In Search of Operational Excellence

This blog post is long overdue. I actually drafted this post already about a year ago, but due to several reasons did not post it before now. Last year was extremely challenging for me, and I reduced my workload by stopping updating this blog. Let's see if I can bring it alive again.

About a year ago I found this article about Five Hallmarks of Operational Excellence by Accenture. Here's my summary of it.

Accenture research on past economic downturns has found that high-performance businesses put a premium on operational excellence and pull ahead of their competition at the end of an economic recession. Here are the five factors that influence the creation of positive, long-term impacts in both good times and in bad.

“Sometimes you need that external threat to make those tougher decisions you knew you had to make anyway, and also to convince others that it is time for change” said one COO

Companies that come out ahead of their competitors share these five essential characteristics
1 Identified competitive essence – the "dominant vector"
2 Establishing the right structure
3 Execution - the path from strategy to action
4 Balancing structure and execution
5 Choosing the right journey

1. Naming the company's dominant vector
The mechanism by which organization best creates economic profit. It is a longterm characteristic—something that should change only when the company’s underlying values change. It can be summarized simply and clearly; it’s a statement that everyone in the organization can hold on to.

Accenture article mentions Kennedy and Nasa here, but let me quote Garr Reaynolds, whose blog, Presentation Zen, has been one of my biggest sources of inspiration for my blog.

(a) “Our mission is to become the international leader in the space industry through maximum team-centered innovation and strategically targeted aerospace initiatives.”
                      Or…
(b) “…put a man on the moon and return him safely by the end of the decade.”

In his post Garr continues "The first message sounds similar to CEO-speak of today and is barely comprehensible, let alone memorable. The second message — which is actually from a 1961 speech by JFK — motivated a nation toward a specific goal that changed the world.")

2. Establishing the right structure
Aligning people, process, technology, and organization structure, the operating model is designed and developed based on external and internal priorities. It relies on strategic decisions about customers, products and routes to market, and serves to deliver the capabilities that match the dominant vector.

Needless to say that my choice of picture of a Leatherman multitool has the right structure.

3. Execution – the path from strategy to action
Excellence in execution revolves around drivers of simplification, standardization and the elimination of waste.
- Clear understanding of what customers are willing to pay for.
- Push for asset productivity.
- Stress process excellence, emphasizing continuous improvement techniques and process discipline.
- Build enduring capabilities and ensure that best practices are proliferated across the enterprise.
- Ensure the close alignment of business strategy, goals, metrics, and initiatives through performance management.

This list by Accenture reminds me of Lean principles and management system such as Really Simple Balanced Scorecard.

4. Balancing structure and execution
Structure and execution must not be considered independent of one another. Execution and robust processes to drive steady gains in product quality and productivity. Structure that supports agility and the resource flexibility to be able to respond easily to new market opportunities. Business leaders have to know how structure affects execution, and how superior execution enables a leaner structure.

This in turn was best summarized in the book and articles by John Spence, another person whose ideas have influenced my blog greatly.

5. Choosing the right journey
Three alternative journeys
- Continuous improvement that focuses on building excellence in execution
- Targeted interventions that span structure and execution in a key functional area
- Transformational initiatives that are top-down and largely structural in emphasis

Accenture concludes the article by saying "The tools, techniques and expertise are available to help make operational excellence an everyday reality—and a long-term differentiator. What’s needed now is the management intent."

They also note the following challenge. "The challenge is that powerful change factors such as these regularly outstrip organization’s abilities to respond; they are not operated and governed with the focus and rigor needed to deal with the current complexities."

Operational excellence is simple as that, but achieving it is not easy.

Things that work

Lately I have been thinking about Operational Excellence. Not the low cost strategic positioning I used to know as operational excellence, but something completely different.

An article by Spencer Stuart starts by stating: Six Sigma, lean manufacturing, total quality management are just a few of the programs companies are implementing to increase profitability and eliminate waste. When integrated under the umbrella of Operational Excellence and applied across the organization, however, a new way of doing business emerges — one that produces higher yields, reduces waste, improves quality and increases customer satisfaction.

The institute of Operational Excellence gives this definition: Operational Excellence is when each and every employee can see the flow of value to the customer, and fix that flow when it breaks down.

But what does this really mean? I tried to define this in a way that would apply to anything and that could be understood by anybody, and came up with my own definition.

• Operational Excellence is your ability to design, produce, deliver, support and continuously improve things that work the way they are supposed to.


• Your customer requirements define the way your products or services are supposed to work.


• Things that work the way they are supposed to lead to customer satisfaction.


• Things that don't work the way they are supposed to lead to frustration.

This morning I saw this ad by Apple, which is pretty much built around the same message.



Did you notice Anne saying: "The real fresh start would be moving to a (product) which is rated #1 in customer satisfaction. ... I could stick to what I know, but what I know is pain and frustration."

Easy choise - isn't it?

Does your product or service work as it is supposed to? Are your customers satisfied or frustrated? And what might be your next step?

The Hazards of Leading Culture Change

I just received the latest ChangeThis newsletter including one manifesto on my favorite topic leading culture change. I decided to just quicly blog the manifesto as is (under the Creative Commons Attribution-NonCommercial-NoDerivs License).



"When great starts have poor endings, it can leave change pioneers disappointed, hard working organizers disheartened, and skeptics with proof they were correct all along. It makes the next initiative more challenging to launch and the next set of resistors more defiant. However, without needed change the organization risks losing its competitive advantage. Losing its edge makes it harder to attract and retain the best talent and resources, and in today’s economy, the death knell begins.

Planned change takes courage and tenacity. Even organizations with a burning platform, effective leaders, and well-crafted plans can sometimes miss the mark because they fail to recognize early signals that the seeds for derailment are being sown or they fail to realize the power of the signals they are sending via decisions that are unsupportive of the culture change commitment. Derailment is much more likely during periods of organizational anxiety from economic challenge, organizational shift (like a major merger or new competitor), or a change in senior leadership. However, these high profile hazards are easier to spot and therefore simpler to combat. It is the more subtle shifts that can do the most damage before their presence is even noticed.”

by Chip R. Bell & John R. Patterson. Their newest book is Take Their Breath Away: How Imaginative Service Creates Devoted Customers. They can be reached through taketheirbreathaway.com.

Lean, Elegant and Excellent

I just experienced the most impressive company visit during my career. I have visited quite a few companies in several industries during the past 15 years, but none of them compares to NBK in Gifu, Japan. NBK originally started 450 years ago as a pot maker and has during the years evolved to a maker of metal parts such as pulleys, couplings and screws, with 410 employees generating US$ 80 million of revenue.

What made this visit so impressive is that they seem to fullfil all

• the 4P model of the Toyota Way


• the 14 principles of the Toyota Way - the subcategories of the 4P


• the 9 criteria for Achieving Business Excellence


• the 4 key elements of Elegance

I'm not going to list all those principles here, I have explained most of them earlier and will be blogging about Toyota Way later.

NBK has managed to create a true learning organization which operates according to lean principles producing high quality products with high customer and employee satisfaction and good profitability.

And they do this with

• no sales budget


• no cost budget


• no profitability target


• no HR department


• no Quality assurance department


• no maintenance department


• no bureacracy


• ...

Instead they had had culture where they put high emphasis on employee learning, job rotation, continuous improvement and meeting each customer's needs. Their Sushi Bar Concept describes how committed they are to meet their customers needs - to understand the rest you need to go and visit the factory.

SUSHI BAR CONCEPT

NBK's craftsmanship meets each customer's needs.

As our customer, we would deliver what you need, right when you need it, in just the amount you require. We at NBK have been polishing our skills in an effort to craft each individual product with precision and mastery, as embodied in the work of sushi bar chefs. We continually strive to respond to all customer needs. We do so by engaging in "one-by-one production," and inspecting every single product that we produce in order to ensure the highest quality possible, and by responding to customer orders anywhere, anytime, and for any quantity, even for an order of one.

Creative Chaos or Productive Neatness?

Recent blog post on Bill Matthies’ Business Wisdom got me commenting on creative chaos and productive neatness. And it got me thinking of brainstorming which might look like creative chaos. But when brainstorming is mastered the creative chaos is actually guided by productive neatness.

I’m not that good at it, but here’s the best practice I learned five years ago by watching the video(s) below by Ideo. While watching the video I sketched the process on the right – the “chaos” at Ideo happens neatly within these boundaries.







See also FastCompany articles Seven Secrets to Good Brainstorming and Six Surefire Ways to Kill a Brainstorm. Or my previous post The Art Of Innovation (which is also name of the book where Ideo presents these rules and stories).

OMG! This is all 5-10 years old stuff, am I getting slow or old?

How should business leaders learn from GM's latest turning point?

In this weeks Harvard Business School Working Knowledge Newsletter several faculty members write about GM: What Went Wrong and What's Next. Nancy F. Koehn, Professor of Business Administration, highlights same fundamental leadership and management issues I have been blogging about earlier.

General Motors was formed in 1908, the same year Henry Ford brought out the first Model T. Ford Motor Company became the undisputed leader of this young market and by the early 1920s, it was producing 60 percent of all the motor vehicles manufactured in the United States and half of those made worldwide. All of these automobiles were Model Ts, offered in one color: black.

Beginning in the mid 1920s, GM staged an astounding victory against Ford Motor Company. Alfred Sloan, Pierre Du Pont, and other GM executives placed a series of important bets on what American consumers wanted (different makes, models and prices; cars that were status symbols and identity holders as well as transportation sources) and they did so with careful, consistent attention to what the competition was—and was not—doing. As company leaders rolled out this daring strategy, they also created an organizational structure and culture developed to support a multi-product, vertically integrated enterprise. By the mid 1930s, GM's market share had risen to 42 percent while Ford's had fallen to 21 percent.

In this context, it is interesting to consider the root causes of General Motor's decline, which has been under way for 30 years. Although there are many factors that contributed to the company's long, slow bleed, the three fundamental issues are management's consistent failure to do the very things that made the business so successful initially.

1. First, pay close attention to what is happening to consumers' lives in the context of the larger environment—not only their stated preferences, but their hopes, dreams, wallets, lifestyles, and values.


2. Second, keep an equally close eye on the competition. (Look close at the picture above and you will see a hybrid Prius among the pick up's and SUV's.)


3. And third, understand how a company's structure and culture relate to its strategy. Use all this understanding to place innovative bets. This is what the early leaders of GM did. And this is what several generations of executives—beginning in the 1970s with the first oil shocks and the entrance of Japanese imports—have consistently failed to do.

It has been a failure of leadership as astounding and momentous (and ironic) as the company's early achievement, Professor Koehn concludes.

In my earlier post Link Between Strategy, Culture, Change and Leadership I quoted Edgar Schein from The Corporate Culture Survival Guide:

The organization clings to whatever made it a success. The very culture that created the success makes it difficult for members of the organization to perceive changes in the environment that require new responses. Culture becomes a constraint on strategy.

This is what happened to GM. At the moment GM is changing their strategy and structure dramatically. Their survival will depend on wether they are able to change also their culture - and that requires a lot of leadership and quite some time. But there is hope – the same thing happened to Ford (in the 1920s) yet today they are the only US car manufacturer not needing government bailout.

What's Blocking Your Ideas?

I read another interesting post by IdeaChampions. This time about enabling an nurturing innovations. They compare Innovation process to a river - If you want to create a river, you will need two things: flowing water and two river banks. If you want to create a culture of innovation, you will also need two things:

new ideas and the organizational structures to keep those ideas flowing forward.

Like in their Team Reality Check, they had an online poll about What's the Problem (with your innovation process). You can use their survey to identify the challenges, bottlenecks, and weak links of your innovation process.

On a scale of 1-5, "5" meaning "it's a BIG problem," and "1" meaning "it's not a problem at all," please rate the following statements re: your company's attempts to generate, develop, and implement new ideas (both incremental and disruptive) to grow the business.:

1. We have too many ideas.	1	2	3	4	5
2. We don’t have enough breakthrough ideas.	1	2	3	4	5
3. We’re not asking the right questions.	1	2	3	4	5
4. We tend to avoid conflict.	1	2	3	4	5
5. We’re not very good at prioritizing projects.	1	2	3	4	5
6. Follow through is not one of our strengths.	1	2	3	4	5
7. Our brainstorm sessions are poorly facilitated.	1	2	3	4	5
8. Our meetings are poorly facilitated.	1	2	3	4	5
9. We lack the tools and techniques to spark creative thinking.	1	2	3	4	5
10. We don’t have enough time to originate & develop ideas.	1	2	3	4	5
11. We lack a company-wide innovation process.	1	2	3	4	5
12. We have an innovation process, but not everyone understands how it works.	1	2	3	4	5
13. Employees are unclear about our company’s vision and strategy.	1	2	3	4	5
14. Senior leadership is not committed to innovation.	1	2	3	4	5
15. Our decision making process is unclear and takes too long.	1	2	3	4	5
16. We never seem to have enough data to make decisions.	1	2	3	4	5
17. We’re not flexible or agile enough to innovate.	1	2	3	4	5
18. Our middle managers feel burdened by new projects.	1	2	3	4	5
19. We share neither our best practices nor the learnings from our failures.	1	2	3	4	5
Other: _________________________________________________________________

This survey should help your identify the problem areas. Ideas and tools on how to solve them are elsewhere in my blog and in IdeaChampions blog.

Picture by lumaxart

We Are All in This Together

If you are committed to accomplishing extraordinary results, chances are good that you will need to collaborate with others. IdeaChampions posted some weeks ago a

Team Reality Check

Most people's experience of being on a team -- especially those who work in large companies -- is less-than-ideal, filled with frustration, power struggles, and the belief that it's not worth the effort.

OK. Those days are over. No matter how disappointing your experience of teamwork may have been in the past, it's never too late to turn things around. And it all begins with AWARENESS -- tuning into what's actually going on with you and your team.

That awareness can start by taking the IdeaChampions Team Reality Check below or online at their site.

On a scale of 1-5 (with "5" being the highest possible score), please rate the team you work most closely with on each of the following indicators of success:

1. Clear about it’s mission?	1	2	3	4	5
2. Aligned about roles and responsibilities?	1	2	3	4	5
3. Communicating effectively?	1	2	3	4	5
4. Freely sharing information?	1	2	3	4	5
5. Trusting each other?	1	2	3	4	5
6. Making the best use of conference calls?	1	2	3	4	5
7. Enjoying the process of being on a team?	1	2	3	4	5
8. Free of blame-making and gossip?	1	2	3	4	5
9. Going the extra yard?	1	2	3	4	5
10. Free of group think?	1	2	3	4	5
11. Giving and receiving feedback to and from each other?	1	2	3	4	5
12. Keeping its commitments?	1	2	3	4	5
13. Collaborating effectively?	1	2	3	4	5
14. Diverse enough?	1	2	3	4	5
15. Thinking creatively about its goals and challenges?	1	2	3	4	5
16. Celebrating its successes?	1	2	3	4	5
17. Sharing best practices and lessons learned?	1	2	3	4	5
18. Equally accountable for results?	1	2	3	4	5
19. Getting the support it needs?	1	2	3	4	5
20. Aligned about its mission?	1	2	3	4	5
21. Operating under clearly defined agreements?	1	2	3	4	5
22. Able to make wise decisions in a timely way?	1	2	3	4	5
23. Speaking its truth with each other?	1	2	3	4	5
24. Truly motivated?	1	2	3	4	5
25. Learning from mistakes and breakdowns?	1	2	3	4	5
26. Asking for what it needs?	1	2	3	4	5
27. Being strategic? Planning ahead?	1	2	3	4	5
28. Flexible and adaptive?	1	2	3	4	5
29. Making best use of email and online collaboration tools?	1	2	3	4	5
30. Taking full responsibility for creating extraordinary results?	1	2	3	4	5
31. Connecting as human beings, not just “task-doers”?	1	2	3	4	5
32. Making best use of outside resources?	1	2	3	4	5
33. Listening to each other?	1	2	3	4	5
34. Focused on results?	1	2	3	4	5
35. Resolving interpersonal breakdowns in a timely way?	1	2	3	4	5
36. Confident about being able to accomplish it’s mission?	1	2	3	4	5
37. Meeting frequently enough?	1	2	3	4	5
38. Succeeding in its mission?	1	2	3	4	5
39. In sync about how and what it communicates to others?	1	2	3	4	5
40. Committed to a process of becoming a high performing team?	1	2	3	4	5

The questionnaire will help you find the strong areas of your team as well as the areas that need further development. Remember to be honest with answers.

IdeaChampions should soon be posting their results of the online poll, with hints to help you and your team get into deep dialogue about what it will take to really collaborate in 2009. I'll post that link here when it is available.

Picture by lumaxart

The Art of Innovation

My friend Jenni, who is in design industry, commented my previous post saying one of her favourites among the management's grand challenges was how to

Further unleash human imagination.
Much is known about what engenders human creativity. This knowledge must be better applied in the design of management systems.

I started thinking about this and realized I have come across a perfect example some seven years ago.

”IDEO Product Development is the world's most celebrated design firm. Its ultimate creation is the process of creativity itself. For founder David M. Kelley and his colleagues, work is play, brainstorming is science, and the most important rule is to break the rules... Can this formula for creativity work in other places? Some of the world's leading companies certainly think so.”

said FastCompany on the back cover of the book The Art of Innovation: Lessons in Creativity from IDEO, America's Leading Design Firmby Tom Kelley, General manager of IDEO and brother of the founder David.

I will let Tom Kelley speak for himself



What this all comes down to is actually not ”the design of management systems”, but the leadership and culture which support (un)management systems unleashing imagination, like at IDEO.

”IDEO's culture is 20+ years in the making. Compound that number by the hundreds of people who have contributed over the years and you get a special mix. Our values are part mad scientist (curious, experimental), bear-tamer (gutsy, agile), reiki master (hands-on, empathetic), and midnight tax accountant (optimistic, savvy). These qualities are reflected in the smallest details to the biggest endeavors, composing the medium in which great ideas are born and flourish ”

And they really are good at this. Click the screenshot below to see what they are thinking about at the moment, or check their projects and how they have been awarded.



Again, I have more ideas than I can fit on one blog post. If you got interested, I will guide you to some great videos related to the topic of creativity and innovation at TED.com and Stanford University:

Young at Heart: How to Be an Innovator for Life by Tom Kelley, who presents five core practices that enhance creativity.

Nine Lessons Learned about Creativity at Google by Marissa Meyer. I have used two of these on my earlier posts about Ideas Come from Everywhere and Right People On The Right Jobs.

Do schools kill creativity? by Sir Ken Robinson, who makes an entertaining and profoundly moving case for creating an education system that nurtures (rather than undermines) creativity.

How creativity is being strangled by the law by Larry Lessig with a vision for reconciling creative freedom with marketplace competition.


I hope these help you, like they help me, to further unleash human imagination.

Benefits of a Better Corporate Culture

Just before Christmas Harvard Business School's Working Knowledge Newsletter contained an article about corporate culture. I had just been blogging about culture a week before.

The article asks: Why is it that many of the same companies appear repeatedly on lists of the best places to work, the best providers of customer service, and the most profitable in their industries? The answer lies in recognizing that

strong, adaptive cultures can foster innovation, productivity, and a sense of ownership among employees and customers.

The article lists top 10 lessons from the new book Ownership Quotient by HBS professors Jim Heskett and Earl Sasser and coauthor Joe Wheeler.

1. Leadership is critical in codifying and maintaining an organizational purpose, values, and vision. Leaders must set the example by living the elements of culture.
2. Like anything worthwhile, culture is something in which you invest. An organization's norms and values aren't formed through speeches but through actions and team learning. Strong cultures have teeth. They are much more than slogans and empty promises.
3. Employees at all levels in an organization notice and validate the elements of culture. Converatsions such as the "fairness of my boss" have the underlying theme of the strength and appropriateness of the organization's culture.
4. Organizations with clearly codified cultures enjoy labor cost advantages for the following reasons:
   - They often become better places to work.
   - They become well known among prospective employees.
   - The level of ownership—referral rates and ideas for improving the business of existing employees—is often high.
   - The screening process is simplified, because employees tend to refer acquaintances who - behave like them.
   - The pool of prospective employees grows.
   - The cost of selecting among many applicants is offset by cost savings as prospective employees sort themselves into and out of consideration for jobs.
   - This self-selection process reduces the number of mismatches among new hires.
5. Organizations with clearly codified and enforced cultures enjoy great employee and customer loyalty.
6. An operating strategy based on a strong, effective culture is selective of prospective customers. It also requires the periodic "firing" of customers.
7. The result of all this is "the best serving the best," or as Ritz-Carlton's mission states, "Ladies and gentlemen serving ladies and gentlemen."
8. This self-reinforcing source of operating leverage must be managed carefully to make sure that it does not result in the development of dogmatic cults with little capacity for change. High-performing organizations periodically revisit and reaffirm their core values and associated behaviors.
9. Organizations with strong and adaptive cultures foster effective succession in the leadership ranks. In large part, the culture both prepares successors and eases the transition.
10. Cultures can sour. Among the reasons for this are success itself, the loss of curiosity and interest in change, the triumph of culture over performance, the failure of leaders to reinforce desired behaviors, the breakdown of consistent communication, and leaders who are overcome by their own sense of importance.

It is amazing how important culture is, how easy it is to notice and distinguish good culture from bad, and how difficult culture is to define and measure.

Personally I am happy that I work in a great company with a great culture, great products and great business results.

Organizational Culture

Organizational culture is created by little things. I experienced this some time ago when we renewed some office furniture.

I realized one day that I was sitting on a nice chair (which I had inherited)
while all the other chairs in the office were literally falling apart.

We started changing the chairs from our service team as they were getting new desks at the same time. This caused some discussion. Some teams felt they are more important than service team, and should have at least as good chairs before the service team. We were soon changing all the chairs, so this did not become an issue.

But of course not all the chairs are similar. It was rather important that some chairs have armrests and others don't. And as you can guess, this has nothing to do with some people needing to rest their arms more than others.

Now I am still sitting on my old chair, while everybody else in the office has nice new chairs.

Years ago I studied organizational culture and I could not have believed it is really built with such little things. But it is. Edgar Schein has a three level model for organizational culture.

1st level

Organizational attributes that can be seen, felt and heard by the uninitiated observer. Included are the facilities, offices, furnishings, visible awards and recognition, the way that its members dress, and how each person visibly interacts with each other and with organizational outsiders.

2nd level

The next level deals with the professed culture of an organization's members. At this level, company slogans, mission statements and other operational creeds are often expressed, and local and personal values are widely expressed within the organization.

3rd level

At the third and deepest level, the organization's tacit assumptions are found. These are the elements of culture that are unseen and not cognitively identified in everyday interactions between organizational members. Additionally, these are the elements of culture which are often taboo to discuss inside the organization. Many of these 'unspoken rules' exist without the conscious knowledge of the membership.

I blogged earlier about how organizational culture is more powerful than organizations strategy. If you want to change one, you need to change both.

The following story of monkeys and bananas illustrates well how organizational culture is formed. And this culture and the original strategy really need some changing...

Start with a cage containing five monkeys. Inside the cage, hang a banana on a string and place a set of stairs under it. Before long, a monkey will go to the stairs and start to climb towards the banana. As soon as he touches the stairs, spray all of the other monkeys with cold water. After a while, another monkey makes an attempt with the same result - all the other monkeys are sprayed with cold water. Pretty soon, when another monkey tries to climb the stairs, the other monkeys will try to prevent it.

Now, put away the cold water. Remove one monkey from the cage and replace it with a new one. The new monkey sees the banana and wants to climb the stairs. To his surprise and horror, all of the other monkeys attack him. After another attempt and attack, he knows that if he tries to climb the stairs, he will be assaulted.

Next, remove another of the original five monkeys and replace it with a new one. The newcomer goes to the stairs and is attacked. The previous newcomer takes part in the punishment with enthusiasm! Likewise, replace a third original monkey with a new one, then a fourth, then the fifth.

Every time the newest monkey takes to the stairs, he is attacked. Most of the monkeys that are beating him have no idea why they were not permitted to climb the stairs or why they are participating in the beating of the newest monkey.

After replacing all the original monkeys, none of the remaining monkeys have ever been sprayed with cold water. Nevertheless, no monkey ever again approaches the stairs to try for the banana. Why not? Because as far as they know that's the way it's always been done around here.

And that, is how company culture begins.

The Positive Business Manifesto

I read another great article at ChangeThis. Jon Gordon wrote a manifesto about Positive Business. He states that you would have to live on another planet not to notice the plethora of business books and articles discussing the importance of developing a positive organizational culture at work. The research is clear, he continues.

Positive leaders, positive work environments, and positive engaged employees produce positive results.

However, if building a positive business is so important and beneficial, then we are left to wonder, “Why aren’t more companies, more positive?” Why are there not more people skipping through the halls, smiling at their co-workers and loving their job? Why do more people die Monday morning at 9am than any other time? Why does negativity cost companies 300 billion dollars and sabotage teamwork, careers, morale and performance?

Successful, positive companies with positive employees and positive cultures are created like anything else—through a set of principles, processes, systems and habits that are ingrained in the corporate culture and each individual employee. Positive companies aren’t born. They are developed by positive leaders. And when you build a positive business, culture drives behavior and behavior drives habits.

To build a positive organization fueled by positive energy, the leader must invite his/her leadership team on the bus and develop a shared vision, focus, purpose and direction for the business. The leadership team must join the leader in making their organizational culture a top priority and be engaged and committed to the process.

In a world driven by stock price and short term results, building a positive, successful company requires leaders to have a long term vision. You should not focus on the fruit of the tree—stock price, profits, costs, etc. You should focus on the root— the culture, trust, people and positive energy of the company. Leaders who run successful, positive companies over a long period of time know that when you take care of the root of the tree you will always be pleased with the fruit it supplies. However, if you ignore the root, eventually the tree will dry up and so will the fruit.

At work you’ll likely face organizational and individual negativity. You’ll have to deal with processes and systems that create poor communication and negative interactions. In other cases negativity will arise from negative co-workers and customers, a group of office complainers and/or a boss who is a jerk. Regardless of your situation or the source of negativity, it is critical that you take action to cultivate the positive and weed out the negative.

Building a positive business always begins with selecting the right people. We must identify who the right people are, make sure they are positive, and create a process that gets them on the bus. We must also make sure we let the wrong people off the bus. Too many leaders know who their negative employees are but they don’t know what to do with them, and so they do nothing, which leads to dangerous consequences.

With the right people on your bus, you want to make sure you communicate consistently and effectively with them so they always know where the bus is going. Peter Drucker says that 60% of management problems are the result of faulty communication. When people feel fearful or uncertain or unheard they start thinking the worse and act accordingly, and negative energy increaces. By designing systems that enhance communication, you allow positive energy to flow through the business.

When you care about your employees and the people you work with, they are more likely to stay on the bus and work harder, with more loyalty and greater positive energy. In turn, they are more likely to share their positive energy with your customers, enhancing service and the bottom line. That’s why I say the greatest customer service strategy has nothing to do with customer service, but rather it has everything to do with how you treat your employees. If you treat them well, they will treat the customer well.

Caring about your employees keeps your people on the bus, but when you drive with purpose they will help you push it when the bus breaks down. The fact is every organization will face adversity and challenges and be tested on their journey. And the answer to these tests is a positive culture filled with purpose driven people.

I've shared a number of principles, strategies and suggestions to develop a positive business. However, he is realistically aware that none of this will do any good unless you and your organization have the ability to take action and execute. The difference between a successful positive business and unsuccessful business is one word: “Execution.” The way the most successful businesses do ordinary things better than everyone else.

To build a positive business, you must be able to not only identify your vision and purpose for your organization, but make it so it is ingrained in the culture, mindset and actions of your people. Having the desire to be a positive business is wonderful, but it won’t happen unless you relentlessly focus on your culture, people, processes and systems.

I wish you all green lights on your journey. Stay Positive,
Jon Gordon

The text above is my short summary of Jon's manifesto about Positive Business.



Jon Gordon is the author of The No Complaining Rule: Positive Ways to Deal with Negativity at Work and The Energy Bus: 10 Rules to Fuel Your Life, Work, and Team with Positive Energy

Difference Between Management And Leadership

My son's class started reading The 7 Habits Of Highly Effective Teens and I went back browsing The 7 Habits Of Highly Effective People.

In the book I found a quote from Peter Drucker

Management is doing things right,
Leadership is doing the right things.

The author, Stephen R. Covey illustrates the difference with a little story.

You can quickly grasp the important difference between the two if you envision a group of producers cutting their way trough the jungle with machetes. They're the producers, the problem solvers. They're cutting through the undergrowth, clearing it out.

The managers are behind them, sharpening their machetes, writing policy and procedure manuals, holding muscle development programs, bringing in improved technologies and setting up working schedules and compensation programs for machete wielders.

The leader is the one who climbs the tallest tree, surveys the entire situation, and yells, “Wrong jungle!”

But how do the busy, efficient producers and managers often respond? “Shut up! We're making progress.”


The other day I was watching Letters from Iwo Jima by Clint Eastwood. I observed very similar leadership behavior by General Kuribayashi (Ken Watanabe) and very similar management behavior by his officers. In small and big issues.

The smallest might be, when he instructed the cook to serve officers same food as for men. He was brought two extra emply plates, because the officers were to be served three course meals (according to the official rules).

A bigger issue was described in New York Times: General Kuribayashi, the highest-ranking officer on Iwo Jima, had instructed their unit to abandon its position so as to concentrate the remaining forces elsewhere on the island. Instead their captain, choosing ancient custom over the explicit directions of a superior officer, put a bullet in his head, after watching his men, one by one, clutch live grenades to their chests.

Dispite the leader had yelled "Wrong battle! Come here and let's continue the battle."

The movie has many more similar examples of good leadership trying to overcome bad management.

Same happens in small scale in many workplaces. Official procedures or long traditions limit people from doing the right thing.

I wonder where were the leaders during US financial crisis? Or during the Chinese milk scandal?

Why didn't they yell "Wrong jungle!"?

Or were there too many people getting blinded by the obvious respond "Shut up! We are making profit."?

Managers Need to Become Innovation Coaches

I read an interesting post by Mitch Ditkoff, the author of Awake at the Wheel: Getting Your Great Ideas Rolling (in an Uphill World).

It's all about creating a culture of innovation, and I could not agree more with what Mitch writes. Below is a slightly shortened version of his original blog post.

"Intellectual capital" is the name of the game these days -- and it is the enlightened manager's duty to learn how to play.

Only those companies will succeed whose people are empowered to think for themselves and respond creatively to the myriad of changes going on all around them.

Managers must learn how to coach their people into increasingly higher states of creative thinking and creative doing. They must realize that the root of their organization's problem is not the economy, not cycle time, not strategy or outsourcing, but their own inability to tap into the power of their workforce's innate creativity.

Everything you see around you began as an idea. The computer. The stapler. The paperclip, the microchip and the chocolate chip. All of these began as an idea within someone's fevered imagination. The originators of these ideas were on fire. Did they have to be "managed?" No way. In fact, if they had a manager, he or she would have done well to get out of the way.

If you want to empower people, honor their ideas. Give them room to challenge the status quo. Give them room to move -- and, by extension, move mountains.

The arrival of a new idea is typically accompanied by a wonderful feeling of upliftment and excitement -- even intoxication. It's inspiring to have a new idea, to intuit a new way of getting the job done. Not only does this new idea have the potential to bring value to the company, it temporarily frees the idea originator from their normal habits of thinking. A sixth sense takes over, releasing the individual from the gravity of status quo thinking.

In this mindset, the idea originator is transported to a more expansive realm of possibility. All bets are off. The sky's the limit. All assumptions are seen for what they are -- limited beliefs with a history, but no future.

If you are a manager, you want people in this state of mind. It is not a problem. It is not the shirking of responsibility. It is not a waste of time. On the contrary, it's the first indicator that you are establishing a company culture that is conducive to innovation.

You, as a manager, want to increase the number of new ideas being pitched to you. It's that simple. You want to create an environment where new ideas are popping all the time. If you do, old problems and ineffective ways of doing things will begin dissolving. This is the hallmark of an empowered organization -- a place where everyone is encouraged and empowered to think creatively. Within this kind of environment managers become coaches, not gatekeepers.

How does a manager do this?

First off, by expressing a lot of positive regard. Get interested! Pay attention! Be present to the moment! This is not so much a technique as it is a state of mind. Simply put, if your head is always filled with your own thoughts and ideas, there won't be any room left to entertain the thoughts and ideas of others. It's a law of physics. Two things cannot occupy the same place at the same time.

And whether the pitch is now or later, your response -- in the form of exploratory questions -- needs to be as genuine as possible. Consider some of the following openers:

• "That sounds interesting. Can you tell me more?"
• "What excites you the most about this idea?"
• "What is the essence of your idea - the core principle?"
• "How do you imagine your idea will benefit others?"
• "In what ways does your idea fit with our strategic vision?"
• "What information do you still need?"
• "Who are your likely collaborators?"
• "Is there anything similar to your idea on the market?
• "What support do you need from me?"
• "What is your next step?"

Basically, you want the idea originator to talk about their idea as much as possible in this moment of truth. An idea needs to first take form in order to take root, and one of the best ways of doing this is to encourage the idea originator to talk about it -- even if their idea is not yet fully developed. The telling of the idea, in fact, is not unlike someone telling you their dream. The telling helps the dreamer flesh out the details of what they imagined and the subsequent hearing of it firmly installs it in their memory -- and yours -- so the idea does not fade quite as quickly.

Most of us, however, are so wrapped up in our own ideas that we rarely take the time to listen to others. Your subordinates know this and, consequently, rarely share their ideas with you. But it doesn't have to be this way. And it won't necessarily require a lot of time on your part. Some time, yes. But not as much as you might think.

Bottom line, the time it takes you to listen to the ideas of others is not only worth it -- the success of your enterprise depends on it. Choose not to listen and you will end up frantically spending a lot more time down the road asking people for their ideas about how to save your business from imminent collapse. By that time, however, it will be too late. Your workforce will have already tuned you out.

Text above is is a slightly shortened version of Mitch Ditkoff's original blog post.

Change Resistance

Many wise people have said many wise words about change resistance. Jack Welch, in his book Winning says "What you have heard about resistance to change is true." I prefer more what Michael T. Kanazawa says in his ChangeThis manifesto People Don’t Hate Change, They Hate How You’re Trying to Change Them:

If you believe that people hate change and that it is your job to change them, they will hate it.
If you believe that people thrive on change and that your job is to unleash it, you will tap into a limitless source of ingenuity, energy and drive that will allow you to consistently take your big ideas into big results.

Kanazawa mentions Apple, Google, Nintendo, Starbucks and IBM as examples of “companies [whose employees] have thrived on change, bringing out their best talents, creativity, ingenuity and determination.” He continues “Why can’t we all work in organizations like these? We can, if we focus on the right challenges.” Check his manifesto for his view of the challenges.

Carly Fiorina, former CEO of HP, talks about the dynamics of fear and change – how “change has to have enough force and enough energy to overcome people's fears and to overcome the power of the status quo.”



INSEAD professors Stewart Black and Hal Gregersen believe "that an organisation changes only as fast and as far as the front-line individuals implementing that change. Therefore, they need to be considered first, in the change paradigm." You can find a 2 page introduction to their new book It Starts with One: Changing Individuals Changes Organizations, and a 25 minute video where they chat about change here.

John Spence mentions adapting to change as one of the foundations of Achieving Business Excellence. Jack Welchdoes the same by saying that "Change is absolutely critical part of business. You need to change, preferably before you have to." Apple got that right with iPod – Sony failed with Walkman... What happened to Sony? Last December Newsweek published an article about why they failed to change.

Leading change is a critical part of every leader's job. Leaders need to help everybody overcome their fears. Every successful company needs to change, and an organisation changes only as fast and as far as the front-line individuals implementing that change. At the end, it becomes a question of enough leadership to change the culture.

To the end, my favourite quote from Peter Drucker, from his article Management's New Role (HBR November 1969).

We will, therefore, increasingly have to learn to make existing organizations capable of rapid and continuing innovation.
How far we are from this is shown by the fact that management still worries about resistance to change.

Do you fear change?

Or are you driven by change?

Do you worry about change resistance?

Do you help others overcome their fear and resistance?

Is your organization capable of rapid and continuing innovation – or should you change?

Leading Change

There is a lot of talk about the need of change, but much less about

How To Lead Change

John Kotter presented his model of Leading Change in Harvard Business Review in 1996. In 2006 he slightly updated the model in his book Our Iceberg Is Melting - Changing and Succeeding Under Any Conditions.

I created a presentation about the model, which is rather simple and universal. It can be applied to any change - global or small.

Our Iceberg Is Melting - Changing and Succeeding Under Any Conditions

SET THE STAGE

1. Create a Sense of Urgency.
Help others see the need for change and the importance of acting immediately.

2. Pull Together the Guiding Team.
Make sure there is a powerful group guiding the change— one with leadership skills, bias for action, credibility,
communications ability, authority, analytical skills.

DECIDE WHAT TO DO

3. Develop the Change Vision and Strategy.
Clarify how the future will be different from the past, and how you can make that future a reality.

MAKE IT HAPPEN

4. Communicate for Understanding and Buy-in.
Make sure as many others as possible understand and accept the vision and the strategy.

5. Empower Others to Act.
Remove as many barriers as possible so that those who want to make the vision a reality can do so.

6. Produce Short-Term Wins.
Create some visible, unambiguous successes as soon as possible.

7. Don’t Let Up.
Press harder and faster after the first successes.
Be relentless with instituting change after change until the vision becomes a reality.

MAKE IT STICK

8. Create a New Culture.
Hold on to the new ways of behaving, and make sure they succeed, until they become a part of the very culture of the group.


Can you think of a change process where this model is not valid?

Link Between Strategy, Culture, Change and Leadership

15 years ago I was reading books about organizational culture by Edgar H. Schein. At that time I was a studying Leadership and Management at the university and did not yet understand

The power of organizational culture.

Now I am starting to understand it. Culture is more powerful than Strategy. As Schein says in The Corporate Culture Survival Guide

The organization clings to whatever made it a success. The very culture that created the success makes it difficult for members of the organization to perceive changes in the environment that require new responses. Culture becomes a constraint on strategy.

Culture is always more powerful than Strategy. If you want to change one, you need to change both. Outlining new strategy on paper is management, but implementing it requires a lot of change leadership to influence the culture related to existing strategy. Often a new organizational structure is helpful, if not required, to implement a new strategy.

I found some related videos from Stanford site. It’s a great resource as videos are cut to 3-5 minute searchable topics, with individual descriptions.

Silicon Valley Bank CEO Ken Wilcox:
Culture Trumps Strategy
Building great corporate culture is more than just metaphors; it's what motivates a winning team.

Click twice to see on Stanford site

Debra Dunn, former vice president of strategy and corporate operations at Hewlett Packard
&
Randy Komisar, partner at venture capital company Kleiner Perkins Caufield and Byers:
Leadership and Change Management
Both speakers believe that leadership skills and the ability to handle change comfortably are the key characteristics that have been useful in their respective careers.

Click twice to see on Stanford site

Has your organization had a new strategy or structure implemented lately?

Simultaneously?

Have these had an effect on the corporate culture?

Was this all planned by clever leaders?

How confortable you are with change?

How confortable the rest of the organization is with change?

What is your role as a leader to influence the underlying culture?

Ideas Come from Everywhere

Matthew E. May begins his book The Elegant Solution: Toyota's Formula for Mastering Innovation with a chapter telling that

The Toyota organization implements a million ideas a year.

That’s a fact, he says. It is their greatest source of competitive advantage. It’s their engine of innovation. But more than that, Toyota has created a culture where every idea counts. It’s an environment of everyday innovation as a result of fanatical focus on getting little better, daily.

Harvard Business Review recently published an article about Reverse Engineering Google’s Innovation Machine. In the article there was a short, but interesting referral to suggestion box. “Google also employs an idea management system whereby employees can e-mail ideas for new products, processes, and company improvements to a companywide suggestion box. Every employee can then comment on and rate the ideas.”

HBR did not go further on linking this to Google’s culture. I am convinced that the secret is in the culture!
Photo of Suggestion box by hashir

I googled a little bit and found an article on Business Week about Managing Google's Idea Factory. (Apparently from this book, which I have not read).

The article is about Marissa Mayer, who was Google’s twentieth employee in 1999. Now she is Google's Vice President of Search Products & User Experience with the power and influence as a champion of innovation. One of the key reasons for Google's success is a belief that good ideas can, and should, come from anywhere. An ideas mailing list is open to anyone at Google who wants to post a proposal. What Mayer does is help figure out how to make sure that good ideas bubble to the surface and get the attention they need.

Or rather, let her explain the same with her own words at Stanford University Educators Corner. The video is just 3 minutes long, and there is more material from her lecture at Stanford site.

The stories of Toyota's and Google's culture of innovation sound similar, don't they? You can gain competitive advantage with a culture that supports everyday innovation coming from anywhere. Without the culture you don't find the ideas, you can't get them in use and you will not benefit from them.


Do you have a system for collecting and using ideas?

Does your corporate culture support ideas?

Would you like to have a culture like that?

What should you do as a manager to build the culture?

If big companies like Toyota and Google can build the culture, smaller companies should be able to do the same.