Is Business Advice from the 19th and 20th Century Still Valid in the Internet Age?

think-and-grow-rich-chapter-10-power-of-the-master-mind

There is no question that we are currently in an age when the fundamental economics of business success are being rewritten almost daily.  The internet and 24/7 connectivity, coupled with global transparency and compounded by breakneck technological advances in all fields have made the road to business and financial success into a multilane superhighway. When the likes of Facebook can have revenue of just $25 Billion yet a market value of $340 Billion, with almost no physical assets, it is a testament to the fact that the game of business is very different now from 1oo years ago. Compare Facebook with ArcelorMittal, the world’s largest steel producer, which has recent annual revenue of $65 billion, yet a market value of only $25 billion. The market places greater value on an internet/technology/social media company like Facebook than a global steel producer like AcrelorMittal.

But are the fundamental principles for effective leadership and business success different as well? Or are they the same, just perhaps speeded up? And is there anything to be learned from the writings and teaching of those who built successful mega-businesses in the last century, or should these past success formulas be ignored?

Think and Grow Rich

think-and-grow-richIn an interview with Andrew Carnegie, the richest man in the world at the time, a young reporter, Napoleon Hill, accepted the challenge to put down the formulas for personal and business success by interviewing the great business and political leaders of the early 20th Century.  Andrew Carnegie would insure accessibility to over 500 successful individuals and it was Hill’s job to tease out the common success principles.  In 1937 the book Think and Grow Rich was published and since has sold over 100 million copies and inspired many to build successful businesses and personal lives.

The main thesis of the book resided in the principle that success in any endeavour begins in the mind, with a strong, compelling belief in self.  It is this strong belief that separates the “I would like to . . ” from the “I will . . .” and leads to action.  Belief, put into determined action, combined with persistence and the desire to give more than you receive, are the fundamental success principles repeated over and over, in various ways, by those whom Napoleon Hill interviewed for his book.  And many readers of Think and Grow Rich during the 20th Century prospered by these success formulas.

Are they still valid? Or has globalization, social media, the Internet and technology rewritten the rules?

There is no denying that the economics and financial metrics of business success have changed since the days of Andrew Carnegie, Alfred Sloan, John D. Rockefeller and other business giants of the 19th and 20th Centuries. Markets value future earnings more than current performance and investors trade stocks quickly rather than seek out long term value holdings.

But when I look at the human formulas behind huge modern global corporations like Alphabet Inc. (Google), Amazon, Starbucks, Facebook, Zappos.com, Apple, Microsoft, Netflix and others we find the basic laws of success still very much at the foundation. Silicon Valley type companies frequently come and go, but those which have lasted not only have cool technology or engaging social media, but the foundations of common success principles.

bill-gates-mistake

Steve Jobs was notorious for his strong belief coupled with determination that anything was possible and that there was ALWAYS a solution.  Reed Hastings built Netflix based on a solid culture of accountability, open discourse, willing to change and learning from mistakes.

“Our mission statement about treating people with respect and dignity is not just words but a creed we live by every day. You can’t expect your employees to exceed the expectations of your customers if you don’t exceed the employees’ expectations of management. That’s the contract.”  Howard Schultz, CEO Starbucks

If you want to build a sustainable modern enterprise and a successful culture with accountable leadership at all levels, I strongly suggest you make a New Year’s resolution to buy a copy of Think and Grow Rich and really study it, then put the principles into practice in 2017.

The best investment you will every make, better than stocks or bonds, is in yourself!  ~My Father

Written and Posted by: John R. Childress

Senior Executive Advisor on Leadership, Culture and Strategy Execution Issues,
Business Author and Advisor to CEOs
Visiting Professor, IE Business School, Madrid

e: john@johnrchildress.com
Twitter @bizjrchildress

Read John’s blog,  Business Books Website

On Amazon: LEVERAGE: The CEO’s Guide to Corporate Culture

Read  The Economist review of LEVERAGE
Also on Amazon:   FASTBREAK: The CEO’s Guide to Strategy Execution

John also writes thriller novels!

Posted in corporate culture, Human Psychology, leadership, Organization Behavior, the business of business | Tagged , , , , , , , , , , , , , , , , , , , , | Leave a comment

SCUBA Diving and Leadership Effectiveness

The Aqualung, better known as Self-Contained-Underwater-Breathing-Apparatus (SCUBA), was developed in 1943 by an engineer Émile Gagnan, and a young Naval Lieutenant, Jacques Cousteau. It consisted of a compressed air tank, two hoses, and a mouthpiece that regulated the air pressure as you breathed in. It revolutionised underwater exploration and photography and Jacques Cousteau went on to become a household name for his underwater films of the wonders of the oceans.

beirut-divingI first learned to SCUBA dive in 1968 while a student at the American University of Beirut in Lebanon.  We used it to explore the marine life of the Mediterranean for my marine biology classes that school year.  I learned on those awkward, double-hose contraptions, but now days the technology has significantly improved in terms of effectiveness and equipment safety and single hose regulators are commonplace.

But what has not changed in SCUBA diving is the human physiology of remaining underwater for extended periods of time at depths where the pressure on the body greatly exceeds the normal surface pressures we are accustomed to every day. In essence, the deeper you descend and the longer you stay submerged breathing from the air tank, gases accumulate in your blood stream due to the excessive water pressure acting on the body. It’s like making carbonated water by pumping air into water under pressure, and when the pressure is released, bubbles form. And the normal air we breathe is made up of 78% nitrogen, 20% oxygen and a small amount of other gases, so nitrogen accumulates more than other gases in the blood under pressure.

Once a significant amount of nitrogen is dissolved in the blood stream, it must be slowly dissipated before returning to the surface, otherwise a sudden decrease in pressure by surfacing too quickly results in the nitrogen gas forming bubbles in the blood stream.  These bubbles circulate throughout the body via the circulatory system and can get trapped in joints, organs and the brain, blocking blood flow and causing what is commonly referred to as “the bends” or decompression sickness. This is not only extremely painful, but also fatal to those divers who surface too rapidly.

decompression-stopsThe safe solution to this problem is through a process called “decompression stops” on the way up to the surface, and physiologists have worked out exactly how much time must be spent at certain depths on the way up in order to let the dissolved nitrogen gas escape though normal breathing. Basically a rope is suspended from the dive boat with markers every 10 meters or so to indicate the stopping points, where divers must remain for a few minutes to breathe off the accumulated nitrogen gas.

The Pressures of Leadership

Those in senior leadership positions in organizations tend to function almost constantly in a high pressure environment. They start early in the morning, usually with phone calls to staff in locations around the globe, then race from meeting to meeting with little time in between, more conference calls, lunch with clients or Wall Street, more meetings, a dash to the airport, usually a conference call once they reach the hotel late at night, a few hours sleep, and the treadmill start again early the next morning with a client breakfast and a full day of more meetings before it’s back to the airport. And even on weekends the phone calls and emails keep coming. Perhaps there is a social/business function Saturday evening, and hopefully a dinner with the family and children, then the week starts again.

Sure most executives take a several week vacation each year and get some “down time” then, but what about all the accumulated pressure that builds up between those rare relaxing vacations?

Leaders need to decompress regularly otherwise they run the risk of making poor decisions.

If leaders don’t take the time to decompress, that is to have regular, uninterrupted thinking time, time for reflection, time for forward thinking, time to explore multiple options without time pressures, then it is not uncommon for good leaders to make bad decisions.

The reality is that important decisions made by intelligent, responsible people with the best information and intentions are sometimes hopelessly flawed. ~Professor Sidney Finkelstein

Most decisions in business are a product of information analysis, pattern recognition based on past experiences, and emotional attachments (see an excellent article in the Ashridge Journal on why good leaders make bad decisions). Working together in a stress-free, non-pressured environment, these three ingredients often ensure quick and appropriate decisions.

However, when a leader is stressed and under pressure, the objective analysis often gets little attention due to time pressures and past patterns and emotional attachments take the lead. And under pressure and stress, past patterns and emotional attachments get distorted and stretched out of shape. Thus it is not uncommon for good leaders to make bad decisions.

The Need for Leadership Decompression

I have found that most business executives and leaders don’t fully understand or appreciate the need for “decompression” time. Time to reflect, to sort out competing agendas and conflicting information, time to make 1+1=3.  Most of their diaries are controlled by others, with little time for reflection and thinking, thus the over reliance on pattern recognition and emotional triggers.

Like SCUBA divers, it is important for those in leadership and decision-making positions to decompress, to have regular intervals of quiet time, reflection time, thinking time. The key to this is for the leader to take back control of their calendar and diary. To purposefully schedule time daily for “decompression stops”.

The mental health and well-being of the leaders is directly proportional to the health and effectiveness of the business.

What does your daily diary look like? If it’s packed to the brim you may be sub-optimizing your real leadership capabilities and effectiveness.

 Written and Posted by: John R. Childress

Senior Executive Advisor on Leadership, Culture and Strategy Execution Issues,
Business Author and Advisor to CEOs
Visiting Professor, IE Business School, Madrid

e: john@johnrchildress.com
Twitter @bizjrchildress

Read John’s blog,  Business Books Website

On Amazon: LEVERAGE: The CEO’s Guide to Corporate Culture

Read  The Economist review of LEVERAGE
Also on Amazon:   FASTBREAK: The CEO’s Guide to Strategy Execution

John also writes thriller novels!

Posted in Human Psychology, John R Childress, leadership, Life Skills, Organization Behavior, Personal Development, Self-improvement | Tagged , , , , , , , , , , , | Leave a comment

Building Your Corporate Culture: One Critical Practice

selection

One of the most overlooked drivers of corporate culture is employee selection.  Think about it.  What if you could identify and hire individuals who fit not only the job requirements, but also the culture requirements?  In other words, people who matched the culture you wanted to create, which in turn would best enable the delivery of your business strategy and objectives.

When employees and executives hold the same core beliefs and values, you need fewer policies to “control” or manage behavior.  Instead, your employees have an innate ability to deliver solutions and customer service that match your desired culture.

ritz-carltonThink it’s difficult to hire for cultural fit?  Not really, and it is definitely worth the effort.  Remember the rise to dominance by the luxury hotel chain, Ritz Carlton?  The only hotel chain to win two Malcolm Baldrige Quality Awards!  CEO Horst Schulze and his executive team decided to create a culture of exquisite service using two key drivers:  focused metrics and focused employee selection.  The key here is focused!

ritz-carlton-qualityThey hired a psychometic research firm, Talent Plus, to develop an employee interview process that focused heavily on cultural fit.  Everyone from senior executives to chamber maids are interviewed this way.  Nobody gets hired at Ritz Carlton without the focused interview process.  Their internal motto was very clear:  Ladies and Gentlemen serving Ladies and Gentlemen.  With a clear understanding of the required culture, they hire people who fit.

Ritz Carlton is not the only successful organization to use focused selection to match the culture.  Focused selection has been a way of hiring at Walt Disney theme parks for decades.  And for a more modern example, since its founding in 1999, Zappos has grown to be the largest online shoe store by focusing on superior customer service, driven by a values-based culture and hiring for cultural fit.  The CEO even wrote a book about building his culture.

I will wager that very few businesses use any type of focused employee selection for cultural fit.  Why? At least two reasons; the senior team doesn’t fully understand the importance of culture on business performance, and secondly, if they have any written values, they are just that, written or posted on walls, not really lived nor built into the business policies and work practices. On the wall does not necessarily mean in the heart!

During my speeches and workshops to executives one of the first things I do is ask them to take out a blank sheet of paper and write down their company values, without conferring with anyone.  More often than not I get first blank stares, then uncomfortable coughs and shuffling of chairs.  The fact is, in all the years I have done this exercise the group average has rarely been above 50%!  What if an employee at a shareholder meeting or a town hall meeting asked the senior team to do the same exercise and got a 50% response.  What would be your excuse?  I forgot doesn’t cut the mustard!

But the good news is you can begin to give teeth to your culture and values by beginning to use a process of focused selection. Hiring for fit will begin to build a culture  better aligned with your strategic and business aspirations, and your employees will help you get there.

Written and Posted by: John R. Childress

Senior Executive Advisor on Leadership, Culture and Strategy Execution Issues,
Business Author and Advisor to CEOs
Visiting Professor, IE Business School, Madrid

e: john@johnrchildress.com
Twitter @bizjrchildress

Read John’s blog,  Business Books Website

On Amazon: LEVERAGE: The CEO’s Guide to Corporate Culture

Read  The Economist review of LEVERAGE
Also on Amazon:   FASTBREAK: The CEO’s Guide to Strategy Execution

John also writes thriller novels!

Posted in consulting, corporate culture, Human Psychology, John R Childress, leadership, Organization Behavior, strategy execution, the business of business | Tagged , , , , , , | 2 Comments

The 1 Leadership Failure: The Nose Knows . . .

road-to-recovery

A while ago I attended a panel discussion at London Business School hosted by the UK Turnaround Management Association.  On the panel were experts from the various professions brought in to deal with distressed companies – legal, operational, financial, advisory, banking and the CRO (Chief Restructuring Officer).  While I am, as I have said repeatedly, a great fan of turnaround professionals, to me there was a glaring ingredient missing.  No one was focusing on management or the employees!

Some of you out there are already rolling your eyes and muttering – “It was management that got the company into trouble in the first place!  The best thing to do is restructure the mess and replace the old management team with people who can get the job done.”

A little harshly worded on my part, perhaps, but a point of view that seems to be widely held.  In fact, when I asked the question:  “How do you evaluate and value the management team when you are brought in to execute a turnaround?” the reply I got was very similar.  It went something like this:  “If you’ve been in this business long enough you develop a nose for good talent, and bad talent.”

Doesn’t it seem odd that we business professionals have numerous sophisticated analytical models and various spreadsheet templates for evaluating cash flows, use of capital, debt and risk models, sales projections, company value formulas, and sophisticated measures like EBITDA, EVA, and weighted cost of capital, but when it comes to evaluating the capability of the management team we have to resort to “the nose”?

Yes, it is more difficult to accurately evaluate people and teams than to evaluate risk ratios and cash flows, and maybe we shouldn’t really try.  What I mean is maybe the solution to a successful, sustainable business is less about the people (whether they are good or bad managers or leaders) and more about the “management processes” (or lack of them) in place.

“If you can’t describe what you are doing as a process, you don’t know what you’re doing.   – W. Edwards Deming

What if the poor behavior and dismal results of the management team was in large part a result of poor business management processes?  What if improving the management processes (and by this I mean processes such as meetings, product planning, budgeting, hiring, induction, promotions, performance reviews) helped the management team focus on more productive business activities?  As I’ve said many times, systems and process drive behavior, which in turn creates culture.  If you have a company with a poor leadership culture, look at the leadership/management processes and you will probably find a major cause of poor business performance.

First we shape our insititutions, then they shape us.                                                                                      – Winston Churchill

Some of you are now probably saying: “But isn’t it the job of executives to develop and implement effective management processes?”  Yes, and here lies the problem:  most executives don’t know how to evaluate the effectiveness of their own management processes. And often they lack the courage to change them.  Let me ask a question, how many of you have worked in a company where you thought the management processes and systems were world-class?  Not many I suspect.

I am convinced one of the reasons for the dramatic turnaround at Ford is because of the world-class business and management process that Alan Mulally, the CEO brought in from Boeing; replacing the old Ford systems of micro-management and cost cutting.

There have been very few studies on leadership processes. Each executive and CEO seems to have their own favorite business process for getting things done; how to run a meeting, how to review people, how to establish budgets, etc.   And to be honest, most of them are crap (that’s a technical term).  How do I know?  Ask their customers  –  middle management.  They will tell you what they have to put up with in terms of unproductive meetings, redundant requirements, reports that take additional manpower to prepare and are not even reviewed.  The list goes on and on.

If we would spend just a little effort on gathering and evaluating world-class leadership processes we could easily come up with several best practices that when implemented with consistency, would allow good, solid executives to lead and run effective organizations.  After all, not everyone is a superstar, a born natural leader with the DNA of Jack Welch or Carlos Gosen.  We need to develop leadership processes and management systems for the rest of us who want to run a good business, provide jobs for the nation and deliver real value to customers.

Or we can just rely on the nose!

 

 

Written and Posted by: John R. Childress

Senior Executive Advisor on Leadership, Culture and Strategy Execution Issues,
Business Author and Advisor to CEOs
Visiting Professor, IE Business School, Madrid

e: john@johnrchildress.com
Twitter @bizjrchildress

Read John’s blog,  Business Books Website

On Amazon: LEVERAGE: The CEO’s Guide to Corporate Culture

Read  The Economist review of LEVERAGE
Also on Amazon:   FASTBREAK: The CEO’s Guide to Strategy Execution

John also writes thriller novels!

Posted in consulting, John R Childress, leadership, Organization Behavior, strategy execution, the business of business | Tagged , , , , , , , , , , , , , | Leave a comment

Leadership . . . Unsafe at any Speed?

092316-chevrolet-corvair-ad

In 1965, when I was a junior in high school and sporty, stylish and innovative cars were all the rage, Ralph Nader, a Harvard trained lawyer, published a book that was both highly controversial and highly influential.  The book was called, Unsafe at Any Speed: The Designed-In Dangers of the American Automobile, and after much persistence and lobbying by Nader, resulted in the establishment of a new government agency,National Highway Traffic Safety Administration to oversee and regulate automobile design and manufacturing safety.

corvair-crashThe Chevy Corvair, a unique rear engine US automobile, was just one of the many cars Nader and his team researched in order to highlight the dangers of automobile design and manufacture.  As a result, many of the modern safety features that are common place in cars today, like airbags, seat belts and collapsible steering wheels arose from this early consumer advocacy work. As a result, passenger deaths over the past 3 decades have dropped significantly, along with more stringent driver training and licensing.

It is impossible to build a 100% risk free, safe automobile, either for the passengers or those outside the car and, like most things in life, auto design and manufacture is a trade-off between cost, safety, efficiency and stylish appeal.

And here’s where our auto design safety analogy comes together with my thoughts on leadership.

burn_stake_king_responsibility_1482265While leadership can confer ever-increasing levels of power, authority and compensation, it also carries with it greater and greater responsibility. Not just to shareholders and Wall Street, but to multiple stakeholders who buy the products and services, to the communities the business resides in, and perhaps most importantly, to the employees and workers. In fact, if you believe in the Johnson&Johnson company credo as a guideline for business excellence and sustainability, then customers and employees are first on the list, with shareholders last.

I am not advocating for another government agency (my personal belief is that there is already far too much government regulation), but I do believe strongly that leadership needs to carry with it more than just a title, a larger office and a bigger paycheck.

If leadership appointments and hires come with big responsibilities, then employers and senior executives have to come to grips with how they train, develop and equip employees for leadership roles inside their company.  And if you talk to almost any senior executive, they will tell you that leadership training, workshops and seminars don’t work! These may be incremental in helping improve a person’s leadership skills and capabilities, but do not deal with the two fundamental foundations of effective leadership that is “safe at any speed”; CHARACTER and COURAGE.

Effective leadership has more to do with character and courage than with IQ or business degrees. Many highly effective leaders who took their responsibilities to heart never attended a leadership course. Leaders who changed things for the better, like Martin Luther King, Gandhi, Mother Teresa, Andrew Carnegie, even Ralph Nader, made an impact through their character and courage and not their degrees or leadership course diplomas.

Nader’s book was instrumental in changing things because it raised awareness to an important issue.

“The book had a seminal effect,” Robert A. Lutz, who was a top executive at BMW, Ford Motor, Chrysler and General Motors, said in a telephone interview. “I don’t like Ralph Nader and I didn’t like the book, but there was definitely a role for government in automotive safety.”

So how do we in business put Character and Courage as an important issue in improving leadership at all levels inside our organizations?  Do we hire for character, or just for skills and experience and hope character comes along for the ride?  Do we have leadership development scenarios for aspiring leaders at all levels that require courage to effectively solve?  When is the best time to start to develop character and courage in our up and coming employees, supervisors and managers?  When was the last time your CEO gave a talk to new employees about character and courage.

Why am I so focused on character and courage as absolute foundations for effective leadership at all levels?  Besides the fact that “it’s the right thing to do”, many of the internal politics, toxic corporate cultures, waste, pollution, unsustainable practices could be more easily solved by those in positions of leadership who had real backbones made of character and courage.

30714908-_uy200_I just read a collection of papers written by Andrew Carnegie and compiled into a book entitled The Empire of Business. It contained one fascinating article on advice for young people starting out in business. The thoughts would make a great leadership foundations class! Another great read about character and courage as foundations for leadership and success is I Dare You, a small book by William H. Danforth, founder of the Ralston-Purina Company, written in 1931 as a model for living a life of character and courage.

The foundation for a great life, a great family, a great company, and a great country is Character and Courage. That’s Leadership!

Courage without Character is dangerous activity. Character without Courage is just wishful thinking.

Written and Posted by: John R. Childress

Senior Executive Advisor on Leadership, Culture and Strategy Execution Issues,
Business Author and Advisor to CEOs
Visiting Professor, IE Business School, Madrid

e: john@johnrchildress.com
Twitter @bizjrchildress

Read John’s blog,  Business Books Website

On Amazon: LEVERAGE: The CEO’s Guide to Corporate Culture

Read  The Economist review of LEVERAGE
Also on Amazon:   FASTBREAK: The CEO’s Guide to Strategy Execution

John also writes thriller novels!

 

 

 

 

 

 

The sharp-edged theme was that there was a “gap between existing design and attainable safety” and the auto industry was ignoring “moral imperatives” to make people safer.

Posted in consulting, corporate culture, Human Psychology, John R Childress, leadership, Life Skills, Organization Behavior, Personal Development, Self-improvement | Tagged , , , , , , , , , , , , , , , | Leave a comment

Leadership and Management: A More Productive Discussion

 

perfect_loop_slide_4

Many men go fishing all of their lives without knowing that it is not fish they are after.  ~Henry David Thoreau

Flyfishing teaches me a lot about life, especially business life.  One of the lesson’s I relearn regularly in flyfishing, and life, is to slow down.

Casting a fly rod is a great example where the faster you move the rod back and forth, the worse your cast. Instead of shooting out 90 to 100 feet, more often than not your line lands in a pile just a few feet away. And the more hectic and stressed you are in business, the worse you perform, especially when it comes to important decisions.

Another of flyfishing’s business lessons is to move on and not, as my Dad used to say, “flog the water into a froth”.  If you make a good cast two or three times to the same area of water without a trout rise, it is time to move on.  Either no trout around, or they are not interested in your fly.  Either way, continued casting is a waste of time with zero return of effort.

And in the business literature, there are plenty of people flogging the same water over and over again with zero return.  One of those continuous discussions and debates that has raged ever since the beginning of modern management is the difference between Leadership and Management. In his 1989 book “On Becoming a Leader,” management guru Warren Bennis composed a list of the differences:

  • The manager administers; the leader innovates.
  • The manager is a copy; the leader is an original.
  • The manager maintains; the leader develops.
  • The manager focuses on systems and structure; the leader focuses on people.
  • The manager relies on control; the leader inspires trust.
  • The manager has a short-range view; the leader has a long-range perspective.
  • The manager asks how and when; the leader asks what and why.
  • The manager has his or her eye always on the bottom line; the leader’s eye is on the horizon.
  • The manager imitates; the leader originates.
  • The manager accepts the status quo; the leader challenges it.
  • The manager is the classic good soldier; the leader is his or her own person.
  • The manager does things right; the leader does the right thing.

All this sounds a little “elitist” to me, with one being viewed as somehow superior to the other.

To me this debate was settled a long time ago by recognizing that leaders and managers are one in the same, just facing different situations or contexts.

It’s not the title on the door, it’s how they behave given the task. Both must have skills, insight, compassion, respect for people, courage and drive. It’s the context, or situation that dictates what role they must perform. A good manager can lead a team of people well.  A good leader can manage a project and people well.

If the comparison is about those 1 in a million game-changing leaders like Steve Jobs or Jack Welch versus the rest of us, that’s a different debate altogether.

Leadership is a lot like flyfishing; you can do it for decades and realize there is still a lot more to learn!

A New Twist

“Let’s move on to more productive waters!”  ~my Dad

But there is some new insight that can be gained if we move on to more productive waters and explore the difference between a Leadership Team and a Management Team. Here is where the real differences show up.

Too often, a leadership team isn’t really a team, but a collection of senior executives who sit together once a week (or month, or less) but work on separate issues.  Let me explain using this diagram of where most senior leaders focus their attention, energies and efforts.

functional silos

 

What is supposed to be a leadership team composed of the CEO and VPs is really a group with very different agendas. The CEO is the only one with an “enterprise perspective”, who is concerned about how the company as a whole functions.  The other members of the senior team, is this case the VPs, all tend to focus on their functions or departments. They have individual budgets to meet, functional metrics to achieve, and either cost or profit targets to deliver. And most of their time is focused downward, into their respective functions, dealing with personnel, production and customer issues.

What’s wrong with this? Isn’t it important to have “functional excellence”?

Yes and No.  Functional excellence is important, but it’s not what running a business is about. Business is about delivering a product or service to a satisfied customer, at a profit and faster and better than your competitors. One department can’t do that alone, it takes all functions and departments working together, not working separately. You can’t deliver on a business strategy by just maximising individual functions. Functional budgets should be guidelines for delivering an overall enterprise strategy, not independent objectives to be delivered.

A business strategy cuts across all functions and requires coordination, transfer of information, moving resources around where needed, and most importantly, rapidly adapting to external market changes. That takes sharing across functions, willingly, openly, quickly and with complete transparency. When the company needs to redeploy assets and resources (people and capital) to respond to market shifts, most functional leaders hold on tightly to their people and budgets, thus slowing down the agility of the company to respond. It’s natural since their focus is functional excellence, not enterprise excellence and most senior managers have the lion’s share of their bonus in delivering their functional budgets and objectives, not overall enterprise objectives.

When Bill Catucci became the new CEO of AT&T Canada, they were losing $1 million Canadian every day.  As he went around to meet the leadership team and asked why they were losing money, the common reply was: “My department is on budget and hitting its numbers; it must be some other department’s fault!”

alan_mulally_ford_ceoWhen Alan Mulally took over at Ford and engineered a turnaround, one of his first acts was to make all senior executives accountable for the overall enterprise health and objectives, and he put 100% of their bonus compensation on delivering enterprise results. Functional goals were what their paycheck was for. Bonuses were for enterprise success. And the only way to deliver was working together.

Here is the chart I often use to describe how to both deliver on enterprise objectives and functional objectives.

enterprise-strategy

 

In essence, the leadership team drives the delivery of the overall enterprise strategy and objectives, sharing information, resources and people when and where needed. The next level, what I call the management team, takes care of the day-to-day business and delivers on functional objectives.

Both require management and leadership skills, but do their work in different contexts!

To me, this is much more “productive waters” and tends to result in some big accomplishments, like the turnaround of Ford Motor Company without the need for a Government bailout!

Productive water also brings the opportunity for other rewards as well.

Written and Posted by: John R. Childress

Senior Executive Advisor on Leadership, Culture and Strategy Execution Issues,
Business Author and Advisor to CEOs
Visiting Professor, IE Business School, Madrid

e: john@johnrchildress.com
Twitter @bizjrchildress

Read John’s blog,  Business Books Website

On Amazon: LEVERAGE: The CEO’s Guide to Corporate Culture

Read  The Economist review of LEVERAGE
Also on Amazon:   FASTBREAK: The CEO’s Guide to Strategy Execution

John also writes thriller novels!

Posted in ecosystems, flyfishing, Human Psychology, leadership, Organization Behavior, strategy execution | Tagged , , , , , , , , , , | Leave a comment

How Leaders Fail . . .

bates-come-back

If you want to know whether or not you are a leader, turn around and see if anyone is following!

The role of “leader” in a business is never easy and for those in charge of a region, division, plant or other significant business unit, the responsibilities are many and the tools for positive impact are few.

One of my roles these days is to advise business leaders on how to focus on the things that have the most positive impact on people and performance, and I also get the privilege of supporting their development and learning as a leader.  Rather than point out the obvious, I tend to look for those few behaviours that unconsciously sabotage their leadership effectiveness.  And many of these “sabotage” behaviours are totally invisible to them; they don’t realize they are behaving this way and certainly don’t understand the negative impact of such behaviour.

You can’t solve a problem you don’t know exists!

Triangle Communications:

One of the biggest leadership self-sabotage behaviours is what I have termed “triangle communications”, which is a nice way of saying, talking about other people to a third person instead of talking directly to the person.

By way of illustration, let’s say that Al has a problem that involves Bob.  Bob either did or said something that upset Al. Instead of talking directly to Bob about the issue and patching it up, Al talks to Charlie about what Bob said or did. Then somehow Charlie goes and talks to Bob about what Al said, and now everyone is upset.  Communication stops and barriers between people build up. And more often than not the actual event gets more and more distorted and negative with each retelling.

Triangle comms

So, what’s this got to do with leadership?  Lots !!

If Al is in a leadership role, his habit of triangle communications sabotages his leadership effectiveness.  Let’s do a classic Ben Franklin +/- on this behaviour.

triangle ben franklin

Lots of negatives and very few positives as a result of this behaviour. And the sad truth is, many of those in leadership roles have multiple triangle communications daily, thus limiting their leadership effectiveness.

There is only one antidote to triangle communication behaviour. Courage.  The courage to sit down directly with the other person and deal with the issue head on.  And surprise, chances are the problem is more a misconception or misinterpretation than a reality. And once faced and openly talked about, the issue subsides, trust and respect is built and your leadership capabilities strengthened.

Don’t Do Triangles!

Written and Posted by: John R. Childress

Senior Executive Advisor on Leadership, Culture and Strategy Execution Issues,
Business Author and Advisor to CEOs
Visiting Professor, IE Business School, Madrid

e: john@johnrchildress.com
Twitter @bizjrchildress

Read John’s blog,  Business Books Website

On Amazon: LEVERAGE: The CEO’s Guide to Corporate Culture

Read  The Economist review of LEVERAGE
Also on Amazon:   FASTBREAK: The CEO’s Guide to Strategy Execution

John also writes thriller novels!

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