Tuesday, September 24, 2013

Followership Part 2


Teams are really about the division of labor. Most people talk about the concept of the division of labor, but never really understand that it means different things at different levels within the organization.

To a worker, division of labor means:
            I do this part of the work, others do something (I may not know what) the product comes out the end and I get paid.

To a bad manager, division of labor means:
            You do this part, you, you, and you do those other parts, product comes out the end, and I look good.

To a leader, division of labor means:
            You do this part, you, you, and you do other parts, I get the obstacles out of your way, the product comes out the end and we all succeed.

Any of the three approaches could work in a factory where the division of labor was obvious and everyone could see and understand the tasks needed to build the product. Even in a complex manufacturing environment the average worker could at least understand the workflow within his or her own area and see how their personal contribution helped. As the nature of work changes from manufacturing to thought based work the bad manager's approach becomes less and less effective. The leader now has to find a way to make sure that the workers understand their part of the process and how their work supports the entire project or deliverable. All this in an environment where very few of the participants can see the entire process and where team members may be in different time zones or even on different continents, speaking different languages.

Henry Ford is quoted as saying, "Asking ‘who ought to be the boss’ is like asking who ought to be the tenor in the quartet?  Obviously; the man who can sing tenor."  At some point the people doing the work or managing sub-sections of the effort must agree on who "can sing tenor"! The old style boss saying "Because I told you too." no longer works.

Most businesses use a hierarchical model as illustrated in the following organizational chart. In this traditional model people follow because that's their place in the "chain of command".




Even in a "horizontal organizations" the structure is the same. The person who evaluates you or signs your time card is “above” you and people who you evaluate or sign the time cards for are below you. People try to satisfy their customer and their customer is always the person who pays them. My customer is the person who signs my time card and writes my evaluation.

In the past, workers were considered as non-skilled, skilled, professional, and management. As the nature of work changes and requires higher education, the workers are less likely to fit the non-skilled and skilled class and much more likely fit the professional and management class. I use the word class because in the past, there were sharp divisions between workers (unskilled and skilled), professionals, and managers.

In the new economy, the work demands much more highly educated workers and those workers are likely to understand the complete scope of the work and many of the other job skills used to complete the work. This creates a situation where the worker is testing the leader’s instructions against his or her own knowledge and experience. In most knowledge-based work the person doing the work has the education and experience to understand the effect of their work on the rest of the organization and the organization's effect on their work.

Because of the complex nature of knowledge-based work, the worker may have a significantly deeper understanding of the details of the work they are performing than their manager. The higher a manager is within an organization, the less likely they are to maintain any real expertise in all of the tasks that create the product or deliverable. The manager is relying on the team as a group or on a single team expert for that level of understanding in any single area.

When the team members are managers in their own right, turf wars and in some cases fights for outright control of the project can occur. Some those fights may happen because the team member truly believes that the decision being made by the team or team leader is wrong. Some times it's just a fight for personal advancement. Whatever the reason, the team member has either never been taught to follow or never accepted that, sometimes, someone else sings tenor.

Followership consists of giving your boss the best of your thinking on every subject and then executing her decisions with your full support. Part of leadership is accepting your team member’s advice and not giving directions that conflict with that advice.

Of course, sometimes the advice is $10,000 and the budget is $5,000 and good leadership demands a clear explanation to the team. When this happens, the team may not be able to deliver and the project may not be viable. Thankfully, obstacles like that will be rare, since that’s caused by a poor cost analysis during the planning phase.

Followership is like being a passenger in an automobile. You accept that someone else is driving and agree not to grab the steering wheel. As passengers, we do get to advise the driver about a faster route and dangers we see, but we trust the driver to make the right decisions.

All right, you get it but how do you teach and practice followership? In four easy steps!

Continued next week.

Tuesday, September 17, 2013

Followership


Everyone promotes leadership. Companies encourage and even pay for leadership training. Everyone praises and rewards the great "leader", but who actually put Part A into Slot B and delivered the product? The workers did. Not the leaders, the followers.

Leadership training attempts to teach managers the actions they should take to interest or engage single individuals or teams of individuals in a goal or process leading to the desired result. Leadership training also teaches how to make group dynamics a supporting element in achieving that result.

OK; you knew all of that, just not in those words. What's the point?

The point is that to be a leader you must have followers. People who, consciously or unconsciously, have agreed to let you make the critical decisions and then follow those decisions by performing the steps necessary to achieve the mutually desired goal.

We've all seen examples of efforts that were less successful than they might have been or were outright failures because of team members who didn't fully support the leader. The tendency is to blame the leader. He/she didn't motivate or engage (or whatever the current buzz word is) the team. But, maybe the team member(s) couldn't or wouldn't follow!

Henry Ford is quoted as saying, "Asking ‘who ought to be the boss’ is like asking who ought to be the tenor in the quartet?  Obviously; the man who can sing tenor."  At some point the people doing the work or managing sub-sections of the effort must agree on who "can sing tenor"!

Followership consists of giving your boss the best of your thinking on every subject and then executing her decisions with your full support. Part of leadership is accepting your team member’s advice and not giving directions that conflict with that advice.

Of course, sometimes the advice is $10,000 and the budget is $5,000 and good leadership demands a clear explanation to the team. When this happens, the team may not be able to deliver and the project may not be viable. Thankfully, obstacles like that will be rare, since that’s caused by a poor cost analysis during the planning phase.

Followership is like being a passenger in an automobile. You accept that someone else is driving and agree not to grab the steering wheel. As passengers, we do get to advise the driver about a faster route and dangers we see, but we trust the driver to make the right decisions.

First and foremost each and every team member must accept that they are followers. Going back to that Henry Ford quote – each team member has to make a conscious decision that the team leader “can sing tenor”! Trying to wrest control from the team leader destroys the team and ensure that the project will fail. Just as the passengers agree not to try and fight the driver for control, team members must follow the directions of the team leader.

Tuesday, September 10, 2013

Why do so many buyouts fail?


If you want to know why so many corporate buyouts end up loosing money, watch the TV show Storage Wars.

In this TV show the participants are buying abandon storage lockers on the chance that there is something of value inside. As part of the show, some of the bidders end up bidding against someone else and not against their own estimate of the value of the locker’s contents!

Now it may be that the bidding rivalries are just TV show dramatics, but it’s instructive just the same. Far too many companies end up paying a purchase price so close to what they need to make to a return on their investment that there is no cash flow left to support normal operations of the company they bought much less to grow that business.

A big part of the overpayment problem, in my not so humble opinion, is the drive to show a profit much too quickly. This causes the acquiring company to be so focused on showing a profit that they starve the company they just bought for the funds it needs to stay healthy enough just to exist.

The other major component in causing the acquisition to fail is that different businesses have different methods. You would run a company that makes washing machines very differently than you would manager a movie production company. But, and it’s a huge but, in the misguided attempt to merge the two business there is an unfortunate tendency to try and make the new acquisition conform to the management and business practices of the buying company.

Whether or not those practices actually fit both companies!

Monday, September 2, 2013

Elastic prices


This may seem dated since it was actually written a few years ago, but the pricing principles remain unchanged through out history and are no less true today than 5,000 years ago.

The news is reporting that gasoline prices may drop in the wake of hurricane Irene.

Demand was down over that weekend because people hunkered down till the storm passed. Remember that the cost of the product and the cost to deliver to the customer did not change. The only thing that could change the price at the pump is profit.

While some very rare situations exist where some product gets sold for less than it cost, no one sells at a loss! The discounted price due to low demand is still making money for everyone in the supply chain. The question is not profit or loss but how much profit.

The frequent swings in gasoline prices appear to be caused by trying to squeeze out the last fraction of a percent of profit from the market or dropping the price because of low sales.

If your price is not tied to the cost of production you’re not a businessman, you’re a used car salesman in the classic cartoon sense. You know the guy I’m talking about, the one who tries to get you to pay $3,000 and finally settles for $2,500? Where would the extra $500 bucks go if you hadn’t haggled? Why into profit of course.

Anybody think that salesman was loosing money at $2,500? Not a chance. He was accepting less profit. That 500 bucks represents his estimate of your ignorance; what you might be willing to pay over the real worth of that used car simply because you don’t know any better. Why do I consider the $2,500 the “real” value? Because that’s what the dealer eventually accepted and that’s what that product should have been priced at all along.

Ever been in one of those store that always have a $109 dollar price tag marked down to $49 and your wife says “XYZ store has them at that price all the time”? No one in the history of the real world has ever paid the tag price for that particular item. It’s a phony price that is artificially inflated to make the markdown to the everyday price seem good. The stores that do this are trading on the customer’s ignorance and gullibility to buy simply because the tag says sale.

As my dear old sainted daddy used to say, “I don’t mind him making a profit, I just don’t want him to make his whole month off of me”.

After the hurricane passed, gas prices rose at many stations because only a few had power to pump gasoline and those few had to supply all the customers formerly supplied by many closed stations.

The often-cited justification for “elastic” pricing is that if something is in short supply and demand is up then rising prices would entice more suppliers to enter the business increasing supply relative to the demand and driving prices back down into some equilibrium.

In this case the shortage was not caused by a shortage of the product but rather by a delivery problem – no electricity, thus no pumps to get existing stocks from the ground into the car’s tanks. No outside force could enter the supply chain and add supply to the system. And if you think those higher prices would cause some stations to get generators to power their pumps, by the time they could get generators to their locations, the utility company had the power back on.

I still don’t understand why raising the price to the end user (and the profit to the seller) is a fairer system of deciding who gets the product than holding the price static and using odd or even license plate buying days.

How about the guy who can afford the higher prices but only wants to be sure he has fuel IF he needs it and the guy who’s wife is about to have a baby but doesn’t have that extra 20 cents per gallon? 

Capitalism is often touted as being a “great” method of allocating capital but as the previous example shows not nearly good enough at allocating resources.