Why We Love Predictions So Much & 3 of Mine

Have you had enough of the look-backs at 2010 and the predictions for 2011? Apparently, most people haven’t, which is just as well, judging by the number of blogs and articles hitting my RSS feeds, Google Alerts and email box. Why do we love predictions so much?

Humans are unique in the animal world in that we can detect and make meaning from complex patterns all around us that result in decisions about how we should behave, think, live our lives and so on. Predictions – our own and others’ – are aggregates of these patterns so we find them confirming or interesting or sometimes just weird but we pay attention to them.

We have a strong need to exercise individual control, some of which is cultural and some of which is human. Getting a handle on the possibilities for the future, gives us a sense of mastery, self-esteem and even optimism. We tuck these predictions away in our memory banks and they become part of our pattern recognition process.

According to Dr. Shelley E. Taylor, a professor of Health Psychology at UCLA, “positive illusions” about the future are mentally and physically healthy; they improve the ability to care for and about other people and they increase the capacity for creative and productive work.

As predictions seem to be so important to our general well being, I’ll offer three of mine for the business environment:

• CEO’s will be more open to experimentation at work BUT these experiments will be verified by analytics. Managing risk is still hugely important in this fragile economy. Trust but verify.

• Social capital will become a key hiring criteria for positions that influence business performance. The quality of a person’s relationships will become as important as her experience and skill set.

• Customers will be more quixotic than ever and companies will make even larger technology investments to try to predict their moods, behaviors and buying intentions. Whether these investments pay off will depend upon:
• Business Strategy
• Organizational Culture
• Quality of Leadership
• Employee Fit
• The Right Data, Metrics and Analytics

As a recent blog from IBM stated, there is no ROI from Business Intelligence unless someone uses it to make decisions.

Happy New Year and let’s get 2011 started!!

What are some of your predictions for 2011?

5 Predictions About Analytics, 4 Tips to Get Started & 3 Cautionary Thoughts

This is the time of year for predictions and there is no shortage of them in the analytics arena. As business owners and managers are redoubling their efforts to find competitive differentiation amid tepid growth projections for 2011, analytics is seen by many leaders as a way to gain an edge.

There are a few key predictions that are shared by seasoned analytics champions and neophytes alike:

• Organizational data is proliferating at an alarming rate, both in terms of volume and complexity. How to make sense of all of this data will be a challenge for those not on the analytics bullet train.

• Desktop analytics will dominate the business environment, making large servers and high cost analytic languages no longer able to return the desired ROI.

• Mobile applications will be hot topics. Devices like iPads, smart phones and tablets will bring analytics into end users’ hands like never before.

• The gap between heavy analytics users and laggards will continue to widen and it will become apparent in areas like innovation and product development as well as bottom line results.

• Privacy regulations could make the collection of personal data more restrictive. At the same time, individuals may balk at the idea of how much of their private information is in the hands of third parties.

Michael Lock of the Aberdeen Group and Caroline Seymour of IBM’s Mid-Size Business unit have some helpful pointers for companies that are taking their first steps into business analytics:

Get Control of Your Data: This means bringing disparate buckets of data into a consistent environment so it’s easier for more people to perform multi-dimensional analysis.

Analyze Data in a Business Context: Data analysis in isolation provides no insight and therefore has limited value to the business. Analytics works for the organization when there is a business strategy to address outside pressures, an assessment of capabilities and analytical needs and the ability to use analytics across the organization.

Think Big – Start Small: This is what Michael Lock calls the Land and Expand strategy. Start with one unit or one pain point and work up to the enterprise level of data consistency. Match resources to the company’s budget.

Empower Non-technical Users: 77% of the Best-in-Class companies measured by Aberdeen Group have what they call “pervasive Business Intelligence with self-service usage”. Only 10% of the Laggards have it. End users have the business knowledge, the business context and the ability to create insight from data.

I’ve been involved in so many fads du jour, from reengineering to knowledge management. All of the concepts were stellar but became hijacked by (gasp!) consultants selling technology or off shoring services or some effort to gain short-term advantages. The problem seemed to be either that the ROI assumptions were inaccurate or that consultants rarely stayed around to see the business through the painful change that inevitably comes with disruptive innovations.

Now for the words of caution...

Leaders Drive Change. That’s what GE’s CEO Jeff Emmelt says and I believe him.

Culture Trumps Strategy. Becoming an analytics-based business means behaviors change across the board. This is often left off the To-Do list.

The Collective Mindset Needs to Shift. If data is a source of power in the organization; if people think they’ve been successful making “gut” decisions; if collaboration isn’t in your vocabulary, you have some work to do to build a successful analytics-based company. But, the rewards are going to be huge.

Business is Unforgiving. Get Used to It

“Life isn’t just about what you want to be. It’s about what you are.” I read this quote from John Rowe, the CEO of Exelon, a Chicago based energy provider in a recent BusinessWeek. His comment got me thinking about how important it is in strategy development to know your starting point.

I’m a right-brained thinker so big ideas, conceptualizing and embracing change are my natural starting points. Nothing is more exciting than new flip charts, fresh white boards and eager faces, ready to brainstorm the heck out of the future.

But wait…that’s a ready/fire/aim approach and because business owners and leaders are more risk averse than ever, it’s essential to use a structured process for evaluating strategic issues in the right sequence to give equal prominence to all aspects of thinking about the present and the future.

1. Frame the issue(s): this first step includes asking the “where are we now” question as well as understanding why we are considering a change in direction (what we want to be).

2. Generate ideas that answer the above questions.

3. Evaluate the options based on facts (resources, competition, etc.)

4. Consider the options based on perceived level of organizational change required and amount of buy-in necessary to be successful. (Do we really want to change and can we sell it to others?)

5. Develop “what-if” scenarios for each option to refine the degree of difficulty and to assess the risk management/risk mitigation challenges. (Where are our back-up plans?)

6. Agree on best course of action based on Steps 1 through 5.

7. Create an action plan designed for implementation, that is, one with timelines, accountabilities, ownership and success metrics.

In the current business climate, we can be too timid, because the future has so many unknown variables OR too bold because our strategic process doesn’t start with "what we are now". Being clear about our present doesn’t diminish our ability to generate innovative ideas for our future; being grounded in reality actually ensures that ideas become more than dreams.

5 Tips to Take Your Strategy Beyond "Hope"

I just returned from a two-day planning session with my business partner. As I said in a recent blog, a plan is nothing; planning is everything. This is the season of the budget and also, hopefully, strategy development, so I’d like to offer my perspective on the things that can make your strategy discussions more productive:

Get away if you can: staying in the office is a terrible idea, mostly because there is a clash of priorities; and the immediate and urgent (but not necessarily the critical) almost always win.

Begin with the end in mind: Thank you, Stephen Covey. For our business, this meant going out to 2014 for a lot of good reasons, including succession planning. Many initiatives can take several years to get right and leaving them until they are urgent is risky in today’s business environment.

Swim into a Blue Ocean: even if it’s going to take longer than 12 months (which may be a long time in American business), dare to create scenarios where your business is doing new and innovative things. This kind of activity expands your thinking and generates more options. Without ideation, your "ocean" gets redder by the minute, as the sharks circle the boat. By the way, reading Blue Ocean Strategy is good preparation for a strategic retreat.

Bite the bullet and take on the tough stuff: Effective strategic thinking means putting the skunk on the table. If you don’t talk about what’s hard, opportunities may never present themselves and, at the same time, challenges are never articulated until they rear up and bite you. Then you’re stuck spending a lot of useless time cleaning up after the skunk.

Boil down your strategy into a memorable sentence: a strategy statement by its nature can be complex and the risk is that a critical piece of your business becomes lost in verbiage. Try explaining two paragraphs of strategic direction to your employees and watch their eyes glaze over. We got ours down to “In It to Win It”. It means something to our company and it’s a lot easier to make decisions when judging them against an easy-to-recall strategy sentence.

The first step in any strategic thinking is to leave the spreadsheets and PowerPoints at the office and focus on the future. Whether your company is large or small; whether you head up a department or the entire business, strategy demands attention and dialogue. Are you using this budget season to take your thinking about your company to a new level?

"A Plan is Nothing: Planning is Everything"

President Eisenhower knew what he was talking about. As a general directing European operations during World War II, he understood the power of determining a plan of action and then constantly communicating it, evolving it and refining it as information came into his camp.

Are our business situations any less mission-critical today? I understand that we aren’t in armed combat (although it does seem like it sometimes) but when you run or own a business, it sure feels like bombs are being lobbed from all corners.

Really, nothing about the fundamental importance of business strategy has changed for 65 years except:

• Businesses don’t like to do it (“takes away from the REAL work”)
• It takes too long (“you don’t understand, things move too fast in our world”)
• Nobody seems to know what he or she are supposed to be doing (they got the email, the slogan and the mug but things dropped off fast after that)

I just finished a one-day strategic planning retreat for a client involving the senior team (yes, I did say one day). Part of the secret sauce in this recipe is doing work up front so I designed an online assessment that got at the heart of the strategic issues. All of the verbatim feedback was put into word clouds (www.wordle.com) so the areas of strongest commonality of thought were prominently displayed.

We used small group and large group activities to define Mission, confirm Values and design the five Big Rocks that became the positioning statement and strategy for the next 24 months. Because the word clouds so powerfully illustrated Opportunities and Challenges, we were not struggling throughout the day to agree on these items.

There is one more day to set 12-and 24-month goals and I use a simple spreadsheet that combines long- and short-term goals, action plans and metrics. It displays the Mission and Values so they never are forgotten in the planning process. This document is the North Star for the client: guiding strategy execution and ensuring that decisions are in line with Mission and Values.

The communication piece is so important -- and frequently not designed -- because everyone in the organization has to know what direction it’s going in for the foreseeable future. That is part of the second day goal-setting workshop. I believe we can boil the strategy statement down to “let’s get a man on the moon by the end of the decade” as President Kennedy did. That way, we lessen the risk of failure to execute.

Business strategy doesn’t have to be a 12-month cycle of PowerPoint presentations and number crunching. I don’t think either General Eisenhower or President Kennedy had that luxury of time. Both understood that planning is far more powerful than the plan and that communication is the trump card for execution.

What planning do you do in your organization? Is it a PowerPoint or a Word Cloud?

Has Management Become Just a J-O-B? Five Enduring Lessons

A couple of weeks ago, I asked whether ‘management’ is obsolete. As a discipline, it’s less than 100 years old and emerged in response to the large and complex organizations that grew after World War I. Management doesn’t have an exam like the law or licensure like medicine to demonstrate proficiency. Nevertheless, management is a difficult practice that many have come to with poor training and confusing expectations. And yet, while some practices must change, there are some enduring lessons about management I’ve learned during my career:

Embrace Your Outliers: I had a manager in London who was gender blind and that was a real asset to me, who wanted to be one of the first women to present insurance risks at Lloyd’s of London. It was about competence and potential, not whether we used the same bathroom.

Get a Mentor; Be a Mentor: One of my favorite managers made it his job to take on new recruits in a structured way to develop our skills and show us the ropes even if we were not in his department. He insisted that we give back by becoming a mentor and I found that teaching was the best way to learn.

The Better You Are, The Better I Look: This was the philosophy of a dynamic manager who made a point of surrounding himself with the best people he could recruit. The team couldn’t have been more different and while that caused friction, it also made for amazing innovations, growth and surprising agility. I learned from him that diversity of thought is a competitive advantage and that as change is the only constant in business, it was advantageous to get out in front of it or get out of the way.

Make a Decision: I once asked a manager for feedback on areas to improve after a performance review. He thought for a minute and then said, “Don’t take forever to make a decision. Gather information, hear opinions and then make a decision. You can always modify it but people hate dithering.” Good advice.

You Are the Culture: If you are a manager, even if you aren’t the uber-manager, you set the tone for your department. People learn the way things are done from you, good or bad. Employees don’t leave their jobs; they leave their managers. A hard lesson I learned as a manager was when I took over from someone who had very different ideas about what it meant to manage. If I had to do it over, I’d spend a lot more time changing the culture before thinking I could change anything else.

I agree with Gary Hamel that management processes have to be redesigned to take account of new organizational structures, different workforce dynamics and technological advances. His Management Innovation Exchange is an open innovation project aimed at reinventing management. It doesn’t mean throwing out every good thing we learned as managers; it’s just about kicking out what no longer works, like celebrity managers.

Waging the War on Bureaucracy: Is Management Obsolete?

Sorry if you choked on your doughnut while reading the title but, really, there has been so much written about CEO’s and their lack of ethics but their abundance of perks; about how leaders are failing every stakeholder they answer to and about how, like the dodo, management as a practice is becoming extinct.

How did things get this bad? Like Wile E. Coyote, didn’t we see Roadrunner aiming that anvil right at our heads?

Here’s my theory: we brought it on ourselves; we asked for the anvil. Why?

• We continue to hobnob with people who look like us and think just the way we do.

• We ignore social media as a passing fad or something IT needs to eliminate from employees’ Internet permissions.

• We haven't picked up on the fact that people are organizing online in communities that criss-cross time zones, date lines and borders to innovate, collaborate and create their own products and services. What's irrelevant are buildings and organization charts and titles.

• We talk engagement but secretly believe “they” are lucky to have a job.

• Change is for everyone else.

• We've been drinking the Kool-Aid of “shareholder value” as the only means to an end.

• And follow it up with a chaser of re-engineering as a synonym for de-layering, downsizing and off shoring (but, oh, that short term lift to the bottom line!).

• We are rock stars, aren't we?

I held management positions for twenty years; I know what it’s like to slog away and then be rewarded for my efforts with a fancy title and a fancy car. The problem is, the Roadrunner is on our tails, with a stick of dynamite.

I am really raving about this issue because there is so much more that managers can do not only save ourselves but also to make a difference in our companies and to the employees who report to us. For a less heated rant, I recommend an article titled, The End of Management by Alan Murray, which appeared in the Wall Street Journal on August 21st.

In my next blog, I may rant less and offer a few solutions to an issue I didn’t know meant this much to me – until now.

Three Big Trends That Will Change the Way You Make Decisions

I attended a seminar this week on predictive analytics, a topic some say would cure insomnia. But, I found the trends important and worth more consideration by anyone who owns a business or runs one or is employed by one – so the majority of us.

I love data, even as a totally right-brained person, because it has a story to tell. The problem is we’ve exhausted the process of using lagging indicators to produce insight about future decisions. Companies should be moving from silos of data hoarded and rarely aggregated to a point where employees collaborate and make real time, fact-based decisions based on modeling organizational data and assessing the power of one choice over others to achieve results.

A few years ago, Thomas Davenport wrote a book titled, Competing on Analytics and cited large companies such as Marriott, Harrah’s and Progressive Insurance as the analytics champions. Not much hope for the rest of us, is that what you’re thinking?

Here’s what I learned from that seminar and I believe it is important for businesses of all sizes to get really clear about the implications of these trends:

Analytics are moving downstream. What was once done by a cube farm full of PhD’s will be done by us regular people who are tasked to come up with hard evidence for what we do (market, train, deploy technology, in short, everything). Technology will make it possible to collaborate with other functions to aggregate data and perform our own statistical and predictive work. On our laptops. In real time. Maybe a lone PhD floating among us.

Analytics are moving into every function. No longer will we be able to get by with a "I -can’t- quantify- the- ROI -of –why- I –need- this- money- from- the- budget-but- trust-me- on- this". Jack Fitz-Enz said it best in his new book The New HR Analytics: if the HR department doesn’t feel up to handling human capital issues in a quantifiable, predictive way; the C-suite will give the responsibility to someone else. That holds true for every function from Marketing to Customer Service.

Predictive analytics are a competitive advantage. At a time when we all are looking for the Holy Grail of business success, if your company isn’t starting now to explore the concept, it could find itself out-maneuvered and shut out by the competition.

• What if your competition could predict which of its customers was likely to defect in 6 months and offer them a sweetheart deal before they are out the door?
• How much money will you spend trying to woo a customer that isn’t interested in moving her business to you because you don’t know which behaviors trigger a purchase?
• What if you could predict which employees had the greatest power to impact customer loyalty and could increase the likelihood of retaining them by customizing their rewards and recognition?

Am I going to turn away from my intuition or sense of what feels right in favor of analytics alone? Heck no, but using both is the right equation: Intuition+ Experience + Analytics = Insight + Results.

How about you?

Who Does Our Customer Experience Satisfy: The Customer or Us?

These days, who isn’t looking to create efficiencies in every work process, transaction and function? When we evaluate our options to be more efficient, can we quantify the impact on the customer and the employee?

I read a good article on the Great Brook website about customer experience management, which, the author contends, is looking from the wrong angle: the experience is designed; then managed to greater effect for both customer and company.

The article cited the notorious example of the JetBlue (ex) employee who went ballistic because of a rude passenger and, while he may have 90,000 “friends” on MySpace, he doesn’t have a job. The article examines the system from two perspectives: the customer (JetBlue actually refers to its passengers as customers) and the employee. The ultimate issue is not employee engagement per se or customer loyalty; JetBlue comes up well in research into both areas. It’s about how well the process has been designed to promote more harmony and less frustration; more engagement and less bad behavior; more loyalty and less attrition (or banging of stuff into overhead bins).

The crux of the problem in so many industries is that workflow and processes are designed from the Inside-Out, and the fact that the customer is actually a key component of the process isn’t factored in. All our side of the ledger shows is how much time and money saved and wasteful steps eliminated -- for us.

The burden of negotiating our unhelpful web sites, hellacious voice mail systems and confusing online storefronts calls falls on the customer; but when is the ensuing frustration accounted for as a cost? And, who measures the impact of (dis)engagement when customers’ anger and frustration are taken out on the front line employee?

When customer feedback says “I want self-service on my schedule, preferably online”, this is not a license to implement any sub-par system on the basis that because the customer has indicated a general preference, anything we implement is bound to satisfy needs.

I’ve spent a lot of time in business process redesign and there is no doubt that there is a smart way to do it and a really stupid way. Let’s outline the smart way and you’ll figure out what the stupid way looks like. When mapping a process that in any way involves customers:

• How are your customer interfaces designed? Inside-Out or Outside-In?
• What tasks are you asking customers to perform instead of you?
• Are you making the process efficient for the customer or just you?
• Are you saving yourself time at the expense of the customers’ time?
• Have you asked your employees which of your processes cause the most frustration for customers?
• Have you asked your customers the same question?
• Have you quantified the costs and benefits of your processes on your customers or you only?

Part of the employee engagement/customer commitment linkage is having processes that respect both parties who are expected to use them. Bringing a customer to the point of anger with an employee means that everyone loses.

Are you designing your processes Outside-in or Inside-out? Do you measure your own benefits from efficiency or do you think about the cost to your customers?

Hot Customer $ervice in the $ummer Time

We’ve been sweltering through a crispy summer in Atlanta and I finally had to bite the bullet to install a new HVAC system.

Of course in these new days of austerity, it wasn’t a matter of picking the prettiest system; oh no, I had to do my homework. Onto the web sites I went, looking at systems, any deals that could be available and, most importantly, what my friends and neighbors are saying about the two contractors I short-listed.

While I had used a locally well-known provider for 15 years, I had a very disappointing experience with one of the company’s executives last year. However, I decided to give them the opportunity to make a service recovery and quote for my business. And, I added another local contractor that had very positive online reviews. Both quotes were very similar but I couldn’t shake the bad experience I had had with my current vendor.

After dithering for a month (it’s $10,000 after all; not exactly an impulse purchase), I phoned the sales person for the second contractor. We discussed scheduling and the fact that in this Sahara-like summer, I couldn’t do without air conditioning for a day and a half. Without hesitating, he arranged to bring a room air conditioner 5 days before the work was due to start because “there is no reason why you have to be uncomfortable”.

Do I have to tell you who got the business?

Bill was on time and dutifully dragged the unit upstairs and down until we found a window that would accommodate it. He installed it, tested it and ensured there was no escape of precious cold air into the outdoors. And he did it all cheerfully on a day with a 106 -degree heat index.

I’ve told everyone who is even mildly interested about my customer experience and why I didn’t select the first vendor. Of course, if anyone asks me, I’d happily recommend Bill and his company. I’ll also be doing online reviews because I found them very helpful when I was looking for a new HVAC contractor.

Lessons learned?

• It takes only one conversation to lose a long time customer so if you have the words “Customer Service” in your title and you don’t live up to it, be prepared to lose your revenue base over and over again.

• What your web site and marketing materials say had better align with how your employees behave with customers; it’s becoming easier to spot the differences. And, in this economy, people are fed up and aren’t putting up with sub-par service.

• It only takes one small thing, in my case, the offer of a loaner air conditioner several days in advance of the installation, to completely surprise and delight a customer. We are so hardened to expect customer “no service” that when the unexpected happens, it produces multiples of satisfaction versus the actual expenditure of resources.

• Online reviews are routinely part of a customer’s research. Ignore them at your peril. Google never forgets!

• Word-of-mouth referrals and recommendations are incredibly important for any company.

• Going above and beyond, often in small ways that are personal, is the greatest source of satisfaction, which will drive intention to buy, refer and repurchase. When everything else is equal between you and your competitors, this kind of differentiator stands out.

What is your company doing to surprise and delight your customers? Do you monitor what people are saying about you – or do you think customers don’t really take notice of other peoples’ opinions?

Your Job is to Motivate: Fact or Fiction?

As a manager, I learned a long time ago that I couldn’t motivate anyone except me because motivation is internal and personal. I did learn, though, that the work environment can influence an employee’s motivation to achieve her own goals and that motivation positively affects performance and business results. Unfortunately, the wrong environment results in an equal and negative impact on motivation.

I just finished reading Dan Pink’s new book, Drive as well as a white paper published by the Society for Human Resource Management (SHRM) on motivation. These are good resources and I recommend them. Both sources agree that there are a number of things at work that can influence motivation including engagement, commitment and job satisfaction.

As a manager, what does all of this research and thought leadership mean to me? How am I going to apply it? Here is the “how” of influencing motivation from my perspective:

It Starts With Selection. Hiring people with the internal orientation, not just the skills, has to be Job #1. Asking interview questions that help you assess the level of motivation present in a candidate is invaluable. Examples:

• “What is it about XYZ Company that makes you think this is the right place for you?”
• “What kind of work makes you excited to be at your job every day?”
• “What do you want to know from me?” (I think this one is key. If the candidate doesn’t have a clue, that’s a clue for you).

It’s Not Always About the Money (or the t-shirt or mug). As Dan Pink pointed out in Drive, extrinsic motivators work in very limited circumstances but intrinsic motivators work in a high percentage of scenarios. This isn’t an issue of pay; if that is out of line, morale and engagement will suffer.

What kind of intrinsic motivators could work with your staff? You’ll have to ask them because motivation, like fingerprints, is unique to the individual. This is where asking relevant questions specific to your company on an employee survey can provide great insights, especially when linked to other employee data and financial results.

Sometimes It’s About You. People don’t often leave their jobs but they do leave their managers. Here are some of the issues I’ve read when analyzing clients' employee engagement studies:

• Showing favoritism
• Not communicating often enough – or at all
• Pointing out failures but not successes
• Managing every detail of my job
• Not listening to my ideas
• Not allowing the flow of information to trickle down from senior management and percolate up from me.

Thinking about your own performance as a manager, here are questions you can ask of yourself:

• Am I managing someone’s job or managing results?
• Do I play favorites or let my personal likes and dislikes influence how work is done?
• Is information my personal power base, accessible by only a chosen few in my team?
• Do I insist on making all of the decisions or do I share that with all team members?
• Am I onboarding my new team members or do I leave that strictly to the HR department?

That Vision Thing. This is a tune I will continue to sing. Talking about the company’s vision, strategy and plans for the future often and with a consistent message is critical for commitment and therefore motivation. What if your company doesn’t have a concrete vision or strategy? Ask yourself:

• What results am I accountable for?
• What is the mission of my department/team/unit? What does it exist to do?
• How does my team contribute to the company’s results?
• How do I communicate our mission and our team goals?

Measure Progress Toward Results. Spread the News. End of story.

As Gary Hamel, a leading thinker on strategy, often says, leaders are needed at every level of a company. Providing a working environment that positively influences employee motivation can start right in your office, no matter what your title.

I’d love to hear what you are doing to influence employee motivation at your organization.

Making Tough News Inspiring

I had dinner with a client/friend last week; she is the COO of a small company that has had a lot of ups and downs given its revenue reliance on the construction industry. She has been studying trends in her business and it’s clear to her that things are going paperless; that more online/cloud computing is on its way and that things will change radically in the way business is transacted. To be competitive, the company will have to drive down the cost of doing business and still provide excellent service in a complex industry.

Instead of hiding her ideas behind a wall of silence until the inevitable day when she has to deliver bad news about restructuring and lay-offs, she called a town hall meeting. Here are some of the ideas she shared with the employees:

This is How Things Are Changing: She spelled out clearly how technology especially online computing would be game changing.

This is How the Changes Will Affect Our Business: She outlined the financial benefits of new technology and the consequences in terms of an uncompetitive position in the marketplace if it doesn’t change.

This is How the Changes Will Affect Job Roles: She drew two columns on a whiteboard: ‘This is How It Is Done’ and ‘This Is How It Will be Done’. Tasks currently done by paper or in disparate systems will be automated online.

This is How You Can Prepare and Benefit From the Changes: Clerical positions can’t stay as they are BUT there are opportunities to move up to more complex positions that are only done by people with knowledge, experience and judgment. Preparing for new roles requires training from us (company) and a determination from you (employee) to 1) ask for new projects and work; 2) be willing to step up and do more; 3) take a proactive approach to learning and building skills.

In Case You Think This Means a Pay Increase: The COO showed data from two outside sources that showed how salaries internally were out of line with the prevailing market.

These are tough messages for any leader to give but what is better: the shock of a lay-off with little or no notice or a clear message of how things will change and the offer of a partnership to develop new capabilities and skills?

The feedback from the staff has been very positive. They got it. This is change management at its best: BEFORE the fact, not AFTER. The senior employees are working diligently with the more clerical staff to design an on-the-job training curriculum and there are daily meetings to talk about progress. This is the tipping point in terms of culture change: it starts here.

Is everyone going to get on board? Probably not, but all employees have a clear vision, the business case, and a roadmap to develop new skills that lead to interesting work and a more rewarding career path. They have a choice: to stay and learn or to find work in a company that still needs their skills. That’s what most of us want when change is all around us: the ability to make an informed decision.

Here are my ‘take-aways’ from this story:

• Frame a new strategic direction clearly and with conviction.
• Be a leader. Don’t hide and don’t waffle.
• Start the change process before the event, not after.
• Explain in certain terms what most people want to know: What’s In It For Me?
• Show how behaviors need to change as well as skills.
• Invite a dialogue but be confident about what parts of the change in strategic direction are non-negotiable.

Are you facing a similar challenge as a leader? Will you share with us how you are delivering a tough message that inspires?

Segmentation: Not For Customers Only

These days, most of us know that if we aren’t segmenting customers in order to understand needs, retention patterns, expectations, profitability and so on, we can’t draw a straight line between our revenue generators and the results we want to achieve.

I’m reading an excellent book by Jac Fitz-Enz titled The New HR Analytics and, no, it’s not for HR practitioners only otherwise, I wouldn’t be reading it. The book is essential reading for those responsible for delivering results. Isn’t that all of us?

Dr. Fitz-Enz suggests that organizations are at the last gasp of the Industrial Age in terms of how we plan our workforces, improve our processes, use data and design our work. Trying to steer a new course using old thinking isn’t going to get us where we want to go. For example, he recommends capability planning, not workforce planning to support a business strategy. Workforce planning involves filling the same kind of jobs with broadly the same skill sets as we have now. Capability planning involves segmenting current and future skills into four categories:

Mission Critical: These skills are key to ongoing success and are necessary in any function; what Fitz-Enz calls a “make or break situation”. (Think David Petraeus)

Differentiating: Based on your current strategic direction or one that you want to execute on, what capabilities will give you a competitive advantage? These skills are similar to Mission Critical but not identical as their impact on the business is unique. (Think Steve Jobs)

Operational: What skills do you need or will you need to keep the company functioning? This is capability without which you would be less efficient, less productive and less effective.

Moveable: This is a critical segment. As the environment and a business’s response to it changes, the work changes but skills often don’t keep up with the change. The result usually is a build up of unnecessary costs and when they become a significant enough drain on results, leaders are faced with massive lay-offs and costly re-structuring.

Thinking "capability" and not "workforce" shifts the paradigm in terms of how your business acquires and builds necessary skills. You may hire Differentiating skills but bring in some Mission Critical skills on an as needed, project-by-project basis. You may outsource some of your Operational skills and will need to look long and hard at Moveable skills.

This is not a once-in-a-while event; it’s an ongoing process of scanning, evaluating and updating your game plan.

There is a growing body of opinion expressed by thought leaders like Jac Fitz-Enz and others who believe that what has worked in the glory days of the Industrial and Information Ages will not work in this Knowledge and Innovation Age. Tomorrow is already here; we should be asking the right questions about our capability and skills; otherwise, we run the risk of becoming irrelevant.

Are you caught between the Industrial and Innovation Ages? Have you started building capability or are you filling jobs?

What Makes a Good Business Strategy?

That question was asked by Veena Houston at one of our recent Leading Engaged Companies webinars; it’s a good one. I’ve been an internal practitioner and external consult of strategy for 25 years and it’s interesting how strategy formulation goes in and out of fashion, seemingly more in vogue when the economy is tough. For me, business strategy is one of the CEO’s KPI’s and there is the additional responsibility for communicating it and for ensuring it is executed.

First, my definition of business strategy, as I see so many references to “strategy” in the blogosphere but their message is really about tactics (marketing strategy, CRM strategy, HR strategy, etc.). The late Peter Drucker defined business strategy as “Analytical thinking & commitment of resources to action and innovation. Making decisions today about an uncertain future. Taking the right risks while exploring opportunities.”

Back to the original question: good business strategy components. Here are my must-haves:

Foundation of Vision, Values and Mission. Strategy can’t tell you what you stand for or why you’re in business but it should guide you in how you’re going to be different, competitive and successful.

Thorough Understanding of the External and Internal Environment. Knowing where you are now in terms of competition, customers, economic and regulatory issues and creating a report card of internal resources are imperatives; otherwise, strategy and direction are built on hope or dumb luck.

Evaluating Options in the Context of Your Reality. Strategy is about moving in a new direction which means building capability (human, structural, financial and relationship capital) that will support these decisions. Because strategy is a 3-5 year look ahead, not everything can be or needs to be accomplished Year One. That’s why we love annual action plans and budgets.

Scenario Planning. I came across this tool while working in England in the 80s through Royal Dutch Shell and the concept was so blindingly obvious that I’ve never thrown it out of my toolkit. We don’t have a crystal ball to predict our future so strategy development is, by its very nature, imperfect. We mitigate the risk by assessing our assumptions and using those to create scenarios of “What Ifs” and responses to those. Scenarios can lessen the impact of a flaw in the original strategy by allowing rapid course correction.

Measures and Monitoring. Failure to execute is the single greatest reason for strategy failure. These days, with financial and business modeling, strategy maps, scorecards and the like, there is no excuse not to design short- and long-term measures. Good strategy also demands that it cascades into departments, regions, and functions; and, ultimately to the individual level through a performance management system. If KPIs and compensation are not tied to business strategy, there is no skin in the game and therefore no incentive to change the status quo.

Communication, Involvement and Celebration. Communicating strategy is not a one-time event; it needs to drip continuously into the organizational consciousness until it is part of the fabric of all discussions, meetings and reviews. Keeping the message simple makes it easier to weave it into everyday activity.

Involving the workforce is critical, not just so that they are engaged but also because employees are in a perfect position to immediately discern a problem, which, if diagnosed quickly, can avoid strategy disaster.

Yes, celebrate. Every success; every mistake as a learning experience; every time a goal is achieved.

What do you think makes good business strategy? Can you add to my “must-have” list?

What If 24% of Your Customers Said, "I'm Off!"?

That alarming statistic in the title comes from a Satmetrix study of UK customers who left buying relationships in the previous 6 months because of a poor experience.

Here is a breakdown of the customers’ reasons for leaving:

How many of these reasons are beyond the companies’ ability to control them? We don’t know what the 7% "Other" is, so let’s assume the companies were not responsible for those; which leaves us with a whopping 93% of the reasons for defections that could have been anticipated and corrected. While this was a UK study, having lived there for almost 20 years, I can tell you that the British become more Americanized every day; that includes customer expectations and buying experiences.

At a time when every profitable customer is a nugget of gold, what were these companies thinking? Is no one asking why such a large percentage of revenues coming from new customers are going to replace income from those who have defected?

How would your company quantify such recurring losses? In addition to lost revenues that must be replaced, there are acquisition costs and lost opportunity costs when you cannot cross-sell to an existing customer (cheaper than acquiring a new one) and when the defecting customer tells ten people face-to-face and thousands online.

The Satmetrix study also reported that while 49% of respondents trusted referrals from friends and family as their primary source of information, only 2% trusted the company’s advertising; what they labeled the Recommendation Generation. It seems that this might be a budget item that could be revisited in the current economic climate.

So, add it all up, assuming 24% of your customers leave annually or whatever percentage you believe is true for your company:

• Lost revenues
• Lost market share
• Acquisition costs
• Loss of cross/up-selling opportunities
• Lost Customer Lifetime Value
• Negative word-of-mouth
• Ineffective advertising

Now ask your department heads and others:

Why would we spend our budget on advertising instead of improving the customer experience? If you can’t have both, the latter seems to be much more a more effective use of limited resources.

How can we afford to hemorrhage so much money in this economy when most of the reasons for customer defections are within our own ability to change the game? What do you think the cost of a good customer experience is? What is it worth to your company?

Let's Hear It For (the New) HR

A lot of us have taken a verbal swipe at the HR profession occasionally; some have written about it. After all, they are the “people people” not the hard-driving, analytical, results-oriented business influencers that the rest of us are. Right?

I had an amazing experience a couple of weeks ago when I volunteered for SHRM-Atlanta at a call in Help Desk for job seekers hosted by a local TV station. Here are some of the things I observed about my HR colleagues:

• They Get It. They not only have a good grasp of business strategy but also are good at formulating it. The organizers developed a mission critical style and approach to this event that was awesome to watch. During our two- day call-in, the organizers were tracking call types and other metrics to analyze how best to follow up and improve for the next call in. I know they also will be tracking and analyzing call resolution.

• They Are Savvy About Business. This group of HR professionals developed a program, including training, researched resources, screened volunteers and marketed the heck out of this event using every channel available including social media; on time and with a shoestring budget.

• They Give Back. SHRM-Atlanta has a vision of Working For a Better Atlanta and from the Board down to individual members; they are trying to live out that vision in all that they do. I don’t think this approach is limited to our local people.

• They Believe in Education and Development. HR professionals are credentialed and take their own professional development very seriously. I never sat for the PHR or SPHR designation but I understand that the curriculum is rigorous and maintaining the credentials requires annual continuing education including strategic coursework. How many of us can say that about our own professional development?

• They Are Collaborative. These HR professionals worked closely with the Department of Labor and the television station as a seamless team; adding their own particular talents to create something bigger and better than anything they could create alone.

• They Can Execute the Heck Out of an Initiative. That says it all.

Is there a theme here? I believe it’s that HR isn’t “Personnel” any longer or the group that processes benefits and payroll or nags us about performance reviews. There has been a sea change and it can only benefit businesses that are challenged to do more with less and yet do it with the best talent available. Your HR department just might be an untapped source of what it takes to lead an engaged company:

1. Strategy Development and Execution
2. Identifying and Developing Leaders
3. Creating a Culture of Collaboration and Teamwork
4. Providing guidance and influence in human capital development and management
5. Selecting, developing and training customer-focused employees through a performance management system.

So, before we put our HR colleagues back in their box on the organization chart, take another look at your HR department. Talk to them; invite a dialogue. Better yet, invite them to your next strategy session. You wouldn’t dream of leaving out the Finance person, would you?

Is your HR Department leading the way to organizational engagement? What are some of the ways you utilize its strengths in non-traditional ways?

Hard Wired For Exceptional Customer Service

This week, I welcome Cathy Missildine-Martin, SPHR as a guest blogger. She also happens to be my business partner and Co-founder of ICC!

I have been traveling on business more than I usually do this year. I have really been exposed to the best and the worst of customer service. I find it fascinating how some companies ALWAYS get it right and some companies ALWAYS get it wrong.

I went to my client's preferred car rental company instead of where I am a "preferred member." I was on the bus from the airport on my way to the offsite car rental facility. The bus drive was happy, greeting everyone, almost whistling while he worked. I thought, "That is refreshing." The next week, I come back, he greets me, "Hi, Ms. Martin, how was your flight from Atlanta?" Wow, he saw me one time. I said, "How did you know that?" He just smiled and said, "It's my job."

I wish more employees felt that knowing the customer, "was just their job."

Contrast the experience below to the one above:

I went to my gate to board my plane; the airport is jammed packed at 6AM. The agents begin boarding and are calling rows and zones. I pass by 2 gate agents, 3 flight attendants, 1 captain and no one even says good morning. I know it is impossible for them to know my name, but is "good morning" too much to ask?

When I returned my car back to the rental car facility, I was greeted by yet, another eager, friendly employee just waiting to check me in. I couldn't help myself to ask this employee about why everyone is so friendly around here. He just said, "I guess we are all just WIRED that way."

How interesting is that? I think there is a lot of truth in his revelation. People can be hard wired for customer service. So, how do the companies that always get customer service right, find people that are hard wired?

I know there is a lot of upfront work that has to happen to make sure we hire for that "hard wiredness" but how to you keep those types engaged and more importantly keep them on board?

What is your experience? Please leave a comment or an example of a company that understands the concept of Hired Wired for Customer Service.

What Business Are You In? Really.

I’ve got a whole key ring full of bar-coded plastic tags that designate my “loyalty” to a particular store; I’ll bet you’ve got fistfuls as well. Are they an indication of my loyalty? Can you measure my loyalty with that piece of plastic?

Companies like Southwest Airlines and Zappos know they are in the customer service business; they just happen to fly airplanes and sell shoes. We all are in the business of serving our customers and that is a tall order when, for years, we organized our businesses around products.

I don’t know about you, but I have a list of criteria that my brain churns through in the midst of a buying decision. If someone wants my business, they have to demonstrate that they know me, respect my needs and provide an experience that suits me.

If you say you’re customer focused, show me. Nothing wears me out faster than marketing messages that bear no relation to the actual experience. Who thinks of this stuff?

Have you ever listened to your own voice mail or help desk systems? Finding the balance between efficiencies and customer experience is a challenge but there is no excuse for making it so hard to talk to a human that we have to Google to find out how to do it. What’s more important than a customer anyway?

Your web site may be great but your (fill in the blank) department lets you down. There are so many ways I can touch your company and if all the touchpoints aren’t designed for my buying experience, I may be leaving and you won’t even know it.

Why can’t the person I’m talking to make it right when there is a problem? As Mick Jagger said, “I try and I try and I try but I can’t get no satisfaction.” Why is there more chain of command in Customer Service than the Pentagon? If your customer strategy spells out how you’re going to deliver a customer experience and the culture supports it, employees should have the tools and skills to make the decisions.

Why are your marketing “campaigns”, coupons and emails so generic? Is it that you don’t really know me, or that you don’t care? You collect so much information from me with that plastic tag and yet you don’t connect the dots.

Please do not expect me to complete a survey foisted on me by an employee who is asking me to give him top marks. This is no way to reward employees or to gather valid customer data.

Loyalty programs are part of customer relationship management but they don’t guarantee that you have hearts and minds. I don’t think loyalty is bought; it’s earned over time by designing the experience customers tell you they want and ensuring the company is aligned around it. What are you doing to earn the loyalty of your customers? Is it more than another piece of plastic for my keyring?

What Drives Your Numbers?

Stephen Sadove is a leader I can follow. The CEO of Saks, Inc. was interviewed by the New York Times recently and was asked about his leadership philosophy. His response was that leadership drives culture, which drives business results. Mr. Sadove went on to say that while Wall Street never asks about leadership, culture or people, they actually are what drive numbers and results. Mr. Sadove, you are my hero.

Trying to define organizational culture is a little like nailing Jell-o to a wall: slippery, messy and just plain hard. But, when a leader understands that the harder- to -grasp organizational elements actually make up the engine that propels results, we are at least half way to having a company that truly is engaged. While many C-Suite occupants are comfortable with spreadsheets and analytics (and no one would argue their essential value), the numbers don’t happen by accident or in a vacuum. It takes a lot of deep searching to arrive at a culture design that supports the results you want.

I recently saw a presentation by Reed Hastings, CEO of Netflix who, while not a fan of process, nevertheless, put the steps for embedding Values, Strategy, Leadership and People into a framework he calls Freedom and Responsibility Culture:

How Do We Define Success? For Netflix, business results are “continuous growth in revenue, profits and reputation”.

How Are We Going to Get There? Hastings defined the strategy as “rapid innovation and excellent execution”.

How Does Our Environment Support Our Strategy? Netflix’s culture specifically supports “effective teamwork of high performing people”.

What Would Jeopardize Our Success? For Reed Hastings, it is a culture that tolerates rigidity, politics, mediocrity and complacency.

From this high level, Netflix is able to articulate how its Values are embedded in its culture and specifically defines behaviors that will be rewarded and those that result in being cut from the team. There is no room for ambiguity in Reed Hastings’ vision of success, which means that employees know exactly what is expected of them (part of a team of high performing people) and how their jobs contribute to the company’s success goals (innovating and executing).

We are in an environment today which demands that we stand out in every way. To ignore organizational culture is to sabotage your business success.

Can you answer the four questions above for your company? Can your employees?

Let's Get This Party Started: Winning the War for Customers

I’m officially declaring the Gloom and Doom funk over! I think we’ve all spent too much time examining the lint in our own navels and have found it much too interesting. Maybe it’s the minute-by-minute access to disasters or the endless shouting by talking heads that has us paralyzed but we won’t get better if we don’t get busy.

Business always has been tough, even when everyone said we’d never had it so good. Finding good people; finding great customers; finding terrific ideas: haven’t these always been our challenges? Sure, the pace of change is much faster and there are a lot more consequences to our global business network. There’s always something so why not acknowledge that it is what it is and let’s get going to find new customers and keep those who have selected us as their provider of choice.

So, what’s on our To Do list? I can think of a few positive things to perk up our customer focus:

Paint a Picture: what is your vision of your ideal customer experience and how are you measuring up? Gather information and insights directly from customers and employees (who are very good predictors of how things really are with customers) and indirectly from web searches. There is a lot of comment in cyberspace and some of it could be about you. Ask your customers about all aspects of the experience including, for example, first call resolution, ease of self-service and access to information on your web site and so on.

Get a Plan: close the gaps between what you want your customer experience to be and what your audience says it is. And, execute it! A plan is not action and hope is not a strategy. You might be surprised at how galvanizing it is for your employees to experience the momentum of putting ideas into action.

Tell a Story: current and prospective customers are more engaged by success stories than by product features, brochures and fact sheets. Buying is an emotional experience and stories tap into that reservoir.

Give Them Something to Talk About: Engage in authentic conversations in ways that your customers prefer: social media, your web site, guest blogs, anywhere. Ask them to write reviews and participate in online focus groups. People are flattered by the invitation and most of the time, are happy to provide feedback (note: just don’t overdo the frequency) IF it’s done in a personalized way.

What else should be on our To Do list? Let’s get busy and start the party. End of funk.