If you asked your employees what your leadership style was, what would they say? If you are in a leadership position, it is crucial to understand the lens you are looking through when making decisions. Your mindset and its corresponding actions will often dictate just how organized and successful your business can be.
In a previous post, I discussed the importance of leadership and offered the growth-oriented leader example. Today, I would like to examine the three other leadership lenses—product, service, and waste.
Product- or Service-Oriented Leader
Product- or service-oriented leaders are masters of their craft, always focused on perfecting their deliverables. They are excellent at what they do. They can demonstrate tons of metrics proving why they are better than everyone else, but they do not have the revenue to show for it. They spend all their time perfecting processes and creating perfect products and services. In these organizations, we must watch for three common problems:
Product- or service-oriented leaders feel their actions are justified because their customers stay with them forever. The real challenge is to have high growth and excellent products and services. You can look at any industry. If you are in business services, you can look at KPMG, Omnicom, Baker McKenzie, and Booz Allen Hamilton. In other areas, consider Trader Joe’s, Chick-fil-A, Costco, and Samsung. These are companies that have snowballed and have a quality product and service.
I recently spoke with the CEO of a talented public relations firm, possibly one of the best in the country. This person suffered from a perpetual problem for this type of leader. The mantra is to “grow smartly.” The firm is always concerned with whether it can service and support new clients. It looks at the other firms and questions their campaigns’ quality and value and the products they produce for their clients. But their firm never breaks $5 million in revenue. This is the typical ceiling for most such firms. When I asked if there was enough work for their company to do $100 million, the answer was yes. I also wondered if there were enough people in the industry to deliver the products and services needed. The answer to that question was also yes.
The problem was the company and its leadership orientation. There was a fear of growth. This organization’s leaders believed that they couldn’t grow quickly and still deliver a quality product or service. If they scrapped that erroneous belief and determined that doing both was essential, they would figure out how to do it. This is what great companies do!
Waste-oriented leaders have a balanced set of key performance indicators, goals, and targets for everything. You can also call them aggressive growth leaders with a profit-centered mindset. They want to multiply and have a net profit margin knowing this will drive their business valuation. They understand their business models and live for continuous improvement. Rather than thinking like accountants, they consider how much revenue they want to make and the net profit margin. They then figure out how much expense is left over to generate that revenue and net profit margin.
For example, if I want a 20 percent net profit margin and have a $10 million revenue target, total expenses cannot exceed $8 million. The profit-centered leader forces the team to achieve the $10 million revenue target without spending more than $8 million. Waste-oriented leaders are more balanced in decision-making and seek to understand what needs to happen to increase their growth and profitability. They look through the sales and product/service lenses and determine how both lenses operate as they relate to their purpose and the core customer’s needs (s). They are continually asking the following questions:
As you reflect on waste-oriented leadership, you will notice that it takes input from more than one leader. The never-ending constructive conflict that naturally exists between sales- and operations-oriented leadership is ideal!
In great organizations, they often bang up against one another. If you do not find conflict like this occurring in your company, beware. You must have extreme leadership from both sides to keep pushing the boundaries. The conflict and mediation bring you to proper balance. If you do not experience this type of discussion in your meetings, you will probably lose growth, profit, or both.
The Reactive CEO: “Fire, Ready, Aim”
Reactive CEOs try to run their businesses based on day-to-day conditions instead of following the strategic plans they’ve agreed to support. Too many lack the discipline to stick to the agreed-upon method to lead their organizations. I would describe this leadership style as “fire, ready, aim.”
This is the most common type of leader in entrepreneurial companies. Before you read this and feel beaten, face it: S#@t happens! We cannot be so stubborn in our positions and plans that we ignore what is going on around us. I have seen people stick to their plans and processes when they need to pause and reconsider. If the boat is sinking, you don’t ignore it. If a significant client (one that represents 20 percent or more of your revenue) is at risk, don’t ignore it. There might also be positive changing conditions to consider.
The typical, reactive, “fire, ready, aim” CEO makes key decisions without including other leaders and members of the organization. Others are left to deal with the consequences of those decisions—usually resulting in a lot more work for everyone else. Such leaders feel justified in how they handled things, oblivious to the adverse effects of their actions. When a leader makes decisions this way and shoves them down everyone’s throats, it limits their company’s potential. If the decision is wrong, the leader will get resistance, lose everyone’s trust, lose time in implementation, demotivate others, and lose colleagues’ respect.
Some reasons that leaders do not take the time to include input from others are that they have poor emotional intelligence, have trouble working in teams, lack humility, lack patience, disrespect everyone, lack integrity, etc. If this is how teammates see a leader, the consequences are enormous. An organization cannot mature and thrive if its leader continues to behave in such a manner. Growth without exercising discipline and making strategic choices creates much waste and burns cash.
To make significant decisions, it is essential to include the other team members and people on the front lines. In every organization my company works with, we conduct the “Gallup Survey” to measure employee engagement, and we have found that organizations whose leaders are “fire, ready, aim” have the following characteristics:
Right or wrong, had the CEO gone about making those decisions differently, he would have affected his organization more productively. It will take far more work—and a lot of discipline—to recover from the damage he caused. How you make decisions, whether you include others in those decisions, and how you demonstrate character in decision-making have a tremendous influence on employee engagement.
The successful are obsessive. They give massive effort and do things that others find crazy. Are you doing things others are not willing to do? Are you ready to sacrifice everything to achieve your ultimate vision of success? Are you playing to win? Until next time, ponder those questions. If you would like to learn how you can find and capture at least $1 million in the next 12 months, pick up a copy of my book, The Leader Launchpad, and get started today.
If you have questions about your leadership style, I’d be happy to discuss them with you. Sign up for a FREE 30-MINUTE NO OBLIGATION CONSULTATION. We’ll talk, I’ll ask more questions, and you’ll gain value from our time.