from R&D Innovator Volume 5, Number 1
Be Competitive, You Must Keep Promises
Ulrich is professor of business administration, University of
Michigan, Ann Arbor. He
consults with companies and does research on how companies
formulate competitive strategies, and how they integrate human
resources into strategic goals.
Week listed him as the top educator in human resources. He is co-author of several books including Passport to
the Future: Creating a Boundaryless Organization (1995, Jossey-Bass,
would happen if your best friend made promises, but never keep
them? How long would
it take before cynicism, fatigue, and enmity come between you and
strategies may be seen as corporate promises.
Strategic promises may be made to multiple stakeholders.
To employees, promises may be made about work
opportunities, management actions, markets served, or value
investors, promises may be made about profitability, performance,
or shareholder value.
often, business strategies are more like former friends than best
strategic promises go unfulfilled, employees, customers, and
investors become cynical. When
relationships break, new friends replace old ones.
When strategic promises aren’t implemented, stakeholders
find new ways to accomplish their needs.
For employees, this means that when choices arise, good
employees may go elsewhere. For
customers, when other suppliers are viable, they will use them.
For investors, those who meet strategic promises will have
capital flow to them.
cannot be best friends with everyone—great friendships are
focused relationships where promises are made and kept.
Likewise, strategies focus resources and may make promises
that go unfilled. More
is promised than delivered; more is said than done; more is
pledged than completed; more is committed than accomplished.
failures, like broken promises, need not occur.
From strategies cleverly conceived and delivered, failure
can be replaced with success; aspirations can be turned into
accomplishments; and promises can be replaced with capabilities.
Strategy into Results
the last few years, a number of us who study competitiveness have
begun to identify and learn the process by which executives turn
strategies into results. We’ve
learned how to replace broken strategic promises with deliverable
commitments through building competitive organizations.
organization starts with competitiveness—this becomes the
ultimate goal of any organizational activity.
If what’s done inside the firm doesn’t add value to
customers outside the firm, the wrong things are being done.
Competitiveness comes not just from strategies, which make
promises about how resources will be allocated, but also from the
organizational activities necessary to fulfill those promises.
strategy in place, competitive organizations focus on building
capabilities that turn strategies into competitive results.
Through working with many firms, we’ve begun to point to
a set of critical capabilities which managers must engender into
their company if they’re to keep the promises made in the
capabilities represent the bundle of individual competencies and
organizational processes within the firm.
These capabilities are those organizational activities
necessary to accomplish strategy.
If executives and their managers can build capabilities,
they shift strategy from a formulation to implementation two-step
process to a formulation-capability-implementation three-step
additional step helps fulfill strategic promises.
identified four critical capabilities that help keep strategic
First, executives and managers must have a capacity for change; they must be able to adapt quickly and readily to new and often unforeseen conditions. Building capacity for change requires that executives learn how to adapt quickly, to experiment, to innovate, and be willing to take risks. Capacity for change also means going through a disciplined and explicit change process—rigorously and regularly. Capacity for change exists when the organization changes occur as rapidly as the external environment changes, when systems and processes which seem embedded within the hierarchy of the firm are broken loose and adapted.
executives and managers must have the ability to work across
boundaries; to share ideas and insights from one unit to another
with little friction or difficulty.
In our work on creating the boundaryless organization,
we’ve identified four boundaries that must be crossed.
Vertical boundaries need to be removed between executives
and operational employees so that every employee shares the vision
and direction of the firm. Horizontal
boundaries need to be removed between functions, business units,
or other groups to ensure a common firm-wide focus.
External boundaries need to be removed between a firm and
the value chain in which it operates to have a free flow of
information and ideas across a value chain.
Geographic boundaries need to be removed so globalization
becomes more than a buzzword.
executives and managers must have the ability to learn rapidly,
which is the process of generating and generalizing ideas that
impact quickly throughout an organization.
Rapid learning requires that environmental signals turn
quickly into organizational initiatives which are leveraged
through the organization culture and management practice and which
add value to customers. Rapid
learning draws on past experiences to reduce the cycle time of
innovation and change.
finally, executives and managers must have the ability to engage
in systems thinking, doing organizational diagnosis and
fundamental culture change as part of their ongoing management
thinking engages employees in placing their work in the context of
a broader management system.
executives and managers learn how to instill these capabilities,
they’re able to turn strategic promises into business realities.
Which of these capabilities require strengthening in your