Simple management

Words: 425
Reading Time: 1 min. 25 sec.s

What actions yield the best financial results when dealing with an economic downturn?

That’s something we would all like to know – always assuming that an economic downturn calls for actions different to those at any other time.

Bruce Tulgan of RainmakerThinking, Inc.® reports finding that cost cutting, innovation and increased supervision were the three strategies that yielded the strongest financial results in 2009.

Well, that’s wonderful! If that’s all we have to do to get great financial results then all our problems are solved. Or are they?

Bruce’s results are drawn from a survey of more than 1,000 managers selected from participants in RainmakerThinking, Inc.’s ® intensive two-day management seminars.

Managers that implemented these actions were found to be the most likely to report that their bottom line financial results (at the level closest to the manager’s control) in 2009 were “good,” “very good,” “better than expected,” or “much better than expected.”

There seems to be a number of weaknesses here:
1) The survey was only of managers, not of workers or financial analysts;
2) All those managers had been trained by RainmakerThinking, Inc.®;
3) Other actions taken by managers who were not participants in RainmakerThinking were not examined;
4) The assessments of financial results were entirely subjective; none were quantified;
5) Corporate benefits or detriments other than financial ones were not looked at;
6) The organization conducting the survey had a direct interest in its outcome.

Besides which, cost cutting and innovation should be high priorities in any company, irrespective of the state of the economy. Had these managers helped create the crisis in their companies by their lack of effectiveness when times were better?

And managers reported that it was their supervision that made a difference – not actions and dedication by a neglected workforce concerned about continued employment that would have happened anyway, without the managers.

No surprises there then. It’s the usual error – we always think we have had a disproportionate effect (hubris) when it’s everybody else that has made the major difference. The higher the individual is in the organization or social grouping, the more marked is this effect as a general rule.

Business suggestions:
1) Start from a position of scepticism;
2) Beware of too much simplification;
3) Ask, “Who says?”;
4) How much interest has the researcher in the outcome of the research;
5) Check for what’s missing;
6) What else could have caused this?
7) Look for a control group comparison;
8) Everything should be as simple as possible, but not simpler (Einstein);
9) Nobody has all the answers;

10) Bosses need the workers; the reverse is not always true.

Acting from a single purpose

Words: 277 Reading Time: 0 minutes 55 seconds

Recently I was surprised to see an experienced NLP Trainer remark on a lady that spent her time at a dancing class actually talking instead of listening to the music and practising.

He was struck by the fact that even though this lady had been told repeatedly that she should not talk during practice the first thing she did was talk about the not talking instruction!

And when he thought about how this lady behaved in class, he realised she seemed to be talking most of the time.

Well, of course!

The evident mistake is to assume that two people doing the same thing, at the same time, in the same place will have the same motive. That doesn’t follow at all. In fact it is highly improbable given the diversity among people.

Those running businesses often fall into the same mode of thinking.

Owners are puzzled that their waged employees do not share their dedication and whole-hearted commitment to the enterprise.

Directors are astonished that the carefully designed, highly remunerative, shiny new incentive package has not had the motivational effect they expected.

And managers are surprised that the disciplinary code ensuring that clerical staff put everything in writing has not cut the error rate one iota.

Blanket policies and uniform procedures are the bluntest of tools. To improve the probability of connecting with an individual we need to know why they are here and what interests them. Only with that information can we hope to tap into their motivationally wellsprings.

I don’t know the talkative lady at the dancing class, but there’s a good chance she was there mainly for the company, not the La Caida.

How are you choosing to travel?

Words: 588 Reading time: 1 minute 58 seconds

I watched as a pedal cyclist rode along the pavement, used a Pedestrian Crossing and then swung right, resuming his journey as part of the road traffic. I put my car into gear and drove on, reflecting on the transition the cyclist had just made.

Using the same vehicle he had moved from being a hazard to pedestrians to take his place as one more risk that drivers have to negotiate. That’s the sort of transition we often make in life.

Changing our transport
On any given day some of us will commute from being a forceful manager in the workplace to being the more regretful half of a failing marriage; a move from being a relatively fast-moving, potentially threatening person to being a much more vulnerable individual.

Our pedal cyclist decided to stay on his bike as he moved from the pedestrian environment into the traffic. In business and in life there are different choices, although equally significant.

As an employee, what kind and what size of company do we aim to work for, and in what position? As a business owner / director do we stay in our comfortable little puddle, or go out and compete against the big boys?

In our relationships, what kind of vehicle are we? Are we a caring parent, or an over-protective pain? Do we own our own problems, or expect somebody else to take care of us? Are we an old-fashioned romantic, or just a semi-permanent fixture?

Our Mode of Transport
And what kind of vehicle would we be if we decided to consciously manage our relationships, make them the best they could be and take care to promote the common good?

A bus: everybody on board and heading in the same direction, with frequent opportunities for people to either join or leave the vehicle.

A plane: a fast, efficient, self-contained vehicle that can get you to your destination by the shortest route possible, but needing lots of infrastructure to support it and somewhat ignorant of the lives of those not on board.

An ambulance: a simple rescue vehicle, always on call, but only for those already in serious trouble, only for the few and only having one destination in mind.

A dust-cart: a highly useful vehicle specially designed to clear away the damage and detritus from everyday living, but offering no real solutions. They’ll be round again next week.

Or a muck-spreader: smelly, often despised, but essential for providing a rich and fertile soil in which other things can grow and flourish, given that other environmental conditions are right. Used too much it can “burn” the plants it’s supposed to be helping.

And I wonder if the Inland Revenue is the Combined Harvester of life? All-encompassing, mechanistic, and unable to distinguish wheat from rye, it waits until someone else has put in all the hard work and grown a worthwhile crop. It then comes along and strips the field bare, leaving little or nothing for the rest of society. Consequently gleaning, after the crop is gathered in, is never seen today.

And who are the tractors – slowing everyone down to a crawl and getting in the way, but ultimately necessary? Is this health and safety?

Harnessing the horsepower
What sort of vehicle do you need to be to realise your life’s ambitions?

And what sort of vehicle do you need me to be, and when?

The pedal cyclist that started all this is now gone. But you can see what disturbance even one may cause, not just to fellow road users, but also to trains – of thought.

People buy from people? Give me a break.

Words: 654 Reading time: 2 minutes 11 seconds

You may feel the same as me. When I find the tired, foot-sore and weary still being dragged from the back of some damped, dark cupboard, dusted off and pressed yet again into unconsidered service I have one of two reactions. Either I feel resigned (not again), or I feel exasperated (good grief).

As my previous posting was on the tired, foot-sore and weary idea of people staying in their comfort zones this posting will look at the equally drained, drawn and discredited idea that “people buy from people”.

Do they? Do they really? What, all the time? Every time? I don’t think so.

Let’s look at an entirely fictional, yet believable week for you and me.

On a Monday morning we leap out of bed at the first peep of the alarm clock ready and raring to go. Freeze frame…

That bed; do you know the people that constructed it? And your alarm clock; that was your local watchmaker, wasn’t it? What about the building you’re standing in; any idea who…?

Moving on, after your shower using the water provided by that nice man from the local reservoir, you tuck into your breakfast. Of course, you’re not really sure who made the bread for your toast and the cereal in your bowl, but hey, you’re only eating them after all; there’s nothing really important about buying from people here.

Then you get dressed (your personal tailor at M&S is so good) and head off safely in your car at 70 m.p.h. (built by Joe, the guy at the motor works on the corner) using the road constructed by the boys you always hang out with in the bar of The Pick & Shovel. You may smell the flowers in your front garden as you pass, the seeds all lovingly harvested and grown by Betty at the nursery in the next village.

At the office it’s lucky Mr Dell has already delivered your computer, together with a little note offering to meet you for coffee, because you can’t wait to log onto the internet provided for you by…well, you can’t quite remember them all. There were so many at the Christmas party last year; but nice people.

Are they nicer than the people who made the pen in your hand, or the paper you’re about to write on? You can’t quite decide as you take an aspirin, a drug made by people in Malaya who you have never met, are never likely to meet, and a drug the strength and constituent parts of which you haven’t checked and don’t know who might have done so on your behalf.

Let’s stop. It isn’t even ten o’clock on a Monday; how many people have you bought from that you actually know?

People buy from people? Give me a break.

People buy from supermarkets, from Amazon and EBay, from slot machines and petrol station forecourts, from serve-yourself tills and McDonald’s. Most people buy anonymously. They buy as much as they can, as often as they can, without having to interact with anybody. People scare them. A soap on the TV is about as close to real people as they want to be.

So, what is it people are buying, if it isn’t from other people?

People are buying minimum inconvenience and as much certainty as they can with as little precious cash as they can spare.

Now as a person you can supply some of that certainty by building empathy and giving reassurance. If you can convince the other party that you are a nice person, that you want to help them and are not trying to rip them off, then you might make some progress.

People only buy from people when they actually help to increase certainty. Thinking that people buy from people is like being fooled by a three-card trick. You’ve missed the essence of the transaction by concentrating too closely on the players involved.

Giving Up Our Comfort Zones

I was listening to James Knight yesterday. He was giving a brief talk on colour styles - an entertaining variation on personality types - and he mentioned comfort zones. That is a familiar concept, but how well does it represent what is going on?

The idea is that where we are now is comfortable; where we want to move to involves effort; so we tend to stay where we are, rather than go through that struggle. Effort = distress.

Well, that's not right.

If we have habits we enjoy, that's great. If we have habits we barely notice, they are not a problem. But if we have habits we actively want to change - that's your discomfort zone (DZ). At that point the habit you wish to acquire represents your new comfort zone (CZ). And the hurdle of effort between where you are and where you want to be is your effort zone (EZ).

To represent the desired state as somehow scary seems wide of the mark. That is where we want to be, for goodness sake!

Moreover, telling someone they are in their "comfort zone" with a habit they are struggling to break will certainly detract from the effort needed to move away from it. The old "comfort zone" concept is no help at all! Little wonder that those fed such a disabling mental diet are often sabotaged by the very ideas that are supposed to help them.

Even the suggestion that effort equals distress is not a universal truth. Some folks enjoy the process of change - like the person that soaks up knowledge like a sponge on their journey to academic excellence, or in the process of acquiring a particular skill.

For some people in some situations effort is distress. They stay in their Discomfort Zone when the distress in making the effort exceeds the discomfort of staying where they are - the dog laying on a nail syndrome. They reach their Comfort Zone when the distress of the Effort Zone is less than the discomfort of staying where they are.

Thanks James, your talk got me thinking.

So, shall we tip the old notion of comfort zones on its head? Or shall we preserve some of our current income stream and leave our clients struggling to make the changes they want?

What’s Your Barometer Reading?

Words: 489 Reading time: 1 minute 36 seconds

When we are sailing along smoothly on an even keel the chances are that one of two things is true:

a) Either things could be a lot better, but we are not pushing the envelope, or
b) Things could be on the verge of getting a lot worse, because we are forgetting to notice the potential threats.

In the current economic climate, which is more likely to be true for you?

In recent weeks I have had three different businesses approach me with essentially the same problem – getting the right amount of money out of clients on a timely basis. The problem manifested itself in three different ways:

~ Collection of debt
~ Terms of business
~ Pricing

The common factor between these three was forgetting to make clear to the clients concerned what the expectations were surrounding payment. The reason for such forgetfulness is common to us all. So common, in fact, that Pace and Kyeli Smith have coined a term to cover it: “The Usual Error”.

The Usual Error in this case was the belief by the business owners concerned that their clients viewed the need to make adequate payment in a timely manner in the same way that they did themselves. Big mistake.

Paul Watzlawick’s theory on communication is relevant here. One of his axioms says that you cannot not communicate, because every behaviour is a kind of communication. Any perceivable behaviour, including the absence of action, has the potential to be interpreted by other people as having some meaning.

These businesses had – probably inadvertently – let their clients know that low, unsecured or delayed payment was not an issue. In fact it was and is in every case, proving that while you cannot not communicate, you can not communicate accurately.

The tale I usually use in these circumstances is of the couple on their first date. The boy is waiting at the appointed time and place, but the girl arrives 20 minutes late.

If the boy complains on that occasion and on any subsequent occasions the girl will get the message that timekeeping is important to him. However, if says nothing about lateness, then he is opening the door to constant lateness on future dates.

Whatever he does, or does not do, sends a very specific message.

If you are in a hole, as these businesses were, the only way out is to first know that you are there. Knowing you have a problem puts you well on way fixing it. And knowing that you can fix it helps your mood, your attitude and strengthens your inclination to take action.

Watching your business barometer will let you know if the wind direction is about to shift, if you face storms, or if you are about to become becalmed.

Having some warning of what is just round the corner is really useful, even though it is but the first step on the path to a better outcome.

Being First

Words: 467. Reading time: 1 min 34 secs.

The story is a familiar one. Some lost and weary traveller asks a friendly yokel the way to some distant location and is advised that it would be better if he did not start from here.

As we weigh up what resolutions we could make for 2009 I would offer the same wise counsel as that helpful country bumpkin – don’t start from here.

Typically, when we imagine doing something different, we start with some preconditions. We say, “When I have the resources, then I could do X and be Y”. For example, we say “If I had a diet that worked, then I could slim down and be a size 10”, or “If I had the time, then I could start writing and be a poet.”

These preconditions not only provide us with a handy excuse if we fail, they also start us off in exactly the wrong place – where we are now.

By following the ‘have – do – be’ route they focus on what we lack; the hard bit.

Only when that’s in place is there implied permission to look at behaviour [do].

Only when behaviour has changed can we tackle beliefs [be].

While this approach can and does work for some people, it is the more difficult approach to change. It looks to sheer willpower to put the first two elements in place before tackling the major roadblock to such actions – our beliefs.

Willpower has its uses, but it is a product of the conscious mind. It calls for considerable effort and is essentially a short-lived, power surge. If the conscious mind does not find resonance in the subconscious mind, then it’s no contest. The subconscious prevails every time.

Therefore, to put long-term changes in place, be they minor or major, we would be better advised to start with our beliefs about what we are being. If your desire is to be a poet then take on the mantle of a poet, think and act like a poet, live as if you are a poet.

In being a poet you will do those things that poets do.

In being a size 10 you will do those things that size 10 people do.

And in the being and the doing you will create those things you have to have.

The poet will stop watching TV, get up earlier and work throughout the weekends on producing verse.

The size 10 will experiment with the food and exercise combinations needed to fit into that dress size.

Use the power surge of your willpower to modify the environment in which your changed persona will operate – the food in the cupboards, the social calendar for the size 10, the alarm clock and the study layout for the poet.

From there the change, driven from the inside, will naturally feel at home.

All Change

You may have come across the phrase “if you always do what you have always done, you’ll always get what you have always got.” Notable speakers who have used it in the past include Penny Phang, Anthony Robbins, Jim Rohn, Chris Widener and Zig Ziglar.

I have even used it myself.

Newsflash from my banking clients: that’s (another) coaching myth.

In the past this little mantra has been used to challenge those clients who were stuck in a rut of working hard in a particular way with little success, but unable to come up with another approach.

In those circumstances pointing out the illogicality of continuing in a fruitless pursuit made sense.

But what of those whose strategy has a history of success, but who face more recent set-backs? Wouldn’t they want to keep doing what they have been doing in order to duplicate previous favourable results?

Certainly they will. However, circumstances have changed. Now they need to change too, in order to match the changed situation.

Once the environment shifts, then so must the approach you use. Doing what you once did will not give the previous outcome.

That much is obvious, so what’s the problem?

Every moment of every day every one of us has to make three choices, whether we are aware of it, or not:

1. We have to choose where to direct our attention;
2. We have to choose how to interpret the event or object that has our attention, and
3. We have to choose what action to take as a result of choices 1 and 2.

The peculiar thing is that many people (not you, of course) do not consciously make those choices, because they do not even realise there is a choice to be made.

The consequence is that such people, instead of consciously selecting an action, merely react instead.

They take no responsibility for what goes on in their heads and the subsequent outcomes. “Other people” are being difficult and “the world” is against them. Their behaviour is entirely derived from habit, conditioning and untested suppositions.

Increasingly, as the world moves on, those habits, that conditioning and their suppositions are no longer appropriate. It follows that the results such people achieve become less and less satisfactory.

The results we get depend on the choices we make we make, either consciously from applied thought, or unthinkingly from the subconscious.

It pays to remain aware of our choices; it maximises our chances of selecting an appropriate action that matches the present circumstances.

At the height of the banking boom a highly successful broker drove his brand new, top the range Ferrari down Wall Street and pulled into the kerb to show it off to his friends. As he opened the door to get out the door was suddenly and completely ripped off by a passing truck.

The broker was outraged. He cursed the trucker. He screamed about the cost of the car. He yelled that the body repairers would never get it to look as good as it did new. He wailed about all the expensive extras that he had had fitted.

A New York cop pulled in behind the Ferrari with his strobe lights flashing. He told the broker to calm down. The car was no more than an expensive toy. And did the broker even realise that the truck had torn off half his arm when it passed? At that moment he was bleeding profusely over the sidewalk.

“My God!” the broker shrieked, “My Rolex!”

Everyone nods

Everybody nods.

In the years leading up to the collapse of the South Sea Company in 1720 there was an increased potential for foreign trade. Consumerism was on the rise. Wealth and luxury were no longer reserved exclusively for the aristocracy.

The company was promised a monopoly of all trade to the South American Spanish colonies.

Everyone agreed that the future was set fair. Everyone nodded.

But through a web of deceit, corruption, and bribery that included both company and government officials it was grossly oversold. The trading concessions barely materialized; the company had a very shaky commercial basis.

The company’s share price fell from a peak of £1050 at the end of June to £175 by September 1720, devastating institutions and individuals alike.

The bursting of the bubble, which coincided with the similar collapse of the Mississippi Scheme in France, ended – temporarily – the prevalent belief that prosperity could be achieved through unlimited expansion of credit.

In the later 1990s the new internet sector and related fields were the place to make your fortune. Everyone nodded.

A combination of rapidly increasing share prices, individual stock market speculation and widely available venture capital created an environment in which many of the internet based companies dismissed standard business models. They focused on increasing market share without regard to the bottom line. That would take care of itself.

These companies expected that they could build enough brand awareness to charge profitable rates for their services later. The motto "get big fast" reflected this strategy.

But the bottom line didn’t and the companies couldn’t. The dot-com model was inherently flawed.

Even if the plan was sound, there could only be, at most, one network-effects winner in each sector. Yet there were a vast number of companies all with the same business plan for the same respective sector. Therefore most companies with this business plan faced inevitable failure. In fact, many sectors could not support even one company powered entirely by network effects.

The dot-com bubble crash wiped out $5 trillion in market value of technology companies from March 2000 to October 2002. Add to this the write-downs by the venture capital community which, to name but three, include at least $280 million for kozmo.com, $160 million for boo.com and $65 million for MVP.com.

And so we come to recent times. The bankers announce they have found a way of lending the same money many times over and, even if it is lent where there is a high risk of default, it’s still safe. And everyone nodded.

However, these events and those like them down the years are merely the tip of the iceberg. These are just instances of high–profile, bizarre and reckless conduct. There is just as much perverse, incomprehensible and destructive business behaviour to be found in everyday dealings.

For example, a recent, cash-strapped client who offered 90-day credit to his customers because, “that’s what this industry does.” Everyone nods.

For example, a business acquaintance who cut back on his sales and marketing expenditure in anticipation of a fall in customer volumes (everyone nods) happily reporting that’s what actually happened.

For example, a company, anxious to have its employees engaged with the business (everyone nods), commissions a consultant to conduct a survey in order to discover what its people think.

For example, the business that is doing things in the same way as its competitors (everyone nods), yet expects a result that will show them as being exceptional.

The human animal is tribal. That is not the same as having a herd instinct. We can think independently if we chose; we are more likely to succeed if we do.

In 1841 Charles Mackay published his book "Extraordinary Popular Delusions and the Madness of Crowds", often cited as the best book ever written about market psychology.

In May 2004 James Surowiecki published The Wisdom of Crowds.

In the light of subsequent events, perhaps Mackay had it right after all.