Video Transcript

00:09 Robert Kaplan: And if you think this is gonna be a highly sophisticated discussion or highly sophisticated questions, I'm sorry that you're gonna be disappointed. There is nothing sophisticated about this. The basic questions you need to ask as a leader are brutally, brutally simple. And if you ask all seven or eight of these brutally simple questions, you would be superman or woman. It is very, very hard to do, okay? And let me explain what I'm talking about.

00:42 Kaplan: Let me start with the first one. The most basic question. And actually I talked to two or three people in the audience, while you guys were milling around, just to get an idea of who's in the group and what issues you're facing, the most basic question I would argue that you need to ask, and it seems like touchy-feely, it's not. "What is the vision for your business?" Okay?

01:11 Kaplan: Now, let me explain what I mean. For most of my career, when I heard people talk about vision, I had no clue what they were talking about. I used to work at a firm, and the CEO would talk about what's the vision for Goldman Sachs, and the only thing it made me feel was I'm glad I wasn't CEO 'cause I would have no clue how to even talk about this. I don't even know what he's talking about. Okay? Uh! You know.

01:34 Kaplan: What I realized years later as I ran more businesses, I realized that every... All of us, each of us has a dream. Each of us has a vision. Each of you has one. And let me explain in the context of running a business, what that is. There's a couple of things you have to think about. What value do I wanna add to customers? What's my dream? When you lay in bed at night or when you dream about your business or you dream about what you're gonna be, some of you may say, "What a stupid question." I'll tell you what I dream about. I dream about making a lot of money. Okay, fine.

02:16 Kaplan: What I've learned is making money is an outcome. Not gonna... Dreaming about making money is not necessarily gonna help you make money. What helps you make money and build a business is adding value to someone else, serving a constituency, customer, client, someone. So, I guess I would ask you... And great businesses, in my experience, and great leaders who are great over a sustained period of time, their greatness is built around adding value to a customer.

02:51 Kaplan: So I would ask you, can you write down on a piece of paper, can you write down in simple clear sentences, short, "What is the value you add to your customers?" Now, this is a little more complicated than it sounds because in order for it to be valuable, customer actually has to be willing to pay you for it. If you tell me you add enormous value to your customers, but you tell me your margins are non-existent or you have no pricing power, which a few of you, I think, I've already talked to, have told me that, I would push you again. "What fundamental value do you add?" And often when I talk to businesses about this, what they realize often they have to go back and do, they may have great client relationships or customer relationships, but maybe they need to rethink how they add value.

03:48 Kaplan: But for starters, can you write it down? By the way, how many of you can write down, I think most of you can, what value you add to customers? How many of you are not sure you can write it down? Alright, but most of you think you can. Okay, so number one, can you write it down?

04:06 Kaplan: Number two, and most people who start businesses, in my experience, can always write it down because it's usually the basis on which you start a business. It's the seed of your idea, okay? Second, "based on what clear distinctive competence?" So, in other words, in order to add value to a customer, you got to be great at something. What are you great at? Your company, what are you great at? And I'll explain why this is so critical. So, how do I add value based on what distinctive competence?

04:50 Kaplan: Why is this so critical to leadership? Many entrepreneurs I work with, started off, in the first few years of their business, they absolutely were very clear on how they added value and they were very clear on what distinctive competence they either had or trying to create. And then what happened is time went on, maybe the economy changed, competitors acted, maybe competitors took action that eroded the value-added and the distinctive competence. And what happened is the entrepreneur didn't... Stopped asking the question, stopped asking it. Because they asked it at the beginning and they stopped re-asking it.

05:33 Kaplan: So I would say to you, can you today write down value-add, distinctive competence, and as a leader, there's one other thing you must do. Do you over-communicate it to your people so that they can communicate back? What's your value-added? What's your distinctive competence? For many of you, the business has been built around you.

06:00 Kaplan: You know, there's a funny commercial, I forget for what company, where the entrepreneur walks into the door and he keeps asking for Dave to fix these and Dave to fix that. He's got a bunch of clones, and they're all him, you've seen that? Funny, except, it's not that far from the truth for many of you.

06:17 Kaplan: Why? Because you may have a clear vision on value-add and distinctive competence, but you don't communicate it. And I would argue, you need to communicate it frequently enough that the people who work for you, they can repeat it back to you. And your customers can repeat it back, which means you got to repeat it over and over and over and over and over and over again. And some people say, "Well, gee, how much is too much?" My rule in running businesses, you should repeat the value-add and the distinctive competence, and I'm about to go through priorities, those also, so frequently that your people begin to mock you. That's how you know when you've communicated enough. They'll say, "Oh, here comes so and so. Blah, blah, blah, blah, blah, blah, blah." But they got it. They got it.

07:06 Kaplan: And so step one, I would argue in terms of being a leader, can you write it down, value-added, distinctive competence and do you repeat it enough because it's enormously powerful when your people understand clearly the value-add and distinctive competence. Why? Because they may be out with the customer and you can't be around and you're not available, and you don't want to be available 24/7, and you're trying to develop people who you can tag team with so you can build your business. And if you don't over-communicate this, if they aren't clear, they're not gonna know what to do without you there. If you are clear, they may not do exactly what you would have done, but they'll be pretty close. This is the first building block of leadership.

Published on: Aug 30, 2012