Archive for the ‘Leadership’ Category
Four Failures from Uncertain Times
The economy may be slowly recovering but those I talk with are still very uncertain about the future. That uncertainty can produce failures that can have devastating results for your organization. If we cannot see the trees because we are focused on the forest, the results can be an unwanted surprise.
I see four areas of failure that have an impact on organization because they are unsure of what the future holds. Looking out into the future trying to predict what actions to take, without keeping focused on the near term, the organization may encounter four key failures:
- Failure to execute
- Failure in focus
- Failure in confidence
- Failure in trust
Failure to execute is an issue during both certain and uncertain times. If the organization cannot translate their strategies into tactics and act on those tactics, the organization will continue to operate on daily activities as they occur (Parkinson’s Law), whether or not they are the correct actions. Execution goes beyond planning and strategizing, it takes a work plan and a willing workforce to implement the plan.
Failure in focus comes from being so concerned with the unknown, that there is a paralysis of the leadership and a shortage of direction. This inability to chart a course and take action is a symptom of an organization that is unwilling to take risk. The enterprise will move forward, but the wasted resources from a lack of direction can take a lasting negative financial impact.
Failure in confidence points to the level of uncertainty experience within the organization. If financial strength is an issue and a lack of focus, then the confidence that the direction will produce the desired results is weak. Without confidence, risk becomes a major issue that cannot be easily overcome. If a lack of confidence lingers, it can have a long term impact on the organizations culture.
Failure in trust causes operating activities to slow and the cost related to wasted resources to rise. Internally this factor shows up on inter-departmental turf wars and office political power plays. Externally the impact is a lack of cooperation, delayed deliveries, incomplete communication and an increased reliance on contractual measurement of performance. The end result is a lack of cooperation and performance.
Look at these four failures as the trees and the level of uncertainty as the forest. Knowing how to see the benefit of focusing on the trees will make the forest of uncertainty much less daunting.
Word Of Mouth Marketing-What?
Obtaining and retaining loyal customers is about developing relationships. Companies spend $millions annually on advertising, hoping to influence the buying habits of their prospective customers.
Advertising does not build relationships, it only hopes to influence the moment and convert those few seconds into a buying decision for a product. Word of Mouth (WOM) is the best and most reliable method of promoting a product.
A Testimonial from one person to another brings with it a level of positive bias and a tested experience. These endorsements or referrals are provided from one trusted person or company to another. It is the trusted relationship that makes the recommendation more credible.
Word of Mouth (WOM) relationship building is growing rapidly due to wider use of social media applications (e.g. blogs, facebook, myspace, twitter). How can your company use a WOM approach to expand your loyal customer base? I am working with an organization that has some new and innovative ways to use this technology to help businesses grow – I will be writing more about this approach next month. To provide a little more introduction and background to WOM, I am offering you a FREE look at an e-book that is the first of a series on how to use digital applications to expand your presence in your market.
Click here for your FREE eBook access: http://wom10.com/Pages/business-tools-book
Entrepreneur or “PermopreneurTM”? Which are you?
Entrepreneurs are heralded by the business community as key contributors to the success of the US Economy; probably one of the most resilient economies in the world (even in a recession). New products, technologies and business ideas are the objectives of millions of aspiring Entrepreneurs throughout the world. Yet, there is an 80% failure rate in the first five years of a new business’s life in the United States. Much has been written about the reasons for such a high failure rate. Let’s consider just one factor – maybe they are not Entrepreneurs at all.
My definition of an Entrepreneur is an individual or group of individuals that take an idea, and develop that idea and manage their business to the point where it becomes sustainable. A sustainable business is an enterprise that can generate cash flow levels that support itself on a going-forward basis. It is no longer depending on investor funding or credit to support its operations. Investors that have believed in an idea, invested in an “Entrepreneur” and eventually saw their investment disappear due to company failure, know exactly what sustainability or the lack of it means to them. More than likely that Entrepreneur may have not been an Entrepreneur at all, they may have been a PermopreneurTM.
What is a “PermopreneurTM”? They are those individuals or groups that take an idea and create a business based on that idea, but are unable to generate enough cash flow to sustain their operation on its own. There are two types of PermopreneursTM; The first type are those that are blessed with the gift of turning ideas into business opportunities, and are very secure in their abilities to know when to turn the business over to professional leaders and operators. They usually employ professional operators to help raise additional funding and direct the company to sustainability. The second type of PermopreneurTM is either intentionally or unintentionally headed toward failure. They are very skilled at convincing investors to finance their idea or technology, skilled employees to join their company, and they believe they can operate their way to sustainability. Unfortunately, they don’t have the leadership ability and operating skills to keep the company from eventual failure. The end result is another failed business with a bewildered promopreneur wondering what happened with a following number of devastated investors and employees. A more sinister version of the PermopreneurTM has no intention of taking the company to sustainability. Their “rush” comes from raising money to support a luxury life-style while they look for the next idea, and the cycle is repeated. They have no intention of taking the company to cash flow sustainability. They know there are plenty of investors that fail to do a proper job of due diligence and are greedy enough to feed the PermopreneurTM ego with lots of opportunities.
I have had experience with Entrepreneurism for many years, having worked with Entrepreneurs and I have held the title myself. I have tremendous respect for those Entrepreneurs and PermopreneursTM that have successful track records for creating sustainable businesses. If you consider yourself an Entrepreneur, it would be worth your time to do a self-evaluation to honestly determine if you have the skills (not just the desire) to direct your business idea all the way to the goal line -cash flow sustainability. If you are not sure, then look for the right time to hand off the company to a skilled leader and operator and consider yourself a successful PermopreneurTM.
Seven Ways a CEO Can Hurt Your Organization
There are organizational leaders that are what I call “empty suits”. They look the part, they sound like they know what they are doing, they have impressive resumes, and yet their track records for organizational results are mediocre at best. Years ago, there was an article (author unknown) that outlined the characteristics of Chief Executive Officers who were unable to help their companies reach set objectives in spite of the positive accolades for their hiring. The article was written to open the eyes of Boards of Directors, who are responsible for hiring and managing CEOs. More recently, much has been written about the less than stellar performance of many CEO’s and the devastating impacts on their companies. I have updated the original article by adding certain characteristics that I have experienced which further defines the seven points. The presence of any one of these seven points should be enough to cause concern to the Board, and any two or more should be enough to cause a Board to take corrective action. I offer up the “Seven ways a CEO can hurt your organization”.
- Poor Leadership
- Lacks the confidence of key personnel
- Hires/retains weak people in key positions or fails to fill key roles
- Fails to grow/retain successor(s)
- Focuses on their personal benefits, not those of the organization
- Poor Vision
- Lacks clear understanding of where business is going
- Lacks focus on organization and priorities
- Is unable to strike key partnership relationships
- Poor Results
- Has major and sustained poor financial performance or missed targets
- Shows major loss of market share or competitive position
- Is unable to forecast timing/nature of recovery events
- Is more concerned with being “politically correct” than attaining measurable results
- Poor Understanding of Business
- Misses key industry trends and changes
- Lacks understanding of fundamental profitability factors
- Cannot crisply define what it takes to win
- Poor Work Habits
- Does not put heart and soul into business
- Sets bad example/role model for others
- Is not viewed in industry as a key player
- Hoards information to increase power base
- Poor Management Style
- Uses the “demand and control” management style
- Allows top management infighting, not working as a team
- Demonstrates unpredictable decision processes, leaving organization too scared to act
- Starves key programs but spares sacred cows
- Poor Board Candor/Communication
- Controls flow of information/agenda, preventing focus on or sufficient time for critical issues
- Does not allow ready access to VPs and other key individuals
- Keeps favorite non-strategic programs or perquisites out of board review and approval process
- Loads the Board with special interest persons/cronies
The ROI of Helping Your Competitors
Most organizations believe it is their objective to destroy their competition. Putting the competition out of business means more customers for them. Consider this, there may be a great ROI in helping your competition in time of crisis. I believe the more competition there is actually validates a market. If you’re the only organization in a market, you don’t have a valid market-yet! If you hear of a competitor having a process breakdown or strike that is not effecting you, consider approaching them and offering to help. In most cases, they will not accept, however, it will change the way they view your organization. If they do accept, then do your best to truly help them and the payback will come your way. Who knows, you may be acquiring them next year or visa versa.
The Influence of Cultures
Organizations are like societies, they each have their own culture that has developed over time due to the actions of their personnel (leaders and employees/volunteers). When working to bring about change within an organization, one of the biggest mistakes leaders make is that they discount the impact that the existing culture has on their efforts. I believe “culture clash” is the number one reason for change failure. Knowing how to build a culture that does not impede your organization’s plan for change, you should focus on seven areas. These seven areas are Hiring, Training, Goal Setting and Tracking, Communication, Responsibility, Accountability, and Advancement Opportunities. These areas must be addressed and taken seriously to create an organization and positive culture that is ready to support the organizations change plans.
Don’t Confuse Efforts with Results
Recently I heard a couple of client employees commenting on how hard they are working to be noticed. I could tell by their conversation that they were both trying to position themselves for a favorable performance review and consequently, a raise or promotion. I never once heard them talk about their accomplishments. Effective employees (leadership or workers)work to achieve desired results in the least amount of time. They fight through Murphy’s Law (problems will happen)and they recognize the benefits from knowing how to use Pareto’s Law (80/20 rule)by applying it to their efforts versus the results they achieve. Lets explore this further:
It is important to an individual to be the most effective person they can be, whether in relationships, parenting, associating with friends and co-workers, as a volunteer within a non-profit organization, being an employee, or being an entrepreneur. One very important principle should be kept in mind – “don’t confuse efforts with results”. This may sound like common sense, but it happens to be a situation that is very unfamiliar to many people striving to be more effective. There are many periodicals, articles and books written about time management, which normally comes to mind when a person is asked what they believe “don’t confuse effort with results” really means. Time management can be defined as “a process for making best use of the time available in order to use that time in a desired manner.” Being more effective with the time available often gets lost in the process of daily activities. In the past 50 years, the average work week in the United States has been declining from the previous 50-year period. The cause of this decline is brought about by governmental intervention over the number of hours one can work without receiving overtime, and the advancement of the industrial and technological ages. No longer are a majority of Americans working from dawn to dark to earn a wage. Evidence of this reduction in the work week is the growing industries that now cater to people’s spare time, such as hobbies, recreation, entertainment and hospitality.
Time is precious. What’s new about that and what does that have to do with “don’t confuse efforts with results”? It has little to do with the actual time available and more to do with what is done with the time available. “To be effective with the time available” implies that the time is used in a very productive way. Being more productive can mean there is more time for doing fun things: to finish a home improvement project faster, launching of a new company sooner or getting more done in the workplace.
Focusing on what is being accomplished rather than how much time is being spent is the key issue for being more effective. How can understanding this principle make a person more effective? People improve most when they decide to make a change, focus on what it takes to make that change, provide the discipline to follow the steps set before them and then take the necessary action. This assumes a person wants to be more effective!
The next time you encounter a co-worker complaining or (surprise) bragging about the extra hours they are putting into their job or project without increased measurable results, ask yourself, “why are they saying this?” If they are paid by the hour, that may be part of the answer. Parkinson’s Law seems to have evolved within many workplaces through less than motivated employees with no differentiation as to whether or not it is focused on staff or management. Parkinson’s Law states, “work expands to fill the time available.” An interpretation of this law is that a person will make sure that they fill the time allotted to the task even if they can complete it sooner. The person following Parkinson’s Law is not the person searching to be a more productive individual. There are clear signs of organizations that are infected with this Parkinson’s Law cultural disease and following are some of the disease’s symptoms:
- Projects are always completed on schedule, because schedules are always changed to meet the anticipated completion date.
- People work more than the normal work week to meet deadlines.
- People work more than the normal work week in order to impress their leadership that they are strong performers.
- Those performing tasks have a lack of accountability.
- Leadership that focuses more on how things are being done rather than on what is being done.
- Higher levels of headcount than necessary to perform the organization’s mission.
These symptoms reflect many of the attributes of less than productive people and organizations. Parkinson’s Law is able to infect people and organizations because they both respond to activity and not results. Ah ha! There is the code to unlock the secret to the phrase “don’t confuse efforts with results”. The key here is that “results” should drive the person or the organization and not the activities directed to achieve the results. In many situations, the biggest excuse used is that people or organizations are so busy trying to get things done that they cannot actually get things done.
This sounds a little like what comes first, the chicken or the egg? How do you get results without the activities? The answer is that you don’t. The important fact to understand here is that the results are the most important items here, not how hard or how long people are working to achieve those results. If people or organizations hold themselves accountable for getting results, they become more productive. That means getting the task done the first time and on schedule. No extensions, no excuses, no wasted time and no confusion about priorities.
Results-oriented people understand that they should and will be evaluated based on what they contribute to the project or the mission of the organization. In organizations that are infected with the Parkinson’s Law cultural disease, the leadership may not be astute enough to recognize that these results-oriented people even exist. Results-oriented people may even be challenged by peers to back off and quit making everyone else look bad because they are more productive. In some cases, leadership does recognize the results-oriented person and then wrongfully takes advantage of them by redistributing more work from the “infected” employees to the “immune” employees. As a result, the infected people then coast even more. This is not a healthy situation for either side. In this case, one of two things will happen to the results-oriented people. They will either find a way to extricate themselves from this situation by moving on or they will also become infected as a cultural casualty. That would be a shame.
What does one do to become a results-oriented person?
- Decide to make a change.
- Keep desired results in sight at all times.
- Set priorities for key factors that contribute most to desired result.
- Determine resources needed to support priorities.
- Stay focused on priorities.
- Manage activities required to support priorities.
- Strive to exceed results expectations, such as quality and time duration.
There are two other Laws that have an effect on how to become a results-oriented person. First, Finagle’s Law of Dynamic Negatives is usually recited as, “anything that can go wrong, will—at the worst possible moment” and is a corollary to Murphy’s Law, which states that ““if anything can go wrong, it will.”. This law is used by infected people as an excuse for not getting results.
When things go wrong, infected people often give up and decide they cannot get the results they want in the time frame originally planned. Either they either decide that the result was not important enough to pursue and move to a new project, if they are working for themselves; or, they go to leadership and leave the issue with them to resolve. On the other hand, results-oriented people realize that there are going to be problems and these issues have to be addressed. They know that problems are a part of the process of getting results. They do not become paralyzed by these issues. They work through the issues, because the desired results are more important than the effort it takes to achieve them.
Secondly, Pareto’s Law or Principle, also known as the 80-20 Rule, states “80% of the effects come from 20% of the causes” If applied properly in any given situation, Pareto’s Law may be one of the most effective tools for increasing a person’s productivity level and there are no technical gadgets required. Applying Pareto’s Law to any area of life means that time and resources used to generate results are used in a very productive manner. Always remember that the “results” are the target, not just how well we manage the activities. Let’s explore a few examples of applying Pareto’s Law:
- Meetings- 80% of the needed information comes from 20% of the meeting attendees. Shorten the meeting by inviting only the 20%.
- Sales- 80% of all sales come from 20% of the sales force. Redirect the efforts to higher quality hiring and training of the top 20% of the sales force and reduce headcount and expenses.
- Customer Care- 80% of complaints or calls come from 20% of the customers. Implement techniques to address the 20% with less labor-intensive means - email/voicemail, etc.
- Operations- 80% of the problem symptoms are caused by 20% of the actual problem issues. Search for the 20% causes and achieve a multiplier effect for reducing problem symptoms.
- Results- 80% of the results achieved are generated with 20% of the efforts and resources. Evaluate the remaining 80% of efforts and resources and scale back to reduce costs.
Results-oriented people are the stars of any group or organization. They are the leaders in their area of expertise. They are successful entrepreneurs. They are individuals who don’t confuse efforts with results.
Strategic Plan Failure? How to fix it!
There seems to be more evidence that strategic plans are failing. Why is that? Maybe it is due to more organizations finding themselves in survival mode, or perhaps corporation leaders are less certain of the future due to the current shakey nature of the economy. Strategic plans are still critical to any organization, so determining why they fail and what can be done to minimize the risk of such failures is this month’s topic.
Purpose of the Strategic Plan:
The purpose of a Strategic Plan is to establish a broad, long range set of objectives and goals that are specifically focused on the achievement of the organization’s Mission (the reason for their existence). The strategic plan can have a varied planning horizon (short-term, mid-term or long-term) depending on the needs of the enterprise. Many businesses, profit or non-profit, use the terms “objectives and goals” interchangeably, but I think it is important to separate them by using the following definitions;
- Objectives define the high level of WHAT the organization wants to accomplish in support of the Mission Statement during the planning horizon. These are broad high level statements (e.g. Increase market share in the Northwest region.);
- Goals define the lower level targets of WHAT, WHEN and WHERE activities need to take in order to achieve the higher level “objective”. There are one or more goals for each “objective” and they should each be measurable deliverables (e.g. Increase sales in King County by 20% over last period.).
The HOW in achieving Goals is a Tactic and is part of a separate tactical or operating plan supports the strategic plan.
Why Strategic Plans Fail:
The reason why strategic plans are failing is relatively unique to each organization, but my discussions with clients and colleagues have surfaced five common statements that seem to explain strategic plan failure:
1. “We are just too busy!”: The day-to-day operational issues have priority and strategic plans get shelved (probably next to the disaster recovery plan),
2. “We are not big enough yet!”: The leadership was never really committed to the process and desired results,
3. “Our company changed direction!”: The strategic plan was at too low a level, contained more tactics than strategic objectives and goals,
4. “I wasn’t even aware of it!”: The planning process did not involve enough of the workforce to gain their commitment to the plan objectives and goals,
5. “I thought we were on track, but I guess we missed the mark!”: The strategic plan objectives and goals were not reviewed throughout the planning horizon to track progress.
How to fix it:
Solutions to the five reasons for why strategic plans fail don’t require a lot of innovation, but it does take a corporation’s commitment to the strategic planning process. Below are suggestions for renovating the planning process in ways that will help reduce the risk of experiencing one of the above mentioned reasons for failure:
- There must be a top down commitment to the strategic planning process. The leadership must “believe” in the value that strategic planning brings to the enterprise and they must be able to evangelize this commitment to the entire workforce. It is important that this occurs at all levels of the overall operating culture and that a separation is maintained between strategic and tactical planning activities. At a minimum, perform a semi-annual review of the organizational Mission Statement; consider how well the existing strategic objectives support the Mission Statement; and, evaluate the relevance and progress of the existing strategic goals in relation to each of the objectives. If any of the objectives or goals need to be changed, then determine why they need to be changed (maybe a sign of weak strategy in the beginning) and then change them. Do not keep this a secret; communicate the change to all involved in the process.
- Open the strategic planning process to as many levels of the functional organization as possible- not just management. Select representatives from several levels within the operating functions of the corporation, and use them to communicate the strategic planning process and its results to their co-workers. This will improve their commitment to the objectives and goals and provide a rationale for the tactics deployed within these functions. Workforce involvement will improve the likelihood of an overall successful strategic planning process and will increase the probability for achieving the desired results.
Performance Issues? Look for the Signs-of-Cause
Today’s economic climate may be amplifying unsatisfactory performance. There are usually many reasons for an organization’s sub-par performance. Taking the time to identify the causes can be expedited if you know which signs to look for. Here are a few examples to look for within your organization.
Start at the Top
Any organization is subject to decreasing performance due to the effects of poor economic conditions within their industry. The leadership will show symptoms of the negative situation before the rest of the workforce. In reaction to the downturn, the leadership will often take short term actions that can actually hurt the organizations performance instead of improving it, so look for some of these signs:
- Less access to management,
- Less direction from management/supervisors,
- Reduction in the top-down information flow,
- Common planning activities are halted or curtailed,
- Less collaboration, a more “demand-and-control” approach,
- Giving conflicting direction, and
- Overlooking strategic objectives for short term tactical activities
Leadership should take a careful look at their actions and demeanor while working through the stresses of a unfavorable economic climate, since both situations can impact organizational performance more than expected.
- Workforce morale is low,
- Inventories are building (raw material, in-process, finished goods, rework),
- Expediting costs are increasing,
- Projects are late and/or poor quality (not meeting requirements),
- Lead-times are increasing, and
- Customer complaints are increasing.
A flow of quality and timely information will reduce the risk of reduced performance within any organization. It is true that the information must still be acted upon effectively, but with out it, the activities of the organization are moving forward like “driving a car through the rear view mirror.”
External Providers
Most organizations rely on products and services from outside suppliers, vendors, consultants, and sub-contractors in order to deliver their service or product. The level of outsourcing over the past 20 years has increased significantly in order to keep costs lower. This outsourcing has brought with it a series of new opportunities and challenges when an organization is depending on these outside providers. Some examples of signs of potential issues that can impact your performance are;
- Casual talks that our contract needs to be “revisited” sometime soon,
- Delivery dates begin to slide,
- Changes of personnel on the support team or project,
- Contacts are less accessible,
- Short shipments are more frequent,
- More push-back on requests, and
- More and more promises that issues will improve in the future.
Very few organizations are totally independent of external providers, and those that have partnerships with outside providers, are staking their reputation on that suppliers ability to perform. Your organization may be performing effectively, but your external partners must perform the same in order for your products and services to meet your customer’s expectations. Keeping your eyes and ears open to the signs of what your external partners are doing may give you the advance notice you need to take action to prevent negative impacts to your performance.
The Influences of Organizational Cultures
Organizations are like societies, they each have their own culture that has developed over time due to the actions of their personnel (leaders and employees/volunteers). When working to bring about change within an organization, one of the biggest mistakes leaders make is they discount the impact that the existing culture has on their efforts. I believe “culture clash” is the number one reason for change failure. Knowing how to build a culture that does not impede your organization’s plan for change, requires a focus on seven areas. These seven areas are Hiring, Training, Goal Setting and Tracking, Communication, Responsibility, Accountability, and Advancement Opportunities. These areas must be addressed and taken seriously to create an organization and positive culture that is ready to support the organizations change plans.