Investor-operator and investor-financier: the distinction

There are not only small organizations that are managed by investor-operators, recalls Rhéal Desjardins. Ben & Jerry’s (Unilever) is one example. (Photo: Chuttersnap for Unsplash)

GUEST BLOG. It is particularly important to have already made you aware of a first attribute of the type “softAssociated with my definition of productivity, because this one covers the other five that I will present to you in the next post. So, to begin with, how do you distinguish an investor-operator from an investor-financier?

As we say back home, “to put it simply”, an investor-operator is passionate about the product or the service he offers to his clients. Its objective is to do everything in its power to achieve the “purpose», or the goal of its organization, this “purpose» also consisting in improving over time its product and / or its service and the money it generates is only one proof (which is very important) that the “purpose», or the goal, becomes a business model.

The investor-operator, unlike the investor-financier, does not confuse goal and proof. Here are some examples of investor-operators. He was a baker who had worked for a number of bakeries for many years and who started his own bakery by financing it. He is a running enthusiast who once retired starts, and therefore invests, in the organization of an annual marathon. He is an occupational therapist who, after having worked in the health network, starts up and therefore invests in a residence for the elderly. It is an analyst-programmer who starts, and therefore invests, in his own techno firm.

Investor-operators are passionate about their sector of activity as well as driven by a real desire to satisfy the customers associated with it. They obviously want to make money with their business model, but first and foremost they feel a particular interest, or even a vocation, for the “purpose» of their organization. They work for a job and for an organization that they love. They instinctively know that the “purpose» of their organization is synchronized with their vocation, and that the latter is at the service of a customer.

In this context, the profitability of the business model simply becomes proof that their vocation is useful to someone else, it is proof that the “purpose» embodies a business model. I repeat, the investor-operator never confuses goal and proof. When there is no confusion at this level, an organization can succeed in creating an endless mobilization of staff which, pegged to the vocation match, in turn generates endless improvement in productivity as well as long-term growth. I call this type of chain reaction “HR exponent productivity”.

It is not just small organizations that are managed by investor-operators. For example, Toyota, Apple, 3M, Ben & Jerry’s (Unilever), Fanuc, Costco, while being very large, are examples of public organizations that I characterize as investor-operators.

For investors-financiers, it is something else. Their primary goal is to make money and increase shareholders’ equity. They short-circuit and therefore confuse goal and proof. In this context, the latter are obsessed with reducing costs (which produces profitable results, but in the short term) and are more or less attentive to the endless improvement of productivity, the latter approach producing more profitable results. long-term.

Investor-financiers are much less interested in this latter perspective and less interested in safeguarding the “purpose», yet a multitude of studies prove the superiority in terms of profitability of the long-term approach. Among others, studies carried out by McKinsey (McKinsey Global Institute – 2017), Bain & Company (HBR – 2017), Raynor Muntaz (HBR – 2013) and my own experiences over the past thirty years, demonstrate how much the approach of improving productivity is superior in terms of long-term profitability compared to a cost reduction approach.

Another characteristic of the investor-financier is that his definition of productivity boils down to “hard», believing that productivity can be bought and having a penchant for eliminating any dependence on “soft».

Also, this type of investor, unlike investor-operators, is rarely found on the Gemba (the place where the product is transformed and / or the service is created). They are simply not interested in this, as they prefer to manage the Gemba remotely with objectives associated with cost cuts. Their absence from the Gemba corresponds to the fact that investors-financiers know very well that by prioritizing the approach of cost cuts, this makes them very unpopular with the Gemba. Investor-financiers confuse purpose and proof and like to create or even transform a “purpose» machine to make money in the short or medium term.

Laurent Beaudoin of Bombardier, Guy Laliberté of Cirque du Soleil and Serge Arsenault of the Montreal Marathon were investor-operators. As for their successors, I let you judge for yourself. At the end of the investor-financier continuum, there is the investor-activist. The rest in a month.

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