The key is the word “differential” and understanding that investors, operators and advisors need different strengths. The best investors can almost see into the future. The best operators build cultures that make things work like well-rehearsed orchestras. The best advisors enable others, bringing out the best in them.

Strengths

In general, strengths are made up of a combination of innate talent, learned knowledge, practiced skills, hard-won experience tying it all together, and, at the highest, best level, craft-level caring and sensibilities absorbed from apprenticeships with masters over time.

Investor – Operator – Advisor Strengths

Investors

Investors choose how to create and allocate financial resources.

Talent: Their most fundamental innate talent is analysis. They are also helped by being deliberative, responsible, self-assured and innately strategic.

Knowledge and skills: They need to learn about and practice finance at the macro, micro and corporate levels as well as compliance and governance.

Experience: They need to make intelligent investment failures.

Many children’s first business experience is operating a lemonade stand. They get to do all aspects of a business: designing the product, making the lemonade, selling it to others, delivering it to those that purchase it and providing after-purchase services like clean up. Parents can ratchet up the experience from letting the children keep all the revenue, to making them pay for their ingredients (operating costs), to making them pay for the construction (capital costs,) to making them pay rent and interest on the money they borrow (financial costs.)

Companies do similar things to develop their people, putting them in charge of a small, lemonade stand-like investment, business, or client, where failures won’t hurt the overall firm.

The point is to give rising investors a chance to make mistakes they can learn from – what Amy Edmondson describes as “intelligent failures.”

Craft: Knowledge and skills are based on past performance. Experience helps you react in the moment. Predicting the future is the highest level of strength for an investor and is generally absorbed from an implicit or explicit apprenticeship to a master investor who passes on their caring about the nuances of investment and sensibilities to changing conditions.

Operators

Operators design, produce, sell, distribute and serve.

Talent: Their most fundamental innate talent is arranging things. They are also helped by having talents in individualization, learning, responsibility and strategy.

Knowledge and skills: They need to learn about and practice strategy, organization and operations.

Experience: They need to make intelligent management and leadership failures.

Leaders influence. Managers direct. While the distinction does blur, leaders generally do focus on what matters and why while managers focus on how. Both use different forms of influence and direction at different times. But leaders have a bias to influencing by inspiring, enabling and empowering, counseling and co-creating, while managers have a bias to command and control, organizing, coordinating and telling.

Operators’ lemonade stands tend to ratchet up from managing small projects to programs to functions, businesses, groups and enterprises in line with Charan and Drotter’s leadership pipeline.

Craft: Building a sustainable culture is the highest level of strength for an operator and is generally absorbed from an implicit or explicit apprenticeship to a master operator who passes on their caring about the nuances and sensibilities of the behaviors, relationships, attitudes, values and environment that make up a culture.

Advisors

Advisors provide investors and operators frameworks and insights to ratchet up their influence and impact, guiding their decisions, relationships, and behaviors

Talent: Their most fundamental innate talent is empathy. They are also helped by having talents in analytical, intellection, communication and strategy.

Knowledge and skills: They need to learn about and practice interpersonal relations as well as enough financial, strategy, organization and operational knowledge to know what questions to ask the people they are advising.

Experience: They need to make intelligent coaching failures.

Advisors’ lemonade stands tend to ratchet up from one-off, one-time, ad hoc coaching to coaching in the moment, to more deliberate coaching, to discrete assignments, to higher stakes situations, to ongoing relationships.

Craft: Telling truth to power and enabling others are the highest levels of strengths for an advisor and are generally absorbed from an implicit or explicit apprenticeship to a master advisor or coach who passes on their caring about the nuances and sensibilities of the keys to influence and impact.

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