Any Buffoon Can Cut Costs. Real Leaders Build

I was running the most successful region globally for a leading software company. We had just competed the year at 300% of annual revenue target for my region and with record margin. In the last two years we’d won 3 of the 4 biggest contracts for the company globally. All this from an office with just 35 people amongst a global workforce of 1,800 staff. This is where I conceived my RSVP deal management framework and it was a key factor in our success.

Then we were acquired by a larger software company and I was appointed as regional head of the new bigger entity. All seemed well… but confidence is often the feeling you have just before you understand the situation. 7 weeks into my new appointment I received an e-mail from North America. It included a spreadsheet with staff names on it and instructions to fire one-third of my employees. No phone call, no explanation, and no rationale for how the names were selected; just instructions to book 12 minute back-to-back meetings in a hotel lobby to hand people a lawyer's letter and tell them they were locked out of the office and IT systems. It was lunacy to wreck a healthy performing business… and the way HQ executed showed incredibly poor values. What happened from there is a story for another time.

3 years earlier I had been leading the Australian and New Zealand region for another company and they appointed a new VP for the Asia-Pacific region. My new boss had convinced the board in Europe that Asia-Pacific needed a clean-out and that he should be rewarded for improving net profit rather than on profitable revenue growth. They fell for it and he proceeded to destroy years of hard work and success while maximizing his personal remuneration. 40% of staff were fired and with much unnecessary angst. Again, very poor values.

Any buffoon can cut costs to temporarily created profit but cost-cutting is almost always a tactic, not a strategy. You cannot cost cut your way to sustained success because sooner or later a business must provide value and differentiate through innovation and service. The world needs builders, not destroyers, but building businesses organically (not just through acquisition) is tough work. It requires genuine leadership, commitment and passionate sales and marketing people to execute.

If you aspire to leadership you must be a builder, not a wrecker. You must be positive, not negative, You must encourage and lead, not criticize and push. Build people, processes and systems to innovate and provide outstanding value and service. Treasure great sales people who create the most valuable asset of a business… quality loyal customers.

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Main Image Photo by Flickr: Simon & His Camera