Archive for October 2008

Managing by Priority

October 29, 2008

A little more than ten years ago, when I began to actively study business process redesign, I came across a book titled Managing by Priority: Thinking Strategically, Acting Effectively. The book’s author, Giorgio Merli, introduced me to a concept called time “horizons” and its role in decision making.

There are a number of ways to understand this concept. On a personnel level, think of it in terms of a typical departmental organization. A customer facing employee (sales reps, customer support staff) operate in an immediate time horizon. There job is to address whatever issue the client or prospect puts in front of them. A departmental manager typically has a longer time horizon. Their thoughts are more focused on a year or two down the road. A general corporate manger is focused typically on a three to five year plan.

From an initiative perspective, to be successful, a company has to effectively pursue objectives with three different time horizons (short, medium, and long) and at the same time manage emergency situations. If they are effective at doing so, the results of their efforts will be seen at different times.

Emergencies are typically problems to be solved or opportunities to be capitalized upon. A work stoppage or the ability to deliver a product or service caused by a “trigger” in the environment is a common example. Success rests on quick reaction times, improvisation and rapid deployment.

Short-term objectives are usually aimed at operational performance. Examples include issues related to quality, cost, processes, and financial results. Corporate leadership will typically frame these as annual objectives.

Medium-term objectives are those that concentrate on assuring that the business will still be competitive two to three years down the road. Leaders would focus on organizational capabilities after assessing where they think the competition will put the company at risk and market trends. Think new product development, retooling and significant technology improvements at this level.

The long-term objectives are more closely aligned with a five to ten year horizon. This point of view looks at where the company must be in terms of its organizational and cultural shape. It is for this reason that the word “vision” is commonly associated with long-term thinking.

If you look for it, you’ll find this pattern of time horizons appearing a lot and in places such as business process redesign, portfolio analysis and – you guessed it – strategy.

Does your mix of initiatives address all of these time horizons? More important, is your leadership team evaluating all of these time horizons when building your strategic plan?

How many business improvement initiatives can a company manage at any one time?

October 24, 2008

Operating a business in these challenging times is certainly not easy. In the last two posts, I introduced a number of strategies that make sense during an economic downturn. One of these strategies can best be classified as a sales strategy – that is, how to reignite opportunities that one would otherwise expect to stagnate when the economy is in difficult straits and businesses are adhering strongly to the philosophy of hoarding cash because “cash is king.”

The other strategy looked to the internal workings of a company and focused on how a company might best use underutilized resources that are suddenly available because sales are lagging. In this context, we discussed the development of best practices and the optimization of internal processes.

It is on this internal opportunity that I would like to discuss in today’s post.

The internal business process redesign discussion begs the question as to how many initiatives can a company manage at any given time. Is there an optimal number and if there isn’t, how does one determine how many initiatives are manageable so that business opportunities and the needs of clients continue to be addressed?

In all of my research and studies, I have yet to come across a discussion that addresses this particular question. To address this question, I will rely on my thirty years of experience as a CEO and consultant and share with you what I have learned from my experiences as a strategist.

To perform this analysis, one must:

  • Understand your company’s strategic goals
  • Define what tactics are required to support these strategic goals
  • Establish what each department must do to achieve the strategic goals
  • Determine the time and effort required by departmental staff to support the achievement of the core goals that essentially enable the company to deliver value and stay in business

What remains after performing this analysis is the amount of time available for personnel to address new improvement initiatives.

In other words, this analysis is predicated on assessing the company’s priorities and the core roles that must be fulfilled. After all, customer support personnel must perform their support function or the company risks client defections. Sales and relationship professionals must be engaging prospects and customers to assure growth. Accounting and internal support staff must make certain that the infrastructure exists so that the organization can run efficiently. These are the prime functions of these departments.

So is there an optimal amount or maximum number of initiatives a company can manage? As best as I can tell, the number of enterprise-wide initiatives that a company can swallow is typically between one and three. (Note added 11/09/08: Interestingly, several weeks after this post was written, the Obama Transition Team was enagged in a similar conversation and may have reached a similar conclusion.)

The reason that I believe this to be so is that I have concluded that most people have a difficulty managing more than five significant goals or projects simultaneously at any given time. And if one considers that the average person has two or three core functions for which he or she is accountable, this only leaves so much space for professional and organizational development without impacting the core responsibilities that each of us have.

Sales Strategies in Challenging Times: What I’m Telling My Clients

October 17, 2008

It is really hard to sell products and services when the economic news is bleak. Besides knowing that your prospects and clients are being reminded regularly that prosperous times are no longer on the horizon, you, as a salesperson or company leader can’t help but be affected by all of this negativity.

It is almost as if you are waiting for the prospect / client to turn your proposal down – and frankly, as a rational person, you can understand why they would decline your proposal.

So what to do?

What I am telling my clients is that there is opportunity in a downturn but it requires a different type of selling – one that embraces with sensitivity the needs of those companies and business relationships that we value. This is precisely the time to open up conversations with your strategic partners, centers of influence and existing clients. And it is an excellent time to engage in some low cost marketing as well.

Let’s discuss the opportunities within each of these groups.

For purposes of this example, we’ll envision that our company provides managed IT services, that is, we support a critical component of a business’ infrastructure.

Strategic partners and centers of influence (e.g. accounting and legal firms, associations, etc.) have a strong need and moral obligation to help their clients navigate turbulent economic waters. Now is an excellent time for our managed IT services company to ask these partners if their clients would benefit from having their infrastructure evaluated at little or no cost in order to identify key risks and prioritize needs. If the company that we are evaluating seems like a good candidate to survive the downturn, this type of advice coupled with prescriptions for meaningful solutions and favorable payment terms may result in a new business relationship.

In order to survive, some of these companies may be forced to make difficult personnel decisions and they may be looking for ways to ease the pain associated with these decisions. Our managed services company can assist here as well.

When there is economic hardship, people who become unemployed often turn to consulting. Our managed services company can create a lower cost start-up bundle of equipment and services to help those who are so inclined to pursue this path. By providing people with an alternate future, we are also providing encouragement, faith and support. And as a managed services company, our business can assume some of the IT responsibilities within the company so that the rest of its workforce can function productively.

Contacting existing clients and reaffirming the commitment that we have to their growth and future is another way to strengthen and forge a long-term relationship. These companies may also benefit from a low cost IT risk evaluation. After all, the suppliers and vendors that support us when times are bad are more likely to be the partners that we choose to work with when times are good.

As to marketing, there are several low cost strategies that can be used. Speaking engagements are one way. One of my former colleagues started a wonderful business called Speakermatch. It is a great way to get in front of the audiences that are interested in what you have to say.

There are also companies who will work with your staff to write and place business articles in trade publications. These articles help to generate business but also forward the credibility of your people and the solutions that they provide. Companies like this one, Andover Communications, can help you get placed in trade publications and ultimately become presenters at conferences.

Now is the time to take the initiative and reach out with sensitivity and care. Please share ways that you think a business can make a positive difference for others during these difficult times.

Strategy and Action in Difficult Economic Times

October 12, 2008

We are living through unprecedented economic challenges. Arguably, never before has there been such an interconnected global economy and never before has there been such a crisis capable of impacting so many.

In recent days, I have spoken to many organizations that have placed expansion and purchases on hold. Leaders from these companies are attempting to stockpile their cash reserves so they can weather this financial storm. For the most part, they would like to retain the professional teams that they have invested in so heavily. At the same time, they would like their staff to continue to be focused, productive and valuable to the organization.

The challenge then is what to do during these times when sales are difficult to come by. Here are a couple of appropriate and meaningful actions to take.

One of the unique opportunities in a difficult economic climate is to perform an intellectual retooling of the business. Specifically, there are several areas to investigate.

First, now would be an excellent time to re-envision the new world that we are entering. Reassessing client needs within the context of the new environment may enable the business to identify new wants and even opportunities. Visiting key clients and collaborating with them will help to forge bonds and strengthen the relationship for any difficult times on the horizon.

Scenario planning is also critical at this juncture. Since we all operate in a competitive environment, it is appropriate to assess how competitors might be reacting to these trends and what steps they will take. Based on this analysis, your business might recognize a different type of opportunity. If the competition is downsizing or jettisoning an not-so-profitable business line, your business might be able to attract rare talent or capitalize on an area that might prove profitable to you.

The next opportunity is to look inward. During a downturn, staff is more open at looking at ways to streamline operations and reduce costs. Re-evaluating processes and the supply chain will allow your business to fortify itself for the inevitable opportunities that will present themselves.

The re-examination that you are undertaking is really a recognition that you control your own destiny.

What other worthwhile efforts that can be undertaken during these difficult times? Please share your thoughts.

Changing Patterns in the World

October 5, 2008

The process of determining the strategy to address your vision begins with understanding the changing patterns in the world.

In his book, “Know-How,” Ram Charan invites the reader to look at these patterns and investigate the impact these changes might have on the opportunities that surround us. There are seven questions that he invites his readers to answer:

  1. What is happening in the world today? The most significant trends tend to cross borders (the global financial crisis, shifts in foreign investment, terrorism are example) and industries.
  2. What part of my frame of reference has worked for me? What hasn’t worked for me? This is tantamount to asking what has surprised me and why was I surprised. By addressing these questions, one becomes more sensitive to looking at other possibilities and in other areas.
  3. What does it mean for anyone? It is important to know how other industries will respond to emerging trends as they might allow for a unique capability within your own industry.
  4. What does it mean for us? Answering this question enables you, as a business leader, to identify what new opportunities these changing patterns will create.
  5. What would have to happen? Answering this question allows you to identify a necessary next step that would create a new opportunity.
  6. What do we have to do to play a role? This tells us what we might have to communicate, organize, market, develop (including skills) etc.
  7. What do we do next?

By answering these questions, one frequently sees opportunities that may be capitalized upon.

The Five Stages of Crisis-Management According to Jack Welch

October 2, 2008

As we all know, our country is experiencing a staggering financial crisis. This crisis has stunned the nation and left many fearful and concerned regarding how to address and solve it.

In September of 2005, Jack Welch, former CEO and Chairman of General Electric, wrote an op-ed piece in The Wall Street Journal. The article was entitled “The Five Stages of Crisis-Management.” The context for the article was the aftermath of Hurricane Katrina and the devastation left behind in New Orleans.

Although we are experiencing a crisis of a different sort, it seems appropriate to revisit and synopsize the lessons that Mr. Welch shared in that article as they are helpful in contextualizing what we are experiencing today.

* * *

Stage 1: Denial

According to Mr. Welch, the first stage of that pattern is denial. This stage usually begins with the belief that the problem isn’t that bad. This is a typical reaction, in part, because people never believe that bad things will happen to them. He goes on to suggest that “one of the marks of good leadership is the ability to dispense with denial quickly and face into hard stuff with eyes open and fists raised.” It becomes the leader’s job to help people confront reality, create a new direction and inspire people to address that reality with positive action.

Stage 2: Containment

The initial symptom at this stage is for people to try to keep the problem quiet. From there, it is not uncommon to find that leaders, even those who are extraordinarily gifted, try to make the problem disappear by giving it to someone else to solve.

Stage 3: Shame-Mongering

Mr. Welch goes on to state that at this stage, “all stakeholders fight to get their side of the story told, with themselves as the heroes at the center.” In the last few days, we have witnessed a demonstration of this phase as we have listened to our present administration, Democratic and Republican leadership tell us who is to blame and who will save the day.

Stage 4: Blood on the Floor

In the fourth stage, as in just about every crisis, there is at least one high profile person who pays with his job. This crisis is no different. Leadership at AIG, Fannie Mae, Freddie Mac and many of the companies that have been swallowed up have paid with their jobs. And unfortunately, again in this case, that leader often brings down many other people with him or her.

Stage 5: The Problem Gets Fixed

In the fifth and final stage, the crisis is resolved and, as Mr. Welch notes, “despite prophesies of permanent doom, life goes on, usually for the better.” The bill that passed the Senate floor tonight added in may new features for taxpayers including increases in the limit on federal bank deposit insurance, tax breaks for production of and investment in industries promoting clean energy such as solar, wind and biodiesel and tax relief for victims of natural disasters in the Midwest, such as flooding, tornadoes and other severe weather events (although there certainly are “sweeteners” that look alot like “pork” such as tax breaks for builders of auto raceways and rum producers in the Virgin Islands and Puerto Rico).

* * *

It seems that we are beginning to enter stage five of the crisis-management process even though it may take us a number of years to fully experience the results. It is also important to remember that crises have a positive element to them as well. They let us know where things are broken and help us identify the solutions so that future similar crises may be avoided.

Mr. Welch’s insights are extremely valuable in one other arena as well.

Knowing that there is a predictable pattern to crisis management is useful as it will help us move on to the recovery stage.


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