“How many quarters in a dollar, daddy?”
My daughter looked up from her math homework, wondering why it had taken me so long to answer. It was the last weekend of the fiscal quarter and my mind had wandered to Wall Street. I carried our overflowing recycling bin toward the garage and answered, “Four, honey.” As I set the sea of empty plastic by the curb, I wondered if I’d heard her correctly: Did she just ask, “How many dollars in a quarter?” My mind raced. Disposable bottles. Quarters in a dollar? Dollars in a Quarter? Suddenly, I saw the connection.
In recent years, leaders have grown so concerned with the number of dollars in a fiscal quarter, that entire organizations have become DISPOSABLE!
The way I see it, there are four primary entities in any public company: The C-suite, the employees, the customers and the shareholders. It is the relationship between these entities that defines whether a business remains Renewable or becomes Disposable.
When leadership has a disposable mindset:
- Each entity believes they compete with the others for a share of a finite resource pool.
- Each entity seeks to siphon value from the others until replacements are needed.
- The culture is fixated on short-term results and burnout leads to attrition.
When thought-leaders have a Disposable mindset, they encourage peers within their entity to take as much as possible from the others. In the Disposable enterprise:
- C-Suites hire the minimum possible number of employees and drive them at unsustainable levels.
- Employees give customers half-hearted service, while audaciously cross-selling additional products.
- Customers are charged the highest possible price and made to pay extra for courteous support.
- Shareholders push the C-Suite to maximize Quarterly dividends at the expense of R&D.
- Each entity believes cooperation increases the overall resource pool.
- Each entity willingly serves the needs of the others.
- The culture is focussed on long-term objectives, increasing retention.
Thought-leaders with a Renewable mindset know that partnership is the path to prosperity. In the Renewable enterprise:
- C-suites serve employees by maintaining reasonable staff levels and clearly communicating long-term vision.
- Employees serve customers by working to make every touch-point into a positive experience.
- Customers serve stockholders by coming back for more, year after year.
- Stockholders serve the C-suite by refusing to base their job security solely on last quarter’s results.
Retention, Profit and the Future
There is a correlation between Renewable thought-leadership and entity retention. And, due to the high cost of attrition, retention is a primary component of profitability. Disposable leadership only drives key contributors away. Here are a few thoughts on the costs of attrition for each internal entity:
- C-Suite: Evidence suggests that key investors follow departing executives to their new companies.
- Employees: Replacing a manager costs an average of 2.5 times their annual salary!
- Customers: It costs six times more to acquire a new customer than to retain an existing one.
With disposable businesses disintegrating daily, it’s time for character-based leaders to bring renewable thinking into each entity. So what actions should we take to encourage renewable thinking? What are a few ways each entity can drive out disposable thinking? What is one thing you can do to lead change in this area?