management by matrices

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Unlocking Potential

My latest column in The Hindu Business Line: Unlocking Potential

Full text follows:


Self-actualisation is a term that was first introduced by Kurt Goldstein and later popularised through Abraham Maslow’s theory on hierarchy of needs. It is the final stage of human psychological development, when all lower needs (physiological, safety, love/belonging and esteem needs) have been satisfied. Through self-actualisation, the individual attempts to make the most of his true self and potential.

Can this notion be extended to organisations and institutions? After all, in the same way that individuals strive towards self-actualisation, organisations too try to realise their true potential through the strategic choices they make. Of course, in a human context, self-actualisation leads to fulfilment, happiness and so on while in an organisational context, the equivalent end state could be financial success, sustainability, employee satisfaction and customer loyalty.

Relationship to corporate strategy

Organisational strategy creation can thus be viewed as the attempts by an organisation to manifest its inner good. This ‘inner good’ in my view is not a ‘general’ good. It is a particular inner good, specific to the organisation under consideration. Formulation of strategy then must take into account the fact that it is best to actualise this particular inner good, rather than try to simply replicate the models of other firms in the marketplace.

For one organisation, the ability to scale may represent its highest potential. In that case, a market share-based strategy would work well. For another organisation, the highest potential may lie in its ability to serve customers well. In such a scenario, adopting a quality-oriented strategy may work better where the focus is not on the number of customers but on customer satisfaction.

In other words, the human notion of ‘being yourself’ holds true for organisations as well. Indian public sector enterprises have faced this dilemma in the face of aggressive private sector players. Some public sector enterprises and nationalised banks, for instance, have made attempts at re-branding themselves along the lines of their private sector competitors by attempting more youthful and contemporary brand positioning strategies. It is debatable whether this will indeed be effective in winning more customers. Instead, a better strategy may have been to play on their true strengths such as ‘trust’, ‘stability’, ‘relationship orientation’ and so on.

Determination of potential

The question then is how does one determine what the highest potential of an organisation is? One way could be to look to the founding leadership and their values. A disadvantage of this method could be that as organisations begin to outlive their founders, founding values tend to get eroded and in some cases lose relevance.

The other way to determine potential is to look at the organisation as it is today and determine what it could be good at. This method has its own disadvantages because the situation an organisation is in at present may well be the sum total of bad choices made in the past.

One other way could be to start with customers. Finding out how customers relate to the organisation and ‘what works’ for them may be a useful starting point to determine the highest good.

When The Coca-Cola Company launched a new formulation of its drink called ‘New Coke’ in the 1980s it was met with serious protests from loyal customers, leading to the withdrawal of the product. To these customers, Coke was the quintessential American drink that represented American values, and hence any change to the brand was seen as almost blasphemous. It could be argued that loyal customers of the brand had a clear notion of the ‘inner good’ of The Coca-Cola Company much more than the executives working there. Thus, determination of potential may involve a holistic study of three axes — founding values of the organisation, existing values of the organisation and customer-defined values.

The end goal – purpose

Finally, self-actualisation (either for an individual or an organisation) is not necessarily an end result. It is also a process of making choices along the journey. The choice could either be what Maslow calls a “growth choice” or a “regression choice”, and the idea is to repeatedly make a growth choice when faced with a decision point. The act of making a growth choice is an act of evolution and evolution leads to greater fulfilment.

Put in the context of organisations, the very process of self-actualisation is likely to create a strong sense of purpose and direction in the minds of all stakeholders, and that alone is worth the effort.

(The writer is an alumnus of XLRI, Jamshedpur.)

Previously published columns: