The Business Sensei

Death of a Thousand Knives

As published in Corp! Magazine

Very few companies are ever driven out of business by their competitors.

I’ve found that this statement upsets a great many people, all of whom are quick to jump up and start providing examples of companies that were, in fact, driven out of business by their competitors. This is missing the point. Indeed, it’s rather like a detective in a murder mystery concluding that the cause of death was that the victim’s heart stopped. It matters whether the heart stopped due to lead poisoning, for example in the form of a bullet, or due to some other cause. Indeed, understanding exactly what led to that heart stopping moment is a key part of solving the mystery.

Similarly, while it’s not so unusual for a failing company to have the coup de grace administered by a competitor, how they got to that point makes all the difference. Focusing only on the end point provides a very simple, comfortable solution, but not necessarily a particularly useful one.

Robotic Chromosomes, for example, was a company that dominated a particular niche in the bioinformatics market. They were an early entrant into the field and their products were initially the best on the market.

Over the course of several years, though, they developed a view of their clients as idiots. The fact that their clients were all highly educated research scientists did not enter into the equation. If they had trouble using the software, they were idiots. As a result, the company became increasingly less open to feedback from either clients or the market. While their market share was increasing faster than the market itself, they could get away with that attitude. Eventually, though, their growth started lagging the growth in the market. Phrases like “law of large numbers” and “temporary aberration” were batted about. When their market share started shrinking, phrases like, “temporary aberration” became even more popular. The view of the clients as insanely stupid for buying competing products became more common.

Today, they no longer exist. Were they driven out of business by their competitors? Only in the sense that they put themselves in a position to allow their competitors to drive them out of their dominant position in the market. Sure, their competitors may have pushed them over the cliff, but they were the ones who chose to walk to the edge and lean over.

Now, it may reasonably appear from the preceding description that Robotic Chromosomes was taken down by a clearly defined event, that is, viewing clients as idiots. That is not, however, quite correct. While it may appear that way in retrospect, the reality is that Robotic Chromosomes suffered from a series of cascading errors. Each mistake was small, easily overlooked or ignored. Each mistake led to more mistakes until eventually the company was suffering from so many small cuts that it eventually had no strength left to resist when its competitors moved in. So how does a company avoid this death of a thousand knives?

The obvious answer is that they needed better communications. While true, it again misses the point. Communications is where problems show up, but the communications are rarely the problem. Rather, the dysfunctional communications are the symptom of the problem. It’s critical to look beyond the symptoms to identify the real problem. Otherwise, you spend all your time looking at the wrong things, as Robotic Chromosomes so eloquently demonstrated.

Avoiding that fate requires a willingness to accept negative feedback; it means being willing to hear what people are saying about your product, your service or your management style. If you aren’t willing to listen, or if you structure the way in which you listen to negate the feedback, you’re setting yourself up for failure, one step at a time. For example, creating a culture that mocks and demeans your clients is not a recipe for success, and closes you off from valuable feedback from those clients.

Being willing to accept feedback is only a first step though. You have to create a context in which employees are not afraid to give you that feedback, and in which they believe that providing feedback is worthwhile. If people believe they’ll be punished for being critical or regarded as “not a team player,” it’ll be hard to get them to provide feedback.

Next, you need to clearly define your goals and also define how you’ll know whether you’re succeeding or failing. Robotic Chromosomes had very fluid definitions of success, definitions that shifted regularly to avoid facing unpleasant results. It’s important to separate the evaluation of the feedback you’re getting from the testing to see if the criteria for that evaluation are valid. In fact, verifying the validity of your criteria should be done before you then evaluate your feedback: otherwise, it’s too easy to redefine success and give yourself a few more cuts. None of them seem all that bad at the time.

Step by step, over the course of several years, Robotic Chromosomes successfully created an environment where any negative feedback could be ignored because that feedback was always coming from idiots. Their competitors didn’t drive them out of business. They drove themselves out of business; their competitors simply put them out of their misery. How will you avoid the death of a thousand knives?

Stephen Balzac is an expert on leadership and organizational development. A consultant, author, and professional speaker, he is president of 7 Steps Ahead (www.7stepsahead.com), an organizational development firm focused on helping leaders grow their businesses. Steve is the author of “The 36-Hour Course in Organizational Development,” published by McGraw-Hill, and a contributing author to volume one of “Ethics and Game Design: Teaching Values Through Play.” Contact him at steve@7stepsahead.com.

Of Deck Chairs and Ocean Liners

As published in The CEO Refresher

“Just give me the numbers!”

Falling firmly into the “I just can’t make this stuff up” category, the preceding statement was made by the head of a certain engineering department. He wanted the performance figures on a series of database lookups so that he could determine if the database code was performing up to specifications. This would be a perfectly reasonable request except for one minor problem: the database code was not producing the correct results in the first place. Performance was sort of irrelevant given that getting the wrong answers quickly is not necessarily all that helpful, although it may be less irritating than having to wait for the wrong answers. It’s rather like driving at 75mph when lost: you may not know where you are or where you are going, but at least you’ll get there quickly. Or something.

In another example, the engineers developing a bioinformatics data analysis package spent all their time arguing about the correct way to set up the GUI elements on each page. The problem was that when they actually ran one of the calculations, the program appeared to hang. In fact, I was assured by everyone, it just “took a long time to run.” How long? The answer was, “maybe a few weeks.”

This may come as a shock to those few people who have never used a PC, but a few weeks is generally longer than either a PC or a Mac will run before crashing. Besides, the complete lack of response from the program regularly convinced users that the program had crashed. The engineers did not want to put in some visual indicator of progress because they felt it wouldn’t look good visually. They refused to remove that calculation from the product because “someone might want to try it.” Eventually, they grudgingly agreed to warn the user that it “might take a very long time to run.”

In both of these cases, the team was solving the wrong problem. Although there were definitely complaints about the speed of the database, that was very much a secondary issue so long as the database wasn’t producing correct results. And while the user interface decisions were certainly important, designing an elegant interface for a feature that will convince the user that the product is not working is not particularly useful. At least rearranging the deck chairs on the Titanic was only a waste of time. It didn’t contribute to the ship sinking.

The element that made each of these situations noteworthy is that in both cases there were people present pointing out that the wrong problems were getting all the attention. The people making the decisions didn’t want to hear that. They wanted to solve a certain set of problems and, by golly, they were going to solve them! This is a version of the Hammer syndrome: when all you have is a hammer, everything looks like a nail. Sometimes, though, that nail turns out to be a thumbnail.

So why were these teams so insistent upon solving the wrong problems? Fundamentally, because they could. Simply put, if you give someone a problem they can solve comfortably, and one that they have no idea how to approach, they will do the former. In addition, they had never established clear metrics for success, never established standards by which they would know if the database was fast enough or the user interface was good enough. As a result, they built their goals and evaluated their performance around those issues. They were not being evaluated on whether they got the right answer, despite the opinions that the customers might have in that regard.

While clear, specific goals are certainly good things, goals also have to make sense. When a company is constantly seeing flaws in its products, it can be a very valuable exercise to look at the goals assigned to each person and each team in the company. Do those goals make sense? What problems or challenges are they addressing? Are the goals complementary, or are there significant gaps? If the engineering team is being evaluated on how many bugs they can fix and the QA team on how many new bugs they can find, what happens to the step where fixed bugs get verified? If no one is responsible for that happening, it won’t get done (and didn’t, in several software companies!). If the team focuses on the wrong problems, they’ll spend their time fighting symptoms or revisiting solved problems, and never deal with the real issues.

Therefore, even before you can set goals, you have to know what the problem is that you are trying to solve. That means first separating the symptoms of the problem from the problem itself. The symptoms are only symptoms; frequently, they can point to many possible problems. It’s important to look at the symptoms and brainstorm which problems they could be indicating. When you start developing solutions, you then need to ask what the final product will look like if you go ahead with your solution and you need to know what success looks like. Make sure that your proposed solution will actually solve at least some of the potential problems you’ve identified, and develop some way of testing to make sure you are solving the correct problem. In other words, have some checkpoints along the way so you can make sure that you’re actually improving things. Only then can you start to set goals that will effectively guide you to producing a quality product.

What are you doing to make sure that you are not rearranging deck chairs on the Titanic?

Mousetrap Company

As published in Corp! Magazine

Remember the classic kid’s game, Mousetrap? In this historic tribute to the legendary Rube Goldberg, players have to assemble an exceedingly convoluted and baroque mechanism that will supposedly catch a mouse. As I have young kids, I recently had a refresher course in the game. What was interesting was the debate about which part of the trap is the most important: the crank turn at the beginning? The shoe that kicks the bucket, the ball bouncing down the stairs, the diver that flies into the washtub or the trap itself falling down the pole? In the end, most of the kids decided that it must be the trap, since without that you can’t actually catch the mouse.

Listening to the debate, I had the rather disturbing experience of being reminded of a certain software company. A similar debate occurred there as well: the engineers who were supposedly designing and implementing the software were being raked over the coals because they hadn’t successfully produced a workable product by the deadline. At first glance, it was clearly their responsibility to build the product, and their failure was costly indeed to the company.

The first glance is not, however, always the most accurate one.

In the game of Mousetrap, a number of things have to happen correctly in order for that all important trap to fall. If the shoe doesn’t kick the bucket, the ball won’t go bouncing down the stairs. If the crank doesn’t turn, the gears won’t rotate and the shoe won’t move. Indeed, while a failure at any point in this wonderfully elegant mechanism will derail the whole thing, failure at the start means that it won’t even get going.

At this software company, the process for getting a release out the door was, unfortunately, even more elaborate than the mousetrap. The biggest problem, though, was the crank at the top. The company had several products, and competition for resources was fierce. What the CEO seemed to be paying attention to was what received the time and energy of the engineers. Although the CEO kept saying that this particular release was critical to the future of the company, he made no effort to organize the company around that release, nor did he delegate that task to anyone else. Thus, the assumption from the top down was that this release couldn’t really be as important as all that.

By the time engineering got involved, the engineers were focused on multiple tasks. Without any direction from above, they took their best guess on which direction to go. Being engineers, that meant that they pursued the interesting technical problems, not the serious business priorities: when not given direction, most people will do the thing they are best at doing, whether or not that is the thing that really needs to be done at that moment.

When it came time to ship the product, the best that could be said about it was that it didn’t crash too often. The customer was not pleased.

What happened here was that there was no logical flow of control or means of prioritizing tasks. Superficially, an unhappy customer was the fault of the engineers; certainly, they took the blame. However, was that really accurate? The engineering team did their job as best they could with the information they had available. The real failure was in the leadership: when no one is leading, people follow the path of least resistance. That may not get you where you want to go. Although the failure did not manifest until the very end, the seeds of that failure were sown long before the engineers ever started working on that particular product.

Fundamentally, it is the job of the leader to set the direction for the company and keep people moving in the right direction.

It is the job of the leader to build the team so that the employees will follow him in that direction. It is the job of the leader to build up his management team so that he does not become the bottleneck.  It is the job of the leader to make sure that the technical problems and the business problems are in alignment and that the biggest contracts are the ones that get priority. This seems obvious, but for something obvious, it certainly fails to happen in far too many situations.

In this particular situation, the company’s mousetrap didn’t work very well. The trap didn’t fall. The rod didn’t move. The diver didn’t dive. The crank might have turned, but it didn’t turn particularly well. Indeed, the company really only got one part of the mousetrap process to work well.

They did manage to kick the bucket.

Stephen Balzac is a consultant and professional speaker. He is president of 7 Steps Ahead (www.7stepsahead.com), an organizational development firm focused on helping businesses to increase revenue and build their client base. Steve is a contributing author to volume one of “Ethics and Game Design: Teaching Values Through Play,” and the author of “The 36-Hour Course in Organizational Development,” published by McGraw-Hill. Contact him at steve@7stepsahead.com.

When the CEO Meets Frankenstein

As published in Corp! Magazine

Horror movies follow some fairly predictable tropes: the monster slowly awakens; someone sees it happening, but no one really believes him. As the story unfolds, people go to investigate and are captured, killed, driven mad and so forth. There’s always something terrible going on, and there’s always some helpless innocent caught up in it, acting the way helpless innocents generally act.

Of course, when the helpless innocent doesn’t act as expected, well, that can cause the whole story to change. The classic comedy, “Abbott and Costello Meet Frankenstein,” is a traditional period horror film, complete with the legendary Bela Lugosi, in which the helpless innocents are Bud Abbott and Lou Costello, acting like, well, Bud Abbott and Lou Costello. This, of course, causes the plot to go flying off the rails, at least as far as Count Dracula’s dastardly plot to reawaken Frankenstein’s monster is concerned.

The key element of a horror film is that our helpless innocents are put into a situation in which they have no idea what to do. As in most situations, when we don’t know what to do, we do what we know how to do. Indeed, successful horror relies on that phenomenon: the terror comes from seeing how our ordinary actions lead deeper and deeper into trouble. Alternately, if those ordinary actions are slightly askew, the horror becomes comedy. In that case, the humor comes from seeing Abbott and Costello responding to a deepening horror by doing what they normally do.

The movie works because the tendency to do what we know how to do is both powerful and universal. Most people, confronted by novel situations, react that way. When there is truly nothing they can do, they attempt to exert control anyway by doing something that they can do. The results are often comedy or horror, depending on perspective and circumstance.

At one nonprofit, the founder of the organization was a man who had started out working in a stockroom. When the organization hit a financial crisis, he fixated on doing inventory. There was simply nothing useful he could do. Rather than feel helpless, he did the thing he could do. This made his board very happy as it kept him busy while they raised money for the organization.

At a high-tech company, a product deadline was threatened by a vendor not delivering a critical software component on schedule. There was nothing that could be done: the entire product was designed around that deliverable. The department head responded to the situation by demanding his employees work long hours, before the vendor delivered. After it was delivered might have made some sense, as the company would need to make up the lost time, but before? The department head had no control over the vendor, so he dealt with the situation by controlling the people around him.

Comedy and horror might be quite enjoyable when viewed from a safe distance, like a movie screen, but are much less fun to be in the middle of. How, though, does a leader avoid having her actions turn the situation into a comedy of errors or frustrating, painful experience for her employees?

The key is to practice dealing with chaos. Consider successful athletes: they learn all the moves and drills of their particular sport. Then they practice by competing against other athletes in order to become comfortable with the unexpected actions of their opponents. Indeed, Judo competition is referred to as “randori,” or “seizing chaos.” Because it’s not possible to predict what strategies people will employ or control what an opponent does, the successful athlete learns to adapt to the situation. Rather than becoming stuck on one response, they become adept at switching strategies to counter their opponents.

Successful leaders need to develop the same skill. It’s not enough to just know the theory of leadership; you also must practice in a chaotic or ambiguous scenario. Sadly, for many leaders, that means practicing on the job. As most athletes learn the hard way if they move straight from drilling to competition, getting used to chaos takes its own practice.

Fortunately, just as athletes have multiple training tools at their disposal to learn to deal with chaos before they enter competition; tools are available for business leaders as well. Predictive scenarios, a type of live action serious game, provide the sort of detailed, ambiguous situations that enable a leader to become comfortable with chaos. Unlike traditional leadership training exercises, there is no one, right answer. Participants need to motivate others, win deals, provide feedback, and execute strategies in a constantly shifting environment. Rather than just talking about leadership, participants need to display leadership and do it well enough to convince others to follow them.

Like the athlete, the leader becomes adept at switching strategies and at managing unpredictable situations. Rather than being trapped by doing what they can, they become able to apply what they know. Instead of comedy or horror, they achieve success. Now, that is something you do want to be in the middle of!

Stephen Balzac is an expert on leadership and organizational development. A consultant, author, and professional speaker, he is president of 7 Steps Ahead (www.7stepsahead.com), an organizational development firm focused on helping businesses to increase revenue and build their client base. Steve is the author of “The 36-Hour Course in Organizational Development,” published by McGraw-Hill and a contributing author to volume one of “Ethics and Game Design: Teaching Values Through Play.” Contact him at steve@7stepsahead.com.

I Don’t Believe It!

Recently, I was running a leadership and negotiation exercise, which involved participants attempting to determine who they could and could not trust. The exercise required that participants work with one another and included various techniques for verifying the truth or falsehood of someone’s claims.

The dynamic between two of the participants, we’ll call them Fred and Barney, became extremely interesting: Fred needed Barney’s help, but Fred was convinced that Barney was lying to him and looking for a way to double-cross him on a business deal. Barney, meanwhile, was going to great lengths to prove that he was telling the truth and dealing in good faith. The more evidence Fred found that demonstrated Barney was telling the truth, the more Fred was sure he was lying. Not only was Fred not convinced, he even came up to me and complained that he thought that Barney was violating the rules of the exercise because he was clearly lying. When the exercise was over and I debriefed the participants, Fred was stunned when he found out that Barney was telling the truth all along.

Part of the value of this particular exercise is that behavior in the exercise tends to correlate well with behavior in the office. Unlike the exercise, however, in real life we don’t have any magical means of verifying the truth. Of course, as we can see, even that doesn’t necessarily matter. Once an opinion is formed, sometimes nothing will change it. That may be fine in some obscure situations, but in business it can get you in trouble.

Read the rest at Corp! Magazine

Hire Slow And Fire… Slower?

How often have you heard someone from a company say, “We hire slow and fire fast?”

I’ve heard this line so often that it sounds sort of a like a mantra or one of those wise sayings that are taken for granted but are generally wrong: “I invest for the long term,” or “There is no room for emotions in the work place,” or “The Red Sox will never win.”

This is not to say that it’s always wrong to “hire slow.” However, it’s important to understand the different ways that a company can hire slow. Some of them make more sense than others. What, fundamentally, does it mean to hire slow? For that matter, what does it mean to “fire fast?”

Read the rest at the Journal of Corporate Recruiting Leadership

Read the first chapter of my book (via Amazon Kindle for the Web)

Between Two Points

My first jujitsu sensei liked to frequently remind us that if you wanted to go from San Francisco to LA, you didn’t go by way of Portland, Oregon. Naturally, the wise-guys in the class, which included me, would make cracks about the airline schedules. I don’t know if there actually were flights that went from San Francisco to LA via Portland, but it wouldn’t surprise me in the slightest!

Of course, the point my sensei was trying to make was that a straight line is the shortest distance between two points. While this is certainly true in normal mathematics, fans of “A Wrinkle in Time,” might recall that a tesseract is the shortest distance between two points. While traveling via tesseract is purely science fiction, the fact remains that sometimes the direct route, that is, the straight line, is not the most rapid means of getting to your destination. Sometimes, you’re better off with a metaphorical tesseract. This is true in business and, as it happens, also in jujitsu (although that’s a separate topic). As a case in point, let’s look at the increasingly popular Results Oriented Work Environments (ROWE).

Read the rest at Corp! Magazine

What Makes Leaders Successful

If you missed my appearance on MYOB Radio on Sunday (or if you heard it and can’t wait to hear it again 🙂 ), you can listen to my interview on what makes successful leadership here.

As Above, So Below

(just in time for this article, I’ve even managed to get comments working properly (maximum spam blockage/minimal hassle) on my blog!)

While it is well known that rolling stones gather no moss, it appears that they are pretty rough on McChrystals. Recently, the news has been filled with headlines about General Stanley McChrystal and the story about him in Rolling Stone. Agree or disagree with how the situation was eventually resolved, it offers some important lessons for businesses.

While everyone has days when they aren’t happy with their boss, their job, their clients or just about anything else, what you say and how you say it makes a big difference. In General McChrystal’s case, perhaps the most striking elements of the article was not what he said, but what his staff said. Occasionally expressing frustration is normal. Open disrespect in the general’s staff is not, and says more about his opinions than anything he said. This attitude sets the tone for how the general and his staff will interact with others, people who, in a business environment, might be viewed as internal or external customers.

Read the rest at Corp! Magazine