Andrew Kakabadse suggests that creating value is the origin of success, the definition of success depending on the type of value the organization wants to create and on the way they want to create value.
What is value?
Creating value should be the “primary purpose of leadership”.
The notion of value stretches itself from going public to the number of stakeholders, from not losing money to making profit, from creating quality products to retaining customers, from contributing to society to connecting stakeholders, customers, suppliers, others individuals to the activity of the organization.
What is success?
“[…] success is the creation of value — economic and social benefits and outcomes that serve a purpose for the people they are intended to help, in accordance with a set of values that the organization subscribes to”.
What is considered failure?
Failure is the destruction of value or the unsuccessful delivery of value due to bad management.
Organizations propose value by holding on to their client and audience, and by explaining how they do well uniquely. Several scenarios can be played out regarding the value proposition:
- If there isn’t any value proposition clearly defined, leaders are easily derailed and pursue purposeless strategies.
- If the value proposition isn’t readjusted to fit the context, leaders are blindsided by the event and lack flexibility.
- If the value proposition is known to be used and a strategy has been implemented around it, but the value proposition has never been tested, then the value proposition of the organization is doomed to fail.
- Only if the value proposition of the company is continually being tested, interrogated and evidence pursued, that the organization can be successful.
How to create value? How to create sustainable value?
Leaders approach value creation differently by:
Approach #1: Replicating a previous strategy. This approach is the most commonly applied in organizations. However, this approach is flawed if the leader constantly employs the same strategy to different situations, without being allowed to evolve and adapt to new situations.
Approach #2: Intuitively formulating an unproven strategy. This approach is flawed if the leader doesn’t challenge the facts and doesn’t test his strategy.
Approach #3: Interrogating and proving a hypothetical strategy with evidence. This third approach is the most accurate because leaders need to gather evidence, data, engage with people within their context to be able to make decisions accordingly. This approach requires a combination of “diversity of thinking”, strategy, engagement and alignment to create value.
Subsequently, two leadership models derive from the three approaches for value creation:
Model #1: The creation of “perceived value”
This is an old leadership model, driven by the belief of the leader. Leaders who create perceived value tend to visualize the bigger picture and to put strategy first.
Model #2: The creation of “delivered value”
This is a new and current leadership model, driven by evidence. In this model, leaders maintain close relationships with the society of the organization (stakeholders, customers, …), gather evidence from them about the advancement of value creation and about the implementation of the strategy.
What is the success formula?
To make sense of value creation in organization that are either evidence-led or strategy-led, Andrew Kakabadse came up with three formulas:
Formula #1
STRATEGY x (ENGAGEMENT + ALIGNMENT) = VALUE PROPOSITION
Formula #1 makes sense of value creation in organizations driven by strategy and disengaged with their contextual reality.
Formula #2
(STRATEGY x ALIGNMENT) + ENGAGEMENT = VALUE PROPOSITION
The formula above represents a situation in which leaders implement a strategy, with which everyone is on board, at a human and cultural cost.
Formula #3 — The Success Formula
STRATEGY + (ENGAGEMENT x ALIGNMENT) = VALUE DELIVERY
The success formula represents an organizations where consensus is first achieved before formulating a strategy that will continually be tested.
What are the other factors for success?
Value delivery is the starting point of success. It is also necessary to seek out different point of views, different perspectives to build a composite understanding of the organization and to sustain success. “Diversity of thinking and engagement are the two sides of the same coin”. Diversity of thinking does not include gender, age, nationality but means “diverse in mind”.
Leaders who want to promote diversity of thinking within their organization must:
- have a “passion for diversity of thinking”. Leaders should be curious, enjoy learning about themselves and the world, should be “open to new experiences and perspectives”.
- have international exposure. Leaders are compelled to welcome and search for international exposures for organizational and personal growth.
- advocate for open communication to instill trust and to encourage positive attitude towards challenges. Open communication comes from exposure to different cultures, which teaches the leaders how to adapt to different environments and to work with different cultures.
- engage with the organization. Leaders can start promoting the culture of diversity of thinking within the corporation, be active listeners and respond to people accordingly.
- build their team. Leaders are obliged to select the right people to make the right decisions and to avoid group-thinking.
Diversity of thinking is at the center of the success formula. Leaders must encourage “diversity of thinking” by listening and showing respect.
How to create a culture of diversity of thinking?
In The Success Formula: How Smart Leaders Deliver Outstanding Value, Andrew Kakabadse put together seven “disciplines” to help create a culture of diversity of thinking, and therefore to fulfill the success formula.
Discipline #1: Evidence Collection
Evidence creates alignment and engagement and allow leaders to reach a balance of opinions. Gathering evidence is part of a transparent process, gives a realistic overview of the market and the position of the company or the market, and allows leaders to gain knowledge in their respective fields.
Evidence-oriented leader:
- deeply believe that the evidence gathering process can move towards success.
- start gathering evidence from day one.
- assemble hard evidence as well as soft evidence, and are comfortable with constructive criticism.
- emphasize on the quality of the evidence.
- actively listen and engage with divergent thinking.
- use evidence to back up their strategies and to debate.
- make time for debates even if evidence is a slow process and delays decision.
- seek evidence in a structured manner.
Discipline #2: Mission Delimitation
Defining a mission for the organization means defining a clear purpose for the organization in order to promulgate their core values.
Needless to say that the nature of these core values is critical: successful organizations promote “inclusiveness and an environment suitable for innovation, the building of trust, and the spotting of new opportunities”.
Discipline #3: Alignment Enhancement
Alignment, “the logic and structure to execute strategy”, is a vital element in fulfillment of the success formula. There are 3 types of alignment:
- “Alignment of thinking between the key players” in order to execute strategy. This type of alignment starts with the hiring process.
- Alignment of structure to gain in efficiency.
- Alignment of operational system, protocols, processes to facilitate the execution of strategy.
Discipline #4: Engagement Enhancement
Engagement, “the desire, willingness, motivation (or demotivation) to make the structures and the processes work”, is difficult to achieve because it is impossible to control people.
Corporations with the highest level of engagement are not led by charismatic nor visionary leaders but are led by humble leaders, with listening skills that treat people fairly, that are open-minded and that reward people for their effort.
Discipline #5: Leadership Style Improvement
In addition to being driven by evidence, to leading with purpose, leaders display 3 main qualities:
- a high level of IQ to respond to the challenges that the organization faces and build “pathways through demanding circumstances”.
- “a profound moral consciousness” which requires integrity and an accurate and sensitive understanding of the context.
- a “persuasive advocacy” which is an ability to “walk the talk and talk the walk”.
Discipline #6: Governance Balance
Governance has two vital dimensions: monitoring and mentoring that are linked to the performance of the organization.
“Monitoring is all about the controls, protocols, and procedures that provide early warning signals and enable the board to take action to prevent wrongdoing or bad decisions”. “It is mentoring that makes the governance difference. This stewardship requires time, commitment, and consideration of how and with whom to engage”.
Discipline #7: Wisdom Development
Wisdom allows the increase of alignment and engagement. Wisdom is “earned through years of experience”, “comes from reflection and a willingness to keep on learning”.
Wise leaders learn to conveniently engage with people, patiently work through issues and dilemmas, accurately solve problems instead of rushing through them.
Review
The Success Formula: How Smart Leaders Deliver Outstanding Value is a robust academic research publication, with simple theories. These theories are illustrated with several real life, relatable, contemporaneous case studies from which leaders can grab inspiration.
Through one simple formula, Kakabadse was able to represent the complexities of todays organizations and highlight the difficulties of putting this formula into practise.
Furthermore, I believe this book is ideal for leaders:
- starting a business or company and are wondering how to create value and a competitive advantage within their company,
- looking to ensure a healthy workplace,
- looking to evaluate their organizations and detect potential issues,
- who have been derailed by a strategy-led organization,
- who are in organizations that are restructuring and want to promote an evidence-led culture in their organization.
Finally, I enjoyed the fact that Andrew Kakabadse stressed that evidence-led leadership does not happen overnight, that the leader’s job is not easy and every decisions have to be thought through, analyze and tested beforehand, and that the organization’s success is not only due to the leader but also to the contribution of the team, and that leaders have to showcase strong core values.
Favorite quote(s)
“[…] success is the creation of value — economic and social benefits and outcomes that serve a purpose for the people they are intended to help, in accordance with a set of values that the organization subscribes to”.
