Penny Wise and Pound Foolish
Organizations tend to cut their leadership development initiatives in order to “save” expense dollars. Words matter. Save means “keep and store up for future use; preserved by not spending or using it,” and invest means “expend money with the expectation of achieving a profit or material result.”
In March 2015, Bill Gates delivered a TED Talk, where he seemed to predict the global pandemic, COVID-19. Nearly everything he talked about during that video became a reality in 2020. During the presentation, Gates talked about the kinds of investment it would take to respond appropriately. In 2015, Gates did not know exactly how much of an investment it would be, but he did predict the global economy would take a $3.3 trillion hit. This might be the only part of his TED Talk he miscalculated. The overall global economic impact of COVID-19 far exceeded $3.3 trillion.
The 2020 virus pandemic provides an extreme example of the need for visionary leadership. In September 2018, the Global Preparedness Monitoring Board warned that the world was threatened and desperately unprepared for a fast-moving pandemic caused by a lethal respiratory pathogen. In fact, they predicted exactly what happened. While Bill Gates may not have known the exact amount of money needed to invest in 2015, in 2018, the Global Preparedness Monitoring Board came closer. The Board believed an $8 billion investment was required to manufacture vaccines, drugs, and better diagnostics.
To be sure, $8 billion is a lot of money to be proactively invested without actually seeing the threat. However, the actual definition of investment uses the word “expectation.”
Investing means you have an expectation of achieving a result.
It may be decades before the actual cost of COVID-19 is finally known. However, if you only consider Gates’s $3.3 trillion estimate, an $8 billion proactive investment would have been only .0024, or less than 3/10 of 1%.
Obviously, in hindsight, an $8 billion proactive investment appears to be a no-brainer at this point. What organizations need to consider, using this as an extreme example, is that the global pandemic WAS predictable, and in fact, WAS predicted. Part of these predictions involved the request for proactive investment.
Bill Gates and the Global Preparedness Monitoring Board did not think being prepared was an expense. Nor did they think it was gambling. They felt it was a certainty. Therefore, they called for an investment.
This is obviously an extreme example of the need to lead and commit to important investments. When it comes to proactive investment, many organizations believe that time is on their side and that worst-case scenarios never really happen. Visionary leaders are exactly that — visionary. Visionary leaders say things and do things that others can’t or won’t.
One of the first things I will challenge you to accept is that leadership development is an investment and not an expense. Time and again, we see organizations cut back on leadership development at the slightest hint of any downturn. This is like firing your best producer to save money. There is a major difference between saving money and investing money.
When organizations are quick to cut expense dollars around leadership development, they are sending an unintended message. It becomes quite clear across the organization that leadership development is nonessential. Cutting leadership development sends a clear message that reproducing leadership does not carry the same weight as reproducing other critical strategic elements.
In difficult economic times, people do not cut expenses that drive revenue and profits. They do not cut strategic items that perpetuate the business and reproduce positive results. Leadership needs to be looked at in this same light. Investing in leadership perpetuates the business, and it reproduces a critical skill set required to drive desired results.
Adapted from Buddy’s best-selling book, The Leadership Decade: A Playbook For An Extraordinary Era.
Check out Buddy’s interview on The Leadership and Loyalty Podcast:
