Over the last five years I have travelled throughout the globe interviewing leaders to gain new insights into the nature of organisational success and how it is created. I carried out in-depth interviews in over 100 organisations in private, public and third sectors in 14 countries.
My research – supported by the global search firm, Heidrick & Struggles – found that the starting point for any successful organisation, or any individual, must be value. Always. Value is the currency of success. The types of value organisations seek to create, and how they approach doing so lies at the very core of any understanding of what success looks like and what is required to make it 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. But all organisations must create value to legitimise their existence and to be regarded by themselves and others as successful.
Creating value therefore is the primary purpose of leadership and the building block of every success story that adorns annual reports, magazine covers and more.
How do leaders create value? How do they create value that can be sustained? The leaders I talked to in my research fell into one of three broad categories, according to their approach to value creation. Their approach was typically one of the following:
- Replicate: reproduce a previously successful strategy/value proposition
- Formulate: take a gamble on an unproven strategy/value proposition
- Evidence-led: Create a value proposition hypothesis and interrogate it with evidence.
Clearly, the replicate and formulate approaches are flawed. Replicating what worked elsewhere is a surprisingly commonplace approach. After all, that is what many consulting firms effectively sell.
I have also encountered many executives who have simply applied the same approach, wisdom and ideas at a series of organisations; corporate groundhogs in search of their next groundhog day. The value this delivers will inevitably diminish with time as the world and contexts change.
The formulate category includes executives – and there are many – 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, to interrogate the facts, have a much better chance of repeating the successful creation of value.
What I discovered in my travels in C-suites worldwide is that smart leaders create value and deliver success through what I describe as 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 best and most reliably achieved through engaging with people, markets and data and then gathering evidence on that reality and making decisions accordingly.
Sounds simple. The reality is quite different. Engaging with people within their context in order to win over their commitment; appreciating the finer points of competitive advantage, locality by locality, and pulling all that together through a cleverly thought out global corporate strategy, requires a sophisticated level of diversity of thinking.
When managers are comfortable with complexity and are able to leverage that defining difference, then the leadership can genuinely claim 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’s latest book – ‘The Success Formula’ is available to order now from Bloomsbury: https://www.bloomsbury.com/uk/the-success-formula-9781472916846/