Centered Leadership: Posnanski: The rise and fall of A-Rod

 No discussion on innovation is complete without leadership. Conversely, one cannot properly discuss leadership without authentic i.e. centered leadership (see Stephen Covey if in doubt).  

Which is all the more reason why this morning's story by Joe Posnanski captured my attention; the word, "ANYTHING." What will you do to obtain niche supremacy? Are you willing to sell your soul? In the movie "Oh Brother Where Art Thou," the famed guitarist Tommy Johnson is blasted for selling his soul to the devil. He replies, "I wasn't using it anyway."  

There is a wonderful quote by Tom Peters I have used often in presentations, "There is no such thing as a minor lapse of integrity." In the long run what one does echoes through an organization as well as ourselves removing a little more of our once treasured veneer a little here and little there. I highly encourage the reading of this magnificent article on a once great man who happened to be a baseball player. See any similarities in yourself or other leaders? Here are several notable failures. But don’t be misled. Such falls from grace are in businesses of all sizes in all niches. I'd like to hear your thoughts below. If you'd like me to speak for you contact me here at my website or call 719-266-6703. Thanks. Jim

Leon Halip / Getty Images

 Allard Baird would say he was literally shaking. Baird is not a demonstrative person — he’s the sort of man who would call the best meal of his life “good” or, perhaps, if he was feeling especially forthcoming, “really good” — and this is why the word “literally” matters. He would remember “literally” shaking as he sent in his report on a high school baseball player named Alex Rodriguez.

 Baird was a young scout — this was before he became general manager of the Kansas City Royals, long before he became vice president of player personnel for the Boston Red Sox. It was 20 years ago. He had been coaching baseball — “on the field,” as baseball people like to say. He grew used to locating players’ weaknesses and working on them.

 With Alex Rodriguez … Baird could see no weaknesses. The kid was perfect.

Read more of the story via nbcsports.msnbc.com

 

7 Signs Your Small Business Is In Trouble - Innovate or die

Things change rapidly in life. Personally, this happened to me in May 1995 when I woke up with blurry vision. A few days later, I was diagnosed with diabetes. That day changed my life forever.

 

Small business fortunes can also “turn on a dime.” It’s a constant roller coaster where one day your company is on top of the world. Customers will buy anything, people are paying their bills on time and everyone wants to work for you. The next day, you can’t give your product away, your computer systems crash and your best employee leaves without notice.

 

Like people, healthy businesses can become "sick" very fast. This is why the stock market places so much emphasis on quarterly earnings reports. Things can change in a matter of months—more of this is likely to happen in the current weak economic recovery.

 

So what are the early signs that your business is in trouble?

1.   You do not understand how profit is generated in your business. Which products or services are the most profitable (not just the best selling)? Can they be divided into primary and secondary streams where one sale depends on the sale of the other? For example, in a software company, annual maintenance, upgrades or add ons will never sell if the original product isn’t first purchased.

2.   You do not know the gross margins of your major products (sales minus cost of goods sold). Remember, it is a lot easier to make money with an 80 percent gross margin than a 20 percent gross margin. In most service oriented businesses, gross margins must approach 50 percent to make a healthy bottom line profit. 

3.   You do not know what your prices are based on. Are they set based on their value to customers, competitive pressures or historical trends? Do a sensitivity analysis to find out how much flexibility there is to charge more for the same products. Most small companies especially early in their life charge too little for their products rather for fear of being rejected and not having any customers.

4.   You don’t understand your cash flow statement. Every other financial statement can be “fudged” except for this one. You need to know exactly where cash comes from and how the money is spent. How much of the monthly profit reported on the income statement actually gets retained as cash in the business?

Click here for more small business strategies to out innovate and out compete. 

5.   You do not know how current your accounts receivables are. Find out your company’s biggest offenders. Remember that customer credit is a privilege, not a right, and it’s available only to those who earn it. A customer is only a customer when they pay.

6.   You don’t know if the problem your business solves is still relevant to your customers. If the nature of the pain for these customers is beginning to change or be substituted by other solutions, you may have a problem. For example, pay phones were needed when people wanted to make phone calls outside their homes. Portable cell phone technology killed this industry.

7.   You don’t know where and how you spend your time.You need to focus most of your energies on generating revenue for your company rather than on administrative duties. In fact, look at what the people in your company do who aren’t generating income and continually justify it. Escalating fixed overhead kills many companies when economic conditions change. via openforum.com

What to do next? What are some other signs of trouble in your business 

In a rapidly changing marketplace, innovation isn’t optional. It’s essential. We’ll teach you how to cultivate innovation within yourself and within your organization. We’re patient experts that will teach you skills and techniques you can apply within your organization to bring powerful ideas forward. We’ll enable you to integrate innovation and competitive strategy into the core of your organization. 

Start developing your competitive advantage. Call us at 719-266-6703 or simply complete the form.

 

Atoms Versus Bits: Where To Find Innovation

“We wanted flying cars. Instead we got 140 characters,” says Peter Thiel, the cofounder of PayPal and an early investor in Facebook. Thiel made billions from PayPal and Facebook, but he says the pace of innovation in the broader world has slowed way down.

Is Thiel right? The answer depends on whether you mean innovation in the world of atoms (physical things) or innovation in the world of bits (software).

•  Atoms: slowing. The Boeing 747 first flew in 1969, yet it still is the main jet carrying people across oceans. Automobiles still travel 70mph on our highways. They use less fuel and are safer, but the pace of improvement is nothing like it was 100 years ago.

• Bits: accelerating. The cellphone was the size of a brick 30 years ago. Six years ago it was much lighter, though still mainly a phone. Today it’s a camera, radio, television, credit card and disease diagnostic tool.

The most fertile areas for innovation become clear in this atoms versus bits view. If the atom world is slow to change, how can bits replace atoms or change the way we use them? Newspapers have transitioned from atoms to bits. Trickier are classrooms and health diagnostics, but they’re moving, too. Finally, bits will never replace such things as cars or airplanes (unless you think Scotty can beam you up), but they’ll change the way we use those things.

Take classrooms. I predict that 50% of colleges will fail during the next decade. The high ROI that a diploma once guaranteed is no longer certain. That’s because the “I” has grown way out of control, a result of decades of 7% annual price increases. Employers now have other and cheaper ways to test for intelligence and drive.

Online education got serious in 2012. Two open-enrollment online colleges–Coursera and Udacity–each raised more than $10 million in venture capital. Both have excellent parentage, started by professors from Stanford. Coursera plans to make money by selling certificates for around $100, verifying course completion. If you can earn a certificate for completing an artificial intelligence class taught by a Stanford professor, gee, where does that leave the math professor at the underfunded liberal arts college?

A second, less noticed kind of education revolution is aimed at replacing traditional corporate training. The Apollo Group, which owns the University of Phoenix, has made a big bet to create the Innovator’s Accelerator and has signed up noted Harvard Business School professor Clayton Christensen and others to teach corporate teams how to become more innovative. I was allowed a sneak peek at Innovator’s Accelerator; it looks like something George Lucas would have cooked up had he turned his creative talents to education. The Innovator’s Accelerator–or something like it–will soon change the $50 billion corporate training market as we know it.

A third way bits can transform atoms is to change the way we consume and value atoms. An example in air travel is XOJet, which has made private-jet travel cheaper.

XOJet, owned by Texas Pacific Group, was able to use TPG’s credit to buy scores of late-model jets on the cheap after the financial crisis. XOJet’s chief, Blair LaCorte, then imported strategies and tactics from two other businesses owned wholly or in part by TPG: low-cost air carrier Ryanair and resorts operator Harrah’s.

“We got people to think of private jets as nice hotel rooms to rent, not resort homes to fractionally own,” LaCorte says. XOJet owns 75 jets but has only three types: the Challenger 300, the Hawker 800XP and the Citation X. “We know how to maintain these three types,” he says. That’s crucial, because XOJet gets 1,200 annual hours of use from each jet, as opposed to 600 hours for the average fractional jet and 250 hours for the average privately owned jet.

XOJet’s volume means that you can rent a Challenger to go from Van Nuys, Calif., near L.A., to Teterboro, N.J., near Manhattan, for as low as $23,000. The more custom your needs–say, Santa Monica to White Plains at a precise time–the more the price will go up, of course. But thanks to the Internet and some clever analytics, XOJet is able to price each request, offer a smart deal and make money. Yes, it’s still a jet, but bits have transformed how the jet is being used.

via forbes.com

Click here for more ideas on how to use innovation as a competitive strategy. 

The Heart of Innovation: Go Beyond Analysis Paralysis

via ideachampions.com

Among Great Companies Leadership Is Simply The Difference

Simply Profound

Saw a great quote about the obvious by Carol Hymowitz: 

“Good governance depends primarily on leaders who put integrity and the interest of their companies ahead of their self-interests. These executives are willing to grapple with difficult decisions that may involve personal sacrifice.” 

Which reminds me of the Hay Group Best Companies survey. 

Hay Group's John Larrere said, "Rapid changes in the world are impacting how organizations do business, and as a result, the old rules of how organizations select, develop and retain good leaders have been turned upside down causing the future of leadership to look very different. ... It's about getting them (people) to be passionate about their work and grooming them to handle the challenges ahead." 

These findings fall in line with those of Peter Drucker in the “The Effective Executive,” who highlight "Inspiring" and “Leaders have a commitment to community and to change lives.” 

Jim Collins highlights - Their drive and passion isn’t about themselves. It’s about the work, the organization, the purpose. Their purpose isn’t just making money or increasing shareholder value. “You have to have a reason to struggle, a reason to endure,” and they are willing to do whatever it takes for the organization, within the bounds of their values."
Franklin Covey 2013 Her Point of View Weekly Planner, Design (Google Affiliate Ad) 

The most effective leaders focus on people as well as profits. They treat employees as assets not commodities as in the Jack Welch management dictum fire the “C” players. The truly great leaders have figured out how to select, build, and maintain people's belief that they are being honestly and competently led in today's unpredictable business world.  Jim

Einstein on The Simplicity of Innovation - Bam!

This Einstein quote nails innovation. Not to mention glowing mission statements that nary an employee nor manager are able to recite.

Need a business or motivational speaker for your next event? Click here to learn more. 
Read "The Five Deadly Signs Your Business is In Trouble."
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Gaining a New Understanding of Risk

In these days of uncertain markets – and an uncertain economy – risk can seem almost omnipresent in business. But how do you manage risk prudently – yet still grow your company?

That timely question reminds me of an interesting talk I heard this past summer by Harvard Business School professor (and MIT alumnus) Robert S. Kaplan. Kaplan is perhaps best known for his work codeveloping the Balanced Scorecard concept.

But, as Kaplan explained to a Harvard Business School Executive Education class this summer, he began exploring the topic of risk management in the wake of the 2008 financial crisis, after he saw venerable firms such as Lehman Brothers and Bear Stearns collapse – despite having risk management functions.

Here are a few of Kaplan’s insights on the topic of risk management.

There are three categories of risks. The first category, Kaplan said, are risks from employees’ undesirable and unauthorized actions. “These risks are the ‘known knowns,’ and the organization gets no benefits from allowing them to occur,” according to Kaplan. So, he advised, “enterprises should strive to completely avoid ‘Category I’ risks.”

Category II risks, on the other hand, are the kind of risks a company can’t avoid:  the risks of not achieving the enterprise’s strategic objectives. “All interesting strategies have some kind of risk,” Kaplan pointed out.

And the third category of risk, according to Kaplan? Risks from certain uncontrollable external events, such as a volcano eruption that affects air travel — or a tsunami that affects your supply chain. Many companies, he observed,  don’t even know that they don’t know about how such external events can undermine their strategies.

Learn from close calls. When it comes to Category I risk from employee actions, “you’ve got to look at…‘near misses’ and why they occur,” Kaplan observed. In particular he noted, as your business expands and gets more complicated, your internal auditors may not have the control systems and competencies to understand your new businesses – which can be a problem, because new business are where you’re more likely to have problems. In Kaplan’s view, the recent trading failure at UBS, which cost the CEO his job, is an example of a Category I risk that should have been avoided.

“If you have high-powered incentives, you’d better have even higher-powered control systems,” Kaplan said – to make sure the way people achieve the goals is consistent with the company’s mission. (One analogy Kaplan gave: What determines how fast you can drive a car safely is not just the size of the engine – but also the power of the brakes.) Strategies for dealing with risk from employee actions, he observed, start with mission statements and values and extend to strong internal control systems.

Ask: What are the risks associated with your strategy? When it comes to mitigating Category II risk associated with strategy execution, it’s important to identify what could go wrong, Kaplan observed – and what could prevent the organization from achieving its strategic objectives.

One option Kaplan described for increasing awareness of Category II risks: a key risk indicator scorecard that seeks to give advance indications of when a significant risk to the organization’s strategic objectives has become more likely or more consequential. He also described how the Jet Propulsion Laboratory (JPL) holds risk review meetings – with a risk review board created for each of its complex projects.

On the other hand, it’s not easy measuring risk – something Kaplan acknowledged. What makes risk management so hard, he observed, is that you’re trying to quantify things that may have never occurred and may never occur. “You can’t rely totally on measurement,” he said.

Ask yourself what different scenarios for the future would mean for your company. When assessing Category III risks – risks from noncontrollable events in your external environment – scenario planning can be helpful, according to Kaplan.

via sloanreview.mit.edu

Jim Woods is a strategy consultant and CEO of InnoThink Group. Leading advisors on strategy and innovation helping leaders make decisions based on innovative and unconventional insight. Read more. 

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Commoditization Not Innovation Destroyed Kmart?

 I spotted a not so surprising story by Kim Peterson on "Is it time to close Kmart?." Anyone perusing the anemic aisles of Kmart in the past 5 years or more must be astounded how a once number two retailer in the world could tumble. 
In 1999 having read an article in Newsweek on Wal-Mart's challenge to Sears and Kmart, I penned a congratulatory letter to Sam Walton founder of Wal-Mart. This new upstart Wal-Mart, had used technology and nimbleness to breathe down the necks of these two perennial “Two big to fail” giants. How this occurred should be of paramount importance.
Today, we recognize Sears and Kmart’s problems as commoditization. A few aspects are noted here:
1.    Speed and nimbleness.
2.    Responsiveness to change and competition
3.    Low entry competitors
4.    Technology
5.    Price
6.    Speed
7.    Innovation. Recognition that no advantage is unassailable.
8.    That size is a detriment.   
For more insights on how commoditization poses a threat to your organization contact us. 

SPEAKING ENGAGEMENTS

Jim has given speeches to lots of different audiences—associations, businesses, and nonprofits. If you're interested in having Jim speak to your group, just send us a note about the event (date, location, audience, etc.): speaking@innothinkgroup.com Visit our website: 

First, Let's Fire All the Managers. The Real Reason You Are In Peril - Gary Hamel

Management is the least efficient activity in your organization.

Think of the countless hours that team leaders, department heads, and vice presidents devote to supervising the work of others. Most managers are hardworking; the problem doesn’t lie with them. The inefficiency stems from a top-heavy management model that is both cumbersome and costly.

A hierarchy of managers exacts a hefty tax on any organization. This levy comes in several forms. First, managers add overhead, and as an organization grows, the costs of management rise in both absolute and relative terms. A small organization may have one manager and 10 employees; one with 100,000 employees and the same 1:10 span of control will have 11,111 managers. That’s because an additional 1,111 managers will be needed to manage the managers. In addition, there will be hundreds of employees in management-related functions, such as finance, human resources, and planning. Their job is to keep the organization from collapsing under the weight of its own complexity. Assuming that each manager earns three times the average salary of a first-level employee, direct management costs would account for 33% of the payroll. Any way you cut it, management is expensive.

Second, the typical management hierarchy increases the risk of large, calamitous decisions. As decisions get bigger, the ranks of those able to challenge the decision maker get smaller. Hubris, myopia, and naïveté can lead to bad judgment at any level, but the danger is greatest when the decision maker’s power is, for all purposes, uncontestable. Give someone monarchlike authority, and sooner or later there will be a royal screwup. A related problem is that the most powerful managers are the ones furthest from frontline realities. All too often, decisions made on an Olympian peak prove to be unworkable on the ground.

Third, a multitiered management structure means more approval layers and slower responses. In their eagerness to exercise authority, managers often impede, rather than expedite, decision making. Bias is another sort of tax. In a hierarchy the power to kill or modify a new idea is often vested in a single person, whose parochial interests may skew decisions.

Finally, there’s the cost of tyranny. The problem isn’t the occasional control freak; it’s the hierarchical structure that systematically disempowers lower-level employees. For example, as a consumer you have the freedom to spend $20,000 or more on a new car, but as an employee you probably don’t have the authority to requisition a $500 office chair. Narrow an individual’s scope of authority, and you shrink the incentive to dream, imagine, and contribute.

Hierarchies Versus Markets
No wonder economists have long celebrated the ability of markets to coordinate human activity with little or no top-down control. Markets have limits, though. As economists like Ronald Coase and Oliver Williamson have noted, markets work well when the needs of each party are simple, stable, and easy to specify, but they’re less effective when interactions are complex. It’s hard to imagine, for instance, how a market could precisely coordinate the kaleidoscopic array of activities at the heart of a large, process-intensive manufacturing operation.

That’s why we need corporations and managers. Managers do what markets cannot; they amalgamate thousands of disparate contributions into a single product or service. They constitute what business historian Alfred D. Chandler Jr. called the visible hand. The downside, though, is that the visible hand is inefficient and often ham-fisted.
Wouldn’t it be great if we could achieve high levels of coordination without a supervisory superstructure? Wouldn’t it be terrific if we could get the freedom and flexibility of an open market with the control and coordination of a tightly knit hierarchy? If only we could manage without managers. via hbr.org

Read why uncertainty and complexity are the major concerns for CEO's. 
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Getting Back to the Human Side of Human Resources: How to Make Online Recruiting More Effective | Idea Climatology

 

By my new cool friend Tony V who really gets it! I strongly encourage you to subscribe to his blog. Jim W

 

By Anthony Vengrove

Recently, the Wall Street Journal featured a piece that caught my attention, Software Raises Bar for Hiring.  For the past several months I have been privately fuming over how silly the job application process has become.  Evidently, Peter Cappelli (Wharton School of Business) seems to agree with my feelings on this subject.

 Via The Wall Street Journal:

In an essay in this newspaper last fall, Peter Cappelli … challenged the oft-heard complaint from employers that they can’t find good workers with the right skills.  ”The real culprits are the employers themselves,” he asserted.

“For every story about an employer who can’t find qualified applicants, there’s a counterbalancing tale about an employer with ridiculous hiring requirements,” [Cappelli] says.  In many companies, software has replaced recruiters, he writes, so “applicants rarely talk to anyone, even by email, during the hiring process.”

Read more at milesfinchinnovation.com

 

Tupac Shakur "Think Different" by Apple - Welcome the Crazy and Quirky Innovators

The bigger picture for this post is YOU. How are your products and services distinctly innovative. Think about that for a moment. Most singers are just like another. Most managers operate from the same playbook. Again, Think about it.

I am often asked to describe what I do. The follow up question is then who are my target audience. This tribute video by Apple of Tupac summarizes in superb details our energy and intent for our clients. This is what separates us from others. Thank you Tupac, for we aim to help our clients to become a splinter in the eyes of their competitors and good enough as well. Be different or go home. The world is intensely competitive. Ho do you stand out and then deliver on your promises? 

via youtube.com