The purpose of this blog is to explain all components of corporate DNA and position it in the overall picture of strategy and strategy execution.
Corporate DNA can be compared with human DNA in the sense that it’s unique and can’t be altered. Corporate DNA is the sum of all ‘unchangeable’ elements of a company which combined describe its identity and uniqueness at the same time. It is all what remains fixed while the business strategies and tactics endlessly adapt to an ever changing environment. The corporate DNA consists of 3 components:
- First of all the ‘real’ core values of the company
- Core values are the operating philosophies or principles that guide an organization’s internal conduct as well as its relationship with the external world. Real core values are the common denominator of the employee’s core values. Hence the importance of identifying them by studying and interviewing people in the organization in contradiction to most exercises whereas top management is defining their so called core values based on the strategy and whom they’re willing to be. An example (Nemetschek SCIA) of ‘real’ core vales is:
- The continuous pursuit for new ideas and innovation
- Commitment and our involvement for the well being of our company
- Loyal long-term relationship with all stakeholders
- Hardworking yet forward thinking people
- Our commitment to take full responsibility and living up to made commitments
- Core values are the operating philosophies or principles that guide an organization’s internal conduct as well as its relationship with the external world. Real core values are the common denominator of the employee’s core values. Hence the importance of identifying them by studying and interviewing people in the organization in contradiction to most exercises whereas top management is defining their so called core values based on the strategy and whom they’re willing to be. An example (Nemetschek SCIA) of ‘real’ core vales is:
- The core Purpose
- The core purpose is the organization’s fundamental reason for being. In other words a written statement that identifies why the organization will exist for the next 10 to 30 years. It makes abstraction of the product/service offering. Some examples are:
- Inspire people to move limits (Nemetschek SCIA)
- To solve unsolved problems innovatively (3M)
- To make people happy (Walt Disney)
- The core purpose is the organization’s fundamental reason for being. In other words a written statement that identifies why the organization will exist for the next 10 to 30 years. It makes abstraction of the product/service offering. Some examples are:
- Your Value Discipline (Treacy and Wiersema):
- The value discipline are our behaviours and actions which ensure the delivery of our value proposition. Value proposition being the mix of products, services, price and payment terms we offer to customers. The value discipline is either Product Leadership, Operational Excellence or Customer Intimacy. One has to be the best at one of them whilst making sure to keep on delivering the ‘Olympic minimum’ on the 2 other disciplines. A good example in the automotive industry is to compare BMW to Toyota. Another good example is Colruyt (Belgian based retailer) for operational excellence. Trying to outperform the competition on more then 1 of the disciplines is unaffordable and always unsuccessful in the long run because it takes too long and costs too much money. Your value discipline is part of your DNA and should be in line with your core values.
It is of the utmost importance to know, track and communicate on your DNA. A diluted DNA is probably the number one reason for stalled growth and/or declining profits in a growth scenario. Their are plenty good reasons to make sure your DNA doesn’t get diluted:
- A lot easier to grow your business because of the ease to get people aligned;
- Sharp value perception leading to more successful lead generation;
- People are self-motivated;
- No need for a lot of written down policies such as travel rules, work schedules, meeting behavior, email policies,….. because people are behaving in a coherent way;
- Improved performance due to focus. i.e. people will not waste time and resources on improvements or idea’s to lower the cost of delivery if you’re in product leadership and your price/performance is at an acceptable level from the market’s point of view. These resources should be spend in becoming even stronger in product leadership;
- …
Typical symptoms of a diluted DNA are:
- Managers managing people instead of the business;
- an increasing level of rules and bureaucracy;
- A lot of emphasis on motivation and programs supporting it;
- HR policies which put job experience above DNA compliance in hiring and retention;
- Spontaneous idea’s and improvement propositions which are totally random;
- …
Better results and less people issues resulting in less stress as a manager will be your personal advantage if you avoid DNA dilution.