If Only Growth Could Arrive Every January 1st!

Some say, “Don’t follow your passion, follow your talent.” While originally aimed at individuals, this principle is equally applicable to organizations. Today, many companies, particularly private ones, struggle to clearly define their core “talent.” They often lack a fundamental understanding of what truly differentiates them in the marketplace. A company’s talent is the foundation of its existence and competitive advantage. Periodically, organizations should pause and engage in entrepreneurial reflection. Executive teams should revisit the entrepreneurial process their founders undertook, while imagining they are currently in a similar early-stage process, asking themselves: What is the idea being developed? What problem are we solving in the marketplace? Why will customers choose us over others? When it comes to strategy, a company’s core talent must be at the center. Developing a coherent strategic direction is challenging without a clear understanding of what the organization does best. Strategy should leverage a company’s strengths, guiding capital allocation toward initiatives that maximize shareholder value. Companies that lack clarity about their core talent often misallocate resources to projects that fail to deliver expected returns. While some of these investments, “home runs”, may generate short-term gains, they rarely contribute to sustainable value creation and often detract from the company’s core competencies. Trophy investments are often a misstep in this regard. Many organizations, both private and public, engage in acquisitions that appear glamorous and generate buzz but, in reality, often lead to value destruction: diluting margins, weakening balance sheets, and adding unnecessary pressure on management and staff. Had these companies conducted a thorough “what is our core talent?” assessment before executing such transactions, many of these poor investments could have been avoided. Remember, your true talent is not just what you believe you're good at, but what you are actually being paid for. -José Arroyo Sinfonica Founder

For many years, Puerto Rico has had a culture and economy anchored in a “Fixed Income” mentality. The Puerto Rican investor, from the wealthiest to the poorest, has always paid attention to fixed-rate returns (often incentivized by tax programs) more than to returns from capital growth. The financial culture of the country was and possibly still is centered around loans and low risk tolerance. It seems interesting to me to think about how this financial approach has permeated the professional culture of our island, assuming the argument is not the other way around. Today, the private sector in Puerto Rico boasts professionals with extensive technical talent. However, our private companies and society in general appear to lack the necessary competencies that could move us from “Fixed Income” to “Growth.” Our society is short on leadership skills which I associate with the principle of risk. To be a leader, one must step forward before the rest. It requires demonstrating and illuminating uncertain paths while motivating the group with the prospect of future returns. A good leader must delegate while taking the risk that some may not execute as expected, but never subsidizing inefficiency through the relegation of empowerment. Let’s not confuse the leader who is attentive and maintains oversight of important KPIs with a "micro-manager." The "micro-manager" is typically not a leader and, worse yet, does not facilitate growth, does not take risks, and falls into a state of self-importance that even obstructs his or her own development. Much of the of the lack of leadership and consequently lack of growth of our private sector arises from organizational structures anchored in the over-valuation of technical skills, but lacking the development and measurement of "Soft Skills." This culture of little investment and lack of growth mindset aligns with our “Fixed Income” mentality. This does not mean that our private sector is not profitable. On the contrary, our private sector enjoys significant cash flows that generate wealth for its owners. However, that is precisely the problem. The “Fixed Income” mentality, coupled with sufficient recurrent income, stifles the appetite for growth and risk tolerance, hindering investment in talent and leadership development, which might seem like unnecessary “overhead.” Our “Fixed Income” mentality not only affects our private sector. Likewise, we constantly instill in our youth the importance of specific careers, without emphasizing the importance of qualitative skills and the risk/return relationship in everything they do in life. I do not mean to separate one career from another and push riskier paths over others. But there must be a stronger emphasis on educating skills associated with a growth mindset, not just economically, but personally. There is a need to emphasize and teach risk as a key tool for development. In short, I believe that our financial and professional culture, anchored in little risk tolerance and fixated on the concepts of “Fixed Income,” is poison for the development of the leadership skills necessary to drive the growth our island needs. We must break out of that vicious cycle and be the leaders we are not. We need to invest in the development of our people and our children and create a mindset of leadership and growth. Let us take risks to achieve growth and not expect “Fixed Income” to provide it. -José Arroyo Sinfonica Founder