A Leadership Imperative for Growth

ALIGNING BRAND, CULTURE AND STRATEGY

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Steve Patti CMO.!

WHAT IS LEADERSHIP?

DIVERSE RANGE OF DEFINITIONS

“Leadership is the capacity to translate vision into reality.” -  Warren Bennis “As we look ahead into the next century, leaders will be those who empower others.” -  Bill Gates “Leadership is influence – nothing more, nothing less.” -  John Maxwell “The only definition of a leader is someone who has followers.” -  Peter Drucker

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WHAT LEADERSHIP SKILLS DO YOU NEED MOST? DIVERSE RANGE OF OPINIONS

HBR.ORG

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¡ Control resources § Human (employees, contractors, etc.) § Financial (budget) § Physical (plant, equipment, etc.)

¡ Direct actions of others § Rank authority § Social influence

¡ Deliver results to meet business objectives § Strategy § Execution

WHAT DO LEADERS DO? GENERAL ROLE EXPECTATIONS

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¡  Elements of an Annual Plan §  Executive summary §  Mission statement §  Business description §  Business environment analysis §  SWOT analysis §  Industry background §  Competitor analysis §  Market analysis §  Marketing plan §  Operations plan §  Financial plan

LEADERS CREATE STRATEGY…

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¡  Elements of an Annual Plan §  Executive summary §  Mission statement §  Business description §  Business environment analysis §  SWOT analysis §  Industry background §  Competitor analysis §  Market analysis §  Cultural analysis §  Brand management plan §  Marketing plan §  Operations plan §  Financial plan

...BUT IS IT ENOUGH?

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GREAT LEADERS MAKE THE CONNECTION:

BRAND > CULTURE > STRATEGY Br

and Benefits:

Staff engagement Staff commitment Lower turnover Access to talent Lower labor costs Increased ROI

Cultu

re

Benefits: Revenue growth Higher stock price Increased ROI Stable cash flow Lower COC

Stra

tegy

Benefits: Revenue goals Business goals Professional goals

Winning with customers requires not only the right narrative but the ability to consistently deliver against expectations.

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¡ Sales (lack of meaningful positioning) § “Last look” RFP price concessions § Executive “heavy closing” road shows

¡ Customer service (lack of consistent execution) § Financial adjustments to “make things right”

¡ Operations (lack of consistent execution) § End-of-quarter “all hands on deck” § Late hours

SIGNS OF GETTING IT WRONG: HEROICS DON’T SCALE

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Why Align Culture to Strategy?

THE BUSINESS CASE

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Approximately 46% of EBIT is explained by the variable of corporate culture (“buy in”)

IMPACT OF CULTURAL ALIGNMENT: FINANCIAL PERFORMANCE

Source: Corporate Culture and the Bottom Line, Eric Flamholz, University of California at Los Angeles, 2001 (published in European Management Journal, vol 19, number 3)

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¡ Firms with strong cultures outperform those with weak cultures

REASON #1:

IMPROVED FINANCIAL PERFORMANCE

Source: Corporate Culture and Performance, Kotter and Heskett, 1992

Average Increase for 12 Firms with Performance Enhancing Cultures

Average Increase for 20 Firms without Performance Enhancing Cultures

Revenue Growth 682% 166%

Employment Growth 282% 36%

Stock Price Growth 901% 74%

Net Income Growth 756% 1%

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¡ Markets like steady, predictable performance ¡ Firms with highly variable cash flows find

themselves at a competitive disadvantage: §  Inability to internally finance discretionary investments. §  Higher cost of external capital

¡ Firms with highly variable cash flows have: §  Lower levels of CapEx investment §  Lower analyst following §  Lower S&P bond ratings §  Higher weighted cost of capital

REASON #2:

RELIABILITY OF FIRM PERFORMANCE

Source: The Strength of Corporate Culture and Reliability of Firm Performance, Jesper Sorenson, Massachusetts Institute of Technology, December 2001

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¡ Since strong corporate culture enhances goal alignment (employees less uncertain about the proper course of action in unstructured situations)

¡ Strong culture enhances employee motivation and performance (if employees lack a clear understanding of the organization’s goals, coordination is more difficult)

¡ Firms that execute well may actually compensate for suboptimal strategies

REASON #3:

EXECUTION OF STRATEGY

Source: The Strength of Corporate Culture and Reliability of Firm Performance, Jesper Sorenson, Massachusetts Institute of Technology, December 2001

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¡ If employees differ in their understanding of the environment, they will either: §  Spend more time debating alternatives §  Behave inconsistently and therefore be more likely to

carry out routine tasks poorly

¡ Strong cultures socialize new members more quickly

REASON #3: (CONT.)

EXECUTION OF STRATEGY

Source: The Strength of Corporate Culture and Reliability of Firm Performance, Jesper Sorenson, Massachusetts Institute of Technology, December 2001

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¡ Millennials want meaning from their careers § Culture trumps

compensation; reverse of Boomers/Gen Y

¡ Culture determines: § Recruiting top talent § Retaining top talent § Delivering superior

financial performance

CHANGING WORKFORCE COMPOSITION:

ARE YOU READY FOR THE SHIFT?

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¡ Fortune 500 Telco §  Goals: move down-market (SMB), sell new product, grow MRR §  Culture: slow to act, inflexible, lack of personalized services

¡ Niche enterprise software developer §  Goals: move up-market (Fortune 500), CIO engagements §  Culture: hip/cool, Millennial staff, 40-hour week, C-suite heroics

¡ Mid-market financial institution §  Goals: move up-market (HHI), trusted advisor, increase CLTV §  Culture: risk averse, “employment for life”, anti-sales, slow to adopt

¡ Mid-market hosting/cloud infrastructure provider §  Goals: move up-market, cross-sell portfolio to grow MRR §  Culture: 3 brands operating as cultural tribes, silo delivery despite

customers buying across portfolio

EXAMPLES OF CORPORATE MISALIGNMENT: “STRATEGY ONLY” FOCUS

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Brand + Culture + Strategy

GREAT LEADERS ACT

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¡ Q1: Do we have a defined culture and can my employees articulate it?

¡ Q2: Are we living the culture?

¡ Q3: Is our culture helping or hurting our ability to deliver against business goals?

SELF-ASSESSMENT

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“Culture eats strategy for breakfast.” - Peter Drucker

WHAT GREAT LEADERS UNDERSTAND: CULTURE ENABLES STRATEGY

Culture Strategy

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“Culture eats strategy for breakfast.” - Peter Drucker

WHAT GREAT LEADERS UNDERSTAND: CULTURE ENABLES STRATEGY

Culture Strategy

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WHAT GREAT LEADERS UNDERSTAND: BRAND STRATEGY SHAPES CULTURE

•  Positioning => Strategy •  Purpose + Vision + Mission + Values => Culture

PURPOSE

VISION

MISSION

VALUES

POSITIONING

VISION: What we aim to achieve

POSITIONING: How we differentiate from our competition

PURPOSE: Why we exist

MISSION: How we plan to achieve our vision

VALUES: What we stand for and how we behave

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WHAT GREAT LEADERS DO: PURPOSE + POSITIONING = RESULTS

Brands that center their business on ideals had a growth rate that is more than triple their competitors. Investments in these companies between 2001-2011 would

have yielded a 382% greater return than the S&P 500.

Source: Millward Brown and Jim Stengel study, 2012

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¡ Benefits of Employment Value Propositions as part of culture and internal branding: § Employee engagement: 55% vs. 36% § Talent acquisition: 60% vs. 40% of labor market § Turnover rate: 10% vs. 16% § Compensation: 26% (lower) cost advantage § Commitment: 38% vs. 9% “high” commitment levels

WHAT GREAT LEADERS DO:

ENROLL EMPLOYEES IN THE BRAND

Source: Is There a Strong Correlation for Companies with a Strong Employment Brand Between Employee Engagement Levels and Bottom Line Results? Park and Zhou, Cornell University, Spring 2013

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Take Stock Take Action WHAT SHOULD YOU DO?

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1.  Understand how brand per formance impacts business per formance (employees, customers, prospects)

2.  Assess the alignment of internal culture 3.  Monitor brand per formance across the buyer journey: new

buyers + existing customers § Perception §  Intent to purchase

4.  Measure financial impact 5.  Activate executives to shape culture to improve business

per formance (delivery alignment to support Sales) 6.  Validate or Adjust based on relevance and importance to

target audience(s)

STEPS TO ALIGN YOUR ORGANIZATION

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MEASUREMENT AND OPTIMIZATION

Tools exist to enable leaders to monitor and measure brand correlation to financial performance.

Benchmark Current Brand Performance

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MEASUREMENT AND OPTIMIZATION

Tools exist to enable leaders to monitor and measure brand correlation to financial performance.

Identify Unseen Opportunities

for Growth

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MEASUREMENT AND OPTIMIZATION

Tools exist to enable leaders to monitor and measure brand correlation to financial performance.

Define Data-Based Positioning Strategy

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MEASUREMENT AND OPTIMIZATION

Tools exist to enable leaders to monitor and measure brand correlation to financial performance.

Monitor the Impact of New Brand Strategy

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StevePattiCMO Steve Patti (210) 201-3246 stevepatticmo@gmail.com www.stevepatticmo.com

BrandingBusiness Ryan Rieches (949) 273-6323 ryan@brandingbusiness.com www.brandingbusiness.com

CONTACT US

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