Bud Taylor - Customer Driven Change

Kodak's Moment

2012-01-22T12:33:00.000-08:00

Kodak declared bankruptcy last week. Can we please let her go gracefully!

I get tired of the presumptuous analyses that assumes that mis-management caused the decline of this beloved icon. The fact is that death is natural, even for corporate icons. There is no reason to believe that Kodak could ever get out of its own way on its slow decline to death.

Kodak lived for over 130 years. At its peak it employed 140,000 people around the world and sold up to 75% of the film and 85% of the camera's in the US. That's what shareholders call success. Those are high margin products. Those are big numbers.

Let's not be naive. Kodak saw digital when it arrived on the horizon, but why would the big gorilla enter such a low margin market, particularly when all of its people, processes, and technology were aligned to dominate the personal photography market that it created.

And what if it has gone digital? What if it built the world's best digital camera? Where would it be today? It would be dying at the hands of the smartphone with it's roots in software engineering, not photography.

If Kodak made a mistake maybe it was the mistake of "hubris." Maybe it was the mistake of holding on too long. Maybe it was the mistake of staying on life support with strategies such as "printing." Maybe it should have broken into parts that could be sold for value. Maybe it could have returned more than last week's $1/per share to it's owners.

But Kodak had a "helluva" run. It made money for its investors; it provided good work to thousands of employees; and it gave its customers, like me, memories that are captured forever in our family albums (which I am quickly digitizing).

Bob Hope would agree: "thanks for the memories."

Social Media's non-Communications

2012-01-10T22:21:00.000-08:00

When did I become a luddite? I don't know the exact day but it was sometime during December 2011. Let me explain.

My business depends on my network. I have a platinum list of clients and I pride myself in staying in touch with them. They provide me with work so I treat them with care and respect.

I don't flood my clients with a weekly mass email message. I craft personal notes with some value added information that I think will be of interest to them. Yes, this is inefficient. It takes a lot of time but I believe that it pays off.

I went through such a cycle last month. Usually about 60%+ of my clients return a quick note. I use this as an opportunity to enhance the relationship.

However, over the past year I have noticed a decline in their rate of response, and last month it was terrible. Likely less than 20%. What's going on? Sure, people are flooded with messages and become immune to what they don't want to see. They choose what to look at. But are they looking at what I send?

Well, I've tested this with some of my contacts and they assure me that they saw my message. So why didn't they write back? I have an untested theory. For the moment I'm blaming social media sites like Facebook, Twitter, and LinkedIn.

Here's my theory. I think we're becoming a total pull society when it comes to communicating - even with friends and relatives. We can be fully informed of the activities of others without having the obligation of "interaction." If I want to know what my son is doing I check his Facebook page or read his tweets or texts. There's no need for me to call and get into an unpredictable interaction. I get the information I want and I don't even need to leave my fingerprints. He knows that I'll pull whatever information I want. End of transaction.

I think that this one-sided communication of social media is infecting business. I think we've morphed into a new understanding of business relationships. It's becoming "alright" to consume business information, even from friends, without feeling obliged to respond. You have pulled the information you want and the assumption is there is no expectation for a response.

I don't think I like this new world. I'm going to smash a loom.

Kim Jong il - Transition

2011-12-22T14:28:00.000-08:00

An era has ended!

I have spent most of the past two years working on a transformation project in Korea. I have come to know and respect my Korean colleagues. They have taught me many things.

First they taught me that they are not South Koreans. They are Koreans. They refer to their neighbors as North Koreans. But in the south they are simply Koreans.

Also they have shown me their resilience and stoic nature. I have been there while the North sank a naval vessel; shelled an island; launched missiles; and refuses to sit down to talks on nuclear disarmament. Through it all my friends continue with their lives.

Then there is the big question of re-unification. It is often discussed at the political level; however, I think it has lost its urgency with the populace - at least the younger people. Sure, many of the elders still have relatives in the North but this situation is literally dying away. The new generations don't have this emotional attachment and they wonder about the impact and costs of unification.

So, an unstable regime has transitioned to equal instability. It seems that the North is impervious to the world it lives in. It marches to a different drum, and a military drum at that.

I wish all the best to my Korean friends as we mark a new year. All they want is what all of us want - continued peace and prosperity. They have earned both.

Korea - Reading Between the Lines

2011-11-26T17:30:00.000-08:00

That's "noonchi", not "kimchi"

If you've been in a Korean restaurant you know "kimchi." Most people associate it with cabbage; however, it's really a spicing and marinating technique that can be applied to any vegetable. A lot of people like it, but after two years in Korea that still doesn't include me.

What does fascinate me is the concept of "noonchoi." In the western world we might think of this as "reading between the lines." But the idea is much deeper. It's about anticipating what the other person wants to say and even finishing the thought for them. Generally it's the responsibility of the subordinate in a relationship to have "good noon chi." It's the subordinates responsibility not to embarrass the superior.

You Better Have Good Noonchi

Usually "noon chi" is at the emotional, feelings level. Korean's are ok exchanging on a rational, factual level; however, they are loath to expose their feelings. For example, if a father has decided they don't like the daughter's new boy friend - the father would never say so. It's the daughter responsibility to read words and gestures and come to the right conclusion. The father would never expose his feeling, or conclusion. We can only hope that the daughter reads it right.

Noonchi at Work

Noonchi is more than a social requirement, it's a core competence at work. Confucius learning instills a set of values and one of the strongest is the respectful relationship that an employee must hold for their boss. Respect is good; however, when it turns to deference in the work place then lots of things can wrong. Specifically: change, innovation, & growth.

I have been working on organizational transformations in Asia and most recently in Korea. Noonchi is my nemesis. We work hard to bring new learnings into an organization so that people can break their paradigms and create new business opportunities. Noonchi is a barrier that we do not face in the west.

This has been exposed to me as I work with executives to engage their employees so we can unleash ideas from everyone, everywhere. We ask executives to balance their management style with inclusive behaviors of leadership. We ask them to become more transparent and authentic. Yes, this is an issue with western executives as well; however, it is not as ingrained nor does it have such a wide work and social impact as it does in Korea.

Executives don't want to let down their guard, and I'm not sure that employees want to see it either. Both sides would be confused and uncomfortable.

The "So What?" of Noonchi

The positive part of the global economy is in Asia these days. While the west struggles to slow its "race to the bottom," the opposite is true in the east. Holding back run away growth is the economic struggle here.

This puts fear and paranoia into western thinking. I'm not sure it's justified. The west still has a spirit of innovation and sufficient disrespect for authority that it will find a way out. The east is living in an economic bubble driven by its strategy of "second in." All boats are rising on the tide of: "we can do it better than the originators in the west."

As visibility and law suits expose this strategy the east will need to change horses. If the horse is still eating "noonchi" it will slow down in the global race.

Police Democracy in South Korea

2011-06-25T18:32:00.000-07:00

I've had the pleasure of working in South Korea (they just call it Korea) for more than a year. We're working on transforming a large public corporation. I have made many new friends and have come to love this beautiful country of 48 million people.

But at the end of the day Korea has not gotten far from its military roots. It is a surface democracy in a police state.

The Economic Miracle

Korea is an amazing story. I believe that Koreans are kind and passive by nature. This has not served them well in their history. They have been constantly invaded and occupied. Their Buddhist stoicism has contributed to their survival. Patience has been the winning strategy.

The past century has been nothing less than a miracle in Korea. From 1910 to 1945 Korea was occupied by the Japanese - a historical fact that continues to sting. On the heels of the occupation came the Korean War, which has never officially ended. Coming out of the Korean War the country was one of the poorest in the world - the war not only killed more than a million people but it destroyed the economy. Poverty and starvation were the color of the day during President Rhee's first republic. Even today when elderly Koreans meet they rarely say "hello"; it is more common for them to ask, "have you eaten today."

But all of this changed. Today Korea has joined the trillion-dollar GDP club and is one of the worlds 20 strongest economies. From 1953 to 1995 the Korean economy grew at an annual average rate of 7.6% - it grew 21 times. Although growth from 1953 to 1960 was slow, the economic growth started to rocket and finished as the "miracle on the Han (Seoul's major river)" before the economic crisis of 1997.

Even the economic crisis was only a minor set back. With the help of the IMF and the world community Korea reestablished its economy and the economic picture has looked pretty good through out the 21st century. Generally the economy grows in the 3% to 5% range and unemployment hovers around 3%. Yes, there is poverty and some employment is artificial: the average wage in Korea is less than $30,000 US because many jobs are ceremonial, lots of security guards, helper staff (a gentleman and his assistant collect my shoes three times a week for cleaning), and excess staff in service businesses.

But when you add it all up Korea is a good place to be. The local news here is always better than the reports I hear about PIG (Portugal, Ireland, Greece), most of the EU and the stumbling US. So what's behind all of this?

The Economics Of Survival

As with any social/political/economic analysis there is no single factor; but let me offer an observation. Korea's military history serves it well economically. I always feel totally safe here, but that's because of the not so subtle presence of police.

When you go back to the economic miracle starting in the 1960's it is supported by a democracy wrapped in autocracy. A democracy run by the military. President Park's government had a clear policy for economic revival. Korea would move from a domestic, agrarian economy to one that was export driven. This required help form the cheabol - the family monopolies that had taken over the industrial threads of the economy from the Japanese after the occupation.

The government set up a policy and financial structure to support the cheabol. The brand names of Samsung, Hyundai, and LG didn't materialize on their own.

In fact, these brand names and many others rose on the backs of Korea's workers. The story of Korean labor is often not pretty. During the Park regime (he was assassinated in 1979) labor was treated harshly. Dissent was put down, and often harshly. In 1970 a young labor leader protested by pouring gas on himself and incinerating himself. Economic success came with a social expense.

Fast forward, and excluding the military uniqueness that causes a constant string of conflicts with the North, what is the picture today? On the surface it's great, and it will always be great if you know and follow the rules. Let me give you a glimpse of the rules.

Protest Within Established Guidelines

First, the police are never far from hand. I live in a hotel residence that is several blocks from my client's office in the financial district of Seoul. Between here and there are two land marks: the Japanese and US embassies. On my walk to work everyday I likely see 100 young uniformed police, men and women.

Half way on my walk to work I always pass a lone gentleman with a placard. He's protesting something, but my poor Korean reading skills don't tell me what. I know he's a protester because he's alone, and he doesn’t have a police escort. Dissents of more than one require a permit in Korea and those are hard to come by because the state needs to incur the expense of assigning police to watch gatherings of more than one person.

And that's exactly what happens several times a month when I return to my residence. Protests happen regularly on the street backing onto the Japanese embassy. Usually there are several vans, a crowd of 20 and about a dozen "comfort women." If you haven't read about the Japanese treatment of Korean "comfort women" its worth a Google. The Korean's want an apology and I think the Japanese are just waiting for the women to die off. In any event, when the scheduled time for the protest is over the leaders load up the vans, clean the site and drive off. It's like pulling your hand out of a bucket of water. You'd never know it was there.

Strike, Please. Not!

Then there's the famous Japanese triple header this March: tsunami, earthquake, and nuclear meltdown. Although the Koreans have a hyper-fear of the "nuclear rain" (you should see the umbrellas go up in a drizzle) the Japanese disaster has been a gift for the Koreans. The disaster for the Japanese car industry has been a gift for the Korean car industry. Or, maybe not!

About a month ago workers started to take advantage of the disruption in the global automotive supply chain. Korea, specifically Hyundai and its subsidiary Kia, were seeing that they could take away huge segments of the Japanese auto market; but not so fast. Labor in one of the large auto parts suppliers decided to use this as leverage. They went on strike. I watched the media reports with interest for several days as negotiations faltered. Then I watched no more. Without warning, one night, the government sent 3000 police into the factory. The strike was over. Labor would not be a barrier to an economic gouge that could be inflicted on an old enemy.

It’s Not Tienanmen

Then there is the student protest that is taking place; a protest that no one knows about. Like everywhere else students are being asked to take more of the tuition load. Like everywhere else, they don't like it. So for the past few weeks you'll hear a bit of noise in the Gwanghwamun area of the city near the palace. When you look you'll see a well-guarded "gathering" of students doing their "riot" thing. Then they disappear and so do you. But the police don't.

On Friday nights it’s my tradition to walk into the wealthy boutique and restaurant area of Samcheong Dong. I have dinner then a drink with friends at a wine bar. The last two Friday nights have been different. This Friday was the most different. You could feel them everywhere. Police!

I have to walk about a mile before getting to the shops and bars. The palace wall runs the full length on one side of the boulevard while art museums and small businesses line the other side. Usually this is a crowded walk until you hit the turn where the commerce really begins, and then it's mayhem. The street is full of cars and you can hardly move on the sidewalk. But not last Friday.

Walking up the boulevard there was no one on the walk and for the first time ever the street lamps were off. When I hit the turn the sidewalks were vacant. I was almost alone for dinner at Eight Steps and when I crossed over the street to Pason the wine bar was empty. My friend who owns the bar told me that the student unrest had been ruining his business for more than two weeks.

The walk back to my room was safe, but eerie. Once I got to the darkened part of the boulevard I could feel the return of my protectors. I was in a mile long dark tunnel that concealed the presence of several hundred police. After every few yards I could make out the vague shimmer of their chartreuse vests. Across the street was a squad of 20 with riot shields; down the alley was a neatly ranked group of ten with their batons in hand; at the stop sign were four more, two in front with two behind holding the shoulders of those in front; there was a big group of protectors in the museum parking lot; there were pairs patrolling the walkway and others in cars in the street; there was a stretch of five police buses book-ended by paddy wagons on the other side of the boulevard and lined up behind this string must have been a group of 50 standing at ease pinched up against the palace wall; as I got to my traffic intersection I wasn't surprised to see large groups of police on each of the corners, but I was caught off guard by the team that was hidden in the shadows of the old hanok behind me.

I was back in the light and a few hundred yards away from home. Oh, how I hoped that those violent students wouldn’t come out to play! If they did then thousands of police would pour from the darkness into Gwanghwamun Square and the riot, like the strike, would vaporize.

It’s All About Trade-offs

So what does all of this mean? I wish I knew. You can go any where in Seoul in the middle of the night and never think of your safety. There aren't many other cities in the world where I can say the same. As for the economy, Korea isn't looking back; it's part of the Asian miracle that sees itself as the new economic order - strengthening everyday at the expense of the decaying West.

Maybe the lesson is simply that world is made up of people just trying to get through their day. They have to find ways to make this happen. That means political trade-offs. In the West we value individual freedom to the point that we have incapacitated our governors; in the East people hold more holistic traditions to the point that the individual is subordinated.

Do you like your trade-off?

Powerful Ideas Drive Transformation

2011-05-20T17:50:00.000-07:00

Olleh KT (formerly Korean Telecom) has to change. Its goal is to double revenue by 2020; however, its core business is in decline.

To grow, and even survive, it will need to fill the revenue gap with new products & services. Doing this requires ideas. New ideas. Powerful ideas.

For more than a year, Bud Taylor led teams of KT professionals in the Mobile & Enterprise business units in their quest for radical ideas that could be implemented in a short cycle.

Crashing Lenses = Ideas
Generating radical ideas starts by asking new questions to find new answers. This is done by using the power of four lenses:
1. Discontinuities
2. Customer Insights
3. Core Competence
4. Orthodoxies

By crashing these lenses we can see opportunities that used to be concealed.

At KT we generated 1000’s of idea candidates from every corner of the organization. Small, dedicated teams synthesized and grouped these candidates into domains and from here they selected the first business opportunities.

Next the high impact business opportunities were explored and expanded; business models were refined; action plans developed, approved, & implemented.

The teams made big changes in:
• Customer service
• Online sales channels
• Retail operations
• Smartphone & tablet sales
• Account management, &
• Operational processes

Idea Graveyard
It wasn’t always easy. Often we had to call on the executive team for help to stop ideas from going to the natural graveyards caused by:
• Silo politics
• Committed resources
• Lack of priority, &
• Bureaucratic controls

In fact we leaned heavily on the executive team. We involved them as sponsors in all of the work & we held working sessions every month to break through barriers & develop their skills as leaders of Innovation.

The Result
It’s been a long & continuing journey that has engaged employees, changed the culture & built capability for the future.

Korea - Living With The Threat of War

2011-01-06T16:20:00.000-08:00

Well, by the end of 2010 I had spent about 9 months in Seoul working on a major transformation sponsored by the CEO of one of Korea's largest companies. Living in Seoul has been life changing. For one thing I've experienced how Koreans live with the constant threat of war.

Sinking of the Chenon
When I arrived in Seoul in April of 2010 the Chenon had just been sunk. You'll remember this as the sinking of a naval vessel where 46 South Korean sailors lost their lives. An international panel concluded that the sinking had been at the hands of the North Koreans - who of course strongly disagree.

The politics surrounding the Chenon were interesting to watch. The US decried the North while China took a strong stance on non-committal. There were several months of blustering and then things cooled down.

For my part I was amazed at how the average Korean took little notice of what was going on. It was business as usual ... "what can we do."

Then in early November, militarism faded while hopes turned to financial reform on a global scale and US-Korean trade on a bi-lateral scale while the g-20 met in Seoul. However, even the graciousness of the Koreans couldn't bring success to the G-20. Everyone went home extolling their agreement to sit down and develop agreements at a later time.

Shelling of Yeonpyeong Island
Everything seemed normal on the Korean peninsula until November 23rd. I was sitting at my desk that afternoon when I got an email from my son who works in Paris. It had a tone of panic: "are you alright? can you get out of there? be safe!" I had no idea what he was talking about. I went to the web and sure enough, the North had just unleashed an attack on the island of Yeonpyeong. Two military were dead as well as two citizens. Here we go again.

I got up and walked around our offices to ask how people viewed the incident. Most people didn't know it had happened and those that did still had a nonchalant attitude. That evening I was driving to dinner with one of my client EVP's. I asked about her reaction. She hadn't heard. Her driver turned on the TV to show her the news. She was annoyed, but not concerned - "what can you do?" This was fully four hours after the attack. She floats around at very senior levels and yet no one she dealt with that afternoon had mentioned the attack.

Ever Decreasing Concentric Circles
I've learned a lot about Korea in the last year. I've learned that things aren't black and white even when we want them to be. I've learned that South Korea has not signed the armistice to officially end the Korean War - they live in hope of reunification. I've learned that the demarcation border that runs into the Yellow Sea has always been disputed by the North; and I've learned that the North warned the South not to do live ammunition naval exercises in the disputed waters.

So yes, we all believe that Kim Jung-Il and his heir apparent Kim Jung-Un are pushing the envelope, but does President Lee Myung-bak of the South have to keep the tension high? Since the Yeonpyeong bombardment the South has put a more aggressive defense minister on the job and it continues to flex it military muscle - along with its alley the United States.

It seems that this whole Korean mess just continues in a state on numbness. Everyone knows that all out war would be devastating and would also be over in about 10 minutes. It's questionable whether the Chinese would engage - it sees the North more and more as a "bad boy" and its global economic power has taken away the need for the North to act as a protection buffer from the US in the South. The only problem is that 10 minutes of hell from the North would result in millions of dead in the South.

Why do North and South put up with this? How do they break with the tensions of the past? You would think that after almost 60 years that someone would find a way to break the cycle. Why hasn't it happened? I'm sure there are many social-economic-political-military reasons that make sense; however, maybe they simply can't break with the orthodoxies that keep them apart. Maybe tension is better than the alternative; that is, figuring out how to include everyone on the Korean peninsula in the modern world.

The Seoul of Kafka

2010-06-05T17:05:00.000-07:00

I'm back in Seoul for the next few weeks to complete some organization transformation work with Korea Telecom. I first arrived here in early April, just a few weeks after the South Korean naval ship, the Cheonan, was sunk. All 46 sailors were lost.

Although the sinking was big news on South Korean channels it only got minor play on the English channels that I receive in my hotel room - even though two are brought in from the region, one from China and the other from Australia.

Out of curiosity, on my first weekend here I took a tour to the DMZ (Demilitarized Zone) that maintains the cease fire (there never has been a peace treaty to conclude the Korean war) between the northern and southern parts of the Korean peninsula. In fact, it wasn't a tour. It was me, my work colleague from the Netherlands, and a guide - she said that business had fallen off dramatically following Cheonan.

The DMZ was what you'd expect. Barbed wire fences, guard houses, and soldiers. The interesting part were the few viewing points where you could look across the river. A stark reality is that the hills on the other side are barren. No trees. They have been forested long ago for fuel. Your looking at a country that is low on energy, and even food - to feed its 22,000,000 citizens. And yet it boasts of a 1,200,000 soldier army, the fourth largest in the world. Behind China, the US, and India.

Gazing to the south there is a different reality. South Korea is somewhat of an economic miracle. It has put big brand names on the global stage, like Samsung and LG. It has almost 50,000,000 citizens - and more than 20% of these live in the capital, Seoul.

Over the past few weeks the world has become acutely aware of Cheonan. An international panel of investigators concluded that it was sunk by a North Korean torpedo. Political tensions have gone on the alert. This little peninsula between Japan and China has become a center for concern. South Korea says it is not ready to retaliate with force. It is looking to the world community to bring clarity and some form of resolution.

However, it's not the South and its President Lee that is the concern; rather, eyes are on the totalitarian regime in the north led by Kim Jung Il. North Korea has about 10,000 artillery pieces aimed south. A hellish devastation could rain down from the sky in minutes. It would not succeed as an act to occupy the South. The South would retaliate in force backed up by the US. However, the loss of life in and around Seoul would be enormous.

So how do people in South Korea live with this? The answer seems to be, "they just do." Yes, the media is filled with Cheonan; however, the people go on with their lives.

I have developed many good friendships while I have been here. I sense that the people of South Korea (they just say "Korea") just want to be left alone. But this is not their history. They are a proud people who, maybe because of their kind nature, have been invaded and occupied for centuries.

A striking fact about Seoul is that it has no soul. It's not like an Istanbul where you can go to the Grande Bizzare, the Spice Bizzare, the Blue Mosque, and the Topkapi Palace to feel the history passing from east to west. Seoul has been occupied and burned so often that now it builds big buildings to the future and rarely looks to the past. This is attested by the beautiful Gyeongbok Palace that was originally built in the 14th century at the beginning of the Chosun Dynasty. The buildings of the palace have been destroyed several times. The last raising was during the Japanese occupation of 1910 to 1946. What you visit today has been constructed since 1995.

Koreans have been living in an uneasy calm for almost 60 years. This is testimony to both human will and human insanity. I'm starting to understand how invading armies often seem to arrive "by surprise." People were just going about their lives.

Can You Find Me Now?

2010-04-25T03:23:00.000-07:00

I've been fortunate enough to be on a transformation project with South Korea's primary teleco, KT (Korean Telecom). They introduced the i-phone to the Korean market and they were kind enough to give us phones for the duration of our stay - phase I ends in mid-June.

Both of my colleagues have been i-phone enthusiasts in their home towns of San Jose and Amsterdam. This is the first time for me and I have to admit to its ease and usefulness of Apps. But I wonder what all of this is doing to the way we work and think. Yes, it changes your life, but what are we losing?

Here's my specific example. On day one our client met us at the hotel. The KT office is about five miles away and although Seoul is a sprawling metropolis of about 11,000,000 people, the drive to the office is not complicated. You turn right out of the hotel for half a block, right again for a long block, and then right onto Tehran. Go five miles and its the big blue building on the right. Easy, right? No!

We have i-phones with Google maps, text messaging, voice recordings and even a phone. Why use the physical world and the recognition features that humans have used for thousands of years to survive when you can use technology.

Day two we were on our own. We jumped into the cab and showed the driver the directions that our client had given us. The driver didn't understand. Panicing, we texted our client who emailed a new set of clearer directions - in Korean! The cabbie still didn't understand. We called our client who spoke to the cabbie. We finally got to work.

The next day was the same confused scene, but this time we couldn't connect with our client. I made the suggestion that we just turn right, right, and right. My colleagues that I was nuts. Why would we do that when we had our i-phones. Finally our client called and we rolled out of the hotel entrance.

Day four had all of the characteristics of the previous days, but this time technology saved us. We had been smart enough to record the directions from our client on our i-phones. Out we went into the world, but the driver still didn't understand. By the time we crossed over Tehran street there were three screaming passengers and three i-phone map Apps in the drivers face.

By the time we got to day five I convinced my colleagues that we just might be able to get to work the "good old way." It worked beautifully. Since then things have been fine.

I love technology. It has its place. But it can erode our survival skills. I suspect that children have already lost directional skills. They put their faith in GPS. It's a different world with a different way of thinking; but I'm not quite ready to give up my internal compass.

Change Management & The US Health Care Debate: A Case Study

2010-03-30T08:48:00.000-07:00

The United States has gone through a wrenching debate over the reform of health care. The new bill cut to the essence of the United States as a republic and the sole of its citizens. This has been high stakes change management. What can the business world learn from this as a case study?

There is an alternative to Private Insurance

The first step in implementing change is for the leader to articulate a vision – what will the new world look like? President Obama’s vision a year ago had tenets such as “single payer and public option”. This is not idealism; it is real life practice that is the norm in most western democracies. It is an alternative and in places like Canada it is less costly and produces better outcomes. Although open to interpretation, here are some numbers.

Spending as a % of GDP: in US 15%, in Canada10%
Spending per capita: in US, in Canada $6700 $3700
Life expectancy - age: in US, in Canada 78.5 80.5
Very satisfied: in US, in Canada 25% 57%
Very dissatisfied: in US, in Canada 44% 17%

The gap exists for two reasons:

1. Administration: A single payer dramatically reduces burdensome administration. In the US this activity constitutes about 1/3^rd of the cost of health care. In Canada it’s a little more than 1/10^th. In other words, the single payer approach would save the US about 20+ percentage points on cost. That adds up when you’re talking about trillions of dollars.

2. Treatment: In Canada there are fewer medical resources than in the US – people, equipment, supplies, facilities. This means priorities are required in the allocation of these scarce resources. In the US, where there has always been a luxury of supply, this idea of “allocation” is interpreted as “rationing”.

America was looking for a new model for health care. Canada provides an alternative, but Americans didn’t choose it. They came up with a framework that is uniquely American; a solution that does not look like the starting vision that included single payer and a public option. Erosion of the vision is a common result in the change business. What happened?

In my view The Administration did not recognize the enormity of the change it was proposing. How do you radically change the private health insurance sector in the US. It’s fundamental to the American DNA of individualism and capitalism. The orthodoxy is that corporations have the right to make profits and individuals have the opportunity to earn money to provide for their health care.

Such a discontinuous change requires strong, directive leadership. Although bipartisanship is a rhetorical principal of the American political system it is not an ally to radical change. The effort to develop consensus opened the door to incrementalism, which is resistance in disguise. Ultimately the bill that got passed did not please anyone.

Lessons Learned

Most changes fail – even when the sponsors don’t admit it. This result comes from not understanding the nature of change and the leadership style required to implement change.

The US health care debate highlighted principles that CEO’s should take to heart.

Know your organization’s DNA. Resistance is directly related to how hard you swim against the organization’s heritage.
Know the type of change you seek – continuous means incremental, discontinuous means breaking with the past.
Know your leadership style. Don’t attempt discontinuous change if you are a consensus builder.

In our culture it is unnatural for leaders to adopt a harsh style. Everyone wants to be loved. That implies that most changes will be incremental. CEO’s should know this before they set their visions for change and underlying migration paths.

TOYOTA'S GOAL DELUSION: A CASE OF HUBRIS

2010-03-10T07:58:00.000-08:00

Toyota fascinates me. As a global icon only Tiger Woods has fallen further and faster. How did this happen to a brand that a year ago was characterized by its quality and durability?

The Toyota fall is the result of the goal Toyota set early in this century to become the world’s #1 in car sales. It decided to take on the wounded GM and move its global market share from about 11% to 15%. It achieved this and more, but now is struggling to maintain its starting position.

Toyota followed all the management rules. It was a case study on goal setting, measurement, and execution – and it failed. It will cost Toyota $3 billion in repairs and lost sales for its hubris. So what went wrong?

Toyota was measuring the wrong thing! Its aggressive market goal was not related to the needs of car buyers.

Toyota believed that its legacy of innovation and high quality, durable products would carry it to its goal of world #1. It forgot its customers and embraced its supply chain. As it got beyond its tier one suppliers it no longer had deep relationships that could ensure quality. Eventually the complexity of the over reach imploded into Toyota’s recall crisis.

The question behind Toyota’s goal should have been: “How much market share can we gain annually and still maintain the high quality and durable products that our customers expect from us?

Goal Confusion

I see this goal confusion all the time in my consulting work. Business plans are set with goals and metrics that have no relationship to the customer. In fact, the customer is rarely part of the discussion.

If we’re going to learn from Toyota then it looks like it will be the hard way. Our executives are still in a cost control mentality. Unfortunately, survival is being built on the backs of customers. This conflicts with the lesson of the financial collapse that shows customers are angry; they feel abused by: financial institutions, the housing industry, and now trusted name brands.

Customers don’t want to do business with companies that just get over the bar. They want to do business with companies that show: moral leadership, social responsibility, and respect for their employees. We are not meeting this customer expectation, and part of the reason is that we’re still setting business goals without regard to our customers.

I believe in goals and monitoring their achievement to know where you are. But we have to know how to set goals and then know what to do with them. All too often our goals are an incomplete reflection of the values that should be leading our business. Too often our goals are built on what we value - that is, making "profit". This causes us to forget about doing things right for those we serve, and we focus on the goal of making money. I know I will be chastised, however, contrary to popular belief the business of business isn't "to make money". The business of business is to serve customers. Making money is difficult without them.

Toyota’s goal forced it to take its eye off the customer. The cost? MasterCard. Priceless!

Grease Is The Word

2010-02-11T13:15:00.000-08:00

A few weeks ago I got back from Athens. I was invited to give a keynote address to Customer Service executives at their annual conference. The conference went well and the feedback on my presentation - Building Sustainable Organizations - was positive.

I've been to Athens several times and I must admit that I'm not a big fan. It's a huge, sprawling city with homes built on the sides of bowls - and it has little or no skyline. Most tragic is that Athens has struggled to showcase its antiquities. Yes, they have been working on the Acropolis for years and it's getting better, but look off the mountain a mile into the distance and you'll literally see the ruins of the Temple of Zeus decaying in an un-kept park.

The financial crisis in Greece has Athens and it's inhabitants by the throat. The city continues to spiral into poverty and squalor. The most precious item in the city is a parking spot - but don't worry if you don't have one, just abandon your vehicle like so many others.

As I walk the streets of Athens I don't get a feeling of friendliness - it's more despair. People do not see a way out.

On the evening of my arrival our hosts, Boussais Communications, took the speakers to dinner. I asked about the financial crisis. The answers were surprising:

firstly, there was the whole question of perspective. I was reminded that Greece is a small economy in the Eurozone. I does not have the mass to bring the system down. Others like Spain are more critical to Euro survival;
secondly, there weren't any real good answers to how the government was going to solve the crisis. You can only sell treasuries for so long. Sooner, rather than later Greece will need to cut social spending and increase taxes. My hosts saw the answer was in cutting back on the government workforce; however, they saw no need for new taxes or reduced benefits to citizens. Interesting, no sense of urgency here.

Well, it seems that laborers in Greece didn't like the idea of government cutbacks; and it looks like the EU leadership is going to get even tougher on Greece. This is not going to be pretty.

For me this situation casts me back to the early 80's in Canada. At one point I worked for the central budgeting organization in the government. My biggest learning is that when government doesn't have money, it does have flexibility. It can't do anything. All of it's energies are focused on paying interest on debt, reducing annual deficits, and eroding the national debt. It took Canada a decade to get it's finances in order but it did, and now it is financially strong - giving the government alternatives in how to help Canadians.

Ooops, do you see a parallel. The US is now mired in debt. We pay over $1,500,000/minute to service our debt. If we can't manage ourselves better then our creditors, like China, will call our notes. We may not want to make sacrifices to get the US financially stable, but I'd prefer that we make the choices rather than having them imposed.

Yes, Greece is on a slippery slope; however, there is grease on the slope that we're riding as well.

Google in China

2010-01-18T16:24:00.000-08:00

The current discussion about Google China fascinates me. I was in Shanghai just before the end of the year speaking on Innovation and Change. I had links in my presentation to YouTube videos. The links didn't work because about a year ago the Chinese government stopped YouTube because of viewings of a dissident.

When you go to Google in China you're actually on Google.China . This is a limited version of the search engine we use everyday. Google is thinking of shutting down Google.China. Google says it's too restrictive; but maybe it's just that Google isn't making money. It has 35% market share against China's homegrown search engine, Baidu.

Television programming is filtered as well. I was in China during the Copenhagen conference on the environment. What I heard about events and results on Chinese TV doesn't square with what I've been learning since I returned.

What strikes me is that these restrictions on information do not align with the economy and the people I worked with.

I worked with entrepreneurs. People who understood capitalism as well as we do. They have ideas, they know how to find investments, and they are winners. Sooner, rather than later, the restrictions on information are going to come up against these vibrant business people.

It will be interesting to see how China responds. Will the politics of information give way to global economics?

How Companies Succeed - Work on the Right Things with the Right People

2010-01-09T09:39:00.000-08:00

Jim Collins' book Why the Mighty Fail has caused a lot of discussion with my clients; particularly since Akio Toyada the head of Toyota has stated that his company has passed through the first three steps on the way to decline:

Hubris born of success,
Undisciplined pursuit of more,
Denial of risk and peril,
Grasping for salvation, and
Capitulation to irrelevance or death.

I think this is a good framework; however, for my part I boil failure down to two things:

Working on the Wrong Thing.

Organizations forget who they are. They ignore their DNA. They want to escape from the basic strategy that made them what they are. They want to become something else. Something greater because others say they should. Others like Blue Ocean and Black Swan strategists.

I'm all in favor of the Blue Ocean and Black Swan sentiment that we have to constantly monitor our environment to understand discontinuities that might alter or kill our business. But I'm not in favor of the implication that if we are under threat we have to vault to a new future that is not rooted in our DNA - those competencies that are ingrained in us and have made us successful.

Often we aggrandize the positive culture at Southwest Airlines that was built by its venerate founder Herb Kelleher. How long would it take to drive this positive culture out of Southwest? I suspect a long time. And during that time initiatives that resist this culture will fail!

Working with the Wrong People.
Today's business world is too complex to have everyone on the same page. Sure, we need agreement on a mission and some broad strategies, but that leaves a lot of room to interpret implementation details.

Implementation will cause conflict with leaders. People will always have different models, data, and understandings of what's going on in the market and the capabilities of the business to meet the challenges. Conflict on content is good. It's how leaders make sense out of chaos so they can choose a path that keeps the organization healthy, relevant, and profitable.

Conflict at a personal level is not good - it subverts conflict on content. Personal conflict is rooted in ESP: Ego, Status, and Power. These political objectives create a lack of trust and lack of openness within leaders. Quickly the organization loses its future.

So if you want to succeed the bottom line is: ... work on the right things with the right people.

2010 Leadership Forecast: Cloudy with a Chance of Clearing

2010-01-03T16:42:00.000-08:00

2009 is in the rear-view mirror. For most of us that’s a good thing. Many businesses suffered. The strategy of the day was: cut costs, conserve cash, and strengthen the balance sheet. Growth was rarely on the radar screen.

And, things seemed to work out. 2009 was a banner year in the stock market. The DOW was up 18.8%; the NASDAQ 43.9%; and the S&P rose 23.5%. All is good in the world of business, right?

Well, maybe not. The strength of the stock market could be masking the hard work that has to be done. The 2009 fight for survival has devastated our organizations; they are no longer healthy and relevant to their customers. Here are a few scary research findings:

A survey by the Centre for Work-Life Policy, an American consultancy, found that between June 2007 and December 2008 the proportion of employees who professed loyalty to their employers slumped from 95% to 39%. The number voicing trust in their employers fell from 79% to 22%.

The lack of trust is confirmed in the 2010 January-February issue of the Harvard Business Review which reports that on a five point scale: employees have a general trust of 3.7; trust in a their firm is 3.0; and trust in their boss is 2.7.

Another American consultancy, DDI (Development Dimensions International) recently found that more than half of survey respondents described their job as “stagnant”; and half of these planned to look for another job as soon as the economy improved. This is taking a toll on short-term productivity and long-term competitiveness: the people most likely to move when things look up are high-flyers who feel that their talents are being ignored

And, the Brand Asset Valuator used by the marketing and communications company, Young & Rubicam tells us that trust in brands has fallen dramatically. Trust was running at about 52% in 1997, while it hovers around 20% today.

Well what can we take from these research trends? The conclusion is that customers are hostile and employees are disengaged. Great! Just at a time when we need our customers and employees most they are sitting on the sidelines. We have told customers that they are secondary to shareholder profits; and we have told employees that they are secondary to cost cutting.

So our leaders have to feel buoyant that the economy has survived as evidenced by the stock market; but they also have to feel angst about how to win back customers and employees; how to make their companies healthy and relevant again. What should they do?

The first thing they have to realize is that what got them here won’t get them to where they need to go. The last several years has been dominated by left brained, cause and effect, management thinking. The next several years will need to re-engage left brained, inspirational, leadership thinking.

The focus has to get back on our customers. We need to know what they know and we need to drive organization change from their perspective. So, what do they know?

1. Value for money. Firstly, they know they want value for money in products and services. When they put out money they want to be satisfied with the transaction. The 2009 recession has taught them how to buy differently. They know:

they can buy down, or bargain for better prices;
o that simple products and services trump “bells and whistles”; and
o they can defer or spread out purchases.

Consumers know they can save. They know that unlimited credit does not mean that it has to be used.

2. Sustainability. Secondly, they know they want to deal with companies that “look and act just like them.” They want to buy from brands that will be around for the long term. They know they want to buy from firms that exhibit three characteristics:

Moral Leadership: It’s not hard. We all know right from wrong – that standard doesn’t change just because “it’s business.” We all know when our actions feel wrong – that is the test on morality. CEO’s would never steal from the cash box – so how is backdating stock options any different? It isn’t. You can’t justify it to your mother.

Social Responsibility. This comes down to being a good corporate citizen. It comes down to a commitment to “green” for the good of our world, and a commitment to our communities for the good of our friends. Green has to be exhibited in our products and services and we have to demand it from our suppliers. We need to sustain the communities that surround us by buying and hiring locally and giving back with financial support to businesses and time to community causes.

Employee Commitment. Customers have had enough of companies who don’t treat their employees with respect. We have pay policies that do not adequately share profits; we have people in authority who abuse their staff; and we have severance policies that are disrespectful. Employees no longer work for companies; they work for customers. Employees who are disrespected will treat their customers in kind. If your not committed to your employees, your customers won’t be committed to you.

This concept of sustainability has been proven beyond small green companies our community niche companies like Whole Foods. There are great success stories like: Johnson & Johnson who puts “customer” at the top of its priorities and used this to recover from the great Tylenol scare; then there’s Research In Motion (RIM) who are so focused on the long term customer relationships that leaders are admonished for discussing quarterly financials in public.

2010 will be a great challenge for our business leaders. They have an opportunity to advance the value of their organizations. They can build organizations with a greater purpose than simply maximizing shareholder returns. They can give us organizations that sustain customers, employees and communities.

Our spirit and creativity are indomitable. Now is the time to clear away the clouds.

Shanghai Central - Innovation in the East

2009-12-24T12:56:00.000-08:00

I'm returning from a week of consulting in Shanghai. Generally I spoke to audiences and presented information on Innovation Through Customer Insights. The central thesis of my work is that organizational change should be driven from the outside. Customers should drive it. There are two major benefits: firstly, it forces managers out of their political silos, and secondly, it engages employees because they love to work for their customers.

I have been to China before but never to Shanghai. It provides an interesting clash of traditional western thinking about government, human rights, and economics.

The first thing I noticed in Shanghai is that it is alive – there is commerce everywhere. It’s the first time in years that I have been awakened by the sounds of buildings being constructed.

Our western world is still struggling itself out of the tar pit of a deep recession. Capital is sitting on the sidelines afraid to get involved. In the west we seem to be looking for reasons not to do business. In Shanghai everyone is looking to do business. There is capital, lots of it, and it’s being used. One of the big oxymorons is all of the Christmas decorations. Christmas has no cultural significance in China except that it is a celebration and it makes money.

So it seems that we have the model for western recovery. Do what the 16,000,000 people in Shanghai are doing. Build the economy on capital. But isn’t that what we do? Well yes, but we have a different political structure – we have a democracy of free people while China has a central government that controls people.

Interesting contradiction. Haven’t we always been taught that democracy and capitalism are linked to produce prosperity that gives us freedom? That may be true, but at this moment that link has provided recession and no clear and fast answers. The trade-off seems to be our freedom. How much freedom would most people give up for a job? I can only pose that question, not answer it.

At least in Shanghai capitalism is being used to push forward prosperity. Money is being made and it is being poured into infrastructure that employs many of the unskilled. So it’s clear that democracy is not the sole garden that can grow capitalism. I think we have to adjust our paradigm. Central planning in China is not Stalinist Russia.

But what about this freedom thing? All of this concern about human rights. You know, those Tibetan monks. Well, I think it’s an issue.

China is governed by a handful of people, and one of the strongest is the mayor of Shanghai. When these people decide to do something it happens. It doesn’t need to go to a center of democracy to enter the gears of gridlock. It just happens – and it happens without criticism. When the Chairman speaks everyone listens in agreement. The governors may be human, but they are never wrong.

The central government in Beijing controls big infrastructure like transportation and communication. The state television channel puts out a constant stream of the glories of China. You can even learn about the Chairman’s daily agenda. The communication channels are controlled. If the leaders don’t want you to hear, you won’t. The Internet has strict controls. YouTube is seen as disruptive – so it’s not allowed. This sounds repressive, but I wonder if some of our politicians and parents wouldn’t want to give the system a pilot test.

The sense of restriction is quite real. I gained half a dozen close friendships in Shanghai. We ate traditional Chinese dinners every night. Yes, everything you’ve heard is true: chicken and duck feet; the spine of the lamb and the stomach of the cow; sea slugs and pig ears. When food is limited and the population is huge, you eat everything. I learned to appreciate vegetables.

However, my point is that I got to know friends during their sacred and almost religious act of eating. We never talked politics. I don’t talk politics State side either, but that’s because of fear of losing friends – not fear of having them sent to jail. On the odd moment when someone did say something approaching a criticism of government the table hushed them and scanned the restaurant to ensure the state police hadn’t overheard.

So, we can’t downplay freedom and we can’t downplay the fact that people know there are limits. People know the rules, and they know the consequences; and the consequences can be harsh. We may sympathize with the Tibetan monks, but inside China the sense is that they know the rules.

Well, what about the people. My experience is that they are some of the most kind, generous and welcoming people that I have ever met. Like everyone else in the world they are just trying to get through their day, but they do it with great kindness and respect (except on the roads where they just wonder all over the place and squeeze you into places you don’t want to be.)

Oh yes, I hear the common complaint about Chinese being deceitful, acting one way but never telling you what they really think. That may be true but maybe the truth lies in their long-term view of how to win in the world; and this view conflicts with our actions to succeed in the short term.

One thing though was clear to me, the old adage is apt: we bring a business deal to the table in the hopes that we can build a relationship; whereas the Chinese bring a relationship to the table in hopes of finding a business deal. By the end of my visit to Shanghai I had new friends and believe they were being open and honest with me. We’ll see if this proves out on my next visit.

My last day in Shanghai was a treat. It started with breakfast with a friend from Paris who is now working in Shanghai. Like the Chinese I believe in maintaining relationships. After breakfast I knew I had to venture into the bustling city to do some shopping; an intimidation that I did not welcome. My client contact, David, solved this problem as he solved all other problems that came up while I was there. He assigned his mother to me for four hours. What an experience.

David’s mother is a retired schoolteacher. She taught accounting to upper class students. She is an exceptionally classy person. But with all of her accomplishments she does not speak English (I’m not implying that she should – just stating a fact about our acquaintance.) We got by with hand signals, pictures and the odd guttural grunt. What I saw, though was a professional at the top of her trade. This woman can shop!

I thought my wife could shop, but David’s mother holds the Olympic gold. I would have been eaten alive in the shopping district. I didn’t want much; just T-shirts for the grandchildren and a gift for my wife. It took her time to get into gear and actually center in on my needs but then the machine went to work.

First it was the T-shirts. We hit a few shops. I chose what I wanted and then the negotiations began – or should I say “the fury.” By the time we left the shop owner was chasing us down the walkway shaking her fist and yelling. I can only imagine the invectives. Now let’s get this straight, we’re talking T-shirts, not nuclear arms. Oh yes, I got three high quality T-shirts – made in China, for $10.

Now turn the page from the back alley T-shirt negotiator to the sophisticated gift buyer. Out she went into the street with me in tow. She darted from store to store demanding that clerks expose their merchandise. She poked, she prodded, she clinked, she gazed. Good quality, bad price; bad price, good quality. Out we flew from the high-end shops and scurried down some side streets. Out of one small shop into another – this was her plan all along. She had all the information she needed about features, quality, and price. She was in control. The only question now was finding the victim.

Finally a hit; a small shop with good merchandise at reasonable prices. Lucky for me the owner spoke good English and had a calculator that converted Chinese RMB into US dollars. Let the games begin! My T-shirt banshee morphed into a sophisticate. A different victim summoned a different persona. We started at $340 and struck the deal at $68. The owner was close to tears. She told me that my representative had driven the best deal in the famed history of shopping in Shanghai. I think I believe her.

Quickly now we dash across the street for a traditional Chinese lunch. Even though we couldn’t speak didn’t mean we couldn’t communicate. Relationships are secured at the meal table, not the sales counter. Out comes the cell phone for a hyper call to David. The phone passes to me. David’s mother wants to know if I’m satisfied with the purchases. My nod quiets her eyes; she puts me in a cab and is swallowed up into the crowd.

Shanghai central: politics, capitalism, shopping, and friends.

Dali, Catalonia, Barcelona

2009-11-28T16:14:00.000-08:00

One of the great things about writing a book like Customer Driven Change is that you get invited to nice places to speak. Barcelona is one of those nice places.

I think that visiting Barcelona and talking about Spain must be equivalent to visiting Montreal and talking about Canada. I'll avoid the temptation and keep my remarks within the borders of Catalonia, the province that holds Barcelona.

Although the Spanish economy is said to be slow in its pull out of the depression, I did not get the same sense for Barcelona. It's reported that Barcelona has about 3,000,000 inhabitants - I think I met everyone of them on my many walks on the mile long pedestrian mall, the Rambla. I have no idea where all of these people were going, all day and all night.

They certainly weren't going into the brand retail shops at the upper end of the Rambla. These shops were nearly vacant except for some specialty stores like Nespresso. But the people were rushing, generally well dressed, somewhere.

Barcelonians tell you that their natural harbor is the biggest port for cruise ships. I can believe it. The ships are huge as you see them docked in the modern harbor. But as I look up the shoreline I see thousands of shipping containers laying idol in the yards. Maybe the local economy is slower than I think.

But some of those people on the Rambla are from the cruise ships. They make their way up from the docks and flood into the narrow side streets for tapas and paella. The wine and sangria are excellent, but not so much so for the beer. Tourism will be good to Barcelona. The local people care about their city and is shows in the way they keep it clean.

But if you want to see a strong sub-economy, work your way to the Sagrada Familia. This was a WOW moment in my life. The Sagrada is Gaudi's glorification of Christianity. When you see the towers your reaction has to be wow!

Construction started more than 100 years ago. Completion is anticipated in 2050. I've stood in the center of many cathedrals such as Chartres in France. I am always awestruck by the architectural and engineering brilliance required to build these monuments. But they were completed - usually hundreds of years ago.

Not so for the Sagrada. It's still being built. As I stood in its vacant interior I felt the flow of history going through this point out to 2050. Just think, hundreds of years from now people will stand in Sagrada, marvel at its grandeur and wonder about the lucky people who saw it being built.

The Sagrada is a culmination of Gaudi's life long study of organic architecture. The mathematical study of a leaf, a vine, or a fern and then its translation into a building. Brilliant, but at times gaudy - oooops?

The economy slows down as you get outside the city. I took a two hour train ride to Figueres the birthplace and home of Dali. The theatre-museum that he left to the city is truly an architectural marvel; however, I never was a fan of surrealism and seeing his work in person didn't convert me.

Figueres is a quaint town but I have to wonder how long this type of culture can survive. Like many small towns in Europe it is built around its daily market. But as the train takes people to and from work you have to wonder how long the self-sustaining farming tradition will survive. It's sad, but globalization and digital wireless seem to have a stronger future than the vegetable gardener and butcher of Figueres.

One thing you won't find in Barcelona is a love of bullfighting. Yes, they have a ring but the continuance of fighting is questionable every year. Bulls are not bred in Catalonia. Fighting is an import from "Spain" and the Catalonian blood runs thin from Spain but deep from Northern Italy and Southern France. There just isn't a deep tradition for the kill as Hemingway describes in Death in the Afternoon.

It's hard to judge how well customers are valued when you're unfamiliar with the language and traditions. However, from my limited interactions I think all is well. Barcelona is high on my "must return" list.

Accountability ... barrier to recovery

2009-10-26T10:54:00.000-07:00

Let' boot this trite use of the term "accountability." We use it whenever we don't have an answer. It's going to get in the way of the serious business of recovery - the NEW business as usual.

The starting point is to define the term. Accountability is something that I extract from someone. In a management sense it is the converse of delegation. In effect, I delegate some of my power to get something done that is my responsibility. For example: "Please complete your report by Friday afternoon and have it on my desk."

Delegation is not easy. It requires you that you break down your duties into chewable chunks so you can hand then off to others. It also means that you have a way to recognize how well these parcels of work are being done: is the report on your desk and does it have the required content.

I now have everything I need for accountability. A clear delegation downward and an equally clear specification of upward expectations - the measures. I can now hold you accountable. Did you get my work done in the way that was agreed. Accountability is purely my job. It's right brained, analytic, cause and effect management. It's me and you with the emphasis on ME.

We need accountability. Likely 80% of what goes on in organizations can be put within an accountability chain. But accountability alone isn't going to lift us to recovery. We've been in risk adverse accountability mode for more than a year. We've protected balance sheets and held onto cash. But this type of thinking won't get us moving again.

Businesses that pull away over the next year will be those that find the white space needed to grow. This will happen because people are empowered. They will not need delegated power from the organization. They will use their own power to "do what's right."

I know this concept of people acting on their own scares businesses: "...we just can't have people running around doing what they think is right - we need empowerment within established guidelines." Oh, really? Doesn't that defeat the purpose?

Well if you can't trust people to "just run around", what keeps them in check? Responsibility, that's what. Responsibility is a personal issue. It's not about the organization telling, it's about the employee doing and doing "what's right" because the organization has imbued them with a strong sense of values.

When I hear managers complain that "... there's no accountability around here anymore", usually they mean "responsibility." What they're saying is that people make commitments and then don't follow through, or they act as bureaucrats without using common sense.

When that happens, managers are really complaining about themselves. They know they have not embedded values based leadership. They know that to get anything done they have to micro-manage. They need to constantly work hard at delegating and extracting accountability.

This type of behavior isn't going to get business where it needs to go. It's time that our leaders understood "empowerment" and trusted employees to be responsible. Yes, there will be mistakes, but deal with irresponsible behavior on a one-to-one bases, not an organizational one.

Your Leader's Biggest Challenge - EVER!!!

2009-10-21T13:02:00.000-07:00

Getting that plane out of Schippol airport in Amsterdam is child's play compared to what's facing captains of corporations.

Look at who our leaders have been and what they've been doing for the last decade. They tend to be right brained, cause and effect, ROI people. The numbers guys. People who stare into their computers all day looking for revenue and margin. Need I mention the likes of Ken Lay, Bernie Madoff, Ken Lewis and countless others.

This wasn't always the case. Even up to the early 90's when I had an idea on how to improve the effectiveness of an organization people would say: "... yeah, but you'll never get it past the CFO." I'd say, "get me to the CEO and I'll sell it." And usually I did. The CEO understood that business was more than profits - it was about keeping the organization healthy and relevant.

Not so today. CEO's have morphed into the Senior-CFO. Employees and customers are trumped by the bottom line when it comes to business strategy and operations.

This has probably served business well in the past year. Protecting balance sheets, conserving cash, and cutting costs have been necessary to survive. Companies have cut themselves to temporary "profitability", but they can't cut themselves to sustainability. It's time for a new trick.

Leaders are facing two very big currents that could merge into a tsunami:

Customers: They're willing to forgive, but not to forget. They're standing at the ready to punish companies that flaunt excess - particularly in profits, executive compensation, and bonuses. They're looking to reward companies that show moral leadership and a willingness to sustain communities and the environment.

Employees: Employee commitment has never been so low. A recent report in The Economist showed that over the past two years it has fallen from over 95% to 39%. Equally disconcerting is that they are willing to stagnate on the job rather than move on. USA Today reported that almost 50% of employees are willing to wait more than a year to find a new job when they are dissatisfied.

This is quite a two punch for businesses trying to "turn things around." We have angry customers and disaffected employees. Wow! That's not a job for a Senior-CFO.

As we emerge from recession leaders will need to be strategic, visionary, and inspirational. Will they remember these skills? Did they ever have them? This is going to be fun.

Bank Branches: Loyalty Savior or Anchor

2009-10-19T07:03:00.000-07:00

The Scenario

Do you remember the global crisis in financial institutions before US banks started declaring healthy profits again in Q2 of 2009? Hate to remind you, but it did happen. Interestingly, at least in the United States, there has been a negative reaction to the new-found financial health of the surviving banks, and especially the ensuing bonuses for their executives. People don’t want to hear about it. They feel ripped off and left behind.

So what are these poor banks to do so they can regain their customers’ trust? After all, they have to make money. Well, maybe part of the answer to winning back customer loyalty is in branch banking. That’s right, those bricks and mortar institutions that house real people to serve real customers.

Banks have tried to kill retail banking for decades. It’s by far the most expensive way to conduct financial transactions. Technology has brought Internet transactions down to pennies per action; and of course we all know that young customers are tech savvy and don’t want to take time to go to their bank. So branches are disappearing, right? Not!

A recent Associated Press analysis in the US shows that 10,000 full-service branches were added to the system in the past five years; for example, J. P. Morgan Chase added almost 2,600 branches. Branches exist because customers want them. An American Bankers Association survey in the summer of 2007 found that 36% of U.S. consumers use branches as their primary banking method. Is that the death knell? Not really. That 36% is still the largest group for any one channel. Online banking came in second at 23%, followed by ATMs at 21% percent, mail at 8% and telephone banking at 5%.

Ok, Ok. Branch banking still exists, but it’s just for the older customers – you know, those people who have a difficult time getting around and would find it most convenient to do their banking from their home. Yes, that group. Well, maybe they are the ones holding onto the legacy of the past, but does that mean that young people don’t want to do their transactions in a public location? The evidence only confuses matters further. The 2007 American Banker’s Association survey found that those who cling to the notion of going to a bank branch are generally older folks; but still, a substantial 25 percent of those under the age of 34 side with the older crowd and prefer to do their banking in person. When will these youngsters learn?

The Conundrum

But, not everything is turning in favor of branches. This summer Bank of America indicated that over the next three to five years it may cut up to 10% of its 6,100 branches. The economic recession may be forcing B of A into some cost cutting; and this is supported by data such as: its online accounts are up 15% from a year ago; and about 50% of its deposits are made at ATM’s – up 33% since 2006.

So banks want to reduce the expensive branches and go with the efficiency and accuracy of technology; however, customers still want to reserve the option of having a face-to-face relationship with those who deal with their money. What will be the future role of retail banking? How should bank executives get the most from the branch footprint that they will be required to maintain?

Part of the answer rests in seeing a new mission for the retail branch. The branch should become the vehicle to deliver a relationship to the customer; a relationship that encourages customer loyalty.

The Loyal Relationship

Banks have no choice. They will have to use to technology to deliver transactions faster, better, and cheaper. This will be the table-stakes of competition and it will reduce the need for customers to “go down the street to the bank.” But, that doesn’t mean that banks should start on a concerted strategy to eliminate all but their flagship branches in favor of technology.

Technology touch points are mechanical. They lead to customer satisfaction, but not customer loyalty. Technology can only drive more impersonal relationships with banks. Oh sure, we can give the web page a nice look and feel and make it user friendly, but we’re still talking to our computer, not our bank.

Particularly in today’s banking climate, customers won’t let banks close retail branches. The reason is simple; customers don’t trust big corporations and especially banks. Customers want to keep an eye on their bank and the best way to do this is when they walk in the door of the branch. Banks have to see this interaction as an opportunity to deliver more than “satisfaction”. This is a chance to extend and deepen the relationship with customers. It’s the time to build a dynamic relationship into what is essentially a mechanical transaction.

That dynamic relationship will be more than a greeter’s smile and spa music. The relationship will resolve the major values issues that customers have today with big business in general, and financial institutions in particular. Customers will want to see their banks as “sustainers”. They want to know that their bank is in business for the long-term, not just this year’s bonus. Customers will judge sustainment in several forms:

o Moral Leadership. Stakeholders will trump shareholders. Doing the right thing will mean more than profits. Akio Toyoda’s apology for errors at Toyota will become an icon for his colleagues at AIG, Citigroup, and the defunct Lehman Brothers and Bear Sterns.

o Employee Commitment. Customers will penalize egregious pay, bonus and severance for executives if the trade-off is seen as lack of respect for employee pay, benefits and appropriate severance. Whole Foods in the US has set a 14:1 ratio as the policy of highest executive pay to lowest paid employee; whereas the average US CEO is paid 300:1 to the lowest paid employee. Measurement for the customer will be easy – employee turnover – do employees stay, or do they go.

o Community involvement: Local will be valued over global. Sure, banks are big and will continue to get bigger; but what does that mean for “my community”. Certainly banks will sponsor local events, but are the employees involved? And how does the bank support and stimulate local business? Are there special loan terms for small business and personal relationships between owners and bankers? How often do bank managers change? Cross training may be good for their careers, but what does it do for the community?

o Environmental Respect: Green is not going away. It may become a cost of doing business, but it is not going away. Branches will be a micro opportunity to test the big banks commitment to environmental sustainability. Customers will be constantly on the look out not only for Styrofoam cups at the coffee machine, but what types are cars are in the employee parking lot. It may seem unfair, but the environmental presentation of the branch will be a proxy for the corporation.

If banks have to invest in branches then branches should serve the bank. The best way to do this is by getting customers to believe in their bank again; by getting customers to trust their banks. Trust is an attitude. It can be identified, measured, managed, and encouraged, but banks have to earn this trust. Branches give them the stage where they can put on their best trust performance.
This is a tall order for banks, but the reward is enormous. Banks that crack this code will have loyal customers for life and an advantage on their competitors.

About the Author

Bud Taylor

Mr. Taylor is an accomplished author, speaker, and consultant. Prior to starting Bud Taylor Partners, was the SVP and Global Director of Consulting for Synovate Loyalty. Before joining Synovate Bud was a Partner with Deloitte where he led its change practice in the US southwest.

Bud is a Canadian and naturalized US citizen. For over 30 years he has consulted to marquee clients in all major business sectors and in all parts of the world. Bud’s clients include: Microsoft Europe, the National Commercial Bank (Capital) of Saudi Arabia, the Whirlpool Corporation, Sony Electronics, and the Overseas Chinese Banking Corporation.

Bud contributes articles to professional journals and has published a business book: Customer Driven Change that demonstrates how to unite customers, managers, and employees in the process of organizational transformation. See:

Leadership Betrayal: When Leaders Don't Deliver

2009-09-30T07:14:00.000-07:00

Leadership Betrayal

When Leaders Promise, But Don’t Deliver

Situation

Most business people aspire to be leaders. We know this is the pinnacle of our profession.

o Most of us start out as “individual contributors” where we get results though our skill, raw talent, or determined force of will. But individuals don’t move mountains

o Next we learn the mechanics of managing people – planning and controlling. Our ability to get results augments exponentially; but there is a limit. We can only get results through people we can “touch” – resources we actually control

o Finally we come to understand that transformations, the big bangs, come through leadership – that mystical ability to inspire and excite others to do extraordinary things. “I have a dream…”; “ask not…”; “yes we can…”

Why do we follow these people? We’re told that it’s because they can communicate. They reach our souls. That may be true in some cases, but Bill Gates never inspires me, but his friend, Warren Buffet, does. No, there’s something more going on than inspirational communication.

I think that leaders reach some deep level of trust with us. We believe in their words and how those words make us believe in ourselves. In many parts of life this is a complete formula: motivational speaking and evangelical eulogizing come to mind.

Words = inspiration, = self-confidence, = pursuit of aspirational goals.

But leadership in business is more than talking and sermonizing. It’s more than infusing people with hope and sending them on their way. Inspiring people with the excitement and vision of flight is figuratively uplifting until they step off the edge of a cliff. At this point they learn the hard reality of Leadership Betrayal.

Complication

Why do we trust people when they are painting us the “…too good to be true” picture? How have they convinced us that we can do something that hasn’t even been in our dream space?

Well, we believe because we not only believe in their words, but we believe in them. We implicitly believe that their inspiration comes with their support. The Grande Armee believed in Napoleon because he was the first to charge into adversity. He painted the inspirational vision and then made the decisions to bring it into a focused picture.

When our leaders speak, we interpret this to mean that their ideas will be backed up with the management discipline and resources needed to implement the grand new idea. Management mechanics will support leadership dynamics. There will be resources, supply chains, systems and controls, legal agreements and what ever else is necessary to turn the ordinary into the extraordinary. And more than anything we expect to bask in the radiance of the leader as we work to change the world.

But what happens when vision isn’t being achieved, resources run out, and the leader is out chasing a new shinny thing? Leadership Betrayal, that’s what. All of a sudden the vision is exposed as unattainable in the absence of the elite talents of the leader.

However, the leader sees it differently. They see that the subordinate has been empowered to make things happen – “…just like I would.” They lose faith in the subordinate. They start to see the subordinate as a mere mortal – “…just another mechanic who can’t turn my ideas into reality.

The leader withdraws resources and their attention. Leadership Betrayal goes into ever decreasing concentric circles until intense acrimony destroys both parties.

Does it have to end this way?

Resolution

If you answer “yes” to these questions, your organization may suffer from “leadership betrayal”

1. Do you have a leader? Someone with big ideas, resources, and the ability to inspire others?

2. Is there a pattern of betrayal? Are there several incidences where big ideas have failed and people feel they were abandoned

How do you reverse this trend? Training is often not the answer. Leaders are more born than made; they just haven’t developed the management discipline to support their leadership. However, management training for natural leaders is usually tedious and repugnant to them.

You might be able to find a trusted lieutenant – Eisenhower had Bradley and Gates had Balmer; but the operative word is “trusted.” Who can you trust when the issue is potential betrayal? When will internal politics overcome the good intentions of the lieutenant? The role of 2iC (second in command) is difficult to sustain.

The best way to guard against Leadership Betrayal is to support with leader with management systems that can be sustained. Here’s an approach:

o Review the documents on past failures and interview the central figures to understand whether mechanics supported the leaders dream

1. Vision. By definition it can’t be precise. But it should derive from some fundamental principles or values. Are these clear?

2. Migration Path. The vision gets clarified as you pass through stages and gates. Are the milestones clear and realistic?

3. Resources. Are there resources to meet each milestone?

4. Competence. Do subordinates have the competence to drive toward the dream? Are you asking a technician to be Steve Jobs?

5. Reward. Not every idea will result in short term, independent wealth. Is the reward overstated?

6. Attention. Did the leader abdicate? Did they set a dream in motion and then lose interest

Leadership is a rare quality. It should never result in betrayal.

#1 Rule for Writing a Business Book - Don't

2009-09-13T09:17:00.000-07:00

Did you know that:

o 500 to 1000 books are published everyday in the United States?

o 95% of books never sell 5000 copies?

o if you get your book into Barnes & Noble, you’ll make less than $2.00 for each book they sell?

o E-book publishing is increasing at 25% to 50% per year

I wish that I had understood these numbers two years ago when I struck out to write my book, Customer Driven Change: What your customers know; your employees think; your managers overlook. Reactions to my authorship tend to be: “what an accomplishment,” and “I think I'd like to do that!”

I'm appreciative of the first comment - since it took me several thousand hours of work; however, I've got to caution you about trying this on your own. Be forewarned, it will be the most excruciating experience of your life. The wonder of writing a business book falls into three sections:

writing the book - this is the easy part
publishing the book - this is not for the faint of heart
selling the book - this makes the first two parts look like child's play

Writing the Book

You’ll need more than a good idea. You’ll need long periods of quiet time. You’ll also need an editor. Usually a family member or friend is not a good idea - but there are exceptions, particularly if you're paying them.

Oh, one other thing. Did you ever wonder why business books have a boring look and textbook feel to them? It's because every time you add a graph, chart, table, or call-out you add in printing complexity. There comes a point where "user friendly" is cost prohibitive.

Publishing the Book

You should decide on how you will publish before you have completed the manuscript - or even have a good draft. Basically you have three publishing choices, each with pros and cons:

Traditional Publishing: The big publishers may give you a small contract and they will do limited marketing, but they’ll own the rights to your book and they get involved in its content.
Self-Publishing: This is you and you better be a good project manager. You will own the rights to your book and you'll get all the net revenue, if you can find people to buy it at a reasonable price.
Hybrid Publishing: This is a niche market where you can go to a recognized publisher and pay them for their services. It's not cheap, but you do have the rights to your book - and its net profit.

Marketing the Book

Don’t fool your self. You may have written the next Wealth of Nations. At this point it’s not about content. It’s about finding people to write reviews; getting media spots; selling books to distributors; mailing books to colleagues and carrying boxes of books to meetings. Sure, Amazon will post your book, but who will buy it if they haven’t heard about it? Oh, yeah – there’s that “viral marketing” thing, right. Well be prepared to invest in a website, produce videos, and write a blog (yes, like this one).

Writing a business book has a lot of intrinsic value, such as personal accomplishment and supporting another line of business like consulting. But don’t get into this venture to make money. People make money in the publishing business, but it’s rarely the first time author.