If you relentlessly drive your team to achieve your goals, they won’t like you. If you try to make everybody on the team happy, you won’t hit your numbers.
As a leader, you have likely felt this fundamental tension – the tension between driving results and developing positive relationships with your people. Despite the theory that effective leaders do both, most of us struggle to balance the happiness of our teams and the health of the bottom line.
We are more comfortable focusing on one or the other, and we feel overwhelmed and drained by the challenges we face when we try to accomplish both.
Your imperative as a leader is to understand which of the things your people do genuinely to create value, and which simply generate activity for its own sake. I honestly believe that up to 50% of everything that many organisations do is a complete waste of time.
No tangible value whatsoever is created. And as a bonus, if you can align the things that create the most value for your company with the things that benefit your people individually, you’ll absolutely turbocharge your team’s performance.
This is such an important topic, because virtually every leader I come into contact with struggles to get a razor-sharp focus on value.
Difference between value and cost
There are a number of core principles around value. Until you understand these, you will struggle to really cash in on the things that make the most difference for your business. None of the decisions on value are simple, which is why it’s so important to consider these principles deeply. This is the work of leadership.
Many leaders think that the best way to create value is to cut costs and, in many cases, this can help. Knowing the most basic business formula: (Revenue – Costs) = Profit, tells us that cost is vital. But often a cost focus destroys value.
For example, you might decide to save money by cutting some customer service staff. This might seem like a good idea at the time, and earnings might increase, at least initially. But this decision might lead to lower customer satisfaction, and you might lose one or two really big customers.
The tricky thing is that, at the time of making the cost-cutting decision, the impacts on your customer base are really hard to predict. This is why many leaders go for the ‘bird in the hand’ principle, and worry about the consequences later.
That’s likely to be someone else’s problem. No matter what level you are at, a key part of your role as a leader is to understand what your team can do to maximise value delivery for your organisation. Then, dedicate all your resources to that.
Traceability of value
If you know what creates value, that’s fine, but you have to see where that value appears. Quite often, you will do something because it sounds like a good idea and it should create value but then it does absolutely nothing to improve your results.
You have see the result, so you must trace that activity from the investment right up front. If you are investing time, money, people, and assets into doing anything, you got to know where that pays you back.
You got to be able to see when and where that value arrives. Will you see it in the financial results? Will you see it in better staff capability and performance? Will you see it in fewer compliance transgressions? Will you see it in fewer safety incidents and injuries?
There should be a clear line of sight between investment of resources and recovery of benefits. Once you understand what your options are for investing your resources, you got to work out which ones are going to give you the biggest bang for buck. Your objective is to pull the biggest value levers that you possibly can, in all the areas of value you are trying to create.
When you have worked out where those biggest value levers are, stop everything else. Stop it! Don’t do all the shit that doesn’t add value. Most organisations do so much that just doesn’t end up anywhere. It doesn’t deliver anything tangible. It’s just a waste of your resources, so find a way to stop it.
Perfectionism
This is an absolute classic. Sometimes we intuitively sense that a particular activity is valuable, but there’s absolutely no way to work out if it actually creates value. The perfect example is safety.
You might think that any investment in the safety of your people is a no-brainer. When and where will you see the value from this investment? If you can’t show how it ultimately reduces the number of incidents and injuries that we sustain, then there’s no value in the investment. You are just polishing knobs. If you are not clear about this, you will end up measuring the means rather than the end. The principle of excellence over perfection is critical in being able to capture value. Even if you manage to get a pretty good sense of the highest value things, they will wither and die on the vine unless you can execute with a sense of urgency.
Perfectionism slows your people down to glacial speed. It’s the value equivalent of sclerotic arteries where the blood simply can’t pass through. In the case of value, perfectionism is the plaque in your arteries. Nothing’s perfect, so you need to build momentum in your team. That’s good enough, keep going, we can adjust as we go.
Bringing this all together, value really has to be at the center of everything your team does. Otherwise, you will end up brilliantly executing on a bunch of things that you shouldn’t be doing in the first place.
Learning how to pull only the highest value levers and, importantly, to stop doing all the other crap is a life’s work. This is one area where the lifetime access to the content in leadership beyond the theory comes in particularly handy.
