“Microsoft dominated its market in 1998. The hugely successful technology enterprise’s software operating systems ran on 86.3 percent of all the personal computers in the United States. Then something happened to bring the giant to its knees. The technology group stopped reporting directly to Bill Gates and began focusing on reporting profits and losses. Instead of developing new and more effective technology for consumers, the company insisted that the technology group only propose ideas that could turn a quick profit. In three short years Microsoft lost more than half its value.”—Lead Right For Your Company’s Type
As managers and leaders within our banks, we are often looking for ways to drive engagement and buy-in, and to motivate our teams to achieve the organization’s goals. The wrong approach to leadership for your type of organization can block the path to success.
In Lead Right For Your Company’s Type, William Schneider reveals valuable insight on the four types of “living enterprises”—what he calls “people systems”: Customized; Predictable and Dependable; Enrichment; and Best-in-Class.
Here’s what each type of organization looks like:
“Customized”: Highly customized, personalized, tailored to each unique customer.
“Predictable & Dependable”: Beyond those traits, reliable products or services.
Enrichment: Helping people grow, developing and fulfilling people’s potential; based on values, ideals, higher-order purposes.
Best-in-Class: Providing unparalleled products/services, high level of expertise, product creates its own market.
Schneider’s premise is that you don’t lead these different types of company the same way.
A particularly illustrative example, which I’ll review in a moment, demonstrates how management picked the wrong way to run a daycare center provider. The result was a major loss in business and huge employee turnover.
What creates your system?
Schneider sets the stage early, making the point that both profit and nonprofit enterprises are living systems and that these systems are driven by customers, employees, and leaders.
As such, the customer promise, the culture, and the leadership approach are permanently connected. Said another way, the promise we make to our customers is the link to our culture.
Our job as leaders is to empower and build teams to most efficiently link the two. Culture and customer promise are ultimately reinforcing principles. Problems arise when either leaders or employees create separation in the living system from this customer promise. So it is important to assess the living system correctly.
Delving into the four types
The customer promise and ultimately the “core trait” drives the living system. A core trait is what a business cannot survive without if it is to continue operating. It is possible to have multiple living systems within more complex organizations or in organizations that have units that support the organization’s core. (Schneider defines those as “sub-enterprises.”)
The author does a good job laying out the four living systems and organizing the reader’s thoughts around the implications of each. He expands on all four, providing examples, further definition, and details—as well as showing how sub-enterprises can exist. For example, a retail bank is unquestionably a “predictable and dependable” organization at its core. However, it’s also likely that the support customer promise is customized or best-in-class.
The implication of a predictable and dependable enterprise, for example, is that the operating system is in control, running consistently and efficiently, and preventing as many errors as possible.
It’s no surprise, then, why banking organizations have as many policies, procedures, and internal audits to manage and provide support throughout.
We need the system to be in control. And our team must reinforce that system of efficiency and consistency. However, this is where complexity builds, as leaders need to consider the implications of the customer support promise and the subsequent interaction between the two.
In addition, this is where competitive advantages and differentiating factors are established. That’s because the customer support promises can be distinctive.
The daycare center that flopped
Schneider presents many examples of the specific types throughout the book. These range from Habit for Humanity’s enrichment; Apple’s best-in-class; IDEO’s customized; and the Flint, Michigan’s water system’s predictable and dependable focus.
Schneider walks the reader through how both a properly run and a poorly run organization operate. In the case study I referred to earlier Schneider gives a great example of a poorly run business: A daycare facility’s move towards central control and being a predictable and dependable enterprise.
As an enrichment organization, the core function of a daycare center is to provide safety and education for young children. However, the leadership began to manage the centers using data, facts, numbers, policies, etc. in a very impersonal way.
The result? A 30% turnover in staffing and 23% loss of families using the centers.
In enrichment organizations, finance and accounting should be support functions that operate in support to the core. The center’s leaders should have been working as catalysts and enablers to empower teachers in the firm’s centers to deliver on the promise of enrichment. Instead, management adopted a more directive, controlling leadership approach.
Learning—or re-learning—to be a leader
Ultimately, it does take different leadership types and cultures to lead these separate living systems and they are outlined well in Schneider’s 15 core cultures and 3 core leadership approaches.
In all, I would recommend this book to leaders and managers within organizations of all sizes. There is much to be learned and relearned about how to best orchestrate strategic business units around the business’s core promise so goals can be achieved and positive cultures can be realized.
Understanding the framework, leadership styles, and the inherent focus required to lead organizations is truly an intellectual exercise that Schneider outlines in a very practical way.
Focusing on the core throughout your business is common sense—but often it can get lost as organizations grow and evolve. If you find your business often changing from decentralization to centralization or in constant turnover, perhaps your organization’s architecture, and ultimately its living system, are not aligned correctly.