Back to Basics: The Key to Improving Performance

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After many years of working with organizations in different industries on a variety of issues, I have discovered that the most common reason for performance falling short of expectations is a lack of attention to the basics.  I have seen numerous initiatives fail because of misalignment between, or inconstancy within, a company's purpose, values, objectives, and reward systems.

Consider the following objectives:

• Improve EBITDA by 20% over the next two years;
• Achieve compounded double-digit revenue growth each year for the next five years;
• Introduce 5 new products to the market next year.

In each of the above examples, the organizations failed to achieve the stated objectives.  This was not because of a lack of talent or desire to meet the goals.  In each case, managers responsible for the objectives felt extreme pressure to succeed but were handcuffed by the problems related to trust, teamwork, reward systems, and overall company focus.

An organization cannot perform at a level beyond its capabilities for a sustained period of time - and its capabilities are determined by the basics.  Setting objectives that are beyond capabilities will do little more than create frustration or apathy among those assigned the responsibility to meet them.  You can challenge, pressure, or cheer as much as you want but unless you deal with the fundamental roadblocks to success, you will end up sorely disappointed.

In sports, it's common for individuals and teams to address a slump by getting back to the basics.  In tennis for example, correcting poor performance requires thinking about footwork, watching the ball, and focusing on each point.  Attempts to ascend to a new level of performance will be fruitless without mastering these basic aspects of the game.

Getting Back to the Basics

Addressing the fundamental issues in an organization can take several different paths depending on the company's situation, but generally involves the five areas listed below.

• Reaffirm & Recommit to the Purpose:  Assure that the organization's purpose - including mission and vision - is absolutely clear.  Obtain commitment to the purpose at all levels and develop objectives that support its achievement;
   
• Clarify & Commit to the Values:  Define the company's DNA and assure that the hiring process includes some type of assessment to assure candidates possess the desired values.  It is important to understand that, regardless of how successful an individual appears to be performing - if he or she does not follow the same values as the rest of the organization, damage will occur;
   
• Align Focus on the Customer:  In relation to the purpose, assure that everything the organization does is focused on the customer.  As Gene Perkins, retired Group Vice President-Flow Products at Emerson Electric Company once said to his management team, "if we're not thinking about the customer first in everything we do, we might as well fold up our tents and go home;"
   
• Increase Understanding of the System:  Especially at the management level, people must understand the company's overall system (i.e., how the company serves the customer) and work to continually improve how materials and information flow through the system.  Managers must be company-focused rather than functionally-focused;"
   
• Align Measures & Rewards with Direction:  Once the direction and focus has been established, make absolutely sure that there is close alignment between them and the reward systems in the organization.  Be continually on the lookout for rewards that may encourage undesirable behavior.

It is very easy for an organization to stray from the above areas.  There is often so much going on and everyone is so busy that it is easy to be distracted with internal issues that do not tend to be as glamorous as improving EBITDA by 20% or achieving double-digit revenue growth.  Without a strong foundation on which to build the business, however, achieving and sustaining any type of significant improvement will not happen.

Successful Job Search: Getting the Interview

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It's been a few years since the worst economic downturn since the Great Depression began and a large number of highly talented people remain unemployed and frustrated at their lack of success in the job search process.  Many regularly submit resumes for positions for which they feel perfectly qualified and receive only electronically-generated rejections - if they receive anything at all from the hiring company.

From a pure numbers perspective, it is easy to understand why this is happening, but understanding the reasons does little to reduce the frustration and depression that many searching for jobs are feeling.  It comes down to the fact that anyone applying for an open position needs to find a way to stand out from the crowd and get noticed by those doing the hiring.

Below are my thoughts on the job search process.  Although I would never describe myself as an expert on the subject, I have witnessed these steps achieve a 40% success rate in getting a positive response from the hiring company.  Keep in  mind that these steps will only help you get a dialogue going with someone in the company - getting beyond the initial contact is up to you.

Resumes are Secondary

Most people focus on the resume or CV as the critical part of the job search.  Resume writing services are booming these days with the promise of providing a CV that will set a candidate apart from the thousands of others who may be applying for an open position.

I believe that the resume is actually secondary in finding a job.  Attempting to communicate the ways in which you will benefit the company through a resume puts the responsibility on the person reading it to make the connection between your background and the needs of the job.  Regardless of how impressive they may be, a listing of qualifications, accomplishments, and keywords will not set you apart from others.  You really need to find a clear and concise way to communicate to people exactly how you will help the company.

Your resume will come into play after you convince the hiring company that you can provide what they need.  With this in mind, it is critical to have a clear and well-organized CV - and one that is specifically tailored to the open position - but it is not the most important part of the job search process.

The Critical Steps

With this in mind, a successful job search process should include the following elements:

1. Read the Job Description very closely to gain a deep understanding about the company's needs.  Use the job description along with other information (e.g., website, annual report, etc.) to look for themes that identify what the company is truly looking for in the position.  Highlight the areas that identify critical issues and those where you have particular expertise.
    
2. Develop a Plan that clearly addresses the issues identified specifically in the job description and, more generally, in your research.  Present a basic overview (exhibit 1) and include a more detailed explanation of the steps that need to be taken to be successful (exhibit 2).
   
   
   
   Sections of the plan will differ depending on the specific position.  The plan shown in the example is for a Lean Director position.  It would obviously need to change for other jobs (e.g., for a VP of Operations, the categories may include such things as People Development, Process Improvement, Product Development, etc.).  It depends entirely on the scope of the position and the needs of the organization.
   
   
   
    
3. Identify the Hiring Manager.  With apologies to my friends in the HR field, most of the people who screen resumes do not really understand the position well enough (or have the time needed) to look beyond what is written in the job description.  In many cases, a junior person or computer filters the resumes to screen out those that don't have the correct keywords.  Your chances diminish greatly if you don't send your information to the person to whom the position reports.
   
   Depending on the level of the position, the hiring manager can be located through sources like LinkedIn, the company's website, or a web search.  This can take time, but is extremely important to assure you reach the correct person.  For higher level positions, don't be afraid to send the plan directly to a C- level person (i.e., CEO, COO, CIO, CFO, etc.).
    
4. Send the Plan to the Hiring Manager.  This step requires patience and creativity to determine the company's email address format.  In some cases, the domain name for the company's website differs from the domain for email addresses, so it may take several attempts to finally get it through.

I can't take full credit for the above approach.  A friend of mine is a lawyer and told me that pursuing a position at a law firm often requires submitting a business plan to identify the target clients the candidate can bring to the firm and how much business these potential clients represent.  Combining this with my own experience leading an organization, I thought that a similar approach would make sense for those in other professions as well.  When I led an organization and hired for an open position, I was much more interested in how well the candidates understood our needs and how they could help than what was in their CVs.

The drawback of this process is that it takes a lot more time to apply for a position and you will probably not be able to apply for more than three or four positions per week, at best.  Besides getting you an interview, however, the plan can also provide a point of reference for discussion during the interview and help you get started once you land the job.

Good luck!  Everyone deserves a job that is challenging and rewarding.

Fast Does Not Mean Cutting Corners

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I believe that, to be successful today and in the foreseeable future, companies will need to continually increase speed and flexibility.  Changes are occurring faster than ever, and those companies that are able to adapt to - and drive - changes quickly will be much more competitive than those that are not.

Whenever I  mention the subject of improving speed and flexibility, however, I inevitably receive comments about the dangers of making decisions and acting too quickly.  The comments often include examples where efforts to increase speed have resulted in major quality or safety problems.

In my view, however, "fast" does not mean cutting corners or operating out of control - since dealing with quality or safety issues does little to improve speed or the ability to adapt to changes int he environment.  Being faster and more flexible actually requires improving focus and perfecting processes on a continual basis.

Successfully streamlining processes and systems requires understanding and continually improving the activities that add value to customers while reducing or eliminating any activities that do not.  And when the focus is on customer value, cutting corners on safety or quality is not an option.

Speed Requires Stability

When driving, the more stable the car, the safer it is to drive at high speed.  In business, the more stable the organization - in terms of purpose, values, leadership styles, employee turnover, and focus - the safer it is to increase speed.

The loss of control, along with the increased variability in processes and results caused by impatience and short-term thinking can quickly throw an organization off-course.  These are the behaviors that drive people to think that being faster means cutting corners instead of strengthening and improving processes.

Focusing on value for the customer can speed up decision-making and processes while prventing the haphazard cost-cutting measures that too often lead to financial trouble, industrial accidents, encvironmental disasters, and deaths.

Keep the Focus Clear

Speeding up an operation requires constant vigilance for anything that interferes with processes operating perfectly every time.  Interference in processes can result from design, handoffs between people, or a variety of other technical, organizational, or cultural issues.  Because of this, it is important for a company to develop the ability to honestly and objectively assess itself for those things that slow it down.

When leaders maintain stability in the organization's basics, and focus attention on improving speed and flexibility, remarkable things can happen.  The improvements in agility will be accompanied by reduced costs, increased customer satisfaction, and a safer operation.

Does Size Matter?

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Is There a "Best" Size for a Company?

I had coffee with a colleague awhile back and we got into a discussion on whether there is a "best" size for an organization.  Small companies are fast and flexible but often lack the capital needed to grow.  Although large companies tend to be slow and unable to deal with change effectively, they have the capital and geographic reach that small companies lack.  A large company also has the ability to crush or acquire a smaller competitor that is seen as a threat, if the threat is recognized early enough.

An interesting observation about this subject is, as a company grows, it tends to become slower and less able to do many of the things that made it successful in the first place.  Additional layers of management and more formalized systems can slow the decision-making process to the point where it becomes unable to respond quickly to changes in its environment.  Another common characteristic of companies as they grow is a tendency to become more risk averse in an effort to meet conservative financial targets or protect share price.

Does it Matter?

So what is the optimum size for a company?  Does it depend on industry?  There are obviously some industries like consumer electronics where, no matter how large a company is, it can't survive without the ability to quickly adapt to, or drive, changes in the market.

These are interesting questions to debate, but I wonder if they really have answers.  What if an organization can remain fast and flexible as it grows?  Think about how successful a company could be if it could continue to be as fast and flexible as it was when it was small and growing.  There are not many examples of large, fast-moving companies, but that does not mean that it is not possible (or important).

A Matter of Survival?

Like most aspects of leadership, it's an issue of focus.  When leaders of an organization determine that speed and flexibility are competitive issues, they will give it the focus they need to make them happen.

I believe that success in the years ahead will require the ability to drive and adapt to changes quickly and effectively.  The world is changing at such a rapid pace that the organizations that are unable to adapt will not be competitive.  Developing the capability will require addressing areas like speed of new product development, flexibility of processes, implementing and upgrading information systems, etc.

Increasing speed and flexibility for many organizations will require transformation.  For too long, we have become obsessed with the idea of growth as the focus of a business.  Investors tend to lose confidence in companies that experience slowing growth [refer to Fortune magazine articles on Google and 100 Fastest-Growing Companies] which can cause problems when, in an attempt to appease the financial community, a company shifts its focus toward growth through acquisitions that are not necessarily strategic or sensible.

If the focus is on developing the ability to drive change through innovation, and respond to change by increasing flexibility, the growth can occur organically through increased competitiveness.  Although organic growth in revenues does not tend to match the growth that can occur through acquisition, it can be much more profitable and less destructive to the company and its culture.

Innovation and speed do not need to be limited only to companies like Samsung, Apple, and Facebook.  Every company has the ability to improve flexibility and adapt to changes in its environment.  Size does not need to be a deterrent to change.  It is a company's characteristics and capabilities, not its size, that determines its flexibility.  All it takes is recognizing the need, being sensitive to the friction created as the company grows, and continually addressing the elements that interfere with the ability to change.

Getting Support from Support Functions

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"Everyone here has a customer.  And if he doesn't know who it is and what constitutes the needs of the customer . . . then he does not understand his job."  - W. Edwards Deming

One of the most difficult jobs of a leader is getting everyone in the organization to work toward the same objectives.  The issue is especially difficult in support functions where team members are generally isolated from customers, which makes it harder to create a connection between work performed and the success of the business.

The problem is magnified even more when the company utilizes a shared services model (i.e., decentralized business units with centralized support functions).  I've heard many business unit leaders over the years complain about poor quality service and lack of support from corporate functions.  In many cases, business units hire their own support people - even if it results in the company doubling up in some positions - in an effort to have more control over these functions.

With the focus and pressure on reducing costs these days, more companies are implementing the shared services concept and combining support functions into a single team in an effort to reduce the company's costs of providing support.  If not done correctly, though, this concept can actually increase costs due to poor quality service or slow response to operating units.

Establishing and communicating the company's purpose can help, but it's not enough.  It is also important to show people how their roles align with the purpose and, without a systems thinking mindset, this can be very difficult, if not impossible.

It's About Value for the Customer

The key to reducing the total cost without sacrificing the quality of support is to continually focus on value.  Focusing on value to the customer is what keeps everyone aligned on what is truly important, and helps make decisions regarding where to invest and where to cut much easier.

It is the entire company's responsibility to serve the customer, and doing it effectively requires a systems thinking mindset by those in leadership positions.  But merely telling people to be systems thinkers is not going to make it happen.  Increasing understanding of the company's high-level system requires education and coaching on a continual basis . . . and the value stream map is a great place to start.

A company's value stream is the chain of events that the transforms knowledge, information, and materials into goods or services to customers.  The value stream is how the company serves its markets and makes its money.  In theory, a company should not do anything that is not directly related to the value stream because it does not provide value to customers or bring in revenue.  Even those functions that exist for purely regulatory reasons should be oriented directly toward supporting the value stream's efforts to serve the customer.

The better people understand the company's value stream (i.e., the high-level system), the better they will understand their jobs.  It will become much clearer to everyone why their job exists, who they serve, and where improvement efforts need to be focused.

The Value Stream Map and Shared Services

Once developed, the value stream map (a diagram, or flowchart of the value stream) becomes the foundation to implementing an effective shared services function.  The internal service providers are just as critical to the company's success as the operations functions.  Without an understanding of the value stream, however, it is difficult to know exactly what value service functions provide to the organization, and particularly how to improve quality and reduce costs.

With this in mind, implementing an effective shared services function requires addressing the following:

• Clarifying expectations that serving customers is everyone's responsibility, and those who do not directly serve external customers are responsible to support those who do (i.e., their internal customers);
• Develop the purpose of the shared services function.  Since this is most likely a new approach for the company, it is important to bring support team leaders together to develop the purpose and assure that, once developed, the purpose is clearly communicated throughout the company;
• Map the company's value stream.  Develop the high-level value stream map for the company and clarify how the shared services functions fit into the system.  Follow up with more detailed maps to show how each support function serves the value stream, keeping in mind that support functions can also serve each other;
• Understand the barriers to effective teamwork.  There are likely obstacles that will interfere with getting people to focus completely on serving the value stream.  These obstacles (e.g., fear, or objectives and rewards that discourage serving internal customers) need to be clearly identified and addressed.

Outsourcing services or cutting support budgets will not, by themselves, result in improving company performance.  It is critical to clearly understand the interactions between functions that exist and how these relationships contribute to serving the external customer.  It is only with this level of understanding that costs can be reduced while service to customers is improved.

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Hire Trustworthy People . . . Then Trust Them

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"Every knowledge worker in a modern organization is an 'executive' if, by virtue of his position or knowledge, he is responsible for a contribution that materially affects the capacity of the organization to perform and to obtain results." - Peter Drucker

What would happen if you offered your employees an unlimited number of vacation days?  Could you trust that people would not take advantage of your generosity?  Would work still get done?  As crazy as it may seem to some, DVD and movie rental company Netflix did just that and, by every indication, it's working just fine.

According the a story in the August 14 edition of the Telegraph [LINK], Netflix stopped counting vacation days for its salaried employees back in 2004.  Reasons given for the decision include the fact that employees regularly spend personal time (e.g., nights and weekends) handling company-related issues and responding to email.  Also, since hours worked per day were not tracked, leaders decided it didn't make sense to track vacation time either.  These are logical reasons, but I believe it comes down to something much simpler:  Netflix hires trustworthy people and trusts them to do their jobs.

It's About Company Objectives, Isn't It?

Many managers forget that it's more about quality of work than quantity of hours that determines the value of an employee.  If an individual is getting his or her job done, and is successfully contributing to the company's objectives, it doesn't matter how many hours or days is spent in the office.  For some reason, though, we tend to think that if people are not putting in 40+ hours per week, they are not valuable to the company.


If a company is effective in recruiting talented and trustworthy team members who fit into the culture, it does not need tight policies and controls.  In fact, the tighter the controls, the less effective creative and energetic people tend to be.  When expectations are clear and barriers to success are removed, people regularly surpass objectives.

The Importance of Culture

Netflix developed a presentation to describe their culture that is widely available on the internet.  As I read through the presentation - all 128 pages of it - it became clear that Netflix leaders understand the type of company they want to be and work tirelessly to develop - and protect - their culture.  The presentation, titled Reference Guide on our Freedom & Responsibility Culture, is worthwhile reading for anyone in business.

It's the Overall Approach - Not the Perks

Applying the Netflix formula for success does not mean copying what is in the presentation.  Unlimited vacation days only works because it is a component of the company's total approach to business.  It means taking care of the things that give direction and inspire people to act.  These include:

1. Understand the Purpose:  Clearly understand why the company exists - i.e., who the customers are and what value customers get from doing business with the company.  Make sure that decisions and actions support the purpose;
2. Set Direction:  Establish a vision for the future that inspires and excites people to make the company successful;
3. Develop the Culture:  Don't let the culture happen by accident.  Create an environment that will make people, customers, and suppliers proud to be associated with the company and want to make it successful.  Once the culture is established, vehemently protect it from the internal and external forces that can change its characteristics;
4. Hire Correctly:  Recruit the type of person who will thrive in the company.  Put more focus on finding someone with the right cultural fit than the correct technical qualifications and consider every hire from the perspective of bringing in someone who will be personally successful while contributing to the long-term success of the company;
5. Develop Individuals & Teams:  Improve the ability of individuals and teams to be successful.  Provide learning opportunities for everyone to assure that organization continually develops.  When possible, develop future leaders from inside the company rather than hiring from the outside;
6. Get Out of the Way:  Stay visible, but let people do their jobs.  Get involved when situations call for coaching and development and remain focused on leading, rather than managing, people.

Virtually every company wants an innovative and energetic workforce but very few know how to make it happen.  It comes down to taking care of the basics (above) and trusting the people you've hired to do their jobs.  You can hire highly talented and qualified people but micromanagement and tight controls shows a lack of trust and leads to a group of people who are uninspired and indifferent about the company's success.

Back in 1997, very few would have thought that a tiny startup from Los Gatos, California had a chance to supplant the mighty Blockbuster in the movie rental business.  As the people at Netflix have proven once again, though, the ability to unleash the talents of people is the most significant competitive weapon a company can have.

Staying Humble & Successful

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Arrogance diminishes wisdom.  Arabian Proverb

One of the critical but rarely addressed challenges facing a leader of a highly successful company is how to keep people hungry.  It is human nature for a group of people to feel invincible when they have experienced success for an extended period of time, and it is the incumbent upon the leader to fight the urge and keep the team humble.

Signs that a company is beginning to develop a superiority complex can include any of the following:

• ignoring customer input when developing new products and services;
• a drop in improvement activities;
• increased costs through quality problems, longer leadtimes, and higher warranty expenses;
• a noticeable decrease in the willingness to learn by team members.

There have been some highly publicized examples over the last several years of companies that fell from grace because they seemingly lost touch with what made them successful in the first place.  The biggest problem with this type of behavior is that a decline in revenue and earnings may not show up for years after arrogance has made its way into the culture, and by the time it is realized, it may be so ingrained that correcting it becomes a major effort.

Prevention is the Key

Like many business issues, the best way to address organizational arrogance is to prevent it from occurring in the first place.  Although sometimes difficult, taking positive steps to keep people humble and focused on satisfying customers is critical to remaining successful.  Some of the areas to address include the following:

Customer Focus:  Stay focused on the customer and coach people when they appear to lose sight of the customer's needs.  Question decisions and plans to assure that they were made with the customer's needs in mind.

Purpose - Purpose - Purpose:  Assure that the company continues to operate in a way that supports its fundamental purpose, including mission, vision, and values.  Look for signs that the mission is becoming unclear or changing and, when necessary, take action to get it back on track.  Although scaring people is not advisable, it is important to make sure that everyone realizes that the company is always vulnerable and letting up is never an option;

Continual Improvement:  Make certain that improvement activities within the company never stop.  At no time should people believe that a processes and systems are perfect and do not need improving.  A telltale sign that improvement activity is waning is arrogance toward other divisions or companies.  When people no longer feel they can learn from others, it's time to act.

Although seemingly simple, actions to keep the company humble and believing that overconfidence can be destructive is an ongoing and sometimes complex responsibility of leaders.  Companies are constantly looking to exploit weakness in competitors, and if your company has been the superstar in the industry for many years, the spotlight will be especially bright on you as others look for ways to take your place at the top.