Be familiar with your company’s procedures and criteria for approving and managing capital expenditures. Your management will require a compelling return-on-investment (ROI) study (net present value, payback, breakeven, or internal rate of return estimates) vis-à-vis explicit or implicit hurdle rates.- Establish clear links between your budget and corporate strategy. If your management can see the real benefits to the business, they’ll find the costs easier to absorb. Amazon’s customer-oriented culture requires every proposal for a new feature, product, or service to be pitched by means of a “Mock Press Release” arguing how a hypothetical Amazon customer would first learn about the feature and its utility.
- Don’t just roll your budget over from the previous year adding a certain percentage “and then some.” Many companies have adapted a cost-management tool called “Zero-Base Budgeting” that requires you to justify each line item in your budget as if it were an entirely new claim for an entirely new project.
- State your assumptions explicitly. Prepare worst-case and best-case scenarios to augment realistic forecasting of the future and help prudent decision-making. Keep your budgets ambitious but realistic.
- Allow room for contingencies. Avoid rigidities that could inhibit the quick and effective response to an unexpected event. Bring your contingency planning into the open for a careful review.
- Add some fat, but not too much. Keep this in your back pocket, but be ready to make some cuts by knowing what their impact can be. Be clear and confident when questioned about any of the numbers in your budget.
- Explain how true you were to the previous year’s budget. Make a distinction between controllable and uncontrollable budget variances. This will build your management’s confidence in your pitch for the year ahead.
- Put your budget proposal to test with your team and supportive peers. Encourage them to ask all the difficult questions they can imagine. They may not only know where the skeletons are hidden and help you with the answers you’ll need, but also become indispensable allies in getting your budget approved.
- To persuade each member of management, know what matters to him/her and link your budget to his/her objectives. Discuss your budget with the key decision-makers separately before a group discussion. (Management consulting firm McKinsey calls this technique “pre-wiring.”) By getting each participant’s buy-in, you can count on his/her support and avoid surprise reactions and disagreements.
Managing People
Etiquette: How to Tell Someone Their Fly is Down?
What do you do if you notice that your boss’s fly is down? Or a manager’s undergarment is showing?
Should you tell them?
Definitely. Because they’ll want to know.
Most people would rather be a little embarrassed now in the presence of someone familiar than later in the company of clients or someone important.
Keep it simple and say, “Jeff, your fly is down.” Or “Hey Rita, your slip is showing.”
Tell them quietly and discreetly. Don’t be vague.
If you’re uneasy with speaking about this to the opposite sex, request a person of that sex to deliver the message.
You may feel briefly awkward and uncomfortable, but the consequences of not informing them could be high—especially if it becomes apparent that you were aware of the problem and said nothing.
The other person will be appreciative. You’ll gain some respect not only for limiting their exposure but also for being candid and considerate.
If they get angry, declare, “I was just trying to be helpful.”
Going Over Your Boss’s Head After She Rejects Your Idea?
If you’re terrified by the prospect of going over your boss’s head to pursue an idea after she’s rejected it, consider the following steps.
First, have an in-depth conversation with your boss to make sure that you’re not misreading the circumstances of getting rejected. Your boss may well have a good reason for her decision.
Ask your boss what’s lacking in your proposals.
- Is your idea solid enough, but lacking the right support products or services to go with it? Is it feasible to implement? Will it divert valuable attention away from other initiatives?
- Does your idea actually enhance the customer’s experience? Have you explained how your idea translates to the bottom line?
- Do you lack credibility? Have you previously blown an assignment? Do you need to rebuild leadership’s trust in you before pitching your idea again?
- Have you prototyped your idea? Have you tested your idea on others? Do you have data confirming your idea’s feasibility? Are you disclosing all underlying issues and potential challenges that will have to be attended?
Address the above concerns, rework your idea, strengthen your proposal, and pitch it to your boss again. Consider meeting with your peers and your managers’ peers to build some grassroots support (management consulting firm McKinsey calls this “pre-wiring”) for your idea.
If your boss rejects your idea again, handle your boss’s negative response by reiterating that you respect her judgment, but would like a go-ahead to take the idea further. Your boss may surprise you with a green light.
Think twice before stepping outside the chain of command and talking to your boss’s boss about something on your mind.
Who Told You That Everybody Was Going to Like You?
From investor Joshua Kennon‘s perspectives on being disliked,
Years ago, a family member had to deal with a work colleague who utterly despised her to the point this colleague couldn’t conceal their disdain.
Exasperated, my family member called the prayer line of a televangelist and pleaded, “Please pray with me to have God to change this coworker’s heart so they like me. I’m friends with everybody. There’s no reason they hate me so much.”
The lady on the other end of the phone was quiet for a moment. When she finally spoke, she asked, “Who told you that everybody was going to like you? You weren’t promised that. In this world, there are going to be people who hate you for one reason or another, perhaps even without justification. As long as you’ve examined yourself and are sure it’s not something you’re doing wrong, if you’ll let me, I’d instead like to pray with you that God helps you find peace with the situation so it doesn’t steal your joy and you can move on to more edifying things.”
If others’ disapproval tends to nurture your self-dissatisfactions, question it. If you’ve made a mistake, try to right the wrong. Learn from it, pardon yourself, and move ahead.
If your quest for others’ approval is rooted in insecurity, remind yourself that your contentment in life cannot spring from other people’s perceptions of you; it has to come from an inner scorecard. Warren Buffett famously said, “The big question about how people behave is whether they’ve got an Inner Scorecard or an Outer Scorecard. It helps if you can be satisfied with an Inner Scorecard.”
Striving to live your life to satisfy others always is an impossible aspiration. You’ll wind up losing your sense of individuality in the quest to conform to others’ expectations. “It is our very search for perfection outside ourselves that causes our suffering,” warned the Buddha.
“The Business of Business is People” and Other Leadership Lessons from Southwest Airlines’s Herb Kelleher
Herb Kelleher (1931–2019), the larger-than-life cofounder and long-time CEO-chairman of Southwest Airlines, passed away earlier this year. He is celebrated for establishing a people-oriented company culture that any leader would envy.
What started as a doodle scratched on a cocktail napkin (this account has been disputed) changed the face of flying. Herb’s then-revolutionary vision of low-cost air travel boiled the business down to its essentials. The disciplined execution of this strategy broke the mold of the aviation industry, brought the freedom of travel to millions of people, and encouraged successful copycats the world over—from JetBlue to Ryanair, and IndiGo to Air Asia.
Here are some key lessons that Herb (he preferred to be called just that) had to teach.
Companies are built in the image of their founders. Herb was well known for his competitive chutzpah, his extroverted antics, and his knack for unforgettable publicity ploys (e.g. his paper bag commercial or the ‘Malice in Dallas’ arm wrestling contest.) To the flying public, Southwest became a brand infused with the unconventional, flamboyant, free-spirited personality of its boss. That culture will continue to reflect his vision even after he’s gone—the tone he set at Southwest is not unlike those set by Steve Jobs (foresight) at Apple, Ben Cohen and Jerry Greenfield (social values) at Ben & Jerry’s, and Walt Disney (teamwork.)
Ego is the enemy of good leadership. Southwest stands as the paradigm of the power of a lighthearted culture. Herb’s stewardship of the well-being of employees started with the ego at the top. At a 1997 testimony before the National Civil Aviation Review Commission, Herb introduced himself saying, “My name is Herb Kelleher. I co-founded Southwest Airlines in 1967. Because I am unable to perform competently any meaningful function at Southwest, our 25,000 Employees let me be CEO. That is one among many reasons why I love the People of Southwest Airlines.” An ego-bound leader with no sense of humor can cast a shadow across everyone’s work, whereas a self-effacing leader who engages a genuine, self-deprecating humor can help create an environment in which employees take risks, work as a team, and enjoy themselves more. “Power should be reserved for weightlifting and boats, and leadership really involves responsibility.”
Focus on your people, they’ll take good care of your customers. Southwest’s successes are widely attributed to its highly committed and motivated workforce. From the very beginning, Herb fixated on looking after his employees, so they looked after each other and took care of their customers. And, the devoted customers ensured the growth of the business. He famously declared,
The business of business is people—yesterday, today and forever. And as among employees, shareholders and customers, we decided that our internal customers, our employees, came first. The synergy in our opinion is simple: Honor, respect, care for, protect and reward your employees—regardless of title or position—and in turn they will treat each other and external customers in a warm, in a caring and in a hospitable way. This causes external customers to return, thus bringing joy to shareholders.
Hire committed people who’ll fit your company’s culture. Under Herb, Southwest pursued job candidates who exemplified three characteristics: “a ‘warrior spirit’ (that is, a desire to excel, act with courage, persevere and innovate); a ‘servant’s heart’ (the ability to put others first, treat everyone with respect and proactively serve customers); and a fun-loving attitude (passion, joy and an aversion to taking oneself too seriously.)”
Hire for attitude, train for skill. For Herb, recruiting was not about finding people with the right experience—it was about finding people with the right mindsets. “We will hire someone with less experience, less education and less expertise, than someone who has more of those things and has a rotten attitude. Because we can train people. We can teach people how to lead. We can teach people how to provide customer service. But we can’t change their DNA.”
Get your employees committed. “We have been successful because we’ve had a simple strategy. Our people have bought into it. Our people fully understand it. We have had to have extreme discipline in not departing from the strategy.” Herb’s magic extended to making employees think like long-term business owners. He once reflected,
We don’t just give people stock options. We have an educational team that goes around and explains to them what stock options are, how they work, the fact that it’s a longer-term investment. From 1990 to 1994, the airline industry as a whole lost $13 billion. Southwest Airlines was profitable during that entire time, but our stock was battered. Eighty-four percent of our employees continued with Southwest Airlines stock during that four-year period. That’s the kind of confidence and faith that you have to engender, so people have a longer-term view, and they’re not trying to outplay the market every day.
Southwest has never been in bankruptcy, nor has it had to layoff or furlong employees—an extraordinary achievement in the turbulent airline industry.
Stay focused on the core mission. During Herb’s era, Southwest never wavered from its core operating strategies. “We basically said to our people, there are three things that we’re interested in. The lowest costs in the industry, the best customer service, a spiritual infusion—because they are the hardest things for your competitors to replicate.” Herb’s low-cost recipe, however, did not expand to pinching on his employees’ earnings during tough times.
Herb’s Idea for Impact: “The business of business is not business. The business of business is people.”
.jpg "'Nuts- Southwest Airlines' by Kevin and Jackie Freiberg (ISBN 0767901843)")
Herb left a colossal impression not only on the airline industry and on those who worked with him, but also on people-management as a practice.
Volumes have been written about Herb’s exemplar of how organizations can be responsibly people-centered. Read Kevin and Jackie Freiberg’s Nuts: Southwest Airlines’ Crazy Recipe for Business and Personal Success—it provides an insight into the unique culture and legacy that Herb shaped at Southwest.
Do You Have an Unhealthy Obsession with Excellence?
Yes, you must develop the habit of excellence, even in little matters. However, the price of perfection can be prohibitive. A maniacal emphasis on excellence can lead to a blind obsession that can drain productivity.
If you’re a manager, insisting on perfection everywhere can hurt workplace morale, reduce employee engagement, and decrease opportunities for innovation and change.
Managers too often call for excellence in the small things because they’re unable to prioritize what matters most. These managers tend to be the ones who also struggle with delegation—given their exacting standards, it makes sense that they would have difficulty letting others do their job. And because monitoring people’s efforts is often time-consuming and difficult, perfectionist managers tend to just decide that it’s easier and quicker to do the job themselves.
Smart Managers Have the Self-Discipline to Turn Excellence On and Off
The smart managers I know of accomplish great things because they often have a “sixth sense” that reminds them that some activities matter more than others do and therefore merit more attention.
They give themselves permission to produce second-rate work on the road to doing a first-rate job.
They are very selective about when they push their teams to the max—only when the stakes are big enough and when it’s entirely justified.
Idea for Impact: Be Excellent Occasionally
Expecting excellence in every detail uses up a lot of bandwidth.
Get comfortable with a little bit of lower quality now and then. Less-than-excellent is a satisfactory outcome. As the British novelist W. Somerset Maugham once warned, “only a mediocre person is always at his best.”
Making a conscious decision about where excellence matters and where it doesn’t is particularly pertinent to managerial success.
In the real world of limited resources, perfection is hard to achieve. The quest for excellence sucks up time, energy, and money that could generate better results elsewhere.
Managers, step back and look at the whole picture. You don’t have enough resources to do everything, so commit them where they’ll bring the greatest overall improvement (use the lens of opportunity costs.)
Have exacting standards, but don’t demand excellence in every idea.
Fire Fast—It’s Heartless to Hang on to Bad Employees
Firing is About an Underlying Commitment to Retaining Great People
The former General Electric leader Jack Welch earned the moniker “Neutron Jack” for sacking some 100,000 employees in the early years of his tenure as chief executive. Welch defended the dismissals by emphasizing that it would have been far more heartless to keep those employees and lay them off later when they had little chance of reinventing their careers. The dismissals were part of his deliberate efforts to establish a corporate culture that emphasized honest feedback and where only the “A players” got to stay.
Many Fired Employees Feel Surprised That the Axe Didn’t Fall Sooner
Managers know that ending a bad fit sooner is better than doing it later. Firing a bad employee is often better for both the employee leaving and the employees remaining.
Then again, many managers hesitate because firing is awfully difficult. No one likes to fire people. Looking an employee straight in the eye and telling he’ll no longer have a job is one of the harshest things a manager will ever have to do.
Besides, some managers are so uncomfortable with conflict that they are unwilling to deal directly and honestly with a problem employee, not to mention of confronting the risk of a wrongful termination claim.
If an Employee is Not Working out for You, Fire Fast
By holding on to a bad employee, you are really doing a disservice to the employee. Forcing a person to be something he’s are not, and giving him the same corrective feedback—week after week and quarter after quarter—is neither sustainable nor considerate. Trying to keep the employee in the wrong role prevents his personal and professional evolution.
- Give the employee a chance to turn the situation around—people can change.
- Try to find him an appropriate role within your company. Recall the old Zen poem,
Faults and delusions
Are not to be got rid of
Just blindly.
Look at the astringent persimmons!
They turn into the sweet dried ones.However, if the employee is a truly bad fit, reassigning him just shifts the problem to a different part of the company.
- If your efforts to remediate a bad employee haven’t worked out, cut your losses and fire him promptly. Help the employee move on to a job or a company where the fit is much better.
Idea for Impact: It is much worse to retain someone who is not suited for his job than it is to fire him. Help him find a new role quickly and land on his feet.
Do Your Team a Favor: Take a Vacation
Everyone understands that a manager should make time to check out and recharge. Yet, there’s an expectation that he remains available, plugged in, informed, and accessible while on vacation. Therefore, even when he does go away, he doesn’t truly get away.
Even the hardworking manager, when overwhelmed and overcommitted, can become a bottleneck. Refusing to take a break not only burns him out but also wreaks havoc on his team’s productivity—it hinders necessary skills building and succession planning. By butting in whenever he can, he subtly undermines his team by insinuating that his team members cannot run things on their own.
In 2012, the contact management company FullContact was in the limelight when it announced a “Paid PAID Vacation” policy. It offered its employees $7,500 every year to go on vacation with the stipulation that the employee totally disconnects. FullContact CEO Bart Lorang explained why employees and their teams can be better when they disconnect:
Once per year, we give each employee $7500 to go on vacation. There are a few rules:
- You have to go on vacation, or you don’t get the money.
- You must disconnect.
- You can’t work while on vacation.
If people know they will be disconnecting and going off the grid for an extended period of time, they might actually keep that in mind as they help build the company. For example:
- They might empower direct reports to make more decisions.
- They might be less likely to create a special script that isn’t checked into GitHub [software development repository] and only lives on their machine.
- They might document their code a bit better.
- They might contribute to the Company Wiki and share knowledge.
Get the picture? At the end of the day, the company will improve. As an added bonus, everyone will be happier and more relaxed knowing that they aren’t the last line of defense.
Idea for Impact: Take a vacation. Empower your team. When a smart manager goes on vacation, he leaves clear directions about the critical situations under which his team should contact him. While he mentally checks out, his team members get the opportunity to stretch and show their individual and collective mettle.
Could Limiting Social Media Reduce Your Anxiety About Work?
In a recent article on “Facebook envy,” I wrote about how looking at the carefully curated lives of others on social media can provoke insecurities about one’s own accomplishments—or lack thereof.
In response, a blog reader directed me to journalist Keith Breene’s writeup about a study on why millennials aren’t happy at work. Here’s a précis:
Much of the stress and anxiety reported by twenty-somethings is caused by ruthless comparison with peers. Emerson Csorba, director of the consultancy Gen Y, reported one millennial describing the challenge like this: “If we are not doing something exceptional or don’t feel important and fulfilled for what we are doing, we have a hard time.”
Where is the pressure coming from? With millennials more connected than any previous generation, opportunities to compare levels of success are ubiquitous, creating anxiety and insecurity. The accomplishments of peers, shown on social media, are a constant prompt to examine millennials’ own successes or failures. The problem is made much worse by the fact that only positive achievements are posted—you only ever see the good stuff.
Even though everyone knows that social media is a kind of PR feed of people’s lives, when you spend so much time online, these messages can easily become overpowering.
Idea for Impact: Resist the Envious Consequence of Social Media
Everyone’s lives are far from perfect, notwithstanding the dreamy pictures they’re posting on social media.
Protect yourself and your own internal goodness from self-sabotage. Rejoice in your real accomplishments without needing to show off to anyone else or seek external validation. Care less for what other people think.
Life isn’t a competition. There isn’t a race to the finish lines.
Furthermore, making others envious should never be a motivation for curating your social media posts. Nothing good comes from trying to be the envy of others.
Microsoft’s Resurgence Story: Book Summary of CEO Satya Nadella’s ‘Hit Refresh’
Leader as Sense-Maker and Cultural Curator
Microsoft CEO Satya Nadella is an exemplar of a leader as sense-maker. He has revitalized how Microsoft’s strategy, mission, and culture connect people, products, and services—inside and outside his company.
.jpg "'Hit Refresh' by Satya Nadella (ISBN 0062959727)")
Nadella has a success story to tell, and his Hit Refresh: The Quest to Rediscover Microsoft’s Soul and Imagine a Better Future for Everyone (2017, with two co-authors) highlights how he is a different kind of leader transforming Microsoft into a different kind of company.
Hit Refresh‘s broad objective is to lay out a vision for the future of the company. The book is aimed at people who work at or with Microsoft. Many employees were given a special imprint of book with Nadella’s faux-handwritten annotations in the margins and highlighted snippets.
The book’s narrative arc shifts from a personal memoir to a management how-to, and then to technological futurism. The latter—and perhaps the least interesting—portion features Nadella’s forethoughts on artificial intelligence, augmented reality, and quantum computing, as well as their socio-economic implications.
Satya Nadella Shook Things Up by De-Ballmering Microsoft
Nadella took Microsoft’s reins in February 2014 after long-time CEO Steve Ballmer resigned in August 2013. Under Nadella’s watch, Microsoft quickly became more open and more nimble as an organization. Its cloud computing, Office 365, and gaming platform franchises are all running remarkably well.
Microsoft pivoted its business model around subscription products that produce recurrent revenue. It acquired Mojang (creator of the popular Minecraft videogame title,) LinkedIn, and GitHub. It ditched Nokia and embraced open source software—it’s even including a Linux kernel in a future Windows release.
Today one of my top priorities is to make sure that our billion customers, no matter which phone or platform they choose to use, have their needs met so that we continue to grow. To do that, sometimes we have to bury the hatchet with old rivals, pursue surprising new partnerships, and revive longstanding relationships. Over the years we’ve developed the maturity to become more obsessed with customer needs, thereby learning to coexist and compete.
A Renewed Sense of Purpose: The Leader’s Tone Steers the Organizational Culture
Hit Refresh‘s foremost take-away is how the tone at the top sets an organization’s guiding values. Properly contemplated, propagated, and nurtured, Nadella’s approach became the foundation upon which the culture of Microsoft has been remade.
With “the C in CEO is for curator of culture,” Nadella’s dominant mission has been to recreate Microsoft’s underlying beliefs, values, and expectations in the eyes of its employees, business partners, customers, investors, and the society. This culture is to be consistent within Microsoft and characterize all the discernable patterns of behavior across the organization.
When I was named Microsoft’s third CEO in February 2014, I told employees that renewing our company’s culture would be my highest priority. I told them I was committed to ruthlessly removing barriers to innovation so we could get back to what we all joined the company to do—to make a difference in the world.
Nadella’s playbook has consisted of challenging complacency, instituting a “growth mindset,” being open-minded enough to welcome new technology and collaborate with Microsoft’s traditional competitors (“frenemies,”) and shifting from a “know it all” to a “learn it all” mindset.
I had essentially asked employees to identify their innermost passions and to connect them in some way to our new mission and culture. In so doing, we would transform our company and change the world.
“Driven by a Sense of Empathy and a Desire to Empower Others”
Core to Nadella’s framework is his conviction that individuals are wired to have empathy. “The alchemy of purpose, innovation, and empathy” is indispensible “not only for creating harmony within organizations but also for creating products that resonate.”
Nadella describes how caring for a special-needs child and his wife Anu’s sacrifices for the family made him become conscious of the significance of empathy. Specifically, Anu helped him recast these setbacks as opportunities to expand his worldview.
Being a husband and a father has taken me on an emotional journey. It has helped me develop a deeper understanding of people of all abilities and of what love and human ingenuity can accomplish. … It’s just that life’s experience has helped me build a growing sense of empathy for an ever-widening circle of people. … My passion is to put empathy at the center of everything I pursue—from the products we launch, to the new markets we enter, to the employees, customers, and partners we work with.
The most interesting section of Hit Refresh is Nadella’s personal journey growing up in India, migrating to America, and working his way up the career ladder at Microsoft. The only child of a Sanskrit scholar and a civil servant, Nadella was hooked on cricket (it taught him how to compete vigorously, the virtue of working in teams, and the importance of leadership direction.)
Recommendation: Satya Nadella’s Hit Refresh is a satisfactory first take on his remarkable revamp of the culture of a company that had become set in its ways. Microsoft’s transformation has been nothing short of dramatic—there’s a lot more to be done and written about.