Tag Archives: management

communicating modes

communication mdoesA friend of mine has a beautiful house outside of Geelong. It sits on an acre, has an orchard and chooks in the backyard and started off life as a church. And it was while looking over this view and drinking wine on a hot day recently, that I had a major insight into management issues.

My friend, a lawyer that specialises in Corporate Governance, was talking about the different modes that a board can communicate to management in. Paraphrasing, they were:

Encouraging – Letting staff know you think they are doing a great job, or trying to motivate them.

Suggesting – Letting staff know of some options that they may want to look into.

Coordinating – Helping staff act in the way that you want them to act.

Controlling – Making sure staff do exactly what you want.

This framework also works for senior management speaking to junior management, or junior management speaking to staff. Its not just a board level issue, its an issue throughout business and in fact anywhere there is a hierarchy, including inside families.

The number one problem he asserted was not so much, poor quality communication, but a misunderstanding of the mode of communication.

All too often you see staff members getting pissed off as they believe they are being ridden and have no flexibility, when in relaity they are just getting suggestions. Alternatively I see managers getting stressed about staff not taking direction.

A friend of mine has recently taken over a business unit of a large corporate, and in the absence of a clear, public instruction from above about the new arrangements, is now finding life difficult as his new staff members don’t actually see him as the boss. He’s just someone from head offices who is loaned in a couple of hours a week to help them improve themselves.  Both he and his staff need to have clarity about exactly what mode he is communicating in.

What made this discussion on communication modes fascinating, was that the conversation occurred whilst we watched the chooks quickly sort out who was boss and the “pecking order”. Non nonsense, quickly done, everybody happy.

 

natural ceilings

Lt ColonelAn odd thing I noticed a long time ago when I was I in the Army was that most of the Lieutenant Colonels I met used to give me a really bad time, and were unpleasant to work with. I accepted this as I assumed that as a young Lieutenant, I was forever mucking things up and the only way I was going to become good at my job, is to have my errors both professional and personal, repeatedly and forcefully pointed out to me.

The odd thing though was that whenever I met a General, they seemed to be genuinely nice people. Sometimes a bit grandfatherly, sometimes a bit scary – but always calm people who made you feel good about yourself and made you feel you could achieve more and were going onto great things. They were also always capable of explaining the “why” of any situation using words or reference points I could understand.

I pondered this on and off for a couple of years, wondering if there was some special course that General’s did that turned them into nice people.

Eventually at a Dining In Night, I plucked up the courage to voice my observation and ask the old general I was sitting next to whether there was a special course they went on. He responded, somewhat drolly, “no son, its just that Lieutenant Colonel is the natural ceiling for the arsehole”.

I’ve taken it with me all my life and it tends to pop into my head unbidden, whenever I am treated badly by someone who perceives themselves as very senior.

The 10 Principles of War

On war ClausewitzAround the start of my career in the late 80’s, Eastern thought was very big in the workplace. There was a growing awareness of Japanese solutions such as Kanban and Keiretsu. Management books such as Miyamoto Musashi’s – The Book of 5 Rings and Sun Tzu’s The Art of War were massively popular as books on strategy. What I found strange though was that these two books were very old. The Book of 5 Rings was written in 1645 and the Art of War in around 500BCE! What was going through my head at the time was, “If I am going to apply military strategy to business, surely there must be something a little more up to date!”. I was certain that we must have learnt something over the last couple of hundred if not thousands of years.

Of course, the answer was staring me in the face. In the Army I had learnt about the 10 Principles of War. These were the ideas first acted upon by French General & Emperor Napolean Bonaparte, then codified by the Prussian Officer Carl von Clausewitz in his essay “The Principles of War” in 1812. Since then these Principles of War have been further tweaked and are now taught in every Military Officer school on the plant.

Each of them are quite simple and in every case can be applied to commercial operations to improve the chances of their success. So what are they?

  1. Selection and Maintenance of the Aim
    A single, unambiguous aim is the keystone of successful military operations. Selection and maintenance of the aim is regarded as the master principle of war.
  2. Maintenance of Morale
    Morale is a positive state of mind derived from inspired political and military leadership, a shared sense of purpose and values, well-being, perceptions of worth and group cohesion.
  3. Offensive Action
    Offensive action is the practical way in which a commander seeks to gain advantage, sustain momentum and seize the initiative.
  4. Security
    Security is the provision and maintenance of an operating environment that affords the necessary freedom of action, when and where required, to achieve objectives.
  5. Surprise
    Surprise is the consequence of shock and confusion induced by the deliberate or incidental introduction of the unexpected.
  6. Concentration of Force
    Concentration of force involves the decisive, synchronized application of superior fighting power (conceptual, physical, and moral) to realize intended effects, when and where required.
  7. Economy of Effort
    Economy of effort is the judicious exploitation of manpower, materiel and time in relation to the achievement of objectives.
  8. Flexibility
    Flexibility – the ability to change readily to meet new circumstances – comprises agility, responsiveness, resilience, acuity and adaptability.
  9. Cooperation
    Cooperation entails the incorporation of teamwork and a sharing of dangers, burdens, risks and opportunities in every aspect of warfare.
  10. Sustainability
    To sustain a force is to generate the means by which its fighting power and freedom of action are maintained.

I tend to think that this is a great framework for both building a plan within, as well as analysing the plans of others. Just replace the word military with commercial and it all tends to make sense. But the big one for me is the first, and master principle – Selection and Maintenance of the Aim. Get this right and everything else starts falling into place.

the money plan

I had breakfast the other morning with Scott Kilmartin of Haul. I like talking to Scott about the retail market because he has both heaps of experience, and quality insight. Scott felt that the small independent retailer was absolutely on the wane at the moment and on June 30th a lot of accountants would be advising their clients to shut up shop. This isn’t because unique offerings aren’t palatable to a jaded market place, its because most small independent retailers haven’t moved with the times and willingly embraced social, technological and commercial landscape changes. For instance, any shop that thinks that just having a Facebook page is a social media strategy is almost certain to die.

Anyway this got us sidetracked onto accounts, finance meetings and what Accountants were useful for.   Scott, as the proprietor of a retail business, is fairly typical in what he does. He doesn’t look at his accounts that often if he has money in the bank, he meets his Accountant once a year to discuss tax returns and the idea of having a finance meeting by himself just seems a bit silly.

So I tried to give Scott some practical advice.

  1. If your accounts aren’t useful for decision making, change them so they are. The list of accounts on your Balance Sheet and Profit & Loss is called the “Chart of Accounts” and you can change them to whatever you want for your own reports. Eg I like to split out landline , mobile and internet phone calls, rather than have and expense called telephone.
  2. Try meeting with your Accountant 4 times a year and ask him to offer proactive advice, not just reactive advice on your tax. You may be surprised what he come up with, and if he comes up with nothing, fire him and get a new one.
  3. Have regular finance meetings. If you have staff, get a senior staff member at the table. You may also like to have an advisor, bookkeeper or your accountant there.

I like finance meetings in small businesses, they really highlight what’s going on in the business and the places you need to focus to become more profitable. Some of the topics you can cover are:

  • Building a budget – so you don’t end up spending more money than you earn. Especially tricky are the costs that only crystallise once or twice year, but are being generated silently all the time, such as leave loadings or car servicing. Depreciation is a good example of this.
  • Comparison your actuals to your budget and determine an action plan to address the variances.
  • Build some simple financial policies such as “what should your working capital be?” My position is that for most small businesses – 3 months expenses is a nice starting point for discussions. Another policy could be “how much profit should you distribute and how much should you reinvest?” of “If you have excess cash at bank, how should you invest it?”.
  • And finally, a personal favourite, work through a couple of expense line items each meeting, to determine whether they are still valid. You would be surprised how often expenses either get reduced or vanish when you put them under the microscope.

So if you don’t intend to put some finance meeting in the diary for this financial year, I reckon it may be worthwhile asking yourself “do I intend to be around next financial year”.

managing money

managing successful employees

At the of the day I lay my head down on the pillow and asked my wife “So how’d it go?”. “Great” she said. She’d been having problems with a senior employee who had started refusing to undertake activities he had been doing for the last 9 months, because they weren’t specifically in his “task list”. Unfortunately, he refused to communicate directly on the issue and wouldn’t even meet her eyes in team meetings so she didn’t know what had changed. Being quite stressed about it, she arranged that morning to have a separate meeting with him just to discuss the issue.

But, she had apparently resolved the issue with a simple question. She said “So I asked him ‘What do you need for me to do for you, for you to be successful?’ He almost cried and all the pressures and worries he had at work just came tumbling out. We then put in place a plan to fix his issues.”

My experience with the workplace over the last 25 years is that good can almost always come from bad. Customers hating your service, leads to to changes in your service. Good staff quitting leads to better employment arrangements etc. For my wife she has suffered under many terrible bosses that were generally either misogynistic or constantly trying to prove their superiority, or both. Her work history has include some spectacular quotes from bosses such as:

  • “One week a month its waste of time you coming to meetings”.
  • “Its a team golf day, blokes only though”.
  • “Don’t ever tell anything to HR, it will always get back to me immediately”.
  • “You role as a worker, is to do what ever I tell you and make sure I look good”.

From these types of experiences (and many others!)  she has evolved an approach where she sees her work as a manager, as a series of tasks she needs to accomplish, but people as the only tools she has.  Keeping her people focussed, effective and motivated is one of the keys of success as she has never been “over-resourced” with people that are “over-qualified” for the job.

So after all her bad experiences with managers, what a great manager she has become because of it! Her approach was “I just explained to him that I couldn’t afford for him to fail, so what did he need from me to ensure he was successful?” Win / Win.

I am very proud.

Tall & Stupid – Meet the CEO

Robert WadlowThe average height of an Australian Male in 1995 was measured at
174.8cm (~ 5ft 9in) by the ABS. I am 174cm (5ft 8in & ½) tall. So imagine my irritation when I met with the CEO of a major (AUD$1B in revenue) Australian organisation who was around 188cm (6ft 2”). He followed me around the board room as we chatted and not only stood to close to me, but was even leaning over a bit.

I realised afterwards that he was used to using his height to his advantage, which I thought was a bit stupid, so I decided to do a bit of research to make myself feel better. And voila.

Tall people are Authority figures
Pretty much everyone realises that size and status are related, its kind of hard wired from children looking up to adults There has been numerous studies around the phenomena and all its variations. Interestingly, the reverse is also true, we perceive that the more authority a person has, the taller he is. Con men know that titles, height, clothes & trapping convince you that they are authorities as they take your money. Robert B. Cialdini, PH.D. The American Psychologist laid this out plainly in his seminal work from 1984 : Influence – The Psychology of Persuasion.

Authority Figures get Promoted
Professor Tim Judge of the University of Florida discovered in 1993 what had been suspected for a long time. Being tall prompts employers and customers to ascribe more status and authority to a tall person. It also boosts self-confidence, actually making them more successful. When it comes to review time the subjective and objective results of their performance gets them the promotion.

Malcolm Gladwell is his book Outliers discovered that men over 6ft made up only 14.5% of the US population, but the made up 58% of Fortune 500 CEOs. This trend isn’t just overseas either, Andrew Leigh of Australian National University found that in Australia, taller people get paid more!

Stupid People are Overconfident
Its called the Dunning-Kruger Effect named for Justin Kruger and David Dunning of Cornell University who published their study of the cognitive bias in a 1999 scientific paper. According to the scientists, “Overestimation occurs, in part, because people who are unskilled in these domains suffer a dual burden: Not only do these people reach erroneous conclusions and make unfortunate choices, but their incompetence robs them of the metacognitive ability to realize it.”

Overconfident People get over Promoted
Overconfidence is an interesting trait – there are many papers on the strategic and mathematical value of overconfidence in negotiations and approaches to problems as well as its role in the downfall of individuals and organisations. Cameron Anderson and Sebastien Brion at the University of California Berkeley had a look at this and concluded that “overconfident individuals will be perceived as more competent by others, and should attain higher levels of status, compared to individuals with more accurate self-perceptions of competence”. That’s because overconfident people send out more “competence cues”. For example they talk louder, have more confidence in their opinions and use more emphatic gestures. This is all wrongly interpreted as signs of actual ability.

The Conclusion
So now I have a new hypothesis which I am testing regularly. If I meet a CEO and he’s tall and overconfident, chances are he’s completely stupid.

The Language of Business

I was in the Army when I first heard the expression “The best way of learning something is to teach it”. Another expression I like is that “you don’t truly understand something until you have to explain it”. This is especially true when you have to explain it to a child.  So last week I had this conversation:

Me “Hi Honey”
Nine year old Daughter “Dad, you know when you go to work”
Me “Yeah”
Daughter “What language do you speak?”
Me “Ummmm, What do you mean?”
Daughter “Well I heard on the TV someone saying ‘the language of business’ and I was wondering whether it was French or something because we do that at school?”
Me “Ummmm”.

I decided to think about this before I came up with an answer. Drawing on my experience in Finance, Technology, Marketing and Entrepreneurship – I decided that business consists of two languages. Emotion & Mathematics

Firstly Emotion.
Emotion drives every transaction. I have a tall Canadian friend who says it always come downs to fear, greed, sex or real estate. But basically nothing happens unless you want it to happen due to aspirations or wants. Consider your last car, the model, style and configuration – its what it says about you. Consider government policies such as the BER, its about calming fears about the GFC. Consider the sandwich you bought at lunch time, its about making you feel better. Even when we think we are using our intelligence, I would assert its only ever to rationalise an emotional decision we have already made – Consider almost every new job hire ever made.

And then Mathematics
Mathematics is used for measuring every transaction or proposed transaction. It doesn’t matter whether its break even point, profit, demand elasticity , net present value, the budget or economic reorder points. Underlying every transaction is mathematics to propose what can be done or record what has been done.

I explained this to my daughter, then went through an example talking about selling lollies at school. She got the fact that people love them more than wholemeal salad sandwiches so we would sell more, and she got the mini profit and loss statement too. She didn’t get the mini balance sheet though, but perhaps that’s no surprise on her first go at age 9.

I discovered I really enjoyed working through the selling lollies exercise too and in fact the whole process gave me insight as I had to distil the essence of business for her.   So much so I think I might start a small business with the kids next year as training for them, and for me too :)

How to get help

The other week I had coffee with Chris Stewart who is a Melbourne based entrepreneur and strategic foresight consultant. Both Chris and I have lots of different skill sets and we both enjoy starting new ventures. We tend to catch up around once or twice a year and discuss what “wisdom” we have gained since the last coffee.

Last week we decided that three questions were critical for the multi skilled or generalist entrepreneur to answer. They were:

  1. What can you do?
  2. What will you do? and finally
  3. What should you do?

We felt these questions were wise because its all to easy getting caught up doing tasks that aren’t the best use of your time, or taking on a task that you never get around to.>

This line of thinking got me pondering over getting assistance, and what form it should take. I decided it might be worthwhile identifying and describing the different roles that “helpers” may take. Mostly because all to often I hear the phrase -”I need a mentor”, when in my opinion in may be the last thing you need. Now some people may argue over the definitions each type of “helper” I have given below because nothing is fixed, but I think its worthwhile focussing on the definitions, not the label.

So here’s a bunch of people that offer you help, with my definitions.

Type of Help Strategic Tactical
Gives Understanding Advisor

Helps you understand your
options.

Gives Direction Consultant

Tells you what they think
you should do.

Manager

Tells you what to do.

Gives Solutions Mentor

Shows you how it can be done.

Coach/Trainer

Teaches you how to do it.

Gets it Done Contractor/Employee

Does it for you.


So at a Strategic level you have three options

Advisor –Helps you understand your options.
Great Advisors give you a framework for decision making and lets you understand your options. They understand that the decision is yours, as are the risks and the rewards. Some Academics can make great advisors and so do people from outside of your field who have no “buy in” to any particular option. Outsiders tend to have great clarity of thought. I would recommend having an advisor to almost everyone as despite how wise you are, the hardest person to give advice to is yourself. Sometimes an advisor can just be a mate you catchup with and use as a sounding board.

Consultant – Tells you what they think you should do
Great consultants have professionalism, experience, expertise in their field and are aligned with your goals. With consultants you tend to get what you pay for so great consultants cost a lot. Understand exactly what the outcomes you want from them look like as the clearer your brief, the more efficient and effective response you will get.

Mentor – Shows you how it can be done
A great Mentor is someone who has been successful in the same field or area as you and is prepared to help you. Their own experiences offer a set of winning solutions for dealing with uncertainty or options. Great mentors are either incredibly busy because they are at the top of their field (don’t be scared of asking these people) or are recently retired and want to give something back.

At a tactical level, you have three other options.

Manager – Tells you what to do
Management is a different skill set from entrepreneurship. Most Entrepreneurs will at some stage in the life cycle of their business choose to bring in professional management. The high energy, high risk, shotgun approach of the entrepreneur doesn’t always benefit you, in fact many small businesses will employ a manager to keep the entrepreneur focussed on performing activities that they know are important. Having great management though depends on you understanding the roles you play and separating out your shareholder role from your employee role.

Coach – Teaches you to do it.
Coaching is all about skill transferral and improvement. Ex sports trainers tend to be very good at the psychology of skill transferral and improvement. Its easy to find a coach, just Google the skill and the word coach , plus “site:.au” to get Australian coaches. Be wary though of those that have products to sell you, eg financial coaches with insurance packages. That’s not about coaching, its about selling.

Contractor/Employee – You tell them what to do
Finally understand what you shouldn’t be doing. Either you are rubbish at it, you won’t get around to it, or it will suck up your time and prevent you from growing your business. I can’t give advice on what makes for a great employee, as I’m simply not sure I know. Most literature tends to focus on how to be a great leader or manager, not an employee although Bill Lang has had a look at it with his 8 skills for career success.

Of course in real life, your helpers will probably play multiple roles, however understanding what you need and where the strengths of the helper are is critical. My other thought on the topic is that it appears that those who attempt to sell their services at a strategic level, generally have the least to offer. Great strategic people, other than consultants, are normally way too busy being successful at their own activity to want to charge a fee for their service.

Making life twice as easy

Earlier this year I had Keith Ishikawa from TBM Consulting Group speak at a Churchill Club function about applying Lean Manufacturing techniques to software engineering.  Keith was one of the original engineering team for Lexus and a major player in Toyota’s Lean Manufacturing push. I was a bit concerned about Keith originally, as his Japanese accent was strong, but he turned out to be fabulous as he told plenty of hilarious anecdotes that he used to make his points.  Anyway, one of the lessons he passed on about running a lean manufacturing programme was to have two suppliers for everything as it kept everyone on their toes.

I already have a tendency to use two suppliers for most things, but I hadn’t put much thought into why.  Other than it was better to have a great commercial lawyer and a great family lawyer, rather than the same guy trying to do both jobs well.

Keith pointed out that there was quite a number of benefits to doubling up your suppliers, including:

1.    Have great suppliers, rather than just good ones
By sharing around your you services, it means you can engage the best person for the job rather than having one group do everything.

2.    Improves the Relationship
Knowing that its easy to shift your business away, your suppliers are motivated to constantly improve the relationship with you and can’t hold you to ransom.

3.   Improves the Service
As your suppliers desire to win more of your business, they will always strive to give you best price, best response times & best quality (rather than at best 2 out of the 3).

4.  Provides a backup plan

You can’t be left in the lurch by a supplier failing or discontinuing a service you always have someone warmed up and ready to take their place.

The difficulties with employing two suppliers is of course you need to manage both suppliers (double the number of lunches?) plus you need to think through how you want to split the business.

Its not the hard though with secondary services, eg:
Lawyers – Overseas Vs Local
Accountants – Company secretarial Vs Tax
Stationary – Marketing Collateral Vs office products

Doubling up parts of your manufacturing supply chain can cause headaches as you try to ensure design standards are met,  but then again tyre replacement services manage to supply more than one brand of tyres, so its not that hard.  It jsut requires thinking though exactly what you want from them.

I have also been thinking about this since my personal accountant has decided to move back to the country town he cam from.  My other accountant is now doing all my work while  I search for a replacement at my leisure.

Life is twice as easy.

5 Learnings for Clear Thinking Teams

Recently at the Churchill Club, we were honoured to have Det. Sen. Sgt. Ron Iddles as a panellist for the “Clarity of Thought” event.  Ron is the longest serving member of the Victorian Homicide squad, having been there over 20 years and investigating over 200 murders.

Ron’s everyday work life is a hell of a lot tougher than anyone in the room had ever had to deal with as it includes dealing with horrific scenes, inflammatory accusations and emotionally distraught parents and partners.  So getting his team to work together well and think clearly in highly stressful environments was something that Ron knew all about.  I thought it would be beneficial to pass on the 5 lessons he shared with us.

1. Get the Culture right
You need to develop a culture where members admit errors early & easily.   Everyone is resource constrained so less time spent on activities based in faulty logic, the better.   Learning from mistakes is also extremely valuable for a team, so ensure this occurs as part of the process and without defensiveness of members.  Your team members can’t grow if they don’t learn easily from their mistakes.

2. Depersonalise the thinking
Train your team to depersonalise themselves from the thinking by laying their ideas out visually and seeking input from others.  Diagrams, maps, charts etcetera are much better for communicating &  figuring out what’s going on in a complex area than written or verbal briefings.

3. Get the Environment Right
The environment the team works in dramatically impacts the effectiveness. eg Gray walls are really bad for creativity but nature is good for it.  If you can’t change your environment, used pictures, props and decorations to improve it.  Eg. even staring at a picture of nature can make you more creative.

4. Manage the personalities
Every team will have a variety of different personalities, as well as people with different levels of expertise, but don’t let strong wills take over.    The team is much more effective  when every team member gets challenged and must  justify their decisions or adapt their thinking.  Making this part of both your process and culture makes for a better team.

5. Make Decisions
Avoid analysis paralysis.  There is never enough information to make decisions with 100% confidence.  So don’t procrastinate about making decisions, however, make sure you can justify your decisions and record the process.   For Ron he asks himself the question “can I justify this decision at court?”.

Nothing better than cross pollination of ideas from other professions!