As a leader, this is a key question to keep in mind.
It is my observation and opinion over the many years that I led businesses, that there are 2 types of businesses, those that focus on the customer and those that focus on the shareholder. Now many will argue that these are not mutually exclusive, and maybe so. However. I believe that in most cases that I have observed, this is a valid statement.i believe that there is only one Organisation that is effective and meets the test of time and that is the Organisation that focuses on the customer. I also happen to believe that the Organisation that focuses primarily on its customer is better serving its shareholders.
The focus on shareholders is usually a short-term view of an Organisation. It is usually a 3 monthly cycle of achieving certain results where if results are not met, the Organisation is severely punished. In order to meet these short term results, so called leaders resort to anything including getting rid of core staff (often not the ones that are obviously bringing the results, but are the hidden jewels, alas), selling core assets and diverting the Organisation away from its true vision, merely to keep investors happy. I use the word merely quite purposefully. As I believe the shareholders are best served if these decisions are not made, if they want long-term “success”.
I am not saying that recalcitrant employees should not be addressed appropriately. However, getting rid of employees, merely for short-term results achievement, is tantamount throwing away the baby with the bath water! This is a different issue and the subject of a separate article.
Shareholders are best served if the Organisation stays focused on its customers; it’s vision, even as times get tough and as shareholders want blood. Of course, one needs to stay relevant and the business of a leader is in fact to continually measure the Organisational one page business plan against market ensuring its validity. However, once validated and/or trimmed, a true leader stays focused on the customer and not the short-term blood thirst of the shareholders. Shareholders operate out of fear and a true leader knows this and is able to stay on course while managing shareholders expectations.
However, back to the original hypothesis. As a leader there is a key choice to make; the customer, or the shareholder. And this is not about politics and rhetoric. It is about conviction.
Practically, what does this mean?
The customer-centric leader understands that the Organisational best asset is the employee. They do everything to ensure that everybody is on board and on purpose. They ensure that training is provided for all to stay on purpose and eliminates those that refuse to adopt the vision and be on purpose. These are not necessarily recalcitrant employees. However, sometimes, there are valid differences of opinion and there is no place for an employee with opposing views of objectives. This is like letting a cancer grow. An on-purpose Organisation is unstoppable, profitable and has longevity built-in; it can whilst and down-times and maximize profits in good times, better serving its loyal shareholders.
I would not call CEOs and Managers of shareholder-centric organizations leaders. They might be brilliant and deliver great dividends. However, the organizations they build are not sustainable long-term, have tragic customer satisfaction levels and have limited longevity. They are the heroes of investors but create organizations with low morale high staff turn-over and as a result unsustainable. This is bad news for loyal investors and create GFCs as they do almost anything (as shown in the GFC) to ensure short-term results. They are Managers, CEOs, great analyses, politicians, often charismatic, but not Leaders.
Unfortunately, these individuals are the yardstick for our youth and this is a sad inditement for our civilization that has placed money as a god above all gods.
Obviously, investors are by nature transient and they pick and choose, dropping perceived hot potatoes for the new short term money making opportunity. This sometimes good for the investors hip-pocket, but always bad for business.
Apple is a great example of my views. It’s share-value has been savaged even as it enjoys, unparalleled customer satisfaction, unparalleled profits, unparalleled growth of liquid assets unparalleled equoty for a company of its size and has effectively created 5 new product categories; simply because it has not met shareholder expectations! Absurd…
As a Leader, it is your choice. Choose wisely as true deep-in-the-heart conviction, alignment and happiness is worth much more than the short-term financial reward. And be clear that choosing the customer over the shareholder is a sure guarantee of investor return, almost and oxymoron!
Last modified: April 12, 2018