Friday, October 29, 2010

"Winning During the Slog. Part 3 - 'Adapt' is New Thinking"

(from Issues for Growth Vol. 19, No. 15)

This is the third of a series of articles about how companies and individuals are winning during the “The Long, Slow, Hard Economic Slog” that we are in (Issues for Growth Vol. 19, No.13). This article is written by Chris Carosella who works with The Mead Consulting Group. –DPM

" Adapt or perish, now as ever, is nature's inexorable imperative" - H.G. Wells

“Learning how to adapt is the #1 reason I had a successful career,” was the response from a CEO to a question about achievement. The CEO’s early career included eleven years with a Fortune 100 company where she had a rapid ascent from a sales account executive to a senior vice president. Every promotion brought relocation to a new city, huge challenges in functional areas where she had little or no experience, more skeptical people to manage who didn’t want to change the way they were doing their work, and the opportunity to prove that success was about a focus on achieving results.

What do you mean by “adapt?”

The follow up question of “what do you mean by adapt?” led to a detailed explanation. “I was recruited to a company that had just been acquired by a global powerhouse with a demand of each business being a top market share company with 20% growth every year. That meant the company needed to change just about everything they had been doing including how they gain the right customers, how fast they could go from #7 in market share to #1 or #2, how processes could be improved, how employees were compensated, and how talent was recruited and retained. Since they had been through change leadership programs countless times, the last thing they needed was another one. No one wants to change because it implies they are currently wrong in some way.”

“How is ‘adapt’ different from ‘change?”

“Employees responded to adapting because it was continuous as opposed to annual change programs led by ‘special’ change leaders. You can debate the semantics but the actions are different. Everyone was taught how to adapt to possible scenarios and to make decisions, improve processes, and collaborate across functional lines to achieve results that kept the company ahead of the competition while serving their customers. An adaptive environment means all employees are accountable in a culture of achievement.”

Adapting encourages a sense of freedom.

“Adapting, continued the CEO, “is that it encourages a sense of freedom as opposed to change constraints. When it’s continuous and part of the culture, adapting means employees innovate more, make faster decisions, and focus on key metrics tied to company success.”

We need to change the way we think about our own businesses.

Changing the way we think about business is the lesson to be learned from this CEO. The CEO understood that the business would only achieve desired results if people embrace the freedom of adapting versus the fear of changing. Using her own experience of always facing new people, new duties and new challenges, the CEO was able to identify critical success factors:

· Start assessing the situation immediately. Don’t just wait to see what happens.

· Ask a lot of questions. Don’t be afraid to learn.

· Trust your instincts. Support them through unsolicited feedback.

· Don’t talk about the need to change everything. If you do, be prepared for fear to set in.

· Do talk about how companies evolve, innovate, and adapt.

· Solicit feedback for new ideas.

· Be clear about what you want.

· Define “adapting” for your company. Communicate and teach.

· Build a culture of “do it now” with an appropriate sense of urgency in getting things done.

· Create an attitude of achievement throughout the company.

· Don’t manage. Lead.

· Execute. Measure. Reward. Repeat.

The nature of work today can be desperate.

The nature of work today can be desperate – on the negative side there are layoffs, recession, companies closing, banks failing; on the positive side opportunities are available for a much shorter time. There’s no time to wait! We must learn how to adapt to this new economy. That means changing the way you think about your own company. The old way is to wait for something negative to happen and then decide to implement a change program. The new way is to create an adaptive culture so that all employees are continuously adapting their strategies and tactics to every possible challenge.

Your success depends on results!

Your success depends on achieving the desired results for your company. Companies are recognizing that, in order to succeed during “the slog,” the current and future economic environment calls for a dramatic difference. RapidAdaptÔ is the recommendation for your success. Adapt means to Accelerate Decisions Attitudes and Processes in Time so that you can stay ahead of competitive, client, and company challenges. The purpose of RapidAdaptÔ is to help you develop the ability to constantly adapt strategies and tactics in order to create a sustainable company. It’s not just a strategy process because it teaches employees how to create an adapting culture with a sense of urgency instead of complacency. That, in turn, creates a continuous learning culture with accountability at all levels of the company.

George Bernard Shaw said, “The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends upon the unreasonable man.”

Some companies are experiencing significant “new thinking” results. What are you doing to change how you think about your business and create a culture of adaptability? Post or email us your comments

Friday, October 22, 2010

Winning During the Slog - Part 2: Companies Don’t Need to Change. They Need to Adapt

(From Issues for Growth Vol.19, No.14)

This is the second of a series of articles about how companies and individuals are winning during the “The Long, Slow, Hard Economic Slog” that we are in (Issues for Growth Vol. 19, No.13). This article is written by Chris Carosella who works with The Mead Consulting Group. -DPM

He remembered the last time. It was painful. People were hurt. Money was lost. Clients left. Chaos was everywhere. And it took so much time. But he knew he had to do it again even though he dreaded it. He actually felt sick at the thought of it. The CEO picked up the phone and called his most trusted direct report and said, “Let’s do it. We know we can’t wait any longer. It’s time for another change initiative in this company. Just make sure it works this time!”

He braced himself for employees’ reactions…
“Not again.”
“It takes us away from our jobs.”
“It doesn’t work.”
“It’s the program du jour.”

His company has gone through some challenging growth over the past few years yet he knows they’re now at a critical point. They’ve made mistakes; they didn’t learn from them. They had plans; they kept them at the management level. He wants sustainable, profitable growth, along with providing his clients and employees what they need to thrive. Yet he loses sleep over how to do it. All he can think of at 2 a.m. is the definition of insanity –doing the same thing yet expecting different results.

What most CEOs aren’t aware of, according to recent Blanchard research, is that up to 70% of change efforts fail, a shocking figure in good times, let alone in the current economic climate. The main reason for that failure rate is not considering the impact of change on those people who are most impacted by it – the employees. Executives see change as a way to strengthen the business. Employees don’t. They see change as unwelcome, disruptive, and intrusive.

Employees focus too much on what they think they will lose from change rather than what they will gain in the end. A profound impact on change efforts is the emotional and psychological adjustments that people go through as they adjust to something new. It is this emotional impact that is usually neglected by leaders because it’s considered a “soft” issue. Given that people are attached to how things are, there is a sense of loss and emotional upheaval if that certainty, and the security it provides, is threatened. This is important, because people cannot work effectively if they are experiencing emotional turbulence.

A business change leader from GE identified why change efforts failed in a variety of businesses:

· Mistaken belief that announcing a change effort is the same as implementing it.

· Colleagues (managers and employees) are not convinced of the need for change.

· Leaders fail to understand employees’ reactions to change.

· Leaders provide too little information about the reason or purpose of the change to employees.

· The practical aspects of making change happen are misunderstood or ignored.

· The actual impact of change is not measured or benchmarked.

· Change is seen as a 'one-off' rather than an ongoing process.

Forget about it. Our challenge to you is to forget change. Yes – forget change. It’s seldom done well, it’s not enjoyable and employees don’t believe you believe in it. So don’t talk about change. For most people change means being afraid of the unknown, which can be overwhelming. That means if you’re managing change you’re also managing the fears of others, which is impossible. Gary Hamel, ranked by the Wall Street Journal as the world’s most influential business thinker, has said, “Today, the overriding problem for every organization is how to change, deeply and continually, and at an accelerating pace.” Hamel’s right – with one suggested edit: Use the word “adapt” instead of “change.”

Begin by considering what it means to adapt versus what it means to change. Change implies a beginning point (how things are now) with the intent to reach a desired end point (how things will be). Adapting is the ability to adjust to a variety of situations as needed. There’s no beginning and end. It’s a constant process that can move in any direction as desired. It includes everyone, not just change leaders. Everyone becomes responsible for results. “Change” and “adapt” are similar to many people. That’s OK. We don’t want to end up in a war of definitions. We do, however, want to alter how you think about and what you do about growing your company or organization into the best it can be.

When the game gets tough, the tough change the game. Companies are recognizing that, in order to succeed during “the slog,” the current and future economic environment calls for dramatic change. RapidAdaptÔ is the recommendation for your sanity. Adapt means to Accelerate Decisions Attitudes and Processes in Time so that you can stay ahead of competitive, client, and company challenges. The purpose of RapidAdaptÔ is to help you develop the ability to constantly adapt strategies and tactics in order to create a sustainable company. It’s not just a strategy process because it teaches employees how to create an adapting culture with a sense of urgency instead of complacency. That, in turn, creates a continuous learning culture with accountability at all levels of the company. A division president of an international bank said it best, “Employees want to take action and create an atmosphere of achievement and continuous improvement. They don’t want to be led through workshops on how to change.”

Some companies are experiencing significant “game-changing” results. What are you doing to “change the game” and create a culture of adaptability?

Wednesday, October 13, 2010

Winning During the Slog: Part 1 - The Long, Slow, Hard Economic Slog

(from Issues for Growth Vol.19, No.13)

In October 2008, when we first presented a possible scenario for the recovery – a long extended period of very slow growth - a long, gray period, many of you questioned whether my typically optimistic personality had taken a cruel twist. Like most everyone else, I searched daily for the traditional signs that the recovery was on the way. But as time progressed it has become apparent that my worst fears are being realized. We can no longer ignore the fact that we are in for a “long, hard economic slog.”

Webster defines slog as “hard persistent work” or “to plod perseveringly against difficulty.” One business owner recently told me it was like running as fast as you can, but not getting anywhere. It’s frustrating; it’s scary; it’s fatiguing. For many, it can be demoralizing. We see some business owners ready to throw in the towel.

Will this period break the spirit of American capitalism? Will years of rejection and lack of success reverse that fundamental optimistic notion that innovation, hard work, determination, and perseverance will ultimately win out?

I do NOT believe that.

In fact, there may be greater opportunity today than ever before - if you know where to look. One thing is for sure – the old ways of dealing with a recession and recovery will not work. New ideas, new business models, innovative products and services will ultimately win the day. For the next several editions of Issues for Growth, we will be focusing on the ways that companies – and individuals – are winning in the long slow slog.

The Long, Slow, Hard Economic Slog. In this September 10th Opinion in the Wall Street Journal, Nobel Laureate Economist Vernon Smith and Steven Gjerstad suggest that we are indeed in for a long slog.

Our study of all the postwar recessions and the Great Depression leads to the following empirical proposition: If there is no recovery in housing expenditures, confirmed by a recovery in consumer durable goods expenditures, then there is no economic recovery.”

They summarize their study and findings with this: “The average increase in new residential construction in the first year following the previous 10 postwar recessions has been 26.3%. The largest increase in residential construction followed the 1981-82 recession, when it increased 75.5% as monetary policy was relaxed. In the past year, residential construction has increased 6.3%. This is the slowest rebound in residential construction in any sustained recovery from a postwar recession. No currently debated policy will likely change this situation, as the market is saturated with foreclosed houses and homeowners suffer from $771 billion in negative equity. This fact needs to be confronted: We are almost surely in for a long slog.” Click here for the full article.

What are your thoughts?

Thursday, October 7, 2010

Which Do You Have – a Lifestyle Business or an Equity Value Business? It’s Important to Know the Difference

(from Issues for Growth Vol.19, No. 12)

In speaking to a group of business owners recently about defining their business vision, I suggested that they be clear about whether they want an "equity value business" or a "lifestyle business", because the way they approach building a business must be very different depending on how they will define success.

The Lifestyle Business. The term “lifestyle entrepreneur” was coined in 1987 by William Wetzel, a director emeritus of the Center for Venture Research at the University of New Hampshire. Mr. Wetzel was using it then to describe ventures unlikely to generate economic returns robust enough to interest outside investors. In financial jargon, “there's no upside potential for creating wealth," he explains.

"Lifestyle ventures are usually ventures that are run by people who like being their own bosses," Wetzel says. "But they're in it for the income as well. Indeed, lifestyle entrepreneurs offer a different...view of success than those who are mainly focused on longer-term wealth accumulation.

Lifestyle businesses are businesses that are set up and run by their founders primarily with the aim of sustaining a particular level of income and little more; or to provide a foundation from which to enjoy a particular lifestyle. Some types of enterprises are more accessible than others to the would-be lifestyle business person. Those requiring extensive capital are difficult to launch and sustain on a lifestyle basis; others such as small “creative” businesses are more practical for sole practitioners or small groups such as husband-and-wife teams.

Lifestyle businesses typically have limited scalability and potential for growth. In conventional business terms, lifestyle businesses typically have limited scalability and potential for growth because such growth would impair the lifestyle for which their owner-managers set them up. However, a lifestyle business can and do win awards and provide satisfaction to its owners and customers. These are firms that depend heavily on founder skills, personality, energy, and contacts. Often their founders create them to exercise personal talent or skills, achieve a flexible schedule, work with other family members, remain in a desired geographic area, or simply to express themselves. But without the founder’s deep personal involvement, such businesses are likely to, well, founder. Professional investors therefore rarely get involved with lifestyle businesses. A lifestyle business is also one that can allow the owner to call his/her own shots and to move at his/her own pace. It’s a business that fits his/her current way of living rather than dictating how things ought to be done. For millions of people, these sorts of small ventures are an excellent way to “do what you love.”

The Equity or Value Business. Equity can be defined as: A company's assets, less its liabilities, which are the property of the owner or shareholders. Popularly, equities are stocks and shares which do not pay interest at fixed rates but pay dividends based on the company's performance. The value of equities tends to rise over the long term, but in the short term they are a risk investment because prices can fall as well as rise.

An equity or value business is one where the owner intends to build real assets with a grow-able, tangible value that can be bought and sold - either as shares or the entire business. Success would be defined as the increase in value of the business over time. These businesses by definition will be built to succeed without the presence of the owner(s). In many cases, current lifestyle of the founder/owner is sacrificed in order to build significant long term value. In equity value businesses, owners focus more on building value as seen by potential buyers: sustained improvements in revenue/EBITDA, strong management team that can operate and grow the business without the owner’s constant involvement,

By contrast, a lifestyle business is one where the entrepreneur seeks to generate an "adequate" income while living where s/he wants, doing what s/he loves, or having the flexibility to be around when the kids or grandkids come home from school or take long weekends in the winter to go skiing. Success would be defined as an increase in satisfaction with one's life over time.

It’s imperative to decide which one you are. These are very different scenarios. "Equity value or lifestyle" is one of those fundamental decisions you should make early in your company’s history. If you're contemplating going into business with a partner, determine if you both would answer the same way. So why is it important to decide? Businesses that do not have a clear understanding of the type of business they want – and are prepared to be suffer inferior returns. Going down a path that straddles both lifestyle and equity value camps is sure to generate both lower current cash (compensation for the owners) as well as lower growth and value potential (lower equity value). Be honest with yourself about your appetite for risk, your need for autonomy, your desire for current compensation.

In the end, neither is good or bad. It's just, which one is for you?