Studying the impact of innovation on business and society

The Time Has Come For Holistic Business Strategy

Guest post by Chris Heuer, Founder/Chairman Social Media Club

What’s the biggest problem in business today?

It’s not access to capital, though that is a real problem in that it inhibits growth in some places where it shouldn’t. No, it’s not command and control management hierarchies, despite the contribution they certainly make. It’s not the problem of “the other” that plagues broad swaths of our society, though that is a close second. I contend the biggest problem is that each business has too few people looking after the whole of the business. This is not only seen in the concentration of power in the hands of the C-Suite and the Board, but also in the org charts that map an often too real silo like operational structure.

What’s the solution? I believe we need to fundamentally rethink the closely held tenets of business strategy, especially in light of the geopolitical and environmental situation we now face. To put it simply, it is time to for organizations large and small to adopt a holistic business strategy that empowers more employees to think about the whole of the business; to more fully understand the ins and outs of the product/service offering; and ultimately focus on serving their markets instead of serving the stock market.

From 2006 until just a few months ago, I had thought that social media would become the big tent where this sort of thinking would take hold and begin to reshape the very way organizations are managed. Now, however, it has become clear that social media, at least in larger organizations has become another silo, albeit an important one.

Further to this point, it seems that social media has bifurcated into two halves; the social side which deals with people issues like support, sales, recruiting and managing the brand’s reputation; and the media side which deals with massive reach, content production and a never ending pursuit for more followers. Much to my chagrin, social media is not the umbrella under which organizations are transforming. Instead it is being relegated to another silo of the disciplines that fall under digital or online marketing – despite the myriad of ways in which it changes all aspects of operations and strategy.

Still, social media is a catalyst for bringing about a massive change in the way that organizations are structured, how they interact with markets and how employees approach the very nature of their work. So I am not giving up on the power of social media, just adapting my world view to how it has actually evolved in its adoption by the mass market.

Over the past few years I resisted this despite watching many forward thinking thought leaders seek new places to hang their hat. Jeff Dachis embraced Social Business, Francois Gossieaux forwarded Human Business and others have sought to simply distance themselves from social media. To a certain extent they were right to do so, but while I agree with many of their principles, posts and perspectives, I have had trouble getting fully on board behind those memes as the next bit thing. To the extent that it describes what needs to happen, I have very much been a supporter around the idea of this time being known as “The Great Restructuring” as advanced by Jeff Jarvis.

Over the holidays, I realized that the reason for my reluctance was that none of these emerging ideas hit upon the most important distinction which should be the focus of our work ahead. Yes, businesses need to be drastically restructured in order to operate as a more social organization, with greater respect for each human within it. But, these core principles alone are not strong enough to transform the very heart of business and the entrenched egoic mindset that has it held hostage. Businesses today also need to think about longer term impacts to the socioeconomic systems over their own short term gains. They need to understand their role in the broader market, rethink how they create value and act as a symbiotic, inter-connected entity within the global ecosystem known as society. These are principles that Michael Porter recently outlined in a brilliant article called Creating Shared Value in a cover story package on Rethinking Capitalism for Harvard Business Review. [Also read this great summary article by Sean Silverthorne on BNet]

In short, this is exactly what I have been thinking about, explained in a much more eloquent way then my writing skills allow. As Michael Porter stated, business should be “creating economic value in a way that also creates value for society by addressing its needs and challenges. Businesses must reconnect company success with social progress. Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success. It is not on the margin of what companies do but at the center. We believe that it can give rise to the next major transformation of business thinking.”

Reading his article brought me back to the insights I first unearthed 12 years ago while working for the United States Mint. It has given me new energy that I will use in the year ahead to advance the principles of holistic business strategy with newfound hope for bringing about real change in how organizations are managed, in how employees relate to their employers, and in how we, as a species, go beyond survival, to thrive together. It is ultimately a vision about a form of conscious capitalism, where innovation can still be rewarded, but without exploiting resources or people. Where doing good leads to profit, rather then coming after profit. Where contributing to the collective good brings personal, communal and societal rewards.

This is largely what I have been talking about under the guise of “Serve the Market” [video | slides] over the past year, and what I will be writing about in the year ahead. How do we serve the market? With a holistic business strategy that does not look at any part of our organization, our operations, our partnerships or our products as separate from the rest, or separate from the people who are seeking value from it.

It’s a simple, almost glib phrase, to “serve the market”, to be of service, but it’s game changing. To reach the greatest success in serving the market requires a holistic business strategy. A strategy that understands the business’ place in the overall ecosystem. A strategy that enables more employees to look after the whole of the business rather then their single silo. As with all good transformative ideas, we need a yardstick to measure the success of our efforts.

While the organizational growth vector and profitability are still core metrics, it’s time for us to improve the measurement of the most important currency in the market, that which either lubricates the flow of market transactions or creates sales friction. What we really need to measure is trust. As I first proposed last year when discussing Market Engagement Optimization, its more important then ever for us to develop the Net Trust Score© as the barometer for measuring a business against its competitors and for determining if its investments in areas like social media are paying off.

I first started exploring these ideas when I entered the business world with the interactive agency and local content site I founded in 1994. I was fairly certain that I was on the leading edge of something that would soon become a massive wave in interest by senior management in this seemingly obvious approach to business. Now 17 years later, holistic business strategy hasn’t taken hold or even gotten onto the radar of many management consultants, but with respected management leaders like Michael Porter supporting this vision, that is all about to change.

Now in 2011 and in the years ahead, I hope to be a catalyst for bringing the philosophy of holistic business strategy to a wider audience by creating a space for open dialogue around the assumptions we have made in the design of our systems, in how we approach profitability, in how we think about the long term over the short term and how we ultimately create strategies that serve the market, rather then exploiting it.

I hope that you join me in exploring and refining these ideas… and also questioning them. And I hope to illuminate what it all means through many case studies we can collect together along the way.

Follow Chris Heuer on Twitter

52 COMMENTS ON THIS POST To “The Time Has Come For Holistic Business Strategy”

  1. Chris..most companies I mentor don’t think social media is some they can use, but I try to explain to them that you must be ready to do things the competition isn’t doing..and that’s online marketing to a new audience..

    BTW Chris..Can you can contact me on my contact page..Its very important..I need your help.

    “Black Seo Guy “Signing Off”

    • Anonymous says:

      Another good point I didn’t really make above.

      Industry leading companies, with courageous employees, will undertake this sort of approach because it will provide a competitive advantage.

      And I know all too well about trying to convince clients of the importance of the next big idea in business – keep trying and eventually your clients will one day say to you, ‘I remember when you started talking about this stuff… you were right’ I still get that from my college buddies about the advent of the Internet, and now about the rise of Social Media…

  2. I’m with you Chris – couple of points.

    There is a trend in business right now – that the executive leaders are now the savvy computer “geeks” we used to be. The stuffy suit-and-tie gang is slowly being shown the door. (Google in recent days?)

    Second, a holistic strategy is built not just on trust but on responsibility – that every member of a company has real skin in the game – not just some stock, but a real investment in the future of the compnay.

    Third, business has to do away with annual reviews – they are insanely archaic. We are in a real-time world. The metrics that we need to gauge our company’s progress can be found in days, if not hours. Waiting several weeks or months to discuss the performance of employees is counterproductive to the immediacy of progress.

    But I think the one thing needed is buy-in. You gotta want to be a part of this. Companies that act more like startups in this nature push faster, push harder, and may succeed in places other companies won’t.

    My .02 – but I love where you’re taking this. Oh, and I’m following you on Twitter now.

    • Anonymous says:

      Really excellent points Paul, thank you.

      Back in the early web days, that is where my bravado found its origins in pointing my finger across the table and admonishing advertising guys that the ‘dont get it’. I thought surely we would rise up and build bridges to enable us to walk across the tar-pits that these dinosaurs of management would leave behind as their legacy. Many years later, I am finding those dinosaurs to often be partners instead of toxic sludge to walk over… its an apt metaphor all around. Even the sub-prime crisis was not the meteor to cause the mass extinction we thought it might be… lots of ancient thinking is still surviving.

      Interesting, there is a great book called Built on Trust that explains quite well how trust is in large part based on being accountable and being responsible in every way, so you are absolutely right to put these concepts hand in hand.

      The only minor disagreement is on the need to abolish annual reviews – perhaps because I haven’t suffered through them like many of my corporate friends. I certainly think they need to be redesigned, but I have found some real value in calling time out, taking a deep breath, and reflecting. I don’t do it regularly myself, but I think its the great Dale Carnegie book “How to win friends and Influence People” suggests a need to sit down and do a review of your goals/situation/learnings every week, every month, every quarter and every year. (I think its this book because I remember this ideal most vividly from my days listening to Tony Robbins audio programs) To this extent, I think there is tremendous value in ‘checking in’ to see about progress and determine ‘have we done what we set out to do’.

      Would love to hear your thoughts on how we might re-imagine the annual review process instead of abolishing it…

    • I’ll keep this short, instead saving some of it for a blog post. But here’s the 30K view:

      To me, reflection is not the same as reviewing. Reflection is stopping to see where you are given the current (and past circumstances). Reviewing is looking back at those circumstances.

      My problem with reviewing is that it often treats the whole as greater than the parts. Out of 365 days, there can be, literally, 1,000s of potential connections, decisions, and activities that shape a result. While we should NEVER confuse effort with results, there are so many minor details that are left off the table is a review – a tweak here, a change there – perhaps the butterfly in the effect…

      I prefer how you put it: Quarterly “reflecting” instead of annual “reviews.”

      Okay, so that’s the short answer, but I’m going to vet this out a little for a blog post soon.

      And thank you replying to me. I appreciate that.

    • Anonymous says:

      excellent Paul – looking forward to seeing your followon post – do tweet it @ me when you get it online

    • Darren Hill says:

      Could I also suggest guys that ‘previewing’ is many times more powerful than ‘reviewing’ too…. IMHO reviews fall short because the preview was not substantial or carried enough vision for people to follow.

      Love the quarterly reflection opportunity too Paul…thats how we keep a ‘preview vision’ strong and at front of mind

  3. Holistic Business Strategy is indeed a laudable goal with solid probability of reaching the outcomes stated in this article, but I believe there is a fundamental and prerequisite factor at work that needs to be addressed prior to the enablement of this strategy to work. This factor is the incentive mechanism in the work place. As long as the business leaders of today choose to operate with short term, silo oriented and individually focused incentive structures we will continue to reap the same results we have been getting over the past 20 years. I state the past 20 or so years because that is about the time span in which I have noticed a dramatic shift in our incentive structures. You only have to look at our stock market and the reward mechanism in play for our leading businesses to spot this shift.

    I do believe that a “Holistic Business Strategy” is possible and the Gen-y workforce seems to be driving towards this shift. Social Media will play a critical role in this movement because this younger generation will have access to the business leaders in ways that have not been possible before. Being able to engage in meaningful conversation with the business leaders even though you are not on the golf course or at the island resort conference with them can be a game changer. This is where the power of social media can break these barriers and allow for new ideas and approaches to doing business. The leaders who end up paying attention to these fresh ideas from the trenches as well as the entire organization and then set up the corresponding incentive structures to allow for the desired behaviors to ensue will then reap the rewards of a “Holistic Business Strategy”

    Norbert Herman @nhsocial

    • Anonymous says:

      Thanks Norbert. A couple of additional points.

      1 – I didn’t manage to weave it into the article, but an important factor here is that I believe those who operate under a holistic strategy who pursue the creation of value for society instead of merely the shareholders will ultimately produce the highest rate of returns as a by-product of their focus and efforts. We’ve already seen the market shifting to reward those who embrace corporate social responsibility, its only a matter of time before the market will no longer do business with those who do think of the greater good while selling their wares.

      2 – You hit it dead on in referencing the need to realign incentive structures. Even today I do not believe that most major companies are incentivizing employees for activities that bring them eminence in and through their efforts in social media. In fact, this is a study we need to undertake, to discover what, if any, re-alignments have been made in HR and annual reviews in order to support the notion of social business and the leveraging of social media by employees on behalf of the business.

      Does anyone have anecdotes on the incentive issue?

    • Darren Hill says:

      Dan Pink goes into some depth regarding incentive schedules in his book, “Drive”.

  4. David Perdew says:

    This movement toward a holistic business strategy requires foresight and bravado on the part of senior management, since they are still the decision makers that can make or break a social media strategy. There is still some old guard philosophy to fight against, and some of those people can point to a measure of success that satisfies this near-sighted outlook toward their own business, even if its being diminished over time.

    I applaud your efforts to educate your audience and motivate change within specific industries as a first step to broadening the scope and power of social media, but as you’ve seen, it will take time to develop a parade of people to lead into the future.

    • Anonymous says:

      The old guard philosophy is the biggest challenge. Indeed, many people, as we have seen in the political realm, are circling the wagons to protect the status quo. A deep well of courage is needed to advance this sort of management philosophy. Until I read the HBR article, I didn’t think it would be possible for a long time, but many people smarter then I are now advancing this notion and hopefully this trickle will indeed become a wave.

  5. Startup Happiness says:

    Chris, I’m with you on this one… but I think that one of the biggest challenges to reinventing business in this way is the effect of public markets. At CPTH, I watched us go from a company that was highly focused on “serving the market” as a private company, to one that was fanatically trying to match its quarterly earnings predictions to the penny, which was serving the *stock* market, rather than our customers. I think part of the systemic change that is needed is ultimately to change the way that public markets work…

  6. Jose Huitron says:

    Brian, the whole purpose of business is to capture and create value for our audience. No matter what industry…it’s all about creating value. That’s why brands stick around and others don’t. Those companies who hit the market in stride and then forget to innovate and drive value are the first ones to fall trap to the mirage of instant gratification in terms of revenue, sales, etc. A selfish company is a lonely company. Great post!

  7. Deborah Mourey says:

    Chris, I am very excited to read this post. It clear that the web 2.0 toolkit (fb, twitter, blah, blah) isn’t going to sustain real business (remember altavista?)

    The transformative power of social business – as it influences hr, product development, finance, as well as sales and marketing is so exciting. I’m working on a short ebook to explore a few of the key elements of the transition. We’re having fun now and it’s going to get even better.

    thanks for being brave enough to call out all the slugs – American business needs to wake up. If or when people in other parts of the world figure out how to create business ‘communities’ that can come and go as needed by the market — we will be in trouble.

  8. Brian, I thought this piece was thoughtful, eloquent and passionate. We keep talking about doing this—and rarely get there—but that doesn’t mean we shouldn’t stop trying. Let’s hope that one day it will go from being a cry in the wilderness to business as usual.

  9. I love the direction of this idea and conversation! I’ve observed that we humans are influenced most by those whom we percieve to be influential and persuasive leaders – and often they are formal leaders – regardless of whether they use social media or not.

    I’ve also noticed that these formal leaders are mostly high performing individuals who are keen to have their team be high performers too – regardless of whether for shared value, shareholder value or personal reward.

    The greatest hindrance is that they themselves are not performing as a high performance team of senior leaders. They are not harnessing their experience and and skill as a team, but remain as highly motivated individuals – and are often the creators and lids on silos. This is not how holistic business strategy is created.

    They are often unaware of how closely they are being watched mimicked or criticized.

    They are unaware of the law of gravity – it all rolls downhill!

    If the senior leaders unite as a high performing team, singing the same song from the same page as would a choir and lead by their example – then the culture and performance will follow more easily, better creation of holistic strategy, less gap between strategy and execution, better realtionships and achievement of shared goals via shared values.

    Most of all, in this state we can harness unconventional wisdom and resolve uncomfortable truths.

    Then we can truly harness the value of technology and certainly social media in the execution of holistic strategy.

    • Anonymous says:

      Yes, and being unaware of how they are perceived by others is a byproduct of the power they have – usually manifested in such a way by surrounding themselves with people who sustain the ego instead of the market. The odd thing being that business leaders have a stated desire of being market leaders, but don’t realize that they are not the market, only players within it. This is where Echart Tolles work becomes very important. Perhaps the book I am working on needs to also include some element of a “Whole New Earth” / “Power of Now” perspective. Better still, maybe someone will write “A Whole New Corporation” or “The Power of Now in Business”.

  10. Darren Hill says:

    Chris, your post on HBS is spot on mate.
    I have been observing behavioural trends in workplaces and society for some time, and the trending away from systems approaches is strong. Successful organisations need to look at the whole picture, and that starts with ensuring the organisation puts its humanity first and its process second.
    I have never seen a system fail; on paper. Yet as soon as human beings are involved the game changes. Every business is a human business, and every generation gets better, not worse at humanity. So for ongoing success we need to ensure the human element of the workforce is at its very best. Not just putting the best system in.

    • Anonymous says:

      Very true Darren.

      You reminded me of my good friend David Dibble’s book, The New Agreements. In going through his coaches training almost a decade ago, he designed an experience to make this understanding of the problem with systems very visceral. Definitely a must read in this area of thinking.

  11. Chris, I’m going to play devil’s advocate on your topic of holistic business strategy. The conscious capitalism you speak of is workable for startups or SME’s. But as soon as organizations get bigger, seek access to funding and investment, they get bound up with traditional concepts of ROI. Shareholders and investment funds are unlikely to be interested in a company’s civic initiatives over the longterm. You only have to look at Shell or any other oil or tobacco company.

    Just as a side note, in the UK there still exists the legacy of Victorian benevolence in the shape of mutual society organizations. These orgs deliver their services to the community for a fee but without serving the need of shareholders.

    I guess the point I’m making is that a holistic business view with civic duties is nothing new, but it’s how its going to be applied that will determine if it is to be common business practice

    • Anonymous says:

      Its also my contention that this will soon be seen as the way to the greatest potential profits with the least possible harm, so as soon as we can demonstrate that we can make just as much money (or almost as much) while also providing huge net gains for the rest of society, those issues will melt away. Still, you are right that those in positions of power will cling to the old ways for some time. As with the adoption of the web, the adoption of electricity, and the adoption of social media, there is a tipping point where the widely held beliefs and attitudes shift.

      What’s new (please do read the Porter article) is that businesses who have been operating under the pursuit of profit at all costs mindset, have not only been shown to harm society, but have fundamentally broken the entire system in the process. You can’t keep making profit if the market itself is broken or perhaps even completely annihilated – so it is in the best interest of the corporation. Further, with the real power of social media being to make things visible that previously would never have seen the light of day, the balance of power has shifted to the people, to the market (evidence exhibit c is WikiLeaks). You can only exploit the market is no one else knows your real motivations and purpose – with transparency, we get truth, with truth we get trust.

      Also, as we will soon be able to demonstrate with the Net Trust Score, the real beauty of rising trust by laying bear our motivations and behaving honestly in the best interest of all is that trust reduces friction in all aspects of operations, from hiring, to reducing the cost of sales, to lowering customer support costs, to accessing the best new ideas from customers and so much more.

  12. Anonymous says:

    Thanks Paul. Holistic Business Strategy is actually something I gave up on back in 2004 or so, after my attempts to promote the ideals inside a client organization was met with the silo reality and a general lack of interest from a post IPO corporation. Only recently have I seen the opportunity to revitalize it, and only with the Michael Porter article on Creating Shared Value did I see a glimmer of hope that it could become mainstream management thinking.

    In the next couple of weeks (or maybe tonight 😉 I will launch a new blog for “Serve the Market” (just add .com) where I will be sharing my insights and capturing the stories that will ultimately be the core of a new book. I just created a group on LinkedIn to discuss Holistic Business Strategy, which is but one of the core principles that we need to embrace for 21st century markets. I expect to leverage many other social media tools as the work evolves, but am trying to keep it simple for now since my vision for this work is quite expansive and covers many principles that could be just as big on their own.

    Through these online discussions, and within Social Media Club (the non-profit association we founded back in 2006 that is now in 200+ cities globally) we will have a chance to advance some of these ideas and collaborate with one another.

  13. Sayo Martin says:

    Are there any companies doing this today, or that you consider to be on the verge? IBM?

    • Anonymous says:

      For small business, my friends/colleagues over at iStrategy Labs are by far one of the best examples. Over in Sweden, I think Salta Kvarn really knocks it out of the park. I also think Facebook is close and in the more traditional big company space there are a lot of companies that have many bright spots but fall short in some key areas.

      Part of the work going forward is to define the criteria and parameters that define what this means and to build out a list, and hopefully an awards program or something similar later in the year. Depends on the level of interest we get behind it really… at this point, things look pretty good 🙂

      Personally, all the great feedback really has me energized and very hopeful for the broader understanding of what I see as a realization of what is already underway. By naming it, we can collectively give it more energy and encourage a wider exploration and adoption of the core principles, which will lead to a widespread expansion of the list of companies doing it well.

  14. gianna says:

    Even today I do not believe that most major companies are incentivizing employees for activities that bring them eminence in and through their efforts in social media. In fact, this is a study we need to undertake, to discover what, if any, re-alignments have been made in HR and annual reviews in order to support the notion of social business and the leveraging of social media by employees on behalf of the business.Ecommerce website development

  15. As I said in my last comment, it is always necessary to have different plans for every quarter and to change the strategy based on the statistics of the current strategy. This is much needed for a company to move in a right direction.

  16. gianna says:

    I certainly think they need to be redesigned, but I have found some real value in calling time out, taking a deep breath, and reflecting. I don’t do it regularly myself, but I think its the great Dale Carnegie book “How to win friends and Influence People” suggests a need to sit down and do a review of your goals/situation/learnings every week, every month, every quarter and every year. ecommerce website developer ecommerce website development

  17. Guest says:

    Basically, you are talkimg about Lean

  18. gianna says:

    The only minor disagreement is on the need to abolish annual reviews – perhaps because I haven’t suffered through them like many of my corporate friends. I certainly think they need to be redesigned, but I have found some real value in calling time out, taking a deep breath, and reflecting

  19. Scott says:

    I stopped reading at ‘bifurcated’. I knew after seeing that word that you must be the type of person that tries to create complexity where none is needed. Just say ‘split’. And your whole company Starrett theory sounds too complex also.

  20. SAHK have sought to apply conductive education to and embed it within their business model holistically, one might say, if by that we mean, the whole.

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  22. By analyzing and sharing this data, we hope to provide insight to corporations, suppliers and business travelers alike, to help them make more informed decisions, create greater value and drive down costs.

  23. Everett Byrd says:

    To the extent that it describes what needs to happen, I have very much
    been a supporter around the idea of this time being known as “The Great Restructuring” as advanced by Jeff Jarvis.

  24. where innovation can still be rewarded, but without exploiting
    resources or people. Where doing good leads to profit, rather then
    coming after profit. Where contributing to the collective good brings
    personal, communal and societal rewards.

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