My colleague Andrew Kakabadse @Kakabadse has published a new book. In his research, supported by the global search firm Heidrick & Struggles, he 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”
He also talks about how 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 be regarded by themselves and others as successful. He (rightly) states that 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.
Andrew Kakabadse’s latest book – ‘The Success Formula’ is available to order now from Bloomsbury: http://www.bloomsbury.com/uk/the-success-formula-9781472916846/.
Ok, so I like maths. But I hate algebra. When I was eleven it gave me a mental block, and I needed some additional coaching. It’s a positive story, because I went on to win the school maths prize at thirteen. Yet even now algebra leaves me cold – but strangely I have an odd fascination with equations…
When I was creating Meritology, that fascination had me looking for an equation to calculate value. By “value,”, I mean the specific value people and companies add to their customers, colleagues and communities. Bigger brains than mine have created some brilliant ways to define value. For example, Henley Business School’s own Andrew Kakabadse (Twitter: @Kakabadse) has developed an evidence-based way of defining whether a senior executive is a “value-delivery” leader. His worldwide research, of almost 15,000 boards and top teams, produces a defined success formula. This shows that a senior executive’s value is driven by:
- how much employees are engaged, and
- to what extent the organisation is aligned
with the strategy that executive creates for the business. I’ll leave Andrew to explain the formula in more detail, and my take is simple – it means that senior directors can create the best business strategy around, but it will fail if there is poor engagement and alignment. By implication, even a reasonable strategy will produce great results, if there is near-perfect engagement and alignment. To prove the point, think of successes like Apple and Amazon, and failures like Phones4U (where suppliers and and stakeholders were very apparently not aligned with strategy).
But is there a more universal equation that can be used to calculate value? Can we develop something simple and straightforward that we can apply to all situations? Research and experience tells me there is definitely a method. And so we have developed a new methodology to define, describe and discuss personal and organisational value. It recognises that calculating value is a science and an art. It’s part equation, and part perception. There are hard factors and soft factors. We call it The MERIT Method, and the five factors are:
- Memory (how people remember you, and what drives their perceptions)
- Emotion (why they connect to you, and their reaction to what you say and do)
- Results (what you deliver, and the methods you use)
- Innovation (where you have increased your value, or solved individual and specific problems)
- Time (when value is recognised, and how that changes – including the “right time, right place” principle)
It’s a working framework, rather than a static model. And we know that every situation is different, making each factor more, or less, important. The fun comes from thinking about each factor, and what you should be doing to increase your today and tomorrow value – making you and your company #standout.
So that fascination with equations helped me create this new method. But I still hate algebra. Someone I know confesses that she has “a little place in my heart just for simultaneous equations”. Thank goodness for that. When my son is struggling with his algebra homework, I know who he’s asking for help!