Focusing on a force for good

X+Why are on a mission to unite, inspire and amplify the use of business as a force for good. By bringing start-ups on a common mission - to make the world a better place, under one roof, businesses of all sizes are able to form a network that’s stronger together. As disruption to economic systems around the world causes increasing amounts of fragmentation, such cohesion has never been more impactful.

Here they discuss how using this synergy to focus on the forces for good harnesses the imagination in a way that creates a more positive and purposeful future for all.

What’s Your Why

Authentic motivation, discipline and focus starts with knowing your why. When we start from first principles and understand our motivations in life, we can more naturally progress onto the how (and who, what, where, when). Knowing what we truly value helps us to adapt to our environment in a way that is sustainable, resilient and creates a more positive impact. As many companies are an extension of the core values of their founders, knowing your why is also about balancing personal and corporate values, which can often be harmoniously aligned.

This involves asking questions such as: ‘what business are we in?’ A companies implicit or explicit perception of the business it is in, is what conditions everything that it sees and does. The definition of the business is the filter or lens through which all information passes - affecting which opportunities are either pursued or rejected. It will also determine the target market, competition and competitive advantage.

Determining the boundaries of such a filter is important because in an age of information overload, it is important to know what to focus on, in order to plan and execute strategy effectively. It also affects intangible human factors such as mood, motivation and inspiration. For example the news is often laden with negativity, division and caution. However it is more often the case that multiple states and narratives exist at the same time, and what we choose to focus or hone in on is what affects our vision of the reality we participate in and create.

Dynamic Definitions

A dynamic view of strategy centred around a guiding set of core values is a constant process of asking questions, generating alternatives, and making choices that in hindsight, may prove to be right or wrong. This is because in every industry, there are several viable positions that can be occupied, the key is to use non-imitable resources that are unique to you, to create a differentiated position. This uniqueness or niche is always transitory and so constantly evolves and adapts to maintain its position in the environment. However having your own goal or vision (purpose) may serve as a guiding north star that prevents you from becoming paralysed by indecision or overly side tracked by the activity of competitors.

Once you know your why, you can use a strategic framework such as Markides Framework to determine the who, what and how in a more efficient way. This defines the rules of the game, and you need to carefully take the underlying economics and competencies of the business into consideration. It is important that the who and the what are determined before the how as these direct decisions around configuring the value chain, technology adoption, which activities are handled in-house, which activities are outsourced, and the overall organisational policy.

Strategy is then about combining these individual factors and decisions into a cohesive system that creates a co-evolving fit between what the environment needs and what the company does. This means the company must construct the appropriate organisational environment that will support the choices made - i.e culture, incentives, format, community and factors that go beyond market, products and customers. It is the way these individual moving parts are put together that will create the emergent properties of a self-reinforcing system. This is a creative process that involves examining the issue from a variety of angles and constantly experimenting with new ideas via trial and error - as theory will always manifest differently to practice given the infinite number of moving variables.

The rise and fall of Xerox illustrates what can happen when an established company fails to continuously re-evaluate its strategy. A market leader in the 1960s, Xerox defined its customers as big corporations and designed copiers for high-speed, high-volume needs. Playing the game differently, Canon instead targeted small and medium-sized companies and focused more on quality. Xerox responded too late to the needs of the often over-looked smaller organisations and within two decades of entering the industry, Canon emerged as the market leader.

On the other hand, Hewitt Associates is an example of a firm that was able to successfully phase in a new strategy while continuing to employ an existing and still profitable one. The Chicago-based human resources consultancy moved from its traditional base of benefit and compensation consulting services to become a major provider of retirement and health plan administration. It therefore moved into a service that successfully straddled both strategic positions.

A novel strategic position is simply another viable who-what-how combination. Perhaps a new customer segment (who), a new value proposition (what), or a new way of distributing or manufacturing your product (how). Gradually, such new positions may challenge the domination of existing positions. This happens in industry after industry: once formidable companies with seemingly unassailable strategic positions find themselves humbled by relatively unknown companies that base their attacks on creating and exploiting new strategic positions in the industry.

Therefore, hard-earned success is often generated as a result of proactively breaking and shifting the rules of the game in a given industry. Strategic innovation establishes distinctive positions that are critical to shifting the wider system - market share or the creation of new markets. Changes in industry conditions, customer needs or preferences, demographics, technology, government policies, competition, and a company’s own competencies generate new opportunities and the potential for new ground rules.

As decisions can only truly be evaluated in hindsight - dealing with decision-making under uncertainty involves one of two things: either becoming the innovator, or leveraging emerging innovation from elsewhere. Established competitors can proactively develop the next strategic innovation in an industry. Balancing the old and the new in mature markets (where cost, efficiency and incremental innovation are key), and developing new products, services and markets (where radical innovation, speed and flexibility are critical) requires strong organisational and management skills. This means management is pulled by two opposing forces - those that demand commitment to the status quo, and those advocating for the future. The most common error is for advocacy to overstate the market potential and underestimate its costs. So finding the right balance between support for incremental improvements and commitments to new and unproven innovations is key.

Firms must develop the capability to recognise early whether a new strategic position is emerging that will unsettle their markets. The most effective way to do so is to regularly monitor indicators of strategic rather than financial health - that is, leading indicators of a company’s performance such as employee morale, customer satisfaction, and distributor feedback. It also means tracking and benchmarking maverick competitors operating in smaller niches, while building a strong sense of direction, and developing the capability to identify and take action on changes early.

In the face of uncertainty, the best a firm can do is build internal variety and diversity (even at the expense of efficiency), and let the market mechanism determine what wins. By nurturing variety, a company also builds the competencies needed in the future. Creating and managing internal variety is intrinsically difficult, but it is achievable if learning is allowed to flourish in the organisation.

The Heart And Soul Of Strategy

The backbone to this dynamism is a foundational set of core principles that serve to align overall direction. Again, building out from the companies ‘why’, it involves recognising personal and corporate core values, which affect individual and organisational action and therefore direction. Our innate values are our internal motivators which denote the degree of importance we place on things we believe to be necessary for the way we live and work. They’re also the yardstick we use to measure the degree of fulfilment we really receive from life.

For many people, determining these true core values is still an on-going process - as it often involves disentangling what we think we should want from what truly nourishes our soul. For example what we think we should want may be affected by culture and other outside influences, or can be negative values fostered as a result of fear and insecurity.

Negative core beliefs such as the perception that the world is a competitive and brutal place, that life is meaningless or that people are mostly powerless to determine their fate are often cultivated in environments that propagate the mentality of ‘survival of the fittest’. If we do not stop to question and identify such core beliefs, we may find ourselves living through the lens of confirmation bias, which in turn affects behaviour and output. While there is always a yin to the yang, where we continually place our focus makes a difference to our overall perspective and vision. As creatures of our environment, modifying unhealthy external factors and finding a better fit for ourselves is therefore vital to overall mindset and wellbeing.

This is what makes spaces such as x+why both impactful and unique. Cultivating an environment of ‘survival of the fairest’ fosters community, cohesion, collaboration, and co-operation. This instills positive core beliefs as a result of witnessing that the world is full of small acts of kindness, that people have the agency and will-power to change their fates and situations, even when their circumstances may be different, the belief that people are fundamentally trustworthy and loving, and have the potential to change - and the belief that we can choose to actively create meaning out of the meaningless.

Corporate core values determine how the company operates in business, while their mission statement determines how they can go beyond this to serve the community. At spaces like x+why, all companies sign a manifesto before joining, ensuring that they can unite, inspire and amplify a variety of purpose-driven businesses, brought together by a common mission – to keep making the world a better place for all. Building positive core values into our enterprise, is a means of creating greater change in our economic and societal systems. As with the B Corporation movement, this is necessary to bring us all into a new paradigm of purpose and create net positive value for the Triple Bottom Line – people, planet and profit, in tandem.