.

The 5P’s of the Purpose Centric Innovation

While there are many definitions available for Innovation - in its crux, innovation is all about strategic change. Depending upon the drivers that necessitate the strategic change, innovation can take three different paths - user centric, vision centric and purpose centric. While “user-centric” innovation is often driven by the unmet needs of the key stakeholders within (or outside) of your organization, “vision-centric” innovation is driven by the design thinking talents of the visionary innovators within your organization. On the other hand, “purpose centric” innovation is a hybrid path – it is vision centric innovation in steroids – as it is envisioned by the purpose minded visionaries of your organization, yet driven by the people (primarily social) and planet (primarily environment) needs. Nevertheless, regardless of the drivers that necessitate the innovation, as a first step, you must choose the right innovation process mix among “user-centric”, “vision-centric” and “purpose centric” paths - depending upon the weight factor you assign to the innovation drivers of your organization.

Like any other concept, “purpose centric” innovations are guided by five purpose principles or the “5P’s” (Purpose Model, Purpose Platforms, Purpose Portfolios, Purpose Pipeline and Purpose brands) to help you assign the right weight factors to the purpose drivers (people, planet etc) to arrive at the right innovation process mix that is suitable for your organization.

- First and foremost, is the Purpose model – Purpose models, as I had outlined earlier, are the revolutionary game changing business models that not only reinvent the firm from business model innovation standpoint, but also mutate the DNA of the brand (and the firm) at the nucleus level from top to bottom with an externality mindset.

- The next principle is focusing on building “Purpose Platforms”, the true enablers of the purpose models. Purpose platforms go beyond the traditional value chain/product boundaries and provide the flexible foundational systems to change the “relevance, access and value” characteristics of the products and services without changing the foundational platform design.

- The third principle is the consumer focused “Purpose Portfolios” that link product experiences to the corresponding consumer segment portfolios within the context of the overall purpose models, yet without impacting the global brand image and brand integrity.

- The fourth principle is the “Purpose Pipeline” - those forward looking ideas within the context of the purpose models that help the corporation to constantly change the product and purpose model characteristics (yet without changing the platform design) in alignment with the “Purpose platform” principle.

- Last, but not least, the fifth principle is the experience based “purpose brands” mindset providing the value focused “product experiences” without compromising the quality and safety – i.e. the “low cost, but, not low quality” principle.

Together, these five principles, not only help you to change the purpose rules of the game within your industry vertical, but also give you the impetus to instill the purpose driven innovation culture within the DNA of your organization. The question is - are you ready for the challenge? The sooner you embrace the purpose driven strategic mindset, the better strategic decisions you will make to move your corporation from good to great.

Bottom line: Embedding this type of purpose centric culture within the DNA of your organization, makes your organization the “Purpose beacon” of your industry vertical. In addition, making regular refinement of the Purpose agenda using the best in class disruptive/reverse innovation methodologies, will definitely make your organization the “Purpose driven innovation paradise” you are dreaming for.

Purpose First or Profit First? The Leadership Dilemma

In an earlier blog, I had explained the concept of purpose driven strategy with a seed analogy. Over the weekend, I heard back from some folks - where does leadership fit in to the seed analogy? Well, Leadership is more important than the Fertilizer - for that matter even more important than the seed itself– as leaders are the farmers who manage the whole cultivation process, right from the plantation stage up to the harvest stage and beyond. Hence, leaders have a much greater responsibility of aligning purpose and strategy with an end goal of sustaining the company’s ‘legitimate purpose’ and ‘profit’. Without legitimacy, more profit dollars need to be diverted to achieve sustainability and without profit, legitimate purpose has no relevance.


So, it is one of those things leaders often wrestle with – “Profit first or Purpose first”. While, research is showing that the purpose driven companies have outgrown( 5 times) the ones who do not have a formalized purpose agenda - one can also argue that the higher profits (without investing too much on sustainability based purpose agenda in the near term) in-turn can help companies to afford the sustainability based purpose agendas for the long term. While there is merit in both arguments, it is one of those "right vs. right" type decisions companies have to wrestle with - and come to terms with “doing both” type of mindset - in the words of Inder Sidhu.


Speaking of "doing both" – even most talented leaders today keep tossing and turning - as doing both – demands you to exhibit some key leadership traits more than the other – i.e. what I call the “3E leadership traits” – especially, when you are challenged with these difficult purpose/profit dilemmas.

• Energize: Hire the right people first and then devise a purpose inspired strategic direction.



• Empathize: Inspire a collective support for the direction by resolving conflicts (if any) with an empathizing mindset and ensure that every voice is heard and everyone is executing as per the direction.



• Empower: Set up the process and systems with an empowerment culture that gives the authority for everyone to own the purpose plan as if it is their own plan.
  

ENERGIZE

To energize means - literally breathing the energy in to the lives of the people around you. Energizing is - first the act of hiring the right people, followed by generating fresh ideas, vision and passion and finally - instilling the purpose within the DNA of every members of the community. How do you do that? As a Leader, you must be authentic and live an example of the message you are preaching so that people can relate to you. This type of authentic purpose in turn energizes the community to achieve the common purpose driven goals.

EMPATHIZE

To empathize means negotiating – it is putting you in someone else’s shoe and see the world from their vantage point. While it is important to translate the big picture purpose driven strategy in to annual operating plans using an iterative strategic planning process, it is equally important for you to demonstrate empathy to feel the challenges of your team as if it is your own- so that individuals will also start doing the same and own the purpose plans as if it is their own plan (and their money). In other words, as a leader, you must ensure that individual cooperation is achieved by negotiating objectives that are consistent with the big picture - as those individual level objectives are the ones that make purpose and strategy actionable.

EMPOWER

Empowering is not a zero sum game. As a leader – you must give all the tools, training and authority needed for all of your employees to achieve the purpose driven objective – and if those tools are not available, they should feel comfortable to speak up and ask you for help. This is very important – as a leader, you must empower the team with proper processes, structures systems, incentives, decision rights and tools to sustain a healthy organization empowered with a high performance culture.

Bottom line: Doing both (Purpose and Profit) – indeed demands you to exhibit this 3E leadership trait on a daily basis - as it is the recipe for maintaining your ability to sustain profit and purpose in the 21st century. By making regular refinement of the purpose agenda along with the 3E leadership traits, you will make your organization a best in class incubator for purpose leaders who not only excel in their leadership skills, but also will be greatly sought after in the industry. Purpose driven decisions on a daily basis increases productivity of the employees, enhances the morale, increases the perceived value to communities, and produces healthy financial results, better stock prices and dividends for your investors and other stakeholders.

Let us keep the conversation going!

Purpose Driven Strategy

Strategy without Purpose is like kicking the ball to the goal post without knowing where the goal post is. In other words, if strategy is the compass, then purpose is the guiding light. At best, strategy is just a set of smart paths to a destination, whereas purpose is the journey in it by itself. Purpose is something that we need as part of our DNA; purpose is what drives us, ignites our passion and gives us the hope and reason for our existence. Strategies are about the means and they cannot be an end in itself. The challenge today is that many corporations are not lacking strategies, they lack a reason for existence–they lack ‘purpose’.

Having a strategy is a must, but not sufficient…. You need to have a purpose driven strategy for the journey… and …its purpose is that brings meaning and life to the journey. The question is - does your corporation’s strategy have a purpose?

I would use a seed analogy - and equate the “Seed" to "Purpose”. The purpose seed, in my mind has four components -

• Vision (what the firm aspire to be)
• Mission (why does the firm exist/what does it stand for)
• Values (the intangible instruction part)
• BHAG (goals/expectation)

Together, these four invisible instructions, tell the purpose seed to take a deeper root called ethical capital (the cornerstone) prospering eventually in to a healthy crop called the corporation. Seeds have invisible instruction(s) inside them – a corn seed turns in to a corn crop whereas the wheat seed in to wheat crops and so on and so forth. Similarly, words that clearly depict the aspiration, values and goals of a corporation are the seeds for purpose - Purpose then becomes the seed for growth. In other words, a company that embed the right type of invisible instruction(s) within the Purpose statement (seed) will definitely grow in to the crop (corporation) the invisible instructions tell it to grow.

So, within this seed analogy – where does strategy fit in? Extending the analogy little further – the healthy soil, fertilizer and water all can be equated to economic capital, strategy and execution respectively. Strategy is more of a fertilizer as it helps the seed to grow faster to its fullest potential very much like how business model strategies help the company to make money faster and efficiently.

Speaking of business models – vanilla business models are usually created by reshaping the capitals and/or resources within the value chain and/or by shuffling the activities within the value chain whereas purpose driven business models go one step further and redefine the purpose (including the ethical capital) of a corporation as well. I call these purpose driven business models as Purpose Models. Purpose models are the revolutionary game changing business models that not just reinvent the business of the firm, but also mutate the DNA of the brand and the firm -alike at the nucleus level from top to bottom. In other words, business models usually shuffle the value chain activities of the firm within the four walls of the firm (or at the maximum within the industry vertical) whereas purpose models go deep – apart from shuffling the value chain activities –they also repurposes the vision/mission/value/BHAG of the firm within the context of the cross border industry boundaries with an externality/internality/actuality based purpose mindset.

Bottom line : The sooner you understand the difference between these vanilla business models and purpose models and the importance of purpose driven strategic mindset, the better strategic decisions you will make to move your corporation from good to great - as the statistics shows purpose driven corporations have always outgrown the ones who do not have a formal purpose agenda.