Improving the Business of the Business- Most recent key learnings

These are the Key Learnings from our business in 2013.  We hope you can use them to improve the Business of your Business.

Context and Calibration

Alan Kay of the Parc Research Institute is credited with the phrase: “context is worth 80 IQ Points.”  We agree.  To put the extra IQ points to good use, we think it’s important to put the context to work and calibrate on your own particular situation – or the challenge you are attempting to understand.

During the past year, we observed a number of organizations marketing their goods and services under the umbrella of the “end of the world is near”.  The multi-scaled graphs were convincing, but once you peak under the covers, different stories emerge.  One of our favorites was the devastating impact the  “huge decline in College-attending High School graduates in Pennsylvania – 6,000 students over the next 10 years” would have on our client.

This was an offer of an apologist theme for the Admissions folks from the consultants they hired and was provided as “clear evidence” as to why it would be so tough for the Admissions folks to hit enrollment goals.

Here was the context (based on the data we were provided):

  • More than 72,000 High school seniors stay in state each year to attend college;
  • Over the next 10 years, a 6,000 student decline would average 600 per year or .8% decline per year;
  • Our client’s market share: .4%;

Some calibration:

  • Student enrollment impact if our client did nothing to improve share: 2.4 students per year

Establishing context and then calibrating the impact enabled the client to focus on the important issue, rather than just wringing their hands and worrying about the devastating decline – and its real potential impact.  Context and calibration helped us to take pause and focus on doing something meaningful and important.

The real important task at hand was to focus on regaining and sustaining market share.  This leads to the next point.

Main events vs. side shows

Over the past several years, we have been lucky enough to work in several very change-averse industry segments- for clients that were convinced that there was value in bucking the adversity.

Time and time again, meetings, or post-meetings, would lead to the recreation of the facts presented and their meaning.  The folks that were recreating history were not being malicious – they were just struggling with the prospects of change, and just how “hard it might be” to work in an environment shaped by different assumptions and guided by new expectations for performance.

The sideshow creation and presentation became the technique du jour to divert attention from the main event.  The sideshow didn’t discredit the main event, but it sure was enticing to be diverted by its allure.  On the other hand, we wanted to take advantage of situations where cumulative learning and resulting shifting perspectives might lead us to better outcomes. Maintaining that balance is the challenge of dealing with the sideshow matter.  It’s also why it can be such an effective technique for folks who want to divert a process of change.

The sideshow diversion approach slows and reduces the intensity of the process of change- particularly when there is a fair amount of lag or cycle time between meetings and gatherings that are focused on the process of change.

To overcome the matter, we had to “name the phenomena” and then gently introduce it in the organization and explore the impact of the sideshow approach.  Over time, we built the capability to question whether a “side show” was being introduced- or whether there was legitimate learning that was taking place, opening up new perspectives that needed to be considered.

Our critical step was to name the phenomena and then introduce effective ways of discerning what was happening as the change process evolved.

Power of people to create and drain organizational energy

Appreciation for the power of people in an organization was likely one of the greatest losses many organizations suffered through the recent economic challenges.  This seems to be a multi-faceted, circular and self-reinforcing challenge for many organizations, leaders and workers.  It may not be pervasive, but it seems to be more of the reality for organizations that have experienced significant challenges over the past several years.  It seems that those that are missing the boat are missing it consistently at many points in the process.

Since hiring has not been a keen necessity for many organizations, many have allowed their capabilities to assess and attract the best and brightest atrophy.  Hiring processes have become “expedient” and don’t get burdened by establishing and using multifaceted job requirements and comprehensive evaluation criteria to aid the hiring process.  People seem to be accepted into positions based on affability rather than real and learned beliefs that people have sufficient experience, expertise, inquisitiveness, attitude and capacity to really do the job.  Instead of focusing comprehensively, on the complete picture, too much attention is focused only on the “high spots” and sometimes on the low spots.

Resources to help people develop have been reduced and homogenized.  Budget cuts caused many organizations to significantly and disproportionately reduce the resources available help people develop the nuanced capabilities that they and the organization require for future success.

Performance management processes have been less than full of candor.  Multi-faceted criteria for success and performance expectations have been diminished and deemed not relevant to the job at hand or to the organization.

Leaders seem reticent to really call balls and strikes based on performance.  Perhaps it is the fear of having to terminate underperforming people, and the risk of not being able to refill the position; or more critically, perhaps leaders have given up hope on building and sustaining high performing organizations and are just “keeping their heads down.”

Whatever the cause, the condition is unsustainable:  People have to want to and actually grow, develop and perform to deal with new realities and advancements [that competitors may use].  Leaders must continually reshape organizations for success.  The organization needs to be positioned to attract the best and the brightest and have processes to secure them.

Leaders can’t continue to satisfice on this point.  To sustainably position organizations for success, leaders have to open this dialogue and develop meaningful approaches to deal with the outcomes of the dialogue.

Intuition and Diligence

We are all in awe of the people who seem to get it right all of the time.  Many business people travel well on that reputation for a long period of time.  We have all come to know that these folks who seem to walk on water have amassed a lot of experience and have sharp inductive skills.

We all rely on our experience and intuition to speed decisions processes.  Most times that is good. But, we have also observed that conditions change.  As leaders we need to balance our assessment of, and reliance on, past performance.  Forgive the political reference, but we need to both trust and verify.

During the past years we have encountered a plethora of situations where great people relied too much on intuition and [past] experience, didn’t recalibrate for current realities and didn’t verify.

During the past year we observed millions of dollars of investments evaporate, because the investors didn’t recalibrate or do diligence.  In some cases, what used to be true, is no longer true.  In others, and embarrassingly, the assets they thought they were investing in didn’t have the assumed value or prospects to generate the value- and in come cases, just didn’t exist. We observed banks over-advance funds for work that didn’t happen- or didn’t happen where they thought it had happened.

The autopsies on many of these situations seemed to point out a common theme- people felt they didn’t have the time (or were pressured into believing they didn’t have the time) or did not want to spend the resources on the diligence (or perhaps didn’t want to know if the diligence might contravene their intuitionally based decisions).  In each of the cases, the time, effort and resources to recover far exceeded what would have been incurred as a matter of due course- before the investments were made.  Worse, in each case the real value that emerged was far less than the originally expected value.

As leaders (particularly those of us that have successfully relied on our intuition in the past), we need to develop the ability and comfort to slow down and support our intuition with good recalibration and diligence.

This is really hard for many in a world where we operate as partners and affiliations and have had past success.  We need to be able to comfortably look at partners and associates with whom we have done business in the past, and tell them how we are changing our business models to be more fact-based and diligent.  We have to become more comfortable portraying this as not being a lack of trust in individuals or organization, but a transition to knowing that the business world has changed and we are trusting both our experiences and current facts and assessments equally.

Inside and outside experiences

Over the last few years we have had the opportunity to work with scores of leaders in different roles and from different backgrounds.  Similarly, we have had the opportunity to help clients select leaders for their organizations.  In all situations, we have worked with our clients to assess performance.

While successful leaders need to have many different skills, experience, expertise and possess appropriate behavioral attributes, one of the areas I had overlooked in the past was sufficient and appropriate mix of successful “inside and outside” experiences.

Successful inside experience involves working within an organization and its cultures, processes and conventions.  Most resumes are chock full of this and it is indeed important to consider.

Outside experience is broader.  It involves experience in dealing with Markets, customers, shareholders, unions, suppliers, regulators, financial markets etc.  It also involves dealing with the experiences that evolve from those interactions- financings, dealing with regulatory matters, law suits, lost business, supplier performance etc.  Outside experience is harder to harness and understand what it might bring to the organization.

Perhaps it is because of the economy and the need to reach out more, or the fact that our work typically requires that we work with people and organizations both inside and outside of our client organization, I have come to appreciate and value the diversity of outside experience more and more.

Since many people spend a lot of their developmental years in one role and in few organizations, many organizations don’t have the benefit of people on their team who have a breadth of outside experience.  Many times the “outsiders” we deal with don’t share the same value or values that we might.  Therefore, for it is hard for us to “figure them out”.  Yet, understanding the world that others work in and shapes their stances on issues is invaluable.

For this reason, I have been more sensitive to searching out people in organizations that possess these outside experiences and to putting those experiences to work.  As we have hired new people, I am constantly in search of the evidence that they have mastered “outside encounters”- not always so much by the specifics, but by the generalities of the fact that they dealt with them, are sensitive to them, and have mastered them.

Great information is no longer obscured by data

Having and using great information is obscured by people, or more precisely, leaders in organizations.  The tools exist today to extract and organize data in ways that can help create meaningful information.  If the information proves valuable, it is relatively easy to develop reporting schemes to present that information either regularly or when it is needed.  The technology exists and continues to morph and improve.  What frequently doesn’t exist is the inquisitiveness, imagination, the skills and experience to make it happen. What is increasing is the need to understand more, understand more completely and understand faster.

In our experience, the solution to this ubiquitous challenge (ask yourself and any leader: “Are you comfortable that you have all of the right information to effectively run your business”) doesn’t arise from spontaneous combustion.  In our experience, the solution arises from an unbending and unrelenting resolve to effectively deal with the information challenge.  As leaders we have to commit ourselves to the organizational cause of creating relevant, reliable and readily available information and using it to make fact-based decisions in the organization.  As leaders we have to commit to increasing our own understanding of how “all of this can work” and then shepherding, encouraging and requiring the right people in the organization to get up to speed- and deliver the relevant and reliable information in ways that make it readily available to all who would benefit from it.

The good news is that it is relatively inexpensive to create the environment.  The better news is that an empowered and enlightened organization can do its job better and enjoy it more.

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