High Performing Teams – Why so hard?

The desire for high performing teams in business is so common that you would think organisations would have a reliable approach to this by now – but in my experience that’s not the case.

The effective interaction of individuals within a team does not occur naturally for any significant length of time.  Leaders lack an understanding of the complexity of group dynamics and the challenges of aligning individuals and their goals with what the team has been charged to produce.  In “Why Teams Donʼt Work – An Interview with J. Richard Hackman by Diane Coutu” HBR they explained that research consistently showed teams underperform due to problems with coordination, motivation and competition. Data on more that 120 teams found that the leaders thought they had set unambiguous boundaries yet fewer than 10% of the senior executives agreed who was on the team!

Various team models exist ( see Drexler Sibbet Team performance model as an example) and with variations these models describe the essential elements such as;

  1. Why the individuals are in the team and what is the teams purpose? Leaders often assume this is known by all in the team or not that important despite numerous studies showing the importance for individuals and teams. Both perform better when they have a sense of purpose.
  2. Building trust within the team through mutual regard, open communication and time to appreciate and understand each other. Spending time on one or more tools such as DiSC, Belbin, MBTI to highlight and build understanding of the diversity and value each team member brings is foundational.  Trust models can help teams understand and accelerate their trust in one another.
  3. Clear goals is so common sense but so uncommon. Your goal is to manage your portfolio and be the subject matter expert and also to work on projects and input to new systems and collaborate with global peers and local departments and would you mind being on the social club? What assumptions underpin the goals and how do the goals flex when those assumptions change? And when the urgent new project shows up half-way through the year and you are asked to prioritise it, how is that reflected in your goals? So what happens when projects take up 60% of your time?  Organisations that have cascading goals and deep conversations at the start of the performance year to work through the likely challenges and have a process for calibrating impacts of new initiatives are in a much stronger position.
  4. Commitment to achievement through roles, responsibilities, authorities,  can be a time-consuming task and many leaders shy away from the work at this point and most importantly the team discussions. The discussions are not intended to produce a manual as we know the world is too dynamic for that but the shared resolution of issues creates principles and a process for how things can be addressed during the year. Interdependencies are understood and clarity on who leads a resolution of issues when they arise is known by the team.
  5. Lets do it! As a leader the favourite part – action!  A this stage it really is about the order – what goes first, who is doing that and when other actions follow. Allocating tasks, dates and finalising an implementation plan that is REALISTIC and based on real experiences is critical. I have seen so many projects set dates that are not related to any projects that have gone before and therefore set unrealistic timeframes that blow up. If the last three similar projects took 3 years why do you think yours will only take 12 months?
  6. High Performance. By having clarity of the bigger picture and purpose, appreciation and understanding of the skills and experience each team member brings to the team, clarity about who does what and when as well as realistic timeframes you have the elements of a high performing team. To get it running takes time and thinking and discipline. You then need to monitor and maintain as little issues left unattended can create bigger issues.

As leaders we would think nothing of spending this time solving a technical issue or challenge but we expect the people side of things to be much easier. We take shortcuts and get fooled by promising starts without recognising the stages that groups go through (see Tuckman’s stage of team development forming, storming, norming and performing).

We do bits of the process and seem disappointed that we get drawn into so many issues as team members clash and we spend inordinate amounts of time coordinating and managing the work. We end up with OK team performance when we really want high performing. In the end we need to decide if we truly want to do the work to create a high performing team or settle for average?

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How do we learn and develop?

For the last few years I have been working to support others to develop and grow. At the same time of course I also needed to develop and grow. My focus is more on the skills or competencies rather than information or knowledge. Acquiring knowledge or information about a topic or piece of technical information may require elements such as motivation, retention and sense-making but I think this is the easier side of learning and development.

Changing behaviours, adapting our responses to people and events and developing new habits goes far deeper. As I examined how I and other adults learn I saw a complexity that I had not been aware of before. There seemed to me to be four stages in developing a new skill/behaviour.

  1. Identify the gap – the skill or behaviour you want to develop – to a high degree of specificity. Be really clear about what you want the new behaviour to look like, in which situations and with whom.
  2. Plan how you are going to make the change including the sources of support for you in making the change. This may include family, friends, a coach. It may mean changing your environment to enable the new behaviour.
  3. Implement the plan and include daily monitoring. Using implementation goals that specify what you will do in the situations that arise are likely to be more effective than goal objectives. e.g. “In each global teleconference I will speak up and share my thoughts on the issues being discussed and draw others into the discussion through questions” is more actionable than “Increase effectiveness in Global Meetings”
  4. Measure or assess the change in behaviour using feedback from others, tangible metrics and other outcome approaches. Use the feedback to modify the plan and make adjustments. You will need resilience as many first attempts fail but third attempts are increasingly successful.

As you progress with your plan one source of support may be a coach who can work with you on what your goals are and identify any limiting assumptions that may be making it harder for you to realise your goal. Do you have a growth mindset that says I cannot do it yet? Do you have a fixed mindset that says I am limited to what I have and actively avoids being put into situations that may require them to acknowledge areas for improvement? Do you have a purpose, a reason why you need to develop?

For more see Ways We Learn


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When it comes to change..speed kills

When it comes to change, speed can kill.
The desire to get things in quickly, be decisive and prove you are an action leader can create a false sense of momentum. Those change efforts appear to leap out of the blocks only to slow as the resistance builds and the lack of commitment drags the efforts of change leaders to a halt. The 12 month integration program becomes a three to five year effort that collapses morale and spurs attrition.

John Kotter, renowned change guru, has highlighted the eight steps to leading successful transformations i.e.
1. Establish a sense of urgency
2. Form a powerful guiding coalition
3. Create a vision
4. Communicate the vision
5. Empower others to action the vision
6. Plan for and create short-term wins
7. Consolidate improvements and produce more change
8. Institutionalise new approaches

These are all necessary however i would like to highlight the most noticeable resistance to change that comes from a lack of involvement by those affected.

Understanding why a change is being undertaken and how it will take shape is critical to a successful change effort. Whilst the communication of these elements are essential they do not build commitment. If you need active participation from individuals and teams you need to listen, acknowledge and explain. You need to incorporate their good ideas and explain why you are not using their other ideas. Whilst it may feel like repetition and pandering to egos it is an essential element to developing the fuel that will drive your program with increasing acceleration.

I have seen the new leader take command and dictate new strategies day 1 using new distribution channels, revised products and new markets without bothering to ask existing leaders and experts what they think. Six months later the market research confirms what was known all along that the channels proposed had no interest in taking on distribution of that product. Detailed research also confirmed the cross-sell initiative faced numerous hurdles and was also another miss.

Great leaders listen first and then decide. They do not resile from removing obstacles that may slow progress. They involve, gain commitment and drive the change through active participation, frequent communication and by highlighting progress. Their energy is focused on building support and respect for the change, removing road blocks and remaining open to feedback and accepting changes along the way. Quality is not compromised, it is enhanced through the participation, involvement and commitment garnered through this leadership approach.

So if you want fast change ..slow down and listen first!

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Starting a new role..seek first to understand

Many executives face the excitement of a new role and feel a strong sense of determination to succeed in it. It is easy to get carried away with the thought that your knowledge, skills and capabilities will launch you into the new role and you should be ready to espouse the direction, strategy and method for achieving that vision from the moment you arrive. Whilst it is appropriate that you have thought about opportunities and have some ideas about where the business/division needs to go be careful as you may be leading with no one following.

In the first 90 days I would counsel any leader to hold that rough draft of a plan loose and spend the first 30 days seeking to develop a better understanding of the business, its staff, clients, markets, strengths and history. A future state is always set in the context of a current state. You need to deeply understand the current state and why it has evolved in order to understand what you can leverage to the future state.

If the first ingredient is success you need to have listened, understood and acknowledged what has gone before – be it people, products, markets, clients or locations. The ability to respect the past whilst explaining the “why” for the changes needed is a key skill for a new leader.

Existing staff and customers will already have ideas about changes that need to be made and these are a great source of opportunity. Use these ideas to help shape your strategy and by listening to your staff and showing respect for the work that they and others have undertaken prior you will start to build loyalty and commitment to the changes you need to make.

Involve your direct reports early, work with them one-on-one and as a group to build their trust in you and your intent to preserve the core values and ethics that staff want from their leader. Where you are unable to shift individuals to the new direction required see it first as a passion for what they believe is right and listen more intently and show you understand their perspective. If they are stuck in the past and unable to accept (these should be few and far between) then your handling of their situation (changed role, reduced responsibility, exit) will be closely watched by the staff to ensure it is fair.

This building of trust and understanding of what is important to staff will provide the foundation to build in your next 30 days the project teams, initiatives, research and analysis to build the case for change.  More on that in my next post

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Innovation – Do Boards and CEO’s Understand?

How many Boards, CEO’s and Senior Managers are urging their staff to innovate yet lack the understanding of the culture, skills and processes required and the risks inherent in innovation?

Scott Anthony wrote recently in a HBR blog that companies make the mistake of assuming a lack of innovation is a human capital problem and that few of their staff are capable of innovation. From his research almost anyone can, with practice, become competent in innovation.

His ideas and approaches to avoid in supporting innovation include;

  1. Issue highly focussed challenges (e.g. Netflix offered $1m to any team that could din crease effectiveness of algorithm for movie suggestions by 10% or more. Over 250 teams rose to the challenge and 2 exceeded the goal).
  2. Beware the Googlephile approach of 15-20% off work time to develop new ideas. Whilst this has worked at Atlassian, Google and some other organisations it runs the risk of creating a lot of suggestions that are incomplete and require more research, leading to delays and staff dissatisfaction and finally reduced participation. Scott suggests we instead focus on a small number of people who are given a significant amount of time to develop innovations.
  3. Lets go to the moon” – such bold visions may stimulate a big idea but more likely the ideas will be high risk and, given Board risk aversion, and their desire to prove the future, these will often be considered high risk and not pursued.
  4. Wing it – no need for a budget– lets just grab money from elsewhere if the idea is good enough. This rarely works and companies need to budget for the time and resources to support the innovation/enquiry.

There is no single solution to creating an innovative workplace so it is important to approach innovation from a range of perspectives.  In the Innovators Dilemma Clayton M. Christensen describes his theory of “Disruptive Innovation” and shows how large successful companies, in all types of industries, had been beaten by much smaller start-up companies.

These small companies would get a foothold by starting in market areas that were not attractive to larger players. The start-up, by focussing on lower cost, lower value products that still met the needs of the target customer segment, would then march their way up the value chain. Where these start-up companies did NOT adopt the big company models, but instead leveraged their start in unattractive markets to add superior value that incumbents could not match, then the strategy was “disruptive”.

To predict the success or failure of a new business initiative Christensen suggested four rules;

  • An incumbent that launches an innovation that targets the needs of its current customers can expect to succeed (Sustaining Innovation)
  • An incumbent that seeks to disrupt its own markets can expect to fail
  • An entrant that launches a sustaining innovation – one that targets the most valuable segments of an established market – can expect to fail
  • An entrant that launches a disruption can expect to succeed

“Disruption,” used in a technical sense, is a theory of innovation—of how particular types of new products and services, or “solutions,” come to achieve success or dominance in markets, often at the expense of incumbent providers.

Michael E Raynor, who co-authored with Clayton Christenson The Innovators Solution, has recently published The Innovator’s Manifesto.  According to Raynor Disruption is a theory of innovation that explains how particular types of new products and services come to achieve success or even dominance, often at the expense of once-powerful incumbents.

“From the rise of the telephone in the late 19th century to automobiles for the masses in the 1920s to restaurant meals available to all in the 1950s to Intel in the 1970s, personal computers in the 1980s, low cost airlines in the 1990s and social media sites today – disruption captures the essence of the “creative destruction” that has long characterized modern American capitalism.”

“in 2009 and 2010 by conducting controlled experiments to test the predictive power of different approaches to evaluate the survival odds of early-stage businesses. Test subjects were asked to predict outcomes based on whatever approaches they felt might be appropriate. The results were no different from random chance. When test subjects were instructed on a specific framework – Disruption theory – and were directed to use that framework on a new set of business plans, they improved their predictive accuracy by as much as 50 percent.’

The reality for most companies is that new products/services, new markets and growth initiatives are inherently uncertain and many therefore go for incremental growth. The tools provided by the Disruptive Innovation model may assist in evaluating these initiatives and provide a framework for focussing effort.

Who innovates?  We probably believe most innovation comes from big corporations (Apple looms large in the consumer mindset) but innovation is often undertaken by passionate consumers whose needs are unmet by current suppliers and therefore develop their own solution. These early adopters then stimulate increased demand and eventually the major companies realise there is a market large enough for them to serve.  An important aspect for companies is how they interact with and garner consumer ideas for products or services.  See Charles Leadbeater speak at a TED conference about the role of passionate and knowledgeable consumers in innovation on Ted (click below).

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When you are looking for new strategic opportunities..think Blue Oceans

Most organisations are looking for growth, innovation, a way to reduce their costs or expand their markets. Many are trapped by their history in relation to the markets and products/services they offer and need a process to think beyond their current approach.

The strategic schools that have developed over the years provide differing approaches to the consideration of strategy – strategy as position in the market, strategy as competencies to be leveraged, strategy as assets to be exploited – and each have something to offer.  The strategy work produced by W. Chan Kim and Renée Mauborgne – Blue Ocean Strategy – provides a number of useful tools by which we can examine potential for new strategies.

The summary (from the HBR article October 2004) is that the “business universe consists of two distinct kinds of space, which we think of as red and blue oceans. Red oceans represent all the industries in existence today—the known market space. In red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are well understood. Here, companies try to outperform their rivals in order to grab a greater share of existing demand. As the space gets more and more crowded, prospects for profits and growth are reduced. Products turn into commodities, and increasing competition turns the water bloody.

Blue oceans denote all the industries not in existence today—the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. There are two ways to create blue oceans. In a few cases, companies can give rise to completely new industries, as eBay did with the online auction industry. But in most cases, a blue ocean is created from within a red ocean when a company alters the boundaries of an existing industry.

The example they use is Cirque du Soleil who were able to change elements from circus and theatre to create a new uncontested market space and away from a declining circus industry.

So how would we start to look at our organisation and what blue ocean opportunities may be available?

1. Strategy Maps – are a useful tool to understand the elements that clients consider when buying your product/service and where you sit in relation to these items versus your competitors.  The elements may include price, service, access, online capability, integration, ease of doing business, post sales support, speed of delivery and many more. You need to consider and understand the utility (usefulness) and importance of these to your target market and to map your performance versus key competitors. This will now give you a visual map of where you are positioned and how you are presenting your value proposition and whether it is superior versus your competitors.

When we look at these elements we need to consider them in four ways;

  • Which elements should we reduce what we do versus competitors
  • Which elements should we add as new
  • Which elements should we eliminate
  • Which elements should we increase versus competitors

2. Blue Ocean Strategy (BOS) is focussed in creating uncontested market space, making the competition irrelevant, creating and capturing new demand, breaking the value-cost trade-off and aligning the whole system of a firm’s activities in pursuit of differentiation and low-cost. If it sounds daunting then this discomfort provides the stimulus to think differently.

3. BOS challenges us to look across industries, and strategic groups and re-define the buyer.

4. The Six Stages of Buyer Experience Cycle

To find your blue ocean you need to look at the buyer experience and consider the utility or value of your product or service from their perspective and across the six stages of buyer experience. How is this occurring at the moment and how would it look differently under the new blue ocean strategy?

The six utility levers – the ways in which companies unlock the usefulness of their product or service for their customers – many of which are are obvious. The simplicity of use, the level of fun and the image associated and the environmental friendliness need little explanation. A product or service offers convenience simply by being easy to obtain and or use. The most commonly used lever is that of customer productivity.

An innovation can increase productivity by helping customers do things faster, better, or in different ways. e.g. by offering on-line analytics, comparisons that analyse and compare the raw information it delivers.

By locating a new product on one of the 36 spaces of the buyer utility map, managers can clearly see how the new idea creates a different utility proposition from existing products. In our experience, managers all too often focus on delivering more of the same stage of the buyer’s experience. That approach may be reasonable in emerging industries, where there’s plenty of room for improving a company’s utility proposition. But in many existing industries, this approach is unlikely to produce a market-shaping blue ocean strategy.

A range of other tools are offered to assist in doing your own blue ocean strategy and there is useful information on the http://www.blueoceanstrategy.com/ website.

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What I like about the Balanced Scorecard for business

When Kaplan and Norton developed the Balanced Scorecard they were seeking to develop a broader perspective of what needs to be measured and managed to achieve success in business and also how to communicate and integrate the measures and targets throughout an organisation.

As the editor of HBR stated in 2007

“In 1992, Robert S. Kaplan and David P. Norton’s concept of the balanced scorecard revolutionized conventional thinking about performance metrics. By going beyond traditional measures of financial performance, the concept has given a generation of managers a better understanding of how their companies are really doing. “

In this way it adds to Peter Senge’s work on the Fifth Discipline and having a systemic view of what a business requires. For example an absence of a systems or systemic view may be the cause of the dreaded cane toads in Queensland as the decision makers sought to eliminate the native cane beetle by introducing cane toads into Australia from Hawaii. The cane toads now number over 200 million and are a huge pest. Their short-sighted solution was to eliminate one pest without thinking that they were simply replacing it with another. Short-term decision making that fails to recognise the implications of changes to an environment, business or system can often lead to problems.

But back to Kaplan and Norton. Their scorecard ensured that leading indicators, such as staff capabilities and internal business processes, were as critical to understand and measure, as the lagging indicators such as revenue and profit.

As leaders we need to recognise that the financial results are the end result of our strategies and their execution. In order to achieve better outcomes we need to re-visit the entire system and assess our strategy from at least four perspectives;

1. How do our client see us and how do we wish to be seen (aka what is your Superior Value Proposition)? What are we trying to solve for the client and how do we plan to do this better than competitors?

2. How will our internal business processes be leveraged to deliver this superior value to the client? How can the way we do things, interact with clients, or utilise information create value we can use to support our client value proposition?

3. How will the capabilities of our strategic job families (roles) need to change or improve to underpin the value we are seeking to deliver?  e.g. Will our consultants advice capabilities allow us to deliver services in a way that complements our products and creates additional value for our clients?

4. How will our performance financially be seen by our shareholders? Are our shareholders seeking steady growth, better cash-flow, reduced volatility or rapid growth with patience regarding profitability?

These four elements were represented in a diagram to show the interrelationships of the elements -e.g. a competency developed with staff could create capacity for unique processes that then meets a key customer need and results in increased customer acquisition and revenue.

The most important aspect is the linkage between overall Vision/Strategy via clear measurements. Importantly it also facilitates the alignment of all business areas and individual staff with a related and supportive set of measures and targets.

I have experienced the benefits of a performance system that ensures alignment between overall corporate goals, divisional goals and personal goals. The system was structured to include the four elements and it is a powerful force towards achievement of a business vision.

The Balanced Scorecard is not sufficient to develop strategy in isolation but provides a direction for focus, in a holistic sense, on the overall business and the critical needs of customers and stakeholders. It also focusses attention on the information and process capabilities that can be leveraged as well as the people competencies that need to be developed and/or used in support of generating client value.

Like many systems it is a guide and the real benefits will only be obtained where creativity, innovation and a deep understanding of customers and business capability exists. The Balanced Scorecard is a great communication tool to explain the underlying components required to deliver a strategy and create the alignment critical to employee engagement.

If you get stuck trying to develop measures then you may want to try “How to Measure Anything: Finding the Value of Intangibles in Business” by Douglas W Hubbard.

So the challenge is multi-tiered;

1. Develop the right Vision and Strategy – the balanced scorecard can assist along with other strategic development tools (Porter’s Five Forces, Blue Ocean Strategy, Resource Based View etc)

2. Ensure the whole system is linked towards its achievement – this is a real strength of the Balanced Scorecard – ensuring everyone understands what the business is trying to achieve and how that will be measured.

3. Focus on the key measures ensuring they are causally linked (i.e. they will reflect the right outcome associated with the right inputs). A poor measure that is not reflective of what it is meant to measure will be counterproductive with staff and managers alike.

Do you use the Balanced Scorecard? How well does it serve your business?

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Change and what we can achieve in 30 days

Whilst the song may say that “Love is in the air..” my experience talking with CEO’s and business people is that “Change is in the air..” – not so catchy and certainly not as well embraced. The result of this is that we have spawned Change Managers, Change Programs and Organisational transformations.

So why is change so hard? Try writing with your non-preferred hand, brush your hair with your non-preferred hand, learn a new language or how to ski – how did it feel?  I still remember learning to ride a motorcycle in my late 30’s (an early mid-life crisis or because I am early adopter?) and finding the throttle control took a bit of getting used to as well as balancing 200kg of bike and rider at low speeds.

Change requires us to establish new patterns for behaviour and the process takes time, persistence and a desire to push through to master the skill so that it once again becomes a subconscious capability. It has been suggest there are four levels in the “Conscious Competence” model (see below or click the link).

The origins of this model are uncertain but potentially goes as far back as Confucius – so it’s not a recent problem!  The model examines both consciousness and competence. As you move from 1 to 4 your skill level improves to a point where, for example, you can drive a car, indicate, brake, depress the clutch, change gears and listen to the radio, think about the next holiday you want to go on and arrive home with a few “blank spots” where you can’t really recall driving (in detail).

Competence Incompetence
Conscious 3 – conscious competencethe person achieves ‘conscious competence’ in a skill when they can perform it reliably at will

the person will need to concentrate and think in order to perform the skill

the person will not reliably perform the skill unless thinking about it – the skill is not yet ‘second nature’ or ‘automatic’

the person should ideally continue to practise the new skill, and if appropriate commit to becoming ‘unconsciously competent’ at the new skill

practise is the single most effective way to move from stage 3 to 4

2 – conscious incompetencethe person becomes aware of the existence and relevance of the skill and is therefore also aware of their deficiency

ideally by attempting or trying to use the skill

the person realises that by improving their skill or ability in this area their effectiveness will improve

the person ideally makes a commitment to learn and practice the new skill, and to move to the ‘conscious competence’ stage

Unconscious 4 – unconscious competencethe skill becomes so practised that it enters the unconscious parts of the brain – it becomes ‘second nature’

common examples are driving, sports activities, typing, manual dexterity tasks, listening and communicating

it becomes possible for certain skills to be performed while doing something else, for example, knitting while reading a book

the person might now be able to teach others in the skill

the skill has become largely instinctual

1 – unconscious incompetencethe person is not aware of;

the existence or relevance of the skill area or

that they have a particular deficiency in the area

the person must become conscious of their incompetence before development of the new skill or learning can begin

If we understand change can be difficult for staff then we can approach the challenge differently.  If the culture has built trust between staff and management it will go a long way to working with people about the change. Getting involvement from staff about the change, educating and getting their feedback are all critical in understanding and helping people through change – think like a personal trainer – firm but supportive – motivating, praising any improvements and focus on efforts at the early stage.  People need time, training, support and encouragement to develop new skills.

Helping employees understand that these are the normal responses to change and that with persistence and help from their company they will develop new skills, grow and benefit and not to fear the change are the conversations companies need to have with staff.

In an interesting attack on a lack of change Matt Cutts, a Google employee, spoke about different 30-day challenges he has undertaken to generate change in his life.

Perhaps we could all improve our receptiveness to change and get more out of life by taking on more of these 30 day challenges!

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Part 2 – Growth Initiatives – traps and inhibitors

In my last post I talked about the elements that would be beneficial to growth initiatives and now I want to touch on those things that can hold back growth initiatives.

  1. A belief that the market you want to enter is easier and less competitive that the one you are in.  I have witnessed the ” build it and they will come” attitude a number of times. The starting point is a belief we can build a product/service and there is a market for it so we should be able to sell some.  This fails to understand the different competitor value propositions, how they will react to a new entrant and the switching costs for a client to move from one provider to another (time, effort, risk, costs, distraction etc).
  2.  Load the new business/service with a share of the overhead costs of the core business – including a hefty amount of support services costs – and add the bureaucracy of an established business.  This will be a sure-fire way to kill a number of new initiatives and make them uncompetitive with smaller players who are not part of a larger business.
  3. Believing the brand will make the sale. I have yet to experience a client who will buy a new product or service just because of the brand. Maybe Apple can do it but there is only one Apple company.  I think Microsoft have found it pretty hard to leverage their brand into mobile phones and Blackberry are under enormous challenge from Google/Android/HTC and have forecast falling revenues.  Brand may be good enough to get you in the consideration set but will rarely be sufficient to make the sale.
  4. A lack of competitor analysis to provide a clear mapping of how your value proposition will differ on key attributes customers use to decide on which product/service they purchase. This is needed to provide a clear sales track for your business development team to use. (Cost, benefits, features, access, servicing, channels, functionality, flexibility, quality etc).
  5. A lack of a pricing strategy. There are a whole range of issues to consider associated with your strategy for the product or service and the volumes and nature of your product or service. If you are hoping to leverage an existing client base what pricing incentives are there to recognise existing clients? Do you need to achieve scale quickly to reach break-even associated with fixed costs? Are you using cost-plus pricing, competitor based pricing or customer based pricing? Having the wrong pricing strategy will impact on your success and even your survival.
  6. No CRM system to allow a targeted and focussed sales and marketing process to build awareness, interest and desire to the key segments that you have identified. Without a good CRM (they don’t need to be expensive) you will not have the data and tracking ability to drive results for your business.
What other traps do you think reduce the ability for businesses to grow?
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Growth initiatives – how do we grow?

We need to grow the business faster than “system” growth (i.e. faster than the overall industry growth rate). The Board is challenging the lack of top-line or profit growth and senior executives are scrambling to find the next big thing. The core business is under huge competitive pressures and we need to find another source of revenue, profit and growth and diversify our business.

All of the above are regular challenges faced by businesses and set off a range of activities to try to develop strategies, plans and projects to generate more growth.  My observation and experiences in these situations suggests a few things that may help with the process and those that may hurt.

Part 1. Things that help

Some business competencies and requirements that will facilitate the ability to act on the desire for growth include;

1. On overarching business strategy that is clear about your core capabilities, key markets, why you are in business and why clients should deal with you. In a Porter framework this may be whether you are a low-cost leader, product innovator or niche customer focussed.  It is little value for a niche focussed high service business to decide it wants to compete in a new market on a low-cost model. The lack of scale and underlying high service business model will react poorly to the conflict and cause a lot of wasted effort and eventually reduce margins, leading to a decline in the existing business and limited results from the new effort. Clearly knowledge and understanding of different strategic views and experience in assessing business opportunities through these differing viewpoints is important.

2. A business model for product and service development. As an example the Lanning & Phillips value proposition model starts with a focus on the client segment you are trying to serve/attract and the superior value proposition that you are offering to that segment of the market. You need a starting point and the best place to start is “who” is going to buy your offer – in a detailed micro-segmentation sense.  I still remember research on banking products and discovering in the focus group research the very different needs of small business owners from other demographics we had determined. Define your segments along multiple factors to test what the differences are in needs before aggregating common segments. Competencies in segmentation, market research and value proposition development are key to this analysis.

Understand the different levers for growth e.g.– acquisitions, vertical or horizontal integration, new markets, new services/products, new distribution channels, new media, bundling/packaging and new pricing models.

3. As you start this process you will immediately understand the need for coordination and integration of activities as well as driving for outcomes. A strong project management methodology with embedded project management skills will be important to achieve desired results.

4. Intrinsic to many of these elements is a need for creativity, insight and innovation. An ability to see unmet needs of clients that you have the capability of fulfilling and doing so profitably. What are you developing in your organization that supports innovation and creativity? Does your culture embrace new ideas or are they subjected to bureaucratic torture? Will someone with a great idea be forced to write paper after paper, asked to prove beyond doubt their idea will work and end of dejected and uninspired to try again? Look at Atlassian FedEx days to get some ideas about innovation and rapid development.

5. This feeds into the idea of risk-taking and clarity about the level of risk that an organization is wiling to take and Board acceptance of the risk-reward trade-off. No risk means low-level rewards in most cases. Being clear about how much risk is acceptable will help guide the nature of projects and the sort of expenditure that can be approved.  There are a number of articles on the benefits of smaller wins (see also Ram Charan’s: Profitable Growth is everyone’s business).

6. Collaboration from the business to input ideas, resources and engage with the program for growth. How will staff engage with the growth initiative? Will business heads see it as a political exercise and seek to protect their patch, budget and staffing? A highly engaged culture with high levels of trust and cooperation will dramatically assist the business in moving forward and supporting the growth project.  A fundamental component is a communications plan to keep all stakeholders informed.

These are just some of the key elements to a successful growth initiative and you probably get a sense of how wide-ranging and interrelated these different elements are and how difficult it may be to switch them on quickly.  All businesses need to be developing these capabilities if they want to achieve high levels of growth.  This list is not comprehensive – what would you like to add?

Next Blog – Traps to avoid when developing new growth initiatives.

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Measures, Business Performance and Staff Engagement

Early in my working life I heard the phrase “if you don’t measure it you don’t manage it” and I would have to say that it has held true over a long period of time. Measuring something achieves two things; firstly it elevates the outcome to a level of objective assessment and secondly it requires us to explore underlying assumptions regarding the causal effects. If you really want to generate debate about causation then link the measure to remuneration as people then become highly motivated to attribute poor results to other reasons/causes than those currently held which promotes good debate!

The link between a measure and its underlying causes is a critical element and one that can be easily overlooked or misinterpreted. Let’s look at an example of staff turnover (% of staff who over 12 months voluntarily leave an organisation as a % of total staff in that organisation) being used as a measure of effective leadership.

Why do people voluntarily leave a company? The causal factors may be many – lack of career progress, desire for travel, changing locations, going back to study, poor management, changing careers, poor pay etc.

Whilst poor leadership may be one of the causes of staff turnover it may not be the primary cause and to use it as the key measure would be both inaccurate and misleading.

The measures around leadership can be difficult and yet there has been good progress on this front with a variety of surveys that seek to examine the engagement that staff have with their workplace and how executives and managers can influence this level of engagement.

The BlessingWhite Employee Engagement Global Study 2010* is one such survey and highlights the benefits of an engaged workforce. The model examines an individuals contribution to the company’s success and their personal satisfaction in the role.

In Australia only 36% are Engaged and whilst this is not bad in global terms it is a sad indictment on leadership both here in Australia and overseas.

Towers Watson found that engaged organisations Earnings Per Share growth rate of 28% compared to an 11.2% decline for low engagement firms. JC Penney found that stores with top-quartile engagement scores generate about 10% more in sales per square foot than average. Hewitt claims that the highly engaged are 78% more productive than the low ones.

Building high levels of staff engagement would appear to be one of those measures that should be managed by all businesses who seek high levels of performance as it underpins achievement in other areas (customer service, sales, profit) by maximising the contribution from staff.

So think carefully about what you measure and the true causes of results and what drives increases and decreases in the measure otherwise you might believe the Mayor of a US city who observed the correlation between when they won the championship and the town celebrating and therefore suggested they start celebrating from the start of the season to ensure a win!

For more on non-financial measures you may want to read this article by Ernst & Young “Measures that Matter”

*For a copy of the full report (92 pages) go to www.polson.com.au .
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When decisions turn out wrong how do you react?

When decisions turn out wrong how do you react? Is it a case of moving on quickly and hoping people forget, undertaking a review and despondently wishing that it was something someone missed and thereby not your fault, or is it a robust post-mortem and review of process so that decision-making is improved and mistakes are used for learning?

I have mentioned before a book called Think Again and there is a YouTube presentation from one of the authors that provides a useful summary http://youtu.be/Ps9adOJjqes . Adding to that is a book from Michael J. Mauboussin about Think Twice -Harnessing the Power of Counter-intuition. Both books examine a number of decisions that are made and suggest an approach to improved decision making. As a business leader or manager this would appear a great insight and a real opportunity for managers and leaders to grasp improved approaches that would enhance their effectiveness and decision-making success – but there is a catch!

The models have some similarities and both highlight the importance of good governance for decisions, active consideration of alternatives and gathering data from external views and cases that could be considered similar. They also point out the need for honest examination of self-interest, any pre-judgements or biased views of the situations and how we need to mitigate these in our assessments.

All of these sound sensible but could struggle when the boss is not a self-aware and open leader. In many situations the “boss” may state a situation and their decision, not seek input or dissenting views and certainly not appreciate any governance oversight.

Misleading experiences, misleading prejudgments, inappropriate self-interest and inappropriate attachments are four root causes of errors in thinking that lead to bad decisions. The wisdom of crowds highlights that the use of a non-expert and truly diversified group to provide input on decisions adds to decision quality. This is covered by Mauboussin and builds on the excellent book by James Surowecki (Wisdom of Crowds).

So what else can you do? The use of a pre-mortem is a great way to get people thinking more broadly about the issues and aspects of a decision and asks participants to go to the future when they are all sitting in a room analysing what went wrong. In this way they can better reflect on where the risks are to decision success and where more information, review and analysis may be required.

Underpinning a lot of this is the need for a strong team environment where people can challenge decisions, test options and ensure robust debate occurs for key decisions. If there is not a high level of trust and commitment within the team there is unlikely to be the level of courage or care to challenge the decision – and yet that is exactly what is required.

So if decisions are not being well made in your business look first to building the trust and commitment of the team then examine the decision-making processes that you use to increase the probability of making the right decision.

In any analysis of results please look at the impacts of chance and randomness. It may have been the right decision (90% chance of success) but ran up against the randomness and dynamic nature of things (see my earlier article on randomness and luck at http://wp.me/pZqFA-3g ). A good decision process does not mean perfect results but a much more robust chance of securing the right decision.

For a further article on Mauboussin’s work see http://www.michaelmauboussin.com/pdfs/SmartPeople-DumbDecisions.pdf

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How much should we practice?

Ever wanted to learn a new language, play the piano or guitar or tennis? Writers such as Malcolm Gladwell have researched this topic and suggest that 10 years of practice or 10,000 hours are required to master a skill. Of course when you are 5 years old you have plenty of time to practice and be a master by 15!

For those of us keen to learn something new in later life the following article from Jonah Lehrer offers some hope that we can at least get some of that practice from passively listening (good for languages – probably not much help with tennis). It also highlights the power of our imagination where practice in the mind, coupled with actual practice leads to the same rate of improvement as if all practice was on an instrument.

How Much Should We Practice? By Jonah Lehrer   September 27, 2010  |  11:53 am

Somewhere, right now, a little kid is fighting with his parents about how much he needs to practice the piano. Or maybe it’s the clarinet. I fought with my parents about practicing everything. I didn’t want to practice my major chords, or my tennis swing, or my multiplication tables. I insisted that I already knew how to do it – I’d just done it – so why did I need to do it again?
Well, it turns out that 10 year-old Jonah had a point. There’s a brand new paper in the Journal of Neuroscience by a team of scientists at Northwestern (first author Beverly Wright) that investigates how much deliberate practice can be replaced with periods of “additional sensory stimulation,” or passive listening.
The experiment went like this: A large group of subjects was taught a difficult auditory discrimination task. Then, they practiced. And practiced. Every subject in the task performed 360 trials of the task per day for at least six days. But here’s where the interesting differences begin: In one follow-up regimen, listeners performed an unrelated task in silence. In another regimen, subjects performed that same task while listening to relevant stimuli in the background. In the final regimen, subjects didn’t get a break, but instead practiced the same auditory discrimination exercise over and over again. We’ll call this the nothing-but-practice group.
So which group improved the most? It turned out that you needed to be exposed to the relevant stimuli. This meant that the group which practiced the unrelated task in silence didn’t improve. However,  these experiments also demonstrated that listening to relevant background stimulation could be just as effective as slaving away at the task itself, at least when the subjects had practiced first. In fact, the scientists found that we don’t even have to be paying conscious attention to the stimuli – subjects still benefited from the stimulation even when distracted by an entirely unrelated task. I emailed with Andrew Sabin, one of the co-authors on the study, who summarized the results:
A great deal of previous work has shown that simply presenting the stimuli to the participant is usually not enough. They actually have to do the task. This is where our group comes in. Basically, what we say is, yes you do have to do the task, just not for the whole time. The main result is that if you practice for 20 minutes, and then you are passively exposed to stimuli for 20 minutes, you learn as if you have been practicing for 40 minutes. You can cut the effort in half, and still yield the same benefit. This finding could be important for clinical training programs, such as the ones that attempt to treat language-based learning disorders.
Obviously, these results have big implications. We spend a lot of time trying to improve our perceptions on very particular tasks, whether it’s a jet fighter pilot learning how to fly or a baseball player learning to hit a fastball or child with dyslexia learning how to read. Although we currently assume that the only way to improve is to constantly practice – in technical speak, the act of practicing provides a “permissive signal” that allows the accompanying stimulation to “drive learning” – this research demonstrates that we can also improve through mere exposure. Furthermore, our obsession with practice comes with serious drawbacks, since the tedium of practice can prove discouraging for beginners. And so we quit the piano and give up on our reading lessons, because we can’t stand the training regimen.
This doesn’t mean, of course, that we can just play Yo Yo Ma in the background and expect to master the cello, or put the textbook underneath the pillow and expect to ace the algebra test. We still need to practice. We just might not need to practice as much as we think. Here’s the kicker from the paper:
On a practical level, the present results suggest a means by which perceptual training regimens might be made markedly more efficient and less effortful. The current data indicates that it may be possible to reduce the effort required by participants by at least half, with no deleterious effect, simply by combining periods of task performance with periods of additional stimulus exposure. If this proves to be a general rule of non-declarative learning, it could help to explain how potent instances of learning can arise when sensory stimulation is not always coupled with attention.
Read More http://www.wired.com/wiredscience/2010/09/how-much-should-we-practice/#ixzz10nRPJPCL
By Jonah Lehrer Email Author
September 27, 2010  |
11:53 am  |
Categories: Frontal CortexScience Blogs

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Why leading people is not that difficult – a list to check!

When you think about it leading people should involve a fair amount of common sense. Treat people as you would like to be treated would be a good starting point (masochists aside). So what would be on your list of how you would like to be treated? I have listed some but encourage you to develop your own list and use it as a tool to cross-check how you are treating your own staff.

  1. Care about me as a person. If I am stressed, sad, excited – ask me why. It doesn’t need to involve hour-long sessions of psychotherapy – simply asking “you look a little ———-  is everything OK”. Finding out a relation/child/parent is very ill and being sympathetic will go a long way to building a connection and link to your leadership when you are asking for an extra effort (or better still they do it without you asking).
  2. Involve me in decisions and matters that affect my work, department, company. Now this doesn’t mean every decision becomes a poll and popular vote. Vroom and Yetton developed a model for optimising type of involvement and decision-making. In summary unless there is a conflict of interest (e.g. what should your pay increase be this year?) or a lack of time (need a decision in 2 mins – there is a fire and we need to take the exit!) you will gain a lot from involving people in planning, projects and decisions. You are likely to unearth some great ideas, build an understanding of why something is required and what options have been considered, develop your staff for the future when these issues arise and build commitment to the final decision.  Of course if you ignore everything they suggest without a reasonable basis or explanation then don’t even start.
  3. Give me some autonomy to apply the skills I have so I don’t feel that everything I do is being monitored. Autonomy generates a high level of intrinsic motivation as good people will rise to the responsibility to excel.
  4. Give me feedback – not once a year but regular simple pieces – good job on that report, nice analysis – next time would be great to also include competitor aspects, client’s loved your materials. It’s Ok to give praise – they won’t put their feet up and feel that they do not need to work anymore. Also as you build their confidence they will be more receptive to those time when you need to feedback that the work needs improvement. In a balanced approach they will be getting both types of feedback rather than to often managers only do one or the other.
  5. Create a sense of purpose for me and my area – we all like to feel that what we are doing is worthwhile to someone.
  6. Celebrate success along the journey – pizza’s in the office, an award/prize (staff vote and judge), a thank you note, dinner certificate etc. This is one area we managers (me too) have often fallen down on as we move from one step to the next without pause for recognition of progress.

Now that’s a good start – see how it goes and remember to add your items (or even post a comment below for others to see).

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Decisions, Outcomes and Luck

Have you ever experienced a time when a decision you made did not results in an ideal outcome? Often in business a decision is measured in terms of outcomes. What was the result that arose from the particular decision. In viewing decisions in hindsight we do not allow for the uncertainties that existed at the time. In a very good example of this experimenters gave experienced senior managers outcome scenario’s from a case study and asked them to predict the likely outcomes. Lets say the results were outcome A – 40%, B, 35%, C 25%.

A second group of senior managers were given the case study AND the outcome. They were asked to assess the probabilities for the different scenario’s irrespective of the fact that they knew the result. They needed to see the problem as it existed at the time and not be influenced by the subsequent result. Of course in hindsight their estimates were far different as it was “plain to see that option A would be the most likely result”.
Again lets say they awarded Option A – 65%, B 20% & C 15%. The only difference between the two groups was that one group had the luxury of knowing what happened and this affected them in a way that made things “self-evident” that were not as clear at the time.

The hindsight bias is often referred to as the “I-knew-it-all-along phenomenon.”

After the GFC many CEO’s were sacked for their firms poor performance. Whilst some of these may have been justified I wondered how many were the victims of hindsight bias or perhaps they were just scapegoats?

In many aspects of business we are like a captain of a ship – the oceans play a bigger role in determining speed, direction and progress than the skipper. The skill of surviving the difficult storms is still to be valued along with the capacity to find the winds that will support speed towards your destination. Just don’t get too caught up in how skilful a skipper you may be as a headwind and bad weather may be about to hit.

For more on this topic read http://hbr.org/2010/12/column-good-decisions-bad-outcomes/ar/pr an article by Dan Ariely where he makes a number of suggestions to assist in combating hindsight bias;

1. Document crucial assumptions. Analyse a manager’s assumptions at the time when the decision takes place. If they are valid but circumstances change, don’t punish her, but don’t reward her, either.

2. Create a standard for good decision making. Making sound assumptions and being explicit about them should be the basic condition for getting a reward. Good decisions are forward-looking, take available information into account, consider all available options, and do not create conflicts of interests.

3. Reward good decisions at the time they’re made.Reinforce smart habits by breaking the link between rewards and outcomes.

Our focus on outcomes is understandable. When a company loses money, people demand that heads roll, even if the changes are more about assuaging shareholders than sound management. Moreover, measuring outcomes is relatively easy to do; decision-making–based reward systems will be more complex. But as I’ve I said before, “It’s hard” is a terrible reason not to do something. Especially when that something can help reward and retain the people best able to help you grow your business.

Another article that may be of interest is an article by Paul Goodwin on hindsight bias as it effects forecasting.


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The role of luck, chance or randomness

You may be familiar with an author – Nassim Taleb – he wrote a book called “The Black Swan” and also a book called “Fooled by Randomness“. In both books he looks at events from a viewpoint of predictability or more correctly unpredictability. In the first book the known fact many years ago from thousands of observations of the world concluded that swans were only ever white. This fact was destroyed when explorers reached Australia to find the existence of a Black Swan – thus destroying what was considered to be an irrefutable and evidence based fact.

His experience in the Wall St investment environment reflects on the many traders who thought they had developed a surefire system for smart investment decisions (think White Swan) that would always make money despite the risks. After a number of years of fantastic success they would “blow-up” and lose a lot of money and destroy the theory and their careers (the black swan).

Taleb shows how poor we are at recognising risks and continuing headlong into the next collapse of markets and the huge impact chance is going to play in short-term performance.  He uses the analogy of Russian Roulette with a prize of $10 million dollars – 5 out of 6 people are going to tell you what a great way it is to make money and one is going to blow their head off! If you are one of the people invited to play you are going to be so upset when (if) the first three people make $10m that you are convinced you should have a “shot”.

So when your friends, colleagues etc are telling you about a fantastic investment opportunity, a winning idea that lots of people have made money from you need to ask yourself (think Clint Eastwood) am I feeing lucky today?

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Why would treating staff badly be a good leadership strategy?

Jeff Holmes, Harvard University, EOL Learning ...

Image by treegrow via Flickr

In trying to solve problems it is sometimes useful to flip them around and look from the other direction. This might mean starting from the last step, which is useful in showing what needs to remain, or taking the opposite argument. Instead of trying to provide lots of reasons why treating staff well is worthwhile pose the negative. Why would it make good business sense to treat staff badly?

I love Tom O’Toole’s story about his success in building up the Beechworth Bakery from nothing to be a multi-site tourist attraction and huge success.  When asked the question “what if you train them and then they leave” his simple reply was “what if I don’t and they stay!”

So my top 5 reasons for treating staff badly;

  1. Most people are lazy so if I say anything good that will make them feel they can work even slower
  2. All the research on intrinsic motivation is developed by left-wing radicals and is not true (Harvard University – that includes you!)
  3. Being mean secures the best financial results and that is all I want
  4. It takes time to think about people and take an interest in them and I am way too busy to spend time on these things
  5. Keeping my job is too important to waste time on doing anything for staff

Now if you think about a lot of the things above they are not evidence based or logical.

Regarding 4 & 5 . The reason many managers are too busy is that they lack the skills of delegation and have not developed their staff to take on an increased range of activities to free them up.  These managers do not get staff proactively offering to help or stay back because their is no relationship and mutual caring for each other. If the manager drowns in work, fails to achieve the results and gets sacked the staff will cheer. Where the manager has developed relationships with their staff then they will do all they can to support and help.

Regarding No.3. Look in the real world at companies like Southwest Airline who have a great reputation for how they treat staff and have incredibly low staff turnover. Southwest are the most profitable airline in the USA and have been so for many years. Sort of kills the argument about better financial results by treating them mean!

Regarding No. 1.  Find any form of training and performance improvement (sport, music, academic) where failing to give positive feedback leads to better performance – versus so many fields where frequent positive feedback is the best way to improve skills and performance. So where do people get the crazy notion that praise will lead to poorer performance!

Regarding 2. In this case you have a nutter (technical jargon for someone who has difficulty differentiating reality from fiction!).  Some simple experimentation may be in order – ask them what motivates them. Ask them how would they feel if their manager only talked to them to complain about a mistake/poor performance? Would they be happy for a survey of staff to see if their answers correlated with the disputed research? Alternatively would that manager’s peers have similar attitudes to the research or would they strongly endorse the research (peer pressure)?

In summary it is very difficult to find a strong case for treating staff badly. Over time one would expect that treating staff badly, having them unmotivated, not allowing their skills to develop to their potential, having high turnover, creating a poor reputation that will impact when trying to recruit staff and paying more for staff due to the poor overall staff environment will not be very successful for the business!

Why do you think managers treat staff poorly?

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Why are so many things broken?

A very funny perpsective on what has gone wrong in the design of so many things from the TED.com website and Seth Godin.


Seth Godin gives a tour of things poorly designed, the 7 reasons why they are that way, and how to fix them.

Seth Godin at Gel 2006 from Gel Conference on Vimeo.

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Stress testing your Strategy

A recent HBR article by Robert Simons discusses seven questions to stress test your strategy. There are two aspects of this that I like. The first is the use of questions as an approach to facilitate broader consideration of issues. I have used this in planning sessions where managers were only allowed to frame questions rather than answers to strategic plans (i.e how can we increase market share in the face of increasing competition? how will we assess our delivery of value to our stakeholders?).  By sticking to questions it opens up a broader consideration and view of “what” needs to be solved rather than a narrower discussion on “the answers”.

The second aspect I like about this article is a quote by former Southwest CEO Herb Kelleher ..“If employees are treated well, they’ll treat the customers well. If the customers are treated well, they’ll come back, and the shareholders will be happy.” To drive this point home, Kelleher regularly appeared in national newspaper ads under the caption “Employees first. Customers second. Shareholders third.”

Now for hard-nosed commercial managers Southwest Airlines is a low-cost airline and is one of the world’s most profitable airlines, posting a profit for the 37th consecutive year in January 2010. Given few airlines in the world are profitable it makes you wonder about their priorities! More companies putting employees first could really change the management paradigm (see also Employees First, Customers Second: Turning Conventional Management Upside Down by Vineet Nayar (Jun 8, 2010).

The Seven Questions are below;

1: Who is your primary customer?
2: How do your core values prioritize shareholders, employees, and customers?
3: What critical performance variables are you tracking?
4: What strategic boundaries have you set?
5: How are you generating creative tension?
6: How committed are your employees to helping each other?
7: What strategic uncertainties keep you awake at night?

A good set of questions.. what others can you think of?

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Education – reducing divergent thinking. Do we need a new model of learning?

In this RSA animated presentation by Sir Ken Robinson he poses the question as to whether we need a new model for education instead of the post-industrial factory approach that has as one of its biggest trends ADHD.

He shows how education reduces our ability for creativity and divergent thinking towards a one answer approach

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