Archive for February 2009

Courageous Leadership? On the Line at GM

February 23, 2009

After a recent session that I presented on success measures, I was asked by one of the participants about the fiscal crisis plaguing our three major United States automakers, Ford, General Motors and Chrysler. The person was wondered why these three manufacturers, with all of the many intelligent and professional leaders in their employ, continued to build cars that the American public did not want to buy.

I responded by explaining that the automakers knew what they were doing and how their cars were being received.  In fact, the problems plaguing the car manufacturers were not one of knowledge but rather of courage.

Paul Ingrassia, Wall Street Journal writer and bureau chief, articulated this issue as it relates to GM beautifully in his Journal opinion column on February 19th.

According to Ingrassia, there are several issues that have created this predicament. Here are two.

(1)   The car manufacturers agreed to let auto workers retire with full pension and benefits after 30 years, This means that it is very conceivable for an employee to be paid for thirty plus years and not contribute to the end product. Couple this scenario with greater life spans and rising costs in health care and the cost structure take a painful hit. Add in the nation’s desire to have smaller cars with smaller price tags and competitive margins and the problem is exacerbated. One can only surmise that new and fresh ideas and the investment in R&D was limited because of these cost factors.

(2)   GM continued to keep two losing brands alive – Saab and Saturn – even though it was costing them money to do so. This was done because the company had spent $1.3 billion dollars to shut down its Oldsmobile brand in a way that allowed them to comply with state-dealer franchise laws.

Could this crisis have been averted? Very possibly but it would have required courageous leadership to take on the unions early on and absorb the short-term losses inherent with shutting down a failing brand early on.

Some weeks ago, we spoke about the concept of false kindness and the consequences of putting off uncomfortable decision s regarding staff. The car crisis today is yet another example of the need of leaders to be willing to do unpopular things, when they need to be done.


Types of Measures

February 20, 2009

There are three types of measures:

1. Activity measures

2. Output measures

3. Impact measures

Activity measures tells us how efficiently something was done. It answers questions such as:

  • How long does it take?
  • How productive is the department?
  • How many resources were used?

It focuses us on internal tasks, timing and resources but it is NOT about outcomes. As an example, profitability is an activity measure because it relates incoming revenue to internal operational costs. It measures the efficiency within which resources are utilized to produce income.

You’ll find activity measures are usually used with internal operations groups and frequently these are the measures used for multiple phases of processes

Output Measures emphasize the results of the work rather than the work activities themselves. Outputs tend to be physical products, services and communications that one group sends to another. These types of measures answers questions about what has been produced such as:

  • Does the product meet quality standards?
  • Was the product sent on time?
  • Was the product delivered on time?
  • Was the customer satisfied?

Output measures are about products NOT about production. They gauge quality, timeliness and evaluation by the CUSTOMER or USERS and therefore the measuring source is usually outside of the group producing the output.

Customer satisfaction is an output measure that requires obtaining feedback from outside the organization (this can be a customer internal or external to the organization.) Most output measures are using internal standards. These measures are useful when you are interested in whether the results meet certain standards.

My personal favorite is the last of our set and the one the President and our legislative leaders truly want to cause.

Impact measures ALWAYS require feedback or customer research to develop meaningful measures. So what is the difference between customer satisfaction measures and impact measures?

Customer satisfaction measures what the customer likes. Impact measures what the product does for the customer. It is all about value.

Impact measures answers questions such as:

  • Does the product make the customer more productive?
  • More successful?
  • Do the services make the customer more effective?
  • More influential?
  • Do the products help the customers reach their goals?

These measures require serious examination of the customer because there is no other way to get information about the customer’s productivity, success measures or goals without their input and evaluation.

Most important it shifts the focus to “What do you need from us to help you succeed on your own measures of success?” This type of measure alters relationships and makes what you achieve more valuable.

It makes you realize exactly what is the point of what we do.

Developing Success Measures

February 18, 2009

One of the more pressing questions asked of President Obama recently was how the American people could tell if the stimulus package was effective. What he was actually being asked to address was the concept of success measures.

In the business world, success measures are what we call “goals.”

Here’s why goals are so important.

  • Goals and objectives are the links between the organizational vision and the new environment.
  • Goals clarify expectations about what needs to be done to help the organization make the transition into the envisioned environment.
  • Goals give direction to individuals and teams for planning and executing change.
  • Goals tell us what we need to do. As such, goals must be measurable.

We measure for a variety of reasons:

  • Tells us if we are winning
  • Defines performance and gives people an observable and quantifiable way to measure progress over time
  • Tells people what really counts and is desirable
  • What gets measured is what gets done
  • Publishing measures makes things change – it shines a light
  • Measures make commitments real – otherwise it may be perceived as a wish or a good idea
  • Forces confusion and misunderstanding into the open by creating an opportunity for alignment
  • Pulls people together

Without goals, we are like Alice in Wonderland as she asked directions of the Cheshire Cat. “Would you please tell me please, which way I ought to go from here?” “That depends a good deal on where you want to get to,” said the Cat. “I don’t care much where,” said Alice. “Then it doesn’t matter which way you go,” said the Cat. “As long as I get somewhere,” Alice added as an explanation. “Oh, you’re sure to do that,” said the Cat, “If you only walk long enough.”

Keeping Your Balance

February 16, 2009

As I mentioned in an earlier post, it appears that President Obama is getting quite an education from both the Democrats and the Republicans. This type of education will hopefully result in the President learning how to keep his balance.

The life of a leader is always a balancing act but never more so than during a transition. Uncertainty and ambiguity can be crippling. One does not know what one does not know. Keeping one’s balance is a key transition challenge.

It is essential that the new leader avoid these seven traps.

1)      Riding off in all directions. You must focus yourself on what is important.

2)      Undefended Boundaries. It is important to establish boundaries around what you are willing and not willing to do. Otherwise bosses, peers, and direct reports will take all that you have to give.

3)      Brittleness. The uncertainty inherent in transitions breeds rigidity and defensiveness, especially in new leaders with a high need for control. The likely result will be over commitment to a failing course of action.

4)      Isolation. Isolation can occur because you do not take the time to make the right connections, perhaps by relying on a few people, on “official” information or, by discouraging people from sharing bad news with you.

5)      Biased Judgment. This difficulty manifests itself as over commitment to a failing course of action because of ego and credibility issues, confirmation bias (the tendency to focus on information that confirms your beliefs and filter out that which does not), self-serving illusions (a tendency for your personal stake in a situation to cloud your judgment), and optimistic overconfidence or underestimation of the difficulties associated with your preferred course of action. Vulnerability to these biases increases in high stakes, uncertain, ambiguous situations in which emotions can run high.

6)      Work Avoidance. The leader avoids making a tough call by choosing to bury him or herself in other work. This causes tougher problems to become even tougher.

7)      Going over the top. All these traps can generate dangerous levels of stress. When stress is too high it becomes counterproductive.

To avoid these traps the author recommends following the leadership transition program outlined in this document, creating and enforcing personal disciplines, and building support systems at home and at work that help you maintain balance.

Personal disciplines that should be considered are

  • Planning to Plan
  • Deferring Commitments until you are certain that you have time to fulfill the commitment
  • Setting aside time for hard work by prioritizing and eliminating distractions so as to concentrate on what needs to be done
  • “Going to the balcony” and allowing yourself to step out and distance yourself so that the problem may be perceived in a different light
  • Focusing on the process of influencing others through consultation
  • Checking in with yourself to privately reflect on the situation.
  • Recognizing when to take a break in order to reenergize yourself.

Building your Support Systems means getting your personal office set-up, stabilizing the home front as your spouse and family are transitioning too, and building your advice and counsel network. This network should include people who can guide you on technical issues, such as expert analysis of technologies, markets and strategies; cultural interpreters who will help you understand the culture; and political counselors who will help you deal with political relationships.

Creating Coalitions

February 11, 2009

Anyone who has been observing the stimulus bill negotiations surely has become much more cognizant of President Obama’s need to build coalitions and the early lessons he is learning. To paraphrase his comments last evening, “old habits die hard.”

In order to exert influence without authority to require that people take certain actions, one needs to create coalitions to get things done. Influence networks – informal bonds among colleagues – can help you marshal backing for your ideas among colleagues. However, to do so, one needs to create an influence strategy. This means figuring out whom you must influence, pinpointing who is likely to support and resist your key initiatives, and persuading “swing voters.” .

Many new leaders make the mistake of focusing on the vertical dimension of influence, i.e., direct reports and supervisors, and not enough to the horizontal dimension, namely peers and external constituencies.  Think about who might be critical to your success and whether you have engaged and enrolled them.

Start by identifying the key interfaces between your group and others. Customers and suppliers, within the business and outside, are natural focal points for relationship building. Another strategy is to get your boss to connect you. Request a list of ten key people outside your group whom s/he thinks you should get to know. Then set up  meetings with them. (This strategy should be employed for your direct reports as well. Create priority relationship lists for them and help them to make contact.)

Another productive approach is to diagnose informal networks of influence. Observe the interactions at meetings including who defers to whom on crucial issues. Identify who is sought after for advice, who shares what information and news, and who is owed favors.

Identify the sources of power that give people influence such as expertise, access to information, status, control of resources (such as budgets and rewards), and personal loyalty. Talk to former employees and people who did business with the organization in the past. Seek out the natural historians.

Eventually, you will identify the opinion leaders. If these vital individuals align behind your A-item priorities, broader acceptance of your ideas is likely to follow.

There is a diagramming tool known as an influence map that will help you identify who influences whom. An influence map will help you identify supporters, opponents, and “convinceables,” people who can be persuaded.

Potential supporters typically share your vision of the future, are quietly working for change on a small scale, or are new to the company and have not yet become acculturated to its mode of operation. You must solidify and nurture this support. It is not a given.

Opponents will oppose you no matter what you do. They may believe that you are wrong. They may be comfortable with the status quo, have a fear of looking incompetent, see you as a threat to a value that they hold dear or to their power, or that your arrival will have negative consequences for people that they care about.

When you meet resistance, try to grasp the reason behind it. This will allow you to counter arguments and you may be able to convert some early opponents.

“Convinceables” are the swing voters who are either indifferent to change, undecided, or may be appealed to based on their interests. Take the time to try to figure out what their interests may be. Ask them or engage them in dialogue about the situation. Ask if there are competing forces that prevent these people from listening to you.

Now you are ready to think about persuasion strategies. People tend to weigh status quo vs. change. People will more likely gravitate to the status quo unless remaining with the status quo is perceived as a future threat or if there is a reward for change. If the leader has earned sufficient credibility, merely asking people to try something new is sufficient. These persuasive appeals can be based on logic and data or on values and the emotions that values elicit, or some combination of both.

There are action-forcing events that require change. Review meetings in which people must discuss progress publicly are one such event. These meetings encourage action and enforce accountability.

If people are unable to move at once, a leader may employ strategies to allow people to make incremental steps towards change called “entanglement strategies.” For example, getting people to participate in an initial meeting may cause them to participate later on. Entanglement works because each step creates a new psychological reference point for deciding whether to take the next small step.

Another way to do this is to get people to participate in data gathering. Once the person recognizes the problem, have them participate in refining the problem definition. From there it is a small step to solution planning and then, to implementation.

Finally, if you get people to change behaviors, right attitudes often follow. This is because people look for consistency between their behaviors and beliefs.

This all leads to a concept called “sequencing strategy.” By getting individual influencer’s alignment and support, group actions follow. If you approach the right people first, you can set in motion a virtuous cycle. Approach people in the following sequence:

  • Individuals with whom you have supportive relationships first
  • People whose interests are strongly compatible with yours
  • People who have the critical resources to make your agenda succeed
  • People with important connections who can recruit more supporters

Building Your Team

February 8, 2009

Much appropriate discussion has taken place regarding President Obama’s vetting process in selecting his team. It remains unclear whether his appointees witheld information or that the process was flawed. For the most part, though, the people that he has chosen have been hailed as competent choices.

In implementing every strategy, finding the right people is essential. It is equally essential to know who should be part of the team and who should go. People need to be moved into the right position without doing too much damage to short-term performance. Beyond that, there must be goals, incentives, and performance measures that propel people in the right direction.

Here are some common traps that you should avoid.

  • Keeping the existing team too long. By the end of the 90 day period, the leader should have a clear understanding of his team and their individual capabilities. By the end of six months, it is appropriate to communicate your proposed personnel changes to HR and your boss. In certain STaRS situations such as a turnaround, these decisions may be required sooner.
  • Fixing the airplane in mid-flight. It is very dangerous to repair an airplane in mid-flight. Develop options such as hiring additional people and allowing them time to learn the ropes, and/or explore whether people down the command chain can take over.
  • Losing good people. When you shake the tree, good people can fall out too. Always look for ways to signal to top performers that you recognize their capabilities and want them to remain.
  • Undertaking team building before the core team is in place. Premature team building exercises may strengthen bonds between staff that will ultimately be displaced. This does not mean that you should not meet as a group, however.
  • Making implementation-dependent decisions too early. Weigh the benefits of moving quickly on major initiatives against the lost opportunity of gaining buy-in from people who will be brought on board later.
  • Trying to do it all yourself. Remember, that restructuring a team involves emotional, legal, and company policy complications. Do not take this on by yourself. A solid HR person is indispensable.

To assess your existing team, establish criteria. These criteria may include competence, planning ahead and risk mitigation capabilities, judgment, professionalism, energy, focus, relationships, and trust. Match these criteria against the circumstances and requirements of the job and evaluate them accordingly.

Regardless of all of the analysis or perhaps, even as a result of it, we will discover that there are certain performers who are not in the right job or simply do not belong in the organization. These are people who are not achieving their performance goals or are failing to exercise leadership effectively. An effective leader must address this situation as well.

Failure to do so exhibits false kindness. While it may be easier to leave these professionals in their roles, doing so harms the leader, other staff, and the whole company. Additionally, it sends a message that non-performance is acceptable in the company.

An employee may not be effective in the job because of any of six reasons. The person lacks the ability, was improperly trained or oriented, has the wrong attitude, demonstrates the wrong behaviors, lacks the required skills, or lacks experience.

To remedy these situations, there are four options. You can train the employee, coach him or her, shift the person to another position, or let the person go. There is a way to determine what the appropriate remedy for each situation is.

  • If it is a matter of skills, training is the appropriate remedy.
  • Attitude related issues may be remedied by discovering what is causing the difficulty, and then addressing the issue while coaching and motivating the employee.
  • Correcting behavioral issues requires coaching and patience. Behaviors shift over time. In order for the supervisor to determine whether that amount of effort should be expended, s/he must determine whether the employee adds significant value in other areas.
  • If the person lacks sufficient experience, it may be possible to shift the employee to a position where her/his experience level is appropriate.
  • If the person lacks the ability, that individual should be let go. No amount of training, coaching, or shifting will allow him or her to make a meaningful contribution. If there is a need to let the person go, do so respectfully and in accordance with the management philosophy that you wish to inculcate. Direct reports will form a lasting impression based on how this part of the job is managed.

Strategy is most effectively implemented when there is a compensation and reward system designed to focus people. Typically, strategic goals will be distributed among functional departments and then further distributed among each department’s employees as employee goals. Performance is encouraged through effective incentives and clear criteria for measuring performance.

A blend of push and pull tools may be employed to reach strategic goals. Push tools, such as compensation plans, performance measurement systems, annual budgets, and the like motivate people through authority, loyalty, fear, and the expectation of rewards for productive work. Pull Tools, such as a compelling vision, motivate people by inspiring them and enrolling them in a new future. Methodical and risk aversive employees are more likely motivated by push tools while high energy performers respond better to pull tools. It is important that an effective mix be developed that rewards collective (where interdependent work is most important) and individual (where independent work is most important) performance.

Achieving Alignment

February 4, 2009

The higher one climbs in an organization, the greater the need to emphasize the role of organizational architect. Strategy, structure, systems, skills, management approaches, and compensation / rewards programs must be in alignment. Otherwise the leader will feel like s/he is pushing a boulder uphill every day. Planning to assess these areas should be in the 90 day plan.

To effectively design organizational architecture, five elements of organizational architecture need to work together.

1)      Strategy. The core approach the organization will use to accomplish its goals

2)      Structure. How people are situated in units and how their work is coordinated

3)      Systems. The processes used to add value

4)      Skills. The capabilities of the various groups of people in the organization

5)      Culture. The values, norms, and assumptions that shape behavior

Misalignments in any of these areas can make even the best strategy useless. Strategy determines each of these elements and if you change strategy, there will be need to be adjustments in each of these areas.

During the first 90 days, the goal is to identify misalignments and design a plan for correcting them. Common types of misalignments include the following:

  • Skills and Strategy Misalignment
  • Systems and Strategy Misalignment
  • Structure and Systems Misalignment

Frequently, leaders attempt to address these problems without doing the appropriate analysis. This typically only exacerbates the problem. Here are examples of efforts that are likely to fail.

  • Trying to restructure your way out of deeper problems without understanding the root causes. Doing so may create other misalignments, disrupting the group, lowering productivity, and damaging your credibility.
  • Creating structures that are too complex, such as matrix management, can often create bureaucratic paralysis. Simplifying the structure may be the right solution because it provides for the greatest degree of accountability.
  • Automating problem processes often creates problem processes that create problems faster. In any redesign, analyze processes first, then apply technology and then refine the organizational structure for that process.
  • Making changes for the sake of change alone and before there is an understanding of the business may aggravate difficulties.
  • Overestimating your group’s capacity to absorb strategic shifts may result in greater confusion. Groups need to absorb changes.

There is a specific logic to aligning an organization.

1)      Start with Strategy. The author dedicates a few pages to crafting strategy. He asserts that it centers on customers, capital, capabilities, and commitments. While accurate, he acknowledges that his discussion is limited and is too simplistic. He suggests additional books be read on the subject. A deeper understanding of the industry, competition, differentiation and positioning, tactical planning, etc is required.

2)      Look at supporting structure, systems, and skills. The author examines this area briefly as well. Although he does not discuss this, what needs to be reviewed are the three layers of every department /  organization:

  • Physical / Technical Layer which contains the processes, supporting technologies and organizational structures
  • Infrastructure Layer which addresses measurements, management methods, and rewards system
  • Values Layer which addresses the organizational culture, political power / decision making and individual belief systems.

It is important to assure that there is an appropriate knowledge base, neither too broad nor narrow, in each group so that it may perform effectively.

3)      Decide how and when you will introduce the new strategy.

4)      Reshape structures, systems and skills, simultaneously. This is business process redesign and involves the physical / technical layer, infrastructure layer and value layer.

5)      Close the loop. There will be lessons learned that will lead to continuous improvement.

To initiate a cultural change, consider the following methods:

  • Adjust the performance measures and incentives. People will take action on what is measured and rewarded.
  • Set up pilot projects. Allow opportunities to test new approaches or methods.
  • Judiciously bring in people from the outside to stimulate creative thinking and discipline among group members. Facilitators, with broad business backgrounds, can surface issues that will create dialogue and change.
  • Promote collective learning so that alternatives are investigated.
  • Engage in collective visioning as brainstorming stimulates new thinking.

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