Leadership, sparking joy, and willingness to sell
RWL # 324
Greetings from the University of New Hampshire! Wednesday’s expected snowmageddon turned out to be only a few inches, so I got to stay home and teach my classes via Zoom even though I could have easily made my way on to campus. I suppose it is always better to be safe than sorry, and I don’t think my students were hamed by watching class from their beds. But it looks like we are expecting an even larger storm this coming Tuesday, which would mean I will be teaching those same classes once again from Zoom. I really don’t like teaching via Zoom. It’s ok in an emergency, but it does not spark joy, as the philosopher of tidying up says.
Speaking of sparking joy, I snapped the above pic as my wife and I were coming out of Fire and Ice Bistro, one of our local restaurants, on Friday evening. They had a couple of strings of these lovely lights hanging from the awning over the front entrance and they caught my eye. If you’re in the Seacoast area, I recommend Fire and Ice. It’s quaint New England style - they make the atmosphere feel intimate, like you are dining in someone’s rustic house. I’m a pretty good cook and I can cook most of what is on their menu given the time and maybe a few tries, and I’d say that’s true of most restaurants. But dining out isn’t about just the food. If it were, we wouldn’t be willing to pay as much as we do. Dining out is about the total experience. It’s the food, of course, but also the surroundings - the cool space, the nice lighting, the decor, the music in the background - and also the sense of being taken care of - having a waiter talk to you about the menu and the specials and make suggestions and just generally make you feel important. All of these things create that willingness to pay (WTP) that I talked about in last week’s essay. Attention to the details makes small incremental increases in the willingness to pay, and thus consumer surplus. It’s why I pay $18 for a burger and fries willingly at Fire and Ice vs. less than half of that at Five Guys (which makes fantastic burgers, but is not a charming place to take your spouse for a bit of romance). Increases perceived quality increase a consumer’s WTP, and that allows a seller to increase their price as well. We just don’t want to be Blockbuster and try to raise the price as close to WTP as possible. That makes resentful customers who will celebrate when we fail.
So this is the value stick I took from Felix Oberholzer-Gee’s new book Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance, which as I said last week, I recommend, and reading the book has inspired me to write these two reflections. Last week I focused on WTP, this week I wanted to talk about willingness to sell (WTS), because anyone in a leadership role could benefit from thinking about WTS in regard to their team.
Willingness to sell and its relationship to cost, as represented on the stick above, is a little less intuitive than WTP and price, but the principles are the same. The length of the stick represents overall value created - for the customer, for the firm, and for the suppliers to the firm. A longer stick represents more value created than a shorter stick.
We can increase value by making the customer experience better and thus pushing WTP up, or we can increase value by making the employee experience better, thus pushing WTS down. When I think about WTS from an employee perspective, I think of what is the minimum amount of money I would be willing to do the job. When I am really excited about a job, my WTS extends downward. Many of us have volunteer roles - we do the work for zero wages. That’s as low as WTS can go. But most of us need to make some money in some part of our lives, so we can’t have WTS be zero across all of our activities. Employee satisfaction is the gap between Cost and WTS. A wider gap indicates greater satisfaction. We care about employee satisfaction because it is directly tied to discretionary effort, turnover, and quality. So how do we increase employee satisfaction?
We can always increase an employee’s satisfaction by raising wages, but most organizations do not have an infinite amount of resources to commit to employee wages. A fair wage is important. Employees who look around and see other people making a better wage for the same work in another organization are likely to leave. But employee satisfaction can vary greatly with the same wage.
As leaders we have to think about what makes employee WTS move down such that they increase their satisfaction with their role without necessarily an increase in wages. Other than wages, we can increase a person’s satisfaction by providing a nicer work environment - more comfortable office furniture, a private office, free coffee in the office, maybe remote work. These are examples of extrinsic motivators. They are external to the job itself, but they are part of the conditions under which the job is performed. Adam Smith (father of modern economics) writing in the Wealth of Nations in 1776 was already talking about this:
Wages vary with the agreeableness of the employment. First, The wages of labour vary with the ease or hardship, the cleanliness or dirtiness, the honourableness or dishonourableness of the employment… A journeyman weaver earns less than a journeyman smith. His work is not always easier, but it is much cleanlier.
Dirty, uncomfortable, and/or dangerous work reduces WTS and requires higher wages. Making work less dirty, more comfortable, less dangerous increases WTS (lengthens the stick).
In my experience extrinsic motivators, beyond a certain level, do not have all that much effect, and this includes pay. All other things equal, I’d prefer to have more pay and nicer accommodations than not. My office furniture is pretty old and rickety, and definitely has a cobbled together, second hand feel to it. It’s fine, but it’s not why I get excited about going to work on Monday mornings. I’m not even going to get into pay. No one joins the Army to get rich, and no one becomes a professor to get rich, either. From a financial perspective, I’ve made pretty poor choices. And yet, I have and have had for most of my working career, relatively high work satisfaction.
Some leaders are really good about being generous with their recognition. I remember one of my early mentors was Colonel (now retired) Doug Dudevoir. I did my comptroller internship under Doug when he was the chief financial officer for Tripler Army Medical Center. Doug worked long hours trying to improve the organization by making sure resources were allocated where they would do the most good. He was always running to one meeting or another, then working late at night to do the analysis necessary for the next day’s meetings. But he always took a minute here or a minute there to compliment our work. He would catch me in the hall and tell me something like, “I just want to tell you how much I appreciate the analysis you did about XYZ”. During staff meetings he would regularly compliment everyone’s work. And it was genuine. He was also good about doing his redirecting and mentoring privately. When he would give me a drive-by compliment like that, I always carried it with me for a few days. It felt really good and I felt appreciated. But recognitions are extrinsic, too. I think it is important for leaders to be generous with appreciation, and I do think this pushes the WTS bar out, increasing satisfaction, but it only goes so far. I think what really creates meaningful changes in WTS is meaningful work.
In previous newsletters, I have talked about my heuristic for meaning as
Meaning = Competence x Contribution x Connection
I think meaningful work has all three of these C’s, and the more deeply we feel each of them, the more our WTS approaches being willing to work for free (again - not suggesting we take advantage of extra WTS to pay less - we want employees with a deep sense of satisfaction because they are better employees). Leadership is important for each of these, even though a leader’s actions are extrinsic influences. My example above of Doug telling me I was doing a good job helped me on all three of these C’s, especially since I was relatively new to working in the finance field. When he stopped me in the hall and told me I was doing a good job, it helped me see that I was competent - I was doing a good job. It also helped me see that the work I was doing was making a contribution to the good of the organization, and having an impact on patient care, however indirectly. And I felt more connected to the organization because my boss showed me appreciation. As we mature in our skills and in our career, external validation becomes less important. We come to have confidence in our competence, and we can see for ourselves that we are making a contribution. We also create connections more readily as we gain confidence. To paraphrase the Aquinas passage that I always append to my newsletter, we form bonds of love with an organization when we work for its success.
Of course, not everyone is going to find meaning in every job. We are each a better fit for some jobs and a worse fit for others. I worked a number of jobs early in my career where I was not a very good fit. I’m thankful that the Army kept moving me around until I discovered where I was a good fit and found a deep well of meaning. Furthermore, some of us are just not that interested in getting meaning from work. Instead, some people are more focused on finding meaning in their families, churches, or other social roles. For these people, the relationship with work will always be primarily transactional.
Nevertheless, leaders have the opportunity to influence followers’ experience of meaning by paying attention to the three C’s, and thus extend WTS. Younger, less experienced followers need more attention, more mentorship, because they may not be competent yet, and they may not be able to see their contributions. Without the first two C’s, they will not feel connected to the organization. Without all three C’s, the gap between WTS and cost shrinks, and the relationship between the individaul and the organization becomes entirely transactional. What is great about creating meaning is it is mostly free, unlike other compensating differentials such as better equipment, nicer surroundings, etc. How a leader treats her/his people, how s/he interacts with them on a day-to-day basis can help create more meaning. You are going to interact with your people - can you be like Doug and reach for the good? It’s a cheap way of extending the stick of value by sparking some joy.
OK - so those were my thoughts after having read Felix Oberholzer-Gee’s new book Better, Simpler Strategy: A Value-Based Guide to Exceptional Performance. I recommend the book, and I hope I added a bit of value to the ideas for you.
And… that’s it for me! I’ll be back Wednesday with links. As usual, willing good for all of you! Happy Sunday!
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