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What's your B.I.Q.?
Posted in Growth
Posted by Oren Harari to his blog in December of 2004 (a version of this article also appeared in the December 2004 issue of Association Management)
For competitive success in today’s knowledge economy, intelligence is power. I’m not talking about IQ, the notorious “Intelligence Quotient”. I’m talking about what I call BIQ, or “Business Intelligence Quotient”. Leaders who have a high BIQ have the ability to do two things: One, they can quickly seize new information that’s publicly available—information about new technologies, scientific breakthroughs, changes in customer needs and expectations, advances in management and systems, shifts in demographics and capital markets, emergence of new competitors with different business models, and such. Two, they can do something with that information, including mobilizing their organizations to create something compelling and innovative with the information--such that the result excites customers and investors.
Exceptionally exciting and successful companies—like Jet Blue, Zara,
Unfortunately, too many managers and executives in too many companies don’t get it yet. They circle the wagons to protect existing products, services, partners and processes, rather than breaking new ground based on new intelligence. Or, they hoard information which has become outdated, or simply replicated by competitors—an especially “un-intelligent” move in today’s transparent economy. Or, they focus on improving products which are becoming commodities and technologies which are becoming irrelevant. (Continuous improvement can help you survive, but on its own it will not help you thrive). Or, they assume that serial deal making will break them out of an earnings rut—as if two tired bureaucracies making dull products with mediocre service will somehow magically transform themselves by marrying. (Small wonder that more than half of high-profile megamergers wind up destroying shareholder value).
We would all be wiser if we heeded the words of Japanese management scholar, Ikujiro Nonaka, who aptly summarizes today’s competitive challenges: “When markets shift, technologies proliferate, competitors multiply and products become obsolete virtually overnight, successful companies are those that consistently create new knowledge, disseminate it widely throughout the organization, and quickly embody it in new technologies and products.” That’s the essence of BIQ. When the major recording industry companies labored mightily, and unsuccessfully, to protect their proprietary compact disc business model from the realities of Web-based file sharing and MP3 data formats, it took a high-BIQ outsider like Steve Jobs at Apple Computer to follow Nonaka’s dictum and capitalize on the opportunities of digital music. The iTunes platform and the iPod product line has been a spectacular success story in a music environment that had been steadily stagnating over the past decade.
Questions to leaders: When it comes to your interfaces with customers, your value propositions, your technologies, your organizations, and your “back-office” operations, are you doing the same-old, same-old? Are you clinging to familiar ground and conventional habits? Or are you aggressively searching for information to build exciting new approaches towards your enterprises? And, by the way, are you teaching your employees to do the same with theirs?
As crucial as BIQ is in developing a great business strategy, it is as essential to executing it. Execution is the Achilles heel of many organizations, and I want to spend the remainder of this article on it. The greatest strategy in the world will not bear fruition if its execution is lousy. Too often executives assume that once the strategic plan is bound and distributed, or once responsibilities are formally delegated, or once the acquisition is announced- - that smooth implementation will somehow occur.
That is a false assumption. The leader must remain “on top” of the flow of execution at all times. The leader must understand that to execute properly, he or she must be actively involved in harnessing, dissecting and acting upon real-time information at all times. Business intelligence is a responsibility that cannot be delegated.
During the Gulf War 15 years ago, Generals Colin Powell and Norman Schwarzkopf--the most senior executives of the command--delegated freely to their commanders in the field. But they were always “in the loop”. They themselves paid excruciatingly close attention to a constant flow of details: satellite photos, artillery movements, diplomatic maneuvers, and so on. These actions allowed them to “intelligently” work with their field commanders to constantly shift tactics, orient troops’ attention to the right places, and develop rolling contingency plans.
In contrast, in my own consulting career, I’ve seen too many examples of how poor BIQ hurt execution:
- Because leaders didn’t insist on staying “on top” of intelligence, a potentially disastrous operational malfunction (or quality problem, or customer defection, or financial reporting error) “suddenly” emerged.
- A major acquisition wound up destroying shareholder value because of two intelligence failures. One, a poor due diligence before the deal led to a stupidly high purchase price and a naïve projection on returns. Two, after the deal, a lack of executive follow up on the lack of progress in integrating two vastly different cultures led to chaos.
- Executives came up with a strategy that yielded a very promising product, but because of a failure to gather and take action on appropriate information, they did not have sufficient preparedness to deliver that product, meet demand, offer customer support, or build capacity for next generation products.
Let’s get even more detailed. If you really want to use BIQ to generate great execution, here are a few pointers:
First and foremost, when you articulate a strategic course, insure that operational drivers are aligned with your goals, and are tracked accordingly. If leaders announce that “being first to market with innovative products” is a strategic priority, then intelligent execution would insure that capital allocation, performance metrics, logistics, sourcing, training and compensation all reflect that specific priority. Monitoring, evaluating, and responding to the ever-changing status those operational drivers is a fundamental component of BIQ. Even when you post financial targets, be clear on the desired operational drivers that impact those financials—and track accordingly.
Second, make sure you have a clear awareness and understanding of the entire dynamic picture. For example, knowing just the sales results of a particular division can be misleading without an awareness of factors like the characteristics of the territory and customer base, what your salespeople are promising customers, the quality of your products and after sale services, customers’ reactions and attitudes, what current competitors are doing, and what emerging competitors are planning to offer in the future.
Third, make sure your systems consistently track and report information to the right people, and that the output of the systems are consistent and compatible with each other. If your marketing and customer service people are the only ones that get regular customer feedback data, you shouldn’t be surprised if the output from R & D or operations is not customer-friendly. If your ERP system tracks product information in one way and your sales system tracks it in another, analyzing sales and product expense figures can be fraught with errors that undermine your efforts.
Fourth, do it fast. Today’s “nanosecond” economy demands rapid tracking and rapid responses. Make sure you have the technologies, systems, and corporate culture to do so. Information that is “too late” regarding problems, crises, ideas or fleeting opportunities damages both strategy development and execution. I’ve heard Target chairman Bob Ulrich remind his troops that in today’s marketplace, speed is life.
Finally, ruthlessly insist that data, outcomes and metrics be real, i.e., based on information that’s accurate, and backed by sources that are reliable and accountable. Regardless of the brilliance of the strategy, if leaders rely on distorted or incomplete data on factors like expenses, cost of capital, progress towards revenue targets, cost overruns, consumer confidence, employee morale, unintended consequences of initiatives, or unanticipated changes in the competitive landscape--then what emerges are unpleasant surprises, greater risk, and poorer decisions—in short, lousy execution.
Even worse, if a corporate culture rewards people for politically massaging data for opportunistic reasons, or for shielding executives from “bad news”, then the organization’s integrity suffers as well as its execution. As seen in the recent spate of ethical meltdowns in many once-proud firms, reliance on slippery reporting and financial sleight-of-hand ultimately destroys companies.
Questions for leaders: When you execute your strategic plan, or any important initiative, do you always stay in the loop? As you delegate and empower others, do you stay vigilant in the details of operations and implementations? Do you make sure that everyone gets the information they need, when they need it? Do you make sure that you follow the criteria outlined above: total picture, consistent, compatible, fast, and real? Do you teach your colleagues and associates to do the same?
In summary, a high BIQ helps leaders develop innovative strategies not from a simple whim, but from real trends and real data points that suggest real opportunities. A high BIQ also helps leaders align their strategy with great execution. By demanding solid information, leaders with high BIQ can continually monitor the effectiveness of their strategy and the organization’s progress towards its goals—and make appropriate adjustments. Coupled with a strong dose of passion and courage, these are the ingredients for great leadership in today’s tough market environment.