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Sunday, 13 January 2019

Unsure About a Decision? Remember That It Is JFDI Time!

It is curious that one of the most important attributes of a leader's activity, that of decision making, can be the most taxing.

I recall a member of my Vistage CEO peer group telling me that his colleague, the Technical Director, was unable to make a decision, which he found irksome to say the least.

He put this inability down to the fact that the director was an engineer and needed to collect all the relevant (and sometimes irrelevant) evidence to substantiate the decision making process.

It wasn't that he was risk averse, or was just that he needed to be absolutely certain that every possible piece of justification had been covered.

The upshot was that he finished up with vast amounts of data, very little information and no intelligence on which he could make a decision.

As a consequence he either went on and on collecting data or just gave up and went negative.

The leader's frustration was understandable; being the owner as well as the leader he wanted decisive people around him who didn't need constant reassurance that the data collecting process was essential to "get it right".

This inability to come to a decision can have several a raft of reasons and sometimes a mixture of all of them.

It must be said that certain functions in a business can lead to this irritating result of indecision; the numerical functions like technical and financial often lead the way whereas sales people can go overboard in the opposite direction.

It's the "ready, fire, aim" syndrome.

If one of the team is inherently risk averse then by definition they are more than likely to be indecisive and hence their value has to be questioned. That form of indecision almost always leads to upward delegation and that has to be resisted at all costs.

Beware of the indecisive one who won't make a decision in case, heaven forfend, failure could prejudice both is/her position and the job itself.

Fear of failure is a very powerful emotion and it takes a combination of personal strength and sensitive leadership to overcome it or at least get it into perspective.

That perceived downward spiral following possible failure leading to the only realistic solution of jumping off Beachy Head is all too real for some people. As I said a dose of reality and getting it into perspective is necessary in these cases.

And what about he leader or executive who shoots from the hip, who is reactive and ready to make a decision often without any evidence to back it up?

More dangerous I would submit than indecision when at least some assessment of the possible risk would be valuable.

It can be a dangerous but exciting roller coaster ride with the outcome in doubt all along the line.

Another issue is decision making by committee.  I remember talking to the Managing Partner of a law firm with 30 partners about how they came to a decision.

I rather naively suggested that he would seek consensus at which he exploded.

"Consensus?  Some hope!  They must have unanimity so that everyone agrees"

Again naively I asked him his they came to a decision on anything.

"We don't,” he said and that was the end of that conversation.

Smooth decision making is the lifeblood of any successful business or organisation for that matter.

There will always be a modicum if risk involved; the art is to assess that risk, decide whether it can be reduced and if not to make a conscious decision to go ahead or abort.

The key is to do it, one way or the other; vacillation does no good to anyone and only spreads uncertainty through the business. 

Remember that it’s always JFDI time!

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Sunday, 6 January 2019

How Many Prices Have You Increased Today? It’s the Road to Success!

Several (actually many) years ago I was retained as a visiting lecturer at Manchester Business School working mainly on short courses for  Senior Executive’s of local businesses.

On one occasion I was discoursing energetically on the need for a business to have a positive pricing policy when I was stopped short in my tracks by  a pair of defensively folded arms and some strong disagreement.

If we aren’t the lowest priced product in the market then we will go out of business” he proclaimed and no discussion or argument would shake him.

A not entirely unusual strategy in those days, it must be said.

Rather to my surprise, a couple of months later he asked me to take a look at his marketing plan. We started by questioning his pricing assertion by asking pretty well every comparable UK manufacturer (about 60 in all) to quote for a range of similar products and guess what?  His prices were just about in the mid-point of the industry. So much for his argument about losing all the business. He didn’t KNOW the truth; he GUESSED it to prove his own opinion.

It transpired that the most visible company in the industry was the largest in terms of sales and profitability.   That was another argument demolished.

Over the years I have used and promoted the “Good, Cheap, Fast” concept making the point that pricing should not be done from an emotional standpoint and people do not always buy the cheapest on the market.

If you want a product to be high quality (good) then it is very unlikely to be cheap and conversely if you want it to be cheap then it is equally unlikely to have a reputation for high quality.

All of this has led me to the understanding that product or service pricing policy is a marketing function and should most definitely not be a purely financial decision.

Just look at a very simple example. A business buys in a product at £10.00 each and sells them successfully at £15.00, a markup of 50%.

The Finance Director suggests at a Board meeting that if we offer a 10% discount then sales would expand so it is given a try. How often have we heard that opinion?

Instead of making a margin of §£5.00 per item, now we make £3.50 and believe it it or not we have to sell over 40% more product just to achieve the same result.

There is a very useful matrix available showing the effects of reducing and increasing prices, how many more items do we have to sell to make a price reduction viable, and even more interesting, by how much can we increase prices without having a material effect on sales levels.

(If you would like a copy of the matrix just email me ivan.goldberg@vistage.co.uk and it will be done)

Many times over have I experienced very doubtful Executives increasing prices and then waiting for the world to end, and are astonished when it doesn’t.

Businesses I have known who have had a reputation for low prices and illogically, top class product quality and service, have decided to increase prices on a regular basis and have not lost any significant business as a consequence.

Go back to the mantra - if you want it good and fast then it won’t be cheap and no more it should be.   I have Vistage members running expanding, successful businesses and are proud that they are succeeding at some of the highest prices in the industry.

Reducing prices in order to increase demand is, in general, an illogical and usually emotional response to market conditions and is a fast road to disaster if you are not very careful.

Give the bullet a good bite and pilot a test price increase.  You will be surprised at how easy it can be.

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Sunday, 30 December 2018

What Are You Doing About Innovation? You Need to Take it Very Seriously!

“If an idea isn’t dangerous then it has no right to be called an idea”

Oscar Wilde postulated this thought and it seems to me that he got it (as usual) just about right.

Sensible leaders, if they have anything about them would welcome innovative ideas from anyone in the business and indeed take steps to implement them if they were to the benefit of the organisation.

Sadly, if the idea has merit, it can only too often be rebranded as belonging to a superior or, heaven forfend, the leader him/herself.  It is a great way to stem the flow of new ideas.

Oscar’s view was that an idea needs to be, as he put it, dangerous and we can rewrite that as innovative or daunting or impractical or even revolutionary.

All of these responses are the province of the nay-sawyer who will always find a reason NOT to do something if it will cause them effort or which would involve change.  They much prefer the even tenor of existence to the potential excitement of change.

After all, if an idea isn’t likely to engender change or even make waves, then it can be implemented and probably no-one would notice the difference.

It is the big ideas, the big change agents that can make a significant difference to the success of a business and often to the people in it. Conversely it is those that will cause the most turmoil among the non- believers.

The key is to have a system that encourages the flow of ideas, assesses them independently and then, if the assessors agree, implements them positively and, most importantly, visibly.

There is nothing more depressing than for someone in the business to have an idea for change which is then pooh-poohed and quietly shelved because implementation would cause problems.  All of this, of course, ignores the possibility of benefit to the business.

I know of an automotive manufacturer which has a very formalised way of generating ideas and which has proved to be extremely successful.   In essence, anyone in the business can put forward an idea for change that must include potential savings or productivity improvements properly costed. 

An “innovation” department that is tasked to search for methods either in manufacturing or administration, and that are likely to show value to the business then assesses the idea.

All ideas are published so that everyone in the business is aware of them and if the innovation department decides to proceed, then the idea is allocated a budget and implementation commences.

It may all seem formal but it does eliminate the “not invented here” syndrome that is the bane of innovators everywhere and the fact that the whole system is transparent makes people feel safe to put their ideas forward.

And what is in it for those people?  Certainly not financial gain because there is no offer on the table.  Rather they are shown to be interested, and innovative and this is publicised throughout the business on noticeboards, and on the company intranet. 

Revolutionary?  Yes, it is, but all good ideas are revolutionary.  Just refer back to Oscar Wilde’s maxim and rewrite it to say so.

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Sunday, 23 December 2018

How Do You Hold Your People Accountable? Who Holds You Accountable?

In October 2009 I was in a breakout session at the Vistage Chair Conference where the topic was Accountability.

We all had to decide on a task that we would work on for the following year and another member of the group agreed to hold us accountable (if you see what I mean)

I agreed to hold a colleague accountable for a very long list of actions and another agreed to hold me accountable for my decision - that is, to write a regular blog.

I haven’t had a call from my colleague for ages but after three weeks of writing the blog on a Sunday, it has now become a (very enjoyable) habit and rather to my surprise this week’s is number 500 in the series.

It is worth considering how effective are the accountability practices in your business, that is, assuming that you formalise accountability practices anyway.  It always surprises me that important tasks can be allocated to people and then not really checked and monitored until completion or not as the case may be.

One of our US Vistage speakers, John Johnson, has an excellent pro-forma template which he uses to monitor progress in the implementation of strategic plans and there is no reason why it should not be used in a wide range of activities in a business.

In essence there is an overall champion allocated to make sure that all activities are being carried out as agreed, with other people holding the individual accountable for separate parts of the task.

All in all, the maxim of "monitor, measure, evaluate" makes sure that tasks are completed with a modicum of supervision and just enough to ensure that effective communication is established.

Too often work is allocated without even a timeline, and then the individual is left to get on with the task without supervision and seemingly a complete lack of interest in what is happening.  One of the most important factors in completing any task is to define its purpose – why is this needed and what can I do to accomplish a successful outcome.

Then if something goes amiss, the task goes over time limits which hadn’t really been communicated properly in the first place, results are not forthcoming or worst of all, the “I wouldn’t have done it that way” syndrome kicks in.  Question: have expectations been clearly defined?

If we delegate tasks then we delegate responsibility for successful completion of that task as well.  This, in turn, implies that we give our people the courtesy of expectation of success and give them the freedom to achieve it.

The quid pro quo is, of course, that as a consequence they are held accountable for the progress and finalisation of the task and it is this that is frequently lacking.

It is a simple task to reprimand someone for not achieving expectations but it is equally simple to eliminate the problem by the practice of accountability.

If we monitor, measure and evaluate together then successful completion of the project is far more likely than if we just leave our people to get on with it and just hope that all will turn out well.

Big caveat!  This is not an open invitation to micro-manage the team member.  Rather it pays then the compliment of setting mutually agreed expectations, then letting them get on with the job while offering assistance and encouragement as necessary.

There is nothing so depressing as a constant flow of questions as to how a task is progressing and indeed it takes the eye of the ball rather than concentrating effort.  Trust is essential and equally leaders need to be kept abreast of activity.  The answer is a bullet point report from the team member, say, once a week to the leader together with any problems being encountered.  The leader then needs to back off and let the team member get on with it. 

It’s not easy but absolutely essential.

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