Posted on

Complexity Can Kill Competitiveness

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.

Posted on

Jim Collins and Brad Pitt

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.

Posted on

When times are Uncertain: Strengthen Business Fundamentals

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!

 

Posted on

Confronting Problem Behavior

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.

If, however, you’re like the majority of people, confronting problem behavior is something you dread. You might even avoid dealing with it at all, making you eligible for all those unpleasant labels: co-dependent, enabling or “in denial.”

There is hope! Confronting problem behavior is a skill that can be learned—and even mastered. With a little practice, you’ll be good at confronting the problem behavior of an employee or peer. It’s even possible to learn how to confront the problem behavior of a boss or customer.

There are substantial benefits from learning how to confront problem behavior. In the workplace there are financial returns that add up, like those from tackling off-task behaviors of certain employees. Over time, these off-task behaviors reduce productivity and add expense. There is the benefit of reducing risk, like the risk associated with unethical behavior that leads to complaints, lost customers and, potentially, civil or criminal action (fines, lawsuits, etc.). And, there is the “priceless” result of confronting someone in authority (such as a doctor or pilot) who is on the verge of making a tragic mistake that leads to injury or loss of life.

These benefits double if you are able to take satisfaction from preventing waste, wrongdoing or tragedy. They may multiply even more if you stop someone from behaving in a way that takes advantage of or otherwise misuses you.

To confront problem behavior, while keeping your own discomfort to a minimum, follow these five steps:

Step 1 – Determine the “gap” between the behavior you observe and the behavior you desire. Determine this gap with “clinical detachment”: observe the difference between what someone is doing and what you want them to do without getting into the whys and wherefores. This step is best done alone with the time to think about what the person is doing and how it is different than what you expect or need.

Example: Phil is frequently late for the start of the workday. Not: Phil seems to be late a lot because he doesn’t care about being on time for work.

Step 2 – Determine the source of the “gap” between desired and observed behavior. Try to understand where the difference in behavior comes from.

This step is a difficult to get right because there is a natural tendency to attribute the problem behavior to a character flaw or other deficit in the person’s makeup. Indeed, it is a challenge for most of us to not start thinking of what is wrong with the person who is under-performing. We tend to think of such a person as “lazy,” “stupid,” or “arrogant.”

Usually, however, we are wrong in our assessment. Being wrong about the source of the problem behavior has a couple of consequences. First, what corrective action can you take when someone is “lazy,” “stupid,” or “arrogant”? There are really no corrective steps to take, if the source of the problem is a character flaw.

Second, thinking of someone as flawed raises the emotional stakes in any discussion about planning to correct the behavior problem. Just think of the difference between having to work with someone you think is “stupid” and working with someone who you think is bright but could use training.

Typically, the source of a behavior problem is something other than a character flaw. More frequently, gaps in behavior are a symptom of poor understanding of expectations, misunderstood priorities, insufficient experience or training, or lack of motivation to complete the desired tasks. Sometimes, the source of the problem behavior is constraints in procedures or resources.

Getting to the source of the problem is a detective’s job that includes observing the behavior, accurately and dispassionately describing the problem behavior, and asking the offenders why they are behaving the way they are. Doing the detective job well means establishing rapport with them so they are not put on the defensive. It also means talking to them in a way that makes them feel you are really trying to understand their view of the source of the problem behavior and not looking for ways to find fault and pin blame.

Example: Phil does not prioritize being on time (even though his boss does). He has a babysitter who is frequently late to arrive to take care of his infant son—making him late, in turn. Not: Phil is late frequently because he is lazy or unmotivated to work at his job.

Step 3 – Develop a plan for closing the gap that is satisfactory to both you and the person with the problem behavior. This should be a joint “solution seeking” session. Ideally such a session will include a clear definition of the gap behavior, an exploration of what the source of the problem behavior is, and a collaborative approach to developing corrective action. Also, there should be agreement to get together in several weeks to chart progress. Finally, there should be a discussion about what’s going to happen if the problem behavior continues.

Example: After speaking about Phil being tardy and Phil’s explanation of why, Phil’s boss explains that having his people show up on time is a priority. Phil tells his boss he understands the importance of being on time and will speak to his babysitter about getting there 30 minutes earlier each day to help keep him from arriving late. They agree to meet every two weeks to chart progress and that if he does not close the gap, he’ll be given a written warning and eventually let go. Not: Phil, be here on time or be fired.

Step 4 – Re-assess the behavior. Has the behavior changed in the wrong direction, the right direction or not at all?

This step is follow-up to the plan created in step 3 and can take place as frequently as needed. The warning here is that if you don’t want problem behavior to grow, don’t just address it once or twice and then ignore it whether it gets corrected or not. Nothing grows problem behavior like ignoring repeated offenses or even improvement!

Example: Phil shows up on time and his improved behavior is discussed with him every week for a quarter. Not: Phil continues to be late to work on a frequent basis. His being late is ignored and he feels it must be okay. Others start showing up late, as well.

Step 5 – Dispense consequences or rewards. This step is the opposite of ignoring problem behavior. It is a simple step conceptually but requires discipline to execute. Simply put, reward with praise and potential for greater responsibility, or punish with written warnings that lead to termination.

Example: Phil is praised for making the change that closed the gap in his behavior. Or, Phil is let go or re-assigned. Not: Phil’s lateness continues but his boss decides to wait until the annual review to discuss.

Confronting problem behavior is much easier if you can follow these five steps, in particular the step of determining the source of the problem behavior without making assumptions about why it is occurring. Most people want to perform well even if they need to be reminded what exactly that means….

For more information on confronting problem behavior see Crucial Confrontations by Kerry Patterson, Joseph Grenny, Ron McMillan and Al Switzler, McGraw-Hill (2005).