Robots + Humans Teaming to Create Future with Lights Out Manufacturing: Retool, Retrain, Restart– New Age Automated Factory…

The factory of the future will have only two employees, a man and a dog. The man will be there to feed the dog. The dog will be there to keep the man from touching the equipment.  ~Warren G. Bennis

The term ‘lights out’ has been used to describe fully automated factories. Human hands never touch the products during the manufacturing process. IBM already has a keyboard assembly factory in Texas that is already totally ‘lights out’. A few engineers and technicians are on-site to support the machines producing computer keyboards.

People drive trucks up to the factory doors, delivering raw materials and picking up finished products. The factory operates 24/7 with down time only for scheduled maintenance or repair. At a dinner in Silicon Valley last year, President Barack Obama reportedly asked Steve Jobs what it would take to bring iPhone manufacturing jobs back to the U.S. to which Jobs replied, “Those jobs aren’t coming back.”

The late Steve Jobs was right. Even though advances in automation, 3-D printing, and the rising costs of labor in China will cause manufacturing to return to U.S., we won’t need the millions of factory workers we needed in the past. That’s because manufacturing jobs we need filled today are different from the ones we sent abroad. The new manufacturing will create new types of jobs. The one thing we can be sure about is that we will require a workforce with much different skills and education than what was required for the manufacturing jobs of yesteryear.

The companies and countries that can attract, develop, and retain the highest skilled talent, those that innovate to stay ahead of competition, and those that can find clean energy strategies and effective energy policies. With competition increasing for so many resources and capabilities– and with the prosperity of nations hanging in the balance– policymakers must be actively looking for the right combination of trade, tax, labor, energy, education, science, technology, and industrial policy levers to generate the best possible future for their citizens…

In the article “The Future of the Manufacturing Industry” by Tiffany Misrahi writes: Manufacturing is no longer what it was in the 19th century; it’s not dirty or reserved for blue-collar workers. Think of the high-tech and innovative products now manufactured around the world, like iPhones or Dyson vacuum cleaners. Indeed, modern manufacturing contributes to economic growth and raises both the technological stock and skills of a country.  It is the backbone of any industrialized society and still today can be a strategic advantage for countries worldwide. I am not disputing the fact that manufacturing has become less strategically important for some countries.

The facts are there; the U. S. for instance: in the 1950s, 30% of GDP came from manufacturing, compared to 12% in 2008. Nonetheless, I believe, in the next 10 years, manufacturing will regain importance and, as a sector, bring a competitive edge. As countries face high unemployment rates, they are likely to turn to labor-intensive industries, such as manufacturing. The world’s complexity and interconnectedness demand a new type of model and solutions for the industrial sector.

The new model for manufacturing must come from a multi-stakeholder dialogue accounting for all relevant issues affecting the sector, including; the rising middle class in emerging economies, innovation, job creation and skills gaps, trade policy, supply value chain evolution, environmental impact and more.

In the article Making the Future– How Robots and People Team-Up to Manufacture Things in New Ways” by ‘The Economist’ writes: Back in the 1980s, when America’s carmakers feared they might be overwhelmed by Japanese competitors, many in Detroit had a vision of beating their rivals with ‘lights-out’ manufacturing. The idea was that factories would become so highly automated that the lights could be turned off and the robots left to build cars on their own. It never happened. Japan’s advantage, it turned out, lay not in automation but in lean-production techniques, which are mostly people-based. Many of the new production methods in this next revolution will require fewer people working on the factory floor.

Thanks to smarter and more dexterous robots, some ‘lights out’ manufacturing is now possible. Yet manufacturing will still need people, if not so many in the factory itself. All these automated machines require someone to service them and tell them what to do. Some machine operators will become machine-minders, which often calls for a broader range of skills. If people on the factory floor or in workshops are provided with easy-to-use robots they can become more productive, says Rodney Brooks. Bring together these new robots with innovative manufacturing technologies, and you could get a manufacturing renaissance.

However, manufacturing revolutions never happen overnight, but this one is already well under way. There is enough transformative research going on in the biological sciences and nanotechnology to spawn entirely new industries, like making batteries from viruses. Additive manufacturing, like anything else digital, is already becoming both cheaper and more effective. The big breakthrough would be in workflow. The aim would be to build things faster and more flexibly rather than to achieve economies of scale.

In the article What the Robotic Age Means for U.S. Manufacturing by Alyssa Sitig writes: In the last fifteen years, manufacturing in the United States has undergone a fundamental shift. As millions of U.S. manufacturing jobs have been lost to outsourcing and automation, output has steadily continued to grow. And while U.S. manufacturing output has decreased by only 1% since 1990, manufacturing jobs have decreased by over 30% in the same time period. Bottom line– we’re producing more goods as a nation, but we no longer need the same amount of manpower to make it happen.

And the trend shows no sign of slowing down. Since U.S. factories began adopting robotics into their assembly lines, national production has risen over 30%; so it’s not surprising that automation is a natural move for manufacturers looking to stay competitive. Japan was one of the first nations in the world to capitalize on the low overhead of factory robots. As negative population growth drove up wages, Japanese manufacturers turned to automation to cut costs. The nation has already invested over $50 million in programs and currently controls 40% of the total factory robotic population around the world.

By 2025, the Japanese government predicts 15 million manufacturing jobs will be replaced by robots. Germany, on the other hand, is leveraging robotics to grow nation’s manufacturing base and bring factories back home. It’s no coincidence that the country with 43% of Europe’s factory robot population and an export ratio of 63%. Government incentive programs encourage Germany manufacturers to adopt automation and help sustain the nation’s global competitiveness.

With results like this worldwide, it’s not surprising that the U. S. is beginning to take an interest in automation. In the first half of 2011 alone, North America nearly doubled robotic orders, due to heightened demand in U.S. automotive factories. Although some fear that we are in the midst of a robotic takeover, the impact of new technology in the workplace is nothing new.

Consider the job landscape when computers were introduced into the workplace in the 1970s-1980s, secretaries feared their jobs would be taken over by machines that could complete the same tasks quicker and for less money. But in reality, computers enabled administrative assistants to take on more complicated tasks and manage more responsibility than ever before– increasing their earning capacity and value in the workplace.

If history repeats itself (as it commonly does) the transition to a fully automated manufacturing floor is inevitable. According to John Dulchinos; not only is the robotic takeover inevitable, but it is a natural part of a continually advancing society. If you look out far enough, machines are going to win. The human body . . . was not designed to be a factory machine. It was designed to be a thinking machine.”

In the article The Future of Industrial Automation” by Jim Pinto writes:  We cannot figure out future trends merely by extending past trends; it’s like trying to drive by looking only at a rear-view mirror. The automation industry does ‘not’ extrapolate to smaller and cheaper… Instead, future growth will come from totally new directions. Industrial automation can and will generate explosive growth with technology related to new inflection points; nanotechnology and nano-scale assembly systems; MEMS and nanotech sensors (tiny, low-power, low-cost sensors) which can measure everything and anything; and the pervasive Internet, machine-to-machine networking.

Real-time systems will give way to complex adaptive systems and multi-processing. The future belongs to nanotech, wireless everything, and complex adaptive systems. The factory of the future will be small, movable (to where the resources are, and where the customers are). For example, there is really no need to transport raw materials long distances to a plant, for processing, and then transport the resulting product long distances to the consumer. In the old days, this was done because of the localized know-how and investments in equipment, technology and personnel. Today, those things are available globally…

Today’s manufacturing is changing; factories are smarter, safer, sustainable, which is quite the opposite from the public’s perception. We need to embrace manufacturing’s critical role in our economic future. The potential for manufacturing innovation is enormous. Today, control, communications, information, and power technologies are converging to enable the next industrial renaissance.

At the heart of this renaissance are advanced, smart manufacturing technologies that blend the best in people, physical assets, business processes and data, and seamlessly connect the plant floor to the enterprise, supply chain and the customer. These advanced technologies make manufacturing more productive and globally competitive. With smart manufacturing, an entire plant can be optimized. Real-time information flows from machine-to-machine and across production lines.  Smart manufacturing is a growth engine for a sustainable economy. The European Union has already approved 1.2 billion Euros for a new ‘Factories of the Future’ research program as part of their economic recovery plan.

The European Union is ahead of U.S. in the race to re-industrialize their manufacturing base… The U.S. can stay in the race by re-thinking the role of manufacturing, investing in advanced automation technologies and re-tooling plants into smart factories that become the execution machine for innovation. Smart manufacturing can be an important factor in the growth of the U.S. economy. However, high technology alone cannot provide all these benefits without a skilled and knowledge workforce who are continually being updated and trained to get the full benefits that each new technology can provide.

The U.S. cannot regain global economic leadership unless there is a continual renewing and honing the skills of current and future employees, such that they can work successfully in the modern manufacturing environment. It’s a new age and the days of the dirty, noisy manufacturing assembly lines with relatively unskilled workers are gone…

Factories of the future will be highly sophisticated with smart robotic-based machines requiring highly skilled, well-trained knowledge workers who will design, develop, install, and support the automated factory of the future…

Countries cannot afford to stop making stuff with the hopes that it can compete by just doing design and innovation. Being competitive, globally, requires a tight intertwining of design, innovation, and manufacturing.

The Great ‘Flation’ Debate– Pick Your Poison: Inflation, Deflation, Stagflation, Hyperinflation… or, Dreaded Panflation….

Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair. ~Sam Ewing

Like everything else in the economy, it works until it doesn’t. And then bad things happen. ‘Flation’ by itself is not in the dictionary. However, when adding prefixes to ‘flation’, various words are created which appear often in economics, for example: inflation, deflation, stagflation, mass inflation, hyperinflation… and the dreaded panflation. 

Inflation has a corrosive effect on business performance, undermines profits, encourages under-investment, and distorts resource allocation. In the article ‘Why Companies Should Prepare for Inflation’ by Ulrich Pidun, Daniel Stelter, and Katrin van Dyken write: Despite near-term deflationary pressures in at least some developed economies, especially those that are carrying high levels of debt, we think that today’s business leaders should really be  worrying about the threat of inflation. In many respects, the current economic condition is a perfect breeding ground for inflation.

The loose monetary policy of many central banks, extremely low-interest rates and unprecedented quantitative easing schemes that have strongly inflated the monetary base and central banks’ balance sheets. At the same time, ongoing fiscal-stimulus packages have left many governments with huge debt levels, which they may be tempted to inflate away.

Although, higher inflation rates can appear to be beneficial but, on the contrary; continued inflation destabilizes the economy, discourages productivity growth, leads to inefficient capital allocation, depresses company valuations, and carries the seeds of future recessions. That’s why senior executives need to start now, to think through the consequences of inflation on their business, understand the company exposure, and prepare for an inflationary scenario that may materialize sooner than many expect…

In the article Which Flation Will Get Us?” by Gary North writes: There are five flations to consider: deflation, inflation, stagflation, mass inflation, hyperinflation, and we had better consider all of them. We should always keep in mind the fact that there are two ways to define flation: (1) as a change in the money supply; (2) as a change in the price level. Most of those who forecast deflation have in mind price deflation.

Price deflation can come through the free market, and it results from steady increases in economic output in an economy with stable money: More goods chasing the same amount of money. On the other hand, monetary inflation produces price inflation. If the central bank expands the money supply, prices will rise. The expansion of money by the central bank is the source of economic booms, and specific asset bubbles.

The expansion of money briefly lowers the interest rate, and for as long as the Federal Reserve creates money, we will have price inflation. But before we get to this, we will suffer from stagflation. This was the burden of the 1970’s. There was monetary expansion and massive Federal deficits. That combination of events was dubbed stagflation. The potential for economic stagnation in today’s world is obvious. Just about every mainstream economist and forecaster is predicting slow economic growth next year.

The mass inflation phenomenon appears when the Federal deficit cannot be covered by private investment and purchases by foreign central banks.  Mass inflation is defined as double-digit price inflation above 20% but below 40%. No industrial nation has seen this except after a major military defeat. The worst-case scenario is hyperinflation, which ‘Ludwig von Mises’ called the crack-up boom. It cannot last long because the currency system is rapidly destroyed, and it no longer serves as a tool of economic calculation.

Just think about it (or maybe don’t); the value of money becomes worthless. No modern industrial economy has suffered this since the recovery after World War II. Now, these are the options; pick your ‘flation’…

In the article The Devaluation of Everything–The Perils of Panflation by ‘The Economist’ writes: Price inflation remains relatively subdued in the rich world, even though central banks are busily printing money. But other types of inflation are rampant, thus we have ‘panflation’. Panflation needs to be recognised for the plague it has become, for example; take the grossly under-reported problem of  size inflation, where clothes of any particular labelled-size have steadily expanded over time.

Estimates by ‘The Economist’ suggest that the average British size-14 pair of women’s trousers is now more than four inches wider at the waist, than it was in the 1970s. In other words, today’s size-14 is really what used to be labelled a size-18; a size-10 is really a size-14. (U.S. sizing is different, but the trend is largely the same.) But when three out of four American adults and three out of five Britons are overweight, the danger is that size inflation reduces women’s incentive to eat less.

Meanwhile, food-portion inflation has also made it harder to fight the flab. Pizzas now come in regular, large and very large. Starbucks coffees are Tall, Grande, Venti or (soon) Trenta. Small seems to be a forbidden word. Inflation is also distorting the travel business. A five-star hotel used to mean the ultimate in luxury, but now six and seven-star resorts are popping up as new hotels award themselves inflated ratings as a marketing tool.

‘Deluxe’ rooms have been devalued, too; many hotels no longer have ‘standard’ rooms, but instead offer a choice of ‘deluxe’ (the new standard), ‘luxury’, ‘superior luxury’ or ‘grand superior luxury’. The value of frequent-flyer miles is also being eroded by inflation. Some other strains of inflation have more serious economic effects. One example is academic grade inflation, in Britain the proportion of ‘A’-level students given ‘A’ grades has risen from 9% to 27% over the past 25 years.

Yet other tests find that children are no cleverer than they were. A study by Durham University concluded that an ‘A’ grade today is the equivalent of a ‘C’ in the 1980s. In American universities almost 45% of graduates now get the top grade, compared with 15% in 1960. Employers are themselves distorting the jobs market with job-title inflation, which has recently accelerated because a fancier-sounding title is cheaper than a pay rise.

Firms are awash with an excess of chiefs and directors, such as Director of First Impressions (receptionist) and Chief Revenue
Protection Officer
 (ticket inspector). This is not just a laughing matter. Job-title inflation has economic costs if it makes the jobs market more opaque and makes it harder to assess the going pay rate. Inflation of all kinds devalues everything it infects. It obscures information and so distorts behaviour.

A former German central banker, Karl Otto Pöhl, compared inflation to toothpaste: easy to squeeze out of the tube, almost impossible to put back in. The usual cure, monetary and fiscal tightening, will not work for panflation. Women will never squeeze back into their old clothes unless they reject size inflation. Instead, it is time for everybody to tighten belts (literally) and fight all sorts of inflationary flab.

In the articleDirector of First Impressions, Startbucks Trenta and the Inflation of Everything by David Nelson writes: An article in ‘The Economist’ titled ‘The Perils of Panflation’ writes; consumer prices and waist-lines are not the only places where inflation is a concern. From the article, here are my favorite examples of non-price inflation:

  • Grades: In U.S. universities almost 45% of graduates now get ‘A’s, compared with 15% in the 1960s.
  • Beverage Sizes: Starbucks recently added the ‘Trenta’ size, which is almost one full liter of coffee. According to the ‘National Post’ this is larger than the capacity of the average adult stomach.
  • Job Titles: Doesn’t it sound cool to be ‘Director of First Impressions’? Better than ‘receptionist’ at least.

In the article “China Has a Pork-Flation Problem by Uri Friedman writes:  The news that China’s government will try to tame inflation by releasing pork reserves from freezer facilities, and subsidize live pigs in large farms might reasonably strike you as bizarre, but as The Wall Street Journal explains, the move actually makes sense. China, after all, is the pig capital of the world.

The country is the world’s biggest pork consumer, with the average Chinese person eating about half a grown hog each year, and China produces more pigs than the next 43 pork-producing countries combined. Furthermore, volatile pork prices are perhaps the most important contributor to inflationary pressure in China. Because China’s favorite meat is, by one estimate, the single largest component of China’s Consumer Price Index (or, as some call it, the China Pig Index), which measures the change in price of a basket of typical household consumer goods.

The government is now trying to boost supply to meet demand, the Journal notes, but its stockpiles represent a tiny fraction of China’s annual pork consumption of 50 million tons… If China can’t get inflation under control, it risks undermining economic growth and social stability…

Bad things happen when a lower dollar fosters inflationary pressures and, according to some economists, rising inflation and rising interest rates are likely to become a rally killer sometime soon. A chief measure of price inflation is the inflation rate, which is the annualized percentage change in a general price index (CPI) over time.  

Economists generally agree that high rates of inflation and hyperinflation are caused by an excessive growth of the money supply. Views on which factors determine low to moderate rates of inflation are more varied. However, the consensus view is that a long sustained period of inflation is caused by money supply growing faster than the rate of economic growth.

According to some experts: The U.S. dollar is turning into dust– Gold and silver prices have soared. Gas prices are outrageous. Yet, ‘official’ inflation is said to be low, and the government keeps printing money and running ever so increasing deficits. But, policies designed to fight inflation, unemployment usually clash. Right now, unemployment is high and inflation (real inflation: money supply growth) is essentially non-existent.

Some experts suggest;  It would be best for the Fed to ignore inflation and pursue policies to benefit unemployment. Then, if inflation begins to get out of hand, it can easily be reigned in once we’ve seen an improvement in employment. What we don’t want to see, though, is a period of stagflation, where the Fed loses control of inflation while the economy stagnates. High unemployment coupled with inflation are the death knell for any economy…

We live in an interdependent world and we must reckon a balance between developed and developing markets, and between revenue growth and managing inflation.

Reshaping the Role of Corporate Executive Leadership: Rearranging Executive Power Sharing in the C-Suite– CEO, CFO, CLO…

New research suggests that having a single leader, the CEO, will no longer work in this era of globalization.

The rapid evolution of executive roles in today’s hyper-dynamic business climate is like the game of ‘musical chairs’, where roles in the executive suit are constantly evolving with the ever-changing globalization of the business environment.

The fundamental concept of executive leadership is changing. CxOs must have a radically new type of creative, innovative mindset. According to Andrew Stein, the roles and responsibilities of just a few years ago of the CEO, CFO, CLO… is much different today, and it’s still changing. Sometraditional tasks have even shifted from one title to another. Today, every executive in the C-suite must communicate effectively, confidently, and convincingly to all stakeholders, partners, and especially customers and employees.

The business priority has changed, it was compliance but now technology innovation is the most profound driver of role change. As a baseline, corporations were historically measured by revenue and profit, whereas  today companies are measured on creative ability to innovate in all aspects; functions and service levels across the business.

The economic drivers of the last few years forced global businesses to innovate to a higher level and at a faster rate, than ever before. It forced the executive team to make innovative decisions that forced seismic-level change. Shifts from efficiency measures to innovation initiatives produced profound results.

Customers are seeking out the innovative companies over those just holding on and riding out the economic storm. Leaders that want to stay on top must reinvent their role; they must be visible and build trust with their organization and extended stakeholders…

In the article “CEO or CFO: Who’s in Driver Seat?” by Lisa Yoon writes:  In a study by Deloitte titled ‘Chemistry of CEO/CFO Relationships’, they identified four personality types that CEOs and CFOs fall into:

  • Drivers: Analytical,  logical, experimental, determined, decisive, direct, tough, competitive, pragmatic.
  • Guardians: Concrete, process-detail-oriented, traditional, socially connected, loyal, conscientious.
  • Pioneers: Adventurous, creative, interested in new experiences, high-energy, spontaneous, optimistic, adaptable.
  • Integrators: Web-thinking, intuitive, imaginative, empathic, expressive, diplomatic.

In this study, researchers at Deloitte asked 91 large-company CFOs which personality type they themselves identified with, as well as the type that described their CEO. Just over half the finance chiefs self-identified as ‘drivers’, while 29% said they were ‘guardians’. The other 20% split evenly between ‘integrators’ (11%) and ‘pioneers’ (10%).  While, 34% said their CEO was a ‘driver’, another 33% called the CEO a ‘pioneer’; even though that was the category were the fewest CFOs saw themselves.

Also, CFOs saw CEOs as ‘guardians’ 22%, and ‘integrators’ 11% of the time. In terms of CFO-CEO pairings, it appears ‘drivers’ are the key component in amicable and lasting partnerships. More than three-quarters of the pairs (77%) had at least one ‘driver’. According to Deloitte, this suggests the versatility of ‘driver’ type; it’s harmonious in pairings with any personality type. It may also be that the decisive and practical styles of ‘drivers’ are simply an essential part of an effective CFO-CEO partnership.

In this Deloitte view ‘driver’ CFOs, presumably, being able to pair well with different CEO types, enjoy important benefits among other CFO types. The ‘drivers’ versatility affords them more career options, better partnerships with their CEOs, and the ability to adapt to CEO changes. That same flexibility, meanwhile, might even help ambitious CFOs ‘drive’ toward the CEO role in the future.

In the article “Chief Legal Officers Have More Power Than Ever Before” by ‘The Economist’ writes: The Chief Legal Officer (CLO) is now one of the mightiest figures in the C-suite. The main reason is that the legal thicket has grown thicker. In the U.S., the 2002 Sarbanes-Oxley act inserted federal law deep into corporate governance. The Dodd-Frank act of 2010 made running a financial business much more complicated.  

In the book ‘Indispensable Counsel’ by Norman Veasey, Christine Di Guglielmo, they argue that a CLO must be a ‘courageous renaissance person’. He must be a business partner and a guardian of corporate integrity. He (or she; 20% of big-company CLOs are women) represents the entire corporate entity, not just its managers. He answers directly to the CEO and the Board of Directors, as well.

Professional ethics often require the CLO to say ‘no’, to the other suits in the C-suite. Sarbanes-Oxley, in particular, has increased the lawyer’s responsibility to keep his company straight, or face punishment. The CLO must protect the company’s reputation with customers, suppliers, journalists and non-governmental organizations. Perhaps the hardest balancing act for a CLO is that he/she must be both a cautious lawyer and a member of the strategy team. Only the best CLOs excel in both roles.

A visionary thinks about the future, but a lawyer’s stock-in-trade is precedent. If he gets too involved in business, he may forget to be a lawyer. (The U.S. courts have ruled that a CLO’s purely business advice is not covered under attorney-client privilege.) Good lawyering can be good for business. For example; sharp legal departments can enforce a sound anti-bribery policy, while rival firms run into swamps.

It can knock down competitors’ patents; handy when so many technology firms are warring over intellectual property. It can smooth takeovers; tricky in any industry under scrutiny by trustbusters…

In the article “Two Leaders in the Corporation of the Future” by Marianne Lepa writes: New research suggests that having a single leader no longer works for the corporation of the future, and that the roles of CEO, CFO, CTO… should be given equal say. The Chief Executive Officer (CEO) as visionary leader is a thing of the past, says Dr. Philip Tulimieri. Dr. Tulimieri believes that the Chief Financial Officer (CFO) should also have equal billing and responsibility for corporate leadership.

Tulimieri says his research suggests that the  distinction between the two roles is blurring and that changes in corporate structure and in society at large indicate that the two roles are merging in many ways. Tulimieri says the forces of globalization have created a confusing and complex set of responsibilities for corporate leaders. The two positions of CEO and CFO while very distinct in duties tend to be recognized now as ‘necessary counterforce’ in the business structure… 

The CEO is the ‘eternal optimist’ leading the way and the CFO is ‘the realist’ being cautious and warning of risk. The two roles, both address the need for growth and responsibility must function as a team rather than adversaries. The CEO-CFO partnership provide the engine for the new-millennium corporation, and serve as a starting point for the new corporate model of ethical behavior, sustainability and true stakeholder value.

In the article “The New Path To the C-Suite” by Boris Groysberg, L. Kevin Kelly, and Bryan MacDonald write:  We know that different times and different circumstances call for different leadership skills. Prior to the early 2000s the typical CFO was a bean counter, responsible mainly for reporting the numbers, measuring performance with integrity and accuracy, and managing the company’s checks-and-balances processes.

CFOs had accounting and financial acumen, as well, as strong quantitative skills but their purview was relatively narrow and confined mostly to their department. The typical CFO was also country-centric, even at firms with an international presence, operating on the theory that regulatory differences made global finance too complicated.

Today, however, regional differences loom larger than ever, and multinationals no longer have the luxury of keeping finance issues within geographical boundaries. As the retired head of finance of one U.S. manufacturer pointed out to us; ‘CFOs now need experience with capital markets, mergers, and information technologies’. The CFOs of the future will operate around the globe, in multiple time zones, and will regularly partner with nonfinancial areas of the business on growth initiatives and international expansion. Thus they will need both a commercial sensibility and a global mind-set.

Whereas, today CFOs are required to develop and implement systems and processes for budgeting and performance metrics, tomorrow they’ll also be required to provide the management team with real-time, operational, and financial data and analyses. They’ll continue to perform the traditional functions of managing the finances, reducing costs, and putting in place the appropriate controls, but strategic thinking will become more important…

Corporate executive leadership can be divided: The positions of CEO, CFO, CLO… while very distinct in duties tend to be recognized now as ‘necessary counter-forces’ in the business structure. The top job has simply become too large, too complex and too demanding for one person.  A CEO-CFO-CLO partnership will provide the engine for this new-millennium corporation, and serve as a starting point for the new corporate model of ethical behavior, sustainability and true stakeholder value.

For the Chief Executive Officer (CEO), a few trends are emerging that are influencing the direction of the role, such as; strong communication, empathy, collaboration, and trust building. As the face of the company, one skill of foremost importance is the ability to elicit public trust. As one executive put it, ‘The C-level person today needs to be more team-oriented, capable of multitasking continuously, leading without rank, and having an open office plan. In other words, a whole new breed of top executive’.

For the Chief Financial Officer (CFO), trends show an active role in talent management, contributing to areas beyond finance, and assuming the role of CEO designate. No longer is the CFO only preoccupied in building credibility for the finance function, he must instill a sense of confidence among employees, customers, partners… It goes without saying that the CFO’s level of understanding of the business has evolved tremendously from what it was a few years ago.

For Chief Legal Officer (CLO), trends show heightened attention to risk management, which includes; safety, security, and reputational risks, which are all central to the senior team’s agenda. The CLO reports directly to CEO, but also functions as high-level advisers to the Board of Directors in matters affecting corporation. Whereas, corporate lawyers were once expected to understand just the rules in ones own country; today the CLO needs to operate across geographic boundaries, and deal with a range of new and evolving challenges in the era of globalization...

The CEO is the moral and ethical leader that bring a sense of optimism and purpose. The CFO is naturally prudent and cautious having developed in an environment of statutory financial information. The CLO is the risk manager and provider of corporate stability. These roles working together, in partnership, is the ‘platform’ for building a successful
enterprise
.

Litigation is Destroying Companies: Abuse of Legal System is Personification of Greed Run Amok…

Frivolous lawsuits are booming in this county. The U.S. has more costs of litigation per person than any other industrialized nation in the world, and it is crippling the economy. ~Jack Kingston

Litigation is inevitable, and in some cases they are probable warranted, but lawsuits are destroying businesses. It doesn’t take much to tie a company in knots with litigation; and the process saps the soul, dispirits, and it’s very expensive. It seldom results in the sort of triumph everyone imagines when it starts. Legal fees, alone, can be crushing and many litigators fail to gauge the cost to their clients as it relates to the potential benefit.

According to JW Howard, litigators approach lawsuits as fixed structure that should be played out in every way the law allows, irrespective of cost or likelihood of success or even if that means destroying the business. Obsessed people can hijack the U.S. legal system: For example, remember that ridiculous lawsuit that litigated for $67 million from a local ‘dry cleaners shop’ for losing pants. Well, the litigator lost the legal suit, but the damage was done and the lawsuit destroyed the business; all over one pair of pants.

A Roper poll reported in the Wall Street Journal showed that 70% agree that liability suits give lawyers more money than they deserve, and 63% agree that some people start frivolous lawsuits because the awards are so big, and there’s so little to lose. About 70% would limit punitive damage awards. By contrast, survey of lawyers and judges reported by the Wall Street Journal found that only 22% viewed the civil justice system negatively, while 77% blamed the media for clogging the courts and the breakdown of the system.

The fact is lawyers are overwhelming in the U.S.  The U.S. has one lawyer for every 265 persons– about 50% of the world’s attorneys (there are 1,143,358 lawyers in the U.S.). The concern is that some not so ethical lawyers inspire panic to promote litigation, while judges’ efforts to resolve cases all too often have resulted in a perverse incentive– causing more cases and more backlog…

In the articleLitigation is Destroying U.S. Companies by Glenn W. Bailey writes: The U.S. civil justice system is hurting business; business is becoming less competitive and jobs are disappearing. What exists is a ‘lawsuit lottery’ that leads to legalized extortion. Lawyers feed on the ‘entitlement generation’ to create panic over products. Attorneys blame the suppliers of products despite, the fact, that warnings on packages are ignored by workers, unions, and employers.

Lawyers wrongly claim that suppliers are overly concerned about profits, more than they are about people. They preach; taking from rich and giving to poor, yet two-thirds of the money goes to attorneys. Opportunities for large fees drive attorneys to recruit more plaintiffs. Trials feed on limiting the plaintiffs’ responsibility for ignoring posted warnings and the employer’s responsibility for not providing a safe workplace or product.

They focus on the supplier and permit the introduction of irrelevant and inflammatory evidence, resulting in verdicts not related to the extent of the plaintiffs’ injury, but the heat of the lawyer’s rhetoric. This inevitably leads to litigation with cases yielding unpredictable, inequitable and arbitrary results. Juries, confronted with essentially the same facts, have awarded damages ranging from zero to millions of dollars! This ‘lottery’ has motivated lawyers to recruit increasing numbers of unimpaired claimants in order to fuel their fee-feeding frenzy…

In the article “The Five Limits of Litigation” by Michael Lee Hanks writes: In the life of most businesses, it’s inevitable that owners will either sue or be sued at some time. Hopefully, these instances will be few, but they are increasingly the case. It’s important for business to understand what is possible with litigation, it is also important to understand the limits of litigation, for example:

  • Litigation reduces predictability in decision-making. Lawsuits place the outcome of a dispute in the hands of lawyers, and the outcome of litigation is unpredictable at best.
  • Litigation places your fate in the hands of persons not familiar with your problems. Lawyers are the main players and they strive to educate and persuade judges and juries about complex matters that are subject to uncertainty and dispute.
  • Litigation impedes efficient problem solving. Operating an ongoing business through a court procedure, such as receivership or bankruptcy, is hellish.
  • Litigation is extremely expensive. Litigation tends to acquire a destiny of its own. It takes-on a momentum which becomes irreversible and moves toward an unpredictable resolution.
  • Litigation destroys relationships. Litigation destroys the relationship between the plaintiff and defendant. It may also require a considerable effort to collect or enforce a judgment, which increases the intensity of the hostility.

In the article “Business Dispute Resolution: Litigate or Mediate” by Jean D. Sifleet writes: In any business, disputes happen. Getting issues resolved, ASAP, is critical, so that parties can limit costs and minimize disruption to their business. Effective dispute resolution can preserve beneficial business relationships. Going to court to resolve a business dispute is a costly, lengthy, and adversarial process that’s unlikely to produce a satisfactory resolution.

So unless the dispute is eligible for ‘small claims’, you are better off using an ‘alternative to litigation’, such as: Mediation: In mediation, a neutral person(s) helps the parties to define the issues in dispute and facilitate the discussion of possible settlement options. Mediation works when both parties want to resolve the dispute.

Another dispute alternative is Arbitration: Arbitration is a more formal process adopting specific rules, such as; American Arbitration Association, International Arbitration Rules, or Chambers of Commerce. Arbitration is used for international contracts with the rules being less formal than litigation. The merits of the dispute are evaluated by independent people who usually have expertise on the subject matter and the resolution is usually binding.

Still another alternative is writing contract dispute resolution provisions into the contract. However, a contract is worthless unless it’s enforceable, and enforcing contracts through the court system for many businesses is unrealistic due to the expense and delays of the court system.

In the article “Introduction to Online Dispute Resolution for Business” by Colin Rule writes: Disputes are a fact of business life, however, with the Internet and virtual businesses, many companies are facing disputes they’ve never dealt with before. In virtual world, transactions take place globally, 24/7, and often between complete strangers. Statistics show that one to three percent of these transactions will go awry.

The online/Internet dispute is relatively new and it can develop between any person and any firm; business, customers, suppliers, partners, regulators, insurers… Companies that do business online will increasingly get entangled in these kinds of disputes. It is obvious that the existing legal system and redress options that are provided in the physical world are not appropriate for the virtual world.  You can’t merely recreate offline judicial mechanisms online and expect them to work, for example a legal system model using; e-judges making e-rulings enforced by e-police running e-jails… just won’t work.

For business litigation in the virtual world other alternatives are required, ones that provide for ‘online business dispute resolution’. There is a growing movement and a consensus is building for the use of such a process. While there is some debate about the mechanics of the process, there is no debate over whether or not an online solution is the best option for redress of disputes on the Internet.

Many international organizations are calling for such an alternative, and they include; OECD, Hague Conference on Private International Law, United Nations, Trans-Atlantic Consumer Dialogue, Better Business Bureau, U.S. Federal Trade Commission, Department of Commerce, European Union, Association for Conflict Resolution, American Bar Association, American Arbitration Association, Global Business Dialogue on E-Commerce, International Chamber of Commerce…

Abusing the legal system for political, social, or greedy ends is fast becoming the U.S.’s favorite pastime. Billions of dollars, millions of jobs, and the survival of legitimate businesses are at stake. Personal injury lawyers are clogging the courts with frivolous lawsuits and unharmed plaintiffs.

There is growing evidence that some personal injury lawyers have teamed-up with so-called medical experts to manufacture abusive ‘junk lawsuits’ propped up by ‘junk science’. Junk science is questionable or misleading information put forth as medical or scientific fact. ‘Junk science’ is medical or scientific claims that are not supported by fact and not validated by others within the scientific and medical community.

These lawsuits erode the credibility and value of expert witnesses, delay, and dilute justice for those who have legitimate claims. It seems like everyday, we read in the news about abuses of our court system, both serious and wacky, and all have serious costs and business consequences. Personal injury lawyers make a living from inventing new ways to sue deep-pockets.

Some lawsuit schemes are so ridiculous that we find ourselves laughing, but the cost of this kind of lawsuit abuse quickly ceases to be funny. All lawsuits, even unsuccessful ones, cost money and the public foots the bill…

If you are faced with litigation involving a business transaction or any aspect of your business, a lawyer can provide assistance and counsel regarding your jurisdiction, court, and possible legal options for the situation. However, for many disputes a business can avoid a complicated and expensive court battle by using, instead, an alternative dispute resolution (ADR) method.

It’s highly unlikely that you will resolve a business dispute with the legal system and satisfy all parties.

 

Business Leadership Needs Radical Change: Thousands of Books, Articles… on Leadership– Yet, Very Few Great Leaders…

  • Myth: Everyone can be a leader–Not true.
  • Myth: People who get to the top are leaders–Not necessarily.
  • Myth: Leaders deliver business results–Not always.
  • Myth: Leaders are great coaches–Rarely.

Inspired leadership is not working in many organizations. Leadership is like a lid or ceiling and organizations will not rise beyond the level that leaders allows, or are capable. According to Mike Myatt, poor leadership cripples businesses, ruins economies, destroys families, loses wars, and can bring the demise of nations. Society has essentially commoditized leadership resulting in a leadership bubble of sorts.

Because leadership has become the latest version of an entitlement program, too many unqualified leaders have been allowed to enter the ranks. When leadership is perceived as little more than a title granting access to a platform for personal gain, rather than a privilege resulting in an opportunity to serve, we’ll continue to find ourselves in a crisis of leadership. Corporate leadership structure needs radical change and true change must be fundamental: Reinventing governance structures, boards of directors and oligarchic public company leadership models.

According to Kelvin Thompson, today’s companies are increasingly complex and global– they need to be managed more as a neural network than as a command-and-control business. The 21st century has already spawned a sizable volcano of daunting new challenges and they represent a permanent change of rhythm for most organizations. This change requires a rethinking of the role and decision-making initiatives for leaders, such as:

  • Broadening the scope of employee freedom by managing less, without sacrificing focus, discipline, and order.
  • Creating an organization where the spirit of shared values and community dominate.

In the article Why Leaders Fail by Mark Sanborn writes: In the recent past, we’ve witnessed the public downfall of leaders from almost every area of endeavor– business, politics, religion, and sports. One day they’re on top of the heap, and the next day the heap is on top of them.  The distance between beloved leader and despised failure is shorter than we think. This shift can occur in several ways.

Often, leaders simply lose sight of what’s important. The laser-like focus that catapulted them to the top disappears, and they become distracted by the trappings of leadership, such as wealth and notoriety.  Leaders are usually distinguished by their ability to ‘think big.’ But when their focus shifts, they suddenly start ‘thinking small’. They micro-manage, get caught up in details better left to others, they become consumed with the trivial and unimportant.

And to make matters worse, this tendency can be exacerbated by an inclination toward perfectionism.  A more subtle leadership derailer is an obsession with ‘doing’ rather than ‘becoming.’  A lack of focus and resulting disorientation typically lead to poor communication. Followers can’t possibly understand a leader’s intent when the leader isn’t sure what it is! And when leaders are unclear about their own purpose, they often hide confusion and uncertainty in ambiguous communication. Leaders at risk often begin to be driven by a fear of failure rather than the desire to succeed.

When driven by fear of failure, leaders are unable to take reasonable risks. They want to do only tried and proven; attempts at innovation– typically a key to initial success– diminish and eventually disappear.  A leader’s credibility is result of two aspects: What they do (competency). Who they are (character). A discrepancy between these two aspects creates an integrity problem. 

The highest principle of leadership is integrity. When integrity ceases to be a leader’s top priority, when a compromise of ethics is rationalized away as necessary for the ‘greater good,’ when achieving results becomes more important than the means to their achievement– that is the moment when a leader steps onto the slippery slop of failure…

In the article “Influential Leadership Styles” by Shrilaws writes: The message is clear, ‘command and control’ leadership is obsolete. A different leadership style, one that depends on ‘influencing’ rather than ‘telling’, is required to deal with current market complexities and fast-paced environmental changes. Traditional leadership worked well in less turbulent times where companies ran on simple departmental lines, and the CEO had time to think, plan, schedule, act…

Communication was straight-forward, markets were predictable and people delivered consistently, but now few businesses run this way. We rarely think or act in isolation in the workplace, we influence and we are influenced by people, both in and out of the organization… In his book, ‘The Unconscious Conspiracy’, Warren Bennis highlights how leaders can positively influence others to bring about change. Interdependence, not hierarchy, is today’s watchword. In fact, ‘organization’ means ‘interdependence’ – with each relying on wide networks of stakeholders.

Today’s leaders work across many boundaries – with globalized business units, partners, suppliers, customers, cultural diversity… A lack of leadership, generally, means the leader has allowed things to remain unchanged and losing relevance.

Successful leaders of change may not always be successful leaders of stability, consolidation, continuity, or thriving leaders in periods of massive disruption. These different conditions require a different style of leadership, which may not necessarily be found in the existing senior management, and thus requiring a change in leadership…

In the article “The Decision-Driven Organization” by Marcia W. Blenko, Michael C. Mankins, and Paul Rogers write:  CEOs tend to believe that company structure is closely tied to performance, so therefore it follows that nearly half of all CEOs reorganize their companies during their first two years on the job.

Study by Bain & Company reports that of 57 reorganizations studied less than one-third saw significant performance improvement. This failure is rooted in a misunderstanding about the link between structure and outcome… In truth, a company’s structure only results in improved performance, if it allows the firm to make key decisions better and faster than the competition. This requires a shift in way we manage organizational change. If there is alignment between structure and decisions, then the organization will work better and performance will improve.

To reorganize around decisions, leaders should follow six steps: Identify their firm’s key decisions; figure out where in the company those decisions should happen; organize the macro-structure based on sources of value; determine how much authority decision makers need; align the rest of the organizational system with that related to decision-making; and help managers acquire the skills they need to make better decisions. The ‘new normal’ means constant change and companies must reinvent themselves, continuously, if they want to survive.

In the article “Two Leaders in the Corporation of the Future” by Marianne Lepa writes: New research suggests that having a single leader no longer works for the corporation of the future, and that the roles of CEO and CFO should be given equal say. The Chief Executive Officer (CEO) as visionary leader is a thing of the past, says Dr. Philip Tulimieri. Dr. Tulimieri believes that the Chief Financial Officer (CFO) should also have equal billing and responsibility for corporate leadership.

Tulimieri says his research suggests that the distinction between the two roles is blurring and that changes in corporate structure and in society at large indicate that the two roles are merging in many ways. Tulimieri says, the forces of globalization have created a confusing and complex set of responsibilities for corporate leaders. The two positions of CEO and CFO while very distinct in duties tend to be recognized now as ‘necessary counterforce’ in the business structure, says Tulimieri.

The CEO is the ‘eternal optimist’ leading the way and the CFO is ‘the realist’ being cautious and warning of risk. The two roles, both address the need for growth and responsibility must function as a team rather than adversaries. A CEO-CFO partnership will provide the engine for this new-millennium corporation, and serve as a starting point for the new corporate model of ethical behavior, sustainability and true stakeholder value.

Intellect is a driver of outstanding CEO performance. Cognitive skills such as big-picture thinking and long-term vision are particularly important. But when calculating the ratio of technical skills, IQ and emotional intelligence (EI), as ingredients of excellent performance; EI proved to be twice as important as the others. ~Daniel Goleman

In the article “Pick A CEO Who Truly Fits The Company” by Nat Stoddard and Claire Wyckoff write: Leadership fit is absolutely crucial, and there are ways you can calculate it. Turnover of CEOs, a prime indicator of wrong leadership, was 50% higher coming into this recession than at the start of the previous one, in 2001.

Several statistics cited in the book ‘The Right Leader: Selecting Executives Who Fit’  likewise indicate that as we entered the current recession, more and more companies were discovering that they didn’t have the right leaders to guide them through normal economic conditions, let alone those we face today. Some 40% of new CEOs are fired or retired, within their first 18 months, and 64% of them never make it to their fourth anniversary on the job.

Surprisingly, the problem is not that leaders can’t do the jobs for which they were hired. On the contrary, everyone in the final slate of candidates for any top leadership position invariably possesses all the abilities, knowledge, skills, experience and personality to do what is needed.

The reason so many of them fail, and are replaced so quickly, is that they don’t fit well enough in the organizations’ cultures or one of the powerful subcultures; to be able to do what is needed in ways that will be accepted by the people they’re supposed to lead. The lack of leadership fit, not a lack of competency or capability, is what causes failure.

According to John Kotter, leadership is a set of processes that creates organizations, in the first place, or adapts them to significantly changing circumstances. Leadership defines what the future should look like, aligns people with that vision, and inspires them to make it happen despite the obstacles.

Management is a process that can keep a complicated system of people and technology running smoothly. The most important aspects of management include; planning, budgeting, organizing, staffing, controlling, and problem solving. This distinction is crucial: Successful organization transformation is 70 to 90% leadership and only 10 to 30% management.

Many organizations, today, don’t have much leadership. Managing change is important, and without competent management, the transformation process can get out of control. But for most organizations, the much bigger challenge is leading change. Only leadership can blast through the many sources of corporate inertia. Only leadership can motivate the actions needed to alter behavior in any significant way. Only leadership can get change to stick by anchoring it in the very culture of an organization

Until the very foundations of leadership alter, businesses will continue to struggle with innovation and employee engagement. We won’t get rid of the stultifying metaphor of the organization-as-one-person (CEO), and where employees are cast in the role of mere ‘hired-hands’. ~ Mitch McCrimmon

Facing Fear Factor in Business: Fear– Paralyzes Decisions, Creates Uncertainty, Kills Businesses… Demystify It…

The only barriers between yourself and a life without limits are the powers you’ve mistakenly given to your doubts and fears. ~Guy Finley

Fear is the biggest obstacle you’ll ever face; it’s detrimental to your business success and your life achievements. Fear is ubiquitous: Fear of failure; fear of embarrassment, fear of success… Demystify fear and you can overcome it. That is, unless you’re too scared to try.

According to Sage Lewis; the four main fears that modern folks run into are: Fear of the unknown (what you’re unfamiliar with). Fear of failure (will you lose money?). Fear of isolation (fear of going against the flow). Fear of looking stupid (self-explanatory). Fear feels bad. It makes your blood pressure go up, your heart rate accelerate, sweat shows up in places you’d rather it didn’t, your mouth goes dry, fingers tremble, the voice quavers and cracks, and your stomach flip-flops.

Repeated fear (stress) causes changes in areas of the brain related to decision-making. Fear distorts decision-making. It’s not just the deciding part of your brain that gets changed by fear. It actually changes your perception. What this means is that fear changes what you think you see. Fear inhibits action. Fear immobilizes. Fear changes the entire decision-making process. Fear creates faulty decisions.

So the fear you feel (of the unfamiliar, of failure, of isolation or of looking stupid) is having an effect on your life and your business. In his book Dave Ramsey’s uses a great example: He said it reminds him of a squirrel that runs in the road in front of a car. The fear of a car bearing down on the squirrel causes them to run one way, then another, then another, all in the street until you hear, ‘blump blump’. It can kill your business!

The challenge is to remove indecision from your life so you can make your decisions and get on with your business. In order to do that you need to find the cause of your indecision and demystify it. Or, like the squirrel, if you don’t know which way to go; the impact on the business can be devastating…

In the articleFear–Your Most Fierce Business Competitor by Clyde Lewis and Stephen Glaros write: Fear clouds your judgment. Fear constricts your blood flow. Fear pushes thoughts out of your cerebral cortex that plays a key role in memory, attention, perceptual awareness, thought, language, and consciousness. I see terrified business owners all the time. They yell. They thrash around. They make irrational decisions.

They forgot all the rational, clear-headed decision-making they had made earlier in their moment of clarity. This is a crucial moment for you and your business. If you start relying on the emotions you are feeling during the process of risk taking you significantly increase your chances of making the wrong choice.  The worst time to make a decision is when you are freaking out. You will undermine your best thoughts and plans if you don’t push yourself through the fear…

In the article What’s Fear Got to Do with Business? by Sage Lewis writes:  Fear can be totally convincing, but the amazing thing is that there is no reality to fear because it is about things that are imaginary. It’s a biological signal to alert your mind and body of approaching danger. It’s about things you think are going to ‘get you’. In modern culture it’s also known as existential anxiety. It causes humans to be anxious about who they are and where they belong.

It has an impact on every facet of life, including your business. You may not be able to sanitize life and eliminate all the discomforts and reversals of fortune. But beware of the fearful things that you’re imagining. They’re not real. When you run into a discomfort, problem, loss, reversal, disaster, you will be able to deal with it. The old adage, ‘don’t borrow trouble’ is more important than ever.

Fear has many faces. Fear’s main tactic is to make illusion seem real. Fear is promoted and encouraged by the culture around you, such as; the news (economy is terrible and everyone is failing), advertisers (no one will love you if you don’t use our product), law enforcement and insurance companies (your car will be stolen if you don’t lock it or you’ll die if you don’t wear a seatbelt), medical (you’ll get diseases if you don’t check for these symptoms)…

It has decision-making repercussions, it locks you into squirrel-cage-type thinking and it has a negative impact on your health. Denial doesn’t help– it only perpetuates the stress.  As Henry Ford said, “Whether you think you can or you can’t, you’re right!” Your fears might be all that’s stopping you from taking the steps for thinking creatively and reaching your goals.

In the article Feel the Fear and Go for It! by AMS writes:  Fear can make you crazy, but it can also drive you to great heights. When fear is controlled it can work for you. When fear controls you it can be devastating. Fear can affect your business in many ways. Fear of rejection keeps you from making sales calls and marketing. Fear of losing an account keeps you from staying in touch. Fear of sharing with people what you do can keep you from getting important referrals. Fear of being blamed for a decision or being wrong keeps you from making important decisions that can positively affect your business and ultimately your life.

Many people live their lives in horrible situations because of the fear of change or fear of the unknown. They become paralyzed by it. Let fear take you to the next level. Let it motivate and challenge you. Harness your fear and let it work to your advantage. Even if you feel terrified move your feet and take that step forward. Don’t wait to feel comfortable to take action.  Fear can be your ally or it can be your enemy. Survive your fear and keep moving forward….

In the article Overcoming Fear in Business by Bradford Shimp writes:  In business, fear can keep you from growing and it can keep a great idea locked up. Many potential great businesses never even get started because of fear. Whether it is the fear of rejection or general fear of failure, ideas are routinely kicked to the curb before they even have a chance because of fear. We allow fear, an intangible, to hold us back.

We must change our focus. Instead of thinking of how we might fail, we should think more on how we might succeed. Even a little chance for success should be enough to spur us on. In my experience, only one thing cures fear; doing the thing you fear is how you overcome fear. When you do something you were afraid to do and realize that you are fine, it’s a little easier to do it the next time. If you can learn to embrace the thrill of fear, then you may be positioning yourself for great success.

Action is the water on this fire. Think about the worse things that can happen. You might look bad or even feel stupid, but if you never try or never take the risk to grow your business (or to launch it), you will live in frustration and well under the level of your potential. Don’t let fear hold you back.

In the article Using Stories to Overcome Fear by Peter Guber writes: Fear can paralyze or catalyze an organization. Leaders’ who embrace fear can effectively manage the fears and success of their enterprise. Leaders must be story-tellers making fear an ally, not an adversary, and ultimately conveying the message that ‘fear’ is just; False Evidence Appearing Real’. I’ve learned to tell stories that turn fear into a powerful motivator.

Good leaders use stories, frequently. They tell stories that cast them and their organizations as agents of change, rather than defenders of the status quo. As a leader, you cannot eliminate fear or abolish uncertainty or avoid the prospect of change for your company. But you can leverage these emotional navigational stakes to your greatest advantage by telling a purposeful story to all your stakeholders. 

So what exactly makes an effective story? A story is a vehicle that puts facts into an emotional context. The information in a story doesn’t just sit there as it would in a list or data dump. Instead, it’s built to create suspense and engage your listener in its call to action. Facts and figures are memorable to computers, not to people.

Research on memory conclusively shows that all the critical details, data, and analytics, are more effectively emotionalized and metabolized by the listener when they’re embedded in a story, and they become significantly more actionable. This is what I call emotional transportation. Your story and its supporting facts transport the people who hear them to carry your story forward. Good stories, well told, turn people into apostles and advocates of your brand, service, mission or cause…

Avoiding what we fear only strengthens the fear and makes us less prepared to deal with it: Confront fear and over-time it often goes away, demystify it. According to Margie Clayman; fear is not always a horror movie kind of fear. It’s not always voiced like the never-ending screams of Shelley Duvall in ‘The Shining’ movie. Sometimes, fear is just a very quiet seemingly rational list of reasons. Sometimes, fear is dressed in a fancy three-piece suit with lots of pie graphs showing you why you should not proceed.

Fear comes in all sorts of forms and shapes. However, once fear is accepted as reality it takes rare and creative leadership to reverse it. The upside of fear is that it can be harnessed and used as a powerful motivator to bring people to act. Leaders must have a clear, viable plan to minimize tension and take bold action to challenge and reduce fear.

Corporate leadership must rise to this unique challenge, and transform fears into opportunities. Recall the famous quotes: The only thing we have to fear is fear without a plan… or; The only thing to fear is fear itself.

The inches we need to be successful right now are everywhere, and it’s up to us, and only us, to fight for them. And when we add up those inches, it will make the difference between winning and losing. Find and keep the people who will fight for those inches with you. That’s a team. Either you win as a team or you all lose as individuals. But fear will not help you win at all. ~ Any Given Sunday (movie)

Jugaad Innovation…Think Frugal, Be Flexible, Drive Growth: India Gutsy Art of Improvising Ingenious Solutions…

Jugaad Innovation is about: Less, but better… it concentrates on the essential aspects and not burdened with non-essentials… back to purity, back to simplicity.

Jugaad is a colloquial Hindi word that roughly translates as ‘an innovative fix; an improvised solution born from ingenuity and cleverness’. Jugaad innovation is, quite simply, a unique way of thinking and acting in response to challenges; it is the gutsy art of spotting opportunities in the most adverse circumstances and resourcefully improvising solutions using simple means.

Jugaad is about doing more with less.  The entrepreneurial spirit of Jugaad is not limited to India. It is widely practiced in other emerging economies such as China and Brazil, where entrepreneurs are also pursuing growth in difficult circumstances. Brazilians have their own word for this approach ‘gambiarra’, and Chinese call it ‘zizhu chuangxin’, and Kenyans refer to it as ‘jua kali’. The French have the term ‘Systeme D’, and the U.S. has  ‘yankee ingenuity’.  

Jugaad was once a big part of Western innovation and it was the flexible mindset of innovators that catalyzed growth during the Industrial Revolution. In the twentieth century, as North American and European economies expanded, large corporations began to institutionalize their innovation capabilities, creating dedicated R&D departments and standardizing the business processes needed to take their ideas to market.

They focused on managing innovation, just as they managed any other business activity. This industrialization of the creative process led to a structured approach to innovation with the following key characteristics: big budgets, standardized business processes, and controlled access to knowledge. This approach delivers ‘more with more’.

According to Booz & Company, the three industries that spend the most on R&D; computing and electronics, healthcare, and automotive, struggle to generate a steady stream of ground breaking inventions, despite their hefty R&D investments. Hence there is a weak correlation between how much money a firm spends on R&D and how well it performs in terms of developing and marketing products that generate a significant financial return. To put it bluntly, money can’t buy innovation. Jugaad is a wake-up call for mature companies with over-developed processes for innovation…

In the articleJugaad Innovation: Think Frugal, Be Flexible, Generate Breakthrough Growth” by Navi Radjou, Jaideep Prabhu, & Simone Ahuja write:  The processes, systems, and mindsets that underpin the structured approach to innovation in most Western firms are now failing. Today’s highly complex and turbulent business environment demands a new approach to innovation and growth– one that is frugal, flexible, and participative.

Many Western firms’ structured approach to innovation is ill-equipped to help them innovate faster, better, and cheaper as they seek to cope with five major components of complexity; scarcity, diversity, interconnectivity, velocity, and breakneck globalization. The basic principles of Jugaad can be distilled into six guiding principles, which anchor the six practices of highly effective innovators in complex settings like emerging economies.

Collectively, these six principles of Jugaad help drive resilience, frugality, adaptability, simplicity, inclusively, empathy, and passion, all of which are essential to compete and win in a complex world. Adopting these principles could also help Western firms innovate and grow in a highly volatile, hypercompetitive environment. The six principles are:

  • Seek opportunity in adversity.
  • Do more with less.
  • Think and act flexibly.
  • Keep it simple.
  • Include the margin.
  • Follow your heart.

In the article “India’s Next Global Export: Innovation” by Reena Jana writes: Jugaad, India’s improvisational style of invention focuses on being fast and cheap– attributes just right for these times. A Hindi slang word, Jugaad (pronounced ‘joo-gaardh’) translates to an improvisational style of innovation that’s driven by scarce resources and attention to a customer’s immediate needs, not their lifestyle wants.

Like previous management concepts, Indian-style innovation could be a fad. Moreover, because Jugaad essentially means inexpensive invention on the fly, it can imply cutting corners, disregarding safety, or providing shoddy service. Jugaad means; ‘somehow get it done, even if it involves corruption’, cautions M.S. Krishnan, a Ross business school professor. ‘Companies have to be careful. They must pursue Jugaad with regulations and ethics in mind’. Nonetheless, Jugaad seems aligned with the times. Recession-slammed corporations no longer have money to burn on R&D.

Likewise, consumers are trading down to good-enough products and services. Meantime, the Indian economy continues to plow ahead despite the global recession suggesting its executives have a winning strategy.  Indian engineers have long known how to invent with a whole alphabet soup of options that work, are cheap, and can be rolled out instantly… Jugaad.

In the article “Jugaad: Lessons in Frugal Innovation” by Mitali Sharma writes: What can companies in the developed world learn from innovators who make irrigation pumps from bicycles or solar ovens from old suitcases? Quite a bit, as it turns out. Frugal innovation and Jugaad principles are especially important in today’s economy, for two reasons.

First, corporations adversely affected by the slow economy lack resources for R&D. They need an alternate approach and Jugaad inspires offerings that are economical for the consumer and the supplier, without having to sacrifice margin.

Second, the practice has long been considered an ‘antidote’ to the complexity of India, a country of perpetually shifting cultures and profound scarcity. Now the same principles can help address issues faced by multinationals whose capacity for breakthroughs has been stifled by rigid internal processes, long R&D cycles, and above all else, multiple layers of complexity.

This alternate approach to innovation is an excellent disruptor of rigid legacy processes because it democratizes innovation, stripping away extraneous features and processes, while opening the door to ideas from unconventional sources. The result is a clean slate, and a chance to re-orient innovation around the customer.

In the article “Jugaad – A Model for Innovation” by Vijay Govindarajan writes:  There is always a danger when you come up with concepts like Jugaad. It could be mistaken as ‘chalta hai’ or ‘everything goes’. But Jugaad, at the heart, is about a new model of innovation, which is based on constraints. Jugaad really means solving a customer problem in the most innovative way when your resources are constrained.

There are three keys to Jugaad: One, for jugaad to really work, start by understanding the customer problem. Talk to customers, understand what they really want.

Two, for a zero-based solution approach, forget about what exists now. Take a clean sheet of paper; start with the customer’s problem, and ask, ‘How do I solve it?’

Three, focus on execution. Innovation is not creativity. Creativity is about the big idea. Innovation is about executing it, and making money out of your idea. It’s about making the right resource allocations, building the right team, and getting the product to the market.

In the article “Monday Morning Motivation: Jugaad – Art of Frugal Innovation by Cherian Joseph writes: Adjustment is a way of life in India. Systems are broken and they do not, for the most part, get fixed. Instead, ingenious attempts are made to circumvent the broken system, for two reasons: the painful ordeal of battling government bureaucracy, and the frugalness that is in the DNA of most Indians.

Everyone is scrambling to live the best possible life with the least possible resources. Life seems like a constant compromise. Interestingly, this situation has resulted in a new class of innovation– a class not led by scientists using expensive resources, but one led by every housewife, street hawker, farmer, transporter or trader. Here innovation is led by creativity, common sense and, more importantly, the need to survive.

There is even a colloquial name for this class of innovation for adjustment– Jugaad… Jugaad means a workaround solution with limited resources. Management gurus now call this ‘frugal innovation.’ The power of Jugaad is amplified in the rural areas where resources are scarcer and the needs more pressing.

The concept of Jugaad is finding its way into large-scale industries in India as well. Despite the positives, I am still wary. I noticed how all these innovations are in some way a result of the need to circumvent the core issue of lack of access to basic amenities like electricity, water, transportation and agricultural tools. The art of Jugaad is well placed for an India where there is so much hardship in securing daily needs for so many.

The overwhelming force of life here that drives people to create their own solutions to intractable problems is inspiring. This is evidence of the resiliency of the human spirit, and if there is anywhere that can come up with its own innovative solutions, it is India. What will be truly ingenious is to see is how we leverage our frugal innovation strength to attack core issues and not circumvent them.

Jugaad is a ‘bottom up’ innovation approach that provides organizations in both emerging and developed economies the key capabilities they need to succeed in a hypercompetitive and fast-moving world: frugality, inclusivity, collaboration, and adaptability. Highly resource-constrained and chaotic environment inspires Jugaad innovators; i.e., entrepreneurs and corporations who practice Jugaad to develop market-relevant products and services that are inherently affordable and sustainable.

Rather than reinventing the wheel or splurging on expensive R&D projects, they develop new solutions by building upon existing infrastructure and assets, as well as by recombining existing solutions.  

Jugaad innovators recognize that consumers in emerging markets are low earners, but high yearners. As such, Jugaad innovators attempt to meet customers’ high aspirations by developing solutions that are not only affordable, but that also deliver superior value. In summary, they strive to deliver more (value) for less (cost)…

The traditional approach (structured R&D projects) to innovation has become too rigid, insular, and bloated… it consumes a lot of resources and makes a lot of noise but produces little of significance.

The Proust Index: The Global Economic Time Machine… Lost Time in Economic Value or Index of Collective Misery…

A big part of what happened this decade was that people engaged in excessively risky behavior without realizing the risks associated… It’s true not just among consumers but among regulators, financial institutions, lenders… everyone. ~ Karen Dynan

The global economic crisis has gotten so bad that we need to invoke classic literature to make sense of it. The prominent novel ‘In Search of Lost Time’ or ‘Remembrance of Things Past’ by Marcel Proust was published in France between 1913 and 1927. The novel has had great influence on twentieth-century literature, whether because writers have sought to emulate it, or attempted to parody and discredit some of its traits.

The article ‘Proust Index: In Search of Lost Time’, which appeared in a recent issue of The Economist, assesses how much economic progress has been undone by the recent economic crisis, and constructs a measure of the lost time in economic value for countries that were hard-hit. According to this article, many global economies have gone backwards, by a decade or more, as a result of the recent economic crisis.

There are 14 advanced countries that have gone back in time in value, as measured by the nominal GDP indicator; the group includes, the U.S. and eight members of the European Union (EU), all of which have to repay their debts from an eroded tax base. Measured by real GDP per person, a third of the 184 countries that the IMF collects data for are poorer than they were in 2007. These 61 countries have each lost at least five years of value.

According to the OECD, which  publishes wage data for 25 rich countries, found that real wages in ten of these countries was lower in 2010 than in previous years, with an average of four years lost in value. However, it’s expected that economic growth, over time, will reset the economic clock providing new jobs, and the resources to recover. But for some workers, the time lost in value during periods of unemployment will never be recovered.

Other views, in contrast, say that although the idea of a Proust Index is intriguing, there are three main issues with it: First, it proposes the idea that there is a goal for economic value that we are aiming to reach, within a certain time, and because of the crisis we’ve lost some of that time. However, it’s unclear that there is such a final GDP value (goal) that we are all striving to reach by a specific time.  

Second, and perhaps more importantly, several of the indices are built based on inflated prices (e.g. stocks, housing…) during a time when there were signs of potential economic bubbles. Building an index on how far down we’ve come from the peak of a bubble does not seem like sound economic thinking.

Finally, the Proust Index is more than anything, an index of collective misery– it measures how we have retreated from a peak, on average. However, it’s not the ‘average’ that is important, but the long tail of people who were ‘below the average’ and they are set back even more. Addressing that would be more relevant for policy makers…

In the article Can Literature Help Explain Economics?” by Bruce writes: Great literature is brilliant at exploring the human condition through beautiful language. However, its usefulness with regards to economics might well be limited. For example, it may be indisputable that Marcel Proust changed the face of world literature with ‘In Search of Lost Time’. Nevertheless, the utility of The Economist publishing a ‘Proust Index’ is open to question. 

If its purpose is to illustrate how much time has been lost in value because of the recent financial crisis, then that’s fine. However, it’s unclear on what lessons can be learned from the index, and how it can be applied as a useful tool. The nostalgic writing of Proust captures a segment of French social life in very poetic prose, whereas, this Proust Index merely highlights the fact that major economies have received a massive economic setback.

One problem with the Proust Index is that it is not possible to think that economic growth in the years before the economic crisis was based on stable foundations. Hence, it is not really possible to imagine a different economic history without recession because things could not have gone smoothly forward.

Defenders of the Proust Index might say that it highlights contrasting economic performance between countries. However, such disparities can be examined in less awkward ways. The real task for policymakers is to look forward.

In the article “Europe in the Crisis, in Search of Lost Time” by Marco Fortis writes: The crisis cannot be measured only using the GDP. There are other, equally crucial, variables that are better indicators than the GDP, which can more fully explain the social hardship generated by the recession. For example, the decrease of consumption or wealth of families, or the increase in the unemployment rate.

In my report at the Edison Foundation, I illustrated very clearly that the rate of unemployment and the decrease in the wealth of families, suffered much more from the economic crisis than appeared from the simple GDP data. Now,

The Economist with its article has created an index, ironically dubbed ‘The Proust Index’ (In Search of Lost Time), that measure seven indicators of economic health, which fall into three broad categories. Household wealth and its main components, financial-asset prices and property prices, are in the first group.

Measures of annual output and private consumption are in the second category. Real wages and unemployment make up the third. A simple average of how much time has been lost in each of the categories produces the overall measure. This all very good but, unfortunately,  the index doesn’t solve any problems or make us feel any better.

In the article “Is Your Business Good at Doing Business?” by Jonathan Wilson writes: The Economist has recently published ‘The Proust Index’, which uses seven economic indicators to measure time lost in economic progress.  While critics of the index argue about what constitutes progress or the usefulness of the indicators, the fact remains that the self-serving behavior of corporations brings about a tremendous destruction of value. 

From 2008 to the present, the ‘Proust Index’ says, that the U.S. has regressed ten years (i.e. the average of the seven indicators places it back to where it was in 2001).  The UK has regressed eight years, Greece has regressed twelve, and so on for other countries. Some key triggers that contributed to the economic crisis were corporations (e.g., Lehman…) that self-destructed as a result of their self-interest behavior and destroyed value.

If the corporation wishes to create value, it must serve the needs of all its stakeholders including; customers, employees, shareholders, and by extension being socially responsible for the world at large.  Anything else, so the numbers tell us, will bring value destruction. It is my observation that whenever social responsibility is a struggle for business, it is precisely because we have falsely separated the task of the corporation from the task of being human.  We have identified social responsibility as something to be considered as secondary to the pursuit of profits.

Milton Friedman’s now famous argument that ‘the social responsibility of business is to increase its profits’ is specious precisely because it divorces from profitability the very thing that drives it: the creation of value. Value increases, I believe, when our products and services are not just socially responsible but socially creative, and in three specific ways:

  • Truly improves the life condition and experience of the customer, rather than pander to the human tendency to take the shortest cut to gratification.
  • Manifests the very best we have to offer from within the insights, abilities and resources of our companies.
  • Accounts for their impact on the customer and the customer’s social and environmental context.

In the articleAughts Were a Lost Decade for U.S. Economy, Workers by Neil Irwin writes: For most of the past 70 years, the U.S. economy has grown at a steady clip, generating perpetually higher incomes and wealth for U.S. households. But since 2000, the story is starkly different.  The past decade was the worst for the U.S. economy in modern times, a sharp reversal from a long period of prosperity. This is leading economists and policymakers to fundamentally rethink the underpinnings of the nation’s growth.

No previous decade going back to the 1940s had job growth of less than 20%. Economic output rose at its slowest rate of any decade since the 1930s as well.  Middle-income households made less in 2008, when adjusted for inflation, than they did in 1999, and the number is sure to have declined further during a difficult 2009.  This was the first business cycle where a working-age household ended up worse at the end of it than the beginning, and this is in spite of substantial growth in productivity, which should have been able to improve everyone’s well-being, said Lawrence Mishel.

The first decade of the new century was an experiment in what happens when an economy comes to rely heavily on borrowed money. The experiment has ended badly.  The economic crisis that hit the world economy five years ago still has a huge impact on today’s economy. The measure of lost time in economic value, for hard-hit countries as a result of this crisis, constructed by The Economist indicates that many countries’ economic time-clocks have been rewound, and in the most serious case, for over twelve years.

The Economist time-clock uses seven indicators of economic health, which fall into three broad categories. The first group includes: household wealth, which is composed of financial asset prices and property prices. The second group includes: annual output and private consumption. The third includes: real wages and unemployment.  Economic loss is evident in stock market and house prices, even though some indicators, one is nominal GDP, are showing a sign of recovery, but very slow.

Lastly, the labor-market indicators show that real wages were lower and unemployment too is at its worst for hard-hit countries, though the situation of unemployment varies. Calculating how many years have been rewound according to the economic clock is very effective in delivering the message that for some, the time lost to the crisis will never be recovered; and even in the countries that are recovering, it will take a very long period of time to fully recover…

Consider the huge and rising debt levels in the U.S., and the very limited extent to which de-leveraging has taken place both in household and government sectors, it would be very nice to see a few years of sustained economic growth.

The problem is that we mismanaged the macro-economy, and that got us in big trouble… The big bad thing that happened was that in the U.S. and parts of Europe, the housing bubbles got out of control. That came back to haunt us big-time. ~ Nariman Behravesh

Execution Trumps Strategy: Strategy is Important but Execution Drives Results… It’s a Bit of Chicken vs. Egg Debate…

Strategy is important, very important, a necessary component for success, but strategy without execution is stagnant — nothing happens. Execute! Get your people to execute! Execution trumps strategy! ~ Sam Geist

Execution trumps strategy: This is about the relative importance of an organization’s ‘strategy’ versus ‘execution’, and at minimal it’s a bit of the chicken-and-egg debate. According to mjfern.com; the claim that strategy is more important than execution, or vice-versa, is puzzling because the two concepts are deeply intertwined. Without a strategy, execution is simply a series of ad hoc activities and initiatives.

Without execution, strategy is simply thoughtful reflection about a business situation. Put simply, to create and monetize customer value– that is, to succeed financially in a market-based economy– a business or venture must develop an effective strategy and execute-on-the-strategy. Strategy and execution are intertwined and iterative, and both are equally important for achieving business success.

According to the Chasm Group; going from strategy to results is about execution, alignment, buy-in, partnering, and shared accountability.   Focus on developing; executable plans, executable positioning, executable go-to-market programs, and executable product roadmaps, which are rooted in the brand of choice drivers.

Executable means cohesive; getting everyone on the same page with the same level of commitment. It means processes and milestones with specific and tangible deliverables. It goes well beyond fanciful visions and the game-changer platitudes. Strategy is great, but fully embracing the ‘top pain point’ is the imperative, and that means: Translating strategy into executables and translating strategy into results…

In the articleEngaging People to Deliver Results by Rich Berens, Jim Haudan, and Katie Outcalt write: The execution of strategy is the most important factor in delivering results. We have heard about importance of concise vision statements, focused strategies, core competence… but, what is it that really drives sustained business results? Studies by Ernst & Young tell us that investors believe the ‘execution of strategy’ is more essential than market position, innovation, or even the quality of strategy itself! We see this play out time-and-time again.

In the book ‘Execution’ by Larry Bossidy and Ram Charan they say that strategy is “no longer an intellectual challenge… you can rent any strategy you want from a consulting firm.” Strategy on paper cannot be the prime differentiator. To deliver results, we must find a way to give strategy a life beyond the paper on which it was written. However, most leaders devote their energy to the intellectual aspects of the strategy and then delegate its execution to others.

This sends a powerful and precarious message. By checking the ‘box’, their role in crafting the strategy is complete; leaders tacitly proclaim that the quality of the ‘strategy trumps its execution’. And so, it becomes clear why 90% of strategies are not delivering. People are the key to executing strategies.

Bossidy and Charan state that the “heart of execution lies in three core processes: the people process, the strategy process, and the operations process.” Deploying strategy is all about creating connections… By building critical connections, people at all levels understand the drivers of change and are empowered to own and execute the strategic response…

Quote by Tom Peters: I do not denigrate the usefulness of a thoughtful strategy. It’s just that it is…  Crystal clear (to me!) that strategy is in fact unequivocally subordinate to Execution Excellence/Execution Mania/ Bias for Action. Yep. That pretty well sums it up. You can have the best strategy, you can even frame it and put it up on the wall, but if you’re not executing…it’s just artwork.

In the article What’s More Important: Strategy or Execution? by Steve Tobak writes:  This is an age-old question. It’s easy to say that companies need to do both, but there are times when one ‘strategy’ or ‘execution’ is more critical than the other. Knowing which one to focus-on, at a particular time, is the key. Here are a few examples of how it works … and doesn’t work: When HP hired Carly Fiorina to take the company forward, they truly believed the company needed a bold new direction and new strategy to get there.

They thought the company had lost its way and needed a ‘rock star’ leader to show the company ‘the path’. Seven years later Fiorina was out and HP hired a new CEO, Mark Hurd, and he managed to pull off an effective turnaround. Sure there was some strategy, but he did it
primarily with basic management blocking and tackling (execution). He did it with no-nonsense discipline, by wringing out expenses and improving efficiency, and by putting the right people in key decision-making roles and empowering them to do what it takes to improve operating results.

On the other hand, companies sometimes need new strategy. IBM was getting ready to split itself into pieces when Lou Gerstner showed up. Gerstner transitioned IBM from big iron to IT services, a gut-wrenching strategy change for a company of that size. Of course, there was a great deal of execution needed to accomplish that feat– changing ‘Big Blue’s’ inertia alone was a gargantuan task. But at the core of the turnaround was a necessary change in direction and strategy. 

Now, let’s look at a few  famous corporate failures: Digital Equipment, De Lorean, Commodore, Polaroid, Sharper Image… It’s hard to argue that these companies flopped because they failed to execute. They failed because of failed strategy. Of course, I can argue that all the best run companies focus on both strategy and execution. Competent CEOs recognize the need for both and have processes for both.

However, there are times when either strategy or execution is indeed more critical than the other. Recognizing those times and knowing which one to focus-on is a critical skill that few managers seem to possess. And that’s the main reason why even great companies sometimes fail to overcome significant hurdles.

In the article Strategy or Execution…Which Matters Most? by Andrew Houston writes: An average strategy that is well executed will beat a great strategy poorly executed; every time. So it goes without saying that execution is key to realizing the value in your strategy, but what does this say about setting strategy? Does this mean that strategy is not as important as execution?

The danger in the above logic is that organizations can rush or diminish the importance of setting strategy, in order to focus on execution, and risk having a terrible strategy–well executed. Strategy setting requires evaluating across multiple options, permutations, paths… to determine the optimal way to reach the goal.

Often organizations skip, rush, and not taking the time to think through the different options and end-up with a strategy that is sub-optimal… or just terrible. I am a strong believer in spending the time to establish the very best strategy, then execute (and execute well). So, which matters most: Strategy or execution? In fact, both matter equally.

Quote by Paul Harris: Great execution trumps everything: Strategy is important, but without great execution you will never really understand if your strategy is right. Execution connects you to customers, validates your strategic thinking and provides the fuel for growth.

In the article “Culture Trumps Strategy and Drives Every Tactic’s Execution” by @daylife writes:  Amateurs talk strategy, professionals focus on tactics, and superstars concentrate on culture.  Superstars focus on culture because a company’s culture will determine if the company will successfully execute its strategy and tactics. A company’s culture is a statement of its values that influences all actions and every decision associated with the execution of strategies and tactics.

Company culture isn’t group think, as much as, it’s the identification of valued behaviors and common beliefs. Many successful business people believe that culture is the basis of everything their employees do. If you create the right culture, it can enable you to succeed even when strategies flail and tactics fail. Cultural values must be specific and describe the behavior and/or goals of the organization within the context of broad principles.

Cultural values must be definitive and result oriented to be useful: Think ‘make’, ‘achieve’, ‘deliver’… rather than ‘demonstrate’, ‘show’, ‘lead’… Ultimately, your company’s culture will influence every element of strategy and every tactic executed by the team, on a daily basis. Without a supporting culture, strategy and tactics are somewhat meaningless and execution is problematic…

Strategy and execution is like architecture and construction: They are equally essential and wholly interdependent. One cannot fulfill one without the other. Bad blueprints and good construction has the same outcome as good blueprints and bad construction: A flawed and dangerous structure.

According to Performance Management: Both strategy formulation and execution have challenges and difficulties, however, execution demands more sustained commitment from leadership, than does formulating strategy. Also, an organization’s deficiencies in execution capability will actually bias, disable and dilute the quality of strategy formulation.

An article in the Wall Street Journal declared ‘Strategic Plans Lose Favor’: It’s easy to jump on the bandwagon and declare that in today’s volatile and uncertain world, strategic planning is irrelevant. However, before we discard strategy lets back-up; maybe the problem is not strategic planning itself, but the way in which we apply the technique.

As Michael Porter, commented: Strategy is a word that gets used in so many ways with so many meanings that it can end up being meaningless.” The fact is that strategy is more important than ever. Strategy is much about synchronization of the organization. The basic accomplishment of having everyone singing from one sheet of music creates value and efficiency. Research has shown that excellent execution of an average strategy trumps average execution of a good strategy every time. The key to sustainable competitive advantage, however, is doing both well.

Strategy should be more than a common sheet of music; it should be a classical score played flawlessly by a talented symphony under the guide of an accomplished maestro. As the conductor leads the orchestra, empowering employees doesn’t mean an absence of leadership; but the essence of leadership.

Reacting nimbly, in real-time, is not the death of strategy, but the ideal application of it. In times of uncertainty– more than ever– innovative strategy not only matters but it’s essential, and when combined with great execution the outcome is outstanding success…

At end of the day what matters is the strength and usefulness of what has been built, not how elegant was the blueprint. ~ Steven Schroeder