Right Attitudes

Ideas for Impact

Management

Are Layoffs Your Best Strategy Now?

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Are Layoffs Your Best Strategy? We’re in a demand slump; if you think downsizing will cut costs and shore up the bottom line, consider the unexpected consequences of layoffs.

Hefty severance pay, outplacement services, and other direct costs can add up quickly, and indirect costs can be substantial. E.g., losing experienced employees can precipitate lasting damage to your business. The direct costs can wipe out any short-term financial benefit if new hard-to-find employees are to be hired and trained within six to twelve months when the downtrend stops.

Then there’s the trap of believing that things will get better soon and downsizing the smallest number of people in anticipation of a quick turnaround. And when that expected miracle doesn’t materialize, you’ll wind up making successive cuts. That’s awful for the morale of the employees spared. The best employees won’t feel indebted to soldier on and may start casting around for new offers terrified that they will be among the next to be cut.

Idea for Impact: Layoffs may not be the best strategy for grappling with hard times. Examine not just the cost of labor, but also the value created by labor. Consider the trade-offs and try furloughs, pay cuts, job sharing, and scaled-down hours instead, depending on when you foresee business rebounding. You’ll spread the pain of the downturn more broadly, keep talented employees, earn loyalty, and better position your company for recovery.

Wondering what to read next?

  1. Employee Surveys: Asking for Feedback is Not Enough
  2. How to Promote Employees
  3. Lessons from Peter Drucker: Quit What You Suck At
  4. Fire Fast—It’s Heartless to Hang on to Bad Employees
  5. General Electric’s Jack Welch Identifies Four Types of Managers

How to Lead Sustainable Change: Vision v Results

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In the Drucker Foundation’s Leader to Leader (1999,) Harvard Business School professor John Kotter proposes one of my favorite visuals on the essence of noticeable results that bear witness to a leader’s vision of change:

How to Lead Sustainable Change: Vision v Results

This illustration encapsulates why some organizational change initiatives succeed while others never get off the ground or break down after a while. Kotter observes,

Results and vision can be plotted on a matrix that has four dimensions. Poor results and weak vision spell sure trouble for any organization. Good short-term results with a weak vision satisfy many organizations—for a while. A compelling vision that produces few results usually is abandoned. Only good short-term results with an effective, aligned vision offer a high probability of sustained success.

Idea for Impact: The only way a leader can produce a well-paced, sustainable, and transformational change is by mobilizing the people around her to appreciate the benefits for them in her vision of the desired future. Ongoing results oblige visibility into progress and will catalyze the organization’s commitments.

Read Kotter’s Leading Change (1996,) an influential missive on change management.

Wondering what to read next?

  1. Don’t Push Employees to Change
  2. A Guide to Your First Management Role // Book Summary of Julie Zhuo’s ‘The Making of a Manager’
  3. General Electric’s Jack Welch Identifies Four Types of Managers
  4. Don’t Reward A While Hoping for B
  5. Eight Ways to Keep Your Star Employees Around

Direction + Autonomy = Engagement

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Direction + Autonomy = Employee Engagement The best way to achieve results as a manager is to give your team clear objectives and then allow them to approach the tasks in whatever manner that makes sense. You can suggest deadlines, schedule check-in appointments, and make yourself available for questions. People tend to take more pride in their work when they aren’t micro-managed. Delegate results when you can and interfere only when you must.

Observe the strengths and weaknesses of each employee and assign tasks based on what will allow each individual to thrive. When employees feel invested in a task, whether because they volunteered for it or because it employs their strengths, they are more likely to take ownership of their work and excel on the project. Have faith in your employees’ ingenuity and give them much latitude in how they do things.

Idea for Impact: Often, the most potent motivator for employees isn’t money—it’s the opportunity to learn, expand responsibilities, contribute and gain appreciation, and be recognized for achievements.

Wondering what to read next?

  1. Don’t Push Employees to Change
  2. A Guide to Your First Management Role // Book Summary of Julie Zhuo’s ‘The Making of a Manager’
  3. General Electric’s Jack Welch Identifies Four Types of Managers
  4. Eight Ways to Keep Your Star Employees Around
  5. Fire Fast—It’s Heartless to Hang on to Bad Employees

How Jeff Bezos is Like Sam Walton

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How Jeff Bezos is Like Sam Walton

Walmart founder Sam Walton’s brilliant autobiography, Made in America (my summary,) was published a few weeks before his death in 1992. The penultimate page reads,

Could a Wal-Mart-type story still occur in this day and age? My answer is of course it could happen again. Somewhere out there right now there’s someone—probably hundreds of thousands of someones—with good enough ideas to go all the way. It will be done again—over and over, providing that someone wants it badly enough to do what it takes to get there. It’s all a matter of attitude and the capacity to constantly study and question the management of the business.

Jeff Bezos started Amazon just two years later. After eight years on Wall Street, Bezos dreamt up Amazon during a drive from New York to Seattle in 1994. His wife (now ex-wife) MacKenzie drove, and Jeff “tapped out a business plan on his computer along the way.”

'Sam Walton: Made In America' by Sam Walton (ISBN 0553562835) Amazon began as a loss-making book e-tailer at the dawn of the commercial Internet and as the dot-com poster child in the late ’90s. It has since evolved into one of the world’s most valuable companies. Amazon has come a long way from its genesis as the curse of bricks-and-mortar booksellers and has diversified broadly into just about every adjacent business it could get its hands on.

Bezos’s and Amazon’s dominant leadership values echo those of Sam Walton and Wal-Mart: frugality, a bias for action, long-term focus, motivating staff to think like owners, and customer obsession.

The Everything Store (2013,) Brad Stone’s excellent chronicle of the rise of Amazon, notes, “In his autobiography, Walmart’s founder expounds on the principles of discount retailing and discusses his core values of frugality and a bias for action—a willingness to try a lot of things and make many mistakes. Bezos included both in Amazon’s corporate values.” On an earnings call, Bezos famously declared, “there are two kinds of retailers: there are those folks who work to figure how to charge more, and there are companies that work to figure how to charge less, and we are going to be in the second, full-stop.”

All along, Bezos has made big bet-decisions that hurt it in the short term but created value in the long term. Amazon’s market capitalization has rocketed up from $4.55 billion in 2001 to $1.08 trillion before the Coronavirus/COVID-19 infected the stock markets. Amazon’s secret, in Bezos’s words, is,

We are genuinely customer-centric, we are genuinely long-term oriented and we genuinely like to invent. Most companies are not those things. They are focused on the competitor, rather than the customer. They want to work on things that will pay dividends in two or three years, and if they don’t work in two or three years they will move on to something else. And they prefer to be close-followers rather than inventors, because it’s safer. So if you want to capture the truth about Amazon, that is why we are different.

Amazon has not been consistently profitable over the years, and that is a deliberate upshot of how Bezos approaches business. Amazon cycles through periods of substantial investments that beget future revenue growth (with low profits) and periods of increasing profits as its investments ebb.

'The Everything Store' by Brad Stone (ISBN 0316219266) Bezos has maneuvered Wall Street into believing that he is just getting started—his “Day 1” philosophy has become something of a legend. “A big piece of the story we tell ourselves about who we are is that we are willing to invent … and very importantly, we are willing to be misunderstood for long periods of time,” Bezos asserted at Amazon’s 2011 annual shareholders meeting.

Not all of Bezos’s bets have succeeded. However, investors have come to acknowledge that his long-term initiatives will produce rich results several years down the road. Little wonder, then, that Amazon’s stock has defied short-termism by continually progressing upward even during quarters of little or no earnings.

Postscript: Bezos has been, until recently, the world’s wealthiest person since about 2018. Walton was the richest man from 1985 until his death in 1992. His inheritors, the Walton family, are collectively more affluent than Bezos!

Wondering what to read next?

  1. Why Amazon Banned PowerPoint
  2. I Admire Business Leaders Who’re Frugal to an Extreme
  3. Book Summary of Nicholas Carlson’s ‘Marissa Mayer and the Fight to Save Yahoo!’
  4. Lessons from Peter Drucker: Quit What You Suck At
  5. How to Handle Conflict: Disagree and Commit [Lessons from Amazon & ‘The Bezos Way’]

Five Rules for Leadership Success // Summary of Dave Ulrich’s ‘The Leadership Code’

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The key to success in any discipline is to figure out the few things that must be done really well and to get those basics right. But so many leaders fail on the fundamentals—and don’t even realize it.

The real implication of leadership has been buried deep over the years: leadership isn’t about the position but about who you are and the responsibility you can undertake. Leadership consultants Dave Ulrich, Norm Smallwood, and Kate Sweetman’s The Leadership Code: Five Rules to Lead By (2009) argues that everything you ever need to know about leadership comes down to five straightforward rules.

If you understand these rules and put them into practice, you can’t fail to spur others and enrich teams, organizations, or communities.

'The Leadership Code' by Dave Ulrich (ISBN 1422119017) Rule 1: Be A Strategist. Deliberate leaders answer the question “Where are we going?” and mull over multiple time frames. They institute a great enough sense of urgency and remove impediments to the new vision. They anticipate the future and work with others to determine how to advance from the present to the desired future. Shape the future.

Rule 2: Be an Executor. The “executor” aspect of leadership focuses on the question, “How will we make sure we get to where we are going?” Effective leaders understand how to make change happen, assign accountability, assess plans, coordinate efforts, and share information that should be incorporated into strategies. Make things happen.

Rule 3: Be a Talent Manager. Leaders who engage talent now answer the question, “Who goes with us on our business journey?” They select the right people for the right job and ensure that people have the right tools and autonomy to succeed. Leaders foster an inviting organization, create a high level of performance and passion, and continuously monitor problems that need to be fixed. Engage today’s talent.

Rule 4: Be a Human Capital Developer. Leaders who are talent developers answer the question, “Who stays and sustains the organization for the next generation?” Leaders take the time to become aware of how future trends could affect their organizations. They position their teams to win by bearing in mind the longer-term competencies required for future strategic success. Build the next generation.

Rule 5: Be Proficient. Leadership demands are more daunting than ever, and the pressure to perform is relentless. Create regular timeouts to review where you invest your time and energy to ensure that you remain capable of self-managing your personal strengths and weaknesses and generating new behaviors to deal with new challenges. Invest in yourself.

As with most “rules-for-success” books, the authors tout their assessment of “hundreds of studies, frameworks, and tools.” But their work is no more than a distillation of notable leadership thinkers’ experiences. Nonetheless, the rules sound right. The five rules are simple, but they aren’t easy. They are sensible and practicable. They’re what you can focus your effort on for maximum return.

Recommendation: Quick read The Leadership Code. It makes a great early book choice for new leaders. It provides a grounded approach to the fundamentals.

Never underestimate the power of key leadership principles that can be well executed. Complement The Leadership Code with Peter Drucker’s The Practice of Management (1954; my summary) and Julie Zhuo’s The Making of a Manager (2019; my summary.)

Wondering what to read next?

  1. A Guide to Your First Management Role // Book Summary of Julie Zhuo’s ‘The Making of a Manager’
  2. How to Manage Smart, Powerful Leaders // Book Summary of Jeswald Salacuse’s ‘Leading Leaders’
  3. A Sense of Urgency
  4. To Inspire, Pay Attention to People: The Hawthorne Effect
  5. You Too Can (and Must) Become Effective // Summary of Peter Drucker’s The Effective Executive

What Elon Musk and Jeff Bezos Learn on the Floor

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The Frontline Advantage

What Leaders can Learn

Leaders can learn a great deal on the frontlines, not only about the inner workings of the products they produce and the services they offer but also about their employees:

  • Tesla CEO Elon Musk sees being on the production line and understanding it an integral part of his job. Musk famously declared, “I have a sleeping bag in a conference room adjacent to the production line, which I use quite frequently.” He has helped his California factory hit its production goals—even “real-time triaging cars at the end of the line trying to get to the root cause of what the issues were.”
  • Amazon requires its deskbound managers to attend two days of call-center training. CEO Jeff Bezos said in 2007, “Every new employee, no matter how senior or junior, has to go spend time in our fulfillment centers within the first year of employment. Every two years they do two days of customer service. Everyone has to be able to work in a call center. … I just got recertified about six months ago. The fact that I did a lot of customer service in the first two years has not exempted me.”
  • Subway Restaurants’ chief development officer Don Fertman appeared incognito as a “sandwich artist” for a week on the popular CBS Undercover Boss reality TV show in 2010. Fertman remarked that this ground-level perspective offered managerial empathy and led to better decisions. Subway’s senior-level executives are now required to spend a week every year in the field, becoming aware of how their choices influence franchisees and customers.

Idea for Impact: The frontlines offer leaders unfiltered information

Leaders, don’t risk the ego trap of losing touch with the frontline experience.

Venture out of the office and work directly with frontline employees. Even do the work of those they lead for a while. You’ll break down the hierarchy and glean a valuable new perspective.

Don’t forgo the frontline advantage—that’s where problems are discovered, and solutions are born.

Wondering what to read next?

  1. Lessons from Toyota: Genchi Genbutsu
  2. How Smart Companies Get Smarter: Seek and Solve Systemic Deficiencies
  3. Learning from the World’s Best Learning Organization // Book Summary of ‘The Toyota Way’
  4. Do Your Employees Feel Safe Enough to Tell You the Truth?
  5. Making Tough Decisions with Scant Data

Lessons from Toyota: Genchi Genbutsu

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Lessons from Toyota: Genchi Genbutsu - Go to the Source and See for Yourself

Firsthand, on-the-frontlines observation can offer critical insights that facilitate informed—and inspired—decision-making.

The Japanese approach to problem-solving calls this Genchi Genbutsu (literally “go and see for yourself.”) Sometimes called “get your boots on,” it’s not unlike the notion of management by walking about (MBWA.)

Genchi Genbutsu Refers to a Disposition Than a Specific Action

Genchi Genbutsu is rooted in the idea that any report, say, about a problem on the shop floor, is an abstraction. It’s separated from its context, and therefore generalized and relativized.

Secondhand information tends to misrepresent reality enough to give you a false sense of conviction. The only real way to understand a problem is to see it on the shop floor and get the full breadth and depth of information to make the right decision.

For that reason, any solution concocted at headquarters, where the report is received and the problem diagnosed from a distance, is doubly abstracted from the source.

Genchi Genbutsu isn’t a license for management interference, but to understand the problem, unearth the root cause, and help those doing it to resolve the issue.

Genchi Genbutsu Case Study: Toyota Sienna and the 53,000-Mile Roadtrip

When Yuji Yokoya was appointed the chief engineer for the 2004 Toyota Sienna minivan, he had never designed a vehicle purposely for the North American market. He traveled 53,000 miles across North America to monitor and discover what was wrong with the previous Sienna models. He drove the Sienna and competitor’s minivans through every state in America, every province in Canada, and every state in Mexico. in February 2003, Forbes noted,

In Memphis, Yokoya’s minivan was blown into the next lane crossing the Mississippi from Tennessee to Arkansas. Fix: Yokoya reduced the van’s wind resistance by narrowing the gaps between panels and adding plastic shields under the wheel wells to redirect air.

In Yukon Territory, road noise on the Alaska Highway prevented conversation between the driver and rear passengers. Fix: Yokoya stiffened undercarriage to reduce twisting and added sound-dampening material to the frame.

A culture of on-the-spot problem solving is so ingrained in the Toyota culture. According to company lore,

In the mid-’70s, Toyota had just introduced a four-speed automatic transmission. It was very unusual to have an automatic transmission fail, if ever. It seemed indestructible. When Dr. Shoichiro Toyoda [scion of the founding family and chairman of Toyota 1992–99] visited a dealership, the dealer complained that a car just came in with a transmission that had failed. Dr. Toyoda, in his pressed suit, walked over to the technician, got in a dialogue with him, walked over to the oil pan where he’d drained the oil from the transmission, rolled his sleeve up, and put his hand in this oil, and pulled out some filings. He put the filings on a rag, dried them off, and put them in his pocket to take back to Japan for testing. He wanted to determine if the filings were the result of a failed part or if it was residue from the machining process.

Genchi Genbutsu Case Study: Medtronic and the Bloody Catheter

In the late ’80s, when Bill George became CEO of medical equipment manufacturer Medtronic, he discovered that its catheter sales weren’t good enough. His engineers had said the product was first-rate and improving.

When George visited an operating room to observe a surgical procedure, Medtronic’s catheter fell apart in the surgeon’s hands as soon as he inserted the balloon catheter into the patient’s femoral artery. The surgeon extracted the catheter from the patient. In a fit of rage, he hurled the blood-spattered device across at George, who ducked to avoid injury.

This “Bloody Catheter” incident helped Medtronic fix faulty products and spurred a thorough overhaul of Medtronic’s engineering, sales, and problem-solving processes. George later recalled,

Field reports are a dime a dozen. There’s no emotional association with them. But when you’re in a medical environment like an operating room, all your senses-sight, sound, smell, taste-are working. It’s a totally different experience than reading a field report.

Idea for Impact: If you haven’t experienced something firsthand, your knowledge about it is probably suspect

Even in the information age, not all knowledge you need can be at your fingertips. Go to the source. Be where the action happens. Don’t forego the power of emotional input.

Wondering what to read next?

  1. What Elon Musk and Jeff Bezos Learn on the Floor
  2. How Smart Companies Get Smarter: Seek and Solve Systemic Deficiencies
  3. Learning from the World’s Best Learning Organization // Book Summary of ‘The Toyota Way’
  4. Making Tough Decisions with Scant Data
  5. Do Your Employees Feel Safe Enough to Tell You the Truth?

Executive Compensation: Pay Them Well, But Not Too Well

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Our executive compensation system is broken. Surveys show that the average public company CEO compensation is many hundred times that of the average employee. This gaping disparity in pay vis-à-vis the relative value they bring to their organizations is a moral embarrassment to our society, a point that wasn’t lost on the Occupy movement of yesteryear.

The debate over executive pay won’t die away anytime soon. As election year approaches, grandstanding politicians are vying to outdo each other with pledges to implement pubic policies that limit executive compensation, whereas theorists argue that, in a market economy, compensations should be set by supply and demand for executive talent.

Disproportionate executive compensation can demotivate employees The latter position is commonly echoed by company boards and executive compensation consultants—both of whom owe their cushy jobs to the CEOs and their top teams. They assert that leaders need to be provided with personal incentives to attract and motivate them.

Strangely enough, such incentives often demotivate the leaders’ followers. Financial incentives that are directed disproportionately to the leader in isolation often prove downright counterproductive.

Leadership is an outcome of the relationship between leader and follower, and excessively compensated leaders do not engender followership effectively.

This comports with financier J. P. Morgan’s observations at the start of the twentieth century that the only characteristic common to his failing clients was a tendency to overpay those at the top. As Peter Drucker commented in The Frontiers of Management (1986,)

[J. P. Morgan found] eighty years ago that the only thing the businesses that were clients of J. P. Morgan & Co. and did poorly had in common was that each company’s top executive was paid more than 130 percent of the compensation of the people in the next echelon and these, in turn, more than 130 percent of the compensation of the people in the echelon just below them, and so on down the line. Very high salaries at the top, concluded Morgan—who was hardly contemptuous of big money or an “anticapitalist”—disrupt the team. They make even high-ranking people in the company see their own top management as adversaries rather than as colleagues…. And that quenches any willingness to say “we” and to exert oneself except in one’s own immediate self-interest.

Idea for Impact: Employees’ efforts are devalued markedly under conditions of gross inequality. Pay leaders well (if you pay peanuts, you’ll get monkeys,) but not too well.

Wondering what to read next?

  1. General Electric’s Jack Welch Identifies Four Types of Managers
  2. How to Lead Sustainable Change: Vision v Results
  3. To Inspire, Pay Attention to People: The Hawthorne Effect
  4. Seven Real Reasons Employees Disengage and Leave
  5. Don’t Push Employees to Change

A Guide to Your First Management Role // Book Summary of Julie Zhuo’s ‘The Making of a Manager’

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First-time managers are often unprepared for—even unaware of—the responsibilities and challenges of being a manager. This is particularly true at fledging startups that don’t have bonafide HR departments to guide their novice managers nor can afford management coaches. Besides, it takes a new boss a year or two to learn the basics and become comfortable in his/her new role.

Julie Zhuo, Vice President of Product Design at Facebook When Facebook was small enough and “the entire company could fit into a backyard party,” 25-year old product designer Julie Zhuo was asked to become a manager. Zhuo had started at Facebook as its first intern and then gone full-time. Having no prior managerial experience, she acted how she thought managers were supposed to act and made many mistakes. In due course, she found joy in the role, expanded her skill set, and evolved to become Facebook’s VP of product design.

In The Making of a Manager: What to Do When Everyone Looks to You (2019,) Zhuo has chronicled her experiences from ramping-up into management and getting to know herself better. It’s the book she wishes had been there for the novice manager that she was.

Zhuo offers many hard-earned insights that only time in the trenches can reveal:

  • Operate from first principles. “Your job, as a manager, is to get better outcomes from a group of people working together.”
  • Not everyone is cut out for a managerial responsibility. “Being a manager is a highly personal journey, and if you don’t have a good handle on yourself, you won’t have a good handle on how to best support your team.”
  • Let go of your old “individual contributor” role and make the shift to being the boss. Don’t spend time trying to do the work. Invest your time in coaching, supporting, and developing employees. Don’t run interference between them.
  • Discover your decision-making proclivities. Map out your strengths and weaknesses. “Great management typically comes from playing to your strengths rather than from fixing your weaknesses.”
  • Realize that the source of your power as a manager is everything but formal authority. Respect trumps popularity.
  • Don’t manage everyone in the same way. Learn to appreciate how distinctive each individual is in what he/she wants from work and what animates him/her to work well.
  • Trust is a critical ingredient in relationships. “Invest time and effort into creating and maintaining trusting relationships where people feel they can share their mistakes, challenges, and fears with you.”

'The Making of a Manager' by Julie Zhuo (ISBN 0735219567) Zhuo offers practical—if basic, but sufficient—advice for setting a vision, assessing the culture, delegating problems, giving feedback, aligning expectations, setting priorities, establishing a network of allies and confidants, hiring cleverly, and other responsibilities of leading a team. She delves into many difficult circumstances she’s encountered, e.g., handling previously-peers-now-employees whom she passed over for a promotion.

Recommendation: The Making of a Manager is an excellent primer for novice managers. It offers an insightful, practical, and relevant playbook for making the transition from being an outstanding individual contributor to becoming a good manager of others.

Complement with Andy Grove’s High Output Management (1983,) Loren Belker et al.’s The First-Time Manager (2012,) and Michael Watkins’s The First 90 Days (2013.)

Wondering what to read next?

  1. Direction + Autonomy = Engagement
  2. Never Criticize Little, Trivial Faults
  3. Fire Fast—It’s Heartless to Hang on to Bad Employees
  4. Don’t Push Employees to Change
  5. Five Rules for Leadership Success // Summary of Dave Ulrich’s ‘The Leadership Code’

We’re All Trying to Control Others

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We're All Trying to Control Others

One of the realities of the human condition is that we’re all operating our lives by trying to make the settings around us—the environments in which we live, work, and play—to be just the way we want them to be.

However, we share these settings with other people, who themselves are trying to make their settings just the way they want them to be.

And herein is the source of a great many conflicts: as we control our worlds and our lives with the purpose of making them transpire as we’d like them to, we intercede with the controlling of others.

Conflict is not necessarily bad. It is a normal, fundamental, and pervasive facet of life. It is a natural outcome of what happens when our expectations, interests, viewpoints, inclinations, and opinions are at variance with those of others.

Every relationship is a minefield of conflict, and each instance of contradictory viewpoints brings new challenges.

The key to getting along amicably and resolving the problems of the world is working out how we can wisely facilitate our control of what is important to us without interfering with other people’s efforts at doing the same thing.

Idea for Impact: Life is negotiation. Getting what you want out of life is all about getting what you want from—and with—other people. Learning how to engage in conflict to get what you want without inflicting damage on the opportunities and the relationships is one of life’s essential and practical skills.

Wondering what to read next?

  1. Why Your Partner May Be Lying
  2. How to Have a Decent Discussion with Those You Love but Disagree With
  3. 20 Reasons People Don’t Change
  4. Our Vision of What Our Parents Achieved Influences Our Life Goals: The Psychic Contract
  5. Don’t Lead a Dysfunctional Team