Performance Orientation is the Biggest Challenge Facing Businesses Today

digital change is biggest challenge

Meet our new Senior Partner in Germany, Björn Sander. With twenty years of strategic consulting and brand management experience, Björn shares his thoughts on the true meanings of customer-orientation and performance orientation, why so many organizations struggle to get it right, and lessons to be learned from stand-out brands.

What do you think is the biggest issue facing businesses today?

Digitalization and technological change are often touted as the biggest challenge facing businesses today – but I think the biggest issue facing organizations is their lack of flexibility and preparedness to react to challenges. They are not capable of strategically and operationally mastering changes as they occur in the market environment – let alone anticipating them – whether these are new market entrants, regulatory conditions or changes in customer behavior. Businesses today must have greater agility, focus, and performance orientation.

What does being performance-oriented mean today?

It means that the traditional perspective on organizational design needs to be flipped; the market performance that is required to achieve a business objective must drive a company’s structure and allocation of resources. Today’s reality is the opposite: managers try to deliver against market objectives with an established structure and a given set of resources, bottom-up, regardless of applicability and meaningfulness. They work with the wrong screw-wrench, but stick to it because it is organizationally entrenched and habitual, which means they achieve, at best, a compromise. Instead, the principle should be top-down: from business objectives to required market performance to related tasks – which consequently define the organizational and resource set-up. Taking that one step further, flexibility and agility of underlying processes allow for faster reactivity to business and brand strategy decisions.

You also mentioned focus as an important aspect of brand management.

Yes, I’ve found that even large companies often get hung up on internal discussions instead of focusing on the business’s core contributions and the external requirements that set the base for outstanding market success. Nespresso stands out as a great example of focused brand management. They redefined market rules and invented a new business model based on attributes like ‘exclusivity’ that are atypical for the coffee category and closer to the positioning of jewelry brands. Then they succeeded in getting into both the hearts and minds of consumers by managing their brand flawlessly and executing it across the product, community building, and an exclusive distribution concept. Transforming the market approach from a coffee product to a luxury item more akin to jewelry requires a tremendous amount of focus and discipline.

What would your recommendation be to ensure success?

Consequent and genuine customer-focus – “customer orientation” needs to be more than corporate lip service. So many companies today claim that customer orientation is their absolute focus, but they do not practice what they preach. They tend to think “inside-out” – in terms of their capabilities, assets, and portfolio – and thus position their brands along their own strengths, technical features, or characteristics. Yet, a truly “customer consequence”-focused company thinks in quite the opposite manner – they are centered around the customer, they develop value propositions that are built around customer benefits instead of features, and they transform their own business model accordingly. The latter is key – a strong “outside-in” strategy is only the first part of the task. The second step is turning this strategy into implementation, to live it throughout the organization such that the entire company consequently, consistently and sustainably works against this benefit focus. Many companies have appealing strategy platforms but fail in professional and perceptible transformation, which is a pre-requisite for market impact and success.

What company do you think does a good job of that sort of “outside-in” brand management?

BMW is a great example. Traditionally, automotive brands have built their brands around features such as technical performance attributes or innovation. But innovation itself is neither a value nor a benefit to the customer. At best, innovation is a means to get to a benefit, like security or peace of mind. In contrast, BMW has done an excellent strategy job by positioning on the “principle of joy” proposition, which is a relevant and strong end-benefit. BMW has also done an excellent implementation job by constantly reinforcing the positioning through their marketing, product line-up, and all their employees and functions. The interesting thing will be to see how the brand masters the balancing act of bridging the ecological and efficient position of the i-series with the highly performance-driven positioning of the M series. 

Any closing words?

This customer-oriented approach is precisely the foundation of much of Vivaldi’s thought leadership, and I look forward to working with Vivaldi’s clients to build brands that tackle both customer consequence and transformation over the coming years.