Wayne Wilson on Companies in Transition

There are goals and then there are GOALS

A coach on LinkedIn recently asked the question, “What stops you from achieving your goals?”

The initial responses from other participants in the discussion included:

• Other people
• Losing hope
• Lack of skills or competencies
• Our beliefs

I have a different theory – we do not or cannot distinguish between little "g" "goals" and big "G" "Goals".

Little "g" goals are all those things we say we want to do but lack the conviction down in our gut to achieve. Sometimes, these goals are transient or simply unrealistic. We are not really motivated, and therefore we do not make the necessary, all-out effort.

Big "G" Goals, on the other hand, are those Goals which grab us where we live, which are aligned with who we are, and which are inherently desirable and achievable IF we are willing to commit the resources and make the effort. If a goal is not truly aligned with who we are, we will not likely make that commitment.

How do you distinguish between a “goal” and a “GOAL”?

For me, big “G” Goals define themselves via an internal clarion call that shouts in my mental ear: “This is it! Now is the time! Go for it!” Failed little “g” goals may litter the landscape, but my personal track record on the big “G” Goals has been pretty good.

Managing Business Risks

The first risk management problem for both executives and directors is identifying the risks they need to be worried about. Some of the biggest problems are stealth risks – they seem to come out of nowhere.

At a recent seminar for corporate directors, the seminar leader, Dr. Krishna Palepu of Harvard Business School, suggested the following matrix as a good place to start.

Types of Risks

- Strategic – did you pick the right strategy?

- Execution – can you effectively execute the strategy you picked?

- Reputation – how could your corporate reputation be damaged?

- Compliance/Fraud – something bad happened; will it be caught in time?

- Legal – regulators, customers, etc sue the company.

Sources of Risks

Internal

- Pressure to perform – the hill is too high

- Incentives – the compensation system encourages inappropriate behavior

- Rationalization – people have a unique ability to convince themselves that what they are doing is okay when it is not.

External

- Competition/markets – aggressive competitors or changing markets

- Regulatory changes – someone changed the rules or the level of enforcement

- Technology – new technologies make what you are doing obsolete

- Society – the larger society decides it does not like something you are doing

While not exhaustive, the above lists can point you in the right direction.

The Coming Leadership Deficit

"Members of Generation Y are less adept at handling ambiguity, Jason Seiden writes. That doesn't just make them more difficult to manage, he suggests, it may require a complete rethinking of what leadership means. Companies will have to readjust their organizational charts to put decision-making power in the hands of the few people on staff who can handle it, while career paths will become more structured, he argues."

Read more at SmartBrief/SmartBlog on Workforce (10/5)

This article introduction from today's SmartBrief on Leadership reminded me of a recent conversation.

A group of people were assembled to talk about the resolution of a potentially serious business problem. When I inquired as to the basis for this particular assemblage of people from throughout the organization, I was informed by the convener that the situation at hand required the skills of a group of thinkers as opposed to doers.

Thinkers versus doers - what does that mean? Seiden talks about the problem in terms of discomfort with ambiguity. Doers like clear direction with defined rewards and penalties. They struggle with uncertainty and ambiguity.

Decision making - deciding what to do - requires thinkers. The decision makers must develop a direction and an action plan for moving forward despite rampant ambiguity and uncertainty. No leader ever has all of the facts or other information they would like to have before making a major decision.

Once a strategic decision has been made, doers become critical to its successful execution.

Organizations need both thinkers and doers - we just need to have the right people in the right roles.

Chasing excess profits

Every entrepreneur dreams of capturing excess profits. Excess profits greatly increase the value of a business and therefore the wealth of the owner(s). Excess profits are the reward for the outsized effort and risk undertaken by entrepreneurs.

What do we mean by “excess profits”? In economics, “excess profits” is usually defined as profits earned by a business in excess of the opportunity costs of labor and capital employed in the business. They often result from oligopoly or monopoly situations where one or a few companies dominate a particular market either through differentiated products (initially) or market muscle (eventually).

Can excess profits be sustained? Research conducted by McKinsey [1] suggests that strategic differentiation (and therefore sustained competitive advantage leading to excess profits) is inherently unsustainable in most markets. Competitors constantly “scrutinize one another’s products, prices and marketing” reacting quickly to counter any competitor initiative which might allow the competitor to gain an advantage. As strategic differentiation diminishes, industry margins shrink as well.

What about companies like Google and Microsoft? They are exceptions proving the rule. Both achieved market dominance in their respective spheres through technological innovation combined with aggressively seizing a first mover advantage. [2] But such companies are few in number, and competitors, emerging technologies, or anti-trust regulators will eventually erode their market dominance. Nothing lasts forever.

What’s an entrepreneur to do? Relentless innovation must drive everything you do, and then run like hell lest someone be gaining on you.

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[1] “When best practice isn’t enough,” McKinsey Quarterly, August 2004

[2] While neither company was the initial market innovator in their respective spaces, both were able to quickly pull away from the pack and thus gain the equivalent market power of a first mover advantage.

Leveraging Leadership

The September issue of our periodic email newsletter to clients and friends has been posted to our website at Companies in Transition – September 2009. The theme of this month's issue is leadership and it includes the following articles:

• 5 Dimensions of Leadership - Leadership is often hard to define. Rather than try, many people simply say, “I know it when I see it.”

• Judgment is the Foundation of Leadership – Good decisions are usually based on the exercise of good judgment.

• Practicing the Art of the Possible – All leaders seeking to bring about significant transformations struggle to bridge the gap between who they are and who they hope or wish to become.

• Confident, upbeat consistency carries the day - Employees, like voters, recognize that their personal fates often depend on the actions of their leaders.

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Planning and Planting

Fall is for planning and planting. Approaching Labor Day and the end of summer, many business owner/CEOs and their management teams are beginning to think about planning for 2010 – not an enviable task given the roller coaster of the last year.

Planning itself is the critical act, not so much the exact shape of the plan that results. Bywords for 2010 might include:

1. Conservative assumptions – the current recession is unprecedented in modern times. No one really knows what a recovery will look like or when it will become meaningful.
2. Multiple scenarios – Economists talk about recession-recovery cycles in terms of V’s, U’s, W’s, and Lazy L’s (you don’t really want to know about that one). Each type of cycle could require a different response from your business. Prepare thoroughly for the most likely variations.
3. Flexibility – The greatest learning of last year’s market contractions was how quickly the markets and economic environment can change. In the face of such volatility, those who were able to move nimbly tended to fair better.
4. Contingency plans – Your scenarios should include extreme variations (sales down 40-50%) even if the likelihood is low. See 3 above.

Then comes the fall planting when you consider and commit to the business and operational investments that will drive your revenue and profit plans for next year. Making those investments may require reducing other costs now, but they are absolutely essential to your future success.

It’s about Results

Apparently there is a social workplace conflict brewing [1] between those who are perpetually committed to self-improvement and those who just come to work every day. On one side are those who tend to be fanatical about self-improvement, be it networking online or working out at the gym. On the other side is the rest of the working population.

Progress leverages ideas, not frenzied activity. For me, self-improvement is not about expanding my IQ or enhancing my physique (both hopeless causes) but about learning from others, as well as by doing myself. I much prefer to implement an idea that has worked successfully elsewhere rather than try to re-invent the wheel.

Benjamin Franklin is one of my heroes. Claiming to be the laziest man in the world, Franklin was always looking for a better, cheaper, simpler way to do things. His inventiveness was driven not by hyperactivity but by a desire to accomplish his goals with the least effort possible.

In the end, it’s about results; it’s not about effort, showmanship, publicity, or taking credit. Self-improvement efforts only matter if the results improve. Acknowledge the effort, but only reward the results.

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[1] Michael Schrage, The Self-Improvement Vortex

Playing for time…

Surviving during the recession is often about playing for time. A California architectural firm hangs on by reducing staff due to lack of work. A large insurance company pushes vendors for lower prices and bigger guarantees. Sales of high-end golf equipment have gone AWOL in some markets. And on and on…

Other companies are making time. I’ve heard three new startup stories in just the last week. At least one software company is preparing for an IPO. And would-be entrepreneurs are coming out of the woodwork.

It was the best of times; it was the worst of times… [1] The relative mix of those doing well versus those not doing so well is clearly out of balance compared to our recent history, but at 9.5% unemployment, 90% of the people are still working. They need services and they are buying products. Companies focused today on emerging consumer trends, needs, and desires will be tomorrow’s winners.

The times are what we make them. The choice is yours. What will you do?

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[1] Charles Dickens in A Tale of Two Cities

Craving simple answers to complex problems

Humans suffer from a dreadful condition – we crave simple answers to inherently complex problems. Healthcare, climate change, and financial regulation – people on each side of these debates demand immediate, specific policy choices to address their specific concerns (and to be paid for by someone else). But none of these “solutions” are cheap and they all come with the potential for massive unintended (harmful) consequences.

Business leaders are seldom immune to the malady. One CEO verbally trounced his chief sales officer for “missing the numbers” without any concern for (or awareness of) the complexity of the company’s sales cycle. A marketing executive was adamantly determined to pursue his plan without regard for the company’s shifting market position. Analysts and investors expect stair-step growth in revenues and earnings.

Here are a few helpful principles for managing this condition.

NOTHING lasts forever – Just as “trees don’t grow to the sky,” neither do housing prices, booming economies or stock prices. The natural world we live in is inherently seasonal and cyclical. Our mistake comes in assuming that we can extrapolate from whatever is happening currently. Maybe we can but only in the short run. And then there are those sudden, unexpected discontinuities. Prepare for the fall. Expect the unexpected.

The Muddle in the Middle – Very little in this world is truly black or white, or right or wrong. The vast majority of things come in varying shades of gray including ethics, public policy and business strategy. Significant business and policy decisions involve costs, tradeoffs and invariably unintended consequences. 

Ask lots of questions and listen – Except in extreme emergencies, thoughtful, consultative decision-making usually results in better decisions, and better outcomes. Scientific discovery and technological innovation come in fits and starts. Why should anything else be different?

Life is a Rubik’s Cube – Finally, take your time; the solution seldom comes any faster by furiously twisting the pieces.

Brain streaming

You’ve probably participated in brainstorming at one time or another – one of those strategic offsite retreat exercises where you try to solve a problem by coming up with as many potential solution ideas as possible in a short amount of time. No analysis or commenting on each other's ideas is allowed. That’s for the staff/management team to crank through back at HQ after the session is over.

But have you tried "brain streaming"? No, this does not involve hard-wired video streaming directly into your brain, although someone, somewhere is probably working on an app for that.

I am blessed / cursed (depending on your point of view) in being an external thinker. External thinkers do their best thinking while interacting with others. Few deep thoughts occur in the solitude of your office. But connect with someone else in a mutually stimulating discussion of a challenging topic and it’s like sticking your finger in an electrical socket. Your brain goes into overdrive; it’s been zapped.

Brain streaming is most exciting in a pitch or sales meeting when you find yourself connecting with the personal across the table and the ideas begin to flow about how they could benefit from your product or service. (What did I do with that order form?!)

But brain streaming is probably most effective in the context of a finely tuned management team where several senior members are external thinkers. (Internal thinkers don’t need a team – they get their ideas directly from the cosmos.) When this group bears down to tackle an issue, it’s like everyone just grabbed onto a hot electrical wire – the kind you can’t turn loose of until someone turns off the juice. (It’s a fantastic endorphin rush without all that sweaty exercise.)

If you are an external thinker and your teammates are not, a consigliore will do just fine. In a prior life, I had a close adviser who tended to be more of an internal thinker, but he was very good. When I wanted to develop an idea, I would call him in, shut the door, and work the whiteboard for an hour or so. I would sketch out the ideas / options. He would comment, elaborate or push back.

The beauty of this approach was that he (like all good advisers) had no agenda other than helping me develop the idea/issue at hand. Nor was he invested in any of the options. His was a pure intellect; he was only interested in what would work.

Brain streaming is not for the faint of heart (figuratively or literally), but try it. You might like it.