Author: Dr. Don Sweet

by Dr. Donald N. Sweet

Strategy is just one piece of the business puzzle, although an important one for sure.  Strategy, we believe, drives the top line of your organization.  If you’re not happy with the growth of your top line it is usually a strategy issue.

When looking for a strategy consultant several important items to consider are:

1)     What kind of broad business experience does the person have?
2)     Do they come only with a specific industry background?
3)     Do they have an integrated framework to assist you in strategy development?
4)     Where have they been successful in strategy development previously?

While specific industry knowledge can have some benefits, often times what a company really needs are thoughts and questions from outside of their industry.  It’s hard to get a new perspective when everyone “knows” how the industry behaves.   There is no one to thoughtfully question long held beliefs.  People with experience in a number of different industries bring a broader perspective to the planning table.

Strategy has a number of integrated components that have to fit well for the strategy to be effective.  Just because someone has participated in developing any number of strategies in the past doesn’t mean they know all the components and how they interlock.  If you’re not happy with your top line, then you probably don’t want to follow the same process you’ve used in the past either.

Too many of us have been in businesses, even led businesses, which followed the same strategy format year after year even when we weren’t happy with the results.  Often times it was really just an annual budgeting exercise with a slim slice of real strategy bolted on.  That’s what many consultants have experience with, too.

Ask your prospective consultant to show you their integrated framework before retaining them to help you with your strategy.  We find tools that are simple but effective to be the best.  At the end of the day, your strategy is only as effective as its execution.  Complex strategic tools result in complex strategies and complex strategies are less likely to be implemented well.  Early in my career, one of my mentor Presidents told me he would take an average plan well implemented over a superior plan with only average implementation.  Complexity is as costly as incompleteness.

Your business strategy needs to be both comprehensive and straightforward.  As many of you begin thinking about your strategy for 2013, we hope you’ll find these past two posts helpful.  The right outside perspective is invaluable when building your plan for future growth.   Good luck in 2013!

by Dr. Donald N. Sweet

Lots of consultants claim to be able to help you with your strategy, don’t they?  Why do you think that is?  It probably has to do with their belief that they have been involved in enough strategy sessions to be able to help business owners.  Experience is certainly important, as are perspectives from outside of the organization.

Furthermore, marketing consultants will say they want to know about the company’s strategy.  While this is usually to align marketing with overall strategy, they also take a view with a marketing slant on that overall strategy.  The CFO type consultants weigh in too, with good solid thoughts, but from a financial bias.  IT consultants also want to understand the client’s strategy to offer the most appropriate solutions.  Having them help develop strategy, while of some value, also comes with IT partiality.

You know the story, everyone has their view on the business world.  It reminds me of what Maslow once said, something like, “If your tool is a hammer you only see problems as nails.”  Don’t you think that probably goes for most tools?  We tend to see solutions from our dominant perspective.

Now wait a minute, a good marketing or CFO or IT consultant says, I have broader experience than that.  While they most likely do, many specialists still see the world in light of their main “tool”.  Is that really the view that serves the business best?

Finally, many specialized consultants don’t have a cohesive structure to help business owners consider the major components of strategy.  Strategy drives the top line in a business.  If you’re not happy with your top line, your strategy needs to be modified.  It is a holistic business issue and must incorporate thoughtful People, Execution and Cash considerations along with the usual product/service, market, customer, technology, etc. issues.

Ask yourself whether your consultant has all the right tools to help you develop a cohesive and effective strategy.

by Dr. Donald N. Sweet

Whether you’re entering a new market, investing in new technology, or hiring to staff a new department, try to seek out some perspective from people you trust who have walked down that road.  All of us come up with new ideas, enter into new situations willingly, but too few of us seek perspective early.  My wife would tell me that’s a guy thing, we never ask for directions.  She may be right.

Recently I was pulled over in a speed trap and given a ticket.  They had the wrong guy; I had just gotten on the road from an access ramp.  As a result I didn’t pay the fine and elected to have my day in court.  Bringing some simple documentation to show where I had come from, why it couldn’t be me, I relied on just being right.  I never asked for a perspective from someone knowledgeable about how those things usually work.  The judge found me guilty; I have to pay the fine.

Hindsight being so good, I now understand where I went wrong.  Has that ever happened to you in your business?  We’re all so busy we don’t slow down and think about how to improve the odds where it really matters.  The ticket was no big deal, but expanding into a lateral product offering could be, just like setting up a satellite office in New Jersey, or any other number of actions.

So don’t make my mistake, ask for help, ideas and perspective from people in the know before plunging into a new endeavor.  As Verne Harnish, Founder and CEO of the Gazelles, often says, “He who taps into the most minds wins!”  Tap into more minds and enjoy your success.

by Dr. Donald N. Sweet

This was the provocative headline of a recent Economist.  The “Leaders” article starts with the example of Hal, the computer in 2001 A Space Odyssey.  Faced with a dilemma, Hal decides to kill the crew.  Morals and the machine.

Immediately the mind moves to question just how we will educate machines, computers, about right and wrong.  We now see the use of computers from driverless cars to drones.  These machines are capable of injuring people.  They will be called upon to make some difficult decisions.  There are undoubtedly many smart people working hard to anticipate the various scenarios.

I realize I’m out of my depth when it comes to these machine conundrums.  However we should extend that discussion to the people in a business organization.  Couldn’t the title just have easily been Morals and the Man?   We have numerous recent examples in our society from Madoff to Murdock that would suggest moral issues there, too.

Merriam-Webster defines morality as “conformity to ideals of right human conduct”.   Wikipedia defines it as “manner, character, proper behavior”.  While a number of my academically minded friends would have issue with the precision of both definitions, it’s clear enough for most of us.

We know what is right and what is wrong.  Do we, however, engage people within our organizations in those conversations?  Should we?  Many of us would probably answer those questions, in order, as no and yes.

Many of us, and our teammates, face moral dilemmas somewhat regularly.  How do we assist each other in dealing with them?  One effective way is to ensure our organizations have a robust set of core values.  The next way is to ensure those core values are alive and discussed regularly.

Without solid core values to lean on, we will be rudderless when the next moral storm hits.  We may not be able to resolve the issue of “Morals and the Machine”.  However, we can provide a solid foundation of core values for our organizations to use when wrestling with the moral issues that arise.

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.

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.

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.

by Dr. Donald N. Sweet

What does the latest economic turbulence mean for the economy and your business?  Who knows!  As we all listen to the pundits we get very different messages.  The bottom line is no one knows for sure what is going to happen in general, let alone how it will affect your industry or your business.

What is a business owner or CEO to do?  How do you sort through all the conflicting data and opinions?  I, for one, don’t think you do.  I don’t believe that is the best place to invest your time and energy right now.   Both CEOs and their teams need to invest time and energy in the improvement of their business fundamentals at this point in time.

You have to do something.  Standing still to wait and see what happens, while an option, is not a good one, in my opinion.  Even in these times of uncertainty, we need to take positive steps forward.  As leaders, we owe that to our employees as well.  They need to have something they can work on that will strengthen the company and help secure their jobs.

I tell my clients to turn off the news, some of which, in my humble opinion, approaches sensationalism.  For many it only serves to depress them.  This is a time we all need to take action, positive action.  We need to do something that will make a difference in our companies, if nowhere else, at the moment.

What could be more fundamental than looking at our business organizational infrastructure?   My colleague, Dr. Brad Lebo, continually tells our clients how important having written core values are to an organization.  Having them is the first important step; effectively communicating them is next.

Core values define our business culture.  Perhaps seeing the glass as half full is a core value in your business.  Do all employees know that?  Do they see you modeling that value?  You get the message.  Perhaps it’s time to revisit your core values.  Maybe they just need to be dusted off and communicated.

The point is if we have positive core values, and what business doesn’t, this is an excellent time to remind everybody about them and for you as boss to walk the talk.  At the end of the day actions speak so much louder than words.  After core values, why not review your brand promises?  We like to see three, a lead promise and two supporting promises.  As an example, Southwest Airlines’ lead promise is Low Fares which are supported by lots of flights and lots of fun.

What does your business promise to the marketplace?  At this point you may be saying what we really need are sales, not brand promises.  While you may very well be right about needing more sales, having a well understood brand promise helps both your sales team and your customers do more business with your company.  Providing focus is critical to your success.  Brand promises also help define what you are not.  Employees and customers should not spend time and effort on what you don’t promise.

How about priorities?  Do you have a handful of company priorities for the next three months?  Does everyone on the team know what they are and what their role is in the execution of those priorities?  Let’s take those questions one at a time.

Priorities are key for the team members in the organization to know what is important.  Without priorities we don’t know what is most important to do next.  If we don’t know we should sail the ship north to arrive at our destination we might go south instead.  We need to have targets, and priorities supply them.

Only have a handful of priorities.  Too many and we lose focus.  We spend too much time doing less important items when we have 17 or 27 priorities.  Narrowing the list down is heavy lifting, but it is also where the payoff is located.  Taking the time and team effort to come up with five priorities for the next three months brings laser focus to the business.  These few priorities need to be tied to the long term goals of the company, too.

When we have a handful of company priorities, it becomes easier to communicate them to the team.  Many organizations bring the players involved together to have them map out what needs to be done to accomplish the priority.  These groups function much like LEAN teams.  The process owners are present along with the champion and folks impacted by the process.  Finally it is always good to have someone present who has no idea about the process that will ask the silly questions like, “why do we do it that way?”

This allows for a fully vetted process to achieve the priority.  Responsibilities are determined, completion dates of intermediate steps agreed, and resources secured.  Everyone should have a document laying out the individual commitments and group expectations.

We now have a number of positive things we can do in our business as we’re waiting for the economic picture to become clearer.  We will have invested this uncertain period in strengthening our organization’s fundamentals.  We will have taught our employees more about our culture, our priorities and how they fit into the overall picture.  We will be in a better position to take advantage of opportunities because our business has better alignment from the top down and from the bottom up.  We will function as a much more productive and happy team.  Be bold and take some positive steps in these uncertain times!

 

by Dr. Donald N. Sweet

Have you ever seen a business that reminds you of our Federal Government? I was at a management meeting of a business facing some difficult financial issues, not unlike our country in broad strokes? In these businesses, like in our country, the management meeting features two factions arguing with each other, protecting turf and constituents while seeming to forget about the health of the business.

When this happens in a business, we usually find that the organization has a very weak set of core values, if any at all. People on both sides of the table, or aisle, are only interested in what is good for their side. Long forgotten are the ideals that first brought them together. Gone are the memories of shared success during the growth periods. Personal and parochial agendas drive each side now.

When this happens in companies and red ink flows—like deficit spending in government–lending sources begin to dry up. It starts with borrowing becoming more expensive which causes higher deficits and the start of a downward spiral (aka: a death spiral). Often times lenders start to put demands on the organization and may go as far as requiring turnaround consultants being brought in to save the company.

Sometimes we may wish that would happen in Washington. From my doctoral dissertation research, turnaround consultants have three main levers to pull. First is changing the CEO, the leader who guided the ship into this mess. Second is selling any non-productive assets, property, buildings, equipment, stocks, etc. The final lever is expense reduction. Cash is king and it must be found and preserved.

This is where Washington can take a lesson from business. Minting money is not a solution to a financial crisis. Neither is gouging customers–tax payers. True, these “customers” may not have anyplace else to go in the near-term, but it is not a healthy long-term strategy.

How do organizations get in these difficult situations? We believe they lose sight of their core values. They forget how to work together, how to play well in the sandbox. Whatever the organization we are part of, we are only one part of a whole. When we start to identify with subgroups, operations, Republicans, sales, Democrats, we begin to lose sight of the purpose of the whole.

We find that when that happens the core values of, “continuous improvement”, “be terrific”, “always do the right thing”, “focus on the customer”, “our word is our bond”, etc. fall by the wayside. Core values are replaced by what’s best for my special interest group, not what is best for the entire organization. We need to continually guard against this happening and acknowledge that this tendency is as old as recorded history!

Continuous emphasis on the core values of the organization can help us overcome these issues. Good hiring practices tell us to hire people who have shown that they have our core values. Good management practices tell us to fire someone for violating one of our core values.

Verne Harnish of the Gazelles would caution us to have only a handful of these values. He further instructs us to repeat them over and again to ensure people continue to hear them. Of course, as leaders we must live those values, to model the way for others as Kouzes and Posner suggest.

Have a few core values. Communicate them continuously and effectively. Walk the talk. Hire people who share those values. Fire people who violate them. If we do that within our organizations our chances of success are greatly improved.

Can we do the same in our Government? What are our top five or six core values? They are the guiding light for our businesses. Why should that differ for our government? Should we enter into a national debate about the five or six things that are most important to us?

To be really core, values must be relatively few in number. When difficult decisions are to be made we should be looking to our core values to inform our deliberations. The Gazelles suggest that you only have five or six fundamental values. Too many and they lose their effectiveness. At the end of the day effectiveness is key for the team, the company, the party, the nation.

When operations and sales agree, the infighting falls away. The emphasis is put on the right issues, not what is best for my part of the team. At the end of the day we are all in this together. We believe Core Values are the glue that keep us together and and help us concentrate on the real problems and opportunities facing our organizations.

 

by Dr. Donald N. Sweet

Core values can put dollars on your bottom line!  However, many of us have only paid lip service to core values in our businesses.  Of course they’re important but there are so many more immediate things that need to be addressed.  Sound familiar?  I know I’ve had those thoughts in my businesses.

During those times, I was where what Stephen Covey calls the first quadrant of time management: the important and urgent quadrant, or quadrant 1.  This is also known as fire-fighting.  Core values work are in what Covey calls quadrant 2, important but not urgent.

You’ll recall Covey instructs us that the best way to stop all the fire-fighting is by spending some time on things that are important before they become urgent.  Why would core values ever become urgent?  They inform most all our decisions, even if we don’t know it.  Our firm’s culture is shaped by them, even when they aren’t written down.

How can that happen, you ask?  Every firm that doesn’t have written and communicated core values has implied values.  Furthermore those values are interpreted differently by employees, customers, vendors and partners.  Sounds like chaos, doesn’t it?  That’s what quadrant 1, fire-fighting, often looks like.

Core values are quadrant 2 material.  They are a small set of timeless guiding principles.  Core values require no external justification; they have intrinsic value and importance to those inside the organization.  They are the bedrock of company culture.  If you don’t have core values written down and communicated there is a decision vacuum in the firm.

Core values inform who to hire: people who share the firm’s values.  Who to fire: employees, vendors or customers, when your core values are violated.  They also tell you when you need to take a financial hit for adhering to your values.  Some of you will remember Johnson & Johnson’s decision to remove Tylenol from all retail shelves in the ‘80s.  That cost them millions but it was the right decision and prompted by their core values.

Ralph Larsen, former CEO of Johnson & Johnson stated that, “The core values embodied in our credo might be a competitive advantage, but that is not why we have them. We have them because they define for us what we stand for, and we would hold them even if they became a competitive disadvantage in certain situations.”

In a recent HBR.org post by Rosanna M. Fiske titled “The Business of Communicating Values”, Ms. Fiske commented that the recent high profile scandals have made it clear that many businesses do not properly or openly communicate their values. That has both direct and indirect effects on their firm. This could be avoided, but not without some heavy lifting.

Having core values requires that they be communicated and lived by the leadership team on a daily basis.  This is truly a quadrant 2 activity.  When line people need to make a difficult decision on the spot, the core values they have learned and lived with will often point the way.  Everyone in the firm has a clear basis for making difficult decisions.

When used as an integral part of the hiring practice they improve our probabilities of making the right hires.  Everyone knows the enormous cost of mis-hires , starting with time and money spent hiring to training time and costs, to the agony of finally letting the mis-hire go, only to begin the process again.  How much time and money is lost?  Dr. Brad Smart estimates the cost of a mis-hire is between six and twenty-seven times their salary depending on their level in the organization.

Most of us have been down this path.  Not only is it costly, it’s painful.  Painful for us and our organizations.  Using our core values as one of our filters can eliminate those candidates that just won’t fit in to our culture and our way of looking at the business world.  Of course that doesn’t mean we just want to hire “yes” people, we don’t.  But we do want people who share our values.  There’s a big difference.

Teams that have the same values work better together.  One of my mentors used to say that he would take a team that worked well together over a team of superstars any day.  Employees feel better about coming to work when there is a shared culture.  When we work well together we are more effective and take care of the customer better.  At the end of the day, core values provide the foundation upon which to build a strong, profitable and vibrant company.