Resource-Based View of Your Organization Goes Beyond the Numbers
by Dr. Karen Otazo
Excerpted from “The Truth About
Being A Leader... and Nothing but
Keeping an eye on resources is essential to managing any
organization, even a household. Yet some people are still surprised
to suddenly find that their cupboards are bare or their bank
accounts have no money because they haven't been watching the inflow
and outflow of their resources.
When you move into
a new leadership position, you naturally think to check on your
organization's tangible resources: financials like revenues and
costs, factories, buildings, equipment, systems, inventory, patents,
and land. But it is also vital to realize that less-obvious
resources like customers, learning, staff, innovation, capacity,
inventory control, and morale can make or break your organization's
Think of each
resource as a bathtub with two valves—one bringing in the elements
of that resource, and one draining them. If the resource is staff,
the in-valve is regular hiring, and the out-valve is staff leaving.
If you don't pay attention to hiring and focused career development,
you may find yourself with a depleted resource of good staff.
developing more business, or new kinds of business, looking at the
bathtub called staff forces you to consider how much inflow you need
to be ready to staff new areas as they come up. Even if times are
tough, it's best to make sure your important resources don't drain
away to a critical level. It is a common mistake not to hire new
people when you have a bad year or are short of funds. In cyclical
industries like the oil business that have boom and bust cycles,
when a downturn is over it becomes almost impossible to find people
to staff the emerging boom.
Thinking of your
resources as bathtubs helps you see that resources move in and out
all the time. So you need to keep an eye on the level in every one
of your tubs and ensure that you're putting enough into each of
your resources as bathtubs helps you see that resources move in and
out all the time.
How do you identify
all your bathtubs (resources)? You can get your team together,
perhaps with some outside players like customers, consultants, and
your board, to determine what makes your organization special. Open
your thinking to the less-tangible resources as well as the obvious
ones. For instance, you might not think of morale as a resource. Or
brand. You might need to have a brainstorming exercise to determine
what all your tubs are—all the things that make your organization
what it is. These might include the people, the location, the value
proposition of the product or service offered, and the advertising.
Then determine what causes inflow and outflow for each resource.
For the resources
of customers and learning, the tubs might look like this:
Customers attracted to another organization
Newly attracted customers
Attracted customers who don't then use products or services
Training and development
Lack of knowledge management
Hiring experienced personnel
Loss of key personnel
bathtub is reputation. Reputations can't be measured in numbers, but
you certainly know if you have a good or bad one. When you realize
that your reputation has drained below the "good" line, you can work
on it. But first you have to realize this!
In gauging the
levels of each of your tubs, you need to do fact-finding. Otherwise,
you're using the intuition and feelings of just a few people. For
instance, you can check on morale by doing a climate survey or check
on customer attitudes with focus groups. Getting solid information
from surveys and staff readiness reports from your leaders gives you
a foundation for your decisions about where to support designated
Taking a real
resource-based view, rather than just getting a few facts and
figures, is important. It's also tricky, because a lot of these
things can't be measured in a bean-counting way. But, as with a
bath, you don't have to count the gallons of water. What's important
is whether your tub is comfortably full or worryingly empty.