Legacies with value added

"What do you think of EVA as a barometer of business performance?" asked a participant at a recent seminar in the Netherlands. "Not much," I replied. I'm no expert on the pluses and minuses of Economic Value Added. I admitted as much, and then confessed that neither was I that keen on earnings per share or return on investment.

Sure, I understand the importance of profitability, in my business as well as in others', and debate over various measures has merit. It is just that they mostly put the cart before the horse.

The horse is what you make. The financial measure - important as that is - is a derivative of the goodness and acceptance of the product. In short, my bedrock performance measure for the packaged-goods maker is: "Do you get a buzz when you use your product?" For the grocer: "Is it a kick to walk through the store during noontime rush?" And the lawyer: "Is there something pathbreaking about your approach to the case you're working on?"

Consider my own measures: 1) Does the seminar I'm presenting turn me on? To do a good job, I first must satisfy myself. I have given thousands of seminars: how do I make this one stand out from the rest? If I am to feel fresh and energetic, the seminarmaterial must feel fresh and energetic to me.

2) Does it excite the most demanding customers? While I would like all seminar participants to go home happy, my standard is to provoke the toughest customers. In Amsterdam, I worried about the chairman of a huge bakery chain, executives from Saudi Arabia, and senior managers from Hewlett-Packard. While I always go over all the feedback that I get, I read theirs first - and if I fail them, I have failed utterly. In fact, I am delighted to lose customers! I want several of them to say, "He's too far out." If I'm not too far out for the most conservative members of an audience, I'm too far in to be helpful to the risk- takers in the audience.

3) Does the material help the average customer? I haven't got it in for Joe or Jane Average. To the contrary, I insist on instant, detailed quantitative measures of customer satisfaction for all my seminars.

4) Does it pass my quantitative innovation test? I use hundreds of 35mm slides to illustrate presentations. Now and again, I count the number of new ones; I like, in general, to have about 20 per cent new material every four months.

5) Does it pass my qualitative innovation test? New slides can be mere line extensions - or completely new product families. Both are acceptable forms of innovation, but the latter is far more critical than the former. In Amsterdam, for instance, I introduced important material on product design and how to implement change if you are not the big boss.

6) Will I brag about it next year? In five years' time? You only brag about things when you have pushed hard, made some bruising, messy leap into the unknown. Obviously, not every seminar is going to pass the one-year-bragging-rights test - let alone the five-year version. But if, over a couple of months, no seminars qualify for memory lane, I'm in trouble.

7) Is the check in the mail? I do like to get paid.

8) Is it a big check? Getting Mercedes rather than Daihatsu-sized checks is a fair measure of competitive strength in my niche.

9) Is it a little check? Little checks are also important. Not just pro bono work (good stuff), but strolls down byways that allow me to explore an entirely new area. I like to give the occasional speech to folks whose businesses are foreign to me. To survive, I must study like hell.

While this list is personal, I think it is also close to universal. As I've said before in this space, I fret about "me-too" products and services in a marketplace where good products and services from all over are arriving at a breathtaking rate.

The solution is clear: bold, brash innovation that stands a chance of leaving customers - and competitors - breathless.

I have heard scores of boardroom debates on targets for earnings-per-share, appropriate internal rates of return, and so on. I've attended far too few, on the other hand, that focus directly on whether the product adds zing to the strings of my heart. That's worrisome.

Perhaps it is just that I am getting older and fretting about my own legacy. Nevertheless, I think there's ultimately just one question worth answering: Will you brag about it in the morning?

And while trimming costs and adding pennies to the earnings per share may be imperative to saving jobs now, success in the long-term will be a byproduct only of scintillating products and services you can brag about 10 years hence.

Think about it.

a TPG Communications

Start your day with The Independent, sign up for daily news emails
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Guru Careers: Communications Exec / PR Exec

£25 - £30K: Guru Careers: We are seeking a highly-motivated and ambitious Comm...

Guru Careers: Pricing Analyst

£30 - 35k: Guru Careers: We are seeking a Pricing Analyst to join a leading e-...

Day In a Page

On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific
In this the person to restore our trust in the banks?

In this the person to restore our trust in the banks?

Dame Colette Bowe - interview
When do the creative juices dry up?

When do the creative juices dry up?

David Lodge thinks he knows
The 'Cher moment' happening across fashion just now

Fashion's Cher moment

Ageing beauty will always be more classy than all that booty
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination

Health fears over school cancer jab

Shock new Freedom of Information figures show how thousands of girls have suffered serious symptoms after routine HPV injection
Fifa President Sepp Blatter warns his opponents: 'I forgive everyone, but I don't forget'

'I forgive everyone, but I don't forget'

Fifa president Sepp Blatter issues defiant warning to opponents
Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report

Weather warning

Extreme summer temperatures will soon cause deaths of up to 1,700 more Britons a year, says government report
LSD: Speaking to volunteer users of the drug as trials get underway to see if it cures depression and addiction

High hopes for LSD

Meet the volunteer users helping to see if it cures depression and addiction
German soldier who died fighting for UK in Battle of Waterloo should be removed from museum display and given dignified funeral, say historians

Saving Private Brandt

A Belgian museum's display of the skeleton of a soldier killed at Waterloo prompts calls for him to be given a dignified funeral