Does anyone remember your vision?

February 3, 2013 4 Comments

Corporate VisionAfter laboring with your leadership team to set a compelling vision for 2013, the chances are, your staff won’t even remember it only 30 days into the new year.

Don’t believe me? Take this simple test:

Ask 3 staff members what the vision is for 2013.

Be prepared for the results you will likely find.

For those that found that all three remembered the vision with clarity, you are part of a rare few. This would suggest that you already know the success was not due to a catchy, compelling headline, nor was it because you were so engaging in your delivery of the vision. Both may have been true, but were not the reason.

Most, on the other hand, fell into the broader category of the ‘forgotten vision.’ Following are a few steps to take before it’s too late and your staff forgets you even spoke about the vision. Before doing so, let’s make sure the reasons are clear for why this is often forgotten so soon after being delivered.

The Forgotten Vision

Last October, I was invited to conduct a Vision & Strategic Planning workshop at a conference in Chicago for leaders from all over the country. The preliminary surveys of the audience members showed that most had led and/or participated in vision setting exercises with an even larger number showing the vision had no measurable impact on their year-end results. Here are a few of the most common reasons cited for the vision failing to make an impact:

 From leader’s perspective:

  • Nobody remembered the vision
  • They didn’t buy into the vision

 From staff’s perspective:

  • The vision failed to connect with staff
  • The vision is an exercise leaders do

Do any of those reasons look or sound familiar to you? What is interesting is that both, in the workshop and in working with other leaders in this area, is that most believe they need help with vision casting, believing that they just needed a better story or a better way to tell the story. While I do give some guidance and attention to that part in my workshops, my primary emphasis is on vision execution.

Two Steps to a Vision Remembered

When you reflect upon the vision setting exercises you have been engaged with, you are likely to remember the sense of relief you had when you finally completed the vision. Most see this process as putting in the hard work up front whereas all that is left is to deliver the vision to the team and expect the results. I have significantly oversimplified how most actually go about this, but the truth of the matter is that people too often place inappropriate emphasis on the front end of vision casting and little to no work in executing the vision.

The truth is that the vision casting is the easiest part of the process. The harder part is in distilling the vision down into executable actions that connect directly to each team member’s behaviors. The second part is in having specific, measurable evidence of where the vision is being carried out for each staff member to call and reinforce further behaviors. Here is a closer look at these two steps.

Step 1: Connect vision to behaviors. As a leader, credibility is one of the most important attributes you have, and should not be taken lightly. When it comes to making your vision a reality, failure to work through your leadership team to connect specific behaviors to the vision not only sets the vision on a course to fail, but erodes your credibility altogether. Therefore, make the time and make the connections. I recommend each leader meets with their direct reports one-on-one to maximize impact. The task itself is not difficult, but rather the difficulty is in committing to the time investment necessary to make this step effective. Don’t bail out on this one. The stakes are too high.

Step 2: Reinforce contributing behaviors. While Step 1 is a great start towards your aligning your staff to the overall vision, assuming it meets standard vision protocol and resonates with staff members, that alone will not be enough. To keep the team on track and to change behaviors leading to a successful progression towards the vision, they will need consistent feedback and reinforcement of how their actions are contributing. Therefore, after having invested the time to connect the vision to individual behaviors, the second critical step is to reinforce behaviors daily, weekly and monthly as you see evidence of the behaviors that lead to success.

As the leader, you know the pressures you experience to get things done with fewer resources. Your staff feels these same pressures, just in differing degrees. Therefore, if you feel that you don’t have time to take these steps to carry out the vision, how likely is it that your staff will naturally commit to carrying out the vision along with their other responsibilities? They won’t! Without you taking these aforementioned steps, they will simply see the vision as an interruption to getting their regular work done. Their everyday responsibilities [as they define them] will win out every time. That is, unless you define and connect the two, then consistently reinforce those behaviors. Is your vision worth the investment?

Filed under Business (General), Business Insights, Business Process, Goals, Planning, Process, Sales (General), Sales Insights, Strategy Tagged with , , , , , , ,

1 Minute Leadership Test…Will You Pass?

February 9, 2013 2 Comments

The role of the leader is a difficult one, to be certain. Done well, it is one of the most rewarding professional and personal experiences for the leader and those they lead. Done poorly, and at best, your team may achieve incidental success from time to time…despite their leader.

After two decades of working in leadership and developing leaders, I continually see one common area in which leaders often fall short. This one minute video clip sums it up as King Leonidas asks Daxos’ men one simple question. After playing the clip, see how quickly you can spot the problem?

 

Leadership Test: If those you lead are asked about the organization’s or team’s top priority, would your team answer like the Spartans or more like the Arcadians?

If your team is lacking a “WAR! WAR! WAR!” response, time for the mirror test. How they respond is your responsibility. For additional tips on how to create more intentional, predictable and repeatable results, see this post on Vision.

Filed under Business (General), Business Insights, Business Process, Goals, Leadership (General), Leadership Insights, Planning, Sales (General), Sales Insights, Strategy Tagged with , , , , , , , , , ,

Reorganization or Turnaround? (Part 2): Top-Line Temptation

November 22, 2012 Leave a comment

Top Line TemptationLast week, I wrote about common mistakes made with an underperforming Division or Business Unit in my post titled Reorganization or Turnaround? (Part 1). Most notably, I spoke of the tendency to prescribe a reorganization to situations when a turnaround was really needed, by failing to recognize issues that are below the “waterline.”

If you are the leader of a struggling division, business unit or team that has solid sales, but have continued to underperform the profitability expectations for multiple periods, this post is for you.

The Top-Line Temptation
There is no doubt that top-line revenue covers a multitude of sins. The problem is that too often this is seen as a good thing…or at least acceptable. These ‘sins’ in business, so to speak, that detract from profitability are analogous to the roots of a young tree that later grows to disrupt the foundation. The foundation, in this case, represents the whole organization. Addressing the root of these problems is always better done earlier, for obvious reasons, as the picture of the tree below perfectly illustrates the implications of letting problems persist.

Unfortunately, what happens all too often is that with solid revenue comes the belief that things will correct themselves over time. That increasing the sales will begin to create economies of scale, eventually leading to profitability. Question – When was the last time you saw a profitability issue like this work itself out over time?

Getting at the Root of the Problem
There are a variety of reasons why a leader may be experiencing solid sales with poor profitability, but I want to address one of the more common reasons I see. This is the ‘sales at any cost’ approach. When this is the case, the inappropriate pursuit of revenue tends to come in one of two forms.

Root Cause

The Root of the Problem

The first way revenue is inappropriately pursued comes in the form of aggressive discounts, incentives, and promotions. Unprofitable discounting creates an inflated sense of demand, which bursts the minute the discounts stop. The more inherent problems with this approach, other than increased costs and false demand, is the longer term impact of discounts and incentives lowering the perceived value in your customer’s eyes.

The second way that revenue is inappropriately pursued is through disproportionate costs of acquisition and retention, beyond that which is profitable. In these situations, typical strategies include increased marketing campaigns, sales blitzes, additional staff or even the introduction of new products or services on top of an overly burdened cost structure.

In some cases, a division may inappropriately pursue both, discount strategies and increased activities. The compounded effect of having lower revenue at higher costs puts the business area on a fast track to what I call ‘divisional bankruptcy.’ Not only is this unsustainable, it is a terrible strategy in general for leading a division to profitability.

5 Questions to Determine if You Have a Profitability Problem
Now that we have a good handle on some of the problems and why they occur, it is important to determine whether these are your problems are somebody else’s problems. Also important to note is that the conditions described above are not the sole list, but rather representative of the type of conditions that lead to solid sales with poor profitability. Therefore, the following questions will help in determining if you are in a situation requiring a reorganization or turnaround.

  1. Were your most recent profit results intended? Comparing performance to plan (PTP) is an important measure. There are times when losses are planned. If so, did you meet the plan? If not, proceed to #2.
  2. If your PTP was not intended, do you know specifically what contributed to this? If you answered “no,” stop reading now. Enlist all necessary resources to figure this out. Without this, remediation is impossible.
  3. What specific steps do you have in place, to correct the problems? Assuming you answered ’yes’ for #2, specific SMART goals should be in place with key staff that will correct the profitability shortfalls.
  4. How long will the plan take to restore profitability? Remediation should occur within 6 months or less. Be very careful about setting anything longer as too often you are delaying the inevitable. The time to act is now.
  5. What is your track record for accurately forecasting corrections? This is an important gut-check. Be honest. If you tend to be overly optimistic, best to confront that now as people are depending on you.

Reorganize or Turnaround?
After having assessed the cause of the problems and determined next steps, you should have a sense of clarity on whether or not you have a ‘waterline‘ issue or not. If you have diagnosed your problem to be below the waterline, this is a turnaround. You are now in a dead sprint to correct the problem before your CEO steps in on your behalf to correct the problem simultaneous with your exit.

Time to A.C.T.
Now that you have properly diagnosed your predicament and are committed to an expedient correction, it is time to act. I have put the steps in the form of an acronym to serve as a virtuous, or repeatable, cycle to follow throughout the recovery.

  • Assess. Pull out the financials along with your sales and marketing metrics to assess where the key profit detractors lie. Don’t fall for only cutting easy, non-essential areas. The allure is that it looks like you took action without disrupting anything too significantly. The problem is that it won’t disrupt anything too significantly. Cut the small stuff, but cut the big stuff first. Remember the tree picture above…address the root issues!
  • Correct. Having identified where to cut, commit to correction through decisive action. These times aren’t easy, so best to communicate lavishly before, during and after the turnaround. Before lets people know what to expect. During to give updates and demonstrate it’s working. After confirms that your actions were worth it.
  • Target. Cuts are important and necessary, but are not the entirety of your action. Time to target key start and stop activities that contribute more quickly to your division’s profitability. Examples include not pursuing unprofitable customers, or to stopping marketing activity that aims to discount its way to profitable growth.

As described above, this process is intended to be followed and repeated, assessing and adjusting as you go. If you are entering this process of a turnaround, I would like to offer encouragement as you have demonstrated the two characteristics I described last week – Humility in acknowledging your situation and Courage to address the problems head on. Once you successfully turnaround your division or business area, not only will you have the respect and admiration of your staff and CEO, but this will likely serve as one of the largest confidence booster’s in your career that will serve you well in years to come.

Next Week…
Look for Part 3 of the Reorganization or Turnaround series as I address the approach for when a division, business unit or product has the opposite condition of solid profitability, but poor sales. My assessment may surprise you!

Filed under Business (General), Business Insights, Business Process, Decision Making, Diagnosis, Goals, Leadership (General), Leadership Insights, Marketing (General), Marketing Insights, Marketing ROI, Planning, Problem Solving, Process, Sales (General), Sales Insights, Strategy Tagged with , , , , , , , ,

Reorganization or Turnaround? (Part 1)

November 10, 2012 1 Comment

Business TurnaroundsAs the end of the year approaches, CEOs all over the country have a laser-like focus on performance to ensure a strong year-end finish. While many organizations will achieve their financial objectives, many others will come up short of the results they expected.

There is yet a third group in which will not only fall short of expectations, but will turn in another consecutive period of underperformance, with no recovery in sight. While this isn’t indicative of the overall organization, but rather a division or business unit struggling to correct performance issues, this still remains problematic for the organization.

For those falling in the unenviable position of this latter group, the CEO’s focus will narrow in on changes that will restore overall organizational health in order to start the New Year off right.

If this describes you, you are likely evaluating your next moves. Assuming this is the case, let’s take a closer look at what to do when you have experienced continued declines and are not seeing a recovery in the results. Is a reorganization of your division needed, or is an all out turnaround in order?

Reorganization or Turnaround?
How you diagnose the problem, and the remedy you prescribe, can either set you on the road to recovery, or lead to further entrenchment in missed results, often worse than before the correction.

Without oversimplifying an otherwise complex problem, there are three general conditions that lead an organization, division or business unit to consider a reorganization or turnaround plan. In the ensuing weeks, I will break down the three scenarios more thoroughly, but my primary aim is to provide an overview of the problem. Following are the three general scenarios most commonly experienced by business areas with ongoing, lackluster results.

The Three Business Performance Conditions:

1. Solid sales, but poor profitability

2. Solid profitability, but poor sales

3. Poor sales and poor profitability

A Common Mistake
When one of the aforementioned scenarios is experienced, the mistake most commonly made is to misdiagnose the problem and subsequently prescribe a reorganization to a turnaround situation. This usually has disastrous consequences as the characteristics of a turnaround differ significantly from that of a reorganization. In other words, a division in turnaround mode that has poor top and bottom line performance, operates much differently…much more expediently…than one that has been reorganized to bring greater efficiency and effectiveness to the division. When a leader of a failing business area makes a recommendation to reorganize the division/business unit/department to improve the underperformance, failure to meet expectations is nearly inevitable.

A reorganization done under the pretense described above just doesn’t work, but you already know this. How? Imagine that you came to me and shared that one of your divisions has a consistent history of declining business performance. Now imagine I say to you, “No problem, simply restructure your division, and this will enable greater growth and profitability.” You would be quick to tell me that 1.) It isn’t that simple, and 2.) You may even tell me that you have already tried this approach, and it didn’t work. Of course, you would be right for both reasons.

A Better Approach
When dealing with prolonged performance issues in a business area, two leadership qualities are highly beneficial: Courage and Humility. Courage will be needed to make a decision that inevitably will depart from the status quo that you have grown comfortable with. This isn’t to say that you were comfortable with underperformance. Far from it, in fact. The comfort came more in the activity of feeling that you were doing something about the problems, and the ‘activity’ itself served as justification for not having to make the more difficult decisions you feared would be necessary.

Humility will also be needed, since the potential is high for you as the business area leader, to feel as if you are conceding defeat to the previous failed approach to correct the problems. This is often linked with a belief that your leadership may be questioned if you change directions. The reality is that your staff already knows something different is needed. Your leadership is already in question until you are willing to break from the status quo and make meaningful change.

A Tip from CEOs
Savvy CEOs that have been through this before will be quick to point out that if their division leader approached them with a plan to reorganize in order to solve business performance issues, their confidence in the leader would diminish significantly and likely result in their departure. Why? No matter how reasonable the cost efficiencies and productivity gains may be, this fails to address the root issues of why the division or unit was failing. Therefore, if they cannot accurately assess the root problems, then they are ill-suited to correct them.

When this goes unchallenged by the CEO, the result is that poor performance is excused for a period of time while people settle into the newly structured organization. This is short-lived, however as soon comes the day of reckoning where all patience has run out and results are expected. Most CEOs state that they don’t have the luxury of that kind of time and money to wait for better performance. Additionally, they know that this kind of decision puts other areas of the organization at risk, thus putting undue pressures on the stronger performing divisions.

Therefore, rather than looking to reorganize to address organizational performance deficiencies, look instead at using reorganizations to address better efficiencies. In other words, a reorganization should not be used to address performance problems, but rather to take good performance and make it great through better alignment.

Reorganizations when used appropriately are liberating to the business area as it allows them to achieve their goals more efficiently and effectively. Unfortunately, reorgs have been used irresponsibly over the years for many organizations as cover for reducing headcount and other operating costs. No wonder why staff hate reorganizations.

General Rule of Thumb: The Waterline Principle
I have a general rule of thumb for whether a reorganization or a turnaround is Waterline Principlethe best approach. Every organization has a specific profitability level they need to maintain organizational health. Think of this as the waterline on a cargo ship. The waterline, or the red paint at the bottom of an otherwise black cargo ship, does two things:

  1. It provides a visual indication of the ship’s relative safety in that is not overly loaded down
  2. It also serves as a clear indicator that any damage below the waterline would be perilous to the ship

In either case, whether too much cargo is loaded on the ship, or damage happens below the waterline, the whole ship is put in jeopardy. No matter how healthy other areas of the ship may be, damage below the line risks the whole. For example, the ship can have state of the art electronics and navigational equipment in other parts of the ship, but all will be lost when the threat below the waterline isn’t properly handled. The same is true in business.

Therefore, when determining how to address a situation in a business area and the choice is between a reorganization or a turnaround, consider where the risks are happening – Are they above or below the waterline? This will bring clarity to your thinking in an instant.

Next Week…
Look for Part 2 of the Reorganization or Turnaround series as I address the approach for when a division, business unit or product has solid sales, but poor profitability.

Filed under Business (General), Business Insights, Business Process, Decision Making, Diagnosis, Leadership (General), Leadership Insights, Planning, Problem Solving, Process, Retail Insights, Strategy Tagged with , , , , , , , ,

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