Making and obtaining effective promises--it's important and rare

OK, it's taken me an entire month, and my next issue of the Harvard Business Review is already in my mailbox, but I've finally absorbed the lessons in April's article entitled "Promise-Based Management: The Essence of Execution" (free link) by Donald Sull of the London Business School and Charles Spinosa of Vision Consulting.

The article contains straightforward advice on the importance of commitments to conducting business, as well as the poor way commitments are typically negotiated, with the expected result--nothing happens and negative surprises abound.

(Ever experience that at your workplace?)

By the way, straightforward doesn't mean simple to do. And that's the beauty of the article and why it's not something that sinks in over a quick read. Making and keeping (as well as obtaining) quality promises is very difficult, and poorly done at nearly all organizations.

And important too. With job specialization and matrix management, and especially today's alliance-based business environment, the potency of direct authority has waned. To get many things done at companies today, you need someone to agree to help you.

Sull and Spinosa give concrete examples of companies that use promises effectively. They also list five attributes of workable commitments:

1. Public--good promises are shared outside the requester and provider
   
2. Active--they are negotiated, but not part of prolonged debates (best quote: "Conversations should comprise offers, counteroffers, commitments and refusals rather than endless assertions about the state of nature")
   
3. Voluntary--people who promise under duress don't feel obligated to deliver
   
4. Explicit--commitments are clearly described and progress tracked
   
5. Mission-based--requests are put in the context of strategy and objectives, so that providers know why the request matters
   

(Photo by pixelstar via stock.xchng)

alliances, commitments, collaboration, Harvard Business Review

Motorola changed CEOs, but its culture lives on

Motorola is in trouble again. Despite forcing out the founding Galvin family and bringing in a highly-regarded outsider, Ed Zander, Motorola finds itself where it's been numerous times in its history--suffering because it couldn't follow up a hit product. In this case, where to go after the RAZR?

In a front-page article in today's Wall Street Journal (link - $$), writers Christopher Rhoads and Li Yuan review what got Motorola into its latest crisis--and find that it's a movie that Motorola-watchers have seen before. Rhoads and Yuan write:

As the Razr grew hot, some former designers and engineers say Motorola repeated mistakes it had made a decade earlier with another big hit, the compact flip-top phone known as the StarTAC. That phone was a huge seller, but it also was an analog phone, and its popularity blinded the company to an industry shift to digital technology. Similarly, while Motorola was selling countless Razrs, competitors were hard at work on more sophisticated products for 3G networks.

Zander was brought in to change "a culture he saw as inward and bureaucratic," yet he encountered a power struggle between the handset division president and an underling right away and seemed unable to defuse it. A year later, the division president left and his rival, Ron Garriques, replaced him. Garriques scrapped much of the ongoing development work his predecessor had authorized, and started afresh. Whatever the personal, business or technical reasons for the change, it had a nasty side effect--Motorola fell dangerously behind in developing 3G-capable handsets.

And now Zander is on the ropes, fighting for survival. Whether he stays or goes, the CEO of Motorola will have to confront how to harness its technical brilliance in service of great products that customers need, instead of ones that executives favor.

product development, wireless, organizational behavior, culture

What is equity?

An economist would say that it's discounted value of future cash flows. That's not a very useful definition, especially for those of us whose businesses are made up of largely intangible assets.

To me, as you're building a business, you've got revenue, you've got expenses. Hopefully the former is greater than the latter. And then you've got this other thing. As you work--performing projects, establishing relationships, selling business, getting references, hiring employees, building a brand--an almost imperceptible momentum grows and accrues over time.

You get bigger. You get better. People know your business. Customers sign up again and again. Someday, that will be worth something and people will offer to pay you for that.

That's equity.

Voice-to-Screen messaging - powered by SpinVox

(Picture from sammi babe via stock.xchng)

entrepreneurism, equity

How much is that mana in the window?

The very cool Hobby Princess blog tells us that when we buy a rare item, we're not buying the thing, we're buying its mana.

Email marketing--a second try

(For those entering our story in the middle, our hero had distributed his first email marketing newsletter in January, all by hand. It took three days of labor and caused him to swear revenge on his ISP. Click here to get the gory details. Somehow, it was a beneficial exercise, but there had to be a better, more effective way.)

It was now April, and time for the second quarterly newsletter. After checking out a bunch of email marketing service companies (there are lots of them--you can see them referenced at the bottom of virtually every email newsletter you receive), I signed up with Listrak.

The experience was light-years different. The service easily imported my two contact lists and eliminated duplicate addresses. It had an easy interface for me to load and edit my newsletter. I could send the newsletter to different test email addresses and see how it looked on Outlook, Internet Explorer, Firefox, etc. And with one click I could schedule the delivery of the newsletter at any time.

And it went out, last Thursday.

The results: 60% more newsletters delivered. 250+ bad email addresses identified. Clear traceability of who opened and read the newsletter. Tracking of each click on the newsletter. Oh, and about 80% less time spent on the process.

DISCLOSURE: Listrak's Director of Marketing is a former colleague of mine. She's written a lot of useful white papers on email marketing that you might want to read.

email marketing, marketing, social networking

Email marketing--how NOT to do it

Have you ever created an email newsletter?

Ever read one?

I thought so. Few people who read email newsletters see what's going on behind them. I was part of that group till recently.

In January, I created and distributed my first email newsletter, completely manually. It was agonizing. First of all, my ISP treated me like a spammer by throttling the number of addressees I could have in any single send (despite the fact that I pay them every month for the privilege of having email accounts and a web site--how many spammers pay for their email accounts?). Furthermore, I had to let an hour or more pass before sending the next email (thanks, Yahoo!). It took the better part of three days to get the newsletter out.

And then, like all informal email, it was very difficult to see whether anyone was reading. I could make some indirect assessments of click rates, but that was all.

Finally, more than a few recipients generously responded with, "Hey, you should use an email marketing service. It will be much easier on you, and on us."

Despite all the hassles, the first newsletter brought tremendous benefits. I reconnected with several dozen former associates, spurred a bunch of new consulting opportunities, and began the process of cleansing my contact list (by fixing or deleting email addresses that were tagged as undeliverable).

Come April, it was time to do it again.

What happened? You'll have to wait till tomorrow.

email marketing, marketing, social networking

The Utopian Company

Having worked for a number of companies and been dissatisfied in one way or another with how each of them is organized, I've always been fascinated with the idea that there is a way to construct a business organization for the benefit of all employees, as well as ownership.

So, I've devoured articles on SAS Institute and Peoplesoft (remember them?), two benevolent dictatorships, and SAIC, the employee-owned company.

And in today's Wall Street Journal, we read about Ternary, a small software developer that runs its business as a democracy. One, in fact, that requires unanimous consent to ratify decisions.

No kidding.

Before you go trying to implement the Ternary model at your company, be advised that they have only thirteen employees and once spent two days trying to agree on a mission statement.

Yet, despite the tendency to joke about approaches like Ternary's, there is something about trying to create a better organization that I, for one, find very appealing. Why?

The Journal says this:

Advocates say such systems appeal to workers, particularly younger ones, searching for careers with meaning. "Everyone wants to be a somebody," says Traci Fenton, founder of WorldBlu Inc., a Washington organization that promotes workplace democracy.

(UPDATE: Here is the WorldBlu list of most democratic workplaces.)

(Photo by winterling)

organizational behavior, strategy, leadership

Does the record industry fix prices? The Economist thinks not

Let's talk about price-fixing, shall we? The Economist reported in a recent issue that the European Commission was re-opening its investigation into the merger that created recorded-music titan SonyBMG.

Says the Economist, "At issue is whether the four majors together might now reach an unspoken understanding about prices."

It's clear that CD suggested retail prices--it's clearly illegal for manufacturers to coerce an actual retail price from a retailer--are highly standardized. The actual retail prices, however, differ substantially based on the outlet (the latest Rascal Flatts CD at Wal-Mart costs far less than it does at Joe Nardone's Gallery of Sound).

The Commission is not concerned about retail prices; instead they are looking at whether wholesale prices--the prices that retailers pay to the record companies for their stock--are coordinated.

Here's why such coordination is virtually impossible. The power in retailing has shifted dramatically from manufacturer to retailer in the last twenty years (the recent book "Private Label Strategy" does a good job of explaining this shift). No record company dictates to Wal-Mart how much they must pay for CDs. Ditto Amazon and Target. So such collusion, difficult as it is to coordinate between the four companies, would fall apart anyway once they tried to enforce it with their retail customers.

So we can all breathe a sigh of relief about that and go back to illegally downloading our music over peer-to-peer networks. (Just kidding!)

(Pictured: the new album from Son Volt, distributed by SonyBMG)

music, Economist, marketing, retail, pricing

More Most Significant Change (MSC) - how to use for business?

In an earlier post, I introduced the concept of Most Significant Change, a monitoring and evaluation technique that was developed for international aid programs. In short, MSC gathers stories and anecdotes on the impact a program has made for its clients, then sorts and selects them through several levels until a single story is selected that represents the most significant change brought on by that program.

So, in business, how would you use it? Let's take the example of the new performance evaluation program that we discussed in the earlier post. Let's say that the company used MSC to monitor this program. HR folks at each division collect stories, then via dialogue they select the most significant in their division; it's passed up the chain, and a further selection is done, and so on, until the executive team selects one story most significant for the whole program. In our example, here's the story they chose:

The most significant change for me, I guess, is that my boss never used to talk to me about performance until review time. Then, you know, I was usually in for a surprise-good or bad. Between reviews, nothing. So, then, after the new system was put in place, it took a few weeks, but all of a sudden she started talking to me about how I was doing as part of our regular one-on-one meeting. Things I was doing well, other things I should do differently. So I could fix what I was doing right away--and not get slammed in a review months later. More than that, a month or so after the program started, she came up to me and said, "Jim, this project plan you sent me to approve, it looks OK, but when you do your project plans, it would be more effective if you put the name of the responsible person alongside each task. That way, if there's a schedule slip, I know who I might need to follow up with." That's a pretty big change compared to what had happened before.

What does this story say about the program? It says that, at least in one case, it spurred a manager to provide feedback on a timely basis. (Disclosure: like the vast majority of technology managers, I am not very good at this aspect of personnel management.)

The story doesn't say that the program spurred this improvement for every manager--or even more than one. However, its selection as the most significant story tells everyone that this is the kind of behavior that the program was intended to foster. Which has three big benefits:

1. Clear communication - one very important program outcome is communicated to everyone in a very tangible, usable way.
2. Enables action - Management can now monitor whether this desirable change is a trend or an isolated case, and intervene accordingly.
   
3. "More like this" - The people who select the most significant stories are cued to look for stories like this as they do their selections.

And it's repeated on a regular basis, say every quarter or half-year. Over time, it shapes the organization's view of the project and its objectives, far better than a bland statement ("We intend to improve the effectiveness of management in the areas of personnel appraisal and feedback, blah blah blah"). And it brings the management teams together regularly for intense dialogue about important issues, and causes them to make a joint decision (which is rare for lots of management teams).

Pretty useful, eh?

(Illustration from the MSC Guide by Rick Davies and Jess Dart (c) 2004, via Inforesources.)

communications, storytelling, measurement, innovation, narrative, strategy

The power of business relationships: an example

During my junior year in college (1983), I applied for a summer internship at IBM. Like more than 90% of the people who applied, I was turned down via form letter. When I told my dad this, he said, you know--I know somebody who might be able to help. My dad was a car salesman and one of his customers happened to be a Human Resources executive at IBM. A week later I had a phone interview, & a week after that I had a job offer. It might've changed the course of my career, & I have networking to thank for that.

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spoken post, networking, relationships

Your leader expects you to stay current

I love the article by Larry Bossidy (author of Execution) in this month's Harvard Business Review, although I do detect an obsession with command-and-control language by former Jack Welch lieutenants in the way they speak and write about business. (For example, Bob Nardelli and Steve Bennett, in addition to Bossidy.)

As you'd guess, the article is called, "What Your Leader Expects Of You."

But I digress. In spite of its military crispness and the frequent use of "I" as a synonym for the business itself, it is an excellent article. Here's the section I like best:

Stay current. There's nothing more depressing than sitting in a business meeting with people who don't know what's going on in the world. I expect people to read, to watch the news - not just because it makes them more interesting but because what happens in the world affects what happens to us, to our marketplace, and to out competition.

About fifteen years ago, I was a product manager, and I found that I kept being invited to meetings even though I wasn't formally connected to the meeting's subject matter at all. After I turned down several invitations, I learned that people were inviting me because I brought a provocative point of view and wasn't afraid to talk. Soon after this, one manager came to me and said the following,

"You're so knowledgeable about the industry and what's going on. Where do you learn all this stuff?"

"The Wall Street Journal and industry publications, for the most part. Sometimes Business Week and the Harvard Business Review. They're in the company library."

"That's great. Would you be willing to sit down with our group once a week and give us an overview of important things we should know?"

I was speechless for a couple of moments. "Are you saying you'd like me to do the group's reading for them?" I said finally. "I'm sorry, but I don't have the time or the desire to do that."

(Picture by a_kartha via stock.xchng)

leadership, communications, Harvard Business Review, management

P.S. To the title of Bossidy's book--isn't that another great military word? And it reminds me of an anecdote--a great old football coach named John McKay was asked, after a particularly poor performance, by his team, "What do you think about your team's execution?"

"I think it's a good idea," replied Coach McKay.

Pulitzer committee takes a cue from Shop Talk

James Bandler, Charles Forelle and Mark Maremont's articles on stock option backdating today were awarded the Pulitzer Prize for Public Service. We had this figured out in December.

UPDATE (23 Apr 2007): Here is a complete free archive of the Journal's options backdating articles.

Google works in mysterious ways

The traffic on this site spiked yesterday--up about four-fold from the average of the rest of the week. Why? Blame Google Images.

Last November I posted on why the characters on "Lost" were like the management of a dysfunctional company. To illustrate the post, I found (on Google Images, of course) a promotional picture that had been used by a South Korean television network. I pasted it into the post, and that was that.

After the first of the year, when new episodes of "Lost" began again, I started seeing traffic spikes from time to time based on people searching for "Lost" images on Google.

And yesterday, it happened again. I went to Google Images, typed "Lost." And saw my blog post as the #1 result. (Why my picture instead of the original from South Korea? Or any other picture, for that matter?) People from Turkey, the UK, the US, Japan, Saudi Arabia, Canada, Austria and many others, all checking out that picture.

Some even spent time reading the content.

The internet can be a really random place sometimes.

(Of course, I couldn't resist posting the picture again.)

UPDATE: April 15. Traffic is back to normal. Ran the Google Images search again. My post is nowhere to be found...

Google, internet, images, algorithms

An anecdote on the power of business narrative analysis

I had lunch with a former colleague yesterday, whom I hadn't seen in ten years. She related to me this story:

Last year we had a pilot of a new performance management system for our employees. The trial group was 4000 people. We had spent a lot of time on the pilot and gathered a lot of data. At the end of the trial, the VP of Human Resources printed out all the comments that had been received on the survey forms. He took them home one night and read every single one. Then he came in the next day and said, "We can't roll this system out." And that was it. The trial was very expensive. We'd gathered lots of data, lots of numbers, but the final determinant was what he read in those comments.

I had been talking to my friend about collecting and analyzing business narrative to assess organizational change using Anecdote's methods. I told her, "He didn't use a system, and comments aren't necessarily stories. But, in essence, your VP was using the narrative technique."

assessment, measurement, narrative, change management

What in hell is Most Significant Change?

Let's first pose a problem. You've put in place a new performance evaluation system and spent a year conducting reviews using it.

How's it working out for you?

Your program will have target objectives like improved employee satisfaction, perhaps, or increased personnel retention. But the first indicator is difficult to baseline and measure, and the second requires a long time to discern a change.

Complex initiatives...vague indicators of success...the hunger to know whether something costly and labor-intensive was worthwhile.

International aid programs face this problem every day, and from that domain has emerged a new method for monitoring these types of programs.

It's called Most Significant Change. (Here's the official guide, written by Rick Davies, the creator of the approach, and Jess Dart.) At its most basic, this deceptively simple approach asks field workers (or first-line managers in the business context) to elicit anecdotes from the people affected, focusing on what most significant change has occurred as the result of the initiative, and why they think that change occurred. These dozens or hundreds of stories are passed up the chain and winnowed down to the most significant, as determined by each management layer, until finally one story is selected.

It's not numbers, or graphs, or ROIs. It's a story, with an explanation, and behind it a collection of other significant stories. A story that describes a real experience, reviewed, defended, and selected by the people charged with the success of the program.

Why can this monitoring method work for programs like our performance evaluation system? I'll discuss that in another post.

communications, storytelling, measurement, innovation, narrative, strategy

Billionaire's brilliant quote of the week (last week's edition)

From Warren Buffett, as paraphrased by Prof. Jeremy Siegel (thanks to Greg Mankiw for pointing it out):

[Buffett] wisely counsels that anything that happens to your finances is secondary to the important things in life – picking a suitable and compatible mate, developing a relationship with your children, and doing something that you enjoy.

I'm very fortunate on the first two points--I think I've got them licked--and working hard on #3.

balance

Billionaire's brilliant quote of the week

From John W. Kluge, benefactor of the Kluge Scholars Program at Columbia College, quoted in today's New York Times:

I'd rather by far invest in people than buildings.

Dream becomes reality--the anything maker

When I was a kid I had a recurring dream that I had a special machine. I loaded plastic pellets into the machine, then if I designed something on paper & fed it into the machine, it would create what I had imagined.

Now I find out that such a machine exists. See the following link. (Thanks Ilya Vedrashko for pointing it out.)

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innovation, technology, spoken post, New York Times

Prospecting yields are low--get used to it

I've recently talked to a couple of self-employed folks who came out of corporate staff jobs. Their unanimous opinion: marketing is a pain in the neck!

When I probed a bit, I found their frustration centered on the low conversion of prospects to sales. And on further probing, it became clear that their expectations for closing rates were much too high. "I meet someone, or get a referral, I give them a proposal. How come they don't buy?"

Buyers need to be ready, willing and able to purchase your product or service. Many of the prospects you encounter are: unqualified, not interested, not ready, not able to make purchases, distracted, etc. Depending on your business, 80%/90%/95% of the leads you get won't pan out, even if you do a good job selling.

The key is to find the nuggets of gold in your prospect list as quickly as possible, and don't waste time on the others (though you want to keep their information handy for future marketing--so that when they are ready, willing, and able, you are top of mind for them).

And that implies you must focus on lead generation. Frustration at conversion yields often truly means you didn't get enough prospects into the top of the funnel to have an adequate level of closed business out the other end.

So stop complaining, and start prospecting.

marketing, sales, lead generation, sales process

Putting ideas into language - and sharing them - makes them come alive

Ever heard someone say, "I have a book all figured out--I just have to put it on paper"? Millions of us are like that. The biggest delusion in this statement is that something in one's head exists for anyone but the thinker. It doesn't.

Which brings me to a great article in this month's Harvard Business Review (link - $) from Steelcase CEO James Hackett on using ideas from complexity theory to enhance the front end of the company's product development and launch process. (Worry not; it's a very practical article.)

Hackett makes a compelling case for taking a beginner's mindset, thinking deeply, and learning before starting implementation of a new product idea. He shows how this worked for Steelcase entering the market for clinical workstations. But this small quote also caught my eye.

Throughout [the thinking phase,] they document the depth and breadth of their research to assemble information into a sensible whole. Documentation is critical; the kinesthetic work cements their thinking [emphasis mine] and creates tangible evidence of their efforts....

The same concept was part of the Gap International and Anecdote Narrative in Business (which also touched on complexity theory) workshops I recently attended.

In summary: putting ideas into language forces your brain to organize and make sense of them; sharing the ideas commits yourself to them and allows others to commit as well.

[It's one of the uses I find for this activity of blogging.]

(Photo from andybahn via stock.xchng)

communications, creativity, ideas, narrative, product development

CEOs like stories

Conventional wisdom tells us that CEOs are bottom-line oriented. If you can't reduce it to numbers for them, it doesn't exist. I disagree with that characterization. I believe that CEOs hunger for non-quantitative information, but typical means of communication are too boring, time-consuming and contextless to provide them much value.

So what works? Stories. (Don't laugh--this is why I didn't post this yesterday, on April Fools' Day.) Stories are brief, detailed, vivid and provide context. Imagine this conversation:

CEO: We had to slam the Heltech merger in. What's the impact been on morale?

Division VP: It's been a bit of a struggle. There have been issues.

CEO: Such as?

Division VP: Well, for instance, there was the customer who got called on by two salespeople, one Heltech and one of our guys, and chewed out our guy for not being coordinated. He's our best sales guy, and got really upset by that.

CEO: Anything else?

Division VP: The websites got combined right away, but not the call centers, so a Heltech center started getting calls for our old products, and couldn't help, and there weren't good handoff procedures yet. So I got a bunch of angry customer calls. One said she was going to tell her CIO to start an RFP process to find a replacement. I think I got her calmed down, but we'll see.

CEO: OK, I get it. What do you think we need to do at this point?

Total elapsed time: less than 2 minutes. Information conveyed: terabytes. In these two brief stories, the CEO has gotten the message that they need to quickly fix the remaining integration issues. Think a stack of PowerPoint slides could've done that?

(Photo from scyza via stock.xchng)

communications, storytelling, narrative

Feeling constrained is a great inspiration to innovate

'Presentation Zen had another great, novelistic post stating that complaining about constraints in product design is completely misguided—in fact, dealing creatively with severe constraints is the essence of good design.

Then, the New York Times profiled 19-year-old basketball player Greg Oden, variously called the next Bill Russell or Tim Duncan (either is a great compliment, but I'd take Russell), and his switch to shooting left-handed after a serious injury and surgery to his right wrist. As a result, now that his right wrist is healed, he's a much more valuable player than he would have been if he hadn't been required to learn to use his left hand.

I'm working to create something within significant constraints. I've been playing with the Spin-my-Blog service (which allows me to talk for up to a minute and then send the transcription directly to my blog) for some weeks, and I've created a new form that will use the capabilities of the system.

Postlets: very short, conversational posts with limited (preferably no) editing, focusing on a brief business-related anecdote, hopefully funny. I'll load them up whenever they pop into my head.

Saturday's post is an example of the postlet form. Perhaps it adds a bit of freshness or change of pace to the normal blogging stuff. Let me know what you think.

mobile, blogging, technology, blogs, spoken blogging