Why Corporate held Emotional Intelligence Underpins Strategy
It is important to first understand what strategy is, in order to have a clear idea as to why Corporate held Emotional Intelligence (ChEI) and a Corporate held Emotional Quotient (ChEQ) is the key element of successfully executing strategy.
Strategy seems to be used as a throwaway word these days, and it is misunderstood. It doesn’t help that most textbooks, including MBA textbooks, get this wrong. Strategy is more than a plan or the ‘long-term direction of an organisation’. In my book, I have defined Strategy as ‘a process, based on the purpose of an organisation, to reach a desired outcome that has been communicated’. Process is described below and is the detail requiring the hard work of anticipation, external analysis, internal analysis and encompassing the concept of Circular Strategy. Circular Strategy is the cultural, continuous improvement style of executing strategy: every employee, every day. The remaining parts of the definition are purpose, desired outcome and communicated.
Purpose/ Raison d'être
One cannot just gloss over the idea that a business needs a strategy but thankfully many businesses are starting to change, slowly. The Simon Sinek video and book “Start with Why”,* has been gaining in popularity. This increase has meant that when doing my work, I am now finding more businesses that have at least considered their ‘purpose’ or what I call, Raison d'être which translates from French as; reason for existence. My definition of strategy is based on purpose and the focus on a why or a purpose is easier to sell now.
When going from business to business to give advice on how to improve, most businesses know what they want to achieve in the next three to five years so for many there is some type of desired outcome. If you don’t have a desired outcome you are guaranteed to never get there. My general advice is to make it bigger; timidity and irresoluteness are a losing formula and being bold wins. I also advise firms to be very clear as to what it is and how to measure it.
The times where the all-knowing king, GM, CEO, Board or owner comes in and hands down a strategy are over, hopefully. Quite pleasingly there are a few companies out there that understand that the single biggest asset in their organisations are the employees. These employees fit the definition of firms having internally sustainable competitive advantages because as Jay Barney** might agree, they are valuable, rare, inimitable and can be organised to exploit the firms’ resources.
There is a saying that ‘culture east strategy for breakfast’ so how can you be sure that your strategy will work? Communicating the strategy is the best way. Not involving the staff in the strategy when it is the staff that will have to execute strategy is a recipe for failure. Was it the CEO of Proctor and Gamble, or was it an engaged employee that suggested adding the work ‘Repeat’ to the directions on a shampoo bottle? I know I am from Tasmania where we wear the brunt of a National pastime of making jokes about two-headed Tasmanians but two heads are better than one, so share the strategy.
If there are aspects of the strategy that are too sensitive to share (which I doubt) then share the mission that you want various groups to achieve. Can you imagine a general in battle saying ‘just go out there and shoot in that direction’. Is it more logical that they would have said we need you to take out that bunker, that is your mission. Your employees will do the impossible if you have engaged staff. If you don’t tell them the strategy, then a least give them their supporting mission.
As above process is anticipation, external analysis, internal analysis and Circular Strategy. Not all of these items are equally important.
Creating a team to critically assess your strategy, to predict competitor reactions so that you have responses ready is a tactic in strategy. You don’t win at chess without anticipating your opponent’s next move.
Strategy is cultural in nature. It has a large element of continuous improvement. It is every employee, every day. Strategy is not linear; it is not a case of we are here, and we want to go there so we will review it a year later. I often say that the goal of having a strategic document is un-strategic, unless that documents resides on the desk and is dog-eared and worn from use.
When I wrote that not all the processes are equally important, I was pointing a finger at external analysis. External analysis features strongly in my expanding collection of textbooks with Porter’s Five Forces***, (I have added a sixth force), Business Model Canvasses and the PESTLE analysis (Political, Environmental, Social, Technical, Legal and Economic). The problem with these, is that they largely don’t matter. Porter’s Five Forces seeks to determine the attractiveness of an industry, something Warren Buffet describes as having either Good Economics or Bad Economics. He goes on to say:
“When a manager with a reputation for brilliance tackles a business with a reputation for bad economics it is the reputation of the business that remains intact.”
Buffet is saying you cannot change the five forces.
A PESTLE analysis will not lead to great impact on your business. (Except for Technological advancements). I like how a well-known speaker, Jim Rohn, explains that tomorrow is pretty much going to be like today or yesterday. Political, environmental, social, legal and economic conditions next year will pretty much be the same as this year. I was working as a CEO of a medium sized multinational and when we were doing very well, I was often reminded that there was a GFC, my response was, ‘I heard there was a GFC, but I refuse to participate’. An external analysis in the Great Depression should have indicated that businesses should be shut down, but there were people joining country clubs, building nice houses, empires and buying one of the most stunning cars ever made, the Cadillac 452 Roadster.
The last item in my Process component of my strategy definition is internal analysis. How to you stack up to a MORTARS analysis? Pestles are useless without mortars. A MORTARS Analysis helps a company to determine the underlying issues that lead to strategy not being executed as planned. Those underlying issues relate to identifying your Limiting Internal Factors.
Identifying your Limiting Internal Factors.
If you cannot change bad economics or external factors, then what is holding a business back from disproportionate success? The answer is in the mirror: Limiting Internal Factors. Determining what is not right within the business is not easy. It requires a Corporate held Emotional Quotient (ChEQ).
Emotional intelligence is divided into two areas: the internal and the external. Internally it comprises Self-Awareness and Self-Management. Externally it comprises social or Relationship Awareness and Relationship Management. My work for the past four years has been what amounts to facilitated self-assessment sessions, a look at corporate held emotional intelligence. Are companies self-aware and can they see what the internal problems are in their own firm? Are companies self-managing properly? Are they relationship aware and managing those relationships?
The idea that leaders need emotional intelligence is not new but is gaining in strength but what about companies? Can a company have an emotional anything? If they cannot then why do we ascribe beliefs and values to companies. Even the thought leading exemplar businesses have beliefs: the internationally acclaimed consultancy group McKinsey & Company says “We believe we will be successful if our clients are successful.”**** I admit that beliefs, values, organisational behaviour and culture are the collective of the group and so is ChEQ and since I have been writing about a something that seems vague: Corporate held Emotional Intelligence, I will appeal to you with logic.
A Case for a Corporate held Emotional Quotient
As above, competency in emotional intelligence is broken into two areas: the self-relationship and the external relationships. Each area is then broken down further into Self-Awareness and Self-Management and Social or Relationship Awareness and Relationship Management. If, as is the case, many firms were to have Public Relations Departments then they must be Relationship Aware. This would indicate that half of the requirements are filled. If firms were to institute standard operating procedures and policies so that employees don’t require constant supervision, then it stands to reason that firms are self-managing. If they are self-managing, then they must be self-aware.
Self-awareness on a corporate level is difficult, in that it can have problems that are akin to shop-blindness; being so close that you cannot see clearly. Emotional intelligence can grow but the path to growth in an emotional quotient is to be aware. My work assists firms to be self-aware.
If a firm aspires to successfully executing strategy, they will need to know what limiting internal factors are impeding success. To know this, they have to be self-aware. When they have self-assessed they will then have to self-manage, to have the culture, the continuous improvement mindset and the discipline to act.
This is not theory. I do not spend time doing research rather I spend all my time working with businesses. When I find a business that demonstrates that they have a higher order plan: a strategy, that they monitor the plan, that has been communicated then I know I have found a business that will be above average. If I am working with a business, and the leaders tell me that they are not very good at one thing or another, then I start to get an inkling that the collective group is self-aware, that they are working in an environment that allows for doubt and improvement. When I find the combination of the two then I know I have found an extraordinary business. I have seen businesses that have both a strategic plan and has demonstrated a ChEQ. In every case these businesses have exceeded what I thought was possible to achieve within a year.
The practical applications of ChEI can be seen in marketing, in having the empathy to connect with consumers emotively as described by Simon Sinek and as used in Design Thinking to improve marketing and product design. It too has a place in managing employees and creating the right culture.
A Future that requires Corporate held Emotional Intelligence
Businesses need to understand that soft skills are now the hard money solutions. That traditional business models are no longer going to result in exemplar firms. Strategy is not about the document it is about living the strategy. Managing staff is no longer traditional human resources, rather it should be an Internal Relations department, implying two ways. Feel good initiatives, that have won firms employer of choice awards in the past, will pale in comparison to firms that create deeper relationships with the employees. Companies need to understand that culture is the most effective way to self-manage. Customer relations are now about emotively connecting. Authenticity and genuineness are the new brand traits.
If your strategy is not working, it could simply be the case that it is bad strategy. It may be that the firm has its own form of shop blindness and does not see its limiting internal factors. It might be that your firm has not found a working mirror, that it is not objectively self-aware. If a firm is self-aware then it can see if it is self-managing. If it is not externally aware it may not see that the traditional business model is being disrupted or that the industry values are changing.
One hundred years ago, the average life of a business was sixty years, now it is fifteen. One hundred years ago each business was conducted in a similar manner to other businesses. In today’s business world of digital disruption and rapid technological changes, a company that chooses to conduct business with traditional methods may not reach the current average life of a business. The future of business requires a Corporate held Emotional Quotient.
Fritz Shoemaker is a business adviser working with dozens of businesses per year and the author of the book ChEQmate: Using Corporate held Emotional Quotient as a Winning Business Strategy
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*Simon Sinek, “Start With Why,” Portfolio Penguin, 2009.
The Simon Sinek Video can easily be found with a search for the following: Simon Sinek Start With Why TEDx.
Barney, J.B.; Clark, D.N. (2007) Resourced-Based Theory: Creating and Sustaining Competitive Advantage. Oxford University Press.
***Porter, Michael E. "How Competitive Forces Shape Strategy," 1979, Harvard Business Review, Boston MA.