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Marshall Goldsmith: Adding too Much Value - A Case Study

Carlos is the CEO of a successful food company. He is brilliant, hard-working, and an expert in his field. He started out on the factory floor and rose through sales and marketing to the top spot. There is nothing in his business that he hasn’t seen firsthand. Like many creative people, he is also hyperactive, with the metabolism and attention span of a hummingbird. He loves to buzz around his company’s facilities, dropping in on employees to see what they’re working on and shoot the breeze. Carlos loves people and he loves to talk. All in all, Carlos presents a very charming package, except when his mouth runs ahead of his brain.

One month ago his design team presented him with their ideas for the packaging of a new line of snacks. Carlos was delighted with the designs. He only had one suggestion.

“What do you think about changing the color to baby blue?” he said. “Blue says expensive and upmarket.”

Today the designers are back with the finished packaging. Carlos is pleased with the results. But he muses aloud, “I think it might be better in red.”

The design team in unison roll their eyes. They are confused. A month ago their CEO said he preferred blue. They’ve busted their humps to deliver a finished product to his liking, and now he’s changed his mind. They leave the meeting dispirited and less than enthralled with Carlos.

Carlos is a very confident CEO. But he has a bad habit of verbalizing any and every internal monologue in his head. And he doesn’t fully appreciate that this habit becomes a make-or-break issue as people ascend the chain of command, A lowly clerk expressing an opinion doesn’t get people’s notice at a company. But when the CEO expresses that opinion, everyone jumps to attention. The higher up you go, the more your suggestions become orders.

Carlos thinks he’s merely tossing an idea against the wall to see if it sticks. His employees think he’s giving them a direct command.

Carlos thinks he’s running a democracy, with everyone allowed to voice their opinion. His employees think it’s a monarchy, with Carlos as king.

Carlos thinks he’s giving people the benefit of his years of experience. His employees see it as micromanaging and excessive meddling.

Carlos has no idea how he’s coming across to his employees.

He is guilty of Habit #2: Adding too much value.

It’s not that people like Carlos don’t know who they are or where they’re going or what they want to achieve. Nor is it that they don’t have an adequate sense of self-worth. In fact, they tend to be very successful (and their self-esteem can often be excessive). What’s wrong is that they have no idea how their behavior is coming across to the people who matter—their bosses, colleagues, subordinates, customers, and clients. (And that’s not just true at work; the same goes for their home life.)

They think they have all the answers, but others see it as arrogance.

They think they’re contributing to a situation with helpful comments, but others see it as butting in.

They think they’re delegating effectively, but others see it as shirking responsibilities.

They think they’re holding their tongue, but others see it as unresponsiveness.

They think they’re letting people think for themselves, but others see it as ignoring them.

Over time these “minor” workplace foibles begin to chip away at the goodwill we’ve all accumulated in life and that other people normally extend to colleagues and friends. That’s when the minor irritation blows up into a major crisis.
Why does this happen? More often than not, it’s because people’s inner compass of correct behavior has gone out of whack—and they become clueless about their position among their coworkers.

You can learn more about this phenomenon in my new book- What Got You Here Won’t Get You There: The Twenty Habits That Are Holding You Back from the Top — and How to Stop Them.

Add comment December 15th, 2006

Booz Allen Hamilton Study Highlights “High-Leverage Innovators”

Booz Allen Hamilton’s annual study of the world’s 1,000 largest corporate R&D budgets uncovers a small group of high-leverage innovators who outperform their industries.

Specific findings include:

• Deep pockets can be dry wells. Analysis of the 2005 Global Innovation 1000 confirms the major finding from our initial study last year: Money simply cannot buy effective innovation. There are no significant statistical relationships between R&D spending and the primary measures of financial or corporate success: sales and earnings growth, gross and operating profitability, market capitalization growth, and total shareholder returns. Gross profits as a percentage of sales is the single performance variable with a statistical relationship to R&D spending.
• Less than 10 percent of companies are high-leverage innovators. Compared with others in their industries, only 94 of the companies in the Global Innovation 1000 produced significantly better performance per R&D dollar over a sustained period.
• Companies are getting better at squeezing benefits from R&D spending. R&D spending by the Global Innovation 1000 rose last year by more than $20 billion, but revenues rose more.
• Bigger can be better, even if it doesn’t boost breakthroughs. Scale provides advantages to R&D spenders. For the largest 500 companies, ranked by revenue and indexed by industry, median R&D spending was only 3.5 percent of sales in 2005, compared with 7.6 percent for the 500 smallest firms.
• Patents generally don’t drive profits. Boosting R&D spending can increase the number of patents that a company controls, but there is no statistical relationship between the number or even the quality of patents and overall financial performance.
• Masters of the innovation value chain have an edge. The high-leverage innovators and the companies with best overall performance distinguish themselves not by the money they spend, but by the capabilities they demonstrate in ideation, project selection, development, or commercialization.

December 15th, 2006