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.

Simplicity

Two years ago I saw Presentation Zen guru Garr Reynolds talk about a new way of presentations. To me it was really eye opening and gave me a totally new of seeing, creating and delivering presentations.

Last summer he delivered the following keynote speach about simplicity. His earlier talk is included in my earlier post Presentation Skills

The presentation is 43 minutes long, and you can read Garr's thoughts about it in his blog. I decided to post it today, because tomorrow Garr is delivering a presentation at Apple Store Ginza.

I will be there tomorrow. Last time I saw him had such a lasting influence on me and I realized that the search for simplicity was a common topic in many books.

Simplicity has became 2nd most frequent tag in my blog. Below some examples:

• Lean can lead to extreme simplicity like at NBK where I visited last summer.
• Management would be awesomely simple without change resistance (and with the right people on board change resistance simply disappears).
• My presentation about Really Simple Balanced Scorecard has exceeded all my expectations in every measure, especially with my simple measure for Customer satisfaction.
• My Mac is about the size of the dvd drive in my old PC. My iPod is smaller than my USB-stick. They simply work!

Let's keep it simple!

Lessons Learned = Some Advice

I created this blog about 3 years ago because I realized there were quite a number of things I needed to cover in my first management position. About two years ago I started updating my blog and it has become a way for me to process the challenges I face in my job.

Now it is time to summarize the lessons learned - next week is my last week in my current position before relocating back to the head office.

Today I gave my management team a book called Awesomely Simple by my friend John Spence along with the following advice:

Please remember to

1. Comment, follow and communicate the direction set by the head office
2. Develop our people
3. Ensure smooth communication locally and globally
4. Make sure that our processes concentrate on important things
5. Systematically manage all of the above
6. Last, but not least, please remember that everything we do must serve our customer

It's that simple, but it's not always easy.

These points pretty much cover all the challenges I had, and all the lessons learned during the past years. What is left outside is mainly the challenge of change resistance when trying to change the way things used to be done - when trying to lead a culture change.

I did my best, I hope with these advice you can do better!

Awesomely Simple Advice for (Middle) Managers

Earlier this week I received John Spence's new book Awesomely Simple: Essential Business Strategies for Turning Ideas Into Action. I have been waiting for the book since May last year, and it was worth the wait.

Before listing the key strategies, let's look at what makes them so important. During his trainings and workshops John has been asking hundreds of executives a simple question: "What are the four biggest issues you are dealing with right now in your company?" Just about all are stuggling with four basic issues listed below with typical example of how they are described to John.

1. Communicating vision. "I have a clear vision of where I am tryin to take my organization. I think about it all the time and it's always on my mind, but I bet if you went two levels down in my company and asked people what the vision of our organization is ... they would not be able to tell you."


2. Openly addressing challenges. "I realize now that we're not having the tough conversation we need to have in our organization. There are issues, challenges, and problems that everyone knows about but no one wants to talk about. As a leader, I now understand that I'm going to have to accept that is is my role to engage everyone in discussing the undiscussable."


3. Enabling mediocricity. "I have a few mediocre people in key places in my organization. And I understand that every day I allow them to come to work and do a poor job, turn things in late, mess up projects, and miss deadlines is another day that I am telling all of the rest of the people in my organization that I was just kidding about excellence."


4. Following trough on plans. "We have a serious problem with lack of execution. We have innovative ideas, good plans. We have goals and objectives, but we lack the discipline to follow trough and ensure that out good intentions become focused actions."

Does any of them sound familiar to you? To me some of them do. If one or more of these are an issues in your organization, I recommend you to buy the book and read more about the six strategies John presents in his book:

1. Vivid vision


2. Best people


3. Robust communication


4. Sense of urgency


5. Disciplined execution


6. Extreme customer focus

For a preview of each of these and some additional resources see John's website at awesomelysimple.com

In his new manifesto, John points out that most of these strategies fall into a handful of key result areas, which are completely within the control (and responsibility) of any manager.



I wish I would have received this advice some years ago. On the other hand, in that case my blog would not exist.

A3 - Toyota’s way of solving problems and creating plans

Toyota has designed a two-page mechanism for attacking problems. In July MIT Sloan Management Review published an article about what can we learn from Toyota's A3.

• The A3’s constraints (just 2 pages) and its structure (specific categories, ordered in steps, adding up to a “story”) are the keys to the A3’s power.


• Though the A3 process can be used effectively both to solve problems and to plan initiatives, its greatest payoff may be how it fosters learning. It presents ideal opportunities for mentoring.


• It becomes a basis for collaboration.

Unlike in my presentation, a real A3 plan is formed trough a series of productive dialogue and iterations which serve on building a common understanding and agreement on the situation and planned actions. Common understanding and agreement are always great help when implementing any plan.

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?

The Atomic Rules of Kaizen

Lately I have been thinking about Kaizen (continuous improvement), and came across shmula.com blog by Pete Abilla. Earlier this year he wrote a post about The Atomic Rules of Kaizen. The post was so good I will quote it as such:

Systems that are internally consistent and externally pragmatic stem from just a few rules. Systems with exceedingly many rules typically fail or will not endure. For example,

• Most mathematical truths stem from just a few axioms
• Music stems from just a handful of finite notes
• Most Martial Arts stem from a few principles of angle, attack, force, etc.

This same approach is true for Kaizen. In Kaizen, it is important to have fidelity to just a few atomic rules, from which a range of behavior will originate. Below are the rules that I subscribe to:

1. Spend no Money
2. Add no People
3. Add no Space
4. Add no Steps (Touches)

These four atomic rules collectively form constraints, leading to some creative tension. For example,

• We will be compelled to use creativity
• We will be compelled toward elegance
• We will be compelled to respect people
• We will be compelled to question the status quo
• We will be compelled to think “we can, if…” instead of “we can’t because…”
• We will be compelled to focus on processes, instead of finger-pointing at others
• We will be compelled to make many small improvements, instead of big, water-shed changes that take a lot of time and resources
• We will be compelled to seek the collective wisdom of many people, instead of a few, select heroes

In a tough economic climate in which we all find ourselves, a Kaizen worldview is needed more now than ever.

By Pete Abilla, shmula.com

An Example of Elegance

I just finished Matt May's new book In Pursuit of Elegance: Why the Best Ideas Have Something Missing, which I had been waiting for.

Matt explores the elements of Elegance in innovations of different types - technological elegance, fast food elegance, architectural elegance, elegance in top athlete training, elegance in art, etc. This variety of fields covered makes it truly an interesting book and for a business book it talks very little about business.

He defines the key elements of Elegance being Symmetry, Seduction, Subtraction and Sustainability.

Symmetry helps us solve problems of structure, order and balance. We notice a lack of symmetry, which is why we can exploit it to our advantage. Elegant solutions can have part of the symmetry missing, and our brain fills it in to make it elegant.

Seduction captivates any attention and activates any imagination. By giving only partial information and leaving something to the imagination, open to temptation, and we are compelled to find answers.

Subtraction helps us solve the problem of economy. Doing less, working smarter. Stopping and thinking of what can be removed to solve a problem - in stead of adding more features and acting upon them.

Sustainability is about achieving and keeping the maximum effect with minimum effort. Sustainability can be achieved With just enough symmetry, seduction and subtraction. If you subtract (remove) too much, the solution will not be sustainable.

While I was finishing the book this morning I saw an ad that seduced me. It was an add by fashion house Gucci, but subtracted to contain a plain T-shirt and a canvas shopping bag. Gucci, along with other top brands, was promoting a movie by Yann Arthus-Bertrand, a master of elegance in photography capturing the symmetry and sustainability of our planet.

The movie will have a unique multi-platform release on June 5th - World Environment Day - in cinemas, on TV, on DVD and on the internet in 14 different languages and in public places like the Eiffel Tower, Paris and Central Park, New York.



I have seen his pictures in two exhibitions and in his books. I bet this movie will have all the Elements of Elegance - Symmetry of landscapes, Seduction to know more about where they are and what the surroundings are like, Subtraction of anything unnecessary to the visual beauty, and Sustainability of our planet, on World Environment Day, and for the years to come.

The Power of Being Organized

I visited two Japanese factories this week and I was impressed on how extremely organized their production lines where. This got me thinking about the Japanese manufacturing line, the Montessori classroom and Google - and the power of being organized.

One of the principles of Lean manufacturing is 5S, a philosophy and a way of organizing and managing the workspace, especially a shared workplace (like a shop floor or an office space), and work flow with the intent to improve efficiency by eliminating waste, improving flow and reducing process unevenness.

5S is comes from a list of five Japanese words which, transliterated and translated into English, start with the letter S:

Phase 1 - Seiri (整理) Sorting: Going through all the tools, materials, etc., in the plant and work area and keeping only essential items. Everything else is stored or discarded.

Phase 2 - Seiton (整頓) Straighten or Set in Order: Focuses on efficiency. Arranging the tools, equipment and parts in a manner that promotes work flow. For example, tools and equipment should be kept where they will be used (i.e. straighten the flow path), and the process should be set in an order that maximizes efficiency. For every thing there should be place and every thing should be in its place. (Demarcation and labeling of place.)

Phase 3 - Seisō (清掃) Sweeping or Shining or Cleanliness: Systematic Cleaning or the need to keep the workplace clean as well as neat. At the end of each shift, the work area is cleaned up and everything is restored to its place. The key point is that maintaining cleanliness should be part of the daily work - not an occasional activity initiated when things get too messy.

Phase 4 - Seiketsu (清潔) Standardizing: Standardized work practices or operating in a consistent and standardized fashion. Everyone knows exactly what his or her responsibilities are to keep above 3S's.

Phase 5 - Shitsuke (躾) Sustaining the discipline: Refers to maintaining and reviewing standards. Once the previous 4S's have been established, they become the new way to operate. Maintain the focus on this new way of operating, and do not allow a gradual decline back to the old ways of operating.

Seeing this in implemented in Japanese production line, reminded me of some of the principles at the Montessori classroom. It is amazing how many similarities there are between them.

All materials in a Montessori classroom are kept in order.
1) There are only essential items.
2) For every thing there is place and every thing is kept in its place which is normally labeled.
3) At the end of each task, the learning area is cleaned up and everything is restored to its place.
4) The materials are standardized and have a way for the child to check their own work.
5) This clean, tidy, calm and child friendly environment is maintained in every classroom around the world.

But what does this have to do with Google? I can think of two things

1) Being organized:
Google's mission is to organize the world's information and make it universally accessible and useful.

2) The Montessori classroom:
Both of Google's founders Larry Page and Sergey Brin attended Montessori school in their childhood. My guess is the have learned something about the power of being organized then.


And I think I need to take a closer look at my office desk and our office space tomorrow...

Photo by Trenton Schulz

In Pursuit of Elegance

I can't wait to get my hands on Matt May's new book In Pursuit of Elegance: Why the Best Ideas Have Something Missing which will be published next week.

His recent ChangeThis manifesto provides a sneak preview of th content:



Matt's previos book The Elegant Solution: Toyota's Formula for Mastering Innovation is one of the most referred to books in my blog. It captures what I have been doing for the past 15 years in my career - applying to knowledge work what I learned from studying industrial management, production control, quality management and organizational development.

I have referred to his book in my previous posts:

Mind of an Innovator:
Innovation, problemsolving and learning employ the same iterative process—blending supposition, logic, creativity and reflection.

Ideas Come from Everywhere
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.

Long Term Goals
Toyota implements 1 million ideas each year. He continues, Do the math: 3000 ideas a day. That number, more than anything else, explains why Toyota appears to be in a league all their own, playing offense on a field of innovation, while their competitors remain caught in a crossfire of cost-cutting.

My Management System
an excellent book about Toyota’s innovation system which is built on learning: “Learning and innovation go hand in hand, but learning comes first.”

In Search of Simplicity
The first step is to start a war on complexity, which can be identified by inconsistency, overload, and waste – all of which unnecessarily consume the resources of time, effort, space, and money without adding value.

His ideas are universally valid and can be easily transferred to knowledge work in the office.

Beer Game

I was reading an article from the Washington Post about how “The sea of new cars, 57,000 of them, stretches for acres along the Port of Baltimore. The customers who once bought them by the millions have largely vanished, and so the cars continue to pile up.” This reminded of the

Beer Game

we once played at the university. OK, we played many beer drinking games, but this one, The Beer Distribution Game is a simulation game created at MIT Sloan School of Management in early 1960's to demonstrate a number of key principles of supply chain management.

The purpose of the game is to meet customer demand for cases of beer, through a multi-stage supply chain with minimal expenditure on back orders and inventory. Communication is against the rules so feelings of confusion and disappointment are common. There are three players in the game including a retailer, a wholesaler, and a marketing director at the brewery. Each player's goal is to maximize profit.
A truck driver delivers beer once each week to the retailer. Then the retailer places an order with the trucker who returns the order to the wholesaler. There's a four week lag between ordering and receiving the beer – just as there is weeks or months lag between ordering and receiving a car.

The following represents the results of a typical beer game as described by Peter Senge in Chapter 3 of his 1990 classic, The Fifth Discipline: The Art & Practice of The Learning Organization

Lover’s Beer is not very popular sells four cases per week on average at the retailer who attempts to keep twelve cases in the store by ordering four cases every week. On week 2 the retailer's sales of Lover's beer doubles to eight cases, so he orders 8 cases.

From week 3 onwards he weekly sells all the beer in stock (5-8 cases), receives less than ordered and orders extra to be on the safe side.

The wholesaler is the only distributor of Lover's beer and delivers to several retailers. The wholesaler's policy is to keep 12 truckloads in inventory, and he orders 4 truckloads from the brewery each week and receives the beer after a 4 week lag.

From week 6 onward he is out of stock, while the retailers are ordering 3 to 4 times more Lovers' beer than their regular amounts. Also the wholesaler receives less than ordered and orders extra to be on the safe side.

The brewery is small but has a reputation for producing high quality beer. Lover's beer is only one of several products produced at the brewery. Orders begin to increase, but it takes two weeks to brew the beer. Even during week 14 orders continue to come in and the brewery has not been able to catch up on the backlogged orders. The marketing manager begins to wonder how much bonus he will get for increasing sales so dramatically.

The suddenly, on week 16,

• The brewery catches up on the backlog, but orders begin to drop off.


• The wholesaler received zero orders from all retailers – “What is wrong with these people? Four weeks ago, they were screaming at you for beer, now, they don’t even want any.”


• The retailer is receiving the beer he has ordered earlier, but demend is down. The pop song that made the beer popular - Cheap Credit by SubPrime - no longer tops the charts.

At this point all the players blame each other for the excess inventory. Conversations with wholesale and retailer reveal an inventory of 93 cases at the retailer and 220 truckloads at the wholesaler. The brewery marketing manager figures it will take the wholesaler a year to sell the Lover's beer he has in stock.


Car industry used to be the example for supply chain management. But something went terribly wrong. In the game the brewery keeps on sending beer nobody wants, in real life “new cars nobody wants to buy continue to pile up in Baltimore and at ports around the globe. Last month, when space filled up at one Swedish port, Toyota was forced to lease a cargo ship as a sort of floating parking garage for 2,500 unsold cars.”

The problem is an observed phenomenon in forecast-driven distribution channels. Since the oscillating demand magnification upstream a supply chain reminds someone of a cracking whip it became famous as the Bullwhip Effect. The solution for this problem is Lean manufacturing, which Toyota should have mastered.


Beer bubbles photo by Tambako
New cars photo by DennisSylvesterHurd

Advice to a Leader

Originally this was Advice to a King on the book Zen Lessons: The Art of Leadership. The same advice is true for every leader.

”In your daily activities,

vigorously carry out whatever is right
and put a firm stop to whatever is wrong.

You should not change your will on account of difficulty or ease. If because of today's difficulty you shake your head and pay no heed, how can you know that another day it will not be as hard as today?”

This is true for or the hard decisions - dealing with difficult people, dealing with diffidult customers, informing about mistakes, or on personal level dealing with your own bad habits. Delaying difficult decisions normally does not make them any easier.

If more leaders would consentrate on doing the right thing, would we even need Corporate Social Responsibility, Transparency International, SEC, etc.? Shouldn't that all come naturally?

Mind of an Innovator

It's been several weeks since my last post. I could say that I have been too busy lately, but actually I ran out of ideas (because of being ”too busy”). So it's time to think how

Innovation, problemsolving and learning employ the same iterative process—blending supposition, logic, creativity and reflection.

This post is based on Matthew E May's ChangeThis manifesto Mind of the Innovator: Taming the Traps of Traditional Thinking. For more ideas and examples than fit this post, please read the manifesto.

Time frames and territories always change, so the central challenge is having the proper mind-set, discipline and tools at our disposal so that we’re able to combine “blink” and “think” strategies in an effort to create something new.

May provides methods to avoid 7 deadly sins of traditional thinking and to train our brains to think differently, allowing our inner innovator to flourish. First he’ll identify them, then provide a means by which they can be neutralized…for every problem, innovation, or challenge. They can be tamed!

1: Shortcutting (leaping to solutions)
Leaping to solutions in an instinctive way or intuitive way—i.e. the “blink” method of problemsolving— almost never leads to an elegant solution to a complex problem, because deeper, hidden causes don’t get addressed. Unfortunately, our brains are trained to perform mental shortcuts.

2: Blindspots
Blindspots are the umbrella term for assumptions, biases, mind-sets and reflexive thinking. Our brains do a lot of “filling in” for us. When our brains make their patterns based on our experience, we have to really focus to consciously break the pattern and “think different.” We don’t get to deeper problem solving until we run out of filling-in actions.

3: Not Invented Here (N. I .H.)
‘Not invented here’ means that blindspots are causing tunnel vision...or a lack of perspective. We adopt this mind-set unknowingly...shutting out another person’s or group’s idea immediately and without due consideration merely because they came up with it.

4: Satisficing
Ever wonder why some solutions lack inspiration, imagination, and originality? It’s because we don’t think as deeply or as broadly as we must to solve the problem. We tell ourselves the optimal solution is a luxury. We throw some resources at the problem and move on. Or tweak a previous solution and fit it to the current situation. We favor implementation over incubation.

5: Downgrading
Downgrading is the close cousin of satisficing, with a twist: a formal revision of the goal or situation. We fall short of the optimal or ideal solution, pick one that gets us most of the way there, then sell the upside and downplay the downside. We do it all the time, because no one wants to feel like they didn’t succeed.

6: Complicating
Why do we overthink? Why do we complicate? Why do we add cost? Most interestingly, why do we ALL do it so intuitively, naturally, and (here’s the killer) consistently? Answer: we’re hardwired that way. Our brains are designed to drive hoarding, storing, accumulating, collecting-type behavior. We are by nature “do more/add on” types.

7: Stifling
We do this naturally...stifle, dismiss, and second guess the ideas of others in favor of our own. Generally speaking, whenever I conduct problem-solving workshops, groups discuss the right answer, but it doesn’t get offered up as a solution. Because members second-guess, stifle, dismiss and even distrust their own genius.

Stifling is the deadliest of the sinful seven, because it is the most destructive. Had you happened upon the right answer in your contemplation, but dismissed it?

Taming the Traps

So how do you defeat, or at least neutralize, the seven deadly sins?

IDEA Loops. IDEA is an acronym for Investigate, Design, Execute, Adjust. It’s a codification of the human learning cycle...the one that starts disappearing around age 5, once we enter the formal school system. That’s when it becomes about the right answer and not the right question.
Our most powerful learning experiences generally occur in a four-phase cycle of (1) Questioning; (2) Solving; (3) Experimenting; (4) Reflecting.

Everything starts with a question, which triggers an investigation and information-gathering effort. How can I do that better? That leads to the definition of a problem to be analyzed and solved. The search for possible answers to your question entails generating ideas, solutions and corrective measures. By experimenting with one or more of the solutions, the most appropriate and effective is discovered. You then reflect on your experiments, observing your own thinking and actions. How well did that work? This in turn stimulates further questions, commencing the learning cycle again.

The beauty of IDEA Loops is that they can apply to all situations. Investigation, Design, Execution and Adjustment are the universal common denominators to successful innovation.

To read more about IDEA loops, or the whole process with examples, please check the Manifesto or get Matthew's book The Elegant Solution

Photo by oranje88

Customer Satisfaction

This week I have been thinking of Customer Satisfaction. Thursday I was reading John Spence's blog. He talks about customer satisfaction as the single most important indicator of business success. He also talks about Net Promoter Score (NPS), which is measuring customer satisfaction by one simple question:

“How likely are you to recommend our products and services to your family and friends?”

I have been using NPS for years. It is an easy and effective way to gather information and trends about customer satisfaction. And you get amazing response rates. But it is difficult to understand the reasons behind the trends without deeper customer interaction.

Personally I measure customer satisfaction based on the number of downloads of my presentations, and based on number of comments on my blog. See slides 61-68 of my Balanced Scorecard presentation for details. (They are quick slides to browse trought, you see two of them on this page already.)

Today I checked the statistics for my presentations and for my blog. My 5 presentations have been viewed over 36 000 times, and downloaded over 4 000 times since last summer. That's more than I could have ever dreamed of and my customer satisfaction measure is over the top!

My blog on the other hand has received only 32 comments on 46 posts, and this is a clear area of improvement.

John's comment about NPS reminded me of some recommendations I have received from Management, Leadership and Communications professionals who have shown what is their answer on the NPS question ”How likely are you to recommend my blog to your family and friends?”

John Spence, an executive educator, professional speakers, management consultant and author, listed my site on his post Some Fantastic Resources for You. The other sites he listed are top ranking professional sites like Harvard, Wharton or Presentation Zen. I am speechless!

Cheri Baker, an HR consultant, recommended my site yesterday on her blog.

My former colleague Taina, who is currently Director of Communications, shared my previous blog post about budgeting on her facebook wall - in other words, she recommened it to her family and friends.

Thank you John, Cheri and Taina , I am really honoured by these recommendations!

Reinventing Budgeting

I was talking the other day with a friend of mine who was preparing for lessons in budgeting on his MBA class. I know January is normally not the time for budgeting, but I decided to write about budgeting anyway, because

So many companies are currently revising their sales estimates and cutting costs

In other words they are revising their sales and cost budgets.

About a year ago I was reading Winning by Jack Welch. One of the chapters in the book is about Reinventing the Ritual – about reinventing budgeting, where Welch is giving a totally different approach to budgeting.

Budgets the wrong way

Before describing how to devicse budgets the right way, he describes two common approaches to budgeting – Negotiated Settlement and Phony Smile.

In Negotiated Settlement (also known as Split the Difference) people in the field come up with conservative targets they absolutely think they can meet, because they are rewarded for hitting budget. Back in headquarters senior managers want to see significant growth in sales and profits, because they are rewarded for increased earnings. Finally and inevitably the sides split the difference, both sides are more or less satisfied and think they can live with the numbers.

In Phony Smile (also known as Everyone Make Nice) people in the field are filled with good ideas, exciting opportunities and bold dreams on where they can go given the right amount of investment. The headquarters smiles and listens to these ideas, but already has plans how to invest and what revenues and earnings they expect. The meeting ends with smiles, but afterwards field gets only part of the investment but is expected to produce higher revenues.

That's budgeting, isn't it? Welch asks, and adds that it's done backwards without thinking of execution.

He then presents a better way – an operating plan that looks forward to hows

• How can we beat last year's performance?
• What is our competition doing, and how can we beat them?
• How can you find out every possible opportunity for growth?
• How various moving parts will be synchronized to achieve targets?

Operating plan needs to include realistic, debated, synchronized and executable product launches, marketing plan, sales plan including new market opportunities, manufacturing plan and productivity plan for improved efficiency in each process.

These should be dealt with simultaneously, since they all interact - optimally in a management workshop where they can be debated.

Jack Welch adds that this kind of budgeting can only happen if compensation is not linked to budget but to actual performance against previous year and competition.

I am yet to participate such a management workshop.

Three Essentials of Leadership

I was browsing trough Zen Lessons - The Art of Leadershipand I was again amazed how correct the ancient wisdom is. The rest of this post is simply a copy of what Master Fushan Yuan said in a letter written about 800 years ago:

There are three essentials of leadership:
humanity, clarity, and courage.

Humanely practising the virtues of the Way promotes the influence of the teaching, pacifies those in both high and low positions, and delights those who pass by.

Someone with clarity follows proper behaviour and just duty, recognizes what is safe and what is dangerous, examines people to see weather they are wise or foolish, and distinguishes right and wrong.

The courageous see things through to their conclusion, settling them without doubt. They get rid of whatever is wrong or false.

Humanity without clarity is like having a field but not plowing it. Clarity without courage is like having sprouts and not weeding. Courage without humanity is like knowing how to reap but not how to sow.

When all three of these are present, the community thrives. When one is lacking, the community deteriorates. When two are lacking the community is in peril, and when there are is not one of the three there, the way of leadership is in ruins.

Master Fushan Yuan
in a letter to
Master Jinqyin Tai

The next US president is elected today – do you think the candidates lead according to these essentials?

How about the world financial crisis? Which of these essentials do you think were lacking?

How about the Chinese food and toy scandals? How many of these essentials do you think were lacking?

Don't you think that humanity, clarity, and courage are as essential for 21st century business ethics as they were for ancient Zen monks?

How Do We Educate Our Children?

I believe that the

Foundation for Lifelong Learning is laid at school

Living abroad, we often have to answer the question:

"How do you educate your children?"

Some times people want to know about education when living in a foreign country, but most often about education at our home country. To answer that question I made a presentation, which is my entry to the World's Best Presentation Contest 2008.

If you like it, please exercise your right to vote and spread the word.

Thank you!

Samuli

I made this presentation based on some 20 years of education, and some 15 years of lifelong learning, and with the help of some books I have been reading lately

About creating and presenting a message

Made to Stick: Why Some Ideas Survive and Others Die by Chip Heat and Dan Heat

Presentation Zen: Simple Ideas on Presentation Design and Delivery by Garr Reynolds

About distributing the message

Wikinomics: How Mass Collaboration Changes Everything by Don Tapscott and Anthony D. Williams

The Word of Mouth Manual by Dave Balter and Seth B. Minkin

And as word of mouth is free, the book can be also downloaded for free as a pdf from
ChangeThis.com - spreading important ideas and changing minds.

Skills to Make You an Effective Manager

I have just returned from a Leadership training and to summarize that I decided to write about Management skills. Why? Because the trainer, Dr. Angelo Kinicki, links management and leadership tightly together

The management skills constitute a cycle of
goal creation, commitment, feedback, reward, and accomplishment,
with human interaction at every turn.

In his book Angelo points out that management is primarily about dealing effectively with people – being effective in leadership.

He lists 11 observable categories of managerial behavior, identified by Clark Wilson.

There is a bit of Curse of Knowledge in these books, but if you look close they provide really great advice, so I tried to make a Made to Stick presentation of them:

| View | Upload your own

Effective Manager

1. Clarifies goals and objectives for everyone involved.
2. Encourages participation, upward communication and suggestions.
3. Plans and organizes for an orderly work flow.
4. Has technical and administrative expertise to answer organization-related questions.
5. Facilitates work trough team building, training, coaching, and support.
6. Provides feedback honestly and constructively.
7. Keeps things moving by relying on schedules, deadlines, and helpful reminders.
8. Controls details without being overbearing.
9. Applies reasonable pressure for goal accomplishment.
10. Empowers and delegates key duties to others while maintaining goal clarity and commitment.
11. Recognizes good performance with rewards and positive reinforcement.

Actually, at the training, Angelo emphasized three topics

1. Goals
2. Feedback
3. Rewards

You could say that the other steps are means to effectively lead and manage your team to achieve the goals.

And there are plenty of tools and techniques for each step, but that's another story. These are the important skills you need to remember to get tools and techniques for.

Simple, isn’t it?

And well in line with my Manager's Toolbox Mission and Vision

Ideas Come from Customers

Peter Drucker and Elisabeth Haas Edersheim point out the importance of knowledge management in their book The Definitive Drucker

Delivering value depends on your listening and translating of customer needs, and innovating accordingly.

My friend told me about this great tool of exchanging ideas with your customers. It’s a tool created by Salesforce.com. They are naturally using their own tool on their website and openly asking their customers to comment their products and propose new features.

The tool was recently featured in BusinessWeek which wrote a story about how Starbucks and Dell use the tool. Dell for example has received thousands of ideas and tens of thousands of comments. (Starbucks requires user account , Salesfoce.com ideas was down or closed during weekend...)

The tool also allows customers and employees to rate the proposals to let the companies know, which are the best ones and should be worked on. Naturally it could be used only internally, if for example capturing customer needs in the web would open a door to your competitors.

Simple and effective. This tool really allows you to capture true customer requirements and ensure customer focus. And eliminate the distance between R&D and customer. It is really hard to think of a more effective and simple way than Salesforce.com Ideas.

How often have your R&D said they are too far from the customer?

How effectively do you collect customer requirements?

How effectively do you deliver them within your organization?

Would you have the courage to be as open as Salesforce.com?


Actually, I proposed this tool internally a year ago. Ideas are appreciated in our company, but I still felt like Bob on this little promotional video by Salesforce.com

To whom should I present this idea, and
how do they know if it a good one?

Have you ever felt like Bob?

The suggestion box in Bob's office looks suprizingly similar to the one shown on my earlier post Ideas Come from Everywhere