Are You Joined-Up?

Are you talking about the right things?

AS we get overloaded with more uncertainty and complexity the need to keep things simple; to ask “are we focused on the right things?” becomes ever more important.

Over my leadership career over the last 30 years I’ve always strived to keep things simple. That hasn't always been easy.

Certainly the industries I was in, whether construction, advanced materials, man-made fibres or insurance, the issues were far from simple. But there was a common theme; we were always seeking to be distinctive in providing value for not only the customer, but the other stakeholders; owners, staff, the community etc..

There is a good Anglo-Saxon phrase that means what it says and says what it means. We had to be “Joined-Up®”

I have now used Joined-Up as a concept for decades in my conversations with my own executive teams. This has increasingly become a theme with clients and my TEC members over the past 10 years. The Joined-Up Model is designed to promote the right conversations, at the right time, with the right people taking ownership.

At its heart is the blindingly obvious concept that any organisation needs to address the needs of three primary stakeholder groups - customers, owners and “the people who do the work”. It is the focus on these three groups and the consequent levers we have to pull that leads to us identifying where the blind spots are, and where the opportunities lie.

What usually comes out from these discussions is that few organisations can claim to be excellent in all these areas. That said, any business that has been around a few years has had to develop competency in several. By structuring a conversation around where the gaps are, how important are they for the specific organisation and what specific actions might be taken, often an executive team are motivated to address blind spots because the why, what and how are clearer.

Where should the priorities be? What is our change agenda?

We recognised that to get to the heart of these conversations it would be useful to have a Joined-Up® diagnostic. You are welcome to try it yourself. You’ll get a short pdf but will not be bombarded with marketing follow ups - we’ll give you the opportunity to follow up further if you wish to. We are interested in the broad findings and feedback.

The diagnostic takes 5-10 minutes.

The six areas are designed around the three main stakeholder groups. To the right is the outside in view, to the left the inside out. The top would be regarded as hard, analytical, action elements - stuff you can put on paper. Below is more emotive, the hearts and minds.

In each of six areas, we’ve framed 5 key questions, easy to ask sometimes harder to answer honestly!

You will receive a high level pdf of your assessment immediately and we’d be interested in your feedback.

If you are interested in the more detailed assessment you are encouraged to contact us and, if you are in Australia, we can have a short exploratory conversation.

Jon Lindsay

The Five Contradictions in Budgeting

Here, in Australia, many businesses are reviewing progress after their first month of the new financial year. Most business leaders are finding the unpleasant truth that the budget, so exhaustingly put together just weeks before, isn’t helping very much.

At the same time many people are questioning whether the rise of the mega ERP systems have helped any part of the organisation apart from the finance function. And everyone is familiar with cascading spreadsheets which allow a myriad of numbers to be produced. All of these are guesses; and usually wrong.

Are we letting ourselves down with the way we budget?

I don't think there's any process in organisations that wastes such a large amount of effort and time for little use as the budgeting process. Almost every business of any size has a budgeting process, but most don't really know why they do it. It's a bit like the monkey on the rope story. “It's always been done that way so we’d better carry on otherwise something terrible will happen.”

It's all about Clarity of Purpose 

There are at least three separate purposes that businesses could have for a budget. These include controlling costs, delivering on a plan and raising performance. By thinking they can do all three, they're more likely to do none of these particularly well.

This is not to say the processes and tools don't have value. They do. But businesses aren't using them correctly. Jack and Suzi Welch recently discussed this in the context of Sales incentives leading to overly conservative targets with no real ownership or trust.

 

Who really owns your budget?

Even the seemingly simple question of who owns the budget doesn't have a clear answer. I know plenty of CEO's who don't feel ownership, despite the fact that they are accountable for the delivery of the financial performance of the organisation. In large corporates most divisional heads would point to the CFO and the finance function. Certainly the timetable of setting a budget may be, but more often than not its for the benefit of the finance function, not the business. These timetables have no bearing on the decision making requirements of the business.

But how about the other stakeholders who influence and are affected by a business's financial performance? What do they need?

For medium-sized businesses, a bank may be a key stakeholder, as this provides some comfort especially in the Australian tick-boxing banking culture. Businesses that are subsidiaries of larger companies focus on profit and loss statements to keep the central financial team happy. It's "comfort", not decisions, these guys are after.

When we look at deploying the plan into the rest of the business, often the primary tool is the budget. How much effort goes into not only item by item budgeting but also tracking these items each month? A fellow TEC Chair, Barry Upfold, is always reminding members that the one budget line all companies are good at meeting is the expenses line, notwithstanding what the revenue line is doing.

Beware the Five Contradictions!

1. Precision over timeliness

How often have we had to wait for the results because the numbers aren't in? The precision required should be defined by the owner, not by the accountant. In 2016 there is no excuse not to know within hours of the end of a period how the business is tracking. The purpose is to inform and to frame the conversation, which then leads to decisions. 

2. Reconciliation over performance

Double-Entry book-keeping was never designed to help run a business. It is brilliant as a control of mis-allocation and fraud and is embedded in the training of professional accountants. But it doesn't inform performance. It doesn't inform progress. Broad brush variance reports can ignore small item reconciliation without losing sense. The purpose is to inform and to frame the conversation, which then leads to decisions. 

3. Review over foresight

Many people use a budget as a control. But a control against what? A frantic ”Finger in the air” guessing game conducted in the six weeks prior to the new Financial Year? It's a actually a poor tool for controlling actions and spending. This is mainly because it is used for review; Lag indicators of course can show trends, but other sources of information are better indicators of the future.The purpose is to inform and to frame the conversation, which then leads to decisions. 

4. Compliance over strategy

Here in Australia we have plenty of compliance obligations. We like our rules. Tax compliance, employment regulations, company obligations specific to industries all need to be monitored. Some of these need regular updates but most just need a periodic overview. The risk is a focus on this compliance rather than on responding to external factors that change often on a weekly, monthly or quarterly basis.   The purpose is to inform and to frame the conversation, which then leads to decisions.

5. Adherence over Response

Often the budget is the main tool keeping alignment to a plan or strategy. Just as most five year strategy plans can be criticised as being too rigid, even an annual plan is become less fit for purpose in many industries. In VUCA world, the merits of an annual plan are questionable and can be downright dangerous. An inbuilt agility is increasingly essential for survival.The purpose is to inform and to frame the conversation, which then leads to decisions.

The purpose is to inform and to frame the conversation, which then leads to decisions. 

Businesses need to narrow down the purpose of their budgets, aiming for clarity rather than a scattergun approach. These processes are often wasteful enough without bloating it further by trying to achieve too many objectives.

We still need financial controls. We still need compliance and audits. We just need to separate these from trying to drive performance of the business.

A focus on Accountability 

Accountability should not be just about sticking to a plan but maximising performance. This informs the conversation and the decisions arising. So we are designing a conversation and decision making framework, not a set of reports.

 

Key Elements in design

1. Create an ongoing process rather than a once off.

Too many organisations start their new financial year at zero. Why? was there some miraculous transformation in the market at the end of the last financial year? Nick Setchell, one of TEC and Vistage's best speakers encourages businesses to look at trailing 12 month results. This overcomes seasonal cycles, smooths out 4 and 5 week months and generally brings the focus on more strategic issues and underlying trends. Once that is mastered look forward and do a rolling 12 month forecast ahead; Once mastered it is no extra effort and a lot less disruptive than the usual budgeting hiatus. If this seems too hard, then start off on a quarterly basis and reset the priorities each quarter.

2. Performance measures focused more on lead indicators.

What drives revenues? How do you monitor these? What drives a gross margin? Utilisation? Delivery in full? These operational measures are the levers that drive the financial performance. Drive looking forward, not using the rear view mirror. Some decisions may lead to more project oriented improvements; use milestone a progress monitoring as part of the same discussion.

3. Make the invisible, Visible

Many CEO's I know have mastered the art of looking through detailed financials. They carry that ability with pride after having spent several years effort. What they forget is that it isn't just them who needs to understand the key numbers, its everyone else. Use graphs, trendlines, trailing averages, pictures. Visual management is the key to an engaged conversation, where every one not only receives the same information but shares it in real time. Less politics, more transparency, quicker action.

Just as many operations have workplace boards, start with a visual management board at the top of the organisation. 

4. Remember, Cash is King

For most businesses, financial reporting focuses firstly on the Profit and Loss statement, less on the balance sheet, considered by some business owners as something to focus on at year end. But for most businesses the working capital movements are critical; in fact in the short term can make the difference between whether a business survives or not. The saying "Revenues are vanity, Profit is sanity and Cash is reality" has been borne out over the centuries. Cash flow forecasting is often a lot tougher than forecasting profit. Many organisations choose not to cascade cashflow drivers down into the organisation; they get what they deserve.

I'd be interested to hear of others' experiences and journeys and if you have other suggestions to the basic elements I've outlined here.

Superhero or Servant Leader - You Choose!

Are you a servant leader or a superhero? A bit of both perhaps? If so, which gives you more fulfillment as a leader? And which role is better for the long term sustainability of your organisation?

I often come across senior executives frustrated by what they perceive to be a controlling CEO. At the same time, some of the business leaders I work with are reluctant to let go because they do not yet see the right “Strategic” talent, usually without considering whether they might be part of the problem.

The end of Superhero leadership

In “Good to Great” Jim Collins profiled "Level 5 leadership" which is characterised the absence of the trappings of status and power. In "The Misguided Mix-up of Celebrity and Leadership" he found to his surprise that there were more Level 5 leaders than he expected. They just didn't often get to the top of the organisation. He observed: “Then it dawned on me: Our problem is not a shortage of Level 5 leaders. They exist all around us...

Our problem lies in the fact that our culture has fallen in love with the idea of the celebrity CEO. 

He goes on to say "Our problem lies in the fact that our culture has fallen in love with the idea of the celebrity CEO. Charismatic egotists who swoop in to save companies grace the covers of major magazines because they are much more interesting to read and write about than people like Darwin Smith and David Maxwell. This fuels the mistaken belief held by many directors that a high-profile, larger-than-life leader is required to make a company great. We keep putting people into positions of power who lack the inclination to become Level 5 leaders, and that is one key reason why so few companies ever make a sustained and verifiable shift from good to great."

This has been taken even further by The Shingo Institute, established to guide leaders in creating sustainable, principle based cultures of excellence. The Shingo Principles include two cultural enablers that provide the foundation for excellence, capturing the essence of a servant leader: "Lead with Humility" and "Respect every Individual" 

One of TEC’s perennial speakers, Colin Chodos recently shared his thoughts around the Harvard Service Profit Chain model with one of my groups. Profits come from satisfied customers who get great service provided by engaged employees led by servant leaders. He challenged my members in how they engaged their teams. As I listened to this discussion I came to the same conclusion that Collins came to some 15 years ago. Level 5 leadership is within many of my members, but often they struggle with the challenges of the day to day to live this consistently.

The Myth of the Servant Leader

So why is it so hard to put Level 5 leadership, especially the concept of service, into practice? Certainly the people I work with have got beyond being status conscious, but still many struggle with how they need to change. As Marshall Goldsmith Says "What Got You Here Won't Get You There".

The very fact that they’ve been successful is at the core of this issue. Whether a successful entrepreneur or a professional and successful CEO there is usually a sub-conscious dependency culture, reinforced by suggestion.

Suggestion is addictive. You feel good, the other person feels good. The short term results are often better. But what of the long term? 

This is even more acute when dealing with potential successors. Succession planning is one of the hardest issues any founder faces. As baby boomer entrepreneurs seek exits and handovers this is becoming an epidemic.

At the core of the issue is the belief by incumbents that a servant leader has to let everything go. This is a myth, its not an "either-or".

Defining "Founders Purpose" or "the Legacy" and setting fundamental distinctive values remain the leader’s role. These are the "whys" of an organisation. It's with the what's and the how's where the servant leader stands back. This is empowerment but not abdication.

Start the shift towards being a Servant Leader

1. Get honest feedback

• A coach is good but peer groups such as TEC / Vistage CEO groups is even better. A recent book The Power of Peers describes this process.
• Use a 360 tool, with a focus on the conversations. I use a profiling tool called VoicePrintwhich analyses how you use conversations especially in 1on1 discussion
• Practice asking questions, developing a more coaching style. Two great books are Susan Scott’s “Fierce Conversations” and Greg Bustin’s “That’s a Great Question”

2. Be transparent

• Use visual management tools. An empowered organisation has to be aligned and engaged. Visual management at all levels of the organisation enables both and creates the context for the conversations.
• Encourage accountability to all - not just upwards. Transparency promotes dialogue with all parts of the organisation.

3. Get out of your comfort zone by meeting your people

• Management by Walking Around (MBWA) was popularized by Peters and Waterman – Kraig Kramers called it Walk the 4 Corners (W4C). In Lean it is Gemba Walks.
• All these are informal ways of engaging with people on the front line and middle management (don’t forget them Chodos reminded us). However, this is not a “Regal Tour” – conversations should be meaningful about the business not about the football results.

4. Lead by example

• Lead with your vulnerability. That’s what we do in TEC. Uncomfortable, but incredibly powerful. This means asking for help, sharing the issue.
• Share with people around you that you are trying to change. It’s not a secret and people will notice the difference, so get them to give feedback on how you are doing.
• Share your values. Publicly. Discuss what they mean to you and explore what behaviours you would expect to see.

In a VUCA world no leader can be across everything. We need all the organisation aligned and engaged. A visionary but servant leader rewards both their organisation and themselves.

I’d be interested in hearing other people’s stories in how they have taken steps towards being a servant leader. Leave your thoughts and experiences in the comments below... 

From Strategic Roadmaps to Strategic GPS

“Whatever you do, or dream you can, begin it. Boldness has genius, power and magic in it. Begin it now."

Gone are the days when a strategic plan could be relied upon to last five years. Even for centrally planned economies that is fast becoming impossible. For a business it is suicide.

Gone is the strategic roadmap – we now need a strategic GPS. We should not have to compromise on our long term strategic goals but almost inevitably we’ll meet obstacles in our path requiring a significant shift in approach.

Why do we wait a whole year to review our plans? And who in their wisdom has decided the world starts again in July? Why should next year inevitably be this year plus 5%?

Budgets serve a purpose, albeit in the twenty teens an increasingly tenuous one. They allow a cascade of cost control and, for the more sophisticated, an element of profit control. But the word is control. Budgets never lead, they don’t have life, they don’t describe the battlefield and the weapons. They are detailed and by definition, wrong. They contribute nothing to strategy.

Great strategy is Joined-Up. That means the business Brand is a combination of core values and the product or service offer. People behave in accordance with the core values and the designed business model. And the financial results are derived from ensuring the business model fully reflects the value proposition of the product or service offer.

The consequence of this is that strategy, especially in the early stages is iterative not linear. You need to go round a few times, do some sanity checks – ensure the Brand and the operational model and the product are consistent. And in all but the smallest of companies, its about ensuring the management team “Get it”and own the process. Patrick Lencioni in his book “the Five Temptations of a CEO” describes the Third Temptation as “Preferring Certainty over Clarity”.  Avoid the detail, stand back.

So when should business strategy be formulated? The first answer is “as far away from the budgeting process as possible”. The second answer is “frequently”and third answer is “Start Now”.

With the financial year just two months away, there is still time to plan a new year strategy process, align the management team, share some common purpose and make this financial year the best one yet! 

A Joined Up Journey to Business Excellence

When senior executives and business leaders are trying to get their minds around how to raise the bar in business performance where do they look?  The latest Guru Superhero's book? Inspiring articles or TED videos? The trouble is the focus is more usually on the achievement and less about the journey itself. For most people trying to transform their organisation its messy, its hard work and the day to day urgent things get in the way. "Surviving" is the usual word, not "Thriving".

Share with others trying to achieve sustainable excellence

One of the best ways is to acknowledge that you are on a journey. Sharing the experiences and the real challenges with others while studying inspiring examples is a way to envision what excellence will look like for your organisation. At the same time, it is allowing you to acknowledge you are in pursuit of perfection, but you sure as hell haven't achieved it yet!

One model that aims to help organisations achieve excellence is the Shingo Model™. The Shingo Model is not an additional program or another initiative to implement; rather, it introduces Shingo Guiding Principles on which to anchor current initiatives and to fill the gaps in efforts towards ideal results and enterprise excellence. The flip side of this is if you don't apply these Principles you are in danger of losing momentum or start going backwards. "

The ten Principles are shared below

Its all about behaviours

As Peter Drucker once was supposed to have said "Culture eats Strategy for Breakfast". By "culture" what we are really referring to is the way we behave in and organisation. The Shingo Institute also has identified Three Insights of Enterprise Excellence™ around behaviours. 

1. Ideal Results Require Ideal Behaviors
2. Beliefs and Systems Drive Behaviors
3. Principles Inform Ideal Behaviors

Way too often business performance improvement is focused on Tools, Structure and Processes only. Many training courses are academic exercises leading to tick box qualifications. A focus on behaviours requires reflection, sharing and, for a leader, an honest assessment of their own behaviours.

A structured approach to Managing by Walking Around

What leaders need is a structured approach to identifying behaviours against a set of principles. For most this is uncomfortable, new and hard to put into practice. It isn't a "Regal Tour" talking about the football but a purposeful conversation aimed at uncovering ongoing issues and opportunities. In short it needs practice and a willingness to go though an unfamiliar and potentially uncomfortable learning process.

Don't try this on your own

Just like any habit forming find some peers with whom to share the experience. Manufacturers usually can find some kindred spirits but for service businesses this is still in its infancy.

The Shingo Institute, through their affiliates (SA Partners in Australia) run experiential workshops hosted by a local organisation already embarked on their journey. Details are linked below.

Hey Jonny, here's a Dopey Idea

What are the elements in a truly Joined-up Strategy?

"Hey Jonny, here's a Dopey Idea"

Jonathan Ive was almost unheard of until a few years ago. Some of you may still be asking "who is Jonathan Ive?" Well, every day 200 million of us use the products he designed. On 19th October 2011 he shared the stage with others in one of the most inspiring events of Corporate leadership ever, the day that Apple employees said goodbye to Steve Jobs.

What Jonny shared that day is insight into the remarkable relationship between himself and Steve. But what he was really sharing was the process of creation. His core message was the frailty of a freshly formed idea, so easily "squished" to use Ive's native English vocabulary. He emphasized that to create something (in the case of Apple, several insanely great products) you need Dopey Ideas, sometimes truly terrible ideas as well. That to deliver something new requires not only great insight, but also the perseverance to focus on the little things.

His highest praise for Steve Jobs was for “Givin’ a Damn" because, in the end, even things that are hidden from the human eye do make a difference.

Most businesses don’t have the scale or vision of a Steve Jobs or a Jonny Ive. But Apple's brilliance is less about amazing technology but more an entire business design. They focus on the 100% solution. They changed the music industry; they designed distribution channels, supply chain organization and brand marketing.

In the process Apple achieved a remarkable triple.

1.     It has become one of the strongest Global brands in the world

2.     It employs some of the best and most passionate technical and business people in the world who clearly do care

3.     And it just happens to have more cash in the bank now than the entire United States Government.

These three facets are not just coincidence. They are a result of the ultimate “Joined Up Strategy”. And it didn’t start by saying “Hey, lets make $80 Billion”

Just as Ive describes the creative process at the top of Apple, we can see that it also applied to the Apple strategy process too.

It will have required plenty of dopey ideas and several terrible ones as well. But it would have allowed the ideas time to build into something worth persevering with. This wasn’t Steve Jobs, this was a team. It was a team, working on a 100% solution. And the Strategy was Joined-Up.

Have you got a Joined-up strategy?

By joined-up, it means recognizing that you will achieve financial results as a result of building other parts first. If you have a great product or service, remember that you also need to clearly and explicitly describe your values, because together this creates your customers perception of you, your “Brand”. Your values also, together with your business model (how you deliver your great product or service) directly effects how your people behave. And if you have the right customer proposition and the right business model - then and only then will you achieve the best possible financial result.

This is true for the smallest business right up to the Global giants.

A great Joined-Up Strategy is created in the same way an iPhone or an iPad is created. It starts with ideas, precious, frail ideas – all too easily squished. There is compromise, but not to the ultimate goal. There is perseverance and ultimately focus on the finer details. And there is care, passion, belief, elegance, excitement and ultimately “Givin’ a Damn”.

A Joined-Up Strategy starts with leadership and an alignment of the top team to achieve an ambitious or challenging goal.

Is your top team aligned? Do they really share an ambitious and challenging goal? Do they truly give a Damn? Or are they just focused on their own little silo?

Leader vs Administrator: Which are you?

How many books and blogs have you read offering you an ideal model for leadership? As leaders, we are constantly faced with new ideas and frameworks that offer this ideal profile.

There are some great ideas and frameworks out there but a lot of the time they miss the point. We will never be ideal leaders in the way that leadership books describe. The reality is that, for many Chief Executives, the challenges they face, the industry they operate in and the scale of the businesses they are overseeing makes it impossible to live up to the leadership ideal.

Certainly, this is something I see a lot with the business leaders I work with. Even the best leaders struggle to bridge the gap between the leadership ideal and having to deal with the real world. In the end it comes down to time prioritisation.

Of all the challenges that leaders face, time prioritisation is at the top. Time is the most important commodity for a leader and as much of it as possible needs to be ON the business, not in it.

Again, there has been plenty written on how an ideal leader allocates their time. However, in a real company that is facing numerous operational issues at any one time, lifting that gaze from putting out fires and actually managing time effectively is incredibly difficult.

The many hats a leader has to wear

Every year I ask my TEC groups to reflect on where they spend their time; in particular, how they fill their month between the different roles that a Chief Executive is expected to fill and operational and administrative tasks. I then ask them to map out where, in twelve months’ time, they wish their time to be spent.

Excellent CEOs have to spend time between becoming a visionary, understanding where their industry is going, as well as developing a strategy to match. They have to represent the company as an ambassador for the brand and they increasingly have to take on a mentoring and coaching role. Lastly, great leaders also have to be constantly learning and absorbing new knowledge.

Fast forward to 2016, and that theory is still useful but it's incredibly hard to actually implement. Terms such as “Innovation” or “Disruption” might be overused but leaders I work with are recognising these factors are increasingly changing the way business models work. There is even more need to be strategic and not get sucked into the operational mire.

Even industries that just a few years ago would have looked like they will never change are now facing the need to restructure and move in a very different direction. In my groups I have seen this in food service, distribution, logistics, insurance, manufacturing and a massive shift in social and community services.

Operating at two levels at the same time

These transformational changes require the CEO to operate at two levels:

• At strategic level

To ensure the organisation and in particular the senior management team has the capability and resilience to act with agility

• At an implementation level 

In the last couple of years my members are realising there are just some things you can’t delegate, which doesn’t mean they meddle with operations.

One example, several years in the making, required a shifting of manufacturing to an Asian base. While delegating the project to others, the CEO realised that this was such a massive strategic shift he had to take a more hands on approach to the move. By getting more intensely involved and being on the ground he immediately saw the greater strategic opportunities opened up by the move in terms of quality of design, global logistics and supply chain opportunities.

There are some excellent speakers on this subject. Tiffany Jones, an expert in change management, gives us the analogy of the CEO being the captain on the bridge. While it is perfectly natural for the captain to go down the stairs and help the crew occasionally, there should always be a plan to get back up on the bridge as soon as possible, looking ahead. Mike Richardson, one of the champions of Agile, differentiates between “good micromanagement” and “bad micromanagement” emphasising the difference between being well informed and giving people tasks. Alan Mulally’s approach at Ford as described in American Icon is a wonderful example of upholding the values of openness and transparency combined with a tool of visual management which allowed strategic micromanagement.

Whose job am I doing now? 

After my TEC members complete their ideal time profile the changes required are usually fairly stark. In buddy sessions and in 121s they develop an action plan for change. For those with over 30% of time on operations there is usually renewed focus on management structure and accountability. In the last year I have seen several CEOs reduce the number of direct reports so they can spend more time with each and increase their “ambassador” role (aka chief salesperson) while still improving their skills as a coach.

If you are a business leader struggling with balancing your roles, then why not start by mapping out your ideal balance? Then have a conversation with yourself and ask the question “whose job am I doing now?”

Speaker Elliot Hayes challenges leaders to consider that if they had to do all they did in a day in just 4 hours what would they focus on and what would they drop. Why not do this exercise with a buddy?

The one role that should never, ever, make a CEO’s list is 'administrator'. I find it ironic that the premier business leadership qualification is a Master of Business Administration. Time for a better label I think.

I would be interested in hearing examples of where you have transitioned from being an administrator to a true leader. Share by leaving a comment below.