Saturday, December 19, 2009

Corporate Social Responsibility Is Good Business Strategy

Lou Miller has owned and operated Big Apple Bagels in Apple Valley, Minnesota for the past eleven years. At the end of each day, she donates whatever bagels she has left over to a variety of non-profits, such as food shelves, veterans groups, and schools. While Lou can't say for sure whether the donations have significantly improved her bottom line, she does know that this small gesture of giving away excess food on a daily basis has generated good will for her business. Most importantly, to Lou, it just feels like the right thing to do.

Some business leaders believe that their only obligation is to their shareholders. The sole objective in business, these managers assert, is to improve profitability for the benefit of the owners of the firm. Increasingly, however, American consumers are rewarding businesses that see their mission more broadly. Many companies, big and small, are becoming aware of and acting upon an important economic reality: corporate social responsibility is good business strategy.

Corporate social responsibility (CSR) involves the array of steps that a company can take to contribute back to the community: philanthropy, product donations, volunteerism, cause-marketing (for example, providing business expertise to non-profit groups), and citizenship, especially around environmental sustainability. While it is no doubt more difficult to precisely measure return on investment for these types of activities, abundant data demonstrates the economic benefits of CSR. DePaul University conducted a study in 2002 that compared the performance of the 100 Best Corporate Citizens from Business Ethics magazine against the remainder of the S & P 500. In measurements such as sales growth, profit, and return on equity, the socially responsible companies exceeded the competition by ten percent.

A Time magazine article from September 2009, entitled "The Responsibility Revolution," cites a 2007 Goldman Sachs report that concluded that companies with a focus on sustainability outperformed the overall market, frequently by a significant margin. PricewaterhouseCoopers recently completed a study that showed a better return on assets for companies that reported sustainability information over those firms that did not share such data.

Time conducted a poll which showed that more than 60 percent of Americans have purchased organic products since January 2009. Almost 40 percent say that they bought products this year because of the social or political values of the company that sold the merchandise. Time says, "What we are discovering now, in the most uncertain economy since [the Great Depression], is that enlightened self-interest- call it a shared sense of responsibility- is good economics… We are starting to put our money where our ideals are."

Many organizations have long understood the importance of CSR. More than 30 years ago, 23 Minnesota companies formed the Keystone Program. Participating firms each contribute at least 2 percent of annual pre-tax earnings back into their communities. Today, there are more than 200 members of Keystone.

Target Corporation- a charter Keystone member as Dayton Hudson- contributes 5 percent of pre-tax earnings, in good times and in bad. I recently spoke with my friend and former colleague Gail Dorn, who was for many years the Vice President of Communications and Community Relations at Target.

Gail talked about the enduring culture and tradition of giving back at Target, and indicated there were many times when it would have been easy to cut the program. She recalled, "Analysts would challenge us, asking Why are you giving away 5 percent? [Target leadership] ignored their pleas. Even though a return on investment was difficult to measure, Target's community programs generated incredible good will. Our customers loved that we always took the extra step to become integrated in the community. This was particularly helpful in 1987 when Dayton Hudson sought public support to fend off a hostile takeover attempt."

Another mighty Minnesota corporation that appreciates the importance of CSR is the Best Buy Company. An article in the December 7, 2009 issue of Fortune magazine describes Best Buy's free recycling program. Since March, when Best Buy began offering free recycling of TVs, computers, and any other electronic gadgets, more than 25 million pounds of old devices have been turned in at Best Buy's 1004 U.S. store locations. Fortune says, "The company's massive recycling program seems expensive to run, until you look at all the benefits: a green reputation, a focus on service, and a fresh way to get customers into the stores. No wonder Best Buy has learned to love old TVs and eight-track tape players."

Best Buy's leadership understands that the take-back program will probably be, at best, a break-even proposition. Nevertheless, P & L consequences aside, Best Buy CEO Brian Dunn described how he feels when a customer drops off an old TV set: "I'm happy because it helps make the connection between Best Buy and the customer and the community."

Sometimes, financial outcomes are not the most important consideration in business.

Small and medium-sized companies should take heed of the responsibility revolution as well. Time points out that shoppers consider not only the nature of the product they buy, but where it came from. More than 80 percent of consumers say they have deliberately supported local and neighborhood businesses (like Big Apple Bagels) that demonstrate a corporate conscience and concern for the environment. Also, there are more than 250 socially responsible investment mutual funds (consisting generally of companies that do not profit from tobacco, oil, or child labor), that today manage approximately $2.7 trillion in wealth.

Time concludes, "… Americans are recalibrating our sense of what it means to be a citizen, not just through voting or volunteering, but also through commerce: by what we buy… That's evidence of a changing mind-set, a new kind of social contract among consumers, business, and government. We are seeing the rise of the citizen consumer- and the beginning of a responsibility revolution." Indeed, smart companies today have seen the future and are taking action. These companies know that corporate social responsibility is good business strategy.

Sunday, December 6, 2009

Be Aware of Cognitive Roadblocks to Good Decision Making

Perhaps the most important skill of an effective business leader is the ability to make good decisions. Yet as leaders we are susceptible to cognitive biases that can hinder the decision making process. Cognitive biases are simply distortions in our perception of reality that can occur when we use traditional shortcuts to help us make choices. Most of the time, shortcuts allow us to arrive efficiently at a good decision. Sometimes, however, making choices in the most economical manner based on familiar rules of thumb is not the right thing to do. Even competent, knowledgeable, and experienced business leaders can get caught up in this trap. Because we are human, we will never completely overcome our natural biases, but we can learn to make better choices by simply being aware of cognitive roadblocks to good decision making.

Cognitive biases can take many forms, but in the case of the Mount Everest tragedy of 1996, three types of bias contributed significantly to a disaster in which two expeditions were trapped in a storm near the top of the mountain and five people died. Those cognitive biases are:
• The overconfidence bias
• The sunk-cost or escalation of commitment bias
• The recency effect

In May 1996, two commercial expeditions consisting of customers who paid up to $65,000 each to be professionally guided to the summit of Everest (the world's tallest peak) became trapped in a blizzard high on the mountain. This tragic event was immortalized in Jon Krakauer's famous best-seller, Into Thin Air (Krakauer, a journalist, accompanied one of the expeditions). Two of the world's best-known and most experienced mountaineers, Scott Fischer and Rob Hall, served as expedition leaders. In addition to the financial outlay, the effort to reach the summit of Everest requires a huge time commitment; climbers must spend six weeks acclimatizing their bodies to the high altitude. The two teams established a series of base camps at ever-increasing heights, and then embarked on an arduous 18-hour round-trip to reach the summit. An unexpected and violent storm moved in, killing both Fischer and Hall, and three other climbers.

In a pamphlet entitled, The Art of Critical Decision Making, Professor Michael Roberto of Bryant University identifies the three primary cognitive biases that reared their ugly heads to contribute to the Everest disaster.

First, both Fischer and Hall demonstrated the overconfidence bias. Research shows that human beings have a consistent tendency to be overly optimistic. For example, even experienced physicians tend to be unrealistically positive in their diagnoses. In talking about Everest, Scott Fischer said, "We've got the Big E completely figured out, we've got it totally wired. These days, I'm telling you, we've built a yellow brick road to the summit." Other members of the team became cocky as well. Jon Krakauer described several of the highly inexperienced amateur climbers as so overconfident in their own abilities as to be "clinically delusional."

The second cognitive bias is the sunk-cost effect. A rational actor makes choices based on the marginal cost of pursuing one choice over another. In contrast, the sunk-cost effect causes people to continue in a sometimes disastrous course of action in which they have invested significant time, money, and/or effort. On Everest, expedition members refused to allow their huge financial expenditure and many weeks of herculean effort to be for nothing. With the blessing of their leaders, they pushed ahead to the summit, even in violation of well-established turnaround times. A number of climbers reached the top too late in the afternoon, and were forced to descend the mountain while negotiating a furious storm in the dark.

Another common term for this same basic phenomenon is the escalation of commitment bias. Consider America's experience in Vietnam, or the current debate about Afghanistan. We have spent eight hard years fighting in that troubled country at great cost in blood and treasure. To be sure, all of our choices there are tough ones. Yet the argument still centers not on whether we should withdraw, pursue a different strategy, or otherwise cut our losses, but rather at what level we will continue the effort.

The final cognitive bias is the recency effect, which simply refers to the tendency to place a disproportionate value on information obtained recently. This data is most salient to us, but can cause us to overlook other relevant information. On Everest, team leaders were fooled by a string of years in which good weather had prevailed on the mountain. One commentator said, "Season after season, Rob [Hall] had brilliant weather on summit day. He'd never been caught in a storm high on the mountain." No one prepared for the worst case scenario. Disaster resulted because of this failure on the part of leadership to consider ample data that demonstrated that in past years, deadly storms had been a common occurrence on Everest.

Think about your own decision making as a business leader. Have you ever allowed overconfidence, sunk-costs, or recency to sway your mind one way or the other? Don't be too hard on yourself if the answer is yes. Despite what economists would have us believe, none of us are perfectly rational actors. We all occasionally yield to a lifetime of biases. Nevertheless, we can improve our decision making if we develop the self-knowledge to be aware of these tendencies and, wherever possible, to overcome them.

Saturday, November 21, 2009

Diversity Is Strength

From 1804 to 1806, Army officers Meriwether Lewis and William Clark led an amazing team known as the "Corps of Discovery" on an 8000-mile journey over 863 days into the unknown reaches of the western United States and safely home again. They were commissioned by President Thomas Jefferson to find an all-water thoroughfare- the fabled "Northwest Passage"- to the Pacific Ocean. Though they failed in that mission (no such waterway existed), they succeeded in exploring and documenting virtually everything they saw along the way, establishing the boundaries of the young nation, and opening the great American West to future expansion.

What is perhaps most remarkable about Lewis and Clark and their incredible journey of discovery is that they achieved this feat- in a day and age when people gave no thought to the importance of celebrating and incorporating differences- with a team of talented individuals who were truly diverse in the broadest sense of the term. Lewis and Clark dramatically demonstrated a fundamental principle that all modern-day business leaders should know and understand: diversity is strength.

We all remember the story from our school days of Sacagawea, the sixteen-year-old Shoshone Indian woman who accompanied the expedition. She was the wife of Toussaint Charbonneau, who had been added to the team en route as an interpreter. Sacagawea was a nursing mother who traversed 5000 miles with her infant son Jean Baptiste (known as "Pomp") on her back. There is a common misconception that she guided the expedition throughout the journey, which she did not, but her value to the Corps of Discovery was nevertheless profound. She was skilled and knowledgeable in field craft: building shelters, making and repairing clothing, and finding food. Through her quick thinking, she once saved valuable equipment and supplies when a canoe nearly capsized.

Most important, Sacagawea served as the physical embodiment of the Corps of Discovery's peaceful intentions. She was instrumental in securing necessary cooperation from Native American tribes along the way. Meriwether Lewis described Sacagawea as "our only dependence for a friendly negotiation with the Snake [Shoshone] Indians on whom we depend for horses to assist us in our portage from the Missouri to the Columbia River."

Another important member of the team was York, who was William Clark's black slave. In a time when it was a criminal offense for a slave to be taught how to operate a gun, York carried a musket throughout the expedition and used it with great skill to hunt. York was valuable during the many months spent rafting on a river because, unlike other members of the expedition, he could swim. York physically accompanied Clark on all of the most dangerous phases of the mission, suggesting that Clark fully trusted York's ability to handle any perilous situation. Finally, by virtue of his skin color, York fascinated the Indian tribes encountered on the journey. They referred to him as "Big Medicine." He was perceived as having greater value because of his uniqueness, and made negotiations with the Indians easier than they would otherwise have been. In the end, because of the special gifts they each brought, Sacagawea and York became regarded, in effect, as fully equal members of the team.

The Corps of Discovery was also diverse in less obvious ways. In an era when social status mattered a great deal, Lewis and Clark did not select a single member of the expedition based on any criteria other than merit. They cast their net far and wide in search of people who were not just physically strong, but who also possessed intelligence, discipline, and distinctive skills. One of the men they hired was a master carpenter; another was a veteran blacksmith. They recruited a tailor, a fisherman, a boatman, and several excellent hunters. They hired interpreters who would help them in their discussions with Native American tribes. The team members came from a variety of cultures: Irish, German, French and English. There were several men who were mixed-race, half-white and half-Native American.

In his wonderful book, Into the Unknown: Leadership Lessons From Lewis and Clark's Daring Westward Expedition, author Jack Uldrich says, "It would be unrealistic to say that Lewis and Clark started their selection process with diversity as an end goal or even a deciding factor. As products of the late-eighteenth century, this was not how they thought. The lesson, however, is that by focusing on their end goal- reaching the Pacific- they were led, by necessity, to assemble a diverse team. As the famous architect Ludwig Mies van der Rohe said, 'Form follows function.' And to conquer the unknown, that 'form' manifested itself as a diverse team."

Even Lewis and Clark themselves possessed complementary skills as co-commanders of the expedition. They were both seasoned soldiers, strong, and experienced in the ways of the wilderness. They were also both curious, ambitious, and excellent leaders. But Lewis was better educated, and a superb hunter and botanist. Clark was a talented boatman and cartographer. Lewis tended to be reserved, humorless, and even prone to bouts of depression, while Clark was warm and engaging, with an easy manner that made him popular with the men. Together they formed a formidable duo, arguably the most successful leadership team in American history.

Do you belong to a diverse business team? A team that is diverse not just in the obvious, visible sense, but that possesses diversity of skills, backgrounds, and experiences? Or does everyone on your team more or less think and act alike? With the increasing complexity of business missions in today's global economy, leaders who ignore the imperative to seek diversity in their approach will lose. As Lewis and Clark taught us so ably more than 200 years ago, diversity is an absolute necessity, because diversity is strength.

Saturday, November 7, 2009

Lead Courageously in a Challenging New World

There are some positive indicators that we are currently rebounding from the worst economic crisis since the Great Depression. The stock market is thriving. Manufacturing activity is increasing. Retail sales are up. With that said, unemployment now exceeds ten percent. Many experts predict the recovery will be slow and arduous at best. We all hope for a better future. But I think we also know- regardless of how the future takes shape- things will never be the same again. To quote the great philosopher Dorothy Gale from The Wizard of Oz, "We are not in Kansas anymore." For business leaders, the critical new skill set will be the ability to lead courageously in a challenging new world.

Survival in a deeply recessionary economy and building for a healthy future requires leaders to take on two important tasks. The first involves stabilizing the current situation. The second involves adapting to a new and uncertain future and seizing opportunity wherever it presents itself.

The old adage "when you are up to your [posterior] in alligators, it's difficult to remember the original objective was to drain the pond," has come to my mind often during these trying times. The down economy has very understandably caused businesses to focus attention on the immediate task of survival. Research shows that both people and organizations are far more highly motivated to take action by the possibility of loss than by the prospect of gain.

Indeed, it makes sense during tough times to take every reasonable step to protect the existing business. Is your financial house in order? Are there opportunities to trim costs or otherwise gain efficiencies? Are you staffed and organized correctly? Does your product mix make sense? Is your product or service priced right? Are there opportunities to divest? These are all important questions that should already have been part of a rigorous review of your current business model.

The risk in undergoing this kind of crisis-mode analysis involves the inclination to hunker down and wait out the storm once near-term steps are in place. All of us as leaders have a tendency to rely on skills and abilities that have worked for us in the past. We look for recognizable patterns so we can respond to them just as we have successfully done before. We want to be able to reassure our teams that things will return to normal soon. But there is great danger in this mindset because the future that we face will be unlike anything any of us have ever previously experienced.

The businesses that will go beyond mere survival and thrive into the future are those that aggressively seize opportunity. They see lean times not as a disaster to endure, but as a challenge to overcome. During the last recession, approximately one in three industry leaders lost their perch at the top of their fields as savvy competitors maneuvered skillfully during the downturn. Those who follow bicycle racing know that in an event such as the Tour de France, the ultimate winner frequently overtakes the leaders during the mountain phase- the toughest part of the contest.

Do you have an opportunity to rethink your business model? In the recession of the early 1990's, IBM experienced its first revenue decline in over fifty years. Losses mounted year over year. CEO Louis Gerstner took time during the downturn to seriously reconsider a business model based on sales of mainframe computers. IBM shifted its focus from hardware into computer services and solutions, and it flourished.

Are you continuing to think about the future by investing in research and development? In 2001, the beginning of a two-year recessionary period, Apple Computer experienced a revenue decline of 33 percent. Yet Apple bravely chose to increase R&D expenditures by 13 percent, and continued to maintain that level of investment throughout the downward cycle. Such innovative technologies as the iTunes music store and software, the iPod Mini, and the iPod Photo were developed during this period. Rapid and healthy growth resulted for Apple.

Are you continuing to invest in your people? Remember, even during bad times, your top performers have other options. Do you have the right players in place? Are you encouraging them in their development? Do they see a future with your organization? I believe that one of the most short-sighted moves that many companies make when the going gets tough is to immediately cut training and development dollars.

Finally, these pragmatic steps of rethinking your business model, investing in R&D, and taking care of your people should not just be one-time responses to a crisis, but rather an ongoing part of how you do business. In a Harvard Business Review article from 2003, business authors Gary Hamel and Liisa Valikangas state that the strongest businesses are those that continuously "reinvent business models and strategies as circumstances change," rather than just making singular adjustments in reaction to an emergency. The authors argue that those companies that work incrementally to try numerous different ideas on a micro scale- while involving many people in the discovery process- succeed over time. Businesses "should steer clear of grand, imperial strategies and devote themselves instead to launching a swarm of low-risk experiments."

No matter how we cut it, the future is daunting and unknowable. But it is also richly abundant with opportunity. Those leaders who work hard to strengthen their organizations in the short run and then courageously look to the future will end up on top of the mountain when the economy improves. A continuous cycle of scrutinizing the business model, investing in lots of new ideas, and developing people will bring success in a challenging new world.

Friday, October 23, 2009

Actively Manage Your Career

In a recent interview in the New York Times, Ford Motor Company President and CEO Alan Mulally was asked to provide his best career advice. He responded, "Don't manage your career. Think about just exceeding expectations in every job you do, continually ask for feedback on how you can do a better job, and the world will beat down your door to ask you to do more…"

I respectfully disagree. Exceeding expectations and seeking feedback are important but, in my experience, success and advancement come most often to those individuals who actively manage their careers.

I spent more than a decade in human resources at Target and Best Buy. I can't count the number of times that people came to me frustrated over their perceived lack of career progress. The common theme sounded like this: "I work really hard. Feedback is positive. Performance reviews are good. Yet no one seems to notice. The best opportunities go to others."

What I frequently found was that many of these individuals simply assumed that if they "exceeded expectations," someone would notice and ensure that their career moved forward. Also, some of these folks could not answer the most fundamental question, What do I want to do with my career?

There may be lots of people- your supervisor, colleagues, human resource professionals, mentors- who think highly of you and will work to help you advance in your career. But, trust me, no one is going to do it for you. You must take personal responsibility for actively managing your own career.

And if you are going to manage your career, you need to know to what end. Ask yourself some tough questions, and be honest about the answers: Am I happy in my current job? Is it challenging and rewarding? Do I have room to grow, or have I hit a plateau? Where would I like to be one year, two years, or five years from now? Backing up from those goals, what affirmative steps must I take now to get there? In short, you need to be able to clearly answer the question, What do I want to do with my career?

Don't measure your progress or self-worth solely by money, title, power or prestige. It is great to be ambitious. We need people in corporate America like Alan Mulally, who want to rise to the top of their organizations. But remember, just one person gets to be CEO. For the rest of us, at some point, we top out. If you are only seeking more money or the next title, you will be forever unhappy, because someone else will always be richer or outrank you.

Consider other measures of success. Is your work interesting? Are your skills put to the test? Are you learning new things? Do you receive recognition for your efforts? Do you believe in the mission of your company? Are you adding not just to the bottom line for your organization, but creating value for society as a whole? Does your work match with your personal values? Consider the definition of career success as broadly as you can, with a focus on those internal measures of satisfaction that are personally important to you.

I do agree with Alan Mulally on the criticality of feedback. In order to successfully manage your career, you need to be in a continuous cycle of seeking, receiving, absorbing, and adjusting to constant feedback. Seek feedback from as many different sources as possible, not just from your boss. Find those one or two really valuable people who will unfailingly give you honest feedback on how you are doing. Listen carefully to what they say. Insist on specifics.

If you are told you lack good communication skills, ask for details. Do you need to work on written skills? Spoken skills? Ask for examples of when you have fallen short and suggestions on how to improve.

Make changes based on the feedback you receive. Demonstrate flexibility and a willingness to learn and grow. Put together a personal development plan with clear milestones and share it with your boss and other trusted advisors. Work that plan with seriousness of purpose. Adjust the plan when appropriate as your career moves forward.

Finally, don't think of leadership or advancement in your career as simply a matter of managing a checklist, like a boy or girl scout completing activities to earn a merit badge. Sometimes people would say to me, "I've done the three things you told me to do… now I'm ready to be promoted, right?" The very fact that they asked that question told me they weren't ready. Think of leadership and your career not in terms of finishing a to-do list, but as an ongoing journey. A sometimes complex and difficult journey.

Managing one's career is challenging, even in the best of times. These days, when so many of us are in crisis-mode, reacting to rather than shaping the reality around us, career management frequently goes to the back burner. Don't let it.
Remember these suggestions:

• Take responsibility for actively managing your own career.
• Develop a clear picture of what you want to do with your career.
• Measure success broadly, with a focus on intrinsic factors that are important to you.
• Seek specific, actionable feedback and respond appropriately.
• Put together a personal development plan and work it with energy.
• Consider leadership and career progress as a journey.

With these tips in mind, go forth and have a great career. Enjoy the adventure.

Sunday, October 11, 2009

Avoid the Tyranny of Meetings

In a classic Dilbert cartoon, a group of co-workers sits down around a conference table and the team leader says, "There is no specific agenda for this meeting. As usual, we'll just make unrelated emotional statements about things that bother us." In that spirit, I'm about to make an emotional statement about something that bothered me throughout my corporate career, which was an excessive number of interminable, meandering, useless meetings. I counsel any of my friends in business who are willing to listen: Avoid the tyranny of meetings.

I once worked in a retail store where, at the beginning of each day, the general manager would pull his leadership team together for a meeting which lasted, literally, all morning. It was not a discussion with give and take, but rather a chance for him to go on about any subject that popped into his head. Then, meeting complete, he would walk the floor with those same leaders and get genuinely angry when he saw problems in their respective areas. Evidently, he thought we each had a clone that was getting the work done while he blathered on. It was surreal, and the very definition of the tyranny of meetings.

Later in my career, I also spent many hours in meetings where the primary objective was to discuss the fact that we spent too many hours in meetings. It was sort of like being in the U.S. Congress and serving as a member of the Committee on Committees.

In the June 2009 issue of Inc. Magazine, entrepreneur Joel Spolsky discussed how the culture of Microsoft-- where he worked in the early 1990's-- has changed in the years since he left. Then, Microsoft employed about 10,000 people worldwide, and was headquartered in Redmond, Washington, on a campus of a dozen buildings within easy walking distance of one another. Now, there are 90,000 employees globally, and 94 buildings comprise the corporate headquarters. A fleet of company-owned vehicles transports people from place to place on campus.

Most notably, at the new Microsoft, meetings have proliferated. Spolsky says, "Back in my day, meetings were avoided like the plague, and it was considered a burden if you had to go to three or four a week. But today, the average Microsoft manager is scheduled to within an inch of his or her life. The new virtue is keeping a schedule of brisk half-hour meetings, and most of the mid-level managers… [have] consecutive half-hour meetings scheduled for stretches of days at a time."

Though Microsoft's business has understandably suffered like most others in today's recessionary economy, one wonders whether bloated bureaucracy (Spolsky describes the comical series of registration steps he was required to go through just to access the free Wi-Fi network as a guest on Microsoft's campus) and the new "meeting culture" have contributed to relatively poor recent performance by Microsoft, in comparison to the leaner, more carefree days gone by.

With that said, there are clearly times when meetings are appropriate and very necessary. Often, the results that can be achieved in a face-to-face sit-down vastly exceed what can be accomplished through a phone conversation, conference call, or e-mail. Every culture is different, and no set of guidelines applies in every circumstance, but here are some basic tips for meeting organizers that might help improve the quality of your meetings and thereby increase productivity:

• Invite the right people. If the invitees to your meeting do not have the requisite experience, technical knowledge, or decision-making authority, you have wasted everyone's time.
• Start and stop the meeting on time. This will force discipline and eliminate meandering. Assign a timekeeper who has the courage to speak up when things get off track.
• Develop a detailed agenda beforehand and share it at the beginning of the meeting. It should contain specific, actionable outcomes. It should answer the questions: Why are we here and what do we intend to accomplish?
• Assign a note taker. The note taker should review key points before the end of the meeting to ensure consensus on what was discussed, and then distribute notes to all stakeholders after the meeting, including those who may have missed the meeting.
• Stick to the agenda. Don't be inflexible, but try to limit unnecessary digressions and stay on task.
• Use real data, not anecdote or emotion. Remain factual in your approach.
• Allow and encourage everyone to contribute. Listen carefully to what each team member says, even if you disagree.
• Create an environment in which people are comfortable speaking up if they do disagree. Encourage open and honest debate. Thoroughly discuss key points of difference.
• At the end, summarize meeting outcomes and assign next steps. Be specific and make sure each person knows what is expected of him/her going forward.

What is the culture of your company, organization, or team concerning meetings? Do you have too many, not enough, or just the right number of meetings? Are your meetings well-organized and efficient? Do you lose productivity with too much time wasted talking about getting work done, instead of actually doing the work? Do you have time to think and reflect in your job? If you are less than perfect in your meeting disciplines, please consider trying some of the above-described techniques. If you do, you will go a long way towards avoiding that dread corporate disease that saps energy and hinders results: the tyranny of meetings.

Sunday, September 27, 2009

Think Like a Chess Player

The game of chess is a metaphor for business, and for life. Seemingly simple at the most basic level, chess is in reality mind-boggling in its complexity. The focus, discipline, and skill required to play chess well are reminiscent of the same attributes that are required to succeed in business. While not every business leader plays chess, every business leader can benefit from thinking like a chess player.

I first became fascinated by chess as a youngster in the early 1970's when the quirky American prodigy Bobby Fisher defeated the reigning world champion, the Russian Boris Spassky, in their famous title match in Reykjavik, Iceland. My sister and I played for hours on end. While there have been periods when I studied and played intensively, I have never been better than an average player. But I still love the game.

In his wonderful book on the history of chess, The Immortal Game, author David Shenk says, "The exquisite interplay of the simple and the complex is hypnotic: the pieces and moves are elementary enough for any five-year-old to quickly soak up, but the board combinations are so vast that all the possible chess games could never be played-- or even known-- by a single person."

Indeed, in a chess game, after just four moves by each player, the number of possible board positions is 315 billion. Shenk says, "The total number of unique chess games is not literally an infinite number, but in practical terms, the difference is indistinguishable. It is truly beyond comprehension-- 'barely thinkable,' as one expert puts it-- and beyond human or machine capacity to play through them all."

Business, like chess, can be seemingly elementary on its surface. The Oxford English Dictionary defines business simply as "commercial activity." Those of us who are in business know that our most fundamental objective is to sell our product or service to customers at a profit. Easy, right? No, because when we delve deeper into the world of business, things quickly become more complicated.

Therefore, preparation and experience are keys to success in both business and chess. Shenk points out that Bobby Fisher supplemented his obvious aptitude for the game with thousands of hours of study. Well-known author Malcolm Gladwell talks about this essential combination of talent and preparation in his book Outliers. Ten thousand hours of practice, according to Gladwell, is what separates the Bobby Fishers of the world from other talented people.

Similarly, in business, it is those leaders who know their discipline inside and out, and who spend years gaining knowledge and hard-won experience, who will best navigate the intricacies of their competitive environment. Those leaders will win over the long haul.

One of history's famous chess players was Benjamin Franklin. He was an American founding father, as well as a diplomat, scientist, publisher, and inventor. He was also a savvy businessman. Franklin said, "The Game of Chess is not merely an idle amusement. Several very valuable qualities of the mind, useful in the course of human life, are to be acquired or strengthened by it… For life is a kind of Chess, in which we often have points to gain, and competitors or adversaries to deal with."

Franklin believed that chess sharpened his thinking, and that it taught several useful lessons. As quoted by Shenk, Franklin "asserted that the game improved a person's:
1) Foresight-- looking ahead to the long-term consequences of any action.
2) Circumspection-- surveying the entire scene, observing hidden dynamics and unseen possibilities.
3) Caution-- avoiding haste and unnecessary blunders.
4) Perseverance-- refusing to give up in dim circumstances, continually pushing to improve one's position."

There is one final way that business leaders can benefit from thinking like a chess player. Professor Dianne Horgan of Memphis State University has investigated how chess might improve various cognitive abilities. She found that, among other things, chess improves a person's self-perception.

Self-perception involves "calibration," which is the correlation between a person's perception of their own ability, and the actual level of their ability. In the population at large people generally have an overinflated view of their own abilities. Improving calibration skills-- by playing chess, for example-- significantly enhances the value of feedback. If people have an accurate idea of their own level of competence, they are more open to input from others.

I would never advocate that every business leader needs to learn how to play chess in order to succeed in the world of "commercial activity." I would argue, however, that the thinking skills utilized by chess players are the same kinds of skills that business leaders need to develop.

Business leaders need to work hard at learning their craft. They need knowledge, experience, and an in-depth technical understanding of their profession.

Business leaders need to be strategic, which involves skills like considering long-term consequences, surveying the entire scene for all possible outcomes, proceeding with caution, and sticking to goals even when the going gets tough.

Finally, business leaders need to be receptive to feedback, and to make adjustments as necessary to improve performance.

The leaders who display these qualities, whether they are actually chess players or not, stand the best chance of putting their competition into checkmate and winning the game.

Sunday, September 13, 2009

Recharge Your Batteries

Summer is almost over. I just returned from a wonderful long weekend with family and friends on a placid little lake in western Connecticut. I came home happy, rested, and ready to go back to work. I am reminded once again of the importance of taking time to recharge one's batteries.

Recently, President Obama and his family spent time at Martha's Vineyard, that scenic and idyllic spot off the southern coast of Cape Cod. When word of the First Family's vacation plans first came out, controversy erupted. How could the chief executive be taking time off when there are so many pressing issues at hand? We need him on duty. America is fighting two wars. The economy is in recession. Workers are unemployed. We are facing crises with the environment and health care. There is so much to do.

I understand how people feel but, politics aside, can't we all agree that our commander-in-chief needs to be healthy, energized, and clear thinking in everything that he does?

Certainly, there is a lot on all of our plates. For many families facing tough economic times, a vacation is not possible right now based on personal finances. But recharging one's batteries is not achieved solely by taking time off in some remote, exotic location. We can refuel the tank every day, in simple ways, by just learning to relax and divert our attention from time to time.

In a recent interview in Harvard Business Review, Pulitzer-Prize-winning historian Doris Kearns Goodwin-- who has written several presidential biographies-- was asked about the essential qualities of a great leader. She listed a few, then said, "I would add here that one more success factor is key for great leadership, be it in business or politics, and it's one that's usually overlooked. As a leader you need to know how to relax so that you can replenish your energies for the struggles facing you tomorrow."

Dr. Goodwin went on to say, "Lincoln went to the theater about a hundred times while he was in Washington. And although he suffered from a certain melancholy, he had a tremendous sense of humor and would entertain people long into the night with his stories. Franklin Roosevelt was the same way. He had this cocktail hour every evening during World War Two when you just couldn't talk about the war. He needed to remain free from thinking about the bad things for a few hours. Or he would play with his stamps. This ability to recharge your batteries in the midst of great stress and crisis is crucial for successful leadership."

There are many other historical examples. John Kennedy loved to paint, sail, and play golf. Winston Churchill loved to paint, write books, smoke cigars, and drink scotch whisky. Harry Truman loved to take a brisk walk every day, play poker and drink bourbon whisky (anecdotal evidence aside, there is no solid data that proves that drinking whisky results in success as a leader). The current occupant of the White House is also a poker player, and enjoys golf and basketball.

There is an additional challenge these days in that we are all so intensely, immediately connected and networked that many of us feel we simply can't take time off or the earth will stop spinning without us. Or perhaps we are secretly worried that if we take time to relax we will realize the harsh reality that business, and life, will indeed go on without us. We don't want to find out the awful truth that we are not individually essential to world progress.

Doris Goodwin offers a fascinating perspective on this phenomena. She comments on how in the nineteenth century, busy as leaders were, they took time to pen lengthy letters. She says, "Looking back, the thing that's really impressive is that here were these leaders running the Civil War, and people like [Secretary of State William] Seward still had time to meditate on the day's events and to write these long letters to his wife at night. These were the days of no television. Leaders weren't worried about cable news or their BlackBerrys. They weren't multitasking; they had time to reflect. It's a luxury many leaders just don't have today, and that's a real loss."

When was the last time you truly paused to take a breath and contemplate life? That you read a fun book just to escape? That you exercised or got outside for some fresh air and sunshine? That you noticed nature's awesome beauty? That you enjoyed quality time with your family or friends? That you actually wrote a letter out in longhand and sent it to someone via snail mail? That you pursued a hobby that enables you to become so focused on what you are doing that you are just in the moment for a little while, unaware of the trials and tribulations of the world around you?

If the answer is "not recently," then please take a serious look at what you need to do to arrange your life so that these things can happen for you from time to time. You will be a better person for it and, as a result of that, also a better leader.

In the end, we all occasionally need to take the advice of that famous and wise philosopher, Tommy Bahama, who reminds us, "Relax…"

Sunday, August 30, 2009

Know Your Business, Employees, and Customers

In 1994 the husband and wife team of Dewey Johnson and Wanda Oland purchased a rough and tumble saloon in Apple Valley, Minnesota, that had metal doors so that glass wouldn't break if anyone got forcefully tossed out into the parking lot. Over the past fifteen years-- through hard work, determination, and a passion for the business-- Wanda and Dewey have transformed that former rowdy watering hole into Rascal's, one of Apple Valley's most popular family restaurants.

Not only have Wanda and Dewey adapted and demonstrated flexibility in building their business over the last-decade-and-a-half, they have shown particular savvy in navigating through the current recession. Wanda and Dewey have a strategy for success that can be summed up as follows: know your business, know your employees, know your customers.

Wanda and Dewey know their business. Wanda has spent her entire professional career in restaurants. Dewey's background is as a general contractor, but much of what he learned in that discipline translates to the restaurant industry.

When business started to slide with the economy, Wanda and Dewey applied the principle, "If you want to find out what's happening with your business, work the back room." Dewey spent months in the kitchen working hard, talking with employees, and discovering potential efficiencies.

For example, Dewey built a laundry room and Rascal's now washes its own linens at significant savings. The couple decided to shop different vendors for such things as paper, chemicals, groceries and credit card processing, and realized additional savings. Wanda says, "We took a good hard look at everything."

Wanda and Dewey have gone through three significant remodels, and Dewey has in effect acted as the general contractor. Dewey hand-built every table in Rascal's. He custom built the bar with thick maple planks formerly used as bowling lanes. Yes, bowling lanes. He has raised and lowered flooring and installed windows. He put in auto-paper towel dispensers because they are more efficient. He has done it all with the physical facility.

The couple went to a part-time bookkeeper and because margins are small, Wanda pays extremely close attention to every penny that comes in and goes out. She says, "Everything we touch matters." All a part of knowing your business.

Wanda and Dewey know their employees too. A number of their people, including kitchen help, servers, and at least one bartender, have been with them from the beginning. How do they achieve such loyalty? They talk with and listen to their folks, and they treat them right.

With the recession, like countless other businesses, Rascal's watches labor hours closely. But instead of releasing people or reducing hourly pay, Wanda and Dewey developed a flexible schedule that allows employees to swap hours and take time off when they need it. They have not backfilled some positions. Wanda does her best to manage labor efficiently based on the flow of customer traffic and to spread out available hours fairly among the staff.

From a morale standpoint, Rascals' employees see the owners there virtually every day, dressed in blue jeans and ready to work. Wanda says, "Don't ever ask an employee to do something that you're not willing to do yourself."

Finally and perhaps most importantly, Wanda and Dewey know their customers (Wanda calls them their "guests"). They understand their guests expect high quality food and excellent service, and in these two areas nothing has changed. Many menu items are home-made. They make their own dressings and sauces. They fillet their own walleye, always fresh, never frozen. They whip up their own batter. They boil and mash their own potatoes. Portion sizes have not changed.

During the down economy, Wanda and Dewey figured their guests would appreciate an opportunity to still go out to eat, but save money. They devised a daily calendar-- featuring enticements like inexpensive burgers, free video games and musical entertainment, or a kids-eat-free from 10 to 2 deal on Sundays-- that encourages people to come out and enjoy themselves any day of the week without spending too much.

They have also tinkered with the menu, focusing on foods that remind people of good old-fashioned home cooking. Guests can now eat meatloaf, turkey, or pot roast at Rascal's.

Rascal's offers catering, serving corporate groups, weddings, local schools, and others. Rascal's hosts fundraisers, most recently an event in support of the Courage Center. In short, Rascal's does whatever is necessary to market their product and reward-- and hopefully build upon-- a loyal guest base.

Survival in the current economy is a struggle even for the healthiest of businesses. But those organizations that understand the business they are in, treat their employees with respect, and focus continually on the needs of their customers will do best. Wanda Oland says it well: "We touch a lot of lives. We'll make it through and we'll be stronger for it."

Two final but important notes: The metal doors are gone, thanks to Dewey Johnson. And I can personally testify that Rascal's homemade meatloaf is to die for. What could be better during a recession than comfort food?

Sunday, August 16, 2009

Share Knowledge and Information in All Directions

I spoke with an executive recently who told me about the corporate culture in his company. Secrecy, withholding critical information, and inconsistent communication were common practice. My friend was frustrated to no end. Organizations that fail to share important knowledge and information up, down and across struggle in the long run.

No organization achieves perfection with regard to information sharing, because human judgment is involved. Obviously, some data is not appropriate for wide distribution. Sometimes, confidentiality is a necessity. To communicate well requires time, focus and effort, which are often in short supply.

Nevertheless some companies, such as Pixar Animation Studios, excel as learning organizations that openly and honestly share knowledge. Pixar is one of the most successful film production companies of all time. The "fraternity of geeks" who work at Pixar succeeded in transforming hand-drawn cel animation to computer-generated 3-D graphics. The string of movies thus created, starting with Toy Story in 1995, have been hugely popular and critically acclaimed.

Through it all, a corporate culture that highly values information-sharing at every level within the organization has enabled Pixar to continue to produce one hit after another.

The September 2008 issue of Harvard Business Review cited several reasons for Pixar's sustained creative success. Among other things, the company espouses a philosophy that "we are smarter than me." The company believes that everyone needs to be involved in the creative process and, to that end, communication throughout all levels is imperative.

Next, Pixar works to hire good people, to support them, and to foster an environment where trust and respect are a given. More specifically, those good people are encouraged to take risks, knowing that they will inevitably make mistakes. Talented people will learn from failures and use their hard-earned discoveries to move forward more effectively on subsequent projects.

Finally, Pixar's culture is flat, collegial and extremely peer-oriented. Hierarchies are out, everyone is treated with respect, and both honest feedback and careful listening are encouraged and rewarded.

One very specific and practical example of the way information-sharing plays itself out is Pixar University. Every employee is encouraged to spend as many as four hours a week furthering his/her education. Pixar University offers more than a hundred courses, from filmmaking and writing to sculpture, painting and drawing.

Randy Nelson, dean of Pixar University, says, "We offer the equivalent of an undergraduate education in fine arts and the art of filmmaking." And this is not just fun time or a way to avoid work, but rather a critical job expectation. Nelson says, "This is part of everyone's work. We're all filmmakers here. We all have access to the same curriculum. In class, people from every level sit right next to our directors and the president of the company."

Pixar University epitomizes the concept of broad knowledge-sharing. Nelson asserts, "The skills we develop are skills we need everywhere in the organization. Why teach drawing to accountants? Because drawing class doesn't just teach people to draw. It teaches them to be more observant. There's no company on earth that wouldn't benefit from having people become more observant."

At Pixar University, employees are also encouraged to try new things, take risks, and learn from mistakes. The University crest says in Latin: "Alienus Non Diutius," which translates to "alone no longer." Says Nelson, "It's the heart of our model, giving people opportunities to fail together and to recover from mistakes together."

In addition to excellent financial results, Pixar has earned countless industry accolades for its work, including 22 Academy Awards, four Golden Globes, and three Grammys. Every Pixar film produced since 2001 was nominated for a Best Animated Feature Oscar and four of those movies, Finding Nemo, The Incredibles, Ratatouille, and WALL-E, came home with the little golden statuette.

Pixar Animation Studios provides an incredibly compelling example of an organization that sees the critical value in gathering information from a diverse variety of sources and then sharing it openly up, down and across the company. Those individuals who hold information closely would not survive in such a culture. Pixar's reputation as a place where creative genius thrives is indeed well-earned.

Companies like Pixar that set themselves up as learning organizations and follow through on that commitment tend to be successful. Other organizations-- where secrecy, lack of clarity, and generally poor communication all around are the rule-- suffer in the end.

Where does your organization or team sit on the communication spectrum? Do you openly share important knowledge and information in all directions? Does your culture foster honest feedback and careful listening? What do you personally contribute from a communication standpoint?

A human or animal organism needs circulation of blood and nutrients to all parts of the body in order to have full physical health. Similarly, freely flowing knowledge and information are the "lifeblood" of any organization that hopes to achieve robust business outcomes.

Sunday, August 2, 2009

Great Teams Never Give Up

Great teams never give up. In business, as in sports or any other human endeavor, the very best teams simply refuse to be defeated.

I was reminded of this fact several years ago when I had the honor to coach my daughter Lucia and her 3rd and 4th grade peers in basketball. Basketball, like business, is a fast-paced, rough and tumble game that involves lots of strategy and, in order to win, requires great skill and determination from its participants. At least at the highest levels of the sport, this is true.

But for Luci and her pals practices consisted mostly of social time, laughing, doing each other's hair, taking bathroom breaks together en masse, and some basketball. I tried to teach basic fundamentals, with a focus on teamwork. They took a vote and decided to call themselves the "Hot Peppers." I was not crazy about this team name, but went along. Did I mention the laughter?

This was a middling team, at best. During the regular season we might have won a couple more games than we lost. No one predicted greatness for this team.

But in the annual year-end tournament that determines the overall league champion, something came over the Peppers. They pulled together as a unit and demonstrated, almost heroically, that great teams never give up.

There was a team that had dominated the schedule all year long. This team had several girls who were big, strong and skilled. This team had gone undefeated in the regular season. Somehow the Peppers got through the preliminary rounds to face this team in the championship game.

I knew we were up against it, but wasn't sure if the girls knew. I did not want to invoke the Holy Bible and cite David and Goliath but, trust me, my thoughts went there. Instead, I recalled the recent Super Bowl, where a lowly underdog had defeated the mighty favorite.

"Did you girls see the Super Bowl?" "Yes." "Who won?" "The team that wasn't supposed to." "Right."

The Peppers went out and fought hard. They were behind most of the game. But suddenly, the other team started to play not to lose. They sat back on their heels. They made mistakes. They even panicked a bit near the end. The Peppers came back.

Pretty soon, with no time left, one of our little gals stepped up to the free throw line, score tied 15-15, with a chance to win the game. First shot missed. Second shot hit the back rim, bounced straight up, and came down through the hoop. Pandemonium erupted. The Peppers had triumphed. Dairy Queen beckoned.

What are the ingredients that go into creating a team with this kind of capability? First, leadership. And not just leadership of the obvious kind, as important as that is, from the head coach or the team leader in business. Leadership can come from any person, at any time. Our final couple of baskets came from one of our best athletes, who had played a quiet game up to that point. Isn't it amazing how your top performers always seem to come through, demonstrating leadership in the clutch?

The second ingredient is skill. Several girls on the Peppers, silliness aside, could put the rock in the hole when they felt like it. This is where hard work, repetition, and practice together as a unit come in. These are essential fundamentals in business, just as they are in sports.

Finally, there is the most important ingredient. This one is the most difficult to describe. Call it team chemistry, call it trust and confidence, call it swagger, call it what you will. A truly great team believes in itself in a way that is palpable. You can see it in the way such a team carries itself, interacts together and ultimately performs.

We are in difficult times right now, but teams that possess that magical something will survive the trial. They will emerge stronger than they were before.

What will your team do in this economy? Will you play not to lose? Will you let events dictate what happens to you? Will you sit back? Will panic set in? Or will you look each other confidently in the eye, take control, count on your leaders, work hard together, trust each other, and snatch victory from the jaws of defeat? This decision cannot be postponed.

In 1941 during the throes of World War Two, British Prime Minister Winston Churchill addressed the students at Harrow School, his alma mater, outside London. He said, "Never give in. Never give in. Never, never, never, never- in nothing great or small, large or petty- never give in…" That was good advice for young people during dark days, but isn't it interesting how young people can sometimes teach us too?

Occasionally, when I face a moment of truth in today's tumultuous world I think back, smile, and whisper to myself, "Remember the Peppers. Never give up."

Sunday, July 19, 2009

Appreciate the Power of Words

As business leaders we often fail to fully appreciate the ability we possess, for both good and ill, to influence people and situations through the simple choice of the words we use. Our teams are listening closely to what we say. The very best communicators select their words carefully and work hard to ensure that followers understand their meaning. This necessity to speak and write clearly is a truly basic leadership objective, but ever so difficult to consistently execute.

Last week I was honored to take a group of executives through a leadership seminar at the Gettysburg battlefield in Pennsylvania. At the end of our day-long tour of that sacred place, one of the participants read Abraham Lincoln's Gettysburg Address near the spot where Lincoln delivered it at the National Cemetery in November 1863. As she read that beautiful little speech- only 272 words long- I was reminded of the power of an idea well expressed to move people to think differently and, sometimes, change the world.

Lincoln had less than a year of formal schooling but he read constantly from an early age in an effort to educate himself. He became a master communicator whose innate yet carefully honed abilities as a story-teller and humorist enabled him to reach and teach ordinary people in unforgettable fashion. His deep study of the Holy Bible and Shakespeare influenced the lovely cadences of his speeches.

Lincoln's masterpiece, the Gettysburg Address, forever changed the way Americans think of themselves. He explained the meaning of the sacrifice of so many lives on the battlefield just a few months prior. He asserted the Declaration of Independence and its central idea- equality- as a matter of founding law. The Civil War, Lincoln told us, was the great struggle around and testing of this new principle. As historian Gary Wills said, "By accepting the Gettysburg Address, its concept of a single people dedicated to a proposition, we have been changed. Because of it, we live in a different America."

Few people, even among great historical figures, possess Abraham Lincoln's gift for language. Of speeches that compare with the Gettysburg Address, for me, only the inspirational words of Dr. Martin Luther King Jr. come to mind, delivered on the steps of the Lincoln Memorial in August 1963, telling his countrymen: "I have a dream today…"

So what does that leave for those of us who are mere mortals? For those of us who often get tangled in our own syntax? For those of us who dread having to put our thoughts down on paper?

There is a popular historical myth that Lincoln penned the Gettysburg Address on the back of an envelope as he rode the train from Washington D.C. to Pennsylvania. To the contrary, the speech was carefully composed beforehand at the White House. He wrote and rewrote, revising the speech even as late as the morning of the day it was to be delivered. Lincoln was incredibly particular in his choice of words, and he worked hard to get the message just right. He knew that his followers, and even future generations, would be paying close attention. In that way, he was a teacher to all of us who would aspire to be leaders who communicate well.

With written communication, take the time to be thoughtful. Who is your intended audience? What message do you want to convey? How can you write that piece- whether a short e-mail or a full-blown speech- in the simplest, most concise way, yet still get your point across (remember Lincoln's 272 words)?

Nothing is more frustrating for a team of people than to read something their boss or colleague has produced that causes confusion. Credibility is lost and time is wasted. Proofread what you write. Better yet, have someone that you trust check your work. Be open to suggestions and make changes accordingly. Like Lincoln did, practice your writing. As with any other skill, writing ability can be developed over time with effort, repetition and feedback.

The spoken word can prove more difficult because we frequently don't have time to be as reflective as we might with a writing assignment. We are often called upon to give an opinion quickly without the benefit of all the information we need to make a judgment. Still, the best communicators are thoughtful in speech as well.

Take a pause before you speak. Collect your thoughts. Consider the audience. It's okay to acknowledge what you don't know and take time to do some research. Gather data. Ask good questions. Select your words. Deliver them well. Confirm understanding.

As always, the old saying holds true: "Talk is cheap, but whisky costs money." Words without appropriate and consistent actions to back them up are mere words. With that said, leadership begins with words. Especially in the difficult economic environment in which we all live and work, anxious business teams are keenly in tune with what leadership is saying. So take the opportunity to be thoughtful with your words. The future of your organization may depend on it.

Sunday, July 5, 2009

Seek Honest Feedback

Most of us intellectually grasp the importance for success in business of giving and receiving honest feedback. Why do so few of us do it well? Because it is difficult.

Many of us are averse to hurting someone's feelings and so are reluctant to deliver the full truth as we see it. We are also generally loath to receive feedback ourselves. It can be embarrassing and unpleasant. How many people (both supervisors and employees) actually enjoy the annual review process, which is all about feedback? Not many that I have met.

With all that said, I am still struck at how often in my ten-year career in human resources I came across even very senior leaders who would not give straightforward feedback when they should have, nor were they at all interested in what anyone had to say about them either. This fundamental unwillingness to tell and/or hear the truth costs organizations dearly over time.

Meg Whitman, during her decade-long run as CEO of online trading behemoth eBay, provided a dramatic example of a leader who not only sought honest feedback, but could not function without it. She listened carefully, mostly to her customers but also to anyone else who offered a useful point of view, and used what she learned to create a unique and powerful success story.

Whitman came aboard as CEO in March of 1998. Any number of skeptics felt that she was not qualified to run eBay for lack of technical expertise. She quickly demonstrated her willingness to roll up her sleeves and learn. In mid-1999, the eBay site crashed for 22 hours, and weeks of uncertainty and instability followed. Whitman sat through endless technical discussions to get at root causes, pulled all-nighters with the team and, when she did sleep, did so on a cot in the office. The problems were fixed and Meg Whitman impressed everyone, including her detractors, by acknowledging what she did not know and working to educate herself.

Whitman was also quick to credit eBay's success to its enormous community of buyers and sellers, who in essence run the business by determining which transactions will take place, and by managing inventory and shipping. The power of the business model, said Whitman, "is in the community of users who have built eBay."

Whitman spent considerable time monitoring feedback from buyers and sellers by perusing discussion boards. She said, "The great thing about running this company is that you know immediately what your customers think." She organized annual member conferences that brought thousands of eBay customers together to swap ideas and learn how to more effectively use the site. She spent time during these events on the floor interacting with as many customers as possible.

Numerous sellers have been able to make a handsome living trading on eBay full-time, and Whitman enjoyed interacting with them. Whitman declared, "Actually, most of these sellers know more about eBay than [eBay] employees. They use it every single day. They're the experts... The businesses that have been built on this platform are remarkable."

Whitman oversaw explosive expansion at eBay. In 2002, for example, revenues rose 62% to $1.1 billion, with an earnings jump of 172% to $249 million. By the time Whitman resigned her position in 2008, eBay had 15,000 employees, just under $8 billion in revenue, and 300 million registered users.

Meg Whitman was honored as Fortune magazine's most powerful woman in business in both 2004 and 2005. Much of what she accomplished can be attributed to her desire to hear what people were telling her, learn from it, and take appropriate action based on that new knowledge.

As a leader, if you arrive at a point where you lose interest in receiving feedback- assuming you had interest in the first place- or you say you want feedback but create an environment that is clearly not safe for providing it, you cannot succeed over the long haul.

Good leaders foster a culture in which it is okay to speak up, even if the message might be painful. The very best leaders not only accept feedback but actively, even manically, seek it out. They could not function without the information they receive, virtually always from multiple sources. It is like the air they breathe. They use that data to drive change in themselves and their organizations.

Meg Whitman is a shining example of just such a leader. She constantly sifted through countless bits of information, especially from her customers, the buyers and sellers who were foundational to eBay's success. She used what she learned to create one of corporate America's all-time growth stories.

Two final questions are critical: 1) Do you have someone in your professional life- at least one person- that pushes you and provides you with genuinely honest feedback? If yes, good for you; 2) If the answer is no, why not and what will you do about it?

Monday, June 8, 2009

Teams Need Common Purpose

Teams without common purpose are rudderless and have no hope of achieving at a high level over time. If you are a leader of people ask yourself, does my team have a common purpose? If you are unsure or the answer is no, find a common purpose and communicate it soon.

What is common purpose? Regardless of the verbiage used- vision, mission, strategy, identity, purpose- no team sustains effective performance without the benefit of a single compelling idea that drives it forward.

During his 20-year tenure as CEO of General Electric, Jack Welch- like him or not- dramatically demonstrated the importance of common purpose. When Welch took over in 1981 GE contained 42 strategic business units: appliances, lighting, transportation, motors, medical materials, industrial electronics, aerospace, financial services, etc.

The profound challenge for Welch became how to develop a common vision for such seemingly disparate disciplines. He said, "We were in so many different businesses. In those days, if you were in a business that was profitable, that was good enough reason to stay in it."

Welch believed that strategy is not a lengthy action plan. It is the evolution of a central idea through continually changing circumstances. He said: "The winners in this… environment will be those who… insist upon being number one or number two in every business they are in- the number one or number two leanest, lowest-cost, worldwide producers of quality goods and services..."

Welch also said, "... where we are not number one or number two… we have got to ask ourselves [management guru] Peter Drucker's very tough question: 'If you weren't already in the business, would you enter it today?' And if the answer is no, face into that second difficult question: 'What are you going to do about it?'" Welch's simple ultimatum was that those businesses would be fixed, sold, or closed.

Welch did his best to convey the idea: "... I repeated the No. 1 or No. 2 message over and over again until I nearly gagged on the words... The organization had to see every management action aligned with the vision."

But while "One or two, fix, sell, or close" passed the simplicity test, and most employees understood and agreed to it intellectually, the emotional leap was a more difficult process. Welch spent a good deal of time in his first five years earning the nickname "Neutron Jack" (he left buildings intact but the people were gone). One quarter of GE's employees left the company during this period, 118,000 total. As Welch himself admitted, "The turmoil, angst, and confusion were everywhere."

On the other hand, under Welch's leadership GE's revenues improved from $27 billion to $130 billion. Market value jumped from $12 billion to $410 billion. Welch presided over more than 600 acquisitions and aggressively pushed GE to enter newly emerging markets. By the end of Welch's reign GE was the largest and most valuable company in the world. In 1999 Welch was named "Manager of the 20th Century" by Fortune magazine. Many of the business methodologies and leadership concepts he espoused continue to be emulated by corporate executives the world over.

I can speak to the importance of this fundamental lesson from personal experience. In a 25-year career that has spanned military service, legal practice, and business, I have observed teams without a common purpose. I have been a member of teams without a common purpose. I have been the leader- shame on me- of teams without a common purpose. Those teams do not work.

In contrast, teams that know with confidence what they are about can become juggernauts. They are led by men and women who make a point of finding a common purpose and sticking with it.

Perhaps my favorite and most memorable personal example of a common purpose was the creed that bound me and my fellow infantry Marines: "To seek out, close with, and destroy our enemy, through fire and maneuver." No ambiguity there. Not coincidentally, the U. S. Marine Corps is by far and away the best team with which I have ever been associated.

Common purpose doesn't have to be complex or blindingly original. To the contrary, it should be simple and reflect common sense. It doesn't have to come from on high, although it might. It can come from you. Not everyone has to agree, and there may be pain in the implementation, but everyone must understand the common purpose.

Use your own business savvy in the discovery process. Read and study. Consult with your team and other valued advisors. Take advantage of both internal and external resources.

The goal is to find a common purpose that is compelling and makes sense. Then you must communicate until you nearly "gag on the words." Finally, follow through to make sure that your team acts to carry out that purpose. You may not become "Manager of the Century," but you will see improved business results.

Friday, May 15, 2009

Wisdom is Not Enough


I love history. I am also an entrepreneur at heart. Recently, I combined my passions by developing a business that uses battlefields as classrooms for corporate leaders. Since the fall of 2007 I have taken twelve groups of approximately 180 managers to the Gettysburg and Little Bighorn national parks. We have had incredible experiences together while studying these momentous events through the lens of individual leadership and team dynamics. I am continually struck by the power of history to teach. The learning from these battles is amazingly timely and highly relevant for leaders right now, especially in the deeply troubled times in which we live.

The challenges in history were the same as business leaders face today: How do we manage through profound change? How can we motivate our people in chaotic circumstances? How do we make good decisions despite imperfect information? How can we communicate more effectively? How do we see things from another person's point of view? How can we understand another culture in a global economy? How will we win or even just survive in a highly competitive and uncertain world?

One of the most dramatic leadership lessons that repeatedly presents itself is the idea that "wisdom is not enough."

Author and humorist Douglas Adams said: "Human beings, who are almost unique in having the ability to learn from the experience of others, are also remarkable for their apparent disinclination to do so." How true. When faced with problems and challenges, no matter how complicated and unfamiliar, we all have a strong tendency to rely on skills, abilities and methodologies that have proven successful for us in the past. But sole reliance on personal experience can be a severely limiting factor and can hinder the new insights that are frequently necessary to achieve complex problem solving.

George Armstrong Custer had seen intense combat in the Civil War and was a veteran Indian fighter after the war. Everything in Custer's experience taught him that swift offensive action resulted in victory. He had led charge after charge at the head of his troops. He survived all of this violent action over many years virtually untouched, despite having eleven horses shot out from underneath him.

Further, Custer had never seen his Plains Indians opponents do anything other than scatter when attacked directly by a body of U.S. soldiers. Time and again he had known smaller numbers of white cavalry and infantry, and even scouts and civilians, to defeat larger Native American forces. Finally, Custer was a well-trained soldier and practitioner of the military arts. The conventional tactical wisdom of the day was that to split a combat unit, allowing one contingent to hold the enemy while the other moved around his flank, might be risky but could potentially provide a big payoff.

Given all this, Custer's decision-making at the Battle of the Little Bighorn in Montana on June 25, 1876, was not surprising. He had received warnings from his frightened scouts about the immense size of the Native American village they confronted. Nevertheless, he moved quickly into action, confident in his own charmed existence, leading in the saddle and from the front. Despite his numerically superior enemy, he divided his forces into multiple wings in hopes of moving around and entrapping the village. To what was undoubtedly his shock and dismay, the angry young manhood of the Lakota Sioux and Northern Cheyenne nations turned and fought. Every man in Custer's immediate command perished.

For Custer, what might have been we will never know. Could he have risen above conventional wisdom- indeed his own wisdom based on hard-won personal experience- to think differently about the extraordinary situation he faced? Could he have decided differently based on his own studies of military history (he was a great reader and student of his profession)? Could he have behaved differently out of sage advice from people who knew what they were talking about- his scouts- but whose counsel he disregarded? In all probability, old mental models blocked the possibility of new insights. For his poor choices, disaster befell the team Custer was entrusted to lead.

Simply put, wisdom is not enough. Most of the time our lifelong learning serves us well (don't put your hand on that hot stovetop or you will feel pain). The challenge for today's leaders is, first, to recognize and acknowledge situations that may on their surface appear familiar, but are in reality new and more complicated than what has come before. Next, the trick is to marshal resources and elevate understanding. This can come through reading and study, discussion with knowledgeable people, feedback from diverse and unbiased sources, or development of rigorous processes. The goal, in the end, is to achieve better awareness and the higher level of decision-making capability necessary to make good choices in tough and unique scenarios.


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