Efficiency vs Excellence?
There are so many ways business leaders can try to boost performance. Among all the compensation schemes, training programs, consultants, frameworks, and tools, what works? The answer depends on what kind of performance we want.
Some leaders pursue efficiency. They focus their attention on using fewer inputs to get the same (or better) output. Producing the same results with fewer employees, less effort, and lower costs is certainly a performance boost. This approach also has drawbacks.
Other leaders are more interested in excellence, in its many different flavors. At Alliance, our goal is always to deliver great returns to our investors. Clarity about what kind of performance we want helps us make the choices that will ultimately help our goal, even when they hurt short term efficiency.
Building team culture, deep relationships, and a great brand costs Alliance time, money, and effort. This expenditure of resources isn’t efficient, but it pays off in the long term. Every person we hire, every investment strategy we employ, and every tool we buy, is calculated to help us deliver.
Our focus on outputs, rather than inputs, frees the Alliance team to do whatever it takes to deliver great results. For example, we spend extra money to do in-person site visits all over the country, even when email, photos, video chat, etc. might suffice. We’ll even send more than one team member if it will help us cultivate a key relationship or ensure we understand all the nuances of a complex deal.
This extra effort gives us confidence that we’ve accounted for every risk and that we have the right plans and relationships in place to deal with every contingency. Usually it’s not needed, but now and then, going the extra mile helps us avoid a nasty surprise.
Too much focus on efficiency can get in the way of becoming a market leader. The long game goes to those who have extra the capabilities and freedom to try new things, even when they’re inefficient. Alliance could not have developed our deep expertise in due diligence and risk analysis if we were overly concerned with cutting costs and reducing effort for a given output. We might also spend our time on more of the “good” deals we find, rather than holding out for the really great deals.
Our extra investments in excellence means we can take on complex and messy deals that scare other companies away. I love these deals — they tend to produce the outsized returns that we’re always looking for.
In business and in life, efficiency can take you so far, and no further. But excellence has no limits.
