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 Search of a Quantifiable Return on Leadership Development

Every few months, I run head-on into a discussion with someone (usually a prospective client) about how to value the return from investments in leadership development.  The question is not asked as a means of qualifying my services, but rather as a genuine practitioner-to-practitioner inquiry, not dissimilar to what two MDs might talk about with respect to the latest treatment results for an experimental drug program.  The person asking knows as well as I do that Return on Leadership Development continues to be an elusive issue that no one has substantively put to rest, and that our best answers are no stronger than impassioned, qualitative opinions. 

The venerable consulting firm, McKinsey & Company in their latest issue of The McKinsey Quarterly (2008, Number 4) offers some exciting results showing: “the relationship between financial performance as measured by profit per employee and ten dimensions of global management talent.”  Their findings: “Companies scoring in the top third of the survey (when all ten dimensions were combined” earned significantly higher profit per employee than those in the bottom third."

The McKinsey results showed strong correlations in three specific areas:

• The creation of globally consistent talent evaluation processes

• The management of cultural diversity

• The mobility of global leaders.

McKinsey indicated that the firms scoring top-third in any of these three areas had a 70% chance of scoring in top-third for financial performance.  Alternatively, companies scoring poorly on these practices had a strong chance of ending up in the bottom third for financial performance.

This is exciting information for anyone and everyone interested in gauging the impact of leadership development initiatives on corporate performance, however, before we consider this case closed, it is important to note McKinsey’s own comment that, "the study results do not show any true evidence of causality, but rather that the results, strengthen our belief that these are important areas on which businesses and HR leaders should focus their attention.”  It always comes down to belief.  Welcome to my conversations, McKinsey.

Should it Be Return on Expectations?

Another interesting thought comes from Professor Albert Vicere who describes his experience facilitating a group of executives through a discussion on how to calculate a return on leadership development:

“Discussion on how to calculate a return on leadership development and learning investments were frustrating until we saw the light, stopped talking about return on investment (ROI), and began talking about return on expectations (ROE).  Participants agreed that due to all sorts of complications we may never be able to calculate a clear financial return on learning initiatives, but if we’re clear on what we’re trying to accomplish through leadership development and learning and if we measure our results against those expectations, we may have the data we need to prove the value of our investments.”

OK, at least this group is giving us a reason to accept that valuing leadership development is a tough task. It is good to know that a bunch of smart people sat around thinking about this dilemma and the best that they could come up with was looking at from a different perspective.  They may be right, and the careful expectation setting and measurement around very specific leadership development initiatives may just yield the elusive data that we’ve been seeking.

Is it time to sharpen Occam’s Razor?

More often than not,the rough translation of  Occam’s Razor: “All things being equal, the simplest solution is the best,” proves true.  My non-statistically significant, can’t prove causality hunch is that effective leadership development practices are part of a whole system and that attempting to value them independent of the other components, while intellectually stimulating, is essentially valueless.  This is perhaps like attempting to value the worth of having a healthy heart in a cancer ravaged body or a healthy body carrying an artery-clogged heart.  No matter how you look at it, the body and organizations function as complex systems and a problem in any one part can adversely impact issues across the entire system. 

Aren't These The True Measures of Leadership Development's Value:

•    Quality
•    Financial health and performance (company and versus industry)
•    Innovation
•    Ability to Execute on Strategy
•    Employee Satisfaction
•    Customer Satisfaction
•    Growth versus industry participants
•    Retention and advancement of the right people and elimination of others
•    Fulfillment of mission
•    Growing contribution to community and society

The Bottom-Line for Now

If these items are generally accepted and desirable outcomes of a well-functioning organization, then executives looking at their talent development programs should quit focusing on the search for discrete ROI measures, and instead focus on identifying those practices that are likely to contribute the most to the above.  We may not prove causality, but just like McKinsey, it is my belief that focusing on becoming great at the right few talent and leadership development practices will yield higher performance than not focusing on these issues.  My vote says focus on: individual development planning, feedback and widespread involvement in strategy creation and execution, and the results will come and the other leadership development pieces will naturally fall into place.  Oh, and the decision on how to invest in development activities is a management team decision, not just an HR call.  Leadership Development is everyone’s business.

Leadership Development Carnival #4: A One-Stop Shop for Great Ideas

I am pleased to be included in some great company again this month at the latest Leadership Development Carnival hosted at Great Leadership.  Dan McCarthy brings together  the perspectives of some exciting Carnival newcomers and some industry stalwarts.  Dan's monthly Carnivals may be the best leadership deal going...great content, ideas that you can use immediately and the price is definitely right. Grab a cup of coffee or favorite beverage and take a stroll through the Carnival.  You will be glad that you did. 

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. 

Drive Out Fear in Your Organization's Leadership Approaches

Students of the late W. Edwards Deming, the quality guru and management consultant will quickly recognize the phrase, “Drive Out Fear” as number 8 of his 14 points for achieving quality excellence.   Dr. Deming penned his points during a period in the twentieth century when the approach to leading in business was highly autocratic; a style that he believed inhibited organizational advancement around quality.  While prevailing leadership styles may have moderated a bit from the “command and control” approach so common a few decades ago, there is ample evidence that “fear” is still used liberally by organizations and small-minded managers to assert control and to drive compliance.

A few examples of Management by Fear:

• There’s the manager that frequently and publicly drops hints in departmental meetings about the likelihood of layoffs and the expectation that he will have to let go 2 out of 10 on his team.   

• One of my favorites: the General Manager who gets visibly angry every time one of his key subordinates submits a vacation request form.  According to one of his workers, “He clearly does not believe in vacations, and let’s us know that it will hurt our future opportunities if we insist on take time off from work.”

• I blogged earlier this year about the manager who railed at his employees: “The only way you will be on my team is if you are married to the job.”  This same dipstick indicated what commitment means to him with: “The only way you will see me in a family vacation picture is with a blackberry stuck to my ear.” 

• A colleague described the manager who expects 100% support of her ideas and policies.  Dissenters have an interesting habit of either being fired or relegated to corporate Siberia working alone on or on projects that no one else would touch.

• One of my personal favorites is the manager that expects his co-workers to join him for drinks in the evening and rewards those who attend with the choice assignments and rides herd on those that refuse to worship his seat at the bar.

• An adult student in one of my recent management classes indicated that it was common for employees to be publicly humiliated by the screaming, cursing, belittling boss that just so happened to be one of the children of the founder. 

Type the phrase “Workplace Bullying” into your favorite search engine, and you will be rewarded with a bevy of articles describing the growing awareness of this destructive behavior and its consequences for individuals, teams and organizations.  Many of these articles describe the problem as “epidemic” and a number of organizations are responding with training programs on “bullying” similar to those on sexual harassment.

Fear is a tool that leaders have used to rule and subjugate throughout all of recorded history.  Those with power use fear to gain compliance, to protect their position or to achieve their ends.  Instead of the local warlord or playground thug, today’s corporate bully is likely a well-dressed, articulate professional that puts on a good face for the higher-ups and a completely different face for direct reports.

Suggestions for Smoking Out the Bullies in Your Organization:

• Make it a clear and visible practice to spend time talking with the team members of your direct reports.  While your intent should not be to spy on the managers that work for you, if you establish a decent rapport with the broader team members, you will be more apt to pick upon the signs that indicate a bully is at work. 

• Create on-going review programs and survey process that gauge manager performance, work-environment satisfaction and that provide people with an opportunity to safely highlight concerns. 

• Ensure that everyone understands that you have a zero-tolerance policy for bullying.  Live up to this policy when the occasion arises or it will be meaningless.

• Be aware that most bullying is done quietly.  While it’s easy to recognize the boss that dresses down employees in public, you have to work harder to identify the quiet assassins in your workplace.

• Make certain that your own behaviors don’t rationalize bullying to the bullies.  In many instances, the leaders frustrated with examples of heavy-handedness are themselves highly autocratic leaders that exhibit behavior that borders on bullying. 

The Bottom-Line for Now:

Spend some time to determine whether “fear” is a factor in your organization.  If people are in fear for their jobs or living in fear of falling under the wrath of a bully boss, they will not create, innovate or even execute their basic job functions in a quality manner.  While today’s corporate bully is not shaking down the other kids for lunch money, he or she is shaking them down and stripping away their self-esteem, their drive and their desire to help the organization succeed.  It’s time to hit back.

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. 

The Art and Approach of Asking and Encouraging Great Questions

Learning how to ask compelling questions in a non-threatening manner is one of those unexciting but absolutely critical skills for an emerging leader to develop.  Questions are the leader's lifeblood of information, and like most skills, learning to ask great questions in the right manner is something best learned through repeated practice. 

I'm not certain if my perspective is widely shared by those that measure intelligence and assess people for leadership potential, but I place a premium on observing an individual's style and comfort in asking questions.  And while asking questions for clarification is a great habit, and something that every leader must encourage, the type of questions that I am looking for are those that I've not thought about before or that show that the individual is looking at a problem from different angles.  For lack of a better phrase, I will call these strategic questions.

Strategic questions tell me a lot about an individual's and a team's command of a complex topic.  When assessing new investments or new business directions, there will never be complete certainty for decision-making (and in fact, it may approach near-uncertainty).  In addition to understanding assumptions, I want to understand what it is that is not known...and what questions people wish they could answer with better clarity.  There is a great deal to learn in the unanswered questions as it relates to assessing risks and anticipating success or failure.

I've observed the questioning styles of many leaders, and some of them are...well, they are truly questionable.  These include: asking questions in rapid fire fashion, tagging on personal commentary and veiled insults, assuming a prosecutor-like pose where the receiver is certain that he or she is guilty of something, not waiting for an answer and many more.  Unfortunately, people learn from observing their leaders, and these bad habits and styles are passed on from generation to generation. 

The alternative is for you as the leader to develop and exhibit a positive style for asking questions and to reinforce this approach at every opportunity. 

Eight Suggestions for Developing Effective Questioning Skills (for you and your team):

• Manage your tone and your facial expressions.  Focus on being calm and thoughtful when asking questions and make certain that your face does not betray you.  Any hint of irritation or impatience in your voice and you've damaged the communications event.

• Ask open-ended questions and then be quiet until the answer is complete.  Sometimes it takes people a few seconds to form their thoughts or even to parse through your question to understand your request or intent.  Silence as the questioner is your best friend.

• Ask clarifying questions to the answers.  This is a great active-listening technique and shows the other party that you are working hard to pay attention.

• Summarize what you think you heard in the answer.  Another active-listening technique that allows the receiver a chance to clarify their answer.

• If someone offers "I need to think about it" as an answer, provide them that opportunity, but don't forget to close the loop.  Your willingness to not embarrass the individual into a spontaneous answer and your accountability in looping back for the follow-up will help strengthen your team's working environment. 

• Encourage people to ask you questions...and provide them opportunities to do just that.  This is not the "Any questions?" comment at the end of one of your meetings, but rather you creating opportunities for people to ask you compelling questions on key issues.  Of course, this only works more than once if people see that you are genuine.  Don't show irritation if you don't like the question or can't answer it, and don't judge the question.  The same rules apply for you..., you can think about a question, but make certain to loop back with an answer.

• Build on one person's questions in a group setting.  "Great question, Sarah.  Let's answer that one first and then I've got another that jumped to mind based on your question.."

• Encourage and reward intellectual curiosity that links to action.  Questions are great, and actions drive performance.  Turn great questions and subsequent ideas or directions into tangible actions as you pursue innovation or experimentation.  This will help fuel an innovation-oriented culture.

The Bottom-line for Now:

The right questions in the hands of a skilled practitioner yield new insights and new ideas.  It behooves you as a leader to develop your skill in this area, and it certainly behooves you to create a culture that encourages and rewards questions and ultimately actions.  We learn by asking, listening and doing, but it often starts with being smart enough to figure out the right questions.  Too many leaders are great talkers and lousy listeners.  How skillful are you at asking and learning from your own questions?

Want to Kill a Few Brain Cells, (Try and) Read a Management Textbook

(Author's note: this post is filled with hasty generalizations and probably a few miscarriages of justice and judgment.  If you are in academia, read it at your own peril.)

I suspect that I might raise the ire of a few publishers and professors with this one, but oh well, life is short and some things just need to be said.  Of the many things that I am involved in, one of the newest and most enjoyable is teaching at the graduate and undergraduate levels.  This has been a long-time goal of mine driven in large part by a number of great experiences and great instructors earlier in life.  You know the type of instructor that I'm talking about.  The ones we all remember are the educators that both created and satisfied intellectual curiosity, entertained and ultimately left an impression on us. 

And while I'm loving the experience, I can't help but observe that the textbooks are some of the most mind-numbing, coma-inducing products ever to emerge from Gutenberg's great creation.  In particular, the Management text in my Fundamentals of Management course this Spring is almost certain to drive the most interested of business majors to consider something more exciting like accounting or neurophysiology.   What a shame to take a noble and exciting and complicated topic like management and wrap a bunch of dead theories in-between some interesting case studies and let that suffice for something that is supposed to teach the fundamentals of management.  (Author's note: I didn't pick the text...it was pre-picked. I won't make that mistake again.)

I confess to being a bit over the top about business education.  I've spent a decade attending programs at Kellogg and I've never left a day long, week-long or year-long program without being filled with ideas, excitement and new found energy for the challenges ahead. (And now that I am teaching at several institutions, I aspire to have that impact on the participants in my classes.) I must have missed the memo that said that it is OK to inspire executives, but for undergraduates, we've got to test them by subjecting them to content that is almost certainly non-essential for success and most definitely, boring.

OK, in fairness to this unnamed textbook, words like strategy, management, market forces, Porter's Forces, leadership, innovation, information technology and many others that you would recognize as belonging to the field of management do appear.  However, it's downhill from there. 

I suppose the best cure is for me to write myself and I may.  I already co-wrote a leadership book that I now look at in a new light after struggling through the text's painful treatment of one of my favorite topics.  I'll stop my ranting now and offer a few suggestions for anyone considering writing about or teaching management to the future managers of the World. 

My suggestions for the ultimate management textbook (versus the one I had to teach from):

• Please skip the history of management theory development or at least condense it down to an interesting few pages. This is a great topic, and likely very important at a more advanced level, but not critical as an initial exposure to management.

• I do want to provide students with some context for the evolution of business and business models and how organizations and leaders have changed over time based on advances in technology and changes in society.  Good stuff and important context.

• Leadership...keep it practical and make certain that we do much more to highlight that leadership is a profession and a very complex, challenging and rewarding one at that.  You can skip the nonsensical debate and endless pages about the mind of a manager versus the mind of a leader.  They are one and the same person...dealing with different topics from tactics and operations to strategy and motivation.

• Speaking of strategy, please portray this powerful tool of leadership and engine for value creation as a dynamic process that involves an entire organization versus something that consists of SWOT and Porter's Forces analyses.  And don't forget execution.

• The section on HR reads like something developed by the Politically Correct Committee.  Please.  HR's role as a critical enabler of strategy through talent and systems and tools is much more exciting than whole sections on diversity and harassment.

• Hmmm, Information Technology as a subset of some other chapter is not going to cut it.  Again, we are talking about a critical enabler of strategy and a complex and constantly changing arena.

And so on...

The Bottom-Line for Now:

I'll stop here with a comment that now that I've thought about it, I don't know why a text is needed at all.  Staff the program with experienced business professionals and infuse the curriculum with readings and concepts from Welch, Charan, Maxwell, Day, Drucker, Collins, Churchill, Lincoln and Franklin and most issues of Harvard Business Review and call it The Joy of Management.  Hmmm, it just might work.  Remember, you heard it here first.