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I was discussing the importance of “core purpose” with a client when their newest team member (a newly minted marketing MBA) piped up and argued that “The core purpose of a business is to make money.” I was gobsmacked. (Really? That’s what they’re teaching? What do you call an observation that is simultaneously obvious and useless?)

In September 1996, Built To Last authors Collins and Porras observed in the Harvard Business Review, “Companies that enjoy enduring success have core values and a core purpose that remain fixed while their business strategies and practices endlessly adapt to a changing world.” They go on to say that companies that do “have historically outperformed the general stock market by a factor of 12.” By contrast, those that don’t often find themselves scurrying after minor market opportunities and living off the crumbs left by more successful competitors.

The article, Building Your Company’s Vision, is part of the collection HBR’s 10 Must Reads On Strategy.  The Kitchen highly recommends reading it cover to cover. Until you find the time, here’s the gist reduced to a single illustration.

Companies that enjoy enduring success have core values and a core purpose that remain fixed while their business strategies endlessly adapt to a changing world.

This picture says you need to have a goal. Not just hitting this year’s revenue numbers, but a Big Hairy Audacious Goal — something like “displacing Microsoft” or “a store in every town in America.”  That goal should be a byproduct of your adding value to the world in ways that no other company can — your envisioned future. (Henry Ford envisioned a world where the streets were free of horse dung because every man owned a car. Seriously.) You get there by leveraging your core technology into a unique and compelling value proposition delivered by a business model designed to capture the market. When things get ambiguous, you and everyone in the company can make good decisions focusing on the company’s core purpose and not straying from its core values.

Sound like too much “peace and love?” Anyone who is invested in your company for the long term will love it. And it will bring you peace of mind.

If customers can’t tell you what they want, how can they help you develop a differentiating strategy?  By walking you through gemba.

Gemba is a Japanese word for “the place where things happen.”  The term comes to American companies by way of the Quality Function Deployment (QFD) movement where gemba refers to the place where the product is used by the customer. Here, a gemba walk is the act of observing the product’s use so that product developers can close the gap between what is being delivered and what the customer actually needs.

The concept of a gemba walk can be just as valuable to business strategists looking to redesign a business model — with two adaptations:

First, it’s critical to expand the concept of “product use” to include all stages of the Customer Lifecycle — from how it is specified, selected and purchased, through how it is received, deployed, used, supported and ultimately replaced.

Second, it can be quite impractical if not impossible to directly observe the customer’s actions — and more importantly, the thinking behind them — at each Customer Lifecycle stage. So we augment direct observation with a simple but structured interview technique, described below.

You’re trying to create a narrative of the truth, told in the context of the big picture, and the big picture is this: your product provides value to your customers in ways that impact (positively or negatively) the ability of each person in the Customer Lifecycle to add value. So it’s important to interview everyone in your Customer Lifecycle — not just the people in purchasing — and understand how their value stories interrelate.

For each person you interview, you want to understand four things: 1) how does their role add value to their company, 2) what is their process for delivering value, 3) what challenges do they face in delivering it, and 4) how does your brand of product help or hinder them in delivering it.

Like running the bases in baseball, the questions can take many forms to fit the situation and your style, but they should generally follow the above order.

The goal of walking the gemba is understanding the value stories of everyone in your Customer Lifecycle.

You’ll probably need to run the bases several times with each person to cover all of their responsibilities.

When interviewing, keep in mind it’s a gemba walk. The goal is simply to understand, “What is going on?”  It’s not a dialogue or an exchange of ideas. You’re not trying to reach an agreement. And it’s certainly not a sales call.

CEOs of established companies often yearn for that “start-up spirit.” And why not? They imagine an infusion of innovation carrying them into new uncontested markets where they can name their own margins and growth is inevitable.

Here’s why not. Start-ups are not innovative. Think about it. Most start-ups are one-hit wonders. It goes like this: someone has an innovative idea; they start a company; then they struggle — just like big companies — to come up with another idea. The innovation almost always precedes the start-up.

It’s ironic. Entrepreneurs are trumpeted as wellsprings of innovation. But they are successful because of their unwavering, almost myopic stubbornness — a kind of tunnel vision where all they see is their one product’s success.

Some say Larry Page is taking over at Google to get back that start-up edge. He may recapture the culture, but that won’t make another AdWords.

Two lessons here: CEOs of established companies need a systematic process for innovation, and so do start-ups.

Our good friends and marketing experts, Jamie Turner of the 60 Second Marketer and Reshma Shah, Ph.D., professor of marketing at Emory University, are putting the “social” in social media with their new book: “How to Make Money with Social Media, An Insider’s Guide on Using New and Emerging Media to Grow Your Business.”

They’re offering first-edition, autographed copies to the first 50 people who donate $40 to their charity, A School Bell Rings. The goal is to raise $2000 in donations for children in Tanzania, India, and Nicaragua.

The book alone is sure to be worth the investment; investing in the future of needy kids makes it even more so.

If you’d like to help or just learn more, here’s the link:

http://www.ASchoolBellRings.org/book

Welcome to the kitchen.

There’s not much to this post.

It’s a simple test to make sure our engines are purring, the windscreen is clear and the seats are comfy yet firm.

Enjoy the ride.

- The Management