Critical Questions for Becoming a More Effective Leader and Reaching Your Potential

Recently, I came across some notes from a book I read in 2011 that I’d like to share — What to Ask the Person in the Mirror: Critical Questions for Becoming a More Effective Leader and Reaching Your Potential by Robert S. Kaplan:

Critical Questions for Becoming a More Effective Leader and Reaching Your Potential

Vision and Priorities

In the press of day-to-day activities, leaders often fail to adequately communicate their vision to the organization, and in particular, they don’t communicate it in a way that helps their subordinates determine where to focus their own efforts.

  • Have you developed a clear vision for your enterprise?
  • Have you identified three to five key priorities to achieve that vision?
  • Do you actively communicate this vision, and associated key priorities, to your organization?

Suggested Follow-up Steps

  • Write down, in three to four sentences, a clear vision for your enterprise or business unit.
  • List the three to five key priorities that are most critical to achieving this vision. These should be tasks that you must do extraordinarily well in order for you to succeed based on where you are positioned today
  • Ask yourself whether the vision (with priorities) is sufficiently clear and understandable. In addition, ask yourself whether you communicate the vision and priorities frequently enough that your key stakeholders (e.g., direct reports and employees) could repeat them back to you. Interview key employees to see whether they understand and can clearly rearticulate the vision and priorities.
  • Identify venues and occasions for the regular communication, reiteration, and discussion of the vision and priorities. Create opportunities for questions and
  • Assemble your executive team off-site to debate the vision and priorities. In particular, consider whether the vision and priorities still fit the competitive environment, changes in the world, and the needs of the business. Use the off-site to update your vision and priorities and to ensure buy-in on the part of your senior leadership team.

Managing Your Time

Leaders need to know how they’re spending their time. They also need to ensure that their time allocation (and that of their subordinates) matches their key priorities.

  • Do you know how you spend your time?
  • Does it match your key priorities?

Suggested Follow-up Steps

  • Track your time for two weeks and break down the results into major categories.
  • Compare how this breakdown matches or is mismatched versus your three to five key priorities. Make a list of the matches and mismatches. Regarding the mismatches, write down those time allocations that are 2s and 35 and could therefore be performed by others-or should not be performed at all.
  • Create an action plan for dealing with the mismatches.

For example, commit to delegating those tasks that could just as easily be performed by someone else. Decide, in advance, to say no to certain time requests that do not fit your key priorities.

  • After a few months, repeat the preceding three steps. Assess whether you are doing a better job of spending your time on critical priorities.
  • Encourage your subordinates to perform these same steps.

 

Giving and Getting Feedback

 

Leaders often fail to coach employees in a direct and timely fashion and, instead, wait until the year-end review. This approach may lead to unpleasant surprises and can undermine effective professional development. Just as important, leaders need to cultivate subordinates who can give them advice and feedback during the year.

  • Do you coach and actively develop your key people?
  • Is your feedback specific, timely, and actionable?
  • Do you solicit actionable feedback from your key subordinates?
  • Do you cultivate advisers who are able to confront you with criticisms that you may not want to hear?

Suggested Follow-up Steps

  • For each of your direct reports, write down three to five specific strengths. In addition, write down at least two or three specific skills or tasks that you believe they could improve on in order to improve their performance and advance their careers. Allocate time to directly observing their performance, and discreetly make inquiries to gather information and insights in order to prepare this analysis.
  • Schedule time with each subordinate, at least six months in advance of the year-end review, to discuss your observations and identify specific action steps that could help them improve and address their developmental needs and opportunities.
  • Write down a realistic list of your own strengths and weaknesses. Make a list of at least five subordinates from whom you could solicit feedback regarding your strengths and weaknesses. Meet with each subordinate individually and explain that you need their help. In your meetings, make sure to ask them to give you advice regarding at least one or two tasks or skills they believe you could improve on. Thank them for their help.
  • Write down an action plan for addressing your own weaknesses and developmental needs. If you have a direct superior (or trusted peer), consider soliciting advice regarding your developmental needs and potential action steps. Depending on your situation and level in the organization, consider the option of hiring an outside coach.
  • Encourage each of your direct reports to follow these same steps regarding their direct reports and themselves.

Succession Planning and Delegation

When leaders fail to actively plan for succession, they do not delegate sufficiently and may become decision-making bottlenecks. Key employees may leave if they are not actively groomed and challenged.

  • Do you have a succession-planning process for key positions?
  • Have you identified potential successors for your job?
  • If not, what is stopping you?
  • Do you delegate sufficiently-
  • Have you become a decision-making bottleneck?

Suggested Follow-up Steps

  • Create a succession-planning depth chart for your business unit or organization. This document should include at least two or three potential successors for your own position.
  • For each potential successor, write down their key development needs and specific actions you might take in order to develop their capabilities in relation to potential future positions. Work to develop and shape these specific development plans.
  • For those key tasks that you have committed to finding a way to delegate, begin matching those tasks with specific candidates on the depth chart. Make assignments.
  • Categorize delegated tasks in terms of their levels of importance to your enterprise. Based on this analysis, note which tasks need to be done at extremely high levels of quality, and which can be done at “sufficient” levels of quality. Ask whether you have calibrated your level of involvement to this categorization, and remember that “involvement” should often take the form of coaching the subordinate, rather than a direct intervention. Make a commitment to “picking your spots,” to ensure that your direct interventions (beyond coaching) are justified by an appropriately high level of task importance.
  • Ask your business unit leaders to perform this same exercise with regard to their direct reports.

Evaluation and Alignment

The world is constantly changing, and leaders need to be able to adapt their businesses accordingly.

  • Is the design of your company still aligned with your vision and priorities?
  • If you had to design the enterprise today with a clean sheet of paper, how would you change the people, key tasks, organizational structure, culture, and your leadership style?
  • Why haven’t you made these changes?
  • Have you pushed yourself and your organization to do this clean-sheet-of-paper exercise?

Suggested Follow-up Steps

  • Identify a key business unit or function to tryout the clean-sheet-of-paper exercise. Create a small task force based on the selected names from the succession-planning depth chart exercise. Attempt to draw professionals from at least two to three different business units and/or functional areas. Give the team a specific assignment, and emphasize that they should assume that there are no sacred cows to be protected. Make clear to them that while you may not follow every piece of their advice, you want their candid views and most likely will implement at least some of their suggestions.
  • Agree on an appropriate time frame. Take into account that this assignment is not in place for doing their day jobs. Make clear that you are available to answer questions or give guidance, but you plan to stay away from this process in order to avoid influencing their analysis and conclusions.
  • Debrief the group regarding their findings. Also, conduct a post mortem to determine what you and the task force learned from the process of doing this exercise.
  • Develop a specific action plan for implementing at least some (if not all) of the group’s recommendations.

The Leader as Role Model

Your actions are closely observed by those around you. They send a powerful message about what you believe and what you truly value.

  • Do you act as a role model?
  • Do your behaviors match your words?
  • How do you conduct yourself under pressure?
  • Is your conduct consistent with your stated values?

Suggested Follow-up Steps

  • Write down two or three key messages you believe you send with your behavior (versus your speeches). Seek advice from key subordinates and advisers who directly observe your behavior, in order to answer this question: is there a disconnect between the messages you wish to send and those you are in fact sending?
  • Do this same exercise for your key direct reports. What messages is each of them sending about what is truly valued in your organization? Again, make discreet inquiries, if necessary, to do this analysis. Incorporate this work into your coaching of these executives.
  • Think of a situation in which you felt enormous stress at work and regretted your behavior. Write down the one or two issues that created the stress you were feeling- acknowledging that these issues may have had nothing to do with work. How would you behave differently if you could replay this situation? Write down one or two lessons you take away from this exercise.

Reaching Your Potential

Successful executives develop leadership styles that fit the needs of their business but also fit their own beliefs and personality.

  • Are you pursuing a path that is consistent with your assessment of your strengths, weaknesses, and passions?
  • If not, what are you waiting for?
  • Have you developed your own style at work?
  • Do you speak up, express your opinions, and conduct yourself with confidence?
  • Do you encourage your people to be authentic and express their opinions?

Suggested Follow-up Steps

  • Make a list of your three greatest strengths and your three greatest weaknesses. Get advice from your senior, peer, and junior coaches or advisers in order to make sure your list reflects “reality” in relation to your current job and aspirations.
  • Develop a specific action plan to work on your weaknesses. Action steps might include specific job assignments, seeking feedback within your organization, and/or getting an outside coach.
  • Encourage your subordinates to do this same analysis and action planning. Discuss these plans in your coaching sessions for subordinates.
  • Think of a situation in which you were at your best, when you performed extremely well and felt great about your impact. What were the elements of this situation? What tasks were you performing, what was your leadership approach, what was the context, and what other factors enhanced your performance? What lessons do you take from this, regarding your passions, values, and other key elements that help bring out your best performance?
  • Think of a time when you brought out the best in others. What was your motivational approach? What was your leadership style? What other elements allowed you to bring out the best in others? When you reflect on this situation, what lessons do you learn about yourself, including about your philosophy and values, as well as how you might best motivate others in the future?
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Thank God It’s Monday!: Key Messages For A More Motivated Workplace

Thank God It’s Monday!: How to Create a Workplace You and Your Customers Love by Roxanne Emmerich —  this book which is twenty years old didn’t offer any new insights for me. Below is an excerpt from the book:

Key Messages For A More Motivated WorkplaceThank God Monday.jpg

Here are some of the core messages for change I share, which you will explore in the pages that follow:

  • Commit with all your heart. If you are anything other than a 10 on a 1-10 scale, you are hurting your fellow team members, your customers, and yourself.
  • Be unreasonable with yourself. Be unstoppable going after what you want.
  • Don’t let the little things take you out.
  • Call it tight on dysfunctional behaviors-yours and others: How you do anything is how you do everything.
  • Show you care-colleagues, customers, and vendors. In every encounter, make it obvious.
  • Celebrate every win. It reprograms the brain for more winning.
  • Clean up your messes. If you “blow it,” and you will, restore your integrity.
  • Use powerful and positive language about what you will do and the attitude you expect from others.
  • No more adult daycare! Dysfunctional behaviors must go, whether yours’ or of those around you.
  • How you do anything is how you do everything. live with passion and creativity by reprogramming your limiting beliefs.
  • You can be as miserable or as joyful as you choose. Those who show they care, who appreciate and celebrate, are leaders of their way of being. They keep a culture focused and people thriving.
  • Stop being busy and start doing what matters. Be accountable for results.
  • The fastest way to success and happiness is by giving. Life gives to the givers and takes from the takers; the world has a perfect accounting system.

Try This:

  • Imagine your workplace as one you are eager to come to.
  • Imagine that the only way your workplace will turn around is if you, and only you, are 100 percent accountable for the turnaround. If that were the case, what would you do differently starting tomorrow?
  • Identify the ways in which you are part of the problem instead of the solution-whining about what’s wrong instead of going to the right people with suggestions, shooting down ideas but not proposing ideas for further progress. Be honest. Really honest. Look at your own behaviors with a magnifying glass.
  • Look around and see the fellow employees who are going to need special help to embrace the vision. Use a mirror if you have to.
  • Think about it. Do you really believe? Can you commit to this? Can you make it happen and keep happening?
  • Do you want this enough to help ensure it can happen? What can you do from all levels of your job?

Everwise: Building a Learning Culture

Do you have a learning culture in your business? The Lumber Buildings Material Foundation (LBMDF) can help with building a learning culture your business. Below is a blog from Everwise by Melissa Fleming: (Reading time is 6 minutes.)

Building a Learning Culture

Last month, Everwise hosted a webinar on “Building a Learning Culture” with Jeff Diana, the former Chief People Officer of Atlassian & Success Factors. A seasoned executive with 20 years of HR experience, Diana serves as a strategic HR consultant and sits on the boards of progressive HR companies including Everwise. He shared his expertise with our community on how to build a learning culture, rooted in the belief that individual growth improves organizational performance. Here are key takeaways:

Focus on career development

One of the most important factors in whether or not an employee recommends a company as a great place to work is career advancement, not compensation. This marks the continuation of a steady shift over the years. It’s true that compensation and career level are correlated, but today’s employees assign a lot of value to how a company helps them develop their careers, not just compensation at each career level. Focusing on career advancement as a company relies on creating a culture of learning, where employees feel they can grow as individuals and in their jobs.

Getting it right is critical to talent retention and attraction, which is increasingly important as many organizations struggle to attract and retain top talent fast enough to keep pace with the markets. “The number one limit on an organization’s success is people’s capability,” says Diana. “In order to get the most out of your people you have to first put in the right cultural foundation.” Diana compares laying the groundwork for a culture of learning to properly equipping your sales team with the tools to crush their numbers. Without a solid foundation that supports people achieving their potential, an organization’s progress will be limited.

Make a case for greater investment

Organizations that are committed to creating a culture of learning have a real competitive advantage. According to Diana, the four primary benefits of putting resources into building a culture of learning are: 1) increased employee engagement, 2) higher retention, 3) streamlined business processes, and 4) higher ROI/organization success. The best way to make the case for increased spending on Learning & Development (L&D) initiatives is to directly link them to specific business outcomes.

“When you look at the business objectives for a three-year period and you tie that to what capabilities the business needs to have, you can see very clear lines that say why we need higher retention,” says Diana.

What we know for certain is that an organization won’t succeed without the right talent. “Supply is lacking,” Diana says. “We have to help people learn on the job within the context of what they are experiencing today to meet the pace and dynamic nature of business.” One way to make the case for increased L&D investment is to identify capability gaps and how L&D programs can help develop the supply chain of skills needed to reach an organization’s desired business outcomes.

Measure your culture to determine development needs

“One way to grab everyone’s attention is to assess culture,” says Diana. “No leader wants to be at the helm of a culture or a team that isn’t deemed healthy and something they can be proud of leading.”

Having employees assess the health of an organization’s culture can help galvanize efforts to create more learning opportunities. Getting employee input also serves the dual purpose of creating a culture that values transparency and its employees’ opinions. Diana suggests starting with a culture quiz that contains 8 to 10 targeted questions. For example, Do you have rituals that regulate and reinforce values? If you have values around learning and growth, do you have rituals that signal that growth? Does your CEO regularly ask for ideas on strategy? Does your company internally publish mistakes and share learnings from mistakes? Is your physical space driving collaboration? Do you have the tools in place to effectively collaborate? Do you have the ability to give feedback? From those questions, strengths and gaps will emerge, making it easier to take action.

Start small and simple

Diana breaks down the process of enabling a learning culture into four steps: process, culture, L&D investment, and measurement. The best way to start is small and low cost. Find a leader who can pilot a program and generate results that could lead to an expansion. Make sure the language within the company – from performance reviews to the handbook to all-hands invitations – reflects a culture of learning. Find internal success stories of high-performing teams of active learners to help you make the case for L&D investment.

While Diana points out that there are many ways an organization can invest in L&D, the most important one is to build learning into the organization’s culture. The four levers that HR professionals can utilize to drive a sustainable culture are values, transparency, rituals and tools. Having a good set of values conveys the message that learning, self-development and risk-taking are part of the company’s mission and an employee’s daily life. A culture that values transparency and access will breed trust and loyalty. Rituals signal learning and the right tools will empower employees to be curious, collaborate and learn and grow on the job.

Putting it all together: Design learning experiences that impact positive behavior change

Learning today is much more about context than content. Simply put, people are more likely to learn if they can easily recall the information and apply it to their day-to-day jobs. So the challenge for HR professionals is to incorporate the social and experiential side of learning into their programs. You’ll see the best results with initiatives that are intimate and collaborative. “Like anything else we’ll participate more in it, we’ll recall it better if the experience itself touches us in a deeper way,” says Diana.

The best learning happens on the job, where the context is clear and the application is immediate. In order to shorten the loop of trying something, gaining insights and putting those different behaviors back in action, Diana says to think about the actual work that is being done. Having the ability to apply that knowledge to what someone does every day is the best way to turn knowledge into capability.

According to Diana, employees want learning experiences to be highly personalized, more social and collaborative, and rooted in real work. Over 70% of managers want their digital experiences to be more adaptive, 60% want the experience to be more social and collaborative and 55% want more experiential learning included.

It’s important for managers to encourage learning on the job to leverage a team’s capabilities and motivate team members. Diana suggests managers encourage learning by providing the content foundations, mentors/coaches, practice in real work situations and performance feedback from teammates. All of these are learning experiences that offer employees opportunities to practice by doing.

With the right combination of people, resources and feedback, all employees can achieve their full potential. To do this Diana advises that you find role models of high-performing teams within the organization and point to internal success stories to make the case for more L&D. Start small and low cost with a pilot program. Make it easy for people to provide feedback. And most importantly, tie the L&D experiences to business outcomes. The investment in building a learning culture is valuable to both employees and management, and will allow you to tap into the potential of your workforce and improve your organization’s performance overall.

View a recording of the webinar here.

Hillbilly Elegy

Hillbilly Elegy: A Memoir of a Family and Culture in Crisis by J.D. Vance is funny and deeply moving. He also talks about the struggles growing up as part of the in Appalachian working class. I would recommend this book to anyone. Below is an excerpt:Hillbilly elegy.jpg

Hillbilly Elegy

Today downtown Middletown is little more than a relic of American industrial glory. Abandoned shops with broken windows line the heart of downtown, where Central Avenue and Main Street meet. Richie’s pawnshop has long since closed, though a hideous yellow and green sign still marks the site, so far as I know. Richie’s isn’t far from an old pharmacy that, in its heyday, had a soda bar and served root beer floats. Across the street is a building that looks like a theater, with one of those giant triangular signs that reads “ST___L” because the letters in the middle were shattered and never replaced. If you need a payday lender or a cash-for-gold store, downtown Middletown is the place to be.

Not far from the main drag of empty shops and boarded-up windows is the Sorg Mansion. The Sorgs, a powerful and wealthy industrial family dating back to the nineteenth century, operated a large paper mill in Middletown. They donated enough money to put their names on the local opera house and helped build Middletown into a respectable enough city to attract Armco. Their mansion, a gigantic manor home, sits near a formerly proud Middletown country club. Despite its beauty, a Maryland couple recently purchased the mansion for $225,000, or about half of what a decent multi-room apartment sets you back in Washington, DC.

Located quite literally on Main Street, the Sorg Mansion is just up the road from a number of opulent homes that housed Middletown’s wealthy in their heyday. Most have fallen into disrepair. Those that haven’t have been subdivided into small apartments for Middletown’s poorest residents. A street that was once the pride of Middletown today serves as a meeting spot for druggies and dealers. Main Street is now the place you avoid after dark.

This change is a symptom of a new economic reality: rising residential segregation. The number of working-class whites in high-poverty neighborhoods is growing. In 1970, 25 percent of white children lived in a neighborhood with poverty rates above 10 percent. In 2000, that number was 40 percent. It’s almost certainly even higher today. As a 2011 Brookings Institution found, “compared to 2000, residents of extreme-poverty neighborhoods in 2005-09 were more likely to be white, native-born, high school or college graduates, homeowners, and not receiving public assistance.”  In other words, bad neighborhoods no longer plague only urban ghettos; the bad neighborhoods have spread to the suburbs.

This has occurred for complicated reasons. Federal housing policy has actively encouraged homeownership, from Jimmy Carter’s Community Reinvestment Act to George W. Bush’s ownership society. But in the Middletowns of the world, homeownership comes at a steep social cost: As jobs disappear in a given area, declining home values trap people in certain neighborhoods. Even if you’d like to move, you can’t, because the bottom has fallen out of the market-you now owe more than any buyer is willing to pay. The costs of moving are so high that many people stay put. Of course, the people trapped are usually those with the least money; those who can afford to leave do so.

City leaders have tried in vain to revive Middletown’s downtown. You’ll find their most infamous effort if you follow Central Avenue to its end point on the banks of the Miami River, once a lovely place. For reasons I can’t begin to fathom, the city’s brain trust decided to turn our beautiful riverfront into Lake Middletown, an infrastructural project that apparently involved shoveling tons of dirt into the river and hoping something interesting would .come of it. It accomplished nothing, though the river now features a man-made dirt island about the size of a city block.

Efforts to reinvent downtown Middletown always struck me as futile. People didn’t leave because our downtown lacked trendy cultural amenities. The trendy cultural amenities left because there weren’t enough consumers in Middletown to support them, And why weren’t there enough well-paying consumers? Because there weren’t enough jobs to employ those consumers. Downtown Middletown’s struggles were a symptom of everything else happening to Middletown’s people, especially the collapsing importance of Armco Kawasaki Steel.

 

Three Traps: Complacency, Cannibalization, Competency

The Three-Box Solution: A Strategy for Leading Innovation by Vijay Govindarajan is a great book to help leader innovate with simple and proven methods for allocating an organization’s energy, time, and resources across the three boxes:

Box 1: The present—Strengthen the core

Box 2: The past— Let go of the practices that fuel the core business but fail the new one

Box 3: The future—Invent a new business model.

Below is an excerpt on the three behavior traps. How do you manage them to the lead your organization to innovate?

Three TrapsThree Box Solution.jpg

While there were many within IBM who clearly understood the implications of both nonlinear shifts, their insights had difficulty penetrating the entrenched logic of the past. The dominant logic of the past exerts its hold on business cultures and practices in three distinctive but tightly interlocking ways. I think of their dynamic effects as traps that snare the unprepared. All three have common origins in mind-sets that focus excessively on past values, behavior, and beliefs.

The Complacency Trap

Current success conditions a business to suppose that securing the future requires nothing more than repeating what it did to succeed in the past. This is the complacency trap. Complacency shrouds the future in a fog of misplaced confidence, hiding from view a clear understanding of the extent to which the world is changing around you.

IBM’s extraordinary success driving revenues in its Box 1 mainframe business masked difficulties to come. Rather than face up to looming threats to the mainframe business, IBM applied temporary patches. One such patch ‘was to change the revenue model from leasing mainframes to selling them outright. S This produced a pleasing surge in near-term revenues that postponed IBM’s day of reckoning.

The loyalty of successful organizations to the past is often so potent that they become quite ingenious at ignoring the onset of fatigue in the Box 1 business. Instead of building the future day by day, IBM prolonged it’s past with what amounted to an accounting change. The resulting years-long period of bolstered revenues made it easy for the company to think that everything was just fine-four words that fairly summarize complacency.

Another way to understand how IBM fell into the complacency trap is that the company’s continuing Box 1 profitability delayed development of a sense of urgency that might have motivated a more prescient Box 2 judgment: that it was important to invest aggressively in the new enterprise model of client/server computing.

This is the dark side of success. No matter the industry or company, each great innovation spawns a steady accumulation of Box I-based structures, processes, and attitudes of the kind that blinded IBM to its predicament. IBM mainframes were not simply smart machines; they were smart machines that over the years had created at customer work sites whole new layers of enterprise management that had never existed before.

Mainframe computers were island fortresses, secured and operated by a newly empowered IT function and inaccessible, except through IT proxies, to the rest of the enterprise. If a technology can embody a governing philosophy, the mainframe’s philosophy was exactly opposite that of the open, accessible internet that was yet to appear. Even before the internet emerged as a business tool, there were pitched battles within almost every company about making valuable mainframe data accessible to and usable by employees with networked PCs. This increasingly loud demand clashed with the mind-set of IBM’s IT customers, who saw their mission as protecting the security and integrity of corporate data: allowing liberal access would lead to data corruption and to proliferating unreliable versions of the “truth.”

In fact, customers can play an important role in deepening a complacency trap. IBM had collaborated with its customers in creating what became an entrenched system of governance for computerized organizations. That system’s structures and attitudes were a self-reinforcing feedback loop amplified by IBM’s large-enterprise customers.

Ultimately, a more modern version of the mainframe emerged and made peace with the rest of the IT infrastructure. Today’s version powers big data analytics and other applications in many large enterprises. But in the IBM of the 1990s, mainframes cast a long shadow over the emergent model of more open, democratized network computing.

The Cannibalization Trap

The cannibalization trap persuades leaders that new business models based on nonlinear ideas will jeopardize the firm’s present prosperity. So, like antibodies attacking an invading virus, they protect the Box 1 business by resisting ideas that don’t conform to models of the past.

At its heart, the fear of cannibalization reflects a wish to keep the world from changing. It is perhaps easy to understand that wish, but it’s much harder to excuse it. The glib answer to those who suffer from this fear is to remind them that change is inevitable and the world will change either with them or without them. When a business allows worries about cannibalization to interfere with its strategy, it has overinvested in its past and is doomed to undermine its future.

Cannibalization is typically understood-and feared-as a near-term threat. As foresighted as IBM was in developing its personal computer in the early 1980s, forces marshaled within the company to protect the legacy business. Those who feared the PC believed it had the potential to threaten the mainframe computing model, perhaps by feeding the growing appetite to liberate enterprise data or by diverting attention and investment away from the company’s dominant business.

People who fear new technology are usually more right than wrong about its potential to supersede legacy products. The truth is, every Box 1 business has reason to fear, sometimes even hate, whatever shiny new thing is being launched. When Steve Jobs gave a big push to the Macintosh launch toward the end of his first stint at Apple, the group in charge of the incumbent Apple II felt threatened and undercut. It was as if cofounder Jobs had sponsored an insurrection.”

In reality, however, cannibalization should be understood as a long- term benefit. The new Apple Macintosh embodied features that soon enough would make its predecessors obsolete. If Apple hadn’t moved quickly, a competitor-maybe even IBM-would have filled the vacuum. Given its history, IBM’s embrace of microcomputing was unexpected. But it quickly set the standard for PCs and legitimized them as tools for both home and business users. While IBM’s marketing of the PC initially tilted toward home users, the real revenue bonanza came from businesses. Suddenly, at least part of IBM had reason to root for client/ server computing. No matter what anyone in the mainframe business thought about it, the client/server model had the shine of inevitability.

So, while companies must take the fear of cannibalization seriously as a problem to manage, it can’t become a reason not to act with foresight when new nonlinear strategies or business models present an opportunity.

The Competency Trap

The competency trap arises when positive results the current core business encourage the organization to invest mainly in Box 1 competencies and provide little incentive for investing in new and future-oriented competencies. In established companies built around a spectacular success, such as IBM’s industry-defining mainframe computers, it is natural to want to create a workforce whose skills dominantly reflect the legacy success. But a competency trap is a double- edged sword. IBM’s investments in Box 1 competencies helped its mainframe business. But Box 1 logic asks, why invest in skills not vital to the company’s current profitability? That is why Box 2 is necessary.

IBM eventually recognized that the dominant computing model it had exploited to achieve such great success was changing. Yet, despite having made significant investments in a robust R&D function, it was having chronic difficulty incubating new ventures. It struggled to find what IBM insiders called “The Next Big Thing.” The organization appeared to have succumbed to a “four monkeys” value system.

Believing that there were indeed systemic problems, then-CEO Louis Gerstner commissioned an internal inquiry to identify root causes. The inquiry, led by Bruce Harreld, IBM’s head of corporate strategy, confirmed Gerstner’s fears. Looking at a number of recent examples of flawed new-business incubation, Harreld’s team concluded that the company’s dominant Box 1 systems, structures, processes, and culture had:

  • Created a powerful bias for near-term results.
  • Encouraged a focus on existing customers and offerings to the extent that new technologies and nonlinear trends were either underestimated or escaped detection entirely.
  • Burdened new businesses with unreasonably high performance goals-especially damaging to ventures that targeted newer, riskier, but often more promising markets.
  • Motivated an unimaginative approach to market analysis that impaired the company’s ability to understand the sorts of “embryonic markets” most likely to spawn nonlinear Box 3 ideas.
  • Interfered with development of the skills necessary to adaptively transition a new business through its emergent and growth stages until it finally became an established enterprise.
  • Caused assorted failures of execution, many owing to the inflexibility of Box l=driven organizational structures, which leaders of new ventures “were expected to rise above … Voicing concerns over [such challenges], even when they were major barriers to new business initiatives, was seen as a sign of weakness.”

What the report didn’t say is important to note. IBM’s problem was not caused by a lack of research competency. On the contrary, its workforce possessed at least some expertise in a wide array of disciplines and technologies. Among its research projects were some that were quite promising and others that were highly speculative, unproven, and obscure. But for all the reasons listed, even ideas that managed to get traction were being ineptly developed and executed. What IBM needed was a well-designed process for enabling, supporting, and rewarding its maverick monkeys and likewise for managing new ventures onward through their developmental stages.

Such a process typically should incorporate a range of structural, cultural, and leadership remedies. At IBM-first under Gerstner and later Sam Palmisano-these distinctive remedies came together under the emerging business opportunities (EBO) framework, which created new structures, changes to the buttoned-down IBM culture, and more versatile and adaptive leadership behavior.

HBR: Ineffective Sales Leaders Can Cause Lasting Damage

Is your vison or strategy going in the right direction? Are you retaining the right talent? Are you serving your customers? Or managing your sales team badly? Is your culture wrong for your vision and strategy? Below is a blog from the Harvard Business Review by Andris A. Zoltners, Sally E. Lorimer, PK Sinha.

Ineffective Sales Leaders Can Cause Lasting Damage

Success in a sales force requires having strong talent up and down the organization. A weak salesperson will weaken a sales territory, a bad sales manager will damage their team and dampen results in their region, and a poor sales leader will eventually ruin the entire sales force. For even the most seasoned among us, it can be difficult to recognize the signs of a poor sales leader and the possible damage the person can do — especially when they appear to do some good early on.

Consider two examples.

An education technology startup hired a sales leader who came from a large, well-respected firm. He had extensive market knowledge and a stellar track record. Although good at scaling and operating a sales organization, the leader was unable to succeed in a rapidly changing environment that needed experimentation and nimbleness. The mismatch between the startup’s need and the leader’s capabilities set progress back at least a year.

A medical device company hired a vice president of sales with an intimidating management style. He ruled by fear. Achieving goals was everything. He tolerated (and even encouraged) ethically questionable sales practices. Results looked excellent at first, but the sales culture became so unpleasant that good performers began leaving in a trickle, and then in a flood. The average tenure of salespeople dwindled to just seven months. The damage to the company continued for years after the VP was replaced.

The reasons that sales leaders fail fall into four categories:

  • Direction. Poor understanding of the business, leading to errors in vision and strategy
  • Talent. Inability to pick and keep the right people for the team
  • Execution. Poor processes serve customers and manage people badly
  • Culture. Inappropriate values damage the very core of the organization

When such failures are coupled with a leader’s egotism or lack of self-awareness, it’s unlikely that the leader can lean on others to overcome his own deficiencies.

Yet ineffective leaders can do some good in sales organizations. They can bring about needed change quickly. Leaders who lack sensitivity have an easier time eliminating poor performers. Leaders who are intimidating can use their muscle to implement difficult changes that past leaders avoided — for example, an organizational restructure that disrupts an existing power hierarchy.

But unless a poor leader can overcome or compensate for his deficiencies, eventually the bad will overpower any temporary good. A tyrant, for example, may fix some things in the short term but create other problems at the same time. For every gain, there are likely to be multiple missteps with the sales force’s vision, team, execution, and culture. A key and very visible marker of ongoing or impending trouble is when talented people on the leader’s team become frustrated and depart the company.

It can take years to repair the damage done by an ineffective sales leader.

First, it takes time to replace the leader and reconstruct the sales team. When a health care company hired the wrong leader for a sales region, it took more than three years to rebuild the team and recover from the initial error of putting the wrong person in charge.

Second, it takes time to reverse the questionable decisions that ineffective sales leaders make, especially decisions that affect sales force structure or compensation. Weak leaders at a technology company made a decision to restructure the sales organization using a model from their own past that did not match the current situation. Again, it took more than three years to undo the damage.

Third, it takes time to rebuild the culture a poor leader creates. Poor leadership at a medical device company had allowed an unhealthy “victim” culture to pervade the sales force. Salespeople had no confidence in their leaders, and managers were willing to accept salespeople’s constant excuses for poor performance.

Bringing about change required replacing the company’s president, followed by more than two years of sustained focus on transforming the sales force using the following process:

  1. Create a fresh vision, reflecting a culture in which salespeople trusted their leaders and in which all salespeople were held accountable for results.
  2. Communicate the vision using every opportunity, including sales meetings, videoconferences, and the company’s intranet.
  3. Rebuild the team starting with a new vice president of sales who had integrity and judgment, and was willing to replace anyone on the sales team who could not adapt to the new culture.
  4. Realign sales support systems and rewards by overhauling the systems for recognizing and rewarding performance and creating accountability.

These four steps are a good starting point for any company seeking to recover from poor sales leadership.

Bad sales leaders can sometimes bring about change in a broken environment and make temporary gains. But they will wreck a sales force unless they are replaced quickly.

HBR: Treat Employees Like Business Owners

Are you teaching your employees what it means to run a lumberyard? And are your employees committed to reducing your cost of goods sold (COGS). Below is a blog from the Harvard Business Review by John Case.

Treat Employees Like Business Owners

Employee loyalty and engagement are hot topics, and for good reason. Companies want to attract and retain talented people who really dig into their work. But most employers ignore two of the most powerful tools for making that happen.

Tool #1 is enabling employees to build real ownership in the business.

Of course, many public corporations offer stock-purchase plans or the like as part of their retirement benefit. And everyone knows about the options collected by a select few in Silicon Valley and other tech centers. But meaningful ownership — sizable grants of stock to rank-and-file employees year after year, to help them acquire a significant stake in the company — is all too rare.

It doesn’t have to be. Many large corporations manage to find big bundles of shares (and huge amounts of cash) for executive compensation, even though there’s little relationship between senior-management pay and financial results. A portion of those assets can be redirected to regular stock grants for employees. And companies — except for the very smallest — can implement an employee stock ownership plan (ESOP), often funded through borrowing. So long as it’s sufficiently generous, either approach gives employees the kind of stake that makes them feel like true owners.

Just look at the supermarket industry to see such ownership in action. H-E-B, the big Texas-based chain, recently announced that it would give up to 15% of company shares over time to 55,000 of its employees, distributed according to a formula based on salary and seniority. That’s a chunk of stock estimated at more than $1 billion. Publix, a large chain headquartered in Florida, is majority owned by its employees and regularly makes the annual “best companies to work for” lists. And there’s WinCo, a grocery retailer based in Boise, Idaho, with 14,000 employees and 86 stores spread across eight western states. Every WinCo employee is an owner. Cathy Burch, who has worked there for 20-some years as an hourly employee, now has close to $1 million in her retirement account.

You don’t think that kind of generosity builds commitment and passion? “We work our tails off,” an employee with 28 years at WinCo told Forbes. “We’re more of a team than just working for a typical company. There’s a carrot out there you’re working for, for the rest of your life.”

Tool #2 goes by different names: open-book management, economic transparency, ownership culture. Whatever you call it, it means encouraging employees to think and act like businesspeople rather than like hired hands.

If you work for a conventional organization, your job is to show up at the appointed time and perform certain tasks. At open-book companies, it’s part of everyone’s job to contribute to the success of the business. Managers help employees understand, track, and forecast key numbers. They welcome ideas for improvement. They reinforce the ownership mindset by sharing profit increases with everyone, usually through bonuses funded by the increase itself. Many of these businesses also have a stock plan in place.

The approach is easiest to understand in a small company. The Paris Creperie, a Boston-area restaurant that’s about the size of a McDonald’s outlet, recently adopted open-book management. Creperie employees learned the basics of the restaurant business, including determinants of profit such as cost of goods sold (COGS). Then, last summer, they launched an initiative to reduce COGS, cutting food waste, reconfiguring some dishes, and coming up with ways to operate more efficiently. COGS dropped from roughly 30% of revenue to 26.5% over a four-week period, and continued to hold in the mid-20s. Operating profit rose by more than 10 percentage points in just four months and has stayed in the 18% to 20% range, compared with a restaurant-industry average of less than 4%.

This year, employees there are on track to get bonuses averaging $6,000. “Any other restaurant, I would just be scraping by,” shift supervisor Amanda Norton told the Boston Globe. “Seeing those bonuses really helps me breathe easier, knowing that it’s not the end of the world when I have to pay bills.”

You can imagine what all this does for employee loyalty and commitment. “Actually,” says Harvard Business School professor Leonard A. Schlesinger, “when employees know more about the business and have an economic stake in the outcome, there’s a high probability that turnover rates would go down exponentially.”

These tools also address two fundamental challenges of today’s free-enterprise system. An ownership nest egg helps mitigate inequality by putting more money in the hands of rank-and-file employees. And open-book management teaches people the basics of business, so they can thrive when they have to change jobs, as most inevitably will in our fast-changing economy. “People are learning what it means to run a business,” says Joe Grafton, a consultant who works with the Creperie. “That’s something they can take with them as they move forward with their careers.”

Both measures give people a stake in the system and the wherewithal to live a more secure life. A company that puts these tools to work helps its community while helping itself.