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	<title>Lanny Goodman&#039;s Strategic Insights</title>
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	<description>Management consultant and author Lanny Goodman&#039;s observations on leading and managing organizations in the 21st century.</description>
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		<title>What Tools Can Teach Us About Change</title>
		<link>http://www.lannygoodman.com/wordpress/?p=54</link>
		<comments>http://www.lannygoodman.com/wordpress/?p=54#comments</comments>
		<pubDate>Thu, 05 Aug 2010 05:50:25 +0000</pubDate>
		<dc:creator>Lanny Goodman</dc:creator>
				<category><![CDATA[Uncategorized]]></category>

		<guid isPermaLink="false">http://www.lannygoodman.com/wordpress/?p=54</guid>
		<description><![CDATA[It’s been months since I’ve written here. I’ve been on a sabbatical of sorts helping my wife with her business (www.wholewoman.com). Things are perking along well over there now so I can get back to my own business. Besides, I’m sick of looking at Blankfein’s smarmy expression from my last post.￼ Why Change Matters Things [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>It’s been months since I’ve written here.  I’ve been on a sabbatical of sorts helping my wife with her business (www.wholewoman.com).  Things are perking along well over there now so I can get back to my own business.</p>
<p>Besides, I’m sick of looking at Blankfein’s smarmy expression from my last post.￼</p>
<p><strong>Why Change Matters</strong><br />
<img class="alignright size-medium wp-image-55" title="rate-of-change" src="http://www.lannygoodman.com/wordpress/wp-content/uploads/2010/08/rate-of-change-266x300.jpg" alt="" width="266" height="300" /><br />
Things have gone pretty nonlinear in many markets and a lot of business people are scratching their heads trying to figure out how to survive, much less prosper.  From my point of view, there is only one thing to really focus on, as illustrated by the chart, to the right.</p>
<p>The message in this chart is simple: one line is your company and the other is your customer(s) that you cannot afford to lose.  What matters here is which line is which.</p>
<p><img class="alignright size-medium wp-image-56" title="rate-of-change-accel" src="http://www.lannygoodman.com/wordpress/wp-content/uploads/2010/08/rate-of-change-accel-298x300.jpg" alt="" width="298" height="300" />If your customer is changing faster than you are, it’s only a matter of time before the gap between￼ what they need and what you are capable of delivering will become large enough that it will break your relationship with that customer.<br />
It’s not a question of if, it’s a question of when.</p>
<p>Even if somewhere along the way you get the message that you’re behind the power curve, look at the slope of change you will have to hit to come into alignment.  Almost vertical.</p>
<p>Think for a moment about the disruption and cost this kind of revolutionary change entails, if it’s doable at all without breaking the company.</p>
<p>If on the other hand, your company is the green line and your customer is the red, you will find yourself pushing your customer forward.  They will either appreciate it and it will make you a preferred vendor, or they won’t.  If they don’t appreciate your pushing them into the future, your enhanced capabilities will be opening new markets and new opportunities for you so it won’t matter.  At some point you’ll probably need to fire that customer or the market will punish that customer to the point where they won’t be important for you any more anyway.</p>
<p>The thing to keep in mind is that cultural change is at best a 2-3 year process.  So if you get significantly behind your customers and can’t revolutionize your company without breaking it, you have to ask the question, “Is my customer going to give me 2-3 years to demonstrate that I’m getting my act together?”</p>
<p><strong>A Tale of Tools</strong></p>
<p>I love technology.  I’ve been very actively involved with it for thirty years.</p>
<p>In my pre-technology days, I owned a fine jewelry manufacturing company.  Every industry has its info tidbits.  In the jewelry business, one of the many involved the diamond cutting industry in Antwerp, Belgium.  Diamond cutting is the process by which the little glassy lumps of raw diamond are turned into the remarkable sparklers that made them “a girl’s best friend”.  In the early days of diamonds, Antwerp was the diamond cutting center.  Later on, the high end cutting went to New York and the low end to India, but the tidbit is that the richest guy in Antwerp was the guy who sold tools for the diamond cutters.</p>
<p>What people who work with their hands understand is that tools extend and expand their capability, which allows them to do more work which allows them to make more money.  Tradespeople understand implicitly that they can only earn what they can produce.  As a result, they tend to be quick to pick up new tools.  Anyone who has ever used a cordless drill will never go back to one with a wire.</p>
<p>Interestingly, knowledge workers do not have the same tangible feedback mechanism.  For the tradesperson, the deck is either complete or it isn’t.  The engine rebuild is complete or it isn’t, the duct work is hung or it isn’t.  A person who can do the job in 2 hours is going to make more than the person who takes three to do the same job.<br />
Because what knowledge workers (like CEOs) do is so much more intangible, new tools don’t have the same immediacy and impact.  For the tradesperson, it is a given that new tools require changes in behavior.  Using a pneumatic lug wrench is a different process than using a manual lug wrench.</p>
<p>What most business people don’t seem to realize is that information tools extend and expand the capabilities of employees.  But using them requires a change in behavior.</p>
<p>Let’s look for a minute how tools develop.￼</p>
<p>The first figure shows a company that is learning how to do thing in new ways.  The curve is the classic adoption curve.  In this case it reflects a company that is experimenting with new and better ways to do things.</p>
<p><img class="aligncenter size-full wp-image-57" title="tools1" src="http://www.lannygoodman.com/wordpress/wp-content/uploads/2010/08/tools1.jpg" alt="" width="494" height="236" /><br />
To facilitate this, they need new tools.  Either they build their own or they attract the attention of a developer who sees an opportunity.  But the tool development is out of phase to a greater or lesser degree with the demand of the company that needs it, illustrated in the second drawing.￼</p>
<p><img class="aligncenter size-full wp-image-61" title="tools2" src="http://www.lannygoodman.com/wordpress/wp-content/uploads/2010/08/tools2.jpg" alt="" width="494" height="236" /></p>
<p>￼As the tool becomes mature and commercialized, other companies get on the bandwagon, the third drawing.  Chances are the third drawing is or has been your company.</p>
<p><img class="aligncenter size-full wp-image-62" title="tools3" src="http://www.lannygoodman.com/wordpress/wp-content/uploads/2010/08/tools3.jpg" alt="" width="494" height="236" /></p>
<p>You hope your competitors are somewhere to the right of you.</p>
<p><img class="aligncenter size-full wp-image-63" title="tools4" src="http://www.lannygoodman.com/wordpress/wp-content/uploads/2010/08/tools4.jpg" alt="" width="544" height="236" /></p>
<p>What’s interesting is look at the gap between the first line and the third.  That gap represents the competitive distance between you and the company on the left.  ￼</p>
<p>There are lots of assumptions here, to be sure.</p>
<p>Once could make the case that customers don’t innovate, vendors do.  No one knew they needed a photocopier until they saw one in action. I suspect that’s more true of tangible product businesses than software.  There will certainly be exceptions, but we’re exploring broad principles here.</p>
<p>The adoption curves are not necessarily congruent either.  Some companies take much longer to adapt than others.<br />
The critical point I want to make here is that adopting any tool, whether it’s a cordless drill or a new information technology requires changes in behavior.  In my experience, few business leaders really understand this.  Nor do they understand how far behind the adoption curve they are, not necessarily in spending the money on new software, which is easy &#8212; write a check  &#8212; but in driving behavioral and cultural change the tools require in their companies.</p>
<p>Enterprise Resource Planning (ERP) has emerged in the past 10-20 years as the platform of choice for companies.  It is very expensive software (can easily run into the millions for larger companies).  But it does something that has never been possible before in business.</p>
<p>Think for a moment how many decisions, large or small, are made every day in your company.  It’s a big number.  People make decisions based on lots of things, many of which aren’t very rational, but by in large, they make decisions to optimize what they can see in their local environment.  If I’m a supervisor and have an employee who needs something to do, I’ll have her make up widget parts to help get ahead a bit on widget production.  This is called local optimization.  The problem is that local optimization may actually suboptimize the functioning of the organization as a whole.  To go back to our example, having an employee create more inventory, may be more expensive to the company than having the employee do nothing at all.</p>
<p>Employees generally make a good faith effort to make locally optimized decisions, because that is all they have ever been able to do.  With ERP, where every part of the business is driven off one database, employees for the first time in history can make globally optimized decisions because all the data is (or should be) available to them.</p>
<p>I haven’t seen any research on this, but I would guess that if you studied a hundred companies that are five years into an ERP implementation, you would see relatively little behavioral change.  The data are there, but to what extent are they being used to make globally optimized decisions?</p>
<p>The point is this: technology is not about tools.  Technology is about behavior.  If you use a wired drill, you either bring the work to be drilled to it, or you never go anywhere without a long extension cord.  The drill sits on the floor or table waiting for you to pick it up because it’s tethered to the wall outlet.  If you use a cordless drill, you take it to the work.  In fact, you never put it down because you wear it in a holster on your hip.</p>
<p>If you don’t change your behavior, you cannot get full value out of the tool.  If you aren’t getting the full value out of the tool as a result of changed behavior, you are falling farther and farther behind the change curve, becoming increasingly irrelevant in the marketplace and your company is wandering down and evolutionary dead end, a box canyon from which you may or may not be able to extricate yourself from when the light dawns that you need to change your ways.</p>
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		<title>Would You Buy a Used Car From This Investment Banker?</title>
		<link>http://www.lannygoodman.com/wordpress/?p=52</link>
		<comments>http://www.lannygoodman.com/wordpress/?p=52#comments</comments>
		<pubDate>Wed, 11 Nov 2009 21:36:12 +0000</pubDate>
		<dc:creator>Lanny Goodman</dc:creator>
				<category><![CDATA[Uncategorized]]></category>
		<category><![CDATA[God]]></category>
		<category><![CDATA[Goldman Sachs]]></category>
		<category><![CDATA[Huffington Post]]></category>
		<category><![CDATA[Lloyd Blankfein]]></category>
		<category><![CDATA[productivity]]></category>
		<category><![CDATA[Ryan McCarthy]]></category>
		<category><![CDATA[Wall Street]]></category>

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		<description><![CDATA[I love this picture. It fairly oozes sincerity, humility and aw shucks integrity. Of course, unless you&#8217;ve been on vacation in Zimbabwe, you know this is Lloyd Blankfein, CEO of Goldman Sachs taken from an article in the&#160;Huffington Post&#160;by Ryan McCarthy. You know, the one who sanctimoniously told us a couple of days ago that [...]]]></description>
			<content:encoded><![CDATA[<p></p><p><span class="mt-enclosure mt-enclosure-image" style="display: inline;"><img alt="s-GOLDMAN-SACHS-CEO-large.jpg" src="http://www.lannygoodman.com/s-GOLDMAN-SACHS-CEO-large.jpg" width="260" height="190" class="mt-image-right" style="float: right; margin: 0 0 20px 20px;" /></span>
<p>I love this picture.</p>
<p></p>
<p>It fairly oozes sincerity, humility and aw shucks integrity.</p>
<p></p>
<p>Of course, unless you&#8217;ve been on vacation in Zimbabwe, you know this is Lloyd Blankfein, CEO of Goldman Sachs taken from an article in the&nbsp;<a href="http://www.huffingtonpost.com/2009/11/11/goldman-sachs-ceo-lloyd-b_n_353504.html">Huffington Post</a>&nbsp;by Ryan McCarthy.</p>
<p></p>
<p>You know, the one who sanctimoniously told us a couple of days ago that Goldman Sachs was &#8220;doing God&#8217;s work.&#8221; &nbsp;</p>
<p></p>
<p>Please.</p>
<p></p>
<p>Today, the Goldman Sachs spinmeisters are telling him to explain to the unenlightened who think that a company that invents securities that no one can understand, with risks no one can assess, insured by companies that can&#8217;t cover their losses and sells them to companies who ought to know better is not in the public interest, that the billions GS rainmakers earn in &#8220;bonuses&#8221; is because &#8220;The people of Goldman Sachs are among the most productive in the world.&#8221; &nbsp;</p>
<p></p>
<p>Unfortunately, they appear to be primarily productive at doing what I just described.</p>
<p></p>
<p>Of course, if you&#8217;ve got a goose the size of the Chrysler building laying eight hundred pound golden eggs, it would be naive to assume that the owners of said goose are simply going to roll over the first time their game comes under some scrutiny. &nbsp;Quite the contrary. &nbsp;When you control the kind of fungolas these guys do, you can afford the best legislation money can buy. &nbsp;</p>
<p></p>
<p>And, if you&#8217;ve been following the news, Congress is having a pre-holiday sale&#8230;all the Representatives and Senators are on sale, but don&#8217;t leave home without your Amex card as prices seem to start in the seven figures.</p>
<p></p>
<p>You would think, however, that given the level of PR talent these guys can afford, they would come up with something more credible than &#8220;we&#8217;re doing God&#8217;s work.&#8221; &nbsp;Are they hoping that the Tea Baggers will ride to their rescue because of a reference to God?</p>
<p></p>
<p>I guess when you own Wall Street <i>and</i> the Treasury Department (thank you Tim Geitner!) then you really don&#8217;t have to worry very much about what the great unwashed think about you. &nbsp;Certainly no need to waste any of those hard-earned billions on a bunch of dumb PR flacks who demonstrably if they had any brains would be working at GS (very productively) and making <i>real</i> money.&nbsp;</p>
<p></p>
<p>Do you every get the feeling that the world has slipped on its axis and that the inmates have taken over management of the asylum?</p>
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		<title>On the Nature of Belief</title>
		<link>http://www.lannygoodman.com/wordpress/?p=51</link>
		<comments>http://www.lannygoodman.com/wordpress/?p=51#comments</comments>
		<pubDate>Thu, 10 Sep 2009 20:12:16 +0000</pubDate>
		<dc:creator>Lanny Goodman</dc:creator>
				<category><![CDATA[Uncategorized]]></category>
		<category><![CDATA[belief]]></category>
		<category><![CDATA[conservative]]></category>
		<category><![CDATA[fear]]></category>
		<category><![CDATA[liberal]]></category>
		<category><![CDATA[politics]]></category>
		<category><![CDATA[religion]]></category>

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		<description><![CDATA[Beliefs. Everyone has them. &#160;They are essential to our ability to function. &#160;We have to believe the sun will come up tomorrow. &#160;We have to believe there is some logic behind life&#8217;s mysteries and tragedies. &#160; But the last few months in the United States, we have seen appalling evidence of how badly people believe. [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>Beliefs.
<p></p>
<p>Everyone has them. &nbsp;They are essential to our ability to function. &nbsp;We have to believe the sun will come up tomorrow. &nbsp;We have to believe there is some logic behind life&#8217;s mysteries and tragedies. &nbsp;</p>
<p></p>
<p>But the last few months in the United States, we have seen appalling evidence of how badly people believe. &nbsp;We have seen senior Senators and Congresspeople lying through their teeth because legislation is being proposed that violates their beliefs. &nbsp;We have seen so called Town Hall meetings turn into near riots because people appear to be terrified that something will be done that violates their beliefs. &nbsp;TV and radio personalities have been spewing an astonishing and revolting litany of fear and hatred because they feel their beliefs are being threatened.</p>
<p></p>
<p>All these examples are symptoms of people who do not believe well. &nbsp;</p>
<p></p>
<p>What is believing well?</p>
<p></p>
<p>It&#8217;s simple. &nbsp;We believe well when we have the courage to acknowledge that believing something doesn&#8217;t make it true.</p>
<p></p>
<p>This statement may appear paradoxical, that of course if we believe something to be true, to us it&#8217;s true. &nbsp;Yes, that is the nature of belief. &nbsp;But I could believe the sun circles the earth and that the earth is flat, and for centuries, intelligent, educated people believed both those things. &nbsp;Those beliefs did not reflect the reality. &nbsp;</p>
<p></p>
<p>Catholics believe their God is different from that of the Lutherans, Methodists, Episcopalians and so on. &nbsp;The Jews have their own God, the Muslims theirs, the Hindus a whole panoply of Gods. &nbsp;All firmly believe their God is the only true God. &nbsp;I&#8217;m sorry, but they can&#8217;t all be right.</p>
<p></p>
<p>Our beliefs in &#8220;ultimate reality&#8221; are where we go astray in our belief process. &nbsp;More trivial items are easy to deal with. &nbsp;I believe Joe&#8217;s Pizza is at the corner of Main and Oak Streets. &nbsp;My friend believes it&#8217;s in the next block. &nbsp;Am I going to destroy my friendship over the matter? &nbsp;Of course not. &nbsp;I&#8217;m willing to acknowledge that just because I believe that Joe&#8217;s is at Main and Oak, I may be wrong. &nbsp;I understand that my belief is not equal to objective, verifiable truth and I remain open to the alternate possibility. &nbsp;That&#8217;s easy.</p>
<p></p>
<p>But the problem with ultimate reality is there is no objective, verifiable truth. &nbsp;Every religion tries to make its case for verifiability, but the hard reality is that what happens after death, what&#8217;s beyond the universe, why are we born, age and die, are we alone in the universe, why do life, time, entropy, the expansion of the universe exist are all questions to which we have no answers. &nbsp;We only have beliefs.</p>
<p></p>
<p>The difficulty in believing well is acknowledging that there may not be a heaven or hell, Christ may not have been the Son of God, Mohammed may have just been a great salesman, and the great teachers and &#8220;saints&#8221; of the east may be as deluded as the rest of us requires courage and the willingness to live in&nbsp;existential&nbsp;ambiguity. &nbsp;</p>
<p></p>
<p>Where is there any evidence that human beings even have the capacity to perceive ultimate reality? &nbsp;Even the Buddhists and Vedic mystics acknowledge in their framework that the highest levels of consciousness are not sustainable in a human body.</p>
<p></p>
<p>What believing well gives us is an open mind and an open heart. &nbsp;Having worked through the fear of living with life&#8217;s existential ambiguity, we can live in freedom from the known and therefore be able to see and assess without the constraint of a belief system that does not permit us to even consider alternatives. &nbsp;In fact, we immediately (and rightly) become intensely suspicious of anyone who tries to sell us a belief system in which all other options are taboo.</p>
<p></p>
<p>When we believe well, we are also disinclined to kill and maim our fellow human beings because they believe something different from ourselves. &nbsp;When we have acknowledged life&#8217;s fundamental ambiguity, it is clear that we have no right to deny others their beliefs since we have no way of verifying that we are in fact right and they are in fact wrong.</p>
<p></p>
<p>When life is viewed from this point of view, the rabid reactions that so many human beings manifest when they feel their beliefs are being threatened are easily understood. &nbsp;They are manifestations of fear. &nbsp;At some level, existential terror is not an overstatement. &nbsp;</p>
<p></p>
<p>One could say that fear is a part of life, it&#8217;s biological and unavoidable and in many cases desirable. &nbsp;I disagree wholeheartedly. &nbsp;I have known fear, I have known what it means to have one&#8217;s life circumscribed by fear and I have known life with very nominal and completely manageable fear. &nbsp;There is no intrinsic benefit to fear. &nbsp;It robs us of our ability to be proactive. &nbsp;Fear is like a computer virus of the mind that locks us in an endless loop. &nbsp;It is stressful to the physiology. &nbsp;In fear we lose our autonomy, our ability to listen and hear, our ability to learn, our ability to expand and grow, even our ability to love. &nbsp;</p>
<p></p>
<p>Fear causes us to close down, shut off our minds, our reason, our intuition. &nbsp;It causes us to close our hearts lest we be hurt. &nbsp;None of these things are life affirming, life supporting or help us becoming more conscious and aware. &nbsp;Further, fear triggers violence. &nbsp;History shows us that more wars have been fought over religion than any other cause. &nbsp;How much suffering in the world has our beliefs caused? &nbsp;It is incalculable. &nbsp;</p>
<p></p>
<p>You may believe that global warming is a hoax. &nbsp;A lot of intelligent people do. &nbsp;You may equally adamantly feel it is the greatest threat humanity has ever faced. &nbsp;How are we to move forward as a species if we remain intransigent in our beliefs? &nbsp;Are the changes necessary to minimize our footprint on the planet so terrifying? &nbsp;Are the consequences of failing to do so, so terrifying? &nbsp;At some level, the answers to both questions are legitimately, &#8220;yes&#8221;. &nbsp;At another level, it doesn&#8217;t take belief to understand cause and effect is a property of manifest reality. &nbsp;That is easily verifiable. &nbsp;Either way we respond to the environmental situation will produce effects that everyone on the planet will have to live with. &nbsp;</p>
<p></p>
<p>So what?</p>
<p></p>
<p>
<p>Yes, people&#8217;s lives will be disrupted, in some cases tragically so. &nbsp;This is also true of crossing the street. &nbsp;As human beings, we struggle to understand what is going on around us and to instigate causes that produce desirable effects. &nbsp;</p>
<p></p>
</p>
<p>The big New York banks created causes that for many people in the world have created tragic effects. &nbsp;Bernie Madhoff created causes that produced hugely dislocating effects for hundreds, probably thousands of families. &nbsp;An airplane goes down and hundreds of lives are snuffed out in a second. &nbsp;A car bomb decimates a marketplace in microseconds. &nbsp;Someone wins the lottery who has never had two nickels to rub together in their lives.</p>
<p></p>
<p>My point is this, we are all leaves tossed on an unpredictable sea of cause and effect. &nbsp;We cannot know from one minute to the next if we will be struck down physically, financially, professionally, emotionally, relationally or that the person standing next to us will be. &nbsp;Beliefs are our bulwarks against this uncertainty. &nbsp;But when we grasp onto these beliefs because really assimilating the reality that our lives are truly &#8220;dust in the wind&#8221;, we become closed, violent, entropic. &nbsp;We breed fear in others and worst of all, become easy prey for those demagogs who resonate with our beliefs but encourage us to be closed to serve their own ends.</p>
<p></p>
<p>Should we have beliefs? &nbsp;Of course. &nbsp;Should we o<br />
rder our lives around those beliefs? &nbsp;Again, of course. &nbsp;Should we work and strive to persuade others to share our beliefs? &nbsp;Yes. &nbsp;But we should also acknowledge that believing something does not make it so. &nbsp;Then we can be passionate, but not violent, we can be persuasive, but honor the integrity of others. &nbsp;We can act in ways that further the influence of our beliefs, but we will be less inclined to lie, manipulate, and disrupt movement when we acknowledge the limitations of our own beliefs.</p>
<p></p>
<p>One of the symptoms we see in the US of not believing well is that political dialogue has become virtually non-existent. &nbsp;It is taboo in American society to discuss politics and religion, because politics has <i>become</i>&nbsp;religion. &nbsp;Conservatives believe that the unfettered market is God and Milton Friedman is his prophet. &nbsp;Liberals feel that compassion for the less well off is the soul of goodness and that society should be geared to the lowest common denominator (as long as it doesn&#8217;t effect their lifestyle). &nbsp;Driven by these beliefs, which cannot be questioned, cannot be assessed critically, the flaws, strengths and weaknesses cannot be rationally explored and dialogue is impossible. &nbsp;</p>
<p></p>
<p>The result is ranting and raving, deceit, violence where more than ever before is needed alignment, consensus, collaboration. &nbsp;From Aesop to Patrick Henry, the phrase &#8220;united we stand, divided we fall&#8221; has never been more true. &nbsp;Believing badly is the barrier that makes a &nbsp;United States, a United Nations, a Global Village difficult and perhaps ultimately impossible. &nbsp;</p>
<p></p>
<p>We will live well as a species only when we believe well. &nbsp;We will believe well only when we have conquered our fears. &nbsp;</p>
<p></p>
<p></p>
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		<title>Manifesto for the Propagation of a New Discipline of Self-Management</title>
		<link>http://www.lannygoodman.com/wordpress/?p=50</link>
		<comments>http://www.lannygoodman.com/wordpress/?p=50#comments</comments>
		<pubDate>Sat, 18 Jul 2009 12:33:09 +0000</pubDate>
		<dc:creator>Lanny Goodman</dc:creator>
				<category><![CDATA[Entrepreneurship]]></category>
		<category><![CDATA[Leadership]]></category>
		<category><![CDATA[Management]]></category>
		<category><![CDATA[complexity theory]]></category>
		<category><![CDATA[manifesto]]></category>
		<category><![CDATA[self-management]]></category>
		<category><![CDATA[traditional management]]></category>

		<guid isPermaLink="false">http://www.lannygoodman.com/wordpress/?p=50</guid>
		<description><![CDATA[Last October, I drafted the above manifesto which I made available on one of my other sites (managementtech.com).  It occurred to me today that I should have posted it on my blog.  So here it is: &#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8211; Manifesto for the Propagation of a New Discipline of Self-Management Whereas: Organizations exhibit a wide variety of dysfunctions [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>Last October, I drafted the above manifesto which I made available on one of my other sites <a href="http://www.managementtech.com" target="_blank">(managementtech.com)</a>.  It occurred to me today that I should have posted it on my blog.  So here it is:</p>
<p>&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8211;</p>
<p><strong><span style="font-size: 1.25em;">Manifesto for the Propagation of a New Discipline of Self-Management</span></strong></p>
<p><strong>Whereas:</strong></p>
<p>Organizations exhibit a wide variety of dysfunctions that undermine their ability to fulfill their potential and adapt to rapidly changing environmental conditions and</p>
<p><strong>Whereas:</strong></p>
<p>These dysfunctions rob employees of enthusiasm, vitality, satisfaction and fulfillment, and companies of productivity, profitability and market leadership and</p>
<p><strong>Whereas:</strong></p>
<p>Traditional management practice was designed very intentionally to minimize employee contributions and</p>
<p><strong>Whereas:</strong></p>
<p>The marketplace is increasingly global providing natural advantages to those countries who have invested in technical education and/or whose cost of labor is very low and</p>
<p><strong>Whereas:</strong></p>
<p>The demographics of the workforces in many developed countries over the next ten years show dramatic declines in the number of available workers meaning that the labor pool will increasingly be a seller&#8217;s market and</p>
<p><strong>Whereas:</strong></p>
<p>We can no longer afford business practices which sub-optimize the productivity and creativity of either our organizations or our people and</p>
<p><strong>Whereas: </strong></p>
<p>It is morally wrong to continue to design and support organizations that treat employees like children, rob them of their vitality, and condemn them to supporting dysfunctional systems and processes when they know they are doing so and</p>
<p><strong>Whereas:</strong></p>
<p>The principles of traditional leadership, management, and organization design are human artifacts, designed by humans and are capable of being redesigned in ways consistent with the current realities of the markets, technology, labor pool and demographics and</p>
<p><strong>Whereas:</strong></p>
<p>We now know how to design more humane and effective organizations that are intrinsically created to leverage the total talent, intelligence, creativity, knowledge, experience, energy and enthusiasm of our employees,</p>
<p><strong>Be it Resolved That:</strong></p>
<ol>
<li>We commit to the propagation of a new model of organization design that requires a different framework for the disciplines of leadership and management, namely self-managing organizations.  We make the commitment to redesign for <strong>our</strong> time and context that which those who came before us designed for <strong>their</strong> time and context.  We do so drawing on the bodies of knowledge we have acquired in recent decades through the quality disciplines, science (especially complexity theory), and human development.</li>
<li>In business, virtue <strong>creates</strong> its own reward.  We are confident that those leaders with the vision, courage, commitment and skill to be early adopters and build self-managing organizations will prosper and establish competitive leadership that will be very difficult for competitors to usurp.</li>
<li>We will draw on the knowledge of the past for that which is useful, but recognize that in these times of dramatic change, experience can be as much a liability as an asset.</li>
<li>The knowledge and experience we gain in building self-managing companies we will propagate and share freely with the confidence that the rising tide we create will raise all ships including our own.</li>
</ol>
<p>Signed the 22nd day of October, 2008</p>
<p>Lanny Goodman</p>
<p>&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8211;</p>
<p>I know all the whereases seem a bit high falutin&#8217;, but that&#8217;s the nature of manifestos.  The bottom line is this: we could dramatically increase quality, reduce cost and make millions of our businesses more productive, competitive and profitable if we got out of our employees&#8217; way, gave them the tools (knowledge and feedback mechanisms) they need to unleash their creativity.</p>
<p>This is not new news.  Back in the &#8217;90s Ralph Stayer and Jim Belasco wrote <em>Flight of the Buffalo </em>which I think may have been the premier business book of that decade, sharing their stories of how they got out of their employees&#8217; way and built amazing companies.  Jack Stack did as well in <em>The Great Game of Business</em>.</p>
<p>How many millions of people wake up Monday mornings and are depressed about having to go to work.  This is data.  Traditional management has reached the end of its useful life as all things do.  It was incredibly powerful in its early years but it is much more a liability than an asset at this point in history.</p>
<p>Let&#8217;s rewrite the rules.  The only thing that is holding us back is fear of the unknown and inertia.</p>
<p>For more information, why not download a free copy of my book, <em>The End of Management</em>?  Click <a href="http://www.lannygoodman.com/htmlfiles/learnmore.html" target="_blank">here</a> to get a copy.</p>
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		<title>The SOLAR Revolution is here!</title>
		<link>http://www.lannygoodman.com/wordpress/?p=49</link>
		<comments>http://www.lannygoodman.com/wordpress/?p=49#comments</comments>
		<pubDate>Thu, 09 Jul 2009 14:52:16 +0000</pubDate>
		<dc:creator>Lanny Goodman</dc:creator>
				<category><![CDATA[Leadership]]></category>
		<category><![CDATA[Management]]></category>
		<category><![CDATA[performance review]]></category>
		<category><![CDATA[SOLAR]]></category>

		<guid isPermaLink="false">http://www.lannygoodman.com/wordpress/?p=49</guid>
		<description><![CDATA[You heard it here first&#8230;the SOLAR revolution is upon us. No, I&#8217;m not talking about arrays of silicon on your roof or giant propellers whirring in your backyard.  I&#8217;m talking about the death of one of the most cherished and persistent of the traditional management artifacts: the job description. If ever there was an icon [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>You heard it here first&#8230;the SOLAR revolution is upon us.</p>
<p>No, I&#8217;m not talking about arrays of silicon on your roof or giant propellers whirring in your backyard.  I&#8217;m talking about the death of one of the most cherished and persistent of the traditional management artifacts: the job description.</p>
<p>If ever there was an icon of the machine model of management, surely the job description is it.  What clearer evidence of the &#8220;cog-in-the-machine&#8221; mindset that gave us &#8220;modern scientific management&#8221; one hundred years ago could there be?  Here are your specifications as a cog in the machine: 243 teeth, spin clockwise at 49.7 rpm and engage with the following other cogs&#8230;Have a nice day.</p>
<p>And business leaders scratch their heads wondering why their employees hate coming to work.</p>
<p>It&#8217;s not like there is any mystery about this.  Since the first organization studies were done in the 1930&#8242;s it&#8217;s been clear that traditional management practice is profoundly enervating and diminishing to the human spirit.  Unfortunately, because talent was plentiful and cheap and the productivity gains at the time were so great, the human cost of what has become traditional management practice was deemed acceptable.</p>
<p>But today, even in this economic climate, top talent is scarce and expensive and unlike in the &#8217;30s, employees have options.</p>
<p>So what is the SOLAR revolution?  To answer this question, we need to go back to the 1970s when a man named John Carver began doing ground-breaking work with non-profit Boards of Directors.  If you know anything about non-profit Boards, you know that the members are there primarily because they are either in a position to donate significant money or have the ability to get others to donate significant money.  As a result, non-profit Boards are notoriously contentious and ineffective and providing governance for their organizations.  This is true by virtue of the Board being either unable to reach consensus on strategic direction and execution and/or by being meddlesome and intrusive into the operational workings of the organization.</p>
<p>What Carver did was first, work with the Board to clarify their vision for the organization and its values.  Then he had them define in that context, what it was <strong>not</strong> OK for the officers of the organization to do.  This would include broad strategic issues such as &#8220;you will not instigate and service offerings outside of our core service without Board approval&#8221;.  Also financial limitations such as what are the financial limits beyond which officers could not obligate the company without Board approval.  More detailed limits were also typical such as policies having to do with sexual harassment and other kinds of legal and values related limitations.</p>
<p>Beyond those limitations, however, the Board&#8217;s message to the officers is &#8220;Go forth and multiply.&#8221;</p>
<p>In a self-managing context, the logic of this approach is completely sound.  It gives the Board the controls that are legitimate for their role in the corporate structure and at the same time it gives the officers room to run and space in which to exercise the judgment they are being paid for to grow and strengthen the organization.</p>
<p>Policy Governance has been widely adopted by non-profit Boards in a number of segments of the non-profit world and has made Boards more effective, made being a Board member more fun and productive, and made running a non-profit much more pleasant and less stressful for management.</p>
<p>If you have followed my blog at all, you know that I am a staunch advocate of designing and building organizations which intrinsically leverage the full value that employees are capable of bringing to the party.  Accomplishing this requires a thorough understanding of the pervasive mechanistic assumptions on which the whole edifice of traditional management practice was built.  It requires the conceptual flexibility to grasp how an organizational model that resembles biology more than the machine is much more in alignment with how the universe appears to actually work and much more in alignment with the demographics and psychographics of today&#8217;s workforce.</p>
<p>So, in the spirit of Policy Governance, the SOLAR is an acronym which stands for Statement Of Limitations And Responsibilities.  Its structure is:</p>
<p>1) Very broadly defined, this is what we want you to do</p>
<p>2) Very specifically, here are the things you cannot do because you:</p>
<p>a) Have not been trained and certified or</p>
<p>b) Have not yet demonstrated your competence in this area.</p>
<p>Let&#8217;s look at some examples.</p>
<p><strong>Welder</strong></p>
<p>1) Work on the production line assembling kitted parts through various welding processes, following all safety procedures, maintaining paperwork for each kit and helping others out where time allows to maximize work throughput, company profitability, and customer satisfaction.</p>
<p>2) You cannot obligate the company for more than $100 without Team Leader approval.  You cannot weld stainless steel.  You cannot do electrical assembly.  You cannot operate the shear or brake.  These restrictions can and will be lifted as you acquire the necessary certifications.  You cannot violate any documented company ethics or policies.</p>
<p><strong>Marketing Director</strong></p>
<p>1) Develop and execute the strategic marketing plan in conjunction with the business unit leaders, serve on the Leadership Team, oversee the marketing function to insure satisfaction of your internal customers&#8217; needs for trade show support, collateral development and any other marketing support.  Be an independent set of eyes and ears in the marketplace to insure that customers are delighted and remain loyal and that the company&#8217;s profit objectives are met.</p>
<p>2) You cannot obligate the company for any amount in excess of the quarterly budget approved for your internal service unit.  You cannot run a strategic business unit.  You cannot interact with a strategic business unit&#8217;s customers unless that contact was initiated by the customer or the contact is done with the support and approval of the strategic business unit leader.  You cannot violate any documented company ethics or policies.</p>
<p>Clearly, for this kind of autonomy to work, employees require much more knowledge and information than they are traditionally given.  Many companies have struggled to identify the return on investment for comprehensive training programs.  In my view there is only one justification for this kind of investment: we can produce more profitable products and services (and therefore revenue) with the same or even less management infrastructure.  Therefore the cost of that management infrastructure is reduced as a percentage of sales and that reduction in cost flows straight to the bottom line.  This profitability gives us the justification for the significant investment in education, training and orientation necessary to give employees the ability to function relatively independently and reliably exercise good judgment.</p>
<p>Contrast this to the traditional management world.  1) Check your brain at the door and do just what we tell you to do.  2) Don&#8217;t worry about or ask about what&#8217;s going on the the cubicle next to yours.  Just do your work.  Worrying about the person next to you is my job as your manager.  Don&#8217;t step on my turf.</p>
<p>In that context, the only training that is really necessary is the training to do the specific job the employee has been hired to do.</p>
<p>An interesting way to look at organizational heath is to compare it to biological health.  In the human body, every cell is aware of the state of every other cell.<br />
The body is flooded with communication (hormones, enzymes, neurotransmitters and others) which keep the whole system apprised of its state of being.  If you cut your finger or catch a cold, the entire organism rallies to its defense.</p>
<p>Compare this model of health to what goes on in your organization.  Does your organization look healthy from that point of view or if your organization was a body would you be calling 911?</p>
<p>The key fact is that the changes in the competitiveness of the world requires that we root out and dismantle the artifacts of traditional management practice and splice new DNA around which the organization creates itself.  There was nothing intrinsically wrong with &#8220;modern scientific management&#8221;.  It was a brilliant conception, gave rise to the huge productivity gains that made the middle class in this country possible and unquestionably made it possible for the US to win World War II.  But that was then and this is now.  The economy is now service driven, knowledge driven and information driven.  Intellectual capital drives the markets far more than financial capital.  Technology has made things routine that fifty years ago would have sounded like science fiction or the ravings of a mad person.  Reinventing leadership, management and organization isn&#8217;t easy because it means that much of our experience is now more of a liability than an asset.  But that doesn&#8217;t make the need any less pressing.</p>
<p>The survivors of this recession will be lean, nimble and ready to rock.  Good times will come again, but they will be different than what we have experienced in the past and much more demanding.  We have to reinvent ourselves if we expect to be up to the challenge.  So&#8230;</p>
<p>The job description is dead.  Long live the SOLAR!</p>
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		<title>A Great Example of Recession Adaptation</title>
		<link>http://www.lannygoodman.com/wordpress/?p=48</link>
		<comments>http://www.lannygoodman.com/wordpress/?p=48#comments</comments>
		<pubDate>Mon, 01 Jun 2009 21:39:49 +0000</pubDate>
		<dc:creator>Lanny Goodman</dc:creator>
				<category><![CDATA[Entrepreneurship]]></category>
		<category><![CDATA[adapt]]></category>
		<category><![CDATA[community]]></category>
		<category><![CDATA[grass roots]]></category>
		<category><![CDATA[recession]]></category>

		<guid isPermaLink="false">http://www.lannygoodman.com/wordpress/?p=48</guid>
		<description><![CDATA[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 [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>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 <a href="http://www.heretohelp.us" target="_blank">recession expo</a> as a resource to help others who were struggling.
<p><span class="mt-enclosure mt-enclosure-image" style="display: inline;"><a href="http://www.heretohelp.us" target="_blank"><img alt="heretohelp.us" src="http://www.lannygoodman.com/340_HERE_TO_HELP_US_copy.jpg" width="340" height="65" class="mt-image-center" style="text-align: center; display: block; margin: 0 auto 20px;" /></a></span></p>
<p>There will be a wide variety of resources there for people needing help with mortgage relief, food stamps, health care, short term financing, you name it.  There will be 150 exhibitors, goal setting and sales guru Brian Tracy will be a keynoter as will be yours truly.  </p>
<p></p>
<p>I think it&#8217;s a great example of entrepreneurial thinking and adaptation.  If it works, it will expand to other cities.  Bart is getting some impressive corporate support as well.  It&#8217;s becoming a grass roots community effort.</p>
<p></p>
<p>The lessons: </p>
<p>1) If you&#8217;re not sure what to do, find someone in pain and help them. </p>
<p>2) If a lot of people have a problem, help them find a solution.  At the very least you will attract a great deal of favorable attention to yourself and PR is good.</p>
<p></p>
<p>Pretty basic stuff, but we get so stuck in our own ways of functioning, sometimes it takes an economic earthquake to shake us out of our narrow worldview and realize the scope of opportunities that are out there.</p>
<p></p>
<p>Bart&#8217;s a make-it-happen guy.  It will be an interesting experience.  I&#8217;ll keep you posted.  Meanwhile, take a look at his site.  <a href="http://www.heretohelp.us" target="_blank">http://www.heretohelp.us</a>.</p>
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		<title>Recession: Prepare Now for the Next Upswing</title>
		<link>http://www.lannygoodman.com/wordpress/?p=47</link>
		<comments>http://www.lannygoodman.com/wordpress/?p=47#comments</comments>
		<pubDate>Wed, 13 May 2009 11:25:53 +0000</pubDate>
		<dc:creator>Lanny Goodman</dc:creator>
				<category><![CDATA[Entrepreneurship]]></category>
		<category><![CDATA[Leadership]]></category>
		<category><![CDATA[education]]></category>
		<category><![CDATA[marketing]]></category>
		<category><![CDATA[orientation]]></category>
		<category><![CDATA[recession]]></category>
		<category><![CDATA[Strategic planning]]></category>
		<category><![CDATA[Technology]]></category>
		<category><![CDATA[training]]></category>
		<category><![CDATA[upswing]]></category>

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		<description><![CDATA[The signs are all around.  Benanke is predicting the recession ending later this year.  Many entrepreneurs I&#8217;ve spoken with tell me business is showing very early signs of movement. If you&#8217;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. [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>The signs are all around.  Benanke is predicting the recession ending later this year.  Many entrepreneurs I&#8217;ve spoken with tell me business is showing very early signs of movement.</p>
<p>If you&#8217;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&#8217;re on the wave, the wave does all the work.  Once the wave rolls past you, you&#8217;ll never catch it. </p>
<p>So it is now with the economy.</p>
<div style="text-align: center;">
<p><b>We Can See the Wave Coming</b></p>
</p>
<p>The wave isn&#8217;t here yet but we can see it coming.  <i>Now</i> is the time to start paddling so you be moving fast and harness the awesome power of economic expansion.</p>
<p>What does &#8220;paddling&#8221; look like?</p>
<div style="text-align: center;">
<p><b>How Has the Game Changed?</b></p>
</p>
<p>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&#8217;re experiencing a lull at the moment, but everyone I read says look for energy moving back up over the next year or two.</p>
<p>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.</p>
<p>The good old days are gone.  The new days will be good too, but much more demanding.</p>
<div style="text-align: center;">
<p><b>Will You Miss the Wave?</b></p>
</p>
<p>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.</p>
<div style="text-align: center;">
<p><b>Technology</b></p>
</p>
<p>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.</p>
<div style="text-align: center;">
<p><b>Marketing</b></p>
</p>
<p>If you are not learning to be a more effective, capable and aggressive marketer in an economy increasingly characterized by &#8220;kick-ass&#8221; marketers and companies who work for &#8220;kick-ass&#8221; marketers (guess who makes the money?), you&#8217;re are missing the wave.</p>
<div style="text-align: center;">
<p><b>Education, Training &amp; Orientation</b></p>
</p>
<p>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. </p>
<p>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.  </p>
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		<title>Is Strategic Planning Still Relevant in a Down Economy?</title>
		<link>http://www.lannygoodman.com/wordpress/?p=46</link>
		<comments>http://www.lannygoodman.com/wordpress/?p=46#comments</comments>
		<pubDate>Mon, 20 Apr 2009 09:42:28 +0000</pubDate>
		<dc:creator>Lanny Goodman</dc:creator>
				<category><![CDATA[Entrepreneurship]]></category>
		<category><![CDATA[Leadership]]></category>
		<category><![CDATA[economy]]></category>
		<category><![CDATA[Strategic planning]]></category>
		<category><![CDATA[strategy]]></category>
		<category><![CDATA[vision]]></category>

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		<description><![CDATA[This is a very important subject because so many companies appear to be in reactive mode. But I&#8217;ll make it short. The answer is yes, of course.  Strategic planning is about exercising the God-like ability with which human beings have been endowed for turning dreams into realities.  The starting point of strategic planning is vision: [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>This is a very important subject because so many companies appear to be in reactive mode.
<p></p>
<p>But I&#8217;ll make it short.</p>
<p></p>
<p>The answer is yes, of course.  Strategic planning is about exercising the God-like ability with which human beings have been endowed for turning dreams into realities.  The starting point of strategic planning is vision: what do we want to create?  If that vision is to be compelling, it must be a human vision.  Business is about living.  Life is not about business.  Creating something worthwhile brings out the best in all of us, creates alignment and commitment on the part of the people involved.</p>
<p></p>
<p>It also transcends good times and bad times.</p>
<p></p>
<p>A lot of companies are having it rough right now.  But if you have a clear vision for your company, the times may change your timing, they may even change your strategy as opportunities open up and others close down, but there is rarely an reason why the times should change your vision.</p>
<p></p>
<p>If you follow the news and the investment reporters, the tea leaves are starting to portend an improvement in the economy.  Now, more than ever, it&#8217;s time to get the strategic planning process pulled back together, regain clarity of vision and identify the strategic priorities that will be your touchstones come good times or bad.</p>
<p></p>
<p>If you&#8217;re not sure how, call me.</p>
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		<title>What to do When What You&#8217;ve Been Doing Isn&#8217;t Doing it Any More</title>
		<link>http://www.lannygoodman.com/wordpress/?p=45</link>
		<comments>http://www.lannygoodman.com/wordpress/?p=45#comments</comments>
		<pubDate>Sat, 14 Mar 2009 10:11:37 +0000</pubDate>
		<dc:creator>Lanny Goodman</dc:creator>
				<category><![CDATA[Current events]]></category>
		<category><![CDATA[Entrepreneurship]]></category>
		<category><![CDATA[Leadership]]></category>
		<category><![CDATA[adapt]]></category>
		<category><![CDATA[cost]]></category>
		<category><![CDATA[Deming]]></category>
		<category><![CDATA[marketing]]></category>
		<category><![CDATA[process improvement]]></category>
		<category><![CDATA[recession]]></category>

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		<description><![CDATA[Ah, recession&#8230;it fulfills my motto in life, &#8220;Not always fun, but never dull.&#8221; In some ways a recession can be defined as that period of time in which you find yourself wishing you had done three years ago the things that would be making a difference in what you&#8217;re experiencing now.  Sadly, success hides a [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>Ah, recession&#8230;it fulfills my motto in life, &#8220;Not always fun, but never dull.&#8221;
<p></p>
<p>In some ways a recession can be defined as that period of time in which you find yourself wishing you had done three years ago the things that would be making a difference in what you&#8217;re experiencing now.  Sadly, success hides a multitude of sins.  It is in the difficult times that we learn what really works and what doesn&#8217;t, what we can really live without and what we can&#8217;t.  Ultimately, we have to assess the structural changes that have taken place in our markets and adapt.  </p>
<p></p>
<p>The worst thing to do is hunker down and assume that if you wait long enough, things will return to the way they were.  Don&#8217;t count on it.  If you have a business that is dependent on cheap, readily available credit, for example, don&#8217;t hold your breath waiting for the days of easy credit to return.  Probably not in your lifetime.</p>
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<p><span class="mt-enclosure mt-enclosure-image" style="display: inline;"><img alt="slingshot1sm.gif" src="http://www.lannygoodman.com/images/slingshot1sm.gif" width="300" height="166" class="mt-image-right" style="float: right; margin: 0 0 20px 20px;" /></span>
<p>The good news is that a recession is like gravity.  It pulls everyone down equally.  The question is what you do with it.  The little illustrations show what I mean.</p>
<p></p>
<p>Our little alien finds him (her?) self drawn inexorably into the sun with the inevitable result being toast.  Not a good strategy.  But, our little alien, being a good astrophysicist, knows that gravity can work for you as well as against you.  It&#8217;s all a matter of trajectory.</p>
<p><span class="mt-enclosure mt-enclosure-image" style="display: inline;"><img alt="slingshot2sm.gif" src="http://www.lannygoodman.com/slingshot2sm.gif" width="300" height="300" class="mt-image-right" style="float: right; margin: 0 0 20px 20px;" /></span>
<p></p>
<p>With a small course correction, our alien friend has used the power of gravity to slingshot back into space at even greater velocity.  Clever alien.</p>
<p></p>
<p>Can we be that clever?  How can you use the pressures that are arising from the shifting tectonic plates of the economy?</p>
<p></p>
<p>I&#8217;m not suggesting there are easy answers.  People are cutting back, in many cases out of necessity, in some cases out of fear or just being conservative until things level out.  In either case, the world a year or two from now will look different from how the world looked a year or two ago.</p>
<p></p>
<p>What to do?</p>
<p></p>
<p>The business equation is pretty simple.  Money in, money out.  More money in, less money out.  That suggests that we should be focusing on two things right now: marketing and process improvement.  As I pointed out in a previous post (<a href="http://www.lannygoodman.com/2008/12/saving-your-way-to-oblivion.html" target="_blank">Saving Your Way to Oblivion</a>), there is a limit to what you can do with traditional cost cutting.  Process improvement, on the other hand, can have a significant impact on cost.  The only problem with it is that it can free up a lot of production capacity, which requires more revenue to support.  (Kind of hard to ask your employees to learn a bunch of new ways of working so they can work themselves out of a job.)  On the other hand, as your costs come down, you&#8217;ve got more margin to play with in the marketplace which you can use to bring in more business.</p>
<p></p>
<p>Let&#8217;s start with marketing.  Most smaller companies tend to be relatively sales driven.  Nothing intrinsically wrong with that, but one of the symptoms of a sales-driven culture is the customer base tends to be very diverse.  What that typically means is that the company is a peripheral player to most of its customers.  From a marketing perspective this is a low margin and strategically precarious position.  Again, from a marketing point of view, narrow and deep will out perform broad and shallow every time.</p>
<p></p>
<p>What does narrow and deep mean?  It means that you have focused your limited resources on a narrow market niche and figured out how to become very important to a relatively small number of customers.  Particularly is you can develop several niches like this, you have the benefit of concentration for each niche and the benefit of diversification as a company in the event one of your niches collapses, which they do from time to time due to no fault of yours.</p>
<p></p>
<p>This starts with segmenting your market and assessing where is business going to be getting done over the next year or two given the current state of the economy.  How can you start building relationships in that market?  How can you tune your products and services to meet that market&#8217;s needs?  How can you position yourself as a desirable vendor?  If you haven&#8217;t read my post, <a href="http://www.lannygoodman.com/2008/03/climbing-the-food-chain-for-fu.html" target="_blank">Climbing the Food Chain for Fun &amp; Profit</a>, this would be a good time to do so.</p>
<p></p>
<p>So firing a bunch of customers who nickel and dime you to death will free up bandwidth to pursue better customers and use your creativity to find ways to bring more value to them.  If you sell through distribution, this would be a good time to start learning how to sell direct.  Your distributors and/or retailers won&#8217;t like it, but almost everyone else is doing it, so they don&#8217;t have a lot of leverage.   </p>
<p></p>
<p>If you don&#8217;t know much about marketing, this would be a good time to get your education going.  If you know some things about marketing but don&#8217;t have any experience with direct response marketing, this would be a good time to start.  If you are not making aggressive use of the web, this would be a good time to start learning about that.  Web marketing is more complex than it used to be but is well worth the investment of time.</p>
<p></p>
<p>On the cost side of the house, when I speak to groups of CEOs, and I speak to hundreds of CEOs every year, less than ten percent have any kind of formal process improvement programs going on.  This is a pretty appalling statistic, but it means opportunity for those who get to work on it.</p>
<p></p>
<p>Again, this is not a quick fix.  You will get lots of resistance from your employees.  You&#8217;ll have lots to learn and lots to teach.  But once you start getting traction the effort will pay dividends forever.  There is a huge literature on the subject now, but if you haven&#8217;t read the classics like Deming&#8217;s <a href="http://www.amazon.com/gp/redirect.html?ie=UTF8&amp;location=http%3A%2F%2Fwww.amazon.com%2FOut-Crisis-W-Edwards-Deming%2Fdp%2F0262541157%3Fie%3DUTF8%26s%3Dbooks%26qid%3D1237053836%26sr%3D8-1&amp;tag=lannygoodmanc-20&amp;linkCode=ur2&amp;camp=1789&amp;creative=9325">Out of the Crisis</a><img src="http://www.assoc-amazon.com/e/ir?t=lannygoodmanc-20&amp;l=ur2&amp;o=1" width="1" height="1" border="0" alt="" style="border:none !important; margin:0px !important;" />, or Philip Crosby&#8217;s <a href="http://www.amazon.com/gp/redirect.html?ie=UTF8&amp;location=http%3A%2F%2Fwww.amazon.com%2FQuality-Free-Philip-B-Crosby%2Fdp%2F0451622472%3Fie%3DUTF8%26s%3Dbooks%26qid%3D1237053952%26sr%3D1-1&amp;tag=lannygoodmanc-20&amp;linkCode=ur2&amp;camp=1789&amp;creative=9325">Quality is Free</a><img src="http://www.assoc-amazon.com/e/ir?t=lannygoodmanc-20&amp;l=ur2&amp;o=1" width="1" height="1" border="0" alt="" style="border:none !important; margin:0px !important;" />, these would be good places to start.  </p>
<p></p>
<p>&#8220;Lean&#8221; is the latest flavor of the quality disciplines and well worth exploring.  There is a government funded organization called Manufacturing Extension Partnership (MEP).  Look on the web to see if they have an office in your community.  They offer a one day class in Lean which is an eye-opener.  They also offer low cost consulting to help you drive cost out of your organization using Lean principles.</p>
<p></p>
<p>As I said at the beginning, a recession is that time where you find yourself wishing you do<br />
ne some things three years ago.  Better late than never.  We all have to adapt to survive.  The hardest part is letting go of the known.  How ironic is it that the act of letting go which should be so easy is so damn hard.  But nothing like a good recession to provide the motivation.</p>
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		<title>Corporate Death Penalty</title>
		<link>http://www.lannygoodman.com/wordpress/?p=44</link>
		<comments>http://www.lannygoodman.com/wordpress/?p=44#comments</comments>
		<pubDate>Fri, 27 Feb 2009 19:12:20 +0000</pubDate>
		<dc:creator>Lanny Goodman</dc:creator>
				<category><![CDATA[Uncategorized]]></category>
		<category><![CDATA[asbestos]]></category>
		<category><![CDATA[Bhopal]]></category>
		<category><![CDATA[corporation]]></category>
		<category><![CDATA[death penalty]]></category>
		<category><![CDATA[trial]]></category>
		<category><![CDATA[Union Carbide]]></category>
		<category><![CDATA[WR Grace]]></category>

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		<description><![CDATA[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 [...]]]></description>
			<content:encoded><![CDATA[<p></p><p>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.
<p></p>
<p>A corporation is legally an entity like a person.  It exists, it pays taxes or passes profits through to individuals.  But underlying this fiction is the fact that a corporation&#8217;s behavior is the result of the behavior of it&#8217;s employees.  Therein lies the conundrum.  Part of a corporation&#8217;s function is to shield the decision makers and shareholders from liability.  But, if a corporation&#8217;s decision makers through negligence, greed or intent responsible for the deaths of others, why should the corporation itself not suffer the same consequences as someone who shoots and kills a convenience store clerk during a holdup?  </p>
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<p> What might that look like?  A good example is the Bhopal disaster.  In 1984 the plant co-owned by Union Carbide and the government of India released 42 tons of toxic gas.  This directly or indirectly led to the deaths of an estimated 16,000 people.  </p>
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<p>Why should a corporation (and the in-depth study of the incident showed clear negligence on the part of Union Carbide among others &#8212; see the wikipedia article for more information) be allowed to continue to exist?  Why should the corporation itself not be tried for murder and if found guilty put to death?  Putting a corporation to death would be the equivalent of a forced chapter 7 liquidation.  </p>
<p></p>
<p>Who would suffer?  The shareholders, who would virtually always include the decision-makers.  For many large public companies, a sizable portion of the shareholders are pension plans, so a lot of people stand to suffer if a major company was liquidated.  Do you suppose this might have some impact on who the shareholders elected to the board and the level of oversight the board exercised?  I expect it would.</p>
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<p>We&#8217;re not talking about something like a civil matter which a company or individual can indemnify itself.  It would be a criminal equivalent.  You can&#8217;t buy insurance to protect you if you murder someone.  You can buy insurance if someone is killed on your property and sues you.  Why should corporations not suffer the consequences of the actions of it&#8217;s leaders?</p>
<p></p>
<p>You could make the point that most of the shareholders would be innocent victims of such an action.  I disagree.  A recent assessment in the news of the Madhoff fiasco suggested that his customers didn&#8217;t care how he was doing things as long as he kept paying their big returns.  I think most shareholders are the same.  As long as the company is making money, the stock is going up and the dividends keep coming, shareholders aren&#8217;t going to look too closely at how the company is run.  But if they knew their capital was at risk of liquidation they would elect directors who would pay very close attention.</p>
<p></p>
<p>What brought all this to mind was an interview I heard on NPR the other night about a trial which is going on right now in Montana.  WR Grace operated a vermiculite mine there for decades which blanketed the town with asbestos fibers.  Workers brought the stuff home on their clothes and exposed their wives and children, the town, downwind of the mine was completely contaminated.  Hundreds of men, women and children have died from asbestos related diseases.  The company insists that the epidemic has nothing to do with asbestos and that they are not responsible.  The case has taken ten years to come to trial, and five executives are on trial for very narrow violations of environmental rules.  (By the way, the EPA has spent hundreds of millions in an effort to clean up the town.)</p>
<p></p>
<p>Here is a perfect example of a company that should be on trial for it&#8217;s life.  Why shouldn&#8217;t this be a murder trial?  Not necessarily for the executives (although I&#8217;m not sure they shouldn&#8217;t be on trial for their lives), but for the company itself.  If proven without a reasonable doubt to be responsible for the deaths of hundreds, the company should be put to death.  Its resources should be redeployed to owners more responsible and ethical.  The shareholders would receive whatever value was generated from the sale of the companies assets after its debts were paid.</p>
<p></p>
<p>The bottom line is this.  </p>
<p></p>
<p>I don&#8217;t believe the executives at Union Carbide, Grace, Enron, Worldcom or Exxon for that matter sprang from the womb committed to becoming master criminals.  But the ecosystem in which they worked caused them to behave in criminally negligent ways.  To a much lesser degree we see this in every company.  People behave in ways that are self-protective in their micro-ecology but that might be highly harmful to the system as a whole.  If we want people to behave differently, there have to be feedback mechanisms to create that desired behavior. Would a senior executive who has earned thousands of shares of company stock be inclined to stress fiscal, environmental, and safety responsibility more if his or her equity was at risk in ways that could not be indemnified?  I think so.</p>
<p></p>
<p>Would there be unintended consequences of such an action?  No doubt.  Trial lawyers would lick their chops at such an idea.  But I think the idea should be studied and as much as possible the consequences could be anticipated.  And if companies felt the risks of manufacturing highly toxic materials was too great, that might not be such a bad thing and might lead to some real creativity in discovering ways to get things done in more environmentally friendly ways.</p>
<p></p>
<p>If we create (which we have) a system in which there are no serious consequences for actions, then unpleasant actions will be taken.  Or as one of my former clients used to say, &#8220;Lead us not into temptation&#8230;because we will fail.&#8221;</p>
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