Discover how to enhance decision-making in your organization by focusing on three crucial areas: solving the right problem, gathering all the available information, and understanding the intent. Learn to empower your team, foster a purpose-driven culture, and improve organizational clarity for better decision-making.
Profit and Revenue are Lousy Core Values
As I mentioned last week, I am down with COVID and tired, so spending more time reading rather than working. I read Bill Browder’s Freezing Order this weekend, and I highly recommend it. However, at the end of the book, Browder says that oligarchs, autocrats, and leaders like Mohammed bin Salman are enabled by the professional service providers that help them. As I reflected on this and Browder’s allegations in his book against John Moscow et al., I had to think, why do these lawyers, bankers, accountants, etc., work for these characters? They know the abuses that their clients commit but are willing to overlook them because their clients pay enormous sums. We saw what Paul Manafort earned helping Russia in Ukraine and Jared Kushner’s recent investment from MBS, so money is the driver. However, money is a lousy core value.
Now don’t get me wrong, I would like to earn a lot of money, but I am not willing to sacrifice my core values. If money, or some proxy like revenue or profit, is your core value, you can have no other core values. Money as the core value overrides any additional core values you may claim and justifies any behavior because the behavior is driving money.
Issues with Money as a Value
So if money is the core value, then the firm attracts those who believe in money as a core value; however, that can cause other issues. For example:
- Loyalty to the firm. If money is the core value, there is no loyalty to the firm as they will move for more money as that is their value. Also, they will do things that can hurt the firm if it brings in more revenue. Here are some examples: Arthur Andersen and Enron, Perdue Pharma and the opioid crises, Boeing 737 Max, and McKinsey’s recent scandals.
- Loyalty to clients. Again there can be no objection to doing something that harms a client if it makes the firm more money as that is the driver. Bill Browder’s book gave a classic example of this with the behavior of John Moscow and Baker & Hostetler. If my research backs up Browder’s claims, I would never recommend Baker & Hostetler to anyone I know and any attorney there is a damaged product in my book.
- Loyalty to colleagues. There is none because making money is all-important, so why sacrifice money to help a colleague?
Now, the scandals above made many a lot of money. If money is your driver, then great. But your legacy is what you did for others, and that is how you are remembered once you’re dead. I would not want people to say, “He was responsible for the death and damage of many.” If that is how you are remembered, many will revile you in time, and your family may start to distance themselves from you. I ran into a high school friend several years ago and mentioned I had met her father after his release from prison. She was so embarrassed she walked away and never spoke to me again. So sad.
As I reflect on all the people I have met in my career, I would say that lawyers are the most unhappy and wish to be doing something else. Now that is not all lawyers, just more lawyers than others. I think that is because many law firms have no culture and will act for any paying client. If your client is against your values, you have sacrificed them for money, which leads to unhappiness because, as we have all heard, “Money doesn’t buy happiness.”
Many of the people involved in the above are on the redemption trail, e.g., Andy Fastow from Enron. But, when you look at him speaking and think of how many people’s lives he knowingly damaged, I have to ask, does going on the speaking circuit redeem him? To me, No.
Culture is Critical.
As discussed earlier, Boeing sacrificed decades of industry safety leadership for profit. The Tory party, today, is sacrificing all its value for power. Once you go down that road, your reputation takes a very long time to return and often more than a lifetime. So it is critical to define your core values. I recommend that you determine your core values and define the expected corporate behaviors that your values prescribe. Then stick to them above all else. As Jim Collins said, “You would sacrifice profit rather than your core values.” Also, when hiring, look at where a candidate has come from, and that firm reflects your core values. It is easier to teach a skill than new values.
As you reflect on decisions, always think of your “elder” self looking back at the end of life and ask, is that how I want to be remembered?
(c) Copyright 2022, Marc A. Borrelli
Recent Posts
Boosting Common Sense Decision-Making in Your Organization
Do You Understand Your Costs to Ensure Profitability?
You can only determine profitability when you know your costs. I’ve discussed before that you should price according to value, not hours. However, you still need to know your costs to understand the minimum pricing and how it is performing. Do you consider each jobs’ profitability when you price new jobs? Do you know what you should be charging to ensure you hit your profit targets? These discussions about a company’s profitability, and what measure drives profit, are critical for your organization.
Sunk Costs Are Just That, Sunk!
If you were starting your business today, what would you do differently? This thought-provoking question is a valuable exercise, especially when it brings up the idea of “sunk costs” and how they limit us. A sunk cost is a payment or investment that has already been made. Since it is unrecoverable no matter what, a sunk cost shouldn’t be factored into any future decisions. However, we’re all familiar with the sunk cost fallacy: behavior driven by a past expenditure that isn’t recoupable, regardless of future actions.
Do You REALLY Know Your Business Model?
Bringing clarity to your organization is a common theme on The Disruption! blog. Defining your business model is a worthwhile exercise for any leadership team. But how do you even begin to bring clarity into your operations? If you’re looking for a place to start, Josh Kaufman’s “Five Parts of Every Business” offers an excellent framework. Kaufman defines five parts of every business model that all flow into the next, breaking it down into Value Creation, Marketing, Sales, Value Delivery, and Finance.
Ideation! Harder Than It Sounds
Bringing in new ideas, thoughts, understanding, and logic is key as your organization faces the challenges of a changing environment. But when you do an ideation session in your organization… how does it go? For so many organizations, many times, after a few ideas have been thrown out and rejected, the thought process slows down very quickly, and a form of hopelessness takes over. How does your organization have better ideation? I’ve come across a new approach with a few teams lately.
Recruit, Recruit, Recruit!
An uptick in business has begun this quarter, and companies are rushing to hire to meet this surge in demand. What amazes me is how many are so unprepared to hire. Continual recruiting is key to the survival of a company. It isn’t the same thing as hiring—continuous recruiting is building a pipeline of people that you would hire if you needed to fill a position, or “A players” you would hire if they were available.
We All Need Clarity
If your organization is focused on obscurity over clarity, whether intentionally or not, your “A” player employees are vulnerable. There is a looming talent crunch. As we start to emerge from COVID, demand is increasing, and many are scrambling to fill positions to meet that demand. Headhunters and recruiters are soon going to be calling your key “A” employees. Have you been giving them a reason to stay?
Not Another **** Meeting
As Leonard Bernstein put it so well, “To achieve great things, two things are needed: a plan and not quite enough time.” Your meetings can be shorter, more fruitful, and engaging, with better outcomes for the organization, employees, and managers. It’s time to examine your meeting rhythms and how you set meeting agendas. This week, I break down daily, weekly, monthly, quarterly, annual, and individual meeting rhythms, with sample agendas for each.
Is Your Company Scalable?
Let’s start here: Why should your company be scalable at all? If your business is scalable, you have business freedom–freedom with time, money, and options. Many business leaders get stuck in the “owner’s trap”, where you need to do everything yourself. Sound familiar? If you want a scalable business that gives you freedom, you need to be intentional about what you sell, and how.
Are you ready for the Talent Crunch?
Companies are gearing up to hire. Unfortunately, many are competing within the same talent pool. Some experts are currently predicting a strong economic recovery starting in May or June. But as the economy booms, there is going to be fierce competition for talent. How will you fare in the looming talent crisis? Your organization should be creating a plan, now, so you can attract the talent you need in the year ahead.