Posts Tagged ‘Adapting’

square peg round hole

Did you ever watch a toddler trying to put the pieces of a wooden puzzle in the proper hole?  Over and over again they try to find a way to get the round peg into the square hole.  It is an interesting learning and discovery process to observe.  Eventually, they discover the right hole and then move on to the next piece repeating the process.  Over time, they figure the puzzle out.  Interestingly, as adults, we have a natural tendency to continue to play this game.  The difference is we don’t know we are playing it.

While the world has gone through significant change over the past five to ten years, some have struggled to adapt to the changes.  Harder and harder they bang on the round peg believing that it must fit into that square hole.  Nowhere is this more apparent than with our political system.  What they fail to realize is that what we are experiencing is nothing like what we have experienced in the past.  It is a new playing field all together.

Unfortunately, the strongest point of reference for dealing with the “new” is often what worked for us in the past.  In effect, we tend to see the new through ‘old’ glasses.  So, our options quickly come to the surface.  And then we get upset with the results.  Maybe if we hit the peg harder.

What is interesting about change is that most businesses quickly figure it out, younger generations embrace it, and advanced institutions are riding it into the future.  However, many of our political pundits are stuck in the government labyrinth and will never figure it out. –  It looks impossible.

Many years ago, I came up with the following quote: “Nothing is more disruptive to the current state than a change in reality.”  What we are dealing with today is a change in reality, and it is disruptive.  No matter how hard they hit the round peg it is not going into square hole.

I wish I had an answer for our political quagmire; because it is painful to watch.


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Reinventive Thinking  (R) Bus Card

Over the past thirty plus years, I have had the opportunity to work with hundreds of business owners ranging from mom-and-pop stores to multi-million dollar international companies.  Regardless of the industry or size of the business, the one common issue CEO’s and owners are concerned with is effective decision-making.  In effective decisions are very costly to a business, so any improvement in this competency vastly improves the performance of their company.  The following is a very brief discussion about my ReINVENTive Thinking®, The Art of Decision-making process.

Peter Drucker once said, “…. the root cause of many of today’s business crises is not that things are being done poorly, or even that the wrong things are being done.  In most cases, the right things are being done – but fruitlessly.  The problem; the assumptions on which the business has been built and being run no longer fit reality.”  Peter Drucker said this in a 1994 Harvard Business Review article, The Theory of the Business, and it is still a big issue for businesses today.

What influences our decisions?

What influences our decisions

To the decision-maker all of these influences can be perceived as reality.

I have said for years that “Most people make decisions based on the first-order consequence of the decision.”  Do you know the second, third or possibly the fourth-order consequence of your decision?  Do you need to?  In life there is almost always a second and third-order consequence to a decision.  Coupling this with not recognizing the reality of your situation, can be very costly to the decision-maker.  So, how do you make more effective decisions?

An effective decision process consists of three unique components that are dynamic, and interdependent.

The decision process

The following schematic shows how the decision process works.

The decision process mechanics

The triangle represents three components of a decision-maker, Decision-making (leadership), Knowledge (competencies) and Action (capabilities).

In this case let’s assume that the schematic represents “how” a business makes decisions.  As outside issues impact a business, the business must be ‘programmed’ to effectively assess the issue.  Is it something that can negatively impact the business?  Is it an opportunity?  Is it meaningless?  To determine this, an organization:

  • Must be receptive to identifying issues that can impact the business. (Blue cloud)
  • Next they must test (through knowledge) the potential impact of the issue. (1)
  • Then they must identify, or design, a reaction/response to the issue. (2)
  • Next, they must test that reaction to the issue. (3)
  • Finally, they must monitor the reaction of the issue. (4)  Adjustments to the response may, or may not, have to be made.

It is important to note that the triangle does not represent an organizational structure.  It is a mindset, and competency, that is automatically applied throughout an organization.  The process can be lightning fast or applied over time.  It all depends on the complexity of the outside issue.  For example, a disruptive product entering the marketplace would require a more intense process than a routine sourcing issue for a product component.  Recognize that the decision-process is not just about operating issues, it’s about all important decisions.  For example, the blue cloud issue could represent an ownership situation that has the potential to change control of the business.

Going back to Peter Drucker’s comment on reality, let’s see how the decision process applies.

The decision process perspective

The blue circles in at the bottom represent the components of the business’s changing environment.  The circles move around, change size, disappear and new circles form.  It is the dynamic external environment within which the business operates.  You have to develop and apply knowledge to your decision process from this perspective.  It is your reality.

The following schematic shows how a business stays connected to the reality of their environment.

The decision process changing environment

The triangles at the right and center indicate that “the assumptions upon which the business has been built and being run no longer fit reality.”  Reality has moved to the left.  Doing the right things (you think) when your reality has shifted, is fruitless.

What do you do now?

There are several critical steps to get you started.

  1. Establish a sound understanding of decision-making responsibility within the organization.
    1. The focus is on the process of decision-making. It answers my favorite question, “tell me the process you used to make the decision.”
  2. Formalize your management process for distributing responsibility by providing direction.
    1. Provide a clear description of the direction, how it is connected to the strategic objectives of the organization, and the expected results.
      • Time frames are important.
    2. As a decision-maker, make clear distinctions between direction for knowledge development and direction for implementation, and manage each accordingly.
    3. Make the decision-making process dynamic, real-time, and on-going.
      1. Make it systemic to the organization. No matter what issue you are dealing with, you have an efficient way to manage it.

Why is effective decision-making so important?

  • About 70% of family businesses fail or are sold before the second generation can assume control.
  • Only 10% of the family businesses make it to the third generation.
  • Most family, and private, businesses are managed by the same ownership control, individual(s), for many years.
  • A major cause for failing is the inability to adapt to a changing environment.
    • A business must be as dynamic as their environment.
    • Assumptions about your business must fit reality. – Drucker
    • In times of drastic change, it is the learners who will inherit the future. – Eric Hoffer

So again, “Tell me the process you used to make the decision.”



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Everything that is going to happen to your business is already in the making, so why don’t you see it?

I recently read a somewhat scientific article on why we fail to seek risk, or opportunity. Simply stated, it is how you have developed the ability to process information and act on it. Your body does this naturally just to maintain its survival. Just watch animals, they have to be very good at processing information and acting on it or they won’t survive. What about businesses?

The article’s perspective was mostly biological, my perspective is much simpler. We have become very good at being dismissive of signals that are the early signs of change, both good and bad. Why is that? It is easier. Why spend time on things that don’t seem to impact the here and now. I can’t tell you the number of times I’ve talked to business people who stated that “I didn’t see this coming.” But when you dig into why they didn’t see it, in many cases, the early signs were everywhere.

I learned long ago that very few things just happen. There is a reason for their existence. You don’t have to dwell on every little thing that pops up, but you should hesitate long enough on those signals that sort-of get your attention. Think about them for a minute and ask yourself: What’s going on here? Is it going to impact me or my business? Do I need to get additional information? Should I keep my eyes on this for a while? I remember a regional sales manager dismissing a small foreign entry into a well-established domestic market by saying “it’s nothing.” Three years later they were a major competitor.

The value of this simple process is that it plants a seed in your thinking that becomes invaluable if the signal comes up again in the future; because when it does it most often will be in a different form. It also provides a perspective that challenges the opinion of others in your organization. How do you know that? Why do you think that?

The future is there to find, but you have to be in a constant state of awareness to have the best chance to be part of that future.

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Over the past year I have had the opportunity to work with four privately-held companies. One company was a rather large second generation business, while the others were relatively small. I had only worked previously with one of the companies, which was a third generation business. Interestingly, this business had a fourth generation high school student working during the summer months. Of the other three, I had conducted considerable research on one before engagement, while the other two were recommended by an existing relationship.

Since all of the businesses were in the same industry and not competitors, I made an effort to make sure that the owners of each company were exposed to one of the other owners. As I observed this interaction I noticed something that you would not normally find on many of the popular lists of the attributes that make business owners successful. What do you think it was? Write down several important attributes that come to mind.

What did I observe that I found so interesting? The business owners had an “insatiable appetite to learn” from others. After brief introductions they quickly moved to areas of interest where each party learned from the other. On every occasion, the business owners picked up something that could help them in their business. They soaked up ideas and recommendations like a sponge. To these successful business owners it occurred naturally.

In dynamical systems theory, this inquisitiveness is referred to as learning on the fringe; the area of existence where change takes place. It is arguably the difference between advancement and survival, and is a game-changer for those who can do it.

Was this attribute on your list?

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Why is it so hard for people to maintain a focus on those significant issues that are impacting their lives or businesses? Looking back over the years, I can tell you many stories of how people in business rationalized not dealing with the ‘tough stuff.’ While the stories are as varied as the businesses, the eventual outcomes were similar. In most cases it was like a bad cold that never went away, or in some cases got worse. Eventually, they came to believe that having a bad cold was normal. – Why?

A few years ago, there was a CEO of a fairly large third generation business that was struggling with how to recapture the strategic focus of the business; they had lost their energy and just existed in a slumbering market. Revenues and earnings were suffering, morale was down, and customers were looking for something new. The CEO just couldn’t bring himself to focus on this challenge. Financially, the family was doing ok. Fast forward to today – no change. They have come to accept their lot in life but their future is uncertain.

On the other hand there was Jack and Ashley. Jack is in his late twenties, works two jobs and is a full-time student studying business. After high school, Jack wandered in and out of school and different jobs not really thinking about the future. Then one day, he sat down and began mapping out where he was headed and where he thought he wanted to go. He told me that where he was headed scared the bejabbers out of him; he had to do something. So he mapped out where he wanted to end up and began taking steps to get there. That was three years ago and he hasn’t lost his focus.

Ashley is in her mid-thirties, works one job, and is studying to become a Registered Nurse. This young lady had an extremely rough childhood, left home when she was eighteen and has been on her own ever since. After crashing at the bottom, she made the decision to make something of herself. She had a lot of catching up to do in her academic studies, took extra classes, and worked long hours; all while maintaining a full class load. Failing to achieve her goal was not an option. She will graduate in about a year and is already talking about getting her Masters. Her focus is solid.

You might be asking why I used these last two stories to compare to the one about the CEO. Who runs companies? People. It is all about individual decisions. Entities do not make decisions about what to focus on, CEO’s do. If Jack and Ashley had continued down their original path for a few more years, they might not have changed and simply adjusted to their current state. However, both got to the point where they recognized that the pain of not changing was greater than the pain of changing. Thus, they started to focus on a new path to the future, in effect, they developed a plan of action to do whatever it takes to get there. While their plans weren’t formal like you would expect in business they had many of the same attributes; e.g. strategies, actions, progress, setbacks and adjustments.

It doesn’t matter if you are struggling as individual or a business, your mind will not accept what it is not prepared to deal with. This is the point of reality; the point that you realize you must do something. It’s the beginning of focusing, planning and taking actions for a new future. What are you waiting for?

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Courage in Decision Making

Success or failure in business can often be measured by the degree of courage in the leadership of the organization. If you look back at the road traveled by successful businesses you will likely find a history of courageous decisions. Did they all work? Absolutely not; but many did. On the other hand, if you delve into the decision process of businesses that struggle to survive or have failed, you will often find timidity, faintheartedness and denial in decision-making. Why are decisions so difficult? – To many the fear of failure and the stigma it brings on the decision-maker is the primary reason they struggle with making decisions.

Making difficult decisions is one of the most rewarding actions you can take in business because it requires preparation, deciding, action, follow-up; and yes, courage. Note that I listed courage last. Courage in decision-making comes from confidence; confidence comes from the process you use to make the decision. You will often see that people who struggle with making difficult decisions do not have a methodology for processing information about the decision; therefore, they lack confidence in making a decision.

Courage is dependent on confidence, confidence requires knowledge, and knowledge requires a process. There are many processes that businesses use in making difficult decisions, almost all of which include three responsibilities that are interdependent. The responsibilities are knowledge development, making the decision (deciding) and implementation. All three are dynamic and must be managed simultaneously.

Knowledge development could include projects, experimentation, analysis, and assessment; gathering information about the issue needing a decision. It enables you to know when to make the decision. Deciding could include, setting strategy, direction, resource allocation, and distributing responsibility; management decisions, based on the knowledge developed. Implementation could include operating or tactical plans, organization structure, operations, and sales, marketing, and distribution projects; actions implemented to address the issue. The three responsibilities are managed by the person responsible for making the decision. When applied effectively, this is a simple process that is scalable within an organization. It generates confidence which enables courage.

In today’s rapidly changing business environment, how you make decisions plays a major role in your ability to accomplish objectives. The assumptions you use about the decision must be based on the reality of the current environment, not biases, opinions, or actions of the past. Businesses, like people, are creatures of habit; we get comfortable with what has worked in the past. The problem is that the world of the past no longer fits today’s reality. We work harder and harder applying what has worked for us before and get frustrated when the desired results are not forthcoming. Reality has moved and we don‘t know it! A major cause for a business failing is its inability to adapt to a changing environment, which is usually the result of ineffective decision-making. It can become a self-fulfilling prophecy; my decisions are not getting me what I want, I’m losing confidence in my decision-making, I lack the courage to make the hard decisions.

Look back at some of the more difficult decisions you have made in your organization. What process did you use to make the decision? Did you get the desired outcome?

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Changing Time

“For the loser now,
Will be later to win,
For the times they,
They are a-changin’.”
Bob Dylan

The iconic words of Bob Dylan introduced almost fifty years ago that were symbolic of the social and political changes taking place in the mid to late1960’s. Words that represented the perspective of a small but rapidly growing number of young people that were determined to change an established perspective of our country’s future. On one side you had an emerging force that demanded change; on the other side you had an entrenched ideology that simply dismissed the need for change. History books tell the rest of the story.

Fast forward fifty years and the pattern remains. You still see emerging forces of all kinds that expect change and established forces that resist changing. The big difference between the two periods is that the 60’s were driven by social/political change while today is being driven by economic/political change. The first was played out on the streets of our cities, while the second is being played out in businesses across our country.

Change develops at the fringe; the outer circle that interacts with the new. On the other hand, resistance has its foothold at the core where it has insulated itself from the new by building up layers that attempt to repel or counteract change. The core wants stability. It is no wonder that the two clash. What is interesting is that the magnitude of the turmoil is directly related to the pain felt at the core. The fringe doesn’t worry about losing its stability; it is in a fight for its life.

What has changed in just a few decades is the breach of the fortification that has been built around the core. What has caused this breach? Technology! It has been like an armor-piercing bullet. There is nowhere to hide from what is going on at the fringe. The walls of resistance at the core are weaker now than they have ever been. This is primarily the result of the spread of computer technology to the masses, which impacts every aspect of business. Today, information is instantly available to all, so the ability to take a stand simply based on information that supported a position in the past, or the power of a position, has crumbled.

Breaking down the barriers to change is good; so long as there is a process in place to test the validity of the change. This is where the core can play its most important role; it has to challenge and test the information from the fringe, and respond accordingly. It can’t stop it, it can only manage it. The organization should adapt to changes that benefit its purpose and reject what does not. This requires the organization, from the core to the fringe, to understand the short and long-term objectives of the business. It is from this point of reference that new observations/ideas can continuously flow from the fringe to the core, which is what enables the core to adapt to a changing environment consistent with what it is trying to accomplish. In effect, it is a win-win for both ends.

There is little doubt in my mind that the future of our economy is bright. In fact, I believe it will continue to be the standard-bearer for the global economy. To those at the fringe who are driving the changes and those at the core embracing change, the future is theirs to win. There is no going back, “for the times they are a-changin’.”

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