Listening and Satisfying Expectations Improves Leadership

I love to engage with others. It challenges me to think differently about myself and the world. I am open to the difference. I find it enriching. However, I have to say my experience is that most people do not share this same passion. They will only go so far before the comparison becomes too painful, and they shut down. Being the dope that I am I often miss these telltale signs and continue trying to engage with them only to find myself alone and frustrated. Sometimes very frustrated. For me, there is nothing worse than not being heard.

On a personal level not being heard brings up feelings of being disregarded, unimportant, diminished in some way. I know that’s only in my head so who cares. The real and lasting impact is the relationship that was established is now broken. No matter the relationship it no longer exists when one of the two turns away from the other.

I’ve experienced this rupture many times over my lifetime; on both a personal and professional level. Some experiences were unpleasant. Others were downright painful.

Building and maintaining relationships is so vital to our sense of self and the communities we inhabit making each of them so very precious.

Sure relationships change over time and we must accommodate for those changes in ourselves and others but maintaining them is fundamental to human existence. Herein lies the challenge.

In my view, the best way to deal with the evolution in relationships is to be clear about and manage expectations. You put your expectations out into the world. And, the rest of the world sends their own back to you. It then becomes a dance of sorts to manage those expectations. When our expectations are unmet that we become introspective, questioning them. In the opposite direction, when the expectations of those around us are unmet we pull out those qualities of kindness, attentiveness, understanding, compassion, forgiveness, and the like, which make us human.

As you can see, expectations are key to building and maintaining positive relationships. You have to listen to the other party and be heard by the them in order to hear and internalize each other’s expectations. Listening to and hearing expectations are the basis for strong relationships.

As a leadership coach, and former business executive, I have been repeating this mantra for decades.

Yes, business is transactional but clients want to have build a trusting relationship with the business. Heck, everyone in the business’s community wants to have a trusting relationship with your business: employees, bankers, vendors, charities, governments,… too. You have to create and manage expectations.

This is the cornerstone of my vision of business.

Easier said than done.

This brings me to four real life experiences I’ve had this year with well-known business who failed miserably in creating and managing expectations, as a result of which broke their relationship with me, and possibly a mutual client.

Bank of America Merrill Lynch

At the end of 2016, I walked into a Bank of America Merrill Lynch office to discuss the financing needs of a couple of clients we have in common. After exposing the first client’s challenges we quickly understood there wasn’t much the bank could do there. Fair enough. We moved on to the second client. After hearing their needs, the representative said they could offer me a product. Great!

Long story short, this representative brought in three colleagues from Wealth Management with whom I met and who confirmed to me this product was the solution and wanted to work with me to get it to our mutual client. I discussed the solution with her and decided to move forward.

I worked with the Wealth Management team for weeks setting everything up and negotiating terms and condition. Set up a meeting for the client to come in and sign the papers only to have the whole thing cancelled the day before the signing. No explanation was given.

Now here’s the problem. I didn’t come into the branch asking for a product I was already familiar with, they offered it to me. To my client, I should say.They created an expectation, not I. At the first meeting the product was offered and the expectation created. Then again, at the second meeting with the larger group of bank representatives. They confirmed this expectation through the numerous weeks of work we put into providing this solution to our mutual customer. They worked toward building a stronger relationship with their customer, and myself and then broke it by shutting down. Failure number one.

Not being one to let things go, I spoke with their boss who put another team on it. Again, assurances were made, expectations created, work put in, and then a failure to execute. That’s twice.

Still needing to satisfy my client’s requirements I pushed ahead for a third time with still another team with the same result. A third failure.

Not a little frustrated and angry, I decided it was important for the bank’s President to know what was going on at street level in the bank he was running so I asked my customer representative for the contact information. I wrote but never received a reply. For the forth time, an expectation was created and not satisfied.

Needless to say, our mutual client immediately entertained leaving Bank of America Merrill Lynch for their repeated failures to deliver on the expectations they created and the relationship she envisaged having with them. Six months later, she is still thinking about leaving the bank.

Thrifty Rent-a-car

A few months ago, I rented a car for a few days while my nieces visited with me. At the time of the rental, I decided to include a couple of extra days after they left to do some errands I had been putting off. Nothing strange or unusual, I thought.

My nieces and I had a wonderful time together and got all the errands done before they left so I decided to return the car early. Big mistake!

You see, Thrifty did not simply apply the same rate and knock off a couple of days from my bill they recalculated the rental as if I were renting that day. The price for less rental days multiples by three the original rental! What an idiot I was for thinking I would pay less than originally thought by returning the car early. Naturally, in the face of a bill that ballooned to three times the price I kept the car for the remainder of the rental, parked, doing nothing.

Now, I don’t know about you but I don’t expect to use a rental for less time and pay three times the price originally contracted.

Although Thrifty is conveniently nearby, I doubt I will ever rent from them again.

FedEx

A New York law firm needed to send me, in southern Florida, papers for the sale of a family owned business. They chose FedEx just before the weather service announced hurricane Irma would hit. Needing to leave the area, I called FedEx asking them interrupt delivery and return the package to the sender as no one would be available to receive it. The customer service representative sent a message to the depot (or whatever they call it) telling them to not deliver the package and return to sender, and confirmed as much to me over the phone and recorded everything in the CRM system.

Like all good plans, something went awry. The parcel was delivered anyway, the hurricane hit southern Florida, and the it was lost. All investigations made by FedEx concluded it is lost. So I filed a claim to recover the cost to reproducing the lost papers contained in the parcel.

FedEx customer service sent me the claim form, I filed it, and not heard anything since. It has been almost a month of silence. I sent an email, as per the form, to inquire about the status of the claim and got no reply.

So what’s wrong here. First, the expectation was set that the parcel would be intercepted and returned to the sender. Failed. Second, the expectation was I could be made whole again by filing a claim. So far as I know, fail. Third, I could find out the status of my claim by sending an email to the email address. Fail, again.

UPS

After hurricane Irma, when it was safe to return to southern Florida, I sent four parcels of personal belongings down from NY. Having had such a poor experience with FedEx, I decided to try UPS. Big mistake!

At first, I went to a local UPS Store. The one and only person working in the store gave me a price quote but told me because of the hurricane UPS had suspended service to Florida. I could leave the boxes with them but they didn’t know when I get them.

So, I called UPS to verify this information and told it was wrong. UPS did indeed have service to Florida and they gave me a price quote around $40-$50 less than the store. No big deal. The store must have a markup. However, giving me the wrong information lost them the sale altogether.

While on the phone, I’d given the customer representative all the information necessary for the price quote so I asked him to process the order. To my surprise, he could not. WTF! All the information was already in the computer?! He told me I had to do it myself online. Not happy, I nonetheless followed his instructions.

Once online, I started to fill in the form but was blocked after the second parcel. Not finding any solution on my own, I called customer service again only to be told I had to create an account for more than two parcels. So I deleted the information, created an account, and started again. This was the now the fourth time in less than two hours I was treating the same information! Why didn’t the first customer representative tell me I needed to create an account?

I entered the information, insured the packages, and checked the box for a pick up. On the confirmation page, after payment, I received further instructions about my shipment including having to request the pick up. But, I’d just requested the pick up!?! Now I was confused again. A third call to customer service told me I hadn’t requested the pick up so I had to start that process and pay more money. Why the pick up was not included in the workflow the first time I’ll never know. Anyway, I scheduled the pick up, paid, and then fought with the form two or three times to correct the information it wasn’t saving properly. I waited for the next few hours until the pick up. When the UPS guy finally came he was very unhappy with his work but at least the boxes were on their way.

A few days later, back in sunny Florida, the boxes arrived. Some of the items in one box were damaged so I filed a claim. UPS’s claim department is much faster than FedEx’s. Faster at refusing the claim, I should say.

Although I provided them with all the documentation they requested they refused the claim on the basis that the package did not conform with ISTA 3A testing norms. I contested this point by indicating that the box was larger than those for which ISTA 3A was appropriate so they should honor the claim. They didn’t want to take this detail into consideration. One would think I purchased the insurance to protect UPS from me instead of protecting my belongings from accidents. Crazy!

Anyway, after speaking with two people in their claims department, it became clear that UPS’s color is brown because it like talking with a brick wall. They don’t want to hear anything the customer has to say.

As you can see, UPS did a tremendously poor job at the relationship with its customer. No wonder they’ve lost so much business and now have to provide line haul services for the post office. Next time, I’ll go to the post office and at least get a level of service in line with expectations.

Beyond my own concerns with relationships, these three examples illustrate two significant trends in our society:

  1. The public’s lack of trust in business and government institutions.
  2. How innovative companies are leveraging listening as a way of building lasting relationships with their customers.

As these four cases demonstrate, the relationship between the companies and their consumer is rather one sided. These businesses are more interested in satisfying their own needs before those of their customers. They abuse their dominant position in the relationship for their own gains. Likewise, their dominant market positions allow them to corner a market segment thereby limiting the market alternatives available for consumers to choose from. These dominant positions allow these economic players to communicate expectations in order to get the business but then to not live up to those expectations without any repercussions.

This bait and switch in business also exists in government where, for decades, we have seen politicians elected to office on the basis of political platforms that are hardly, if ever, executed once in office. It is no wonder we live in such a polarized economic and political world today.

It seems, all too often, we are being told what we want to hear in order to start a relationship – enter the transaction – but end up with dominant players exacting so much from us than we would like to permit. It is no surprise the level of trust we have in businesses and governments is so low.

On the other hand, if you look at a number of successful companies you see how giving the consumer the opportunity to be heard and considered sits at their center. Regardless of whether these companies are truly trustworthy, or not, they deliver on the expectations created and allow customers – often their whole community – to participate in shaping their future.

Using the most powerful communication tool we have to date, the Internet, AirBnB hosts and guests provide feedback to each other; car sharing companies – like, Uber, Lyft, and Didi – allow drivers and passengers to hear each other; and, Amazon sellers, hotel guests, and many more provide for at least one way listening. Social networks are prime vehicles for listening and possibly engaging.

Although still marginal, blockchain technology respond to this same human need for trusting relationships from just the opposite side of the coin, by creating a system in which expectations are met in the total absence of a trusting relationship. The cyberpunks who started the dabbling in blockchain, cryptocurrencies, and smart contracts did it starting from a worldview of distrust in institutions and the belief that self-regulating distributed system could remove trust from the relationship.

Although I have great respect for and an certain intellectual curiosity for this new technology, I am still old fashion enough to think the warmth of another human being is preferential to the heat given off by a computer. So I ask you when thinking about leading your business to look at your community (customers, employees, vendors, bankers, charities, governments,…) as welcome members with whom you have a mutual interest instead of as an adversary to be dominated at all cost. Likewise, when thinking about leading yourself – always a prerequisite to leading others – you should consider your community in the same way.

We need more listening, more hearing, more consideration, more authenticity, and more explicit expectations to have better trusting relationships; not the less which seems to be the norm today.

What’s Wrong With My Business

So many people get in touch with me to find out what is wrong their business, why it won’t grow, that I decided to share my answer with as large an audience as possible by posting it online. For the lazy readers amongst you, the quick answer is you have spent so much time online reading, listening, and viewing process driven solutions to your business problems that you haven’t paid enough attention to the fundamentals: the resource your business owns and/or controls. Business is, after all, a resource allocation problem. So the best question you can ask yourself is, “What is my resource?”

For those willing to work through my prose, here is the long answer.

Since businesses use many resources, you might be asking yourself which one I am referring to. To be clear, there is one resource without which any of the other resources are of much use. Also, the resource I have in mind is used in all the products/services your company sells. This resource is so important I call it the Key Component.

A Key Component can be just about anything. It depends on your business. Personally, I have worked with small businesses where the owner is the Key Component – a designer, artist, contractor/builder, architect, health care professional, lawyer, a chef,… – while in others it may be an employee – one of the above. Likewise, I’ve worked with more complex businesses where the Key Component is some form of property like a machine, trademark, land, patent, copyright, process, license, and so on. In even more sophisticated businesses we find what are commonly referred to as derivative products/services that will be based on an underlying property, like a insurance contract, financial derivatives and data.

To be pragmatic about it, most countries have spent centuries developing legal systems that attribute some form of legal status to the Key Component making legal recognition the common element. After all ownership is recognized by the law through titles, deeds, and what not, while control is affected through ownership it is also determined through licensing, renting, leasing, and such.

Legal recognition of the resource that makes everything else in your business possible makes perfect sense when viewed from a competitive standpoint. The law is your first line of defense against competitors. In other words, another economic actor cannot compete against your company using your own Key Component. They must come up with their own.

Let’s look at a base case. The most basic resource which can be considered a Key Component is land. In most societies, the legal system – or some other system – recognizes title to the owner allowing the owner to then derive the benefits that land produces for them. Depending on the land’s attributes it can be used for many different ways and provide many different benefits, such as: farming, grazing, building, mining, transportation, and so on. However, the owner may not want to exploit the land directly in which case it can be made available to another party by way of a rental agreement or lease, or in some other contractual form giving this party effective control.

Of course there are other Key Components. This website is built with software written by someone for which they received a copyright. I get to use it to write this article but I don’t own or control the software allowing the copyright owner to modify it as they see fit. However, this content remains mine by way of my own copyright which means the website or you can’t use it without my permission. Similarly, the website is trademarked and the owner of the trademark keeps all the rights to it. The server on which the software runs is also a Key Component for the company owning it.

Furthermore, legal recognition makes the Key Component transferable. It can be sold outright. It can be used as capital when transferred to a legal entity. A lender can use it as collateral for a loan.

Conversely, the law can limit a Key Component. Let’s take a person working as a chef in a successful restaurant as an example. The restaurant owner will exercise control over the chef through an employment contract. But this may not be enough for the chef. The chef may realize how important they are to the restaurant’s success – the Key Component – that they may seek to negotiate an ownership interest thereby aligning both parties interests in the venture and also further limiting the chef’s courses of action outside of the restaurant. An owner may seek even further control over the chef even after they leave the company by obliging the chef to sign a non-compete agreement covering a certain number of months after leaving, all in an effort to limit competition.

Here is another example. Think of airline. What is their Key Component? Can you guess?

Most people say “airplanes” but this is not correct. An airline’s Key Component is its takeoff/landing slots at the airports it serves. It is for this reason that when there is a merger between airline companies the anti-trust authorities or courts will examine the proposed merger on the basis of how many slots the merged entity will control in each airport in an effort to ensure the new entity does not control too much of the market. If it is deemed too much control may be exercised the authorities may okay the merger only on the condition that a certain number of those slots be sold to a competitor.

Now, think of a franchisee; someone who wants to acquire the rights to a Seven Eleven, for example. What is their Key Component? The trademark maybe? Wrong! The franchisee will get a license to use the trademark but so does every other franchisee. Sure, it is important but it is not the franchisee’s Key Component. The local/geographic market is what they will have effective control over making it their Key Component. It is for this reason that the franchise operator needs to pay close attention not sell the rights to too many franchisees in a given area for they risk limiting franchisee revenues which leads to unhappy franchisees and potentially less franchisees because their poor reputation.

A second attribute of the Key Component is time. A resource will lose its “power” over time either because of age, competition, or law. If you are the Key Component you may not be as effective when you are older than when you were younger. The same can be said about most organic resources, like land, which will lose nutrients the more it is farmed or disappear through erosion. Many machines only have a given useful life as they will become less performant through wear and tear. The law may also stipulate how long title is given on Key Components like intellectual property and contracts. Likewise, as you may have read in many articles, with the increasing rate of competition the useful life of many technological products becomes shorter and shorter. Software, for example, many have a long life by law – copyrights – but competition reduces it to anywhere from 18 to 36 months. In the best cases, you may reach 5 years before a new version needs to be launched.

The Key Component has many other uses in business which I don’t want to go into right now but do believe me when I state it covers everything from: asset to company valuation, mergers and acquisitions, pivoting, growth, cultural and belief systems, central bank interest rates, trade policies, labor relations, wars, and so on. Basically, the Key Component touches on all aspects of our daily life whether we know it, or not.

All I want you to takeaway from this article is this, (1) in order for a business to exist it must own and/or control a legally recognized resource, the Key Component, and (2) this resource is only useful for a certain period of time. Without understanding these two fundamental and important attributes of your business you can try all the process improvement gimmick out there and you will still be asking yourself, “What’s wrong with my business?”

If you are ready to take the next move then please contact my by messenger to schedule an exploratory call.

Worldview

#1 Leadership Attribute: A Worldview

How can we define a leader? All across the Internet, in specialized and generalist journals and magazines, on TV, on the radio… in sum, everywhere, people are hard at work trying to define the attributes of a leader. As a leadership coach, I do so as well, which has brought me to define a leader as follows:

An individual who is able to see a less uncertain world, communicate it to their community, and inspire everyone to cooperate and collaborate to make it a reality.

This definition works well because it encompasses the three elements most often attributed to leaders as well a fourth, my own contribution, which gets the leadership process rolling. These are:

  • Vision
  • Communication
  • Execution
  • Less uncertainty

I have been very fond of this definition and plaster it all over the place in my writings and talks. That is, until yesterday when someone asked me, “What is the ONE attribute that defines a leader?” As you can imagine I was stumped because I always discuss the four attributes mentioned above. So I gave this question some thought by examining the underlying premises of those attributes before explaining how a personal view of the world is the one attribute that sets a leader apart from everyone else or to be more economical with words than I am known to be: A worldview.

Before a leader can develop their vision and communicate to their community, and inspire everyone to work together to make it a reality, the individual in question must develop an understanding of how their world works as well as their place in it.

Not necessarily a view and understanding of the whole world, but the part that is relevant to them. A worldview can be as small or as large as the person desires as long as it is meaningful for them and their community.

A worldview is the precursor of the vision. Without understanding their “world”, it is not possible to develop a vision that brings less uncertainty to them and to their community.

In fact, one of the most-asked business questions is to explain the difference between a leader and manager. It is exactly this: the first has a worldview while the latter does not. Okay, maybe I’m being a little hyperbolic here. Undoubtedly, it is not so black and white. However, I seek to make a point and ask your indulgence in doing so. Through their worldview, a leader can see how the different facets of an issue interact and influence one another thereby giving them the insights necessary to guide the community past each obstacle and hindrance to a successful execution.

As a leadership coach, I understand that it is the absence of a worldview, which limits many of my clients in their ability to reach full maturity as leaders. Although I try my best to share my own worldview with them it is not theirs. Successful leaders differentiate themselves by having and using their own worldview.

So if you don’t mind I will amend my definition of a leader to include a view of the world as the precursor to everything else.

Leaders are those individuals who are able to develop their own view of their world, see how to make a specific aspect of it less uncertain, communicate that vision, and inspire people to cooperate and collaborate to make that vision a reality.

What is your worldview?

Integrity

How Good is Your Word? Integrity, Anyone!

I have to admit I am a big believer in words and their meaning, all sorts of meanings in fact, and this has often been to my detriment. In a world based ever-increasingly on communication I think it is time for a word Renaissance, if I can call it that. To be clear, I think people should take more care in using words with their correct meaning(s) and consequently improve their communication skills and the actions that follow.

Undoubtedly this a challenge that has existed for centuries but although illiteracy has been significantly reduced over the course of the 20th century I still don’t see many people doing a very good job of using language.

What brings me to share this particular subject today? Disappointment in the behavior of someone I thought I could trust.

A former close friend who occasionally hired my consultancy services, implored me for help closing a deal with one of her clients in exchange for compensation for my efforts. My role was to be an advisor and nothing more. No reports to produce, no documentation of any kind. Given our friendship, I had often been available to assist this person. Most of that help had to do with her work, but sometimes it was also of a more personal nature, such as rearranging her furniture.

On this particular occasion, since my assistance involved advisory work (which is, after all, how I make a living), I made sure each time we spoke that she was aware I would be billing her for my time. I made an effort to clearly let her know that I would do the work only if I billed her. After all, this contract she was negotiating with her new client would mean a substantial payday for her and it seemed appropriate for me to be compensated for the time I invested in helping her to close the deal. Each time she asked me to work with her, I informed her I would bill her and each time she said “Yes.” So I advised her on the contract type and negotiation with this client.

The first bit of advice I gave her was the price point. I provided this advice free of charge because she was still uncertain whether she wanted the work. She had been working with this client as a consultant for a few months when the International Marketing & Sales Manager left the company. She decided to offer her services in his place but didn’t know how much to charge nor what kind of contract to establish given her pre-existing relationship. I showed her she could find a very nice breakdown of compensation arrangements on salary.com, which resulted in her multiplying by four her income in comparison with what she wanted to ask! She took this back to the client who accepted but because of budgetary constraints they agreed she would only work three days a week. Not a bad gig if you can get it: $120,000 a year for 3 days of work a week. Remember, she was going to ask only a quarter of that.

Then, things started to get more serious in the negotiations. The sticking point being how to go from working as a consultant to being an interim manager representing the company to clients around the world. Each time she asked for advice on this subject I reminded her that I would be asking for payment. The first contract came in and she asked me to review it and advise her on what to do. So we met one afternoon at Argo Tea on Broadway, in Manhattan, and discussed the contract for an hour and half. I sent her the bill and she paid me. Great! Thank you.

After a couple of days, she came back to me with a revised contract and asked for the same service: review the contract and advise her on what to do next. I did on the condition of being paid for my time, which she accepted. Unfortunately, when it came time for her to discuss these points with her client’s lawyer she was unable to and asked me to represent her. At this point of the negotiation I didn’t think it would be very efficient for me to talk with the client’s lawyer because we would end up playing something like the game “Telephone” where the message comes out distorted because so many people are modifying it to their understanding. So, I politely informed my friend/client and the lawyer of this view and declined. The next day, a Saturday, my friend/client contacted me to say she and her client would be in my neighborhood, and would I have the time to meet with them in a coffee shop to discuss the contract. Again, I gave my availability on condition I be paid for my time and advice, and she accepted.

The meeting with her client went well. We covered all the major points and in particular agreed that a part-time employment contract for my friend/client’s work was better for everyone. Her client thanked me for taking the time on a Saturday to come and discuss the sticking points with them, everything was much clearer now. The client then went on to compliment me for being so generous with my time and even paying for everyone’s coffee. To which I instantly replied, no thanks were needed as my friend/client was paying me for my time.

Over the next couple of days, I was asked to address a couple of other points, also for a fee, which I did. Afterwards, my client’s client sent us both a term sheet reflecting everything we had discussed and forwarding it to their lawyer to be drafted into a contract. I then sent my client a breakdown of my time, which was not contested, and then raised the invoice. Like the previous invoice, I expected it to be paid right away but it wasn’t.

Although each time I was asked for my advice we agreed it was billable time, and even though I had taken her best interests to heart and not worked directly with the lawyer, and even sent a breakdown of my time before raising the invoice, the amount was beyond her expectation. All told, it came out to $3,000 ($450 had already been paid) for advice on a deal worth $120,000 plus 10% bonus. Do you think my rate was excessive? I don’t.

Long story short, we had a number of exchanges over a number of weeks during which she came to terms with this amount and I received numerous messages saying she was intent on paying me. In the second to last one, she asked for a payment plan. I sent her one for payment over four months, which she refused.

In the face of this strange situation – someone who says she is going to pay me but then doesn’t – I was obliged to take her to small claims court. For three months I heard nothing from her. Then, on the day of the hearing I got the surprise of my life.

Her argument was that all I had done for her was as a friend and, in any case, worthless; anyone could have provided the advice I gave her, she was a nervous Nellie and I was there to hold her hand. Okay, it’s an argument, but in the face of all the words she had previously communicated, it was a total contradiction. Not even an about face; a total negation of an objective reality as written in her previous messages.

As of this writing, we do not have the court’s ruling so I don’t know what the outcome will be. However, I will admit to a certain concern I have about the arbiter’s approach. Notwithstanding all the written documentation I brought as evidence that my client did not contest the amount of the invoice in either hours or rate, and did clearly state at numerous times her intention to pay me, even asking for a payment plan, he still wanted to verify the veracity of the work done and the rate applied. So even this agent of the state apparently did not accept the meaning behind the words used but wanted to test them for himself.

What is the lesson here? People use words but ultimately these words are devoid of any true meaning. No actions follow to support what was previously stated. Except for me; I am stupid enough to live my life based on the expectation that words have meaning and we prove that everyday through our actions. You know, “walk the talk”, or “talk the walk”, or “walk the walk”(I never know how the expression goes). Or “Say what you do, do what you say.” Basically, a person is only as good as their word. You get my meaning. You do, don’t you?

Over the span of my life, I have to say I have encountered this kind of behavior on numerous occasions. It always left me with a ….well, angry. I am angry with those with whom we created a shared expectation. I am angry with myself for being gullible enough to actually believe the sh-t that comes out of people’s mouths or that they write down or communicate in some other way. I am disappointed in people’s behavior. I am disappointed because I feel taken advantage of. I live up to my end of the deal but they don’t. This kind of behavior brings on a whole bucket full of bad emotions and sometimes even worse thoughts. Nothing good comes of it. A friendship broken. A working relationship broken. A family broken. Relationships thrown onto the rubbish heap.

Now, don’t get me wrong. I’m not perfect. Sure, I falter too. However, I learned a long time ago that relationships are more important than anything else; you shouldn’t burn down the bridges that connect you and your community, rebuilding them is very costly. As anyone who knows me well will attest, I actually tend to go above and beyond to make sure I live up to my word. Words are sacred to me. My word is important to me. It is all I have in this life. I don’t speak much but when I do, I want what I say to be meaningful, to hold true. When I was a chief executive in companies, it used to confuse and amuse me how when I started to open my mouth everyone would shut up and listen. I know I am only as good as my word.

As a mentor, coach, consultant, I teach my clients the importance of their word from day one. If you can’t commit to one hour a week, at the same time every week, for three consecutive weeks, I will not work with you. If you contact me an hour before a session to cancel, I will drop you. Unless force majeur doesn’t allow you to be present you had better live up to your word by following through with the appropriate action. My reasoning for being so demanding on this point is quite simple: if you do not live up to word when it’s for your own benefit then how can you possibly lead a business when your word is for the benefit of others–clients, suppliers, employees, partners, shareholders, bankers, and all the other stakeholders in your community? If your words have no meaning then everyone is in a constant state of uncertainty including you.

Just think of all situations in which you communicate through words a given intention or you receive the intention of another and you will see how important it is to be a person/company of your word in order to create value for your clients/community. To my way of thinking, every time we communicate we are creating the expectation of a certain action and consequence in our world. Yes, we have to manage that expectation so it isn’t over the top. But most importantly we have to live up to that expectation in order to be a positive force in the world.

I’m going to leave you with this last thought: If you agree with the above, would you keep on an employee who has no word?

 

Business Success

Lead A Successful Business

As just about any expert – in any subject area – will tell you, do the basics well and you will be reasonably successful. The same is true about business.

The ROKC ™ Method is so simple to understand that I can explain it in 3 easy to read propositions. But don’t think it is easy to implement, because it isn’t! Like anything you do well, it requires practice and discipline.

The 3 propositions are the following:

  1. All businesses exist because they own and/or control an asset that they use in their products or services, which customers will seek to acquire if it provides them with a competitive advantage in achieving a specific task for they are uncertain about the outcome.
  1. All businesses will survive if the rate of return on the fore mentioned asset is higher than the cost of capital.
  1. Leaders are those individuals who are able to see and share with their community a less uncertain way of achieving a specific task, which inspires them to cooperate and collaborate to make it a reality.

The asset in the first proposition is so fundamental to everything that comes after we have named it the “Key Component”.

The return generated by all the processes required to make the Key Component usable and available to the customer is therefore referred to as the Return On Key Component, or ROKC. The higher the rate of the ROKC the more readily the business can satisfy the requirements of all stakeholders.

And, leadership is required to create the conditions by which all the stakeholders want to cooperate and collaborate to make the competitive advantage perceived by the customer a reality.

With this methodological framework can “Lead A Successful Business.”

Leading a Customer-Centric Business

Leadership has changed over the decades in substance but not in form. To be clear, leaders still have to identify and communicate a less uncertain view of the world, which the community will perceive as well, and together they can make into a reality. However, in business, the key to realizing that vision was a tangible assets everyone could see, touch and/or feel. More recently, those assets became intangible and while one part of the community could still relate to them the other perceived only the benefits. These businesses are noteworthy for their productive capacity; that is, the making of products and services used by clients. Exercising leadership in production-side businesses requires clearly identifying the asset underpinning the business and maximizing the return on it. Today, many economies are consumption-based – also known as customer-centric – making leadership a bit more challenging.

Consumption based businesses are no longer established on the basis of assets owned and/or controlled by an organization but by their ability to capture a specific market segment of like minded clients.

the evolution of e-commerce might be a good way to illustrate this point. The first e-commerce companies provided clients with a stand alone software product they ran on their own servers. This gave existing and new companies the opportunity to develop sales through a new distribution channel, online, as opposed to the tradition “brick and mortar” store on the high street. The second generation came in the form of software as a service, allowing anyone to start an e-commerce business without any of the costs associated with maintaining and developing a stand alone site. Here, once again, the e-commerce platform targets an intermediary by providing them with an efficient tool. These businesses are all on the productive side of the fence.

However, the benefits of the e-commerce solution were short lived. The process of driving traffic to the site and converting visitors into paying customers is significantly more expensive than the store. Many of you have surely heard the term “cost of acquiring a client” when pitching your online business to investors; well, this is what investors are referring to.

Consequently, on the consumption side of the fence any number of new economic actors entered the marketplace to help manage the processes and costs associated with capturing prospective clients and turning them into repeat buyers. But these tools too are only tools and should not be confused with actual leadership. They are simply bought in resources available to all competitors.

So how does the leader of an e-commerce site contribute to the success of the business?  The most successful e-commerce leaders are those who approach their business not on the basis of the old product-driven mindset but of a consumption-driven one targeting a distinct segment of the market on the basis of shared identifiers and values. A shared culture, if you like.

Let’s take the example of Zappos, a very successful online shop company. The company doesn’t make shoes, it only distributes them. The technology underlying the business can be acquired by anyone. Similarly, the tools for attracting customers will be bought by many competitors. There is no real ability to differentiate in market without any proprietary assets. So how to resolve this challenge and stand out in the marketplace as a place where consumers want to shop? Initially, the company put the emphasis on customer service. This worked well for a time but like with any market competition rolled in making the distinction between Zappos and the competitors difficult to distinguish.

In a brave move, company leadership, Tony Hsieh, saw that what brought together  employees, customers, vendors, partners,…, all stakeholders, was a shared set of values. A quick view of the company’s “about us” website page illustrates this point quite well:

As we grow as a company, it has become more and more important to explicitly define the core values from which we develop our culture, our brand, and our business strategies. These are the ten core values that we live by:

  1. Deliver WOW Through Service
  2. Embrace and Drive Change
  3. Create Fun and A Little Weirdness
  4. Be Adventurous, Creative, and Open-Minded
  5. Pursue Growth and Learning
  6. Build Open and Honest Relationships With Communication
  7. Build a Positive Team and Family Spirit
  8. Do More With Less
  9. Be Passionate and Determined
  10. Be Humble

 

The stakeholders attracted by and who contribute to Zappos’s “culture” of openness were welcome and work together to make their community a comfortable place for like minded people. From a leadership perspective, the uncertainty of living in a non-like-minded community is reduced.

The company went one step further with its mantra of openness by implementing an organizational structure based on ideas of holacracy; an organization without hierarchy. After 2 years of implementation, in 2015, the company pushed out anyone who didn’t subscribe to this new organization. Although such a move might be perceived as intolerant – thus contrary to the company’s values – it is not because culture is the foundation on which this business is built. Not adhering to the company culture in a consumption-based company is like impairing or stealing the property on which a production-based company is built. The important thing to note here is the significance – if not, importance – of maintaining a like-minded community through whatever means possible.

The consistency of values communicated to the community and echoed by the same allows company leadership to be effective and drive results in a purely consumption-based business. In effect, any other economic actor seeking an entrance into this market will have a much easier time of it if they go through the  gate keeper known as Zappos making the company very valuable.

  • Are you the leader of a company on the production side or consumption side of the economic fence? Or, is it in between?
  • If you are on the consumption side, are you really able to access a specific market segment? Which one?
  • How authentic are you, as a leader? Are you perceived as such by your community of stakeholders?
  • If your business’s key component is culture, how good a leadership job are you doing at keeping the connection with your community going?

If you wish to explore these questions and issues like these, please contact me directly.

Business Solutions Take Uncertainty Out of Specific Tasks

Once again, the truth comes out of the mouths of babes. Well, maybe not exactly babes but fourth graders; my truly bright twin nieces. Below you will find an article they wrote after seeing how popular a previous post based on their play was with my community. You can read the previous post here: Productive Teams is Child’s Play.

From my point of view, what is important to see in their writing below is that even at a very young age we are taught to use whatever resources are available to us to make certain tasks easier. Or, as I like to say, less uncertain. This is a fundamental approach to business that every business leader should always keep in mind when running their enterprise: the products and/or service they provide to customers must make doing a specific task less uncertain in order for customers to value it.

Please take the time to read how my nieces quite simply explain:

Why Horses Are Important to Humans

                    Horses have been very important to humans for a very long time.  Humans use and have used horses in many ways.  People also love horses for many reasons, like their beauty, and strength.  There are many more reasons for this, for example:

                    Horses were like tractors for farmers for centuries!  On farms, horses pulled plows.  They also helped pull wagons of goods, animals, and supplies.  In return, the farmers fed, cleaned, cared, etc. for the horses.

                    Horses also helped cowboys.  They herded cattle with the cowboys.  Horses also provided transportation for bringing cowboys and cattle to towns.  When a calf, bull, or cow got loose, the cowboys and their horses would chase and try to catch it.  When there was a stream, the horses would pull the cowboys across it because many people couldn’t swim.  Cowboys like to use Quarter Horses (a breed of horse) best because they are fast, can stop short, and can make sharp turns.

                   In the Middle Ages, large and strong Friesians (breed of horse) were used as battle horses.  They could carry knights in shining armor and their own shining armor.  People in the Middle Ages also used horses to pull heavy loads of things.  They also used horses because they could work in large noisy crowds.

                  Horses in Egypt were used as pack animals.  The Bedouins used these horses.  The breeds were Arabians and Barbs.  The Bedouins gave their horses camel’s milk to drink and dates to eat in the dry desert.

                  The Chinese also used horses.  They were the first people in the world to put an actual saddle on a horse.  The Chinese decorated the saddles with bells and ribbons.  People played drums on the horses.  In wars, the Chinese used horses as transportation and war animals.

                Horses pull carriages everywhere!  Big ones, small ones, short ones, tall ones.  You name it they pull it. It’s their job.  People also ride horses.  For pleasure and for work. 

                Horses worked and still work for humans around the globe.  They worked for farmers.  They also worked for cowboys in the Wild West.  They worked for people in the Middle Ages too.  The Bedouins had horses in Egypt.  The Chinese were the first to put a saddle on a horse.  Every country, except Antartica, uses horses now!  Horses made a BIG difference in life.

                -Lara & Pia      (Two, 4th graders)

Why Inclusiveness?

“Inclusiveness”, “inclusivity”, “included”,…and the like seem to the catch-word of the last few weeks. Without really knowing why, I can only speculate that it has something to do with the up-coming U.S. presidential election in which similarly populist sentiments will be the chords struck by candidates on both sides of the aisle: democracy, free enterprise, freedom, no one left behind, we are all in this together, shared values, a shared way of looking at the world, and so on and so forth. Political imagery aside, the inclusiveness is quite a powerful concept when discussing my favorite subject: leadership.

As a matter of discourse, I like to define leaders as those individuals who are able to show the members of their community a less uncertain view of the world which inspires them to work together to make it a reality. This definition – in my view – captures the essence of leadership very well. Contrary to popular usage, leaders do not really base their role on a vision as visions are not always realistic. Not many people will follow a leader if the vision does not lead to a more certain outcome. How that outcome is measured or what it is can be anything under the sun. The other aspect of this definition is its inclusive quality. The community is included in the process of making the situation real. There is a dependence of the leader on the followers and the followers on the leader.

Recently, I met with a leadership professor, lawyer and former judge I know, Michael Gregorek, in preparation for a discussion I am having with his students and those of another class. Over drinks, he recounted an exercise he does with his students to help them understand different styles of leadership which involved religious figures. This brief moment we shared got me thinking about the archetypical process we often see by which individuals become leaders, and how fundamental “inclusiveness” is in this process.

One of the figures used by the students was Moses. If memory serves me correctly, Moses was born a Jew – a slave class – adopted by the Pharaoh – the ruling class – and raised as a member of the ruling family before leading the Jews out of Egypt, leaving his community behind to go on his quest, returns with the ten commandments, and establishes a new less uncertain community for the Jews. This paradigm is repeated by Jesus, also a Jew although not a slave definitely poor, who goes up against the status quo, goes on a quest in the desert, returns to lead a group of people out of an uncertain world to found a new one that we named Christianity. Interestingly, Muhammad and Buddha follow the same process: contest status quo, go on a quest, return to lead the community to a less uncertain world.

However, this process is not limited to religious leaders because it is very similar to that of the hero. I say similar because the hero returns to better the community once left whereas the religious leader establishes a new one. In either case, a less uncertain reality is the new normal.

Notwithstanding the process, there is one detail that is often left out: leaders will get a buy-in from only a small segment of the community but will ultimately affect a much larger population. Consequently, when approaching the subject of leadership it is important to keep in mind a leader cannot change everyone’s perception but needs to focus on the “true believers” who will then carry the message outward to the greater population. A leader helps those chosen few become leaders in their own right by providing them with a message they can repeat to those members making up their community. In other words, by creating an inclusive community around themselves the leader provides the first circle of followers with the means to make an inclusive community around themselves and so on and so forth propagating outward from the center just as a people does when thrown into the calm waters of a pond.

So the next time you consider your leadership action please remember to conceive of them with respect to those a degree of separation beyond your direct reports. You want to make it easy for those closest to you to be able to communicate your more certain world without fault. The return you will get from having put in the time and effort will pay off in the long run many times over.

Leaders Reduce Uncertainty

No matter the discussion. No matter the company. No matter the culture. I always come back to the same point, so I am going to share it with the larger LinkedIn audience. Leaders reduce uncertainty. Or, as I like to write/say: “leaders are those individuals who can show the rest of their community a less uncertain world, inspiring them to work together to make it a reality.” Effective leaders are those who deliver on the paradigm. Excellent leaders are those who deliver over and over again.

When working with my clients, I often use the example of food because it is a basic need we can all understand. Since some of my readers are also clients, please forgive the repetitiveness of my example.

At the start of time, man has been challenged by the need to feed himself. (In many places, this is still a challenge. Without wanting be politically incorrect, I hope not hurt anyone’s sensibilities with this Western male position.) Man started as a gatherer, picking at bushes and plants. With the arrival of tools, man added hunting to the gathering. Next, in the evolutionary scale, came agriculture. By learning how to domesticate animals and cultivate crops, a sedentary life was established. As production methods improved yields, the uncertainty of feeding oneself was reduced and man could dedicate himself to other pursuits. Villages and towns grew out of the opportunities created from specialized labor. This process was, subsequently, accelerated through industrialization. The food we once had to grow individually, which was then brought to market by cart, we now buy in a supermarket. However, and most importantly, the supermarket exists because the uncertainty for the customer to find food has been reduced to almost zero. After all, how often do you go to the supermarket and not find what you want? Not often, I imagine. And if you do, chances are the next day you will find it.

In order for the supermarket to provide its customers with such a low level of uncertainty, the whole supply chain must be certain. From the food producer to the transporter, to the warehouse, the refrigeration system, the fuel, …. every thing must work with a 99.9% rate of reliability to get the food to your table and into your mouth so you survive. Consequently, each economic actor along the way must be able to supply those 99.9%. So the leaders of those organizations are in the business of reducing the uncertainty for their portion of the supply chain or they risk going out of business.

However, in the last 30 years, or so, a new uncertainty has creeped into this process. Although not shared by all, some are uncertain about the quality of the foods. This new uncertainty paved the way for new economic actors to enter the market providing organic products, free range chickens, and such.

In some cases, this was not enough. Some other segments of the population were equally uncertain about the supply chain itself and demanded locally sourced food. This allowed for local food producers to develop their businesses responding to this uncertainty.

There are any number of other economic actors operating in your market satisfying other uncertainties. Some consumers are uncertain about their own abilities to prepare food so they want already prepared dishes: frozen foods, catering, restaurants, street food, and such all respond to one degree or another to this uncertainty. Likewise, some people are more concerned about the uncertainty food preparation puts on their time so they want something fast. Here again, we find the same solutions suggested above but we have to add self-service, deliveries/take-a-away, fast foods, drive through windows, and the like. In other cases, the uncertainty perceived by the market takes the form of an equitable distribution of the profits; this led to equitable commerce. I’m sure there are many, many, other uncertainties I have not touched on but I think I made my point.

Businesses exist because they reduce some uncertainty perceived by some segment of consumers. And, leaders work with their communities to organize resources in such a way as to respond to those uncertainties.

To date, there is no business, organization, or even political leader…who – in my opinion – cannot be best understood as an uncertainty reducer. So the next time you think of a new business, look at your existing one, work with your colleagues, decide on a course of study,…what have you, see if you can identify what uncertainty is being reduced. I’m certain you will see it.

Scroll Up