By Chris Stevenson
A couple weeks ago, I attended the Filene Research Institute Sustainability Colloquium. At the meeting, noted Harvard Business School professor and Advanced Leadership Institute faculty member, Francis Frei, presented an outstanding session on driving excellence in credit union operations.
Professor Frei began her session by stating that the No. 1 obstacle to sustaining excellence is being unwilling to be bad at anything. At first blush, that seemed old hat. Anybody who has sat in a strategy class has heard the teacher quote Michael Porter--"The essence of strategy is what not to do." We know that organizations that try to be exceptional at everything end up being exceptionally mediocre. They lack the focus, financial resources, and human resources to excel in anything. But Professor Frei went a step further.
Organizations that drive excellence make hard-coded trade-offs between what they are downright bad at and what they excel at. If you do it right, choosing to be bad in one area can fund/enable an area of competitive advantage.
The now defunct Commerce Bank chose to offer the worst rates, and they were proud of it. Why? Because by paying the worst rates, they could fund their extended hours in evenings and on weekends. Commerce Bank chose to have a narrow product line. Why? Because by offering only simple, easy-to-understand products, they could hire employees for their cheerful attitudes instead of their technical aptitude. Those cheery employees enhanced the retail experience of customers who were stopping by the branch at 4 p.m. on a Saturday afternoon. They also cost less to employ than better educated, more experienced employees. Commerce Bank chose to be bad at some things (rates and product line) so they could enable the things that provided a competitive advantage (convenience and customer experience).
"Oh, Christopher," you may say, "Why on earth would you use the scandal-ridden Commerce Bank as an example? I'd never model myself after an organization that flamed out in shame."
Fair enough. Let's look at another example.
Wal-Mart. I hate Wal-Mart. Hate. Hate. Hate. I hate trying to find things in their cramped aisles. I hate trying to hunt down someone who can help me. And saving a few bucks isn't worth the hassle. But here's the thing: I'm not their target. Wal-Mart is all about efficiencies, including keeping staff costs to a minimum. That allows them to drive their prices down and attract their target market--those people who are price sensitive and don't mind sacrificing service to get a deal.
I know I'm oversimplifying (this is a blog, not a research study, after all), but I think the point is valid. We all know that effective strategy requires us to choose what to do and what not to do. But if your organization is going be sustainably excellent, you have to make hard-coded trade-offs. The thing is, most organizations don't.
Christopher Stevenson is CUES' director of professional development.
