Leading to ‘Do Better’: The Soft Skills of Value Creation
We’ve long since passed the time to debate automation and digitization. The cost reduction battle favors competitors who effectively harness new technologies. Robots, artificial intelligence, and the like promise not only lower costs, but also more targeting and tailoring, choice of engagement mode, and customized products. The jobs that remain (as well as new ones that are created) will require individuals to work fluidly, to make judgment calls that take context into account, and, generally speaking, to do the higher-order creation of business value that robots can’t. In the future of competition, companies (and their employees) that cannot compete on value delivered will be crushed.
To create and sustain value, organizations and their people must collaborate more closely across an entire ecosystem of suppliers, customers, distributors, complementors. And leaders must account to an increasingly broad set of stakeholders for the value they foster. Therefore, “value creation” provides a useful North Star to guide individual choices and align expectations about behavior — and a rich platform upon which to build strategy.
Leaders should demonstrate value creation — it is not enough to preach it, without some visible, effective practice. Leaders have to demand, and themselves model, value creation in the company’s most important deals, and in how they manage the necessary tensions across the matrix — the predominant design for organizations of all sizes today, according to a six-year Vantage Partners study. Leaders must ensure product development plans, distribution models, and “coopetitive” relationships with others in the market are all premised on value creation. If leaders do not focus on value creation, the firm’s strategy won’t reflect it, and execution will be impossible.
Value creation also doesn’t happen unless leaders enable it. Individuals in an organization watch for, and internalize, leaders’ signals about what matters; what leaders “count” helps define the culture. Measures of success for an organization come from the top: targets are set, resources are allocated, and aligned behavior is rewarded. Leaders have to guide the organization to excel in its relationships with clients, suppliers, or other business partners. For account teams, for example, to focus on creating value for customers (as opposed to just selling them stuff), sales leaders must make creating value part of their role and their compensation system. Similarly, procurement leaders must ensure that those who negotiate with suppliers recognize the importance of helping suppliers do better for themselves as well as for us. Operations, back office, information technology — all must orient toward the North Star of value, acting as if everything they do matters, in an overall, accretive system. Because it does matter.
If we are not actually creating value in such relationships, then we are taking value from others — a strategy that suffers from diminishing marginal returns. Eventually there is no more value to take, nor willing partners from whom to take it. Yes, of course, we care about how the value we have created is shared between us and our counterparts. But if the intent and effort to create value aren’t there, then the entire interaction becomes zero-sum — about making them worse off so we can be better off.
How do we develop leaders to be better at creating value? This development journey starts with challenging some common assumptions and seeking to influence mindset. It’s hard to get leaders to adopt new value-creation behaviors in how they conduct or instruct others to conduct negotiations, for example, if they believe that the point of a negotiation is to “for us to get more than they do”; that’s an assumption that bears testing in some visceral and memorable way! If leaders approach conflict by homogenizing stakeholder interests and marginalizing differences, they will struggle to allocate resources or set targets in ways that create value (much less encourage others to do so). If they fail to explore the potential value in intelligent trade-offs, in doubling down, or in sharing or spreading risk, they leave important value sources untapped (and signal they don’t matter).
Value-creating dialogue requires different skills than zero-sum confrontation. Demanding, anchoring, bluffing, and threatening behaviors, for example can be very effective in the latter, but utterly disabling in the former. Inquiry, curiosity, and creativity go a long way in value-creation; so do risk management, option-development, sensitivity-analysis, and story-telling. That’s not to say we want leaders who blindly trust, give away value, or fold in the face of a more aggressive competitor, client, or supplier. Leaders also need to be sophisticated diagnosticians, able to assess a situation and choose whether and how to play or change the game.
Successful value creation comes as the product of:
- Mindset — looking for the opportunities to do so
- Skills — exploring those opportunities effectively, and
- Analysis and meta-skills — knowing when and how to influence counterparts and stakeholders who may be less ready to embrace value creation
As we know, leadership development is not primarily about taking leaders away from the business and putting them in the classroom for days at a time. Development of value-creation capabilities in our leaders requires thoughtful design of learning journeys that leverage some key modalities:
- Action learning. No useful value creation happens entirely “in theory.” Learning ways to identify value opportunities and how to bring even skeptical counterparts around requires real world application — and space for reflection on what has seemed to work (or not).
- Spaced learning. It takes more than just a single, concentrated effort to build value-creating habits, develop a repertoire of effective value-creation techniques, and change well-established patterns in how we talk about value. To change mindset and build real capability, we need to find ways to interject learning opportunities into the rhythm of daily work. Think process, not an event.
- Direct instruction. As with any other important soft skill that is part of a future-oriented leadership development program, there is also a need to afford leaders some time in a relatively safe environment to practice, take some chances, and reflect on their own capabilities. Part of a leadership development program intended to build practical and usable value-creation skills should include some classroom (or virtual classroom) opportunities to challenge participants’ own perceptions of their repertoires and whether and how they should supplement them.
This overview of the skills of value creation is the second of five “Soft Skills, Adaptive Leaders” articles appearing on Medium. Forthcoming articles will dig into three other critical, interrelated leadership capabilities: collaborating and solving problems jointly with others, influencing others and building alignment, and enabling (and accelerating) change.
As I outlined in my first article, “As the Unexpected Becomes Routine,” leaders have to do (make choices and take actions), but they also have to enable their people to do, while guiding them to do better (whether “better” means more, or different, output and impact). “’Leadership,’” as Edgar Schein noted, “is wanting to do something new and better, and getting others to go along.” Recognizing that to “do better,” it’s not sufficient simply to admonish leaders to create value — nor for leaders to exhort others to do so — how on a continuous basis can Learning and Development actually shift what leaders say and do (and how they think and feel)? How do you foster not only leading to “do better,” but “getting others to go along,” in your organization? Drop me an email or leave a comment and tell me what you think.
