The triad that sustains classic organisations

The Effectiveness lab continues its September 2016 ‘learning from the sayings of the wise’ blog sequel – wise individuals that have left indelible marks in the world. We return yet again to Henry Ford, the industrialist that changed the motor vehicle industry.

Over the last two blogs, we have discussed the need for organisations to create an environment where ’honest discourse’ can be had by all, reassured that there will be no adverse consequences. Organisations should create and protect spaces where employees can engage in discourse while at the same time remaining true to their character. Also, it became apparent to many of us in last week’s blog that principles and not individual pedigree, drive success at the organisation – after all, individuals are mortal.

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This week, we reflect on another wise saying by Henry Ford – coincidentally, Ford’s utterances have influenced some of the philosophical underpinnings at the Effectiveness lab:

There is one rule for the industrialist, and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible. Henry Ford

Products should not only be the archetypal, but also low-cost - Concorde Aircraft!

Products should be not only the archetypal, but also low-cost – Concorde Aircraft!

From the above thinking by Ford, we deduce three fundamental success drivers for organisations. We shall call the three drivers the triad that sustains classic organisations:

  1. Best products and services
  2. Low cost of goods and services
  3. Paying high wages/salaries

The classic organisation triad explained:

  • Best Products/Services

All organisations that want to achieve a state of sustained profitability and the tag ‘classic-organisation’, need to define their product/service offer in the first instance, and then position them correctly in the market. It is no use designing the best product or service that has no market. Think of the Concorde aircraft story or Google glass. Even the best products and services need to satisfy demand

Best products and services are grounded in a culture of strong customer-needs research – classic organisations invest incredible amounts of time and resources to understand the needs of their current and prospective clients and design products/services that meet such need.

Many of you must be thinking of the traditional marketing function as the sponsor of ‘client needs’ research and mastery. Well, no longer the case. Every employee is a ‘client needs’ researcher. There is an on-going shift from orthodox customer service points manned by marketers to holistic customer service journeys. Best products and services are informed by comprehensive customer feedback, collected at every point by every employee, and collated long before the products and services are even designed. Marketing, like many other orthodox organisational functions, is fast becoming seamless and mainstreamed in the organisation’s value chain

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To sustain the best product/service position in the marketplace – classic organisations continuously innovate. Continuous innovation and the resulting success are not achieved through investing millions in strong research/science departments. The best product/service position shall be achieved and sustained when the entire organisation value-chain and its people are taught to think about change 24/7 – organisations have to learn to change seamlessly across their value chains and all the time.

For example, by the time the research/science department is putting its hands to a new product/service, the design/re-design process will have been informed by multiple iterations of miniature feedback from every department at the organisation. It is not easy to get organisations to think this way.

Organisations are used to working in silos. The cash and dispatch office may not understand their role in informing product redesign and packaging – yet feedback about what customers consider inconvenient at the acquisition point (cash counter) is critical to designing ‘convenience and value’ into products and services. We suppose that there is a good reason as to why Apple pay too much attention to not only product design, but also packaging. I am sure Apple gets a lot of feedback on this aspect from its Apple Store front end.

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The linear and boxed approach to best product/service development and sustenance can no longer guarantee success and therefore, classic-company status. Integrated Value Chain effort/s is informing product/service development. Like the example of the cash and dispatch office above, product development is informed by multiple, miniature interactions between employee and employee, employee and the customer, employee and other external stakeholders, and in more complex cases all of them.

The emerging organisation complexity calls for a new kind of employee – therefore, investment in people is the other key variable to sustaining best products/services and the classic organisation status. Organisations have to understand what kind of skills they need in the ‘new employee’ starting with the leadership all the way down to the gate man.

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  • Low cost of goods and services

Ford recommends that Best products/services should be produced at low cost. At the Effectiveness lab, we recognise that organisations can be effective but not efficient. If effectiveness is the ‘capability to produce the desired result’; and efficacy the ‘extent to which the effect you want is achieved’, effectiveness and efficacy, unlike efficiency, are about ‘achievement’ and not the ‘resources spent on achieving effectiveness’. Therefore, you may be effective but not efficient

Organisations should work to attain effectiveness and efficacy, by producing the best products/services, but not at the cost of efficiency.

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The Effectiveness-Lab philosophy

  • Paying high wages/salaries

At the Effectiveness lab, we recently urged the case for Service-Purity; a situation where we work not necessarily for the money, but the passion for what we do and therefore the brand.

Sadly, those organisations that want to tap into the obvious potential of the service-purity paradigm are faced with a double whammy; the double whammy of a world where employers no longer guarantee employment for life and as a result, employees find it hard to connect with and ‘love’ the brand – i.e. employment is about giving your very best at a point in time (read: employment contract) and the employer letting go of you as and when circumstances dictate. A very artificial relationship we must add.

On the other hand, you have the Z-generation coming of age and getting employed.  Very soon Z-generation kids shall become the leaders at a majority of organisations – but the Z-generation type does not have the patience, attitude, and values to connect with brands – that is not them. What will happen when they attain the critical mass of numbers at work? The simple answer, the little that remains of service purity will also die.

Having said the above, if organisations attain the best products/services, low cost of goods and services, then they should have enough to pay their employees very well. Companies should pay high wages/salaries to attract and retain the very best. Sadly, that is a fact that organisations cannot escape. Classic-organisations boast of very satisfied employees.  Both from the finance and values perspectives.

I hope that like us at the Effectiveness lab; you decipher from this blog that classic-organisations need to be effective. However, effectiveness cannot be looked at in isolation. It is a system of ‘things’ that ends in a state of efficacy. Effectiveness only results in efficacy and S.M.A.R.T outcomes, when a significant level of its twin, efficiency, is attained.

Effectiveness is, therefore, systemic.  Classic-organisations have mastered the art of doing business systemically



Categories: Strategy

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