Archive for the ‘Productivity’ Category

Executive Success - it’s a simple equation…

Wednesday, March 4th, 2009

It’s not WHAT you know.
It is not WHO you know.
It is not HOW you deliver.
It is ALL of it.

In the new world of tough competition for positions, careers and recognition it is important to remind ourselves that it takes 3 to be successful and compete.

We can look at this as the following formula:

SUCCESS = IQ * EQ * XQ

IQ - Intelligence, Credibility

Most of us have been taught that through learning and personal development we will succeed. It is certainly part of the equation but the as John Maxwell’s classic reminds us - Talent is Never Enough.

EQ - Relationships, Intimacy

Relationship building may be the most misunderstood area of the equation. Many assume EQ is the area for salespeople and managers. Others believe that having 10,000 online “friends” or consumers does the trick. The most important for us is to create long term relationships of give and take that will help you advance your agenda. Whether it is sales, politics, social or otherwise. Keith Ferrazzi emerged as the most prominent advocate of this skill.

XQ - Execution, Consistency

The most under-appreciated factor in success is to actually deliver the goods, so to speak. Being smart and knowing the right people only matters if you produce results. We are always astonished how many people forget this. Leading advocates of this skill are Bossidy , Kaplan and David Allen .

In fact, our research shows that most executives overweigh their focus in one of these areas so much so that certain archetypes are emerging

The Expert Archetype: “IQ eq xq” - I am the expert in my field, I have the best insight. I already know the right solution.
Typical roles that overemphasize this skill: consultant, advisor, attorney, researcher, professor.

The Connector Archetype: “iq EQ xq” - I build connections with everyone. I can leverage it to advance their and my agenda.
Typical roles that overemphasize this skill: sales, marketer, politician, PR, fundraiser.

The Manager Archetype: “iq eq XQ” - I deliver results through teams. I meet objectives, deadlines and budgets.
Typical roles that overemphasize this skill: project manager, plant manager, supervisors, crisis managers.

Great, very insightful (IQ), but what can I do about this (XQ)?

ACTION STEPS:

1.) DEVELOP ALL 3 SKILLS: All successful leaders create a balance of these 3 skill areas and augment their own shortcomings by partnering with others that are strong in areas where they are weak. It is interesting to see what other executives think about relative importance of these skills in today’s economy. Check out our global executive poll:

2.) EXCEL IN ONE OR TWO - Our research shows that in order to be considered an effective leader - in a given corporate or social environment - it is critical to meet the ‘minimum’ expectations in ALL 3 areas and demonstrate excellence in at least 1 area. According to Marcus Buckingham the best approach is to ‘Build on your strengths’ and focus on the area where you are already good at.

3.) BALANCE THEM, DAILY - We believe it is important to strike a daily balance to make sure all of us work on tasks that strengthen all 3 areas and create a personal development program to improve each discipline. What-if our daily GTD lists have reminders to do that… (we will talk about that our next blog)

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Why the technology sector is the most price efficient

Monday, March 2nd, 2009

Technology prices have always been falling

We all know that technology product prices tend to fall 60-80% in a decade for the same spec. Whether it’s DVD players, flash memory, TV, computers, servers - they all follow the same pattern.
The more interesting question is why other industries cannot achieve any similar price reduction.

Following the electronics industry model:

  • a $3.50 latte from a decade ago should cost today $0.70
  • your child’s education “product” should sink from $200,000 to $40,000
  • your car of $30,000 should now be $6,000
  • heart surgery prices in 10 years should drop from $250,000 to $50,000

Of course it does not happen for other industries.

No other industry apart from High Tech outperforms the pressure of inflation. At least not due to productivity and efficiencies. Only due to falling demand. See Real Estate, Investment Assets, etc.

Consumer food product companies have a similar mantra by holding food prices steady in the stores. To achieve that they have to keep improving efficiencies by 4-5% each year just to eliminate the impact of material and labor price inflation.

Then there are industries that do the opposite. Even in today’s economy health care related costs, education and some professional services prices are still growing at 5-8% far outpacing inflation and GDP growth (or lack thereof).

The Monster is not Deflation but Lack of Innovation and Productivity

There is all this talk about the deflation and how falling prices will kill the economy. Maybe so. However I think the real debate should be about productivity, innovation, efficiency and hyper competitiveness.

Annual Productivity Growth 2000-2005 (OECD 2008):

  • Technology: 17%
  • All Manufacturing: 5%
  • Metal products: 3%
  • Textile/apparel: 5%
  • Heavy Equipment; 3%

In the US - industry productivity has been lackluster outside technology. That’s what the tech sector has that no other industry seem to have. In the coming year of falling prices maybe other industries get to practice a little high tech life.

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Secret Simple.ology

Friday, April 18th, 2008

First there was The Secret that created a massive worldwide following in the area of success / destiny mashup. What used to be a series of isolated personal development movements can now be aggregated into a single offering for a much greater impact. It is happening on YouTube (who thought running into fences can be a national pastime by now?) and it is happening across all content types. The interesting thing is the massive co-authoring of these ideas (The Secret had dozens of virtual contributors) is becoming similar to the open source movement. So here comes yet another idea - Simple.ology that already has more online spinoffs than its Amazon sales would indicate. This time it is the linkage between personal improvement, Getting Things Done and wealth creation that brings three evergreen bestselling topics together.

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The value proposition of the story is attractive: Most people have great ideas but how do you actually follow up and deliver on your dreams and do it half the time… The online community has been very active on this ever since it came out in a book form. The book is great read despite the usual skepticism that creeps in when you are reminded of things. More than once. Persistently. We all know the basics:

  • Set goals you are passionate about
  • Take action every day towards them
  • Always do what you say you'll do

Maybe Simple.ology can motivate us to do more of what we know we should do.

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Execution Gap - a buzzword that did not deliver

Wednesday, January 16th, 2008

For the last 5 years Execution Gap has been a favorite buzzword of healing underperformance in business. Simply stated most organizations fall far behind at least some of their stated goals due to lack of follow-through by their members. Countless organizations focus on this from FranklinCovey through Palladium to David Allen. According to research by Steven Covey, • only 9% of employees can relate their daily activity to their company's goals • only 44% can describe what their company's goals are David Norton (the inventor of the Balanced Scorecard) states that 90% of the companies fail to execute on their strategy. More than half of the people in this country work without clearly understanding what they are really supposed to do. There are dozens of consulting outfits focused on this topic and the key recommendations are as follows:

  • Companies should focus on fewer goals (2-3 at most)
  • Break down goals to chunks that team members can relate to and get excited about
  • Everyone should have a role at least in developing the action plans (decentralize strategy)
  • Everyone should do what they said they would do
  • Measure results and hold each other accountable
  • Spend 20% on planning and 80% on actions
  • Make sure incentives and disincentives are aligned with actual results

When the majority of the population faces strategic planning once a year in the form of New Year Resolutions and no elementary training in any form of planning or execution discipline it is not surprising that only half of the people surveyed can translate organizational goals to personal goals. Wouldn't it be great if high school or college curricula included execution as a critical element. There are pioneers out there from David Allen Co, Franklin Covey's K-12 Execution Training and volunteers like Marc Orchant that one day may create a better trained society in results and follow-through.

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Weak Dollar Poorer Nation

Saturday, April 7th, 2007

Something unnatural happened in the Wealth of Nations. As an economist in school I learned that weak dollar helps exports, employment and growth. All in all if the dollar falls imported goods may be more expensive but everything else is supposed to be positive.

Some good old rules are getting broken…

  • Despite 12% drop in the dollar in the last 2 years and 46% drop in the last 5 against the Euro the US growth is behind that of Germany and even the EuroZone. They were supposed to be shrinking under the pressure of the cheap US exports… It turns out we are increasingly competing globally with companies that source products from the same place we do: China. And the Chinese currency is pegged to the dollar. The cheaper US exports get, the cheaper Chinese exports get…

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  • If we take two graduating buddies (Class of 2002) from the same midwest College split up and one lives in Germany the other one in Chicago the real cost of currency becomes real for them. If the two make the same money for the last 5 years what they made when they graduated… the German fellow would have over twice as much in dollars as his Chicago buddy by 2007 assuming they save at the same rate…
  • The Chicago house one of them bought that appreciated 50% in those 5 years would have been flat counted in Euros. The same house in Frankfurt appreciating 50% would have doubled in price if measured in dollars..

Maybe all in all it is a good thing considering someone has to buy up all the savings and assets we accumulate over the years as I wrote in my prior article… We expected Chinese investors but we may have to take some Euros as well…

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Time Magic Quadrant for GTD maniacs

Sunday, March 25th, 2007

I got an email to my last post with an interesting twist. A fellow GTD enthusiast started measuring the time he spent in the various segments of the Team Magic Quadrant and came up with an obvious insight:
If you want to be a leader you should spent time doing leader-like things.

I put his time assessment in the chart to make the point. Now he wants to structure his next action list so that the priority is determined by the Magic Quadrant. Way to go, Rick.

Magic Quadrant And Gtd-2

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Strategic Creativity Killers

Wednesday, October 18th, 2006

It’s the season for strategic planning for most companies. Despite what I stated in my earlier post I still believe that business model changes are happening at an increasing rate. If you are like most companies, strategic planning takes place at some offsite in a reasonable climate with the leadership brainstorming away.

Dave Dafour’s list reminds us that this one time in a year we really, really need to think outside the box.

Here is his partial list of Creativity Killers: (please avoid them at all costs…)

  • Our place is different
  • We tried that before.
  • It costs too much.
  • That’s not my job.
  • They’re too busy to do that.
  • We don’t have the time.
  • Not enough help.
  • Not that again.

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Complexity as Growth Killer

Wednesday, October 18th, 2006

All of us technology professionals were supposed to make business simpler. Well, we failed. As I am working with companies with hundreds if not thousands of enterprise applications and multiple competing business models and processes in the same company it makes you wonder where this is all going.

The new buzzword in business improvement is complexity management. Most companies still do not understand the correlation between increased complexity (products, technologies, organizations) and the resulting growth or lack thereof.

Harvard Business Review had a great article on this topic titled Innovation vs Complexity:

As a company increases the pace of innovation, its profitability often begins to stagnate or even erode. The reason can be summed up in one word: complexity. The continual launch of new products and line extensions adds complexity throughout a company’s operations, and, as the costs of managing that complexity multiply, margins shrink.

They also point out that business wealth is created in the simplification of interactions between systems, processes and organizations.

That is where most studies are going. Internal complexity becomes the number one prohibitor of growth. It is not lack of customers, lack of talent, lack of products. in fact it is due to too many products, services, channels and talent. All major strategy shops are exploring this topic in recent articles from ATKearney, Bain, and Booz-Allen and McKinsey.

Complexity comes in many forms from product portfolio proliferation through diverging technologies to non-standard processes.

If you can afford the top strategy firms they could send you back to the drawing board and ask you to design your business from scratch as if your were selling one product to one customer. Then keep adding product lines and channels without adding unnecessary organizations or processes. It is amazing how an exercise like that paints a real best-in-class view of your business.

In my research complexity and uncertainty feed on each other. When businesses face uncertainty (and who doesn’t) they tend to create what I call safety buffers by adding people, procedures and technologies. Depending on the business it may be

  • excess inventory or capacity because the management does not trust the planning process or technology
  • excess people because the human glue is needed to ensure information flow in divergent processes
  • excess process and technology solutions because divergent organizations need more procedures and technology
  • excess innovation to meet unspecified customer needs

Complexity management may one day give us some guidelines on how to simplify and standardize businesses and show us companies that did go back to the proverbial drawing board. Until then new technologies will need to focus on simplicity, standardization and thereby making a small contribution to that elusive concept: sustainable growth.

As the Booz-Allen study so aptly stated when describing the role of technology providers:

Process complexity is one of the silent killers of profitability. Any time a new product is added or changed or a service level is increased without addressing complexity the result is a process that is a little more cumbersome and a little more costly. Over the long haul, many good strategies go wrong simply because of the drag created by all those incrementally increasing costs.

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On Demand and Process Optimization

Monday, October 16th, 2006

Zoli had a great insight of a potential “Blue Ocean” emerging from the Saas/On Demand space. Saas vendors hold customer data and could develop the ability to offer statistical services ranging from benchmarking through process management to process optimization.
Today these offerings have not taken hold but I can imagine selective opt-in by businesses for higher value-add services like:

  • Process benchmarking - based on transaction data available voluntary participants could receive real-time comparison of their performance against their peers. These would be for areas not considered competitive edge, most notably finance (headcount allocation, transaction costs, cost of service, billing cycles, DSO), human resources (rev per employee, retention metrics, training metrics, etc), procurement (supplier performance, DPO, etc).
  • Process management and optimization - develop systematic recommendations on how to tweak workflow, process steps to have a more streamlined, lower cost process. The system can monitor everything from dispute management (DSO) through supplier performance and recommend corrective actions (replace suppliers with a better one).

If we couple low user cost of on-demand with process optimization typically provided only by large-scale business process reengineering with ERP/CRM enablement then we have real value proposition. Low cost is important but as most companies move to growth mode from efficiency optimization we need more than cost savings to make on demand stick.

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Strategic Advantage and Strategic Rewards

Thursday, October 5th, 2006

Even companies that understand what their strategic advantage is have the hardest time aligning reward structures to match the strategy.

In many cases a firm may break away from the pack in manufacturing with superior customer service but maintain higher rewards for engineers and backoffice functions due to industry conventions. Similarly a service company shifting to productize its offerings may still reward their professional services staff better than their newfound development or engineering staff.

Many of the same companies believe that they are paying market rates but that may not be enough. If they are pursuing a differentiation strategy than they will have to attract and reward the most differentiated (best) employees and suppliers in that category to maintain competitive advantage.

It means that in areas where you want to have competitive advantage you will have to pay top dollar and in other areas you will pay the “going market rate”.

Jack Welch in the book Winning pointed out time after time that companies have a hardest type assessing talent and retain the highest performers and get rid of the lowest performers. In this sense it is true of employees and suppliers.

I have yet to meet a company that does not believe that they hire only A-players... Who is hiring the B and C players? It is an unfortunate and inefficient myth. As a motivational speaker told us in our first partner meeting in my E&Y days: “Half the people in this room are below average”. It is true and not necessarily a bad thing. You will not be able to reward and motivate the A-players in non-strategic areas and similarly you have to create great opportunities and rewards for A-players in strategic areas.

Companies that under-reward players in strategic areas will eventually erode their competitive advantage which holds true for most companies with one size fits all compensation structures and procurement procedures.

To win, you have to reward the real A players in your areas of strategic advantage and happily hire and retain the B and C players everywhere else and keep those motivated with specific performance metrics.

The following table may serve as a strategy guide for building the right teams. My earlier post also describes characteristics of A-players in any successful environments.

Strategy Reward

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Hertz vs Thrifty’s Customer Interface

Wednesday, October 4th, 2006

Today Hertz was sold out and I had to rent from Thrifty at the airport. Our corporate provider is Hertz where I had Gold Service so I signed up on the web for the equivalent Thrifty Blue Chip service. I guess that is where similarities ended. It absolutely intrigues me that in the commodity business of auto rentals there can be such a difference in processes. To get your car is basically a 3-step process at Hertz but it takes Thrifty 9 steps.

This makes me warm and fuzzy how good enterprise applications could make a drastic difference in perceived customer value as it is the case of Hertz. Thrifty could introduce a nice web app where I could pick my car, print my rental agreement, provide credit card and check out. And that would not even be anything revolutionary but would sure make it convenient.

Here is my flow through the world of auto rentals and hopefully my last journey through Thrifty’s workflow…

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Update (10/10) I just returned my rental car and to be fair the return process is as smooth with Thrifty as it is with Hertz. So as long as the front end of the process is streamlined we may have competition again…

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The Anatomy of Enterprise Overhead Bloating

Tuesday, September 26th, 2006

Having spent my fair share in both the entrepreneurial and large enterprise world it always made me wonder why in big companies overhead gets out of hand. Before you start rolling your eyes consider this - in most areas of the enterprise scale provides leaner processes and organizations - larger companies have better negotiating power (efficient sourcing), better supply chain (lower overall cost of supply chain), lower transportation costs, more cost-efficient distribution and so on. But not in real overhead - the way we define it.

Our definition of Real Overhead is the following:

Real Overhead: The percentage of your workforce that does not interact with either the product or the customer

This is always a fascinating conversation with customers. In my last startup we had 2.6% of the workforce in this category. 97.4% was interacting with the product or the customer. I just worked with a Fortune 500 client where this ratio is around 25-35% (they can’t quite figure it out). In their case thousands of people do something else but what makes the company create value.

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I think the term overhead just covers up the essence of the problem which is actually simple.
Buffering for lack of information

So the big aha is actually quite obvious: organizations buffer for lack of information and the resulting ambiguity. Depending on the company it will be the most accessible form of resource which is usually

- commitment levels - this is my perennial favorite and a massive enterprise disease. Almost every group in a large organization plays with commitment levels. It means keeping more inventory than necessary, sandbagging sales forecasts to leave room for error and so on.

- capacity (machine or human) - this one is also obvious. We cannot plan for 90 or 100% utilization of any resource with downtime (machine) and time off (people). So most organization plan for a lot less and execute at an ever lower level.

- people - This is the Real Overhead because the easiest ambiguity buffer is people. Almost everywhere where information flow is a problem you will see hordes of analysts, controllers and also proliferation of spreadsheets and meetings. This is the most accessible measure of Real Overhead as stated above.

In any organization if the Real Overhead is above 15% there is a structural information problem.

The prescription is better information, of course, but that can come from a variety of approaches ranging from

  • simplified processes
  • enterprise integration
  • better analytics
  • better workflow

More importantly it is not always a technology solution.

Part of the advantage of a startup is that it has fewer products/services, fewer channels and therefore fewer ambiguities. So companies that simplify their product portfolio or channels or customer/supplier base typically see a reduction of Real Overhead. Also companies that move from an operating company to a holding company many times reduce their real overhead.

Unfortunately many large companies we dealt with do not even know exactly how many people work for them, let alone what they do all day. Nonetheless measuring RO is a always revealing for those taking that tentative first step…

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16 Rules of Survival

Sunday, July 16th, 2006

Bob Parsons (CEO of Godaddy.com, the largest domain registrar) has 16 rules to live by that is so succinct and inspiring that I want to repeat them here.
Most people (and businesses) never define their big rules or live by any rules of conduct. Every now and then it helps to get centered and review a checklist like this. If we are surely aligned with these standards and still not reaching our goals then we can be sure that it is getting closer.

1. Get and stay out of your comfort zone.

2. Never give up.

3. When you’re ready to quit, you’re closer than you think.

4. With regard to whatever worries you, not only accept the worst thing that could happen, but make it a point to quantify what the worst thing could be.

5. Focus on what you want to have happen.

6. Take things a day at a time.

7. Always be moving forward.

8. Be quick to decide.

9. Measure everything of significance.

10. Anything that is not managed will deteriorate.

11. Pay attention to your competitors, but pay more attention to what you’re doing.

12. Never let anybody push you around.

13. Never expect life to be fair.

14. Solve your own problems.

15. Don’t take yourself too seriously.

16. There’s always a reason to smile.

(The above Rules of Survival are included with the permission of Bob Parsons and is Copyright © 2004-2006 by Bob Parsons. All rights reserved.)

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Return to Hipster PDA

Saturday, June 10th, 2006

I have completed my seasonal migration from electronic organizer back to paper. I seem to repeat this cycle depending on how much staring at my computer I can tolerate. While the new age-old debate whether paper or electronic is the best way to organize rages on from Microsoft to the chat rooms I can switch as I see fit. Thanks to the flexibility of David Allen’s GTD system which allows me to just transfer my action lists back and forth between the mediums without changing my behavior.
There is no right answer anyway considering that there are endless organizing tools out there. So I’m settled back to my Moleskine as my notebook and Hipster as my main organizer. This gives my Blackberry a break for now.
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Quick mobile reminder

Saturday, May 13th, 2006

We are all busy. Sometimes too busy to even check our todo lists… That’s where Oh Don’t Forget comes in. This is the quickest way I know to remind myself (or others) of that most important action item… Any time, any phone.

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