Dispatches from the New World of Work

Where's the WOW?

Remember that television commercial that asked "Where's the Beef?" Last week, I read a great article from the Gallup Management Journal about Toyota Financial Services and their transformation. One question that came to me was "Where's the WOW?"

In the midst of change, at the very core, is a little thing called "talent." Leaders can have great ideas and great visions, but the only way that change is effected is through people. Toyota Financial Services had a grand idea of moving beyond car loans for its Lexus and Toyota dealerships. Why not offer branded credit cards, and other loans? Toyota was looking to increase their brand loyalty. They understood that it would require transformation in many areas of the organization.

When we think about change, we have to start with talent. But we must look at the architecture (systems and structures), and what's our goal (ambition). This is the area that Toyota had to reassess: What was the ambition of the company and how could they connect that to the talent.

Toyota had to discover how to get energy and momentum going in this transformation and, most importantly, how to engage the talent. They asked the question that I have asked many of my clients, "Where is the WOW?" What was going to get the attention of the talent, and what was in it for them? How was this initiative for Toyota going to be different from others, and how would their financial services be unique and special amidst the services from others?

WOW happens when you ask the question, put "fresh eyes" on the project, get closer to your stakeholders, and do not accept excuses that lead to mediocrity. How many times have organizations missed this important question, "Where is the WOW?" In other words, why should anyone, the talent, the customer, and other key stakeholders care about this initiative?

Ambition and Productivity

Last week the Associated Press reported that "Worker productivity, the key factor in rising living standards, slowed sharply in the final three months of the year while wage pressures increased." This drop in productivity coupled with the news that the service sector shrank for the first time in five years has many economists talking about how big the impending recession will be rather than debating whether one will occur.

At tpc we have long advocated enabling IT efforts and structures to increase organizational productivity. Many of you are familiar with Tom's rants on the white collar revolution and the advent of white collar robots. We also believe there is another, powerful mechanism for improving productivity. People will become more productive when they want to become more productive! And they want to when their output is moving the organization closer to a compelling shared purpose, vision, or what we call "Ambition" in our Future Shape of the Winner model.

Many of us have probably known someone in the workforce who was going through the motions, fulfilling their job duties with no particular zeal, and sometimes even beginning their retirement while they were still on the payroll. And yet this same person may be a hardworking volunteer for a charitable organization they believe in. The difference is having a purpose that has real meaning. Being part of something that really matters! And improving the return for investors (although the lifeblood of a successful business) is not compelling enough to pull out that voluntary discretionary effort we all have available. It has to be a statement of the common cause for the common good.

That is why we advise our clients to start with ambition. Who do we intend to be and what part might the individual members play? Why does it matter? When it is important, it becomes a "want to" driver, rather than the "have to" necessities of my job. And the work we perform when we want to is always more productive than the work we do because we have to.

What do you think? Agree or disagree that it's the place to start in your strategic plan? Can that raise productivity? Do you have any ideas for building passion through purpose?

It's Good to Talk!

There has been a lot of talk on this blog lately about how an organisation's structure and infrastructure (which, in Future Shape of the Winner™ parlance, we call its Architecture) can affect the ability of its people to innovate, or even just to get things done. For many of our clients there is a limit to what they can do to change organisation structure or infrastructure, and yet, if they want to release the potential of their people, we believe there has to be a way around this dilemma.

So, it was with great delight I read a recent study done by Google, that has uncovered some fascinating insights into how information flows around their organisation. Google has been able to correlate information flow amongst their employees with a whole variety of factors; a person's department, their membership on email lists, projects they had worked on, friends, where they went to college, etc., etc. ...

What they have discovered is that by far the most significant influence on who knows what is their physical location at work. Their study has found that social and professional proximity matters very little, whereas people who sit near each other in the office tend to know the same things.

Over the years, I have seen a number of situations in which my client, apparently restricted by organisation charts and structures, has simply decided to sit people together who ought to collaborate, without changing any reporting relationships. Particularly when there is a customer service dimension to the work, the natural outcome of such a relocation is that everyone settles into a pattern of sharing that has a significantly positive effect on the work.

The study findings were rather surprising to me in today's world of multiple virtual connections. And yet one conclusion is rather depressing–if you really want to influence a person's behaviour, must you live in their world? So, what can we do in our dispersed organisations? Are we doomed? How are organisations that you know well overcoming the problems of distance in getting their messages out there?

Annual Opportunity

I happened to hang out with a lot of financial advisors this week. At two different times I found myself in conversations where advisors were talking about their strategies for conducting annual review/planning meetings with clients whose investments they manage. I was struck by the contrast:

1. The first firm was genuinely interested in using the annual review/planning meeting as a chance to build their relationship with their client. We discussed how to make the meeting a relationship-building encounter, as opposed to a rote, obligatory, perfunctory process.

2. The second firm described their standard process for an annual meeting, in which an annual plan update is produced in such a way that the advisor can easily sell additional products to their client at the meeting.

All else being equal, which strategy, do you think, is more likely to generate the most revenue over time?

We Have Met the Enemy ...

There are other coffee chains. And damn fine independents. The coffee is good at Dunkin' Donuts ... and McDonald's for that matter. (My next door neighbor will go to the mat defending DD.) Still, Starbucks is sailing in pretty blue ocean to this day. So why is its stock in the tank, why did founder Howard Schultz decide last week to can the CEO and re-take the job himself?

Simple, as I see it. There is an Enemy of inestimable power—moreover, power growing by the day. Incidentally, the same Remorseless Enemy that brought McDonald's to the brink a decade ago. Namely, itself-themselves.

I "like," in a fashion, "the Starbucks case." The company does not have an external enemy worth talking about, or to blame the decline on. And its stock is surging South. Ergo, its enemy must, necessarily, be Starbucks. And if a company that is unchallenged in conventional terms is in a pickle, that bodes poorly for all of us. In fact, it's downright scary.

You see, I think most "strategic analysis," indeed most "strategic thinking," is specious. (Specious being a synonym for "baloney.") Consider GE's troubles before Jack Welch. IBM's pre Lou Gerstner. Microsoft's current troubles—or at least loss of infallibility. Big Pharma's swan dive. Or, take the case of Home Depot, circa 2001.

Of course Home Depot was somewhat flummoxed by Lowe's as Bob Nardelli came aboard in December 2000. I'd judge, with unrealistic precision, that Lowe's was about 3% of HD's problem. Bob N, admittedly with a pronounced "GE bias" about Operational Excellence, was simply staggered by the lack of useful, fundamental systems and measures at a company that logged $50 billion in revenue. Bob made some boo-boos, big ones, and was given the boot. But he also made amazing progress in creating operating infrastructure—getting the company's innards in order in the aftermath of years of Starbucks-like growth. That is, Bob N confronted directly Home Depot's Enemy #1—not Lowe's, but Home Depot.

Yes, to use the oft repeated Walt Kelly quote (from his comic strip, Pogo): "We have met the enemy and he is us." "Innovation" is the business topic du jour. Of course, it's really the "topic du always"—even for 5-year old companies that started with a bang, and took advantage of said bang to undertake expansion. Or, for that matter, those choosing not to expand and graying in place. To use an even more oft used quote by the ubiquitous whomever: "Get thine own house in order first, dude." That is, in, conservatively, eight out of ten cases, I'd judge after 35 years of close observation, it's not a surging competitor with a "disruptive" strategy that generates a star's tailspin, but the star's inherent entropic (remember Newton) drift, away from innovativeness and toward mediocrity; such companies, almost all companies, do not have to learn how to innovate ... they have to learn how to not not innovate. "Data drawn from the real world," said Norberto Odebrecht, founder of the remarkable Brazilian heavy construction giant, Odebrecht, "attest to a fact that is beyond our control: Everything in existence tends to deteriorate." It's the molding innards, not the lousy strategy or uppity competitor, that cause most of, if not all of, the decline. And addressing said molding innards must, simply must, be the new or extant CEO's Job #1. (Or, more accurately, Job # 1, #2, #3, #4 ... at least. Make no mistake—that was Welch's script at GE. A ship sinking under the weight of its own morbid obesity was returned to fighting trim—GE learned to Execute, again, after years, decades, of accrued flab & barnacles.)

The purpose of this Post is not one more "Tom Rant" against "them"—the strategy uber alles clan, no matter how much they clearly need to be ranted against. Instead, it is a simple reminder ... to my professional self, as well as you and those bosses of bumbling giant pharmaceutical companies busy not discovering new drugs. Namely, your problem (my problem, their problem) lies near at hand. Don't necessarily change your strategy—why waste your energy? And don't worry excessively about "the vision thing"—why waste your energy? Worry instead about Execution and Operational Excellence. Worry about the plaque building up in your increasingly clogged arteries—and even capillaries. Worry about policy manuals laden with blubber and still super-sizing and inhaling Big Macs. Worry about not enough customer visits and too many meetings attended by too many people viewing too many PowerPoint presentations. Worry, worry passionately and continuously, about the internal, ever-thickening Walls of Steel that separate and alienate those who must, to succeed, work together. Worry about offices for executives that are bigger than they were 10 years ago—and employee turnover that has grown in tandem with executive office-size creep.

Starbucks' enemy is Starbucks. Tom Peters' enemy is Tom Peters. You and your department's enemy is you and your departmental mates. Make no mistake.

A Useless, But Necessary Rant!

Some things piss me off—a lot of things piss me off, in fact, as members of our Blog Community well know. But some things really piss me off. I was "pissed off" at James Kilts, former Gillette CEO, for getting almost $200 million for selling Gillette to Procter & Gamble for no particular reason. But that's a quibble. (Well, not really.) But I am horrified-outraged-sickened by the barfworthy $100 million plus that Countrywide CEO Angelo Mozilo is scheduled to pocket when the recently announced takeover by the Bank of America closes. Kilts' move was unnecessary in my book. But, in fact, P&G has done a good job with garnering fruits from the merger, and, in fact, a lot of people who more or less deserved it made some bucks from the merger. But Mozilo maliciously screwed customers by the 10s of thousands who didn't deserve to be screwed, no matter how much you may swear by "caveat emptor." (And I do swear by it in 9.642 cases out of 10.)

If no one can talk Mozilo into forgoing his separation check, maybe someone could talk him into at least sharing it with former Enron CEO Jeff Skilling, who surely didn't cause more harm than our friendly Countrywide founder. Some small poetic justice will be served when (not "if") the acquisition gives Bank of America a black eye; CEO Ken Lewis may be one helluva manager, but the odds of effectively melding the "aggressive" C-wide culture with the BofA culture are between slim and none, and thank God for that.

(I'm in Palm Beach, Florida, for a speech. As I left Reagan National Airport yesterday, I found in the DCA souvenirs shop the display of dolls depicted above and below—and I couldn't resist sharing.)

The "PSF" "Debate"

My colleague Madeleine McGrath, co-head of our UK firm, is a practicing devotee of the "PSF" idea—and more aware, than anyone else I know, of what, perversely, a hard sell it is. (I say "perversely," because the "PSF delivered-value concept" is, among other things, actually the only sound defense against the international outsourcing tsunami. Yes ... only.)

She offered this Comment to yesterday's Schlumberger post:

Tom's first publication on the subject of PSF (that I possess) is a Tom Peters Group Occasional Paper dated 1988, so, I can see why the idea could be described as "dated." However, my experience of working with Tom and helping our clients apply his ideas is that the lag between the idea being presented and its more general application can take many years. For heaven's sake, In Search of Excellence, now over 25 years old, still attracted a massive audience to hear Tom speak in London last October.

However, I think there is an important reason why the PSF thinking has been difficult to apply, aside from the unhelpful associations that Ben [Commenter] mentions. [PSF equated with overpaid, under-experienced MBA-consultants working for a Big 4 firm.] PSF requires a major mindset shift for many well established organisations in that it puts the "professional" at the centre of the organisation. What great PSFs know is that they must find the world's best professionals in their field, and then create a context for them where they can do their best work—in which case the practice benefits and they get great rewards. My experience is that this orientation goes against the much more scientific and rational approach to management that has become embedded in much western corporate thinking of the 80s and 90s. Becoming "talent centric" is not a quick or easy journey, and requires leaders who have ambition to be different.

I am convinced that the PSF orientation will be at the heart of the revolution that is undoubtedly taking place in organisations over the globe, and that its impact will eventually be as great as that of the production line thinking that dominated the organisation thinking of the 20th Century.

To try and reflect the much more expansive potential of PSF thinking, in Tom Peters Company, we describe the approach as the "Future Shape of the Winner."

The big question is, who is "up for" this massive shift in thinking? It's more often seen in start-up companies, particularly in the high-tech arena, where talent is so critical for success. But you might argue it is much easier for them as they have no status quo to disturb. What about existing organisations—can they change?? Examples like the one Tom has pointed to in Schlumberger seem the most promising approach for larger organisations—find a piece of the business that can be "PSF'd" and give them the scope to try to be different.

[TP note: I am 100% sold on the "PSF-ing" as the best-almost only way to add high value, à la IBM and Schlumberger, mentioned in yesterday's Post. Before being canned for other reasons, CEO Bob Nardelli was doing this at Home Depot—"PSF-ing" the "retailer" by creating turnkey client (contractor, homeowner) packaged services, such as economical employee healthcare programs and turnkey accounting services for his small-contractor customers—I'm convinced it would have been a big, "transforming" winner. Madeleine has more passion for this than I do—and the tenacity of a bulldog. But over my very noisy moral objections, she and her colleagues last year renamed our related service "Future Shape of the Winner," as she said in her Comment. That was solely because that in a decade she was rarely able to light a fire with the "PSF" fuel. I am convinced that the principal reason is what I call the "parasite axiom." As in, "Those accountants-consultants-lawyers-ad guys are parasites—they've never done a real day's work in their adult lives." That may or may not have once been true, but now it's downright silly. When it comes to "parasites" and "real people," the parasites have won out. We don't need the product of most of our work, except to keep us occupied. Basic food and shelter, the relentless pursuit of the species for millennia, perhaps occupy less than 5 percent of us in developed economies. The rest of us are at work on frivolous things—iPod design, software creation, accessories for Hummers, "home entertainment centers," fashion goods—and what isn't a fashion good these days including toilet-bowl mops and screwdrivers, courtesy Target et al. Brink Lindsey, in his superb book The Age of Abundance, argues persuasively that we are only a few scant decades beyond an economy geared to produce necessities. And the fact is that we are floored by the whole thing. Some primal instinct says that if I, Tom-male, am not out tossing spears, or at least working in Welsh mines or Pittsburgh's steel mills surrounded by the fires of Hell, well, I'm not a real guy. So the world of "soft" value-added, the economy based on "desk stuff," is still troublesome to us. No matter, Madeleine and I shall soldier on, me with my "PSF," she with her more commercially viable "Future Shape of the Winner." I sleep well, damn well—because in one of those veeeeery rare cases, I know I'm on the right track with this—and I am certain, yes, certain, that "The Schlumberger Solution" is the bedrock of our new economy for you and me and Schlumberger alike.]

"PSF-ing" a Memphis Specialty Chemical Company

I posted last month on the matchless value of erasing functional barriers. I posted yesterday on Schlumberger. And I had a New Year's dinner discussion with a fresh-caught CEO about adding value by bringing his new organization's full skills palette to bear on providing "turnkey customer solutions"—in a traditionally functionally oriented company where the techies (chemists, engineers) believe that they stand above the fetid commercial fray.

All this led me back to my bookshelf and Bob Buckman's wonderful Building a Knowledge-Driven Organization: Overcome Resistance to the Free Flow of Ideas. Turn Knowledge into New Products and Services. Move to a Knowledge-Based Strategy (McGraw Hill, 2004). Bob, an old pal, runs Buckman Labs, a half-billion dollar, Memphis-based specialty chemicals company. You might well roll your eyes at the overused "customer solutions" moniker—but Buckman does just that with panache and for profit, creating and applying chemical compounds in customized ways to deal with production and cleanup issues for specific customer facilities in the likes of the paper and leather-making industries. The devotion to custom "solutions" is the bedrock, the alpha to omega, of the firm's extraordinary new-product and financial record. Those closer to the intellectual fray than I am claim that Bob gets "inventor" rights in the now ubiquitous "knowledge management" arena (they have an alternate knowledge-nurture website!). In any event, this book is the Buckman Labs saga—particularly valuable because it moves so far beyond the relatively easy software-technology bit and emphasizes the way in which a company's culture must be jerked around 180-degrees to pull off this new approach to creating value.

One more tribute to destroying organizational barriers.

One more tribute to "PSF-ing," and thus wholly re-imagining, an entire enterprise.

Create the "Perfect Storm" PSF/Professional Service Firm!

Rule the World!

He was perhaps the most independent, self-assured person I'd met—certainly the most independent-minded under 30. He worked for me for several months during my McKinsey days, on a distribution project for Frito-Lay in Dallas. I'd worked with a lot of very smart guys, but he was somehow different, though I couldn't at first put my finger on the how. Over dinners together, talk would sometimes turn to our backgrounds. We both had pretty similar, not particularly scintillating origins; and we'd both ended up in engineering school, he mechanical, me civil. But our paths then diverged. The U.S. Navy paid my way through school, and I returned the favor with four years' service. He had gone to work, at world's end and virtually alone, as a young—and remarkably independent and accountable—field engineer at Schlumberger, the French-based, lean-mean-autonomous-R&D driven oilfield services firm. I continued to follow the company, through some ups and downs, for the next 25 years. It surfaced again, with a bang, this week.

This week's BusinessWeek cover story (0114.08) informs us that Schlumberger may well take over the world: "THE GIANT STALKING BIG OIL: How Schlumberger Is Rewriting the Rules of the Energy Game." In short, Schlumberger knows how to create and run oilfields, anywhere, from drilling to fullscale production to distribution. And the nugget is still those hardcore, small, technically accomplished teams. As China and Russia, among others, make their move in energy, state-run companies are eclipsing the major independents. (China's state oil company just surpassed Exxon in market value.) At the center of it all, abetting these new players who are edging out the Exxons and BPs, the Kings of Large-scale, Long-term Project Management wear Schlumberger overalls. (The pictures in the article from Siberia, alone, are worth the cover price.)

At the center of the center of the Schlumberger "empire" is a relatively newly configured outfit, reminiscent of IBM's Global Services and UPS's integrated logistics' experts and even Best Buy's now ubiquitous "Geek Squads." The Schlumberger version is simply called IPM, for Integrated Project Management. It lives in a nondescript building near Gatwick Airport, and its chief says it will do "just about anything an oilfield owner would want, from drilling to production"—that is, as BusinessWeek put it, "[IPM] strays from [Schlumberger's] traditional role as a service provider* and moves deeper into areas once dominated by the majors." (*My old pal was solo on remote offshore platforms interpreting geophysical logs and the like.)

As I see it, and you doubtless know my longterm, noisy bias toward the "PSF-as-center-of-value-added" (PSF = Professional Service Firm), Schlumberger is transforming itself into the biggest and most powerful "PSF" in history. Moreover, paths like this, from IBM and UPS and Best-Buy to Schlumberger, are open to many firms—and provide, to use the term du jour, "blue ocean" of unimaginable breadth and depth.

All I ask is "think about it." If your imagination is fertile enough, there may be a space for you—tiny or large, local or global outfit—in a game like this.

So: Think about it.

(By the by, last year Schlumberger, growing at 25% per year, netted $7 billion on $23 billion in revenue. Its market cap is $120 billion—and it's by far outstripped its traditional rival, Halliburton.)

(Above you'll see my April 2006 picture—as my Air Siberia flight approached Novosibirsk in central Siberia.)

Don't Know Where You're Going? So What?

Get Going Anyway! Now!

When you decide to move, no matter where, no matter how wise, you more or less (mostly "more") force "the other guy" (army, opposing team, business competitor) to react. And those who watch or participate in, say, football know—running backwards and reacting is as tough an act as there is.

General U.S. Grant was the master of this. "Keep moving, somewhere, anywhere, but keep moving" was his de facto-de jure "strategy." As long as he was on the move the other general was in a constant reactionary mode of operations. ("What the hell is Grant up to now?") This strategy applied with legendary relentlessness led Grant to victory after victory—and won the Civil War for the Yankees. (Since there's no such thing as a free lunch, it's worth noting that one of Grant's few weaknesses was building defensive fortifications.)

I thought about all this while examining the results of this year's Gator Bowl. Texas Tech's Red Raiders are in the second tier when it comes to the likes of recruiting might, yet once again they had a great season, ending with a Gator Bowl win against the favored and nationally ranked Virginia Cavaliers.

Texas Tech is football's #1 proponent of "just keep moving"—and let the other guy react. Their basic offensive "strategy" is "everybody who legally can run like hell down the field and we'll throw the ball toward one of you." Against UVA the result was an unexpected 31-28 victory.

Virginia's quarterback, Jameel Sewell, passed 28 times, and garnered 17 completions—an average set of numbers per normal offensive practice. (For the year, Mr Sewell completed 162 of 270 passes—again, about normal.) On the other side of the line at the Gator Bowl, Red Raiders quarterback Graham Harrell threw the ball an astounding 69 times—and picked up 44 completions; for the year, which included one 75-7 victory, Mr Harrell had 512 completions from 713 attempts. (Those who are not fans of American football will have to take my word for it that statistics like this, to the normal follower of the sport, are truly "dumbfounding"—at the least.)

Air Force Colonel John Boyd re-wrote the modern military strategy book with an idea called "O.O.D.A. Loops." O.O.D.A. stands for: Observe. Orient. Decide. Act. Whoever has the shortest OODA cycle tends to win—mostly by confusing the enemy, who is forced into a permanently reactionary mode of action. In aerial warfare, the opponents of those with the quickest OODA loop-cycle tend to die not shot down, but by crashing courtesy disorientation caused by overreacting to the lightening fast twists and turns of the "keep on moving" pilot.

We have, I am aware, but a small number of fighter pilots in our Blogging community at tompeters.com—and a large # of you who couldn't care less about this year's Gator Bowl, hard as that is for me to fathom. For you, as well as those of us blessed with a love of the smell of pigskin, my bottom line is quite simple: Instead of spending the first weeks of the New Year reviewing plans for the days ahead, hustle the hell out onto the field and visit a passel of customers, give the green light to a slew of half-baked prototype tests, say "yes" to damn near any proposal that crosses your desk. (Why not, in fact, a green light, permanently lit, on your office door or desk?) Message: Just start chuggin'! We want the "other guys" to be immediately forced to run backwards—and as the title of the Post says, don't worry much about what you're doing, just get doing. (E.g., Have you made those 50 calls I ordered on New Year's Eve? I'll generously give you a week of grace—but I will not tolerate your attendance at a bunch of planning meetings. Period.)

Size Does Matter!
Small Rules!

Size matters!
Small rules!

** "For Nations, Small Is Beautiful," reads the headline of a Financial Times article (12.04.07) by Gideon Rachman. Mr Rachman begins as follows: "Europe seems intent on slicing itself up into ever smaller pieces. ... Kosovo is likely to declare independence—making it the seventh new country to emerge from the wreckage of Yugoslavia. The Soviet Union has given way to 15 new states. Even in Western Europe, there is talk of Belgium dividing in two, while a pro-independence party has taken power in Scotland. People tend to treat countries that split up a bit like married couples. It is a sad event. ... But if the formation of new countries can be achieved peacefully, it is usually a cause for celebration. This is the age of the small state." Rachman goes on to provide a bucketful of supporting evidence. For example, four of the five richest nations in the world have populations of less than five million. (The U.S., number four, is the exception.) Five of the seven most competitive countries, according to the World Economic Forum, have populations of less than 10 million.

Support for this idea comes from many quarters.

** The peerless Japanese thinker, Kenichi Ohmae, wrote years ago that the age of the "city-state" had returned. Richard Florida, our premier student of the "creative class," which in turn is the engine of modern economic growth, backs into something like the city-state argument when he shows how a minuscule number of postal ZIP Codes account for a stunning share of U.S. patents. Likewise, biotech start-up founder many times over (formerly of Harvard B-School) Juan Enriquez, in As the Future Catches You, argues that "The future belongs to small populations who build empires of the mind, and who ignore the temptation of—or do not have the option of—exploiting natural resources."

** Some (many, most, virtually all) have argued that the only way to deal with globalization is through consolidation—and that tomorrow's winners will gobble up so much market share that you will be "on the bus" or "off the bus." But, in a November-December Foreign Policy article, titled "The World's Biggest Myth," author Pankaj Ghemawat claims otherwise. "Some believe globalization is a force for good. Others see it as a global curse. These two camps agree on almost nothing, except that globalization leads to increased market share for fewer players. In fact, both sides couldn't be more wrong." The detailed statistical analysis Ghemewat presents makes it clear that, in even our largest industries, the "consolidation equals more share" hypothesis is far more often wrong than right.

Irrefutable fact is, from nations to corporations ("Is CitiGroup Too Big to Manage?"—headline, several times repeated in the last couple of weeks), size ain't all it's cracked up to be. Tiny may not always be beautiful ... but, by and large, hyper-big and growth for growth's sake are a loser's strategy, time & time & time & time again.

(I'm tuned into this in general, but, at the moment, in particular, because when you read this I will have ventured from Vermont to Dubai for my last seminar of 2007. In my lectures I refer to the emergence of this great modern city-state as "the single most extraordinary act of pure imagination that I have ever been privy to.")

The "XF-50": 50 Ways to Enhance Cross-Functional Effectiveness and Deliver Speed, "Service Excellence," and "Value-added Customer 'Solutions'"

(This is a very long Post—but too important to truncate—or put in a "to be continued" format. We are also providing this doc as an MSWord file, and another Word file [PDFs forthcoming] that contains the "Top 50 Have Yous" from our 12.03.07 post.)

A 2007 letter from John Hennessy, president of Stanford University, to alumni laid out his long-term "vision" for that esteemed institution. The core of the vision's promise was a more multi-disciplinary research, aimed at solving some of the world's complex systemic problems. The chief of GlaxoSmithKline, a few years ago, announced a "revolutionary" new drug discovery process—centers of interdisciplinary excellence. (It worked.) Likewise, amidst a study of organization effectiveness in the oil industry's exploration sector, I came across a particularly successful firm—one key to that success was their physical and organization mingling of formerly warring (two sets of prima donnas) geologists and geophysicists. The cover story in Dartmouth Medicine, the Dartmouth med school magazine, featured a "revolutionary" approach, "microsystems," as "the big idea that [might] save U.S. healthcare." The nub is providing successful patient outcomes in hospitals by forming multi-function patient-care teams, including docs, nurses, labtechs, and others. ("Cooperating doc" may top the oxymoron scale.) One of the central responses to 9/11 is an effort to get intelligence services, home to some of the world's most viscous turf wars, talking to one another—we may have seen some of the fruits of that effort in the recently released National Intelligence Estimate. And in the military, inter-service cooperation has increased by an order of magnitude since Gulf War One—some of the services' communication systems can actually be linked to those of other services, a miracle the equal of the Christmas miracle in my book!

All this, and much more, amounts to a "revolution" (the latest revolution?) called "working together." Web-based tools certainly abet this latest attempt, but the story at the end of the day is timeless: attitude, relationships (investment therein), protecting powerbases-turf, "corporate cultures," and the like. I.e., dealing with human nature itself. But if anything helps this eternal-intractable problem it is simply "keeping it on the agenda." Relentlessly! In Re-imagine I tried to do just that with a full chapter titled "Welcome to XF/Cross-functional World." The main idea was-is that in order to provide the "value-added" solutions to customer problems that are necessary to move beyond commodities and compete with India, China et al., we have no choice but to deliver the "integrated" "goods" from every nook and cranny of the organization and its supply chain. XF wars are a killer, now much more than ever. Alas, no one paid the slightest bit of attention to this chapter—which I thought was one of the most important in the book.

But I refuse to give up. The Re-imagine chapter was organized around a list of 50 ideas. I have herein resurrected that list—and modified it significantly in the process. Hence this holiday gift—of sorts. In short, nothing (n-o-t-h-i-n-g!) is more important than getting the bits of the organization, or organizations (most project teams extend beyond our borders), in synch. "In synch" and more, much more—XF work at its best is not merely about "reducing organizational friction," as important as that is. It is about fundamental revision of the breadth and depth of the "product" the company offers. If the chef doesn't get along with two of our four waiters—the clientele is screwed, and the restaurant evaporates. Intellectually that's the same story, writ small, as development of the Airbus A380 or intelligence services cooperation.

Enough of my introduction. What follows is my latest effort to get you to pay "strategic" attention to what has always been Issue #1 in organizational effectiveness, from Airbus to the Army, from Napoleon to the man on the moon:

1. It's our organization to make work—or not. It's not "them," the outside world that's the problem. The enemy is us. Period.
2. Friction-free! Dump 90% of "middle managers"—most are advertent or inadvertent "power freaks." We are all—every one of us—in the Friction Removal Business, one moment at a time, now and forevermore.
3. No "stovepipes"! "Stove-piping," "Silo-ing" is an Automatic Firing Offense. Period. No appeals. (Within the limits of civility, somewhat "public" firings are not out of the question—that is, make one and all aware why the axe fell.)
4. Everything on the Web. This helps. A lot. ("Everything" = Big word.)
5. Open access. All available to all. Transparency, beyond a level that's "sensible," is a de facto imperative in a Burn-the-Silos strategy.
6. Project managers rule!! Project managers running XF (cross-functional) projects are the Elite of the organization, and seen as such and treated as such. (The likes of construction companies have practiced this more or less forever.)
7. "Value-added Proposition" = Application of integrated resources. (From the entire supply-chain.) To deliver on our emergent business raison d'être, and compete with the likes of our Chinese and Indian brethren, we must cooperate with anybody and everybody "24/7." IBM, UPS and many, many others are selling far more than a product or service that works—the new "it" is pure and simple a product of XF cooperation; "the product is the cooperation" is not much of a stretch.
8. "XF work" is the direct work of leaders!
9. "Integrated solutions" = Our "Culture." (Therefore: XF = Our culture.)
10. Partner with "best-in-class" only. Their pursuit of Excellence helps us get beyond petty bickering. An all-star team has little time for anything other than delivering on the (big) Client promise.
11. All functions are created equal! All functions contribute equally! All = All.
12. All functions are "PSFs," Professional Service Firms. "Professionalism" is the watchword—and true Professionalism rises above turf wars. You are your projects, your legacy is your projects—and the legacy will be skimpy indeed unless you pass, with flying colors, the "works well with others" exam!
13. We are all in sales! We all (a-l-l) "sell" those Integrated Client Solutions. Good salespeople don't blame others for screw-ups—the Client doesn't care. Good salespeople are "quarterbacks" who make the system work-deliver.
14. We all invest in "wiring" the Client organization—we develop comprehensive relationships in every part (function, level) of the Client's organization. We pay special attention to the so-called "lower levels," short on glamour, long on the ability to make things happen at the "coalface."
15. We all "live the Brand"—which is Delivery of Matchless Integrated Solutions that transform the Client's organization. To "live the brand" is to become a raving fan of XF cooperation.
16. We use the word "partner" until we want to barf! (Words matter! A lot!)
17. We use the word "team" until we want to barf. (Words matter! A lot!)
18. We use the word "us" until we want to barf. (Words matter! A lot!)
19. We obsessively seek Inclusion—and abhor exclusion. We want more people from more places (internal, external—the whole "supply chain") aboard in order to maximize systemic benefits.
20. Buttons & Badges matter—we work relentlessly at team (XF team) identity and solidarity. ("Corny"? Get over it.)
21. All (almost all) rewards are team rewards.
22. We keep base pay rather low—and give whopping bonuses for excellent team delivery of "seriously cool" cross-functional Client benefits.
23. WE NEVER BLAME OTHER PARTS OF THE ORGANIZATION FOR SCREW-UPS.
24. WE TAKE THE HEAT—THE WHOLE TEAM. (For anything and everything.) (Losing, like winning, is a team affair.)
25. "BLAMING" IS AN AUTOMATIC FIRING OFFENSE.
26. "Women rule"—women are simply better at the XF communications stuff—less power obsessed, less hierarchically inclined, more group-team oriented.
27. Every member of our team is an honored contributor. "XF project Excellence" is an "all hands" affair.
28. We are our XF Teams! XF project teams are how we get things done.
29. "Wow Projects" rule, large or small—Wow projects demand by definition XF Excellence.
30. We routinely attempt to unearth and then reward "small gestures" of XF cooperation.
31. We invite Functional Bigwigs to our XF project team reviews.
32. We insist on Client team participation—from all functions of the Client organization.
33. An "Open talent market" helps make the projects "silo-free." People want in on the project because of the opportunity to do something memorable—no one will tolerate delays based on traditional functional squabbling.
34. Flat! Flat = Flattened Silos. Flat = Excellence based on XF project outcomes, not power-hoarding within functional boundaries.
35. New "C-level"? We more or less need a "C-level" job titled Chief Bullshit Removal Officer. That is, some kind of formal watchdog whose role in life is to make cross-functionality work, and I.D. those who don't get with the program.
36. Huge (H-U-G-E) cooperation bonuses. Senior team members who conspicuously shine in the "working together" bit are rewarded Big Time. (A million bucks in one case I know—and a non-cooperating very senior was sacked.)
37. Get physical!! "Co-location" is the most powerful "culture changer." Physical X-functional proximity is almost a guarantee (yup!) of remarkably improved cooperation—to aid this, one needs flexible workspaces that can be mobilized for a team in a flash.
38. Ad hoc. To improve the new "X-functional Culture," little XF teams should be formed on the spot to deal with an urgent issue—they may live for but ten days, but it helps the XF habit, making it normal to be "working the XF way."
39. "Deep dip." Dive three levels down in the organization to fill a senior role with someone who has been proactive on the XF dimension.
40. Formal evaluations. Everyone, starting with the receptionist, should have an important XF rating component in their evaluation.
41. Demand XF experience for, especially, senior jobs. The military requires all would-be generals and admirals to have served a full tour in a job whose only goals were cross-functional. Great idea!
42. Early project "management" experience. Within days, literally, of coming aboard folks should be "running" some bit of a project, working with folks from other functions—hence, "all this" becomes as natural as breathing.
43. "Get 'em out with the customer." Rarely does the accountant or bench scientist call on the customer. Reverse that. Give everyone more or less regular "customer-facing experiences." One learns quickly that the customer is not interested in our in-house turf battles!
44. Put "it" on the—every agenda. XF "issues to be resolved" should be on every agenda—morning project team review, weekly exec team meeting, etc. A "next step" within 24 hours (4?) ought to be part of the resolution.
45. XF "honest broker" or ombudsman. The ombudsman examines XF "friction events" and acts as Conflict Resolution Counselor. (Perhaps a formal conflict resolution agreement?)
46. Lock it in! XF cooperation, central to any value-added mission, should be an explicit part of the "Vision Statement."
47. Promotions. Every promotion, no exceptions, should put XF Excellence in the top 5 (3?) evaluation criteria.
48. Pick partners based on their "cooperation proclivity." Everyone must be on board if "this thing" is going to work; hence every vendor, among others, should be formally evaluated on their commitment to XF transparency—e.g., can we access anyone at any level in any function of their organization without bureaucratic barriers?
49. Fire vendors who don't "get it"—more than "get it," welcome "it" with open arms.
50. Jaw. Jaw. Jaw. Talk XF cooperation-value-added at every opportunity. Become a relentless bore!
51. Excellence! There is a state of XF Excellence. Pursue it. Talk about it.

Good luck!

"Top 50" "Have Yous"

While waiting last week in the Albany airport to board a Southwest Airlines flight to Reagan, I happened across the latest Harvard Business Review, on the cover of which was a yellow sticker. The sticker had on it the words "Mapping your competitive position." It referred to a feature article by my friend Rich D'Aveni. His work is uniformly good—and I have said as much publicly on several occasions dating back 15 years. I'm sure this article is good, too—though I didn't read it. In fact, it triggered a furious negative "Tom reaction" as my wife calls it. Of course I believe you should worry about your "competitive position." But instead of obsessing on competitive position and other abstractions, as the B-schools and consultants would always have us do, I instead wondered about some "practical stuff," which I believe is more important to the short- and long-term health of the enterprise, tiny or enormous.

Hence, rather than an emphasis on competitive maps or how blue your water is, I am urging you to pay attention to my "Top 50" "Have Yous," as I shall call them. The list could easily be three times as long—but this ought to keep you occupied for a while. Of course, the underlying hypothesis is that if you do the stuff below your "competitive position" will improve so much that mapping will become a secondary issue! Some will rebut with the tired old saw (and silly idea) of "doing the right things" versus "doing things right." I, for example, believe that if you do even a smidgeon of what's below you will wildly enhance both "do the right thing" and "do things right." (Admission: As an engineer by training and disposition, doing things right is priority #1. I am an admitted "implementation nut.") In any event here's my list, random, but in batches of ten:

Have you in the last 10 days ... visited a customer?
Have you called a customer ... TODAY?
Have you in the last 60-90 days ... had a seminar in which several folks from the customer's operation (different levels, different functions, different divisions) interacted, via facilitator, with various of your folks?
Have you thanked a front-line employee for a small act of helpfulness ... in the last three days?
Have you thanked a front-line employee for a small act of helpfulness ... in the last three hours?
Have you thanked a frontline employee for carrying around a great attitude ... today?
Have you in the last week recognized—publicly—one of your folks for a small act of cross-functional cooperation?
Have you in the last week recognized—publicly—one of "their" folks (another function) for a small act of cross-functional cooperation?
Have you invited in the last month a leader of another function to your weekly team priorities meeting?
Have you personally in the last week-month called-visited an internal or external customer to sort out, inquire, or apologize for some little or big thing that went awry? (No reason for doing so? If true—in your mind—then you're more out of touch than I dared imagine.)

Have you in the last two days had a chat with someone (a couple of levels down?) about specific deadlines concerning a project's next steps?
Have you in the last two days had a chat with someone (a couple of levels down?) about specific deadlines concerning a project's next steps ... and what specifically you can do to remove a hurdle? ("Ninety percent of what we call management consists of making it difficult for people to get things done."—Peter "His eminence" Drucker)
Have you celebrated in the last week a "small" (or large!) milestone reached? (I.e., are you a milestone fanatic?)
Have you in the last week or month revised some estimate in the "wrong" direction and apologized for making a lousy estimate? (Somehow you must publicly reward the telling of difficult truths.)
Have you installed in your tenure a very comprehensive customer satisfaction scheme for all internal customers? (With major consequences for hitting or missing the mark.)
Have you in the last six months had a week-long, visible, very intensive visit-"tour" of external customers?
Have you in the last 60 days called an abrupt halt to a meeting and "ordered" everyone to get out of the office, and "into the field" and in the next eight hours, after asking those involved, fixed (f-i-x-e-d!) a nagging "small" problem through practical action?
Have you in the last week had a rather thorough discussion of a "cool design thing" someone has come across—away from your industry or function—at a Web site, in a product or its packaging?
Have you in the last two weeks had an informal meeting—at least an hour long—with a frontline employee to discuss things we do right, things we do wrong, what it would take to meet mid- to long-term aspirations?
Have you in the last 60 days had a general meeting to discuss "things we do wrong" ... that we can fix in the next fourteen days?

Have you in the last year had a one-day, intense offsite with each (?) of your internal customers—followed by a big celebration of "things gone right"?
Have you in the last week pushed someone to do some family thing that you fear might be overwhelmed by deadline pressure?
Have you learned the names of the children of everyone who reports to you? (If not, you have six months to fix it.)
Have you in the last month taken an interesting-weird outsider to lunch?
Have you in the last month invited an interesting-weird outsider to sit in on an important meeting?
Have you in the last three days discussed something interesting, beyond your industry, that you ran across in a meeting, reading, etc?
Have you in the last 24 hours injected into a meeting "I ran across this interesting idea in [strange place]"?
Have you in the last two weeks asked someone to report on something, anything, that constitutes an act of brilliant service rendered in a "trivial" situation—restaurant, car wash, etc? (And then discussed the relevance to your work.)
Have you in the last 30 days examined in detail (hour by hour) your calendar to evaluate the degree "time actually spent" mirrors your "espoused priorities"? (And repeated this exercise with everyone on the team.)
Have you in the last two months had a presentation to the group by a "weird" outsider?

Have you in the last two months had a presentation to the group by a customer, internal customer, vendor featuring "working folks" 3 or 4 levels down in the vendor organization?
Have you in the last two months had a presentation to the group of a cool, beyond-our-industry idea by two of your folks?
Have you at every meeting today (and forevermore) re-directed the conversation to the practicalities of implementation concerning some issue before the group?
Have you at every meeting today (and forevermore) had an end-of-meeting discussion on action items to be dealt with in the next 48 hours? (And then made this list public—and followed up in 48 hours.) (And made sure everyone had at least one such item.)
Have you in the last six months had a discussion about what it would take to get recognition in a local-national poll of "best places to work"?
Have you in the last month approved a cool-different training course for one of your folks?
Have you in the last month taught a front-line training course?
Have you in the last week discussed the idea of Excellence? (What it means, how to get there.)
Have you in the last week discussed the idea of "Wow"? (What it means, how to inject it into an ongoing "routine" project.)
Have you in the last 45 days assessed some major process in terms of the details of the "experience," as well as results it provides to its external or internal customers?

Have you in the last month had one of your folks attend a meeting you were supposed to go to which gives them unusual exposure to senior folks?
Have you in the last 60 (30?) days sat with a trusted friend or "coach" to discuss your "management style"—and its long- and short-term impact on the group?
Have you in the last three days considered a professional relationship that was a little rocky and made a call to the person involved to discuss issues and smooth the waters? (Taking the "blame," fully deserved or not, for letting the thing-issue fester.)
Have you in the last ... two hours ... stopped by someone's (two-levels "down") office-workspace for 5 minutes to ask "What do you think?" about an issue that arose at a more or less just-completed meeting? (And then stuck around for 10 or so minutes to listen—and visibly taken notes.)
Have you ... in the last day ... looked around you to assess whether the diversity pretty accurately maps the diversity of the market being served? (And ...)
Have you in the last day at some meeting gone out of your way to make sure that a normally reticent person was engaged in a conversation—and then thanked him or her, perhaps privately, for their contribution?
Have you during your tenure instituted very public (visible) presentations of performance?
Have you in the last four months had a session specifically aimed at checking on the "corporate culture" and the degree we are true to it—with all presentations by relatively junior folks, including front-line folks? (And with a determined effort to keep the conversation restricted to "real world" "small" cases—not theory.)
Have you in the last six months talked about the Internal Brand Promise?
Have you in the last year had a full-day off-site to talk about individual (and group) aspirations?

From BHAG to CCAG

The book Built to Last made popular the concept of the "BHAG"—the "Big Hairy Audacious Goal."

You know what the problem is with BHAGs? They're big and hairy.

Over the past years, I've seen a number of clients proudly unveil a BHAG. Their pride stems from the idea that having a lofty goal will encourage people to stretch, and, if they stretch, they'll achieve more than if they hadn't.

I'm all for lofty goals and stretching, but I continually see a problem, in practice, with Built to Last's BHAG. Instead of being excited and motivated by the BHAG, team members are often confused and disillusioned.

Why?

BHAGs are often half-baked and poorly communicated. What I often hear about BHAGs from employees in client companies are things like, "We can't keep up with the workload now. What will happen if we achieve this growth?" or, "I'm not sure what this means to me. What am I supposed to do to help us reach this goal?" or, "I'm not really sure what the goal is. It sounds visionary, but I don't get it."

Sure, the best performers will get it, and be motivated by it. But, let's face it. Achieving the BHAG requires more than just the top performers. It requires a broad team.

I looked back at the article where Jim Collins and Jerry Porras first mentioned the BHAG ["Building Your Company’s Vision," Harvard Business Review, September-October 1996]. They defined that the BHAG must be "clear and compelling." Too bad these all-important words have been lost in translation.

I suggest we replace the idea of the Big Hairy Audacious Goal with the CCAG—the Clear and Compelling Audacious Goal.

The CCAG is just as lofty and just as much of a stretch as the BHAG. But it is more likely to be achieved, because more people will understand it and be motivated by it.

As Michelangelo said, "The greatest danger for most of us is not that our aim is too high and we miss it, but that our aim is too low and we reach it." So true—but I'm sure that Michelangelo's aim was not only high, but clear and compelling.

How clear and compelling are your organization's goals to your team members? Are these goals "big and hairy" or "clear and compelling"?

The "2Bs": Buffett. Basics.

The subprime mess gets nastier by the day. I've seen recent estimates of the fiscal damage alone exceeding $1 trillion. (Not enough pain to reduce Wall Street bonuses, mind you—a record $39 billion in performance-based handouts expected.) W Buffett long ago gave us fair warning when he said that all the higher-mathematical models in the world can't overcome problems with the value in the original transactions. (Bob Herbert's "A Swarm of Swindlers" op-ed in yesterday's NY Times is an appalling tale of the behavior of the hyper-aggressive lenders.) Then a couple of days ago I read that Buffett also got the A-Rod deal with the Yankees sorted out. Turns out A-Rod wanted to stay with the Yanks. His pal Mr Buffett offered him a great suggestion: Call 'em. A-Rod called direct, no agent (all-mighty Scott Boras) involved, and the deal was done. (Well, not quite; as I read it, A-Rod, post-Buffett call, in turn called 2 of his senior Goldman Sachs buddies to see if they thought it would be cool if he called one of the Steinbrenners direct—dear God, as it were, does A-Rod call Pope Benedict and ask if it's okay to cross against a "don't walk" signal? How many agents can be fit on the head of a pin ...)

So Buffett is my "cutting through the fog of war" hero: (1) If lotsa truly crappy loans were made, it'll eventually catch up with us. (2) If you want to play for the Yanks, why don'tcha speed-dial 1-800-Hank Steinbrenner.

In fact, I'm busy Buffett-izing my presentations. The Madrid Keynote posted a couple of days ago is the best example to date. I'm turning my back on "sophisticated formulations" and "tightly argued," logical presentations. I'm focusing instead on "common sense stuff" (a Buffeteria of ideas?) that I've picked up over the years—and presenting it in as straightforward a way as I can. (I have recently begun my public remarks with, "I am here under false pretenses. I have nothing interesting to say. I have flown 5,000 miles for the sole purpose of reminding you of things you've known for years or decades—which, alas, get lost in the shuffle of daily affairs.") I believe to my marrow that we fail to achieve excellence by failing to obsess on the basics—not because we couldn't decide precisely where in the blue ocean we wanted to drop our anchor.

Thinking about subprime mortgage mathematically derived packaging instruments and sports agents with sophisticated spin-driven negotiating tactics, doubtless based on "game theory" math, led me to a pair of quotes from an 18th century leader, N Bonaparte: "The art of war does not require complicated maneuvers; the simplest are the best, and common sense is fundamental. From which one might wonder how it is generals make blunders; it is because they try to be clever." "A military leader must possess as much character as intellect. Men who have a great deal of intelligence and little character are the least suited. It is preferable to have much character and little intellect." (Source: Jerry Manas, Napoleon on Project Management. Manas claims that Napoleon's "six winning principles" were: exactitude—sweat the details, speed, flexibility, simplicity, character, moral force. This makes sense to me, especially since Manas' sextet matches perfectly the approach of the two military figures I most respect, Horatio Nelson and Ulysses Grant.)

There's one other quote that comes to mind, from Picasso: "Every child is an artist. The problem is how to remain an artist." So, if we (Napoleon's generals or commanding officers of 4-person training departments) can somehow manage to hold dear those beloved basics of childlike artistry, we will be well served, regardless of our chosen field of practice.

Systems Thinking, Luck, and a Great Comment

In response to "Systems Thinking II: My Summer Vacation," there were a number of fascinating Comments. For only about the third time since we started this blog, I am reprinting the comment in full.

(NB: Re Paul's riff on luck, I was utterly delighted to see that my "bible," Fooled By Randomness, is on the BusinessWeek bestseller list—and I have the smallest hope that I had the smallest bit to do with that—I've never mentioned any other book so often in this blog.)

From Paul: "Chetan, I disagree with your assessment. I don't think we can recognize, with any degree of accuracy, the full 1st order consequences of a major action such as war, much less the second order consequences, or "consequences of the consequences", as you termed it. To believe that we are that capable is epistemic arrogance. Bush's administration likely DID try to anticipate 1st and 2nd order consequences, only they anticipated the ones they wanted to see. Others anticipated less optimistic consequences, and time proved them to be right. It does not mean they were any better at it—I believe a high degree of luck was involved.

This is exactly why I asked Tom if Grant would still be his hero had he lost. Is Grant a great general because he won the war, or did he win the war because he was a great general? Has Bush's war policy failed because he is a poor strategic planner, or is Bush a poor strategic planner because his war policy failed?

This is precisely why action is so important. We have far, far less ability to predict outcomes than we think we do. Much deliberation is needless, and I think the outcomes are more random than we realize (yet we trick ourselves into thinking it worked out because we planned it that way). The most we can hope for is to get out there, "thrash around", and see if something good happens. If something doesn't, keep moving.

I absolutely believe hard work and skill play their role, too, so don't get me wrong. I'm just saying that a lot of what we attribute to those two actually belongs to luck as well.

Read Arrian's account of the Battle of the Granicus. Alexander rushes into battle against the judgment of his wise old general Parmenion. You will see that Alexander comes within inches of death in his very first battle! Had he been killed (which he easily could have been), would we then consider him a poor, arrogant general, rather than one of the best of all time? What a role luck plays, then!

Perhaps your experience in war has been much different than mine, but in my experience we constantly tried something, saw if it worked, and kept at it if it did, abandoned it if it didn't.

I have no doubt you are intelligent, but to think that the development of nations like India and Pakistan could have been foreseen in any reliable way is a shortsighted mistake that many intelligent people make. I do not agree that the Brits merely "thinking about it" a little longer would have made a lick of difference. Things may have turned out differently, but they would have equal chance of being worse as they would better."

IMHO.

Posted by Paul Knepper on October 3, 2007

Systems Thinking II:
My Summer Vacation

This summer was the summer of brush clearing.
And more.

It started as simple exercise. After a day or two, scratches from head to toe, and enjoyment, I set myself a goal of clearing a little space to get a better view of one of the farm ponds. That revealed something else. ... to my surprise.

At a casual dinner, I sat next to a landscaper, and we got to talking about our farm and my skills with clipper, saw, etc.

In particular, she suggested that I do some clearing around a few of our big boulders. Intrigued, I set about clearing, on our main trail, around a couple of said boulders. I was amazed at the result.

That, in turn, led to attacking some dense brush and brambles around some barely visible rocks that had always intrigued me—which led to "finding," in effect, a great place for a more or less "Zen garden," as we've taken to calling it.

Which led to ... more and more. And more.

(Especially a rock wall, a hundred or so yards long, that is a massive wonder—next year I'll move up the hill behind it—I can already begin to imagine what I'll discover, though my hunch will be mostly "wrong," and end up leading me somewhere else.)

(Yesterday, 4+ exhausting hours clearing around another rock-boulder—that just a month or so ago I could never have imagined messing with.)

To make a long story short:

I now have a new hobby—this winter I'll do a little, but I also plan to read up on outdoor spaces, Zen gardens, etc; visit some rock gardens-spaces close by; and, indeed, concoct a more or less plan (rough sketches) for next spring's activities—though I'm sure that what I do will move forward mostly by what I discover as I move forward. (This is at least a 10-year project—it could readily go on past my ability to cut down trees of size.)

I proceeded by trial and error and instinct, and each experiment led to a greater understanding of potential—the "plan," though there was none, made itself. And it was far, far better (more ambitious, more interesting) than I would have imagined.

I was able to do much more than I'd dreamed—overall, and project by project.

Not that it matters, but my "skill" has skyrocketed—though I've kept to my promise of only hand tools; that's the spirit of the affair, and the slower pace reveals more, among other things.

Along the way I managed to lose about 10 pounds—while eating garden grown stuff like a pig.

"Systems thinking"? It would have killed the whole thing.

Is "everything connected to everything else"? Well, duh. But I had no idea how everything was connected to everything else until I began (thank you, Michael Schrage—see my last Post) "serious play."

Systems Thinking III

I guess I have a prejudice that comes from my restless nature—and my great mentor at Stanford, the late (alas) Gene Webb—who was one of the world's most prominent "experimentalists" in the social sciences.

My colleagues and I (about 5 of us) in my PhD class, were, oddly, all engineers. At some point we became smitten by the emergent systems literature—bread and butter to the engineering mind.

Our charts and graphs linking this to that and the other became evermore complex—and we became evermore hooked on our "understanding of this and that." (One of the legendary systems gurus was on the Stanford faculty, and we worshiped at his egocentric alter.)

Along the way, my thesis slipped farther and farther behind schedule—though I was still in love with the central idea. (And my "finances"—what a joke—became more and more of an issue.)

One late fall afternoon, in 1976, over a good bottle of Zinfandel, my advisor-mentor-best friend (Webb) unloaded on me in a way that is still memorable, 32 years later:

"For C-sakes, quit drawing those f-ing maps and run some experiments, quick and dirty, and see if anything you are babbling on about actually works or makes the slightest bit of sense in the real world as we know it. And after you've done your real work, then you are welcome to write your 'complete theory of everything.'" (That was close to the actual script, minus many more f%^*s and about 25 minutes of elaboration.)

He hit me at the right moment—my growing frustration with whether or not I was actually moving forward, or just engaging in mental masturbation ("thought experiments" to the pure of heart), was already festering inside my systems-besotted brain.

At any rate, the experiments began the next week, the dissertation topic remade itself time and again, my true sense of connectivity grew in the process, and an original theory evolved along the way, too (a PhD requirement); I finished the work, won high honors at Stanford—and a few prizes.

Save a few forays, I found myself well clear of systems thinking—and on a path to "discovery through action," or some such.

I've hardly "lived happily ever after," but the process definitely affected some of my milestone work, such as In Search of Excellence. To a significant extent, the book was a smash to the jaw of "paralysis of analysis," systems thinking, business-strategy style circa 1980—and the basis for, among other things, our Basic #1 in the book: "A bias for action" (which we learned from the best, such as 3M and GE).

Enough said.

"Systems Thinking" and Me: Never the Twain Shall Meet

I just read a major article on Bill Clinton's new approach to philanthropy. It is profit-based. (Stuff, to get imbedded in day-to-day life, has to be based on sound economics.) I applaud that. The problem I had was that Clinton's principal associate is Ira Magaziner, the same "intellectual" who was the schemer-in-chief behind "Hillary care" in 1993.

Years ago, in my McKinsey days, one of my bosses was bemoaning the help we were getting from an "economic genius." He said, "Tom, consider a matrix. One axis boils down to 'simplifier' vs 'complexifier.' The other is 'smart' and 'dumb.' Thus we are dealing with a 2X2 matrix. The analyst-from-heaven is the 'smart simplifier.' The analyst-from hell is 'smart complexifier.' He is, in fact, worse that the 'dumb complexifier,' who you can simply ignore, and the 'dumb simplifier' who might actually be of help." I can't help but think (Huh? I'm quite certain) that Magaziner is the poster child for "smart complexifier."

I'm also told that Mr M is a devout advocate of "systems thinking." Well, I'm not.

The first thing I wrote that got national attention was an Op Ed in the Wall Street Journal in June 1981. (It appeared 5 days before my Dad died, which was sad, because rightly or wrongly he would have been beside himself.) The article got me in deep doo-doo with my McKinsey colleagues. It was called, "Ideas. Plans. Actions." Planning was the rage, as it mostly still is—and it was-is McKinsey's bread & butter. My article claimed that "planning" was highly overrated. The best performers, I said, seesawed back and forth between "ideas" and "actions." That is, they had a "big idea." (Or a small one, for that matter.) Rather than think it to death, they immediately got the hell into the field and experimented with some element of it (a prototype). They watched what happened, adjusted, and then quickly ran another experiment—in the meantime the "big idea" also was trimmed or expanded to fit the incoming "real" data, the results of those experiments. As far as I'm concerned this approach, rather than a "planning-centric" approach, is the best (bold assertion) route to success. By the by, another definition of "my" approach is the Newtonian "scientific method," wholly dependent on ideas shaped and reshaped by actions—my studies of Nobel laureates in the sciences, for example, suggests (and not oversimplifying by much) that the winners "do more experiments faster." (Among other things, this was what my summer neighbor for a few years and winner of a Nobel for the first successful organ transplant told me of his situation, giving me heightened confidence in my beliefs.)

I am an unabashed fan of MIT Media Lab guru Michael Schrage—particularly his book Serious Play. His principal axiom: "You can't be a serious innovator unless you are ready and able to play. 'Serious play' is not an oxymoron; it is the essence of innovation." And, in turn, the heart of his serious play is ... fast prototyping: "Effective prototyping may be the most valuable core competence an innovative organization can hope to have." His intriguing connection, which makes all the sense in the world to me, is that true innovation comes not from the idea per se, though it guides the work, but from the "reaction to the prototype." In fact, in a surprising number of cases (the majority?) the collective responses to a host of fast prototypes reshape the original idea beyond recognition—or lead one down an entirely new path.

Years and years ago, while working in the UK, I delightedly heard a Cadbury exec call his approach to product development "Ready. Fire. Aim." It was love at first sound. (Mistakenly, Ross Perot is often given credit for this—though I acknowledge it captures his successful mode of action.)

Here is a sampling of my favorite quotes, from trustworthy sources, on the topic:

"How do I know what I think until I see what I say."—C.K. Chesterton

"We made mistakes, of course. Most of them were omissions we didn't think of when we initially wrote the software. We fixed them by doing it over and over, again and again. We do the same today. While our competitors are still sucking their thumbs trying to make the design perfect, we're already on prototype version #5. By the time our rivals are
ready with wires and screws, we are on version #10. It gets back to planning versus acting: We act from day one; others plan how to plan—for months."—Bloomberg by Bloomberg

"This is so simple it sounds stupid, but it is amazing how few oil people really understand that you only find oil if you drill wells. You may think you're finding it when you're drawing maps and studying logs, but you have to drill."—The Hunters, by John Masters, wildly successful Canadian Oil & Gas wildcatter

"Experiment fearlessly"—BusinessWeek, in a Special Report, on the premier innovation strategy of the best innovators

"The secret of fast progress is inefficiency, fast and furious and numerous failures."—Kevin Kelly, founding editor, Wired

I won't arrogantly proclaim "Case closed"—though, secretly (not), that's what I feel based on over a quarter century of pretty intensive study.

There is lots to learn from "systems thinking"—but the heart of the matter for me will always be to cast the plan aside for the moment—and get into the lab (field) and try something concrete. Only then will you begin to learn about the practicality (implementability) of your Grand-Grandiose Design—uh, system.

(NB: The principal objection to my approach is that we end up with a not so pretty cobbled together design. True. But there is a term for that: "Welcome to the real world." Or Speaker Tip O'Neill's "Politics is the art of the possible"—all effective implementation is the product of smart corporate or non-corporate politics, as much as that idea offends purists. Magaziner's approach in '93 might well have been "perfect"—though most of us think the opposite, but its result was overcomplexity, total failure to implement—and loss, after 50 years of hegemony, of the House by the Democrats.)

Perceived Effort

I'm not going. Nonetheless ...

"They say" that I help them because I condone-certify-applaud their excesses in pursuit of ... innovation, a business start-up, etc. Thank you! I say that the late sports super-agent, Mark McCormack (once voted the most powerful man in sports), condoned and certified me in one of my excessive habits.

McCormack said there are times, and not necessarily that infrequently, when it is wise to travel 5,000 miles for a 5-minute meeting. It was a tactic I started using instinctively years ago, when I was working in Washington, in 1974, on drug abuse issues; the fact that I could say, "Look, I was with Ambassador Moynihan in Delhi just three days ago and he assured me that ..." was, well, a show-stopper. Without fail! (And worth a 25,000-mile roundtrip in 96 hours.)

I'm not going, this time, as I said at the top of this post. Because a tough situation mostly cleared itself up, or at least went sub-critical. But I changed my plans just yesterday, so that I'd arrive in L.A. from Sydney, doubtless exhausted after 14 hours in the air, at 10 a.m., then take off from LAX two hours later for a 1,500 mile one-way trip, be at my destination about 6 hours, then head back to L.A. and immediately go on to Las Vegas for a difficult speech.

But the point here is that I did not hesitate (and it wasn't a critically ill family member or some such personal crisis), and it's something I end up doing at least a couple of times a year. And the power is, as in the D.C. example, literally beyond measure—and almost without fail. Some part is substance, but it's overwhelmingly psychological. The fact that someone would make an "insane effort" (e.g., travel, exhausted, thousands of miles for a 25-minute audience with whomever) almost always breaks a logjam, and sometimes leads to a solution on the spot.

(Incidentally, this timeless tool is arguably more important than ever—in this age of electronic communication, the personal touch has become more valuable because of its rarity.)

To Get Out of Bed.
Or Not Get Out of Bed.
That Is the Question.

Labor Day is done. The leaves in VT are turning (see above). And I'm about to get rolling on the Fall Season—off to SF-SEA-Australia at the end of the week. But part of my summer's end hangover is my still nagging concern re "What's it all about?" Hence, yet another little "thought paper" is attached. Before one (me) can "get on with it"—the details of coping—one (me) must be clear as to why it's worth the candle, whatever exactly the candle is. That's what I'm trying to play with here. The language is frightfully ponderous at points, with far too many adverbs, adjectives, run-on clauses. But the point is that I'm trying to boil "all this" down—the usually overlooked "big stuff." So here we go ...

Breaking All the Rules in School?

Those of us who are struggling with the challenge of making our enterprises "Future Winners" are wrestling with an almost impossible paradox—how to be well enough organised so that we can reliably produce an output, and yet leave space for our people to "screw around vigorously" in the interests of doing the best work of their lives!

A revolution is what is called for, so it's heartening to see that some of our schools are getting in on the act! Just take a look at the pioneering Thomas Deacon Academy in Peterborough, UK, where they are abandoning many of the familiar planks of the school structure—playground, break times, school bells, and registers—in favour of much more flexibility; mixed-aged tutor groups, 90-minute lesson periods, time out when it's needed, pupils taking responsibility for themselves. You can read about it in this recent Observer article.

There are echoes here of another pioneering educational project in the USA, The Big Picture. This fabulously successful experiment was co-founded by an old friend of Tom Peters, Dennis Littky. The Met School began its life in a tough neighbourhood of Providence, Rhode Island, and has now spread to over 30 more locations across the country. It's certainly an education system, but one that caters to the individual learning needs of every pupil through completely re-imagining the way pupils' learning is organised.

What examples have you seen of organisations that have shifted away from conventional wisdom in the way they structure work? More to the point, can established organisations ever really take on this kind of revolution, or does it have to be new start-ups that set the pattern for the organisation of work in the future?

The Decent Thing to Do Is the Smart Thing to Do

Going back 25 years to 1982 and In Search of Excellence, Bob Waterman and I were simply interested in what made for excellent corporate performance. We didn't have much in the way of pre-conceived notions. Delightfully, our research showed that some very human "basics"—doing rather than talking, focusing on the growth and wellbeing of our people and our customers, and being clear about "what we care about around here"—were the apparent bedrock of superior performance. Five years on, my Thriving on Chaos snuck into print. Needless to say I was pleased when Hoover Institute reviewer Paul Weaver wrote in the Wall Street Journal: "Mr Peters is an enthusiast, a storyteller and a lover of capitalism. He is saying [in Thriving on Chaos] that effective management is management that delivers more value to customers and more opportunity for service, creativity and growth to workers. He is saying that the decent thing to do is also the smart thing. It's a wonderful message."

Immersed in a somewhat leisurely summer, and on the verge of the 25th birthday of Search, I have been thinking about what the good or bad or indifferent practice of management is all about. Notwithstanding the very real threat posed by nihilistic terrorists, I do believe that entrepreneurial capitalism is the strongest force possible for unleashing human potential and perhaps a relatively peaceable kingdom—from Tinmouth Vermont to Dubai to Nairobi. And, by and large, successful entrepreneurial capitalism depends upon the effective practice of management. And if you believe Paul Weaver—"Effective management is management that delivers more value to customers and more opportunity for service, creativity and growth to workers. ... The decent thing to do is also the smart thing"—effective management is humanistic management. With such grand "stuff" circling in my brain, I composed a rambling piece that you'll find here. It is no more than a halting effort to answer, "What's it all about, Alfie?"

Football: Failing Forward Fast

We all know Tom is a die-hard San Francisco 49ers football fan. (Yes, American football.) But in this article from the South Florida Sun-Sentinel in which he is asked his opinion about a pre-season game, Tom likes what he hears about the new coach of the Miami Dolphins and his attitude toward young players and failing the first time out.

"Hard Is Hard"

Bob Waterman and I got our 15 minutes of fame in part by the assertion-slogan-axiom that "Hard is soft. Soft is hard." In the Age of Strateg