Team Habits: A New Book for Org Leaders

 It didn’t take long for me to fall in love with this book--Team Habits by Charlie Gilkey to be published August 2023--as soon as I saw Gilkey’s citation of Amabile’s and Kramer’s book, The Progress Principle—a must read for any manager or leader. Of course, this book’s title “Team Habits” is also attractive since so much of business and organization life is conducted through habits (see The Power of Habits by Duhigg). We make a decision “once” and stick with it until there’s a disruption to our processes, policies, strategies, etc. Leaders and teams operate the same way. We conduct ourselves through routines that are hard to change, just like any habit. Gilkey’s book helps disrupt those “trances” by providing takeaways at the end of each chapter and, more importantly, practice ideas to implement and start creating new habits. A leader will do well to reinforce new behaviors and find ways to put obstacles in the path to “the way we used to do it” (ala the fable of Cortez burning his ships or sending them back to Spain, so that his conquistadors were forced to march forward and no chance to quit). For anyone who’s tried to create change in organizations, this is important and Gilkey provides a service to us all with his book.

Since decision-making is one of those habits that interferes with team performance/excellence and overall motivation (see Kohn’s Punished by Rewards in which he shows giving employees choice is important, and its iteration in Daniel Pink’s Drive), the author’s broad treatment of how teams and leaders make decisions is vital. I once had a CEO ask me how he could get his staff to be more empowered. I advised that his staff would continue to be “disempowered” as long as he continued to behave (i.e. handle decision-making) as he always has. The team would continue to defer to his judgment and look for his approval of ideas. He needed to decline attendance at meetings. If he did attend, he needed to put on his best “poker face”: no non-verbal cues as to his interest or dislike in any of the proposals, no raised eyebrows, frowns, sighs, smiles, drumming fingers, sitting back/forward, etc. Until he changed the decision-making process, the team was going to be stuck. Gilkey would teach this CEO about which decisions he needed to retain, which ones he should seek input before deciding and which ones the staff could decide. (What I have learned and taught as discerning when to tell, sell, consult and join your team in the decision-making. The differences are determined by urgency, responsibility and how much team ownership in the decision is evident or desired.) Gilkey’s material would also coach that team in how to make and implement decisions. 

There is a lot more here than just decision-making, but I find it’s often overlooked in team-building materials. Gilkey also covers the “traditional” topics of team structure, team composition, team dynamics and so on.  

Even team-building, team-leading veterans will glean something from this book.

Grocery Shopping and Other Business Traps

 When you go to the grocery store, or your partner does, how often are you purchasing a different brand or style of food? If you’re like most of us, you thoughtlessly wander down the aisles pulling off those same, familiar packages or produce. In the “name of efficiency” we don’t often stop to reevaluate our previous decisions unless there’s a hiccup in our system, like a stock shortage or dramatic price increase. Once we’ve made the decision about the most economical, most trusted, most nutritious, most flavorful, most delightful food stuffs, we make our shopping trip as short and painless as possible by getting the same old, same old. 

Likewise, in business, we have the same habits. Once we decide on certain service providers and suppliers, we thoughtlessly just “reorder.” Once we decide on our strategy, we rinse and repeat. Same with marketing channels and job advertising. If we make any adjustments, we increase the intensity: more, faster, harder… If one person is making the grade, hire another high-powered, more experienced person. If the sales leads aren’t happening, up the advertising budget, put it in more places, make it more frequent.

Rarely do we stop and question whether we’re heading in the right direction, targeting the right audience, seeing the gaps in competitive offerings. If there’s a problem, we want a magic pill to solve it. It’s true in our health—90% of heart disease patients don’t change their detrimental lifestyle—and it’s true in our decision-making habits. We rarely change how we do strategic planning, how we explore the unknown unknowns, etc. Even a crisis doesn’t make long-lasting changes. With a stock shortage, we go back to the comfortable, purchasing once again what we used to buy when it’s newly replenished. With strategies, we see glimmers of success and so we continue on blissfully unaware that this may lead to a dead-end, a trap.

You can reinforce habits, even business habits, with good feedback mechanisms. You can also create new habits by “burning the ships” so you can’t go back to the old way of doing things, the old standby “recipes” of strategies and decisions. Beware: even change programs don’t create lasting change.

When was the last time you made a long-lasting behavior change? When was the last time you made a significantly different, countercultural, revolutionary, industry disruption? Please don’t just thoughtlessly go down your business “aisles” plucking the same old, same old decisions and strategies off the shelves.

Simple Business Market Plans are Often Wrong: Hypnotic Trance Theory

 At a local undergraduate college, I’ve sat in several entrepreneurial student presentations for hypothetical businesses. I’ve also been a guest lecturer at entrepreneurship classes. I’ve also coached several young entrepreneurs. I’m sure my experience is not unusual but this initial marketing plan is often what I see, with only a little exaggeration.

There are 300 million people in the US wearing socks on a daily basis—discounted from the total because of the newborns, those in southern climes who go barefoot and others who wear sandals. On average each person has 40 pairs of socks—10 for babies, 20-30 for youth, more for adults because they want different types of socks for different activities and seasons. Therefore there are 12 billion pairs of socks being bought. My new company will capture 1% of this market through innovative product, pricing, promotion through social media by celebrities and influencers. We’ll sell 120 million pairs of socks. Won’t you want to invest now at the ground floor?

[Apologies to Bombas and other new sock companies if their pitch sounded like this.]

This simple marketing plan is wrong on several levels:

• The data: each person might have dozens of pairs but they’re not replacing each pair every year. (I’m sure the average age of my pairs is 3 years. If I have to replace a type of sock every year, and I’m not wearing them every week, I’m buying a different brand next time.) Plus the average is just that and doesn’t show the statistical distribution of socks ownership: what’s the median number? Is the distribution normal or skewed, exponential…? Nor do we have socioeconomic demographic breakdown. There is some acknowledgment of geographic differences and seasonal differences but we don’t know how this influences ownership quantities or replacement volume. After these and other considerations, what really is the market potential?
• Marketing strategies are dependent on the target segment. Consumer marketing is definitely from business-to-business (B2B) marketing. The “volume” of consumer marketing is like the ocean and you’re going to throw your cup of red dye in it and hope to see some spread throughout. Not impossible but improbable for startups. When is marketing effective for the target segment—in their unaware-of-the-need phase, their research phase if any, in their okay-I’m-ready phase? If the last, how do you time it and how many of your target segment is it in any given day (think “data” again)?
• Buying habits: most of business, like most of our lives, is dominated by habits honed from previous decisions. We avoid making new decisions unless we need to. We generally buy the same things we did before, get exposed to the same media channels as yesterday, follow buying patterns that are seasonal or some other frequent triggerpoint. We basically reorder what we’ve purchased before.. We might only change if we can’t buy what we’ve done before. And there may be a few things where brand loyalty is fluid. What do we know about the sock market? How much does brand loyalty influence our target market decisions? How much is driven by immediate need? Habits are a bit like a hypnotic trance. It takes something amazing, startling or catastrophic to snap us out of our trance. (These same considerations happen in B2B marketing too. A businesses customer list is only good to the new owner for 30 days; the change in ownership snaps the customers out of their “reorder” trance. Sometimes a fresh look allows for customers to ask the dumb question—e.g. “Why are we ordering this $80/lb cold-temperature grease to slap on parts that are put in an oven?” “Don’t know. We must have ordered it once because it was all we could get and never stopped reordering it.”)

So I’d like to see how young entrepreneurs are going to snap an established customer base out of their buying (or non-buying) habits. Early adopters are not a significant market segment and there are limited number of early adopters for any single product/service niche. (There are no universal early adopters who try everything new no matter what kind of product or service it is: geography, age, sex are obvious limiters plus only the super-rich can gamble on ineffective or unsatisfactory products/services that don’t meet a need, want or reduce a pain.)

In one business, I couldn’t find the secret to getting new customers out of their habit of ordering from my competitors. I couldn’t find the trigger to bump one of those other suppliers out of the reorder plan. So I was stuck. There might have been a way but I didn’t find it. It wasn’t social media because that’s not where the customers would have looked. They already had an established and satisfactory base of service providers. No need to Google/Bing/Instagram/TikTok/Twitter/Facebook anyone else. I was also fighting against much bigger players in the market so it was a struggle to get brand recognition. 

All you budding entrepreneurs, please don’t show me plans that start with a global population. Tell me more about your target market segment’s buying habits and how you plan to snap them out of their repurchasing trance.

 

Look Again: Beware of Becoming Habituated

 This may become one of my favorite, go-to, oft-quoted books, like “Invisible Gorilla,” “Tipping Point,” “Black Swan,” “Abolishing Performance Appraisals,” “Progress Principle” and others of this sort that challenge our paradigms. Sharot and Sunstein alert to how easy it is to become habituated to our routines, our beliefs, our ingestion of news and friends’ stories. The “Power of Habits” taught us that 40-60% of our routines are habits: decisions we made once and don’t re-evaluate unless there’s a disruption. These authors encourage the disruption so we can avoid becoming tolerant of lying, misinformation/disinformation, risky behavior and slow adjustments to the political enterprises…and more. They also provide ways to break “the trance” that don’t provoke defensiveness, fear, flight/fight when our own ‘habits’ of thinking, deciding, acting are challenged. The book is easy to read, digest and act on, if you’re willing to “look again.” (I appreciate the opportunity to get an advance copy provided by the publisher and NetGalley.)

In business, we have a lot of habits—SOPs, policies we’ve adopted from other organizations, and other behaviors because “that’s the way we’ve always done it”—and most of us who have explored and implemented world-class, best practices know that it’s good to review, re-evaluate and revise those ways we do business. I’ve written about how we did away with work shifts in a manufacturing company. I’ve challenged the promise of social media marketing for every industry—in construction, you have to be in the project manager’s top 3 list for those rush-jobs.

Therefore, it’s wise to avoid the trap of taking for granted that what we’ve done is always the best.

habits, habits, habits...

Try this experiment: put your watch on the other wrist. Or if you don't wear a watch, put your phone in another pocket, on the other hip...take it out of the purse and put it on the hip. Put your wallet in the other pocket or in the front or in the back, whichever is opposite of your normal practice.

This change doesn't make you any less efficient, nor is it wrong. But it feels weird and we almost immediately want to change it back.

That's how most change programs feel in our companies. They don't create inefficiencies nor are they wrong. But they feel weird because we have to create new habits. We have to reach on the other side of our bodies to grab the phone. We have to flip the other wrist to tell time. We have to reach into a different pocket to pay for things.

Changing back is easy for these examples. It's also easy in our companies. We'll revert to past practices unless there's no way to revert back. Unless you've had an unfortunate accident, like Bethany Hamilton in Soul Surfer, you can put your watch, phone and wallet back where you're used to having them. Unless you change the organizational structures, change meeting agendas and invitees, change policies and procedures, your staff will continue to operate like they have since they started at the company. And so will you. You'll continue the habit of perception that everything's hunky-dory and change is too much bother for no benefit. It's just too uncomfortable to see things and feel things differently.

Change program will fail and you'll continue to get the same results. You'll hope for different results but you won't change. And that's insane, as defined by Einstein. There's probably a pill for that so you won't notice or care that your company is just plodding along not getting any more success. Until you change.

Business Recidivism

Change is hard for individuals. On average it takes several attempts to quit smoking. Dieting is a multi-billion dollar business because we try different diets to help us with weight loss. Most heart disease patients (including C-level people), by definition in the midst of a life-threatening crisis, continue their bad lifestyle habits.

It's even harder for a group of individuals--our businesses. It's not that we resist change. We embrace change. But we revert quickly to old habits. Change programs don't succeed. That's been reported in such auspicious places as Harvard Business Review...and yet we can't keep ourselves from the Change Program Addiction!

A while ago there was research by management guru Marshall Goldsmith and Howard Morgan points out that there are several reasons why 'successful' people continue behaviors, like their style of decision-making and other management aspects, even though the organization is failing:

• Confusion between correlation and causation: "my behavior made me successful" rather than a fortunate confluence of circumstances and continue that style as a form of "superstition" (i.e. "if I change my behavior, I'll be less successful")
• Persistence leads to stubbornness and failing to recognize that "it" is not working any longer
• Omission of failure experiences and strong memory focus on successes
• Identity found in self-perception and self-esteem; they cite a leader who acknowledges he was a poor listener but that not listening to people is part of his self-made image--new behavior could feel "phony"
• Inflated performance relative to peers: like Garrison Keillor's "all are above average", successful people believe their in the top 10-20% of all successful people
• Recognition as successful means there is heavy investment in those behaviors and management styles

On the last point, remember the story of the "Emperor's New Clothes". There was such a heavy investment in the process that it was impossible to admit that it wasn't working. That's a lot like business with our change programs. We've invested so much we can't admit that it's not working so we persevere to the point of burnout...and we ignore the program 'work' to do what we're good at doing, reverting back to old destructive habits.

Let's be courageous to recognize when our processes, systems, management styles aren't working as well as we want. If we're measuring the right things, it'll be apparent. That can support a real change...and not a change program.

Your Business on Crutches

I've never broken a leg but I understand the purpose and benefit of crutches. They help you make travel forward when something isn't working right. When you've healed and your physical problem is resolved, the crutches are discarded.

Unfortunately in business (and other organizations), management has a problem. They find a way to fix it enough to keep moving forward. Sometimes the fix is inspection or audit or some other QA step. Sometimes it's monitoring efforts on customer service calls. Sometimes it's a redesign of the product or service like extra reporting, project reviews, additional authorizations on purchases. For example, when management realizes there should be individual development plans, that focus gets tacked onto performance appraisals. (And then performance appraisals are trying to fulfill eight purposes, become cumbersome and don't accomplish any of its intentions well.)

The problem with this mode of operation is that the crutch becomes the fix...and keeps getting used...until it becomes a standard operating procedure (SOP). The short-term remedy turns into long-term. Very few, if any, go back and revisit what the solution should be. Crutches becomes habits and habits become traditions and "that's the way we've always done it and it works". Sort of.

When there's a problem, we often don't have time to get to the root cause and implement a long-term solution. (I've written about how Six Sigma can be in conflict with ISO and other quality management systems in this regard.) However, we need to revisit the issue and change the process inputs or make the processes robust enough to handle the causes of problems. If trash blows around on garbage-collection day because of the wind, you can put bricks on the lids...but then the truck drivers have to exit their vehicles to remove the bricks. Or you'll lose the bricks when they get dumped with the trash. Since you can't change the wind, change the trash container in a way that can handle the wind, and not make the drivers get out. If you're having a manufacturing problem or some other issue with errors, hassles, headaches, etc., don't add inspection or audit for the long-term. Add it with a "sunset" policy or procedural change that expires in a month or two. This will force the team to revisit the process, discover the real cause and install a better, more effective and less expensive solution. If skill development plans aren't happening, make them a topic of performance appraisals for a quarter until you can develop a simple, effective procedure and educate managers on it.

Look around your own organization. How many behaviors, procedures and so on are happening because there may have been a problem at one time, and the cause hasn't really been dealt with?

Uphill Battle

"Everything worthwhile is uphill," John Maxwell, the leadership guru said at a recent global leadership summit. "Yet our behaviors and habits are downhill." Think "Easy Button" (sorry, Staples). Downhill thinking includes self-centeredness (what's in for me? the leader asks) and contentedness--which includes blaming others for poor results. (Think about all of the recent bad business news being blamed on the election. NFL viewership is down, restaurant revenues are down, etc. 'course English football viewership is down but can't blame that on the US election--they'll find their own scapegoat.) Uphill hopes, downhill habits: That's a big disconnect, according to Maxwell, and it's detrimental to our leadership and horribly impacts our organizations.

The solution he says are found in five "intentions":

• Value people--even the ones you don't with whom you don't like connecting or correcting
• Think of ways to add value to people
• Look for ways to add value to people
• Add value
• Encourage others to do the previous four intentions

It wasn't unlike the message Alan Mullaley, former Ford chief, had at the same leadership summit: people first and include everyone. He gave an example of having corporate teams collaborate with dealers.

Crash Tax Conversation

"Hey, did you hear the news that cities in 26 states charge you if they have to respond to an accident you caused?"

"Man, that's wild. How else will they tax us?"

"What do you mean?"

"Everytime we turn around, there's a new tax."

"Well, this isn't really a tax. If you don't pay taxes to that city--in other words, you live somewhere else--and you cause an accident, they'll charge you several hundred dollars for their fire department and police department to show up, take care of you and clean up the mess you created. It's more like a glorified user fee. You use their services, you have to pay."

"Well, I'm not going to any of those cities."

"Hmmm, interesting. Some cities have repealed their fees, or crash tax, for fear that people won't want to shop in their communities anymore. Why wouldn't you go to a city that has a crash tax?"

"I don't want to get charged for their fire department."

"You plan to have an accident when you go there?"

"No, but I'm just saying."

"If you're the kind of guy worried about paying a crash tax, then you must be the kind of guy who always drives new cars and has the worst driving habits."

"What do you mean?"

"People in new cars and bad drviing habits probably just had an accident and needed a new car. I get out those people's ways as fast as possible. By the way, how new is your car? Naw, don't answer that. Tell you what though. If you're worried about a crash tax my city might have, please stay home and have your accidents in your own neighborhood. Okay?"

"I'm not going to have an accident!"

"Okay, then you don't need to worry about the crash tax. All those cities can keep them to help defray the cost and still count on you, the good driver, to continue to shop at their stores, right?"

"I don't know."

"If you don't know if you're avoiding accidents, then you need to stay home. Look, give me a ten minute head-start going home tonight."

Biblical Business: Return to the Land of Goshen?

Consider 2020 and the upheaval for many businesses and the once-in-a-century recession that wasn't related to a financial crisis, or lack of demand, but to a pandemic that artificially shut down businesses and reduced demand for a most things outside of our residences. Many of us pine for the "good old days" when we understood the economy and the rules of business. We knew how to recover from recessions, knew how to market and sell to new segments of marketplace, knew how to develop new products and services to attract more customers and capture more profits. Those rules didn't help in 2020 and now going into 2021. Many business owners have adapted within their business models, but business as it used to be may not be recoverable as new work-from-home (WFH) routines have been developed. The auto, hospitality and airline industries may never recover to pre-COVID levels. There may not be pent-up demand waiting to be fulfilled when it's safe to be in crowds again.

So then what?

I'm reminded of the Israelites at a couple of inflection points in their history. The Exodus from Egypt was a key marker in their history and a point that is remembered yearly in their Passover/Seder meals. It is the model for many other transitions throughout Judaism, Christianity and Islam. However, let's take a look at it as if we didn't know the conclusion to the story.

The family of Jacob settled in a part of Egypt called Goshen (the Nile River delta). When they went there, one of the sons, Joseph (yes, of Technicolor Dreamcoat opera fame), was already there managing affairs for Pharoah's government. The population of this family grew from 70 to 600,000 men (plus women and children--the population of many 2nd-tier metro areas or the states of Wyoming/Vermont/Alaska/N. Dakota combined). By this time, several generations of Pharaohs had come and gone. The latest one in this story enslaved the Israelites--which is astounding that it happened without bloodshed, except the killing of male babies. (Moses' generation of men was lost.) 

Enslavement had nothing to do with disobedience to God; it wasn't a consequence of poor choices or disregard for the rules.

Skip ahead 80 years when Moses comes back to Egypt to lead his people.

What was the goal God could have communicated to Moses? "Hey, we'll stop this slavery thing so you can live in Goshen in peace and prosperity again." "Hey, even though slavery won't end, we'll bless you in financially." "Hey, the financial system won't change but you'll be in charge of your own organization--no more overseers." "Hey, we'll improve your worth by developing more skills than brick-making for those pyramids and farming because there's no way to build a power base from there." "Hey, we'll attract venture capitalists/private equity firms in the form of Sheba/Ethiopia, Assyria, Persia, Macedonia, etc to rescue you."

Instead, God said the "temporary" living location is finished after more than 2 centuries. It's become too painful for the Israelites to stay. Also, after generations of slavery, there was a mindset--business habits and routines--that needed to be abolished. The options of how to conduct business needed to be proven ineffective. In effect, following Cortes' example, it's time to "burn the ships" so that we can't go back into old patterns of thinking and business practices. Time to go to a whole new place, a Promised Land. A whole generation that had lived as slaves couldn't adjust to the new thinking needed for the Promised Land so the journey was delayed until the only ones who succeeded were ones who couldn't remember the "old ways".

What's your business's Promised Land? How much is it tainted by "old ways" thinking and acting? What promises do you need to focus on? How much of your team is ready for new paradigms and ready to stick with those new ways of conducting your business?

A New Framework for Employee Engagement

As noted before, employee engagement hasn't really gone anywhere in the past two decades. It's still a lot less than managers like to think it is. We often think we've got half our team fully engaged (enthusiastic about contributing to the vision, committed to doing their best work, etc.)--the blue line in the graphic below--but reality is that it's half of that (green line below). And we think with a some effort (which we don't have to continue forever), the engagement levels will radically improve.

We can listen to all kinds of engagement gurus but most are missing the vital framework to creating the levels of engagement in their teams that knock your customers' socks off (i.e. gets your Net Promoter Score above 50%).  4ward Associates has developed a proven framework and toolkit that creates those levels. It's starts with realizing that a manager's efforts need to be daily.

• Foundation: organizational trustworthiness deriving from manager's trustworthiness [Update July 2017: Harvard Business Review confirms this...]
• Personal Motivation: understanding each person's set of motivators (and the lowest proportion of the population is motivated by money)
• Manager's own level of engagement
• Understanding the key drivers for engagement (it's not what you think)
• Understanding how to influence change
• Daily reinforcing the change using focus, and feedback on vital behaviors and the six dimensions of influence (this is also part of the toolkit)

It's not rocket science. In fact, many successful leaders do a lot of this because it's common sense. However, it's hard because we have a hard time changing our own leadership paradigms (frameworks) that we don't embrace the new framework. We maintain the bad habits that got us into this situation even though we know it's not the best...but it's working well enough...we think.

If you miss any of the elements above, you'll be skating on the green line above (or stuck at point 1 on that particular line). It's where business has been for 50-60 years probably, ever since the dawn of the 'company man' who does the work because it has to be done but he/she would rather be doing something else.

Reformed Workaholics

I once interviewed with a company that offered me a job even though I made it clear I already had a job offer that I planned to accept. For two days, they tried to woo me over. When I asked about the vacation policy, they replied, "We don't believe in vacations." How do you prevent burnout? "That's up to the employees to manage," I was told. They scheduled people for 6 day work weeks. There was no work-life balance.

That company is no longer in business.

Lately, an article about how the best employees are not the workaholics has been getting a lot of exposure. It mentions finding balance in work and life. It talks about a loss of productivity after "too many" hours. I will add a few more things that cause workaholics to be less-than-stellar employees:

• Downtime creates an opportunity for creativity. Sometimes stepping away from issues allows you to explore other areas that might have influence on the paradigm you have about work.
• There are roles in our lives that only we can fill. No one else can be a father, husband, son or good friend. Someone else can always fill the role of VP, manager, director, shoe-shiner just as well as you.
• Working a lot of hours puts pressure on efficiency, not on effectiveness. We handle work the way we've always handled work, out of our own habits and traditions. "Oh, this customer wants a proposal. Pull out the template and fire it off." There's no room to think about the situation and its potentially unique characteristics that might allow you to create growth and new opportunities. You might stop and ask what the customer is really looking for. Don't just give them "any color you want, as long as it's black" as Henry Ford famously said.
• Downtime--and this includes time away from the Crackberry and Eyes-Phone (can't look at anything but it)--forces empowerment and engagement on the rest of the team. If they know they can't always reach you for an answer, they have to think through the situation. It's great for learning, development and finding your new leaders.

Thermostat and Thermometer

A leader is the thermostat for the team. He sets the target temperature for vision, collaboration, an ethical and energizing culture and effective communication. However, the leader can't be the thermometer. He or she can't be the one to say that's it working. Only the staff can provide that feedback. Therefore, it's critical you've got people on the team to tell you the truth.

If there's tension between top team members, it's got to be addressed by the leader. Not necessarily in the way that leads to eliminating the "errant" subordinate. That's one of the problems highlighted in a recent Forbes article about the 7 Habits of Spectacularly Unsuccessful Executives. If there's tension, it's going to affect the rest of the organization. There's got to be respect and trust. A leader has got to take steps to correct the dynamics and relationship before a lack of respect turns into disrespect and distrust. (Understand there's a difference between disrespect and dislike. Dislike does not equate to disrespect.) Once the organization gets a whiff of disrespect among any of the staff, they'll be like kids trying to stay out of the way of divorcing parents when both are around.

You also set the tone for right thinking. An electronics factory in China reportedly had several suicides, supposedly related to working conditions. Instead of addressing the working conditions, leadership installed nets around the roof of the building. That's like instituting auditing and inspection rather than fixing the cause of the mistakes. We've all seen that, perhaps done that, but it doesn't make it right.

The thermostat can't know it's sending the right signals unless it's getting good feedback from the environment and soliciting the right ideas, opinions and solutions.

Perfectly Designed

I've often talked about how we are creatures of habit and we can hardly get out of our own way in order to make better change. 1 out of 10 heart patients can't make lifestyle changes--eat better, exercise more, less stress, etc.--but continue to do the things that got them into trouble in the first place.

Today at a conference, friend and management guru Victor Aspengren from Prairie Capital Advisors created a corollary to Einstein's famous definition of insanity: "we are perfectly designed to get the current results." Our lifestyle habits are perfectly designed to give us the bodies we have now. In business terms, our organizations are perfectly designed to get the functional silos we experience. Our corporate culture is perfectly designed to get the politics, low productivity, low morale, high levels of confusion, distrust, destructive conflict and other maladies of dysfunctional teams. Our policies and procedures are perfect for creating the apathy, lack of initiative, and self-centered CYA actions we experience in our projects.

So if those aren't the results you want, it's time to redesign your organization, your culture, your policies and procedures.Otherwise, if you continue to do the same things over and over again, but expect different results, then you know what: you're insane.

Oh, and you might want to rethink some of your budgets and policies to really communicate that people are your #1 asset. (That's another challenge from Victor.)

Habit #2

Life sometimes 'reads' like a Dilbert comic.  Scott Adams has said that even his cartoons sometimes don't even come close to the real-life stories people have submitted. Recently, I had a case of Dilbert deja vu.  (I've just copyrighted the phrase too, by the way.)

Working with a retail store, I realized that they hadn't created a goal for some training they had been doing.
They'd been trying to upgrade the customer service skills of the sales staff. However, unlike Covey's admonition, there was no end in mind--Habit 2 of his 7 habits of highly effective people. "We want our associates to be better at interacting with the customers," the manager said. The training was being received in rather a lackadaisical manner partially because the execution of the training had no purpose except to impart knowledge. One of the metrics for the store is conversion rate--the percentage of people who walk in the door and buy something. "How about if we set a goal of 60% conversion rate?" I suggested by way of a question. I went on, "If we achieve that, then sales are up in the store. That will allow for more staff hours to be scheduled which would be beneficial to those who want more hours. Not only that, but the sales education that's happening strengthens the competitive edge we're trying to get over Amazon, Wal-Mart, Target and even Barnes & Noble." The sales training is one way to get to that important goal, and it provides a purpose for the trainers and the trainees.

Another manufacturing company had floundered with the Lean efforts because it wasn't attached to any meaningful goal in mind. It was being communicated as critical to the strategic efforts.

In a conversation with an HR manager a few years ago, I had asked why she wanted to work on improving the hiring practice of the company. She had suggested the improvement of the practice as a goal. It seemed that the only reason for setting this project as a 'goal' was to relieve her responsibility of turning in annual goals.

After a few ambiguous and vague answers to "what will we get if we do this?", I tried the opposite question: "What would happen if the hiring practice got worse?" Some more vague answers came. "And if we don't hire some of the best applicants, what can we expect to happen to our performance?" "Oh," she said with some energy, "now I get it! I want to improve the way we hire so that we can improve the performance of the company. If we hire the best applicants, we'll be successful. People will stay. Turnover will be reduced. And so my goal is to reduce turnover, not just improve the process. That's the means to the end of low turnover. Perhaps I can also measure if I'm able to hire the best applicants.  Perhaps there's a 3-month follow-up metric--like the 90-day reviews--that might tell me what percentage of people we want to keep or believe are or will be stars. I already have a baseline from the past few years. After improving the hiring process, I can measure if the 90-day reviews increase."

"So, what's your goal?" I asked again. "To improve the 90-day reviews, and reduce turnover," she replied. She got it. Not only were her goals specific, measurable and relevant (3 of the SMART criteria), they had an end in mind for her own functional responsibility and the company's performance. She didn't get stuck by focusing on the journey, but knew what her destination was.

Begin with the end in mind.  Thank you, Steve Covey.

We Don't Evolve in Business

This morning, as on many mornings, on my bike ride, I saw a rabbit with a white tail which flashes conspicuously against the green grass and brown bushes. I remember learning about evolution in school with one of the examples being the moths in London (or someplace in England) that changed their shade of color over the generations so that they would blend in with their sooty surroundings. This thought led me to wondering why rabbits haven't gotten rid of their white tails, and why deer in North America haven't lost theirs. Predators must love tracking those little splotches of white against a dark, natural background.

Though we're not dealing with blind, non-reasoning genetics, businesses too haven't evolved much. We still rely on practices that have been around since before the Industrial Age:

• physical inventories, 
• budgets to control spending, 
• work shifts, 
• 100% inspection (even automated inspection), 
• reliance on hiring interviews, 
• purchasing limits and
• performance appraisals.

They were created for a purpose, and because we had nothing better at the time. However, the purpose is no longer valid, other techniques are available and, in some cases, additional aims have been piled on to these techniques so that the original purpose is diluted and ineffective. These practices are tradition, however. They are sacred cows, not easily butchered for the meat we need. If we really want to evolve beyond our traditions and habits, let's apply some thinking to what we can do instead to be more effective and successful in our businesses.

If you're still wasting resources on the efforts in the list, then you might have a competitor on your white bushy tail ready to eat you for lunch.

“Tell Me a Story” Gets You Farther Than Facts

It’s a marketing truth that story telling captures your customer’s hearts. Recently, I purchased a toiletry item and was pleasantly surprised that it came with a back-story: the item was manufactured and packaged by disadvantaged people who have employment because of my (and thousands of others’) purchases. My satisfaction with the item already has a base of 4 (on a scale of 10) even before I received it because of the story. Maybe not every item can have such a noble back-story but it’s important. An article recently touts that Simon Sinek’s “Start With Why” is the wrong way to communicate to your customers—be they consumers, businesses, venture capitalists, etc.—and that the right way is to start with the story. The author postulates that people buy the story. It’s not the ‘why’ that captures your customer but the story behind the ‘why.’ Other marketing professionals have critiqued the use of Sinek’s tome similarly.

Starting with the ‘why’ might work for strategic planning but not so much with marketing. It’s important also that you’re honest with the ‘why’. In a recent Intelligence Squared debate on whether Silicon Valley has ‘lost its soul,’ it seems that the legendary startups weren’t created for altruistic purposes solely; the founders were also clear that they wanted to make money.

The danger in focusing on stories is that the story gets extrapolated to be generally true of the whole experience, the whole group...even of the whole universe. Suddenly anecdotes are the ‘data’ basis of decision-making. Don’t let it be. Just because the toiletry item has a great back-story doesn’t mean it is the best value (currently I happen to think so...) without getting more data.

Even though the story tells me the ‘why,’ I wouldn’t have purchased the item unless it seemed to also have great value. The ‘why’ didn’t sell me. As humans, we all want a good deal. We might appreciate that Panera Cares operated in such a way to try to feed homeless people if others would pay more for their own meal in order to subsidize the free meals but we don’t in general. We might appreciate Fair Trade goods but if they’re much more expensive than regular goods we don’t change our buying habits in general; we will once and that gives us moral license to ‘sin’ in other purchases. We might oppose slave labor, but we still buy our inexpensive t-shirts from companies we suspect utilize factories that employ ‘slaves.’

Stockholders are Not the Only Stakeholders

Recently in Harvard Business Review, it was reported that 78% of CFO's would make a decision that would increase stock value even if it meant hurting the company in the long-term--such as reducing economic value. 55% would cancel a project even though it had a positive Net Present Value. What is going on here?

Sure, these decisions could increase stock price, which means more in their own and their colleagues' pockets when they cash in their shares, options, phantom shares and other stock equivalents. But it also means that it's going to be harder for the stock price to be sustained in the long run. The company's value will decrease in the long-term. The only saving grace is that three-quarters of the their competitors are willing to do the same.

Here's where you can gain competitive advantage. Do what makes sense. As Eli Goldratt says, the goal of a business is to make money now...and in the future. If you hurt the productive capability there won't be any production in the future. There's a lot of pressure, and a lot of momentum, and a habit of making decisions for the shareholders' benefit. Fight it. Be part of the one in five who's willing to make things right for the long term. As I've pointed out before, it's hard to fight habits; only 1 in 10 do. Evaluate your decisions before you make them in light of long-term value (economic value, or EVA). Challenge yourself to decide differently from what you would have decided in the past. (I'm not saying automatically do something different; I'm saying take a fresh look at the options rather than selecting the one you've made in the past.)

Quick and Easy Business Plan

Recently, I met with a young man who is excited to start his own business.  Like many people who have a passion for doing good and not just making money, he has a pretty good idea. This drive can start young when you open your first lemonade stand to quench the thirst of the passersby on a hot, humid day. Like many entrepenuers, he has the tolerance for risk. However, he wasn't sure of any particulars about the chances of success. I talked him through the 3 C's (or four depending on how you think about the last category). I've learned that successful people may take risks, but they're calculated risks. Therefore, before opening the new "lemonade stand", let's make some calculations.

Customers: No business will succeed without customers, and enough of them. What is the demand for the product or service? What is the typical payment schedule, and what is their ability to pay (i.e. are they struggling with their own cash flow issues)? (This answer will flow into the Cash Flow/Costs.) How much business is done through relationships, and how likely are customers going to accept a new unproven business? Customers have a lot of inertia based on their current spending habits. To get them to break their habit, you need to have a compelling reason for change. Will it be price, delivery, quality, technology or service? How do you learn about contracts, bids or other needs for the product/service?

Competitors: Likewise, what will be your competitive advantage in terms of price, delivery, quality, technology or service (like accessibility)? How will you overcome the connections the market has with your competition? What will be the likely responses your competition will have to your entry, and your attempts to shake up customer expectations? Will they copy, create a workaround/end-run on your offer or will they escalate the battle on the value dimension? How easily can you partner or supplement their business so as to not appear as competition but raise the overall market demand? (Like the proverbial story of the single lawyer in town going bankrupt, but there's plenty of business when a 2nd lawyer moves in.)

Cash Flow & Costs: Write out a story of how your business is going to look and feel, day by day. Start with "Day One" and then "Day Two" and so on. Make sure to include payments you have to make. Determine when income is going to occur after delivery of the product or service. What investment needs to be made: cash, equipment, services, other start-up expenses & fees? Watch out for hidden expenses (e.g. registering your business with your state is often a low fee but then they might require the printing of legal notice which can cost 4x as much). What will be the profit on each "part" of the product or service sold? How many sales have to happen to break-even for monthly expenses? How soon can costs be reduced? How long can you lose money, because costs are initially high, before the cash runs out?

I know people who have drafted a cash flow report for their new business, cut the income in half to be conservative, and were still too optimistic in hindsight. They hadn't thought through the timing of the sales, payments, capital requirements, and the inertia of the customers to stay with their current suppliers.

This is pretty quick and easy, down-and-dirty, pro forma business plan writing. It may not be sufficient for venture capitalists or bankers. However, it does force you to answer some basic but key questions about your business idea. Answer them before you sell your car, home and baseball card collection to finance your new "lemonade stand".

I Am Fourth

No, I'm not part of a league of supernaturally endowed humanoids fighting evil in the world. It's the experience of many employees in an organization. Take this recent conversation:

"What do you think of our retail operation?" asked the regional manager.

"Frankly, I don't think very highly of it," I answered. "You place yourself above everyone else. Now, I'm not just talking about you personally but all of the corporation's management. If I was an employee here, I'd feel demoralized, put down and confused between the espoused values and the real values."

I continued, "Your visit today to a store location is a good example. You came unannounced. This shows no respect for the local store management. You consume the attention of five customers because you distract the associates from serving real customers with long, unimportant conversations. By having the visit unannounced, it served your purpose of seeing the store 'in the raw' so to speak, but you didn't allow the store manager to put on extra staff so she could meet with you and still serve the customer. When you have their attention, they can't respond to pleas for customer assistance, so the customers' experience today is diminished. In fact, you're countermanding your own expressed values that the customer comes first. Customers needs are ignored while yours are met. Do you know why third shift in most factories is the most productive?"

"No," he answered suspicious of where I was going with the question, especially now that I wasn't sugar coating my feedback.

"Because there aren't any management or engineers around to interfere with steady, consistent operations," I explained. "People are allowed to do the work they were hired and trained to do without any interruptions."

"Above a certain level in the organization," I pointed out, "all I see are white males. This seems to deny that there are any other class of person with management skills. That's just false besides hinting at some violations of US law. It makes management meetings very comfortable, however."

"All this indicates is that you've put management as the number one priority for the organization," I concluded. "But that's not all."

"Secondly, your systems make it hard to serve the customers. This is a book store. Things are arranged by topics which only helps one kind of customer--the browser--but hinders the customer who knows what they're looking for. Also, your computer system only tracks one location but your marketing software designates multiple locations for product placement. This creates difficulties for store associates to locate the item when they're assisting a customer. It makes them look stupid and ill-trained. When they try to use the only tool they have to help a customer, it only gives them the one primary location. They don't have access to the marketing system that might suggest where else it might be--like feature displays or other categories. So they lie--sometimes--to the customer about whether they really have the product or not, or blame other customers' lazy habits of replacing items where they found them. It's just bad policy."

"You don't pay for product training," I added. "So associates are not knowledgeable and able to help customers who want to know about the latest or best choices. You want them to be knowledgeable and helpful, but the only way to become so is to sacrifice their own family time to hang out in the store and browse themselves. Otherwise, the manager is not allowed to have cost overruns by letting employees have training time on paid time. (All of this is horrific for part-time employees who have no chance in hell of learning about the product or staying aware of what's sold out, or where things get moved to.) Organization profits are king, right? Yet profits are reduced when customers walk away without confidence in the store's ability to provide the best product guidance."

Rhetorically I asked, "Aren't you sorry you asked? Just through observation, I can tell you an order of hierarchy: corporate management, stockholders, customers, employees. This isn't at all what the corporate values say, but it's the order that's lived in your stores and other stores in the other regions. I can tell you too that the only ones that are satisfied are the first group--corporate management. They are the only class of stakeholder whose needs are being met. Because customers and employees are lower down, profits are not as high as they could be, and therefore stockholders are suffering too. But the stockholders at least get some return for the success of the company. And that's why they haven't rioted yet."

"Store level managers and employees are last because they get zilch out of the whole deal:  no support to make them feel successful. At the end of the day, they're not sure how they contributed to anything and nothing was given back to them to help them be better at their jobs. They don't even get respect from the next tier up, because regional management can't even provide the common courtesy of an advanced notice."

"And here's the kicker," I said with a wink. "Your medical costs are sky high because of this hierarchy. When employees have excessive workplace stress and don't like the environment and atmosphere in which they spend most of their day, they have more illnesses and injuries. By pushing the needs of employees down the ladder, you're actually shooting yourself in the foot making it harder to meet the corporation's needs for higher profits. Absenteeism is rampant causing extra hassle for store management, and health insurance costs are too high. I don't even have to look at the data, but I'm 80% confident that it will prove me right, just based on the observations in one store location.  There's one thing in your favor to keep these costs low: the extensive use of part-time employees who have no benefits. Not a good thing from the employees' perspective though."