Real Leaders

Why Business Success Requires Balance

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Behind every successful business is a finely balanced set of competing tensions. As a leader, it is your responsibility to find the right balance for your particular business in order to create long-term success.

Responding to the tensions they face is a critical decision for any leader, as the wrong response could tip the scales and lead to significant problems.

Tensions are an entirely natural part of business, and they can’t simply be ignored in the hope that everything will sort itself out in time; failure to make a decision is a choice by default.

The goal isn’t to eradicate tensions, as this is neither possible nor beneficial. What is needed is a strategic approach to managing these tensions, one where choices are made between competing demands. By doing so, a business starts to figure out exactly what kind of organization it wants to be and begins to prioritize the aspects that are most important.

Tensions are rising

We only have to look to COP26 to see how managing competing tensions around sustainability is playing out in businesses across the globe right now. As a planet, we must transition from a carbon-intensive economy to one that favors sustainability. This isn’t the natural position for many businesses that were not created with this goal in mind. For many, it’s an entirely new tension to manage as they figure out how to balance business growth, profits, and shareholder value with being environmentally and socially sustainable.

Another tension that is present in many businesses is the continued evolution of society, and the changing wants, needs, and motivations of younger generations of employees, customers, and stakeholders. A new breed of business is emerging, where decentralization and people-centricity supersede hierarchical ‘command and control’ style leadership. With every new idea comes a new model for success, new tensions to balance, new choices to make, new opportunities to grasp, and ultimately, a new balance to find.

Success v Failure

Businesses are under significant pressure to make these critical decisions in real time, and before any damage is done. Given the immediacy of modern global news reporting, it’s pretty clear which businesses are failing to balance their tensions effectively, as they’ll be the ones we read about in the news.

Some recent examples include the stories leaked from unhappy Amazon warehouse workers, where it appears that the tensions between command-and-control leadership and worker trust and autonomy are out of kilter. Shell and BP’s continued prioritization of short-term commercial reward over long-term sustainability is a tension that will only get tighter, particularly in light of greater awareness of the role fossil fuels play in climate change. Nokia’s historic fall from grace illustrates the danger of prioritizing incremental improvements in existing products over new product innovations, such as touchscreen technology.

These businesses are not alone, far from it. I could go on citing examples of businesses that are struggling to balance their business tensions effectively. It’s a constant process as different forces come in and out of play. What is much harder is to find those who have got the balance just right.

Many of the businesses that are balancing things well are hidden from sight, perhaps because the news doesn’t find their success ‘click worthy’. But I can assure you they are there.

One such example is Buurtzorg, a pioneering healthcare organization established in 2006 with a nurse-led model of holistic care that revolutionized community care. Buurtzorg is Dutch for ‘Neighborhood Care’ and their ability to balance the tensions has seen them grow from a small nurse-led start-up to providing support to nearly 100,000 people today. The company has created a way to balance patient needs with regulatory standards, nurses’ desire for autonomy over care pathways, and affordability.

Identifying tensions

The business of balancing tensions is unique to each organization, but that does not mean that the tensions themselves are different. There is much common ground between the varying strategic tensions that are present in modern business.

Common business tensions include:

● Short-term goals v long term vision
● Commercial ambition v sustainability
● Control v freedom
● Transformation v incremental change
● Challenge v support
● Purpose v profit

The Principles behind Balance

Having identified the key tensions a business faces, the next step is knowing which to prioritize. A business’s values alone cannot guide the decision-making process as they tend to be too vague to be enough in the face of a difficult choice.

Instead, it is essential to develop a set of strategy or design principles. These act as a set of rules to follow when faced with an important decision and help to define the type of organization you want to be.

These principles should ensure that making difficult decisions is easy. A great example of this was the response by Crossfit New England Owner Ben Bergeron to the Covid-19 outbreak. Given that the overarching goal of the company was to ‘optimize members’ health over the long-term, the decision to sacrifice short-term income by closing the gyms in order to protect them from infection, was crystal clear.

It doesn’t mean action will be easy, of course, that’s the toughest part. The next step is to build accountability systems so that these decisions aren’t ignored or overruled. Turning these principles into measurable behaviors or actions means that the organization can track its progress and celebrate when they are achieved.

Maintaining internal communications is essential to continued buy-in across the organization as is being transparent when the road has been rocky, but you stayed true to your principles.

The Board also has a major role to play in choosing which stakeholders matter the most, and in whose best interests the firm should act when faced with a difficult decision.

In conclusion, an organization is the culmination of every decision made by the company’s leaders when faced with competing tensions. Balancing the business scales simply cannot be left to chance; it’s not a decision you can abstain from. By consciously choosing what decisions you take and designing a set of principles that the business abides by, even when faced with difficult choices, you can ensure that the act of balancing becomes a deliberate one, the rewards of which are plentiful.

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