Category Archives: Harvard Business Review

Does short-term management pay?

Natalie Mizik and Robert Jacobson wrote an article entitled, The cost of myopic management for the July/August edition of the Harvard Business Review in which they explored the costs paid by the organization (and ultimately investors) when they become too focused on short-term revenue targets and begin inflating their earning by cutting expenditures. During their study executives would cut discretionary spending, which often included R&D, in favor of more impressive looking earnings. Mizik & Jacobson tracked over 400 companies and found that those firms that practiced “myopic management” would often have very impressive returns in the short-term, but long-term performed miserably. In order to begin to correct this behavior, firms need to begin to penalize executives for losses, not just reward them for gains. In addition, a portion of their compensation package should be tied to tenure, long-term growth and brand strength. Once an executive’s compensation is tied to long-term goals and objectives the myopic behavior will change as well.

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Filed under CEO, CEO Pay, CEO Salary, Executive Pay, Harvard Business Review, Leadership, Management, Natalie Mizik, Robert Jacobson

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

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

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

Do companies need a second in command?

Second in Command  Recently I read an article written by Nathan Bennett and Stephen Miles which was published in the May 2006 issue of Harvard Business Review entitled, “Second in Command” which discusses the relationship between CEOs and COOs.  The authors point out that no two COOs have the same job description – not even two that have been employed by the same organization.  This, they argue, is a result of the fact that position is determined largely by the needs (and strengths and weaknesses) of the CEO.  They quote statistics that show the gradual decline in the number of COOs who are currently employed.  More interestingly they point out that 17% of COOs, who are promoted to CEO, elect not to hire a replacement COO.  I am surprised by this statistic, because I would imagine that a former COO would understand the benefit that a COO brings to an organization.

 

Many would agree that, among many other things, the CEO needs to be focused on the long-term direction and strategy of the organization.  The COO should be focused on the day-to-day operations of the business and implementing the CEOs vision.  A mistake that some organizations make is by having a CEO who is too tactically focused.  If we view those companies over a 5, 10 or 15 year period, I am willing to bet that those organizations – with tactically focused CEOs (and no COO) – will be much less successful than those with a CEO and COO.

Companies do need a second in command.  The CEO can not effectively be both strategically and tactically focused.  They need a trusted employee to focus their attention on the daily operations of the business and on executing on the CEOs strategy.

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Filed under CEO, COO, Harvard Business Review, Leadership, Nathan Bennett, Stephen Miles, Strategy, Uncategorized