Tips for a Well Run Company: #IBMConnect Day Two, Part 2

Rob Enderle
Slide Show

Seven Evolving Leadership Qualities for the Twenty-First Century

Day two of the IBM Connect event provided some important lessons on corporate success through an incredible keynote address. The focus was placed on the IBM Kenexa tools and how companies can use them to identify what makes employees productive, successful and loyal.

Another section presented on day two covered tips for a well-run company. Let’s take a look at these points and how a company can use them to turn itself into a well-oiled machine.

Culture wins. In a competition between culture and any other aspect of the company, culture wins. This is because it permeates the company. Culture defines what people do and why they do it. If the culture is one of rigid controls and arrogant management that can never be wrong (which pretty much defines Siemens), that will override any other practice in the firm. It’s the same if the culture promotes the biggest jerk at the table (most of us have worked for one of these firms), you simply can’t fix that stupidity unless you first fix the culture. Promoting a culture of life balance, of reasonable risk taking, of hiring for flexibility and loyalty, and of common passion over one of predatory ruthlessness or blind obedience can and does result in better-run companies and, more importantly, far more rewarding lives. But if you can’t fix the culture, you’ll never fix the company. Many of the failed CEOs I’ve studied failed not because of a bad strategy; they failed because they didn’t first fix the culture of failure in the firm.

Command and control. Helicopter management is obsolete; you have to trust your people. The recommendation is to reverse the trend of writing decisions into policy and making those polices inflexible. If you hire people to make good judgments and allow them to use that skill, you’ll have a more flexible company and a more loyal workforce. Telling people they can’t work from home, creating long lists of things folks can’t do (and they can’t remember) and micromanagement just doesn’t scale and can’t be successful. It strikes me that this one recommendation, if turned into policy, would fix the U.S. Veterans Administration.

Be flexible. One size does not fit all. Most talent mechanisms are set up with the idea that everyone is the same, but it simply isn’t true. We are all individuals with individual talents and capabilities. The smart executive knows how to optimize and enhance the unique skills of their staff; the stupid one treats employees like machines that are interchangeable. (It strikes me that as we move to AI technology, this might no longer work for many machines in the future either). Like a mechanic that treats each unique tool as a screwdriver, or worse a hammer, the practice of inflexible management tools just doesn’t work.

Move people around. Cross pollinate your talent so they learn the company and people get a vested interest in the outcome. If they don’t move inside the firm, they will move outside of it. This is about moving people beyond their job and getting them to see the bigger picture. Having had this kind of background myself, I can speak to how invaluable it is. If you can see the bigger picture, you can more easily see mistakes before they are made and see paths that will be more successful because you’ll better know what will work organizationally. It amazes me how many CEOs haven’t had this breadth of training and they fail because their assumptions about how finance, manufacturing, marketing, sales or operations works are incorrect. They’ve never been given the breadth to understand the other functions. Most of the post mortems I’ve done on failed projects can be traced back to a fundamental misunderstanding of how a critical organizational function worked.

Don’t be stingy with recognition and rewards. This is the number one reason good people leave a company. This is likely one of the biggest problems with forced ranking; most good people just don’t get rewarded for their work and eventually leave, or worse, become demotivated and stay in their job, becoming a barrier to others. If the entire team is doing amazing things, then the entire team should be rewarded. Forced ranking prevents this and remains one of the stupidest policies I’ve ever seen, yet it has gone viral.

Support a healthy life work balance. You have to really get in front of people who are not achieving a balance so they don’t burn out and feel trapped by their own success. Working people to death isn’t a path to success; it is a path to failure. If people are overworked and they don’t take time to think, they not only won’t be happy, they also won’t be creative, they can’t be innovative, and your very best people will burn out or leave. Overwork, outside of a crisis, isn’t a successful process. It assures suboptimal performance because those that are overworked aren’t working optimally.

Boost the career trajectories. Don’t skimp on training. Give them opportunities for diversity and it will better engage them, make them more valuable, and make them more loyal. Letting employees age out of their jobs because they don’t have the time or motivation to stay current isn’t good for them or the company. A known productive human asset depreciates over time if he or she can’t stay up to date. Even machines can get updates and allowing them or the people that use them to become obsolete is simply bad management practice. It favors the tactical over the strategic and can cause the firm to degrade over time.

Live what is next. Being the best at one thing isn’t a good thing to be. You want hybrids because that type of worker is more flexible and more useful. They are also more engaged and more interested in the business. Companies and people need to evolve in order to become more successful. The world, particularly the technology world, is changing very rapidly and the company, executive or employee that doesn’t evolve with it will become obsolete. One of the biggest causes of company failure is the inability to evolve to address this future. Look at Amazon vs. Sears. Sears, which started as a catalog store, should have evolved to become Amazon and didn’t, as a result it is on deathwatch. A more recent example is Yahoo, which should have become Facebook, didn’t, and is still on deathwatch. I’ll bet Facebook makes this same mistake. It is interesting to note that IBM was the only company that had built into its design as a company the concept of evolution and is, as a result, one of a handful of U.S. firms that’s survived for a century.

Hire for passion and agility. Companies often hire for specific skills. The problem with that focus is that often it favors inflexibility and forces unplanned staffing changes like layoffs. The recommendation is to hire instead for passion and agility so the workers you have invested in increase in value over time and can more easily be shifted as new opportunities, company changes, or industries present themselves. A flexible workforce equates to an agile company, and in a rapidly changing world, the agile company wins.

Harness the digital. Distinguishing between the digital and the real may simply not be possible in the near term future. Tools that can give you answers about what works and what doesn’t, that provide statistical proof that certain paths work and others don’t, that allow a company to optimize around what is successful, and not on what an executive might, with his or her gut, believe may be successful will assure success. Like the opening of an old TV show that came to mind, we have the tools (analytics), why not use them to assure success?

Make it mean something. People want to get behind something. It’s about shared values and driving the company to do something amazing. This reminds me of a story I was told about Thomas Watson Jr., which helped make him the definitive CEO in IBM’s history. He would visit each site and ask a random employee how they fit into IBM strategically, how they contributed to the whole that was IBM. If they couldn’t answer that question, he would punish that employee’s entire management chain. Because it could happen to anyone, this forced every employee to develop an understanding of what the IBM strategic goal was and fit themselves within it. This was one of the most successful periods in IBM’s history.

Reward failure. Make it OK to take chances and fail. One of the big problems with Microsoft and most companies of its age is a focus on punishing failure. Risk takers are forced out of the company and the firm hits an innovation wall. I’ve watched Microsoft closely and you can go back and almost see the connection between when it implemented this policy and the wall Microsoft hit. It just recently courageously eliminated this policy, but I expect it will be much harder to eliminate the practice.

Stay curious. The key to innovation is having people constantly looking at why things are done and for ways to do it better. As an Internal Auditor for IBM for a number of years, I often found some of the biggest problems were the result of folks doing things they should have known were wrong, but they never thought them through. This was largely due to a practice of pounding on people who asked questions and not encouraging this curiosity. So you’d get large numbers of people doing stupid things and the result was always failure.

In one instance, it was a practice in product test, which tested each assembly step but never tested the entire product until the end. This was stupid, because the process wouldn’t catch if a step broke something that had been done previously. This was coupled with a policy to discard non-functioning products rather than diagnose and fix them because it was cheaper. When the line was audited, it was discovered that the failure rate was nearly 90 percent. Yet it wasn’t corrected because folks were afraid to ask questions. It was caught when someone from the outside was brought in and asked “WTF?” When I presented this to the IBM senior vice president in charge, he indicated he was aware of problems like this, but had avoided trying to fix them because he was afraid that if they surfaced, they would reflect badly on him and he was close to retirement. True story.

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