As a manager, how do you start getting your head around what to do in this crisis?
Back in March 2009 I ran a TeleSeminar (remember them?) on how to manage in a recession. I recorded it at a time, as you'll recall, of steep economic decline - a time, just like now, of great uncertainty and no little fear.
So, even though I believe this current crisis to be a very different, much deeper, one than then, I thought I would go back and review what I had taught in 2009, to see if any of the principles stood the test of time.
I was surprised to find that, apart from quoting events, people, industries and sectors specific to the time, I am embracing precisely the same principles in trying to navigate myself and my clients through the impact of COVID-19.
So here it is. If you attended my webinar a few weeks ago on 'How to Lead Your Organization Through (and Out Of) this Crisis' you'll notice some overlap in the first third of the content, but after that I go deeper into specific tactics to employ as a manager 'on the ground'. I've left the workbook exactly as it was in the original, so look for a decade-younger me and some since-retired branding.
Running time: 59' 52" Don't forget to leave your comments below!
Well, good day everyone and a very hearty welcome to this conference call on managing in a recession.
My name is last McKeown and I'm the president and CEO of Predictable Success.
We have over 150 people registered for this call, and folks are calling in from 17 countries around the world. And I want to thank you all for coming and joining us, and particularly those of you that have set up very late at night in order to take this call. The call is going to last a an hour, and during that time we're going to go through a lot of information. I hope that you have downloaded and printed out the workbook that I provided to you. We're going to go through, excuse me, what's in the workbook in some detail. but I do want you to know that when we're finished we will be providing you with an audio of this call.
You'll be able to listen to it again. So if you miss anything on the way through, don't worry about it. I'm also going to follow up with the opportunity for you to provide me with any questions you may have. this call is being recorded in presentation mode. What that means is that I'm speaking, you're listening, but you all are muted so that we don't have too much background noise on the call with so many of you joining us and because that doesn't allow us to do a live Q and a session, I want to give you the opportunity to ask me some questions whenever we're done. We'll do that through a web based form and I undertake to answer any and all questions that you may have. So please make a point as we're going through the material of jotting down any questions that you do have, you will have an opportunity to send those to me.
We'll give you all of that information in a followup email together with some additional resources that I'm going to provide you on each of the points that we're going to discuss. So if there's a particular point where you'd hope that we might've gone a little deeper and we will be following up with some additional resource indicators that you can use in order to do that. Now if you've printed out your workbook, which I hope you have because you're going to need to take a lot of notes during the session, you will see that on each page of the workbook and the top left hand corner, there's a very large maroon box with a number in it and I'm going to use those numbers to navigate during the session. So if you hear me saying I'm on page three, I want you to look up to the top left of each page and find that page number and I want to start with the page that's marked executive summary.
If you flick over the cover and over the dial-in instructions, you'll come to a page marked 'Executive Summary', and that's where we're going to begin.
Here's what I want to cover in this call - and I want to spend a little bit of time just placing what we're talking about in context. And then I want to do four things.
I want to talk about how to use this current economic crisis in order to build a competitive advantage for your organization or your division, your department, your project, your team. And in order to do that, I want in particular to spend some time exploring how it is that we think about, not just our business, but business in general, the economy and your role in your organization.
Then I'm going to move on to looking at some specific activities that, in my understanding at this point in time are particularly important for you to put some, emphasis and focus on.
And then I'm going to give you a chance to reflect on your own personal action plan, what might come out of this call specifically for you to implement.
So let's get started by flicking over to page zero - a good beginning point, to start on page zero. I got a really good quotation sent to me by my wife this morning. my wife handles a management development at Harvard university and she sent me this great quote from America's homespun philosopher, Eric Hoffer. He said,
"In time of drastic change, it is the learners who inherit the future, the learned find themselves equipped to live only in a world that no longer exists."
And you know, we've heard an awful lot of talk about how much our current world has changed recently. And I want to start by trying to put in context my understanding of what we're seeing happening to the role of the business owner and manager at this point in time.
And you'll see a graph here that really shows the movement in terms of the, notion of what a manager is, during the whole of the 20th century up until now and right back as far as the 1930 Great Depression. At that point, really a manager was a production supervisor. The role of the manager was just to get out whatever productivity had, was required.
That's what the rule of the manager was seen as being, and interestingly, as deep and painful as it was, the great depression didn't really change the the role or the view of the role of the manager really at all. It wasn't until about the 1950s when conglomeration began to take place and very large international companies began to develop that the role of the manager then started to shift into something that you might view as say, a resource allocator.
This is, the role of the manager whereby they're starting to be made responsible for allocating scarce resources. A few other things begin to happen, rise at the service economy, but most particularly the rise of the business planning process. And as you'll see, these changes are happening and sort of 20 year cycles, the manager begins to be seen as a strategic partner in achieving the overall organization's goals. The manager begins to be perceived as being an active part of the direction of the organization.
About 20 years later, particularly pushed by the increasing use of technology, re-engineering, stuff like that, the manager's role as a developer of others begins to become more pre preeminent. Now those changes, as you'll see, they're all relatively seamless. They're on a curve. The role of the manager is increasing over time, there's more expected of him or her over time, but it's a growing gradual change in that role.
What we're seeing now, shown by the little circle, is a little break in this current downturn that we're presently in. It's what seems to me to be the first time that I can certainly personally see an in any of the research that I've done - the first time I can find an example of when it looks like there's going to be a step change in what the role of the manager is.
It's my belief that coming out of this particular economic cycle that we're in right now, that the role of the manager is going to fundamentally change. I have to be honest and say that anybody who thinks they know what's happening, or is going to happen over the next couple of years is deluding themselves. We're in a time of great change and I'm not pretending that I have the answers here, but I want to give you some examples of what I see happening that may bear fruit.
It seems to me, if you look at the blown up version of the little circle at the bottom of page zero here, that what happened in 2008 was we were in a time of a realization. We've got to realize that things are changing in a dramatic way here that we hadn't really anticipated at this present point that we're in now. There's a bit of a sense of paralysis. I want to talk a little bit more about this in a moment or two. There's a sense of not knowing what way to look, where to turn, what to do. A lot of people are just sitting down wondering and waiting to see what will happen. It's my belief that towards the end of this year, we'll begin to see some more solid analysis of what might be going on. people will begin to pick apart the changes that are happening in business and the infrastructure in the economy.
And as we move towards 2010, we begin to see a strategic redesign of the concept of what a manager is here to do. I don't know, but I believe, but I think that's highly likely that the role of the manager is going to take a step change where certainly in the most proactive of organizations, the manager is going to have to develop what I'm calling predictive agility, the ability to see round corners, the ability to try to see what's going to happen, not just in the next month, week or quarter, but over the next year, two, three, four years, and be agile enough to face those challenges.
So that's the context in which I want to talk about managing in a recession. Let's begin on page one here. By looking at how to use a crisis might seem a strange concept. How do you use a crisis? In fact, there was a very interesting quotation, made by Rahm Emanuel, president Obama's new chief of staff.
In October of last year, he said, "You never want a serious crisis to go to waste. It's an opportunity to do things you never thought you could do before."
And that's very true. And I want to start with the idea of what it means to manage in a recession by reminding you that not every crisis needs to end negatively. We saw this in a pretty joyous detail a couple of weeks ago with US Airways flight 1549. You may remember Captain Sullenberger bringing that plane down in what could have been a dreadful crisis and turning it into something that was really exceptional, with a really positive outcome.
Almost everybody involved in that whole activity came out of it with a considerable amount of credit. It was something - a crisis that did not end negatively. And you can make that happen for you.
It may well be, it certainly is the case, that none of us can change the macro economic big tectonic plates that are moving at the moment. Neither you nor I are going to stop what's happening in the motor industry, in the construction industry, in the finance industry. But what we can do is we can make sure that in the midst of this crisis, at a micro economic level, that our organization, our team, our group, our division, our department always come out positive, stronger perhaps than before.
I think there are three principles here that we're going to be coming back to again and again during the call. One is have a vision for the outcome. There's no doubt that the pilot of that plane, Captain Sullenberger, he had a vision for what the outcome was going to be. That was not the disaster that it could have been. Secondly, follow process. Can you imagine trying to get all of those people out of that plane without following a well established, proven process
So: have a vision, follow process, and thirdly, work together.
Getting out of that plane with not one person injured was a magnificent piece of teamwork, and we're going to see all three of these principles coming back again and again: having a vision for the outcome that's positive, following process, and working together.
Now let's move forward a little bit and on page two here I want to start looking at what really most impacts what we do. And that is how we think, how we think about things is really the progenitor. It's the basis of all that we do. It's how we thought about current market conditions that got us here in the first place. It's how we think about our current economic situation that's going to move us forward.
Think about the concept of fatherhood. You know, one person thinks fatherhood is an intensely involved, open, emotional interaction with his kids. Somebody else may think of fatherhood as a strict, burdensome duty to protect his children from harm at all times. Maybe somebody else thinks fatherhood is merely a genetic act. All three of those people are going to be a different type of father because of the way they think. Because of the mental model they have of what a father is.
You're going to choose your home based on your mental model. The way you think of what a home is. If you think a house isn't a real home without a decent sized yard, then you'll prefer houses with decent sized yards. If your idea of a model home is dominated by bathrooms or fireplaces or water views or sprawling kitchens, then not surprisingly, that's what you're going to look for when you're looking for a home.
It's our mental model of what something is that shapes what it becomes. I saw this in a very trite example. I saw this when I first moved to the US from the UK, that the mental model of what scrambled eggs are, is very different in the US from what it is back in the UK, and I couldn't really quite for some time get my head around that. What was being served up for me in the US as scrambled eggs. I had a different mental model.
So whether it's a small thing or a big thing, what really determines what we do is our mental model. They determine three things, our perceptions, how we see things. Our mental model determines our decisions. It impacts what we think about what we see, and it determines our actions. Our mental model determines what we do about what we think about what we see.
We saw a real gripping example of this when Alan Greenspan went to Congress to testify about his observations on the current economic crisis. He said this:
"I made a mistake in assuming that the self interest of organizations, specifically banks and others, was such that they were best capable of protecting their own shareholders."
Alan Greenspan admitted that his mental model was insufficient for what happened. This is why thinking is important. So I want to talk about how we think about, first of all, our own business on page three.
The single most fundamental driving force for us as managers is the mental model we have of what business is. And I have to say that in my experience, the three most common mental models of business that managers use are flawed, particularly at times of great change like this.
The three models that are most common are, first of all just nothing.
A very, very large number of managers have no holistic, cohesive mental model of what business is. They may have some idea of how parts of business work, but I find a lot of managers have no overall, cohesive model for what a business is. And of course that leaves us empty empty-handed at a time of need.
The second mental model, and this can be either explicitly held or just implicitly held, is the idea of business as war. This assumes that business is a win-lose activity: if I win, you lose. It's a zero sum game. And business is war. was a growing mental model for business through the 90s and the early part of the first few years in the century and it was promoted a lot by books like The Art of War by Sun Tzu and so on and so forth. I have to be honest that while it's useful at some times - there are times when business is like war - it's just not true.
Business is not war and that mental model doesn't hold and it's particularly not helpful at times such as this.
As a secondary aside, it's often held by folks I have to say, who use that mental model as a cover for doing things that are not very good - for doing bad things.
The third mental model that's most common is that a business is competitive sports, and this is really just a weaker version of the business as war and it's often held by folks who can't bring themselves quite to be as aggressive as to use the businesses war model. So they'd like to use the business as competitive sports model.
Now all three of these models fail us at a time like this because they don't provide us the tools to think about business in a way to recover from the sort of impact that we've experienced over the last few months and we're going to experience it in the next couple of years.
I want to move you, if you'll turn over to page four, to use a mental model that I believe is the most agile and useful model to think about how to manage in a recession. And that's to think of business as a journey. And that sound, it might sound very West coast, very woo-woo, but I don't mean it that way.
I don't mean just 'enjoy the journey...think of it as a journey'. I mean something very specific.
I want you to think about it as a journey to a specific place, and we'll look at what that place is in a moment or two. But think about the usefulness of the mental model of business as a journey.
First of all, there's six things here that it lets us do so.
First of all, it lets us decide where we're going.
Secondly, it lets us plan how we're going to get there.
Thirdly, it allows for the fact that we're often going to find ourselves in a detour. You're going to find yourself going down a path that you maybe thought looked good and it turns out to be a cul de sac. And we find that's happened a lot in business. All of us, any of us who have been managers for a while will know that quite often you take a detour - and one of the useful things about seeing businesses as a journey is you begin to realize that detours aren't mistakes. If your mental model is one of business is war or business as a competitive sport, then what are viewed as detours look like failures.
We were supposed to make that play, complete that pass, win that battle - anything else is a mistake. Well, the reality is that in business there are a lot of circumstances in which taking a detour is a perfectly valid decision to be made.
Let's go to look see what it's like down here. Let's try this price structure. Let's try this marketing model. Let's try this selling tactic. And detours are valid.
So as a journey, it allows uss to decide where we're going, the mental model of business is a journey allows us to plan how to get there, and to pack what we need in order to get there. It allows for us to detour.
It allows us to linger. It's perfectly acceptable on your path as a journey, as a manager building your business, to decide. I like it here. I want to linger here. Constant pushing for increased growth at all times isn't everyone's final decision about business. it's quite valid to get to a stage in development and say, 'Hey, I like it here and I want to stay here'.
Most importantly for our discussion today, the mental model of business as a journey acknowledges that we can get blown off course - that can happen to any of us - erxternal circumstances, the environment can cause us to get blown off course and that's what's happened to a lot of businesses in the last year and is going to happen increasingly this year and probably into early next year - is that they're going to get blown off course on their journey.
Now with that mental model that allows us to accept that we've got blown off course but allows us to get our GPS back out and get back on course again.
Business as war makes us interpret what's happening at the moment as is being crushed, defeated, beaten, knocked down on our backs. Business as a competitive sport makes us look at what's happened is we've lost a game. We've lost a season.
Here, what we can do is begin to realize that simply we've had an adjustment made by external circumstances on our journey.
Finally, in terms of the analysis of business as a journey, it allows us the concept of overshooting and as we'll see in a moment or two, although there's a very specific destination on the idea of businesses as a journey that we want to go to, many, many organizations overshoot.
They get there and then go too far, and that's going to be important in looking at how to manage in a recession, particularly those of you working in larger mature organizations.
So what does that mean - in terms of a journey - about where we're going to get to?
On page five, I want to show you very quickly (and many of you have seen this before and don't need to hear me talk about it all over again - those of you to whom this is new, one of the resources I'll send you is more information on this) but I want to revise real quickly what we mean here. Predictable Success. When we talk about where you're taking your business on the journey, the goal is to get to that place that we call Predictable Success.
What does that mean? It means that once there, you can set and readily attain your goals with high consistency.
Let me say that one more time. Here is where your journey should be taking you to, is to a place where you can set and readily attain your goals with high consistency.
That's where most owners and managers want to take their business - somewhere where I can set goals and I can attain them with a high degree of consistency. And we call that (stage) Predictable Success.
Now, every organization goes on that journey. Whether or not you accept my mental model here, the reality is that every organization goes through that journey. Every organization goes through in fact, seven stages leading up to and away from Predictable Success - overshooting it, if you will.
Businesses start going through Early Struggle for a number of years trying to get off the ground. Very many businesses fail at that stage. If they get through the first two or three years, they'll often go through a stage called Fun - early stage first growth.
The business grows really, really quickly. After a while, the business will hit what I call Whitewater, a stage in growth where the complexity and the scale of the growth begins to cause the business to become inefficient and needs to bring process in place. And if it successfully does that, it reaches that stage of Predictable Success.
Businesses can however, overshoot, and having got in to Predictable Success by the use of good processes can become over-reliant on process. When a business begins to age, get inflexible, get arthritic, it gets to this stage, which I call Treadmill, when it just is all a bit of the same - all form before content.
It's all box ticking, and if it's not carefull, the organization will fall down into Bureaucracy [what we now call The Big Rut] and then ultimately hit what I call Death Rattle and die.
This journey is a journey that every business, every organization, in fact, every division, department, team, group, project goes through.
And if you will bring with you the model of business as a journey to Predictable Success, either making your way there or making your way back there, having got there at one point and overshot, then that will give you the tools (as we'll see in a moment or two) to effectively manage in a recession.
What do I mean by that? Let's look at page six. The secret of getting to Predictable Success in any economic cycle (and I want to move onto what the specific implications of the current economic situation are in a moment or two), but in any economic cycle, the secret of getting to Predictable Success is in achieving the right balance between two things, process and vision. Process and vision.
Now about vision, I mean creativity, risk taking, that entrepreneurial spirit and thinking that gets the business off the ground in the first instance.
And on the left side of our journey map here, organizations are driven by vision, and eventually reach a stage where they need more process. That's the stage we call Whitewater. So growing younger businesses tend to be driven by vision and need more process in order to hit Predictable Success. Process and vision are in perfect balance. One plays off the other. We have just the processes we need to fulfill our vision. Our vision is worked out in process.
And what happens with many organizations is that having introduced process and seeing it being successful, is that the balance gets overcooked in favor of process, and older, more mature organizations that are becoming arthritic and beginning to get old typically are driven by process, and need more vision. So left side of the journey driven by vision, needs more process, right side of the journey driven by process, needs more vision.
Now what does that all mean in this current climate right now? Well that brings us to how to think about the economy. And on page seven I just listed out for interest's sake how I see most people's current mental models about the economy.
I say current maybe up to a couple months ago. I think people are beginning to think about it a lot more now than they used to. But historically, the three main models that people have used are first of all to ignore it. Just an empty vacuum. I don't think about it. I have no model for this.
Secondly, to black box it - to think, well, we're all in the same boat. I do know that this is an economy out there that does have an impact, but it's external and it's uncontrollable. So let's just treat it like a black box.
And the third model is to take a stab at something - the 'take a stab' model: do some scenario planning, get some budget ranges, try to crank out some numbers that will help us understand what the economy might do to it in the light of what we've seen about business as a journey.
On page eight, I want to show you how I believe we should be thinking about the economy as business owners and managers at this time, for now.
The most important thing to recognize is that the effect of the economy on an organization is like that of a headwind. It's like trying to get out on this journey and facing a huge headwind.
And the impact of that is to push organizations, divisions, departments, teams, groups, projects to push them down and away from Predictable Success.
So I want you to look at our roadmap here on this page to Predictable Success. And I want you to think about the economy blowing a massive headwind down on the head of Predictable Success. And here are organizations in green, one on the left just coming up, a younger, more agile organization coming up to Predictable Success and other one perhaps, which is overcooked, a more mature organization, beginning to show signs of a overcommitment of process, and heading to that Treadmill stage.
What will happen is that in this economic headwind, both those organizations will be pushed down and away from Predictable Success. But the way in which they're pushed is different on either side. The younger, more agile organization (and if you're in one of those organizations - and a resource that we'll send you when we're finished gives you a way in which you might assess just what stage you happen to be at the moment) but younger growing organizations will be pushed backwards in the life cycle - back in their journey.
They'll be forced to retrace their steps, and they'll be pushed back down towards what they were in a younger, previous time. By shedding process, it's very important to see this. Growing organizations are pushed back to an earlier stage in development, and the way that happens is the economic climate forces them to shed process.
What do I mean by shedding process? Newly put in place HR departments melt in the ice of the economic frosts. The new hiring process that we put in place gets disregarded. Ways in which we were doing business that we maybe just put together over the last year or so disappear.
And why? Because there's a retreat to the visceral, gut style of management. The smaller organization that's still driven by vision retreats back to the vision it trusts and begins to shed process.
Contrast that to the effect of the headwind on larger, more mature organizations. If you work for a larger, a more mature organization, one that's heavily dependent on process, who's maybe just overcooked through Predictable Success, maybe slightly overripe and is in that sort of Treadmill zone where you're doing a lot of work by process and checklists.
Then what happens in the face of this economic headwind is you get pushed further down your journey, further down the path - and in a way that's negative, towards bureaucracy and death rattle.
Less nimble organizations are pushed forward to a later, less flexible stage in the journey.
How and why does that happen?
Well, the organization has got where it is - it's shifted from let's say a 50 million business to $1 billion business or from $1 billion business to a $10 billion business by depending on process. That's been where their success has been in recent years. And so in reaction to what's happening, now we grab the thing that worked for us (process) and we put even more process in place.
If you find that your organization's response, your large mature organization's response, is to grip harder on more process, put more process in place, you need to understand you're responding incorrectly to the economy. The business needs to put vision in place, the larger growing business. Otherwise there will be a further retreat of vision in the headwinds of the economy.
Let's take those two models, one of what business is and the second one of what the economy is, the journey and the headwind, and let's push it forward to help us think about our business - what is our business like? Our own business, not business in general - the very specific, organization or division or department or team or group we work at, we work with.
Well there are three most common models here. The most common mental models people have of their business is first of all that of the people model - our business is a family. It's a good model. It's got a lot of strong points going for it.
The second most common mental model is the system model. The one that says our business is a set of processes, a systems way to do things.
As you can see, or maybe could work out, the first of these, the people mental model - the idea that our business is a family, a group of people, and it's all about our people, tends to be most common in those growing, nimble, flexible businesses that are on the up curve of their journey to Predictable Success. Not always - not exclusively by any means, but most often that people model is in the smaller, more nimble, grueling businesses.
And that tends to filter out and give way to the model of our business systems model, in the larger, more mature organizations. And again, not exclusively and not always, but most often organizations that are on the back side of the journey away from Predictable Success tend to be those organizations where the systems model is most commonly in place.
The third, less common model is that of 'network thinking' about the business as a supply chain between suppliers and customers.
And that model is most often found in and around the area of Predictable Success. Although again, not exclusively, it's found quite a lot in smaller growing businesses in technology (for example).
But those three are the most common models. People, systems, or a network.
They're all very helpful models. Unlike the idea of a business as a whole being like war or competitive sports. I don't find these models to be, deleterious. They're not, they're not painful, but they're restrictive and they're limited.
When all three of these models are being shaken as they are at times like this, neither our mental model of business as people; or thinking about your business as a system or a supply chain are sufficient to provide the tools to know what to do.
Right now - is there a model that'll help us work out what to do right now in our own business?
Well, I'd like you to look at page 10 here and here's my shot at it and I have to remind you way back at Page Zero that we were looking at that we're in a transitional period, and what I'm about to share with you is what I think is what is needed at this point to get us to that 2010, 2011 period whenever the role of the manager, I believe, will be fundamentally reassessed.
In the meantime, we've all got to get our 'plane down in a water landing.
We've all got to manage our business through what's currently going on, and what model will help us do that right now?
I want you to see here on page 10 that every business, every division department, team, group or project exists to do this, to translate its underlying values into day to day actions that achieve its goals.
Let me restate that. An organization exists to translate its underlying values, who we are, and why we started this thing into daily individual actions, that in turn achieve the organization's goals or the division's goals or the department's goals or the group or team or project goals.
And what I'm showing you here is a triangle that under normal circumstances provides the linkages between our base values and our daily individual actions. When you think about it in your organization, there are thousands in large organizations, literally millions, millions of individual actions happening every day that are the sum total of what that organization is and what it achieved that day.
If you think of an employee undertaking somewhere between five and 25 individual actions in a day that may have an impact on your success or failure. If you got 10,000 employees, that's a heck of a lot of individual activities. You've got 10 employees, it's a heck of a lot of individual actions. How did those actions, that action cloud up there at the top, how can we be sure that taken together, they're moving us closer to Predictable Success?
Well, in historic terms, the way we achieved it was in making connections up this triangle.
I've left out - just to force you to listen to what I'm saying and write it down and think about it - I've left out the intervening steps here. Let me go through them with you real quickly.
Organizations start with their values. Out of that they build their mission. What are we going to do? We're going to be the largest second hand used car sales network in Florida. Whatever it might be.
That mission will give rise to some goals, some overarching goals. We'll sell - we'll be number one in Toyota and in Honda and whatever. Those will typically turn themselves into objectives, which are normally budgets. So we've got our values give rise to our mission; our mission gives rise to our goals; our goals give rise to objectives - we're moving up the triangle, nearly halfway there - out of those objectives, that set of budgets, we produce some strategies and those strategies then allow us to decide on some tactics.
And out of those tactics come the individual actions. And this is the subject of an hours call in its own right - but that's what happens in a normal economy where we can plan, when we can plan, we can fill in this pyramid, we can get a cog in a wheel that connects every part of the pyramid from the bottom right up to the top.
Our values, who we are, determines what our mission is. Our mission determines what our goals are. Our goals help us write our budgets or objectives. Our budgets or objectives help us decide on some strategies or strategies, and the tactics guide our individual actions.
So (say) somebody is in a second hand car lot looking at ways to finance a car purchase for a young urban professional who's got a lot of income but no capital - that makes sense because it's one of our tactics to go get young urban professionals, because one of our strategies is to sell most of the demographic between 25 and 35 because one of our objectives is to make 250 car sales this quarter, because one of our goals is to sell the most Hondas in this year in Southern Florida, because our mission is to be the largest used car sales organization in Florida.
It all links, usually it all makes sense, all adds together. That's what our business is.
But when you flip over to page 11, you can see what's happening at this point of transition. When you look at the graphic in the middle, you see that the clarity about why and how we're doing things begin (is beginning - has already in many organizations) fogged over right in the middle here. Our strategies aren't making sense anymore. Even our objectives don't hold up.
Many of you've rewritten your budgets - how many times this year? and are probably still being asked to rewrite your budgets again and again because our objectives and our strategies or goals aren't holding up. There's a lack of focus. There's a lack of clarity. There's a lack of visibility in the middle here.
So during this time of transition to take my top line here, it's most beneficial for managers to focus on that action cloud, those individual actions that are happening, because those are still happening everyday. Your people are still going out every day. It's harder to get a logical, understood connection up the line from those actions to tactics, to strategies, to objectives, to goals, because our goals have been broken and they're not mended yet. We don't know what's achievable, but people still gonna go ahead and do stuff.
So think about it this way. What got everybody out off that crisis water-landing in the Hudson two weeks ago?
It was a series of individual actions. There was some type of process, but it was a whole series of individual actions. There wasn't time to think about strategy and tactics. In fact, one of the reasons why air crew are trained to shout at you and to raise the noise level and make a lot of movement and shout at you to get out, get out, get out, get out is because they don't want you stopping to think.
If you stop to think you're going to do something dumb, like try to get your laptop or try to get your wallet and they don't want you to do that. We're making a water landing. The only thing that's important is we get out of this. So we want actions, actions, actions, actions to do one thing to achieve that goal to get out. And at the minute, as a manager, the best that I believe we can do managing in this recession at this point, now, is to address our attention to that action cloud and get stuff done. We're like a crew on that airplane.
On the other hand, business owners and C level executives - If you own a business or you're part of the senior executive team, this is a time to reappraise the organization's values and mission. Probably values now, and mission more later in this year, 2009.
Why do I say that? Because it's the two extremes of the pyramid here that are, that are clear. They're the ones that are poking up above the the fog. We can still see that everybody's got to do stuff. Gotta make steel, got to sell cars, got to chop wood, gotta nurse patients,. got to do the individual actions, and managers' focus needs to be there for the next six to nine months, I believe.
But the current economic climate also is putting under a spotlight 'What are our underlying values? What are the values that this businesses exists for?'
And we've seen that a lot - i's been highlighted in the financial press. We're going to see a lot more talk about it in the next three to six months, I believe in the motor industry. And it's going to move into other industries as well. What are we here to do?
And there's another good read across here too, to that crash landing, that water landing, that we saw recently in New York. The thing that got that plane down in the first instance was Captain Sullenberger's clear perception of his values and his mission. He could see that end of the scale, both his values and his mission told him what his mission was, which was to bring that plane down safely, and avoid loss of life if at all possible, either to his passengers and or to the public in New York city.
And knowing that those were his base values, his core values, and what his core mission was at the end of the day, getting away from the day to day strategy, tactic of flying the plane - banking left and pushing this up and pushing that down - what took over was core values. Look after the safety of my passengers and the people in the town that I'm flying over.
Then the crew took care of the actions.
So I think that in terms of thinking about your business right now, I would be concentrating on that action cloud (I'll explain in a second what I mean by that), I'm looking at on the underlying values and mission are - what are we here to do and how are we going to achieve it.
What about your specific job as a manager? Your role, I believe in managing your business or your division or your department or your group, your team, your project at a time of crisis like this is, to assess and then if possible, reverse the effect of the economic headwind.
Let me repeat that. I think your role is to assess and then if possible, reverse the effect of the economic headwind, mainly by ensuring that the actions of your team are oriented properly... by ensuring that the actions of your team are oriented properly.
Just like the crew on the UA flight concentrated on the actions of everybody on that aeroplane in affecting a successful water landing, your job is to ensure that the actions of your team are oriented properly, that they're doing the right thing.
What do I mean by that specifically? Specifically, if you are on the left side of the journey path of the lifecycle that you have here on page 12, your job is to elevate process where it's needed, because the impact of the current economic headwind is it's going to push you back further and further towards that visceral, highly entrepreneurially driven, vision oriented organization.
And your business owners and senior executives are highly likely to want to go back into, to retreat into their visceral, gut-based management decision making process that got them through trouble times and Early Struggle. Because don't forget Early Struggle for most organizations, was just as like an economic crisis - because that's what it is! It is not having enough cash to get started, and your business founders and owners (particularly if the founders are around) will remember what that was like, and they know that they got themselves out of that by using their own visionary entrepreneurial skills and they will naturally tend to retreat towards that.
Your job as a manager is to try to hold the line on the processes necessary to be able to move forward out of this recession. Recessions come and go. This one's come. It's going to be here for a while, but it's going to go.
You want to be in a position to step back into Predictable Success whenever that happens. And a key thing to do that is to not to retreat to the concept of the maverick, lone Wolf manager who's going to sell his or her way out of this problem; of the maverick owner-manager who's going to personally see of this business from going any further in decline. You've got to understand the importance of the processes that you've been putting in place as you agree as grit as an organization and uphold and elevate those.
Equally importantly, and 180 degrees reversed from that, If you're in a larger, more mature organization, the key role of your job in this current climate is to elevate vision, to elevate creativity, risk-taking, flexibility. You've got enough process. Part of the reason why as a maturing organization you just started to move away from Predictable Success is that you've overcooked the process side of things.
And I personally believe that crises are much more difficult for larger companies than for smaller ones because let's face it, even if the smaller growing organization doesn't uphold process and it does go back down the path a little bit, it can come back up again. If you get pushed back down from Whitewater to Fun you can work your way back up to Predictable Success. It's a shame to lose that time and by holding the right processes in place, you can save yourself a lot of time.
But for larger organizations, if the economic headwind pushes you further down, you may never reach retrace your steps. And here's the reason why. The organization - the younger, vibrant organization - as process gets stripped, squeezed, died, it still has its vision, its entrepreneurial spirit, it's risk taking, it's creativity, and it can always add process there.
For the larger organization, if you're becoming over dependent on process, you're going to squeeze your vision out. It may die. In fact, that's how most organizations slide into bureaucracy and Death Rattle is that the whole entrepreneurial spirit of the organization, just departs - it isn't there anymore. There aren't people, there aren't ways in which to be entrepreneurial, to be creative, to be risk taking, to be visionary. Everybody's adhering to process. So your job, I believe, as detailed here on page 12, is to either uphold process or elevate vision. Depends what side of the journey you are right now.
What does that mean, practically speaking? I want to take the last 10 or 12 minutes of the call to go through some very specific things that I believe you should focus on for this stage in your organization's development.
I'm on page 13 here and I want to emphasize that what I'm sharing with you here is again, in reflection of where we currently are in this economic cycle. I'm certainly to keeping a dialogue open with myself and the people that I've talked to about this over the next year to two years. And I'm, I believe that the role of the manager's going to continue to change even further, but at this point in time, what do I see that, the individual rule of the manager, needs to focus on right now?
I believe that managing a business, division, department, team, group or project in a time of crisis involves reprioritizing the activities that you focus on. It doesn't mean necessarily doing anything new. Some of these things may be new to some of you, but for most of you, you'll already be doing some or all of this. it's a question of reprioritizing.
I mean, think about it. If you were the crew or even a passenger on that UA flight, what activities would you stop if you knew you were becoming involved in a forced landing? What would you start to do? Things would certainly change. Your focus would not be on your magazine, on your coffee, on the book you're reading - it wouldn't be on the inflight magazine. You'd be focusing on a number of other things instead, and it's much the same here.
We are in a time of crisis. For many of us it feels like we're bringing our business in for a water landing, and it's important to focus on the right things, and I believe there are three things to look at right now.
One is your own personal effectiveness. We'll look at what each of these mean in a moment. Secondly, how you lead and develop others, and thirdly, how you work as a team: Personal effectiveness, leading and developing others, and how you work as a team.
Let's look at page 14, and I have resources on all of this. I'm going to go through this last section here really quickly, but you will be getting an email with detailed resources on each of the three pages I'm about to go through, and don't forget you'll have the audio recording as well.
Personal effectiveness - personal productivity. You can't effectively manage your business in times of crisis unless your own decision making processes are themselves highly effective.
Could you imagine being in that plane with somebody trying to manage the process of evacuation who couldn't make up his or her mind about decisions or didn't have a good decision making process? Can you imagine going to the ER room and being faced with people who didn't know how to do triage, didn't know how to make effective decision making, didn't have an effective decision making process?
You need to be highly skilled at your own personal productivity and effectiveness. By the way, this is also providing a considerable amount of recession-proofing for yourself. Although this is a very big area that I'm talking somewhat glibly about, if you can nail the four skills involved (and which we'll go through in a second or two) in building a foundation of personal effectiveness, it makes you a highly valuable member of any organization.
Now, as I said, right, let's start, you will almost certainly have many of these already, quite well developed.
I'm going to go through them, list them out for you and you can use them as a little checklist.
The four key skills in being highly personally productive are time management - just managing your time. Secondly, priority management - doing the right things, in other words, during that time. So it's fine to manage your time, but maybe you're managing time really effectively, but not working on the right priorities.
Thirdly, crisis management - how do you do what things that pop up that need to be dealt with quickly, that triage ability. So time management, priority management, crisis management. And fourthly delegation. Delegation skills are (counter-intuitively) incredibly important right now for managers.
Counterintuitively, because with a reduction in workforce and people's time being cut and so on and so forth, it may seem more sensible or intuitive to do more yourself, to look busier, cause you don't want... the last thing you want is for anybody to look at what you're doing and say, Hey, you know, what are you delegating all these things for, you know, time's tough, do it yourself. But you're a manager and your business is highly likely to be at some stage of crisis. It means you've gotta be able to delegate.
Captain Sullenberger couldn't have done everything on that plane himself. He couldn't have landed that plane and got everybody off himself. There was a, there was a delegation of roles and activities.
Once you've got your personal productivity nailed, then you're in a position page 15 to lead and develop others with a foundation of personal effectiveness. You can more effectively develop your team during crisis. If you don't have personal productivity, personal effectiveness, you won't get to this stage in a crisis. You'll be too overwhelmed to effectively develop other people.
You will at some point then begin to be seen as being in the way of the organization achieving its goals and getting out of this , because you're not leading and developing your team. You're in turn not leading and developing your team, because you're too overwhelmed yourself. So point one is the foundation, personal effectiveness.
Then you get to page 15 here you can do number two which is leading and developing others. And their are five key ways that you must develop your team if they're going to lead you back to Predictable Success. (I wrote 'five key areas' in the workbook. I should written 'five key ways'.)
One: hiring. You've got to get your hiring right. And it seems dumb to talk about hiring at a time when everybody's laying off, but let me tell you the biggest mistake I've seen in every recession up until now, that most organizations make is whenever it does begin to ease back and they do start to rehire, rehiring is done in a very lax manner. It's not done in the rigorous way that it may have been done previously, and your employee pool, the quality of the employee pool gets diluted and undermined.
You'll be doing some - maybe very little - hiring over the next few months, but '09 - sorry, in 10 - you're going to be hiring again. I just want to put it up there. Keep your hiring skills honed and hire quality people. It's easier to develop people who come in who are high quality to start with.
Secondly, performance assessment, regular performance assessments. I'm not going to comment on any of these in any detail. We don't have time and I've got a lot of notes on them, but I just want you to know what they are. I'll send you the resources later.
Hiring [number one], number two, performance assessment.
Number three, skills assessment, leading to coaching. Coaching.
Hiring, performance assessment, skills assessment, leading to coaching.
Number four, mentoring and one-on-ones. So if coaching is helping their skills, mentoring is developing them as people: through one-on-ones, ride alongs, time with your people, however you want to spend that.
And fifth, empowerment. Actually giving people the ability to make decisions. I want to particularly emphasize this, for those of you who are managers in those larger, more brittle organizations that are on the right side, the downward leg of the journey, who are trying to get back up to Predictable Success. You need to reinstill vision, creativity, risk-taking. And that can only happen by genuine empowerment (there's more in resources and the handout to help you with that).
So you've got your personal productivity, effectiveness, foundation that let you lead and develop others. The third and most vital way to get out of this situation, in the next say, 18 months, is teamwork - working together as a group, cross-functionally.
The greatest threat to getting the blend of process and vision right, that's needed to manage an organization through crisis, the biggest threat is when people work in silos - when people don't work cross functionally.
And I'll make a prediction now that for some of you - it may be as many as 20 -25% of those of you on the call today who are working in organizations that are large enough to have silos, to have departments and divisions and functional areas (that means more than 30 to 35 people), 20 to 25% of those organizations are going to not make it the way they want to through this current economic crisis for one key reason: the inability to work cross functionally - inability to work as a team and the loss of efficiencies and the loss of knowledge and the loss of information that happens as a result of that is going to cost dearly in the current climate.
What happens is that in a growing market, the inability to work cross functionally gets hidden because there's money, there's cash, there's profits around, and it funds the inefficiencies of an organization that's working poorly cross-functionally.
Whenever the headwind blows and pares everything back, then that cost can't be held by the organization anymore, and the inability of working cross functionally begins to pull the organization down.
Five indicators of a manager who leads a team that works effectively across functions. One, they deal with conflict management, they've got conflict management skills. They don't avoid conflict. Secondly, and very much related to it, they are able to have difficult conversations. Probably the biggest area in my work that I've done recently, the biggest growing area is equipping managers to have difficult conversations. You've felt that pain this year, you'll continue to feel it if you need to get good at it.
Third, general communication skills. Communication is hugely important in this current climate. Transparency, filling vacuums, allowing people to see what's going on, communicating to them effectively why and how we're doing what we're doing. Absolutely vital to getting people to work cross functionally and not to retreat into their own silos.
Fourth, actually working cross functionally as a skill. The ability to know when and how to reach out across functions and seek help, advice and transfer information to and from other functional areas in your organization
So it's conflict management, the ability to have difficult conversations, communication skills, working cross functionally, and finally, accountability.
If you have or can put in place a reasonable degree of accountability for seeing the results of your actions over this next three to six months, if you're blocking in a kind of ability as a manager or you just haven't got used to it, then you'll hugely increase the probability of that water landing turning out well instead of being a disaster.
Why? Because accountability is what ties all of this together. It's what brings you back into the loop of going to your manager and showing what you've done increasing either process or vision as necessary in your organization.
Conflict management, difficult conversations, communication skills, working cross functionally and accountability.
I've used up a lot of time on the call and I realize we've gone through a number of things in huge detail. We've also gone through them at a level let I'm going to call it a 10,000 foot level. We're not way up at 30,000 feet talking only in broad terms, nor are we at a hundred foot level here because what I think has been most telling to me I want to convey to you is right now is the importance of how we think about what business is, what the economy is, what our business is and what our role in that job is, and that should then dictate our actions over the next three to nine months.
I believe I will redo this call, in nine months from now, and I believe it's going to be different. I believe there going to be other things that will have come to the fore.