3 - Leadership Archives - Page 17 of 19

Managing in a Downturn: The Good News

October 28, 2009 by Matt Perman

Post 2 in the series: Managing in a Downturn

Here’s the good news about recessions:

Recessions are famous for breaking companies. But what few people realize is that recessions are in fact more likely to make a company’s reputation.
A recent study by Bain & Company found that twice as many companies made the leap from laggards to leaders during the last recession as during surrounding periods of economic calm.[1]

So recessions are an opportunity. This doesn’t make them any easier, of course. And part of the opportunity lies precisely in the fact that they “shuffle the deck more than boom times do.” Thus, the study also indicated that more than a fifth of all leadership companies–those in the top 25% of their industry–fell to the bottom 25%.

So there is a big risk of falling in a recession. But it is through this that they provide the opportunity to advance and improve. The article continues:

These findings show that recessions are not so much “slowdowns” as they are intense crucibles of opportunity. Why is this so? Good times can cushion the hard truths of company performance, whereas tough times reveal true strengths and weaknesses.
Then, too, the number of strategic opportunities to make deals or to take advantage of weaker players increases during a recession. Many companies either hunker down or stray outside their core business in a desperate bid for growth, creating openings for companies willing to pursue thoughtful and balanced recession strategies. Judging from the experiences of the best performers of the last recession, the key is to stay focused.

So good times can cushion things, but hard times can reveal true strengths and weaknesses.

This means that a challenging economic environment is not ultimately about the factors beyond your control, but is actually about what is in your control — the nature of your company.

Thus, whatever has happened in your organization, the only way to advance through a recession (or turn things around if you’ve gone backwards) and seize the opportunity is to resist the temptation to blame external factors.

That can be hard to do, because conditions in a recession (and this one especially) are very tough.

But I am reminded of the point that Jim Collins makes at the end of Good to Great and the Social Sectors. He mentions that many people in the social sectors can “obsess on systemic constraints.” But, he points out in response, “every institution has a unique set of irrational and difficult constraints, yet some make the leap while others facing the same environmental challenges do not.”

In the for-profit world, for example, the company that generated the greatest return to investors on a dollar-for-dollar basis of all publicly traded companies from 1972 to 2002 was in the airline industry. It was Southwest Airlines.

“You cannot imagine a worse industry than airlines over this 30-year period,” notes Collins. The industry endured “fuel shocks, deregulation, brutal competition, labor strife, 9/11, huge fixed costs, bankruptcy after bankruptcy after bankruptcy.” Yet Southwest Airlines came out number one of all companies in all industries.

The point is: you cannot blame circumstances, as hard as they are. Great companies are able to succeed despite a challenging environment. One reason is that they live out “the Stockdale Paradox.” The Stockdale Paradox means that “you must retain the faith that you can prevail to greatness in the end, while retaining the discipline to confront the brutal facts of your current reality.”

This applies at all times and it applies in this current recession. Do not blame circumstances, as hard as they are. Own the difficulties and take responsibility to do what you can to “create a pocket of greatness, despite the brutal facts of your environment.”

For, as Collins points out at the end of the monograph, the most important point in all of his research for Good to Great was this:

Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious choice, and discipline.

Notes

1. “Taking Advantage in a Downturn,” by Sarabjit Singh Bevaja, Steve Ellis, and Darrell Rigby in Executing Strategy for Business Results, published by Harvard Business School Press.

Posts in This Series
Managing in a Downturn: An Introduction
Managing in a Downturn: The Good News
Managing in a Downturn: Don’t Retreat
Managing in a Downturn: Don’t Overreact
Managing in a Downturn: Be Careful of Cost-Cutting Campaigns
Managing in a Downturn: Keep Making Meaning
Managing in a Downturn: It’s Time to Hire

Managing in a Downturn: An Introduction

October 27, 2009 by Matt Perman

Post 1 in the series: Managing in a Downturn

Posts in This Series
Managing in a Downturn: An Introduction
Managing in a Downturn: The Good News
Managing in a Downturn: Don’t Retreat
Managing in a Downturn: Don’t Overreact
Managing in a Downturn: Be Careful of Cost-Cutting Campaigns
Managing in a Downturn: Keep Making Meaning
Managing in a Downturn: It’s Time to Hire

This week we are going to do a series on managing in a downturn.

This leads us to two questions right away. First, why now? Isn’t the recession just about over? And second, if I’m not a manager, how does this relate to me?

Why Now?

Why do this series now, when it looks like the recession may be nearing its end?

First, the recession might not be over. Second, even if the economic contraction is over, it may be the case (especially if government policy doesn’t change) that an actual recovery could be a decent way off. So even if the downturn ends soon, there may be much managing in a down economy left to do.

Third, looking at how to manage in a downturn provides good lessons about management in general. The lessons you learn in a downturn are still relevant in ordinary times. Fourth, these lessons will be useful for future recessions, although after this one I don’t relish the thought that there are more to come down the road.

Why This is Relevant to Everyone

This series is relevant to everyone, even if you are not in senior leadership, because productivity isn’t just about how to be more personally productive, but also about how to be more productive as a society. Society as a whole is better off when everyone, not just senior executives, understands the things that make organizations effective.

It is also relevant in many other specific ways to people at all levels in an organization.

If you are a manager, it is relevant because you can apply these things as much as possible in your specific area. And it can hopefully give you a grid for understanding what the overall leadership of your organization is doing or is not doing. This, in turn, can help you contribute ideas and prepare for the next level of leadership.

If you are an individual contributor, it is relevant because you can fulfill your role more effectively when you understand the big picture in more detail. Further, the decisions made by the leadership in your organization affect you, so it will only be to your advantage to develop and refine your point of view on the matter more fully.

Last of all, this series is relevant even for those who are not employed by organizations, such as stay-at-home-moms, because all of society is better off when everyone, not just the specific people at the helm of an organization, understand the principles of management.

The more people throughout society who understand organizational management, the better.

Incentives: Irresistible, Effective, and Likely to Backfire

October 26, 2009 by Matt Perman

A good article by Chip and Dan Heath on incentives. Here’s the first paragraph:

Ken O’Brien was an NFL quarterback in the 1980s and 1990s. Early in his career, he threw a lot of interceptions, so one clever team lawyer wrote a clause into O’Brien’s contract penalizing him for each one he threw. The incentive worked as intended: His interceptions plummeted. But that’s because he stopped throwing the ball.

(And for a bonus, you’ll also learn why the really cold upper-Midwestern winters don’t make the people here less happy overall.)

The Universal Requirements for a Visionary Company

October 1, 2009 by Matt Perman

From Jim Collins’ Built to Last: Successful Habits of Visionary Companies:

A company must have a core ideology [core purpose plus core values] to become a visionary company. It must also have an unrelenting drive for progress. And finally, it must be well designed as an organization to preserve the core and stimulate progress, with all the key pieces working in alignment.
These are universal requirements for visionary companies. They distinguished visionary companies a hundred years ago. They distinguish visionary companies today. And they will distinguish visionary companies int he twenty-first century.
However, the specific methods visionary companies use to preserve the core and stimulate progress will undoubtedly change and improve. BHAGs [huge, audacious goals], cult-like cultures, evolution through experimentation, home-grown management, and continuous self-improvement — these are all proven methods of preserving the core and stimulating progress. But they are not the only effective methods that can be invented.
Companies will invent new methods to complement these time-tested ones. The visionary companies of tomorrow are already out there today experimenting with new and better methods. They’re undoubtedly already doing things that their competitors might find odd or unusual, but that will someday become common practice.
And that’s exactly what you should be doing in the corporations [and organizations] you work with — that is, if you want them to enter the elite league of visionary companies. It doesn’t matter whether you are an entrepreneur, manager, CEO, board member, or consultant. You should be working to implement as many methods as you can think of to preserve a cherished core ideology that guides and inspires people at all levels. And you should be working to create mechanisms that create dissatisfaction with the status quo and stimulate change, improvement, innovation, and renewal — mechanisms, in short, that infect people with the spirit of progress…. Use the proven methods and create new methods. Do both.

Avoid the Gray Twilight

September 23, 2009 by Matt Perman

From Theodore Roosevelt (quoted in Built to Last):

Far better to dare mighty things, to win glorious triumphs, even though checkered by failure, than to take rank with those poor spirits who neither enjoy much nor suffer much, because they live in the gray twilight that knows not victory, not defeat.

What is a Great Organization?

September 23, 2009 by Matt Perman

Jim Collins gives a very helpful, succinct, and profound definition of a great organization in Good to Great and the Social Sectors:

A great organization is one that delivers superior performance and makes a distinctive impact over a long period of time.

So there are three characteristics of a great organization. They are:

Superior performance
Distinctive impact
Lasting endurance

I think we ought to aim to build great organizations, and so it is helpful to have a good outline of what that means. It’s not enough to just say “we should seek to make our organizations great.” We need to know what that means. This is a good start.

Having this before us, though, also leads to more questions — such as “Why should you try to build something great?” and “How do you assess how your organization is doing on these qualities, especially when they are hard to measure?” I’ll address these questions in upcoming posts.

On Eliminating Artificial Motivation

September 17, 2009 by Matt Perman

I’m jumping into the middle of a story here from Good to Great (p. 206), but I think you’ll get the point. This has far-reaching implications for many things (including — and perhaps especially — churches):

Of equal importance is what they don’t waste energy on. For example, when the head coach took over the [cross country] program, she found herself burdened with expectations to do “fun programs” and “rah-rah stuff” to motivate the kids and keep them interested — parties, and special trips, and shopping adventures to Nike outlets, and inspirational speeches.
She quickly put an end to nearly all that distracting (and time consuming) activity.
“Look,” she said,”this program will be built on the idea that running is fun, racing is fun, improving is fun, and winning is fun. If you’re not passionate about what we do here, then go find something else to do.”
The result: The number of kids in the program nearly tripled in five years, from thirty to eighty-two.

The Laugh is on the Valet

September 4, 2009 by Matt Perman

From Peter Drucker’s The Effective Executive:

There are indeed no great men to their valets. But the laugh is on the valet. He sees, inevitably, all the traits that are not relevant, all the traits that have nothing to do with the specific task for which a man has been called on the stage of history.

The Surprising Science of Motivation

August 28, 2009 by Matt Perman

A friend emailed me the link to this talk and said that it was definitely worth the 18 minute investment of time. He was right.

I highly recommend this TED talk by Dan Pink. Here’s the key point: “There is a mismatch between what science knows and what business does” when it comes to human motivation.

And it is very interesting that, as he touches on at the end, the science of motivation naturally demonstrates the value of some of the more significant emerging workplace practices, such as a results-only-work-environment and 20% time.

(Although I acknowledge that 20% time isn’t necessarily new — it was practiced at 3M more than 50 years ago. Come to think of it, ROWE was also the basic operation of many people before the rise of the modern organization and the concept of an employee — a relatively recent occurrence. It is interesting how what is “new” is often actually “old.”)

(Final note: By pointing out the relatively recent occurrence of the concept of an employee, I am not implying that I think it is a bad concept. I do, however, think that many of the primary early practices for managing employees, which focused on control, were wrong-headed and we are still seeing their effects today. Employees deserve autonomy, not tight controls, and this leads to better results for organizations as well. This will be an interesting course of discussion for future blog posts.)

John Piper on Spiritual Leadership

August 25, 2009 by Matt Perman

John Piper has a very helpful but often overlooked article from 1995 called The Marks of a Spiritual Leader. I highly recommend it. Here are three things that stand out from the article.

First, Piper gives a very helpful definition of spiritual leadership, which differs in some ways from leadership in general:

I define spiritual leadership as knowing where God wants people to be and taking the initiative to use God’s methods to get them there in reliance on God’s power. The answer to where God wants people to be is in a spiritual condition and in a lifestyle that display his glory and honor his name. Therefore, the goal of spiritual leadership is that people come to know God and to glorify him in all that they do. Spiritual leadership is aimed not so much at directing people as it is at changing people. If we would be the kind of leaders we ought to be, we must make it our aim to develop persons rather than dictate plans. You can get people to do what you want, but if they don’t change in their heart you have not led them spiritually. You have not taken them to where God wants them to be.

Second, Piper spends the rest of the paper outlining the characteristics a person must have in order to be a spiritual leader “who excels both in the quality of his direction and the numbers of people who follow him.” He divides these characteristics into an inner circle and an outer circle:

The inner circle of spiritual leadership is that sequence of events in the human soul that must happen if anyone is to get to first base in spiritual leadership. These are the absolute bare essentials. They are things that all Christians must attain in some degree, and when they are attained with high fervor and deep conviction they very often lead one into strong leadership. In the outer circle are qualities that characterize both spiritual and non-spiritual leaders.

Third, and among other things, Piper has a great discussion of the outer circle characteristics. Below is the list of characteristics he discusses. I especially love the emphasis on optimism, energy, hard thinking, dreaming, and decisiveness.