The Leader's Vision: A Big-Picture Take on American Politics Going Forward

It is amazing how so many people expect Presidents of countries to solve the nation’s problems like a magician. For example, my girlfriend is from a country called Suriname in South America.  The President, Desi Bouterse, was elected in August of 2010. The people of Suriname are complaining about high fuel prices and a bad economy.  Like President Obama, the Surinamese President was elected in the midst of a global recession. Yet, people expect instant results.

In both countries, people ask ‘when is he going to fix things?’  In both countries, people question whether the Presidents can do a good job since things have not gotten better. 

In the US, while President Obama has been quite ambitious, he needs to create a focal point. He has focused on banks, health care, jobs and the economy. Some think he is focusing on too much too soon which could result in mediocre progress. Some say he should choose one issue and do it well. Then move on to the next.  

There is another possibility. If you look at the Founding Fathers of the US, they focused on independence from Great Britain and included freedom and liberty in several areas. John F. Kennedy focused on sending a man to the moon with a big commitment to lead the global space race. While these leaders declared a possibility that seemed insurmountable at the time, their vision inspired people to come together to make the vision a reality. 

In fact, the success of many leaders like Martin Luther King and Gandhi have required many people to unite as one for a cause that was larger than the whole. In the face of a global recession and an interconnected world, it is essential for the leaders to come together for a cause that will inspire its citizens.

President Obama could still focus on the areas that he has deemed important. However, those areas are better served if they are components of a bigger picture. Take education. When Kennedy declared a man to the moon. The educational system had to produce the best mathematicians, engineers, astronomers, and computer scientists to name a few. Therefore, the US had reason to ensure the educational system was world class.

We are at a time of crisis. There is a quote which says never waste a good crisis. We have a huge opportunity to dare to dream and dare to come together as a nation and a world to accomplish something that has never been done.

What could be so enticing in the 21^st Century that people of different races, cultures, religions, and social economic classes would come together as one? 

How Will You Stay Relevant in a Global Work Force?

Globalization is changing corporate strategy. For example, 20 years ago no one would have considered merging the NYSE with a German exchange. However, as exchanges of various countries consolidate, it may be imperative for the NYSE to be ahead of the curve. If the NYSE stands still, it may lose its relevance in the future as other countries continue to merge their exchanges. Besides, the merger gives the NYSE access to foreign markets in a way they could not have done as effectively on their own. In today’s world, he who has the greatest access to global markets will raise the most capital.    

In other industries, hospitals are facing similar questions of relevance as a result of President Obama’s healthcare plan. Hospitals are engaged in M&As to ensure their relevance and ability to effectively penetrate a wider market. In some cases, the merger does not afford all the normal economies of scale that is typically received from corporate mergers.  At the same time, it can increase a hospital’s core competencies by merging with a hospital that specializing in a different aspect of healthcare or surgery.

While it is easy to see the importance of an organization’s need to stay relevant, how important will it be to ensure the individual remains relevant? As citizens of the US, we complain that many jobs are being outsourced overseas. Instead of seeing this as a problem, let’s see how the US fully benefits from outsourcing and the role the individual plays to remain relevant.

There are only 300 million people in the US.  Therefore, there are only so many televisions, cars, jeans… that can be sold in the US. The global population is over 6 billion. At least 3 billion live in poverty. How will we sell them our products and services if they cannot afford them? When we outsource, we create new loyal customers. The lower paying jobs go overseas first. As a result, the training, skills and competencies in the US have to reflect a knowledge-based society, instead of a manufacturing society. 

As a nation, we have gone through this transformation more than once.  Approximately 150 years ago, 95% of the jobs in the US were agriculturally related. Now the number is reversed with 3% dedicated to agriculture. What would have happened if we resisted the transition from working on a farm to working in factories? We are just in another phase of a continuous transformation.

In the 1850s, people learned new skills and competencies for labor, manufacturing and management. It is the same now. There are tremendous opportunities to develop and position an individual to be more valuable. Even though it is important to have specific skills in a specific industry, the ability to transfer those skills and competencies to other industries and tangential job functions will increase your relevance in the job market. In addition, foreign language skills set you apart, especially in the US.

Before you complain about outsourcing, look at the trends of big business. They often foretell the demands of the individual. Remaining relevant will require more than hard work. It will require each person to increase the intellectual capital they possess and be able to use it various capacities.

How to Survive Abrupt Leadership Change

                                          (via Abidjan.net)

What the arrest of Dominique Strauss-Kahn shows us is that no leader or CEO at an organization should be taken for granted. From the CEO of Hewlett Packard to the President of the United States and now the IMF chief, any business is apt to lose its leader without warning. However, the popular sentiment is that the company will not survive without the leader.  

In some cases, initially it seems true. The loss can take a serious toll on the business or even drive it into the ground. It can create a power and decision-making vacuum. And if there is a yes-man culture, for example, where the primary role of employees is to agree with the CEO, the enterprise will have a difficult time recovering from a displaced CEO.  It could be said that in 1980’s, Lee Iacocca cultivated such a culture. Chrysler paid the price when Iacocca retired. They struggled in his absence and lost the momentum Iacocca had built.

In the end, Chrysler survived, and the IMF will, too. However, the IMF will have a much easier time. One of the main take-aways of this case is the ease with which the IMF was able to accept the loss of their chief, quickly shift their balance and keep standing. Even as they begin their search for DSK’s replacement, they still haven’t missed a beat. The IMF will continue to exist and function business as usual because the structures in place are stronger and more important than the individual leader.

To ensure this kind of continuity in a company’s future, organizations need processes that are replicable and scalable and function independent of leadership. In fact, as employees become more effective at a specific process it can be scaled, presenting the opportunity for growth. For example, an assembly line at Chrysler continues whether the CEO exists or not. If more orders for cars come in, the assembly line process can be expanded to new plants and replicated. If a process identified as valuable to the final product or service can be replicated by qualified personnel, the company has a chance of perpetual existence.

Another way to safe-guard your organization is good succession planning from day one. As a CEO grows and develops new skills, he should be delegating old tasks to those around him and training direct reports. In this way, he can groom his subordinates to be able to fill his shoes.

For every case where a business has come close to failing after the departure of a leader or great performer, there is one where the organization stays strong and continues achieving. After John F. Kennedy’s assassination, for instance, the vision of a man on the moon was still fulfilled. From budgets to NASA, the US was structured to put a man on the moon. 

Hewlett Packard didn’t hesitate to say goodbye to a very important leader. Their stock suffered for a short time, because everyone else was afraid of what would happen to them. Except, internally the company continued to grow and service clients.

While this article focuses on CEO and top leadership, it also applies to key personnel in operations as well as high performing sales people. No one should be so powerful within an organization that without them the entire structure would fall. 

Is the US Ready to Have a Billionaire CEO as President?

In 1992, Ross Perot ran for President of the US.  He earned 19% of the votes after dropping out and coming back.  If he had won, would the US have experienced the economic crises of the past 20 years?  Or would he have used his business savvy to avert some of the financial challenges?  Many people doubt the value of a billionaire CEO as President. Except, maybe

Birth of the 'Yes-Man Culture'

The Chairman's response to a CNN Money Article "Saying No to the Boss"

This article addressed a critical issue for leaders/managers in companies, especially for the CEO.  The dilemma for many CEOs is they initially moved up the ladder because of their ability to solve problems and provide great solutions.  This implies he or she has the right answer. While that is great, the down side it creates a closed mind to the ideas of others.  When you learn to trust yourself and you are usually right, you expect others to follow you – the birth of the “yes man culture”.  However, the best managers/leaders rely on their people.  If you rely on your people, you send a strong message that you trust them.  To build a culture of trust, it has to come from the CEO. And if he is really smart, he will hire and empower people to be smarter than him.  In an age of knowledge workers, it takes a very confident leader to allow your people to be smarter than you.  At the same time, it will give you access to untapped intellectual capital in your organization.  In most cases, it can become a competitive edge.

Why German Luxury Carmakers Should Be Afraid of Chrysler

By Ted Santos

In Chrysler’s Super Bowl XLV commercial, a brutally honest narrator muses, “What does Detroit know about luxury?” A better question would be “What do US automakers know about luxury?”

Chrysler’s new “Imported from Detroit” slogan implies that they have America’s answer to luxury European automakers. However, their newly minted line, including the $19,245 MSRP 200 Series featured in the commercial, stops short of the price, quality and performance of a top-line BMW, Daimler, or Audi. 

Chrysler should consider a more audacious approach to capture the luxury car market. Looking at the numbers, there is an opportunity for an American automaker to make a play. As the economy rebounds from its March 2009 lows, high-end items are making the strongest comeback. The big three German automakers, including BMW, VW, and Daimler, are expected to exceed pre-recession revenues after adding over $90 billion in market value since 2009.[1] Audi, the third largest luxury brand in the world, announced that its US sales were up 20% from a year ago.[2] However, GM, Ford and Chrysler have quietly allowed Europe to take the majority of the affluent auto market in the US.

To make matters worse, over the last decade, Chrysler’s share of new-vehicle sales in this country declined steadily from 14.5% to 10.7% according to Autodata Corp. Their calendar year-to-date sales were down 0.1% from March of 2010 [3]. When sales drop, as they did at the end of the decade, Chrysler scaled back by closing plants and laying off employees. Unfortunately this strategy is a short-term solution and has not increased car sales.

A long-term overhaul of Chrysler’s brand would be a complex and ambitious undertaking. For a sense of what this may entail, here are three steps that could be taken to transform Chrysler into a luxury carmaker: re-branding with exclusive style and bold messages like “Imported from Detroit”, capitalizing on aftermarket sales, and partnering with Apple Computer on design.

To see how that fits together, it may be best to view Chrysler several years in the future. Imagine it is the year 2020, eleven years after Fiat purchased a significant portion of the company:

To start, Fiat Group focused on re-branding Chrysler. It left Dodge alone as a separate brand so that its sales of cars and light trucks could serve as a cash cow as Chrysler looked to reshape its image.

Although Chrysler’s nascent brand was fairly neutral, the benefits of its connections with Daimler were evident, especially in the design of the 300 series, which looks like a close cousin of the Bentley.

Given these close ties to high-end auto manufacturers, Fiat saw an opportunity to parlay what they identified as America’s major contribution to the high performance automobile market: Chrysler’s own Dodge Viper.  Chrysler redesigned the Viper to create a new sports car that retained the Viper¹s performance, yet came with unprecedented luxury features and revolutionary styling. Additionally, Chrysler developed a line of luxury sedans that could compete with the Mercedes S-class and BMW 7-series. To top it off, they redesigned dealerships to appeal to affluent buyers.

Management also expanded their operations to capture aftermarket sales. In 2007, car buyers were spending in excess of $30 billion annually in aftermarket upgrades. Chrysler redesigned Mopar, the arm of Chrysler dedicated to parts and services in order to incorporate aftermarket services into the assembly line and give buyers more custom options.

Finally, Chrysler’s exclusive partnership with Apple Computer offered unbeatable quality and interior design. Apple developed a stunningly original dashboard, user interface, and entertainment system with a range of entirely new capabilities in an intuitive format to complement Chrysler’s engineering.

This is clearly an aggressive project. It will require Chrysler to shrink its product line as well its revenues.  However, with a narrow market segment, they could build a much stronger organization. Given a renowned brand, higher margins and global sales, Chrysler could grow revenues to sustainable levels.

In taking on this commitment, Chrysler could restore the allure of the American made car and inspire innovation among the other US auto manufacturers. This fierce growth platform and global perspective could turn the spotlight back on the Detroit assembly line.

 ______________________________________________________

    

Ted Santos is CEO of Turnaround Investment Partners (TIP). TIP serves as an outsourced Chief Innovation Officer to companies that are not meeting revenue growth expectations. Ted partners with CEOs and board members, serves as a trusted advisor to companies going through change, and coaches executives to uncover and penetrate untapped markets, shift corporate cultures and align staff and management to the corporate vision.

[1] Bloomberg, “German Top Carmakers Set for Record Profit as

Value Swells by $90 Billion”. Chris Reiter 2-14-2011

[2] The Independent, “Luxury Car-makers Drive the Boom in

German Exports”. Tony Patterson 2-9-2011, p. 38

[3] http://www.motorintelligence.com/fileopen.asp?File=SR_Sales2.xls

Beyond the Numbers: How Important is Salary?

From the desk of the Chairman:

“If you pay in peanuts, you get monkeys.” Anonymous

In a high performing culture, which comes first – money or performance?

Doling out a salary of peanuts to your employees may very well turn them into monkeys.  At the same time, you don’t want to overpay them either. Before you get caught up in a chicken-egg paradox, you must realize that money alone will not increase employees’ value proposition to the company.

After speaking with many retired CEOs, they have all commented that it is people who take care of the company and its clients, not processes, money, metrics, and benchmarks. If you value the people, they will take care of processes and money.

Too often, executives overlook three main areas of focus that affect employee and company performance:

1. Building your global competitive edge through the right employees
2. The importance of an empowering vision – leadership’s role 
3. Making sure your employees maintain a strong value proposition for the company and clients into the future

Clearly, if you want to have an edge in this global economy, you need to pay a competitive salary. However, you also must make sure you are paying it to the right people. For example, in 2007, the Bank of China took extreme measures to make sure its employees were competitive with the rest of the world. The bank made every single employee apply for their jobs as if they were applying for the first time.

I’m not advocating this practice, but the message was clear: you are competing against anyone who wants your job. Your job is no longer guaranteed and if you’re not the best person for the job, you will lose it. Everyone at the company should be focused on the importance of their position to the company.

Additionally, it is important to consider that even a company with a competitive global salary can run out of steam without a vision to inspire employees. For example, I have seen the CEO who pays employees higher than normal salaries. His vision was based solely on creating more money. That philosophy did not excite employees, and that CEO did not have an environment where people were rewarded for learning and being stretched and challenged. They just did more and more work. Even though the CEO of that business felt he was overpaying his people, his feeling was he had monkeys.

On the other hand, there are countries that do not have the luxury of high salaries and bonuses.  In some instances, money serves little or no purpose in the workforce. For example, while living in the jungles of Belize and rural villages of Costa Rica, I learned leadership strategies that empowered people to perform their best without exchanging currency. The leaders of these villages held a vision of collaboration and mutual benefit, except they did not own it for themselves. They shared those ideals with the community so that every worker, myself included, worked hard because they wanted to see the group or organization succeed.

Despite the need for capital, when people are empowered by the ideals of a village or company, they take pride in what they are accomplishing. When they are in an environment that embraces change, encourages high performance and rewards it, people deliver beyond expectations. We see this in sporting teams that have the highest paid athletes, yet they never make it to the playoffs.    

An ideal business model would feature employees who are too valuable to be let go. So how do you ensure employees have greater value as they progress in their tenure? It is partly the result of getting the right people on the bus as Jim Collins states in Good to Great. The other is making sure the job the person is doing creates value. As Richard Goeglein, Chairman of Pinnacle Entertainment explains, “It’s an insult to an employee to be in a job that does not provide value to the organization or its customers.”

Certain jobs lose value over time. Like a business, employees must remain relevant in a world of constant change. Therefore, employers and employees have a shared responsibility of increasing employee value. To keep a corporation on the tip of its feet, employees need to constantly develop new skills and competencies. To maintain a dynamic company, employees must be able to evolve. At the same time, the company also has a fiduciary responsibility to see that their employees are growing more effectively.

Ultimately, employees with skills and competencies that become obsolete will end up being paid peanuts and companies that don’t develop their employees will be left with monkeys. 

How the wrong words can slow your company's growth

http://blogs.hbr.org/hill-lineback/2011/02/the-words-many-managers-are-af.html

Words managers are afraid to say 

There is a much larger impact on the organization as a whole when the managers are not having the right conversations with employees.  As a manager, you should always have an exit strategy and a successor.  While it is important to possess knowledge yourself, it is more important to know how to manage knowledge.  More importantly, managers are responsible for extracting as much knowledge as is required to build a thriving organization.  So the notion of being afraid to tell your people you don’t know, you were wrong, or ask them, “what do you think?,” or “what would you do?,” is a formula for a struggling organization.   

I have seen smart managers come up with all the answers.  In the end, his employees became resentful and sat back and watched the manager solve all the problems.  As long as the manager had “the right answer” the other employees were not able to contribute.  Unfortunately, that manager stunted his and his company’s growth.  All problem solving depended on him, so once he was taken out of the operations room, the employees had to make the tough decisions themselves.  As they became more confident in their problem solving abilities, they became a huge asset to the organization.  In fact, they developed a competitive edge as an operations team.  That only happened because the new manager used the Socratic approach.  He started asking what would you do if I were not here?  Can you explain what will happen if…?    

Asking questions serves several purposes.

1. Develop leaders – successors
2. Creates problem solvers who can function independently
3. It ensures your people feel valuable to you and the enterprise

In times of constant change and global competition, no one should have the same job functions from one year to the next.  As a manager, you should be working to make yourself obsolete.  Work yourself out of a job.  To do that, you will have to find a successor.  Or your people will choose the successor.  Delegating is one way to prepare people for increased responsibility. 

The other is to let your people have the answers.  There are times when you may know it.  However, it is more valuable long term to ask your people to solve the problem for or in partnership with you.  As your people become accustomed to your dialogue, they will have a process for solving complex problems.  As a manager, this frees you up to focus on larger issues, instead of putting out fires your people are not comfortable handling. 

When your team or company grows, your direct reports develop a sense of pride knowing they contributed to the growth.  Asking your people questions empowers them and makes them feel valued.  If you have all the answers they are not needed. 

The Chairman's response to WSJ's "Harvard Changes Course"

To see the article, click here

On Revamping Harvard:


Requiring students to work in groups of 6 is a good start. The fact they will have to create something is even better. Is it enough to address the source of the problem? Are the appropriate questions being asked to create leaders of the future?

While it is important to learn from case studies and just as important to be competent in finance, a question remains. How do you build valuable products or services that are sustainable or a least malleable enough to continue to produce value?

If Harvard is going to make significant changes to its curriculum, they need to understand there are mental models that are built into every system. If they change what they present to students without adjusting for mental models that perpetuate the existing paradigm that caused the financial meltdown, the paradigm will not be changed. It will be improved or diminished.

It is what happens when the average person wins a large lottery. The person burns through cash because their money management principles remain constant. As a result, the wealthy lottery winner is usually worse off with more money. Will the new Harvard curriculum allow students to justify the same past behavior with a new intellectual spin for why things will be different this time?