The Business Sensei

Who Betrays One Master

A nervous looking man in a suit slips furtively through the streets of an unnamed city. He comes to an office building and, checking to make sure that he isn’t being watched, slips inside. There, another man greets him.

“Do you have the plans?” the second man asks.

“Do you have the money?” replies the first.

Perhaps they haggle for a moment, but then the second man hands over the money and the first man hands over an envelope. The second man glances into the envelope.

“I see you kept your word.”

“You earned it,” replies the first man as he turns to leave.

“No,” says the second, as he pulls a gun and shoots the first man, “I bought it.”

“I betrayed my company for you! I proved my loyalty.” gasps the first man, as he falls to the floor.

The second man looks down at the body on the floor and says, “The man who betrays one master will assuredly betray another.”

If this scene sounds familiar, it probably is. Some variation of it appears in hundreds of movies, from James Bond to WWII action films to fantasy adventure. The trope is a simple one: a man betrays his country, company, organization, or teacher. The person to whom he sells out reaps the rewards, but never believes the traitor’s protestations of loyalty to his new masters. Eventually, it ends badly for the traitor.

Now, if this scenario were only a work of fiction, there would be little more to say. Unfortunately, the fictional part is the end: in real life the disloyal person is rewarded and given every opportunity to betray his new masters.

Read the rest in the Journal of Corporate Recruiting Leadership

The Hydrangea Conundrum

As published in The CEO Refresher.

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.

Smell Test

As published in Corp! Magazine

The door opens onto a room filled with equipment: banks of computers, spectrometers, air and tissue samplers and things that you cannot even recognize. The hum of electronics fills the room and there is a definite odor of fish. As you look around, you can see dozens of fish waiting to be analyzed for oil contamination. The purpose of all this machinery is to determine if seafood is safe to eat after the Gulf oil spill.

Sounds like something out of a science-fiction movie. That’s because it is something out of a movie: reality is not nearly so visually impressive. It turns out that the most sophisticated instrument for determining the safety of seafood is the trained human nose. With remarkably little training, the human nose can do something that all the expensive and elaborate electronic equipment cannot do: figure out whether a fish is contaminated or not.

About 20 years ago, a Japanese business decided to conduct a thorough chemical analysis of fine wine. They used sophisticated equipment and complex computer analysis to determine the chemical composition of the perfect bottle of wine. They then produced a wine that perfectly matched their profile.

In the ensuing blind test, tasters had no trouble recognizing the Japanese wine: it was universally described as “having the taste of dishwater and a bouquet of dirt.”

Once again the human nose proved superior to all the fancy equipment that was brought to bear on the question.

When speaking to a group of managers, I asked them to describe their company’s goals. The response was a rather confusing medley of Gantt Charts, Microsoft Project, comments on the latest decision support software and so forth. What was their approach to management? Once again, the same cacophonous medley ensued.

Fish, wine and management have a couple of things in common.

First and foremost, all those fancy tools and gadgets are tools, nothing more. There is nothing inherently special about them, any more than there is anything inherently special about a hammer. In the hands of a master craftsman, a hammer can be a very useful and versatile tool; in the hands of someone without that skill, a hammer is little more than a device for making sure that every problem looks like a nail.

By the same token, the value of management support software, or whatever other power tools are being used, is only as great as the skill of the manager using it. Tools leverage skill; if there is no skill, there is no leverage. There is also a strong possibility of cutting yourself off at the knees: power tools can be dangerous. In other words, all the management support tools in the world won’t help someone who doesn’t know how to manage. More to the point, just as a trained human nose is the best tool for detecting contaminated fish, the best leaders and managers are those who have actually learned how to lead and manage.

From a very practical perspective, the best leaders are those who can connect with their followers. It’s not about Gantt charts or other fancy tools. It’s about building trust and enabling people to feel that they can count on you.

Wait, isn’t that backwards? Doesn’t the leader need to be able to count on his followers? Sure. And the way you get there is by demonstrating that they can count on you, that they can trust you.

In a sadly familiar tale, at Soak Systems, no trust exists between different departments, between marketing and engineering, between engineering and the CEO. Why is there a lack of trust? The CEO constantly visits clients and makes promises that engineering can’t possibly fulfill. Even worse, he regularly changes direction and priorities: one day project X is vital to the future of the company, even when it fails to ship on time or when it ships and doesn’t work. The next day, it’s project Y. Each prediction of impending doom is followed by another prediction of impending doom if the project doesn’t work.

At this point, no one believes the CEO. No matter how important or unimportant his pronouncements, they are all greeted with the same level of skepticism. All his charts and graphs are failing to convince anyone. Is it possible for the CEO to reverse the trend and actually build credibility? Sure! The easiest way is for his prediction of doom to come true just once. Granted, that’s not particularly useful, but it is the easiest approach.

A more difficult approach is to put aside all the shiny tools and actually pay attention to the people. If he is willing to learn how to build trust and establish connection with his followers, then there’s a good chance he can turn things around. But he has to be willing to learn instead of being distracted by all the pretty toys.

I said earlier that there are two things that wine, fish and management have in common. We’ve discussed one. The other is pretty simple.

They all stink when they’re bad.

Recruit Confidently

As published in ERE.Net

Recently, I heard a hiring manager comment that she would “Prefer not to hire anyone at all.”

Her company is growing. They are actively looking for people. At the same time, this manager who has been tasked with building up her team is openly telling candidates that if she has her way, not one of them will be hired. Indeed, given the choice, it’s hard to imagine candidates accepting an offer if they did get one, compared, say, to an offer from an enthusiastic and confident employer.

While making the observation that this woman lacked confidence might be something of an understatement, it is only a start.

Confidence begets confidence, just as lack of confidence begets lack of confidence. This manager was demonstrating a lack of confidence in herself, her company, its hiring process, and in the candidates. That, in turn, makes it extremely difficult to attract top people: if the hiring manager doesn’t seem confident, what does that tell the candidate about the company?

While most businesses viewed the Great Depression as a time to hunker down, cut everyone possible from the payroll, and hide under the bed until things got better, one CEO took a different perspective. He saw the Depression as an opportunity to find the best people, build their loyalty and commitment, and stockpile equipment and material against the day the economy turned. Tom Watson’s confidence that things would get better propelled IBM into becoming the global powerhouse it remains to this day.

In another example, a recent news report featured an economist claiming that hyper-inflation and total social collapse is just around the corner. Is that likely? I’m no economist, but I have to wonder how many people today remember Dow 36,000? James Glassman’s book was published at the height of the Internet boom: in October 1999, just a few short months before the market crashed in March 2000. The predictions of a rosy future stretching into forever were loudest, and most believable, at the top; what does that say about the news today?

In the end, though, while this woman’s lack of confidence may have been made obvious by the economy, and helping her reframe the news was an important step, further investigation revealed the economy wasn’t the actual cause. The actual cause was both more immediate and less obvious: she fundamentally didn’t trust the hiring process her company used. If you don’t trust the process, it’s hard to have confidence in it, and the more vulnerable you are to surrounding influences such as the news. In a strong economy, her lack of trust could easily go unnoticed simply because the positive news flow would allay her fears; without the positive backdrop, however, her fear and her lack of confidence in the system were fully exposed. Sadly, this lack of confidence appears to be the case in a great many different companies.

It’s a topic I write about in the next Journal of Corporate Recruiting Leadership. In that article, I specifically get into some ways to address the problem. While it’s certainly true that we don’t control the economy, we can control how we react to it. We control as well how well our recruiting systems are designed and how well trained we are in using different parts of it. Understanding what we control and how to exercise that control well is the key to true confidence.

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.

The Peter Principle of the thing

Okay, the Peter Principle, that each person in an organization is promoted to their level of incompetence, is legendary. Since it was first advanced by Lawrence J. Peter in the 1960s, it’s been one of those things that is spoken about amusingly but with a certain element of “yeah, right.” (which is, I believe, the only example of a double-positive making a negative, but I digress.)

Well, if you’ve ever wondered if the Peter Principle works, it turns out that it does. This year’s management Ignoble Prize went to The Peter Principle: A Computational Study. The researchers found that not only does it work, it’s potentially unavoidable if ones duties following a promotion are essentially unrelated to ones duties before the promotion. In other words, the skills of an engineering manager are not identical to those of an engineer. Being a good salesmanager is not the same as being a good salesman, and so on. The study went on to state that organizations could improve their efficiency by promoting randomly the most and least competent performers!

Looking at this study, I’m struck by the basic assumption underlying it: the principle works if the duties as you move up are substantially different from what they were at the “lower” level. Unfortunately, this is a pretty valid assumption. There is a cultural belief in most businesses that management is “higher” on the corporate ladder than being an individual contributor. As a result, if you really want to increase your salary and status in the company, you need to keep climbing. Unfortunately, this means that there’s a very good chance that eventually you’ll reach the point that you can’t do the job well anymore, and hence you’ll be stuck in a job that doesn’t fit your skills and talents.

It’s a very perverse incentive!

It occurs to me that instead of insisting on the ladder or believing that doing well at job X means that you’ll do well at job(not x), perhaps a better approach might be to give people the opportunity to try out a new job. Providing some sort of training for the new job is also a good idea. It’s rather disturbing how often people are “promoted” into management and then given no training on what to do. In a perfect example of the Peter Principle, they are taken out of the job that they excel in and for which they probably trained for many years, and put into a job for which they have no training and possibly no talent. The former, at least, can be fixed.

Of course, even when there is management training, it has to be done right. The occasional one-off, soon forgotten until the next year, is hardly sufficient. Consider how much training it probably took for the person to be successful in their previous job! Management training needs to be focused, given the reality of time constraints that exist in most businesses, and it also needs followup. Waiting a year until the next training won’t do it!

It takes a lot of effort to avoid the Peter Principle. I suspect that many businesses are figuring they can’t afford to do anything about it. My question is, can they afford not to?

How You Hire Just As Key As Who You Hire

Where you start is what you get. I regularly hear managers say:

• “An unexpected problem arose and the team didn’t step up.”
• “I can’t figure out how to motivate them.”
• “No one goes above and beyond.”
• “They are just so passive!”

Alternately:

• “They won’t stop arguing!”
• “People complain about being interrupted all the time.”

Businesses like to describe their culture in positive terms, as “can do” or “fun-loving, but hard working,” or “highly motivated, team-driven atmosphere,” and so forth. Unfortunately, as the comments above illustrate, this is often wishful thinking. Culture is a complex construct and actions taken early in the company’s history can have far reaching effects. And while everyone knows that who a company hires can make a big difference, what is less obvious is that how a company hires can be even more critical.

Read the rest at the Indus Business Journal