Effective Decisions

Theodore Vail was perhaps one of the most effective decision makers in American business. Vail was the president of Bell Systems during the turn of the century. He built that company into what was to become the largest private business in the world. So large in fact that the government had to break it up into many smaller companies. Such a behemoth was Bell that it took nearly an entire decade to accomplish the break-up of the monopoly.

Back in 1914 however Bell was in some trouble. Its phone patents had expired and other smaller companies were getting into the business. Suddenly, Bell had competition. Vail solved this problem in three ways. First, he decided Bell would be called AT&T. He decided they must have the very best phone system available. He committed the company to building a long-distance system that would cross the entire US. To do this he knew he would have to invest in scientific research, and he developed AT&T’s own research laboratory, Bell Labs. Second, he cooperated with the competitors, leasing them the use of AT&T’s phone lines. Third, he managed to convince the public and the government that the best possible phone system was one that could provide “universal service” around the country, in essence, the best phone system would come from a monopoly like AT&T.Management guru, Peter F. Drucker talks about Theodore Vail in his book, “The Essential Drucker.” He credits Vail’s decision to grow AT&T as based on implementing the four elements of effective decision making:

Rule of principal
Boundary conditions
Moral “right”
Action commitments

The Rule of Principal
The first issue that confronts business leaders in making a decision is to determine if the circumstances are generic or exceptional. In other words is the situation in which we find ourselves caused by a symptom of a greater, more generic problem or is it a truly unique event. Vail knew that the lapse of those patents would forever change the way Bell would compete in the marketplace. He knew they were symptoms of a far larger problem within Bell. He recognized that Bell needed again to become a research-driven organization. I see so many business people today ignoring the generic issues in their businesses. Instead they ascribe problems to a never-ending series of “unique exceptions.” I encourage leaders to make every attempt to associate the exceptional symptoms in their businesses to the generic and create rules of principal or business “values” in order to help make effective decisions.Boundary Conditions
The second major element in the decision process is clearly defining the specifications of what the decision needs to accomplish. What are the minimum goals? What is the ultimate vision of success? Science has a name for this type of discipline. It is called “boundary conditions.” What boundary conditions must be satisfied in order for a decision to be effective? The clearer the boundary conditions, the more effective the decision. Boundary conditions must be rooted in the values that are the core of any business or institution. These are the guiding principals that give strength and uniqueness to any business. If our decisions are consistent with these principals then we have greatly improved our odds for success.Moral “Right”
Who can say what is “right?” What is morally right for one is anathema to another? We only need look to the horrific events of September 11th to see this clearly. What was an act of cowardly aggression from our vantage was heroic retribution from the Talaban’s. But if we are determining what is morally correct by measuring our decisions against our “boundary conditions” or business values as discussed above, then we are evaluating moral “right” in a viable way. Again, I see far too many business leaders measuring their decisions NOT by what is “right” but rather what is “acceptable.” Some might say, “come on Mark, you’ve got to compromise don’t you?” Like the old saying, “half a loaf is better than none.” But what about the old proverb from the book of Solomon? Is half a baby better than none? I implore all leaders to start measuring decisions by predefined business values and like good scientists with well thought-out boundary conditions.Action Commitments
Even the decision that meets the rule of principal, is consistent with the boundary conditions, is morally right is useless without the effective plan of action. Decisions result in change. Typically people have to carry out the decision. If this part of the formula is missing in our decision making process than our decisions will be completely ineffective. We need to answer the questions: Who needs to know about the decision? How will they react? What could be the consequences? What is our plan to ensure that the decision is carried out and that change occurs? As leaders it is our responsibility to not just make decisions but to ensure their implementation.Let’s face it effective decisions require good judgment. It is a choice between alternatives. It requires more than merely gathering the facts and weighing them. While that is important, it isn’t enough. We need to be able to discern the cause of the problem. Is it a symptom of a larger issue? We need establish boundary conditions and measure the decision against our values. And finally we need to take ACTION to ensure that transformation occurs and our goals are accomplished.At the Small Business Advisory Network we like to say that we influence decisions, improve performance and inspire change. That’s what our consulting, workshops, web site, weekly articles and The Small Business Hour Radio Show are all about.

Creating Value

“Customers are never happy!”

That’s what it often seems like. They have very short memories. One day they are praising us for saving their world, the next we might as well not exist.

Sound familiar?

I received a plea for help from one of our loyal readers this week. She described a circumstance where she was doing everything that the customer asked yet they were still unhappy. She said her customer wanted more.

I asked if the customer was receiving value from the relationship. She said they were but they just didn’t realize it. I had to think about that for a moment.

Is such a thing possible? Doesn’t the customer create the perception of value?

Value, like beauty, is in the eye of the beholder. Let’s face it, only our customer can decide whether something is valuable to them. Not you. Not me. Not our company or employees. If a customer perceives something to be valuable, then it is.

Said another way by one of my very own clients, Ian Mitchell from First Capital: “value is created when responsibility is assumed, shifting the burden from client to service provider. All value is lost at any moment when perception of responsibility is altered and related agreements, spoken or unspoken are broken.”

If you think about it, responsibility has a lot to do with value. When we as service providers act responsibly by meeting or, better yet, exceeding our customer’s expectations, we are creating value. (Hope you feel that WE are creating value for you Ian.)

But the question remains, are we creating enough value for our clients? In today’s new economy, unless you are creating value every single time you’re with a customer, you’re vulnerable to being replaced by another supplier or professional.

That’s a pretty strong statement to make, but it’s the most important concept for marketers to grasp in this new millennium. Since your success depends on value creation, you must understand exactly what the term “value” means — and that can be a tough challenge since it’s entirely relative.

Here are some things that you can do to increase your chances of creating exceptional value for your clients:

Anticipate their needs.
Even the most proficient, educated and well-informed clients are unaware precisely what they need in order to solve their problems. They may have a good idea but much of their perceived solution is guesswork. When we can help customers anticipate their needs we set ourselves apart. We become more than just solution providers. We become problem identifiers. This is what allows us to be the best possible solution providers at every step of the way.

Be willing to take the burden.
Today customers are looking for business partners that will assume the burden of implementation. Simply selling your product or providing your service just won’t cut it anymore. It is our RESPONSIBILITY to ensure that our product or service is implemented correctly by the client. That sounds nice, you may be saying, but how can we ensure that the client will fulfill their role or do their part. There may be variables that are not under our control. Then I say, GET IN CONTROL. As the leader in the relationship it should be our role to always be in control. We can maintain control by taking a leadership position and accepting greater responsibility for implementation.

Know your client’s motives.
In today’s competitive, information rich environment simply having a better performing product or service is not enough. It’s not about just giving our clients WHAT they want anymore. It’s more about understanding WHY they want it. This is their motive. By matching our solution to their motives we differentiate ourselves and make our solution personal. How will your product or service change your client’s business position or even their life? When we are in touch with this we have incredibly powerful leverage.

Be willing to take a risk.
With leadership comes responsibility. With responsibility comes risk. If you allow your clients to assume all the risk, then you relegate yourself to a commodity. You will be evaluated based on your price and price only. If you join your clients in taking some of the risk they will truly begin to see you as a partner.

In short the marketer that creates the most value will win the client’s business and fuse a relationship that will stretch far into the future. Creating value for the client is about anticipating their needs, taking their burden, knowing their motives, and being willing to take a greater risk. This is not the easy path but the most responsible.

Team Innovation

Today, businesses large and small like to say they are “team oriented” (whatever that means). I guess it means they work in teams. Big deal. Does that improve their performance? Does that mean that the quality of their product or service is better than the competition? Does that allow them to complete a project more timely, profitably or effectively? Is teamwork really a better way to go about solving problems than say the “hermit” approach? What about Thomas Edison or Leonardo DaVinci or Alexander Graham Bell?

If you’ve ever worked on a team you know there is one thing that can not be avoided: CONFLICT. At some point someone is going to disagree with somebody else and then, look out! Getting to a simple solution can take hours or days while these two “team-members” fight over minutia. Sound familiar?Let’s face it, often times, teams can hit roadblocks that can sabotage their success. There are a number of things that can be done to ensure good teamwork:Conflict is GoodAs team leaders we must not allow ourselves to think that we solely carry the burden of resolving conflict. I see so may managers, owners and team leaders rush to squish the most subtle sign of conflict within their team. Without conflict we can not reach the best solution. This also places us in a patronizing, parental position that encourages your team members to abdicate personal responsibility for resolving conflict. It keeps them from developing the skills to necessary to grow, mature and hold each other accountable. Allow the team to detect conflict and manage only those that escalate.Guidelines for Managing ConflictAs leaders we need to model guidelines that set the tone for resolving conflict. In this way we will be educating our team members to take responsibility. These should include:

No personal attacks
No heated outbursts
No backbiting
No hostile assumptions

Establishing Expectations
Over the years I have noticed that communicating expectations to the team is paramount in achieving exceptional team performance. The following are areas that team leaders should develop clear expectations for members:1. Work methods – Make sure your team knows the methods and procedures you expect them to follow when completing the job. If they do not they may frustrate themselves by taking the “long route” and end up disillusioned.2. Deadlines – Make sure that the team fully understands the time frame for completion. This should include non-negotiable dates as opposed to to dates that can slip.3. Responsibilities – Ensure that every team member understands their role in the team process. This should be communicated one-on-one with each team member prior to establishing the team. Also ensure that the team members responsibilities are consistent with the teams responsibilities.4. Priorities – It is critical that team members know the proper priorities. What’s to be done first, second and so on.5. Performance – Paint a picture of the outcome for the team. Show them a vision of a “good” job vs. a “bad” job. Make sure they understand the degree of effort that you expect them to each contribute to the successful solution.6. Measurement – Establish a system to measure performance in small increments.7. Communication – Establish a format for consistent communication with the team. This forum will give you the ability to ask the right kind of questions to determine whether the team is “on-track.” At this pint you can provide feedback to the team and make suggestions on course correction.8. Resources – Make sure that your team members understand the resources that are available to them. This could include staff, facilities, technology, equipment, outside consultants and so on. Encourage them to use the resources to their best advantage but in a cost effective way in order to achieve their goals.As leaders it’s our job to foster innovation. Team members look to us for confidence, guidance, direction and innovation. What can you do to set the stage for creative thinking in the teams that you lead? How can you get your team to discover the best solutions in the most cost effective manner. Remember teams are not just resources, they are people. As I have said many times, we line in an age of relationships. How can you create relationships that go beyond just getting the job done. How can you create relationships that can produce the kind of Edison, Bell and DaVinci innovation.

Office Politics

Someone asked me the other day: “Mark what do think is the biggest challenge for small businesses today?”

I didn’t have to think about this very long. I know they were expecting me to say something about: the affects of the economy or the stock market or the impact of technology or the lack of funding or resources or even the breakneck speed which we are expected to operate at.But the reality is that these are relatively minor forces when compared with the most powerful force of all:Office Politics!If you could walk with my consultants and I, in and out of businesses we each see everyday you would see the obvious yet devastating result of office politics. I believe it is by far the biggest obstacle to change and growth for companies today. Not that this is new. Office politics has been with us for decades. But the changing financial, political and social landscape makes it more insidious than ever and literally threatens the survival of many small businesses and even larger organizations.Why? Because of the exorbitant cost associated with office politics.The cost of office politics is a kind of activity-based cost. It includes time lost, waste of resources, low staff morale and ineffective delegation. Some of these costs are tangible but not accountable. Often time this kind of loss is ignored or neglected. Since many political activities are cross-departmental, office politics can render an organization completely dysfunctional in a very short period of time. While it is usually unwise to let office politics freely develop, unfortunately many companies cannot tackle such a political problem and let it erode their productivity and profitability and sometimes even endanger their survival.Office politics is about the application, distribution and negotiation of power and resources in an organization. This power includes authority (formal power) and influence (informal power). Politics is basically the application of that power. The desire for power is determined by one’s personality. Leaders can affect this principal in every organization. Strong, ethical leadership regulates the application of informal power (i.e. influence) to avoid the overuse and abuse of authority. Abuse of authority will lead to a chain of negative effects such as low staff morale, conflict, bias, bad image, poor communication, dishonesty and social conflict.When ethical leadership exists, office politics will abate. This is because ethical leadership is essentially self-management and self-control as an example for subordinates to follow. It is the strongest influence for change in any relationship. As I’ve said before, leaders act the way they want their team members to act. Cultural actions cannot be ordered or commanded. Most political office issues are symptoms of weakness at the senior management and organization level.While every organization is different, most have some type of definable culture. Some call this the organization design. It is essentially referring to the general distribution and structure of authority, responsibilities and resources in the organization. Poor organizational design is a common cause of office politics because ineffective organizational structure allows too much room for the negotiation for authority and resources.The organization chart in the business leader’s mind is far more important than the official one. Ricky W.O. Lau, author of Politics in Business calls it the “hidden organization chart.” Often times this means that the leader has bias and personal favor to individual members but does not act openly and his delegation is based on the hidden organizational chart rather than the official one. This is a common yet unfair and very detrimental management practice.While delegation is the distribution of specific work, responsibilities and authority, in an effective organization, delegation must be based on the organizational structure. Otherwise, there would be structural overlap, confusion, conflict and politics. Conflict usually involves different interests of different people (especially in different departments). Conflict may be minimized if the focus is on the whole organization rather than individual department or individuals. Some management styles may easily lead to office politics because the focus is on the performance of individuals and departments rather than the organization as a whole.Certainly interdepartmental conflict cannot be completely eliminated. Nor should we attempt to do so. It is important to remember that disagreement is not equivalent to conflict. People may disagree or criticize others if:

They view the matter from another viewpoint
They have misunderstood other’s meaning
They want improvement
They want to challenge others’ position or power.

Out of the above four motives of disagreement, only the last one is the result of conflict and is a political motive. However, when a manager is too politically sensitive, he may mistakenly treat the first three motives as political motives, and interpret the conflict as an intention to challenge his position or power.Desire of power may be a strong motive to perform, but it may also lead to a negative and destructive result. An effective manager should apply his influential power rather than authority because abuse and overuse of authority can lead to poor relations, distrust, misunderstanding and disorganization.Are office politics an issue in your business? If any of these symptoms are present in your business, its time to think about making some core changes to your business culture. At the Small Business Advisory Network we like to say that we influence decisions, improve performance and inspire change. That’s what our consulting, workshops, web site, weekly articles and The Small Business Hour Radio Show are all about.