Generating Revenue Through Leadership
Leadership must be seen as your company's fundamental revenue generator.
By Brent Filson - 7/2007
Clearly, revenue drives organizations. However, most leaders don’t understand what really drives revenue.
Of course, there are the obvious reasons: for profit making organizations, products/services sold to customers; for non-profits, money raised; for government agencies, budget allocations.
But focusing on the obvious can keep one from seeing the deeper and more important cause of revenue generation. I submit that the fundamental cause of revenue generation is not products/services, it’s leadership.
The traditional view of leadership is that it involves the marshaling and directing of people and resources toward the achievement of specific goals -- and hence is an aspect of revenue generation.
However, just the opposite is true: revenue generation is an aspect of leadership. One of the reasons organizations generate a fraction of the revenue they are capable of is they don’t understand this point.
When you understand it and put it into action, you’ll be able to position your organization to generate more revenue, faster, on a continual basis.
Let’s take the simplest example, a pencil. This example can be applied to highly complex and far reaching products and services. Your company makes pencils. The customers pay for the pencils. The money is revenue for your company. The conclusion is that selling pencils creates revenue.
It’s a wrong conclusion. Pencils are only a superficial cause of revenue generation. There’s a deeper, more fundamental cause. To begin to understand this cause, let’s ask how many people it took to make that pencil. Answers can range from the one person who invented the concept to the ten people on the manufacturing line that turned out the pencil to maybe a couple dozen involved in sales, marketing, packaging, distribution, etc.
However, the answer is that it has taken veritably millions of people to make the pencil.
That pencil is composed of products coming from forestry, agriculture, mining, energy, and many other economic sectors. The sales/marketing, logistical, manufacturing, financial and distribution systems that flow into the pencil involve the work of countless numbers of people the world over.
The long and the short of it is -- and here’s the revenue lesson -- the pencil is not an independent entity. The pencil is an interdependent entity. It exists as an interdependent manifestation of a broad and deep complex web of materials, forces, and peoples.
Furthermore, the pencil’s interdependent existence does not stop with materials brought forth in the present, but also is connected with materials and people and activities going far back in time.
This phenomenon of the true existence of the pencil has been described by systems analysts. Systems thinkers are particularly interested in studying systems because changing a system frequently leads to more productive responses. Traditional decision making, such as seeing a pencil as a revenue producer, tends to involve linear cause and effect relationships. By taking a systems approach, we can see the whole complex network of interrelationships and often gain more useful results than traditional methods.
Clearly, we will never figure out the full universe of interconnections with the pencil. The good news is we don’t have to. When we see the pencil in this new, dynamic way, we are in a sense liberated from seeing it in the old, less effective, static way. In that liberation, we can choose the level of understanding and interaction we wish to operate on.
If we see our revenue generation as coming from the pencil, that is one level of interaction. Another level is leadership. When you see leadership, not the pencil, as the true cause of revenue, you see your organization and all its people and functions within the context of dynamic systems. Working with these systems can help you generate more revenue than if you were simply working in the old, linear ways.
There are three ways you can do this, simple transformation and radical transformation.
1. Simple Transformation. Invest your existing revenue generating products/services, activities, and functions with leadership insights and leadership processes.
There is not a product/service, activity or function in your organization that cannot be made more effective through the introduction of leadership processes.
Of course, you can’t ignore products/services. It’s important that you keep developing them, improving them, selling them, distributing them, etc. However, you can also focus systematically on having cause leaders promote them as the key revenue generators.
Mind you, I’m talking about right leadership. If leadership drives revenue, it’s clear that the better the leadership the greater the revenue. Don’t accept wrong leadership – leadership that is order-directed, tyrannical, and self-centered.
Right leadership is motivational. And it’s the motivational aspect of right leadership that is the true revenue driver.
Right leadership isn’t about ordering people to do tasks but motivating them to be the ardent cause leaders of tasks. Generally speaking, right leadership trumps bad products. But wrong leadership is its own worse enemy. The wrong leadership can be worse than no leadership.
The best way to drive revenue through a simple transformation is to introduce the Leadership Talk into your organization where functions and processes touch revenue generation.
For instance, you can apply leadership to revenue generation in sales situations. Salespeople often fail to get "step-ups" because they have a short-sighted view of the customer. They view the customer as only a customer! Whereas, if we want to get big increases in sales results, you may see the customer not just linearly as a customer but systematically as a "cause leader," one who both buys products/services and also leads your cause both inside and outside their respective company. See this article.
2. Radical Transformation. Engage in a systematic overhaul of your organization to increase revenues by using a Leadership Strategy.
7/2007© The Filson Leadership Group, Inc. All rights reserved.
The author of 23 books, Brent Filson's recent books are, THE LEADERSHIP TALK: THE GREATEST LEADERSHIP TOOL and 101 WAYS TO GIVE GREAT LEADERSHIP TALKS. He is founder and president of The Filson Leadership Group, Inc. – Celebrating 25 years of helping leaders of top companies worldwide achieve outstanding results every day. Sign up for his free leadership e-zine and get his FREE report "7 Steps To Leadership Mastery"