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Turning the Corner to Where?

Lately I have been hearing a more positive message from executives in their communications to their employees, the business press, and business analysts. Whether the message is the familiar "we've turned the corner" or the milder "the worst is behind us," the intent is to signal that a better tomorrow looms. But does it? And what does it look like?

The question I have been asking my clients now is whether the strategies they put in place to deal with the economic downturn have made their organizations more capable of producing excellence as they move forward? Most respond that the emphasis on lean structure and cost control were necessary adjustments that made their companies "more fit" for the future. Certainly the cost reductions have had a positive impact on margins, but I wonder how long this can be sustained? I suggest that there are a number of areas ripe for scrutiny to determine if they will, in fact, lead the business to a better place once that corner has been turned.

First, the increased scrutiny on spending may have some unintended, and unmeasured, consequences. I wonder about the speed of execution when new checkpoints are added into a process. New layers of managerial waste and delays may eat up the apparent savings in cost reduction in time to market. Also, it may be sending a message to the management that executive leadership has little confidence in their business savvy, undermining their potential contributions. It may be time to loosen up the controls a bit.

Second, I have seen some pretty good talent leave organizations because the new, leaner management structure doesn't seem to have the upward mobility they want. A more fluid project approach to work might be the ticket here. Top talent demands work that matters!

Third, oddly enough, executives may have to prove their competence to the workforce—who paid some prices in the downturn. Many executives have been using the "economy" as the reason for poor performance, but my coffee chats with their employees lead me to believe that the rank and file aren't totally buying that. It is important that the road forward is seen as doable by the employees in an organization, and that these workers believe that the current executive team can lead them to success.

And last, I might suggest that it is a good time to focus a little less energy on Wall Street analysts, and a little more on employees and customers. I continue to marvel at how much executive time is focused on pleasing the analysts. Yes, they need attention paid to them, but long-term success is more dependent upon employee and customer satisfaction. And that means switching the focus to them.

Mike Neiss posted this on 07/07/09.

Comments

Top talent also has the knack of sensing opportunity wherever it may be. If you've shut off 'work that matters' which also may mean 'work that changes the company/world' then your best will be the first to see those opportunities elsewhere. Watch for those chomping at the bit. The starting gate may be out your front door.

Posted by Fred H Schlegel at July 7, 2009 9:51 AM

I just finished reading Grossman & Christensen's 'On Combat,' and one of the many interesting things in the book related to the phrase, "The worst is behind us."

It turns out that the military psychology braniacs have decided that it's improper to tell a dying soldier or policeman, "You're going to be okay." Instead, you tell them, "The worst is behind you."

Thought it was interesting that you said business executives were using that phrase these days...

Posted by Patrick Parker at July 7, 2009 9:54 AM

Your last suggestion nailed it in my book.

Of course your customers need to be satisfied--they are the reason your company is even still going. In fact, I would say you need to try and exceed their expectations rather than just meeting them. In these harder times, if you don't, they are more likely to take their business elsewhere.

If your employees are satisfied, see the importance of the customer, and are on the same page you will have a better dynamic in your business and everyone will be more motivated to make sure the company succeeds. When everyone in the company is happy and unified, customers can't help but recognize this.

Posted by Elizabeth at July 7, 2009 10:42 AM

The main mantra I am hearing is Sustainable. What's useful about this is it broadens the thinking (environmental, long as well as short term, understanding your eco system etc)

Obviously there is the danger that it means a different thing for everyone, but for me I like the fact that the debate is happening in this way.

Posted by PaulH at July 7, 2009 12:51 PM

I hear ya, Mike. I always perk up to statements like, "executives may have to prove their competence to the workforce." I think we'd agree that all managers should be proving their competence to the workforce day in and day out. With the business teams I performed on in the 60s & 70s, managers had to meet performance benchmarks or they were fired. (Those teams, of course, were rock & roll bands - and one performance benchmark for the manager(s) was getting the band a recording contract.) Once I started working in the corporate world everything looked upside down.

Posted by John O'Leary at July 7, 2009 1:18 PM

"I might suggest that it is a good time to focus a little less energy on Wall Street analysts, and a little more on employees and customers."

Standing ovation for that comment. It's exactly the same problem that occurs when employees are expected to work for the Q.A. numbers. If your interest is on customers getting high quality qoods and services, then the numbers should follow. Not that it's wrong to watch the numbers and talk about what they mean. As you always say, the numbers are important. But REAL focus on people includes the numbers. On the other hand, focusing on the numbers doesn't always include people. Part of what Deming tries to convey.

Pure focus on Wall Street analysts, Q.A. numbers, accounting data -- outside an overarching context of and focus on people and "experiences" -- is like yanking someone's heart out for a few days to play around with it and try to fix it... you might, but why bother when the patient's body is now lying in the morgue? We kill a lot of companies by forgetting that the numbers are just PART of something bigger, like it or not.

Posted by Dan Gunter at July 7, 2009 2:05 PM

Great post. In tough times, the tendency is for leaders to focus inward and internally for answers. It is interesting that we don't often look to our human capital for the answers during our internal scan. Those companies that focus on customers (who pay 100% of our salaries) and ask the employees who are on the front lines (call center reps, receptionists, project managers, customer service, etc.) for their ideas will increase employee engagement and, with it, customer satisfaction and loyalty. EBITDA/EPS is an end, not a means.

Posted by David Porter at July 7, 2009 2:23 PM

"I might suggest that it is a good time to focus a little less energy on Wall Street analysts, and a little more on employees and customers."

I completely agree with Dan and Elizabeth that this was one of the most important changes you stated.

@Dan-" We kill a lot of companies by forgetting that the numbers are just PART of something bigger, like it or not."

When troubled times come people tend to take drastic measures. They devalue the relationships they have with their employees and customers in order to fix other "problems". A quote that was recently posted on my website explains this perfectly. "Dying dogs bite at their wounds." http://www.emergingtiro.com/?p=325 If someone or a company knows they are in trouble they should take time to analyze the situation and assess whats important before taking immediate action.

Posted by Ryan Freed at July 7, 2009 3:31 PM

Ryan, you nailed it well. On the topic of slowing down and assessing the situation instead of knee-jerk reacting:

"...The irony is that to do things faster, you often have to go slower. You have to be more reflective. You have to develop real trust. You have to develop the abilities of people to think together. Why? Because it requires you to go through basic redesigns. You need to build a shared understanding of how the present system works.... People must trust one another through difficult systemic changes..." -- Peter Senge, "The Fifth Discipline - The Art and Practice of the Learning Organization."

Shared "understanding." Understanding requires something beyond assumption. Way beyond. Hence my assertion that the numbers do not bring understanding. They are like "symptoms," driven by an underlying state of wellness or disease.

What so many companies (executives) do is akin to a health care scenario I sometimes share.

Nurse: "Doctor, this patient's heart rate is really, really high."

Doctor: "Well, I guess we'd better send him for brain surgery. And assign a different nurse to take care of him... one that counts a different way."

"Uh, doc, you think it might be a good idea if you actually assessed the patient to figure out why his heart is beating so fast?"

"WHY for God's sakes would I do that? You already told me his heart rate's really high. I know what I'm doing! In fact, I think I'll also remove his gall bladder and amputate the left leg. Be sure to let me know what his heart rate is after EACH of the three surgeries, will you? That way, all you lesser-educated idiots can see how smart I am when his heart rate slows down. What's that noise?"

"That's his heartrate monitor, doc."

BEEP BEEP BEEP... BEEP...........BEEEEPPP....................... BEEEEEEEEEEEEEEEPPPPPPPPP

"See there, you moron! I fixed the patient's problem by just writing an order! Ain't I the smartest doctor you ever met?"

Posted by Dan Gunter at July 7, 2009 5:05 PM

Here in the UK we have a few new sayings:

"The best is long gone; its over; why bother."
"You are fired & shall never work again in this town little Ms. Perfect."
"The Trevor cult of hooligans shall be your destiny."
"Chips & chips again?"
"Was that waiter speaking Russian?"
:>)

Posted by UK Love at July 7, 2009 7:01 PM

Except the worst isn't behind them. It hasn't even started.

So, asking them (and us) to think about how we have tightened their belts is inappropriate. You need to be asking people what they are doing to batten down the hatch for the worst Q4 in human history.

Posted by WalterSear at July 7, 2009 9:25 PM

"Second, I have seen some pretty good talent leave organizations because the new, leaner management structure doesn't seem to have the upward mobility they want. A more fluid project approach to work might be the ticket here. Top talent demands work that matters!"

Could it be argued that True Modern Top Talent is not concerned about the upward mobility - they just want to do cool work?

The down side is that most companies still attribute pay and perks acording to hierarchy. One of the best things we did at our place was to instigate a true technical career path for support engineers - if they are good they get paid for it and get to do work that is high profile and more challenging.

Posted by PaulH at July 8, 2009 7:04 AM

Absolutely Paul. By more fluid work, I mean organizing work project by project, allowing talented folks to contribute on definable pieces of work. The hierarchical approach to organizing work does not fit well in the new, need for speed economy.

Posted by mike Neiss at July 8, 2009 7:18 AM

I hear what you say Mike but my concern is always that this implies we only need to take seriously our employees and customers when things go south in a big way. The reality that you and I know is this is normal practice in any good organisation at ANY time if we have the right leadership.

BTW - I heard on Radio today that our illustrious UK Chancellor has told banks they need to keep some money by for a rainy day when things are going well so they can deal with economic downturns. Wow Rocket science!!! …. Excuse me .. Isn’t that precisely the advice bankers give us when advising us about how we should manage our own money? Talk about simplicity! Is there anything simpler than that?….. And yet we have a world screw-up in finance – what does that tell us? Pass my pills please Nurse.

Posted by Trevor Gay at July 8, 2009 9:06 AM

Trevor...certainly not my implication. Just a restatement of many current surveys showing employees feel that their companies care more for the shareholder than they do for them. By the way, I don't expect that to change soon. Truth is, there is more SHORT term financial gain to be had from pleasing Wall Street rather than employees and customers.

Posted by Mike Neiss at July 8, 2009 2:38 PM

I think we are agreeing Mike. I’m not surprised at all that surveys are showing what you say. The worst companies always put employees second. The best companies always put their employees first. This is mainly about good/bad leadership in my view. The best leaders know instinctively that people should always be number one item on the agenda.

Posted by Trevor Gay at July 8, 2009 3:37 PM

generic viagra online uk Tom you are so right on. We have also seen an additional limitation on "turning the corner" and that's the energy and resilience of the leadership. In our new book: Sink, Float, or Swim we talk extensively about this dilemma. This turn of the corner is more like hitting the bottom of the dip and having to accelerate up hill to beat the competition. It will require huge amounts of energy, resilience, brain performance, and capacity. In the past, so many executives and top leaders left their performance to chance. They thought just showing up at the meeting was enough. Those days are gone. Luck isn't an option anymore. Sustainable high performance is a matter of choice and even more important a matter of design.

Posted by Scott Peltin at July 8, 2009 3:57 PM

Dear Peter,
your thoughts concernig executives too much focused on Wall Street reminds me the famous quote "Nobody is perfect. But, who wants to be nobody?"
In other words:
long-term success is more dependent upon employee and customer satisfaction. But, who wants long-term success?

Posted by J. Gomez at July 8, 2009 5:07 PM

Tom,

Your posts have been very good recently; I was lukewarm on the butterfly post, but some of your business experience (that I admire) is shining through.

We are a consumer nation now. The country, even into the 80's, was focused on manufacturing and proud of producing a product for domestic sale and exporting. As I look at the enormous amounts of debt being committed by congress for whatever, I'm not sure of what our nation has to offer other than a giant cream puff to pay down the debt. At some point the country may have to devalue the dollar greatly to pay back other countries.

Obama is beginning to cut defense contracts and there are rumblings in my section of the country of further cuts with military contractors. I was also speaking with a US postal worker today and he was discussing the impact of their cuts. He prays everyday that he won't be involved in the next round of layoffs.

I'm just curious...seeing as we're a consumer nation and we've outsourced thousands upon thousands of jobs since the 80's and 90's, what's going to move us back up the hill?

I was in a Broadway Deli with my family a few Thursdays back, and when we left at 7:00 p.m., we were the only clients in the place; on a major street.

I'm afraid that it's not so much whether your product is excellent or service is great, but whether or not the buying public has any money in their pocket.

Executives are talking up the turnaround more and more because they've cut everything they can, they have nothing left in their bag of bullshit, I mean tricks, and they need a new mantra. THEY SHOULD BE CUT NEXT.

Well said Gomez. As Queen wrote, "I want it all, I want it all, I want it all, and I want it now!"

Posted by Scott Peters at July 8, 2009 7:51 PM

Scott - To clarify, Tom was not the author of the butterfly post, that was our colleague, John O'Leary. This post was written by our colleague Mike Neiss. Tom occasionally asks some of our associates to write for this site as he values their perspectives. You can find the name of the post's author at the end of each post.

Posted by Shelley Dolley at July 8, 2009 8:35 PM

"...what's going to move us back up the hill?"

Scott, I like your question. Perhaps "marketing" and "distribution" are the new industry in the U.S. Just look at how we're scrambling to find new, creative ways to monetize what's free. Newspapers and magazines are having to lean toward advertising for revenue, by attaching it to what consumers want to get at no cost. Namely, information. You might bundle entertainment with that, especially since vehicles such as YouTube, Facebook, etc. have totally blurred the distinctions between the spread of "news" and other avocations. To be honest, I rarely go to a news website or even television. Most of the stories I come across and follow no longer seem to be under the direction of editors and publishers. What is really "newsworthy" is now determined by other non-news friends online. I find it a bit ironic that we might still consider ourselves to be "consumers" of information, yet we are becoming increasingly more "gatekeepers" and "publishers" and part of the information distribution network: we help shape the flow of it every time we post a link to a story or item (or DON'T post such a link.) Either way, we become quasi-editors/quasi-filters.

Posted by Dan Gunter at July 9, 2009 7:29 AM

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Good post Mike, sorry about the identity confusion.

Dan---thx for the note.

Posted by Scott Peters at July 9, 2009 7:39 PM

Scott, I also liked your comment about how people aren't buying executive B.S. anymore and the bag is empty. Sad, but oh, so true.

I can't believe the GM "Chapter One" ads. Apparently, they must not have hired the same folks to assist them in their recovery marketing/P.R. efforts that the makers of Tylenol did. THAT was a graceful recovery from a situation many thought might not be manageable. Of course, the circumstances were vastly different. The Tylenol tampering disaster was not the result of the company's mistakes. They learned a valuable lesson -- a lot of people did -- and made the necessary changes. GM has had ample time and opportunity to adjust. They just haven't demonstrated the capability.

Maybe "Chapter One" was just a video production and scripting error: they left off a digit, perhaps? That, or in GM's version of math, "1" is just one breath away from... well, being mathematically challenged could explain a lot of their troubles.

Posted by Dan Gunter at July 10, 2009 11:05 AM

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Very thoughtful and creative comments.

With regard to one of the comments about outsourcing, being a consumer nation, and outsourcing, I believe that was our design. We consumed more because we created more value (exported more earlier) and continued to consume more though exports(value creation) fell. When companies had surplus cash couple of years ago, they bought back stock rather than reinvest in value creation and the effects of those decisions can be felt now. When other countries are stepping up their competitive advantage, we have to move up the ladder in value innovation by strengthening the foundations of the economy through strengthening education standards.

I believe we need pipeline of innovation that can continue to raise our productivity and contribute to economic sustainability.

Posted by Veera Srinivasan at July 19, 2009 8:32 PM

Veera, very interesting thoughts. Makes me wonder, as a nation have we gotten so caught up in importing, selling, and adding value to the other people's mousetraps that we've forgotten how to design totally new, truly innovative ones? I know there are pockets of innovation to be found all over the U.S., but is such innovation being compartmentalized and concentrated in small areas as opposed to being disseminated throughout various industries?

Posted by Dan Gunter at July 20, 2009 7:33 AM

Veera and Dan...yes, agreed. Dan, I work with one client that knows that innovation keeps it alive and is the lifeblood of their product line's brand equity. But even they are feeling tremendous pressure to lower costs, and prices, because the buying public seems to value the low cost supplier to the innovative product. At least in their market. It is going to be interesting!

Posted by mike Neiss at July 20, 2009 8:17 AM

very good

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