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Where Value Really Resides
May 29, 2009
By Omar Khan
Companies are prone to confusing "activity" with “value," "technicalities" with the real "adaptation" required to solve real problems.
Because my company, Sensei, focuses on improving business results by improving human performance, you would think I'm a fan of human capital management strategies. Well, I'm not a fan of any strategies decoupled from real value.
As an example from a not-too-distant past, one of the world's leading oil companies was known as a leader in progressive people management initiatives—among them, a corporate learning university and intranet systems for sharing knowledge. However, tools don't provide results in and of themselves. It depends on how you use them.
If you spend your time crowing about the technical quality of your intranet, or the "professionalism" of your internal university, you can get seduced by irrelevant metrics. Check out actual performance and see if there's any correlation.
The company over-declared proven reserves by 20 percent, had a major expense overrun (in the billions of dollars) in Canada, lost its chairman, was pilloried in the business press for a cumbersome bureaucracy and a prickly intransigence to outside views and inputs. Many factors doubtless conspired to produce some of these unfortunate results. But in "human capital" terms, the over-declaration of oil reserves, as an example, was a stark indictment of either probity or internal communication or the absence of a culture that faces reality and doesn't shoot the messengers.
As a result, their share price, depletion rate assessments, and costs of finding and developing new fields were affected. The company has moved on, and the history is only relevant as a demonstration that despite clearly being awash with talented people, somehow those people were not coming together with their capabilities to produce the right type of overall corporate performance or competence.
In a nutshell, that's the rub, in companies far and wide. Talent often isn't being converted effectively into collective competence. Non-value advocates, people who propose "initiatives" in the abstract, always prefer to go for less intellectually taxing or emotionally demanding solutions—those that require less leadership adaptation. But leadership adaptation is inescapable, and is the only thing that will ripple out into adaptations in the behavior of individuals and teams throughout the organization.
Staying in the same industry, another iconic petroleum giant (circa 2005) doubled its corporate advertising budget in a $150 million bid to portray a "greener" image. When considering value gets downgraded, then spin seems attractive. When a major refinery leak took place in Texas and more recently in Alaska, one wonders what those leaks did to its green credentials. Perhaps more of the advertising budget should have been better spent toward actual environmental safeguards and less on appearances. Not having done so preventively, they ended up having to commit more than a billion dollars to U.S. operations, including notably to "pipe replacement."
Larger lesson: Don't get waylaid by activity posing as results or initiatives lacking a clear line of sight to business value. The cosmetics of leadership can be purchased. The reality of leadership engagement, the type that leads to real business success, can only be earned. And one of the best ways of earning it is to look for where the real value in your business resides, and to spend the best of your talent, your energy, and your leadership there.
Omar Khan is a global leadership expert, author, and consultant. He is founder and senior partner of Sensei International, a leadership development and consulting firm that operates in the Americas, the UK, Asia/Pacific, the Middle East, and South Asia. His books include "Synergy," "Liberating Passion," and "The Global Consultant."
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