When In Doubt, Speak the Truth

Posted on February 20th, 2012

When John McCain ran for the Presidency in 2008, he hosted a town hall meeting at which a woman claimed that his opponent was an Arab, while others yelled that he was a terrorist. McCain replied that Obama was a good family man, someone not to fear as a potential President, and a good citizen “I just happen to disagree with.”

I’m struck by how that scene continues to be the most-played clip of the campaign. McCain made mistakes during his run for the Presidency, and said things he no doubt regrets today – yet he’s most remembered for the moment when he did the right thing, however politically inconvenient.

All of us find ourselves in politically and intellectually difficult situations virtually every day. We see a program that is no longer working, the illogic of a stated strategy, or a dysfunctional but intimidating member of the team. If in those situations we remember to strive to speak the truth, we’re going to win a lot more than we lose. We need to speak it respectfully and gracefully, and to wait for the right moment to do so – but we do need to speak it if we want to achieve the legacy we are seeking. When John McCain delivered that reply he was heckled and booed by some in the audience, but I have no doubt, as that clip is played again and again, that he’s proud that he did the right thing, and that history will remember him for doing so.

When in doubt, speak the truth.

Harvesting a Declining Business

Posted on February 13th, 2012

When a product’s future is bleak because of the inexorable march of technology, you have exactly two choices: (1) To slash your spending on it and harvest it profitably, or (2) To remain in denial and fight until the last breath, denying yourself not only growth but the last available years of profitability. What is not an option is to defy the law of gravity and sustain a product longer than the market wants it.

Whether it’s land-based phone lines or coal mining, there is often money to be made through a harvest strategy: if and only if you take a hard look at all of your costs and stop throwing good money after bad, whether it’s marketing, R&D, overhead, bureaucracy, or anything else. Sometimes profits can be sustained for as much as a decade or more, but only if you acknowledge that you’re in possession of a dying business and manage it accordingly. A harvest strategy can even be a profitable enough to fund your conversion to the new technology, if you’re clever and dexterous enough to do both at the same time. That should be motivation enough to stop denying reality and shift the money to something more promising.

It was Nietzsche who said, “That which is falling should also be pushed.” I don’t think he was talking about newspapers or bricks-and-mortar mass-electronics stores, but he may as well have been.

A Useless Mission Statement …

Posted on February 6th, 2012

… reads something like this: “We will exceed the expectations of our customers, maintain a rewarding work environment for our employees, maximize returns for shareholders, and be responsible corporate citizens, while infusing excellence in all that we do.“

This statement is so broad as to be meaningless: It could apply to any company, and therefore says nothing about what your company should do. It provides your team zero guidance as to how to allocate scarce resources, or where to focus their creativity and innovation.

A great mission statement declares what your company is going to do better than other companies, and for whom. It should be broad enough to allow flexibility and the ability to evolve, and can be updated every five or ten years – but it must actually say something specific and meaningful about how your company is unique, and how your strategy will allow you to outperform your competitors. And it had better be credible rather than hyperbolic – or it will be ignored by your team.

It is far harder to write this type of mission statement than the vacuous sort listed above – and that is precisely the point. If you’re not able or willing to rigorously arrive at this vision, then you don’t yet have a strategy to win sustainably over time. That in turn means that everything else you’re doing ultimately will be for naught. You can ignore the hard work of crafting a truly winning mission and strategy, but you cannot escape it.

Marketing’s Brave New World

Posted on January 30th, 2012

Marketing has always been one of the least-carefully-managed business functions, and even in relatively stable times, before the internet and social media revolutions, vast amounts of money have been wasted on ineffective marketing, much of it avoidably.

And now things have gotten a whole lot murkier. Everything about marketing is changing, with much of it falling under the rubric of “social media.” But while these changes are real, they are far from settled. Much change remains ahead of us, most of it unpredictable.

Yet already there are legions of books, marketers and companies prescribing “the answer”. They have mastered the mechanics of the currently-popular social media and advertising platforms, and are ready to take your money so that you can check the box and say that you are there.

To not go there at all, for most industries, is foolish. But to go there unthinkingly is just as foolish. Many CEOs and executives are of the wrong generation to feel comfortable on this terrain, so the “hire an expert,” unthinking option is a tempting, default way to go. But it is an expensive option, and worse than that, one that won’t be effective and won’t grow your business.

You have no choice but to engage the problem, personally. This is the future (or at least the current future, if not the future future), and your company will have to change along with the times. But there will be scores of judgment calls that will need to be made, as well as dozens of convincing-sounding but ineffective ways people will want to spend your money. And don’t forget: Many of the “old” ways of marketing are still working for you, even though the new breed of experts have little interest in them and will want to divert your resources elsewhere.

To delegate all of these decisions is an abdication of leadership. Your job is to achieve CEO-level (if not marketer-level) mastery of the new world of marketing, and then to make discerning and tough decisions about where and how to invest and where not to – just like you do with everything else. If instead you let the generation gap get the best of you, you’ll waste a lot of money and find yourself at the mercy of trends and people you don’t understand – a bad place to be. Your choice?: Stay current, or render yourself obsolete.

Two Roads Diverged

Posted on January 23rd, 2012

Beginning in 1848, three hundred thousand people from all over the world rushed to California in the great Gold Rush, braving long and dangerous trips and a lawless society once they arrived in the hope that they would strike it rich. The family of Levi Strauss ignored the gold but focused on providing the homeless miners with badly-needed (if mundane) dry goods and supplies.

More than a century and half later, descendants of Levi still populate the Board and ownership of Levi Strauss & Company, which has revenue of four and a half billion dollars. How many of those 300,000 miners do you suppose struck it rich, and of those how many successfully passed that wealth on to multiple generations?

In this century’s internet gold rush, the stories of Google, Amazon and Facebook are phenomenal, not only for the wealth they created but for their impact on society. Congratulations to those who pulled it off and to others who plan to be the next big thing – particularly in light of the hundreds of thousands of others who have tried and failed to do the same. Be aware, however, that there’s a fork in this road. You can go for the glory with a low-odds, high-risk, and high-profile “hail Mary”. Or you can march down the field and pick up yards, first downs, and points with good products, profit-optimizing pricing, focused sales and marketing, strong leadership, and tightly controlled costs. Because most of your competitors will run their companies less rigorously, a good (if more mundane) product plus superb execution can be a path to plenty of growth and plenty of riches.

The two approaches require very different personalities, objectives and risk profiles for their leader. Pick the one that feels right for you – but remember that both are very real options. Don’t be suckered into believing that there is only one fork in this road.

Giving Credit Where Credit’s Due

Posted on January 16th, 2012

When I was a young CEO, a woman reporting to me worked long hours one weekend preparing a draft report to show me first thing Monday morning. I came in at 7:00 AM and went through it with exacting standards and a critical eye, eager to provide my next set of instructions and get on with the rest of my day as quickly as possible. With the instructions delivered I indicated the meeting was over, and she got up to go. As she reached the door she turned back to me, and as a young woman only a year out of college speaking to the head of the company she offered this advice: “You know what the problem with you is, Bob? You don’t say ‘Thank you’ enough.” With that she left, closing the door behind her.

I’ve never forgotten that moment, nor my admiration for her directness and courage. And with time, I’ve learned to understand her advice within a broader context.

Great leaders need to demand the very best of their people. They set standards high, and then follow through by managing to those standards and delivering feedback and rewards consistent with results. Leaders need to be appropriately tough, and while they should offer every employee unconditional respect, they can’t afford to offer unconditional praise – unless they want their company to be mediocre.

At the same time, when results are delivered and standards are met, your employee deserves not only tangible rewards but personal appreciation. If you offer “thank you” whenever (but only whenever) it is deserved, it will be as motivational as the raise, bonus or promotion that is the other part of the equation.

Your employees are people, not machines, and they crave the approval of their boss. When you express your appreciation, sincerely and meaningfully, you put a smile on their face, a bounce in their step, and a turbo-charger in the quality and productivity of their next piece of work. The more you do it, the more you’ll find people trying to move mountains for you and your company. And best of all, gratitude like charity is even more gratifying for the grantor than the recipient: You’ll put a smile on your own face and a bounce in your own step.

Now if you’ll excuse me, I have to go hunt down a woman from long ago to send her this post and say “thank you.”

How Strong a Leader Do You Want To Be?

Posted on January 9th, 2012

In the business press, it has become fashionable to argue that the productivity gains enjoyed by companies during the past few years have reached their natural limit, and that you’re now in for a period of steady or rising costs.

That’s patently wrong, or rather as right or wrong as you choose it to be as leader of your company. I’m inside a wide variety of companies large and small every year, and I’ve yet to encounter one that has come close to reaching its productivity or profitability limit. Of the many opportunities to improve profitability that you’re not yet fully exploiting, here’s one: Upgrade the quality of your team, by being a stronger leader.

You can hire more carefully and intelligently, digging deep to research and qualify new hires and holding out for only the very best candidates. You can manage and motivate a lot better, instructing your people explicitly and inspiringly how they can raise their game, and then holding them to that standard through regular coaching and feedback. You can pay your people more differentially, creating large variance in compensation tied directly to the results achieved by each employee, which will create stronger incentives for the desired behaviors and keep your best performers within the company for longer. And you can weed out underperformers more quickly (after appropriate feedback and opportunity to improve), rather than expensively forestalling the inevitable because firing people is one of your least favorite things to do.

I’ve yet to walk the halls of a company that can’t raise the quality of its average employee by 20% through this type of leadership. That’s a 20% increase in productivity – and this greater output can take the form of higher revenue, lower costs, higher profit, or all of the above.

Every leader I know is capable of leading this way. The limiting factor is not your ability, but rather your drive and your willingness to self-improve. Are you already as strong a leader as you’ll ever be? Or are you ready to take yourself and your company to the next level?

Small Changes, Huge Implications

Posted on January 2nd, 2012

Woody Allen’s movie Match Point explores how a tiny twist of fate – the final rotation of a twirling gold ring, which will determine if it will disappear forever in the river or settle on land to be discovered later by detectives – can have gargantuan implications down the road. Literature imitates life: The outsized implications of small decisions occur all the time in the realm of marketing, determining the ultimate success or failure of products and services.

The George Foreman Grill is one of the great product launches of recent times. It sold more than 100 million units, and netted Foreman more than $200MM cash – more money than he made in his entire championship boxing career. He became extraordinarily wealthy selling what is a simple, and quite frankly unremarkable, cooking appliance.

While you’re probably familiar with the product, you likely don’t know that the product absolutely flopped out of the gate. The original commercials for it started with brief clips of George boxing, seeking to trade on his huge success in that arena. Consumers didn’t respond, and Foreman and his partners came very close to giving up.

They decided to give it one last try, replacing the boxing clips with scenes of Foreman cooking and enjoying a home life with his large and photogenic family. Sales instantly took off, and continued soaring for more than a decade. The difference between bankruptcy and riches?: A few seconds at the beginning of a commercial.

Your potential customers are busy, they are distracted, and they are hard to convince. As true as all of that was a decade ago, it is far truer today as new technologies bombard each of us with data and media all day long. While you can’t win without a strong product or service, equally important are the subtleties of marketing, which if fine-tuned precisely right – but only if fine-tuned precisely right — can allow you to break through the noise, get people to notice, and convince them to open their wallets and give your offering a try. Further compounding (and confounding) the problem, marketing is three parts art and only one part science: There is no book in which you will find the right answer.

Are you investing enough in hiring, retaining, and integrating into your company the very (repeat: very) best marketing people? Are you investing enough time – of you and others – to study, think, analyze, and refine the very best possible marketing message – and then refine it again, and again, and again, based on feedback from the marketplace? The work may not be sexy, but like Woody’s Allen twirling ring, it will make all the difference.

You wouldn’t send your product to market without ensuring it the best offering possible. Are you doing the same with your marketing?

When You Resist Change

Posted on December 17th, 2011

“If change is happening on the outside faster than on the inside the end is in sight.”
– Jack Welch, former CEO, General Electric

“Institutions are rarely murdered; they meet their end by suicide.”
– Lawrence Lowell, former President, Harvard University

For almost every one of you, the environment faced by your company is changing rapidly, and the pace is accelerating. Do you and your team view change as exciting and fun, and why you get paid? Or as difficult and scary, and something to be held at bay for as long as possible? If the latter, the start of the new year might be a good time to turn over a new leaf.

I wish you the best for 2012 and beyond,

Bob

The Power of Doubling Down

Posted on December 12th, 2011

Every company has a mix of businesses, representing different products, services, market segments, customer demographics or geographies. You should also have a full-cost accounting system that accurately assigns sales, marketing, and other overhead costs to each business based on where the time and money is actually spent, as opposed to margin- or contribution-based systems, both of which can produce dangerously misleading impressions. If you accurately measure full costs, you are likely to discover that you earn close to or even more than 100% of your profits from half or less of your businesses, with the rest of them earning low or negative profits – and by the way, that is true whether or not your system measures full costs.

Now go look at your plan for growth. If you’re like most companies, your people feel tapped out in your core markets, so the bulk of your energy and investment – whether in sales, marketing, or R&D – is focused on newer and seemingly sexier areas.

Undoubtedly, one or more of those growth investments is worthwhile. Yet most of them will never produce enough revenue to truly move the needle, and even many of those that do will only produce unprofitable revenue, because they are too far afield from where your natural competitive strengths lie.

Meanwhile, most companies insufficiently attend to the less-sexy but more-profitable job of finding all potential ways to grow their core businesses – the ones that produce the bulk of your profit. I’ve yet to meet the company where the sales force can’t be upgraded in order to capture new customers. More focused and intelligent service can improve retention of customers and encourage them to buy more from you. Investment in new products and technologies can be focused on improvements to the core, rather than spread too thinly and too far afield. And since the core areas are the most profitable, price can be used as a selective weapon to aggressively and intelligently win customers from your competition.

Your company is populated by human beings, who are of course captives of their own psychology. The allure and seeming ease of finding a new customer where you haven’t looked before, despite the often-dubious long-term payoff, often illogically trumps the more subtle but also more profitable job of growing your core businesses by working smarter and pushing the envelope. I’m not against growing in new areas, if they are intelligently selected — but I am if comes at the expense of your most profitable way to grow, which is within your areas of core strength.

A good blackjack players knows that one of the keys to the game is to double down (double your bet) when the cards are in your favor. Have you doubled down enough times on your strongest businesses?