ValuExecBlog

Don't tell me the problem!

There is always a right way and a wrong way of doing things. Take the case of Estee Lauder for example. Recently, they announced their four-year strategic plan and outlined a set of performance goals for fiscal 2010 through to fiscal year 2013. In line with their plan however, they announced that they would be retrenching approximately 2,000 employees or 6% of their workforce. 

The company also outlined the geographies where they expected growth to come from over the strategic period (60% of sales would come from outside the USA); the operating margins they will achieve by fiscal 2013 (12% to 13%) showing a step-change improvement annually starting from a low fiscal base in 2009. 

In addition, the company provided a time frame for turning around under-performing brands (between 18-24 months) and the time frame for realigning their organization structure in keeping with the changing growth dynamics of the various geographies. They indicated that they would improve productivity and reduce the complexity that was hindering the execution of strategy. Furthermore, the company will invest $50 million to fuel market share growth, a better understanding of their consumers' needs and research and development for future product pipeline.

Now take the case of Pacific Brands which owns the 'Bonds' clothing range which is an icon in Australia. Recently they announced that they would be moving their manufacturing facilities off-shore to China. This would entail a loss of 1,800 jobs - 200 less than the number at Estee Lauder; but two days after making that announcement, it was revealed that their CEO (Pacific Brands CEO) recently had a $1 million salary increase and was now being paid in the region of $2 million / year.

Now, here's the thing. Two different companies with two different approaches to the market. Both cutting their workforce by +/- 2,000 and, I would guess, both CEOs probably earning around about the same salary. Yet, one company leaves you with a warm feeling of confidence whilst the other leaves you feeling ever-so-slightly angry. 

One company communicated very clearly their strategic plan and even though they provided the bad news about letting so many people go, they also provided a solution and the good news that they will be investing for future growth which, one would hope would create future jobs. The other company communicated only the bad news which I am sure was an inevitable strategic decision and which their senior managers had given a lot of thought to - but they provided no solution, no 'hope' for the future, nor any indication that they had a strategy for the future. The result, you are left feeling that those people lost their jobs so that the company could some how fund the CEO's salary ( I know this isn't the case, but perception is reality).

Once, a long time ago, I had to cut 10% of my workforce. It must rate as the most difficult and gut-wrenching thing that I have ever had to do. Even though it was painful for all involved, the employees could see the pain that I was going through. They might not have like the cuts, but they supported me because they could see my pain. It is difficult for employees to empathize with a CEO who announces job cuts and then a salary increase for herself of $1 million.

So, the take out is this - in today's climate, we have to step out from under the cloak of fear that has clouded our thinking in the past with regard to providing too much information to the public that may be used by our competitors. We have to clearly communicate our strategic direction over the next 4 years. It is not enough to say that because revenues and profits are falling, people will lose their jobs. We need to show that we have a plan that accommodates the present climate but also outlines clearly what our plans are for future growth. We need to communicate our key metrics and the time frames that we will measure ourselves against. We need to take a leaf out of Estee Lauder and show that we really do know what we are doing. We need to bring 'hope'.

As the old saying goes - Don't tell me the problem, just tell me the solution.

ian

'The man who sold Hot Dogs'

By now you would have gathered that I am, deep down at least, an optimist. To that end, I came across the following article by Doug Kennedy, President of the Kennedy Training Network, that was taken from ehotelier.com, January 30, 2009. The article entitled: 'First step in new sales: Believe it is possible!' addresses the hospitality industry, however Mr. Kennedy's message is relevant to all of us regardless of what industry we work in. Key points coming out of the article:

> Don't cut the level of optimism for the future

> Your level of optimism is visible every day in the actions of sales managers and employees as a whole

> The lack of optimism in sales becomes a self-fulfilling prophecy

Mr. Kennedy's final words provide valuable advice to us all: 'Make sure your actions as well as your words demonstrate a strong belief that although we might currently need to work a little harder and a little smarter than we did during those last few years of record profits, there is still plenty of business out there to be won.'

My thanks to Mr. Kennedy and the team at ehotelier.com

ian

Learning from The Master

In the October 2008 issue of Toastmaster, the monthly publication of Toastmasters International Inc., there is a wonderful interview by Craig Harrison with Coach John Wooden, Head Basketball Coach, University of California, Los Angeles - on lessons in leadership. Inspired by the article, I visited Wooden's website at www.coachjohnwooden.com and soon realized that I was in the presence of a Master. Here was a man who was larger than life; who had reached the top of his profession and yet was modest, and humble; who had no airs about him and just told it like it was. His philosophies on success, leadership, team-building were so clear and yet so simple that you could not help but marvel at the man's clarity of wisdom. Here are some of Coach John Wooden's pearls of wisdom taken from Mr. Harrison's article:

On Leading and Motivating Teams
"In my opinion, one of the greatest motivating tools we have is a pat on the back. Another technique is listening."

Tips for New Leaders
"Lead, don't drive. And give credit. Don't blame. Criticism must always be given in a gentle way, never harshly. As a coach I had 3 rules:

1. Never be late
2. You must never criticize a teammate
3. I would not tolerate profanity from anyone, anytime

Pursuit of Excellence
"My bench never heard me mention winning. My whole emphasis was for each one of my players to try and execute the fundamentals to the best of their ability. Not to try to be better than somebody else, but to learn from others, and never cease trying to be the best they could be."

On Resolving Conflict
"Unless a problem is brought to the forefront, it will just continue to fester."

On Struggle and Difficulty
"Hardship brings people closer together if you share it."

On Patience
"Leaders must have patience for those under their supervision. Don't expect too much too soon. Maybe it was easy for you, but that doesn't mean it's going to be easy for somebody else. And then you must believe in what you are doing, that what you're doing is the proper thing, the right thing."

Tremendous insights indeed from a true Master!

ian

I would recommend that you review Coach John Wooden's 'Pyramid of Success' which you can download from his website (provided above). The building blocks are a reminder of what builds winning teams.

"Shut up! You had me at hello."

There is a wonderful scene in the movie Jerry Maguire where Jerry, played by Tom Cruise, is standing before his estranged wife, played by Renee Zellweger and he is rambling on about his undying love for her and the fact that she 'completes him.' She stands there in total silence listening to him and then not able to take it any more she blurts out, 'Shut up, just shut up! You had me at hello.' Call me soft, but I love that moment and the comment, 'Shut up! You had me at hello.' For me it was the defining moment of the movie and Cruise's character for that matter because it was at that moment that he actually really connected with her for the first time. The rest was superfluous. And so it is when we connect with others. There is a defining moment when the other party can say 'Shut up! You had me at hello,' and the rest will be superfluous.

'Connecting' as defined by The Concise Oxford Dictionary is 'uniting with others in relationship' and must not be confused with the notion of 'touching' which is simply the means of 'coming into contact' with a person and does not imply the formation of a deep relationship. In alignment surveys that we have undertaken with our clients, we have found that one of the biggest barriers to strategy execution and individual performance is a lack of connection that people have with the strategy they are meant to execute as well as the lack of connection they have with their managers. In such instances the employees become disengaged and just go through the motions although their hearts and minds are elsewhere. As a result, strategy execution suffers.

The power of 'connecting' with people became evident to me when a company I was managing a while ago divested of one of its core businesses which as you would expect, created a lot of uncertainty and angst amongst the employees who were afraid of losing their jobs. (As a side bar: The uncertainty was fueled further by the fact that we had heard of the divestiture via the internet and not through company channels.) However despite their underlying fear, we were able to have on of our best years ever. The reason: we were connected with our employees. Their pain was our pain and they knew it.

Managers have opportunities to 'connect' with their employees and customers daily. However, there is one time when the need to connect is of paramount importance and that is on the first day of an individual's employ. Most people that I have spoken to remember the first day that they walked into their company. They remember how they were treated by the receptionist, the HR manager, their manager's PA and their boss. They also remember the actions of their peers throughout the day and whether they were made to feel welcome or unwelcome;  whether they were made to feel included or excluded. Managers that I have spoken to admit however, that they do not spend enough time on that first day trying to connect with their new employee. 

In a nutshell, if your employees or customers aren't able to say, "Shut up! You had me at hello,"  then you are probably not connected.

ian  

Aligning incentives to strategy

It is generally a well known fact that people will give priority to those activities for which they are rewarded. I have written before that if you want to change culture, change the incentives or metrics by which you measure individuals in the organization. This will change their performance which over time, will lead to a change in culture. Yet, individual incentives or metrics are often out of sync with strategy. A survey carried out by Kaplan and Norton in 1996, found that only 30% of companies linked incentive compensation to strategy and that fewer than 10% of employees understood their company's strategy. ('The Execution Premium: Linking Strategy to Operations for Competitive Advantage; Kaplan R.S, Norton D.P; Harvard Business Press; 2008). Admittedly, the survey was carried out a while ago, but recent experience would tend to support the view that companies still have a long way to go in aligning individual incentives or metrics with strategy.

Which begs the question - why? I think that there are 3 main factors at play: First, for subsidiaries incentives are usually dictated by corporate policy. Strategic dynamics may differ from one country to another and what may be a priority in one country may not be applicable to another. Market dynamics do differ from country to country but local subsidiaries tend to have little room to move when dealing with their employees' incentives. Secondly, incentives have a very nasty tendency to become a 'fixed' and 'expected' component of an individual's remuneration package. This is particularly true in those industries where there is a shortage in skilled talent. But, the good news is that this is beginning to change. Finally, changing incentives based on strategy is, let's face it - hard and time consuming. I mean if we are really honest about it, even annual budgets are seldom linked to strategy as subsidiaries are directed to add on a percentage to last year's numbers when setting their budgets.

If companies are to get individuals aligned with strategy and to understand how their roles actually do contribute to strategy, they are going to have to make sure that individual goals are aligned with company priorities at all levels and that incentives are actually aligned with those goals. Good incentives will reward the right behavior. It simply does not make sense to expect a certain strategic outcome and then reward other outcomes or behaviors. Rewarding the wrong things will frustrate the execution process of that you can be guaranteed. 

ian

This is your captain speaking...

There has been a lot of news coverage recently about the Qantas jet that suffered a gas explosion whilst in flight. Most of the coverage has been on trying to find where to lay the blame with very little coverage on the actions of the pilot and the crew in avoiding a potential disaster.

In one of those few articles, the pilot said that he was flying on instinct but 'instinct' like 'luck' is strongest when you train and work hard at being the best at what you do. One passenger praised the flight crew and said that they were calm, took control and helped the passengers through the unfortunate experience. Whereas I do believe in instinct, I also do not underestimate the role played by the hours of training and preparing for such emergencies which enabled the pilot and his team to avoid disaster and land the plane safely.

I have peace of mind knowing that if anything untoward should happen on a Qantas flight, I will be in safe hands. Compare that to an experience that a colleague of mine had on one particular Asian carrier. At one point during the flight, the aircraft went through severe turbulence which resulted in it dropping at what seemed to be 100 feet per second. My colleague said it was pretty hairy stuff but made all the more so by the flight attendants running down the aisles screaming in fear.

Qantas prides itself on being one of the 'safest airlines in the world,' and the actions of the pilot and crew in the latest saga would certainly back that up. But, all is not rosy in the Qantas camp one fears. A post investigation into the explosion and the events thereafter has revealed that not all gas masks in the cabin fell down and some of those that did were not operational. The unions were quick to blame this on the cost cuts that have been going on at the company for a number of years. A fact violently rebutted by Qantas management. Whether it is true or not I would not know, but of one fact I am certain and that is if a company, in the name of profitability or cost cutting, starts meddling with those factors upon which it has based its mission and built its reputation, then it will not survive in the long term. The message is simple - Don't mess with your DNA - that is, don't mess with what has made you unique.

If you are asked to cut costs in your department or company - look at those factors upon which you have built your reputation and protect them from the 'money grabbers,' but be ruthless in cutting or shedding all other factors not related to your reputation or mission. Otherwise the last words you may hear are, 'This is your captain speaking...'

ian  

The Courage to Say 'No!'

What a lot of leaders lack is the courage to say 'No!' No to the number of projects that have a tendency to accumulate within an organization and that divert scarce resources away from those projects that are critical. By critical, I mean those projects that are aligned to strategy.

It was a lesson that I learned only too well when I was heading up the Beauty Care and Nutritional Division of a pharmaceutical company. We had been asked to deliver more profit which called for a very close look at where our resources were being used. To my surprise, I am ashamed to admit, we uncovered over 150 projects that were in some way sapping the organization.

All were valid projects. All project leaders had good reasons as to why they were being done and the need for the resource allocation - but, if the truth be told, only a very few of them were absolutely critical and aligned to strategy. By focusing on the very few, we freed up resources, both financial and human; our response time improved as did our overall performance. Importantly we delivered on the revised profit target.

I spoke last week about navigating the minefields of Power and Influence and one of the outcomes of power and influence is the emergence of a project or activity and the corresponding allocation of scarce resources to support it. As leaders, we need to be true to strategy and have the courage to simply say 'No!' and to encourage others in the organization to do likewise.

In closing, review all the projects that are currently in the pipeline or on the drawing board and cull those that are not critical. Be ruthless is this task. Then, develop a culture in the organization  where people are encouraged to identify projects or activities that should be stopped and where to say 'No!' is encouraged rather than frowned upon and is not seen as failure.

ian

Navigating the Minefields of Power & Influence

At some point in your career, you will need to navigate the minefields of power and influence that exist within your organization. You will need the support of others to enable you to execute your strategy effectively or you will need to influence others to act in a certain way or to change their behavior so that you can meet your needs. You will need to either exert power and influence or tap into the power and influence of others.

Power is the opposite of dependency. The more dependent a department is on another to provide say, technical support, or key data etc, the more power and influence that department has over the department requiring the support or data. Power and influence is also related to the ability of a department to monopolize what other departments require. In other words, if a department can not obtain its technical support or data from any other source, then its dependency on and the power of the department providing what it needs is greater.

The same applies to people. People on exactly the same hierarchy level in an organization often enjoy different levels of influence. Therefore, when executing strategy, it is important that you recognize and understand the sources of power and influence within the organization. The following 3 actions will assist you in navigating the minefields of power and influence in the execution of strategy:  

1. Define the power bases and relationships in the organization
Map out the key dependency relationships affecting power or social influence within the organization. Who are the main players that affect what you do in your job (i.e., what departments do your department depend on for knowledge, data, technical support, etc), and conversely, which departments or SBUs depend on your department?

2. Form coalitions with those in power
It is important that you get power people in your corner in order to reduce resistance to your strategy or plan. The larger the power base that you create, the less likely that you will be ignored.

3. Focus on value-added, measurable results so as to gain influence and ensure that you achieve successful execution outcomes
Results do count. Individuals that create value obtain power. Therefore, when putting forward a strategy or plan, focus on the benefits that will accrue as a result of executing your plan. Measurable outcomes are important since hard measures are what people can see clearly and understand fully. To that end, try and express a problem in a way that people can identify with by providing data on the cost of the problem (i.e., the real hard numbers); then position your plan as the way to solve the problem. Finally, having a history of successful execution and positive results will increase your power and influence. 

I saw first hand the use of power and influence when working for a global food company. One of the Directors of the company had used his power and influence to push hard for expansion into Asia, particularly into Indonesia. Because of his power and influence, he was able to secure the resources for expansion. However, 2 years later, the Director retired and his replacement lacked the power and influence of his predecessor. As a result, resources that were once readily available dried up and further expansion into the territory was halted. 

Whereas the 3 actions described above will assist you in executing strategy, you need to bear in mind the downside to power and influence of which there are two:

1. People in power tend to want to stay there, and

2. Power is slow to change.

If you want to change the power structures that exist within the organization or more specifically your department, then you need to focus on and change the conditions that bestow power:

• Change Strategy
• Alter structure
• Reduce resource allocations & dependencies
• Create different levels of centrality & importance

Ultimately, the challenge for management is to ensure that power and influence furthers  the achievement of organizational or department goals and the execution of strategy.

ian

Lost in Translation!

There is an old saying that 'we judge others by their actions, and ourselves by our intentions.' I suspect that also applies to companies. I had the wonderful experience today of sitting through the launch of a new concept by a company in the hospitality industry. There was nothing wrong with the entertainment value of the event. In fact, the guest speaker kept us all entertained for well over an hour. But, I wasn't there to be entertained (although that was a bonus) - I was there to learn about their new concept. And as I left the venue at the end of 2 hours, I could not help but think that something got lost in translation because all I remembered was the guest speaker (who used every opportunity to plug himself) and very little of their new concept. In fact, if you were to ask me now what their concept was - I would not be able to tell you. So, where did their intentions and their corresponding actions get lost in translation?

10 Questions you have just got to ask!

As I sat across the table from the MD of a large global beverage organization, I realized that the door of opportunity was slowly closing and that it was only a matter of time before I was shown the elevator. The MD was adamant that they were executing their plans effectively; that everyone was aligned behind strategy and although he confessed to having some issues (hey! no-one's perfect) they were not related to execution. But, the whisperings around the corridors told me a different story. Morale was down; there was confusion as to what their strategy really was; and they were losing people. And still, I could see that door closing. And then, I asked the 10 questions! 10 questions that you should be asking of your company.

1. On a scale of 1:10, with 1 being 'Not very important' and 10 being 'Extremely important' - where would you rate 'Execution of Strategy?'
2. On a scale of 1:10, with 1 being 'Not at all well' and 10 being 'Excellent' - where would you rate your company on the 'Execution of Strategy?'
3. If your company were to move just 2 points on that scale, what impact would that have on revenues?
4. How do you monitor/measure how well strategy is being executed (i.e., what mechanism do you use?)
5. How often do you measure it?
6. On a scale of 1:10, with 1 being 'Not very important' and 10 being 'Extremely important' - how important is it that people throughout the whole organization are aligned behind strategy?
7. How do you measure alignment and how often?
8. What is the biggest challenge that you face regarding, a). the execution of strategy and b). getting people, resources and systems aligned behind strategy?
9. How do these challenges affect your profitability/performance?
10. If you could create the ideal solution, what would you like to improve or change?

After each question and his corresponding answers, I noticed a shift in his posture and his approach. He was now engaged. We were beginning to confront the real issues - the tangible issues of execution excellence and he could see the numbers. The door was beginning to open wider.   

ian