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Is Long Range Planning Still Relevant?

In today’s rapidly changing business environment, some argue conventional long range planning may no longer be relevant.

As background, here are the elements of a traditional strategic plan1:

  1. Mission – why you do what you do
  2. Vision – where do you want to be
  3. Core values – what guides you
  4. Driving Force – What is the nature of the products, services, customers, market segments and geographic areas that a company chooses to pursue?  What is it now?  Should it change?
  5. Strategic analysis
  6. The Five Forces2 – suppliers, customers, threat of substitutes (technology), ease of entry (potential entrants)
  7. SWOT – Strengths, Weaknesses, Opportunities and Threats
  8. Analysis of competitors SWOT
  9. Competitive advantage
  10. What should we continue, what should we change?
  11. Operating Plans & KPI’s (Key Performance Indicators)
  12. Budget, both capital and operating
  13. Balanced Scorecard – Finance, Internal Processes, Learning & Growth, Customer Satisfaction

Among those challenging traditional strategic planning is Clayton Christensen.  In his book, The Innovator’s Dilemma3, he questions traditional concepts of strategic planning in an environment populated by increasingly innovative and agile competitors.  His focus is on large companies who historically are not good at being agile and innovative and therefore lack the ability to respond to small, entrepreneurial, innovative competitors.

Rita Gunther McGrath, in her new book, The End of Competitive Advantage4, makes a frontal attack on accepted strategic planning methods designed, in her opinion, for another time. These are methods based on the presumption that competitive advantage is sustainable.

McGrath believes that the best one can hope for is “transient competitive advantage.”  Her prescription for achieving transient competitive advantage includes smaller, faster, more agile organizations where “management-by-consensus” is a thing of the past. Her emphasis is on marshalling rather than owning assets, including talent. To ensure the appropriate deployment of these assets from one opportunity to the next, it is necessary to recentralize control over the resource allocation process, moving it out of strategic business units (SBUs). This raises the question as to the relevancy of SBUs and suggests that they be replaced by transient teams as a primary form of organization.  They engage in a continuous process of creating and testing options, doing things fast and “roughly right” rather than relying on traditional strategic planning methods.

Like Christensen, McGrath’s message is aimed at large, historically slow moving companies.  So as a TEC member, is strategic planning still relevant to you?  What do you think?

Some closing thoughts:

  • “Strategic Planning is the single most important function of the CEO”, Patrick Below
  • “I have always found that plans are useless, but planning is indispensable.”, Dwight D. Eisenhower
  • “If you don’t know where you are going, any road will take you there”, Lewis Carroll

Click here to read more on this subject.  ( http://hbswk.hbs.edu/item/7341.html )

1”The Executive Guide to Strategic Planning”, by Patrick J. Below

2”Competitive Strategy”, by Michael E. Porter

3Clayton M. Christensen, The Innovator’s Dilemma (Boston: Harvard Business School Press, 1997)

4Rita Gunther McGrath, The End of Competitive Strategy: How to Keep Your Strategy Moving as Fast as Your Business, (Boston: Harvard Business Review Press, 2013)

How to Be an Effective Group Leader

Why Dominating Leaders Kill Teams

Dominating leaders tend to stifle creative ideas that might otherwise emerge from group discussions thus making the teams less productive.

Francesca Gino is an Associate Professor in the Negotiations, Organizations, and Markets Unit at Harvard Business School.  In the November 13, 2013 edition for “Working Knowledge” published by the Harvard Business School, Michael Blanding discusses Professor Gino’s series of studies in which she and her colleagues, Leigh Plunkett Tost of the University of Michigan and Richard P. Larrick of Duke University found that when leaders are focused on their own sense of power, they can hurt the performance of their teams—but with an important catch. The effects only occur when leaders are actually in a position of power.

Usually when we think about groups, we think that a strong leader naturally improves the functioning of the team. Professors Gino, Tost and Larrick explore this in depth in their article “When Power Makes Others Speechless: The Negative Impact of Leader Power on Team Performance”. In their work they differentiate between a “subjective sense of power,” that is, when someone thinks they have control over others, and actual power, when someone has formal authority over compensation, promotions, how resources are allocated or how decisions are made. Actual power and as sense of power often go hand in hand, but not always.

Sometimes in a group situation without a formal leader, a leadership role can be assumed by a person who believes he or she has superior knowledge or skills. The researchers found that in cases when someone felt powerful but was not recognized as being in a position of authority, team members were able to override that person’s domination of the conversation and add their own input.

As I would expect, they found that in the best performing groups, the leader orchestrates the conversation, and gets everyone talking. In other words, strong leaders can and do improve team performance when they go into a situation with a sense of humility about their own relative power.

On the other end of the spectrum, poor performing teams were dominated by a leader who made his power known, controlling the conversation and stifling input from the non-leader members of the group.

In conclusion, Professors Gino, Tost and Larrick suggest there is a powerful opportunity to improve performance just by making leaders aware of the dangers of hogging airtime in a discussion.

“I want to believe that oftentimes we behave the way we do because we are not aware of the effects of our actions,” says Gino. “Bringing this type of awareness to leaders walking into group decision-making situations could set up a different process whereby they benefit from what others have to offer.”

They further conclude that being aware of the negative effects generated by an overpowering leader can make non-leaders feel more empowered to assert their own point of view—whether or not the person dominating the conversation is a formal leader.  I believe that this requires the non-leaders to trust that the leader with power will not exercise that power against them.

It is no surprise to me that getting leaders to listen to others and to facilitate a productive group discussion is powerful indeed.

Read the complete article, here.

9 Things Successful People Do Differently

Why have you been so successful in reaching some of your goals, but not others?

If you aren’t sure, you are far from alone in your confusion. It turns out that even brilliant, highly accomplished people are pretty lousy when it comes to understanding why they succeed or fail. The intuitive answer — that you are born predisposed to certain talents and lacking in others — is really just one small piece of the puzzle. In fact decades of research on achievement suggests that successful people reach their goals not simply because of who they are but more often because of what they do.

1. Get specific. When you set yourself a goal, try to be as specific as possible. “Lose 5 pounds” is a better goal than “lose some weight,” because it gives you a clear idea of what success looks like. Knowing exactly what you want to achieve keeps you motivated until you get there. Also, think about the specific actions that need to be taken to reach your goal. Just promising you’ll “eat less” or “sleep more” is too vague — be clear and precise. “I’ll be in bed by 10pm on weeknights” leaves no room for doubt about what you need to do, and whether or not you’ve actually done it.

2. Seize the moment to act on your goals. Given how busy most of us are, and how many goals we are juggling at once, it’s not surprising that we routinely miss opportunities to act on a goal because we simply fail to notice them. Did you really have no time to work out today? No chance at any point to return that phone call? Achieving your goal means grabbing hold of these opportunities before they slip through your fingers.

To seize the moment, decide when and where you will take each action you want to take, in advance. Again, be as specific as possible (e.g., “If it’s Monday, Wednesday, or Friday, I’ll work out for 30 minutes before work.”) Studies show that this kind of planning will help your brain to detect and seize the opportunity when it arises, increasing your chances of success by roughly 300%.

3. Know exactly how far you have left to go. Achieving any goal also requires honest and regular monitoring of your progress — if not by others, then by you yourself. If you don’t know how well you are doing, you can’t adjust your behavior or your strategies accordingly. Check your progress frequently — weekly, or even daily, depending on the goal.

4. Be a realistic optimist. When you are setting a goal, by all means engage in lots of positive thinking about how likely you are to achieve it. Believing in your ability to succeed is enormously helpful for creating and sustaining your motivation. But whatever you do, don’t underestimate how difficult it will be to reach your goal. Most goals worth achieving require time, planning, effort, and persistence. Studies show that thinking things will come to you easily and effortlessly leaves you ill-prepared for the journey ahead, and significantly increases the odds of failure.

5. Focus on getting better, rather than being good. Believing you have the ability to reach your goals is important, but so is believing you can get the ability. Many of us believe that our intelligence, our personality, and our physical aptitudes are fixed — that no matter what we do, we won’t improve. As a result, we focus on goals that are all about proving ourselves, rather than developing and acquiring new skills.

Fortunately, decades of research suggest that the belief in fixed ability is completely wrong — abilities of all kinds are profoundly malleable. Embracing the fact that you can change will allow you to make better choices, and reach your fullest potential. People whose goals are about getting better, rather than being good, take difficulty in stride, and appreciate the journey as much as the destination.

6. Have grit. Grit is a willingness to commit to long-term goals, and to persist in the face of difficulty. Studies show that gritty people obtain more education in their lifetime, and earn higher college GPAs. Grit predicts which cadets will stick out their first grueling year at West Point. In fact, Dr. John Izzo, a recent TEC Inspirational Leadership speaker referred to studies that indicate that grit is a key component of managerial success.

The good news is, if you aren’t particularly gritty now, there is something you can do about it. People who lack grit more often than not believe that they just don’t have the innate abilities successful people have. If that describes your own thinking ….well, there’s no way to put this nicely: you are wrong. As I mentioned earlier, effort, planning, persistence, and good strategies are what it really takes to succeed. Embracing this knowledge will not only help you see yourself and your goals more accurately, but also do wonders for your grit.

7. Build your willpower muscle. Your self-control “muscle” is just like the other muscles in your body — when it doesn’t get much exercise, it becomes weaker over time. But when you give it regular workouts by putting it to good use, it will grow stronger and stronger, and better able to help you successfully reach your goals.

To build willpower, take on a challenge that requires you to do something you’d honestly rather not do. Give up high-fat snacks, do 100 sit-ups a day, stand up straight when you catch yourself slouching, try to learn a new skill. When you find yourself wanting to give in, give up, or just not bother — don’t. Start with just one activity, and make a plan for how you will deal with troubles when they occur (“If I have a craving for a snack, I will eat one piece of fresh or three pieces of dried fruit.”) It will be hard in the beginning, but it will get easier, and that’s the whole point. As your strength grows, you can take on more challenges and step-up your self-control workout.

8. Don’t tempt fate. No matter how strong your willpower muscle becomes, it’s important to always respect the fact that it is limited, and if you overtax it you will temporarily run out of steam. Don’t try to take on two challenging tasks at once, if you can help it (like quitting smoking and dieting at the same time). And don’t put yourself in harm’s way — many people are overly-confident in their ability to resist temptation, and as a result they put themselves in situations where temptations abound. Successful people know not to make reaching a goal harder than it already is.

9. Focus on what you will do, not what you won’t do. Do you want to successfully lose weight, quit smoking, or put a lid on your bad temper? Then plan how you will replace bad habits with good ones, rather than focusing only on the bad habits themselves. Research on thought suppression (e.g., “Don’t think about white bears!”) has shown that trying to avoid a thought makes it even more active in your mind. The same holds true when it comes to behavior — by trying not to engage in a bad habit, our habits get strengthened rather than broken.

If you want to change your ways, ask yourself, What will I do instead? For example, if you are trying to gain control of your temper and stop flying off the handle, you might make a plan like “If I am starting to feel angry, then I will take three deep breaths to calm down.” By using deep breathing as a replacement for giving in to your anger, your bad habit will get worn away over time until it disappears completely.

It is my hope that, after reading about the nine things successful people do differently, you have gained some insight into all the things you have been doing right all along. Even more important, I hope are able to identify the mistakes that have derailed you, and use that knowledge to your advantage from now on. Remember, you don’t need to become a different person to become a more successful one. It’s never what you are, but what you do.

How We Will Operate | B. Charles Ames Series

How We Will Operate

This is the fourth in a series of posts that will describe what the CEO Reliance Electric thought about basic commitments, how the organization was going to operate and ground rules for managers. Once again, all the content of this article is based on the work of B. Charles Ames as outlined in his management manifesto titled Basic Management Concepts dated January 14, 1974.

Reliance Electric was a $1 billion conglomerate at the time our company was acquired.  They had been on a run of successful acquisitions for several years.  They owned about a hundred companies producing electric motors, power transmission equipment, retail food packaging and weighing equipment, telecommunications equipment, and more.

How do you run a conglomerate with a wide range of diverse businesses . . . effectively?  Ames wrote the following.

  • In light of Reliance Electric’s girth, the Divisions of the company needed to work together to take advantage of lessor endowed competitors.
  • The company centralized “certain functions” when it was economically advantageous.  The interests of the corporation trumped those of any individual Division.
  • Reliance followed a uniform set of administrative policies throughout all operations.  Human Resources, for example, would be managed consistently throughout the organization.

So far, so good.  Here is where it gets interesting. Ames was clear here:

  • The company would not force integration where it didn’t make sense or seek consistency among the Divisions without regard to individual differences of the Divisions.
  • The company would not impose corporate policies on decisions without seeking into from the Divisions.

What Ames wanted us to do was gain a competitive advantage from our size and diversity, without messing around with the basic integrity of the divisional profit center concept.  An interesting balancing act, to be sure.  And, the basic business strategy of the company.  Because Ames wrote it down and distributed it all of us, we knew what was expected.

B. Chuck Ames and his wife Jay currently manage the Ames Family Foundation.  They divide their time between a home in Vero Beach, Florida and a second home in a suburb of Cleveland.  

 

Getting Referrals Isn’t That Hard

As we work with sales professionals, we regularly preach about the importance of getting referrals. Many feel uncomfortable asking for referrals from new customers. As with so many things, the easiest way to get referrals is to ask for them. It becomes surprisingly easy the more you practice.

Let’s look at the last time you completed selling a solution to a new customer. You are wrapping up the conversation. Everyone is feeling really good about the process. They are pleased with you and your company, and you feel confident that they will be happy with the results.

Now that you’ve established a strong new relationship, this is the perfect time to capitalize on it.  But do NOT make the common mistake of asking “Do you know anyone else I should be talking to about my product/service?” More than likely, that will produce the typical response of “Gee, no, I don’t” or “Hmm, let me think about it and get back to you.”

It is so much easier for someone to make a referral if they know the type of businesses or people you want to add to your portfolio of customers. You’ve done this homework already and know the type of customers that have been most successful for you. You have targeted customers by job title, annual company sales, location, approximate size, and other factors. Now, just use these characteristics when you ask for a referral. Try something like this:

“Martha, my best customers are those I have found from a referral. I’d like to describe my preferred customer. Would you be so kind as to just jot down the names that come to mind as you hear those qualities? “

After you’ve finished describing your preferred customer and a list has been created, ask for some details. Don’t overdo it. Get basic contact information and permission to use your new customer’s name when contacting the referral.

Failed Change Initiatives Come Down To The CEO

 Most TEC-involved CEOs and organization leaders are well aware of the elements that need to be in place to create change initiatives.  In today’s world, change comes more rapidly than ever.

But by and large, these initiatives are not sufficiently successful … at least they don’t reach the performance levels we aspired to.

Why?

In his TEC presentations, Michael Canic of Bridgeway Leadership, Denver, provides a litany of required efforts under the headings of the right environment, focus and people.  But we get all that.  We do it, at least most of it.  So, why don’t our people make it happen?

He was asked about the top three reasons after a recent presentation.  They are, in his consulting experience:

1.  CEO Commitment

We say we are, but we actually aren’t.  Canic says, “There is a massive difference between the will to win, and the will to do what it takes to win.”  We earnestly put in place the roadmap for the change initiative and make assignments to our most competent direct reports, with touch base sessions.  But then we get distracted with all the other demands on our time.  We fail to give the impression that the change effort is a “must”.  We send a “mixed message.”  The energy we initially created subsides.

What the CEO has to do, he says, is have just one major commitment at a time … and focus relentlessly on it.  There might be three important ones, but deal with them sequentially.  It will be CEO attention that makes them happen, he says.  By your paying attention, people take responsibility to perform on schedule.

2.  CEO Capability

Simply, this means that some important elements aren’t put in place.  The CEO doesn’t know about them, or doesn’t feel they’re important to the initiative.  We’re good at knowing the technical things that have to happen, but not the “people” things.  These include knowing that people really do understand the purpose … what success looks like … have the knowledge and skills to do what’s expected of them … that they know what’s expected and by when … that they get affirmation … and help when they have a problem.  Simple things when we say them … but often missed.  Have a very visible Master Calendar, showing initiatives, champions and timelines, and manage to it.  It shows people the whole process is being managed, and they see where their part fits in.

As Canic says, what YOU do as CEO is not as important as what your PEOPLE experience.  Don’t assume.

3.  CEO Control of His/Her EGO

Too often, he says, CEOs compromise their own forward success by reflecting their past success in how they comport themselves, in their demeanor.  People recognize this immediately.  You aren’t on the same “level” with them, not on the same “team” with them … and it affects their commitment.  Successful change leaders hold their egos in check.  They put what’s necessary in place, and then spend the rest of their time being a servant, helping others to be successful.

Interestingly, he notes, all failed change initiatives come down to the CEO!

 

WAIT: Why Am I Talking? | The Power of Silence in Business

The Sounds of Silence

“If we were meant to talk more than listen, we would have two mouths and one ear” is a famous Mark Twain quote, one that is good to reflect on when communicating in business.  Leaders that excel at active listening possess a critical asset that will elevate them from good to great.  That element however is often the hardest to grasp and incorporate into day-to-day interactions.  Why is it so hard to listen effectively?a

Most business leaders are very driven individuals, constantly moving forward with great intensity and a deep desire to perform.  This stereotype is well ingrained in our business culture.  The profile of a successful leader rarely includes appreciating and practicing the art of being a good listener.  BTW – have you ever seen a CEO  position description include “must be an excellent listener”?

True listening (not just waiting to speak) presents an opportunity to evaluate, process and uncover clues to solve problems and create strategic advantage.  Chances are when listening in earnest we will  learn something new or be motivated to think about an issue or topic differently, particularly when engaging individuals who view the world differently.  The best solutions and strategies can result from these diverse exchanges. Without this experience we might never grow and improve as business people!

The benefits of having those skills when interacting with colleagues and associates are many. Someone who is an authentic listener can and does evoke a higher level of trust within a relationship.  And, trusting relationships are priceless. When individuals feel that they have been heard, leaders are much more effective at inspiring professional development and overall performance.

So why is it so hard to shut up and listen?  It takes work. Wanting to be a better listener is a start.  A tip?  Recently a fellow TEC Chair shared this acronym. I think is terrific and use it as a reminder.  WAIT: Why Am I Talking?

Unexpected Business Lessons from Artist Henri Matisse

Thanks Matisse!

I somewhat reluctantly (I am now embarrassed to say) attended the Henri Matisse retrospective at the Minneapolis Institute of Art. I freely admit to a limited appreciation for art, but this was a fantastic exhibition. And Matisse offered up some unexpected business lessons:

 “Each picture as I finish it, seems like the best thing I have ever done…. and yet after a while I am not so sure. It is like taking a train to Marseille. One knows where one wants to go. Each painting completed is like a station—just so much nearer the goal. The time comes when the painter is apt to feel he has at last arrived. Then, if he is honest, he realizes two things—either that he has not arrived at all or that Marseille… is not where he wanted to go anyway, and he must push farther on.” – Henri Matisse

The artist’s quote illuminates the business canvas. Like why we, and the organizations we create, are in a constant state of change, chaos, and renewal. Which helps me understand why I have never met a satisfied, successful CEO. Which helps me appreciate the best CEO’s I know who take extreme pleasure in the journey, including the ups and downs, and treat the achievement of a goal simply as a part of the process.

Successful enterprises, and the CEOs who run them, embrace as compatible equals both evolution and stability; they neither fear, nor overly celebrate, the moments of light and dark that ultimately lead to business excellence.

A contemporary artist of a different sort, Steve Jobs, said: “If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it. And, like any great relationship, it just gets better and better as the years roll on.”

 

 

 

 

Stress Ain’t Good For You

Companies and organizations that survived the “Great Recession” did so because of perseverance, effort and focus. However, there is a price to pay for everything and perhaps the price in this case is a lot more stress. And yes, this is an understandable outcome – do more with less, work additional hours, a sense of uncertainty, disrupted sleep, it all adds up to stress.

Recently a growing number of people have mentioned to me how stressed they are. They tell me stress plays a larger part of their professional as well as personal lives. For some, stress is affecting their health, outlook of life, quality of family activities and on and on.

So, I listen and am reminded of how I used to get consumed by life situations and feel stressed from time-to-time.

Here is a simple method I learned years ago to alleviate stress and bring some calmness into my life.

Each of us possesses a wonderful tool to calm us whenever and wherever we notice we are upset, angry and allowing ourselves to get stressed out. You have access to this tool every second of every day as long as you live. It is simple, costs nothing, is always your choice and will make a difference!

Intentional Breathing

Breathe in . . .

Breathe out . . .

Breathe in . . .

Breathe out . . .

Breathe in . . .

Breathe out . . .

Just pause for a few minutes and remember anger is not a good strategy for solving problems instead choose to intentionally breathe, stay relaxed and alert for better decision making.

Try intentional breathing the next time you find yourself edgy and ready to get stressed . . . get better results instead.

The TEC slogan for many years has been Better Leaders, Better Decisions, Better Results.

***
Looking for more quick fixes to stress? Check out this article by Harvard Medical School – Mini-Relaxation Exercises: A quick fix in stressful moments

Managing the Family Business – Firing the CEO

In the March 2014 edition of “Working Knowledge” published by the Harvard Business School, John Davis, Senior lecturer in Entrepreneurial Management discusses when to make a change at the top of a Family Business.  Firing the CEO is never easy.  It is a tough decision when the CEO is a “hired gun”, but this issue becomes especially problematic if the CEO is a family member.

The decision to fire the CEO often suggests that something has gone very wrong and the organization could be in trouble. It implies that the person was a bad choice in the first place, which reflects on the judgment of those who hired the CEO.

Davis argues that the family should fire their CEO when either of the following conditions exists:

  1. There is a weak and irreparable fit between the CEO’s skills and the needs of the company

  2. The CEO does not support, or worse, disrespects the core values of the company

And if the CEO must go, the family should develop good options to replace him or her, with manageable consequences that are generally positive.

In the article, Davis elaborates on each of these.

Factor 1: Fit

High performing companies require CEOs with the right skill set, decision style, and values. They are able to build strong executive teams that can help develop the strategy of the company and then execute it. A good CEO always as strengths, but of equal importance, they recognize their weaknesses.  So they surround themselves with strong executives who complement their skills, and help chart the right course for a company.

The family needs to look for a leader with the right skills, values, and abilities and who can build a strong leadership team. If a family member has the right mix of strengths, having a family leader is usually the better choice. If not, find a non-family executive who is a good match.

The CEO is always accountable for whatever affects overall performance. But Davis states that in a family business that more interested in long-term success, poor short term performance may not be enough reason to fire the leader. There may be circumstances that lead to the poor results, and the current CEO may even be the right person to help restore good health. Davis recommends that the family look beyond current performance to the kind of leadership the company needs over the long-term.  Often, if not usually, this is difficult for the family to clearly analyze and articulate, especially if the CEO is a son or daughter.

The family needs to judge their CEO on his or her fit with the needs of the company, and work to remove whatever may be blocking the leader from doing their job.

So if there is a good CEO-company fit consider Factor 2. If not, then a change may, and likely is, needed.

Factor 2: Does the CEO support the core values of the company?

There is nothing more detrimental to the culture of a company than a CEO that violates the company’s core values. This may manifest itself by cutting corners to boost profits when the company says it stands for excellent quality, or by showing disrespect to the legitimate needs of employees. Employees watch what the CEO does much more that what they say.  They see what he or she will tolerate and adjust their behavior accordingly.  If the CEO violates the company’s values (which is the same as violating the values of the family), the family must take action and fire the CEO, even if he or she is otherwise performing well.  Procrastination only serves to further damage the culture of the company.  When values are ignored or overridden by the CEO, employees see what is going on.  And once the CEO is gone, the family will be greeted with the comment “What took you so long?”

Refer to my post dated Friday, December 27, 2013 “Do You Know Your Company’s Core Values?

Factor 3: Do you have good options?

Finally, the family should have options ready if they must fire their CEO.  Even if they don’t contemplate a CEO change, they should always develop alternatives in the form of a succession plan in the event of an emergency situation. Unfortunately, they rarely do.

Davis concludes that the best approach is to make every effort to avoid the need to replace the CEO in the first place.  The family as owners must make sure that they provide the CEO with clear expectations, useful feedback, good guidance, and the understanding that he or she must be accountable to them first and foremost.

Read full article, here.