Art Petty on Management

Is it Time to Panic?

I suspect that anyone not concerned about the state of “things” going on in our world and specifically in our economy would reasonably be labeled as naïve.  We have big problems, they could get bigger in a hurry or maybe they won’t.  The loss of some long-standing financial icons is annoying, the potential for the choking off of access to working capital for otherwise healthy companies is downright disconcerting.  The issues being debated in Washington have long-since ceased being about Wall Street and are most squarely about mitigating catastrophic risk on Main Street.

You don’t have to look far for some pundit somewhere offering up the end of life as we know it, usually with comments about a worldwide depression the likes of which we’ve never experienced.  Hey, they may be right or they may not.  I’ve long since given up trying to peer into the crystal ball and prognosticate beyond the late George Carlin’s famous weatherman bit that called for a forecast of “dark, followed by widely scattered light in the morning.”  The sun will rise and it will still be in the east.

In spite of my inability to foretell the future, I do know one thing for certain, it is never good to panic.  For you science fiction buffs out there, Frank Herbert had it right when he wrote that, “Fear is the Mind Killer.”  Panic creates a fight or flight response, where rational thinking is replaced by instinctual flailing.  Individuals panic, participants in markets can panic, and organizations can panic.  More often than not, the panic results in dramatic or even fatal mistakes.

Unfortunately, we have recent experience with horrific scenarios.  What happened on 9/11 was unthinkable on 9/10.  There were no road maps for dealing with the grief and the anger, and for awhile no one understood what was next.  It was a time when the best that many could hope for was to process on taking the next breath.  In all likelihood, we are still dealing with the ripples of this unthinkable day, and those ripples will likely shape the lives for generations to come in some form and fashion.

In addition to the pundits and talking heads, some really smart people that I know are beginning to let fear creep into panic.  Discussions of how to grow, how to compete better and even discussions about the pursuit of excellence are being replaced with focus on retrenching, battening down the hatches and/or boarding up the windows for the storm on the way.  Again, we would be naïve to ignore the signs and we would be naïve to think that anyone actually understands the impact of this horrific financial mess unfolding in front of us in real time, albeit drawn out over the past few weeks.  It’s time to focus on taking one breath at a time.

While there is some probability that the worst cases will play out, I will place my bet on widely scattered light towards morning.  There are many reasons why the world’s global capital markets cannot stop and why the earth’s burgeoning population and the world’s rapidly growing economies will not stop consuming, investing and yes, even growing.

As you look at your own firm and your own situation, it is not a time to take foolish risks.  Frankly, it’s never a time to do that, so nothing has changed.  It is a time to adopt a philosophy that seeks to find opportunity in chaos.  It is a time to carefully evaluate your strategies and check your assumptions.  It is also a time to consider making some hard calls on your future.  Working for a firm in the post 9/11 world where the board and leadership had the courage to invest in reinventing the firm’s core offerings at a time when our competitors were scaling back R+D efforts, was a brilliant learning lesson. 

It’s always time to improve your talent…either by investing in growing their knowledge and capabilities and by culling the herd.  It’s a great time to evaluate spending, to hold marketing accountable to genuine measures of value creation and to deploy the best-trained, solutions focused sales force to serve your customers.  It’s also a remarkable time to scale up your communications with your stakeholders and with your employees and provide them opportunities to share their many great ideas.   

The Bottom-Line for Now:

At the end of the day, people must eat, people must clothe themselves and frankly smart people will figure out how to use the opportunity to challenge themselves and their organizations to improve.  The rest will start boarding up the windows to hunker down for a long, agonizing wait.  I know which team that I want to be a part of. 

Career Growth and the Product Manager

I wear my respect on my shirt-sleeve for the many dedicated Product Management professionals that hold down what I believe is one of the most difficult and one of the most critical roles in today’s fast moving technology and B2B organizations.   (See my post: In Support of the Product Manager as MVP)  The individuals in these positions have a tremendous responsibility to provide guidance to the organization, often with little formal authority to translate this guidance into action. 

While admittedly biased based on my own PM and PM leadership experience, I firmly believe that these talented and well-rounded business professionals are potentially some of the most valuable assets in an organization’s talent pool.   Of course, realizing value from this talent requires a proactive approach to helping Product Managers develop some of the “softer” skills that we all know are important, but that we as leaders often overlook in our preoccupation with the day to day crises that can rule our lives.

Here’s my short-list of the skills that Product Managers cum Executives must focus on if they want to crack the ranks of senior leadership.  Given the fact that Product Managers are some of the only individuals that see the firm from the outside-in and inside-out, it is well worth it for Product Managers and their managers to steer development, and yes, training efforts towards these areas.

• Leadership: This is perhaps the stickiest or squishiest of all skill sets and yet developing context for the true role of a leader, understanding what it takes to build credibility and engender trust as a leader are critical lessons on the road to success.  Instead of generic leadership training, focus on an approach that emphasizes the development of key leadership skills and the application of these skills in a series of diverse leadership situations.  Ideally, any leadership development program for Product Managers will emphasize developing the skills and gaining experience for leading as an informal leader, leading horizontally and managing upwards.  (OK, again, I’m biased, but a manager armed with my book, Practical Lessons in Leadership and committed to creating a robust developmental program for their Product Managers is miles ahead of the manager sending their PM to some of the generic leadership training in the marketplace.)

• Strategic thinking.  Like leaders, strategists aren’t born and in most cases, they are made.  Few positions in a firm have the potential to contribute more to strategic thinking and strategy process creation and sustainability, than that of the Product Manager.  I was fortunate enough to enjoy early career mentors that challenged me to constantly think outside of my product, outside of my company and to look at the big picture, tune in to my various audiences and to develop and test strategic hypotheses while growing the business.  That is a very different way of thinking versus “what are the top 10 features that I can jam into my next release?”  Too many Product Managers don’t learn to look beyond their narrow scope (product, market segment) and all too many don’t grasp the importance of their role as a strategist in the overall firm’s plans.  Challenge yourself or your Product Managers to take an active role in educating the firm on the market and customer situation and proposing ideas to leverage the situation for growth.

• Communications Skills and Mastering the Art of Diplomacy.  Great Product Managers learn to speak the language of executives and they recognize that every encounter regardless of who they are meeting with, is an opportunity to build trust by understanding needs, creating shared perspectives and creating reasons for people and teams to move forward. The recent HBO miniseries, John Adams, based on David McCullough’s biography of the same name, shows the mercurial and aggressive Adams nearly destroying any chance to earn France’s support for the revolution, as he demands action and nearly destroys the hard-won credibility that Franklin had earned in several years of creating an understanding and developing shared-reasons to fight the British. The days of command and control leadership in the corporate world are generally over.  Developing a communication style that creates interest and fosters respect is essential for success.  Diplomatic skills to manage upwards, to manage across and to manage the generations and the various cultures via distributed teams are skills that will carry the Product Manager way beyond their mid-level role.

The Bottom-Line for Now:

Rather than coming across as picking on Product Managers for being deficient in leadership, strategic and communication/diplomatic skills, it is my intent to encourage them to proactively develop these skills.  It is remarkably easy to get caught up in the pursuit of day to day business and forget that everyday is a chance to advance your career.  If you are fortunate enough to have a great mentor, that is good.  If not, it’s incumbent upon you to take the initiative to create the experiences necessary for you to develop and fine tune these critical skills.  Your future depends upon it.

The Hubris of Leaders

It takes a strong reserve of self-confidence to be an effective leader.  It’s also remarkably easy to get comfortable crossing the fine but dangerous line between self-confidence and arrogance.  The best leaders are conscious of that boundary and walk along it but resist the lure to cross into this self-gratifying but credibility destroying country.

Being an effective leader requires the self-confidence to deal with constant ambiguity, to put faith in people and to recognize that success comes through others.  Unfortunately, all too many leaders get the formula wrong.  They begin to believe their own press clippings.  They convince themselves that they are in a leadership role because they are better than others, and they begin to lead and manage according to that premise.  When times are good, the positive results reinforce this behavior and feed the out-of-balance level of self- confidence of these individuals.   When times are bad, the debts created by this leader’s hubris come due, and like many of our struggling financial institutions, they do not have the currency (=credibility) to make the payments.  They default on their role as leaders.

Suddenly it appears that times are challenging.  That’s OK.  Great things and great people emerge from difficult times.  In particular, challenging circumstances are proving grounds for leaders of all ages and all levels, and those that emerge will be those that understand the difference between self-confidence and arrogance. 

The effective crisis leader exudes confidence, not based on a false view that all will be alright, but based on a genuine belief in the ability of smart people to work together to solve any problem.  Imagine Winston Churchill at the peak of the Blitz when enemy bombs were dropping all around London, and he had to summon the will to believe that the British people would persevere to survive and win.  His self-confidence fed the nation for a time, and the actions of his countrymen under his leadership won the day. 

If you are a leader facing tough times, check your hubris at the door and remember your job as a leader is to get things done by appealing to the hearts and minds of others.

The Dollar Auction and a Failure of Rational Judgment

One of the more fascinating social experiments that I have observed is a game credited to Martin Shubik, called The Dollar Auction.   My context for this auction has been in groups of senior leaders (classrooms of 30 or more) during Executive Development events.  In these settings filled with lofty titles carried by people driving nice cars and wearing expensive suits, the auction is actually for a $20 dollar bill…not just a lowly $1.

The game works like this:

-Everyone in the room is eligible to bid on the $20 bill.  The bidding starts at $1.00.

-The second place bidder must pay the amount of his/her losing bid.

Things start out as expected.  Someone opens the bidding, it quickly escalates to the risk-free level of par value and then pauses for just a second as the players ponder their strategy.  Often, the  $19 bidder recognizes their risky situation and decides to stick it to the fool willing to pay $20 to get $20.  After a momentary pause, this group of executives is off to the races. 

I’ve personally witnessed corporate executives of all types escalate the bidding into the hundreds of dollars.  I’ve also watched as groups came back to their senses and stopped short of $100.  I’ve not yet witnessed any group stop at $20 or below.  (Full disclosure: you should know that the executives were told in these settings that the winning bid above par will be donated to charity and the losing bid payment used for drinks that evening.)

Shubik commented on observing the same behaviors above that, “game theory alone will probably never be adequate to explain such a process.” 

While I am unqualified to offer clinical commentary on this pathological behavior, we don’t have to look far to see it at work in the current financial crisis.

• AIG is admitting on the day following the $85 billion (billion with a “B”) federal government bailout of this global giant that they had no idea how bad things really were.  I thought that firms that dabbled in insurance had a good handle on risk. 

• The overnight dissolution of Lehman, Bear and billions of dollars in partner equity was created on the back of exotic mortgage-oriented financial instruments that are so complicated that few understand them.  Hmm, how many over-educated people willing to bid more than a dollar for a dollar does it take to destroy a financial system?

• The housing industry and mortgage financiers built the real-estate bubble and catalyzed the credit crisis by effectively enticing unwitting individuals into paying more than a dollar for a dollar.  Hey, I’m all for caveat emptor, but why did the builders and mortgage bankers/brokers/underwriters think that they could extend this auction indefinitely without someone or something calling a sudden, rude halt to these people printing their own money?

The Bottom-Line for Now:

The common outcome of The Dollar Auction offers an interesting perspective on human behavior.  We are seeing similar manifestations of this behavior at work in what we are slowly learning about the events leading up to this historic (not in a good sense) financial crisis.  For some reason, common sense, prudence and good, old-fashioned principles of  risk management fly out the window when it appears that the magical money-making machine has been turned on.  Whatever happened to making money by developing goods and delivering services that meet and exceed customer needs?

I’ve long spoken openly about my perspective that the destruction of a business and the abuse of stakeholder trust are crimes punishable by imprisonment.  Ditto that for the destruction of a financial system.

Looking for Leadership Lessons in the Wake of Wall Street Crisis

The greatest spectator sport available the past few weekends has been the systematic dismantling and reassembly (of sorts) of many of America’s financial icons and of America's capital markets. 

In case the return of college and pro football the last few weekends kept you from paying attention to the financial news, the American financial infrastructure (or at least the world’s confidence in the American financial infrastructure) has teetered on the brink of disaster.  Last weekend, the U.S. effectively bailed out the FNMA and Freddie Mac and this weekend, we watched as Lehman Bros. was sent into oblivion, Merrill Lynch was sold (at 66% less than a reported buy-out offer in 2007) and AIG, the venerable insurance giant scrambled for liquidity.

I’ve chatted with a number of my financial friends and I ask my naïve and still unanswered question: “How did this happen?  After receiving some elegant explanations backed by all sorts of terms like derivatives and mortgage backed securities etc., etc., I invariably derail the discussion by saying, “Oh, so you’re saying that greed run amuck is at the root of this problem.”  I’ve yet to receive anything other than shoulder shrugs and comments like,  “Yeah, that’s the bottom line.”  And while we should take comfort in the fact that humans are at least predictable and consistent, I’m still left wondering where the true leaders were during the build-up of this mortgage-backed house of cards.

I’m left wondering how some of the world’s supposedly smartest and best educated professionals managing the firms that have created the world’s most effective, efficient and liquid capital markets allowed this mortgage-driven disaster to systematically destroy confidence and credibility in their firms and in large part, in the U.S. financial system.  What happened to risk management?  Heck, what happened to sanity? 

Where were the leaders making the hard calls on their firm’s activities?  Whose job was it to take away the punch bowl? How did the activities of quasi-public and private but accountable publicly traded institutions seemingly operate in a black box?  Who was writing and approving the compensation plans that said that the laws of finance and risk were suspended and it was everyone’s right to crank up the money machine.  Who forgot to highlight that there are no money machines?  Where was the accountability?

The Bottom-Line for Now:

While leadership on Wall Street seems to have taken most of the decade off, there are some remarkable opportunities for new leaders to stand up, deal with the crisis and begin restoring confidence by imposing accountability and sanity on their practices.  Additionally, the tendency of society and government will be to potentially move too far in the wrong direction towards regulation and governmental intervention.  The credibility and ultimately the liquidity afforded by the American capital markets are at stake.  The implications for global economic health are significant the implications for health on Main Street profound.  While I take comfort in my naïve faith in the long-term survival and success of a free market system, prudent and deliberate leadership is required to keep this system free and effective.

Good People or Good Ideas? The Importance of the Working Environment

Ed Catmul, cofounder of Pixar and president of Pixar and Disney Animation Studios offers his perspective on the people versus ideas question in a powerful and practical leadership article entitled: How Pixar Fosters Collective Creativity, in the September, 2008 issue of the Harvard Business Review.

Mr. Catmul is quick to offer his selection of “people” over ideas, a choice that almost might seem counter intuitive for the leader of an organization that clearly wins or loses on big ideas.  While acknowledging that great creativity is essential starting with the “High Concept” (the high-level idea for a new production) and continuing through thousands of steps to completing the project, he submits that it is the working environment that allows this creativity to emerge and evolve rapidly and effectively.  (As an aside, his description of moving from the “high concept” to the finished product as “an archaeological dig where you don’t know what you’re looking for or whether you will even find anything,” wonderfully describes the reality of the creative process in so many functions and industries.  As leaders, we are well served to remember that creativity doesn’t happen on command and rarely on schedule.”

Your Priority as a Leader: Create the Right Working Environment

Catmul’s thesis: getting talented people to work together requires a working environment that nurtures trusting and respectful relationships and unleashes everyone’s creativity, is valid for leaders at all levels and all situations.  The concept of creating the effective working environment is so important to me that it earned a full chapter in my portion of my book with Rich Petro, Practical Lessons in Leadership.  It is also the essence of my description of “The Leader’s Charter” which starts out with the words…”The true role of a leader is to create an environment that… .” 

Mr. Catmull offers that while “most executives at least pay lip service to the notion that they need to get good people and should set their standards high, how many understand the importance of creating an environment that supports great people and encourages them to support one another so the whole is far greater than the sum of the parts.” 

This great article goes on to tie in Pixar’s three key operating principles as powerful components of their effective working environment:

• Everyone must have the freedom to communicate with anyone (my phrase: an effective feedback culture)

• It must be safe for everyone to offer ideas (feedback culture again)

• Stay close to innovations in the academic community (my interpretation: foster a learning organization). 

Pixar’s operating principles emphasizing open communications, mutual respect and the development of trust are bolstered by a refreshing attitude towards risk:

"Management’s job is not to prevent risk but to build the capability to recover when failures occur." 

And on pursuing a compelling vision:

"We as executives have to resist our natural tendency to avoid or minimize risks, which is of course much easier said than done."

The Bottom-Line for Now:

After many years of leading and now several years of working with aspiring and experienced leaders in all manner of industries and cultures, I remain convinced that most individuals lack proper context for their role as leaders.  The great leaders at all levels understand that they have a unique responsibility and unique power to adapt and form their working environment to the unique circumstances at a point in time.  Less effective leaders allow the environment to form around the wrong issues including ego (theirs) and petty politics.  The lessons of Pixar are hard-won and the outcomes visible to all.  You would be well served to listen, learn and apply some of Mr. Catmul’s wisdom to your environment. 

Latest Edition of Leadership Development Carnival at Great Leadership

Dan McCarthy is back this month with the 3rd edition of his Leadership Development Carnival at his Top 25-rated blog: Great Leadership.  Dan brings together in one place some of the best leadership and talent blogging content from around the globe.  Oh, and he was kind enough to include a post of mine as well! 

Enjoy this one-stop shop for compelling content! I would be shocked if you don't walk away from this Carnival without a few great ideas to put into play in your own world.  Dan, thanks again for your hard work putting this together! 

One last word of advice.  Dan consistently puts out some of the best leadership content in the blogosphere.  Check out his recent posts and remember to subscribe.  You will be glad that you did.  -Art

Common Sense and the Role of Leadership in Project Management Success

Dr. James T. Brown, PMP, offers a number of interesting observations about achieving the right balance between methodology and pragmatism in his PM World Today Viewpoints article, entitled: Why Your Project Management Methodology Doesn’t Matter Much.  His central thesis is: “It is not the methodology that is the primary factor of success.  It is the leadership!”

Dr. Brown encourages clients to focus on to beware that, “too much methodology can contribute to project failure.”  He suggests: “Strong leadership is striking a balance between people dependency and process dependency with respect to the given methodology.”

Art’s Comments:

Dr. Brown is right to caution about the over-reliance on methodology as a guarantee of success.  In particular, I’ve worked around early-career Project Managers that with the best of intentions have ridden the methodology horse all the way to project failure.  By the same token, I’ve worked in client organizations where the leadership was either too cavalier about supporting the methodology or falsely assumed that they once the chosen methodology was in place, their job was complete. 

An organization’s leaders must be actively involved in supporting project success, and part of their role is serving as the gatekeeper on when methodology can be sacrificed on the altar of project progress.  Project Managers must be astute enough to recognize the early warning signs of methodology overload and engage their project teams, sponsors and senior leadership on the issues so that changes to the process can be properly vetted and concluded.

“One Size Does Not Fit All”

I love Dr. Brown’s phrase: “Project Management is simply Structured, Organized, Common Sense.”  He suggests that if requirements are relatively fluid and the project contains high uncertainty, then is common sense to choose an iterative method.  Alternatively, mission-critical projects demand a strict development methodology to minimize risk and optimize chances for success. 

Art’s Comments:

Leadership plays a critical role in assessing the importance of a project to a firm’s goals or strategies.  Those projects deemed mission critical merit strict (but not unyielding) adherence to a defined methodology.  An established software firm with many products may be able to relax time constraints on smaller or lower priority projects without suffering significant repercussions.  Alternatively, an early-stage firm dependent upon a new release to satisfy early adopter clients can ill afford to deviate from a methodology that will ensure an on-time release in line with customer requirements.  Methodology and reasons for violating or adapting the methodology should be considered in the initial project planning and prioritization phases and communicated to all stakeholders.

The Bottom-Line for Now:

As organizations grow increasingly dependent upon project execution and professional project management practices to drive strategy execution, a firm’s leaders have to be smart enough and engaged enough to recognize an imbalance between process and people.  Methodologies are guidelines to be strictly or liberally adhered to depending upon circumstances.  Good leadership in this sense means tuning in to project activities at a level sufficient to ensure that the right approaches are being applied for the right reasons.  While your methodology might have its champions, don’t lose track of the fact that the methodology must enable success, not fight it.

What's A Good Meeting Anyway?

I’ve heard the phrase “We had a good meeting,” or some derivative of it so many times that I’ve lost count.   Whenever I hear this meeting review or it’s ugly stepchild, “We talked about a lot at that meeting,” alarm bells start ringing, my spider sense tingles and I have to resist the sudden urge to scream. 

As best as I can tell, my visceral reaction(s) to “the good meeting” verbiage has a lot to do with the fact that when I politely inquire as to what made it good, I receive wishy-washy, touchy-feely kind of answers like: “ we reached a common understanding,” or, “we got on the same page,” or something else that tells me that there was no point to the meeting. 

With a bit more probing about the meeting outcome, I can usually satisfy my hypothesis that not only was there no point to the meeting and, there was no action-oriented outcome that when realized will move us one step closer to executing on a key strategy.  Last and not least, the “good meeting” vernacular is generally put forth by people that I view as Professional Meeting Attendees.  You know the type…an outlook calendar so full that it’s a lock there’s no time to do any work other than to show up at the next meeting. 

I’ve posted on my perspective about meetings before and offered some reasonable advice for ensuring productivity if you absolutely have to have a meeting.  (See: Leaders Are Your Meetings Straight Out of A Dilbert Comic Strip and How to Improve A Dysfunctional Meeting Culture Without Removing the Chairs.)  While not interested in repeating myself I feel duty bound to raise the flag on this rampant productivity killer that infects so many cultures. 

People grow accustomed to the comfort of the meeting room.  In most cultures, there is little accountability for meeting output, so it is at least in part a paid social experience.  People saunter in, crack jokes, catch up with colleagues and then ten minutes after the hour, the person that called the meeting pulls people to order.  Everyone gets serious for a few minutes, an issue is highlighted and then it is fascinating to watch the meeting masters at work.  A Professional Meeting Attendee knows that if he or she raises some sticky questions everyone will marvel at how on-top-of the issue that they are.  The Pro also knows that a few good questions will ensure that there will need to be a follow-up meeting, thus perpetuating their existence.  It’s Darwinian survival right in front of your eyes. 

The Bottom-Line for Now:

OK, I will end my rave with a few reminders for leaders everywhere:

• Strive to run meetings that have a purpose and a clear, action-oriented outcome.  (Brainstorming meetings are a separate issue..and they still need a purpose.)

• Teach by example with your own meetings.  Your rigor and discipline in managing meetings for productive information exchange and pointed outcome will serve as a model of meeting behavior for your subordinates to follow.

• Show up at the meetings that your subordinates meetings and provide coaching feedback soon after the meeting.  Your goal with the coaching feedback is to elicit behavioral change, so remember that you need to show up again (and again) in the future to monitor and provide feedback on progress.

• High-level executives are some of the biggest abusers of good meeting protocol.  This starts at the top. 

• Always tie meeting topics to strategic objectives.  If you cannot, consider killing the meeting.

• Beware recurring meetings on your calendar.  After a few sessions they tend to degrade.

• Take pride in running great, productive, action-oriented, strategically focused meetings.

• Never ever give up trying to promote effective meeting management!  It's an insidious productivity killer that requires constant vigilance.