The question, “so, what business are you in” has promoted many CEO and CSO-level conversations, often leading into a deeper discussion around “what is actually your ‘idea of the firm’?”.
In our work and research, we find that this simple question is a genuinely powerful way to start a conversation on transformation. We also find that successful transformation cases often point back to a specific time or event when they explicitly decided they had to, or already had, shifted the idea of the firm.
So, what is ‘the idea of the firm’?
At its most basic level, ‘the idea of the firm’ is who are we, why do we exist and who do we want to be, all bundled into one statement or one sentence. It should be deep, foundational, yet also simple, easily communicative and easy to grasp.
It should be aspirational, something to strive for. It should also be ambitious, something bold and future-oriented. In the foundational strategy tool, Strategy Intro, we call this “Ambitions”
‘Idea of the firm’
- Are we a newspaper company or a media company?
- Are we a media company or a tech company?
- Are we a publisher or are we a shaper of the media of the future – today?
- Are we a train company or a future-oriented mobility company?
- Are we a car manufacturer or a mobility solutions company?
You probably recognize some of these questions and the companies behind them. You may also have similar questions yourself.
Your ‘idea of the firm’
These are just a handful of the foundational questions, the very ‘idea of the firm’ questions we have met in the last few years.
These are not easy to answer.
In fact, they can fuel explorative discussions, often stretching over years before the organization is able and willing to make a decisive choice. Even then, the choice is highly delicate, careful and deliberate.
In our framework, the 10 Principles of Transformation, we encourage the pursuit of strategic dilemmas, as these strategic dilemmas may provide new lenses to unlock new perspectives and new growth opportunities far outside your traditional core business.
So, what is your ‘idea of the firm’ and how do you see it changing in the coming decade?
CASE: EQUINOR
From Oil & Gas Company to Energy & Technology Company
Case in point is Equinor, who shifted from being an Oil & Gas Company to become a broad-based Energy & Technology Company.
In 2018, CEO Eldar Sætre published a manifesto titled “From Oil Company to Broad Energy Major”. In this manifesto, which was published both internally and externally in major newspapers, Mr. Sætre laid out a vision and high-level roadmap to transform Equinor into a leading global energy company.
With this publication, many on-going conversations on the future of the company aligned into a clear shift in ‘the idea of the firm’ for Equinor’s 20.000+ staff, aligning them around a three-step strategy to balance the Core, Growth & Explore areas of the company.
We have been privileged to follow this Transformation Journey closely over the past seven years. Today we are optimistic on behalf of the company, but also recognize there are a number of strategic dilemmas, accelerating shifting investor expectations and an overall rise in the market cap of pure play clean energy companies, all pushing into the transformation narrative at Equinor.
Equinor’s ‘Idea of the firm’
Seeing opportunity in the transition to a low-carbon future
Equinor CEO Eldar Sætre explains how his company is putting its weight behind the Paris Agreement and seizing the opportunities presented by changes in global energy markets. “We must be part of the response to the challenges facing the world,” he says.
To succeed over time, the internal pace of change in a company must exceed the rate of change externally. Equinor is no exception, and three areas are important:
- They will produce oil and gas that the world needs, competitively and with lower greenhouse gas emissions.
- They will grow significantly within renewable energy with an ambition to invest around NOK 100 billion over the next few years.
- They will actively stress-test our business to ensure that we are competitive in a low-carbon future.
From…… to….
Where are you heading from… and to?
Are you able to clearly articulate your journey in three simple steps?
Do you have a clear Transformation Roadmap in place?
Is this fully understood by your organization and well-implemented with new KPIs, leadership behaviors, new talent development programs, strategic acquisitions and a clear story to the financial markets?
_______________________________
If you want to dig deeper into the tools, case studies and methodology behind Building the Transformational Company, register here for our 5 week online certification program starting on September 16, 2021. For more insights on how to build your own transformational company, download the Building the Transformational Company report here.
Strategy & transformation advisor to companies, innovation clusters, ecosystems and governments around the world.
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