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Is your business model efficiently ineffective?

Systems and processes are a vital precursor to achieving Predictable Success. Overdoing it can send your organization into decline - even while looking efficient.

Like many European airports, Frankfurt airport extensively utilizes buses to transport passengers from the terminal building to the airplane (rather than using walkways to board). On the way to Florence recently I joined my fellow passengers in boarding a bus that then proceeded to drive 75 yards - about three times its length - to the waiting plane. While for the very last passengers to board the bus this was a humorous diversion, those who boarded the bus first could see how horrendously ineffective the process was - they could have walked to the 'plane and boarded in a tenth of the time.

On the return flight, we all 'deplaned' (as the airlines insist on calling it) into the waiting bus, only to wait for 10 minutes while one passenger argued with the air crew abut whether or not he was entitled to retrieve his baby carriage there or in the terminal.

On both connections, the bus - once it had reached the terminal - remained unmoving for between five and ten minutes, waiting for the busses in front to finish unloading and move forward, leaving passengers with tight connections staring at the terminal doors mere feet away and berating the driver for his unwillingness to open the doors and let them out until he had reached the official unloading zone.

Even allowing for the short patience of travelers and the tendency of air travel to contract time frames, this is a business model that manages to be highly efficient, yet painfully ineffective.

Other examples? The local outlet of a regional convenience store chain insists that their checkout staff ID's everyone who buys alcohol, irrespective of their age. I'm a 53-year-old who absolutely looks their age, and the chances of me being mistaken by anyone as being under 21 is precisely zero - about the same chance as me remembering to take my driver's license into the store when I decide to grab a bottle of wine on the way home. Net result? The liquor store round the corner gets my business, despite being between five and 15% more expensive, depending on the wine. The convenience store is being efficiently ineffective.

My local bookstore, gasping to survive against the triple threat of Amazon.com, two giant 'physical' book retailers and declining book reading in general has a loyalty program of which I'm a part and wish to be a regular participant. The sales clerk can verify my registration by using my phone number to access their database, and can see how much credit I have earned from pervious purchases, but won't allow me to use it unless I produce the little printed coupon they hand out when I bought the earlier purchases. Gloriously efficient, painfully ineffective. Net result? Fiduciary duty wins out against the desire to support local retailers for my wife and I, who between us spend around $5,000 a year on publications.

Which parts of your business model are efficiently ineffective?

Is Your Organization in Precovery?

Those of the organizations that I work with which are ahead of the economic curve - those that you might say are in 'precovery' - share a number of common characteristics. Although each organization uses different vocabulary, these are the top five:

1. They have a source of trusted metrics that provides the information they need on how their organization, their industry, and the economy in general is performing (rolling 12 months) and likely to perform over the short term (3 to 6 months).

2. They accept the data for what it is. Rather than second-guessing, massaging, re-interpreting, filtering, disguising, best-case-ing, optimizing, projecting, top-slicing, averaging or blurring the numbers, organizations in precovery accept that the data is what the data is. Period.

3. They understand and respond to the changes in the trading landscape. Most organizations have seen two or three radical, material changes in their trading landscape in the past 18 months in either the demand or supply side of their business - sometimes in both. Whether it's the need for new pricing strategies, distribution methods, sourcing techniques or workforce configuration, organizations in precovery have identified them and responded accordingly.

4. They plan in a range, not on a line - in other words, their forecasts are not a single line of numbers, but a range of likely outcomes over the medium-term.

5. They are learning, instilling and rewarding predictive agility. A much repeated (if sloppy) analogy is that while management is like playing checkers, leadership is like playing chess. Any truth in that old canard has being sunk in the last 18 months: you no longer get to play a chess move then stop the clock while waiting for your competitor's response.

Leadership now requires the ability to predict events and make changes accordingly in real time. For those organizations in precovery, leadership is more like gaming (think World of Warcraft or Eve Online), with multiple options being played out simultaneously and in real time.

Your bottom line:
If you haven't changed how you source, analyze and project metrics; how you generate demand and fulfill supply; and how you define and teach leadership, you're probably not yet in precovery.

The Leadership Flaws of Don Rumsfeld

Concentrating as it does mostly on his two stints as Secretary of Defense (first under Gerald Ford, then almost 25 years later, under George W Bush) Bradley Graham's new biography of Don Rumsfeld, 'By His Own Rules', is less a biography of one man than it is an exceptionally detailed, occasionally leaden-footed, but ultimately revealing portrait of the difficulties inherent in managing highly complex organizations.

Augmented by two shorter sections on Rumsfeld's business career, particularly his stints as CEO of GE Searle and General Instrument Corporation, 'By His Own Rules' suffers a from little too much 'tell' and not enough 'show': there are many labored laundry-lists of Rumsfeld's Rules, memos, comments and observations, and not enough fly-on-the-wall un-editorialized description - at times, it feels like Graham doesn't trust the reader to draw the right conclusion from the evidence he presents, and so ends up spoon-feeding us obvious and derivative tropes when he would have been best letting the picture he paints speak for itself.

Nonetheless, 'By His Own Rules' is a gripping and highly informative book, and I thoroughly recommend it for anyone who is battling to manage complexity: there are few organizations as complex as the US Department of Defense, and Graham meticulously and entertainingly illustrates the many issues involved in trying to come to grips with a sprawling, hidebound, conservative bureaucracy that is resistant to change and yet in charge of the defense of the planet's one remaining global superpower.

There are many lessons in this sprawling book, but here are the three that I took away as the most striking:

1. An obsessive pursuit of efficiency will eventually lead to ineffectiveness.
Rumsfeld came to his second stint as Secretary of Defense committed to what he called 'Transformation' - essentially, a pogrom to root out inefficiency in the military. His obsessive commitment to the transformation agenda blinded him to the reality that the efficiencies he mandated (and the micromanaging that was necessary to enforce them) was materially hobbling the military's ability to be effective, especially in Afghanistan and Iraq.

2. Thinking 'meta' has its limits.
From the evidence of Graham's biography at least, there is no doubt that Donald Rumsfeld has a fine brain. He not only analyses information well, he looks for - and often finds - the underlying and recurring patterns in data that allows for a consideration of the higher-level issues involved. So for example, when early in his tenure he is trying to get the information required for a quadrennial review of his department and he is confronted with a Joint Chiefs of Staff that appear to Rumsfeld to be intransigent and 'silo-d' in their service functions, he not only finds a way to get the information he is then currently looking for elsewhere, he also redesigns the entire interaction between his office and the Joint Chiefs to avoid a repetition of the clash in the future.

This 'meta-thinking' is important to Rumsfeld (he regularly fires off memos to people on 'how to think about' many of the key issues of the day, regardless of whether the issue is technically within his brief or his advice has been sought by the recipient), and is a required skill for any leader. But for Rumsfeld, it eventually becomes a barrier to effective decision-making - there are simply too many issues, too much to be decided and implemented, for him to afford the time to muse on the higher issues. And yet he does, leading eventually to a stagnation of his Transformation agenda.

3. Leadership requires trust.
The single most dominant and recurring theme in Graham's book is the lack of trust Rumsfeld engendered during his second term as 'SecDef' - from his direct reports, from military leaders, from his peers managing other departments in the US Government, from Congress, and eventually, from the public. Equally clear is the fact that up until the final phase of his tenure he garnered respect - from the very same people.

'By His Own Rules' shows clearly - tragically - that while management can run on respect alone, leadership requires trust. In the end, by the reading of Graham's book, Donald Rumsfeld left a legacy as a great manager, but a failed leader.

The Leadership Skills of Van Morrison

I grew up in Belfast about a mile away from Van Morrison, and as a near-contemporary, I've had the good fortune to watch him perform live for nearly thirty-five years.

As a performer, Van is unpredictable - sublime one night, cantankerous and unengaged in another, you can never be quite sure what you're going to get. But as the years have passed, one thing has remained constant: when he is in the mood, this man - with only average instrumental skills, a less than melodic voice, and the physical presence of a pile of coal - can produce music of such sheer transcendence that time seems to stop, until he decides it can begin again.

Van performed here in Boston last night, and as the set was mostly a re-working of his 1968 album 'Astral Weeks', it provided a great opportunity to reflect on how someone so idiosyncratically stubborn, so inured to fashion, trends and public demands has managed to stay on top - on his terms - over a career spanning 45 years.

The single most striking change over that time - a change that began around 1980 when he moved out of the Brown-Eyed Girl / Gloria / Moondance pop-influenced phase and back to his roots as a rhythm and blues singer - is that Van is no longer a performer in the sense that say, Elton John, Paul McCartney, Neil Young or Bob Dylan are performers. For decades now, Van has essentially been an arranger: not just in the narrow musical sense of 'arranging' the numbers, but in the wider sense of constantly, insistently and precisely guiding his team of musicians (a rolling group of between 6 and fifteen people, depending on the needs of the set), live and in real time.

Watching Van again last night, I was struck less frequently by his personal direct contribution to the music (though he did contribute mightily, most effectively on harmonica) than I was by the way in which he controlled, managed and directed the musicians around him, using hand signals, nods, facial gestures and shouted instructions to generate the hills, valleys and peaks of the musical landscape he was constructing.

Compared to the brash, arrogant, preening 'Van the Man' of say, 1976 in his performance of 'Caravan' at The Band's farewell 'Last Waltz' concert, or on 'Live at Montreux 1974' (both magnificent performances), the Van Morrison of 2009 is a big dog turned leader, a once- solo performer who now leads a high performing team, a maverick turned guru (though he would hate the word).

Van never lets the crowd forget who's headlining the show: his exits in particular are, like those of James Brown before him, designed to make that abundantly clear. But tellingly, after he leaves the stage the band always get their time in the sun - a few minutes to take the set through to its final conclusion, unsupervised, as if to say "Hey, you did good. Go for it."

In business, some people become hobbled because of their early success as individual high-performers - they get trapped in their identity as 'stars'. The big dog in sales, or the prize-winning research scientist, or the ground-breaking advertising maven gets star-struck, unable to yield the spotlight, craving the encore. They want to continue being the sole focus of the adoring crowd.

Can you move from being 'just' a performer to being an arranger?

Redeeming the Torpor of August

August is a slow month in most (though not all) businesses. With people on vacation and a general slowdown in activity, it's often a month in which little of real value is achieved. It doesn't need to be that way.

Here are ten ways to redeem the month:

1. By now, you know what's working and what isn't in your current year plan. Decide which faltering programs and activities to cease for the final third of the year.

2. Decide which already-successful programs and activities to focus on for the final third of the year - what resources can you provide to make them even more successful?

3. Begin the planning process for next year - not by working on numbers, but by listing and challenging the unspoken, implicit assumptions you have developed this year about what next year will be like. Write up a short memo and send it to people who's opinions you trust and ask for their take on your assumptions.

4. Then, write up your first draft of the business plan for next year, not in Excel or PowerPoint, but as if it where the first chapter of a novel.

5. Have one of your team shadow you for three days for a period of immersive mentoring.

6. Shadow one of your team for three days - as their assistant, not as their boss.

7. Spend one day gathering ten books and 50-100 journals, white-papers, articles or case studies on topics that will help you build a better business. Then schedule a 'reading week' (offline and unplugged: web sites don't count, as you'll simply hyperlink yourself to oblivion).

8. Write the names of three people you really want to meet, and the three questions you most want to ask them. Then find a way to meet one of them this month - attend a conference or workshop, or simply call them up and ask if they'll let you buy them coffee.

9. Dumb questions often generate valuable dialog. Call a smart friend who knows little about your business and ask them to morning coffee in your office. Invite your senior managers, and challenge your friend to find out as much about your business as she can in one hour by asking questions of the managers.

10. Ask your biggest customer and your biggest supplier to lunch - together. Ask them how you can build a better business.

Enjoy your August!

The Gates-Crowley-Obama Decision-Making Grid

The recent Henry Gates arrest imbroglio left most parties involved looking a little shaky in their decision-making processes. Where do you and your key team members fit in the Gates-Crowley-Obama Decision-Making Grid?

The Gates-Crowley-Obama Decision-Making Grid