Beyond Business Model: Why A People Model Will Be The Next Differentiator

Developing a business model is required, but a People model will be the next differentiator.

There is an opportunity I see within the entire ruckus going on around us. Call it the silver lining on a dark cloud. I suspect that we are on the brink of large scale business rebirth. There’s truly a lot going on at the moment that it may be difficult to find a method out of the madness. As we speak global markets are undergoing spits and spurts in an attempt to rise strong out of the financial crunch. The Nigerian capital market hasn’t made it out of the ‘recovery theatre’ yet, with the all-share index suffering from one blow after another.

The banking sector? Some category are making efforts to consolidate on the gains made by their long-standing predecessor CEOs, another league is in the recapitalization quagmire and a third, the nationalized banks, are in the hands of ‘Big Brother Amplified’ (AMCON-NDIC-CBN). While the local oil and gas business, though unleashed by the local content act but encumbered by corruption and political interests, remains in the state of becoming.

Still better than the power sector which can be best described as an electric train running on locomotive tracks – entirely dependent on the political will of Mr. President. While agriculture continues to gain attention – has a non-politician as Minister, a huge push by the CBN to fund and de-risk and a frontal involvement by the new Economic Management team.

In all these, is an opportunity for whole new organisations to be born. Even for those whose names will not change, the entities that will arise as the dust settles, will undoubtedly be whole new or else … Certainly, to even be admitted, by customers, as serious contenders, would require that organisations develop new business models; like some are already doing. Even for late adopters it is clear to all that business will not be as usual. But those who will make a huge success of the ruckus are those who not only have designed new business models but have painstakingly crafted a People model that they are committed to. Developing a business model is required, but a People model will be the next differentiator.

With more squeezes from regulatory authorities, banks will now need to seek out, nurture and maximize its chief resource – people. With customers becoming more demanding, service expectation levels will now, more than ever task the ingenuity of bankers. With information widely dispersed, and thus shorter cycle times, time itself then becomes a liability that needs to be harnessed. With the huge cash liabilities the race to profitable asset generation will be hot and fierce.

To hit the floor running, potential heirs to the throne will require more customer–relevant business designs. Likewise the companies gearing up to take advantage of the new vista within the Power and Agriculture sectors would also require thought-out business models. In the same vein, as players within the oil and gas are sifted into different strata (Premiership, Division 1, etc) it just may be an auspicious moment for redesigning new business models.

“A business model (also called a business design) is the mechanism by which a business intends to generate revenue and profits. It is a summary of how a company plans to serve its customers. It involves both strategy and implementation. It is the totality of how it will select its customers; how it defines and differentiates its product offerings; how it creates utility for its customers; how it acquires and keeps customers; how it goes to the market (promotion strategy and distribution strategy); how it defines the tasks to be performed; how it configures its resources and how it captures profit.

The world has gone from the shop keeper business model to much more sophisticated models such as the multi-level marketing and direct-to-customer models. We saw new business models being introduced in the ‘60s by Wal-Mart, in the ‘80s by Dell Computer and Home Depot, in the ‘90s by Southwest Air, Amazon.com etc” (Wikipedia). Beautiful! As useful, sorry, as essential as a business model is a People Model will be the next differentiator. Put differently, business modeling is ineffective when it isn’t influenced by strategic people management issues – here lies the flaw of some of the more ingenious models of the 21st century.

Where does a business model intend to get the kind of people that will help it deliver its objectives? And how does it hope to manage them so they stay to serve the customer? Not just so they stay but so that they stay and consistently contribute their strengths and energies.

A People Model is an integrated system that is used to create engaged employees. It is a mechanism by which a business attracts, manages and retains committed people. Studies have shown that a more engaged employee is a more productive employee. The research also proved, if proof were needed, that a more engaged employee is also a more profitable employee, a more customer-focused employee, a safer employee, and an employee who is more likely to withstand temptations to jump ship. Many of us have long suspected this connection between an employee’s level of engagement and the level and quality of his or her performance. This study laid the matter to rest – engaged employees produce engaged performance.

Engaged Performance (trademark of the management consulting firm Hay Group) is a result that is achieved by stimulating employees’ enthusiasm for their work and directing it toward organizational success. This result can only be achieved when employers offer an implicit contract to their employee that elicits specific positive behaviours aligned with the organisation’s goals. Getting Engaged Performance is not just about investing financially in employees through perks or pay hikes.

It is about striking a new contract in which the organization invests emotionally in its workforce. In exchange, employees make a similar emotional investment, pouring their “discretionary effort” into their work and delivering superior performance. The new contract says, “We’ll make your job (and life) more meaningful. You give us your hearts and minds.” This is the mission of a People Model. Is it an employer’s job to give meaning and passion to employees? Before now, the answer is no; but now, it is an emphatic ‘Yes’.

If people are a key source of competitive advantage, their engagement and performance levels can make or break any organization’s strategy or business model. Ultimately, delivering strategy is about hiring the right people and motivating them to deliver results. Employers therefore need to answer three People Modeling questions:

What types of people will help our organization succeed?
Why would the best people I need for my business want to work here?
How should we treat our people so they deliver peak performance?

These questions cut to the heart of engaged performance, which is a major factor influencing company valuations. A survey by Ernst and Young of institutional investors showed that 35 percent of their decisions now hinged on non-financial factors. The investors’ top-ranked non-financial factor was “execution of corporate strategy” – which is to a large extent about management’s ability to motivate people and channel their “discretionary effort.”

Companies ignore at great risk the elements that contribute to the engaged performance of their employees. For existing companies or emerging organisations to continue to manage people like before could be perilous. Organizational effectiveness research at the Institute of Work Psychology at Sheffield University UK showed that people management practices were a better predictor of company performance than strategy, technology or research and development.

And so now a new challenge presents itself. Because it makes good business sense to engage our employees, what is the most effective way to make this happen? If we can’t use our benefits program to differentiate ourselves, because our program looks so similar to everyone else’s, then what lever can we pull, what discipline can we institute, what process can we install to beat our competitors at employee engagement? We need to design a People Model for Engaged Performance.

For its insightful nature and simplicity, I recommend the Hay Group’s People Model for Engaged Performance. This model has identified six motivational drivers that help an engaged workplace and influence results. They are: Inspiration and Values, Future Growth/Opportunity, Quality of Work, Enabling Environment, Work/Life Balance and Tangible Rewards. Not all these drivers will matter equally to everyone. One-size-fits-all no longer works as an HR or reward strategy.