The Counterintuitive Nature of Management Excellence

December 2, 2008 By 2 Comments

I suspect that most readers will agree that examples of management excellence, high performance and great leadership are not the topics dominating the news in this emerging “we’ve never seen anything like this before” economy.  Instead, we are fed a constant stream of downward revisions, requests for bailout and examples of management failure of “someone should go to jail”   Whole sectors are crashing, great old brands are on the brink of fading into the history books and recently great businesses are floundering.

Contrast this current phase with the other extreme of recent memory, the dotcom bubble of the late 90’s, when the laws of physics were upturned, profits didn’t count, and it was all about clicks and eyeballs.  Everyone knew someone that was a gazillionaire and massive amounts of paper wealth came into existence overnight.  And then disappeared.  A few firms like Amazon, eBay and Google ultimately emerged from the carnage following the bust, to play major roles in a changed world.  Ironically, this changed world looked more like what we knew than what had been professed by temporary pundits feasting on the momentary gullibility of the masses.

The point.  It’s easy to ride with the herd in boom and bust periods.  It takes no management skill whatsoever to spend a fortune building up clicks and it definitely takes no skill to slash budgets, cut headcount, freeze programs and hunker down and wait out the storm.

It does take remarkable management courage and skill to run against the crowd and conventional wisdom by investing in strategic initiatives and talent during tough times and resisting the temptation to chase mythical fortunes during boom times.  Leveraging adversity to stimulate creativity and rethink business models, refocus on customers and look everywhere for innovation that will create value is counter-intuitive to the “flight” response that so many firms are exhibiting.  This counter-intuitive nature is also the hallmark of great management and great managers.

Deming dared to call U.S. manufacturing on the carpet and predict their ultimate suicide if they ignored quality during a time when quality got in the way of volume and profits.  Drucker spent a lifetime teaching managers the rules of management excellence.  Based on recent news, most of us forgot to listen.

You face the choice everyday to stay with the herd or dare to do something different in pursuit of management excellence.  In case you are looking for some thought-starters on counter-intuitive ideas, consider these:

  • Resist the temptation during tough times to make all of the “hard calls” by yourself.  Talk with and involve your employees in decision-making and idea generation.  They are just as concerned as you are about their survival and they want to help.
  • Don’t shred your strategic plan because “everything has changed.”  It’s great to challenge your assumptions or as Ayn Rand often said, “Check your premises.”   There may be new or more opportunity than you imagined, and the plan may need revision, but don’t scuttle it based on fear.
  • Invest in your talent now.  While you may be culling the herd of poor performers, you should also be investing in building the leadership and strategic thinking skills of your workforce.  If this ends, they will propel you to new heights, and if this economic environment lingers, they will save your skin.  Either way, you need to invest.
  • Your customers are as perplexed and worried as you.  It’s time to seek nontraditional relationships with key customers and partners.  These relationships include joint-strategic planning, joint brainstorming and true partnering solutions that transcend the traditional press-release relationship.
  • Take a sledgehammer to internal silo walls.  The dysfunction inherent in most sales and marketing or marketing and engineering relationships is significant enough to sink your ship.

The bottom-line for now:

It’s an outstanding time for great leaders to stand up and be heard, and it is an outstanding time to focus on excellence in management.  It starts by checking your conventional wisdom at the door.  Go visit a customer, ask questions and listen.  Do the same with your employees.  And then do something that creates value versus something that reduces your chances of creating value.  Your actions may just start a revolution.

Filed Under: Crisis Leadership, Leadership, Leading Change, Marketing, Product Management, Project Management Tagged With: , , , , , , , , , ,

Management Excellence Tips for Tough Times: Rethinking Customer Segmentation

December 1, 2008 By Leave a Comment

(Note from Art Petty: this is the first post at the new Management Excellence blog. If you are receiving this update via e-mail, please take the opportunity to visit the site and check out the new tools and resources.  And of course, the 160 plus posts on Best Practices in Leadership, Strategy and Sales and Marketing from the former site, Art Petty on Management, are all available at the new site.)

Ian MacMillan and Larry Selden writing, “Change With Your Customers and Win Big” in the December, 2008 Harvard Business Review, suggest that firms should look for advantage during an economic downturn by rethinking how they segment their customer groups.

They offer an example of a retailer of premium priced, private-label organic products who instead of viewing their market segment through traditional lenses, might break it into the following segments;

  • Health-conscious consumers who will stay pay a premium for foods that they perceive as having health benefits.
  • Frequent restaurant goers looking to trim expenses that might consider a line of high-quality carry out foods as an alternative.
  • Companies looking to rein in corporate catering costs that might substitute with the firm’s offerings.

Art’s Suggestions:

Many firms preoccupy on cutting costs and scaling back offerings, when they should be doubling their efforts to understand the unresolved problems of their customers. However, breaking the back of conventional thinking about either what to do in a recession or how to view your customer groups is a difficult task for many organizations.  Start by putting your team to work.

Instead of losing precious time and corporate energy to the collective nervousness that paralyzes organizations during tough times, get your team out into the field and into the market where your customers and their customers are.  Listen, ask questions and most of all, observe.  Where are they struggling?  What might help?  How do they use your products?  How do they use other products?  What unresolved problems can you identify?

Bring your observations back and get some help in what creatives like to describe as “ideating.”  We mere mortals call it brainstorming.  Regardless of the label, get your entire organization thinking about and generating ideas that might help your customer address their issues.  If you are looking for a process, pick up a copy of Tuned In and start with the formula that the authors suggest for creating “resonators,” offerings that solve unresolved problems so perfectly that they practically sell themselves.

The Bottom-Line For Now:

Rethinking your customer segmentation model is a potentially powerful approach for differentiating versus key competitors and for finding new needs that you can fulfill with your core capabilities.  Experiment with the various ideas and strengthen your team’s execution skills in the process.  In additional to the potential tremendous upside from solving customer problems, the energy and excitement generated during this process will convert the organization’s “sense of fear” into a “sense of urgency.”

Filed Under: Leadership, Marketing, Strategy Tagged With: , , , , , , , ,

Change or Die

November 10, 2008 By Leave a Comment

Perhaps it is human nature, but we tend to eschew change either in our personal habits or in business settings until we are faced with mortality.

In organizations, most significant change occurs during times of crisis when the threat of extinction sufficiently motivates individuals and groups to consider changing long-standing ways of doing things.   The crisis brings into stark focus the fact that it is easier and less costly to accept or embrace change than it is to suddenly become extinct.  Unfortunately, by the time this clarity is achieved at the top leadership levels, it is often too late.

As difficult as it is to follow the news everyday, we are living and working through a period of time when the extinction of firms and industries is taking place in front of us, like some business simulation game gone horribly wrong.  The game unfolds like this: focus only on short-term results, add in a measure of personal greed, consistently make the wrong decisions and act shocked as the results spiral out of control to the final act….a low probability of success, last ditch effort gambit (or bailout).

For some, the distance from the top of the Mount Olympus to the graveyards and swamps below is fast and furious.  The suddenness and rapidity of the fall is shocking, but perhaps easier to digest than those firms that have systematically planned their own demise step-by-step as they move from Masters of the Universe to what will soon be footnotes in our history books and business texts.

As in life, there are no guarantees of survival…there is no prescriptive formula that says “if you do X then you survive and prosper,” but there are methods to improve your odds.

How to Improve Your Odds of Survival

  • Senior leaders must embrace the fact that survival and prosperity occur only at the pleasure of customers.  Instead of giving lip service to the importance of customers, you need to develop systems to constantly seek out, understand and translate into actions the Voice of the Customer.  This is remarkably difficult to do in practice and requires for many an impossible shift in culture and values.  Nonetheless, you must change or die.
  • Senior leaders must embrace the fact that without motivated, dedicated employees they have nothing.  There can be no doubt that satisfied, engaged, respected, informed employees are essential for survival and success.  Why then are our systems and our managers and leaders so often at odds with what it takes to create an environment where employees will gladly give their best.   The poor leadership habits that are vestiges of another era must change or you will die.
  • Call it total quality, performance excellence or whatever you want, but you must embed the notion of high performance and all that it takes to achieve it into the DNA of your organization’s culture.  Success can breed success or it can give birth to complacency.  An unyielding focus from the firm’s leaders on creating a high performance culture is required.  This means that the fire-fighting mentality must stop, clear performance/quality priorities  established and the systems developed to allow these to succeed and for people to learn in the process.  You must change to create a learning organization or you will die.

The Bottom-Line for Now:

Change or die.  It’s that simple.

Filed Under: Crisis Leadership, Leadership, Leading Change Tagged With: , , , , , , , , ,
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