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.

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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. 

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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