Monday, September 16, 2013

The Four Principles of Business

In order to succeed in their endeavors, leaders must understand and embrace the demands of their chosen competitive field and want to grow.

I was working with a frustrated leadership team last week. They had just reduced the size of their team to meet the financial demands of their investors. I listened as they complained about the injustice of unreasonable expectations, the loss of good people, and their inability to be effective leaders in such an environment. Then we discussed how they could evolve and grow in order to meet the new demands placed in front of them. This is when I introduced the idea of the four principles of business. Leaders need to understand and accept these principles in order advance their business goals and reduce their frustrations.

Principle One:  Business is Ultra Competitive

Successful business leadership is tough. A business leader has to create value in a marketplace that constantly demands more. In order to do this, a business leader must create a culture that can meet the demands of the market and beat their competition. The insatiable demand of the market is both the great opportunity and problem of every leadership team. The key point here is that every business leader must be psychologically prepared to thrive and be fulfilled by the challenges of a brutally efficient system defined by its customers. If you have a product or service that is valued and trusted then your company will survive- if you don't you will fail. The business world is not fair; it only rewards the best. Business leaders must be able to handle the rigors of this environment in order to serve their teams.

Principle Two: Investors Always Want More

Investors will always demand more (and then some). If the company performance is below expectations, there will be pressure to meet the plan and perform to the market standards. If the company is growing and meeting plan, investors will ask the management team to come up with a strategy for expanded growth and increased profitability. Investors demand more- it is a fact of business life. A business leader has to embrace this idea and not resent it.

Principle Three:  Business Teams Are Ever Evolving

Over time, all business leaders will have to fire good people. Business cycles, failed initiatives, and strategic shifts all contribute to reduction in forces or layoffs. If times are tight, business leaders will have to reduce payroll costs. If times are good, business leaders will increase payroll to meet new market potential. When the business is growing and profitable, business leaders will invest in new teams to attack new initiatives.

If everything follows its natural course, a business cycle will occur over a certain number of years. Additionally, a good business will have to tighten its belt again in a soft market or as a result of increased competition. This is the nature of strategic long-term business leadership. Business leaders will have to make tough decisions regarding good people. It's a hard part of the game.

Principle Four:  Great Business Leaders Get It

Great business leaders find a way to inspire cumulative increases in the value of the organization everyday. They understand how to get the most out of their situation, their team, and their resources in order to make sustainable progress. They also figure out a way to make their organizations prepared by aligning their leadership teams in order to create a culture which serves their mission, ensures the organization can thrive or survive in any business environment, and is able and willing to do what it takes to beat their competition.  

Leaders must continue to grow their awareness, skills, confidence, and capabilities before their teams can grow. Leadership development never ends for a great leader because the demands to innovate never cease. Consequently, leaders must invest what it takes to grow in order to properly serve their teams and meet the expectations of the customers, investors, and teams. Great business leaders never stop recreating themselves.

The market is pure and it is brutal. This requires business leaders to be different. Business leadership is emotionally and physically demanding. It's difficult to sustain constant improvement, and it can be overwhelming to live with the idea that the demands of your team, organization, and investors never end. This will not change - you will have to change to meet the challenge.

By Mike Nally

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