20 April 2015
The starting point for success is value, says Andrew Kakabadse
I have interviewed leaders of organisations in private, public and third sectors in 14 countries to gain new insights into success and how it is created. I found that the starting point for any successful organisation, or any individual, must be value – it is the currency of success. The type of value an organisation creates, and how it does this, lies at the core of what is required to make success a reality.
Different types of organisations seek to create different sorts of value – whether it is shareholder value, social value, stakeholder value or financial value. All organisations however must create value to legitimise their existence and to be regarded as successful. Creating value therefore is the primary purpose of leadership and the building block of every success story.
According to their approach to value creation, the leaders I talked to fell into one of three broad categories, which give insight into how value can be created and sustained:
The replicate and formulate approaches are clearly flawed. Despite this, replicating what worked elsewhere is a surprisingly commonplace approach. After all, that is what many consulting firms effectively sell. I have also encountered executives who simply applied the same approach, wisdom and ideas at a series of organisations; corporate groundhogs in search of their next groundhog day. This type of value will inevitably diminish with time as the world and its contexts change.
The formulate category includes many executives who see the creation of strategy to deliver value as a gamble; an intuitive and somewhat disparate art. They formulate strategy in a glorious vacuum. Sometimes it works, but good fortune has a knack of petering out fairly quickly.
Executives willing to wrestle with reality and interrogate the facts have a much better chance of repeating the successful creation of value.
I discovered in my investigation of C-suites worldwide that good leaders create value and deliver success through evidence-led stakeholder engagement. They build the commitment and passion which delivers value through real evidence rather than neat consultant-generated strategies, or distant dreams. In these successful organisations, evidence is not an aberration, but the result of hard work, persistence and structure. Reality is robustly and constructively interrogated and examined. Organisational success is built on a disciplined approach to an array of key issues – from mission to diversity.
The insights from my research have a deceptive but refreshing air of simplicity: success is about delivering value and this is most reliably achieved through engaging with people, markets and data and then gathering evidence on that reality and making decisions accordingly.
This sounds simple, however, the reality is quite different. Engaging with people within their context to win over their commitment; appreciating the finer points of competitive advantage, locality by locality; and pulling all that together through a global corporate strategy, requires a sophisticated level of diverse thinking.
When managers are comfortable with complexity and are able to leverage that defining difference, then the leadership can genuinely claim that the organisation delivers value. In effect, value delivery and diversity of thinking are inextricably linked. They are the two sides of the same coin. The challenge for leaders is to nurture a mind-set of value delivery together with diversity of thinking so that true differentiation is realised.
Andrew Kakabadse worked with ICSA on the research paper ‘The Company Secretary: Building trust through governance’. Download a copy here.
Andrew Kakabadse is Professor of Governance and Strategic Leadership at the Henley Business School