Expert Answer:Business Assignment on Company Strategy Critique H

  

Solved by verified expert:Select a leading company from healthcare industry and research its vision, mission, and values. Use any applicable materials to analyze these important direction-setting statements. Complete a 3-5-page paper. Be sure to cite your sources APA.Note: you can use this article to guide you through.
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SEPTEMBER-OCTOBER 1 9 9 6
MOI
by James C. Collins and Jerry I. Porras
We shall not cease from exploration
And the end of all our exploring
Will he to arrive where we started
And know the place for the first time,
T.S. Eliot, Four Quartets
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. The dynamic of
preserving the core while stimulating progress
is the reason that companies such as HewlettPackard, 3M, Johnson & Johnson, Procter & Gamble, Merck, Sony, Motorola, and Nordstrom became elite institutions able to renew themselves
and achieve superior long-term performance.
Hewlett-Packard employees have long known that
radical change in operating practices, cultural
norms, and business strategies does not mean losing the spirit of the HP Way – the eoinpany’s core
principles. Johnson & Johnson continually quesHARVARD BUSINESS REVIEW
September-October 1996
tions its structure and revamps its processes while
preserving the ideals embodied in its eredo. In 1996,
3M sold off several of its large mature businessesa dramatic move that surprised the business pressto refocus on its enduring core purpose of solving
unsolved problems innovatively. We studied companies such as these in our research for Built to
Last: Successful Habits of Visionary Companies
and found that they have outperformed the general
stock market by a factor of 12 since 1925.
fames C. Collins is a management educator and writer
based in Boulder, Colorado, where he operates a management learnmg laboratory for conducting research
and working with executives. He is also a visiting professor of business administration at the University of Virginia in Charlottesville. Jerry I, Porras is the Lane Professor of Organizational Behavior and Change at Stanford
University’s Graduate School of Business m Stanford,
California, where he is also the director of the Executive
Program in Leading and Managing Change. Collins and
Porras are coauthors o/Built to Last: Successful Habits of
Visionary Companies (HarperBusiness, 1994).
65
VISION
Truly great companies understand the difference
between what should never change and what
should he open for change, hetween what is genuinely sacred and what is not. This rare ahility to
manage continuity and change – requiring a consciously practiced discipline – is closely linked to
the ahility to develop a vision. Vision provides guidance ahout what core to preserve and what future to
stimulate progress toward. But vision has hecome
one of the most overused and least understood
words in the language, conjuring up different images for different people: of deeply held values, outstanding achievement, societal honds, exhilarating
goals, motivating forces, or raisons d’être. We recommend a conceptual framework to define vision,
add clarity and rigor to the vague and fuzzy concepts swirling around that trendy term, and give
practical guidance for articulating a coherent vision
within an organization. It is a prescriptive framework routed in six years of research and refined and
tested hy our ongoing work with executives from a
great variety of organizations around the world.
A well-conceived vision consists of two major
components: core ideology and envisioned future.
¡See the exhihit “Articulating a Vision.”) Core ideology, the yin in our scheme, defines what we stand
for and why we exist. Yin is unchanging and complements yang, the envisioned future. The envisioned future is what we aspire to hecome, to
achieve, to create-something that will require significant change and progress to attain.
Core Ideology
Core ideology defines the enduring character of
an organization – a consistent identity that transcends product or market life cycles, technological
hreakthroughs, management fads, and individual
leaders. In fact, the most lasting and significant
contrihution of those who huild visionary companies is the core ideology. As Bill Hewlett said
about his longtime friend and business partner David Packard upon
Packard’s death not long ago, “As far
as the company is concerned, the
greatest thing he left hebind bim was
a code of ethics known as the HP
Way.” HP’s core ideology, wbicb has
guided the company since its inception more than 50 years ago, includes
a deep respect for tbe individual, a dedication to affordable quality and reliability, a commitment to
community responsibility (Packard bimself bequeathed bis $4.3 billion of Hewlett-Packard stock
to a charitahle foundation), and a view that tbe
66
company exists to make technical contrihutions for
tbe advancement and welfare of humanity. Company huilders such as David Packard, Masaru Ibuka of
Sony, George Merck of Merck, William McKnight
of 3M, and Paul Galvin of Motorola understood tbat
it is more important to know who you are than
wbere you are going, for wbere you are going will
cbange as the world around you changes. Leaders
die, products hecome ohsolete, markets change,
new technologies emerge, and management fads
come and go, hut core ideology in a great company
endures as a source of guidance and inspiration.
Core ideology provides tbe glue tbat boids an
organization together as it grows, decentralizes, diversifies, expands glohally, and develops workplace
diversity. Think of it as analogous to the principles
of Judaism tbat beld tbe Jewish people together for
centuries without a homeland, even as they spread
throughout the Diaspora. Or think of the truths
held to he self-evident in tbe Declaration of Independence, or the enduring ideals and principles of
the scientific community that bond scientists from
every nationality together in the common purpose
of advancing human knowledge. Any effective vision must embody the core ideology of the organization, which in turn consists of two distinct parts:
core values, a system of guiding principles and
tenets; and core purpose, tbe organization’s most
fundamental reason for existence.
Core Values. Core values are the essential and enduring tenets of an organization. A small set of
timeless guiding principles, core values require no
external justification; they have intrinsic value and
importance to those inside the organization. Tbe
Walt Disney Company’s core values of imagination
and wholesomeness stem not from market requirements hut from tbe founder’s inner belief that
imagination and wbolesomeness should he nurtured for their own sake. William Procter and James
Gamhle didn’t instill in P&G’s culture a focus on
product excellence merely as a strategy for success
ideology provides the glue
that holds an organization
together through time.
but as an almost religious tenet. And that value has
been passed down for more than 15 decades hy P&G
people. Service to the customer-even to the point
of suhservience-is a way of life at Nordstrom tbat
traces its roots hack to 1901, eight decades before
HARVARD BUSINESS REVIEW
Septemhcr-Octoher 1996
Articulating a Vision
(J Core values
D Core purpose
lÜ-to-.ÍU-yearBHAG
¡Big, Hairy, Audacious Goal)
J Vivid description
customer service programs became stylish. For Bill
Hewlett and David Paekard, respeet for the individual was first and foremost a deep personal value;
they didn’t get it from a book or hear it from a management guru. And Ralph S. Larsen, CEO of Johnson & Johnson, puts it this way; “The eore values
embodied in our eredo might he a eompetitive
advantage, but that is not why we have them. We
have them beeause they define for us what we stand
for, and v^^e would hold them even if they became
a eompetitive disadvantage in eertain situations.”
The point is that a great company decides for
itself what values it holds to be core, largely independent of the current environment, competitive
requirements, or management fads. Clearly, tben,
there is no universally right set of core values.
A company need not have as its core value customer service (Sony doesn’t) or respect for the individual (Disney doesn’t) or quality (Wal-Mart Stores
doesn’t) or market focus (HP doesn’t) or teamwork
(Nordstrom doesn’t). A company might have operating practices and business strategies around those
qualities without having them at the essence of its
being. Furthermore, great companies need not have
likable or humanistic core values, although many
do. The key is not what core values an organization
has but that it has core values at all.
Companies tend to have only a few core values,
usually between tbree and five. In fact, we found
tbat none of tbe visionary companies we studied in
our book bad more than five: most had only tbree or
four. (See the insert “Core Values Are a Company’s
Essential Tenets.”) And, indeed, we sbould expect
that. Only a few values can be truly core-tbat is, so
HARVARD BUSINESS REVIEW Sept ember-October 1996
fundamental and deeply held tbat they will cbange
seldom, if ever.
To identify tbe core values of your own organization, pusb with relentless honesty to define wbat
values are truly central. If you articulate more tban
five or six, chances are that you are confusing core
values (wbich do not cbange) with operating practices, business strategies, or cultural norms (wbicb
should be open to cbange). Remember, the values
must stand tbe test of time. After you’ve drafted a
preliminary list of the core values, ask about eacb
one. If tbe circumstances cbanged and penalized us
for holding this core value, would we still keep it? If
you can’t honestly answer yes, tben tbe value is not
core and should be dropped from consideration.
A high-tecbnology company wondered wbether
it sbould put quality on its list of core values. Tbe
CEO asked, “Suppose in ten years quality doesn’t
make a boot of difference in our markets. Suppose
the only tbing tbat matters is sbeer speed and
horsepower but not quality. Would we still want to
put quality on our list of core values?” The members of tbe management team looked around at one
anotber and finally said no. Quality stayed in tbe
strategy of tbe company, and quality-improvement
programs remained in place as a mechanism for
stimulating progress; but quality did not make the
list of core values.
Tbe same group of executives tben wrestled witb
leading-edge innovation as a core value. Tbe CEO
asked, “Would we keep innovation on the list as
a core value, no matter how tbe world around us
changed:” This time, tbe management team gave
a resounding yes. Tbe managers’ outlook migbt be
summarized as, “We always want to do leadingedge innovation. That’s who we are. It’s really important to us and always will be. No matter what.
And if our current markets don’t value it, we will
find markets tbat do.” Leading-edge innovation
went on tbe list and will stay tbere. A company
sbould not cbange its core values in response to
market cbanges; ratber, it sbould cbange markets,
if necessary, to remain true to its core values.
Wbo should be involved in articulating tbe core
values varies witb tbe size, age, and geograpbic dispersion of tbe company, but in many situations we
bave recommended what we call a Mars Group. It
works like tbis: Imagine tbat you’ve been asked to
re-create tbe very best attributes of your organization on anotber planet but you have seats on tbe
rocket sbip for only five to seven people. Whom
sbould you send? Most likely, you’ll cboose tbe
people who bave a gut-level understanding of your
core values, tbe highest level of credibility witb
tbeir peers, and the highest levels of competence.
67
Core Values Are a Company’s Essential Tenets
Merck
a Corporate social responsibility
D Unequivocal excellence in all aspects of
tbe company
Ü Science-based innovation
D Honesty and integrity
• Profit, hut profit from work that benefits
humanity
Nordstrom
• Service to tbe customer above all else
D Hard work and individual productivity
n Never being satisfied
• Excellence in reputation; being part of
something special
Philip Morris
C The right to freedom of choice
G Winning – beating otbers in a good fight
We’ll often ask people brought together to vi’ork on
core values to nominate a Mars Group of five to
seven individuals (not necessarily all from the assembled group). Invariably, they end up selecting
highly credible representatives who do a super job
of articulating the core values precisely because
they are exemplars of those values-a representative
slice of the eompany’s genetic code.
Even global organizations composed of people
from widely diverse cultures can identify a set of
shared core values. The secret is to work from the
individual to the organization. People involved in
artieulating the eore values need to answer several
questions: What core values do you personally
bring to your work? (These should be so fundamental that you would hold them regardless of whether
or not they were rewarded.) Wbat would you tell
your children are the core values that you hold at
work and that you hope they will hold when they
become working adults- If you awoke tomorrow
morning with enough money to retire for tbe rest of
your life, would you continue to live those core values? Can you envision them being as valid for you
100 years from now as they are today? Would you
want to hold those core values, even if at some
point one or more of them became a competitive
disadvantage? If you were to start a new organization tomorrow in a different line of work, what core
values would you build into the new organization
regardless of its industry? The last three questions
are particularly important because they make the
crucial distinction between enduring core values
68
D Encouraging individual initiative
Ü Opportunity based on merit; no one is entitled
to anything
D Hard work and continuous self-improvement
Sony
n Elevation of the Japanese culture and
national status
G Being a pioneer – not following others; doing
the impossible
G Encouraging individual ability and creativity
Walt Disney
G No cynicism
G Nurturing and promulgation of “wholesome
American values”
G Creativity, dreams, and imagination
G Fanatical attention to consistency and detail
G Preservation and control of tbe Disney magic
that sbould not change and practices and strategies
tbat should be changing all the time.
Core Purpose. Core purpose, the seeond part of
core ideology, is the organization’s reason for being.
An effective purpose reflects people’s idealistic motivations for doing the company’s work. It doesn’t
just describe the organization’s output or target
customers; it captures the soul of the organization.
[See the insert “Core Purpose Is a Company’s Reason for Being.”) Purpose, as illustrated by a speech
David Packard gave to HP employees in 1960, gets
at the deeper reasons for an organization’s existence
beyond just making money. Paekard said,
I want to discuss why a company exists in the first place.
In other words, why are we here? I think many people
assume, wrongly, that a company exists simply to make
money. While this is an important result of a company’s
existence, we have to go deeper and find the real reasons
for our being. As we investigate this, we inevitably come
to the conclusion tbat a group of people get togetber and
exist as an institution tbat we call a company so they are
able to accomplisb sometbing collectively that they
could not accomplish separately – they make a contribution to society, a phrase which sounds trite but is fundamental…. You can look around |in the general business
world and] see people who are interested in money and
notbing else, but the underlying drives come largely from
a desire to do something else: to make a product, to give
a service – generally to do something which is of value.’
Purpose (whicb sbould last at least 100 years)
should not be confused witb specific goals or busiHARVARD BUSINESS REVIEW September-October 1996
VISION
ness strategies (which should change many times
in 100 years). Whereas you might achieve a goal or
complete a strategy, you cannot fulfill a purpose,- it
is like a guiding star on the horizon-forever pursued but never reached. Yet although purpose itself
does not change, it does inspire change. The very
fact that purpose can never be fully realized means
that an organization can never stop stimulating
change and progress.
In identifying purpose, some companies make
the mistake of simply describing their current product lines or customer segments. We
do not consider the following statement to reflect an effective purpose:
“We exist to fulfill our government
eharter and participate in the secondary mortgage market by packaging mortgages into investment
seeurities.” Tbe statement is merely
descriptive. A far more effective
statement of purpose would be that
expressed by the executives of the
Federal National Mortgage Association, Fannie
Mae: “To strengthen the social fabric by continually democratizing home ownership.” The secondary
mortgage market as we know it migbt not even exist in 100 years, but strengthening the social fabric
by continually democratizing home ownership can
be an enduring purpose, no matter how much the
world changes. Guided and inspired by this purpose, Fannie Mae launched in the early 1990s a series of bold initiatives, including a program to de-
velop new systems for reducing mortgage underwriting costs by 40% in five years,- programs to
eliminate discrimination in tbe lending process
(backed by $5 billion in underwriting experiments);
and an audaeious goal to provide, by tbe year 2000,
$1 trillion targeted at 10 million families that bad
traditionally been shut out of home ownership minorities, immigrants, and low-income groups.
Similarly, 3M defines its purpose not in terms of
adhesives and abrasives but as the perpetual quest
to solve unsolved problems innovatively-a purpose
Core ideology consists of core
values and core purpose.
Core purpose is a raison d’être,
not a goal or business strategy.
that is always leading 3M into new fields. MeKinsey & Company’s purpose is not to do management
consulting but to help corporations and governments be more successful: in 100 years, it might
involve methods other than consulting. HewlettPackard doesn’t exist to make electronic test and
measurement equipment but to make technical
contributions that improve people’s lives – a purpose that has led the company far afield from its
origins in electronic instruments. Imagine if Walt
Core Purpose Is a Company’s Reason for Being
3M: To solve unsolved problems innovatively
Cargill: To improve the standard of living around
the world
McKinsey & Company: To help leading corporations
and governments be more successful
Merck: To preserve and improve human life
Fannie Mae: To strengthen the social fabric by
continually democratizing home ownership
Nike: To experience the emotion of competition,
winning, and crushing competitors
Hewlett-Packard: To make technical contributions
for the advancement and welfare of humanity
Sony: To experience the joy of advancing and applying
technology for the benefit of the public
Lost Arrow Corporation: To he a role model and a
tool for social change
Telecare Corporation: To help people with mental
impairments realize tbeir full potential
Pacific Theatres: To provide a place for people to
flourish and to enhance the community
Wal-Mart: To give ordinary folk the chance to buy the
same things as rich people
Mary Kay Cosmetics: To give unlimited opportunity
to women
Walt Disney: To make people happy
HARVARD BUSINESS REVIEW
September-Octobt-r Í996
69
VISION
Disney had conceived of his company’s purpose as
to make cartoons, rather than to make people
happy; we probably wouldn’t have Mickey Mouse,
Disneyland, EPCOT Center, or the Anaheim Mighty
Ducks Hockey Team.
One powerful method for getting at purpose is
the five whys. Start with tbe descriptive statement
We make X products or We deliver X services, and
then ask, Why is tbat important? five times. After
a few whys, you’ll find that you’re
getting down to tbe fundamental
purpose of tbe …
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