Issue 1.2 | July 2009

In this Article: the path to greatness lies in your corporate soul and not your strategy.

by Jonathan Wilson

What strategic decisions has your company made in order to respond to this recession effectively?  What guided your leadership team in making those decisions?  Were those decisions made confidently even if they were also difficult?  If so, what gave your team that confidence?

It is said that companies that win big on the other side of a recession are those who seized the opportunity to take a brutally honest inventory of themselves, trimmed the fat in all the right places, and reinvented themselves for the coming new economy.

In contrast, companies that, post-recession, remain mediocre (or, worse, are thrown on the corporate scrap-pile by the Darwinian forces of capitalism) are those who thought about one thing only – survival.  So they engaged in indiscriminate cost-cutting measures as a way of staying viable: only to find when the market buoyed up that they had trimmed muscle as well as fat and could no longer compete.

Not that surviving is a bad thing.  Winning companies have to survive too; otherwise their self-reinventions would never see the light of day.  Staying cash strong in a recession is essential, and to stay liquid often necessitates cost-cutting measures.

To remain competitive requires a solid understanding of your company’s present and future business fundamentals.  Knowing these allows you to confidently make smart, strategic decisions that are truthful to the brutal realities of the market (e.g. a recession) and to the strengths, weaknesses and untapped potentials of the company.  In other words, if you know the fundamental truths about your company, you will know where to invest, and where to divest.  I call these truths the “soul” of the company.  A company’s soul consists of three integrated pieces, each reinforcing the other:

1. Moral Passion: What morally-inspired passion would drive you to succeed?  Author and leadership guru, Nikos Mourkogiannis, describes four kinds of moral passion: Discovery, Heroism, Altruism and Excellence.  It is not enough to simply say “passion”, because passion without moral substance has a short life-span.  A company driven by a morally superficial passion is a company set up for future failure.  The current recession has provided many examples.

2. Unique Capability: What cluster of insights, expertise, skills and resources have the potential to set you apart and enable you to provide unique and substantial value to customers?  Do you know how this cluster integrates into one, simple-to-describe, offering?

3. Economic Driver: Your inspiration and ability make no difference in the world unless they are economically viable.  The market will ascribe value wherever it perceives value.  It will continue do so whenever that value is real and proven. What are the economic fundamentals that, integrated with your moral passion and unique capability, will drive sustainable financial growth for the business?

Last year a Fortune 500 company located near us undertook extremely disciplined cost-cutting measures.  At the end of 2008, this resulted in a double-digit increase in their profit margins, despite the fact that revenues had remained constant.  Such discipline is admirable, and a crucial skill in business success.  This year they continue to rigorously cut costs, but their revenues are now in decline and their sales force turnover sits at 60%.  Their remarkable discipline is not applied strategically and that, I suspect, is because they have lost sight of the fundamental truths of what makes their company do well.  They run competing product lines that divide their sales force, and one of these lines is equivalent to a stitched on appendage that doesn’t naturally belong.  In the past they were a stunning corporate athlete, whose name sat in the list of the top 11 “great” companies in Jim Collin’s book, Good to Great.  Now they run the risk of turning themselves into a corporate Frankenstein.  Have they lost an understanding of their soul?

In contrast, a TV company I worked with endeavoured to precisely define their company soul.  Once they had a tentative analysis in place, we ran a “soul audit” on their primary product: current affairs shows.  We assessed to what degree each show reflected their moral passion, their unique capability and their economic driver.  The results revealed a 40% “hit-rate”.  While this was initially discouraging, there was in fact a very bright silver lining to the cloud.  A comparison with ratings revealed that the public agreed.  This meant that from here on, the TV company had a clear guide by which to confidently design, produce, broadcast and assess their shows, even before the public’s opinion was known through post-show ratings.

Knowing our soul enables us to make strategic decisions that navigate our companies beyond survival to greatness, to the point where we add lasting value to the customer and their world.

Navigating to Greatness: Leveraging Your Soul

Here’s how understanding your company’s soul can help your company become a leader, and not a follower; a “thriver”, and not just a survivor.

1. You are in possession of fundamental truths about your company that allow you to realistically but powerfully engage the brutal truths of the economic environment.

2. You have a clear guideline by which to make strategic level decisions, even tough ones, with great confidence.  If you need to cut costs, knowing your soul will help you assess which products, systems or structures in your company are least relevant or strategic.  You know where to invest, and why.  You will know how to respond to competitor actions, or changes in the market.

3. Your chances of differentiation in the market are greatly increased.  As I’ve said before, no-one can replicate your soul.  This insight will guide your development of products and business models.

4. You will have found the basis for the best value you can provide your customers: value that will contribute to a better world, value that will endure, and therefore value that will be affirmed in your top line and bottom line for years to come.

Another soul insight from www.leadbysoul.com.