Recognizing the Old (and Totally Outdated) Philosophy of Leadership

The Modern Leader Creates the Conditions for a Problem Solving Culture

highlights from Jim Luckman’s article, link below

“Start by considering whether or not you are operating within an outdated model of leadership”

“you are likely operating inside the old paradigm, typical of most companies, that imposes blanket solutions on performance problems without first understanding your organization’s real, most urgent business problems.”

Recognizing the Old (and Totally Outdated) Philosophy of Leadership

“common leadership practices that consistently create poor outcomes.”

“Another outdated idea? Most leaders today still believe that maximizing profits is the purpose of the organization.”

“It addresses the focus on customers vs. profits.”

“What percentage of your daily activity is tied to maximizing profit (sales growth and cost savings) vs. improving value delivery to your customers?”

Read it here: https://www.linkedin.com/pulse/modern-leader-creates-conditions-problem-solving-culture-jim-luckman/?trackingId=iIryYOaHQdaFu93C9vgZ4Q%3D%3D

What is Margin Retreat?

- avoiding price competition by moving into higher-margin products or services

Develop your self awareness around whether you are avoiding price competition by moving into higher-margin offerings (called Margin Retreat). It is a common response in business to increased competition, however it can “lead to corporate suicide”

When you do this, someone will pick up the business you’ve decided to leave, establishing a presence. Over time they continue picking off the parts of your business they want, driving you into smaller & smaller pockets of demand, however you are focused on higher & higher profits and do not notice. Seeing the higher margin business reinforces this decision.

As your company retreats, its costs & footprint likely stay the same (or rise), while you leave a bread crumb trail for competitors to expand up. 

As competitors are now fulfilling your vacated ‘low margin’ positions, your revenue base stops growing. It may eventually shrink to the point it can no longer support your fixed costs around the operation. The typical levers managers pull in response are ‘restructuring’ and ‘cost cutting’ feeding more ‘reason’ to chase higher margin business, repeating the cycle, driving further shrinkage, which unchecked can spiral to extinction.

This idea has been around since 1990 and still worth being mindful of.

Do you have self awareness around where you may be doing this?

Post examples where you see this in comments