As Enron Shows, Tying Everything to Profit Is Not the Way to Grow a Business

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If customers buy benefits, why do most businesses spend so much time measuring transactions?

Benefits are the things that are derived from an organization. Transactions are the things that people and organizations do.

Benefits might be the ability to drive your car—the benefit derived from filling up with petrol—or something more prosaic than the obvious. For example, a pension provider’s main benefit to those buying the service is confidence that one’s financial future is secure. It has nothing to do with how quickly the provider answers the phone, although this might add to the feeling of security but everything to do with maturity values and the integrity of the company.

How does that person feel when the service he or she gets is from someone with one eye on the bank balance and the other eye on the clock?

The transactions associated with the pension provider might be ensuring a quick answer to problems and queries and regular and easy-to-understand updates on the fund. Transactions use up resources, be it time, energy or materials. This means that they are, therefore, finite; there is a limit to how many transactions can be done. Therefore, transactions ensure that an organization and its people are busy; whereas, benefits ensure that an organization is delivering on its promises.

When you consider how things are measured, you recognize that an organization goes in the direction of its measures, or at least, it tries to. That is why it has measures. So for example, if an organization has a target to make a profit, the people in that part of the organization will shape themselves around the need to make that profit. If everyone in the company is focused on that profit target, that will be the staff’s primary concern.

“Great!” you say, “Everyone here trying to make a profit, it is bound to be successful.” However, it often doesn’t work like that. The extreme cases like Enron are classic examples of a target driving behavior in a negative way, but there are plenty more. We uncover lots of these transactional, busy targets in our work as researchers, and they always make me frustrated. Who said that a busy organization is a good organization? Who says that it is delivering its promise, to the employees who work there, its shareholders and stakeholders and, very importantly, its customers?

Effect on creativity

Say you are a creative business and hire a bunch of creative people to service your creative-hungry clients. You then focus your creative people on profit. What effect does that have on their creativity? Does it make them more creative, or does it divert their attention away from the creative process and end up giving them creative block (or whatever the expression is)? And what about the customer who bought the promise of a creative and outward-looking service? How does that person feel when the service he or she gets is from someone with one eye on the bank balance and the other eye on the clock because the best part of the day is going home?

So how would focusing on benefits, rather than transactions, help? We have designed a way that allows organizations to measure benefits and focus on those. If an organization measures the benefits the organization delivers, it will attract and keep the best staff, and the same will happen with customers. Why? Because people buy benefits. There are not too many customers—or staff, for that matter—who are committed to making your company rich, but people do like to feel that they have made a difference. And customers are keen to realize the benefit they bought your company’s service for in a tangible way.

Now think about it. Which company is going to be the most successful? One that has everyone focused on profit or the one where everyone is focused on the benefits the business provides, be they tangible or intangible? All our work has shown that the profitable businesses are the ones who align themselves behind the benefits they sell. Yes, they measure profits, but the main focus is an alignment behind the core business they operate. The staff members stay, and the customers are loyal. We call these benefits measures “Halo Measures” because they go beyond the logical, transactional “head” measures traditionally used in organizations to something that we all know is important but often find difficult to articulate. That is the “think and feel” things. It includes levels of integrity, the enthusiasm and passion for what is being delivered and the openness of communication. These are directly related to the benefits that people buy or use an organization, for they are things that keep people loyal.

Halo measures are way more fun to use than transactional measures because they are all about people, and we are all members of that club. So using them makes sense. They are also much cheaper to use than transactional measures because they have a universal nature, which means that levels of rating and scoring can be done by the user, rather than external consultants. As a consultant, I am committed to organizations delivering what they say they are going to and for their employees to enjoy their work life more. Halo measures assist with this, and the sooner we see them in widespread use, the better.

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