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Ducks in a Row: Open-book Management

Tuesday, July 8th, 2014

https://www.flickr.com/photos/carlcollins/69912897

Among today’s most popular buzzwords is ‘transparency’.

Transparency is one of the most important underpinnings of ‘authenticity’ and ‘trust’.

Corporations large and small trumpet the transparency of their dealings—except financial ones.

(Individuals, too; they will describe in detail their thoughts, attitudes and actions, even their sex lives, but freak when the subject is their money.)

But some bosses believe that financial transparency is not only possible, but can lay the groundwork for an extraordinary culture.

Financial transparency means not just sharing all the company financials with all its employees, but ensuring they have the skills to understand them by explaining and discussion them.

It’s called open-book management and was documented in “The Great Game of Business” by Jack Stack and Bo Burlingham.

Mr. Stack and the managers bought the plant [International Harvester engine plant], renamed it Springfield ReManufacturing and turned it into a thriving collection of more than 30 businesses now known as SRC — thanks largely to an innovative strategy that came to be known as open-book management.

The basic rules are

  • Know and teach the rules: every employee should be given the measures of business success and taught to understand them
  • Follow the Action & Keep Score: Every employee should be expected and enabled to use their knowledge to improve performance
  • Provide a Stake in the Outcome: Every employee should have a direct stake in the company’s success-and in the risk of failure

Ari Weinzweig and co-founder Paul Saginaw wanted that kind of inclusive, engaged culture when they started their company and used open-book to anchor their growth.

Zingerman’s Delicatessen, a tiny sandwich shop near the university, into a group of nine businesses that, three decades later, has 650 employees, 18 managing partners and combined annual sales of $50 million.

That’s called success and has been recognized as such and emulated a la Tony Hsieh.

Wayne Baker, a professor in the Ross School of Business at the University of Michigan, turned it into four case studies. Bo Burlingham featured Zingerman’s in a book called “Small Giants,” which is about companies that “choose to be great rather than big.” And the owners and employees of more than 1,000 companies have attended ZingTrain seminars to learn more about the Zingerman’s model.

While their approach is definitely a success, not everyone likes or wants the involvement.

Former staff members talk about the frustrations of having to placate difficult customers, as well as the stress of being “Zingy” throughout a long shift. “It is exhausting to work somewhere where you feel like you have to improve what you do constantly,” said one former worker at Zingerman’s Roadhouse.

Others love it.

Krystal Walls, who works in the mail-order business and has two children and a third on the way, said at the training session, “I have never worked anywhere where I was trusted or respected like this.”

When their little deli first succeeded they were offered substantial buyouts, as well as the opportunity to franchise, but none of those options allowed them to pursue their vision and make a difference. The company pays its people well and provides full health benefits.

“Employees who are stressed out financially, wondering how to pay for their kid’s allergy meds, or their rent or auto insurance, are not going to be able to do their job well,” said Mr. Saginaw, who has been lobbying in Washington for the last year for an increase in the minimum wage. “We’re comfortable with the notion that there’s such a thing as enough. Others may be wealthier than we’ll ever be, but I wonder if they’ve lost a certain amount of joy in their work.”

Flickr image credit: Carl Collins

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Ducks in a Row: the Case Against Surveillance

Tuesday, June 24th, 2014

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There are two types of managers, those who believe that productivity improves through constant oversight and those who don’t.

And for those who do there is an abundance of new technology that fosters increased worker surveillance.

Until now it’s been more of a philosophical argument, but new research is working to quantify it and so far it seems that less is more.

Trusting workers to help each other, be creative, solve problems and find better ways of doing things has typically been the province of knowledge workers.

But Ethan S. Bernstein, an assistant professor at the Harvard Business School, did his initial research with workers at a giant factory in China and the results were surprising.

The small amount of privacy the experiment created yielded a 10-15% percent productivity hike against other workers in the same factory.

“Creating zones of privacy may, under certain conditions, increase performance.” The right degree of privacy, he added, can foster “productive deviance, localized experimentation, distraction avoidance and continuous improvement.”

Bernstein’s research will only get more interesting and relevant to higher-level employees.

Since the factory project, Mr. Bernstein has conducted research studying the privacy-transparency trade-off in other settings, including biotechnology labs and service businesses. That research is not yet published, but Mr. Bernstein said the results so far point to “larger effects” than in manufacturing.

This isn’t rocket science to good managers, but it’s always nice to have your methods validated by Harvard research.

What it boils down to is that you should give your people all the information, authority and support necessary to do their job well and then get the hell out of the way and let them do it—often more efficiently and with better results than expected.

Flickr image credit: laurawashere95

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Entrepreneurs: a Culture of Openness

Thursday, March 6th, 2014

http://www.flickr.com/photos/psd/3717444865/

Many founders talk about the desire to build truly open cultures.

Then they start adding exceptions and caveats, especially when it comes to compensation—whether dollars or stock.

Sharing compensation information is usually discouraged and discussing stock options or salary may even be considered a firing offense.

While there are startups opting for openness, what happens over time?

Based on Whole Foods nearly 30-year trial salary openness can work.

Whole Foods co-CEO John Mackey introduced the policy in 1986, just six years after he co-founded the company. In the book, he explains that his initial goal was to help employees understand why some people were paid more than others. If workers understood what types of performance and achievement earned certain people more money, he figured, perhaps they would be more motivated and successful, too.

It takes solid planning and a culture with a real commitment to transparency and developing people over time to make it work.

By making it’s financials, including profitability, available to all it employees, so they could see not just what everyone was paid, but where else the money went, Whole Foods created a true feeling of ownership along with the knowledge that promotion was available and the support to make it happen.

The company’s openness even drew recognition from the Federal Government.

In fact, in the late 1990s the widespread availability of so much detailed financial data led the SEC to classify all of the company’s 6,500 employees as “insiders,”

Building openness into your culture requires support and full buy-in from your senior staff.

And that means being willing to pass on people who have the right skills, but not the right attitude.

Flickr image credit: Paul Downey

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If the Shoe Fits: When Bad Stuff Happens

Friday, June 21st, 2013

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

5726760809_bf0bf0f558_mA few days ago I was asked if it was OK to warn a startup team by email that it was doubtful funding would happen before the money ran out.

My response was ‘absolutely not!’

The final word from a variety of experts is that it is not OK to fire, lay-off, break up, ask for a divorce, ground kids or any similar action by email, text or even by phone.

These are all subjects that must be done face-to-face for a variety of reasons, but all falling under one of the falling categories,

  • Respect
  • Trust
  • Authenticity
  • Transparency
  • Fairness

The list goes on, but I’m sure you get it.

That said, I thought I’d repost a slightly edited how-to for dealing with bad news that is as applicable today as it was when hard-copy memos, wires, carrier pigeons and smoke signals were the normal modes of communication.

Bosses know when they’re in trouble (duh), but they still seem to think that their people don’t know the facts (double duh).

Too many bosses, from startups through Fortune 100 and everything in-between, clamp down, say nothing, run scared, freeze, bluster, or some combination thereof and do it by email and/or text.

The result is management by rumor, which once started never ends.

The way to deal with bad news is directly, openly and honestly.

Even when the subject is no funding or lay-offs this axiom applies; in fact, it’s the only approach that gives your company or your reputation a chance of emerging intact.

Here are six basics to keep uppermost in your mind—whether they are comfortable or not.

  1. Bad news must be communicated in person—just like good news.
  2. Employees aren’t dumb—they know something bad is happening—and if they’re not explicitly told what it is, rumors will make any difficulty a catastrophe and a catastrophe a death knell.
  3. Management must be explicit about the ultimate potential consequences. In a situation that’s unfolding, such as a funding or economic crisis, when no one knows the ultimate outcome or can predict when it will change, frequent updates are effective.
  4. Everyone hates uncertainty, which is all you may have to offer, so analyzing and then explaining the worst case outcome as well as what you’re doing to counter it and how your people can contribute goes a long way to stabilizing the team and gaining their buy-in to your plans.
  5. Successful plans are dependent on how well they are communicated, which is what determines employee buy-in; if you choose the delusional approach of minimizing the situation then you should expect minimal results and maximum disruption.
  6. Share the outcome of your thinking, whatever it is—layoffs, plant closures, project cancellations, etc. If you don’t trust your people with the information your problems are far more serious than you realize.

Any solution to a crisis must be seen as fair, reasonable, and businesslike. If management’s reaction is illogical, petty, slipshod, unrealistic, draconian or any combination of these, then it’s likely employees will conclude the ship is about to sink and leap off.

People understand that difficult situations demand difficult remedies, and they appreciate that management must at times step up to harsh challenges. But if solutions are irrationally or whimsically applied, they become a demoralizing factor, increasing the difficulties that people encounter in trying to do their jobs.

Finally, you should always attempt to find a positive note to leave with employees. Everyone already knows that things are bad; it’s your job to find a potentially favorable course of action.

Just remember, you hired your people for their brains, so don’t expect them to suddenly go dumb. Employees easily spot propaganda masquerading as a solution.

Predicting an impossibly favorable outcome not only demeans your reputation, but also could affect your future entrepreneurial efforts.

Image credit: HikingArtist

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A Packet Full of Dreams

Monday, February 25th, 2013

Thirty-odd years ago when what most people think of technology were young and the Digital Generation was barely started Bill Gates and other experts raved about how that generation would revolutionize the world because they would all grow up programming.

The assumption was that most anyone with a computer would learn to program, because that was the nature of the beast.

Many others disagreed saying that just because someone drove a car didn’t mean that person wanted to work under the hood.

Turned out the latter group was correct.

Few people, whether their careers or their pleasures, depend on computers and the Internet have a clue as to what is actually going on—nor do they particularly care.

But for those of you who have a bit of curiosity as to what happens when you click ‘send’ I offer the following video; and if you already know watch anyway.

You’ll appreciate the skill it took to make something opaque so transparent.

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Ducks in a Row: Tuit Culture is BAD!

Tuesday, January 15th, 2013

Has tuit culture invaded your team’s culture?

Has it seeped into your personal culture and infected your values?

Tuit culture is insidious; it usually starts with small inconsequential stuff and then quietly spreads.

If not dealt with immediately it can delay projects, impact vendors, damage customer relationships, substantially increase turnover, especially among your best and brightest, and ruin your street rep.

Are you familiar with the warning signs, so you can take action before tuit culture takes root?

Be warned if you notice any of the following:

  • Small tasks aren’t done on time or just aren’t done.
  • One or more of your team are slow to respond to requests.
  • Individuals and teams find ways of bypassing one or more of its members or bosses.

The best antidotes to tuit culture are vigilance, awareness (both group and self), transparency and open communications.

round_tuit.gif
Beware the Round Tuit

Image credit: RampUp Solutions

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If the Shoe Fits: the Most Important Management Action

Friday, January 11th, 2013

A Friday series exploring Startups and the people who make them go. Read allIf the Shoe Fits posts here

5726760809_bf0bf0f558_mWhen I started this blog I wrote a post called Management Bedrock in response to a query from a newly promoted manager who didn’t want to be mediocre.

My advice to him hasn’t changed and it reflected in two very different situations.

The first is from Derek Flanzraich, founder of Greatist, talking about mistakes to avoid.

Not Sharing Enough With the Team

I aim to be transparent with my team to the point of feeling uncomfortable about it. Since we’re so small and what we’re doing is so important, believe it’s key to express that trust. This year, I failed to share my general thoughts on the future a few times, so I’ve learned to be more proactive. We’re all in this together–and I need their help!

It’s an older and much different environment in Europe; however, transparency and skilled communications not only worked for BMW, but won it an award.

“There is no better way to motivate than to communicate,” Johannas Haider, VP of Purchasing, Production and Technology Plastics-Exterior at BMW, told INSEAD Knowledge at the 2012 Industrial Excellence Awards ceremony near Munich in October.  Haider calls his BMW subsidiary in Tubingen a “Transparent Factory” in which management and workers are cross-trained to understand the entire manufacturing process.  The workflow is also visible on “dashboard” charts throughout the plant.  “This is our answer to complexity,” he says.

Transparency; trust; openness.

Here’s the simple mantra I shared years ago and have shared with clients for more than three decades.

Premise: People are intelligent, motivated and want to help their company/manager succeed.

Corollary: It’s management’s responsibility to provide them with all the information needed to understand how to perform their work as correctly, completely and efficiently as possible.

Print it. Post it in where you’ll see it every day. Practice it all the time.

Don’t wait for a good time, just do it now—do it always.

Image credit: HikingArtist

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Entrepreneurs: First Impressions

Thursday, August 16th, 2012

http://www.flickr.com/photos/geekandpoke/2101300139/Back in the 1980s and before and maybe after recruiter was the entry point for a career in HR.

As you may imagine, this contributed little-to-nothing to that all-important first impression on candidates.

What was ignored so often back then (and still is) is that whoever is the first direct contact with the outside world, whether customers, vendors or candidates, IS the company.

Internal recruiters, customer service, tech support, receptionists, etc., create that all-important first impression—think Zappos—the impression that lives forever in the back of the mind no matter what happens after.

Computers and mobile haven’t changed this, only now it is often your UI that creates that oh-so-important first impression.

The thing that entrepreneurs, especially young ones, need to understand is that unless their target audience is limited to the tech-savvy or nerds who rate learning new programs right up there with chocolate and visits to the amusement park a UI that doesn’t provide obvious labels and simple instructions is going to turn off a large number of prospective customers.

No matter how sophisticated your app, website or program that sophistication needs to be totally transparent.

People are creatures of habit; many hate change most have to be dragged kicking and screaming into the new whatever.

Simplicity, honesty and transparency go a long way to eliminating that resistance as well as to creating a great first impression.

That’s why first contact points aren’t always the best place to have a newbie learning—not so much the job, but the importance of external players and first impressions.

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Questions? Email or call me at 360.335.8054 Pacific time.

Flickr image credit: Geek and Poke


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Ducks in a Row: Drug Your Team with Oxytocin

Tuesday, July 10th, 2012

http://en.wikipedia.org/wiki/OxytocinWhether your team is virtual or on-site drugging them with oxytocin will keep productivity humming, drive innovation, boost retention and put your organization on the ‘best places to work’ list.

The upside of oxytocin is that it’s totally legal; the downside is that it’s directly tied to your management/leadership skills.

“Whether it’s online or in an office, the leader’s role is to empower individuals to be more successful,” says Paul Zak, a professor of economics and director of the Center for Neuroeconomics Studies at Claremont Graduate University in Claremont, Calif. “If you keep making me successful, I’ll want to keep working for you.”

That’s because oxytocin is a neurochemical produced by the brain in response to certain stimuli that bosses like Tony Hsieh are experts at keeping it flowing.

The economist’s studies tell him that oxytocin is produced in high-performing workplaces. “The classic way to get people to do what you want is fear, but people acclimate to that,” he says. “If you want to keep people on task all the time, you want oxytocin-producing situations.”

Increasing oxytocin is a byproduct of the traits and actions evangelized by management, leadership and corporate culture experts not to mention 110% of the general workforce.

The leadership traits he has identified to produce this include praise, given unexpectedly and in public; transparency in identifying tasks and setting goals; authenticity; effective delegation of work; empathy to others’ situations; anticipation of challenges; and autonomy.

Not exactly rocket science; in fact, you need to be from another planet not to have heard of the value of these traits.

If you don’t already, start practicing them; if you do practice them look for ways to increase/enhance your actions.

Be the drug dealer your people will love.

Wikimedia image credit: Edgar181

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If the Shoe Fits: Staying Lucky

Friday, March 16th, 2012

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

5726760809_bf0bf0f558_mAnalysis by VC Anthony Tjan, founder of Cue Ball, found that 25% of both entrepreneurs and corporate business builders consider themselves lucky.

That’s a big percentage for something considered random, dubious or non-existent, depending on whom you ask.

Further research found “a combination of what we call a lucky attitude and a lucky network” as opposed to random luck.

What happens next? Does that attitude continue as success mounts?

But the biggest risk for top leaders is being complacent and overconfident — which amounts to being disconnected from the reality, attitude, and relationships that can sustain and take excellence to a new place.

Tjan recommends seven MAP functions to avoid the disconnect:

  • humility, the lack of which leads to arrogance;
  • intellectual curiosity, the lack of which also leads to arrogance;
  • optimism, looking first for the positive attracts great people, while the opposite repels them;
  • vulnerability, the best preventative for arrogance;
  • authenticity, which is lost when shrouded in spin; worse, believing the spin leads to arrogance;
  • generosity, no matter your success, share your knowledge sans the ‘what’s in it for me’ attitude; and
  • openness, willingness to a listen to new ideas from 360 degrees of non-traditional sources.

Read the article (it’s short) and then share your thoughts on luck below.

Option Sanity keeps you lucky.

Come visit Option Sanity for an easy-to-understand, simple-to-implement stock process.  So easy a CEO can do it.

Warning.

Do not attempt to use Option Sanity™ without a strong commitment to business planning, financial controls, honesty, ethics, and “doing the right thing.”
Use only as directed.
Users of Option Sanity may experience sudden increases in team cohesion and worker satisfaction. In cases where team productivity, retention and company success is greater than typical, expect media interest and invitations as keynote speaker.

Flickr image credit: HikingArtist

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