Category Archives: Management

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Say It Loud

I like that people are speaking out.  I like that customers are letting corporations know what they think.  It’s good for democracy and free enterprise.  It’s great for business.

Bank Transfer DayLast week one individual, 27-year-old art gallery owner Kristen Christian, kicked off a true grass-roots movement that came to be known as Bank Transfer Day.  No one told her to do it, no giant entity or association formally backed her cause, she just did it and thousands of people got on board.  Since September 29, 2011 when Bank of America announced its $5.00 debit card fee, as many as 650,000 new credit union accounts have been opened.  This past week, Bank of America changed its mind about charging that fee.  You think they aren’t listening?  Maybe not as carefully as they should be, but it is clear some message got through.  This is how it should be.

Companies must never forget why they exist — to serve customers.  When they forget that, they are on a slippery slope.  Corporations can have a tendency to be inward thinking, they can focus with intense obsession on their internal issues, efficiencies, operations, politics, succession plans, and tactics for improved profitability.  Internal company struggles can become engrossing to the exclusion of more important matters, like creativity and customer focused quality.  When companies forget about customers, the other stuff ceases to matter.  They need to be reminded of that often and with passion.  Don’t feel bad when you complain or move your business, you are helping them.  They need to hear from us.  Our voice is vital to their survival.  If they don’t believe that and embrace it as a core value, creative destruction will do its job.

As I have written before, we are customers, we cannot allow ourselves to be reduced to the notion of being treated as consumers.  Customer service in a company needs to be both reactive and proactive:

Reactive customer service is when you call them to identify an issue or concern, the person on the phone or chat or responding to your email should do everything possible to solve your problem.  Great companies love these inbound calls, because each contact point is an opportunity to bond a customer for life.  If something goes wrong and a customer service person “makes the save,” your loyalty and lifetime value to that company can increase exponentially.  Conversely, if the customer service person manhandles the “win-back” moment, not only are you likely to be gone, you are likely to take a few dozen of your friends or the company’s future prospects from them, maybe more with the power of social media.  Again, you are doing the company a favor.  If you give them a chance to be helpful and they succeed, you have invested in their brand.  If they let you down, you teach them a lesson they need to learn quickly before their brand is permanently damaged.

Proactive customer service is the job of listening to customers before an action occurs, reading the trends and common themes that flow through the data bases of feedback systems.  Did banks know of the anger of the 650,000 customers who opened credit union accounts last month?  Some did and some didn’t.  Did they act in advance?  Did yours?  Why not?  If they are taking your business for granted, they deserve to lose it.  We all have options.  Proactive customer service focuses on retention activity in advance of crisis.  After crisis, it’s a public relations campaign, the spin doctors join the fray.  That may have worked a generation ago, but not so much today.  When we go, we are gone.

The Bank Transfer Day effort was careful to acknowledge that although it shared some inspiration from the activities of Occupy Wall Street, it was not part of that movement, it was its own thing.  Here again, the idea of customer voice is the key takeaway — what is being said, what is being heard, how can this help make systems function better?  Last week in the Wall Street Journal, Jeff Greene suggested the same basic idea, that “We Should Listen to the 99%” because they “are giving us a chance to address our problems before they grow worse.”  Neither Greene nor I are suggesting that every idea being articulated by OWS is necessarily actionable, but there is most certainly upside in listening and nothing but downside in ignoring the voices of passion.  If people have something to say, business is always well advised to listen.

And how about Congress, where the public approval rating dropped to 9%, are these elected officials not in need of working much harder at hearing?  Never has the need for the public’s voice been in more demand, and yet, as so many of us keep asking, is anyone listening?  The debt ceiling follow-up deadline for the Super Committee is November 23, just weeks away.  I don’t sense a consensus plan on the horizon or an amicable resolution, seems like business as usual in Washington to me.  Maybe we aren’t making enough phone calls or sending enough emails, we are much too polite.

It takes courage to speak out, to draw attention to oneself in a public forum and ask to be heard.  Likewise it takes courage in a corporation to align with the customer and advocate for improvements in the enterprise that cause customers to embrace goods and services along the lines of brand.  How much do banks spend on advertising to drive people through their doors?  What is the lifetime value of your business to a bank, to any company for that matter?  Can the banks not offer us valuable services over the course of a lifetime that produce reasonable profits?  Of course they can, or there would be no such sector.  While corporations worry about driving the value of their share prices, is there any better way to create value than to address customer needs and build lifelong customer relationships?  These are the backbone of profits, not much else that isn’t short-term financial engineering.  When innovation is applied to addressing real customer needs, good things happen for buyers and sellers.

It is so easy to give up and think that one individual cannot make a difference, but then someone like Kristen Christian comes along, fires up a Facebook page and shows us that there is power in the fabric of our nation.  That power of responsiveness is at the core of what can make a business great.  Our economic system can serve us well if we demand that it be responsive.  Don’t be quiet.  If you have something to say, say it and share it and drive the companies who need to earn your respect to work harder for the privilege to serve you.  When businesses listen they can only get better, help them to hear you by being brave and bold and honest.  A robust feedback loop makes good business sense, and everyone can have a say in that.  This is a business proposal with unlimited potential.

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Your Next Move

Few people these days seem to have a lot of choices to make about job opportunities. With national unemployment stuck above 9% for the past 26 months, those who have jobs are largely counting their blessings, and those who don’t are spending most of their waking moments trying to get anything at all, hoping to stay in a field relevant to their expertise and not drain their savings. We all hear the stories of people’s sorrow, hardship, and demoralization. The impact is daunting, and those you meet fighting to pursue their passions and remain financially independent deserve our most sincere empathy. If you have the chance to offer support to a friend or networked acquaintance, do it. Even if all you can do is lend an ear, you may be surprised how much that outreach is valued and appreciated.

This past week I had the opportunity to lend an ear on a different tangent, helping advise a bright young rising executive on his next career move. I enjoy being able to mentor those whose careers I have watched evolve anywhere from one to thirty years, and although the last thing in the world I ever want to do (or will do) is tell someone what to do, I do like to put very difficult and often uncomfortable questions in front of people for them to answer, hoping that the thought process leads them to their own answers. My sense is, the better the questions, the better chance you have at improved answers, and anyone who knows me knows that I love to ask questions.

I didn’t know this fellow extremely well, but I had the good fortune of observing his broad range of skills. He called me up and wanted me to help him decide if he should leave his current position and take another offer. Simple enough, right? You have this package and set of circumstances, and the other company is offering that package and set of circumstances. Compare and contrast, make a decision, stay in place or move on. Well, if that’s your framework for making a career decision, I am certainly the wrong person to ask for coaching. First, you don’t need someone else to help you with that framework; you can do that math in your head all by yourself. Second, I would never use that framework; to me it’s a path to an almost certain dead-end.

Where I begin the process of deciding if you should make a move is with a very simple metaphor: have you ever played pool? If you haven’t, have you ever watched a pro run the table? And if you haven’t, check out Jackie Gleason and Paul Newman in the original 1961 version of The Hustler. But I digress. What you observe in the difference between amateur and professional pool is how the table is run. Amateurs look for the best shot on the table and sink that ball. Pros only take a shot when it lines up their next shot, so after a ball has dropped, there is another ball ready to drop, then another, then another, letting them run the table and only then sink the eight ball. An expertly-targeted pool shot is only good if it strategically sets up the next shot.

That’s the framework I suggest for anyone trying to make a tough career decision: each move has to set up the next move, even if you don’t know where the balls are going to stop moving—which you never will because our lives are governed by market forces and luck as much as they are our determination (that’s a lesson humility teaches us). The job and package you have is known. The package being offered is known, the job not so much because you haven’t done it yet. What is unknown is where and when you will be at the end of the next job if you take it, and the one after that, and the one after that. Those can never be known unless you can see the future, in which case you don’t need to have lunch with me.

To have a chance at getting the right decision, you’re going to need to answer three extremely personal questions. Sorry.

The first question I asked this fellow was quite simple: to what do you aspire? If you could see the future, five years out, ten years out, what do you think you want those elusive opportunities in your target sights to be? Force yourself to focus on that, think about what you want downstream. It may never happen and you may change your mind a dozen or more times between now and then, that’s fine and natural. Still, ask yourself right now, what is the downstream job you want?

Now the second question: why can’t you have that job right now? It’s a trick question. You can’t have it because it isn’t being offered, but the real question is what skills and experience don’t you have right now that would let you step into that job? You know what experience and knowledge you have today. What don’t you know or haven’t you learned to make you qualified for that opportunity? You must answer this honestly and specifically.

Now you’re ready for the third and most important question: what knowledge and experience do you need to acquire in your next opportunity to most closely qualify you for the opportunity beyond it? You know the present, you have an inkling of what you think you want the future to look like. How do you close the gap between the present and the future? What do you really want out of your next job to set you up for the job beyond it, or set you up for the best chance at the desired job beyond it, or set you up for the best and broadest set of potential choice opportunities for the job beyond it?

To me, that is how you decide if the next gig you are being offered is the right gig for you. Don’t take the shot unless it sets up another shot. More money is nice, more responsibility is nice, an expense account is nice, a beautiful office is nice. All of those things are very, very nice. And all of those things are fleeting. They can disappear in a nanosecond. When they are gone, what will you have? The only thing you will have is your experience—what you have learned is what you can take with you. Nothing more, including salary history. What you can do next is a combination of your track record, your integrity (= your reputation), and the probability that what you have learned will be of value to your next set of challenges.

At the end of our lunch, the fellow whom I assaulted with these questions made an interesting decision. He was neither going to stay in his current job nor take the new offer on the table. He was going to revisit an offer that had been made to him a few months earlier that he had rejected. He realized he had rejected it for the wrong reasons. He rejected it for the package and relocation requirement. When he thought about the opportunity downstream that he really wanted and the gap he needed to fill to be ready for that, the offer he rejected appeared to him to be the perfect fit. He left the lunch hungry to see if that gig would still be there, and if not, how he could actively find one more like it. He was 100% focused on filling the learning gap—that was his new criteria! That felt pretty spot on to me, and it will be interesting to see where he goes from here. I have a pretty good idea that he and I will be talking again in about five years.

Oh, one more thing. If you are going to be a manager and have never had a good boss, get one. The odds are terribly against this, as you know from your history. The reason most employees complain about their bosses is because their bosses aren’t good bosses, and the reason their bosses aren’t good bosses is because they never had a really good boss. There is no way you can learn to be a good boss if you haven’t experienced one, been mentored by one, and drained them dry of all they know. If this is part of the package, value it over cash big time. Most people don’t quit jobs, they quit bosses. The value of someone who cares about you and will help you become your best cannot be quantified.

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Image: Pixabay

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Eyes on HP

Hewlett-Packard is not just any company. It is iconic. Like Disney, Ford, General Electric, Apple, Microsoft, and a few others, it is not only part of business history, it is deeply wound into the fabric of American history. Modern Silicon Valley pretty much begins with Hewlett-Packard—the foundations of information technology as a new sector of productivity, the power of innovation, the hardware/software product life-cycle, the beginnings of west coast venture capital, and the splitting atom of employees spinning off from the mothership to become founders themselves. The Hewlett-Packard story until recently is a magnificent tale.

HP WayBill Hewlett and Dave Packard really did start in a garage. One of the very first products they sold was a precision audio oscillator, to of all people, Walt Disney. They captured their thoughts in a book, The HP Way, reinforcing the need for a company to have a mission and a vision. When we talk about a job being more than a paycheck, a lot of that comes from the work ethic and values of Hewlett and Packard. They set the stage for a generation of entrepreneurs. They made it okay to fail, as long as that failure contained learning that was honestly disseminated. HP on an engineer’s resume was gold. The sales and marketing team was second to none.

It is almost impossible to understand the impact of a global company with over $125B in annual revenue and 325,000 employees changing CEOs four times in six years, not including the interim CEOs between hires. Carly Fiorina, Mark Hurd, and Leo Apotheker each left the company for different reasons, and while the HP board is now taking a lot of heat for perhaps not scrutinizing their decisions around these leaders carefully enough, that is unfortunately water under the bridge. The company is now under the direction of former eBay CEO and recent California Gubernatorial candidate Meg Whitman, who will need to move quickly and definitively to steady the ship.

HP has seen numerous mergers, divestitures, and acquisitions throughout this period of seismic change, and each time one strategy replaces a previous version, the impact is costly. Whitman has said she believes the strategy in place at HP now is largely correct, so if the issues she is facing are managerial, perhaps we will see a positive impact sooner rather than later. My guess is she will dig into strategy a bit more in the coming months, and then move aggressively to make her mark. The sooner she can restore confidence with customers, employees, and shareholders, the better it will be for all those who do care deeply about the company’s future.

Why is HP so important in the scope of business enterprise? When you dig into exceptional business books like Built to Last and Good to Great, both by Jim Collins, you realize just how hard it is for even the strongest corporations to go the distance in an environment of creative destruction. As Collins points out so often in the data he cites, only 62 of the original Fortune 500 companies named on the original list in 1955 remain there in 2011.

The great former CEO of Intel, Andy Grove, talks at length about the “strategic inflection points” facing companies at every stage of their evolution—particularly technology companies—in his critical study Only the Paranoid Survive. Grove makes it all too clear how easy it is for a well established organization with vast resources and expansive markets to miss a fundamental change in the continuum of progress, only to catch its error to late to be fixed, having been lapped by any number of competitors.

Where Collins approaches the challenge largely from the aspect of defining and reinforcing a brand, Grove looks at it from the point of view of ceaseless innovation and refusal to accept the status quo as satisfying. Both approaches are vital, but neither has a chance in the face of organizational chaos. Products, features, and benefits must remain in constant flux, but ideals and values are their balancing counterparts. Remove the rudder from a very fast ship and it really doesn’t much matter what is powering the engine room.

It takes both leadership and strategy to steer one of these mammoth ships through the rough seas of business change, and simply taking those notions for granted is the easiest way for a company to fall from grace. Robert Burgelman, a colleague of Andy Grove who teaches strategy at the Stanford Graduate School of Business (and is also a former board member of mine), tells us that strategy becomes real when we apply resources to concepts. We see that very much in action now at HP, but we see those resource decisions changing too frequently in real-time. The leadership of the CEO drives that strategy from concept to action, from white board idea to investment cost center, and if strategic shifts are reversed before cost centers become profit centers, value can be destroyed at an astonishing pace.

No CEO or strategy is meant to last forever, but change them too often, and costs pile up without reward. The toll on staff morale is immeasurable, and the lost jobs from reversing decisions may never be recovered. Employees feel the impact in loss of income, shareholders get pummeled. Customers just move on.

It’s time now for HP to turn the corner. As I said, HP is iconic, it is Silicon Valley. We need it as an example in the tech sector of a company that is Built to Last and can continue to grow from Good to Great. HP dates to 1939. It is the standard-bearer for all the great companies that followed its mantra, were born in garages, and now have office space in the adjacent neighborhoods. If we want to believe companies like AOL and Yahoo can find new creative life through reinvention, we have to have models for long-term success. We need succession plans that show great companies can transcend their founders and achieve new levels of success by ensuring that values are more than words in the employee handbook, and that they are liberating, not confining, as long as the leaders who embrace them help guide their teams through increased commitment to innovation with coherent planning and rigorous evaluation. No shooting from the hip, but no fear of change.

On a pragmatic level, we also need the jobs, particularly in HP’s home state of California. Surely the majority of new jobs in our nation will come from small business and startups, but we can’t afford to lose the ones we have in the enterprise, not for the families who depend on them, not for the state budget that needs the payroll tax. Because of its deep history in the community and legend, HP leads the ethos in Silicon Valley in so many ways, its stability is a reflection of hope, its instability a drag on the headlines when we need a shot of optimism.

This is a once in a lifetime career and company defining opportunity for the new CEO at HP. It’s like getting the chance to manage the NY Yankees after three bad seasons no one saw coming. They might be on a losing streak, they might have made a bunch of bad trades, but they’re still the Yankees. Everyone knows they can win, that they have the resources to win and a history of winning. Meg Whitman just needs to ask herself, what kind of game does she want her team playing, who does she want in the line-up, and where does she need to better read the competitive landscape. A little consistency in management will go a long way.

Let’s hope Hewlett-Packard has it right this time. There is already new criticism of HP’s board that they acted too quickly in hiring Meg Whitman, that she should have first been named interim CEO, or that her background is not right for the job. Their decision has been made, so I am rooting for the new CEO. This isn’t politics, this is P&L. It is critical that Meg gets this right and succeeds. A win for her in this role is a win for all of us.

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Is Other People’s Money Different?

Buried among last week’s headlines—that included a nation embarrassing spat between the President and the Speaker of the House over what day our President could address a joint session of Congress and The People—was this gem found among other reports on Thursday Page 3 of the Wall Street Journal (Nathan Hodge, 9/1/11):

The Commission on Wartime Contracting in Iraq and Afghanistan, established by Congress in 2008, unveiled a final report Wednesday that represents the most comprehensive assessment to date of how the U.S. government has managed the more than $206 billion it is projected to spend on contracting in both wars through the end of fiscal 2011.

The findings, first reported by the Wall Street Journal in July, point to what the panel describes as a pattern of waste, fraud and abuse that has cost taxpayers dearly and at times undermined U.S. foreign-policy objectives.

The report includes a copy of an extortion letter sent by Afghan insurgents to a contractor working on a U.S. government-funded construction project in Afghanistan. It also details many instances of projects the panel says were poorly conceived, badly executed and, in the long-term, impossible to sustain without more U.S. or foreign funds.

The commission’s findings were based on hearings in Washington, staff research and a series of fact-finding trips to both Iraq and Afghanistan.

Michael Thibault, one of the bipartisan panel’s co-chairs, said the commission found wasteful spending amounted to between 10% and 20% of total contract and grant spending. Fraud, he added, has ranged between 5% and 9% of contract totals.

Let’s extract a few of the more choice words from this excerpt:

Waste. Fraud. Abuse. Poorly conceived. Badly executed. Cost the taxpayers dearly.

Transforming War CostsI haven’t heard one person mention this in conversation. Other than in perfunctory reports, I’ve heard no outrage or rebellion. According to the Final Report to Congress, Transforming Wartime Contracting (August 2011) Executive Summary Page 5: “The Commission’s conservative estimate of waste and fraud ranges from $31 billion to $60 billion based on contract spending from FY 2002 projected through the end of FY 2011.” That’s not less than $30 billion—and possibly twice that much—of our money spent on stuff that it didn’t have to be spent on, for the same outcome. If you paid tax last year, some of that was your money. Willing to let that sail on? I’m not.

I still have wrenching memories from the 1980s of the government audit that revealed we were paying $500 for toilet seats. It was shocking, and never meant to have a command performance. I also know that profiteering in our nation is illegal, but perhaps we don’t have the resources to investigate and prosecute those kinds of abuses any longer. Legal fees are expensive—no sense throwing bad money after bad, right?

I also know that much of the money we use to pay these invoices is borrowed. Not only are we getting fleeced on value, we are paying interest on it to boot, and interest on the interest, because I can’t see a way the accumulated balance gets paid down in our lifetime. If a CEO allows his company to send our government a bill that smacks of fraud or abuse, I really do wonder what he is thinking when he sings the national anthem and stares at the flag in his hometown stadium. If the law and his conscience don’t get him, is he still a patriot as long as he sings the Star Spangled Banner in or out of key? He is not.

For a few thoughtful milliseconds, I want you to pretend you are responsible for 0.01% of that amount in your job ($20.6 million) and it is reported in your hometown newspaper that the public company you work for wasted that money on nothing whatsoever. Your boss calls you in and the conversation goes something like this:

Boss: It’s good to see you today.

You: Thank you, boss. Always good to be called into your office.

Boss: Hey, I need to ask you something. Seems the local newspaper—that printed thing in the machines by the gas station that take quarters—says we lit up $26 million of our shareholders’ money with a blazing torch and got nothing for it. The CEO can’t believe that’s true, and traced it back to our department. So a quick question—did it happen?

You: Well, to be honest, yes, it did, boss.

Boss: I appreciate your candor. Can you tell me why?

You: Not really. I guess I screwed up. I’ll try to do better. None of us are perfect, right?

Boss: Right, none of us are perfect. Some of us don’t watch money closely enough. Some of us make poor hiring decisions. It happens.

You: Am I in trouble, boss?

Boss: Trouble, for absent-mindedly destroying $26 million of Other People’s Money? I shouldn’t think so. You didn’t take any of it, did you?

You: Not a chance, boss. You know I would never do that.

Boss: Know is a pretty strong summation, but I am confident enough it can’t be proven. Hey, another question. When your counterpart at the company where we burned this money sent you the contract, is it possible he committed any possible act of deception?

You: Deception, gee, that’s a hard one. You know, I don’t really know. The thing about fraud is, if it’s committed well, you don’t even know it occurred. So how would I know?

Boss: Exactly, if you are duped, the other fellow is in the wrong. You had no reason not to trust him, so how could it be your fault?

You: So I still have a job, boss?

Boss: As do I. Our investigation is complete. I will report as much to the CEO.

You: Gosh, I felt really bad when I came in here. You are such a supportive boss. I feel so much better,

Boss: As do I, we are in this together. Do try to be more careful with Other People’s Money where you can. And always remember, candor is your friend.

You: Thank you, boss. You’re the best!

For an abundance of clarity, that wouldn’t fly in any legitimate enterprise.

From time to time, you may hear the expression OPM, as in Other People’s Money, as if somehow that is different from your money. If you treat Other People’s Money differently from how you would treat your own money, there is something wrong with you for allowing yourself the permission to do that, and there is something wrong with them for empowering you to do it.

Whenever you are in control of a business budget, you are being trusted to manage OPM. There is only one way I know how to do that: treat it as if it is your own. Nothing else can be justified, nothing else can be defended. Ask yourself on every allocation that can be tracked back to you: if this were my money, would I say yes? If the answer is honestly yes, you are acting in the best interests of those to whom the money belongs. If the answer is no, then ask yourself why you are saying yes, before someone else does. Your boss is likely to be a lot less understanding than the one depicted above, unless of course he is part of the problem— in which case, get out quickly! Life is much too short to be part of anything you cannot proudly explain.