Maslow’s hierarchy of needs for businesses

The test of a good theory is how its principles/framework can be leveraged in other domains outside which it was originally intended. Maslow’s hierarchy of needs describes the stages of human motivation and needs. The theory is often represented by a pyramid with foundational “needs” at the base with increasingly advanced needs as you move further up the pyramid. Maslow suggested that the most basic needs be met before an individual was is able to focus on attaining higher level needs.

Another parallel is sports. Take golf as an example: I started by learning “swing fundamentals” like stance, body position, grip etc. before I progressed to more advanced techniques like shot shape, controlling distance, spin etc. If I’d tried doing it the other way round I would have been one frustrated golfer.

In the business world, this same model can help organizations prioritize activities that lead to long term, sustained growth. Without foundational elements in place, other “higher level” activities will not accrue to any value and will ultimately fail. This is common in businesses that are trying to grow but find themselves bumping up against an “invisible ceiling”, which could be measured in revenue, profit, number of people etc. Often, it’s the lack of fundamentals that stunts company growth and eventually lead to customer and talent retention problems.

maslow

Mission, Culture & Values

In the absence of clear direction / higher purpose (mission) and pillars by which to guide decision making (culture & values) organizations find it hard to steer away from uncertainty and ambiguity. Teams are unclear about how their activities accrue to the company’s goals and how to prioritize the many facets of the work they do. The most successful organizations are not only clear about their mission, culture and values but their team members demonstrate them consistently and hold each other accountable for following them. LinkedIn’s CEO, Jeff Weiner, does a really nice job of establishing mission, culture and values – have a read through their “Culture Book” here for some further inspiration on how to lay out these important items.

Corporate Governance

The meaning behind corporate governance is often clouded by finance, but at its essence, it’s really just a fancy term for defining who does what in an organization. Clear roles and responsibilities are important to help facilitate empowerment, leadership and accountability which are essential as an organization grows and inevitable complexity creeps into getting business done. It also helps team members build clear expectations on how to progress to the next level in their careers. Harvard Business Review has a good piece on the importance of defining roles and responsibilities.

Business Goals

What is the company trying to achieve? Defining, communicating and regularly reviewing company goals helps align teams and individuals on activities that accrue to the overall mission. They should be strategic as possible so that you avoid the “moving the goal post” dilemma and teams have time to plan and execute against them. Peter Drucker’s SMART goals are widely regarded as a good framework for how to set goals.

Unique Differentiation

Being able to create unique value for customers allows a company to outmaneuver the competition and drive customer retention. This is arguably the area where a company is able to generate the most incremental value for stakeholders. Capitalizing on differentiation is done by telling the story to the market through the sales and marketing teams and should be woven into the brand positioning. Entrepreneur magazine lays out principles to think about when defining a company’s unique differentiation.

Sustained Innovation

The ability to continuously create new products, enter new markets and disrupt incumbents helps organizations create sustained, long term growth. Cultivating sustained innovation is the “self-actualization” moment for an organization. Consider Apple, who defined the era of digital music and then proceeded to reinvent the smartphone which set them on a path to become the largest company on the planet by market capitalization. Often, sustained innovation is baked into an organization’s culture to encourage more frequent occurrence. Fast Company writes about this concept and how to approach it.

Where to start?

Achieving all of this, and reaching sustained innovation is by no means easy. It starts at the top with the CEO. He or she is responsible for leading and setting forth many of the high level initiatives; mission, culture and vision and corporate governance. At the same time they need to be putting in place a leadership team that are able to plan, budget and execute those initiatives and then empower and hold them accountable for driving outcomes that accrue to the organization’s success.

Have a different view on Maslow’s hierarchy of needs for a business? I’m waiting to hear from you in the comments below.

 

— Hat tip to Ray Wang at Software Insider for his version of the business hierarchy of needs which helped me structure my thinking around the priorities.

Read More

Bezos waiting for Windows at the race of the bottom

I  like Paul Thurrott’s piece on Windows and the race to the bottom. It reflects Microsoft’s impatience to win in tablets and flip flopping between strategies that are long term (Windows 8 and addressing the high end market) and short term (price reduction). They have tried to compete with Apple and have come away licking their wounds and now are preparing for a battle at the low end. The reality is that Apple wins with it’s compelling devices and lock-in to valuable first & third party apps and services (iTunes, Spotify etc.), where it is super hard to compete without compelling market share and therefore monetization for publishers. Instead, they are now going to dip their toe into the low-end market, where Jeff Bezos and the Amazonians are waiting to wrestle them in the mud. Where margins are thin, Amazon will win – they are relentless in their pursuit of stickiness to their own services (Kindle, Amazon Instant Video, MP3, LoveFilm, Book store, Prime, etc.) where they make the most margin.

Oh and by the way, they have a pretty nice little shop front to sell their devices too.

Read More

Changing corporate culture

Much has been written about the changes afoot at Microsoft. The reorganization of the company, inclusive of the CEO change, will be the subject of business case studies and MBA courseware well into the future. With that backdrop, I found McKinsey & Company’s interview of Alan Mulally from November 2013 fascinating reading. Mulally is of course one of the supposed “final candidates”, (yesterday’s news about Mulally not withstanding), for the CEO position at Microsoft and his transformation of Ford is widely documented. With Microsoft having restructured from divisions to functional units, the first job any incoming CEO presumably is to instill a culture that reflects the new organization. This begs the question; how does Mulally view changes like this?

McKinsey: You’re widely credited with reshaping the culture at Ford. What’s different now?
Alan Mulally: At the heart of our culture is the One Ford plan, which is essentially our vision for the organization and its mission. And at the heart of the One Ford plan is the phrase “One Team.” Those are more than just words. We really expect our colleagues to model certain behaviors. People here really are committed to the enterprise and to each other. They are working for more than themselves. We are a global company, so we really have to stay focused on the work. There are so many people around the world involved in our daily operations that it has to be about more than a single person—it truly has to be about the business. Some prefer to work in a different way. Ultimately, they will either adopt the Ford culture, or they will leave.

Given the well-documented company DNA, this kind of approach might be exactly what the doctor ordered. This is why many believe that someone from outside the company is best suited for the role, even in a caretaker / temporary position, so that they can instill the culture that fits the functional structure and then stand aside to let the product visionary take over the reigns.

Disclaimer: Whilst I work at Microsoft, I have no insight into the CEO selection process. Of course, opinions stated on this blog are my own and discussed purely from an interest in macro business strategy and trends.

Read More