The Fundamentals of Start-Up Business Success--Part 4

Though the road to sustained success is paved by consistent execution it is lit by the leader's clear vision.  As a fundamental, vision is not some starry-eyed sound bite intended to inspire but more often than not, confuses.  

Clear vision is a necessary fundamental because it allows leaders to see things as the are so they can chart the right kind of action. 

1.  Separate Activities from Actions. 

I am always most wary of any employee with an unchallenged reputation for being a hard worker.  More often than not these employees actually create their own hard working urban legend and then propel it by "being too busy" for pretty much anything thrown at them during the business day. I've seen too many managers mishandle these extremely busy hard workers to the point they do serious damage to a business. In the most extreme cases, mismanaged hard workers become their own renegade operation within a greater company.

Hard work and staying busy are, at best, means to an end and not objectives. When properly channeled, they are activities that certainly contribute to any company's success and are also positive cultural attributes.  The only useful measurements are (a) activities that make money, and/or (b) activities that save a company money.   Unless activities can be tied to these tangible actions they are counterproductive. Activities that correlate to positive actions then must be further measured by Time + Expense/Return analysis. The lessons of confusing activities with actions tend to be the costliest and in many instances are the most difficult to undo. 

2.  Manage By The Decision-Making Tree.

At all levels, as it relates internally or externally, a disciplined approach to processing and making decisions is necessary for successfully managing to meaningful business plans.  Emerging businesses do not have an abundance of time or resources; decision-making proficiency is essential. 

I've adopted "The Decision Making Tree" as my best method for mastering the process:

• The lowest, sturdiest, and easiest to reach branch is mindshare--taking time to evaluate information.
  
• A stretch, but within reach for a fit climber who sees the potential, the next branch is priority.
  
  When presented with something that makes sense and has the potential, grab that priority branch and pull yourself up.
  
• The view from priority is usually rather spectacular, but also a bit scary so before going any further you want to make sure it's a worthwhile climb. Research, consider, take input, and just to be sure you are not setting yourself up for a great big fall as the branches get thinner and harder to grab, make proper resource allocation.
  
  This could come in the form of a pilot program, trial, or some other controlled study that will validate whether you should keep climbing or shimmy down this tree.
  
• Like any tree, the highest branch is the most perilous to reach.  Because it is also the weakest and thinnest, you must give it proper support before perching yourself on it. However, when you are there, the view is as sublime as the achievement is great!
  
  The highest branch is commitment and in this decision making tree, commitment means an absolute, unyielding come-hell-or-high-water commitment to seeing the endeavor through to success. 

This orderly process allows one to make go/no-go decisions at natural break points, while obligating participants to drive an initiative to goal once that final decision has been made. In far too many tragic instances I get called into companies that had the right ideas, but lacked the resolve to see good decisions through. Rarely does anything even happen in one natural straight line, there will always be challenges and setbacks to anything new.  

The Decision-Making Tree allows us to move forward through confidence based on each prior step so that when we get to the top we have the confidence to conquer.

Yes, I use this method to also evaluate sales funnels for the purposes of improving close ratios and sales cycle times.  Using The Decision-Making Tree criteria analyze where you stand with each of your prospects.  Chances are you will find many of the prospects you think "look good" have never progressed past mindshare. 

3.  Growth is a Leading Indicator.

Most management tools and even perspectives follow lagging indicators. We all know why historical data is important, but an over-reliance on history and obsessive reviews of last month and last quarter makes absolutely no sense unless you possess the power to change history.  Since we do not possess these superhuman qualities, let's out our mortal capabilities to best use.

What we learn from last month or last quarter is important, but how we apply it to meet our objectives is everything. Therefore, the leading indicators smart growth businesses run the business by put the greater emphasis on setting realistic yet aggressive short and longer range objectives and then recognizing/rewarding employees based on performance.  

When combined with the other easy-to-implement and highly integrated fundamentals outlined in this series your business will have a record 2013.

Happy New Year and best wishes for a successful 2013 to all!

The Fundamentals of Start-Up Business Success--Part 3

Leaders control their own destiny, the best leaders distinguish themselves when faced with adversity. Earlier this month (December 11 - The Fundamentals of Start-Up Business Success--Part 1), I established five (5) necessary qualities for building and sustaining success. These qualities are brought to life, through consistent action, starting with these 3 primary fundamentals:

1.  Ensure Alignment Through Plans: Every company's highest ranking officer must set the tone by delivering a strategic and tactical plan to all direct reports.  Within one week each direct report must create the same for her functional responsibilities.  These plans must cascade throughout the organization and progress against established goals becomes the focal point for internal weekly meetings. The process must be guided by honesty; it is incumbent on every manager to challenge presented plans, 360 degrees.

For example, I worked with one CEO whose primary if not sole objective was to earn as large a bonus for himself as he could.  At the other end of the chain-of-command spectrum a VP reporting to me was singularly focused on getting promoted.  Of course neither openly admitted to this, which is why the former groused every year about not making enough money in his role while the latter never got that promotion.  Neither the CEO nor VP were able to constructively work with others because they defined success purely through their own personal agendas, where co-workers, supervisors and direct reports were all adversaries. Simply put, it was impossible to align the organization which kept the company from generating reasonable results years on end. Within 6 months of implementing this process, both the CEO and VP were out of their positions as they were unable to support their words with consistent deeds or actions. 

2.  Meaningful Customer Mapping and Segmentation:  You undoubtedly know the percentage of revenue your top 5 and top 10 customers represent.  How does this list compare to prior years, both the names on the list and their impact on your business?  What do you attribute any changes to?  More critically, unless you've previously implemented business plans and disciplined reviews you can't honestly say if any changes are positive.  Though one can build a business by simultaneously growing customer share and market share there must be a driving strategy to manage your business against.  I'm too often called into companies when they've fallen into the last stage of desperation because they misread what was really happening in their business, fooling themselves that "I don't care how we made the number as long as we made the number" is sustainable.  For example, if you expected to grow in 2012 by adding new customers but at year's end you satisfied your revenue target strictly by growing existing customer revenues you should be concerned.

I believe the most important aspect of customer mapping is to identify the degrees and strength of mutual touch points.  How many people from your organization regularly interface with each customer and how wide and deep are your contacts in each customer's organization?  Expecting "relationships" will prevail ignores the competitive global environment and hinging your revenue on a singular (customer) executive contact ignores the reality that C-level executives and senior managers are turning over at faster rates than ever before.

Meaningful customer mapping and segmentation does not merely protect your existing base. When I first did this exercise I discovered that my organization had deep ties to our best customers' Accounts Payable departments.   Following through on this data, I quickly discovered that virtually every AP department in every company hated our industry because our high-volume low-dollar invoices were a pain in the neck to process.  Within a year we added over $100 million in new business by selling streamlined billing while our competitors never knew what hit them.

3.  Competition is Broadly Defined:  Whenever I ask "who is your competition?" I get the same stock answer: like-companies producing like-products for like-customers. Wrong!  Your competition is everyone selling every conceivable product in the world because in building your business what you are first competing for is mind share: engaging a prospect in conversation that may eventually create a customer.  No buying influence can make time to meet with or review materials from every company trying to sell them something. As practical people they will entertain only meetings with prospective suppliers most likely to help them meet objectives where high tech and low tech are lumped into one schedule dictated by (perceived) impact.

The typically narrow view of competition is best evidenced by the myopic sales pitch I now hear in my sleep, those droning promises to save me time and money.  A business, let alone an entire economy based solely on the promise of reducing costs cannot sustain growth.  I can assure you any prospective supplier suggesting they can help my business make money will get serious mind share and if these initial promises prove to be true that conversation will become a fast-tracked priority. 

In industries that are often dismissed as commodities I've had particular success positioning the company to help its customers convert a cost center into a profit center.  This is surprisingly easy to implement as long as your company manages to plans and has a firm grasp of its customer base.

Part 3 of this series features the three (3) effective steps for controlling your own destiny while others fret over fiscal cliffs and things they can't control. Like all fundamentals, they build on one another and are dependent.  

In Part 4, I'll put the finishing touches on necessary basics for ensuring your emerging business success.

Power Lunching: Is it Good for Business?

I was very honored to have been mentioned in Diane Clehane's regular "Lunch" column for Media Bistro's FishbowlNY this week.

I have not been to Michael's for a "Power Lunch" for quite some time as I usually have way to fit in this type of luxury into my busy schedule. 

Although I must say it is more of a necessity these days. Thus I had a great time re-connecting with old friends to include my long time friend and colleague, Stu Zakim, 

So the story goes... It’s the last Wednesday power lunch of the year (or the last one ever if you believe those wacky Mayans), and the usual suspects at Michael’s came bearing gifts to be traded over Cobb salads today. Read more...

What's your take on Power Lunching (with regards to business development or networking...)? Good for business or a waste of time? Would love to hear what you have to say. 

On a side note, watch for "Fundamentals of Start-Up Success Part 3" to be posted before Christmas.

The Fundamentals of Start-Up Business Success - Part 2

Instead of looking to politicians in DC, business leaders must control their destiny. Part 1 in this series identified matters executives can take into their own hands. Part 2 features NFIB's troubling survey.

In Part 3, I will highlight strategic and tactical initiatives small, start-up and emerging businesses should take to ensure profitable growth.

The Fundamentals of Start-Up Business Success - Part 1

Start-up and early stage businesses will determine whether or not the US economy makes any progress in 2013.  Though there is a great deal of advice offered to help entrepreneurs succeed, most of it is redundant and ineffective; just look at the historical record of new venture failure if you have any doubts about this.

In this multi-part series, I will identify the key ingredients for building a successful start-up/early-stage enterprise that have been proven to work in all industries.

1.  It's a For-Profit Business, Not an Offspring:  Understandably, entrepreneurs get emotionally wrapped up in their business.  Though the deep attachment has its benefits, like any other strength when left unchecked it becomes a weakness.  Leading a business requires consistently excellent judgment; emotion is the enemy of sound decision-making.

2.  Maintain Proper Roles and Responsibilities:  Arguably the most expansive and challenging aspect for successfully growing a business.  In many instances executive management rewards early hires through promotions to bigger roles.  For example, a loyal hardworking bookkeeper is rarely equipped to become a CFO.  More urgently, entrepreneurs should set very specific ground rules for investors who become board members.  Venture capitalists, private equity professionals and the like are far more experienced in business analytics than they usually are in business operations.  I have seen more businesses harmed by amateurs with money pretending to be experts at strategy or organizational design than any other single factor.

3.  Successful Disruption Comes From Outsiders:  Hiring senior management from within the industry a start-up business intends to compete in defies logic.  Industry veterans are rarely ever able to conceive anything other than an industry's status-quo.  Captive to convention, "that's not how this industry works" is both the industry veteran's favorite saying and the entrepreneur's motivation.  Early stage companies must offer superior alternative value to the way things have been and are.  This simply can't be achieved by those who know only those rules.

4.  The Curiosity Imperative:  Regret only the meetings you didn't have and the people you didn't meet.  For early stage executives, working on the business is more important than working in the business yet too often leaders claim to be too busy to do anything but work in the business, consumed by tasks.  Your bright ideas will be validated and even further illuminated by those you meet.

5.  Resources are Precious:  One of the great big lies is "we need fancy office space to impress prospects and customers." Emerging companies spending too much for swanky offices do so for their own ego, not because the customer expects it.  For every $1 fully loaded expense you had better be able to generate at least $7 in revenue.  If you can't then expect each $1 spent will destroy your company's value by at least $10.  And above all remember this: your most precious asset is time because you can never get that minute back you lost.  Therefore, if you do not run the business through and by meaningful plans you're wasting too much of your time.

Despite the popular advice, there are neither short-cuts nor fairy tales for building a successful business from scratch.  If you are a start-up/early-stage business executive, I urge you to evaluate your company on each of these 5 basic fundamentals and if you don't like what you come up with you should be encouraged!  The first step to fixing a problem is recognizing it.  

In Part 2, I'll cover positive ways to steer the business forward. 

The Consequences of a No-Sacrifices-Environment

Several recent news reports caught my eye, not as individual stories but as closely connected pieces of the same continuum:

1. Adam Davidson's November 20th "Skills Don't Pay theBills" piece in the NY Times Magazine highlighting the fact that despite high unemployment rates and advanced jobs training programs nearly 80 percent of manufacturers have jobs they can’t fill.
2. The tragic factory fire in Bangladesh that killed 112 workers, earning on average $43 per week apiece, and the leading consumer brands the garment factory was producing for.
3. Mixed reports on 2012 holiday season retail sales, where the one accepted fact seems to be deep discounting is the only true stimulus for making the cash registers ring, following a 0.2% decline in October consumer spending.
4. The Bureau of Economic Analysis' report showing record profits for US corporations in the 3rd quarter 2012.
5. Around the clock coverage of the looming fiscal cliff that pretty much says nothing because it sure doesn't seem as if there's been any progress in DC.

Business' truest measurement is profitability and if Q3 2012 produced record profits then executive management is doing its job, superbly.  In part we can attribute the nearly $72 billion increase in 3rd quarter profits to greater cost-efficiencies, but top-line revenue growth certainly had significant impact. But where cost management and sales/marketing might once have been opposing forces, the trends further convince me the lines between revenue generation and cost controls have not only blurred they have merged.

If consumers now value every product and service as little more than a commodity then companies have no option but to meet this demand by so reducing costs they can profit by winning the discount game.  Labor usually represents a substantial business cost and it is little wonder that manufacturers are finding it difficult to hire trained workers if they are paying less than a McDonald's shift manager earns, as Adam Davidson reported.  I have nothing but contempt for modern day sweatshops like the Bangladeshi factory, but racing to the bottom is inevitable when any industry is caught in commodity hell.

It's very easy to blame business and "heartless executives", and whenever there's an easy answer for anything I grow suspicious. Consider this:

The consumer is really the most accountable participant in this vicious cycle by making price the single largest success factor! The same person who laments stagnant wages, off-shoring and the overall shaky economy demands prices that are sure to perpetuate these conditions. 

Politicians are usually the best reflection of the era they serve in. As the Obama administration and congress continues its food fight over the massive problems we will face at midnight December 31st they seem no closer to resolving anything because they, too, want easy answers with no sacrifice on the most complex issues.

Leading the Art of Positive Change Outweighs Its Science

I spent the day with an extremely bright IT professional capable of creating the type of needed change his company is depending on him to produce. Throughout the day he kept proclaiming "I don't do politics" with equal doses of superiority, ferociousness and judgmental frustration. Perhaps not coincidentally, yesterday I was with a different equally talented IT leader who spent his day encouraging our mutual client to join him in a crusade against paper, chanting "I hate paper" to open and close every session (I'm convinced he tortures a Dwight Schrute voodoo doll each night before going to bed).

Any day now we will start seeing year-end features from all media outlets, and more than one is bound to pay its annual homage to the billions (or is it trillions?) companies waste each year on strategically sound IT initiatives that fail to produce expected returns.  To help get this ball rolling, I'd like to frame the subject through these two different professionals in two different settings trying to solve two different company problems. Especially because their attitudes are quite similar to most highly competent IT consultants and professionals I've worked with over the years, and I believe the experts represent the biggest hurdles for getting better universal ROI on technology projects.

I've previously debunked certain aspects of the cliched "people hate change" myth in this blog, but when ideas and ensuing transformation is managed by someone who arrogantly campaigns against politics as a critical change component, of course the people effected will resist with real hatred! These resisting masses will enlist managers at all levels because every good business leader recognizes humans are political animals that are best motivated to do the right things when they fully buy in-clinically as well as emotionally.  Equally, when a project leader sets his or her sights on the wrong objective, employees will quickly reject the direction and see it as a threat to their collective and individual security.

Eliminating paper is not a widely applicable business objective is, but creating greater cost efficiencies certainly is.  Every successful IT project I've ever been party to ultimately does eliminate paper, but as a by-product not as the goal.  Even if this consultant didn't mean it literally, it was received that way by the vast majority of the people he met with (I know, I had to undo the damage).  Nobody will get others to follow them if the audience believes the person in charge is attacking the wrong problem.

By way of a contrast, I will cite another IT leader that will also dominate the annual year in review features.  Of course, I'm talking about Apple, but not from the product design or consumer market standpoint.  Look around and you will see Apple products becoming a bigger part of the corporate landscape despite the aversion almost all CIO's, CTO's and their staffs have to bringing Apple into the workplace.  Apple's successful penetration of the corporate market is due to their going over the heads of the IT experts, appealing directly to users who ultimately insist on iPads for sales presentations, iPhones for marketing campaigns and the like.  Apple certainly seems to understand that the science of changing minds starts with the art of owning hearts and guts.  That's why they are a great corporation, not merely a great technology company.

The intentions, objectivity and execution of a successful organization

In today's mail I received a very lovely talking birthday card from the NY Jets, with a personal note from head coach Rex Ryan.  Of course my birthday was almost two weeks ago and the card arrived the day after Coach Ryan's team lost 49-19 to their fierce AFC East rival New England Patriots. The Jets have now lost their last 2 home games by a combined score of 79-28, both to fierce AFC East rivals.

The Jets are proud professionals; I have no doubt these Jets want to win every game and even if I pay an absurd price for Jets club seats and personal seat licences, sending me a birthday card is a very nice touch from an organization that clearly wants to do the right thing. But the utter consistency between the lousy play of an utterly undisciplined team and their sending birthday cards two weeks too late is reinforcement the NY Jets is still an organization that can't execute on anything.  At this juncture, I'm rather convinced that Matthew Broderick based his character Jimmy Winter on Jets owner Woody Johnson in the terrific Broadway musical "Nice Work if You Can Get It."

Under-performing companies tend to take operate much the same way the lost and wounded NY Jets do: breakdowns in every facet of the business conspire to keep them from achieving very much. Mediocrity becomes the norm, miscues are rationalized, management does more to justify why they have been victims of bad luck or bad economies rather than engaging the strenuous process that will really fix the apparent and growing structural problems.  Just as Rex Ryan continues to defend the embarrassingly horrible play of his poster boy QB Mark Sanchez, most managers in troubled companies strenuously defend their direct report employees guilty of their own on-the-job fumbles, interceptions and routine bad judgment.

Businesses are a collection of human beings and it is only natural that people who spend so much time together in the same workplace in their chosen field will develop close relationships with one another.  I'm always particularly wary of those proclaiming "we're so close and we so care about each other we're like a family!"--- because they are guaranteed to be the least objective of all.  Just as being a player's coach serves Rex Ryan well when he has talent that can win games, I can't fully blame management for failing to stop a company in decline when it is built on a culture of camaraderie.  Clearly, I'm not suggesting organizations should not foster positive working conditions, but when they are plagued by poor execution it becomes necessary to bring in professionals who do not carry the baggage of established relationships.

Without objectivity even the best intentions won't be sufficient. Bringing in external help to navigate through diminished performance is not a sign of weakness, in fact excellent executive teams recognize its importance.  My experience is only the strongest executives, those with the serious intentions of winning have the good sense to engage objective professionals to align intentions with objectivity that will drive desired results through superb execution on all levels.

Omnishambles

The Oxford English Dictionary set a new standard for yearly awards by naming "omnishambles"--defined as "a situation that has been comprehensively mismanaged, characterized by a string of blunders and miscalculations"--the 2012 Word of the Year by the BBC.

Last Tuesday, Mitt Romney was so convinced the national election would go his way he reportedly didn't even draft a concession speech. As a proven top flight executive, it defies logic that Governor Romney would be so unprepared regarding an outcome he could not control.  I have to attribute this miscalculation mostly to his staff that apparently didn't have a firm handle on electorate variables and realities to properly advise Mr Romney last week's outcome wasn't certain.

Mitt Romney is hardly the first last or only leader to get insufficient insights and direction from trusted staff. With alarming consistency across Corporate America, mid and senior managers filter and package information designed to either make themselves look good or to have their executive team feel good. The end result is always omnishambles.

Even during flush economic times successful businesses engage a series of problem solving exercises. Clearly, problems cannot be effectively solved if they are not fully evaluated. When facts are altered and factors shaded, even the best and brightest executive teams cannot make wise decisions. But the omnishambles cycle is not restricted to a activities below the C Suite.

We are all familiar with companies that run board meetings like they are dog and pony shows, designed to entertain and mollify board members instead of using these critical sessions to address serious issues and get the board's advice and counsel. More often than not these boards are comprised of mostly investors or others captive to the company's success so they accept what they are told, triggering even greater degrees of omnishambles.

Based on my professional experiences, I strongly believe the short-term mentality that has taken hold of Corporate America is omnishambles' primary culprit. The courage necessary to tackle difficult problems simply poses greater risk than it offers reward when companies are guided strictly by each moment. While true leaders don't neglect the short term they remain ever-mindful of longer-range implications and consequences

Given the inadequacy of true leadership in 2012, Oxford English Dictionary got it right! Omnishambles is the word of this year. And as always, true leaders will determine 2013's Oxford English Dictionary's word of the year.

Fundamentals Always Rule

Election week ended with a bang, bringing news very much in line with this year's vote to maintain the status quo.  JC Penney's Ron Johnson continued to reinvent retail, this time coming up with the outrageous new idea of offering coupons and discounts to get holiday shoppers in the door while David Petraeus reinvented Washington-sex-scandals-as-an-older-man-in-a-powerful-position, having an affair with a much younger woman.  But even these great stories weren't enough to turn our attention away from continued east coast hardships created by Superstorm Sandy.

Take these two NY-based companies that have both severely crippled by Sandy and the storm's aftermath: Both have suffered damage to their operations, both have had a difficult time getting gas for their vehicles, both serve customer bases equally impacted by Sandy, and both are in extremely competitive industries.  Both companies also have longstanding records of valuing employees, caring deeply about respective workforces. However, one of these companies has had a very strong 2012 ( "Company A") while the other ("Company B") has posted declining revenues and profits this year. I was very intrigued to hear how these companies made such vastly different decisions on how to handle rather substantial payroll for the days employees couldn't get to work due to the storm. Thus I believe is truly newsworthy as this difference illustrates real action that supports turning-around of the US economy.

After much discussion and deliberation, profitable Company A decided not to pay employees for days they didn't work, instead having workers take them as either vacation or personal days.  By contrast, the struggling Company B CEO made a snap decision to pay everyone for the lost days without even bothering to talk it through with his senior staff.  Seems like that CEO is a better executive to work for and his pro-employee stance is certain to better motivate the workforce, doesn't it?  Think again.

I marveled at Company A's careful examination of all the facts and possibilities before making such an enormous decision.  They fathomed that the price of raw materials, notably gas, would continue to rise and likely squeeze profit margins if even temporarily.  They also projected a spike in customer demand which would increase use of overtime hours, while further forecasting that many of their clients would pay slower than usual which might compromise cash flow.  Their conclusion was to base the decision on sound fundamentals: if their conservative views proved wrong they could then elect to distribute greater bonuses at year end and if they proved right they would not then be forced to take more drastic measures in reaction to full payroll days that weren't worked. 

Little wonder this company has been consistently profitable, weathering several recessions, post-/9/11 trauma and other challenges the business has faced in over 30 years of operation, never taking a layoff or forcing salary cuts on its workforce.  By working as a team, they also incorporated the best in managerial due process.

In his haste, Company B's CEO didn't consider any of these trailing issues.  How could he?  He didn't even bother to discuss it with staff.  Sure, all the employees getting paid for days they couldn't get to work for no fault of their own will be thrilled...at least in the moment.  But how long will that last? If they run into the same or even similar problems Company A's management team evaluated, you can bet Company B will face another round of austerity measures.  Indeed, it should not be surprising that since the broad economic downturn 4 years ago Company B has regularly eliminated jobs, imposed pay cuts and frozen hiring. 

Fundamentals aren't interesting enough to make news, especially because they are the anti-reinvention. But in the end, regardless of the endeavor, fundamentals always rule.  Perhaps this is why JC Penney has learned selling other company merchandise is not the same as selling proprietary technology in today's retail environment, why the incredibly qualified and talented head of the CIA can't stay in his job if he violated the trust of his family, and why Company A will continue to thrive as an excellent organization with a true commitment to its employees while Company B will likely join the scrap heap of businesses that failed in the not-too-distant-future.

Unfortunately, no surprises--we're all in this together.

With predictable regularity the business press can be counted on to run feature articles that "change is hard" and "most change management initiatives are very expensive and time consuming yet fail." These pieces are usually accompanied by tips for creating the right change environment so that the reader's company succeeds with its change management strategies.

In an election cycle that seemed to have started the day after John McCain conceded in 2008, after billions of dollars spent, and public opinion polls consistently showing politicians--of all stripes--are less popular than wicked storms on the east coast, the same population that doesn't successfully implement business change management programs voted to keep the governmental status quo.

The House of Representatives, Senate and Executive branches of government will look rather identical to the very group we overwhelmingly find distasteful. From my experience leading business transformation across a range of industries this, sadly, comes as no surprise.

The barrier keeping companies from realizing change management objectives is rarely a matter of sound process and subject matter expertise. Rather, it is the people and lack of purposeful determination to make an occasional sacrifice, grow, adapt and learn for the benefit of an organization (and, more importantly, an individual's career). When I initially assess a company, the vast majority of its time functional managers are certain their department runs superbly, but can point out shortcomings everywhere else in the organization. Senior executives and boards are usually right there with them, convinced they are brilliantly leading the business, only to be undermined by a lousy workforce, unfair (foreign) competition, or government.

Our public opinion polls might express strong desire to replace under performing politicians, but our votes say "my guy's great, yours is the problem." These are the same sentiments and actions I routinely see and fight through in the workplace. The same strategies and tactics I employ in business apply to voting and all other phases of life: It starts and ends with what you see in the mirror.

Shortly after Ohio was called for President Obama he tweeted, "We're all in this together." For the health of our nation and vibrancy of our economy, let's do more than hope this is more meaningful than "another Twinkie."

Undercover Boss, Visible Anarchy

I hadn't previously seen CBS' "Undercover Boss" until they aired an episode featuring someone I know and have done business with. Though it was an entertaining 60 minutes, some of it very funny and quite a bit highly emotional, I'm deeply troubled by this program's premise and message.

Executives most likely appear on the show to get publicity for their companies (as opposed to taking the time and effort to put on a disguise to learn about what's really going on), for what should be obvious reasons, and I do hope that's the case, but I have to believe this: What's troubling is the apparently great things that happen as a result of these close encounters between high ranking officials and lower level employees must unleash the laws of unintended consequences.

As a result of spending time with four rank-and-file employees, by the (new season premier) show's end, this CEO awarded three promotions, two salary increases, promised to review compensation structure for two entire departments, and awarded substantial bonuses to each of the four people he spent time with. Seems nice enough until you consider it all from an organizational perspective.

How many layers of management did this CEO bypass to make these major decisions?  How many direct report supervisors had their credibility shattered as a result of the CEO intervening?  Of course, the majority of staff didn't catch the lucky break of getting directly exposed to the CEO; does this make them less deserving of being awarded 5 and even 6 figure bonuses?  Going forward, can there be a true unity of command in an organization featured on "Undercover Boss" if employees know their CEO can and will override managerial decisions, or even policy?

In 1961 "How to Succeed in Business Without Really Trying" debuted on Broadway, telling the story of J. Pierrpont Finch's morally questionably rise from window washer to vice president. Certainly, everyone on "Undercover Boss" was far more committed to their jobs than Finch, but 50 plus years later the entertainment industry's view of corporate American seems to be roughly the same: "Who you know matters far more than what you know." Lucky breaks and style is more often than not more meaningful than substance and structure. In the highly transformative economic climate we live in, I can't think of a worse message to deliver than this.

Performance and Competitiveness

Hurricane Sandy's tragedy continues to unfold in ways I can't describe. While the media will rightfully focus on the horrible loss of life, property and commerce, I want to contrast the remarkable work being done by combined public and private forces post-Sandy to those failing.

As Sandy was barreling up the east coast, die hard NY Jets fan and season ticket holder that I am, I went to the Jets-Dolphins game on Sunday. On my way in I was stopped by a gate security supervisor who aggressively told me I could not bring the small bag I was carrying in to the stadium. Despite my showing her the bag contained towels and rain gear, and despite the fact I've been toting the same small bag to MetLife Stadium since it opened, she wouldn't relent. Of course the Jets went on to lose 30-9 as they once again limp their way through a mediocre season. The organization's judgment and execution--on the field, its personnel moves, or the over-officious security supervisor--is consistent, typically resulting in being on the short end of a 30-9 score.

After the worst of Sandy cleared my Connecticut neighborhood, I went out for a walk and saw literally dozens of well-coordinated crews working on different streets to clear roads blocked with enormous trees, fix power lines and ultimately restore electricity. Undoubtedly each crew was led by a supervisor, but I couldn't tell because everyone on each work team was furiously working intent on getting the job done. Clearly, they were well trained and inspired to produce results despite many challenges. Both the town and state officials have provided regular updates throughout this ordeal.  Everyone impacted by Sandy will suffer, but for most of us it's a pain of inconvenience. Thank goodness the companies and agencies managing Sandy clean-up operate at the opposite end of the spectrum from the NY Jets!

Shorthand and oversimplification remain two of the biggest problems US businesses face. 

When we think of athletes we automatically assume "competitive" yet the Jets have lost 2 of their 4 home games this year by scores of 34-0 and 30-9...nothing competitive about that.  By contrast, government agencies are routinely ridiculed for not performing and if there is any business sector that gets the same scorn it's the utilities.  My professional and life's experience continues to lead me to one absolute truth: 

Great organizations can be built and are to be found in any field, but it certainly requires great management PLUS leadership.  

Vote! But Not For Jobs

Every eligible voter should exercise that right come November, but nobody should vote for a political candidate based on a promised jobs program. Delegating up has become the scourge of US businesses in recent years and this year’s election confirms we have now reached the point where this plague has now moved from the CEO’s office to POTUS.

No elected official can cure the epidemic at the root of little to no job growth yet politicians willingly accept the mantle of these profound problems delegated to them by a workforce that eschews accountability they demand in others.  I further submit “The Asian Jobs Flu” of low cost offshore labor isn’t nearly as influential as it’s made out to be.  No, the problem is mostly attributable to what have become normal behaviors in the workplace, a problem I can illustrate from this one of many examples I can cite from my experience in business turnarounds and transformations.

I last saw him 9 months ago when he controlled a multi-million dollar budget for a large company, we were on opposite sides of a negotiating table. At that time he was totally dismissive of my showing him over a decade of data proving that the entire industry I was working in was both without prosperity or profitability and he had little interest in statistics that verified the rate of raw materials inflation was putting the industry in greater peril if it couldn’t generate higher price levels.  Back then it was a scheduled meeting in his well apportioned office where he repeated these lines “that’s not my problem, if you want our business you figure it out”, “I already have several of your competitors willing to go 35% lower than what I currently pay”, and “I will get the best price and then demand the service.” My well-researched and supported analysis was of such little interest to him he refused to even take a copy and he “didn’t have time for a long meeting”…he just needed our best price.

This time we bumped into each other on a Manhattan street corner where I must admit I didn’t recognize him at first and had a bit of trouble recalling his name. And this time he really wanted to spend time with me, as he opened the conversation with “can you believe those bastards fired me after all those years as a senior manager?  After all I’ve contributed over the years?  What jerks, they don’t know anything about my profession, they replaced me with a couple of 20 or 30 something year old kids!”  Because his primary reason for treating me like a close associate was to help him land a new job, I couldn’t resist trying to explain to him that the very attitude he took with me in early 2012 was behind the reason for him losing his job.  True to form, he didn’t see the irony here and became somewhat agitated when I tried to equate our two encounters.

“Not my problem” has become so pervasive it has created chronic knee jerk syndrome. 

Prior to that early 2012 meeting senior people from the company I was working with advised me to not waste my time putting together analysis with a chorus of “nobody wants to hear that stuff.” Of course, after that meeting it was a round of “I told you so” and “so are we going to cut our price?” But what my coworkers were on to speaks louder volumes than just commercial print: everything from national elections to how everyday business decisions are made has been debased by making problem-solving a zero-sum game and by steering clear of topics that will make people think or otherwise feel uncomfortable.

It’s always been easy for management to blame a lazy workforce or for workers to point the finger of blame at out-of-touch management for inadequate business results. Blaming the Indians or Chinese even easier.  But politicians are always the easiest targets, especially because they seem to relish the opportunity to become so. Job stability and growth is a function of competitiveness; companies, indeed entire industries, simply can’t sustain competitive edges. 

If you’re looking for the candidate to vote for find the one who insists on better education, demands accountability in business where it belongs, insists on higher standards rather than relaxing them in everything from finance to energy. Better yet, if you’re looking for a job or have one you want to grow in vote for yourself by doing these very things at your place of work.

Happy Anniversary! Now get real or get lost...

A media professional, who I have a great deal of respect for, recently urged me to read as much of Forbes.com as I could. Thanks to this wonderful advice, I came across "5 Reasons Why J.C.Penney's Ron Johnson Will Reinvent Retail....Again" --an opinion piece the author will undoubtedly follow-up with "Why I Want Alex Rodriguez Batting Clean Up For My Team in The Post-Season!"

Ron Johnson has now been running J.C. Penney for almost one year. His track record is defined by (1)  quarterly losses, (2) 25% decline in the share price, and (3) wild shifts in strategic plans. Can we attribute this track record solely to Mr Johnson, or might we recognize that large companies in complex businesses during an era of rapid change are neither saved nor screwed by one heroic figure? Yet it seems as if everyone involved, from the business press to boards of directors, insists on an oversimplified hyperbole with just about everything.

Clearly, Mr Johnson has an incredible track record of success most recently and notably at Apple where he last reinvented retail. Or was the success due to Apple reinventing product design?  Or Steve Jobs reinventing the world?  I've lost track of all the reinventing Apple is responsible for, yet  in my view their greatest achievement is that Apple continues to excel a year after Mr Jobs' death and Mr Johnson's leaving for J.C. Penney. Perhaps the real story at Apple wasn't reinvention, but something far more basic: sustained achievement by a company dedicated to sound fundamentals in everything from organizational structure to product performance.

Regardless of the field, successful people and organizations (business or athletics) have one thing in common:  they are fundamentally sound and the best of them fundamentally superior. Strong fundamentals create the basis for continuously managing to higher standards and performance. A track record of success is more like incremental advancement than reinvention. Unfortunately, our short-term society has little interest in something as boring as fundamentals!

Ron Johnson has already enjoyed the greatest success he will ever know at J.C. Penney all by himself. If he's able to build an organization that can actually perform on the most basic levels then he might be able to truly turn J.C. Penney around. Having worked with  J.C. Penney as both a supplier and customer, in my opinion, instilling these fundamentals won't be easy. I can't think of any company (in any industry) with a culture as consistently lousy the one as I've seen out of J.C. Penney. And if Mr Johnson approaches his job the way the press claims he does then his J.C. Penney tenure will be painfully short, unhappy and expensive for all stakeholders. 

Let's skip the genius talk and reinvention nonsense and get real about it: J.C. Penney's problems are so entrenched that one person can't solve them and if you really believe something can be reborn or reinvented without proper fundamentals, then as a Yankees fan, I'd also like to sell you a superstar 38 year old 3rd basemen who can't catch up to a fastball!

It's back to business for Merisel--winner of American Business Awards Turnaround of the Year

and updating my blog... 

Last night the American Business Awards were handed out at the Marriott Marquis in New York City. I was a finalist in two categories and I truly am honored to have lost to the likes of Ford's Alan Mulally (Executive of the Year-Manufacturing).  

As many of you know, the American Business Awards --part of The Stevie Awards program--honors the achievements and contributions of US-based businesses and their employees.

Individual awards are never as meaningful as team accomplishments and I am privileged to report that Merisel won Business Turnaround of the Year at last evening's 9th Annual American Business Awards. As a member of Merisel's executive management team, I couldn't be prouder of this accomplishment. 

More updates to follow.

RIP Amy

My cousin Amy died earlier this week. During the late 70's and early '80's Amy was one of the few who could actually pull off the Farrah Fawcett look-alike style. Back then her eyes smiled and she could light up a room when she broke into a full facial smile. When she died this week she was alone in her apartment. The Amy I remember from when we were kids could have never conceived she'd have a mostly sad adulthood spent trying to find her meaningful place in life. I hope the Amy still had memories of the Amy that once existed. She was a young girl filled with potential. I'll never know if she died too soon or too late when her body was discovered earlier in this week; she was in her mid 40's.

On the day I went to Amy's memorial service I spent most of my time working with a couple of different cross-functional teams trying to solve frustrating operational problems and institutionalize improved cost-efficiencies. The teams were comprised of skilled professionals, highly knowledgeable in their craft, all extremely passionate about their work. The issues we were confronting weren't easy. Every time the stakes in our problem-solving excercises were raised or when we would get to oftentimes difficult truths, someone would invariably say "look, it's not like what we do here is life-and-death important" (or some similar version of that remark) as a way to let everyone off the hook.
Today I won't digress in to one of my rants or dissect the meaning of or implications of cross-functional team members letting one another off the hook. No, the real subject here is way too important as I think back on Amy's life not lived---considering that there are probably millions of people in the world who have said or thought the same ("it's not life and death") about the work they do.


If my cousin Amy had found her meaningful place in the world, had she found a fulfilling career in a field she was passionate about, where she had been respected for her knowledge, admired for her skill, I dare say she would still be alive today and those expressive eyes and the mile wide smile would still radiate life that was really and sadly extinguished long ago.

So, please, for your own sake and for my cousin Amy's memory, no matter what you do, no matter what your industry or career path, never ever demean yourself or the work you do by even thinking anything as absurd as "it's not life or death." I'm here to tell you, with Amy as a haunting image, what you do, how you do it, and the meaning you get from all significant aspects of everything you do is very much a matter of life and death.

Perhaps 49er Coach, Mike Singletary's "Getting-Results-Style" could be an example of how to succeed in business for 2010?

I couldn't have wished for a better end-of-year lengthy discussion than my lengthy session with Chris this week. He's one of the brightest, curious and most committed young professionals I've ever had the privilege to work with. As we get set to bury the truly God-awful 2009 reconnecting with Chris is the best reinforcement that better days are ahead because ambitious emerging talent always leads to a better future.

During our discussion Chris talked about a particular department he had been working with that certainly had issues but he said was thankfully comprised of "many experienced people." He reeled off a rather extensive list of issues, but the headlines were:
1. The department didn't have a true manager;

2. Each of the department employees did things their own way;

3. 2009 was a disappointing year for the company, revenues were off and although they had made great progress, costs were still higher than they should be. As he assessed it, the biggest cause for higher costs was waste due to breakdowns in the order entry-to-production cycle;

4. The department was supported by tools that were decent enough and although they were constantly being upgraded not everyone in the department thought it necessary to use them;

5. The company and its industry was going through radical and perhaps even painful changes but not everyone in the department was sensitive enough to these changes to adopt new methods.
So here I am with a wonderfully gifted individual who represents the future, fascinated by his apparent celebration of the past--one that was no longer working--who valued experience.

Clearly,"experience" can mean a great deal of many positive things, but in an environment that is defined by change, I'm rather certain that captivity to experience --for the sake of it-- is a guaranteed losing strategy. Of course Chris, like all of us, must respect and honor proven experience yet I believe it is just as important to keep in mind that experience is not a synonym for expertise.

Given the five isolated problems (listed above), does this seem like an expert group?

Shortly after speaking with Chris I found the time to finally check out the 2010 NFL Pro Bowl rosters. The first thing I noticed was, although named an alternate, NY Jets' Left Tackle D'Brickashaw Ferguson didn't make the AFC roster. A classic case where voters confused experience with expertise because in his 4th year Ferguson played so expertly he deserved to earn Pro Bowl. But the selection that really leaped off the page was San Francisco 49er Tight End Vernon Davis earning the starting Pro Bowl spot for the NFC. That's the same Vernon Davis who wanted to do things his own way during the 2008-2009 season his coach, Mike Singletary, publicly blasted him, more than once. A year ago it sure looked like Vernon Davis was headed for the scrap heap of "uniquely gifted athletes never to be heard from again, destroyed by a lousy attitude."

Singletary, an NFL Hall of Fame player and a 10-time Pro Bowl selection himself cared enough about excellence, followed his convictions to push Vernon Davis, and one year after Davis was shocked by his head coach's tirades against him, undoubtedly was the catalyst for Vernon Davis becoming an NFL all star.

For Chris and his company and all others, I wish only the best things for you in 2010 and suggest it can be a wish-come-true by applying a bit of Mike Singletary's style of getting results to succeed in business climate more volatile, competitive and exhausting than the NFL.

Happy 2010 Everyone!

It's Time for Business to Focus on Meaningful Performance Standards: Let's Get Back to Inspiring and Teaching

In recent weeks I've heard from a surprisingly large number of you urging me to post a new column. This space is intended to share useful information and insights from my interesting business encounters and experiences; quite frankly I thought I was becoming redundant and not breaking new ground. So I've resisted the temptation to write for the sake of it and am now reappearing because I've got something worthwhile to share.
As the economy plods along, as adjusted real unemployment figures are estimated at nearly 18%, as companies struggle to compete, the great strains are showing in most insidious ways. Not enough managers are truly leading their organizations by inspiring them, teaching them, better equipping them and it's creating greater levels of fear and suspicion in the workplace. At a time where organizational strength is an imperative far too many employees are looking to play the hero; freelancing and pushing others away from what they believe is their turf. In many respects this stands to reason: the fear of being unemployed is now so powerful that otherwise capable and rational human beings are determined to prove themselves to be indispensable. It's happening at alarming rates and these misguided efforts are universally making bad situations worse. I won't go as far to say we're approaching organizational anarchy, but there are too many signs of it coming from too many companies to not put a spotlight on this dangerous trend.
Signs of this self-indulgent behavior are evidenced throughout society, whether it's the Henne's of Colorado or Salahi's of Virginia who aspire to fame through outrageous and no-value behavior that will earn them starring roles on (anything but) reality tv. Just as the Salahi's believe they're worth a few hundred thousand dollars so a television network can interview them, many in the workforce evidently believe crashing their organizational structure or undermining corporate unity of command will not only guarantee their continued employment doing so will earn them big bonuses. I find the seeds for the twisted logic were sewn well before this diabolical behavior became apparent.

In one case a senior executive had delegated virtually everything in his business to tenured staff, but over time both company staff and their customer base eroded. This is hardly coincidental; employees developed deep resentment for a leader that hadn't been involved for quite some time but ruled his business as an emporer so they left and took customers with them. His reaction was to further wall off access to his staff and customers as an attempt to be the hero to parent company executives that had lost patience in direct correlation to the control he had lost in his business. Even though steps have been taken to prohibit this senior manager from following a disastrous course of self and turf protection, it will be a constant effort to stay on him and manage the situation that will undoubtedly further drain corporate resources.

Another example is a sales person who recently closed a couple of deals; his first significant sales in roughly 18 months. Between 2007 and ytd 2009 this sales person's business was off by nearly 60%; of course he attributed this to "the economy" and nothing he had any control over. Emboldened by a couple of new deals he is now attempting to hold his company hostage by demanding no less than a 50% increase in his compensation. His rationale is that he's owed extra pay to compensate him for the tough couple of years he's had, never mind his company continues to lose substantial money or that his tough couple of years was a direct reflection of his poor sales performance.
It's as easy to make this a story of individual behavior as it is for me to cite other examples, but I believe the root cause is deeper. Any system that seems to have replaced merit with entitlement, achievment with grandstanding, is badly broken and must be repaired through compelling leadership and reinforced management. We've all let standards devolve over the years and as companies prepare themselves for 2010 I urge them to put an immediate and significant focus on meaningful performance standards.