Understanding the ‘Value Proposition’… Placing a Value on Desired Results

    “Great minds must be ready to not only take opportunities, but to make them.”

    Charles Caleb Colton

    Understanding the value of an investment or just looking at the dollar amount as another expense. This difference is one of the key determinants that will separate top level, world class and progressive business organizations from the second tier, mediocre cultures. First understanding the value, and secondly having the willingness to make the necessary investment, is the trait of true leadership -“ leadership that knows by investing in the upfront and foundational work, the end result will have true sustainability, will achieve the desired objective, will build a legacy, and will be accomplished in a cost-effective manner.

    We’ve all heard the sayings “you can pay now or you can pay (more) later” or, “you get what you pay for.” Unfortunately, when decisions are primarily made on a bottom line, dollars and cents basis, the end result and long-term impact can be marginal or even negative. The quick, least expensive fixes are typically not process based, aren’t optimal, are pursued for the wrong reasons, and wind up costing more in the long run.

    One example might be a business that wants to, and knows it must, reduce lead times, reduce costs and improve efficiencies. Undeniably, all of these items are essential. They are important to the overall company needs such as market growth, customer satisfaction and loyalty, improving organizational morale, achieving higher quality output, and increasing profitability. However, the “wants” vs. the “needs” must be put together in order to provide long lasting staying power. Yes, fixing the problem(s) is vitally important but it is equally important and critical to implement foundational solutions that last and become integral parts of the culture and process.

    In another scenario, we could have an organization that wants to restructure and realign its resources, hire the right people, and be more responsive. The true “needs” are to improve the organizational efficiencies and effectiveness, improve morale, increase teamwork, reduce costs, improve productivity and improve the overall work environment. Only by understanding and pursuit of the “total package” can a true top-level, high-performance, highly motivated and profitable environment be achieved.

    How about a practical word picture? Let’s say a person goes to the doctor with a pain in his or her shoulder. The doctor does a quick, inexpensive exam, prescribes a muscle relaxant, and tells the patient to apply a heating pad -“ taking the way of the quick fix, least costly, Band-Aid approach. Although this may provide some temporary relief, the real, long lasting solution might be to do rotator cuff surgery -“ once this is done, the patient will never deal with the problem again. However, in order to evaluate, plan, and execute the true corrective action, the doctor must first perform a series of tests and examinations followed by an analysis and evaluation. It is only after this upfront work and assessment is done, that the doctor can make the proper diagnosis and determine the true course of corrective action. Although this will involve a bit more time and cost, the upfront investment will produce a lasting solution.

    You’re probably asking, “What is the point of all this?” In a nutshell, the point is “Do you want to invest in the upfront foundational work -“ things such as a ‘needs assessment,’ strategic planning, proper due diligence, etc. -“ in an effort to bring about the right changes in culture, processes, responsiveness, profitability, etc.? Or, are you simply looking for the ‘quick fix,’ least costly, and apparent immediate corrections?”

    More times than I care to think about, I have been part of companies or have run into companies that are reluctant to make the upfront investment to bring about long lasting improvements, processes and cultures. Too often they think they can take the “immediate change,” “finger in the dyke” approach. They try to spend as little money as they can, create and initiate another “program,” charge their people into another “Chinese fire-drill,” and demand that the situation be corrected and turned around as soon as possible.

    Sadly, in some companies and organizations leadership has not created high-performance cultures that know, and understand, there is no instant and magical path to sustainable success. They don’t demonstrate an understanding of the “value proposition” -“ the value and benefit their business will achieve as a result of an investment made in money and time. The outcome can be things like reduced costs and increased profitability, improved efficiencies, reduced inventory and improved inventory turns, more effective work layouts, implementation of long lasting processes, increased organizational responsiveness, making the right M&A or facilities decisions, and improved morale and overall culture. Do some of these elements sound like things you desire to achieve for your organization?

    I have a friend and colleague who is the CEO and president of a large, successful, and growing product development and manufacturing company in the Midwest. Step-by-step he, and the team he has built around him, have methodically and steadily developed and created a company culture that embraces the “value proposition” mindset. His organization is passionate about what they do and how they do it. It is an aggressive, high performance, responsive and fun working environment. It’s clear that a legacy is being built.

    He recently told me a story of how he engaged a consultant firm to come into his company. Although the fee was hefty, the capabilities and the value this firm delivered were well worth the investment. The process and work flow improvements, reduction in costs and increased profitability that have been recognized by a two-year effort were substantial and sustainable.

    Leadership should not simply focus on the short term P&L, expenses, and “optics.” But rather, leadership should stand tall, create the right culture, develop the right strategic plans for the future of their organization or business, and make the “needed” investment decisions that will produce true lasting solutions and the required results.

    As Jim Collins hammers home in his book “Good to Great: Why Some Companies Make the Leap-¦and Why Others Don’t,” this is the difference between the comparison companies and the great ones. As a leader, which kind of organization or business will you lead?

    Paul DiCicco is the president and founder of Relevant Consulting Services. He has more than 35 years of operational, manufacturing, and business industry experience. Contact him at [email protected].