Victoria Tifft: What really drives your firm? Featured

8:01pm EDT May 31, 2011
Victoria Tifft: What really drives your firm?

If you asked your employees, would they be able to tell you your firm’s core objectives?

Do you know?

Simply put, a core objective is a critical force that drives the company. Yet every day businesses operate without a solid sense of their core objectives. Many companies don’t know the role core objectives play or how they form its underlying foundation.

It is a well-known fact that Southwest Airlines considers flight turnaround time to be one of its core objectives. Many Southwest decisions support this turnaround objective, including the hiring of in-house mechanics and cross training of all personnel. The flight and ground crews understand the importance of the objective and work together to ensure turnaround times are met, and because the objectives are measurable, flight-by-flight performance is published for all to see so teams clearly know if they have met their objectives, and they can make adjustments if they have not.

The reality is there are generally four or five objectives that drive each firm. Because every business is different, it’s important to identify which objectives are critical for your business and your customers. The further removed your core objectives are from your customers’, the more opportunity you provide a competitor to step in and close the gap. A good example is when the domestic automotive market let the Japanese step in between it and its customers. While quality was not a core objective in practice of the domestic automakers, it was for customers. So when Japanese automakers took advantage of this disconnect, they turned an entire industry on its head.

Once your firm has identified its four or five key objectives, there are several strategic mapping methods you can use to your match core and customer objectives. My firm uses a COAR map designed by CASE Weatherhead School of Management’s Sayan Chatterjee. It is designed to map the relationship between four areas: customer outcomes, company objectives, activities and resources.

Here’s an example of how this works:

Let’s say your entrepreneurial 10-year-old wants to earn some extra money this summer by operating a lemonade stand.  If we asked a 10-year-old (and we did) what his or her core objectives would be, the answer might be: Repeat customers, great lemonade and make a profit.

If we asked the 10-year-old’s customers for their core objectives, they might say: Lemonade that is readily available, great taste and reasonable prices.

In this case, the 10-year-old’s core objectives match the customer’s objectives. With the objectives in hand, effective activities follow easily: recipe, location and cost-effective supplies. Every decision this 10-year-old makes should then align with the established core objectives. If your company’s core objectives are to make a profit and enjoy repeat customer business by selling superior lawn services, the activities and resources that you assign to ensure you have superior lawn services will determine how successful you’ll be in achieving repeat business.

We like the COAR map because it illustrates the interconnections between the customer and the company’s objectives, the core metrics that we should track and the financial allocations for activities and resources that support the objectives. Understanding the connections between customer and corporate objectives, activities and resources is imperative for long-term business success. Once you’ve aligned these connections, you’ll have a good handle on the driving forces at work within your firm.

Victoria Tifft is founder and CEO of Clinical Research Management, a full-service contract research organization that offers early- to late-stage clinical research services to the biotechnology and pharmaceutical industries. She can be reached at vtifft@clinicalrm.com.