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Your no. 1 sustainable advantage

Kathleen Quinn Votaw //June 29, 2010//

Your no. 1 sustainable advantage

Kathleen Quinn Votaw //June 29, 2010//

Most of us don’t have the courage to do what Nordstrom did. For many years, this was all that employees received in the way of an employee handbook:

Rule #1: Use your good judgment in all situations.
There will be no other rules.

Nordstrom understood from the beginning that people are the only sustainable competitive advantage any company has. You can’t watch over your people every second; you have to trust that when you give them the responsibility, the authority and the resources to create success, they’ll do it.

Leaders everywhere these days state with pride and gravity that “people are our most important asset.” And, of course, their employees are “empowered to make decisions at every level.” Wouldn’t leaders like to believe it? And maybe they do. But ask their employees and you usually get quite a different perspective.

It takes a great deal of faith in humanity in general, and in your people specifically, to follow anything close to the Nordstrom way. But that is exactly the way to a sustainable competitive advantage. It’s not a single handbook rule I’m advocating, but singular faith in your people. How strong is yours? Here are a few things to consider.

First, what are you thinking?
Conventional wisdom used to be (and still is now) that sustainable competitive advantage was tied mainly to industry: things like how much and how powerful the competition is; and how steep the barriers to entry are. There are many things that impact success, but the one thing that the competition cannot duplicate is the uniqueness of your team.

Understanding that competitive success is primarily achieved through people means that you have to fundamentally alter how you think about your employees and your relationship with them. It means letting go of control and increasing the scope of their responsibilities and activities. And it means looking at your people as the strategic advantage they are and not as a cost to be minimized.

Second, does your culture support or impede?
A great way to start evaluating your culture and whether it supports your faith in people is to take an honest look at your employee handbook. It sets a tone for employees from their first day at work. Recently, I saw this line in a handbook: “We expect you to act in a professional and friendly manner to customers and to your fellow employees at all times.” Messages like these not only treat employees like children, they are personal insults. Look honestly at your handbook. Is it chock full of rules for every possible type of behavior with threats of punishment if they’re not followed? Or, does it resemble Nordstrom’s, in tone if not length?

Are your vision and mission statements simple to understand and remember? Are they motivating and do they instill pride? Most, unfortunately, are filled with multi-syllabic words written generically – and no one can repeat or explain them.

Are compensation and benefits fair and motivating? Are your people involved in your community? Are they recognized for their accomplishments? Does everyone know where you’re going and why? Are bad managers and disruptive personalities tolerated? Do you encourage people to take risks? All of these things and more constitute your culture. Do all of these factors, both individually and taken together, create an environment that people can care about?

Sam Walton said: “Communicate everything you can to your associates. The more they know, the more they care. Once they care, there is no stopping them.” Don’t stop your people from caring or acting.

Third, what does it mean to lead a sustainable company?
The best leaders are constantly evaluating their people to ensure they have the right ones, with the right training, in the right places to achieve success. Nothing else you can create is as strong as your unique team – not your product, not your customer service or anything else you might imagine would trump the importance of your people.

When you have the right people working in the right environment, your competitors will most likely not be able to lure them away, even with offers of higher pay. Retention becomes part of your competitive edge. You keep the knowledge inside your company and save the costs of endless rehiring and retraining.

Leaders have the responsibility, and the pleasure, to create a supportive environment that makes working in your company as enjoyable, productive and rewarding as possible. Only then do you succeed in ensuring a sustainable competitive advantage. Such a simple concept, and it begins with generating the courage to believe in your people.
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