3,330 views Nov 23, 2018, 01:17am
Chris Pearse Contributor I write about the realities and challenges of leadership.
There are a multiplicity of reasons for business failure, all of them ultimately manifesting as the inability to generate sufficient profit or provide a return on investment.
Many articles have been written on the reasons why so many businesses reach this point of no return, attributing failure to a spectrum of causes ranging from the economy to management incompetence.
Here we explore three fundamentals not usually associated with the success/failure dichotomy but which, in reality, are critical drives of all business activity and its consequences. All three are entirely within the gift of the leader to govern.
The Flow Of Value
Business is built on exchanging value. There is a flow of value from supplier to customer, usually in the form of goods or services, and a balancing return of value, usually in the form of money. Businesses succeed when they add value and can recuperate more cash in the sale than they consume in delivering that value.
Regrettably, many businesses prioritise the collection of cash over and above the delivery of value. At first sight, this might seem a subtle distinction – after all, good management of receivables is crucial to any business, as is the awareness of cash flow, expenditure and bank balance. The problem arises when these considerations obscure the focus on the outward delivery of value, which represents the raison d’être of the business.
In practice this means that every function of the business that is not specifically charged with the management of money, needs to be constantly searching for evermore innovative, creative and impactful means of delivering more and more value to the world. This is a fractal process and has to operate in exactly the same way when someone answers the phone, sweeps the floor, or closes a large deal.
Significantly, the business has infinitely more power and control over the delivery of value than it will ever have over the collection of money in return. It always makes sense to invest effort where you have dominion.
When the business is wholly engaged with delivering its value, getting paid becomes far less problematic – customers also fixate on the value they receive rather than the money they are spending and the business attracts those who are value-focused, not penny-pinching.
The Flow Of Initiative
Initiative: disposition to take the lead
The initiative, responsibility, or the will to act is generally considered to come from the top of the business hierarchy and diffuse downwards. This is perhaps one of the most insidious and destructive mistakes that many leaders buy into.
When the source of initiative comes from the top, the entire organisation is limited to the energy and creativity of a few individuals. The business becomes fundamentally unscalable and runs out of steam way before it approaches its natural limits of growth.
Frequently, this problem is driven by fear – fear that those more junior might represent a threat to the leadership through their energy, intelligence, creativity or competence.
Anyone looking to take initiative in this kind of business will soon find their efforts thwarted and will drift away to be replaced by passive drones, creating the antithesis of the agile organisation.
When initiative emerges from everyone, the leader can focus on steering the organisation, not pushing it and the available energy scales with the business.
The Flow Of Purpose
Purpose: to put forth
Every business has a purpose. Every individual has a purpose. Those purposes need not be congruent, but they do need to be compatible.
When the individual feels their purpose fulfilled through the collective activity then, in general, people will be happy, cooperative and willing. When the individual purpose is not fulfilled, poor performance, stress and conflict ensue, without exception.
Anyone whose purpose at work is primarily to provide an income, rather than to fulfil their innate purpose, will inevitably deliver a sub-optimal result compared to those who find true meaning in their jobs. In a highly destructive fashion, the preoccupation with income can tether the worker to a job that starves them of their true purpose. Productivity, success, wellbeing and health are progressively eroded to the point where the situation becomes untenable..
The flow of these three qualities – in the right direction – is essential to every successful organisation. Having the initiative to deliver value, on purpose, at every level of the business, creates a vibrant, enlivening environment which delivers value to the world. To the worker it delivers fun, fulfilment and wealth. Work becomes play.
Stifling these flows, as so many leaders do inadvertently, wrecks collaboration, performance and jobs, ultimately wrecking the business itself.
I help leaders accelerate their development and impact through a deepened awareness of our inner dynamics – the belief systems and emotions that shape our leadership. Discover more here…
Chris Pearse Contributor
I am an Executive Coach to leaders across diverse sectors including FTSE100s and SMEs. I am also an Interim CEO.