The “It” of a Business
During annual strategic planning exercises, devilishly difficult philosophical questions must be answered. Examples of corporate strategy statements include, “What’s our purpose,” “What’s our vision,” “What are our values,” and “How will we behave?” I’ve spent hours upon hours in dimly lit conference rooms contemplating those questions with senior teams over the years. Gaining clarity on these difficult questions was rewarding and exhausting.
The list of questions to be answered or validated each year also include theoretical softballs like, “What does our company do?” After stretching and straining our grey matter to the limit, the senior team and I looked forward to a softball or two so we could reset and get reenergized. On the surface, it seems like the answer to this question should be easy. “How hard can it be to define what we do?” was the common refrain that echoed around the conference room.
To the great dismay of the senior team, it turned out that defining what the company did was also one of those devilishly difficult questions. Each year we’d look forward to quickly “checking the box” of validating the previous year’s answer to “what do we do?” Each year, we’d spend several hours ensuring that we got the answer right.
So how can a seemingly easy question like “what do we do?” turn into a journey down the rabbit hole? The root cause is entropy.
As a quick reminder, entropy is a fancy way of saying that over time, everything falls apart–our bodies, machinery, electronics, your flower garden, the solar system–everything. As I’ve mentioned previously, technically, a business is a going concern and should last indefinitely. To make a business last takes consistent planning and effort. Left to idle, a business will dissolve–sometimes imperceptibly slowly with the cadence of a sloth–sometimes spectacularly quickly like a 4th of July fireworks display.
In our case, we would let the answer to “what we do” idle for a year. The faulty logic we’d apply went something like this: “Only a year has passed since we last discussed this topic, how much can change in a year?” It turns out that a lot can change during the course of a year.
During a typical year, new products were launched, departments x, y, or z were reorganized, a small competitor or two were acquired, and/or an externality disrupted product line a. In isolation, each event seemed minor and inconsequential. Taken as a whole, changes like those mentioned above can significantly alter the trajectory of the business and make answering “what we do” challenging at best.
Flow versus a Seasonal Approach
The fact that a softball question like “what do we do” can easily turn into a nasty curveball is one of the stronger reasons to work strategic and tactical planning into the flow of the business versus relying on an episodic “seasonal” approach to planning.
Placing the answers to our strategic, business framing questions like purpose, vision, values, behaviors, and the company’s “it” front and center throughout the year keeps them top of mind and fresh for everyone in the business. Weaving the answers into the flow of business also minimizes the unnecessary extra work (waste) of having to open the dark drawer where they’ve been resting, dust off our responses, remind ourselves of what we did last year, and reestablish context/meaning before getting started on the heavy lifting.
What is the “It?”
While some authors and leadership consultants focus on the question “what do we do?” I like to go a step further and ask: “what’s the ‘it’”? Why? Because if you ask about the “it,” then differentiation is central to the question. Focusing on the “it” forces a simultaneous evaluation of what the company does with what makes the business different from its competitor’s value proposition.
In my book, Balancing Act, I introduce the concept of indispensability and the importance of continually striving to become and remain indispensable to customers and clients. However, a discussion of indispensability is moot without first defining the company’s “it.”
The best way to think about the “it” is to scale the conversation way back. Back to the beginning when there was one product and the business was very small. What was the “it” of that singular product? Did you differentiate on service, support, features, or delivery? I still like to use the “it” question when thinking about a new product launch. More than one product owner has been in my office pitching a new idea only to be sent back to the drawing board by my query: “What’s your ‘it,’ what makes the offering different?”
The thought experiment of thinking first about a single product before diving into the “it” of the entire business can be an incredibly useful tool to get the team aligned.
The “It” and Change
It bears repeating that the “it statement” combines “what do we do?” with “what makes us different?” This may seem counterintuitive as I’ve noted in previous work that combo statements (e.g., the mission statement) do too much heavy lifting and are to be avoided. Here, creating a combo statement makes sense because it’s essential that we avoid bland, generic, catch-all statements that give a business permission to do almost anything within the confines of an industry category.
Why? Because humans abhor unexpected change and hate surprises. If your business is like most, your people–your most valuable asset–are working in an environment of tight deadlines and very little system slack. They’re likely so overwhelmed with the volume and cadence of workflow within their department that even small changes in organizational direction can send a team into a tailspin that leads to disengagement and job dissatisfaction. Remember that one of our key goals is to build a high trust, high accountability culture within the organization.
As a reminder, in last week’s muse, we introduced the concept of change management as a critical component of your business’s management operating system. Being crystal clear about what the company does and what its differentiator is will make any subsequent change process much easier to ingest and work through. Instead of freaking out and digging their heels in when a merger or new product is contemplated, the team will instead be able to connect the dots between the new offering and the standard work that’s currently in place. The questions then become less about “why are we merging with Company A?” and more in line with “Okay, I see the fit, so tell me how we’re going to weave the new offering into our existing workflow?”
By being clear about what the company does and its differentiator(s), the average individual change management curve gets shorter and individual morale/competence improves–all else the same. Since the average individual curve shortens and individual outcomes improve, the organizational change curve (aggregated curve) gets shorter and overall outcomes improve.
The Elements of the “It” Statement
Before we introduce a few examples of “it” statements that exist in the wild, let’s first define the essential elements of good “it” statements. In addition to being differentiated. Your “it statement” should:
Balance Specificity with Future Growth: Yes, the “it statement” should be as specific as possible to help reduce the inevitable unnecessary waste that accompanies change. However, the human desire for consistency and sameness should not quash the need for continuous improvement and growth. The key to this balance is to ensure that the company’s vision statement and “it” statement are congruent with one another. Both statements should leave the door open to expansion and business pivots–vision more so than the “it.”
There are two mechanisms that help ensure congruence. The first is to use recursive thinking in the initial development and subsequent validation of the company’s strategic statements. For example, define the company’s purpose, then define vision and ensure vision is congruent with purpose. Next, define values and ensure that values are congruent with purpose and vision, etc. The second way to ensure congruence is to employ the concept of catchball in the creation and validation of strategic statements with the next level down from the senior team (a.k.a., the extended leadership team). Catchball is a wonderful check on the senior team–especially as it relates to the practicality of strategic statements.
Be Inclusive: There’s not much worse than working on a team that doesn’t have a strong fit with company strategy. While the senior leadership team may make excuses and rationalize why this team belongs in the organization, I guarantee that the members of “team odd duck” don’t take comfort in those rationalizations and are constantly looking over their shoulders. They’re waiting for the other shoe to drop–a reorganization, layoffs, or terminations are surely just around the corner. The members of every team should be able to draw a straight line between their goals, their work, and the “it” of the organization. Asking team members to become mental contortionists to continually try to justify the “why” behind their existence is the fast-pass to disengagement.
Help Define the Field of Play: In many industries, the field of play is so broad that using corporate strategy statements to define the boundaries of target markets, customer segments, and product categories is essential to minimize entropy and unintentional product bloat. Some leadership teams may want to spend extra time defining the field of play in a separate statement to enhance organizational clarity as recommended by Lafley and Martin in their work, Playing to Win (HBR, 2013). My advice is to only add to the company’s suite of strategic statements if they are value-adding to stakeholders. If a strategic statement is redundant, confusing, or a non-value-adding word salad–ditch it or start over.
Be a Communication Tool: Yes, all corporate strategy statements are communication tools to improve organizational clarity across a variety of stakeholders. However, the question your team members will get asked more than any other is “what does your company do?” Yes, some might ask about purpose, vision, values, or behaviors, but the #1 elevator question is: “remind me what your company does?” The last thing you want a team member to do is freeze up and say: “You know what? I’m not really sure.” An equally terrible result is that the company is so complicated that the elevator pitch turns into an eye-glazing three minute response.
A great litmus test is to engage with team members from multiple departments via informal skip-level meetings and ask them directly how they answer the question “what does your company do?” when confronted by a new acquaintance at a cocktail party or your uncle Bill at the next family reunion. If you get ten different answers from ten different team members, then “Houston, we have a problem.”
Be Easy to Find: All corporate strategy statements should be in one place and be no more than one click from the company’s homepage on their website.
Be Concise: Parsimony is important. Avoid flowery marketing jargon.
Examples of “It Statements”
The websites of many major corporations are silent on the topic of their “it” and instead make the assumption that such a statement is not necessary or is obvious based on their history or reputation. This isn’t a huge surprise as most businesses still rely on their mission statements to try and describe why they exist, where they’re going, and what they do–way too much information to stuff into a single statement. This is why I indicate above that combo statements are not effective (see my muse on Purpose for more on this topic).
Some companies also utilize the headline of their “about us” webpage to explain what they do. In my opinion, hiding “what we do” in a headline on the website is a missed opportunity to provide clarity to stakeholders.
Others rely on their vision statement to explain what they do. I also believe this is a mistake as vision is designed to be aspirational. What the company does today and where they aspire to go can be two different things.
With that said, here are several examples of “what we do” statements:
Cognizant: “We use expertise that’s been proven and tested around the globe to help you get ahead of challenges, sense opportunities sooner and outpace change.”
Analysis: Unfortunately, neither the company’s name, Cognizant, nor its “what we do” statement provide much clarity on exactly what the company does. When the name of a business is contrived, its leadership carries the added burden of clearly explaining to stakeholders what the company does. This statement is overly vague and fails the differentiation and elevator pitch tests.
Ecolab: “Ecolab is the global leader in water, hygiene and infection prevention solutions and services. Every day, we help make the world cleaner, safer and healthier–protecting people and vital resources.”
Analysis: The Ecolab “what we do” is an example of a statement that’s embedded in their “about us” headline on their website. While it may be obvious to the designers of the webpage, it is not obvious to the casual observer that “about us” is the same thing as “what we do.” In addition, the “about us” statement at the top of the page is not the same as the “about us” statement listed at the bottom of the page, adding to the reader’s potential confusion. Since the two statements are not the same, Ecolab fails the elevator pitch test.
Expedia Group: “We build connections. We leverage our platform and technology capabilities across an extensive portfolio of businesses and brands to orchestrate the movement of people and the delivery of travel experiences on both a local and global basis. We help our travelers and our partners find the right pathways through millions of possibilities to reach the best possible outcome.”
Analysis: I applaud Expedia Group for explicitly indicating what they do. Bravo. The statement checks all of the boxes with the exception of parsimony. Since it is not concise, it will also prove challenging as an elevator pitch.
Owens Corning: “Together, our Mission, Purpose and Values are the foundation of our unique culture and guide the way we live and work locally and globally. They describe what we do (emphasis added), why we do it, and who we are - it is the essence of our commitment to our customers, shareholders, partners and each other.”
Analysis: This statement is also the header of the company’s “about us” page. It says that “what we do” is woven into their mission, vision, and values statements, but no such clarity is to be found. Hence, Owens Corning leaves “what we do” up for significant interpretation and none of the criteria for an effective “what we do” statement are met.
PPG: “PPG is a global supplier of paints, coatings, optical products, and specialty materials. Through leadership in innovation, sustainability, and color, PPG helps customers in industrial, transportation, consumer products, and construction markets and aftermarkets to enhance more surfaces in more ways than does any other company.”
Analysis: This was a real struggle to find. All corporate strategy statements should be one click away from the company’s homepage. In the case of PPG, their “what we do” statement is three clicks from the homepage, one of those clicks is to a different website, and is not clearly labeled.
P&G: “We make superior quality products and use every ounce of their power to make a difference.”
Analysis: Proctor & Gamble is a gigantic company with a truly global reach. I’m certain that developing an effective “what we do” statement is difficult, but what they’ve come up with is so broad as to not be meaningful. In my assessment, it would be better to be silent than to produce such a bland, cover-all statement. In fact, this statement is so generic, it could be used by myriad companies across multiple industries.
Conclusion
I can’t stress enough how important the creation of effective, useful corporate strategy statements are to the creation of high trust, high accountability institutional cultures.
Unfortunately, many leaders look upon corporate strategy statements as “fluff” and look forward to working strategy sessions with the same dread that accompanies a trip to the dentist or the family tax specialist.
Remember that clarity is driven from one place: the top of the organization. If you’re one of those leaders who thinks that execution and the “doing” is more important than setting and communicating strategy, I implore you to think again. I’ve been that directive, “Andy said” leader in the past who poo-pooed the need for clarity and avoided the work that goes into the creation of strategy statements.
In the category of “you reap what you sow,” failing to invest in the collaborative creation, routine validation, and frequent communication of corporate strategy statements like the “it” will yield more uncertainty, dissatisfaction, and waste than necessary.
Have a great weekend!
Andy
PS: This muse, along with many of my muses this spring, will show up in my next book, which will be released in late 2022. Stay tuned!
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End Notes:
Links to examples of corporate “what do we do” statements:
https://www.cognizant.com/us/en/about-cognizant
https://www.expediagroup.com/who-we-are/our-story/#module-tabs_item--first
https://www.owenscorning.com/en-us/corporate/who-we-are
