The Fourth Gimbal

Value of Subjective Assessment for Organisations

It was Senator Robert Kennedy who, in 1968, commented that there is more to life than GDP. He was correct. You just have to consider how the UK’s long-term growth in GDP has impacted upon our existing measure of national well-being . The fact of the matter is that, for the greater part, it hasn’t. Data from the UK’s Office for National Statistics suggests that what is known as the ‘Easterlin paradox’ kicked-in a long time ago.

In 1974, Richard Easterlin, Professor of Economics at the University of Southern California, concluded from both GDP statistics and subjective ‘well-being data’ collected in earlier years from a number of nation-states, that once a certain level of GDP is achieved, the relevance of GDP growth as an indicator of enhanced national well-being declines markedly. Thus, after basic needs are met, nations that get richer don’t necessarily become happier. In fact, he concluded that the positive change in aspiration which occurs as a result of GDP growth may actually limit the potential of nation states to achieve enhanced levels of happiness.

 Since Easterlin reached his conclusion, there have been a number of claims to the contrary, which serve to widen this useful debate on the value and appropriateness of subjective research. And, of course, there will always be those who will argue to the bitter end that any attempts by researchers to have society ‘self-anchor’ a subjective measure of something as obscure as ‘happiness’ will inevitably deliver an inconclusive result.

 All very logical, and difficult to disagree with. And yet……… we all know, in our hearts, that Kennedy was right. GDP doesn’t tell the whole story. So, what does?

 Societal well-being has hit the UK headlines recently because our Prime Minister, David Cameron, has openly supported the investment of taxpayers’ money to investigate the meaning of well-being. Hardly a priority in these straightened economic times, you’d think. So the chat rooms are abuzz with the scepticism and negativity of those desperate to grab the moral high ground on behalf of the thousands of public sector workers who are about to lose their jobs, and the countless others who are suffering in myriad ways as a result of the recession. All perfectly understandable if your aim is to undermine a new approach or score a political point.

And yet Cameron is right to proceed. Why? Well, if the banking crisis and global economic recession has taught us anything, it is that our traditional approach to balancing the books(or even understanding what ‘the books’ are telling us) does not make clear everything that we need to know. As social groups, whether in the home, in the office, as a community or as a nation, our over-reliance upon traditional numbers-based assessments of performance means that we are singularly failing to balance tangibles and intangibles or even know how to interpret nuance.

 Consider the litigious, rule-based, target-driven and compensation-seeking culture which has taken hold of our society in the past 2 decades.  Beggar thy neighbour. In short, there is something missing in the way in which we define what success looks like and determine whether we are being successful, beyond the strictures of the balance sheet. Yet nuance and interpretation can provide such insight.

It is to Cameron’s credit that he has brushed off the attacks on his happiness initiative, telling his detractors that ‘if you believe in something, you just have to get on and do it’. It would be all too easy to cave-in to the naysayers, but Cameron senses, albeit belatedly, that Kennedy was on to something. Well-being can say just as much about the state of the nation as GDP. As economies and societies evolve, seeking new techniques to measure the subjective is no bad thing, offering the potential to enlighten us far more than relying entirely upon traditional measures.  

And Kennedy’s argument that there is more to life than GDP translates well within the business, firm or corporate environment. In fact, for the people-led business, it represents a crucial, yet sadly under-developed attitude of corporate mind. Revenue growth and the profit imperative continue to be immensely important to the economic success of any business. But are we missing an opportunity to further investigate, understand and manage the intangible nature of business success? It is this very thought which underpins the thinking behind the study of organisational personality, to which this blog is mostly dedicated.

By understanding intangibles and striving to measure subjective feedback, we have much to discover about the demeanour of our people and the potential of our organisations to succeed in the future. It is these important aspects of organisational character which traditional balance sheets can never hope to reflect or represent.

Instinctive personality beats management by list

Lists, lists, lists. Everywhere I look, I see the remnants of good business advice boiled down into lists of do’s and don’ts.  Whether it’s becoming a good leader, motivating employees, achieving a vision, selling more or writing a blog, someone will have distilled the essence of a good conversation into a list.

The argument is that the list is quantified, definitive and easy to source, whereas the conversation is often rambling and, at times, incoherent. So, what could be easier than reading someone else’s list and putting it into action? Simple. Job done. Success awaits.

Of course, for the creator of the list, fleshing it out and publishing it in book form remains an attractive source of income. And publishing a business book is now so straightforward that this appears to be the main reason why the business sections of most bookstores are crammed full of so much ‘management by list’.

Yet, the fact is that you cannot run a people business by relying upon another manager’s list of actions and priorities in isolation. No matter how much they try to accommodate your particular circumstances, their lists are inherently personal and are developed almost entirely from their own readings, thoughts and experiences.  Whereas the list is sterile, it is the nuance in the conversation which has the potential to generate ideas, unlock uniqueness and engender differentiation. When it comes to good advice, it’s all a question of knowing where to look and what to look for.

It was this odd stream of thought which grabbed me as I meandered around an airport book store awaiting my departure announcement. Everywhere I looked, there were cold and calculating lists of how to do things. And yet, there was I, clutching a couple of secondhand titles by Paulo Coelho. Little did I realise at the time that Coelho’s writings were about to teach me more about the essence of leadership, visioning, people management, motivation and communication for the people-centric business than all of the business lists in the book store.

Motivating a team? Try ‘The Fifth Mountain’. Creating the corporate vision? Read ‘The Zahir’. And if you are steeling your organisation for a long and difficult struggle in new markets, read the ‘The Alchemist’ – a wonderfully engaging story of a boy who follows his dreams, listens to those he meets along the way, recognises good advice and is eventually rewarded with success.

So much more rewarding and relevant to the real-world challenge of running a successful business than A N Other’s ‘How to do something difficult in 10 easy steps’! As I say, when it comes to sourcing useful advice, it’s all a question of trusting your instinct and knowing where to look.

Organisational proposition – Nudge, nudge, think, think

“Are you involved in any charitable activity?” asked the interviewer, …….and there it was – the final question in an otherwise benign ‘magazine-meets-entrepreneur-for-‘in-depth’-interview’ piece published in one of the UK’s most popular broadsheets. Of course, the answer was a gushing ‘Yes!’, followed by a few well-chosen words about a pet project, fundraising for autistic children.

Great answer? Well, maybe. It ticks the box, and whether we like the product/service on offer or not, we now have a good feeling about the brand, don’t we? Until recently, the standard answer to that type of question said more to the marketplace about the values and morality of the business, as projected by its leader, than anything you might read on its website about its products, services, green policy or profits. It must be a good company because it cares about autistic children. Right?

 Now consider this. Would the answer to that question be sufficient to nudge you, the buyer, in the direction of that company’s services in preference to another business offering the same or similar? Perhaps, and perhaps not. It depends upon what motivates you when considering the seller’s proposition, and whether the values, operating ethos and morality of the seller hold any sway whatsoever.

However, for me, the interesting thing was not the answer, but that the question was being asked in the first place. Increasingly, we want to know more about the personality of the organisations we may be considering doing business with. The interviewer has tapped into this need and, as far as our entrepreneurial interviewee is concerned, answering the morality question is relatively easy. More often than not, for the small business, the answer comes from the heart. A detailed substantiation is rarely necessary.

However, scale-up the organisation for the mid-sector or corporate markets, and the question takes on an entirely different hue. This simple question alludes to an altogether more complex interrogation: ‘We understand all about your services and your commercial proposition. Now let us understand more about the way you work, your culture and your values. What do you stand for? How might our association with you affect our reputation, for better or for worse?’

Questions such as these bring into sharp relief a far more complex challenge for the majority of businesses, far beyond the calculated messaging inherent within so many Corporate Social Responsibility agendas:

• First of all, the questions demand an answer. No faltering, stumbling, or avoidance tactics.
• Secondly, they may be asked not just of the Leader or the Board of Directors, but possibly of the entire workforce.
• Thirdly, the questions can and most probably will be asked both formally, as part of the buyer’s supply chain research and tendering processes, and also informally during the everyday buying and selling routine.
• And finally, the supplier will increasingly be asked to substantiate aspects of its personality, morality, organisational proposition and core values by way of policies, best practice, smart partnering initiatives, leadership examples and hard facts.

 Answering these questions entails listening to the heartbeat of your organisation more than ever before, and ensuring that its people live and breathe its core values. Yet, the bar is about to be set much higher. With the exception of the small, owner-led business whose Leader can respond from the heart to the question of core values and morality, most businesses remain ill-prepared to present, in good faith, a substantiated organisational proposition. Those firms which take steps now to make that leap are the ones with the greatest potential to combine the delivery of long-term societal benefits with a nudge of the market in their direction.

Alignment of values will nudge the buying decision

It is worth a couple of minutes of your time to listen to Umair Haque on the influence which ‘values’ may be having on capital investment and resource allocation decisions  – or, put another way, how the criteria which influence resource investment decision-making may be changing. Think of these as the criteria which support the business decisions which may ultimately impact upon the relative attractiveness of your business as a service provider.

Whilst it is easy to head-off down a path from which a discussion on corporate values never returns, this one is nicely framed by the real-world example of what drives GE to build wind turbines – is it environmental altruism or the profit motive?

 I would argue that the two need not be mutually exclusive. In fact, in some saturated supplier markets, where service differentiation is already difficult to articulate clearly, values are becoming part of the marketing proposition – marketers are asking themselves ‘Do we actually have a core set of values and, if so, how do we portray them in the marketplace without sounding glib and ‘me too’ ‘? Of course, profits still have to be made, but the alignment of buyer/supplier values in the supply chain will hold greater sway than used to be the case.

 The challenge facing all organisations is to ensure that the business does more than just talk a good game. It has to be seen, through the daily actions of its employees, to be embracing a core set of values which represents the operating ethos of the organisation and its leadership. For many, superseding the service proposition with the organisational proposition is, indeed, uncharted territory, but it represents an aspect of proposition development which has the potential to nudge the buying decision in your direction.

Business personality and the messaging triangle

If you actively manage the three sides of your organisation’s messaging triangle by consciously developing the relationship between Portrayal, Perception and Expectation, you are more likely to nudge the market in your direction. However, get it wrong and the consequences of message dislocation can be costly and very long-term.

Examples of message dislocation abound: -

• The big banks portray themselves as the friend of small business, yet are generally perceived by the small business community to be unsupportive when times are hard.
• BP’s self-portrait as an environmentally-friendly business flies in the face of the emerging perception of the company as one which puts profits before safety and environmental care.
• Consider the UK’s Valuation Office Agency, a government quango which portrays itself as the reasonable voice of commercial property tax-raising power, yet is perceived as being contentious, unreasonable and antagonistic.
• And the UK government’s Foreign Office, portrayed as a progressive and sophisticated overseas support for UK business, yet perceived by some to be staffed by introverted, ‘risk-averse clones’.

It is easy to discount arguments such as these as the rabid claims of a disenchanted minority. However, mud sticks, particularly in our highly networked online social/business environment. A well-spun press release alone is no longer sufficient to counter an emerging negative market perception.

So, let’s consider the relationship between a) how a business formally portrays itself, b) how the day-to-day actions of employees can alter the perception of the business and c) the market’s expectations of the service provider. The first thing to recognise is that Portrayal, Perception and Expectation rarely align naturally for any significant period of time. There are simply too many external factors altering expectations and influencing perception. So the choice is yours; pray for divine intervention or take action to minimise message dislocation. Meeting the market’s expectations is a continuous work-in-progress, not just in delivering service value but in the portrayal of a higher sense of purpose and meaning which permeates the entire business and is perceived as having become part of the fabric of the organisation.

In short, it is no longer just about pitching service definition. It is about pitching the organisation, its culture, values, beliefs and ethos. This is a hard nut to crack because it is not just a question of marketing or a question of human resource management or a question of service delivery. It is a question of actively shaping and communicating the true personality of the business – its values, its standards, its ethos, what it stands for, its principles, as well as its services and solutions – in the knowledge that the entire organisation is on-board and has the skills, tools, belief and wherewithal to deliver.

The organisation in its entirety has to be seen to living the brand message, and delivering upon the promises being made to the marketplace. If those representing the organisation, through their informal words and daily actions, fail to dovetail what they say and what they do with the organisation’s self-portrait, then the ensuing credibility gap between words and actions is likely to have a detrimental effect upon the market’s perception of the business, and may ultimately bring about its undoing.

Take, for example, terms such as Sustainability, Corporate Social Responsibility or Climate Consciousness as the latest in a long list of buzz terms which have become fundamental to the way in which a business seeks to portray its morality and higher-value credentials. Talking the talk is all very well, and from there the ethical high-ground is clearly visible, but organisations are increasingly being asked, both formally and each day in informal conversation, to substantiate their claims and prove that they are walking the walk. Blink, stall, hesitate or fail to respond and the battle is surely lost. This is organisational positioning as an extension of service positioning. The further apart Portrayal and Perception become, the larger the credibility gap and the more likely that the market’s Expectations fail to be met, and so respect for the organisation, its people and its capability diminishes.

 Tightening the relationship between Portrayal and Perception, and ensuring that Expectation can be met, is a crucial new area of cross-discipline challenge within any services organisation. To gain an edge, the successful service provider must better coordinate each as part of an integrated approach to communication and delivery which proves beyond doubt that the organisation has a meaningful proposition, has taken a position on the important issues of the day and, importantly, is already ‘walking the walk’. Hoping to impress the market by spinning an idealistic portrayal of a service, in isolation, is no longer enough.