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Why Inspiration Alone Is Not Enough To Be An Inspiring Leader

Strong leaders unlock higher performance by empowering people.

Tiaan Moolman and Eric Garton

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Inspirational Leadership

When employees aren’t just engaged, but inspired, that’s when organisations see real breakthroughs. Inspired employees are themselves far more productive and, in turn, inspire those around them to strive for greater heights.

Our research shows that while anyone can become an inspiring leader (they’re made, not born), in most companies, there are far too few of them. In employer surveys that we conducted with the Economist Intelligence Unit, we found that less than half of respondents said they agree or strongly agree that their leaders were inspiring or were unlocking motivation in employees. Even fewer felt that their leaders fostered engagement or commitment and modelled the culture and values of the corporation.

To understand what makes a leader inspirational, Bain & Company launched a new research programme, starting with a survey of 2 000 people. What we found surprised us. It turns out that inspiration alone is not enough. Just as leaders who deliver only performance may do so at a cost that the organisation is unwilling to bear, those who focus only on inspiration may find that they motivate the troops but are undermined by mediocre outcomes. Instead, inspiring leaders are those who use their unique combination of strengths to motivate individuals and teams to take on bold missions — and hold them accountable for results. And they unlock higher performance through empowerment, not command and control.

Related: 22 Qualities That Make A Great Leader

Here are some of our additional findings about how leaders both inspire, and get, great performance.

You only need one truly ‘inspiring’ attribute

We asked survey recipients what inspired them about their colleagues. This gave us a list of 33 traits that help leaders in four areas: Developing inner resources, connecting with others, setting the tone and leading the team:

  • Stress tolerance, self-regard and optimism help leaders develop inner resources
  • Vitality, humility and empathy help leaders connect
  • Openness, unselfishness and responsibility help set the tone
  • Vision, focus, servanthood and sponsorship help them lead.

We found that people who inspire are incredibly diverse, which underscores the need to find inspirational leaders that are right for motivating your organisation — there is no universal archetype. A corollary of this finding is that anyone can become an inspirational leader by focusing on his or her strengths.

Although we found that many different attributes help leaders inspire people, we also found that you need only one of them to double your chances of being an inspirational leader. Specifically, ranking in the top 10% in your peer group on just one attribute nearly doubles your chance of being seen as inspirational. However, there is one trait that our respondents indicated matters more than any other: Centeredness. This is a state of mindfulness that enables leaders to remain calm under stress, empathise, listen deeply and remain present.

Your key strength has to match how your organisation creates value

Effective leadership isn’t generic. To achieve great performance, companies need a leadership profile that reflects their unique context, strategy, business model and culture — the company’s unique behavioural signature. To win in the market, every company must emphasise the specific capabilities that make it better than the competition.

We found that the same is true of leaders: They must be spiky, not well-rounded, and those ‘spikes’ must be relevant to the way that the company creates value. For example, an organisation that makes its money out-marketing the competition isn’t likely to be inspired by a leader whose best talent is cost management. Spiky leaders achieve great performance by obsessing about the specific capabilities that underpin their company’s competitive advantage. They make sure those capabilities get an outsized, unfair share of resources and provide the key players the freedom they need to continue to excel.

Related: 15 Of South Africa’s Business Leaders’ Best Advice For Your Business

You have to behave differently if you want your employees to do so

Even with a clear idea of your company’s winning behavioural signature, leaders need to develop new ways of operating. We found that leaders who both inspire people and generate results find ways to constructively disrupt established behaviours to help employees break out of culture-weakening routines.

Inspirational leaders recognise the need to pick their moments carefully to reinforce a performance culture in a way that can also be inspiring. These are real moments of leadership and truth. Two of our favourite, classic examples include:

  • When Howard Schultz returned to Starbucks as CEO after a nearly eight-year hiatus, he realised that Starbucks’ unique customer-focused coffee experience was now in the back seat. In the front seat were automation and diversification, both implemented in pursuit of throughput and growth. Schultz took swift action to change the company’s direction; he even shut down 7 100 US stores for three hours on 26 February 2008 to retrain the baristas in the art of making espresso. In this highly symbolic move, he left no doubt about his intentions — and about what he thought it would take to make Starbucks great again.
  • When Alan Mulally came to Ford in 2006 to help turn around the business, he took bold actions to change the way the company operated. In one highly visible moment, he applauded Mark Fields (who would eventually become his successor) for admitting to a failure in an executive meeting. That was pretty much unheard of at Ford and it set the tone for the open and honest communications required for a new culture at the company.

While these are only single actions by leaders who are famous for producing both performance and inspiration, they provide a window into what inspirational leadership looks like.

Drawing insight from Eastern philosophy, one of our clients once said, “If you want to change the way of being, you have to change the way of doing.” This struck us as profound in the moment and even more profound over time — and the sentiment matches what we learnt in our research. Leaders can only change by doing things differently. The more often they behave in a new way, the sooner they become a new type of leader, an inspirational leader. We know that individual inspiration is the gateway to employee discretionary energy, and that, in turn, is critical to making the most of your scarcest resource — your human capital.


Leaders driving economic value

To win in the market, every company must emphasise the specific capabilities that make it better than the competition.

We found that the same is true of leaders: They must be spiky, not well-rounded, and those ‘spikes’ must be relevant to the way that the company creates value.

Tiaan Moolman is a partner in Bain & Company’s Johannesburg office where he leads the firm’s Organisation practice in Africa. Eric Garton is a partner in Bain & Company’s Chicago office and leader of the firm’s Global Organisation practice. He is co-author of Time, Talent, Energy: Overcome Organisational Drag and Unleash Your Team’s Productive Power.

Leading

4 Common Myths About Leadership That Can Hold You Back

Alignment with your values and belief systems is the foundation of becoming an effective leader.

Malachi Thompson

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To be a great leader in today’s world, being a brilliant knowledge expert or technician is no longer enough. Even harder is trying to learn the golden rules of the wrong and right ways to be a great leader. The amount of content spouted in countless books and resources is overwhelming let alone confusing.

To be unstoppable leaders for our businesses and our people, tuning out from the noise and distractions potentially misguiding us is pertinent now more than ever. Pay attention to any presence of these four myths and make guiding your people a more soul-enriching journey that they and you will want to continue well past your leadership term’s end.

Myth 1: Great leaders are highly ranked individuals

Richard Branson proves a classic example of how great leaders can get to the top without having ivy-league school connections and astounding qualifications. Having had enough of struggling at school, Branson dropped out of the highly reputed Stowe boarding school at the age of 16 to start a magazine called Student. The first publication sold $8000 worth of advertising. We all know the Virgin story from there on. Then there are the likes of Rachael Ray, food industry personality whose empire has amassed a $60M fortune without her having any culinary qualifications whatsoever.

There’s a common entrepreneurial DNA that runs through the veins of such leaders. An avant-garde vision, tenacity and patience seem to be common underlying themes for many. For others, it’s about making sacrifices and taking risks that could cost their life to serve a cause extending far beyond serving their own needs.

Related: 22 Qualities That Make A Great Leader

By publicly speaking out against the Pakistan Taliban’s extremist rulings, one of which of was to prevent females from accessing education, Malala Yousafzai became a target. At 15 years of age, a masked gunman boarded her school bus and shot her in the head. She survived and many months of rehabilitation spurred her determination to fight for every girl to have the opportunity to attend school. The work she achieved through establishing the Malala Fund with the undying support of her father, earned her the Nobel Peace Prize in December of 2014.

Whether from desperation or a happy place there is always the genesis of a passion driving a persistence to go against the grain and to continue the fight. Often there’s no formal training, qualification or certification in sight.

Myth 2: Following a certain checklist of behaviours will make you a great leader

The ‘fake it ‘til you make’ adage has become a common throw-away phrase consultants and coaches spout as a means to quickly build confidence. Following advice to merely emulate the behaviour of those you admire and respect can pose grave risks, especially when you become a leader by default as opposed to by your own audition. Smart teams can smell falsehood and copycats a mile away. Your integrity will often be scrutinised and your jury will constantly evaluate the values and principles you lead by. One foot wrong might end your leadership term just as quickly as it began and not necessarily by your team’s choosing.

Imagine being tasked with driving credit card sign-ups yet you yourself struggle to make repayments on your own overdraft. How long can you resist your inner conscience? You’ll feel the tug every time you invite a customer to sign up and at every request to your team to follow suit. At some point, you’ll be struggling to face yourself see in the mirror.

This article was originally posted here on Entrepreneur.com.

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9 Ways To Get Employees To Buy Into Your Vision

Your business is your dream come true, now it’s time to include your employees in your vision to drive future success.

Nicholas Bell

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Your vision statement is the foundation of your business. It is the baseline against which all strategic planning is assessed and the benchmark against which all results are measured. However, as important as it is to have a vision when it comes to business success, it is equally important to get your employees to buy into this vision to ensure that success.

Here are nine ways to get your employees to buy into your vision by making it their dream, as much as it is yours…

  1. It must be believable – Your company vision needs to be within the realms of possibility otherwise people just won’t believe in it. It must be steady, achievable and relevant.
  2. It must be inclusive – Employees need to see how they can play a part in achieving this vision to make it relatable and inclusive. If they don’t understand what the business does, they won’t care how well the business does.
  3. It must be reinforced – Talk about your vision all the time. Don’t assume everybody has read it or is familiar with it as new people may not have seen it and older people may have forgotten. Constant communication is critical to ensure everyone is, literally, on the same page.
  4. It must be transparent – Make sure your communication around your vision is open and clear. Talk about it with clients, with all staff members, at all meetings and keep on talking until everyone understands it. When a vision is tangible and accessible it is far more achievable than when it is ethereal and vague.
  5. It must be practical – Don’t make flamboyant statements that are almost impossible to achieve like, ‘We will be number one in X!’. Be practical. It doesn’t matter if you’re not number one, it does matter  that  your vision is practical.
  6. It must be shared – Connect people’s careers to the vision by creating opportunities for them. Show them how the work they do is tied back to the vision and the business. If the business is only about profit and customer, then employees often don’t see how they fit in or why they are important. Create opportunities for them and they will be inspired to achieve your vision.
  7. It must be people-centric – People make up the core of your business. It is bigger than just one person or one idea. So, give them something to aspire to with a realistic, practical and human company vision.
  8. It must have purpose – Embed your vision and its values into the way you do business. The way you treat your employees and your customers and the choices you make should all reflect your vision.  Take it beyond just ‘We want to make money’ and show how your vision positively affects your community and others.
  9. It must be visible – Put your vision on doors, in emails, on letterheads, in proposals. Show what you stand for at every opportunity. Employees need to feel that there is a cohesive plan for the future. This will not only drive engagement but it will keep them steadfast when times get tough – they believe in the ship too much for it to sink.

Related: 22 Qualities That Make A Great Leader

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Leading

What’s Your Number? How To Unpack Company Valuations

Business is booming. Investors want in. But how do you put a price on the value of the company you have built with your own hands?

Louw Barnardt

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company-valuations

Company valuations is such a hazy part of the scale-up journey of a private company. Putting a price tag on a business is both art and science. At the end of the day, the number that makes the headlines (if ever disclosed) will be where willing buyer and willing seller meet.

But how do you , as business owner,  go about setting your asking price? Before approaching investors, it’s a good exercise to determine your own valuation range for the business. Choosing the right valuation method is the first big question. The answer has many parts to it, but the most important driver is the stage of the business.

Let’s look at some of the most commonly accepted valuation methods in our market:

Earnings Multiple

Applicable stage: Established, profitable companies

Listed companies, institutional players and private equity investors normally invest in a company for its cash flow profit that can contribute to their portfolio income. More often than not, companies will be valued based on their current earnings (bottom line profit after tax).

This method can only be used for companies that consistently make a profit. A multiplier will be chosen based on the company’s perceived risk. Younger, more risky businesses will likely have lower multipliers (as low as 3 and 4) and high growth, well established, lower risk companies will get higher multipliers (8-15).

Sometimes small adjustments are made to current year earnings (like non-standard, non-repeating income statement items) after which the valuation is set at Earnings times multiplier equals company valuation.

Related: 7 Factors That Influence Start-up Valuations

Discounted Cash Flow (DCF)

Applicable stage: Post-revenue start-ups, growth companies and established businesses

The most commonly used method in practice, the DCF method argues that a company’s value is determined by the future cash flows that it will yield to investors.

The starting point is creating a five to ten year cash flow forecast for the business. This is no small feat. In order to create a full financial model – income statement, balance sheet and cash flow statement – for the next decade requires a lot of work, both from a strategic and technical perspective.

Investors love this model because if forces the owners to put a clear strategy and expansion plan for their business into numbers. It will include dozens if not hundreds of assumptions – all of which can be scrutinised for reasonability. The result of financial model will be five to ten years’ worth of projected cash flows. These amounts are then discounted to present value at a discount rate that reflects the company’s risk and expected cost of capital.

The sum of the discounted future cash flows plus a terminal value (that represents the value after the five or ten year period of the model) then represents the valuation of the company after some final small adjustments for things like existing debt in the business.

Revenue Multiples

A revenue multiple valuation approach is focused on the market for similar businesses and is underpinned by your company’s current turnover. It seeks out the sales price of other similar companies in the country or worldwide, adjusted for size, stage and market differences.

A company that sold for R100 million at a turnover of R50 million would have a two times revenue multiple (valuation/revenue). If the average revenue multiple for similar companies is in a certain range, this multiple is then slightly adjusted and applied to your business.

If the average sale in your industry has been two times revenue but you are growing much faster than the average with a better competitive advantage, you can argue that two and a half times revenue is a more applicable number for your business. Revenue multiples are often used as a reasonability check in the market for the current asking price.

Related: Why Start-ups Like Uber Stumble When They Scale

Other methods

Most established companies are valued using one or a combination of more than one of the above three methods. At start-up stage, there are a number of other methods like Cost to Replicate or the Scorecard Method that early stage investors look to. When a company is simply in too early stage to practically value it, seed stage investors would also consider SAFE Agreements (Simple Agreement for Future Equity) – an instrument that determines that the percentage of the company the investors are buying with their investment. This is only determined when the Series A round is raised at a future date and under certain conditions, generally at a discount to the price the series A investors are paying.

Company valuations are complex. Many of the above technical factors play a role. A lot of it also comes down to the salesmanship of the owners and the negotiating capabilities of the parties. In ‘How Yoco Successfully Secured Capital And The Importance Of A Pitch’, the Yoco team speak about the importance of the right approach in their recent R248 million fundraising

Don’t go into this process without seeking some kind of expert advice. The price of the wrong valuation is simply too high. Make your numbers and your arguments bulletproof and you will be on your way to defending a strong and exciting valuation for your next raise!

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