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Sunday, 19 December 2010

New Ideas About Leadership? They're Nearly 2,500 Years Old!

Many of the social media gurus on leadership seem to think that their ideas are brand new, radical, revolutionary and innovative.

As it happens, the Greek philosopher, Aristotle (384BC-322BC) suggested that there are three forms of rule: the rule of one, the rule of the few and the rule of the many.  A student of Plato, he opined that the 'rule of one' was necessary to prevent anarchy and mob rule.  Now that is radical.

In those years and subsequently during the rise of Rome, the 'rule of one' came into prominence wth emperors like Augustus, Claudius and the unlamented Caligula ruling.  So what happened to the rule of the few and the rule of the many?

It seems that even if there were a valid example of the 'rule of the many', in very short order a leader emerges to impose the 'rule of one'.   Post 1917 Russia is a classic example where the revolution of the masses spawned Stalin's 'rule of one'.

I recall a workshop weekend with a previous company where we had some six breakout groups of about ten in each, and we were asked to work on solving an insoluble problem.  Each group was allocated a minder who sat there and took notes and, in the event, reported back to the meeting after an hour's deliberation.

It turned out that we weren't actually working on problem solving, but were there to give the minders (all psychologists) a view of how groups work and how they choose their leaders.

Astonishingly, all the minders reported the same results,  In every case each group elected a notional leader/chaiman, usually a Director of the company who happened to be in their group, and then proceeded to ignore him.

The more forceful and articulate seemed in each case to emerge into a leadership role with the majority of the other members of the groups deferring to them.  Seniority had no effect.

So what does this mean in terms of a modern approach to leadership?  Many businesses, especially those which are essentially entrepreurial, are run on the 'rule of one' basis and the 'rule of the many' applies only in unusual cases like the John Lews Partnership.   Most SMEs are run on the 'rule of the few' basis and preferably 'the virtuous few'.

However, it must be said that in the business world, Aristotle was percipient to the extent that in well run companies, all his rules apply.  Starting with an entrepreneurial leader, as the business grows and expands, an effective management team has to be built into a 'virtuous few'.

So where does the 'rule of the many' come into the calculation?   Until a business understands that 'the many' have much more to offer than merely their labour, then it will effectively be run on a 'top down' basis without any upwards contribution. 

Perhaps this implies that one of the most important facets of great leaders is that of humility; the acceptance that they don't know everything about everything, and that everyone in the business has a place in the scheme of things.

An anonymous sage once said "The people wnat me to be their leader: I must follow them".  Now that calls for humility.

There won't be a Sunday post next week as we are away (weather permitting) so may I take this opportunity to wish everyone a very happy Christmas and a successful, healthy and peaceful New Year.

For further information, visit www.vistage.co.uk and www.maa-uk.co.uk
To contact us, email to ivan.goldberg@vistage.co.uk

Sunday, 12 December 2010

Captaincy? I Want Eleven Captains on my Team!

The relative gloom engendered by the choice of Russia and Qatar as Football World Cup venues was, for me at least, very quickly dispelled by the excellent showing of the England cricket team in the Second Test at Adelaide.
It was a triumph of teamwork and for the first time for many years, they even outfielded the Australians.  Every member of the team contributed and there is an evident will to win.

I heard Andrew Strauss being interviewed and one of the things he said had a great resonance for me.  He said, when asked about his concept of captaincy:

"I want eleven captains on my team".

He went on to say that, in the end, he makes the final decision but what he is looking for is full input from all members of the team, with almost a requirement that they contribute to the running of the side.

This is a great metaphor for management in general.   Strauss's style echoes that of the companies known as the great engines of growth in Kenneth and Will Hopper's book, The Puritan Gift, (www.puritangift.com) where they emphasise their culture of "bottom up" management as distinct from "top down", which by definition, implies the opinions of one person.

I recall an instance in a previous company which manufactured, among other things, fabrics coated with rubber, both natural and synthetic.  The technical people had designed a product for use in divers wet suits and a small prototype run was being prepared.   One of the machine operatives asked what the product was being used for and on being told, said it wasn't suitable.

Somewhat surprised, the techies asked what evidence did he have to make such a contentious statement and were somewhat taken aback to be told that he was the Secretary of a national sub-aqua organisation, and was probably rated as a world expert in these matters.

The company,very sensibly, accepted his opinion and asked him to act as an internal consultant to the project.

A VIstage speaker once told us that one of the problems in business is that we allow people to turn up at work, hang up their coats, hang up their brains and then go home again at 5.00pm to take up their hobbies, run a youth club, learn a language or generally use their minds to some effect.  The problem is, that in the main, we don't know anything about them other than what they do during working hours.

It is a waste of intellect and exploiting the opportunities, in the most positive way, can materially contribute to the success of the business to the benefit of everyone.

It is more important to develop upwards communication than it is to shout down instructions from the isolation at the top.  Isolation?  Certainly: the people on the shop floor, either actually or metaphorically, know more about what is happening than does the management, and until there is an ethos of openness, there will always be a communication gap.

It isn't about incentives either: it's a matter of encouragement and visibly demonstrating that peoples' opinions are sought, desired and, above all, are valued.

How many captains do you have on your team?

For further information, visit www.vistage.co.uk and www.maa-uk.co.uk
To contact us, email to ivan.goldberg@vistage.co.uk

Sunday, 5 December 2010

Negotiation! Does That Mean the Demise of the Price List?

An inspiring session with Vistage UK speaker, Malcolm Smith, this week on Negotiation Skills was a timely reminder that we are generally pretty inadequate when it comes to serious negotiation.

Malcolm gave a detailed and incisive view of the whole subject  with many great ideas and techniques including several on the subject of pricing.  Fairly obvious, of course, because price is such an integral part of what we do in business.  Moreover, it is a very contentious subject eliciting some odd views of what is the right approach.

In the end, there are three main methods of determining the price for a product or service.  Firstly the time honoured (and that is about all) cost-plus.  This implies that we are able to calculate accurately the total cost of making or purchasing a product (or service) and then to add what we consider to be a fair mark up.

There so many variables in that simple statement that put the whole idea of cost-plus into doubt, and many companies have foundered on the premise that they thought that knew the true cost of sales.

The next popular method is to match or go slightly below the prices generally charged in the market place.   This leads to the dreadful habit of discounting to "beat the competition" when in actual fact, all it does is drive down prices and hence gross margins usually without having any impact on sales.

Finally, there is the "let's see what we can get for it" method.  This requires a skin as thick as a brick wall and a certain amount of blind faith.  I recall one client who when asked if his prices were reasonable replied, "Well, we like them".

So what is the answer?   Malcolm is strongly of the opinion, it seems to me, that everything is up for negotiation and this implies that, for most occasions, the "let's see what we can get" method is probably the best.   I understand, let it be said, that when you have to tender for a project, then blind faith does come into the reckoning and realistically only method No. 1 above is anywhere near appropriate.

If all prices are to be negotiated, then where does that leave the published price list?   I have yet to see a B2B price list that isn't decimated by vast numbers of various discounts applied according to the status of the customer, and also which will allow sales personnel to adjust prices so as to get the order at any cost.

If the best way to get the best prices is by negotiation, why should we be hamstrung by a published price list, even with a range of variables built in?

Agreed, it does mean that even small deals would need to be negotiated so there may be a case for retention of fixed prices for those while, in general, all other deals should be negotiated by the sales people within certain stated parameters and after having been properly trained in the skills required.

In the end, the idea is to increase prices while delivering the highest quality of product and service and a price list, per se, can only inhibit that objective.  I have offered the wonderful price/margin matrix before and if you would like a copy please email your request.  It shows how much more business you have to generate if you discount and how much you can afford to lose if you increase your prices.  Very illuminating!

For further information visit www.vistage.co.uk and www.maa-uk.co.uk
To contact us, email to ivan.goldberg@vistage.co.uk