Leading Successful Change in a Financial Turnaround

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In Aesop’s Fables is the story of a fox that tried in vain to reach a cluster of grapes dangling from a vine just out of reach above its head. The fox lept high with all his might but after several unsuccessful attempts gave up and said to himself, ‘‘These grapes are sour, and if I had reached them I couldn’t have eaten them anyway.” It’s the source of the phrase ‘‘sour grapes.” It also illustrates the distressing mental state of conflict or anxiety when people’s actions are inconsistent with what they believe. The fox’s willingness to stop trying clashed with his knowledge that the grapes were tasty. By changing his attitude toward the grapes he rationalized his behavior. The tension individuals feel in the financial recovery of a business motivates them to either change their behavior or change their belief to avoid the distressing feeling. The implication of this in situations from post-recession recovery to life-saving turnarounds is that, to be successful, it’s critical that the organization go beyond behavioral compliance with recovery actions to commitment, through genuine belief, to a new way of doing business.

There is a direct link between management’s ability to gain that commitment and the underlying culture of the organization. Corporate culture is the belief system of a company revealed through the collective actions, behaviors, and rituals of the individuals within it. It is not enough to have the right product, operations or qualified management to succeed in a recovery. Every company going through radical change must have the right culture and it’s the responsibility of management to bring the culture into alignment with the new vision and priorities of the company. If the workforce believes in the overall purpose and direction of the change, they will be willing to modify their individual behavior to serve that purpose. If they don’t, they will resolve the conflict between what’s being asked of them and what they truly believe by rationalizing their old behavior, slowing or possibly dooming the change. The key then is to enable the workforce to see that the pain and inconvenience of change is far more attractive than to rationalize and remain in the current operational state.

To feel comfortable about change and to carry it out with enthusiasm, people must understand their role in the unfolding drama of the turnaround and believe that it’s worthwhile and in their best interest to play a part. It isn’t enough to tell employees that they’ll have to do things differently. Anyone leading a major change program must take the time to think through the “story” behind the change, what makes it worthwhile and explain it in such a way that it creates an attraction more compelling than the status quo. For everyone involved, their contributions must make sense to them at an individual level.

Support for the changes must not only come from management but also from leaders in the informal groups with which people identify. The support of informal organizational leaders, those people who exercise influence without positional authority, and the groups that surround them must be earned if the desired change is to have a deep and permanent influence. If influential individuals complain that “we’ve heard this a thousand times before and nothing happened,” others will be inclined to rationalize the current behavior and avoid the needed change. Change must be understood and made meaningful to groups at every level of the organization to achieve sustainable traction. 

Many change programs make the error of exhorting employees to behave differently without teaching them how to adapt general concepts to their individual situation. The company may urge them to be more “customer-focused” but if little attention was paid to customers in the past, they will have no idea how to act now or what successful “customer focused” actions looks like. Likewise, new reporting structures, management and operational processes, measurement procedures and financial and non-financial reward systems must be consistent with the behavior that people are asked to embrace. When a company’s goals for new behavior are not reinforced, employees are less likely to consistently adopt them.

Summary:

Financial distress is not just about wrongdoing at the top. Rather it’s about failed performance at all levels of the organization. Therefore, changing the culture and thereby the minds and belief systems of individuals must be at the core of any turnaround effort. When companies are unable to change their cultures, they cannot expect to be successful in responding to the radically changing business conditions associated with a financial recovery. Company management needs to proactively engage in a deliberate culture building process and not let it evolve on its own. It is critical that the desired values, behaviors, performance standards and leadership requirements for a successful recovery be communicated clearly and often. To change behavior throughout an organization, it isn’t enough to ensure that people at the top are in line with the new ways of working; role models at every level in the company must consistently “walk the talk.” In any recovery situation, culture transformation is a necessary prerequisite to sustainable change. Management must realize that changing corporate culture is not one thing they do in revitalizing a company, it is everything they do.

Posted in Corporate Finance, Human Capital, Leadership, Operations, Sales & Marketing, Strategy, Training | Tagged , , , , , , , , , , | Leave a comment

Getting Focused

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A client said to me “I’m working in the business instead of on the business”. Sound familiar? This is all too common for most business owners. The intention is to work on the business, but because you’re so lean, you are needed to put out any and all fires. There isn’t enough time in the day to get things completed let alone plan for the future. So that begs the question,

“Is strategic planning missing from your business? Sometimes you have so many things going on in your business that you can overlook many important things. You could lose your focus and end up mismanaging your business, projects or career. Sometimes in your business and career you may feel like something is missing and/ or not going right. The very thing that you could be missing in your business is strategic planning and strategic management. These 2 are the dynamic duo that can lead your business and career to success. They are the missing pieces to your puzzle. These 2 are the processes and tools that you need to help you keep your business operations running smoothly and in top shape. They help you to sort through your issues, develop sound plans, solutions and action steps for improvements.”

From CEO Business Management Solutions

If this sounds like a challenge you are facing and would like help, just let me know by responding to this post or contacting me using the Contact Us tab.

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Unleashing the Power of “Impossible” Goals

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Michelangelo said “The greatest danger for most of us is not that our goal is too high and we miss it, but that it is too low and we reach it.” Such is the case with many strategic planning processes. During the annual planning process, goals, strategies, action plans and budgets are developed. It’s a neat and organized process but the implication is that when the goal is set, a plan or at least a fairly solid idea exists for how to deliver the results. Sales organizations know all to well that after they provide a sales forecast they’ll need to answer the question “What’s your plan to get it?”

The problem with this model is that the goals are based largely on what is known today. It satisfies our mind’s need for structure and certainty and enables us to complete the plan. Making matters worse is that compensation and rewards are often tied to the goal. This is certain to result in plans that are safe and achievable, but low in potential results.

High-performance individuals and organizations though, have found that break-through performance is not achieved by an attitude of determination and grit, but rather an attitude of confidence and optimism. They take on opportunities and face challenges larger than they’ve ever seen before, not with the knowledge for how they’ll accomplish it, but with the internal confidence that they’ll grow into it. They’re not intimidated by what might stop other organizations. They hear the same news, live in the same economy and face the same problems, but they do so with a calm resolve and belief that they’ll find the answer. It’s not risky when they know they can do it.

Goals and Motivation
One of the wonderful characteristics of human beings is that we are goal oriented. We are able to achieve great results when we’re motivated. The more attractive and exciting the goals, the more energy and creativity we have to solve them. Goals set in the context of what we “believe” we can accomplish are not motivating goals. In an effort to make goals achievable, we often remove the catalyst to motivation and energy. When the internal self-efficacy of an organization is low, it’ll expect little of itself. For our own sanity and to avoid disappointment, we won’t let ourselves expect something we don’t believe we can create. Therein lies the big problem with large, seemingly impossible goals. If the expectations and confidence of the organization are low, so will be its reach and results. The goals of the organization will be limited and the creativity and energy of the organization will match what, in its collective mind, it believes it can cause to happen.

Creating Disruption
Setting large goals throws our system out of order. They challenge what we “know” and push us beyond the boundaries of our comfort zone. They send us on a journey where the path and outcome are unknown. It creates a problem for us, a gap between what we believe we can accomplish and the picture of a challenging but potentially beneficial future. It’s a gap that our minds are programmed to close. If we’re drawn to the challenge we’ll move forward into uncharted territory seeing solutions and possibilities beyond the tried and true. But if the goal is too intimidating or unattractive, we’ll move backward to the old performance level, fully able to rationalize the decision. We get either drive and ideas to move toward what we want in the future, or ideas and drive to stay where we are.

The Role of Coaching and Leadership
The solution is to build an organization of individuals with high self-confidence and a strong belief and expectation in their ability to achieve great outcomes. This is arguably the most important coaching responsibility leadership has. It’s a concept with tremendous potential for improving individual and organizational results but one that’s overlooked in most organizations.

Leaders should keep asking themselves, not “where do we think we will be?”, but rather “where do we want to be?” They need to keep creating gaps between where they are and where they want to be. They need to awaken the potential capability of the organization with goals that challenge the organization to go where it’s never gone before. Then, with an energized workforce, inspired by a compelling new future and encouraged by leadership, let the human creativity and energy that’s unleashed invent how it will be accomplished. With the right leadership I’ve seen organizations “surprise” themselves by accomplishing things they once thought unachievable.

Sea World doesn’t select the smartest dolphins in the ocean for its attractions. It selects dolphins and then through inspired coaching and training is able to accomplish incredible feats of performance. Likewise, truly great organizations don’t have fewer problems than other organizations. They don’t start out with the most brainpower, better employees or more money. In fact, sometimes they face incredible odds. But they have a way of looking at things, a way of seeing big challenges as exciting opportunities, and a way of hanging in there that almost guarantees success. They live by an attitude of optimism and, when challenged with an almost impossible goal, have an expectation that what they don’t know, they can figure out. It’s all a matter of attitude.

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Investment in Excellence

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Workshop:  August 25 – 27, 2014
Additional Details HERE

Every day you are striving to be at your best, but what holds you back? Discover the key to unlocking human potential and build extraordinary organizational performance and corporate culture.

Investment in Excellence® is The Pacific Institute’s powerful flagship curricula, delivering the tools for growth and change in a variety of media formats. Containing enhanced information on how personal beliefs and attitudes affect an organization’s culture, this program teaches to the “whole person,” presenting how the curriculum concepts affect not only the individual, but the family, workplace, community, nation and the world. Based on the results of current research in the cognitive sciences, Investment in Excellence addresses the very foundation of all change processes – the human mind. Promoting self-examination and reflection, IIE illuminates areas where we may be holding ourselves back. It provides easy-to-understand and easy-to-implement tools to change attitudes and beliefs, which immediately reflect in greater results and higher performance.

Participants gain real insights into areas of personal, professional and organizational growth opportunities through professionally facilitated study and discussion with others. The facilitation process is designed to reinforce curriculum concepts and to practice using the tools so critical to sustainable Peak Performance.

Investment in Excellence goes to the very core of quality improvement, performance enhancement and employee engagement – effective human thinking skills. It assists in creating a constructive culture with a common language, a creative environment, as well as a renewed sense of accountability and an interest in positive contribution, whether that is at home or at work. Processes already in place will be enhanced by effective thinking by the individual, which is reflected in attitudes and behaviors aligned with the results desired by the organization.

Continuous Education:
Investment in Excellence® includes an independent study audio program, presented by Lou Tice, and designed to augment the education presented in the classroom. These 40 sessions can be spread over an eight-week period, providing two additional months of education and reinforcement. This audio program delves deeper into the concepts and skills taught in the facilitated sessions, encouraging participants toward continuous growth.

 

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Avoiding The Pitfalls Of Planning

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Setting strategic direction is never easy, but when leaders don’t get the results they’re expecting they often overlook the role human nature played in the outcome. While most CEOs acknowledge the traps, many don’t see the extent to which they contribute to them. When planning becomes an exercise in doing it right rather than doing the right thing, results will suffer. By focusing on five common pitfalls, planners can increase the quality of the plan and the likelihood of better performance.

Failure to address fundamental problems of the business – Planning should be a purpose driven activity, and a good place to start is with an honest appraisal of the challenges facing the business. The important word here is “honest”. From a behavioral perspective, we experience anxiety when our expectations don’t match the results we’re getting and we subconsciously hunt for an explanation to resolve this conflict. Group discussion of the underlying causes behind poor performance can result in rationalizing the circumstances to explain them. It feels good to breathe deep once the “truth” behind the results is identified, but in doing so management relieves itself of accountability for the performance of the business. How often has the recession been used to rationalize poor results rather than a lack of internal vision, talent or plan execution? Sure the recession had an impact. Certainly some businesses experience a seasonal impact, but using those external situations to explain results can be a convenient way to avoid taking responsibility for them. In short, if you fail to critically assess the capability of the company to achieve its goals, you’ll have hopeful plans with little chance of success.

Over optimism -The planning process is, by its very nature, an exercise in projecting actions and results we’d like to see. I’ve never seen a company plan to take itself backwards. Planning is an opportunity to step out of the present challenges facing the business and move into a future where the imagined circumstances and results can be much different than today. In a way, it’s like a buffet dinner; when I’m planning everything looks good but when I sit down to eat I discover that I’ve bitten off more than I can chew.

There’s a narrow line that separates aggressive stretch goals from over optimism. That line is crossed when plans for short term results are projected to produce similar long-term outcomes without a sound basis for the expectation. The result is a “hockey stick” forecast. Focused cost cutting efforts can produce meaningful results and may be a good strategy to improve competiveness, but jumping to the conclusion that continuous improvement will generate similar results without a realistic assessment of what it’ll take to do it can lead to unrealistic projections and disappointment.

Failure to link plans and execution -Few things kill a good plan more than getting caught up in the day-to-day demands of business.I’ve seen many good plans get sidetracked because the business got either too busy or too slow. Well intended plans get pushed off and eventually are reassigned to next year’s plan. While there’s always a reason to explain why execution fell by the way, it often stems from a failure to monitor and adjust the plan throughout the planning horizon.

Planners need to create direct and specific linkages to actions with a feedback loop. Managers should understand their contribution to the overall goal and strategy, actions to achieve results should be in alignment with the overall strategy and managers should be held accountable for their results. Then, as business changes, the plan should be assessed and adjusted, not abandoned.

Poor communication -I’ve seen too many strategies that were incomprehensible to the employees. Others remain in the hands of the senior planners and managers with little communication and linkage to the workforce where responsibility for carrying out the plan resides. Strategies that are simple to understand, few in number and with goals that are measurable at all levels have the best chance of success. Employees must be able to see themselves achieving the goal and contributing to the higher strategy if they are to be engaged and the plan to succeed.

Putting form ahead of function -I’ve been asked many times what a good strategic plan should look like. What components should it have and in what order? The problem with this line of thinking is that the planner has put the form of the plan ahead of its function. Marketing plans, business plans, or budgets that begin with form seldom have the substance or linkage to execution necessary for success. Many don’t make it out of the executive suite and wind up living on the shelf until next year.

Making matters worse is that the same plans are often filled with slogans and lofty exhortations that, while sounding strategic, lack the specifics necessary to engage employees and produce meaningful results.

Planning is a necessary step to achieve best results in business. But to be effective it has to be practical and achievable and that means it’ll be different for every organization and situation. Avoiding the basic pitfalls mentioned above will go a long way to making your plan practical and productive.

If want to take the mystery out of planning and need help creating relevant and simple plans that  get results,  select the Contact Us tab or reply to this post.

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