Dare to be Great in the New Global Economy

Dare to be great! That’s my challenge to every business owner, CEO and business leader. Why? Because if you aren’t a GREAT company,Dare to be Great you may quickly become a casualty of the new global economy.

In his book, “Good to Great,” Jim Collins said “Good is the enemy of great.” In the new global economy good enough just won’t cut it anymore. There are countless former market leaders who settled for good and are paying the price of lost revenues, profits and customer loyalty. Companies like RIM (Blackberry), Sony, Sears, Bally Fitness, and Hostess are just a few examples.

If you decide to take my challenge and dare to be great let me warn you it won’t be easy. If it was easy every company would do it. When you consider the alternative of not becoming a great company I think you’ll get the motivation necessary to jump on board.

Over the past few years I’ve been researching successful business leaders who are making great strides in this demanding economy.  I’ll be sharing their stories in my upcoming book, “Leadership in the New Economy”. Today I’ll share twelve key lessons learned that will help you in your quest to dare to be great.

12 Dare to be Great Lessons

  1. Have a vision that inspires. If you don’t have a vision that helps people rise above pettiness, egos and personal agendas your company will be doomed to major in the minors.
  2. Tend to your culture. Whether you have three employees or 30,000 culture happens by design or default. The choice is yours.
  3. All customers are not alike. Focus your time, energies and resources on attracting, acquiring and retaining customers who will help you reach your vision.
  4. In the battle for market supremacy the product with the best marketing wins not necessarily the best product.
  5.  The three biggest factors in determining your success are your business category (Standard Industry Classification), your Business Model and luck. Don’t confuse the three.
  6. When it comes to human capital be sure to win with your winners and don’t lose with your losers. Make sure that you hire, develop and retain people with your vision clearly in mind so that they: Get it, want it and have the capacity to do it.
  7. Stop looking in the rear view mirror. Accept the fact that what got you here won’t get you where you want to go.
  8. Leadership matters. Great leadership can’t fix a broken business model but poor leadership can kill a great business model.
  9. Customer loyalty is a contact sport and every contact counts.
  10. Before you change your company, look in the mirror and ask yourself, “Am I ready for this?” Change must be led not managed. If you’re not up for the challenge don’t put yourself and your people through the aggravation. Just because you can do something doesn’t mean you will. Recognize what you’re great at and do more of that. Everything else must be done by others. This means delegating it, developing the capability internally, acquiring it or outsourcing it. To change the company you must “be the change.”
  11. Embrace innovation and agility.  As you move into uncharted waters the number of “known unknowns” will be replaced by the” unknown unknowns”. Your speed to vision will be measured by how quickly and effectively your organization can self-correct their course. Failures will happen. That is guaranteed. Learning, adapting and speed of recovery are optional. Fail, learn, adapt or simply fail.
  12. Monitor the signals in the noise. Every great leader must become like hockey great Wayne Gretzky and “skate to where the puck will be.” The new global economy is producing lots of noise in every market. Determining which faint signal will result in a full bloom market trend is both art and science. If you’re not diligently monitoring and discerning signals you’re flying blind.

Before you accept my challenge to dare to be great take a moment now to imagine what your business will be like if you do. Create a clear and compelling picture in your mind’s eye of your business when it is great. Specifically how will it be great for your customers, employees, the marketplace and you?

If that image inspires you to dare to be great then take the next steps to make it happen. Assess where you are now. Determine what you need to achieve your vision. Develop a plan. Implement.

If you want a quick strategic snapshot of where your company is now take the Growth Positioning Survey (GPS). It’s a short online survey that pinpoints how your company is performing in twelve key growth factors. The insights gained from the GPS will give you the focus and confidence to accept my challenge to dare to be great. To get your free access now go to:   http://philfarisassociates.com/gps/ click the “Free Instant Access” button to get your copy now of “Growth Positioning Survey!”

 

Leadership Challenges:Technological Velocity

leadership challengesLeadership challenges can be found lurking around every corner. One of the biggest leadership challenges facing CEOs, executives and business leaders alike is technological velocity. Trying to keep up to speed with the advances in technology is similar to trying to drink from a fire hose. The volume and speed of innovations in technology are simply becoming overwhelming. One of the biggest dilemmas with technology is that it represents a double-edge sword. Although advancements in technology bring about greater efficiency and productivity, they also eliminate jobs and put constant stress on organizations to continually adapt and assimilate new systems and processes. These are leadership challenges confronting every organization.

To highlight the impact of  this trend consider the following:

  •  Just a few years ago a website was considered a luxury for many businesses. Now it’s essential for survival.
  •  Cyber Monday didn’t exist before 2005 and now retailers do over $1 billion in online sales on that day.
  •  Digital advertising wasn’t a serious vehicle for most businesses 10 years ago. Now it exceeds $30 billion and captures 1/5 of advertising money spent in the US.

Market leadership is not a destination. It’s a race that must be won every day! Harnessing the power of technology is one of the keys to market leadership. Welcome to the New Economy!

To further highlight the scope and complexity the technological velocity has and the challenges leaders must contend with consider the implications of these technology facts:

  •  Worldwide there are 88,000,000,000 searches a month done on Google and 46% of the searches are for products and services.
  •  Facebook has 800,000,000 active users. This population would make it the third largest country in the world.
  • There are 6.6 billion mobile phones for a world wide population of 7 billion.
  •  Last year’s mobile data traffic was three times the size of the entire Internet in 2000.* (Cisco Visual Network Index: Global Mobile Data Traffic Forecast Update, 2010)
  • The computing power of a smart phone is equal to that of mainframe computers from the 1980s.

Armed with this technology customers want information available to them at anytime and anywhere. If one company won’t provide it there are dozens more who will. This is a real and present danger for every business and one of the leadership challenges that can’t be ignored.

Technology is changing our lives both at work and at home. Let me share a real-life example that highlights this idea. I was eating breakfast at a McDonald’s reading the newspaper when I noticed a 5-year-old girl giggling and pointing at me to her father. The father quickly apologized by saying, “I’m sorry about my daughter, it’s just that she has never seen anyone reading a newspaper. I always get my news on my phone.” The young father was in his twenties and had never relied on the newspaper for getting news so his daughter had never seen it.

To succeed companies must incorporate technology into their organization so they can compete in a changing marketplace. One of the biggest leadership challenges business owners and executives have with technology is deciding which technology move the business forward. Select the right technology and the company leap frogs ahead of the competition. Guess wrong and the company is saddled with obsolete gadgets that become obstacles to doing business.

New Global Economy Sends More Mixed Signals

The New Global Economy continues to chart its uncertain course. Business leaders looking for clear direction are still finding it difficult to read the signals in the noise. Here are just a few signals that may or may not be signals for an enduring trend.

  • New home sales reached a 2 year high. The Commerce Department stated that single family homes surged 7.6% in May which is the highest increase since April 2010. This coupled with the increasing building permits and the forth straight month of increases in the median price of previously owned homes gives support that the housing market is in a recovery mode. Will it last and will it be strong enough to ignite the economy long term? Stay tuned.
  • Shrinking emergency funds. 49% of Americans don’t have enough funds to cover three months of expenses according to Bankrate.com. Although this figure is up from last year’s 46% and moving in the wrong direction it is better than the 61% posted in 2006. On a similar note only 25% of the people polled said they had enough savings to last six months. If the economy continues to stagnate more families will deplete their savings and these figures will continue to increase.
  • New car prices decrease. The cost of a new car dropped about $500 from a year ago according to Kelly Blue Book. The biggest reason for the decline is the inventory shortage caused by the earthquake in Japan has been resolved.  This is a good example of how we are at the mercy of the New Global Economy because black swan in Japan (an earthquake) had such far reaching impact on new car prices both last year and now.
  • More trouble for the European Union. Cyprus became the fifth Eurozone country to seek a bail out on 6/25 when they asked for a$2.2 billion. Although the European Union has voted to support it’s members this situation is far from resolved.
  • Student loan debt becoming the next debt bomb. Student loan debt has reached a new high of $870 billion and now exceeds credit card and auto loan debt. More importantly the Federal Reserve Bank of New York expects the balance to continue to rise. Lisa Madigan, Illinois Attorney General said in a Chicago Tribune article, “Just as the housing crisis has trapped millions of borrowers in mortgages that are underwater, student debt could vary well prevent millions of Americans from fully participating in the economy or achieving financial security.” For many this is the elephant in the room that nobody wants to tackle because of the enormity of the problem.
  • Edward Jones see growth and opportunity with the middle class. Edward Jones who provides financial services to middle class Americans announced its plans to add 8,000 brokers and double its client assets over the next 8 years. Their goal is by 2020 to have 20,000 agents and $1 trillion in client assets. Many are skeptical because of the time and cost in training agents and in the diminishing assets of middle class Americans. Maybe Edward Jones sees a more promising signal in the noise created by the New Global Economy.
  • JP Morgan loses $4-6 Billion in the second quarter. The bank has been taking a financial beating while its been getting out of most of its disastrous credit bets. Besides questioning the size of the loss many are scratching their heads as to how such a large loss could happen in today’s “fiscally responsible” banking climate. Didn’t anyone at JP Morgan pay attention to our last financial crisis?

These are just a few signals in the New Global Economy. Do they represent trends that will lead to opportunity or greater danger?  Probably both depending what business you’re in.

The lesson from this post is for you to know which trends in the New Global Economy will give you greater clarity around your business. If you can “pull a Gretzky” and skate to where the puck will be you’ll gain a competitive advantage.  Guess wrong and you’ll become a casualty. The dots are there for all to see. Its all a matter of which dots you look at and how you connect them. Let me know which trends you’re tracking and how they’re impacting your business.

Corporate Culture and Leadership: A View from the Corner Office

corporate culture and leadershipCorporate culture and leadership are important no matter what size your company is. Mike Sheehan, CEO of the ad agency Hill Holiday shares his insights into corporate culture and leadership in an interview with Adam Bryant. Below is an excerpt from that interview which appeared in the Wall Street Journal.

“I think there are two kinds of cultures, and then you can subdivide them after that. One is based on a foundation of insecurity, fear and chaos, and one is based on a firm platform where people come to work and they’re worried about the work itself. They’re not worried about things that surround the work and are not important. I’ve tried to make Hill Holliday that kind of environment, where people come to work and they’re not worried about their peers shooting them. If leadership doesn’t provide a forum for that kind of behavior, it dies quickly. People forget about it and they just focus on doing their job.

You don’t want a conflict-free zone, but you want the conflicts to be about the work itself. Sometimes you have to dig a little bit and talk to people, but if you find out the conflict is about the work, then that’s good, because it’s healthy. I think that in a lot of workplaces it’s the opposite — people have to come to a consensus on the work, and so all the conflicts are political.

That’s one thing that the founder, Jack, instilled in the culture. It’s not a democracy. You’ve got to make tough decisions and then you’ve got to move on. “The enemy’s out there,” he would say. “The enemy’s not in these four walls.”

What kind of culture does your company have and what are you doing to create it?  To many CEOs leave their culture to chance. That’s why corporate culture and leadership are linked together. Make sure you have the culture you want. To learn more about corporate culture and leadership read the entire article by going to:

http://www.nytimes.com

The New Global Economy Sends Mixed Signals

The NewGlobal EconomyThe New Global Economy continues to send mixed and perplexing signals making it difficult for business leaders to chart clear paths. Is now the time to re-trench again or accelerate growth? The answer is a resounding “It depends.”

Here are just a few highlights from the New Global Economy that makes navigating businesses now so challenging:

  • According to Zillow 15.7 home owners in the US were underwater on their mortgages at the end of March.  90% of these home owners are making their monthly mortgage even though there is little hope on the horizon that their equity will ever become positive.
  • Sales of new homes 3.3% in April according to the Commerce Department. Also the price of both new and existing homes increased. This gives hope that the housing market may be moving upward after the collapse in 2006.
  • As Germany’s economy stumbles the euro hit two-year lows the week of May 21. Many investors are concerned that countries like Spain may join Greece on the economic crisis watch.
  • The US economy is plugging along on a less than robust two and a quarter percent.
  • Unemployment for the “Lost Generation” (job seekers under 25) remains at 16% which is more than double the national rate. For many in this group pursuing the American Dream is becoming quickly diminishing mirage. Only half of recent grads are working full-time. Furthermore the starting salary of graduates from 2009-2011 are $3000 less than they were before the recession.
  • Hewlett-Packard plans to cut 27,000 jobs or 8% of their workforce in an effort to jump-start their growth.
  • America’s midsized companies are less optimistic than they were a year ago, according to a survey by Deloitte, LLC. The reason for their outlook was tied to slower economic growth, uncertainty in an election year, financial trouble in Europe and rising health care.
  • China announced new rules that will impact the four largest foreign auditing firms. Under the guideline the firms must limit the number of foreign-certified partners in China to a max of 40%. By 2017 the cap will be 20% but all senior partners must be Chinese.

What do these facts have to do with your business? Everything and maybe nothing.  In the New Global Economy unrelated trends can both signal and camouflage trends that can impact your business. What’s important is for business leaders to keep their eyes on the horizon looking for a trend that can lift your business to new heights or crash it on the rocks of the New Global Economy.

If you’re a business owner or executive and your primary focus is managing the day-to-day activities of your business watch out you’re about to get blindsided. In the New Global Economy be sure to devote time each day to monitor trends that are or can drive your business. What trends are you monitoring for your business? How quickly can you respond should a trend emerge that can impact your business’s success?

Is the American Dream Dead or Just on Life Support?

The American Dream is different for every person. To some it’s the opportunity to own their own home; to others it’s to work hard, save and live their golden years in comfort; to others it’s the opportunity to start a business and use it to build security and wealth for themselves and their families. So how is the American Dream working for you. For many today the American Dream is still very much alive to others its dead or at least on life support. Just consider the following:

Home ownership-One of the cornerstones of the American Dream

  • 11 million homeowners are upside down on their mortgage and have little hope on the horizon that their situation will change.
  • The value of the average American home has decreased 23.7% since the peak of May 2007 according to Zillow.
  • Foreclosures activity will increase this year as RealtyTrac expects 1 million homes to be repossessed by banks versus 804,000 in 2011.

Jobs Creation/Unemployment

  • Although 1 million jobs have been created in the last six months we’ve only replaced 43% of the 8.3 jobs that were lost in the Great Recession
  • Civilian labor participation is 63.6% which is the lowest since 1981. This means that in addition to high unemployment many people who can work are choosing not to for many reasons including: Baby Boomers retiring rather than continuing to work at unsatisfying jobs, second earners who find little incentive to rejoining the work force, student who stay in college because of limited employment opportunities and people on public assistance programs (food stamps, Medicare etc) who can’t afford to give up the benefits they receive if they become employed.
  • Although the Bureau of Labor Statistics’ unemployment rate is moving down towards 8% much of the improvement is created by workers who are still unemployed but aren’t counted anymore. Up to 500,000 workers have run out of benefits and have given up on looking for work so they are no longer considered “unemployed” by the Bureau of Labor statistics. If we added all people who are actually unemployed with people who are working part-time but who want full time work the number would be 16-20%. Adding people who have accepted jobs that pay less than the ones they lost about 1 in 4 Americans have been impacted by the New Economy.

Debt Crisis

  • The United States now owes more than it produces. Our national debt is $15.5 trillion and our GDP is $15 trillion. Unfortunately there is no plan in place to address this issue and probably won’t be addressed until after the November elections. Given how the two parties have behaved in the past there is little evidence to support that a viable long term solution will be worked out any time soon.
  • Taxes are needed to run government programs and reduce the debt. However only 50% of Americans pay taxes. This means that the half who does pay taxes must carry the full burden.
  • Export sales are slumping. After a two good years of selling American products to a global market exports are softening due to economic problems in Europe and a deceleration in economic growth in India and China. With this decline in global demand our ability to grow our export business is limited.

The American Spirit-We as Americans have always faced adversity with optimism and a belief in our collective ability to surmount any challenge. This is part of our DNA. Two Gallop statistics suggest that our spirit is still strong but may be wavering a little.

  • 53% describe themselves a s thriving (This is the silver lining and reason for optimism)but 44% say they are struggling (This means close to half of Americans have been impacted by the New Economy)
  • Last year 65% of those polled by Gallop said they made enough to live comfortably but that figure dropped to 60% this year. That’s a trend that is going in the wrong direction.

So what’s the solution for resurrecting the American Dream?

I’ll give you a clue. It won’t come from Washington, it won’t have government strings attached to it and it won’t happen without innovation, courage and hard work.

The simple and unavoidable truth is that job creation is the fuel for the nation’s economic growth. When more people have jobs, more consumers have money to spend — and consumer spending drives about 70% of the economy. Economic growth is the driver of the American Dream.

This means that the road to recovery and restoration of the American Dream must be paved with an entrepreneurial spirit and the growth of small businesses! Why small businesses and not corporate giants?

  • Large corporations tend to be slow to adapt in a changing marketplace (Sears, Black Berry, Kodak, and Boarders Etc).
  • Large corporations are often driven by quarterly results and investors looking for short term profits.
  • Many corporate CEOs are charged with maintaining the status quo rather than igniting the passion that originally drove the business to success.
  • Many of our current economic problems can be traced to corporate leaders who were corrupted by power and greed (AIG, MF Global etc)

Although current data from Intuit and ADP shows small businesses are adding jobs at a faster rate than larger companies, many experts still project the end of 2013 before small business employment reaches where it was in 2007. This of course is dependent on the global economy remaining relatively stable during that period of time.

What has to happen to accelerate small business growth?

According to a recent survey by the National Federation of Independent Business (here):

“The two principal impediments to current small-business growth are business uncertainty and weak sales… The single most important indicator that would renew small-business owner confidence in business conditions is increased sales in their businesses.”

So how do small businesses increase sales and gain confidence?

Based on the research I’ve done for my book “Leadership in the New Economy”, there are two ways business leaders look at these challenges.

  • The first and easiest way is to say it’s a demand issue. These businesses feel that business will improve when the economy picks up. Unfortunately, those who are waiting for demand to “knock on their door “are struggling (and will continue to do so IMHO).
  • The second way is to look at these challenges as marketing and business operations issues. I’ve found that businesses who are thriving now are effectively market themselves and adding greater value for their customers.

If you own a small business don’t wait for the economy to carry you. Have the courage and conviction in your own business to market yourself more effectively and find ways to create more value for your customers. Create a customer experience that not only creates customer satisfaction but inspires loyalty as well. Improve your business operations by engaging your employees in ways that taps into their knowledge and passion for your business.

Leadership matters more now than any time in our nation’s history. I’m not just talking about the leaders we elect I’m talking about the leaders who will lead the small business revolution that will restore the American Dream for generations to come. To borrow form Shakespeare, the question is no longer “to be or not to be” the question for American small business owners is, “To become a leader or be forgotten.”

If you’re interested in learning how to increase sales and profits in your marketplace get FREE access to the Growth Positioning Survey by clicking here. You’ll get a strategic snapshot of your business that maps out what you need to do to grow your business.

The New Global Economy Update

Now is a good time to take a quick look at the new global economy. The first quarter is behind us and trends are beginning to take shape. This update on the new global economy is designed to give business leaders a heads up on factors that can have a direct and indirect impact on their business. If you are looking to grow your business or avoid becoming a business casualty this is for you.

During my research for my book “Leadership in the New Economy” many business leaders felt that they would be immune to factors playing out in the new global economy. To them these factors were benign threats on the distant horizon of their business reality. Although they didn’t experience a direct hit due to global trends they found themselves in their wake which produce unexpected setbacks.

Please use these examples as a yellow flag for your business. Consider their potential impact and adjust your plans accordingly.

  • Our Export business is softening. After two years of impressive growth the Administration’s goal of doubling exports from $1.58 billion to $3.15 billion in five years is in serious jeopardy. With China and India decelerating their economies from the double digit growth of the past economists are predicating sluggish growth for the next couple of years. We can’t sell our goods to a market that is growing at a significantly slower pace. Who in your value chain or customer base can be impacted by a significant slow down in our export business?
  •  Business investment is declining. According to USA Today, “Investment climbed just 1.4% a forth of its late 2011 pace, which helped limit the economy’s growth to 2.2%.” This rate is below most experts forecast for 2012. How will reduced investment by businesses impact you and the local marketplaces in which you operate?
  • Unemployment in Europe reaches record high with 17.4 million workers unemployed. At 10.9% this is the highest rate since the Euro was installed. Compounding the impact of high unemployment is the fact that the austerity programs in place to reduce the counties’ debt have had poor results in lifting the economy. The rising borrowing costs, political infighting and social unrest promise to keep the European economy unsettled for the foreseeable future. How could prolonged unrest in Europe impact your investments, business and local economies?
  • Job gains in the US hit 7 month low. According to payroll giant ADP’s April jobs report the US added just 119,000 jobs. This is the second month in a row that the results were disappointing. Although many experts predict an upswing in May they remain cautious in their predictions for the year. Is this just a blip or the beginning of a stall? How will your business fare if the jobs growth stays soft?
  • Best Buy is down sizing. Like many big box retail stores the electronics chain had a poor forth quarter and an loss for the year. In an attempt to right the ship Best Buy recently reported that they will be trimming costs by cutting 400 job, closing 50 stores and downsizing many others. This is an example of a big company trying to “Right Size” their business to compete in the realities of the new global economy. By matching their business operations to the market demand Best Buy hopes to pull itself out of the red ink and into the black. Is your business in need of “right sizing”? It’s always easier to do it early instead of waiting until it may be too late.
  • Black Berry changes leadership team and launches new market strategy to stop the bleeding. After seeing its stock shrink 90% since 2008, its market share retreat from 14% to 8.2% and feeling the heat of five straight quarter of sales short falls the smart phone company is shaking things up. By installing a new leadership team led by Thorten Heim and unveiling a new market strategy RIM hopes to stop the slide into smart phone oblivion.Experts aren’t sold on their new strategy and CEO Heim  admitted that he was wrong in his January assessment the company didn’t need to make “drastic changes”. what kind of drastic changes lie ahead? You’ll have to stay tuned. Many experts feel their best chance of survival is to put the”for sale” sign up.  When a market leader starts losing touch with its customers and fails to deliver solutions that the market demands the fall from grace can be rapid and often fatal. How well does your company deliver solutions to your customer base? If your market position is weakening are you poised to respond effectively?

The lessons you can learn from these examples about the new global economy is that there are many factors in play that can be disruptive to your business even if they seem in like they’re in the distance. Successful leaders identify the indicators that can impact their business and carefully keep their eyes on the horizon looking for trends that may be the tip of  the economic ice berg. They know that “shift happens”, often unexpectedly so they remain poised to respond.

Although the example given represent potential dangers the new global economy also represent tremendous opportunities. Joseph Grobler COO of  Reveal a company says,This is the absolute best time to be in business because the growth opportunities are unbelievable”

Other companies who have successfully positioned themselves for growth include :

The CEOs of these companies have business plans in place that ensure that they are responsive to their customers and are alert to the market dynamics that can surface in the new global economy. If you’d like to discover how well your business is positioned to grow take the Growth Positioning Survey by clicking here.  I’ll also send you a copy of the Special Report:Welcome to the New Economy: Discover the 12 Biggest CEO Mistakes and How to Avoid Them.

Business Growth Strategies That Can Ruin Your Company

Business owners, CEOs and presidents are always looking for business growth strategies. The key to success is to grow,grow grow! In the old economy mistakes made while growing were more forgiving so even poor business growth strategiebusiness growth strategiess often were  rewarded. However, things are different in the New Economy. A poorly designed or poorly executed growth strategy can be terribly costly.

One of the biggest mistakes with business growth strategies is growing beyond your company’s means because it’s like going on vacation without cash or credit cards. Neither will turn out to be a pleasant experience. This may sound like common sense but common sense isn’t always common practice. One of the top reasons for small business failure is lack of capital. And if following this principal was universally applied in larger businesses, why did we have to bail out the auto industry and the banking industry? In fact, of the 150+ major businesses that failed in 2008 and 2009 most were due to bankruptcy. (Wikipedia)

Some companies struggle because their eyes are bigger than their wallets. For example, a $5 million tech firm had enjoyed steady double-digit sales and profit growth selling non-core technology to small businesses.  In late 2011 the company jumped at the chance to bid on a large project for a mid-sized business for their core technology. They were ecstatic when they were awarded the business and high fives were given all around. However the euphoria quickly turned to angst when the CEO realized the project would consume most of their resources and cash flow for the next 6-9 months. Although the project would eventually be profitable the company had to take extreme measures to survive the implementation, including laying off personnel and putting a halt on new business development. The long-term viability of the company is still in doubt.

Spending and committing resources as if the road will always be straight and narrow is inviting disaster. Cash must be managed as the precious resource that it is instead of the endless supply people thought existed before the start of the Great Recession. At that time, much growth was fueled by the desire to grow and the availability of money. In the New Economy credit and cash have tightened up and demand has fallen off in many markets. This means unless you have money to burn don’t pursue business growth strategies in a market that doesn’t have demand or you can’t uniquely and effectively service. At least not right now.

Bob Hamilton Group President for ITW put several initiatives in place that helped his organization recover rapidly from the downturn they experienced in 2009. Among the actions taken, ITW:

  • Restructured several businesses to get their cost structures in line with the marketplace.
  • Assessed their various global markets and put resources where they saw growth and put growth plans on hold where markets were stagnant.
  • Improved working capital by managing receivables and inventory.
  • Implemented programs to increase cash flow.

These actions helped ITW implement business growth strategies in targeted markets and realize a 15% growth rate.

Do you have the financial resources to support your growth initiatives without putting the company at risk? Find out how your company’s growth strategies stack up by taking the Growth Positioning Survey FREE.

 

 

 

 

 

Corporate Culture and Leadership: Lessons Learned from Goldman Sachs

The corporate culture and leadership at Goldman Sachs was put into an unflattering light by one of it’s own executives. Greg Smith retired from leadership and culturethe his position at the financial services company where he was executive director and head of the firm’s equity derivatives business in Europe. His parting gift to the firm was a March 14th op-ed in the New York Times, “Why I left Goldman Sachs.” He took unflinching shots at the company’s corporate culture and leadership by outlining “a decline in the firm’s moral fiber.” Smith wrote “Today many of these leaders display a Goldman Sachs cultural quotient of exactly zero percent. …Integrity? It’s eroding.”

Smith’s action brings to mind two key questions. First is Goldman Sachs really that bad? Second why would an executive take such drastic action against his former employer?

Let’s address the first question. Although executives at the Goldman Sachs have been disputing Smith’s claims the firm’s shares dropped 3.4 percent on the day of the op-ed. This suggests that there are shareholders who suspect that there may be some truth to the allegations.

Why did Smith write the piece? He said he did it as “a wake-up call” to the board “(to) make the client focal point (of its) business again.” The firm said he was a disgruntled employee. Only time will tell who is right. There is probably merit for both sides.

What’s the lesson to be learned?

These are stories told at the water cooler, at a lunch table or in the ladies or men’s room. These aren’t the glowing stories created by a PR firm or ad agency. These are the stories that reveal the true DNA of an organization.

If culture defines “how we do things around here” then the stories employees tell are the way it’s conveyed. In many organizations there are the SOPs and then “the way we really do things.” In other organizations they are one in the same. Which one are you?

Great companies have employees who tell great stories that are aligned with the direction set by their leaders. When negative issues surface great companies listen, discern and take appropriate action. They do this because they know failing to do so is the first step down a slippery slope towards a dysfunctional culture.

The challenge for you is to know what stories your employees are sharing. If your employees were to write an op-ed in the New York Times about your organization would it be glowing or scathing?

Corporate culture and leadership must be developed and cultivated over time. It’s based on what you say and the extent your actions support your words.  The by-product is the stories employees tell. Make sure your actions cultivate the stories you’d want to appear in the New York Times.

To get a better picture of your culture take the Growth Positioning Survey.

Corporate Culture and Leadership in the New Economy

Corporate culture and leadership are essential in the New Economy. Why? Because in turbulent times it’s imperative that organizations have a clear sense of direction and purpose. Not having everyone on the same page results in chronic organizational dysfunctionAligning Vision, Values, Mission and Culture in the New Economy where employees and departments are working at cross purposes by pursuing conflicting goals. Remember every misalignment squanders your company’s ITEAM *(Information, Time, Energy, Attention and Motivation) and drains your profits. (*Mike Jay, B-Coach)

Many companies may have a written mission, vision and values statement but most fail to formally develop their cultures. Because leaders put off the heavy work of erecting the scaffolding of values, policies, shared beliefs, rewards, rituals, and visual elements that form culture, a void is created. In that void, culture happens spontaneously, organically and usually chaotically. Culture becomes an aggregation of random decisions made by different people in particular circumstances. The notion is that if the people are good, decent and competent, chances are, the culture be good, decent and competent as well. This approach is a recipe for disaster. As the leader your biggest responsibility is creating a culture that is scalable and sustainable. With or without direction nature and nurture will combine to form organizational DNA that informs your people of “how we do things”. This message grows more visible and pervasive over time.

Many successful entrepreneurs aren’t content to leave their corporate culture and leadership to chance. From the beginning they select people, implement policies and clarify what’s important at every step of the way. Because they want a culture that can sustain itself these leaders believe in culture by design.

“If you don’t define the culture and you don’t work on it and you don’t progress it even when it’s 2-3 people, it’ll define itself. And it’ll define itself really quick, and it may not be the one that you like.” -Matthew Porter, CEO Contegix

Large organizations with well-developed cultures often neglect them resulting in the culture changing into something at odds with the organization’s vision and stated values.

A good example of corporate culture and leadership that went awry is AIG. According to Corporate Culture: The Ultimate Strategic Asset*, AIG’s failure during the global financial crisis of 2008-09 in part can be attributed to misaligned values and a changed culture. AIG had as a core competency managing risks and a culture where anyone could challenge a trade. Under Joseph Cassano, the financial products group sold hundreds of billions of credit protection in the form of CDs without having to put up any real money as collateral. As sales grew the group took on more and more risk. Under Cassano’s leadership the culture evolved into one in which transactions couldn’t be criticized. When, in the financial crisis of 2008, investment banks sought insurance money for their collapsing derivatives, AIG could not deliver and received a bail-out from the taxpayers. A culture of growth at any cost overshadowed the old culture of managing risk and the rest as they say is history. (*Corporate Culture: The Ultimate Strategic Asset, Eric Flamholtz and Yvinne Randle,Stanford University Press 2011)

Many successful organizations like FedEx, IBM, Amgen and Disney have “woken up” to find that their corporate culture and leadership weren’t aligned with their vision. This “Ah Ha moment” forced leaders to impose a cultural re-alignment. This was a painful process (IBM laid off 60% of its workforce).

When you look at your company’s corporate culture and leadership what do you see? Are your company’s Culture, Mission, Vision and Values aligned so everybody in the organization understands and acts congruently with them? Take the Growth Positioning Survey and discover where your company stands.