Lanny Goodman's Strategic Insights

My old friend and rock climbing buddy Bart Berry in San Diego has become a successful consultant but found himself struggling as his clientele began cutting back a couple of years ago.  Finally as the recession got really rolling and a lot of people were starting to get hurt he got a great idea:  Put on a recession expo as a resource to help others who were struggling.

The signs are all around.  Benanke is predicting the recession ending later this year.  Many entrepreneurs I've spoken with tell me business is showing very early signs of movement.

If you've ever been surfing or body surfing, you learn one thing very quickly: those waves are coming in a lot faster than you can swim. There comes a point where you have to be paddling for all your worth so you have enough speed to catch the wave as it rises under you.  Once you're on the wave, the wave does all the work.  Once the wave rolls past you, you'll never catch it. 

So it is now with the economy.

The wave isn't here yet but we can see it coming.  Now is the time to start paddling so you be moving fast and harness the awesome power of economic expansion.

What does "paddling" look like?

First it means carefully assessing how the game has changed in your industry and market.  If your business is heavily debt dependent, game over.  It will be a long time (hopefully) before we see the irresponsible easy money of the past twenty years.  If your business is energy intensive, we're experiencing a lull at the moment, but everyone I read says look for energy moving back up over the next year or two.

In almost every business to a greater or lesser extent, the tectonic plates of the market have shifted.  This is good news for forward thinking, adaptive companies who have rigorous planning processes in place. These are the companies that  have been using the recession to research, experiment, retool and train employees. The companies who think the good old days are just around the corner will be in for a rude awakening.

The good old days are gone.  The new days will be good too, but much more demanding.

Do you have a formal process improvement program in your company?  I speak to hundreds of CEOs every year and pose that question.  The affirmative response on average is probably five percent.  In this day and age, this is an appalling statistic.  If you and your employees are not proactively working to do whatever you do for a living faster, better and cheaper, you are missing the wave.

If you are not looking closely how technology will allow you to make your company easier to do business with, to provide your employees with the information they need to make decisions that will minimize cost and maximize customer satisfaction, you are missing the wave.

If you are not learning to be a more effective, capable and aggressive marketer in an economy increasingly characterized by "kick-ass" marketers and companies who work for "kick-ass" marketers (guess who makes the money?), you're are missing the wave.

If you are not training your people, teaching them how business actually works, how to read your financial statements, how to exercise good business judgment so you get full return on payroll, you are missing the wave. 

It is in recession that we really learn what we need to be doing.  Most important organizational changes take two to three years to fully implement.  The reality is that it is late already to take full advantage of the turnaround.  All the more reason to start paddling now.  

This is a very important subject because so many companies appear to be in reactive mode.

Ah, recession...it fulfills my motto in life, "Not always fun, but never dull."

At various times in my life I have vacillated on the moral dimension of the death penalty and finally came down on the side of approving of it.  There are some human beings who have committed acts which should cost them the right to exist.  I suspect most business leaders feel similarly.  However, I would doubt most business leaders would support a corporate death penalty.

In a meeting the other day at a client's office, we were discussing collaboration and what happens when the collaborative dynamic breaks down.  People get defensive, offensive and confrontational which makes things very unsafe.  This particular client is in the construction industry and has a full time safety manager, safety coordinators on every job site and a world-class safety record.  In the construction industry, safety has become a major strategic focus in the last 20 years and huge gains have been made in insuring worker safety.  

Graduation from high school, college and/or grad school is for many of us a dim memory.  But whether graduation is a recent or ancient experience, it's important to recognize that in an important way, the education system has let us down.

1. You are a customer and the author is a vendor.  In your business, you would have no qualms about releasing a vendor who no longer added value to your business.  Nor should you have any such qualms about an author who is not delivering value to you.  It is the author's responsibility to give you something of value, not your responsibility to plow through a bunch of stuff that is meaningless to you.  This propensity we have to feel like we have to start at the beginning and end at the end is an artifact of our educational reading strategy.  Let it go.
   
   
By the way, any lack of relevance to you may not be the author's fault.  The book may be packed with nuggets, they may just not be nuggets for you.  More on this in a minute.


2. Recognize that the nuggets you seek may be anywhere.  They may be in the table of contents, they may be in the first chapter, they may be in the epilogue.  They may be in the promotional copy on the back cover or may even be in the title of the book.  At a conference where I was speaking one time, someone came up to me and asked if I had read Mass Customization.  Bing!  There was the nugget, right there in the title.  Brilliant.  Did I run out and buy the book?  Heck no.  I already got the nugget.  I didn't need to read the book.  Now if I was running a manufacturing company, I probably would have bought the book to understand the concept better and how to implement it.  But for my purposes, I got the nugget.  
   
   So obviously, the process is to scan.  If you were a gold miner, you know you have to move tons of dirt for every nugget of gold.  You don't go through every gram of dirt with a microscope.  You move a lot of dirt fast to get at the stuff that matters.  Likewise with reading.  Scan the table of contents.  Scan the chapters that look interesting.  If there is anything of value there your attention will naturally be drawn in.  If you find your attention drifting, then start flipping pages.  Your attention is drifting because there is no value there for you.


3. What determines what is a nugget and what is dirt is how your perceptual filters are set.  What that means is that at any point in time in your life, there are things that are top of mind.  It might be the health of your marriage, it might be your mortality, it might by process improvement in your business, it might be how to deal with unruly teenagers, whatever.  Whatever is at the top of your personal mental and/or emotional in-basket will shape what looks like a nugget to you.  To go back to our jigsaw puzzle analogy, it's whatever corner of the puzzle you happen to be working on.  If you're trying to figure out how to complete the flower pot in the corner, as you scan the loose puzzle pieces, you're not looking for pieces that come from the sky or the buildings, you're looking for that distinctively red color that says, "flower pot".  
   
   So it is with reading.  Your perceptual filters are constantly changing.  This is why you should never throw or give a book away.  If you have skimmed through it and gotten the nuggets that are there for you (and by the way, most business books  only have one or two), if you come back to it six months, a year, or two years later and have another look, it is pretty likely that new nuggets will show up.  You didn't see them the first time because your perceptual filters weren't set to recognize them as nuggets.

With these three concepts in mind, you will find reading becomes a whole new experience.

But now I'm going to give you a gift that will change your life.

Somewhere back in the third grade, Mrs. [enter the name of your third grade teacher here] made it clear to you that unless you started at the beginning and read through to the end, you couldn't say that you've read the book.  Think about it.  You're having lunch with a colleague and he/she says, "I've been reading The Fourteen Secrets That Eskimos Know That Will Transform Your Business Overnight.  Have you read it?"  Instantly, your mind sees the book sitting on your nightstand.  You had gotten as far as the first sentence of chapter two before your eyes drifted closed and your spouse suggested you might want to turn off the light and lie down if you're going to go to sleep.  "I've started it," you reply guiltily.

So here's my gift.  In the scenario I just described, if you have a book and you've scanned through it at any level, gotten a nugget or maybe realized there are no nuggets there for you (at this point in time - which is not all that uncommon, by the way) then you have my permission to say, "Sure, I read that."  

You're a grownup now.  What Mrs. [enter the name of your third grade teacher here] said doesn't matter any more.

I buy a lot of business related books.  I rarely read one cover to cover.  Sadly, the thesis of most business books could have been delivered in an article but have been padded out with fluff so that they take up a credible amount of space on the bookshelf at Barnes and Noble.

Life is moving really fast.  Intellectual capital is depreciating faster than ever.  Your experience is increasingly becoming as much a liability as an asset.  Continuously enriching your worldview is becoming more important than ever.  Books are an important vehicle for that.  The articles you read in the newspaper and your trade and business magazines are too, but a book is a larger canvas on which the author can explore an issue in much more depth than in any other format.  You need to buying and reading books.  

The richness of your worldview will determine the scope of your strategic vision and will impact every dimension of your life.  Embrace the principles I've described and reading will become a joy again, as it was when as children we discovered the magic that these symbols on the page revealed.

Did you ever see The Coal Miner's Daughter with Sissy Spacek and Tommy Lee Jones?  It's about the life of Loretta Lynn, the great country singer.  At one point early in Loretta's career, Tommy Lee (playing her husband) calls her "stupid".  She turns on him quick as a flash, spits in his eye and says, "I may be ignorant, but I ain't stupid!"

"transfer of knowledge that enriches and broadens the learner's horizons and worldview, facilitates systemic and critical thinking and exposes him/her to the fundamentals of business processes."

and training:

"the acquisition of specific technical and behavioral skills."

They may be ignorant, but they are not stupid.  It doesn't take an MBA to figure out that quality products and services delivered on time at competitive prices and comfortable profit margins equates to job security.  There is no other job security.

I was preparing for a speech recently thinking about how powerful inertia must be in virtually every business.  What besides inertia could explain why so many companies are so far behind the power curve in so many dimensions of their businesses?  For example, I speak to hundreds of CEOs every year and I always ask, "Who has a formal process improvement program in your company?"  On average I'd say less than 10% of the hands go up.  Often no hands go up.

1. A CEO who has created the bandwidth in and an interest in ideas, tools, techniques and technologies that are percolating out in the world.


2. A company culture that has processes for evaluating and institutionalizing those new ways of doing things that employees deem mature enough, of importance to their future and of benefit to their customers.

In this time of intense cost consciousness, an important caveat seems in order.

I'd like to propose a law which I have modestly named Goodman's Law which states: 

When the cost of something is easy to quantify but the benefit is not easy to quantify, it is likely to be eliminated.

There are many examples.  A good one I heard recently was the elimination of a construction coordination office at a company that spends billions a year in construction.  This office was composed of senior construction experts who managed all phases of the company's relationship with their contractors.  The cost was significant and highly quantifiable (salaries, benefits, office expense, travel etc.).  The benefit was more difficult to measure. 

Sure enough, at the first sign of contraction, the office was shut down.  The knowledgeable executives were let go and the project managers were left to fend for themselves.  The result: difficult to quantify also, but the evidence suggests costs for construction problems and delays probably far outstripped the cost of the original office.  Can those costs be readily quantified?  No.  Can they be directly attributed to the loss of the office?  Also no.  Does that mean the costs aren't real or that there isn't a correlation?  Definitely no.

Training is another easy target.  Definable costs, difficult to define benefits.  It's worth remembering W. Edwards Deming's admonition from Out of the Crisis:

"The most important numbers in a business are unknown and unknowable."

Of course, when things get difficult you have to carefully scrutinize quantitative costs of everything.  But you also have to very carefully scrutinize the qualitative costs of eliminating programs, processes and people who may be delivering enormous value that is difficult to measure but which would be sorely missed when it was gone.

I hope if nothing else comes out of this downturn, it will be a renewed commitment on the part of all business people to institute a formal process improvement program that will prepare them for the next downturn.  As I've said many times, tough times don't last, but then neither do good times.  The investments you make in training your people and eliminating waste can be lifesavers when business slows down.