Three Leadership Pillars Every Company Can Master
No matter what business you are in or how long you have been in business neglecting any of the three leadership pillars will stifle your performance. Think of these pillars as the legs of a stool: they all have to be equally long, strong and durable for the stool to perform. A slight flaw in any one and you have a problem. So what are they?
The three leadership pillars are Strategy, Finance and Operations.
Solving a big problem is commonly the foremost motivating factor behind every business idea. A unique solution that works better than conventional methods should be an exciting discovery for all who benefit. To turn the idea into a successful business requires that your team overcome some pretty serious, always varying and deeply layered challenges across three core functions that must be mastered for the business to achieve its highest purpose. Interdependent elements of all successful businesses are Strategy, Finance and Operations.
The big picture goal? The reason to master these leadership pillars? Sustainable revenue growth and quality of earnings. This requires scale. And scale requires leadership.
Why does scale require leadership? Because the right team will achieve much, much more than the sum of its parts. Great leadership can leverage strengths while mitigating weaknesses. According to Vistage, to scale your company, focus on these key decisions.
Strategy and the CEO
Back to solving a big problem. It starts with a vision, a new solution to a big problem with inadequate or outdated workarounds. It’s worth getting excited over, and worth inspiring other people that want to help you make it happen. But it’s going to take a serious investment of time and money. And wasting either is out of the picture. This is where strategy comes into play, and its the responsibility of the Chief Executive Officer. The CEO has to refine, promote and elevate the vision to every stakeholder: partners, employees and consumers.
Strategy involves defining what problem you are solving and how you are going to get people to buy into your solution. Your solution, not others. Why would they use your solution? Because your story is inspiring and your solution is truly unique, better than any other out there. Strategy is your plan, your path, your habits that aim to build brand value. To convert. This is why brand value is so important – it creates a connection between your solution and your customers’ values. It builds loyalty, buzz and sustainability. The stronger the bond between your brand and your customer, the more opportunity you will have to grow, to scale up and to profit.
This is why brand value is so important
Profit is the result of investing ample time and money into building a solid, scalable revenue model. Profit is a function of economies of scale and scope. Think of a writer selling a book – it took a fixed amount of time to write, edit and publish. Now that the work is done the author’s goal is to sell as many as possible. The more books that sell, the more profit is earned. Without any additional work. This can go on for years. This is the goal: building sustainable revenue growth and quality of earnings.
So how do you invest in building sustainable revenue growth? How do you measure the quality of earnings?
Finance and the CFO
Investing in, and profiting from doing what you love makes it a business. Your CFO is your company’s internal investment manager. The CFO’s top priority is providing the rest of your management team with accurate data, analyses and KPIs so you can make good business decisions. It’s a forward facing mindset. Think about it, the CFO’s responsibilities go so much further than accounting. Remember your first finance course? Finance is forward looking, accounting is backward. This is a critical distinction. Financial planning & analysis, and the resulting financial projections from this process are equally as important as actual financial results. The closer the two are, the more you will be in control of your own success.
The CFO plays a major role in helping validate many types of data so your entire organization can make informed decisions that drive sustainable revenue growth and quality of earnings. Growth, contraction and evolution are situations that happen to every business. Being prepared and being able to manage the financial implications of change are capabilities you should demand from your CFO.
There are four primary functions of the CFO including Control, Forecast, Comply and Measure.
- Control: Ensure accurate and timely financial information
- Forecast: Deliver critical decision making data
- Comply: Financial disclosure and fraud prevention
- Measure: Measure key performance indicators (KPIs), ratio analysis and benchmark assessments
The CFO is responsible for leading your company’s financial strategy, risk management and accounting functions. They direct your company’s financial planning and accounting practices as well as its relationships with lending institutions and the financial community by performing a host of duties directly and through staff.
When your financial condition is strong and cash flow is well managed it’s so much easier for operations to deliver your CEO’s vision to your customers.
Operations and the COO
Sustainable revenue is embedded in repeat business. A reliable user base will provide you with critical insights to the value of your solution, enabling you to constantly adapt and evolve to meet more and more demands from your user base. The best way to do this is to engage with your customers on their terms. Ask them what you could do better, how to improve their experience. This is why delivering the CEO’s vision is critical to driving repeat business and constantly expanding your user universe.
Delivering the vision is the responsibility of the COO
The organization chart, job descriptions and staff become pivotal in this regard. This is also why your people are your most valuable assets – they control the customer experience. The better the customer experience, the more valuable the product or service. The more valuable the sale, the higher the profitability.
When fine tuned, the three leadership pillars will enable your business to reach peak efficiency, serve your employees and customers optimally and establish the path forward to scale up and reach sustainable revenue growth and quality of earnings. The goal is to eliminate silos between functional groups and provide clear accountability for tasks – both quantity and quality – throughout a process or project, and to do it continuously on an ongoing basis.
Establishing the right plan for your business can be a daunting prospect so getting started with an Alignment Map is an easy first step. The sooner you start the sooner you will align the three leadership pillars.
With the right plan in place you can create something that doesn’t exist. Something of real value. With the three leadership pillars aligned you can design a system to do it over and over again.