If they won't talk to you

Andreas Steinert asks:

In your new article Marketing is a Conversation you say "You can't really write a proposal until you find out which version of success a client wants with this project". Working in Germany as a PR consultant for more than 20 years I fully agree to this. But in the past five years or so I feel it is getting more and more difficult to get close enough to potential clients to hear their personal views on their objectives and their ideas of success.

An increasing number of companies tend to follow an ideal of "objective" and "not personally influenced" decision-making processes. So we have to cope with poor briefings, short presentation (not discussion) sessions and remarks that alternative proposals are not allowed at all (especially with public tenders.) More and more decisions are made without personal dialogue and information only obtained by exchanging papers. Is this also happening in the US market?

What has worked is the "long" way: getting to know potential clients in a situation not directly related to jobs or projects or having a personal contact to a potential. And then after months or years being invited to present oneself.

What has failed is the "normal" way: coming in face-to-face contact with potential clients with a credentials presentation, a first short proposal related to the briefing and than talking briefly about the whole stuff.

The problem with this is that the chances to win get increasingly reduced to situations where you've got a personal relation before and beside the official business request.

You no longer can count on being a well-known professional service company.

As consultants, we seem to have only a choice of the "Here's our firm's approach (and proposal)" gamble that you warn us against in the article, or the "No proposal without discussion" gamble that might seem arrogant and evasive. Do you see a third way?

What you describe is happening every part of the world in every profession.

My thinking is that if a client or prospect is going to follow a purely paper-based process, then either the decision is already made and they are just going through the pretence of considering others (because their regulations require it), or else it's going to be a price-based decision.

It's certainly not going to be decided on trust, and it's unlikely to be based on a sensible, thorough comparison of 5 100-page formal statements of qualifications and proposals from 5 different firms. Have you ever tried to compare 5 100-page documents? It can't be done! You know what's going to happen: they are going to reduce all 500 pages to a single page of 5 columns, comparing the key dimensions of all 5 proposals only by what can fit on that one page, and presented to the key decision-maker. He or she will never even see your proposal. They are going to decide it on price.

So, if they are going to do that, give them what they want. Come up with a price (one that will make you a decent profit) and invest an absolutely minimal amount of time writing the proposal. (There's no point investing time on things that aren't going to make a difference.)

I'd also probably say in the proposal something like "To minimise the cost to you of doing this project we have made the following assumptions about what you are looking for. If our assumptions are incorrect, please let us know, and we will resubmit our proposal. If what you wish the project to achieve changes from these assumptions after it has begun, we will need to negotiated a change in our estimates or fees." (If they can be formal, so can you! Two can play at that game.)

If they accept it, fine. If the work goes to someone who bid lower, then you're OK, because who would want to win work on which you can't make a decent profit? I assume you are not a charity, and do have a family to support.

There is another way, the one that I prefer. If someone asks you to write a proposal, think carefully about whether the potential work is exciting enough and the client is interesting enough. If these tests are met, then say something like: "I recognise that I need to work to earn and deserve your business. I must also give you the opportunity to judge my worth and whether or not we have the right chemistry to work together."

"So, let me make the following offer. Name the time and the place, and I'll happily donate a day of my services for free, with no obligation. We can spend that day exchanging views, exploring topics of interest to you. I'll share my knowledge and experience with you, answering any question you have. At the end of that day you can decide whether or not you still want me to participate in a competitive proposal and I can decide if I wish to pursue the opportunity with you."

If the client or prospect accepts, then you have hit a home run. You will win the business with one day's investment, which is a lot less than you would have done spend on preparing and presenting the proposal.

And if they don't accept your offer, well you can always go back to plan B described above: invest minimal time and send them a number.

Lies

Let's face it: lying is a very common human activity. Not only is it easy to lie -- it can even be the polite or politically correct thing to do. "Your baby is beautiful." "Don't worry, spilling your drink on my carpet is no big deal." "Your party was so much fun." We often find ourselves lying for the sake of kindness and social graces.

However, equally common are the times when we lie not to preserve the feelings of others, but to try and create an advantage for ourselves. That's when we get ourselves into trouble -- almost always. We are so eager to impress that we end up saying things that are so hackneyed and improbable as to backfire immediately: "My child is brilliant" "Trust me, I'll do the right thing" "The cheque's in the mail" "It's not about the money." (Does any listener ever believe any of those claims?)

The lies accounting firms tell flow just as easily. And, like social lies, accounting firms often tell them knowing that nobody really believes them. Everyone, speaker and listener, knows we are making conventional, time-worn claims (often phrased the same old way) that have little correlation with reality.

There are four categories of accounting firms lies:

Lies to clients: These lies occur throughout most firms' marketing materials. Look at some obvious lies prominently placed on the Web sites of three firms in the INSIDE Public accounting list of the largest 100 accounting firms:

• "We dedicate all of our resources to the long-term success and general well-being of our clients."
• "[Firm X] is uniquely qualified to provide audit and accounting, tax, information technology, estate and financial planning, and management consulting services to a wide range of industries, individuals, estates, and trusts."
• "Our core purpose is to use knowledge, experience and innovation to solve problems and enhance opportunities for our clients."

Do the firms that say these things about themselves really think clients and prospects who read these statements will believe them? And if everyone knows that the claims are not going to be believed, why do firms continue making them? All that happens is that by continuing to make claims that are (literally) non-credible, less trust and confidence is built, not more. It's all very peculiar!

It's no explanation to argue that firms really believe that they are superb at these things. It's always been true that what you think about yourself is irrelevant data. It's what others think of you, not what you think of yourself that determines your success. Unproven claims have become a hallmark of marketing, but in a reputation-based business like accounting, it's much more effective to provide some evidence and let people draw their own conclusions. For example, client testimonials are an effective way to deliver your message. They allow you to avoid the perception of lying, because you're not making a claim.

Lies to staff: I recently spoke with a firm that claimed to be a terrific place to work. When I asked for proof, firm leaders replied, "Well, we can't prove it, but we just know we're a fantastic place to work!" Saying something is true doesn't make it so. In these times of desperate staffing situations, it's tempting to say what employees and potential employees want to hear: "We have great communication between partners and staff." "Our people are our greatest asset." "We offer flexible schedules and believe in work/life balance." "We live by the following core values ..." We want to believe we are great at these things, but are we really? When was the last time you asked your employees how well you were living up to your espoused values?

Lying to staff can have damaging long-term consequences. Recently a tax senior felt so compelled to vent his frustration with the firm he recently left that he wrote a confidential letter to the editor of IPA: "[Firm Y's] partners ... have to lie in interviews to get people to come work for them. When I interviewed with this firm, they made multiple promises that they didn't keep."

Is this what you want former employees saying about your firm in your community, or to the press? Again, testimonials are extremely powerful. The only people really qualified to say whether your firm is a great place to work are your employees.

The biggest danger in lying about our performance and effectiveness (without confirming feedback) is that it can lure us into believing our own PR. Once you start lying to yourself about what you are good at, you're really in trouble, because you'll stop looking for ways to improve and you'll suffer doubly -- once for the poor performance and secondly for being so manifestly "out of it" that you can't even see what you need to improve.

Lies partners tell each other: Here are some common ones: "We act like team players, putting the interests of the firm before our own." "We treat each other with respect."

"We keep our word to each other in contributing non-billable time to help the firm develop." "We don't care who gets the origination credit. We help each other with marketing and business development"

These are all very nice things to say. We might even mean them when we say them. But how many times do partners catch each other dropping a ball or breaking a promise to the practice group or some other team -- and do nothing about it? "The trouble with law firms is that the culture is: Promise big. Deliver little. Get forgiven. Repeat until totally frustrated," says consultant Patrick McKenna. Accounting firms aren't much different, are they? Forgiveness, toleration and understanding are certainly virtues, but failure to hold each other accountable isn't good business.

Successful businesses don't tolerate broken promises and uncompleted actions. "At McKinsey & Co., there is very little you have to do. But if you say you're going to do it, you must keep your word," Managing Director Ian Davis reported in a speech at the London Business School. People who don't keep their word create a chain reaction of consequences -- wasted meetings, redoing of tasks, unnecessary downtime, and missed deadlines that are deadly to an organisations efficiency and quality. And of course, the attitude quickly spreads that if the other guy doesn't have to keep his word, I don't have to either, and the whole thing spirals!

Lies partners tell themselves: Do any of these sound familiar? "We manage for the long term around here." "We balance financial metrics with soft contributions like mentoring and being a good citizen when dividing the pie." "We reward our group leaders for time managing their groups and forgive them if that means fewer personal billable hours or less origination. We want them to focus on their groups." Sounds nice, doesn't it? But is it the truth? We'd save ourselves from so many blunders and foolish notions if we could only see ourselves as others see us, the poet Robert Burns points out. Like the other types of lies that firms tell, these lies aren't mean or malicious. They're the lies of self-delusion. We want to believe them. Often, the claims we make don't have the desired impact, so we raise the temperature of our tone. We exaggerate to make affect, and in the process, hurt our own credibility.

Exaggeration, misrepresentation and lying -- however innocently or well-intended -- has never made good business sense, as tempting as it may be. Lying and getting away with it puts you at risk of being found out in the future. Lying and not being believed destroys your credibility immediately. It's just not worth it!

Managing Your Boss -- new careers podcast episode

Managing the boss is a critical skill that everyone needs to learn early in our careers, but most professionals neglect -- to their regret. Once you master the art of managing your boss, you can enjoy your job more, experience less stress and ambiguity about your assignments, and increase your career success.

My latest podcast episode, entitled Managing Your Boss, explores specific suggestions to help you take more initiative and excel at your assignments to improve your work relationship with your boss.

In this episode, I am also pleased to include several excellent tips on managing your boss that were sent in by readers of this blog. I would like to offer a special thanks for their contributions to Arnoud Martens, James Cherkoff, Ken Hedberg, Liz Zitzow, Shawn Callahan, Brendan Connelly, and Kathleen DeFilippo.

Timeline

00:31 -- Learning to receive assignments well
01:42 -- 11-point checklist to clarify your assignments
06:21 -- Tips from Richard's readers' on how to manage your boss
07:00 -- Arnoud Martens: show respect
07:38 -- The importance of taking initiative
09:19 -- James Cherkoff: how to make your boss's job easier
12:04 -- KenHedberg: 4 tips on managing up
13:45 -- Liz Zitzow: make your boss lookgood
14:50 -- Shawn Callahan: match your boss's communication style
15:30 -- Brendan Connelly: commit to weekly status reports
16:03 -- Kathleen DeFilippo: take responsibility
16:48 -- A taking initiative success story

You can download Managing Your Boss or sign up to receive new Business Masterclass seminars automatically with iTunes or other podcast players. (Click here for step-by-step instructions on how to subscribe.) My seminars are always available for download at no cost.

Professional Firm Boards

An old friend and client writes to ask:

How do professional service firms obtain independent, external input at the leadership level? Do they add a few independent directors to the board of (inside) directors, if there is one? Do they form an external advisory board of people? Do they hire specialised consultants on an issue-by-issue basis? Do they bring in outsiders as co-CEO, COO or as a full- or part-time vice chairman?

Corporate boards bring valuable experience, expertise and networks to their managements. But doing this in a professional services firm would pose numerous challenges, not least of which is the amount of time it would take the outsiders to really get to know the business, the top managers and customers before their counsel would be valuable and valued.

As to advisory boards, in the 1970s a number of high-profile American companies created international advisory boards peopled with former heads of state (e.g., Willy Brandt), high-profile foreign corporate leaders, statesmen (Henry Kissinger) and others.

Hiring a highly talented retired executive or regulator as full- or part-time vice chairman or senior advisor might be a viable approach to accessing ongoing independent thinking at the top. However, in a number of years the thinking might lose some of its "independence."

Are any of these approaches wise or viable for today's professional service firm?

Let's begin with the cheap shot. What does it tell you that one of the most pioneering, prominent, distinctive and heavily promoted advisory board in professional services (with the calibre of people you mention) was that of Arthur Andersen? I have no way of knowing whether that instance was cynical window dressing or a real strategic advantage to the firm, but as a professional cynic I incline towards the former interpretation, especially given the way events unfolded.

I would be more impressed by a firm that had such a Board, but told no-one about it. Now that would be a good clue that they weren't doing it just for the image!

I am willing to believe that getting high-level input and access to great minds is helpful to any top executive (CEO or managing partner) in any business, large or small. That's why organisations like The Young Presidents' Organisation, Rotary Clubs and private dining clubs in every major city exist to allow business people from different industries to get to know and help each other.

I don't at all accept your implication that professional service firms are going to be particularly difficult for an outsider to understand. That's pomposity. Professionals themselves pretend they can quickly understand all their clients' industries and businesses when they get hired, but to turn around and say "our business would take years to understand" is the (unsurprising) height of arrogance (and self-delusion.)

The biggest barrier for professional firms acting like corporate businesses and getting high-level input at senior levels would likely be their (un)willingness to accept advice! Who is going to successfully get the world's top advice-givers to accept critiques and suggestions that what they are doing could be done another way? Who's going to tell some of the world's smartest brains that they have reached a faulty conclusion? Who's going to get away with doing this more than once, and still be asked back again and again? It's a very peculiar set of skills to have, and only a (small) subset of top professional firm leaders who would want this on a regular basis. (I don't think I ever could have got started in this business without the crimson USQ of the University of Southern Queensland glowing out of my forehead!)

So, should firms have these formal structures? One of my eternal rules is to eagerly look for productive processes, but beware of sticky structures. The key here is to engage in activities (or processes) that get input from fresh perspectives (dinner clubs, mentors in other industries, use of consultants to do make evaluations and recommendations and to do so in such a way that there is a route for the input be surfaced, dealt with and responded to, not just collected and ignored.

However, for me the warning sign would be that if this ever goes beyond being a process (the regular way you do business) and becomes a structure (a board, a committee, a bureaucratic system) then that's a pretty good sign that you're only playing games, and its likely to be of limited value. There's no more certain way to avoid facing hard issues than to form a committee, establish an oversight board, or hire a new executive to a new position who actually cannot influence how the firm actually does things.

One final thought: you may be over-estimating the impact of corporate boards. We all know they are not only supposed to provide wisdom to top management, but also to exercise oversight on behalf of the shareholders. So it is, in theory also, with professional firms. Many partnerships, for example, have a board of partners whose job it is to oversee the activities of the firms' executive. My take is that, most of the time, these are no more and no less effective in controlling management than they are in the corporate sector. And adding outsiders theoretically should give the board more power, but rarely does. It's usually a well-paid boondoggle for the board member who is expected to behave.

LLP

Nicole Munro of Lovells (an eminent UK law firm, if you need to know) asks: "What do you believe are the fundamental changes to the risk profile of those professional firms which are converting/have converted to an LLP?"

The honest truth, Nicole, is that I have not begun to think about this. I hope others will correspond either by posting here or sending private emails. When I have thought my way through to some conclusions, I'll share them.

Anyone got some initial thoughts to kick off the discussion?

Blunt Marketing Critique

There's an interesting (and very blunt) critique of some marketing materials from big-name law firms like Shearman & Sterling, Bingham McCutchen and Frost Brown Todd at the following site: link

The points he makes are very interesting, but I can tell the author from personal experience that pointing out to important people what their flaws are, even when you're correct, is not always the way to win their hearts and minds (or their business!)

Team Rivalry

I received this question from a client executive:

One division of our private banking unit is 5 years old, with 7 investment directors and 7 client relationship managers. As we grow we are in the process of dividing the 14 people into 3 sub-groups, each with informal team leaders who support me by helping their team members to be motivated, to fulfill their aims and to solve problems.

As we do this, we want to avoid internal competition between the teams. We want members of each team not only to co-operate within their team, but to be supportive of other teams and to have a feeling that we stand for the same purpose. We also wonder how we should measure the teams, the individual team members and the team leaders to accomplish both small-team performance and group-wide collaboration.

When you get big, it may be necessary to have formality and "official" structures, but it is not clear to me why you need it now. Managing 14 people should be possible without official structures and, as you point out, the minute you draw a circle around a group of people, you automatically get less collaboration across boundaries. Always.

So, I would work hard to make the team assignments feel informal. You want mission-oriented teams, not structurally-defined departments. For example, I would not "publicise" or "publish" any official team metrics, but only discuss performance in private with individuals and small teams, making sure that you insist on making judgments, not just sticking to measures.

In private meetings, you can say "The hard numbers look great but people do not give you great praise for collaboration. Both are important to us. Can we discuss ways to improve? Can you tell me what you have done to help others look good, within your team and outside your team?"

Done this way, here will be little opportunity to play games with the system by trying to look good on fixed metrics, individual or team. Again, the rule -- for firms and groups large or small -- is: "Avoid ANY fixed system of metrics -- always make judgments."

Your people will not like this. Everyone, especially the quantitative types attracted to banking, wants a precise formula as to how they will be measured and compensated. It is always a mistake to give in to this request. There is no quantitative system that cannot be "gamed." Some firms like to think that financial measures are "objective," but that's a delusion. They are not objective if people are making the numbers look good by hoarding work, failing to share and collaborate and thinking of their own metrics. What's objective about that?

Something else I would try is to make team assignments short term or temporary -- rotate people between the teams as the months and years go by, and make sure everyone knows that this will happen. It will be good for their careers (they will be better advisors for having worked in all our areas) and they will have more opportunities to be close to people who were once team members even if they are not now. People collaborate with individuals they trust, and you need to give them repeated experiences of working together.

Finally, some wonderful examples of how nine managers got teamwork going and built a sense of community (and made lot of money by doing so.) Among the things they did were:

• Arrange a series of group days out of the office (picnics, films, shows)
• Eat lunch together every day as a group.
• Regularly throw a good office party!
• Make sure people believe management is not ONLY out to make a lot of money for themselves.
• Discuss all financials (except salaries) with everyone -- open disclosure of how every group is doing.
• Have a bulletin board where you list everything anyone wants to celebrate either for themselves or for someone else.
• Ensure everyone knows why a decision is made.
• Give regular "State of the Union" addresses to the entire firm.
• Have team leaders meet with you regularly to discuss cross-group issues

Does anyone else have ideas about avoiding cross-group competition?

Warlords and Dickensian Factory Owners

Ellen Ostrow, who is a coach/consultant with a Ph.D. in psychology sent me this question:

I just came back from a meeting on work/life balance in law firms and had an extended discussion with the managing partner of a large firm. His point of view was essentially that if a firm were to implement work/life policies, profits per partner would go down and as a result big rainmakers would leave, thus devastating the firm.

The discussion was particularly interesting since there were two senior Booz Allen managers present who commented that their business model would never give that kind of power to individuals.

I'm not an economist -- not even a lawyer. I'm just trying to understand why all the research on employee satisfaction/engagement resulting in greater profitability does not seem to apply to law firms? Can you please help me understand this?

My own lawyer told me pretty much the same thing, Ellen. "We all know we're making enough money, but it's a race to the bottom. We've got to keep the average per partner profit going up or the powerful guys and the bright, aggressive young lawyers seeking to get to the top of the profession will leave."

This all reminds me as nothing so much as a dark ages warlord terrorising the villagers into compliance, while forcing them to pay tribute or they will be left to defend themselves against the roving bands of rogue bandit knights.

There's another aspect to this. Lawyers have discovered, like the Dickensian factory owner, that you can, in reality, make a lot of money if you work everybody very, very hard and really slash your costs, and don't give a gosh-darn about the how people (partners, associates or staff) feel about their work-lives.

But as I analysed in a 2005 article called Are You Abusive, Cynical or Exciting, while it's an approach to riches, it can be proved that it is not the approach to riches. "Let's succeed by working more hours with ever decreasing amounts of support" is not the most sophisticated piece of business thinking I've ever heard. Yet it's exactly what most law firm partners tell me (and you, Ellen) that their firm is doing.

Why do law firms find it so hard to understand that a feudal warlord system forcing everyone to work harder is not the height of mankind's achievement in civilisation? I have spent eleven years trying to say all professions look similar and can learn from each other, but I'm finally prepared to concede that lawyers are different -- and it has nothing to do with economics.

Peter Rouse, a UK legal profession consultant, drew my attention to a fascinating quote from Martin Seligman in his book AUTHENTIC HAPPINESS: "Lawyers are trained to be aggressive, judgmental, intellectual, analytical and emotionally detached. This produces predictable emotional consequences ... he or she will be depressed, anxious and angry a lot of the time."

People like that are unlikely to be natural democrats, happy to work in a collaborative society. Depressed, anxious and angry? Sounds like a bunch of feudal villagers (and their oppressors) to me!

It only changes, just as history teaches us, when a courageous William Tell or Joan of Arc rallies the common people and forges them into a principled, mutually committed force that can throw off the oppressor and craft a more civil and economically functioning society. I'm proud to say I've played a small part in making that happen in one or two places, and not embarrassed to report that, on other occasions, I have not been invited back because I'm viewed as too disruptive and idealistic. Guilty as charged! I continue to believe there's a better way, and to believe that lawyers are not condemned to follow the model they currently favour.

Relationships and Romance -- new careers podcast episode

Many people who say they want the benefits of romance still act in ways that suggest that what they are really interested in is a one-night stand -- but it is clear that those who have a talent for building real relationships get more from the world. Building mutually-beneficial, mutually-supportive relationships is as important to your career as it is to your personal life.

My latest podcast episode, entitled Relationships and Romance, explores how to improve your personal and professional relationships with the Six Rules of Romance

Timeline

00:31 -- Understanding Relationships
02:02 -- Relationships vs One-Night Stands
06:18 -- The Six Rules of Romance
06:37 -- Romance Rule #1: Go First
09:01 -- Romance Rule #2: Express Appreciation
10:35 -- Romance Rule #3: Listen (for what's different)
12:32 -- Romance Rule #4: Keep Asking
14:36 -- Romance Rule #5: When You Need Help, Ask For It
17:26 -- Romance Rule #6: Show an Interest in the Person
19:46 -- An Exercise for Improving Your Relationships

You can download Relationships and Romance or sign up to receive new Business Masterclass seminars automatically with iTunes or other podcast players. (Click here for step-by-step instructions on how to subscribe.) My seminars are always available for download at no cost.

Gatekeepers and Trusted Advisors

"JAH of Connecticut" submitted this question:

As you mentioned in The Trusted Advisor, trust implies keeping client confidences. In theory, accountants, lawyers and others are also supposed to police the actions of management in the interests of shareholders or the public. But doesn't doing so necessarily exclude them from being management's "trusted adviser?"

The responses to Enron and the other scandals has reinvigorated the role of gatekeeper in many professions. Bankers, insurance companies, insurance brokers and agents, investment advisors, and others now have positive obligations to prevent their products and services from being used as instruments of fraud.

There are very few professionals who are so renowned or so essential that they can walk away from the miscreant client or can afford a reputation as a potential fink or "inflexible rule-citer."

The professional who wants to work with or inside public companies now must be a gatekeeper first and a trusted adviser last. Companies attitudes now are "We used to work together, now the auditors are the policemen/adversaries not consultants/advisors. We don't share strategies, ideas or proposals with them any more than we would share them with the IRS."

What does this mean for the professional who is trying to market himself or herself to public companies?

I did address similar concerns as these in my article The Auditing Debate (which is on this website) which came to the conclusion that the gatekeeper and advisory roles are inherently irreconcilable.

However, JAH may be misunderstanding what my I meant by being a Trusted Advisor. I did not intend it to mean "I'm exclusively on your side." A trusted advisor is not some caricature of a mafia consigliere out of the movies -- a professional hit man or woman. It means letting your client know when he or she is contemplating something illegal, immoral or just something that will create a bad public image. The key to the role is the skill of doing it so that you actually have influence, and don't just come across as a nay-sayer.

It means having a big-enough repository of trust so that you can successfully get your client to actually listen to and act on your counsel. As I stress in the article, it is an attitude and a set of skills in helping the client understand options, face reality, and reason through to a sensible decision or conclusion.

And that's the way you've got to market yourself. If you even hint in your marketing that you're an amoral gunslinger for hire to whoever pays the price, guess who's going to hire you? The good guys or the bad guys? The only way to avoid the bad guys (ie future troubles) is be clear about the role you're prepared to play, and what you're not. And if that loses you business with the bad guys, well, is that good for you or bad for you? Why is it so hard for some professionals and professional firms to understand that there is such a thing as bad business you should not take on?

Yes, it is going to take a lot of courage and self-discipline to do it that way, but it's the only sensible long-run approach that's going to keep you out of jail. The lessons of all the scandals (and near-misses that didn't hit the papers) is neither that we now have more onerous regulation to adhere to, nor that that commercial pressures will continue to be irresistible. The lesson is that it's just not worth it to play it anything but straight.

I'm afraid that JAH may be right, though. Many professionals are going to continue to get themselves in a LOT of trouble by being afraid to question what their clients are asking them to do, not least because of the financial pressures imposed from firm management. I don't think we've seen the last of the professional service firm provider scandals. He (and many others) think only a special élite can afford to walk.

I disagree -- we can't afford not to. And I still maintain that one of the best ways to avoid the ultimate confrontation is to point out, when appropriate, things like: "What you are suggesting is legally risky, and if you were to take that route anyone in my position would have regulatory obligations to notify the authorities. Let's keep trying to understand the feasible options and not put you or your company at risk."

If you can develop -- and market -- the counselling skills that The Trusted Advisor analyses, you're going to have a very healthy book of business -- and avoid ending up in either the cell block or at the bottom of the river wearing concrete shoes.

Anyone else out there want to pitch in on this important issue?

My Blogging Philosophy

The title of my blog derives from a comment made by Tom Peters who observed in his blog that "... (it’s) interesting how all these gurus -- e.g. Stan Davis, Gary Hamel -- come to put People & Passion first as they age. Hmmm ..."

The only element I've added is the importance of having principles both in personal and professional life. One way or another, all my research conclusions, consulting advice and speeches come down to passion, people and principles.

I hope to use this blog to share my initial thoughts on new issues that I may, someday, write an article about. I really hope that these thoughts will create dialogues, and not just one-way pontifications. Please participate, by posing challenging new questions and suggesting emerging topics, and perhaps together we can all make progress in our understanding.

By the way, before I launched this blog, my website had an "Ask Richard" section which allowed visitors to pose questions to me. I still eagerly solicit your suggestions for blog topics, but I will no longer be responding to questions about topics about which I (or others) have already written extensively. I don't want this blog to be filled with old answers and old advice.

Earning Trust -- new careers podcast

No matter what stage of your career you are at, your progress will depend upon whether or not you are trusted by your boss, your colleagues inside and outside your own group, your clients and / or your subordinates. And the only way to be trusted is being truly trustworthy and showing it through your behaviour.

My latest podcast episode, entitled Earning Trust, explores how to cultivate trust by mastering the four main components that communicate trustworthiness.

Timeline

03:14 -- The four main components of trustworthiness
05:59 -- Intimacy: The most common failure in trust-building
09:16 -- Harness control over your self-orientation
11:08 -- Personal examples of trust building

You can download Earning Trust or sign up to receive new Business Masterclass seminars automatically with iTunes or other podcast players. (Click here for step-by-step instructions on how to subscribe.) My seminars are always available for download at no cost.

Friendship Skills -- new careers podcast

When you develop your friendship skills, it can help your business life as much as it helps your personal life. Clients go with providers who can:

• make them feel at ease;
• make them feel comfortable sharing their fears and concerns;
• can be trusted to look after them as well as their transaction; and
• are dependably on their side.

In other words, the social skills that earn you the position of "trusted friend or advisor" are the same in a business situation as they are in a personal context.

My latest podcast episode, entitled Cultivate the Habits of Friendship, explores how you can develop your friendship skills. It is never too early (or too late!) to learn how to earn and deserve trust.

Timeline

02:37 -- Exercise your friendship skills
03:49 -- How to develop a talent for friendship
08:33 -- A "client-centric" approach to friendship
10:24 -- 4 attitudes you can cultivate for better relationships
15:41 -- How to make deposits in your "trusting relationship bank"
18:26 -- The key lesson: friendship skills are learnable

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Are We In This Together? The Preconditions For Strategy

Managers build their plans and strategies on the assumption that people in their firm are ready and willing to be team players, acting collectively to create or achieve something in the future.

The truth, however, is that these attitudes cannot be assumed to exist. In fact, they may even be relatively scarce. In many firms -- perhaps even most -- these preconditions for strategy may not exist.

It is hard to identify and create buy-in for what "we" (i.e., the firm) should do if there is no strong sense of "we" -- a mutual commitment and sense of group loyalty and cohesiveness. Similarly, it can be meaningless if the members of the firm are not committed to go on a journey together into the future.

This was brought home to me when I was facilitating a strategy discussion in an industry that has a long tradition of hiring, celebrating and rewarding stars -- individualistic, solo operators. As we discussed the investments and initiatives necessary to pull off the strategy identified by management, one of the "players" in the room asked: "Why would I want to do this. What's in it for me?"

It must be immediately recognised that having this thought is normal. The industry I was working with is only unusual in the (refreshing?) willingness of people in this business to actually say things like this out loud.

In other industries and professions, they just think it all the time, without actually saying it!

As we worked through the issues, it became increasingly clear that there were major differences among the people in the room, the key players in the company, whose participation and collaboration would be essential to pull off ANY strategy.

The issue was not the specifics of the proposed strategy. What came through clearly was that no commitment to each other -- or to their joint future -- existed.

The differences among them were based on what seemed to be some inherent personality characteristics, or at least some strongly-held preferences, on two key dimensions -- their desire to be engaged in a joint, mutually-dependent enterprise (collaboration) and the time frame they wanted to apply to their decision-making (future-orientation).

On the first dimension, there were people who actively wanted to be part of a team, with joint accountabilities, responsibilities, and rewards. They wanted to be part of something.

However, not everyone in the room fit this category. Many others freely admitted that they were most comfortable (and would seek out) situations where they could be independent -- judged on their own individual merits and accomplishments, without being tied to the performance of others.

The second dimension we explored was time-frame. Some people had an appetite for high-investment, future-oriented strategies. They were willing to defer (if necessary) some immediate gratification in order to invest -- to get the chance to reap higher rewards in the future. Others are reluctant to invest, even in their own future. They prefer to focus on "winning today," letting tomorrow take care of itself.

Combining these two dimensions led to the identification of four kinds of preferences that individuals (and companies) have.

• Type 1 is the solo operator who values independence, wants to make little investment in the future, but is willing to bet on his (or her) ability to catch fresh meat each and every day. I call this the Mountain Lion approach. "Pay me for what I do today (or this year.)"
• Type 2 is the individual who prefers to act in coordination with others, but doesn't like to invest (or defer gratification) too much. I call these people (collectively) the Wolf-Pack. "If we act together we can kill bigger animals, but it had better pay off soon or I'm joining another Pack!"

Types 1 and 2 may be unwilling to invest or "bet on the future" for a variety of reasons, including risk aversion.

• Type 3 is the individual who wants to be independent, but is interested in building for the future by investing time and resources to get somewhere new. Such people remind me of Beavers building dams to provide a home for their (own) family.
• Type 4 are individuals who want to be part of something bigger than they can accomplish alone, and have the patience, the ambition and the will to help the collective organisation invest in that future.

I call this group "The Human Race" since one of the rare things about Homo Sapiens that differentiates it (at least in scale) from other species is its ability to act collectively to build and develop. (It's called civilisation.)

Note, however, that Type 4 could also be a description of an Ant Community or Beehive, where individuals slave for the benefit of the community, suppressing and subsuming their own identity within the whole. (This interpretation is most likely to be applied, naturally, by those who do not place themselves in this category.)

	Capture Rewards for Short-Term Performance	Build For the Future
Interdependent Team Players	Wolf Pack	Humans (or Ant Farm)
Independent Solos	Mountain Lions	Beavers

I don't have a precise metric to measure the differing orientations described here, but I have found two proxy questions to be useful.

On the issue of independence versus team-play, I ask people whether, in general, they would prefer rewards in their organisation to be based (compared to the current arrangements) a little more on individual performance or a little more on joint rewards for joint performance. I then ask whether, compared to the current arrangements, people would like their firm to invest more in its future, even if this meant they would have to accept less current income in the form of salaries and current bonuses.

These two (imprecise) questions tend to cause people to reflect on their true preferences. The underlying issue is not really about pay schemes, but phrasing the questions this way tends to crystallise the issues for many people.

In exploring these orientations, I frequently use secret voting machines which allow people to express their views while remaining anonymous.

I ask people in the group which of these four preferences best described their own, personal desired way of behaving. (At this point you may wish to pause and guess what percent of all your colleagues would place themselves, by preference, in each category.)

In this particular company where I first explored the model, all four groups were well represented, although only 10 to 20 percent put themselves in the "I want to be part of something bigger than me that is working to build for the future."

Thirty to forty percent put themselves in the "solo-short-term" (Mountain Lion) category, with approximately twenty to thirty percent each of the "team-play short term" (Wolf Pack) and "solo builder" (Beaver) categories.

I don't know if the fact that only 10 to 20 percent of key players wanting to be "team-play builders" strikes you as low, or matches your experience, but it leads to an interesting question: what do you think the chances are of melding people that describe themselves that way into an institution that has a differentiated reputation?

My own conclusion, then and now, is clear. An organisation that had these proportions might succeed through individual, entrepreneurial activities, but it would be quite literally incapable of having a company strategy. For example, no common reputation or differentiation could be achieved in the competition either for clients or talent. Firm leaders that tried to develop and implement company strategies would be wasting their time.

In applying this model and conducting these votes numerous times in other firms, it has been revealing how much diversity is exposed among people who had previously thought of themselves of members of, and loyal to, their firm.

They may indeed, be loyal, but their desires and preferences differ so much on the key dimensions that, in many cases, no strategy can accommodate the diversity of preferences among the members of the group.

The mixture of preferences may place very severe limits on what an organisation can achieve. While there may be some logic and merit in like-minded people banding together, (whether they be Mountain Lions, Wolves, Beavers or Humans) an organisation made up of an unmanaged mix of such types is unlikely to function well.

If a majority of the key people really DON'T want to act collectively in building for the future, it is meaningless to develop plans as if they did.

In spite of this, very few people or organisations have frank and open discussions about this kind of thing. The preconditions for strategy are rarely surfaced and examined, possibly because the implications of discovering a disparity of preferences can be very scary and disruptive.

It is important to note that it is not required that a majority choose the "team-play building" preference.

A group of people who all identify themselves as preferring to operate as "independent short-term" players can succeed in many businesses. Many businesses can be, and are, constructed around "star players" rewarded for their short-term results.

Similarly, a Wolf Pack can achieve something that is called "strategy" and can align its recruiting, systems, rewards around a strategy of collaborative short-term actions, if that's what everyone wants.

However, without a majority of key players committed to collaboration and investment in the future, it is unlikely that most of what is usually considered to be firm-level strategy can really be accomplished. Before discussing their plans, firms need to uncover whether their people really want to go on a journey -- any journey -- together.

Dealing With Diversity

If you were to conduct this poll in your organisation (asking people either to place themselves in one of the four categories, or to estimate what percentage of their colleagues they would place in each group), what choices would you have if you found that you had a broad diversity of preferences?

I can think of the following (theoretical) options.

Option One: Try to Accommodate Differences

Is it possible to find different roles for people, so that individualists and short-term players can be accommodated by playing specific roles in the organisation without compromising the commitment and determination of the majority?

This would clearly be very desirable if it were to prove practical. It would require the least disruption to the status quo.

Manufacturing corporations have different activities (such as sales, production, or finance) which may require different attributes, so the question arises as to whether other organisations, such as professional service firms, can also accommodate different orientations?

I believe that this may be possible, but not by allowing people of different orientations to play the same role in the organisation. There may be differences between the desirable characteristics of those in sales and those in production, but I doubt that much variety can be acceptable within one of these groups.

If one sales person (or team) is taking a collaborative, building approach, is it acceptable for another to act in an independent, short-term fashion? If the answer is yes, it would be hard to see what is meant by saying the organisation has a strategy!

The only way I've really seen "biodiversity" work in the real world is if different species are kept away from each other and do not compete for the same resources.

That means the wolf-pack is a completely separate department (preferably in a separate building) than the mountain lions who have their own "deal" (privileges, responsibilities, metrics). It is necessary to keep one group away from the others if they are to co-exist!

On my blog Passion, People & Principles, Brit Stickney wondered whether short-term individualists can be convinced to join the group effort. He asked:

How can we articulate to our colleagues that the team approach is in their individual best interest?

Even, or especially, if only, 10 to 20% of individuals want to be part of "something bigger" to build for the future, it is critical to be able to articulate to each team member why their role within the will help them individually. It may be possible to be persuasive that by relying on and working with others, they will be able to achieve their personal goals.

Personally, I'm not sure I share Brit's hope in this area. Is it really possible to get short-term individualists to "do the right thing" for the company's long-term bests interests either through persuasion, systems, or setting individual goals that further corporate goals?

I am increasingly sceptical that this traditional "managerial systems" approach can be made to work.

In my experience, the whole thing falls apart when we try to mush them all together and pretend that everyone is measured and rewarded on the same things, that everyone has the same performance standards and everyone plays the same role.

Ultimately, the hope that (too much) biodiversity can be accommodated may be impossible to achieve. I doubt that you can have a random, equal mixture of all types and make it work well.

Option Two: Work To Change People's Orientation

The second choice for dealing with biodiversity is to try and affect people's orientations. One way that MAY be possible to accomplish this is to craft a sufficiently compelling vision for the future, so that even those who do not start off with an initial preference for team play or investment are willing to "sign on."

The potential success of this option will turn on one critical question. Are people's orientations relatively fixed, based on underlying personalities and preferences? Or can they either change with time, or be made dependent upon specific circumstances?

The answer is important. If people's orientation toward teamwork and time-horizon is context-specific (i.e., dependent upon the particular team and strategies being proposed), then there is hope that some process of building commitment to a strategy can successfully forge collective action even from those initially unwilling.

However, if there is a relatively sizable fixed component in people's attitudes, then no strategic planning process can be successful. The choices will either be to abandon strategy, or to separate from those who do not wish to enter upon the journey together.

My own hypothesis is that the fixed component in many people's personalities is relatively high. People really do differ as to how they want to live their lives. Solo operators rarely develop a preference for team play, and people who want immediate gratification rarely develop the patience to sacrifice even a portion of today for an uncertain future -- especially if they have to make that investment in conjunction with (and be dependent on) others.

In this view, it is not the clarity or the glamour of the vision that affects people's lack of buy-in to collective, future-oriented strategy, but their willingness to participate in strategy at all.

Another hypothesis that emerges from this is that it will be hard, if not impossible, to reconcile differences through pay schemes: it will be hard to change working behaviours based on deep personal preferences through the clever construction of incentive schemes.

If this is correct, people who do not match the basic orientation of the company should either be in or be out of your organisation depending upon what it wants to accomplish. Companies, according to this point of view, must achieve a consistent philosophy by being careful about the kind of people they bring into their organisation.

This alternative was phrased well by Brit Stickney:

First we must define what our "Super Bowl" is -- what we wish to accomplish. Second, we should define what wins and losses are. And finally we should find the players that can help us (and want to) win games and reach the Super Bowl.

I think this way of framing the challenge is closer to the real problem that organisations face. But notice, Brit's proposition suggests that organisations must "find the players that can help us (and want to) win games and reach the Super Bowl." This suggests a degree of selectivity that many organisations fail to reach.

It is not easy, but it can be done. It is very encouraging, I have found, to discover how many people will, in fact, choose to accept a well-articulated philosophy, even if it is not the ideal one they might have chosen for themselves.

In spite of what I have argued above, the relatively "fixed" component of people's collaborative and future-orientation is not COMPLETELY determinative.

If the firm is prepared to bring the issues of collaboration and future-orientation to the surface, and (through some open process) ask participants to commit themselves explicitly to a joint, building future, then significant degrees of buy-in can be obtained.

Options Three and Four: Split Up or Cover Up

The consensus-building approach does not always work. As Antoine Henry de Frahan asked on my blog:

How would you manage a situation when the firm has been in existence for a long time and is finding it impossible to define a coherent strategy because there is no consensus on the partnership model in the first place? I see two options: business as usual (which actually means inertia) or split. Is there any third way?

If people truly differ in their orientations and objectives, it may become necessary to ask those who are not prepared to commit collaboratively to the joint venture to separate from the organisation.

This is the strategy advocated by Jim Collins in his book Good to Great, where he asserts that one of the primary keys to success is "getting the right people on and off the bus," a conclusion that I share.

This sounds tough, brutal, scary and risky, and it is all of those things. Notice, the argument is NOT that doing this is unconditionally necessary. Rather, the argument is that it must be done if an organisation is going to be capable of having a strategy -- any strategy.

The fourth alternative is, by far, the most common: avoidance of the issue, papering over the differences, ignoring the problem, or (worse and most common), complaining all the time that everybody wants different things, and nothing gets done.

This does not necessarily lead to disaster (particularly since it is so common). However, it will almost certainly prevent the organisation from making any strategic shifts.

It is commonly observed that the biggest problem with developing strategy is implementation. It may be the case that the problem is more profound -- that the members of the organisation have insufficient commitment to each other -- or their mutual future -- to pull off ANY strategy.

In a world in which many organisations have been put together with mergers, acquisitions and extensive use of lateral hires, the underlying problem may grow in importance, rather than diminish.