When operating a business, you are constantly striving to cultivate growth. There is a management principle called the Builder/Protector Ratio that exists in different stages of development in every company. Builder/Protector Ratio is an important analytical tool that measures confidence and caution within your company, and allows the leadership team to assess its ability to navigate business growth and help the company achieve its goals.
A Builder mindset creates new ideas, takes on new initiatives, and finds ways to expand the revenue and profitability of the enterprise. A Builder chooses to challenge and improve the way things are done. A Protector mindset is cautious and prefers a slower pace of change. Protectors are risk averse and can be highly suspicious of growth. Both are needed in the right proportion so that growth proceeds with a modicum of caution.
Whenever I think about these two leadership approaches, I recall a 120-employee company I worked with years ago, whose founder wore the CEO hat and the CFO hat at the same time. The company was very successful, but the CEO claimed to want the management team to step up more, come up with more ideas for improvement, and be more involved in decisions. That’s a Builder attitude, of course, as is the case with most CEOs.
The challenge for them was that CFOs tend to fall in the Protector category – they’re numbers driven and always guarding the bottom line. It was interesting that this split-profession CEO tended to listen more closely to their Protector side. The CFO mindset won out more often than not. Instead of a healthy back and forth debate at the highest levels, the CEO tended to quash the very growth initiatives he claimed to want from his leadership team. The team itself took a more Protector-like approach to running their own divisions. This showed up in how decisions were made, who made the decisions, and how involved the managers felt in the day-to-day operations.
When we helped the CEO realize how the Protector-mindset was permeating the company – beginning at the top – they brought in a CFO. The impact was swift and positive. The CEO was able to embrace a Builder attitude, confident that the CFO would be there to apply the brakes when necessary.
With this healthy dichotomy at the highest levels, the company continued to grow for many more years.
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