In the last two articles, I have discussed the The Importance of Business Value for Business Owners and how a Business Value focus impacts Strategic Decision Making in Small Businesses. However, some words of caution: Like any approach to strategy, there are potential downsides that need to be considered.

In this article, we delve into the potential pitfalls of overemphasizing value drivers and the importance of finding the right balance.

What Can Go Wrong?

You could probably summarise what can go wrong as too much of a good thing. Most of the issues that arise in applying the business value approach are unintentional. Some are due to poor application by some businesses (and their consultant advisors). The rest is bad press.

Tunnel Vision and the Neglect of Other Critical Aspects of Your Business

I don’t advocate the pursuit of value as an all-consuming pastime for business owners. While I believe concentrating on value drivers is essential in business, don’t become fixated on these elements. Avoid the tunnel vision that can result. Overemphasizing value drivers can lead you to overlook other critical aspects of your business – factors that might be important to you, your employees, and your customers. Factors like work/life balance, sustainability, and job satisfaction.

Neglecting the broader picture could harm the overall health of your business.

Probably the main example of this I have seen is where business owners downplay – or even neglect – the people component in their business. Don’t prioritize processes, metrics, and profit strategies over the well-being of your employees. Engaged and motivated employees are valuable assets that contribute significantly to your business’s overall success. Don’t let your value driver initiative get derailed by pushing your team members to be disengaged.

Short-Term Gain vs. Long-Term Sustainability

The trade-off between profits now and enduring value on the long-run is an essential tension that, at some point, every business owner is likely to face.

Focusing heavily on boosting value drivers might tempt you to pursue short-term gains at the expense of long-term business sustainability. This leads you to make to decisions that prioritise immediate profitability while jeopardising the business’s future. This is strategic myopia. In a squeeze, do you cut marketing spend to ensure profit? Reduce headcount? Stop R&D spend? The short-term wins become long-term liabilities.

Value drivers are often internal factors and decisions you have direct control over, like operational efficiency. Push this too far, and your customers will suffer. The quality of your offering decreases, your customer service slips, customers feel neglected. You know growth in the long term is driven by your ability to meet your customers’ demands and create meaningful relationships. Don’t put your future in jeopardy to hit this month’s targets.

Sometimes, it is the other way around. In an attempt to secure the long-term vision you have for the business, you neglect the realities of cashflow, customer acquisition, and efficiencies today. Striking the right balance between short-term gains and lasting value is a delicate dance that requires careful consideration.

Value Misalignment

A common challenge in applying value drivers is where they misalign with your core values. Blindly following a value driver can create a disconnect with something you hold dear. I have been challenged when working in some Asian countries to balance my desire to grow the business while remaining ethical and true to myself.

An example by way of an anecdote: I am a non-smoker. When discussing a potential business relationship with a business owner in China, he thrust a cigarette into my mouth and said “if you want to do business with me, you need to smoke.” It was a potentially lucrative deal. Very lucrative. I declined the smoke, and told him we wouldn’t be doing business. The price of the deal was too much. I was affronted by his behaviour, and recognised that he was trying to push me around, to get the upper hand. I decided not to play.

I chose my principles over profit. It is not always that easy or straight forward, but it is also not uncommon to be faced with this type of decision in business. And small concessions on your part can result in a large move away from what you believe is important to you.

Misalignment often presents as tension with your employees. This is a good bellwether – if your trusted employees (or even external providers) are telling you not to so something, take heed. Take your blinkers off, consider the situation, and make a deliberate decision.

Prolonged misalignment erodes trust, damages brand reputation, and can lead to long-term consequences that overshadow the short-term gains. Unfortunately, these truths are sometimes only apparent when seen through a rear-view mirror.

Reduced Agility

Overemphasizing current value drivers might make your business less adaptable to unexpected market shifts. Rigidly adhering to any narrow set of drivers could leave your business ill-prepared to pivot when you need to. You can be blindsided when industry trends change or disruptive technologies emerge. You can stifle innovation.

If you prioritize only what you know to be valuable, you might miss out on the next big thing. We also see this when a business relies too heavily on metrics – especially when they are the wrong metrics, or are incomplete. Be careful not to overlook qualitative insights and external market trends.

Flexibility and a broader perspective are crucial to navigate the uncertainties of the business landscape.

The Road to Perfection Leads To Burnout

Obsessively focusing on enhancing your value drivers – aiming for perfection – too often leads to resource drain and burnout. You and your employees push yourselves to the limit, pouring all their energy into optimizing and improving each factor. The toll on mental and physical well-being, coupled with diminishing returns, leads to burnout, which then impacts productivity and creativity.

I strongly advocate for what I refer to as ‘Good Enough.’ I have written a few articles here on the topic as well. For some of those value drivers, your goal should be good enough, not perfection, not to be world class. This is true in most cases, but not all. There will need to be one or two key areas of your business where, strategically, you want to excel, to differentiate, to be the best.

Striking The Right Balance

In my worldview, value drivers play a central and critical role in driving business success. But I also recognise the need to strike the right balance. Overdoing your focus on value drivers can inadvertently lead to tunnel vision, misaligned priorities, and unforeseen risks. To make it work, you need to adopt a holistic approach, integrating value drivers with broader considerations of what is important to you, such as ethical practices, employee satisfaction, and adaptability.

By doing so, entrepreneurs can create a sustainable path to growth—one that enriches not only the bottom line but also the long-term well-being of the business and its stakeholders.