StrategyDriven » Tactical Execution

Tactical Execution Best Practice 6 – Succession of Authority

StrategyDriven — Tue, 17 Jan 2012 11:09:52 +0000

“You are not open for business unless you are ready to do business.”
StrategyDriven Contributors

Limited resources, personnel, financial, and material, are a constraining reality faced by every business. These constraints prevent leaders from executing on business activities and in some avoidable cases result in customers not receiving the goods and services to which they are entitled. In other instances, business operations cease altogether. While demand spikes cannot be perfectly anticipated, policy-induced limitations are fully avoidable and often inexcusable. An executable authority succession pan is one such mechanism used to avoid a policy-driven operational stoppage.

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The Advisor’s Corner – When Should Consultants Be Used?

StrategyDriven — Mon, 24 Oct 2011 11:30:53 +0000

Question:

We’ve brought in a number of high priced consultants to perform a business case analysis. In hind sight, it appears we could have done the same work with internal resources. Why then did we hire these costly advisors?

StrategyDriven Response:

There are many reasons for hiring consultants. One or more of these likely applied in your situation:

The consultants brought unique insights and experiences from outside your organization; enabling them to develop and present points of view that would otherwise have not been available for consideration.
The organization staff did not have the capacity to perform the given task. Therefore, the consultants were hired to augment the labor pool.
The existing staff had the capacity but not the knowledge and skills to perform the work. (Note that this appears to not be a factor given the question asked but is a legitimate reason for hiring consultants.)
The organization is reluctant to implement the recommendations made by those internal resources not viewed as being experts in a particular area. Subsequently, the consultants are brought in because of their ‘expert status’ that leaders know will enable them to move forward with a desired course of action.

The reason for engaging consultants should always be understood prior to hiring them. Clear, quantifiable expectations should be documented within the statement of work that define the value they are to bring to the organization whether that is external knowledge and experience, labor augmentation, skills augmentation, or to drive a particular perspective. The consultants must be held to the achievement of these established goals in order to ensure they have met the return on investment promised by their employment.

Final Thought…

Using consultants should always be on a temporary basis. Some organizations fall prey to hiring consultants for temporary staff augmentation only to find that these individuals remain in position for years if not decades. Such circumstances highlight an understaffing condition that should be alleviated by the typically less expensive option of hiring additional resources rather than engaging costly consultants for extended periods.

Additional Resources

StrategyDriven Contributors further highlight the benefits of using consultants in the article, Independent Assessors.

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StrategyDriven Podcast Video Edition 2 – What makes an organization StrategyDriven?

StrategyDriven — Thu, 06 Oct 2011 11:30:43 +0000

StrategyDriven Podcasts focus on the tools and techniques executives and managers can use to improve their organization’s alignment and accountability to ultimately achieve superior results. These podcasts elaborate on the principle, best practice, and warning flag articles found on the StrategyDriven website.

Episode 2 – What makes an organization StrategyDriven? examines the qualities and characteristics of a StrategyDriven organization as well as the benefits these organizations realize over competing firms not so well aligned.

Learn more about how to become truly StrategyDriven by reading: The StrategyDriven Organization.

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Thank you again for watching this StrategyDriven Podcast – Video Edition episode!

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Recommended Resource – Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage

StrategyDriven — Thu, 08 Sep 2011 11:46:27 +0000

Beyond Performance: How Great Organizations Build Ultimate Competitive Advantage
by Scott Keller and Colin Price

About the Reference

In Beyond Performance, Scott Keller and Colin Price reveal that achieving organizational excellence is a combination of performance – the delivery of financial results – and health – the ability to perform year after year. Both are shown to be measurable and achieved through the five frames of:

Aspire: Where do we want to go?
Assess: How ready are we to go there?
Architect: What do we need to do to get there?
Act: How do we manage the journey?
Advance: How do we keep moving forward?

The findings presented in Beyond Performance are founded on extensive research and empirical data. This underlying evidence gives Beyond Performance a level of credibility few other business books have been able to achieve.

Benefits of Using this Reference

StrategyDriven Contributors like Beyond Performance because it provides a method for achieving organizational excellence that is founded on the real-world performance of top companies. Additionally, Beyond Performance provides insights to the role of organization leaders in fostering ongoing performance excellence.

The analysis behind the actionable performance enhancement method is presented in such a manner that it gives the reader a clear understanding of how excellence might be similarly fostered within his/her organization. Use of organizational characteristic models and definition tables further enhances this clarity. Enough detail is provided so that the reader can create performance metrics to measure for the existence of enabling organizational characteristics and performance improvement when the journey for excellence is undertaken.

Beyond Performance‘s method for achieving organizational excellence is well aligned with that recommended by StrategyDriven; making it a StrategyDriven recommended read.

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How to Turn a Great Strategic Principle into Great Results

StrategyDriven — Mon, 27 Jun 2011 11:11:02 +0000

Results start with a strong strategic principle – a shared objective about what the organization wants to accomplish. The strategic principle guides the company’s allocation of scarce resources – money, time, and talent.

The strategic principle doesn’t merely aggregate a collection of objectives.

Landing in the Executive Chair: How to Excel in the Hot Seat
by Linda Henman

In today’s fast-paced, unprecedented, and unpredictable economy, many executives simply don’t know what to do. Conventional methods-which many never entirely understood in the first place-often don’t work during economic upheaval. Executives, especially CEOs, need something better. They need a guide that identifies the roadblocks and points out the landmines. In her more than 30 years of working with hundreds of executives, Dr. Linda Henman has observed the critical elements of success, both for the new leader and the one who aspires to the next level of success. In Landing in the Executive Chair, you’ll learn how to:

Avoid the pitfalls and identify a clear plan for personal and organizational stress.
Leverage the first months in a new executive position- that time of transition that promises opportunity and challenge, but also brings a period of great vulnerability.
Create a competitive advantage, set the right tone, make effective decisions, keep talent inside your doors, and establish credibility-all while navigating unfamiliar and turbulent waters.

As organizations expand and grow, the skills that led to success often won’t sustain further development in a more complex, high-stakes environment. Present and future executives need more. They need Landing in the Executive Chair.

Rather, this simple statement captures the thinking required to build a sustainable competitive advantage that forces trade-offs among competing resources, tests the soundness of particular initiatives, and sets clear boundaries within which decision makers must operate.

Creating and adhering to a concise, unforgettable, action phrase can help everyone keep an eye on the ball at all times. Wal-Mart offers one of the most well-known strategic principles: Low prices, every day.
A well-thought-out strategic principle pinpoints the intersection of the organization’s passion, excellence, and profitability, or in the case of not-for-profit organizations, its unique contribution. As you can see from the graphic, success lies at the intersection of the three. (See Figure 1)

If your organization operates in section one, you will probably experience some short-term success. People who can do the work they feel passionate about and engage in work that rewards efforts with large monetary compensation, can often stay in the game for the short run. But if you aren’t the best, the competition will soon surpass you.

Figure 1: Strategic Success

Passion and excellence without profitability, or section two, won’t even allow you a short run. This undisciplined orientation – to do what you like and are good at – without consideration of the market, won’t provide anything other than some short-lived fun, which should last right up until the time your bills come.

Section three is a recipe for burn out. You can work hard at something you’re good at and that makes you significant money, but you won’t excel at it for long unless you feel some passion for it.

Sustained success lies in area four, the intersection of passion, excellence, and profitability. Only here can your organization thrive as you work diligently to produce a product or service that your competition can’t match.

When companies face change or turmoil, the strategic principle acts as a beacon that keeps the ships from running aground. It helps maintain consistency but gives managers the freedom to make decisions that are right for their part of the organization. Even when the leadership changes, or the economic landscape shifts, the strategic principle remains the same. It helps decision makers know when to develop new practices, products, and markets. When they face a choice, decision-makers will be able to test their options against the strategic principle by simply applying the three-part litmus tests:

Are we passionate about his work?
Can we do it better than our competitors?
Will it make us money?

When designed and executed well, a strategic principle gives people clear direction while inspiring them to be flexible and take risks. It offers a disciplined way to think about decisions, strategy, and execution and challenges people to play an ever-evolving better game.

About the Author

For more than 30 years, Linda Henman has helped leaders in Fortune 500 Companies, small businesses, and military organizations define their direction and select the best people to put their strategies in motion.

Linda holds a Ph.D. in organizational systems, two Master of Arts degrees in interpersonal communication and organizational development, and a Bachelor of Science degree in communication. By combining her experience as an organizational consultant with her education in business, she offers her clients selection, coaching, and consulting solutions that are pragmatic in their approach and sound in their foundation.

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Seven Strategies for Managing Workplace Internet Usage

StrategyDriven — Mon, 13 Jun 2011 11:13:23 +0000

As social media and personal email continue to be many individual’s primary forms of communications, it becomes harder to keep them focused at the workplace. An increase in usage of media-rich sites can place a considerable strain on limited bandwidth, which can hurt the performance of critical business tasks. The challenge is establishing a proper workplace balance that allows some personal internet usage without a related drag on business efficiency.

Black Box Corporation is a trusted provider of comprehensive communications and infrastructure solutions. As a value-added reseller of platforms and applications from the industry’s top manufacturers, and a provider of our own line of technology products and services, we design, build, and maintain today’s complex voice and data networks.

Headquartered in Lawrence, Pennsylvania, Black Box Network Services has the largest footprint in the industry, with 194 offices serving 141 countries. With more than 4500 Team Members worldwide, we serve more than 175,000 clients in every major industry sector.

As a business owner or IT manager, you need tips and tactics on striking the right balance. We offer seven strategies:

Accept that employees are going to have the need to conduct some personal business. Limited usage of for example Gmail or Yahoo! Mail personal accounts should be allowed to give employees a connection to their personal lives.
Use a tool that can help you accurately measure and report internet bandwidth usage. Establishing a benchmark allows you to fairly assess the situation and address the most frequented sites and the heaviest individual bandwidth users.
Take a more granular approach that allows the use of certain sites, but at a throttled down bandwidth level so business processes are not slowed. By slowing the access to a site such as Facebook, employees can use the site, but might get frustrated at slow-loading page. They can then be subtly pushed back towards work-related tasks.
Treat employees like grownups! Don’t publicly shame those who visit undesirable sites or who spend too much time online. Work with them to establish clear best practices.
Beware of the workarounds! If you take draconian measures and restrict all personal internet usage, employees might use proxy sites or other tricks which introduce your business to malware and are difficult to manage and detect.
Frame your need to limit personal web use in terms of business performance. For example, describe how streaming movies at work is severely interrupting the CRM system, which will affect everyone at bonus time.
Consider tailoring access by department or individual. Marketing might need greater bandwidth for YouTube campaigns, for example.

About the Author

Keith Ross is product manager for Networking products at Black Box Corporation. His product line includes Ethernet switches, media converters, network security, and WAN optimization products. Keith has over 10 years experience in telecommunications and data networking. He worked at FORE Systems, Marconi, and Ericsson previously. Keith has a BSEE from Carnegie-Mellon and an MSEM from Stanford University. To learn more about Black Box, click here.

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What Really is The Big Picture of Business

StrategyDriven — Fri, 06 May 2011 11:12:14 +0000

The biggest problem with business, in a one-sentence capsule, is:

People exhibit misplaced priorities and impatience… seeking profit and power, possessing unrealistic views of purpose, and not fully willing to do the things necessary to sustain orderly growth and long-term success.

What organizations and individuals started out to become and what we’ve evolved into being are decidedly different things. The path toward progress takes many turns, expected and unexpected. How we evolve reflects the teachings, experiences and instincts that are not part of formal education.

The Business Tree: Growth Strategies and Tactics for Surviving and Thriving
by Hank Moore

Any company or organization is like a tree. It seemingly looks the same each day but sheds leaves, lets its limbs rot and applies “band-aid surgery” to its branches late in life. Therefore, it does not fully grow and bloom. Often, it withers and dies an early death.

The Business Tree™ has 7 major parts… 5 primary branches, a trunk (6) and the base (7):

The business you’re in
Running the business
Financial
People
Business development
Body of Knowledge
The Big Picture

No single branch (business component) constitutes a healthy tree. None of the limbs and twigs on each branch (staff-consultants) provide all nourishment required to breed a healthy tree (company). Each branch has its proper responsibility and should learn to interface with the others.

The Business Tree will not stand without a trunk and the base. These keep the branches, limbs and twigs (divisions, consultants and vendors) on a growth curve. Trees with thicker bases and deeper roots will sprout greener (be profitable), shed less often (fewer corporate flaws) and live longer (dominate its industry).

Learn more about Hank Moore and The Business Tree™ by visiting his website, www.HankMoore.com.

Pressures continue and accelerate for companies to stay in operation, become competitive, keep ahead of the marketplace and perform quality work. Businesses of all sizes are besieged with opportunities, competing information sources and large amounts of uncertainty.

Executives are not fully prepared to handle challenges of the moment, much less to begin developing Big Picture thinking. Seasoned executives face burnout daily. Much of the workforce is in transition, with unclear anchoring of where they’ve been and where they could head. Young and mid-level workers do not really know what it takes to succeed long-term and are, for the most part, impaired from optimum achievement.

Failure to prepare for the future spells certain death for businesses and industries in which they function. The same analogies apply to personal lives. Greater business awareness and heightened self-awareness are compatible and part of a holistic journey of growth.

The term Big Picture is often used but rarely applied correctly. If one believes vendors and niche consultants, the Big Picture is what their specialty is. It may be: human resources, organizational development, training, technology, sales, marketing, advertising, public relations, coaching or financial management. Few of those have actually written Strategic Plans and do not really comprehend what the Visioning process actually is.

Thus, few in business know how to frame, craft and sustain a Big Picture of business. There are reasons:

Niche consultants say that their niche is The Big Picture, and the uninformed accept that.
Vested interests have a stake in keeping certain niche consultants in the driver’s seat.
Business school education is limited and behind the times.
Fear of change forces people to go to extreme lengths to defend their turf.
Spin doctors mine the fear and represent the vested interests of niche service providers.
People in business are so overwhelmed that they do not know any better.
A great many people set up barriers to learning anything more than is what is on their radar.

Businesses usually stop growing because they have failed to make investments for future company success. Rather than plan to grow and follow the plan, they rationalize organizational setbacks, excuse poor service or quality, and avoid change, all the while denying the need for change and avoiding any planning. Too often, they rely upon what worked for them in the past, on buzzwords, and on incomplete strategies. We’ve all seen businesses in which a paralysis creeps in, keeping them from doing anything at all.

A growth plan or strategic plan is essential for any organization that intends to survive and thrive in today’s rapidly changing business environment. Companies need to heed messages from the marketplace telling them of changing market conditions, new global business imperatives, new partnering concepts, recognition of new stakeholders, and other changes outside of their influence that may profoundly affect them.

These are the points at which a company must conduct a planning retreat to assess its own Big Picture and chart the process forward:

The Big Picture

The organization is not now what it started out to be.
There seems to be a need to change the direction of the organization.
No Vision was actually created…the organization just rolled with the flow.
Management is concerned that resources are not concentrated on important things.
Management of the organization seems tired or complacent.

Growth

Management is cautious and uncertain about the company’s future.
The company has grown too rapidly.
No-growth or slow-growth has occurred.
There is a need to step up growth and improve profitability.

People-Productivity

Apathy, low productivity and discord are exhibited.
Management seeks perspective and needs to be recharged.
There is a need to develop better information to help management make better decisions.
Individuals are more concerned about their own areas than for the overall organization.

Processes

There is a sense that company operations are out of control.
Management expresses a need for better internal coordination of company activities.

External-Marketplace

External forces threaten the status quo… and open up new opportunities.
The environment in which the organization competes is rapidly changing.

Did you ever wonder why some people have good ideas, and others make them succeed profitably?

Would it surprise you to know that one third of your efforts, money and resources will go toward reducing problems in your business this year? And if you don’t tend to issues as they occur, your high costs could multiply as much as six times per year.

Small business owners need all the tools they can get. Big corporations don’t have all the answers. Small businesses, in reality, have more flexibility to do something well and be more successful more quickly.

What Big Picture Growth Strategies Programs Accomplish:

Prestige or favorable image… and its benefits.
Promotions of products and sales.
Good will of the employees.
Prevention and solution of labor problems.
Fostering the good will of communities in which the company has units.
Good will of the stockholders, board of directors, and owners.
Overcoming misconceptions and prejudices.
Good will of suppliers.
Good will of government.
Good will of the rest of your industry.
Attraction of others into the industry.
Ability to attract the best personnel.
Education of the public to the purposes and scope of the product.
Education of the public to a point of view.
Good will of customers (and their friends and colleagues).
Seeing that the industry is properly represented in the curricula of schools and colleges.
Assisting educators in teaching about the industry.
Creating public support for legislative proposals that the industry favors or public opposition to legislation that it opposes.
Obtaining public recognition for the social and economic contributions that the industry makes to the nation.
Addressing outside interference or competition with the industry.
Public understanding of the regulation of the industry by the government, in order to assure equitable regulation.
Consumer understanding of how to use the product.

Expected Results:

Your service is efficient and excellent, by your standards and by the publics. You are sensitive to the public’s needs, and you are flexible and human in meeting them.
Your staff is likeable and competent. They demonstrate initiative and use their best judgment, with authority to make the decisions they should make.
You have a good reputation and are awake to community obligations. You contribute much to the economy. ou provide leadership for progress, rather than following along.
You always give your customers their money’s worth. Your charges are fair and reasonable.
You employ state-of-the-art technology and are in the vanguard of your industry.
You provide a good place to work. You offer a promising career and future for people with ideas and initiative. Your people do a day’s work for a day’s pay.
The size of your organization is necessary to do the job demanded of you. Your integrity and dependability make the public confident that you will use your size and influence rightly.

Conclusions and Opportunities

Here are 15 sure-fire steps to begin putting this information to immediate use in your business.

Business cannot exist in a vacuum. You must put everything that you produce into a Big Picture context.
Recognize that there is a Big Picture, and be skeptical about niche consultants and vendors who purport that their approach is the only one.
Choose your advisors very carefully. Insist that they benchmark everything they do for you toward a Big Picture of your business.
You must have both a Sales Plan and a Marketing Plan as sub-sets of your Strategic Plan.
Advertising is a process, part of marketing and a cousin of sales. Running an ad here and there does not constitute advertising.
Have concurrent programs in your plan, including direct marketing, sales promotions, advertising, internet presence, specialty advertising, public relations and other marketplace presence.
Running a small business is tough. You cannot be a Lone Ranger. Develop a support system of friends and colleagues. Surrounding yourself with employees and consultants is not enough.
Always think about new products to create.
Never stop changing. Change is 90% positive. Every person and company changes 71% per year anyway. You might as well benefit from it, rather than become a victim of it.
Find ways to measure the success of every new initiative that you adopt.
Use my Business Tree as a way of always looking at the whole of any situation… then at the parts…and back to the whole again.
You never stop paying dues. It doesn’t get easier… yet, creative opportunities create more successes.
Take ownership of planning programs, rather than abdicate them to human resources or accounting people.
Predict the biggest crises that can beset your company. 85% of the time, you’ll prevent them from occurring.
Challenge yourself to succeed by taking a Big Picture look… while others are still thinking and acting small-time. Your biggest resource is a wide scope… and the daring to visualize success and then all of its components.

About the Author

Hank Moore has advised 5,000+ client organizations worldwide (including 100 of the Fortune 500, public sector agencies, small businesses and non-profit organizations). He has advised two U.S. Presidents and spoke at five Economic Summits. He guides companies through growth strategies, visioning, strategic planning, executive leadership development, Futurism and Big Picture issues which profoundly affect the business climate. He conducts company evaluations, creates the big ideas and anchors the enterprise to its next tier. The Business Tree™ is his trademarked approach to growing, strengthening and evolving business, while mastering change. To read Hank’s complete biography, click here.

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The Big Picture of Business – Business Lessons to be Learned from the Enron Scandal

StrategyDriven — Fri, 11 Mar 2011 16:19:03 +0000

This is my own Big Picture full-scope analysis of the Enron debacle. It far transcends financial analysis made by other people.I have been carefully observing Enron with interest since 1984 and have seen the trouble coming for most of those years. The company cried ‘case study’ from the very beginning, when it segued from the former Houston Natural Gas moniker. I have been chagrined as to why people could not or would not see through the facade. But, human nature being what it is, people are more easily duped than they are taught to appreciate the attributes of quality and substance.

The Business Tree: Growth Strategies and Tactics for Surviving and Thriving
by Hank Moore

The Business Tree™ has 7 major parts… 5 primary branches, a trunk (6) and the base (7):

The business you’re in
Running the business
Financial
People
Business development
Body of Knowledge
The Big Picture

Learn more about Hank Moore and The Business Tree™ by visiting his website, www.HankMoore.com.

I once had a client who felt that he owed Ken Lay a favor. Thus, when Lay (CEO of Enron) was chairing a charity drive, Lay asked for 100% participation from the client’s firm, and the client reciprocated by edicting donations from his 200+ employees. This client was a prime example of a leading CEO who served his community, profession and firm well. Lay was the outsider who wanted status with the downtown CEO clique.

I thought that demanding participation in one person’s pet cause was too punitive to the company’s employees and told the client so. I further made recommendations that future charitable requests would go through committee and that the client’s partners and key executives were better suited by serving on community boards, thus polishing their own luster. The company’s emphasis shifted from making ad hoc contributions to chunks of time, whereby the firm got recognition, the partners became better leaders, and the community benefited from their expertise.

In the ensuing years, I saw Lay get lots of community credit, but his other executives and friends in different companies who aided the causes rarely got billing. For a period of time, Enron had an excellent foundation that steered it toward important community activities. Yet, when the company shifted from being an energy supplier to the hucksterish energy trader, the charitable activities were dispensed with. So were professional development programs, rewards for random acts of kindness and other empowerment initiatives.

Executives never stayed long. Enron routinely fired 10% of its top salaried people each year, fostering a lean-and-hungry spirit among producers of business.

The Enron scandals of 2001 and 2002 focused only upon cooked books audit committees and deal making. There was so much more to look at… from the perspective of learning from the trouble and inspiring other companies to more forward.

Enron’s debacle can serve all of us with lessons learned. Within that spirit and out of respect to many fine professionals who tried to save that company, I offer this analysis. These are my considered opinions, having conducted Performance Reviews, Strategic Planning and Visioning for other companies over 35+ years. I never worked for Enron… they never would have related to my Big Picture of business scope. I would have asked too many tough questions, and that was not what they wanted consultants for.

These observations are intended to contextualize the Enron case studies in broader terms than were reported in the news media:

Conditions Which Allowed It to Occur. The pivotal event was the passage of the Securities Reform Act of 1995, also dubbed the ‘Securities Rip-off Act.’ Corporations lobbied for and got major loopholes and a relaxed posture on the part of the Securities & Exchange Commission. As a result of that act, the SEC is no longer a watchdog but is a sideline to brokerage houses and major financial institutions. In my opinion, deregulation, as a whole, has worked negatively upon business and society (banking, airlines, trucking, and broadcasting), and the SEC is no exception.
Congressional Hearings. It was a public and media curiosity, though becoming a good opportunity for the public to understand business better. Many of those investigating Enron had received campaign contributions from the company, yet kept maximum objectivity. Several committees competed with each other for the spotlight. After the hearings, there was little follow-through. Granting immunity often sets dangerous precedents, making it hard to get the complete truth. While frying some fish, immunity lets other more culpable ones off the hook.
Corporate Culture. At Enron, it was dictatorial and repressive to new ideas. It was very ‘old school’ (a management style that was 40 years obsolete), though it pretended to be ‘new school.’ It fostered a false sense of security for employees, paying higher salaries than the marketplace, thus keeping employees dependent upon the system via golden handcuffs. It demanded blind loyalty, hired ISTJ personality types for support and rewarded dogmatic sales types for trading deals. Employees were expected to live the same ways (even in the same neighborhoods) and have common outside interests, with little individuality.
Core Business. Enron (like many other companies) got into areas beyond their core competencies. They got into business ventures on whims or for flashy reasons, utilizing concepts that were untried.
The Deals. The company did more than 4,000 deals…most risky and without research, planning and benchmarking. Stock was transferred to partnerships simply to lock in gains on balance sheets. Many deals were put on the books in order to inflate the price of Enron stock, which the insiders sold at peak price levels. The audit committee of the board would not sign off on behalf of the deals, which just kept happening and developing secret lives of their own.
Attitude with Suppliers and Vendors. They took posture that nobody could say ‘no’ to Enron and that suppliers and vendors work with Enron on their terms only. The attitude was non-collaborative, with business units acting as Lone Rangers and often in competition with each other. There were no checks and balances for members of the supply train. This archaic mindset flies in the face of progressive supply chain management, which successful companies now embrace.
Communications. They were secretive and guarded from the beginning. The manner in which company and unit name changes were handled exemplified a non-communicative executive suite, with lack of media or public access to top management. Spokespersons were not media-trained, nor media-friendly. The company issued everything through written news releases. No on-camera interviews were sought or granted No pro-active corporate communications campaigns were ever waged. The Annual Reports carried and permeated this communications aloofness. The way the California energy crisis was handled speaks to Enron’s disdain for media openness.
The News Media. Though it took a field day with the Enron story, the media itself had played a part in crowning Enron as the king in previous years. In absence of substantive business reporting and asking the tough questions, the media tends to pander to the hype and flash that the companies themselves dish out. Financial media indeed bought and published Enron’s version of the story without checking as far as journalists have recently.
Concept of Examining the Company. Bean counters set the perimeters at Enron and ran the company. The term ‘audit’ is too micro-niche and limited. Companies should be doing full-scope Performance Reviews. Without Strategic Planning, there is no benchmarking of specific tactics. When goals are only in financial terms, the company is disproportionately lopsided.
Accounting. Enron paid too much for outside auditing services. ($1 million per week) Every company should re-examine its major professional services relationships every five years, take competitive bids (especially from talented mid-sized firms) and look at options available from service providers. Enron did not demand enough accountability, fairness, ethics and operational autonomy from its outside auditor.
The Auditing Firm Employed by Enron. In their marketing, accounting and auditing firms claim to be full-service business advisors, in order to get business. In reality, audit, tax and management consulting services rarely communicate and are, in fact, competing business profit centers within large firms. Enron’s auditor says its scope was limited, when, in fact, it should have been as full-scope as the company could have provided. The outside auditor took unfair advantage of not being watched. It charged too much money and got away with it (because mid-managers but brand names of firms). There was a conflict of interest in alliance with Enron…not objective enough. After the scandals hit, the auditor played the Blame Game, without admitting itself of wrong-doing. The CEO of the auditing firm tacitly dismissed the whole issue as, ‘A company failed because the economics did not work.’
Lawyers. They too were privy to what was transpiring. Congressional investigations have so far avoided implicating lawyers.
Executives. No executive development program was held at Enron. Ken Lay’s management style was that he sat in the tower and had people to filter the bad news out. Other executives were brash, exhibited poor management judgment and made windfall money by selling stock due to insider trading information, when employees could not cash-out. The roles of other executives were to keep quiet and look the other way.
Bonuses. Doing deals was the mantra…quickly and with great flash. Exorbitant bonuses and side ‘consulting fees’ for executives were the goals…and what were most aggressively pursued.
Employees, Morale, The Workforce. Employees pledged blind loyalty to Ken Lay, though few ever had access to him. They worshipped the emperor from a distance. Individuals blindly accepted the company’s 401k directives but could have managed their money alternately. Employees emulated corporate culturisms. Egos and working mannerisms did not produce the most productive workforce. Too many bought into the hype and lost objectivity. Employees were better paid than the marketplace, thus forcing many to stay or not question policies. They’ll find some rude awakenings in the outside job world. Training, empowerment and team-building programs were cut and never reinstated. Incentive and ‘random acts of kindness’ programs were deleted.
Community Relations. The company was quite active in the Houston community for many of the right reasons…but took its controls and influence too far. The company pushed many of its own pet agendas upon an unsuspecting community. It made too many charities dependent upon the company…thus wielding more community control. By 2001, many charities that were still counting on pledged donations and found themselves left in a lurch (though it was also their fault for not casting other nets for funding and being too dependent upon Enron). This circumstance had occurred years before, when Enron diverted pledged charity and community funds into high-gloss events, such as the 1991 Economic Summit and the 1992 Republican convention.
Customers. They could have asked more questions, could have demanded further accountability. The customers are being hurt the most by the collapse…and need to communicate their stories better to the public.
Wall Street Analysts. They too could have asked more questions and could have demanded further accountability over the years of Enron’s growth and boom. Some analysts who asked the tough questions were scorned or scapegoated by Enron. One must question why one company could wield such control over the investment community and what powers Wall Street had acquiesced in order for such power to grow. One must also ask why weren’t regular reviews conducted by underwriters and why were not annual reports more properly screened.
The SEC. The commission could have asked more questions, could have demanded further accountability. However, since deregulation, it has not been compelled to do so.
The Government. Nobody knew or kept their eyes on Enron until the scandals hit the front pages. Bureaucratic agencies quickly distanced themselves from funding issues or responsibilities in letting such a catastrophe occur. The U.S. government had deregulated too many industries over the years…thus, having the effect of allowing loopholes and marketplace-unfriendly situations to occur. In my opinion, Congress should look at re-regulating certain industries (oil & gas, utilities, airlines, banking, trucking, broadcasting). Long before congressional hearings were held, the government could have asked more questions and could have demanded further accountability.

Techpitfalls.com – Roadblocks to growth, opportunities missed.

Companies come and go. Not every startup is destined to make it. Yet, in this era of super-hype about tech and dot.com companies, unrealistic expectations precluded most of their successes from the beginning.

The hype now is that the bubble burst. Former dot.com owners are crying that they were stripped of their entitled riches. Employees who were promised stock options came away without still knowing what it takes to build a real business.

The e-commerce and dot.com wars have more than their share of casualties because their players never had the artillery and mindset to play seriously in the first place. Overt marketing hype led to an unwatchful marketplace…which always wakes up to the realities of business eventually.

Technology companies must now learn the lessons that steady-growth companies in other industries absorbed. Actually, most companies still have not truly learned the lessons. Thus, most businesses are at frequent ‘crossroads,’ where turns have deep implications and far-reaching.

I advised several technology companies during their gravy years. I tried to warn them about the things that would get them into trouble:

Focusing upon technology… not upon running a business.
Maintaining too much of an entrepreneur and family business mindset
Branding before being a real company
Their system’s inability to deal with any kind of disruption
Each side picks their favorite numbers for ‘success’ because they really do not know
Not comprehending the business you’re really in
Venturing too far from your areas of expertise
Thinking that the rules of corporate protocol did not apply to them
Misplaced priorities and timelines
Making financial yardsticks the only barometers
Wrong relationships with investors…letting angels call too many shots
Getting bad advice from the wrong people, mainly other tech professionals
Rationalizing excuses, ‘the rules have changed’
Feeling entitled to success and exemptions from business realities
Copycats of others’ perceived successes
Working long and hard, but not necessarily smart
Failure to contextualize the product, business, marketplace and bigger picture
Inability to plan
Refusal to change

Most of these pitfalls are common to so many industries. They simply were focused upon tech companies from 1994-2000 because they were the latest flavor. Some heeded the advice of myself and others… many did not avail themselves.

Reasons why some want to grow beyond their current boundaries:

Prove to someone else that they can do it.
Strong quest for revenue and profits.
Corporate arrogance and ego, based upon power and influence (as well as money).
Sincere desire to put expertise into new arena.
Really have talents, resources and adaptabilities beyond what they’re known for.
Diversifying as part of a plan of expansion, selling off and re-growing subsidiaries.
The marketplace dictates change as part of the company’s global being.

Circumstances under which they expand include:

Advantageous location became available.
Someone wanted to sell out…a great deal was tough to pass up.
Can’t sit still…must conquer new horizons.
Think they can make more money, amass more power.
Desire to edge out a competitor or dominate another industry.
Create jobs for existing employees (new challenges, new opportunities).
Part of their growth strategy to go public, offering stock as a diversified company.

This is what often happens as a result of unplanned growth:

The original business gets shoved to the back burner.
The new business thrust gets proportionately more than its share of attention.
Capitalization is stretched beyond limits, and operations advance in a cash-poor mode.
Morale wavers and becomes uneven, per operating unit and division.
Attempts to bring consistency and uniformity drive further wedges into the operation.
Something has to give: people, financial resources, competitive edge, company vision.
The company expands and subsequently contracts without strategic planning.

7 Defeating Signs for Growth Companies:

Systems are not in place to handle rapid growth…perhaps never were.
Their only interest is in booking more new business, rather than taking care of what they’ve already got.
Management is relying upon financial people as the primary source of advice, while ignoring the rest of the picture (90%).
Team empowerment suffers. Morale is low or uneven. Commitment from workers drops because no corporate culture was created or sustained.
Customer service suffers during fast-growth periods. They have to back-pedal and recover customer confidence by doing surveys. Even with results of deteriorating customer service, growth-track companies pay lip service to really fixing their own problems.
People do not have the same Vision as the company founder…who has likely not taken enough time to fully develop a Vision and obtain buy-in from others.
Company founder remains arrogant and complacent, losing touch with marketplace realities and changing conditions.

Everything we are in business stems from what we’ve been taught or not taught to date. A career is all about devoting resources to amplifying talents and abilities, with relevancy toward a viable end result.

Business evolution is an amalgamation of thoughts, technologies, approaches and commitment of the people, asking such tough questions as:

What would you like for you and your organization to become?
How important is it to build an organization well, rather than constantly spend time in managing conflict?
Who are the customers?
Do successful corporations operate without a strategy-vision?
Do you and your organization presently have a strategy-vision?
Are businesses really looking for creative ideas? Why?
If no change occurs, is the research and self-reflection worth anything?

Failure to prepare for the future spells certain death for businesses and industries in which they function. The same analogies apply to personal lives, careers and Body of Work. Greater business awareness and heightened self-awareness are compatible and part of a holistic journey of growth.

About the Author

Relate Articles:

How to Stress-Test Your Strategy

StrategyDriven — Thu, 10 Mar 2011 11:05:43 +0000

Robert Simons, the Charles M. Williams Professor of Business Administration at the Harvard Business School, explains why management teams must ask themselves tough strategy questions. During this interview, Robert covers:

obstacles business leaders face when executing their business strategy
why companies need to focus on one primary customer
the importance in choosing which among shareholders, customers, or employees are most important to the company’s success
how executives should decide which few metrics to focus on
key approaches to effectively making tough priority selection decisions

Robert Simons on the StrategyDriven Podcast

Last month, we were privileged to talk with Robert about his new book, Seven Strategy Questions, on the StrategyDriven Podcast. Listen as we explore the seven strategy questions that can help an organization’s leaders identify gaps within their strategy and its execution.

Relate Articles:

The Big Picture of Business – Situations Causing the Downtown and Corporate Scandals: Barriers to Progress and Business Growth

StrategyDriven — Fri, 04 Mar 2011 16:02:38 +0000

Every business, company or organization goes through cycles in its evolution. At any point, each program or business unit is in a different phase from the others. Every astute organization assesses the status of each branch on its Business Tree^TM and orients its management and team members to meet constant changes and fluctuations.

It’s not that some organizations ‘click’ and others do not. Multiple factors cause momentum, or the lack thereof. As companies operate, all make honest and predictable mistakes. Those with a willingness to learn from the mistakes and pursue growth will be successful. Others will remain stuck in frames of mind that set themselves up for the next round of defeat or, at best, partial-success.

The Business Tree: Growth Strategies and Tactics for Surviving and Thriving
by Hank Moore

The Business Tree™ has 7 major parts… 5 primary branches, a trunk (6) and the base (7):

The business you’re in
Running the business
Financial
People
Business development
Body of Knowledge
The Big Picture

Learn more about Hank Moore and The Business Tree™ by visiting his website, www.HankMoore.com.

The saddest fact is that businesses do not always know that they’re doing anything wrong. They do not realize that a Big Picture must exist or what it could look like. They have not been taught or challenged on how to craft a Big Picture. Managers, by default, see ‘band-aid surgery’ as the only remedy for problems… but only when problems are so evident as to require action.

Is it any wonder that organizations stray off course? Perhaps no course was ever charted. Perhaps the order of business was to put out fires as they arose, rather than practicing preventive safety on the kindling organization. That’s how Business Trees in the forest burn.

This article studies obsolete management styles and corporate cultures that exist in the minds of out-of-touch management. Reliance upon many of these management tenets subsequently brought Enron and many others down.

This includes the characteristics of addictive organizations, their processes, promises and forms. It reviews the Addictive System, the company way and the organization as an addict. This chapter studies communications, thinking processes, management processes, self-inflicted crises and structural components of companies that go bad, or maybe never do what it takes to be good. Topics discussed include the society that produced business scandals, accountants and auditors, pedestals upon which CEOs are placed, spin doctoring, compensations and accountability issues with managers.

Companies are collections of individuals who possess fatal flaws of thinking. They come from different backgrounds and are products of a pop culture that puts its priorities and glories in the wrong places…a society that worships flash-and-sizzle over substance.

Characteristics of Corporate Arrogance

Support others who are like-minded to themselves
Scapegoat people who are the messengers of change
Blame others who cannot or will not defend themselves
Find public and vocal ways of placing blame upon others
Shame those people who make them accountable
Neither attends to details nor to pursue a Big Picture
Perpetuate co-dependencies
Selectively forgets the good that occurs
Find three wrongs for every right
Do little or nothing
At all costs, fight change… in every shape, form or concept
Making the wrong choices
Inability to listen. Refusal to hear what is said
Stubbornness
Listening to the wrong people
Failure to change. Fear of change
Comfort level with institutional mediocrity
Setting one’s self up for failure
Pride
Avoidance of responsibilities
Blaming and scapegoating others
People who filter out the truths
Non-risk-taking mode
Inaccessibility to independent thinkers
Calling something a tradition, when it really means refusal to change
Pretense
Worshiping false idols, employing artificial solutions
Preoccupation with deals, rather than running an ongoing business
Arrogant attitudes
Ignorance of modern management styles and societal concerns
Failure to benchmark results and accomplishments

Incorrect Assumptions that People Make

That wealth and success cure all ills
That business runs on data. That data projects the future
That data infrastructure hardware will navigate the business destiny and success
That all athletes are role models. That all well-paid athletes are national heroes
That the CEO can make or break the company single-handedly
That doctors don’t have to be accountable to their customers
That education stops after the last college degree received
That TV newscasters are celebrities and community leaders
That having an E-mail address or a website makes one an expert on technology
That the Internet is primarily an educational resource
That technology is the most important driving force in business and society
That buying the latest software program will cure all social ills and create success
That community stewardship applies to other people and does not require our own investment of time
That white-collar crime pays and that highly paid executives will avoid jail time
That senior corporate managers have all the answers and do not need to seek counsel
That return on shareholder investment is the only true measure of a company’s worth
That all people who grew up in the south are racist
That government bureaucrats are qualified to make decisions about taxpayer money
That activists for one cause are equally open-minded about other issues
That corporate mid-managers with expense accounts are community leaders
That deregulation is always desirable and in the public’s best interest
That home-based businesses are more wealth-producing than holding a job
That professionals can get by without developing public speaking and writing skills

Fatal Quotations Voiced to Justify Fatal Thinking

“Might makes right. Take no prisoners. Wear the other side down.”
“Everyone knows who we are and what we do.”
“Our accountants will catch it and take care of it.”
“It’s none of their business. The public be damned.”
“We’re not paying people to think…just to do. Make them understand.”
“We don’t need outsiders coming in and hogging the credit.”
“If you don’t cooperate with me, I’ll bring you down.”
“We cannot do that right now. Once this crisis is past, we can think about the future.”
“How does this contribute to our bottom line?”
“If it does not contribute directly to the bottom line, we’re not interested.”
“We have more business than we can handle.”
“Too much competition destroys free enterprise. We need to eliminate competition.”

Addictive Organizations

Addictive organizations are predicated upon maintaining a closed system. Alternately, they are marked by such traits as confusion, dishonesty and perfectionism. They are scarcity models, based upon quantity and the illusion of control. Only the high performers get the gold because there are not enough bonuses to go around. Addictive organizations show frozen feelings and ethical deterioration.

Addictive organizations dangle ‘the promise’ to employees, customers, stockholders and others affected. People are lured into doing things that enable the addictive management’s pseudopodic ego.

All that is different is either absorbed or purged. The addictive organization fabricates personality conflicts in order to keep people on the edge all the time. There exists a dualism of identifying the rightness of the choice and a co-dependence upon the rewards of the promise.

In such companies, the key person is an addict. The CEO and his chosen lieutenants have taken addictions with them from other organizations. The organization itself is an addictive substance, as well as being an addict to others. They numb people down and addict them to workaholism.

The addictive system views everything as ‘the company way.’ The entity is outwardly one big happy family. It is big and grandiose. The emphasis is upon the latest slogans of mission but does not look closely at how its systems operate. The term “mission” is a buffer, excuse, putdown and roadblock.

Rather than embrace the kinds of Big Picture strategies advocated in this book, the addictive system seeks artificial fixes to organizational problems, such as bonuses, benefits, slogans and promotions of like-minded executives.

Communications are always indirect, vague, written and confusing. People are purposefully left out of touch or are summarily put down for not co-depending. Secrets, gossip and triangulation persist, as a result. The addictive organization does communicate directly with the news media and often adopts a ‘no comment’ policy. Company officers (who should be accessible to media) are cloistered and unavailable. The addictive organization does not recognize that professional corporate communications are among the best resources in their potential arsenal.

The addictive system does not encourage managers to develop thinking and reasoning processes. The system portrays forgetfulness, selective memory and distorted facts into sweeping generalizations. We are expected to take them at their word, without requesting or demanding facts to justify.

In the addictive organization, those who challenge, blow whistles or suggest that things might be better handled are neither wanted nor tolerated. Addictive managers project externally originated criticism back onto internal scapegoats. There is always a strategy of people to blame and sins to be attributed to them.

Management processes tend to exemplify denial, dishonesty, isolation, self-centeredness, judgmentalism and a false sense of perfectionism. Intelligent people know that perfectionism does not exist and the quest for quality and excellence is the real game of life and business. Addictive organizations do not use terms like ‘quality’ and ‘excellence’ because such terms must be measured, periodically reexamined and communicated… the organization does not want any of that to occur.

There persists a crisis orientation, meaning that everything is down to the wire on deadlines (not to be confused with just-in-time delivery, which is a good concept). Things are kept perennially in turmoil, in order to keep people guessing or confused. Management seduces employees into setting up competing sides in bogus feuds and manipulating consumers.

Structural components include preserving the status quo, fostering political games, taking false measurements and pursuing activities that are incongruent with the organization’s announced mission.

7 Layers of Organizational Addictiveness – Companies That Go Bad… Self-Inflicted Crises

Self Destructive Intelligence. There exists a logic override. Since the company does not believe itself to be smart enough to do the right things, then it creates a web of rationalism. Since the mind often plays tricks on itself, management capitalizes upon that phenomenon with people who may question or criticize.
Hubris. This quality destroys those who possess it. Such executives exhibit stubborn pride, believing their own spin doctoring and surrounding themselves with people who spin quite well on their behalf. They adopt a ‘nobody does it as well as we can’ mentality. Such companies scorn connections, collaborations and partnering with other organizations.
Arrogance. Omnipotent fantasies cause management to go too far. The feeling is that nothing is beyond their capacity to succeed (defined in their minds as crushing all other competition).
Narcissism. Company executives possess excessive conceit. They are disconnected from outside forces, self-centered and show a cruel indifference to others. The view is that the world must gratify them.
Unconscious Need to Fail. These companies try too hard to keep on winning. With victory as the only possible end game, all others must be defeated along the way. In reality, these people and, thus, their organizations, possess low self-esteem. Inevitably, they get beaten at their own games.
Feeling of Entitlement. Walls and filters have been established which insulate top management from criticism (which is viewed as harming the chain of armor, rather than as potentially constructive). Anger stimulates many of their decisions. The feeling is that they deserve it all. Power satisfies appetites. These executives have poor human relations skills. They believe that excesses are always justified.
Collective Dumbness. Such organizations have totally reshaped reality to their own viewpoints. The emperor really has no clothes, but everyone overlooks the obvious and avoids addressing it forthrightly. The organization dumbs down the overall intelligence level, so that people are in the dark and cannot readily make judgment calls. Cults of expertise function in vacuums within the company. Neurotic departmental units do not interface often with others. Employees are slaves of the system. There exists total justification for what is done and an ostrich effect toward calls for accountability.

About the Author

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StrategyDriven Podcast Special Edition 57 – An Interview with Robert Simons, author of Seven Strategy Questions

StrategyDriven — Thu, 24 Feb 2011 11:28:10 +0000

StrategyDriven Podcasts focus on the tools and techniques executives and managers can use to improve their organization’s alignment and accountability to ultimately achieve superior results. These podcasts elaborate on the best practice and warning flag articles on the StrategyDriven website.

Special Edition 57 – An Interview with Robert Simons, author of Seven Strategy Questions explores the seven strategy questions that can help an organization’s leaders identify gaps within their strategy and its execution. By asking and effectively answering these questions, executives and managers gain the insight necessary to better align their organization’s day-to-day operations to the optimal achievement of mission goals; thereby enhancing overall bottom line results. During our discussion, Robert Simons, author of Seven Strategy Questions: A Simple Approach for Better Execution, shares with us his insights regarding:

the benefits of routinely asking the right strategy questions
the key Seven Strategy Questions and what makes them so important
how leaders can formally incorporate the Seven Strategy Questions into their business processes
actions executives should take to develop rising managers so that they instinctively ask the Seven Strategy Questions as a part of their internal thought process and the way they interact with their staffs

Additional Information

In addition to the outstanding insights Robert shares in Seven Strategy Questions and this special edition podcast are the resources accessible from his Harvard Business School Working Knowledge website. Robert’s book, Seven Strategy Questions, can be purchased by clicking here.

Final Request…

The strength of our community grows with the additional insights brought by our expanding member base. Please consider voting for us on Podcast Alley by clicking here. Casting your vote for the StrategyDriven Podcast improves our ranking and helps us attract new listeners which, in turn, helps us grow our community. Thank you again for listening to the StrategyDriven Podcast!

About the Author

Robert Simons, author of Seven Strategy Questions, is the Charles M. Williams Professor of Business Administration at the Harvard Business School. For twenty-five years, he has taught accounting, management control, and strategy implementation courses in the Harvard MBA and Executive Education programs. Robert’s research has been published in the Harvard Business Review and the Strategic Management Journal, among others. To read Robert’s complete biography, click here.

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The Big Picture of Business – What Business Must Learn: Putting the economic downtown and recent events into perspective

StrategyDriven — Fri, 04 Feb 2011 11:15:19 +0000

The public does not react to any crisis until it is big enough and far-reaching to affect their daily lives. When business news gets on Page 1 of every day’s newspaper and every evening TV newscast, then the public notices and cares.

Business and organizational stories do not hit the public consciousness until there is a crisis. People decry the scandals and rest assured that such doings are not happening in their companies. Often, it is assumed that some protector or regulator will adequately address the issues. When the outcomes are of high magnitude, the outcry becomes larger. As people see the events as having a direct effect on the economy and their livelihood, they take notice and follow the stories more thoroughly.

The Business Tree: Growth Strategies and Tactics for Surviving and Thriving
by Hank Moore

The Business Tree™ has 7 major parts… 5 primary branches, a trunk (6) and the base (7):

The business you’re in
Running the business
Financial
People
Business development
Body of Knowledge
The Big Picture

Learn more about Hank Moore and The Business Tree™ by visiting his website, www.HankMoore.com.

The recent years succeeded in exploding a great many myths and presumptions about business. Formerly sainted icons went down in disgrace. Tactics deemed as ‘standard operating procedure’ for some companies were exposed and ridiculed by others. A few whistle blowers were lauded in the efforts, though others were attacked as the perpetrators of the chaos shuffled aside.

One must ask many simple and pertinent questions about a seemingly unsettling business future:

How did business get this far?
Why did the scandals and corporate disrepute occur?
What are the implications of Enron and other corporate scandals upon business?
Where are the next trends and opportunities?
How do we cope in the new environment?
What beacons of opportunity do we look for?
What will it now take to succeed and fail?
How do we react to and benefit from changes, rather than become victims of them?
Do we still take band-aid approaches (such as buying enterprise software)? Or, do we now see the need and importance to embrace longer-term approaches?
How far will we go to excel?
How creative must we become in the New Order of Business?
How far-reaching are business practices?
How much further should we extend ethics?
Where will the pendulum swing next?

Business in the 21st Century is real and dangerous. People suddenly feel lost. They are no longer in a safe port. They don’t know how to cope. Yesterday’s strategies simply do not work anymore.

Many of the old assumptions which business previously held have proven untrue and unworkable. We really must examine what we assumed before and what we can assume now. Business is at a juncture and needs new focus.

The victims’ fear and the public’s apathy enabled the crises to occur. This is the perfect climate for unethical people to have gotten away with murder. Sadly, many of the perpetrators did not see lapses in ethics… it was legal and just business to them.

It takes tragedies occurring in order for the system to stand back, take focus and fix what is wrong. It’s a whole new world. This chapter talks candidly about recent trends. Other chapters will discuss the need for and exciting opportunities for adaptability. By maintaining an awareness of further changing environments, there are further opportunities to be successful, ethical and move ahead of the competition.

The term CEO has recently been held in disfavor. We decry CEOs for the same reasons that we formerly sainted and canonized them. People are envious of the power, status and wealth of company heads. Yet, most CEOs were never trained on how to be CEOs, with all the responsibility, people skills, leadership and ethical management that must go along with the job.

The game of duping and fooling shareholders, customers and employees has ended… as well it should. We cannot ignore or compartmentalize board members, stockholders, employees and stakeholders anymore. We cannot fool them. We must listen to them and respect them.

Every organization in the world must reexamine how we will keep score in the New Order of Business. Continuing to justify blind spots will blur accountability. Having maintained too much of a myopic focus is what got so many companies in trouble already.

Thinking that we dodged the bullet while others got caught is a mentality that will still bring many other companies down in value and defeat. The scandals are not all aired in public yet. Up to 25% of our businesses are in peril and must take corrective actions, lest they be brought down in disgrace too.

Most of the downfalls, stumbles, false starts and incorrect handling of situations stemmed from business’ lack of focus on the macro… and over-emphasis upon certain micros, to the exclusion of other dynamics.

This chapter puts business events of the last two years into perspective… covering a broader scope of subjects than has been reported and discussed. This book states the case for more of a macro-focused approach to management. An analysis of business encompasses much more than accounting fraud and stated values of stocks.

What we do with fear and uncertainty determines who we are. It is time for fresh thinking, heightened ethical behavior and a shift to a macro focus. Rules and responsibilities within each sector of companies are changing. Each of us must ask what we can contribute and our roles in adapting to the crises.

High Costs, Learning Curves.

Corporate scandals of each of the last 10 years cost the U.S. economy more than $200 billion in lost investment savings, jobs, pension losses and tax revenue. The scandals resulted in one million job cuts. 401(k) plans dropped $13 billion as a result of these events alone. Recent corporate scandals have cost good businesses in reputation, credibility and support, by virtue of being lumped with some bad apples. Thus, consumer confidence dipped, and it will take years to fortify the trust in business.

Losses from 401(k) investment accounts alone totaled $175 billion, making them worth 30% less than they were two years ago. Public pension funds nationwide lost at least $6.4 billion as the stock market plummeted, amid a crisis of investor confidence. More than a million workers lost their jobs at the affected companies, while company executives cashed out billions of dollars of their stock.

This demonstrates the impact of accounting failures at high-profile companies. There has been $13 billion in lost federal tax revenue from companies with questionable accounting practices under-reporting their profits to the IRS. Twenty-three companies under investigation have laid off 162,000 workers.

We have been subjected to the second longest bear market in history, the longest being that of the Great Depression. The stock market is down 25%. We are now $7 trillion poorer than we used to be, thanks to Wall Street over-valuing of companies. Sweeping reforms by Wall Street and the Securities & Exchange Commission (SEC) are needed, forcing firms to separate their investment banking business from their stock advisory business.

There are 25 million small businesses in America… all affected in some way by corporate scandals. The healthcare industry is the primary business sector that is most expanding right now.

Steroid scandals periodically rock the sports world. The public decries the use of steroids but secretly supports the results that they yield (athletic records being set). The steroids usage norm in some team sports has the effect of institutionalizing breaking the rules, even though the health of some is seriously endangered. Temptations to break the rules for the hope of future financial gain are at the heart of corporate arrogance, greed, deceptions and double-dealings, as well as in the minds of some sports promoters.

Operational Statistics.

One out of every 12 businesses fails. 90% of all e-businesses will fail. 99% of all internet websites do not make a profit.

Retailers make 70% of their earnings in the fourth quarter of each year. That is why holiday sales are vital to their bottom line and, thus, the economy.

There have been 53 peacekeeping missions from 1948-2000, 40 of those from 1988-2000. Spending on peacekeeping peaked in 1994 at $3.2 billion, and is estimated at $2.2 billion for 2000. Successful peacekeeping missions include El Salvador, Namibia, and East Timor. Less successful include Somalia and Bosnia where there was less local support for their presence. A major report to the United Nations Millennium Summit calls for changes in the way in which peacekeeping operations are organized and financed. It also recommends they do not remain neutral when one side initiates aggression.

Airport screeners fail to detect fake bombs and guns 24 percent of the time.

52% of all high school students know someone who brought a weapon to school. 61% of those students did nothing about it. 52% of all high school students know someone who made a weapon-oriented threat. 56% of those students did nothing about it.

The Pentagon says that it cannot account for 25% of what it spends.

Shoplifting costs American business $10 billion per year.

Airlines say that delays caused by air traffic controllers cost them a combined $4 billion per year. For every 1-cent reduction in the cost of jet fuel, the airlines save $170 million.

Cargo theft costs the U.S. economy $6 billion per year. The victimized companies pass their recoveries from losses along to the customers. For example, $125 of the cost of each new personal computer goes to reimburse companies for previous thefts.

Consumers are cheated at gas pumps of self-serve marts each year in excess of $1 million because of faulty computer chips.

On any given day in the United States, over 100 convenience stores are robbed. Every day in the U.S., people steal $20,000 from coin-operated machines.

The average bank teller loses about $250 every year.

One third of our nation’s Gross National Product is spent in cleaning up mistakes. Yet, only 5.1% is spent on education, which is the key to avoiding mistakes on the front end.

Fires cost more than $150 billion per year in damage. Most fires are caused by carelessness: overloading electrical sockets, smoking in bed, failure to turn off kitchen burners, malfunctions with space heaters, allowing trash to accumulate, failure to repair electrical wiring and electrical breaker explosions. Electricity-related incidents account for half of all fires.

Learning the Lessons and Moving Forward.

The U.S. Congress enacted the Sarbanes-Oxley Act, corporate reform legislation, in 2002. The bill delineated new regulations, in response to the accounting scandals at WorldCom, Enron, Tyco and other large companies which left thousands of employees without retirement savings and investors with worthless stock shares.

The bill was intended to prevent malfeasance, restore investor confidence and crack down on corporate cheaters. It set up new regulations for corporate auditing practices and creates strict penalties for executives who hide debt in accounting tricks. It was the largest reform since changes were made to halt the Depression-era slide into bankruptcy.

Sarbanes-Oxley instituted extensive corporate governance reforms, including standards for advisors representing public companies and their nonpublic subsidiaries. Under it, business leaders are expected to embrace both the letter and spirit of the bill and other existing laws, designed to protect investors, employees and other stakeholders.

Unfortunately, the material covered by Sarbanes-Oxley represents only two percent of Corporate Responsibility and Ethics. As one who has conducted ethics audits and put programs into practice, I know that the reform did not go far enough. Thus, the economic downtown of the past two years. A more holistic approach to ethics would have averted many of the crises.

In moving forward, one must review those junctures where leaders and their companies recognize when a business is in trouble. These are the high costs of neglect, non-actions and wrong actions, per categories on The Business Tree^TM:

Product, Core Business. The product’s former innovation and dominance has somehow missed the mark in today’s business climate. The company does not have the marketplace demand that it once had. Others have streamlined their concepts, with greater success. Something newer has edged your company right out of first place.
Processes, Running the Company. Operations have become static, predictable and inefficient. Too much band-aid surgery has been applied, but the bleeding has still not been stopped. Other symptoms of trouble have continued to appear… often and without warning.
Financial Position. Dips in the cash flow have produced knee-jerk reactions to making changes. Cost cutting and downsizing were seemingly ready answers, though they took tolls on the rest of the company. The overt focus on profit and bean counter mentality has crippled the organizational effectiveness.
Employee Morale and Output. Those who produce the product-service and assure its quality, consistency and deliverability have not been given sufficient training, empowerment and recognition. They have not really been in the decision making and leadership processes, as they should have been. Team members still have to fight the system and each other to get their voices heard, rather than function as a team.
Customer Service. Customers come and go… at great costs that are not tallied, noticed or heeded. After the percentages drop dramatically, management asks “What happened?” Each link in the chain hasn’t yet committed toward the building of long-term customer relationships. Thus, marketplace standing wavers.
Company Management. There was no definable style in place, backed by Vision, strategies, corporate sensitivities, goals and beliefs. Whims, egos and momentary needs most often guided company direction. Young and mid-executives never were adequately groomed for lasting leadership.
Corporate Standing. Things have happened for inexplicable reasons. Company vision never existed or ceased to spread. The organization is on a downslide… standing still and doing things as they always were done constitutes moving backward.

These situations are day-to-day realities for troubled companies. Yes, they brought many of the troubles upon themselves. Yes, they compounded problems by failing to take swift actions. And, yes, they further magnify the costs of “band-aid surgery” by failing to address the root causes of problems.

Each year, one-third of the U.S. Gross National Product goes toward cleaning up problems, damages and otherwise high costs of failing to take proper action. On the average, it costs six times the investment of preventive strategies to correct business problems). This concept was addressed in another of my books, The High Cost of Doing Nothing^TM.

There are seven costly categories of doing nothing, doing far too little or doing the wrong things in business:

Waste, spoilage, poor controls, lack of employee motivation.
Rework, product recalls, make-good for inferior work, excess overhead.
Poor controls on quality, under-capitalization, under-utilization of resources.
Damage control, crisis management mode.
Recovery, restoration, repairing wrong actions, turnover, damaged company reputation.
Retooling, restarting, inertia, anti-change philosophy, expenses caused by quick fixes.
Opportunity costs, diversifying beyond company expertise, lack of an articulated vision.

About the Author

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The 2010 Execution Round-Up: Six Companies That Couldn’t ‘Get It Done’ This Year (and Two That Did)

StrategyDriven — Mon, 24 Jan 2011 11:26:50 +0000

No doubt about it: 2010 saw its share of losers (and the occasional winner) in the business arena. Here are a few of this year’s headline makers and the lessons that can be learned from each of them.

It’s that time of year again: time for business owners and senior executives to take stock of the past twelve months. What did 2010 look like for you and your company? Did you struggle to regain your post-recession footing? Were employees engaged and focused? Are financials on track? The questions you could ask during your year-end assessment are endless. But there’s only one that really matters: Did your company effectively execute its plans and initiatives?

Closing the Execution Gap: How Great Leaders and Their Companies Get Results
by Richard Lepsinger

If an organization can’t execute its plans and initiatives, nothing else matters: not the most solid, well thought-out strategy, not the most innovative business model, not even technological breakthroughs that could transform an industry.

So what really differentiates the companies that are able to get things done and deliver consistent results?

Based on extensive research and years of practical experience, Closing the Execution Gap outlines five prerequisites for effective execution and five ‘Bridges’ that differentiate companies that do it best. It also describes six ‘Bridge Builders’ that leaders at all levels can use to close the execution gap and help people get things done. Specifically, it addresses:

What really gets in the way of getting things done – for individuals, teams, and entire companies
What leaders can do to enhance their organization’s ability to close the execution gap and achieve solid business results
What it takes to execute plans and initiatives consistently at a day-to-day operational level

As the business world becomes more competitive and less forgiving, execution matters more than ever. This is a book for the times we live in—and one that for many companies could mean the difference between success and failure.

If an organization can’t get things done, nothing else matters – not the smartest strategy, not the most innovative business model, not even game-changing technology. And for many companies, there is a clear gap between intent and execution – we’ve seen plenty of evidence this year.

This assertion is backed by hard evidence. Recently, my company, OnPoint Consulting, conducted a study of over 400 companies. We found that 49 percent of the leaders surveyed in the study reported a gap between their organization’s ability to formulate and communicate a vision and strategy and its ability to deliver results.

This wasn’t the surprising part, though. What really shocked us was that only 36 percent of leaders who thought their company had an execution gap had confidence in their organization’s ability to close the gap between strategy and execution. That means a staggering 64 percent of leaders who saw an execution problem didn’t believe their company could fix it.

My research uncovered five characteristics and competencies, which I call ‘The Five Bridges,’ that enable people to traverse this execution gap. It is these bridges that differentiate the companies that are consistently able to get things done from those that aren’t. (I call the former ‘Gap Closers’ and the latter ‘Gap Makers.’)

Of course, time has marched on since the book was written, and plenty of other well-known companies have dropped the execution ball in the meantime (BP in the most spectacular fashion). To help the rest of us learn from the ‘living laboratory’ of real-world companies, I present the following lists – the first lamentably longer than the second!

OnPoint Consulting’s 2010 Execution Gap Maker Round-Up…

Execution Gap Maker #1: BP (Need I say more?)

It’s obvious from recent events that BP experienced an enormous execution gap. (More like a chasm, really.) Had the company focused on recognizing and closing that gap, it would have prevented this year’s unprecedented disaster. While the oil spill is a complex and tragic event, the cause can be traced back to BP’s failure to build the critical bridges.

Leading up to and after the oil spill BP violated almost all the guidelines of effective execution, including lacking an effective structure and lacking clear accountability. These gaps created another problem for them: In the critical stages following the spill, BP was unable to get input from those who had the knowledge and experience to make the best decisions about how to handle it.

What’s more, BP failed to empower people to use their best judgment and take appropriate action. Consider that hours before the explosion the rig crew was arguing about the best way to finish the oil well and move the rig to the next site. A Transocean mechanic testified that he overheard a ‘company man’ telling rig workers ‘how it’s going to be,’ and that although the rig workers felt the plan was too risky, they reluctantly agreed. And just after the explosion, as workers were scrambling for safety, a worker was yelled at by the captain (who worked for the rig’s owner, Transocean) for pressing the distress button without authorization, and when another worker was asked if he had called to shore for help, he said he had not because he did not have permission to do so.

The BRIDGE that failed: Employee Involvement in Decision Making… among others.

The LESSON: In order for any company to execute successfully, the right people have to be involved with the right decisions. BP provides a devastating example of what can happen when this isn’t the case.

Obviously, this lesson is even more critical when there is as much at stake as there was in the BP disaster. But really for any company trying to gain footing in a constantly changing business environment and tough economy, empowering the right people to make the right decisions can be the difference between landing that next great customer or account or not.

Execution Gap Maker #2: Nokia

Nokia’s share of the worldwide market for mobile phones continued to slip in 2010. It may surprise you to learn that about five years before Apple introduced the iPhone and three years before it launched an online applications store, Nokia was ready to introduce its own Internet-ready touch screen handset with a large display and had an early design of an online applications store. So what happened? Why was this once-dominant player unable to execute and maintain its market position?

It appears Nokia was not able to coordinate decisions and activities across departments or levels of management. Many innovative ideas became the victims of in-fighting among managers who had competing objectives. Plus, as a result of a lack of cross-organizational coordination and cooperation, Nokia wasn’t able to improve its proprietary operating system, Symbian, which would have allowed it to support a more sophisticated smartphone.

Execution Gap Makers #s 3 and 4: The Federal Drug Administration (FDA) and the Agriculture Department

In August of this year, thousands of consumers became ill after eating eggs that were contaminated with salmonella. The discovery of the contamination resulted in over half a billion eggs being pulled from store shelves. How could something like this, and on this scale, have happened?

Much of the blame has been attributed to poor federal oversight. And the cause appears to be a significant lack of coordination across federal agencies. You see, the responsibility for food safety is split between two agencies: The Agriculture Department is responsible for chickens, the grading of eggs for quality, and regulating liquid eggs that are used in industrial food production. But the FDA oversees the safety of eggs still in their shells.

So who inspected the Iowa farms to make sure the eggs were safe for human consumption? It turns out that no one did. It just fell through the cracks. The lack of coordination between these two agencies is one reason why so many consumer advocates believe we suffer from a dysfunctional food safety system.

The BRIDGE that failed for Gap Makers #2, 3, and 4: Company-Wide Coordination and Cooperation.

The LESSON: It’s critical that organizations learn to coordinate and collaborate decisions across organizational boundaries. But doing so requires more than faith and words alone.

Shared goals and clearly defined roles provide the foundation upon which cooperation and coordination can be built. In addition, people must be held accountable for results. This requires a combination of direct leader behavior and systems that encourage and reinforce the appropriate behavior among employees.

Execution Gap Maker #5: Johnson & Johnson

It’s been a bad year for J&J. Since 2009 McNeil Consumer Healthcare, the J&J division that makes over-the-counter drugs, has had eight recalls, including popular children’s versions of Tylenol, Motrin, Benadryl, and Zyrtec. Most disturbingly was what has been called the ‘phantom recall,’ in which contractors hired by J&J carried out a scheme to buy every package of Motrin by going store to store without informing the FDA.

Poor execution doesn’t happen overnight. It can often be traced back to a pattern of behavior that gradually erodes a company’s ability to deliver consistent high-quality results. At J&J it may go back to 2005 when employees reported a lack of alignment between manager behavior and company values and policies. When one million bottles of St. Joseph aspirin failed a quality test after a sample did not dissolve properly, quality workers who blocked the distribution of the bottles claimed their supervisor ordered them to retest the drugs and then average the scores to get a passing grade.

Fortunately, there was not a problem with the batch that was released, but it appears that the misalignment of leader behavior with company values in this situation laid the foundation for poor execution, and a potentially dangerous situation, in the future.

The BRIDGE that failed: Alignment Between Leader Actions and Company Values and Priorities.

The LESSON: Leader behavior must be aligned with company objectives and values. While this phrase has been said so often that it’s become a cliché, companies can’t afford to ignore it.

You don’t really understand how important value alignment is or the impact it has on effective execution until you see what happens when it’s not there. That’s why stories like the Johnson & Johnson one are so important. They remind us not to take it for granted or assume it’s a ‘no-brainer.’

Execution Gap Maker #6: Toyota

During 2010 Toyota recalled millions of cars due to a variety of defects. This was an extraordinary number for a company once recognized for the quality of its vehicles. What went wrong? It appears Toyota’s decentralized structure, which served it well for many years, turned into a liability as the company continued to grow and dominate worldwide markets.

For example, some of Toyota’s former U.S. senior executives believe that keeping the U.S. operations separated in a functional structure – rather than reporting to a single headquarters – forced each to report back to Japan. This required customer complaints to first make their way through the U.S. operation and then over to Japan where they were reviewed by a special committee – which would then have to communicate back to the U.S. All this had to happen before a recall could be issued.

The BRIDGE that failed: A Structure That Supports Execution.

The LESSON: Make sure you have a structure that supports execution. A good structure enhances accountability, coordination, and communication. Plus, it ensures that decisions are being made as close to the action as possible. Toyota’s structure slowed down decision making and the company’s ability to effectively respond to the recall crisis.

The Toyota breakdown also illustrates that the five execution bridges are not permanent. In fact, they are quite fragile. Once you’ve built them, you must keep vigilant watch over them and work hard to maintain them over time. It’s quite possible for a company to have a bridge in place one year, only to discover that over time it has weakened or even crumbled and is no longer able to help your people traverse the gap.

…And Its Execution Gap Closer Round-Up

Execution Gap Closer #1: Netflix

Netflix received considerable media attention this year as it demonstrated its ability to successfully execute its strategy to provide video over the Internet. The company began streaming movies to TV-connected devices such as the Nintendo Wii, Microsoft Xbox 360, and a new Blu-ray Disc player, and the strategy is already showing signs of paying off. Although the ability to deliver streaming video has just recently become a reality, Netflix has been preparing to replace its original business model of delivering DVDs through the mail since the company was formed in 1997.

The company’s readiness for change is incredible. A decade before the technology was even a commercial reality, it recognized that the delivery of movies over the Internet would eventually replace mail. Even the name they chose for the company reflected this awareness. They named the company ‘Netflix’ and not ‘Mailflix,’ which would have been an easier concept to understand more than a decade ago.

Execution Gap Closer (Well…Maybe) #2: Barnes & Noble

I would like to classify Barnes & Noble as a success, but it’s just not clear yet whether the company really fits in that category. The move to electronic books has caused booksellers to take a close look at how they do business, but the jury is still out on whether Barnes & Noble’s response to the dramatic changes in the publishing industry will be successful.

Barnes & Noble appears to be doing a lot of the right things. It developed the NOOK and has devoted significant space in its retail stores to display and promote it, and it has a broad online library. The big question is whether the company is fully committed to this change. Will it turn out like Netflix and successfully make the transition to a new method of delivery? Or will it end up more like Blockbuster, which has struggled to adapt to new technology and shift from bricks-and-mortar stores to an online-based business model?

The BRIDGE that held for Gap Closers #1 and 2: The Ability to Manage Change.

The LESSON: The ability to manage change is critical. Yet, despite all the effort and resources that have been devoted to helping them achieve this, managers and organizations still often get poor marks in this area. That said, yet another change management process or program is not the solution.

Change is made one person at a time. And our research, as well as the research of others, indicates that successful change is connected more to the individual and collective mindsets of employees than any process. People change when they are ready – not just when they understand the need for change. The most successful companies facilitate change-readiness and don’t just rely on making the business case to drive people’s motivation to change.

Yes, as these stories illustrate, execution is the real bottom line and my constant battle cry. It’s what I push my clients to focus on as they seek to improve organizational performance – and it’s the lens I urge all leaders to look through as they review 2010 and make their ‘business resolutions’ for 2011.

Execution is not a single-point event. It’s an ongoing process. But since your ability to execute well and consistently is the very fabric of success, I can think of no better place to focus your time and energy.

About the Author

Richard Lepsinger, author of Closing the Execution Gap: How Great Leaders and Their Companies Get Results, is president of OnPoint Consulting, a management advisory firm specializing in helping clients close the gap between strategy and execution and create a culture of getting things done. His client list includes Bayer Pharmaceuticals, Citibank, Coca-Cola Company, ConocoPhillips, Goldman Sachs, Johnson & Johnson, NYSE Euronext, PeopleSoft, Prudential, and Subaru of America, among many others. In addition to writing Closing the Execution Gap, he has co-authored four books on leadership including Flexible Leadership: Creating Value by Balancing Multiple Challenges and Choices, The Art and Science of 360 Degree Feedback, The Art and Science of Competency Models: Pinpointing Critical Success Factors in Organizations, and Virtual Team Success: A Practical Guide for Working and Leading from a Distance. To read Richard’s complete biography, click here.

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Tactical Execution Best Practice 5 – No Co-, Only Vice

StrategyDriven — Tue, 11 Jan 2011 11:29:54 +0000

No two people are exactly alike; they will always have at least a slightly different interpretation as to what the organization’s ultimate goals are and how to be achieve them regardless of the amount of painstaking detail put into describing each objective. For this reason, actions that are highly acceptable to or desired by one individual will cause some to pause and appear entirely counterproductive to others. For this reason, there must be one decision-maker, one leader. There must be no Co-, only Vice.

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Seven Secrets of Driving Customer Loyalty – and Profits

StrategyDriven — Mon, 07 Jun 2010 12:30:37 +0000

In these rough and recessionary times, it’s important to escape the commodity pricing wars and to find ways to strengthen the marketing backbone of your company. The most reliable and affordable way to achieve both these goals is by building a strong personal bond with your customers. Loyal customers see you as more valuable than a mere commodity purveyor, and can serve you as a powerful marketing arm, going out of their way promote and defend your company online and off – for free. Here are seven ways to get process started of building customer loyalty.

Exceptional Service, Exceptional Profit: The Secrets of Building a Five-Star Customer Service Organization
by Micah Solomon and
Leonardo Inghilleri

“Filled with treasure and big ideas, this book will help you become exceptional.” – SETH GODIN

In a tight market, your most powerful growth engine and your best protection from competitive inroads is this: put every thing you can into cultivating true customer loyalty. Loyal customers are less sensitive to price competition, more forgiving of small glitches, and, ultimately, become “walking billboards” who will happily promote your brand. In Exceptional Service, Exceptional Profit insiders Leonardo Inghilleri and Micah Solomon reveal the secrets of providing online and offline customer service so superior it nearly guarantees loyalty. Their anticipatory customer service approach was first developed at The Ritz-Carlton as well as at Solomon’s entertainment and technology company Oasis, and has since proven itself in countless companies around the globe from luxury giant BVLGARI to value-sensitive auto parts leader Carquest, and everywhere in between. Now, readers can take the techniques that minted money for these brands and apply them directly to their own businesses. As Ken Blanchard writes, “Leonardo and Micah’s philosophies, rules, and winning examples of service excellence will make you want to implement their suggestions immediately in your own organization.” Filled with detailed, behind-the-scenes examples, the book unlocks a new level of customer relationship that leaves your competitors in the dust, your customers coming back day after day, and your bottom line looking better than it ever has before.

Did you shine that doorknob? Research shows that customers remember the first and last minutes of a service encounter much more vividly — and for much longer — than all the rest of it. Make sure that the first and final elements of your customer interactions are particularly well engineered, because they are going to stick in the customer’s memory.
Set your clocks forward: Modern customers expect speedier service than did any generation before them. (Not only speedier than their parents expected, but even than their older sisters and brothers expected.) In this age of Blackberrys and iPhones, of Amazon.com and Zappos, you may as well not deliver your product or service if you’re going to deliver it late.
Customers want to connect with a real person – online or off. For example, instead of a web-based chat window that blandly announces “you are now chatting with Jane,” try “you are now chatting with Jane Yang-Katzenberg.” The customers will treat your “Jane” better, they’ll take her advice more seriously – and they’ll be more likely to want a committed customer relationship with her company.
Remember each returning customer. Whatever your business – and no matter how large, work to achieve the computer-assisted effectiveness of a beloved bartender, doorman, or hairstylist – the kind who would know Bob’s preferences, the name of Bob’s pet, when Bob was there last … Superb client tracking systems can create that same “at home” feeling in your customers – regardless of the size and price point of your business, and whether it exists online or off.
Anticipate a customer’s wishes. When a customer’s wish is met before the wish has been expressed, it sends the message that you care about the customer as an individual. That cared-for feeling is where you generate the fiercest loyalty.
Don’t leave the language your team uses up to chance. Develop and rehearse a list of vocabulary words and expressions that fit your business brand perfectly. For example, the expression “no worries” sounds fine if a clerk at a Portland Bose® Audio Store says it, but would be exceedingly off-brand for the concierge at The Four Seasons in Milan. Equally important, search and destroy any vocabulary words that could hurt customer feelings. For example, your service team should never tell a customer “you owe us.” (Try instead: “our records seem to show a balance…”)
Be patient when filling positions. In a superb service organization, a single disagreeable or unresponsive team member can erode customer loyalty and team morale. That is why it can be better to leave a position unfilled rather than rushing to hire someone unsuitable. More generally speaking, customer excellence is most fully achieved once you become expert at recruiting, selecting, training, evaluating and reinforcing the efforts of service personnel.

About the Author

Micah Solomon is the co-author with Leonardo Inghilleri of Exceptional Service, Exceptional Profit: The Secrets of Building a Five-Star Customer Service Organization (AMACOM Books) and President of Oasis Disc Manufacturing. His free online resource site for customer service advice is CollegeOfTheCustomer.com.

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How to Lead An Online Business

StrategyDriven — Thu, 27 May 2010 11:46:47 +0000

First and foremost, find an idea you love.

Whether it’s ice cream, bean bags, or shirts with funny slogans, find a product or service you’re passionate about selling. I started my career as a marketing executive. One day, I was invited to dinner with Japanese business associates. The dinner was a great success, and afterwards we moved to a Japanese tea house where, following tradition, everyone removed their shoes. I looked down, and I had two different socks on – one with a hole in the big toe. I sat cross-legged for an entire evening, trying to hide my foot. I’m passionate about helping executives avoid such embarrassments by allowing them to buy fine-quality essentials in one convenient place online, and have them delivered to their doorstep. Because wouldn’t it be wonderful if your sock drawer could replenish itself?

Blacksocks

Socks on subscription

In 1999, in order to rid the world of sock sorrows, we founded Blacksocks and launched the sockscription. We now send socks – and since 2007 we have also been sending underwear – all around the world.

To celebrate our anniversary, we have rummaged the archives and dug out a few anecdotes. Would you like to draw your own picture of our story?

Never enough socks in your drawer?

Never buy socks again, never sort out socks again. You…

More…

Keep your Internet presence fresh.

The first version of Blacksocks’ website was launched in 1999. It was a single shot of a washing machine. Customers entered their orders into a slot in the machine, which sent an e-mail directly into my inbox. As the Web has developed, our site has become increasingly sophisticated, with the most recent relaunch this April. We’ve positioned content more intuitively and enhanced visual communication to make for smoother and more enjoyable shopping for Blacksocks clients. Ask yourself, if I were a customer looking at my site, what would I want to be different?

Maintain a human connection with your customer.

No one likes to feel they’re buying products from a machine. Remind your customers that there’s a human face to behind your online business. Humor helps. At Blacksocks, we’re lucky to have a funny story behind the origins of the brand, and no one can take the business of selling socks too seriously anyway – after all, they’re just socks. Incorporating humorous touches into your website’s content will make a virtual transaction feel personal, enhancing the customer experience.

Experiment with social media.

Everyone knows that Facebook has now overtaken Google as the most popular U.S. website, but not everyone is sure how to turn social media into profit. Explore these new distribution channels and marketing concepts. Blacksocks has an active presence on Facebook; Joe and Jane Blacksocks run Twitter accounts on the company’s behalf; and Blacksocks is the official sock sponsor of iweartyourshirt.com, run by two guys who serve as human billboards. We also strive to keep our customers engaged by inviting them to post comments on the Blacksocks site.

Invest in long-term success.

Many budding Web-preneurs give up after only a few months. Be realistic about your goals: it’s extremely unlikely that you’ll achieve financial success immediately, particularly if you’re one person on a shoestring budget. Most decisions, whether they’re for online businesses or brick-and-mortar ones, need to be made within a working time frame of two to five years at least. Think about where your website will be a decade from now. If you’re creating original content, timeless content, content that connects with customers, and you have researched the market your product is aimed at thoroughly, you have the tools you need to create a successful online enterprise.

Additional tips can be found at Blacksocks.com.

About the Author

Following his studies of economics and business administration at the University of St. Gallen, Paris and Toronto (earning the title of lic. oec. HSG in 1993) Samy Liechti was a marketing and communications consultant for various agencies in Switzerland and abroad, working with numerous prominent brands. Samy Liechti has been Blacksock’s managing director ever since its foundation in the summer of 1999.

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Tactical Execution Best Practice 4 – Eliminate Redundant Work

StrategyDriven — Tue, 08 Dec 2009 11:09:18 +0000

Whether in an economic recession or boom, resources are always limited and redundant work always an unnecessary resource expenditure. Yet no matter how hard leaders try to eliminate redundant work, these practices seem to reappear; often the result of well intentioned actions to correct a performance deficiency or misguided adherence to a legacy practice. Therefore, all leaders from the C-suite to the shop floor must relentlessly wage an ongoing war against unnecessary duplicate work.

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Tactical Execution Warning Flag 1 – Incomplete Staff Work

StrategyDriven — Tue, 19 May 2009 13:39:16 +0000

“The job is not done until the paperwork is signed.”

StrategyDriven Contributors

All too often, documentation of job performance is trivialized, viewed as an unimportant impediment to progress and is either not completed or not completed well. What goes unrecognized is the impact this documentation has on performance improvement, equipment reliability, and financial accounting; all of which affect a company’s bottom line.

Completed staff work or paper closure is as integral to job completion as task performance itself. Staff work includes all documentation associated with the job’s performance including:

status reports
time and expense reports
operations and maintenance records (as found and as left conditions, materials consumed, tools used, actions taken, meter readings, causal codes, etcetera)
condition/problem and cause evaluation reports
management observation forms

Staff work completion only occurs when the required data is recorded in such a way so as to support performance of the next process step. For most organizations, this means data is either entered into a computer system or hard copy forms are filled out and appropriately filed.

Data quality and its entry or documentation accuracy are critically important, for without these, downstream processes are corrupted. Inaccurate date flowing to downstream processes necessarily creates an inaccurate representation of circumstances upon which leaders make decisions and/or procedural follow-on activities are driven. This problem’s frequent occurrence yielded the modern cliche ‘garbage in, garbage out‘. It is important to remember that no data can be equally, if not more, misrepresenting of actual circumstances than bad data. Subsequently, incomplete staff work, the absence of documentation, represents ‘garbage in‘ and more often than not results in ‘garbage out.’

Incomplete staff work is a result of deficient processes and/or systems or the way in which the process is reinforced and executed. While not all inclusive, the four lists below, Process-Based Warning Flags; Process Execution Warning Flags – Behaviors; Potential, Observable Results; and Potential Causes, are designed to help organization leaders recognize whether their organization’s staff work is being completed in a proper and timely manner. Only after a problem is recognized and its causes identified can the needed action be taken to move the organization toward improved performance.

Process-Based Warning Flags

work processes to not direct the completion of staff work
computer systems, where applicable, do not reinforce complete data entry
staff work completion expectations are not contained within management performance standards documents
management observation programs do not contain provisions to review work documentation
performance management systems do not contain criteria for assessing an individual’s staff work performance, particularly for non-administrative personnel
no standard recurring self assessments exist to evaluate the impact of incomplete or inaccurate staff work on bottom line results

Process Execution Warning Flags – Behaviors

supervisors and individual contributors resist performing staff work
managers and supervisors do not reinforce the need for effective and efficient task documentation
managers and supervisors routinely press for the continuation of field work activities over the performance of administrative work
executives and managers do not demand that computer systems be upgraded or configured to reinforce complete and accurate data entry
executives and managers to not request evaluation and control processes be used to assess the impact of incomplete or inaccurate staff work on bottom line results

Potential, Observable Results

missing and incomplete data records
inconsistent data records for like objects (equipment/tools, plant components, personnel, etcetera)
inaccurate and/or late billing
indiscriminate fluctuations in performance measures
manual manipulation of system provided data during performance measure updates

Potential Causes

field workers feel staff work is an administrative task that is beneath them to perform, often because while others can perform data gathering and recording activities few can perform the associated field work
managers and supervisors do not recognize the business value or adverse impacts resulting from the data gathered and recorded by field workers and therefore view staff work as either unimportant or a wasteful expenditure of field workers’ time
managers, supervisors, and workers do not recognize that those closest to the actual work are in the best position to accurately document work results and findings
individuals are resistant to changes that require them to learn a different method for gathering and recording data

Final Thought…

Fundamentally, any time decision-makers are presented with an incomplete or inaccurate understanding of the state of their business or the business environment decision-making is impaired; diminishing their effectiveness in guiding the organization to its most optimal value creation.

The following list captures a few ways incomplete or inaccurate staff work can impact a company’s bottom line:

a lack or incorrect documentation of personnel performance data forfeits the ability to accurately produce organizational behavior trend data; preventing analysis and implementation of optimized improvement initiatives to increase performance efficiency and reduce costs
imprecise documentation of equipment operation and maintenance parameters can result in the performance of unnecessary maintenance or in the unexpected failure of under-maintained equipment; both of which result in unnecessary expenditure of the organization’s capital
inaccurate time and expense or activity status reporting can result in errant billing; greatly reducing revenues if under-billing occurs or disgruntled and subsequently lost customers and the forfeiture of future revenue in the case of over-billing

Relate Articles:

Tactical Execution Best Practice 3 – Timely Reporting of Activity Status

StrategyDriven — Tue, 14 Apr 2009 05:50:56 +0000

Rarely does unique, creative, or exploratory work complete on-time and on-budget (accounting for personnel, material, and financial resources). Although planners make every effort to accurately predict task needs, the many variables and uncertainties associated with these types of tasks make highly accurate planning nearly impossible. Even highly repetitive tasks can suffer from unforeseeable circumstances that delay their performance or raise costs. Subsequently, buffers are often added to work plans to accommodate for the uncertainty. At times, these buffers aren’t enough. On other occasions, excess time and/or resources remain. Only through timely communication of activity status can managers proactively prioritize and adjust their operations or project plans to accommodate the unknown and recover excess time and resources.

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Tactical Execution Best Practice 2 – Illustrated Priority Systems

StrategyDriven — Tue, 24 Feb 2009 05:32:02 +0000

“If everything is important, then nothing is.”
Original Author Unknown

Leaders struggle with the prioritization decision of how to most optimally deploy their limited resources so to return the most organizational value. Professionals also face this choice with respect to allotting their own time and attention to the myriad of assignments before them. Often, a philosophically or monetarily based Priority 1, 2, 3 or A,B,C system is adopted to differentiate between important activities. Because all individuals perceive circumstances differently, this system frequently results in a task receiving different priority assignments by various contributors; potentially disrupting the flow of work or delaying performance of organizationally critical tasks. To better align their workforce’s efforts, executives and managers should create an illustrated priority system.

An illustrated priority system is one containing situational examples that are easily related to and broadly understood; they help individuals ‘see’ how organizational priorities apply to their work. Such a priority system may be foundationally based on philosophical goals or monetary cost/benefit thresholds and is then illustrated with situational examples that are recognizable by organization members in the performance of their daily activities. If organizationally applicable examples are difficult to identify, division/department managers should further illustrate the priority system with examples based on their business unit’s unique activities.

Relate Articles:

Tactical Execution Best Practice 1 – Priority System Alignment with Mission Goals

StrategyDriven — Tue, 10 Feb 2009 13:55:05 +0000

Seldom do leaders assign work to individuals based on the corporate goal of achieving something. Instead, they interpret and internalize the emphasis placed on assignments given them and then translate this emphasis by way of priorities when delegating or performing tasks. But just as a message changes meaning when passed from person-to-person, so does the perception of priority. This priority drift builds with each successively lower organizational level; eroding the company’s overall effectiveness in achieving its stated mission goals.

Priority system alignment helps alleviate priority drift and further ensures the workforce’s day-to-day activities are optimally aligned with the organization’s mission goals. To achieve this alignment, each organization level must define its activity priorities in terms of contribution to the next higher level’s priorities; much like vertically cascaded, horizontally shared organizational performance measures. Done throughout the organization, the resulting priority system serves to align workforce efforts up, down, and across the organization; improving alignment and workflow.

Additional Information

The following StrategyDriven recommended best practices can be used achieve the priority alignment discussed above:

Registered members can also find information regarding cascaded performance measure alignment within the StrategyDriven whitepaper Organizational Performance Measures – Alignment.

Individuals registered to receive StrategyDriven ‘s monthly newsletter gain complementary access to the complete collection of StrategyDriven whitepapers, models, and members’ only articles. If you have not already done so, please click here to register today!

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StrategyDriven Podcast Special Edition 3 – An Interview with Forrest Breyfogle, author of Integrated Enterprise Excellence, Volume I – The Basics

StrategyDriven — Fri, 25 Jul 2008 01:18:04 +0000

StrategyDriven Podcasts focus on the tools and techniques executives and managers can use to improve their organization’s alignment and accountability to ultimately achieve superior results. These podcasts elaborate on the best practice and warning flag posts on the StrategyDriven website.

Special Edition 3 – An Interview with Forrest Breyfogle, author of Integrated Enterprise Excellence, Volume I - The Basics explores how to achieve organizational performance improvements through the use of the Integrated Enterprise Excellence system. During our discussion, Forrest Breyfogle, author of Integrated Enterprise Excellence, Volume I – The Basics: Golfing Buddies Go Beyond Lean Six Sigma and the Balanced Scorecard and CEO of Smarter Solutions, a global management coaching and consulting firm specializing in the design and application of innovative enterprise-wide performance measures and business solutions, shares his insights regarding:

the importance of an integrated approach to organizational performance improvement
how using the Define, Measure, Analyze, Improve, and Control (DMAIC) model at the enterprise and project levels can drive performance improvement
acquisition of critical option value insights through the use of the Design of Experiments (DOE) approach
how other business management approaches such as Total Quality Management (TQM), the Theory of Constraints (TOC), SMART goals, and ISO 9000 are related to the Integrated Enterprise Excellence system

Additional Information

Complimenting the outstanding insights Forrest shares in Integrated Enterprise Excellence, Volume I – The Basics and this special edition podcast, are the organizational performance improvement materials and resources found on his website, Smarter Solutions (www.SmarterSolutions.com). Forrest also offers free one-day seminars throughout the United States. For additional information regarding these seminars, click here.

As mentioned in the podcast, Integrated Enterprise Excellence, Volume I – The Basics, is just one of four books in the Integrated Enterprise Excellence series which includes:

Final Request…

Thank you again for listening to the StrategyDriven Podcast !

About the Author

Forrest W. Breyfogle III, author of Integrated Enterprise Excellence, Volume I – The Basics, is CEO of Smarter Solutions, a global management coaching and consulting firm specializing in the design and application of innovative enterprise-wide performance measures and business solutions. For over 15 years, Forrest has advised company leaders and their teams on how to improve their organization’s performance through the use of his Integrated Enterprise Excellence system. In 2004, Forrest received the prestigious Crosby Medal from the American Society for Quality for his earlier book, Implementing Six Sigma. He serves on the Board of Advisors for the University of Texas Center for Performance Excellence. To read Forrest’s full biography, click here.

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Tactical Execution – Some Things Get Better with Time, at least for a while

StrategyDriven — Wed, 25 Jun 2008 02:43:53 +0000

Experience is almost universally valued. Those possessing it are viewed as being superior; able to perform tasks with more practiced efficiency and more easily recognizing and responding to challenges that would otherwise inhibit forward progress. The question, therefore, is this: “For a given position, will one’s experience-based effectiveness grow without limit?”

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Tactical Execution – Introduction

Tactical Execution – Introduction

StrategyDriven — Thu, 20 Mar 2008 11:00:56 +0000

“Execution is where the rubber meets the road.”

StrategyDriven Contributors

Strategy without execution is nothing more than wishful thinking pursued with hope. No organization achieves true success unless it is able to effectively execute its initiatives. It is only through execution that leadership’s strategic vision is married to reality.

Tactical execution refers to the collection of actions taken and decisions made at all levels of the organization in the here and now; actions and decisions that ultimately shape the company’s future. Effective execution occurs when the right things get done efficiently. In organizations that execute effectively, leaders continually focus their workforce on accomplishing the priority activities defined by the strategic plan while workers strive to perform those activities in the most efficient manner possible.

Execution is the life blood of successful organizations. Articles in this category are dedicated to discussing the leading practices of companies that effectively execute their business initiatives and operations to the fulfillment of the organization’s strategic vision. The following articles, podcasts, documents, and resources cover those topics critical to a effective day-to-day work execution:

Articles

Principles Articles

Some Things Get Better with Time, at least for a while [StrategyDriven Premium Content]

Best Practices Articles

Best Practice – Priority System Alignment with Mission Goals [StrategyDriven Premium Content]
Best Practice – Illustrated Priority Systems [StrategyDriven Premium Content]
Best Practice – Timely Reporting of Activity Status [StrategyDriven Premium Content]
Best Practice – Eliminate Redundant Work [StrategyDriven Premium Content]
Best Practice – No Co-, Only Vice [StrategyDriven Premium Content]

Warning Flags Articles

Warning Flag – Incomplete Staff Work [StrategyDriven Premium Content]

StrategyDriven Expert Contributor Articles

How to Lead An Online Business by Samy Liechti
Seven Secrets of Driving Customer Loyalty – and Profits by Micah Solomon

StrategyDriven Podcasts

StrategyDriven Podcast – Video Edition

What Makes an Organization StrategyDriven?

StrategyDriven Podcast – Special Edition

FREE StrategyDriven Trial Membership

Start your FREE trial membership^* and receive:

FULL ACCESS to StrategyDriven’s premium content for 14 days
FREE COPY of a StrategyDriven Expert Contributor book^†
EVALUATE how StrategyDriven gives you a competitive advantage