by Charles Plant | Nov 23, 2012 | Leadership Development
Random thought for the day.
Many people get the concepts of process and bureacracy confused. They think that adding process is making an organization more bureaucratic. This really isn’t so.
What process does is allow you to delegate decision making down to the lowest level possible in the organization.
With good process, few people need to be involved in a decision and thus decisions can be made quickly. Thus customer service is improved, people get things done, and there is clarity, coordination and speed. No bureaucracy.
Bureaucracy results when there is a lack of process or too much process. Without process, no one is sure how a decision is to be made, who gets to make the decision and as a result lots of people have to communicate and decision making is slow. With too much process, too many people are involved, communication is slow and as a result customer service is poor and people are frustrated.
by Charles Plant | Nov 21, 2012 | Leadership Development
It’s funny but when you look at early stage companies, they all seem to have a strong corporate culture. When you look at them again several years later after much growth, the original culture has usually died and been replaced by another less appealing one. What’s going on here?
First, a definition of corporate culture. To me it’s the set of values and beliefs that a group of people hold, it’s how they communicate, and how they make decisions. Now why is this important? Well all the research seems to say that a strong culture of leadership, client service, and innovation results in much better financial performance than where those cultural elements are weaker.
For a company of below 10 people, it’s really easy to develop a positive corporate culture. A passionate founder with a strong personality, the ability to talk to everyone in the company every day, and the greater use of group decisions means a stronger culture. Employees are more engaged, customers are closer to the company and everyone is passionate about the next product.
Take that company out a few years and give it more than 25 people, a plethora of products, and a new CEO and you have the recipe for cultural stagnation. No longer is there a passionate founder leading the charge. You can’t talk to everyone every day and with that many people, who knows who makes the decisions? The result is unfortunately, less engaged employees, a weaker link with customers, and less radical innovation.
One key to success in a startup is to keep your culture strong as you grow. That is possible and you can even regain it even after you lose it. Google is a positive role model for maintaining a strong culture and Apple is a great case in point of a company that lost its corporate culture and managed to regain it.
To keep your corporate culture strong you need to work at it every day. An annual retreat won’t work and neither will a sporadic program or two. What does work is having the CEO take responsibility for culture, defining that culture in written form, getting a buy-in from everybody, and talking about and reporting on culture on at least a monthly basis.
If you force yourself to assess and report on cultural changes on a regular basis you’ll be able to keep it strong and vibrant and keep being a high performance company.
by Charles Plant | Nov 20, 2012 | Leadership Development
Perhaps if you’re in a relationship your partner will tell you nicely that you smell. But will your direct reports tell you that you’re a lousy leader?
There are times I feel like I’m trying to sell deodorant to people who don’t know they smell. While the rest of the world is telling them that a bath once in a while is all you need, I’m trying to tell them that bath works for a short while but you have to keep taking baths your whole life and use deodorant if you don’t want to stink.
What’s up here? It seems like everyone I talk to is a great leader. How can everyone be a great leader if 65% of employees are not fully engaged in their work. Perhaps leadership is like driving, sex or bodily odours. We all seem to think that we’re great leaders, great drivers, great in bed and don’t stink.
Wake up, if you think you’re a great leader, chances are high that this isn’t really the case. And why should it be? You’ve probably not spent much time working with a great leader, taking courses, reading books, trying things out or getting feedback.
Most companies seem to offer a leadership course every now and then and think that is enough. Well golly, is a bath once a week good enough so that you don’t stink? No way. Leadership is something that you will need to learn your whole life. It is so multi-faceted and situationally dependent that unless you stay in the same job at the same company working with the same people your whole life, you’ll need to be learning leadership your whole life.
So here’s an idea. When you have your shower tomorrow and every day thereafter, when you put on your deodorant, and get into those fresh clothes, all so you don’t stink, ask yourself…..what am I doing today to become a better leader?
by Charles Plant | Nov 16, 2012 | Innovation
I promise I’ll get off this Passion soapbox next week. Meanwhile, just one last post in the series.
For a long time, I’ve been trying to figure out reasons why Canada’s innovation economy may be under performing that of the US. Someday someone smarter than me will figure it out. Meanwhile it just forms part of our national angst and I’ll keep chipping away at the subject.
This week, I’ve determined that business passion and its dampening of product passion may be contributing to Canada’s weak performance. Bear with me here.
One thing that bothers many in the innovation economy is our inability to grow large public (or private) companies that dominate markets, are category busters, star performers. RIM was one of those and still may be again. Nortel was one. What typically happens is that good fast growing Canadian companies are bought out early in their development, before going public. While they may leave a development team in Canada, for the most part, the growth of the enterprise occurs elsewhere.
Here’s what I think is happening to cause these premature exits. The rising stars are funded by, for the most part, the canadian venture capital community. Most Canadian VCs have backgrounds in finance, not in technology or entrepreneurship whereas in the US, there is a more even mix. In Canada, I suspect that VCs are replacing the founder earlier in the company’s evolution with adult supervision, those MBA types that have been though the startup tech war and got an exit or two.
The problem with replacing a founder with a “business professional” is that the company loses the passion that brought it into being in the first place. The passion for people or product is replaced by a passion for process. The “professional” CEO doesn’t care so much about changing the world but about getting the job done for the VC. That means reducing risk and getting out early. That way the CEO can earn a few bucks and go on to doing it again. One more tick for the resume. The founder might have stayed the course a little longer as the founder was not so much interested in the money but changing the world.
Thus a passion for business is trumping a passion for product and stunting the company’s potential. Going back to RIM and Nortel. It is interesting to note that neither of these two got early VC backing, RIM getting it just before going public. In RIM’s case, this allowed the founders to stay at the helm until very recently. In Nortel’s case, it had a parent that was more interested in building a business than an exit.
We are replacing product passion with business passion, going for quick exits, and stunting our innovation economy.
by Charles Plant | Nov 15, 2012 | Research
I was preparing for a speech on Monday and looking for examples of great leaders who founded great companies. To do this I looked for the largest technology companies I could find figuring that would be the path to finding great leaders. The thing that jumped out at me was that for the most part, the largest technology companies overall and in their sectors had been led for a long time by their founders, not by so-called experienced managers. (Jobs, Gates, Dell, Bezos, Ellison, Zuckerberg, Page, Moore, Hewlett etc)
When I looked some more I found that in a few cases (Jobs and Dell) the founder had to come back in as CEO to rescue the company. It made me ask the question:
Do companies do better with their founder than with professional managers?
Funny thing is the answer is yes. The private equity industry has a habit of investing in companies doing poorly with bad management. In those cases, replacing the CEO is usually a good idea and the reason the firm invested.
Unfortunately, the venture capital industry has followed this practice. In the name of adult supervision, the CEO is usually gone within 3 rounds of VC investment.
According to this blog: “When I analyzed 212 American start-ups that sprang up in the late 1990s and early 2000s, I discovered that most founders surrendered management control long before their companies went public. By the time the ventures were three years old, 50% of founders were no longer the CEO; in year four, only 40% were still in the corner office; and fewer than 25% led their companies’ initial public offerings.”
However, other research shows that on average “Shares of companies that retain their founders as CEOs, even after they become large corporations, have enjoyed gains that top the market by four times on average, according to a USA TODAY database study.”
You Can’t Buy Passion
The moral of the story is that the founder brings a passion for people or a passion for product that is priceless. The company often loses this passion when the founder is replaced by a professional manager. (Think Sculley) Unfortunately these often MBA trained technocrats have a passion for process and this isn’t what makes great companies. (Although perhaps it makes great banks, insurance companies and conglomerates.)
Companies need these professional managers to complement a founder’s skill set but they should be in roles such as COO or CFO. You can’t buy passion and you can’t create great companies without it.
by Charles Plant | Nov 14, 2012 | Leaders
Take a look at the three leaders featured above, Richard Branson, Steve Jobs, and Jack Welsh. Each of them was successful but each seems to have had a different passion in business.
Richard Branson entered multiple businesses because he was fed up with the poor customer service that was a standard in the industry for each business. He sought to change the customer experience in each business because he cared about people and figured they deserved better.
Steve Jobs built multiple products in a variety of sectors because he cared deeply about the beauty and simplicity of product design, a passion for product.
Jack Welsh had a passion for the business process and was able to make GE a consistent world leader in multiple indistry sectors because of this basic passion for process.
Each one of them was exactly what was needed for each style of business and each would have failed in the others’ business. In fact when you put someone who has a passion for process like Sculley in a product business like Apple he fails when he can succeed in a business that needs process.
Leadership is complex and multidimensional but passion plays a large part in determining what leader is suited for what type of business.
