The Strategic DNA of a company composes the organizational foundation. It is the unique culmination of processes, resources, ideas, and culture that distinguishes a company from its competition.
According to John Coleman, 88% of the companies that appeared on the Fortune 500 list in 1955 did not make the cut less than 60 years later. Companies must change to stay relevant. What innovative companies have in common is their willingness to take calculated risk, ability to collect and integrate raw customer feedback, and provide employees with room to express their creative processes. Many companies claim that their businesses abide by these principles and yet still struggle with innovation. Oftentimes, the company structure obstructs an adaptable strategy. Innovation requires companies to challenge conventional, ingrained beliefs. They support new-age ideas with information about what is and will happen in the business environment rather than historical trends. This requires companies to analyze competitors from a 360-degree perspective to ensure that they are monitoring even unconventional up-and-comers. Innovative companies are also able to get away from being defined by the products and services they offer. Instead, these companies focus on unique competencies and resources and leverage these to deliver ultimate value to the customer. In our book, Delivering Value: A Holistic Approach to Strategic-Powered Growth, we introduce a framework that places the customer at the center of the business ecosystem. Through the six core drivers of value (purpose, plan, people, process, product, and profit) companies can invest the resources to develop innovative methods of delivering and capturing value.
Only 15% of companies spend more than one hour per month discussing strategy.
The result of the inner workings of the corporate DNA is visible to customers and assists in forming an exclusive brand identity. This DNA connects the organizational value proposition to the activities performed to deliver ultimate value to the consumer. The more complex and interlinked the Strategic DNA, the harder it is for competitors to replicate the organizational strategy. A superior customer experience is the byproduct of harmonic interaction of a bulk of company activities. For example, Southwest Airlines is renowned for its impressive customer service. The majority of airline employees receive extensive training in the art of client satisfaction. Southwest exceeds its competitors because its DNA roots back to the hiring process. The airline’s acclaimed company culture is developed during recruiting where the company seeks candidates with “a warrior spirit, a servant’s heart, and a “fun-luving” attitude*. They uncover these values through asking hard questions including “what [candidates] did when they had to respond to an irate customer.” The rigorous hiring process reveals how people will behave in a broad range of situations. The Southwest values are reflected in the service employees provide to customers. While the customers may be unaware of the employee pre-requisites, trainings, and tools applied to deliver the end experience, these aspects underpin the Strategic DNA and define Southwest’s unique value proposition. In order to support a strong strategic DNA, companies must spend time developing the strategy and understanding how each activity enhances the customer experience. Management must constantly refine the Strategic DNA and discuss progress toward objectives on a regular basis. This requires Companies to prioritize strategy as an integrative process rather than an annual chore.
In our next post, we’ll discuss Your Strategic DNA: Competing with Tactical Advantage.
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*Ken Makovsky, “Behind the Southwest Airlines Culture,” Forbes Magazine, November 21, 2013.