Tag Archives: OrgDev

Smarter Family Business Via Communication

Having grown up in a family owned business, I have experienced a thing or two in common with many of my clients. Even when I was yet in middle school, I would be recruited to help out in the business, much to my own dismay at times when I would much rather be doing something (anything?) else. However, a little bit of pay went a long ways to making a young man very content. As I grew older, however, the conflict between what needed to be done in the business and what I wanted to do became greater. My goals, dreams, and ambitions had less and less to do with staying in town, working alongside my dad, and us building something together. As you can imagine, this difference of opinion caused a bit of a rift in our relationship. So it goes with many family businesses.

The mismatch between the expectations that a founder has in terms of the involvement of children in the business and their actual desire to be involved is one of the leading problems encountered in family businesses. The parent (substitute other type of founder, but effect is similar) wonders why the child doesn’t put forth the same effort, see the same vision, realize the potential, etc. I delivered a talk for Harley Davidson University on this subject a few years ago, “Why They Don’t Ride With You.” In my session, I spoke with dealers about their frustrations with family members who seemed disinterested in working in or taking over the business. My encouragement to them was to do three things:

  1. Hold the opportunity with an open hand. Instead of making up your mind that there is only one “right” scenario for family members to take part in your business, be flexible! Determine that, while you may have preferences, you will corral your opinions and keep them in check as you attempt to find a common ground.
  2. Communicate often, specifically, including listening. Far too often, a patriarch will squelch the input of a child, spouse, etc in the home–and at work–particularly if work and home blend as in the case of a family business. Rather than honing in on what the other person has to say, we can easily insist on getting our point across before seeking to understand the other person’s view. Ask open ended questions about what the family member enjoys doing, what role they see themselves in, and how those choices affect the business. Create an open dialogue-constantly.
  3. Distinguish between ownership and management. An heir may work in the business or out of it, but still function as an owner. Sometimes, it is best for all if it’s known to be a safe choice to be just an owner or just a manager, rather than both as the founder has been. Realizing that such options exist can diffuse tension, lead to productive conversations, and aid in succession planning. Quite often, outsiders are better successors to founders because they can be objective about the contribution family members make to the business.

There are many other issues that, seen operating in a family business, look and feel different than their counterparts in other types of businesses. Everything from performance measurement to compensation, perks to preferences, psychology to sociology, and very much in between can be seen at work and become a spark for emotions. By far, family businesses are more emotional than others. Whatever your situation, think about tools that help create objective conversations about business issues so that you can lessen the impact of emotions in decisions that are being made. Your business and your family will be better off for it!

 

Innovating Words Make Healthy Corporate Hearts

 

Cheryl Heller, Board Chair of PopTech, a laboratory for disruptive innovation focused on technology and social change, says that,

The wealth of jargon used to describe intrapreneurship (itself a bit of jargon), innovation and corporate social responsibility is more exhausting than enriching, and as their importance becomes more evident, the labels and complexities grow. What’s the difference between corporate social responsibility, cause branding, cause marketing, and a triple (or sometimes lately double, as if we can just decide to leave the environment out of it) bottom line? Should companies now stop all their work on sustainability in order to focus on resilience? Has all independent thinking, or even perhaps all generative thinking inside big organizations become intrapreneurship?  What’s the difference between social innovation and innovation? What’s the relationship between design thinking and innovation? What’s the difference between disruptive innovation and incremental innovation? Is some innovation more innovative than others and is more innovation always better? And does anybody else see this as a silly and dangerously circuitous trap of our own devising?

The significance of the debate about the proper terminology is to find a means to communicate disruptive breakthrough ideas as a valuable corporate asset–without simultaneously creating anarchy! Words cited in Heller’s comment (above) evoke values and desired activities that can help an organization create–or sustain competitive advantage.  Yet, if innovation is perceived as an altogether separate category than “ordinary business,”  then it can be argued that no one will want to do what is methodical if they can be celebrated and rewarded for dreaming over practical execution of existing initiatives. Most organizations and their leaders would prefer that employees see the process of introducing initiatives as a normal part of their positions, rather than stand alone activities that become the topic du jour and are jettisoned when times get tough in favor of “that’s the way we’ve always done it here. (TTWWADIH)” 

TTWWADIH can be a pervasive attitude that implies that we can add to what exists, but should not be expected to improve what exists. In this scenario, positions and/or departments are launched rather than tackling sticky, often political issues. Star studded teams are put together many times to represent cutting edge thinking, only to exempt the teams from performance, which ultimately leads to demotivated executive management.

Yesterday, we looked at Scott Anthony’s HBR article about Medtronic, a company well known for innovation, and their efforts to become even more adept at broad scale innovation. The Healthy Heart For All product has been launched towards the rural Indian population target market. Medtronic is large, smart, connected, positioned and incentivized enough to out-hustle upstart competitors. Though they brought in a key intrapreneur, the company was effective in changing the corporate cultural stance on what it takes to be competitive.

No one wants an unmotivated workforce. Nor do we want idealists who are not well grounded. The concept to “innovate properly” is a core value of a former employer of mine who understood that creativity and innate personal responsibility for the benefit of others must work in concert. By including this core value in position descriptions, the leadership team recognized the need to challenge employees to see advanced initiatives as the responsibility of every employee–not an isolated activity. Furthermore, when innovation becomes the expectation, we don’t have to “stop the presses” to encourage innovative thinking and actions.

Find a way to articulate your expectations for intrapreneurship (or innovation if you prefer) (or corporate social responsibility if you are a part of a grandiose cause) inside your environment. Ask people to define what they mean when using these terms. Expect all employees to take initiative!

 

 

 

Why Ignore the Obvious?

Margaret Heffernan wrote a book last year entitled Why We Ignore the Obvious at Our Peril, a look at how leaders have intentional blind spots. She queries why many people prefer ignorance over being well informed. In examining the Catholic Church, political despots, unethical corporate leaders, financial mismanagement, and the foibles of top military brass, Heffernan makes the tie between a leader’s choices and the impact on the organizations served. using psychology, researched accounts, and some intuition, she has been compared to Malcolm Gladwell and Nicholas Taleb and has received kudos from Dan Pink.

In an article published in Inc, she analyzes the General Petraeus fiasco and makes comparisons between others she covered for her book and the characters in the saga splashed across many websites, newspapers, and journals presently. Heffernan tries to get inside his head as to what he may be thinking about his new dilemma: soon to be unemployed and suddenly having destroyed a very accomplished career that others coveted until the story broke. 

Yet, was it so sudden? Hasn’t this revelation been building since the point of the first indiscretion? Digging more deeply, what was the thought process that led up to the first bad decision? Heffernan says she heard a CNN interview in which a Petraeus friend said that the general “sees this as a failure, and this is a man who has never failed at anything.” She asks the counterintuitive question–did he go wrong by never going wrong? An excerpt from her article:

If you have never failed at anything, then you haven’t been trying hard enough, aren’t very imaginative, or have had such extraordinarily good luck that you have come to believe you are invincible. And that, of course, is the problem.

“Success confers its own blindness,” Emily Brown told me. She’s a marriage counselor who has worked extensively with couples who have had the experience of infidelity.

“Successful people believe they can get away with it,” she says. “I talked once to a group of men who’d all become millionaires before the age of 40, and they’d had affairs. They don’t even see the danger! It isn’t a love of risk. They think: The wives will never know, so where’s the harm? Everything else in their lives has worked out, so they think they have some kind of magic, that their success has meant that they can have everything they want and they’re invulnerable. And they were completely blind to the harm they had done.”

Most of us make mistakes, and we should take some comfort in the fact that these usually remind us that we are fallible. If we are very lucky, we make mistakes from which we can learn and recover. Most of us have the oddly good luck not to imagine that we are infallible.

I’m a big believer in mistakes. Not just because I make lots of them–like everyone, I try very hard not to–but because every mistake contains learning. The best mistakes are the ones from which you learn the most and that you never forget. I would bet Petraeus thought that never failing was a sign of his genius. The truth is probably that he made mistakes, but he didn’t take time to learn from them. Or, hauntingly, he got away with mistakes by benefiting from everyone else’s care and attention, like a man who drinks too much but drives home safely.

No one is infallible. And those who think they are are probably going to be the most disappointed.

As you read about the former general’s mistakes, hopefully you can look at your own and have some perspective. Have you grown from them? Do others cover over your missteps — or do you have a circle close to you who will level with you at the expense of saying something that you may not want to hear in the short run?

 

Watch Your Asset – It May Not Be a Resource

First, the bad news: making operations, finances, and employees work to maximum value can mean having to eliminate some employees or operations at times. The good news, though, is that many businesses have been able to hold on to existing resources–even during a turnaround situation–by reassigning them to better purposes and uses where required. This is the heart of asset redeployment–the practice of reassigning people, things, and efforts to achieve optimal efficiency. By using capital wisely, your team can make it stretch a lot further. For example, coordinating employee and independent contractor work to produce the greatest amount of work with the fewest number of people working the least number of hours means greater return on efforts and dollars.

Eliminating Operations

Eliminating unprofitable operations–in whole or in part– is a wide-ranging task. Anything that may be termed “waste” in the company needs to be discarded or put to better use. One area that should be addressed is waste due to unnecessary multiple consumption of potentially shared resources. In plain terms, the individual use of items that could be shared is an extravagance that few small businesses can afford. Think of shared printers rather than a printer on each desk as an example. it is highly unlikely that every single person in the office will be printing at the same time. What’s more, high volume printer/copier combination machines use less expensive toner than ink cartridges in smaller units. This initiative may require more cooperation and patience than providing unique units for each employee, but such a move can reduce the amount of money the company must spend to get work done.

Avoiding Duplicate Efforts

A counter problem to the above is too many employees doing the exact same job, either knowingly or unknowingly. Such multiple effort, a clear waste of time, resources, and money, often occurs when someone is fearful of delegation or feels threatened by another’s talents and abilities. Therefore, management should make sure that several people are not doing the same job in differing formats and degrees. 

Non-linked software is a perfect example of this kind of waste; if the secretary maintains supplier addresses and phone numbers, and the accounting group keeps the same information in their files, someone is performing an unnecessary job. Instruct employees in ways to avoid duplication of effort. Look across your organization, document processes by task, and find ways to reduce overlap. This is not to say that your staff should not be cross-trained. It is, in fact, good succession planning and talent management to have people who could do someone else’s job in a pinch!

Managing Capital Resources

Capital resources include facilities, supplies, and work in process. Buying only what is needed when needed (“just in time”) is one way to wisely manage resources. Another way would be to try to have more finished goods inventory than unfinished, because finished goods can be sold quickly to raise cash. At times, you may consider renting or leasing an asset rather than purchasing it–especially if the term of the contract is less than the useful life. You may elect to “turn in” resources that you don’t need very often or convert them to less cash intensive resources through alternate financing. 

Coordinating Human Resources

This is an area often overlooked because it is seen as “just administrative.” When employees, however, have jobs that overlap in requirements, it is up to the executive team in the small business to correct the situation for optimization. When your people are performing jobs that are not their strong suit, they usually take more time and make more mistakes than a better qualified and motivated counterpart.

Develop a competent management team to help you steward resources more efficiently. There are multiple areas for gains in efficiency and profitability if you will commit to the process. Note: process rather than one-time task–follow-through and experience the fruit of your labors!

Urgency in Turnarounds

When a team has tried everything in their power to solve a dilemma and is unsuccessful, the turnaround manager must step in. The buck stops with him; if a third party cannot reach resolution with company staff, someone with more clout must reestablish credibility. Use of a consistent complain resolution process can prove quite effective. It frees the team up to not have to stress relationships with those with whom they have either had long term relationships or with whom they must transact business once the turnaround is complete. Even managers should appeal to the business owner or turnaround executive if a third party will not accept their efforts to resolve issues.

Doing the Job Effectively

Encouraging employees to perform their jobs thoroughly, to the point they exceed performance standards, is most easily done by providing responsibility and reward. Treat employees as peers, recognizing that they too have responsibilities and commitments. Offering them the opportunity to wield more authority is rarely rejected. Promote a diligent working atmosphere wherein employees want to go the extra mile.

Ask all employees to document any problems with suppliers, customers, or service providers. Often, taking it a step further and documenting issues with sales teams, distributors and governmental agencies (where appropriate) can provide a paper trail to  help the executive team and turnaround artist in their work to remove roadblocks. When relevant facts are understood, appropriate actions can be taken.

Dealing With a Lack of Resources

When a company is in the middle of a turnaround, certain items that would make work easier are not going to be available due to a lack of funds. Using skills and abilities creatively to overcome this lack of resources or other unpredicted occurrence as an example for employees to follow. In tough situations, executives should look for a way to overcome the situation rather than dwelling on the inconvenience caused.

Successful turnarounds are a tribute to employees who strive to overcome limitations and exceed performance standards rather than merely meet them. To bring work projects in early and under budget, everyone must strive to do much better than is required, constantly searching out ways to improve efficiency. No time can be wasted–every minute and every dollar that exceeds schedule or budget extends the distance between a struggling company and its ultimate goal of renewed profitability.

Following the Turnaround Plan

All employees need to be reminded that a plan has been developed to promote optimal recovery and that all actions taken are done so in accordance with the dictates of the plan. United by common objectives, the work force can and will help to implement the turnaround plan. Three essential principles apply:

  • Some short-term gains will be sacrificed for ling-term profitability.
  • Some long-term successes will have to be postponed for short-term cash flow.
  • The means of implementation is always open to suggestion and never open to argument.

Creating a Sense of Urgency

Certain goals, particularly dates and milestones, need to be met without fail. To accomplish these goals, a sense of urgency must prevail. Departures from the schedule can cause the company to lose out on windows of opportunity. The interest carrying cost of financing operations longer than anticipated is an example; if work projects are completed on time, lines of credit can be paid down sooner. Even one foot-dragging employee can impede the progress of the group, and the resulting missed deadlines can mean substantial financial losses.

Meet With Employees

Sit down with your staff and clearly and frankly describe the situation. Inform them that the company is experiencing some short-term problems in meeting its objectives and that actions are being undertaken to minimize long-term  impact. Explain and reiterate throughout the turnaround that company health can be restored through combined best efforts. Explain the turnaround plan, with an emphasis on the valuable role of each and every employee in reaching plan goals.

Meet With Management

Regular meetings with managers will be needed to discuss progress in detail. Begin with twice weekly meetings and progress to biweekly as the situation improves. Update reports should be given on activities since the prior meeting, with input required from managers from each department. Discuss problems and develop plans to resolve them within the meeting. Take advantage of a quorum of opinions to move the company forward in rapid-fire fashion.