Leaders, problems, and action

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“We measure a leader, not by the absence of problems, but how he or she confronts those problems and takes action.”

Rosabeth Moss Kanter

There has been a long and largely unprofitable debate in management circles about the difference between management and leadership. Over the years I have come to a realisation that management and leadership are inextricably linked and that they are defined by actions.

In the long run it does not matter what is said. The finest words pale into insignificance beside our actions. What we do defines us.

The true test of leadership is when problems arise. And the actions taken by the leader in response to problems are the measure of their leadership.

The leader needs to embody the values espoused by the organisation. The actions taken by the leader enable their teams to see how they too can respond to problems facing the organisation.

Good management goes hand in hand with good leadership, and it is how efficient and effective processes are put in place to support the business, its customers, and its staff.

Too often we see a combination of poor leadership with an absence of good management. This makes for an organisation with unhappy customers that is a horrible place to work.

And it is easily changed. Good leadership and good management will fix it. It can be surprising how quickly appointing an effective manager can turn a dysfunctional team into a functioning team. And to effect this change it is often how the leader confronts the challenges facing the team that causes a cascade of behavioural change among the team.

A good leader is a catalyst for new ways of being and of thinking for the team. As mentioned previously, the good leader embodies new ways for the team to be and gives them permission to act differently.

As managers we must give sincere thought to our role as leaders. We are the ones who set the tone for the team. For good or ill, leaders set the scene and signal the boundaries of acceptable and desirable behaviour.

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Business plan – ultimate waste of time or absolute necessity? #startups

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There is an enormous amount of information and advice about creating a business plan for one’s startup.

The advice ranges from the necessity to prepare a traditional narrative form business plan document, to preparing a business model canvas, or using a business planning tool or app.

There are even notions like the idea-less startup, where the team is formed before the startup idea comes together.

No business plan at all is not a good idea

While the consensus nowadays seems to be that shorter business plans are better, some folks even argue that preparing a business plan is a complete waste of time. Others who argue that business plans are a waste of time suggest:

“Throw your business plan in the recycling bin. Instead, focus on your team and on getting to market as quickly as you can.”

What a business needs to think about

That notion of no business plan is all very well. But a new business does need to consider things that are traditionally covered in a business plan, such as:

  • Business purpose – the purpose for which the business exists (some like to include mission and/or vision); what makes the business and its products special or different
  • Markets in which the business will operate – including competitors, geography, since these inform operational matters such as logistics and distribution
  • Sales – how the business will make money, as Guy Kawasaki said recently during his visit to Canva in Sydney: “Sales fix everything“, also need to consider pricing and distribution
  • Business finances – funding sources, financial projections including operating costs and revenue; how the business will make money
  • Business structure – incorporation, board and directors
  • Management and ownership – who will manage the business operations, who owns what and what obligations are to be fulfilled
  • Key personnel – people required to run the business, either contract or staff positions
  • Products or services, innovation, and intellectual property – including how the product will be developed and brought to market
  • Insurance and risk management
  • Legal considerations
  • Business operations – how the business will manage production, logistics, distribution, customer service, sales, accounting, bookkeeping, statutory requirements, etc

If these types of information are not written down it is hard to ensure that all participants share a common understanding.

Quick approaches to business planning

My approach to business planning is to do it in stages, with each stage focused on checking the team’s current understanding of key issues, risks, and obtaining agreement as to sensible next steps.

Lean business model canvas

A good way to start the planning process is to use a lean business model canvas to get the team thinking about the key issues for the business. If the team cannot answer the questions posed in this document then it is a clear risk signifier for the project.

Once agreement is reached on the high level information in the lean business canvas it is a good checkpoint for the team. The canvas also provides a helpful artefact for sharing with potential collaborators and investors. It is a useful way to assess the viability of the business idea.

More detailed planning

For the preparation of the next level of detailed business plan I had traditionally used the narrative form document with charts and tables. However, recently Avis Mulhall put me onto a business planning tool called Live Plan. I’m now a total convert to this approach (please note that I have no affiliation with Live Plan, just find it a very handy tool).

This kind of tool asks the right questions and enables the team to prepare a good looking presentation document that includes sensible categories of information.

This more detailed plan provides another useful artefact for sharing with potential collaborators and investors.

Quick business planning

For a few startups I’m working with, the teams went through the entire planning process outlined above – including lean canvas and detailed business plan – in a single day.

The business planning process does not have to be onerous.

Business planning at its best

At its best, business planning is about the team asking sensible questions about:

  • how the business will work,
  • how it will find and keep happy customers,
  • how it will make money,
  • how the risks will be mitigated,
  • and how the rewards for success will be shared among the founders and investors.
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Predicting success #startups

Un bonobo mâle du parc Lola ya bonobo
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“The only major personality trait that consistently leads to success is conscientiousness.” via Business Insider

In large companies personality tests and similar instruments are often deployed to provide people with better insight into their own and team performance.

Over the years I have participated in many of these – for example, Myers Briggs, DISC, Belbin Team Roles, Hermann Brain Dominance, 16PF, Big Five Inventory, etc.

Many people debate the efficacy of any or all of these instruments. However, the primary importance of these kind of instruments is the opportunity they provide for people to reflect upon their personal and work preferences. They also provide an opportunity for people to consider how best to participate in teams and to collaborate with others in a work context. These personal reflections and insights are the true value of these personality profile tools in the workplace.

Startups rarely have the luxury of investing time or money into administering these kind of instruments for their teams. This means that personal traits and interpersonal skills are not explicitly considered as part of the setup of a startup.

For co-founders and investors due diligence on the business is typically about the ‘hard’ data – budgets, sales targets, capital – rather than on ‘soft’ skills of the startup team.

Success, focus, and startups

In recent times I have been pondering how to assess the soft skills of startup teams. The one trait that keeps coming up is conscientiousness.

In the long run, brilliance and inventiveness are less important than the ability to focus and persist in the everyday tasks that accrete to make a successful business.

As Thomas Edison said:

“Genius is one percent inspiration, ninety nine percent perspiration.

Related research on the Big Five

How Universal Is the Big Five? Testing the Five-Factor
Model of Personality Variation Among Forager–Farmers
in the Bolivian Amazon

 

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Startup, stay in business.

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The biggest hurdle facing most startups is to stay in business long enough to be successful. If they accomplish this then they have the chance to turn into an ‘overnight success’ after many years of hard work.

The numbers are against most new businesses. Many new businesses fail within the first three to five years. Even inside well-resourced large companies the challenges of bringing new products to market see many fail to make it.

This means that every startup sets out on a journey with the odds stacked against it. Every new startup is a triumph of optimism over evidence of other startup failures.

The real challenge for each startup is to stay in business. And sometimes hard questions must be asked to help the business survive.

The important factors in small business survival are:

  1. Focus – ability to say no to interesting opportunities that do not support the strategy
  2. Revenue – realistic sales targets with concrete and realistic plans to achieve them
  3. Cost control – ability to resist non-focused expenditure
  4. Customer focus – understand the specific market or markets and deliver what they will pay for; be ruthless with products that they don’t want
  5. Competitor analysis – know what competitors are doing and how to respond (if at all)

Focus

As Mick Liubinskas is well-known for telling entrepreneurs, startups must “focus or fail“. It is easy for a new business to find many things that it could possibly do. Often it is more important to identify the things that the business will not do (or will not do now).

One of the most important things to know is what things the business will absolutely not do. Out of scope items are more critical than in scope items, since they determine the boundaries within which the business will operate.

Survival

Everyday that the business survives and makes money is a good day. Many startups have big dreams. But if the business cannot survive to realise them then those big dreams will be crushed.

Cashflow and sales are nourishment for the business. There is a temptation to say “more capital will solve our problems”. However, this is not always the best course of action. The more investors a business has, then the more obligations one has to deliver for the investors.

Substance over style

There is a temptation for many startups to focus on external impressions and public relations at the expense of doing the hard work. That is, the hard work of setting up proper business management systems and processes to support the enterprise. While marketing and public relations are important, if the substance of the business is not well formed, the business will likely struggle to scale (or even to survive).

Leadership and management

Typically people startup a new business due to passion, and very often they do not have previous experience in leadership and management.

Business leaders undertake serious roles with obligations to shareholders, investors, customers, and staff. The fiduciary duties associated with business leadership are often not common knowledge.

Some things to do…

  • Set up sound management and operational processes and systems to support the business
  • Clearly define roles and responsibilities within the business
  • Have a clearly documented business plan together with key performance indicators to track progress
  • Set up a business support or mentor network – get advice from people with experience (and be willing to act on that advice)
  • Read up on why other businesses failed and work out how to avoid the same pitfalls
  • If in doubt, seek professional advice, and be smart enough to take it

Some useful links from the Australian Securities and Investment Commission (ASIC) about running a company:

Articles on business failures

 

 

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The Reputation Economy, Employees, and Privacy

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As companies embrace the notion of a reputation economy fueled by the power of social platforms this brings a new set of challenges for management and employees.

I was at the Salesforce #cloudcrowd event in Sydney recently and we were discussing this issue with guest speaker Peter Coffee.

The issue is that companies increasingly require employees to interact online on behalf of the company but using their own persona.

Upon consideration, it is not much different to offline where one meets with business contacts using a real name.  But the difference is that those meetings are mostly written on the wind.  Online interaction is forever. It is an almost permanent record of where you were, what you said, and to whom it was said.

Thus for the employee, the private conversations and meetings of the past have transformed into public online interactions, potentially geotagged and with accompanying photo.

What this is doing is tying the individual’s personal reputation very closely with that of the company in a very public and well documented way. In the past it was relatively easy (especially in a big city) to gloss over a former job and what you really did in it.

But now this will become increasingly difficult as more and more of our business interaction is transacted in public and online.

It will also become increasingly difficult for companies on several levels:

  • Firstly, they will find it more challenging to repudiate the activities and actions of employees, since these will be well documented online.
  • Secondly, they will find their public reputation increasingly tied explicitly to employee behaviour as played out in various online forums.
  • And thirdly, there is the risk that employees will use online forums to share their feelings (both positive and negative), as per the very colourful  examples of Goldman Sachs’ former employee Greg Smith Why I Am Leaving Goldman Sachs or Google’s James Whittaker Why I Left Google.

Problems for employees include:

Rawn Shah’s October 2011  presentation gives a nice overview of the issues involved in The Blurring of Job Loyalties, Social Collaboration and Personal Freedom.

One thing is certain, the boundaries between private citizens and their online activity as representatives of a company is starting to blur and this is likely to increase.  It also means that we individuals will increasingly be subject to ongoing and continuous surveillance from companies as well as the government.

Privacy is truly dead.

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Leadership, personality traits, and success: Do nice guys really finish last?

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I came across an article in Wired Science by Jonah Lehrer titled Do Nice Guys Finish Last?. It had plenty to get me thinking.

Apparently:

“… levels of ‘agreeableness’ are negatively correlated with the earnings of men”

Then:

“There are six facets to agreeableness: trust, straightforwardness, compliance, altruism, modesty and tender-mindedness. “

Also:

“Women were slightly less likely to get picked for promotion regardless of their personality.”

But:

“Agreeable women weren’t nearly as bad off, earning only 1,100 less.”

This research seems to be anchored in personality trait theory (Costa & McCrae, 1992); and there’s been a lot of theorising around trait theory and leadership over the years. That the facets of agreeableness – trust, straightforwardness, compliance, altruism, modesty and tender-mindedness – might not be considered helpful in some contexts sounds bad.

Why wouldn’t high levels of agreeableness be a good thing?  But when it comes to getting things done being agreeable is not always helpful.

For example, scientific advances rarely come to light from agreeing with everyone else. Instead they come from fighting against the current flow of ideas and consensus.

Getting a new business or new business model off the ground requires something different to agreeableness. It requires passion and vision, it calls for team-building and collaboration, it requires dedication and persistence. And, while some of the facets associated with agreeableness are helpful, they alone will not drive the change through to fruition.

Think about many of the leaders of history, for example: Steve Jobs, Jack Welch, Margaret Thatcher, Mohandas Gandhi, Mother Theresa, or Winston Churchill.  Not one of them was reputed to be easy to get along with.  They were each, in their own way, not very agreeable. But, love them or not, they got things done.

But perhaps the agreeable people, who didn’t get promoted, are happier?  Where’s the research on that?

However, it is interesting to note that women displaying agreeableness are less badly off than those not displaying it. Thus it seems powerful women remain undervalued, unlike powerful men.

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Navigating the New World of Hyperconnectivity

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This week I spoke at the Recruitment Technology Evaluation Convention in Sydney. The topic was navigating the hyperconnected world from a recruitment and human resources perspective.

The key issues facing businesses now include:

  • Hyperconnectivity and the digital revolution
  • New rules for engagement and recruitment
  • Why community matters more than ever

The proliferation of social computing and huge growth in smart phones means that the communication landscape is changing. No longer are people tied to desk to access applications and the internet. And the high usage of social networks is driving different expectations in our user communities.

Further, there is an increase in social recommendations as an engine of business. The workplace is changing. We are changing both the physical experience of the workplace, with creation of collaborative spaces for people to gather in as well as traditional work stations. Along side the changes in the physical work spaces we are seeing a rapid evolution in social business practices and platforms that mirror the experience of public social networks.

The challenge for businesses today is how to engage and retain staff, and to build a culture that supports the creation of value for all stakeholders. Maintaining relationships with current and former staff members (through alumni communities) and other stakeholders is becoming critical. This is where community management becomes increasingly important.

Also, for many years, employers have taken it as their right to undertake surveillance of various kinds in respect of their current and potential employees. Now we are seeing the rise of sousveillance or ‘inverse surveillance’, where the watchers become the watched.

This phenomenon of sousveillance is merging with the trend towards social recommendations to create reputation networks that not only encompass the personal brands of individuals, but also include corporate brands. This is changing the rules of engagement for all parties. Employees are increasingly likely to bring with them a fully fleshed personal brand and a propensity to use social media as part of their daily lives.

Companies are increasingly demanding that their employees participate in social media on behalf of their brands. This means that the boundaries between personal and corporate brands are likely to blur, and we can expect to see skirmishes along those boundaries. Questions such as who really owns the contacts made via social media that an individual has made during their employment will need to be resolved. We are already seeing legal cases testing this question.

The big challenges that I see (from a company perspective) within the new hyperconnected landscape include:

  • the need to master complexity;
  • finding ways to deal with shifting or blurred boundaries between the public and private or between business and personal;
  • the need to remove friction in processes across silos and boundaries;
  • continued demands to deliver value to all stakeholders; and
  • the increased need to build and maintain relationships and the growing visibility of those relationships via social channels.
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Maximizing shareholder value should NOT be the only goal of the corporation

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It is interesting to think about this now that we see Occupy Wall Street spreading around the world (even to Occupy Sydney).

Back in 1976  Michael Jensen and William Meckling argued that the solution to the principal-agency problem — business leaders advance their own interests not those of shareowners — was to make the goal of the corporation the highest return to shareholders and to align shareholders and business leaders through granting stock options. Today this remains the prevalent model of organizing and motivating people within organizations in the western world.

I have long argued that this approach evokes extremely dangerous behaviours in companies – creating corporations that are run as if they are peopled by soulless automata.

The construction of reward systems that prioritize shareholder value as the sole objective of the corporation encourage risk taking, little focus on other concerns (such as social and environmental good), and poor treatment of human resources.

Dan Ariely has written about Better (and more) Social Bonuses – it is worth reading. Bonus scheme incentives encourage unhealthy competition and can drive unintended outcomes, such as ignoring due process (as in the various bank scandals such as the recent UBS rogue trader).

One characteristic of the shareholder value model in action is the objectification and monetization of things – people, environment, social good.  This attitude has inherent problems for all stakeholders in a business, even for the shareholders. Shareholders are people too, they live within a society and an environment.  Thus prioritizing shareholder value over social and environmental good is not necessarily good for shareholders.

As a senior manager in large corporations I often found myself referring to people as FTE (a.k.a. full time equivalents). This objectification of the people within the organization – treating them as if they are mere machines – is a characteristic of this shareholder primacy model.

Once the people who work in the business are successfully objectified it is much easier to treat them in ways that previously impossible. It is easier to implement inhumane or unsafe work practices. It is easier to fire people. It is easier to ask people to do things that are unethical.

The other part of this unhealthy equation is the large institutional shareholders in corporations.  Because they represent interested parties at second or third hand again we see objectification of the process.  They too seek only to maximize benefit for the shareholders that they represent.  But  because they represent those shareholders at arm’s length they do not understand the needs or wants of those shareholders.  Thus the real people who are shareholders are assumed to only seek maximum value no matter how that is achieved.

The common thread in all of this that real people with real desires to create a good world for themselves and their grandchildren do not have their interests adequately represented.  Instead we all suffer – people, planet, nature – because of this single-minded pursuit of maximal shareholder benefit.

 

 

 

 

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Customer service in the digital age – what changes?

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During an exchange on Twitter earlier this year with some folks who were attending #scrmsummit we chatted about customer service and about how costs are a real focus for most customer service activity. Thus, rather than focusing on excellent customer service, most organisations focus on the cheapest and most efficient form of customer service.

But it seems to me the starting point must always be understanding what value customer service delivers to your business.

For most businesses customer service – during the purchase decision making process, during purchase, and afterwards – is critical.

Then the question that a business must answer is: how important is customer service to driving sales, and how important is it to drive repeat business? But it is also necessary to understand what form that customer service ought to take to delight customers.

Based on my experiences as a customer in the ‘real’ world many organisations see me as a bother or an annoyance that gets in the way of something more important. It certainly makes switching to an online shopping context rather easy. Mostly there’s no special customer service person with whom I have a relationship. That lack of a relationship makes switching to another supplier very easy. Especially when the main differentiator is service.

However, a personal relationship is not necessarily fundamental to excellent customer service.

There are a few notable example of this.

Sharon, at the local general store, has built up a great relationship with us. We often choose to shop with her rather than at a larger store in town, even though her prices are slightly higher. Because of the relationship we have (and that relationship might just be in my head, I might actually be just another annoying customer, but she never lets me know that). I often choose to shop there rather than buy something online or at another store.

Net-a-Porter is a great example of how to do online customer service. I have never spoken to them, I just order products online. But if there is a problem with fit the return process is so smooth and easy – usually the replacement item is in my hands within 48 hours of sending the return. No questions asked. This makes me happy.

Another example is the guys who just painted my house (for those on the Sydney north shore KMK Painters = highly recommended). They did a fantastic job. Not because they painted the house (although they did that well). It was the little things like turning up when they said they would, cleaning up really well afterwards, patting my dog when she came sniffing around, and helping me to carry stuff from my car. Those little extras were not part of their core mission – painting the house – but these little extras made them stand out from the last lot of painters. It means they’re top of mind for any more jobs.

Three quite different models of customer service. Each good. Each satisfying in their own way. Each earning and retaining my repeat custom. It seems to me that customer in the digital age does not differ much from customer service in any preceding age.

Some thinkers who have interesting ideas about customer service in the digital age include:

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