Category Archives: Leadership

Analysis, Differentiators, Leadership, Performance

Cost Plus

Do customers really care what it costs a company to provide a good or service to them? We have all heard that the vendor – customer relationship is supposed to be more like a partnership these days, but does it really? How much more would a customer be willing to pay to have that partnership? Do we really care what the cost of the car is that we decide to buy, and by extension how much that automobile manufacturer makes on each car we buy? I don’t think so. Do we really want to have a “partnership” with that automotive manufacturer, or do we just want to buy a car? I think people, and companies are more concerned about the price they pay and the value they receive for the good or service, more so than the cost the provider bears to provide the good or service.

I think this is a pretty interesting distinction. Customers are concerned with a supplier’s price, not with the supplier’s costs. Customers are concerned with the value they perceive they will get from the good or service, not the profit (or possibly lack thereof) that the supplier will recognize from the sale. In short, costs and associated profitability are an internal supplier issue, and prices are an external customer issue. In short it seems that it is the customer’s decision on whether or not they make the purchase decision, and it is the supplier’s decision on whether or not they stay in business.

I will look at a couple of examples to illustrate this point. People do not seem to care how much Apple makes on its iPhones or Macs or any of its other products. Apple is hugely profitable. They make an incredible amount of money on every product unit they sell, yet every year we see people line up (or even more unexplainably, camp out) in order to get the next new iteration of Apple’s products. They willingly spend the money. They don’t care how much Apple is making. They perceive the value and make the purchase. And every year Apple creates a new iteration of the product to feed this cycle.

On the other end of the spectrum, people did not perceive the value proposition of the products being produced by Studebaker, American Motors, Chrysler and General Motors at various times in the past. They didn’t care that these companies were not making enough margin on their products to remain in business. They did not like the designs, the quality or the prices enough to pay what the manufacturers needed to stay in business. Studebaker and American motors are long gone. Chrysler and General Motors would also have departed were it not for governmental intervention.

Economics teaches that the market sets the relative price for all readily substitutable goods and services. This price point is usually referred to as the intersection of the “supply” and “demand” curves. Unless you can influence or control the supply curve, you are pretty much at the mercy of the market when it comes to the price of the good or service.

Aha! You should be pointing to the fact that Apple does not control the supply of smart phones into the mobile phone market. As such, how can they set their price so high and make so much money? The answer here is that Apple does not in fact control the mobile smart phone market. Apple controls the supply of iPhones in the mobile smart phone market, and it has been shown that more than forty two percent of people buying smart phones want an iPhone.

While other manufacturers might like to try and convince the market that their product is a readily substitutable alternative to the iPhone, it looks like they have not been entirely successful there.

While on the other side of the example, it has been shown that one manufacturer’s car can be substituted for another’s. We have seen this in the branding and segmenting that goes on in the automobile market. Segmenting is a process where a very large market is in essence broken down into several smaller market segments. That is why we have “economy” cars all the way up market to “luxury” cars.

It may not be logical to expect that a Hyundai is readily substitutable for a Mercedes-Benz, but it could be expected that a BMW, Audi or possibly a Cadillac, could suffice. It has been shown that there are certain brand loyalties in the various automotive segments, but as market trends, automotive designs and prices move, these can be overcome and new loyalties established.

However the point remains the same. Customers are not so much concerned with the cost of the Hyundai, Mercedes, BMW, Audi or Cadillac. They are concerned with the price. And even more specifically the relative price and the relative perceived value. A person looking for a “luxury” car could buy a cheaper “economy” car for a lower price, but would not receive the perceived value they want. Conversely an economy car patron might want a luxury car, but can’t afford it.

So now the question that this leads to is:

If customers do not care what the supplier’s cost for a good or service is, why do so many suppliers create their customer market pricing based on their internal costs associated with their good or service?

This is known as “Cost Plus” pricing.

If it is the market price, or the relative competitive market price that is of primary concern to a customer, why would a supplier base their prices on their costs, which are irrelevant to the market? If you are a low cost supplier and use this method you could undershoot the competitive market price and forego significant revenue and margin. You can bet that Apple did not make this mistake, judging by their revenues and earnings reports. They saw the price the market would bear and adjusted their price upwards accordingly. They are letting the other suppliers try to compete on price.

On the other hand, if you are not the low cost supplier, but rather a less efficient higher cost supplier, basing your prices on your costs could bring you in well above the market price. While Apple may be able to sell its products at a premium, I’m not aware of too many other suppliers that enjoy a similar market position. You can ask the extinct Studebaker or American Motors how that higher cost versus the market price thing worked out for them.

I guess Oracle might be another company that tries and somewhat succeeds it setting its own market price. Larry Ellison, the CEO at Oracle has always done things his own way. But then again, he likes to build yachts to race in the America’s Cup (a really expensive pastime) and he does own his own Hawaiian island (Lanai) so he must have figured something out.

The major difference between Apple and Oracle is that I am not aware of anybody that “likes” Oracle the way the like Apple (they are rarely, if ever mentioned in the same breath), and I have never seen anyone line up in the street to be the first to buy the latest iteration of Oracle’s database systems and applications.

“Cost plus” pricing assumes that a supplier has a competitively based cost structure. This may or may not be the case. Regardless, the market doesn’t really care. What the market (and the associated specific customers) cares about is the price and the relative perceived value that is derived from the good or service.

Those goods and services where there is a perceived high value and not a readily substitutable alternative can and do charge a premium in the market regardless of their cost structures. Those goods and services where there is a perceived readily substitutable alternative, regardless of the market value, can only command the market price, also regardless of their cost structures.

It seems that the only times that cost plus pricing can be used is if the supplier has a competitive cost structure (which will be difficult to ascertain since suppliers rarely share such information), or if the supplier controls the supply of the desired good or service, in which case the supplier can price in any manner they choose include cost plus methods.

In most other cases suppliers need to be cognizant of the prevailing market prices and trends, and strive to keep their costs reduced so as to retain their profitability at those market pricing levels.

Accountability, Achievement, Leadership, Self Analysis

Credibility

Let’s make certain that we are all on the same page from the start here:

Your personal credibility is the currency that you use for all of your business transactions. And like any other currency it is subject to many events and actions that can affect its value. Just like the value of the Dollar can fluctuate with respect to other currencies, the amount of credibility attributed to you can also fluctuate with respect to other leaders.

I had just read some article about writing that said something to the effect of “write killer first sentences to make sure you hook your readers into your story”, and thought I would give it a try. Somehow it doesn’t seem to have me hooked, but then again I’m writing this instead of just reading it. I await feedback to see what the rest of you think.

By the way, I didn’t finish the article. I guess I wasn’t fully hooked.

Despite the somewhat ham-handed introduction I want to look at the role that our credibility plays in business and leadership. I think it is important in that our personal credibility can be the difference between “compliance” with our requests and directives, and “commitment” to our leadership. Compliance occurs because you may inhabit a role where others who report to that role must respect the requests of the “office”. Commitment occurs when the transition is made from aligning with the requests of the office to aligning with the requests of the person in the office.

It’s subtle, but significant.

Credibility is a pretty strange concept. You can increase your credibility by doing incredible things. On the other hand you can decrease or even destroy your credibility by claiming to be able to do incredible things. Credibility is somewhat similar to a retirement or savings account. Credibility is built up over time with continually reinforced deposits. It is added to slowly over time. However it can be destroyed or fully withdrawn as the result of a single, poorly planned action.

Your credibility is based upon other people’s beliefs in your abilities.

Think about that for a minute. Your credibility is not entirely based upon your abilities. Your credibility is not entirely based on what you think you can do, or even on what you know you can do. It is based on what you have done and other people’s opinions of your abilities and what you have done. This idea can lead to multiple mismatches within the business organization.

You can believe you are credible, when others don’t. You can believe someone else is credible when others don’t. You can believe someone else lacks credibility when others ascribe credibility to them. All of these situations can add to the complexities already infesting the business process.

Many items contribute to people’s opinions. It is not just what they observe, but also what they are told, what they hear, and how it is presented. It is also based upon what people want to believe as well. People are required to sort through a blizzard of information on a daily basis. While we all strive to be as objective as possible, sometimes based on the inputs we have received it may be difficult. Such are the vagaries of credibility.

I guess that sometimes credibility doesn’t seem to matter. As I have noted before, we have all been through the various political election seasons where various politicians are contending to see who can appear to be the most credible while claiming to be able to do the most incredible things. This would seem to violate almost all of the precepts associated with credibility, but such is the case for politics. This seems to be a case of who can tell the most people what they want to hear, and not so much what they need to know.

However there are those in business that can also be described as being politically astute. I think that may be where the term originated with respect to business performance. We all know these types. They are more capable of being able to tell people what they want to hear and not so much what they need to know. We look upon them with a mixture of both derision and jealousy. They are able to take what appears to be failure and position it as success. They can take the smallest success and spin it as a game changing moment in business. They seem to be able to create credibility out of almost nothing at all.

Personally, I prefer to see the data.

Here in lies the issue with credibility. It is almost always a personal preference issue. By telling someone something that they want to hear, no matter how outlandish or impossible you can increase your credibility with that person. At the same time there may be those that recognize the implausibility of those statements and will accord a decrease in your credibility because of them.

Every time you say something or do something in business, you change your perceived credibility. Statements are interesting in that they can affect your credibility twice: once as they are first made when people can consider the relative plausibility of them, and then again a second time when the result of the statement can be measured out against the reality of the business performance.

It is somewhat interesting to me in that the credibility associated with actions can only be measured once, when they occur.

It is the action in business that is the credibility defining event. Promising huge growth, or market defining strategies, or game changing products are all well and good. We have all seen many such announcements. It is the delivery of growth, the implementation of strategies and the introduction of new products that define the true credibility. Sooner or later all statements or claims will eventually need to be backed up with performance and attainment.

We have all seen the effect of setting expectations in the valuations of companies in the market. During the quarterly earnings announcement times the company’s actual performance is measured against the markets perceived expectations for earnings. Those companies that consistently “miss” these expectations tend to be priced lower, because the expectations that they set lack credibility.

In short credibility is based on doing. It can be based on doing what you say you can do, but the key aspect is the doing. Meeting the deadline. Achieving the goal. Doing it almost as a matter of course. It seems that Tom Peters, the co-author of the book “In Search of Excellence” has been attributed as the first to coin the phrase:

“Under promise, over deliver.”

It sounds simple to do. If it was, everyone would have a high credibility rating. The reality is that not everyone ascribes to this approach. That’s why we have “marketing”.

Many things go into the credibility that you are accorded. Your level of confidence, how you position or phrase things, it may even be somewhat indefinable as in “charisma”. In the final analysis the end result of what you do will be the primary contributing factor to your credibility. If you are recognized as someone who does what they say they will do, then over time you will build credibility. If that is not the case, you will very quickly lose credibility. And once lost, credibility is very hard to regain.

I wish I could think of a short cut to generating credibility, but I can’t think of one right now. If someone else claims to have one, I might question their credibility.

Accountability, Achievement, Analysis, Efficiency, Leadership

Getting Better

One of the things that I have learned as I have gotten older is that age doesn’t make you any smarter. It just provides you the experience to recognize the things you didn’t know the first time you saw them. It was Randy Pausch, the author of “The Last Lecture” who said:

“Experience is what you get when you don’t get what you wanted”

I have wanted many things that I have not gotten, so needless to say, I think I have probably gained a lot of experience. Some of this experience I think I probably could have done without, but I gained it anyway. What I think I now recognize is that sometimes solving some issues or fixing some problems may be beyond our individual or collective reach. The key to situations like this is to recognize them, and instead of trying to make the quantum leap from thoroughly screwed up to pristinely perfect, just try to make them better.

One of the other things that I have experienced is that just about every situation that I have been in falls into this category.

It’s now election season and the number of talking heads earnestly speaking directly to us through our collective big screen televisions is growing. The various media outlets are lining up behind their favorites, and the various positions on the issues are being identified. In short it is the same thing all over again.

People are searching for the best thirteen second sound bite regarding their personal favorite unsolvable problem. Whether it’s the national debt, immigration, unemployment, or any other issue, it seems everyone is jockeying to position their glib and simple solutions to the Gordian knot style problems that are besetting us.

For those of you that are unfamiliar with the Gordian knot, in ancient times there was a knot that was thought to be unsolvable or intractable. When the knot was presented to Alexander the Great, who at the time was the acknowledged leader of the known world as a challenge, instead of trying to untie or solve the knot, he simply took out his sword and cut it. Believe it or knot (pun intended) this is thought to be the genesis of phrase and concept of “outside the box” thinking (True!).

When I look at today’s slate of candidates I am concerned that any of them that may in the remotest of possibilities be mentioned with or the even more remote possibility be positively compared with Alexander the Great. However there they are, swinging away with their metaphorical swords on television.

I think we have all see the business equivalents of these would be world beaters and problem solvers. They are the ones that have the “simple” answers to declining sales (‘just sell more”) or low margins (“just spend less”), or any other intractable long term problem that the business may be facing.

Unfortunately with all that is plaguing leaders in business today it is easy to see how they may fall victim to the siren song of the “simple solution” providers.

Please do not misunderstand me. I truly believe the basic premises of business are pretty simple. I have said this many times in the past. It is usually the business itself that adds complexity to its organization and operations in search of ever better and more eloquent was of completing the simple tasks required for it to run.

If a simple process adequately handles eighty percent of the situations then with only a little tweaking it might handle close to eighty five percent of the situations. A little more tweaking might get it to ninety percent. Still more might enable it to be implemented globally instead of specifically for the region in which is currently working. Still more might enable the creation and publishing of fancy metrics charts detailing various aspects of the process and the state of its implementation.

Eventually a process is created that works everywhere in all situations, but takes more effort and resource from the business to work for the entire business than the original eighty-twenty rule process that was the starting point.

It can be argued that the “getting better” approach to business could in fact be responsible for the evolution of both business and process into the complex systems that they are today. This would be akin to the example of taking several small logical steps one after the other to eventually arrive at an illogical conclusion or solution.

I think part of the issue we see in situations like this is the lack of rigor that is applied to defining the problem, setting a baseline and then measuring against the improvement on the baseline. If we all know that we need to improve then we just accept the premise. If we state that the plan is to take the solution global then why would we need to measure if there is in fact a global improvement? The goal is no longer improvement of the business but instead is now the global dispersion of the solution.

Getting better does not mean making breakthrough advancements, although these are always exciting and welcome. Rather it means actually trying to use the primary building blocks of the Continuous Improvement Process that J. Edwards Deming envisioned where Feedback drove Efficiency drove Evolution which in turn drove further feedback, and so on.

The key step in this cycle that seems to be missing in both politics and business today is the Efficiency review. Efficiency by its very nature requires the identification, reduction or elimination of sub-optimal structures and behaviors. The definition of efficiency is:

1. The ability to accomplish something with the least waste of time and effort; competency in performance.
2. The ratio of the work done or energy developed …. to the energy supplied…

Many thanks again to Webster’s Dictionary. One of my favorite books.

The idea of efficiency, and getting better means that we need to continuously look at what we are getting out of systems, processes and businesses as compared to the work that we are putting into them. Efficiency is not just the output, but the output as compared to the input required to get it. Too many times it seems that it is taken for granted that just because there is some new way of doing things, or a new process is being implemented that it is better (read more efficient) than what currently exists.

Almost everything that I read these days in books and periodicals regarding business performance seems to bemoan the loss of speed in business, or the lack or loss of decision making abilities in business, or the complexity that is now being faced in business. These seem to be issues that are now inherent in the business system. The simple command to “sell more” or “spend less” won’t solve them.

I guess the same goes for politics in that the system seems to have evolved to reward those that “sound” the best but in reality only kick the problem down the road for the next generation to deal with. Their simple solutions fit nicely into the thirteen second sound bites provided by the media for public consumption. Perhaps that is why it seems that in this iteration of the political campaigning those that are viewed as being outside the normal political process seem to be preferred more than the established politicians by the general populace.

At its most basic getting better, as well as efficiency means doing more business with less resource. That means that being efficient requires the removal of some functions, effort and work from the business as compared to the set baseline while still accomplishing the set goals. It doesn’t need to be a lot. It just has to be measurable in some fundamental way.

Getting better means making sure that attaining your goals actually, measurably improves the business. The simplest definition of getting better that I can think of is showing some measureable improvement in efficiency. If you can’t directly relate and measure the business activity to somehow improving the business efficiency (mathematically identifying work being done to work being saved or improved), then there is probably a pretty good chance that it is not associated with the business getting better.

Accountability, Achievement, consensus building, Leadership, Teamwork

Do We Still Want Teams

It seems that throughout our lives we have been indoctrinated into the idea and benefits of teamwork. I think it starts off when we are children and our parents sign us up for the various team sports that are available. Whether it is little league soccer (or football to my European friends), or little league baseball or youth football (American football, again for my European friends), many of us have been conditioned to want to be part of the team. While this may in fact be a good socializing activity for children, I am beginning to wonder if the current idea of teams and what they have evolved to in business, may have outlived its usefulness in the business game.

Those that know me probably can try to understand how I can possibly question such a basic and heartfelt tenet of business. Everybody else is probably wondering what planet I am actually from. Please bear with me as I go through some of the observations and thinking (or lack of thinking as the case may be) that are going into these questions regarding business teams.

A little background first. I actually played little league baseball as a kid. I wasn’t real good, but I wasn’t bad either. I played third base. As I recall, I didn’t enjoy it all that much. You only really get to play when a ball is hit to you, or it’s your turn to bat. The rest of the time it seemed to go pretty slow.

I moved on. I took up tennis. It was more active, more involved, more of an individual sport. By this I mean that there were usually only me and my opponent on the court at any one time. Oddly enough I was also part of the tennis team. However the difference here was that whether I won or lost was not the result of how the rest of the tennis team played. No one could “pinch hit” for me. I could win and the team could lose. I could lose and the team could win. The success of the tennis team was the result of the sum of the successes of each of the individuals on the team.

It was interesting in that no one individual could win a baseball game, but I guess it could be construed that an individual could lose one. An example would be the baseball player that commits the error that allows the winning run to score. It was also interesting that no team could win a tennis match. It was solely up to the individual performance as to who won or lost.

It was also interesting to note that whether you won or lost was the key. That was the reason you kept score. Unlike today, there were no “participation” trophies. I’ll leave that rant for another time.

As another aside, I think there have been several attempts to create a “Team Tennis” league or format over the years. I don’t think any of them have been successful. It seems the public is not buying into the idea that you can turn what is viewed as in individual contest into a team sport.

When you look at great advancements and successes in business you rarely have them associated with a “team”. You have Bill Gates, and to a much lesser extent Steve Ballmer and Paul Allen at Microsoft. You have Steve Jobs and again to a lesser extent and Steve Wozniak at Apple. If you want to look at historical game changers look at Henry Ford, Thomas Edison and Nikola Tesla. You don’t hear about their teams. You hear about them, and how they led the way and what they did to succeed.

Teams seem to only be good if a leader steps up and provides the vision and direction and an unwillingness to accept anything other than the attainment of the goal. At that point “the” team actually seems to become “their” team. I am sure that there were many others involved with the successes attributed to the men I listed above, but it was the leadership and the force of will associated with the names listed that actually carried the day. The teams may have been good, but it seems that in many instances it was the individuals that were better.

I have written in the past that I believe the consensus environment present in business these days is the evolution of a defensive mindset. The appreciation and value associated with success seems to be overshadowed by the fear and avoidance of making a mistake. The consensus environment has evolved as a way to homogenize the business decision making process. If consensus is achieved there is a security in knowing that if the wrong decision was made, everyone else made it too and the blame will be equally spread.

More and more it seems that teams are created not to achieve a goal, but to achieve a consensus.

If we look at Gates, Jobs, Ford, Edison and Tesla, it is apparent that there were in fact teams associated with their achievements. But they were not the teams of today. They were teams that were organized and structured specifically to realize the vision of the individual. There are many stories associated with each individual where they would not accept less than their vision or compromise their goals based on the input of the rest of the team. There are also stories associated with what the teams went through in order to achieve the visions and goals of the leader.

There was never a question about a consensus or who would be responsible for any failures associated with the team.

They understood that if there was a failure, it was their failure, not the teams. Their team was an extension of their drive and direction. They also seemed to have a different definition or approach to failure. Thomas Edison had this to say about failure:

“I have not failed. I’ve just found 1,000 ways that won’t work.”

Bill Gates had this to say about failure:

“It’s fine to celebrate success but it is more important to heed the lessons of failure.”

And finally, Steve Jobs said:

“Embrace every failure. Own it, learn from it, and take full responsibility for making sure that next time, things will turn out differently.”

These were leaders that failed and were not afraid to fail again. They didn’t like failure. They hated it. They didn’t accept failure as the final decision. If they failed, they viewed it as temporary and something to learn from. They moved on and found another way to succeed. They didn’t stop until they succeeded.

In the team built, consensus oriented business environments of today it appears that company and organizational teams are more afraid of the perception of failure, no matter how transitory than they are driven by the need for success. These leaders understood that success had to be driven, that failure was to be learned from, and that mitigating responsibility for it was not part of the plan.

The team that was once organized to fulfill the vision of the leader seems now to be structured to protect the team members from the stain of possible failure. The avoidance of the responsibility for failure seems to have limited the team’s value as well as its ability to succeed. If everyone on the team must agree on a direction if the team is to move forward, then the team only moves forward very slowing.

If the structure and value of a team has indeed been reduced to furthering the consensus approach to doing business, is it time to step away from it? Gates and Jobs and all the others were very successful without it. Or rather, they built their teams to specifically follow their vision. The fear of failure didn’t paralyze them. They weren’t really all that interested in a consensus. They all knew failure for what it was and used it as the springboard for their next attempt.

Perhaps it is time to get back to vesting the responsibility for performance and success with the individual, instead of the team. If the individual has responsibility then there will be an entirely different dynamic in the team’s work process. It will no longer be so focused on getting everyone to “buy in” or agree on the direction to be taken. It will be more about each individual member of the team delivering on their responsibilities in alignment with the leader’s vision. As noted, those leaders never accepted failure as the final outcome and found a way.

It seemed to work pretty well for some pretty successful individuals.

Challenge, Change, Decisions, Leadership, Organizations, Reacting

Darwin and China

I think it is safe to say that we are all experiencing some sort climate change. I am not just saying that because it is one hundred and four degrees here in Texas. It is mid-August in Texas. It is always one hundred and four degrees in Texas in mid-August. Remember Climate is what you expect. Weather is what you get.

What is interesting about this year in Texas is that we had almost four feet of rain in the first five months of the year, and now it hasn’t rained since then. That is a little odd. We have had something of a drought for the last few years where all of the water resources were way below normal. Most municipalities had instituted water conservation rules because of it. Needless to say, there were a lot of dirty cars because we could not wash them and a lot of brown lawns because we could not water them.

We then had a short period of a few months where it rained a lot and filled all the reservoirs to literally over flowing. Everything got green and lush. Most importantly, the golf course fairways were lush and the greens were soft. Life was good. And now we are back to no rain, a drought, but with full lakes. And on top of that it’s August and really hot, again. Go figure.

There are many that would like to point to man as the cause of this perceived global climate change (global warming). I am not entirely convinced of this causality since the geologic record across hundreds of thousands and millions of years indicates that we have had multiple periods of global glaciations (ice ages) followed by significant periods global warming in the past. I’m pretty sure that man didn’t cause these as he (we) weren’t around for most of them. It is possible that man is potentially affecting or exacerbating this cycle with carbon emissions and the like but with a data sample of only a few hundred years (against a historical record of millions of years), as I have said, I am not sure I am entirely convinced.

Be that as it may, this entire introduction regarding environmental change brings up the topics of how do you recognize environmental change, and how do you cope with that type of change. As always there seems to be some significant parallels between what is going on (and has gone on) in the environment and what businesses are facing on almost a daily basis.

Darwin in his “Origin of Species” postulated that organisms either adapt to their environments, or they go extinct. This is pretty interesting stuff when you remember that he figured this out by looking at some little birds in what are now Galapagos Islands. This is now a basic tenet that we all seem to agree on.

It is those that adapt to their changing surroundings that survive.

About ten to eleven thousand years ago North America experienced a period of rapid warming associated with the end of the last glacial period. During this time lions, cheetahs, mastodons, and various types of bears that were present in North America went extinct. It is interesting to think that there were lions, cheetahs and mastodons as little as a few thousand years ago in North America, and that they are now extinct. That is a veritable “blink” of an eye in climate or geologic time.

It is believed that several of these species were unable to adapt quickly enough to the changing environment associated with the post glacial period warming and began to die off. It is then thought that other species in that particular food chain (predators and such) also began do die off as they could not quickly enough adapt to utilizing other prey. The net result is that they are gone, and we only know about them here because of the bone and fossil record.

When we look at what is going on in the various markets, not only in the Americas, but globally, we see similar adaptation and extinction events occurring. Businesses and organizations must be quick to recognize shifts and changes in their environments and be agile and flexible enough to be able to adapt to them.

This adaption – extinction pressure requires businesses and organizations to continually perform a balancing act between their desire to codify and stabilize the activities and functions that allowed them to succeed yesterday into a repeatable format, and the ability to be flexible and change these activities and functions in order to meet the new demands of the environment (and the competition) of tomorrow.

There is an old joke that if you are a member of the group that is being chased by a bear, that you don’t have to be faster than the bear. You just have to be faster than the slowest member of the group.

This idea works for a while, until the bear has caught all the other members of the group that are slower than you. Now you had better be faster than the bear, or able to figure something else out. Just running, like you always do is no longer good enough. If you don’t change, you are probably in line for the next personal extinction event.

All this leads to the rather simple position: Changing environments require businesses and organizations to change.

We have all heard the platitudes that organizations have with respect to change and their ability to change. They have to plan on change. They have to react to change. The only constant is change (a particular favorite of mine). This is all well and good. They may or may not do these things. It appears certain that if businesses cannot accept and come to grips with the idea that the way they are doing things today will not be good enough “to outrun the bear” tomorrow they may not get to see the next “tomorrow”.

Climate change may involve the possible change of tenths of a degree across tens or hundreds of years. It is not constant or consistent, as demonstrated by the fact that average temperatures have actually declined slightly in the last few years. It seems the past changes were small and slow, but it was enough to send multiple species into extinction, rather rapidly when looking at things from a climate and evolution time frame point of view.

Such is not the case in business.

Over the last few days the Chinese government has “officially” devalued its currency, twice. In global warming terms this is the equivalent of announcing tomorrow the world will officially be five degrees warmer and good luck to all you seals, walruses and polar bears. This move in China fundamentally alters a business’s ability to move products from other countries into the world’s second largest market by making them significantly more expensive, and at the same time makes products manufactured in China far more competitive in other global markets by making them significantly less expensive.

A business that finds itself on the wrong side of this type of import-export governmental cost equation manipulation has a very short time to change its model for doing business. Maintaining that a company is flexible and that it prides itself on its ability to change isn’t any good here. When there is a recognition that the environment has changed, there needs to be the accompanying recognition that in reality the bear is now running faster.

The only thing that counts in a situation like this, or just about any other situation where a business is confronted by a reality that is in conflict with its current operating model is, does the leadership recognize the new environmental reality, and do they have what it takes to get to the new required business reality? Discussions, meetings and attention to process improvement do not “change” the need for a new approach to doing business when you find yourself in a change or extinction situation.

Sometimes the changes in the business environment occur like they just did in China. They are blatant, easily recognized and either drives a business response, or extinction. However sometimes they are more similar to the changes associated with global warming in that they have occurred slowly, and somewhat erratically and inconsistently over time. There will be those (like me for instance) that recognize and agree that an environmental change is occurring but differ on the attribution of its cause, and there will be those who deny that any change has actually occurred.

It is very clear though that in either case there comes a business morning where you wake up to an unseasonably hot day, and smell bear breath over your shoulder. What you change and how you change will then decide which side of the adaptation – extinction equation you are on.

I think Darwin would be agree.

Customer Management, Customer Relationship, Customers, Leadership, Sales

The Customer Pendulum

Customers are interesting things. They are the source of all business’ survival. They are hard to find and easy to lose. Many times they don’t know what they want and are almost always not willing to pay for what they need. They are fickle with their allegiance and occasionally are not entirely forthcoming about their preferences. They are part of and are sometimes caught up in a changing environment that most of the time they may not be prepared for. It would probably be possible for a vendor to solve the customer’s problems, if only those problems would remain unchanged for any sort of measurable time.

But they don’t.

Customer’s problems change. The very act of solving one problem invariably creates, or at the very least reprioritizes another problem.

Please don’t get me wrong. This is the way of business very much in the same way of Darwin’s Theory of natural selection. I’ll use the evolutionary speed race between cheetahs and gazelles here.

Faster gazelles mean that only the fastest cheetahs are selected to survive as they are the only ones that can catch the gazelles. This means that the next generations of cheetahs are based only on the faster bloodlines.

Now, the next generations of faster cheetahs mean that only the fastest gazelles will be selected to survive as the slower ones will fall victim to the cheetahs. This means that the next generations of gazelles will be based only on the faster bloodlines.

Now only the fastest of the faster generation of cheetahs will survive.

And the pendulum continues to swing from one side to the other.

I am going to focus on business services here because I think it best illustrates the changing focus, and the swinging pendulum of customer desires. In the business world of services there are no gazelles and cheetahs, but rather there are prices and service levels. There may be those that may try to interject other variables into the service customer equation, but the reality remains primarily associated with these two variables. The interesting part of this price and service level relationship is that only one of them seems to vary at any given specific time.

In the initial stages of the vendor to customer relationship the primary variable will be price. (There may be times where this relationship may be referred to as a “partnership”. This would be inaccurate. Partnerships of the sort implied here take time to evolve. Particularly when there is an ongoing service based relationship.) When a customer is looking to enter into a business services relationship, they are initially looking for a vendor.

This is due in no small part to how most customers go about entering into a services relationship. They will invariably set a minimum required performance level for the services they want, and then look to the vendor that agrees to provide them the greatest cost reduction from their current spend level at the selected service level. That means they are looking for the vendor that bids / quotes them the lowest price.

Of the two variables previously noted, price and service level, they have fixed the service level and are trying to vary the price to the lowest level possible. If the price for the desired services is low enough (as opposed to the total attracted cost that they are currently paying) they will select the vendor and sign a contract. If it does not return sufficient savings the customer will usually stay with the service arrangement that they currently have and avoid any service provision change event issues.

Once the service contract is signed, the price for those services is now fixed. The customer focus will now shift to the service levels associated with the service. Requests for incremental service or services and faster solutions to issues and problems will become the focus.

It is at this point that a relationship can begin to become a partnership.

Businesses want to help with and solve their customers’ problems. That is the value they bring and why customers buy their services. One of the things to remember is that customers associate value with that which they pay for. That means if you give them something for free one of two things will happen. They will either associate no value with what you have given them (since it was free) or you will have established a new service baseline where what you have given them will be incorporated into what they expect going forward. You will in effect raise the service baseline performance expectation going forward.

And once the new increased service level baselines are set the next generation of discussions (or contracts) will once again be focused on the price of the new service level.

And the customer pendulum will continue to swing, price, service, price, etc.

The point here is that despite their best intentions, vendors need to resist the urge to provide quick and cost free solutions in an effort to engender customer gratitude. There will always be times where quick support decisions will need to be made to support the customer, but it is always in everyone’s best interest to go back and revisit them after the issue has passed. Providing “freebies” provides some credence to the customer perception that once the price is set, they can continue to push for a greater scope of work to be provided.

A partnership has to have more of a connotation of a peer to peer relationship instead of a customer to vendor relationship. That means that there is a give and take instead of just an ask and take oriented relationship. If something is provided, then something should be asked for in return. It does not need to be strictly quid pro quo, but there needs to be some sort of cost or consequence associated with each request and action in a business services relationship.

Contrary to what we might feel, without some sort of cost consequence for their requests, many customers will only more deeply ingrain their vendor type perception of the relationship. The customer asks, the customer gets and it is up to the vendor to figure out how to provide it and continue to survive in the relationship. Businesses need to remember that making a customer happy by giving them things does not create a partnership. It usually just creates an expectation that more can and will be given in the future.

One of the best ways to stop the customer pendulum from swinging and creating a business partnership is to focus on the customer’s business service needs while remembering your own business needs. Being responsive as well as empathic regarding the customer’s issues will go a very long way in this regard. It is also necessary to educate the customer on the supply side issues in the service equation and the requirements that are required for a viable business relationship going forward.

I don’t know that you can ever get a customer to be fully empathic about the issues and costs associated with solving their service problems, but educating them about what it takes to provide them service can probably go a long way toward getting them to acknowledge and accept the bill that should be presented to them after the issues have been solved.

Employees, Empowerment, Leadership, Management Style, Responsibility

Micromanagement

Before I dive head first into the metaphorically shallow waters associated with this topic, I guess it would be best to find an acceptable definition of exactly what micromanagement is. We are all pretty comfortable with what a microprocessor is. I am particularly well versed in what a microbrewery is and the delicious products that they produce. I am even familiar with the show “Tiny House Nation” on the FYI channel. (I couldn’t think of another micro-something, so I had to settle for a tiny-something. It’s the same thing really.) But I think everyone has a different view or definition of micromanagement.

Webster’s dictionary defines micromanagement as:
verb (used with object), micromanaged, micromanaging.
1. to manage or control with excessive attention to minor details.

That’s a pretty good start, but I don’t feel that it entirely captures the full annoyance factor that can be associated with this management practice. I have found that attention to detail is sometimes a necessity and not a particularly negative connotation item the way micromanagement is. I think we can all reminisce back to past assignments, lives and times in our respective business careers when we each may have been members of teams that were led by individuals that might possibly have been defined as micromanagers.

A cold chill just ran down my spine. I think I will go and get one of those previously mentioned microbrews to try and soften that specific micromanager memory.

The definition of a micromanager that I will start with is someone who not only tells you what to do (which is the role of just about any standard run of the mill manager) but also tells you how to do it.

Remember, a leader is someone who tells you what has to get done and then supports you when you work out the part that you need to do, and how you plan to go about doing it. Leaders inspire and groom future leaders by challenging them to perform the radical business process commonly known as thinking.

Micromanagers seem to believe that they should do all the thinking. If something needs to get done, they will tell you what you need to do, how you need to do it and when you need to do it. Your responsibility will simply be to follow the instructions. That is unless you have been told to do the wrong thing. Then it will most likely be your fault for not recognizing it was the wrong thing that you were told to do, and instead doing the right thing.

I have heard of many micromanagers being described as “control freaks”. Again I think this description has a little bit too much of a negative connotation that I don’t wish to be fully associated with. I think I would prefer to refer to them as “control enthusiasts”. Some of them can be so enthusiastic about it that at times they can become difficult to tolerate.

So now that we have hopefully adequately defined what a micromanager is, the question that is engendered is: Why do people become micromanagers?

The simple answer to this one is: I have no idea.

If I were going to guess, I would guess that during their formative years in business they were once given an assignment and for whatever reason they created and implemented an ultra-detailed plan, and it worked. This possibly reinforced what here to fore might have been a latent behavior and voila, and a future micromanager was born. Perhaps during the same formative period the future micromanager reported to a current micromanager and the micromanagement DNA was passed down to the future management generation through some sort of micromanagement osmosis.

It might be as simple as a personality defect.

Whatever the cause micromanagement is in and of itself a self limiting management style. As a manager matriculates up the management structure they take on more responsibilities. This means that there are more and more items for the micromanager to try and keep track of and manage. There are only so many hours in a day. Sooner or later the micromanager is going to run out of time to micromanage all that they have on their plate.

One of two things will then happen. The pace of the business will either slow down to accommodate the micromanager’s business technique, or the micromanager will learn to let go of some of the control that they are so enthusiastic about in order to keep pace with the demands of the business. If the business is slowed by the management process, it will fall behind the market, which will not slow down in order to accommodate the micromanager’s technique and it will soon find itself in a recovery mode.

Either way the level of micromanagement will have reached its limit.

During a discussion some time ago I was asked if there was ever a time where micromanagement was called for.

I had to sit quietly and think about that one for a moment. With the entire myriad of business structures and environments there probably was at least one that called for this approach. After careful consideration I had my settled on my response.

I said “no”.

I have mentioned many times that people and teams want a leader not a manager, and certainly not a micromanager. A leader does not tell all members of the team what they are to do. Team members have their respective responsibilities. It is up to the leader to define and communicate the goal and then enable the team to achieve it.

If a team truly requires micromanagement attention in order for them to achieve their goals again one of two things has happened. They have either been so conditioned that their individual input is not appreciated or utilized and have adapted their behavior to that desired by the micromanager, or they truly cannot or do not know what to do.

In the first instance, a management or management style change may be able to return that micromanagement conditioned employee to a business condition where they can contribute more fully to the success of the business. Instead of being an “order follower” they can become a solution creator in their own right.

In the second instance the team either needs to be better trained or replaced. If the team is incapable of performing except under constant management supervision they may be trying to do work that they are not qualified or capable of completing. If the team members are in fact capable and qualified to do the work, yet still require micromanagement in order for them to achieve their goals then they may be candidates for roles in other organizations where micromanagement is the preferred form of management.

Offhand, I can’t think of many of those types of organizations.

Micromanagement is a centralized decision making management structure. One person, the micromanager tries to make the decisions for everyone else in the organization. As organizations become more culturally diverse and geographically dispersed this structure rapidly becomes a limiting factor instead of a performance enabler. The speed and flexibility of response that an organization needs to be successful in today’s business environment is lost when micromanagement is in play.

People will respond to the guidance provided by leaders by making good business decisions and will be fully vested and committed to the outcome. The only response people will have to micromanagement direction will be to make no decision, only to comply rather than commit to the desired outcome, and just follow orders.

As leaders we need to focus on what needs to get done, and rely on the talents of our team members to help us come up with the best ways to get it done. By definition they are closer to the issues than we are. It only goes that they should have some good ideas on what needs to be done and how they can best do it. It is up to the leader to best utilize all the ideas that are available, not just their own.

Goals, Leadership, Process

Goals and Processes

Whenever I find myself casting around for a topic to write about, I seem to always migrate toward one of my favorite conundrums: Goals and Processes. Is it goals that drive business processes, or is it processes that enable business goals? Because I have a little time, I think that I’ll go ahead and address this one some more.

Almost everything I see and read these days on this topic seems to be focused on the Process side of this question. It is interesting how the focus and primacy of management ideas and structures ebb and flow over time. In the past it did not seem to be such a Process focused set of business literature. I guess William Deming was one of the first to work in this area, and he did some ground breaking work. Having a Process focus is good from a predictability and repeatability point of view. Businesses like a predictable and repeatable outcome.

A good business process is like a security blanket. If you don’t know what to do, you can fall back on the process and hopefully expect to end up relatively close to where you were aiming to be at the end. Having a process reduces the risk and can remove uncertainty from the business.

At the risk of sounding like some sort of business contrarian I need to openly admit that I do not particularly ascribe to this way of leadership or business thinking.

For me an over reliance on process removes the value of people from the equation. They don’t Plan-Do-Study-Act as Deming said, they just follow the process. If they are following an industry “best practice” they probably are not even encouraged to think. They are part of a production line-like process. This seems to promote a very risk averse position for people. They can’t be wrong if they are following the process, and if they are wrong it is the processes fault not theirs.

I think a process is an extremely efficient and effective way to codify something that you have already done. That means that some way, somehow somewhere someone has already achieved the goal, and that the process has become the documented method that they used to achieve it. If you have been successful in manufacturing the first widget, then a production line process for all subsequent similar widgets would be called for.

When Sir Edmund Hillary climbed Mount Everest, there was no known process associated for a successful summiting attempt. People had been attempting the summit since 1921, but it was not until 1953 that is was actually accomplished. It was only after he was successful that the process of creating a series of ever higher camps, and the selection of which specific routes provided the greatest probability of success started to coalesce. In fact it has now evolved to a situation where the process for climbing Everest is so well defined that even novice non-climbers are now being taken up the mountain escorted by seasoned mountain climbing guides.

I think the cost for the Everest “guided expedition” is approximately sixty five thousand dollars ($65,000) and takes several months to prepare and execute.

I think this is a little bit of hyperbole, but it does illustrate my point. It took more than thirty years to achieve the goal. There was no defined process that anyone could fall back on. Every attempt was breaking new ground. We also need to recognize that just because there is a process does not guarantee that each climb will be successful.

To date there have been about eleven thousand (11,000) expedition attempts to summit Everest, with the vast majority of them since the year 2000. This would indicate that the process is reasonably well defined. However there have only been three thousand (3,000) expeditions that have ended in success. These successful expeditions resulted in only approximately five thousand (5,000) individuals that have actually stood on the summit.

In the mean time it should also be noted that more than 260 people have died while trying to climb Everest. That means that for every 20 individuals that succeeded in climbing Everest, 1 paid the ultimate price.

Thank goodness for the internet and Wikipedia. Where else can you get facts and statistics like that so easily?

So, what does all this have to do with the discussion of Goals and Processes in business? As I said, I think it illustrates several points:

First, if something has never been done before, there is probably no defined process available for doing it. People knew the process for climbing mountains. They had been doing it for years. It took more than thirty years and many unsuccessful attempts before they climbed Everest. They ended up creating a new process in order to do it. If you are trying to do something in business that has been done before, you had better come up with a faster, better cheaper way of doing, otherwise being the second successful one probably won’t get you too much.

Second, it was not the “process” of climbing Everest that captured people’s imaginations. It was the “goal” of climbing Everest that did. It is difficult to get people committed to a process. It is far easier to get them committed to a goal. The same goes in business. It is the goal that drives people to succeed, not the following of a process.

Third, just because you have a process that has proven to be successful in the past does not mean that it will continue deliver success every time. Less than a third of the expeditions attempting Everest are successful. Even well defined processes can fall victim to external environmental issues or potential team issues from within. Expecting to follow a process to get you to a goal without being prepared to deal with the unexpected or unforeseen enhances the probability of not being successful.

Fourth, even if only one or two out of the entire expedition actually get to the top of Everest, the entire expedition is considered a success. The goal is to get someone from the expedition on top of the mountain. If the goal was to get everyone to the top of the mountain, no expedition would be considered a success, and we would still be searching for the process to do it. The idea is to make sure that success is clearly defined and that everyone can participate in it.

I think it is reasonably apparent that it is goals that inspire people and it is the attainment of those goals that most people are measured against. Processes are good in that they provide a guideline on how to go about achieving the goal. But just like the weather on Everest, or the makeup and capabilities of the team attempting the summit, there are always variables associated with achieving the goal that cannot be accounted for in the process.

Processes are at their best and most useful when they are simple and allow for variances based on the environment surrounding the goal. It is only in the most repetitive of manufacturing production lines that a process can be fully relied upon, and even then it is subject to the vagaries of the humans doing the work.

As an example of this I would point to automobiles. They are produced primarily in a production line; however the quality of some cars can vary significantly. They are all produced by the same process, but some are acknowledged to be significantly worse than others. Hence the concept of getting a “lemon”, and the creation of “lemon laws” to protect the consumers unfortunate enough to have purchased one of “those cars”.

Business is lead and inspired through the use of goals. Processes can be of assistance in attaining those goals, but it is the goal and the measurement of progress against that goal that is important in generating progress. It is when business supplants goals with processes as its primary focus that the business will start to lose its way.

Communication, Leadership, Relationship, Self Analysis

Verbal Volume and Value

The “conversation” is a key aspect in business. That statement should elicit a collective “Duh!” from all those that read this. I think I am going to go a little bit deeper here. With all the electronic communications, email, Instant Messaging, Texting, etc. I think we may have lost some of our ability to have a viable and valuable conversation. Certainly it appears that some of the rules for conversations have changed, or perhaps better said they are now being ignored.

And it is not just conversations that I am going to address. It can be conferences, consultations, deliberations, dialogs, dissertations, disputes, discourses, meetings and reviews. You name it. Any place or time where people verbally exchange ideas is going to be the topic here.

That was some pretty nifty work with a Thesaurus, don’t you think?

The interesting point about electronic communications is that everyone is essentially equal. We all get to use the same electrons and bits and bytes in our electronic communications. We can all use CAPITAL LETTERS when we want to yell or make a point. It is almost impossible to interrupt anyone in an electronically communicated discussion. We can all use as many words as we want or like when positing our comments to each other. We can all ignore what someone else has written and blithely go on about our agenda in the electronic conversation as if the other participants had not said a thing of value. There are however some basic rules such as name calling and cursing are probably not viewed as entirely acceptable to name a couple, for electronic communication conduct, but by and large everyone gets to play as long as they play nicely, share, bring their own crayons and don’t color outside the lines, too much.

In short it is a pretty fair forum for discussion. However it is not real time and it is relatively slow.

Now let’s go to the real time, high speed, human to human, interactive discussion, verbal version of communications. It’s called a conversation or maybe even a discussion. The electronic discussion rules definitely don’t apply here. At least I don’t think they do. And sometimes this seems to have put me at an apparent disadvantage when it comes to dealing with those people who seem to think that it is okay to use the verbal equivalent of of some of the electronics conversation rules of conduct.

There are those that will use the verbal equivalent of underlining, bold or CAPITAL LETTERS, ie. Yelling or raising their voice in the discussion to make their point at almost any time. There are also those that will employ the verbal equivalent of not reading the other participants messages before sending their own. This is usually demonstrated by their interrupting when they have something to say while someone else is already talking. And then there are those that will engage in the verbal equivalent of trying to monopolize all of the available electrons, bits and bytes for communications. The idea here being that if they never stop talking you do not have the opportunity to present your positions, ideas or arguments and you lose by forfeit.

What is also interesting to me is that it is not three different kinds of people that employ these types of conversational domination. It is usually just one kind of person that employs these three conversational tactics.

It is also an incredible bore.

I am by no means the best of conversationalists. I do try to have relevant information and input, and I am not afraid to disagree on points of content. I will almost always try to wait for someone to stop or pause before I try to take up my side of the conversation. I also work pretty hard at not yelling as I have found that it usually doesn’t improve the effectiveness of the content I am trying to communicate.

What has me concerned is the apparent number of people who DO NOT feel the same way about verbal communications as I do.

It seems all too often that there are those that are applying their electronic communications protocols to their verbal communications interactions. They will interrupt. They will speak louder so that they can talk over the top of your discussion points. They will attempt to overwhelm the conversation just in the sheer volume of verbiage that they will put forth, effectively limiting the available time for your input.

It’s either that or they are just effectively being rude.

I was recently in a discussion where one of the participants was employing all of the aforementioned tactics for dominating the conversation. They wouldn’t listen. They would interrupt. They ran on and on and wouldn’t allow the opportunity for anyone else to provide input.

I was at one point both impressed and awed by that capability. Not so much the content, which was by my reckoning just management type blather, but the ability to inhale in such a way as to not interrupt their ability to keep talking. I surmised that they had either mastered the ability to inhale through their ears while still talking, or alternatively had an extra internal air bladder organ of some sort (similar to the air bladder that is used by someone who is playing the bagpipes) where they would use it to keep talking while they inhaled.

The point I guess I am trying to get to here is that trying to dominate a conversation really does no one any good, and it will probably just make people write strange things about you (in their Blogs and other places). Having a predisposed agenda or solution in reality negates the value of a discussion. It is reasonable to have a position that you want to either put forth of alternatively defend, but interrupting, talking over, or just outright ignoring other parties to the discussion removes everyone from the discussion.

It becomes less than a discussion or a discourse. Possibly more like a diatribe.

Turning up the volume of what you have to say (being louder than everyone else) doesn’t make your opinion better or position stronger. Increasing the volume of what you are saying (saying far more than anyone else) doesn’t make what you are saying any more convincing. Value comes from the resolving of differences, not the subverting or overwhelming of everyone else’s opinion.

A small hint here. If you are in a discussion and you recognize that not many other people are talking, there is a good chance that you are being “that person”.

There is an old quote (there is always an old quote for just about everything). Epictetus, the ancient Greek philosopher said:

“We have two ears and one mouth so that we can listen twice as much as we speak.”

It is probably a good rule to follow if you want to have a healthy and mutually valuable discussion.

Achievement, Alternatives, Change Management, Leadership, Self Analysis, Strategy

Disposable Business

Leave a comment

A long, long time ago, in a galaxy far, far away, a family sat despondently in their family room. They didn’t know what to do. Their color television had for some reason stopped working. Since they had never felt the need to communicate with each other while the TV had worked, they were now horribly out of practice. What to do? Things looked bleak. It was time for action.

Now here is where things get really weird. The eldest male of the family, the nominal head of the family unit (I say nominal head as this was only a fictional title. He actually reported to his mate, the most powerful woman in the universe) stood up, put the non-functioning television in the family’s means of conveyance (re: minivan) and took it to a place that was known as the repair shop.

Yes, he actually took the TV in to be repaired.

I can actually remember back to a time when this would not have been a fictional story. The reporting structure of the family is non-fiction. Every male, nominal head of a family does in fact report to their respective specific most powerful woman in the universe. The rest of this story is border line science fiction. Today when something breaks we don’t seem to fix it. We don’t even seem to be inclined to try and fix it. We just throw it away and go get another, newer one.

What used to seem to be a society based on the utilization of durable goods seems to have evolved to society based on the purchase of disposable goods. We don’t seem to want to fix anything anymore. When something breaks our first inclination is to get a new one. If that is not eminently feasible, the next step is to call someone to have them fix it. It has become the societal norm these days.

Now let’s go to go to different galaxy that is not so far away. We still have a disposable versus a repairable product mindset, but now we will be talking about businesses, not products. In this galaxy there is a business that has been performing well for many years, making products that have been well received and are well thought of by their customers. I was going to say that they made high quality, repairable televisions, but that would have been just a little excessive in my opinion.

Let’s say something now happens to this business. For whatever reason it is now no longer performing as well as it did. Its products are no longer well received nor are they well thought of by their customers. For lack of a better description, this business can now be considered broken.

Are broken businesses as disposable as broken products? How does a business actually break anyway? In a broken product, it is usually a component that fails and brings down the entire product. What happens when the components of the business are all still operating as they did when the business was not broken?

We were a culture that used to fix our own cars, change our own oil, fix our own flat tires, do our own home maintenance and improvement work. Now we just get a new replacement or call someone to come fix it. How does this culture translate to our new business models? What do we do when the current business model doesn’t work anymore?

I am fond of quoting Albert Einstein. I think he is universally recognized as a pretty bright guy, with the theory of relativity and all that. One of my favorite quotes of his, and I have used it before is:

“We cannot solve our problems with the same thinking that created them.”

I have met a few leaders that could actually change the way they think. There have not been many, but there have been a few. Most of the time a manager learns a way to do something successfully gets rewarded for that approach and spends the rest of their career replicating that solution set. They continue to think the same way. They just try to apply the same methodology in different situations.

Think of the old phrase:

“When you are a hammer, everything looks like a nail.”

In effect, they were once successful as a managerial hammer, and seem to have dedicated the rest of their managerial life to finding another perfect business problem nail.

Businesses are not disposable, and can invariably be repaired. Repairing a business changes it. It takes a different mindset. You can’t just call someone to come fix it. You can’t call a plumber or electrician to come fix it for you. You have to understand the plumbing and wiring of the business yourself. You have to get back to the mindset of changing your own oil and fixing your own flat tires.

Sorry for the poor metaphors, but I think you get my point.

Part of the solution may be to get a good plumber or electrician on your team, and to listen to them when they give you their recommendations and opinions.

I think this is the essence of learning to change the way you think. Sometimes you are the proper hammer for the current nail. Sometimes someone else is the proper hammer. The key is not being locked into a specific method or process of solving problems, and being able to recognize when things have changed and some different thinking is required.

A broken business is made up of many “working” people. I think that despite the trends to the contrary, they are not disposable. If they are performing poorly it is usually not because they want to perform poorly but rather they have been given poor leadership and are focusing on the wrong issues (re: nails). Disposing of them and getting new people will not fix that problem.

Remember, the thinking of those that got the business into its current state will usually not be sufficient to get it out of that state. The way the business is being managed, or those that are managing have to change. It is difficult for a leader to recognize that they must change. I think it is almost impossible for a manager to recognize that they must change.

I think our disposable product culture has taken its toll on our ability to repair broken businesses. At the risk of sounding too trite we seem to be predisposed toward disposable businesses. We seem to have evolved a mindset that if the current compliment of people cannot achieve the desired goals that we should dispose of them and replace them (like our products) with newer models.

The problem with that thinking is that it seems to be some of the thinking that may have been responsible for getting the business into its current state, and as Einstein noted, that probably won’t be sufficient for getting it out of that state.