Ignite the Promise

Keep Winning, Reinvent the Organization!

When the economy is down, unemployment is high, and business is weak, companies falter, and some fail.  The best companies weather these down turns better because they have a mindset to succeed.  They have a culture of creativity and innovation.  They continuously reinvent themselves!

In a recent issue of Washington SmartCEO (April 2012), the idea of 'don't turnaround' was presented that notes that less than 10% of companies that face major growth issues fully recover (i.e., don't turnaround).  Trying to turnaround a failing business is extremely difficult. It's tough on the leadership, the employees, the suppliers, and the customers.  Importantly, once one's image of a successful enterprise is damaged, it is hard to repair.  "Can I trust that this company will still be here when I need them?"  'Don't turnaround' suggests that it is best not to get into a position where growth stalls. 

In a small way, I know the pain of a turnaround.  I was once the executive of a small nonprofit association.  When I took office, the association was not financially sound, but we were not fully aware of it.  The problem was that the way membership fees were collected made it very difficult to know precisely how much money was available.  Instead of an annual date for membership renewals, renewals were set based on when the member joined.  Hence there could be 365 different dates when someone's membership was to be renewed!  With this practice, budgeting on a calendar each year was, at best, a guess.  Well, you might surmise that we could run out of the budgeted funds before the end of each year.  In the first year I took office, we used up the year's budget within 6 months into the year!  We then needed to borrow 'next year's' funds to continue running the office and the association for 6 months.  At this juncture, we were $200,000 in the red and our association management firm stepped in and told us we needed to tell them how we were going to raise 50% of that in 30 days!  Long story short, with a turnaround specialist 'on my hip' we completed the turnaround and in two years, we no longer had debt.  In the midst of the crisis, there was fear (of failure), anger (of members), and embarrassment (from others looking in). What did I learn?  It is definitely better to 'don't turnaround!' 

How does one avoid the need for a turnaround?  One way is for a company to 'reinvent' itself even before there is a need to take drastic recovery actions.  In most organizations, there are a set of products or services that produce most of the revenues.  In order to stay successful and competitive, it is important to 'reinvent' the products and services from time to time to avoid decreasing revenues due to competition or reduced interest of current customers.  The creative maintenance wheel is a framing of this effort.  The first step is to 'retreat' to reassess and rethink the products.  An actual offsite creative work session is ideal.  Beyond the retreat, one 'rethinks' the product and its new attributes to align with anticipated acceptance by customers and, finally, 'refresh' the product line.  I have always liked what Microsoft did with its DOS operating system.  When DOS was still the 'cash cow' for Microsoft, they came out with Windows.  Thus rather than see the expected dip in revenues in the normal life-cycle of a product (as DOS users decreased), there was very little dip in revenues as the Windows operating system ramped up in sales.  If an organization regularly uses a creative maintenance wheel approach -- retreat, rethink and refresh their products and services, their chances of having a strong positive revenue trajectory is enhanced.  Hmmm, is this what Apple Computers is doing?

© Baldwin H. Tom CMC
www.tbgroupconsultants.com

Cascading Enterprise Strategy

Every once in a while, you see another approach to strategic planning.  There is not much new under the sun here, just different emphases and branded terms that represent a nuance created by the authors.  I equate strategic planning approaches to seeing the many churches across the landscape.  Just as there is a church for everyone, there is a planning process for everyone!

So, here is another that I used five years ago.  It's not new, but may be of interest if you want to borrow some ideas.  It's about how strategic planning should move up and then down the organizational hierarchy to be optimally effective. 

Truisms.  The plan is not a document but a guide.  As a guide, it is not perfect and is modified as circumstances dictate.  Planning is not a task but should be part of an organization's culture.  Everyone needs to be involved because the strategic plan is designed to help plan one's corporate future.  Strategic thinking and exploration should precede any planning because searching possibilities helps to think outside of the box.  If we are not growing as a business, we are dying.  Finally if we fail to plan, we plan to fail.

Strategic planning should not be a solution for remediation, it should be a guide to new business plateaus.  It should draw the organization into the future.  Consider the following players in an enterprise -- executives, directors, managers, and staff.  In a cascading enterprise strategy approach, planning moves up and down the components, like a cascade. 1) Thinking should be focused from the bottom (staff) up; 2) Planning should move from top (executives) to bottom and from bottom to top; and 3) Implementing should be driven from top to bottom.  With this approach all stakeholders have some role in the process and this instills a higher sense of ownership and greater expectations that the plans will be implemented well.

This cascading approach also addresses the importance to link thinking and exploring with planning.  The strategic thinking step involves understanding the purpose for the organization and its direction.  The thinking and exploration in this step helps generate ideal options for the plan.  This step encourages free imagination without criticism and allows exploration of 'crazy' ideas.  We have found this step very energizing for participants.  This right-brain creative step is followed by a left-brain strategic planning step.  Thus when a SWOT analysis is carried out within the planning process, there will be some useful (and even exciting) opportunities that can be considered.

The left-brain planning step also includes exploration of opportunities from the ideas generated in the creative thinking step.  In contrast to the creative thinking step, the ideas must now be realistic and actionable to insert into a plan that moves the organization's efforts forward.  This is a reality check on what can or cannot be done.  Notice that if the strategic thinking and exploration is not done, then the strategic plan will most likely miss out on some great opportunities because the reality constraints of the actual plan would too quickly discount those ideas. 

In order to tie the planning back to the traditional Vision, Mission, Goals, Objectives and Tasks framework, the cascade of activity responsibilities move from executives (vision, mission) to directors (mission, goals) to managers (goals, objectives) and then to staff (objectives, tasks).  As a final step, one can add a balanced scorecard to each level to present a cascading scorecard model.  However it is done, the idea is to engage people at all levels to develop the strategy and to measure the progress so each success can be celebrated.

© Baldwin H. Tom CMC
www.tbgroupconsultants.com

Can't Win for Winning!

When one does all the right things in all the right ways and still loses, it's time to rethink! 

Over the years I have collected books that interest me in the consulting area, especially in areas of creativity, innovation, and competitiveness.  As I was scanning my bookshelf, I pulled out a book (now 15 years old) I had not looked at for quite some time.  It is about the reason great firms can fail even as they adopt new technologies.  The Innovator's Dilemma is the title of the book  (The Innovator's Dilemma -- When new technologies cause great firms to fail, by Clayton M. Christensen. Harvard Business School Press, Boston, 1997).

Do the observations in the book have relevance to today's businesses?  Yes.  The lessons learned are yet compelling.  Christensen lists a number of companies in different industries that failed to stay atop their industries.  The important point is that these were not poorly run companies.  Indeed, these companies were well-managed, customer focused ones that lost market dominance.  Sears Roebuck (missed on discount retailing), IBM (missed on personal computer), Xerox (missed on desktop copier), and others are discussed. 

How do outstanding companies lose market share even when doing everything right? Breakthrough innovations (disruptive technologies) that are not used by their customers (yet) and hence not advocated by these high performing companies often cause the demise of these stellar firms.  What these successful companies were doing was to keep close to their customers, provide exceptional products and services, and thus missed out on the emerging opportunities.  They could not make the switch to catch the next wave of competitors.  The challenge for these world-class firms is that sometimes it is right to not listen to your customers, to invest in lower-performing products (with lower margins), and to enter small markets.

Christensen recommends understanding the difference between sustaining versus disruptive technologies to begin to avoid difficulties.  Sustaining technologies include improvements in products and services currently desired by customers.  On the other hand, disruptive technologies are products and services that may not be in demand by one's customers.  While disruptive technologies are not yet in the mainstream and underperform established products, these technologies are often cheaper, simpler, smaller, and often more convenient to use.  It is about price and convenience where 'good enough is good enough!'

In the face of this challenge Christensen says, "planning better, working harder, becoming more customer-driven exacerbate the problem.'   He offers four principles of disruptive technology: 1) Customers and investors control resources.  Hence, ideas that do not meet the interest of customers and investors will not be supported; 2) Small markets do not solve growth needs of large companies.  Hence, as disruptive technologies do not start with large markets, these would not be attractive to large firms; 3) Markets that don't exist (yet) cannot be analyzed.  Hence, it is not possible to provide traditional market research to define, nor justify moving into such undefined markets; and 4) The technology exceeds what the current customers demand.  Hence, the disruptive product will underperform (not be well received) in the marketplace.

Christensen details with a case study how an executive could succeed in the face of disruptive technologies.  He shows how to address the above four principles.  He says the solution to this dilemma is to create an independent organization with its own cost structure to succeed in the low margin market.  The size of the new organization should be matched to the size of the targeted market. 

Is this scenario still in play today?  Most certainly is.  Note the hospitals and large clinics and their decline because of increasing costs.  The disruptive technology in this case are the mini clinics springing up in strip shopping malls, in grocery stores and in drug stores.  They are taking away business from the large medical groups.  Is there more?  Just look for small service units at strip malls and see if there is a larger industry unit somewhere that is oblivious to the mini-units. 

What dynamic business today might face a similar demise tomorrow?

© Baldwin H. Tom CMC
www.tbgroupconsultants.com

Disruptive Innovation

Every once in a while, we need to clean house, especially make room for new business files.  After over 30 years in the consulting business, I have accumulated much stuff.  I have been discarding old client files, read over some project reports of clients and wondered if they are still in business, noted how unsophisticated I was in my early work, and marveled that I am still in the business.  By the way, it feels good to clean out the really old stuff.

As I was recycling magazines, I spotted a name I recognized and began reading the article.  Disruptive Innovation for Social Change, by Clayton M. Christensen, et. al. was a Harvard Business Review article of December 2006 that caught my eye. 

Christensen's message is relevant for me now because I have been working on a new service idea and was wondering how best to enter the competition.  The article pointed out a type of thinking that, I believe, will give me excellent ideas for the new effort.  What Christensen said was that competition requires a fundamentally different approach -- a disruptive innovative approach.  Disruptive innovation (DI) challenges the status quo.  DI solutions are typically simpler, more convenient, and less expensive.  For example, mini-health clinics found inside drug stores provide inexpensive, convenient, and good enough care for basic needs.  Such clinics are disruptive to traditional medical clinics with their large overhead costs.  Here are Christensen's key points regarding catalytic innovations, a subset of DI. Catalytic Innovations (CI) have five qualities:  1) They create systemic social change through scaling and replication; 2) They meet a need that is either overserved or not served at all; 3) They offer products and services simpler and less costly than existing alternatives, but users consider them to be good enough; 4) They generate resources, such as donations, grants, volunteers, or intellectual capital; and 5) They are often ignored, disparaged, or even encouraged by existing players for whom the business model is unprofitable or othewise unattractive.  How might I use this concept?   My first inclination is to use the five qualities of CI to define our new service idea.  If we are successful in aligning with CI to define our new service, then we can determine how best to implement the solution. I believe that this approach will work.

I know.  I can't stop to read each item if I want to get the cleaning done.  But oh, I really hate to discard those pithy magazines ... but must!

© Baldwin H. Tom CMC
www.tbgroupconsultants.com

HELP WANTED: Business Solution Designers!

The challenges of the new economy -- global impact, global downslides, plus international competition -- demands more from all of us.  In one scenario it is recommended that we need Information Technology (IT) professionals to become more business oriented to be able to go beyond a technology fix, i.e., to also provide business solutions within the context of their IT expertise.  This will be a challenge to some to shift their thought processes from fundamental IT to thinking the integration of people and technology to fulfill a business mission.

In the electronic newsletter CIO of 28 September 2011 (www.cio.com/article/print/690630), we read about this new hybrid professional called the Business Solution Designer (BSD).  The BSD would be capable of applying technology to solve business and operational problems, not just functional technology ones.  There are already IT professionals doing this but now they have a name, BSD!

I don't know if it is the sound of 'Business Solution Designer' or what, but the article caught my interest.  Maybe it's because I tend to be a systems person interested in the whole enterprise and this new 'person' reaches beyond their defined specialty to a broader perspective.  Becoming a BSD would certainly make one more valuable to influence business decisions and to be a better bridge across disciplines. I found this focused idea definitely a worthy direction for all professionals to consider, i.e., add business acumen to one's specialty. 

 © Baldwin H. Tom CMC
www.tbgroupconsultants.com

The U.S. Navy Seals Approach to Contract Management

The U.S. Navy Seals team that found and killed Osama Bin Laden was mission focused.  They planned, acted, and went home.  Except for the 'search and destroy' element, there is a nice parallel for management consultants with this approach – plan, act, depart – in working on projects.  Consultants do this in their normal approach to client work.  They do not linger and do not bill time not doing work.  The client pays for the work and not for ‘wait’ time.  We suggest this should be the norm in working on contracts with the federal government, or any entity that has broad needs. 

Since no one person or small group (company) can have all that is needed to address every issue that may arise within a large organization, a means to have available talent, experience, and resources to meet needs is key. Navy Seals teams are assembled to represent all the expertise needed for each engagement.

Traditionally, management consultants and their firms work on a range of projects and don't remain long with any single client.  Very large consulting firms tend to 'win' one project after another because of their size and breadth.  Effectively the clients buy needed services off of a ‘menu’ and when the service (meal) is complete, the consultant and client part company (except for large firms who have more than one 'menu').  This approach when applied to needs within a federal agency has the potential to be very efficient and cost effective.  Small firms and individual consultants can provide such needs by joining forces with each other.  

We suggest that one approach is to have a small business with access to a large cadre of talented consultants become that menu-driven provider of services, with the potential for adding new menu items as the situation dictates (like the Navy Seals adding another expert to their team).  The difference between this small team and the large firm approach is that the large firm has high overhead and personnel costs that they cannot ignore.  The small team approach does not have the same cost burden because each of the team members is an independent entity that manages their own costs.  Thus, the client gets the services needed without the additional expense of a large parent organization.  Importantly, the small team approach (because its members can be moved about) can continuously bring in best-in-class expertise that the large firms cannot, since their personnel are already set in place.  Just like the Navy Seals, the small team is flexible and agile.  It does not have the hierarchical structure that will slow decision making found in large firms.  The client benefits because decisions can be made on the spot.

So what is needed for a Navy Seals Team approach?

1. 'Flat' team (small hierarchical structure) with a large national footprint to access talent and resources
2. Easily accessible by the client
3. Proven administrative and financial ability to support multiple teams
4. Strong infrastructure for financial management, knowledge management, and project management
5. Electronically capable to support enhanced communications with clients and team members
6. Proven ability to successfully manage multiple projects with demonstrated flexibility and agility in support of client’s unexpected needs
7. Proven capacity to 'partner' and manage client expectations to client’s satisfaction
8. Defined processes to leverage collective knowledge – ‘think tank team’
9. Talented certified personnel to serve as project directors, managers, and project staff
10. Linkage to best practices, professional association, and other subject matter experts
11. Third-party awards and recognition that validate claims of excellence
12. Bound by a third-party independent Professional Code of Ethics and Professional Conduct

© Baldwin H. Tom CMC
www.tbgroupconsultants.com

Tip of the Day for Consultants

This is a first.  I am sharing an interesting article from the daily tips from the Institute of Management Consultants USA (www.imcusa.org).  If you find this article interesting, you may wish to subscribe to the IMC USA's daily tips for consultants.  It's free!

Institute of Management Consultants USA; Consultant's Tip of the Day for October 28, 2011. #685: Consultants Need to Understand Type I and Type II Errors

Today's Inquiry:

I always hear about Type I and Type II errors in business and how important it is that consultants understand these concepts. Why should I care about this?

People are referring to a statistical concept where a Type I error is a false positive and Type II error is a false negative. For the statistician, a Type I error is rejecting the null hypothesis when it should have been accepted. For a businessperson or consultant, a Type I error is seeing something that is not really there. Type II errors are missing something that is really there (and potentially company making or breaking).

A Type II error (false negative) can be serious when looking at competitive markets or human resource issues such as culture or employee opinions. Inadequate surveys or incomplete analysis may lead a consultant to conclude that there are not serious competitors or impending revolts among employees when, in fact, there are. Depending on the situation, a Type II error may result in serious losses for a company or put it out of business.

False positives are of most interest to consultants engaging in diagnostic or investigative activities, in two ways. As a consultant whose job it is to find problems to solve or opportunities to capture, we are looking for something on which to act. Maybe a process is "broken" or a market is "large and available" to your client. In either case, you may identify something that is not really significant enough to expend resources on. Alternatively, as a result of your activities, you conclude that your impact is significant when it really is not. In both cases, you have overstated the significance, or even existence, of your role to the client. Understanding Type I and Type II errors gives you good perspective on your value to a client.

Tip: Think in terms of medical testing when you consider how you are going to control for Type I and Type II errors. The worst outcome when looking for a serious disease is to conclude it is not present when it is (Type II). To accommodate that, we use screening procedures that are relatively fast, cheap and for which we can tolerate a Type I (false positive) error. As a consultant, you may want to develop protocols that let you quickly tease out potential problem areas and for which you recognize there may be Type I errors. Those items that show up may be real or, more likely, false positives. Then you can proceed with more focused and rigorous protocols to look more closely at an issue, recognizing that what you want to avoid is a Type II error (false negative). You don't have to be a statistician to understand the concept and how your ability to mitigate risk on behalf of your client is a significant value added.

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Model Federal Administrator

It is always refreshing to see a federal administrator who has it together.  The eArticle, Departing Commerce Secretary Laments Government's 'Aversion to Failure' by Charles S. Clark (Government Executive; June 2, 2011) about outgoing Commerce Secretary Gary Locke is worth a read.  Secretary Locke demonstrated by his performance and in this report that he is aware of the problems and challenges that face agencies and that there are solutions.  If only this approach to management at the federal level were communicated, considered, and applied at all federal entities, government would definitely be well served and our country would be better for it.  As citizens, we would applaud and also appreciate the approach and the effort.  As Locke put it, “If government is performing well, America performs well.”  What a concept!

 As a Certified Management Consultant (www.imcusa.org) with over 20 years in the field, I suggest that Secretary Locke speaks as a seasoned consultant who understands what it takes to manage and lead.  Here is what Secretary Locke suggests are basic requirements to successfully lead an agency:

1. Set clear goals, some of which are high performance ‘stretch’ goals that will force people to get out of their ‘box’ and re-think their jobs
2. Establish priorities for the goals because there will never be enough money to do everything one wishes to do
3. Employees must have the initiative to take risks to re-think how to get their job done.  "They must know they will never be hung out to dry if they fall short of their goal as long as they've acted in good faith and ethically," Locke said.

Here are some of the successes from Locke's administration:

1. Following a performance-based assessment, Locke eliminated 16 low-priority programs from the 2012 budget to save $250 million. 
2. The 2010 census that was expected to be a costly failure was 25% under budget, returning $1.9 billion to the federal treasury.
3. Process time for grant application review for technology incubators is now 18 business days, down from six to seven months.
4. Patent office review of applications went from 38 months down to 28 months.

Secretary Locke has been nominated to be the next U.S. Ambassador to China. Read the full article by Charles Clark (http://www.govexec.com/story_page.cfm?articleid=47930&dcn=e_gvet).

PS:  My sister-in-law is related to Secretary Locke.  Her mother is a Locke.

 © Baldwin H. Tom CMC
www.tbgroupconsultants.com

 

 

Do I need to worry about this?

This question suggests the obvious that not all concerns need a solution.  The follow-on question is, "What are the problems needing solutions?"  This topic is not a new one for me, but it came up again when I was listening to a radio broadcast about 'worry.'  The point of the broadcast was that the things we worry about are mostly not important, will go away, or are out of our realm of our control (which means we can do nothing about it -- like the weather).  The number that surprised me (and gave me comfort as well) was that only 8% of our worries need to be dealt with.  That means a whopping 92% of worry time is wasted energy that could be diverted to some more constructive use!  In this blog, a worry is like a problem.  Do I need to deal with it?

Here is a suggestion.  Whenever there is a problem or concern or worry, ask, "Do I need to deal with this?"   The answer will be Yes, No, or Perhaps (but later).  One of my supervisors once asked me if the problem I was bringing to him was urgent and needed a solution 'right now.'  I said, "No."  Then he said that until the problem becomes one that affects work or performance, just ignore it.  He effectively said that unless the problem was immediate, it doesn't exist.  It was actually a relief when I absorbed what he was saying, i.e., don't address problems until they become one.  While I do not adhere to this fully, there is truth to this approach.  A cautious person may act to anticipate and want to address a potential problem more quickly than a less cautious person.  The point is that we will have enough immediate problems and worries that are real to not need to gather potential problems and worries to ourselves before their time!

If you are helping another person or business, it is cost effective and efficient if you question whether the problem at hand is the real one to tackle.  In this light, I now ask, "Is this the problem you need to solve?"  This questioning will help you eliminate peripheral issues and arrive at the 'real' problem needing a solution.

© Baldwin H. Tom CMC
www.tbgroupconsultants.com

Is Conservation Worth the Effort? Measures and Valuation

It is a truism that if you don’t measure it, then any result will do.  Not a precise saying, but the concept is valid.  If we have no idea whether we have accomplished a goal, then what we achieve may not be what was expected.  We just accept it. 

When we provide a numerical or objective measure to a desired end product, the chances of getting what we expect is high.  This is why businesses count their revenues and expenses to determine whether the effort has provided a positive return on investing in the enterprise.  Was there value in the effort, or did the expenses exceed the revenues?

Beyond the obvious answer to “was it worth doing,” performance measures and valuation information provide the following: 

1. Measures help justify continuing an effort versus terminating it
2. Measures help determine if additional resources should be increased or not
3. Measures help determine whether a new approach may be needed or not
4. Measures provide comfort and satisfaction to those who will be affected by the effort
5. Measures help executives make go/no go decisions on an effort

When we look at business or land development, or conservation, we should do the same – measure and value.

Why is this important?  Just as it is important in the commercial industry to know that there was a positive return-on-investment (ROI), it is equally important to know whether efforts in conservation have value.  Without measure of value or ROI, it would be difficult to justify further investments in the work, and very difficult to convince the public that the effort is worth the use of resources or funds.

For an "Introduction to Economics for Coastal Managers" go to http://www.csc.noaa.gov/economics/ to order a copy.  This handbook is a valuable start to understand the components in measuring and valuing actions that do not have immediate results, such as investing in environmental efforts.

© Baldwin H. Tom CMC
www.tbgroupconsultants.com