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On How Not To Manage

January 31st, 2012

Terrific article in McKinsey Quarterly in January this year.  It discusses how senior management can destroy the engagement of their people by not paying attention to their “inner work life” which revolves in no small part around job satisfaction, alignment with strategy and corporate vision, understanding of autonomy etc.

In many respects, it has some resonance with Patrick Lenceoni’s “Five Dysfunctions of a Team”:

  • Absence of Trust (dealing with vulnerablity);
  • Fear of Conflict (dealing with artificial versus real harmony):
  • Lack of Commitment (dealing with ambiguity);
  • Avoidance of Accountability (focus on standards); and
  • Inattention to results (around status and ego).

For a diagrammatic representation of this model, look here.

The level of freedom that can be provided by senior managers to staff is critical in enabling them to not only get engaged but stay passionate about what they are doing – this then evolves in to a healthy “inner work life” that ensures that the business is working at its optimum level.  Part of this is “Leader as Servant” and part is a focus on the issues  from the Five Dysfunctions of a Team.

I recommend you have a read of the McKinsey Article which can be found here.

On Keynes and his Views in 1930

January 23rd, 2012

Richard Watson, on his blog http://toptrends.nowandnext.com/ linked to the following article by John Maynard Keynes.  It was written in 1930 and provides Keynes’ view on what the next 100 years would be like.

It is fascinating reading and, whilst seven pages long, provides some observations which are just as relevant today.  I enccourage you to read the paper which can be found here.

On 2012

January 17th, 2012

Happy New Year!  I trust you have a successful one and it brings success and happiness to you and yours.

The coming year promises to be an “interesting” one on many fronts. 

The global economy is in a state of flux at the moment and the position of the European economy in particular is concerning.  I suppose it will depend on what happens with the various sovereign debt issues and the bank and financial market approach to things, but, in some ways, it could well create fantastic opportunities for many businesses.  If Europe does melt down this year, there will be great prospects for businesses to exploit openings that were serviced from there.  The only draw-back will be that our exports to Europe will become relatively more expensive (just look at the change in forex rates between AUD and EUR at the moment).

The other issue relates to the health of the US economy.  In many ways, it reflects the situation in Europe.  There is still the issue however of the underlying strength of the US economy – if they can get their domestic issues better controlled.  The debt position of the country is a concern, however, if internal demand can be driven by increased confidence by US consumers, the impacts on the global economy can be profound.  One issue that needs to be considered is the upcoming Presidential election over there – not sure as to what will happen and whether Obama will be re-elected.  There seems to be a significant drift to more conservative politics globally which may mean a major change in policy direction from the US government.

Then there’s China.  The development of their economy has been spectacular, but there is a school of thought that they might be a little “over cooked”.  Stories are starting to emerge as to whether the reality is in line with the published facts (all government vetted) for their economy.  There was a report the other week on the debt position of a number of internal governments in China that was not healthy.   Yes, they have significant foreign reserves, however, these may not be able to be called in if Europe and the US contract markedly.  As stated above, it is “interesting”.

On numerous occasions over the past 16 years, I have mentioned to our customers that times of great uncertainty are also times of great opportunity.  This is one of those times. 

By getting your vision, goals and strategy right, you will be able to exploit the opportunities that exist and significantly develop your business and lifestyle.  It is simply a matter of devoting the time and thinking space to develop the vision, goals and strategy for you and your business.  Once they are detailed, it then comes down to implementation.  Many, many great ideas and opportunities fail because of a lack of commitment to implementation and falling in to the bad habit of micro-managing.  By keeping your head up in 2012, you maintain your focus on the important things.  This will put you far ahead of your competitors.

Make 2012 a great year – it is your choice!

On Ron Baker’s Tour Downunder

December 19th, 2011

I am very pleased to announce that Ron Baker will be touring Australia in March 2012.  We’re sorting out dates and venues at the moment and will post details as they come to hand.  John Chisholm from Chisconsult is co-ordinating most of it with a number of us other Verasagi from around Australia.

In the interim, if anyone would like to know further details, please let me know and I’ll make sure you’re given plenty of notice as things get locked in and finalised.

Ron will be available to do private meetings with interested firms (again, let me know if you’re interested in arranging one for your firm) and we’re also arranging a number of events where accountants, lawyers and other interested professionals can come and learn from the master!

On Europe’s Debt Issues…

December 11th, 2011

Received this from a mate:

Dummies guide to what went wrong in Europe. (And USA)

Helga is the proprietor of a bar.

She realizes that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronize her bar.

To solve this problem, she comes up with a new marketing plan that allows her customers to drink now, but pay later.

Helga keeps track of the drinks consumed on a ledger (thereby granting the customers loans).

Word gets around about Helga’s “drink now, pay later” marketing strategy and, as a result, increasing numbers of customers flood into Helga’s bar.  Soon she has the largest sales volume for any bar in town.

By providing her customers freedom from immediate payment demands, Helga gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages.

Consequently, Helga’s gross sales volume increases massively.

A young and dynamic vice-president at the local bank recognizes that these customer debts constitute valuable future assets and increases Helga’s borrowing limit.  He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral!!!

At the bank’s corporate headquarters, expert traders figure a way to make huge commissions, and transform these customer loans into DRINK BONDS.

These “securities” then are bundled and traded on international securities markets.

Naive investors don’t really understand that the securities being sold to them as “AA” “Secured Bonds” really are debts of unemployed alcoholics.

Nevertheless, the bond prices continuously climb!!!, and the securities soon become the hottest-selling items for some of the nation’s leading brokerage houses.

One day, even though the bond prices still are climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Helga’s bar. He so informs Helga.

Helga then demands payment from her alcoholic patrons, but being unemployed alcoholics they cannot pay back their drinking debts.

Since Helga cannot fulfill her loan obligations she is forced into bankruptcy. The bar closes and Helga’s 11 employees lose their jobs.

Overnight, DRINK BOND prices drop by 90%. The collapsed bond asset value destroys the bank’s liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community.

The suppliers of Helga’s bar had granted her generous payment extensions and had invested their firms’ pension funds in the BOND securities.  They find they are now faced with having to write off her bad debt and with losing over 90% of the presumed value of the bonds.

Her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers.

Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multibillion dollar no-strings attached cash infusion from the government.

The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers who’ve never been in Helga’s bar.

Now do you understand?

On Common Sense

December 6th, 2011

I received this today from one of my mates – thought you’d like to have a read and think about it:

Obituary printed in the London Times – Interesting and sad. 

Today we mourn the passing of a beloved old friend, Common Sense, who has been with us for many years. No one knows for sure how old he was, since his birth records were long ago lost in bureaucratic red tape. He will be remembered as having cultivated such valuable lessons as: 
- Knowing when to come in out of the rain; 
- Why the early bird gets the worm; 
- Life isn’t always fair; and
- Maybe it was my fault. 

Common Sense lived by simple, sound financial policies (don’t spend more than you can earn) and reliable strategies (adults, not children, are in charge).

His health began to deteriorate rapidly when well-intentioned but overbearing regulations were set in place.. Reports of a 6-year-old boy charged with sexual harassment for kissing a classmate; teens suspended from school for using mouthwash after lunch; and a teacher fired for reprimanding an unruly student, only worsened his condition. 

Common Sense lost ground when parents attacked teachers for doing the job that they themselves had failed to do in disciplining their unruly children.

It declined even further when schools were required to get parental consent to administer sun lotion or an aspirin to a student; but could not inform parents when a student became pregnant and wanted to have an abortion.

Common Sense lost the will to live as the churches became businesses; and criminals received better treatment than their victims.

Common Sense took a beating when you couldn’t defend yourself from a burglar in your own home and the burglar could sue you for assault. 

Common Sense finally gave up the will to live, after a woman failed to realise that a steaming cup of coffee was hot. She spilled a little in her lap and was promptly awarded a huge settlement. 

Common Sense was preceded in death, by his parents, Truth and Trust, by his wife, Discretion, by his daughter, Responsibility, and by his son, Reason. 

He is survived by his 4 stepbrothers; 
I Know My Rights 
I Want It Now 
Someone Else Is To Blame 
I’m A Victim 

Not many attended his funeral because so few realised he was gone. If you still remember him, pass this on. If not, join the majority and do nothing.

 

On Culture

December 6th, 2011

Culture – do you trust yourself with it?

 Over the past weeks, I have had the opportunity of discussing culture with a number of people from a number of different businesses and across a range of industries.  They all agree that culture is important for the success of their business, but, across their variety of operations, they all have different views of it.

 Culture is something that is very hard to define.  I remember speaking with one of my crew about it a month or two ago.  They asked when I knew that the culture in our business was working.  My response was that I didn’t – but I knew when it wasn’t!

 Culture is something that, when it is working, you don’t notice.  It happens and, in some respects, manages itself (more on that later).  It is something that a lot of businesses talk about: “we have a great culture” or “our culture’s great”.  With respect, when I hear that from a number of business owners/managers, I am somewhat sceptical.

 In many respects, culture is created by the people in your business – after all, they’re the ones who represent your business to each other and to your customers.  The way they talk about your business and their role in it speaks volumes about their level of engagement with the business and consequently, your customers.

 Over the years, we have worked on developing a culture in our business which is based on our values (you can see them on our website) – we make sure we “walk the talk”.  Unfortunately, I find that a lot of businesses talk the talk “we’re honest and trust each other and our customers” but won’t walk the talk (assess their staff on timesheets and write up bills for customers).

 In a discussion today with one of my senior technical people, we discussed the different cultures that they had seen and experienced in their career to date.  Their view was that their experience in our business was one where they were trusted, respected and free to practice their profession as they saw fit.  We provide an environment for them to thrive and be their best.  They see themselves as supported and able to develop their skills and abilities and also follow their areas of interest.

 Having been in another accounting business before us, they see their move as very positive – and it’s all due to the culture.

 We have been fortunate enough to be able to recruit and retain fabulous people over the years.  They’re terrific people and contribute in a variety of ways to each other and to the business.  They have wonderful relationships with their customers and have a level of engagement and trust with them that a lot of professional firms would love to have.  I believe this all comes down to culture.

 Stephen M R Covey wrote “The Speed of Trust” which encapsulates the benefits of positive culture well – when trust is high, speed of transaction is high and cost is low.  When trust is low, speed of transaction is low and cost is high.  I suppose the best way of demonstrating this is where you get in to a legal dispute – they generally come about because trust is lost, and we all know how expensive they can be.

 To move to a culture where you can free you people (and yourself), you need to demonstrate trust (not just talk about it).  Trust your people and let them show you and their colleagues that they are worthy of that trust – don’t micro-manage them.  If they need to be micro-managed, you might just need to look at your recruitment process!  You’re probably the issue….

 Over many years, I have found that people want to go a good job, take pride in their work, be appreciated for their contribution and to feel that they have made a difference.  Once they are in this “zone”, they will treat their colleagues with the same level of trust and they will respect each other enough to be open when the team doesn’t perform to the accepted level.  In effect, they become a self-managing team.  Isn’t this what a profession is all about?  AND, you don’t need to manage them.

 I must admit that I have made mistakes with recruitment over the years.  Big egos generally don’t work well in a team environment (unless they are reasonably emotionally aware), destabilisers don’t work (at all – they’re just plain dangerous), self-interested people don’t work (they’re too focussed on themselves) and people who are simply in the wrong roles won’t work.

 To be incredibly harsh, the list above is one which can be used to describe the owners/managers of a number of businesses (especially professional businesses) that I have seen – they are ego-centric hoarders of glory who believe they need to divide to conquer.  There are a great many exceptions to this generalisation – and I apologise to them.

 Culture needs to be very clearly delineated in the mind of the custodian of the business.  It is not about them, it’s about what they can help their people to be.  It’s like a surgeon – if they’re not working, they’re not earning.  To enable your business to earn without you, you need to develop a culture that is based on trust.  Then you need to walk the talk.

 So, do you trust your people – and most especially yourself – to develop the culture you’ve always wanted?

On Success

December 1st, 2011

Received the following summary from one of my mates.  It is observations by four highly successful people (they’re billionaires) on what it takes to be successful.  I thought it was well worth sharing:

Barbara Walters on 20/20 (via The Wealth Report) interviews four billionaires, and culls out some wisdom for managing success.

Here is the top 10 list culled from billionaires:

1. Figure out what you’re so passionate about that you’d be happy doing it for 10 years, even if you never made any money from it. That’s what you should be doing.
2. Always be true to yourself.
3. Figure out what your values are and live by them, in business and in life.
4. Rather than focus on work-life separation, focus on work-life integration.
5. Don’t network. Focus on building real relationships and friendships where the relationship itself is its own reward, instead of trying to get something out of the relationship to benefit your business or yourself.
6. Remember to maximize for happiness, not money or status.
7. Get ready for rejection.
8. Success unshared is failure. Give back — share your wealth.
9. (A secret so powerful, we simply cannot tell you)
10. Successful people do all the things unsuccessful people don’t want to do.

Source: The Big Picture

On Peace and Quiet

November 21st, 2011

Regular readers will know that I occasionally refer to posts by Richard Watson.  Richard has just posted on the issue of time and quiet and the development of the “now and faster” culture that is becoming more pervasive.

Similarly, I believe it is important that we all take some time away from what the ever-increasing demands of modern life place on us and give ourselves the opportunity to reflect, rest and think.  I have copied to contents of Richards post below and I encourage you to read it.

A while ago I met a Marketing Director of a food company in Melbourne who was in her 40s. She told me about a conversation she’s had with someone who was working for her who was in their 20s. The 40-year-old was wondering why everyone left the office at precisely 5.30pm regardless of what they were doing.

The 20-something answered:

“Why are you so obsessed with the physical presence thing?”

I thought at the time that this was an interesting comment.

What I think this means is that if I do my work, and I do it well, what’s your problem? If I happen to do it at 1.00am on a laptop, while lying in bed naked, watching old episodes of Law and Order, why is that a concern of yours?

Clearly there’s a difference of opinion here about the nature of, and more specifically the location of, work.

Generation X and Baby Boomer managers tend to subscribe to an old school view of work as being something like school or possibly prison.

People have to be physically present to be properly managed and ideally they should be in a single room full of identical desks with a manager (or it could be a teacher or a prison warden) taking a roll call to check if everyone is present and correctly dressed. Their job is then to walk around seeing whether everyone is behaving themselves.

If there’s physical movement it’s generally assumed that people are working. If someone is looking out of a window it’s usually thought that they are daydreaming or not paying attention. This possibly stems from the traditional idea that work is about brawn not brains and discipline and control are everything.

Formal organisational hierarchies were therefore translated into large rooms full of identical desks, watched over by a large clock and someone in charge holding a big stick (or P45).

Things have obviously changed. We have moved into a post-information processing age and I believe that it is now time to re-think how employees interact with each other in physical and virtual spaces and it is also time to reflect on how environments (and objects) can be used to improve the quality of people’s thinking, because it is thinking where the competitive advantage and value ultimately lies.

Organizations that talk about the need for breakthrough thinking and ideas need to attract smart people and to do this they need to create environments that are stimulating, both physically and intellectually, especially if declining fertility rates in the UK and elsewhere mean that power is shifting towards the employee.

Organizations also need to recognise that if it’s peoples’ thinking and ideas they’re really after then perhaps peoples’ physical presence is unimportant.

But before we go forwards I think we should go backwards.

It’s generally accepted that the modern office was invented around 1900. The main reason was the development of the factory, which dates from roughly 1790 when Eli Whitney created mass-production techniques to satisfy the musket needs of the US government and slowly developed thereafter.

Henry Ford generally gets the credit for developing factory production after this although other individuals made vital contributions. Regardless of who started things it was WW1 and WW2, when governments needed large quantities of armaments, that factory owners realised that they needed somewhere to house the exploding number of administrative workers. Bingo, work as we know it today was born.

But there’s another reason for the creation of the office, which was the invention of a bit of new whiz-bang technology, namely the typewriter.

Before 1868 typewriters did not exist and so there was no need to build rooms to house typists. After 1874 when Remington (an American gun company) perfected the manual typewriter, demand for office assistants and typists was small. Even when Olivetti invented the electric typewriter in 1920 demand was still relatively modest. There was just not much to type. And if there’s not much typing there’s not much need for meetings or meetings about meetings.

This all changed in the 1950s when consumerism, global markets and information processing power really took off. Things are changing again right now largely now due to digitalisation, mobile connectivity and virtualisation.

So is one model of work better than the other? Does physical presence matter in an office and if not how do you successfully manage a virtual workforce? Moreover, does it matter where the thinking occurs? Should thinking be a solitary activity or is it the case that none of us is ever as clever as all of us?

In short, is our Generation X manger right or is it the Generation Y employee?

I think they are both right and equally wrong.

Globalisation, digitalisation, mobile connectivity and virtualisation are changing how we work in fundamental ways and this is bringing with it a series of new risks and opportunities.

There is more flexibility in terms of when and where we work, collaboration, both locally and globally, has become easier and things can now been done much faster.

On the other hand, a lack of physical presence – and perhaps, more importantly, a lack of mental presence – is having some nasty side affects.

I am not really going to comment on the upside of digital culture because this has been well covered by others. All I’ll say is that the advantages probably outweigh the disadvantages and that I for one couldn’t do half of what I do today without digital technology.

However, there are some significant negatives to digital culture and I’d like to highlight five of these and then suggest a few potential solutions.

So what are some of the problems?

1). The first issue for me is that a culture of immediacy, rapid response and multi-tasking is emerging, and this is spawning silly mistakes – or what I call constant partial stupidity. I’m guilty of this myself. I read emails to fast and sometimes fail to see the important ‘PS’ about a changed time or location.

I receive emails, and intend to respond, but halfway through I receive more emails and forget. My drafts folder currently has 157 emails in it dating back to June 2009. You could argue, probably correctly, that if something goes back to June 2009 it’s probably not very important. I guess that’s my subconscious taking over my desktop.

I get bank statements online and read them so fast that I miss important errors. Or I receive text messages from my 13-year-old nephew saying: “I love you” to which I immediately think “Oh how sweet” and text back “I love you too” only later to have it dawn on me that the text was probably not intended for me.

2). A second related issue is that screens and mobile screens in particular are encouraging thinking that is rushed and devoid of context. For example, 99% of Google searches do not proceed beyond page 1 of results. We opt for what’s easiest and most convenient, with the consequence that we end up using the same sources and to some extent thinking the same things. Hardly a model for original thinking.

Online we are generally in a hurry and this means we sometimes fall for falsehoods too. A famous example of this some students who were asked to look at a website featuring a rare tree octopus. 90% of the students thought the animal was real.

3). Thirdly, we relish constant communication and connection, but we are often forced to act without properly thinking things through. People demand instant answers. Mobile devices scream for attention. A business culture of quarterly results and political cycles of 4 or 5 years do much the same thing. Taking our time, doing things slowly, is slow last century.

A study by a Dutch University, has found that we make more effective decisions when we first walk away from a problem and this very much chimes with how our brains work. More often that not it’s our subconscious that does our best thinking for us and for our subconscious to work properly it needs time. The expression ‘sleep on it’ doesn’t come out of nowhere.

4). Fourthly, we benefit from the ubiquity of instant communication, but it comes at a cost. Constant digital interruptions and Too Much Information are atomising our attention and splintering our concentration. Constant connectivity via Facebook updates and Twitter streams are giving us a sense of other peoples’ lives, but on one level it means we are replacing intimacy with familiarity.

We know more people nowadays, but we know them less well.

Research by sociologists at the University of Arizona and Duke University North Carolina has found that Americans have fewer real friends than they used to. This is odd. You’d think the opposite, what will 800 million Facebook users and so on.

Back in 1985 the average American had three people to confide in about their most serious problems. Now the figure is just two. Ironically, one consequence of our connected age is isolation.

5). Fifth, and finally, we have more choice nowadays. Indeed, in many instances if you don’t want choice you can’t have it. We are able to personalise more things too, but the downside to all this is less serendipity and less understanding of others. If you are able to isolate yourself in a personalised bubble, one where opposing information and opinions are shut out, this is likely to lead to an increase in narcissism and a decrease in empathy.

Moreover, online crowds are drowning out individual opinion, especially opinion that is somewhat original or eccentric because there is now networked pressure to confirm.

Peer pressure, in a sense, is now networked and available 24/7.

And if you think all this is a bit worrying, just wait until the next generation walks into the workforce. This is the generation that’s currently the same age as Google or younger (so 13 years-of-age and under). Some interesting traits are emerging.

This generation prefers multi-tasking, parallel processing and interactive personalised experiences. They prefer images rather than words, read text in a non-linear fashion and have reduced attention spans.

This youngest generation is perhaps summed up best by a remark I heard last night.

The remark last night was from a father who had asked his young daughter why she was always late and why she didn’t wear a watch? There was no real answer to why she was always late, but in response to the watch the girl replied:

“Why would I want to spend money on a single function device?” She was twelve.

OK, enough generational warfare. What can do about this?

1. My first suggestion is that we need to step off the speed is good treadmill and deal with our fear that a slower pace will negatively impact productivity. Slow thinking has many negative connotations, but if slow food and slow cities are good ideas why not slow thinking or slow media?

2. My second thought is that we need to switch some of our devices off from time to time so that our brains can relax. This is not a glib point. Our brains need rest and relaxation just as much as the rest of our bodies do. If this doesn’t happen there are physical and mental consequences. It is curious to note that parents often set boundaries for technology use by their children, but do not apply the same boundaries or balance to their own use of technology.

3. Three. We need to get away from the idea that all information – and all interruption – is good. We need learn to make the distinction between information that is essential and information that is ephemeral or inconsequential. And trust me, 90% + of incoming information is inconsequential.

4. Four. We need to be patient. One of the biggest problems with big problems is that we give up too soon. We find a problem, we think about it and then we give up because we can’t think of a solution. But ideas come about after three stages. The first is what I’d call an education phase. We need to find out about a problem. Look at it from many sides and expose ourselves to varied inputs and so on. But then we need to forget about things. We need to mentally and physically relax and go and do something that’s not directly related to the problem. This is an awkward stage because it doesn’t look like work. At this stage our subconscious largely takes over and everything gets mixed up and joined together only to pop out as a new idea when we least expect it.

5. Five. If we are after good idea we need to go where good ideas can find us.

I wrote a book recently called Future Minds, which was really about the future of thinking and ideas. At one point I decided it would be a good idea to talk to lots of people about where they did their “best thinking.”

In the end I got responses from 1,000 people. Out of this 1,000 only 1 person said that they did their “best thinking” in the office… and they didn’t mean it.

They were lying. They said very early in the morning when there was nobody else around. In other words, when the building wasn’t really functioning as an office at all.

Do any of the other responses have anything in common? I’d say yes. A significant proportion of the activities cited involve a relative degree of solitude and silence.

In an age of multi-tasking, crowd-sourcing and 24/7 media, doing nothing, or what sometimes appears to be nothing, seems to be vastly underrated.

You can find the original post here.

The End of Time – published article

November 2nd, 2011

This month’s edition of “Charter” magazine includes an article written by yours truly on the issue of getting rid of timesheets.  I expect a number of my colleagues around Australia will be tightening the bows and sharpening the arrows!

If you are interested, you can have a read here.