Author: Dr. Brad Lebo

See here for an article on Confronting Problem Behavior in the workplace by Brad Lebo, Ph. D.

If you look forward to confronting problem behavior and don’t rely on intimidation, you have my utmost respect. You also probably don’t need to read any further.

On September 22nd we will hold a workshop in Portsmouth on how best to capture the rewards of growing your company. We will host Mr. John Murphy, President of Atlantic Management Company, to speak about The Four Most Common and Effective Exit Transitions for Business Owners. See here for more information.

On October 13th we will co-host a workshop in Woburn, MA on how to grow a company by Mastering the Rockefeller Habits. This is an exceptional opportunity to get introduced to the Gazelles approach to growth (by Mastering the Rockefeller Habits) and take a giant step forward in planning and executing to achieve growth. See here for more information.

See here for a recently published article on Motivation in the Workplace by Brad Lebo, Ph. D.

We at Vital Growth know that company culture is central to organizational effectiveness. Organizations can succeed with a poor culture but more often they fail or “fail to thrive.” The article below makes the case for attending to your company’s culture for the benefit of employees and the bottom line…

Does Corporate Culture Pay?

The Beryl Cos.’ CEO Paul Spiegelman argues that having a strong corporate culture makes smart business sense. See here for the full article.

Culture: It’s a word that often makes CFOs cringe because of the perception that it’s expensive. From my experience, it’s far more costly to do business without it. As CEO of The Beryl Cos., which specializes in managing patient interactions for hospitals, I’ve found that employee engagement through our unique corporate culture is what allowed us to move from a commodity to a business that doesn’t need to compete based upon price. Read More…

We at Vital Growth Consulting Group endeavor to share some of the best thinking on management that we encounter in our travels. Below is a HBR blog post by Rosabeth Moss Kanter titled, “Five Tough Questions Every Entrepreneur Must Ask about Growth.” The five include the areas of People, Finances, Partners & Allies, Organizational Culture and Outcomes & Impact.

Changes in organizations are constant. They add an additional level of complexity for the entrepreneur to deal with. We at Vital Growth CG recommend business owners consider joining organizations like HBR (link below the article for your convenience) for timely thoughts on business issues and trends.

Five Tough Questions Every Entrepreneur Must Ask about Growth

by Rosabeth Moss Kanter

Getting a venture underway is often easier than keeping it going and growing. At each major stage from start-up to sustainable success, entrepreneurs face tough questions about shifting gears, making major changes, and letting go of people, partners, and products. For new businesses, inability or unwillingness to change can land them in the statistics about high failure rates at the five-year mark. For non-profits, clinging to the past can lead to marginality and stagnation.

To keep an enterprise on track while facing the often-pleasant challenge of growth requires making sometimes-painful adjustments in these five areas.

The People. One of the hardest questions is when to change the people — not just individually, but the whole mix. Founders often start with friends and true believers who work hard because of zeal for the cause or hope for future returns. They occupy multiple overlapping roles. But do the people with single-digit badge numbers or members of the founding generation have the skills the organization needs as it creates routines and requires depth in every specialty? Who can make the cut? A winery I knew from its beginning kept the original group longer than the business could afford, and loyalty got in the way of bringing in experienced people “above” the people who felt they were founders and thus privileged to call the shots. Raise a glass to courageous leaders willing to tell people they must either grow or go.

Finances. Whether the original source of funds is venture capital or venture philanthropy, an investor base or a donor base, each growth phase challenges organizations to shift assumptions and thus change practices. Perhaps investors expect customers to take over as funders of growth by paying more (or paying at all), a challenge dot-com companies faced in the first Internet wave and social media companies face now. Non-profits also outgrow friends-and-family angels or local sources and must find sustainable revenue and capital sources. How do you move from being discretionary nice-to-have in a portfolio to essential-to-fund? Where are the new sources appropriate to a new, larger size? A multi-site non-profit went from local businesses close to the founding city to national funders in government and foundations to a revenue model replicable in every site through ongoing school budgets on a fee-for-service basis.

Partners and Allies. The best organizations are attuned to the need for key external relationships that provide resources and support. At the same time, entrepreneurs do not want to be captive to the needs and desires of their first distribution partners, component suppliers, source of talent, or marketing allies. It is tricky to know how to nurture and draw benefits from key partners without being subsumed by them — or subject to damage if they stumble — and, at the same time, add to a partner set without creating conflicts. Which partners should be downplayed or replaced as the organization grows? How can key relationships be managed to lessen dependence while seeking new, more relevant, allies? And with growth comes the need for entirely new types of relationships — which is why Facebook now has an enlarged Washington office.

Organizational Culture. Are you making explicit what the organization stands for in tangible ways that can be transmitted and endure? Are you on guard against drifting away from the culture? Numerous studies, including my own, show that an emphasis on organizational culture is associated with continuing excellence. Values, stories, artifacts, and rituals provide a source of identity that makes the organization feel the same, in pursuit of the same mission even while everything else changes. Culture provides internal glue. As an organization grows, what was once informal must be documented, codified, memorialized, and passed on to new people. Savvy entrepreneurs ensure that their organizations are built to last by stressing culture. At every stage, they invest in preserving fundamental values and principles while adding new iconic stories that reflect them.

Outcomes and Impact. What results are being produced, for whom, and are these sufficient? In the beginning it’s enough to show that it can be done at all — to address a good cause or to prove that something works in a handful of markets. In the next phase, you might look at growth indicators — we did more this year than last year. Recall the signs that McDonald’s posted outside its stores during its rapid growth phase, heralding how many millions of hamburgers had been served. Sooner or later a new question arises: Are you making a difference that makes the venture more essential?

Ventures that go from proof of concept to “permanent” player have become icons, household names, or must-have players because they can show differentiated user, recipient, or national benefits — that they have impact not just on their immediate customers but on the entire industry. We all know that success provokes imitation. As the organization grows, its distinctiveness gets harder to maintain. But often many in and around the organization come to believe that existence is a sufficient sign of importance — a trap particularly for non-profits. Asking the “so what if we weren’t here?” question about making a difference can provoke soul-searching and strategy change.

The bottom line: In addition to the challenges of innovation to ensure new offerings and new capabilities, entrepreneurs and organization founders must also be alert to the ways that the organization itself changes as a result of growth. It is important to anticipate those developments and ask the five big questions at every stage in order to get ahead of change and master it.

We at Vital Growth Consulting Group endeavor to share some of the best thinking on management that we encounter in our travels. Below is a HBR blog post by Nicholas Bloom, et. al. entitled, “Why American Management Rules the World.” The article is something to cheer about if you’re an American and provides the “secret sauce” for achieving managerial success.

We at Vital Growth CG recommend business owners consider joining organizations like HBR (link below the article for your convenience) for timely thoughts on business issues and trends.

Why American Management Rules the World

by Nicholas Bloom, Rebecca Homkes, Raffaella Sadun, and John Van Reenen

After a decade of painstaking research, we have concluded that American firms are on average the best managed in the world. This is not what we — a group of European researchers — expected to find. But while Americans are bad at football (or soccer, as it’s known as locally), they are the Brazilians of Management.

Over the past decade, a team from Harvard Business School, London School of Economics, McKinsey & Company, and Stanford has systematically surveyed global management. We have developed a tool to measure management practices across operational management, monitoring, targets, and people management. We scored each dimension on a range of practices to generate an overall management score, surveying over 10,000 firms in 20 countries. This has allowed us to create the first global database of management practices.

Here are some of our findings.

Well managed firms thrash their poorly managed competitors

First, not surprisingly, we find that organizations with better management massively outperform their disorganized competitors. They make more money, grow faster, have far higher stock market values, and survive for longer. (For details see our previous HBR blog post.)

The American Management Century

Second, when it comes to overall management, American firms outperform all others. This U.S. dominance occurs in the manufacturing, retail, and healthcare sectors (but interestingly, not in high schools). Japanese, German, and Swedish firms follow closely behind. In contrast, developing countries like Brazil, China, and India lag at the bottom of the management charts. Southern European countries like Portugal and Greece appear to have management practices barely better than those of most developing countries. In the middle stand countries like the UK, France, Italy, and Australia, which have reasonable but not brilliant management practices.

Bottom dwellers drive the rankings down

While the ranking of countries is certainly eye-catching, the real story lies within the countries. Almost 90% of the cross-country differences are driven by the size of the “tail” of really badly managed firms within each country. Countries like the U.S. that excel have hardly any badly managed firms, while those like India that have low average scores have a mass of very badly managed firms pulling down their averages.

Every country has some world-class firms

But while there are many of these extremely badly managed, every country also hosts some excellent firms. Even bottom-ranking India has dozens of firms that use world-class management practices. A key takeaway is that individual companies are not trapped by the national environments in which they operate — there are top performers in all countries surveyed. Conversely, being in a world-class environment like the U.S. does not guarantee success. Even in America, more than 15% of firms are so badly managed that they are worse than the average Chinese or Indian firm.

What is the secret sauce of management success?

One of the biggest drivers of these differences is variation in people management. American firms are ruthless at rapidly rewarding and promoting good employees and retraining or firing bad employees. The reasons are threefold.

1. The U.S. has tougher levels of competition. Large and open U.S. markets generate the type of rapid management evolution that allows only the best-managed firms to survive.
2. Human capital is important. America traditionally gets far more of its population into college than other nations.
3. The U.S. has more flexible labor markets. It is much easier to hire and fire employees.

Many developing-country firms, even while trying to implement new techniques like Lean Management, ignore the fact that labor is different from other “inputs.” Many of the Chinese firms surveyed did not even employ managers who spoke the same language as the workers, relying on interpreters or basic sign-language for communication. As you can imagine, this does not lead to a feeling of mutual support between management and workers.

But the U.S. should not be complacent. Other countries equal or better the U.S. in some of the other areas of management we examined, such as careful monitoring, lean production, and sensible targets. The manufacturing prowess of Germany, which has helped it weather the recent downturn so well, is built upon such advantages. Furthermore, although Chinese management practices are well below U.S. standards, they showed the fastest improvement since 2006 of any country we have looked at.

Changing the ranks and reaping the rewards

What lessons emerge for others wanting to reach the top of the ranking?

The answer is not for all firms to be more American but rather to consider some of the practices U.S. firms — and especially U.S. multinationals — continually exhibit and implement. Across all countries, organizations that properly incentivize talented workers, whether through promotion, pay, or other rewards, outperform others. As best practices spread and firms continue to implement these techniques they will narrow the existing gaps, reaping huge growth and profitability gains.

Do you want to know where your firm would fall in the rankings? For more on our research agenda and related work, go to the World Management Survey, where you can also benchmark your own organization and determine where you fall within the ranks of your industry or nation.

Nicholas Bloom is a Professor of Economics at Stanford University. Rebecca Homkes is the Director of the Management Project and a Research Officer at the Centre for Economic Performance at the London School of Economics. Raffaella Sadun is Professor of Strategy at Harvard Business School. John Van Reenen is the Director of the Centre for Economic Performance and a Professor of Economics at the London School of Economics.

See here for an article on hiring by Brad Lebo, Ph. D.

“I would not give a fig for the simplicity this side of complexity, but I would give my life for the simplicity on the other side of complexity.”

– Oliver Wendell Holmes

One of the organizing principles of the work we do is to appreciate the value of simplicity in strategic planning. In short, we work hard to make complex work simple by distilling the key goals and priorities from the complexity of operating a business–accelerating growth. The quote by Oliver Wendell Holmes sums it up better than we ever could.