Distortions and deceptions in strategic decisions

Companies are vulnerable to misconceptions, biases, and plain old lies. But not hopelessly vulnerable.
Dan P. Lovallo and Olivier Sibony
2006 Number 1
The chief executive of a large multinational was trying to decide whether to undertake an enormous merger-one that would not only change the direction of his company but also transform its whole industry. He had gathered his top team for a final discussion. The most vocal proponent of the deal-the executive in charge of the company's largest division-extolled its purported strategic advantages, perhaps not coincidentally because if it were to go through he would run an even larger division and thereby be able to position himself as the CEO's undisputed successor. The CFO, by contrast, argued that the underlying forecasts were highly uncertain and that the merger's strategic rationale wasn't financially convincing. Other members of the top team said very little. Given more time to make the decision and less worry that news of the deal might leak out, the CEO doubtless would have requested additional analysis and opinion. Time, however, was tight, and in the end the CEO sided with the division head, a longtime protégé, and proposed the deal to his board, which approved it. The result was a massive destruction of value when the strategic synergies failed to materialize.

Does this composite of several real-life examples sound familiar? These circumstances certainly were not ideal for basing a strategic decision on objective data and sound business judgment. Despite the enormous resources that corporations devote to strategic planning and other decision-making processes, CEOs must often make judgments they cannot reduce to indisputable financial calculations. Much of the time such big decisions depend, in no small part, on the CEO's trust in the people making the proposals.
Strategic decisions are never simple to make, and they sometimes go wrong because of human shortcomings. Behavioral economics teaches us that a host of universal human biases, such as over optimism about the likelihood of success, can affect strategic decisions. Such decisions are also vulnerable to what economists call the "principal-agent problem": when the incentives of certain employees are misaligned with the interests of their companies, they tend to look out for themselves in deceptive ways.

Most companies know about these pitfalls. Yet few realize that principal-agent problems often compound cognitive imperfections to form intertwined and harmful patterns of distortion and deception throughout the organization. Two distinct approaches can help companies come to grips with these patterns. First, managers can become more aware of how biases can affect their own decision making and then endeavor to counter those biases. Second, companies can better avoid distortions and deceptions by reviewing the way they make decisions and embedding safeguards into their formal decision-making processes and corporate culture.

Distortions and deceptions
Errors in strategic decision making can arise from the cognitive biases we all have as human beings.

These biases, which distort the way people collect and process information, can also arise from interactions in organizational settings, where judgment may be colored by self-interest that leads employees to perpetrate more or less conscious deceptions (Exhibit 1).

Distortions
Of all the documented cognitive distortions, over optimism and loss aversion (the human tendency to experience losses more acutely than gains) are the most likely to lead people who make strategic decisions astray, because decisions with an element of risk-all strategic ones-have two essential components. The first is a judgment about the likelihood of a given outcome, the second a value or utility placed on it.

When judging the likelihood of potentially positive outcomes, human beings have an overwhelming tendency to be overoptimistic or overconfident: they think that the future will be great, especially for them. Almost all of us believe ourselves to be in the top 20 percent of the population when it comes to driving, pleasing a partner, or managing a business. In the making of strategic decisions, optimism not only generates unrealistic forecasts but also leads managers to underestimate future challenges more subtly-for instance, by ignoring the risk of a clash between corporate cultures after a merger.

When probabilities are based on repeated events and can therefore often be well defined, optimism is less of a factor. But loss aversion is still a concern. Research shows that if a 50-50 gamble could cost the gambler $1,000, most people, given an objective assessment of the odds, would demand an upside of $2,000 to $2,500.

Over optimism affects judgments of probability and tends to produce over commitment. Loss aversion influences outcome preferences and leads to inaction and under commitment. But the fact that over optimism and loss aversion represent opposing tendencies doesn't mean that they always counteract each other. Over optimism and loss aversion, though opposing tendencies, don't always counteract each other

Loss aversion wouldn't have such a large effect on decisions made in times of uncertainty if people viewed each gamble not in isolation but as one of many taken during their own lives or the life of an organization. But executives, like all of us, tend to evaluate every option as a change from a reference point-usually the status quo-not as one of many possibilities for gains and losses over time across the organization. From the latter perspective, it makes sense to take more risks. Most of the phenomena commonly grouped under the label of risk aversion actually reflect loss aversion, for if we integrated most gambles into a broader set, we would end up risk neutral for all but the largest risks. This truth has important implications for strategic decision making.

Deceptions
The strategic decisions that companies make result from interactions among their executives: a manager proposes an investment, for example, and an executive committee reviews and evaluates it. In this kind of setting, a conflict of interest often arises between an "agent" (in this case, the manager) and the "principal" (the corporation) on whose behalf the agent acts.

Such "agency problems," which occur when the agent's incentives aren't perfectly aligned with the principal's interests, can lead to more or less intentional deceptions-misleading information provided to others-that compound the problem of the agent's unintentional distortions. Recall the CEO who was grappling with the big merger decision: trusting the protégé (the head of the largest division) exposed the CEO to the risk that the merger's proponent was not only over optimistic but also attempting to further his own career by exaggerating the deal's upside or underestimating its risks.

When companies evaluate strategic decisions, three conditions frequently create agency problems. One is the misalignment of time horizons between individuals and corporations. Several consumer goods companies, for example, have noted that brand managers who rotate quickly in and out of their jobs tend to favor initiatives (such as introducing new product variants) with a short-term payback. These managers' deception, intentional or not, is to advance only certain projects-those aligned with their interests. The development of radically new products or other important projects with longer payback times can rarely succeed without a senior sponsor who is likely to be around longer.

Another problem that can generate harmful deceptions is the differing risk profiles of individuals and organizations. Consider a real-life example. A midlevel executive at a large manufacturing company decided not to propose a capital investment that had a 50-50 chance of either losing the entire $2 million investment or returning $10 million. Despite his natural loss aversion, the chance of a 5:1 gain should have enticed him into accepting the bet, and his superiors, for the same reasons, would have deemed it attractive. Instead, he worried that if the investment failed, his reputation and career prospects would take a blow, though he didn't anticipate being punished if the investment was forgone. As a result, he decided not to recommend it and thus in effect acted deceptively by not promoting an attractive investment. This asymmetry between results based on action and inaction is called the "omission bias," and here it magnified the executive's loss aversion.

The final agency issue arises from the likelihood that a subordinate knows much more than a superior does about a given issue. Higher-ranking executives must therefore make judgments about not just the merits of a proposal but also their trust in the person advancing it. This is unavoidable and usually acceptable: after all, what more important decision do CEOs make than choosing their closest associates? The tendency, however, is to rely too much on signals based on a person's reputation when they are least likely to be predictive: novel, uncertain environments such as that of the multinational that went ahead with the megamerger. We call the tendency to place too much weight on a person's reputation-and thus increase the exposure to deception-the "champion bias."

Furthermore, the multinational's merger decision exhibited an element of "sunflower management": the inclination of people in organizations to align themselves with the leader's real or assumed viewpoint. The CEO had expected to find dissenting voices among his senior executives. But except for the CFO, they believed that the CEO favored the deal and that the merger would proceed no matter what they said and thus kept their doubts to themselves for fear of harming their careers. In effect, they misled the CEO by suppressing what they really thought about the deal.

Improving individual decisions
Knowing that human nature may lead decision making astray, wise executives can use this insight to fortify their judgment when they make important decisions. To do so, however, they must know which bias is most likely to affect the decision at hand. Exhibit 2 offers a road map for the types of decisions where over optimism or excessive risk aversion will probably be the determining factor.

In general, the key to reducing over optimism is to improve the learning environment by generating frequent, rapid, and unambiguous feedback. In the absence of such an environment-for instance, when companies face rare and unusual decisions, which, unfortunately, are the most important ones-there is a bias toward optimistic judgments of the odds. The size of a decision determines the appropriate degree of risk aversion. For major ones, a certain amount of it makes sense-nobody wants to bet the farm. For smaller ones, it doesn't, though it often prevails for reasons we'll soon explore. Companies should see minor decisions as part of a long-term, diversified (and thus risk-mitigating) strategy.

As Exhibit 2 shows, companies don't always rationally factor risk into their decisions. In the large, infrequent ones

(for instance, the industry-transforming merger that went horribly wrong) represented in the exhibit's upper-left quadrant there is a tendency to take an overly optimistic view. In essence, faulty judgments lead executives to take risks they would have avoided if they had had an accurate judgment of the odds. Since executives facing such a rare decision can't benefit from their own experience, they should learn from the experience of other companies by collecting case studies of similar decisions to provide a class of reference cases for comparison.

Dissecting global trends: An example from Italy

Research in Brief
Dissecting global trends: An example from Italy
Executives should examine the impact of trends on sub industries, segments, categories, and micro markets before placing their bets.

Stefano Proverbio, Sven Smit, and S. Patrick Viguerie, March 2008

Executives know they must incorporate social and environmental trends into their strategies, but few act on trends in ways that would allow them to ride the waves successfully. Our experience, backed by recent research, suggests that companies should navigate important trends by first studying their impact on sub industries, segments, categories, and micro markets. That kind of analysis breaks down megatrends into micro trends that companies can invest in with confidence. When they do, they are applying an approach similar to the one they should use when targeting growth opportunities in any market.

Indeed, we find that the importance of taking a granular view of where to compete can hardly be overestimated. We compared the global growth rates of industries with those of an international sample of 416 large companies, from 1999 to 2005. We found that we could explain why some companies grew faster than others only by measuring their exposure to sub industries and product categories.

To show what that approach looks like in practice, we analyzed the market impact that an important trend-aging populations in developed economies-will have in Italy, which has one of the world's most rapidly aging populations, because of low birth rates and a high life expectancy. The starting point for a granular growth and trend analysis is to break down market information into increasingly fine-grained levels (Exhibit 1)-from the world market (which we call G0); to 24 broad industry groups, such as health care equipment and services (G1); to 151 individual industries (G2). These, in turn, can be divided

• G0. At the world-market level, we estimate that aging populations will reduce global GDP by 0.1 percent a year until 2020. In Italy, the impact will be virtually neutral-lowering GDP by just 0.03 percent a year. This gap offers no useful information for an executive considering whether to ride Italy's trend to aging.
• G1 and G2. At the level of industry groups and individual industries, the impact of aging clearly varies across the Italian economy (Exhibit 2). We estimate that changes in the age mix will increase demand for health care, housing, energy, and food and beverages by 0.15 percent (food and beverages) to 0.30 percent (health care) between now and 2020. Conversely, industries such as apparel, furniture, and automobiles are all likely to suffer a drop in demand of around 0.15 percent a year over that period. Games, toys, and sports will likely be hardest hit, with an annual decline of 0.4 percent. Aging will therefore have a positive impact on some Italian industries and a negative one on others. But industry averages don't tell executives enough to make specific decisions about where to compete.

DETERMINATON

In 1883, a creative engineer named John Roebling was inspired by an idea to build a spectacular bridge connecting New York with the Long Island. However bridge building experts throughout the world thought that this was an impossible feat and told Roebling to forget the idea. It just could not be done. It was not practical. It had never been done before.

Roebling could not ignore the vision he had in his mind of this bridge. He thought about it all the time and he knew deep in his heart that it could be done. He just had to share the dream with someone else. After much discussion and persuasion he managed to convince his son Washington, an up and coming engineer, that the
bridge in fact could be built.

Working together for the first time, the father and son developed concepts of how it could be accomplished and how the obstacles could be overcome. With great excitement and inspiration, and the headiness of a wild challenge before them, they hired their crew and began to build their dream bridge.

The project started well, but when it was only a few months underway a tragic accident on the site took the life of John Roebling. Washington was injured and left with a certain amount of brain damage, which resulted in him not being able to walk or talk or even move.

"We told them so."
"Crazy men and their crazy dreams."
"It`s foolish to chase wild visions."

Everyone had a negative comment to make and felt that the project should be scrapped since the Roeblings were the only ones who knew how the bridge could be built. In spite of his handicap Washington was never discouraged and still had a burning desire to complete the bridge and his mind was still as sharp as ever.

He tried to inspire and pass on his enthusiasm to some of his friends, but they were too daunted by the task. As he lay on his bed in his hospital room, with the sunlight streaming through the windows, a gentle breeze blew the flimsy white curtains apart and he was able to see the sky and the tops of the trees outside for just a moment.

It seemed that there was a message for him not to give up. Suddenly an idea hit him. All he could do was move one finger and he decided to make the best use of it. By moving this, he slowly developed a code of communication with his wife.

He touched his wife's arm with that finger, indicating to her that he wanted her to call the engineers again. Then he used the same method of tapping her arm to tell the engineers what to do. It seemed foolish but the project was under way again.

For 13 years Washington tapped out his instructions with his finger on his wife's arm, until the bridge was finally completed. Today the spectacular Brooklyn Bridge stands in all its glory as a tribute to the triumph of one man's indomitable spirit and his determination not to be defeated by circumstances. It is also a tribute to the
engineers and their team work, and to their faith in a man who was considered mad by half the world. It stands too as a tangible monument to the love and devotion of his wife who for 13 long years patiently decoded the messages of her husband and told the engineers what to do.

Perhaps this is one of the best examples of a never-say-die attitude that overcomes a terrible physical handicap and achieves an impossible goal.

Often when we face obstacles in our day-to-day life, our hurdles seem very small in comparison to what many others have to face. The Brooklyn Bridge shows us that dreams that seem impossible can be realised with determination and persistence, no matter what the odds are.

Even the most distant dream can be realized with determination and persistence.

George L. Hanbury
Dawgen Public Accountants
5 Melmac Avenue, Kingston 5 Jamaica

Controlling Negative Thoughts

Athletes regularly carry on an inner dialogue—this is called self-talk. Your self-talk can be negative and self-destructive to confidence or it can be positive and help you remain confident in challenging situations. If you want to be negative with yourself, you have plenty of opportunity to do so in sports. However, I do not think you will perform your best nor have much fun. The key point is that you have control over what you say to yourself and have to work on staying positive.

It is easy to forget someone else's criticism of you, but it's not easy to forget your own criticism of yourself. I ask the athletes I work with to monitor what they say to themselves. If you get negative with your own self-talk and cut yourself down, you have to recognize this behavior and make an effort to change. When you say to yourself "I can't win this fight," "you are the worst", or "Don't lose another match", you are hurting your own confidence. Negative thoughts lead to low self-confidence and negative outcomes. You are the only person who knows when you being negative and the only one who can turn it around.

The first step is to pay attention to what you say to yourself and notice when you begin to have negative thoughts. The goal is to quickly identifying your negative self-talk. After you finish a match, go back and think about when you were negative with yourself. Write down the negative statements and in what situations they occurred. If you have more negative than positive self-talk during a match, this indicates that you need to work on changing your self-talk.

The next step is to modify your typical negative thoughts or doubt. Write down the negative self-statements from the previous exercise. Next to each self-statement, change the negative thought to a positive statement. For example, the negative self-statement: "I can't believe he fooled you on that move, you are the worst fighter in the world" change to "You are human and will make mistakes, next time you will know better". Practice changing your negative thoughts to positive thoughts on paper.

The final step is to apply what you have done on paper to your matches. The next time you become aware of a negative thought or doubt, you will have a positive response ready to put into place and apply. Make the choice to keep your self-talk positive and confidence enhancing.

Closing the Gap between Success and Significance

Think of the person you most admire. This might be a teacher, a business associate, an inspirational leader, a mentor or friend who made a significant impact on your life. You remember them for what they did for you at a time when you needed their direction.
Contrast this person with the college professor who said, "You can interpret this story two ways, my way and the wrong way."
In the past, accepted business leadership styles resembled the college professor's attitude. Using a command style, executives demanded better, faster, cheaper, more efficient strategies, pushing employees to higher standards and criticizing rather than praising.
As a result, the driver leader struggled, employees refused to make an emotional commitment, the management team did not work in a unified fashion and the organization suffered.

The Changing World
Today's business leaders face a world undergoing change such as we have never seen before. New technology, international competition, lightning information availability, and new legal accountability challenge leaders to make not just directional but transformational changes to remain competitive.
In this environment, it is difficult for a CEO, President, or leader to drive an organization to realize its vision and to deliver sustainable results.

The Changing Leadership Model
Many leaders forget a basic adage of leadership. Their success depends on the success of their employees and co-workers. High level leaders understand that they contribute to this success by making it easier for their employees to do their jobs, by making them feel that their jobs have significant value and by treating them as individuals with valid opinions and suggestions.

Research shows that the organizational climate, the way people think about working for an organization, has a significant impact on human performance. The way employees perceive the leader and his management team drives the organizational climate and employee performance.

In today's world-class organization, people at every level must have a personal stake in the vision of the business. The world-class leader understands that the most important part of his job is to develop an organization where people want to work and want to do their best.

Like the person you admire the most, today's effective business leaders develop significance with their associates. They enjoy continued long-term professional and personal success. They leave an indelible impact on their employees, customers and suppliers because of what they do and continue to do for them.

Becoming a Significant Leader
Turn this around and ask yourself who sees you as their mentor, as their inspiration, as memorable in their life. This may be difficult at first since we seldom see ourselves as making a significant impact on others.
Ask yourself how many people in your life want to help you? How many people have you dedicated your time and energy to help this year? If the answer to both questions is "a handful", you may lead a comfortable life, but you will not develop significance in your relationships.
To create significance, you must develop the attitude of the "Servant's Heart". You must ask how you can help people.

This requires you to shift your focus. You develop a Servant's Heart by dedicating yourself to the success of those who help you achieve your success. A self-centered driver has fleeting success because he builds on too small a foundation.

People walk around with the letters MMFA - Make Me Feel Appreciated – as a figurative imprint on their foreheads. You, as a leader with a Servant's Heart, must ask how you can help these people become more effective and feel more important. You must make your customers, employees and suppliers understand that you have their best interests at heart and that your commitment is unconditional.

All of us aspire to reach our dreams and goals. The leader with a "Servant's Heart" inspires others who realize that he cares about them and wants them to succeed at a personal level. When people realize that they can reach their personal goals through helping the organization reach its goals, they make impressive results possible.

Important Attitudes That Lead to Significance
Empathy, defined as the understanding of others, is the fundamental trait that leads to significance. The three levels of empathy are:
1. Being able to read another's emotions
2. Sensing and responding to a person's unspoken concerns or feelings
3. Understanding the issues or concerns that lie behind another's feelings
People with this ability notice emotional cues, listen well, show sensitivity, and understand others' perspectives.
You, as an empathetic leader, sense others' needs and bolster their abilities by looking past the obvious. You see the next step and how to get there. You want to help subordinates and co-workers build their personal identity and their self-image so they can become more successful and you want them to realize that you too are doing the same thing.

You, as the authentic leader with empathy, give advice that serves the person's best interests. When people understand that you have a sincere desire that they succeed, they respond with great enthusiasm. In an organization where people want to be and do their best, you can obtain great results.

Making Personal Changes Is Not Easy
You can use several proven steps to assist you to become an empathetic leader.
First, you must acknowledge your current attitudes before you can change them. People with strong self-awareness understand emotions, strengths, limitations, values and motives at a deep level. They are honest with themselves and about themselves. They know the direction they want their life to take and why.
Second, to make personal changes you must practice the new actions and thoughts you want to develop. In sports, athletes spend far more time practicing than performing. Tiger Woods hits hundreds of practice shots for every tournament shot. In contrast, we in the business world perform but never practice. To be more successful we must practice skills and attitudes that will further our success.

As you practice building empathy and the other skills you need to become significant in others' lives, you must track your new skills. Busy lives make it is easy to delay doing uncomfortable tasks. However, when you hold yourself accountable you will stay on target and make progress towards your goals.
Finally, use a coach or mentor. At the times when you get cranky, a trusted friend, colleague or coach can give you an unbiased perspective. By helping you through rough times, they help you stay focused on your goal.

A Caveat
To build a business culture where employees have a say in the direction of the organization, you do not need to give up leadership. The effective leader understands the importance of building a culture where accountability is expected.

Some might object that working through others as opposed to giving firm direction leads to pressure to lower performance standards, tempting us to make accommodations to personal interests.
Effective leaders understand the importance of building a culture that expects accountability. They hold individuals and the organization accountable every step of the way to reaching the future they envision.
Effective leaders work with individuals without compromising performance. Under such leaders, employees understand and accept the importance of meeting objectives they have helped establish. They understand that when they help the organization meet its goals they meet their own goals. This dynamic has a substantial positive effect on performance by both the organization and the individual.
Successful leaders insist on involving their employees in the planning process as a way to build personal commitment. With a "Servant's Heart," significant leaders have their employees' best interests at heart and will commit to their personal development.

Successful leaders insist on a continuous process of planning and development, of accountability and results, and build the culture of the organization around these cornerstones.

Significance Is a Timeless Concept
People want to feel appreciated. You remember the people you most admire for what they did and do for you. As an empathetic leader, you leave an indelible impact on the lives of others. You accomplish this by developing a "Servant's Heart", helping them become more successful.
In a healthy organization people have a personal stake in the vision of the business. The effective leader develops an organization where people want to work and want to do their best. At the same time he does not sacrifice performance. He builds accountability into the culture of the organization. Everyone understands the performance imperative and this mutual understanding brings great results.
Gaining personal success through helping others is timeless. William Shakespeare said, "The more I give to thee, the more I have."

And to quote Ralph Waldo Emerson, "A man cannot help another without helping himself even more."
To become an extraordinary leader and develop sustainable success, become significant. Make an indelible impact on the lives of others.

Change Management Secrets to Creating a Winning Culture of Change

Change is occurring all around us everyday. Most changes are small and go unnoticed by us. Think about your daily ride to work and notice what changes are taking place over the course of a week: possible changes in traffic patterns, new stores opening, weather patterns, etc. Each day we adapt to the changing situations without even thinking about it, and we achieve our goals.
The organizations we work for are going through change to adapt to a very competitive marketplace. Most organizational change, much like your daily commute, is subtle. Some changes create a variety of emotions among employees: from joy and enthusiasm to distrust and anger.
The best organizations create a strong culture of change management. In fact, management at these organizations is constantly encouraging change for the good of the overall organization.
The following are seven change management secrets to creating a winning culture of change:

1. Understand the Present
Take the time to ask questions to understand where the culture of change presently stands. Examples of questions great managers of change are consistently asking to ensure the success of change are the following:

Do employees understand the difference they make at work everyday?

Are there strong relationships between employees and management?

Is there an environment of openness and trust?

Is there an understanding of mission, purpose, beliefs, and business goals?

Do we have an environment of learning, growth, and empowerment?

Take the time to ask these and other questions and, most importantly, listen to the answers.

2. Recognize That Change Management Culture Starts at the Top
As a leader, you set the tone for change management. If you express or show a negative attitude towards the change, the culture for change will have negative results. If your attitude towards change is positive, then the culture for change will have positive results. Constantly communicate the positive overall results from the change and how the employee will benefit from this change.

3. Establish Channels of Communication
Before the changes are to take place, implement ongoing channels of communication. This is important for the following reasons: a. Hear and address the concerns and fears of the employees. b. Obtain new innovative ways of implementing the change. c. Gain employee buy in for the changes. d. Address the rumor mill before it spirals out of control. Remember, there will probably be a lot of emotions mixed in with the communication. First, set the parameters for positive, productive communication and really take the time to listen. You will need to separate the emotions from the message and/or questions. Also, if you don't have an immediate answer to the question, promise to find the answer and respond with the answer within a certain deadline.

4. Give Your Employees the Tools for Successful Change Management
Make sure your employees have the tools to successfully implement the organizational changes. This could include training, technology, and additional management help to remove barriers to successfully implementing the changes. Be mindful that with the changes there are new relationships being developed. As the change leader, monitor what work relationships are working and what relationships are not working; and take the appropriate actions to remove any relational barriers to your employees' successful completion of the plan.

5. Build a Change Management Community
Build a sense that we are all in this together and that if one person on our team has a challenge adapting to change, we all have a challenge adapting to the change. Build this sense of a change team so that a positive environment for change and innovation is developed. It makes the road to change so much easier.

6. Understand That Employees Handle Change in Different Ways
Because of stress and emotions, your employees handle change in different ways. The model employee who was once calm may now become disruptive and challenging in the environment of change. Take time to tone into your employees' "emotional change barometer," get their feedback, and provide the guidance so that they are successful in the culture of change.

7. Follow-up to Create Better Change Results
As a change leader, follow-up through meetings, personal coachings, surveys, memos, e-mails, etc., to monitor how the changes are progressing. Embrace and acknowledge the employees' valuable feedback so that you can efficiently implement the changes.
Apply these seven change management techniques and you will create a successful culture of change and achieve your organizational goals.

Can Followers be motivated by Leadership Styles?

"Wives, submit to your husbands as to the Lord."

This is exactly what companies are expecting from their followers. They are making their followers feel obligated to being loyal and have taken it out of context, just as readers of the cited scripture do. What happened to the rest of the scripture which states in Ephesians 5:21 "submit to one another out of reverence for Christ?" The command advises a two-way relationship and that part of the scripture appears to have been ignored. Companies that serve their
followers will receive superior service from them if they cultivate a serving relationship.

How are results-oriented companies able to compete in a world full of results oriented businesses? They recruit followers as potential future leaders and direct them to be compliant toward a desired goal. The follower's career path is based on the direction of the customer. The training plan is already created and the only thing the follower has to do is select "I commit" to the appropriate training plan. The follower either complies or doesn't have a job with this type of company.

When the goal is to do what is best for the customer, the company conveys behaviors they require to achieve success in a high performance culture. This type of culture is one in which performance goals and commitments are blatantly clear. A high performance culture, according to Reid and Hubbell (March/April 2005), "is based on discipline. This discipline promotes decisiveness and standards of excellence and ensures direct accountability." I currently work for an organization that cultivates a high performance culture. Each employee is provided with a two page template of performance goals. In previous organizations I've worked for, the leader would collaborate with me to determine my performance goals.

In my current organization, my leader emailed me a mandatory set of goals for my review. I deleted those I didn't agree with, put them in my final document and emailed the final document to her. Upon her receipt of my performance plan, she contacted me and stated that the goals were formatted so that they would fit neatly into my document. I was quite shocked by this. Where was the collaboration? Apparently this was a one-way relationship and I am expected to agree with the policies.

In a high performance culture the leader and followers are expected to buy into corporate shared values and policies and are expected to apply these values to work life and interactions with others. Sometimes the values are rejected but many times are accepted as normal behavior. Another way to explain this type of organization is a concept called a Psychic Prison or Plato's Cave.

Gareth Morgan (2006) describes people who are together in an underground cave so that they cannot move. There is a fire burning and they can only see shadows of people and objects on the wall. To those on the inside of the cave, what they see and hear in the cave is reality, but when an outsider comes in, he finds it difficult to accept these conditions and has pity on his fellow cave dwellers/co-
workers. When he tries to share the knowledge of the outside world, it may cause the cave dweller/co-worker to hold on tighter to their familiar ways of seeing things instead of embracing the new knowledge.

A results oriented corporate culture gets that way because it has nurtured its followers through various leadership styles and it encourages submission. Sometimes these strong cultures with powerful visions of the future and expected commitments, can lead to their downfall. The company I work for is the cave and I am the outsider. The cave dwellers are expected to consistently work extra hours at home in order to complete the mandatory company administrative tasks
because they need to be able to bill the customer 100% when they are at work.

When I questioned a leader about this and asked how this was possible considering obligations in the home, the leader told me that "this was reality" and anyone that wants to work for this company has to accept the reality as it is. I cannot assimilate. In trying to understand this particular company and its culture, I began reading the biography about the founder of the company. It all began to make sense. As I began to establish relationships within the organization, I began to share the information from the book. A follower was just as curious as I and I gave him the book to read. He is sharing it with other cave dwellers. Why am I with this company? I am here to open the eyes of the cave dwellers and provoke
others to work together to change this false sense of reality

Business Excellence: Its in the Eye of the Beholder

At a recent forum the panel the discussion was around programs that lead an organization to excellence. The most consistent views seemed to suggest that few programs on their own will achieve excellence. There needs to be an overall strategy moving an organization towards excellence. Nothing occurs overnight and each piece of the puzzle has its own pitfalls.

Looking at the Ford Motor Company, as an example. They have implemented almost every business improvement or business excellence strategy possible and they recently posted losses of about $12 BILLION. Clearly, the strategies they have implemented (TQM, TPS, JIT, Lean, Six Sigma, TOC, and probably more) as well as new IT systems that have been installed, have not led to business excellence.

I have seen companies get results from each strategy individually but few have had breakthrough results. Each strategy has usually only focused on one aspect of the business, mostly process. Yes, Lean is moving into the office but it is still process. It is now about shuffling paper faster and more efficiently. Big deal. ERP
systems moved companies to think in terms of processes and attempted to break functional silos, but ERPs are transactional systems that move companies forward incrementally, by creating piecemeal savings. Yes in a F50 the numbers are large but relatively speaking they are incremental. People in the business require new skill sets and ROIs are hardly ever equal to those planned or projected by the IT
departments and consultants! Been there seen that.

GE is often mentioned as an outstanding organization. Business owners and managers often mention GEs success and Six Sigma in the same breath. What they fail to realize is Six Sigma was part of an overall plan. Some GE companies only started on their road to excellence and using Six Sigma after many years had been spent re organizing, redesigning, re hiring and focusing the business in minute detail. Six Sigma was not the cause and final end result of their improvement, nor their excellence!

Over the past few years I have been working with companies to achieve their strategies. What this has meant is looking at business in a holistic manner and making sure each piece of a strategic plan is budgeted for and is executed to achieve the desired results, or better. Essentially companies realize that no matter what happens in their strategic planning sessions they are not realizing the results they would like to see. Yes, one can just imagine FORD executives saying" OK guys we are going to drop $12 Billion this next year!

What this means is companies needs to improve their performance in a multitude of areas. This can be done without a name brand process, or a software package. To reiterate, it is not about ERPs, CRMs, Lean, Six Sigma, TQM, or anything else you can think of. Sure you may add one later but that is not the reason for success, although it probably will assist in reinforcing the changes that are made
along the way.

The key to excellence in performance is rather simple; It is not easy but it is simple.

1. Have a great strategy.
2. Surround yourself with people who believe in the strategy.
3. Aggressively execute the strategy.
4. Measure your results along the way.
5. Celebrate your successes

This very simple strategy is often scoffed at as not possibly being able to work. The reasons for chuckles are typically; my business is too complex, we are different, and you dont understand my business, I am sure you have all heard these and more, yet this process has never failed. Its tried and tested. Everything else clouds your vision and makes things seem more complex than they really are.

There are, however, any number of small, middle market, and transitional businesses who have grown 3 - 5x their revenue using this very simple strategy. Again, the simplicity should not overshadow the difficulty of actually implementing it. It is tough. People are the issue. Its about challenging paradigms. Moving through false assumptions and mental models which may have become
ingrained over many years.

So how do you get this right? Get your top team together. For a session with a difference. Develop that strategy that everybody can support from the get-go. Start with assessing and analyzing the things you do well and the things in which you are challenged. Be rigorous and hide nothing. Your failures reversed could just propel you to success. Failures are an indication of trying new things and
just not having figured out all the kinks. Develop working guidelines for achieving success when implementing new approaches. Ensure these are in line with your companies values. This step is all too often overlooked and very quickly leads to discontent and resulting failure.

Next step is letting each team member developing process based, or even functional based priorities for the year. Present these to the group with the rationale as to their inclusion. Once they are all up there select no more than ten as the major objectives for the organization. This is not as simple as it sounds, mind you. A good facilitator will certainly help.

List those top ten objectives. Determine the metrics of success. Define monthly targets. Determine how to get the data in a format to present to your group and the company to show success.

This will be the basis of a monthly review. You will be visiting the exceptions in detail and celebrating successes. This will be the cornerstone of achieving strategic success and corporate excellence. Focused monthly review session based on the top ten objectives will place you squarely on the path to success and excellence.

Like I said, simple. Not easy.

Business Excellence Is in the Eye of the Beholder

At a recent forum the panel the discussion was around programs that
lead an organization to excellence. The most consistent views seemed
to suggest that few programs on their own will achieve excellence.
There needs to be an overall strategy moving an organization towards
excellence. Nothing occurs overnight and each piece of the puzzle
has its own pitfalls.

Looking at the Ford Motor Company, as an example. They have
implemented almost every business improvement or business excellence
strategy possible and they recently posted losses of about $12
BILLION. Clearly, the strategies they have implemented (TQM, TPS,
JIT, Lean, Six Sigma, TOC, and probably more) as well as new IT
systems that have been installed, have not led to business
excellence.

I have seen companies get results from each strategy individually
but few have had breakthrough results. Each strategy has usually
only focused on one aspect of the business, mostly process. Yes,
Lean is moving into the office but it is still process. It is now
about shuffling paper faster and more efficiently. Big deal. ERP
systems moved companies to think in terms of processes and attempted
to break functional silos, but ERPs are transactional systems that
move companies forward incrementally, by creating piecemeal savings.
Yes in a F50 the numbers are large but relatively speaking they are
incremental. People in the business require new skill sets and ROIs
are hardly ever equal to those planned or projected by the IT
departments and consultants! Been there seen that.

GE is often mentioned as an outstanding organization. Business
owners and managers often mention GEs success and Six Sigma in the
same breath. What they fail to realize is Six Sigma was part of an
overall plan. Some GE companies only started on their road to
excellence and using Six Sigma after many years had been spent re
organizing, redesigning, re hiring and focusing the business in
minute detail. Six Sigma was not the cause and final end result of
their improvement, nor their excellence!

Over the past few years I have been working with companies to
achieve their strategies. What this has meant is looking at business
in a holistic manner and making sure each piece of a strategic plan
is budgeted for and is executed to achieve the desired results, or
better. Essentially companies realize that no matter what happens in
their strategic planning sessions they are not realizing the results
they would like to see. Yes, one can just imagine FORD executives
saying" OK guys we are going to drop $12 Billion this next year!

What this means is companies needs to improve their performance in a
multitude of areas. This can be done without a name brand process,
or a software package. To reiterate, it is not about ERPs, CRMs,
Lean, Six Sigma, TQM, or anything else you can think of. Sure you
may add one later but that is not the reason for success, although
it probably will assist in reinforcing the changes that are made
along the way.

The key to excellence in performance is rather simple; It is not
easy but it is simple.
1. Have a great strategy.
2. Surround yourself with people who believe in the strategy.
3. Aggressively execute the strategy.
4. Measure your results along the way.
5. Celebrate your successes

This very simple strategy is often scoffed at as not possibly being
able to work. The reasons for chuckles are typically; my business is
too complex, we are different, and you dont understand my business,
I am sure you have all heard these and more, yet this process has
never failed. Its tried and tested. Everything else clouds your
vision and makes things seem more complex than they really are.

There are, however, any number of small, middle market, and
transitional businesses who have grown 3 - 5x their revenue using
this very simple strategy. Again, the simplicity should not
overshadow the difficulty of actually implementing it. It is tough.
People are the issue. Its about challenging paradigms. Moving
through false assumptions and mental models which may have become
ingrained over many years.

So how do you get this right? Get your top team together. For a
session with a difference. Develop that strategy that everybody can
support from the get-go. Start with assessing and analyzing the
things you do well and the things in which you are challenged. Be
rigorous and hide nothing. Your failures reversed could just propel
you to success. Failures are an indication of trying new things and
just not having figured out all the kinks. Develop working
guidelines for achieving success when implementing new approaches.
Ensure these are in line with your companies values. This step is
all too often overlooked and very quickly leads to discontent and
resulting failure.

Next step is letting each team member developing process based, or
even functional based priorities for the year. Present these to the
group with the rationale as to their inclusion. Once they are all up
there select no more than ten as the major objectives for the
organization. This is not as simple as it sounds, mind you. A good
facilitator will certainly help.

List those top ten objectives. Determine the metrics of success.
Define monthly targets. Determine how to get the data in a format to
present to your group and the company to show success.

This will be the basis of a monthly review. You will be visiting the
exceptions in detail and celebrating successes. This will be the
cornerstone of achieving strategic success and corporate excellence.
Focused monthly review session based on the top ten objectives will
place you squarely on the path to success and excellence.

Like I said, simple. Not easy.

Building an effective change agent team

A carefully constructed change agent program is essential to any successful operational transformation.
Philippe Arrata, Arnaud Despierre, and Gautam Kumra
2007 Number 4

When a company attempts a transformation focused on its operations, a sound plan and a robust execution strategy are not necessarily enough. Another important factor in the success of this type of initiative-involving everything from simplifying processes and improving the efficiency of equipment to modifying an entire supply chain-is the designation of specific employees as "change agents" who lead the organization through the journey.
Change agents are leaders who cut across the organization and its business units without regard to the traditional hierarchy. Often these men and women are freed from day-to-day tasks in order to focus solely on leading and driving change. Directly or indirectly, they implement new processes, train employees on new procedures, and act as role models to demonstrate new and better ways to work. For example, change agents might spend more than 50 percent of their time visiting areas undergoing change, auditing progress, or advising managers on how to improve performance.
Organizations that overlook the importance of an appropriate change agent program risk paying a high cost. Consider, for example, an Asian pulp and paper company that created a change agent team to drive its lean-operations program. The group reported directly to top management and was staffed with new hires. However, senior executives failed to recognize and combat the tenacity of the operating group's silo mentality and culture. Plant managers, who held the real organizational power, resisted what they saw as intrusion by a team of young outsiders, leaving management with no choice but to abandon the change program after several months. The change agents could not establish themselves as a credible force in an organization that valued experience and seniority over youth and innovation.
Our experience suggests that a carefully constructed change agent program is essential to any reorganization effort. Such a program requires three elements: a thoughtful design, the careful recruitment and development of personnel, and close integration between the change agent team and the organizational areas targeted for transformation.
Designing the program
Two of the most important tasks when creating a change agent team are defining the roles of its members and establishing a reporting structure.
As in any organization, each individual on the change agent team has a specific role. For example, executers are responsible for implementing solutions, experts use their extensive knowledge to solve difficult problems, coaches train line employees in the new processes, custodians ensure that knowledge is shared across organizational units, and controllers track what's been done and what must still be accomplished. How much emphasis an organization places on each of these roles will depend on the nature of the change program and the existing culture of the organization; for instance, an organization with a weak culture of accountability will need more coaches and controllers in order to ensure consistency.
As for reporting structures, there are two possible models. One is to create a centralized change agent team that reports directly to the top team. The other, decentralized option is to keep change agents in their respective groups so that they report through a dotted line to a central change agent leader. In our experience each of these approaches has its advantages and drawbacks, and no one plan will work for everyone. A centralized change agent team encourages new ideas, the thorough development of new thinking, and a standard set of solutions across the organization. Alternatively, the decentralized model tends to foster greater skill building, the quicker dissemination of the program's values, and better customization of solutions for each site or group. Short-term priorities, the long-term rollout plan, and the culture of the existing organization are all factors that must be considered when determining which change agent structure will be most e
Recruiting and developing the best team
With a change agent organizational structure in place, the next step is to identify and recruit the best team possible. A crucial component is spelling out the benefits and opportunities members will receive as a result of moving outside their existing career paths.
Identify credible candidates
A useful litmus test when considering possible change agents is to anticipate the reaction from other staff members when an appointment to the new position is announced. Selecting high-performing people who are already well respected within the company sends a clear signal that management takes the program seriously. Moreover, a credible set of team members will be better able to drive change and implement recommendations.
Change agents need more than raw analytical power to solve complex business problems; interpersonal skills are also critical if they are to lead others through change. Important traits for a potential change agent include empathy, strong communication skills, perseverance in the face of challenge or ambiguity, and an ability to deal with conflict constructively.
Change agent teams must also make a strong effort to hire people with an appropriate mix of skills. A balance should be struck between young "academic types" who have strong analytical capabilities and seasoned managers who have proven track records within the organization. Working together, these two types of employees complement each other, broadening the team's skill base and providing for the two-way transfer of knowledge and capabilities within the team.
Develop a compelling case for team members
Potential change agents need to understand the explicit benefits and career opportunities that will be open to them as a result of joining the change effort. The best employees often hesitate to take an assignment that may last only 18 months-which is usually the minimum amount of time required for a transformation-fearing that it will damage their careers in the long run.
To counter these fears, high-performing organizations tend to develop a formal career plan for change agents. Some make participation a requirement for promotion to senior management; others build a career-development track within the program. Such mechanisms can prove to be highly effective recruiting tools, motivating potential candidates by offering short-term benefits-including opportunities to build new capabilities and exposure to new areas of knowledge-as well as the longer-term payoff of career advancement. Companies with traditionally weak human-resources processes may find it worthwhile to invest in a distinct HR system for change agents, including specific recruiting, development, and compensation schemes.
Integrating with the front line
The third important requirement for a successful change agent program is active support from line management. Time and again, change leaders discover that an "80 percent right" solution embraced and implemented by line managers beats the "100 percent right" solution that fails to win their acceptance. This buy-in rate is a critical indicator of success for a change program. Change agents should typically spend more than half of their time working collaboratively on the "shop floor," maintaining open, two-way communication and keeping abreast of the latest developments on the front line.
Line managers need to be actively engaged from the beginning of the change process, and they should participate in problem-solving sessions with change agents, senior managers, and other employees. Such sessions encourage openness and the sharing of ideas, allow difficult issues to be raised early on in the change process, and build personal connections between line staff and change agents. At one oil and gas company, for example, the change agent team created a group of "sparring partners" staffed with midlevel production managers. The team jointly tested proposed ideas, won approval for standardization of tools and processes, and acted as a conduit to the rest of the organization. In such sessions, communication barriers are removed and collaborative teamwork becomes the norm.
About the Authors
Philippe Arrata is an associate principal in McKinsey's Calgary office, Arnaud Despierre is a consultant in the Singapore office, and Gautam Kumra is a director in the Delhi office.

Broken Eggs and Shattered Glass

On a recent Saturday evening at around midnight, my wife and I were just about to turn out the light and go to sleep when we heard the sounds of a group of people talking in the street, outside our home. Then out of the blue came two loud thuds above our bedroom window, followed by the noise of laughter and people running away down our street.

We both jumped out of bed, I turned on the external lights and rushed outside unsure of what had caused the two thuds or what damage I could expect to see. The silence of the night was broken by the distant sound of people laughing, and at that moment I was of a mind to chase after them; however, running bare-footed on the road in the dark is not a very wise thing to do.

I could hear dripping noises on the driveway, and the flood light above our garage helped me to identify just what had happened. Our home had been the victim of an egg bombing!

Being faced with the prospect of cleaning up this sticky mess in the early hours of the morning was not a pleasing thought, on top of which I was less than impressed that we had been singled out for this annoying prank. I decided that it was too late to clean up the mess, as it would disturb our neighbours, so it could wait to the
morning.

Early next morning with a bucket of warm water and scrubbing brush in hand, and with the extension ladder placed on the front wall, I was now ready to wash off what was now two dry yellowish, egg grit impregnated, 1 metre long patches above our front bedroom windows.

My task was made even more challenging by the two large canvas awnings which protect our bedroom windows from the heat and glare of the afternoon sun. My annoyance with the late night pranksters was again building to the level of the night before.

After retracting each of the awnings, something we rarely do except when there are very high winds, I then climbed the ladder to clean up the first patch of egg stain and then move the ladder to clean the second patch.

As I climbed the ladder for the second time, I noticed that the glass in a small window just under the roof line was very badly cracked. On closer inspection the crack ran around over half of the outer edge of the window pane. As the awning protected the window, it was clear to me that the damage had not been caused by the egg bombing. As I carefully placed my hand on the glass, I discovered that the pane of glass was very loose and had the window been closed with any force, it would have most likely shattered and the glass dropped to the drive way, some seven metres below.

Just a few metres away, we have a basketball ring and on most days of the week there are up to six young people who play in the immediate area, including both my sons. My thoughts immediately turned to what could have happened if the broken glass in the window had gone undetected for much longer and then suddenly shattered. The likelihood of my two sons and their friends being seriously injured
was extremely high.

After quickly washing the remaining egg stain off the front wall and with the help of Tom, my youngest son, I got to work with some heavy duty masking tape and secured the cracked window as best I could. Within 24 hours the cracked window had been replaced and all was back to normal, except for the small bits of egg shell I kept finding on the front drive way and stuck to our garage doors.

Over the next few days, I realised that had our home not been bombarded by those eggs late on that Saturday night, I may not have discovered the broken window pane before it shattered and came down all over our drive way.

Even though it had been an annoyance at time, the broken eggs and the stains were cleaned up very quickly; however, the pain that could have been caused by the shattering of glass would never have gone away and would have haunted my wife and myself, forever and a day.

The cold shudder that ran down my spine when I first discovered the cracked window and the thought about the consequences of someone being seriously injured or even killed made me realise just how very lucky we had been.

Frequently in life, the small things that happen to us may have a negative impact and cause some form of pain, sadness, discomfort or personal aggravation. It is often said that we should not 'sweat the small stuff' and always look for the positive outcome or the silver lining in those dark clouds of the current circumstance, even though at the time that is not always an easy thing to do.

My personal experience with the egg bombing on that Saturday evening reminded me that in most cases there is always a flip side to everything that happens to us, and that often the flip side can provide a positive outcome or an even greater benefit—if not now, then at some time in the future.

From now on, whenever I see or break an egg, I will think of the egg bombing incident and say a thank you to those late night pranksters. Equally, I will always be reminded of Jean-Paul Sartre's quote:

'What is important is not what happens to us, but how we respond to what happens to us.'

Breaking Through Uncertainty

We all question our ability at times. Uncertainty plagues us. It is even more intense if the ability we are questioning relates to something we have never tried or not succeeded at in the past.

Set backs are common, but we rarely welcome them. We are inclined to respond negatively to adversity. It may be time to revisit that reflexive response.

I had an experience recently that caused me to reconsider whether a negative response to adversity is always justified when I was confronted with a life-threatening situation.

It was mid-morning on a warm and pleasant Saturday. I was in the midst of my first skydive of the day. It was my 2,123th jump since having taken up the sport fifteen years ago.

After about one minute of freefall and 5,000 above the ground, I parted ways with my fellow jumpers to get far enough away from them to open my parachute safely. I initiated opening around 3,000 feet above the earth.

My parachute opened with some twists in the lines between the parachute and me. This is not that uncommon. What was different this time was that I was not able to clear the twists.

The twists in the lines caused my parachute to take on an asymmetrical shape. Receiving asymmetrical inputs, the canopy did what it is designed to do and initiated a turn -- that's how it's steered. The problem occurred when the turn quickly became a rapid, diving downward spiral that was spinning me a full 360 degrees about once every second. This was a problem.

I looked up to assess my canopy and saw something I don't often see - the horizon clearly visible ABOVE the trailing edge of my canopy. This meant my canopy and I were now on roughly the same horizontal plane. In that I could see the horizon behind it, I was actually above my parachute and it was leading our fast spinning parade rapidly towards mother earth.

My first need was to acknowledge that I was not going to be able to solve this problem. This is not as easy as it seems. Having successfully completed over 2,100 jumps without having to resort to my second parachute, it was hard for me to believe I had really encountered a problem I could not solve. I had a natural inclination to assume I could fix this problem as I had all those in the past.

Sound familiar? It's always easy to lapse into denial when confronted with a problem. Until we acknowledge the problem and our possible inability to solve it - or to use the methods we have used in the past - we don't have a chance of making things better.

Fortunately, the urgency of this situation caused my hard-headed nature to yield much quicker than usual. That decision probably took a second or two.

The next step, having accepted the need to follow a different course than in the past, was to determine the course. Fortunately fifteen years of training and practice before every day of jumping took hold.

I looked straight down at the two handles on either side of my chest - one to release me from my malfunctioning canopy and one for deploying my reserve parachute - and realized I needed to quickly get them in my hands. I could not help but notice when I made eye contact with them, as had been ingrained in me during my First Jump Course way back in 1988, that by now the rapid spins had turned me back to earth and there beyond my toes was once again the horizon. This was bad!

Time was of the essence at this point not only because I was now rapidly progressing toward the horse pasture below me, but also because the centrifugal force I was starting to experience would soon make it impossible to get my hands to those two handles.

With my hands now securely on the handles, I was confronted with a bothersome question, "Now, which one goes first." The wrong order could cause my reserve parachute to deploy into my spinning main parachute which would result in an incurable entanglement.

Fortunately, ingrained training once again took over and I pulled them in the right order. First the handle on the right side which released me from my spinning main parachute followed by the handle on the left side to deploy my reserve parachute.

This brought on a wonderful experience. My malfunctioning black, teal and magenta canopy was replaced with a bright, yellow never before used reserve parachute. What a lovely sight! And all this by 1,700 feet - plenty of time to spare.

Many years ago, I read a book about the challenges and responsibilities of Secret Service agents. One of the sad aspects of that profession is that agents who never have the chance to validate their years of training by responding to a threat sometimes struggle severely in retirement. They are faced with not knowing - with
certainty - how they would respond when faced with the paramount challenge their career can deliver. For this reason, agents who have faced such a challenge successfully are admired within the culture of the Service.

That Saturday morning, I had the privilege of facing a similar, life-threatening and I now realize life-defining challenge. I faced what Secret Service agents call "the dragon."

For all of us the greater dragon is not the external threat, whether it be an assassin's bullet, the unforgiving and fast approaching earth or another challenge. The real dragon is the self-doubt we carry within us.

For those few splendid moments after landing safely, I was able to put my foot firmly on the neck of the dragon ... and it felt great.

Keep this in mind the next time you are confronted with adversity. On the far side of the experiences the adversity presents, there could be a valuble gift - a renewed confidence and certainty.

Birthday Cards with Secret Codes

I looked at the scrawled handwriting on the envelope. I blinked and read it once again before tears began to tumble. My birthday card had been addressed, sent, and signed by Dad.

I'd not thought about, or expected, a card that year. The prior months had been dreadful as we watched Mother's health spiral downward. At Dad's age, the ordeal eventually took a terrible toll on him as well. Especially when he realized Mom's only option was to live out her final days in a nursing home. She would never come home again and soon Dad would be alone for the first time in his life.

Yet, there it was…a birthday card, and the only one I had ever received without Mom's familiar handwriting. I didn't even feel the need to open it, for Dad's efforts told me all I needed to know, and more. I cradled it like a priceless breakable and wept buckets of tears. Some for a card I would always hold dear, others for the
sorrowful changes taking place in the lives of those I love.

When I did open the card...the sentiment was lovely and it was obvious much thought had been given to the selection. Although it was signed "Mom and Dad," never had I seen my parent's names written by Dad…another gloomy reminder of what was to come. Mom would not be with us much longer.

Six years later, with Dad rapidly approaching 90 years of age, I smiled when my birthday card came today! It always arrives several days early and the birthday check inside holds a brainteaser Dad concocted when greeting cards became one of his duties. The "memo" line at the bottom of the check is where his now-infamous secret code is found. Using capital letters he leaves a birthday message. An example: H. O. A. Y. T. Y. When I call to thank him for my card, you can bet your boots I will be quizzed on the answer.

A year after Mom's death I was on an extended summer visit at Dad's. I yawned as I plodded to the coffee pot one morning, poured a cup, and sat down next to Dad at the kitchen island. He was addressing a card to an old family friend.

"Dad, how do you keep track of all the birthdays and anniversaries? And, your cards are never late. You do a really good job!"

The look he gave me with those big, blue eyes suggested I might be dumb. "It's simple! On the first of the month I get my calendar and write down all the cards I'll need to send that month. The next time I go shopping, I buy them…then I place them in order in the file cabinet drawer."

I grabbed Dad's calendar and yanked open the file drawer. Sure enough, the cards were in perfect order, from the first of the month to the last.

"Wow, you've got quite a system here!" I exclaimed. "Maybe I should set up one just like yours." I teased.

"After Mom died I had to figure out something! I didn't realize how many cards we sent out in a year's time."

I've never asked Dad about his secret codes for I know they began as a witty distraction during a sad and emotional time. They've continued because he's a wise man who knows life goes on regardless of our circumstances…and that a new comical twist along life's path can always lighten our load.

Birds of a feather flock together

Don't spend major time with minor people. If there are people in
your life who continually disappoint you, break promises, stomp on
your dreams, are too judgmental, have different values and don't
have your back during difficult times...that is not friendship.

To have a friend, be a friend. Sometimes in life as you grow, your
friends will either grow or go. Surround yourself with people who
reflect values, goals interests and lifestyles.

When I think of any of my successes, I am thankful to God from whom
all blessings flow, and to my family and friends who enrich my life.

Over the years my phone book has changed because I changed, for the
better. At first, you think you're going to be alone, but after
awhile, new people show up in your life that make it so much sweeter
and easier to endure.

Remember what your elders used to say,

"Birds of a feather flock together.
If you're an eagle, don't hang around chickens:
Chickens can't fly!"

Better strategy for business units: A McKinsey Global Survey

Executives are most positive about the outcomes of strategy formulation for their companies' business units when they work at companies that use a collaborative approach. And while they say following best practices yields better results, they use those practices less often than they think they should.
Web exclusive, July 2007
When a company formulates strategies for its business units, it reaps what it sows, executives say. Those who work at companies that frequently apply best practices-such as assessing trends, risks, and competitor reactions-and take on the challenge of fostering collaboration between executives at the corporate and business unit levels are more positive about the outcomes.
The latest McKinsey online survey

of executives around the world reveals tension throughout the process. Corporate-level managers tend to perceive their companies' processes for developing business unit strategy as collaborative, while their colleagues at the business unit level more often see the strategies as mandated by the corporate center.
Most respondents do agree, however, that their companies have some way to go before the formulation of business unit strategy meets the rigorous standards associated with best practice. For instance, while eight executives out of ten surveyed say it is relevant to identify the top business, social, and environmental trends that would affect a business unit's strategy, only half report that their companies frequently do so.
What's more, executives have mixed feelings about the results. While a large majority of respondents say the process aligns business unit leaders with the strategy and makes managers committed to the implementation of strategy, relatively few report that it fosters creativity or incorporates the priorities of employees at all levels.
Three approaches
Equal shares of respondents report taking a collaborative or a corporate-led approach to developing business unit strategy at their companies. Thirty-seven percent say corporate and business unit representatives share the work, and as many say strategy is formulated on the basis of targets set at the corporate level in areas such as growth, profit, or market share. Twenty-three percent report that the business unit formulates its strategic plan, which is then reviewed by the corporate center.
Executives at smaller companies are more likely to report taking a collaborative approach (Exhibit 1). The larger the company, the more likely it is to use a corporate-led process. How executives characterize the process at their companies also depends on their affiliation. Managers involved in strategy on the business unit side more often view strategy development as being led at the corporate level, while corporate-level executives tend to see it as a collaborative effort.
&l


Best practice and real practice
Companies know what steps to take to formulate an effective strategy, but they don't take them as frequently as they should. The survey asked about critical best practices (such as assessing trends, economic drivers, risks, uncertainties, and competitor and stakeholder reactions), as well as others such as providing more than one strategic option and using case studies and analogies to guide decisions.
A strong majority of the respondents describe nine such practices as relevant for the formulation of strategy in their companies' sector or sectors. Explicitly taking into account the organization's strengths and weaknesses is the practice seen as most relevant (Exhibit 2). Two particularly sophisticated practices-the use of case studies in a business unit's own industry and examples or analogies from other industries-are the only two that a majority do not consider relevant.
However, a gap of 15 percentage points or more separates the portion of respondents who consider these best practices relevant from those who say that their companies frequently use the practices. The gap is particularly wide-almost 30 percentage points-for two activities: identifying and assessing the top trends that would affect a business unit in the next three to five years and explicitly defining a business unit's industry and its role within the company's portfolio.
What's more, serious shortcomings emerge when we pressed executives about the specific actions their companies take when applying some of the best practices. For instance, while 65 percent say it is relevant to take the reactions of competitors into account, and 41 percent say their companies frequently do so, no more than 29 percent say their companies often discuss and analyze the prospects of other players entering their markets. Only 10 percent say they frequently conduct gaming exercises to test the probability of such market entries and potential responses to them.
Companies with a collaborative approach do somewhat better overall than those with a corporate- or business unit-led approach. And executives at collaborative companies are significantly more likely to say they frequently take into account expected reactions from competitors and analyze top trends.
Taking the lead
Although there's general agreement on what companies ought to be doing, there is much less agreement on who's in charge.
The overall response indicates a roughly equal split between the corporate side and the business units about who is taking the lead in formulating and monitoring strategy, but while corporate-level executives most frequently see a small group of senior corporate managers as taking the lead, respondents at the business unit level are more likely to see business unit leaders as being in charge (Exhibit 3). Both groups overwhelmingly agree that business unit leaders have the main responsibility for implementing the formulated strategy.


Getting satisfaction
The quality of an approach to formulating strategy can be measured in part by whether participants are satisfied that the process meets goals such as involving those who carry out strategy, identifying growth opportunities effectively, and fostering creativity-all of which presumably increase the chances of making and executing successful strategies.
A clear majority of executives agree that their companies' approaches to formulating business unit strategy help to align business unit leaders with the strategy and guarantee a commitment to its implementation, ensure that those who execute the strategy are involved in making it, and build a shared understanding of market dynamics (Exhibit 4). But only a minority agree that their approaches foster creativity, incorporate priorities of employees at all levels, and effectively identify growth opportunities outside of the core business. What's more, corporate executives hold a consistently rosier view than business unit executives do.
To dig deeper into the satisfaction of executives with strategy development, we combined their levels of agreement with each of the outcomes in Exhibit 4 into a single composite measure

and divided the respondents into three groups: those who are satisfied (in overall agreement with the statements), those who are neutral, and those who are dissatisfied (disagree with the statements). According to this analysis, executives who are satisfied are the likeliest to describe the process at their companies as collaborative. Specifically, executives at companies with a collaborative approach to strategy represent 37 percent of the sample but 42 percent of those who are satisfied with their
In addition, there is a strong and consistent correlation between satisfaction levels and the frequency of using best practices in strategy formulation. For instance, 57 percent of executives who are satisfied with the process say they apply one of the least-used best practices: frequently providing more than one option when making strategic recommendations. Only 31 percent of the neutral executives and 23 percent of the dissatisfied ones report using that practice (Exhibit 5).

Notes

This measure was constructed as an index of the six outcomes in Exhibit 4. Each respondent received an index score ranging from a low of 6 (if he or she selected "strongly disagree" with all six outcomes) to a high of 30 (if he or she selected "strongly agree" with all six). The index values were then grouped into the categories of satisfied, neutral, and dissatisfied.
Achieving strategic targets
In the end, though, the effectiveness of strategy formulation must also be measured by whether the company achieves its strategic goals. The frequent use of best practices in the process seems to help somewhat.
For instance, of respondents who report that over the past three fiscal years their companies performed better than the strategic targets they had set, 62 percent say their processes frequently take these targets into account and assess risks, compared with 56 percent of executives at companies that performed on target and 47 percent of those that performed below target (Exhibit 6). Indeed, the outperforming companies were more likely to make frequent use of 7 of the 11 practices.
About the Contributors
Contributors to the development and analysis of this survey include Jungkiu Choi, a McKinsey alumnus; Dan Lovallo, a professor at the University of Western Australia Business School and an adviser to McKinsey; and Anna Tarasova, a consultant in McKinsey's Waltham, Massachusetts, office.

] Become a Better Communicator by Keeping Your Mouth Shut -Kenny Moore

In corporate life we are in serious danger of believing that those who talk the loudest win the day. My 20 years in business have taught me that leaders who can actually keep their mouths shut and ears open have a better chance of being heard, believed and followed.

Transplanting Monastic Practices

When I lived in the monastery as a Catholic priest, we had a spiritual practice called the "Grand Silence." Each evening after dinner and night prayer, we would retire to our cells under a cloak of silence that reigned until after Mass the following morning. It was spiritual time spent reflecting on life, death and one's relationship to the Divine. A chance to grapple with the dynamic tension between human frailty and the personal call to holiness. While religious reading was tolerated, we were encouraged to spend the time creatively doing nothing. The Roman philosopher, Cato, once said: "Never am I more active than when I do nothing." Granted, he wasn't a monk, but he was articulating one of life's golden truths. In sacred silence, we have a chance to hear an alternative voice beyond our self-serving subconscious. There are certain messages that will only be revealed in darkness and uncluttered space. Those who have the fortitude and faith to wait there are often copiously rewarded.

I came to understand how valuable this silence was only after I left the monastery and got married. When my wife and I returned from our honeymoon and began our life of marital bliss, she would, each evening, talk about her day at work, planned projects for the house, the number and names of our expected offspring, as well as an endless array of other wifely concerns. It took about a week before I broke under the barrage of words. "Dear," I remember saying, "In the monastery, we didn't talk after dinner; we had the 'Grand Silence.'" I explained that I wasn't used to ongoing evening conversations. "I need some quiet in the house," I whispered. With concern and respect for her new husband, she lovingly replied: "Honey, you're so damn weird!"

This tension between monastic silence and marital discourse went on for years. It eventually got resolved around the dinner table when my wife and I were sharing an evening repast, surrounded by our two young squabbling sons. Milk was being spilt, food was being thrown and parental patience was being compromised. After the ninth foray into a cacophony of sibling rivalry, my wife threw down her napkin and announced: "That's it. Grand Silence! There's no more talking. You boys leave the table, go upstairs and put your pajamas on and get into bed. I've had enough!" As the boys retreated to their lair, I looked at her with deep affection and said: "Honey, you're so damn weird!"

If my memory serves me well, I think I spent that night sleeping alone on the couch.

Silence as an Executive Competency

It's not just our personal life that benefits from silence. So does our corporate one.

I recently had a chance to work with one of our Operating officers. He asked my help in designing a group meeting with his managers to get their input regarding departmental goals. We worked assiduously in crafting a session largely focused on what the employees had to say, and intentionally kept executive remarks to a minimum. During the half-day program, participants broke into small groups to write down their thoughts about organizational needs, operational gaps and suggestions for productively moving the business forward. The employees spent some time writing and a lot of time speaking. The officer largely listened.

There were a few interesting insights. We came to learn that when executives speak, employees rarely listen or if they do listen they don't believe. But co-workers have great credibility and when they talk, they have a significant impact on their peers. Mostly because they're not seen as paid political envoys, but fellow workers laboring in the daily muck and mire. Even though the executive could have waxed eloquently about customer satisfaction and safety, having employees talk about their experiences on the job proved far more compelling.

After unedited conversations about business challenges and operational needs, one engineer remarked: "This is the first time I understand how our department actually fits into the company's Growth Strategy." Thank God the folks from Corporate Planning weren't in the room; they would have reeled in horror.

In the midst of executive silence, we also got a chance to hear about our newly minted performance appraisal program and forced ranking system. Seems we achieved exceptional results in disheartening our employees and marginalizing the workforce. As one brave director said: "I don't mind raising the performance bar, but I personally resent being badgered and threatened by the system." How surprising: our slavish adherence to "Best Practices" had once again ruptured employee relations and compromised intrinsic motivation.

When employees evaluated the half-day program, their one clear and consistent comment was: "How refreshing to be in a meeting with an officer who actually listens. It makes me hopeful about our future."

Additionally, for the last few years my CEO has been hosting informal dinner meetings with a handful of managers once a month. He wants to hear what's working well in the company and what's not. His main contribution to the conversation is silence, coupled with an intense interest in learning about what's really going on at the workplace. Oddly enough, our top-ranking officer has come to learn that he finds out more about the hopes and concerns of our workers when he doesn't speak. Initially, he had me joining him to make sure he didn't talk too much. Over time, he's become a pro at it. My main responsibility now is to pick up the dinner tab and fret over my diminishing value to the company.

Practice Makes Perfect

While silence comes more easily to monks than to Alpha-males, it is a skill that can be learned and honed. Here are some practical steps to get you started:

The next time you're out driving, turn off the radio. Likewise, resist the temptation to use your cell phone. Besides being illegal, it's dangerous to your life: interior as well as exterior. Drive around in the glow of silence and pay attention to what your eyes notice and your soul surfaces. There's inspiration and beauty abounding.

At an upcoming business social, go around the room and hook up with as many strangers as possible. After a brief introduction, ask them what they do for a living, then shut up and listen. Periodically nod your head in agreement and use your eyes to offer support and encouragement.

Occasionally say: "That sounds interesting, tell me more." People will be impressed. By evening's end, attendees will leave the gala affair commenting on your leadership potential and exceptional communication skills.

Stop watching TV. George W. Bush has gotten a few things right, and this is one of them. Television deadens our senses, causes undue anxiety about the future and leaves us feeling sullen and morose. In return for this small sacrifice, you'll receive a dividend of extra time to creatively do nothing. Spend it wisely. Perhaps lighting a candle or expanding your spirit of gratitude for life's little blessings.

Sit still for ten minutes each day in silence. No prayer needs to be said; no mantra recited. Simply be present and be quiet. Mystery in the Marketplace

Mystery is marbled into all of life, and especially that of work. The realm of business is often the place where the drama of life unfolds. The perplexing realities of good, evil, suffering, and injustice are made manifest. The inscrutability of growth, transformation and personal redemption often accompanies our work. As we journey in our jobs, we come to realize that life is not a problem to be solved, but a mystery to be lived.

It's said that upon graduation, doctors are informed that half of what they were taught is wrong. The problem is, the medical establishment's not sure exactly which half it is. When you're dealing with a human being, mystery runs rampant. Working with people is not a mechanical relationship. It's a sacred one.

If you consider that corporations are comprised of hundreds and thousands of human beings, it's unlikely we can readily mandate operating principles that will engage and motivate them. Perhaps simply showing up and listening is a worthwhile strategy for business success.

When confronted with mystery, our most practical response is awe: boldfaced and with abject stupefaction. It's no surprise that "mystery" comes from the Greek verb meaning: keep your mouth shut. If we're looking for an executive role model for the competency of managing mystery, we might want to consider Moses standing before the burning bush. In stark imitation, we're well served to remain silent, remove our sandals and recall that we are standing on sacred ground.

I wonder how long it'll take Stephen Covey to add these to his list of "Highly Effective Habits"?

The Author

Kenny Moore (www.kennythemonk.com) is co-author of The CEO and the Monk: One Company's Journey to Profit and Purpose (John Wiley and Sons, 2004), rated as one of the top ten best selling business books on Amazon.com. He is Corporate Ombudsman and Human Resources Director at a New York City Fortune 500 energy company. Reporting to the CEO, he is primarily responsible for awakening joy, meaning and commitment in the workplace. While these efforts have largely been met with skepticism, he remains eternally optimistic of their future viability.