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!

Sustaining Performance Excellence in Business and in Life

It genuinely bothers me when organizations spend years and untold dollars reinventing themselves and succeeding with a quality framework (i.e. Baldrige or Six Sigma) only to show up in the business press as an organization fighting for survival. 

It’s like the obese person with one foot in the grave suddenly committing to health on America’s Biggest Loser and at the end of the program, successfully completing a marathon. For a moment, life is good and our belief in our capacity to do anything that we set our mind to, restored.  Certainly the experience and lessons-learned during the successful journey to improve have changed this individual’s life for the better.  And then, we glance at the tabloid cover in the grocery store checkout line to see a picture of this fat then fit and now fat again individual working out with a box of Krispy Kremes.

I wrote a related post a few days ago with the harsh title of Change or Die, and upon second thought, the title should have been: Change & Sustain or Die.  Organizations and people are fairly adept at changing for a moment at the end of a gun barrel, but they are not so good at sustaining the change when the barrel is no longer pointing their way.

• There’s the former Baldrige winner that lost their CEO in an untimely passing.  The new leader took a cost cutting mentality and ended up cutting out programs and people critical to the organization’s focus on performance excellence.  The ensuing performance included a stint in bankruptcy.  That’s a bad case of the Baldrige Blues.

• Motorola is given large credit for helping create the Six Sigma Quality framework.  Their focus on process improvement and their Baldrige award are legendary and define the culture.  The company is fighting for survival, mired down in completely forgetting the Voice of the Customer in pursuit of endless elegant iterations of cell phones that no one wants.  Their imbalanced scorecard had them losing $12 for every device they sold last quarter and burning through billions with a “b” in cash over the last year. 

• Ford.  Enough said.

• GM, don’t get me started.

It’s not like Toyota withheld key information about the legendary Toyota Production System and the many other business practices that they learned by applying Deming’s principles, studying the writings of Henry Ford and the unique innovations in the operations of early supermarkets in the U.S.

• Circuit City.  See ya.  (OK, this one is unfair…they never achieved any form of recognizable Performance Excellence.)

The Bottom-Line For Now on Sustaining Performance Excellence

Leadership is always an issue when it comes to performance, and in my opinion, it is THE issue when it comes to sustaining excellence.  The various Quality frameworks offer essential directions for the never-ending journey in pursuit of creating value and continuously improving, but the secrete is that there is no final destination.

Achieving milestones and winning awards helps reinforce the progress on the journey, but leaders at all levels have to foster a culture that is perpetually dissatisfied.   The fact is that the market never sleeps, customer issues/needs change constantly and there are always competitors interested in taking your share of the customer’s budget.  

An MBA student reminded me the other night of Andy Grove’s (Intel) classic book and philosophy: Only the Paranoid Survive.  Perhaps we should work on a Balanced Scorecard measure for Paranoia.  Actually, that raises an interesting question.  What do your metrics and measures and scorecards truly tell you about whether you are continuing the upward climb or falling backwards, potentially into oblivion? 

Hey leaders, wake up.  Someone’s going to have you for lunch while you are busy basking in the glow of your latest quality award.  And speaking of lunch, do you know how long it will take you to work off that piece of carrot cake?  Just say no to the dessert and get to the gym tonight.  You're looking a little pudgy.

Another related post: Does Your Dashboard of Performance Measures Include a Warning Light?

Managing Resistance to Change

At the risk of showing my inner-nerd, one of the more memorable sayings from the Star Trek series of shows (post Kirk & Crew) is: “Resistance is Futile.”  This of course was the mantra of the Borg, a race of part-human, part machines that sought to assimilate all life-forms into their collective.  Of course, their fatal weakness was that they were only able to operate as a collective…and lacked the many characteristics that ultimately serve as advantages and that make us distinct as humans.  (OK, I suspect that I’ve gone beyond showing my true nature and nerdiness.)

Resistance to Change in corporate life is a very real force, and of course, the bane of existence of the many advocates of change challenging you to put aside your fears and embrace the new way of doing things. 

H. James Harrington, writing in Quality Digest in an article entitled: Managing Resistance to Change—How to handle the inevitable, offers some insights and perspectives on dealing with this very powerful and limiting force in pursuit of a shift away from an organization’s status quo.  He writes:

“Sponsors who drive change tend to think of resistance as an inexplicable but avoidable force that affects people. When resistance occurs, they believe it’s actually a result of somebody’s failure. Typical responses are, "What’s wrong with that person? What’s wrong with that group? Why won’t they support our change effort? There must be something wrong with those people." In fact, such a perspective is a major barrier to successful change.”

Most so-called change agents when faced with resistance will adopt the universal tool for breaking through…the organizational sledgehammer.  Instead of finesse and psychology, resistance is often met with arguing, imploring, and something a bit more insidious…political approaches to gain compliance or eliminate the roadblocks.  Alternatively, Harrington offers: “Expect resistance and manage it, either through a preventive or healing approach.” 

His fine and short article reflects a “seek first to understand and then be understood” philosophy to dealing with this inevitable characteristic of organizational life.  Check out the rest of the article for his prescriptive guidance on dealing with resistance.

The Bottom-Line for Now:

Resistance to your agenda for change might seem futile to you.  After all, who can argue with the expected benefits that you’ve so eloquently and logically outlined.  As Harrington indicates, you are going to pay for resistance up-front by dealing with it, or your going to pay during the life of the initiative.  Some resistance can be overcome through training and education and the rest will only be solved with accountability measures.  Proper investment up-front will hopefully minimize the cost and pain as the initiative unfolds.

Does Your Dashboard of Performance Measurements Include a Warning Light?

Count me as one of the last idealists.  Or perhaps the last of the naïve idealists.  In a world filled with Quality Management Systems and Performance Measurement techniques backed by legions of people trained to implement and sustain quality performance, it seems reasonable to me that organizations are capable of not only keep themselves from imploding, but that they are armed to the teeth with tools to ensure prosperity beyond the wildest dreams of  Dr. Deming. 

As an aside, Dr. Deming once famously indicated that it was his hope that his legacy was to keep U.S. companies from committing suicide.  Perhaps it is good that he is not here to see the firms elbowing each other out of the way in an attempt to get to the front of the line on the edge of the cliff.

• The U.S. auto companies are almost finished carrying out their joint suicide pact in a world where the rules for success as an automobile company are on display for everyone to see. 

• Motorola, an icon of U.S. electronics has systematically destroyed itself by flailing and flailing in the mobile device (read: cellphone) world, and stands a reasonable chance of failing to survive without drastic action.   (See my earlier post on the Dollar Bill Auction to get a feeling for Motorola’s problems.)  The fact that Motorola is a Baldrige winner, one of the founding fathers of Six Sigma and an organization staffed with brilliant engineers, yet it cannot seem to engineer success is both puzzling and frustrating.

• Earlier this week, Boeing indicated that they would again delay the launch of its now several years late and much hyped 787 Dreamliner.  The article indicated that the latest problem had to do with quality issues related to a new type of fastener required for the high tech and lightweight materials being used in the plane.  The advance sale of 900 of these puppies at $178 million a piece and the expected 20% fuel consumption savings has customers hopping mad over this latest in a series of seemingly endless project management and supply chain problems. 

• Financial services, banking, investment banking.  Ugh.  These icons of risk management succeeding in maximizing risk beyond their wildest expectations.

How does this happen in a world filled with balanced scorecards and legions of certified quality professionals constantly measuring, monitoring and striving to improve performance?  I suspect that my own answer is that while we have ample tools available for our use in building, the one tool that we haven’t yet mastered is staring back at us in the mirror.

In discussions and lectures with the up and coming generation of leaders, there is widespread cynicism over the intentions and the capabilities of many of their firm’s senior leaders.  There is little faith expressed that their leaders understand their firm’s key drivers and little confidence that the leaders are taking actions and measuring performance based on anything other than preconceived notions of what they think is right.  Fewer organizations than you might think are doing anything to engender employee satisfaction…which is ironic given the mountains of data that indicate that employee satisfaction flows through to customer satisfaction and strong financial performance.

This current generation of senior leaders is failing, and the very imbalanced scorecard is visible all around us.  The business cycle is one thing, but our problems go way beyond the business cycle to our preconceived notions of how to lead, how to run businesses, how to fuel innovation and how to create an environment where talent and calculated risk-taking are carefully cultivated. 

Many organizations are hives of activity with no vector and the output is chaotic. Firms and top leaders need to quit guessing and start using the tools available to identify key business drivers and to measure and monitor the efforts and outcomes of focusing on those drivers. 

The Bottom-Line for Now:

There’s nothing like a good old-fashioned crisis to engender creativity.  Well, we have one.  In spite of the difficulties, it’s a great opportunity for organizations and leaders to quit paying lip-service to cliché’s like customer-satisfaction, performance excellence and quality.  It’s a big world with a growing population and while the forecast is stormy now, the seas will eventually calm and the sun will shine.  It will be interesting to see who has the courage and fortitude to do the things necessary to make it through the storm.  Even money that we find a whole new generation of leaders in the process. 

 

Does Your City Government Treat You Like a Customer?

This is my pre-election post on government, and I promise to stay focused on performance and not politics.  There’s enough hot air being expended by the candidates and pundits and I don’t need to add to the global warming.  However, it does seem like a good time for all of us to evaluate the return we are getting from government and frankly, ask for more.  And by more, I don’t mean more money or even government. I mean quality, performance, results, and yes, even a bit of good old-fashioned customer treatment. 

A great example of government delivering on its responsibilities for its customers…yes, I said customers, is 2007 Malcolm Baldrige Award Winner, Coral Springs, Florida.  The city of Coral Springs won a Baldrige Award for Performance Excellence, a feat that is remarkable for even the best of businesses. 

A little bit of background on this post.  I am working with a talented group of MBA students at DePaul University in Chicago studying the Baldrige program as a framework for performance excellence.  We are looking at the practices and results of great companies in all sectors of the economy,  and the idea of performance excellence in government seemed like a fitting pre-election topic.  As a group, we struggled to recall if and when we had ever felt like “customers” much less “satisfied customers” in our dealings with our community governments. 

As an aside, most people mistakenly associate Baldrige with just quality, when in fact it is one of the most comprehensive programs in the world in challenging and guiding organizations to become great at creating value for stakeholders.  Of course, quality in all facets is at the center of this high performance formula.  Coral Springs is the only municipal government to win this award to-date, and offers some powerful lessons for all of our communities as we head to the polls to elect our leaders next week.

A few noteworthy points:

• Coral Springs truly views its citizens and businesses as customers and designs all of its services to maximize customer satisfaction.  From Saturday hours to their “City Hall in the Mall” facility that provides added convenience for people going about their normal business.

• The city is a model of strategic planning effectiveness, engaging stakeholders in the development of a strategic plan and importantly, the development and execution of this plan around clearly defined goals and objectives.

• Continuous improvement is inherent in this community’s emphasis on measurement and control of critical processes.  From customer satisfaction to employee and volunteer satisfaction, to focusing on measuring, monitoring and improving around the processes that create value for citizens and businesses, Coral Springs runs like you would expect the most quality conscious business to run. 

• The results are clear and visible for all to see in the form of ongoing reporting of key performance indicators to remarkable achievements in delivering what the customers deemed important in a high-performance community.  From schools to traffic to safety, the community appears to have achieved results that most communities will envy.

The Bottom-Line for Now:

If you are intrigued and want more tangible information on what a city government looks like when it clearly identifies its customers and holds itself accountable to creating value for those customers, take a look at the Baldrige Video at the city’s website.  Do yourself a favor and watch the long-form of the video, preferably before you head off to the polls to elect or re-elect your city officials.  Better yet, send these officials a link and ask them if they understand who their customers are and what you expect.  Perhaps if we all hold our officials accountable, we might just get a reasonable return for our investment.  About now, any form of positive return would be good. 

 

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.

“If I had asked customers what they wanted, they would have said faster horses.”

Students of business history might recognize the quote above as coming from Henry Ford, the founder of Ford Motor Company and one of the early management innovators.  Mr. Ford’s quote raises a profound issue of when and how to listen to customers, or perhaps the more challenging flip side: when not to listen to customers.

The notion of not asking customers what they want and responding directly to their needs may seem like heresy to those individuals and organizations consumed with improving customer satisfaction and creating customer loyalty.  In fact, you should always listen and importantly, observe.  The real art in this process is understanding what customers really need, what problems they really would like to solve and what approaches and experiences that you can create that can surprise and delight them.

Harvard Professor, Clayton Christensen, seized upon this issue in his Innovator’s Dilemma/Innovator’s Solution books, where he suggests that a well-intentioned business may do everything right by listening and responding to customer requests, and ultimately fail as disruptive offerings upset the status quo.  

In my own work in the technology space over the past two decades, it is easy to look back at product development cycles driven by a never-ending desire to cram in customer-driven features, without a good understanding of why those features were needed and whether they were solving key problems or attacking symptoms.  It always felt like we were doing the right thing, but in hindsight, it was blind marketing. As Product Management systems improved and requirements development received more scrutiny, this situation improved.  Nonetheless, it is hard to see how the forest is changing when you are staring so intently at the trees. 

Christensen’s classic scenario is the company that dutifully enhances its offerings based on client input, ultimately creating bloated offerings with capabilities far exceeding what might be required of many or any buyers.  In the interim, a disruptive offering…something perhaps with fewer features and priced much lower (not always the case) can easily swoop in and…well, disrupt the market.  In essence, the well-managed, well-intentioned company created a vacuum that was filled by someone who understood the essence of the client’s problems…not just the features they were asking for.  (Think “Faster Horses” versus a new mode of transportation.)

The authors of the recent book, Tuned In, tackle this important topic by suggesting that a firm focus on developing Resonators, products or services that practically sell themselves.  Their six step process for creating a resonator and for Tuning In is in my opinion, a framework for avoiding the Innovator’s Dilemma that Christensen warns us about.

The design firm Ideo in their famous Deep Dive segment on ABC News showcase a process for design innovation that is what you might imagine a sociological dig would look like, as they follow and observe the various “buyers” of shopping carts in pursuit of understanding how this classic device could be grossly improved to better solve real problems.  While there is a fair amount of criticism of the “made for TV” nature of this episode, it offers some classic lessons in looking and observing to identify significant and perhaps even disruptive improvements.  Just asking a store manager or a customer about what they would like to see improved in their shopping cart may be insufficient for identifying what a shopping cart might actually be able to do.  Think cell phones and the iphone. 

The Bottom Line for Now:

My message here is intended as a cautionary tale.  It is good and right and noble to pursue increasing levels of customer satisfaction in your framework for operational excellence.  However, it is also easy to be misled by false signals, and sometimes those signals come from your customers.  Remember, they know you in a narrow context, so when they engage with you to talk about improving the Widgets that you make, they are thinking about you only as the Widget Company and as users of your widgets.  Their context is to give you ideas to improve your widgets. Just remember that it is quite possible that they don’t need a better widget or a faster horse. 

You need to build the institutional intelligence, the systems and of course the talent that truly focuses on understanding the unstated needs of buyers.  Of course, once you understand this, the real work of meeting and exceeding those needs as an organization begins. 

Are You Making Progress?

Not surprisingly, it’s often difficult for senior executives and management teams to gain objective feedback on their individual and collective performance.   I’ve worked with clients and in organizations where the management team was generally satisfied with their own performance and would give themselves high marks at a time when the employees would give them lower or even failing grades.  In all cases where I’ve observed this perception gap, there was no objective, systematic means of measuring performance and perceptions in place.

During periods of widespread growth, the rising tide effect and decent numbers tend to support management’s belief that they are doing the right things to secure the future of the business.  Along comes a slowdown in the economy, a movement in the key metrics in the wrong direction and the painful recognition that all is not right in Camelot.  We all know what happens from here.  Top management runs around, holds a bunch of meetings with employees, consultants are invited in to help out, “strategy” becomes the new buzzword, lofty new goals are announced and somewhere in here there’s a reorganization or two.  (I don’t mean to sound cynical, but even in these enlightened times, this cycle is repeated over and over again.)

At least one critical component to avoiding the scenario above and to isolating on problem-areas before they manifest themselves as crises or at least significant organizational performance problems is to consistently monitor employee and leader perspectives on the issues and areas that count.  You can do this the hard and expensive way by investing in outside resources or you can take advantage of some remarkable and free resources courtesy of the Malcolm Baldrige National Quality Program.

Baldrige Is About Performance:

While you may assume that the Baldrige program is focused on quality (that’s part of the story), it is also heavily focused on performance and on the integration of all of the systems and processes that interact to create sustained, outstanding performance.  The criteria for the award are covered in seven categories:

1. Leadership
2. Strategic planning
3. Customer and Market Focus
4. Measurement, Analysis, and Knowledge Management
5. Human Resource Focus
6. Process management
7. Results.  

According to the site, the intent of the program is to: help organizations enhance their competitiveness by focusing on two goals: delivering ever improving value to customers and improving overall organizational performance.

Part of the expansive set of tools available license and restriction free for you to use are two different, brief and easy to use survey instruments: Are We Making Progress? and Are We Making Progress as Leaders?  The surveys follow the seven categories described above, and ask leaders and employees to give their opinions of organizational effectiveness on the most critical issues that drive overall performance.  As a bonus, the site includes the aggregated survey ratings of the companies that applied for the award in previous years for your use in comparing your organization’s results.   All in all, these are some remarkably important and powerful tools available free for your use at the click of a mouse.

Observations and Suggestions: The Answers Are Closer Than They Appear: 

• Thoroughly read and digest the Criteria for Performance Excellence document(s) at the Baldrige site.  You might be surprised how much wisdom has been nicely aggregated over twenty plus years into some powerful and brief documents.  In my opinion, this 70+ page document has more insights between the covers than entire shelves of business books found in stores.

• Assess the gap between employee perspectives on organizational activities and effectiveness and your leadership teams perspectives by using the surveys.  Compare your results to the summary results of past year Baldridge candidates to develop some context for the gaps.  I promise that the results from this survey will be fascinating, eye opening and actionable.

• Leverage the survey results and the vast body of Baldrige tools and materials to architect a holistic and sustainable business improvement program that focuses on the key drivers of organizational performance.  You don’t have to search for the secret formula or even the answers…they are right in front of you, and in this case, neatly organized, well documented and supported by an ample body of cases for your use. 

The Bottom Line for Now:

If you’ve not studied Baldrige, you would be well served to fill that gap as part of your professional development(see my post, Back to School!).  There’s a remarkable amount of good common sense in gauging your organization’s performance and maturity against well-established criteria for success.  You don’t have to pursue a Baldrige award and I certainly am not interested in inviting debate over the efficacy of one discipline versus another (e.g. Six Sigma, ISO, Deming Award Criteria etc.).  However, I am interested in suggesting that a great starting point for figuring out what ails you is to ask people, to understand perception gaps, and to mine the gold from those gaps as part of your improvement programs.