Monthly Archives: April 2007

Promise-Based Management

Promise

 

Most of the vexing challenges leaders face – improperly executed strategy, lack of organizational agility, disengaged employees, and so on – stem from broken or poorly crafted commitments.  Executives can overcome some of their thorniest problems in the short term and foster productive, reliable workforces for the long term by practicing what we call ‘promise-based management’: cultivating and coordinating commitments in a systematic way.

 

I came across this article written by Sull and Spinosa, Promise-Based Management: The Essence of Execution, in the April edition of the HBR and was fascinated by its title.  As I read the article I began to reflect on my own personal experiences with the organizations that I have worked for, and with my own staff.  I agree that one of the quickest ways to take the wind out of a person’s sails is to break a commitment – especially one that was made publicly.  Most employees realize that in business, as in life, that change is one of the few constants.  With that said, it is hard to justify breaking a promise that was made without adequately considering the impact.  I am suggesting that there are those around us who are “serial committers” – they always say yes and rarely say no, even when they should.  These individuals become so engulfed by the shear number of commitments that they have made that it becomes impossible for them to execute on any of them, at least not effectively.

 

I found Sull and Spinosa’s five characteristics of good promises particularly interesting.  They define good promises as those that individuals are committed to keeping.  And point out that they are:

  1. Public – promises that are made, monitored, and completed in public are more binding.
  2. Active – negotiating a commitment should be an active, collaborative process.
  3. Voluntary – effective promises are not coerced.
  4. Explicit – requests must be clear from the start.
  5. Mission based – explanation of why the commitment matters.

In conclusion, it is time for us to retrain our staff, colleagues and senior executives that it is completely appropriate – if not valuable to the organization – to say no.  Or looking at it a different way, to put the commitment on hold until there is ample time to evaluate the entirety of what is being requested, and its impact on the organization.  It would provide us all with the requisite time to evaluate what the impact would be if the promise is not acted upon.

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Filed under Charles Spinosa, Corporate Culture, Donald N. Sull, Harvard Business Review, Management, Strategy

Vonage: Not Quite Dead Yet

vonage.gif

About a month ago – after a Federal court issued an injunction which prevented Vonage from signing up new customers during their appeals process – there were those in the media who were predicting the impending death of Vonage.  Well now after an Appeals court granted Vonage’s grant for an extended stay, it appears that they are not dead yet.

 

First let me point out that every individual or entity has the right to protect his or her IP.  Now let’s assume for the sake of argument that Verizon is accurate in their claims.  I find it hard to be sympathetic for a company that is (A) not able to successfully market the technology that they develop, (B) not actually interested in marketing a potentially less expensive technology to its consumers because it cannibalizes an existing cash cow, or (C) its organization is so terribly slow to react to market forces that they could not successfully introduce the technology that they developed before a competitor beat them to the punch.  It will be interesting to see how this appeal ultimately plays out.

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Filed under Appeal, Innovation, Intellectual Property, IP, Marketing, Verizon, Vonage

Ubuntu v7.04 – Fiesty Fawn

Ubuntu

Late last week, I decided to upgrade two of my PCs from Ubuntu’s v6.10 (Edgy Eft) to the beta release of v7.04 aka Fiesty Fawn.  Now while I have mentioned before that I have “tech-tendencies” but not nearly as tech savvy as many of you, I found the upgrade process to be extremely easy.  Better yet, as the OS was doing its thing, I was able to continue surfing the internet and do other work.  The entire upgrade process took about 40 minutes and to my surprise – given my experiences with other operating systems – everything was working as expected.  And now with almost a week under my belt, I have not experienced any issues with this beta release.  So far, I have to say that I am very impressed.  I like having the latest and greatest release, but normally in this situation you hope for the best, but expect the worse.  And so far (knock, knock, knock) all is great!

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Filed under Edgy Eft, Fiesty Fawn, Linux, OS, Technology, Ubuntu

Nasty People Drain Productivity in the Workplace

Nasty People

I recently re-read the Robert Sutton article entitled Nasty People.  This article, which helped lead the way to his recently published book The No Asshole Rule: Building a Civilized Workplace, discusses the impact that employees who create a hostile work environment have on others and the organization itself.  I immediately began to reflect on the various nasty people who I have worked with over the years.

I thought of two people in particular who didn’t know what a carrot is, but they have a mountain of sticks.  They need a mountain of sticks because they wear them out so quickly – figuratively bashing those that don’t do exactly what they want, when they want over the head.  More frustratingly they will often employ their clubs when they only have a small amount of facts, often clubbing an innocent person.  And once proven wrong, they can not muster the strength to say “I apologize,” instead they are out clubbing the next person.

 

By clubbing I am referring to the nasty, accusatory and public emails (conference calls and face-to-face meetings) that a large number of us have had the displeasure to witness (or experience).  You know the type – the one that has nearly every member of the organization on copy – and it serves to public point the finger at an individual(s).  More often than not, its purpose is to cover the butt of the person sending it.  This is because they are admitting that, while the subject of the email is near and dear to them, they couldn’t manage to stay engaged in the project to help keep it on track.  But they will now cast blame, after the fact, where they believe it should lie.  Go back and re-read these emails, as a key stakeholder do they accept any responsibility?  I am willing to bet that in 98% of the cases the answer is NO.

 

What these individuals don’t seem to understand is that this behavior does not accomplish what they hope.  My belief is that they feel that by publicly chastising people, it will motivate that employee to work harder the next time.  While I am not a Psychologist, I have to believe that this actually de-motivates people as well as it creates bitterness and resentment.  As Professor Sutton points out, it can often lead towards the escalation of this nasty behavior as people begin to lob verbal hand grenades at each other.  I would also argue that as a result of these behavior productivity decreases, which is exactly the opposite effect that the “club” holder would argue they were trying to accomplish.

 

If there was no management intervention following a “clubbing” the employees learn that they need to “CYA” from this point forward.  So they begin to document every step and wait for countless approvals and signoffs before they move forward.  Projects begin to take much longer than they could or should, often because the employees are covering their butts by documenting where the problem has probably always existed – with the person(s) doing the clubbing.  The net effect is that the mood of the group drops and so does productivity.

 

I disagree completely with publicly embarrassing a colleague and those that do it should be disciplined.  And when it is done with a lack of evidence the penalty should be more severe – up to and including termination.  People who are too busy to pick up the phone, or visit with a colleague that they “believe” missed the target, in order to gather data and possibly council them (if necessary) are too busy to continue to work for the organization.

 

Because of the nature of business, we ask employees to deal with a lot – from 50+ hour work weeks, nearly 7 day work weeks, and on and on.  We should not hire or tolerate nasty employees who make work life even more difficult.  And when you consider the price of unproductive behavior and possibly future legal activity, they can produce a very tangible negative financial impact on the organization.

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Filed under Corporate Culture, Ethics, Harvard Business Review, HR, Leadership, Nasty People, Productivity, Rant, Robert Sutton, The No Asshole Rule

Executive Compensation

Executive Pay

 

Everywhere that we look we see articles, reports and blog postings about excessive executive pay.  Now, I admit that I am a bit conflicted.  I do not consider myself a greedy person, but I do believe that I am willing to accept as much as someone is willing to pay me for my absolute best efforts.  But, when you see some of the examples of executive pay over the last few years – some have gone past fair compensation to pure greed.

 

One such example is Occidental Petroleum Corp. CEO Ray Irani who, according to the LA Times, received $460 million in total compensation in 2006.  But the all-time “best” was William McGuire, CEO of UnitedHealth Group who in 2006 earned $1.6 Billion.  Luckily only $333 million of the compensation was tied up in a stock options backdating scandal that may land him in jail.

 

“From 1992 to 2005, the average CEO saw his or her pay rise by 186.2%, while the median worker saw wages rise by 7.2%.” (2007, PBS.org)  According to Anderson et al. in “Executive Excess 2006,” for every $1 earned by the average worker, a CEO earns $411.  No single employee is valuable enough to command such a wide disparity in pay.  No one will argue that a CEOs job isn’t stressful and we recognize that if is nearly a 24×7 position.  But a CEOs base salary and bonus make up for the nature of the position.

Ratio Executive Pay

 

So while the chief executive has a base salary that is significantly larger than the average employee – understandably so.  What is inexcusable is when an executive breaks the law in order to line their own pockets.  “Fourteen percent of option grants to top executives between 1996 and 2005 were ‘backdated or otherwise manipulated.’” (2007, PBS.org)

 

The largest gap in executive pay is when we focus on the industry that has seen the largest jump in the price of its products – energy.  “CEOs of the top 15
U.S. oil companies are paid 281 percent that of the average CEO in a comparably sized businesses. The top 15
U.S. oil CEOs received an average of $32.7 million in 2005 compared to an average of $11.6 million for CEOs operating in a similar market size.” (2007,
PBS.org)  The poor oil companies are seeing the costs of crude oil go up, while their profits and executive compensation both go through the roof.  How will they manage to survive?

 

When you consider that they executive compensation committee is made up of senior executives or CEOs of other companies, is it any wonder that they approve these incredible pay packages for their “buddies?”  Imagine if there were caps on executive pay and these additional profits were either returned to the shareholders in additional dividends and/or reinvested back in the business – instead of lining one person’s pockets.

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Filed under CEO, CEO Salary, Ethics, Executive Excess, Executive Pay, LA Times, Occidental petroleum, Options backdating, PBS, Ray Irani, United Health Group, William McGuire

Perfecting product launches

HBR

 

The April 2007 edition of the Harvard Business Review contained the article “Preparing for the perfect product launch” by James P. Hackett, President and CEO of Steelcase.  Hackett does a wonderful job of explaining the troubles that many organizations face when developing and launching new products and services – failing to adequately think out and plan their strategies.  He points out that in one of his organization’s less successful product launches, that their “concept was a breakthrough, but the development process” broke down.  He attributes this in large part to the fact that they did not fully think through and test the entire process – every one was focused on “doing” and had not rigorously scouted out “the territory before we sprinted down the execution path.”

 

This is very common in most organizations.  We often notice a trend or base our opinions on a finite number of facts and – in our goal to introduce a new product to the market first – we mobilize resources to develop and launch that new product.  While not realizing, until it is too late, that our facts were flawed, because we did not do the proper due diligence in advance.  Often we subjectively find facts that support our business plans, rather than letting the facts determine what the correct decision should be.

 

Employing complexity theory and critical thinking skills, Hackett developed the following four phase process for new product development that he and his team implemented at Steelchase:

1.      Think – deeply consider the problem or opportunity

a.       Have every member of the team consider the problem independently.

b.      Ask the correct questions about the problem. 

c.       Divide the topic among the team members, read and research as much as possible. 

d.      Employ your team’s network to talk to the smartest people that you know about this topic. 

e.       Document all of your discoveries.

2.      Set the point of view – Develop a specific approach to the problem

a.       Have the team collegially and open-mindedly discuss all of the options generated.

b.      As a team, define the mission and what constitutes success

c.       Assign a member of the team to “own the point of view.”

d.      Once the point of view is set, stay the course.

3.      Plan implementation – develop the launch strategy and test it

a.       Make sure that the mission is understandable to non-team members.

b.      Determine the role that stakeholders will play in the implementation.

c.       Practice the plan so implementation runs smoothly.

4.      Implement – they implement the strategy

a.       Elect a spokesperson to be the voice of the company.

b.      Stay true to your measures of success.

c.       Give credit liberally and where it is due.

 

Now I can all ready hear most people saying that they do this currently.  It is important to point out that in this process, Steelchase does not cut corners, they provide employees with the time to fully think out and research new ideas.  They fully engulf themselves in any and all data available on the issue.  Once they are done with the thinking phase, then they move on to develop their solution to the problem.  Another key difference is that Steelcase has made this part of their company’s culture.  Hackett feels so passionately about this process that he personally teaches it to his employees.  He believes that it is more effective coming from him than a trainer or consultant that he could hire.

As busy as we all are it is much too easy to “go-go-go” and “do-do-do.”  It is much more difficult to stop, and consider all of the facts.  Test out your theories.  Create your plan and practice it.  And then implement your plan.  This is an enormous culture shift to the “reactionaries” who love to shoot from the hip.  But the long-term benefits to the organization are tremendous.

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Filed under Business Plans, Corporate Culture, Harvard Business Review, Innovation, Marketing, Product Development, Product Launch, Product Management, Steelchase, Strategy