Executive Master in International Postal
Management
Patrick Foley
April, 2010
Executive Master in International Postal
Management
Value Creation- Strategic Leadership
Leadership Culture and Innovation
Wednesday 14th April, 2010
Patrick Foley
Creativity from Intrinsic Motivation
Factors that increase intrinsic motivation of employees:
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Challenge: matching task to stretch employee’s abilities just sufficiently
Resources: allocating adequate (but not excessive) amount of time and money
to project
Freedom: giving people autonomy regarding the means but not necessarily the
ends
Work-group features: creating mutually supportive teams with diversity of
backgrounds and perspectives, and sharing common excitement towards goal
Supervisory encouragement: acknowledging creative efforts irrespective of
outcome, keeping open mind to new ideas
organisational support: putting in place systems, procedures, values that
emphasise creativity as top priority, e.g. encouraging collaboration, reducing
politicking
Supervisory
encouragement (+)
•Goal clarity
•Supervisory support of ideas
•Open interaction between
supervisors and subordinates
Work group supports (+)
•Background of individuals
•Intrinsic motivation
•Constructive criticism of
ideas
Freedom (+)
•Relative high
autonomy
•Control over work
•Choice on how to
accomplish tasks
Workload pressure (-)
Challenging work (+)
•Assignment of
challenging work
Organisational
encouragement (+)
•Shared vision
•Risk taking
•Support and evaluation of
ideas
•Recognition of ideas
•Collaborative
Creative Task
Accomplishment
Sufficient resources (+)
•Adequate resource
allocation
•Perception of
adequate resources increases
creative accomplishment
•Some degree of pressure has a
positive effect on creativity
•Extreme pressure undermines
creativity
Organisational
impediments (-)
•Internal political problems
•Conservatism
•Rigid formal structures
•Destructive internal
competition
Key Traits:
Companies known for innovation share and
excel in certain key traits
1. Mindset: They foster an atmosphere which encourages
innovation, trust and a continuous and rapid
communication between business units – specifically
between R&D and Sales & Marketing
2. People: They encourage entrepreneurship from
employees at all levels of the organisation, creating an
atmosphere of collective responsibility in which employees
can be inspired and deliver against a defined set of
criteria; emphasis on creating genuine value rather than
just meeting targets
Key Traits:
Companies known for innovation share and
excel in certain key traits
1. Processes: They have put in place dynamic, vision- and
solution-based processes linked to multiple strategies.
The decision-making process is transparent and efficient
– bottlenecks are swiftly ironed out. The ultimate aim is
always to commercialise successful products rather than
indulge in research per se
2. Technology: They facilitate networking throughout all
levels of the organisation enabling the workforce to share
knowledge, thus integrating the ‘front and back end’ of the
business
3. External input: They forge links with external experts (eg.
academics, partners) to enrich the debate and provide
fresh perspectives to help deliver innovative solutions
Underlying characteristics of a
firm’s control systems
Administrative domain
Tight, extremely detailed
Centralized
Stress conformity
Inflexible, no discretion
Formal
Rule and procedure based
Emphasis on feedback
Entrepreneurial domain
Loose with broad guidelines
Decentralized
Permit individuality
Flexible, allow discretion
Informal
People and communication based
Emphasis on feed forward
Using Key elements of the HRM system to create an entrepreneurial
environment
Job Planning and design
What are employees asked to
do, and how do we allow
them room to show initiative?
Recruitment and
selection
Whom to we hire to
be entrepreneurial
and how do we hire
them?
Creating an
entrepreneurial
work environment
Performance
appraisals
How do we guide and
reinforce employees
and help them identify
with entrepreneurial
performance?
Training and development
Compensation and rewards
How do we incentivize employees
to be entrepreneurial, take
ownership and stay with the
company?
How do we help employees
recognize their entrepreneurial
potential and develop the skills
to best capitalize on that
potential?
Components of the innovative
organisation
Component
Key features
Shared vision,
leadership and the will
to innovate
Clearly articulated and shared sense of purpose
Stretching strategic intent
‘Top management commitment’
Appropriate structure
Organisational design which enables creativity, learning and
interaction. Not always a loose ‘skunk works’ model; key
issue is finding appropriate balance between ‘organic and
mechanistic’ options for particular contingencies
Key individuals
Promoters, champions, gatekeepers, and other roles which
energize or facilitate innovation
Effective Teamwork
Appropriate use of teams (at local, cross-functional and
interorganisational level) to solve problems
Requires investment in team selection and building
Elements of an entrepreneurial
culture
 People and empowerment focused
 Value creation through innovation and change
 Attention to the basics
 Hands-on management
 Doing the right thing
 Freedom to grow and to fail
 Commitment and personal responsibility
 Emphasis on the future and a sense of urgency
 Discuss Your organisation in terms of these
dimension…..
11
12
13
Leadership Versus Management:
Leadership:
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Promotes change and development
Envisions new directions and motivates others
Inspires commitment, loyalty and involvement
Management:
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Is planning, directing, controlling
Provides predictability and order
organises and structures its processes
Kouzes and Posner’s Innovation
Leadership Model
 The five practices and ten commitments are
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associated with exemplary change leadership
according to Kouzes and Posner.
Kouzes and Posner LPI model is widely used and
encourages the development of organisations with a
high level of emotional intelligences and adaptability
(GE).
Kouzes and Posner’s Change
Leadership Model
 Increases individuals’
capability to deal with the
human and organisational
changes both as leaders
and as participants of
organisational change
Kouzes and Posner’s Change
Leadership Model’s Five Practices
 Inspiring a Shared Vision:
 Modeling the Way:
 Challenging the Process:
 Enabling Others to Act
 Encouraging the Heart
“We are being judged by a
new yardstick; not just how
smart we are, or by our
training and expertise, but
also how well we handle
ourselves and each other.”
Today’s priorities:
team building and managing change
Daniel Goleman, Ph.D.
Working with Emotional Intelligence
19
The Service-Profit Chain
Internal
Service
Quality
Employee
Satisfaction
Employee
Retention
Employee
Productivity
• Workplace Design
• Job Design & Autonomy
• Employee Selection & Development
• Rewards & Recognition
• Resource Adequacy
External
Service
Value
Customer
Satisfaction
Customer
Loyalty
Revenue
Growth
Profitability
• Customer
Benefits
• Lifetime
cost to
consumer
• Attractive Value
• Retention
(Benefits/Cost Ratio) • Repeat Business
• Service Designed & • Referral
Delivered to meet
targeted customers’
needs
A Framework for
Customer Value Creation
Sources of Value Creation
Product
Services
Relationship
Management
Image
Exit
Financing
Maintenance
Set-up
Acquisition
Search
Relative
Life-Cycle
Benefit
Relative Life
Cycle Cost
Relative
Delivered
Value
… From a Physical Process Sequence
Make the
Product
• Design Product
• Materials
procurement
• Manufacturing
Sell the
Product
•
•
•
•
‘Cost plus’ price
Sell / Advertise
Distribute
Service
… to a Value Delivery Sequence
External
Focus for
Value
Creation
Choose
the
value
• Customer Value (CV) &
Needs Analysis
• Market Segmentation
& Target Markets
• Value Positioning
vs. Competitors
Internal
Focus for
Value
Delivery
Provide the
value
• Organisational Value
Engineering
• Product & Process
(re)design
Communicate
the value
• Build Internal & External
Understanding of:
• CV Framework
• CV Position vs.
Competitors
Understanding Customers’
Definition of Value
 How do customers define benefits?
 …not in terms of product and service features, but
in terms of results delivered
Improved
Performance
Improved Asset
Productivity
Improved
Operating
Productivity
Reduced
Risk
Value Proposition: Superior value
 How do we create superior value for key
stakeholders and customers?
 What is unique about this value that allow us to
maintain a competitive advantage?
– What is it about our value equation that makes
it hard to imitate?
– V=B-C
How do we communicate our value
propositions (V= B-C)?
 Value Proposition a definition:
– How items of value, such as products and
services as well as complementary valueadded services, are packaged and offered to
fulfill customer needs (Kambil et al. 1997).
Kambil, A., A. Ginsberg and M. Bloch (1997). Rethinking Value Propositions. Working Paper, NYU
Center for Research on Information Systems
A Profitable Value Proposition
‘Benefits’ v. ‘Features’
 Organisations think ‘features’…
but customers think ‘benefits’
Some ‘Features’
- new design
- multi-functional
- quality engineering
- warranty
Some ‘Benefits’
classy
flexible
reliable
peace of mind
‘Value’ comes from ‘benefits’, not ‘features’
Benefits vs features
 Customers think benefits
– Reliable
– Classy
– cool
 Suppliers think features
–
–
–
–
Multi-functional
Warranty
New design
Value comes from benefits, features deliver
benefits
Understand your Value Propositions
Company
and
Product
Target
Customers
Benefits
Price
Value
Proposition
Perdue
(chicken)
Qualityconscious
consumers of
chicken
Tenderness
10%
premium
More tender
golden chicken at
a moderate
premium price
Volvo
(station
wagon)
Safetyconscious
“upscale”
families
Durability
and safety
20%
premium
The safest, most
durable wagon in
which your family
can ride
Domino’s
(pizza)
Convenienceminded pizza
lovers
Delivery
speed and
good quality
15%
premium
A good hot pizza,
delivered to your
door door within
30 minutes of
ordering, at a
moderate price
Value Propositions
are more than Value Consumption
From Osterwalder and Pigneur Modelling Value Propositions in E-Business 5th International Conference On
Electronic Commerce (ICEC2003), Pittsburgh, 30 Sep - 3 Oct 2003
Tools for Creating Value through Benefits
 Product
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Features
Performance
Conformance
Reliability
Packaging
Design
 Support Services
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Distribution
Installation
Merchandising
Training
Maintenance
Consulting
Information
Management
Tools for Creating Value through Benefits
 Relationship
 Image
Management
 Competence
 Courtesy
 Credibility
 Reliability
 Responsiveness
 Communication
 Involvement
 Security
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Company Reputation
Brand Reputation
Atmosphere
Promotion
Media / Publicity
Understanding Customers’
Definition of Value
 How do customers define costs?
– …Not in terms of purchase price, but in terms of total
tangible and intangible costs/savings over the relationship
life cycle
Less Money
Less Time
Less Psychic Cost
Less Effort
Tools for Creating Value
through Life-Cycle Costs
 Search Cost
 Product
availability
 Information
availability
 Relationship
Management
 Competence
 Responsiven
ess
 Credibility
 Acquisition Cost
 Price level
 Timing
 Order
placement &
fulfilment
process
 Allowances
 Incentives
 Image
 Set-Up Cost
 Switching Costs:
 Economic
 Psychological
 Tooling
 Installation
Tools for Creating Value
through Life-Cycle Costs
 Maintenance
Cost
 Service Costs
 Complexity
 Reliability
 Availability
 Repair Costs
 Relationship
Management
 Systems
Management
 Financing
Cost
 Processing /
Admin.
 Deposits
 Credit
 Subsidies
 Penalties
 Flexibility
 Security
 Exit Cost
 Product:
 Replacement
Cycle
 Compatibility
 Upgradeability
 Market-Making
Opportunities
 Experience
 Commitment
Kim and Mauborgne Knowing a Winning Business Idea When You See One Harvard Business Review.
September-October 2000
Value Propositions and Value
Innovation
 To value innovate, managers must ask two
questions:
– "Is the firm offering customers radically superior
value?"
– "Is the firm's price level accessible to the mass of
buyers in the target market?"
Link technology to customer needs
Value Innovation v.
Conventional Strategic Thinking
Dimension
Industry
Strategy
focus
Customer
focus
Capabilities,
assets
Products,
services
Conventional
Strategic Thinking
Conditions are given
Build competitive
advantage to
beat competition
Existing customers
Segment, customise
Leverage existing
ones
Determined by
industry boundaries
Value Innovation Logic
Conditions can be changed
Competition is not benchmark
Pursue quantum leap in value
Mass markets
Key commonalities
What would we be doing if we
started anew?
What is the total solution for
the customer?
Fixed mental maps
 There is a pernicious tendency of managers to
build a fixed mental map of the industry in
which they compete
 The focus is on familiar competitors who use
similar techniques to produce similar products
or services for a shared customer base
– These are the ‘usual suspects’
Strategy is about breaking
free
 From an obsession with management tools
 Of industry dogma
 From the industry ‘rules’
 Of the present to create the future
 From tactics
 From sameness
 From hostility to change
Blue ocean thinking
 Kim and Mauborgne propose
a new approach to strategy
 They question the essence of
Porter-type approaches and
call it red-ocean thinking
– They are critical both of the
idea of industry attractiveness
and the need to choose
between differentiation and
low-cost generic strategies
Analytical tools
 Kim and Mauborgne outline a series of
analytical tools and frameworks to facilitate
blue-ocean/market driving thinking:
– The strategy canvas
– The four actions framework
– The eliminate-reduce-raise-create grid
The strategy canvas
 This attempts to capture the principal factors
that presently characterize the way the game is
played in a particular market or industry
 These factors can be ranked high to low
 The strategy canvas reveals the shape of what
Kim and Mauborgne call the ‘value curve’
The US Wine Industry
The four actions framework
 This framework guides the search for a new
value curve by asking four questions:
– Which of the factors that the industry takes for
granted should be eliminated?
– Which factors should be reduced well below the
industry’s standard?
– Which factors should be raised well above the
industry’s standard?
– Which factors should be created that the industry
has never offered?
The ERRC grid
 An extension of the four actions
framework is the eliminate-reduce-raisecreate grid
 It is about ‘value innovation’: creating
value for both the organization and for
customers
The characteristics of good
strategy
 Kim and Mauborgne insist that ‘good’ strategy
has three characteristics:
– The value curve has focus
– The value curve diverges from other players’
– The strategic profile has a clear and compelling
tagline