Bold Exec

IT DOESN'T TAKE HINDSIGHT

Here's a short business test. Try it, it's not difficult. Suppose you have an extremely large revenue and profit project:; I mean extremely large. It's success will be of overwhelming importance to your company.  It utilizes really complicated technology in an extremely harsh environment, but others have done it and had no failures. Failure is seen to be of extremely, extremely low probability. However, a failure would be unprecedented in scope, and not only create a problem which threatens your entire company but the lives and fortunes of thousands of others as well. And you have no idea how to cope with such a failure. You face three choices (sorry, you'll have to click through to see those choices):

One Trick CEO-Ponies

  When you're hiring a new CEO, how do you measure their track record? Sure you can look at revenue growth, earnings per share, margin improvements, market share improvements, and all the other quantitative metrics. And they do tell a story, let's assume in this case a positive one.

Then you ask what specific things they did to achieve those results, and you will get a listing of techniques, attitudes, approaches that resulted in the achievements. Perhaps they sound right, so another test has been passed. But at this point you have done nothing to separate a truly excellent CEO from a one trick pony.

The CEO Rudder

After many experiences with harvesting wisdom from within an organization, rather than relying on outside consultants or assuming I knew everything (or anything for that matter), conversations with various MBA school faculty led me to a parallel universe book, “The Wisdom of Crowds” by Surowiecki. This paraphrased excerpt corroborates the same point:

...[my findings challenge] the assumption that true intelligence resides only in individuals, that finding the right person—the right consultant, the right CEO—will make all the difference.  In a sense, the crowd is blind to its own wisdom. Trying to find smart people will not lead you astray. Trying to find the smartest person will.

Further from Surowiecki, comments in brackets are his:

The four conditions that satisfy wise crowds are: diversity of opinion (each person should have some private information, even if its just an eccentric interpretation of the known facts), independence (people’s opinions are not determined by the opinions of those around them), decentralization (people are able to specialize and draw on local knowledge), and aggregation (some mechanism exists for turning private judgments into a collective decision).

Business organizations seem to meet all the first three factors; diversity or difference of opinions, independence, and decentralization via different departments prevailed in every one of my experiences. The key remaining factor is aggregation. The CEO’s tough job, providing the rudder, is collecting these private judgments and opinions, and turning them into smart decisions. By creating a reasonably informed employee constituency and inviting candid input, intelligent aggregation will be very rewarding. This is of course the exact opposite of an oppressive management style.

Many CEOs or boards look for the consultant who will provide the strategic beacon.  I have witnessed consistent disappointment with this approach but almost universal success with gathering and cultivating the wisdom inherent in the organization’s individuals.  The skill is in separating good ideas from bad, putting the good ones into patterns or packages, and then incorporating that input into an ever-improving set of priorities and strategic direction.

Harvest Organizational Wisdom

So now you’ve opened communications lines with the people by openly and candidly broadcasting your businesses' problems, opportunities, dangers, and directions. Now it’s time to harvest the organizational wisdom. Be as aggressive in harvesting these organizational fields as you were in communicating. All the answers are out there somewhere in the organization. But constructive harvesting takes an open mind, an open door, a dialogue based process, personal time, and great sorting and filtering capabilities.

There are good ways to do this and some not so good. The currently popular idea of encouraging email inputs is not much better than the old suggestion box. Whether physical or digital they have the same problem; they present an easy way for people to gripe without the necessity (for you it’s an opportunity) of face-to-face dialogue. Sure email or text interaction is a form of dialogue, but face-to-face communications which also include body language, linguistic nuances, the opportunity to challenge without offending, the ability to ask the follow up questions, and other inter-personal characteristics make one-on-one live communications the most meaningful. The first comment, complaint, or suggestion is usually not very useful. The responses to the second or third, to the "however we have to consider this" comment, the "how would you do it if you had to face this issue?" question, is where you learn by gaining useful ideas and insights into the existing mind-sets or culture, and have the opportunity to gain personal-interaction-based trust.

Some management consultant years ago labeled this process “managing by walking around”. What you can learn by engaging in meaningful and challenging conversations concerning your company’s issues, conversations with a purpose, will be truly amazing. In addition, company employees, sensing that you care, will automatically be better followers as their respect for you grows.

Try it!

Corporate Culture

Business organizations have cultures just like countries, ethnic groups, tribes, neighborhoods and political parties. If you don't understand them, especially including subtle nuances, you can't possibly know what influences and ingredients, what style, and what displayed personal qualities will be effective in progressing toward exceptional achievement. Knowing what to do and even being able to communicate effectively are simply stepping stones; getting the entire organization willing to both follow and step up on their own is equally or more important.

A single hidden cultural facet, perhaps in an individuals’ background or a company’s experience base, can cause relatively clear and well-intended communications to fail or have unintended negative results. In stage-perforoming terms, it’s “know your audience”. In marketing terms, it's "know your market". In behavioral theory terms, per Albert Bandura broadly acknowledged as the guru of behavior theory in “Social Learning Theory” “Humans do not simply respond to stimuli; they interpret them.”  Great companies do exhaustive market research concerning their potential customers. Most do not pay the same attention to their employees. A simple, almost simple-minded, example follows:

Direct Communications

How do you make your organization smarter, and you smarter, and the organization smarter, and…. in a non-ending get-smarter cycle. The first key element is one not often practiced. Tell your employees--all of them, your suppliers, your direct staff, your investors, your board, and even (with some judgment) your customers the same exact story; here are our problems, here’s how critical they are, here’s what we plan to do about them. Your credibility grows when you tell everyone the same story (presuming it’s truthful and candid). Most everyone better understands what they can do to help. Possible solutions sprout from the woodwork. Work rule changes are volunteered. It’s amazing; except that it’s not. Human nature is such that individuals and organizations feel they’re on the team and want to contribute when they are treated like they’re on the team.  Bad news doesn’t scare people away, whereas continuous doses of spin turn them off. There’s an extra benefit for the CEO; you don’t have to remember which version you previously delivered to your current audience.

Why do CEO’s and managers feel more comfortable communicating “the real stuff” only to their direct staff rather than broadly to all their employees and constituencies? Then when there’s no choice, deciding on the current spin version can be tortuous. They want to stay in a nice comfort zone, talk only to direct reports, talk more broadly only in terms of happy platitudes, do the “dirty work” behind locked doors.

Staying in the comfort zone means relying on management staff and lower layers to relay important information. This approach doesn’t work. It offers the opportunity for so much error through honest mistakes, misinterpretation and deliberate sabotage, it’s a wonder anything of importance makes it to the most important people in any organization, those on the front line.

Back in the dark ages of the ‘50s and ‘60s, the telephone game was a popular party game. A circle of people passed a story or comment to the rest of the group by whispering to the person next to them. Once it went entirely around the circle, the version the last person heard was compared to the original.  The final tale was always significantly different.

Of course, everybody laughed to hear how much the message had changed. But in a modern business environment when the purpose is to communicate critical new information or to galvanize the organization in a new direction, message changes are no laughing matter.

In the game, several miscommunication phenomena are at work.  First is the lack of listening skills. Comprehension of what one person is hearing may be incomplete, or the person may simply not be listening at all.  Second is the faulty memory and transmission skills that accompany even the best listener.  Third is the purposeful altering by individuals bent on mischief or with a hidden agenda. The number of transmittal events further compounds each miscommunication. 

In an organizational environment, the telephone game perfectly describes the communication process as information passes through an organization’s different layers.  The CEO calls a policy or strategy meeting. Managers listen well or not well, filter the message through their own experiences, and hear what they want to hear.  Each manager then selects what they want to remember and translates it into their own words. 

Of course, the managers also have a history of what they’ve previously told subordinates. If they are now tasked with delivering a different message, their level of authority or respect may drop.  Then there are those whose agendas purposefully change the message. When we’re all done, what do we have? Confusion! An organization with no confidence in the company’s direction and no knowledge of which behavior patterns will be rewarded.

For exactly that reason, deliver your initial and continuing communications directly to all employees. In addition to achieving fuller understanding, the entire organization will have interacted with you. You will create a connection that enables people from all levels to return the favor. As information flows out of these levels, you’ll have another way to gain insight into how your business actually functions. 

Once you’ve chosen to make communication direct, you still need to figure out what to say. Determining the message shouldn’t be torturous.  You’ve already decided on the company’s direction, determined its priorities and problems, and you obviously know the state of its performance.

That’s it.  Use those three components as your broadcast message and don’t change them. Don’t worry about sensitivities. Deliver the message to all employees the same as you would to directors. The approach is easy, it saves time, it builds your credibility and is highly beneficial to the organization’s growing intellect.  It’s also a lot easier to remember one message rather than attempting to remember what version you most recently gave to constituency A, B, etc. Following is a real story that is so much fun to recall, a real positive emotional experience crafted out of a rather bleak situation.

Power To and From the People

Weak management will firmly install a highly ineffective organizational culture. The culture will contribute little to, and rather significantly hinder, any progressive change. To significantly improve your chances of success, you must break through the barriers and enlist your employees in the cause.

A relatively simple fix is to deliver honest, meaningful and straightforward messages directly to all principal constituencies. Thoroughly communicating directly with all elements of the organization ensures that your message isn’t garbled.

Interacting in this fashion with all levels of your organization rather than sending a memo or counting on managers to be your messengers instills an immediate, one-on-one sense of sincerity. The old telephone tag syndrome, captured in the illustration, clearly demonstrates why communicating to an organization through the existing organizational structure is nonsense. And, the corporate culture has already changed because the chief is now moving among the tribe rather than standing alone.

This combination of communication and interaction creates many benefits. By opening up communication both to employees and from them, one of the most important results is that you reap the wisdom of the group. James Surowiecki’s highly acclaimed The Wisdom of Crowds: Why the Many are Smarter than the Few and How Collective Wisdom Shapes Business, Economies, Societies, and Nations provides research-based confirmation:

“under the right circumstances, groups are remarkably intelligent, and are often smarter than the smartest people in them.  Groups do not need to be dominated by exceptionally intelligent people in order to be smart.  Even if most of the people within a group are not especially well-informed or rational, it can still reach a collectively wise decision”

When all individuals have some information about the state of the company, its priorities, its problems and its general direction, good ideas and effective implementation come out of the woodwork. You empower the entire organization and:

• Capture the good ideas and business intelligence inherent within the organization.
• Create an overall environment that will be more receptive to change.
• Enable middle-management to make more confident decisions.

So why be smart and stupid simultaneously. Recognize that you don’t have all the great ideas. Open up the lines of communication. Interact with your employees. Learn about and utilize the subtleties of your own corporate culture. Then select the cream of the wisdom you’ve gathered to steer the company down the best, perhaps even surprising, path. Next week emphasis on extremely direct communication; fully laying out the good news and the bad news!

Aggregate Wisdom Summary

Consultants can sometimes be of value, but in almost every case I’ve found that the inherent wisdom within the employee ranks was totally sufficient to determine both a strategy and a set of accompanying tactics.  All it takes to harness that wisdom is clear two way communications; from the CEO to all employees through no filters, and to the CEO employing patience and an experience based listening filter. Topics: Power To and From the People; Direct Communication; Corporate Culture Sensitivity; Harvest Organizational Wisdom; The CEO Rudder; The CEO’s Guide to Aggregate Wisdom; Smart Company, Smart CEO. To be published 2Q07.