Profit and Revenue are Lousy Core Values

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

 

 

 

 

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I am currently sick with COVID, so, killing time yesterday, I watched Downfall: The Case Against Boeing about Boeing’s issues with the 737 Max and how the focus and financial results versus anything else led to the problems with the plane. The company focused on production, and so it scrificed safety to meet financial performance. One of the documents in the documentary was a little like Ford’s one with the Pinto. They knew there was an issue but calculated that the odds of people dying were so small that they could figure a solution in the meantime. So over 300 people lost their lives. When the Lion Air accident occurred, Boeing blamed the pilots for not being correctly trained on a system it had not disclosed. When the Ethiopian crash occurred, the pilots had done everything Boeing recommended, and it still blamed them and their training. As a result of the Max crashes, Boeing’s reputation for safety and engineering excellence has been tarnished and will take many years to reclaim.

Whether or not, as the documentary claimed, the move of company headquarters from Seattle to Chicago to separate the engineers from the executives is true, the company sacrificed its core values of safety and engineering for a higher share price. The memos reveal the company’s effort to hide the MCAS system from pilots and regulators, so more certification by pilots would not be required. The company seems to have come a long way from Tex Johnson’s barrel roll of the 707 prototype over Lake Washington in August 1955. during the Gold Cup hydro races, where a crowd of 250,000, including airline executives from around the world, were attending. That sold the aircraft!

The company’s focus on financial performance and share price enabled the price to rise into the $300-$400 range; however, the Max took it below $100, and its performance over the last five years is a loss of 4%. Over the same period, Boeing’s most significant competitor Airbus has seen its share prices increase by 34%. Sacrificing your core values for profit is never the solution, and profit results from your core values, not the driver!

Furthermore, in speaking with an FAA-certified engineer, he said the Max had damaged the FAA’s reputation worldwide. Where once, if the FAA said something was good enough, other countries would follow along, no more.

Finally, one more sad indictment of current U.S. public corporations was when Dennis Muilenburg resigned as the CEO and board director after the two crashes of 737 MAX aircraft and the loss of 300+ people; he received $62.2m in stock and pension awards. But as we repeatedly see, if you are the CEO of a public corporation, accountability is different. You may be fired, but you will get paid very well, unlike anyone else.

(c) Copyright 2022, Marc A. Borrelli

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You need to take an extended vacation. No, seriously, you do.

You need to take an extended vacation. No, seriously, you do.

Not only do you need a vacation, but it needs to be at least two weeks, and preferably longer. I have given many CEOs and business leaders this advice over the years, and I believe in it. 

Why a minimum of two weeks? Well, you need the first week to unwind and let work “go.” The second week, you truly relax, the tension of work and all its issues leave, but the brain continues to work in the background. After two weeks, I start to see the forest for the trees. The problems that were prominent in my life no longer are as relevant as I thought they were. Turning to my navigate sage power, I turn to my elder self to look back and see what is essential and what I should be focused on rather than that what has my attention.

Now I am unwinding

However, like the old saying, “Physician heal thyself,” I have failed to heed my advice until two weeks ago. I am now sitting in NE Spain, enjoying a quieter time and relaxing with good friends, food, and wine. To ensure my disconnection, I have adopted the following rules:

  • Limit email activity to 15 minutes a day.
  • Disconnect from Facebook (well, I effectively did that a couple of years ago) and all social media other than LinkedIn. 
  • Post to LinkedIn, but according to a plan, it takes about 5 minutes a day.
  • Avoid the news and television.
  • Reading lots but no business books.
  • At least 30 minutes of meditation a day.
  • Walk at least 5 miles a day.
  • Swim as often as possible in the ocean.

These rules are not complicated, but we are so conditioned to remain connected and tuned in that it takes effort to disconnect.

As I relax, I remember that I, like my clients, need to take an extended vacation to recover from the low-level stress of COVID over the last eighteen months. COVID has taken a toll on me, and more than I realized. While I have been active during COVID, I recognized that I have been reactive more than proactive. Now, not only do I want to change this behavior, but I am framing it around what I want to accomplish in Q4 2021 and 2022. 

The benefits for you

Sitting in quiet squares or overlooking the ocean, the focus has gotten more precise, the planning more effortless, and many things are just getting crossed off the list or deleted. Also, I am finding that I can better help my clients as my mind declutters.

I am focusing on achieving my long-term goals and not get distracted by what is in front of me. By refocusing, I realized much of what I was doing was not relevant to the long-term goals and thus a distraction.

Now, I can’t say that everything will be done and perfect at the end of this. But I will have more energy, be much better mentally to deal with what lies ahead, and cope with winter.

The benefit for your business.

Taking a minimum of two weeks off provides additional benefits too. You can see how your business operates without you. You will have answers to the following questions:

  • Does my leadership team function well in my absence? Are they aligned, and Is there conflict?
  • Do my team and company understand its mission, strategy, and purpose?
  • Does the organization continue to hit its KPIs for the quarter?
  • Do my clients need to deal with me, or can my team handle the clients’ needs?

I have asked many clients how their business would perform if they were unavailable for three to six months, and the answer is usually “Fine.” However, if you cannot go away for two weeks and disconnect, is that true?

If your business cannot operate without you, you don’t have a business; you have a job! To successfully leave your business, you have to make yourself redundant. Only by creating your own redundancy can you sell it, pass it on, or assume a non-executive position. I realize for many business owners, this isn’t easy, as their identity is tied up in their business, but to create a more significant legacy, ensure it operates without you.

So when did you last leave?

As I said earlier, with COVID, I hadn’t taken a vacation in 18+ months. Not only that, but with WFH, I had, like many others, increased the amount of time I was working which typically included at least one full day of every weekend. All of this took a toll.

So when did you last take a “proper” vacation for at least two weeks? Did you disconnect, or were you on calls and emails all the time, putting out fires and saving the company? The stress of the last eighteen months has taken a mental toll on all of us. If you don’t take a break and let yourself recover, you will be ill-prepared for what is ahead. While none of us know what is ahead, we can be sure that labor, supplies, and demand will be unpredictable. 

COVID and its effects are not done. I feel like we’re just finished the first half, but there is another half to go, and the opposing team that emerges from the locker room has a new strategy.

If it has been a while since you took an extended vacation, take one now, you will be amazed at how much you and your business will benefit.

 

Copyright (c) 2021, Marc A. Borrelli

 

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Like many of my clients, if you are experiencing significant increases in business, you’re noticed that there is a War for Talent! That is not surprising. There are approximately 9.3MM job openings and 9.5MM unemployed, so demand is about equal to supply. So how do you find employees? Without getting into political arguments about the lack of employees, here are five ways to attract prospective employees better.

If we take the business model that I have outlined before, which I believe can be applied to many situations, e.g., Recruiting employees and the collapse of the Superleague. So, I will examine attracting employees through the lens of:

  • Value Creation
  • Core Customer
  • Brand Promise
  • Value Delivery

and the fifth item is “Spread the Word.” You don’t want to be the unknown greatest secret among employers!

Value Creation

Value Creation in hiring refers to Why Should I Work for You? 

The first part of this is the company’s mission, or as Patrick Lencioni puts it, “Why do you exist?” Articulating a reason for existing that will resonate with the prospect is critical. There is much research by McKinsey and others that shows that if the employee can identify with the organization’s mission, they are more likely to stay and be more productive. Thus, know your mission! It needs to be succinct and easy to understand. But the entire organization needs to know it and express it the same way so that the prospect believes that you believe in it.

Second, you need to explain why the prospect should work for you. Having asked many CEOs, the following hypothetical.

You are interviewing a candidate, and they are “It.” They are an “A” player, exactly what you need and want, and you about to offer them the opportunity. Still, before you do, you ask if they have any more questions. The candidate looks are you and asks, “Why should I work for you?”

To date, not a single CEO or business owner answers this question in a way that would attract the candidate. The most common answers I get are, “We are a great company,” “We offer employees great opportunities,” and “This is an exciting place to work.” If these are your answers as well, consider the following. Do you think when the candidate asks your competitors the same questions, the responses are:

  • “We are an awful company.”
  • “This is a dead-end job where employees’ careers go to die.”
  • “This company and position are boring beyond belief, and nothing ever changes. There is no excitement or challenge.”

Of course not! They provide the same answers as you.

What to do? Consider the question and have a response ready that is supported with details and stories.

  • If you are a great company, explain how in a way that resonates with the candidate.
  • If you offer opportunities, tell stories of how employees have had great opportunities at all levels and how they have progressed.
  • If you are an exciting place to work, show how and make sure the energy is reflected in your tone and attitude.

Being able to articulate this is more critical than many CEOs, and C-Level people realize. Prospective employees have many options. If you want “A” players to take your organization to the next level, you have to stand out from the rest and show them why you are the best choice. Being the “Tallest Pigmy” is not going to cut it.

Core Customer

As with Customers, we determine our Core Customers, so we know how to market and sell to them. With employees, we need to determine who is our “core employee.” As Jim Collins has often said, culture is more important than skills as the job will change, but having people with the same values is critical! Also, you can teach skills much easier than you can teach culture. Hire for core values! Ensure that all the people involved in the hiring decision can determine that the prospect has the correct values. Finally, if you hire them, ensure that your onboarding process makes those values a habit!

Because Core Values are critical, companies that permanently rely on temp agencies are making a mistake. Temp agencies provide you with someone who can fog a mirror and do the job, but there is no test for culture. So, they don’t last, and if you have to get a new temp in who needs training. The cost is high, and productivity is low. Finally, the temp agency is competing against you. If they have another client who will pay the employee more, your temp employee is gone. While temp agencies may solve a short-term problem, they are not the solution many think they are.

Brand Promise

As with customers, you have a brand promise to convert prospects into customers; what is your promise to your employees. What are you offering them other than a salary? A CEO once told me that he couldn’t keep employees, but when we discussed it, the only thing he could say that he offered was a salary, which was in line with the market. No wonder none of his employees stayed. What you offer is not just a salary, but you need to consider things like:

  • Benefits;
  • Career advancement and development;
  • Further education and training;
  • Other opportunities; and
  • Feeling part of something bigger.

It reminds me of Cameron Herold, who, on the first-day offer that an employee joined the firm, used to celebrate to welcome them to the company. At this party, the new employee had to prepare their bucket list. The company used to commit to helping them realize an item on it during their first year. Helping didn’t mean paying for it but instead finding a way to work with the employee to realize it. Doing this gained a tremendous amount of company loyalty.

More recently, a client was telling that her daughter had just joined a new company during COVID. A few days after accepting the offer, her daughter received a laptop and a large computer monitor to help her work. The daughter was so excited about the monitor. She felt that the company cared about her and her performance, increasing her loyalty to the new employer.

Value Delivery.

How do you measure value delivery with customers? NPS scores. Well, do you get NPS scores from your employees or get them to complete Gallup’s Q12 Employee Engagement Survey? I do these for my clients. Doing these things will enable you to understand if you deliver on your promise and show that your employees are engaged. You can use this as recruiting materials. (If you are interested in having an NPS and Gallup Employee Surveys done, don’t hesitate to get in touch with me.)

Get employee testimonials from employees at all levels. The strongest recommendation you can have is from your employees in their own words. Get them on video so that prospects can see how strongly your employees feel about the company and how you deliver your brand promise to them.

Spread the Word

Finally, most companies have no information on their website about any of these things. At best, a few websites ask you to submit a resume without even listing any jobs. Why would an “A” player do that? If this is the best you offer, you are not attracting them. Your website needs a section in the top menu for employment opportunities. It needs to tell prospects:

So, attract them.

While the above is not a guarantee to fill your empty positions, it will help great employees find you and be interested in working for you. If someone applies and appears to be a great candidate, but you have no role for them, find a place for them or keep them in a talent file for when a need arises. As with selling, if you don’t get the message out that you have a great product, meet your brand promise and have the data to prove it, you need to do this with hiring. Failure to do so will limit your success. Just because you are a company, realize you are now fighting for employees, and you need to work harder!

 

Copyright (c) 2021, Marc A. Borrelli

 

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Are you killing your firm’s WFH productivity?

Are you killing your firm’s WFH productivity?

WFH during COVID did result in the falling of productivity that many feared. Surveys showed that productivity remained the same and, in some cases, increased. However, a new study of more than 10,000 employees at an Asian technology company from April 2019 to August 2020 provides a different picture. Using software installed on employees’ computers that tracked what the employee was doing, the research confirmed that the employees worked hard. Total hours worked were 30% higher than pre-COVID, including an 18% increase in working outside regular hours. But this additional effort failed to translate into an increase in output. 

This research confirms early survey evidence where both employers and employees felt they were producing as much as before. However, the correct measure of productivity is output per working hour, not hours worked. Using this measure of productivity, productivity fell by 20%.

The research further analyzed the time the employees spent in:

  • “collaboration hours,” time spent in various types of meetings, and
  • “focus hours,” time where they could concentrate on their tasks and weren’t interrupted, even by email. 

The data showed that despite working additional hours, the employees had less focus time than before the pandemic as meetings consumed the extra time. The study supports Bartleby’s law which states that “80% of the time of 80% of the people in meetings is wasted.”

Why were there so many meetings?

  1. Managers can check on their team’s performance as they are less sure of the team’s commitment.
  2. Managers call many to validate their existence when they are not in the office. 
  3. The increased difficulty of co-ordinating employees who are working remotely. 

The latter suggests that WFM is inefficient, not to mention that remote employees also spend less time being evaluated, trained, and coached.

So, while workers saved commuting time, they didn’t hourly pay fell. However, WFH did not impact all employees similarly.

  • Those who the longest tenure with the company were the most productive, suggesting they could use well-formed relationships to work more effectively. Simon Sinek explained this in a recent video
  • Employees with children worked around 20 minutes a day more than those without, implying an even more significant fall in their productivity, presumably because they were distracted by child-care duties.

The researchers point out that the firm’s staff are nearly all college-educated whose roles “involve significant cognitive work, developing new software or hardware applications or solutions, collaborating with teams of professionals, working with clients, and engaging in innovation and continuous improvement.” The impact on other types of employees could be very different.

WFH expectedly resulted in teething and coordination problems as it was imposed suddenly. However, since the study stopped last August, there is a question of whether employee productivity has increased since. Most important from the research is that employees achieved the same output with slightly less ‘focus time’ than at the office. The real culprit of inefficiency was the time spent in meetings. 

Conclusion

So, to increase your firm’s productivity, don’t have as many meetings and keep them short. Ensure that the behaviors you accept and expect as part of your firm’s culture are not encouraging non-productive meetings. Also, with a move for more WFH, start building behaviors that will encourage meeting efficiency. Finally, there are a number of ways to improve meeting productivity as I mentioned in Not Another **** Meeting.

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Five Ways to Attract Prospective Employees

Five Ways to Attract Prospective Employees

There is a war for talent. How do you attract talent to your company and have them apply for jobs there? You have to show why they should consider you, who you want, what you offer, and how your current employees feel.

EOS is just that, an Operating System

EOS is just that, an Operating System

For those of you who are not aware of EOS, it is the Entrepreneurial Operating System. It seeks to improve businesses by getting six components aligned to enhance business operations. The six are:

  • the vision
  • the people
  • the issues
  • traction – meetings and goals (“Rocks”)
  • the processes; and
  • the data

I am a supporter of EOS in that I believe all companies should have some system to improve their performance. However, as I have worked with clients who have implemented EOS, I found that it is just that, an Operating System and not a business model that enables the organization to grow!

As defined by Wikipedia, an Operating System is “the software that supports a computer’s basic functions, such as scheduling tasks, executing applications, and controlling peripherals.” So for a business, I defined it as “a model that supports the company’s primary functions, such as identifying a vision, getting the right people in the organization, improving meetings, defining goals (rocks), etc.” At the risk of upsetting EOS Implementers®, I think EOS satisfies these metrics to a varying degree, but in most cases, doesn’t enable the company to build a growth engine.

Here is what I believe is missing to develop a growth model.

The Hedgehog Concept

In Good to Great, Jim Collins talked about the Hedgehog Concept named after Isaiah Berlin’s essay, “The Hedgehog and the Fox,” which divided the world into hedgehogs and foxes. The theme is based upon an ancient Greek parable where “The fox knows many things, but the hedgehog knows one big thing.” Collins found that those companies who became great followed the Hedgehog Concept. Those companies which didn’t tend to be foxes never gaining the clarifying advantage of a Hedgehog Concept, being instead scattered, diffused, and inconsistent. 

The Hedgehog Concept is based on the questions prompted by the three confluence of questions. 

  • What can you be the best in the world at?
  • What are you deeply passionate about?
  • What drives your economic engine?

The EOS Model® doesn’t focus on the hedgehog concept, and so many companies using EOS have goals and strategies based on bravado than from understanding.

Knowing your hedgehog concept will keep the organization focused on something that aligns its passion with what it can be the best at. Being good at something means you are only good and indistinguishable from many others. If you are the best at something, then you stand above the crowd. Finally, the economic engine keeps the company focused on a metric that drives profit.

Vision

While the EOS Method® works to develop a ten-year goal, I find that is not as compelling as Jim Collins’ BHAG. A BHAG, Big Hairy Audacious Goal, is a clear and persuasive statement and serves as a unifying focal point of effort with a defined finish line. It engages people, is tangible, energizing, highly focused, and often creates immense team effort. People “get it” right away; it takes little or no explanation. 

A visionary BHAG is a 10-25 year compelling goal that stretches your company to achieve greatness. It should be a huge, daunting task, like climbing going to the moon, which at first glance, no one in the company knows how on earth you will achieve.

As Collins’s noted, the best BHAGs require both “building for the long term and exuding a relentless sense of urgency: What do we need to do today, with monomaniacal focus, and tomorrow, and the next day, to defy the probabilities and ultimately achieve our BHAG?”

Profit/X = Economic Engine

The BHAG’s economic engine is the concept of Profit/X. In Good to Great, Jim Collins defines this strategic metric as “One and only one ratio to systematically increase over time, what x would have the greatest and most sustainable impact on your economic engine?” Unfortunately, too many companies don’t have an economic engine, so they fail to deliver hoped-for profits. This metric is not easily identified; however, Collins noticed that the companies that took the time to discuss, debate, and agree on one key driver for their economic engine are the ones that went from good to great.

Profit/X how you choose to make money; it is a strategic metric, not an operational one. This ratio is a key driver in your financial engine and when you make decisions about how to spend money. When developing your Profit/X, you need to have that is unique and not the industry average because if you choose the latter, then everyone will be pricing and driving costs the same way to maximize it. Like the BHAG, a correctly defined Profit/X will promote teamwork as everyone can focus on their role to drive the metric, from how many people to hire, where to open new operations, etc.

Here are some examples of Profit/X.

  • Profit/customer experience or customer visit
  • Profit/customer
  • Profit/employee
  • Profit/location
  • Profit/geographic region
  • Profit/part manufactured
  • Profit/division
  • Profit/sale
  • Profit/brand
  • Profit/local population
  • Profit/invoice
  • Profit/market segment
  • Profit/store
  • Profit/plant
  • Profit/purchase
  • Profit/square foot
  • Profit/fixed cost
  • Profit/recurring revenue client
  • Profit/seat
  • Profit/plane
  • Profit/product line
  • Profit/life of the customer

To frame this in a real-life context.

Southwest Airlines: Profit per plane

Walgreens: Profit/Customer Visit

New System Laundry: Profit/Delivery Truck Load

I think the EOS Method® ignores the following areas, but to me, they are part of the Hedgehog Concept. If you are doing something with clarity and focus, you need to have clarity and focus on these areas.

Value Creation

It is said, “A Business That Doesn’t Create Value for Others is a Hobby,” so what value does your organization create? Value creation is part of what you can be the best at. However, organizations need to know, “What is the problem they are seeking to solve for their customers.” Christian Claytonson defined this as “What is the job your customer is hiring you or your products to do?” Too many organizations define the job to be done as what they do, e.g., “We integrate your systems.” While that is what they do, that is not the job they are hired to do. The job they are hired to do may depend on the client but could be, “Provide information from across the organization to make better-informed decisions.” Knowing the job to be done enables your marketing and sales efforts to focus on the customers’ needs rather than on what you do. No one cares about what you do; they care if you can solve their problem. I don’t see the EOS Model®’s focus on this crucial question, but it is central to a company’s growth.

Core Customer

Who is the company’s core customer? I have discussed this before, and many companies can identify their core customer. However, most haven’t analyzed their customers from the point of view of Profit/X. If Profit/X is the driving metric of the organization’s profitability, then failing to know which customers meet and exceed it is crucial in defining your Core Customer. There is little point focusing on a Core Customer that doesn’t meet your economic engine’s critical financial metric, hoping that somehow you will magically capture the lost profit elsewhere. Furthermore, if you don’t know your Core Customer, your marketing and sales activities will be directed towards the wrong groups, further weakening your performance. 

Brand Promise

What is your Brand Promise, and how is it measured? This question is one that the EOS Model® doesn’t address. However, it is crucial.

  • It is what convinces your targets to buy from you. 
  • It is what you stand for and promise to deliver. 
  • It is the metric against which you will be measured.

Some organizations do have a brand promise, but it is not measurable. In that case, it is “valueless” because if it is not measurable, no one knows if you are delivering it, and in that case, it has no value to prospects or clients.

Value Delivery

Value delivery is vital for knowing how customers value the performance of the organization. While the EOS Model® discusses many metrics, this one does not get enough focus. Companies need to understand if their customers are satisfied with their performance. Recently, I spoke with a CEO who said that 80%+ of their customers were “Very Satisfied.” However, on further investigation, I discovered:

  • It was just a guess as they didn’t measure it.
  • 7 – 10% of their customers had complained in writing about their product and delivery in the last year.
  • None of their clients had recommended them.

Here is wishing over reality. I would expect that the company had a “Very Satisfied” score of less than 25%, and they should be working hard to improve their delivery and start collecting customer satisfaction data.

Critical Number and Counter Critical Number

The EOS Model® deals with goals (Rocks) and meetings, and that is one area that I think it does very well. However, I notice that the Rocks are not aligned to improving a critical number for the quarter. The Rocks should seek to improve some Critical Number each quarter. Without a Critical Number, you are once more a Fox, not focused. Those that use Scrums know the importance of the Critical Number. 

Rocks are great, but they need to improve a single business area to have the most significant benefit. As the saying goes, “You cannot defeat ten soldiers by sending in one soldier every day for 100 days.” For example, if our Critical Number is Customer Service in a Call Center, then the Rocks could relate to:

  • Hold time
  • Time on the call
  • Customer satisfaction at the end of the call
  • Percentage of calls resolved in one call
  • Employee satisfaction.

The Counter Critical Number is essential to preventing the critical number from overwhelming the company and leading to adverse effects. For example, if our Critical Number is project completion, then a Counter Critical Number would be customer satisfaction. This metric would counter the attempt to deliver incomplete or defective products or projects.

Focusing on a Critical Number and Counter Critical Number for the 13-Week Sprint is essential to developing focus and alignment within the organization.

Team Alignment

The EOS Model® does a great job of looking at the “Right People” in the “Right Seats.” However, what it doesn’t look at are alignment among the leadership team and employees’ satisfaction. Is your leadership aligned around the company’s direction or not? Culture will bring them to agree on values, but not necessarily alignment.

Your employees may all have the correct values, which is crucial, but if they are not engaged or dissatisfied with the leadership, cultural values will not prevent them from leaving or, worse, showing up but not there. Companies need to survey their leadership teams for alignment and their employees for satisfaction to ensure everyone is working in the same direction and committed to its success.

Conclusion

Thus while I like the EOS Model®, I think it doesn’t deal with many of the key things involved in the Hedgehog Concept. This failure enables companies to perform but not grow at an optimum rate. I am not ignoring many of his other areas of focus in Good to Great; however, this refinement of the Hedgehog brings an additional guide that the EOS Model® doesn’t. 

The above model is most of Gravitas 7 Attributes of Agile Growth® model, and if you add in the rest, you have a model that will propel you to growth while keeping your operations running smoothly. The 7 Attributes of Agile Growth® focuses on:

  • Leadership
  • Strategy
  • Execution
  • Customer
  • Profit
  • Systems
  • Talent

making it a more encompassing system. If you want to start your transition to an agile growth company as a certified Gravitas Agile Growth coach, please contact me.

 

 

Copyright (c) 2021, Marc A. Borrelli

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