In the dynamic landscape of business and organizational performance, achieving sustainable success is a complex task that requires a delicate interplay of various factors. One model that encapsulates this interplay is The 3Cs Model, developed by Karl Perry. This model emphasizes the importance of Commercial Responsibility, Customer Value, and Culture, or as I like to call them, the 3C’s of organizational performance. However, it’s not about balancing these elements in isolation, but rather about creating a potent synthesis of the three.
Though seemingly distinct, these elements are inextricably linked, creating a powerful tension that, when correctly harnessed, can drive unparalleled growth and high performance.
As Christopher Luxon, former CEO of Air New Zealand, aptly stated:
“As a business leader, you have a responsibility to lead a company for the future…My job is to make sure that commercials are strong, the customer experience is great, the culture of the organisation is constantly improving.”
However, achieving this synergy requires overcoming many obstacles and the various forms of conflict they create. By understanding and addressing intra-personal conflict, inter-personal conflict, and organizational conflict, and by using Interest-Based Problem-Solving and the Theory of Constraints Thinking Processes to accelerate the evaporation of conflicts, organizations can remove those obstacles and pave the way for sustainable high performance.
Speaking of the Theory of Constraints, Eliyahu Goldratt also highlighted the importance of the 3Cs in his book It’s Not Luck:
“Let me review what we have agreed on. We agreed that we should, ‘Make money now as well as in the future,’ ‘Provide a secure and satisfying environment for employees now as well as in the future,’ and ‘Provide satisfaction to the market now as well as in the future.’
The first one represents the traditional view of people who own companies.
The second is the traditional view of the unions, the employees’ representatives.
And the third expresses the message that all new management methods are zealously advocating.
We, as top managers, must make sure that our companies provide all of them.”
To support finding synergy between the 3Cs, the High Performance through Engagement (HPtE Strategy® or HPtE) is a framework that creates a pathway for organizations to achieve sustainable high performance. It provides a systematic approach to finding synergy and embedding IBPS and TOC within the organization.
The HPtE Strategy® offers a roadmap to navigate obstacles and find synergy.effectively. It’s a strategic guide and communication tool that supports clients implementing their High-Performance Engagement initiative. It aids in understanding the intricate interplay between the 3C’s and illustrates both the current reality where conflict and tension might exist, and the future scenario where this synthesis can be harnessed for mutual benefit.
The HPtE Strategy® emphasizes the importance of stakeholder engagement, constructive culture, and continuous improvement. It provides tools and methodologies for identifying and addressing the underlying interests of all stakeholders, fostering a constructive culture, and continuously improving processes and outcomes.
Understanding The 3Cs
The Stool Metaphor
The 3Cs can be thought of as a three-legged stool, where each leg (Commercial Responsibility, Customer Value, and Culture) is dependent on the other two for stability. The seat of the stool represents Sustainable High Performance, which can only be achieved when all three legs are strong and working in synergy.
Here’s the breakdown:
Commercial Responsibility (Leg 1):
This leg supports the organization’s financial health and long-term viability. It’s dependent on the other two legs, as providing value to customers drives revenue, and a constructive culture enables efficient and effective operations.
Customer Value (Leg 2):
This leg represents the organization’s ability to meet the needs and expectations of its customers. It’s dependent on Commercial Responsibility (the organization needs resources to create value) and Culture (a customer-focused culture is necessary to understand and meet customer needs).
Culture (Leg 3):
This leg symbolizes the shared values, beliefs, and behaviors within the organization. A constructive culture is dependent on Commercial Responsibility (providing a sense of security to employees) and Customer Value (creating a sense of purpose and satisfaction among employees).
The Seat (Sustainable High Performance):
This is the result of all three legs working together in synergy. When Commercial Responsibility, Customer Value, and Culture are all strong, the organization can achieve sustainable high performance. If any leg is weak, the stool becomes unstable, and high performance is harder to sustain.
This metaphor illustrates the interdependence of the 3Cs and the importance of focusing on all three to achieve sustainable high performance.
Just like a stool needs all three legs to stand upright, an organization needs Commercial Responsibility, Customer Value, and Culture to achieve sustainable high performance. The tension between these three elements, much like the tension between the legs of a stool, is what gives the system its strength and stability.
Adding wires between the legs of a stool can make it stronger. In the context of the 3Cs Model, these wires can be seen as the synergies between the three elements. When these synergies are effectively harnessed, they can strengthen the organization and drive unparalleled growth and high performance.
For instance, when Commercial Responsibility and Culture work together in synergy, they can create a collaborative environment that fosters innovation and improves financial performance. When Culture and Customer Value are in synergy, they can create a customer-centric culture that enhances customer satisfaction and loyalty. And when Customer Value and Commercial Responsibility are in synergy, they can lead to the creation of high-quality products or services that meet customer needs and are profitable for the organization.
The key to achieving sustainable high performance lies not in balancing the 3Cs in isolation, but in finding and harnessing the synergies between them. This is where the HPtE Strategy® comes into play, providing a roadmap for organizations to navigate this intricate interplay and harness these synergies for mutual benefit.
The Three-sided Pryamid Methaphor
A three sided pyramid is another excellent metaphor for the 3Cs Model and its relationship to sustainable high performance.
In this metaphor:
The Base (3Cs: Commercial Responsibility, Customer Value, and Culture):
The three corners of the pyramid’s base represent the 3Cs. Each corner is necessary for the structure’s stability, symbolizing how each component of the 3Cs Model is interdependent and crucial for the organization’s success.
The Peak (Sustainable High Performance):
The peak of the pyramid represents sustainable high performance, which is the ultimate goal of The 3Cs Model and HPtE Strategy®. Just as the peak cannot exist without the base, an organization cannot achieve sustainable high performance without a strong foundation in Commercial Responsibility, Customer Value, and Culture.
This metaphor emphasizes the strength and stability that comes from having a synergistic and integrated approach to the 3Cs. Just as a pyramid can withstand the test of time, an organization that effectively integrates the 3Cs can achieve long-term, sustainable high performance.
Moreover, the pyramid metaphor also implies a sense of upward progression or aspiration, which can symbolize the organization’s journey towards ever-higher levels of performance.
The 3Cs Model
The 3Cs Model begins as a simple venn diagram containing the 3Cs.
Commercial Responsibility (Top Circle):
This circle represents the organization’s financial health and long-term viability. The area where this circle intersects with the other two represents the synergy between commercial responsibility and customer value, and between commercial responsibility and culture.
Customer Value (Left Circle):
This circle represents the organization’s ability to meet the needs and expectations of its customers. The area where this circle intersects with the other two represents the synergy between customer value and commercial responsibility, and between customer value and culture.
Culture (Right Circle):
This circle symbolizes the shared values, beliefs, and behaviors within the organization. The area where this circle intersects with the other two represents the synergy between culture and commercial responsibility, and between culture and customer value.
The area where all three circles intersect represents the optimal state where Commercial Responsibility, Customer Value, and Culture are all in synergy. This is the point of sustainable high performance.
This Venn diagram visualization emphasizes the interdependence of the 3Cs and the importance of finding synergy among them to achieve sustainable high performance. It can also visually demonstrate that focusing on only one or two of the components without considering the others can lead to suboptimal results.
Now we can add the key levers for each element.
Commercial Responsibility
Commercial responsibility in a business context traditonally involves managing three key financial levers: Margin, Operational Expense, and Investment.
Margin:
This refers to the difference between the sales revenue and the cost of goods sold (COGS). It’s a measure of the profitability of a company’s products or services. Increasing the margin can be achieved by raising prices, reducing the cost of goods sold, or a combination of both. However, it’s important to consider the potential impact on customer value when making changes to prices or costs.
Operational Expense:
These are the costs associated with the day-to-day operations of a business, such as salaries, rent, utilities, and maintenance. Reducing operational expenses can improve a company’s profitability, but it’s important to do so in a way that doesn’t negatively impact the quality of products or services, or the company’s culture.
Investment:
This refers to the allocation of resources to long-term assets or projects that are expected to generate future returns. This could include investments in new product development, marketing campaigns, equipment, or employee training. Making wise investments can drive future growth and profitability, but it requires careful planning and risk management.
Managing these three levers effectively is a key aspect of commercial responsibility. It requires a deep understanding of the company’s financial performance and the ability to make strategic decisions that balance short-term profitability with long-term growth and sustainability. Customer value culture should also be an important consideration.
Customer Value
The three levers of Customer Value are Quality, Price, and Speed.
Quality:
This refers to the standard or grade of a product or service. It’s about meeting or exceeding customer expectations and delivering a product or service that performs as advertised. High-quality products or services can increase customer satisfaction, build brand loyalty, and drive repeat business.
Price:
This is the amount of money that a customer must pay to purchase a product or service. Price is a major factor in a customer’s purchasing decision. It’s important to price products or services competitively, but also at a level that allows the company to maintain profitability.
Speed:
This refers to the rate at which a product or service is delivered to the customer. In today’s fast-paced world, customers often value quick service and fast delivery times. Speed can be a key differentiator in industries where customers require immediate or rapid service.
Balancing these three levers is crucial to providing high customer value. For example, a company might be able to offer low prices and fast service, but if the quality of its products or services is poor, it may not provide high customer value. Conversely, a company might offer high-quality products or services, but if its prices are too high or its delivery times too slow, it may not provide high customer value either.
In the context of the 3Cs Model, managing these levers effectively can contribute to Commercial Responsibility (by driving revenue and profitability). Culture is also an important consideration in the context.
Culture
There are three levers of Culture — People Satisfaction, People Security, and Stakeholder Interests.
People Satisfaction:
This refers to the level of contentment among employees in the organization. It’s influenced by factors such as the work environment, job roles, compensation, recognition, and opportunities for growth and development. High levels of employee satisfaction can lead to increased productivity, lower turnover, and a more positive workplace culture.
People Security:
This refers to the sense of job security among employees. It’s influenced by the organization’s financial health, market stability, and management practices. When employees feel secure in their jobs, they’re more likely to be engaged, committed, and willing to contribute their best efforts.
Stakeholder Interests:
This refers to the needs and concerns of all individuals or groups who have a stake in the organization or its projects. Stakeholders can include employees, customers, shareholders, suppliers, community members, and others who are impacted by or can impact the organization’s actions. Considering and addressing stakeholder interests is crucial for maintaining positive relationships and ensuring the organization’s actions are socially responsible and sustainable.
In the context of the 3Cs Model, managing these levers effectively can contribute to Commercial Responsibility (by fostering a motivated and productive workforce) and Customer Value (by ensuring the organization’s actions align with customer and societal needs). Awareness of these levers is key to creating a constructive culture that supports sustainable high performance.
Summary of The Levers
The 3Cs Model (Commercial Responsibility, Customer Value, and Culture) each have three levers, making a total of nine levers that can be adjusted to achieve sustainable high performance. Here’s a recap:
- Margin
- Operational Expense
- Investment
- Quality
- Price
- Speed
- People Satisfaction
- People Security
- Stakeholder Interests
By understanding and effectively managing these nine levers, an organization can create synergy among the 3Cs and achieve sustainable high performance. It’s important to note that these levers are interconnected, and changes to one can impact the others. Therefore, a strategic approach is necessary to optimize all nine levers.
That is the job of the HPtE Strategy®.
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Before I explain the HPtE Strategy®, I am going to take an even deeper dive and show you how The 3Cs Model works. That is coming next. This is a work in progress, so please check back next week for an update.
We run an Introduction to The 3Cs Model interactive workshop online. Book a time for a no-obligation chat if that would be of interest to you.