Connecting the dots

Posted October 8, 2009 by Hans Norden
Categories: Uncategorized

Have you ever noticed that when many people observe the same event how each has a different interpretation of what happened? It all goes back to our mental conditioning through socio-economic background, education and personal experiences. We become more alert, remain oblivious or desensitize. The same applies to our unique qualities. We have a hard time recognizing them ourselves because we are who we are and don’t know any better; its our blind spot.

As an independent consultant I observe organizations with different eyes than many of their decision-makers. It comes naturally to me to look for structure; specific patterns in the way organizations operate. Patterns reveal themselves in the form of Actors and their Behavior.

Actors are people but also departments or systems. They are the building blocks that are there to perform a specific function. Once the Actors have been identified, I look for their behavior; what do they do, how do they do it, why do they do it and how do they interact with other Actors and their behavior? This is all about relationships and interdependencies.

Frederick Winslow Taylor, the father of Scientific Management, unraveled organizations to their component parts and individual activities. His aim was to improve efficiency through specialization. In other words, his analysis broke down the structure and took away the meaning of individual activities and jobs; do you remember the Charley Chaplin movie “Modern Times”?

The challenge before any decision-maker today, is to tie everything back together again. Strategic planning, social media, customer service, operational efficiency and on-and-on are very interesting but they derive their meaning and thus their value only from their relationships to other actors and their behavior. They simply cannot be dealt with in isolation of the organization as a whole.

Taylor’s ideas about operational efficiency were very effective when there was still a lot of slack to be picked up. Once we reached an optimum, it became harder and harder to achieve any gains without eroding the benefits that made the product or service successful in the first place.

Customer service is a great example of taking efficiency to an extreme and its subsequent damage to the organization’s reputation. When you call, you have to listen to a recording with an endless number of options that are irrelevant to your need. Then they suggest you don’t bother them by going to internet where you can figure it out yourself. Just in case you could get hold of a real person, that person can only follow a fixed script that s/he reads off a computer screen. Obviously, no matter how kind and willing your customer service person is, s/he cannot do for you what the system does not allow. Oh, did I mention that when you were on hold, a recording emphasized how much they value you as a client and how much they are committed to quality? There goes their credibility down the drain.

The moral of the story is that clients don’t care about your efficiency and that they vote with their feet. Customer service people are justified in blaming the system for their inability to satisfy clients. No wonder that employee turn-over is high in customer service and I wonder if the subsequent cost of continuous recruiting and training is even considered in measuring net efficiency gains. The heart of the matter goes right to the top of the organization. After all, it requires a high-level decision-maker to sign-off on specifications for designing, building, implementing and accepting investments in new strategic initiatives.

This executive should have evaluated the real value of efficiency gains in relationship to how clients experience the Brand. After all, a Brand is about the behavior of an organization as a whole and its perception by individual clients. A Brand is not some marketing-sauce made out of fashionable colors, suggestive logos and catchy slogans that is poured liberally over all your marketing campaigns. It has to mean something and there should be substance to your claims. It has to be a coordinated effort and sometimes, less efficiency in one department means more profit in another. All you need to do is connect the dots and paint the bigger picture. Call me direct at (858) 764-1969 to ask me how!

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Judging vs. Thinking

Posted October 1, 2009 by Hans Norden
Categories: Uncategorized

You should have seen this scene and I wish I’d remembered the title of the movie. Picture this; the scene is set in an Asian country where two young and beautiful American women are visiting a local market. They pass the many stalls with fish, vegetables and crafts when they stop and look at a stall with cute little puppies, squeaking for attention. They’re so adorable and one of the ladies, you guessed it, is going soft in the knees. She buys the cutest of them all and when she reaches for her wallet in her handbag, the sales lady hands her the dog in a nice kind of Nordstrom’s bag. Then, horror strikes as she peeks inside the bag … the little puppy is dead!

What happened? West meets East; two cultures collide. The American woman was buying a pet and the Asian woman was selling food! Confusion all around; the American woman is speechless and outraged and rightly so. The Asian woman is equally confused about the American woman’s reaction; didn’t she get what she wanted?

This is such a great example of a dilemma; a di-lemma or two lemmas. A lemma is a statement that affirms or denies something and is either true or false. See, true or false is thinking in terms of logically correct reasoning. On the other hand, right or wrong is judging; putting your opinion on a situation based on the models you created in your own mind according to your conditioning during your education.

Everything depends on your mind’s conditioning; the values, beliefs and cultural background of your upbringing. Both women had their own line of reasoning that was true to their own cultural heritage but the outcomes were very different. Not only are they not the same, they cannot be reconciled because each argument stems from a different starting point; puppies are pets and puppies are food. Therefore, let’s suspend our need for judgment, labeling someone or something as right or wrong and accept the differences as they are; different from your expectations.

What does that have to do with Organizational Governance! Everything, because success and failure depend on the expectations of your principal or buyer. Don’t assume anything but ask explicitly: “How will you know that we are successful?

I belief that we are in so much trouble because we are confused about our purpose or what we expect as a sustainable outcome of a commercial enterprise. If you believe the purpose is making money, and you do whatever it takes, you might have a run-in with the law or local ethics and beliefs. For examples, may I refer you to the Economic news of the past year? How rich is it to spend your golden days in a minimum-security facility?

On the other hand, if you believe the purpose is to provide buyers with utility, a real product or service that is of practical use, and you do whatever it takes to satisfy your clients before, during and after the transaction, people will come back because they value doing business with you and they’d rather spend their money with you than with anyone else. They are even willing to pay you a premium, wouldn’t you agree? The premium is an additional profit margin, over and above the industry-average. You are making money as a result of pursuing the realization of your purpose!

The lesson learned is that at the end of the day you want to experience peace of mind; knowing that you did the right thing in the form of leaving behind a thriving company as your legacy. That’s what Organizational Governance is all about. Just like the centrifugal governors installed since the 17th century in the windmills, for which my home country is so well known, they prevent the system from destroying itself. Isn’t that what you really want and expect, continuity? Are you willing to do whatever it takes, even changing your own mind?

Goal!

Posted September 30, 2009 by Hans Norden
Categories: Uncategorized

The other day I had lunch with a university professor and former consultant. We talked about the Executive Mastery Fellowship program that I am developing for CEOs and Board of Director members. One of the critical questions we discussed was the nature of the pain that CEOs experience; is that an insufficiency in goal-setting or in solving a particular problem and implementing its solution? At first sight they seem to have goals but they are struggling with their realization.

This raised another critical question regarding a consultant’s moral conduct. Should consultants just answer questions uncritically, take the money and leave or look for the right question first? The answer is not always obvious especially in those critical issues that require self-examination which can evoke serious push-back and possibly the loss of an attractive assignment. Here’s an example: I consulted with a small manufacturing/marketing company in Seattle, WA that received a cash-offer for the purchase of a container load of their products from a wholesale buyer. As this could possibly become a new and recurring source of revenue, they wondered whether they should accept or reject the enticing offer.

The idiosyncratic consultant’s answer is “It depends”. It depends on what? Well, what is the bigger picture perspective? From a pure financial point of view they should take the money because cash is king and liquidity was an issue for my client. This is a good answer but is it the answer to the right question, the question that would bring this company closer to achieving its goals?

From a strategic point of view they needed to ask some critical questions first; questions about their own goals and mission and that of the wholesale buyer. It turned out that my client wanted to build a brand around superior quality that commands a superior margin. The wholesaler turned out to be an Internet marketer who dumped my client’s products on the market at seriously discounted prices. As a result, the variance in prices for one and the same product between e-bay offerings, the dealer network and factory-direct was in some instances as high as 92 percent!!! This is detrimental to the image of the Brand.

The lesson learned is that goals exist within a hierarchy. Purpose translates into a vision. Vision translates into a Mission and in turn, that Mission must be translated into a Competitive Strategy. Strategy must be broken out in long-term Goals for the different departments and these Goals must be interpreted and defined into short-term Objectives. In other words each hierarchical level within the organization must support the objectives and thus Goals of the next highest hierarchical level, all the way back to purpose. In other words, observing the hierarchy of Goals is the easiest tool for preserving integrity or wholeness (read: fewer problems, less friction and conflict, higher net-profits) inside your organization. It takes some work but I guarantee it’s worth your time and efforts!

The Wright brothers were right!

Posted September 30, 2009 by Hans Norden
Categories: Uncategorized

For some years I have been afflicted with the belief that flight is possible to man.” In pursuit of any available data and information on the topic, Wilbur Wright wrote this line to Octave Chanute, a contemporary and eminent pioneer in the field of aeronautics, on May 13th, 1900.

Because Wilbur wanted to fly, which he could not achieve without any assistance, he set out to build a flying-machine; the vehicle for the pursuit of his purpose. Together with his younger brother Orville, he decided to break-up the project in three parts:
1. Creating a wing that would produce enough lift to carry a person.
2. Discovering a control mechanism for steering the flying-machine.
3. Adding an engine to make flight sustainable.

The biggest challenge for all pioneers was conquering the issue of control. This was such a hard nut to crack that most pioneers settled for creating an inherently stable machine that could fly in straight lines. However, the bicycle mechanics Wilbur and Orville knew from personal experience that an inherently unstable machine, such as the bicycle, would find its stability in its interaction with the human intellect. In other words, Wilbur and Orville were comfortable with the unstable nature of their flying-machine and it didn’t take them very long to figure out the three-axis control system of Yaw, Pitch and Roll that is still used in every single aircraft today. All aircraft derive their stability from people operating the control system, including those equipped with intermediary technology such a fly-by-wire, flight-management computer or auto-pilot. The Wright brothers were right!

http://commons.wikimedia.org/wiki/File:Wrightflyer.jpg

How is this relevant to executives of commercial organizations? Well, the organization is also a vehicle for the pursuit of a specific purpose. Furthermore, organizations are inherently unstable and need people for their guidance and control; after all, financial statements do not balance themselves! No employee can be allowed as a passenger who’s there just for the ride. No matter how much technology you have deployed, people control the business and they steer their organization towards success or failure.

The fact that people make mistakes is part of the vehicle’s inherent instability and this should not be remedied by “Zero-Tolerance” practices or replacing people by technology but by pro-active adjustments to the conditions under which humans work. Extensive studies into human error have concluded that “Human error is not the cause of failure but the symptom of a failing system”.

Who design, build, maintain, update, operate, manage, improve, change, grow, audit, legalize, finance and market that failing system? Right, people do! How does one turn a failing system into a successful system? Right, by engaging your employees; all of them! Do not turn anyone into a passenger who’s there just for the ride by low-balling their importance; if they’re not on the team you’d probably don’t need them. Who’s taking the lead? That must be the Chief Executive Officer! Happy landings.

Bigger, Higher, Faster, Farther …

Posted September 29, 2009 by Hans Norden
Categories: Uncategorized

Facts tell but stories sell. Here’s an up to date story that’s of immediate relevance to your business. That’s right; I’m talking to you, the CEO decision-maker with ultimate authority and ultimate responsibility for the success and failure of the company.

The highly successful F-16 fighter jet was developed in secret; not just kept away from the outside world but from the “Stars & Bars” inside the Pentagon; the generals that could make or brake the project. Sounds crazy right? What was the conflict of interest you might ask? Well, the project-instigator was a phenomenal fighter pilot who was after an aircraft that would command air-superiority and the Pentagon staff wanted the latest and greatest; nothing but the best of the best. Their jet should be bigger because they believed that was better and their jets should fly higher, faster and farther distances for being a worthy successor to the current jets. This zeal for having these capabilities dominated rational thought about the function of fighter aircraft and thus what they should look like; form follows function.

If the wishes of the fighter pilot and the Pentagon Generals sound rather similar to you, then think again. The fighter pilot saw the aircraft as a Means to an End; air-superiority. The Pentagon Generals saw technology as their Means to an End; packing all the latest and greatest that US technology had to offer into a single aircraft. This is a perfect example of what Albert Einstein meant when he said: “Perfection of means and the confusion of Ends characterize our age”.

So, the question is “What makes a great aircraft?” Well, that depends on your definition of success or on the End you have in mind! Is it about the prestige that comes with deploying state-of-the-art technology for its own sake or serving the Tax-payers; defending them from all foreign and domestic threats? How much are we willing to spend? What gives us the biggest bang for our bucks? Shouldn’t there be an objective organizing principle?

Our fighter pilot, US Air force Col. John Boyd developed such an objective organizing principle in the form of a computer program that produced the design principles for the F-16. He knew that success was a trade-off between many factors. For example, every additional engine burns additional fuel that needs to be carried which increases weight and changes the aero-dynamics and requires the size of the aircraft to grow. Bigger radars have bigger radar domes that increase the diameter of the aircraft’s fuselage, which increases drag, reduces fuel efficiency and aircraft agility. Consequently, the question becomes “What are the bare-bone features necessary for being successful?

Go to slides 37 and 38 of a presentation about the F-22 and F-35 1) fighter aircraft that you can find here: http://www.cdi.org/pdfs/Stevenson%20F-22%20Brief.pdf
What makes more sense to you when stealth operation is a critical success factor; designing a small aircraft for specific tasks or making a one-size-fits-all aircraft for the Air force, Marines and Navy of all NATO-partners that is big and easily visible with the naked eye and thus requires radar, radios, etc. to make the aircraft less visible on radars but that increases shape and weight that needs to be compensated by other on-board technology, making bigger engines necessary that consume more fuel and thus put out more heat that can be spotted by infra-red detectors and on-and-on?

Do you see the analogy between the Pentagon-logic and that preached by military contractors and in your case service providers and professionals? They make tons of money off you. Military contractors help the Pentagon gold-plate fighter aircraft and as a result, jets have become ineffective and too expensive to buy and operate; they are compromises for all the specific tasks they were meant to perform.

Your decisions to buy-into the advise of many self-serving service providers and professionals gold-plates your organization too. Just like the Pentagon, you are committing predatory cultivation on your own organization with the best of intentions, no-doubt. However, your investments have sky-rocketed, products and services that were meant to differentiate yourself from competitors have been standardized and their value propositions have converged with those of competitors. As a result, you are burning more money than before for an organization that is less effective in satisfying client needs and if that’s not bad enough, you are forced to fight a war of attrition on price; your only differentiating quality.

Please, don’t blame your poor results on the economy? Business is not bad because of the economy but the economy is bad because of the way you do business! Keeping cost down is important but not without being relevant to buyers who are willing to pay the profit margin that you deserve.

Realize that the driving force behind any business is its people. People provide your strategic ability to serve clients, to make good on your brand-promise and instill trust and confidence for creating loyal customers. People do business with people; they make decisions, observe other people’s needs, create tools and provide customer service. Your buyers are willing to cut you some slack and help you be effective and relevant when you serve humanity and sustainability. Now is the time to re-direct our intentions away from Bigger, Higher, Faster, Farther and to pursue our purpose in life by defining success in terms of goals that enhance humanity and sustainability so that organizations can thrive on their own terms; Have fun!

1) The Pentagon insiders couldn’t wait for John Boyd to leave so they could throw out his organizing principle and go back to business-as-usual with the predictable results that are plaguing the development of the F-22 and F-35.

Is our approach to business insane?

Posted September 23, 2009 by Hans Norden
Categories: Uncategorized

Albert Einstein once described insanity as “Doing the same thing over and over again and expecting different results”. He also said that: “The significant problems we face cannot be solved at the same level of thinking we were at when we created them.”

 You don’t need to be an Economist or a Business analyst to conclude that the human race IS facing significant problems when even the mightiest of companies and industries collapse. Then, the one remaining question is: “What IS our current level of thinking about business?” or “Why does it get us into so much trouble?”

 Well, we slice up organizations into silos of specialized knowledge such as finance, marketing and Information Technology. So, if your toolbox is filled with financial degrees, you have programmed your mind to solve financial problems with financial solutions. This explains the near insatiable appetite for more detail and specialization for optimizing effectiveness and efficiency of anything done inside the company. No wonder your options to improving Bottom Line results are limited to either Raising prices, Increasing sales or Cutting costs. But, no body cares about efficiency if your products and services fail to attract any buyers!

 Is it possible that organizations collapse because we have forgotten the Purpose or raison d’être of organizations? What’s our organizing principle anyway? I know we need to make money but does that mean that making money is the purpose? Because human beings need to eat and drink, does that imply that eating and drinking must be the essence of life? We are trapped and bouncing off the walls inside our own boxes. Is it possible that we are on the wrong track and have come to a dead-end?

 No matter how much smarter we work, or how much we improve our proficiency in performing ordinary tasks extraordinarily well, we’re still on the wrong track- period! Therefore, we don’t need more best-practices or newer, more advanced and faster tools because they represent only better means to wrong ends. Albert Einstein foresaw this obsession with tools of ours when he said: “The perfection of means and the confusion of ends seem to characterize our age.”

 Nonetheless, from Universities to networking events we are offered more of the same solutions, but now with the additional mentioning in the title of: “… in difficult times. Is that insane or not? You be the judge.