Dec 15, 2021 | Leadership, Management
What happens if you are on the receiving end of negative feedback during a debate, or an ‘executive heckle’ during a presentation?
How do you respond?
Our natural reaction is to push back, to defend your position, which creates friction and ‘heat’.
That is what happens when you respond to a negative proposition with ‘Yes but’. You are setting yourself apart from the questioner, defending an alternative position.
By contrast, had you responded to the heckler with ‘Yes and’: what you have just done is agree with the heckler, at least partially, and then been able to move onto the reasons why it is an ‘and’
This subtle but fundamentally important distinction was brought home to me years ago. I was in a running debate with the MD of a conglomerate to whom I reported as GM of a division at EBIT. I had taken over as the GM after 5 years as Marketing manager, running the logistics, and part of the sales in my spare time. It had been turned around from a disaster into a commercially aggressive, successful and profitable entity.
The MD’s latest ‘brain-fart’ at the time was to incorporate the division into the much larger core division of the company. The much larger division was monolithic, and relatively unprofitable, lacking the innovation, commercial skills, and ‘can do’ culture of our much less bureaucratic smaller division. The MD’s view was that an amalgamation would bring to the larger division the commercial hard edge of its smaller cousin, thus making the larger entity more responsive.
My view expressed strongly was that to amalgamate the smaller division into a larger division would kill the very culture that had been built which made the smaller division successful. There were better ways to address the problems of the larger division than risking smothering the culture of the smaller one.
It was a debate I lost, and resulted in me leaving a short time later, rather unceremoniously.
With the great benefit of hindsight, and from experience gained in the almost 30 years since, what I should have done instead of saying ‘yes but’, and having the argument, which I was certain to lose, was to say ‘yes and’ agreeing that the problems of the larger division were real and needed fixing. I could have then suggested creative and practical solutions to the problems. Instead, I unknowingly chose to lose the argument.
It still may not have worked, but the odds would have moved dramatically into my favour. However, at about 40 years old, and having been given the responsibility of running the business, almost my perfect job, I was too self-unaware and perhaps arrogant to acknowledge the inevitable failure of the path I unwittingly chose to argue the case.
Simple and subtle changes of words can have a profound impact on the response they bring.
Dec 6, 2021 | Change, Innovation, Leadership
The old way of thinking and working in silos, based on organisation charts, is gone.
The key commercial question now is how to develop and commercialise innovative solutions to problems faced by individuals, and the wider community, faster and more efficiently than others.
We all know that we work better in small groups, differently but better, more productively. The problem is we have had imposed on us the structures originally conceived to enable scaling from cottage industries to mass manufacturing, where the benefits of scale outweighed the transaction costs incurred.
We have now reached a point where the worm has turned.
The transaction costs are greater than the scaling benefits, because of the transparency enabled by digital.
The nasty covid pandemic has accelerated the process of digitisation to the extent that we have consumed a decade or more of change in a year or so. Some have not made the change, and long for the return of the ‘normal’ way before covid. However, the truth is that we must go forward, we need to accommodate the new world as it is now by the way we collaborate.
For the last 30 years we have struggled with the growing inefficiency and resulting lack of engagement of employees down the organisation chart, driven by the remoteness from decision making.
We tried to fix it with various forms of matrix organisation, but we approached it from the old mindset of accountability and responsibility. ‘How can I be responsible for something over which I have no control????’ This question has loomed large on many occasions.
Matrix organisations with a silo management mentality do not work.
We need to embrace not just the ‘radical transparency‘ espoused by the likes of Ray Dalio, and Atlassian where it is a core value, but ‘radical adaptability’ to prosper.
Giving control and accountability for outcomes over individual workplaces to the people in them is the new way. Finding ways to speed up the process of change, to be able to adapt and innovate has become the path to commercial survival. We have been talking about it for ages, but trying to build it from a siloed mentality starting point will go nowhere.
The ‘radical transparency’ of Dalio will not suit everyone. You need to be a resilient personality to take and grow from the negative feedback. Recognising this, Dalio only hires what he calls ‘arseholes’, those who are resilient enough to take the feedback and learn from it.
A business with a culture of being ‘nice’, polite, keeping ideas and views to yourself, and not articulating those views and ideas to others, leads to the politics we see in most organisations. Things that are thought, and said privately, that will not be said publicly are corrosive of trust and collaboration.
Radical transparency needs an entirely different mindset.
That different mindset can lead to ‘radical adaptability’, as any idea is a good one until it is taken down by a better one, or by finding some flaw in the argument. By another name, in other circumstances, this is ‘Evolution’ or ‘Survival of the fittest’, and John Boyd’s OODA Loop at work.
Accountability & candour lead to collaboration, and collaboration is the key to growth in this new, digitised world, as it compounds effort and outcomes.
Header cartoon credit: WWW.Gapingvoid.com Highlights the challenges of enabling transparency. It is usually great for others, and in principle, but not for me!
Dec 3, 2021 | Leadership, Management
How often have you heard the question ‘tell me about your weaknesses‘ in an interview of some sort?
As a corporate bloke climbing the greasy pole I heard it a lot, and it has popped up from time to time in the last 25 years I have been consulting.
It always struck me as the question disinterested people would ask, when they ran out of sensible questions.
However, all is not lost.
A recruiter I know looking to fill an interim role called me, and we got caffeinated, during which he expanded his view that I was partly wrong.
A part of his process is to define the four crucial ‘Must haves’ for a role he is filling. Towards the end of an interview, he asks the candidate to rate themselves on the 4, best to worst.
It is a more sophisticated way of asking the dumb question, and engages the candidate in a conversation about their self-confessed strengths and weakness in the context of what is important to the role, after the interviewer has had the opportunity to make their own assessment. Any significant divergences can be further investigated.
If I was interviewing for a B2B sales manager, I might have the following 4 ‘must haves’ :
Coaching – How do you work with front line sales people to help them improve their performance?
Attention to detail – Are you a detail person, or a ‘big picture’ person?
Creativity – Are you someone who finds creative solutions to problems, or are you best communicating and working with an established process.
Growth – How good are you at finding new avenues to grow, by better leveraging the resources you have?
Recruiting for a senior financial manager, or CMO, would require a different four questions, but you get the picture.
I was not the right person for the job my recruiter friend had open, we both knew that, but I came away from the conversation with a great insight into a common question, one that I have sometimes had difficulty answering politely (I once responded with ‘you will have to hire me to find out’. Did not get that gig).
Nov 22, 2021 | Collaboration, Leadership
When the owner of a medium sized business is thinking of selling, the road in front to complete a transaction is a rocky one.
On top of the pressure and tension of financial and strategic due diligence, there are always questions about employee reaction.
- Will it impact on the value of the business?
- Will productivity drop?
- Will key employees leave?
- Will they disrupt the process?
- How will I replace any that leave when the business is for sale?
These questions, and more will be out in force.
Given that the large majority of private sales processes do not end in a transaction, the long term impact of a failed process can be significant.
Is it better to take employees into your confidence, and include them in the process, giving them the opportunity to contribute, or better to keep quiet and hope they do not find out?
Employees in a medium sized business are generally close to each other. Rumour and assumptions that might impact them, accurate or otherwise, get around very quickly. It is also the case that employees are rarely stupid, they can see when the owner is getting near retirement, has had an approach, or just getting tired of the grind, and draw their own conclusions.
The stress of uncertainty is far more corrosive the certain knowledge of difficult things to come.
On several occasions, once in defiance of instructions, I have taken employees into my confidence when a plant has been nominated for closure. In every case, all I did was confirm what they suspected, and knowing the truth proved to be much better than the uncertainty of not knowing. In every case, the plant closure, or sale process has been greatly assisted by the employees, who now had a clear picture of what lay in front of them, and of the measures put in place to assist.
Similarly, I have been in several situations where the closure of a plant or sale of a business was kept as confidential as was humanly possible. In every case, the corrosive impact of the suspicion that something was up amongst employees greatly impacted the outcome negatively.
My recommendation: Always assume employees are not stupid, and that they will react positively to being taken into your confidence, and even assist the process, not just for your benefit, but for theirs. There are many examples around the world of the impact employees can have on the success of a business. I have been in a small way involved in several. The current poster-boy for employee engagement is Chobani founder and CEO Hamdi Ulukaya, who turned an old, broken yogurt plant in upstate New York into a global success by engaging employees, then told the story in this TED talk.
Cartoon credit: www.gapingvoid.com
Questions in cartoons
Nov 19, 2021 | Leadership, Sales
Cash is the final arbiter of commercial success. You cannot live without it, too much of it and you get lazy, too little and you are wheezing, struggling to breathe, living moment to moment.
There is a lot of advice around about how to manage your cash, reduction of debtor days, management of inventory, project progress payments, pricing structures and the ret. All are valid and should be managed explicitly.
One item not often considered in the context of cash is the sales process, the pre-order or sales pipeline, time and resources consumed in that process.
The Cash Conversion Cycle is usually started at the point where there is a direct cost to filling an order, or buying materials for inventory.
It is a small leap to extend it to a point at the beginning of the sales process. That might be at the point where a lead becomes a sales qualified prospect, whatever nomenclature you use. The point at which the odds of closing the sale increase past an inflection point of some sort.
Many sales pipelines I have seen are long, torturous, ambiguous, and subject to gaming by sales people to make their ‘numbers’. The advent of CRM systems, and the logging of prospects and the expected conversion rates to generate revenue forecasts has made fools of many senior executives.
In the absence of a disciplined and regular review of the numbers, they always tend to be optimistic, until the crunch comes, then it is a nasty surprise.
Sales, like everything else in a business that is repeated, is a process that can be broken down to its component bits, systematised and optimised. While normally hidden in the fixed costs of a business, the expenses incurred in generating sales consumes working capital. Any reduction in the working capital required to run a business, increases the value and profitability of the business. Therefore, treating the sales pipeline as a process to be optimised makes both financial and strategic sense.
Ask yourself how any sporting team that is successful over a period of time does it. The personnel changes, the opposition changes, but the success stays. An exemplar is the Melbourne Storm rugby league team. Few believed they could continue their long-term success in the absence of their three superstars, Slater, Cronk, and Smith, but they defied the expectations. How? I bet coach Bellamy has a playbook that contains all their standard plays leveraging the skills of the individuals in every position, which are practised and practised over and over until they are second nature. There will also be a set of plays tailored to the weekly opposition, and the individuals they expect to meet on the field, which are run over and over in the week leading to the game, so they are also second nature. In the heat of the game, nobody has to wonder what to do next, they have practised it.
How many businesses practice their sales game? Mapping out each stage, looking for the friction points and practising how they will be addressed, workshopping the best responses to all possible objections, and ways to smoothly move to the next ‘mini-close’ in the process.
Very few.
If you were to practice and practise while optimising, do you think the sales cycle would shorten?
Clearly it would, and it would also confirm those who are likely to become a customer earlier, and probably increase the net price at which they were converted.
Together that would shorten the lead time and optimise the leverage from the resources committed, leveraging the relationship between sales and financial outcomes.
As the old saying goes, ‘More sweat in training means less blood in battle’
Nov 17, 2021 | Leadership, Strategy
Strategy is an essential ingredient for success. Without a clear, unambiguous, and well communicated strategy, there will be wasted effort, sub-optimal decision making, lack of alignment between functional responsibilities, and any number of other problems.
Therein lies the problem with strategy.
You spend time and money researching, developing, road testing and implementing strategy. You build a deep commitment to it, the CEO if he/she is doing their job well spends a significant percentage of their time building the engagement of all stakeholders in the strategy.
What if it is the wrong strategy?
What if one of the core fundamentals suddenly turns against you, or becomes irrelevant to the customer purchase decision?
Not only have you wasted the resources getting to that point, but the whole point is also to generate commitment. It is very hard then to turn around and say, Oh Crap, we got it wrong!
The inclination is to double down, work harder, not throw the sunk cost against the wall and change tack.
Blockbuster did not survive this challenge. Suddenly the core assumption that people would rent videos from a central location, then incur late fees when they finally brought them back, failed. When Netflix emerged as a subscription DVD by mail service, Blockbuster management saw it as an odd, fringe product that would never take on. Netflix management, virtually broke, offered to sell the business to Blockbuster for $50 million, an opportunity they declined. Technology caught up with Netflix, streaming became a viable option, and Blockbuster took only 3 years to go from king of the multi-billion dollar castle to broke.
Blockbusters strategy sucked. It assumed no change to the business model that had made them successful, could not pivot to a new model, and disappeared, because their strategy was wrong.
Kodak made the same mistake, and so did a local bottle shop that set out to compete with Dan Murphey’s on price and range.
Consider the strategic foundations of the current Australian Government’s commitment to the continuation of fossil fuel. Despite the spin of the last few weeks, their actions display that continuing commitment to the ‘Gas led recovery’ and options such as Carbon Capture and Storage, dismissed as fantasy by serious scientists. Business on the other hand recognises the inevitable failure of this strategy, and have been taking steps for the last few years to pivot their own operations. Now even the business lobby groups have publicly stated the government’s strategy sucks.
Tesla by contrast, founded in 2003, went public in 2010 for $17 a share. It took a few years before the strategy became an evidently powerful one. You could have bought a Tesla share in early 2020 for $70. That same share today is hovering around $1100. Tesla holds almost 80% of the US market for EV’s, 20% share worldwide. The market for EV’s is about 3% of total vehicle sales, but has doubled for the last three years: compounding is at work. All the major car manufacturers are fighting for a share, but I wonder if they missed the boat, In the US at least, you do not buy an EV, you buy a Tesla. A bit like Hoover, the brand becomes the verb describing the category.
The problem with strategy is that when it is well locked into the decision making and performance measurement of an organisation, it is very hard to change. Vested interests, personal, professional, and institutional all get in the way, and actively work against the change until too late.
To be effective, strategy also must be agile, subject to continuous evolution, as well as being the ‘North star’ of decision-making. The alternative is that you follow it into irrelevance at best, but often extinction.
Header cartoon credit: Scott Adams via the wisdom of Dilbert
