For the past 50 years, executives have focused on using financial capital wisely, since it was the most precious resource a company had. But today, according to two Bain & Company consultants, that's no longer true. Financial capital is abundant and cheap. And that's likely to continue for at least two decades, due to demographics; notably more and more people shifting from the heavy-spending years when they have children to the savings decades that follow.
Instead, the consultants argue – after a study looking at the differences between top companies and less successful ones – three other resources demand attention: Time, talent and energy. Managing those well, instead of squandering them as we are inclined to do, is the key to success.
"Companies have rigorous methods developed for managing financial resources. Investments have to exceed predetermined hurdle rates [for what the return will be]. The investment is tracked. But time, talent and energy are not tracked with the same rigour," Michael Mankins, who with fellow Bain partner Eric Garton wrote the book Time, Talent, Energy, says in an interview.
Time is the most obviously and frequently squandered, Mr. Mankins says in the interview. It's scarce and critical. But we misuse it. He notes that Andy Grove, former chairman and chief executive officer of Intel, says we would never allow an employee to walk away with a piece of office equipment but they routinely walk off with their colleague's time.
And the pressure expands exponentially, in an era of greater telecommunications, as we connect with more people who connect us to more people. Then there are meetings, which also seem to mushroom. "You need to invest time as carefully as money," he insists.
Monday morning, look at the meetings in your calendar for the week and see how many you have set up that have too many people attending. Pare that down to the essential folks for the decisions being taken. His other quick tip: Eliminate "reply to all" on e-mail, either technically, by stripping it from computers, or through a cultural change you should model. Each reply to all tugs at people's time.
More broadly, follow in the footsteps of Alan Mulally, who, when he became CEO of Ford, found that the top executives came to head office every month for a week of meetings. He told them he had no idea if that was needed but insisted they would add no more meetings unless they subtracted some. The consultants call that a fixed time budget: Establish one now, based on the existing meetings, and begin reducing.
Beyond that, organizational complexity is a drag on people's time. Simplify. "If you think your work force is not as productive as it should be it's not their fault. It's your organization. You have practices and structures that are too complex and involve too many people. It's an outcome of growth, and you must change it," Mr. Mankins says.
The key with talent, their study found, was deployment. There was hardly any difference in the number of star players between the top companies, where those A players composed 16 per cent of staff, and the regular companies, where they were 14 per cent of staff. The difference was they were deployed in the best companies on strategically important tasks rather than evenly across the firm's functions. The consultants urge you to be more thoughtful, assigning these "difference makers" to roles where they truly can make a difference, as Apple, Google, Tesla and other top companies do. You also, obviously, want to improve your ability to find these A players and the best way to do that, the consultants found, is to have A players handle the hiring – not outside consultants and not B players, who may be challenged by the top talent they scout.
Finally, focus on increasing the discretionary energy that people bring to their work. Engaged employees are 75-per-cent more productive than satisfied employees. But even more significantly, inspired employees are 125-per-cent more productive than satisfied employees. So you don't just want to engage employees; you want to inspire them. And that will occur when their personal mission and ambition is aligned with the company's mission and ambition. Toms Shoes has inspired employees because, for every pair they sell, the company gives a pair to somebody in need. You may not have such a gambit at hand but you can try to help employees see their personal link to corporate goals, give them more autonomy and manage humanely.
Time, talent and energy are the key to success, the consultants argue. Find out where your company falls short and then improve.