Is this statement a turning point in Corporate Culture?

Is this statement a turning point in Corporate Culture?

Aug 28, 2019 | Communication, Governance, Leadership

In 1970, Milton Friedman wrote an article for the New York Times  that set the tone for enterprise management and culture from that time. His argument was that the role of the executive was to conduct the affairs of his employer: ‘in accordance with their desires, which is generally to make as much money as possible while conforming to their basic rules of society both those embodied in law and those embodied in ethical custom’

The executives ‘social responsibility’ was to act in the best interests of his employer. By doing otherwise, he is making a judgement about what others outside his employer may wish to spend their money on, and making that choice is outside his responsibility. To do otherwise is to accept the socialist view that political mechanisms, rather than market mechanisms, are the more appropriate way to allocate scarce resources to their best use.

Last week, the ‘Business Roundtable,’ an association of the CEO’s of many of Americas leading  companies released an update, signed by181 of those CEO’s. Titled ‘Statement on the purpose of a corporation’ it committed their leaders to: ‘lead their corporations for the benefit of all stakeholders, customers, employees, suppliers, communities, and shareholders’. 

In todays world, remarkably different from that of the 1970’s, such a statement makes sense, not just as a statement of intent, but as a driving value. Who now does not want to build customer loyalty by looking beyond the transaction currently on the table, and the battle for talent is now mobile, transparent and global, so being acknowledged as a great employer builds competitive advantage.

In Australia, the content of Royal Commissioner Haynes report should tell us all we need to know about the cultural changes necessary in many of our largest corporations. While the government procrastinates and prevaricates, hoping the fence gets a bit more comfortable after their surprise election win, perhaps we, as those charged with the responsibility of managing and directing those corporations, will have gained a little wisdom.  

For the fabric of our communities, let’s hope so.

The header cartoon, courtesy of Tom Fishburne was published to poke fun at the hypocrisy evident in much of the corporate PR speak about sustainability. However, it struck me as also being a metaphor for the Business Roundtable statement, given the pressures of Wall Street, and entrenched ‘short termism’,although I hope I am wrong.

 

Sustainability in blogs used.

 

The two most valuable asset every business person must build

The two most valuable asset every business person must build

Aug 23, 2019 | Leadership, Small business

 

Every person in business has two crucial and potentially synergistic assets.

  • Your skill, capability, and distinctive way of adding value to a customer.
  • Your network.

One without the other is not much use, together they are multipliers of each other, synergistic.

A little bit of skill and a great network will deliver a living.

Great skill but no network will deliver a living.

Great skill together with a great network will not only deliver a great living, but it will also deliver personal satisfaction.

Skill x Network  = Leverage.

Leverage is the ability to do more with less, something we should all be striving to achieve.

We are social animals,  we need at a primal level to be acknowledged, respected, and trusted by others.

As business people, we all need to have at our disposal a range of skills and capabilities that make us attractive to our customers.

When we have both, the trust of others and capabilities that add value to others, not only are we likely to be successful, but it is more likely we will be a rounded, balanced and happy person.  

 

6 characteristics to look for when assembling an advisory board

6 characteristics to look for when assembling an advisory board

Jul 31, 2019 | Governance, Leadership

Small and medium businesses need outside assistance in order to build the depth of capability that is required to compete effectively on the big stage that we now have.

I often advocate they have some sort of ‘Advisory board’ that delivers the guidance and experience to make a difference.

So, what sort of people should you look for to go onto that board? It is easy to suggest it be set up, but very hard to find the right people, particularly for SME’s with limited networks and resources to go and find these people.

Here are some of the characteristics that it seems to me are needed on such a board. It will be rare to find them all in one individual, and two brains are always better than one anyway, so look for some diversity at the same time. Of course, these are the personality traits you should look for, and are on top of the technical ones you may need, finance, engineering, marketing, and so on.

  • They spend a lot of time ensuring that the right questions are asked, rather than jumping to the answers.
  • They work from the challenge backwards to the current, rather than from the current forward. I call it hindsight planning when developing strategy, but it is also a mindset that ensures the problem being considered is adequately defined.
  • They are looking to learn themselves, from the competitive and  strategic problems they see, the people they encounter, and the differing options that emerge from considering a problem. The last thing you want is someone who already knows all the answers!.
  • They are biased towards action, rather than riding the status quo. Being prepared to take action, and sometimes be wrong, able to concede the mistake and move on again is a vital personal capability to seek.
  • They treat your resources, as if they were their own.
  • Underlying everything they do is the recognition that only by creating value for someone else can you move forward: Personally and commercially.

An alternative to an advisory board, is membership of one of the emerging ‘executive roundtable’ services, of which there are several. These ‘tables’ assemble the executives of non competing businesses into groups of 7 to 11, chaired by an experienced advisor and chair, and they act as each others advisory board. This model has the added advantage of addressing the hidden cost of the CEO of a medium sized business, loneliness. It is often a very lonely place, and such a table has a powerful social aspect as well as delivering great commercial value.

Everybody needs informed, and neutral advice and a sounding board to make better decisions. 

 

 

Where is the demarcation between Accountability, Responsibility and Authority?

Where is the demarcation between Accountability, Responsibility and Authority?

May 20, 2019 | Governance, Leadership, Management

The words ‘Accountability’ ‘Responsibility’ and ‘Authority’ are often mixed up, used inconsistently, and often as synonyms.

How often have I heard someone say they have accountability, but not the responsibility, as well as the opposite?.

In any organisation, the ‘language’ used has to be crystal clear. Without clarity, ambiguity and finger pointing creeps in.

Let’s put this one to bed.

In my world, the demarcation between these words is very clear.

Accountability.

The clue is in the word: ‘count’. The person with accountability is the one keeping track of progress, counting it. They may not have the power to make all  the decisions, their role is to be the one who gives voice to issues as they arise, and should be independent of the role the person plays in the organisational hierarchy.  In former marketing management roles I held product managers accountable for margins of the products for which they held responsibility. They did not set final prices, nor did they control the promotional spend or COGS, but they were accountable for margins, and it was their role to monitor, communicate, and persuade, to deliver both the percentage and dollar outcomes.

Responsibility.

Anyone who is in a position to ‘respond’ carries responsibility. An individual does not have to carry either accountability for outcomes, or the authority to make decisions to be responsible for actions taken, most particularly their own. It is in this area of responsibility that the cultural aspects of an enterprise are felt most keenly. When those without any institutional power feel attachment to an outcome, and act accordingly, they are exhibiting a level of responsibility, and it is a powerful marker to a positive, productive culture. 

Authority.

This belongs to the person who has the final say, the power of veto. Authority can be delegated, even to the lower levels in an enterprise. On a production line where there is an ‘Andon’ line in place, workers carry the authority to stop the line when they see a quality fault, rather than allowing it to proceed further down the line.

The larger an organisation becomes, the more nuanced and ambiguous these definitions can  become as people interpret their position and role, and that of others, slightly differently.

A regular and blatant misuse of the word authority occurs when it is used to point at someone who is expected to be an expert. The word sometimes carries the preposition, ‘an’, in front of it, becoming ‘an authority’, as in the header illustration. The doctor was used in the header ad because he was seen as ‘an authority’, and therefore had an opinion that should count, but had no authority over the actions of an individual.  

As a further example, In most organisations, the CFO is accountable for the cash. They literally count it, report on it, and recommend actions that impact on it. The CEO retains authority over the cash, as they have the final say in how it is managed and allocated, and everyone in the organisation has a responsibility to ensure that cash is spent wisely, with appropriate governance and reporting.

Having clarity around these definitions, and a culture that respects and responds to them, is crucial to any improvement process.

 

Where is Occum when you really need him?

Where is Occum when you really need him?

May 17, 2019 | Change, Leadership, Personal Rant

We need Occum’s Razor to be applied to our deliberations on all sorts of things, from our personal and professional lives, to the  way politics is being practised around the western world.

The term comes from the writings of William of Ockham, a 14th century philosopher monk, and calls for simplicity of logic, the removal of superfluous ingredients when you have a simpler idea that accommodates the facts just as well.

In effect,  strip an argument back to its essential elements, and work with the facts. Conjecture, personality, and status quo of all kinds should play no part in the development of an idea.

Tomorrow is federal election day 2019, the culmination of a campaign that really started back in August last year when Malcolm Turnbull was rolled by his own party.

The ‘campaign’ has been little more than a display of clichés, vague and inconsistent promises,  and pork barrelling to both fragile electorates and interest groups. I guess to be fair, it must be said that the Labor party has at least set out to articulate an agenda of change that does make an offer to voters, but the chief salesman is a dud.  

What appears to be happening more and more is the phenomena of ‘Occum’s Broom’, which suggests that inconvenient facts and unwanted insights are swept under the carpet. Utilising Occums broom is both intellectually dishonest, and way too easy to deploy as a shortcut to some sort of outcome preferred by one group or another, who seek power.  

By Sunday, we will know who wielded the broom to the best effect, at least in the house of Representatives. In the Senate, I suspect there will be a bit of a wait as the dust from the broom settles its way through the myriad of minor ‘parties’ whose primary vote is limited to their families, and a few zealots.

Bob Hawke passed last night, and I cannot help but wonder if his passing will deliver a telling fillip to the Labor vote, as we are confronted by personalities from both sides observing his great contribution to the nation, and to the practice of politics as a means to make positive and lasting change.

The header cartoon is again by Hugh McLeod at www.Gapingvoid.com and represents the question we will all be asking ourselves come Monday.

 

Electric Vehicle manufacturing: The prospects for Australia.

Electric Vehicle manufacturing: The prospects for Australia.

Apr 29, 2019 | Change, Innovation, Leadership

One of the more fanciful of a grab bag of fanciful bullshit surrounding the ‘debate’ on electric cars a fortnight ago was the assertion that South Australia could become a world centre of electric vehicle manufacturing.

It seems superficially logical, all those car assembly and supplier plants sitting idle, and all those manufacturing skills being wasted as the former  employees become unemployed baristas. However the entry barriers to successful manufacturing and export, and infrastructure requirements for domestic market penetration beyond central suburban areas, are significant.

GM in the US is quietly packing its bags on EV development and manufacturing to shore up profits, particularly in the light of the halving of federal Green House Gas ( GHG ) subsidies. The Californian ZEV credits scheme to encourage electric vehicles, which contributed greatly to the initial research momentum may not be enough by itself to maintain the momentum.  Tesla, the poster boy of electric vehicles is walking a financial tightrope, despite its undoubted success in the market.

Labor appears to have done a bit of homework, if reports are correct, so perhaps there is hope. However, it seems to me the core of electric vehicles, where Australia has some level of competitive ability that can be protected and leveraged is the R&D solving the storage problems, subsequent battery production, and lithium mining and processing.

Lithium, the base of current battery technology is not easily available. However, Australia has considerable Lithium resources, well behind Chile and China, but carrying more sovereign certainty despite the regulatory and political hurdles.

Let’s hope the flights of oratorical fancy yet to come in this election campaign are founded on fact and solid strategic thinking, rather than what sounds good in front of a populist audience.

Anyone for a debate on Adani? (some facts and consistency of argument would be nice)