Improved leadership results start with changing culture

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I recently wrote an article on achieving better strategic planning results. It was a look at how Toyota became number one in the auto industry through effective long term strategic thinking and execution. It touched on the subject of culture but didn’t go into any real detail.

Just this week I asked a group of people why they thought Toyota had enjoyed so much success and growth. The answer was of course their Toyota Production System (TPS), lean manufacturing and attention to detail. That is exactly what General Motors came away from the Toyota / GM joint venture at NUMMI. Learn the TPS and we’ve solved our problems. And it’s exactly what most U.S. companies feel, that lean manufacturing, or Six Sigma or some other program will make them world class.

They are all missing the point.

Toyota recognizes that the TPS is an excellent tool but is not a silver bullet. Real excellence comes from developing a culture that engages and empowers employees.

This was further emphasized by conversations with a friend that works for a large Fortune 1000 company. He told me about the repercussions he got from escalating a problem with a major account. The company actually put him on a communications improvement plan to work better with his peers, even after the major account told his VP that the performance of one of his peers was preventing them from doing more business together. The old “shoot the messenger” adage is alive and well.

Toyota has a carefully cultivated culture of employees being expected to report problems. Development of that culture begins with the hiring process and continues through training and constant reinforcement. In Japan it is actually considered shameful not to report a problem when it’s noticed.  However saying you want to have employees report problems and actually being receptive and following up on problem resolution is where most managers and executives fall short.

Toyota’s culture employs a term called “Genchi Genbutsu”, translated as go and see for yourself. Employees are expected and required to report problems and managers and executives are expected to go to the source and see for themselves. They are taught not to rely on hearsay.

That’s as far from “shoot the messenger” as you can get.

If you truly want high quality products, excellent customer service, engaged and empowered employees, leadership has to “walk the talk” every day.

The overall culture of the organization has to clearly and visibly support open communications, and a blameless approach to problem solving.

In my book, “Bottom Line Focus” I talk about my own experience with continuous improvement training and implementation. I worked for a then Fortune 500 computer manufacture and was sent to an expensive training session on Total Quality Improvement. The very first time I tried to implement it back at the plant I was told “ship it, it’s month end and we need the sales”. That attitude prevails in the majority of companies I’ve been associated with.

If you really want to see improved leadership results, be a better leader. Don’t just say something live it. 

Create value to “fight China price”

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I read an article in our local paper entitled Furniture Industry fights China Price”. Northeast Mississippi is a furniture manufacturing hub and is being hit hard by low cost imports. The article covered a workshop developed by the Mississippi State Franklin Furniture Institute and really provided few answers to the problem.

Having grown up in a steel mill town and seeing what happens to an industry that cannot compete with low cost competition I have some historical knowledge of what happens to a region when the key industry is decimated. My hometown has never recovered.

I’ve done some research on the subject of competing with low cost manufactures and competing on price simply doesn’t work. The average burdened labor rate in China in 2007 was between .70 cents and .92 cents per hour depending on where you get the data. The corresponding rate per hour in the United States for manufacturing jobs is about $25.27 fully burdened with benefits.

In addition the Chinese companies don’t have the regulations and environmental rules to follow and we can all agree it isn’t a level playing field.

But come companies are competing and doing well against low cost competition. Those companies are identifying and developing niches to operate within that take advantage of problems with Chinese production:

• Freight costs
• Increases inventory and safety stock necessitated by potential supply interruptions or poor quality
• Lost sales due to stock out and poor quality
•  Poor logistics support within China
•  Duties, fees and taxes.

The reality of the situation in furniture or in any industry if you allow the product to become a commodity, low price will win every time. In high volume production of the same product with no service or customization, low price is the only differentiator.

What are the companies doing that compete?

• Performance improvements alone such as automation or lean will not allow U.S. companies to compete on price. Certainly U.S. manufacturers must get lean and be as productive as possible, but they will never automate to .90 cent and hour.
•  They take advantage of the close proximity to markets and stay close to their customers, quickly turning customer requirements into opportunities.
• They develop the capability to run low volume and high quality products based on customer orders, allowing retailers and distributors to save money on inventory levels. This can be accomplished through Lean Manufacturing.
• They market their competitive advantages such as some level of customization, build to order, or features based on regional preference.
• They provide excellent customer service and warranty policies that offset the Chinese manufacturers distance from the market.
• Identify and market to consumers that are looking for a higher quality, higher tolerance product that can’t be easily produced in China.
• Use logistics and information to develop a competitive advantage within the supply chain.
• Allow the consumer or end user to have some input to the design and selection of the final product.

There are numerous things that U.S. manufacturers can look at strategically to offset some of China’s weaknesses. Allowing a market to be driven by low price is allowing a market to become at risk and expendable, and once a product becomes a commodity it seldom returns, electronics is a great example.

Better strategic planning, better marketing, and better communications with the customer can all be used as a competitive advantage by U.S. Manufacturers, and directly exploit weaknesses of Chinese manufacturers. Allowing them to dictate the market in our regions and establish low prices as the only selling point is giving up on an industry. Government tariffs and tax credits will never be enough to bridge the gap in labor costs. We must find a different way to do business.

Back to northeast Mississippi the furniture industry seems to be more concerned about each other than trying to form a cohesive marketing strategy to change the market.

Biggest problems facing small business may be small business

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Ask any businessperson what the biggest problems are that they face in this or actually any economy, and they will invariably list three or four external issues that have a negative impact on their business. While the issues they list may be real, they are probably impacting every business to some degree; they all deal with them differently.

When I was doing research for my book, “Bottom Line Focus”, I ran across some interesting data that validated the theme I was using.

In the United States only about 3% of all companies provide the majority of revenue and job growth. They were referred to as high impact companies.  They went further to say it took an average of 17 years to become a high impact company.

What was disturbing was that after 4 four years 75% are no longer high impact!

My experience tells me that there are several reasons for this, but most all come back to leadership issues. A small business finds a profitable niche and the founder is hands- on. It grows quickly and adds people without clear vision and adequate processes. The business grows beyond it’s ability to execute. For the record in m coaching business small business is any organization with less that 500 employees.

In my research I found from numerous sources that the following is fact:

·     Over 50% of small businesses do not have a documented strategy or business plan.

 ·     Only 10% of businesses execute their strategy.

 ·     75% of business improvement initiatives fail due to lack of sustainability.

 ·     85% of leadership teams spend less than one hour per month on strategy.

 ·     On average 95% of employees are unaware if or don’t understand the company’s strategy.

 All of these factors can be traced directly to leadership. While external factors certainly impact business my advice to clients is to take care of the things they have direct control over and they will be in a much stronger position and have more options in dealing with the external issues that they have limited control over.

One of the most common things I run into on a regular basis is management so busy with fighting fires and hand holding poor processes that they tell me they simply don’t have time to develop a strategy. It is hard to convince them that having a solid foundation with a thorough S.L.O.T. analysis would go a long way in identifying root causes of current problems and inadequate processes. It is also a great forum to develop a team approach to strategy, vision, and problem solving.

The planning process is also useful in developing leadership qualities within the management team, as well as identifying potential weaknesses within the management structure.

Successful businesses develop management teams that function together to empower employees to innovate and solve problems. Unsuccessful companies often don’t progress beyond the point of a top down management style that becomes less and less effective with growth. 

Effective change management is proactive

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Change is a constant. It's always been with us, it always will be, and it's never easy. That's something that doesn't change. 

But the challenge of dealing with it is greater today because the pace of that change is accelerating. Only fifty years ago, we had decades to adjust to significant changes. Today we often have only a year or two. Science, technology, transportation, and communications are advancing so rapidly that all of life seems to be in constant transition.  

That means that at times you may have to be ready and willing to make major changes to your business and your life. You must be willing to abandon everything you’ve built, if necessary, in order to survive and prosper.

Most people can't do that. People naturally don't like change because it creates uncertainty. They instinctively resist it because they fear the unknown. 

Effective change management is learning to anticipate the need and deal with it on our own terms. We must anticipate change so we're not surprised by it. And we must anticipate where their market or industry  is headed so we can get out in front of it.  

Wayne Gretzky, one of the greatest hockey players of all time, captured the essence of this principle when he said, "A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be."

Prospects frequently ask me "What if we try something different and it doesn't work I respond the same way each time, "Do you think sticking with the status quo is a viable option? How’s that working for you?”

Obviously it isn’t or I wouldn’t be there.

We change only when the pain to change is less than the pain to remain as we are.

Nothing wrong with that. But too often we don't recognize how much pain we're in until it's too late.

Many of today's business owners and managers are in denial. They are refusing to face the seriousness of the changes that are occurring in the workplace from such things as –

·     Global competition.

·     Advances in technology.

·     Automation.

·     Increased governmental intervention.

·     Immigration.

·     Changing values and motivations of workers (Gen X, Gen Y).

What are you doing as a leader to anticipate change? 

What are you doing to stay current with new market and employment trends?

What are you doing to encourage and help your employees upgrade their skills and knowledge?

If you're like most business executives, I'm afraid your honest answer would have to be, "Not nearly enough."

You are your company's change agent.

That means that you must intentionally develop your company's workforce and processes to stay in front of change. Personally dealing with change is one thing. Helping others deal with it is another.

You can help people more effectively manage change by –

·      Helping them understand the reasons for it by taking time to communicate clearly about the issues and the options. Make sure everyone involved understands the rewards of change and the consequences of not changing.

·      Considering the impact of changes on the people involved and taking steps to minimize adverse effects.

·      Giving people opportunities to share in the positive benefits of change. People want to know WIIFM? (What’s in it for me?)

·      Implementing new policies, procedures, and approaches as organized components to well-conceived plans rather than as knee-jerk reactions to circumstances. 

Biggest problems facing small business in 2010

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A while back I wrote an article on the biggest problems facing small business in general. It generated a lot of interest and is by far my most read article. That tells me that business leaders are not only searching for answers but are also searching for the right questions.

To clarify that point, many business leaders know their organizations aren’t doing as well as they want they just don’t know why.Things such as declining revenue, shrinking profit margins, and losses ofcustomers are obvious, but they are the result of problems not the real issue.This is further confused by a poor economy, is my company doing poorly because the economy is slow, or are the causes internal?

Poor economic times allow weak organizations to fail. That may sound harsh but think about it, dollars are still in circulation, there arejust fewer of them. Consumers still need goods and services, they are just more cautious about buying them. I used the example if there are five auto repair shops in an area, people still need their cars repaired, they just won’t do it as quickly or as often. The top service providers with the loyal following will survive, the marginal ones will not.

The top problems for business in 2010 aren’t new, they are simply being magnified, and they will continue to become more and more critical. We need to accept that “business as usual” will never mean the same thing. Technology is making the world smaller. There are new competitors entering nearly every market every day. The Internet has created an environment where small companies can level the playing field with large corporations by reaching millions of people with their message with little or no cost. Good news as well as bad news on a product or service travels far and fast.

So the biggest problems for business in 2010?

1.    Lack of a clear vision and plan – Most companies don’t have one. Throwing something at the market and hoping it will stick will become tougher and tougher. Find a niche and excel at it.

2.    Lack of execution– When you decide on a strategy execute.

a.    Over 90% of strategies that are developed are never executed.

b.    75% of improvement projects fail.

c.     85% of leaders spend less that 1-hour per month on strategy.

d.    Over 90% of employees don’t know the company’s strategy. (This is a direct result of top management not documenting and communicating it)

e.    Well over 90% of organizations don’t have meaningful performance measurements in place.

3.    Ineffective leadership – Things are moving faster and are more complex, and an effective leader must develop an environment that fosters innovation and open communications to take advantage of all human and capital resources.

4.    Sales and marketing effectiveness - this leads back to planning and leadership. Many companies have not taken the time to decide what their USP is. They try to compete in conflicting areas, such as lowest price and highest service. One takes away dollars and the other adds cost. Part of the planning process should include a very clear answer to one simple question, “with all of the products and services available to my customers why should they buy from me?”

In my book I had a chapter that stated flatly that all businesses have problems.While this may seem obvious my experience has taught me that not all leaders deal with problems in the same way. Many unfortunately try to deal with them by ignoring them, others by treating a symptom, still others by trying to blame someone. A few actually use meaningful data to get to the root cause and fix the issue.

The economy seems to be rebounding in 2010. The questions iswhat have you done as a business leader to position your organization to take advantage of it?

What’s your job satisfaction rating?

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There has been a lot written about employee engagement and job satisfaction. What you never see discussed is the owner or CEO’s level of satisfaction.

It must be assumed that because he or she is on top of the pile everything is fine. Why wouldn’t they be satisfied?

Having sat in that chair myself for many years burnout, stress, loss of enthusiasm, fatigue, are all very real issues facing the top management team.

Facing the same issues everyday with no quick solutions, and fighting the same fires takes a huge toll on anyone. The top people however have little or no outlet to voice their frustration. Can you imagine a CEO or owner telling an employee, “you think you have it bad listen to all of my problems”?  There would probably be a mass exodus.

Running an organization is tough enough when you are charged, enthusiastic, and optimistic. When times are tough the job gets much harder.

The questions is what do you do about it? How do you handle it?

Based on my personal experience and the information I’ve gathered over the years from others in my position, the first step is to acknowledge you have issues. This may sound strange but too many leaders refuse to acknowledge their problems. It’s as if they think if I admit it’s there I need to deal with it, if I ignore it maybe it will go away. It doesn’t go away of course and it adds to the stress level.

The second step after acknowledgement is dealing with the issues effectively. I’m amazed at the commonality of problems I see, as I get involved with various businesses. In many cases the solutions are known, but the decision to execute isn’t made. It’s the devil you know vs. the devil you don’t thought process.

Lastly get help. It’s always easier to get help on your own terms before someone forces you to get it. Too often I’ve seen CEO’s and owners wait until a lender or the board of directors forces help on them and it creates a situation that is difficult for the CEO and the coach. Recognizing you need help is not a sign of failure. It’s a sign of logic and maturity. Today’s businesses and markets are complex, everyone needs help from time to time. Only the wise get it early.

Bottom Line Results come with Risk.

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I had a very interesting conversation this week with a potential client about risk. This person was an entrepreneur in the true sense, in that he had built several businesses successfully, and ultimately failed at one. He went through a personal bankruptcy, started over working in a sales position, made a small fortune and recently quit the lucrative and secure sales job to work full time in another startup that he is currently self funding.

Since we both had the pleasure and experience of laying it all on the line through personal guarantees and risking our entire net worth on startup ventures multiple times we had a common platform from which to access risk.

His comment to me during the discussion was “most people could not live with the level of risk we accepted”.  I thought about that afterward and he’s probably right. Most people are content working for someone else and letting them take the risk.  However most small to mid-sized business owners and CEO’s accept risk as part of the price to play the game. How they deal with that risk however varies greatly.

Personal guarantees on bank loans and lines of credit are a fact of life for the small to mid-sized guy. Often between cash invested in order to satisfy other investors that you have “skin in the game”, and guarantees to lenders to “insure you’re committed”, they have most, if not all, of their net worth on the line.

Thinking back over my 35 years It seems that the successful ones are those that develop an attitude that they cannot fail, and do whatever is necessary to make the business work. Those that fall by the wayside are those that are slow to move and deal with issues, sometimes even the obvious ones. They both often have the same level of stress and risk they just deal with it differently.

The successful ones met issues head on. Even when they didn’t know how to resolve them, they asked for help, tried different things and ultimately figured it out. They seemed to accept the old adage “bad news doesn’t get better with age”.

They seem to have figured out that dealing with stress effectively is a direct path to better bottom line results. 

It seems the unsuccessful ones dealt with stress and risk differently. They often ignore obvious problems and stay busy with the day-to-day things they can control.

They hope these issues will go away on their own. They are reluctant to ask for help because many are afraid that accepting change means they were wrong in what they were doing. As I thought about this further I reflected on experiences I’ve had with clients and can think of numerous specific examples of these two scenarios.

How is your business doing? Are you satisfied with the direction you’re going and the results you’re getting?  Take that question one step further how are you dealing with the stress associated with the risks you’re taking?  Then ask yourself what am I going to do about it?

Effective leadership needed drive change in your business in 2010.

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If you are like the majority of company leaders the short answer is not much until it’s forced to happen.

Just like the famous new years resolutions for weight loss or some other worthwhile goal frequently falls by the wayside the goals of business leaders for their organizations frequently go off track.

March is the last month of the first quarter of 2010. By now you should have a good idea of where your plans and goals are headed foe the year.

There is an old saying that people change only when the pain to change becomes less than the pain of staying the same.

Experience has shown this to be all too true.

We’ve all read that over 50% of business that fail don’t have a business plan. What is probably not as well known are the following facts:

• ·     90% of well crafted and documented strategies fail due to poor execution.
• ·     Over 70% of business improvement initiatives and programs fail due to inability to sustain focus.
• ·     Nearly 90% of leadership teams spend less than 1 hour per month on strategy.
• ·     On average 95% of employees don’t know or don’t understand the company’s strategy and don’t even have access to it.
• ·     92% of organizations don’t measure performance.

 The current recession has forced many companies to make changes. The question is, were those changes proactive or reactive in nature? Change is a constant, and how you plan for it and deal with it is up to you.

My role as a business coach gives me a broad inside look at many types and sizes of organizations. I like to tell people I have two types of clients, the inspired and the desperate. Unfortunate there are too few inspired and far too many desperate.

In my business I am constantly looking at programs and tools available to small and mid-sized business leaders. There is no shortage of information and products to choose from. What must be considered prior to buying a product or service is what is the desired outcome? Clearly sustainability is an issue in the majority of companies regardless of the challenge. The statistics above prove that.

 A seminar on quality, or motivation usually lasts as long as it takes for the participant to get back to the office and get hit with “business as usual”. The only thing that drives true change is spaced repetition of a new concept and accountability.

True change management starts with a clear vision, is supported by a documented plan that aligns people and processes to support that vision, and is sustained by leadership and accountability.

There just isn’t any other way.

Follow the link for a free whitepaper “How to Recession Proof Your Business “

Leadership is key for middle mangers job search.

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Improved leadership processes required for strategy execution !

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As the owner, CEO or senior executive of a business, you share many things in common with the coaches of professional sports teams. Can you imagine the head coach of a team – say in the National Football League – going into a game without a game plan? Of course not! That coach would soon be out of work. Coaches literally spend hundreds hours preparing for a 60-minute event.

A good coach not only develops and documents a strategy to win; he makes sure it’s understood by every player on the team. Every successful coach knows that a plan is essential for success.

But every successful coach also knows that a plan alone is not sufficient for success. The best plan in the world is useless if it’s not implemented. When the whistle blows to start the game, the players can’t simply stand on the sidelines and talk about what a great plan they have. They must take the field and play to win.

A coach that doesn’t learn from failures and make adjustments so that his team consistently wins soon finds out what the letters NFL really mean: Not For Long.
Why should you view your business as any different?

Your role as an executive is to execute!

It never ceases to amaze me – I’ll work with a company for weeks to develop a comprehensive strategic plan, and then nothing! Nada! It’s as if management says, “OK, now that we’ve finished the plan, we can check that off our list and get back to business as usual.”

They know they have issues that need to be changed. They pay good money to hire outside assistance to facilitate a planning process. They complete their plan. Then they proceed to ignore it!

Why? Is it fear of change? Fear of making a mistake? Fear of confronting people? A lack of confidence in themselves and/or their staff? Probably it’s a mixture of some or all of these.

For most executives, implementation is harder than planning. It takes determination and courage to actually do what you say you want to do. Implementation requires commitment, accountability, and change. That’s where the majority of companies fail.

Bold actions require bold leadership.

The absence of a decision is a de facto decision. That goes for all aspects of business planning and execution – from acknowledging problems to resolving them.

Tolerating poor personal performance from a staff member is choosing mediocrity. It lowers the bar for the entire staff.

Failing to take action about substandard quality is a decision about quality. It sends a message about core values to everyone in the organization.

It’s wise to gather the facts before making decisions. But postponing action “until there’s a better time” or “until there’s more data” is too often a cover-up for plain old fear to act.

Want to diminish focus and credibility in your organization? Here’s a sure-fire way: Develop a plan, communicate it to your people, and then fail to execute it.

When you fail to act on your plans, you undermine motivation, enthusiasm, pride, respect, commitment, and productivity. Yet 90 percent of American companies do just that, as shown by the chart below.

Paul R. Niven, The Balanced Scorecard (New Jersey: John Wiley & Sons, 2006).

Talk about an alarming statistic! If only 10 percent of American companies take the necessary actions to implement their plans, no wonder we’re losing our edge.

Many executives confuse busyness with effectiveness. They think they’re accomplishing a lot when people come to them all day long with questions and problems. It makes them feel important. They like being the center of the storm.

But executives who react instead of act accomplish little. They don’t produce progress because they’re concentrating on the minutia and ignoring the momentous. They’re playing around instead of playing to win.

But remember that your employees are watching your actions. They’ll respond to your leadership based on how you execute your plan.

To help you maintain your focus on decisive action, here are four principles for you to periodically review:

• If the status quo isn’t working, change it.
• If you don’t make a decision, you’re making a decision.
• If you don’t like making tough decisions, you’re not alone. But winners do it anyway.
• If you want to exercise real leadership, you must act.

You have to “walk the talk” every single day to attain excellence in any organization. You must take the field and play to win!

Action without vision is a nightmare. Vision without action is a daydream.

Japanese proverb