We are a numbers driven world. Look at the way we all watch the weather reports for tomorrow’s temperature. We watch the stock market to see where the market is today and what the change is from yesterday. We are constantly being told of unemployment rates, interest rates, price changes and approval ratings. Look also at the way we watch our own key performance indicators to help us keep track of the health of our businesses. Metrics are an important aspect of what we do. They shape our opinion of our world and of how things are going.


We need to remember that good metrics do not cause good performance. Good metrics measure performance, good or bad. Metrics provide you guidance on how to look at the various aspects of the business.


Metrics also take time and effort. They require business leaders to continually make judgments as to whether the effort required to generate different or more detailed tools and systems will result in better visibility and detail of the performance of the various aspects of the business, and if this better visibility can provide better guidance as to what potential changes need to be made to the organization. The other side of this business discussion is could the effort required to generate better the better tools and systems be invested in the elsewhere in the business and provide a better return (more sales, cost reductions, etc.).


More detailed or complex metrics will not improve your business’ performance. Good planning, implementation, competitive capabilities and commitment to cost control will help improve your business’ performance. It is not the metric that improves your business. It is what you do with the metric that can improve your business.


Metrics are a ways to a means. In many instances they seem to have become the means unto themselves. The objective is not to have good metrics. The objective is to have a good business, where the metrics will reflect this performance. Businesses in some instances have a tendency to believe that it is the metrics fault that poor business performance is being reflected. This phenomenon can be seen in the periodic revamping of report and review materials to provide more and greater detail. Real information has a tendency to be subjected to ever more complex statistical analysis in order to provide more detailed views of performance.


I have found that metrics, like objectives are best when they are very simple, and focused. They need to focus only on those attributes that directly affect your ability to achieve your goals. If they require incremental or additional explanation, then they are not appropriate to the business. They should almost be intuitive in the nature of the information that they are conveying. Good metrics should guide you both on performance and what type of changes, if any need to be made to the business.


Metrics should provide facts and real event based information, not statistical means or averages. Remember what Mark Twain said about statistics.


“There are lies, damn lies, and then there are statistics.”


Keep the metrics simple, focused and fact / event based. It’s not the metric; it’s what is done with the information the metric provides that is important.

Substantive Changes

I think we have all either been part of a business that was in a troubled condition, or been asked to work in a business that was in a troubled condition. Either way the objective was to improve the performance of the business so that it would no longer be considered a troubled business. Left to themselves troubled businesses will tend to continue to be troubled businesses. They won’t fix themselves. That being said, I have found that the only way to improve a troubled business is to make substantive changes.


I want to take a moment here to clarify the difference between substantial changes and substantive changes. Substantial changes are big, visible changes. They attract attention and provide the illusion of progress. Substantive changes are those that change the way the business operates. They are usually not nearly as big or seemingly apparent as the substantial ones.


Substantial changes tend to come in the form of reorganizations – groups are combined or divided in the hopes that the leader will be able to make substantive changes to the new combined or divided organization, executive programs – programs where new metrics or measurement methodologies for example are put in place to help better quantify the issues are put in place, or new processes and reviews – teams and meetings to help try and reduce poor business decisions or behaviors.


As I have said these types of changes tend to be showy. They tend to get a lot of internal corporate “press” and extol the business virtues that are trying to be maximized. They are usually accompanied by catch phrases such as “change our corporate DNA” and “improve our customer satisfaction”.


And in the longer run, it has been my experience that they usually don’t work.


Substantial changes also tend to communicate to the business that you have not identified what the real issues are with your business. For example, how can your “corporate DNA” be the root cause of your issue? Certain business behaviors possibly, but I don’t think the DNA is the issue.


The best business performance improvements that I have seen have been as the result of a careful analysis of what the desired business state or goal is, an understanding of what is currently being done, and even more importantly, why things are currently being done the way they are. By understanding the “why” of things you can get to the underlying reason for the improper behavior or performance.


Some of examples of this phenomenon from my experience include a business performance issue where inventory was deemed to be too high for the business. This tied up cash and affected both the balance sheet and the P&L. It was decided that greater efficiencies could be gained by putting the entire inventory function in one location. There were many reorganization announcements and a great deal of senior management attention was paid to the issue, but it didn’t seem to improve the inventory levels.


When a deeper analysis of the inventory was done it was found that the inventory levels were in fact at the appropriate levels for the products being supported. The real issue was that there were too many old products being supported. The issue was not really an inventory one; it was a product management one. Products were not being retired or discontinued in an appropriate or timely manner. Once that was resolved, inventory levels came down to a more acceptable level.


Another example was where the profitability of the entire business, not just the individual customer projects within it was called into question. An entire new system of reports was called for to help identify where the failings occurred. The frequency of reviews and the number of attendees was increased to catch the issues before they adversely affected profitability. A significant amount of management time and effort was expended but the profitability did not improve.


A deeper analysis here showed that the sales team got the same commission for the sale of an unprofitable project as they did for a profitable one. The real issue was not one of being unable to implement a project efficiently, effectively and profitably; the issue turned out to be the price for the deals that sales was quoting. They were simply reducing the price for “strategic” opportunities and making up for the reduced value of each by increasing the volume of sales. When the sales compensation plan was modified to include margin targets and incentives, the overall profitability of each deal and the business improved.


It is very tempting to make big, sweeping changes to a business to try and improve its performance. They tend to make a big splash but not much progress. It is much more difficult to try and understand why business is being conducted in its current manner, and then to make the substantive, but usually subtle changes that are required to correct business performance issues. It may take a little more effort and time, but it is much better for the business.


I think we have all heard the old saying “Not everyone can be a leader.” I don’t know if I fully agree with that or not. I do however think that everyone can be, and to some extent is a follower. It seems recently that being a follower has acquired some negative connotation to it. But think about it. Unless you are the CEO of your own (private) company, you have to follow someone else. If you don’t chances are that you probably won’t be around there for too long.


Being a follower doesn’t make anyone any less of a leader. In fact if you are able to follow in an open an honest way, it probably makes you a better leader. Leaders need to lead by example. If you can take an order or a directive whether you fully agree with it or not, and follow it and complete the task, you are demonstrating the type of behavior that you will expect from your team. You may have disagreed with the decision, but that does not relieve you of the responsibility of accomplishing the assigned objective.


Being a follower doesn’t mean that you have to agree with every order or that you may not have a different opinion from your leader. A healthy organization has diverse opinions and views. It helps prevent mistakes. No one person has all the answers. Because of this a good leader cannot be afraid to learn a new answer from one of their followers. Good leaders need to expect and encourage differing points of view. Good followers need to present them for consideration. It is how good followers in turn become good leaders. Good leaders and good followers need to understand that differing opinions before decisions are good for the organization. This type of healthy friction needs to occur throughout the organization.


As the decisions are made, and handed down from leaders to followers, who in turn become their teams’ leaders, directional alignment needs to happen. If you have had your input and say on an issue, but a different course of action from your proposed one was decided on, it is now time to be a good follower.


You will now in turn need to work with your team, align them in the creation and implementation of a plan to achieve the assigned goal. To do anything else would be dissention, and that will be harmful to the organization. You can have multiple opinions from followers in a healthy organization, but you can’t have multiple directions emanating from each leader in the organization.


Every company I have been associated with has had a strategy. In just about every company I have been associated with I have been able to identify and understand the strategy. This is usually a good thing. The more people who understand the strategy, the more people will get aligned to it and the more people who can execute it.

In business as in competition as in war for that matter, no plan of attack or “strategy” survives contact with reality intact. They must be continually modified and updated as the environment, risks and opportunities change. It may not be the entity with the best strategy that wins. It is usually the one that best executes their strategy that wins.

There are two basic aspects of the strategy process: The setting of the strategy and the implementing of the strategy. Setting a strategy entails understanding the current environment, the desired end state and then putting together the steps on how to get there. Too often it is easy to confuse the desired end state, or goal with the strategy. The goal is “what” you want. The strategy is “How” you get there.

I continue to be a little surprised by the number of people that want to be involved in the strategy aspect of business. As I noted above, every business already has a strategy. As I also noted above the strategy must continue to evolve as it is executed because the execution of a strategy changes the environment, which in turn requires a change to the strategy. It seems that there is no shortage of people who want to say how things should be done.

Let’s now address accountability here. I have heard it put very simply, so I will relate it the same way here:

Saying is not doing.

Doing is doing.

Doing is much harder than saying.

The setting of a strategy is good, but the executing of a strategy is much more valuable. One is “saying”, the other is “doing”. In today’s business world there is a get it done approach to things. If faced with a choice between someone who will say how to get things done, and someone who will do it, almost every leader will choose the person who can get things done.

Strategy is an important aspect of business. It just shouldn’t be separated from the accountability associated with getting it executed. It is difficult to measure a strategy, but much easier to measure its execution.

I remember seeing a post game interview with John McKay, when he was the coach of the Tampa Bay Buccaneers. They had just lost something like their sixteenth game in a row. They were discussing his game plan for that game. They didn’t ask him if it was a good game plan or strategy. They asked him what he thought of his team’s execution that day.

He answered simply. He said he was in favor of it.