Reflections on 2011 learnings and affirmations regarding improving the business of the business

As we pledged when we started, we would periodically share our learnings and affirmations with our friends and supporters.  We are a bit late with our learnings from 2011, partly because we were busy, and partly because there was so much ambiguity and paradox operating in our client situations.  As a result, we wanted to take time to sort out what we believed to be most meaningful and beneficial.  None of our thoughts are groundbreaking, but we believe it is healthy and helpful for leaders to frequently revisit the basics and to question how they are operating in their own areas of responsibility.  We hope the following is helpful and not pedagogic.  Our intent is to help you improve the business of your business.

Good luck!

Cash is King, Information is the power behind the throne

Creating and managing cash were certainly key to survival in 2011.  While there was a lot of focus on cash, few focused on the value of knowledge in the business.  Information that can be synthesized has much greater value than cash- as it can grow and renew- and is not really a one or few-time event.  Like cash, idle vessels of data and information sit around the organization and are never harvested for the benefit they can provide.  While a trait of a successful business is that they significantly invest in gathering and using information, a trait of a company that is struggling to survive- is that they don’t focus on what they can learn about the business through the resident data and information they can create.  Like many who develop their careers in cash starved businesses don’t appreciate and are frequently loathe to use cash resources to invest or develop, those that have developed in information starved environments, don’t have an appreciation for the value of information and don’t have the resolve to find out how to get it and capitalize on it for the business.

To help businesses thrive- they have to capture, harness and use all of the resources available to their business.

This past year we have been particularly focused on the collection of Accounts Receivable and have used information in client and payer billing files to reduce outstanding balances and increase cash flow.  We moved this organization from one that closed its books 6 times a year and presented corporate level financials, to one that can now close in under 3 days and present business level financial information. This has become information that can help positively impact operations before the middle of the next month, helping business leaders to improve the business of their business.

As leaders you have to strive to know, and can’t take no for an answer

In many organizations- particularly those that are challenged and stressed- it becomes increasingly easy to accept “no” or “we can’t” as an answer- particularly in domain of items that (as the Brits say) fall into the “too hard” bin.  Data and information about finances, transactions, operations, and competitors are frequent visitors to the “Too Hard Bin” as it frequently takes less than glamorous actions to make that data helpful and useable.  But, this information can be a tremendous resource to the organization- and for all intents and purposes, once it is acquired (usually as a by-product) its development and use is practically free.  Knowledge will build and enhanced perspectives will help people in the organization continuously make better, more informed and more aligned decisions.

As leaders you have to set the example by displaying and demanding your satisfaction of a huge appetite to know and understand more about the business.  You have to energize the organization to work and think in the same way.  As ad-hocracy gives way to fact based decision practices, the organization will respond positively.  Wistful and Pollyanna like requests will give way to solid requests and decisions about the business that add value.

Like tough-love parents we have to inspire the organization to search, be innovative and creative in the development and communication of fact based information.  We can’t take “ I can’t find it” as an answer, but instead have to know enough ourselves about data and information (and its attendant structures) in the organizations to inspire and guide others about how to access the data, create information and use it in decision processes

You can never fight hard enough to achieve strategic and operational fit and balance in your business

In years like the past one, it is difficult to attract or create additional resource or capacity for your business to work.  Yet, many organizations allow existing organizational resources to be wasted and dissipated by continuing with organizations practices and processes that don’t fit with their strategy and prevailing market conditions.  The cost of lack of alignment or fit is sometimes difficult to isolate, but we all know that friction and rework sap organizational resources.  Lack of alignment and fit, is simply too costly to continue to fund.  Further, the folks in the trenches see it and understand it and question why leaders don’t do something about it.  That makes the issue an implied question of leadership authenticity, connectedness and understanding.

 

While this concept is more customarily discussed on the strategic level, we find plenty of daily examples where operational components don’t “fit” together, much less align with corporate strategy and the realities of market conditions.  Perhaps it is because in environments where more resources were deployable, resources were “thrown” at patching these cracks, and they really only protruded when those resources were taken away.

The issue of strategic alignment is of course critical, but it seems that until organizations that are underperforming, can’t address operational fit issues they don’t or won’t have the capability to address the more critical issue of strategic alignment.  So the first step on the path from surviving to thriving is to deal with the issue of operational fit.

We encountered one organization where the monthly payroll exceeded revenues in 8 months of the year; the workforce was only 30-40% productive by the most basic of measures, yet 40% of transactions were allowed to pass through business systems with critical errors.  While you could argue, that the organization was overstaffed- it was even more of a shame to see that the obviously excess organizational resources were not deployed to fix critical business processes and the related data and information quality issues that resulted.

In most cases, significant leaps in organizational performance can be made in a cost neutral way.  It requires vision, engagement and clear thinking, but can indeed be achieved.  Organizations that can’t take the first step to improvement will likely not be able to make a leap to outstanding organizational performance.

Our job as leaders is to help the organization build and sustain this most basic of “muscles” and to inspire and lead the organization to above average performance. This resource can create its own energy, replicate itself each day and make little waste, making this activity one of the “greenest” that can be undertaken in any organization – Now!

Build and develop leadership and management capacity throughout the organization- use it and don’t work around it

The silent victim of the recession in the business world has been the “surviving workers”.  They have seen colleagues’ careers interrupted, and have seen their own somewhat stymied.  Lack of growth has staunched opportunity for real advancement and the few “field promotions” that have taken place because of reassigning work etc. because of reduced resource levels, have not been the type of advancement to which many aspired.

Many organizations that were development oriented had to reduce budgets in this area, so real development opportunities have been placed on hold.  As a result, the surviving resource is (and has been told to be) appreciative that they are employed, but many are frustrated and looking for developmental pathways.  The frustration suffered by many is deafening- it is just that its roar is overshadowed by many other challenges being suffered in the organization.

As the economy brightens, one of the first areas for companies to invest will be in the development of existing high potential employees.  They should be challenged with developmental opportunities and rewarded with positions of increasing responsibility.  That investment will have to be conditioned.

In many of the challenging situations we encountered, we have observed senior management frustrated with performance in the workforce, and instead of making the tough and right people choices, they have let underperforming management in place, and instead “go around them” to people they trust to get information, make decisions and implement change.  In place management can feel the neutering that is taking place, and while initially appreciative of the “vote of confidence” they question the authenticity of the management practice- and wonder if they will be next.

For organizations to move from surviving, they will have to objectively assess the people talent in their organization and make the right management decisions to put the right people in place to lead the transition from surviving to thriving.  They will have to develop the people and establish the conditions for their success.  Satisficing will not be a successful strategy to effectively make the transition.

You can no longer just tell people to change

This year has been profound in terms of refining our understanding of the conditions and the “moves” necessary to set the stage for and realize successful change.  We are not talking about gratuitous or peripherally beneficial change, but basic fundamental changes necessary to “stay in the game”.  We observed in great detail the approach followed by many- just tell them to change (parenthetically:  they ought to be happy to have a job) and they will do it.  This was an “expedient change model” for tough times- and then when the desired outcomes did not take root or happen- the “changees” failed and it was their “fault” that it did not happen.

Instead- in good times or bad, it is the responsibility of leadership to set the conditions to enable and promote change- and to establish the strategies that are based on solid principles and objective assessment of the situation.

The change strategies have to be based on:

  • A solid assessment of the organization’s capability to change- the intersection of the understanding of its willingness and capacity to change
  • The depth of change required
  • The pace of change required

Moreover, the context for the change needs to be firmly established, communicated and understood.  To give the people a chance to embrace the change, the need to at least understand, if not (preferably) embrace the need to change.

Lastly, the vision for the end state needs to be clear.  It is best if that end state is mutually created by interdependent members of the “system”.

The days of merely telling people (and employees) to change are over- in all but the evacuation of a clear emergency situation.

We hope these learnings and affirmations are helpful to you.  We don’t think we have broken new ground with what we have learned or affirmed in the past year or so, but we believe it is important for Leaders to frequently focus on and take courage for action from the basics.

We wish you the best for a healthy, happy and prosperous 2012!

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