Why Amish Businesses Thrive

Statistically, Amish businesses have a survival rate that is almost double other American businesses. Erik Wesner decided to find out why. After years of research and interviews, he has gathered together in Success Made Simple a number of transferable lessons on operating a business. I think it is a critical insight to their success that they don’t get the cart before the horse. Wesner writes, “Amish tend to keep in mind that business is first a means to realize core values, ones which don’t usually come to mind when thinking ‘business prosperity.’”

Jonas Lapp (not his real name) is an Amish home-builder. Wesner says that “Jonas loves what he does. But you can see that it’s less the actual construction of homes or the financial payoff that drive him. Instead, it’s the chance to be a father figure to an employee who never had one, to form a friendship with a ‘customer’ who in the end never even does business with him, to do his small part to strengthen ties in his community.”

In the beginning when he first started his business, Jonas struggled with fear; the fear of it not working out; of failure. The problem with fear Jonas told Wesner, is that when you are operating out of fear, “you’re not establishing relationships. You’re in it for what you can grab today. You’re after as much as you can get.”

Not surprisingly, what grounds Jonas is his faith, operating from the premise that God will take care of him. “Amish lean on faith,” writes Wesner. “It’s a seemingly bottomless source of strength and security. Faith helps them see hope when tragedy strikes. Faith fosters gratitude in the fortunate. It’s a basic element of Amish life and, by extension, their approach to business.” It changes his perception of his role in the business and how it all relates to his life in general.

Jonas neutralizes fear by shifting his focus. “If you’re a servant-leader, that means other people are gonna come first,” he explains. “People have to be very important to you. You’re not in it for the dollar anymore … you’re in it to help people. And the profits? They come.” Wesner adds, "He executes in the day-to-day, while the far-horizon focus frames each decision."

A big part of Amish business thinking that come through in everything is their family oriented approach. “Amish business thinking reflects community….In Amish America, the familial aspect comes preinstalled.” Employees are often regarded as extended family. “The Amish remember that their employee is usually a spouse to someone, and often a parent to a hefty handful—before being a worker.” Jonas Lapp says:

If they’re married … or he has a fiancée or a girlfriend, if that fellow’s important in your business, let their helpmate know, that your husband is doing a wonderful job, and he’s very important in my business.

Humility is practiced and demonstrated in their respect for others. If your goals are important enough for you to pitch in on the unpleasant tasks, then perhaps those goals will be important to your employees too. Again Lapp says, “I think a good boss won’t just stand there and say, ‘Hey, your piece belongs over there’; he’ll say, ‘I’ll help you put it there.’ I think people learn faster if you help them with their part.” Success Made Simple will help you rethink your approach toward business and people. It will encourage you to clarify your values and methodically apply them to everything you do.

Gratitude. Family focus. Looking out for the other guy. When it comes to business, the Amish haven’t reinvented the wheel. One thing Amish excel at is applying certain time-honored principles—hard work, treating people fairly, providing quality goods and services—consistently.

Posted by Michael McKinney at 10:23 PM
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There’s No Such Thing As Mature Companies

We have all been told that businesses have a life cycle. It’s usually broken down as start-up, growth, maturity and decline. But in terms of agility and sustainability, that’s not a helpful way to look at it. If you intend to lead people for the long-term, you need to consider a different outlook.

London Business School professor Don Sull says that the secret to the fountain of youth is: “companies do not pass through life cycles, opportunities do. Most firms, particularly large organizations, oversee a diverse portfolio of opportunities that exist at different stages of the life cycle.”

Even one-hit-wonders can find hidden opportunities if they look hard enough. To view what you are doing through the lens of the business life cycle, tends to make you myopic and limits your thinking. A perspective that emphasizes the opportunity life cycle encourages agility and openness in your thinking.

Sull writes in The Upside of Turbulence, “There are no mature companies, only portfolios overloaded with mature opportunities. Organizations can avoid a corporate midlife crisis through portfolio agility—the ability to quickly and effectively shift resources, including cash, talent, and managerial attention, out of less promising units and into more attractive ones.”

“To achieve portfolio agility,” writes Sull, “leaders should view their organization as an array of opportunities at various stages in the life cycle, paying attention to promising opportunities. The trick then is to keep your opportunities in balance. To that end the following questions are helpful:

• Can the mature opportunities fund all the start-up and scaling activities being undertaken?
• Are there enough or too many early-stage start-ups?
• Is a core business about to enter a period of decline?

While this is directed at organizations, how might you apply this to your own personal life path? How might you keep your personal portfolio in balance and relevant to your world?

Posted by Michael McKinney at 07:49 PM
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Do Your Goals Look Like a Variation of What You’ve Always Done?

We’ve all heard about SMART goals. The idea has been around for about 30 years. SMART goals are Specific, Measureable, Achievable, Realistic, and Timebound. Sounds reasonable. But Mark Murphy thinks they often “act as impediments to, not enablers of, bold action and actually encourage mediocre and poor performance.”

SMART goals seem to say, he contends, “Don’t push beyond our resources; don’t bite off more than you can chew; play it safe and stay within your limitations.” Maybe if we weren’t so focused on making sure our SMART goals were written correctly on our goal-setting forms, we might ask, “Is this goal fundamentally wimpy?”

“Most organizations are pretty good at filling out forms correctly” says Murphy. “What we’re less adept at is making sure the content on those forms is gutsy and challenging enough to result in something great.” Perhaps our SMART goals are beginning to look like more of the same. There is the ever-present pull to keep doing things the way we have been doing them. There’s a feeling of safety there. We like to stick to what’s known. The result is that our goals can look like a variation of what we’ve always done. To be outstanding, to rise above the noise, we need challenging, we need inspiring, we need essential.

To overcome inertia, Murphy recommends we set HARD goals. In Hundred Percenters he describes HARD goals as: Heartfelt, Animated, Required and Difficult. “Every business plan we write represents an opportunity. Every sales presentation, every customer interaction, every budget request, and every financial approval is a chance for us to push ourselves and our employees toward untold greatness.”

HARD goals are:

Heartfelt. Working for something bigger than oneself. “If you want to build a heartfelt higher purpose into your goals … make your goals NOBLE.” (Name a party Other than ourselves who will Benefit from this goal Like customers or End users.)

Animated. One critical reason people don’t get excited about their goals is that “our goals typically sound sterile. When’s the last time you got so jazzed about the thought of hitting your budget target that you actually fantasized about the exact moment you would present the results to the team.” Help people to experience your goal.

Imagine if Martin Luther King, Jr. had stood on the steps of the Lincoln Memorial and said, “Our goal should be that within the next 30 years, the incidents of hate crimes will be reduced by 63% and that the percentage of minorities living below the poverty line will be no higher than the percentage for any other racial group.” Those would be aspirational goals, to be sure. But inspirational? Not so much.

Let’s be thankful he said:

I have a dream that one day on the red hills of Georgia, the sons of former slaves and the sons of former slave owners will be able to sit down together at the table of brotherhood.
I have a dream that my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character.

HARD goals are aspirational. They force us to push through our self-imposed limitations, to focus on something bigger than our own immediate wants, and to solve challenges of vital necessity. HARD goals are also inspirational.

Required. HARD goals do “more than paint a picture of something in the future. It also solves a deep-seated pain. HARD goals aren’t just nice to do, they’re necessary to do.” If you’re going to set a HARD goal, you need to let people know why it is required.

Difficult. It is possible to set a goal that is so difficult that it is demotivating, but that is rarely the issue. How difficult is difficult? Murphy asks two questions: What new skills (if any) will you have to learn to achieve these goals? And Do you think you can accomplish these goals. “If they aren’t learning all sorts of new skills, then your goals are probably not heard enough.…Hard goals are scary and force us to question our abilities. So if your employees knew they could accomplish the goals before they even started, try making [them harder].”

When you announce your HARD goals, you’re going to see visible signs of perspiration and palpitations as folks listen…. Your employees may walk out of the meeting or put down your memo feeling like they just heard a very loud alarm clock. But you can bet every mind is already hard a t work coming up with ideas that meet the challenges ahead.

Posted by Michael McKinney at 08:14 AM
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7 Signs You Might Be In Denial

Nothing is easier than self-deception. For what each man wishes, that he also believes to be true.

—Demosthenes

Business historian Richard S. Tedlow, shares in Denial examples of CEOs who have made mistakes that could and should have been avoided and those that did it right and why. The lessons Tedlow uncovers in these examples provide us with insight into our own flirtation with denial and how we might battle it.

You might be in denial if you think you have all of the information you need. “Power deranges. Powerful people are routinely surrounded by yes-men, but that is not the real problem because they are relatively easy to spot. The real problem is the courtier who is sufficiently clever not to be detected.” Powerful people, Tedlow continues, “don’t really know as much as they may think about their own organization because people stop telling them the truth.”

You might be in denial if you don’t make a point to listen. If people think they won’t be heard they will not speak up. You need to create an open environment where it is safe to say what’s on your mind. Tedlow offers a quick test of your environment: “are the private conversations that follow meetings usually more frank and honest then the public discussions in the meetings themselves?” If so, it’s because everybody is talking about what didn’t (couldn’t) get said.

You might be in denial if you think short-term. You are sticking your head in the sand. Trying to put a Band-Aid on a much larger problem only delays your response to the inevitable. Deal with it now and completely. “Denial is all about you—and how you view the world. Your view does not change the world, the realities of which you will inevitably have to face sooner or later.”

You might be in denial if you talk trash about competitors and individuals. Anna Freud called it “defense by means of ridicule and scorn.” Tedlow writes, “If you find yourself trash-talking your competition take a moment to think about what you’re doing. What am I using this derision to hide—perhaps from myself?”

You might be in denial if you relabel actions rather than changing them. When you don’t like reality, you just change its name. The result as George Orwell said is to “perform the important service of partially concealing your meaning even from yourself.” “Troubled assets aren’t ‘troubled assets.’ They are worthless pieces of junk.”

You might be in denial if you don’t tell the truth. “Denial occurs when we push aside hard truths in favor of more palatable or convenient narratives.” This works two ways: the lies we tell and the lies others tell us. Don’t participate in either.

You might be in denial if you don’t think denial is a problem you face. That of itself is denial. Tedlow cautions, “It can never be completely defeated because we can’t fully know or face the truth about ourselves. It is impossible to be both subject and object.” You need to develop a self-awareness about it. “Denial-avoidance is a life’s work, not an agenda item….If one could simply resolve to wake up tomorrow and unflinchingly confront reality, denial would hardly be the problem that it is….You can’t avoid blind spots when you drive. However, good drivers know those blind spots exist and take them into account when they get behind the wheel. So it should be with denial.”

Some people deny less than others. How can you be one of them?

Posted by Michael McKinney at 11:16 PM
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12 Leadership Guidelines for Leading through Learning in Turbulent Times

In January 2009, founder and chairman of India’s Satyam Computer Services—the “largest publically traded company you’ve never heard of”—Ramalinga Raju confesses to massive accounting fraud and resigns. In a five-page letter to the board, he described the problem saying, “It was like riding a tiger, not knowing how to get off without being eaten.” In an instant, he left behind him, chaos, distrust, and plummeting moral among his more than 53,000 employees. But Riding the Tiger is not about how the Enron-like tragedy occurred, but how a leading through learning strategy calmed the chaos and helped the company recover and rebuild.

Authors and former Satyam employees Pricilla Nelson (Global Director of People Leadership) and Ed Cohen (Chief Learning Officer) share the take-away lessons learned on the road to recovery and renewal. Step one was what they eventually called the “Lights On” strategy. That is “deciding exactly what must be done to keep the business moving and doing only that which is critical to help the organization stabilize.” They describe 6-steps—beginning with hold everything and build an adaptable start-stop-continue plan—based on the two pillars of learning and communication.

Nelson and Cohen write, “Learning is critical for stabilizing the organization, providing guidance to leaders, communicating with employees, and keeping the business open.” Communication is critical. “The leaders who lead out loud—those who maintain transparency, approachability, and integrity—are the ones with whom people want to work, in good times and bad.”

Venkatesh Roddam, Director of VenSat Tech India was the CEO at Satyam BPO (a Satyam subsidiary), reflects on the resilience at Satyam, “To be faced with a crisis the magnitude of what Satyam dealt with and then one year later to be reborn and vibrant in a new avatar speak volumes about the value of a strong leadership culture. This resilience is the result of years of painstakingly implemented leadership strategies.” The authors stress the need for developing leadership guidelines in order to leverage learning and to assist leaders with the complicated people and relationship dimensions of the business. You can use these 12 guidelines as a basis for coaching conversations:

1. Understand that we will never get back to normal: While it is comfortable to want to seek the status quo, “normal” in times of a crisis is constantly changing. Leaders need to move on to seek better ways of doing things, letting these new ways become the new normal.
2. Take care of one another: Listening reduces anxiety. Provide regular updates on what is happening across the organization and expand inclusivity.
3. React…pause…respond: The right response will be made once information gathering, integrity, an open heart, and seeking to understand have been considered.
4. Talk—even when you don’t believe there is much to say: Overcommunication is essential during turbulent times. Consistent and continuous messaging prevents rumors from spreading and demonstrates the leaders’ approachability and transparency.
5. Be visible—now is not the time to play hide-and-seek: People become fearful when the leader goes into hiding. As a leader, be present, inform comfort, and provide strength for others.
6. Maintain integrity and high value morals: Current circumstances should not influence or distort your definition of integrity and other core values.
7. Optimize costs, with retention in mind: Make cost optimization decisions keeping employee retention in mind. This allows leaders to assess risk and make more informed decisions.
8. Be a brand ambassador: The organization needs people who are brand ambassadors. As brand ambassadors, you are responsible for representing the organization both internally and externally in a positive manner. This means you must refrain from making statements that might cause further turbulence.
9. Assess and rebuild trust: Rebuilding an injured organization requires making difficult decisions that not everyone will understand. For this reason, you and other leaders must continuously asses and rebuild trust.
10. Remember, leaders are human, too: Though there will be difficult times during a crisis, as leader, it is important to remain composed.
11. Think like a child: Try to live “in the moment,” not allowing business to consume every moment. Work/life balance can exist, even in a crisis.
12. Take care of your emotional, physical, and spiritual well-being: Don’t put any aspect of your well-being on hold. While change and uncertainty at work are draining, you cannot allow them to take over your life.

The authors say that 87% of businesses fail to recover from devastation such as this because they have “not correctly aligned their priorities for recovery, and more importantly re-growth. Too often the immediate focus is put on salvaging customer relationships and brand identity. The relationship with employees does not receive the same priority. Leaders do not communicate as much as needed leaving them wondering what the future holds for them and their colleagues. This dichotomy results in major turnover, far more than companies in crisis can withstand, and ultimately contribute to their failure.”

Posted by Michael McKinney at 04:00 PM
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The Face Game at Zappos

Tony Hsieh, CEO of Zappos, has made the company culture the number one priority at Zappos. For them, building community is what it is all about. It has become part of their brand. As he writes in Building Happiness, that while some of the things they do have grown organically, there are a few things that have been more purposeful and planned. One way to help build community is an internal game they call, The Face Game. He writes:

In most companies, logging in to the computer systems requires a login and a password. At Zappos, an additional step is required: a photo of a randomly selected employee is displayed, and the user is given a multiple-choice test to name that employee. Afterward, the profile and bio of that employee are shown, so that everyone can learn more about each other. Although there is no penalty for giving the wrong answer, we do keep a record of everyone’s score.

We’re always on the lookout for ways to improve our company culture, no matter how unconventional or counterintuitive the approach may be.

Posted by Michael McKinney at 02:53 PM
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Leading Outside the Lines: Mobilizing the Informal Organization

Right now, the informal elements of your organization are either working for you or against you. Yet for most leaders, say Jon Katzenbach and Zia Khan, authors of Leading Outside the Lines, the informal organization is poorly understood, poorly managed, and often disregarded because it is too hard to think about.

The formal organization has its own way of attracting, selecting, developing, and rewarding people—but it rarely has the power to affect promotion or compensation. Therefore, those who rise to influential positions in the hierarchy are more likely to be more comfortable with and skilled at using the formal organization than the informal….Informal leaders rarely have the kind of explicit qualifications that can be easily documented or communicated, much less evaluated.

The informal organization lies in the human side of the enterprise and as most things that reside there, it is hard. Unlike the formal side with its top-down, rational approach, the informal is fuzzy, constantly changing and hard to measure. So it is understandable that we would like to somehow ignore it or work around it. But, “if you want your entire organization to improvise frequently and energetically in response to fast-moving change, formal management techniques alone won’t get you there. You need help from the informal side as well. Mobilizing the informal organization helps support formal management mechanisms, increasing their chances of success and deepening their long-lasting impact on the organization.”

For leaders, the challenge is to find the balance between the formal and the informal elements of the organization in their particular situation, to achieve concrete, measureable results.

When trying to make a change, our default tactic is to explain “in excruciating detail why the new plan is important.” We think if they get the logic of it, they will get behind it. But they often don’t. People need an emotional connection. Simply formalizing a new set of rules, programs, and structures will not pull the company's culture along. “To that end, leaders need to be able to translate vision, targets, and strategies into personal purpose, accomplishments, and choices that each one of their people can understand and feel good about pursuing.”

The authors make the distinction that while the formal organization is best when dealing with predictable and repeatable work that needs to be done efficiently and without variance, the informal organization is best suited to unpredictable events—surprises that need to be sensed and solved. They add that in many cases, when activity in the informal organization starts to repeat itself, it “is a signal for broader changes that need to be made to the formal organization.” To move beyond “best practices” and the status quo—to get to “best performance”—a leader needs to learn to mobilize the power and plasticity of the informal.

What You Can Do Now

• Identify and understand the key elements of the informal organization (e.g., back channels, shared values, beliefs) that are at work in the organization at all times.
• Know which personal and emotional motivators work (e.g., pride in the work itself). Formal motivators, such as money, can be counterproductive. They can actually undermine the natural pride people take in their work.
• Develop bottom-up and cross-organizational approaches that complement and accelerate hierarchical efforts. “The more admirable enterprises take advantage of three motivational vectors: top down, bottom up, and peer to peer….Motivational leaders invariably treat their subordinates as peers as often as they can.”
• Design meaningful "values" that are tied to specific behaviors and results. And not just values-displayed. But values-driven; values that are “lived, breathed, and drawn upon to guide day-to-day actions and decisions.”
• Enlist employees adept at managing both sides of the organization. They call them “fast zebras.” These are people who absorb information quickly, adapt to sudden challenges, and act constructively.
• Mobilize peer networks and communities to spread knowledge, behaviors, and message. Not manage. “Leaders need to prod the informal organization, to guide or herd it in the right direction without trying to control or constrain it.”

Posted by Michael McKinney at 12:05 PM
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The Little BIG Things

In many ways leadership is about taking an oath of excellence. To a leader, excellence matters. Excellence requires “re-imagining” (to borrow a Peters’ term) your world done excellent. Leaders see things differently and this difference can be taught. Teaching excellence—one behavior at a time—is what The Little Big Things by Tom Peters, is all about.

Some of what you will read in TLBT has been presented on the Tom Peters blog over the years. But for this book, the posts have been edited, revised, organized and conveniently packaged. It’s a compilation of 163 behaviors you can put into practice to achieve excellence in any endeavor. As such, it is not meant to be read straight through. Jump in anywhere it looks interesting. The process here is: read—consider—implement—repeat.

Tom, as we’ve said here before, is good at boiling things down to basics. You’ll find opportunities to pursue excellence in basic insights that produce big results.

Courtesies of a small and trivial character are the ones which strike deepest in the grateful and appreciating heart.

—Henry Clay, American statesman (1777-1852)

Sometimes the little-big-things can seem too “soft” or beneath the demands of business. Tom explains: “Ideas like conscientiously showing appreciation are matchless signs of humanity—and the practice thereof, in my opinion, doubtless makes you a better person, a person behaving decently in a hurried and harried world….Acts of appreciation, to stick with my theme of the moment, are masterful, even peerless, ways of enthusing staff and partner and client alike, and, hence, greasing the way to rapid implementation of damn near anything. That is, ‘Soft is hard’ is wholly pragmatic—and more often than not, effectively implemented, makes the bottom line blossom!”

Excellence has to be challenged into existence. The Little Big Things does just that.

Posted by Michael McKinney at 08:00 AM
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Get to the Why by Starting at the Epicenter

When beginning or introducing anything—an idea, a project, or a new venture—you need to start with asking yourself why. In Rework, authors Jason Fried and David Heinemeier Hansson write candidly about where to begin:

When you start anything new, there are forces pulling you in a variety of directions. There’s stuff you could do, the stuff you want to do, and the stuff you have to do. The stuff you have to do is where you should begin. Start at the epicenter.

For example, if you’re opening a hot dog stand, you could worry about the condiment, the cart, the name, the decoration. But the first thing you should worry about is the hot dog. The hot dogs are the epicenter. Everything else is secondary.

They suggest you begin by asking, “If I took this away, would what I’m selling still exist?” It’s easy to get bogged down in the details and get off on tangents. And while details are important, they can distract you, pulling you in the wrong direction or even derail your idea. They caution: “Getting infatuated with details too early leads to disagreement, meetings, and delays. You get lost in things that don’t really matter. You waste time on decisions that are going to change anyway. So ignore the details—for a while. Nail the basics first and worry about the specifics later.”

Posted by Michael McKinney at 11:31 PM
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The Purpose of Business is to Win Respect

February 22, 2010 The Purpose of Business is to Win Respect by Michael Skapinker, Financial Times In his column, Michael Skapinker asks what is business actually for? He makes the following case for respect: Some are lucky enough to fulfill the highest of Maslow’s needs, self-actualization, at work. All sorts of people find true fulfillment at work – software developers, recording artists, even auditors. But it is a lot to ask from a job. Others, perhaps most people, hope for work that is reasonably interesting, and indulge their true passions – singing, hiking, wine-tasting – on the weekends. The best businesses are good at providing a sense of belonging. But belonging can be transient. Businesses succumb to competition and disappear. Or technological innovation makes them redundant. No doubt the photographic darkroom was a companionable place to work; so was a travel agency. There is less need for them now. I suspect it is Maslow’s second highest need – respect – that people most crave from work: respect not just from their colleagues but from the world … and it gets us closer to what business is for: making profits and serving customers by doing something we can be proud of. You can find the complete article on the Financial Times web site. * * *

Posted by Michael McKinney at 03:02 PM
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5 Global Trends Unfolding Over the Next Decade

In an address by Muhtar Kent, President and CEO, The Coca-Cola Co., he described five global forces that will unfold over the next decade. Although he is focusing on the beverage industry, these are trends that will impact many industries.

1. A powerful shift in the epicenter of global economic growth. By the year 2020, the world’s economic power will radiate from many nations and not just a few. Despite the current economic woes, we’re going to see 20 trillion dollars of global GDP growth created in the next 10 years. Most of this will be in the emerging and developing economies of the world. In the next 10 years, we’re going to see a billion new consumers rise to the middle class.
2. Rapid urbanization as people move to cities for opportunities. Today, the world’s cities are growing by 70 million people each year, and that will continue for at least the next decade. That’s the equivalent of adding a metropolitan area the size of Atlanta to the planet every 30 days for the next 10 years.
3. A world wrestling with energy and resource scarcity. In the coming years, as wealth grows and consumer demand increases, we are going to be faced with constant scarcities and cost pressures. Demand for fuel, food and other commodities will expand significantly. This will have long-term cost implications for all of us. In a world of constant cost pressures, it is essential that we achieve a low-cost structure and that productivity is embedded in everything we do.
4. A reset of consumer attitudes, values and expectations. Consumers worldwide are focused on value. They expect to engage with brands in a dialogue as opposed to a one-way monologue. They do not want to be told what to do. Today's consumers are dictating what they want... how they want it... when they want it... where they want it... and what price they are willing to pay. This is an important trend—and one that threatens to break the traditional distinction between buyer and seller that has been at the cornerstone of modern business and economics.
5. An emerging new era of innovation brought on by these first four trends and fueled by sustainability imperatives. Most new breakthrough innovations over the next decade will spring from a world radiating economic power from multiple sources... from a world with more empowered consumers... and from a world where natural resource scarcity is the norm. New ideas and innovations will originate well beyond the four walls of a company. Innovation will be just as likely to come from customers, suppliers, and consumers. Innovations will be truly global. They will no longer just trickle down from developed to lesser developed nations. They will just as likely originate in emerging nations as well.

How will these trends impact you?

Posted by Michael McKinney at 09:38 AM
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The Right Fight

If you believe that the single most important thing leaders have to get right is alignment, if you think that the leader’s time is best spent promoting teamwork and making sure everyone is on the same page and playing nice, then you might want to take a look at Saj-Nicole Joni and Damon Beyer’s book, The Right Fight.

The book is based on a counterintuitive premise: In an environment where alignment is the only goal, alignment robs us of necessary dissent, of the checks and balances that mitigate risk, and of the tensions that create innovation and sustainable value. In short, you need to systematically orchestrate the right fights but … you need to fight them right.

The Right Fight principle is based on the idea that you learn and grow by the right amount of friction and stress. “A certain amount of healthy struggle is good for organizations and for individuals. Indeed, people and organizations perform optimally when they are under the right kinds and amounts of stress.” They add, “With alignment and properly managed tension, organizations hit a sweet spot and start realizing their potential.”

Citing a studies by Theresa Wellbourne of eePulse, the single greatest predictor of poor performance is when employees are happy or complacent and thus unmotivated to change. The second greatest predictor is when employees are overwhelmed. Both groups exhibit a low level of energy. They conclude that, “Tension in the right measure creates the emotional energy people need to change.” The trick for leaders is to avoid these extremes. “Knowing where and when to use tension is critical. Knowing how to work through the tension is equally important.”

They lay out three principles that identify right fights and three more principles that clarify the rules of engagement. The first three Right Fight Principles will help you in identifying and eliminating destructive tensions:

Right Fight Principle #1: Make it Worth Fighting About. Make it Material. “A right fight has to create significant value, require integration of multiple perspectives, and change the way work gets done in an organization. In short, a material fight is worth the trouble.”

Right Fight Principle #2: Focus in the Future, Not the Past. “Obsession with past performance, or intense interest in decisions made months or even years before, is a dead giveaway that your organization is stuck in a wrong fight.”

Right Fight Principle #3: Pursue a Noble Purpose. “Right fights connect people with a sense of purpose that goes beyond their own self-interest, unleashing profound collective abilities to create in ways they didn’t think possible.”

The final Right Fight Principles guide you in fighting right fights right:

Right Fight Principle #4: Make it Sport, Not War. “Right fights, like sports, have to have rules. One of the key tasks for leadership in a right fight is to define the parameters so everyone involved understands how to participate and what it takes to win.”

Right Fight Principle #5: Structure Formally but Work Informally. “You need to structure right fights through the ‘formal organization,’ but work out the tensions created by those fights through the ‘informal organization.’”

Right Fight Principle #6: Turn Pain into Gain. “There is a fine line between productive tension and destructive distress, and no two people draw that line in exactly the same place. For right fights to be fought right, leaders need to make sure no one is put under unbearable pressure. Turning pain into gain requires leaders to relate to their team members as individuals and to figure out what creates synergy, stretches skills, and honors outcomes for each of them.”

There are case studies to illustrate each of these principles in action. It’s easy to see the negative side of tension: focusing on the past, stigmatizing the losers, fighting over turf. “But without tension, nothing moves.” Tension creates an opportunity for leaders to help their organizations fight the right fight.

Of Related Interest:
  Focus on the War, Not the Battle
  A Pyrrhic Victory

Posted by Michael McKinney at 08:57 AM
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What Kind of Leadership Will Work in 2010?

The Work Foundation, a British think-tank, released a reaffirming report on the principles of outstanding leadership. They concluded that outstanding leaders do three things:

1. They think and act systemically: they see things as a whole rather than compartmentalising. They connect the parts by a guiding sense of purpose.
2. They see people as the route to performance: they are deeply people and relationship centered rather than just people-oriented. They not only like and care about people, but have come to understand at a deep level that the capability and engagement of people is how they achieve exceptional performance.
3. They are self-confident without being arrogant: self-awareness is one of their fundamental attributes. They are highly motivated to achieve excellence and are focused on organisational outcomes, vision and purpose. But they understand they cannot create performance themselves. Rather, they are conduits to performance through their influence on others. The key tool they have to do this is not systems and processes, but themselves and the ways they interact with and impact on those around them. This sense of self is not ego-driven. It is to serve a goal, creating a combination of humility and self-confidence. This is why they watch themselves carefully and act consistently to achieve excellence through their interactions and through their embodiment of the leadership role.

While these studies are helpful in defining what leaders need to aspire to, what is not so easy is converting these values into daily practice. In another fine article in the Financial Times by Stefan Stern, he offers the conclusions of a study by Rob Goffee and Gareth Jones. In Leaders Must Live Up to Their Promises, he writes, “Mr Goffee and Mr Jones concluded – after speaking to followers, i.e. lower-ranking employees rather than leaders – that the best leaders brought four things to their organisations: a sense of community, a sense that the work is significant, a sense of excitement (or fun), and authenticity (meaning that the personality and behaviour of the leader is consistent and credible).

“Not too many leaders can place a tick by all four of these requirements. Cynical or disillusioned leaders will just add that list to the pile of other leadership theories, which have urged them to become “servant leaders”, “coaches”, “player managers”, and so on. Meanwhile, the disillusionment and dissatisfaction of those who are led grows. And we do not seem much nearer to establishing a clearer idea of what sort of leadership will work in the cynical and confused world of 2010.”

He adds this closing anecdote:

During the British general election of 1959, the journalist Geoffrey Goodman spent the campaign following the deputy leader of the Labour party, Aneurin Bevan, around the country. He made a record of Bevan’s many memorable speeches. One quotation in particular stands out. Contemplating the world’s increasingly interlinked problems, and the leadership that was on offer to deal with them, Bevan summed up what he saw in these terms: “Smaller and smaller men, strutting across narrower and narrower stages.”

Timidity and smallness in our leaders is nothing new. It has to be exposed and challenged, generation after generation. Even while we secretly hope for powerful new leaders to emerge.

In another highlight from the Work Foundation study, they made this observation about the process of becoming an outstanding leader:

Becoming an outstanding leader is likely to depend a great deal on maturity, self-awareness and self-development within the job. Some of the outstanding leaders featured in the research did not originally have a people-focused approach, but realised the impact they were having on people and therefore adjusted their style accordingly. They arrived at this point through experience, maturity and reflection. They had a very sophisticated understanding of cause and effect and how their actions can dramatically affect outcomes.

I would suggest that “maturity, self-awareness and self-development” will help us to adjust our leadership to the context we now find ourselves working within.

Posted by Michael McKinney at 09:09 AM
Permalink | Comments (1) | TrackBacks (0) | General Business , Leadership Development

Building a Community of High Commitment and High Performance

If the leaders of the financial institutions implicated in the economic crisis had had the aspirations, the higher moral purpose, or the savvy to build resilient organizations capable of sustained advantage, could we have avoided the financial crisis? Harvard’s Michael Beer thinks so. Leaders of high commitment, high performance organizations (HCHP) make principled choices. He argues in High commitment, High Performance, “These choices begin with their definition of firm purpose—a desire to make a positive contribution to customers, employees, and society.” If a leader’s “primary goal is to acquire money and power, building an HCHP organization will be beyond their reach.”

To build enduring HCHP organizations, leaders must stick to the firm’s why: purpose and guiding values, strategy, risk profile, and basis for motivating, organizing, and managing people. “In times of crisis, when capital markets may demand expedient decisions that could take the firm off the HCHP path, commitment to principles enables CEOs to go against conventional wisdom in decisions about strategy, debt, growth rate, acquisitions, and layoffs.”

These circumstances often create conflicting demands between people and profits that leaders must learn to integrate. This does not call for heroic leaders—single-minded and single-handed leaders—but leaders who are willing to listen and engage others in a collective action learning process. In a crisis we often look for saviors, but instead, writes Ron Heifetz in Leadership Without Easy Answers, “we should be calling for leadership that will challenge us to face problems for which there are no simple, painless solutions.”

Heroic leadership isn’t about listening or collective learning. “Most important,” writes Beer, “heroic leadership fails to perform the central function of leadership—engaging employees authentically in a process of organizational learning and development from which they as leaders also learn.” Leading the creation of a HCHP organization is “not about aligning the company with the leader’s ideas. It is about enabling leaders and their people to learn together about the problems they face and the actions they must take.”

Surviving and thriving in this crucible of conflicting demands is no easy task. It requires that leaders strengthen and develop their internal resources. They must learn to enter the fundamental state of leadership when faced with challenges—a state that demands that they dig deep into their values and purpose. That fundamental state of leadership requires leaders to move from comfort with activities to focus on results, from self-absorption to commitment to mission and higher purpose, from focus on self to focus on others, from being internally closed to being externally open, and from hiding the truth to embracing the truth.

Incidentally, it will not come as a surprise to readers of the Leading Blog, that generally, underperforming companies have not developed leaders throughout their organizations. Beer suggests that this is because “most managers had come up through their home function, business unit, or region, and never acquired the broader general management perspective needed to understand and manage cross-boundary activities….In many of the companies, ineffective senior teams did not spend time developing common values and perspective about what constituted good leadership.” Again, the primary responsibility to learn to lead from where you are lies with you.

Posted by Michael McKinney at 12:02 AM
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Thriving In the New Economy

We have been going through the worst economy in three generations. It has been a defining moment for many leaders. While many of us have been focused on surviving, there have been those leaders that have thrived in this economy; leaders who have taken advantage of this changing economy and have found opportunities amid the uncertainty.

Lori Ann LaRocco, Senior Talent Producer at CNBC and a producer of the show Squawk Box, was in a position to ask some of the best minds in business today how they are responding this economic environment, how they are defying failure and what opportunities do they see?

As a result, LaRocco has assembled 23 insightful essays in Thriving In the New Economy. In their own words, they shed light on how they view the crisis, what they did as a result, and what they plan to do. It makes for a compelling read to gain a window on these leaders' different but similar viewpoints and approaches.

The essays are divided into five sections: the economy, banking, real estate, autos, and retail. You will read personal accounts from people like economists Larry Lindsey and David Malpass; Wall Street legends Jack Bogle, Bob Doll, Abby Joseph Cohen, Ron Baron and Peter Cohen; bankers Kelly King, and Donald Powell; real estate executives Don Peebles Richard LeFrak, and Ron Peltier; and from the auto and retail industries Jim Lentz and Steve Sadove.

Larry Lindsey, CEO of The Lindsey Group shares this on the function of leadership: “Most institutions prefer managers who will serve the needs of an existing institution—that is, who will follow the wishes of the various constituencies within the institution—rather than managers who will lead the institution to a new place."

“Our political process is dominated by leaders who tell us what they think we want to hear, thereby effectively following the polls and the media and not necessarily leading the country…. But that type of leadership by itself can actually be a handicap for a society dealing with a financial or economic catastrophe. To be precise, financial crises throughout history have developed when excesses went unchecked. Like the over-leveraging of risk in our capital system. All these manias, panics, and bubbles have the same characteristic: the absence of real leadership that takes a contrarian perspective.”

At Forbes, Steve Forbes says, “Essentially, we learned that in a down economy you have to both tighten your belt and plant seeds for the future, which is tough to do.”

Peter Cohen founder of the $7.5 billion alternative asset management company Ramius, says you have to remain open and pay attention. “What I do know,” Cohen writes, “is you have to show up every day at work; you have to be there every day to find opportunity. You have to be constantly alert to what the possibilities are. Good ideas are all around all the time, if you’re paying attention.” He continues:

I’ll take information wherever I get it and run it down. Winning is all about showing up. I know a lot of people who say they don’t want to go to work and claim to have nothing to do there. That’s not true. There is always something to do at work—always. That is a philosophy that I follow, and that we follow. And while I think we’re in for a really difficult time ahead, I’m really excited that there’ll be some great opportunities that will come out of it.

Luck must play a part in all of this too. Thriving in the New Economy has no chapter 11. LaRocco says that when she began to assign chapters in the book, a lot of the authors asked her not to put them in “Chapter 11.”

You can read (PDF) the contribution by Wilbur Ross on how he analyzes a crisis and how he chooses to invest.

Posted by Michael McKinney at 06:11 PM
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Business Reputation Isn’t Just About Business

Peter Firestein makes the claim that “reputation is the strongest determinant of any corporation’s sustainability.” It determines value and relationships.

The corporate landscape has changed. Corporations don’t exist in a social vacuum. In Crisis in Character, Firestein writes, “the individuals who run significant companies hold much more than the companies themselves in their hands. Their influence extends to where the children of their employees can go to college, and whether the communities that surround them survive.”

People look to corporations as they look to their politicians. They want corporations to reflect their own values. As a consequence, the question arises: Why should the conduct expected of corporations and individuals differ from each other? Why should we not hold both to the same standards? A corporation’s strong social identity can cast its light across products and services, and onto the attitudes of investors, legislators, regulators, and prospective business partners.

All of this adds up to a greater reputation risk. Reputation goes deeper than a corporate press release. It’s embodied in the system and the people who run it. To help companies achieve a balance between their internal realities and the demands of investors and society, Firestein developed a set of seven strategies that are of immediate use:

• Establish Core Values, and Reputation Will Follow
• See Yourself through Stakeholders’ Eyes: Market Intelligence and the Art of the Perception Study
• Define Your Company’s Landscape: The Power of Stakeholder Mapping
• Build Your Reputation from the Inside Out: Become the Company You Want the World to See
• Tell Your Corporate Story: Engagement and the Communications of Convergence
• Prepare for Crisis: How the CEO Saves the Company Every Day
• The Governance Imperative: Oversight, Informing the Board, and Compliance

As reputations are built over time, it’s not surprising that it is lost “in all the sins of commission and omission that lead up to a reputation-threatening event.” Building a reputation is a daily job. A CEO should expect a crisis and prepare for it by having a response plan. The solution to a reputation problem doesn’t lie in PR and corporate communications.

The CEO must foster a company whose characteristics are such that its influencers assume both its good intentions and its fundamental ethics in all circumstances. Should a crisis occur, that company receives the benefit of the doubt during the crucial time it takes to investigate the oil spill, the factory explosion, or the defective product. It will already have earned the chance to tell its story before the adverse event takes place. That’s the most important characteristic of a good reputation. The history of corporate failings is laden with tales of companies that have arrived completely unprepared at moments of crisis.

When did Noah build the ark?

Before the rain.

Posted by Michael McKinney at 09:06 AM
Permalink | Comments (4) | TrackBacks (0) | Ethics , General Business

The One Question You Should Ask Now

Why?

WHY gets to the cause of things. The answer is your purpose or belief. It explains why you get up in the morning, why should I follow you, why should I buy from you.

Your why is what inspires people. It gives clarity. Everything you do—your HOWs and WHATs—flows from your WHY.

Why is vital to leaders. It inspires action through inspiration instead of manipulation. Simon Sinek, author of Start With Why, says, “To lead requires those who willingly follow. It requires those who believe in something bigger than a single issue.” He distinguishes between leaders in name and those who actually lead. The difference is the why. It is possible to motivate people by external factors like a tempting promotion or fear. General Motors, for the last 70 years, has been the leader in their industry, but for the most part, did not lead. Sinek explains:

Great leaders, in contrast, are able to inspire people to act. Those who are able to inspire give people a sense of purpose or belonging that has little to do with any external incentive or benefit to be gained…. Those who are able to inspire will create a following of people—supporters, voters, customers, workers—who act for the good of the whole not because they have to, but because they want to.

“People don’t buy WHAT you do, they buy WHY you do it.” The problem says Simon Sinek, “is most businesses today are making decisions based on a set of incomplete or, worse, completely flawed assumptions about what’s driving their business.” They don’t know or have forgotten the why. Whys are hard to communicate. It’s easier to talk about what you do or how you do it. So we focus on the whats and the hows and over time, the why can get lost.

In Start With Why he introduces the Golden Circle to explain loyalty and how to create enough momentum to turn an idea into a social movement. It begins from the inside out. It starts with why.

WHATs are easy to identify. They are your products and services. HOWs are the ways you do what you do. They differentiate you. WHYs tell people why they should care. Most organizations usually communicate from the outside in—the clearest to the fuzziest. “We say WHAT we do, we sometimes say HOW we do it, but we rarely say WHY we do WHAT we do. But not the inspired companies. Not the inspired leaders. Every single one of them, regardless of their size or their industry, thinks, acts and communicates from the inside out.”

"All great leaders have charisma because all great leaders have clarity of WHY; an undying belief in a purpose or cause bigger than themselves."

Begin your year by asking WHY. Then communicate it through everything you do. Let WHY be the inspiration to your Hows and Whats. “Achievement comes,” says Sinek, “when you pursue and attain WHAT you want. Success comes when you are clear in pursuit of WHY you want it.”

Posted by Michael McKinney at 03:02 PM
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Is Business Just About Making Money?

We’ve all heard, “The business of business is making money. If you don't make money, you won't stay in business for long. If you don't have it you can't give it.”

The question for business is: “Can you ever care about anything other than profits?”

How to be profitable and socially responsible is not always self-evident. Daylian Cain, a professor at Yale School of Management who specializes in conflict of interest issues says that “acting on your values in the workplace can be more complex than it seems.”

Alina Dizik interviewed Cain for the WSJ article, Teaching the Golden Rules. Mr. Cain teaches a course called, “Business Ethics Meets Behavioral Economics” at Yale. He says, “Mixing behavioral economics with these kinds of corporate responsibility issues is an emerging trend. We don’t want to merely say lying is wrong; we are not trying to change people’s values from evil to good. Behavioral economics is such a great tool because it shows how people make bad decisions and separate their actions from their values. [Once they see this] we can show students all the ways they will fail even by their own standards.”

Realities of the marketplace often clash with social responsibility. It costs money to do more than look after the bottom line—to do the right thing for employees, the local community and society at large.

As consumers, we demand lower prices. We don’t want to pay any more than we have to. If we can buy a product for half the price of a similar product, we usually do. But what if that behavior drives the socially responsible business out of the marketplace?

Just because we can squeeze out another dollar, should we? By acting in our own "best interest" are we bankrupting socially responsible efforts? Are we willing to pay the price for social responsibility?

Social responsibility is a two way street. Quite often we look to business (and government) to solve our most pressing issues, but the issues we face are bigger than that. If we merely point a finger at business without taking a look at our own responsibilities as consumers, the social and environmental reform we seek will be impossible.

Professor Ray Fisman of Columbia Business School remarked, "There is no shortage of inspiring examples of companies who have made money and done good for the world, but I wouldn't want to frame it as a generalized principle. There are also companies that have made enormous sums of money by not doing good. I think suggesting that good citizenship is always a win-win can be dangerously misleading."

Most businesses and consumers want to do the right thing. But our commitment is really put to the test when it costs us something. Principles consistently applied over time are the ones we really care about. Cain said “A lot of students have mixed feelings about the purpose of business. [They wonder if it’s] really only to make a profit. One of my jobs is to provide a safe space for sharing those views. One of the challenges is not merely to educate about these problems but to try to change behavior.” Social responsibility, he says, “is about doing good because it’s the right thing.”

Social responsibility is more complex than just pointing a finger and saying, “Clean it up.” Although we don’t like it anymore, we have what we wanted. The question is: are we willing to pay the price—in terms of money, time, attitudes, habits and beliefs—to get the kind of world we now seek?

Posted by Michael McKinney at 12:36 AM
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Warren Buffett on Business

Richard Conners has done us a service by creating a collection of Warren Buffett’s writing and thoughts over the last 40 years. Warren Buffett on Business is a selection Berkshire Hathaway letters written over the last 40 years and the occasional Buffett interview or comment. Conners has categorized these into 18 topics like corporate culture, executive compensation, executive behavior, risk management, mistakes I’ve made, and humor and stories.

Conners, who teaches a course on Warren Buffett at Washington University in St. Louis says Buffett’s “genius is in his character. His integrity is unsurpassed. His patience, discipline, and rationality are extraordinary.” Here are a few business principles in Buffett’s own words:

It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.

* * *
I think we have a very good culture virtually everyplace in Berkshire. I hope it’s everyplace. This is what we are looking for, and it’s more a question of culture than controls. If you have a good culture, I think you can make the rules pretty simple.

* * *
An observer might conclude from our hiring practices that Charlie and I were traumatized early in life by an EEOC bulletin on age discrimination. The real explanation, however, is self-interest: It’s difficult to teach a new dog old tricks. The many Berkshire managers who are past 70 hit home runs today at the same pace that long ago gave them reputations as young slugging sensations. Therefore, to get a job with us, just employ the tactic of the 76-year-old who persuaded a dazzling beauty of 25 to marry him. “How did you ever get her to accept?” asked his envious contemporaries. The comeback: “I told her I was 86.”

* * *
We cherish cost-consciousness at Berkshire. Our model is the widow who went to the local newspaper to place an obituary notice. Told there was a 25-cent-a-word charge, she requested “Fred Brown died.” She was then informed there was a seven-word minimum. “Okay” the bereaved woman replied, “make it ‘Fred Brown died, golf clubs for sale.’”

* * *
I’ve said many times that when a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact. I just wish I hadn’t been so energetic in creating examples. My behavior has matched that admitted by Mae West: “I was Snow White, but I drifted.”

* * *
My most surprising discovery: the overwhelming importance in business of an unforeseen force that we might call “the institutional imperative.”… I thought…that decent, intelligent, and experienced managers would automatically make rational business decisions. But I learned over time that isn’t so….For example:

1. As if governed by Newton’s First Law of Motion, an institution will resist any change in its current direction
2. Just as work expands to fill available time, corporate projects or acquisitions will materialize to soak up available funds
3. Any business craving of the leader, however foolish, will be quickly supported by detailed rate-of-return and strategic studies prepared by his troops; and
4. The behavior of peer companies, whether they are expanding, acquiring, setting executive compensation or whatever, will be mindlessly imitated.

Institutional dynamics, not venality or stupidity, set businesses on these courses, which are too often misguided.

* * *
It’s no sin to miss a great opportunity outside one’s area of competence.

* * *
I tell students to do work for an organization you admire or an individual you admire, which usually means that most MBAs I meet become self-employed.

Posted by Michael McKinney at 07:36 AM
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Lead Your Boss

A can-do person himself, Theodore Roosevelt once advised, “Do what you can, with what you have, where you are.”

Roosevelt’s admonition is easier said than done. Most of us are not in a position to implement sweeping change by the wave of our hand. And some of us are in a counterproductive culture where sticking your head up is a good way to get it knocked off. But we can learn to do what we can, with what we have, from where we are.

It means that we must learn the art of leading from the middle—from among rather than from in front. And if we are honest, in most contexts, we find ourselves leading from the middle. (CEOs included) We are trying to influence the people around us, above us and below us. So learning to appropriately and effectively lead in this way, will impact our success in most areas of life.

John Baldoni has written a primer on leading from the middle with Lead Your Boss: The Subtle Art of Managing Up. What I appreciate about his writing is that it is down-to-earth, nuts-and-bolts, and easy to connect with. He is aware of the fact that it is not easy and can be fraught with peril. He writes,

Those who lead from the middle are those who think big picture and can do what it takes to get things done so their bosses and their teams succeed….Those who succeed at leading from the middle also are artful and adept managers.

Not so easy to do, but it is possible when you rethink and reframe what you want to accomplish and how you want to do it. That is, you are not acting for yourself, but you are acting for the good of the organization. This requires initiative, persuasion, influence, and persistence and no small amount of passion.

Baldoni says that leading up begins with answering three questions:

1. What does the leader need?
2. What does the team need?
3. What can I do to help the leader and the team succeed?

As he suggests, this is a selfless act that speaks to the heart of leadership. It requires people who can think for themselves and take the initiative to make things happen. Answering the three questions, taking the initiative and making it happen is the trick and is the focus of the rest of the book.

Lead Your Boss walks you through every critical step of leading up. It provides instruction for overcoming those inevitable obstacles and you’ll find tips and strategies for:

• Thinking like a boss, without stealing the boss’s spotlight, and establishing trust with peers.
• Turning ideas into action by thinking critically (and strategically), reframing opportunities, and challenging conventions.
• Let others create the how by giving the team direction, setting clear expectations for behavior and performance, and then stepping back and letting team members get things done.
• Breaking down the doors, beginning with mastering the principles and means of influence and then balancing the need to look out with the need to lead up.
• Working the system with attention to managing the details, determining priorities, and using organizational politics to everyone’s advantage.
• Demonstrating resilience by acknowledging failure, knowing when to give in without giving up, exerting and exuding strength, and excelling at turning setbacks into comebacks.
• Preparing others to lead by recognizing achievement, investing in talent (and differentiating talent from skill), and making leadership personal.
• Leading with passion… Yes, character and conviction matter!

Leading up is not a solitary job. “Leading up requires the ability to develop the talents of others; this is important for two reasons,” writes Baldoni. “One, you need to demonstrate that you know how to lead others; and two, putting others into leadership positions gives you the time you need to think and act strategically, that is, to lead your boss and your team more effectively.”

Below is a two and a half minute video that provides a good overview of the book by author John Baldoni:

Posted by Michael McKinney at 03:26 PM
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Marc Benioff: How We Went From Idea to Billion Dollar Company

Marc Benioff begins: “I started salesforce.com in a rented apartment in 1999 with the goal of making enterprises software as easy to use as a Web site like Amazon.com. That idea—to deliver business applications as a service over the Internet—would change the way businesses use sophisticated software applications and, ultimately, change the way the software industry works. In less than a decade, our business has grown from a simple idea to a public company with more than a billion dollars in revenue.

We have achieved success by approaching business in a new way. The new models we have created…have been effectively employed by other companies, and we believe that any company can succeed with our strategies.”

Behind the Cloud is divided into nine playbooks: Start-Up, Marketing, Events, Sales, Technology, Corporate Philanthropy, Global, Finance and Leadership. In these playbooks, 111 plays or lessons arise from the story of how they focused their vision, utilized available resources, overcame obstacles and measured their success that is woven through them.

While the Plays themselves won’t blow you away, the stories behind them often provide great insight as to how they were implemented to build an extraordinary business. You'll find that many of them will resonate with whatever you are doing. Behind the Cloud is a fast, jargon-free read. The style is very open and down-to-earth and represents well the attitude and approach that made salesforce.com what it is today.

Posted by Michael McKinney at 08:41 PM
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Save the World and Still Be Home For Dinner

Save the World and Still Be Home For Dinner by Will Marré shows how can we can both live life on our terms and do something that matters for others, how we can both find financial security and live life as a personal adventure, how we can both make radical changes in life and keep the relationships and things we most value. "After all," Marre says, "Isn't that what we all want? To save the world and still be home for dinner?"

In a thought provoking interview, Will Marré speaks to Vision about about leadership, organizations, changes in the corporate world, personal contentment, and quality relationships.

“The critical issue of leadership today is moral intent. If we get people who are very effective at being leaders, who don’t have worthwhile moral intent, we get what we got.”

“Self interest is not a sufficient motive to create valued innovation. In other words, big innovation.”

Many large organizations, “become protected around their financial well-being and they start to look at everything in terms of financial risk and so it thwarts true innovation.”

“It all comes down to the quality of intimacy in our relationships. In other words, there’s no success that compensates for a lack of that high quality intimate relationship with at least one other if not several other human beings. We don’t get that without making an effort. We don’t get that by being stupid about relationships.”

“If you imagine the very best thing you can do … and what might be really good is being the best mother you can be this afternoon or the best father you can be tonight. Sometimes the best way to change the world is to change a diaper. In other words, there are moments of truth everyday – many times – and if we step in do the best thing we can imagine doing in those moments of truth, then we will set up a chain of life that is self-reinforcing, self-motivating, self-fulfilling.”

The short 15 minute interview is time well spent.

Posted by Michael McKinney at 11:24 AM
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Why Unemployed College Grads Should Channel Their Inner Entrepreneur

Donna Fenn is the author of Upstarts! How GenY Entrepreneurs Are Rocking the World of Business and 8 Ways You Can Profit from Their Success. She offers this perspective:

Last spring, the Bureau of Labor Statistics reported that unemployment among 18 to 25-year-olds was a staggering 16.1%. That was grim news for college grads, plenty of whom headed straight to grad school, or promptly moved their belongings into the family basement. If you are among this army of unemployed or underemployed young people, it's time you considered another option: start your own business.

In the middle of a recession? Absolutely. Lots of great companies were founded in lousy economies: Trader Joe's, Clif Bar, MTV and Wikipedia are among them. Typically there's an uptick in startup activity during recessions. Why? Resources are cheaper, there's an available talent pool, and big companies that are focused on keeping their heads above water often let quality and service go by the wayside. That all spells opportunity for smaller, innovative, and agile players. Besides, what have you got to lose? Probably not much right now. You're young and you probably don't have a mortgage and a family to support. And rumor has it that you don't mind sleeping on futons or eating lots of Ramen. So if you've got an idea percolating, here's how to get started:

1. Choose partners wisely. Of the entrepreneurs I surveyed for my book, Upstarts, 64% had started companies with partners. There's a good reason for that. A partner will minimize your financial risk and instantly expand your knowledge base, provided you choose someone with skills complimentary to your own. Do not sign on with "mini-me!" Your partner should hold your feet to the fire, but also be supportive when things get tough. Sound like marriage? It is, but riskier. So lay out the terms of your partnership in writing with an attorney. Be sure to address what happens if one of you wants out. One more thing: note that these points about partners come before we even discuss your idea. Every venture capitalist worth his or her salt will tell you that the team is more important the idea. Even if you never plan to seek outside investors, remember this mantra: it's the team, stupid!
2. Don't be a perfectionist. Launch your product or service fast and imperfectly, because the more time you spend planning and tweaking, the more time you give a competitor the chance to sneak up behind you and eat your lunch. And if you launch quickly, customers will typically help you adapt your product according to their own needs. When Sam Altman launched Loopt, a personal GPS-like mobile application, his first version was a flop with young women who demanded better privacy settings. The result: Altman took that customer feedback and used it to create a better version of Loopt -- one that customers felt invested in because they helped create it.
3. Tap outside resources. They're more plentiful than you think. You might start with your alma mater. Miles Lasater and Mark Volchek, the Yale University-based founders of Higher One, a financial services company that focuses on the higher education market, did just that. They sent out a selective mailing to prominent Yale alumni simply seeking out sound advice and ended up getting a chunk of financing as well. Also, don't be afraid to ask people in your own industry for help; if they're in non-competitive markets, they may be surprisingly helpful. Brian Adams, the founder of Restoration Cleaners in Houston, assembled a peer group of 12 dry cleaners in different parts of the country to help him learn about the industry, thus shortening his leaning curve.
4. Be a proud bootstrapper. It's wildly difficult to raise capital right now. No worries. Sure, you need some cash, but probably not as much as you think. If you have a good credit rating (and you had better!), apply for a line of credit before you actually need it; draw your vendors into your company vision and negotiate favorable terms with them; ask all partners to tap into their own savings so that everyone has skin in the game. Remember that having limited resources often forces you to make better decisions and to be financially disciplined from the get go. This will serve you well as you grow. My Upstarts! survey revealed that while approximately half of the companies that had received angel or venture funding were in the black, nearly 80% of the self-funded companies were profitable!

More information can be found at: UpstartsRock.com

Posted by Michael McKinney at 10:00 PM
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IBM's Robert Sampson on Values-Based Leadership

Robert Sampson, general manager of Global Public Sector at IBM, delivered a speech to the Industrial College of the Armed Forces, on the power of values to change the world. He says, “Technologies, no matter how game-changing they are, come and go. What really matters in industry and in government is individual character.”

Sampson relates the story of an IBM computer scientist named Arun Hampapur who was driven to enhance the value derived from surveillance systems, to illustrate the value of creating a culture in which people seek to innovate not just for the sake of innovation, but to apply themselves to the kind of innovation that changes society:

Arun Hampapur began studying the video surveillance systems in New York and Chicago. As Arun saw it, these systems had an inherent problem: They could ingest data, but they could not react to real-world incidents in a timely way. You could only respond to a criminal event once it already happened. That wasn’t good enough for Arun.

Arun and his team came up with algorithms that could identify patterns of suspicious behavior and then instigate a real-time alert. In New York City, for example, Arun’s team defined nine patterns of criminal behavior. A guy standing around in the subway on a 90-degree day wearing a trench coat and carrying two duffle bags, for example, constituted one pattern. A white, windowless van circling the block ten times constituted another. And so on.

Who told Arun to develop this digital surveillance system? Nobody. He thought it up on his own.

We haven’t yet calculated the revenue that IBM and its business partners will derive from this solution. But as for the contribution that Arun Hampapur has made to the well-being of millions of people he will never know—here is truly something of value. It’s the value that comes from having values, from believing in the kind of innovation that matters in the lives of individuals and of nations. I’d like to leave you with four leadership principles based on these values:

• Be grounded in a set of values you believe in. If you are committed to every client’s success, you have to communicate that belief in every interaction with your employees and clients. And reward the people who look past organizational silos or who rethink existing technologies to come up with smart solutions.
• Keep your leadership and management roles in balance. You have days where you’ve got to tell people what to do. You might have to kick them in the fanny. But you also have days where you’ve got to lift them up. The hardest days are when you do both.
• Think huge. Wild and crazy ideas matter. What’s holding you back on executing them? Organizational obstacles? You can deal with them. Skills? You can acquire them. Remember that you are in the ICAF because you already have demonstrated your desire to think huge, to act on your need to make the world a better place.
• Determine your legacy. If an organization thrives only when you run it, you have not made any intrinsic change. Leave something of yourself behind. Share what you know. Become a mentor.

The world is ready for a smarter planet. It is begging for strong, smart, value-driven leadership.

Posted by Michael McKinney at 01:16 AM
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Disconnecting Horizontally

In his excellent analysis of How Rome Fell, historian Adrian Goldsworthy makes some interesting observations about how we tend to disconnect horizontally from anyone or anything outside of our group. We lose our sense of place and this makes any change so much harder. People resist change when they can't see the bigger picture and why it is necessary. The challenge is to cross our self-imposed boundaries into a world not of our own making and connect to the outside both personally and organizationally.

It is only human nature to lose sight of the wider issues and focus on immediate concerns and personal aims. In the Late Roman Empire this was so often about personal survival and advancement – the latter bringing wealth and influence, which helped to increase security in some ways, but also rendered the individual more prominent and thus a greater target to others. Some officials enjoyed highly successful careers through engineering the destruction of colleagues. Performing a job well was only a secondary concern…. The game was about personal success and this often had little connection to the wider needs of the empire.

All human institutions, from countries to businesses, risk creating a similarly short-sighted and selfish culture. It is easier to avoid in the early stages of expansion and growth. Then the sense of purpose is likely to be clearer, and the difficulties or competition involved have a more direct and obvious impact. Success produces growth and, in time, creates institutions so large that they are cushioned from mistakes and inefficiency. The united Roman Empire never faced a competitor capable of destroying it. These days, countries and government departments do not easily collapse – and Western states do not face enemies likely to overthrow them by military force. In the business world the very largest corporations almost never face competitors that are truly their equal. Competition within the commercial market at any level is obviously rarely carried out on entirely equal terms.

In most cases it takes a long time for serious problems or errors to be exposed. It is usually even harder to judge accurately the real competence of individuals and, in particular, their contribution to the overall purpose….For the vast majority of people, their work is less open to the public gaze, but is similar in that the real consequences of what they do are not obvious. Comparatively few people these days actually make or even sell something, or work in a profession where at least some of the goals are obvious. A doctor or a nurse knows if their patient recovers. A hospital manager operates at a completely different level, dealing with numbers and budgets and not individual patients. Such distance is inevitable and in many walks of life the wider goals are even less clear.

And this on ever expanding bureaucracy:

By their nature bureaucracies tend to grow. This was true in the Roman Empire, let alone with the massively larger government agencies of modern countries. Individuals within a department obviously have to focus on a particular task. It is only natural to believe that with more people they could deal with this more effectively. The larger they grow, then the more distant most members will be from the reality of the overall function of the department, and they will become even more removed in their way of thought to anyone outside. This is not inevitably a bad thing, but it does mean that they will continue to expand unless restrained, since their problem or concern is the only one they will see.

Posted by Michael McKinney at 11:55 PM
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10 Rules For Leading the Turnaround of a Declining Business

I have been involved in turnaround situations at Topco Associates, Kayser-Roth Corporation, and Cordiant. The similarities between these situations were greater than the differences.

In each case, they were companies that had fallen on hard times, but there was a belief that they could rise again like a phoenix from the ashes. Additionally, the fact that the companies were not doing well was by no means a secret to the employees, who were always eager to have the leadership that could bring it all back together and get things moving again.

Here are my ten rules for a successful turnaround:

Rule 1. When formulating goals, start with the answer and work your way back to the solution. Do not get bogged down in the morass of yesterday. Get going toward where you need to be in the immediate future. At Cordiant, we developed a five-year financial forecast within three months of arrival that we used as the basis for refinancing the company. Subsequently, we exceeded every benchmark of that forecast.

Rule 2. Get out in front of people immediately and position yourself as the new leader in the company. Tell them who you are, what you believe in, why you are there, your perspective on the situation, and how you intend to proceed. At Cordiant, I visited all the principal people and major locations in London and New York in my first two days.

Rule 3. Bring an extraordinarily high sense of urgency to what you are doing, but also look before you leap. People are anxious for results, but this is no time for dead ends. Think carefully about everything you do, but keep moving. At Topco, we immediately commenced development of a line of environmentally-friendly products because there was an obvious niche and need in the market for them.

Rule 4. Do not sit around headquarters! Get out to where the work is done—plants and field offices. You need this input, and you need to be a motivating force for people. At Cordiant, I got around to offices accounting for 60% of our revenues in the first six months.

Rule 5. Go out and listen to customers and clients. At Kayser-Roth, one of my first visits was to Wal-Mart. They told me, “Mr. Seelert, we are concerned about the viability of your company as a supplier.” Two years later, we were named their vendor partner of the quarter. If I had not personally gone there to listen and learn, I doubt that this would have happened.

Rule 6. Listen to everybody in the organization who offers an opinion about the business—don’t just hang around with the people who report to you. There are two sides to all coins and stories. You need to understand both. If you can, meet with your competitors or the heads of similar organizations. When I went to Cordiant, I met with the heads of other holding companies, agency networks, consultancies, and service organizations.

Rule 7. Recognize that you cannot get the job done alone. Open communications and clearly assigned accountabilities are essential. Your visits to locations provide the forums for rallying and directing the teams, as well as quickly identifying the true talents across the organization.

Rule 8. Lay out your vision, purpose, values, beliefs, objectives, strategies, and plans for accomplishment as quickly as possible. People cannot really get going until you set the right direction. At Cordiant, I laid out my initial vision on day one: to be the “World’s Best Creative Communications Resource.” I indicated that I would be a good listener and that together, we would drive the vision forward from there.

Rule 9. If you do not have the internal resources to get the jobs at hand done, do not be afraid to use outside resources. At Cordiant, we employed Price Waterhouse Business Turnaround Services. At Kayser- Roth and Topco, we hired Luther & Company.

Rule 10. Develop the short list of critical priorities and stick to it. At Cordiant, it was two things: stabilize clients and staff, and refinance the company. Accomplishing these two goals set the stage for everything else.

BOB'S WISDOM: Turnarounds are intensely difficult 24/7 situations. Follow the ten rules and you will prosper.

Adapted from Start with the Answer: And Other Wisdom for Aspiring Leaders by Bob Seelert.

Posted by Michael McKinney at 09:44 AM
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The Upside of the Downturn

While we recognize that nothing good can be said about the misery that people are experiencing as a result of the current financial crisis, it is a “rare moment when we all face the greatest possible opportunity to make ourselves winners for a long time to come,” says Geoff Colvin in The Upside of the Downturn.

In his standard brisk, clean and engaging style, Colvin argues that the recession has created a new world in which the U.S. economy will be less consumer driven and consumer focused, social attitudes toward working, saving, spending, and borrowing will shift, the world economy will become less U.S. centric, investors will remain spooked for a long time, and, as you might expect, government will play a much larger role. He contends that the best companies will respond in ten particular ways beginning with resetting your priorities. To borrow from Max DePree, "the first responsibility of a leader is to define reality" and then to understand exactly what that means for you and your organization or as Colvin puts it, “to understand the challenges of what you see, is the first crucial step toward finding opportunities in this recession.” Colvin then advises:

Protect Your Most Valuable Asset. Layoffs are more costly than you think, and are not always the best answer. Toyota’s policy of keeping employees on staff during recessions (and giving them extra training) means that when the economy turns up, those employees are in the plant, ready to go, and far better prepared than the employees of any competitor.

Reexamine Your Strategy and Business Model. Excellent companies are certain of their core, and focus their attention there. Kohl’s actually spent more on marketing in the recessionary 2008 holiday season than it had in 2007, because marketing is an essential part of their core.

Create New Solutions for Customers’ New Problems. Instead of cutting prices, Hyundai offered US consumers a different value proposition that was entirely original – buy one of our cars, and if you can’t make your payments, you can give the car back to us and we’ll cancel the debt. While sales of most carmakers fell, Hyundai’s sales rose by double digits.

Get Fitter Faster. American Express recently made an unusual offer – pay off your outstanding balance and close your account, and we’ll send you a $300 prepaid gift card. They figured it was worth paying people to clear their debts now rather than let those debts go bad, at a much higher expense to Amex later.

In addition, he advises that we engage the outside world, manage for value, price with courage, understand all our risks, and don’t forget to grow ourselves. He says that faced with the fact that the recession pushes us past our current abilities, the question is “how will we respond to being shoved outside our comfort zones.” Now “is the very best time for us to surge, to push ourselves ahead and develop the new skills and abilities that will change us and stay with us forever.” Agreed.

Posted by Michael McKinney at 11:26 PM
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Lead, Sell, or Get Out of the Way

Lead, Sell, or Get Out of the Way by Ron Karr provides more evidence that leadership isn’t just about a few titled people at the top. It is a choice to think differently. Leadership is a choice to think differently about anything you do. Selling is no exception and is closely linked to the functions of a leader. Leadership is not always about people we “lead” in the conventional sense, but is frequently about people we must influence. Karr writes, “Whether you sell a product, a service, or an idea, you must be able to influence other people as leaders do.”

It begins with being able to and understanding the need to engage others in continuous strategic conversations as part of the normal way of doing things—a process Karr has termed Integrated Dialogue. Integrated dialogue is a conversation of shared purpose that draws people out “to create a powerful relationship, one that identifies whole new zones of mutual opportunity, addresses far-ranging issues, and positions you as an invaluable resource: a leader.”

As with all leaders, sales people too will succeed when they fully appreciate the many relationships inherent in their success. Sales leaders lead a whole cast of people in their own organizations from the customer service, tech people to accounting and senior management. In addition they lead not only their customer or end user but also many points of contact in their customer’s organization that are likely to have some input on the buying decision like operations, accounting, purchasing and senior management. Gone are the days where everything filters through the salesperson. “Your success as a salesperson depends on your ability to build and sustain coalitions both inside and outside your organization. You must create and lead the coalition, no matter what you are selling.” This will resonate with any leader:

Your job is to manage multiple constituencies and alliances, and to use those alliances to identify new and better ways of generating the desired results. Your job is to do what most salespeople don’t do: lead the conversation with your prospects and customers about the results they need, the problems they have, and the obstacles they face.

To make this happen you must possess and develop the belief that you have everything you need and can build on that, the belief that you can improve any area of your life, everything is possible, preparation maximizes your potential, and your customers—the people you need to influence—come first.

After laying the groundwork, Karr defines and explains the seven traits that great sales leaders share:

• Visualize: Begin with the end in mind
• Position: First impressions lay the foundation for the entire relationship
• Build Alliances: They reach out; sales leaders leverage their influence
• Ask Good Questions: Sales leaders ask powerful questions that uncover opportunities to enhance customer outcomes and results
• Create Powerful Value Propositions: They create and deliver a powerful value proposition based on a simple formula that is based on both tangible and intangible incentives that motivate buyers to take action
• Communicate Persuasively: They inspire action in others by delivering messages that are congruent with the larger purpose
• Hold Themselves Accountable: Personal accountability matters. People are accountable to other people—not organizations

Karr demonstrates how to move from task-oriented selling (which is what most salespeople do) to purpose-oriented selling. These principles are worth bearing in mind on a personal development level as well. Karr encourages, “The bottom line is that you have the ability to increase your sphere of influence and sales just by the way you act toward those you are trying to influence.” Change your conversations, change your outcomes. Leaders in any field will find much here to assimilate into their daily activities. Read it and grow.

Posted by Michael McKinney at 11:15 AM
Permalink | Comments (0) | TrackBacks (0) | Communication , General Business , Marketing , Personal Development , Teamwork

Whatever Happened to the Rugged Individualist?

“Corporate America is in the midst of a crisis” write Jonathan Littman and Marc Hershon in I Hate People! “The spirit of the individual has played a huge part in forging our nation’s history. Yet the scourge of teamwork pap has made solo efforts in companies seem unwanted, crazy, even dangerous.

“Instead of thinking of yourself as a staffer in a big company, the manager of a division, or a top executive, you begin to define yourself in concrete individualistic terms. You are a brand unto yourself. Brainstormer extraordinaire. Marketing whiz. Charismatic project leader.”

At the same time the soloist is not a loner, a recluse or a maverick. They fit smoothly within a group, playing with it expertly while often leading or accompanying fellow members. I Hate People! Kick Loose from the Overbearing and Underhanded Jerks at Work and Get What You Want Out of Your Job is a guide for navigating through the kinds of people in the workplace that make us all miserable and undermine rugged individualists.

How do you know if you're a Soloist, or at least destined to become one? The easiest sniff test is how many times a day you mutter, shout, or even think to yourself, "I hate people!" But not all People Haters are necessarily Soloists.

Littman and Hershon have created the Am I a Soloist Quiz to help you determine the depth of your Soloist leanings. The higher your score, the more Soloist blood in your veins.

A. The portion of the day I prefer working by myself is . . .

1. one hour.
2. two hours.
3. four hours.
4. six hours.
5. all day.

B. My favorite part of the day is . . .

1. staff meetings.
2. status meetings.
3. dinner or cocktails with clients.
4. lunch with colleagues.
5. meeting with my boss.

C. I'm most comfortable working in a team with . . .

1. ten or more people.
2. seven to nine people.
3. five to six people.
4. two to four people.
5. nobody.

D. An empty office makes me feel . . .

1. creepy.
2. lonely.
3. unmotivated.
4. at home.
5. excited.

E. When I get to the office in the morning, I usually . . .

1. bring in doughnuts and coffee for everyone.
2. say hello to people and ask about their evening.
3. nod to people I run into between the front door and my desk.
4. grunt and head to my workspace.
5. head to my workspace.

F. When I see an empty conference room, I think . . .

1. I hope I didn't miss the meeting.
2. I hope I set aside enough time for the meeting.
3. the meeting is about to start.
4. how can I get out of the meeting?
5. what a great place to write my report.

G. When I dream of the perfect office, I visualize . . .

1. a glass fishbowl in the center of the action.
2. the latest collaborative open-space environment.
3. small work-group offices.
4. a cubicle.
5. four walls and a door that locks.

H. The place I do my most creative work is . . .

1. at my desk.
2. in a meeting room.
3. in the break room.
4. at home.
5. outside.

I. I like a boss who . . .

1. checks up on me periodically.
2. asks what I'm working on in the morning.
3. gives me weekly assignments.
4. asks for monthly status reports.
5. rarely comes in.

J. I like a coworker who . . .

1. is friends with everyone.
2. regularly breaks up the day with office gossip.
3. freely converses during breaks and at lunch.
4. barely interacts with just a few people.
5. minds his own business.

YOUR SCORE

10–15	Forget it. You, my friend, are a teamworker, through and through.
16–25	Though more comfortable in a team setting, you occasionally like your alone time. Soloist larva.
26–35	Stretching your Soloist muscles. Yes, you like people a little too much.
36–45	Strong Soloist. You could be teaching others if you weren't spending so much time alone.
46–55	Cream of the Soloist crop. No one's getting in your way, and that's the way you like it.

  On the author's I Hate People web site, you will find a blog, free I Hate People! Do Not Disturb signs, videos and more.

Posted by Michael McKinney at 04:55 PM
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Creating a Sustainable Business Environment

Charles Handy writes that to repair the damage to the image of business, leaders of those businesses should bind themselves to a form of the Hippocratic Oath, “Above all, do no harm.” It means doing more than being legal. It means being ethical. It means taking the lead in creating sustainable environments for both individuals and the world they live in.

Lee Cockerell, former executive vice president of operations for Walt Disney World Resort, says that “the organization of the future will pay as much attention to people and leadership strategies as it does to products and services.” He adds that “good leaders are environmentalists: their responsibility is to create a sustainable business environment—that is, one that is calm, clear, crisp, and clean, with no pollution, no toxins, and no waste—in which everyone flourishes.”

To that end, leaders must create an inclusive workplace where every employee can contribute to the best of their ability. In The Organization of the Future 2, he suggests ten goals you can set for yourself where you can impact your organization’s culture:

1. Know Your Team. Get to know them as people. Know their skills, talents, goals and understand their potential.
2. Engage Your Team. Ask them for their opinions.
3. Develop Your Team. Stay engaged with your team members and know where they can benefit from training, mentoring and other forms of development.
4. Greet People Sincerely. Don’t get so busy that you don’t notice other people.
5. Build Community. Think of your team as a community with all of its diversity. Get to know their differences so you can leverage these dynamics.
6. Listen to Understand. Show you care enough to listen. This is MBWA (Management By Walking Around). Get out and give people your complete attention and listen to what they are saying as well as what they are not saying. Take the time.
7. Communicate Clearly, Directly, and Honestly. This is one where we all fall short from time to time. Use ordinary words and say what you mean. That doesn’t mean rude, blunt or intimidating. Listen for understanding.
8. Hear All Voices. Encourage other people to share. Practice the Four Cast Member Expectations:
      • Make Me Feel Special
      • Treat Me as an Individual
      • Respect Me
      • Make Me Knowledgeable, Develop Me, and Understand My Job
9. Speak Up When Others Are Excluded. Be on the lookout for people who are being excluded (for whatever reason) and bring them along.
10. Be Brave. Have the courage to do the right thing, encourage your team to do the same and let them know that you have their back when they do.

Posted by Michael McKinney at 12:30 AM
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The 14 Questions Every Board Member Needs to Ask

The question of who’s running the organization is a critical one in this economic environment. Many boards are being asked to do what they were never prepared to do. The challenges and pressures are immense. In a critically important book for directors—Owning Up—world-renowned adviser Ram Charan says the economic downturn is a wake-up call to corporate boards. “Boards need to own up to their own accountability for the performance of the corporation.”

Increasingly, "governance now means leadership, not just over-the-shoulder monitoring and passive approvals. Boards must fiercely guard their companies against the threats of rapid decline and sudden demise, while at the same time helping management seize the opportunities that tumultuous change presents but are hard to see in the daily fray of running the business. The board that does both turns governance into a competitive advantage." And all of this without micromanaging. It’s quite a balancing act. [Charan: “Asking questions of an operating nature is not in itself micromanaging, as long as the questions lead to insights about issues like strategy, performance, major investment decisions, key personnel, the choice of goals, or risk assessment.” Why and how is key.]

Charan offers fourteen questions that “get to the heart of the unique issues that boards are facing now.” I think the questions are as insightful and provide as much food for thought as the answers they might evoke:

Question 1: Is the Composition of the Board Right for the Challenge?
Question 2: How Are We Addressing the Risks that Could Put Our Company over the Cliff?
Question 3: Are We Prepared to Do Our Job Well When a Crisis Erupts?
Question 4: Are We Well Enough Prepared to Name Our Next CEO?
Question 5: How Well Does the Board Own the Strategy?
Question 6: How Can We Get the Information We Need to Govern Well?
Question 7: How Can Our Board Get CEO Compensation Right?
Question 8: Why Do We Need a Lead Director Anyway?
Question 9: Is Our governance committee Best of Breed?
Question 10: How Do We Get the Most Value out of Our Limited Time?
Question 11: How Can Executive Sessions Improve the Ownership Function of the Board?
Question 12: How Can Our Board Self-Evaluation Improve Our Functioning and Our Output?
Question 13: How Do We Stop from Micromanaging?
Question 14: How Well Prepared Are We to Work with Activist Shareholders and Their Proxies?

In good times, not enough consideration has been given to question one. Does the board have enough depth of knowledge or experience to ensure the organization stays on track? “Directors as a group must have the specific skills and perspectives needed to carry out their responsibilities.” And these skills must evolve with the times. “If the composition of the board is not appropriate, it is the failure if the [governance] committee. The board must empower the committee to actively shape the board composition.” Bad directors drive out good directors. It’s time for a check-up. Charan’s questions help boards do just that.

Additionally, while squarely aimed at directors, Charan’s questions serve a wider audience of leader’s as well. The questions speak to any leader of the need to “own up” to the responsibilities found in their own context? Are we up to the challenge in the area we have chosen to lead? Are we dealing with the issues? Are we trying to identify the issues early and get ahead of them? Are we learning so that we are better able to perform? Are we aware of our impact? All of these questions speak to the need for personal accountability. Addressing Charan’s questions is the way forward.

Posted by Michael McKinney at 10:03 AM
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Ten Leadership Skills You Need For An Uncertain World

Uncertainty is a part of life. Uncertainty is a call for leadership. Creating clarity from uncertainty is a leader’s stock in trade. Unquestionably some periods of time are more demanding than others. Times like these call on leaders to take a broader view of who and why they are leading and the impact they are having on the world around them. While this is very demanding for any leader, it is also more meaningful.

In Leaders Make the Future, futurist Bob Johansen reports that volatility, uncertainty, complexity and ambiguity will only get worse in the future. “Solvable problems will still abound, but top leaders will deal mostly with dilemmas which have no solutions, yet leaders will have to make decisions anyway.”

Johansen emphasizes ten leadership skills that will help leaders to cope and thrive in the volatile decade ahead. “We need not passively accept the future. Leaders can and must make a better future.” Although it’s “hard to even think about the future if you are overwhelmed by the present … looking to distant possibilities can provide new insight for the present.” The ten skills he lays out move from the instinctual to the complex and build on each other. Here is a summary of Johansen’s work for you to think on:

1. Maker Instinct: The ability to exploit your inner drive to build and grow things, as well as connect with others in the making. Future leaders will need both a can-do and a can-make spirit. The maker instinct is what separates the leaders from the powerless.

2. Clarity: The ability to see through messes and contradictions to a future that others cannot see. Leaders are very clear about what they are making, but very flexible about how it gets made. How can you as a leader, create and communicate with clarity in confusing times – without being simplistic?

3. Dilemma Flipping: The ability to turn dilemmas – which, unlike problems, cannot be solved – into advantages and opportunities. We must be able to nurture the ability to engage with hopelessness, learn how to wade through it to the other side, and flip it in a more positive direction. Think Roger Martin’s concept of the “opposable mind.” How can you remake a situation with no solution?

4. Immersive Learning Ability: The ability to immerse yourself in unfamiliar environments; to learn from them in a first-person way. Immersive learning requires active attention, the ability to listen and filter, and to see patterns while staying centered – even when overwhelmed with stimuli. Leaders can’t absorb everything, so they must filter out extraneous information and learn how to recognize patterns as they are emerging.

5. Bio-Empathy: The ability to see things from nature’s point of view; to understand, respect, and learn from nature’s patterns. It is big-picture thinking that respects all the multiple interrelated parts and nonlinear relationships, as well as cycles of change.

6. Constructive Depolarizing: The ability to calm tense situations where differences dominate and communication has broken down – and bring people from divergent cultures toward constructive engagement. The next decade will be characterized by diversity and polarization. The temptation is to pick sides, but that is rarely a good strategy.

7. Quiet Transparency: The ability to be open and authentic about what matters to you – without advertising yourself. This begins with humility. Leaders who advertise themselves and take credit for their own performances will become targets. Are you self-promoting?

8. Rapid Prototyping: The ability to create quick early versions of innovations, with the expectation that later success will require early failures. Fail early, fail often, and fail cheaply. Accept failures as important ingredients to success and learn from them.

9. Smart Mob Organizing: The ability to create, engage with, and nurture purposeful business or social change networks through intelligent use of electronic and other media. Leaders are what they can organize. Can you organize smart mobs using a range of media?

10. Commons Creating: The ability to seed, nurture, and grow shared assets that can benefit other players – and sometimes allow competition at a higher level. Can you create commons within which both cooperation and competition may occur?

Posted by Michael McKinney at 09:30 AM
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What Games Do You Play?

We all play games. We play them for the promise of reward they hold. They function as a coping mechanism to help us to navigate uncertain and challenging settings. But they are self-serving and drain people of energy and commitment. “They lock people into routines and rituals that hamper flexibility and thwart change efforts.” They will never go away, but we can minimize both the frequency and their effect.

“A lack of knowledge about games allows them to thrive” say Mauricio Goldstein and Phillip Read in their book, Games At Work: How to Recognize and Reduce Office Politics. “The more you know the better able you’ll be to limit their damage and turn the energy of your people in more productive directions.”

You might have played or been involved in some of these common games they mention:

• Gotcha …where people act as if they receive points for identifying and communicating others’ mistakes.
• Gossip …the rumor mill is used to gain political advantage.
• Low Budget …where managers purposely low-ball budget requests as a negotiating ploy.
• Marginalize …effectively exile individuals from teams or groups because they challenge the status quo, or aren’t one of the boss’ people.
• Blame …individuals seek scapegoats in order to excuse failure.
• Gray Zone …deliberately fostering ambiguity or a lack of clarity about who should do what to avoid accountability
• Pecking Order …people play favorites and put others in the doghouse as an exercise of power
• Pessimism …people artificially inflate the difficulty of an assignment in order to create lower expectations
• Big Idea …suggesting visionary strategies and concepts to communicate one’s creativity and vision without regard for whether the ideas can be implemented.
• No Bad News …avoiding or suppressing negative data in relentless pursuit of a positive approach.

“Games meet powerful needs" they write, “whether for approval, promotion, camaraderie, or continued employment, and may seem to participants that they can’t get those needs met any other way. Therefore, even when their eyes are opened to the existence of games within their group, they do nothing. Even though they know that games are bad, the alternative seems worse.” So they can’t simply be eliminated by edict.

The authors give managers the tools to “diagnose” the games that people play in their company. Using a three step process entitled AIM—Awareness, Identification, Mitigation—with specific examples from global companies that illustrate both the games and their solutions, Goldstein and Read provide a clear outline for managers to address and end the games people play in organizations. They also present five principles to keep in mind:

To game is human. Your goal is to have fewer and less.

Games flourish during times of high anxiety. Companies need anxiety to fuel performance, however this anxiety and stress needs to be channeled into productive rather than manipulative behaviors.

Your company’s games are not comparable to another company’s games. Different organizations have different game ecologies.

Minimizing game playing starts at home. As soon as you deny that you play or facilitate games, you’ve limited your options for dealing with them. Recognizing this tendency in yourself helps you deal with these issues at a personal level.

Dialogue is a natural antidote to games. Don’t embark on a course of “gamocide” – that is. Don’t create programs and policies to punish game playing. This will serve only to create more games. Speaking openly and honestly discourages game playing.

Posted by Michael McKinney at 04:23 PM
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How to Hit the Ground Running

Stakes are high. Whether you are just starting out, trying something new or just starting each day with the understanding that you need to be putting your best foot forward, you need to know how to get up to speed, make the right decisions, and produce the right results fast. You need to hit the ground running.

If you could sit and learn from some of America’s best CEOs, you could discover the right steps to take to insure your success while avoiding many of the pitfalls that come from learning from one’s own experience. In Hit the Ground Running, Jason Jennings has made that possible. He has selected ten CEOs that created more economic value for their companies than all of the other CEOs of America’s top one thousand companies during the study period. They made the decisions that allowed them to achieve great results on issues we can all relate to by adhering to, sometimes counter-intuitive principles. From interviews and observation, Jennings has compiled these principles into ten lessons from each of these CEOs that if applied, will help you to hit the ground running.

Rule 1: Don’t Deceive Yourself—You Will Reap What You Sow   Let the Golden Rule guide every decision. Richard Smucker says, “In matters of style, swim with the current but in matters of principle, stand like a rock.”

Rule 2: Gain Belief   Leaders gain belief by being authentic and humble, getting rid of regal trappings, proving their worthiness, asking others for belief, and surrounding themselves with others who are also trusted. "I need everyone to respect and support one another and work with each other. Everything else is B.S." says Fred Eppinger of the Hanover Group.

Rule 3: Ask for Help   Howard Lance CEO of Harris Corporation “has a keen sense of humor and doesn’t have a problem generating a laugh even at his own expense.” He says, “Sometimes you have to take the veneer and let people see you for who you really are and share a chuckle or two.” To “hit the ground running" requires that you admit that you don’t have all the answers and engaged the assistance of others when assuming new duties.

Rule 4: Find, Keep, and Grow the Right People   Ronald Sargent’s strategy at Staples is to promote from within, move people around, identify rising stars, make everyone an owner, communicate with your workers and make diversity your priority. Promoting from within “creates a career culture that encourages people to stay longer and stretch their skills.”

Rule 5: See Through the Fog   Pat Hassey, CEO of Allegheny Technologies told Jennings, “It’s the job of the CEO to see through the fog and to be a destination expert. People want to know where the company is headed, what their future holds, the opportunities that exist for them, and what their role is going to be. And they don’t want to wait forever to find those things out.” (See page 97 for Hassey’s well thought out Team Rules that all team members have to agree to part of a Hassey-led team.)

Rule 6: Drive a Stake in the Ground   Jennings writes, "Driving stakes into the ground allows a leader to provide a clear vision about what the company is, where it’s headed, and how it’s going to get there so it can hit the ground running. But it isn’t for the faint of heart. Once you’ve driven a stake in the ground you have to talk about it and promote it relentlessly.” Mike McCallister, CEO of Humana says, “The problem with most businesses is that instead of driving a stake in the ground, they stick a toe in the water and when it gets hard or boring they start thinking about it too much, begin questioning their decision and pull their toe out, changing things, and starting all over again.”

Rule 7: Simplify Everything   "Oversimplify everything! Sit down and ask, `If I could start with a blank sheet of paper today and create the best answer, what would I do?'" says Jeff Lorberbaum, CEO of Mohawk Industries.

Rule 8: Be Accountable   “Setting a personal example of accountability is where many leaders fall short,” writes Jennings. “Instead of starting by being accountable themselves, they use the threat of accountability as a tool to drive others.”

Rule 9: Cultivate a Fierce Sense of Urgency   Keith Rattie, CEO of Questar says, “You must have a sense of urgency—if one doesn’t exist, the CEO’s job is to create one. The mind-set needs to be ‘We’re not as good as we know we have to be.’” Rattie adds that it will be time for him to leave when he loses the “sense of urgency and the belief that we have to be better tomorrow than we are today… it’ll be time to get somebody else in the chair who will bring a new pair of eyes and fresh thinking to the job.”

Rule 10: Be a Fish Out of Water   The CEOs interviewed don’t fit the typical picture of what a CEO should be. They have been described as “humble, authentic, accessible, highly ethical, compassionate listeners and truly, believable committed to doing the right thing for all stakeholders.”

Jennings skillfully weaves the thoughts from these business leaders into coherent and practical lessons. You will find all kinds of great advice in this book, much of it delivered in an almost off-the-cuff manner that belies its value. But it makes this insightful and crisply written book great reading.

Posted by Michael McKinney at 11:09 PM
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More Useful Quotes from Hit the Ground Running by Jason Jennings

These quotes are from Hit the Ground Running: A Manual for New Leaders by Jason Jennings

Ronald Sargent CEO of Staples warns, “I think a leader has to do something big, new, and different within the first one hundred days and make sure that it’s properly communicated to everyone. If people don’t know what’s going on they’ll assume nothing is going on.”

“The three most important observations I made early on in my career,” says Pat Hassey of ATI, “were that most people are loyal and want to do a good job and be successful, that offering a sincere thank you goes a long way, and that a soft response is always better than a harsh one.” Hassey also remarked, “I promised I’d never let myself get into a position where I’d stop growing. Everybody has a question, an idea, and an opinion, and if you take the time to listen, you’ll end up with a better business. There’s no such thing as a dumb question or idea.”

Mike McCallister, CEO of Humana: "We try to treat all of our people like they are adults, which sounds like straightforward common sense, but it's amazing how many businesses don't."

Goodrich CEO Marshall Larson: “The one thing I did know is that if all leaders in the company thought like me and acted like me, we’d end up with groupthink and make on hell of a big mistake someday and march off the side of the cliff like lemmings.”

Goodrich CEO Marshall Larson: "Any CEO who thinks he can pull all the strings that make things happen is kidding himself.”

Posted by Michael McKinney at 11:08 PM
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The Making of a Leader: Jamie Dimon

It is not surprising that The House of Dimon by Patricia Crisafulli is full of praise for JPMorgan CEO Jamie Dimon. When the financial crisis hit, Dimon was the only CEO ready to answer the call for help. As the book brings out, this can only come from preparation and his philosophy of “doing the right thing” no matter what the short-term cost.

His success has put him on a pedestal, which is not a comfortable place to be in this day and age. He told CNBC, “The pedestal is a terrible place to be…. I almost want to get knocked off the pedestal so I don’t have to hear this any more.” Too often, when we look at someone on a pedestal we make the mistake of assuming perfection and expect uninterrupted success. This is a mistake as it leaves no room for growth – theirs or ours. People find themselves on pedestals because they live lives of continual growth. When they make a mistake – as they eventually do – we like to discount everything that came before it and go off in search of a make-believe land where everything always comes out right. It doesn’t exist. If we do this we short-change ourselves and miss the appropriate lessons to apply in our own lives.

Dimon has been tried and tested and has succeeded. Fortunately this provides us with ample opportunity to glean valuable lessons in leadership and in running a business. His thinking and methodology has lessons we can all use to make our lives and leadership more effective. Here are some:

The Credit Crisis: “I think you’re going to be writing and learning from this for years: cases and books about different things from SIVs to accounting to the business purpose of CDO-squareds to regulatory rules to globalization to the balkanization of regulation…. Honestly, I think if you made a list today, you probably wouldn’t get half of them. We’re in the thick of it.”

Lessons Learned: “Experience and judgment—I don’t think they’re replaceable. You go to a lot of businesses—they don’t remember how bad things can get. It takes someone who has been there. We will never forget the aftermath of the housing bubble, but 40 years from now, believe me, someone is going to forget again somewhere.”

Dealing with the Downside: “Look where you could be wrong; admit when you’re wrong. To me it’s important to do that because I want everybody to do that, so that we actually make a better decision the next time.”

Buying Bear Stearns: “We weren’t looking to buy Bear Stearns. We wouldn’t have bought it on its own, but we were asked to look at it. We knew the financial system was extremely delicate and Lehman [Brothers bankruptcy] helped prove that.”

The Bear Stearns Negotiations: “The amazing story wasn’t the financial engineering. After I got the call from [Bear Stearns CEO] Alan Schwartz, I called [JPMorgan Investment Bank co-CEOs] Steve Black and Bill Winters, and then we had 50 or 100 people get dressed and come back to work. And by 12 hours later, there were 500 and 1,000 people working on it in every department: bond trading, equity, equity derivatives, all these areas—tax, legal, compliance, systems, ops [operations]—everyone doing their job. And that’s the amazing kind of thing: people acting that way—just trying to figure it out very quickly. That really enabled us to do [the Bear Stearns deal]. And then the comfort that when we bought the company we could actually manage all that.”

Loyalty: “If you walk into my office and say, ‘Jamie, I’m loyal to you,’ it makes me nervous. I want you to say, ‘I’M loyal to the company … or the principles … what we’re trying to build,’ not to the individual, and I think it’s a very important distinction.”

Risk Disclosure: “If you wouldn’t treat your mother that way, don’t treat the client that way. If this piece of paper tells the client how much risk they’re taking and you don’t want to give it to them, they’re probably taking on too much risk. Give them the paper.”

Financial Discipline: “You’ve got to have disciplined reporting and a disciplined review of [what’s] reported. And then it’s got to be widely shared with smart people who also have experience and judgment. You will minimize problems. You’ll still have them, by the way, but they should hopefully be smaller and fewer.”

Being Prepared: “Always have a column called ‘worst ever’ and make sure you can survive under that.”

Life Priorities: “My children, my family—but especially the children I’m responsible for, even though they’re kind of on their own… They’re way up here. Right next to that is humanity. Honestly, we’re not all here just for ourselves.”

Marriage and Children: “I do think that the hardest things to do in life are marriage and kids. They are like complete secrets until you do it. We teach you everything, but we don’t teach you that… You’ve got to work [at] those things.”

Posted by Michael McKinney at 11:31 AM
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10 Survival Tips from Donald Trump

What's happened to the economy has been likened to a tsunami as well as an implosion. When the undersea earthquake and subsequent tsunami hit in Indonesia in 2004, the world was stunned by the devastation that took place. It triggered earthquakes around the globe as far away as Alaska. It happened in a very short amount of time. This kind of event takes shape over a period of time and then erupts with incredible force. What happened this past year is similar in that respect -- it'd been brewing for some time. When it hit, it was like a tsunami which caused other economies to start crumbling as well. We are all familiar with that scenario. What we need to do now is deal with it.

The aftermath of a tsunami requires surveying the damage, picking up the pieces and moving on. Some people have bigger losses than others, but everyone has to keep going.

When it comes to implosion, it's more of a cave-in than a wipe-out, but equally potent. We saw the effects of an implosion watching the towers fall on 9/11. It's a domino effect. We won't sink because we can swim, but let's not go the way of dominos. Let's be smart and learn to think for ourselves in positioning ourselves for what comes next. Here are a few survival tips:

• Pay attention to national and international news and finance coverage at least several times a day, preferably hourly. In volatile times, vigilance is necessary.
• Absorb, assess, and then act. Knowledge without action is impotence.
• When a tsunami hits, there's no time for procrastination. Keep your momentum in tune with the times.
• Avoid your comfort zone -- it's probably outdated anyway.
• If you're honest, you should know the questions that should be asked, as well as the answers. That's probably why there's so much confusion out there today.
• Remember The Blitz. That can put things into perspective. Things may be tough and getting tougher, but we're not being bombed day in and day out either. If you don't know what The Blitz is, use your time wisely to study WWII to find out.
• Is your life half empty or half full? Half is better than zip. Count your blessings.
• Realize that fear is the exact opposite of faith.
• Resolve to be bigger than your problems. Who's the boss?
• Don't negate your own power. Whatever you've been dealt, know you can deal with it.

Posted by Michael McKinney at 01:12 AM
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Think Like a Champion: Lessons From Donald Trump

Donald Trump enjoys teaching. He sees it as another side of his nature and is devoting more time to it as evidenced by his many books and Trump University.

Think Like a Champion: An Informal Education In Business and Life is a collection of short essays that illuminate Trump’s thinking and approach to business and life. He is reflective and as usual, candid.

What keeps Trump relevant is his passion for learning. He writes, “It’s important to remain open to new ideas and new information. Being a know-it-all is like shutting the door to great discoveries and opportunities. Keep your door open every day to something new and energizing.” It’s a theme he weaves throughout this book. Here are several lessons from Trump’s Think Like a Champion:

We don’t really create, but we assemble what has been created for us. Be a great assembler—no matter what your interests may be—and you’ll be on your way to inventiveness.

Considering the availability of news, blind spots can’t really be rationalized anymore, no matter where you might be living. Information is available to everyone, and if you aren’t plugging into it, it will eventually work against you—maybe on your first interview. Don’t learn this the hard way.

Do not allow fear to settle into place in any part of your life. It is a defeating attitude and a negative emotion. Recognize and zap it immediately. Replace it with a problem-solving attitude, faith in yourself, and hard work.

Momentum is something you have to work at to maintain. Find your own current and then go with it! Don’t allow for distractions. Do everything you can to maintain your energy flow. Watch out for streaks of momentum that you can’t sustain—keep your equilibrium in all things, even in your energy output.

I always ask myself, “Is this a blip, or a catastrophe?”—it gives me a point of reason in the midst of bad news. Your problems can be temporary if you keep your momentum moving forward. We all experience difficulties, but they can be blips if you remain positive and move on.

Posted by Michael McKinney at 01:03 AM
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The Bull Inside the Bear - Is You!

If you’re looking for a candid explanation of the financial crisis and what you can do about it, you couldn’t go wrong with investment manager and former Federal Reserve economist Robert Stein’s new book, The Bull Inside the Bear. He puts a perspective on recent events that paves the way for rational thinking. I found his review of the fundamentals of economics in the context of the financial crisis to be most helpful. Here are several excerpts:

• We must look at the present in the context of the past. This helps to keep things in perspective that the sky really isn’t falling and financial Armageddon isn’t upon us.
• The events of 2008 stemmed from a breakdown in the financial system, not the economy. The economy was already weak and this was a hit where it really hurt. But the economy was still standing…. Our economy survives recessions and can combat inflation, but a meltdown of the system that supports the economy is a different story. Inflation is not the front page story, although it will be in the future. First we have to survive the credit crisis, and then we must prepare for a change in long-term economic fundamentals like inflation.
• The remedy for a problem in one sector becomes the tonic to boost activity and opportunity in another. The key is to look for the remedy and follow it where it flows. And that, in a nutshell, is the bull inside the bear. (Now the next bubble is the last leg of trade positions in Treasuries: Bonds.)
• The recurring cycles of expansion, peak, contraction, and trough, have not changed—thankfully. We need all four for a healthy economy, the contraction just as much as the expansion, even though most people think of contraction as “negative” or “bad for the economy.”
• I would advocate changes in mark-to-market accounting to avoid massive writedowns of depreciating assets.
• Contraction of the credit market has led to classic deleveraging…. The problem is one of delveraging of assets and the lack of liquidity. Deleveraging is just a fancy way of saying that a particular asset—a house, for example—can only be valued based on factors such as the location, size, type of property, and so forth. If this sounds like a return to the good ol’ days when a perspective buyer with a down payment in cash met with the local banker to discuss a mortgage, it is.
• As for your own home sweet home, appreciate it as a place to live, whether it’s a lot in the city or a house in the distant ex-burbs. This is your home, your castle—not your ATM machine.
• I can’t see the necessity of making more than a few changes in your portfolio each quarter or actually each year. Try to wait for at least two data points before jumping in. (He shows you where to get those data points and how to analyze them.)

The subtitle, Finding New Investment Opportunities in Today’s Fast-Changing Financial Markets, is well met and should be reviewed by anyone considering where to go next. I’ll leave you with two more thoughts:

"Having a long term view and the discipline to stay the course is commendable. However, a multiyear time horizon for your investment portfolio doesn’t mean buy, hold, and forget about it. You need to be actively engaged as an investor. That means staying nimble and alert, with an eye on the big picture." (Key: Utilize ETFs (Exchange-Traded Funds) to diversify your portfolio.)

"The more educated and empowered you are, the better decisions you will make—not by listening to the talking heads on television or reading the latest bog posting. You will do your own homework and your own research, paying attention to the economic indicators that tell you what’s happening. This is not difficult, and it will put you in the driver’s eat as you make investment decisions based on better rationale than buy-hold-and-forget it or panicking and following the crowd."

Posted by Michael McKinney at 05:20 PM
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Collapse of Distinction: How Do You Get People Thinking About You?

I’ve seen Scott McKain speak on a couple of occasions and he is all about customer experience in both content and delivery. His new book Collapse of Distinction, is no different. The collapse of distinction is a cultural phenomenon of not just blandness, but sameness. McKain writes that it has become a “corporate and professional nightmare.”

The current economic environment makes this book all the more important. The problem isn’t just the economy though; it’s that the economy exposes a problem that is more easily ignored in a good economy. To ignore the collapse of distinction now, can be fatal.

Today customers want value more than ever. How will you create that value? Low price isn’t the answer, but without doing the homework, that’s really all you’re left with. McKain writes, “If you cannot find it within yourself to become emotional, committed, engaged, and yes, fervent about differentiation, then you had better be prepared to take your place among that vast throng of the mediocre who are judged by their customers solely on the basis of price. It is the singularly worst place to be in all of business. If you aren't willing to create distinction for yourself in your profession—and for your organization in the marketplace—then prepare to take your seat in the back, with the substantial swarm of the similar, where tedium reigns supreme.”

Three factors conspire to destroy differentiation:

• Capitalism Produces Incremental Advancement. We tend to make the “safe” moves not the “smart” ones. Difficult times seem “to enhance our desire to play ‘follow the leader’ with our competition.
• Dynamic Change Is Delivering New Competition. We try to replicate the perceived advantages of the dynamic new competitor. “Unfortunately, despite your best intentions, you cannot out-original the initial player in almost every situation.”
• Familiarity Breeds Complacency. What we are familiar with we take for granted. This translates into lack of attention.

Coming to grips with this propensity of human behavior takes a lot of effort. We would rather “execute the least progressive, most conforming activity [we] can to achieve the success [we] desire.” However, McKain lays out the process to overcome sameness to lift you or your company out of the doldrums, as clearly and as simply as possible.

How do you grab attention? How do you get people thinking about you? How do you get the opportunity to use the combination of your expertise and talent?

You can differentiate yourself on product, price, and/or service. For most of us, the only real way we are going to differentiate ourselves is through service. McKain lays out the Four Cornerstones of Distinction and devotes a chapter to each explaining how you apply them in your situation: Clarity, Creativity, Communication and Customer-Focus. Each chapter ends with an executive summary and solid action-points to get the ball rolling.

He says that we have to profitably create experiences that are so compelling to our customers that loyalty is assured. Your organizations survival may depend on the concepts presented in this book. “What is compelling about you, what will create points of distinction about you, and what will establish a connection between us?”

You do not need to change everything about how you do business to create distinction. Start by walking through your list of points of contact with customers, reframing and redefining how you perceive each moment of interaction. From these new perspectives, you can then begin to create specific points of differentiation with your customers. By developing your professional laundry list from the exercise—and recognizing that if these practices are the industry standard, then they will almost always fail to create distinction for you—you are taking an important first step in disciplining yourself as a professional to develop differentiated methods and tactics. Different is not just good, different is better.

As an added bonus, this title is part of the publisher’s Nelsonfree program. By purchasing this book, you can also download both the e-book and the audio versions for free. Three for the price of one.

Posted by Michael McKinney at 03:56 PM
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What To Do When Growth Stalls

It happens to every company. No one is exempt from the cycles of business. It’s not a question of competence or enthusiasm. It’s normal. “Generating consistent growth is just plain hard, no matter how smart, experienced, or talented you are. As one of the company leaders we interviewed told us, it’s like ‘trying to keep an ice cube from melting.’ It can be done, but only in the right environment.”

Steve McKee has written an insightful analysis of the problem. When Growth Stalls “is about generating growth for your company at a time when growth may be nothing but a glimmer of hope in your mind.”

There are external forces that we all fall victim to: economic upheavals, aggressive competition, and changing industry dynamics. But McKee’s research has identified four internal factors that work against recovery and often paralyze you:

Lack of Consensus. Consensus doesn’t mean management by committee. It means “agreement among an organization’s senior leadership about the nature and purpose of the company and where it’s intended to go.” McKee writes, “Consensus issues are hard to identify and unpleasant to face. But if you have a consensus problem, things can’t get better until you recognize it.” Only then can you work together to uncover the genuine issues you are facing. Everyone needs to be on the same page working from the same playbook.

Loss of Focus. “No matter how big the company, its management team has only a finite amount of resources—money, time, talent, energy—at its disposal. The less focused those resources become, the less muscle management can muster to move the company forward or, if necessary, pull it out of a ditch.”

Loss of Nerve. Probably the most insidious factor. When growth stalls, as McKee points out, it’s confusing. “Great leaders are supposed to be firm, decisive, and sure-footed. When things go wrong, you just fix them. That is, until the problems spin beyond your control.” It’s discouraging. “When the road drops out from under the company, the CEO’s own discouragement can be difficult to hide.” It’s contagious. “It’s one thing to struggle privately…it’s quite another when the discouragement and disillusionment hit you so hard you can’t hide them. When the CEO is worried, everybody’s worried.” It's paralyzing. “You don’t have the luxury to think strategically when things are so desperate.” It’s wearying. As one CEO told him, “I wasn’t so much scared as ticked off and drained. I was tired of pushing the rock up the mountain like Sisyphus.”

When you’re struggling to keep your head above water, taking risks is the last thing you want to do. Ironically, some risk taking is just what is needed. Nobel Prize winner Myron Scholes “believes that companies should outsource as much ‘generalized risk’ as possible and focus on ‘idiosyncratic risk’; that is, risk related directly to a company’s core competency, where the company’s unique knowledge has a chance to produce better-than-expected results.”

Marketing Inconsistency. “The companies with the strongest track records do everything they can to maintain a consistent identity in the marketplace, even as the economy moves up and down, competitors come and go, and consumer tastes shift.”

These four factors can create a vicious cycle that can be crippling. The first step is to step back and understand that while it is common as a leader to feel guilt, “that attitude is not only unhealthy and unproductive, in most cases it’s just plain incorrect….As long as denial, doubt, and fear—and in some cases, sniping, finger-pointing, and other destructive behaviors—are wreaking havoc with your internal dynamics, you’ll remain stuck in the vicious cycle.”

McKee shows you how to identify and deal productively with these factors. Writing from personal experience, he uses good examples and appropriate metaphors to explain what is happening when growth stalls. This adds to the book’s credibility and the friendly, thoughtful tone of his writing. If your growth has stalled, you need this book to help you get your company back on track.

Posted by Michael McKinney at 12:00 AM
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Newswire: The Cult of Shareholder Value

The Financial Times is currently running a good series on the Future of Capitalism. “The credit crunch has destroyed faith in the free market ideology that has dominated Western economic thinking for a generation. But what can – and should – replace it?” Below are a few highlights from today’s analysis: A Need To Reconnect by Justin Baer, Francesco Guerrera and Richard Milne, Financial Times, March 13 2009 Long-held tenets of corporate faith - the pursuit of shareholder value, the use of stock options to motivate employees and a light regulatory touch allied with board oversight of management - are being blamed for the turmoil and look likely to be overhauled. "We are in uncharted waters," says Jack Welch, the former General Electric boss who embodied an era when the untrammelled interplay of market forces, domineering chief executives and the laser-like focus on quarterly earnings rises reigned supreme. Today, that focus on the here and now is seen as a root cause of the world's economic predicament. "Immediate shareholder value maximisation, by itself, was always too short-term in nature," says Jeffrey Sonnenfeld at Yale School of Management. "It created a fleeting illusion of value creation by emphasising immediate goals over long-term strategies." Even Mr Welch argues that focusing solely on quarterly profit increases was "the dumbest idea in the world". "Shareholder value is a result, not a strategy," he says. "Your main constituencies are your employees, your customers and your products." Many business leaders object to what they regard as the growing encroachment by the state and other interest groups on their ability to run the company. "If there is a danger in the current situation, it is that we don't know how to exit from this little adventure in socialism so that the private sector can do what it does best - which is to innovate, grow and create jobs," says John Castellani, president of the Business Roundtable, the lobby group for some of America's largest companies. * * *

Posted by Michael McKinney at 09:56 AM
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Shrink to Grow and Other Backward Steps Forward

In The Moneymakers (i.e., long term winners – consistent performers), author Anne-Marie Fink addresses foundational business issues from her experience as one charged with understanding whether businesses were solid, long-term moneymakers – or rotten tomatoes – before investing with them. Fink has spent more than twelve years studying businesses and investments, as a vice president and analyst at JPMorgan Asset and Wealth Management.

Not all of the concepts are new – is there such a thing? – but they are all important, well thought out and presented in a way that will make you stop and reconsider your approach. These concepts are divided up into eleven lessons that she has formulated from observing real-world businesses that work. The eleven lessons are:

1. Think like an investor to establish your edge. Investors focus on economic profit to distill businesses down to the most important factors.
2. Problems in business are like cockroaches – there’s never just one. How to catch problems before they infest your business
3. Avoid the trap of profitless growth. Additional profit is an illusion if it consumes too much capital
4. Don’t be a customer fanatic. When to listen to and when to ignore your customers. Customers don’t know your business, and what you should deliver, as well as you do.
5. Business forecasts are as reliable as weather predictions. Planning too far into the future raises risk and lowers rewards. How to position yourself for the future to come to you, rather than actively pursue it.
6. Economics always trumps management. Ignore bedrock economic laws – such as supply and demand – at your peril; it is akin to ordering the tides to stay in place.
7. Why happy employees don’t make for high-performance workplaces.
8. Good performance requires inefficiency and duplication. How maximum efficiency produces suboptimal results by stifling innovation.
9. Megatrends start as ripples. How to position your business to ride long-term waves, not be swamped by them
10. Don’t delay performance gratification since we’re all dead in the long run. Most bold transformations base their hopes on some mythic future. Go for them with incremental steps that bring home the bacon today.
11. Shrink to grow. Why expanding a bad (low-return) business means you just have more of a problem, and how a step backward is often the best way forward.

Even for the moneymakers, eventually something goes wrong. What distinguishes them is how the handle it. A downturn is an opportunity to step back in order to move forward. She calls it shrink to grow. Here are ways she suggests to make the most of a downturn in business:

• Fess Up   Don't massage your numbers. You will only postpone the day of reckoning and make things worse when that day arrives. Don't let the short-term pain of admitting to disappointing numbers determine your execution and your spending. Good managers and partners will stand. If you have a good strategy and execution, earnings will come back and your stock price with it.

• Fish or Cut Bait   Don’t let hubris, fear of admitting a mistake, or concern about walking away from a prior investment keep you from exiting a problematic business. Consider the value of your time when considering whether to exit a business. [And I thought this was key:] Exit underperforming operations even if it means opting out of a potentially lucrative long-term trend. The trend may not be “ripe.” By getting gout of the business now, you will be able to retrench and come back later. Look for alternative ways to participate in the trend rather than stubbornly sticking with a losing proposition.

• Shrink to Grow   Shrink troubled operations down to their profitable core; if there is no profitable core, either sell or close the operations. Err on the side of cutting too much rather than too late.

• Amputation or Minor Surgery   Assess whether a slowdown is cyclical or long term, temporary or permanent, and calibrate your response accordingly. Even as you make cuts to respond to a slowdown, continue to invest to drive growth when the cyclical slowdown ends. Improve the mix of your business.

She adds, “Exceptional leaders take steps backward in troubled times so they can lay a solid foundation for future growth.” Ask:

Are the changes that are causing your operations difficulty rooted in long-term trends or cyclical events, or even a combination of both factors?

Have you considered a “shrink to grow” strategy?

When deciding where to invest during a difficult time, what are the goals of the spending? Will it produce a more efficient way to conduct your business? If so, then spend. Does it provide the next leg of growth when the market returns? If yes, then invest – but somewhat more cautiously, since you do not know when the market will return. Does the investment produce better returns but only at volume levels above currently depressed levels? If so, then perhaps tinker around with the idea, but do not invest serious funds to it.

In times like these, this book is certainly a place to spend some time.

Posted by Michael McKinney at 01:10 AM
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A Downturn Provides the Ideal Opportunity to Force Hard Choices

London Business School professor Donald Sull writes in today’s Financial Times that we need to take advantage of the opportunities that are presented by the economic downturn:

Major change efforts are difficult in the best of times, and many executives worry that a downturn will halt future progress or reverse any gains made to date. Indeed, in a downturn, managers too often scurry from fighting one fire to the next and thereby lose sight of the longer transformation effort.

Large-scale change initiatives typically require eight to 10 years to complete and often run out of steam along the way. Downturns provide an ideal opportunity to re-invigorate an ongoing transformation. Managers can harness a downturn to renew a sense of urgency, justify unpopular decisions and overcome complacency or resistance to change.

Posted by Michael McKinney at 11:29 AM
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Step One: Reality Check

We have written here that this is the season to rethink, explore, fine tune what works, discard what doesn’t and set a new course. Essentially what we need is a reality check. No longer can we skate by on surplus. Guy Kawasaki’s new book, Reality Check: The Irreverent Guide to Outsmarting, Outmanaging, and Outmarketing Your Competition, is a good place to begin.

It would be unfortunate if the book’s heft – 474 pages – made it too intimidating to pick up because it’s full of great insights, clever thought and often provocative ideas that will make you see things in a new way. I don’t recommend reading it from cover to cover. It’s not that kind of book. It’s more of a highly readable, reference tool that you’ll want to refer to again and again. Besides, unless you were born in this century, you’ll need some time to allow your brain to create some new circuitry.

There aren’t any shortcuts given here. Often life and especially entrepreneurship, is about grinding it out; sticking to what you believe in until it works. It’s not about sticking to your competition either. It’s about focusing on what you can do to add value to your customers and the world. Frank Sinatra famously said, “The best revenge is massive success.” What drives your competition crazy is your success.

The 94 chapters are based on his highly regarded blog, How To Change the World. The topics cover everything from the start-up, maintaining, growing your business to communicating your message and surviving what comes your way.

Some takeaways:

• Postpone, or at least de-emphasize, touchy-feely goals. (The free cafeteria and laundry service is the reward not the catalyst.)
• Follow through on an issue until it is done or irrelevant.
• Establish a culture of execution and reward the achievers.
• The 10/20/30 Rule of PowerPoint. 10 Slides. 20 Minutes. 30-point Font.
• Be able to explain something in thirty seconds.
• The purpose of school is not to prepare for working but to prepare for living.
• Don’t coerce or dominate, reconcile conflicts, and give power to get power. That’s how to influence people.

There’s more, but it would take 474 pages. Better get the book.

Posted by Michael McKinney at 07:21 AM
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Hitting Your Goals by Knowing What Matters

“The trouble with an overload of information isn’t just that it’s confusing. It’s that the data have conflicting implications,” writes David Apgar in Relevance: Hitting Your Goals By Knowing What Matters. Today, data is cheap so we make more of it. But in generating more of it, we unwittingly complicate our decisions. The problem is in determining what is relevant.

Two tests help to determine the usefulness of any piece of information. First, is its specificity “because you can draw more conclusions from precise outcomes rather than vague ones.” And secondly is its relevance. “Relevance has to do with how well a piece of information tests your expectations.”

Apgar suggests that while we have become used to less relevant data we have developed two bad habits. “Instead of devising a specific strategy to meet a financial goal like a sales or profit target, we’re increasingly tempted to enumerate requirements for meeting the goal…. Requirements are not strategies. An unlike strategies, there’s little to learn when they fail to work.” And then there’s our growing reliance on red herrings. “Red herrings are results that appear to confirm your plans but in reality are merely consistent with them.” We end up chasing after the wrong thing.

It leads to an unintended use of the balanced scorecard. “It’s too easy for organizations to fill out balanced scorecards with lists of obvious requirements for success that resemble ingredients in a cookbook. The trouble isn’t that the ingredients may be wrong; it’s that they run so little risk of being wrong. As a result, they end up saying very little.” The strategy should look more like a recipe than a list of ingredients. There is little chance of the ingredients being wrong. You can execute the ingredients, but the recipe is what needs to be tested.

Apgar offers a quick and efficient way to get the indicators that test strategic assumptions and devising better performance strategies. He writes, “A leader must both promulgate polices clear enough to test and be ready to change them. Clarity and a critical attitude are great virtues when combined. Instead of avoiding leaders with simplistic or nuanced approached to the world, organizations and countries alike need leaders who alternate between them.”

Posted by Michael McKinney at 09:21 AM
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Here's To 2009! Please Lead Responsibly

Posted by Michael McKinney at 12:01 AM
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Geoleadership is Culturally Relevant Leadership

Kevin Kelly, CEO of Heidrick & Struggles, states in The Secrets of CEOs, “Attracting talent capable of accelerating national and regional businesses has been a tremendous challenge for CEOs for years; there’s a very limited number of top-flight twenty-first-century leaders who are truly global in outlook and can take a global profit-and-loss account to another level. They’re gold dust.”

It is this critical need that Eileen S. Wibbeke addresses in Global Business Leadership. Globalization has placed greater demands on leaders than ever before. In times past, differences in cultures and thinking we have been able to hold at arms length. Today, it is estimated that 70% of global business ventures worldwide fail due to mismanagement of intercultural differences.

The need for leaders who are self-aware is critical for beginning to lead in a new context. Wibbeke writes that in addition to “extraordinary business leadership skills, a leader now needs cultural intelligence.” She adds, “Learning about how other cultures both define and exert leadership is crucial in gaining and maintaining market share. The challenge is how to manage multiple, simultaneous cultural identities.



Wibbeke introduces the Geoleadership Model and considers how the concepts of care, communication, consciousness, change, and capability all vary around the world. Underlying the model is the principle of goodwill and perceiving the world through a perspective other than your own. Through case studies she demonstrates the use of the Geoleadership Model in various situations to develop an understanding and mastery of these vital intercultural competencies.

Wibbeke explains, “Learning how to interact in other cultures takes effort beyond just learning another culture’s language. For the American business leader operating in another culture, interaction requires a deeper cultural understanding about how things are done. When people do not have a common frame of reference – as is found within a culture – misunderstandings, conflict, and productivity problems tend to arise.” It is interesting to note that “task-oriented people tend to have more difficulty adjusting in an unfamiliar culture.” You’ve got to pay attention to the soft-side of leadership too.

For more information go to Dr. Wibbeke's web site.

Posted by Michael McKinney at 02:13 AM
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Hiring the Right Skill Set and Motivating the Millennials

In raising and schooling our children in the U.S., it appears we have dropped our standards. And it shows. Finding the right people is becoming a more and more difficult proposition. (I enjoyed reading about Linda Zdanowicz's search for a dental assistant on her blog.) Tony Wagner, author of the The Global Achievement Gap has written am important book that should not be ignored by business leaders. It sets a meaningful agenda for a good dialogue between educators and business leaders and concerned parents about our educational system. Wagner has written the following for us:

In an economic downturn, employers need to be even more careful with their hiring decisions. And recent graduates from some of the best schools may not have the skills that matter most in the new global knowledge economy. In researching my book, The Global Achievement Gap: Why Even Our Best Schools Don’t Teach The New Survival Skills Our Children Need -- and What We Can Do About It, I have come to understand that there are "7 Survival Skills" for the New World of Work, and that employers must look beyond applicants' "pedigrees" to carefully assess whether they have the skills that matter most.

New Skills
Here are the Seven Survival Skills, as described by some of the people whom I interviewed:

• Critical Thinking and Problem Solving
"The idea that a company's senior leaders have all the answers and can solve problems by themselves has gone completely by the wayside . . . The person who's close to the work has to have strong analytic skills. You have to be rigorous: test your assumptions, don't take things at face value, don't go in with preconceived ideas that you're trying to prove."


• Collaboration Across Networks and Leading by Influence
"The biggest problem we have in the company as a whole is finding people capable of exerting leadership across the board . . . Our mantra is that you lead by influence, rather than authority."


• Agility and Adaptability
"I've been here four years, and we've done fundamental reorganization every year because of changes in the business . . . I can guarantee the job I hire someone to do will change or may not exist in the future, so this is why adaptability and learning skills are more important than technical skills."


• Initiative and Entrepreneurship
"For our production and crafts staff, the hourly workers, we need self-directed people . . . who can find creative solutions to some very tough, challenging problems."


• Effective Oral and Written Communication
"The biggest skill people are missing is the ability to communicate: both written and oral presentations. It's a huge problem for us."


• Accessing and Analyzing Information
"There is so much information available that it is almost too much, and if people aren't prepared to process the information effectively, it almost freezes them in their steps."


• Curiosity and Imagination
"Our old idea is that work is defined by employers and that employees have to do whatever the employer wants . . . but actually, you would like him to come up with an interpretation that you like -- he's adding something personal -- a creative element."


Looking Beyond the Degree

The conventional thinking of many who make hiring decisions is that graduates from "name-brand" colleges are likely to be more intelligent and better prepared than students who have gone to second or third tier schools. But, in reality, what the degree may mean is that these students are better at taking tests and figuring out what the professor wants -- skills that won't get them very far in the workplace today. A senior associate from a major consulting firm told me that recent hires from Ivy League business schools were constantly asking what the right answer was -- in order words, how to get an "A" for the job they were doing -- and were not always very adept at asking the right questions, which was the single most important skill senior executives whom I interviewed identified. So what does this mean for the interview process?

First, listen carefully for the kinds of questions the applicant asks. Are they probing? Insightful? Do they suggest that the applicant has really prepared for the interview by trying to understand your business? Do you feel as though you or your company are being interviewed? If so, that's a very good sign.

How a perspective employee asks these questions matters, as well. Does he or she listen carefully and engage you in discussions? Is the potential new hire both interested and interesting? In addition to the ability to ask good questions, senior execs told me that the ability to "look someone in the eye and engage in a thoughtful discussion" is an essential competency for working with colleagues and understanding customers' needs.

Finally, perhaps the most important question you might ask is, "what do you want to learn or how do you want to grow in this job?" This question is essential for two reasons: First, the quality of the answer will tell you how reflective this individual is -- and how intentional he or she may about his or her own development. More than any specific skill, individuals must want to learn, grow, and improve continuously to be successful in today's workplace.

Motivating the Millennials

The second reason why this question is important goes to the heart of the problem of how to motivate new hires to do their best. In asking the question, "how do you want to grow," you are signaling to a prospective employee that you and your company are committed to developing the talents of your workers. Many employers worry that this generation lacks a work ethic. But in my research, I have discovered that this generation is not unmotivated but rather differently motivated to learn and to work. Above all else, they want opportunities to be challenged and to make a difference.

Describing the different work ethic of this generation, Ellen Kumata, who is managing partner at Cambria Associates and consults to senior executives at Fortune 200 companies, told me, "They don't see coming into a company as being a career experience. They don't want to climb the corporate ladder and make more money and please the boss. And so you can't manage them the same way -- you can't just put them into a cubicle and expect them to perform." Tracy Mitrano, who manages the Office of Information Technologies at Cornell University, agreed: "You have to make the work more interesting and allow them to work in different ways. They are prepared to work just as much and just as hard -- but not at a desk 8 hours a day."

Andrew Bruck was finishing a law degree at Stanford when I interviewed him last year. "We want to feel ownership. We have a craving for an opportunity to do something really important," he told me. "People in my generation have been in a constant state of training. Now they're excited to go do something. The more responsibility you give people, the better they produce . . . There are more and more recent law school grads who are willing to take a lower salary in return for an opportunity for more meaningful work."

Ben McNeely, a journalist, described to me the difference between his former employer and his current one. "At the paper where I worked previously, the publisher would kill stories if they portrayed an advertiser in a negative light. At the paper where I work now, I have an opportunity to contribute something in a growing community. I was brought in to cover the new bio-tech research campus under construction nearby, where the Canon towel factory used to be, and to cover health care issues, as well. I have support from the editor and publisher who both have strong journalistic ethics. I like it that the editor pushes Windham, who us to dig deeper."

Carie Windham, who graduated from college in 2005, told me about the best boss she's ever had. "He asked me where I want to be in 10 years. He talked to me about creating the experience I want to have. He understood I wouldn't be there forever . . . Mentoring is a huge motivational tool, someone showing an interest in you and giving you feedback. We want to feel we have a creative, individual role -- that we're not just working on an assembly line. We want to feel like we have ownership of an idea."

Hiring the right talent, then, is only part of the problem employers face today. Equally important is how businesses create challenges and learning opportunities that motivate the Millennials to do their best. Google, which had more than one million applications for 5,000 jobs in 2006, is the number one pick of a place to work for many of the Millennials. Listening to twenty-two year old Matt Kulick talk about his work, one begins to understand how profoundly many companies will have to change in order to attract and retain the best talent: "First, they (Google) share ideals that I believe in -- open source software. And their products are solving important problems for people -- doing good in the world. I believe in what they're doing -- these values are very important to me. I wanted to help out, to make a contribution. The second reason I came to Google is because they give me the resources I need to accomplish major things that will really make a difference in world. The third reason is the responsibility they give you from the day you start. It is a winning combination. It makes me happy to go to work every day."

Posted by Michael McKinney at 06:07 AM
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Fixing the Financial Crisis Once and For All

Hoping to sound like leaders, Washington lawmakers want to get to the bottom of this financial crisis and create regulations to keep it from ever happening again. I don’t think is comes as any surprise to anyone that greed—on the part of both borrowers and lenders—is at the bottom of it. You can’t regulate greed out of existence. Regulation just improves creativity. Greed is regulated by character. Character is built at home, in our schools, in our churches, and yes, in our businesses.

No one likes to talk about character because it isn’t a quick fix, it often goes against our inclinations, it’s not immediately measurable, you can’t take credit for it, and it’s a time consuming, never ending process. George Eliot wrote in Middlemarch: “Character is not cut in marble; it is not something solid and unalterable. It is something living and changing.” It’s built in individuals day by day in little, almost imperceptible ways over the course of a lifetime. The problem is that we have only given a patronizing nod to character and politely moved on with the business at hand. How will I get mine if I don’t play it like everyone else? We learn too late, without character, no one gets anything.

Character needs to be part of the very fiber of the organization. It must be a part of its philosophy and vision. I don’t mean a statement of values we hang on the wall, but a statement of behavior beginning with the CEO on down. Tom Peters wrote in Thriving on Chaos that “effective visions are beacons and controls when all else are up for grabs….To turn the vision into a beacon, leaders at all levels must model behavior consistent with the vision at all times.”

In July, Hugo Dixon opined in the Wall Street Journal, “Greed for higher returns entices investors to take risks; fear causes them to avoid excess. When markets are healthy, the two are finely balanced. Problems emerge when that balance is lost.” You will find character behind this balancing act. Character stabilizes both people and markets. Character is inseparable from the culture in which it is formed.

Nothing will fix the financial crisis once and for all, but character will regulate it. Greed is a human issue and it will always be with us. It will always be something we need to train ourselves, our children, and our employees to regulate from within. The consequences can be devastating.

Apparently, Mr. Gekko, greed is not good. Lou Mannheim was right, “The main thing about money, Bud, is that it makes you do things you don't want to do.” Or shouldn’t do.

Related Interest:
  Ethics: Reinforcing Fixed Points

Posted by Michael McKinney at 11:04 AM
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What Makes Us Human Conference

If you’re going to be in the Los Angeles area at the end of this month, you might want to check out the What Makes Us Human Conference.

Asking what makes human beings unique brings to mind a seemingly endless list of attributes and activities, both positive and negative.

Self-awareness and free moral agency, speech and symbolic cognition, our nimble thumbs, conscience and the capacity to imagine: these are just a few of the traits that distinguish us from other species.

Join some of today's leading thinkers from a broad spectrum of backgrounds, including religion, psychology, biochemistry, social philosophy, humor, art and music, as they present their views on the many faces of humanness at the What Makes Us Human Conference, April 28 - 29, 2008 (Monday/Tuesday).

Two days of panel discussions and question-and-answer opportunities will explore topics ranging from the age-old question of what sets us apart to what the future may hold for humanity.

The conference is jointly sponsored by Vision.org Foundation and the Oxford International Biomedical Centre. Vision.org publishes a superb, thought provoking, high-quality journal. I am an occasional contributor to the Vision Journal and you can get your own free one-year subscription here.

Posted by Michael McKinney at 08:52 AM
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Outsmart Your Competition

In the opening pages of Outsmart!, Jim Champy argues that “in whatever field you’re playing, you must outsmart all your rivals. But luckily, the world is expanding rapidly. Shrewd competitors can stake out new territory, define the boundaries, and even set new rules for the game.” How do you do that?

Champy demonstrates how eight companies have outsmarted the competition by either:

Seeing what others don’t,
Thinking outside the bubble,
Using all you know,
Changing your frame of reference,
Doing everything yourself,
Tapping the success of others,
Creating order out of chaos or by
Simplifying complexity.

This adds up to a lot of intriguing lessons in how to. While there are no formulas to be found here, there are principles that certainly can be applied in your situation. In general though, Champy says ambition matters. Look for dramatic growth. Of course this means risk and not getting bogged down in research and analysis. Intuition counts. Risk is just part of doing business and we need to get comfortable with it. He writes, “I believe shortsightedness of shareholders prevents many incumbent companies from doing what the need to do to grow.” Risk and innovation need to become part of the culture. Everyone needs to be engaged in the process.

In talking with people at every level of the smartest companies I know, it’s clear that they all believe they own a piece of the solution. Because these companies look for distinctiveness in almost everything they do, opportunities abound for everyone to get involved, whether it be contributing ideas or executing them. The inclusiveness also nurtures a company’s growth because everyone see himself as a partner in setting strategy, not a minion being imposed upon from on high.

This book will leave you with new questions and generate wide-ranging conversations. It’s a great place to start when reorienting your thinking.

Posted by Michael McKinney at 10:24 AM
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The Increasingly Political Role of Business

Recent articles in Foreign Affairs and The McKinsey Quarterly, promote the idea that businesses have a clear responsibility—increasingly a very political one—to the community beyond its shareholders.

In Foreign Affairs, Klaus Schwab, the Executive Chair of the World Economic Forum, writes, “Above all, a new imperative for business, best described as "global corporate citizenship," must be recognized. It expresses the conviction that companies not only must be engaged with their stakeholders but are themselves stakeholders alongside governments and civil society. International business leaders must fully commit to sustainable development and address paramount global challenges, including climate change, the provision of public health care, energy conservation, and the management of resources, particularly water. Because these global issues increasingly impact business, not to engage with them can hurt the bottom line. Because global citizenship is in a corporation's enlightened self-interest, it is sustainable. Addressing global issues can be good both for the corporation and for society at a time of increasing globalization and diminishing state influence.”

Schwab writes that state power has shrunk. “At the same time as state power has declined, the influence of corporations on communities, on the lives of citizens, and on the environment has sharply increased. This fundamental shift in the global power equation means that just as communities and citizens look to government for answers and leadership, so now they target corporations with both requests for help and criticism for wrongdoing.”

Similarly, in an interview published in The McKinsey Quarterly, with the head of the Council on Foreign Relations, Richard Haass observes that “Today, the environment that business leaders operate in is fundamentally different than it was a generation or two ago. It’s far more political. There is a conceit in the business and management literature that businesses face the toughest problems and have a lot to teach the rest of us. But the reality is that the environment business leaders operate in is increasingly political. It is global and it involves tremendous transparency, greater accountability, independent stakeholders, less freedom to maneuver, and an inability to narrowcast messages. That sounds a lot like politics. Businesses actually have a lot to learn.” Businesses should look to government for clues.

Both Haass and Schwab see a wider role for the CEO now than in the past. Haass tells MQ, “There is a slightly hermetic quality to management books that doesn’t quite capture an increasingly political, transparent, and demanding reality. Too much of the business literature operates within the confines of the firm, inside the balance sheet, or inside headquarters. That is important and necessary, but insufficient....The new role involves nothing less than a fundamentally different way of doing business. It is about dealing with a wider and more powerful group of stakeholders and constituencies and being proactive, not reactive, with them.”

Areas where businesses should assume a stronger social role include the lag between globalization and global arrangements, climate change, how best to integrate a rising China and a rising India into that region and the world, and the Middle East, which contains enough issues to keep anyone occupied. Haass adds, “The uncomfortable reality is that there is no shortage of subjects worth thinking and writing and speaking about if your business happens to be assessing political, economic, and strategic risk and suggesting what to do about it.”

Posted by Michael McKinney at 06:58 AM
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Alan Greenspan: The Age of Turbulence

Alan Greenspan begins The Age of Turbulence on the morning of September 11th, 2007, but then leaps back to his childhood, and follows the arc of his remarkable life’s journey through to his more than 18-year tenure as Chairman of the Federal Reserve Board, from 1987 to 2006, during a time of irrational exuberance. It’s a good read, written in clear language on the workings of the economic world (and then some). Here are some of the informed opinions he presents in the book:

“For the five years we overlapped, President Bush honored his commitment to the autonomy of the Fed….The administration also took the Fed’s advice on policies we thought were essential for the health of the financial markets. Most important was the effort that began in 2003 to curb excesses at Fannie Mae and Freddie Mac….President Bush had very little to gain politically by supporting a crackdown. Yet he backed the Fed through a two-year struggle that resulted in crucial reforms. My biggest frustration remained the president’s unwillingness to wield his veto against out-of-control spending.”

“After the Republicans lost control of Congress in the November 2006 election, former House Republican majority leader Dick Armey published a perceptive op-ed piece in the Wall Street Journal….Armey had it exactly right. The Republicans in Congress lost their way. They swapped principle for power. They ended up with neither. They deserved to lose.”

“[Wealth Creation] requires people to take risks. We can’t be sure our actions to acquire food, clothing, and shelter, for example, will succeed. But the greater our trust in the people with whom we trade, the greater the accumulation of wealth.…Reputation and the trust it fosters have always appeared to me to be core required attributes of market capitalism. Laws at best can prescribe only a small fraction of the day-to-day activities in the marketplace. When trust is lost, a nation’s ability to transact business is palpably undermined. In the marketplace, uncertainties created by not always truthful counterparties raise credit risk and thereby increase real interest rates.” Looking toward the U.S. economic future, a 4 to 5 percent inflation rate “is probably not a bad first approximation of what we will face.” He continues, “Yet to keep the inflation rate down to a gold standard level of under 1 percent, or even a less draconian 1 to 2 percent range, the Fed, given my scenario, would have to constrain monetary expansion so drastically that it could temporarily drive up interest rates into the double-digit range not seen since the days of Paul Volker.“

“A simple test for any retirement system is whether it can assure the availability of promised real resources to retirees without overly burdening the working-age population. By that measure, America may be on a collision course with reality….[W]e likely won’t have enough people working, nor will we likely have a sufficient increase in the amount each worker in average can produce, to cove the enormous shortfall from entitlements under current law. It may not even come close.”

“The notion of enlisting representatives of a corporation’s various stakeholders on the board—unions, community representatives, customers, suppliers, and so forth—has a nice democratic ring to it. But it is ill-advised and I strongly suspect it will not work. Today’s highly competitive world needs each corporation to execute plans from a single coach, as it were. A vote by the whole team on each big play is a recipe for defeat. I assume that eventually some of the more abrasive edges of Sarbanes-Oxley, especially Section 404, will be honed down.”

"The shift of manufacturing jobs in steel, autos and textiles, for example, to their more modern equivalents in computers, telecommunications and information technology is a plus, not a minus, to the American standard of living,"

“However we get to 2030, the U.S. economy should end up much larger, absent unexpectedly long crises—three-fourths larger in real terms than that in which we operate today.”

“We should focus on addressing and assuaging the fears induced by the dark side of creative destruction rather than imposing limits on the economic edifice on which worldwide prosperity depends.”

“Venice, I realized, is the antithesis of creative destruction. It exists to conserve and appreciate the past, not create a future. But that, I realized, is exactly the point. The city caters to a deep human need for stability and permanence as well as beauty and romance. Venice’s popularity represents one pole of a conflict in human nature: the struggle between the desire to increase material well-being and the desire to ward off change and its attendant stress.”

Posted by Michael McKinney at 08:08 AM
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Making Your Team Swing

World renown Jazz artist, Wynton Marsalis, has some profound things to say about business and relationships that are worth reviewing. Earlier this year, USA Today's Del Jones interviewed Wynton Marsalis about principles found in both jazz and business.

Marsalis told USA Today, “When you listen to great jazz musicians, you hear the respect they have for each other's abilities. During a performance, most of the musicians' time is spent listening to others. You see the trust they have for each other because they are always making adjustments and improvising based on what someone else does.”

Marsalis acknowledges that trust and listening to others goes hand-in-hand, but he brought up another important point that I think applies to any functioning organization or relationship. He points to the mindset of being aware of what others are doing and making adjustments for them in what you are doing, for the sake of the whole group. It’s not pointing fingers and affixing blame. It’s being so tuned-in to others that you can absorb their mistakes and they can absorb yours without missing a beat. He calls it “swing.” Here is more on that concept:

Swing is a rhythm, an era in American history, and it is a world view. In this world view, there is a belief in the power of a collective ability to absorb mediocre and poor decisions. When a group of people working together trust that all are concerned for the common good, then they continue to be in sync no matter what happens. That is swing. It's the feeling that our way is more important than my way. This philosophy extends to how to treat audiences, consumers, staff or dysfunctional families. This may seem idealistic, but think about how church congregations recite, nearly together and completely unrehearsed. They proceed by feel. Swing is the single objective. It is the core that makes us all want to work together.

Posted by Michael McKinney at 07:05 AM
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Neuroscience in the Workplace Podcast

In this recording, David Rock speaks with John Case, CEO of Electrolux Home Care Products North America about how neuroscience links to the performance strategies implemented in his organization. John first heard David speak in Las Vegas and found that neuroscience helped to explained why his business strategies have worked.

  Listen Now / Total time: 36:29 minutes

Posted by Michael McKinney at 08:44 AM
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The Strategy Paradox

The Strategy Paradox is about managing risk. It provides a vocabulary and set of frameworks to help us begin to embrace our ignorance about the future and deal with it.

The strategy paradox lies in the fact that the characteristics that we typically associate with success are also systematically associated with total failure. That is, the strategies with the greatest possibility of success also have the greatest possibility of failure. Author Michael Raynor, says that resolving this paradox requires a new way of thinking about strategy and uncertainty.

In his research he found that strategies normally associated with success look very much the same as strategies that in fact lead to failure as well. What was interesting is that while successful and failed strategies look the same, strategies that lead to mediocre financial performance look very different from strategies associated with both successful and failed strategies. This leads us to the conclusion that the opposite of success is not failure, but mediocrity. So to assume that we are safe with a compelling vision, commitment and a clear focus—all defining elements of successful strategies—is misguided as these elements are also systematically connected with some of the greatest strategic disasters. The real issue is that these elements must be based on an accurate view of the future, and not surprisingly even the best minds often get this wrong. Naturally, the further out you go the greater the degree of strategic uncertainty.

One of the reasons the future is difficult to predict is because it is random. In other words, the past isn’t always a good indicator of the future. Randomness enters in your analysis because at some point you have to confine it. You have to leave some data out, thus reducing your accuracy. To avoid this “we find ourselves compelled to build a theory of everything in order to predict anything.” Not practical—analysis paralysis.

Another issue is cause and effect. Accurately determining why something happened before—initial conditions—is a judgment call. Even if we are correct, recreating those conditions exactly is not generally doable. (See The Halo Effect.)

What are we to do? Raynor suggests implementing what he calls strategic flexibility and using what he calls requisite uncertainty to allocate responsibility for managing uncertainty vertically through an organization. That is, calibrating the focus of each level of the hierarchy to the uncertainties it faces.

For instance, Board members should be looking ten or more years out and asking, “What is the appropriate level of strategic risk for a firm to take? What resources should be devoted to mitigating risk? What sacrifices in performance are acceptable in exchange for lower strategic risk?” CEOs looking out five to ten years, should ask, “What strategic uncertainties does the company face? What strategic options are needed to cope with those uncertainties? In other words, it falls to the CEO, and the rest of the senior team, to find ways to create the strategic risk profile the board has mandated for the firm.

Moving down the hierarchy, operational divisions dealing a time horizon of two to five years should ask, “What commitments should we make in order to achieve our performance targets? For these folks, it’s no longer about mitigating strategic risks, but making strategic commitments. And then managers with a short term time of horizon of 3 months to a year should ask, “How can we best execute the commitments that have been made in order to achieve our performance targets? There are no strategic choices to make at this level, because the time horizons are too short.

What is useful about this book is that it is not just for CEOs. As just shown, people at all levels in an organization deal with a certain amount of uncertainty. Regardless of the timeframe they are dealing with or looking at, the tools outlined here are valuable for managing that risk.

Posted by Michael McKinney at 12:16 AM
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Five Tests of Obviousness

We’ve received a lot of interest over the last few days in a little book written 90 years ago, due to a Forbes commentary by Jack Trout entitled In Search Of The Obvious. The book is the business classic, Obvious Adams written by Robert Updegraff. Jack Trout calls it his favorite marketing book, although its application is far wider. Why does Jack like it so much?

Well, because the search for any marketing strategy is the search for the obvious. Consider the dictionary definition of the word "obvious": easy to see or understand, plain, evident. With that definition you begin to see why an obvious strategy is so powerful. It's simple, easy to understand and evident. That's why it works so well.

Interestingly, when presented with a simple, obvious strategy, many clients are not impressed. They are often looking for some clever, not-so-obvious idea. What I often hear is something like, "That’s something we already know. Is the solution that simple?" I then have to go into my evident speech, which goes like this: "You’re right, it is evident. But if it's evident to you it will also be evident to your customers, which is why it will work."

The author warned of this reaction when he wrote, "The trouble is, the obvious is apt to be so simple and commonplace that it has no appeal to the imagination. We all like clever ideas and ingenious plans that make good lunch-table talk at the club. There is something about the obvious that is--well, so very obvious!"

In 1953 Updepgraff added a section where is laid out five tests of obviousness:

Test One: The problem when solved will be simple. The obvious is nearly always simple--so simple that sometimes a whole generation of men and women have looked at it without even seeing it.

Test Two: Does it check with human nature? If you feel comfortable in explaining your idea or plan to your mother, wife, relative, neighbors, your barber and anyone else you know, it's obvious. If you don't feel comfortable, it probably is not obvious.

Test Three: Put it on paper. Write out your idea, plan or project in words of one or two syllables, as though you were explaining it to a child. If you can't do this in two or three short paragraphs and the explanation becomes long, involved or ingenious--then very likely it is not obvious.

Test Four: Does it explode in people's minds? If, when you have presented your plan, project or program, do people say, "Now why didn't we think of that before?" You can feel encouraged. Obvious ideas are very apt to produce this "explosive" mental reaction.

Test Five: Is the time ripe? Many ideas and plans are obvious in themselves, but just as obviously "out of time." Checking time lines is often just as important as checking the idea or plan itself.

Jack adds, “To me, those five principles are worth a thousand books on marketing, mine included.”

Posted by Michael McKinney at 08:06 PM
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Can’t Think For Yourself?

Are consultants making us insecure? Are we afraid to make decisions for ourselves? According to a recent article in the Guardian even consultants are saying enough is enough. Guy Clapperton reports: Alastair Clifford-Jones, chief executive of management consultancy Leadent, has identified what he calls "consultancy addiction" - the process by which clients get so hung up on having consultants around that they won't let them go. "You just see that people are using consultants and work alongside them - you go to a meeting and next to them is a consultant," he says. "It's like losing the ability to make a decision."

Indeed, some consultants actually create this dependency by not giving the client the decision making responsibility. Clapperton continues: Simon Rawling, head of project management consultancy PIPC, puts a lot of the onus on the client's stated requirements. "The consultant should help with the business and not run it," he says. "They can put a new IT platform in, put a required change in, but not run the day to day business." People have to recognize the roles of consultants before commissioning them, he says.

Consultants can be of immense value to an organization—and often quite wise—by bringing awareness of another viewpoint or approach. In the end, for successful change to occur, the change needs to become a part of the organizations culture and that only happens by implementing it yourself. You can’t outsource out change. Consultants influence, guide, facilitate and structure change, but the goal is ownership by the organization and not the partnership.

Capperton offers the following five questions as an Addicted to Consultancy Self-Check:

Ask yourself the following questions to find out whether you're over-using consultants:

1. Can you say for certain, or even roughly, when your consultant will be leaving the premises permanently?

2. Do you have a good reason for not taking someone on as staff to fulfill the consultant's role?

3. Do you have a defined objective for the consultancy you've employed?

4. Do you ask your consultant for advice on matters other than the task for which you hired them?

5. Do your employees refer to the consultant as the "owner" of an initiative, as distinct from the internal sponsor?

Answer "yes" to the first three questions and "no" to the last two and you're likely to be using consultants sensibly. "No" to the first three and "yes" to the last two means you're using consultants as a crutch rather than a defined part of your business. Ask them about it - if they're any good they'll probably be pleased to hear it from you rather than having to raise it themselves.

Posted by Michael McKinney at 08:54 AM
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Hiring Teams as the Talent

Often overlooked in the rush to find that one person that can make a difference in your organization is the context that that superstar worked in. Rarely is an individual great of and by themselves. It usually requires a team of people working together in a great environment to make something great happen. Taking the superstar out of that context can often lead to less than great performance. Thinking of and hiring the team as the talent may be what we should be looking for when trying to hire-in great performance.

Bob Sutton makes this point in an excellent post on his blog. Commenting on a May 2006 Harvard Business Review article by Boris Groysberg, Andrew McLean and Nitin Nohria entitled, Are Leaders Portable? he writes:

One of the most interesting findings … was that GE executives who brought along 3 or more GE alumni to join their teams had “annualized abnormal returns” of 15.7% above average; while those that hired one or none from GE had -16.7%. Groysberg and his colleagues call this past experience working together “relationship human capital,” horrible language from economics. Other researchers call it “prior joint experience,” which isn’t much better. But whatever you call it, while HR practices turn attention to individual stars, study after study shows when people have experience working together – and have learned who knows what, how to read those little signals that people send off, and can communicate ideas quickly and efficiently – their teams and organizations perform better.

The implication of this research is pretty clear and shows the limits of modern HR practices, assumptions, and even the enterprise software systems that they use. If you are going to hire some “talent,” don’t focus on just landing that lone star – focus on hiring as much of his or her team, or network, as possible. You win the war for talent by bringing aboard talented sets of people, not talented solo acts.

[A]s the war for talent seems to be heating up again, companies that fight it right will spend less time looking for solo stars and more time looking for dynamic duos, teams, and networks of people that have worked together in the past and want to work together more in the future. And perhaps it is time for modern HR practices to catch-up with the evidence.

Posted by Michael McKinney at 03:50 PM
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Executive Compensation

Prompted by a piece in the New York Times reporting that Ivan Seidenberg, CEO of Verizon, collected $19.6 million in compensation last year, Tom Peters commented on executive compensation. Here’s an excerpt:

In general, there's been a firestorm surrounding executive pay this year. I've generally avoided the topic. I believe in markets—including markets for exec pay. On the other hand, when something looks downright silly ... it may well be downright silly. Seidenberg is but one of many examples of this magnitude of apparent disjunction between pay and performance.

Frankly, I think the impact of mega-corp CEOs on performance is wildly overrated. Looking at the pay scales you'd think the CEO had done all the work of the company single-handedly. I acknowledge that there are probably a handful of CEOs who have indeed moved mountains—Gerstner at IBM in the 90s, Nardelli at Home Depot today. But by and large, the boss's impact, while important, is hardly as important as the pay disparity between him and his top lieutenants, let alone the rank and file.

So, I give up. I hereby join the parade of those who say, "Enough."

Tom is right on. In general, we give CEO’s too much credit for successes and too much blame for failures. This impairs the performance of both the top management team and the organization as a whole. Robert Sutton, professor of management at Stanford, recently said in an interview that new research is coming out that suggests that the bigger the difference in pay between the CEO and next top three people of that management team, the worse that firm performs. The problem isn’t that they get more. They should. The problem is that is disproportionately more. But, how should that compensation be determined? Perhaps compensation should be linked to defined earnings performance goals? Should a highly qualified CEO get what the market is willing to pay? Should a wise CEO place a self-imposed cap on their compensation for the good of the organization and the market in general?

Posted by Michael McKinney at 09:18 AM
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