I admit – I do enjoy reading (or skimming) management books. In my career, a few have been very helpful. Many are useful, helping to re-invigorate and focus as attention and time can be diverted by the mundane tasks of day to day operations. I also enjoy the new ideas, and new takes on the challenges of running a business. What intrigues me on a personal level is the seeming divergence of opinion on how a new leader should start a new job: move fast, or take time and move more judiciously? Are these distinct? How does the new leader know how to proceed? The run-up to President Obama taking office, from the day of his election until now is the most current example of moving fast. He entered office with a myriad of problems, the most pressing, of course, being an economy that was a mess. When George Bush entered office in January, 2001, there was no such sense of urgency. Bush also entered office without the clear support of the “owners” – the general public. In that situation, his better approach was to move more slowly. That was, of course, until the attacks on September 11. Bush then moved quickly, initiating a number of actions, from the creation of the Department of Homeland Security, the so-called “Patriot Act”, and the invasions of Afghanistan and Iraq. With this sense of urgency, he had the political capital and support to move quickly and implement his ideas and plans. When President Clinton took office in 1992, one of the first high profile moves was to develop a comprehensive, large scale restructuring of the health care industry. The move failed. I wonder whether a big reason for the failure was that there was not broad agreement that there was a sense of urgency to act. Come 2009, however, there is a sense of some urgency, AND the issue has been percolating for some time as individual states, led by Massachusetts, have been taking action. We are likely to see healthcare taken up in the next two years, as it is viewed as a critical issue, and that the cost of insurance and services is seen as an economic issue as well. If you are new in a leadership position, I would ask your superiors directly: what are the key issues, and what is the sense of urgency? It takes time to learn a new job – I have long contended that it takes at least six, full months. An insider can move faster than someone from the outside, only because they will have more of an intuitive understanding of the organization, the people, and the issues. On the other hand, an outsider is not tied to the past, and has more freedom to move in new ways. As a newcomer, they can move quickly on strategic issues. Operational issues may take longer to plan and execute changes, as such changes are more disruptive. Taking a bit more time also allows the new leader to gain credibility with the staff to drive cooperation – and assistance – in creating and implementing new processes and procedures. A new leader may feel compelled to act quickly to demonstrate to their superiors that they can be effective in the new position. Coming in, ask probing questions to assess what the expectations are. Moving on, meet frequently, sharing what you’re learning and seeing, and discussing your plans as they evolve. The new leader may have to probe to get at the real expectations. Much as President Obama has helped to define the priorities, the new leader has the opportunity, through these discussions, to set the priorities in conjunction with the people who they are responsible to. There is no one rule on how to fast to proceed when taking a leadership position. Speed depends upon the perceived urgency, and by asking questions – lots of questions – the new leader can proceed in the best interests of the organization, and of themselves.
My uncle was a psychiatrist and professor, and would comment that a good sign of a person’s mental health is their ability to cope with stress and duress, such as setbacks, a layoff and so on. These days, an awful lot of people are struggling to keep their mental health on an even keel.
There’s a lot to worry about these days. Even for those where business is good, there is the nagging worry – how long will this last? How do we keep cash coming in to support our business and employees? Will we have to let people go? I worked in one situation where I would wake up in the middle of the night, running the cash flow in my head (in wasn’t good).
Every so often, I shake myself and resolve – again – to get out and meet with at least one person a week. Even in my days of having a “W-2 job”, I tried to have lunch at least one day a week with someone outside of my company. It worked pretty well as a means of expanding my contacts, developing relationships and friendships, and having an outlet to share the stresses – and joys – of work.
One of my favorite quotes comes from Andre Meyer, the financier and one time head of the fabled Lazard Frere investment bank (one that is profitable and still stands independent). His comment to his daughter: “Business – real business – isn’t about money. It’s about people. You have to know and understand people”.
It can sound New Age-y, but there is truth to the advice that our physical and mental health makes us better people and better business people. It’s not a matter of building a huge number of contacts (LIONS, in Linked In terms), but, rather, building a network of friends and business friends – the people who you can trust, who can keep confidences and be forthcoming in advice as needed. Under pressure, it’s easy to tend towards being “down”, and to withdraw and work longer hours. We used to call it “burned out”, which is really being depressed. Getting out helps us see that we are not alone, that many, many people are struggling and trying to keep their business going in very tough times. We work much better – and are more successful – when we are mentally “up” in conducting our business.
Once I post this to my blog, I’m making plans for my first meet next week.
Several well known companies, including GE and Microsoft were started in recessions. FORTUNE magazine was started in the midst of the Great Depression. Starting a business at any time entails risk, and it may be harder now than at other times. You may also find that your competitors have pulled back under their shell, or that they are for sale.
If you’ve been the victim of a layoff, you situation is different. On the one hand, you have to keep “looking for work” in order to continue to get unemployment. Still, you can work on developing a business. Put together a solid business plan – do your homework, test out your ideas with trusted colleagues and advisors.
So, look at the New Year as one of opportunity. This year, resolve to:
Keep moving forward
Get out and make new contacts, friends and acquaintances
There are three ways to build a business - build, borrow or buy:
Build: develop new business
Borrow: temporary arrangements, including joint ventures and subcontracting
Buy: buy an existing business and merge
Building and buying takes more internal resources, particularly cash to invest in assets and developing products and services. In the midst of the current recession – one that may be a real doozy – conserving scarce resources becomes the priority. To grow your business then, the best strategy is to borrow.
The Borrow Strategy brings together two organizations whose skill set, contacts and services complement one another. There may be overlap, but that can also be OK. For example, I have a good friend who consults in marketing. I do some marketing consulting, and his experience, skills and interests are more in the branding, medical devices and technology oriented companies. We don’t belong to the same business organizations and go to different meetings. But we can bring the other to a meeting, saving the other the cost of membership and only spending the meeting cost. We can also seek out different clients, and subcontract to the other for the respective expertise we may not have or would rather not do.
The Borrow Strategy can be for any number of things. It can be to share marketing efforts – each keeps an eye out for the other, making introductions and referrals as appropriate. Some may share production, or warehousing of a product that both may sell. Or, they may, as my friend and I do, seek out bigger and more complex projects and bring in the other party to both sell and execute a project.
“When you ain’t got the money, you’ve got to think”. So said Samuel Johnson three hundred years ago – it’s still one of my favorite quotes. So think.
Many times, good leadership is in the small things. There are two recent examples that set a positive tone in difficult times.
The first comes from Dr. Harris Pastides, who were installed a president of the University of South Carolina. Passing on the expected black tie dinner and usual pageantry, Pastides held an open “Pastides Palooza”, with local bands and…..pizza. Total cost – around $13,000. The South Carolina government is whacking at an already minimalist budget (don’t believe Gov. Sanford’s running around proclaiming fiscal responsibility) so there was some grumbling – students activity fees are frozen and Pastides will have to implement more budget cuts shortly. But for a new university president, a community party was a much more symbolic and important act, and enabled many students to see and greet the new president.
The second was from Dr. Ray Greenberg, President of the Medical University of South Carolina. The budget cuts in state funding will impact only some areas of the university, which includes several schools (medicine, nursing, pharmacy, public health, etc) as well as a hospital. The cuts amount to almost $17 million, or 17.7% of the total state support (most of the revenue is generated through clinical care and research grants). Healthcare organizations are people intensive, so cuts had to be made. The biggest impact were in targeted areas and provided for four days furloughs. President Greenberg will voluntarily take eight days of leave, and some 300 high paid staff are also taking voluntary cuts. Yes, he can absorb the income loss more so than most people effected – but he is doing it, and he will be working anyway. (As a practical matter, university presidents work seven days a week).
In both of these examples, I see people who are taking real steps to carry forward in very difficult and emotional times. Installing a new university president is traditionally a big deal, a time for the academic robes to come out, fellow presidents to be welcomed and big donors to be courted. Pastides took a low cost affair and opened it up to more people, particularly students. On a day that should have been a time for him to celebrate his own achievement, he took a humbler, low key route. Greenberg and MUSC are taking steps to spread the pain – furloughs are spread out over several months that will start after the holiday. He, and the leadership, are taking voluntary pay cuts. Most importantly, they are trying to follow up with attempts to help employees through – steps that are outside their specific responsibility.
Both Pastides and Greenberg set a tone and example in their actions, and in both situations, these actions were highly visible. The image created is real, and while they will not make everyone happy, they will soften the blow and make their point real.
When I teach business classes, one of my favorite discussion sessions looks at whether the personal characteristics of the person make a difference when choosing a CEO. I use the example of Avon when they appointed Andrea Jung as CEO, the first woman to hold that position. The question I pose is this: was it important for Avon to appoint a woman as CEO? Were there personal characteristics about Jung that made her particularly appealing?
I argue that “yes, it does”. In the case of Avon, this is a company that sells to women. Yes, they have had a line for men (I don’t know if that’s still the case), but their customers are women. More importantly for Avon, their sales force of 5 million worldwide are women (with some exceptions).
I argue that Jung was appointed for several reasons, including (1) she’s a woman, (2) she has a strong track record of accomplishment in growing a business (at Avon and Neiman-Marcus)
I would argue that “who” is important in top positions. As Avon CEO, Jung “is” the company. Blessed with beauty and style as well as brains (Princeton – get this – English Lit major) she made herself a visible presence in the company. The race among three women to be named CEO of Avon in 1999 was a lead business story in and of itself, which helped put Jung in the public eye. For the sales force, she also represents a woman of achievement, as many of the sales forces have goals of financial success from selling Avon products. While she comes from educated parents and had the advantage of growing up in an upper middle class community and graduating from Princeton, her first job was a management trainee at Bloomingdales. Today, she was recently named to the board of Apple, partially reflecting her success in doubling Avon’s sales as well as being a woman.
The Economist ran a story this week about Barack Obama. Part of the appeal and their reasoning to support him was put this way:
Most of the hoopla about him has been about what he is, rather than what he would do. His identity is not as irrelevant as it sounds. Merely by becoming president, he would dispel many of the myths built up about America: it would be far harder for the spreaders of hate in the Islamic world to denounce the Great Satan if it were led by a black man whose middle name is Hussein; and far harder for autocrats around the world to claim that American democracy is a sham. America’s allies would rally to him: the global electoral college on our website shows a landslide in his favour. At home he would salve, if not close, the ugly racial wound left by America’s history and lessen the tendency of American blacks to blame all their problems on racism.
The point here is not that the “who” makes Obama the better candidate for president. The point is that the “who” is part of what makes him a viable candidate, and is a legitimate consideration in making a choice. For too long, the “who” was an excuse to exclude, to focus only on white, Christian males. Diversity is not about numbers. What diversity is about is understanding and reflecting the interesting and ever changing mix of race, ethnicity and culture that make up the customers we serve or could be serving. The people we want with us in our companies bring this with them in terms of not only the characteristics that they were born with, but how these characteristics are reflected in the kind of people they are, their judgment, outlook and experience.
Fortune magazine began publishing during the Great Depression. The Empire State Building, Chrysler Building and Rockefeller Center in New York City were built during the same time. Microsoft had a major growth spurt in the downturn of the 1990s.
Yes, things are tough out there. We are clearly in a recession, and you have to act to save your business. The challenge, however, is to balance spending control with the strategic need to invest, innovate and grow your business. Drop the credit crunch on top of this and management loses a lot of sleep.
To paraphrase Samuel Johnson, “when you ain’t got the money, you got to think”. While time is money, it is only meaningful if the time is spent earning revenue or cutting expenses. Do both, but focus on earning revenue – hampering the ability of your people to work is stupid, and it annoys them.
So, despite the tough times, and the need to cut spending, now is the time to re-double efforts to produce revenue, now and for the long term. Ad rates have dropped, and business service companies are more likely to be open to some price negotiation, particularly if you will bring work in consistently. Now is the time to get out and in front of people, turning up new business and laying the groundwork for when the economy picks up - which it will.
What now? Go through your marketing message and materials and start dialing/emailing. Join an association, go to meetings and events – be seen as out and about the business community. Write a letter to the editor, and share it with your contact list. To quote the late Andre Meyers of Lazard Freres: “Business, real business, isn’t about money. It’s about people. You have to know and like people.”
Well, it’s no secret that the economic falloff is bad – real bad. The challenge for management is to keep the company focused and moving forward. You have to be of two minds – watch the pennies at home, and spend the dollars to continue to build your business.
Sequoia Capital reportedly (see Gigaom, among others) called together their funded startups for what has been referred to as a “Holy Sh**t!” meetings – or, what in the South would be politely referred to as a “Come to Jesus” meeting. Om Malik of Gigaom wrote:
The message delivered to those in attendance was that things could get a lot worse than people think, and it will be a more protracted downturn. To give a historical perspective, Sequoia had a similar meeting back before the last bubbleburst. We know how that turned out.They want the companies to cut costs, to figure out way to survive and emerge at the other end of this downturn, which could last years. The speakers went through each functional area of the business and told the companies how to cut costs. By holding this special meeting, Sequoia is telling its companies to put survival strategies in place and figure out ways to outlast the broader market troubles. One piece of advice is certainly interesting: zero-based budgeting, or “ZBB”. ZBB was popular in government agencies in the 1960s and 1970s – I actually studied this back in college. ZBB is a pretty simple concept – start your budget process at zero, and build a budget from scratch each year. Most budgeting processes start with the current spending and staffing, and adjust from there. ZBB starts from zero, and is supposed to build up to the spending and staffing that the organization needs for the scope of operations planned for the coming year. It is time consuming, and not at all easy to implement, and fell into disfavor.
If your company is on the small side, try working up a staffing model with a blank slate – stick to tasks rather than people. If you need to let people go, do it sooner rather than later. You can decide whether to ask people to continue working until either a final date, or until they get a new job – either way, I’d try to give them something to soften the blow. Watch the pennies – cut back on the variety of free food and drink, a filtered water fountain may be more cost-effective than bottled water, reduce the inventory level of office supplies, review cell phone plans and phones out there, use freelancers as opposed to new staff – there are many seemingly small items that can quickly add up to significant dollars.
The recession is likely to last a while – it could be 9-12 months, it could be longer. The heart of the problem is in the credit markets – everything else springs from there. The chain of responsibility is complex, and is not your focus here. Your focus is to keep moving forward, watching, evaluating, and adapting as events unfold – watch, listen and act.
In the midst of the stock market cliff jump, one commentator pondered whether the top management of the financial firms really understood the “products” that they were selling and were the source of so much of their wealth. The question was an interesting one from an intellectual perspective (and a sickening one from a real life perspective).
Interesting – and an excellent question. Do you really understand and have a command of your business? Do you understand the products and services your company provides, who your customers are, and the people who work with you? As a company grows, it becomes harder to maintain the level of involvement and understanding of the day to day details of the organization.
Understanding a company and its business has to be from bottom to top and top to bottom. I’m a proponent of ongoing training of all employees so that they have at least a basic command of what the company does. Top management is not able to effectively make strategic decisions on products if it isn’t able to evaluate the opportunities and risks involved. Relying on a subordinate puts the company at risk for a rogue employee – or employees – to do serious damage to the company. It reminds me of the $7 billion trading loss at Societe General this past January. The bank claims that a rogue trader hid his activity, and trader claims the bank knew and was happy with his multi-billion euro profit in 2007. Either way, it was bad for management.
The larger your organization, the more that you have to rely on others. This, alone, is why the selection of key staff is such a critical task for top management, surpassing just about any other task. But being visible – by physically walking over to someone’s office rather than calling them in, going over to thank someone personally for something well done (a difficult sale), and personally running key employee meetings and events – will do more do engender loyalty in the company, confidence in the leadership, and for people to open up and be more open about what they do and the challenges they deal with in their jobs.
Time to take stock. We are likely to be in difficult times for awhile – could be months, could be years in some industries. You need to have a good command of your company in order to create your plan, keep employees committed and confident, and to work through whatever the world throws out you.
