Post No.: 0880
There’s always competition, hence there’s always change, which requires you to periodically adapt. Some of the biggest companies in history have disappeared because they didn’t respond to changing markets – including political, wider economic, as well as technological change.
So don’t ignore reality or avoid necessary action. What made you successful in the past mightn’t keep you successful in the future. (This applies to our own individual skill sets too – we need to keep up our personal development.)
It’s not always straightforward however. A culture of continuous product and manufacturing improvement and evolution sounds great, yet if your head never looks up at the bigger picture, you might miss the bigger revolution that’s required for your business. Or what makes you agile as a small business may work against what makes you efficient as a large business (hence don’t force a big business structure, bureaucracy and culture onto a small business you’ve just acquired). Likewise, decentralisation enhances managerial autonomy to react fast to opportunities and threats, but centralisation enhances integration and perceived fairness. You may also want employees who think identically to push in the same direction, but diversity of thought and disagreements combat groupthink. Or ‘breaking the rules’ can be a sign of innovation, yet we still must care about what’s ethical, legal and safe.
These are conundrums that business leaders must navigate, and you’ll receive little sympathy if you complain about the stress! There isn’t always one best way of doing things. Like the way the most knowledgeable don’t always get listened to, the nicest don’t always easily find love, or the hardest-working don’t always succeed – the best technology doesn’t always win on sales (to the lament of engineers) because there are other points of differentiation that customers consider, like better user-centred design, what’s considered trendier, and of course value. Post No.: 0807 touched upon better product design.
You should therefore play to your core competencies or strengths. Do a ‘value chain analysis’ – if you’re fabulous at designing and marketing shoes but not at manufacturing, logistics or retail then focus on the former and outsource the latter to businesses whose core competencies are there (without ending up being dependent on them or surrendering your technologies or knowhow to them, hence there are tradeoffs that must be considered and risks and partnership relationships that must be carefully managed, perhaps by having multiple suppliers so that all your eggs aren’t in one basket). You cannot be the best at everything so avoid complacency or arrogance, which is often worse than ignorance or not knowing something in the first place. And don’t aim to be the best at everything either – you don’t have to in order to be successful. You don’t want your focus being severely diluted anyway. A core competency is valuable if people are willing to pay you enough to make a profit from it, is unique and hard to imitate or substitute within the industry, and can be leveraged to create fur-ther pawesome business opportunities. (An example of the last point is Amazon opening its AWS cloud service for other clients too, or of course eventually selling almost everything and not just books.)
Beware because the value can migrate too, like the prime location of a restaurant was formerly critical but nowadays there are numerous ghost kitchens in cheaper locations that solely serve the delivery market. This also shows us that our competitors aren’t just other identical businesses. (On an individual level, could your skills become less valuable tomorrow, like due to the rise of AI and automation?) The assumption that the past always predicts the future is flawed. Knowing that change is constant allows you to anticipate market disruption, plan to shore up your competencies, and even get ahead of the competition.
Being large definitely has its advantages for survival but no business is destined to last forever, including giant household-name corporations. Being large and international exposes you to almost every global event. The formula for growth isn’t infinite either – you make something, then you sell it, and you can sell the same thing to new customers and/or sell new things to existing customers, but eventually you’ll have reached every customer globally who wants your product or you’ll venture into industries where you don’t have an inherent advantage. And you’ll start to compete merely on price, which may result in culling staff, concentrating on stock buybacks and desperate cost-cutting measures to boost the earnings per share or other proxy metrics of success, which means you’ll lose top talent and possibly enter a downward spiral.
Business shouldn’t be personal when it comes to one’s competitors – you can make some terrible decisions because you’re obsessed with denigrating their products or vowing to never do what they’re doing simply because you personally despise them. We therefore need the intellectual honesty to realise the way things are, not the way we wish they were. When the facts change, change with them. Woof!
Bad leaders also dismiss opinions, or even facts, from inside or outside the organisation (e.g. employees, customers, suppliers) that counter the party line – they don’t want to know or learn about what’s not going right and would rather shoot the messenger. Riding on a crest of success with a culture of unwavering positive thinking can often blind us to the future challenges because of the belief that ‘we’ve got it all figured out so we don’t need to change’.
The customer or anyone else isn’t always right (e.g. they might demand something unsafe – whereby quality and especially safety and ethical integrity must never be abandoned, which requires good oversight and asking plenty of questions). It’d however be wrong to assume they’re wrong as your initial reaction to criticism – this creates groupthink and encourages everyone to not challenge their bosses. So encourage debate. Don’t ignore it if the reports are bad. Own up to what went wrong and desire to solve the situation, learn from the mistakes/failures and ensure they don’t repeat. The organisational culture matters. (You should query the culture of an organisation as a jobseeker too.)
Look for every opportunity to elicit honest direct feedback – it could just take a few seconds asking someone as you pass by. And to elicit genuine feedback, ask, “What are a couple of things I could’ve done better from x?” instead of, “Did you think I did well?” and hear them out and ask follow-up questions if required. Untap everyone’s expertise. If you find a pattern from the people you ask then you should consider acting upon the feedback.
And reciprocate on giving feedback. If it’s not a formal feedback-sharing setting like an after-action review then ask, “Can I have permission to give you feedback?” to disarm any defensiveness, then firstly state something you specifically liked.
Seek feedback from all levels of your organisation, not just senior staff. Bring your curiosity to work every day! Listen to what others are saying even when you have something on your mind or you’re itching to speak. Record the good ideas generated by others and act on them.
So promote a culture of open feedback and learning. This requires you to have a degree of genuine self-confidence, as opposed to arrogance – to listen to and accept criticism with grace. It’ll improve your credibility. It’s often said that ‘culture eats strategy for lunch’ because no matter how amazing your ideas are, it’s the people in your organisation who’ll bring them to life. So understanding human psychology will go a long way towards your success. These ‘soft skills’ are usually the hardest to get right but the most valuable to. The right, listening, learning and supportive culture doesn’t just automatically happen though – it needs to be worked at. People who believe they know it all don’t make good listeners. And people who don’t listen well will only have their own limited knowledge to solve problems.
Internal competition shouldn’t be a case of ‘warring tribes’ where each group tries to place blames on others to make themselves appear better. Different groups within your organisation must instead communicate with each other, share knowledge across boundaries, and avoid silo management. You might find that different divisions face similar problems that’d be better solved together, or another division already has a solution to your problem? This might involve social media, bi-monthly meetings where each person is asked to share an idea for solving a problem, short case studies that can be used for internal learning, or creating more opportunities for impromptu conversations. You might need buy-in from senior executives before others will act and follow though. Recurring tough quandaries that people typically want answers to involve how to influence those one doesn’t have direct authority over, like one’s boss; and what to do when two members of one’s team are always fighting yet they’re both needed? In other words – people issues!
A lack of accountability could stem from bureaucracy, poor communication, thinking ‘this isn’t my job’, the bystander effect (when more than one person is responsible for something, no one is) or misaligned incentives. CEOs receive generous compensation packages, and if they fail then they may lose their jobs – yet still take home massive severance payouts(!) Does this motivate accountability?! Does everyone in an organisation really win and lose together? (Other tricks CEOs use include appointing board members who’ll be beholden to them, or ingratiating themselves with the powerful board members and removing particularly talented executives who might be a threat to them.) Well-meaning job practices like job rotation for newly-graduated MBA students are a sound idea to allow them to get a feel for different parts of a business in order to be a more rounded manager, but the short stays incentivise short-term wins with minimal concern for the long-term consequences. Taking accountability cannot be assumed – it must be motivated in the right ways and leaders must demonstrate it themselves.
Some other pitfalls of leaders are having an enormous ego or the illusion of personal pre-eminence (the delusion that ‘I’m so smart, everyone should see things my way no matter what, and if they don’t then they’re the idiots, not me’ or ‘the rules don’t apply to me because I’m special’); thinking one knows all the answers and it’s ‘my way or the highway’ (which only leads to a group of ‘yes men/women’ surrounding oneself); thinking the company is theirs because they were/are the founder/CEO and so they can do whatever they want with it regardless of the ethical, social, environmental, etc. considerations (a sense of entitlement and also not wishing to relinquish any control – but executives are merely the stewards or guardians of a business with limited liability); being obsessed with image (wanting to be the centre of attention, albeit only good attention) or with perceptions more than reality (like the saying ‘turnover/market cap for vanity, profit for sanity’ or ‘style over substance’); and disregarding major obstacles and not learning.
Relying on formal power (your power just by virtue of your position) is the most fragile strategy because people will just plot behind your back and not give you their all if they don’t actually respect you. It’ll ultimately drive top talent away too.
Most entrepreneurs (or people generally) hate hearing that their own ideas suck and will double-down on proceeding with them. Sometimes the entrepreneur proves to be right – entrepreneurs need to have thick skin, to persevere. But at some point, if the preponderance of evidence indicates that one is heading in the wrong direction – one needs to adjust. There are mixed messages here – we revere stories of resilient, maverick entrepreneurs who fought their detractors to become successful, yet mock those who kept going despite the warnings. So it’s not easy! An entrepreneur needs to somehow have thick skin whilst watching out for any patterns in the feedback.
Woof! The best business leaders are humble. They have immense humility. Unfortunately, it’s frequently the least humble who wish to become leaders or politicians(!)