Building Business Value | Corporate Management Strategies

Are You a Bottom Line Manager or a Top Line Leader?

I was in a meeting recently when I overheard a senior executive make a bold pronouncement:  “I’m a bottom line kind of guy”!  There is nothing wrong with this mind you.  Harry Truman was famous for the “buck stops here” sign on his desk.   Most of us feel great when we finally “get to the bottom” of a sticky problem, but as the economy has stagnated and recovery has slowed, I’ve noticed an overemphasis on bottom line management in many companies.

What are Bottom Line Managers? These managers concentrate on the expense side of the income statement. They sit at their desks with their operating budgets in hand, dutifully reviewing each and every expense report to make sure it is in the budget. Organizations spend thousands of hours developing, reviewing, and reconciling operational budgets and very little time discussing their customers.

Top Line Leaders, on the other hand, focus on the revenue side of the equation. They understand that the only way to create new opportunities is to find new customers.  I saw a documentary on the history of Apple last week on CNBC and marketing guru Guy Kawasaki shared his philosophy that “sales cure all ills” and I remember thinking “ain’t that the truth".

Top Line Leaders focus on substantially increasing revenues by finding new niches, new or modified products and services, or by expanding geographically or online. Top Line Leaders build a leadership team that includes Bottom Line Managers, but the Top Line Leader is always first among equals.

Many growing companies experience an overwhelming urge to put in place a "manager" who begins to control expenses. Thomas Watson, Jr., the long time CEO of IBM, is quoted in his book “Father, Son and Co” as saying that IBM “didn’t have an operational budget until it was over $400M in revenue”.  Obviously, expense control is important and essential to a company's long-term health, but revenue generation and the expansion of the top line should drive expense decisions.

Stagnant businesses have an abundance of Bottom Line Managers. It is not a creative job. The hard part is Top Line Leadership.

My Top 10 Business Leadership Books

Guilty as charged!

I'm a notorious "book name dropper".  I give away two or three books a week and probably reference another twenty in a given week.  During a recent workshop, someone asked me for my top 10 leadership books.  I said "sure, no problem", but this exercise turned out to be more difficult than I anticipated.  You see I have about 400 business books in my office library (it's getting rather crowded) and if they stay in my office, they have at least one redeeming quality!

So I took on the challenge to come up with 10 Leadership Books that influenced me.  Ten books that challenged my leadership thinking and convinced me to do something new or different ... to change.  This is the list I would suggest to those interested in furthering their leadership development. Whether you are a CEO or a wet behind the ears project leader, this is still a great place to start.  Of course books can only go so far in developing your leadership skills, but in order to build on your strengths, you are going to have to feed your knowledge base.  Great books are the answer!

The books on my list are ‘general' leadership books.   I purposely left off terrific personal growth books like Covey's "7 Habits" and Carnegie's "How to Win Friends & Influence People" or even books that touch on one or two aspects of leadership like Blanchard's "One Minute Manager."  These are terrific books and should be in your library but they don't cover all the aspects of leadership.

I've also not included classics like "Good to Great" by Jim Collins or "In Search of Excellence" by Tom Peters.  Every leader should read these but they are more strategy than leadership.  Again, my list includes books on broad based leadership concepts.

There is no real prioritized order to the list except for number 1.  In my mind, Robert Greenleaf is sort of the granddaddy of all the contemporary leadership scholars and authors.  You don't have to start with Greenleaf ... he can be a little dry ... but once you feel like you need a bit more foundation, spend some time with Greenleaf.  He'll become a good friend.

So here you go!

   1. On Becoming a Servant Leader, Greenleaf, Jossey-Bass
   2. The Leadership Challenge, Kouzes Posner, Jossey-Bass
   3. Leadership is an Art, Depree, Dell Publishing
   4. Leading Change, Kotter, HBS Press
   5. Reinventing Leadership, Bennis & Townsend, Morrow
   6. The Leadership Engine, Tichy, Harper Business
   7. The Heart of a Leader, Blanchard, HB
   8. Leaders, Bennis & Nanus, Morow
   9. Execution, Bossidy & Charan, Crown
   10. Lincoln on Leadership, Phillips, Warner Books

So let the debate begin!  What did I miss?  What does your top 10 look like?

5 Things We Know About How Your Workforce Learns

Could the last meeting you attended be characterized as "death by Powerpoint?"  Did the leader of the meeting preach or speak "at" you?  Did you zone out or worse yet, fall asleep during the presentation?  Many executives run meetings as if the room were filled with children.  They end up preaching or presenting in a tone that has little emotion and almost no interaction.

Successful leaders know that for any change initiative to be effective, they are going to have to be good communicators.  Knowing how your team, audience or workforce learns is the first step to getting them to take action.

The following "5 Tips" are an aggregate of past experience, a classic paper by Zemke and Zemke, as well as a recent article by Chris Clarke-Epstein.  See if it helps as you strive to shape your workforce into a change leadership machine!

   1. Your workforce has expectations, and it's important to take time early on to clarify and articulate all expectations before getting into content.  There is an old saying that people don't care how much you know until they know how much you care.  Take the time to find out their expectations before drilling into stats and spreadsheets.

   2. Your workforce will appreciate focus on one thing at a time and a direct connection to the application of the idea or concept. Remember the rule of three.  Only have three initiatives going on at one time.  Focus on a small number of things, accomplish those, celebrate and move on.  In our book "Act Like an Owner", Bob Bloncheck and I coined a term "Line of Sight" which meant you should be able to tie everyone's day to day work to the performance of the company.

   3. Your workforce has existing beliefs.  They bring a variety of experiences to your meetings.  This is especially true for new leaders or new executives to appreciate and get an early handle on.  Take into consideration the existing norms and behaviors in the workplace as well as the cultural and socio-economic backgrounds of the workforce before rolling out something new and radical.

   4. Your workforce doesn't appreciate being talked down to.  Sure, mistakes were made in the past (and they'll be made in the future) but don't create an environment where mistakes are so toxic they keep you from trying new things. Keep trust high and encourage innovation (even at the expense of making mistakes).

   5. Your workforce could be doing other things rather than listening to you. Show them the value of participating in the change effort early.  Give them exciting reasons to join the team.  Create an esprit de corps among the team and reward those that volunteered.


Adapted from: Zemke, R., Zemke, S. 30 THINGS WE KNOW FOR SURE ABOUT ADULT LEARNING Innovation Abstracts Vol VI, No 8, March 9, 1984 http://www.hcc.hawaii.edu/intranet/committees/FacDevCom/guidebk/teachtip/adults-3.htm Accessed February 2003

Leading Corporate Change - The Soul

Last in a series on corporate change.

The underpinning of the mind and body is the soul, the culture of an organization.  A corporate soul that informs both the mind and the body is the corporate culture - what is accepted as normal behavior in an organization, a kind of code of ethics. Any change strategy should specifically deal with the major elements and nuances of  the soul or culture of an organization.

Are you cultured?

Culture consists of the norms of the organization. Though many may think their workplace lacks a culture, it is crucial to remember that every organization has a culture. It may be an adventurous and risk embracing culture like exists at Odyssey Marine Exploration or a team oriented culture like Whole Foods or it can be a low initiative, high accountability and bureaucratic culture such as  .... (you fill in the blank). Whatever the particular culture is, it is defined by a series of norms and behaviors, a code of what is accepted and not accepted. A culture is the glue of the organization. It holds things together when other things fall apart at the leadership or process level.

Creating a ‘Line of Sight'

An effective culture comes from a sense of shared ownership, which comes out of the shared sense of an organization's vision and operations, a "line of sight" between what happens day to day and the general performance of the organization. Such a "line of sight" leads to a sense that people's contributions are valued by the organization, an ownership culture in which everything is important to the bottom line. There is a great value to creating this ownership culture because the organization becomes comfortable with change and ambiguity - the only constant in business today.  Everyone should be thinking like an entrepreneur, a mindset in which what is good for the organization is good for the individual contributors.

Make your Values Public

There are useful methods and techniques for assessing the soul of the organization, and once this code of values, norms and ethics is established, it should be publicized. Most organizations should have their values posted. This justifies tough decisions, because such decisions - over hiring and firing, for instance - can be persuasively articulated when they can be connected with the organization's value system. In most organizations, the code of behavior - issues like lateness and timeliness, dress, and approach to customers - is left largely unspoken. This can pose a challenge when you're in the midst of a large change effort because there is no true north to point.

It's critical that important aspects of the culture be clear and documented.  Make sure that new people are brought into the organization in accordance with this code. It can even be used as a selling point, attesting to an organization's commitment to its customers and employees.

Documenting and then leveraging these unspoken codes will provide you the opportunity to use your corporate soul, your corporate culture, as an ally in the battle of corporate change.

Leading Corporate Change - The Body

Third in a series on change leadership.

Remember those three rocks held together by a rubber band? The rocks represent the mind, body, and soul, respectively, of an organization. All three must move in the same direction and at the same time, or suffer the consequence ... the rubber band snapping back and stymieing progress. Then you're back in that awful situation of looking at the same business challenges but with the added burden of a failed initiative in your rear view mirror.

The Body

When you think about the "body" of an organization, it is important to remember the image of the three rocks held together by that rubber band. If the three rocks don't move together, they will certainly not be able to move separately. An organization's body is its processes and structure, the core processes the company needs to work well. These can range from account management, to product development, to supply chain management to inventory control to sales turnover to professional services delivery. These processes must be looked at critically - just as the organization's leadership is analyzed - to make sure that they can handle the extra pressure of change.

What are your Key Processes?

Fred Wiersema and Michael Treacy wrote "The Discipline of Market Leaders" in 1997 and the basis of the book still hold true.  Know what  kind of company you are.  Is it critical that you are world class in customer service?  Is it critical that you are a market leader in innovation and research?  Is your success dependent on being operationally efficient?  Understand what processes are key to your success and focus on being world class in those.

If it ain't broke ... break it!

Where are the black holes in your organization? Where is value being drained from your company because you are slow to market, late in your deliverables, unaware of your target market needs and wants.  A trend I keep running into recently is lack of governance.  Some organizations have such poor governance and insight on how their key corporate processes support their business operations, that by the time they realize they are in trouble, it is already too late.

A check up from the neck up on your structure.

Are the organization's structures aligned with the vision for the organization's growth and future? It may well be that business transformation and re-engineering may be necessary to support the change, and it is crucial that these determinations are made early in the process.  When changing the processes of an organization, it is also important to align those processes with one another (in keeping with the image, the little pebbles within the rocks must be held together, just as the big rocks are held to each other).

Reorganization is not the only thing that is important to changing the body of the organization. The elements within the organization may be fine, but their alignment may be problematic. In that case, it is important to realign things appropriately to ensure that the processes will not be overwhelmed by change. These realignment plans should take a collaborative approach. This kind of change is not about one person imposing swift changes, but is about the organization itself making the change. Outside help can manage or facilitate the process, but it should not impose solutions. Internal input should be maximized.

We'll wrap up this series and tie everything together with our next conversation on the soul of an organization - corporate culture.

3 Tips For Leading Change

Second in a series on Change Leadership

Thomas Jefferson said the "dispositions of the mind, like limbs of the body, acquire strength by exercise."  The "mind" of an organization is its leadership. And leadership is defined as those making decisions, including but not limited to those "in charge" of the organization. There is leadership, in other words, at all levels of an organization. Leaders of an organization are the ones who are setting strategy, articulating vision and direction. But they are also the ones that are making tactical decisions while executing the strategy.  To paraphrase our learned friend TJ .... "if we don't exercise our mind (our leadership), it will atrophy and become useless."

Make an Honest Assessment of your Current Situation

In moving the mind of the organization forward, the first thing to consider is the leadership. The first step in this kind of growth is a critical skills assessment of the leadership itself. It is important that this assessment be more general and all-encompassing than some kinds of superficial assessments you might have experienced. Some sort of team-based assessment, called a 360 degree assessment, is probably advisable. A 360 degree assessment is an evaluation of leadership capabilities. A good tool will address all the classic leadership attributes, from establishing a vision to setting direction to motivating and inspiring. A thorough leadership assessment also assesses classic management skills like controlling, monitoring and directing. A 360 degree assessment shows the level of functioning of both a leader and that leader's circle of influence.

I happen to be a fan of the "Leadership Practices Inventory" tool developed by James M. Kouzes and Barry Z. Posner, authors of the best-selling book, The Leadership Challenge.  But there are a number of good tools available in the market.

Everyone who is influenced by you is part of the assessment, from supervisors to coworkers to subordinates. It may very well be that a leader is good at certain parts of leadership - say, the intellectual/financial side - but lacks certain key qualities of emotion or vision. A 360 degree assessment allows for both strengths and weaknesses to be highlighted.

Who Participates in the 360?

Everyone in your leadership group!  The goal for any change or transformational initiative is not just for one person to have the skills to move forward, but for the entire leadership group as a whole to have those skills. A full evaluation and assessment can have both major and minor consequences; new employees may be required to compensate for weak skills in the group, or perhaps new training of existing employees. The most important part of an organization's growth is the advancement of the mind, though it cannot happen without the simultaneous growth in the body and soul.

When do I know it's working?

Assessment is generally very successful if it is approached enthusiastically by an organization.  The CEO or someone with a traditional leadership role in the organization being an avid supporter.   It can be tied to new planning initiatives and a professional development initiative. And it's important to remember that the identification of strong skills is just as important as the identification of weaknesses. Strengths, after all, will be your leverage points. But the assessment of all these aspects is the most important thing, and is crucial to preparing for growth.

Make Leadership Development Ubiquitous

As mentioned above, it is important that "leadership" not be a quality only perceived as residing in a few individuals at the top of an organization. Change is easier and more effective when sound business decision making exists throughout the organization. It's useful to teach everyone in the organization about the organization; when everyone knows how the business works, everyone understands their role in the business' success and, with reason, thinks that their work is integral to that success. Leadership, then, becomes ubiquitous in the organization. If lower levels of management know how everything impacts the bottom line, it will be easy to make them aware of how to be more productive and cost-effective. This form of transparency can be a huge benefit for the organization, especially when a change initiative is seeking to change deep-seated ways of doing things.

Driving the Big Points Home

Executives can make this sharing of knowledge easier for other members of the organization. It can be as simple as anecdotal, everyday stories which make it easier to understand how the organization works and how individual employees' work has an impact on an organization. It's important not to use complicated business terms like "return on investment capital"; a key line to remember in this context is "turning Wall Street into Main Street." It's not just the content of a message that is important, but its medium. Rather than a serious, somber message, often the more humorous or accessible information is more effective. In general, though, however they go about it, executives should drive home every day sick and tired of articulating the organization's vision, direction and objectives. If they're not, they're not doing it enough.

3 Tips for Leading Corporate Change

First in a series on Change Leadership

Machiavelli said "there is nothing more difficult to take in hand, more perilous, or more uncertain in its success, than to take the lead in the introduction of a new order of things."  Smart man that Machiavelli!  If you've been in a leadership position for more than five minutes, you know how true this is.

A useful way to think of strategies for effective organizational change is the image of three rocks held together by a rubber band. The rocks represent the mind, body, and soul, respectively, of an organization. All three must move forward at the same time, or else the rubber band will snap back, stymieing progress and leaving you, at best, in the same position as when you started the change initiative.

The "mind" of an organization is its leadership. The leadership is defined as those making decisions, including but not limited to those "in charge" of the organization. There is leadership, in other words, at all levels of an organization. Leaders are the ones who are setting strategy and articulating a vision and direction.

The "body" of an organization consists of the key components of the organization-the processes, the structure, and even the finances of the organization. The body represents the moving parts of an organization.

The "soul" of an organization, informing both the mind and the body, is the corporate culture-what is accepted in an organization, a kind of code of ethics.

Any growth strategy has to move all three of these elements in unison (or close to it) if it is to be successful in the long run.

Keeping in mind the metaphor of the rocks held together by a rubber band is a simple way to think of change leadership.  It is also a reminder of the challenges of leading a successful change effort.  Every transformational initiative represents change and since change is the only constant in business, learning to effectively lead the change is the only way to ensure survival.

Making the Commitment to Build Value

Nothing gets employees' eyes rolling like a CEO returning on Monday morning from a management seminar with a brilliant new initiative by which the whole company will now be run. If you're going to get your company truly committed to the idea of building enterprise value, you've got to get buy-in from everyone on board. Everyone must share the vision, so you have to find the algorithm for convincing really good people that they want to be part of this process.

How do you, as a C-level executive, create a sense of shared ownership with the entire leadership team?  How do you get heads bobbing over this methodology for building value, so that all the thought and dreams actually come to fruition?

You and your leadership team must commit.

Commitment is actually threefold - it's emotional, intellectual, and spiritual. Most people don't do anything unless they feel emotionally connected to the process. They don't get married, buy a car, take a job, run a marathon, have a child, or do anything of importance without first having an emotional commitment to the process. People may intellectualize and rationalize 'til the cows come home, but they don't do anything unless they have a gut-instinctual, emotional desire for doing it.  And it must impact them directly.

For example, the award winning PBS series Frontline ran the "Poisoned Waters" documentary again this week and in it environmentalists talked about changing their message from "saving the Chesapeake Bay" to controlling traffic, fighting gridlock and improving the local living conditions.  It turns out people will make huge commitments and sacrifices if they personally can see and feel the need for change.  Saving the Bay is a great cause, but it seems so distant for most people in the watershed.  Environmentalists have learned that moving people to control traffic, growth and gridlock will help the bay without ever making that plea.

So before you start marshaling arguments and building compelling intellectual reasons for making changes, concentrate on getting emotional buy-in first. Keep in mind that your staff and fellow executives are emotionally committed to doing things the way they've always been done, and they will use their powers of reasoning to swat away your brilliant new initiatives. What do you reach for first, their hearts or their minds? Without question, you should appeal to their hearts. Otherwise, their minds will be your worst enemy.

Do You Have the "Fat and Happy" Syndrome?

A CEO who develops a reputation as a turnaround specialist is likely to be wooed by other struggling companies to accomplish the same magic for them. To accomplish this, the CEO often tries to "put the band back together" by going out and rehiring the team that made the first turnaround so successful. The problem is that a lot of those executives may be fat and happy by now - they made their money on the first deal and no longer have the fire, the energy, or the desire to work those sixty-hour weeks again. Putting the band back together might work for the Eagles, but in the business world, people often end up singing an unhappy tune.

The Power of Attitude

Is it possible to change somebody's behavior?  Is it possible to get them to act differently?  When we exert pressure and threaten punishment, it is possible to force someone to act differently?
If it does work, the effect is only temporary.   To get someone to change from the inside out, you start with attitude.  People change their behaviors when their world-view changes. The normal change process goes something like this:

1. People accept a new idea as appropriate and possible.
2. Their attitude changes.
3. Their behavior changes.

In other words, until someone accepts a new idea as appropriate and possible, their attitude won't change. And until their attitudes change, their behavior won't change. At least not viscerally. They may fake it if it's in their best interest, but it won't be meaningful, lasting change.