If Porter Has 5 Forces, Kring Has 4 Principles

Introduction

The objective of this piece is to make the lives of business people: happier, faster and more productive. Business is all about getting the most you can out of your resources. This piece is designed to make it easier for people to do this. Please read this piece. Share this piece with others. Provide feedback. And check out other useful pieces @ https://goo.gl/JInBfi. Enjoy!

If Porter Has 5 Forces, Kring Has 4 Principles

I have always been fascinated with how some small companies, that are under-resourced and deemed to be insignificant, can thrive and go on to dominate an industry. While some much larger, more powerful companies stall-out and eventually fail. Superior strategy explains a lot of these differences in the market place. Superior strategy makes it easier for a company to thrive, when resources are scarce or limited. And at the edges, all companies have limited resources. Even with borrowing.

Early on, I was interested in how to develop and design these types of superior strategies. And as part of the formal learning process I was taught:"Porter's 5 Forces", SWOT analysis, and dozens of other frameworks. Each framework felt useful. Each framework helped organize some of the chaos that can exist in business. The chaos was better organized into more manageable business patterns using these frameworks. Patterns that even today, help people make better sense of the business world(s) around them.

However, a few years ago I was working with a CEO. The CEO was looking to grow the company. And while the team was giving him a lot of ideas on how to grow the company, he paused and asked me "yes, but what I really need to know is, how do I best invest in the company?" I thought to myself “how do I best invest”, is a much different question than “how to grow the company”. Since the question was substantially different, the overall impression I had was, that the answer(s) to the question would be substantially different as well.

In taking a shot at answering the “how do I best invest” question, I broke the challenge down into the separate pieces needed to answer the question. What I was left with were piles of chaos. In order to put the pieces back together, in a new way, to answer the question, I turned to the frameworks I had been taught. The end result was a bit disappointing. None of the business frameworks adequately addressed how to best invest in the company.

It dawned on me that the solution to the challenge, must require a different approach from all of the ones that I had been taught.

In working through the different elements to the challenge, it quickly dawned on me that . . .  

Unless you know how all of the pieces of the business fit together, you are not going to be able to determine how to best invest in the company.

Integrated thinking is essential to answering the question, because in order to determine how to best get the most out of your limited resources, you need to know the best answers to all of the trade-off decisions that need to be made along the way. And in knowing this, how all of those trade-off decisions best impact the larger company.

For example: It may be necessary to over-invest in one area of a company, and under-invest in another area of a company, to be able to maximize the value of the company as a whole.

However, there are business leaders that say, "we just need optimize the individual pieces of the business (departments, functions, products, etc.) and the whole will take care of itself".

What these leaders don’t understand is that, this kind of disjointed thinking can risk, "optimizing the company right into the ground".

And if the company isn’t destroyed by this type of disjointed thinking, this thinking often leads to a company under-performing. Under-performing given its potential. Under-performing quarter after quarter.Under-performing year after year. This is because by only looking at the pieces individually, at what is best for each of the individual pieces, you can destroy the larger company in the long run.

Some executives are so insistent on optimizing the individual pieces of the company, that they are strongly against different portions of the company even talking to each other. In one company the president actually said, “You are given different departmental goals for a reason. Because you are supposed to do what is best for your department - don’t be concerned with what is going on in other departments - stick to the goals you were given in your department!”

For some of these executives, it is easier to understand the kind of damage this disjointed thinking can do, when you use healthcare as a metaphor for business.

For example: If doctors thought like business people, then there would be doctors that only focused on legs. They would only be concerned on the health of any leg they were dealing with. Why? Because all of their success metrics would be leg-based. The head of the hospital would even insist that the leg-focused doctors not be concerned with any other part of the body. They are again, just to focus on the leg. To some business people this feels efficient. This is the way they like to run their business.

If a patient were to come into the hospital, with a leg that had an aggressive infection, the priority for some of the leg-based treatments could be: cleaning and dressing the infection site on the leg, prescribing antibiotics, and other treatments that would optimize the preservation of the leg. Since the doctor is only concerned with health and preservation of the leg, surgery in most cases would be the option of last resort. Because surgery would mean cutting away parts of the leg. And with your only goal being to care for the leg, cutting away parts of the leg would only happen in the most extreme leg based situations.

If the doctor is trained more like a healthcare professional and not like a narrowly focused business person, the doctor would look at both the leg and the body as a whole. When the doctor looks at an aggression leg infection this way, surgery in some instances might be the first choice. The first choice instead of the last. Because with an aggressive infection, there may be a concern that the aggressive infection would spread to the body as a whole and kill the patient.

With a doctor that is focused only on the leg, they may work hard to save the leg, but because of the spread of the infection, kill the patient. This is a reasonable outcome if your metrics are only leg-based.

However, what good is a saved and healthy leg, if the patient is dead?

Yet, this happens in business over and over again. Optimizing the pieces, only to kill the whole. This happens again, and again because business schools have huge opportunities for improvement, when it comes to teaching integrated thinking.

To get a better “real-world-feel” to this, optimizing the pieces while killing the whole, is often seen in companies that eliminate: research, innovation and the development functions. Because these functions typically don’t have an immediate pay-off.

These same executives then seem confused and surprised when competitors are seen stealing market share from them. Stealing market share with new and compelling value propositions. Value propositions that did require research, innovation and development. The executive then quickly realizes that their company doesn’t have anything in the product and service pipeline. Because the processes required for having new compelling value propositions in the pipeline, had been “optimized away” quite some time ago.

In healthcare, we can transplant hearts and show others how to do it. In science, we can split atoms and show people how to do it. In business we do a poor job of integrating the pieces of business: the customers, prospects, competition, marketing, finance, operations, research, data design, etc. And we certainly don’t do a good job of teaching others how to do it. This is sad, sick and needs to stop. And the solution to changing this is not that hard.

In business, it is possible to balance the optimization of both the pieces and the whole, if you know how all of the pieces fit together. This requires going beyond traditional frameworks and utilizing Kring’s 4 Business Principles. Hey, I figured if Porter could have “5 Forces”, I could have “4 Business Principles”. While this is a serious business piece, please feel free to imagine a smiley emoticon inserted here.

Kring’s 4 Principles Of Business

If you know Kring’s 4 Principles of business, a lot of the business chaos evaporates away. Simply put, Kring’s 4 Principles are:

1. There really is only one main goal
2. Driving the profitable behaviors of customers
3. Driving the profitable behaviors of employees
4. Knowing what your puzzle box lid looks like

Here is the detail behind each of the 4 Principles.

Principle #1 - There Really Is Only One Main Goal

Whether you are the CEO, a janitor, or anyone else in between, your job directly or indirectly, is to drive profitable behaviors. That’s it! That is all there is to it.

If you want to break it down a bit further, it is to drive the profitable behaviors of both the customers and the employees. Everyone should know how their behaviors support driving the profitable behaviors of the customers and employees. For example, for the CEO it can mean the organizational development of the business, leadership, resource allocation, etc. For the janitor, it can mean providing a clean safe workspace that allows others to best focus on getting their jobs done.

Principle #2 - Driving The Profitable Behaviors Of Customers

Driving the profitable behaviors of the customers, means shifting key perceptions. To shift key perceptions, means overcoming the key barrier(s) that stand in the way of shifting the key perceptions.

If you understand the specific key barrier(s) that stand in the way, you can then design specific actionable strategies to overcome the key barriers, to shift the key perceptions, to drive the profitable behaviors of the customers. It is amazing how powerful this line of thinking is. It is also amazing how few people know about this clean, impactful, results oriented line of thinking. This should be taught in high schools.

Principle #3 - Driving The Profitable Behaviors Of Employees

Driving the profitable behaviors of the employees requires building and sharing: solid, transparent and defensible foundations. These foundations are the best way to drive the profitable behaviors. Because with these types of foundations, employees are better able to see what needs to be done and why. And also they are better able to play stronger roles in getting it all done.

It is easier to achieve total global domination, if you can drive the profitable behaviors of both your customers and your employees.

Principle #4 - Knowing What Your Puzzle Box Lid Looks Like

It is easiest to operationalize the strategic power behind each of the principles above, if you know what your puzzle box lid looks like.

The power of the puzzle box lid can be quickly illustrated through an exercise. Take three groups of people and have each group assemble the exact same jigsaw puzzle:  

• The first group with the puzzle pieces face down
• The second group with the puzzle pieces face up  
• And the third group with the pieces face up and with a copy of the puzzle box lid

Which group is going to be happier, faster, more productive?  The group with the puzzle box lid. (Quick note, I usually use a 24 piece puzzle in workshops, because it only takes about 5 minutes to learn this lesson.)

With the puzzle box lid, business people can more quickly see:

• The flow of the business
• Where they fit in the flow
• How they hook up to others in the flow
• And how they impact the flow as a whole

This knowledge can be used to: (Principle #3) provide employees with solid, transparent, defensible foundations, that they can use to (Principle #2) drive the profitable behaviors of customers, which then best ensures that the company realizes its one main goal (Principle#1).

All of this is designed to help companies improve things. However, to improve things, people need to change things. Changing things is incredibly difficult. Especially if everyone in the organization has been encouraged (forced) to only understand their piece of the business. When people only understand their piece of the business, the collective business environment turns into an “us versus them” mindset. However providing employees with the puzzle box lid as a foundation, shifts the collective environment away from an “us versus them” mindset and into a more collaborative “we” based mindset.

Here is an actual example of a person going from an “us versus them” mindset into a “we” mindset.

I was just about to go into a meeting to present recommendations regarding site selection due diligence analysis for a potential expansion opportunity at the company I was working at. Moments before going into the meeting I had a conversation with Betty. Betty was waiting to go into the meeting as well. While we were standing there, Betty asked me what I was going to be presenting. I gave her a quick summary of the presentation. During the conversation she went on to tell me, “well in our department . . . and you know their department . . . which is why we can’t . . .”. The feedback she gave, over and over again, in response to the quick summary was heavily laced with “us versus them” arguments.

It felt very combative. It felt strongly resistant to any kind of change whatsoever. And without change, you can’t get improvements. Her impression was that any change should be defeated, even before starting the presentation. At the time, her attitude didn’t bother me much. Probably because this attitude of “death before change” felt familiar. This pattern plays itself out in business over and over again.

However, after starting the meeting, I was only about 15 minutes into my presentation when Betty said that “WE need to do this . . . WE need to do that . . .”. I notice that her attitude felt more more collaborative inside the meeting, than our brief conversation in the hallway, outside of the meeting.

After the meeting I followed up with Betty. I asked her why she seemed to shift from an “US versus THEM” mindset before the meeting, to “WE this” and “WE that” mindset during the meeting. Betty said that, “In your presentation, you showed me how the expansion opportunity fit in the flow of the business. And once I saw: the flow of the business, where I fit in the flow and how I impact the flow, it dawned on me, that when you get a hole in your section of the boat, my ankles get wet. WE need to work together.”

To this day I still smile when I think of Betty and the conversation. In 15 minutes it was possible to turn someone from an “US versus THEM” mindset person, to a much more collaborative “WE” mindset person.

What I learned from Betty and others is that once you can see what the puzzle box lid looks like, you can better influence the profitable behaviors of employees. By building and sharing with them foundations that are solid, transparent and defensible. So that people can see: given the flow of business, where they fit, how they link up and how they best affect the whole. It makes it much easier for everyone to know what needs to be done and why. When there are shifts in the business or market place, everyone can still see how all of the pieces fit together, with only slight modifications to the puzzle box lid.

If you don’t know how all of the pieces fit together, how can you tell if you are best investing your resources?

How can you tell if you are best driving the behaviors of both your customers and employees? The answer to these questions is that you can’t tell, unless you do know how it all fits together.

Building and sharing the puzzle box lid is the best way to accomplish all of what is listed above. But how do you do this? By understanding how the business flows from potential to profitability and the points in between. In a way that generates value for both the company and the customer. And the necessary balancing point. More detail on each of the principles can be found at:

1. There really is only one main goal
   [ How to best invest: http://goo.gl/UsRxqP ]
2. Driving the profitable behaviors of customers
   [ Driving profitable behaviors and ad agencies: http://goo.gl/Axn9lc ]
3. Driving the profitable behaviors of employees
   [ Getting the most out of most valuable asset: https://goo.gl/5MCF7c ]
4. Knowing what your puzzle box lid looks like
   [ Business Strategy Mapping should be taught in high schools: http://goo.gl/GYFTv9 ]

And links to other useful content can be found @ https://goo.gl/JInBfi.

Conclusion

With Kring’s 4 Principles of business, it is possible for you to be more efficient at driving your business toward better outcomes. And be happier, faster and more productive while you do it.

This isn’t an academic exercise. It is meant to be useful, valuable and results oriented. While helping you build and move forward. And if it isn’t, you can swap out pieces with others to ensure that it is useful, valuable and results oriented.

There is even an article @ https://goo.gl/JInBfi that includes an 11”x17” worksheet. The “fill in the blank” worksheet is strategically scalable. It allows you to quickly build your puzzle box lid for: your company, a product or a project. Anything that can be driven from potential to profitability, and the points in between.

What Next

• Start today!
• Make sure to check out the other pieces @ https://goo.gl/JInBfi
• Provide feedback - knowledge is gained iteratively and I learn a lot in talking with others
• Share this information and links with others. We need to help make the world a better place more quickly.
• Let me know what you are wrestling with. I am a business/strategy geek and I love this stuff.
  (I am also especially interested in talking with anyone that is interested in total global domination.)

You can send me a LinkedIn invite to share a message, or reach out to me at kkring@gmail.com

Thank you for taking the time to read this.

#Kring’s4Principles, #Strategy, #ProfitOptimization, #IntegratedThinking, #ChangeManagement, #BusinessStrategyMapping, #CEO