After more than 45 years of working with CFOs and other senior managers across the full spectrum of industries, I know what the key driver of business success is.
Put simply, business success depends on every person in the organization uniformly and clearly understanding exactly what success should look like and precisely how it should be achieved.
There is clear evidence that a lack of shared clarity has a profoundly negative impact on organization-wide performance. For example, a Harvard Business Review study indicated that, on average, companies realize less than two-thirds of their potential, and that clarity and unity-related issues are the main cause.
A lack of shared clarity is almost surely a key reason why so many companies vanish within a few years of their founding and more than a third of the companies listed in the Fortune 500 in the early 1970s are gone.
There are two types of organizational power: the power to command, and the power to connect.
On the surface, the power to command may seem more impactful. It’s reflected in such common job titles as manager, director, and supervisor.
The problem for companies is that few big things are achieved by the dictates or efforts of individuals. They’re almost always accomplished over time though the collective efforts of groups of properly motivated people or teams, often reporting to different people from different internal functions and organizations.
Many of these efforts are out of the direct sight or knowledge of the organization’s leaders. They require a different type of leadership power.
The power to connect is focused on hearts and minds. It acts like an invisible hand that guides and encourages desired actions, decisions, and behaviors well beyond those that leaders are able to see, know about, or personally direct.
With full shared clarity people better anticipate and avoid unnecessary risks. They are more motivated. They work together better and focus their individual and collective efforts on the right things. They naturally feel more valued and valuable. They get the intended results even when they are not “directed” to do so. They set the right example and encourage others to do the same.
To boost a company’s level of success, CFOs must ask themselves these questions:
The answers to the questions become the “unity beacons” that will help guide everyone’s actions, decisions, and behaviors toward success.
Unity beacons are simply the things that everyone in the organization must be completely and uniformly clear about for the organization to achieve maximum business success.
Clarity or lack of clarity about these things directly influences what people do, what they focus on, how they collaborate with others, the decisions they make, how they perform their work, and what they avoid.
Today’s “numbers” are simply the net present value of past decisions, actions, and behaviors. That makes creating and maintaining shared clarity an important element of the CFO’s fiduciary responsibility.
Shared clarity creates leadership integrity, and it builds trust. It is the “glue” that keeps everyone in the company connected to success and the “oil” that allows the company to operate successfully.
When things are made clearer to people, they tend to be more committed and engaged. They feel valued and sense fairness and trust. They gain new respect for the organization’s leaders. They become more accountable. They focus on the right things. They find new meaning in the work they do.
They are able to make sounder judgements and better utilize their skills, knowledge, aptitude,s and talents. They develop new capabilities. They innovate. They work better together. They coach others in the right ways. They build more productive internal and customer relationships. They produce better “numbers.”
Shared clarity also plays a critical role in dealing with today’s workforce.
Today’s workers are much different from earlier generations. They grew up with iPods, iPads, computers, cell phones, and social media. They are the connected, digital generation. They are more interested in understanding “why” than “what.”
To attract, maintain, and motivate this generation of talent, organizations must connect with people in new, more meaningful ways that go beyond directing people in their day-to-day jobs and traditional boss/subordinate relationships.
Shared clarity is also an insurance policy against business risk.
It’s hard to find a better example of the importance of shared clarity than the recent situation in which Wells Fargo was found to have opened many new customer accounts without customers’ consent or knowledge. The results were heavy fines and almost $22 billion in lost market value.
Managing shared clarity requires policies, procedures, responsibilities, tools, and metrics. In that sense, it is is a business process, just like any other.
Rick Yeager is founder and president of Richard J. Yeager LLC, a business-performance consultancy. A former Fortune 50 company executive and CFO, Yeager is the author of “Clarity: Creating Organizational Connectedness through Shared Clarity.”