Art Petty on Management

Art Petty on Management Has Changed and Moved

I don't like to do things small or simple, so in what I sincerely hope is the absolute last time I put myself and you through this, I have moved and changed the name of my blog. 

You will now find me at www.artpetty.com and the new name of the blog is Management Excellence.

As I'm writing this and realizing that most people that have moved blogs have basically had to start over from zero to build traffic, this seems like taking two steps in the wrong direction.  However, sometimes you have to step back to grow, and I've got some compelling reasons for making the move, including:

• Integrating my former corporate web site and my blog under one content management system.

• Creating a simpler url (artpetty.com...12 characters versus the almost 40 for this site).

• Gaining the tools and the control through a hosted blog so that I can easily add planned podcasts, webcasts, forums and other tools that I will roll out this year.

• Aligning my blog's name: Management Excellence with my personal mission to promote high performance, great leadership and the pursuit of excellence in business.  

All of the posts and hopefully, all of the comments have been moved to the new site, so 14 months,  160 plus essays and a tremendous number of thoughtful comments on best practices in leadership and strategy, project management, product management and marketing and sales, all remain part of the library. 

For those of you that subscribe via your favorite Reader or happen across this post via Search, please take the opportunity to visit the new Management Excellence site and click on the site's feed.  And don't forget to check out some of the new tools, including the live polls, free down-loadable tools and links and references to many other great resources.

Thanks so much for reading and referencing Art Petty on Management, and I hope to earn your confidence many times over in my new home at the Management Excellence blog!

In Hopeful Praise of the Millennials

To read the articles “The Trophy Kids Go to Work” (WSJ, 10/21) and especially to view programs like “Here Come the Millennials” (60 Minutes), you would be justified if the thought of what life will be like managing and working with this unique generation caused you to roll your eyes and reach for the aspirin bottle.

However, I suggest that you think twice before you prematurely write off the 80 million people born between 1980 and 1995.  While most of these individuals have grown up with us as “Helicopter Parents” hovering over nearly every activity of their lives from play-dates through college-enrollment and even job interviews.  I’ve seen glimpses of the future and I am encouraged about the potential for this generation. 

Much of the content around the Millennial generation focuses on their slightly sheltered upbringing, the emphasis on encouragement that we have provided in the form of constant praise and awarding trophies for just showing up and the widely reported unrealistic expectations that they have about life in the real world of work. 

In particular, the 60 Minutes piece (great fun to watch, although watch out if you are showing it to a group of Millennials) goes out of its way to hype the different and potentially selfish expectations that members of this new professional generation bring to the work environment.  Things like interesting work, flexible work hours, the freedom to be comfortable, the freedom to remain connected to the technology that they’ve grown up with, are all identified as issues.  Additionally, the group has expectations for rapid advancement and the ability to gain access immediately to those residing in the rarefied air of executive suites.  Hmmm.  So far, I’m not offended, and in fact, quite the contrary, I like the confidence and clarity of purpose that seems to be inherent in this generation.

The very wrong perspective on Millennials is that they are as a group, lazy.  Far from it, but they are restless and demanding.  Don’t ask them to pursue purposeless work, don’t expect great things if the job demands have them killing time, don’t minimize how important it is for them to be connected and to receive feedback, and most of all, don’t underestimate them.

This is the most technologically advanced generation of individuals in the history of the planet.  They’ve grown up using technology to multi-task, to reach large number of people in a hurry and they seem to have a different frame of reference on time than prior generations.  Communication is instantaneous, feedback is constant, brand is everything, fads are born, mature and decline in real-time and this group keeps moving, learning and creating. Sounds a lot like the business environment that we find ourselves struggling to understand. 

They may not know what they want to do for the next 30 years (an incomprehensible amount of time to think about work), but they do know that they are smart and adaptable and they are clear on what they don’t want to do: waste time like many of their parents fighting a losing battle with loyalty-free corporations.  There is little interest in “paying their dues” and frankly after having watched their parents over-pay their dues to be rewarded with life in a world that looks frighteningly similar to the Dilbert comic strip, who can blame them for wanting something different.

Whether I’m engaging with the older Millennials in my MBA classes or watching my own sons and their friends grow up, I can think of countless examples that make me excited about the impact that these people will have on our world.  The MBA students are wicked-smart and frighteningly worldly for their youthfulness.   The creativity and good character that I perceive in the older teens that I come in contact with are both exciting and reassuring.

My son on his own volition is traveling a great distance this weekend to spend a few minutes at the memorial service for a high school coach who passed unexpectedly.  He’s doing this because he knows that this is a simple token of respect and thanks.  It turns out that this coach’s former players are coming from around the country to spend a minute to say thanks to one from our generation that took the time to see the potential in them.  You wouldn’t recognize this loyalty and sense of responsibility from the content in the popular press about this generation.  It’s there, but it requires our own creativity as managers, leaders and parents to figure out how to tap into it.

The Bottom-Line for Now:

I’ll opt for the dissenting view on the Millennials.  Where others see management headaches, I see fire, creativity, passion, skill and maybe the capacity to face a world that looks very much the worse for our efforts.   Maybe, just maybe, this group will earn the label of The Next Greatest Generation.  Perhaps like the coach referenced above, you can still make a difference by helping this generation realize its potential. 

Overall, I’m encouraged and hopeful.

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. 

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.

Help Wanted: Great Leaders to Solve Vexing World Problems

This is what I describe as a boil-over post—short on useful advice and long on observations about the obvious.  I usually shy away from commenting on the world scene, however, I'm breaking form today. 

As is my habit on gorgeous Mid-Western U.S. mornings (that's for all of you folks all over the globe that love to point out the temperature differentials to me in February!), I rise early, grab a quick cup of English Breakfast Tea, glance at the Wall Street Journal and then jump on my bicycle for my wake-up workout.  I suppose this morning's paper is not much different than every other paper for the last few months, but as I said, this is a boil-over post: it's been simmering for a while.  My positive spin on the over-abundance of miserable news is that this is a great time for leaders everywhere to ply their trade and show the world what they are made of.

Just a few of our very visible and very important "leadership" opportunities:

The Economy.  The Federal Reserve Chairman, Ben Bernanke has perhaps the worst job on the planet right now.  In what is looking more and more like a perfect storm, the Chairman must simultaneously deal with the still-unfolding housing crash, the implosion in mortgage financing, the wholesale failure of some of the planet's alleged smartest financiers to do anything right (think Bear Sterns), record oil prices, a record low dollar value, the specter of inflation and general weakness in many U.S. and global markets.  Perhaps the only thing more complicated than the macroeconomic environment is the weather.  Oh yeah, if Chairman Bernanke's daily dilemmas aren't tough enough, spend a few minutes listening to the windbags in Congress posture while they attempt to blame him for everything, including the '29 crash.

U.S Auto Manufacturers.   The headline I want to see is: U.S. Auto Executives Fired En Masse for Arrogance, Idiocy and Forgetting to Diversify their Product Portfolios.  What is galling to me is that these executives had clear visibility into competitor strategies as well as the bigger picture of energy and oil.  Did they really expect to live on the profits from the SUVs and Trucks of the '90's forever?  Killing an industry should be a crime punishable by ample jail time.

U.S. Airlines (except for Southwest).  Most of my work is in the Chicago-area, so I've avoided flying for a while.  A good friend of mine described his recent experience on a major carrier as: "something out of a movie shot in a third-world country."  In a bold stroke, most major U.S. carriers (except Southwest) have decided to bet their survival on making an already lousy experience miserable.  I wonder what happened to the memo that said that if we serve our customers and give them great reasons to use our services, they will help us weather the storm.  Jail time for these execs as well.  It's time for some fresh approaches from new leaders interested in running businesses that serve customers.

Iraq.  Absolutely no joking here...U.S. soldiers and Iraqi civilians are losing their lives.  This situation has serious repercussions for the U.S. and for the Middle East for years to come.  The next President will be saddled with resolving (hopefully) this nightmare.  There are encouraging signs, but it is a complex situation.  Kudos to the military leaders on the ground and the brave citizens that are working towards a self-governing, democratic Iraq.

Iran.  Hmmm, if this situation wasn't complex enough, the leaders in this country seem to relish their ability to destabilize. 

I could keep going, but I won't.  It's time to stop, with just one other light by comparison leadership dilemma: Brett Favre.  As I'm writing this, my oldest son is listening to ESPN reporting on the Brett Favre saga.  Put yourself in the shoes of the Packer's GM, Ted Thompson, who has to decide whether to fire this remarkable Wisconsin (via Mississippi) hero or bring him back and let him play in spite of having moved on once Brett announced his retirement a few months ago. 

I do have some advice for Ted Thompson, and it is based on the track record of Jerry Krause, the former Chicago Bulls General Manager who once indicated that one of his major goals was to build a championship team without Michael Jordan.  How did that work out, Jerry?

The End of the Rave For Now:

Tough times and challenging circumstances provide outstanding opportunities for leaders at all levels to test their mettle and gain valuable experience.  There have been few times in recent history with this number of complex challenges staring at us in everything that we do.  As individuals, we cannot solve these issues alone, but we can hold our leaders from local politicians to congress and the next President accountable.  We can make good decisions with our finances, demand accountability from our elected officials and challenge the leaders in our businesses to do more than focus on the short-term.  We can support our troops even if we disagree with the policies, and we can cast our vote this November.  It's a great time for leaders everywhere to stand up and be counted.