It’s Not the Strategy, Stupid!

point_of_views

When two organizations adopt the exact same strategy, are in the same industry, compete geography and seek to capture the same customer segment, have equal access to capital, one would expect similar results and performance.  But there is more to performance than a business strategy and finances.  The real differentiator is in how they work and the behaviours adopted in executing that strategy.

Some may call it “corporate culture” while others call it “execution guidelines”, but whatever the name, behaviour is often the big differentiator between seemingly similar organizations. Why is low-cost retailer Walmart so successful when it sells the same merchandise as Target, K-Mart and Costco? Many Walmart insiders believe its success is based on how the company treats its employees and how the employees treat customers.

Each Walmart store should reflect the values of its customers and support the vision they hold for their community.  ~Sam Walton

Behaviour Results From Point-of-View

Here’s a good example in the airline transportation industry, particularly in the ultra low cost (ULLC) travel segment in Europe. Two companies compete head to head in most cities; Ryanair and Easyjet.  Both adopted their business model and strategy from studying US carrier, Southwest Airlines, consistently the most profitable airline in the world (40 straight years of positive quarterly profits).  Single aircraft type, point-to-point routes (not hubs), quick turnaround times, relentless drive on cost control.  Both have grown significantly over the past 20 years and are about the same size in terms of annual revenues.

However, Ryanair is hated by most passengers and tolerated at best.

“I will put up with crappy service and rude behavior if the flight is cheap enough, and short enough!” -remark from a website dedicated to Ryanair passengers

Ryanair has been rated as having the worst customer service out of Britain’s 100 biggest brands, according to the readers of Which? magazine in a recent survey of UK customers. And in a YouGov survey that ranks customer experience on a regular basis, Easyjet consistently out ranks Ryanair by a significant factor.

Slide074And there is recent evidence that as the European market for ULLC travel becomes saturated and where there is a choice between Ryanair and Easyjet for cheap travel, customers are beginning to opt for the better customer experience of Easyjet.

So why with the same strategy and other similarities, are the execution behaviours so different?

One of the answers lies in management’s Point-of-View about the business.  Ryanair’s arrogant and customer unfriendly behaviours come from the point-of-view of the Shareholder.  Maximizing shareholder value and return is the major driver for Michael O’Leary, Ryanair CEO, the Board of Directors, and subsequently the management team.  From this point-of-view, customer service and frills costs money and decreases shareholder returns. Simple and easy to follow; if it costs money and doesn’t improve on-time performance or impact safety, don’t do it.

Easyjet, on the other hand, makes business decisions from a different point-of-view.  The view of the customer. The mantra of founder Stelios Haji-Iannou and the Easyjet management team is also simple and easy to follow; within our cost and performance guidelines, what can we do to give the customer a positive travel experience? Smiles cost nothing. Friendly interactions cost no more. Spending money on training and branding give positive returns in safety, performance, and repeat business from satisfied customers.

Same strategies, different execution behaviors.  For a long-term investment, where would you put your money? For a positive customer experience, which would you want your family to fly?

Your point-of-view is just as important as your knowledge, skills and strategy.

John R Childress

Business Author and Advisor

LEVERAGE: The CEO’s Guide to Corporate Culture

About johnrchildress

John Childress is currently Visiting Professor in Strategy and Culture at IE Business School in Madrid and a pioneer in the field of strategy execution, culture change, executive leadership and organization effectiveness, author of several books and numerous articles on leadership, an effective public speaker and workshop facilitator for Boards and senior executive teams. In 1978 John co-founded The Senn-Delaney Leadership Consulting Group, the first international consulting firm to focus exclusively on culture change, leadership development and senior team alignment. Between 1978 and 2000 he served as its President and CEO and guided the international expansion of the company. His work with senior leadership teams has included companies in crisis (GPU Nuclear – owner of the Three Mile Island Nuclear Plants following the accident), deregulated industries (natural gas pipelines, telecommunications and the breakup of The Bell Telephone Companies), mergers and acquisitions and classic business turnaround scenarios with global organizations from the Fortune 500 and FTSE 250 ranks. He has designed and conducted consulting engagements in the US, UK, Europe, Middle East, Africa, China and Asia. Currently John is an independent advisor to CEO’s, Boards, management teams and organisations on strategy execution, corporate culture, leadership team effectiveness, business performance and executive development. John was born in the Cascade Mountains of Oregon and eventually moved to Carmel Highlands, California during most of his business career. John is a Phi Beta Kappa scholar with a BA degree (Magna cum Laude) from the University of California, a Masters Degree from Harvard University and was a PhD candidate at the University of Hawaii before deciding on a career as a business entrepreneur in the mid-70s. In 1968-69 he attended the American University of Beirut and it was there that his interest in cultures, leadership and group dynamics began to take shape. John Childress resides in London and the south of France with his family and is an avid flyfisherman, with recent trips to Alaska, the Amazon River, Tierra del Fuego, and Kamchatka in the far east of Russia. He is a trustee for Young Virtuosi, a foundation to support talented young musicians. You can reach John at john@johnrchildress.com or john.childress@theprincipiagroup.com
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