Obligatory New Year Resolution

The beginning of every year, we as business people are obliged to set new goals for the upcoming year. I have gone through this process over 30 times in my career. During this time I have noticed one striking trend. Those who believe succeed; those who don’t, don’t. Brian Tracy in his Psychology of Achievement spends a great deal of time helping people reset their subconscious so that they can achieve the success they have always wanted. His story is that you have to concretely believe you can succeed before you can actually do it. There is a lot of data to support that this is fundamental to individual success. What about corporations?

Thirty years of business planning has taught me that it’s very true of corporations as well. If the annual plan is a hope and a prayer, it will not succeed. Many companies have a top down planning approach. Those in the know determine the cash requirements of the corporation to survive and meet expectations for the coming year. They then extrapolate the revenue number taking into account cost of goods and cost of sales. The revenue number is then passed down to the individuals responsible. Sometime, like when I work for British Telecom, the number is inflated as it is passed down to assure each management group is successful. The final number given to each sales person is a result of this process and doesn’t reflect the reality of their market. The people at the top “believe” in their number because it makes sense. The people at the bottom find the number arbitrary at best and will strive to do their best.

A deviation to this strategy is a top-down, bottom-up approach. While the executive management is forecasting from above, the sales force is forecasting from below. They meet in the middle and develop a compromise. Sound better doesn’t it? Heisenberg taught us that this isn’t necessarily so. My experience collaborates this. The people at the top assume the people at the bottom are going to sandbag (low ball) their numbers and the people at the bottom assume that the top is going to inflate the numbers. Everyone knows it’s a negotiation, therefore it’s best to build in some level of compromise. In this case neither party”believes”. Both have had to compromise and assume the other is not being fully honest in the process. This by the way is true.

So, how do you get everyone to believe? The answer is to take a more systemic approach. If you haven’t ever done this it won’t happen for 2008, but it can happen in 2008. The object is to align the entire company toward a single goal. Everything is tied to achieving that goal; from product development, to marketing, to sales, to legal, to accounting, to procurement, to support. Everyone knows their responsibility for achieving that goal and believes they can do their part. No one is part of the “sales prevention” team. The sum of the parts becomes greater than the whole. What’s the systemic approach?

This takes some thinking. It is not intuitively obvious. If you are a glass half empty type of person, you may not see how it will work. Every activity must be tied directly to revenue and carry a specific expense associated with that activity. Some will be profit centers and some will be cost centers. But they are all tied to the final objective. Deciding how this will work within your specific corporation may take a lot of thought. Many departments don’t like this thinking because either they don’t truly understand how their department impacts revenue or they do understand and they would just as soon you don’t. A good place to start is to map out the process, cradle to grave. Apply your vision and mission to the process, you do have one right? Make sure everything aligns, and then start doing the math. Always seek input from those responsible for implementation.

Reprogramming the human subconscious to succeed is a consistent, repetitive process. The same is true of corporations.

The corporation that believes…. Succeeds.

Change is inevitable, but it’s the speed of change that determines success.

I am constantly trying to find ways to accelerate performance without burdening the process or people. The first question that comes to mind is “If performance is accelerated how can the process be burdened?” To find that answer, let’s start at the very beginning. At some point a need within the company is recognized. Something is not being done as well as it could be to the benefit of the company. A new process is defined, new job descriptions are developed, compensation equal to the effort is determined, and extensive search for the right employee is undertaken. A business ecosystem is developed that like all biological ecosystems is based not only on the inhabitants of the local system, but also the interaction with the contiguous systems surrounding it.

In James Moore’s book “The Death of Competition” he talks about the difference in the biological ecosystems of Hawaii and Costa Rica. Hawaii is an island that is somewhat sheltered from outside biological influences. Costa Rica is a virtual highway of migrating plants and animals. Costa Rica hardly notices a new entrant into its ecosystem, while Hawaii is devastated by every variant. So it is with business ecosystems. A business process that is virtually independent of other process within the business has less tolerance for change than business processes that are heavily dependent on external processes. The dependent process is constantly being pushed to and fro with changes from the co-dependent processes. Employees are so use to change that they notice lack of change more than change. Someone is always doing something to disrupt their karma.

Highly independent processes are more rigid and inflexible. They change only when the inhabitants want the change to take place. Homeostasis dictates that change is hard to accept, so given an option, it won’t happen. When change is thrust upon this independent process it is very disruptive. People fight back. They intentionally or unintentionally sabotage the desired results. Wayne Anderson wrote an article “People Performance: Can you believe what you see?” In it he discusses Heisenberg’s Uncertainty Principle which says the very act of observing performance changes the performance while it is being observed.

So, when an opportunity arises to make a change that will theoretically improve performance, a close eye has to be kept on whom it affects. A highly dependent process will adapt much easier than a highly independent process. The performance improvement that is expected from the change may be eroded or eliminated in an independent process by the disruption to the system. While a more dependent process may take it in stride, make the adjustment and reap the benefits more easily.

Change is an inevitable and desired aspect of running a business. To constantly evolve is to continue to grow, but at what cost? Before diving into even obvious change, determine the ability to absorb the change. Change is inevitable, but the speed is dependent. Engage all the stakeholders. If they appear to be a fairly homogeneous group get buy in up front, take the time to paint a clear vision of how things will be better after the change is complete and implement the change in well documented stages. If this sounds familiar it’s because it follows Gleicher’s Formula for Change. Gleicher doesn’t have a time element. But timing is very important.