The Role of Business in Preventing a Swine Flu Epidemic

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With concerns over a global swine flu epidemic growing, it will be interesting to see the role that businesses take in dealing with and preventing the spread of the disease. Although there is no doubt that companies can help the situation, I am hoping that business leaders at least cease some of the common practices that encourage the spread of illness among employees.

It is not unusual for organizations to award some type of bonus to people who do not use their sick days over a defined period. The bonus may be in the form of a direct payout for not using sick days or indirectly combined with some other type of reward (e.g., a bonus which, to be eligible, requires perfect attendance during the period). However the payout is packaged, it is basically an incentive to discourage people from using (or abusing) sick days.

This type of incentive makes perfect sense when you do not trust some employees. Offering a bonus to those who do not abuse sick days seems logical because it rewards the reliable workers while punishing the irresponsible employees. What I have found with this type of incentive, however, is that it actually results in increasing – rather than decreasing - the number of sick days taken by employees; especially during cold and flu season.

Some companies distinguish between “excused” and “unexcused” absences by limiting incentives to only those who present a note from a doctor after calling in sick. Besides creating a patriarchal culture within the company where managers are believed to be more trustworthy than workers, this type of policy forces ill employees to take the time, energy and expense to see a doctor when all they may need is to rest for a day or two to recover sufficiently enough to return to work.

Rewarded for Spreading Colds & Flu

Rewarding people for perfect attendance encourages employees to come into work when they are sick and need to stay home and rest. This results in spreading the cold or flu to other employees, thereby increasing the number of people who either take sick days or come into work when they, like the person who first came into work when he or she was sick, should stay at home. In a small company, this can be devastating because a large percentage of the workforce can end up sick. In one large company, I saw infections spread quickly – even to facilities in other countries – because sick employees were encouraged to come into work instead of staying home to recover.

One can imagine the effect this type of behavior can have on a swine flu epidemic. Whether faced with a worldwide epidemic or the common cold, however, managers need to understand that encouraging sick people to come into work shows a lack of regard for the health of all employees and can result in large costs for the company.

Why We Think It Works

Over the years, this type of incentive program has been very common among American companies for a variety of reasons.

1. Frustration It is frustrating when someone calls in sick. We hire people because we need them to do a job and when they miss work without advance notice, it can cause problems with productivity, customer service, and scheduling, in addition to putting pressure on other employees.
   
   An incentive to reduce absenteeism is an attempt to deal with the frustration that unfortunately can make the situation worse.
   

2. School Perfect Attendance Awards Rewarding perfect attendance is a concept that many of us were first exposed to during our school days. It is very common for schools to award certificates to students who do not miss any days during the school year. As is does with companies, though, this type of incentive often results in sick students coming to school and spreading the sickness to other children – thereby increasing the total number of days missed by the student body (and teachers), as a whole.
   

3. Focus on Direct/Easy to Measure Costs Determining the cost of absenteeism by measuring the number of sick days taken is easy, but unfortunately inaccurate. It is impossible to determine the costs associated with the lower productivity that results from employees coming into work sick. When multiplied by the number of employees who were infected by a person who came into work sick, the total drop in productivity can be staggering.
   

4. Hero Worship Whether the result of an direct incentive or positive reinforcement, the American business culture tends to make a hero out of the employee who comes into work even when he or she is sick. We tend to look at anyone who is more committed to the company than their own health as a valued employee.
   I once worked with a company where the CEO publicly praised managers in the corporate office for coming into work when they were ill. As a result, people became afraid to call in sick and only did so when they were physically unable to come into the office. During flu season, infections spread quickly through the office resulting in a number of problems for the company.
   

5. Lack of Trust Offering an incentive that discourages the use of sick days shows a lack of trust in employees because if you trust their motives, you would believe them when they called in sick. This can be a reflection of the company’s hiring practices and its process for screening employees. If the company’s values are clear and job candidates are carefully screened before hiring to assure they possess these values, you should be able to trust the motives of individuals.
   
   Dealing with employees who appear to be abusing the company’s attendance policy should be done immediately and on a case-by-case basis and not through companywide policy changes.
   

What Can Be Done?

There are a number of things that can be done to reduce absenteeism at a company. The most obvious is proactive health planning, which includes nutritional and health counseling to help employees strengthen their immune systems – especially during flu season. In addition to reducing employee sickness within the company, this type of initiative can improve productivity (by having healthier employees) and morale (by demonstrating that management cares about employees).

Another action that has been shown to help reduce absenteeism is to offer unlimited sick days to employees. When a specific number of sick days are offered, people think of them as something they are owed by the company and tend to believe they need to use them or lose them before the end of the year. An unlimited sick leave policy does not give the impression that people will lose days that they do not take.

As an example, a company I once worked with changed its sick leave policy from 10 days per year to unlimited days. Within the first year, the average number of sick days taken per employee was significantly reduced. [As mentioned earlier, though, care must be taken in any measure used to evaluate the results from a change in sick leave policy]

Focus on Health

Basically, the way to reduce absenteeism due to sickness – including a flu epidemic – is to focus on health instead of sickness. Attempting to improve the situation through artificial means like monetary incentives will not help people get sick less often. On the other hand, providing information, counseling, and a healthier work environment can give those who are willing to change the ability to do so, leading to sustained improvement.

Some of the steps businesses can take to help prevent an H1N1 epidemic (and reduce the financial impact if it does occur) are as follows:

• Telecommuting: Encourage those employees who can work from home to do so. This obviously involves a certain level of trust that employees will, in fact, work when they are not in the office;
  

• Stress Management: Implement stress management and reduction programs for employees. Studies have shown that stress depresses the immune system and anything the company can do to help employees deal with stress can help to prevent (or reduce the effects of) the flu;
  

• Nutritional Counseling: Diet can help or hinder the effectiveness of a person’s immune system. Counseling people on food choices and eating habits can help them strengthen their immune systems to fight off infections, as well as improve their overall health;
  

• Education: Educate people on the ways to prevent the spread of disease. Provide hand cleaners and anti-bacterial wipes in convenient locations throughout the workplace;
  

• Stay Home! Implement a policy for people to stay home when they are sick. Send people home when they are sick and come into work. Do not penalize people for using sick days and consider implementing an unlimited sick leave policy at least until the swine flu scare has passed. Also, eliminate monetary incentives that encourage people to come into work when they are sick.
  

Executives have the responsibility to take a role in preventing the spread of swine flu – not only for the health of their employees (and themselves), but also to help reduce the financial impact that a flu epidemic can have on an organization. Implementing the above actions, however, will not be easy for American companies because they require a fundamental change in the way managers think. The fear of an H1N1 global pandemic, however, may be just thing that stimulates this type of change in thinking.

Breaking Down the Silos

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GETTING PEOPLE TO WORK TOGETHER & SHARE BEST PRACTICES

One of the biggest issues facing leaders today is figuring out how to get people in different areas of the company to work together and share best practices. Whether the people are in different departments or locations, a lack of teamwork is a frequent problem and is difficult to resolve.

Whenever I am asked to help with this type of problem, I ask the following questions to the leaders to probe into the organization’s culture and leadership practices.

· How do you evaluate the performance of people and regions?

· What do you do if a particular location or person does not seem to be meeting objectives?

· When meeting with people or visiting different locations, what do you generally talk about?

· What is the company’s purpose? Is it clearly understood throughout the company – i.e., in different locations? How do you know?

In many cases, the answers to these questions point to the company’s leadership practices as the main cause of the problem of a lack of teamwork and sharing. The company’s system for evaluating performance, in addition to the actions and behaviors of management tends to inadvertently create barriers that interfere with the desire and ability of people to share information and/or accept ideas from others.

Evaluating Performance

It is important to exercise care when using measures to drive behavior because it just might work – although not necessarily in the way you intended. Holding a sales manager accountable for sales in his region tends to drive him to focus on sales in his region – even if it hurts sales in another region.

The following are actual examples of failed attempts to improve performance by holding people accountable to goals based on individual or localized measures.

· In a mid-sized global manufacturing and service company, the CEO measured the revenues generated in each region and made it clear to the sales managers that they were responsible for increasing sales in their assigned territories. Bonuses were based on exceeding forecasts and whenever he visited the different regions, he would meet with the team and review their YTD results and plans for growth.

The sales manager in Slovakia was an expert in a particular application of one of the company’s products. Although there were similar opportunities in other regions, the other sales managers needed the support of this person to capitalize on them. Because of pressure from the CEO, however, the Slovakian sales manager could not afford to take time away from his region to help others. He was aware (and frustrated) that this type of behavior did not benefit the company as a whole, but he felt he was doing what was necessary to meet his objectives and keep his job. As a result, he met his targets (as did the other regional sales managers), but the company missed out on a fairly easy opportunity to grow revenues.

Other companies I have worked with experienced similar results. Salespeople fighting over credit for cross-regional accounts, and different regions of the same company competing with each other for business are common results from the pressure to meet targets set by leaders.

· A purchasing agent in a manufacturing company was evaluated on containing costs for the products she purchased. Her main responsibility was to purchase pipe used by the production department for one of the company’s main products. She met her goal by procuring pipe from a variety of sources which saved on material costs, but resulted in a great deal of variation in the quality of pipe, as well as late deliveries. As a result, the production department experienced late shipments, increased cycle times, and additional labor costs to process the pipe. The situation hampered the ability of the production people to meet their targets and resulted in a deterioration of teamwork between procurement and production.

Organizations are far too complex to assume that evaluating performance of people or regions based on isolated or localized measures will result in optimizing the results of the whole. The issue has psychological and sociological ramifications which results in complications that have to be dealt with carefully.

If you take a cat apart to see how it works, the first thing you have in your hands is a non-working cat. – Douglas Adams

It is not possible to effectively lead an organization by breaking it into pieces and setting goals for each piece. What matters is the performance of the entire organization . . . not the individual people or departments.

In the sales manager example above, the CEO needed to stop worrying about the individual salespeople and focus instead on the sales of the entire organization. The objective of the regional sales managers should be to increase revenues for the entire organization – which by the way also involves procurement, production, engineering, and finance, as well as all sales managers. If the CEO made it clear to the team that their objective was to increase sales for the entire organization, the sales manager in Slovakia would feel empowered to help sales managers in other regions increase business. He would also feel better about his job knowing that he is helping other salespeople improve overall company’s results.

It’s About the Team

Getting people to work as a team requires treating them as a team. On the other hand, when you measure and hold people accountable as individuals they will act as individuals.

Although it seems simple, this premise tends to be difficult for many leaders because we are taught in business schools about the importance of performance reviews and increasing accountability to improve performance. Getting people to work together, however, requires holding the team – and ultimately the team’s leader – accountable for achieving results.

What About the Stars?

When you begin to manage and reward the team instead of individuals, there is a chance you will lose the “superstars” who like to work alone and be rewarded for individual effort. In every instance where I have seen this happen, however, the company actually improved performance after a superstar left. In the right environment, teams are much more effective than individuals – even if those individuals are superstars. Ridding the organization of those who put their own needs ahead of the company as a whole tends to unleash the talents of the team, enabling amazing things to occur. Superstars tend to shine in dysfunctional organizations where people do not work well together. Once teamwork starts to improve, the superstar starts to hamper, more than help performance.

Try It . . . It Really Does Work

When I work with organizations on teamwork-related issues, I suggest initially implementing changes in a pilot area to help reduce the apprehension of the leaders to change the way the organization is managed. In the sales example, the CEO agreed to change the high-level measures for the European business unit and focus on revenues and EBIT for all of Europe instead of country-by country. Regional measures remained, but were only used by sales managers and their teams to determine what was happening at the local level and to determine if action needed to be taken to improve results.

As a result, the level of teamwork between sales managers improved, and by year-end, revenues exceeded forecast by 27%. Sales actually declined in some regions because the team decided to focus on the areas where the biggest growth opportunities and higher margins existed – which contributed to EBIT surpassing budget by 57%. Customer satisfaction also increased because people in different regions were now working together to serve needs and resolve problems.

Strong From The Start

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The Six Elements of a Healthy Organization

In my book, Avoiding the Corporate Death Spiral, I outlined the six warning signs that an organization’s leaders must continually identify and address in order to avoid a crisis. Since writing the book, I have been approached on several occasions by entrepreneurs asking what they can do during the startup phase of a company to prevent a future death spiral. In other words, can the signs of decline be reversed to become the elements of a healthy and strong organization?

It is actually much easier to do things correctly from the start than to fix problems within an existing organization. Knowing the elements of a healthy company can help many problems be avoided, which is critical during the organization’s fragile startup phase.

Along these lines, I have put a positive spin on the warning signs and revised them to become the elements of a strong organization. These elements are:

1. Clear & Consistent Purpose
2. People/Process/Customer First - Numbers Second
3. Strong Supplier Relationships
4. Valued Employees
5. Clean and Well-Organized Workplace
6. Holistic Management

Keeping these elements in mind during the startup of a business can help to embed them into the culture early on, helping to assure they last many years into the future. Although there is always a certain level of cultural drift within an organization that requires the attention and action of leaders to keep the company on-track, it is much easier to address problems before they become engrained into the culture. The key for leaders is to understand that they need to continually be on the lookout for problems – during the good times as well as the bad. Strangely enough, it is actually when the organization becomes highly successful that it becomes the most susceptible to bad habits. It is very easy to take your eye off the ball when business is good.

Focusing on the Elements

1. Clear & Consistent Purpose

The most important aspect of starting and operating a business is having a clear and unchanging purpose. This means creating a simple and clear, but detailed description of why the business was created. It describes the value provided to customers – not necessarily in terms of a product, but the specific value that the product provides (see simple examples below).

Automobile Manufacturer:
YES: Provide safe, comfortable, reliable, and efficient transportation
NO: Build and sell cars

Call Center
YES: Helping companies provide high quality service to their customers better
and more efficiently than they can themselves
NO: Provide low cost call center services

Pressure Relief Valves
YES: Provide effective protection for people, equipment and the environment
NO: Provide pressure relief valves

Focusing on the value enables the company to keep up with changes and advances in technology instead of getting stuck with an obsolete product or service (e.g., typewriter manufacturers).

Having clarity on the purpose will enable you and the others in your organization to stay focused on the market(s) you serve and products/services you offer. Without this level of clarity, you run the risk of getting into areas where you do not belong, or attempting to take on more than you are able.

2. People/Process/Customers First; Numbers Second

As the leader of a startup, it is easy to get wrapped up in spreadsheets analyzing the financial aspects of the company. Although it is important to understand the numbers, it is even more important to understand that the numbers are merely the effect of taking care of your people, processes and customers. In meetings with the people on your team, it is a good idea to start with people, process, and customer issues first and close with financial discussions.

Also, do not get caught up in the idea that everything can be measured. In fact, the most important aspects of leading an organization cannot be accurately measured, but will require a great deal of your attention. This includes the costs associated with employee satisfaction, poor planning, lack of teamwork, etc. As an example, you may be able to put some type of measure on the level of employee satisfaction, but estimating the cost of a one point increase or decrease is impossible.

3. Strong Supplier Relationships

Your suppliers are a part of your system and as such, have just as much of an effect on your success as does your own team. The key is to find suppliers who have the same philosophy on business as you do and evaluate them based on the total cost of doing business (which includes price, payment terms, leadtimes, defects/reject rate, cost of inspection/appraisal, variation in materials, level of technical support, etc.).

4. Valued Employees

Without enthusiastic and happy employees, you have no chance of having happy customers. It is the workers who provide the products and services to satisfy customers and if they are not actively engaged in the business, it will show up in the quality of the work they do. This may seem like an obvious point, but it is so often forgotten that it bears repeating. Getting the correct people on your team is a critical first step, but keeping them enthusiastic and proud of what they do is just as important.

5. Clean & Well-Organized Workplace

This element includes setting up the workplace so needed equipment and information is readily available to people. This involves regular 5S efforts (Sort, Set in order, Scrub, Standardize, and Sustain) to assure that workplace setup continues to help, rather than hinder the work being performed.

Also included in this element is putting processes in place to effectively maintain the company’s assets (i.e., preventive maintenance), so they continue to perform as intended well into the future.

6. Holistic Management

An organization is an interdependent system that works to serve customers. Every person either serves the customer directly or serves someone in the organization who eventually serves customers. Because of this, it is important to understand how the entire system operates, including how materials and information flow from concept to customer and especially how they are handed off between processes.

It is very risky to set goals for individuals or functions because it is pretty much guaranteed that people will meet virtually any goal set for them (especially when money is involved) - whether it helps or hurts the company is secondary. As an example, if you set a goal for the procurement team to keep purchased costs down and another for the production people to meet the shipping forecast, chances are that both will meet their goals. The procurement team will bring in sub-standard materials with little regard to quality, and the production team will be forced to use poor quality materials and produce sub-standard products (at a higher cost) in order to meet the schedule. Both teams have met their goals while the company and its customers suffer.

These six elements will help assure that the company starts off with a strong foundation that will help it succeed, even when faced with negative external events. This assumes, of course, that there is a market for the products and/or services offered by the company, and that the company has solid financial strength. Given these two assumptions, the organization has a much greater chance of growing and succeeding well into the future if the leader assures the six elements are present from the start.

Reinventing the Automakers

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It’s refreshing to hear President Obama talk about the need for the American automakers to reinvent themselves to become more competitive. Politicians, business leaders, writers and newscasters continue to talk about the need for General Motors and Chrysler to fundamentally change in order to survive. My concern from what I have seen so far, however, is the idea that “getting smaller” is considered fundamental change.

If we look at the dictionary, the term fundamental is defined as, “serving as, or being an essential part of, a foundation or basis.” Following this definition, selling off divisions, laying off workers, closing plants, and shedding dealers does not constitute fundamental change. They are ways to cut costs, and may be necessary because of decisions made and actions taken in the past, but it has nothing to do with changing the philosophy and basic approach to business.

In my opinion, fundamental change for American automakers begins with getting back to the basics by clarifying and communicating the purpose of these companies. At one time, the Big 3 had very clear missions that involved offering safe transportation that provided value for their customers. Somewhere along the way they forgot about this and got the idea that their purpose was financial – e.g., related to profit or earnings for shareholders. When this happens in any business, decisions become much more focused on the short-term and the company’s overall health begins to break down.

Valuing Employees

Another area requiring fundamental change is the relationship between management and workers. There have been problems for years between the union and management, and it appears that the problems are still not being addressed. Unions don’t trust the intentions of management and the situation needs to be addressed immediately. And recent conversations with the union have been completely focused on concessions, with little or no discussion about improving the relationship.

If the relationship is to improve, the union needs to be involved in planning at the highest level and management needs to improve its communication with the workers throughout the company. This may work itself out because of the large stake unions are taking in the companies, but it can’t be assumed – it must be acted upon quickly.


Supplier Relationships

Another relationship that has been severely strained over the years is the one between the automakers and their suppliers. Surveys of tier 1 suppliers have shown a very small percentage of them feel they have a “good” or “very good” relationship with the Detroit 3. These surveys also show that suppliers feel that the automakers have little or no concern in the success of their supply chain. Lengthened payment terms and continual pressure to reduce prices has left many suppliers on the verge of bankruptcy and forced others into other industries because they just could not afford to continue to do business with the U.S. automobile manufacturers.

From a business perspective, it is crazy for any company to disrespect its suppliers. Unfortunately, large organizations in the U.S. and Europe have somehow come to believe that pressuring suppliers and shifting business around to keep prices down is good practice. Suppliers are a part of a company’s overall system – they just happen to be external to the organization. The effect they have on the quality, cost and delivery of the company’s products are just as important as employees inside the company. In this way, it would seem crazy to pressure employees to reduce their pay, increase the time between paychecks, and continually look for new workers in order to reduce pay by getting people to compete with each other for existing jobs. This is exactly how suppliers are treated.

Any supplier relationship must be based on mutual success. Analyzing suppliers must be done on the total cost of doing business with them; not just price and payment terms. In this way, all costs must be included – including inspection costs, inventory costs (due to defects, late deliveries and leadtimes), defects, design support, and extra labor due to variation in incoming products, in addition to price and payment terms. Unfortunately, price and payment terms seem to be the only components measured.

Better Cars

Whatever the change looks like for the U.S. automakers, it absolutely has to include offering better cars. The latest J.D. Power survey results regarding initial quality have been released and American cars are the noticeable minorities on the list. With all the publicity surrounding the improved quality of American cars, the survey results show that, unfortunately, they still lag behind those from Japan, South Korea, and Germany. This has got to change.

The processes for designing and building cars requires overhaul to give U.S. producers a better chance against foreign competitors. Anyone who has read, The Toyota Way by Jeffrey Liker has to wonder what it must be like to compete against a company like Toyota. Their methods are so different from traditional Western manufacturers, that it’s difficult to know where to start. What is important, though, is that the Detroit 3 actually “start.” They have got to start doing things differently and not believe that survival will come from cutting back.

Will it Work?

I know that something had to be done to keep the Detroit automakers afloat during the recession. Letting GM or Chrysler close down at this time would be devastating to the unemployment rate, the economy, the automotive supply chain, and the auto industry, in general. What I can’t help but wonder, though, is that giving GM and Chrysler billions is just delaying the inevitable and they are going to disappear anyway. The fundamental change that is needed to stave off closure just doesn’t seem to be happening . . . or happening quickly enough.

I hope I am wrong.

The Importance of Purpose

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Of all the reasons that an organization can fall into a death spiral, the most common and destructive is losing sight of its fundamental purpose. The Cambridge Dictionary of American English defines an organization as a group whose members work together for a shared purpose in a continuing way. Following this definition, without a shared purpose, there is no organization; there is nothing more than a group of people who come to work, put in their hours, and go home.

Whenever I bring up the subject of purpose, I get comments that it is passé for a company to develop mission and vision statements. It is true that this subject was addressed many years ago by W. Edwards Deming, Peter Drucker, and others, but it is also true that many organizations have not done it well and many leaders still don’t understand why it’s important.

Every organization was created for a reason – and it most likely was not to make a profit. The founders of many companies had a passion for fulfilling a need that they felt could be served better than what was offered at the time. Back in 1927, William Boeing founded The Boeing Company to, “so develop airplane design and construction that today’s spectacular feat of bravery will become tomorrow’s accepted mode of speedy transportation – inexpensive, dependable, safe!” More recently, Google was founded to, “organize the world’s information and make it universally accessible and useful.” What would happen if these companies forgot why they exist? What chance would they have to remain successful . . . or even survive?

It’s Not About the Money

A situation that is just as destructive as having no clear purpose is to define it in terms of maximizing financial gain – e.g., profits, shareholder value, stock price, etc. Although it is important for a company to earn profits over the long run, it is not a reason for its existence. Focusing on financial success above all else results in actions and decisions that drive short-term results at the expense of long-term health. Those aspects of the company that do not directly deliver profits today become seen as non-value-added and, therefore easier to eliminate. Research, new product or service development, training, and even workers become seen as interfering with success and pressure mounts on leaders to make cut.

In an interview in Quality Progress magazine many years ago, Peter Drucker was asked what he thought about the relationship between profit and purpose. His reply was, “[the statement that] the purpose of an organization is to make a profit is not only false, but is total irrelevant.” This is because the purpose is external to the business – it is in society. It is directly related to the value the organization provides to its customers. When an organization successfully accomplishes its purpose, it makes a profit. In this way, sustainable profit becomes the indicator of how well the company meets its purpose

The economic crisis we’re in today has exacerbated this problem. Companies have gotten so focused on cutting costs that many have act as if their purpose was to cut costs. In my experience, implementing across-the-board cuts is a sure sign that a company has lost its purpose. During a recession, it is critical to get back to the basics and focus on the organization’s fundamental purpose. As a result, some areas of the organization will become more critical than others and may actually need an increase in spending while others are cut back or even eliminated.


It’s About Value – Not Products

It is critically important to define the purpose in terms of the value provided to customers instead of a specific product offering. Manufacturers of typewriters, slide-rules, and carburetors demonstrated the importance of this concept. An organization that ties its purpose to a specific product offering can run into serious trouble when technology changes and their product no longer satisfies needs as well as it once did. Think about how many typewriter, slide-rule, or carburetor manufacturers are still around today. Each of these products was replaced by something that, although more expensive to purchase, met needs much more effectively than what they replaced.

Understanding the fundamental needs of customers and how a specific product or service currently meets that need can help a company change along with technology and the tastes of consumers.

I recently spoke at a call center conference in Portugal and had the chance to listen to other presentations and talk to many of the attendees. There was real concern from those in attendance about the effect low cost call centers in Asia will have on the industry in Portugal. Labor costs are much higher in Portugal than in India, China and the Philippines, and Portuguese companies do not feel they can compete with companies in these areas. If they define their companies in terms of providing low cost call center services for their customers, they are correct – they cannot compete. If they dig deeper to understand the real value they provide, however, and define their purpose in terms of helping companies serve their customers better and more efficiently than they can themselves, they have a much better chance of competing successfully. Defining their purpose in this manner can help them focus on high quality, as well as cost effective service. It can also help encourage innovation of new technology and services that can redefine what call centers provide to customers.

Practicing What You Preach

Defining your purpose is not about creating slick or catchy mission statements. It is about clarifying why the company exists and guiding team member behaviors and actions. It is critical that leaders believe enough in the purpose to stick to it – in good times and bad – and allow team members to question decisions that appear counter to the organization’s purpose.

Technology and consumer tastes will change but, when defined clearly and correctly, a company’s purpose will never change. It is the one thing that must remain constant within an organization.

An Industry Without Direction

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Okay, here’s the scenario:

You are leading a business in a troubled industry. Rising costs, falling demand, and intense competition have been dragging profits down for years and many of your competitors are on the verge of collapse. Across the industry, customer satisfaction is low. What is your strategy?

How about pretty much continuing with the same outdated business model, while drastically cutting costs, and services to deal with the crisis.

Believe it or not, there are several companies in this situation doing just that. They are called airlines.

As a management consultant, I spend a lot of time in the air traveling between assignments, and I have to admit that I have never dreaded flights the way I do now. The service is poor (due to fewer people and improper focus – not the quality of the people), the food is awful, and even my frequent flier miles (if I get them at all) are not worth as much as they used to be.

What really does not make sense from a business perspective, however, is why, during a period of shrinking markets and increased competition, the airlines do not seem to think that increasing customer satisfaction is a way out of the crisis.

It has got to be that they are so focused on their balance sheets that they have forgotten about the customer, or still follow the belief that quality means higher costs. This is common to organizations, especially during a crisis. It is easy to get so focused on cutting costs that people begin to think of cost management as the organization’s fundamental purpose. When this type of situation occurs, employees suffer due to a stressful work environment, customers suffer because of poor service, and shareholders suffer because the fundamental problems are not effectively addressed.

If there was ever an industry in need of lean thinking, it is the airlines. As soon as someone discovers how to improve quality and costs together, and offer safe, clean, comfortable air travel to customers, they will clean up.

For now, however, I continue hoping that someone will catch on and the quality of air travel will someday improve.

GM Product Development & Efficient Cars

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GM Fallout?

BusinessWeek reported in its February 23 issue that Bob Lutz, the “legendary” product chief at General Motors will resign at the end of 2009. The report states that, “The thought of designing cars to meet Washington’s fuel economy rules – as opposed to consumer tastes,” drove him to retire.

This article once again reminded me one of the key reasons GM continues to suffer. The exercise about going to Congress to ask for billions in taxpayer aid and the scrutiny they have had to undergo throughout the process has seemingly not increased their humility one bit. They have lost the auto industry’s number one spot – a position they have held since 1931 – to Toyota (and appear primed to lose the number two spot to Honda in the not-to-distant future), and have apparently not learned anything through the process.

Maybe it’s me, but I fail to see how GM has been designing cars to “meet consumer tastes,” over the last several years anyway. If they had, they would not have lost the top spot to Toyota. And to think that it is only Washington – and not the consumer – who cares about higher fuel economy, shows the culture of hiding your head in the sand continues.

Besides higher quality, better fuel economy, lower costs, innovative production techniques, and a happier workforce, Toyota’s cars are more exciting than GM. And when I visited the Detroit-area last October, the high number of Toyotas and Hondas told me that Detroiters now feel the same way. When I think of “cool” cars for different age groups, I think of the Accord, Civic, Lexus, Prius, BMW 3-Series, Mini Cooper, Scion, and a few others, but can’t seem to recall any GM cars that fall into that group.

So, as GM moves into a new era of product design, they have got to increase the cool factor of their cars. Oh, and while doing that, it wouldn’t hurt to also work on the quality, reliability, cost, and fuel economy.

On another subject . . .

Does the Government Really Want Electric or Hybrid Cars?

Like many Americans over the last several years, I could not understand the seemingly complete lack of interest that the government has in assuring the success of hybrids or fully electric cars in the U.S. The Bush administration gave token tax breaks to purchasers of hybrids a few years back, but it didn’t make sense why the incentive was limited to only a small number of people who first purchase the cars.

The reason has recently become clear to me – and it will be tested as we watch how committed the Obama administration is to the development of high mileage or combustion-free automobiles.

The U.S. and state governments collect a great deal of tax revenue on sales of gasoline ($0.47/gallon for gasoline and $0.536/gallon for diesel). If we move away from gasoline engines to non-combustible engines, this huge source of revenue will dry up. Determining what will replace the fuel tax is destined to be a hotly debated and highly charged political issue – and probably one that politicians are not ready to tackle given the current state of mind of Americans.