Huge Horizon-vs-DeepThinkers

Doing the right thing-v-Doing things right

Yesterday I wrote a post about top-down versus bottom-up thinking. There is a corollary to that advice, which is “doing the right things is more important than doing things right.”  Sounds simple but in practice I promise you most organization fall into the latter trap.

Here’s how it goes:

You have a business development group with two people.  They are tasked with “getting deals done” so they race around talking to tons of potential partners inking anything from channel sales deals, product integration, international distribution agreements, co-marketing arrangements, M&A discussions, etc.  You can often measure how many deals were achieved but there often doesn’t flow a steady stream of revenues / profits from these deals.

You have a marketing department with three people.  They’re tasked with doing … marketing.  So they create a task list of all the marketing activities an organization can do: press releases, web site updates, customer case studies, blog posts, daily Tweets, Facebook fan page, attending conferences, etc.  You get a lot of traffic – not always results.

When you hire people in functional roles they want to show that they’re achieving results and results are easiest to measure by tasks accomplished.  But many CEO’s and management teams fail to set clear guidelines on what the company objectives are and make sure that everybody is driving toward the same goal.  It’s actually quite hard to lay out an annual company strategy that is articulate and underpinned by facts. So many CEO’s just carry on being … CEO’s –>  fund raise, get media attention, attend conferences, hire staff, “set direction”, whatever.  But this leads to organizational drift because staff will continue to produce “work.”

 

 Let me give you an example.  Let’s say you have a marketing department with an incredibly talented leader who knows SEO, SEM, social media and how to hit the cover off the ball on press coverage.  So you generate a ton of traffic to your website.  If the traffic is unfocused you actually can be doing a disservice to your company rather than a benefit.  Your sales department has to have somebody has do deal with these inbound inquiries.  If the people who wind up at your site are not high quality leads, you either piss people off by not responding to them or you respond and burn up your critical resources trying to be helpful to people who are not likely to convert to become customers.

It’s why I’ve often start when running marketing campaigns the most simple of questions:

- with whom are we trying to communicate?
- what messages are we wanting them to receive?
- what is the best channel to reach these people?
- if they receive our message what actions (if any) are we hoping for?
- how will we handle those responses

And the reality is that you might be better off doing less activity but doing “the right” activities really well.  To do the right activities you need to start with a top down assessment with what you’re trying to achieve with your marketing.

 

Similar with product features.  One of the most important movements in software design in the past few years has been a return to simplicity – a move away from the Microsoft era of every release adding a new 150 unused features.  One of my favorite sayings in this area comes from a portfolio company, RingRevenue, who like to say “ease of use = use and use = revenue.” I love that saying.  If you don’t know WHY you’re adding features don’t do it just because you have a development team.  Better that they work on new initiatives, performance improvements, operational features to help internal management or anything other than just cranking out features for the sake of it.

But the counter case is equally ineffective.  You sometimes find CEO’s who want press coverage, want to speak on important panels or want features that their competitors offer without knowing whether their customers care about these features.  So they direct staff to meet these objectives without considering what the purpose of activity is and what the end result will be. People will certainly follow orders and do the things you ask of them.

Smart people produce high quality work.  As management your job is to make sure that everybody understands how their initiatives tie into the overall company strategy.  Do the hard work and try to define your company’s objectives and get them on paper.  Everybody should be able to answer the question, “why am I doing this?”  Otherwise they’re likely to be doing things right, but not the right things.

Thanks Mark Suster!

 

Top Down-v-Bottom Up Thinking

 

For the first 5 years of my career I was a “bottom up” thinker and worker.  I assembled tons of data, grouped things, found results and drew conclusions.  It was difficult to make the transition to a “top down” thinker but as a senior executive – and as an entrepreneur – you’re far less effective without this skill in your arsenal.  You need to be able to structure problems / solutions at the appropriate level to communicate effective and drive decision-making. The difference is in formulating hypothesis then testing conclusions / data vs. assembling data and finding patterns.  I know it might sound a bit esoteric so let me explain:

I started my career as a programmer.  We did big, boring but necessary implementations for large companies.  I started by doing billing systems. In billing we literally started thinking about all of the types of bills that would be generated for customers: full payment, partial payment, split payment, senior discount, student discount, level pay plan, etc.  We then made groupings of the common features of each piece of logic so we could figure out what “shared services” we could build so that we could have reusable code.  This is bottom-up planning.  It is useful in many situations and was useful to me in this situation. I next moved into system design where I designed computer systems to deal with large industrial natural gas customers and telecommunication companies.  I had to understand their business requirements and document them all.  I had to understand all of the normal business rules as well as all “edge cases.”  Again, I grouped them into related functions and then designed systems to handle the rules. I spent the first 5 years of my career as a “bottom up thinker.”  It was appropriate for my job and stage of career. Post MBA I went into strategy consulting where my job was to problem solve for clients.  Often I had a very limited time.  Clients wanted to see “preliminary findings” in 4-5 weeks and final results in 8-10.  This is a problem for a strategy consultant because you are, by definition, a generalist that is thrown into new problems again and again.  I struggled on my first few assignments.  It took too long for me to get around to speak to every departement, get data, assemble it, analyze the data to formulate conclusions and then communicate it to executive staff.

The wisest mentor I ever had was Ameet Shah, my partner on several projects.  He taught me much that I know about critical thinking.  He coached me that I had to start with the answers.  WTF?  How can I START with the answers?  How can that be effective?  ”Well, we know the basic structure of the problem we’re trying to solve and we have hypotheses about what some of the answers will be based on our experience.  You need to put this all down into a structured diagram from the first week with the answers that tie to the logic of the problem we’re trying to solve.” Heresy. But he had more insight, “once we know the structure of the problem and our solution we can plan the data that proves or disproves our theories.  The key is not to be wedded to our original answer.  But by problem solving in a ‘top down’ manner we can be much more focused about what data we collect.  We can also begin to socialize our answers with people in the company to get their reactions.  That alone will help us solve the problems.” It was very difficult to get used to it because I didn’t think I had it within me to do this kind of top-down structured thinking.  I bought the most popular book on the topic, “The Mind of the Strategist” by Kenichi Ohmae, who is ex McKinsey.  I found this book very useful but still a little bit hard to implement.  I’m glad I read it though.

 

I later took a course with Barbara Minto (who taught McKinsey people) and bought her book “The Pyramid Principle.”  This was a breakthrough for me.  It is about structuring your thoughts, presentations and communications.  You group items into component parts in a top-down manner.  The book is expensive but for me personally this helped me enormously.  This and frankly a lot of practice. But I approach problems in a different way now.  I start with answers and structure what I think the organization of the problem is.  I then try out my solutions by interviewing people to “prove or disprove” my conclusions.  I’m never right the first time so I spend time adjusting my frameworks.  And if data is required then I apply actual data to my conclusions.  The process is bankrupt if you simply tweak the data to support your hypotheses. But applied correctly and this is golden. I often go into meetings with portfolio companies with a structure worked out of what I believe the critical issues are.  I structure it top down so we don’t get bogged down in the details that are irrelevant.  To give you an example it might go something like this, here is a made up situation that a portfolio company might face:

-          We currently sell through channels.

-          We’re the market leader in signing up our channel partners.

-          But not enough volume of business is yet going through the channels.

-          Our three options are: spend more time helping the channel sell, spend more time with customers bringing them into our channel partners or sell direct.

-          My guess is that we aren’t prepared to sell direct because that would require a broader team and more capabilities than we have.  So the real question is – do we spend more of our time and limited resources helping our channel or educating and marketing to their customers.

-          On a less critical path we should evaluate the capabilities required to serve customers directly if we ever needed to and know what the channel’s response would be.

If I framed the issue incorrectly I haven’t done my job.  If it requires minor tweaks we change the discussion on the fly.  But we have the roadmap for our discussion and don’t have to wander on the back roads of unstructured conversations.  I needed no data for this discussion.  It is at the appropriate level.  It drives the conversation to what matters. I know it sounds exceedingly easy.  It’s not.  And few people in my experience do this well so many board meetings wander. I challenge you to consider whether you’re top-down or bottom up.  In analysis there are always circumstances for each approach.  But in leadership and entrepreneurism the top-down approach will be the right solution more often than not.

Thanks Mark Suster!

What Toyota Got Right

As we all know, Toyota is a very visible company, a company known around the world for making quality products priced for almost any budget. Toyota’s approach to building quality automobiles has changed very little in the past sixty years; quality only comes second to safety, compare that to the disgusting reputation of what used to be known as ‘The Big Three’. However, the process of assembling automobiles has changed significantly in those sixty years. Way back in the day, car companies used to build their product on their assembly lines from the firewall to the finished product. Today, the process of putting a car together involves building a family of support companies that manufacture the many parts of a car, to the car company’s specifications. Most automakers depend on a large pool of Tier 1 and Tier 2 suppliers for many components that the car companies assemble in their plants. In this regard, Toyota is no different. So, for the assembly of a Toyota vehicle, Toyota depends on their suppliers to provide high quality and safety critical products to Toyota plants that are manufactured to the high standards of the Toyota Quality System.

So, with Toyota’s high profile safety and quality issues still fresh in many people’s minds, let’s do this one differently, let’s consider the things that Toyota got right:

 

•  From day one, Toyota got right out in front of the quality issues. Understanding ‘where there’s smoke, there’s probably fire’. At a time when a company is under fire for anything specific to safety and quality, it’s time to stand up- and stand tall. If there’s accountability to consider, then accept it and move forward. Toyota problem solved immediately so that the consumer could know that current product being released to the markets met all specifications. Toyota stayed visible, talked to their markets, letting them know that the issues were at least as important to Toyota as to their customers. Toyota began releasing regular press notices and recall notices in order to shore up consumer confidence.
• Toyota went straight to the source. Tier 1 and two Tier 2 suppliers are expected to meet Toyota’s high quality standards for every part manufactured, and every system assembled. For everything that these suppliers do, there is a policy and procedure in place. However, procedure sometimes is not followed; policy gets forgotten and when that happens there should be accountability. For a company that has set the bar worldwide for safety and quality, and is the model for so many companies for lean manufacturing and value stream management, Toyota has left no doubt with any of their tiered suppliers that there are no exceptions to the expected quality of safety-critical part.
• Toyota didn’t lower the bar for quality or safety, and in an act of true class, Toyota didn’t do any finger-pointing, but they did do a lot of problem solving. If a car has a Toyota badge, and that car is proven to be unsafe in any way, Toyota issues recall notices immediately, problem-solves their processes specific to the issue, and accepts complete responsibility and issues accountability where it belongs.

It’s not often that the rest of the automobile industry gets to take shots at Toyota. In truth, all manufactures have their issues and their crosses to bear. The best thing to come out of this was that Toyota’s management got a wakeup call. From time to time people tend to get slack, make too many assumptions that everything is always going well. The “Toyota Way” teaches about observing the value stream, getting out from behind the desk (go see) and looking for what can go wrong. You can bet that for Toyota its back to the basics, back to doing the things that propelled them to being the best car builder in the world.

 

Why Simple Works

I was spending some time in the “war room” yesterday, this is the central hub for Echelon, gosh was I surprised! Several things hit me; just look at how far we’ve come in 2 short years and listen…you can hear the voices, but not the equipment(more on that in a minute)—so let’s run this down.

In just 2 short years, Echelon’s gone from a casual conversation between my wife and I, to a company that has gone global. Echelon Value Consulting LLC was created with this mantra: “If you can see it in your mind, and you believe it in your heart, then do it with your hands”. It is my goal to make Echelon the most effective, value added consulting group anywhere. Our teams’ collective experience is over a hundred years of value added activities that are aimed at making our clients more financially fit. Ok, the commercial is over, let’s talk about the equipment I mentioned earlier.

Echelon Value is a paperless company, well almost. All of our information that other companies would print and put in a file folder, we mange electronically. So, what you won’t hear in the “war room” are printers, what you will hear are shredders. We scan every document into an electronic file and then shred it. We have continuous backup systems running and maintain an electronic master copy offsite.  I never “heard” the phone ring once, but hold on a minute. Most of the distance communication we have with our clients is voip, that is that we have our conversation and we can see each other. Also, we can file share with them, use an electronic dry erase board and our distance conversation has significantly more value. Wow, sounds complicated, but it’s not-but it is change. Change from the days when companies had 10 people working in accounting, a receptionist out front, managers for other managers that had managers, 39 four drawer file cabinets, more printers than trash cans, and someone on payroll just to manage the 39 four drawer file cabinets-oh and a manager for the person working the cabinets. Understand, there is NO VALUE in that, none. We can accomplish the tasks of 60 people…..ready?…..with 5 people.

But, why wouldn’t we be good at this, after all—it’s what we teach. The days of having a front office loaded down with non-value added people are gone. If you still do it, you are way behind the curve, and more importantly, your company is throwing money away. Assess your condition, use the data that a loss of effectiveness index will give you and make the transition. Once you’ve done that, use the extra people, don’t lose them. Start a new line in the factory; add a new product, or start a new value added project. This isn’t about throwing people out of the workplace, it’s about being more efficient, being more effective and adding value to you company and your customers.

Change Management, Day Three

Planning, implementing and managing change in a fast-changing environment is increasingly the situation in which most organizations now work.

Dynamic environments such as these require dynamic processes, people, systems and culture, especially for managing change successfully, notably effectively optimising organizational response to market opportunities and threats.

Key elements for success:

• Plan long-term broadly - a sound strategic vision, not a specific detailed plan (the latter is impossible to predict reliably). Detailed five years plans are out of date two weeks after they are written. Focus on detail for establishing and measuring delivery of immediate actions, not medium-to-long-term plans.
• Establish forums and communicating methods to enable immediate review and decision-making. Participation of interested people is essential. This enables their input to be gained, their approval and commitment to be secured, and automatically takes care of communicating the actions and expectations.
• Empower people to make decisions at a local operating level - delegate responsibility and power as much as possible (or at least encourage people to make recommendations which can be quickly approved).
• Remove (as far as is possible) from strategic change and approval processes and teams (or circumvent) any ultra-cautious, ultra-autocratic or compulsively-interfering executives. Autocracy and interference are the biggest obstacles to establishing a successful and sustainable dynamic culture and capability.
• Encourage, enable and develop capable people to be active in other areas of the organization via 'virtual teams' and 'matrix management'.
• Scrutinise and optimise ICT (information and communications technology) systems to enable effective information management and key activity team-working.
• Use workshops as a vehicle to review priorities, agree broad medium-to-long-term vision and aims, and to agree short term action plans and implementation method and accountabilities.
• Adjust recruitment, training and development to accelerate the development of people who contribute positively to a culture of empowered dynamism.

© alan chapman 2005-2010

Change Management, Day Two

change management principles

1. At all times involve and agree support from people within system (system = environment, processes, culture, relationships, behaviours, etc., whether personal or organisational).
2. Understand where you/the organisation is at the moment.
3. Understand where you want to be, when, why, and what the measures will be for having got there.
4. Plan development towards above No.3 in appropriate achievable measurable stages.
5. Communicate, involve, enable and facilitate involvement from people, as early and openly and as fully as is possible.

Be wary of expressions like 'mindset change', and 'changing people's mindsets' or 'changing attitudes', because this language often indicates a tendency towards imposed or enforced change (theory x), and it implies strongly that the organization believes that its people currently have the 'wrong' mindset, which is never, ever, the case. If people are not approaching their tasks or the organization effectively, then the organization has the wrong mindset, not the people. Change such as new structures, policies, targets, acquisitions, disposals, re-locations, etc., all create new systems and environments, which need to be explained to people as early as possible, so that people's involvement in validating and refining the changes themselves can be obtained.

Whenever an organization imposes new things on people there will be difficulties. Participation, involvement and open, early, full communication are the important factors.

Workshops are very useful processes to develop collective understanding, approaches, policies, methods, systems, ideas, etc. See the section on workshops on the website.

Staff surveys are a helpful way to repair damage and mistrust among staff - provided you allow allow people to complete them anonymously, and provided you publish and act on the findings.

Management training, empathy and facilitative capability are priority areas - managers are crucial to the change process - they must enable and facilitate, not merely convey and implement policy from above, which does not work.

You cannot impose change - people and teams need to be empowered to find their own solutions and responses, with facilitation and support from managers, and tolerance and compassion from the leaders and executives. Management and leadership style and behaviour are more important than clever process and policy. Employees need to be able to trust the organization.

The leader must agree and work with these ideas, or change is likely to be very painful, and the best people will be lost in the process.

Watch for day three of Change Management

Thanx DeepThinkers 

& © alan chapman 2005-2010

The Echelon Value Office

Some time ago I challenged my Deep Thinkers to release a short blog highlighting some of the things that they do for Echelon and our clients. Their counter- challenge for me, to short blog on the Echelon Value office. The “Value Office” is a truly different operational office environment that most of our clients have never been exposed to, so here goes.

First, understand that almost everything that happens in the “front office” is non-value added. Companies spend about 20% of their operating budget on the “front office”. And, also understand we’re not just talking about people and their compensation packages; think about the non-value added cost of paper, printers, shredders, toner, furniture and the cost of maintaining the property. There is the cost of time, time to print, time to talk on the phone, time to set up meetings and with a heavy manned front office, there are a lot of meeting. None of this is value added, so that means its waste-right?

As any focused business owner should know, there is a difference in an expense and an investment. Financial software can handle AP, AR, invoicing, quoting, company P&L reconciling and you can even set up some customized applications to fit your business = 1 person. Messaging, handling social media updates, scheduling and departmental interfacing (ex. production to engineering) = 1 person. Handle incoming mail (snail and electronic), scan snail mail into the correct files and shred, answer incoming calls and forward messages via speech to text in real time = 1 person. Does your company really need a person sitting in a fancy reception area greeting people when the person that they are supposed to meet can meet them there? And why did someone travel to your company when they should have scheduled a meeting online and saved your employee some time. I could go on, but you get the idea. How huge would some of these changes be for your company? Not just in the business of running the business, but in the amount of money that would be saved (value)? There is the one time investment of software and training and there is the continuing expense of a non-value added Front Office. How you spend your money is key to how valuable your company is.

Words Matter

It’s true, I mean just think about it. The words we use to deliver a message really determine the effectiveness of the message. If you know that you’re going to have a conversation with someone that is quite and somewhat reserved, you need to understand that they are listening, probably better than you realize. The key to having a value-added conversation with someone is understanding that what you say is just as important as how you say it. And, one of the best ways to know for certain that you’ve effectively delivered a message is to ask a question or two about the subject. Example, “Did I explain the initiative completely?” or “Do you have any questions that I can answer about that?”

So, words do matter. Try to watch for body language clues, and be careful about the body signals you send. Most people feel threatened, or feel as if you’re in their space if you lean forward, brow furrowed. Also, when people feel comfortable around you, making a statement or delivering a message is much easier. So, look for listening cues; one hand on the chin, direct eye contact and asking questions. If they’re asking questions, they’re truly engaged in the conversation, and that’s VALUE!