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Apply the competencies of Business Acumen and Critical Evaluation to make strategic recommendations
Basic addition is taught at a young age: 2 + 2 = 4, right? We also learn that 4 - 2 = 2 as well. Let's say that company XYZ currently manufactures 100 products, but most customers rarely use or may not even be aware of 20 of these products. It's possible for companies to have amazing products that mask how poorly its other products are doing. In this case, the success of the 80 high-demand products erases the losses from the 20 in low demand. But why is XYZ still making those 20 products? What value do they add, if any?
When people think of adding value, they typically think of "more products" or "increased profit." But that thinking doesn't always work; more doesn't always mean better.
Developing more products (or creating new services) means more work for employees, which increases costs. Those additional costs have to be worthwhile. Business leaders must know which products add the most value and how that value can be optimized. A company can subtract 20 low-performing products and invest the resources that had been devoted to them elsewhere—for instance, by having employees improve a different product so that it brings added value to the consumer.
An illustrative example is Apple Inc., worth roughly $750 billion. The company provides a free support service for its iPhone clients. Would the iPhone be as popular today if this service hadn't been provided over the years? My guess is no. While it is unlikely that the support team increases profit directly, it surely does so indirectly—by generating repeat customers, building customer awareness of other Apple products, etc. Customers who buy Apple's top products deem the company's support service essential, making it an indispensable value-driver.
Subtraction can paradoxically add value as long as the equation results in higher value. HR professionals proficient in Business Acumen and Critical Evaluation know this. An HR professional skilled in these competencies can steer the company to a philosophy that is valuable because it is linked to outcomes: "How might we optimize our value addition?"
Use your inner researcher to ask the right questions and interpret your organization's data. Understand the organization's business operations and functions, and keep an eye on the external environment. When you make recommendations that contribute to the organization's strategic plan, you highlight application of the Business Acumen and Critical Evaluation competencies. Your recommendation may be an addition or a subtraction—either way, it is made with intention.
Here are some examples for adding value with subtraction, across your organization or within your own HR work:
Lindsay Northon, M.A., SHRM-SCP (@SHRMLindsay), is HR competencies specialist at SHRM.
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