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The Power of “Risktakes”

August 19th, 2010
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Your animated interaction in response to my post The Miracle of Making Mistakes delved deep into the subject, broadened the interpretation of a mistake, and even coined a delightful new term: Risktakes. Thank you Notmd, Dawna, Brett, and all the others, who provided terrific insights over the past four weeks.

A mistake is as an error in action or calculation caused by poor reasoning, carelessness, or insufficient knowledge. Risk is the exposure to the chance of injury or loss, the chance that the actual return might be different than the one expected. Thus, a risktake is an error — but not one caused by carelessness or insufficient knowledge. Its possibility has been foreseen, calculated, and accepted.

A simple test will help you differentiate a risktake from a mistake. Ask yourself: Did I account for the possibility of failure before it happened — or did the mistake catch me by surprise? We are not promoting carelessness, but genuine, well-intended mistakes, as Dawna pointed out.

Every new company and new product launch, every new service and new discovery has the potential of being a risktake. In fact, every strategic decision has the potential of proving to be just that. We usually take them with the joy experimentation brings, enhanced by the courage to fail and stand up again. Doing everything “perfectly” breeds stagnation and laziness, argued Brett.

I am all for taking risks as long as the process is supported by conviction, persistence, and discipline, and it is based on knowledge. During the recent worldwide recession, the decision by HCL to acquire Axon — the biggest overseas acquisition by an Indian IT company — had the potential of becoming a risktake. There were many critics of the deal, but so far, the takeover hasn't given them the occasion to say: I told you so. Would I do it again? Sure, as long as the possibility of short-term losses is less than the potential of long-term gains.

Lemuel Morrison shared a potential best practice with us: Maintain a mea culpa list and update it regularly with new risktakes along with what, if anything, was learned. My new book, Employees First, Customers Second, provides an account of several risktakes at HCL. For instance, we made a risktake while measuring the success of a new “Smart Service Desk” set up to address employee problems. There was a need to get employees to believe in the process and to induce those on the desk to respond quickly. We therefore started out by measuring the number of tickets that the latter closed, signifying the resolution of employee problems, as an indicator of success. That was a risktake because it skewed the picture: The larger the number of complaints, the larger was the possibility of success! We eventually amended the metric so the service desk today aims for zero tickets.

Understandably, executives fear the unknown and crave the security of the comfort zone even though that’s a prescription for predictable and controlled performance. Moreover, today’s environmental volatility won’t allow the comfort zone to stay comfortable for long. That’s why I would suggest that we should create discomfort with the present situation. Then draw the path, which will be littered with risktakes, to where we would like to be in the future. Keep your sights focused far ahead and stay undeterred.

Mark Twain once wrote, “Twenty years from now you will be more disappointed by the things you didn’t do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover. “

Are you ready to sail away on the winds of your risktakes?

blog, Innovation, Leadership, Risk management

Hire Senior Executives That Last

August 4th, 2010
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Not long ago a C-suite executive left a major corporation after being there for only a year. Although the official statement said that she left "for personal reasons," in truth she was not a good fit with the company and had alienated many of her colleagues and demoralized the function she was leading. Most disturbing, however, was that this same executive had a pattern of similar failures in previous positions — but somehow that history was either missed or ignored when she was hired.

Unfortunately this is not an uncommon situation. Studies peg the failure rate of executives coming into new companies at anywhere from 30% to 40% after 18 months. The costs of this failure rate are enormous — wasted and duplicated recruiting fees, missed business objectives, unproductive employees, and distracted colleagues. It's a significant but mostly invisible drain on corporate productivity.

So what can companies do to improve the odds of hiring successful senior managers? Let me suggest three relatively simple steps:

To start, ramp up the due diligence process. Most senior management candidates come through executive recruiters, and we assume that they've done their research. However, search firms have a vested interest in placing their candidates, and often rely on the candidates themselves for references. If you're involved in hiring, you should supplement these reviews with your own investigation. Identify people in the candidate's previous companies and give them a call; talk to people in the industry or function about the candidate's reputation; and find people in your own company who might have crossed paths with this person previously. The more data you can get the better — which will hopefully uncover previous patterns that might have gone unnoticed.

Once you have a candidate that you want to consider, the second step is to go beyond the typical interviews. Most recruits are subjected to a series of one-on-one meetings with other senior executives, many of whom are not trained in effective interviewing techniques. So they end up having pleasant meetings, exchanging impressions, and in the end making a decision based on relatively little data. To make this process more robust and revealing, create other mechanisms for seeing the candidate "in action." Ask the recruit to make a presentation; give the candidate a problem situation and ask her to develop a range of solutions and a summary memo; conduct a role play on how to deal with a difficult employee; or ask the person to facilitate a meeting with several other managers on a particular topic. The range of possibilities is really unlimited once you liberate yourself from the constraints of traditional interviews. The key is to see how the person thinks on her feet and how adaptable she is to the culture of your company — information that is difficult to uncover in a series of friendly peer interviews.

Finally, the third step that you can take to increase executive hiring success is to reduce the number of outside hires. While it is certainly important to continually enhance your company's gene pool with outside DNA, for most companies it should be the exception rather than the rule. If you have a strong and consistent succession and development process, you will have good candidates for top positions — candidates who already know how to succeed in your company's culture. So when it is necessary to fill a senior opening, consider whether it makes sense to hire from within.

None of this is revolutionary or the equivalent of organizational rocket science. But if you can put these steps in play it can have a huge impact on your company’s success.

What’s your experience with outside senior hires?

blog, Hiring, Leadership, Talent management

Four Things Groups Want that Leaders Can’t Give — and One They Can

August 2nd, 2010
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Emerging group experiences have predictable dynamics, whether they are new project teams, training and development programs, wilderness experiences, or just people learning new jobs. People form relationships based on first impressions and sometimes-false hopes, find that things haven't gone as imagined, and then struggle through confusion and misunderstanding to create their own positive norms that help them work effectively. The best leaders help people through these stages only to find some common issues popping up — things people seem to want that even the best leaders can't provide.

Anticipating these dilemmas makes it easier to resolve them. Here are four desires that are almost impossible to satisfy:

  1. Absolutely clear expectations about everything. Expectation-setting sounds good as a leadership principle but is difficult in practice, especially when leaders try to tell people about things they haven’t yet encountered and do not yet have the experience to comprehend. No matter how much leaders try to define expectations, lay out the nature of likely events, or describe the steps that the group will be going through, it’s not enough. As the work unfolds, leaders are likely to hear, “Why didn’t you tell us X, Y, or Z?” Even when leaders pull out the opening memo with X, Y, and Z spelled out in detail, some people deny that they received it. All leaders can do is strive to be thorough, to communicate repeatedly, and to document the flow of events.
  2. Perfect certainty about the future. A related demand some groups make is that everything should be known in advance and unfold without variation. Yet, even the best plans, with alternative scenarios and multiple contingencies, still fall prey to unanticipated events. My favorite unfortunate example is the volcanic ash that disrupted Europe in April; who would have built that unlikely event into their project or program plans? But knowing that certainty isn’t possible, groups still crave it, especially when the task or situation arouses anxiety. Leaders sometimes feel forced to announce schedules knowing that they could slip or other activities interfere. A better tactic is to acknowledge that there are always unknowns and to offer a different kind of security in the form of regular updates and honest communication about what decisions will be made when.
  3. Yes all the time. Leaders are the linchpins linking their groups to the wider organization, marketplace, or community. When leaders do this well, they protect the group from intrusions by the surrounding systems so that the group members can focus on their work. As leaders patrol the boundaries, however, they also need to maintain them. Group members tend to look inward, not seeing the constraints flowing from the wider system. They often push to get more of what they want, regardless. Thus, leaders who want to be highly positive and supportive still find themselves having to say “No.” Empowerment doesn’t mean stepping aside and abdicating responsibility. Leaders must excercise good judgment about what is appropriate, even if that makes some group members uncomfortable.
  4. The ending at the beginning. This wish is an impossible fantasy. When groups finish their tasks or experiences on a highly positive note, members often say that later experiences should have been offered earlier — that they would have been able to do their work even more effectively if things that happened at the end had happened at the beginning. Adjustments are always possible, of course, and smart leaders listen to the feedback. But some of this is just about the effect of time. As groups mature, they are better able to respond to experiences that would have fallen flat at the beginning.

These tensions go with the leadership territory. It helps to be aware of them and remain unrattled while working through them.

But here's the good news. The one thing groups want that leaders can always provide, with predictably positive results, is TLC — tender loving care. People respond well to a sympathetic ear and frequent communication. Knowing that leaders care about their success can help people let go of the rest.

blog, Leadership, Managing people

When Your Employees Know More Than You

July 21st, 2010
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Managing today's highly skilled professionals takes special skills — and not the ones that you may think. Oftentimes, knowledge workers know more than you do about their jobs. So, how do you manage people who know more about what they do than you do?

In such instances, you have to look at leadership through the wants and needs of the worker as opposed to the skills of the leader. Here are some quick tips for effectively managing knowledge workers.

Demonstrate passion
In days past, working 40 hours per week and taking 4-5 weeks of vacation meant that people often focused less on loving what they do. Today people work 60-80 hours a week and it’s crucial that they love their work to avoid burnout. Those who lead by example and demonstrate passion for what they do make it much easier for their followers to do the same.

Strengthen abilities
With less job security and more global competition, it’s critical that people update and refine their skills continuously. Leaders need to look beyond skills needed today and help their workers learn skills they will need tomorrow.

Appreciate time
People have less time today, which means the value of that time has increased. Leaders who waste their workers’ time are not looked upon favorably. Leaders will be far more successful if they protect people from things that neither encourage their passions nor enhance their abilities.

Build networks
Today, job security comes from having ability, passion, and a great network. Leaders who enable people to form strong networks both inside and outside the company will gain a huge competitive advantage along with the loyalty of their workers. These professional networks allow people to expand their knowledge and bring it back to the organization.

Support growth
The best knowledge workers are working for more than money. They want to make a contribution and to grow in their fields. Leaders who ask their people, “What can our company do to help you grow and achieve your goals?” will find it comes back tenfold.

Expand happiness and meaning
No one wants to work at a meaningless job that makes them unhappy. Leaders must show their workers how the organization can help them make a contribution to the larger world and feel rewarded for doing something about which they are passionate.

Managing knowledge workers is a challenging and rewarding job. Leaders who do so must look beyond the work and think about the person who does the work if they are to be successful. By appreciating and encouraging the dedication, time, and experience of their workers, leaders help shape not only the futures of the professionals they lead but also the future of their organizations.

blog, Leadership, Managing people

Advanced Entrepreneurship

June 23rd, 2010
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110-stever-jpgWhat makes an entrepreneur successful? Many have tried to answer this question, but few have delved deeper into what distinguishes a good entrepreneur from a great one.

Based on three decades of working inside 10 start-ups as a founder or early team member (and advising several more), I’ve come to believe that great entrepreneurs approach their job with a different mind-set than those who are merely good. Good entrepreneurs apply intelligence, drive, and business best practices to building their companies. Great entrepreneurs do this too, but they also know that a company’s early stages sometimes require less traditional methods. They add to their tool kit approaches that handle the chaos of a start-up.

In a series of blog posts, I’ll explore these tactics and how to cultivate a great-entrepreneur state of mind, starting this week with the Entrepreneur CEO Job Description.

***

An entrepreneur is the de facto CEO. Most (many CEOs included) don’t really know what this means on a day-to-day basis. With little oversight, CEOs must judge for themselves how well they’re using their time. Some spend time finding the perfect office space. Others obsess over spreadsheets, calculating to the penny how much their bartender is over-pouring. Still others delegate those financial details and spend hours making deals.

The essence of the entrepreneur CEO job is what can’t be delegated:

Setting strategy. The CEO has the final say over the company’s strategy. Strategy covers everything from creating the company’s vision to deciding which markets to enter. Even if others advise the CEO or the board has final approval, it’s still the entrepreneur CEO who sets the budget, forms partnerships, and hires the team to steer the company accordingly.

Team building. It’s nice to believe that small companies don’t need much team building. After all, we’re all in it together, David against Goliath, right? Wrong. Once there are two people in a room, team dynamics appear. Goals need aligning, agendas need fulfilling, and conflicts need resolving. Even “solopreneurs” who outsource everything must coordinate all their outsourcers. The CEO is also the only one who can hire, fire, and align the senior team.

Setting culture. Culture also appears as soon as you have two people in a room. Or sometimes, even just one person (though then, we call it “personality”). A bad culture can drive away high performers, while a great place to work can attract and retain the very best. Culture is set early, and everyone watches the CEO to know what’s acceptable. Does she throw tantrums? That signals that tantrums are fine.

Policies about advancement, recognition, and decision-making also define culture. The CEO can approve or nix any policy, and it’s up to her to stay on top of the cultural impact (or not, if she wants to set a culture of ignoring the impact of culture!).

Communicating. A young company’s future prospects are uncertain, and everyone looks to the CEO for reassurance that the company will deliver on its promises. Like it or not, that makes the CEO directly responsible to all stakeholders: employees, investors, suppliers, customers, and partners. If she doesn’t communicate, or communicates poorly, she can single-handedly derail the entire company.

Building the income machine. The entrepreneur CEO's goal is a company that can sustain itself by generating income. That means finding income that will drive the business on an ongoing basis. In the process, she may have to raise cash to keep the business alive until it becomes self-sustaining. Most new entrepreneurs obsess about raising their initial cash. Yes, that's important, but most important — and much less discussed — is finding the business model, distribution, and consumer engagement that create ongoing revenue.

Allocating resources. At the end of the day, the CEO decides how the money gets spent. She needs to manage investments in the ways that most move the company forward.

These six areas comprise the heart of an entrepreneur CEO’s job. Over the next several weeks, we’ll tackle each area more deeply. We will explore real-world companies (the ones from my past will have names changed to protect the not-so-innocent). We’ll learn how good entrepreneurs approach each area of the job by using solid business tools, and how great entrepreneurs know when to discard those tools in ways that reveal they’ve mastered the great-entrepreneur state of mind.

Stever Robbins is a serial entrepreneur, top-10 iTunes business podcaster (“The Get-it-Done Guy”), and CEO of Stever Robbins, Inc., an entrepreneurial consulting and coaching firm. He teaches at Babson College on building social capital. His first book, The Get-it-Done Guy’s 9 Steps to Work Less and Do More, is coming out this September.

blog, Entrepreneurship, Leadership