Success is a function of four things: 1) The quality of the concepts and information that we act upon 2) Resources (networks & capital) 3) Natural and Acquired Talents (some aspects are uncontrolable) 4) The ability to get things done (execute). The following is based on #4. (Note: There is a "fifth" attribute : luck, which has been proven to be both irrelevant and uncontrollable over the long term).
Everything we have to get done can be broken up into: those things we like to do and those things we don't like to do.
According to the common denominator of success, success is determined by who is willing to do those things we don't like to do (popularized by the book: Eat that Frog).
Now, the more frogs we eat (with all other variables held constant) the more successful we will become.
Eating frogs is best done in spurts (30min - 1 hour long). Personally I can not do more than two spurts in a small amount of time without a breaker. A breaker is something that reenergizes our focus (running, nap, meeting a friend for lunch, sex).
Breakers need to be strategically placed throughout the day to allow for maximum recooperation throuhgout the day and peak performance.
Those who understand this concept will embrace the 7 day work week with less hours per day and a nightly re-energization to keep from burnout. You can also keep some of the more enjoyable things to do for the weekend. (This is similar to the mini-retirements in 4 Hour Work Week).
Also, it is best to start the day off as early as possible (perhaps 8 A.M.), because it will be easier to get things done that you don't want to do while others are working (harder in the evening psychologically). Also, I find the most productive time first thing in the morning before lunch. Of course, it's important to get enough sleep.
Note: See Theory of Constraints relating to availability of time.
Note: Consider the concept of Anchoring (google it) to give you a sort of turbo towards the end.
Friday, October 31, 2008
Never Eat Alone
The following are direct quotes from Never Eat Alone. Click here to purchase the book on Amazon.
Becoming a Member of the Club
I learned that real networking was about finding ways to make other people more successful. It was about working hard to give more than you get. It's a constant process of giving and receiving - of asking for and offering help (it's better to give before you receive). Here's the hardeset part: You've got to be more than willing to accept generosity. Often, you've got to go out and ask for it. But to do so, first you have to stop keeping score.
"Hey, Ray. Who do you know in the entertainment world that I can talk to for some advice about breaking into the industry? You know any people who'd be open for a short lunch?"
What's Your Mission?
The more specific you are about what you want to do, the easier it becomes to develop a strategy to accomplish it.
Here was a chance to become an expert on a relatively new body of knowledge and research that was quickly becoming in hot demand. I read all the case studies and attended every conference or lecture I could.
Step One: Find Your Passion
"A goal is a dream with a deadline."
Within each person there's an intuitive knowledge of what he or she wants most in life. The blue flame is where passion and ability come together.
1. Look inside
When I'm in the right frame of mind, I start to create a list of dreams and goals. I don't attempt to censure or edit the nature of the list - I put anything and everything down. Next to that first list, I write down in a second column all the things that bring me joy and pleasure: the achievements, people, and things that move me.
2. Look outside
Next, ask the people who know you best what they think your greatest strengths and weaknesses are.
In his book 'The Arc of Ambition', Champy found that the abilities of successful leaders like Ted Turner, Michael Dell, and Jack Welch are less important than the fact that each shares a clearly defined mission that drives him in all he does.
Our achievements grow according to the size of our dreams and the degree to which we are in touch with our mission. The transformation of a dream into reality requires hard work and discipline.
Step Two: Putting Goals to Paper
The first part is devoted to the development of the goals that will help you fulfill your mission. The second part is devoted to connecting those goals to the people, places, and things that will help you get the job done. And the third part helps you determine the best way to reach out to the people who will help you to accomplish your goals.
Some people will require that you cold call them. Others you'll be able to reach through friends of friends; still others might best be acquainted through a dinner party or conference.
Your goals must be in writing. They must be:
1) Specific. Vague, sweeping goals are too broad to be acted upon.
2) Believable. If you don't believe you can reach them, you won't.
3) Challenging and Demanding.
Next, take action! It's called a Relationship Action Plan for a reason. To prepare yourself for a marathon, you must get out there and jog every day. With a plan in place, it's up to you to start reaching out. Every day!
Step Three: Create a Personal "Board of Advisors"
It helps to have an enlightened counselor, or two or three, to act as both cheerleader and eagle-eyed supervisor, who will hold you accountable. I call this group my Personal Board of Advisors.
Exercise has always been a refuge where I do some of my best thinking.
Build it Before You Need It
"The most important thing is to get to know these people as friends, not potential customers," I said. "Though you're right about one thing: No matter how friendly you are, if the people you approach are any good at what they do, they won't hire you right off the bat to do their PR."
Too often we get caught up efficiently doing ineffective things.
My first year in business school, I started consulting with my friend Tad Smith. The idea wasn't to create a sustainable consulting company that we would run after school. Instead, we wanted to offer our knowledge and work ethic to small companies for cut-rate pieces. In exchange, we'ld learn about new industries, gain real-world skills, and have a list of references and contacts when we graduated, as well as make some ready cash.
Focus on your immediate network: friends of friends, old acquaintances from school, and family. Have you investigated the friends and contacts of your parents? siblings? friends from college or grad school? Church, Gym, Doctor, Lawyer, Realtor, Broker?
The Genius of Audacity
Every time I start to set limits to what I can and can't do, or fear starts to creep into my thinking I remember that Big Wheel tricycle. I remind myself how people with a low tolerance for risk, whose behavior is guided by fear, have a low propensity for success.
The memories of those days have stuck with me. My father taught me that the worst anyone can say is no. If they choose not to give their time or their help, it's their loss.
I didn't want to cold-call executives from BMW and MasterCard and pitch them my wares. But you know what? Pushing to get into BMW was not that difficult when the alternative was laying off a bunch of my staff or failing in the eyes of my board and investors. (See book: Eat that Frog!)
The choice isn't between success and failure; it's between choosing risk and striving for greatness, or risking nothing and being certain of mediocrity.
The Networking Jerk
The networking jerk is the image that many people have when they hear the word "networking." He is the man or woman with a martini in one hand, business cards in the other, and prerehearsed elevator pitch always at the ready. He or she is a schmooze artist. Their stick doesn't work because they don't know the first thing about creating meaningful relationships.
Instead of viewing my employees as partners to be wooed in achieving my long-term objectices and theirs, I saw them as called upon to carry out my tasks.
1. Don't schmooze
Have something to say and say it with passion. Make sure you have something to offer when you speak and offer it with sincerity. Most people haven't figured out that it's better to spend more time with fewer people at a one-hour get-together, and have one or two meaningful dialogues, than engage in the wandering-eye routine and lose the respect of most of the people you meet.
2. Don't come to the party empty handed - have something of value to give (whether information or anything else).
3. Don't treat those under you poorly
4. Be transparent
"I am what I am," the cartoon character Popeye used to say.
5. Don't be too efficient
Nothing comes off as less sincere than receiving a mass e-mail addressed to a long list of recipients. Reaching out to others is not a numbers game. Your goal is to make genuine connections with people you can count on.
Do Your Homework
"Spectacular achievement is always preceded by spectacular preparation." - Rober Schuller
Before I meet with any new people I've been thinking of introducing myself to, I research who they are and what their business is.
These days, doing such research is easy. Here are a few places to start:
1) The Internet
2) The Public Library
3) Literature from the Company's Public Relations
4) Annual Reports
But as you talk with the person, you'll aslo find out that perhaps their kids are hoping to land an internship, that they themselves have health issues, etc. The point is you have to reach beyond the abstract and get to someone as an individual.
Food, I find, has a unique ability to facilitate conversation. People are usually open, even eager, to be amused while eating.
The challenge in such circumstances, as it is in every conversation, is to try to transcend the trivilities of polite chitchat.
Knowing he had attended Yale, I knew that he's have a bio listed on the Yale University Web Site. It turned out we both had been in Berkeley College at Yale. I found a professor we both had and when I brought up our many common experiences, we hit it off.
When I ran into this CEO, I mentioned the marathon he was training for. Of course, she was surpirsed, "How the heck did you know I ran a marathon?" she happily quipped. I never shy away from mentioning the research I've done. "I always make a special effort to inquire about the people I'd like to meet." Inevitably, people are flattered. Wouldn't you be?
Take Names
The successful organization and management of the information that makes connecting flourish is vital. But you don't need the latest and greatest gadgets. Ink and paper will do. (Note: I personally use Highrise).
First, I sat down and established ninety-day, one-year, and three-year goals in my Relationship Action Plan.
To create excitement around our product, I wrote down a list of people I called "influentials": early adopters, journalists, and industry analysts that help spread the initial buzz about a product or service. Next, I made a list of potential customers, potential acquirers, and people who might be interested in finding us down the road.
Take the time to list people such as : Relatives, Friends of relatives, Current colleagues, Members of professional and social organizations, Current and former customers and clients, Parents of your children's friends, Neighbors past and present, People you went to school with, People you have worked with in the past, People in your religious congregation, Former teachers and employers, People you socialize with, People who provide services to you.
Long before I became one of Crain's "40 under 40" for example, I had been ripping out that list for years. I clip out lists of top CEOs, most admired marketers, the nation's most progressive entrepreneurs - all of these kinds of lists are published in local and national publications; every industry has something similar.
Warming the Cold Call
So how do you manage a cold call? First, it's all about the attitude. Your attitude. Your fears will never be completely quieted, because inviting rejection is never going to be appealing. There are always a hundred reasons to procrastinate. The trick is to just plunge right in. You have to view getting to know new people as a challenge and an opportunity.
I called in the early morning but got Serge's voice mail. So I left a message: "I just want to reiterate my excitement regarding our meeting. I've never heard John talk so flatteringly of a business associate. I understand how busy you must be. I haven't heard from your administrative assistant, but I'm sure I will. See you soon." At no point do you want your interactions to become strained. Creating and maintaining a sense of optimism and gentle pressure around the appointment is all a part of the dance.
When I still didn't hear from his office, I called Serge's direct line after hours, around 6 P.M. This time, Serge picked up the phone himself and I gave him the pitch.
In fifteen seconds I used my four rules for what I call warm calling:
1) Convey credibility by mentioning a familiar name
2) State your value proposition: Jeff's new product would help Serge sell his new products
3) Impart urgency and convenience by being prepared to do whatever it takes whenever it takes to meet the other person on his or her terms
4) Be prepared to offer a compromise that secures a definite follow-up at a minimum.
1. Draft off a reference
Having a mutual friend or even acquaintance will immediately make you stand out from the other anonymous individuals vying for a piece of someone's time. Our task is to tap our network of friends, family, clients, neighbors, classmates, associates, and church/synagogue members to find a path back to the person we're trying to reach.
Again, the wonderfully effective Google is nearly invaluable in this process. Do a name search and you'll likely find where a person went to school, what his or her interests are, and what boards he or she sits on. A company called Capital IQ aggregates the market data and information on executives, for example, to make it very easy to find out whom they know that you know.
2. State your value
3. Talk a little, say a lot. Make it quick, convenient, and definite.
You want to impart both a sense of urgency and a sense of convenience. Instead of closing with "We should get together some time soon," I like to finalize with something like "I'm going to be in town next week. How about lunch on Tuesday? I know this is going to be important for both of us, so I'll make time no matter what."
Managing the Gatekeeper - Artfully
Half the difficulty in reaching out to others is actually reaching somebody at all. First, make the gatekeeper an ally rather than an adversary. And never get on his or her bad side. Many executive assistants are their bosses' minority partners. Every time I have went head-to-head with one I have lost.
Apparently, people rarely called Mary to thank her for organizing events, and she was very grateful. She even bragged the next morning to Pat about how much she liked me.
As important as gatekeepers are within an organization, they're that much more important when you're working from the outside.
Example: Kent would call my assistant Jennifer once a week. He was deferential and overwhelmingly kind. Every so often, he would surprise her with a box of chocolates or flowers or something. Still, despite my assistant's suggestions, I saw no reason to take the meeting.
"Have him go meet with my buyers," I finally said one day. "No, you're going to meet with him. You can take five minutes out of your day. He's very nice and creative and worth five minutes." So I relented.
Never Eat Alone
The dynamics of a network are similar to those of a would be celebrity in Hollywood. Invisibility is a fate far worse than failure. It means that you should always be reaching out to others, over breakfast, lunch, whatever. It means that if one meeting happens to go sour, you have six other engagements lined up just like it the rest of the week.
Sometimes it is good to combine meetings. Mentees get a kick out of sitting in on business meetings or lunches.
Share Your Passions
I have a confession to make. I've never been to a so-called "networking event" in my life. When it comes to meeting people, it's not only whom you get ot know but also how and where you get to know them.
For example, take the first-class section of an airplane. Fellow first-classers assume you, too are important, and they often seek to quench their curiosity about who you are and why you're as dumb as they are to pay such an inflated price. At a so-called "networking event" the effect is reverse and people will assume you are desperate.
Friendship is created out of the quality of time spent together not the quantity.
Usually it's the events and activities you excelt at that you're most passionate about. So it makes sense to make these the focus of your efforts. When we are truly passionate about something, it's contagious.
Contrary to popular business wisdom, I don't believe there has to be a rigid line between our private and public lives. Of course, we all need to schedule the appropriate time with friends and family as well, or just to read or relax.
Follow Up or Fail
In such a world, it's incomprehensible that only a small percentage of us decide to follow up once we've met someone new. Take the extra little step to ensure you won't be lost in their mental attic.
The most memorable gifts I have ever received are those whose value could not be measured in dollars and cents. They are the heartfelt letters, e-mails, and cards I receive from people thanking me for guidance and advaice. FOLLOW UP is the key to success in any field.
Give yourself twelve to twenty four hours after you meet someone to follow up.
Why go to all the trouble of meeting new people if you're not going to work on making them a part of your life? Don't remind them of what they can do for you, but focus on what you might be able to do for them. It's about giving them a reason to want to follow up.
While e-mail is one perfectly acceptable way to follow up, there are other methods to consider. A handwritten thank-you note these days can particularly capture a person's attention.:
-Always express your gratitude
-Be sure to include an item of interest from conversation
-Be brief and to the point
-Send them as soon as possible after t he meeting or interview
-Don't forget to follow up with those that have acted as go-between for you and someone else.
Make follow-up a habit.
Be a Conference Commando
Military strategists know that most battles are won before the first shot is fired. Don't just be a conference attendee; be a conference commando!
Conferences are good for mainly one thing. They provide a forum to meet the kind of like-minded people who can help you fulfill your mission and goals. Before deciding to attend a conference, I sometimes informally go so far as using a simple ROI thought process. It the likely return I'll get from relationships I establish equal or greater to the price of the conference?
Some owners don't see conferences as revenue generators but rather perks for executives. This attitude stems from the all-too-common misperception that conferences are places to find insight. Wrong. Real, actionable insight mostly comes from experience, books, and other people. Roundtable discussions and keynote speeches can be fun, even inspirational, but rarely is there the time to impart true knowledge.
But there may be no better place to extend your professional network and, on occasion, get deals done. Smart salespeople and entrepreneurs spend 80 percent of their time building relationships with people they do business with. Slickest powerpoint can't compete with real affection and trust.
Help the Organizer (Better Yet, Be the Organizer)
First, review the event's materials, visit its Web Site, and find out who the main contact is for putting together the conference. Put in a phone call. Say, "I'm really looking forward to the conference you're putting together. I'm interested in helping make this year be the best year ever, and I'm willing ot devote a chunk of my resources - time, creativity, or connections, to make this year's event a smash hit. How can I help?" - I garauntee the coordinator will be shocked with delight.
Listen. Better Yet, Speak.
You should know that giving speeches is one of the easiest and most effective ways to get yourself, your business, and your ideas seen, heard of, and remembered, and you don't need to be Tony Robbins to find yourself a forum of people willing to hear you out.
The American Society of Association Executives says that the meeting industry is a nearly $83 billion market, with over $56 billion spent on conventions and seminars itself. That ranks conferences as the 23'rd largest contributor to GDP! The point here is that the opportunity to speak exists everywhere, paid or unpaid. It's fun, it can be profitable, and there's no better way to get yourself known - and to get to know others - at any event.
As a speaker at a conference you have a special status, making meeting people much easier. Attendees expect you to reach out and greet them.
First you need something to say: You need content. You need to develop a spiel about the niche you occupy. In fact, you can develop a number of different spiels, catering to a number of different audiences. If you take the first step and get to know the organizer, landing a speaking gig isn't that tough. In the beginning, it's best to start small. My friend started small, getting to know all the organizers of small, local, industry-specific events. He would ask these people, in return for his help, to give him a room during an off-hour at the end of the event, so he could speak to a small gathering of people that he would organize.
Initially he wasn't even listed on the conference agenda. He'd meet people throughout the conference and tell them that he was organizing an intimiate gathering of professionals interested in talking about their branding issues.
Be noticed, when sessions open up for questions, try and be among the first people to put your hand in the air.
Arrange your own events and dinners during the conferences especially during boring events. There's no reason why you can't take the lead in developing your own personal trou or visit to an out-of-the-way place that convention organizers might not have thought about.
Draft Off a Big Kahuna
If you get to know the most popular man or woman at the conference - the one who knows everyone - you'll be able to hang with them as they circle the most important people. You must remember to talk with speakers before they hit the stage. Find them before they've gained celebrity status, and you have a better chance to connect. Or ask the conference organizer to point them out if you don't know what they look like (or use Google).
Be an Information Hub
Once you've created an opportunity to meet new people, esetablish yourself as an "information hub" - a key role of any good networker. This might include information about trade gossip, the best local restaurants, private parties, etc.
Master the Deep Bump
Deep bumps are an effort to quickly make contact. You've just paid a boatload of money to be at this conference (unless you're a speaker, when it's usually free!).
Creating a connection between any two people necessitates a certain level of intimacy. In two minutes, you need to look deeply into the other person's eyes and heart, listen intently, ask questions that go beyond just business, and reveal about yourslef in a way that introduces some vulnerability into the interaction. All these things come together to create a genuine connection.
Know Your Targets
At each conference, I keep a list of three of four people I'd most like to meet on a folded piece of paper in my jacket pocket. I check off each person as I meet them. Beisde their name, I jot down what we talked about and make a note about how I'm going to contact them later.
Breaks Are No Time to Take a Break
Breaks are where the real work happens at a conference. Make sure and stake out the right place. One warm and centrally located spot is often the center of any party. As Kissinger said, "Enter the room. Step to the right. Survey the room. See who is there. You want other people to see you."
Remember look sharp. Don't underestimate the importance of dressing well in places where you'll be noticed. And start bumping.
Connecting with Connectors
In other words, it's not necessarily strong contacts, like family and close friends that prove the most powerful; the contrary, often the most important people in our network are those who are acquaintances. Your weak ties, occupy a very different world than you do.
1. Restaurateurs
It's quite easy to get to know a restraurateur. The smart ones will go out of their way to make your experience delightful. All you have to do is reach out and go there enough. When in a new city, I generally ask people to give me a list of a few of the hottest restaurants. I like to call ahead and ask ato speak with the owner and tell them that I go out regularly, sometimes in large parties, and I'm looking for a new place to entertain, a lot!
2. Headhunters
3. Lobbyists
Well informed, persuasive, and self-confident, lobbyists are generally impressive networkers. How do they work? Lobbyists will often host cocktail parties and dinner get-togethers, allowing them to interact with politicians - and their opponents - in a casual atmosphere. Their more grass roots efforts involve long hours spent on the phone and in writing letters, trying to rouse the community to get involved behind an issue.
4. Fundraisers
"Follow the money" are words fundraisers live by. They know where it is, what it will take to get it, and most importan, who's most likely to give it away.l As a result, fundraisers, whether they work for a political organization, university, or nonprofit group, tend to know absolutely everybody.
5. Public Relations People
PR people spend their whole day calling, cajoling, pressuirng, and begging journalists to cover their clients. The relationship between media and PR is an uneasy one, but at the end of the day, necessity brings them together like long-lost cousins. A good friend who works in PR can be your entree into the world of media, and sometimes, celebrity.
6. Politicians
Politicians at every level are inveterate networks. They have to be. They shake hands, kiss babies, give speeches, and go to dinners, all in the name of gaining the trust of enough people to get elected. The stature of politicians is derived from their political power rather than their wealth. Anything you can do to help them gain power with voters, or exercise power in office, will go a long way to ensuring you a place in their inner circle.
7. Journalists
Journalists are powerful (the right exposure can make a company and turn a nobody into a somebody), needy (they are always looking for a story), and relatively unknown (few have achieved enough celebrity to make them inaccessible).
These are seven different professions tailor-made for super connectors. Reach out to some. And there are others - lawyers, brokers, etc. Become a part of their network and have them become a part of yours. Cut the umbilical cord to the folks around the office water cooler. Mix it up. Hunt out poeple who look, act, and sound nothing like you. Connect with the connectors.
Never forget the person who brought you to the dance.
The Art of Small Talk
We all have what it takes to charm everyone around us - colleagues, strangers, friends. But having it and knowing how to work it is the difference between going through life in the shadows and commanding center stage wherever you happen to be.
The fact is that small talk - the kind that happens between two people who don't know each other - is the most important talk we do. Language is the most direct and effective method for communicating our objectives. When playwrights and screenwriters develop characters for their work, the first thing they establish is motivation. What does the character want? What is he or she after?
About ten years ago, Thomas Harrell, a professor applied pscyhology at Stanford University Graduate School of Business, set out to identify the traits of its most successful alumni. The one train that was common among the most accomplished was those who could confidently make conversation with anyone in any situation.
Start a conversation, keep it going, create a bond, and leave with the other person thinking, "I dig that person."
The first thing "small-talk experts" tend to do is place rules around what can and can't be said. Wrong! Don't listen to these people! Nothing has contributed more the development of boring chitchatters everywhere. Personally, I'd rather be interested in what someone was saying, even if I disagreed, than be catatonic any day. Be YOURSELF!
Being up front with people confers respect; it pays them the compliment of candor. Ths issues we all care most about are the issues we all want to talk about most. Of course, this isn't a call to be confrontational or disrespectful.
How many negotiations would have ended better if both parties involved were simply honest and forthright about their needs?
Power today, comes from sharing information, not withholding it.
The truth is that everyone has something in common with every other person. Once you know heartfelt candor is more effective than canned quips in starting a meaningful conversation, the idea of "breaking the ice" becomes easy.
Again and again, I'm surpirsed by the power of the vulnerability principle in the art of making small talk.
The message here is that we can go through life, particularly conference and other professional gatherings, making shallow, run-of-the-mill conversation with strangers that remain strangers. Or we can put a little of oursleves, our real selves, on the line, give poeple a glimpse of our humanity, and create the opportunity for a deeper connection. We have a choice.
The real winners - those with outstanding careers, warm relationships, and unstoppable charisma - are those people who put it all out there and don't waste a bunch of time and energy trying to be something they're not.
Tips:
-First, give the person a hearty smile. It says, "I'm approachable."
-Maintain a good balance of eye contact. Somewhere between 70-100%.
-Unfold your arms and relax.
-Nod your head and lean in, but without invading the other person's space.
-Learn to touch people.
Be Sincere
In LA, w here I live, eye darters are a party staple. They're constantly looking to and fro in an attempt to ferret out the most important person in the room. Frankly, it's a disgusting habit, and one that's sure to put off those around you.
The surest wayt ot become special in other's eyes is to make them feel special. The correlate, of course, is equally true: Make people feel insignificant and your significance to them shall certainly diminish.
Develop Conversational Currency
When meeting someone new, be prepared to have something to say. Keep up with current events. GIVE VALUE!
Make a Graceful Exit
During meetings and social gatherings, I'm often quite blunt. I'll mention something meaningful that was said in the course of the conversation and say, "There are so many wonderful people here tonight; I'd feel remiss if I didn't at least try and get to know a few more of them. Would you excuse me for a second?" People generally understand.
Until We Meet Again
In order to establish a lasting connection, small talk needs to end on an invitation to continue the relationship. Be complimentary and establish a verbal agreement to meet again, even if it's not business.
Learn to Listen
"The deepest principle in human nature is the craving to be appreciated." There are a few ways to signal to your listener that you are interested and listening actively. Take the initiative and be the first person to say hellp. If all else fails say: "You're great. Tell me more."
Talk in terms of the other people's interests.
Health Wealth and Children
Learning to become a connector means in some sense learning to become an armchair therapist. The only way to get people to do anything is to recognize their importance and thereby make them feel important. Every person's deepest lifelong desire is to be significant and to be recognized. What better way is there to show appreciation and to lavish praise on others than to take an interest in who they are and what their mission is? Loyalty to me, means staying true to someone through thick and thin.
One of the most successful people I knew was Michael Milken. I have seen him spend hours talking to people you'd never expect from secretaries, the very old and the very young, the powerless and the powerful. He reminded me of Ralph Waldo Emerson: "Every man I meet is my superior in some way. In that, I learn of him." Everyone has something to teach us. This focus on people was the reason why so many of them showed so much loyalty to him.
When help someone through a health issue, positively impact someone's wealth, or take interest in their children, you engender life-long loyalty. The highest human need is self-actualization - the desire to become the best you can be. Dale Carnegie astutely recognized this.
Have you helped someone find a new diet? Found a particular vitamin or suppliment that has helped you and passed it on? Helped with their kids? With these three issues, health, wealth, and children (Note: and relationships) little things mean everything.
I work hard to funnel customers to all my contacts who are consultants, vendors, and suppliers of all stripes. I know they are good, I trust them, and I want others to benefit from their expertise as well.
"Jack," I said, "I'm sure you don't remember me. There's no reason you should. We sat together for a lunch once at the Democratic convention. But I met with your son a few months ago to give him some career advice. I was wondering how he is doing?"
Jack dropped everything he was doing and couldn't be more interested. He peppered me with questions about his son and what the best tack was to enter my industry. He instantly became a good contact.
You start with the philosophy, the worldview, that every human is an opportunity to help and be helped. The rest - whether it means helping with someone's health, wealth, and children, follows from that.
Social Arbitrage
Start thinking first about how you're going to make everyone AROUND you successful. Today the system is more akin to social arbitrage: a constant and open exchange of favors and intelligence. When someone mentions a problem, try to think of solutions.
You've got to stop thinking of yourself and your company as an island. You need to meet people. There are a lot of CEOS and smart people in the Executive Club who could've done what I'm doing for you, only a few years ago. You need to be making these connections. Hank's products are superb; what he needed was the network.
My point? Real power comes from being indispensable. Indispensability comes from being a switchboard, parceling out as much information, contacts, and goodwill to as many people - in as many different worls - as possible. It's sort of career karma.
Individual managers with enterpreneurial networks move information faster, are highly mobile relative to bureaucracy, and create solutions better adapted to the needs of the organization.
What do you do when your financial and relational resources are thin? The solution is knowledge, one of the most valuable currencies in social arbitrage. Knowledge is free - it can be found in books, articles, on the Internet, pretty much everyone and it's precious to everyone.
The ability to distribute knowledge in a network is a fairly easy skill to learn. So easy, in fact, you should get started today. Identify some of the leading thinkers and writers in your industry. Presto! You're a knowledge broker. After you get the swing of it, you might want to send out a monthly Big Idea Cliff Notes email.
To paraphrase Dale Carnegie: You can be more successful in two months by becoming really interested in other people's success than you can in two years in trying to get other people interested in your own success.
Pinging - All the Time
80 percent of building and maintaining relationships is just staying in touch. I call it "pinging."
Tips:
-People need to hear your name at least 3 times before there is recognition.
-Once you have gained recognition you need to nurture a developing relationship with a phone call or email at least once a month.
One way I've found to make maintaining my network of contacts, colleagues, and friends easier is to create a rating system for the network that corresponds to how often I reach out. Segment your contacts into different categories.
Another time saver is to pay close attention to when you place your phone calls. Sometimes you don't have the time for an in-depth conversation in these situations I'll call when I know they're not around (or text/email instead of call). Plaxo is a useful program.
For people important to my career or business, I tend to favor the value-add ping. Here I'm trying to provide something of value in my communication. I also like to send relavant articles, short notes of advice, or other small tokens that convey what I am thinking of them and eager to help.
My personal favorite time for pinging is people's birthdays. People never forget this.
Find Achor Tennants and Feed Them
For all the sheer delight and good times a dinner party can impart, it seems our fast-food culture has diminished our centuries-old belief in the power of shared meal. Six to ten guests, I've found, is the optimal number to invite to a dinner (Note: Consider inviting influential entrepreneurs to dinner).
1. Create a Theme - there is no reason that a small dinner party should not have a theme (more enticing for people to come and creates more of a sense of urgency and scarcity).
2. Use Invitations - Use MeetingWizard.com
3. Don't be a kitchen slave - go to restaurant or cater in.
4. Create atmosphere - candles, flowers, dim lighting, and music.
5. Forget being formal - Good food. Good people. Lots of wine. Good conversation.
6. Don't seat couples together - things can get boring if you do. Mix and Match.
7. Relax - If you're having fun, odds are that they will, too. Enjoy the fruits of your labor.
Be Interesting
I hope it's not a surprise that I see effective marketing as just building relationmships with customers and prospective customers.
How can you offer your company or your network anything of value if you have not thought about how you want to stand out and differentiate yourself in building that relationship? Marketers and networkers alike take heed: Be interesting! Virtually everyone new you meet in a situation is asking themselves in a variation one question: "Would I want to spend an hour eating lunch with this person?"
Remember, people don't only hire people they like, they hire people that they think can make them and their companies better. That means someone with an expanded view of the world.
All my efforts had to be powered by a deep passion and a set of beliefes that went well beyond my own personal benefit. There was a difference between getting attention and getting attention for your desire to change the world.
Seek people who will volunteer rather those will be appointed. Huge different in commitment levels.
Have a unique point of view. You need a well-thought-out point of view.
It's knowing what you have that most others don't. Its your differentiation. It's the message that will make your brand unique, attracting others to become a part of your network.
Being known is just notoriety. But being known for something is entirely different. That's respect. You have to believe in something as Joael Ratner did, for people to believe in you.
In every job at every stage in my career, I had some expertise, some content that differentiated me form others and made me unique, made me more valuable in my relationship swith others and the company I worked for.
On some occasions, as was with the case with TQM and reingeneering, you can acquire content by simply appropriating another person's innovative ideas and beocme leader in distributing and applying those ideas. On the other occasions, as with YaYa, we had to develop the content from scratch.
Remember the wise words of Mark McCormack in his book 'What They Don't Teach You at Harvard Business School': "Creativity in business is often nothing more than making connections that everyone else has almost thought of. You don't have to reinvent the wheel, just attach it to a new wagon.
So I told him: "Create story about your company and the ideas it embodies that readers will care about. That's your content. Then share it. Have you ever picked up the phone and actually talked to a reporter about why you think what you do is so special?
In American's information economy, we frame our competitive advantage in terms fo knowledge and innovation. That means today's market values creativity over mere competence and expertise over general knowledge.
Content creators have always beein high demand. They get promotions. They're responsible for the Big Ideas. They're regularly asked to speak at conferences and are featured in newspapers and magazines. So how do you get that way? The easiest route is by niche expertise. I'd latch on to the latest, most cutting-edge idea in the business world. I'd immerse myself in it, getting to know all the thought leaders pushing the idea and all the literature available. Becoming an expert was the easy part. I simply did what experts do: I taught, wrote, and spoke about my expertise.
I would go on to parlay my experience into giving speeches, writing articfles, and connecting with some of the top business minds in the country. After a short period, I even persuaded the industrial giant ICI to craft a new position for me within a newly forming group as one of the leaders of TQM in North America.
There's no better way to learn something, and become an expert at it, than to have to teach it. People who are proactive jump at trying something new and they get the job done. In fact, after reading this book, there's no reason you couldn't put together a course on relationship building or content creation at your local community college. You'll learn in preparation, and gain even more interacting with students.
1. Get out in front and analyze the trends and opportunities on the cutting edge.
Foresight gives you and your company the flexibility to adapt to change. Creativity allows you to take advantage of it.
2. Ask seemingly stupid questions
If you ask questions that are like no other, you get results that are unlike any that the world has seen. How many people have the courage to ask those questions? "Don't you think having all your MP3's on a little Walman like device would be cool?" or "Why can't we view our pictures immediately?"
The power of innocence in business is so wonderfully depicted in a scene in Big, where Tom Hanks plays a kid transformed into an adult. He says, "I don't get it." Despite what all the graphs and numbers said the toy simply wasn't fun. Sometimes the numbers do lie.
3. Know yourself and your talents
4. Always learn
5. Stay healthy
As hectic as my schedule is I never miss a workout. I try to take a five day vacation every other month. And I do something spiritual every week.
6. Expose yourself to unusual experiences
When management guru Peter Drucker was asked for one thing that would make a person better in business, he responded "Learn to play the violin."
7. Don't get discouraged
To this day, I face rejection on a regular basis. If you're going to be creative, cutting edge, out of the mainstream, you'd better get used to rocking the boat. And guess what - when you're rockin' the boat, there will always be poeple who will try and push you off. Passion keeps you going through the rough times come hell or high water, and both will come.
8. Know the new technology
You don't need to be a "techno geek," but you do need to understand the impact of technology on your business and be able to leverage it to your benefit.
9. Develop a niche
Successful small businesses that gain renown establish themselves within a carefully selected market niche. Individuals can do the same thing. Think of several areas where your company underperforms and choose to focus on the area that is least attended to.
10. Follow the money
Creativitiy is worthless if it can't be applied. The bottom line for your content has to be: This will make us more money. The lifeblood of any company is sales and cash flow. All great ideas are meaningless in buisness until someone pays for it.
What truly moves us as human beings, what prompts us into action, is emotion. Despite the odds, the Dalai Lama makes us believe that the seemingly impossible is in fact, possible.
Build Your Brand
Branding guru and all star business consultant Tom Peters instructs in his customary bravado to "create your own microequivalent of the Nike swoosh."
I always emailed my boss or my boss's boss ideas. What's the worst thing that could happen? I'd get fired from a job I didn't want anyway? Alternatively, I'd make the effort to creat the job - regardless of where it was - that I thought would make me happy.
The novelist Milan Kundera once reflected that flirting is the promise of sex with no guarantee. A successful brand, then, is the promise and garauntee of a mind-shattering experience each and every time. It's the email you always read because of who it's from. It's the employee who always gest the cool projects.
Develop a Personal Branding Message
A brand is nothing less than everything everyone thinks of when they see or hear your name. The best brands, like the most interesting people have a distinct message.
Package the Brand
There is one general, overarching caveat in this step: Step out! Style matters. Whether you liek it or not, clothing, letterheads, hairstyles, business cards, office space, and conversation style are noticed - big time. Take an honest look at how you present yourslef. Ask others how they see you. How do you wish to be seen?
Broadcast Your Brand
Why is "The Donald" considered the ultimate dealmaker? Probably because he's called himself that a million times over in any number of articles and TV interviews and now a highly rated TV show. Because he has a book entitled 'The Art of the Deal'.
His self promotion is not just ego it makes plenty of business sense too. His buzz-worthy brand now has a value unto itself. Building with his name on it are more valuable and bring in higher rental fees. Like it or not your success is determined as much by how well others know your work as by the quality of your work.
Every day you hear or read about companies in newspapers. Most of the time the article or story is about a celebrity CEO or company. It's not because they are more deserving of the press than you or me. It's the result of well-planned and strategic public relations. Big companies have PR machines working for them to shape and control their image (though not always successfully).
Smaller companies and inviduals have to do it themselves, access to the media is not as difficult as you may think. They get a majority of their stories from people that have sought them out, not the other way around. And like everyone else in any profession, they tend to follow the herd. Which means once you get written about, other reports will come calling.
As a marketer over the years, I have developed an idea of how buzz is created.One way is to generate "catalytic moments." When you watch a football game, have you noticed how the tide of a game will suddenly turn in favor of one team or another? Buzz is like that. It needs a pivotal moment, something that will get the crowd whispering. Similarly, I look for compelling stories that create buzz within the news media.
That's where feeding the influentials come into play. Influentials are the early adopters who can ignire brand buzz. They are the small segment of the population that will adopt a cool product early on and infect everyone else with the bug.
One way is to have a white paper written on you. A white paper is a research document that consulting companies put out on hot topics of the day. Getting your technology and company introduced from an unbiased perspective would be far more effective and lead to more credibility than anything we could do ourselves. When the white paper was completed, it received amazing publicity due to KPE's PR engine. It took less than a year for us to appear on the cover of BrandWeek, in the marketplace section of Wall Street Journal, etc.
One lesson we learned is that your PR campaign has to be realistic. More often than not, you will have to start small. You'll be forced to focus on your local paper, high school or college newsletter or industry trade journal.
Reporters constantly ask, "But why is it important NOW?" If you can't answer that sufficiently your article will have to wait. So I began to rewrite the intros to my piece each week, to relate to something that was in the news at the time. In short order, the article finally saw the light of day.
Journalists get fed up with people who are nitwits and pitch articles without substance. You have to start building relationships with the media before you have a story you'd like them to write. Send them information. Call regularly to stay in touch. Remember, you can't force-feed or pressure a good journalist. The best journalists are almost always also the most ethical.
Be careful. Listen to the reporter when he or she says, "I'm doing a story about displaced workers..." No matter what YOU say, that's the story he'll write.
You are Your Own Best PR Representative
You must manage your own media. PR companies are facilitators and act as leverage. I've been represented for years, but ultimately the press always wants to talk to the big guy - you, not a PR rep.
Start making calls to the reports who cover your industry. If something timely occurs around your content, send a press release. They're nothing more than two or three paragraphs describing what's memorable about your story. It is that easy.
They may not need your exact story at the time you want, but with a little stick-to-itiveness, they'll come around.
Knowing the Media Landscape
Nothing infuriates reports and editors more, I'm told, then to get a pitch from someone who clearly has no idea what their publication is about or who their audience is. Rmemeber, media is a business, and the companies who are in the media are looking for ratings or to sell more issues.
Work with Angles
There are no new news stories, it has been said, only old stories told in new ways. To make your pitch sound fresh and original, find an innovative slant. Perhaps you can play up how your store is one recent example of the entrepreneurial book (there are books on PR that outline all slants, the 24 or so popular ones).
Think Small
Go local first. Start a database of newspapers and magazines in your area that might be interested in your content. Try college papers, the neighborhood newspapers, or the free industry digital newsletter you find in your inbox. You'll get the fire started and learn how to deal with reports in the process.
Master the Art of the Sound Bite
Tell me why I should write about you in ten seconds or less. If the President is only getting a few seconds, how much time do you think you will get?
Don't be Annoying
If a pitch gets rejected, ask what else it needs to make it publishable. It is okay to be aggressive, but mind the signals, and back off when it's time.
It's All on the Record
Be cautious: What you say can hurt you, and even if you're not quoted or you say something off the record, a report will use your words to color the slant of the article. Just remember: All press is not good press, even if they spell your name right.
Trumpet the Message, Not the Messenger
All your efforts at publicity, promotion, and branding need to feed into your mission; if they're only feeding your ego, you'll find yourself with a reputation you hadn't bargained for that could hold you back for the rest of your lucky. I was lucky. Looking back, I merely wasted a lot of time.
Treat Journalists as You Would Any Other Member of Your Network or Community of Friends
As in any interview, your primary objective when you meet with a member of the press is to get the person across form you to like you, and your empathy for his or her hard work will go a long way.
Be a Name-Dropper
Connecting your story with a known entity - be it a politician, celebrity, or famous businessperson - acts as a de facto slant. Bottom line: the media wants recognizable faces in their pages.
You've Got to Market the Meaning
Once you've put in all the hard work and landed a nice article, it's no time to be modest. Send that article around. Give it to your alumni magazine. Update your class notes. Use this article to get even more press coverage. I'll attach a recent article about me to an email in the subject line write, "Here's another one of Ferrazzi's shamless attempts at self-promotion." Most people get a kick out of it and it keeps you on everyone's radar.
The Write Stuff
"Write, then write some more. When you're done - and here's the kicker - keep writing."
What's an editor going to say when you pitch him or her an idea? Probably, something like "Sure, sounds great. Very busy. Gotta go."
But now, when you call others to interview them, you're not just Joe Shmo, you're Joe Shmo calling about an article targeted for the Poughkeepsie Gazette. And these aren't just random people you'r calling either. These are the people you painstakingly targeted as the top experts and thinkers int he subject you're investigating.
Guess what? By article's end, wheter it's been published or not, you've managed to learn a great deal and to meet a group of important poeple who potentially might be important to your future. And you now have a very good reason to stay in touch with them.
Getting Close to Power
"As long as you're going to think anyway, think big." - Donald Trump
Newt Gingrish, is known to tell a story. A lion, he says, can use his prodigious hunting skills to capture a frield mouse with relative ease anytime he wants, but at the end of the day, no matter how many mice he's ensnared, he's still be starving. Sometimes, despite the risk and work involved, it's worth our time to go for the antelope.
Are you only connecting with field mice? If you are, start turning your attention to reaching out to the sort of important people that can make a difference in your life and the lives of others. The kind of people who can make you, and your network, sparkle.
Becoming a Member of the Club
I learned that real networking was about finding ways to make other people more successful. It was about working hard to give more than you get. It's a constant process of giving and receiving - of asking for and offering help (it's better to give before you receive). Here's the hardeset part: You've got to be more than willing to accept generosity. Often, you've got to go out and ask for it. But to do so, first you have to stop keeping score.
"Hey, Ray. Who do you know in the entertainment world that I can talk to for some advice about breaking into the industry? You know any people who'd be open for a short lunch?"
What's Your Mission?
The more specific you are about what you want to do, the easier it becomes to develop a strategy to accomplish it.
Here was a chance to become an expert on a relatively new body of knowledge and research that was quickly becoming in hot demand. I read all the case studies and attended every conference or lecture I could.
Step One: Find Your Passion
"A goal is a dream with a deadline."
Within each person there's an intuitive knowledge of what he or she wants most in life. The blue flame is where passion and ability come together.
1. Look inside
When I'm in the right frame of mind, I start to create a list of dreams and goals. I don't attempt to censure or edit the nature of the list - I put anything and everything down. Next to that first list, I write down in a second column all the things that bring me joy and pleasure: the achievements, people, and things that move me.
2. Look outside
Next, ask the people who know you best what they think your greatest strengths and weaknesses are.
In his book 'The Arc of Ambition', Champy found that the abilities of successful leaders like Ted Turner, Michael Dell, and Jack Welch are less important than the fact that each shares a clearly defined mission that drives him in all he does.
Our achievements grow according to the size of our dreams and the degree to which we are in touch with our mission. The transformation of a dream into reality requires hard work and discipline.
Step Two: Putting Goals to Paper
The first part is devoted to the development of the goals that will help you fulfill your mission. The second part is devoted to connecting those goals to the people, places, and things that will help you get the job done. And the third part helps you determine the best way to reach out to the people who will help you to accomplish your goals.
Some people will require that you cold call them. Others you'll be able to reach through friends of friends; still others might best be acquainted through a dinner party or conference.
Your goals must be in writing. They must be:
1) Specific. Vague, sweeping goals are too broad to be acted upon.
2) Believable. If you don't believe you can reach them, you won't.
3) Challenging and Demanding.
Next, take action! It's called a Relationship Action Plan for a reason. To prepare yourself for a marathon, you must get out there and jog every day. With a plan in place, it's up to you to start reaching out. Every day!
Step Three: Create a Personal "Board of Advisors"
It helps to have an enlightened counselor, or two or three, to act as both cheerleader and eagle-eyed supervisor, who will hold you accountable. I call this group my Personal Board of Advisors.
Exercise has always been a refuge where I do some of my best thinking.
Build it Before You Need It
"The most important thing is to get to know these people as friends, not potential customers," I said. "Though you're right about one thing: No matter how friendly you are, if the people you approach are any good at what they do, they won't hire you right off the bat to do their PR."
Too often we get caught up efficiently doing ineffective things.
My first year in business school, I started consulting with my friend Tad Smith. The idea wasn't to create a sustainable consulting company that we would run after school. Instead, we wanted to offer our knowledge and work ethic to small companies for cut-rate pieces. In exchange, we'ld learn about new industries, gain real-world skills, and have a list of references and contacts when we graduated, as well as make some ready cash.
Focus on your immediate network: friends of friends, old acquaintances from school, and family. Have you investigated the friends and contacts of your parents? siblings? friends from college or grad school? Church, Gym, Doctor, Lawyer, Realtor, Broker?
The Genius of Audacity
Every time I start to set limits to what I can and can't do, or fear starts to creep into my thinking I remember that Big Wheel tricycle. I remind myself how people with a low tolerance for risk, whose behavior is guided by fear, have a low propensity for success.
The memories of those days have stuck with me. My father taught me that the worst anyone can say is no. If they choose not to give their time or their help, it's their loss.
I didn't want to cold-call executives from BMW and MasterCard and pitch them my wares. But you know what? Pushing to get into BMW was not that difficult when the alternative was laying off a bunch of my staff or failing in the eyes of my board and investors. (See book: Eat that Frog!)
The choice isn't between success and failure; it's between choosing risk and striving for greatness, or risking nothing and being certain of mediocrity.
The Networking Jerk
The networking jerk is the image that many people have when they hear the word "networking." He is the man or woman with a martini in one hand, business cards in the other, and prerehearsed elevator pitch always at the ready. He or she is a schmooze artist. Their stick doesn't work because they don't know the first thing about creating meaningful relationships.
Instead of viewing my employees as partners to be wooed in achieving my long-term objectices and theirs, I saw them as called upon to carry out my tasks.
1. Don't schmooze
Have something to say and say it with passion. Make sure you have something to offer when you speak and offer it with sincerity. Most people haven't figured out that it's better to spend more time with fewer people at a one-hour get-together, and have one or two meaningful dialogues, than engage in the wandering-eye routine and lose the respect of most of the people you meet.
2. Don't come to the party empty handed - have something of value to give (whether information or anything else).
3. Don't treat those under you poorly
4. Be transparent
"I am what I am," the cartoon character Popeye used to say.
5. Don't be too efficient
Nothing comes off as less sincere than receiving a mass e-mail addressed to a long list of recipients. Reaching out to others is not a numbers game. Your goal is to make genuine connections with people you can count on.
Do Your Homework
"Spectacular achievement is always preceded by spectacular preparation." - Rober Schuller
Before I meet with any new people I've been thinking of introducing myself to, I research who they are and what their business is.
These days, doing such research is easy. Here are a few places to start:
1) The Internet
2) The Public Library
3) Literature from the Company's Public Relations
4) Annual Reports
But as you talk with the person, you'll aslo find out that perhaps their kids are hoping to land an internship, that they themselves have health issues, etc. The point is you have to reach beyond the abstract and get to someone as an individual.
Food, I find, has a unique ability to facilitate conversation. People are usually open, even eager, to be amused while eating.
The challenge in such circumstances, as it is in every conversation, is to try to transcend the trivilities of polite chitchat.
Knowing he had attended Yale, I knew that he's have a bio listed on the Yale University Web Site. It turned out we both had been in Berkeley College at Yale. I found a professor we both had and when I brought up our many common experiences, we hit it off.
When I ran into this CEO, I mentioned the marathon he was training for. Of course, she was surpirsed, "How the heck did you know I ran a marathon?" she happily quipped. I never shy away from mentioning the research I've done. "I always make a special effort to inquire about the people I'd like to meet." Inevitably, people are flattered. Wouldn't you be?
Take Names
The successful organization and management of the information that makes connecting flourish is vital. But you don't need the latest and greatest gadgets. Ink and paper will do. (Note: I personally use Highrise).
First, I sat down and established ninety-day, one-year, and three-year goals in my Relationship Action Plan.
To create excitement around our product, I wrote down a list of people I called "influentials": early adopters, journalists, and industry analysts that help spread the initial buzz about a product or service. Next, I made a list of potential customers, potential acquirers, and people who might be interested in finding us down the road.
Take the time to list people such as : Relatives, Friends of relatives, Current colleagues, Members of professional and social organizations, Current and former customers and clients, Parents of your children's friends, Neighbors past and present, People you went to school with, People you have worked with in the past, People in your religious congregation, Former teachers and employers, People you socialize with, People who provide services to you.
Long before I became one of Crain's "40 under 40" for example, I had been ripping out that list for years. I clip out lists of top CEOs, most admired marketers, the nation's most progressive entrepreneurs - all of these kinds of lists are published in local and national publications; every industry has something similar.
Warming the Cold Call
So how do you manage a cold call? First, it's all about the attitude. Your attitude. Your fears will never be completely quieted, because inviting rejection is never going to be appealing. There are always a hundred reasons to procrastinate. The trick is to just plunge right in. You have to view getting to know new people as a challenge and an opportunity.
I called in the early morning but got Serge's voice mail. So I left a message: "I just want to reiterate my excitement regarding our meeting. I've never heard John talk so flatteringly of a business associate. I understand how busy you must be. I haven't heard from your administrative assistant, but I'm sure I will. See you soon." At no point do you want your interactions to become strained. Creating and maintaining a sense of optimism and gentle pressure around the appointment is all a part of the dance.
When I still didn't hear from his office, I called Serge's direct line after hours, around 6 P.M. This time, Serge picked up the phone himself and I gave him the pitch.
In fifteen seconds I used my four rules for what I call warm calling:
1) Convey credibility by mentioning a familiar name
2) State your value proposition: Jeff's new product would help Serge sell his new products
3) Impart urgency and convenience by being prepared to do whatever it takes whenever it takes to meet the other person on his or her terms
4) Be prepared to offer a compromise that secures a definite follow-up at a minimum.
1. Draft off a reference
Having a mutual friend or even acquaintance will immediately make you stand out from the other anonymous individuals vying for a piece of someone's time. Our task is to tap our network of friends, family, clients, neighbors, classmates, associates, and church/synagogue members to find a path back to the person we're trying to reach.
Again, the wonderfully effective Google is nearly invaluable in this process. Do a name search and you'll likely find where a person went to school, what his or her interests are, and what boards he or she sits on. A company called Capital IQ aggregates the market data and information on executives, for example, to make it very easy to find out whom they know that you know.
2. State your value
3. Talk a little, say a lot. Make it quick, convenient, and definite.
You want to impart both a sense of urgency and a sense of convenience. Instead of closing with "We should get together some time soon," I like to finalize with something like "I'm going to be in town next week. How about lunch on Tuesday? I know this is going to be important for both of us, so I'll make time no matter what."
Managing the Gatekeeper - Artfully
Half the difficulty in reaching out to others is actually reaching somebody at all. First, make the gatekeeper an ally rather than an adversary. And never get on his or her bad side. Many executive assistants are their bosses' minority partners. Every time I have went head-to-head with one I have lost.
Apparently, people rarely called Mary to thank her for organizing events, and she was very grateful. She even bragged the next morning to Pat about how much she liked me.
As important as gatekeepers are within an organization, they're that much more important when you're working from the outside.
Example: Kent would call my assistant Jennifer once a week. He was deferential and overwhelmingly kind. Every so often, he would surprise her with a box of chocolates or flowers or something. Still, despite my assistant's suggestions, I saw no reason to take the meeting.
"Have him go meet with my buyers," I finally said one day. "No, you're going to meet with him. You can take five minutes out of your day. He's very nice and creative and worth five minutes." So I relented.
Never Eat Alone
The dynamics of a network are similar to those of a would be celebrity in Hollywood. Invisibility is a fate far worse than failure. It means that you should always be reaching out to others, over breakfast, lunch, whatever. It means that if one meeting happens to go sour, you have six other engagements lined up just like it the rest of the week.
Sometimes it is good to combine meetings. Mentees get a kick out of sitting in on business meetings or lunches.
Share Your Passions
I have a confession to make. I've never been to a so-called "networking event" in my life. When it comes to meeting people, it's not only whom you get ot know but also how and where you get to know them.
For example, take the first-class section of an airplane. Fellow first-classers assume you, too are important, and they often seek to quench their curiosity about who you are and why you're as dumb as they are to pay such an inflated price. At a so-called "networking event" the effect is reverse and people will assume you are desperate.
Friendship is created out of the quality of time spent together not the quantity.
Usually it's the events and activities you excelt at that you're most passionate about. So it makes sense to make these the focus of your efforts. When we are truly passionate about something, it's contagious.
Contrary to popular business wisdom, I don't believe there has to be a rigid line between our private and public lives. Of course, we all need to schedule the appropriate time with friends and family as well, or just to read or relax.
Follow Up or Fail
In such a world, it's incomprehensible that only a small percentage of us decide to follow up once we've met someone new. Take the extra little step to ensure you won't be lost in their mental attic.
The most memorable gifts I have ever received are those whose value could not be measured in dollars and cents. They are the heartfelt letters, e-mails, and cards I receive from people thanking me for guidance and advaice. FOLLOW UP is the key to success in any field.
Give yourself twelve to twenty four hours after you meet someone to follow up.
Why go to all the trouble of meeting new people if you're not going to work on making them a part of your life? Don't remind them of what they can do for you, but focus on what you might be able to do for them. It's about giving them a reason to want to follow up.
While e-mail is one perfectly acceptable way to follow up, there are other methods to consider. A handwritten thank-you note these days can particularly capture a person's attention.:
-Always express your gratitude
-Be sure to include an item of interest from conversation
-Be brief and to the point
-Send them as soon as possible after t he meeting or interview
-Don't forget to follow up with those that have acted as go-between for you and someone else.
Make follow-up a habit.
Be a Conference Commando
Military strategists know that most battles are won before the first shot is fired. Don't just be a conference attendee; be a conference commando!
Conferences are good for mainly one thing. They provide a forum to meet the kind of like-minded people who can help you fulfill your mission and goals. Before deciding to attend a conference, I sometimes informally go so far as using a simple ROI thought process. It the likely return I'll get from relationships I establish equal or greater to the price of the conference?
Some owners don't see conferences as revenue generators but rather perks for executives. This attitude stems from the all-too-common misperception that conferences are places to find insight. Wrong. Real, actionable insight mostly comes from experience, books, and other people. Roundtable discussions and keynote speeches can be fun, even inspirational, but rarely is there the time to impart true knowledge.
But there may be no better place to extend your professional network and, on occasion, get deals done. Smart salespeople and entrepreneurs spend 80 percent of their time building relationships with people they do business with. Slickest powerpoint can't compete with real affection and trust.
Help the Organizer (Better Yet, Be the Organizer)
First, review the event's materials, visit its Web Site, and find out who the main contact is for putting together the conference. Put in a phone call. Say, "I'm really looking forward to the conference you're putting together. I'm interested in helping make this year be the best year ever, and I'm willing ot devote a chunk of my resources - time, creativity, or connections, to make this year's event a smash hit. How can I help?" - I garauntee the coordinator will be shocked with delight.
Listen. Better Yet, Speak.
You should know that giving speeches is one of the easiest and most effective ways to get yourself, your business, and your ideas seen, heard of, and remembered, and you don't need to be Tony Robbins to find yourself a forum of people willing to hear you out.
The American Society of Association Executives says that the meeting industry is a nearly $83 billion market, with over $56 billion spent on conventions and seminars itself. That ranks conferences as the 23'rd largest contributor to GDP! The point here is that the opportunity to speak exists everywhere, paid or unpaid. It's fun, it can be profitable, and there's no better way to get yourself known - and to get to know others - at any event.
As a speaker at a conference you have a special status, making meeting people much easier. Attendees expect you to reach out and greet them.
First you need something to say: You need content. You need to develop a spiel about the niche you occupy. In fact, you can develop a number of different spiels, catering to a number of different audiences. If you take the first step and get to know the organizer, landing a speaking gig isn't that tough. In the beginning, it's best to start small. My friend started small, getting to know all the organizers of small, local, industry-specific events. He would ask these people, in return for his help, to give him a room during an off-hour at the end of the event, so he could speak to a small gathering of people that he would organize.
Initially he wasn't even listed on the conference agenda. He'd meet people throughout the conference and tell them that he was organizing an intimiate gathering of professionals interested in talking about their branding issues.
Be noticed, when sessions open up for questions, try and be among the first people to put your hand in the air.
Arrange your own events and dinners during the conferences especially during boring events. There's no reason why you can't take the lead in developing your own personal trou or visit to an out-of-the-way place that convention organizers might not have thought about.
Draft Off a Big Kahuna
If you get to know the most popular man or woman at the conference - the one who knows everyone - you'll be able to hang with them as they circle the most important people. You must remember to talk with speakers before they hit the stage. Find them before they've gained celebrity status, and you have a better chance to connect. Or ask the conference organizer to point them out if you don't know what they look like (or use Google).
Be an Information Hub
Once you've created an opportunity to meet new people, esetablish yourself as an "information hub" - a key role of any good networker. This might include information about trade gossip, the best local restaurants, private parties, etc.
Master the Deep Bump
Deep bumps are an effort to quickly make contact. You've just paid a boatload of money to be at this conference (unless you're a speaker, when it's usually free!).
Creating a connection between any two people necessitates a certain level of intimacy. In two minutes, you need to look deeply into the other person's eyes and heart, listen intently, ask questions that go beyond just business, and reveal about yourslef in a way that introduces some vulnerability into the interaction. All these things come together to create a genuine connection.
Know Your Targets
At each conference, I keep a list of three of four people I'd most like to meet on a folded piece of paper in my jacket pocket. I check off each person as I meet them. Beisde their name, I jot down what we talked about and make a note about how I'm going to contact them later.
Breaks Are No Time to Take a Break
Breaks are where the real work happens at a conference. Make sure and stake out the right place. One warm and centrally located spot is often the center of any party. As Kissinger said, "Enter the room. Step to the right. Survey the room. See who is there. You want other people to see you."
Remember look sharp. Don't underestimate the importance of dressing well in places where you'll be noticed. And start bumping.
Connecting with Connectors
In other words, it's not necessarily strong contacts, like family and close friends that prove the most powerful; the contrary, often the most important people in our network are those who are acquaintances. Your weak ties, occupy a very different world than you do.
1. Restaurateurs
It's quite easy to get to know a restraurateur. The smart ones will go out of their way to make your experience delightful. All you have to do is reach out and go there enough. When in a new city, I generally ask people to give me a list of a few of the hottest restaurants. I like to call ahead and ask ato speak with the owner and tell them that I go out regularly, sometimes in large parties, and I'm looking for a new place to entertain, a lot!
2. Headhunters
3. Lobbyists
Well informed, persuasive, and self-confident, lobbyists are generally impressive networkers. How do they work? Lobbyists will often host cocktail parties and dinner get-togethers, allowing them to interact with politicians - and their opponents - in a casual atmosphere. Their more grass roots efforts involve long hours spent on the phone and in writing letters, trying to rouse the community to get involved behind an issue.
4. Fundraisers
"Follow the money" are words fundraisers live by. They know where it is, what it will take to get it, and most importan, who's most likely to give it away.l As a result, fundraisers, whether they work for a political organization, university, or nonprofit group, tend to know absolutely everybody.
5. Public Relations People
PR people spend their whole day calling, cajoling, pressuirng, and begging journalists to cover their clients. The relationship between media and PR is an uneasy one, but at the end of the day, necessity brings them together like long-lost cousins. A good friend who works in PR can be your entree into the world of media, and sometimes, celebrity.
6. Politicians
Politicians at every level are inveterate networks. They have to be. They shake hands, kiss babies, give speeches, and go to dinners, all in the name of gaining the trust of enough people to get elected. The stature of politicians is derived from their political power rather than their wealth. Anything you can do to help them gain power with voters, or exercise power in office, will go a long way to ensuring you a place in their inner circle.
7. Journalists
Journalists are powerful (the right exposure can make a company and turn a nobody into a somebody), needy (they are always looking for a story), and relatively unknown (few have achieved enough celebrity to make them inaccessible).
These are seven different professions tailor-made for super connectors. Reach out to some. And there are others - lawyers, brokers, etc. Become a part of their network and have them become a part of yours. Cut the umbilical cord to the folks around the office water cooler. Mix it up. Hunt out poeple who look, act, and sound nothing like you. Connect with the connectors.
Never forget the person who brought you to the dance.
The Art of Small Talk
We all have what it takes to charm everyone around us - colleagues, strangers, friends. But having it and knowing how to work it is the difference between going through life in the shadows and commanding center stage wherever you happen to be.
The fact is that small talk - the kind that happens between two people who don't know each other - is the most important talk we do. Language is the most direct and effective method for communicating our objectives. When playwrights and screenwriters develop characters for their work, the first thing they establish is motivation. What does the character want? What is he or she after?
About ten years ago, Thomas Harrell, a professor applied pscyhology at Stanford University Graduate School of Business, set out to identify the traits of its most successful alumni. The one train that was common among the most accomplished was those who could confidently make conversation with anyone in any situation.
Start a conversation, keep it going, create a bond, and leave with the other person thinking, "I dig that person."
The first thing "small-talk experts" tend to do is place rules around what can and can't be said. Wrong! Don't listen to these people! Nothing has contributed more the development of boring chitchatters everywhere. Personally, I'd rather be interested in what someone was saying, even if I disagreed, than be catatonic any day. Be YOURSELF!
Being up front with people confers respect; it pays them the compliment of candor. Ths issues we all care most about are the issues we all want to talk about most. Of course, this isn't a call to be confrontational or disrespectful.
How many negotiations would have ended better if both parties involved were simply honest and forthright about their needs?
Power today, comes from sharing information, not withholding it.
The truth is that everyone has something in common with every other person. Once you know heartfelt candor is more effective than canned quips in starting a meaningful conversation, the idea of "breaking the ice" becomes easy.
Again and again, I'm surpirsed by the power of the vulnerability principle in the art of making small talk.
The message here is that we can go through life, particularly conference and other professional gatherings, making shallow, run-of-the-mill conversation with strangers that remain strangers. Or we can put a little of oursleves, our real selves, on the line, give poeple a glimpse of our humanity, and create the opportunity for a deeper connection. We have a choice.
The real winners - those with outstanding careers, warm relationships, and unstoppable charisma - are those people who put it all out there and don't waste a bunch of time and energy trying to be something they're not.
Tips:
-First, give the person a hearty smile. It says, "I'm approachable."
-Maintain a good balance of eye contact. Somewhere between 70-100%.
-Unfold your arms and relax.
-Nod your head and lean in, but without invading the other person's space.
-Learn to touch people.
Be Sincere
In LA, w here I live, eye darters are a party staple. They're constantly looking to and fro in an attempt to ferret out the most important person in the room. Frankly, it's a disgusting habit, and one that's sure to put off those around you.
The surest wayt ot become special in other's eyes is to make them feel special. The correlate, of course, is equally true: Make people feel insignificant and your significance to them shall certainly diminish.
Develop Conversational Currency
When meeting someone new, be prepared to have something to say. Keep up with current events. GIVE VALUE!
Make a Graceful Exit
During meetings and social gatherings, I'm often quite blunt. I'll mention something meaningful that was said in the course of the conversation and say, "There are so many wonderful people here tonight; I'd feel remiss if I didn't at least try and get to know a few more of them. Would you excuse me for a second?" People generally understand.
Until We Meet Again
In order to establish a lasting connection, small talk needs to end on an invitation to continue the relationship. Be complimentary and establish a verbal agreement to meet again, even if it's not business.
Learn to Listen
"The deepest principle in human nature is the craving to be appreciated." There are a few ways to signal to your listener that you are interested and listening actively. Take the initiative and be the first person to say hellp. If all else fails say: "You're great. Tell me more."
Talk in terms of the other people's interests.
Health Wealth and Children
Learning to become a connector means in some sense learning to become an armchair therapist. The only way to get people to do anything is to recognize their importance and thereby make them feel important. Every person's deepest lifelong desire is to be significant and to be recognized. What better way is there to show appreciation and to lavish praise on others than to take an interest in who they are and what their mission is? Loyalty to me, means staying true to someone through thick and thin.
One of the most successful people I knew was Michael Milken. I have seen him spend hours talking to people you'd never expect from secretaries, the very old and the very young, the powerless and the powerful. He reminded me of Ralph Waldo Emerson: "Every man I meet is my superior in some way. In that, I learn of him." Everyone has something to teach us. This focus on people was the reason why so many of them showed so much loyalty to him.
When help someone through a health issue, positively impact someone's wealth, or take interest in their children, you engender life-long loyalty. The highest human need is self-actualization - the desire to become the best you can be. Dale Carnegie astutely recognized this.
Have you helped someone find a new diet? Found a particular vitamin or suppliment that has helped you and passed it on? Helped with their kids? With these three issues, health, wealth, and children (Note: and relationships) little things mean everything.
I work hard to funnel customers to all my contacts who are consultants, vendors, and suppliers of all stripes. I know they are good, I trust them, and I want others to benefit from their expertise as well.
"Jack," I said, "I'm sure you don't remember me. There's no reason you should. We sat together for a lunch once at the Democratic convention. But I met with your son a few months ago to give him some career advice. I was wondering how he is doing?"
Jack dropped everything he was doing and couldn't be more interested. He peppered me with questions about his son and what the best tack was to enter my industry. He instantly became a good contact.
You start with the philosophy, the worldview, that every human is an opportunity to help and be helped. The rest - whether it means helping with someone's health, wealth, and children, follows from that.
Social Arbitrage
Start thinking first about how you're going to make everyone AROUND you successful. Today the system is more akin to social arbitrage: a constant and open exchange of favors and intelligence. When someone mentions a problem, try to think of solutions.
You've got to stop thinking of yourself and your company as an island. You need to meet people. There are a lot of CEOS and smart people in the Executive Club who could've done what I'm doing for you, only a few years ago. You need to be making these connections. Hank's products are superb; what he needed was the network.
My point? Real power comes from being indispensable. Indispensability comes from being a switchboard, parceling out as much information, contacts, and goodwill to as many people - in as many different worls - as possible. It's sort of career karma.
Individual managers with enterpreneurial networks move information faster, are highly mobile relative to bureaucracy, and create solutions better adapted to the needs of the organization.
What do you do when your financial and relational resources are thin? The solution is knowledge, one of the most valuable currencies in social arbitrage. Knowledge is free - it can be found in books, articles, on the Internet, pretty much everyone and it's precious to everyone.
The ability to distribute knowledge in a network is a fairly easy skill to learn. So easy, in fact, you should get started today. Identify some of the leading thinkers and writers in your industry. Presto! You're a knowledge broker. After you get the swing of it, you might want to send out a monthly Big Idea Cliff Notes email.
To paraphrase Dale Carnegie: You can be more successful in two months by becoming really interested in other people's success than you can in two years in trying to get other people interested in your own success.
Pinging - All the Time
80 percent of building and maintaining relationships is just staying in touch. I call it "pinging."
Tips:
-People need to hear your name at least 3 times before there is recognition.
-Once you have gained recognition you need to nurture a developing relationship with a phone call or email at least once a month.
One way I've found to make maintaining my network of contacts, colleagues, and friends easier is to create a rating system for the network that corresponds to how often I reach out. Segment your contacts into different categories.
Another time saver is to pay close attention to when you place your phone calls. Sometimes you don't have the time for an in-depth conversation in these situations I'll call when I know they're not around (or text/email instead of call). Plaxo is a useful program.
For people important to my career or business, I tend to favor the value-add ping. Here I'm trying to provide something of value in my communication. I also like to send relavant articles, short notes of advice, or other small tokens that convey what I am thinking of them and eager to help.
My personal favorite time for pinging is people's birthdays. People never forget this.
Find Achor Tennants and Feed Them
For all the sheer delight and good times a dinner party can impart, it seems our fast-food culture has diminished our centuries-old belief in the power of shared meal. Six to ten guests, I've found, is the optimal number to invite to a dinner (Note: Consider inviting influential entrepreneurs to dinner).
1. Create a Theme - there is no reason that a small dinner party should not have a theme (more enticing for people to come and creates more of a sense of urgency and scarcity).
2. Use Invitations - Use MeetingWizard.com
3. Don't be a kitchen slave - go to restaurant or cater in.
4. Create atmosphere - candles, flowers, dim lighting, and music.
5. Forget being formal - Good food. Good people. Lots of wine. Good conversation.
6. Don't seat couples together - things can get boring if you do. Mix and Match.
7. Relax - If you're having fun, odds are that they will, too. Enjoy the fruits of your labor.
Be Interesting
I hope it's not a surprise that I see effective marketing as just building relationmships with customers and prospective customers.
How can you offer your company or your network anything of value if you have not thought about how you want to stand out and differentiate yourself in building that relationship? Marketers and networkers alike take heed: Be interesting! Virtually everyone new you meet in a situation is asking themselves in a variation one question: "Would I want to spend an hour eating lunch with this person?"
Remember, people don't only hire people they like, they hire people that they think can make them and their companies better. That means someone with an expanded view of the world.
All my efforts had to be powered by a deep passion and a set of beliefes that went well beyond my own personal benefit. There was a difference between getting attention and getting attention for your desire to change the world.
Seek people who will volunteer rather those will be appointed. Huge different in commitment levels.
Have a unique point of view. You need a well-thought-out point of view.
It's knowing what you have that most others don't. Its your differentiation. It's the message that will make your brand unique, attracting others to become a part of your network.
Being known is just notoriety. But being known for something is entirely different. That's respect. You have to believe in something as Joael Ratner did, for people to believe in you.
In every job at every stage in my career, I had some expertise, some content that differentiated me form others and made me unique, made me more valuable in my relationship swith others and the company I worked for.
On some occasions, as was with the case with TQM and reingeneering, you can acquire content by simply appropriating another person's innovative ideas and beocme leader in distributing and applying those ideas. On the other occasions, as with YaYa, we had to develop the content from scratch.
Remember the wise words of Mark McCormack in his book 'What They Don't Teach You at Harvard Business School': "Creativity in business is often nothing more than making connections that everyone else has almost thought of. You don't have to reinvent the wheel, just attach it to a new wagon.
So I told him: "Create story about your company and the ideas it embodies that readers will care about. That's your content. Then share it. Have you ever picked up the phone and actually talked to a reporter about why you think what you do is so special?
In American's information economy, we frame our competitive advantage in terms fo knowledge and innovation. That means today's market values creativity over mere competence and expertise over general knowledge.
Content creators have always beein high demand. They get promotions. They're responsible for the Big Ideas. They're regularly asked to speak at conferences and are featured in newspapers and magazines. So how do you get that way? The easiest route is by niche expertise. I'd latch on to the latest, most cutting-edge idea in the business world. I'd immerse myself in it, getting to know all the thought leaders pushing the idea and all the literature available. Becoming an expert was the easy part. I simply did what experts do: I taught, wrote, and spoke about my expertise.
I would go on to parlay my experience into giving speeches, writing articfles, and connecting with some of the top business minds in the country. After a short period, I even persuaded the industrial giant ICI to craft a new position for me within a newly forming group as one of the leaders of TQM in North America.
There's no better way to learn something, and become an expert at it, than to have to teach it. People who are proactive jump at trying something new and they get the job done. In fact, after reading this book, there's no reason you couldn't put together a course on relationship building or content creation at your local community college. You'll learn in preparation, and gain even more interacting with students.
1. Get out in front and analyze the trends and opportunities on the cutting edge.
Foresight gives you and your company the flexibility to adapt to change. Creativity allows you to take advantage of it.
2. Ask seemingly stupid questions
If you ask questions that are like no other, you get results that are unlike any that the world has seen. How many people have the courage to ask those questions? "Don't you think having all your MP3's on a little Walman like device would be cool?" or "Why can't we view our pictures immediately?"
The power of innocence in business is so wonderfully depicted in a scene in Big, where Tom Hanks plays a kid transformed into an adult. He says, "I don't get it." Despite what all the graphs and numbers said the toy simply wasn't fun. Sometimes the numbers do lie.
3. Know yourself and your talents
4. Always learn
5. Stay healthy
As hectic as my schedule is I never miss a workout. I try to take a five day vacation every other month. And I do something spiritual every week.
6. Expose yourself to unusual experiences
When management guru Peter Drucker was asked for one thing that would make a person better in business, he responded "Learn to play the violin."
7. Don't get discouraged
To this day, I face rejection on a regular basis. If you're going to be creative, cutting edge, out of the mainstream, you'd better get used to rocking the boat. And guess what - when you're rockin' the boat, there will always be poeple who will try and push you off. Passion keeps you going through the rough times come hell or high water, and both will come.
8. Know the new technology
You don't need to be a "techno geek," but you do need to understand the impact of technology on your business and be able to leverage it to your benefit.
9. Develop a niche
Successful small businesses that gain renown establish themselves within a carefully selected market niche. Individuals can do the same thing. Think of several areas where your company underperforms and choose to focus on the area that is least attended to.
10. Follow the money
Creativitiy is worthless if it can't be applied. The bottom line for your content has to be: This will make us more money. The lifeblood of any company is sales and cash flow. All great ideas are meaningless in buisness until someone pays for it.
What truly moves us as human beings, what prompts us into action, is emotion. Despite the odds, the Dalai Lama makes us believe that the seemingly impossible is in fact, possible.
Build Your Brand
Branding guru and all star business consultant Tom Peters instructs in his customary bravado to "create your own microequivalent of the Nike swoosh."
I always emailed my boss or my boss's boss ideas. What's the worst thing that could happen? I'd get fired from a job I didn't want anyway? Alternatively, I'd make the effort to creat the job - regardless of where it was - that I thought would make me happy.
The novelist Milan Kundera once reflected that flirting is the promise of sex with no guarantee. A successful brand, then, is the promise and garauntee of a mind-shattering experience each and every time. It's the email you always read because of who it's from. It's the employee who always gest the cool projects.
Develop a Personal Branding Message
A brand is nothing less than everything everyone thinks of when they see or hear your name. The best brands, like the most interesting people have a distinct message.
Package the Brand
There is one general, overarching caveat in this step: Step out! Style matters. Whether you liek it or not, clothing, letterheads, hairstyles, business cards, office space, and conversation style are noticed - big time. Take an honest look at how you present yourslef. Ask others how they see you. How do you wish to be seen?
Broadcast Your Brand
Why is "The Donald" considered the ultimate dealmaker? Probably because he's called himself that a million times over in any number of articles and TV interviews and now a highly rated TV show. Because he has a book entitled 'The Art of the Deal'.
His self promotion is not just ego it makes plenty of business sense too. His buzz-worthy brand now has a value unto itself. Building with his name on it are more valuable and bring in higher rental fees. Like it or not your success is determined as much by how well others know your work as by the quality of your work.
Every day you hear or read about companies in newspapers. Most of the time the article or story is about a celebrity CEO or company. It's not because they are more deserving of the press than you or me. It's the result of well-planned and strategic public relations. Big companies have PR machines working for them to shape and control their image (though not always successfully).
Smaller companies and inviduals have to do it themselves, access to the media is not as difficult as you may think. They get a majority of their stories from people that have sought them out, not the other way around. And like everyone else in any profession, they tend to follow the herd. Which means once you get written about, other reports will come calling.
As a marketer over the years, I have developed an idea of how buzz is created.One way is to generate "catalytic moments." When you watch a football game, have you noticed how the tide of a game will suddenly turn in favor of one team or another? Buzz is like that. It needs a pivotal moment, something that will get the crowd whispering. Similarly, I look for compelling stories that create buzz within the news media.
That's where feeding the influentials come into play. Influentials are the early adopters who can ignire brand buzz. They are the small segment of the population that will adopt a cool product early on and infect everyone else with the bug.
One way is to have a white paper written on you. A white paper is a research document that consulting companies put out on hot topics of the day. Getting your technology and company introduced from an unbiased perspective would be far more effective and lead to more credibility than anything we could do ourselves. When the white paper was completed, it received amazing publicity due to KPE's PR engine. It took less than a year for us to appear on the cover of BrandWeek, in the marketplace section of Wall Street Journal, etc.
One lesson we learned is that your PR campaign has to be realistic. More often than not, you will have to start small. You'll be forced to focus on your local paper, high school or college newsletter or industry trade journal.
Reporters constantly ask, "But why is it important NOW?" If you can't answer that sufficiently your article will have to wait. So I began to rewrite the intros to my piece each week, to relate to something that was in the news at the time. In short order, the article finally saw the light of day.
Journalists get fed up with people who are nitwits and pitch articles without substance. You have to start building relationships with the media before you have a story you'd like them to write. Send them information. Call regularly to stay in touch. Remember, you can't force-feed or pressure a good journalist. The best journalists are almost always also the most ethical.
Be careful. Listen to the reporter when he or she says, "I'm doing a story about displaced workers..." No matter what YOU say, that's the story he'll write.
You are Your Own Best PR Representative
You must manage your own media. PR companies are facilitators and act as leverage. I've been represented for years, but ultimately the press always wants to talk to the big guy - you, not a PR rep.
Start making calls to the reports who cover your industry. If something timely occurs around your content, send a press release. They're nothing more than two or three paragraphs describing what's memorable about your story. It is that easy.
They may not need your exact story at the time you want, but with a little stick-to-itiveness, they'll come around.
Knowing the Media Landscape
Nothing infuriates reports and editors more, I'm told, then to get a pitch from someone who clearly has no idea what their publication is about or who their audience is. Rmemeber, media is a business, and the companies who are in the media are looking for ratings or to sell more issues.
Work with Angles
There are no new news stories, it has been said, only old stories told in new ways. To make your pitch sound fresh and original, find an innovative slant. Perhaps you can play up how your store is one recent example of the entrepreneurial book (there are books on PR that outline all slants, the 24 or so popular ones).
Think Small
Go local first. Start a database of newspapers and magazines in your area that might be interested in your content. Try college papers, the neighborhood newspapers, or the free industry digital newsletter you find in your inbox. You'll get the fire started and learn how to deal with reports in the process.
Master the Art of the Sound Bite
Tell me why I should write about you in ten seconds or less. If the President is only getting a few seconds, how much time do you think you will get?
Don't be Annoying
If a pitch gets rejected, ask what else it needs to make it publishable. It is okay to be aggressive, but mind the signals, and back off when it's time.
It's All on the Record
Be cautious: What you say can hurt you, and even if you're not quoted or you say something off the record, a report will use your words to color the slant of the article. Just remember: All press is not good press, even if they spell your name right.
Trumpet the Message, Not the Messenger
All your efforts at publicity, promotion, and branding need to feed into your mission; if they're only feeding your ego, you'll find yourself with a reputation you hadn't bargained for that could hold you back for the rest of your lucky. I was lucky. Looking back, I merely wasted a lot of time.
Treat Journalists as You Would Any Other Member of Your Network or Community of Friends
As in any interview, your primary objective when you meet with a member of the press is to get the person across form you to like you, and your empathy for his or her hard work will go a long way.
Be a Name-Dropper
Connecting your story with a known entity - be it a politician, celebrity, or famous businessperson - acts as a de facto slant. Bottom line: the media wants recognizable faces in their pages.
You've Got to Market the Meaning
Once you've put in all the hard work and landed a nice article, it's no time to be modest. Send that article around. Give it to your alumni magazine. Update your class notes. Use this article to get even more press coverage. I'll attach a recent article about me to an email in the subject line write, "Here's another one of Ferrazzi's shamless attempts at self-promotion." Most people get a kick out of it and it keeps you on everyone's radar.
The Write Stuff
"Write, then write some more. When you're done - and here's the kicker - keep writing."
What's an editor going to say when you pitch him or her an idea? Probably, something like "Sure, sounds great. Very busy. Gotta go."
But now, when you call others to interview them, you're not just Joe Shmo, you're Joe Shmo calling about an article targeted for the Poughkeepsie Gazette. And these aren't just random people you'r calling either. These are the people you painstakingly targeted as the top experts and thinkers int he subject you're investigating.
Guess what? By article's end, wheter it's been published or not, you've managed to learn a great deal and to meet a group of important poeple who potentially might be important to your future. And you now have a very good reason to stay in touch with them.
Getting Close to Power
"As long as you're going to think anyway, think big." - Donald Trump
Newt Gingrish, is known to tell a story. A lion, he says, can use his prodigious hunting skills to capture a frield mouse with relative ease anytime he wants, but at the end of the day, no matter how many mice he's ensnared, he's still be starving. Sometimes, despite the risk and work involved, it's worth our time to go for the antelope.
Are you only connecting with field mice? If you are, start turning your attention to reaching out to the sort of important people that can make a difference in your life and the lives of others. The kind of people who can make you, and your network, sparkle.
That's why a smart start-up company, for example, will seek to populate its board of directors with reocgnized business personalities who can impart credibility to a new business.
Fame breeds fame. The hard truth is that the ones who get ahead are usually those who know how to make highly placed people feel good about having them around.
And if you are emboldened by a mission and you've put in the time and hard work to establish a web of people that count on you, then the time will come when your growing influence will put you in a place where you'll be face to face with someone who can convey a lot of sparkle to your next dinner party.
I've found that trust is the essential element of mixing with powerful and famous people - trust that you'll be discreet; trust that you have no ulterior motives behind your approach; trust that you'll deal with them as people and not as stars; and basically trust that you feel like a peer who deserve to be engaged as such.
To assure them that you're interested in them for themselves, rather then what the public perceives themt o be, stay away from their fame and focus, instead, on their interests. You can certainly let them know that you respect their work, but don't dwell.
Just remember that famous and powerful people are first and foremost people: they're proud, sad, insecure, hopeful, and if you can help them achieve their goals, in whatever capacity, they will be appreciative.
In America there is an association for everything. If you want to meet the movers and shakers directly, you have to become a joiner. It's amazing how accessible people are when we meet them at events that speak to their interests.
Young President's Organization, Political Fundraisers.
Become an outspoken advocate on a particular issue; if it lights your fire, it's sure to light the fire of others.
Conferences
When you have something unique to say and become a speaker, you momentarily become a celebrity in your own right. There are thousands of conferences that indulge any number of interests.
Nonprofit Boards
Eventually, the goal is to become a board member yourself and sit side by side with these people. But be sure you care and indeed want to help the cause.
Sports (especially golf)
Ah, golf. I would be doing you an injustice if I didn't tell you that squarely golf, among all the other sports, remains the truth hub of American business elite. I do not play golf since it is very time consuming but it is necessary to mention that it is an important avenue for business.
Remember, there is nothing wrong with looking for ways to spend time with people who have accomplished more and have more wisdom than you.
Built It and They Will Come
It's just that all the clubs that seemed worth attending had their doors closed to a young, relatively unconnected guy like me. The World's premier power and business gatherings, like the World Economics Forum in Davos and Renaissance Weekend, are such tough events to get into. At Renaissance Weekend, we've seen unknown politicians connect with the type of people that would lead them to become nationally known figures.
At a time like this, you have to figure out what is your U.S.P - unique selling proposition. What secret sauce can you bring to the table? Your proposition can be an expertise, a hobby, or even an interest or passion for a particular cause that will serve as the foundation from which an entire organization or club can be established.
Consider starting your organization and seeding it with top people in industry or nonprofit. Here's the kicker: since you start it you get to become the President. Two years after I started my organization I knew every major CEO in Chicago on a first-name basis. The days when clubs were only for wealthy white men to consrt with people just like themselves are over.
Never Give in to Hubris
Don't get your PHD in connecting, and then, for some reason, forget all the classes and values that were your foundation.
Find Mentors, Find Mentees, Repeat
"To teach is to learn again" - H.J. Brown
By studying the lives of those who know more than we do, we expand our horizons.
Ferrazzi took the Deloitte offer under the agreement that he would have dinner with the CEO and top management three times a year. I realized that finding a talented, experienced mentor who is willing to invest the time and effort to develop you as a person and professional is far more important than making career decisions based purely on salary or prestige.
He offered his guidance because, for one, I promised something in return. I worked nonstop in an effort to use the knowledge he was imparting to make him, and his firm, more successful. The best way to approach utility is to give help first, and not ask for it. If there is someone whose knowledge you need, find a way to be of use to this person.
Some people think that there is just ONE special person out there waiting to be all things to them. Mentors however are all around us. Mentoring is a nonhierarchial activity that transcends careers and can cross all organization levels (note: see Power Mentoring).
In fact, the people I've learned so much form are my own young mentees, who help me periodically to update my skills and view the world anew.
But your determination to connect with others should never come at the expense of your values. In fact, your network of colleagues and friends, if chosen wisely, can help you fight for the causes you believe in.
Balance is B.S.
When it became clear to me that the key to my life was the relationships in it, I found there was no longer a need to compartmentalize work from say, family or friends.
Welcome to the Connected Age
Community and alliances will rule in the twenty-first century. "Our souls are not hungry for fame, comfort, welath, or power. Our souls are hungry for meaning, for the sense that we have figured out how to live so that our lives matter so the world will at least be a little bit different for our having passed through it.
If you commit yourself to finding your passion, that blue flame, it's interesting how that commitment is rewarded with answers.
There is however, no end, no final arrival; the quest never ends. There is no one job title or material possession that can ever act as the final finishing line. Which is why the achievement of some goals can feel as dissapointing as failure.
Creativity begets more creativity, success begets more success, and giving begets more giving.
Unrealistic Expectations
Unrealistic expectations can be a large reason for procrastination. We can be discouraged from starting if we see that our actions will not lead to anything grandiose.
The goal is to start anyways, because everything (including billion dollar companies) started with something small. Action begets action and creates momentum.
Don't worry about making A LOT of money right away. Start the process and the momentum will carry you to success.
The goal is to start anyways, because everything (including billion dollar companies) started with something small. Action begets action and creates momentum.
Don't worry about making A LOT of money right away. Start the process and the momentum will carry you to success.
Thursday, October 30, 2008
Customer Centrisim
Throughout all my reading and experience I have noticed one reoccuring phenomenon: The best companies the world are customer-centric. This is not just another aspect of business, it is the be all and end all of all succesful companies (something I haven't grasped until this year).
The reason more companies are not customer centric is because they "know better." This is especially inherent in the most intelligent people. There seems to be a slight negative correlation between customer centricism and high technical ability, but it doesn't have to be that way.
The reason more companies are not customer centric is because they "know better." This is especially inherent in the most intelligent people. There seems to be a slight negative correlation between customer centricism and high technical ability, but it doesn't have to be that way.
Self - Sabotage
One of the reasons that humans take part in self-sabotage is that they unconsciously feel deprived of something because of their action. For example, they are working 14 hour weeks and they miss seeing their friends so they sabotage their business. Sometimes, this is done aon a subconscious level where the person doesn't even know.
The solution to this is to make sure that you are not keeping yourself from doing something you love because of your action. You must have the courage to ask yourself this question and seek the truth within yourself.
Once you find out what you are being deprived of, make sure you indulged in it enough to keep yourself satisfied. For example, you will work 10x more effectively in the above case if you work for 12 hours and spend 2 hours a day with your friends.
The solution to this is to make sure that you are not keeping yourself from doing something you love because of your action. You must have the courage to ask yourself this question and seek the truth within yourself.
Once you find out what you are being deprived of, make sure you indulged in it enough to keep yourself satisfied. For example, you will work 10x more effectively in the above case if you work for 12 hours and spend 2 hours a day with your friends.
The Now Habit: One Drawback
If you have been following my blog, you know that I have become a big fan of "The Now Habit". There is one drawback as you start to become a peak performer and overcome procrastination in all aspects of your life.
Here is the drawback: you might find yourself addicted to tasks that you can batch together and do in one sitting. For example, reading or writing.
You will start to look down on tasks that are necessary such as responding to customers, etc. which can be very crucial to your business.
All this is fine as long as you realize the need for balance between those small tasks that need to be done along with the large tasks.
Remember, "The Now Habit" as powerful as it is, is still simply ONE tool in an tool set that should have many different tools.
Here is the drawback: you might find yourself addicted to tasks that you can batch together and do in one sitting. For example, reading or writing.
You will start to look down on tasks that are necessary such as responding to customers, etc. which can be very crucial to your business.
All this is fine as long as you realize the need for balance between those small tasks that need to be done along with the large tasks.
Remember, "The Now Habit" as powerful as it is, is still simply ONE tool in an tool set that should have many different tools.
Wednesday, October 29, 2008
How to Break Very Bad News
Personally, I have problems doing sudden bad things like 'firing someone' or 'breaking a partnership' when the other person is not aware of what is going to happen.
My fear is that the other party will act irrationality and become very angry.
Here is a method I personally came up with to counteract this:
1) Introduce the possibility of the breaking of the partnership / firing the employees with a neutral statement and buy yourself time: "I am going to a meeting right now, but when I come back we need to discuss your employment" or send an email "I have meetings all morning but we need to discuss our future business this afternoon" (notice the word future to show that there is no implicit garauntee of partnership in the absence of a contract; also notice that the more stern it is the more notice the person will get so that he/she will know what is going to happen).
2) The person will have some time to think it over and will entertain the possibility of the partnership breaking or getting fired. The news will break much easier under these circumstances.
My fear is that the other party will act irrationality and become very angry.
Here is a method I personally came up with to counteract this:
1) Introduce the possibility of the breaking of the partnership / firing the employees with a neutral statement and buy yourself time: "I am going to a meeting right now, but when I come back we need to discuss your employment" or send an email "I have meetings all morning but we need to discuss our future business this afternoon" (notice the word future to show that there is no implicit garauntee of partnership in the absence of a contract; also notice that the more stern it is the more notice the person will get so that he/she will know what is going to happen).
2) The person will have some time to think it over and will entertain the possibility of the partnership breaking or getting fired. The news will break much easier under these circumstances.
Tuesday, October 28, 2008
Entrepreneurship and the Need for Management
Peter Drucker once commented that Entrepreneurs need management, and management needs entrepreneurship. Unfortunately, entrepreneurs are taught entrepreneurship and management is taught management!
Rates to Bring a CEO on to your team
According to my friend: John Ramey (founder of isocket):
Chicago rates:
CEO (non-founder)
Salary $180-200k, bonus $50k+, equity around 5-7%
Here is a very interesting link on this issue that will give you a good point of reference: http://www.askthevc.com/blog/archives/2007/06/what-are-typica.php
Keep in mind this is for high growth companies.
David
Chicago rates:
CEO (non-founder)
Salary $180-200k, bonus $50k+, equity around 5-7%
Here is a very interesting link on this issue that will give you a good point of reference: http://www.askthevc.com/blog/archives/2007/06/what-are-typica.php
Keep in mind this is for high growth companies.
David
In Search of Excellence
Here is the link to the Amazon.com book: Click here.
The following are actual quotations from the book.
Successful American Companies
At a gut level, all of us know that much more goes into the process of keeping a large organization vital and responsive than the policy statements, new strategies, plans, budgets, and organization charts can possibly depict. But all too often we behave as though we don't know it. If we want change, we fiddle with the strategy. Or we change the structure. Perhaps the time has come to change our ways.
A natural first step was to talk extensively to executives around the world. We found that they, too, shared our disquiet about conventional approaches..Moreover, the crucial problems in strategy were most often those of execution and continuous adaptation; getting it done, staying flexible. And that to a very large extent meant going far beyond strategy to issues of organizing - structure, people, and the like.
We asserted that innovative companies not only are unusually good at producing commercially viable new widgets; innovative companies are especially adroit at continually responding to change of any sort in their environment.
Our findings were a pleasant surprise. Excellent companies, were, above all, brilliant on the basics. Tools didn't substitute for thinking. Intellect didn't overpower wisdom. Rather, these companies worked hard to keep things simple in a complex world. They persisted. They insisted on top quality, they fawned on their customers. They listened to employees and treated them like adults. They allowed their innovation product and service "champions" long tethers. They allowed some chaos in return for quick action and regular experimentation.
Eight Attributes that emerged:
1. A bias for action, for getting on with it. Even though these companies may be analytical in their approach to decision making, they are not paralyzed by that fact. Instead of allowing 250 engineers and marketers to work on a new product in isolation for fifteen months, they form bands of 5 to 25 and test ideas out on a customer, often with inexpensive prototypes, within a matter of weeks.
2. Close to the customer. These companies learn from the people they serve.
3. Autonomy and entrepreneurship. The innovative companies foster many leaders and many innovators throughout the organization. They are a hive of what we call product champions.
4. Productivity through people. The excellent companies treat the rank and file as the root source of quality and productivity gain. They do not foster we/they labor attitudes or regard capital investment as the fundamental source of efficiency improvement.
5. Hands-on, value driven. McDonald's Ray Kroc regularly visits stores and assesses them on the factors the company holds dear (Quality, Service, Cleanliness, and Value).
6. Stick to the Knitting. "Never acquire a business you don't know how to run." Past CEO of Proctor and Gamble, "This company has never left its base. We seek to be anything but a conglomerate." While there were a few exceptions, the odds for excellent performance seem strongly to favor those companies that stay reasonable close to businesses they know.
7. Simple form, lean staff. Top level staffs are lean; it is not uncommon to find a corporate staff of fewer than 100 people running multi-billion-dollar enterprises.
8. Simultaneous loose-tight properties. For the most part, as we have said, they have pushed autonomy down to the shop floor or product development team. On the other hand, they are fanatic centralists around the few core values they hold dear. One analyst argues, "The brainwashed members of an extremist political sect are no more conformist in their central beliefs."
The excellent companies live their commitment to people, as they also do their preference for action - any action.
Above all, the intensity itself, stemming from strongly held beliefs, marks these companies. During our first round of interviews, we could "feel it." The language used in talking about people was different. The expectation of regular contributions was different. The love of the product and customer was palpable. And we felt different ourselves, walking around an HP or 3M facility watching groups at work and play, from the way we had in most of the more bureaucratic institutions we have had experience with.
We should note that not all eight attributes were present or conspicuous to the same degree in all excellent companies we studied. But in every case at least a preponderance of the eight was clearly visible, quite distinctive. We believe, moreover, that the eight are conspicuously absent in most large companies today. Or if they are not absent, they are so well disguised you'd hardly notice them, let alone pick them out as distinguishing traits.
They are heartened that the "magic" of a P&G or IBM is simply getting the basics right, not possessing twenty more IQ points per man or woman. The process of acquiring or sharpening the basics to anything like the excellent companies' obsessive level, after all, is a lot harder than coming up with a "strategic breakthrough" in one's head.
The Rational Model
The numerative rationalist approach to management dominates the business schools. It teaches us that well-trained professional managers can manage anything. It seeks detached, analytical justifications for all decisions.
It doesn't tell us what the excellent companies have apparently learned. It doesn't teach us to love the customers. It doesn't instruct our leaders in the rock-bottom importance of making the average Joe a hero and a consistent winner. It doesn't show how strongly workers can identify with the work they do if we give them a little say so. It doesn't show, as Anthony Athos put is that "good managers make meanings for people, as well as money."
Show us a company without a good fact base - a good quantitative pictures of its customers, markets, and competitors - and we will show you one in which priorities are set with the most byzantine of political maneuvering.
What we are against is wrong-headed analysis, analysis that is too complex to be useful and too unwieldy to be flexible, analysis that strives to be precise about the inherently unknowable.
"Those who implement the plans must make the plans."
We are also against situations in which action stops while planning takes over, the all-too-frequently observed "paralysis through analysis" syndrome.
A researcher concluded recently that research effectiveness was inversely related to group size: assemble more than seven people and research effectiveness goes down. Our stories of ten-person "skunk works" out inventing groups of several hundred are corroborative (definition: are certain).
Yes, quantification of these sorts of factors is difficult, probably not even useful. But the factors can certainly be considered sensibly, logically, and fairly precisely in the face of modestly well documented past experience.
True, learning to segment markets, to factor in the time value of money, and to do sound cash-flow projection have long since become vital steps to business survival. The trouble arose when those techniques became the pint and love of product became the tablespoon.
Misplaced Emphasis
Perhaps the most important failing of the narrow view of rationality is not that it is wrong per se, but that it has led to a dramatic imbalance in the way we think about managing. Stanford's Harold Leavitt has a wonderful way of explaining this point: He views the managing process as an interactive flow of three variables: path finding, decision making, and implementation. The problem with the rational model is that it addresses ONLY the middle element - decision making.
To add understanding, Leavitt has his class associate various occupations with his three categories. People who fall into the decision-making category include systems analysts, engineers, MBAs, statisticians, and professional managers - they have a bias for the rational approach. Implementation occupations are those in which people essentially get their kicks from working with other people - psychologists, salesmen, teachers, social workers, and most Japanese managers. Finally, the path finding category we find poets, artists, entrepreneurs, and leaders who have put their personal stamp on some business.
Path finding is essentially an aesthetic, intuitive process, a design process.
Implementation is also greatly idiosyncratic. As Leavitt points out, "People like their own children a lot, and typically aren't that interested in other people's babies." As consultants, we repeatedly found that it does the client no good for us to "analytically prove" that option A is the best - and to stop at the point. At that phase in the consulting process, option A is our baby, not theirs, and no amount of analytical brilliance is going to get otherwise uncommitted people to buy it. They have to get into the problem and understand it - and they own it for themselves.
Man Waiting for Motivation
The central problem with the rationalist view of organizing people is that people are not very rational. Man is the ultimate study of conflict and paradox.
1. All of us are self-centered, suckers for a bit of praise, and generally like to think of ourselves as winners. Not all of us can be above average, but rubbing our noses daily in that reality doesn't do us a bit of good.
2. Our imaginative, symbolic right brain is at least as important as our rational, deductive left. We reason by stories at least as often as with good data. "Does it feel right?" counts for more than "Does it add up?" or "Can I prove it?"
3. As information processors, we are simultaneously flawed and wonderful. On the one hand, we can hold little explicitly in mind, at most a half dozen or so facts at one time. Hence there should be enormous pressure on management to keep things very simple. On the other hand, our unconscious mind is powerful, accumulating a vast storehouse of patterns, if we let it. Experience is an excellent teacher; yet most businessmen seem to undervalue it in the special sense we will describe.
4. We are creates of our environment, very sensitive and response to external rewards and punishment. We are also strongly driven from within, self-motivated.
5. We act as if express beliefs are important, yet action speakers louder than words.
6. We desperately need meaning in our lives and will sacrifice a great deal to institutions that will provide meaning for us. We simultaneously need independence, to feel as though we are in charge of our destinies, and to have the ability to stick out.
Why do TI and Tupperware, by contrast, insist that teams set their own objectives? The answer is surprisingly simple, albeit ignored by most managers. It is to gain commitment from the employees.
In a recent psychological study when a random sample of male adults were asked to rank themselves on "the ability to get along with others," all subjects, 100 percent, put themselves in the top half of the population. Sixty percent in the top 10 and 25 percent thought they were in the top 1 percent of the population.
We all think we're tops. We're exuberantly, wildly irrational about ourselves. And that has sweeping implications for organizing. Yet most organizations, we find, take a negative view of their people. They verbally berate participants for poor performance. They call for risk taking but punish even tiny failures. They want innovation but kill the spirit of the champion. With their rationalist hats on, they design systems that seem calculated to tear down their worker's self-image. They might not mean to be doing that, but they are.
The message that comes through so poignantly in the studies we reviewed is that we like to think of ourselves as winners. The lesson that excellent companies teach us is that there's no reason not to design systems that make most of the people feel like winners. Their systems reinforce degrees of winning rather then losing. Their people by and large make their targets and quotas, because the targets and quotas are set to allow that to happen.
In the not-so-excellent companies, the reverse is true. While IBM explicitly manages to ensure that 70 to 80 percent of its salespeople meet quotas, another company manages so that 40 percent meets it. With this approach 60% of their salespeople think of themselves as losers. (David's Note: While you can have 70-80% of your company meet quotas they can still get no bonus and leave the real bonuses to the top 20%, the idea is just not to deflate the other individuals' ego).
The systems in the excellent companies are not only designed to produce lots of winners; they are constructed to celebrate the winning once it occurs. Their systems make extraordinary use of non-monetary incentives. They are full of hoopla.
Psychology shows that we typically attribute any success as our own and failure as the system. People tune out if they feel they are failing, because the "system" is to blame. They tune in when the system leads them to believe they are successful. They learn that they can get things done because of skill, and, most important, they are likely to try again.
The old adage is "Nothing succeeds like success." It turns out to have a sound scientific basis. Researchers studying motivation found that the prime factor is simply the self-perception among motivated subjects that they are in fact doing well. In a study of school teachers, it turned out that when they held high expectations of their students, that alone was enough to cause an increase of 25 points in the students' IQ scores.
Simply said, we are more influenced by stories than by data. One of the key attributes of the excellent companies is that they have realized the importance of keeping things simple despite overwhelming genuine pressures to complicate things.
For one thing, excellent companies keep corporate staffs small. Then there aren't enough corporate staff around to generate too much confusion down the line. The excellent companies focus on only a few key values that lets everyone know what's important, so there is simply less need for daily instructions.
Among the paperwork fighters, P&G is legendary on its insistence on one-page memos as the almost sole means of written communication.
Skinner's experiments show that negative reinforcement will produce behavior change, but often in strange, unpredictable, and undesirable ways. Positive reinforcement causes behavioral change too, but usually in the intended direction. At best those who are punished learn how to avoid bad punishment. It usually results in frenetic, unguided activity.
To give a negative example first, suppose that we get punished for "not treating a customer well." Not only do we not know what specifically to do in order to improve; we might well respond by "learning" to avoid customers altogether. In Skinner's terms, "customer" per se, rather than "treating a customer badly," has become associated with punishment.
On the other hand, if someone tells us via a compliment from a "mystery shopper" that we "just acted in the best traditions of XYZ Corporation in responding to Mrs. Jone's minor complaint," well, that's quite different. Per Skinner, and our own experience, what we are now likely to get is an employee out beating the bushes to find more Mrs. Joneses to treat well. He or she has learned that a specific behavior pattern leads to rewards and has at the same time satisfied the insatiable human need to enhance one's self-image.
Positive reinforcement also has an intriguing Zen-like property. It nudges good things onto the agenda instead of ripping things off the agenda. Life in business, as otherwise, is fundamentally a matter of attention - how we spend our time. Thus management's most significant output is getting others to shift attention in desirable directions. First, we must attempt through positive reinforcement to lead people gently over a period of time to pay attention to new activities. This is a subtle shaping process.
The "nudge it on the agenda" approach leads to a natural diffusion process. The positively reinforced behavior slowly comes to occupy a larger and larger share of time and attention.
Our general observation is that most managers know very little about the value of positive reinforcement. As Skinner notes, the way the reinforcement is carried out is more important than the amount. First, it ought to be specific, incorporating as much information content as possible. Second, the reinforcement should have immediacy. Thomas Watson, SR. is said to have made a practice of writing out a check on the spot for achievements he observed in his own management role. Other on the spot bonuses were mentioned frequently in our research.
The fourth characteristic is that a fair amount of the feedback comes in the form of intangible but ever-so-meaningful attention from top management. When you think about it, with management's time being as scarce as it is, that form of reinforcement may be the most powerful of all.
Finally, Skinner asserts that regular reinforcement loses impact because it comes to be expected. Thus unpredictable and intermittent reinforcements work better - the power of walking the shop floor again. Moreover, small rewards are frequently more effective than large ones. Big bonuses often become political, and they discourage legions of workers who don't get them but think they deserve them. Remember, we all think we're winners.
His hypothesis, presented in 1951, was simply that people most strenuously seek to evaluate their performance by comparing themselves to others, not by using absolute standards. Normal Triplett observed in a controlled experiment that bicyclists "race faster against each other than against a clock."
But the largest context of high performance, we believe, is intrinsic motivation. On the surface, self-motivation is opposed in many ways to the beliefs of reinforcement theory; but in our minds the two contexts fit together nicely.
Virtually all of the excellent companies are driven by just a few key values, and then give lots of space to employees to take initiatives in support of those values - finding their own paths, and so making, the task and its outcome their own.
Probably few of us would disagree that actions speak louder than words, but we behave as if we don't believe it. "Of course, he's for quality. That is, he's never said, 'I don't care about quality.' It's just that he's for everything. He says, 'I'm for quality,' twice a year and he acts, 'I'm for shipping product,' twice a day." In another case, a high technology company president pinned his company's revitalization hopes on new products, publicly proclaiming, that they were on the way.
The implications of this line of reasoning are clear: only if you get people acting, even in small ways, the way you want them to, will they come to believe in what they're doing. "You more likely act yourself into feeling than feel yourself into action."
"If we hope to live not just from moment to moment, but in true consciousness of our existence, then our greatest need and most difficult achievement is to find meaning in our lives."
As we worked on research of our excellent companies, we were struck by the dominant use of story, slogan, and legend as people tried to explain the characteristics of their own great institutions. All the companies we interviewed, from Boeing to McDonald's, were quite simply rich tapestries of anecdote, myth, and fairly tale. And we do mean fairy tale.. These days, people like Watson and A.P. Giannini of Bank of America take on roles of mythic proportion that the real persons would have been hard-pressed to fill. Nevertheless, in an organizational sense, these stories, myths, and legends appear to be very important, because they convey the organization's shared values or culture.
In these companies, people way down the line know what they are supposed to do in most situations because the handful of guiding values is crystal clear. One of our colleagues is working with a big company recently thrown together our of a series of mergers. He says: "You know, the problem is every decision is being made for the first time. There are no cultural norms." By contrast the shared values in the excellent companies are clear, in large measure, because the mythology is rich...They speak of business integrity, of fair treatment of employees.
Poorer-performing companies often have strong cultures, too, but dysfunctional ones. They are usually focused on internal politics rather then the customer, or they focus on "the numbers" rather than on the product and the people who make and sell it...The excellent companies seem to understand that every man seeks meaning. "He who has a why to live for can bear almost any how." John Gardner observes in Morale, "Man is a stubborn seeker of meaning." So strong is the need for meaning, in fact, that most people will yield a fair degree of latitude or freedom to institutions that give it to them.
We will surrender a great deal to institutions that give us a sense of meaning and, through it, a sense of security.
Finally, and paradoxically, the excellent companies appear to take advantage of yet another very human need - the need one has to control one's destiny. At the same time that we are almost too willing to yield to institutions that give us meaning and thus a sense of security, we also want self-determination. With equal vehemence, we simultaneously seek self-determination and security.
Stated simply, its findings indicate that if people think they can have even modest personal control over their destinies, they will persist at tasks. They will do better at them. They will become more committed to them. Now, one of the most active areas of this experimentation is the study of cognitive biases.
A set of experiments that really highlights our need for self-determination and at the same time our desire for control is the "shut off the noise button" variety mentioned in the Introduction. Even though we never use the button, the fact that we could if we wanted to improves our performance by quantum steps.
And here, too, the excellent companies seem to understand these important, if paradoxical, human needs. Even in situations in which industry economics seem strongly to favor consolidation, we see the excellent companies dividing things up and pushing authority down the line. These companies provide the opportunity to stick out, yet combine it with a philosophy and a system of believes that provide the transcending meaning - a wonderful combination.
The transforming leader must build a loyal team at the top that speaks more or less with one voice. His job is much tougher than that of the transactional leader, for he is the true artist, the truth pathfinder. Transforming leadership occurs when one or more persons engage with others in such a way that leaders and followers raise one another to higher levels of motivation and morality. Their purposes which might have started out separate but related, in the case of transactional leadership, become fused. Various names are used for such leadership: elevating, mobilizing, inspiring, exalting, uplifting, exhorting, evangelizing. Leaders stir emotion.
We find two attributes that are most important: believability and excitement. On the first count, believability, we find that our value-infused top-performing companies are led by those who grew up with the core of the business - electric engineering at HP or Maytag. The star performers are seldom led by accountants or lawyers. Excitement comes from the idea: "You have to believe in the impossible." At Hewlett-Packard, top management's explicit criterion for picking managers is their ability to engender excitement. To instutionalize this is to infuse the value beyond the technical requirements of the task at hand.
The much larger group of nonexcellent performers seem to act, almost perversely, at odds with every variable we have described here. Losing instead of winning is the norm, as are negative rather than positive reinforcement, guidance by the rule book rather than tapestries of myths, constraint and control rather than soaring meaning and a chance to sally forth, and political rather than moral leadership.
Managing Ambiguity and Paradox
"The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function. " - F. Scott Fitzgerald
But let's return momentarily to the world of the rational model. The old management theories were attractive because they were straightforward and not laden with ambiguity or paradox. On the other hand, the world simply isn't like that.
The main point seems to be that the simple act of paying positive attention to people has a great deal to do with productivity. This effect permeates data on our excellent companies. Hewlett-Packard values innovation from a large body of workers, and its systems for paying attention to innovation (e.g., talking about it, honoring it) are crystal clear on that score.
Mr. Watson, in fact, in carrying out his open door policy, had an unfailing weakness for the worker; his managers rarely won when a worker complaint was surfaced. On the other hand, all of these gentlemen were tough as nails. All were ruthless when their core values of service to the customer and unstinting quality were violated. They combined, then, a caring side and a tough side. Like good parents, they cared a lot - and expected a lot. To oversimplify their characteristics as predominantly "X-ish" or "Y-ish" is almost entirely to miss the point.
In the excellent companies, we see just that. Values are clear; they are acted out minute by minute and decade by decade by the top brass; and they are well understood deep in the companies' ranks.
The clear starting point is acceptance to the limits of rationality, the central theme of the last two chapters. Building on that, four prime elements of new theory would include our observations on basic human needs in organizations: (1) people's need for meaning; (2) people's need for modicum of control; (3) people's need for positive reinforcement, to think of themselves as winners in some sense; and (4) the degrees to which actions and behaviors shape attitudes and beliefs rather than vice versa.
(1) the notion of companies, especially the excellent ones, as distinctive cultures; and (2) the emergence of the successful company through purposeful, but specifically unpredictable evolution.
The Importance of Culture
Some colleagues who have heard us expound on the importance of values and distinctive cultures have said in effect, "That's swell, but isn't it a luxury? Doesn't the business have to make money first? The answer is that, of course, a business has to be fiscally sound. And the excellent companies are among the most fiscally sound of all. But their value set integrates the notions of economic health, serving customers, and making meanings down the line. "Profit is like health. You need it, and the more the better. But it's not why you exist."
The estimate of 3M quoted in Chapter 1- "The brainwashed members of an extreme political sect are no more conformist in their central beliefs" - remember, is the same 3M that's known not for its rigidity but for its unbridled entrepreneurship.
It seems to add up to a small is beautiful, small is effective philosophy among the companies that are good. Repeatedly we found things a lot more divided up and a lot less tidy than they should be according to conventional wisdom. Again, what's going on? Whatever happened to economies of scale? How can these companies be cost-effective?
The excellent companies understand that beyond a certain surprisingly small size, diseconomies of scale seem to set in with a vengeance.
We found divisions, plants, and branches that were smaller than any cost analysis would suggest they should be. We found "simulated entrepreneurship"; here Dana "store managers" are a good example. Decentralization of function was practiced where classic economies would ordain otherwise; that is, Dana's approximately ninety store managers can all have their own cost-accounting system, each do his own purchasing, each control virtually all aspects of personnel policy. In company after company, we found ten-person skunk works that were regularly more innovative than fully equipped R&D and engineering groups with cast of hundreds. We found example after example of internal competition, of various teams working on the same thing, of product-line duplication and overlap, of people experimenting and pointing with pride to their useful mistakes.
We strongly believe that the major reason big companies stop innovating is their dependence on big factories, smooth production flow, integrated operations, big-bet technology planning, and rigid strategic direction setting. They forget how to learn and they quit tolerating mistakes.
Indeed, we believe that the truly adaptive organizations evolves in a very Darwinian way. The company is trying lots of things, experimenting, making the right sorts of mistakes; that is to say, it is fostering its own mutations. The adaptive corporation has learned quickly to kill of the dumb mutations and invest heavily in those that work.
Burton Klein and others have demonstrated in scores of studies that, in industry, it is never the industry leader who makes the big leap. On the contrary, they claim, it is the inventor or small guy who makes the big leap. Our own investigations indicate that most of the big new businesses breakthroughs from McDonald's (example: breakfast menu) have come from small bands of zealots operating outside the mainstream. Indeed, a long-time observer noted that no major IBM product introduction in the last quarter century has come from the formal system. That's not to say that the company doesn't place a big, well-planned bet on a new product or business at some point. Of course it does. It is to say that the mutation itself, even the big one, occurs pretty far down the line and invariably under the tutelage of outside-the-system zealots.
So the evolutionary, somewhat untidy theory of management holds for large - as well as small-scale innovations, and for efficiency as well as effectiveness.
It's not just experimenting; it's thousands of experiments that characterizes these operations. It's not just internal competition; it's doing virtually all resource allocation by internal competition. It's not just small is beautiful; it's hundreds of very small units, a tiny fraction of the technologically attainable size. It's not just customer contact, but a vast array of devices for getting everyone from the junior accountant to the CEO in regular contact with the customer. In short, the core management practices in the excellent companies aren't just different. They set conventional management wisdom on its ear.
A Bias for Action
"Eighty percent of success is showing up" - Woody Allen
"But above all try something" - FDR "Ready. Fire. Aim." - Executive at Cadbury's
We experience some of the same helplessness in describing an excellent company attribute that seems to underpin the rest: action orientation, a bias for getting things done. It's very difficult to be articulate about an action bias, but it's very important to try, because it is a complex world. Most of the institutions that we spend time with are ensnared in massive reports that have been massaged by various staffs and sometimes, quite literally, hundreds of staffers. All the life is pressed out of the ideas; only an iota of personal accountability remains.
However, life in most of the excellent companies is dramatically different. Yes, they too have task forces, for example. But one is more apt to see a swarm of task forces that last five days, have a few members and result in line operators' doing something differently rather than the thirty-five-person task force that lasts eighteen months and produces a 500-page report.
The intensity of communication is unmistakable in the excellent companies. It usually starts with an insistence on informality. At Walt Disney Productions, for instance, everyone from the president on down wears a name tag with only his or her name on it. HP is equally emphatic about first names. Then come the open door policies. IBM devotes a tremendous amount of time and energy to them.
We see a very conscious management effort to do two things: (1) honor with all sorts of positive reinforcement any valuable, completed action by people at the top and more especially way down the line; and (2) seek out a high volume of opportunities for good news swapping.
The astonishing by-product is the ability to have your cake and eat it, too; that is, rich informal communication leads to more action, more experiments, more learning, and simultaneously to the ability to stay better in touch and on top of things.
Chunking & Task Forces
The line officer who has headed one of Exxon's Asian affiliates for the last ten years made a presentation on "strategy" at a recent top management meeting. He reported a remarkable tale of improvement. Was it a tale of shrewd foresight and bold strategic moves? Not in our view. It was a story, instead of a series of pragmatic actions. In almost every one of the ten years, some single problem had been knocked off. One year a blitzkrieg group came through from regional headquarters and helped get receivables under control. Another year, the attack was aimed at closing down some unprofitable segments. In another year, a further blitz effort helped work out a novel arrangement with distributors. It was a classic example of what we have come to call the "theory of chunks." We have come to believe that the key success factor in business is simply getting one's arms around almost any practical problem and knocking it off - now. Exxon in Japan simply executed a series of practical maneuvers. They made each problem manageable. Then they blitzed it. The time associated with each program was fairly short. That it was the real number one priority for that short period of time was unquestioned. They had just gotten a string of practical tasks done right. There is an underlying principle here, an important trait of the action orientation that we call chunking. That simply means breaking things up to facilitate organizational fluidity and to encourage action. The action-oriented bits and pieces come under many labels - champions, teams, task forces, czars, project centers, skunk works and quality circles - but they have one thing in common. They never show up in the formal organizational chart but they are one of the most important parts of the company.
Small groups are, quite simply, the basic organizational building blocks of excellent companies. Usually when we think of organization building blocks, we focus on higher levels of agglomeration - departments, divisions, or strategic business units. Those are the ones that appear on the organization charts. But in our minds, the small group is critical to effective organizational functioning. In Japan, the entire business and social structure is build around the Kacho (section head) and the eight-to-ten person group that typically comprises a section...For this system to work effectively leading section personnel need to know and to identify with company purposes to a higher degree than persons in an American firm. They achieve this through long experience and years of discussion with others at all levels.
Apparently the small group as building block works in the United States as well, although not as natural to our culture. 3M has several hundreds four-to-ten-person venture teams running about. The truth power of the small group lies in its flexibility. New product teams are formed about whether or not they fit exactly into division boundaries (cross functional teams). Appropriately, TI chairman Mark Shepherd calls his company "a fluid, project-oriented environment." (David's Note: notice project centered not division centered, this by itself can change the culture of a company). The good news from the well-run companies is that what ought to work does work.
The effective productivity or new product teams in the excellent companies usually range from five to ten in size. Teams that consist of volunteers, are of limited duration (in one company the task force was not broken up after 3 years!), and set their own goals are usually found to be much more productive than those with the obverse traits.
The Ad Hoc Task Force. The task force can be the epitome of effective chunking. Unfortunately, it can also become the quintessence of hopeless bureaucracy. Like any other tool adopted within a bureaucratic context, it eventually became an end in itself. Paper pushing and coordination took the place of task-directed activity.
The good news is that in organizations in which the context is right - ready acceptance of fluidity and adhocracy - the task force has become a remarkably effective problem solving tool. In effect, it is the number one defense against formal matrix structures. It acknowledges the need for multifunctional problem solving and implementation efforts, but not through the establishment of permanent devices.
Effective groups don't have many members on these task forces, usually ten or less. The point is to limit active task force participation to the principal actors. That wouldn't work in many companies, because it requires trust on the part of those left out that they will be represented well. The task force reporting level, and the seniority of the members, are proportional to the importance of the problem. If the problem is a big one, virtually all members are senior people and the task force reports to the chief executive. It is essential that the people have the charter to make stick whatever they recommend.
The duration of the typical task force is very limited. This is a compelling characteristic. At TI, it's rare if any task force lasts more than four months. Among the exemplary companies, the idea that any task force could last more than six months is repugnant. Membership is usually voluntary. This was explained to us best at 3M: "Look, if Mike asks me to serve on a task force, I will. That's the way we do things. But it had better be a real problem. There'd better be some results. If there aren't, I'm damned if I'm going to waste my time helping Mike again. If it's my task force, I'll try to make sure that those who spend time on it get real value from it.
The task force is pulled together rapidly, when needed, and usually not accompanied by a formal chartering process. Follow-up is swift. We are told that three months after a task force is formed, senior management wants to know what happened as a result. "Nothing; we're still working on a report," is not a satisfactory answer. No staff are assigned and documentation is informal at most, and often scant. Minutes were published in less than twelve hours. Everyone on the project had access to all the information he needed: every programmer, for instance, saw all the material coming from every group of the project (see Base camp or comparable). Nobody who attended the weekly meetings came in an advisory (i.e. staff) role. "Everyone had the authority to make binding commitments" and therefore had personal accountability. Most companies we have observed couldn't conceive of sending twenty key players off for two weeks; or of meeting together for a half day each week. Nor could they conceive of widespread information sharing or meetings at which all participants had the authority to make binding commitments. Project Teams and Project Centers
Most organizations when confronted with an overwhelming strategic problem, either give it to planning staffs or tack it onto the objectives of numerous otherwise busy line managers. If staff is supposed to solve the problem, commitment never develops. If the usual line organization is supposed to solve it, momentum never develops.
The Japanese use this form or organization with frightening alacrity. To build a world-competitive position in, say, robots or micro computing, the Japanese pull key people from various companies into project centers to do the basics of development research. When the key technological problems have been solved, the key people go back to their own companies and compete like crazy with one another. Products are then ready for the world - after they've been honed by tough competition within Japan. Honda's CVCC program is an example. Key people were pulled off all other tasks and put on the CVCC project for several years. Canon did the same thing in developing its Canon AE-1; the company bundled its 200 of its senior engineers together in "Task Force X" for two and a half years until the AE-1 was developed, implemented, and successfully launched in the marketplace.
There are numerous examples of chunking. At the moment, there are four main messages to get across about chunking: 1) Ideas about cost efficiency and economies of scale are leading us into building big bureaucracies that simply cannot act.
2) Excellent companies have found numerous ways to break things up in order to make their organizations fluid, and to put the right resources against problems.
3) All the chunking and other devices will not work unless the context is right. Attitudes, climate, and culture must treat ad hoc behavior as more normal than bureaucratic behavior.
4) The free-wheeling environments in which ad hoc behavior flourishes are only superficially unstructured and chaotic. Underlying the absence of formality lie shared purposes, as well as internal tension and a competitiveness that makes these cultures as tough as nails.
Experimenting Organizations "Do it, fix it, try it," is our favorite axiom. Karl Weick adds that "chaotic action is preferable to orderly inaction." Learning and progress accrue only when there is something to learn from, and then something, the stuff of learning and progress is any completed action.
The most important and visible outcropping of the action bias in the excellent companies is their willingness to try things out, to experiment. There is absolutely no magic in the experiment. It is simply a tiny completed action, a manageable test that helps you learn something, just as in high-school chemistry.
P&G is apparently not afraid of testing and therefore telegraphing its moves. Why? Because, we suspect, the value added from learning before the nationwide launch so far exceeds the cost of lost surprise. Charles Phipps, of Texas Instruments, describes the company's early success, its willingness to be bold and daring. He captures the spirit of the experiment - TI's ability to learn quickly, to get something out in the field. "They surprised themselves: as a very small company, $20 million, with very limited resources, they found that they could outmaneuver large laboratories like Bell Labs, RCA, and GE in the semiconductor area, because they'd just go out and try to do something with it, rather then keep it in the lab. Example after example reflected the same experimenting mentality.
Robert Adams, head of R&D at 3M, puts it this way: "Our approach is to make a little, sell a little, make a little more." McDonald's has more experimental menu items, store formats, and pricing plans than any of its competitors. P&G is, as we have said, especially well known for what one analyst calls its "testing fetish." At the very successful Ore-Ida company, market tests, taste tests, pricing tests, and consumer panels are under way continuously, and the chief executive is as familiar with these tests and their results as he is with the financials.
At HP, it's a tradition that product-design engineers leave whatever they are working on out on top of their desk so that anyone can play with it. Walking around is the heart of the philosophy for all employees, and the trust level is so high that people feel free to tinker with these things their colleagues are inventing.
David Ogilvy like ways says that there is no more important word than "test." If you pretest your product with consumers, and pretest your advertisement, you will do well in the marketplace. Manufacturers who don't test market their products incur the colossal cost of having their products fail on a national scale, instead of dying inconspicuously and economically in test markets. Test your media, headlines, illustrations, commercials. Never stop testing and your advertising will never stop improving.
Have you heard of the zoom lenses? One of the greatest advantages of being new in a company is that you are thoroughly unaware of what cannot be done. I thought a zoom camera was something that you used for football games. One day I was in the lab, and there was a zoom lens. I had never seen one in my life and I put it up to my eyes, and -well, it is a very dramatic thing. I asked, "What would it cost to make a camera for me?" They said, "Just one? Do you mean a crude modification? I think we would probably spend $500 on it." At a dinner party that night, I put this zoom lens on the piano and I asked everybody coming in to participate in a very sophisticated piece of market research; namely, to put the camera to their eye. To the man, the reaction was extraordinarily enthusiastic: "My, this is marvelous; I've never seen anything like this in my life." We did this for about $500....If more industry would try out new ideas on a low-cost basis, perhaps the expectations of what the market will bear would go up.
(Note: This is a consistent theme of Drucker that technology within an industry is usually invented in another industry. The transferring of technology requires some testing and tinkering with technologies in other industries.)
When "touch it", "taste it", "smell it" become the watchwords, the results are most often extraordinary. Equally extraordinary are the lengths to which people will go to avoid the test-it hands on experience. Fred Hooven, protégé of Orville Wright, holder of thirty-eight major patents, and senior engineering faculty at Dartmouth, describe a ludicrous, yet all-too-typical cause: "I can think of three instances in my career in which my client was making no progress on a complicated mechanical problem, and I insisted that the engineers and the technicians be put in the same room. In each case the solution came rapidly.
So, via experimentation (getting a good feel for the product) it is much easier for people to think creatively about a product, to be creative about product uses, if a prototype, which is to say a low level of abstraction, is in hand. Thus, no amount of market research can predict certain phenomena. That is why HP puts such emphasis on having its engineers leave their new experimental prototypes out where others can fool around with them. That is why Peterson's dinner-party market research on the zoom lens was, in fact, the most sophisticated marketing research imaginable.
Speed and Numbers Proactivity and the sheer numbers of experiments are critical ingredients to success through experimentation. Indeed, an analysis of Amoco, recently revitalized to become the top U.S. domestic oil finder, suggests just one success factor: Amoco simply drills more wells. We found the same phenomenon in minerals exploration. The critical difference is the amount of drilling that they do.
It has been my observations that people often work on something for years and then some urgent situation comes up...and it suddenly comes through. Now, in one case we had a 8mm electric eye movie camera in development and we anticipated it would take about three years to complete. Then one day the marketing vice president decided to try a different technique. He took something down to the engineers and said, "I just got an announcement that our competitors have an 8 millimeter electric eye camera!" Within 24 hours they had a completely different approach. I wonder just what is the role of urgency? (Note: See Sense of Urgency)
With most projects or experiments, no matter how many milestones you set all you are really buying with the money invested is more information. You never know for sure until after the fact whether it has all been worthwhile or not.
They break them up into manageable chunks; review quickly; and don't over-manage in the interim. Making it work simply means treating major projects as nothing more than experiments, which is indeed what all of them are, and having the poker player's mental toughness to fold one hand and immediately start another whenever the current hand stops looking promising!
Cheap Learning: Invisibility and Leaky Systems
Experimentation acts as a form of cheap learning for most of the excellent companies, usually proving less costly - and more useful - than sophisticated market research or careful staff planning.
Before we let an idea get emasculated, and before we let any thoroughly rational appraisal of the idea convince us that it will not work, we ask ourselves another questions. Is there any way that we can experiment with this idea at low cost? The experiment is the most powerful tool for getting innovation into action and probably is not as widely used in American industry as it should be. The point I am trying to make is that if we can get the concept of the experiment built into our thinking and thereby get evidence on a lot of these "can'ts," "won'ts," and "shouldn'ts" more good idea will be translated into action.
Let me give you an example. One day someone walked in with an idea that, on the surface, was "preposterous". Those who have read the Harvard marketing casebooks will know every reason why this will not work. Rather than say, "Gentlemen, this idea is preposterous," we tried to build in this notion: "Let's examine some reasons it might work." "What would it cost to try out the idea?" The cost was only about $10,000. The point is that we could have spent over $100,000 worth of time over-intellectualizing this problem. Nine out of ten experts will tell you the idea just will not work. Yet it did and is now the basis of an important and profitable new business for us. It is possible for us all to get a little pompous on the powerful of an intellectual, rational approach to every idea.
Another important property of the experiment is "bootlegging". There the tradition of squirreling away a little bit of money, a little bit of manpower, and working outside the mainstream of the organization is time-honored. Huge GE successes, such as those mentioned earlier in engineered plastics and aircraft engines, have resulted directly from bootlegging. The process has been essential to GE. In fact, a recent analysis suggested that virtually every major GE breakthrough in the past couple of decades had its origins in some form of bootlegging.
Finally, and most important is the user connection. The customer, specially the sophisticated customer, is a key participants. Each experiment is with a user, on a user's premises. The McDonald's experiments, obviously, are all done in conjunction with users - the customers. Many companies, on the other hand, wait until the perfect widget is designed and built before subjecting it - late in the game and often after millions of dollars have been spent - to customer scrutiny. The Digital, McDonald's, HP, 3M magic is to let the user see it, test it, and reshape it, very early!
The Experimenting Context
Just as we have said ad hoc systems won't work if context is wrong, same is with experimentation. Management has to be tolerant of leaky systems; it has to accept mistakes, support, bootlegging, roll with unexpected changes, and encourage champions.
One store decided to do the following: I'm gonna bring in the regional manager, merchandisers, buyers, and other store managers. I want to know the sum total of our know-how by taking a sampling of a group of people dedicated to finding out what they can do thinking together. After gathering the information they tested the new concepts on the store and then subsequently rolled out all the successful changes to all the other stores.
Similarly, McDonald's introduction of the breakfast menus started in the boondocks. A few franchisees picked it up and it then spread, over a two-year period, like wildfire. It now accounts for 35 to 40 percent of McDonald's revenues.
The essential idea is to focus immediately on tangible results - rather than programs, preparations, and problem-solving - as the first step in launching performance improvement thrusts...People must ask different kinds of questions...Not, "What is standing in the way?" but rather, "What are some things we can accomplish in the next little while?...Instead of trying to overcome resistance to what people are not ready to do, find out what they are ready to do...Almost inevitably, when the managers successfully complete a project, they have many ideas about how to organize subsequent steps.
Schaffer describes, a la Neaman in Indianapolis, how to pick a manageable task. He suggests honing until the doable emerges. "Select one branch whose manager seems interested in innovation and progress. Work with a team of sales people to increase sales on a FEW selected lines, perhaps in only some selected market sectors, by a specific percent in a matter of a month or six weeks. As they see tangible results...recommend how to expand the test".
The experimenting process is almost revolutionary. It values action above planning, doing above thinking, the concrete above the abstract. It suggests, in a very Zen-like fashion, going with the flow: doable tasks, starting with the easiest and most ready targets, looking for malleable champions rather than recalcitrant naysayers. The image of a host of modest risk takers at Bloomingdales, 3M, etc. come to mind. The whole notion of risk taking is set on its ear. IT becomes risky in the excellent companies not to take a risk, not to "step out and do a little something." The management task becomes one of nurturing good tries, allowing modest failures, labeling experiments after the fact as successes, leading the cheers, and quietly guiding the diffusion process.
Simplifying Systems P&G systems are small in number and simple in construction, in harmony with the institution's no-nonsense approach to execution. At P&G the language of action - the language of the systems - is the fabled one page memorandum.
We recently had breakfast with a P&G brand manager and asked if the one-page memo legend was really true. "I submitted a set of recommendations to take a few changes to my brand's strategy. It ran a page and a quarter and got kicked back. It was too long." The tradition goes back to Richard Deupree, past president: He sometimes would add, "I don't understand complicated problems. I only understand simple ones." When an interviewer once queried him about this, he explained, "Part of my job is to train people to break down an involved question into a series of simple matters. Then we can all act intelligently." Ed Harness, P&G's recently retired chairman, echoes the tradition: "A brief written presentation that winnows fact from opinion is the basis for decision making around here." A one-page memo helps a lot. In the first place, there are simply fewer numbers to debate, and the ability to cross-check and validate twenty on one page, say, is easier than twenty times one hundred. It FOCUSES the mind. Moreover, one stands on display. You can't reasonably hold someone responsible for getting a number wrong deep in Appendix 14. If there are only twenty numbers, on the other hand, accountability goes up automatically - and breeds reliability. Sloppiness is simply inconsistent with the one-page memo.
John Steinbeck once said that the first step toward writing a novel is to write a one-page statement of purpose. If you can't get the one page clear, it isn't likely you'll get far with the novel. We are told that it is fairly conventional wisdom in the writing trade, but it apparently eludes most businessmen. It's little wonder that the key assumptions get lost in a 100-page investment proposal. The logical is probably loose. The writing most likely is padded. The thinking is almost by definition shoddy. And, worse, the ensuing debate about the proposal among senior executives and reviewers is apt to be similarly unfocused.
A financial analyst once said of P&G, "There are so thorough it's boring." Another added, "They are very deliberate, exacting company." Outsiders wonder how they can be all the thorough, deliberate, and exacting if reports are only a page long. Part of the answer lies in the struggle to get it all on that one page. Tradition has it that the typical first memo by an assistant brand manager or young brand manager requires at least fifteen drafts. Another part of the answer is that they have plenty of back-up analysis available, just like everyone else. The difference at P&G is that they don't inflict all those pages on one another. Still another compelling feature of the one-page cult is .... less paper!
Charles Ames, talking about his earlier experience at Reliance, speaks of the love affair with complex systems that often hides an inability to manage the basics: "We had planning systems of every sort from long-term to short-term. But we couldn't predict what we were going to do the next months. I dismantled the five-year planning system and ran the company on thirty-day systems. Only then did we learn to get the numbers right. Eventually we built back up to a long-term system, though never back to the epic proportions of the one we'd had originally.
An article on Dana states: "Although head office does not require much in the way of written reports, it does need a certain minimum of information. The most important item is the revenue figure. In the old days it used to come up, along with much else, in an actual against budget tabulation by the 20'th of the following month. Under the current system, the division transmits to head office their invoice total and approximate profit earned at the end of each working day!
Virtually any system can be cleaned up and made simple. Some watchwords at TI are: "More than two objectives is no objectives". Most MBO systems we're run across include up to thirty annual objectives for a single manager. It's obvious that no one gets more than a handful of activities done every few months. We gradually trimmed, and trimmed, and trimmed. Now each manager has one milestone a quarter. That's it. You can - and we do - expect someone to get one thing done. Others have done the same. HP's John Young says: "In our strategic reviews, the critical point is the division manager's three to five objectives (for the years).
The Action Orientation There is no more important trait among the excellent companies than an action orientation. It seems almost trivial: experiments, ad hoc task forces, small groups, temporary structures. Excellent companies don't give in and create permanent committees or task forces that last for years. They don't indulge in long reports. Nor do they install formal matrixes. They live in accord with the basic human limitations we described earlier: people can only handle a little bit of information at one time, and they thrive if they perceive themselves as even somewhat autonomous (and if they feel they are completing their given objectives).
The major complaint about organizations is that they have become more complex than is necessary. Refreshingly, the excellent companies are responding by saying: If you've got a major problem, bring the right people together and expect them to solve it. The "right people" very often means senior people who "don't have the time." But they do, somehow, have the time at excellent companies. They have the time in these institutions because these companies aren't transfixed with organizational charts or job descriptions or that authority exactly matches responsibility. Ready. Fire. Aim. Learn from your tries. That's enough.
Close to the Customer
"Probably the most important management fundamental is staying close to the customer. In too many companies the customer is being ignored and is a bloody nuisance whose unpredictable behavior damages carefully made strategic plans!" - Lew Young, Editor-In-Chief, Business Week
That a business ought to be close to its customers seems a benign enough message, and obvious to many. Still, many companies have yet to embrace this. The good news is that in the excellent companies the customers intrude into every nook and cranny in the business - sales, manufacturing, research, accounting. A simple message permeates the atmosphere. All business success rests on something labeled a sale, which at least momentarily weds company and customer.
"The only way you're going to survive in the long haul is if everybody's out there scratching, looking for things to do to get the next product generation into customer's premises." - John Doyle (head of R&D at HP).
Being customer-oriented doesn’t mean that excellent companies are slouches when it comes to technological or cost performance. But they do seem to us more driven by their direct orientation to their customers than by technology or the desire to be the low-cost producer. Take IBM, for example. It is hardly far behind the times, but most observers will agree that it hasn't been a technology leader for decades. Its dominance rests on its commitment to service.
The point of this chapter is that winners seem to focus especially on the revenue-generation side. The one follows the other. (Note: Costs can be benchmarked and brought to part with competition).
IBM is fanatic about its service beliefs. In most companies, "assistant to" functionaries are usually paper shufflers. Not so at IBM. There, some of the best salesmen are made assistant to the company's top officers. While people are in this position, they spend their entire, typical three-year stint doing only one thing - answering every customer complaint within twenty-four hours.
Rodger states that every proposal to a customer should be "overwhelmingly cost-justifiable from the customer's standpoint. An IBM's salesmen always sells the cheapest product that will get the job done." Rodgers comments that IBM is "customer and market-driven, not technology driven." He says he wants salesmen to "act as if they were on the customer's payroll." Finally, he notes that "getting the order is the easiest step; after-sales service is what counts."
To make sure it is in touch, IBM measures internal and external customer satisfaction on a monthly basis. These measures contribute heavily to compensation, especially for senior management. Employee attitude surveys are taken every ninety days, and a check is kept on employee perceptions similar to the way customer service is maintained. The corporate officers at IBM still make sales calls with great regularity. In New York one of us recently ran into a senior financial officer who makes customers calls and insists that all his people do so as well: "How's someone going to design a receivables policy if he doesn't know the customer?" Chairman John Open underscores the point: "You have to remember who pays the bills. No matter what the primary discipline - finance, manufacturing - you have to know and experience the excitement of sales." (Note: You can also gather this information by utilizing line workers, in this case salesmen, in helping shape policies all across the company, for example the reactions of customers to the receivables policy can be gaged with the help of salespeople on a cross functional team).
There is a tough side to IBM's emphasis on service. Account representatives have "full liability" for the equipment in place. For example, suppose some of a client's IBM equipment is taken out, you would still be docked even if the predecessor had been the sales rep for the last ten years. Needless to say, this system reflects the depth of IBM's commitment to after-sales service and the important of continuing customer relationships. Other tough systems include "joint loss reviews." Regional and branch people are brought in monthly to discuss account losses. In addition, the president, chairman, and senior officers all receive daily report of lost accounts...Ex-IBMers are astonished by the absence of such vigorous systems in their new companies. One who is now an executive vice president at a competitor commented recently with dismay, "I can't believe it. The chairman doesn't even keep a list of our own top hundred customers." (Not to mention, the chairman doesn't even keep a customer lost list.)
It starts at IBM, with role models, Wesley Cantrell, the president of Lanier exudes customer orientation. The top Lanier executives all make sales calls once a month. Lanier's customer orientation also stresses product simplicity and "friendliness."
Perhaps our favorite example of service overkill is Frito-Lay. What is striking about Frito is its nearly 10,000 person sales force and its "99.5 percent service level." In practical terms, what does it mean? It means that Frito will do some things that in the short term clearly are uneconomic. It will spend several hundred dollars sending a truck to restock a store with a couple of $30 cartons of potato chips. You don't make money that way, it would seem. But the institution is filled with tales of salesmen braving extraordinary weather to deliver a box of potato chips or to help a store clean up after a hurricane or an accident. It is a cost analyst's dream target. You can always make a case for saving money by cutting back a percentage point or two. But Frito management, looking at market shares and margins, won't tamper with the zeal of the sales force. Frito simply lives for its sales force. The system succeeds because it supports the route salesmen, believes in him, and makes him feel essential to its success.
Nemeroff finds three principal themes in an effective service orientation: (1) intensive, active involvement on the part of senior management (2) a remarkable people orientation (3) high intensity of measurement and feedback.
Of another aspect of top management interviewed reveals a crucial and subtle point: "They believe they must maintain a long-term view of service as a revenue builder." This point is all too often missed in big American companies. Profit objectives, while very necessary, are internally focused and certainly do not inspire people by the thousands way down the line. Service objectives, on the other hand, are almost without fail meaningful to down-the-line employees. A strong sense of personal accountability among down-the-line employees is crucial. And one knows that this has been accomplished in the field when one says, "Each one of us is the company." Inseparable from this is the fact that employees satisfaction is clearly evidenced in customer satisfaction. One mirrors the other.
For example, intense management involvement is highlighted at Disney by an annual week-long program called "cross utilization." The program entails Disney executives leaving their desks and going to sell popcorn, ice cream, or take on one of the 100 on-stage jobs that make the entertainment park come alive.
The service-through-people theme at Disney starts, as it does in many of the excellent companies, with a special language. There is no such thing as a worker at Disney. The employees out front are "cast members" and the personnel department is "casting". Whenever you are working with the public, you are "on stage." People are brought into the culture early. Everyone has to attend Disney University and pass "Traditions I" before going on to specialized training. (Note: there is a very conscious emphasis on culture).
The systems support for people on stage is also dramatic. For example, hundreds of phones hidden in the bushes serve as hot lines to a central question-answering service. And the amount of effort put into the daily clean-up amazes even the most calloused outside observers.
Whether or not they are as fanatic in their service obsession as these top companies, all excellent companies have a very powerful service theme that pervades the institutions. In fact, one of the most significant conclusions about the excellent companies is that, whether their basic business is metal bending, high technology, or hamburgers, they have all defined themselves as service businesses.
Over measurement of service may actually detract from it, he adds. One loses sight of the individual customer. Suppose you have a "ninety-five percent standard" McGill asks, "What about the five percent? Even though one hundred percent may be theoretically unattainable, the business ought to act is if any failure is intolerable. As David Ogilvy reminds us: "In the best institutions, promises are kept no matter what the cost in agony and overtime." It holds for advertising, for computers, for typewriters, for amusement rides, and for pretzels.
Finally, we observed that customer orientation is an intense motivator for employees. One employee was especially turned on. I only later realized the key. He was the only one who had real "customer contact." He saw ships and the people who drove them. The numbers weren't abstractions to him. His actions had measurable, better yet tangible, effects. In retrospect, there are hundreds of things I could have done to have made that experience commonplace for all my people.
In our experience with the better-run companies, there is no part of an enterprise that can't be touched by the customer. Caterpillar sends people from the plants out to the proving grounds to watch the big machines at play. Citibank lets "back room" operations people regularly visit customers and account officers to solve operational problems directly.
Quality Obsession
Another company that overkills on the quality dimension is McDonald's. For years, its theme has been "Quality, Service, Cleanliness, and Value." Ray Kroc says, "If I had a brick for every time I've repeated the phrase : Quality, Service, Cleanliness, and Value, I think I'd probably be able to bridge the Atlantic Ocean with them." Since the early days of the organization, all of its stores have been regularly measured against these four criteria. Consistent failure to meet McDonald's high QSCV standards can get store managers fired or cause a loss of franchise. Ray Kroc and other members of the top management team are legendary for personally inspecting store for these four qualities. McDonald's is equally fanatical about cleanliness. Talk to an ex-employee about what he or she remembers best, and almost invariably they'll tell you about constantly cleaning.
Quality and reliability are not synonymous with exotic technology. It was especially interesting, and surprising, to us to find that even in higher technology businesses, reliability was always preferred over sheer technical wizardry. The star performers conscious sacrifice an unproven technology for something that works. We call the phenomenon "second to marketplace and proud of it." Here is an example: A competitor's new product comes on the market and HP engineers, when making service calls on HP equipment, ask their customers what they like or dislike about the new product, what features the customer would like to have... And pretty soon HP salesmen are calling on customers again with a new product that answers their needs and wants. The result: happy and loyal customers.
Caterpillar is another example. It has built its reputation by letting other companies go through the trial and error process of introducing new products. Caterpillar later jumps in with the most trouble-free product on the market. Indeed, Caterpillar products do not usually sport the lowest price tag. The company relies, instead, on quality and reliable service to woo customers.
Now the excellent companies' apparent satisfaction with being second shouldn't fool anyone about their technical abilities. What distinguishes them is that their bias is toward making technology work for the consuming public. New products that make it through their screen are, above all, aimed at consumer needs.
The impossible becomes possible in the excellent companies. Is a 100 percent quality or service program plausible? Statistically, no it's not possible. On the other hand, a friend at American Express reminds us, "If you don't shoot for one hundred percent, you are tolerating mistakes. You'll get what you ask for."
As is often the case, the rational model leads us to get "hard" and "soft" mixed up on this one too. We usually think of principal barriers to entry as concrete and metal - the investment cost of building the plant, etc. For the excellent companies, the real barriers to entry are the 75-year investment in getting hundreds of thousands to live service, quality, and customer problem solving at IBM, or the 150-year investment in quality at P&G.
Nichemanship
The customer orientation is by definition a way of "tailoring" a way of finding a particular niche where you are better at something than anybody else. A very large share of the companies we looked at are superb at dividing their customer base into numerous segments so they can provide tailored products and service. In doing so, of course, they take their products out of the commodity category and then they charge more for them.
3M is the classic player of the niche game. Its chairman Lew Lehr says, "Our organization does not believe in making just a few bets. Our people make hundreds of little bets in the form of new products for specialized markets."
Here is but one example: We recently talked to the chief executive of a $50 million Richmond, Virginia printing company. It is a leader in high-volume offset printing, a modest-sized niche served by a variety of 3M products. 3M decided it wanted to really learn to do business with the segment the company represented. It attacked in full strength. Sales teams descended from St. Paul together with engineers and technical people to try to figure out their problems. Then they invited the CEO and some of his principals to St. Paul to lecture in several division on how 3M could best serve them. What we found especially attractive about the incident was not only the intensity of the 3M approach but also its flexibility. 3M teams from various product areas all responded to the opportunity. There were no turf battles and no bureaucratic delays. While the 3M magic goes much deeper, as we will see, the attitude that it will attack any niche, no matter what size, is astonishing.
We find five fundamental attributes of these companies that are close to the customer through niche strategies: 1) Astute technology manipulation (note: this also involves moving technology from one industry to another) 2) Pricing Skill 3) Better segmenting of customer base 4) A problem-solving orientation 5) A willingness to spend in order to discriminate
Niche people are also superb at pricing mainly on a value basis. We're providing a new tool that is some kind of labor saver and we expect the market to pay what it's worth. (Note: they believe in the opposite of Drucker's mentality and believe that high premiums should be sought even if it creates an umbrella for competition.)
Nichemanship is frequently accompanied by a problem solving mentality. IBM trains its salesmen not to be salesmen but customer problem solvers. 3M has always done the same. A General Instruments sales executive captures the spirit of getting to know the customer well enough to really solve his problems: I remember my first job. I spent forever getting to know a small handful of customers really well. It paid off handsomely. I came in at 195% of quota, tops in my division. A fellow at corporate called me and said, "Good job, to be sure, but you average 1.2 sales calls a day and the company average is 4.6. Just think of what you could sell if you could get your average up to pair." You can guess my response after I came down off the ceiling, I said, "Just think what the rest could sell if they could get their calls down to 1.2."
The niche people are willing to spend to discriminate. Says Edward Finkelstein of Macy's, "So long as you spend what's necessary to make a store attractive, you'll prosper. Another example is a successful catalogue house overspends on data accumulation. "Using our data better, we can open a personal store for each customers." an executive says.
How Cost-Oriented are they?
The excellent companies tend to be more driven by close-to-the-customer attributes than by either technology or cost. As the figure on the opposite page illustrates, we find high-performing companies in different industries to be mainly oriented to the value, rather than the cost, side of the profitability equation.
Compared to its truly superb performance of the last couple of decades, TI has been struggling a little in the last few years and has turned its sights outward again, toward marketing. Too much attention to cost causes an internal shift in attention that seeps in slowly, almost unobserved.
J&J, in our minds, is uniquely a niche company. The firm consists of about 150 nearly independent companies, each of which has a primary responsibility to get new products out the door.
Listening to the Users
The excellent companies are better listeners. Proctor & Gamble was the first consumers good company to put a toll-free 800 number on its packaging. In its 1979 annual report, P&G says it got 200k+ calls on that 800 number, with customer idea or complaints. P&G responded to every one of those calls and the calls were summarized for board meetings. Insiders report that the 800 number is a major source of product improvement ideas. (Note: Fast forward a couple decades to see: MyStarBucksIdea.com).
The best companies are pushed around by their customers and they love it. Who in Levi Strauss invented the original Levi's jean? Nobody, in 1873, for $68 Levi's obtained the right to market steel-riveted jeans from one of its users, Jacob Youphes, a Nevada buyer of Levi's denim. When did 3M's Scotch Tape business take off? When a salesman, not the technical people, invented a handy desk-top dispenser for what had previously been a narrow use industrial product.
A top executive at Allen-Braldey notes, "We won't try anything unless we find a user who will cooperate with us in an experiment." In one successful high tech company we talked with, the head of R&D takes a two-month "summer vacation" to travel exclusively to user locations, carefully surveying what customers do with his company's products and what their figure needs might be.
These stories would be of little interest if they didn't stand in such marked contrast to most management practice. All too often the product is designed in a vacuum, the pipedream of engineers who love the technology but may never have seen living, breathing customers use their company's products. So the excellent companies are not only better on service, quality, reliability, and finding a niche. They are also better listeners.
Allen Braldey was driven to test robotics not by their central labs, but by their giant customers. IBM was really driven to distributed processing by its lead users, notably Citibank. The top "better listeners" then pay especially close attention to their lead users.
In summary, Freeman and his colleagues noted: "Successful firms pay more attention to the market than do failures. Successful innovators innovator in response to market needs, involve potential users in the development of the innovation, and understand user needs better." The excellent companies clearly do more and better competitor analysis than the rest. It's just that the work is not done by ivory tower staffers, reading or producing abstract reports.
Autonomy and Entrepreneurship
"The new idea either finds a champion or dies." - Edward Schon, MIT The most discouraging face of big corporate life is the loss of what got them big in the first place: innovation...According to Inc., a National Science Foundation study finds that "small firms produced about four times as many innovations per research and development dollar as medium-sized firms and about twenty-four times as many as large firms." Studying the same subject, the economist Burton Klein found that major firms are seldom if ever responsible for the major advances in their industries. The relationship of objective material resources to research effectiveness is... generally minimal and sometimes negative.
On the other hand, we have the excellent companies. They are big. They have enviable records of growth, innovation, and consequent wealth. Perhaps the most important element of their enviable track record is an ability to be big and yet to act small at the same time. A concomitant essential apparently is that they encourage the entrepreneurial spirit among their people, because they push autonomy remarkably down the line: Dana with its "store managers," 3M with its venture teams, TI with over ninety Product Customer Centers.
Many of these companies were proud of their "skunk works," bands of eight to ten zealots off in the corner, often out producing product development groups that numbers in the hundreds. It eventually became clear that all of these companies were making a purposeful trade-off. They were creating almost radical decentralization and autonomy, with its attendant overlap, messiness around the edges, lack of coordination, internal competition, and somewhat chaotic conditions in order to breed the entrepreneurial drive. They had given up a measure of tidiness in order to achieve regular innovation. We felt that there must be something more than radically decentralizing and then urging the troops to "be creative, damn it" and it turn out there was..
The Champion All the activity and apparently confusion we were observing resolves around fired-up "champions" and around making sure that the potential innovator, or champion, comes forward, grows and flourishes - even to the extent of indulging a little madness. For, as Tait Elder, the head of the New Business Division at 3M told us flatly, "We expect our champions to be irrational."
Recently, TI conducted a fascinating survey, reviewing its last fifty or so successful and unsuccessful new-product introductions, and found that one factor marked every failure: "Without exception, we found we hadn't had a volunteer champion. There was someone we had cajoled into taking on the task."
Number one is the presence of a zealous, volunteer champion. After that comes market potential and project economics in a distinct second and third. In fifteen of the twenty-four cases that were successful, fourteen involved a clear champion, while of the nine failures, just three were champion-led. To our surprise, more over, the Japanese and American data matched. We had expected few champions in the collectivist Japanese environment. Yet 100 percent (six out of six) Japanese successes had a champion, and three of the four Japanese failures had none.
Chairman Vincent Learson created this style at IBM during the company's most innovative period. He encouraged different groups to bring forward proposed designs for 'performance shoot-outs' against competing proposals. It was, in fact, difficult to find any successful major IBM innovation that derived directly from formal product planning rather than the championship process.
One may ask, if so many voices agree that champions are pivotal to the innovation process, why don't companies go out and hire or develop more of them? Part of the answer seems to be that the champion's working style is at odds with the way most businesses manage. Most corporations fail to tolerate the creative fanatic who has been the driving force behind most major innovations. Innovations, being far removed from the mainstream of the business, show little promise in the early stages of development. The champion is seen as obnoxious, impatient, egotistical, and perhaps even irrational and is therefore not hired or promoted.
The trouble with much of the advice business gets today about the need to be more vigorously creative is that its advocates often fail to distinguish between creativity and innovation. Creativity is thinking up new things. Innovation is doing new things... A powerful new idea can kick around unused in a company for years, not because its merits are not recognized, but because nobody has assumed the responsibility for converting it from words into action. Ideas are useless unless used. The proof of their value is only in their implementation. Until then, they are in limbo.
If you talk to the people who work for you, you'll discover that there is no shortage of creativity or creative people in American business. The shortage is of innovators. All too often, people believe that creativity automatically leads to innovation. It doesn't. Creative people tend to pass the responsibility for getting down to brass tacks to others. They are the bottleneck. They make none of the right kind of effort to help their ideas get a hearing and a try...
The fact that you can put a dozen inexperienced people in a room and conduct a brainstorming session that produces exciting new ideas show how little relative importance ideas themselves have...Idea men constantly pepper everybody with proposals and memos that are just brief enough to get attention, to intrigue and sustain interested - but too short to include any responsible suggestions for implementation. The scarce people are the ones who have the know-how, energy, daring, and staying power to implement ideas... Since business is a "get-things-done" institution, creativity without action-oriented follow-through is a barren form of behavior. In a sense, it is irresponsible.
The champion is not a blue-sky dreamer, or an intellectual giant. The champion might even be an idea thief. But, above all, he's the pragmatic one who grabs onto someone else's theoretical construct if necessary and bull headedly pushes it to fruition.
Our observations have led us to identify three primary roles : the product champion, the execution champion, and the godfather (we've intentionally left out the technical innovator, or inventor because we don't view the initial technical work as a principle variable in innovation).
The product champion is the zealot or fanatic in the ranks who we have described as being not a typical administrative type. On the contrary, he is apt to be a loner, egotistical, and cranky. But he believes in the specific product he has in mind.
The successful executive champion is invariably an ex-product champion. He's been there and has seen what it takes to shield potential practical new ideas from the organization's formal tendency toward negation.
The godfather is typically an aging leader who provides the role model for championing.
Playing the Numbers Not surprisingly, most champions fail most of the time. Innovation success is only achieved by way of a numbers game. The only way of assuring more "hits" is to increase the number of "at bats".
The numbers story would hardly be worth telling were it not for the "home-run only" mentality that marks most businesses, even oil. The home-run mentality proceeds from a misplaced belief in planning, a misunderstanding of the disorderly innovative process, a misguided trust in large scale, and an inability to comprehend the management of organized chaos and lots of base hits.
Support for Champions. Champions are pioneers, and pioneers get shot at. The companies that get the most from champions, therefore, are those that have rich support networks so their pioneers will flourish. This point is so important it's hard to overstress. No support systems, no champions. No champions, no innovations.
What strikes us most about the excellent companies is the completeness of their support systems for champions. In fact, the excellent companies are structured to create champions. In particular, their systems are designed to "leak" so that scrounging champions can get something done.
They often do this in "skunk works." At a $5 billion survey company, for example, three of the last five new product introductions have come from a classic skunk works. It consists at any time of eight to ten people, and is located in a dingy second-floor loft six miles from the corporate headquarters. Skunk works are notoriously pragmatic.
The entire socialization process at P&G makes the product champion sound like a great hero. Time and again the system of myths and tales lauds the valiant brand manager who has challenged those many years his senior and repositioned his brand against all odds (and in competition with all the other brand managers). In our view, there is only one trick to making positions like this work. But it's a tough one. It involves socializing managers to believe they are would-be champions, yet at the same time maintaining very substantial control where it counts.
Many companies introduce brand or product management schemes trying to copy P&G. But what they seldom take time to do is create the mythology, role models, and structure of heroes that transfer the burden (commitment, fire) onto the brand managers. Or if they do transfer the burden onto their brand managers, then they don't play the other half of the game - providing the incredibly tight and regular support systems that silently prop up the P&G brand manager and aid him in getting his job done. Yet with the disciplined abetted by the vertical brand-management structure and the small number of "deeply grooved" systems, his autonomy is in reality extraordinarily limited. It's some juggling act.
The message from the excellent companies we reviewed was invariable the same. Small, independent new venture teams. Like 3M, the name of the name is not to grow 'bigger divisions' but to span or "hive off" new ones. As such, each division is responsible for its own accounting, personnel activities, quality assurance, and support of its product in the field.
Internal Competition. A large share of new P&G products is likely attributable to the intensity of brand managers' desires to be judged winners. Each year's brand managers become a "class" and competition among classes is fierce. IBM is the acknowledged master in fostering competition among would-be product ideas. The company formally encourages bootlegging and multiple approaches to the same problem. Then, at some point, it conducts performance "shootouts" among the competing groups - real performance comparisons between working hardware and software. TI puts the competitive pressure on by forcing the marketers and product designers to go straight to the customer, with a car and sales kit, to make the first sales presentation of new prototypes. It is a trial by fire.
Internal competition as a substitute for formal, rule and committee driven behavior permeates the excellent companies. It entails high costs of duplication - cannibalization, overlapping products, overlapping divisions, etc. Yet the benefits, though less measurable, are manifold, especially in terms of commitment, innovation, and a focus on the revenue line.
Intense Communication 1. Communication systems are informal. At 3M there are endless meetings, though few are scheduled. Most are characterized by people casually coming together - from different disciplines - to talk about problems. The campus like setting at St. Paul along with other cultural settings adds up tot he right people being in touch with one another very regularly.
2. Communication intensity is extraordinary. The questions are unabashed, the flow is free, and everyone is involved. Nobody hesitates to cut off the chairman, president, a board members. And how this contrasts with the behavior of most companies we encounter! Senior people, who have sometimes worked together for twenty years or more, won't attend gatherings unless there are formal agendas. They can't seem to do anything other than watch presentations and then politely comment on the contents.
3. Communication is given physical supports. People from different disciplines are close by so that communication can flow freely (just like in the St. Paul campus situation). It's no coincidence that so few of our best performers come from NYC, Chicago, and LA. Instead its Deere's complex in Moline, Caterpillar's Peoria facility, etc.
4. Forcing Devices. Several companies such as IBM appoints "fellows" that are allowed to use resources from all across the company to help with innovations.
5. The intense, informal communication system acts as a remarkably tight control system. 3M is a leading example: "Of course, we are under control. No team can spend more than a few thousand dollars without a whole bunch of people looking over their shoulders, not kicking them around, but being genuinely interested in how it's going." We believe that similar "controls" throughout the excellent companies are truly tight ones. You can't spend much time at one of these companies without lots of people checking up informally to see how things are going.
Tolerating Failure
Tolerance of failure is a very specific part of the excellent company culture - and that lesson comes directly from the top. Emerson's Chales Knight argues: "You need the ability to fail. You cannot innovate unless you are willing to accept mistakes."
The big failures, the ones that really leave scars, are usually the ones in which a project was allowed to go on for years without serious guidance.
Champions don't automatically emerge. They emerge because history and numerous supports encourage them to, nurture them through trying times, celebrate their successes, and nurse them through occasional failures. But given the supports, the would-be champion population turns out to be enormous, certainly not limited to a handful of creative marvels.
Peter Drucker observes, "Whenever anything is being accomplished, it is being done, I have learned by a monomaniac with a mission." What keeps 3M employees motivated is the knowledge that anyone who invents a new product or promotes it when others lose faith has a chance to manage the product as though it were his or her own business with a minimum of interference from above.
A part of the champion's support system that we earlier observed as so critical is a protector or buffer of some sort. At 3M one of the protectors is the executive champion (someone who was a product champion in the past and succeeded).
The fundamental unit of support for the champion at 3M is the new venture team. It's a task force with some very special characteristics. The three most important: full time indefinite assignment from various disciplines; volunteers, and staying power.
After a venture team is formed at 3M, it quickly comes to have full-time members from at least the technical area, manufacturing, marketing, sales, and perhaps finance. The team gets full-time members whether it needs them initially or not. The company knows this ritual is apt to be duplicative, but they seem willing to pay for the price of duplication to get commitment. And only full-time assignment, the sensible 3M argument goes, leads to zealous commitment.
Another marked spur to commitment is that all team members are volunteers. Says a 3M executive, "The team members are recruited, not assigned. There is a very big difference. If IU am the marketing person assigned to evaluate the technical guy's idea, in most companies with the usual incentives I can get myself off the hook by saying the idea is poor, by pointing out all the deficiencies.. That just doesn't happen if I'm a volunteer team members. (Note: DO NOT discount the importance of personal conscious commitment and how essential it is to company success). Finally 3M supports venture team autonomy and staying power. MIT's Edward Robers, who has studied 3M for twenty years says, "They say we commit to you as a group. You will move forward with the product onto the market and benefit from its growth, so long as you meet our conventional corporate measures and standards of performance. In case you fail, we will give you a back-up commitment to job security at the level of the job you left before you entered this ventures.
The reward system supports both the team and the individual. Everyone gets promoted as a group as their project moves along from hurdle to hurdle. The champion benefits as the group prospers and vice versa.
The individual involved in a new venture will have automatic changes in his employment and compensation categories as his product hits milestones in sales figures (every time it keeps on going up). If the product reaches $20 million, it suddenly becomes an independent product department, and if he is the key technical person associated with it, he now becomes "manager of engineering or R&D" for that department.
If you want to understand the culture that encourages entrepreneurial activities at 3M, a good starting point is its "eleventh commandment." It is: "Though shall not kill a new product idea." If you want to stop a project aimed at developing a new product the burden of proof is on the one who wants to stop the project, not the one who proposes the project. When you switch the burden you do an awful lot of changing the environment within the company with respect to sponsorship of entrepreneurial people.
In order to reinforce the shared values clustered around autonomy, innovation, individual initiative, and entrepreneurship, the company's leadership celebrates its heroes - past and present.
3M doesn't limit projects on the basis of potential market size, exactly because the first use is so often unrelated to eventual product potential. Serious students of innovation note this phenomenon time and time again, with virtually every kind of new product. And although the company does stick close to its knitting it doesn't reject projects that seem unrelated as long as it can meet financial measures of growth, profitability, and the like.
Fifteen to twenty or more times a year some new and promising project reaches a level of a million dollars in profitable sales. You may think that this does not get much attention but it does. Lights flash, bells ring, and video cameras are called out to recognize the entrepreneurial team that is responsible for the achievement.
Failure is supported against by mythology which is socialized: Chairman Lehr preaches: We got into the business of making roofing granules for asphalt shingles because one worker persisted in trying to find a way to use reject sandpaper minerals. He was actually fired because of the time and effort he spent on this. But he kept coming to work anyway. Our Roofing Granules Division today earns substantial revenue. The man responsible retired ten years ago as vice-president of the division.
3M is the first to recognize innovation as a numbers game. "Our approach is to make a little, sell a little, make a little bit more," says Robert Adams, vice president of R&D. One of his colleagues talks about "big ends from small beginnings." In early interviews at 3M, we heard that the average length of a new-product plan was about five pages and were amazed at such brevity. They responded, "We consider a coherent sentence to be an acceptable first draft for a new-product plan."
We don't constrain ourselves at the beginning when ignorance is highest. Sure we plan. We put together meticulous sales implementation plans. But that's after we know something. At the very front end, why should we spend time writing a 250-page plan that tries to drive out ignorance before having first done simple tests on customer premises or in a pilot facility somewhere?
"Out experience," says one executive, "tells us that prior to entry into the market we don't know how to properly anticipate the sales growth of a new product. Consequently, we tend to make market forecasts after we've entered the market, not before."3M remains a radically decentralized business. It has forty or so divisions. Moreover, the name of the game is creation of new divisions; the forty is up from about twenty-five just a decade ago. Spinning things off rather than seeking higher sales volume for one's division is the time-honored (albeit unconventional) path to success.
The fellow heading any group gets rewarded for funding projects outside his group. The same rule is there for division heads. Straightforward incentives are there pushing you to look to any place to sell an idea, and if you're a buyer, to look any place to buy one.
There are some associated rules. For example, each division has an ironclad requirement that at least 25 percent of sales must be derived from products that did not exist five years ago.
Productivity Through People
The man who gave us this said there was but one key to a people orientation: trust. Some will abuse it. "Three to eight percent, he says, with a smile at the precision of his estimate. Nonbelievers will give you an "infinite number of reasons why workers can't be trusted. Most organizations are governed by rules that assume the average worker has an incompetent never-do-well just itching to screw it up." "Ever go to the park? Most are peppered with signs, "Stay off the Grass" rather than "Campers welcome." Such a difference in assumptions is monumental in its impact on people, he argues persuasively.
What I tried hardest to do was ensure that every officer and man on the ship not only knew what we were about, not only why we were doing each tactical evolution, but also managed to understand how everything fitted together. Zumwalt adds that, within a short eighteen months, practices like this vaulted his ship from last to first in efficiency.
Treat people as adults. Treat them as partners; treat them with dignity; treat them with respect. Treat them - not capital spending and automation - as the primary source of productivity gains. You MUST treat your workers as your most important asset.
There was hardly a more pervasive theme in our excellent companies than the respect for the individual. That basic belief and assumption was omnipresent. What makes it live at these companies is a plethora of structural devices, styles, and values, all reinforcing another so that the companies are truly unusual in their ability to achieve extraordinary results through ordinary people. They turn the average Joe and the average Jane into winners. They let, even insist that, people stick out. They accentuate the positive.
We are not talking about mollycoddling. We are talking about tough-minded respect for the individual and the willingness to train him, to set reasonable and clear expectations for him, and to grant him practical autonomy to step out and contribute directly to his job. Caring runs in the veins of the managers of these institutions. People are why those managers are there, and they know it and live it.
Perhaps surprisingly, the people orientation also has a tough side. The excellent companies are measurement-happy and performance oriented, but this toughness is borne of mutually high expectations and peer review rather than emanating from table-pounding managers and complicated control systems. Nothing, however, is more enticing than the feeling of being needed, which is the magic that produces high expectations.
The word "manager" in lip service institutions often has come to mean not someone who rolls up his sleeves to get the job done, alongside the worker, but someone who hires assistants to do it. These companies never mention peer review. They are secretive and purposely hide information from employees. The message here is clear: the employees supposedly aren't grown up enough to handle the truth. The opposite is true in excellent companies.
We also discovered an incredible array of nonmonetary incentives and an amazing variety of experimental or newly introduced programs. No one device - even in the best institutions - is likely to be effective indefinitely.
The program started when "Big Jim" Danielle, a former pro football player and ex-captain of the Cleveland Browns, was made chief executive. His plants became peppered with notices that say, "If you see a man without a smile, give him one of yours," or: "People rarely succeed at anything unless they enjoy it." All are signed "Big Jim." The local union president paid him the following compliment: "He calls us into his meetings and lets us know what's going on, which is unheard of in other industries. What's the result of it all? Well, in the last three years, with hardly a penny of investment spending, he's managed an almost 80 percent productivity gain.
Another example, many years ago we did away with time clocks and more recently we introduced the flexible work hours program. Again, this is meant to be an expression of trust and confidence in people as well as providing them with an opportunity to adjust their work schedules to their personal lives.
The people philosophy at HP is clear. The very first sentence reads: "The achievements of an organization are the result of the combined efforts of each individual..." And a few sentences later HP reinforces its commitment to innovative people, a philosophy that has been a driving force in the organization's success. "First, there should be highly capable, innovative people throughout the organization, SECOND, the organization should have objectives and leadership with generate enthusiasm at all levels.
At Wal-Mart, at the insistence of Sam Walton all his managers wear buttons that say, "We Care About Our People." His people are referred to as "associates," not employees. And he listens to them. He says, "It's terribly important for everyone to get involved. Our best ideas come from clerks and stock boys."
There are several key ingredients to increase productivity through people:
1) Face to face communication. It is critical to provide and discuss all organization performance figures with all your people.
2) Providing training and opportunity for development
3) Provide job security for people
4) Create incentive pools that rely on ideas and suggestions as well as on hard work.McPherson says: "The philosophy comes first. Almost every executive agrees that people are the most important asset. Yet almost none really live it."
Mcpherson quickly reduced his corporate staff of 500 to 100 and the number of layers in the organization from eleven to five. His plant managers - about ninety of them - all became "store managers." In a litany repeated at Delta and at Disney, they were made responsible for learning all the jobs in the plants. And they were given the autonomy to get the overall job done. Mcpherson spent 40 to 50 percent of his time on the stump, carrying the message directly to his people. He insisted on what he called "Town Meetings," with everybody in attendance.
At Dana, philosophy does come first; but then it's largely a matter of a voluntary diffusion of ideas. Everyone is responsible for ensuring that productivity increases take place.
Common Themes
As we step back from the analysis of people and productivity, we find a number of strikingly similar themes running through the excellent companies data. First is language. The language in people oriented industries has a common flavor. In many respect, form precedes substance.
Once they start talking the philosophy, they may start living it, even if, initially the words have no meaning. For example, we doubt that "the HP way" meant very much to anyone in Hewlett-Packard when the language was first introduced. As time went by, we suspect that the phrase took on a deeper and richer meaning in ways that no one would have suspected - not even Hewlett or Packard.
In fact, we doubt that a true people orientation can exist unless there is a special language to go with it. Words and phrases like Family Feeling, open door, Management by Wandering Around, show people in the institutions that the orientation is bone-deep.
Most impressive of all the language characteristics in the excellent companies are the phrases that upgrade the status of the individual employee. Again, we know it sounds corny, but words like Associate (Wal-Mart), Crew Member (McDonald's) and Cast Member (Disney) describe very special importance of individuals in these excellent companies. Many of the best companies really do view themselves as an extended family. We found prevalent use of the world family in excellent companies.
If you look at the entrepreneurship of American industry it's wonderful. On the other hand, if you look at the paternalism and discipline of the Japanese companies, it's wonderful too. Companies like 3M have blended these attributes and became a community center for employees as opposed to just a place to work. They have employee clubs, intramural sports, travel clubs and a choral group. This has happened because the community in which people live has become so mobile it is no longer an outlet for the individual. The schools are no longer a social center for the family. The churches have lost their drawing power as social-family centers. With the breakdown of these traditional structures, certain companies have filled the void. They have become sort of mother institutions, but have maintained their spirit of entrepreneurship at the same time.
Another of the more striking characteristics of the excellent companies is the apparent absence of a rigidly followed chain of command. Of course, the chain of command does exist for big decisions, but it is not used much for day-to-day communication. For information exchange, informality is the norm..everyone is typically on a first name basis.
We see evidences of informality in many other traits. For example, at the excellent companies the physical configuration of facilities is different with open doors, fewer walls, etc. It is hard to imagine a free-flowing exchange of information taking place in a formal setting that marks so many corporate or divisional offices.
Another striking aspect of the orientation of the excellent companies is the way they socialize incoming managers. The first element, of course, is recruiting. The screening is intense. Many of the companies we talked to are known for bringing potential recruits back seven or eight times for interviews. They want to be sure the people they hire, and they are also saying to would-be recruits, "Get to know the company. Decide for yourself whether or not you can be a good fit with our culture."These companies like to start their aspiring managers in "hands-dirty" positions that are in the mainstream of the business. "The young MBAs must get immediate experience in new-product introduction. It's a typical starting job. It reinforces the whole concept of bringing new products to market, which is such an important business value to us." says the CEO Young of HP.
The notion of socializing managers by starting them in hands dirty jobs is strikingly different from what we see in many large companies. MBAs or other would-be managers, because they are "expensive", start in staff jobs and spend years there, never coming to know the reality of the business.
The important result is realism. Those who start in the company's main job, making or selling parts of the business are unlikely to be fooled by abstractions of planning, market research, etc. Moreover, there instincts for the business develop. They learn to manage not only by numbers but by feel of business.
The next part in the crucial socialization is learning through role models - the heroes and the myths. The new recruits learn how to do the job from war stories. At IBM the war stories surround customer service. At 3M the stories are about sometimes failing, but always persisting in pursuit of innovation. At P&G, the tales are about quality.
Informational Availability and Comparison
We are struck by the importance of available information as the basis for peer comparison. Surprisingly, this is the basic control mechanism in the excellent companies. General objectives and values are set forward and information is shared so widely that people know quickly whether or not the job is getting done - and who's doing it well or poorly. Some really do believe in the business of sharing information. Bringing financial information down to the shop floor is a major step in bridging the gap between management and labor; more than any single act, it makes the goal explicit and the nature of the agreement.
A long time ago, the organization theorist Mason Haire said, "What measures gets done." He argues that the simple act of putting a measure on something is tantamount to getting it done. It focuses management attention on the area. Information is simply made available and people respond to it. Example: Management tried everything; the level of absenteeism wouldn't go down. Finally they put up a huge, visible board with everybody's name on it and posted a gold star next to each name when people came to work. Absenteeism dropped dramatically - almost overnight.
We respond - more than we likely know or realize - to comparative performance information. Sadly, the excellent companies' policy of making information available stands in vivid contrast to typical management practice, in which so many fear that "they" will abuse the information, and that only competitors will benefit. It's one more big cost of not treating people as adults or indeed, as winners.
As we did this research, we were struck by the wealth of non-monetary incentives used by excellent companies. Nothing is more powerful than positive reinforcement. These companies actively seek out and pursue endless excuses to give out rewards. At Mars every employee, including the president, gets a weekly 10 percent bonus if he comes in to work on time each day in the week. Even though IBM has a "gold circle" for the top 10 percent, they have more hoopla around the incentive which covers over two thirds of the sales force. Many companies believe in special awards but use them exclusively to honor the top few. As McPherson states, the real key to success is helping the middle 60 percent a few steps up the ladder.
We found less obvious structuring and certainly less layering at the most of the excellent companies. "How many layers do you think it takes to run the Catholic Church," the answer is five." If many layers exist, a kind of Parkinson's law of management structure set in: extra levels of management mainly create distracting work for others to justify their own existence. Everybody appears busy; but in reality it is simple management featherbedding. The reoccurring characteristic is crucial: small is productive.
The point of smallness is that it induces manageability and above all, commitment. A manager really can understand something that is small and in which one central discipline prevails. Small is beautiful. The economic theorists may disagree, but the excellent companies evidence is crystal clear. We find that the lion's share of the top performers keep their division size between $50 and $100 million, with a maximum of 1,000 or so employees.
What are the characteristics of a typical TI team? It is usually limited to eight to ten members, consisting of shop floor people as well as an outside engineer or two, who are typically called in on a voluntary basis. It takes on a LIMTED set of objectives. The duration is limited to between three and six months. More important, the objectives are always set by the team. Finally, opportunity after opportunity is used to celebrate team achievements; reviews at all levels are frequent, including a couple of groups quite regularly telling their stories directly to the board of directors.
Hands-On, Value-Driven
We call the fifth attribute of the excellent companies, "hands on, value-driven." We are struck by the explicit attention they pay to values, and by the way in which their leaders have created, exciting environments through personal attention, persistence, and direct intervention - far down the line.
Every excellent company we studied is clear on what it stands for, and takes the process of value shaping seriously. The formation of an institution is marked by the making of value commitments, that is, choices which fix the assumptions of policy makers as to the nature of the enterprise, its UNIQUE aims, methods, and roles.
One of the most important of these techniques is the elaboration of socially integration myths. Successful myths are never cynical or manipulation... To be effective, the projected myth must not be restricted to holiday speeches or to testimony before legislative committees. It requires some interpreting and the making of many diverse day-to-day decisions. The myth helps to fulfill the need. And so, as it turns out, the excellent companies are unashamed collectors and tellers of stories, of legends and myths in support of their basic beliefs.
We find among the excellent companies a few common attributes that unify them despite their very different values. First, as our original survey showed, these values are almost always started in qualitative, rather than quantitative, terms.
Furthermore, financial and strategic objectives are never state alone. They are always discussed in the context of other things the company expects to do well. The idea that profit is a natural by-product of doing something well, not an end in itself, is also almost universal. A second attribute of effective value systems is the effort to inspire the people at the very bottom of the organization.
The cardinal responsibility of leadership is to identify the dominance contradiction at each point in history. Any business is always an amalgam of important contradictions - cost versus service, operations versus innovation. A company's super ordinate goals must be general. But they must also clearly delineate 'us' from 'them'.
David Packard's words, "innovation people at all levels in the organizations." The excellent companies recognize that opportunity finding is a somewhat random and unpredictable process, certainly not one that lends itself to the precision sometimes implied by central planning.
The last common theme, informality to foster communication, is at the heart of the HP way, to cite only one example, and therefore the company makes specific points of its use of first names, managing by wandering around, and its feeling of being one big family.
An effective leader must be the master of two ends of the spectrum: ideas at the highest level of abstraction and actions as the most mundane level of detail. The value-shaping leader is concerned, on the other hand, with soaring, lofty visions. That's where path finding role is critically important. However, the leader also has to be a bug for detail, and directly instill value through deeds rather than words: no opportunity is too small. So it is at once attention to ideas and attention to details.
Leaders implement their visions and behave persistently simply by being highly visible. These leaders believe, like an evangelist, in constantly preaching the "truth," not from their office but away from it - in the field. They travel more, and they spend more time, especially with juniors, down the line.
David Ogilvy makes much the same point: "Do not summon people to your office - it frightens them. Instead go to see them in their offices. This makes you visible throughout the agency. A chairman who never wanders about his agency becomes a hermit, out of touch with his staff.
One of the problems in American corporations is the reluctance of the chief executive officer to get out and travel, to listen to criticism. There's a tendency to become isolated, to surround himself with people who won't argue with him. What I was trying to do was create the feeling that the chief executive officer was approachable... If you maintain good working relations with your people in line positions you shouldn't have any trouble. Whenever I picked up some information, I would call the senior officer of the division to tell them what I had picked up from different locations.
We have talked about the leader as hands-on manager, role model, and hero. But one individual apparently is not enough; it is the team at the top that is crucial. The senior mangers must set the tone.
Clarifying the value system and breathing life into it are the greatest contributions a leader can make. Moreover, that's what the top people in the excellent companies seem to worry about most. Creating and instilling a value system isn't easy. For one thing, only a few of all possible value systems are really right for a given company. For another, instilling the system is backbreaking work. It requires persistence and excessive travel and long hours, but without the hands-on part, not much happens, it seems.
Stick to the Knitting
More important acquisitions suck up top management time. Our principal finding is clear and simple. Organizations that do branch but stick close to the kitting outperform the others. The most successful of all are diversified around a SINGLE skill. Less successful, are those companies that diversify into a wide variety of fields. Acquisitions especially, among this group, tend to wither on the vine.
The crucial question, then, is: How have the excellent companies avoided these traps? The answer is simple. The excellent companies don't test new waters with both feet. Better yet, they stuck a toe in new waters and failed, they terminated the experiment quickly. As a general rule, the top performers moved out mainly through internally generated diversification, one manageable step at a time.
In brief, then, is the excellent companies' story. They do acquire; but they acquire and diversify in an experimental fashion. They buy a small company or start a new business. They do it in manageable steps, and clearly contain the risks. And are willing to get out if it doesn't work.
Simple Form Lead Staff
Along with bigness comes complexity, unfortunately most companies respond by designing complex systems and structures. The solution just doesn't go well with the nature of people in an organization, in which things need to be kept reasonably simple if the unit is truly to pull together. The paradox is clear. On the one hand, size generates legitimate complexity, and a complex systems or structural response is perfectly reasonable. On the other hand, making an organization work has everything to do with keeping things understandable for the tens or hundreds of thousands who must make things happen. And that means keeping things simple.
A wonderful example of simplicity in form despite size is Johnson & Johnson. As a $5 billion company it is broken down into 150 independent divisions, average size just about $30 Million. Each division has its own "board of directors" and acts independently. Although there is duplication, these costs are offset by increased productivity and motivation. This also allows the company to shift people and even product lines among divisions. Regardless of industry or apparent scale needs, virtually all the companies we talked to place a high value on pushing authority down the line and preserving autonomy.
First, what functions have to be retained at corporate? The answer, in many of the excellent companies, is practically none. Few staff jobs are manned by "career staffers"; they are manned by line officers. Moreover those who do get into corporate staff are rotated out every three years which keeps them from making complex systems that they would have to use later themselves. Hands on management becomes a lot more workable when there are fewer people in the middle.
Simultaneous Loose-Tight Properties
Organizations that live by the loose-tight principle are on the one hand rigidly controlled, yet at the same time allow autonomy, entrepreneurship, and innovation from the rank and file. They do this literally through "faith" - through value systems, which our colleagues Phillips and Kennedy have suggested most managers avoid like the plague.
We have talked a lot about soft traits, all of these traits focused on the positive, the excitement of trying things out in a slightly disorderly fashion.
Intriguingly, the focus on the outside, the external perspective, the attention to the customer, is one of the tightest properties of all. In the excellent companies, it is perhaps the most stringiest means of self-discipline. If one is really paying attention to what the customer is saying, being blow in the wind by the customer's demands, one may be sure he is sailing a tight ship.
A shared set of values and rules about discipline, details, and execution can provide the framework in which practical autonomy takes place routinely. The nature of the rules is crucial here. The "rules" in the excellent companies have a positive cast. They deal with quality, service, innovation, and experimentation. Their focus is on building, expanding, the opposite of restraining; whereas most companies concentrate on controlling, limiting, constraint.
By offering meaning as well as money, they give their employees a mission as well as a sense of feeling great. Every man becomes a pioneer, an experimenter, a leader. The institution provides guiding belief and creates a sense of excitement, a sense of being a part of the best, a sense of producing something of quality that is generally valued.
There is a value set and it is a value set for all seasons. It is executed by attention to mundane, nitty-gritty details. Every minute, every hour, every day is an opportunity to act in support of overarching themes.
The people who lead the excellent companies are a bit simplistic. They are seemingly unjustified in believing that virtually every worker can contribute suggestions regularly. It is simplistic. But it may be the true key to inducing astonishing contributes from tens of thousands of people. It's a focus on the external, on service, quality, people, informality, those value content words we noted. But so many can't see it. There are always practical and justifiable ways to compromise these variables. But the greatest companies continue to stay simplistic.
The Corporate Boss
There is a reason there are bosses in corporate America. It is for the reason of accountability...and accountability is crucial for personal and company-wide success.
Entrepreneurs often struggle by being at the top of the ladder. Unlike public CEOs, entrepreneurs often time do not have shareholders or boards of directors to keep them accountable.
To counter-act this every entrepreneur must establish an accountability partner, most likely to be a business coach (Six Disciplines has this as well). This will also further motivate the entrepreneur by giving him/her pyschological rewards (when a job is done well) along with the financial rewards.
Entrepreneurs often struggle by being at the top of the ladder. Unlike public CEOs, entrepreneurs often time do not have shareholders or boards of directors to keep them accountable.
To counter-act this every entrepreneur must establish an accountability partner, most likely to be a business coach (Six Disciplines has this as well). This will also further motivate the entrepreneur by giving him/her pyschological rewards (when a job is done well) along with the financial rewards.
Right or Successful?
In marriages they say, "You can be right or you can be happy?" The same rule applies to all relationships and is carried over to business.
The question of whether you want to be right or successful sounds like an obvious one. Unfortunately, the majority of people I know, especially the "experts" choose the former.
The question of whether you want to be right or successful sounds like an obvious one. Unfortunately, the majority of people I know, especially the "experts" choose the former.
Monday, October 27, 2008
Criticism Management
This is a very important book on a subject that I have historically had issues with: giving and receiving criticism. Go here to purchase the full book, it is a very quick read and can be read in a couple sittings:
http://www.amazon.com/Criticism-Management-Effectively-Receive-Lives/dp/0977499707/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1225132305&sr=8-1
Below is direct quotes from the book:
Introduction: Critical Queries
The goal of this book is to have us better understand criticism and the dynamic of criticism-prone situations...In fact, thoughtfully offered criticism can be extraordinarily valuable in helping us to grow, recover, improve, prosper, and excel - in both our professional and personal life.
As we shall see, the real lesson in dealing with receiving criticism is in the appraisal process. It is not so much the words that others speak, but the significance we give to those comments.
What is Criticism?
"Honest criticism is hard to take, especially from a relative, a friend, an acquaintance, or a stranger."
Our common understanding of the word criticism is decidedly negative and condemning. Interestingly, the origin of the term was much different.. The term criticism derived from the Greek words "kritikos" and was coined by Aristotle, a student of Plato. At this time, however, the term was defined in the context of an intellectual activity and indicated that one was "able to judge or discern."
The Hebrew word for criticism, toch'acha, is from the same word meaning "proof." As a result, it can be suggested that the best way to criticize is not through harsh rebuke or condemnation, but by offering clear and obvious proof so that the person can see for themselves the potential for improvement. The goal of criticism, therefore, should be to help others grow, recover, improve, prosper, and excel; a somewhat different approach than is often practice today.
The definition of criticism use in the book - offering productive and constructive information intended to help others grow, recover, improve, prosper, or excel.
Even mean-spirited destructive criticism allows us to learn something about the character of the critic and gives us an opportunity to practice our ability to keep our emotions in check.
G.R.I.P.E in Action (The reasons for criticism)
Grow - Find ways to help others grow as individuals, as colleagues, or in whatever role they may be struggling.
Recover - Our criticism should be directed toward helping others overcome their sense of loss and stem any further deterioration. The idea of recovery conjures the image of recuperation; helping another to heal or get better.
Improve - Criticism should always be designed to help another improve. The problem with most criticism is that it focuses on what another may have done wrong, not on ways to improve and do better.
Prosper - Criticism can be offered in such a way that it can help another to thrive. The ultimate goal of productive and constructive criticism is to help others succeed.
Excel - Effective criticism cannot only offer the guidance for others to improve and prosper, but to become truly exceptional.
The Bother of Criticism
Criticism tends to confront our self-esteem - the way we feel and think about ourselves. We have an almost automatic emotional response when we interpret that someone is criticizing us; however, recognizing that we DO interpret criticism is the key to becoming more effective at criticism management. It is how we retool our thinking about the way we appraise and assess criticism that is essential for our success. Giving criticism can be equally difficult as it can often involve conflict, stress, and giving people information that they may prefer not to hear. It reminds us that we cannot always be the "nice guy."
Studies have shown that criticism can be more difficult for us to handle because we have not designed an approach or method to deal with criticism; we allow it to haphazardly impact us...We can either learn strategies and tactics to become better at criticism management or we can choose to limp along in a haphazard and unproductive manner. The goal here, of course, it to recognize that criticism is a potentially powerful force and we want to find ways to harness that power to become better at giving, receiving, and seeking criticism in our life.
Criticism Appraisal
Albert Ellis, the father of Rational Emotive Therapy, long ago reminded us that what tends to cause us to have an emotional reaction to events is not so much the event itself, but the meaning we attach to it. According to Dr. Ellis, it is how we appraise the criticism that can cause the unproductive emotional response.
Unfortunately, we sometimes give too much power to the critic, allowing them to assail our self-esteem without fully assessing the validity or credibility of the criticism. We allow the words of others to bypass our cognitive appraisal process and permit the criticism to elicit an adverse emotional reaction. Once we realize that we have the ability to manage and appraise the criticism more effectively, the undesirable impact of criticism can be diminished.
"People are not disturbed by things, but by the view they take of them." - Epictetus
The appraisal process does not have to follow some automatic cognitive functioning that elicits anxiety, fear, apprehension, or angst, merely because someone elects to offer us criticism.
We can become more cognizant of how we all tend to appraise criticism differently. We must work not only to recognize the triggers for how we appraise an event, but also how a potential recipient of criticism might appraise it.
Critical Disclosure
"It is infinitely easier to criticize than to create" - John McCormick
Why Do People Criticize?
Some criticize because it is their job, like a coach, teacher, boss or parent. Some may simply enjoy irritating others. Still others may criticize for reasons that have nothing directly to do with you; they may be upset, emotional, exhausted, or they may be trying to prove that they are more important or more intelligent. Criticism can be manifested by a lack of trust, lack of knowledge, or fear.
Criticism often occurs when: 1) we make a mistake 2) someone thinks we made a mistake 3) someone uses the complaint as an opportunity to express problems that may be unrelated to the criticism.
Such as criticizing your work, when in reality they are more concerned with your manner of dress or the way you ignored them at some prior time. Despite attempts to offer a redefinition of the term, most criticism is negative in tone; partly because we have been "taught" that is the proper approach to criticism, and partly because it is just easier to call attention to faults. Additionally, people tend to label negative comments as criticism, whereas information that is perceived by the recipient to be helpful may be labeled as "feedback."
Who Criticizes?
In a word: everyone. It has been suggested that offering criticism is practically a national pastime.
As we all tend to engage in criticism, for our purposes the real question is who criticizes well? Caustic criticism is easy; what is much more difficult is to offer appropriate criticism that is well thought out, well crafted, well organized, and has the recipient's best interests in mind.
Types of Criticism
Generally, criticism comes in two forms: constructive and destructive.
Constructive criticism is based on accurate perceptions of circumstances or behaviors and the conveyor is motivated by a sincere desire to help the recipient improve. (David's Note: This is the type of criticism that you should listen to, not destructive).
Constructive criticism is:
-Problem focused, not personal
-Specific, not vague
-Describes, rather than evoking judgment and blame
-Recipient may have heard the same information from others
-Critic has credibility in dealing with the subject under scrutiny.
Destructive criticism is not necessarily based on accurate perceptions and the conveyor of the criticism may have ulterior motives in giving the criticism. In short, the goal is not improvement or helping, but to injure anther's self esteem. It may be given to show "who's the boss," or belittle the other person.
Destructive criticism is often characterized by:
-Personally focused
-General or vague
-Focuses on judgment and blame
-Without best interests of the recipient
-Critic has little or no credibility with subject under scrutiny
"It is much easier to be critical than to be correct." - Disraeli
Taking criticism unquestionably, ultimate, does nothing to protect your self-esteem. It may lead us to feel hurt, worthless, or defeated. Unquestioned acceptance of the criticism of others is not the solution. If done enough times the critic may come to see you as an easy target to vent their frustration.
Learning to more effectively deal with criticism is clearly the option of choice. Managing the critic is not always easy, but it is likely the most effective approach. You must try to assess where the person is coming from; determine their motivation for the criticism.
Benefits of Criticism
If the criticism is accurate and you are capable of change, it can serve to motivate you to grow, recover, improve, prosper and excel.
A number of studies have demonstrated that those who are most successful in their professional and personal lives develop the ability to effectively handle criticism - constructive or not.
This study suggested that it was not the criticism per se that was most important, it was the ability of the executive to appraise and manage the criticism that resulted in a successful tenure.
People consistently report that what distresses them most about criticism is that they feel as though they have no control over the criticism or the critic and feel somewhat vulnerable to the person giving it. However, as we will see in later chapters, the recipient may actually have greater control in managing criticism than they may first realize.
Criticism: Is it better to give than Receive?
"To profit from good advice requires more wisdom than to give it." - John Churton Collins
It is unlikely anyone could prevail in a challenge to identify a behavior that could not be criticized by someone. For some, dispensing caustic criticism - often under the guise of "help" - seems to be their mission in life. The chronic critic can always find a way that something could have been done differently or better; some greater goal that we should have been striving to achieve; some quality opportunity that we foolishly missed.
Why does receiving criticism bother us?
-It's always been portrayed as negative
-It assaults our self-esteem
-It can leave us feeling confused
-It may be unfair
-It may present a view with which we do not agree or perceive
-The critic seems to enjoy the delivery
-It hurts our feelings
-It makes us seem less than we see ourselves
Power of Receiving Criticism
Can we accept that criticism can be both hurtful and helpful?
Once the criticism has left the mouth of the critic, it cannot be recast or ushered back. The power of the criticism communication now clearly shifts to the recipient.
Self-Criticism
Research has shown that we are often not objective in our examination of the issues and we often focus on the negative to the exclusion of all else. In fact, this overly and overtly negative orientation is a key feature of self-criticism.
As with most other aspects of dealing with self-criticism, the key is to evaluate and assess; to appraise whether what you are saying to yourself is fair. It may be based on a relatively insignificant comment from the prospective of another that we unfairly overweigh.
Critical Communications
One of the most important considerations in dealing with others is the recognition that people typically see things not as they actually are, but as the person is.
As a result, a criticism of one's paper, for example, that merely suggests it "needs a little work" can be processed by an individual in an overly emotional or sensitive state as "it's a complete mess." It seems that we tend to suffer from what has been termed the False Consensus Effect; the belief that out opinion is shared by most others.
Nonverbal communication can play a major role in the criticism communication process. Facial expressions, body language, eye contact, vocal tone, and interpersonal distance can all contribute to the interpretation of a message...Males tend to engage in more visual dominance posturing; looking or keeping eye contact more with a person considered to be lower status than one who might be considered higher status.
Those who speak in a clear, quick pace are seen as more trustworthy. This may be a result of being confident - so there is no halting speech pattern - or may be due to the pace of the message exceeding the recipients' capacity to consider counter arguments, as has been suggested in some studies.
Listening, not just hearing is what provides the significance to the communication process.
"The greatest gift you can give another is the purity of your attention." - Richard Moss
Power Questioning
This is a technique and one of the "secrets" of providing non-offensive feedback and criticism. It allows you to ask questions in a non-offensive way that tends to short-circuit the natural defensiveness that many people experience when given criticism. Instead of seeming threatening, you are merely asking questions that may lead the recipient to the conclusion that something may need attention.
In fact, numerous management studies reveal that strong communication abilities are synonymous with leadership success.
Effective Criticism: Putting the PC into Criticism
While it is true that we can sometimes gain a measure of satisfaction by letting someone have it with both barrels; such guilty pleasure is often short-lived. Giving someone a strong rebuke, especially if we feel they truly deserve it, can be satisfying - the problem is that it's not particularly successful in the long run.
The Art of Giving Criticism: Being P.C. or Productive and Constructive
Providing criticism to others can be challenging and is usually not the most efficient communication technique. However, efficiency takes a backseat to long term effectiveness in the areas of critical communications.
Giving criticism causes us to recognize that we may have to hurt others feelings by telling them information that they may not wish to hear. Many of these concerns can be diminished, if not alleviated, by reflectively and carefully considering the goal of criticism, the significance of our redefinition of criticism, and maintaining respect for the recipient.
Preparation and consideration are the keys. To be the most effective in walking through the potential minefield of providing criticism to others, one needs to consider three important phases: what to do before, during, and after providing criticism.
Before Giving Criticism
Even before you utter a word, you must reflect on your motivation, your goal, the best approach, and the process of offering productive and constructive criticism. Even if the criticism could be helpful, it should likely not be offered when the motivation is less than honorable.
Gather all Relevant Information
Nothing could be worse than offering criticism that is unwarranted, undeserved, and based on faulty information.
Consider the Time and Place
In order to effectively offer constructive and productive criticism, the time and location of the interaction must be considered. I am not a particular fan of impromptu criticism unless the giver is well experienced. Criticism that is immediate and not well thought out has the possibility of being overly emotional and harsh - not consistent with our goal of helping others improve. The myth of immediacy has torpedoed many a well-intentioned critic.
For example, a meeting at the end of a long and strenuous day might be ill advised. The timing must consider the emotional states of both the giver and receiver of criticism. Fatigue, irritability, or excessive emotionality can impede the effective delivery of criticism. Management experts suggest that criticism is often best provided early in the day and early in the week. The idea is that this provides for other opportunities to interact in a more lighthearted or causal context at other points in the day.
The rule is "praise in public, criticize in private." Typically, criticism is best handled in private. It is generally unprofessional and would run counter to the best interests of the recipient to criticize in a public venue. However, there are unusual circumstances where the presence of others may be beneficial, for example, when a problem employee consistently misstates or misrepresents to others what you have said in private, you may be required to use another tactic.
Consider the emotional state of the Giver and Recipient
It is helpful to ask yourself at least two questions: "Would I be receptive to criticism if I were this person right now?" and "Am I emotionally calm so as to offer criticism in the spirit in which I intend?"
If you are upset, fatigued, or emotionally exhausted there is a much greater chance that the criticism will come across as overly harsh or demeaning. Overly emotional and callous criticism can have potentially devastating long term consequences, not just for the initial recipient, but for other individuals who may wonder if they will be the next victim. It is better to recognize when your emotional trigger has been activated and wait to calm down and constructively organize your thoughts.
Even if you, as the giver, are feeling ok, it is important to assess the recipient. In order for the criticism to be productive and constructive, it must be received in the context of a helping spirit and not obscured by emotional obstacles.
Psychologically, people need to know that they have worth and value. Even though you are criticizing them for a particular issue, they likely do many things well and that should not be neglected in the process.
Evaluate the Criteria Being Used to Validate the Criticism
Criticism is always offered in context and recipients expect to know what criteria are being used to judge their behavior. Policies, rules, procedures, guidelines can be identified to support and validate criticism. Recipients deserve to know what yardstick is being used to support the criticism.
Use Mental Rehearsal and Visualize the Encounter
Always keep the end game in mind; the ultimate goal. It the ultimate goal to make the other person feel worse or is it to help someone improve so they may do better? As Stephen Covey says, "being with the end in mind." Know how you want the meeting to turn out and prepare yourself to have the greatest probability of success.
It is important not to just give this encounter some inconsequential thought. Rather, research has demonstrated that actually visualizing the encounter and possible scenarios can be very useful.
"Criticism is the disapproval of people, not for having faults, but having faults different from your own." - Unknown
Once you are certain that you have clearly communicated and have been understood, do not become repetitive. Make you point and move on. Offer a clear message and then stand clear. Don't clutter the simplicity of a clear message with needless chatter.
Think Win-Win
Before giving criticism consider how the solution can be beneficial to everyone involved. It might be helpful to think about providing criticism as if it were a business meeting. Do you want the meeting conducted by someone who is unprepared; maybe jotting down a few last minute notes seconds before arriving, or do you want someone who has done their homework and is organized?
Criticism: The Gift of Giving
1. Don't Procrastinate
Once all the important points have been considered before giving criticism, and you have concluded that it's appropriate to proceed, do not procrastinate.
As discussed previously, most of us want to be the 'good guy' and rendering criticism reminds us that we cannot always be in the position to offer praise. While it is certainly true that being overly critical is far from wise, avoiding criticism for fear of creating a confrontation can be worse.
2. Remain Calm - Monitor Your Own Emotions
3. Stick to the Facts and Be Specific
Make sure you fully understand the problem, the evidence, and the yardstick against which you are measuring the behavior.
4. Criticize the Deed: Not the Doer
If you find yourself slipping into criticism that focuses on the individual rather than the behavior, you have missed your mark.
5. Make Sure It's Dialogue
The goal of criticism communication is to ensure that there is dialogue, not a monologue. However, if you do not allow for a two-way dialogue, you may miss important information that might help you better assess the particulars of the situation.
6. Be Prepared for a Variety of Responses
7. Ensure Effective Communication has Occurred
You will want to use a feedback technique to elicit from the recipient their understanding of the criticism. Some people find saying something like the following to be helpful: "OK, we have been talking about a number of things, let's make sure we compared notes so we are not missing anything."
8. Focus on the Future not the Past
Direct your attention to things that can be done to fix problems that lie ahead. The problem of the past has already occurred; the goal is not to dwell on the past issue but to use it as a tool to prevent similar occurrences in the future. Productive and constructive criticism is future oriented.
9. Be Concrete Regarding Expectations
Don't require people to guess as to how they can improve. Destructive criticism is directed at "punishing" the recipient for past actions. The problem with punishment is that it often reprimands the receipient without regard for explaining how things should be done differently in the future.
10. Acknowledge it is Subjective
Whatever the case, criticism is often subjective and providing that acknowledgement to the recipient may help to protect their self-esteem by allowing them to recognize that the criticism is about some action in this situation, not about their worth in general.
Start to Finish
It is helpful to start the conversation with a clear indication of why you wanted to meet with the individual.
Use the conjuction "also" instead of "but." "I appreciate your efforts and I really want you to be best. I also wanted to discuss. End the conversation, "I am very willing to work with you on this issue and I anticipate things being much better as a result of us addressing this together."
1. Be Positive
Expectations often breed the anticipated results; what psychologists call a self-fulfilling prophecy. If we expect others to improve they will reciprocate with results. The goal is to reflect the attitude that the other person will succeed.
2. Be Accessible
Conversely, PR critics want to be available to keep the recipient on course and give direction and guidance as needed.
Special Criticism Considerations and Techniques
Chronic Critics
The techniques of dealing more effectively with criticism will not always be successful, especially when dealing with emotionally immature individuals or those we might categorize as chronic critics. These are the people that take our openness to criticism and use it against us as a weapon to make themselves feel important, rather than as a tool to help others excel.
People who constantly criticize are often insecure and many attempt to enhance their own self-esteem by belittling and attacking others. If you offer even a tacit agreement or apology, this type of chronic critic will often reply with something like, "Well let me tell you what else you do that's wrong!" In this case, the assessment process becomes all the more critical. For this type of chronic critic, the usual rules do not apply.
"Maturity beings when we're content to feel we're right about something without feeling the necessity to prove someone else wrong." - Sydney Harris.
Hurt the Ones You Love
We sometimes believe that we have Carte Blanc to "correct" those we love the most. Before you offer criticism to a love one, take a moment and examine your own heart. What is motivating you to offer this criticism? If it is anger or frustration, you may wish to wait until the emotionality subsides so that you can address the real issue that created those emotions in the first place.
The Power of Criticism Questions
Questions allow you to provide information in a non-offensive manner that tends to short-circuit the natural defensiveness that many people experience when given more direct criticism.
An important caveat, however, is to ensure that the tone of your question is carefully monitored. If your questions reflect an attitude of arrogance or your tone imparts a sense of condescension you have missed the point of this valuable technique.
Additionally asking questions enhances the self-worth of others; they feel that their opinions count and will usually appreciate the opportunity to address issues that may potentially impact them.
Sample:
Q: "That's an interesting idea, how do you think it might impact productivity?"
A: "Well I'm not sure; I was really focusing on the front end. I'd better look at that."
Question Categories
Informational questions can be used to both communicate and gather information. For example, "Could you clarify how this will...?" is a question that will not only yield information but may cause the recipient to more carefully reflect on their decision.
Consequence questions provide the opportunity for the recipient to consider the outcome of their position or decision. For example, "How will this decision affect the other units?"
Explicit questions are those that provide the recipient with an idea or a particular solution. "What if we were to get the same result by doing...?"
One form of question to avoid is the "Why did you..?" variety. Frequently, when someone is overtly asked why they did something, the defensive shields are activated.
Criticism Communication Techniques and Strategies
"Explain as if the Other Doesn't Know" Technique
"You may not know this, however, we need to have..." You offer criticism in a similar style that is used in non-offensive questioning though it is intentionally worded to act as if the other person does not know the proper procedure, etc. - through no fault of their own. This can be a good criticism communication technique especially when dealing with co-workers without eliciting a defensive response.
Super-Ordinate Goal Technique
This tactic focuses on the "we are all in this together" approach. It demonstrates to the recipient that we are all working toward some common achievement. For example, "I know that we all have unique ideas; however I know everyone understands that the ultimate goal is to..."
Mental Rehearsal
Research suggests if you think about and consider the impending situation in advance, then when confronted with the actual events it is much less stressful and your confidence is much improved.
Use Humor
Careful use of humor can be another useful tool as long as it is not perceived as making fun of the person or a serious issue - it can lighten the mood and may offer some perspective if a discussion seems to have been blown out of proportion.
Demonstration
One of the best ways to communicate how to accomplish a task is through proper example.
Disguise Criticism
Another technique that can be useful is to disguise the criticism as though it is a problem you are facing and ask the person - for whom it is really intended - to offer suggestions or advice on how to deal with it.
Have Third Party Involvement
On occasion the best way to address criticism most effectively is to allow another person to provide it. This can be especially true in close relationships or in circumstance when the potential recipient may not view you to be as objective as you would hope (due to emotional clouding created by the relationship).
Receiving Criticism from Others
"To avoid criticism, do nothing, say nothing, be nothing" - Elbert Hubbard
Criticism is unavoidable. Period. There simply is no behavior that is universally accepted; and some people seem predisposition to criticize anything and everything.
Because of past influences and examples, we have been conditioned to believe that criticism should be caustic; some believe that it must be painful in order to work. Sadly, such beliefs are misguided and counterproductive.
One of the reasons we have difficulty with criticism is that we have not consciously considered how to best handle criticism and criticism-prone situations.
She had learned valuable lessons of assessing the criticism for what it was - the ravings of a very unhappy individual - and did not accept it as a reflection of her own esteem or competence.
Typically, people want to be heard and will often feel better about the situation if someone has listened with empathy.
In fact, that is one of the crucial elements in managing criticism - to recognize when criticism can actually be valuable and help you improve, even if poorly delivered. The goal is to rethink criticism in such a way that you become successful criticism managers.
Effective Criticism Managers tend to:
1. See the Criticism as an Opportunity
This is a real hallmark of the successful criticism manager. The opportunity can come in many forms; it might be an opportunity to learn about yourself, your ability to handle tough situations, or to learn more about the critic.
2. Recognize There May be Truth in the Criticism
Even if mostly inaccurate, recognizing that criticism can be a perception that others may share, it may be wise to consider it as a caution to reexamine your actions.
Interestingly, sometimes our enemies may be more helpful than our friends. After all our friends are usually trying to be polite and spare us from information that might jeopardize our friendship. Our enemies, on the other hand, are not necessarily interested in being our friend or codling our emotions - they will tell us things we might not necessarily want to hear but may need to hear.
3. Engage in Honest Assessment
It is important to be honest with yourself and recognize that the criticism - even if not well delivered - may still have a ring of truth.
4. Separate the Criticism from the Critic
Although this can be difficult to do, the effective criticism manager distinguishes the criticism from the critic. Even if the critic is neither credible nor well intentioned, the information may still be useful. Focus on the lesson, not the teacher.
5. Remain in the Third Person
When receiving criticism, don't get caught up in the rampant emotionality that may be whirling all around; instead look at the events as a dispassionate third party, merely observing the other person and assessing their tactics and motives.
6. Recognize the Potential for Personal Development
Look more carefully at how the criticism may help you - even if it is nothing more than an exercise on how to remain calm in the face of hostile criticism. Criticism is uncomfortable and you frequently have little choice but to hear it; however, if you are going to listen, you might as well determine what information might be there that could help you to better yourself.
7. Do not Dwell on the Criticism
This is often easier said than done. It seems to be human nature to focus on the negative. If the criticism is accurate then 1) Learn the lesson 2) Consider what needs to be done to improve 3) Implement the improvement 4) Get over it and move on!
8. Accept the Criticism if Correct: Learn the Lesson
Some would say the essential way to learn is through failure. Some has suggested that if we are not failing, we are either not learning or we are playing it safe; not striving to grow.
Assessing Criticism
"The trouble with most of us is that we would rather be ruined by praise than saved by criticism." - Norman Vincent Peale
Recent studies show that verbal abuse is far more prevalent and harmful than physical abuse.
Interestingly, criticism is a great opportunity to learn about ourselves. However, when someone offers criticism it does not automatically render it correct or accurate. In reality, there may be many reasons that someone offers criticism and sometimes it has little to do with the actual actions of the recipient. As a result, one of the most important aspects of handling criticism is to accurately assess the comments for content and accuracy.
Actively Listen
Often we get caught in the "reply trap" where we are so involved in crafting how we are going to respond, we do not truly listen. Even if the criticism is not true, the one offering the criticism likely perceives it to be accurate. Try to refrain from responding too quickly. We listen more effectively when we are not defending.
Consider the Source of the Criticism
Just because someone decides to offer criticism does not mean they are in a position that makes their comments valid. In the process of assessing criticism you should ask yourself a few questions similar to these:
-Is the person knowledgeable in this area?
-Is the person trying to help me improve or is he being destructive?
-Are they a chronic critic or do they usually offer productive criticism to others?
If a critic is offering their uninformed opinion about a topic with which they are unfamiliar, the result of your assessment is apt to be quite different (and should be). Although the chronic critic is motivated for reasons other than to help you improve, some individuals may offer useful information, even if you are unaware of their "credentials" to criticize.
Consider the Importance and Benefit
Even when criticism may be valid, it is important to not get "caught in the thick of thin things." In others words, the issues being criticized may be so trivial that the effort to institute change exceeds the potential benefit derived. Keep it in perspective!
Don't React or Take it Personally. Reacting is a part of the Act-React cycle, with little thought in between. Responding has the connotation of some reflection before answering.
Accept that Criticism Can be Unpleasant
If you are striving to reach new goals; it is likely that you will experience failure, setback, and complications. If you simply are not capable of carefully assessing and responding to the criticism of others - using the techniques in this book - then it may be time for a career change. You've got to be able to stand the heat if your goal is to be a firefighter. You've got to be able to handle criticism if your goal is to go beyond the status quo to become the best that you can.
Have a Sense of Humor
A good sense of humor can help to diffuse hurtful criticism and help us to gracefully accept criticism that hits the market.
Respond
Acknowledge the Critic - Start with a brief statement, "Thank you for sharing your thoughts with me about this, I appreciate your wanting to help."
Ask Questions - This helps in several ways. It likely allows you to get better information; it provides a natural pause from the conversation and it clearly demonstrates that you are listening, are concerned, and want to really understand.
PUT THESE IDEAS IN PRACTICE!
Responding to the Critic
It takes a while and it takes a few failures; however, ultimately you will get it right more than not and benefit from the ability to more effectively manage criticism-prone situations. For example, consider that after working through the advice offered in this book, you being to handle 70% of criticism situations better then before. (this is a significant).
Ineffective Response Styles
An aggressive response is really a counterattack that frequently results in a greater escalation of emotions. This runs in opposition to everything we have discussed in better handling criticism.
A passive response is a little better. Although it may not immediately escalate the situation, an individual who essentially surrenders at the first sign of conflict forfeits their ability to effectively manage or assess the criticism.
A passive-aggressive approach is equally unproductive. This too often stems from poor coping and communication skills. this passive-aggressive typically agrees with and may even apologize to the critic, even when they feel that they have committed no offense.
ABC's of Criticism Management - Accept, Blanket, Clarify, Dismiss
Accept
Amazingly enough, as hard as we usually fight to consider otherwise, criticism can be accurate and ultimately helpful - even if poorly delivered.
Blanketing
Blanketing criticism can best be considered by visualizing a blanket of fog that covers the criticism; some parts you see and agree with, other information you do not.
Perhaps you have accessed the criticism to be partially constructive; use that information for your own professional and personal growth and essentially ignore the rest.
You can also respond to criticism that is only moderately productive or useful by acknowledging that the information may be correct or has the possibility of being right.
Clarify
In some cases the critic is not specific in their comments. As a result, you are not able to accurately assess the criticism and are unable to effectively reply. When this occurs, try asking for clarification.
Dismiss
Dismiss the criticism if the critic has wrong information, is emotionally venting, or is involved in some perceived ego struggle. Dismiss if the critic has low self esteem and is getting it out on you.
Dealing with the Caustic Critic
Despite your best efforts and intentions, some individuals are just chronic critics who can potentially become abusive complainers.
Seeking Criticism: Some Pain; Mostly Gain
"If you are hungry to grow, you will be eager to hear people's criticism" - Proverb
One of the reasons we have difficult with criticism is that it may come at a time when we are most vulnerable and are not emotionally prepared. This can be especially true if we are involved in a project or activity that is already taxing our skills and capabilities. Criticism at this time can seem more harsh than intended and can catch us off guard. However, if you invite the productive criticism of respected individuals, you are better prepared to assess the information received.
Actually seeking criticism from others can help you grow both personally and professionally. Rather than waiting for a crisis to develop...preemptively seek criticism from respected individuals who know will have your best interests in mind.
"Criticize a wise person... and he'll love you for it" - King Solomon
Seeking Criticism from Others
Asking someone to criticize your work or efforts is probably one of the most mature yet potentially unsettling things we can do. It makes us vulnerable, yet, if properly handled, allows us to benefit from the wisdom of others. Requested criticism can potentially allow us to grow, recover, improve, prosper, or excel - the same goal as when we provide criticism to others.
Seeking criticism, of course, does not suggest that we should unquestionably accept the criticism of others (though we have specifically asked them for their criticism), just as we would not naively accept unsolicited criticism. Not everyone is skilled in offering clear and helpful criticism in a way that allows us to use the information to our advantage.
Unfortunately, it may take a few trial runs to determine who your best critics might be.
Before Criticism Hits You
Preemptively strike at potential problems and pitfalls before they arise by seeking criticism that will allow you to perform better and prevent you from being blind-sided by criticism.
Ask yourself, "Do people feel they can tell me things without fear of consequence?" and "Do I actively seek feedback and criticism from others?"
"An individual's judgment can be no better than the information on which it is based." - Proverb
Be Aware of Strengths and Weaknesses
If we are honestly aware of our strengths and weaknesses we will be in a much better position to know what we can and cannot handle. Obviously venturing into a task or situation that exceeds our capacity is a sure invitation for criticism. However, personal and professional growth requires that we expand our limits and, thus, we will all experience times when our capabilities are taxed. Recognizing when we may need assistance or training to strengthen our abilities can help deflect unnecessary criticism, although some criticism is still sure to come to those who push the envelope.
Critical Summary
"Let me never fall into the vulgar mistake of dreaming that I am persecuted whenever I am contradicted." - Ralph Waldo Emerson
Final Thoughts
Criticism has clearly developed a negative connotation. If we focus on criticism as being improvement oriented, we can transform our thinking in a way that allows us to view criticism as a teaching tool rather than a platform for mere correction.
The best criticism comes from a caring heart and a sense to help others. If we are to criticize another it should be with the greatest regard for the other person; delivered with modesty, understanding, empathy, and generosity. Criticism can be a great gift for others and ourselves if we offer it with compassion, receive it with humility, and seek it with conviction.
http://www.amazon.com/Criticism-Management-Effectively-Receive-Lives/dp/0977499707/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1225132305&sr=8-1
Below is direct quotes from the book:
Introduction: Critical Queries
The goal of this book is to have us better understand criticism and the dynamic of criticism-prone situations...In fact, thoughtfully offered criticism can be extraordinarily valuable in helping us to grow, recover, improve, prosper, and excel - in both our professional and personal life.
As we shall see, the real lesson in dealing with receiving criticism is in the appraisal process. It is not so much the words that others speak, but the significance we give to those comments.
What is Criticism?
"Honest criticism is hard to take, especially from a relative, a friend, an acquaintance, or a stranger."
Our common understanding of the word criticism is decidedly negative and condemning. Interestingly, the origin of the term was much different.. The term criticism derived from the Greek words "kritikos" and was coined by Aristotle, a student of Plato. At this time, however, the term was defined in the context of an intellectual activity and indicated that one was "able to judge or discern."
The Hebrew word for criticism, toch'acha, is from the same word meaning "proof." As a result, it can be suggested that the best way to criticize is not through harsh rebuke or condemnation, but by offering clear and obvious proof so that the person can see for themselves the potential for improvement. The goal of criticism, therefore, should be to help others grow, recover, improve, prosper, and excel; a somewhat different approach than is often practice today.
The definition of criticism use in the book - offering productive and constructive information intended to help others grow, recover, improve, prosper, or excel.
Even mean-spirited destructive criticism allows us to learn something about the character of the critic and gives us an opportunity to practice our ability to keep our emotions in check.
G.R.I.P.E in Action (The reasons for criticism)
Grow - Find ways to help others grow as individuals, as colleagues, or in whatever role they may be struggling.
Recover - Our criticism should be directed toward helping others overcome their sense of loss and stem any further deterioration. The idea of recovery conjures the image of recuperation; helping another to heal or get better.
Improve - Criticism should always be designed to help another improve. The problem with most criticism is that it focuses on what another may have done wrong, not on ways to improve and do better.
Prosper - Criticism can be offered in such a way that it can help another to thrive. The ultimate goal of productive and constructive criticism is to help others succeed.
Excel - Effective criticism cannot only offer the guidance for others to improve and prosper, but to become truly exceptional.
The Bother of Criticism
Criticism tends to confront our self-esteem - the way we feel and think about ourselves. We have an almost automatic emotional response when we interpret that someone is criticizing us; however, recognizing that we DO interpret criticism is the key to becoming more effective at criticism management. It is how we retool our thinking about the way we appraise and assess criticism that is essential for our success. Giving criticism can be equally difficult as it can often involve conflict, stress, and giving people information that they may prefer not to hear. It reminds us that we cannot always be the "nice guy."
Studies have shown that criticism can be more difficult for us to handle because we have not designed an approach or method to deal with criticism; we allow it to haphazardly impact us...We can either learn strategies and tactics to become better at criticism management or we can choose to limp along in a haphazard and unproductive manner. The goal here, of course, it to recognize that criticism is a potentially powerful force and we want to find ways to harness that power to become better at giving, receiving, and seeking criticism in our life.
Criticism Appraisal
Albert Ellis, the father of Rational Emotive Therapy, long ago reminded us that what tends to cause us to have an emotional reaction to events is not so much the event itself, but the meaning we attach to it. According to Dr. Ellis, it is how we appraise the criticism that can cause the unproductive emotional response.
Unfortunately, we sometimes give too much power to the critic, allowing them to assail our self-esteem without fully assessing the validity or credibility of the criticism. We allow the words of others to bypass our cognitive appraisal process and permit the criticism to elicit an adverse emotional reaction. Once we realize that we have the ability to manage and appraise the criticism more effectively, the undesirable impact of criticism can be diminished.
"People are not disturbed by things, but by the view they take of them." - Epictetus
The appraisal process does not have to follow some automatic cognitive functioning that elicits anxiety, fear, apprehension, or angst, merely because someone elects to offer us criticism.
We can become more cognizant of how we all tend to appraise criticism differently. We must work not only to recognize the triggers for how we appraise an event, but also how a potential recipient of criticism might appraise it.
Critical Disclosure
"It is infinitely easier to criticize than to create" - John McCormick
Why Do People Criticize?
Some criticize because it is their job, like a coach, teacher, boss or parent. Some may simply enjoy irritating others. Still others may criticize for reasons that have nothing directly to do with you; they may be upset, emotional, exhausted, or they may be trying to prove that they are more important or more intelligent. Criticism can be manifested by a lack of trust, lack of knowledge, or fear.
Criticism often occurs when: 1) we make a mistake 2) someone thinks we made a mistake 3) someone uses the complaint as an opportunity to express problems that may be unrelated to the criticism.
Such as criticizing your work, when in reality they are more concerned with your manner of dress or the way you ignored them at some prior time. Despite attempts to offer a redefinition of the term, most criticism is negative in tone; partly because we have been "taught" that is the proper approach to criticism, and partly because it is just easier to call attention to faults. Additionally, people tend to label negative comments as criticism, whereas information that is perceived by the recipient to be helpful may be labeled as "feedback."
Who Criticizes?
In a word: everyone. It has been suggested that offering criticism is practically a national pastime.
As we all tend to engage in criticism, for our purposes the real question is who criticizes well? Caustic criticism is easy; what is much more difficult is to offer appropriate criticism that is well thought out, well crafted, well organized, and has the recipient's best interests in mind.
Types of Criticism
Generally, criticism comes in two forms: constructive and destructive.
Constructive criticism is based on accurate perceptions of circumstances or behaviors and the conveyor is motivated by a sincere desire to help the recipient improve. (David's Note: This is the type of criticism that you should listen to, not destructive).
Constructive criticism is:
-Problem focused, not personal
-Specific, not vague
-Describes, rather than evoking judgment and blame
-Recipient may have heard the same information from others
-Critic has credibility in dealing with the subject under scrutiny.
Destructive criticism is not necessarily based on accurate perceptions and the conveyor of the criticism may have ulterior motives in giving the criticism. In short, the goal is not improvement or helping, but to injure anther's self esteem. It may be given to show "who's the boss," or belittle the other person.
Destructive criticism is often characterized by:
-Personally focused
-General or vague
-Focuses on judgment and blame
-Without best interests of the recipient
-Critic has little or no credibility with subject under scrutiny
"It is much easier to be critical than to be correct." - Disraeli
Taking criticism unquestionably, ultimate, does nothing to protect your self-esteem. It may lead us to feel hurt, worthless, or defeated. Unquestioned acceptance of the criticism of others is not the solution. If done enough times the critic may come to see you as an easy target to vent their frustration.
Learning to more effectively deal with criticism is clearly the option of choice. Managing the critic is not always easy, but it is likely the most effective approach. You must try to assess where the person is coming from; determine their motivation for the criticism.
Benefits of Criticism
If the criticism is accurate and you are capable of change, it can serve to motivate you to grow, recover, improve, prosper and excel.
A number of studies have demonstrated that those who are most successful in their professional and personal lives develop the ability to effectively handle criticism - constructive or not.
This study suggested that it was not the criticism per se that was most important, it was the ability of the executive to appraise and manage the criticism that resulted in a successful tenure.
People consistently report that what distresses them most about criticism is that they feel as though they have no control over the criticism or the critic and feel somewhat vulnerable to the person giving it. However, as we will see in later chapters, the recipient may actually have greater control in managing criticism than they may first realize.
Criticism: Is it better to give than Receive?
"To profit from good advice requires more wisdom than to give it." - John Churton Collins
It is unlikely anyone could prevail in a challenge to identify a behavior that could not be criticized by someone. For some, dispensing caustic criticism - often under the guise of "help" - seems to be their mission in life. The chronic critic can always find a way that something could have been done differently or better; some greater goal that we should have been striving to achieve; some quality opportunity that we foolishly missed.
Why does receiving criticism bother us?
-It's always been portrayed as negative
-It assaults our self-esteem
-It can leave us feeling confused
-It may be unfair
-It may present a view with which we do not agree or perceive
-The critic seems to enjoy the delivery
-It hurts our feelings
-It makes us seem less than we see ourselves
Power of Receiving Criticism
Can we accept that criticism can be both hurtful and helpful?
Once the criticism has left the mouth of the critic, it cannot be recast or ushered back. The power of the criticism communication now clearly shifts to the recipient.
Self-Criticism
Research has shown that we are often not objective in our examination of the issues and we often focus on the negative to the exclusion of all else. In fact, this overly and overtly negative orientation is a key feature of self-criticism.
As with most other aspects of dealing with self-criticism, the key is to evaluate and assess; to appraise whether what you are saying to yourself is fair. It may be based on a relatively insignificant comment from the prospective of another that we unfairly overweigh.
Critical Communications
One of the most important considerations in dealing with others is the recognition that people typically see things not as they actually are, but as the person is.
As a result, a criticism of one's paper, for example, that merely suggests it "needs a little work" can be processed by an individual in an overly emotional or sensitive state as "it's a complete mess." It seems that we tend to suffer from what has been termed the False Consensus Effect; the belief that out opinion is shared by most others.
Nonverbal communication can play a major role in the criticism communication process. Facial expressions, body language, eye contact, vocal tone, and interpersonal distance can all contribute to the interpretation of a message...Males tend to engage in more visual dominance posturing; looking or keeping eye contact more with a person considered to be lower status than one who might be considered higher status.
Those who speak in a clear, quick pace are seen as more trustworthy. This may be a result of being confident - so there is no halting speech pattern - or may be due to the pace of the message exceeding the recipients' capacity to consider counter arguments, as has been suggested in some studies.
Listening, not just hearing is what provides the significance to the communication process.
"The greatest gift you can give another is the purity of your attention." - Richard Moss
Power Questioning
This is a technique and one of the "secrets" of providing non-offensive feedback and criticism. It allows you to ask questions in a non-offensive way that tends to short-circuit the natural defensiveness that many people experience when given criticism. Instead of seeming threatening, you are merely asking questions that may lead the recipient to the conclusion that something may need attention.
In fact, numerous management studies reveal that strong communication abilities are synonymous with leadership success.
Effective Criticism: Putting the PC into Criticism
While it is true that we can sometimes gain a measure of satisfaction by letting someone have it with both barrels; such guilty pleasure is often short-lived. Giving someone a strong rebuke, especially if we feel they truly deserve it, can be satisfying - the problem is that it's not particularly successful in the long run.
The Art of Giving Criticism: Being P.C. or Productive and Constructive
Providing criticism to others can be challenging and is usually not the most efficient communication technique. However, efficiency takes a backseat to long term effectiveness in the areas of critical communications.
Giving criticism causes us to recognize that we may have to hurt others feelings by telling them information that they may not wish to hear. Many of these concerns can be diminished, if not alleviated, by reflectively and carefully considering the goal of criticism, the significance of our redefinition of criticism, and maintaining respect for the recipient.
Preparation and consideration are the keys. To be the most effective in walking through the potential minefield of providing criticism to others, one needs to consider three important phases: what to do before, during, and after providing criticism.
Before Giving Criticism
Even before you utter a word, you must reflect on your motivation, your goal, the best approach, and the process of offering productive and constructive criticism. Even if the criticism could be helpful, it should likely not be offered when the motivation is less than honorable.
Gather all Relevant Information
Nothing could be worse than offering criticism that is unwarranted, undeserved, and based on faulty information.
Consider the Time and Place
In order to effectively offer constructive and productive criticism, the time and location of the interaction must be considered. I am not a particular fan of impromptu criticism unless the giver is well experienced. Criticism that is immediate and not well thought out has the possibility of being overly emotional and harsh - not consistent with our goal of helping others improve. The myth of immediacy has torpedoed many a well-intentioned critic.
For example, a meeting at the end of a long and strenuous day might be ill advised. The timing must consider the emotional states of both the giver and receiver of criticism. Fatigue, irritability, or excessive emotionality can impede the effective delivery of criticism. Management experts suggest that criticism is often best provided early in the day and early in the week. The idea is that this provides for other opportunities to interact in a more lighthearted or causal context at other points in the day.
The rule is "praise in public, criticize in private." Typically, criticism is best handled in private. It is generally unprofessional and would run counter to the best interests of the recipient to criticize in a public venue. However, there are unusual circumstances where the presence of others may be beneficial, for example, when a problem employee consistently misstates or misrepresents to others what you have said in private, you may be required to use another tactic.
Consider the emotional state of the Giver and Recipient
It is helpful to ask yourself at least two questions: "Would I be receptive to criticism if I were this person right now?" and "Am I emotionally calm so as to offer criticism in the spirit in which I intend?"
If you are upset, fatigued, or emotionally exhausted there is a much greater chance that the criticism will come across as overly harsh or demeaning. Overly emotional and callous criticism can have potentially devastating long term consequences, not just for the initial recipient, but for other individuals who may wonder if they will be the next victim. It is better to recognize when your emotional trigger has been activated and wait to calm down and constructively organize your thoughts.
Even if you, as the giver, are feeling ok, it is important to assess the recipient. In order for the criticism to be productive and constructive, it must be received in the context of a helping spirit and not obscured by emotional obstacles.
Psychologically, people need to know that they have worth and value. Even though you are criticizing them for a particular issue, they likely do many things well and that should not be neglected in the process.
Evaluate the Criteria Being Used to Validate the Criticism
Criticism is always offered in context and recipients expect to know what criteria are being used to judge their behavior. Policies, rules, procedures, guidelines can be identified to support and validate criticism. Recipients deserve to know what yardstick is being used to support the criticism.
Use Mental Rehearsal and Visualize the Encounter
Always keep the end game in mind; the ultimate goal. It the ultimate goal to make the other person feel worse or is it to help someone improve so they may do better? As Stephen Covey says, "being with the end in mind." Know how you want the meeting to turn out and prepare yourself to have the greatest probability of success.
It is important not to just give this encounter some inconsequential thought. Rather, research has demonstrated that actually visualizing the encounter and possible scenarios can be very useful.
"Criticism is the disapproval of people, not for having faults, but having faults different from your own." - Unknown
Once you are certain that you have clearly communicated and have been understood, do not become repetitive. Make you point and move on. Offer a clear message and then stand clear. Don't clutter the simplicity of a clear message with needless chatter.
Think Win-Win
Before giving criticism consider how the solution can be beneficial to everyone involved. It might be helpful to think about providing criticism as if it were a business meeting. Do you want the meeting conducted by someone who is unprepared; maybe jotting down a few last minute notes seconds before arriving, or do you want someone who has done their homework and is organized?
Criticism: The Gift of Giving
1. Don't Procrastinate
Once all the important points have been considered before giving criticism, and you have concluded that it's appropriate to proceed, do not procrastinate.
As discussed previously, most of us want to be the 'good guy' and rendering criticism reminds us that we cannot always be in the position to offer praise. While it is certainly true that being overly critical is far from wise, avoiding criticism for fear of creating a confrontation can be worse.
2. Remain Calm - Monitor Your Own Emotions
3. Stick to the Facts and Be Specific
Make sure you fully understand the problem, the evidence, and the yardstick against which you are measuring the behavior.
4. Criticize the Deed: Not the Doer
If you find yourself slipping into criticism that focuses on the individual rather than the behavior, you have missed your mark.
5. Make Sure It's Dialogue
The goal of criticism communication is to ensure that there is dialogue, not a monologue. However, if you do not allow for a two-way dialogue, you may miss important information that might help you better assess the particulars of the situation.
6. Be Prepared for a Variety of Responses
7. Ensure Effective Communication has Occurred
You will want to use a feedback technique to elicit from the recipient their understanding of the criticism. Some people find saying something like the following to be helpful: "OK, we have been talking about a number of things, let's make sure we compared notes so we are not missing anything."
8. Focus on the Future not the Past
Direct your attention to things that can be done to fix problems that lie ahead. The problem of the past has already occurred; the goal is not to dwell on the past issue but to use it as a tool to prevent similar occurrences in the future. Productive and constructive criticism is future oriented.
9. Be Concrete Regarding Expectations
Don't require people to guess as to how they can improve. Destructive criticism is directed at "punishing" the recipient for past actions. The problem with punishment is that it often reprimands the receipient without regard for explaining how things should be done differently in the future.
10. Acknowledge it is Subjective
Whatever the case, criticism is often subjective and providing that acknowledgement to the recipient may help to protect their self-esteem by allowing them to recognize that the criticism is about some action in this situation, not about their worth in general.
Start to Finish
It is helpful to start the conversation with a clear indication of why you wanted to meet with the individual.
Use the conjuction "also" instead of "but." "I appreciate your efforts and I really want you to be best. I also wanted to discuss. End the conversation, "I am very willing to work with you on this issue and I anticipate things being much better as a result of us addressing this together."
1. Be Positive
Expectations often breed the anticipated results; what psychologists call a self-fulfilling prophecy. If we expect others to improve they will reciprocate with results. The goal is to reflect the attitude that the other person will succeed.
2. Be Accessible
Conversely, PR critics want to be available to keep the recipient on course and give direction and guidance as needed.
Special Criticism Considerations and Techniques
Chronic Critics
The techniques of dealing more effectively with criticism will not always be successful, especially when dealing with emotionally immature individuals or those we might categorize as chronic critics. These are the people that take our openness to criticism and use it against us as a weapon to make themselves feel important, rather than as a tool to help others excel.
People who constantly criticize are often insecure and many attempt to enhance their own self-esteem by belittling and attacking others. If you offer even a tacit agreement or apology, this type of chronic critic will often reply with something like, "Well let me tell you what else you do that's wrong!" In this case, the assessment process becomes all the more critical. For this type of chronic critic, the usual rules do not apply.
"Maturity beings when we're content to feel we're right about something without feeling the necessity to prove someone else wrong." - Sydney Harris.
Hurt the Ones You Love
We sometimes believe that we have Carte Blanc to "correct" those we love the most. Before you offer criticism to a love one, take a moment and examine your own heart. What is motivating you to offer this criticism? If it is anger or frustration, you may wish to wait until the emotionality subsides so that you can address the real issue that created those emotions in the first place.
The Power of Criticism Questions
Questions allow you to provide information in a non-offensive manner that tends to short-circuit the natural defensiveness that many people experience when given more direct criticism.
An important caveat, however, is to ensure that the tone of your question is carefully monitored. If your questions reflect an attitude of arrogance or your tone imparts a sense of condescension you have missed the point of this valuable technique.
Additionally asking questions enhances the self-worth of others; they feel that their opinions count and will usually appreciate the opportunity to address issues that may potentially impact them.
Sample:
Q: "That's an interesting idea, how do you think it might impact productivity?"
A: "Well I'm not sure; I was really focusing on the front end. I'd better look at that."
Question Categories
Informational questions can be used to both communicate and gather information. For example, "Could you clarify how this will...?" is a question that will not only yield information but may cause the recipient to more carefully reflect on their decision.
Consequence questions provide the opportunity for the recipient to consider the outcome of their position or decision. For example, "How will this decision affect the other units?"
Explicit questions are those that provide the recipient with an idea or a particular solution. "What if we were to get the same result by doing...?"
One form of question to avoid is the "Why did you..?" variety. Frequently, when someone is overtly asked why they did something, the defensive shields are activated.
Criticism Communication Techniques and Strategies
"Explain as if the Other Doesn't Know" Technique
"You may not know this, however, we need to have..." You offer criticism in a similar style that is used in non-offensive questioning though it is intentionally worded to act as if the other person does not know the proper procedure, etc. - through no fault of their own. This can be a good criticism communication technique especially when dealing with co-workers without eliciting a defensive response.
Super-Ordinate Goal Technique
This tactic focuses on the "we are all in this together" approach. It demonstrates to the recipient that we are all working toward some common achievement. For example, "I know that we all have unique ideas; however I know everyone understands that the ultimate goal is to..."
Mental Rehearsal
Research suggests if you think about and consider the impending situation in advance, then when confronted with the actual events it is much less stressful and your confidence is much improved.
Use Humor
Careful use of humor can be another useful tool as long as it is not perceived as making fun of the person or a serious issue - it can lighten the mood and may offer some perspective if a discussion seems to have been blown out of proportion.
Demonstration
One of the best ways to communicate how to accomplish a task is through proper example.
Disguise Criticism
Another technique that can be useful is to disguise the criticism as though it is a problem you are facing and ask the person - for whom it is really intended - to offer suggestions or advice on how to deal with it.
Have Third Party Involvement
On occasion the best way to address criticism most effectively is to allow another person to provide it. This can be especially true in close relationships or in circumstance when the potential recipient may not view you to be as objective as you would hope (due to emotional clouding created by the relationship).
Receiving Criticism from Others
"To avoid criticism, do nothing, say nothing, be nothing" - Elbert Hubbard
Criticism is unavoidable. Period. There simply is no behavior that is universally accepted; and some people seem predisposition to criticize anything and everything.
Because of past influences and examples, we have been conditioned to believe that criticism should be caustic; some believe that it must be painful in order to work. Sadly, such beliefs are misguided and counterproductive.
One of the reasons we have difficulty with criticism is that we have not consciously considered how to best handle criticism and criticism-prone situations.
She had learned valuable lessons of assessing the criticism for what it was - the ravings of a very unhappy individual - and did not accept it as a reflection of her own esteem or competence.
Typically, people want to be heard and will often feel better about the situation if someone has listened with empathy.
In fact, that is one of the crucial elements in managing criticism - to recognize when criticism can actually be valuable and help you improve, even if poorly delivered. The goal is to rethink criticism in such a way that you become successful criticism managers.
Effective Criticism Managers tend to:
1. See the Criticism as an Opportunity
This is a real hallmark of the successful criticism manager. The opportunity can come in many forms; it might be an opportunity to learn about yourself, your ability to handle tough situations, or to learn more about the critic.
2. Recognize There May be Truth in the Criticism
Even if mostly inaccurate, recognizing that criticism can be a perception that others may share, it may be wise to consider it as a caution to reexamine your actions.
Interestingly, sometimes our enemies may be more helpful than our friends. After all our friends are usually trying to be polite and spare us from information that might jeopardize our friendship. Our enemies, on the other hand, are not necessarily interested in being our friend or codling our emotions - they will tell us things we might not necessarily want to hear but may need to hear.
3. Engage in Honest Assessment
It is important to be honest with yourself and recognize that the criticism - even if not well delivered - may still have a ring of truth.
4. Separate the Criticism from the Critic
Although this can be difficult to do, the effective criticism manager distinguishes the criticism from the critic. Even if the critic is neither credible nor well intentioned, the information may still be useful. Focus on the lesson, not the teacher.
5. Remain in the Third Person
When receiving criticism, don't get caught up in the rampant emotionality that may be whirling all around; instead look at the events as a dispassionate third party, merely observing the other person and assessing their tactics and motives.
6. Recognize the Potential for Personal Development
Look more carefully at how the criticism may help you - even if it is nothing more than an exercise on how to remain calm in the face of hostile criticism. Criticism is uncomfortable and you frequently have little choice but to hear it; however, if you are going to listen, you might as well determine what information might be there that could help you to better yourself.
7. Do not Dwell on the Criticism
This is often easier said than done. It seems to be human nature to focus on the negative. If the criticism is accurate then 1) Learn the lesson 2) Consider what needs to be done to improve 3) Implement the improvement 4) Get over it and move on!
8. Accept the Criticism if Correct: Learn the Lesson
Some would say the essential way to learn is through failure. Some has suggested that if we are not failing, we are either not learning or we are playing it safe; not striving to grow.
Assessing Criticism
"The trouble with most of us is that we would rather be ruined by praise than saved by criticism." - Norman Vincent Peale
Recent studies show that verbal abuse is far more prevalent and harmful than physical abuse.
Interestingly, criticism is a great opportunity to learn about ourselves. However, when someone offers criticism it does not automatically render it correct or accurate. In reality, there may be many reasons that someone offers criticism and sometimes it has little to do with the actual actions of the recipient. As a result, one of the most important aspects of handling criticism is to accurately assess the comments for content and accuracy.
Actively Listen
Often we get caught in the "reply trap" where we are so involved in crafting how we are going to respond, we do not truly listen. Even if the criticism is not true, the one offering the criticism likely perceives it to be accurate. Try to refrain from responding too quickly. We listen more effectively when we are not defending.
Consider the Source of the Criticism
Just because someone decides to offer criticism does not mean they are in a position that makes their comments valid. In the process of assessing criticism you should ask yourself a few questions similar to these:
-Is the person knowledgeable in this area?
-Is the person trying to help me improve or is he being destructive?
-Are they a chronic critic or do they usually offer productive criticism to others?
If a critic is offering their uninformed opinion about a topic with which they are unfamiliar, the result of your assessment is apt to be quite different (and should be). Although the chronic critic is motivated for reasons other than to help you improve, some individuals may offer useful information, even if you are unaware of their "credentials" to criticize.
Consider the Importance and Benefit
Even when criticism may be valid, it is important to not get "caught in the thick of thin things." In others words, the issues being criticized may be so trivial that the effort to institute change exceeds the potential benefit derived. Keep it in perspective!
Don't React or Take it Personally. Reacting is a part of the Act-React cycle, with little thought in between. Responding has the connotation of some reflection before answering.
Accept that Criticism Can be Unpleasant
If you are striving to reach new goals; it is likely that you will experience failure, setback, and complications. If you simply are not capable of carefully assessing and responding to the criticism of others - using the techniques in this book - then it may be time for a career change. You've got to be able to stand the heat if your goal is to be a firefighter. You've got to be able to handle criticism if your goal is to go beyond the status quo to become the best that you can.
Have a Sense of Humor
A good sense of humor can help to diffuse hurtful criticism and help us to gracefully accept criticism that hits the market.
Respond
Acknowledge the Critic - Start with a brief statement, "Thank you for sharing your thoughts with me about this, I appreciate your wanting to help."
Ask Questions - This helps in several ways. It likely allows you to get better information; it provides a natural pause from the conversation and it clearly demonstrates that you are listening, are concerned, and want to really understand.
PUT THESE IDEAS IN PRACTICE!
Responding to the Critic
It takes a while and it takes a few failures; however, ultimately you will get it right more than not and benefit from the ability to more effectively manage criticism-prone situations. For example, consider that after working through the advice offered in this book, you being to handle 70% of criticism situations better then before. (this is a significant).
Ineffective Response Styles
An aggressive response is really a counterattack that frequently results in a greater escalation of emotions. This runs in opposition to everything we have discussed in better handling criticism.
A passive response is a little better. Although it may not immediately escalate the situation, an individual who essentially surrenders at the first sign of conflict forfeits their ability to effectively manage or assess the criticism.
A passive-aggressive approach is equally unproductive. This too often stems from poor coping and communication skills. this passive-aggressive typically agrees with and may even apologize to the critic, even when they feel that they have committed no offense.
ABC's of Criticism Management - Accept, Blanket, Clarify, Dismiss
Accept
Amazingly enough, as hard as we usually fight to consider otherwise, criticism can be accurate and ultimately helpful - even if poorly delivered.
Blanketing
Blanketing criticism can best be considered by visualizing a blanket of fog that covers the criticism; some parts you see and agree with, other information you do not.
Perhaps you have accessed the criticism to be partially constructive; use that information for your own professional and personal growth and essentially ignore the rest.
You can also respond to criticism that is only moderately productive or useful by acknowledging that the information may be correct or has the possibility of being right.
Clarify
In some cases the critic is not specific in their comments. As a result, you are not able to accurately assess the criticism and are unable to effectively reply. When this occurs, try asking for clarification.
Dismiss
Dismiss the criticism if the critic has wrong information, is emotionally venting, or is involved in some perceived ego struggle. Dismiss if the critic has low self esteem and is getting it out on you.
Dealing with the Caustic Critic
Despite your best efforts and intentions, some individuals are just chronic critics who can potentially become abusive complainers.
Seeking Criticism: Some Pain; Mostly Gain
"If you are hungry to grow, you will be eager to hear people's criticism" - Proverb
One of the reasons we have difficult with criticism is that it may come at a time when we are most vulnerable and are not emotionally prepared. This can be especially true if we are involved in a project or activity that is already taxing our skills and capabilities. Criticism at this time can seem more harsh than intended and can catch us off guard. However, if you invite the productive criticism of respected individuals, you are better prepared to assess the information received.
Actually seeking criticism from others can help you grow both personally and professionally. Rather than waiting for a crisis to develop...preemptively seek criticism from respected individuals who know will have your best interests in mind.
"Criticize a wise person... and he'll love you for it" - King Solomon
Seeking Criticism from Others
Asking someone to criticize your work or efforts is probably one of the most mature yet potentially unsettling things we can do. It makes us vulnerable, yet, if properly handled, allows us to benefit from the wisdom of others. Requested criticism can potentially allow us to grow, recover, improve, prosper, or excel - the same goal as when we provide criticism to others.
Seeking criticism, of course, does not suggest that we should unquestionably accept the criticism of others (though we have specifically asked them for their criticism), just as we would not naively accept unsolicited criticism. Not everyone is skilled in offering clear and helpful criticism in a way that allows us to use the information to our advantage.
Unfortunately, it may take a few trial runs to determine who your best critics might be.
Before Criticism Hits You
Preemptively strike at potential problems and pitfalls before they arise by seeking criticism that will allow you to perform better and prevent you from being blind-sided by criticism.
Ask yourself, "Do people feel they can tell me things without fear of consequence?" and "Do I actively seek feedback and criticism from others?"
"An individual's judgment can be no better than the information on which it is based." - Proverb
Be Aware of Strengths and Weaknesses
If we are honestly aware of our strengths and weaknesses we will be in a much better position to know what we can and cannot handle. Obviously venturing into a task or situation that exceeds our capacity is a sure invitation for criticism. However, personal and professional growth requires that we expand our limits and, thus, we will all experience times when our capabilities are taxed. Recognizing when we may need assistance or training to strengthen our abilities can help deflect unnecessary criticism, although some criticism is still sure to come to those who push the envelope.
Critical Summary
"Let me never fall into the vulgar mistake of dreaming that I am persecuted whenever I am contradicted." - Ralph Waldo Emerson
Final Thoughts
Criticism has clearly developed a negative connotation. If we focus on criticism as being improvement oriented, we can transform our thinking in a way that allows us to view criticism as a teaching tool rather than a platform for mere correction.
The best criticism comes from a caring heart and a sense to help others. If we are to criticize another it should be with the greatest regard for the other person; delivered with modesty, understanding, empathy, and generosity. Criticism can be a great gift for others and ourselves if we offer it with compassion, receive it with humility, and seek it with conviction.
The Dark Side of Man: The Fairness Principle
The sense of fairness is DEEPLY ingrained in every human. A recent study even showed that capuchin monkeys, primates like human, also believe in fairness: http://www.msnbc.msn.com/id/21773403/.
Fairness also applies to entrepreneurs. While many (such as myself) would lead you to believe that entrepreneurs are super-human, they are at the end of the day still human.
I have found in myself that it is easier to work during the day on things I do not like as long as there are others in the office that also have to stay and work.
Is it right, is it logical, is it based on common-sense? No. Do I still feel this way? Yes.
The moral of the story: if you are an entrepreneur, having an employees or partner work with you in the same physical vicinity will improve your morale and productivity.
Fairness also applies to entrepreneurs. While many (such as myself) would lead you to believe that entrepreneurs are super-human, they are at the end of the day still human.
I have found in myself that it is easier to work during the day on things I do not like as long as there are others in the office that also have to stay and work.
Is it right, is it logical, is it based on common-sense? No. Do I still feel this way? Yes.
The moral of the story: if you are an entrepreneur, having an employees or partner work with you in the same physical vicinity will improve your morale and productivity.
Sunday, October 26, 2008
One Shift that Will Decrease Your Procrastination Considerably
Recently, I have learned that one of the things that keeps people from action & achievement is incongruency. A battle of the conscious and the unconscious. This happens when we know a truth in our gut (our subconscious) but are unable or unwilling to admit it to our conscious mind. This can be as complex as our greatest ambitions and desires to as simple as how long/hard a task is.
This is where it comes to affect procrastination. One thing that I commonly procrastinated on is ironing my clothes. Why? Anytime that I thought about ironing my clothes I had two conflicting beliefs. My subconscious knew that it was something that would take 15-20 minutes while my conscious mind kept saying it'll only be 2 minutes. After 30 seconds I would get distracted and go on to something else.
In order to reverse this you must make your conscious and subconscious mind at ease with each other. In lamen's terms, you must learn to be brutally honest with yourself. All decisons need to be formed on the basis of reality rather then the basis of a simple or complex lie.
The conscious thought process should be: it will take 15 minutes to iron my clothes, do I want to do this or not? Only when we come from the perspective of the truth can we hope to make wise decisions and consequently significant achivement.
Read my post on Six Pillars of Self Esteem for more on this topic.
This is where it comes to affect procrastination. One thing that I commonly procrastinated on is ironing my clothes. Why? Anytime that I thought about ironing my clothes I had two conflicting beliefs. My subconscious knew that it was something that would take 15-20 minutes while my conscious mind kept saying it'll only be 2 minutes. After 30 seconds I would get distracted and go on to something else.
In order to reverse this you must make your conscious and subconscious mind at ease with each other. In lamen's terms, you must learn to be brutally honest with yourself. All decisons need to be formed on the basis of reality rather then the basis of a simple or complex lie.
The conscious thought process should be: it will take 15 minutes to iron my clothes, do I want to do this or not? Only when we come from the perspective of the truth can we hope to make wise decisions and consequently significant achivement.
Read my post on Six Pillars of Self Esteem for more on this topic.
Saturday, October 25, 2008
The Most Important Aspect of Leadership
There are certain prerequisites to becoming an efficient and effective leader. None is more important than the desire to take responsibility for the outcome of your organization. This means no excuses, period. As a leader you are responsible for surrounding yourself with the right people and therefore, everything, ultimately is your responsibility. Employees, professionals, consultants, partners, etc.
This is not to say, of course, that leadership qualities, like all other qualities, are not formed and evolve over a trial-and-error process. To be a good leader takes time and good leadership is on a continuum not on a simple binary yes/no scale. Very few leaders are 10's. If you are a 3 your goal should be to become a 5, if you are a 7 your goal should be to become a 9, etc.
At the end of the day, taking responsibility is tough. It takes a real man/woman to do this. This is especially relevant to my generation that has been taught to avoid responsibility, conflict, and decisions at all cost.
Every morning when I wake up I say the following affirmation:
'I take ultimate responsibility for my actions. I am the leader.'
The organization(s) of tomorrow will require many leaders. It is time to embrace our destiny and to anoint ourselves as leaders of tomorrow. Our economy and society depends on us to do just that.
This is not to say, of course, that leadership qualities, like all other qualities, are not formed and evolve over a trial-and-error process. To be a good leader takes time and good leadership is on a continuum not on a simple binary yes/no scale. Very few leaders are 10's. If you are a 3 your goal should be to become a 5, if you are a 7 your goal should be to become a 9, etc.
At the end of the day, taking responsibility is tough. It takes a real man/woman to do this. This is especially relevant to my generation that has been taught to avoid responsibility, conflict, and decisions at all cost.
Every morning when I wake up I say the following affirmation:
'I take ultimate responsibility for my actions. I am the leader.'
The organization(s) of tomorrow will require many leaders. It is time to embrace our destiny and to anoint ourselves as leaders of tomorrow. Our economy and society depends on us to do just that.
Friday, October 24, 2008
Suffering, Entrepreneurship, and The Concept of Relative Pain
I have come to understand a phenomena. It's not pain that people dislike, it's relative un-balanced pain. You see, most people, even the lazy ones, see no problem working in a boring 9-5 job Monday-Friday. Even these lazy people think that it's just the way it is and more or less accept their fate with no protest.
However, throw a simple twist into the equation and even the most conforming individuals will protest. For example, tell them that they have to come in on Saturday to work for 2 hours... 2 measly hours, and they will complain.
These people will complain because relatively speaking, other people are having a good time but they must work (of course, it is also not part of their original agreement but this is much less of a factor).
These lazy people, as little as we like to admit it, live within each one of us.
The problem is that as entrepreneurs we often times must work 7 days a week at times.
The way to improve our efficiency and motivation is simple: schedule pleasant necessary tasks on the weekends and unpleasant necessary tasks during the week. That way, relatively speaking, you are only doing bad work during the week (along with the rest of the world).
For us, we are in the process of scheduling weekly meeting on Friday rather then on the weekends (I still can't get myself to enjoy starting them). Not to mention, the mere act of starting something is painful so therefore, to minimize pain we combine it with the act of already being at work.
P.S. This is how people are able to work 90+ hour weeks in investment banking. Everyone around is doing the same, it's all RELATIVE.
However, throw a simple twist into the equation and even the most conforming individuals will protest. For example, tell them that they have to come in on Saturday to work for 2 hours... 2 measly hours, and they will complain.
These people will complain because relatively speaking, other people are having a good time but they must work (of course, it is also not part of their original agreement but this is much less of a factor).
These lazy people, as little as we like to admit it, live within each one of us.
The problem is that as entrepreneurs we often times must work 7 days a week at times.
The way to improve our efficiency and motivation is simple: schedule pleasant necessary tasks on the weekends and unpleasant necessary tasks during the week. That way, relatively speaking, you are only doing bad work during the week (along with the rest of the world).
For us, we are in the process of scheduling weekly meeting on Friday rather then on the weekends (I still can't get myself to enjoy starting them). Not to mention, the mere act of starting something is painful so therefore, to minimize pain we combine it with the act of already being at work.
P.S. This is how people are able to work 90+ hour weeks in investment banking. Everyone around is doing the same, it's all RELATIVE.
Accomplishment and Complacency
Lately I have found an interesting phenomenon, there is indeed a inverse relationship between doing and learning. This has nothing to do with the opportunity cost of time. Instead, it has to do with a much larger theme of accomplishment and complacency.
A sense of accomplishment comes more from "number of acts" then the "size of acts". For example, an individual with the same level of complacency would feel the same improving sales 20% in on a $10,000 project as he would improving sales the same 20% on a $1 million project. This is because both of them are similar increase and are one act. It would take more willpower to improve ten $10k projects by 20% (a $20,000 improvement overall) then a single $1 million project 20% ($200,000 improvement).
The point here is fairly simple. If you want to achieve a lot you can't fragment your sense of accomplishment into small acts. While you can positively reinforce yourself with small psychological rewards the "act" in your mind should be the final completion of something big.
Otherwise, if you feel that reading a book is an accomplishment you are less likely to push yourself in business.
There is a middle-ground solution that acknowledges the fact that learning is crucial to success. The solution is to go on reading binges, 2 to 7 days of constant reading to educate yourself (preferably not more often then every couple of months). At all other times, I would limit my reading to articles and other types of media that do not give us a sense of accomplishment (perhaps reviews of previous reading).
Agree/Disagree?
A sense of accomplishment comes more from "number of acts" then the "size of acts". For example, an individual with the same level of complacency would feel the same improving sales 20% in on a $10,000 project as he would improving sales the same 20% on a $1 million project. This is because both of them are similar increase and are one act. It would take more willpower to improve ten $10k projects by 20% (a $20,000 improvement overall) then a single $1 million project 20% ($200,000 improvement).
The point here is fairly simple. If you want to achieve a lot you can't fragment your sense of accomplishment into small acts. While you can positively reinforce yourself with small psychological rewards the "act" in your mind should be the final completion of something big.
Otherwise, if you feel that reading a book is an accomplishment you are less likely to push yourself in business.
There is a middle-ground solution that acknowledges the fact that learning is crucial to success. The solution is to go on reading binges, 2 to 7 days of constant reading to educate yourself (preferably not more often then every couple of months). At all other times, I would limit my reading to articles and other types of media that do not give us a sense of accomplishment (perhaps reviews of previous reading).
Agree/Disagree?
The Employee Paradox
One of the most important and paradoxical points in Tom Peter's 'In Search for Excellence' book is that people's greatest desire is to have meaning in their work. They will sacrifice much, hard work, and even individual freedom, in order to to succumb to a greater reason for existence. At the same time, people want to feel like they have some control over their lives, even a little.
At Ticket Celebration we have adopted the following policies in the last couple months to account for this:
Mission Statement : To be the most innovative ticket brokerage in the world (gives all of us meaning, including myself).
The Focus on Outcome not Method: We tell our employees the specific quantifiable outcome that we are looking for. If they can achieve this by coming in at 11:30 and leaving at 1 P.M. everyday then we are fine with that. Of course, the outcomes rely on them being at the office, but this autonomy gives employees the freedom and flexibility they so crave.
At Ticket Celebration we have adopted the following policies in the last couple months to account for this:
Mission Statement : To be the most innovative ticket brokerage in the world (gives all of us meaning, including myself).
The Focus on Outcome not Method: We tell our employees the specific quantifiable outcome that we are looking for. If they can achieve this by coming in at 11:30 and leaving at 1 P.M. everyday then we are fine with that. Of course, the outcomes rely on them being at the office, but this autonomy gives employees the freedom and flexibility they so crave.
Thursday, October 23, 2008
Long Range Planning by Drucker
"The idea of long-range planning - and much of its reality - rests on a number of misunderstandings. The long range is largely made by short-run decisions. Unless the long range is built into, and based on, short-range plan and decisions, the most elaborate long-range plan will be an exercise in futility."
What it means to Teach
The role of the teacher and professor is one of the most important roles in society.
The first role of a teacher is to learn. In fact, to be of any use a teacher must learn 3 times more then he/she teaches (depending on the quality of reading materials). This is because the role of the teacher is to weed out necessary from unnecessary information for the students.
To teach without learning is to urinate without drinking.
Schools and universities need to drastically improve the way that professors learn and create a systematic method of education.
The fact that the PHD program is a one-time "event" is a misunderstanding of the entire process of learning. This may explain why many academic institutions are often 10-20 years behind cutting edge companies (the average PHD is roughly 10-20 years since defending his dissertation).
The first role of a teacher is to learn. In fact, to be of any use a teacher must learn 3 times more then he/she teaches (depending on the quality of reading materials). This is because the role of the teacher is to weed out necessary from unnecessary information for the students.
To teach without learning is to urinate without drinking.
Schools and universities need to drastically improve the way that professors learn and create a systematic method of education.
The fact that the PHD program is a one-time "event" is a misunderstanding of the entire process of learning. This may explain why many academic institutions are often 10-20 years behind cutting edge companies (the average PHD is roughly 10-20 years since defending his dissertation).
Wednesday, October 22, 2008
The Daily Drucker
Direct quotes from the Daily Drucker. Click here to purchase it.
Integrity in Leadership
The spirit of an organization is created from the top.
The proof of sincerity and seriousness of management is the uncompromising emphasis on integrity of character. Character is not something one can fool people about. The people with whom a person works, and especially subordinates, know in a few weeks whether he or she has integrity or not. They may forgive a person for a great deal but they will not forgive for a lack of integrity. Nor will they forgive higher management for choosing him. "Trees die from the top"
Action Step: Evaluation the character of the CEO and top management when considering a job offer. Align yourself with people who have integrity.
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Identify the Future
The important thing is to identify the "future that has already happened."
The most important work of the executive is to identify the changes that have already happened. The important challenge in society, economics, policies, is to exploit the changes that have already occurred and to use them as opportunities. The important thing is to identify the "future that has already happened" - and to develop a methodology for perceiving and analyzing these changes.
Action Point: Identify the major trends in your market that have ALREADY happened. Write a page on their likely longevity and impact on your life and organization.
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Management is Indispensable
Management also expresses the basic beliefs of modern Western society. It expresses the belief in the possibility of controlling man's livelihood through the systematic organization of economic resources. It expresses the belief that economic change can be made into the most powerful engine for human betterment and social justice.
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Organizational Inertia
All organizations need to know that virtually no program or activity will perform effectively for a long time without modification and redesign. Eventually every activity becomes obsolete. Among organizations that ignore this fact, the worst offender is government.
Businessmen are just as sentimental about yesterday as bureaucrats. They are just likely to respond to the failure of a product or program by doubling the efforts invested in it. But they are, fortunately, unable to indulge freely in their predilections. They stand under an objective discipline, the discipline of the market.
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Abandonment
There is nothing as difficult and as expensive, but also nothing as futile, as trying to keep a corpse from stinking.
If leaders are not able to slough off yesterday, to abandon yesterday, they simply will not be able to create tomorrow.
Without systematic and purposeful abandonment, an organization will be overtaken by events...Far too few businesses are willing to slough off yesterday, and as a result, far too few have the resources available for tomorrow.
Action Point: Stop squandering resources on obsolete businesses and free up your capable people to take advantage of new opportunities.
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Practice of Abandonment
Ask yourself: If we did not do this already, would we go into it now? If the answer is no, the reaction must be "What do we do now?"
In three cases the right action is always abandonment. Abandonment is the right action if a product, service, market, or process "still has a few years of life." It is these dying products, services, or processes that always demand the greatest care and the greatest efforts. They tie down the most productive and ablest people. But equally, a product, service, market, or process should be abandoned if the only argument for keeping it is "It is fully written off." For management purposes there are no "cost-less assets" only "sunk costs." The third case where abandonment is the right policy - and the most important one - is the one where, for the sake of maintaining the old or declining product, service, market, or process the new and growing product, service, or process is being stunted or neglected.
Action Point: Ask the questions posed above and if the answer is no, make the tough choice to abandon a cherished business.
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Knowledge Workers : Asset Not Cost
Management's duty is to preserve the assets of the institution in its care.
Knowledge workers own the means of production. It is the knowledge between their ears. And it is a totally portable and enormous capital asset.
Management's duty is to preserve the assets of the institution in its care.
Action Point: Attract and hold the highest-producing knowledge workers by treating them and their knowledge as the organization's most valuable assets.
David's Point: Find a way to systematically transfer knowledge into the organization.
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Autonomy in Knowledge Work
Demanding of knowledge workers that they define their own task and its results is necessary because knowledge workers must be autonomous.
Indeed, knowledge workers must know more about their areas than anyone else; they are paid to be knowledgeable in their fields. What this means is that once each knowledge workers has defined his or her own task and once the work has been appropriately restructured, each worker should be expected to work out his or her own course and to take responsibility for it. Knowledge workers should be asked to think through their own work plans and then to submit them. What I am going to focus on? What results can be expected for which I should be held accountable for? By what deadline? Knowledge work requires both autonomy and accountability.
--
The New Corporation's Persona
Action Point: Focus on the organization's values, mission, and vision, and consider outsourcing everything else.
--
Practice Comes First
Decision makers need to factor into their present decisions the future that has already happened. For this they need to know what events have already occurred that do not fit into their present-day assumptions, and thereby create new realities.
As a rule, theory does not precede practice. Its role is to structure and codify already proven practice. Its role is to convert the isolated and "atypical" from exception to "rule" and "system," and therefore into something that can be learned and taught and, above all, into something that can be generally applied.
--
The Managerial Attitude
The demands for a "managerial attitude" on the part of even the lowliest worker is an innovation. (David's Note: See Great Game of Business for more)
--
The Spirit of an Organization
It's the abilities, not the disabilities, that count.
On the inscription of Andrew Carnegie's tombstone it said:
Here lies a man
Who knew how to enlist
In his service
Better men than himself
Action Point: Figure out what each of your employee's or colleague's strengths are and develop these strengths to help people perform better.
--
The Function of Management is to Produce Results
Above all management is responsible for producing results.
Management has to give direction to the institution it manages. It has to think through the institution's mission, has to set its objectives, and has to organize resources for the results the institute has to contribute.
It has to organize work for productivity, it has to lead the worker toward productivity and achievement. It is responsible for the social impact of its enterprise. Above all, it is responsible for producing the results - whether economic performance, student learning or patient care - for the sake of which each institution exists.
--
Management: The Central Social Function
Non-economic institutions need a yardstick that does for them what profitability does for business.
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Profit's Function
Innovation, in Schumpeter's famous phrase, is also "creative destruction." It makes obsolete yesterday's capital equipment and capital investment. The more an economy progresses, the more capital formation will it therefore need. Thus, what the classic economist - or the accountant or the stock exchange - considers "profit" is a genuine cost, the cost of staying in business, the cost of a future in which nothing is predictable except that today's profitable business will become tomorrow’s white elephant.
Action Point: Insure that you are investing enough in innovation to prepare for the day when your profitable business becomes obsolete.
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Feedback: The Key to Continuous Learning
Whenever a Jesuit priest or a Calvinist pastor does anything of significance (for instance, making a key decision), he is expected to write down what results he anticipates...This very soon shows him what he did well and where his strengths are. It also shows him what he has to learn and what habits he has to change.
Action Point: List your strengths and the steps you are taking to improve them. Who knows you well enough to help identify your strengths?
--
Reinvent Yourself
Knowledge people must take responsibility for their own development and placement.
Knowledge, however, changes itself. It makes itself obsolete, and very rapidly. A knowledge worker becomes obsolescent if he or she does not go back to school every three of four years.
--
The Discipline of Management
If you can't replicate something because you don't understand it, then it really hasn't been invented; it's only been done.
Action Point: Are your management practices ad hoc or systematic?
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Controlled Experiment in Mismanagement
The first Ford failed because of his firm conviction that a business did not need managers and management. All it needed, he believed, was the owner-entrepreneur with his "helpers."
Action Point: Are you an owner-executive who treats all your employees as your helpers? Are you an employee who is treated as a helper? List three ways your organization could be more profitable if employees were encouraged to assume responsibility.
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Performance: The Test of Management
Achievement rather then knowledge remains both the proof and aim of management.
The ultimate test of management is performance. Management, in other words, is a practice, rather than a science or profession, although containing elements of both.
On the contrary, the test of good management is whether it enables the successful performer to do her work. And any serious attempt to make management "scientific" or a "profession" is bound to lead to the attempt to eliminate those "disturbing nuisances," the unpredictability’s of business life - its risks, its up and down, its "wasteful competition," the "irrational choices," of the consumer - and in the process, the economy's freedom and its ability to grow.
Action Point: Which of your management practices have yielded good results? Which practices should you abandon now?
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Crossing the Divide
Action Point: Next time you hear colleagues pounding the table for something that is clearly yesterday's news, find a way to tell them they need to wake up and smell the coffee. (David'
s Note: Use statistics and other tactics in Sense of Urgency.)
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Face Reality
Action Point: List three new opportunities created by demographic shifts.
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Balance BOTH Continuity and Change
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Modern Organizations Must be a Destabilizer
The only way in which an institution - whether a government, university, business, labor union can maintain continuity is by building systematic, organized innovation into its very structure. Institutions, systems, policies, eventually outlive themselves, as do products, processes, and services.
Innovation and entrepreneurship are thus need in society as much as in the economy, in public service institutions as much as business. The modern organization must be a destabilizer: it must be organized for innovation.
--
Human Factor in Management
The task of management is to make people capable of joint performance, to make their strengths effective and their weakness irrelevant.
All members need to think through what they aim to accomplish - and make sure their associates know and understand that aim. All have to think through what they owe others - and make sure that others understand. All have to think through what they, in turn, need from others - and make sure others know what is expected of them.
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Demands on Political Leadership
Beware of charisma. The constructive achievements of the twentieth century were the work of completely uncharismatic people (Eisenhower and Marshall). Both were highly disciplined, highly competent, and deadly dull.
Action Point: Seek out the most competent people in your organization, not necessarily those with the most charisma.
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It can be said that there are no "underdeveloped countries" only "undermanaged" ones. Management creates economic and social development.
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Failure of Central Planning
Action Point: Do you micromanage your employees? Start empowering them by making sure that they are trained properly to do their jobs, and then give them responsibility to do it. Provide room for failure.
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Defining a Business Purpose and Mission
Define a purpose that employees can believe in and challenges them to contribute their best work. (David's point: This is why mission statement's are so important). Ask: What is our business?
Action point: Talk to customers and ask them what they think about your company, how they see it. Use this feedback to better define your company's mission.
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Understanding what the Customer Buys
What does the customer consider value?
For the teenage girl, for instance, value in a shoe is high fashion. It has to be "in". Price is secondary and durability is no value at all. For the same girl as a young mother, high fashion becomes a restraint. She will not buy something that is quite unfashionable. But what she looks for is durability, price, comfort and fit, and so on. The same show that represents the best buy for the teenager is a very poor value for her slightly older sister.
Action Point: What do your customers consider most valuable about the product or service you provide.
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The Change Leader
The most effective way to manage change successfully is to create it.
One cannot manage change. One can only be ahead of it. Anticipate the future and be a change leader (be the first one that takes action in times of change).
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Test of Innovation
Measure innovations by what they contribute to market and customer.
Action Point: Identify innovations in your organization that are novelties versus those that are creating value. Did you launch the novelties because you were bored with doing the same thing? If so, make sure your next new product or service meets your customer's needs.
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Knowledge External to the Enterprise
The technologies that are likely to have the greatest impact on a company and an industry are technologies outside its own field.
Action Point: Identify at least one change that has originated outside your industry that has transformed or has the potential to transform your enterprise. Look for ideas in other industries that can be used profitably in your industry.
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In Innovation, Emphasize the Big Idea
Executives in innovative organizations therefore demand that people with ideas think through the work needed to turn an idea into a product, a process, a business, or a technology. They ask, "What work should we have to do and what would we have to find out and learn before we can commit the company to this idea of yours?" These executives know that it is as difficult and risky to convert a small idea into successful reality as it is to make a major innovation. They do not aim at "improvements" or "modifications" in products or technologies. They aim at innovating a new business.
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Managing for the Future
Prediction of future events is futile
1) Finding and exploiting the time lag between the appearance of a discontinuity in the economy and society and its full impact - one might call this anticipation of a future that has already happened.
2) Imposing on the yet unborn future a new idea that tries to give direction and shape to what is to come. This one might call making the future happen.
The future that has already happened is not within the present business; it is outside: a change in society, knowledge, culture, industry, or economic structure. It is, moreover, a major trend, a break in the pattern rather than a variation within it. Looking for the future that has already happened and anticipating its impacts introduces a new perception to the beholder. The need is to make oneself see it.
Predicting the future can only get you in trouble. The task is to manage what is there and to work to create what could and should be.
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Innovation and Risk Taking
Successful innovators are conservative.
Action Point: Determine which of your ideas presents the least risk and the most opportunity and focus on them.
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Creating a True Whole
Create a true whole greater than the sum of its parts
A manager has the task of creating a true whole that is larger than the sum of its parts. One analogy is the task of the conductor of a symphony orchestra, through whose effort, vision, and leadership individual instrumental parts become the living whole of a musical performance.
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Turbulence: Threat or Opportunity?
When it rains manna from heaven, some people put up an umbrella. Others reach for a big spoon.
The manager will have to look at her task and ask, "What must I do to be prepared for danger, for opportunities, and above all for change?
Action Point: Get rid of unjustifiable products and activities, set goals to improve productivity, manage growth, and develop your people.
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Organize for Constant Change
An organization must be organized for constant change. It will no longer be possible to consider entrepreneurial innovation as lying outside of management or even as peripheral to management. Entrepreneurial vision will have to become the very heart and core of management. The organization's function is entrepreneurial, to put knowledge of work - on tools, products, and processes; on the design of work; on knowledge itself.
Deliberate emphasis on innovation may be needed most where technological changes are least spectacular. Not only in pharmaceuticals but also in insurance - where its survival - depends on the development of new forms of insurance.
Action Point: Decide how you and your organization can systematically innovate, and build this into your management process.
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Searching Change
A change is something people do; a fad is something people talk about.
Entrepreneurs see change as the norm and as healthy. Usually they do not bring about the change themselves. But - and this defines the entrepreneur and entrepreneurship - the entrepreneur always searches for change, responds to it, and exploits it as an opportunity.
Look at every change and ask: "Could this be an opportunity?" Is this new thing a genuine change or simply a fad?" The difference is very simple: A change is something people do, and a fad is something people talk about. An enormous amount of task is a fad. If you start out by looking at change as threat, you will never innovate. Don't dismiss something because this is not what you had planned. The unexpected is often the best source of innovation.
Action Point: Take a half an hour to discuss with a colleague the changes sweeping your industry and identify the biggest genuine changes. Ignore the fads; figure out how to capitalize on the genuine changes.
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Piloting Change
Neither studies nor market research not computer modeling is a substitute for the test of reality.
Everything improved or new needs first to be tested on a small scale; that is, it needs to be piloted. The way to do this is to find somebody within the enterprise who really wants the new. Everything new gets into trouble. And then it needs a champion. It needs somebody who says, "I am going to make this succeed," and who then goes to work on it. And this person needs to be somebody whom the organization respects. This need not even be somebody within the organization.
Often a good way to pilot a new product or new service is to find a customer who really wants the new, and who is willing to work with the producer on making truly successful the new product or the new science. If the pilot test is successful - it finds the problems nobody anticipated but also finds the opportunities that nobody anticipated, whether in terms of design, of market, of service - the risk of change is usually quite small.
Action Point: Make sure the best ideas in your organization have fierce advocates to see them through a test in the marketplace.
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The Purpose of a Business
A business enterprise has two basic functions: marketing and innovation. There is only one valid definition of business purpose: to create a customer. The customer is the foundation of a business and keeps it in existence.
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Converting Strategic Plans to Action
The best plan is only good intentions unless it degenerates into work. (David's Note: See Six Disciplines).
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Universal Entrepreneurial Disciplines
The entrepreneurial disciplines are not just desirable; they are conditions for survival today.
Every institution and not only businesses - must build into its day to day management four entrepreneurial activities that run in parallel. One is organized abandonment of products, services, processes, markets, distribution channels, etc. that are not longer optimal allocation of resources. Then any institution must organize for systematic and continuous exploitation, especially of its successes. And finally, it has to organize systematic innovation, that is, create the different tomorrow that makes obsolete and, to a large extent, replaces even the most successful products of today in an organization. I emphasize that these disciplines are not just desirable they are conditions of survival today.
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Balancing Objectives and Measurements
To emphasize only profit, misdirects managers to the point where they may endanger the survival of the business. To obtain profit today, they tend to undermine the future.
Objectives are needed in every area where performance and results directly and vitally affect the survival and prosperity of the business. Seven areas in which performance and objectives must be set:
1) market standing
2) innovation
3) productivity
4) physical and financial resources
5) profitability
6) manager performance and development
7) worker performance
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The Purpose of Profit - Profit is the ultimate test of business performance.
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The Great Strength of E-Commerce
Selling is tied no longer to production but to distribution. The great strength of e-commerce is that it provides the consumer with a whole range of products, no matter who makes them. Examples include Amazon.com and CarsDirect.com. E-commerce separates, for the first time, selling and producing. There is absolutely no reason why any e-commerce facility should limit itself to marketing and selling one maker's product brands.
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Management of the Multinational
Action Point: Is your expertise or your boss's expertise in the nuts and bolts of operating a division or in knitting together a far-flung confederation of strategic partner?
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Information for Strategy
Strategy has to be based on information about markets, customers, and noncustomers, about technology in one's own industry and others', about worldwide finance, and about the changing world economy. For that is where the results are. Inside an organization there are only cost centers.
But no matter how successful, no retailer ever has more than a small fraction of the market as its customers; the great majority are noncustomers. It is always with noncustomers that basic changes begin and become significant. At least half of the important new technologies that have transformed an industry in the past fifty years came from outside the industry itself.
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Why Management Science Fails to Perform
It is that the business enterprise is a system of the highest order: a system whose parts are human beings contributing voluntarily of their knowledge, skill, and dedication to a joint venture. And one thing characterizes all genuine systems they are all interdependent. For that matters in any system is the performance of the whole; this is the result of growth and of dynamic balance, adjustment, and integration, rather than mere technical efficiency.
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Management as a Human Endeavor
To achieve these ends, the peculiar modern invention we call management organizes human beings for joint performance and creates social organization. But only when management succeeds in making the human resources of the organization productive is it able to attain the desired outside objectives and results.
Management is no more a science than is medicine: both are practices. A practice feeds from a large body of true sciences.
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The Responsible Worker
Responsibility, therefore, is both external and internal. Externally it implies accountability to some person or body and accountability for specific performance. Internally it implies commitment. The Responsible Worker is a worker who not only is accountable for specific results but also has authority to do whatever is necessary to produce these results and, finally, is committed to these results as a personal achievement.
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Spirit of Performance
Morality, to have any meaning at all, must not be exhortation, sermon, or good intentions. It must be practices. Specifically:
1. The focus of the organization must be on performance. The first requirement of the spirit of performance is high performance standards, for the groups as well as for each individual.
2. The focus on the organization must be on opportunities rather then on problems.
3. The decisions that affect people - their placement, pay, promotion, demotion, and severance - must express the values and beliefs of he organization.
4. Finally, in its people decisions, management must demonstrate that it realizes that integrity is one absolute requirement of any manager, the one quality that he has to bring with him and cannot be expected to acquire later on.
Action Point: Focus on performance, opportunities, people, and integrity.
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Organizations and Individuals
The more the organization grows, the more the individual can grow. The more the individual in an organization grows as a person, the more the organization can accomplish - this is the insight underlying all our attention to manager development and advanced manager education today.
Action Point: Keep learning. Take full advantage of your company's educational benefits.
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Picking a leader - I ask myself, would I want one of my sons to work under that person?
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Qualities of a Leader
Leadership is the lifting of a man's vision to higher sights, the raising of a man's performance to a higher standard, the building of a man's personality beyond its normal limitations. Nothing better prepares the ground for such leadership than a spirit of management that confirms in the day-to-day practices of the organization strict principles of conduct and responsibility, high standards of performance, and respect for the individual and his work.
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Base Leadership on Strength
In human affairs, the distance between the leaders and the average is a constant. If leadership performance is high, the average will go up. The effective executive knows that it is easier to raise the performance of one leader than it is to raise the performance of a whole mass. She therefore makes sure that she puts into the leadership position, into the standard-setting, the performance-making position, the person who has the strength to do the outstanding, the pacesetting job.
Action Point: To raise the performance of a business unit, put a strong leader at the helm.
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Leadership is Responsibility
All effective leaders I encountered knew four simple things: a leader is someone who has followers; popularity is not leadership, results are; leaders are highly visible, they set examples; leadership is not rank, privilege, titles, or money, it is responsibility.
Effective leaders delegate, but they do not delegate the one thing that will set the standards. They do it.
Action Point: Don't expect to retain the respect of your employees if you completely delegate the central function of your enterprise.
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Absence of Integrity
A person should never be appointed to a managerial position if his vision focuses on people's weaknesses rather then on their strengths, this will undermine the spirit of the organization.
A person should not be appointed if that person is more interested in the question "Who is right?" than in the question "What is right?" To ask "Who is right?" encourages one's subordinate to play it safe, if not to play politics.
Management should not appoint a person who considers intelligence more important then integrity. It should never promote anyone who sees strong subordinates as a threat. It should never put into a management job a person who does not set high standards for his or her own work.
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Crisis and Leadership
The most important task of an organization's leader is to anticipate crisis. Perhaps not to avert it, but to anticipate it. To wait until crisis hits is abdication. One has to make the organization capable of anticipating the storm, weathering it, and in fact, being ahead of it.
Action Point: Confront the major problems facing your organization. Communicate their essence frankly and fully. Gather support for taking the steps necessary to solve them.
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The Three Competencies of a Leader
Keep your eye on the task, not on yourself. The task matters, and you are a servant.
First competence: Willingness, ability and SELF-DISCIPLINE to listen. Listening is not a skill; it is a discipline. All you have to do is keep your mouth shut.
Second competence: the willingness to communicate, to make yourself understood. This requires infinite patience.
Third competence: willingness to realize how unimportant you are compared to the task. Leaders subordinate themselves to the task.
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Alfred Sloan's Management Style
"A CEO who has 'friendships' within the company.... cannot remain impartial." The only criteria must be performance and character. And that is incompatible with friendship and social relations. A CEO who has 'friendships' within the company, has 'social relations' with colleagues, or discusses anything with them except the job, cannot remain impartial - or at least, which is equally damaging, he will not appear as such. Loneliness, distance, and formality may be contrary to his temperament - they have always been contrary to mine - but they are his duty.
David's Note: Keep close to friends and family OUTSIDE the company so that you can fulfill the desire for friendship.
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People Decisions
No organizations can do better than the people it has. People decisions are the ultimate - perhaps the only - control of an organization (David's Note: See Topgrading). The first sign of decline of an industry is a loss of appeal to able people. Know the strengths of each hire, don't hire a person for what they can't do; hire them for what they can do.
The most important thing is that the person and the assignment fit each other. The soldier has a right to competent command. Accept responsibility for placements that fail. Remove people who do not perform.
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The Succession Decision
The most critical people decision and the one that is hardest to undo, is the succession to the top. The only test of performance in the top position is performance in the top position - and there is very little preparation for it. What not to do is fairly simple. You don't want a carbon copy of the outgoing CEO, carbon copies are ALWAYS weak.
You don't want the "faithful assistant" who for eighteen years has been at boss's side. By and large, people who are willing and able to make decisions don't stay in the assistant role very long.
Look at the assignment. In this institution, what is going to be the biggest challenge over the next few years? Then look at the people and their performance. Match the need against proven performance.
Action Point: Determine the single biggest challenge facing your organization is going to be over the next five years and choose someone who has a proven track record of surmounting those challenges.
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What is Business Ethics?
Business ethics assumes that for some reason the ordinary rules of ethics do not apply to business. There is only one ethics, one set of rules of morality, one code, that of individual behavior in which the same rules apply to everyone alike.
Action Point: Do not separate personal values of what is right and wrong from the values you put into practice at work.
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Managing Knowledge Workers
The management of knowledge workers is a "marketing job." What motivates knowledge workers is what motivates volunteers. Volunteers have to get more satisfaction from their work then paid employees, precisely because they don't get a paycheck. They need, above all, challenges.
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Global Competitiveness
This executive must convince his associates that the competition faced by the firm is global and the performance of the firm must be compared against global competitors, not just those in the U.S.
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Knowledge Does Not Eliminate Skill
Knowledge without skill is unproductive. Knowledge does not eliminate skill. On the contrary, knowledge is fast becoming the foundation for skill...Only when knowledge is used as a foundation for skill does it become productive. For example, surgeons preparing for an operation to correct a brain aneurysm before it produces hemorrhage spend hours in diagnosis before they cut. The surgery itself, however, is manual work - and manual work consisting of repetitive manual operations in which the emphasis is on speed, accuracy, uniformity. And these operations are studied, organized, learned, and practices exactly like any other manual work.
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Price of Success in the Knowledge Society
The fear of failure has already permeated the knowledge society. Therefore, knowledge workers need to develop some serious outside interests to balance this fear.
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People as Resources
The Japanese heeded first and best my point of view that people must be viewed as your colleagues and as your prime resources. It is only through such respect of the workers that true productivity is achieved.
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Raising Service-Worker Productivity
Service work in many cases will be contracted out of the organization to whom the service is being rendered. "Outsourcing," moreover will be applied increasingly to such work as drafting for architects and to the technical or professional library.
The greatest need for increased productivity is in activities that do not lead to promotion into senior management within the organization (David's Note: Therefore, this will not be done by the most talented people in the company which will lead to inflated prices and lack of ambitious and in turn innovation).
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Knowledge-Worker Productivity
Knowledge-worker productivity requires that the knowledge worker be both seen and treated as an asset rather than a cost.
Six major factors determines knowledge-worker productivity:
1. Demands that we ask the question: What is the task?
2. Knowledge workers have to manage themselves.
3. Continuing innovation has to be part of the work, the task, and the responsibility of the knowledge workers.
4. Requires continuous learning on part of knowledge worker.
5. Both quantity and quality of output is important.
6. Knowledge workers must be treated as an "asset" rather than a "cost."
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Defining The Task in Knowledge Work
In knowledge work, the how only comes after the what has been answered.
But in knowledge work, what to do becomes the first and decisive question. Knowledge workers know what steps are most important and what methods need to be used to complete the tasks; and it is their knowledge that tells them what chores are unnecessary and should be eliminated.
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Continuous Learning in Knowledge Work
A knowledge organization has to be both a learning organization and a teaching organization.
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Rank of Knowledge Workers
No knowledge "ranks" higher than another. The position of each in an organization is determined by its contribution to the common task rather than by any inherent superiority or inferiority.
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Managing Oneself
And this means most knowledge workers will have to manage themselves. The key to managing oneself is to know: who am I? What are my strengths? How do I work to achieve results? What are my values? Where do I belong? Finally, a crucial step in successfully managing oneself is feedback analysis. Record what you expect the results to be of every action or key decision you take, and then compare actual results nine months or a year later to your expectations.
Action Point: Manage yourself by knowing your strengths, values, and where you do best.
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A Successful Information-Based Organization
The system worked because it was designed to ensure that each of its members had the information he needed to do this job...He put down in detail what he had expected would happen with respect to each of them, what actually did happen, and why, if there was a discrepancy, the two differed. (Note to self: implement).
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The "Score" in Information-Based Organizations
Action Point: Have a common "score" for your organization that clearly states management's performance expectations for the enterprise and for each specialist, and that compares expectations to results.
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Taking Information Responsibility
A requirement of an information-based organization is that everyone take information responsibility. The bassoonist in the orchestra takes information responsibility every time he plays a note.
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Hierarchy Versus Responsibility
Action Point: Is your organization held together by financial controls or by understanding, shared values, and mutual respect? Accept responsibility for yourself and your unit, including your goals, relationships, and your communications.
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Sudden Incompetence
The greatest waste of resources in all the organizations I have seen is the failed promotion. The reason in practically all cases I have seen, is that people continue in their new assignment to do what made them successful in the old assignment and what earned them the promotion. This doesn't work. It requires concentration on the things that the new assignment requires, the things that are crucial to the new challenge, the new job, or the new task.
Action Point: Do not continue to do in your new assignment, what made you successful in the old one. When you enter a new assignment, ask "What new things should I be doing in my new assignment to be effective?"
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Individual Responsibility
The person with the most responsibility for an individual's development is the person himself - no the boss. The first priority for one's own development is to strive for excellence.
The critical factor for success is accountability - holding yourself accountable. Everything else flows from that. The important thing is not that you have rank, but that you have responsibility. To be accountable, you must take the job seriously enough to recognize: I've got to grow up to the job. By focusing on accountability, people take a bigger view of themselves.
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What to Do in a Value Conflict?
I saw no point in being the richest man in the cemetery. What one does well - even very well - and successfully may not fit with one's value system.
I was doing well as an investment banker in London, it clearly fitted my strengths. Yet I did not see myself making a contribution as an asset manager of any kind. People, I realized, were my values. And I saw no point in being the richest man in the cemetery. I had no money, no other job in a deep Depression, and no prospects. But I quit - and it was the right thing. Values, in order words, are and should be the ultimate test.
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Place Yourself in the Right Organization
To develop yourself, you have to be doing the right work in the right kind of organization. The basis question is: "Where do I belong as a person?" David's Note: Consider whether you want to be in a small vs. large company. It is different for every person.
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Management Education
Management courses for people without a few years of management experience are a waste of time. Planned, systematic work by students while at school in real work assignments and organizations should be required (similar to MD residency).
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Attracting Knowledge Workers
In attracting and holding knowledge workers, we already know what does not work: bribery.
The first thing people want to know is what the company is trying to do and where it is going. Next, they are interested in personal achievement and personal responsibility - which means they have to be put in the right job. Knowledge workers expect continuous learning and continuous training. Above all, they want respect, not so much for themselves, but for their area of knowledge. Knowledge workers expect to make the decisions in their own area.
Action Point: Manage professionals as volunteers by defining for them what the company is trying to do and where it is going.
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Enjoying Work
Those who perform love what they're doing.
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Theory of the Business
Everyone of the great business builders we know of had a definite idea, had indeed a clear theory of the business that informed his actions and decisions. A clear, simple, and penetrating theory of the business, rather than intuition, characterizes the truly successful entrepreneur, the person who builds an organization that can endure a great long after he or she is gone.
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Reality Test of Assumptions
Marks and Spencer decided that it was the merchant, rather than the manufacturer, who knew the customer. Therefore, the merchant, not the manufacturer, should design the products, develop them, and find producers to make the goods to his design, specifications, and costs. This new definition of a merchant took five to eight years to develop and make acceptable to traditional suppliers, who had always seen themselves as "manufacturers" not "subcontractors."
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The Obsolete Theory
A degenerative disease will not be cured by procrastination. It requires decisive action.
We can't rely on miracle workers to rejuvenate an obsolete theory of the business. And when one talks to these supposed miracle workers, they deny vehemently that they act by charisma or vision. They start out with diagnosis and analysis. They accept that attaining objectives and rapid growth demand a serious rethinking of the theory of the business. They do not dismiss unexpected failure as the result of a subordinate's incompetence or as an accident but treat it as a symptom of "systems failures." They do not take credit for unexpected success but treat it as a challenge to their assumptions.
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Focus on Excellence
What is our specific knowledge?
To have real knowledge of the kind for which the market offers economic reward requires concentration on doing a few things superbly well. There is no loss to the customer by eliminating activities that do not add value. Leadership rests on being able to do something others cannot do at all or find difficult to do even poorly.
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Each Organization Must Innovate
Every organization needs one core competence: innovation. And every organization needs a way to record and appraise its innovative performance. The starting point is not the company's own performance. It is a careful record of the innovations in the entire field during a given period. How many of them were ours? Are our successful innovations in the areas of greatest growth and opportunity?
Action Point: Keep a careful record of innovations in your area and periodically assess your organization's innovation performance.
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Exploiting Success
Change leaders should starve problems and feed opportunities
The first - and usually the best opportunity for successful change is to exploit one's own successes and build on them. Problems cannot be ignored. And serious problems have to be taken care of. But to be change leaders, enterprises have to focus on opportunities. They have to start problems and feed opportunities.
This requires a small but fundamental procedure change: an additional "first page" to the monthly report, one that should precede the page that shows the problems. It requires a page that focuses on where results are better then expected, whether in terms of sales, revenues, profits, or volume.
The way to allocate people is to list the opportunities on one page and then to list the organization's performing and capable people on the other page. Then one allocates the ablest and most performing people to the top opportunities.
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Organized Improvement
Continuous improvements in any area eventually transform the operation. Whatever an enterprise does internally and externally needs to be improved systematically and continuously: product and service production processes, marketing, service, technology, etc. Continuous improvements in any area eventually transform the operation.
If performance is to be improved, we need to define clearly what "performance" means.
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Systematic Innovation
Successful entrepreneurs do not wait until "the Muse kisses them" and gives them a bright idea; they go to work.
Systematic innovation means monitoring seven sources for innovative opportunity...The unexpected - the unexpected success, the unexpected failure, the unexpected outside event; the incongruity - between reality as it actually is and reality as it is assumed to be or as it "ought to be"; innovation based on process need; changes in industry structure or market structure that catch everyone unawares. The second set of sources for innovative opportunity involves changes outside the enterprise or industry: demographics, changes in perception, mood, and meaning; new knowledge both scientific and nonscientific.
The lines between these seven sources of innovative opportunities are blurred, and there is considerable overlap between them. Monitor them.
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Unexpected Success
It takes an effort to perceive unexpected success as one's own best opportunity.
It is precisely because the unexpected jolts us out of our preconceived notions, our assumptions, our certainties, that it is such a fertile source of innovation. In no other area are innovative opportunities less risky and their pursuit less arduous. Yet the unexpected success is almost totally neglected; worse, managements tend actively to reject it. One reason why it is difficult for management to accept unexpected success is that all of us tend to believe that anything that has lasted a fair amount of time must be "normal" and go on "forever."
Action Point: Don't neglect or reject unexpected success. Identify it, absorb it, and learn from it.
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Unexpected Failure
Failure should always be considered a symptom of an innovative opportunity.
The unexpected failure demands that you go out, look around, and listen...One does not just "analyze." One goes out to investigate. A good many failures are, of course, nothing but mistakes, the results of greed, stupidity, thoughtless bandwagon-climbing, or incompetence, whether in design or execution. Yet if something fails despite being carefully planned, carefully designed, and conscientiously executed, that failure often bespeaks underlying change and with it, opportunity.
Unexpected failure often informs us of underlying changes in customer value and perceptions. The assumptions upon which a product or service, its design or market strategy, were based can quickly become outdated. Perhaps customers have changed their value proposition - they may be buying the same thing, but they are actually purchasing a very different value. For example, after the failure of the Edsel, Ford decided that income segmentation no longer applied to the automobile industry. Rather, it was lifestyle segmentation that mattered to customers.
Action Point: Identify an important unexpected failure, yours or a competitor's. Identify plausible explanations for the failure.
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Incongruity
There is often a discrepancy between "what is" and what management thinks "ought to be" that represents an incongruity within an industry, a market, and a process...Insiders may notice it but think, "this is the way it has always been," as a reason for not initiating a change. Change leaders exploit these incongruities to the organization's advantage.
Take, for example, the unequal information in the hands of buyers and sellers of automobiles. There are a few things about buying vehicles most of us dislike. These include haggling over prices, misleading ads, spending hours at a dealership while the salesperson goes back and forth. Several online organizations have created one-stop shopping for used and new automobiles with complete and accurate information about vehicles of all types. They have leveled the playing field for customers.
Action Point: Are there any incongruities within a process or within your market that may be exploited to your advantage.
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Process Need
Necessity is the mother of innovation. I call it the process need. Everybody in the organization always knows that the process need exists. Yet usually no one does anything about it. However, when the innovation appears, it is immediately accepted as "obvious" and soon becomes "standard." It requires widespread realization that there ought to be a better way.
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Industry and Market Structure
Market and industry structures are quite brittle. One small scratch and they disintegrate, often fast. A change in market or industry structure is a major opportunity for innovation. In industry structure, a change requires entrepreneurship from every member of the industry. It requires that each one ask anew: "What is our business?" And each of the members will have to give a different, but above all a new, answer to the question.
Large dominant producers and suppliers, having been successful and unchallenged for many years, tend to be arrogant. At first they dismiss the newcomer as insignificant and, indeed, amateurish. But even when the newcomer takes a larger and larger share of their business, they find it hard to mobilize themselves for counteraction.
Action Point: Never stop asking yourself, "What is our business?"
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Demographics - Changing demographics is both a highly productive and a highly dependable innovative opportunity.
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Changes in Perception
If general perceptions changes from glass as "half-full" to seeing the glass as "half-empty," there are major innovative opportunities. Unexpected success or unexpected failure is often an indication of changes in perception and meaning to the consumers. When a change in perception takes place, the facts do not change.
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New Knowledge
In the theory and practice of innovation and entrepreneurship, the bright-idea innovation belongs in the appendix. New knowledge is not the most reliable or most predictable source of successful innovations. For all the visibility, glamour, and importance of science-based innovation, it is actually the least reliable and least predictable one. Knowledge-based innovation has the longest lead-time of any innovation. First, there is a long time span between the emergence of new knowledge, and it's becoming applicable to technology. And then there is another long period before the new technology turns into products, processes, or services in the marketplace.
The introduction of innovation creates excitement and attracts a host of competitors, meaning that innovators have to be right the first time. They are unlikely to get a second change. But it should be appreciated and rewarded. It represents qualities that society needs: initiative, ambition, and ingenuity.
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Innovation in Public-Service Institutions
Most innovations in public-service institutions are imposed on them either by outsiders or by catastrophe. For example, the modern American university came into being after the country's traditional colleges and universities were dying and could no longer attract students.
Action Point: Fight the bureaucrats at your nonprofit institution who just do what has "always been done."
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Optimal Market Standing
Market domination produces tremendous internal resistance against any innovation. Market domination tends to lull the leader to sleep; monopolists flounder on their own complacency rather then on public opposition. There is also well-founded resistance in the marketplace to dependence on one dominant suppliers.
It also does not do much good for a company's sales to go up if it loses market share, that is, if the market expands much faster than the company's sales do. A company with a small share of the market will eventually become marginal in the marketplace, and thereby exceedingly vulnerable.
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Worship of High Profit Margins
High profit margins hold an umbrella over the competitor. Most businesspeople are aware that profit is not the same as profit margin. Profit is profit margin multiplied by the turnover of capital. Maximum profitability and maximum profit flow are thus obtained by the profit margin that produces the optimum market standing and with it the optimum turnover of capital.
Why is the worship of high profit margin likely to damage - if not destroy - the business? It not only holds an umbrella over the competitor; it also makes competing practically risk free and virtually guarantees that the competitor will take over the market. Xerox invented the copier, and in all of business history few products have been as success as the copy machine. But then Xerox began to chase profit margin. It put more and more gimmicks on the machine, each developed primarily to increase profit margin. But each of these accessories also increased the price of the machine, and what was probably even more important, each made it more difficult to service the machine. And so a Japanese company, Canon, developed what was not much more than a replica of the Xerox machine but was simple and cheap.
Action Point: Is your organization guilty of worshiping high profit margins?
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Lesson in Marketing
Marketing starts with ALL customers in the market rather than OUR customers. The Japanese did not ask, "What is the market for the fax machine?" They saw when looking at the growth of courier services such as Federal Express, that the market for the fax machine had already been established.
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From Selling to Marketing
Despite the emphasis on marketing and the marketing approach, marketing is still rhetoric rather than reality in far too many businesses...It demands that business start out with the needs, the realities, the values of the customer...Consumerism is the "shame of marketing." Indeed, selling and marketing are antithetical rather than synonymous or even complementary.
There will always, one can assume, be a need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits her and sells itself. Ideally, marketing should result in a customer who is ready to buy. We may be a long way from this ideal. But consumerism is a clear indication that the right motto for business management should increasingly be, "From selling to marketing."
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Cost-Driven Pricing - Consumers do not see it as their job to ensure that manufacturers make a profit.
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Cost Control in a Growth Business - Focus costs on ROI not on budgeting. Invest for the future and how large you believe the market will be and how big you must be to remain a market leader.
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Eliminating Cost Centers
But businesses that actually succeed in cutting costs don't wait until they have to cut costs. They build cost-cutting into normal operations. They build into their routine operations organized abandonment. Otherwise, eliminating activities and operations runs into extreme political resistance.
Action Point: Set up a systematic process of reviewing all products, processes, and services. Abandon those that no longer contribute to customer value. Put all the activities in your organization on trial every two or three years.
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Diversification
There are only two ways in which diversity can be harmonized into unity. A business can be highly diversified and yet have fundamental unity if its businesses and technologies, its products and product lines, and its activities are embraced within the unity of a common market. And a business can be highly diversified and have fundamental unity if its businesses, its markets, its products and product lines, and its activities are held together by a common technology.
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Being the Wrong Size
Action Point: Analyze your business. Are you too small to compete in your business? If so, develop a profitable niche within which you can compete effectively.
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Growth
Growth should be relative to market growth. If the market expands, a company has to grow with the market to maintain its viability. At times a company therefore needs a very high minimum growth rate.
A business needs to distinguish between the wrong kind of growth and the right kind of growth, between muscle, fat, and cancer. The rules are simple: Any growth that, within a short period of time, results in an overall increase in the total productiveness is good growth. It should be fed and supported. But growth that results only in volume and does not, within a fairly short period of time, produce higher overall productivities is fat.
Action Point: Determine the minimum growth rate for maintaining your organization's market standing.
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Managing the New Venture
Every new project is an infant and infants belong in the nursery. The "adults", that is, the executives in charge of existing businesses or products, will have neither the time nor understanding of the infant project. The most successful entrepreneurial large companies set up the new venture as a separate business from the beginning and put a project manager in charge. Keep infant businesses in the nursery. Separate "infants" from "adults."
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Calculated Obsolescence
Being the one who makes your product, process, or service obsolete is the only way to prevent your competitor from doing so.
Action Point: Cannibalize your own products before your competitor does.
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Tunnel-Vision Innovation
When a new venture does succeed, more often than not it is in a market other than the one it was originally intended to serve, with products or services not quite those with which it had set out, bought in large.
Action Point: When innovating, go with the market response, not with your preconceived ideas.
Follow the example of successful entrepreneurs and do market driven research and development.
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Research Laboratory: Obsolete?
The company-owned research laboratory are becoming obsolete. Why? Technologies crisscross industries and travel incredibly fast, making few of them unique anymore. And increasingly, the knowledge needed in a given industry comes out of some totally different technology with which, very often, the people in the industry are quite unfamiliar.
Action Point: Scan the environment for technology developed in any other industry that can help you now.
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The Infant New Venture
Businesses are not paid to reform customers. The new venture needs to remind itself that a "product" or "service" is defined by the customer, not by the producer. It needs to work continuously on challenging itself in respect the utility and value that its product or services contribute to customers. The greatest danger for the new venture is to "know better" than the customer what the product or service is or should be, how it should be bought, and what it should be used for.
Action Point: See the unexpected success of a new venture as an opportunity not as a problem.
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The Rapidly Growing New Venture
The more successful a new venture is, the more dangerous the lack of financial foresight. Develop sound financial plans and controls for the new venture. Utilize your accounting and financial people as partners not "bean counters."
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Management Team for the New Venture
Key activities are not to be found in books. They emerge from analysis of the specific enterprise. First of all the founders, together with other key people in the firm, will have to think through the key activities of their business.
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Unrealized Business Potential
"Opportunity is where you find it," not where it finds you. Prosperity and growth come only to the business that systematically finds and exploits its potential. No matter how successfully a business organizes itself for the challenges and opportunities of the present, it will still be far below its optimum performance. Its potential is always greater then its realized actuality.
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Finding Opportunities in Vulnerabilities
Finding and realizing the potential of a business is psychologically difficult. Searching for the potential of opportunity in a company's vulnerabilities, limitations, and weaknesses is therefore likely to be resented by its most accomplished people as a direct attack on their position, pride, and power. This is the reason why the opportunities are often not realized by the industry leaders but by people on or near the outside. That this area is difficult both objectively and psychologically only means that businesses have to work at it and the management have to stress it heavily.
Action Point: Convert the vulnerabilities of your enterprise into opportunities.
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Exploiting Innovative Ideas
There usually are more good ideas in even the stodgiest organization that can possible be exploited. The real problem is the shockingly high mortality rate of healthy new products or services...It can be reduced fairly fast and without spending a great deal of money. Much of it is simply the result of ignorance of the entrepreneurial strategies. The right entrepreneurial strategy has a very high chance of success.
The four strategies aimed at market leadership are: Fustest with the Mostest, hitting them where they Ain't, finding a occupying an ecological niche, and changing the economic characteristics of a product, market or industry.
There strategies are mutually exclusive. One and the same entrepreneur often combines two, sometimes even elements of three, in one strategy. Still each of these four has its prerequisites. Each fits certain kinds of innovations and does not fit others. Each requires specific behavior on the part of the entrepreneur. Finally, each has its own limitations and carriers its own risks.
Action Point: Be systematic in exploiting innovative ideas, remembering these four strategies for success.
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Threats to Niche Strategies
While it lasts the niche strategy is the most profitable entrepreneurial strategy. However, one threat is that the niche can be outflanked, and especially by technological change. That happened to Alcon. Fifteen years after it became a worldwide near-monopoly, somebody in Czechoslovakia invented a new cataract operation, the implant lens, in which eye muscles have to be maintained rather then dissolved. And Alcon's solvent became history.
Action Point: Evaluate the threat of obsolescence to any of your products, processes, and services. Maintain a systematic program of innovation to offset inevitable threats to the products and services of your enterprise.
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Baker Company: Research Strategy
The strategy of Baker Company is completely different. It works in an enormous number of fields. It does not, however, enter a field until the basic scientific theoretical work has been done. Then it goes to work. Of every ten products that come out of its own libratory the company itself markets only two or three. When it becomes reasonably clear that an effective drug will result from a line of research, the company carefully scrutinizes the product and, indeed, the entire field.
First, is the new product likely to be medically so superior as to become the new "standard"? Second, is it likely to have a major impact throughout the field of health care and medical practice rather than be confined to one specialty area, even a larger one? And finally, is it likely to remain the "standard" for a good many years rather than be overtaken by competing products?
If the answer to any of these three questions is "No," the company will license or sell the development, rather than convert it into a product of its own. This has been highly profitable in two ways. It has generated licensing income and it has assured itself that each of the company's products is considered the "leader" by the medical profession.
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Charlie Company: Research Strategy
Charlie Company does no research. It looks for areas where a fairly simply development can give it a near-monopoly position in a small but important area.
Charlie Company does no research. All it does it develop. It will not tackle any of the products Able or Baker companies consider attractive. It looks for areas in medical and surgical practice where existing products are not doing a good job, and where a fairly simply change can greatly improve the doctor's or surgeon's performance. And it looks for fields that are so small that once there is a truly superior product, there is no incentive for anyone else to go in and compete.
In each area, the world market is limited - maybe $20 million - that a single provider, provided it offers a truly superior product can occupy a near monopoly position with a minimum of competition and practical no pressure on price.
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Success Always Creates New Realities
Only the fairy story ends "They lived happily ever after." Success always obsoletes the very behavior that achieved it. It always creates new realities.
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The Opportunity-Focused Organization
Performing organizations enjoy what they're doing. Organizations have a gravity, the weight is constantly being pushed into being problem-focused, and one has to fight it all the time. Not very many organizations are good at what I call "exploitation of success."
But if you build that into the organization and demand it from everybody, then you create a receptivity for being opportunity-focused rather than problem-focused...I'm always asked how I know what kind of organization to accept as a client. When you walk through your door, you know in two minutes whether the employees enjoy it. And if they don't enjoy it, then I'd rather not work for them. But if they like it and they feel that tomorrow is going to get better - that creates a totally different climate.
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Finding Opportunities in Surprises
One survives problems by making them irrelevant because of success. The entire reporting system kind of encourages the neglect of opportunities and surprises, but also it's fairly easy to change...Every manager, down to the first-line supervisor, sits down every months and writes a letter with one subject: the unexpected. Not what went right or what went wrong, but the unexpected.
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Maintaining Dynamic Equilibrium - Management has to maintain the dynamic equilibrium between change and continuity.
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Know Thy Time
Effective executives start with their time. "Know thyself," the old prescription for wisdom, is almost impossibly difficult for mortal men. But everyone can follow the injunction, "Know thy time" if one wants to, and be well on the road toward contribution and effectiveness.
Action Point: Find out where your time goes by recording, managing, and consolidating your time.
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Record Time and Eliminate Time Wasters
All one has to do is to learn to say "no" if an activity contributes nothing. Create a time log of your activities. Eliminate those activities that are time wasters. Consolidate your time and set aside large blocks of time to complete major tasks.
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Practice of Effective Executives
All that effective executives have in common is the ability to get the RIGHT things done. The effective executives I have seen differ widely in their temperaments and abilities. But all effective executives I've known perform only necessary tasks and eliminate unnecessary ones.
Five practices have to be acquired to be effective:
1) Know where their time goes.
2) Focus on OUTWARD contributions
3) Build on Strengths
4) Stay within priorities (discipline yourself)
5) Make effective decisions: they know that this is a system - the right steps are required in the right sequence.
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Focus on Contribution
The question "What should I contribute?" gives freedom because it gives responsibility.
The great majority of executives tend to focus downward. They are occupied with efforts rather than with results. They worry over what the organization and the superiors "owe" them and should do for them. And they are conscious above all about the authority they "should have." As a result, they render themselves ineffectual. The effective executive focuses on contribution. He looks up from his work and outward towards goals. He asks: "What can I contribute that will significantly affect the performance and the results of the institution I serve?"
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Performance Appraisals
The appraisal takes a much more critical look at a person than usual procedures do. But it focuses on strengths. Here are the questions
1. What has s/he done well?
2. What therefore is he likely to do well?
3. What does he heave to learn or acquire to be able to get full benefit from his strength?
4. If I had a son or daughter would I be willing to have him or her work under the person?
a. If yes, why?
b. If no, why?
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How to Develop People
Any organization develops people; it either forms them or deforms them.
Any organization develops people; it has no choices. It either helps them grow or it stunts them. What do we know about developing people? Quite a bit. We certainly know what not to do. For one, don’t try to build upon weaknesses. One can expect adults to develop manners and behavior and to learn skills and knowledge. But one has to use people's personalities the way they are, not the way we would like them to be. A second don't is to take a narrow and shortsighted view on the development of people. One has to learn specific skills for a job. But development has to be on career and life. The specific job should fit into the longer-term goal.
Another thing we know is not to establish crown princes. Look always on performance and not potential. One can always relax standards, but one can not raise them.
In developing people, the lesson is to focus on strengths.
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Knowledge Worker as Effective Executive
Knowledge workers demand economic rewards too. Their absence is a deterrent. But their presence is not enough. They need opportunity; they need achievement, they need fulfillment; they need values. Only by making themselves into effective executives can knowledge workers obtain these satisfactions.
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Defining One's Performance
Performance is not hitting the bull's-eye with every shot. Performance is rather the consistent ability to produce results over prolonged periods of time and in a variety of assignments. A performance record must include mistakes . It must include failures. It must reveal a person's limitations as well as his strengths.
The one person to distrust is the one who never makes a mistake, never commits a blunder, never fails in what he tries to do. Either he is a phony, or he stays with the safe, the tried, and the trivial. The better a person is, the more mistakes he will make - for the more new things he will try.
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Results that Make a Difference
Results should be hard to achieve. They should require "stretching," to use the present buzzword. But they should be within reach. To aim at results that cannot be achieved - or can be achieved only under the most likely circumstances - is not being "ambitious." It is being foolish. At the same time, results should be meaningful. They should make a difference. And they should be visible and, if at all possible, measurable.
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Managing Oneself: Identify Strengths. It takes far less energy to move from first-rate performance to excellence that it does to move from incompetence to mediocrity.
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Managing Oneself: What to Contribute?
Successful careers are not the products of luck or planning; they are built by people who are able to seize those opportunities that match their own strengths.
Action Point: Seek the opportunities that allow you to apply your strengths and match your work style and values.
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Managing Oneself: The Second Half
What's commonly called "burnout" the most common affliction of the forty something knowledge worker, is very rarely the result of stress. Its common, all too common, cause is boredom on the job. I can do it now in my sleep. It no longer challenges me. I am just plain bored. I no longer look forward to coming into the office every morning.
What they needed was to regain some true interest, And once they had that - one of them, for instance, started to tutor high school students in math and science - suddenly their work, too , became again satisfying.
Action Point: Set goals outside of your current work. Begin to pursue these goals now. (David's Note: DO NOT UNDERESTIMATE THIS POINT. Fun creates "happy chemicals" in the brain that act as great motivators).
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Managing Oneself: Revolution in Society
Managing oneself is a REVOLUTION in human affairs. It requires new and unprecedented things from the individual and especially from the knowledge worker.
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A Noncompetitive Life
No one can expect to live very long without experiencing a serious setback in one's life or in one's work. Knowledge workers therefore need to develop, preferably, while they are still quite young, a noncompetitive life and community of their own, and some serious outside interest. This outside interest will give them the opportunity for personal contribution and achievement beyond the workplace. (David's Note: see Diversifying your life)
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Staffing Decisions
Strong people always have strong weaknesses (David's Note: This is because they are so passionate about one thing that they pursue it at the expense of others). Where there are peaks there are valleys. There is no such thing as a "good person"; "good for what?" is the question. Look for excellence in one major area, and not for performance that gets by all around. Human excellence can only be achieved in one area, at the most, in very few. Always start out with what a person should be able to do well and then demand that he or she really do it.
By themselves character and integrity do not accomplish anything. But their absence faults everything else.
Action Point: When making people decisions, make sure you know the assignment. Then choose the candidate who has proven strengths in skill-areas required by the new assignment.
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Controls, Control, and Management
Review each of the performance measures you use to manage your organization. Eliminate each of those measures that is not meaningful to the results of the organization.
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Controls: Neither Objective nor Neutral
The act of measurement changes both the event and the observer. Controls in a social situation such as a business are goal-setting and value-setting. Controls create vision. They change both the events measured and the observer. They endow events not only with meaning but with value. And this means that the basic question is not "How do we control?" but "What do we measure in our control system?"
Action Point: Remember, "What you measure is what you get." Ensure that every measure of performance is pertinent to the achievement of a goal or value from your organization. Otherwise, you risk misdirecting your organization.
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Controls Should Focus on Results
What today's organization needs are synthetic sense organs for the outside.
In consequence results exist only on the outside. It is the[ customer only who creates a profit. Everything inside a business creates only cost. But results are entrepreneurial. Yet we do not have adequate, let alone reliable, information regarding the "outside."
The outside, the area of results, is much less accessible than the inside. The central problem of executives in the large organization is their insulation from the outside. What today's organization therefore needs are synthetic sense organs for the outside. If modern controls are to make a contribution, it would be, above all, here.
Action Point: Develop a systematic method of collecting critical information about the environment. This information should include knowledge of customer satisfaction, noncustomer buying habits, technological developments, competitors, and relevant government policies.
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The Ultimate Control of Organizations
People act as they are being rewarded or punished. A system of controls that is not in conformity with this ultimate control of the organization, which lies in its people decisions, will therefore at best be ineffectual. At worst it will cause never-ending conflict and will push the organization out of control.
Action Point: Specify the system of rewards and punishments in your organization, including the procedure used for making promotion decisions. Evaluate the performance measures in place in your organization. Make sure that good performance on the performance measures leads to rewards, promotions, and punishments.
Develop a compensation system that rewards individual performance while balancing individual rewards with rewards that help maintain the continuity of the entire organization as a whole.
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Harmonize the Immediate and Long-range Future
Action Point: Develop a system of performance measures that will lead to maximizing the total wealth-producing capacity of your organization. Include both short-term measures and long-term measures, as well as quantitative and qualitative measures.
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Pursuing perfection - pursue perfection in your work, however elusive.
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Decision Objectives
A decision process requires clear specifications as to what the decision has to accomplish. What are the objectives the decision has to reach? In science these are known as "boundary conditions." A decision, to be effective, needs to be adequate to its purpose.
Conversely, any serious shortfall in defining those boundary conditions is almost certain to make a decision ineffectual, no matter how brilliant it may seem.
A wrong answer to the right problem, as a rule, can be repaired and salvaged. But the right answer to the wrong problem, that's very difficult to fix, if only because it's so difficult to diagnose.
Action Point: Take a decision you are facing today. Clearly specify what purpose or need you want to fulfill by making the decision.
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Building Action into the Decision
A decision is only a hope until carrying it out has become somebody's work assignment and responsibility with a deadline.
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Organize Dissent
The effective decision-maker organizes dissent.
Alfred Sloan is reported to have said, "Gentlemen, I take it we are all in complete agreement on the decision here." Everyone around the table nodded assets. "Then," continue Mr. Sloan, "I propose we postpone further discussion of this matter until our next meeting to give ourselves time to develop disagreement and perhaps gain some understanding of what the decision is all about."
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Elements of the Decision Process
Every decision is risky: it is a commitment of present resources to an uncertain and unknown future. But if the process is faithfully observed and if the necessary steps are taken, the risk will be minimized and the decision will have a good chance of turning out successful. Good decision makers:
-Know when a decision is necessary
-Know that the most important part of a decision is making sure it is about the right problem
-Know how to define the problem
-Know that they will in all likelihood have to make compromises
-Know that they haven't made a decision until they build its implementation and effectiveness into it.
-Don't even think about what is acceptable until they have thought through what the right decision is
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Is a Decision Necessary?
One does not make unnecessary decisions any more than a good surgeon does unnecessary surgeon.
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Classifying the Problem
Executives face four basic types of problems:
1. Generic events that are common within organization and industry
2. Generic events common in industry but not in organization
3. Truly unique events
4. Events that appear to be unique but are really the first appearance of a new generic problem
All but the truly unique event requires a generic solution. Generic problems can be answered with standard rules and practices. Once the right principle has been developed, all manifestations of the same generic event can be handled by applying the standard principle.
Truly unique event are quite rare; someone else has solved virtually EVERY problem an organization faces already. Applying a standard rule or principle can solve most types of problems.
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Getting Others to Buy the Decision
Unless the organization has "bought" the decision, it will remain ineffectual; it will remain a good intention. And for a decision to be effective, being bought has to be built into it from the start of the decision making process.
In Japan, everyone who is likely to be affected by a decision - is asking to write down how such a decision would affect his work, job, and unit. He is expressly forbidden to object to the possible move. But he is expected to think it through. And top management, in turn, then knows where each of these people stands. Everyone who will be affected by the decision knows what it is all about - whether he likes it or not - and is prepared for it.
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Testing the Decisions Against Results
Feedback has to be built into the decision to provide a continuous testing, against actual events, of the expectations that underlie the decisions. Decisions are made by people. People are fallible. Even the best decision has a high probability of being wrong. Even the most effective one eventually becomes obsolete.
In no area is it more important than in decision making to build continuous learning into the executive's work. And the way to do this is to feed back from results of the decision to the expectations when it was being made.
Feedback from the results of a decision compared against the expectations when it was being made makes even moderately endowed executives into competent decision makers.
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Placing Decision Responsibility
Executives should be high enough to have the authority needed to make the decisions and low enough to have the detailed knowledge.
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Organizational Agility
An organization, no matter what it would like to do, can only do a small number of tasks at any one time. This is not something that better organizations or "effective communications" can cure. The law of organization is concentration.
Action Point: What is the small number of tasks that your large organization is doing? Are they the right ones? If not, discontinue them and focus on others.
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Business Intelligence Systems
Erroneous Assumptions can be disastrous
A business intelligence system is a systematic process of organizing information about the business environment. It involves gathering and organizing outside information and then integrating the information into decisions. Organizing information about the environment needs to include information about actual and potential competitors worldwide. Half of new technologies that transform an industry comes from outside the industry, and information about these new technologies is available.
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Gathering and Using Intelligence
Information has to be organized to test a company's assumptions about its theory of business. Even big companies will have to hire outside experts to help them acquire and organize the information they need. Most of what the enterprise needs to know about the environment is available only from outside sources - from all kinds of data banks and data services, from journals in many languages, trade associates, government publications, World Bank reports, scientific papers, or from specialized studies.
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The Test of Intelligence Information
The ultimate test of an information system is that there are no surprises. Before events become significant, executives have already adjusted to them, analyzed them, understood them, and taken appropriate action.
Action Point: Identify key variables in your environment. Make sure you have intelligence information about each of these variables to minimize surprises.
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The Future Budget - Prepare a "development budget" that contains funds to exploit opportunities. Make sure the budget provides stability of funding in good times and bad.
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Winning Strategies
"One prays for miracles but works for results," Saint Augustine said. Strategies lead you to work for results. They convert what you want to do into accomplishment. They also tell you what you need to have by way of resources and people to get the results.
Action Point: Always have a strategy in place.
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The Failed Strategy
When a strategy or action doesn't seem to be working, the rule is "If at first you don't succeed, try once more. Then do something else." The first time around, a new strategy very often doesn't work. Then one must sit down and ask what has been learned. Maybe the service isn't quite right. Try to improve it, to change it, and make another major effort.
There are exceptions, however most of the people who persist in the wilderness leave nothing behind but bones.
Action Point: If at first you don't succeed, sit down and ask what you have learned. Improve your approach and try once more. Maybe make a third effort. Then do something else.
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Long-Range Planning
The future requires decisions - now. It imposes risk - now. It requires action - now. It demands allocation of resources, and above all, of human resources - now. It requires work - now.
The idea of long-range planning - and much of its reality - rests on a number of misunderstandings. The long range is largely made by short-run decisions. Unless the long range is built into, and based on, short-range plan and decisions, the most elaborate long-range plan will be an exercise in futility.
Long range-planning should prevent managers from uncritically extending present trends into the future, from assuming that today's products, services, markets, and technologies will be the products, services, markets, and technologies of tomorrow, and, above all, from dedicating their resources and energies to the defense of yesterday. Everything that is "planned" becomes immediate work and commitment.
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How to Abandon
Abandonment must be practiced systematically. "To abandon what?" and "To abandon how?" have to be practiced systematically. Otherwise they will always be "postponed," for they are never "popular" policies.
In one fairly big company offering outsourcing services in most developed countries, the first Monday of every month is set aside for an abandonment meeting at every management level from top management to the supervisors in each area.
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The Work of the Manager
There are five basic operations in the work of the manager.
1) Managers, in the first place, set objectives.
2) Managers organize. They classify work, divide it into management activities and further divide the activities into manageable jobs.
3) Managers motivate and communicate.
4) Measurement. The manager establishes yardsticks.
5) Managers develop people, including themselves.
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Management by Objectives and Self-Control
The greatest advantage of management by objectives is perhaps that is makes it possible for a manager to control his own performance. Self-control means stronger motivation: a desire to do the best rather than just enough to get by. It means high performance goals and broader vision.
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How to Use Objectives
Objectives are not fate; they are direction. If objectives are only good intention, they are worthless. They must degenerate into work. And work is always specific, always has - or should have - clear, unambiguous, measurable results, a deadline, and a specific assignment of accountability.
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The Right Organization
The only thing that evolve by themselves in an organization are disorder, friction, malperformance.
The pioneers of management a century ago were right: organizational structure is needed. The modern enterprise needs organization. But the pioneers were wrong in the assumption that there - or should be - one right organization. Instead of searching for the right organization, management needs to learn to look for, to develop, to test, the organization that fits the task.
One hears a great deal today about "the end of hierarchy". That is blatant nonsense. There always needs to be a "boss".
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Characteristics of Organizations
Organization is a tool. As with any tool, the more specialized its given task, the greater its performance capacity.
Organizations are special-purpose institutions. They are effective because they concentrate on one task.
And in an organization, diversification means splintering. It destroys the performance capacity of any organization. Because the organization is composed of specialists, each with his or her own knowledge area, its mission must be crystal clear. The organization must be single-minded, otherwise its members become confused. They will follow their specialty rather than applying it to the common tasks. They will each define "results" in terms of that specialty, imposing their own values on the organization. Only a clear, focused, and common mission can hold the organization together and enable it to produce results.
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Federal Decentralization: Strengths
In "federal decentralization" a company is organized into a number of autonomous businesses. Each unit has responsibility for its own performance, its own results, and its own contribution to the total company. Each unit has its own management which, in effect, runs its own "autonomous business."
In a federally organized structure, each manager is close enough to business performance and business results to focus on them. The federal principle therefore enables us to divide large and complex organizations into a number of businesses that are small and simple enough the managers know what they are doing and can direct themselves toward the performance of the whole. Because management by objectives and self-control become effective, the number of people or units under one manager is no longer limited by the span on control; it is limited only by the much wider span of managerial responsibility.
The greatest strength of the federal principle is, however, with respect to manager development. This by itself makes it the principle to be used in preference to any other.
Action Point: Give people maximum responsibility by organizing according to the federal principle. Become an organization that develops numerous people.
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Reservation of Authority within Federal Decentralization Strategy
Top management in a decentralized company must think through carefully what decisions it reserves for itself. Specifically there must be three reserved areas if the business is to remain a whole rather then splinter into fragments:
1) Top management and top management alone, can make the decision on what technologies, markets, and products to go into, what businesses to start and what businesses to abandon.
2) Top management must reserve to itself the control of the allocation of the key resource of capital (both supply of capital and its investment).
3) The people in a federally organized company, and especially managers and key professionals, are a resource of the entire company rather than any one unit. The company's policies with respect to people and decisions on key appointments in the decentralized autonomous business are top-management decisions - though of course, autonomous business managers need to take an active part in them.
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Simulated Decentralization
Whenever a unit can be set up as a business, no design principle can match federal decentralization. We have learned, however, that a great many large companies cannot be divided into genuine businesses.
When this is the case, simulated decentralization forms structural units that are not businesses but which are still set up as if they were businesses. They buy from and sell to each other using "transfer prices" determined internally rather then by the market. Their "profits" are arrived at by internal allocation of costs to which then, often, a "standard fee," such as 20 percent of costs, is added. See Activity-Based costing for more information.
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Building Blocks of Organization
Key activities should never be subordinated to non key activities. Revenue-producing activities should never be subordinated to non-revenue producing activities. Any support activities should never be mixed with revenue-producing and result-contributory activities.
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Fundamentals of Communications
To improve communications, work not on the utterer but the recipient. Communication always makes demands. It always demands that the recipient become somebody, do something, believe something. It always appeals to motivation.
Where communication is perception, information is logic. As such, information is purely formal and has no meaning. Information is always encoded. To be received, let alone to be used, the code must be known and understood by the recipient. This requires prior agreement, that is, some communication.
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Rules for Staff Work
Staff work should be limited to a few tasks of high priority. Effective staff work requires specific goals and objectives, clear targets, and deadlines. "We expect to cut absenteeism in half within three years" or "Two years from now we expect to understand the segmentation of our markets sufficiently to reduce the number of product lines by at least one third." Keep support staff small and few. Unless staff people have proved themselves in operations, they will lack credibility among operating people and will be dismissed as "theoreticians."
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Control Middle Management
As a job becomes vacant through retirement, death, or resignation, don't automatically fill it. Leave it open for six to eight months; unless there is an overwhelming clamor for filling the job, then abolish it. The few companies that tried this report that about half the "vacancies" disappeared after six months.
A second way to reduce middle-management is to substitute job-enlargement for promotion. The one and only way to provide satisfaction and achievement for young managers and executives - and for the even younger people working under them - is to make jobs bigger, more challenging, more demanding, and more autonomous, while increasingly using lateral transfers to different assignments, rather than promotions, as a reward for outstanding performance.
We built into performance review questions such as "Are they ready for a bigger, more demanding challenge and for the addition of new responsibilities to their existing job?" (David's Note: a small pay raise is needed but it can save a lot of money from having to pay 2 people for the same job).
Action Point: Create a flat organization. Use information processing - its structure, its content, and its direction - to ensure that your organization is agile and effective.
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Turbulent Times Ahead
In turbulent times, the first task of management is to make sure of the institutions capacity for survival, to make sure of its structural strengths, of its capacity to survive a blog, to adapt to sudden change, and to avail itself of new opportunities. Turbulence, by definition, is irregular, nonlinear, erratic. But its underlying causes can be analyzed, predicted, managed.
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Activity Costing
Activity based costing starts from the end and asks, "Which activities and related costs are used in carrying out the complete value chain of activities associated with the cost object?" Activity based costing includes the cost of quality and service.
By designing quality into products and services during the design stage, design costs may increase, but warranty and service costs are likely to decrease. And unlike traditional costing, it includes all costs or producing a product or service.
The real cost is the cost of an entire process, in which even the biggest company is just one link. Companies are therefore beginning to shift costing from including only what goes on inside their own organization to costing the entire economic process, the economic chain (including suppliers, etc.).
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Benchmarking for Competitiveness
Benchmarking correctly assumes that being at least as good as the leader is a prerequisite to being competitive. "Best performers" are often found in identical services for functions inside an organization, in competitor organizations, but also in organizations outside the industry.
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Resource-Allocation Decisions
The allocation of capital and performing people converts into action all that management knows about its business - they determine whether the organization will do well or poorly. An organization should allocate human resources as purposefully and as thoughtfully as it allocates capital.
Decision makers should not evaluate capital investments in isolation, but as part of a cluster of projects. They should then select the cluster that shows the best ration between opportunity and risk.
An organization needs to have a systematic process for making people decisions that is just as rigorous as the one it has for making decisions about capital. Executives need to evaluate people against expectations.
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Six Rules of Successful Acquisitions
Acquisitions should be successful, but few are, in fact. It is always because of the disregard of the well-known and well-tested rules for successful acquisitions.
The six rules of successful acquisitions are:
1. The successful acquisitions must be based on business strategy, not financial strategy.
2. The successful acquisition must be based on what the acquirer contributes to the acquisition (not vice-versa).
3. The two entities must share a common core of unity, such as markets and marketing, or technology, or core competences.
4. The acquirer must respect the business, products, and customers of the acquired company, as well as its values.
5. The acquirer must be prepared to provide top management to the acquired business within a fairly short period, a year at most.
6. The successful acquisition must rapidly create visible opportunities for advancement for both people in the acquiring business and people in the acquired business.
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Business Not Financial Strategy
Acquisitions targets must fit the business strategies of the acquiring company; otherwise, the acquisition is likely to fail. The worst acquisition record of the last decades of 20'th century was of Peter Grace, a brilliant man. He assembled the ablest group of financial analysts and had them scout all over the world for industries and companies low price/earnings ration. He bought these companies at what he thought were bargain prices. The financial analysis of each Grace purchase impeccable. But there was absolutely no business strategy or unity.
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What the Acquirer Contributes
An acquisition will succeed only if the acquiring company thinks through what it can contribute to business it is buying, no matter how attractive the expected "synergy" may look. It may be management, technology, or strength in distribution. This contribution has to be something besides money. Money, by itself is never enough.
The acquisition of Citibank by Travelers was successful because the acquiring company, Travelers, though through and planned what it could contribute to Citibank that would make a major difference.
Action Point: Before making an acquisition, focus on contribution, not synergy.
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Common Core of Unity
There has to be a "common culture" or at least a "cultural affinity."
Successful diversification by acquisition, like all successful diversification, requires a common core of unity. The two businesses must have in common either markets or technology, though occasionally a comparable production process has also provided sufficient unity of experience and expertise, as well as a common language, to bring companies together.
One example is a big French company that has been built by acquiring luxury goods: champagne, high fashion designers, expensive watches, perfumes, handmade goods, etc. What all the acquisitions of this successful acquirer have in common is their customer's values. Champagne is being sold quite differently from high fashion. But it is being bought for much the same reason.
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Respect for the Business and Its Values
No acquisition works unless the people in the acquiring company have respect for the products, markets, and customers of the company they acquire. Many large pharmaceutical companies have acquired cosmetic firms, none has a great success of it.
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Promote Across Lines
But politically, the people in the acquired company become "us" determined to defend the company against "them," the people in the acquiring company...It is therefore imperative that, within the first few months after the acquisition, a number of people on both sides are promoted to a better job across lines. This way both sides see the acquisition as a personal opportunity.
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From Data to Information Literacy
Information is what holds an organization together and information is what makes individual knowledge workers effective. Enterprises and individuals will have to learn what information they need and how to get it. They will have to learn how to organize information as their key resource. In moving from data literacy to information literacy, you need to answer two principal questions: "What information does my enterprise need?" and "What information do I need?"
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Lessons from Marvin Rush (founder of trucking company that groses $2 billion / year
This from the talk of Marvin Rush, the founder of the publicly traded Rush Enterprises that has revenues of $2 Billion / year.
Interesting Points/Insights:
1) Have intricate knowledge of your business. Know the basics from everything from the ground up.
2) Used CPA's to help find investors for him when he needed them.
3) Know your numbers. Make sure you are getting a report on all the numbers and what they mean. He too had his controller steal money from him (similar to many successful entrepreneurs I have read about).
4) Watch your credit risk (don't give away too many "perks")
5) Be persistent, became entrepreneur at 10 didn't get traction until 50!
6) Pay talent well and make sure if you are making good money that the talent around you gets paid to (give top talent stock options). Consider restricted stock. Don't bother paying stock options to mechanics and others unless they know what it means.
7) Grow own talent from high school / college (much higher retention rates then hiring out and much better culture fit)
8) When he went public he sold his car business in order to concentrate on his core business.
9) Don't let investment bankers convince you to run business differently in order to increase "earnings and growth" in the short term.
10) Have employees function as entrepreneurs, make them make decisions and be accountable.
11) If you're not having fun something's wrong. Change what you're doing.
12) Rush coins for employees to hold on to to engrave main cultural points.
13) When the company gets big enough, hire several people to help teach culture around the company and make sure that it is kept up.
14) Know your competition well.
Interesting Points/Insights:
1) Have intricate knowledge of your business. Know the basics from everything from the ground up.
2) Used CPA's to help find investors for him when he needed them.
3) Know your numbers. Make sure you are getting a report on all the numbers and what they mean. He too had his controller steal money from him (similar to many successful entrepreneurs I have read about).
4) Watch your credit risk (don't give away too many "perks")
5) Be persistent, became entrepreneur at 10 didn't get traction until 50!
6) Pay talent well and make sure if you are making good money that the talent around you gets paid to (give top talent stock options). Consider restricted stock. Don't bother paying stock options to mechanics and others unless they know what it means.
7) Grow own talent from high school / college (much higher retention rates then hiring out and much better culture fit)
8) When he went public he sold his car business in order to concentrate on his core business.
9) Don't let investment bankers convince you to run business differently in order to increase "earnings and growth" in the short term.
10) Have employees function as entrepreneurs, make them make decisions and be accountable.
11) If you're not having fun something's wrong. Change what you're doing.
12) Rush coins for employees to hold on to to engrave main cultural points.
13) When the company gets big enough, hire several people to help teach culture around the company and make sure that it is kept up.
14) Know your competition well.
Mind Rape Theory
I have a theory, it is based on nothing else but personal experience. My theory is this, unless you feel like your mind just got raped you are not gaining significant knowledge.
The knowledge that I am talking about needs to be paradigm shifting, meaning that it changes the way you look at the world. It is a fundamental shift, not just an addition of detail.
After reading the information, your mind needs to be toast. In fact, you will be thinking to yourself "What the hell just happened?" In fact if information is to truly be beneficial it must at some level be rejected by your mind. Personally, it takes me several days after my mind gets raped to comprehend the information.
What would happen if we had our minds raped on a daily basis?
The knowledge that I am talking about needs to be paradigm shifting, meaning that it changes the way you look at the world. It is a fundamental shift, not just an addition of detail.
After reading the information, your mind needs to be toast. In fact, you will be thinking to yourself "What the hell just happened?" In fact if information is to truly be beneficial it must at some level be rejected by your mind. Personally, it takes me several days after my mind gets raped to comprehend the information.
What would happen if we had our minds raped on a daily basis?
Tuesday, October 21, 2008
The Laziness Era
In my college years (I am now an old man) I would hear students say on a daily basis:
"Dude, I have no classes before 1 P.M. all week long so I get to sleep in" or "I have no class tommorow let's get *%%*ed up and sleep in all day". Even now when I say I am going to a meeting the response from my roommates is "that sucks."
All in all it has been culturally accepted among my generation that work is bad and the one goal in life should be to expend as little effort as necessary to get by.
"Hello world, this is America, we're *%%*ed." It seems that our country is beyond a culture of entitlement and is now entering 'The Laziness Era'.
In order to stay a superpower, our country will have to completely change this culture. Here are several ways we can do this:
1) Starting with the educational system we need a complete overhaul. Colleges need to be taught by retired/semi-retired practioners that can inspire students and act as role models. At the very least, once a week college classes should be required to bring in practioners who would inspire students and show that hard work pays off.
2) The educational system then needs to switch to a "place to educate" rather then a "place to evaluate". This fundamental culture shift will make students eager to learn rather then eager to manipulate the system.
3) We need to increase the cost of college to improve teacher-to-student ratios as well as simultaneously increasing merit based scholarships
4) We need to do a better job at fostering entrepreneurship by lowering/eliminating capital gains for startups and encouraging more collegiate entrepreneurship. (I'm sure you will agree with this one)
All in all we can each help by educating our kids on these issues. Often times, the children of successful entrepreneurs end up spoiled rotten and lazy. I can assure you that this will not be the case for my future kids. Hopefully you can say the same.
"Dude, I have no classes before 1 P.M. all week long so I get to sleep in" or "I have no class tommorow let's get *%%*ed up and sleep in all day". Even now when I say I am going to a meeting the response from my roommates is "that sucks."
All in all it has been culturally accepted among my generation that work is bad and the one goal in life should be to expend as little effort as necessary to get by.
"Hello world, this is America, we're *%%*ed." It seems that our country is beyond a culture of entitlement and is now entering 'The Laziness Era'.
In order to stay a superpower, our country will have to completely change this culture. Here are several ways we can do this:
1) Starting with the educational system we need a complete overhaul. Colleges need to be taught by retired/semi-retired practioners that can inspire students and act as role models. At the very least, once a week college classes should be required to bring in practioners who would inspire students and show that hard work pays off.
2) The educational system then needs to switch to a "place to educate" rather then a "place to evaluate". This fundamental culture shift will make students eager to learn rather then eager to manipulate the system.
3) We need to increase the cost of college to improve teacher-to-student ratios as well as simultaneously increasing merit based scholarships
4) We need to do a better job at fostering entrepreneurship by lowering/eliminating capital gains for startups and encouraging more collegiate entrepreneurship. (I'm sure you will agree with this one)
All in all we can each help by educating our kids on these issues. Often times, the children of successful entrepreneurs end up spoiled rotten and lazy. I can assure you that this will not be the case for my future kids. Hopefully you can say the same.
Sunday, October 19, 2008
Six Pillars of Self Esteem
To order the book on Amazon click here. The following are direct quotes from the book.
Self-Esteem: The Immune System of Consciousness
"There are realities we cannot avoid. One of them is the importance of self-esteem...Yet self-esteem is a fundamental human need. Its impact requires neither our understanding nor our consent."
"Self-esteem, fully realized, is the experience that we are appropriate to life and to the requirements of life. More specifically, self esteem is:
1. Confidence in our ability to think, confidence in our ability to cope with the basic challenges of life.
2. Confidence in our right to be successful and happy, the feeling of being worthy, deserving, entitles to assert our needs and wants, achieve our values, and enjoy the fruit of our efforts."
"To trust one's mind and to know that one is worthy of happiness is the essence of self-esteem."
"With high self-esteem, I am more likely to persist in the face of difficulties. With low self-esteem, I am more likely to give up or go through the motions of trying without really giving my best. Research shows that high-self-esteem subjects will persist at a task significantly longer than low-self-esteem subjects. If I persevere, the likelihood is that I will succeed more often than I fail. If I don't, the likelihood is that I will fail more often than I succeed. Either way, my view of myself will be reinforced."
"The value of self-esteem lies not merely in the fact that it allows us to feel better but it allows us to live better - to respond to challenges and opportunities more resourcefully and more appropriately."
The Impact of Self Esteem : General Observations
"The level of our self-esteem has profound consequences for every aspect of our existence: how we operate in the workplace, how we deal with people, how high we are likely to rise, how much we are likely to achieve - and, in the personal realm, with whom we are likely to fall in love, how we interact with our spouse, children, and friends, what level of personal happiness we attain."
"Healthy self-esteem correlates with rationality, realism, intuitiveness, creativity, independence, flexibility, ability to make change, willingness to admit and correct mistakes, benevolence, and cooperativeness."
"High self-esteem seeks the challenge and stimulation of worthwhile and demanding goals."
"The more solid our self-esteem, the better equipped we are to cope with troubles that arise in our personal lives or in our careers; the quicker we are to pick ourselves up after a fall; the more energy we have to begin anew. (An extraordinary high number of successful entrepreneurs have two or more bankruptcies in their past; failure did not stop them)."
"The higher our self-esteem, the more ambitious we tend to be...The lower our self-esteem the more urgent the need to "prove" ourselves - or to forget ourselves living mechanically and unconsciously."
"High self-esteem individuals tend to be drawn to high-self-esteem individuals. Medium-self-esteem individuals are typically attracted to medium-self-esteem individuals. Low self-esteem individuals seek low self-esteem in others - not consciously, for sure, but by the logic of that which leads us to feel we have encountered a "soul mate." The most disastrous relationships are those between persons who think poorly of themselves, the union of two abysses does not produce a height...The healthier our self-esteem, the more inclined we are to treat others with respect, benevolence, goodwill, and fairness. High self esteem individuals have a "surplus" that they can channel into loving."
"But if I lack respect for and enjoyment of who I am, I have ve