10 tips on how to build a ‘learning organisation’

10 tips on how to build a ‘learning organisation’

Feb 18, 2019 | Change, Leadership

 

‘Learning organisation’ is a cliché mouthed too often by those who have no experience with such a rare beast. 

The key is not to try and help the organisation learn, it is to help the people in it learn by doing, spread the good outcomes, and nip the causes of bad practises before they become established as a norm.

‘Learning’ is a key part of an organisational culture that is able to evolve in response to the external pressures it faces, to best leverage the resources available.

To achieve ‘learning organisation’ as an outcome, you must change the natural order of most enterprises, by applying a huge dose of leadership.

That is what makes it so hard, so to succeed, follow these 10 tips!

Remove the fear of failure.

Fear of failure is perhaps  the greatest impediment to learning, as nothing new is tried.  Employees need to be given the confidence that following an idea that does not deliver will not result in retribution.  Experimenting and learning in collaboration with suppliers and customers offers rich rewards.

Employment policy.

Employ those who are prepared to try new things, be a bit different, seek challenges and opportunities to test themselves. Too often we employ people who ‘look like us,’ and as a result we get more of the same. Be aggressive about the sort of employees you want. Being selective at the beginning pays off in spades, as there is little as challenging as undoing a poor employment choice, for  the person let go, the person doing the firing, and for the survivors. That does not take into account the costs of recruiting, training, and the opportunity costs of a poorly performing employee.

Future focused metrics.

Use metrics that are based on leading indicators of performance, not extrapolations of past performance. These metrics are challenging to identify and track, but the effort will be worth it.

Cause and effect, not correlation.

Ensure the links between cause and effect are real. Too often I see outcomes attributed to something other than the real causes, mostly because it is convenient and easy, and there appears to be a causal relationship. True cause and effect can be challenging to identify and quantify,  but is essential to understanding how the future will shape itself.

Use data but be careful of data seduction

Data can be used well or poorly, but data has in itself a character of precision and certainty that can be misleading. Clean and objective data that removes assumptions,  the power of the status quo, and really digs into the reasons something worked, or did not work, is required. Data also has two faces. What has happened, and what will happen. The former, when interrogated effectively can tell you a lot about ‘what’ happened, but often the ‘why it happened’ is elusive, requiring testing. Data presented as a definitive picture of the future should be taken with a huge degree of scepticism, as the only thing for sure we know about the future, is that it will not be the same as the past.

Take action.

Nice words do not move anything. Nothing happens until you take action, then learn from the outcomes and improve next time, by ensuring that the action is taken against a framework that has in it a core assumption being tested. When you do this methodically, you get to understand if the assumption was right or wrong, and why.

Build in time to think.

Those who are always busy, pushed by external schedules, do not reflect on things, do not give themselves the opportunity and time to just think about what has happened and why, the opportunity for the  flashes of insight, questions that need to be  answered  to emerge must be present.

Diversity.

Change the status quo from one where you have to fit in, to one where differences are valued, celebrated, and actively sought. This is not about gender, it is about thinking styles and differentiated skill bases.

Accountability. 

When no one is accountable, few will be prepared to take the initiative. Being transparently accountable, creates a bias towards action, which leads to learning. 

Process stability. 

This is a prerequisite for improvement. Unless you know which variable moved, and caused the outcome being examined, you have no chance of improving. Process stability is an essential ingredient of any improvement exercise, and improvement is all about learning.

These 10 tips have significant areas of overlap, and have in themselves cause and effect relationships. When you need someone to help untangling the mess, give me a call.

 

Header cartoon credit: another by the great Hugh McLeod of gapingvoid.com

What will happen after the Hayne report goes off the front pages?

What will happen after the Hayne report goes off the front pages?

Feb 15, 2019 | Change, Governance

 

Following the rather cynical post last Wednesday asking where the blame would be placed when the Royal Commission dust has settled, it seems only fair that I be prepared to stick my neck out to make some observations and suggestions, rather than just chucking stones.

•   The root cause of the malfeasance is the huge pot of money accumulated via Australia’s superannuation and various tax policies. Such juicy pots are always going to attract the sharks, therefore the oversight has to be that much more rigorous and transparent. APRA and ASIC have clearly failed in this arena, perhaps predictably as their resources have been progressively ‘trimmed’ by both sides of politics and the capability and motivation gap between them, and those setting out to get their noses in the trough, is significant.
However, we should not throw them too the wolves, rather we should give them the tools and leadership to do the job they were set up to do, and by world standards, have done pretty well to date. I am not so sure of the commissioners recommendation to establish an oversight body, as it seems that another bureaucratic level will just add to weight of bureaucracy for little value.

•   The complexity of the system has led to confusion and opacity of an advanced order. It is within the power of governments to set about reversing the trend. It will take a long time, and needs some level of bi partisan support (there I go again, dreaming) as any change will necessarily create losers. Those who have made decisions based on current rules must not be disadvantaged. The current proposal of the Opposition to change the dividend imputation rules is both stupid and immoral, and they should be whacked for it. However, if they must, make the changes but grandfather the current arrangements, as they are proposing to do with negative gearing.

•   We can spend all the money we like on so called ‘Education’ without much return. Increasing the average level of financial literacy during school years is sensible, but not an antidote to the cause of the problem, system complexity. Public broadcasting perhaps has a role in producing ‘infotainment’ similar perhaps to the ‘Checkout’ program on the ABC, but unfortunately, those in the most need of the information delivered are too busy watching some cooking or renovation show, and increasingly avoiding the ads by paying for bingeable streaming services.

•   The rorts have largely originated with the obsession with revenue, rather than the longer term outcomes. This is a function of our fixation with short term returns as measured by stock prices. While the pressure for short term performance will not go away, it is the responsibility of boards to ensure the longevity of the assets they are managing on behalf of shareholders, so it is therefore also their responsibility to manage them despite the inevitable short term fluctuations. The AICD should be taking a lead role in this, by both being very noisy which will be uncomfortable for them, and by providing quality longitudinal research that demonstrates the value of a longer term perspective upon which boards can build strategy with the strength to withstand the prevailing ‘short-termism’.

Last week the Wentworth Group of concerned scientists released their damming (forgive the pun) report on the progress of the Murray-Darling Basin plan. Like most such fact based research this will be lost in the welter of press releases, appearances by ‘deeply concerned’ politicians, and hubris, while nothing changes. Similarly, The Henry Review, the major report into Australia’s future tax system chaired by the then head of Treasury, Dr. Ken Henry, released in 2010, has been largely ignored or grossly mishandled. No wonder Dr Henry took the money and ran to the NAB, from which he will now exit in the near future. The list of examples goes on.
My point being that the bleating, hand-wringing and pontificating following the Royal Commission about doing better will make little progress in the face of political partisanship. The only exception I can recall that breaks this mould is the investigation into Institutional Child abuse, a damming report on the collective morality of our institutions, which has been met with bi-partisan support.

As a community we must not let the Hayne report be shelved, or used as a political football. Intelligent, fact based consideration needs to be given not just to the contents of the report but to the wider questions of the causes of the problems, and development of strategies that will deliver continuing prosperity to our children.

 

Header cartoon courtesy David Rowe and the Financial review.

How to find the ‘Zig’ when others are ‘Zagging’.

How to find the ‘Zig’ when others are ‘Zagging’.

Feb 11, 2019 | Change, Customers, Leadership

 

Being a part of the herd may be comfortable, but it is rarely sustainably profitable at levels greater than the cost of capital.

Finding points of differentiation, the means by which you can be distinctive preoccupies most thinking marketers, those factors that customers value that attract them to your offering rather than going up the street.

It also means, by extension, that you have made decisions about the nature of the market segments or niches that you wish to serve.

By definition, if you are setting out to be all things to all people in the hope that you will not alienate anyone, you cannot also differentiate, as it means that you are not distinctive in some meaningful way that adds value to specific types of customers.

Differentiation covers more than the value proposition and copy on your website, it follows through to the visual elements of your branding, and most importantly, the behaviour of your employees, channel partners and stakeholders. By reflecting the few factors that will make those ideal customers react to your differentiated offering in a niche they inhabit is a valuable building block. Everyone is familiar with the  cliché ‘a picture replaces a thousand words,’  which is never truer than when communicating a differentiated offer to specific group of users in a defined market niche. A graphic artist will call it a ‘Visual identity’ and it is worth the investment to refine it.

One of the best known ‘Ziggers’ is the recently deceased Herb Kelleher, co-founder and CEO of Southwest Airlines. Southwest retained an unbroken 43 year record of profitability in an industry that had wild fluctuations in profitability, and many of those airlines that set about killing Southwest in the early days are themselves now history, like Pan Am, or in and out of Chapter 11 like United.

Southwest focused on simplicity and their customers. When others employed spoke and wheel routing, they went point to point, as others added services like allocated seating and differing classes, Southwest did not, and they flew just one type of plane (Boeing 737) , making servicing easier, and while everyone else went to war with their employees, Southwest turned theirs into apostles for their employer.

Differentiation is more than being different, those differences must be of sufficient value to some customers, that they would  not go anywhere else.

 

   

 

 

Who gets the blame when the Financial Services Royal Commission is distorted and ignored?

Who gets the blame when the Financial Services Royal Commission is distorted and ignored?

Feb 6, 2019 | Change, Governance, Leadership

The release of Royal Commissioner Haynes final report into the Financial Services industry has been instructive in many ways.

One that will not get much media coverage is the manner in which the various political and interest bodies respond and reflect on their own part in the mess. By contrast, every person watching the various commentary will immediately come to a conclusion about the trustworthiness of those in whose hands is the commentary on the report, and the formulation and implementation of the means by  which the eggs will be unscrambled.

The refusal of Royal Commissioner Hayne to be a part of the governments spin job by refusing the treasurer a handshake for the cameras is instructive. It could be passed off as a bit rude, the reflection of a personal relationship  that needs some repair, or simply a reflection of Justice Haynes absolute lack of  faith in the goodwill of the Treasurer and the Government.

It would be surprising if it was not the last one.

On being interviewed on the ABC later that night, the Treasurer refused to answer the simple question ‘Was the Government wrong in voting against the establishment of the Royal Commission 26 times?  Followed with the equally simple ‘was it the threat of a backbench revolt that finally led the Government to agree to conduct the Royal Commission?’ 

We live in a complex world, ruled by a voracious appetite for the product of an ‘always on’ media, which has responded not by reporting facts, but  by supplying more shallow, opinionated, uninformed and juicy grist for  the mill.

Added to which politicians of all shades pick and choose selectively the numbers and quotes that reflect their established positions, ignoring anything else that might get in the way of a press release.

It is not the media’s fault, it is ours.

We no longer value truth, facts, and a contrary fact based opinion, although we crave them all.

The outcome is that we assume when a public figures lips are moving, they are either lying or blaming someone else.

The only solution is the implementation of what Ray Dalio would call ‘radical transparency’. 

Photo credit: ABC news

 

Modern Marketing’s dark underbelly.

Modern Marketing’s dark underbelly.

Jan 14, 2019 | Change, Marketing

 

On hearing the term ‘Modern Marketing,’ most would immediately imagine something digital.

That was my intention.

Marketing used to be about delivering meaningful information to potential and current customers in order that they become or remain customers, despite the flirtatious approaches of competitors.

The more appealing the information,  the greater the chance of some sort of engagement that might lead at some point to a consummation.

Bit like the University bar in 1970, when I was young(er).

Advertising used to be, and still is a crucial component, however, this is where it has changed.

Advertising in my day used to be the means by which the information was communicated.

In todays marketing, advertising is often the way people are identified, tracked, stalked, and targeted for  offers, sometimes genuine, sometimes outrageous, increasingly fraudulent, and usually unwanted.

This is the dark side of the digital advertising component  of modern marketing.

I have yet to hear anyone complaining that they do not receive sufficient numbers of unsolicited digital offers.  

No wonder we do  not trust anyone or anything anymore.

While it is counter intuitive, limiting your ‘digital reach’ to those who have actively demonstrated they welcome your approach, will become a valuable tactic. By ‘actively demonstrated’, I do  not mean just filled in one landing page email address to access a lead bait, I mean meaningful interaction.

Back to the Uni bar.

There was one rather unprepossessing bloke we all made some fun of, as he would sometimes turn up with a bunch of flowers. His ‘transaction’ rate was impressive indeed, and few of us ever figured out how that was the case until much later.

Perhaps being truly generous with our knowledge rather than demanding an email address in return for some valueless rubbish is the new digital bunch of flowers.

 

The 11 point program for scaling your business.

The 11 point program for scaling your business.

Jan 8, 2019 | Change, Leadership, Strategy

 

Successful scaling of a business is not luck, nor is it just good management, it is way more than both.

It is having the leadership capacity that enable all those in the business to consistently and willingly take action that collectively, over time, compounds into growth greater than that available from just doing what you are doing now a bit better every day.

It takes leadership, because this stuff is hard.

Good managers manage, leaders define what it is that needs to be managed, when, and how.

Over 40 years of working with this challenge, it seems to me there are some common traits amongst those businesses that successfully scale, all originating with the leadership.

None of the following can be taken in isolation. as they all contribute to each other. There is a synergy you need to find that is necessary for scaling, as distinct to improvement.

To scale, you need to change what is done, and how it gets done, rather than just improve the way in which things get done. There is a quantum leap in this seemingly minor semantic difference.

 

Have a genuinely stretch goal

Scaling a business requires change, which is uncomfortable, so there must be a very good, well communicated reason for the discomfort to be imposed, with a specific outcome. Often this is now called a ‘BEHAG’ a term coined by Jim Collins in his book ‘Built to Last”. In it absence, nothing will change. The most obvious example is President Kennedy’s 1962 commitment to land a man on the moon by the end of 1969. You have to find, communicate and commit to your metaphorical ‘man on the moon’ goal.

Underneath the BEHAG there must be a strategic plan, broken down progressively into its tactical components in order to deliver the goal.

 

Alignment.

A much used and abused word, but absolutely necessary.  Every person, and every persons activity has to contribute meaningfully to the strategies in place to deliver the objectives, irrespective of the time frame of those objectives.  Without some sort of overriding objective towards which every person and activity can be looking, the outcomes will be suboptimal.

The metaphor I always use to describe alignment is that of a rowing eight, training towards a major championship, for example the Olympics. Every training session, every activity of each of the eight who will be in the shell, as well as their support staff, needs to be looking towards that goal of winning that medal. Everything that is done needs to be judged by the simple criteria of ‘will this add to winning that medal’?

 

Strategic Ambidexterity.

Let me explain this idea of strategic ambidexterity.  Every small action taken has to be a part of a larger action that builds into the scaled outcome. Any individual is easily distracted in their daily lives by the urgent but not important things that arise. Allowing those distractions to consume time takes away from the objective of scaling. Therefore, the focus of every person has to be on the one thing today, tomorrow, this week, month, quarter, and so on that has to be achieved in order to achieve the scaled target.

If you were to set out to run a marathon under 4 hours, you would  not just start trying to run the 42km from day one, you would fail. You would break your training down into pieces, each one building on the last towards the objective. You would have a range of daily sessions, building into weekly and monthly targets that would eventually result in the successful completion of the marathon. It takes time, dedication, and a dual focus in getting every small step completed sequentially, while recognising that each one builds progressively towards the objective.

Engaging your supply chain partners and customers in the process adds to the power of the process. It is like having specialised trainers and suppliers of equipment contributing to your overall program. As success builds, you will find that they want to come on board, as everyone wants to be part of a winning team, which further builds momentum.

 

Operational rhythm.

Every activity and set of activities can be managed to have some sort of operating rhythm. In most cases it is unrecognised and unmanaged, so is not optimised. The most obvious example is the annual budget setting process most businesses go through. This normally happens in some sort of regular order and manner, to some sort of timetable. It is also in most cases I have observed, an addition to the routine set of activities, and is therefore an imposition rather than being a key part of the business management and development process. Similarly, the process to turn an order into product will follow some sort of routine that follows roughly the same set of steps every time. However, in every case, without an explicit and transparent process that has performance measures and associated management in place, the process will inevitably ‘wander’ being subject to change for many reasons. Process stability, noted below is essential for a predictable and consistent operational rhythm.

 

Accountability.

Ensuring clarity of accountability  for an activity, item, and process is essential to performance that can be measured and improved. Without accountability, a problem will always be someone else’s problem. Accountability, responsibility and authority often become entangled in ways that leave the improvement and scaling of any set of activities challenging.

Accountability means that someone is specifically held accountable for the activity or set of activities. That person is accountable to track the progress of the activity, process, function, whatever it may be, and give it a ‘voice’. If you cannot nominate one person who is specifically accountable, it will fall through the cracks. Responsibility falls on anyone who has the ability and opportunity to respond to proactively support an activity or process. Anyone who ‘touches’ a process has some responsibility. Authority belongs to the person with the final veto power.

For example, in a previous life as GM of a large organisation, I had authority over the expenditure of marketing budgets, product managers had accountability for  the specific activities that took place in their brand portfolios, and we all had responsibility to ensure that the customers who bought our products were serviced in a manner that had them coming back for more. 

The question ‘how can I be held responsible without the authority’ is often asked. The answer is that ‘it depends’. Everyone has the responsibility to manage their own activities on a daily basis, and be held accountable for the outcomes, but as you move up a corporate ladder, it becomes increasingly challenging to maintain the link. The more senior you are the more you will be held accountable for things over which you have less and less direct control. That direct control is held at lower levels in the organisation.

The key to making this all work is to thoughtfully and consistently delegate. This requires that you pinpoint the job to be done, have a system of interlinking KPI’s, and that there is explicit and transparent performance feedback and management of both the process and those held accountable for the components of the process.  

 

Stakeholder engagement.

All stakeholders, and most critically, employees need to be ‘engaged’ in the objective of scaling a business. To go back to the metaphor of the rowing eight, if one oarsman is not concentrating, and is therefore slightly out of rhythm, the performance of the eight will be critically compromised. That out of rhythm may be created by the training regime of the individual, the maintenance of the oar, and many other specific sources that together add up to the sub optimum performance of the eight when engaged in the race.

 

Clear, unambiguous and valuable personal purpose.

Again to refer to the rowing eight. Every member of  the crew and support staff know the purpose is to compete in the Olympics, and to do everything possible to win. To every person, the goal of winning is a personal one, as well as one that motivates and directs the team, and to every person, the goal provides a deeply personal objective upon which they can focus all their efforts and emotion.

It is no different setting out to scale a business. If the employees see the objective of scaling as being one that will enrich the proprietors  and shareholders without  anything in it for them, why bother. The purpose has to be one with a ‘higher calling’ that delivers something very personal for everyone.

 

Performance transparency.

No improvement project, let alone one that requires scaling can be successful without a roadmap provided by performance measures to show progress, identify weak spots, and offer alternative perspectives.  The greater the level of transparency the better able will the whole team be able to buy into the program.

Performance transparency  has a number of faces. It covers individual, team, and corporate performance measures, from the perspective of both the internal KPI’s and the external ones that will impact on the manner in which the enterprise competes. These external KPI’s are those factors that impact performance, but over which the enterprise has no control other than being aware and able to accommodate and when possible leverage them.

 

Process Scalability.

It is a fact that as enterprises become bigger, the degree of complexity increases as the number of people, teams, functions that require co-ordination and alignment grows. With size comes complexity. The essence of a scalable management infrastructure is simplicity and conquering complexity is a challenge of leadership as well as the management of the processes themselves.

The tool that works best in my experience is to document all processes. This enables the process to be applied consistently irrespective of the person working it, and is the basis for  improvement, without a starting point that is stable, no process can be improved.

 

Marketing.

Everyone is in marketing. From the CEO to the lowest level support staff, everyone has a responsibility to be an apostle for the business. Word of mouth, personal recommendation, whether it be by clients referring you to prospects, or your employees telling their friends what a great place it is to work, remains the most effective form of marketing. All that comes after is in one way or another a scaled version of that first person marketing.

Scaling marketing is not a matter of posting some cat photos on Facebook. It is a disciplined process of communicating your value proposition progressively to those most likely to be future customers, and retaining those you already have. It is very easy to blow huge resources under the banner of ‘marketing,’ but like all things worth doing, it is not as easy as it sometimes seems, requiring clarity of the value proposition, an ideal customer persona to be served, and a product and service mix that is both differentiated and valuable to customers.

As marketing is exercised externally,  the potential for misdirection and complication is significant, so focussing attention on the productivity of marketing expenditures is a key to being able to successfully scale.

 

Cash.

Growth, let alone scaled growth, are voracious consumers of cash. Proactively managing your cash resources is essential. From time to time borrowing may be necessary, but when it becomes necessary to keep the day to day activities going, you have over-reached, and quick remedial action s necessary.

 

Without wishing to belabour the point made in the intro, the absolutely essential ingredient is leadership, without which scaling will not be possible.