The new era of business strategy is here, and there is very little room for error.
You’ve likely heard the Peter Drucker saying “culture eats strategy for breakfast”. And while this has historically been true, in this new turbulent era of business, it’s no longer the people culture that is impeding your business strategy. It’s your financial culture.
I can’t tell you how many off-site strategy sessions I have attended where leaders expressed alignment and enthusiasm with the agreed strategy, only to find 90 days later, little to no traction.
Before the era of COVID, there was more flexibility for multiple business strategies and priorities to unfold. When a VP said they were aligned to a business strategy, yet remained committed to other priorities that either distracted or actively worked against the core strategy, the impact wasn’t as critical as it is today. With lean teams working beyond capacity, there are no longer the margins for a multi-strategy approach to business.
Ten years ago, I went to Florida to study under Dr Ted Prince whose research in behavioural economics and the corresponding Financial Signature Model provided deep insights into what many leadership teams are feeling right now – “we are having good conversations, but at the end of the day nothing is changing in our business.”
These tensions are very real. In reality, we all have an innate financial strategy on how to build value in a business. In fact, if I were to give everyone on a leadership team $100 million to invest, there would be 9 different ways to spend it.
- Save and Protect – these people would keep the 100 million and protect it at all costs. When faced with business uncertainty, their first reaction is to cut costs and save.
- Keep our People Motivated – these leaders believe that people are the business and feel that the way out of uncertainty is to keep the people engaged. They would give salary increases to everyone.
- Hire More and Invest in Systems – these individuals are stabilizers and builders and feel that the problem is that we aren’t investing enough in the future. They would put the money into adding head count and likely an ERP.
- Invest in Opportunity Markets – these leaders look to parallel markets or look to invest in new areas that have great opportunities for streamlining, good margins and simplification. They look to cut back where needed and re-invest in promising opportunities.
- 1 million Dollars Each. These individuals believe in the power of the group and want to win together. They will give all business units a similar increase and budgets. – “We all win together. They are protectors of the current state and believe in slight tweaks to make the business better.
- Double Down on Sales and Marketing – the people believe that the reason why we aren’t growing is that people don’t know about us. They love the current product and service and want everyone to hear about it. They spend on marketing and brand.
- Minimal Viable Product – these people are the black sweater-wearing tech leaders who want to put all their effort into R & D and finding the next best thing. They would rather invest in the net new rather than the current state.
- Biggest Bang For The Buck – these people have a keen eye for the best value for investment. They are believers in the 80/20 rule and would rather invest heavily in servicing those clients that offer the best margins rather than the high-maintenance accounts with lower returns. They will invest in areas that offer good returns.
- Go Big or Go Home – these leaders describe themselves as cheap and yet they are either cheap or big-time investors. This is the person who won’t buy new pens for the office but will spend $50 million for a new capital investment. They are investors for the long run and will hold on to the $100 million until the right opportunity comes and then they are all in.
As your leadership team gathers over the next few months to strategize on navigating these turbulent waters, ensure that your team’s innate financial tendencies aren’t hindering your progress.
The most critical element to leadership team success over the next 12 months is that the team’s financial culture is aligned with the business strategy.
Are you interested in learning more about your team’s financial culprits? Contact us.
