The Business Sensei

Who Needs Strategy?

This is an excerpt from my upcoming book, “Organizational Psychology for Managers.”

“Our goal is to succeed!”

“Our goal is simple: we will build a winning product.”

“Joe’s goal is to get his work done on schedule 75% of the time.”

“Billy’s goal? He should cross the street safely 75% of the time.”

I’ve heard each of these so-called goals presented with a straight face. They sound good; well, at least the first three sound good. The fourth? Well, isn’t it just like the third?

Goals are an interesting beast. We talk about them all the time, put them down on paper, hang banners with goals written on them, and exhort people to stay focused on the goal. Despite all that effort, a great many of these goals never come to pass. Most of them are little more than wishful thinking or downright fantasy.

The goal problem is two-fold.

First, setting a goal does not make it happen. You can set a goal of finding a pony under your Christmas tree, but that doesn’t magically cause a pony to appear. For a goal to succeed, there needs to be a plan to accomplish it. That planning process, sometimes known as the strategy, is critical. It doesn’t matter how much you want to succeed if you aren’t willing to plan you aren’t going to get there.

Now, I frequently hear that planning is pointless since no battle plan survives contact with the enemy. That may be true, but seeing the plan not survive is at least giving you feedback that you’ve encountered the enemy. Seeing how your plan is failing can give you vital information on how to shift focus, allocate resources, and generally adjust your strategy.

More broadly, though, the difficulty is often a misunderstanding of what it means to plan. I’ve worked for companies that tried to plan projects out 2-3 years. While this is possible in a very broad sense, details matter, and you can’t plan details that far in advance. Instead, you have to plan the steps in front of you. Part of the plan is to pause periodically and review the plan. What worked? What didn’t work? What are the next steps? Developing an effective strategy is not something you do once and then execute blindly; you have to constantly adjust as circumstances change. The beginning chess player tries to play out a sequence of moves and is paralyzed when the opponent doesn’t respond as expected; the chess master has a plan and constantly adjusts his strategy in response to his opponent.

Interestingly enough, the beginner usually can’t explain his plan, while the master can. The beginner’s plan sounds like, “I have a plan: I’ll do this, and this, and this, and that’s how I’ll win.” The chess master, on the other hand, is likely to treat you to a detailed discussion of his thinking processes and chess strategy. The first is easy to say and easy to listen to, but is fundamentally useless. The second is hard to articulate and takes a lot of effort to follow, but actually does have a chance of working.

I said earlier that there are two big problems with goals. The second is failing to fail correctly.

Sometimes failure is a form of feedback. In fact, this is exactly what you want failure to be: a means of testing out different strategies and figuring out which ones work best. It is Edison’s proverbial, “I learned a thousand ways to not make a light bulb.” Used this way, failure can be very helpful. Indeed, without such productive failures learning and strategy development is impossible.

However, sometimes the cost of failure can be somewhat higher. If Billy’s goal is to cross the street safely 75% of the time, what about the other 25%? Even if we raise the expectation to 99%, that one failure can negate all the successes: getting hit by a car can ruin your whole day.

It’s all too easy to confuse the two types of failures and businesses do it all the time. They are afraid to fail when that failure would give them valuable information and they take risks that sound good but where one slip causes you to lose everything.

How do you tell the two apart?

Check out the strategy around the goal. If there is a strategy and the possibilities of failure are being considered and managed, then odds are good that if you fail, you’re failing successfully. If there is no strategy or failure is not being considered as a possibility, turn and run away. All you’re doing is rolling the dice, and if that’s your game, Vegas is a better bet.

Stephen Balzac is an expert on leadership and organizational development. A consultant, author, and professional speaker, he is president of 7 Steps Ahead, an organizational development firm focused on helping businesses get unstuck. 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.” Steve’s latest book, “Organizational Psychology for Managers,” is due out from Springer in 2013. For more information, or to sign up for Steve’s monthly newsletter, visit www.7stepsahead.com. You can also contact Steve at 978-298-5189 or steve@7stepsahead.com.

Dial M for Manager

I am pleased to announce that my next book, Organizational Psychology for Managers, will be published by Springer in 2013.

James Bond movies always follow some very predictable patterns. The movies always open with Bond involved in an extremely dangerous mission, which he single-handedly accomplishes to the tune of numerous explosions. Bond then shows up in M’s office in London to be briefed on the mission that will be the focus of the current movie. That done, Bond picks up his arsenal of tech toys from R (formerly Q), and is off. M, meanwhile, remains behind trying to keep track of what is going on and presumably coordinating other agents and missions.

James Bond is, of course, the ultimate individual contributor. While various people might help him from time to time, he’s basically on his own. Because Bond has a script writer, he’s never going to become a manager: that would spoil all the fun. Of course, we can imagine what might happen were Bond to end up behind a desk running the operation. SPECTRE would hatch some sort of dastardly plot and the agents sent out to stop them would all be killed, except for the dying guy who escapes to tell Bond what happened. Bond would then have to go back into the field and foil SPECTRE himself.

Unlike James Bond, many individual contributors do end up in management. Perhaps it has something to do with their jobs not being as exciting as Bond’s, or maybe it’s just that that’s the only promotion path in the business. Either way, it’s not unusual to see excellent salesmen becoming sales managers, excellent engineers, engineering managers, excellent marketers, marketing managers, and so forth. Like our hypothetical Bond scenario, however, many of them unsuccessfully fight the urge to do everything themselves.

Being an individual contributor means being in the trenches getting your hands dirty. While it’s very frustrating at times, it can also be very rewarding. Perhaps more important is the fact that you get to be the person taking action. You don’t have to sit around and wonder, you know what’s happening. You’re in the middle of it. You are like James Bond, only without the explosions, deadly tech toys, and, of course, the women. On the other hand, odds are pretty good that no one is trying to kill you.

Now, like Bond’s boss, M, you are a manager. Being a manager means not being in the thick of things. It means not doing the work yourself. It means going against years of training because now you have to work through others. Now you have to give instructions to your team of individual contributors and wait to hear back from them. You no longer know exactly what is going on, because you are not doing it. This can be a very stressful and unpleasant experience, especially if your manager is someone who is always asking for updates because she finds not knowing as unpleasant and stressful as do you.

Truth be told, the transition to management can be a very disorienting experience. Unlike a James Bond movie, if you don’t manage your team well and there’s a problem, your direct reports won’t appreciate you coming in to save the day. In fact, such an act would only make it harder for you to gain respect as a manager instead of an individual contributor who happens to sign time cards.

So what can you do to make the transition easier?

Start by embracing your role as someone whose job it is to build up others. You’re now the coach, not the player. Look for opportunities to improve the skills of your team, build their confidence, and foster a sense of team unity. Remember that there really is an “I” in team, so praise both good teamwork and individual initiative.

As you and your team build out goals, make sure you mark logical checkpoints on the calendar. That way, both you and they will know when you expect an update on what’s going on. Then make sure they know that if someone is having trouble, you’re there to act as a sounding board, help brainstorm, or just bounce ideas around. You may not have the answers, but you can help your experts figure out the answers.

If you do have to solve problems for the team, don’t just give them the answer. Let them see how you work through the problem to arrive at a solution. Then, the next time around, have them solve the problem while you coach from the sidelines. Sometimes you have to teach your players new moves. That’s okay.

If something goes wrong, make sure they know that you’re there to help them fix it, not to yell at them. You want people to feel comfortable bringing problems to your attention early, while they are small, rather than after they’ve had time to get large and unwieldy.

Finally, periodically take the time to see how far you’ve come and celebrate your progress with the team. The positive feedback will build your skills as a manager, and their skills as team members.

Good luck!

Stephen Balzac is an expert on leadership and organizational development. A consultant, author, and professional speaker, he is president of 7 Steps Ahead, an organizational development firm focused on helping businesses get unstuck. 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.” Steve’s latest book, “Organizational Psychology for Managers,” is due out from Springer in 2013. For more information, or to sign up for Steve’s monthly newsletter, visit www.7stepsahead.com. You can also contact Steve at 978-298-5189 or steve@7stepsahead.com.

For Want of a Rubber Band

The other day, my DVD player stopped working. Naturally, this happened the night I was sitting down to watch a movie I’d been looking forward to. Quite simply, the tray wouldn’t open (presumably, it wouldn’t close either, but there was no way to test that). As we all know, a feature of modern electronics is that there are “No user serviceable parts inside.”

Nonetheless, I decided to open it up anyway. If nothing else, I figured I could at least recover the trapped DVD one of my kids had left in the machine.

Opening it up was an interesting experience. Inside was mostly empty space with a tray and a circuit board. Apparently the major difference between a portable player and a non-portable one is the amount of wasted space.

There was also one user serviceable part: the rubber band.

Yes, in the midst of the electronics there was a broken rubber band. That rubber band acted as the “drive train” to open and close the DVD tray. Just think about that: all this high tech electronics rendered completely useless by the failure of a sixty cent rubber band. How much is that rubber band really worth? Sometimes the value is not the cost of the item but what it makes possible. Sometimes the critical problem that is blocking us from moving forward turns out to be something small and simple, but only if we know where to look and what to look for. While I could have replaced the DVD player, that would have been a much more expensive solution than replacing the rubber band. Knowing the real problem enabled me to pick the best possible solution.

I was asked recently about my opinion on attendance point systems.

“Why?” I replied.

The person explained her company was having problems with absenteeism and people changing shifts without notifying anyone in authority. Based on this, she wanted my opinion of attendance point systems, presumably on the logic that implementing one would solve her problem. Unfortunately, without knowing exactly why people are not showing up for work on time and without knowing why they’re constantly switching shifts, implementing an attendance point system is as likely as not a solution in search of a problem. Sure it might work; on the other hand, it might not work. It’s basically a roll of the dice.

So why jump to that solution? Simple. It’s easy. Faced with a problem without an obvious solution, the natural response is to impose a solution that fits the symptoms. Symptoms, unfortunately, are not the problem; they’re just the symptoms. Like taking an antibiotic for the flu, it doesn’t help and may make you feel worse.

Instead, we need to work backward from the symptoms to understand the underlying problem. With my DVD player, the symptom was that the tray wouldn’t slide out. Had I assumed the problem was that the electronics were fried, I would have tossed it and bought a new one. By investigating the problem, I had a working DVD player in less than fifteen minutes.

Investigating the problem, however, requires a certain amount of effort and frequently appears overwhelming and expensive. The lure of an obvious, easy, and, above all, cheap solution is very strong. The fact is, there are a lot of obvious, inexpensive solutions to many problems. In a business, it’s particularly easy to find an easy solution particularly if you don’t care if it actually works. If you want a working solution, though, the choices become somewhat more limited.

Investigating a problem is rarely as overwhelming as it first appears. With the DVD player, it was easy to open it up and see what was going on inside. With human systems, on the other hand, taking them apart in that way can be a bit problematic. Putting them back together again is even more tricky. The real key is to see how often the symptoms appear and under what conditions. What other symptoms are there? What do people say when you ask them about their experiences and their observations? As you put together a picture of the symptoms and when they appear, you can start brainstorming about possible causes. Does your organization have a cold? The flu? Is it suffering from growing pains?

At one company, everything was going great until they went public, had a huge influx of cash, and began a rapid expansion. Suddenly, all sorts of symptoms appeared: increased conflict, passive-aggressive behavior, confusion, inability to follow through on decisions, and so forth. Fixing the problem required first identifying what was really going on, and then crafting a solution appropriate to that organization. None of the problems were that big, but, like that rubber band, they were in critical places.

In a sense, it’s not how big the problem is that matters most. What matters most is what that problem is preventing you from doing.

How much was that rubber band worth again?

The Death of Brainstorming?

An article by Susan Cain appearing in the NY Times a few weeks ago argued that brainstorming is counterproductive, a poor way to stimulate creativity.

While the arguments are persuasive, they are also flawed. They appear to proceed from the assumption that brainstorming is a relatively simple process that can be done by any group at any time. In fact, effective brainstorming is surprisingly difficult, and problems with team cohesion, decision making, and leadership can easily turn it into an unpleasant time-waster. Teams that haven’t developed good conflict management and debate skills are also unlikely to brainstorm effectively. Rather than producing good ideas, they are likely to experience exactly the sorts of groupthink that Cain argues is likely to occur.

Fundamentally, though, Cain’s article confounds several problems and concludes, therefore, that brainstorming doesn’t work. So let’s look at how to make it work:

Don’t take on too much in one day. 3-4 topics are about it, probably less. In general, the more important the topic, the more that should be your focus. Spending several days on one large topic is often seen as a “waste” of time, but, done correctly, is actually the most likely way to get useful results.

Give yourself lots of time and take short breaks every 60-90 minutes. Take a long lunch break and get out of the office. Brainstorming is surprisingly draining, so taking regular breaks gives people a chance to refresh their perspective and keep the creative juices flowing. Once people start getting tired, the quality of ideas and effective debate decline rapidly.

Don’t try to cram more work into the day: after 4-6 hours of serious brainstorming, people are drained. If they know they have to go back to work afterward, they’ll hold back during the brainstorming, or do low quality work because they’re tired. Go out to dinner or something afterward and call it a success.

Separate idea generation from idea evaluation. Evaluating ideas as they are presented only invites argument and defensiveness. Instead, spend half your time collecting ideas, no matter how outrageous. Some people brainstorm very effectively by being silly or cracking jokes. Let it flow. I’ve found that the craziest ideas often provide the spark for the best solutions. After you’ve collected enough ideas, then take a break, or even wait until the next day, and then evaluate them. A little distance gives wonderful perspective.

Assign someone to collect ideas; don’t rely on memory. Use multiple whiteboards, an easel with a giant pad of paper, your favorite technology, etc. It can often help to bring in an outside facilitator who has no emotional connection to any outcome. This also helps prevent the appearance of bias or of having someone emotionally connected to a particular outcome attempting to influence the result.

Work in a large, brightly lit space. Institutional gray only dampens creativity. Yes, physical environment matters. A change of venue, away from the office, can work wonders.

If you find your team slipping into a groupthink mentality or unable to agree on a course of action, that’s not a problem with brainstorming. That’s a problem with your debate and decision making process. Bring in someone who can help you fix it, or your brainstorming efforts are going to be a waste of time (in addition, problems with debate and decision making are likely to be reducing your productivity in other areas as well!).

Brainstorming is a powerful tool, if you use it correctly.

Take a Future Retrospective

Originally published in Corp! Magazine.

Once upon a time there was a staircase. Although it wound its way up from floor to floor in the manner traditionally associated with staircases, this was no ordinary staircase. Although it stood in a courthouse in Franklin, Ohio, in a fashion much like other staircases, yet it was not like the other staircases. With most staircases, those who look down see stairs beneath their feet. With this staircase, however, those who looked down saw the floor below and those people walking up the stairs. They saw those who stood at the bottom of the staircase, for this staircase, you see, was made of clear glass. While we have no information as to whether those climbing the staircase felt a sense of vertigo when they looked down, we do have definitive information about what they said when they looked down: “Hey, those people at the bottom of the stairs are staring up my dress.”

Although the news report was slightly vague on this point, we may safely assume that this comment was made only by those who were, in fact, wearing a dress.

But yes, it seems that people on the staircase made an observation that had eluded the architects who designed the staircase: that if you can look down through the glass, you can look up through it as well.

When questioned on this point, the architects responded by saying that they had naturally assumed that no one would be so inappropriate as to stand at the bottom of a glass staircase in a courthouse and look up women’s dresses.

When this insightful observation was relayed to the judge, he replied that, “If people always exercised good judgment and decorum, we wouldn’t need this building.”

The architects had carefully considered their building material. They had thought about how to make the glass durable and resilient. They had considered the problems involved in building a glass staircase in such a way that it would continue to look good even after having hundreds of people walking up and down it each day. They had, in fact, solved each one of these problems.

What they had not considered was how the customer, to wit, the people in the courthouse, would actually use the product. They were so fixated on the concept that a staircase is for walking on, not staring through, that they failed to consider the ramifications of their architectural decisions. To be fair, architects are hardly unique in making this type of mistake. It can be very easy to let your assumptions about how something should work or how it will be used to blind you to how it will actually work or be used. Consider the example of the business school competition to design a helicopter. The contest was judged on a number of factors, including the weight of the finished product. The winner was the helicopter without an engine. Apparently, no one had included “able to fly” in the criteria for success. The assumption that, of course, a helicopter should fly was so taken for granted that no one thought to see if it was included in the rules.

On the bright side, it had considerably less severe consequences than the situation involving the helicopter that flipped upside down while in flight. Or the data analysis software package that looked like it had crashed the computer, causing users to reboot shortly before the calculations were complete. Or the organizational improvements that led to a massive talent exodus.

In each situation, the people designing the end result honestly believed they were giving the customers, including the employees in the final case, what the customers had requested — and that belief prevented them from considering any other possibilities.

“We asked!” the designers protested. “That’s what they said they wanted.”

Were the customers really asking for a helicopter that flipped upside down or an expensive glass staircase that had to be subsequently covered? Of course not. But somehow, that’s what the designers heard.

The problem was that they asked the wrong questions, further leading them into their one, narrow, view of the result. Thus, no one ever stopped to imagine how the end product, be it staircase, contest rules, helicopter, software, or organizational procedures would actually be used.

In each situation, rather than seeking information, the people asking the questions sought validation. They already had an idea in their heads, and any inquiries they made were aimed at confirming that idea, not testing it.

When you say, “This is what you wanted, right?” or “What do you think of this approach?” odds are you aren’t requesting information; you are requesting validation. Indeed, even if you are seriously trying to get information, such questions usually get you validation instead. This is because the client assumes that you, as the expert, know what you’re talking about.

So how do you ask for information? One answer is to change the time frame. Instead of asking them to imagine the future, pretend it’s the future and imagine the past: “If we went with this approach, and six months from now you weren’t happy, what would have gone wrong? If you were happy, what would have gone right?”

This small change causes people to actually imagine using the product or living with the new procedures. Now, instead of validation, you’ll get information. That information may shake up your carefully constructed vision of the future, but that’s fine. Better now than after the sightseers congregate at the bottom of that glass staircase. A future retrospective also forces you to be more honest with yourself and to address the issues in front of you.

What challenges is your business facing? If, six months from now, you had successfully addressed your most persistent problems, what would you have done to make that happen?

What Are You Really Asking For?

This article was originally published in Corp! Magazine.

The names have been changed to protect the silly…

History teacher Norman Conquest had a very difficult student, Sasha Pandiaz. Sasha was constantly disruptive in class, driving Norman up the wall. Finally, Norman decided on a simple solution: when Sasha misbehaved, he would be sent out into the hall for five minutes. If he misbehaved three times, he spent the entire class sitting in the hall.

Inside of a week, Sasha was spending the entirety of each class in the hall. Sasha, it turns out, didn’t like the class. Although Norman thought he was punishing Sasha, apparently no one bothered to inform Sasha of that. As a result, Sasha was quite happy to miss each class; the long-term negative of a bad grade in the class was simply too far off and abstract to change Sasha’s behavior.

Fred was the VP of Engineering at Root-2 Systems. Fred had the habit of indicating his displeasure with engineers in his department by assigning them projects that were not particularly fun or interesting. At least, Fred didn’t find them particularly fun or interesting. Unfortunately, the engineers did. Rather than feeling punished, they thought they were being rewarded! As one engineer put it, “I thought Fred was ready to kill me, but then he gave me this really cool project.”

Thus, for example, instead of realizing that Fred was punishing them for blowing off a meeting, engineers believed he was rewarding them for skipping a meeting that they thought would be a waste of time. As a result, they kept repeating the behaviors that were infuriating Fred. By the time he figured out what was going on, Fred was bald.

At Mandragora Systems, Joe took over a key product team. He regularly exhorted his employees to work together: “We’re a team!” Joe cried loudly and often. But when it came time to evaluate performance, the song was a bit different:

“What were you doing with your time?”

“I was helping Bob.”

“If you’d finished your work, why didn’t you come to me for more?”

“I hadn’t finished.”

“Then why were you helping Bob?”

“It was something I could do quickly and would have taken him all night.”

“If Bob can’t do his job, that’s his problem. Worry about your own work.”

Astute employees soon realized that the key to a good review was to focus on their own work and devil take the hindmost. While Joe won points with his boss for his aggressive, no-nonsense style, and for his success in identifying weak players and eliminating them, something rather unexpected occurred: team performance declined on his watch. Instead of a team working together and combining their strengths, he ended up with a group of individuals out for themselves and exploiting one another’s weaknesses. The fact that this was damaging to the company in the long-run didn’t really matter as it was very definitely beneficial to the employees in the short-run.

There are several lessons to be drawn from these experiences.

First, it doesn’t matter whether you think you’re rewarding or punishing someone. What matters is what they think. If they think they’re being rewarded, they will naturally attempt to continue to get those rewards. If that means you lose your hair, so be it. If, on the other hand, they think they’re being punished, or at least not rewarded for their efforts, they will change their behavior no matter what you might say. Your actions really do speak louder than your words.

Second, no matter how much we might tell employees to think about the long-term rewards and delayed gratification, short-term rewards offer an almost irresistible lure. If you create a contradiction between the short-term and the long-term, most people will go for the short-term.

Third, if you want a strong team, you must reward team-oriented behaviors. If you only reward individualism, you’ll get a collection of individuals. For some jobs, that really is all you need. For many other jobs, though, it’s virtually impossible to succeed without a team.

In the end, people will do whatever they hear you telling them to do. It pays to make sure that what they are hearing is what you think you are saying.

A Tale of Two Light Bulbs

As published in the CEO Refresher

Make a New Plan, Stan

As published in Corp! Magazine

Jesse Livermore, the legendary stock trader of the early twentieth century, was famed for his ability to keep his cool no matter what the market was doing. He neither became discouraged when he lost money or exhilarated when he made money, and he made a lot of money. His greatest triumph was making $100 million (no, that’s not an error) on Oct. 29, 1929, the day of the market crash that preceded the Great Depression. He was one of only two people to make money that day. As people were panicking around him, he calmly covered his short positions into the chaos. What was his secret?

It was simple: Jesse Livermore had a plan. Over the course of his trading career, he developed a plan for when to buy and when to sell. When the plan didn’t work, he stepped back, analyzed the failure, and adjusted his plan. Jesse Livermore’s plan failed many times, especially during his early days as a trader. He went broke more than once and, in 1915, was a million dollars in debt. But Jesse Livermore never failed.

Now this may look like sophistry: he created the plan and the plan led him into bankruptcy. Isn’t that a failure? Sure: it was a failure of the plan. By creating an external construct, a plan, Livermore was able to prevent his emotions from dominating his trading. More broadly, he was able to place the failure outside himself. It’s much easier to change one’s plan than it is to change oneself. On the flip side, when things went well, he could enjoy the fruits of victory without allowing the excitement to color his perceptions and cost him his profits. Each day, he knew that he had followed his plan.

This lesson can be easily applied to the business world, especially today. The news is a steady drumbeat of economic disaster after economic disaster, bankruptcies, shrinking sales, and so forth. It’s extremely difficult to not become discouraged; I regularly hear from business owners that they are no longer listening to the news. It’s simply too depressing. Unfortunately, restricting information only reduces a business’s ability to act when the opportunity presents itself; you won’t even know that the opportunity is there! Tom Watson, the founder of IBM, was reputed to read the papers every day all through the Great Depression. He had a plan, and part of his plan involved staying aware of what was happening around him. He was waiting and watching for his moment of opportunity. That moment came, and the rest, as they say, is history.

So how do you go about making a plan?

• Start by defining a broad vision of what your business wants to accomplish. What will the world look like if you’re successful?
• Identify the steps needed to bring that vision into reality.
• For each step, identify how you will recognize whether or not it is working. It pays to decide upon your metrics before the pressure is on, and to identify the signs of trouble as early as possible. Jesse Livermore never bought a stock without deciding in advance the conditions under which he’d sell it, whether for a profit or a loss. As a result, his losses were small and his profits large.
• Break those steps down into activities that can be done on a daily, weekly, and monthly basis.
• Define appropriate checkpoints where you can evaluate progress and determine whether or not your plan is working. Remember to allow sufficient time to collect enough data to make a good decision. Evaluating before you have enough information is an excellent way to abandon a successful plan before it has time to pay off.
• Execute your plan, day in and day out. You measure your own success or failure by whether or not you stuck to the plan.
• Constantly review and revise your plan as you learn more. Failures of the plan are simply an opportunity to evaluate and adjust.

When we fail, it can be difficult indeed to get up and try again. But when the plan fails, it’s relatively simple to modify it and keep going.

What’s your plan?

Stephen Balzac is an expert on leadership and organizational development. A consultant, author, and professional speaker, he is president of 7 Steps Ahead, an organizational development firm focused on helping businesses get unstuck. 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.” For more information, visit www.7stepsahead.com or contact steve@7stepsahead.com.

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.

When the Fat Tuesday Sings

As published in the CEO Refresher