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Small-Unit Leadership And Top-line Growth
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by Brent Filson
Reengineering is running smack into the hard wall of an economic law: the Law of Diminishing Returns.
This law states that the continued investment of one thing derives fewer returns as time goes on. Reengineering is an investment that takes costs out to enhance the bottom-line. But the more businesses reengineer, the fewer returns they get on their investment and so must switch their focus in another direction to get earnings' growth.
The new focus: the top-line.
Top-line growth, revenue growth, is not a function of reengineering, of taking costs out by taking people out, but instead of putting people back in. "Putting people in" doesn't mean adding people but instead putting people into the mix of vital factors that trigger top-line growth — having, not power over people, but power with people.
And the key to having people spearhead growth is leadership, especially small-unit leadership, the leadership of the most basic units or teams of an organization, those units/teams dealing directly with the selling, marketing, making, distributing or researching of products or services. In other words, those units/teams that are the closest to the customer, that touch reality.
Without small-unit leaders — the supervisors and the first-tier managers — leading the charge for results, organizations stumble.
Here are four ways to begin to get great small-unit leadership in your organization.
First, recognize: Before an organization can have effective small-unit leadership, that organization, all levels of that organization, must recognize the importance of such leadership.
I've seen many companies whose top executives were so focused on cost-out dance to get the stock price up that their small-unit leaders weren't even on their radar scope. And when leaders are ignored, they become inept.
Until those executives make that simple recognition of the small-unit leaders vital importance to top-line growth and communicate it to their organizations, those small-unit leaders can only put down roots in stony soil.
Second, demonstrate: It's not enough that top executives know that small-unit leadership is important, it's not enough that they say that small-unit leadership is important, they must do something about it. They must demonstrate that recognition.
Napoleon always had a corporal at his staff meetings. If his generals propounded plans that the corporal didn't understand, Napoleon threw the plans out.
And the Marine Corps, which has a vigorous tradition of small-unit leadership, demonstrates this in the field when the troops line up for chow: The lowest ranking Marines eat first, the highest ranking eat last. When the troops see a general letting a corporal in front of him in the chow line, that speaks powerfully of how the general, of how the Corps, value their corporals.
What would a company be like if the supervisors were given the parking perks and the senior executives had to take their changes in the main lot?
When top leaders demonstrate and celebrate in many substantive ways, by action not simply lip-service, that they value their small-unit leaders, those leaders will be motivated to deliver.
Third, challenge: But motivation isn't enough either. Delivery is. Delivery is the key challenge of all small-units. Small-unit leaders must clearly understand the exact results that they are expected to deliver. I asked an R&D executive what results his group was expected to achieve, and he stared at me blankly. After a moment, he said, "I'm embarrassed to say. I don't know! We haven't been told what precise results our group should get." If group targets are vague, the targets of the small-units will be vague too. And when teams have vague targets, they take misdirected action.
In order for small-unit leaders to be good, they must clearly understand exactly what they are supposed to be good at, what results are needed. And then they must be challenged to be good at achieving those precise results.
It is in challenge, challenge that expects more of teams than the individual members think they can deliver, that small-unit leaders must thrive. For small-unit leadership is all about getting common units/teams to deliver uncommon results. To meet tough challenges, small-unit leaders cannot order people to do jobs but must have those people want to do those jobs. That want to is the fulcrum of top-line growth.
Fourth, develop. An executive of a manufacturing firm recently told me something that sent cold chills up my spine. "We don't teach our leaders about leadership. They either have it or they don't. We give them a team, and if they can't lead it, we get somebody else who can."
That's a blueprint for ultimate failure. People are usually promoted to lead a small-unit for the first time, not because they are good leaders (that hasn't been demonstrated) but because they are good at their jobs. Only when they begin leading can it be seen that they are good leaders. And just as people learn their jobs, so they can learn how to lead on those jobs.
Few of us are natural leaders. Most of us need help, a lot of help. Plus, we need to work hard at being leaders. And the work is all the more productive when we are given the resources, training, encouragement, and mentoring. A business that wants consistent top-line growth must have a culture that promotes continuous improvement in leadership. That means employees must be measured, evaluated, and monitored on the kind of leadership behavior that gets consistent results.
Reengineering is not dead. In the coming years, it will still play a role in keeping costs down. But it will not play the prominent role that it has recently played. As the returns on its investments diminish, its importance to earnings' growth will diminish.
For many of those businesses that have been riding the reengineering wave, top-line growth will once again be key to earnings' growth. And when those businesses' leaders recognize the linkage between small-unit leadership and top-line growth and align strategies and resources to make that linkage precise and powerful, then the focus will shift from the flow charts and histograms of reengineering to what really gets results: actions that flow from the human heart.
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