Art Petty on Management

Decision-Making and The Three Rules of Risk Management

Your decision-making style says a lot about you as a leader.  Some people make a lot of decisions with little more than a gut hunch to guide them and others spend a lot of time gathering insights and information to support their decision.  Others struggle to make decisions on anything and might still be considering what to order for breakfast when it’s time for dinner.  And still others avoid making decisions because taking a stand increases the odds that they will be held accountable for results.  

Our decision-making style is driven in large part by our tolerance of risk, something that can change based on many personal and professional circumstances.  An executive guiding a turn-around might operate with a high-degree of risk tolerance, while a project manager leading a construction project might have a much lower risk tolerance.  First-time leaders might not have formed a solid decision-making style and might process risk at a slightly more conservative level than how they perceive their direct manager dealing with it. 

A participant in a recent leadership workshop that I conducted offered up the Three Rules of Risk Management that she learned from her father (an engineer).  I am grateful that she shared and appreciative of the wisdom her father passed along in these simple but powerful rules.

The Three Rules of Risk Management

1. Don’t risk more than you can afford to lose.

Good advice for corporate leaders, mid-level managers and everyone in their personal lives.  Determining what you can “afford to lose” is of course the key issue here, and sometimes not so easy to calculate.  A patient requiring a heart-transplant to live has one definition and a single parent that needs a paycheck to feed his family has another.  It’s OK to agonize over this one a bit…it is the foundational data point of the Three Rules.

2. Never risk a lot for a little.

Common sense, yes, but I see this one violated everyday. People risk their credibility arguing over who’s right and who’s wrong on small issues.  Boards and executive teams pursue ill-conceived acquisitions based on questionable assumptions.  Marketing and development teams invest heavily in new products without a good understanding of the problem they are trying to solve for their prospective buyers. The operative issue here is defining whether the perceived end game or outcome is worth a lot (usually the assumption) or some fraction of a lot (usually reality).  Align risk with the true definition of the outcome.

3. In general, take the risk if you can affect the outcome.

In my opinion, this is the most profound of the three rules, and another point worth agonizing over as you formulate your decision.  Hoping that the dice roll your way is what helped build all of those grand palaces in Las Vegas.  You cannot control the dice…they have a mind of their own, and in a business environment, hoping for the market to move your way is a guarantee that you will make your better-prepared competitor rich.  You cannot affect the outcome of most situations at 100 percent, so once again, you are left to sort what you can control and what is beyond your control.  This rule guides you to accept risk if you can control a significant portion of the outcome. 

The Bottom-Line for Now:

Learning to think through your risk-environment can help you make the right calls on the tough issues.  The Three Rules are not a silver-bullet, but they do offer a simple framework for mentally processing the implications of a decision. 

In general, I’ve found that most people prefer working for leaders that make a lot of decisions and that make decisions quickly.  Certainly, a leader that is slow to make up her mind or that will never make a decision has an adverse impact on her team and her organization.  Alternatively, a leader that is too fast to decide or that decides more on a hunch than a good understanding of the facts, issues and risks, is prone to making significant mistakes as well.  The trick is finding the right balance, and balance is about understanding and measuring your risks against possible returns.  Use the Three Rules to find the right risk/return balance for your decisions. 

Inspirational Leadership: The Victim of the Balanced Scorecard?

Note from Art: Today's post is by Guest Blogger, Amy Meyer, a veteran technology marketing and product/project management professional, and an all around talented leader and wonderful person.  I hope that this post helps launch Amy's blogging career.  She has a lot to say worth listening to. (More Bio/Contact Info at end of post.)

My name is Amy Meyer and I have had the pleasure of working for and with Art for many years.  I look back on this time with gratitude, for the experience has rewarded me with life-long insights into how a company can achieve and maintain excellence.  But I can also tell you that this is truly a double-edged sword.  The experience has also made me less tolerant of poor leadership and as Art continually shares, there are plenty of examples from which to draw.

Today I’d like to cover what I believe to be a disturbing management trend.  In today’s world of the Balanced Scorecard, companies have never focused so much energy on alignment of results with strategy.  I applaud the approach.  In fact I recommend it.  But sadly it seems that for some organizations, results have become the sole focal point—the only thing that matters.  What they are losing touch with is the fact that results are driven, at least in most companies, by living, breathing human beings. 

It’s time these companies face the facts.  You can’t get results by placing a scorecard in front of a talented individual and say “Get this done or you won’t get a raise next year”, and then walk away.  This approach only works if your goal is to drive up your attrition rates and lose your best and brightest.

A balanced scorecard is not a replacement for leadership.  To blow your scorecards out of the water, you need to nurture those people who make the magic happen.  This requires more than management—it requires inspirational leadership.  It is great to have smart people as colleagues and friends, because they can help you out if you ever need to write a guest blog!  In this case I asked some of my most respected how they would define an inspirational leader.  Here’s what they had to say.

An Inspirational Leader is Someone Who...   

• Includes you in deciding the team’s direction rather than telling you what direction to go

• Picks up the shovel and digs with you rather than standing above you telling you to dig faster

• Makes other people feel important and appreciated, helps people believe in themselves

• Sets the pace, leading by example rather than decree

• Only assumes credit for providing his or her team the opportunity to succeed

• Motivates through personal performance examples and exemplifies the skills that he\she possesses through knowledge transfer and demonstration

• Knows when and how to encourage individual talents and maintains team integrity while respecting every individual

• Takes time to understand team members, creating bi-directional relationships that ensures the team that he/she has their best interests in mind

• Is proactive rather than reactive—two steps ahead, instead of one step behind

• Creates excitement in the workplace

• Builds efficient teams by trusting the occupational strengths of his or her subordinates and recognizes individual talents that balance one another

• Builds team morale by recognizing work-related achievements

• Provides opportunities for development on enjoyable and challenging projects rather than artificially inseminating the team with mandatory bonding events

• Sets a credible and ethical example to follow, has integrity

• Displays exceptional communication behavior, both as a speaker and listener, using well-educated inference as necessary

• Can either make or break a company

It’s time to wake up.  Scorecards are measurements.  To achieve and exceed your corporate goals requires the inspiration of confident leaders.  So, how are you doing?  Are you providing your team the support they need to achieve the results the organization requires?  Why don’t you ask them what you could change to make them more successful!  Being an inspirational leader requires a thick skin.  Have the courage and the self-confidence to learn from the team you serve.

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Amy Meyer is a veteran technology professional with a broad spectrum of experience including strategic marketing, product and project management, software development and IT management.  Amy is currently focusing her efforts and research on the topic of enhancing technology project success through investment in talented individuals and collaboration with cross-functional stakeholders.  If you share Amy's passion for the topic, feel free to contact her via e-mail at amy.meyer@charter.net

Capturing Talent and Creating Great Customer Experiences: They Go Together

The Poor Interviewing Habits of Many Managers

You would think that we would have this problem crossed off the list by now.  I wonder how organizations and leaders in good faith can let managers recruit talent without teaching them HOW to interview and holding them accountable for executing this task effectively. 

Most organizations offer some cursory training in the compliance and legal issues of interviewing, but I’m hearing from too many job seekers with hilarious (sad, but true) examples of miserable interviews.  Consider the slob that took two smoke breaks while interviewing a talented professional.  In-between breaks, his focus was on convincing the individual that he should come to work for the firm, even though they could not pay him what he was making now.  Great recruiting!  Impressive.  This person has no business interviewing. 

Questions to consider:

• Are the interviewing skills of your managers helping or hindering when it comes to recruiting talent?

• Do you know what your managers are saying in interviews?

•  What’s your organizational batting average on landing the top recruits (and then keeping them)?

Great Marketing: Building Value with The Complete Customer Experience. 

I received my new 24” Apple iMac yesterday and once again, marveled at how hard this company works at creating an incredible experience for the customer.  The unpack to on-the-internet time is about 4 minutes, but the experience transcends the simplicity of set-up.  My wife helped me with the unpacking she marveled at the detail and quality of the packaging materials.  “It feels like we are unwrapping something very special,” was her comment.

It’s hard not to be awestruck by the beautiful design and the spectacular display on your desk, and I’m going on five years with our stable of Macs growing as our two sons head to college.  The products always work and it’s still exciting to use one. 

Questions to Consider:

• Are your customers saying the same things about your offerings?

• Are your employees obsessed with creating great customer experiences?

The Bottom-Line: Talent Fuels Performance:

There’s no way that an organization that accommodates sloppy interviewing habits is landing and retaining the best and brightest.  As a business leader, you want your customers to constantly be surprised and delighted.  A manager that takes mid-interview smoke breaks and badgers a talented candidate about salary expectations is someone that I want working for my competitor. 

My suggestions:

• HR, get it in gear as the trustee of talent and create systems and tools to ensure best interviewing practices are developed and reinforced. 

• Leadership Team: It's not all HR's job.  Set high standards and demand excellence at all levels in the hiring process. 

• Managers at all levels: evaluate the interviewing habits and track records of your managers and supervisors. 

There are no excuses for getting this wrong and just one reason for getting it right: success. 

When Projects Go Horribly Wrong: A Great Example

The folks that designed Denver International Airport's infamous baggage handling system can breathe a bit easier now.  While the much publicized start-up disasters at Denver have faded into the past, apparently the project management lessons learned did not transfer across the pond to the teams responsible for the new Terminal 5 at London's Heathrow Airport.

Training for the Swimming Leg of the Leadership Triathlon

My casual poll of business friends and gym associates that are also amateur tri-athletes (admittedly, a small sample set) indicates that the least-enjoyable, most difficult segment of the triathlon is the swimming leg. (No surprise here, especially for someone who feels fortunate to swim a lap across the width of a pool.)  Most, but not all admit that they train the least for this leg, and all indicate that improving their performance here is the key to improving their overall event time.   

In researching the habits and challenges of leaders at all levels with my Practical Lessons in Leadership co-author Rich Petro, we discovered that delivering constructive feedback to associates as well as peers and even the boss is viewed as the least enjoyable and most difficult part of leading by many. 

Management by Jane: Leading Effectively from the Middle

One of the most inspiring leaders I've come across in awhile is a mid-level manager that refuses to read the memo that says you cannot make a difference unless you have a big title and corresponding office.

I ran across "Jane" recently in a workshop, and after listening to some of her answers to questions and examples, I made it a point to talk with her during a break.  I was fascinated to find such a thoughtful, practical and committed leader and asked if I could pass along my observations in my blog.  She seemed surprised that anyone would find her leadership style interesting, but was agreeable to me sharing her approaches as long as I kept her name confidential.  Here are the highlights:

From Strategy-Starved to Strategy-Fueled: It's All About Communication

"It’s a dirty little secret: Most executives cannot articulate the objective, scope, and advantage of their business in a simple statement. If they can’t, neither can anyone else," indicate David J. Colliss and Michael G. Rukstad in the opening of their article, "Can You Say What Your Strategy Is?" in the April, 2008 issue of Harvard Business Review.

In an MBA class on Project Management that I am currently teaching, this topic came up in the context of the role that project managers play in strategy execution.  This class of working professionals agreed that strategy execution is conducted largely via projects, yet it is uncommon for individuals in project management roles to be plugged into the strategic management process.  As such, there is little context for many of the critical decisions that arise in the form of executing major projects.  In my informal poll of the class participants, there was additional consensus that most organizations do a less than stellar job communicating strategy to the broader employee population.

It's Time to Recognize the Project Manager as a Leader

The most challenging leadership positions are the informal roles where an individual leads based on his or her credibility and capability without the backing of a formal reporting structure.  These positions are often characterized by a high-level or responsibility for results with little direct authority over the people doing the work.  The role of Project Manager matches this description perfectly, with organizations increasingly looking to the individuals charged with project or program management to play key roles in executing on strategic priorities. 

Unfortunately, in many organizations, the role of Project Manager is inappropriately disconnected from the strategy process and is often viewed and treated by executives as a mid-level or administrative role.  This is wrong.  Senior executives would be wise to tap into the unique skills, insights and capabilities of the best Project Managers as they look to build out their leadership teams and to propel their organizations faster.

How do Ideas Turn Into Actions in Your Firm? Hint: Check Your Leadership Culture

Seriously.  If you are at or near the top of the food chain in your organization, this is one of those perplexing questions that can have you staring at the ceiling at two in the morning, asking yourself, "Yeah, how do insights and ideas turn into actions in our business?"  and "Who is really responsible for new ideas here?" 

This is a particularly bothersome issue if you are thinking in terms of strategy and wanting to make certain that profound insights and ideas gained in the market are turned into actions that create value for your stakeholders. 

Sales and Marketing Managers: Use the Lead Refinery Approach to Improve Results

I talk with a lot of marketing and sales managers and have spent most of my life working in these environments. In spite of the dramatic advancements in software tools available, I still find gaping holes in the way many sales and marketing organizations manage and account for the flow of leads into the sales pipeline.   Although there are undoubtedly some technology constraints, I suspect that the primary issue is one of process more than anything else.  Employed properly, changes in the output of the lead refinery foreshadow expansion or contraction of volume in the sales pipeline. 

Here are some thought-starters for employing the Lead Refinery approach to improve your performance: