CONTINUOUS Improvement: What are these brands’ secrets to superior performance in the present and the future?

Tuesday: Return Driven Strategy FROM THE DESK OF MILES EVERSON: Have you heard about Return Driven Strategy (RDS)? This pyramid-shaped framework has 11 tenets and 3 foundations. When applied properly, these principles can help firms ethically achieve true wealth and value creation. Professor Joel Litman and Dr. Mark L. Frigo explain this framework in detail in the book, “Driven.” In today’s article, let’s talk about another important aspect of RDS’ Tenet Four: Deliver Offerings. Continue reading to know how having a strategy-and-execution continuum mindset led to an effective business strategy for these two companies. CEO, MBO Partners Chairman of the Advisory Board, The I Institute

CONTINUOUS Improvement: What are these brands’ secrets to superior performance in the present and the future? What first comes to your mind when you hear the word, “offering” in the context of business strategy? Products? Services? Features and benefits? It’s easy to think of offering as just the actual product or service that a business provides. However, according to Professor Joel Litman and Dr. Mark L. Frigo in the book, “Driven,” an offering is more than that. It is the total of the product, service, function, benefit, and psychological value designed by a firm to fulfill the needs of customers. Offerings as the Path to Fulfillment Return Driven Strategy’s (RDS) “Goal Tenets,” Tenets Two (Fulfill Otherwise Unmet Customer Needs) and Three (Target and Dominate Markets), state that the path to wealth creation is through customers. LOTS AND LOTS of customers! This means business success is achieved by fulfilling customers’ otherwise unmet needs… and one of the ways to do that? Through the design and development of the RIGHT offerings. Let’s take a look at this scenario… Fact: High-return businesses realize their salespeople can also help them gather information about the types of offerings that must be developed in the future. These firms believe discussions between salespeople and customers must always be a part of the execution of today’s strategy, and a key element in the planning of future business strategies. In short, these conversations are a key to successful strategy AND execution. For instance: Motorcycle company Harley-Davidson’s salespeople have developed great rapport with their customers. Throughout the years, the company has “kept on cruisin’” by co-creating brand experiences with customers and engaging them as a community. Owning a Harley is both a personal and social statement. Connoisseurs spend as much time cleaning and admiring their bikes as riding them. In 1983, Harley-Davidson formed the Harley Owners Group (HOG) to encourage owners/bikers to be more involved in the sport of motorcycling and the entire Harley experience. The result? The company’s delivery of its offerings became centered on a unique Harley experience and led to an achievement of superior performance in terms of return on investment (ROI), growth, and shareholder returns over a 20-year period beginning in 1986. During this time, Harley-Davidson ethically created wealth through co-creating value for customers. Another example of a company that does well in terms of the design and development of the right offerings is automotive manufacturer Toyota Motor Company. According to an article from the Harvard Business Review, Toyota has become one of the world’s greatest companies because of the Toyota Production System (TPS). The unorthodox manufacturing system enables the Japanese giant to make some of the world’s best automobiles at an affordable price, and develop new and enhanced products quickly. To put it simply, the TPS is both a “hard” and “soft” innovation from the company—“hard” as it helps Toyota improve how it manufactures vehicles; “soft” as it relates to corporate culture. This system enables the firm to view its employees not just as pairs of hands but also as knowledge workers who accumulate “chie,” or the Japanese term for “wisdom of experience.” As a result, Toyota heavily invests in people and organizational capabilities, and garners ideas from everyone in the shop floor, office, or field. This encouragement of participation has been essential to the company’s high-quality vehicle production, an offering that for years could be matched by only a few at similar price points. The Strategy-and-Execution Continuum According to Professor Litman and Dr. Frigo, during periods of great performance at firms, it’s important that the shop floor personnel who are manufacturing, promoting, or selling the products of today are also contributing ideas and insights for better strategies in the future. Why? It’s because they are the ones who are in direct contact with customers! By having positive conversations with consumers and actively listening to them, these personnel will not only establish good relationships with customers but also gain more knowledge on how firms can effectively create and deliver better products of tomorrow. When that happens, companies will successfully execute their strategies AND regularly update their strategies based on information gained from previous executions. Keep RDS’ Tenet Four in mind when delivering offerings to your target market! Remember: There are results every time a task or execution of a strategy is performed. These results should be incorporated into the reconsideration and restructuring of a plan on an ongoing basis. This concept holds true for every area of high-return organizations. The implementation of existing plans today is part and parcel of the strategizing of the plans for tomorrow. Hope you found this week’s insights interesting and helpful. Follow us on LinkedIn.     Stay tuned for next Tuesday’s Return Driven Strategy! Nowadays, success in the workplace requires having a multitude of skills. Learn more about the importance of having good interpersonal skills in the workplace in next week’s article!