Business Insight Zone

And how much should they?

My friend Dave Livingston (you may remember him) made a simple statement in an e-mail exchange that stopped me in my tracks:

“Most businesses don’t have the habit of thinking about themselves.”

I think it’s true, and that it’s true of must individuals as well, in the sense that we seldom think through how we do things and how we might do them better. (Deliberate practicers, by contrast, do this sort of thinking all the time.)

What do you think?

A while back I got into a discussion with Tom Peters over Carly Fiorina’s role in reshaping Hewlett-Packard. He held that Mark Hurd’s success in improving HP’s operations would have been impossible without the groundwork that Fiorina laid to remake the company’s culture — and to give HP enough scale, through its acquisition of Compaq, to go toe-to-toe with both Dell and IBM.

Peters liked my eventual formulation of Fiorina as “Leader A,” the one who starts the revolution, and Hurd as “Leader B,” the one who implements the needed changes that build out and sustain that revolution.

Now I’m wondering if something similar has happened at Ford. Consider this excerpt from a comment Wally Bock left the other day:

[Mulally] benefitted from being hired by Bill Ford after Ford had done the CEO job for a while. Both parts of that are important. Bill Ford, as a Ford and key stockholder, had a leverage that no “hired hand” could ever have, inside the company, inside the family, and inside the board room. But it’s also significant that he had tried on the CEO job and had an idea of both how tough it was and what was needed. A year earlier, I’m not sure he’d have made as good a decision.

What do you think? What other examples of this phenomenon come to mind?

~

Related:

• Ford’s Sustainability Focus.
• Would you give up scale for quality?
• Mark Hurd’s 3-minute management clinic.

~

Image source.

Hair-Splitting Doesn’t Make for Happy Employees

At his excellent Gruntled Employees blog, Jay Shepherd wrote a good post on “Nickel-and-diming your employees.” He lays out an example of a company with pointlessly nitpicky rules about when its traveling salespeople can buy meals on the company tab. Then he appeals for common sense in the writing and application of rules like this. Here’s the kicker:

Employers: resist the urge to have policies like these. Treat your employees like adults. If they spend unreasonable amounts on meals or other expenses, talk to them about it. If it’s a persistent problem with a particular employee who’s taking advantage of the company, fire that employee. But don’t assume that all your employees are trying to bilk the company for an extra airport donut.

Amen. Compliance and cost control are good things, as I remind myself every time I use D&B’s precise-but-fair system for filing expense reports. You don’t want people stepping out of bounds with their expense accounts or anything else. But Shepherd is exactly right here, and to my mind what he’s really calling for is . . . management.

When in Doubt, Write a New Rule? No.

I’ve worked in organizations where the infractions of one person, or a handful, were answered not by individual correction, but by the bureaucratic institution of new rules. Because one person was clueless, or selfish, or whatever, everyone had to jump some new hurdle. And honestly, I’ve never even had it that bad — the horror stories from some of my friends would make you grind your teeth.

By contrast, I’ve also had great managers who took it upon themselves to offer correction at the point of need.

• Somebody’s coming in late and taking too many smoke breaks? Talk to that person and lay out a better schedule for them.
• Somebody’s making reams of photocopies for the Cub Scout pack on company equipment? Create a non-threatening opportunity to talk it over one-on-one, explain why it’s a problem, and set clear expectations for the future.
• Somebody’s demeanor in meetings stifles discussion and wins them enemies? It’s an opportunity for pointed coaching, not aversion.

One of the best conversations I ever had with a manager came many years ago. He laid out my performance, starting with the good things, then pointed out some aspects that were lacking, and made the connection between those aspects and the way bonuses were calculated. Then he said something like, “We love what you’re doing in a lot of ways, but X and Y cost you money this year.” He said it in the tone of a friend offering candid advice to a friend; it was clear he said it because he would rather I did succeed. It was some of the best feedback I ever got.

That’s what managers — or the good ones, anyway — do.

Simple, eh?

~

Photo by Traci Todd, used under a Creative Commons license.

On Sunday I asked “Who’s the best CEO in America?” Although a number of folks weighed in on my question via Twitter, “only” two readers left comments on the post. (Don’t get me wrong: every comment is like manna to me.)

Yet Wally Bock, whom I met recently through Twitter and whose blog I’ve enjoyed reading, took the time to tangle not just with my own (intentionally simplistic) question, but with various issues raised by the Atlantic Monthly article I cited in the post. That culminated in an extra-long, detailed comment from Wally about modern corporate leadership, which could be a good blog post in its own right.

So, two morals to this story:

1. Wally Bock is someone worth listening to on business leadership;
2. I love blogging because, for all that I work to educate and inform with my posts, I always end up learning more than that from my readers.

~

Given its current bankruptcy, it might be easy to forget that General Motors was once the Colossus of the business world, and that Alfred P. Sloan (that’s him on the cover of TIME) was regarded in his own day not merely as a great executive, but as one of the greatest business leaders of all time. This has me thinking of a question that I’d like you to answer in the comments:

Who’s the best CEO in American business?

Related questions come to mind thanks to the Atlantic Monthly’s recent article, “Do CEOs Matter?”:

How much do the best CEOs matter to their businesses?

Why?

When do they matter most?

I look forward to having your thoughts on these questions.

~

Image via Beth Kanter, shared under a Creative Commons license.

When you fix the alignment on your car, everything runs smoother.

That little shimmy on the highway vanishes. Your mileage improves. Your brakes and tires work better and wear better.

Simple concept, really: you make sure that all the parts, all the systems are playing nicely together, and all pointed in the right direction.

But “alignment” gets a bad name in business because it has become a piece of jargon — like “buy-in” or “operationalize” or “net-net” (ugh).

It deserves that bad name, in many instances, because it’s not alignment in the sense that the mechanic at your garage uses. Instead, it means “falling in line behind the boss” or “not making a stink” or “raising objections only to have them summarily batted down.” It means straightening deck chairs as the ship takes on water. It’s the kind of alignment that afflicted GM and Chrysler for many years: you could take one of their cars to the shop and have it aligned lickety-split, but the companies couldn’t align themselves around the right goals in any meaningful sense.

Groupthink helps no one. It robs us of effectiveness because it takes a team’s diversity of views, experience, and expertise and grinds them into pablum.

Real consensus — forged through argument and analysis and discussion and passion and, sometimes, tears — drives some of the greatest businesses in the world.

Which one are you working toward?

~

Photo by Billingham, used under a CC-Share Alike license.

In response to The three-part litmus test, for social media and everything else, Woody Williams left a comment today that hit home:

Curious: In the tripartite litmus test, where do people count? Internal people — owners, directors, managers, employees — are they “enterprise value?” People (internal) could help differentiate the organization, but is that it?

Organizations undertake many things to improve people and place related processes, infrastructure, and the like. The goal is usually happier, more optimistic, committed, and productive people. Is that worth a piece of litmus paper?

My response: absolutely — and the best companies fold in people considerations to everything they do.

Woody’s in good company: in this Inc. magazine interview, Jim Collins likewise stresses the importance of people in business.

Whether you’re running a business in 1812, 1886, 1925, 1950, 1975, 2000, 2050, I see nothing to contradict the principle that who comes first and what comes second, for a very simple reason: If you cannot predict the what, you have to be able to do a good job with the who, because the what is going to be constantly shifting.

Think about your own life, your own career. You’ve known people who were reliable under all circumstances, others who were unreliable, and many in-between. The same holds if we replaced reliability with creativity or empathy.

Who do you turn to if you’re starting a new venture? Or turning a company around? Or when you’re in bad trouble? Ideally, you’ll know people who are reliable, creative, and easy to work with — and who have the domain expertise you specifically need.

But failing that — unless the matter at hand is something like heart surgery — I’ll take the reliable, creative, and empathetic ones, not the subject-matter experts.

Get the who right, first.

Social media is not just about marketing. As I said the other day, there are good reasons that its use has started within marketing departments at many companies, but it’s impossible that it will be contained there.

Jeremiah Owyang — someone you should read regularly if you care about this stuff — hits that nail on the head with this post, which I encourage you to read:

As Social Technologies Become Pervasive, Prepare Your Company

Here’s my comment on Jeremiah’s post:

I’ve been telling anyone who will listen that social media is not — cannot be — just a marketing or PR/corp comms item to be checked off a list. It is becoming more pervasive by the day, and while different companies, industries, and individuals will take up use of different types of social media at different rates, it’s naive to think that any of them *won’t* take it up.

As always in business, the focus should come back — as you rightly say — to customers. How do we serve them & give value to them? How do we build value across the enterprise? How do we differentiate ourselves in the marketplace?

These questions were relevant before the birth of the telegraph. They’ll still be relevant for as long as there are companies and customers — regardless of the specific technology in play.

What do you think?

Run a Google search on “social media ROI” and you’ll get 1,140,000 results.

It makes sense: companies understand that the social media have taken off as a cultural phenomenon, but they don’t know whether it’s worthwhile for them even to participate on social media platforms, much less pursue them actively as channels for business. So managers do what they’re trained to do — what they should do — and ask “How will we know when we win?”

Unfortunately, this inquiry often gets oversimplified as “What’s the ROI?” — which prompted this heretical thought from me during the Inbound Marketing Summit:

ROI is a fine thing.

It’s fine because it gets at a fundamental, laws-of-Newton relation of business: How much will we spend? And how much will that bring us? Good.

ROI works best, though, when we’re using it on known entities. Examples:

• If we start hiring today to add 20 more salespeople, how much business can we expect them to book in the next six months? This works great because we already have salespeople, we know how long it takes to find new ones, we know how long it takes to get new ones ramped up, and we should be able to venture a solid guess at how much business they’ll close in the early going.
• If we build a state-of-the-art factory, how long will it take for it to pay for itself? As complicated as this question is — and consider what Intel faces when it must decide whether to build a multi-billion-dollar fab — there are great tools in place, down to the last decimal of tax treatment of amortization, to help make a decision on it.
• If we increase our spending on Marketing Program X, how much sales lift can we expect to see? Even in the often-murky arena of marketing, there are areas that we understand very well in a quantitative sense. A good e-mail marketer can tell you in seconds how much sales lift to expect from a 2% increase in click-through rates, for instance.

There are always many unknowns in the world of business, even with the best projections and in areas that we understand well, but in cases like these we can at least go forward on our ROI calculations with a good degree of confidence.

Unknowns abound in social media.

Social media, however, in still so new that there are many more unknowns than we’re used to dealing with for lots of other areas of business. I like to compare it to the U.S. automobile industry in 1900, when there were scores of companies making forays into car-making. At that time, automotive technology was up in the air, Henry Ford hadn’t yet revolutionized how manufacturers were organized, and the makers hadn’t even settled on which fuels to use. Beyond all that, there weren’t many good highways joining major cities. Everything was in flux.

Don’t get me wrong: the fact that the same state prevails today in social media doesn’t mean we just throw up our hands and start spending without thinking. But plenty of what we try will be experimental, even if only because the examples we have to study come from companies of different size, in different industries, with different strategies and parameters. So we have to be in test-and-learn mode, understanding that we’re going to have to take some calculated gambles and then, in the words of Paul Gillin, “fold your losers, double down on your winners.”

The good news is, much of what you can do in social media today is cheap. That low “I” means that if you can hit even modest “R” numbers, your ROI gamble will pay off.

Social media is not just marketing.

For reasons that aren’t hard to understand, many companies’ social-media programs have started from within marketing and p.r. units. But social media is a hydra-headed beastie, with both internal and external faces.

Without diving  into specifics, social media is already finding good fits, for different companies, in:

• marketing
• sales
• operations
• customer support
• training
• product development
• market research
• recruiting
• . . .

Consider the parallel to e-mail. There might be only one person in a company with “e-mail” as part of a job title: an e-mail marketing campaign manager. Yet every person in the company uses e-mail to get their jobs done. That’s what we’ll also see — what we are beginning to see — with social media.

In the face of this, how will you calculate — or even guess — at the return on investment?

So, to summarize:

• By all means, keep asking, “How will we know when we win?” Social media deserves as much discipline as any other area of business.
• In those areas where you can measure ROI connected to specific social-media efforts, by all means do so. ROI is a useful tool — a fundamental tool — when it’s used right.
• Understand that, sooner or later, social media will probably become as pervasive for your business as e-mail, phones, or face-to-face communication. That’s neither good nor bad — but it’s a good idea to be ready for that day before it’s staring you in the face.

Your thoughts?

~

Photo by Daisy Romwall, used under a CC-Share Alike license.

It may be a case of spring fever.

Ever have one of those weeks when you work like crazy but finish very little?

*raises hand*

So, here are varied items of interest to launch you into the (U.S.) long weekend.

~ ~ ~

>> Three IPOs in the span of a week? Pinch me! – And not just three IPOs, which makes for a tidal wave of activity relative to what we’ve seen lately, but three successful IPOs. DigitalGlobe, SolarWinds, and OpenTable all made a good showing in their market debuts between May 14 and May 21, which may encourage other would-be public companies to come forward (or, at least, encourage those with NamesLikeThis).

From the end of last summer until this spring, the IPO market has been mired in an awful slump — worse than anything in many years. But maybe we’re seeing the right baby steps as the market gets its feet back under it.

Related:

• A (relative) flurry of activity in the IPO market.
• Silicon Valley, the IPO drought, and the culture of innovation.

~ ~ ~

>> Looking for work? Want to make a difference in the world? — Change.org has launched an initiative it calls Jobs for Change. Danny Moldovan, who heads the program, told me that “Our goal is to recruit more people into careers in service, and we’re currently working to build the largest database available of jobs in the nonprofit, government, and social enterprise sectors.”

The project is backed by several nonprofit groups and employs its own career advisers to offer advice to job-seekers. It also lists jobs in various categories. I know lots of job-seekers who are having to get creative with their career planning — who knows but what some of them will end up in the not-for-profit sector, earning a living  while trying to make the world a better place?

Related:

• JoblessJoe: when the going gets tough, the tough MAKE something.

~ ~ ~

>> Some of the biggest turnarounds happen the fastest. — That’s the punchline of an article at Slate’s “Big Money” site that centers on Sergio Marchionne’s turnaround of Fiat. To be honest, the article could have benefited from a lot more detail on the turnarounds at Fiat, H-P, and Boeing, but the moral of the story still hits home:

Just as bad management can erase billions of dollars of value (think of the $36 billion that Daimler paid for Chrysler), good management can create it, and often more quickly than you’d expect. One difference between the best CEOs and the worst is that the good ones work at a faster pace. Murdering a major company can take many years of painstaking ineptitude. Successfully turning it around takes much more skill but sometimes less time.

Go back and look at other great turnarounds, e.g. Gerstner’s at IBM, or Jobs’s return to Apple. They don’t happen overnight — but they don’t take ten years, either.

How long are YOU taking to turn things around for yourself or your company?

Related:

• Mark Hurd’s 3-minute management clinic.
• The turnaround CEO — what to look for.

~ ~ ~

>> Ursula Burns will succeed Anne Mulcahy as CEO of Xerox. — Three great things about this: (1) a woman is succeeding a woman running an old-school, business-to-business enterprise (I’m sure Tom Peters approves!). (2) Burns is the first African American woman to head a Fortune 500 company. (3) The succession comes as absolutely no surprise, since Burns has been groomed for this role for years.

Thinking of turnarounds, there was a time, not so many years ago, when Xerox needed one desperately. It got it, thanks to Mulcahy and Burns, and it looks to be in good hands going forward.

Related:

• CEO succession — successes and failures.

~ ~ ~

>> When the going gets tough, the really tough grow market share. — Cisco has talked openly about its ambitions to “move with a speed nobody has ever attempted” into dozens of new areas. This piece from The Register talks about the networking giant’s grand design, which is founded in its existing expertise in moving huge amounts of data traffic across wired and wireless networks.

Mostly, I just love Cisco’s chutzpah. It could sit on its laurels, quietly dominating one or more areas of networking. Instead, it’s taking advantage of (a) the market downturn, (b) its own technical prowess, and (c) a monstrous pile of cash to elbow aside competitors in areas likely to grow rapidly for years to come.

Pulling it off will take some doing — but if any company is likely to do it, it’s Cisco.

Related:

• Disorganization Negates Talent.

~

Photo by Brendon, used under a Creative Commons license.