The Leader’s Notebook

Hard questions, ambiguity and opinion for leaders

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Undercover Boss and Henry V

February 21st, 2010 · Follow the Leaders, Sliding Down the Razor Blade of Life

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In the early days of business process re-engineering, many companies went through the exercise of following an order through its entire life cycle so that they could truly understand the costs and issues with fulfillment.  One of the exercises I will often ask a leader to undertake is to follow a decision through its life cycle inside their organization.  Looking at it from the viewpoint of all those it will impact can have a startling effect.  Larry O’Donnell, President and COO at Waste Management got that opportunity on national TV recently- and we can all learn from his experience.

I was pretty skeptical when I saw promos for Undercover Boss.  The concept is not new of course.  Shakespeare’s Henry V removed his crown and robes to walk among his troops on the eve of battle.  Of course, he did it without a camera crew.  Given how staged reality TV seems to be, the main question in my mind was, “Why would Larry O’Donnell, well respected President and COO of Waste Management even consider such a stunt?”  Turns out that the answer is more important than the TV show.

In Steve Tobak’s interview with O’Donnell on his BNet Blog the Corner Office, O’Donnell tells us why he did it and what he learned.  In essence, he did it not for the celebrity status or even ego- but for the same reason that Henry V did- and another just as important.  Yes, he did get a first hand experience of the front line operations and the impact of cost cutting decisions he had made.  And while the camera crew might have diluted the experience, there is nothing like getting out of the corner office and into the trenches to keep an executive connected to the business.

But the interview also shows O’Donnell’s canny use of internal communications and the event to support an employee engagement initiative that began long before the TV show aired or was even proposed.  Smart leaders use internal PR to keep employees informed and engaged, especially about change. O’Donnell values the opportunity not just for its external PR, but for the ways he could use it to continue to support employee engagement and internal culture change.

It is easy to be cynical about the experience and the staged rally afterward.  And of course those who O’Donnell worked with and for during his incognito adventure are not the only ones who were impacted by decisions that he has made, even if they are the ones who were publicly recognized and rewarded.  Aside from the PR and the internal rally, the real question is whether or not the executive who gets to walk among the troops can learn to make decisions differently.   The good news is that we will get to watch what happens at Waste Management to see.  O’Donnell talked a lot about cost cutting early on.  Part of his experience in the field was seeing the impact of some of the cost cutting on the front lines- and much of it was not pretty.

So, what decisions did you make this week?  What changes will you start to implement this month?  This quarter?  This year?  More importantly, what do you know about the the full impact of those decisions?  It is easy to see the impact on the P/L from the corner office.  But to see the full impact, you have to get out to the front lines.

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PonderThis: Accountability for Accountability

February 4th, 2010 · PonderThis, Sliding Down the Razor Blade of Life

A change leader can delegate parts of an initiative, but ultimately accountability for accountability remains with the leader.

Gartner Group, the tech analysis organization famous for their predictions, is out with their prognostication about the use of Social Networking in business.  (See the whole article here).   One of their pronouncements is unfortunately very familiar:

“Through 2012, over 70 percent of IT-dominated social media initiatives will fail.”

Through the rise of Customer Relationship Management (CRM) we saw a similar early frenzy for adoption and similar failure rates.  Based on Gartner’s research, we have not learned much.  The main reason they cite is that although these are branding, marketing, PR and even sales initiatives they are launched and/ or driven by IT.

The leaders of an organizational, process or culture change can delegate parts of that initiative.  Communications, planning, software, training and all the parts needed to see effective change.  But only a leader with sufficient credibility and influence can be accountable for the entire initiative.

In one of the most powerful passages in Execution, the Discipline of Getting Things Done, Larry Bossidy says,  “And never launch an initiative unless you are personally committed to it and prepared to see it through until it’s embedded in the DNA of the organization.”  No technology-supported initiative is a Field of Dreams and anyone who has been involved with one knows:  Just because you build it does not mean that they will come.

But you will still have spent the money and time to build it.

PonderThis is published to arrive in your RSS/ mailbox on Fridays as a concept to ponder over the weekend and goes to thousands of subscribers on 4 continents

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Scylla and Charybdis – Protecting the Brand

February 1st, 2010 · Follow the Leaders, Leadership, Literature and Myth

One of the most challenging issues leaders must face is the balancing of short-term return vs. long-term value.  In ideal circumstances, a leader will strive to balance polarized needs.  The split between short term and long term is difficult territory to navigate.   Deciding for one is too often at the cost of another, especially when the one getting the nod is short term gain.

The classic story of short-term pain vs. long-term sustainability is found in Odysseus’ choice between Scylla and Charybdis. One was a serpent that was going to eat some of his sailors as he passed.  The other was a whirlpool that would consume the entire vessel.  Avoiding the total destruction that would come from sailing too close to Charybdis, Odysseus chose to sail nearer to Scylla, who despite his best efforts, still ate 6 of his crew.  The irony for the modern organizational leader is that one of the ways to avoid short-term pain is by sacrificing a percentage of the workforce.  (Transferring organizational pain to employees is another blog post)

Let’s face it.  The pressure to squeeze cost and drive efficiency has been at the base of managerial thinking since the day that the assembly line was born.  More than one pundit has reduced all managerial science to 3 basic questions: “How do we do this faster?  How do we do it cheaper?  How do we improve quality?”  Even in this simplest of models, 2/3 of the thinking is about efficiency.  But at what cost?

Ask the executives at Toyota.  The current brouhaha about accelerators may be a short-term glitch, but it will have impact on more than just quarterly sales numbers.  Toyota built their brand on quality.  Even their current ads focus on it, stating, “…over 80% of Toyotas sold in the last 10 years are still on the road.”  So this short-term glitch has hit them in the place most important to their long-term sustainability- their brand promise.

I have read a number of articles about what brought about the debacle.  Many business pundits blame a focus on opening new markets for Toyota’s taking their eye off the quality ball.  The WSJ cites Lean Manufacturing practices, originated by Toyota but taken to an extreme, for sacrificing quality on the altar of efficiency.  And I have heard more than one executive cite the old business joke “Quick, good or fast… pick two”.  But I think that the issue may sink to a different level, one more difficult for the leaders of Toyota or any organization to change- culture.

In the current economic climate, even manufacturing environments have been subject to extreme corner cutting.   We have seen what outsourcing has done to customer service and to technical support.  The focus on cost cutting has turned what could be a strategic advantage into an albatross around the neck of brands that depend on service levels and customer loyalty.  There is not much to recommend that the same “out of sight out of mind” standards would not govern the outsourcing of auto parts.  I am not informed enough to know whether it was expansion or Lean manufacturing that distracted Toyota.  But one thing is evident.  Efficiency and scale became more important than the clear focus on quality that took the company to the top.

One thing I learned in my days working with clients on customer centered strategy: each new strategic initiative a company takes on is generally made possible only on the foundation one previous.  Strategic focus on the quality of customer interactions does not negate the need for excellent product.  It must be built on that foundation.  The same must be said for efficiency and scale.  If they come at the cost of the foundation of the company’s brand, then they are merely an attempt to avoid short term pain (usually in the form of poor quarterly reports) that can send the entire enterprise into the clutches of larger and more threatening monsters over the horizon.

Akio Toyoda, grandson of Toyota’s founder became CEO in June of 2009 and has kept a very low media profile in that time.  It will be interesting to see if he has the subtlety to look past the operational part of this kerfuffle to the root cause, and the courage to address it without cutting corners.

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Leading Change: It’s About Friction, Force and Risk

January 25th, 2010 · Organizations at Their Best, Team Notes

I recently spent a half-day with students at the William J. Clinton School of Public Service.  They are a remarkable group of students working on a Masters degree in Public Service.  We spent our time focusing on a framework for personal leadership as well as some practical tools for their teams to use as they engage in service projects as part of a practicum course.   Most of all, we talked about leading change.

Change- any change- no matter how significant or how simple, means upsetting the current reality.  It means incurring friction and risk.  If the change is merely moving a coffee cup from one counter to the other, by definition friction is needed to grasp the cup force is needed to move it.  And the risk that the cup will end up on the floor in shards, no matter how small, is significantly increased from when it was at rest on the counter.

Big organizational and cultural change is not as different as we might think.  Asking people to move to a new reality means leaving behind the familiar.  It means getting them to let go of what is comfortable.  That requires friction and force.  Ideally it is self generated friction and force.  The ideal motivator is a vision compelling enough to create willingness to be uncomfortable.  But the outcome is still the same, friction and force.

In one debate, one of the students was concerned about the unfairness of stress put on people who may not feel that they are in a position to pursue a change.  She argued that not everyone can tolerate the amount of stress or has the resource to pursue big dreams… and that is where the risk part comes in.  No one changes the world by playing it safe.  And no one is promised parity either.

Every change carries with it risk.  In order to seriously pursue any new reality, we must be willing to sacrifice the current one.  Or, as André Gide put is so eloquently “One does not discover new lands unless one is willing to lose sight of the shore.”

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HBR and the Virtuous Circle

January 11th, 2010 · Follow the Leaders

I mark it as a dark day for American corporate leadership when stock options became the fundamental center of executive pay.  Options were meant to focus an executive’s attention on long-term growth.  But a market fueled by ever shorter-term demand for double digit growth morphed the rewards into an addiction for relentless quarter on quarter performance.

Shareholder value became the drug of choice for CEO’s.  And while consultants and pundits have said it for decades, this month, Harvard Business Review finally pointed a finger at the obvious– and with research to back it up.  Roger Martin, Dean of the Rotman School of Management at the University of Toronto authored The Age of Customer Capitalism.   Right up front he labels the goal of shareholder value based capitalism as “tragically flawed.”

I highly recommend this very thoughtful article, which centers on an analysis of market cycles and organizational performance.  But I am a simpler guy and look at the world through a leadership lens.

Business operates best on a virtuous cycle:

  • Executives take care of employees
  • Employees take care of products and customers
  • Customers take care of shareholders by spending money
  • The Board (representing shareholders) takes care of executives.

When options fuel the drive for near term results, with a goal of shareholder value:

  • Employees are busy taking care of executives through cost cutting and deal making
  • Executives are taking care of shareholders (and through options, themselves)
  • Which leaves customers to take care of themselves.

Shareholder value is important- but as a artifact of performance, not as its very definition.  And Martin shows us that it is simply not sustainable.

By the way, just in case you think this stuff is new, here is a link to an article I wrote on leadership for DestinationCRM.com almost a decade ago.

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