Demonstrating at individual level
- Understands business, revenue and profitability model and works accordingly- As an individual one needs to place his work and prioritize it to maximize the financial and sales related objectives. One needs to evaluate as well as plan one's actions accordingly. For example- As I make a sale, I will work on selling products, which are more profitable and as per the planned product-mix strategy. example of the non-sales world is- As a product manager, I am coming up with product ideas, based upon my understanding of the minimum margin requirements set by CFO.
- Managing the work so that it is adding maximum value to the organization- This is something more than meeting the business objectives. Business objectives are the end outcomes, but they are supported by many inherent goals. As an individual I am expected to differentiate between the value-add and non-value add tasks. Have you heard a statement like ‘much of our energy is spent in non value-added work’ in your organization? The examples of these kinds of activities is-
- Spending inordinate time in taking decisions which have little consequence to any of the stakeholders
- Spending long discussion hours to discuss a control-gap, where maximum financial exposure is USD 10000
- Attending many meetings, where one is not a critical attendee.
- Getting the best value within the budget boundaries- The leadership competency is not to work within the financial boundaries, but to use the money to get the best value for the organization. The previous point was related to deployment of your time to maximize value. This point is related to use of your finances to maximize value. Some examples of leadership in this point is-
- Spending your monies on the initiatives which are most aligned to strategy and which have the best business-case.
- Cut costs ruthlessly in areas, which are less consequential (i.e. not to print tons of reports, which are not read by anyone)
- Reduce costs by outsourcing work which is not linked to your core-competencies and is low-skilled.
- Demonstrate analytical and problem-solving capabilities- This point is related to how you approach and analyze the problems and opportunities. While the goal it to resolve an issue, and leadership competency is to do with how you resolved the issue. This includes-
- The information you gathered
- The pros and cons you have considered
- Alternatives you generated etc...
Demonstrating at managerial level
- Ensure that team understands business, revenue and profitability model and work accordingly- There are multiple steps in this:
- Effectively communicating to the team on business, revenue and profitability model
- Setting up the goals of all individuals in the team, so that the priority and weight age is aligned to the money and profit making.
- Gives online inputs on how you can make more money and profits for the company.
- Ensure that team manages the work so that it is adding maximum value to the organization- You cannot set-up standard rules on how to reduce the non-value add tasks. For example, you cannot place a rule 'no individual will spend more than 25% of his time in meetings'. It is more to do with nurturing a mind-set over time, so that people loath non-value add tasks and stop spending too much energies in promoting themselves, instead of doing real- work. Constantly challenge your team on this front and be a role-model yourself. 'Fostering innovation + reducing non-value add tasks' is a sure formula for maximizing efficiency.
- Ensures that the team gets the best value within the budget constraints- Its worth-while to make your team conscious on using the budget as it’s their own money. Here are some heuristics one can give to the team-
- Clearly demarcate between needs, wants and desires
- Maintain a small company mind-set and put your money where it matters most
- Be ruthless in pushing for ‘every dollar counts’ mind-set.
NOTE- The above is more to do with the way you live your life on day-to-day basis. This does not take away the need for investing for long-term.
- Develops analysis based solutioning and problem-solving capabilities within the teams- This points includes:
- Training the team on analysis and problem-solving methods including six-sigma
- Do a real-time check on the approach. When discussing a problem, ask questions like 'what alternatives you have considered?', 'what do you think is the root-cause?'
- Be a role-model. When you help in resolving issues, you demonstrate the analytical approach. If your team sees you taking impulsive decisions, they will not get a right learning.
NOTE- Every leader has a different style and that diversity should be maintained. A leader can be working more on gut or he may be doing analysis to the end, and seeking last byte of information before taking a decision. The key here is that one should maintain some level of a systematic approach to resolving problems.
- Develop knowledgebase within the team around business priorities, business processes, customer perspectives and share-holder perspectives- This is not only a one time training or education. You can achieve this by-
- Including this learning as part of development plan
- Keep on questioning and challenging the team on their knowledge. For example, 'do you know, what is the shareholder hurdle rate on IRR?’ NOTE- Shape your questions depending on the level. You will not ask this question from customer service executive.
- Encourage people to seek knowledge, instead of coming to you with their questions.
Demonstrating at strategic level
- Identifying and prioritizing strategic directions- Every organization has two challenges. First is to identify the potential opportunities and threats, and secondly prioritizing the ones which it will work upon. This prioritization is guided by the resources, organization readiness, management band-width etc...A strategic leadership will demonstrate the ability to gather information, doing a SWOT and identify the focus areas.
- Build a culture where people are continuously thinking of enhancing revenue or profitability- This essentially means that a leader should be building a sense of business ownership in the people. If you are running your own business, your mind will always be thinking about building revenue and profitability. In reality, it is not possible to have your employees (unless they have a decent level of shareholding) building as intense a sense of ownership as with the senior levels in the organization. Most people take jobs as jobs. They may be passionate and sincere about what they are doing, but not all of them can think like an entrepreneur. However, as a leader one needs to keep on working on maximizing this ‘ownership’ mind-set.
- Hold people accountable for financial discipline- Strategically, an environment should be built so that people at lower levels in the hierarchy feel responsible for fiscal discipline and budget compliance. This may be achieved by making lower levels in hierarchy to be responsible for budgets and also placing sound guidelines on expenses.
- Possess a strong knowledge leadership on industry, market and competition- Strategic leadership requires people to be in touch with what's happening in an overall business environment. This is achieved by extensive network, membership of industry forums and an acute sense of observation.
- Posses a strong knowledge on the internal environment- one needs to know the SWOT of the enterprise and key business functions. One needs to understand the tricks, which are possible to leverage on strengths/opportunities and to overcome threats/ weaknesses. Ability to link between the SWOT (internal perspective) and the business environment (external perspective) is the key. This link is what will determine your strategy.