Reading

I read nearly non-stop, easily a book every week or so. The summer is usually spent with novels on the deck in the evening, but this summer I'm re-reading business books that I liked well enough the first time to keep. It started with an overhaul of the family room in the basement and a total re-do of my home office. Both required that nearly every book in the house be sorted through and either gotten rid of or saved. As I was doing the sorting I came across a few treasures.

First, if you haven't read Steven Covey's The Seven Habits of Highly Effective People, read it. Better yet, read it twice - once through from beginning to end, and the second time through work the exercises. My copy is old, somewhat tattered, is full of sticky notes, and has a lot of writing in the margins. Unlike a lot of the fluff out there on personal development, this isn't about an easy fix. It changed my outlook and helped me to recognize my true priorities. It will affect both your personal and professional lives.

Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant by Renee Mauborgne and W. Chan Kim is another one. I read it the first time a couple of years ago, and I just finished re-reading it for the third time. In a nut shell, and without using a bunch of business terms like "value innovation", it's about how companies have defined something unique to offer to differentiate themselves from the market. What I found most interesting was tht in each case it wasn't about a new thing-a-majiggy but about offering customers what really need, and positioning utility, price, and cost. Some people that I've talked to have said that they thought it was over simplified, but I whole heartedly disagree. By keeping to the basics they've made it accessible, clear, and elegant. If you're in sales, even if you're not in a position to change corporate direction, read it with a point of view of what you as an individual have to offer that separates you from the masses. While I'm thinking about it, it could also be a unique approach for a job seeker. My daughter is in college studying business and marketing - I've made a note to get her a copy. I've also given one to a friend who is the owner of a company I used to work for.

Another oldie but goodie is The Goal: A Process of Ongoing Improvement by Eliyahu Goldratt that is about the easiest to read business book out there. Written as a story with lessons along the way, it focuses on a struggling manufacturing manager who's about to lose his plant. Along the way we learn about the Theory of Contraints, which has become one of the primary principals in manufacturing along with lean and six sigma. It's about identifying and fixing the bottle necks. If you're not in manufacturing, don't think that you don't need to read it. You do. Bottle necks don't just happen on the plant floor - they happen in the sales office, in accounting, in management, and in the warehouse.

I've just started reading The Tipping Point for the first time, after which I think I need to go back to a novel and relax or summer will be over before I know it. I have the new Dan Brown book, The Lost Symbol, on pre-order. Should be a great read for the pool.

Resistance to Change

I've come to the conclusion that people aren't really resistant to change. They are very resistant, however, to being changed. When people are a part of the process and when they're hearts and minds are in the game, they not only aren't resisistant they become champions.

Change, whether it's in your personal life or in business can be either good or bad, depending on what you make of it. When we see change as potentially threatening by nature we dig our heels in and fight it. When we look at it as an opportunity to achieve our goals, we want to move foward.

I've found that one of the best ways to be an agent of positive change is to take a collaborative approach with the team, making sure that we all know that the goals we are trying to acheive benefit us all. The beneift may be direct or indirect, depending on the role each person on the team plays, but the objective and the outcome potentials are key.

Other than outright resistance, there are a lot of reasons why people may not jump on the band wagon. The most common one I've seen isn't so much a fear of the outcome but more inertia. An object in motion tends to stay in motion, and an object at rest tends to stay at rest. "I'm happy where I am". They don't recognize a need. Some of the other subtle resistors are procrastinators ("if I keep everyone occupied with something else, maybe the boss will forget"), and nesters (I've worked hard to get where I'm at, and this might be threatening in the long run").

The most dangerous are the active resisitors (assholes). They are usually either in a position where the potential implications of defiance aren't substantial to them, or they are in a high enough position to be an obstruction. It may be a long time legacy employee that no one would ever think will leave (he thinks he's irreplaceable) or the VP who will sing the praises of change to the top and silently undermine from the background. In either case the issue needs to be dealt with quickly. If not, the poison seeps through the rest of the team and the change is doomed to fail. I'm not usually an advocate of the ax, but people who actively work against the best interest of the company should be out the door quick.

A while back I wrote about solution selling. Driving change within an organization isn't all that different. The company has a whole and each person in it has defined needs. Rather than sell the change as change itself, sell it as a solution to the problems at hand. Without the individuals recognition of the need, the change will be an uphill battle. Needs are drivers of action, and action is a driver of change.

Leading from below

So often we think that leadership has to be from the top down, but great leadership can come from the bottom. Alan Keith (Genentech) said that "Leadership is ultimately about creating a way for people to contribute to making something extraordinary happen." Nearly all of us serve someone higher than ourselves, and we can all lead from the bottom.

The way to lead from below is simple - make sure that the ones you serve know everything they need to know to do the right thing because they are the ones who will be deciding what you will be doing. The success of those we serve equates to our own success.

If I had Only Known

I've been offline for a couple of weeks. Busy with projects and a big party for the 4th of July.

While we're all scratching our heads trying to figure out when this mess will end, I find myself thinking "what if we had seen it coming and had been better prepared?" Here's a few things I think we should have done sooner rather than later.

1) Pay more attention to long terms "given" costs. Look through the long term supplier contracts, renegotiate lease rates, and review service providers. Then again, there is an opportunity now to take advantage of the tough times and leverage lower prices for the long term to help us come out of this mess.

2) Go after weaker competition. We all have a tendency to take for granted that a competitor's account is the competitor's account. I hate to say it, but by all means kick the competitor when they're down. Market to their core base. It's not like there's a lot of "new business" out there in the market. The only way to grow business is to take it from the other guy.

3) Talk to the Bank and the Board. Optimize cash flow and liquidity. There will be companies that make it through by the skin of their teeth, and there will be acquisition opportunities at bargain basement prices. Know your market and your competition though - if you can get their business for free (#2 above) there's no reason to buy them out.

4) Don't spend when you don't need to. We all do it - we stretch out spending to fill the available budget with a "use it or lose it mentality". Customer events don't need to be pricey to build business. Instead of hosting a golf outing for 100, invite the key players of core customers in for a private lunch and tour of the facilities. Once account, once a week or so. Don't make it a dog and pony show - find out what their needs are and how we might be able to help. Employee events don't need to be over the top either. I worked for a company once upon a time that flew all of their sales people out to California once per quarter for three days of meetings at the corporate offices. Dinner and drinks out in the evening, and a "fun day" at the end to wrap it up. Total cost per employee was over $3500 a head. Insane. Oddly enough they nearly went out of business for a lack of profitability right about the beginning of this recession. Go figure.

5) Focus on Talent. I had a rant a month or so ago about branding as it relates to talent acquisition and retention, so I won't get into that again (at least not today). Hindsight being what it is, people were let go due to short tenures that were probably a better fit for the company in the long run than some of the employees that were kept on. Besides just using performance reviews look at ability to drive new business, generate gross profit or for operational folks to improve effectiveness and reduce operating costs. Anyone on the payrolls who isn't offering value to the bottom line should have been let go long ago. Don't take your top performers for granted, either. Whatever the state of the market there are always opportunities out there. You want their best option to be to stay with you. Also, it's always a good time to bring in the best, whether they are in the ranks of the laid off or working for the competition.

6) Optimize Optimize Optimize. I'm all for continuous improvement, kaizen, lean, and such but all too often we take for granted that it's not just about manufacturing. It's so much easier to go with the flow with a "if it ain't broke, don't fix it" approach. Improve administrative processes, cut out layers that don't add value, improve forecasting, reduce energy consumption, etc. We don't need to wait for a downturn to optimize profitability.

7) Go for the Gold and Cut the Crap. Review the customer base on a regular schedule, at least once per year or more often if possible. Don't just look at revenue and GP. Look at average days to pay, overhead requirements, administrative processes, freight and delivery costs, average order value and cost per order. The most profitable accounts will not necessarily be the highest revenue generating. More of than not there will also be customers that cost more to support than they bring in. Determine which customers are bringing in the most "gold" and stop pouring efforts and resources into crap accounts.

8) Maintain a Needs List. Plan ahead. If you know you're going to need to expand the warehouse, improve plant lighting, add machinery, or upgrade the servers, it better to plan ahead. There are always deals to be had, especially in bad times when everyone is struggling to bring in business.

9) Keep a Smile on Your Face. Enough gloom and doom already. If you're always smiling people will wonder what you're up to.

Not great news, but better

There may be a light at the end of the tunnel that isn't another oncoming train.

Consumer confidence index rose from 40.8 for April to to 54.9 for May

ISM (Institute for Supply Management) New Orders Index is over 50 for the first time in 17 months at 51.5 for may (April was 47.2). Their Order Backlog was at 48.0 (40.5 April) and Exports Index was also 48.0 (44.0 April)

The PMI (Purchasing Managers Index) was at 42.8 "A PMI in excess of 41.2, over a period of time, generally indicates an expansion of the overall economy". This the the 6th month in a row that it's increased.

Unemployment is still a staggering 8.9%, or about 4.5 million people, but there are over 3 million posted jobs online. Unemployment will definitely get worse before it gets better, but there was also a 23% increase in job postings for May

Existing home sales are up 6.7% for April and non-residential construction showed an increase of 2% over last year for March.

Out of the Box Thinking

I had to take one of those evil management assessment tests. We were testing the entire management team, me among them. I recognize how they can be useful but I hate feeling like a hamster in a lab. Anyhow, when my results came back there were two things that I found particularly entertaining.

First, that am apparently off the charts in being overly analytic while at the same time constantly questioning the status quo. The second, the one that I really got a kick out of, was that the reviewer noted "the subject tends to think outside the box to the extent that a person might wonder where the box went". Thank goodness I scored high on the analytics and personal responsibility or lord knows what hair brained schemes I would have come up with over the years.

Here's my take on it. To be successful in business, whatever business you're in, and at whatever level you're at, creativity is a beautiful thing. Great businesses have been built on ideas that no one in their right mind at the time would have tried. They bucked the system. Who ever thought that a couple of nerds in a garage would turn into Apple? Where would the world be without Henry Ford who paid his workers twice the prevailing wage, making his own workers able to afford the product they built and helping to create the middle class. The Wall Street Journal at the time had a conniption. Walt Disney was an animator that created the theme park.

Not everyone is destined to be an icon, least of all me. I do know, though, that being smart and creative will get me farther than those who aren't. I don't want people working with me who make decisions based solely on the numbers - I want their gut instinct to play a role. I hate performance appraisals based on score cards nearly as much as I hate arbitrary numbers based goals and "economies of scale". Entry level people often have more customer interaction than the higher-ups. I want good people, and I'll pay them more. Standardization is not always the best way to improve. Never ever ever use a call script in sales. Internal competition will not drive a team forward.

There's a great quote from Dr W. Edwards Deming that one of these days I'm going to have hanging on my wall ""It is not necessary to change, survival is not mandatory." Without creative there would be no innovation, and without innovation there's just the same old status quo. What fun would that be?

Best Practices

Best Practices - not so much.

First, there's nothing as ingrained as an bad idea. You can re-brand it, re-name it, tweak the details, but it's still the same old bad idea. You learn in business school that strategic management is implemented through the use of business rules, and a business rule is a constraint on an aspect of your business. Business rules, unfortunately, are often the result of benchmarking best practices. Equally unfortunate, "though shalt benchmark and implement best practices" is often also a business rule. Clearly we need to define optimums, maintain metrics, and so forth. What get's my goat is the "constraints" part of the equation.

Second, if people are going to define a "best practice", and they will, I don't want to be the one chasing the "best". I want to be the one they're trying to catch up with. Imitation is the highest form of flattery, after all.

Just because a methodology worked for another company doesn't necessarily mean it will work for yours. A business is a microcosm of interconnected factors; culture, model, strategy, processes, operations, etc. It worked at the other company because it meshed with their overall business environment. You can implement the same strategy and tactics and not achieve the same results because the underlying and interconnected factors aren't aligned.

What made the strategy successful is often not as obvious as it may seem. Want to lead a successful basket ball team? Win a record breaking 902 NCAA career games? The most obvious thing to benchmark would be the most visible. Bobby Knight threw chairs, cussed profusely, was arrested for assault, and was accused of choking a player. Not a "best practice" to implement. What wasn't as obvious was that his programs were among the cleanest in the league and under his leadership his programs were never sanctioned for recruiting violations. What made him successful was the way he lead his teams. His plays required his players to work together, to take a disciplined approach, and to be unselfish.

Ever heard the saying "if you're not the lead dog the view never changes"? How about "Eat Shit. 100 billion flies can't be wrong"? Be creative, lead the pack, and be the best.