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How leaders train their people to fail

It goes without saying that leaders are driven to succeed—to do the best they can for both themselves and their organizations.

It also goes without saying that they expect their people to succeed—to do well in the jobs they’re paid for, meet and exceed targets, handle projects effectively, produce new ideas, create constructive relationships with colleagues and business partners, develop the people around them, reach their own potential, and so on.

Yet all too often, leaders set themselves and others up to fail. They “throw sand in the gears” of their organizations, by creating conditions in which under-performance is guaranteed.

That’s a hell of an indictment, so let me explain it.

For more than a decade, I’ve encouraged my clients to reduce all their strategies to a few goals and a series of 30-day action plans with specific people responsible for each result. This has four critical benefits:

  1. It forces people to break work down into “do-able” chunks, and to focus on the few things that really matter rather than the many which otherwise crowd their agendas.
  2. It puts immense pressure into an organization, as 30 days isn’t long and there’s no time for wheelspin. When it’s clear exactly what needs to happen, by when, and whose name will be called, people have to put their heads down and get moving.
  3. It enables you to see, very quickly, whether your strategy is on track or needs fine-tuning, and how the people responsible for various actions are doing. Fast feedback and accelerated learning let you deal with problems and opportunities in as close to “real-time” as possible.
  4. It enables you to quickly praise or reward people for a job well done, or guide, sanction, or replace those who don’t deliver. So the very process of driving your strategy becomes a powerful performance management process. And because success does lead to more success, celebrating some quick wins provides important motivation.

Making plans and assigning work is the easy bit. The hard part comes when you start reviewing progress. For that’s when things either get a boost or fall apart.

Every time you bring your team together, you have an opportunity to either turn them on or turn them off. The way you craft and conduct your conversations will either bring out the best in them or the worst.

Review meetings need to be both respectful and robust. So on the one hand, people must be treated decently. They must be listened to and given the sense that they are valued and their ideas count. But on the other hand, they need to know that your purpose is not to create a “social club” or win a popularity contest.

This is about work and results and progress. Everyone must know that they’re expected to deal in facts and well thought-through opinions, and that there’s zero tolerance for blaming, bluster, bullshit, or excuses.

I’ve sat through any number of these review sessions, in companies of many types. Some leaders get things right: people come well prepared, the conversation is informative and constructive, and they leave feeling positive and knowing exactly what they need to do next. But often, things break down quite quickly.

Typically, everyone pitches for the first meeting. The first few people to report back do it well. Mike, Sue, and Dumesani seem to have a grip on things and achieved what they had agreed to. And they’ve thought about what they need to do in the next 30 days. They get a “thank you” and a pat on the back. Smiles all around.

But then there’s a hiccup. Damien couldn’t do what he should have because he was still waiting for budget approval. Or a supplier had let him down. Or he’d had to deal with some emergency or other. Or he hadn’t been able to recruit a key person because the headhunters hadn’t come back to him. Or the IT guys hadn’t delivered. Or Jeff or Derek or Sam or whoever had been away for much of the month and hadn’t been available to discuss certain issues. Or…

What the leader should do when this happens is come down hard on the individual, question each of his “reasons” and make him explain why he couldn’t do something about them, demand that he take his plan for the next 30 days 100% seriously, and make it clear to everyone that such behavior is not acceptable. In other words, the “rules of the game” must be firmly established right from the get go.

What the leader actually does when she gets the ducking and diving is say, “Oh, OK. Thanks, Damien. Well, do try to sort those things out and get things moving before the next session. Now, let’s move on. Who’s next?”

In that moment, the leader has done two extremely dumb things: first, she has taught Damien that not meeting commitments is acceptable, that non-performance doesn’t matter. (And she has thanked him for letting the team down!) But even worse, she has taught the whole team the same thing. So her very first review session has set the tone for trouble.

When the next meeting comes around, one or two people don’t show up and more of them report that they haven’t done what they promised. Even fewer pitch for the third meeting and there’s a longer list of excuses. Meeting four gets called off because too many call in to say they can’t make it. Meeting five gets rescheduled a few times, but then doesn’t happen at all.

Game over!

Strategy reviews are, in effect, training sessions. You can make them work for you or against you. Clients who use my 30-day planning process say it’s the best thing they’ve ever done. The pity is that things so often start with a bang but end with a whimper. And that clever executives keep wondering why executing strategy is so hard, when it’s they who enthusiastically agree to a sensible way of working then show they didn’t really mean it.

Effective leadership requires tough love. Leaders need to show empathy, foster teamwork, and be unfailingly polite to their people. But they also need to instill discipline, enforce compliance with agreed procedures, and show courage in handling those who play fast and loose with their organization’s future.

Notions like “servant leadership, “principled leadership,” and “values-driven leadership” are all popular. However, if they’re not leavened with firmness, they cannot possibly drive performance and results. Being nice is no substitute for managing. Empowering people does not mean simply letting them loose and leaving them free to do or not do whatever they choose.

The buck stops on the leader’s desk. He owes it to himself to use the power of his position to make things happen. If he doesn’t, he’ll undermine himself because his people will know in a flash and lose respect for him.

If bad habits are allowed to creep into a business, it’s hard to get them out. Only the leader can stop them in their tracks. And strategy review sessions offer the ideal forum for doing it, because they usually involve senior people who, in turn, teach the rest.

Of course, virtually any other get-together—even those chance encounters in the passage where people share ideas or update each other  about projects—provides a similar opportunity. But the discipline, structure, and status of a 30-day review makes it special. Not to be wasted.

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Rules for strategists

Every company today faces growing uncertainty and complexity. Executives are under increasing pressure. Employees are nervy, and many are not fully engaged in their work. So how do you stay competitive and keep producing results?

What you don’t need now is another complex formula. So instead, here’s a simple checklist to remind you of what’s really important and to keep you focused.

Keep it on your desk. Pin it on your wall. Share it with your team. Use it in your meetings and strategy review sessions. And if you think it’s just too simple, read it again, and ask, “Is this what I do?… Is this the way we work around here?… What must change?”

  1. Your #1 challenge as a leader is to take your people with you. So create a climate for high performance and engage them constantly in a rich, robust conversation.
  2. Accept complexity, but simplify everything you can. Cut through clutter and focus on the few things that make the most difference. You have limited resources and a lot to do, so don’t try to do everything and be everything to everybody.
  3. Know what you’re aiming for, and spell it out loud and clear and often. Make sure your entire team understands your purpose, strategy, values, and priorities. You can never communicate enough, so keep repeating yourself.
  4. Focus on your “right” customer … forget the rest. Create clear criteria for defining your “right” customer (industry, size, growth potential, reputation, buying power, ease of doing business, ability and willingness to pay, what they can teach you, etc.) Make these criteria clear to all your people. Be ruthless about customers that don’t fit—they’re a dangerous distraction and you can’t afford them.
  5. Get your “basics” right. Put “gas in your tank and air in your tyres” and do what you must to get your “engine” firing on eight cylinders, not four. Strike a balance between consistently meeting customers’ current expectations and surprising them with something new, better, or different.
  6. Relentlessly drive value up, costs down. It’s the only way to compete.
  7. Learn from everything you do, and share new insights with your whole team fast. The more you learn, and the quicker you do it, the more adaptable your company will become.
  8. Hold your course. Be boringly consistent and persistent. Don’t be tempted to zig-zag. Sustainable strategy might be an impossible dream, but you have to repeat yourself for some time to hone your performance and build key resources and capabilities.
  9. Be ready to change when you must … then do it with everything you’ve got. Gather all the information you might need. Think about what you might need to change, and how. Develop the strengths that will matter. Practice, practice, practice. And when the time comes, don’t dilly-dally—go for it!
  10. Pace yourself … when you think it’s time to make a new decision, ask, “Is this really the time? If it’s not, wait. Sometimes, doing nothing is best. In another day, week, or month, you’ll have more information and a clearer picture of what you need to deal with. And it’s quite possible the risks you see right now, or the challenges you think you need to respond to, will have come to nought.
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Eurozone meltdown is tripping the world into decades of trouble

The news out of Europe is terrible. Day by day, things get more dire. However difficult the past four years were, there’s much worse to come. As The Economist puts it (May 12), “the night terrors are back.”

First quarter growth for Germany came in at 0.5%; the Netherlands and France showed no growth; Italy contracted by 0.8%. Greece by 6.3%. The Eurozone as a whole came in flat. More than half of Eurozone countries are now in recession. Unemployment in the 17 hit 10.9% in March.

After years of dithering about what to do about Greece, it’s now clear that kicking that can down the road was always a bad idea. Policymakers have run out of road and hard decisions must now be made. U.K. prime minister David Cameron sees this as “make or break” time.

The only thing that came out of the recent Greek non-elections was proof—as if it were needed—that Greek voters can’t live with the tough conditions imposed on them by the ECB/IMF bailout package that was signed only a few months ago. Their economy has shrunk by 20% in five years. Their lifestyle has gone to hell in a hand basket. Many of them are struggling to survive. They’ve lost hope. The tragedy of their plight is captured in a headline in the New York Times“Increasingly in Europe, suicides ‘by economic crisis.'”

Greece has been in recession for five years, and can’t pay its bills without even more more help. The central bank now holds just $1.9 billion in cash. There are fears of a run on banks, as withdrawals rise. Even if everything goes Greece’s way from now on, it will take decades for the country to trade its way out of the hole. (Will tourism, olive oil, and goat cheese do the trick? Will Greece suddenly become a manufacturing powerhouse, a financial hub, or the next Silicon Valley?)

The elections failed to produce a new government and highlighted deep disagreement about the best way forward. No party won enough support to assume power, and despite days of intense haggling after the poll, politicians were unable to put together a coalition to govern. A judge has been sworn in as interim prime minister to “manage” the place until new elections are be held on June 17—and who knows what will happen afterwards?

Even though it seems most Greeks would prefer to stay in the Eurozone, most analysts believe Greece has no choice but to default on its debts and get out. The bust-up would be traumatic, and the impact nasty. There are massive legal hurdles, and no agreed way of making it happen.

BLEAK TIMES GET BLEAKER

The European dream is unravelling. Whatever Greece does, a long period of deep uncertainty and insecurity lies ahead. And while it drags on, the rest of the world will struggle to grow.

French and German voters have joined the anti-austerity chorus. Francois Hollande became France’s first socialist president in 17 years after defeating Nicholas Sarkozy, and centre-left voters in the German state of North Rhine-Westphalia hammered Angela Merkel’s conservatives. (Merkel’s overall support has plummeted from 34.6% to 26.3%.) Hollande has promised to stimulate growth; Merkel is holding her ground on austerity. So it’ll be interesting to see who blinks first.

Spain is a basket case. The banks are in terrible shape, and it’s getting worse. Moody’s downgraded 16 of them on May 16. Shares in the second largest, Bankia, fell by 29% after reports that customers had withdrawn €1 billion in less than a week. Writing in the New York Times (April 15, 2012), Nobel economics laureate Paul Krugman proclaimed the country to be “in full-on depression, with the overall employment rate at 23.6 percent, comparable to America at the depths of the Great Depression, and the youth unemployment at over 50 percent.”

The Spanish economy, of course, is much larger than that of Greece.

And then there’s Italy… and Portugal… and Ireland… and …

A VICIOUS CYCLE MEANS TROUBLE FOR ALL

Any country that sells into Europe is feeling the freeze. Demand in the region is weak, with finished goods, components, and raw materials all taking strain. Many suppliers are from emerging markets, and the slowdown is hurting their economies—just when they were seen as the growth opportunity of the future. So the ripples are spreading outwards. From India to South Africa to Latin America, growth forecasts are being cut.

GDP in the UK shrank by 0.2% in the first quarter, putting the country into a double-dip recession. The official forecast is for 0.8% for this year; and a return to pre-2008 growth is not likely before 2014. Mervyn King, governor of the Bank of England, is preparing for more fallout from Greece.

China’s growth has slowed month after month, and a Bloomberg survey shows it at a 13-year low. Pimco, the world’s biggest bond trader, now sees 7% as the likely number for 2012. Both imports and exports are sharply down. Domestic demand is sluggish. Bank lending in April was way below expectations. Investment in fixed assets is at level not seen in a decade. Foreign direct investment has fallen six months in a row. Electricity consumption, rail freight, and bank loans are all slipping. The property market is taking strain (house prices are falling at a record pace) as a result of government measures to avoid a credit-driven bubble, and the construction industry is in a funk. And to complicate matters, the inflation rate is heading upwards.

The U.S. economy seems to be getting some of its spark back, but there are still weaknesses. Growth this year should be around 2.2%, but a survey of economists had most of them confessing that their forecasts were probably too optimistic. Krugman says the country (like Spain) is in a depression, not just a recession. Economists warn of a “fiscal cliff” at the end of 2012, when the Bush tax cuts expire and new taxes must kick in, but in this election year, politicians will avoid committing to any action to deal with the problem. March jobs figures were disappointing—unemployment fell slightly to 8.1%, but only because more people have given up looking for work. One American in six can’t always get enough to eat.

Punting his latest book, Paul Krugman warns that the world is in a dangerous place and stimulus is the only way out

 A TEST FOR OPTIMISTS

I could offer many more facts to show just how shaky things are. I could toss in the gloomy views of any number of economists, think tanks, business people, and others worth listening to. But you only have to watch Bloomberg or CNBC, or read the daily news, to get more than enough evidence that the world is in a precarious state.

As I wrote in my February 28 post (“Where is the global economy going, and what does it mean to you?”) we’re in the middle of a colossal economic experiment, and while many people have strong opinions on what to do, there are questions about every “answer.” The past may or may not be a reliable guide to the future. Well accepted theories may or may not hold up in a complex new world.

Economics and politics are on a collision course. Society is caught in the middle and is thoroughly pissed off.  Any leader dispensing unpleasant medicine risks losing support and being voted out of office. But without unpleasant medicine, the Great Recession will run and run—and the entire world might be ungulfed by a new Great Depression before we know it.

There is no reason to think we might be in calmer waters anytime soon. There’s every reason to fear some dramatic event ahead that will be calamitous. And to accept that the difficulties we face right now are just the precursor of more to come. The Greek problem is Europe’s problem. Europe’s problem is everyone’s problem.

Here’s Krugman again:

“…it’s hard to avoid a sense of despair. Rather than admit that they’ve been wrong, European leaders seem determined to drive their economy—and their society—off a cliff. And the whole world will pay the price.”

A NEW ERA IN GLOBAL COMPETITION

As I’ve observed many times before, competitive hostility has risen dramatically in recent years. But if companies thought they were walking through fire in the past four years, that was just warm-up time. There’s a new array of daunting challenges ahead. They’re coming from all directions, and they’re coming thick and fast.

Firms in many countries are sitting on piles of cash, too nervous to lay new bets. They face the hard choice: seize the moment and invest in the hope of capturing today’s opportunities and preparing for tomorrow’s, ahead of the herd; or preserve their war chests in case more bad stuff hits the fan. But one thing they cannot avoid is taking another clear-eyed look—and another, and another—at the world around them.

Some companies will sensibly decide to continue with their current strategies, perhaps with some incremental changes. Others will have to pursue a more radical course. And for many, a bit of both will be best.

What no management team should bank on is that their business performance will soon get a lift from either an economic upswing or a breakthrough in strategy. What they should do is:

  1. Stay tuned in to their environment so they quickly sense significant changes.
  2. Get back to basics, dump any activities that weigh them down or distract them, and shorten their “to-do” lists.
  3. Focus on making a difference that matters to the “right” customers.
  4. Fine-tune their business models to deliver, and keep innovating and improving.
  5. Make sure there’s clarity—across their organization—about what they must do, 30 days at a time.

Strategy is always about laying bets for a world you can’t see. That’s becoming trickier by the day.

World’s priciest picture captures current angst—but should inspire possibility thinking

During April, I went to see Edvard Munch’s famous 1895 artwork, “The Scream,” which was on display at Sotheby’s in London, prior to being auctioned in New York.  It was a theatrical experience. Getting to the picture meant enduring three layers of security checks. Finally, in a darkened room, there it was, embedded in a black wall in its original gold frame. Very dramatic!

At the time, Sotheby’s estimated it might sell for $80 million. But as the clock ticked towards the sale date, some art experts speculated the price might go even higher—perhaps reaching the $106 million record fetched by Picasso’s “Nude, Green Leaves and Bust” in 2010. On May 2, “The Scream” was knocked down to an anonymous buyer for $119,922,500 million dollars (including commission) after 12 minutes of bidding. Meanwhile, outside on the street, there was a protest by Occupy Wall Street and the Teamsters.

The sale catalogue for this iconic pastel proclaimed it “the second most immediately recognizable art work in the world, after the ‘Mona Lisa.’” It appears all over the place—on T-shirts, coffee mugs, posters, and elsewhere.  And the publicity it’s now getting will see it even more widely reproduced.

"The Scream," Edvard Munsch, 1895

So what’s this got to do with business, you ask?

Nothing, directly. However, “The Scream” depicts a moment of awful uncertainty and anxiety—the “zeitgeist” of the late 19th century. (Sotheby’s describes it as “the visual embodiment of modern anxiety and existential dread.”) And the mood that Munch captured is similar to the one that has now settled across so much of the world.

Munch produced four versions of his picture. The other three are in public collections, so only this one was available for sale. And only this one has these words, written by Munch, on the frame:

“I was walking along a road with two Friends

the Sun was setting—the Sky turned a bloody red

And I felt a whiff of Melancholy—I stood

Still, deathly tired—over the blue-black

Fjord and City hung Blood and Tongues of Fire

My Friends walked on—I remained behind—

shivering with anxiety—I felt the great Scream in Nature—EM”

In this age of uncertainty, mass unemployment, austerity, and customer frugality, there’s a screaming opportunity for companies to offer comfort, confidence, predictability, flexibility, and affordability.  But there’s also a need to surprise and delight customers, to meet their needs in unexpected ways, to enable them to have fun, to lift their spirits and make them smile and feel good about themselves.

There are countless ways to do this. It might be through offering innovative new products and services. Or by bundling your current offerings differently, repackaging and re-branding them, or promoting them differently. Or by adding new “bells and whistles”—or taking something away to make things easier for customers and perhaps drive down costs and prices, too.

But it always begins with focusing anew on just doing what you promise. On simply getting your “basics” right. So that should be the central debating point in any strategic conversation.

“The Scream” fetched its astonishing price in a room full of the world’s glitterati, in an art sale which fetched a total of $330 million—another Sotheby’s record. Speculation was that the anonymous buyer might be a museum or a possible donor—or, quite likely, a private collector from Asia or the Middle East. The rich have gotten richer. There are lots of them around. They’re customers for lots of stuff. And they’re spending furiously.

Consider, too, that the harsh new conditions now affecting people in Europe, the U.S., and other countries which have enjoyed decades of relative prosperity are normal for most people on the planet. They’ve never known anything else. So while you’re thinking of ways to keep satisfying your traditional customers, what about these others? The market opportunity is enormous.

This is a time to expand your horizons, discover customers you’ve ignored, and invent products and services that give them a shot at a better life. By changing what you do and how you do it for today’s customers, you almost certainly will meet some of the needs of tomorrow’s.  And in discovering new kinds of value to offer those unfamiliar customers, you’ll doubtless be able to bring some new offerings back to the markets you know.

In short, the worst of times might actually be the best of times. Finding out is surely worth a focused and determined effort.

Some questions:

  1. How has your customers’ behavior changed?
  2. What do they need and want now, that might be different from what they sought in the past, and how well do you meet those demands?
  3. How are your competitors responding, and what might they do next?
  4. How do your people feel, and what might you do to keep them focused and energized?
  5. What’s happening to your business partners, and what might you do to keep them on side, motivated, and sustainable?
  6. What else is happening in your world that demands change from you (think demographic shifts, regulation, politics, etc.)?
  7. How well do you deliver on your promises, and what must you do to lift your game?
  8. What can you do altogether to make the most of today’s mood and realities?
  9. What new market opportunities should you explore (and what ideas can you bring back from undeveloped markets into the markets you know)?
  10. What should you stop doing, because it’s no longer appropriate or working?
  11. What should your priorities be for the next 12 months?
  12. What must you do in the next 30 days to get things moving in a new direction?

“Value for money” means different things to different people at different times. How they see it changes constantly. To keep up with them, you have to walk in their shoes and see things the way they do.

Right now, many are being forced into a lifestyle they never expected—downscaling, skimping, saving, hunting harder for bargains. Their shopping behavior is not what it used to be and they’re killing firms that can’t shift with them. On the other hand, there’s a generation of enthusiastic new consumers who are enjoying better lives—and are shopping as if there’s no tomorrow.

“The Scream” is a vivid portrayal of the anxiety that is so much part of the human condition. And a harsh reminder of just how tough these times are. But it doesn’t tell the full story.

There are both problems and possibilities all around us. So while Edvard Munch’s remarkable artwork is notable as a comment on the state of the world, you might also see it as a catalyst for change, and an inspiration to make a difference in new ways.

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