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I recently completed reading the book “Obliquity” by John Kay, which provides an important perspective on vision, goal setting, strategy and decision making. Obliquity is the idea the complex goals are often best achieved indirectly.
For example, one of the central ideas in the book is that individuals and companies succeed when they focus on striving towards a compelling purpose, as opposed to a focus primarily on financial success. In the book, John Kay points out that businesses are best run by enthusiasts, men and women who pursue excellence and that financial success follows form this pursuit. However, if financial goals are made the primary objective, then organisations begin to loose their way and significantly increase their chances of failure.
One example of this error, discussed provided in the book is that of Boeing, the aircraft company. Boeing went downhill after their primary strategic focus shifted from being passionate about building great planes, to a focus of delivering “shareholder value”. Bill Allen, the Boeing CEO from 1945 – 1968 described their purpose as to “eat, breathe, and sleep the world of aeronautics”. The downhill spiral began when the new Boeing CEO, Phil Condit explained the new focus “we are going into a value based environment where unit cost, return on investment, shareholder return as the measures by which you’ll be judged”.
Another example comes from the Collins and Porras book, Built to Last, which compared and contrasted the strategies and approaches of two companies in the same industry. In the book, Merck and Pfizer were two companies that formed part of their analysis.
- Merck followed an oblique approach to their strategy, as emphasised by George Merck – “We try never to forget that medicine is for the people. It is not for the profits. The profits follow, and if we have remembered that, they have never failed to appear”
- John McKeen of Pfizer, in contrast to Merck, followed a more direct strategy, John stated “so far as humanly possible, we aim to get profit out of everything we do.”
However, it was Merck who achieved success and made the most money. So it seems that the most profitable companies in the world are not the most dedicated to profit. Instead they are dedicated to pursuing a compelling purpose. They are dedicated to pursuing excellence. It’s not all about the numbers and shareholder value, it’s about passionate employees, great products and satisfied customers. The most profitable companies are not necessarily the most profit orientated.
In the the article “Jack Welch Elaborates: Shareholder Value”, an interview with Jack Welch, the former CEO of General Electric, discussing his ideas on shareholder value, he points out that…
“On the face of it, shareholder value is the dumbest idea in the world… Shareholder value is an outcome—not a strategy… That’s not a strategy you can touch. That’s not a strategy that helps you know what to do when you come to work every day. It doesn’t energize or motivate anyone.” – Jack Welch, “Jack Welch Elaborates: Shareholder Value”
The reality is that ‘getting the numbers’ and ‘shareholder value’ as goals will never be enough to stir the souls of men. It’s the commitment to a cause we passionately care about that really matters, it’s this commitment that causes us to get out of bed in the morning and that inspire us go the extra mile.
Why all this Matters
So, why does all this matter? When is comes the practice of leadership it’s important that we adopt a vision strategy that is compelling enough to drive the outcomes of leadership, being direction, alignment and commitment (see post). Let’s examine the application of the concept of obliquity as outlined in this post to our practice of leadership. Consider the following leadership challenges that a direct approach creates.
Strategy: When we have generic goals and objectives, such as “improve shareholder value”, this does not provide clear direction for the organisation and assist to answer questions like:
- How do we best allocate resources in support of this vision and strategy?
- What trade-offs should we be making to support the vision and strategy?
- What tactics would allow us to achieve our vision?
Execution: Without a strategy that results in clear and compelling direction, execution that results in alignment becomes difficult to achieve. Consider that alignment cannot be achieve if you are unable to address the following questions:
- What should we all be doing differently or better when we come to work each day?
- Who is accountable to achieve what outcomes?
- How do we ensure that the plans, decisions and action across the enterprise all contribute towards the same goals?
Culture: Without a strategy that considers all stakeholders, it is almost impossible to gain the level emotional commitment from employees to support the execution of strategy and to drive meaningful change. Consider the following:
- Does the vision inspire people to go the extra mile?
- What behaviours are being encouraged by the vision and strategy?
- What type of leadership style and behaviours are require to lead this strategy?
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{ 11 comments… read them below or add one }
Great Article.
To paraphrase Jim Collins in Good to great – The analogy of the fox and the three intercepting rings. Find your passion. Do what you love and do it well. It’s hard not to make money that way – but then again it was never about the money.
Hi George,
A great article and definitely lots of useful points.
According to you are there any known ways to make people feel passionate about the work? Does there exists a way by which one can get zeal and passion in her/his team members?
To me the core of this article is focus. The interesting idea emerging however is that although we are taught by contemporary wisdom that you get exactly what you focus on, it seems in practice that this is not always the case. It seems that one must make a distinction between core focus areas and focus benefit areas. As soon as you start focusing on the benefit, you not only lose the benefit but the core as well. The role of Leadership is to keep the correct focus.
Poonam,
>”Does there exist a way by which one can get zeal and passion in her/his team members?”
Absolutely! To succeed one must focus your vision and define what THIS WORK is for you, and help team members do the same.
It is generally accepted that passion drives results; but then what drives passion? Hope fuels and rekindles our passion to embrace challenges; then what drives hope? What drives hope is to know that we have new possibilities. How do we produce new possibilities?
What were your assumptions when you/your team began your work? Can you see a connection between your initial assumptions and the challenges you now face? What new assumptions might you make that would drive different behavior and results? When we shift our assumptions, attitudes, behavior and results change. When we shift our assumptions we create hope for new possibilities…
…New possibilities produce hope; hope for a better future rekindles passion; passion (oblique vision) drives results.
George,
Excellent article that concisely says what I wish more CEOs and business leaders could understand, that business does not exist to make a profit, but to add value that attracts and maintains customers. Profit is an outcome that makes it possible for the business to continue to serve its primary purpose, but profit and shareholder value is not that primary purpose.
I like to ask people to compare how they feel when they walk into a business that is obviously focused on profit compared to one that is obviously focused on keeping loyal customers. With which one do you want to continue doing business? What kind of story do you tell your friends and family about each one?
Mark,
Your comment…
I thought this a really insightful observation! One a similar track how do you think employees feel working in a company focused on profit compared to one focused on a passionate, meaningful purpose!
Where do you think the most talented individuals will want to give of their time and energy?
I somehow missed your reply when you made it…
Employee loyalty is the key to customer loyalty, no doubt. And if “profitability” is the biggest thing that a company asks its people to work for, the effect will show up in attitudes, daily habits, performance, productivity and customer service, or more likely employee and customer complaints.
Want to increase profitability? Begin with all the things that produce employee loyalty, including a Great Strategic Aim with a passionate, meaningful, service-focused purpose!
Great post! Vision is about clarity and in my experience the best way to come to that clarity is to actually have a creative and to your point, a multifaceted approach to getting there. Leading organizations are driven toward more than money because they are made of leaders who are creative and who desire to innovate/create/think and live. It’s good to see that they are beginning to get more and more recognition.
I certainly can identify with honing in on a compelling focus. As a manager and leader I subscribe to the theory that followers need a compelling vision that isn’t boiled down to revenues and profits. The underlying purpose of the organization needs to be communicated to employees, i.e. serve the customer, perform to the best of your abilities, etc…. profits and revenues will take care of themselves when a a higher purpose is pursued.
Simple, clear purpose and principles give rise to complex, intelligent behavior.
Complex rules and regulations give rise to simple, stupid behavior.
– Dee Hock (founder of the VISA network)
George,
Great article – really well written and researched. You make some very compelling points.
Kind regards
Michael