How these two things happen speak volumes about company culture

17You can gain deep insights about an organization’s culture by understanding:

  • how decisions are made
  • how recognition, aka “kudos,” is awarded

Consider asking those two questions about a company the next time you are interviewing for a new position, in addition to the other best job interview questions.

The answers to these questions reflect the leadership style and organizational dynamic established by the leader. As a recovering consultant, I could not resist the impulse to reduce this concept to a two-by-two matrix:

Learn about a company culture by understanding how decisions are made and how recognition is awarded
Learn about a company culture by understanding how decisions are made and how recognition is awarded

 

In the lower left corner, we have a culture of lobbying and arm twisting where for decisions and recognition the forum is private and the basis is mostly on influence. This culture is often found in teams with weak leadership, where the boss is routinely peppered with closed-door “advice,” either thinly or thickly disguised as an agenda of personal advancement. Team direction changes frequently and indescribably, relying on informal channels of communication to disseminate the new direction. Expect high attrition from staff who value transparency and meritocracy.

In the upper left corner, we have a culture dominated by the “squeaky wheel” where for decisions and recognition the forum is public and the basis is mostly on influence. Tantrums, meeting hijack, and open conflict are reinforced as means to an end by the steady advance of a vocal minority in the organization. While also a product of weak leadership, the only improvement over the lower-left lobbying culture is that the rules of the game are publicly known. Anyone unwilling to compromise personal integrity for career advancement will not last long in this culture.

In the lower right corner, we have a stable, humble culture of relative introverts where for decisions and recognition the forum is private and the basis is mostly on merit. This culture likely reflects the self-image and natural personality of its leader. I’ve chosen a cupcake as the image to reflect this culture because it is a satisfying individual treat. While it might be relatively boring, this culture will also likely be more successful than those on the left side of the matrix, as individuals who cannot compete on merit alone and those who crave public recognition will exit.

In the top right corner, we have the most transparent, extroverted, results-oriented type of culture in this matrix, where for decisions and recognition the forum is public and the basis is mostly on merit. The multi-tiered party cake represents the culture in which the success of an individual greats benefits for the group. Decision making and recognition are public and merit, meaning that the “rules of the game” are clearly demonstrated and objective. While this culture requires a strong leader who is not afraid to hire “A players”, it will likely have higher performance and lower turnover than the other squares in this matrix.

In this summary, I have done my best to withhold judgement and simply provide a framework for readers to identify a company culture so that they can best chose the one that fits their own needs. If you have other “cultural diagnostic” questions to share, please leave a comment!

If you can’t answer these three questions, you won’t increase revenue

In the words of Peter Drucker, patron saint of business leaders everywhere, “there is only one valid definition of business purpose: to create a customer.” Many professionals in private practice, such as designers, health care providers, architects, etc., rely on the quality of their work to sustain the growth of their business. At some point, repeat business and word-of-mouth referrals become insufficient to supply revenue required to grow (or sustain) a business. Larger companies often face the same challenge, but this post is directed more towards small businesses run by professional service providers.


Whether you have just set up your own professional service business, or are looking for more “tech savvy” ways to grow revenue, invest time in understanding the answers to the three questions below and you will see the payback very quickly.

  1. Who are my contacts, leads, and customers? Customer Relationship Management (CRM) has evolved several generations since the Rolodex. A web-based CRM database gives you secure, fast, permanent access to the contact details and history of interactions with everyone who’s paid you, and everyone who hasn’t – yet. Ideally, your CRM system will be integrated with marketing and content management tools (see below) to work more efficiently.
  2. Is my most engaging content reaching my most valuable customers? Brand reputation is maintained by the quality of the products and services their companies provide. But at any given moment, a very small percentage of the customers who are aware of a brand is actually purchasing from the company. The rest are either recent buyers (potential repeat customers at risk of buyer’s remorse) and future buyers looking to learn more about a company’s capabilities and form an emotional connection (because all commitments, financial and otherwise, are made with the head and the heart). To establish and maintain this connection, a firm first needs to generate great content, and then ensure it reaches key audiences through the channels they use most. This requires content management across multiple channels: web, email, blog, social media, and advertising. A structured approach can prevent spinning wheels and slipping down rabbit holes: here’s a very pragmatic checklist for creating a blog from Build.
    • Which tools? Squarespace and Jetstrap are powerful and intuitive website building tools, WordPress is a leading blog management site that can easily add more functionality, Verticalresponse makes managing email marketing with analytics very straightforward, and a presence on LinkedIn, Twitter and Facebook are table stakes for any business these days.
  3. Which lead channels are producing the most profitable sales? Don’t forget, you’re doing all this to make more money…so the last step is to check that all your contacts are reading all your content and actually buying more of your stuff. To do this, make sure the tools you choose provide the data–or even better, a button to click that gives you the answer–about which lead channels are producing the most profitable revenue streams. Should you increase your advertising budget, block out more time for in-person events, encourage more personal referrals, or nurture more repeat business?
    • Which tools? The CRM tools referenced in #1 above will all provide a sales funnel and lead analysis package. Of course this can be done with good old fashioned spreadsheets, too: feel free to contact me if you need help getting started.

Setting goals only works if it’s personal. Four steps to do it effectively

Adapting Tolstoy’s famous opening line about families to business: “every unsuccessful business is unsuccessful in different ways.” One way that I’ve encountered in numerous settings is the disconnect between corporate goals and the work that people do every day. As we’ve come to understand employee motivation more completely over the years through the work of authors like Daniel Pink, being able to tie daily tasks to larger objectives or a shared sense of purpose improves retention and performance.
Dilbert.com
But setting corporate goals is a difficult process because, by necessity, they are big. How can we phrase them in a way that is actionable — so that regular Joe and Jane can come to work each morning, do their best, and make a measurable difference? It’s a tough challenge, but surely the most profitable company in the world has this figured out…let’s see what we can learn from ExxonMobil’s goals!

Here are some excerpts taken from the 2011 Corporate Citizenship Report, which highlights performance and goals in six areas. Below are the first statements under “what we plan to do” for each of those areas:

  • Environmental Performance: “Continue to implement recommendations on improving oil spill response capabilities”
  • Managing Climate Change Risks: “Continue to improve energy efficiency by at least 10 percent between 2002 and 2012 across our worldwide refining and chemical operations”
  • Safety, Health, and the Workplace: “Continue to learn from personnel and process safety performance metrics to help achieve our goal that Nobody Gets Hurt”
  • Corporate Governance: “Continue to recruit highly qualified non-employee directors”
  • Economic Development: “Partner with the United Nations Foundation to develop a report examining the most effective investments to advance women’s economic empowerment”
  • Human Rights and Managing Community Impact: “Continue to review existing practices toward making appropriate adjustments relative to expectations under the U.N. Framework and Guiding Principles on Business and Human Rights”

Those are some high level, long term goals, and as the largest company in the world, they should be. But coming to work every day, how many of the 82,000 employees can make a direct contribution to these? The answer is none — not when the individual’s goals are worded this way. The critical step that leaders at all levels, in companies large or small, must take is to translate high-level business goals into aligned, measurable goals within an individual’s span of control.

How to do this? Just like you’d knock down a wasps nest: very carefully and with plenty of preparation. I’ll oversimplify in to these four steps; if you’re interested in a more complete set of instructions, please reach out to some of the folks in my network listed below who do this for a living.

  1. Set your overall organizational goals in specific measurable terms. For example, grow free cash flow at 20% CAGR for the next 3 years.
  2. Decompose the high-level goals into the measurable sub-goals based on how the system works. In the example above, the major levers on free cash flow are profit, net capital expenditure, and net change in working capital. At the next level of detail, the major drivers of profit are revenue and operating expenses; the major drivers of CAPEX are the number of capital projects and the size/schedule of each. Continue to expand out these measurable sub-goals until you reach tangible metrics that can be influenced by leadership teams and individual contributors (things like revenue from specific customers, OEE, and expenses by category).
  3. Measure the gaps and set targets for the detailed goals so that they add up to meet the overall goals. It’s math. This is the easy part compared to the next step.
  4. Have a series of conversations with your leadership teams and individual contributors to agree the targets, improvement projects, and timelines so that people understand the numbers, how they are mutually dependent, and take ownership of the outcome. These conversations can be truly defining moments for organizations.

But don’t take my word for it – seek out the advice of some talented folks who have made goal setting and translation a focus of their careers.

5 ways to make your next business trip less aggravating

$30 for a checked bag, but this service is included.
$30 for a checked bag, but this service is included.

In certain ways going on a business trip is like having kids. When you make the decision to have another one, you have forgotten the most painful parts of the previous ones. And on the day you make the commitment to do it, the actual event is far enough in the future that it doesn’t seem real — until you wake up in a strange room in the middle of the night and realize “this is happening to me right now and there’s no going back.”

I spent 11 years as a road warrior working on client sites, flying 2-8 times per week  and eating dinner in restaurants more than 250 times per year. I’m not trying to claim victory (if you feel the need to comment that you have traveled more, please do, we’ll all be impressed). Similarly, I’m not asking for any pity; it was a choice I was willing to make at the time. The reason for citing my travel pedigree is to suggest that I have learned some of these lessons the hard way and that the tips I’m offering are effective. I hope you enjoy your future travel a bit more as a result.

  1. Be nice. The ticketing agents who collect baggage fees, TSA agents who inspect your toothpaste, and rental car clerks who tell you the only car left in Cedar Rapids, Iowa is a Chevy Impala that costs $300/day are people who got up in the morning and went to work just like you. Call it “the Golden Rule,” “catch more flies with honey,” or one of many other cliches: in the heat of the moment we can forget basic respect for others. Smile and address people by name. Read Carnegie’s classic for more similar techniques.
  2. Bring stuff home for the people you miss. The cost isn’t important; making the effort and as a sign that you were thinking of them while you were away really does count.
  3. You don’t get what you don’t ask for. Stuck in a middle seat and the map looked totally full at check-in? Stop at the service desk on your way to the gate and ask if anything has opened up (this got me a free aisle seat in Economy Plus last week). Hotel room on the club floor? Rental upgrade to the convertible? Help someone else have a little bit better day and they are likely to reciprocate (see #1 above).
  4. Soak in the experiences where you are, rather than wishing you were home already. If you catch yourself burning energy and attention on where you were yesterday or where you’re going tomorrow, try to bring your attention back to the present. Who knows, this might be your only chance to experience Cedar Rapids in this lifetime. Thousands of people have actively chosen to live there: find out why and enjoy it.
  5. Embrace the unexpected. Terry Leahy quotes British military strategists frequently in his great new book, including this one from Sir Michael Quinlan during the Cold War: “What does happen is what we did not deter, because we did not plan and provide for it, because we did not expect it.” Laugh instead of crying or yelling. You and the people around you will enjoy the unexpected situation much more.

Whether you travel for work once a year or every day, it is easy to catch yourself thinking “why me?” when plans go awry. Business travel doesn’t have to be agonizing, and I hope these tips help you.

Cedar Rapids is one of hundreds of locales I was fortunate enough to visit during my first stint in consulting. I’ll never forget the Amana beef cookoff, Hibachi, and the friends I made there. I joke because I love.

Four ways to prevent employee incentives from destroying value

With the new year comes a new set of business goals and likely a new set of personal performance objectives for your team. If you work in sales, you probably have a new boss, too. With the best of intentions, most organizations I’ve encountered set the incentive structure in a way that leaves company profit on the table and erodes personal initiative. Before your team adopts Homer Simpson’s work ethic, use my 4 tips below to adjust your incentives

Any team will consist of high-, average-, and low-performing individuals. The modern incentive toolkit has two main features: traditional “carrot and stick” incentives that keep everyone accountable, and others tapping into intrinsic motivators that spur your top performers even higher. Daniel Pink describes these as autonomy, mastery, and purpose. And don’t depend on money alone as a reward. While Alfie Kohn takes an extreme view that pay for performance flatly doesn’t work, Michael Sturman’s research shows it is more about careful choice of how and how much you pay (hint: more than the competition).

  1. Create tiered goals to prevent “checking out” – For the core operational tasks in your organization, publish goals well in advance. Set rewards proportional to the minimum acceptable, target, and stretch levels. The metrics you choose for individuals should map clearly to overall business goals.
  2. The best rewards are unexpected yet consistent – Daniel Pink describes this as using “now that” rewards instead of “if, then” rewards. By providing recognition and non-monetary rewards (e.g., free lunch or a nice company fleece) to the people who embody the culture you wish to develop in the team, you will incite more of the same. When those rewards come as a pleasant surprise (but are completely unsurprising in hindsight), you are rewarding your best people for what they “would do anyway.”
  3. Small rewards for everyone, big for the best – Another variant on #1 above is to set a target for the group as a whole and also reward the top performers with a larger prize. This technique works particularly well when you have built a team with what organizational psychologists like David Hekman call high organizational identification and low professional identification. More simply, their sense of “I am Google” is stronger than “I’m an engineer.”
  4. Choose personal improvement areas from a list of company priorities – Lastly, ratchet up the sense of ownership for outcomes by providing choice. For example, provide your team members with the 5 key metrics for the business, and let them choose which 3 they will improve by 10% over last year.

It should be obvious that how you manage to targets matters (look for more on this topic in leadertainment). But carefully setting performance targets can avoid destroying both profit and motivation in your team.

Re-focus your team for the new year

Team building exercises can quickly turn into embarrassing wastes of time. But the best ones can be insightful, efficient, and strengthen communication among team members.

The New Year is a great time to tune a team’s working practices and sharpen focus. Below is an exercise I developed in my consulting days that got positive reviews internally and from clients. It takes about 2 minutes to set up and typically after about 15 minutes the torrent of new ideas has reduced to a trickle. Done regularly, it can become one of the rituals and myths that define the culture of your team. Tried this? Have a better exercise? Leave a comment and let me know!

  1. [Optional] send a quick email to the team members letting them know what the exercise will cover so they can prepare ideas in advance
  2. Hang 3 flip charts on the wall. Label them: Stop, Start, More.
  3. Start the discussion by reminding the team of their shared goals and priorities. Then direct everyone’s attention to the flip charts. In order to meet our goals, what are we currently doing that we need to stop, i.e., what are the distractions and wasteful activities? What are we not doing that we need to start? And what are we already doing well that we need to do more? See my previous post on New Year’s resolutions for more on the last one.
  4. Let everyone loose with markers to add their ideas to the flip charts. Circulate to encourage people to add and clarify comments.
  5. As the scribble rate subsides, bring the group back together to review and discuss the results. Get a sense as to which ideas are broadly supported and which are pet peeves.
  6. Either during the session or afterwards, follow up with the team members with which actions to pursue as a result of the feedback. Where possible, empower the folks who provided the ideas with the accountability (and resources) to see them through to completion.

Three steps to grow faster in the Information Economy

Behind barriers are new markets for growth
Behind barriers are new markets for growth

One of the key components in my career search has been joining an organization with a high growth rate. This has prompted me to think about what steps businesses can take to scale a “killer” idea into new markets. Below is a loose framework with a couple examples. Does it resonate with you? What examples come to mind to strengthen or disprove the theory? I look forward to your comments, and I hope that my lesson for success doesn’t sound too much like the Underpants Gnomes.

1. Generalize your competitive advantage. Start by making an abstraction of what makes your businesses viable. Like any tough problem, the answer will be obvious in retrospect. It might be helpful to answer key questions on your strategy first and then generalize it. Also Jim Collins has written some great books comparing companies and what contributes to their success or failure.

2. Translate across barriers to new markets for growth. What are the barriers that stand between your strategic advantage and new growth? These barriers could be functional (e.g., moving from finance to HR), geographic, or up/down the supply chain. Peapod by Stop & Shop, salesforce.com, Lean/Six Sigma as management fads, and Starbucks VIA/Verismo are all examples that spring to mind.

3. Deploy with operational excellence. Regardless of the market you choose (or create), your team will need to expand with speed and efficiency. Michael Porter argues that operational excellence is a prerequisite, not a strategic advantage. Jack Welch reminds us to “pick a general direction and implement like hell.”

The Myth of Unintended Consequences

A quote that rings in my ears from time to time, especially when I get caught out in the rain, is: “There is no such thing as bad weather — only a poor choice of clothes.” I’m not certain where I heard it first but I’m going to attribute it to my colleague Taylor’s mother.

In business, politics, or our personal lives we often hear much hand-wringing and excuse-making about unintended consequences. Today I offer you a more pragmatic view: “There are no such things as unintended consequences — only a poor choice of solutions.” After looking at a couple examples, I’ll suggest how you can help your team avoid unintended consequences by:

  • developing a more robust understanding of the problem and the system that governs whether the problem occurs
  • executing effective trial solutions, and then leading change effectively at full-scale

Recently, a few examples of unintended consequences in the news have reminded me of other historical examples. Copenhagen is trying to get more of its residents to commute using bicycles. At the same time, concerned advocacy groups also started promoting bicycle safety through helmet use. What happened? Ridership dropped. Let’s look quickly at a few more examples for reference:

As leaders, we all understand that the future is uncertain and “the ideal time to make a decision is never” (see diagram).

The ideal time to make a decision is … never. Increase your certainty in decision making by steepening your team’s learning curve with a structured approach.

Over time, we gain more and more information about the system and can be more certain. The slope of this curve depends on the method we use to understand the system — and sadly many teams rely on nothing more than brainstorming. For more about using a structured approach to understand a system quickly, read my previous post challenging the effectiveness of “5 Whys.”

When it comes trialing solutions and then managing change, there are countless “proven models” to follow. Two resources I can recommend are:

  1. John Kotter’s Leading Change — straightforward and timeless
  2. The Build Network has concise, informative articles targeting senior leaders in rapidly growing business. One example is about mapping a business model before you improve it.

Do you believe in unintended consequences? have you busted the myth? Leave a comment!

Jury Lesson #1: Know Your Customer’s Buying Process

Justice is blind. And apparently not very modest

Jury Lesson #1 is: know your customer’s buying process, not just what content matters to them. We, the jury, were the customers of the two lawyers (maybe they were attorneys…sorry I don’t know the difference) arguing a civil case regarding personal injury damages. The plaintiff’s lawyer spent his opening statement, and the rest of the first day’s testimony, detailing the amount of pain and suffering this poor old lady endured after she fell off the sidewalk one sunny July day at an estate sale. Sure, there was some uncertainty about the exact cause of the fall, but there was no disputing how miserable her life was afterwards and how she deserved compensation. It was very moving content, communicated in a persuasive style.

The defendant’s lawyer (representing the property management company), stated in a firm yet heartfelt manner that sometimes terrible accidents happen to good people. She reminded us that our role as jurors was not to assess the magnitude of her suffering without first deciding whether the evidence established both negligence and cause. Her evidence trivialized both the magnitude of the defect in a suspect sidewalk seam, and the likelihood that a 200lb elderly woman could have flown 14 feet from tripping on that seam to landing on the asphalt.

When the judge handed us the verdict sheet to fill in and instructed us on the relevant laws, our decision making process was clear: step 1, negligence (requires five points in the affirmative); step 2, cause; step 3, damages. In deliberations, we all felt terribly for the woman and her family. We also never got a “yes” past step 1b and the case was decided before our pizza got cold.

So to bring that lesson back to the world I normally play in–marriage, parenting, and business leadership–I am paying much more attention to the process by which  my customers (and wife and kids and colleagues) make their decisions, in addition to the content. What sort of vendor certification do they need to cut a purchase order? How many other parents do we need to meet from the new pre-school for my wife to feel comfortable? Which pajamas do I want my 3 year old to wear (because once she knows, she will choose a different set)?

I hope you find success by making the same shift in emphasis, especially by lifting the burden and asking the customer about his or her buying process directly. Whether you are in or out of the courtroom, a lot is riding on that decision.

What tips do you have about understanding your customer’s buying process? What crazy jury stories do you have? Looking forward to your comments!

photo: shutterstock

Organization’s Evolution Summarized in Four Words

During my ten plus years in industry, I have seen countless examples of (and even been part of a consulting team working for) organizations failing because they are trying to run before they can crawl. Working on the wrong things is never a deliberate choice, just a failure to accept the current reality. This post isn’t about trying to out-jargon the smart, motivated fellows who have defined organizational culture in nuanced and clever ways. This post will help you assess where your team stands in its evolution and help you focus your energy on the right changes.

What happened?

I’ll summarize the stages of any organization’s evolution in four words: Integrity, Discipline, Excellence, Innovation. Money, careers, and trophies are lost by getting the first two wrong; success and magazine cover articles are gained by getting the last two right. You can assess your own organization by asking “where does my team’s energy go?” Let’s look at the major phases in an organization’s evolution:

  • The Age of Integrity: “we meet our commitments.” Before establishing Integrity, life is hand-to-mouth, as the team’s energy goes into getting customer orders shipped, making payroll, and keeping software and equipment operational. Turnover is high, moral is low.
    • Establishing integrity means not burning down your refinery, not harming patients in your hospital, or not hacking into voicemail to write stories in your tabloid.
    • To move through the age of Integrity in your organization, try creating basic values and operating principles for your organization, lead by example, and make it clear that people who cannot uphold those expectations must leave. The process industry offers rigorous tools like Sutton’s book on PSM as examples.
  • The Age of Discipline: “we do routine things routinely.” Before establishing Discipline, life is unpredictable, as the team’s energy goes into managing the SNAFU of the day. Heroic leaders thrive in this environment, swooping in to save the day, while frustrated employees shrug their shoulders and wait for the day to end.
    • Establishing Discipline means always getting planned maintenance done on time, or always getting invoices out the same day without errors. Routine aspects of your business do not take disproportionate or varying levels of effort.
    • To move through the age of Discipline in your organization, try setting up the natural work teams in your organization like pit crews: they have clear responsibilities, effective tools, a sense of shared goals, and time to train and practice. Save everyone’s brain and brawn for the problems no one’s encountered yet. The Marine Corps embodies this belief in Warfighting.
  • The Age of Excellence: “we perform better than the best.” Before establishing Excellence, efforts go towards achieving budgets and benchmarks. Pet projects, activity-based improvement programs, and self-promoting corporate banners abound. Behind the proud facade of any “top quartile” organization is the fear of being discovered as an impostor, when a truly excellent competitor surges past. Collins’ How the Mighty Fall offers great lessons from  businesses getting stuck in this phase.
    • Establishing Excellence means never setting sights on the industry average or best in class, but knowing these are artificial limits and looking far beyond.
    • To move through the age of Excellence in your organization, try rewarding people for exposing opportunities that go beyond budgets and benchmarks, and ensure the organization has a robust set of problem solving tools available to realize those opportunities (hint: the tools don’t have to be in bestselling books or contain Greek letters, they just have to get results).
  • The Age of Innovation: “we harness creative destruction to surge ahead.” Before establishing Innovation, organizations chase diminishing returns and evaporating markets. Risk aversion, which has been an asset so far, becomes a liability which hamstrings facing nimble competitors.
    • Establishing Innovation means never letting a pipeline of novel products and never shutting down the internal Skunk Works that spawns new processes to provide a competitive edge.
    • To move through the age of Innovation in your organization, sprinkle a pinch of dehydrated Steve Jobs into the coffee each morning, and read up on the theory and practice of harnessing Innovation in my previous post.
image: delamagente.wordpress.com