Dear CEO

Chapter 34

A Dear-CEO Advice Column You Might Want to Read

Self-help books and newspaper advice columns, such as the famous Ann Landers column, are prevalent for issues involving relationships, money, or etiquette. What if there were an advice column for chief executive officers (CEOs)?

Dear CEO:

 

I am a relatively capable midlevel manager in my mid-40s. I have worked for my employer for ten years. During the past few years our company has been losing market share and declining in profits. Our executive team tries to talk a good game with quarterly town hall meetings with employees, but they appear to show no interest in implementing any of the core methodologies of an enterprise performance management framework, such as strategy maps, customer profitability analysis, or driver-based budgeting. Some of our executives openly ridicule these managerial techniques and say that real managers just need good old common sense and instinct, not fact-based information. What can I or my coworkers do to encourage our executives to be more innovative?

 

—Confused and Dismayed

Dear Confused and Dismayed:

 

Executive teams are one of the more interesting social groups to research and study their behavior. Even the most talented executive teams fail to reach their full potential due to their lack of trust and confidence in one another and the inevitable conflicts, reduced commitment, and avoidance of accountability that result from mistrust.

Sometimes you just have to figure out how to manage your bosses. Resistance to change is often the root of their problem. This is understandable because resistance to change is human nature—people like the status quo. I have relied on a simple formula to overcome resistance to change. It is (D × V × F) > R, where R stands for resistance. Do not underestimate how large the R is; it can be enormous. Therefore, in the equation, if D, V, or F is zero or small, then their combination will not exceed R.

You will need all three factors in great abundance. You are now asking what D, V, and F stand for.

• D is dissatisfaction with the current state. Unless people have discomfort, they will not be interested in changing anything.

• V is a vision of what “better” looks like. When people see a different view of their circumstances that can lead to an improved condition, they will consider changing.

• F is often neglected—it stands for “first practical steps.” Some may think that a lot of dissatisfaction (D) with a solid vision (V) is sufficient to overcome that large resistance (R) variable. Large amounts of D and V are not enough. If people think the vision is overly theoretical, complicated, costly, or impractical, they will not pursue changes to realize that vision. You need F to make the vision attainable.

So how do D, V, and F apply to influencing your executive team? Most enthusiastic and well-meaning managers try to promote their vision. They get excited about implementing enterprise performance management techniques, such as strategy maps for critical projects and initiatives and with identified core business processes that need to be improved. My advice from experience is to first focus on the D. Here is why.

Change will result only when people feel compelled to change. Having high levels of dissatisfaction and discomfort, the D, is your best lever to influencing your executives. But dissatisfaction is often latent, not overt. You will need to create the discomfort in them. My suggestion is to use the Socratic method of questions, named after the classical Greek philosopher Socrates, who stimulated rational thinking and illuminated ideas by posing questions to his students, such as Plato.

• Do you have the nerve to start asking your executive team questions like these?

• Are your largest customers presumably your most profitable ones?

• Are any of them so demanding that the extra costs erode your profits? How do you know?

• Do all your managers and employee teams understand your strategic objectives?

• How do they know that what they do each week and each month contributes to achieving your strategy?

• Are the performance measures you monitor more weighted toward lagging, after-the-fact reporting that you react to?

• Or do you monitor leading key performance indicators (KPIs) that enable you to make proactive decisions? If it is the latter, how well do the leading KPIs correlate with the lagging ones?

• How do you know which types of customers to acquire, to retain, to grow, or to win back?

• How much is optimal to spend on each customer type with deals, offers, and promotions to acquire, retain, grow, and win back those customers?

• Won’t any spending amount above or below the optimal for each customer type lead to destroying shareholder wealth?

In many cases, the executives may not have good answers. That is when you can hit them with the knockout-punch questions. Ask them, if they do not know the answers, “Is that a good thing? How long can we keep making decisions without knowing these answers?” If you ask these thought-provoking and deliberately disturbing questions in the right way, you will not need to spend much time on promoting your vision (V) of the equation, the variable that many managers prefer to begin with. By converting and exposing latent problems into ones evident to your executives, the solutions become more obvious and understandable.

And what about the F in the equation—the first practical steps? Many organizations embarking on the journey of adopting enterprise performance management struggle with how to get started. Consider pilots and rapid prototyping with iterative remodeling techniques to demonstrate value and prove concepts. These accelerate learning and will get more buy-in.

Always remember that in the absence of facts, anybody’s opinion is a good one. And usually the biggest opinion wins—which is likely to be that of your boss or your boss’s boss. So to the degree your executives are making decisions on intuition, gut feel, flawed and misleading information, or politics, your organization is at risk. Write me again in few months and update me on how you are progressing. You can make a difference.