A few years back, I wrote an open letter to CEOs about making IT more valuable for their businesses. I just came across a story about GE’s new push into services enabled by IT, a move which they expect will add significant value to customers and shareholders. The era of making products and services smarter is still in its infancy… don’t miss it.
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The first important context about nothing is the unmatched benefit of starting initiatives with a clean slate. Think about what your work – indeed, your life (but I’m not going there) – would be like without any baggage. No issues with people, no constraints on possibilities, nothing to preserve. It’s all good, and then you have the luxury of choosing among and pursuing the best. Alas, the real world doesn’t always permit it. But try starting every effort with the perspective of considering what would be possible if you indeed had a blank canvas on which to work. That perspective will yield insights into potential breakthroughs that would be hidden behind clutter masquerading as necessities.
The second distinction about nothing is the empowering action when you play like you have nothing to lose. One reason why immigrants make great entrepreneurs is that they often arrive with nothing, having already risked everything for a fresh start. Then with nothing to lose, they work hard to make a success of their endeavor. If you don’t feel at risk doing something, then you may not be making a bold enough commitment to achieve something important, to make a difference.
Finally, your path to achievement starts with an acceptance that almost all work requires abilities that are not innate, that you start at zero and work from there. More on that in my next post.
How have you embraced nothing?
In case you’ve been vacationing off the planet for the last 30 years, we live in the era of shareholder supremacy. Milton Friedman wrote “there is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits…”
Rubbish. Just because he was a smart, confident, articulate guy doesn’t mean he’s right. But we’ve all somehow managed to hear this statement as The Truth rather than one good man’s perspective.
The purpose of any business is to serve customers. Period. Without customers, there is no business. A lack of customers makes a business look like a hobby, or a pipedream, not a going concern. To be a going concern, the business must be sustainable, which takes a lot: a value proposition to meet current needs and wants, people, processes, technology, and capital, among others.
Capital has many forms. Investment capital. Working capital. Intellectual capital. Human capital. A perspective that I think is more valuable than Friedman’s comes from the late Walter Wriston, CEO of Citicorp: “Capital goes where it’s wanted, and stays where it’s well treated.” Capital is used to enable the productive assets of the enterprise. It’s fuel, without which the enterprise cannot move forward. In the same way that the purpose of a car is not to maximize fuel, the purpose of a business cannot be to maximize profits. But like a car without fuel, try running a business without capital (and commensurate, without profits). To preserve capital, it has to be treated well, which in the case of financial capital means generating market rates of return. For human capital, people need to see growth, recognition (and reward), and fulfillment, or they too will go where they are better treated.
Capital and the profits to sustain it are a constraint for a business, not the objective. It’s part of the rules of the game, not the purpose of the game. You have to follow this rule or you don’t get to play. Among the many stakeholders in a business, shareholders – investors — are an important group to be treated well, but they cannot be sustainably well treated if their interests always come before all others. Their satisfaction is an indirect result, not the objective.
The velocity of capital continues to accelerate, and we may need to re-think how to treat it well in the context of why, and under what circumstances, the business exists. How are you managing this challenge?
The New York Giants are playing the San Francisco 49ers this weekend in the NFC Championship Game. I’m rooting for the Giants… hey, I’m from New York, and although I consider myself a Jets fan (OK, Rex has a big mouth that he needs to zip), that hometown thing has a strong pull. But I acknowledge that I’m drawn to people and organizations where strong leadership and management approach show unmistakable results. The Niners are just such a team this year.
The Niners, the darlings of the NFL in the 80s and 90s, have not lived up to their reputation and standards more recently. Even last year, they were a 6-10 team. But this year, they excelled at 13-3 in the regular season and decisively beat the powerhouse Saints in the first playoff round. Yet the roster this year is almost identical to last year… so what’s different? Football fans knew the punchline before I wrote this: it’s Jim Harbaugh as Head Coach. Harbaugh took over from Mike Singleterry, who everyone knows is a great football man with a passion to win.
Bob Ryan of the Boston Globe described it this way in his appearance on ESPN’s The Sports Reporters: the team wasn’t buying what Mike was selling, but they’re buying Jim’s brand of leadership: “Who’s got it better than us? NOBODY!” Jim is selling belief in their ability, and he demonstrates how that ability is equal to any challenge.
Interestingly enough, on the other side of the ball this week, Giants Head Coach Tom Coughlin tells (and tells, and tells again) his players that “the only way to win is if you believe in each other”. In fact, there is a case to be made that every NFL team has enough talent to be a winner, and many enough to be champions. The difference in most instances is the team’s chemistry and commitment to excel, stoked by the leadership.
For most of us, work is a team sport, so lessons from sports teams can provide valuable lessons. I know that turns off some people, but learning from wherever is always a good thing. I’m not big on selling, but prefer enrolling, so that a commitment to achieve something creates a breakdown for everyone if it’s not happening. But you also know that I believe that the other success factor is deployment, putting the commitment into action. The team that does that best this weekend will win.
I’m expecting a great game from both teams, so enjoy the game, have some fun, but appreciate how both teams got here… and what it says about winning.
I am breaking my own rule: I hate litmus tests, as they assume nothing else matters. Alas, life might be easier if it were more black-and-white, but far less interesting.
Yesterday I was told about the situation of a young person we know who had a bad day at work. [Wow! That can happen?] Got yelled at by the boss for a mistake (that he didn’t make, by the way) and was thoroughly demotivated by the event. The story reminded me of Bob Sutton’s key test of the adaptive culture of an organization: what happens when someone makes a mistake?
Another wow!! People make mistakes! I make lots of ‘em. So do you. So does everyone else… welcome to the club. Few mistakes in business are unrecoverable, as very few effect life-and-death. Best actions in the event of a mistake: clean it up fast and do it again until you get the result you intended. And managers: don’t attribute your anger to your commitment to the customer. Customers often expect mistakes, just as they expect you’ll jump into action to correct it. Studies show that customers actually think better of you for having quickly corrected a mistake than they did had the mistake never occurred.
We often write, speak, and breathe management systems. That’s the ‘hard stuff’ (meaning tangible) of management. It’s so important yet so ignored. To make the management system really work to create a high-performing organization, you also have to address the ‘soft stuff’ (people, emotions, culture, et al), which is even more important. Bob Sutton’s books, The No Asshole Rule, and Good Boss, Bad Boss are great counsel to all of us who manage. There are no strict formulas, but Bob’s research has uncovered a surprisingly small number of behaviors we can adopt… and avoid… that would help everyone in every organization.
So, to our young friend, for whom getting out of bed this morning was probably a challenge, we say ‘hang in there… bosses make mistakes, too. The litmus test is not in the mistake, but in the response.’ And to you: if you make a mistake where you work, how does your shop fair in the litmus test?
The economy is anemic (at best), and there is a lot of talk about job creation. How could something that EVERYONE is for be so tough to achieve? [Everyone being committed to the same goal is the starting point; everyone needs to remember to what they are committed in order to get past differences in how we achieve the objective.] This being an election year, listening to every candidate talk about jobs, you’d think that good times would be right around the corner… or at least right after the election.
Good luck with that.
The talk ignores the action needed to make it so. Government can create government jobs (show of hands: how many think that’s answer?), and it can foster the creation of government-related jobs in the private sector. But it can’t create non-government-related jobs, the very thing we need so much. All that talk ignores what it takes to grow jobs, and that is, quite simply, a growing business.
So how do we have growing businesses? This is something like the Grant’s Tomb question in that the answer should be obvious (though a disturbingly large number of people either don’t know, or answer ‘Tomb’). Rapidly growing businesses offer their customers dramatically more value than me-too businesses: benefits, tangible and intangible, customers can’t get elsewhere, at prices they gladly pay given the value they receive. [See a recent blog, Two Coats Plus Prep Work.]If you’re not sure how to do that, start by asking the people at the front line of your organization and your top customers what it would take to accomplish… betcha they know. David Thomson has described seven factors for rapid growth, all of which help inform the management system needed to make it happen. David’s research and insight are first-rate, but the key points are that it is possible to learn to build a growing business and that it starts with creating something especially valuable.
I grew up in an era, which I think we are still in, where every manager had a mindset of reducing headcount, producing more with less. Corporate profits don’t look too bad these days. But if you look at top line growth, revenue doesn’t look as good. Profits are being achieved via expense reduction. And what expenses are being reduced? Compensation, via headcount being frozen or reduced… maybe cuts in R&D too, limiting our ability to innovate our way back to health and build rapidly growing businesses.
How about a different point of view: what if we used job creation as a key performance indicator of the success of any business? No fair gaming the system (that would be fresh!) by adding make-work jobs, though in tough times that might be tempting or possibly even beneficial. But growing revenue so fast you couldn’t hire great, or even average, people fast enough. Wouldn’t that be a welcome change?
Who’s up to changing their POV to job creation? Anyone? Anyone?