Vital Growth Consulting Group

Using Culture as a Competitive Weapon

Dr. Brad Lebo — Mon, 07 May 2012 19:42:31 +0000

This is a copy of the article appearing in the Portsmouth Herald 5/7/2012 (see here):

If we view the marketplace as a battlefield where organizations fight for customers, then an organization’s culture can be its most important weapon. This is because a healthy culture is synonymous with efficiency and effectiveness. It is also because in the hyper-connected world we inhabit, any culture that tolerates shoddy service or an inferior product is bound to be exposed for what it is by the broadcasts (tweets and postings) of its detractors.

More frequently than not, an organization’s culture develops and evolves without much attention. It just happens. This is despite the fact that intentional and healthy cultures, ones that are developed purposefully, are more efficient, resilient and, ultimately, profitable. In other words, intentional cultures are more effective competitive weapons.

Being intentional can be a challenge, particularly for a growing company. The demands of customers, employees, and vendors can undermine or sidestep “the best laid schemes.” As Les McKeown describes it in his book Predictable Success, to be successful all organizations must find their way through the inevitable “whitewater period” of growth (where demands stress people and process alike).

Fortunately, there are organizations that have studied growing companies with the goal of sorting through what does and does not work. This takes much of the guesswork out of what the best practices are for achieving optimal growth. It also streamlines the effort needed to formulate and maintain the schemes that must withstand the pressure of customers’ and others’ demands.

Gazelles International is one organization that has spent a great deal of time studying and working with growth companies. The thought leader at Gazelles is Verne Harnish. Much of Mr. Harnish’s wisdom can be found in his book, Mastering the Rockefeller Habits: What You Must Do to Increase the Value of Your Growing Firm.

Mr. Harnish and his team have continued to collect the best business practices of small and medium-sized businesses. They have continually updated what it means to “Master the Rockefeller Habits.” Their latest thinking about how to grow a company—while instilling a purposeful, healthy and effective culture—is to master the Four Decisions™. These are the four basic concepts all businesses must master: Strategy, People, Execution and Cash.

In other words, successful, growing companies deliberately attend to their strategy (where they are going and why they want to go there), their people and how they execute (the right people doing the right things) and their cash supply. Attention to these four decisions goes a long way toward establishing, improving the health of (and, to be provocative, weaponizing) an organization’s culture.

Attending to an organization’s strategy is really about making a number of decisions that address: the core values at work in the organization, what the purpose of the organization is, who the customer is for the organization’s products or services, what the organization’s brand promises are…all of these within the context of the organization’s “Big Hairy Audacious Goal” (BHAG)—the North of its compass.

Decisions about strategy are always made, either covertly or overtly. In successful and healthy growth companies, these strategic decisions are deliberate, purposeful and communicated throughout the organization to help align people. As one CEO is fond of repeating, communicating strategy puts “the wood behind the arrow.”

Selecting and developing the right people is a favorite and often-visited topic of ours. Done well, the outcome is a functional team of people who are each an excellent fit for the role they are in—roles that serve the organization’s strategy for growth. Key points to address when determining fit are: how the individual’s values match the organization’s values, what is expected of the person, and how performance is measured. Other key points are how frequently performance reviews take place and how to develop or redeploy individuals whose performance does not regularly meet or exceed expectations.

When it comes to the execution decision, the question that a successful organization tries to answer is: how do we hold people accountable? According to Mr. Harnish, successful organizations master three disciplines to drive execution and ultimately, efficiency and effectiveness. The first discipline is identifying and communicating priorities. Less is more here, with sharp focus on three to five priorities being far superior to scattered focus on many. The second is developing metrics for assessing progress and providing clarity about the future. The third is establishing a rhythm for getting feedback about progress and noting challenges—a rhythm achieved through regular meetings. These disciplines serve to help hold people accountable for their activities, address challenges as they emerge, and establish a culture that PERFORMS.

Last but not least, the cash decision can often mean the difference between thriving and struggling during periods of growth. In a striking metaphor, cash is the oxygen for a growing business. We all know what happens when the oxygen supply is low or cut off.

The decision about cash has two sides: how to collect it and how to spend it. The Gazelles utilize the Cash Conversion Cycle as a tool for improving a company’s cash position. By analyzing where any one of the common cycles (the Sales Cycle, the Make/Buy Cycle, the Fulfillment Cycle or the Collections Cycle) for turning activity into cash can be shortened or re-engineered, opportunities to “find” cash literally turn up.

In a different analysis, spending is seen in the context of the additional sales required to justify an expense or outlay of cash. This analysis correctly demonstrates that any dollar spent may require four to five dollars of additional revenue before it is “earned.”

We believe that as companies become purposeful in creating a culture that gives them a competitive weapon, they will see greater success in the marketplace—a marketplace that is, potentially, now worldwide. [contact-form]

Five People Challenges to Master

Dr. Brad Lebo — Mon, 02 Apr 2012 11:27:51 +0000

This is a copy of the article appearing in the Portsmouth Herald 4/2/2012 (see here):

I’ve come to rely on “top-five” lists for just about everything. Perhaps too much. On the other hand, the top five of anything doesn’t completely overwhelm my ability to keep all of them in mind. Like with juggling, five balls in the air is a lot easier to manage than 10.

So, here are the top five people challenges to master if you want to be successful as a leader or manager in business:

Challenge one

Understanding yourself well enough to know your values. Values influence every decision you make and the resulting actions. What you believe is important or valuable will determine how you interact with peers, employees and customers, as well as determine how you react to lapses in effort, integrity and judgment.

Being able to clearly define and communicate your values will guide and influence your own behavior and the behavior of others in the organization. Hiring the right people is impossible without clarity about values. Deciding who you reward or punish is nearly impossible without knowing your values.

If you are confused about your values, you will suffer the same fate as anyone who tries to build a house on sand. Everything shifts when pushed and nobody can be sure of what’s happening next.

Challenge two

Communicating clearly. There are many ideas and instructions that a business leader needs to communicate on any given day. For the most part, business leaders and managers have a track record of success in communicating clearly. There are several typical stumbling blocks, however.

The first stumbling block is inconsistency. This is when communication happens sometimes but not always, for no reason other than the communication priority got bumped down a notch. The solution to this stumbling block is relatively easy: Meet frequently with peers and give top priority to the meetings. There is nothing like a regularly scheduled meeting to keep communication channels wide open.

The second stumbling block is fear. I’m referring to fear of saying something that causes someone else to take offense and yell, storm out of a meeting, sulk or worse. Fear is what keeps most of us from confronting and holding others truly accountable for behavior that we are confident is a problem.

Clarity in communication is often the first casualty of this kind of fear, closely followed by lost time and energy spent crafting communication that does not cause offense. The solution to this stumbling block is relatively hard, and it’s beyond the scope of this article. Interested readers should refer to “Crucial Conversations” by Patterson, Grenny, McMillan and Switzler, or “Fierce Conversations” by Susan Scott.

The third stumbling block is selfishness. Let’s face it, everyone listens a little better and sometimes a lot better if their own interests are attended to. Think of the contrast between hearing, “If we reach our goal this year, I’ll be able to get that boat I’ve always wanted,” and “If we reach our goal this year, every one of you who contributes to our success will get a bonus.”

The solution to this stumbling block is to communicate in a way that accounts for the interests of your audience. People are motivated by a broad range of interests. For some it will be money. For others it will be the opportunity to help others. Know your audience’s motivating interests, and get everyone’s attention by appealing to them. Do it with integrity, finding the way that is genuine and win-win rather than manipulative and win-lose.

Challenge three

Assessing people for their talent, motivation and values. This includes current employees and those who will be hired. Assessing people in an organization is a task that benefits from having a process. A complete process will include features such as measuring performance against expectations, measuring fit with company values, and providing feedback to redirect and develop individuals.

The dark side of this process is that some people will need to be redeployed or let go, freeing up their future.

Done well, getting the right people in the right positions — through assessment, redirection, development and hiring — goes a long way toward taking care of other people challenges such as employee retention and alignment behind company priorities.

Challenge four

Confronting problem behavior and holding others truly accountable. This challenge is mentioned above, where it’s a kind of sub-challenge. In my opinion it still deserves a headline of its own because of its importance.

Most leaders and managers struggle to effectively confront problem behavior. It is a skill that, if learned and practiced, can make a profound difference in the performance of any organization.

Challenge five

Leveraging a team of people. With few exceptions, a team of individuals working well together typically outperforms even the most talented individual. Teams have the advantage of multiple minds and broader experience.

But, we all know dysfunctional teams that cannot outperform individuals working alone. Such teams do not leverage the expertise and perspective inherent in a team.

Learning how to grow and nurture a functional team to leverage its potential is one of the most important challenges any business leader can undertake. This includes overcoming the potential dysfunctions of a team (as identified by Patrick Lencioni in “The Five Dysfunctions of a Team,”) as well as learning how to assimilate new team members.

The good news is that it’s not that hard to do the things Lencioni and others like him suggest. And, given the state of most teams, any improvement can bring dramatically positive results.

The bad news is that like all the other challenges mentioned, it takes conscious effort and the discipline to keep the effort going. As one CEO recently admitted, “I’ve got to get better at managing people. It’s the only way my company can grow.”

Hears hoping you now have a better idea of what you can get better at.

Human Capital, aka People, Investment

Dr. Don Sweet — Thu, 01 Mar 2012 21:34:10 +0000

by Dr. Donald N. Sweet

Human Capital investment is stressed in an HBR article this March by Thomas Kochan. As you know, human capital is “multinational speak” for employees, fellow workers, teammates and friends. Therein lies one of our smaller privately held companies’ advantages: we see human capital as people. People with families, likes, dislikes, strengths and opportunities for growth. Just like us.

With the right management systems in place, privately held companies can be much more personal in selecting and developing their people. The right management system is key. To be clear, we’re not talking about an information system, but a management system.

This is a system the owner and/or CEO puts in place and works to improve broader outcomes. It’s needs to be a management system that helps identify core values, instilling them in the organizational DNA. It’s a system that helps to hire, promote and, when necessary, release people according to those fundamental values.

Examples of core values include: Customers First, Do the Right Thing, Can Do Attitude, Fanatical Support, Continuous Improvement, The Glass Half Full, etc. You get the point. Core values are what an organization feels are truly important, above all else. As individuals we all have our own core values. A good match between employees and the organizational values is essential.

To effectively attract, nurture and retain the right people, organizations must articulate their values. They must purposely reinforce those values continuously. This is the essence of developing a meaningful and solid organizational culture.

For privately held businesses any management worth its salt should put heavy emphasis on people. The Gazelles management system points to the four major decisions any private company needs to address. They are people, strategy, execution and cash. While many maintain all four are important, at the end of the day it is people that make it all happen. People, not human capital.

Vital Growth Newspaper Column on Leadership

Dr. Brad Lebo — Wed, 29 Feb 2012 21:59:04 +0000

See here for a Portsmouth Herald Business Monday column on Leadership.

Complexity Can Kill Competitiveness

Dr. Don Sweet — Mon, 20 Feb 2012 21:05:31 +0000

by Dr. Donald N. Sweet

Harvard Business Review’s March issue has a special report about reinventing America’s competitiveness. Michael Porter and Jan Rivkin argue that a nation’s competitiveness hinges on its long run productivity. Productivity is defined as the value of goods and services produced per unit of human, capital and natural resources.

A recent issue of The Economist picks up the baton from HBR writing about an “Over-regulated America”. Singling out our sagging health care system, they point out how every hour of treatment requires almost as much time doing paperwork. Obamacare is scheduled to increase the federally mandated categories of illness and injury from 18,000 to 140,000. There will now be nine different codes for injuries caused by Parrots. Really? Is that necessary?

Complexity, whether at the national or individual company level, creates waste. The truly important items we need our resources to focus on get lost in all the minutiae. Having those important few core values, BHAG, brand promise, and quarterly priorities that everyone on the team knows and understands is critical to improve competitiveness.

We hinder ourselves by erroneously thinking we can have a rule for all contingencies. Not only is that impossible, but it is also extremely ineffective. The Italian economist Vilfredo Pareto was one of the first to observe that the vital few make all the difference. Often referred to in business as the 80/20 rule, focus on the few key items can make all the difference in productivity, competitiveness and success.

Yet, so few of our organizations focus solely on those vital few items. Why? It often seems to be the cluttered closet syndrome. We continue to add new items (read rules, systems, paperwork, etc.) into the closet (read business). But we seldom stop to clean out the clutter already there: rules, systems, paperwork we no longer need to run our businesses effectively.

At one point they may have been important, but have outlived their usefulness. Take a look at any two page form in your company today. Is it all necessary for the way you do business today? What about how that form is used, copied, stored? Are all of those activities adding value? Probably not. Your closet is cluttered with meaningless complexity that is costing you money.

What’s the answer? Start with determining the important few issues everyone on your team should know, understand and embrace. They were mentioned above. Core values define the culture, building a team where members hold the same basic values. Everyone should know the company’s long term or, BHAG (big hairy audacious goal). That is the organization’s compass reading providing necessary direction. The brand promise is what the organization agrees to consistently provide its customers. Southwest Airlines brand promise for years was Low Fares, Lots of Flights and Lots of Fun. Finally the quarterly priorities, no more than five each quarter, are the commitments the management team makes to move toward its BHAG.

This all takes the fanatic discipline Jim Collins writes about in his latest book, Great by Choice. Eliminating complexity, articulating the key values and goals and making sure the entire team understands and embraces them is difficult at best. However, if we want to be more competitive, we need to take on these challenges and overcome them.

Jim Collins and Brad Pitt

Dr. Don Sweet — Mon, 30 Jan 2012 03:24:25 +0000

by Dr. Donald N. Sweet

What can business owners and CEOs learn from Moneyball?

The recent movie Moneyball has a number of examples for business owners and CEOs. First and foremost, there are times when we need to redefine how we do business. Sometimes long time employees can’t see that need. New ways of looking at their world and new ways of operating are foreign and repulsive to them.

In those cases, we may need, as my partner Brad Lebo says, to free up the individual’s future. We must, of course, be relatively certain we’re charting the best new direction, and then we must be committed to it. Jim Collins might call this the twenty mile march mentality. We set the goal and then stay the course to execute it.

Deal with reality by being open to new ideas. Next we need to set realistic goals based on the empirical data. Sounds like Collins again, when he suggests that we fire bullets, then cannonballs. In Billy Beane’s case he was out of choices. Things had to change. His club had just had an exodus of top talent with little resource available to replace it. Sound familiar? We can substitute “top talent” with key customer, product obsolescence, hemorrhaging cash, etc.

Beane was managing at what Collins would call the Death Line. The only option was to recast the way the game was viewed and managed. The team and how they played the game had to be managed differently if they were to be successful.

Those moves took guts. Some might say desperation. Nonetheless, when the environment in which we operate changes dramatically, we have to change the way we respond to it. Both the movie Moneyball and Collin’s new book, “Great by Choice”, show executives successful ways to respond.

Vital Growth Newspaper Column on the Importance of Self-Awareness

Dr. Brad Lebo — Wed, 25 Jan 2012 23:18:48 +0000

See here for a Portsmouth Herald Business Monday column on the Importance of Self-awareness.

Vital Growth Newspaper Column on Retaining Key Employees

Dr. Brad Lebo — Wed, 16 Nov 2011 14:48:06 +0000

See here for Portsmouth Herald Business Monday column on Retaining Key Employees.

Vital Growth Newspaper Column on the Great Recession

Dr. Brad Lebo — Mon, 17 Oct 2011 22:04:01 +0000

See here for an article on the relationship between a depressed economy and a depressed public by Brad Lebo, Ph. D.

Vital Growth Newspaper Column on Facing Uncertainty

Dr. Brad Lebo — Mon, 05 Sep 2011 14:41:00 +0000

See here for an article on facing uncertainty (economic or strategic) in your business by Brad Lebo, Ph. D.