“A company can’t prioritize everything, and while BP was prioritizing PR and acquisitions, it wasn’t prioritizing operations.” Holman Jenkins, WSJ A preventable catastrophe is unfolding along our Gulf shores and much of the region is going to suffer for years. Who’s to blame? The easier question may be who isn’t to blame. However, one thing is clear; a combination of bad politics, policy, and corporate leadership can claim a significant portion of the responsibility. My concern focuses on corporate leadership, and their role in allowing such a massive operational failure. The Weekly Standard has an excellent article titled “Beyond Pathetic”. The Standard is a conservative magazine so be prepared for jolts of politics throughout the article. However, from a business perspective the article is a fascinating study on poor executive leadership and how its failure to prioritize operations into the company strategy has led to an unmitigated disaster. Much of this is from Oberon Houston’s perspective. He was an engineer who resigned from BP in early 2004 for reasons summarized below. “In short, Houston no longer trusted the company to do the right thing. As someone who grew up idolizing the company, he came to the reluctant conclusion that BP itself … Read More
The Strategy Focused Organization (Part 1)
In 1991 Kaplan and Norton wrote the highly influential book called “The Strategy Focused Organization”. One of the first things they address is the key principles a company must hold in order to create a break through strategy that drives profitable growth. There are five principles overall, today I will write about the first two. Principle one: Translate the Strategy to Operational Terms Successful businesses understand that your operations define your strategy. In order to execute your strategy a company must understand how you must change your operations in order to support it. Many companies make the mistake thinking strategy stops at defining your market position. A company wants to add an offering so they change their collateral and website, tell their sales people to sell it and poof, they are done. Who are the targeted buyers? Can the sales force sell this type of offering? How do you deliver the offering? What are the key performance indicators? These are some of the operational questions that provide important insight on the feasibility of the strategy and what capabilities are required in order to successfully execute. Principle Two: Align the Organization How does a company effectively leverage its strengths? Identifying and … Read More
What role does Strategy have in Staffing?
Staffing at its roots is an entrepreneurial industry. Some of the most successful staffing companies can point to strong leadership, aggressive execution, and ambitious production personnel as keys to their success. It is an industry defined at many levels by its shear will to succeed, and through the nineties that seemed to be enough. Over the last decade, we have seen massive changes in the competitive forces that impact the industry. These changes have allowed buyers to become increasingly sophisticated on how they engage and manage their relationships with staffing vendors. Buyers are leveraging technology to enable programs that closely manage both processes and pricing, driving the staffing firm’s operational costs up while at the same time squeezing gross margin profitability. To preserve bottom line profits staffing firms responded with a focus on increasing the “productivity” of the recruiting and sales organizations to achieve activity metrics that were simply not possible even five years ago. Operational improvements are a continued necessity to survive in the staffing business, and can briefly give a company a competitive advantage. However, is it enough to outperform the competition long term? The short answer is no. A longer answer can be found by reading an … Read More