OCT 1, 2008 2:41am ET

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A "Dear CEO" Advice Column

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Self-help books and newspaper advice columns, such as Ann Landers’ famous column, are known for issues involving relationships, money or etiquette. What if there were an advice column for CEOs?

 

 

Dear CEO,

 

I am a relatively capable midlevel manager in my mid-40s. I have worked for my employer for 10 years. During the last few years, our company has been losing market share and declining in profits. Our executive team tries to talk a good game with quarterly town hall meetings with employees, but they appear to show no interest in implementing any of the core methodologies of an enterprise performance management framework, like strategy maps, customer profitability analysis or driver-based budgeting. Some of our executives openly ridicule these managerial techniques and say that real managers just need good old common sense and instinct, not fact-based information. What can my co-workers and I do to encourage our executives to be more innovative?

 

 - Confused and Dismayed

 

Dear Confused and Dismayed,

 

Executive teams are one of the more interesting social groups to research. Even the most talented executive teams fail to reach their full potential due to their lack of trust and confidence in one another and the inevitable conflicts, reduced commitment and avoidance of accountability that result from mistrust.

 

Sometimes you just have to figure out how to manage your bosses. Resistance to change is often the root of their problems. This is understandable, because resistance to change is human nature - people like the status quo. I have relied on a simple formula to overcome resistance to change. It is (D x V x F) > R.

 

  • R stands for resistance. Do not underestimate how large the R is; it can be enormous. Therefore, in the equation if D, V or F is zero or small, then their combination will not exceed R. You will need all three factors in great abundance.
  • D is dissatisfaction with the current state. Unless people have discomfort, they will not be interested in changing anything.
  • V is a vision of what “better” looks like. When people see a different view of their circumstances that can lead to an improved condition, they will consider changing.
  • F, which is often neglected, stands for “first practical steps.” Some may think that a lot of dissatisfaction (D) with a solid vision (V) is sufficient to overcome that large resistance (R) variable, but this is not enough. If people think the vision is overly theoretical, complicated, costly or impractical, they will not pursue changes to realize that vision. You need F to make the vision attainable.    

So how do D, V and F apply to influencing your executive team? Most enthusiastic and well-meaning managers try to promote their vision. They get excited about implementing enterprise performance management (EPM) techniques, such as strategy maps for critical projects, initiatives and core business processes that need to be improved. My advice from experience is to first focus on the D, because change will only result when people feel compelled to change. Having high levels of dissatisfaction and discomfort is your best lever for influencing executives. But dissatisfaction is often latent, not overt. You will need to create the discomfort in them. My suggestion is to use the Socratic method of questions, named after the Classical Greek philosopher Socrates who stimulated rational thinking and illuminated ideas by posing questions to his students. Start asking your executive team questions such as:

 

  • Are our largest customers our most profitable ones?
  • Are any of them so demanding of us that the extra costs erode our profits? How do we know?
  • Do all our managers and employee teams understand the strategic objectives?
  • How do they know how what they do each week and each month contributes to achieving your strategy?
  • Are the performance measures you monitor more weighted toward lagging after-the-fact reporting that you react to, or do you monitor leading key performance indicators (KPIs) that enable you to make proactive decisions? If it is the latter, how well do the leading KPIs correlate with the lagging ones?
  • How do we know which types of customers to retain, to grow, to acquire as new or to win back?
  • How much is optimal to spend on each customer type with deals, offers and promotions to retain, grow, acquire and win back those customers?
  • Won’t any spending amount above or below the optimal for each customer type lead to destroying shareholder wealth?

In many cases the executives may not have good answers. That is when you can hit them with the knockout-punch questions. Ask them if not knowing the answers is a good thing, and how long can we keep making decisions without knowing these answers?” If you ask these thought-provoking and deliberately disturbing questions in the right way, you will not need to spend much time promoting your vision (V) of the equation, the variable that many managers prefer to begin with. By converting and exposing latent problems into evident ones, the solutions become more obvious and understandable.

 

And what about the F in the equation - the first practical steps? Many organizations embarking on the journey of adopting EPM struggle with how to get started. Consider pilots and rapid prototyping with iterative remodeling techniques to demonstrate value and prove concepts. These accelerate learning and will get more buy-in.     

 

Always remember that in the absence of facts, anybody’s opinion is a good one. And usually the biggest opinion wins, which is likely to be that of your boss or your boss’ boss. So, to the degree your executives are making decisions on intuition, gut feel, flawed and misleading information or politics, your organization is at risk. Write again in few months to update me on how you are progressing. You can make a difference.

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