Posted by Mark Brousseau
Out of control? When it comes to management, “Out of Control” is a compliment. Siamak Farah, director and CEO of InfoStreet (www.infostreet.com) explains:
It may seem counter-intuitive, but the more you control, the less you will succeed. In other words, unless you let go, you won’t grow.
Especially in small business environments, there is a general feeling that if management does not keep it all in check, the business will fall apart. For a moment, let’s assume that this theory is true. By this definition, the more management controls, the better work gets done.
Expanding further, it then behooves us to give management control of everything to ensure it is done the best it can be done. Now, we have just bound the growth of the company to the availability of management. Since the hours of the day are limited, the growth of the company is now limited. Therein lies the fundamental flaw in “control by management”.
If management liberates itself from control it can then be free to think of larger plans. After all, presumably the reason you are in a management position is that you have experience.
Experience can not only create competitive advantages, but it can also avoid costly mistakes. In business, as in sports, wins often come from not making mistakes. Yet, when in the trenches, even the most experienced can make mistakes since they are not sufficiently removed from the process to clearly see the obstacles. This is precisely why even the best players in the world have coaches.
Be a Coach, Not a Player
Throughout our business lives, we have all heard the advice: “delegate, delegate, delegate”. But often this great advice is shrugged off with “I wish I could”, “Don’t have the talent”, “We are under-resourced”, “It’s too risky at our size”, and similar rationalization. Yet, the truth is that by delegation you will get more done with better quality, have a happier team, and the quality of your business and your business life will increase at least ten-fold.
Some are fortunate enough that they can afford great talent, therefore delegation seems like a no-brainer. However, delegation is an acquired skill for most. Those who don’t have it will try to micromanage even the best talent, rendering it virtually ineffective.
On the other hand, some may overcompensate for previous micromanagement and completely wash their hands off of the tasks at hand. That, in the words of my friend Allen Hargreaves, is abdication and not delegation.
Delegation is about letting the person closest to the problem solve the problem, and you, the management, being there in support of them, not to monitor them. You have to be there, side-by-side and close enough to share your experience, but far enough that the work is done by the delegatee and they receive ALL the credit for it.
Developing Delegatees
A great psychiatrist friend of mine once told me that counseling is ineffective. It amounts to giving advice, in one ear and out the other. By contrast, with therapy, the psychiatrists often know the answers, but never share it with the patient. They just ask questions leading the patient down the path so they themselves can reach the right conclusions. That experience will never be forgotten, and thereafter, the patient will always take the right steps.
Management coaching should also be very similar to the therapy approach. Using this model, you can empower the best talent to be better. You can also take even the least experienced, and turn them into the most valuable team members. This approach can allow you to hire out of college, and in no time compete very effectively with those who are paying much higher salaries.
Control has its place
As you may have seen in my other posts, patience is running thin in today’s work environment. Impatient people are often short with others, especially with those that are in the learning phase, or simply did not see a problem the way others viewed it.
This is where control has its value. Regardless of how frustrated, outraged, or peeved you are, you need to be in control of your emotions. This is even more important for leaders who are coaching, teaching, and sharing their experience on a daily basis.
Remember the rule on controlling emotions: In any given exchange, regardless of the position one holds, the one who loses their temper has lost. The damage might seem temporary, but I can assure you it is not.
People often don’t remember details of events, but they do remember how they felt at the event. Therefore an event in which you have shown frustration – or worse yet, anger – will be forever be remembered in a negative light, diminishing your value as a leader or a team player.
Manage Processes Not People
In the 1930s, when talking about black empowerment, Marian Andreson was credited with a quote which truly applies to today’s business environment. She said:
“As long as you keep a person down,
some part of you has to be down there to hold him down,
so it means that you cannot soar as you otherwise might.”
So let go of controlling people today, and focus on creating processes, strategies, and competitive advantages. When you create processes, people can follow them with minimal guidance. As a result, you get controlled quality without having to control people.
This is the formula for growth. Let go, so you can grow.
What do you think?
Thursday, March 18, 2010
What Every Business Can Learn from Toyota
Posted by Mark Brousseau
Toyota is having a very bad year. In a matter of months, its once sparkling reputation for quality and dependability and its status as a respected leader in the auto industry were zapped. Replacing those accolades were a recall of over eight million automobiles, over 60 class action lawsuits filed against the company, and company president Akio Toyoda admitting that the company may have grown too quickly. What can every business—small or large, privately or publicly owned—learn from Toyota's problems? The answer is simple says author Ed Hess: If you aren't careful, you can grow your company to death.
"Bigger is not always better," says Hess, a professor at the University of Virginia's Darden Graduate School of Business and author of the new book Smart Growth: Building an Enduring Business by Managing the Risks of Growth. "For decades, growth has been a determining factor for success—but the truth is growth can be bad. It can create serious business risks that if not properly managed can dilute a company's brand and destroy its value."
In his new book, Hess provides advice that Toyota executives could have used. In it, he debunks the three big myths about business growth:
Myth 1: All growth is good.
Myth 2: Bigger is always better.
Myth 3: All companies must "grow or die."
He replaces those myths with the "3 Ps" for proper growth:
1: Plan for growth.
2: Prioritize the processes and controls needed to accommodate the growth.
3: Pace growth so as not to outstrip capabilities, processes, and controls.
"Contrary to popular opinion, there is no scientific or business basis for the belief that growth is always good," says Hess. "Clearly, it isn't. That belief is actually one that is perpetuated by Wall Street. Shareholders demand short-term growth, so that's what companies deliver, even if what they're doing is unsustainable in the long term.
"My research shows that too much growth can stress a business's culture, controls, processes, and people, eventually destroying its value and even leading the company to 'grow and die,'" he adds.
In Toyota's case, it made a major strategy change in 2002 when it set out to be the largest automobile sales company. To accomplish that goal quickly, it had to open new plants globally, hire many new employees, expand its outsourcing suppliers, and design its automobiles for faster, cheaper production. The result? The quality of Toyota products began to decline.
"Not only did Toyota products suffer, but its ability to fix those problems suffered," says Hess. "We see just how true that is through the conflicting reports from company executives over what exactly is causing the gas pedal problems and reports indicating communication issues between Japan and its U.S. and European operations. Bottom line: The company outgrew its quality controls and diluted its processes for effectively responding to customer complaints. "Regardless of size, companies should assess the risks of growth using a Growth Risks Audit found in my new book prior to undertaking a major growth initiative and to develop a plan to manage those risks," he adds. "Since managing risks requires a completely different mindset from managing growth, companies need to devise early warning systems to alert them to potential problems."
With Toyota, the cumulative effect of lots of small changes added together to create big consequences. In the heat of growth and in the heat of the battle to be Number 1, no one was able to "pull the cord and stop the Toyota line." Being the biggest is a different goal from being the best in quality and dependability. When conflicts between speed, growth, and quality arise, no one wins in a "be the biggest" environment.
Hess suggests that large public companies like Toyota could learn a few lessons about growth from the private companies he has researched. He recently conducted a study of 54 high-growth private companies located in 23 different states. Through it, he found that CEOs with prior high-growth experiences acquired a healthy respect for the risks of growth and espoused the (ironically named) "gas pedal" approach to growth—letting up on the growth pedal to allow processes, controls, and people to catch up. They learned that a business, like an engine, can run at a red-line pace for only so long.
"Many businesses strive for continuous high growth," says Hess. "Unfortunately, the research shows that sustained high growth is the exception, not the rule. Fewer than 10 percent of public companies are able to grow above industry or GDP averages for five years or more."
The moral of the story? Be realistic about growth—and understand that it is a complex change process dependent on human behavior.
"Humans, like markets, are not efficient or rational actors all the time," says Hess. "Growth can be good and it can be bad. You can increase the probability of a good outcome if you assess the risks of growth and proactively manage those risks simultaneously as you grow. Grow for the right reasons and grow smart."
What do you think?
Toyota is having a very bad year. In a matter of months, its once sparkling reputation for quality and dependability and its status as a respected leader in the auto industry were zapped. Replacing those accolades were a recall of over eight million automobiles, over 60 class action lawsuits filed against the company, and company president Akio Toyoda admitting that the company may have grown too quickly. What can every business—small or large, privately or publicly owned—learn from Toyota's problems? The answer is simple says author Ed Hess: If you aren't careful, you can grow your company to death.
"Bigger is not always better," says Hess, a professor at the University of Virginia's Darden Graduate School of Business and author of the new book Smart Growth: Building an Enduring Business by Managing the Risks of Growth. "For decades, growth has been a determining factor for success—but the truth is growth can be bad. It can create serious business risks that if not properly managed can dilute a company's brand and destroy its value."
In his new book, Hess provides advice that Toyota executives could have used. In it, he debunks the three big myths about business growth:
Myth 1: All growth is good.
Myth 2: Bigger is always better.
Myth 3: All companies must "grow or die."
He replaces those myths with the "3 Ps" for proper growth:
1: Plan for growth.
2: Prioritize the processes and controls needed to accommodate the growth.
3: Pace growth so as not to outstrip capabilities, processes, and controls.
"Contrary to popular opinion, there is no scientific or business basis for the belief that growth is always good," says Hess. "Clearly, it isn't. That belief is actually one that is perpetuated by Wall Street. Shareholders demand short-term growth, so that's what companies deliver, even if what they're doing is unsustainable in the long term.
"My research shows that too much growth can stress a business's culture, controls, processes, and people, eventually destroying its value and even leading the company to 'grow and die,'" he adds.
In Toyota's case, it made a major strategy change in 2002 when it set out to be the largest automobile sales company. To accomplish that goal quickly, it had to open new plants globally, hire many new employees, expand its outsourcing suppliers, and design its automobiles for faster, cheaper production. The result? The quality of Toyota products began to decline.
"Not only did Toyota products suffer, but its ability to fix those problems suffered," says Hess. "We see just how true that is through the conflicting reports from company executives over what exactly is causing the gas pedal problems and reports indicating communication issues between Japan and its U.S. and European operations. Bottom line: The company outgrew its quality controls and diluted its processes for effectively responding to customer complaints. "Regardless of size, companies should assess the risks of growth using a Growth Risks Audit found in my new book prior to undertaking a major growth initiative and to develop a plan to manage those risks," he adds. "Since managing risks requires a completely different mindset from managing growth, companies need to devise early warning systems to alert them to potential problems."
With Toyota, the cumulative effect of lots of small changes added together to create big consequences. In the heat of growth and in the heat of the battle to be Number 1, no one was able to "pull the cord and stop the Toyota line." Being the biggest is a different goal from being the best in quality and dependability. When conflicts between speed, growth, and quality arise, no one wins in a "be the biggest" environment.
Hess suggests that large public companies like Toyota could learn a few lessons about growth from the private companies he has researched. He recently conducted a study of 54 high-growth private companies located in 23 different states. Through it, he found that CEOs with prior high-growth experiences acquired a healthy respect for the risks of growth and espoused the (ironically named) "gas pedal" approach to growth—letting up on the growth pedal to allow processes, controls, and people to catch up. They learned that a business, like an engine, can run at a red-line pace for only so long.
"Many businesses strive for continuous high growth," says Hess. "Unfortunately, the research shows that sustained high growth is the exception, not the rule. Fewer than 10 percent of public companies are able to grow above industry or GDP averages for five years or more."
The moral of the story? Be realistic about growth—and understand that it is a complex change process dependent on human behavior.
"Humans, like markets, are not efficient or rational actors all the time," says Hess. "Growth can be good and it can be bad. You can increase the probability of a good outcome if you assess the risks of growth and proactively manage those risks simultaneously as you grow. Grow for the right reasons and grow smart."
What do you think?
Tuesday, March 16, 2010
The 6 Levels of Customer Engagement
Posted by Mark Brousseau
Is your company a great innovator? It's a tricky question. If you interrogate your sales team a couple of times a year, then bombard the marketplace with new "solutions" to customer problems, you might assume the answer is yes. After all, you are giving your company's product developers a real workout. But if you're merely practicing the R&D equivalent of what the military calls "spray and pray," you're wasting time and money. (Can you afford either right now?) According to product development guru Dan Adams, the true litmus test is customer engagement.
"Too many companies fail to factor the customer into their innovation efforts," says Dan Adams, the author of New Product Blueprinting: The Handbook for B2B Organic Growth. "Oh, they may half-heartedly solicit customer input—in a 'You do need this product, right?' kind of way—but they don't really listen to it. They don't let customers drive the process. And that's too bad, because if they don't engage customers directly, aggressively, and objectively, they're going to get sluggish results."
Adams cites a massive study, "The Global Innovation 1000," undertaken by Booz Allen Hamilton. Through it, they studied 84 percent of the planet's corporate R&D spending. The researchers identified several distinct innovation strategies, but uncovered one universal factor that led to success: "Companies that directly engage their customers had superior results regardless of innovation strategy."
And not just a little bit superior, notes Adams. A lot superior. Those companies that used direct customer engagement while innovating—vs. indirect customer insight—enjoyed the following financial gains:
1) Profit Growth: Operating income growth rate that was three times higher.
2) Shareholder Return: Total shareholder return that was 65 percent higher.
3) Return on Assets: Return on assets that was two times higher.
So what do you do with this information? For starters, says Adams, if you're in a conversation about your company's innovation and nobody's talking about the customer, realize something might be very wrong.
"To put it in terms of this study, your company might be practicing 'indirect customer insight' instead of 'direct customer engagement,'" he explains. "This is a kind way of saying, 'We've lost track of who our innovation is supposed to help.'"
Adams says he's spent the better part of a decade helping B2B suppliers engage their customers in the innovation process. During this time he's observed six distinct levels of customer engagement during product development:
Level 1: The Conference Roomers: If you're innovating at the lowest level, you decide what customers want around your conference room table. Internal opinions determine the design of your next new product. As you might guess, this isn't very effective.
Level 2: The Expert Askers: At the next level, you poll your sales force, tech service dept., and other internal experts to determine customer needs. This is better than Level 1—because more voices are heard—but still too "internal."
Level 3: The Customer Surveyors: Companies at this level use surveys and polls to ask customers what they want. This begins to shake out internal biases... but doesn't deliver much in the way of deep insight.
Level 4: The Qualitative VOC-ers: If you're at this level, you send out interview teams that meet with customers to learn what they want. This is a quantum leap from VOO (voice of ourselves) to VOC (voice of the customer).
Level 5: The Quantitative VOC-ers: The problem with just qualitative VOC is that people hear what they want to hear. Companies that move beyond it to Level 5 get far more objective customer input. Yes, quantitative feedback drives out assumptions, bias, and wishful thinking.
Level 6: The B2B VOC-ers: Companies at this level really, truly get it. They know that unlike end-consumers, B2B customers are knowledgeable, rational, and interested. B2B-optimized interview methodology fully engages them to take advantage of this reality.
What do you think?
Is your company a great innovator? It's a tricky question. If you interrogate your sales team a couple of times a year, then bombard the marketplace with new "solutions" to customer problems, you might assume the answer is yes. After all, you are giving your company's product developers a real workout. But if you're merely practicing the R&D equivalent of what the military calls "spray and pray," you're wasting time and money. (Can you afford either right now?) According to product development guru Dan Adams, the true litmus test is customer engagement.
"Too many companies fail to factor the customer into their innovation efforts," says Dan Adams, the author of New Product Blueprinting: The Handbook for B2B Organic Growth. "Oh, they may half-heartedly solicit customer input—in a 'You do need this product, right?' kind of way—but they don't really listen to it. They don't let customers drive the process. And that's too bad, because if they don't engage customers directly, aggressively, and objectively, they're going to get sluggish results."
Adams cites a massive study, "The Global Innovation 1000," undertaken by Booz Allen Hamilton. Through it, they studied 84 percent of the planet's corporate R&D spending. The researchers identified several distinct innovation strategies, but uncovered one universal factor that led to success: "Companies that directly engage their customers had superior results regardless of innovation strategy."
And not just a little bit superior, notes Adams. A lot superior. Those companies that used direct customer engagement while innovating—vs. indirect customer insight—enjoyed the following financial gains:
1) Profit Growth: Operating income growth rate that was three times higher.
2) Shareholder Return: Total shareholder return that was 65 percent higher.
3) Return on Assets: Return on assets that was two times higher.
So what do you do with this information? For starters, says Adams, if you're in a conversation about your company's innovation and nobody's talking about the customer, realize something might be very wrong.
"To put it in terms of this study, your company might be practicing 'indirect customer insight' instead of 'direct customer engagement,'" he explains. "This is a kind way of saying, 'We've lost track of who our innovation is supposed to help.'"
Adams says he's spent the better part of a decade helping B2B suppliers engage their customers in the innovation process. During this time he's observed six distinct levels of customer engagement during product development:
Level 1: The Conference Roomers: If you're innovating at the lowest level, you decide what customers want around your conference room table. Internal opinions determine the design of your next new product. As you might guess, this isn't very effective.
Level 2: The Expert Askers: At the next level, you poll your sales force, tech service dept., and other internal experts to determine customer needs. This is better than Level 1—because more voices are heard—but still too "internal."
Level 3: The Customer Surveyors: Companies at this level use surveys and polls to ask customers what they want. This begins to shake out internal biases... but doesn't deliver much in the way of deep insight.
Level 4: The Qualitative VOC-ers: If you're at this level, you send out interview teams that meet with customers to learn what they want. This is a quantum leap from VOO (voice of ourselves) to VOC (voice of the customer).
Level 5: The Quantitative VOC-ers: The problem with just qualitative VOC is that people hear what they want to hear. Companies that move beyond it to Level 5 get far more objective customer input. Yes, quantitative feedback drives out assumptions, bias, and wishful thinking.
Level 6: The B2B VOC-ers: Companies at this level really, truly get it. They know that unlike end-consumers, B2B customers are knowledgeable, rational, and interested. B2B-optimized interview methodology fully engages them to take advantage of this reality.
What do you think?
Subscribe to:
Posts (Atom)
