Personal Finance

Refine your value to outlast Covid

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Corona has forced us to reinvent ‘reinvent’. To both think the same, and different. At the heart of the matter, for any business is how does it create value for its customers. What is a useful mental model for your business? And, what is it that really makes managers happy?

VALUE OF VALUE

What is the value of value? “Price is what you pay. Value is what you get.” These are the wise words from the investor extraordinaire, Warren Buffett, who has never strayed from his focus on understanding the basics of a business, logic, and a stress on value.

How does a company create ‘perceived’ value? Perceived [emotional] value is what counts, as opposed to the actual accounting cost of production. When the customer purchases a product or service, how do they want to feel? Why buy an Apple, when a popular make of Chinese smartphone will do the job of communication for roughly a tenth of the price? Why a shinny Mercedes and not a durable Toyota Corolla?

Somehow one needs to get inside the head of the buyer and figure out what it is that they really value, that provides those ‘this is worth it’ tingling sensations. When your competitors’ level of service is just average, or poor to mediocre, this is a chance to excel. No reason why a one-star establishment, can’t give five-star service. Strange thing is, the cost to do this is bordering on nothing, it’s all mindset. Thoughts turned into actions.

MENTAL MODEL POWERED BY SAM AND JANE

Getting through this time of Corona, coming out stronger, more perceptive with a greater sense of self-awareness is our destination.

We all need to be fast learners to navigate through to the ‘end of the start of the beginning’ -- a new normal. This requires an approach to planning, projecting how things are going to be in the future, that has to be open-ended, rather than fixed in time. “Everyone has a plan till they get punched in the face,” said boxer Mike Tyson. Yes, it is important to plan, for instance, it’s useful to have your goals written on an index card that you look at daily. But, have the mental acuity to realise it won’t work out exactly how you put it down on paper.

Think about a mental model based on two managers, beavering away inside your organisation. One of them, Sam has the ability to absorb uncertainty and incorporate lessons into the operating model quickly. He is able to quickly react quickly, to pivot, to change plans and base decisions on hypotheses [a best guess] about the future. Ideally, ICT savvy Sam has his finger on the pulse of what is happening, perhaps supplied with continually refreshed dashboard data.

Jane, the other manager, takes a longer term plan perspective, managing through the structural shifts, your business sector is in. She back casts, Jane looks 3 to 5 years into the future, painting a picture of where the organisation needs to be. Then works backwards, from the ideal future, looking at likely what has to occur, to make the blue sky aspirations, a day to day reality. Jane and Sam are present, in those conversations in your head. You can probably hear them talking to you now ?

WHAT PUTS MANAGERS ON CLOUD NINE?

As a manager, what makes you happy? Is it when you clinched a new deal? Your boss picked you for a promotion? Operations went smoother than expected, making cash flow less of an issue?

One view of what creates happiness, is given by biologists, who believe that the level of pleasure in our mental and emotional worlds is governed by biochemical reactions. They would argue that our mental state, our well being, is not determined by, for instance, salary, the car you drive, or whether you live in Muthaiga or Mathare, but by a complex system of nerves, neurons, synapses and biochemical substances like serotonin.

For some, this more ‘mechanistic’ view of what makes us happy might be disturbing. Philosopher and historian, Yuval Harari in his thought provoking book Sapiens: A Brief History of Humankind writes: “People are made happy by one thing, and one thing only – pleasant sensations in their bodies. A person who just won the lottery or found new love and jumps for joy is not really reacting to the money or the lover. She is reacting to various hormones coursing through her bloodstream, and the storm of electrical signals flashing between different parts of her brain.” Interesting, ask yourself, when good or bad performance happens at work, where do you feel it, where does it occur for you ?

CREATING SMALL WINS

In getting organisations to perform better, the initial focus is always on creating ‘small wins’, picking the ‘low hanging fruit’ that give staff the confidence that things are changing for the better. Small wins might be having a last Friday of every month ‘town hall’ meetings where everyone can say what they think, or just plain acknowledging people for their stand out unusual contribution, on a weekly basis. Aim in these ‘organisational transformations’ is getting staff to perceive, to feel that small results have been achieved, and that more is enroute. In organisations, the genesis of real change, generally begins with one person, a leader who is upset with the status quo, and just won’t accept that, the way things are, are the way they should be. Can you think of an organisational change that worked, that did not begin with one ‘driving force’ individual ? This may not be the ‘politically correct’ view, but when you look at the evidence in Kenya and East Africa, it’s hard to dispute.

What applies in the large corporate, applies in the small business, and for the individual entrepreneur. There is this wonderful feeling you get, when you think about something, make a plan, and eventually, through all those small daily steps forward -- bingo, you were able to make it happen.

Today much of wealth, the value, an enterprise has consists of the skills, knowledge and mindset, the organisational know how, that staff carry with them, when they leave the building. For both the once dominant NSE market leaders, whose future in January 2020, seemed to be assured, and who have recently lost billions of shillings in value – and, the Mama Mboga selling vegetables by the side of the road, both have been impacted by a bordering on invisible RNA related crown shaped virus. In a climate of uncertainty, we don’t have to know all the outcomes. All we can do each day, is to take those baby steps forward, making things just a little bit better. As Martin Luther King, Jr. said: “Faith is taking the first step even when you don't see the whole staircase”.