Read an Excerpt
Act Like an Owner Building an Ownership Culture
Robert M. Blonchek
0-471-32285-7
The Power of an Ownership Culture
Think about what characterizes successful entrepreneurs. They have tremendous belief in their abilities and in their vision for the business. They have developed ways of doing things that allow them to earn a profit. They are prone to action and don't worry about making mistakes. Instead, they learn from their mistakes. They understand that when the business succeeds they'll succeed, so they focus their energy on building a successful business.
Now imagine that every person in your organization shared these same beliefs. Imagine the possibilities if everyone in your organization believed in the purpose of your business. Imagine the possibilities if everyone in your organization believed in the reward for exercising initiative in creating value for your customers and profit for your business.
When all employees in your organization share these beliefs, you will have created an ownership culture. They will think and act like entrepreneurs-like owners of the business. That's the power of an ownership culture.
SUDDEN IMPACT
In an ownership culture people interact in positive ways, they stay focused on winning new customers, and they collaborate. They are accountable for business results. They keep the best interest of your business in mind because it's in their own best interest.
In an ownership culture, the entire workforce understands how the company or business unit makes money and are able to identify new business opportunities. Since each employee understands the profit drivers of the business costs are better controlled. Employees have a direct line-of-sight between their daily activities and your income statement, balance sheet, or operating budget.
An ownership culture is a great way to attract and retain employees. An ownership culture provides career security for everyone in the organization by opening a range of new opportunities. Employees engage more with their jobs because they are provided with a broad view of how the business works. Their level of responsibility and authority increases and they become better skilled so that they are valuable to you and to the employment market. Even if your company goes out of business tomorrow, or your organization is restructured out of existence, your employees are secure because their skills and experience are in demand.
An ownership culture provides increased financial opportunity because employee compensation is self-funded by the success of the business. It increases when corporate profits increase.
Here are several clear examples that illustrate the power of an ownership culture.
A REAL-LIFE OWNERSHIP CULTURE
Shawn was dejected. After spending six weeks working around the clock to get the remaining bugs out of the software, the client was demanding that 200 additional changes be made to the system in less than 14 days. He didn't know what to do. How could he ask his team to spend another two weeks working around the clock? He decided he couldn't.
After gathering the team together, he thanked them for their efforts and told them he was proud of them. He told them that the client was demanding even more changes, but he didn't expect them to kill themselves in order to get it done. They had done enough. He thanked them again and headed out the door to let his boss know that they were not able to meet this final deadline. They were just too exhausted.
His team wouldn't let him do it. They believed they could pull it off. They brainstormed ideas on how to approach the problem and set into motion a plan to complete the necessary changes. Two weeks later the customer accepted the system.
Brian was intercepted by his customer on his way out the door. The customer asked if he knew a good place to buy several hundred laptop computers. Brian thought about it for a moment and told the customer he couldn't think of a source off the top of his head. However, he was sure that someone in his 250-person company would know the best place to buy them. He asked to borrow the customer's phone and left a global voice mail for everyone in the company, asking for a good source for laptop computers.
Before he could put on his coat and leave the customer's office, his beeper started to vibrate. Jokingly, he said that it was probably the answer on the laptops. He asked to borrow the phone again and quickly checked his voice mail. Sure enough, it was the answer. In less than five minutes, someone working across town had responded to the original voice mail and was able to answer the customer's question. Brian left that day knowing he had a happy customer and feeling proud to be part of the team.
Mark had just joined the company after spending several years working for a large international management consulting firm. He was hard-working and intelligent, but he had never been responsible for building a business before. However, he had a few solid ideas and sensed that the company would support him.
Over the next 2 years, Mark built a $2-million consulting business by creating an alliance with one of the largest computer manufacturers in the country. He not only found new customers, he hired almost 20 people, managed every customer engagement, and often contributed to the technical work. This alliance became a key part of the company's revenue growth over the next several years.
What's going on here? How does a young engineer have the courage to say enough is enough? Why does a team, when given the chance to slow down, agree to do even more? Why does an employee go out of his way to find an answer to someone else's question? And why is a new employee motivated to achieve tremendous personal and business objectives?
The examples described here are not the result of happenstance. They resulted from a calculated effort to nurture entrepreneurial spirit throughout an organization. They are the predictable outcome of building an ownership culture based on these five entrepreneurial beliefs:
1. Belief in the leader
2. Belief in the purpose
3. Belief in the operating model
4. Belief in empowerment
5. Belief in the reward
Let's look at these five beliefs in more detail.
Belief in the Leader
When everyone in your organization believes in you as a leader, a high level of trust develops in your organization. Kouzes and Posner studied the characteristics of admired leaders in their book, The Leadership Challenge. They found that the top characteristics of admired leaders are honesty, vision, and competence. Belief in the leader means that the people in your organization believe that you and the other leaders have the business acumen and talent to succeed, and that you are trustworthy.
Competence doesn't mean brilliance. In fact, Kouzes and Posner found that intelligence ranks low on the list of characteristics. You don't have to be the smartest person in your organization. Competence means that you are reasonably smart (a matter of genetics) and that you are constantly learning and growing (a matter that is under your control). People want to know that you try hard, make good decisions, and constantly learn. They want to know that you are decisive.
What about trust? Humans don't instinctively trust each other. It's not in our genetic makeup. We earn trust in each other over time. To earn the trust of employees you must be trustworthy. You must make and keep commitments. You must ensure that your words and deeds are aligned with the best interest of the business. If you make commitments to people and keep them, they will view you as trustworthy. It's that simple.
If people realize that the company's success takes precedence over your personal goals, they will trust the company. They want to know that you and the company's other leaders believe that your personal goals and objectives are best met when the business succeeds. They want to know that they can focus on building the business instead of worrying about hidden agendas. They want to know that they can stay focused on the customer instead of on internal politics.
Nothing is worse than working for a manager who believes that his or her own success is a separate issue from the company's success. As an employee in this situation, where do your loyalties lie? Do you support the manager's agenda or the company's agenda? Even worse, do you now interpret your manager's actions as appropriate behavior? He or she seems to be getting ahead by acting this way. Maybe you should follow suit? The old adage that the best way to succeed is to find somebody who is already successful and copy their methods seems to apply. But does it?
If the people in your organization are spending time answering these questions for themselves, they aren't spending time serving customers. Answer the questions for them. Make sure the entire leadership team puts the company's interests ahead of their own. When they do, trust will blossom.
Belief in the Purpose
Most people want to be a part of something big. They want to share in the creation of something important. They want to believe in the purpose of their organization.
Most leading companies have a strong purpose. For example, Wal-Mart's stated purpose is to allow common people to buy the same things as rich people. Microsoft's stated purpose is to enable people to have information at their fingertips. The Body Shop promotes social responsibility. Your employees want to know your company's stated purpose. They want to know that the business is trying to achieve something that is important and meaningful. They want more than a job. They want to be part of changing the world, even if it's just their own little corner of it.
To discover your purpose, ask yourself why your organization is important. If your company went out of business tomorrow, or your organization was reorganized out of existence, why would your customers care? We often ask managers to reflect on this question. In one case, we asked a group of service managers. Initially, their answers revolved around the fact that they would lose their jobs. But after further probing, they began to open up. They talked about how they truly believed that their customers would be left in a bind. They mentioned that they often solved business problems that other companies couldn't. Without them, their customers would not be getting high-quality solutions to their problems.
Now, you can argue that their stated purpose wasn't unique, but that's not important. It was their purpose. That's what matters.
When all the employees in your organization share a belief in the purpose of the business, they stay focused on the big picture. Their actions align with the direction of the business. Their collective thoughts focus on better ways of achieving the purpose. They feel a personal sense of fulfillment that goes beyond just completing a job.
In order to believe in the purpose, they need to understand it. You have to constantly repeat your stated purpose as if it were a mantra. It doesn't have to be earth shattering in its creativity or uniqueness; it just has to be yours.
How many times have you heard someone in your organization say, "We need a better understanding of where we are headed."? We see too many managers thrown off balance by that question. They can't understand why people have a hard time understanding where the business is heading.
The president of a professional services firm shared his experience regarding the perceived lack of vision in his organization. He was confronted with the question, "What direction are we heading?" Out of exasperation, he rattled off a very simple, nondescript vision statement. Something along the lines of: "We are an organization that provides superior results to our customers. We are going to continue to serve our existing customers better than anyone else while we target new customers in the telecommunications industry." To his amazement, the questioner responded, "That's exactly what we need to be hearing!"
People need to know where they are going. They want to know that the things they do every day contribute to a vision. Many companies develop mission statements or vision statements. But a mission statement is only as good as the number of people who can live it every day. You need to put meaning behind the words. Identify the key words of your mission statement, and tell stories about people living those words. If your mission statement says you are customer focused, share company folklore about employees who have focused on the customer. If your mission statement says you are a team, give examples of how teamwork has helped win new customers. Bring the words of your mission statement to life through storytelling. Tell these stories to customers, partners, and your employees. Tell them to people you are trying to hire. Tell them to anyone who will listen.
Once employees understand the vision, they set off to live it. They refine it based on their own experiences. It becomes the rallying cry of your organization. Your purpose concentrates the creative energy of your people on helping your organization reach its goals.
Belief in the Operating Model
We define an operating model as the integration and interaction of your business constructs-the policies, procedures, processes, and structures of your business in dynamic interchange. It's how your business works.
The people in your organization constantly pass judgment on your operating model. They evaluate whether it makes sense, given their view of the world. They compare your operating model to those of other companies where they have worked, to those of your competitors down the street, and to the models described in the business or industry literature they read.
Every day, your employees pass judgment on your marketing strategy, accounting practices, management approach, hiring practices, and every other aspect of your business. Your job is to help them find reasons to believe that your operating model makes sense.
Belief in your operating model fosters effective action because belief is a by-product of knowledge. When everyone believes in your operating model, they understand the rationale behind the processes, policies, and procedures you have implemented. They are equipped to make decisions, and they frame every decision against the purpose of the company and an understanding of business financial principles.
Again, your job is to share the operating model with everyone so they can inform their daily activities with knowledge and purpose. They have to know that you take the operating model very seriously. You have to show them that it is designed to help the business achieve its purpose. Talk to them about it at every opportunity. Your operating model has to be a reflection of what you believe and what you want for your business. It's that important.
Our mantra is: It's not what you do; it's how you do it. Your operating model is really how you run your business. You probably aren't offering a product or service that is completely unique and different. There is too much competition for that. To be different, you have to develop an operating model that reflects your unique vision of what your customers need. And you have to ensure that everyone believes in its ability to succeed.
Belief in Empowerment
The real benefit of working in an ownership culture is the ability to act on your own with the full support and backing of the organization. In an ownership culture all employees act like owners of the business. Therefore, you authorize them to make decisions. But even more important, you train them to make the right decisions. Just authorizing people to make decisions is not enough-they won't act unless they feel confident that they can act appropriately.
When people believe in empowerment, they believe in the organization, and they believe in themselves. They know the organization supports their actions, and they believe they will make the right decisions. Most important, they know they are allowed to fail. Mistakes are tolerated. However, they must recognize how to learn from mistakes and avoid repeating them.
One of the authors once made the mistake of the century. He signed a $1 million fixed-price contract without checking a box to request progress payments along the way. In other words, he signed a contract that required the company to deliver $1 million worth of services without receiving any form of payment until completion of the entire job, almost nine months later. In essence, he created a massive cash-flow problem for the company.
His first response (after the tears stopped) was to control the damage. The company set out to control expenses and raise cash to solve the immediate cash-flow crisis. Then he met with the legal staff to put a process into place to ensure that the problem would never occur again. He shared the story with everyone (even though he took a lot of ribbing), so that everyone would avoid making the same mistake. In the end, the company survived and everyone learned from the experience. More important, they realized that the company could tolerate mistakes as long as everyone learned a constructive lesson and took action to avoid repeating the mistake.
People believe in empowerment when they have the authority to act, have the ability to act, and receive support when they do act. When they believe in empowerment, they feel a sense of purpose and fulfillment. Employees today want opportunities for growth, and they want to have an impact on their organization. They want to be empowered. Make sure everyone in your organization believes in empowerment.
Belief in the Reward
If you feel that salary and bonuses are the major reasons why your company can attract and retain people, you have a real problem on your hands-especially with the unemployment rate hovering below 5 percent. In this environment, when many people can go elsewhere and command a higher salary, you must give them other reasons to stay than just money. You must ensure that they enjoy what they do. In the current business climate, you attract people with competitive salaries and financial rewards, but you retain them by giving them opportunity and a rewarding place to work.
When employees believe in the reward, they believe that they will succeed when the business succeeds. They are willing to give their best efforts on behalf of the business, because they know that their personal success is tied to the success of the business. This is constantly on their minds. When you help your people stay focused on the big picture, they, in turn, try to improve the business so that their reward increases. They think and act like entrepreneurs, like owners of the business. They protect the bottom line as if it's their own, because it is their own.
THE POWER OF TRUST The ability to trust and believe in a system is the key determinant of the system's success-even if that system is a business. If your employees don't believe in your business system, they cannot be effective. They spend too much time watching their backs instead of focusing on the customer. They spend their time trying to figure out the hidden agendas. They work within the system rather than working on the system. Politics dominates the environment. Trust becomes nonexistent. In the end, good people take their services someplace else.
Trusting the system is liberating. It frees up an enormous amount of time to focus on more important things. In this case, employees focus on the customer. When employees believe in the leaders, they adopt their beliefs and values. When they believe in the purpose of a business, they become prophets and spread it to anyone who will listen. When they believe in empowerment, they act. And because they understand the operating model, they act appropriately. When they believe that they will succeed when the business succeeds, they focus their attention on the success of the business, nothing else.
When the five entrepreneurial beliefs are inculcated in your culture, your business becomes a finely tuned system, your people a team. They believe in the game plan and focus on winning. Your business begins to operate on its own, without your constant attention. You have more time to work on the business instead of working at the business. You have more time to improve its operating model, to find new opportunities, to develop more people, and to stay focused on the changing market.
Ensure that everyone in your organization believes in the leadership of your company. Ensure that they believe in the purpose of your business. Ensure that they believe in the operating model, and that they believe in empowerment and the reward. Then let them go. Get out of their way. Discover how powerful a company of entrepreneurs can be.
