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Sunday, 25 October 2015

Unsure About Making a Decision? Remember That It Is Always 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 if 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".

Thus 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' 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 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. Fortunately few people other than the owner of a business are prepared to operate in this way.

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!

You can download my book "Leadimg to Success" from Amazon
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Sunday, 18 October 2015

Not Getting Through to the Team? Check Your “4P” Rating!

In the dozens, nay hundreds, of books about leadership, most offer a list of those attributes that leaders exhibit to a greater or lesser extent. They become a "pick your own" potential to see if you comply.

Recent events have brought some of these attributes to the forefront of my mind, and particularly that of passion.

In the owner-managed sector of the SME world, there is no shortage of passion for the business, the products, the technology, the service and sometimes even the people.

I can't count the number of times that leaders have said to me "Why is it that while I am passionate about the business, that enthusiasm, with the odd exception, doesn't seem to transmit to the people?"

It isn't easy to point out that the leader possibly owns and runs the business so has a vested interest in making sure that it is successful.

In any case most entrepreneurs have come through a silo route like technology or sales and have thought of a great way to go off on their own in a business of their own.

They have a strong parental feel for the business and I believe, certainly for men, it offers a form of creativity that women have naturally.

I often imagine men going into the business in a morning, metaphorically putting their warm arms round, patting it on the head and saying "There, there, don't worry, Daddy is here now".

As usual it hinges on how the leader relates to the team.  If it is an authoritarian regime then the people will keep their noses clean, do their job and go home or leave. Passion is unlikely to be evident.

On the other hand if the leader shows respect and trust to the ream the response is much more likely to be positive. It has been said that the best approach is to hire the very best people then get out of their way, let them get on with it, and learn from them.

Passion being an emotion is naturally transient and to be really effective people need to have persistence, that attribute that says I will persevere until the road ahead is clear.

Add that to passion and the results can be startling.  Winston Churchill was credited with the motivational "Never give up" mantra that was highly effective during the dark days of war.

Apparently however he didn't say, "Never give up".  He actually said:

      "Keep buggering on"

which is much more fun but perhaps slightly less motivational.

To make it all come together effectively we need to exhibit patience and that can be very difficult to achieve.

I have heard so m many leaders say that they are impatient, that people don’t seem to understand, that I have to explain into much detail, that people don’t do things immediately.  A measure of understanding and acceptance that this is the world in which we live can help with the blood pressure.  It can be very irritating but in the end, ask yourself, “Does it matter?”  In other words, learn and practice patience.

Not everyone has the passion and persistence that most entrepreneurs have in spades and leaders need to understand that. It is easy to assume that others look at the needs of the business as we do but that is not necessarily the case.

Some will sow and some will reap and some will put in a good day's work without contributing directly to the higher ideals of the business. Everyone has their place and some contribute more than others.

The key is to ensure, as far as possible, that everyone is respected and acknowledged for their abilities and for their contribution to the business.  Essentially there must be an atmosphere of Positivity throughout the organisation

If these criteria are evident in the ethos of the business the Passion, Persistence and Patience will not be far behind.

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Sunday, 11 October 2015

“Truth in Engineering”? Believe It or Not That’s Volkswagen’s Strap Line!

One of the members of my Vistage CEO peer group recently sent me a link to an article written by the much admired journalist Lucy Kellaway, columnist at the Financial Times.

Lucy debated the subject of corporate values and came to the general conclusion that the definition of  "corporate values" has little meaning.

It is a beautifully argued article and while I don't altogether agree with her conclusions it had a certain resonance for me.

In the furore swirling around the Volkswagen emissions scandal it seems to me that while just about every facet has been and indeed is being dissected and discussed at length, the one factor of corporate ethics has been relegated to the sidelines.

If the matter had emanated from a "failed state" in the more remote regions of the planet we would nod sagely and say something like "What do you expect?" 

It isn't a failed state, it's the largest automotive manufacturer in the world and it is in Germany, for heaven's sake!

To summarise we are talking here about 11 million diesel powered vehicles worldwide, of which there are 8million in Europe and 1.3 million in the UK that are affected.

Now it has been alleged that some bright but misguided software engineer at Volkswagen realised that if the customer is to be satisfied with performance and fuel consumption, then low emissions have to sacrificed.

All well and good but unfortunately emission levels are generally government regulated  so now we have a dichotomy. How best to square the circle?

Someone decided that everyone had to be satisfied and devised a fiendishly clever piece of software that could detect when the vehicle was undergoing laboratory tests and ensured that the results would be well within the regulated levels.

This was done in the knowledge that if emissions were to be acceptably low consistently then performance and fuel consumption would suffer and customers wouldn't like that.

Unfortunately when the vehicles were driven by normal people in a normal manner on normal roads, the emission levels were at normal levels, that is, way over the maximum permitted.

The regulatory bodies accepted the laboratory results so everyone was happy except some bright spark who disclosed the awful truth, that VW in the USA had been deliberately misleading the regulators and the public.
Please note that diesel powered vehicles in the US comprise 5% of the total whereas in the UK the proportion is nearer 50%.

Latest reports are that VW has allocated €5 billion to cover the cost of the debacle against a pre-tax profit last year of €8 billion. It is almost certain that the cost of correction plus the likelihood of class actions will massively increase the costs.

Please note: apparently this debacle was not an error but rather a considered approach to solve a problem and to maintain commercial success worldwide.

Illegal?  Probably. Ethical?    Absolutely not.

It is a dubious blame game being played here by VW.  Do we really believe that one engineer can make a decision that affects 11 million vehicles without anyone noticing?

Back to Lucy Kellaway's article. I am quite sure that VW have a nice list of values by which they live, a list that makes everyone feel nice and warm, and trusting.

What we actually have sparks memories of Enron with the company saying one thing and apparently doing the opposite in the background, again for commercial gain.

If this can happen at the great Volkswagen, we ask how widespread is this approach in business?

What about the bankers who invented fiendishly complex derivatives that were so complicated that no-one really understood them making some individuals very rich and brought on the recession?

The stated values by which we run our businesses define the culture, the way that we do things around here.

If they are not lived by everyone in the business, consistently and ethically, then Lucy was right; ditch them and go you town way but be aware of the potential consequences.

You can download my book "Leading to Success" from Amazon
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Sunday, 4 October 2015

Daunted by All That Financial Stuff? It’s Fattening the Pig That Matters!

A recent speaker at my Vistage CEO peer group meeting offered the following neat little philosophical aphorism:

     "You can't fatten a pig by weighing it"

It was greeted with a lot of laughter and people (like me) jotting it down for future use and, lo and behold, it has come to mind today.

I have just returned from a Vistage conference where the keynote address was on "Finance for CEOs"

A great deal of the day was devoted, and rightly so, to the need for business leaders to be fully involved and knowledgeable in the finances of their businesses.

The speaker detailed the really important factors that impact on the success or otherwise of any business and particularly on those that hide coyly in the undergrowth.  These are the ones that can cause the maximum disruption if they are not tackled quickly and effectively.

However on the downside, not every leader rises to the top of the business by the finance route. Other disciplines like sales, marketing, operations, technology and even HR are just as likely to feature on the leader's CV.

The consequence of this then is an understanding of the importance of the finances of the business but a deep-seated and worrying realisation that they don't really understand all the implications.  

The consequence is that the function defaults to the CFO or Finance Director to produce the statutory information in the accepted format of profit and loss account, balance sheet and cash flow forecast.

All well and good and the good FD will present the information in easily understood reports, at least monthly, on time (no more that five working days after month end) and totally accurate. Additionally he/she will analyse the figures and offer advice to the leader as to any action that may be required.

Let's face it. That is an ideal situation but not a universal one.

The consequences of poor information allied to inadequate and often now misleading advice can be catastrophic so leaders need to have some sort of a fallback to ensure that the business finances are clean and accurate.

All of this is about historical financial evidence, how the business has been doing and not about how it us going to. It is weighing the pig, in facet.

A good idea because it is difficult to know where the business is going if you don't know the starting point.

It all devolves on those fascinating little acronyms, the KPIs or Key Performance Indicators and give them the credit. They can be very valuable in monitoring past and to some extent present performance.

However not many of them contribute to the fattening of the pig and that is in the province of the leader.  The problem is then that we have some leaders with inadequate financial expertise but with a concurrent need to plan the growth of the business based on current financial values.

The fact and it may be somewhat unsalable is that business leaders must have some form of backup, perhaps some basic training or a trusted contact, who will assist in explaining the validity of the figures.

That needs to cover all the necessary aspects of the finances of the business, things that leaders MUST know and understand.

After that it's fattening of the pig time and that is where the leader excels. It isn't necessarily financially based because there has to be at least initially a good deal of blue sky and green field thinking.

When it is all finished, polished and ready for presentation then you can let the finance gurus loose on it.  They may well find (and probably will) all the pitfalls in the plan but they need to have their fun as well

Remember that it's the fat pig that fetches the best price at market.

You can download my book "Leading to Success" from Amazon
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