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Posts Tagged ‘Leadership’

Watching

I was recently talking to a young executive in a large corporation who was frustrated with his boss.  His frustration centered around his perception of his boss’s indecisiveness, guidance, and commitment to a very important project.  He said, “I can’t believe the executive team doesn’t see what is going on.”  If you have been in business long enough, you no doubt have experienced this frustration.  Maybe not with your boss, but certainly with a coworker or fellow manager.

It has been my experience that in most situations the level above the young executive, and all those impacted by the project, know what he is dealing with.  So, they are all watching.  Not only the progress of the project, but also how he is managing himself in a difficult situation.  Early in my career I was made an assistant manager of a department where the department manager had his issues.  I had to learn how to effectively manage the department in spite of the challenges.  It was only much later that I learned the Vice President of the division knew the situation and was watching/hoping I could get the department back on track.  I did, but it was frustrating because I didn’t think people knew how bad it was.  I never forgot this.

However, I don’t believe that above example is the norm; it happens but not often.  More often the frustrated young executive “believes” that their boss is disconnected when in fact, they are challenging the young executive to figure it out without a lot of hand-holding.  I have distributed responsibility and provided direction to many managers over the years.  I was crystal clear in what I needed but I wanted them to develop their own ideas and processes to carry out my direction.  Sometimes I knew that they had to deal with difficult people in order to be successful, but they had to figure it out. – Not only was I watching, in many cases, so was my boss.

One of my favorite sayings I tell young managers is that “You have to be able to sit at a table with Mother Teresa on your left and Attila the Hun on your right, and still carry out your direction/responsibilities.” – Remember, they are watching.

 

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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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courage402x302

“One cannot answer for his courage when he has never been in danger.”

                                                                                                  Maximes 1665

All of us like to think that we are courageous.  We have the mental strength to stand up in the face of adversity; we will persevere.  Really?  What is the measure that makes someone courageous?

Recently, I was talking to a second generation business owner who was telling me about the challenges he was facing and how it took “courage” to face them.  As we discussed the issues, it became apparent that the possible negative consequences facing the business were, on a scale of one to ten, maybe a four.  As I dug deeper into the issues and his background, I realized that he had never really faced danger.  Not in his personal life or in the business.  In his mind, his reality, he was a very courageous person.

A few weeks later, I was meeting with a business owner that was facing an incredibly difficult business situation.  The company has been in business for over twenty-five years and had developed a firm standing in their industry.  Then about five years ago things began to unravel.  Technology innovations, competition, and material costs challenges all seem to hit at once.  The owner aggressively moved to address these challenges while trying to maintain his market presence.  Hard decisions at first, then more difficult decisions and finally scary decisions.  He told me, “I am fighting for my life here.”

Granted, both individuals had the knowledge and background, i.e., confidence, to tackle the issues, but only one faced real danger.  As I look back over my business career, the individuals that I remember as being “courageous” were the ones that were facing “real danger.”  So what is the principal component of courage?  –  Danger; something that can hurt you, or your business.  The greater the danger, the greater the courage required.  And, the more courage you build up over the years, the better you become at making decisions.

Next month I will talk about the ultimate courage.

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Capital Dome

…Governments are instituted among Men, deriving their just Powers from the Consent of the Governed, that whenever any Form of Government becomes destructive of these Ends, it the Right of the People to alter or to abolish it, and to institute new Government… it is their Right, it is their Duty, to throw off such Government, and to provide new Guards for their future Security.

Thomas Jefferson, The Declaration of Independence.

Over the past several decades I have come to realize the emergence of two realities.  –  The reality of what really is, i.e. the real world, and the reality of the distorted perspective of a group of powerful individuals, i.e. their view of the world.

The focal point of my concern is with our elected officials; specifically our House and Senate leaders as a group.  This is not about Democrats, Republicans, Independents or specific ideologies; it is about governance.  The reality of this group is out-of-whack with the reality of what the citizens expect from our elected officials.  Our citizens expect our elected officials to govern this country on behalf of its citizens; all citizens.  They expect its leaders to do what is in the best interest of our ‘society.’  They expect honesty of purpose, integrity, informed judgment, and the courage to do what is right.  It is that simple.  What I am observing in our elected officials is bizarre.

It seems as if Washington, D.C. has become disconnected from the rest of the country.  They stand for and represent either nebulous constituencies or powerful political action committees (PAC).  As I look around my community and talk to others, I don’t see a manifestation of these nebulous constituencies. or the standard-bearers of the PAC’s.  It is like trying to grasp fog; you can’t get your arms around it.  When I question my elected officials, I usually get a canned and non-committal response from an aide that leaves me more at a loss.  Consequently, I believe that a critical mass of our elected politicians do not have the substance to govern.

The problem is that this pervasive misalignment of reality in Washington, D.C. is having an increasingly negative impact on society in general and business in particular, whereas, it appears the Washington, D.C. group remains unscathed.  Let me give you a comparison.  If business owners ran their companies the same way as Washington, D.C., they would go out of business.  Let me say that again, they would go out of business.  Business owners focus on what is in the best interest of their company and its stakeholders, which includes the community, and perform accordingly.  They either succeed or they fail.

As I watch the theatrical performance of the cast of characters running for our next President, I ask myself; are we at the point Thomas Jefferson was talking about in the Declaration of Independence.  Remember, society is always perfectly positioned to get the government it deserves.  If you leave government unattended, this is what you get.  We have left it unattended for too long.

Let me close by saying that I truly believe that our country has a great future.  The substance of our ‘citizens’ is incredible.  All you have to do is observe the selfless generosity and courage of people in times of crises, the millions of the small business owners who put their personal capital at risk to drive our economy and employ two-thirds of the workforce, the hordes of volunteers who serve our communities, and the bravery of our military community who stand their post in harm’s way so we can enjoy the benefits of this great country.  Our substance is in place, now we need to change Washington, D.C. so they see the real world.

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Question

Years ago, I found myself in a unique position that, for me, redefined the ‘approach-avoidance’ phenomenon. I had a tremendous drive to move forward on something that I knew was critically important and at the same time, caution lights were going off all around me. This was a new area for me.

My boss, a Vice President, was struggling with an objective he was trying to implement to the point that it was becoming challenging for him to focus on other matters. From my perspective I saw things that I would be doing. Granted, I realized that I did not have the same information he did. But to me, the way forward was clear. So I decided to have a meeting with my boss so I could set the stage for asking him ‘the question.’ – How can I help you?

All of us at some point in our career find ourselves in this same position. Based on my experience and observation most of us choose yielding to the caution lights. But why? What is the distinction between those that forge ahead and those that choose not to?

How do you get to the point where you are willing to take the chance?

  • Frist, prove yourself in your current responsibilities, show that you are on top of your game. This gives you the confidence to test your perimeter.
  • Observe, observe, observe. Try to understand the challenges your superiors are facing and how they are connected to your skill-set and experience.
  • Formulate ways you might help them. This is not just an idea or an opinion, but a well thought-out perspective using your competencies and capabilities. Work up an outline, make notes, etc. Develop a strategy on how you would move forward. All of this becomes critically important when discussing the challenges with your boss. – Listen carefully, interject slowly.
  • Be prepared for rejection. However, you can’t lose if you do this right; you will learn a lot.
  • Be prepared for taking on additional, higher risk, responsibilities.

By the way, I became actively engaged in the project, working with other senior people in the organization. Over a period of about eighteen months my recognition and contribution grew. The project was successfully implemented and I never looked back.

Ask the question!  –  How can I help you?

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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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For the past twelve months the CEO had been focusing on changing the strategic direction of the company.  Numerous meetings had been held with senior management of the company’s three divisions, documents shared, etc.  However, it was obvious that the largest division was not transitioning to the new direction and the other divisions were only showing slight progress.  Frustrated, the CEO began questioning the senior manager responsible for implementing the new direction.  “Why hasn’t Division A shown more progress in implementing our new direction, asked the CEO?”  “I don’t know, responded the senior manager, I’ve told them about it many times.”  So, what went wrong?

Almost all privately-held companies start off with very informal processes for getting things done; e.g., meetings, instructions, agreements, conversations, handoffs, etc.  It works because of the close interaction and commitment of the participants.  Over time, as the organization grows, these human capital links are diluted due to an increase in the organizational structure and key individuals leaving the company.  As a result, the ability of the leadership to accomplish objectives has become more difficult because the dynamics of the organization have changed.  The old methods of running the business no longer provide the results previously experienced.  Unfortunately, many years can go by before the leadership recognizes what is happening.

What do you do?  Every organization should, as soon as possible, aggressively focus on establishing tested and proven management practices for running the business.  This can be accomplished by ‘formalizing’ how you get things done by using what has worked for others.  This doesn’t mean simply copying what is there; it means using what is available and adapting it for your use.  Adapting the practices make them unique to your business.  The best thing is that these proven practices are readily available in literature, or through organizations and firms that specialize in various management disciplines.

I chose the direction case because a formal direction process is a lifeline of an organization.  It is a critical part of how the company is being lead (its leadership) and establishes an effective method for developing and implementing strategy throughout the organization.  Formal direction can have a significant impact on the organization because it is an interactive process that has to be continuously managed, and it results in a written document that becomes a point-of-reference for future decision-making.

In the example above, the CEO should have developed a written document (direction) for the senior manager responsible for implementing the strategic direction.  The senior manager would then develop a ‘written plan’ to carry out the direction from their level of responsibility.  The plan becomes the driving force to cause the desired changes within the business units.  In other words, it is the basis for telling the divisions what needs to be accomplished, and identifies how the organization determines if the plan is being successfully implemented.

Four key areas of a direction document include:

  • Purpose – This is a brief description of the purpose of the direction.  It should be clear and concise, and answer the question of why you are providing the direction.
  • Background – Discusses the events or history that led to establishing the direction.  This could include changing competitive markets, emerging or disruptive technologies, new opportunities, a weakening economy, or a change in ownership perspective.
  • Direction – A detailed description of what you want the recipient to do.  This should also include a timeframe, reporting requirements and measurements.  You must identify measures that show how you are going to know if the direction is being successfully implemented.  (The measures could be quantitative or qualitative, or both.)  The results you get from your measures also enable you to make adjustments to your strategies.
  • Summary – Summarize the direction by pulling the first three parts together.  This establishes a complete picture of the direction.

Keep the direction simple and to the point.

Think about the major decisions that are made each day within your organization.  What are the points-of-reference for making those decisions?  Are the decisions consistent with your direction?  If it is unclear, a direction document provides a basis to have further discussions.

What is the most critical issue in your business that could benefit from a formal direction process?  Try writing a direction for that issue; I think you will be surprised at the results you get and what you will learn.

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