Leadership: how healthy is your business?

Published: 2011-02-28 There are 6 comments ... please add yours below

You can respond to early signs of underperformance or decline and take remedial action

making sure things don’t worsen and undermine long-term profitability or viability

If you’re feeling off-colour, a doctor checks your “vital signs” of temperature, blood (both pulse and pressure) plus breathing. A leader working in the healthcare industry asked me what might be comparable vital signs for a business. It’s probably foolhardy to draw parallels between people and businesses. People are singular but substantially similar bio-organisms. Companies, though, are hugely more diverse: in nature, scale and organisation. But, foolhardy I am! So below, I’ve listed three tests plus a fourth for good measure – my four “Cs”. As a leader, what does each tell you about your business today? More importantly, which is tracking least well? And, what leadership medicine are you administering?

CASH. If your business is throwing off enough cash to pay its bills and reinvest, then it has continuing viability and potential. Excess cash is a sign that the business model is working: you have customers, they pay their bills, costs are under control and so on. Cash is perhaps like breathing: the business is getting adequate financial oxygen.
COMPETENCE. This evaluates fitness for service. Does your organisation have the skills and equipment to function: to deliver its products and services? Plus, the intellectual property and software to support this? Is there adequate reinvestment?
CULTURE. A business can be financially OK and have the technical attributes, but it will fail if its people are not aligned and committed. This is perhaps the "temperature" of the organisation. Are people happy and want to make things work? Or, are they holding back and undermining performance?

Let me now turn to that fourth factor: what you as the leader, like any doctor, can pick up from signals observed or heard during contact with a corporate patient.

COLLAPSE – or worse, CORRUPTION. When I meet someone, I'm often struck by how they look or sound – fit and bright-eyed or perhaps tired and blotchy-skinned. A doctor might notice a trembling hand or skin cancer. Such data is not pre-planned but can suggest something is undermining the person – or business: deliveries are late or invoicing inaccurate. Products look outmoded. Or, people are goofing off and joking about cutting corners.

As a leader, you need to have these types of tests. Not only to check the health of your own business but also those of your suppliers and customers. You don’t want to wake up some morning and find that one of them has gone bust. That disease can be contagious!

Please share your thoughts in the comment box below. That way we all learn.

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" ... process is superb" Paul Sprokkreeff, CEO Web Profits Pty Ltd
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Dr. Timothy Pascoe AM
PhD (Cambridge), MBA (Harvard), BE & BEc (Adelaide)
Creator, V|E|C|T|O|R Leadership^®

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Comments (6)

Timothy Pascoe - date: 2011/03/04 11:59 am

Dear John,

What a great series of points: all taking the discussion further. Many thanks.

Thanks also for your kind comments re our shared involvement some years back (further back almost than I care to remember).

Best wishes,

Timothy

John Kitney - date: 2011/03/03 03:22 pm

The four tests are very interesting and are minimums for excellent performance.

Cash is king. Generating sufficient cash to pay the bills and reinvest is a minimum test. An analogy is a tidy rooom for a teenager this is a starting position and then we can add other desired attributes to achieve a harmonious life in he household.

We may be satified initially with a loss leader in order to break into a new field. Obviously, this situation is only acceptable for a planned period. At some time, cash generated must meet or exceed the real Cash test which satifies one's investment hurdle compared to other options.

Competence and Culture are strongly linked concepts. Our workforce must be competent, fully informed, focused, happy and all pulling together in the desired direction. Timothy, you demonstrated the importance of these two areas to me many years ago when you adapted your vision to manage stresses in our organisation. In doing so, you showed great sensitivity and purpose and leadership.

Collapse can occur because of a range of reasons. Identifying and living values pertinent to the organisation's shared vision are important. Active or passive resistance is destructive and results from the leader not communicating the vision and obtaining shared commitment. In a healthy organisation this requires the leader to recognise what is happening and then listen, evaluate and adapt where necessary.

A great series of tests, Timothy.

Timothy Pascoe - date: 2011/03/01 08:01 am

Dear Phadke,

Thanks for your comment - and support.

I think your metaphors sound a lot more engaging than mine - but perhaps that's because I like food!

As you say, great leaders are often great story tellers.

Best wishes,

Timothy

Phadke Subodhkumar Narayan - date: 2011/02/28 07:52 pm

Sir,

This is classic way of preaching. Trust me and I mean it.

In my professional I use the same ways & means.

Like to explain BOM? I share the example how to make different types of tea.

To explain CAD configurator? I share the examples of tons of vegetable biryani's (rice dish)made.

The way you explained about the health of business is perfect.

By adopting this method, story teller can accommodate large group of people. From dumb to intelligent.

Thank you so much for sharing this. This article also I am sharing back in India to empower them & to educate them.

Sincerely I remain,

Phadke S. N.
City: Pune
State: Maharashtra
Country: India

Timothy Pascoe - date: 2011/02/28 01:45 pm

Dear Joseph,

Spot on. Particularly since I sell myself as a strategy consultant, as well as in the leadership space! So, I like suggestions like that.

However, to be more serious: what you say is critically important - and more so in bad times. Sadly, however, we all put off the big check-up when money is scarce - or when we fear what the results might show.

In the Posthot, I was trying to find a parallel to the medical first-line evaluation but, as you say, an MRI or similar is the right thing from time to time.

Timothy

Joseph Mullin, MBA Principal - date: 2011/02/28 01:03 pm

Timothy,
Well done!

But a leader has to on occasion get their business a full MRI scan. They have to examine every inch of the business to make sure that it is fully healthy from the toes to the head!
This allows them a peace of mind. But it has to be more than a yearly check up.
The environment right now is not conducive to good health so more frequent checks are needed.

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