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What Got You Here Won’t Get You There: Lessons for New Leaders

April 13th, 2013

The first part of the title to this post is the name of Marshall Goldsmith’s brilliant best selling book. It’s a book, among many, that I strongly recommend to anyone who wants to excel in life and business but that’s not the purpose of this post.

One of the really big challenges business people face is moving from working IN their business to the more leverageable (is that even a word?) function of working ON it. OK so you’re probably thinking “we’ve all heard about this, Michael Gerber talked about it in The E-Myth so let’s move on.” But hold on, I want to make a point.

In professional service firms from the time you start working at “the firm” your performance is judged primarily, and in some firms exclusively, on the basis of the quality and productivity of y  our “IN” work. You can’t help therefore aligning your work behavior to the belief that you get rewarded (as in promoted, bonuses, more responsibility and ultimately equity) for doing well at the “stuff” the firm does for its clients.

The better you are at the IN work the more likely you are to be made a partner. Then you join rank with a bunch of other people who share the belief that doing IN stuff is where firm value is created–which is partially correct, but it’s not where significant firm value is created.

The challenge faced by many firms (maybe most firms is closer to the truth) is that when the majority of partners are “IN-orientated” people because that’s how they got there, the firm’s organic growth peaks and then stabilizes so that the only way it can continue to grow is through mergers and acquisitions. Now, I’m not saying M&A is necessarily a bad way to achieve growth but it rarely yields superior profitability and superior profitability (as measured by net profit per partner or net profit margin) is the measure of competitive advantage which in turn is the purpose of strategy.

Goldsmith is so right. What got you to the position of partner will not get your firm to the next level of performance. That requires a whole new set of skills not to mention an organization structure and governance model that recognizes the critical importance of the need to separate ownership from directional leadership.

I’ve used the phrase “directional leadership” to distinguish it from leadership generally because leadership should be exhibited at all levels, by all people, all the time. But let’s not go into that now. By directional leadership I’m talking about that person or group of people who’s job it is to be thinking about ways to re-design the business model to better meet existing or emerging customers’ needs.  This involves, among other things, conceiving, communicating and ultimately orchestrating a different and exciting vision for the future role and growth of the firm and the relationship it has and creates for its clients and its team members.

This is the most important element of the ON stuff.

Of course it also involves seeking and implementing best practice solutions in your current business process but most other firms are doing that so it tends to diffuse rapidly and doesn’t give any firm  a sustainable competitive advantage–it’s one of those “necessary but not sufficient” operational initiatives that manifests in competitive convergence.

And that brings me to the main point I want to make here.

New partners need to be made aware that the greatest contribution they can make to the firm is get good at the ON things. Things like contributing to the creating of a great vision, things like developing your people especially through training, mentoring and delegating, things like networking outside traditional circles and getting outside their traditional comfort zones, reading widely  and consciously challenging their beliefs about how a firm should be run.

New partners should ask themselves the question: what will it take for me to be the best? Why not ask that question? I’m sure you would not ask yourself, what will it take to be the worst? Would you even ask yourself , what will it take to be average? Seriously, who is going to do that so why not seek to be the best and THAT is ON stuff fair and square.  This is elegantly stated by Seth Godin in The Dip, when he says at page 13:

People settle. They settle for less than they are capable of. Organizations settle too. For good enough instead of best in the world.

If a new partner is not interested in, or naturally endowed to, work ON the business then she should focus on working ON herself! By that I mean work “ON” being the best tax or audit guy in the world, or the best business development guy in the world, or the best team developer in the world, or the best rainmaker in the world. Don’t settle for less and don’t just be an ordinary IN person. IN people don’t leverage. Leverage is the source of synergy. Synergy is the source of growth both for the organization and the people in it.

 

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