Blawg Review #131

It is a great honour and privilege to be invited back to host the Blawg Review again. I did so previously for the Blawg Review #76.

The Blawg Review is designed to be a collection of posts on blogs relating to the law. In making my selection, I have focused on issues relating to the business of law, rather than legal matters (which I am not qualified to judge.)

Let's begin with some MARKETING blogs.

Charon QC ... the blawg has an absolutely amazing post about marketing at the UK firm of Eversheds, which talks about the need for "Innovateers, Knowlivators, Logithiser, Performibutors, Proactilopers, Professionaries, Prioricators and Winnowmats."

Intrigued? Go check it out -- it's worth it.

Dan Hull, at What About Clients? has a good post summarising the key elements in winning high-end clients.

Michelle Golden, president of Golden Marketing is also an active member of the VeraSage Institute, which is committed to abolishing the billable hour. She reports on the advice given by another consultant on how to implement a value-pricing approach.

Susan Cartier Liebel at Build A Solo Practice, LLC offers tips on how to build a practice. I was surprised, to put it mildly, that she was passing on "classic" sales advice with questions like: "Is the prospect pre-qualifed? What is their motivation to buy your product? Always conclude with a call to action."

I had hoped we had moved on beyond such traditional sales advice in our understanding of how professionals get hired. See, for example, (my co-author) Charlie Green's blog for an ongoing discussion of an alternative approach -- trust-based selling.

To be fair, there's a lot of otherwise good stuff on Susan's site. See, for example, this post:

Lori Herz, on her blog Write for Clients talks about Customer Experience Management (CEM). Evolving in tandem with the new experience economy, the CEM model considers a customer's relationship with a service or product from the vantage point of user experience. As she notes, people tend to translate their consumer (or, I'd note, professional service) experiences into stories that they quickly share with others.

***

Now, let's turn to the topic of LEADERSHIP.

The ever-stimulating and readable Bruce MacEwen asks whether "transformative change" is on your agenda. As he notes, it's probably in your future, though, regardless whether it's made it onto your agenda. Relying heavily on McKinsey research MacEwen offers relevant advice on how one can successfully drive radical change within an organisation. He takes us through the steps of aspiration, leadership and engine (or ideas) and process.

Tom Collins, at More Partner Income, reacts to Bruce MacEwen's post with some thoughts of his own on "The Right Way to Manage Change in the Law Firm."

As I also try to stress in my new article, Tom points out that the benefits of change are not immediate and do not follow a smooth linear line of improvement. He tells us that the magic ingredient is "KASH". KASH stands for new Knowledge which, when combined with the right Attitude, results in new Skills, which, through use, become Habit.

Another of my favorite legal bloggers, Arnie Herz at Legal Sanity, quotes an executive coach in posing an interesting and, perhaps, daunting question for law firm leaders: If you lost your title, position and power tomorrow, would others still support you and want to work with you?

Actually, that's not a bad question for any trusted advisor who provides client counselling advice to ask himself or herself!

Patrick McKenna, has a checklist of questions to self-assess your leadership, including: alignment; engagement, retention, innovation, collaboration, talent, productivity, agility, responsiveness.

Katheryn Hayes Tucker, asks whether the General Counsel job could be a route to a CEO position. She cites Delta Air Lines' new CEO, Richard H. Anderson, the former Texas prosecutor who started in the airline business as an in-house lawyer with Continental Airlines and then became general counsel at Northwest Airlines Inc. before moving up the ranks to CEO there. She also mentions Home Depot's CEO Frank Blake, a former GC at General Electric and Former Coca-Cola Co. GC Deval Patrick, who is now a chief executive of a different kind: governor of Massachusetts!

Brian Sommer is a former Accenture partner whose blog, while it does not explicitly address law firms, is essential reading for those tracking the latest thinking in managing professional businesses. In one of his latest blogposts, he interviews Beth Carvin, CEO and President of Nobscot Corporation. Her firm has software that allows workers to request and find potential mentors and mentees within their own firm.

***

Some ECONOMICS issues are touched on by these posts:

Peter Lattman at The Wall Street Journal Law Blog provides a link-heavy blog covering a lot of stimulating territory, including whether deal-making attorneys earn enough money, and the ongoing debate about whether (for example) Goldman Sachs should be allowed to buy Simpson Thatcher. If you want to track the latest chat about money-making in the law, this is a good place to start.

A recent ruling blogged by Joseph Palazzolo on the Legal Times blog hits contingency fee-based firms where they'll feel it. From the case: "A client may discharge his attorney, with or without cause, and such a discharge will not constitute a breach of any agreement between them," Judge Janice Rogers Brown wrote. "This rule is admittedly harsh to attorneys, especially to those who provide services under contingent-fee agreements, for they bear a substantial risk."

***

A couple of BLOGS ABOUT BLOGGING are worth noting.

When it comes to corporate blogging strategy, some corporations, even cutting-edge ones, are more conservative in their approach. Kevin O'Keefe focuses on Google and describes how its blogging strategy may be a good model for such conservative firms, allowing them to participate in the blogosphere without getting in over their heads. Every product team at Google has a blog but their focus is strictly PR, not to give rise to a conversation on the blogs, none of which allow comments. Law firms may also want to follow Google's lead on the use of blogs in place of press releases.

Daniel A. Schwartz at the Connecticut Employment Law Blog discusses his decision not to publish a blogpost rather than risk disrupting his firm's relationships with a client. That leads to a discussion of proposed blogging principles in a law firm.

A warm blogosphere (blawgosphere?) welcome to the renowned Ellen P. Goodman, making her first ever blogpost at Balkinisation.

She shares a few thoughts about the need to radically reform our system of public service media for the digital age. She explores the question of what media regulation might mean in a networked environment, and concludes that traditional broadcast regulation, which assumes content scarcity and captive audiences, is of limited use today in achieving the kinds of democratic values that were advanced 40 years ago in Jerome Barron's important article Access to the Press: A New First Amendment Right.

Professor Daniel Solove at Concurring Opinions has a really interesting discussion of "Who, Exactly, Is a Journalist?" The story is about Howard Bashman, who calls himself a “member of the news media,” yet who also happens to be a Pennsylvania attorney who also operates a blog. Does readership define a journalist? Does receiving money for writing make one a journalist, as Bashman does?

***

On the HUMAN INTEREST topic, Rhonda Muir at Law People reports on a story in Inside Counsel. She quotes John P. Donahue, Senior Vice President, General Counsel and Secretary of Rhodia Inc., as saying "We evaluate 'courage' as a behavioural characteristic of our lawyers, and we link this evaluation to compensation. Rhodia has "embraced professional objectivity of its in-house lawyers as a core value" and Donahue wants to make sure that "our lawyers can deliver bad news to clients," with whom they are often closely aligned.

Rhonda notes that Hospital administrators contend that a ratio of 1 conflict avoider in 4 employees results in a "dangerous workplace" -- think: "I don't want to get so-and-so in trouble over reusing needles" or "Maybe she'll start writing down dosages after she gets used to our procedures". Left to their own proclivities, lawyers' much higher rate of avoidance than hospital workers risks being just as dangerous.

Then there's the story about 18-year-old Kathleen Holtz, who, if she passes the California bar, will be the youngest lawyer in the Golden State, and quite possibly the nation. L.A.'s TroyGould has hired her as an associate, and she's reportedly doing great.

***

And that's it for this week!

Blawg Review has information about next week's host, and instructions how to get your blawg posts reviewed in upcoming issues. Also they are hosting the Carnival of the Capitalists this week, so don't forget to go check it out.

Loyalty to Whom?

Another reader question:

A partner of a large firm specialising in training and development asks how to make sure that the clients develop loyalty to the firm, as opposed to the individual trainer?

When the firm gets a contract to train managers of a company X, the firm assigns a trainer (who is, most commonly, an independent contractor) to the company. If the company likes the results of the training, they would most likely invite the same training firm again and again, most commonly asking for the same trainer. Over time, the relationship between the trainer and the client company flourishes to the degree that the company starts offering training assignments directly to the trainer, without even notifying the firm.

How can the training company protect itself from such an unfortunate turn of events? I realise that there are some "half-baked" solutions like, for instance, try not to send the same trainers to the same company, but there should be something else.

***

There are two dimensions along which this can be examined. There is a triangle formed by the individual consultant (or trainer), the client and the consulting (or training) firm. The question makes clear the strength of the link between the individual and the client. But what strengthens the link between (a) the client and the firm and (b) the individual and the firm?

In both cases, we are asking how the firm "adds value" above and beyond the talents of the individual service provider. Some possibilities:

1. On-going enhancement of the consulting / training product or service
2. Access for both the individual consultant and the client to proprietary tools owned by the firm
3. Access for both the individual consultant and the client to research conducted by the firm
4. Access for both the individual consultant and the client firm to regular "solons", discussion groups, seminars and other learning opportunities, so that there is Value in belonging to the network.

Does anyone else have other ideas?

Call for Blawg Review submissions

The Blawg Review, weekly showcase of the best recent posts on blawgs (law blogs), has again invited me to host the Review for this coming Monday, October 22.

I would like therefore to encourage my readers and contributors to submit your own articles for review.

If you aren't familiar with the Blawg Review, you can look at the Blawg Review home page, as well as the current issue: northern hemisphere edition and New Zealand edition.

Blawg Review Submission Guidelines

• Deadline for submission is 11:59 p.m. PST on Saturday, October 20
• I greatly appreciate if you can send your submissions well before the deadline!
• You are welcome and encouraged to submit blog posts by other people which you'd like to recommend as well as your own writing
• Articles on law practice management, marketing, business strategy and career development are especially welcome
• Click on this Blawg Review submission link to submit your article

With your support, I look forward to presenting readers here as well as the Blawg Review regulars with an excellent roundup of blog articles on the business of law and life as a lawyer.

Adhering to agreed standards

If sticking to diet and exercise programs is difficult for an individual, the challenge is exponentially more difficult for a group. Agreements on group strategy might be reached, but there is always the problem of ensuring that everyone (powerful people included) act in ways consistent with the strategy.

The most basic (and blunt) instruments for achieving this are pay schemes (reward the right behaviour) and terminations (fire those who don't act in ways consistent with the strategy.) It is amazing how many firms still rely just on those two tools.

A third approach is to try and establish agreement on "values," achieving performance consistency through "ideological influence."

To make this approach work, it must be recognised that something is a value if and only if you are willing to enforce it. A value is NOT a high aspiration you plan to strive for (that's a dream). A value is a non-negotiable minimum standard to which everyone has agreed to comply.

However, the agreement alone is clearly insufficient. To have values, there must be a system for responding to and eliminating non-compliance. Such a system would, preferably, begin gently with a closed-door office visit from a group leader (or manager) and a counseling session to provide help would result.

If this does not induce compliance within a finite time, then the group must be prepared to contemplate exit -- asking people who do not live up to standards to leave.

However, I am continually surprised when firm and group leaders tell me they don't have the time to (a) spot non-compliance with standards and (b) devote the time to help people who are not meeting standards get back on track.

Without having this time available to manage, they are thrown back on using the pay scheme to deal with egregious departures from standards, and no system for dealing with minor departures.

The question then gets posed: what else can a group or firm do to ensure that its standards are, in fact executed? Beyond, pay, termination and managerial attention, what else is there?

Some groups try to argue that peer pressure can create a culture, even if no one person has the responsibility (and time) to monitor (and follow up on) the new behaviours.

I'm sceptical. Peer pressure can work to sustain a culture but is weak when introducing a new standard.

For example, in the face of the war for talent, many organisations want their senior people to live to higher standards in coaching, supervising and mentoring juniors. But if it's left to the group to police itself in this "new" behaviour, I think it unlikely that higher standards of excellence will result. More likely would be a "you forgive me and I'll forgive you" culture.

As we know, new (visible) scorecards can help. Even if there is not managerial time to spot and follow up on non-compliance, a new metric tracking the new behaviour (if appropriately visible) can create the incentive to change.

But still I get asked "What else?" We know what we should do, my clients say, we've agreed among ourselves to do it, but we don't have the managerial culture that allows group leaders to spend time monitoring the group.(!)

So, they ask, what else can we do?

What would YOU say?

B-School competition on Human Capital

I received an email from Susan D. Strayer, the Director of Talent Management at the Ritz-Carlton Hotel Company. She included a press release letting me (us) know that students from the Vanderbilt Owen Graduate School of Management who focus in human and organisational performance issues are hosting the nation's first-ever competition focusing solely on human capital challenges.

The National MBA Human Capital Case Competition will be held in Nashville, Tenn. on Oct. 19-20. The teams will be judged by a panel of industry executives, including leaders from General Electric and Deloitte, who are sponsoring the competition. The teams will have the chance to win more than $30,000 in cash prizes.

Strayer (a 2007 grad of the Owen school) said "Some of the biggest obstacles companies of any size will face have to do with their employees. It's imperative that business school students make employee-related issues as important as other avenues of business. That's why Owen is taking the lead to elevate the study of human capital to be on the same level with marketing, finance and operations."

For more information on the National MBA Human Capital Case Competition, log onto www.humancapitalcasecompetition.com.

I'm sure other business schools will take issue with the assertion that Vanderbilt is "taking the lead" here. Any current or recent B-school grads have anything interesting to report about the extent to which the "study of human capital" (horrible phrase) is being integrated into the curriculum and treated "at the same level with marketing, finance and operations"?

Earning a Relationship

A core element in my view of the world is that everything we want must be given to us by another human being. So whether it is about getting our staff to co-operate with us, or to get clients to entrust us with business, our main task is to make other people, want to give us what we want. We must learn how to earn relationships.

The following video, taken from my personal life, shows a remarkable effective way, of pulling this off.

Book Review: Lead Well and Prosper

Nick McCormick has written a slim, large-type paperback book (with cartoons) called "Lead Well and Prosper."

His 15 chapter headings are:

1. Adopt a Serving Attitude
2. Teach
3. Provide Honest and Timely Feedback
4. Share Information
5. Listen
6. Treat People Like Human Beings
7. Set Goals, Plan and Execute
8. Learn
9. Do the Right Thing
10. Embrace the Uncomfortable
11. Clean Up Your Own House First
12. Persist
13. Do what You Say You'll Do
14. Always Follow Up
15. Plan your Week

That's a pretty good summary checklist for any manager!

Which of these would everyone say tends to be done best? Which are usually least well done?

Relationships: What's the Problem?

Almost every firm (and individual professional) I know SAYS (and has said for a long time) that they want to build their strategy on having deep and broad relationships with key clients.

But the percentage of firms that have pulled this off is (in my experience) relatively small. I explore this in part in STRATEGY AND THE FAT SMOKER where I explore the fact that while firms say they want romance, too many firms still act in a transactional "let's win this one" mode.

But there's more that needs to be said. It's not enough to argue that relationships are a good thing, or even prove that they are economic. We must understand why they are difficult to pull off.

Here's a preliminary list of some of the possible barriers:

1. Many clients, in fact, don't want relationships. They prefer to buy on a transaction-by-transaction basis.
2. Too many providers are not really trying to build a relationship, they're just trying to sell more product and services -- and clients can tell
3. Firms or individuals are too short-term focused, over-investing in short-term sales opportunities and under-investing in long-term relationship-building: it's a time allocation problem
4. Senior professionals just don't have the time to invest in relationships: it's a time problem
5. Senior professionals are actually not that interested in clients: it's an attitude problem
6. Individuals are not skilled in earning clients' trust: it's a skill problem
7. Internal barriers in firms -- for example, excessive "silos" mean no incentive to create opportunities for colleagues to provide additional services to "your" clients: it's a structural problem
8. Lead professionals see it as too risky to introduce their colleagues -- they worry that their own PERSONAL relationships would be threatened by any attempt to turn the relationship with a client into an INSTITUTIONAL relationship: it's a quality or cultural problem
9. Firms are not discriminating enough in selecting which client relationships actually have a chance at succeeding: they try to develop relationships with too many clients -- they should focus more effort on fewer, carefully selected opportunities: it's a focus problem

What would you add to the list? What do you think is the most common explanation of why most firms' relationship strategies fail to succeed as often as they hope?

Three Months’ Worth of Gratitude

It has already been three months since I expressed my gratitude for all your thoughtful contributions. Your generosity and enthusiasm are clearly essential to the success of this blog. I am looking forward to another season of engaging discussions as we all move forward with new ideas and projects. In the meantime, let’s keep the exchanges going. Thanks to all of you for the comments and trackbacks.

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We Just Don't Want to Do That!

As everyone who reads this blog regularly knows by now, the theme off STRATEGY AND THE FAT SMOKER is that if you don't want to get on the diet, you can't achieve your goals.

Stated that way, it's a pretty tough message, and I sometimes struggle to find a way to soften it while maintaining the point.

For example, in my seminars, it's almost always the case that people ask how to make their practice groups more effective.

As a starting point, I feel it's necessary to go through the (simple, familiar) points that (a) the key is the group manager's time and skills and (b) that it is economic and effective to allow -- even require -- group leaders to take the time to manage the people in their groups, and not just expect them to carry a full personal "sell and deliver" load, and then manage their group on top of that.

Yes, I know these are old points, but that's the message -- "eat less, exercise more" is the answer to losing weight, and everything else is commentary.

But that frequently doesn't satisfy my audiences and clients.

"But what do we do if our culture and systems don't reward people for managing, and pays them on their personal production?"

OR "What do we do if none of our partners wants to take on the role of being a manager, each preferring to build his or her own book of business rather than taking the time to helping other people succeed?"

In essence, I say (with as supportive and comforting tone as I am capable of) "Well, if you don't want to do what works, then just don't expect to get the benefits. Your choice!"

Not surprisingly, people are often frustrated with this "tough love" answer. All of us want the "magic pill."

So, here's the challenge: What do you do if the problem posed by your client is presented with excessively binding constraints?

It is remarkably common to hear clients ask "We don't want to change how we do things, that's our culture, but tell us how we can get more of what we want!"

Can anyone shed some light on the best way to help when people pose things this way?

New Case Study Discussion feature at BusinessWeek.com

BusinessWeek.com has a newly launched "Managing Channel", which replaces its popular Careers Channel. Among the terrific new features are interactive case studies which feature a story, a column, two videos, a reader poll and an opportunity for visitors to engage in substantive discussion of a real-life business case.

The very first case study zeroes in on a controversial management decision made by Procter & Gamble CEO A.G. Lafley, who skipped over 78 general managers with more seniority in making a key staff appointment without even consulting the rest of his management team. Lafley says "there was almost a revolt" over his decision. The case study includes an analysis by Noel Tichy, the leadership maven and University of Michigan professor.

It's worth checking out!

How to be a Customer

In the latest online issue of Harvard Business School's Working Knowledge professor John Quelch argues that, as a customer, it is possible to get preferential (or at least better) service from your vendors, suppliers, etc, if you know the right approach.

He lists the following as the keys:

1. Be Demanding
2. Be Respectful
3. Be Reliable
4. Be Surprising (eg reward a job well done)
5. Be Engaging.

You can join John's discussion, or we can start one here.

We've had discussions here before about what we providers seek in an ideal client, but would you agree with John's starting list? Do you agree that these are the keys to eliciting better reactions from providers?

Dynamos

In this video clip we're going to look at the issue of energy, excitement, and ambition in a different way and talk about the different states of drive that you and I might experience at different stages of our career.

About Women

I'm still at the Australian Institute of Management Convention. A number of speakers have made a central point: that women are INHERENTLY better leaders than men, or at least are better at the type of leadership that the emerging society and economy requires: relationships, empathy, the long-term view. Again, and again, the point is being made here that numbers, logic, science are "masculine" approaches and are inadequate or insufficient for progress.

Most insistent on the issue has been Tom Peters. he basically said "You can disagree with me on many issues but not this one: I'm right and you're wrong." (To see Tom's arguments, go to his website www.tompeters.com and download his slides. He's very generous in making them freely available.)

Over dinner, I heard practicing businesspeople (and those in local governement) increasingly willing to comment on the ability and desirability of hiring females as opposed to males. According to what I was told, young males are less loyal and committed, harder to handle and are more demanding as employees.

Is it me, or are people increasingly willing to make generalisations about male/female differences? Isn't this dangerous territory? Or is it just reflecting statistical realities? Do you feel comfortable listening to (or participating in) discussions about why women are better/ different than men?

I don't. I'll listen and try to learn, but it feels like the opportunties for bias and gross exaggeration are boundless.

Outcomes and Behaviours

I have just listened to an interesting interview with David Morgan, CEO of Westpac -- Australia's oldest bank and oldest company. (I'm here in Sydney as part of a convention organised by the Australian Institute of Management.)

Among the interesting things he had to say was a description of how Westpac enforces its values. For each person, from the CEO on down to the lowest front-line person, each individual is evaluated according to two dimensions -- what they accomplished (their outcomes) and HOW they accomplished them (their behaviours.) The behaviours evaluated include "doing the right thing", integrity, apolitical behaviour, thinking of the best interests of the bank rather than just the individual's own operating unit, etc. According to David Morgan, the system which feeds directly into a person's remuneration, is a key mechanism for ensuring that the values are lived.

I've heard that GE also has a similar system.

Has anyone out there experienced such sytems (ie lived within an organisation which uses this approach)? How effective is it in ensuring compliance wit organisational values?

How Much Standardisation?

Here's what I hope will be an interesting question for many people. A correspondent of mine wrote in as follows:

***

I work for a firm of about 20 people (15 consultants.) We all work independently, the consultants rarely meeting up -- if we do, it's for training sake. We are sole practitioners at the client site, coaching and leading client teams. Our projects get little or no oversight, as long as the client is happy and we are getting results. We do have "standard methodology", a standard project roadmap, some standard analysis tools, and some standard training presentations and exercises that we use, or at least they are available to us.

Compliance to the standard methodology is low. The tools are typically used, but there is huge variation in the exact project sequencing/schedule and the training presentations. Many of us in the group were hired in from different companies and we have different backgrounds and we all bring something different to the table.

Most of us personalise and adapt the training material based on what and how we like to teach. I think some of the training material is either incomplete, inappropriate, or unprofessional. So, I spend time customising the slides, sharing some of them with co-workers in an informal way, but, again, nobody is really watching to see HOW I do my consulting work, just to see if I'm delivering results (which I do).

Recently, we had a very frustrating week-long offsite meeting as a team. There was a lot of contention and confusion about this idea of standard methodology, namely who defines it? How much standardisation is enough?

A team of four people volunteered to look at the issue of standard methodology -- but those of us who didn't volunteer (or weren't chosen) didn't realise how much power this group would have. Instead of looking at ALL of the variation and the ways some basic training presentations were crafted and delivered, they picked one version and made edits to it, basically ignoring the input that the rest of us would have given.

In our consulting, we preach that standardised work can't be dictated to people -- yet, we're doing the same thing within our group. Can we ever get 15 diverse people to perfectly 100% agree on what material should be presented and in what order? There are too many diverging opinions (and too much history of not being perfectly standardised) for us to all just suddenly get on board.

We're getting very inconsistent and schizophrenic "direction" from our leadership. On the one hand, they'll say "the standard is the bare minimum of content, you can add to it" and then later saying "you must all do the work exactly the same way." Is it enough to have a standard framework that we can all customise to our personal tastes and client needs? Or, do we have to be "consultant-bots" who follow a perfectly scripted program, for the sake of consistency?

I fully believe "nobody likes to be told what to do" and that it applies equally well to assembly workers, nurses, and consultants. If I am told to perfectly standardise on what I consider to be sub-par material, I'll most likely look for a new firm (or start my own). I understand the need to deliver a consistent experience to our clients, but how standard is standard enough from their standpoint? I can handle standardising to the level of "here's what you must accomplish in a 16-week project and here's what you should be doing each week, if all goes well." But dictating every single slide seems like overkill, like standardisation for the sake of standardisation. If we're all getting good results with slightly different methods, isn't that ok?

What are your thoughts? Is this a common problem in a consulting firm?

***

My first instinct is to share the view that no-one like to be dictated to on HOW to do things. In general, as you suggest, the key is to have very solid accountabiity for outcome effectiveness, and then let people do it their own way "on the day."

But let's think about this. Under what circumstances might you argue the opposite? If you're not involved and can look at it in a detached way, then you could observe that standardising the process is exactly what businesses have done for centuries to capture efficiency and get things done with lower cost workers. Does MacDonalds let each outlet decide how to do things? Should they? What about a steel mill?

Now, I'm not arguing that fits your situation. I merely observe that I know consulting operations whose entire business model is built around getting lower paid people to deliver very effective standard methodologies. You and I might not want to work there, but it's not inherently a dumb idea.

In Memoriam

This is a day to remember many tragedies and losses, and resolve to carry on nonetheless. That's what's expected of us, and it's the best we can do.

Think of Work

A core proposition in my way of thinking about business development is that you will have more success if you're trying to market things that turn you on for clients that you are truly interested in. Now this is simple to say, but it appears that it is not the case with the way that many professionals actually come to market. Listen to the following presentation and reactions.

Why Does Bad Management Thrive So Much?

One of the things that puzzles me and fascinates me is that, according to the economics and competitive strategy I was taught, companies that do things well, are efficient and achieve high standards should (in theory) drive out their competitors who are managing poorly, fail to use resources effectively, etc.

The source of all these reflections is an email I just received from a young professional describing how his firm operates. My question is: why hasn't this egregiously bad management been driven out competitively? How do firms like this stay in business?

Here's the story as it was relayed to me in my correspondent's email:

***

Over the last few weeks situations at my workplace have sent me down and interesting journey of thought. Specifically, I have noticed how distorted our perception can be in the accounting industry.

There was a particular engagement in my sector which was new to us this year. We had one staff member with less than a year experience, one supervisor who has been at our firm for less than 6 months, and a principal who has been with our firm for 3 years but has extensive public accounting and private industry experience. As the engagement went on it became very clear that work was not progressing at a satisfactory rate but nothing was adjusted to compensate for it.

Finally, last week, the young staff member stressed once again that he did not believe they would be able to finish the work on time. At this point the sugar hit the fan! The principal came down very hard on the staff and supervisor and stated she was "disappointed" in their inability to get the job done. For the rest of the week, the principal and another manager from our department stepped in and worked close to 20 hour days to complete the project. I should also mention that both the staff and supervisor had put in 60 hour weeks over the last 2 months attempting to meet the deadline.

I first became upset when the principal threw the staff member under the bus and failed to take any responsibility for the engagement herself. But what bothers me even more is that from the outside, the principal (and the additional manager who stepped in to help out) looks like she saved the day when in reality the engagement "failed" due to poor management throughout. Part of me realises that my youth may cause me to overlook many aspects of the situation but I also know that this has solidified in my mind the up-hill battle that many individuals in my generation will have in public accounting.

Unfortunately, this industry will continue to reward those who sacrifice their time, their family and their lives over those who find ways to manage effectively, and become more efficient. The end result is that current senior management will label my generation as lazy and arrogant (both are partially true). If you tell me that I can achieve success, as my superiors have, by working 3,000 hours a year I would see it as a failure. If I have to work as much as someone else did 20 years ago to accomplish the same results have we really progressed at all?

I always thought that a fun experiment would be to tell someone that they only had 45 hours this week to accomplish their work. I bet we would all be surprised by the efficiencies and innovation that would come out of it. The fact that this profession will permit, and even worse, reward those who work such ridiculous hours exposes a fundamental flaw in the collective thinking of the industry. After all, we are not teaching our young staff to find better, more effective ways to do anything. But rather, we are simply showing them how to put their career before their family and personal life. We do not encourage that people take risks, try something new, or go out on a limb. We take the easy, safe route ... we just work more. In the process we are rewarding many who are poor managers, poor developers and are stagnant in their own development.

Thank you for your time, I look forward to hearing your thoughts.

***

I'd like to hear everyone else's thoughts: How do firms that manage this way survive? Is it simple that EVERYONE is equally bad, so there's no penalty?

The September Carnival of Trust

Welcome to the fourth Carnival of Trust, originally launched by Charles Green at Trust Matters.

My job was to choose the top 10 for this month. So, here are some interesting items that I think are worthy of your attention.

First, in the category of trust in society, the economy and politics, look at Marty Lederman's frightening discussion of The Rosetta Stone of the Detention/Interrogation Scandal, in which he explores the role trust plays in the interrogation of prisoners.

Next, Tiffany offers what she unabashedly calls a "political rant" about the recent Lead in the Children's toys events.

Annalee Hewitz explores issues of anonymity and trust in the use of Wikipedia.

Alan Weis tells an interesting story about being approached by PR firms to be an expert for the media on the Minneapolis bridge collapse story -- and why he declined.

Then there is Rajesh Setty's advice in his ongoing series on "How to Distinguish Yourself" The latest in his advice series is Watch Who You Refer.

In The Secret Sauce for Virtual Teams, Anne Truitt Zelenka provides a stimulating discussion about how to make geographically dispersed teams function through the use of trust.

Also in the category of trust in managing, take a look at Bruce McEwen (who blogs under the name of Adam Smith, Esq.) who reports on a Harvard Business School Study of an advertising agency that tried to manage through "values", but found it harder than it first appears!

Rob Millard reports on a study in Harvard Magazine about the relationship between Trust and Betrayal in the Process of Strategy.

Paul Pedrazzi, of Oracle, provides a stimulating explanation of "Why Social Networks Don't Work for Business."

Michelle Golden offers an interesting twist on client portability and trust. She discusses the provocative view that the fact that a member of the firm COULD walk away with one of the firm's clients is a mark of appropriate client intimacy!

Thanks to everyone who submitted blogs for consideration and for those looking for more about trust, the first, second and third carnivals should satisfy. If you'd like to be submit an article for consideration for the next carnival of trust you can do so here.

The Importance of Appearance

Back in February, I blogged about my experience being a juror. As part of the follow-on discussion, Penelope Trunk (who has a fabulous blog called "The Brazen Careerist") commented: "one thing I learned is that fat women don't have a lot of empathy and defendants usually try to strike those jurors."

Yesterday, Joseph Dunphy reacted by saying: "On behalf of many, I suspect, I'd just like to say WHAT? Did I really just read that? Unbelievable. That's just terrible."

I understand Joseph's initial reaction, but I don't think Penelope was advocating anything -- she was just sharing her real-world experience that appearance matters a great deal more than we like to admit openly.

For example, last week I was conducting a workshop for a global corporation that had concentrated a number of its in-house services into one "shared services" unit. One service line in particular received much higher client satisfaction ratings than the others. We discussed why, and focused on the traditional client service topics.

During one of the coffee breaks, one of the participants came up to me and said, "The real reason that unit does so well is that it explicitly sets out to hire attractive young women. No-one likes to admit it, but that makes a huge difference." (The unit was in a South American country, if that makes a difference to your reaction to the story.)

Of course it does. I know of more than one top-flight professional firm that takes appearance into account in its hiring of both males and females and gives its young people lessons in how to dress well and how to behave with sophistication.

Should appearance, youth and manners matter? Maybe not, but they do -- a lot. To pretend they do not is just unrealistic.

Yet in many countries this is called discrimination and is legally barred.

All of this raises some interesting questions:

Should more firms continue to include physical appearance in their hiring, even to the point of preferring some ages and genders?

Are we naive to believe they are not already doing that?

Are discrimination laws fighting a losing battle against human nature?

Should I get back on the treadmill and worry more about my clothing in order to enhance my career prospects?

Getting Hired by New Clients

In this video clip, we explore how you can win business from a non-client who is looking around and talking to many providers. So this is the situation that may be described as a beauty parade or a competitive bid or a request for proposal.

We analyse it by using a direct experience of my own.

Warlords and Civil Society

I need some help from the historians and anthropologists among you.

In the history of mankind's evolution, civil society (social collaboration, governed by the rule of law) triumphed in most countries over the warlords (rule by those with aggressive individual force and the willingness to use it.)

But how and why? How did the feudal barons with their armies come to accept the rule of law? How did developed economies come to root out (most) self-serving corruption and establish trustworthy civil servants?

What lessons can we learn that apply within businesses? How do we "tame" the individual warlords (rainmakers) and get them to do things for the good of the firm?

Experts vs. Advisors

In the marketing of professional services, you can come across in one of two ways to the buyer. You are either interested in them, or you are interested in their cash. We will show why the former is the key to successful business marketing.

Making Mergers Work

A reader offers this anguished cry:

Given what is happening in my firm these days, I felt compelled to blurt out some observations and questions and see if they resonate with you, or whether your audience would care to comment.

I am part of a firm created in a merger with the assumption that the combined skills of the merged entities would lead to an integrated powerhouse. The idea was that some sort of combined/integrated methodology would emerge and we would operate as an integrated entity.

In the following few years, this is what has occurred:

There is not a single instance where the legacy firms have worked together on an integrated offering, delivered to a client. There have been a few cross-sells, but these have been matters of luck more than skill.

Each legacy firm operates as if the merger has not occurred. My group proceeds semi-autonomously, unable to see the value or need to link to the "other" side of the business. Their specialty rarely enters our discussions. And vice versa -- the delivery of their work rarely leads to a discussion with the client CEO about what we can do. We're like two separate islands.

The cultures of the merged firms could not be more different. One was loose and entrepreneurial, the other was tightly controlled and process driven. People from the latter firm seem to have taken over firm management, so we are drowning in process and layers of account management.

Everyone is unhappy. We are now on our 4th reorganisation.

Richard, I was wondering: How frequently do firm mergers fail? Why? If the original value proposition of a merger seems sound, then why does it still fail? If the merger is based upon integration and complementarities of offerings/skills, does it make more sense to simply ram a new integrated methodology down everyone's throats and announce this is the way the new form works, or take an organic approach and hope that a few smart people will make it work and let momentum take over? We tried the organic approach and it has not worked.

Richard, I send this to you not expecting a reply, not expecting you to post this on your site, but more trying to reach put to someone I trust "virtually" (you!) to unburden myself of the pain this merger has caused me and many others. Thanks for "listening."

******

MY reply is this: I first wrote about mergers in my articles.

The key points I made there were as follows:

" 'Alchemy' mergers are based on the expectation of synergy -- the hope that the firm will be able to create something new. However, firms will not do so merely by bringing these (different) specialists in-house (whether through merger or hiring). The key added-value (from the client's perspective) will be the ability to design, coordinate and integrate a variety of diverse specialists. This will place significant stress on firms, as well as challenge their abilities to manage a completely different beast than the one they are used to.

"Another way to think about this is to recognise that on complex transactions, clients need a 'prime contractor' who will take responsibility for the total job, including the management, coordination and integration of a variety of technical discipline specialists needed to take care of the various detailed issues (managerial, accounting, legal, financial, consulting, business strategy, and so on.) The question, then, is who credibly possesses the project management skills essential to be the prime contractor?

"Many firms have merged or acquired their way to bringing multiple specialists in-house. Few have convinced the market that they have created (and can manage) a seamless, integrated service."

So, for me, the answer to the core question posed by the reader is clear. Unless you have a clear formula for creating the new, truly integrated service, don't combine the firms. It's combined services that appeal to clients, not combined firms. And, of course, creating something truly new and valuable is incredibly hard unless it's pursued with passion by the people inside the firm who want to be part of something different. (Which doesn't seem to be the case here.)

It's not about "ramming a new methodology" down everybody's throats. That won't create the energetic innovation that will produce what clients want. A better approach is to form a special unit that dedicates itself solely to the integrated approach (being protected from short-term economic pressures while it does so), so that they can develop and market test the theoretical synergy. If it survives the market test (clients actually pay for it and like it) then you can roll it out.

But, as always, that takes patience. And one thing recently merged firms rarely have is patience. (The Fat Smoker Principle Strikes again: we don't want to incur short term discomfort to get where we want to be tomorrow.)

Friendship Skills and Strategy

My forthcoming book is an exploration of things we all claim to know, but few of us actually do. For example, many firms claim that what distinguishes their organisation is that their people are client centric and act like trusted advisors. However, few of these organisations, when they hire, have programs to select for people who have basic friendship attitudes and skills and few have systematic programs to help their people develop them.

As others have observed (for example, Pfeffer and Sutton in their book HARD FACTS, DANGEROUS HALF-TRUTHS & TOTAL NONSENSE) we should draw upon what we already know from relationships in our personal lives when it comes to understanding business relationships. People and firms often don't do this. It sometimes seems as if, when they come to work, people leave behind everything they have learned about interacting effectively with others.

If you have an active social circle and people like being with you, the odds are that you will have a significant advantage in learning the skills and habits of business development. If, on the other hand, you're a social recluse, you will find it more difficult to convince clients to see you as a trusted advisor they wish to work with.

The way most clients choose professionals is essentially identical to the way people choose their friends. They look for professionals who can (a) put them at ease, (b) make them feel comfortable sharing their fears and concerns, (c) inspire trust in their ability to oversee both the client and his transaction, and (d) prove their dependability.

Creating these feelings in others begins with having the correct attitude -- a sincere interest in others. However, the outward signs of this genuine caring are often conversational and interpersonal skills.

If you want to win a client's business, it's necessary to give the client the chance to talk to you, person to person, about their needs, wishes, and wants. The key is to make it easy and comfortable for the client to share his or her feelings and secrets. In short, if you really want to win a client's business, you must know how to have a conversation.

Imagine a dinner party conversation. What makes a good conversationalist in such a setting? He or she:

• Has a fresh point of view, but does not try to thrust it upon everyone else
• Speaks politely and respectfully
• Tells good stories to illustrate key points
• Is good at drawing other people's views out and drawing them into the conversation
• Speaks intelligently on a variety of subjects, but is not afraid to admit areas of ignorance
• Avoids trotting out well-worn arguments or clichés.
• Listens with genuine interest
• Is light-hearted in style, but always respectful of others' views

All of these conversational skills also apply to effective marketing and selling. You may remember to behave this way at a dinner party, but do your client meetings really meet these criteria? What about your seminars, speeches, articles, blogs, and websites?

Is the tone of your client interactions friendly, inviting the client to chat, to think about ideas and to encourage both sides to get to know each other as people?

Suppose you want to be good at building romance: getting another person to work with you to build a mutually beneficial, mutually supportive relationship. What characteristics would make you good at this? Most of us have discovered that whether it is love, friendship, or work, people respond best when they believe that you are (among other things) considerate, supportive, understanding, and thoughtful.

It's worth pausing and asking yourself right now: do people think I am considerate, supportive, understanding and thoughtful? Do my friends and acquaintances? Do those I work with? Do those I manage? Do those I serve? If the answer to any of these questions is "no," then it's worth asking yourself, "Why not? What's the problem?"

The answer is likely to be some variant of the fat smoker syndrome. You know what's good for you, but it takes attention to a lot of detail today to get the reputation that's going to benefit you in the future.

A reputation for being supportive, for instance, must be earned through social habits. And to be seen as considerate, you have to be able to remember information that people share about their lives, proving that you listened and paid attention. It also helps to follow up with skillfully phrased questions about what you were told last time you met. The idea is demonstrate concern, not intrusiveness, with a question like, "How did it work out with that guy you met?"

To be viewed by other people as supportive also takes thought and careful attention to language. It is important to remember that friends don't judge each other. They don't evaluate. They don't point out each other's weaknesses. Suppose that your friend has a child who is badly behaved. You don't say, "Your kid is a little horror!" or "You're raising that kid incorrectly," even though both statements may be true. Instead, a friend could say something like, "Have you ever thought about doing or saying such and such to little Ashley?"

Having the ability to respond with the right phrase in real time takes practice, as do all social skills.

As individuals, or as organisations, it is possible to set out to develop friendship skills. However, like all aspects of the fat smoker syndrome, it requires a concerted effort to invest today in building skills (and relationships) that will pay off tomorrow. Unless they are already naturals, relatively few individuals -- and even fewer organisations -- have the self-discipline to stick with the program. That's why it's a successful strategy for those who do.

Do you know of firms that make a competitive advantage out of all this by selecting for and training these attitudes and skills? Can it be done?

Marketing To Existing Clients

One of the biggest ways that professionals and professional firms can improve their marketing effectiveness is to think through and make sure that they are actually putting their marketing efforts in places which yield the highest return.

This is actually not commonly the case. Most firms say that they believe that marketing to existing clients is the best source of new revenue. But when you add up all of the non-billable hours that are spent on marketing you often get surprised that a very high majority of it is diverted to chasing new clients.

In this clip, we examine all of the places that marketing efforts can go. We make some very clear recommendations about where the priorities are.

Blawgworld 2007

For you lawyers out there (and those who consult to them) there is a new resource released today: BlawgWorld 2007 -- a collection of 77 thought-provoking essays from 77 of the most influential law-related blogs ("blawgs").

Handpicked by each respective blogger, these essays provide a window into their blawgs, making it easy to figure out which ones merit your ongoing attention.

You can download the 300 page document here.

You can quickly find essays of interest in BlawgWorld 2007 by using an interactive table of contents. From any page, click on the Blawgs navigation tab. From there, two more clicks will take you to any essay.

Rules of Relationships

We all say we want relationships and we want to be good at romance, but we have not all thought through the actions and behaviours that are necessary to create those things. In this video clip, we begin to explore the necessary skills.

Governement Operations as Professional Service Organisations

Here's a reader question:

I work for a government department that has just re-organised into 30 unwieldy 30 directorates (on the recommendation of a famous consulting firm.)

I have been asked to develop an operating model that might help senior management plan for the deployment of the professional human resource at their disposal.

Our working assumption is that we have something to learn from the PSF model (as set out broadly in your articles) but our project is veering towards a model based on time recording (a sort of "billable time" analogue) relating individuals' efforts to one or other of the broad strategic objectives that our management board has designated as a priority.

I'd be interested to know whether you believe the material in your articles is, in principle, adaptable for a government department where the drivers are in many ways very different. Actual profitability is not one, for example, but cost effectiveness and customer experience certainly are.

Other differences are that we have a much more static career structure where promotion and performance pay are often less important than pride, respect and "public service" as individual motivators.

Nor do we really have the types of leaders that seem to be the prerequisite for the working of your model. By and large they are not inspirational or dynamic strategic leaders, but are, more often than not, managers because they happen to have been in the department a while or have reached a certain level of seniority.

Hence, I'm sceptical about the notion that we can solve our problem of improving our effectiveness by developing another administrative layer of resource management. (I've tried unsuccessfully quoting chunks to them of your article on how managers really add value.)

****

Richard replies: I have always had difficulty with the notion that there is such a thing as one unique "PSF model," if that is taken to mean one clear set of policies, practices, processes, structures and attitudes.

Yes, I did try to offer some generalisations and insights that I hoped (and have proven to be) broadly applicable, but there is no one recipe that fits all situations.

I think the closest parallel I've seen to the government situation is the running of in-house service departments inside large for-profit corporations. They face similar issues that there is a more limited career path, they are often not profit-driven, and their mission is often less clear. If I were you, looking for comparable situations, I'd look at companies that have in-house legal departments, real estate or property departments, shared-service accounting departments, etc.

Using the for-profit model will, I think, be completely misleading. Even in the for-profit sector, some of the underlying assumptions that the traditional model was built on (and are described in my book) are proving to be untrue in the modern world.

Take, for example, a topic of promotion opportunities. In the traditional model I described, it was assumed that the vast majority of people hired at junior levels would want to become "partners", and would be willing to work very hard toward that as a primary goal. As a counterpart, it was assumed that the organisation wanted a high percentage to become partners, because what the organisation provided to its market was the fully rounded, fully developed professional.

You point out that this is not necessarily the case in government: not everyone has the dynamism to want to move up, and top management doesn't necessarily want them to.

Here's my point: that's actually the direction that many private practice firms are going in: Firms are promoting a smaller and smaller percentage of people to partners, because they can show more "profits per partner" by keeping partner numbers small. For these and many other cultural reasons, fewer and fewer younger people feel that it is worthwhile or sensible to compete in the "tournament" to become partner.

I would agree with two other points you make. The solution is absolutely not about structures (reorganising) or systems (time-keeping.) You get better efficiency, quality, morale and everything else by having managers in place who now how to manage. Without them, the rest is truly irrelevant.

Romance and Sincerity

In thinking about business development, there are two basic mindsets that must be distinguished. On the one hand, you could focus on trying to win each transaction, transaction by transaction. Somewhat rudely, I call this the mindset of going for the quick hit, or the one-night stand.

The other way of coming to market is trying to build relationships. Trying to get good at romance, where you're trying to persuade potential clients to enter into a long-term relationship with you.

The key point is that we must understand that whilst either can be made to work, there is a crucial difference between being good at one-night stands and being good at romance.

Executive Intelligence

Time for another book by someone associated with an executive recruiting firm. This time, it's EXECUTIVE INTELLIGENCE by Justin Menkes from Spencer Stuart.

Here's Menkes' key findings (or assertions, according to taste):

Managerial work can be broken down into three subjects: accomplishing tasks, working with other people, and self-evaluation. Within each of these categories there are identifiable cognitive skills that determine how well an executive performs, such as:

• TASKS -- the abilities to properly define a problem, identify the highest-priority issues, and assess both what is known and what needs to be known in order to render a sound decision.
• OTHERS -- the abilities to recognise underlying agendas, understand multiple perspectives, and anticipate likely emotional reactions.
• SELF -- the abilities to identify one's own mistakes, encourage and seek out constructive criticism, and adjust one's own behaviour.

Though these cognitive skills play a profound role in determining a manager's success, they are not what most employers focus on when recruiting or promoting executives. Instead, nearly everyone fixates on personality type, style, or other irrelevant characteristics.

The book is filled with quotes from famous, successful people, and is not shy about stating firm conclusions. For example: "Not one study has shown emotional intelligence to be a meaningful predictor of job performance beyond what has long been explained by other measures."

Menkes and his other consulting firm (MenkesStark) claim to have a proprietary approach to measuring what they call Executive Intelligence. I don't buy everything he has to say, but it's probably worth your $14.95 and the plane-ride time it will take to examine it.

Living by the Principles

Here's another question I received by email:

"I work for a consulting company (50 people) and have been in the business 10 years. Recently our partners rolled out a list of "guiding principles" for the company. You talk a lot about setting minimum standards of behaviour and strict adherence to group values. So I tried to create a way whereby we could measure if we were living by these principles.

I suggested to the partners that we create a checklist whereby the employees can rate the partners on how well we think they are living up to the standards. This received a lukewarm response -- "We’ll think about it".

For reference, here are our "guiding principles" (by the way, it seems almost impossible for any one human to meet them all):

Trust

We believe that trust is fundamental to success in our business, which means we must be transparent, reliable, accepting and congruent. We must do what we've said we'll do, we must be clear in our expectations and opinions, be accepting of mistakes and limitations of others, and "walk our talk". We must also be sincere, hear and acknowledge others, be candid and straight, and demonstrate integrity and clarity with boundaries.

Accountability

We believe that individuals are the source of who they are, how they feel, behave and perform. We can choose to be a player and not a victim, and can lead with head and heart. We recognise that we can choose to be inspiring, self-motivated and determined. We take on accountabilities out of creative cause, not for praise or credit, or out of burden, blame or guilt.

Perspective

We seek out perspective because we don't believe in "right" answers, just better interventions. This requires us to be thoughtful, self aware, humble and low ego. But we are not afraid to have a point of view on what we believe can work better.

Performance

We judge performance by what is achieved, but in the meantime we assume positive intent. We believe in courage and energy, look for the positive and are future focused. We recognise that performance is situational and some achievements need to be judged over longer time periods. We set high standards, welcome challenge and are honest and transparent about our own performance.

Learning

We are aware of our interactions with the world and the opportunity to learn from our successes and failures. We are comfortable with ambiguity and use an enabling leadership style that allows people to experiment and learn. We don't take ourselves too seriously. We believe upsets are setups for learning.

Externally Open

We are externally curious and understand the value of seeing and acting beyond ourselves. We value the thoughts and suggestions of others and invite them into all our conversations. We actively encourage collaboration and interdependency.

Human

We believe in people. We are supportive, and show empathy and compassion to see the potential in everyone. We understand the importance of meaning at a personal level, and how active appreciation can counteract fear. We believe we engage with the whole of a person, not just their work persona and are sensitive to cultural diversity. We encourage health and life balance. We believe businesses should do good when they're doing great.

Richard, what do you think about such things? If we create these great aspirations but don't hold people accountable what good are they? (Ironically, you'll note that one of the guiding principles is "accountability.")

***

The questioner has answered his or her own questions, right? If it's humanly impossible to live up to the standards, what do the partners mean to convey when they pronounce them? What is achieved by stating your commitments to the unachievable? And if you're not willing to be evaluated on what you say you stand for, what do people think you mean?

Note that I don't think it "immoral" to enunciate principles you're not prepared to be accountable for -- I just think you're fooling yourself as to the beneficial impact of preaching them. My experience says it's even worse than neutral: you train people to see that you cannot be depended upon to act according to what you advocate, and they end up either trusting you less or just ignoring what you preach.

****

What do the rest of you think? Does all this mean that firms shouldn't even try to enunciate their principles? Should they survey everyone each year and publish the results? Internally? Externally? How many firms -- good or bad, successful or unsuccessful, actually do that?

How We Buy

The key to all marketing, selling, client service, and client relations questions is actually not about how do you market, or how do you sell. The thing that we need to understand is, "How do clients buy?" And what follows is my attempt to explain that perspective at a recent lawyers conference.

Earning Trust when there's too little time

Most of us want to be caring trusted advisors, showing an interest in our clients' affairs and staying current on what's on their mind.

But there are only so many hours in a day, and many of us have more than a handful of clients to take care of at once.

So what can you do to earn and deserve trust (and a relationship) if you only have a limited amount of time?

The first point I'd make is to ensure that, in the limited few interactions you can afford the time for, you succeed as coming across as sympathetic and understanding. I don't necessarily want a lot more of my doctor's time when I see him or her, I just want to be treated a certain way when we are together.

Second, Getting in contact before I'm needed. ("I'm going to be away: is there anything I can take care of for you before I go?") This is one case where seeking permission (to be unavailable) is better than seeking forgiveness.

I don't know if the metaphor applies, but the situation reminds me of struggling to be a good parent or marriage partner. You can't always give the other person all the time they want from you, but there must be ways to maximise the impact of the time you do have.

I'd love to hear everyone's thoughts on good practice, since I think building and sustaining relationships with limited time is a common challenge.

What if Your Customers Can't Be Trusted?

I was participating in a discussion with a group of executives, when an insurance company CEO pointed out that, according to their market research, about 30 percent of their customers acknowledged that they would "cheat" on an insurance claim. (He didn't elaborate on the precise details: it wasn't that kind of meeting.)

But assume his research is correct: what is the appropriate company response? In most cases, as we know, companies will then get very suspicious of ALL of their customer claims (they can't know which 30 percent are untrustworthy) and you end up with bureaucracy and MUTUAL distrust, which quickly spirals down.

Insurance companies get a bad rap (Hurricane Katrina, Mike Moore's new film -- Sicko) for too often denying claims. But the fault is not just on one side, is it?

Put yourself in the shoes of being an insurance company executive. Is there a middle ground between over-trusting a customer base which will exploit your goodwill 30 percent of the time, and acting defensively all the time and coming across to everyone as non-responsive?

There's clearly a difference between what you would do as an individual, on-on-one, when you can take it case-by-case. But what do you do if you're a corporation, trying to work across the country or internationally with hundreds of thousands of customers. What policies do you put in place, and how do you train your front-line people?

New book on HOW

One of the advantages (or is it disadvantages?) of being a blogger is that I've ended up as a target for the book publicists, who want to promote their authors' books.

As someone who has tried to get my own business books noticed, I feel sympathetic. So, I'll try to let my readers know what's crossing my desk. I won't always be timely: sometimes it takes a while for reading a book to rise to the top of my to-do pile.

One that I was recently sent is how: Why HOW we do anything means everything in business (and in Life) by Dov Seidman

It's already doing well (Number 389 among all books on Amazon.)

It's got some great stories, but like many modern readers, I want to get straight to the punch-line. Seidman helps with this by providing end-of-chapter tabular or graphical summaries, enabling you to skip through the book and get it's main messages.

One table I liked was this:

The Problem With Rules (As opposed to Values or Principles)

1. Rules are External: made by others
2. We are Ambivalent About Rules (we like breaking them)
3. Rules are reactive to Past events
4. Rules are both over- and under-inclusive (they are proxies, not precise)
5. Proliferation of rules is a tax on the system
6. Rules are typically prohibitions
7. Rules require enforcement
8. Rules speak to boundaries and floors, but create ceilings
9. The only way to honour rules is to obey them exactly
10. Too many rules breeds over-reliance

Thank You for Making This Possible

This is the time of the month when I pause to recognize and celebrate those of you who contributed to this blog. Your efforts and willingness to share ideas do not go unnoticed. I thank you for making possible another month of fruitful exchanges and I encourage you to continue posting comments here. We all enjoy the contributions.

Since the winter months are coming (in the Southern hemisphere), I am going to switch to posting a "Thank You" post like this every three months, instead of every month. That doesn't mean any less (or less frequent) gratitude!

Cheers!

Commentors

Harry Alexander, Jerome Alexander, Alisya, Stephanie West Allen, Wally Bock, Galba Bright, Duncan Bucknell, CA, Daphne Castillo, Alan Chapman, Charlie, Chris, Stuart Cross, Dorian, Bill Dotson, Stephen Downes, David Faye, Geoff, Mark Graban, Charles H. Green, Ted Harro, Diana Hird, Dennis Howlett, Jennifer, Joseph, Cary King, David Kirk, Greg Krauska, Peter Macmillan, Erik Mazzone, Tom Metz, Cristian Mitreanu, Mi, Nancy, Neil, Nick, Mitch Owen, Brad Potter, Laura Ricci, Robert, Frank Roche, Steve Roesler, Ian Scott, Jeff Scurry, Carl Singer, Carl Singer, Shaun Stevens, Tom "Bald Dog" Varjan, Coert Visser, Susie Wee

Trackbacks

Business Development
Charles Green's Trust Matters
Counsel to Counsel
McArthur's Rant
Software Development and Human Capital
Wally Bock's

What We Hate About Those People

The key to giving your clients a great client experience is to understand what it feels like to be a client. In the following clip, we explore exactly that, by drawing on our common experience of being the patient of a doctor.

The Consultant and the CEO

R Shawn Callahan, Founder of Anecdote Pty Ltd in Australia, has a question for all us. He writes:

"For the last month or so I have been working well with a client and her staff helping them develop their brand strategy. My client heads a division of a company. A couple of weeks into the project I've become aware that my client has an abysmal relationship with her CEO, whom she reports to. I also quickly learned that the CEO is a tyrant and displays many of the characteristics Bob Sutton described in his book The No Asshole Rule. The CEO makes the lives of her staff miserable. They are both terrified and befuddled by her unpredictable, bullying and overbearing behaviour.

"Last week my client went overseas for work and the CEO has decided she wants to run the branding project during my client's absence. The CEO attended a meeting of the leadership team I'm working with and she proceeded to denigrate her staff telling them that their opinion meant nothing and then proceeded to attack the project. The staff all looked at me to say 'sorry' but couldn't say a word.

"My question for you and your readers is this. How involved should a consultant get in trying to help a group of people who can't make headway because the way the CEO behaves?"

***

Shawn, others may disagree, but my opinion is that you have virtually no choice. You were not hired to help the group deal with their boss, and it's neither practical nor "the right thing to do" to try and take on that role. You're gonna lose!

Maybe, if you really have superior psychological, political, interpersonal, sociological, emotional and intervention process skills, you could pull this off. But the odds are incredibly low. It's one thing to be explicitly hired as a process consultant to help an organisation function, with the CEO's explicit consent. It's a whole 'nother thing to take it on as an extra challenge on a project where you were hired to do something else.

And if that means the project you were hired for is doomed, well, it's doomed.

***

Anyone else have different advice for Shawn?

Client Focus and the Halo Effect

Ed Kless, Senior Director of Sage Software, just wrote me an email asking this: "I have just finished Phil Rosenzweig's The Halo Effect. It casts some serious doubts on the beliefs of many people in business today. In particular he calls in question the belief that customer focus causes financial performance. This has been a key belief of mine and was reinforced by your articles. I would be most interested in your seeing thoughts (if any) as a blog post."

Well, Ed, Rosenzweig's book is, indeed very stimulating. He doesn't actually question the conclusion (or belief) that customer focus causes financial performance; he challenges the validity, rigour and logic of the various studies that purport to have proven the link. In the language of the court system in Scotland, it's a matter of "case not proven."

Rosenzweig's main point -- the halo effect -- is that it is a fatally flawed research approach to identify successful companies and then ask people (internal or external) what attributes these companies or leaders have. He argues that this approach could equally well uncover attributes that are the outcomes of successful financial performance, not the cause of it.

So, he points out, if you ask observers or employees at a financially successful company if the company is customer focused, there will be an "after-the-fact" bias to say "yes," whether or not the company actually was, in some more solidly measured way, actually more customer focused than others.

Rosenzweig's targets are books like "In Search of Excellence," "Built to Last" and "Good to Great." He doesn't say their conclusions are wrong; he says their conclusions are not even close to being "proven" (contrary to what the authors say.)

My articles are not covered by Rosenzweig but I have no doubt he would make a similar critique of my methodology. I surveyed people in 139 businesses on 74 questions and explored the statistical relationships between that opinion data (on what was and wasn't going on in their office) and the financial performance of those businesses.

I think I would argue two relative strengths of my study: By allowing the statistics to tell me which of the 74 questions had explanatory power, I allowed the data to be discriminating between which aspects of office culture was correlated and which wasn't.

If you were nit-picking, you COULD argue that all I discovered is which characteristics have a high halo effect (i.e. are given high ratings by employees when things are going well) and those that have a low halo effect. But that's a pretty complicated argument.

Secondly, I did use a statistical methodology (structured equation modeling) -- used by none of the authors Rosenzweig examines -- which allows you to test for causality (and the direction of causality) not just correlation. (Which is one of his big concerns.)

So, net, net, net -- I think he's written a terrific book to remind all managers to beware of quick fad conclusions, and to remind all researchers and consultants that many (if not most) relationships in business that we think we know for sure actually don't have much of a solid research backing to them.

(Which by the way, was also the subject of Pfeffer and Sutton's book: Hard Facts, Dangerous Half-Truths and Total Nonsense)

Great People Decisions

Claudio Fernandez Araoz, a senior partner at executive recruiting firm Egon Zehnder International, has just published a book offering a manager's guide to Great People Decisions.

As the subtitle suggests, it's about why people decisions matter so much, why they are so hard and how you can master them. I'm not sure one book alone will make any of us more skilled at people decisions, but this one is a good introduction to and summary of some of the latest research in the area, as well as the author's own extensive experience. It will make you think, and you'll enjoy the personal stories. Araoz comments:

"Nothing is more important for your career success than making great people decisions. Just think about it: once you become a manager, everything you do will depend on the people you've chosen: your results, your performance, your chances of being promoted, your risks ... In short, your career success."

"However, we rarely get any type of effective education for these crucial skills! Making great people decisions is a craft, and a discipline. It can be learned, and it should be learned."

What have YOU learned about the craft, skill and discipline of making better people decisions. How did you learn it?

Where Should Marketing Time Go?

In this video clip, we're going to explore another example of how you go about investing in a relationship in order to get involved in more of the transactions in business that your client has, otherwise known as cross-selling or expanding a relationship. We will explore the tactics that work with a particular emphasises on how you invest in the relationship.

Sales Commissions

Here's another reader question:

"We run a small-ish (just under 30 employees) but rapidly growing high-end engineering/manufacturing company. In truth, we're more a service firm than a manufacturer per se, in that we provide an enormous amount of guidance/advice and consulting services to our clients, in addition to the systems and other hardware that we produce and sell. We enjoy an excellent, almost cult-like reputation in the global marketplace for our products and depth of knowledge in this area.

"We're doing our utmost to build a world class company, much along the lines of Jim Collins' "Good to Great" and with key precepts from your work as well. We've read your exceptional articles, have internalised many of the insights and ideas in them, and have found it enormously helpful vis-a-vis our perspectives on running & growing the business. Truly a tour de force!

"The crux of this message is to ask for your recommendations, if any, in regard to an intelligent commission or bonus arrangement that we can implement for our sales/advisory staff. We currently have our 3 main sales guys on salary as we've wanted to compensate them as generously as we can but don't want them feeling like they have to either punch a clock or as though their income is going to rise or fall on a given transaction.

"Essentially we want them to work with our customers and each other in a fashion that engenders a healthy cooperative environment in the sales office and rewards them both individually and as a group for attaining departmental goals. Each one holds his own admirably on all levels, and as the company grows we want their income to grow commensurately with sales revenues.

"They also do a pretty fantastic job in general within our office operations and so our objective is to structure an arrangement that provides meaningful incentives to them as individuals and as a group without fostering an overly competitive tone. Also oftentimes in this business it takes a collective effort on the part of all of them to thoroughly assess a prospective client's needs, and performance objectives, and then to define the optimal means for achieving those objectives. What we do definitely requires a team of passionate and dedicated individuals.

"I have seen instances within other companies where management's idea of a commission set-up ended up pitting the members of the sales team against one another, sometimes with pretty disastrous results. And customers could immediately sense the overly aggressive and protective attitudes on the part of the sales people (as in "hey, he's MY customer! And that should have been MY sale!!!) We don't want anything to divide our team, we only want to implement a program that will reward them for working with one another and enable them to succeed together. We also want to keep things pretty simple and straightforward for everyone, management included!

***

Thanks for the kind words. I think you can guess my main response, which is that while, like the questioner, I believe in (generous) rewards, it is my experience that any explicit commission system which builds in incentives for particular things will lead people to ignore anything which is NOT included in the system. So, especially since you are of a small scale, I'd keep it personal and human and judgemental (non-formulaic) as long as possible.

That means, working with each person regularly to discuss objectives, challenges, and needs, and also holding regular team sales meetings to solve common problems and learn from each other. The only incentive your people should need is the absolute confidence that you'll play straight with them and be fair -- if they truly contribute in ways that produce results, you'll reward them.

And here's the key, obvious point: if they don't trust you to treat them fairly, no incentive scheme is going to work. So, keep doing what you're doing.

(I did a podcast about this, called "You Cannot Manage Through Pay Schemes.")

*****

Does anybody else out there have a different point of view? For example, if this logic is correct, why do we see so many sales commission schemes out there? Are there good ones to consider?

A Summation of What I've Learned

It's no coincidence that the title of this blog is Passion, People and Principles. I believe that possessing all three is the recipe for success.

If you have passion, an understanding of how people work but no fixed principles, then I think you are dangerous. You'll seduce a lot of people to your side, but you'll end up fooling them or betraying them. You'll be an exploiter.

If you have passion and principles, but no understanding of how people work, you'll also draw a lot of people to your side, but it will all come to naught. Without an understanding of people, you'll never build an organisation nor get clients and customers to trust you. You'll be a firebrand.

If you have principles and an understanding of people, but no passion, you'll be righteous but ineffective.

Life, careers and business require all three.

****

Discuss, with reasons. Do not write on both sides of the paper at once (grin.)

Accountability

In the following video we will make the case that, if the employees of an organisation are to raise their performance, then logically what is required is that the managers must first be better at performing their role and that, in order to make this happen, the managers must be prepared to be accountable for their performance. In the video, you'll see one idea put forward about how managerial accountability for performing the managerial role could be installed inside an organisation.

Authentic Leaders

I'm coming late to the party here, because Bill George's book TRUE NORTH (written with Peter Sims) is already a best-seller. It's a follow-up to George's AUTHENTIC LEADERSHIP book, and here's his description of the five dimensions of authentic leadership:

1. Pursuing Purpose with Passion
2. Practising Solid Values
3. Leading with the Heart
4. Establishing Connected Relationships
5. Demonstrating Self-Discipline

George is the former CEO of Medtronic and is now a professor at the Harvard Business School, as well as a board memeber of such firms as Goldman Sachs, Target and Novartis.

The TRUE NORTH book contains the stories of 125 prominent individuals judged by George to be authentic leaders. It makes for fascinating and inspirational reading.

George obviously intends us to believe that we can learn from these stories, but I walked away believing that, even though there were commonalities among the people profiled, each achieved what s/he did because of who they WERE. As George stresses, these people were formed and forged through their early life experiences.

Which makes me worry and wonder? Can we ordinary folk really learn from these examples? Can the dimensions listed above (which are really personaliity characteristics and deeply-formed attitudes) really be affected by books, speeches, training programs, consultants?

Is leadership development an oxymoron?

The 2R Manager

In preparation for a seminar I was doing, I reviewed a wonderful book called "The 2R Manager," (Jossey Bass, 2002) for which I recommend a lot.

It was written by Peter Friedes, the former CEO of Hewitt Associates, the HR consulting firm.

Pete's basic insight is that, to be effective in managing others, we must know both how to be "requiring" of people (that's the first R) -- make sure that they deliver on and live up to the tasks they take on. A manager must also, however, do this in a way that "Relates" (the second R) to each individual.

These two dimensions can define nine kinds of managers:

The first four are the extremes:

• The Abdicator: low requiring, low relating
• The Demander: high requiring, low relating
• The Pleaser: low requiring, high relating
• The Overwhelmer: high requiring, high relating

Then there are four which are less problematical, but still less than perfect:

• The Supervisor: About right requiring, but low relating
• The Friend: About right relating, but low requiring
• The Encroacher: About right requiring, but high relating
• The Energiser: About right relating, but high requiring
  

The best, in Pete's view, is someone who is about right in both requiring and relating:

• The 2R Manager.

Which are you? Which is your boss?

Managing Dad

In this clip we dig into the parallels between being an effective manager in the workplace and being an effective change agent within your family. How do you learn how to deal with different family members and bring about harmony and joint action in a family situation? And where does that match what you have to do at work?

New Article on "Integrity Impugned"

Because of prior poor experiences -- or the generally bad caricatures that exist about many professions -- clients are often suspicious (at least initially) of the motives of their service providers.

Just think of the many jokes about consultants who act as if they are more concerned about looking for the next follow-on assignment to cross-sell than doing the current one well; lawyers who are suspected of running up the billable hours because they are paid by the hour; and advertising agency people who are more concerned with winning prizes than selling the client's product or service.

Whatever your profession, you need to be prepared for the fact that, at the beginning of every new relationship, you must avoid confirming other people's (inevitable) starting suspicions about your motives, and must actively work to demonstrate that you are, in fact, unlike the providers that the client may have experienced before.

These are the opening paragraphs of a new article of mine called Integrity Impugned. The article is based on my seminars and an extensive blog discussion we held here almost a year ago.

Using Language To Get What You Want

In business, performance appraisal or even out and out criticism supplants skillful use of language and careful presentation of issues and solutions. We will examine a story of exemplary language skills and note the various applications in business life.