Five Ways to Attract Prospective Employees

Five Ways to Attract Prospective Employees

Like many of my clients, if you are experiencing significant increases in business, you’re noticed that there is a War for Talent! That is not surprising. There are approximately 9.3MM job openings and 9.5MM unemployed, so demand is about equal to supply. So how do you find employees? Without getting into political arguments about the lack of employees, here are five ways to attract prospective employees better.

If we take the business model that I have outlined before, which I believe can be applied to many situations, e.g., Recruiting employees and the collapse of the Superleague. So, I will examine attracting employees through the lens of:

  • Value Creation
  • Core Customer
  • Brand Promise
  • Value Delivery

and the fifth item is “Spread the Word.” You don’t want to be the unknown greatest secret among employers!

Value Creation

Value Creation in hiring refers to Why Should I Work for You? 

The first part of this is the company’s mission, or as Patrick Lencioni puts it, “Why do you exist?” Articulating a reason for existing that will resonate with the prospect is critical. There is much research by McKinsey and others that shows that if the employee can identify with the organization’s mission, they are more likely to stay and be more productive. Thus, know your mission! It needs to be succinct and easy to understand. But the entire organization needs to know it and express it the same way so that the prospect believes that you believe in it.

Second, you need to explain why the prospect should work for you. Having asked many CEOs, the following hypothetical.

You are interviewing a candidate, and they are “It.” They are an “A” player, exactly what you need and want, and you about to offer them the opportunity. Still, before you do, you ask if they have any more questions. The candidate looks are you and asks, “Why should I work for you?”

To date, not a single CEO or business owner answers this question in a way that would attract the candidate. The most common answers I get are, “We are a great company,” “We offer employees great opportunities,” and “This is an exciting place to work.” If these are your answers as well, consider the following. Do you think when the candidate asks your competitors the same questions, the responses are:

  • “We are an awful company.”
  • “This is a dead-end job where employees’ careers go to die.”
  • “This company and position are boring beyond belief, and nothing ever changes. There is no excitement or challenge.”

Of course not! They provide the same answers as you.

What to do? Consider the question and have a response ready that is supported with details and stories.

  • If you are a great company, explain how in a way that resonates with the candidate.
  • If you offer opportunities, tell stories of how employees have had great opportunities at all levels and how they have progressed.
  • If you are an exciting place to work, show how and make sure the energy is reflected in your tone and attitude.

Being able to articulate this is more critical than many CEOs, and C-Level people realize. Prospective employees have many options. If you want “A” players to take your organization to the next level, you have to stand out from the rest and show them why you are the best choice. Being the “Tallest Pigmy” is not going to cut it.

Core Customer

As with Customers, we determine our Core Customers, so we know how to market and sell to them. With employees, we need to determine who is our “core employee.” As Jim Collins has often said, culture is more important than skills as the job will change, but having people with the same values is critical! Also, you can teach skills much easier than you can teach culture. Hire for core values! Ensure that all the people involved in the hiring decision can determine that the prospect has the correct values. Finally, if you hire them, ensure that your onboarding process makes those values a habit!

Because Core Values are critical, companies that permanently rely on temp agencies are making a mistake. Temp agencies provide you with someone who can fog a mirror and do the job, but there is no test for culture. So, they don’t last, and if you have to get a new temp in who needs training. The cost is high, and productivity is low. Finally, the temp agency is competing against you. If they have another client who will pay the employee more, your temp employee is gone. While temp agencies may solve a short-term problem, they are not the solution many think they are.

Brand Promise

As with customers, you have a brand promise to convert prospects into customers; what is your promise to your employees. What are you offering them other than a salary? A CEO once told me that he couldn’t keep employees, but when we discussed it, the only thing he could say that he offered was a salary, which was in line with the market. No wonder none of his employees stayed. What you offer is not just a salary, but you need to consider things like:

  • Benefits;
  • Career advancement and development;
  • Further education and training;
  • Other opportunities; and
  • Feeling part of something bigger.

It reminds me of Cameron Herold, who, on the first-day offer that an employee joined the firm, used to celebrate to welcome them to the company. At this party, the new employee had to prepare their bucket list. The company used to commit to helping them realize an item on it during their first year. Helping didn’t mean paying for it but instead finding a way to work with the employee to realize it. Doing this gained a tremendous amount of company loyalty.

More recently, a client was telling that her daughter had just joined a new company during COVID. A few days after accepting the offer, her daughter received a laptop and a large computer monitor to help her work. The daughter was so excited about the monitor. She felt that the company cared about her and her performance, increasing her loyalty to the new employer.

Value Delivery.

How do you measure value delivery with customers? NPS scores. Well, do you get NPS scores from your employees or get them to complete Gallup’s Q12 Employee Engagement Survey? I do these for my clients. Doing these things will enable you to understand if you deliver on your promise and show that your employees are engaged. You can use this as recruiting materials. (If you are interested in having an NPS and Gallup Employee Surveys done, don’t hesitate to get in touch with me.)

Get employee testimonials from employees at all levels. The strongest recommendation you can have is from your employees in their own words. Get them on video so that prospects can see how strongly your employees feel about the company and how you deliver your brand promise to them.

Spread the Word

Finally, most companies have no information on their website about any of these things. At best, a few websites ask you to submit a resume without even listing any jobs. Why would an “A” player do that? If this is the best you offer, you are not attracting them. Your website needs a section in the top menu for employment opportunities. It needs to tell prospects:

So, attract them.

While the above is not a guarantee to fill your empty positions, it will help great employees find you and be interested in working for you. If someone applies and appears to be a great candidate, but you have no role for them, find a place for them or keep them in a talent file for when a need arises. As with selling, if you don’t get the message out that you have a great product, meet your brand promise and have the data to prove it, you need to do this with hiring. Failure to do so will limit your success. Just because you are a company, realize you are now fighting for employees, and you need to work harder!

 

Copyright (c) 2021, Marc A. Borrelli

 

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WFH during COVID did result in the falling of productivity that many feared. Surveys showed that productivity remained the same and, in some cases, increased. However, a new study of more than 10,000 employees at an Asian technology company from April 2019 to August 2020 provides a different picture. Using software installed on employees’ computers that tracked what the employee was doing, the research confirmed that the employees worked hard. Total hours worked were 30% higher than pre-COVID, including an 18% increase in working outside regular hours. But this additional effort failed to translate into an increase in output. 

This research confirms early survey evidence where both employers and employees felt they were producing as much as before. However, the correct measure of productivity is output per working hour, not hours worked. Using this measure of productivity, productivity fell by 20%.

The research further analyzed the time the employees spent in:

  • “collaboration hours,” time spent in various types of meetings, and
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The data showed that despite working additional hours, the employees had less focus time than before the pandemic as meetings consumed the extra time. The study supports Bartleby’s law which states that “80% of the time of 80% of the people in meetings is wasted.”

Why were there so many meetings?

  1. Managers can check on their team’s performance as they are less sure of the team’s commitment.
  2. Managers call many to validate their existence when they are not in the office. 
  3. The increased difficulty of co-ordinating employees who are working remotely. 

The latter suggests that WFM is inefficient, not to mention that remote employees also spend less time being evaluated, trained, and coached.

So, while workers saved commuting time, they didn’t hourly pay fell. However, WFH did not impact all employees similarly.

  • Those who the longest tenure with the company were the most productive, suggesting they could use well-formed relationships to work more effectively. Simon Sinek explained this in a recent video
  • Employees with children worked around 20 minutes a day more than those without, implying an even more significant fall in their productivity, presumably because they were distracted by child-care duties.

The researchers point out that the firm’s staff are nearly all college-educated whose roles “involve significant cognitive work, developing new software or hardware applications or solutions, collaborating with teams of professionals, working with clients, and engaging in innovation and continuous improvement.” The impact on other types of employees could be very different.

WFH expectedly resulted in teething and coordination problems as it was imposed suddenly. However, since the study stopped last August, there is a question of whether employee productivity has increased since. Most important from the research is that employees achieved the same output with slightly less ‘focus time’ than at the office. The real culprit of inefficiency was the time spent in meetings. 

Conclusion

So, to increase your firm’s productivity, don’t have as many meetings and keep them short. Ensure that the behaviors you accept and expect as part of your firm’s culture are not encouraging non-productive meetings. Also, with a move for more WFH, start building behaviors that will encourage meeting efficiency. Finally, there are a number of ways to improve meeting productivity as I mentioned in Not Another **** Meeting.

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  • the processes; and
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I am a supporter of EOS in that I believe all companies should have some system to improve their performance. However, as I have worked with clients who have implemented EOS, I found that it is just that, an Operating System and not a business model that enables the organization to grow!

As defined by Wikipedia, an Operating System is “the software that supports a computer’s basic functions, such as scheduling tasks, executing applications, and controlling peripherals.” So for a business, I defined it as “a model that supports the company’s primary functions, such as identifying a vision, getting the right people in the organization, improving meetings, defining goals (rocks), etc.” At the risk of upsetting EOS Implementers®, I think EOS satisfies these metrics to a varying degree, but in most cases, doesn’t enable the company to build a growth engine.

Here is what I believe is missing to develop a growth model.

The Hedgehog Concept

In Good to Great, Jim Collins talked about the Hedgehog Concept named after Isaiah Berlin’s essay, “The Hedgehog and the Fox,” which divided the world into hedgehogs and foxes. The theme is based upon an ancient Greek parable where “The fox knows many things, but the hedgehog knows one big thing.” Collins found that those companies who became great followed the Hedgehog Concept. Those companies which didn’t tend to be foxes never gaining the clarifying advantage of a Hedgehog Concept, being instead scattered, diffused, and inconsistent. 

The Hedgehog Concept is based on the questions prompted by the three confluence of questions. 

  • What can you be the best in the world at?
  • What are you deeply passionate about?
  • What drives your economic engine?

The EOS Model® doesn’t focus on the hedgehog concept, and so many companies using EOS have goals and strategies based on bravado than from understanding.

Knowing your hedgehog concept will keep the organization focused on something that aligns its passion with what it can be the best at. Being good at something means you are only good and indistinguishable from many others. If you are the best at something, then you stand above the crowd. Finally, the economic engine keeps the company focused on a metric that drives profit.

Vision

While the EOS Method® works to develop a ten-year goal, I find that is not as compelling as Jim Collins’ BHAG. A BHAG, Big Hairy Audacious Goal, is a clear and persuasive statement and serves as a unifying focal point of effort with a defined finish line. It engages people, is tangible, energizing, highly focused, and often creates immense team effort. People “get it” right away; it takes little or no explanation. 

A visionary BHAG is a 10-25 year compelling goal that stretches your company to achieve greatness. It should be a huge, daunting task, like climbing going to the moon, which at first glance, no one in the company knows how on earth you will achieve.

As Collins’s noted, the best BHAGs require both “building for the long term and exuding a relentless sense of urgency: What do we need to do today, with monomaniacal focus, and tomorrow, and the next day, to defy the probabilities and ultimately achieve our BHAG?”

Profit/X = Economic Engine

The BHAG’s economic engine is the concept of Profit/X. In Good to Great, Jim Collins defines this strategic metric as “One and only one ratio to systematically increase over time, what x would have the greatest and most sustainable impact on your economic engine?” Unfortunately, too many companies don’t have an economic engine, so they fail to deliver hoped-for profits. This metric is not easily identified; however, Collins noticed that the companies that took the time to discuss, debate, and agree on one key driver for their economic engine are the ones that went from good to great.

Profit/X how you choose to make money; it is a strategic metric, not an operational one. This ratio is a key driver in your financial engine and when you make decisions about how to spend money. When developing your Profit/X, you need to have that is unique and not the industry average because if you choose the latter, then everyone will be pricing and driving costs the same way to maximize it. Like the BHAG, a correctly defined Profit/X will promote teamwork as everyone can focus on their role to drive the metric, from how many people to hire, where to open new operations, etc.

Here are some examples of Profit/X.

  • Profit/customer experience or customer visit
  • Profit/customer
  • Profit/employee
  • Profit/location
  • Profit/geographic region
  • Profit/part manufactured
  • Profit/division
  • Profit/sale
  • Profit/brand
  • Profit/local population
  • Profit/invoice
  • Profit/market segment
  • Profit/store
  • Profit/plant
  • Profit/purchase
  • Profit/square foot
  • Profit/fixed cost
  • Profit/recurring revenue client
  • Profit/seat
  • Profit/plane
  • Profit/product line
  • Profit/life of the customer

To frame this in a real-life context.

Southwest Airlines: Profit per plane

Walgreens: Profit/Customer Visit

New System Laundry: Profit/Delivery Truck Load

I think the EOS Method® ignores the following areas, but to me, they are part of the Hedgehog Concept. If you are doing something with clarity and focus, you need to have clarity and focus on these areas.

Value Creation

It is said, “A Business That Doesn’t Create Value for Others is a Hobby,” so what value does your organization create? Value creation is part of what you can be the best at. However, organizations need to know, “What is the problem they are seeking to solve for their customers.” Christian Claytonson defined this as “What is the job your customer is hiring you or your products to do?” Too many organizations define the job to be done as what they do, e.g., “We integrate your systems.” While that is what they do, that is not the job they are hired to do. The job they are hired to do may depend on the client but could be, “Provide information from across the organization to make better-informed decisions.” Knowing the job to be done enables your marketing and sales efforts to focus on the customers’ needs rather than on what you do. No one cares about what you do; they care if you can solve their problem. I don’t see the EOS Model®’s focus on this crucial question, but it is central to a company’s growth.

Core Customer

Who is the company’s core customer? I have discussed this before, and many companies can identify their core customer. However, most haven’t analyzed their customers from the point of view of Profit/X. If Profit/X is the driving metric of the organization’s profitability, then failing to know which customers meet and exceed it is crucial in defining your Core Customer. There is little point focusing on a Core Customer that doesn’t meet your economic engine’s critical financial metric, hoping that somehow you will magically capture the lost profit elsewhere. Furthermore, if you don’t know your Core Customer, your marketing and sales activities will be directed towards the wrong groups, further weakening your performance. 

Brand Promise

What is your Brand Promise, and how is it measured? This question is one that the EOS Model® doesn’t address. However, it is crucial.

  • It is what convinces your targets to buy from you. 
  • It is what you stand for and promise to deliver. 
  • It is the metric against which you will be measured.

Some organizations do have a brand promise, but it is not measurable. In that case, it is “valueless” because if it is not measurable, no one knows if you are delivering it, and in that case, it has no value to prospects or clients.

Value Delivery

Value delivery is vital for knowing how customers value the performance of the organization. While the EOS Model® discusses many metrics, this one does not get enough focus. Companies need to understand if their customers are satisfied with their performance. Recently, I spoke with a CEO who said that 80%+ of their customers were “Very Satisfied.” However, on further investigation, I discovered:

  • It was just a guess as they didn’t measure it.
  • 7 – 10% of their customers had complained in writing about their product and delivery in the last year.
  • None of their clients had recommended them.

Here is wishing over reality. I would expect that the company had a “Very Satisfied” score of less than 25%, and they should be working hard to improve their delivery and start collecting customer satisfaction data.

Critical Number and Counter Critical Number

The EOS Model® deals with goals (Rocks) and meetings, and that is one area that I think it does very well. However, I notice that the Rocks are not aligned to improving a critical number for the quarter. The Rocks should seek to improve some Critical Number each quarter. Without a Critical Number, you are once more a Fox, not focused. Those that use Scrums know the importance of the Critical Number. 

Rocks are great, but they need to improve a single business area to have the most significant benefit. As the saying goes, “You cannot defeat ten soldiers by sending in one soldier every day for 100 days.” For example, if our Critical Number is Customer Service in a Call Center, then the Rocks could relate to:

  • Hold time
  • Time on the call
  • Customer satisfaction at the end of the call
  • Percentage of calls resolved in one call
  • Employee satisfaction.

The Counter Critical Number is essential to preventing the critical number from overwhelming the company and leading to adverse effects. For example, if our Critical Number is project completion, then a Counter Critical Number would be customer satisfaction. This metric would counter the attempt to deliver incomplete or defective products or projects.

Focusing on a Critical Number and Counter Critical Number for the 13-Week Sprint is essential to developing focus and alignment within the organization.

Team Alignment

The EOS Model® does a great job of looking at the “Right People” in the “Right Seats.” However, what it doesn’t look at are alignment among the leadership team and employees’ satisfaction. Is your leadership aligned around the company’s direction or not? Culture will bring them to agree on values, but not necessarily alignment.

Your employees may all have the correct values, which is crucial, but if they are not engaged or dissatisfied with the leadership, cultural values will not prevent them from leaving or, worse, showing up but not there. Companies need to survey their leadership teams for alignment and their employees for satisfaction to ensure everyone is working in the same direction and committed to its success.

Conclusion

Thus while I like the EOS Model®, I think it doesn’t deal with many of the key things involved in the Hedgehog Concept. This failure enables companies to perform but not grow at an optimum rate. I am not ignoring many of his other areas of focus in Good to Great; however, this refinement of the Hedgehog brings an additional guide that the EOS Model® doesn’t. 

The above model is most of Gravitas 7 Attributes of Agile Growth® model, and if you add in the rest, you have a model that will propel you to growth while keeping your operations running smoothly. The 7 Attributes of Agile Growth® focuses on:

  • Leadership
  • Strategy
  • Execution
  • Customer
  • Profit
  • Systems
  • Talent

making it a more encompassing system. If you want to start your transition to an agile growth company as a certified Gravitas Agile Growth coach, please contact me.

 

 

Copyright (c) 2021, Marc A. Borrelli

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I am a strong believer that company culture is critical in its success. It defines who you are, who you attract, and how you behave. As Jim Collins says, the most important thing is “Who is on the Bus.” However, when talking to many clients and business owners, I often hear that they have a “Family” culture within their organization. I am always perplexed by this answer, but it has become a red flag in my book about the possibility of the organization’s performance.

What Does Family Culture Mean?

Drilling down, it would appear that it means that the organization is nurturing like a family. Mentally they envision a Norman Rockwell painting of everyone happy and getting along. However, most family gatherings are not like that. Rather it starts that way and then someone says something that leads to the usual conflicts arising. I know families where they always invite guests to ensure everyone remains on good behavior.

When I hear family, the first thing I think of is “dysfunctional.” Now everyone is pointing out that only my family is dysfunctional; however, we all have thought our spouses/partners’ families were dysfunctional when we met them because they didn’t behave like ours. But it is not just behavior; there is true dysfunction. As a friend reminded me of at my wedding, at every wedding, there is the equivalent of the “Drunk Uncle.” Let’s consider some of the cast of characters that can appear.

  • The matriach/patriach. They rule. All allegiance is to them. They were paramount in the family’s success, so their “rules” are lived to even when no one can remember how or why the rule came into being. I have seen families lose fortunes following such directives because the world had changed, but all that remained was the rule and not the intent.
  • Favored child. There is always one. They often perform way below par and everyone else, but the parents continue to make excuses for them and support them. They are the ones who believe they are owed everything under their “favored” child status.
  • Second Class Child. The one that was ignored as all the attention got lavished on the favored child. They often work harder, produce more, and die for the family’s success; only they are never taken seriously. Often they become bitter and seek the destruction of all.
  • Drunk Uncle. We all know him/her. Embarrasses everyone, totally inappropriate, starts fights, resented by all, yet tolerated because they are family. However, everyone hopes they will not make the next event.
  • Bitter Sibling. Was overlooked in the succession plan, so bitter forever. Points out how the others received everything on a plate, but they received nothing. They ignore the fact that they have lived off the families’ wealth for the entire lives.
  • The Outcast. Unable to fit in went on their own. Has done well, but resented because they had the strength to walk away and is enjoying life.

If we have a “Family” Culture, then we probably have some of these in the organization.

What is the Problem?

Employees leave organizations because they lose respect for their supervisors.  Why? Their supervisor tolerates “B and C” performers. “A” players want to be surrounded by other “A” players. In a high-performing company, if you don’t meet expectations, you are fired. There is no job security other than through performance.

However, we never fire relatives; we can’t. You are always my father, mother, son, daughter, etc. Thus, claiming a family culture, by definition, requires that you will tolerate poor performance. Knowing that there are “B” players on the team who are never going to leave because of the “family” culture will just driveway more “A” players. This is a negative reinforcement cycle that leads you into a future of mediocre performance as an organization.

My father gave shares in his company to his parents and siblings. When my aunt married someone who didn’t reflect my father’s values, she demanded that my father give him a job in the company as she was a shareholder and it was a “family” business. My father fired all his family members and reminded them that he had them sign undated sale agreements back to him when he gave them their shares. He dated them all and became the sole owner. From then on, he would only hire those that could perform.

So What to Do?

If one looks at successful family businesses, I see that they don’t claim a family culture. They emphasize those family values that they care about. They can say that their values are “nurturing and developing” e.g. they are a “pool” company. Or they can say that they train and develop their people to go on to better things, e.g. a “stream” company. In my father’s case, one of his values was caring. When one of his accounting staff’s husband was diagnosed with terminal cancer he sent her home on full pay until the husband had died. He made sure that the bonuses and gifts he gave made it to the employees’ families. When my father died, over three hundred Africans came from the townships in South Africa to pay their respects at his funeral.

Further, I have noticed that high performing family businesses often have rules, like those below, when a family member wants to join the family business they must:

  • Have worked elsewhere before joining.
  • Apply for an open position
  • Have the requisite experience and qualifications,
  • Be interviewed and selected by non-family members.
  • Report to non-family members and stepping over the chain of command to family members higher up can be a termination event.
  • Realize they will be fired for nonperformance. If they are, they are still in the “family,” just not in the company.

So if you want a culture of performance, don’t say you have a family culture. Focus on what part of the “family” culture you want to emphasize and say that.

Copyright (c) 2021, Marc A Borrelli

 

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The Greatest Own Goal or the Greatest Collapse

Last week saw the birth and collapse of the European Super League (ESL). Living in Atlanta, to me, the defeat was on a par of the Falcon’s 2017 Superbowl and Greg Norman’s 1986 Masters. On Sunday evening, there was the announcement of the formation of the ESL, comprising 12 “founding clubs” from England, Spain, and Italy. Three other unnamed clubs were soon to join, along with another five teams that would qualify annually for the 20-team competition. Within 48 hours, it was dead!

The announcement of the ESL was accompanied by a promise to “deliver excitement and drama never seen before in football,” and did they deliver!

Why was the ESL formed?

Why? Simply, MONEY. The fifteen founding clubs were guaranteed a place every year with no messy football stuff like qualifying and relegation! The teams would capture a larger share of the revenues with less risk. Expectations were that broadcasting rights might generate €4bn a year, nearly double the €2.4bn brought in by the Champions League in the 2018-19 season. 

As Martin Baumann put it, “We can sell just about anything to the Europeans. Why not our hyper capitalistic cartel-based pro sports system?” That sentiment seems very popular on this side of the Atlantic. Many other commentators pointed out that the owners sought profits before tradition, financial opportunities before culture, and self-interest before communal identity. The ESL was the logical outcome of the increasing commercialization of football and powerful few’s desire for monopolistic control. To enable the ESL, J.P. Morgan underwrote its formation with a $4 billion line of credit. 

While I like capitalism, I find it interesting the claim that this is capitalism. So saying ignores a couple of the mainstays of capitalism – no monopolies or cartels and creative destruction. The owners were not imposing an American capitalistic system on football; they sought to create an American-style cartel to reduce risk and transfer more money to themselves. This has just been done with F1 under the ownership of Liberty Media, turning the ten existing teams from car manufacturers into holders of very valuable franchise charters. Of course, technology development will slow, and the product quality fall. But we can’t let that get in the way of making money.

American sports competitions, especially the major leagues, are all effective money-producing cartels. Professional sports leagues in the United States are monopoly-like structures that ensure that the riches are spread evenly among a self-selected group. The teams stay in the league no matter how they perform. So much for the American ideal of meritocracy! 

The only economic competition they face is from rival leagues; that is why the U.S. system is a century-old marketplace of rival sports leagues. The combination of less risk and less competition for talent produces higher profits for owners. According to a ranking last year by Forbes magazine, forty-three of the world’s 50 most valuable sports teams are American – aren’t cartels wonderful! Such a structure has several results:

  • “Brand value” is not necessarily tied to on-field success. The “worst teams” in one season get the best players through draft picks the following year. 
  • It provides an inferior product, as I have discussed before. Guaranteed a place in the league means there is no need to invest in the team and deliver a good product for the fans. Recognition that the product is inferior is reflected in U.S. sports capturing a smaller share of the global viewing audience each year. 
  • It delivers more money to the billionaire owners, who theoretically have invested in the clubs. In every American sport, an inferior on-field product isn’t a reason for billionaire owners to make less money, e.g., Tampa Bay Buccanneers. The Bucs, I believe, have the worst record of any team in the NFL, even though they have two Super Bowl titles – 278-429-1. With such a record, they would have probably been relegated in European sports and no chance at any championship.

For those unfamiliar with relegation, unlike American teams, European sides play in open leagues, where the three poorest performers get demoted to a lower tier, with stingier broadcasting and sponsorship deals. The three top performers in the lower leagues get promoted to a high league reaping greater rewards. Club owners thus gamble on making it to the top, investing generously at the expense of profits.

The European model is genuinely a capitalistic one where owners take risks and invest for a potential reward. Creative destruction is evident: between 1992 and 2014, there were 45 insolvencies in the top three tiers of English football, 40 in France and 30 in Germany. 

So why did the ESL collapse? 

I believe it was because of hubris. Through hubris, the founders ignored the sport’s business model and Ben Horowitz’s sage advice, “Take care of the People, the Products, and the Profits— IN THAT ORDER.” 

Hubris

Hubris is a terrible thing and causes many failures in life and business. Only hubris can cause a few rich people to come up with an idea that generates such visceral and universal hatred, or put another way, Never underestimate the incompetence of people.” The hubris of the American owners that they could easily impose the U.S. system on European clubs showed that they were willfully ignorant of an alien culture.

Value Creation

Value creation is about “the job to be done” for the customer. The league claimed it would be an exhibition of elite football. However, with no qualification, the teams would not have had to try very hard and thus reduce the value of the “job to be done.” However, even more concerning was that the league’s criteria were not based on being the best in Europe but merely the richest. Once a world power, Arsenal is barely one of the best in England and just a bougie to Newcastle United. Arsenal currently sits ninth in the Premier League table, out of reach of Champions League qualification, and likely to miss out on the less lucrative Europa League as well. Choosing the clubs by the wealth of the owners killed any pretense at value creation.

Marketing

The key to marketing is delivering on your brand promise. The brand promise in European sports is the promise of the club’s success. The basic unit is the club in European sports, which tends to be much older and more locally rooted than any franchise and far more fervently followed. Many clubs are over a century old and ripple with local associations and mythologies. For those who want a greater understanding, I would suggest watching Sunderland Til I Die.

Not only is the club the basic unit, but there is a “holy trinity” in a football club, the fans, the players, and the manager. The owners are there to invest and collect profits. Unlike in the U.S., when a team wins a championship, the owners are never seen lifting the trophy, only the players and the managers.

Sales

The key to sales is to know your core customer, the FANS. The fans were not amused, to put it bluntly. Unlike peripatetic American sports fans, English football clubs’ fans are even more zealous and less forgiving. The Glazers, Stan Kroenke, and John Henry were pretty much despised by the fans of Manchester United, Arsenal, and Liverpool, respectively, before the ESL. If they were unaware of this, the fans that welcomed the Glazers to Manchester chanting “Die, Glazers, die!” should have been a hint. The ESL announcement only made things worse. Liverpool fans were burning effigies of John Henry outside Anfield. A banner outside Old Trafford read, “Created by the poor, stolen by the rich.” A YouGov poll found that 79% of British football fans opposed the Super League, 68% of them “strongly.”

There have been massive protests by Chelsea, Liverpool, Arsenal, and United fans at Stamford Bridge, Anfield, The Emirates, the Carrington training ground, and Old Trafford within the past 5 days. All the fans have been complaining about the money taken out of clubs rather than investing in them. Opposition was fiercer still among fans of clubs outside the ESL, some of whom burned Liverpool shirts. However, American billionaires excel at ignoring public outrage. Kroenke and the Glazer family might’ve waited out the protests until kingdom come. However, the rest of the founders abandoning the ESL gave them no choice.

Value Delivery

The key to value delivery is keeping the customer satisfied which in European sports is RIVALRY. The rivalry between teams is local, not leagues as in the U.S. Liverpool’s main rival is neither of the Manchester teams but Everton, a mile from Anfield. The ESL would have removed these rivalries. Further, ESL was not designed with these in mind, but for millions of foreign fans, in Asia and America who care less about such details. In European football, this was heresy. But overall, the ESL would have stopped the key rivalries that make European football what it is and thus reduced value delivery.

The Outcome

There were apologies all around. John Henry issued a groveling apology to Liverpool’s fans: “I’m sorry, and I alone am responsible.” This is something I don’t any U.S. fan has heard from an owner. Also, JP Morgan has apologized, which shows how much it has realized that its role might damage its chances of getting business in Europe. However, apologies are the least of the owners’ issues as hubris takes its toll. The speedy collapse presents an opportunity for the wider community [members of the Premier League] to drive a harder bargain during the auction of a new round of Premier League broadcasting rights. The result is that the ESL founders may receive a small cut this year.

However, the real threat is regulation. Boris Johnson, Britain’s populist prime minister, read the tea leaves and thus vowed to “do everything I can to give this ludicrous plan a straight red [card].” Oliver Dowden, Britain’s sports minister, wants to examine everything to stop the new league, from competition law to governance reform. His words, “Owners should remember that they are only temporary custodians of their clubs; they forget fans at their peril,” should be a stark warning. Also, the British government launched a wide-ranging review into how football is run this run. There is pressure for British clubs to adopt the German community-ownership model with fans owning 51 percent. While some point out that fan ownership did not dissuade Barcelona and Real Madrid from joining, the Spanish and Italian leagues’ financial health is more impoverished than England’s.

Who says football is boring?

 

Copyright (c) 2021 Marc A. Borrelli

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I often hear a variant of this in meetings with business leaders, when discussing their employees or the actions of their direct reports: “Why don’t they use common sense?” As Abraham Lincoln supposedly noted, “God must have loved the common man because he made so many of them,” then, surely, most of the decisions involve common sense.

We all think that all it takes is common sense; however, we all decide based on the information we have and the guides we use to make those decisions. Thus, for people to make better decisions, we need to ensure that they:

  • Are solving the right problem.
  • Have all the available information.
  • Know the “Intent.”

 

Solving the Right Problem

The first person to state a problem rarely has the best insight into the issue. However, once a problem is defined, our problem-solving and “get it done” nature kicks in, and we dive straight in. We don’t stop to ask, “Are we solving the right problem?” As a result, many decisions made solve the stated problem, but not the right one.

To prevent solving the wrong problem, make sure of the following:

  • You defined the problem and not someone else.
  • You are close to the problem.
  • You are thinking about the problem from many levels and angles.

 

Have all the Available Information

Having all the available information is challenging; however, I look to two military people to guide me. First, David Marquet, whose great advice is, “Move the decision-making to the information.” This ties in with being close to the problem above. So, move the decisions to the front lines, where people with all the available information about the situation are. The second person is John Boyd and his OODA loops, which I have written about before. OODA means Observe, Orient, Decide, Act. I would say that having all the available information is a combination of Observe and Orient.

 

Observe

Here the purpose is to observe the situation to get the most accurate and comprehensive picture possible. Information alone is not sufficient; we need to take the data and put it into context. The real skill here is identifying what is “noise” and thus irrelevant for the current decision. Ensuring you can put all the information in the correct context requires asking questions to build a comprehensive picture.

At a simplistic level, this reminds me of two stories.

A little girl asked her mom where she came from. The mother responded with the full explanation of the birds and the bees. The little girl looked a little confused, so the mother asked why? “Well,” said the little girl, “Jill next door says she is from New York.”

A car stops next to someone walking down the street, and the driver asks for directions to the nearest interstate. The pedestrian responds with directions, and the driver goes off. However, the pedestrian should have asked, “Where do you want to go?” The interstate may not be the best solution or the quickest for where the driver wanted to go.

In both cases, questions upfront result in a better answer as they help understand the issue. However, we are programmed to answer, not to question!

 

Orient

Orientation is seeing the world as it is and removing the influences of cognitive biases and shortcuts. If you properly orient yourself, you can overcome disadvantages from less information or fewer resources. However, there are four barriers to the ability to orient effectively.

  1. Cultural traditions. Much of what we consider universal behavior is culturally prescribed.
  2. Genetic heritage. We all have certain constraints.
  3. Ability to analyze and synthesize. We fall back on old habits if we are faced with new types of thinking.
  4. The influx of new information. If the environment keeps changing, it is hard to determine what is going on.

To overcome these barriers, Boyd recommended “deductive destruction,” a process of understanding our biases and assumptions and developing mental models to replace them.

As Boyd put it, “Orientation isn’t a state you’re in; it’s a process. You are always orienting.”

 

Know the “Intent.”

You will notice that I didn’t say know the “Rules”, as I feel rules are too limiting. They tend to prescribe an exact situation, and if the situation changes, then a new rule is needed. Also, rules are easy to get around. Knowing the intent is a broader guide but makes it easier to understand.

A great example was GM when Mary Barra changed the corporate dress code. GM’s dress code was ten pages long, trying to cover everything. As a result, it was complex, and I doubt anyone read it. However, Mary Barra decided to change it to “Dress appropriately.” Before the change, someone would have to go through ten pages of rules to determine if an outfit met the code; now, they have to decide whether it meets the intent. Now Dress Appropriately on its own may have caused a few issues, but in discussions among teams to explain the purpose, it didn’t take long for everyone to understand what was required.

So, when I ask CEOs and business leaders, do they have organizational clarity, they respond, “Yes.” But when I ask the following:

  • What is your BHAG?
  • What is your passion?
  • What are your core values/expected behaviors?
  • Why do you exist?
  • What is your Strategy in a sentence?
  • What is your Brand Promise?
  • Who is your Core Customer?
  • How do you make money in a sentence?

Often, they cannot answer all these questions and think that many are trivial. Yet these are the “Intents” that provide organizational clarity. If you know the answers to all these questions, you know whether an action will support the organization or not.

However, the answers to the questions are the “Intent” that helps your team know what is expected of them. If everyone knows the same answer to all these questions, then it is more likely that they will make a decision that falls within the “Intent” and meets your definition of common sense.

Returning to David Marquet, he emphasized that for people to make good decisions:

  • They need to have control, e.g., make the decision so they take ownership of the problem. If you retain the power and don’t give it, your team members will never make the decisions you want.
  • They need to be competent. Do you have the “right people in the right seats?” If you do, then they should be able to make the decisions. If not, then it is not their issue, but yours. You have the wrong people running things.
  • Organizational Clarity. Or stated as “Is it the right thing to do?” If your people know the above guides’ answers, they will know if the action supports the organization’s purpose and goals.

So next time you feel your team is not making “common sense” decisions, ask yourself:

  • Are they solving the right problem?
  • Do they have all the available information?
  • Do they know the “Intent,” and is there organizational clarity?

I think you will find that something in the above is missing.

However, a warning! This course is not easy; you are giving up control, and to make it work, you have to allow them to make different decisions. If you keep snatching power back, it will fail. 

Once you decide to go down this path, ensure that the “Intents” are answered, and everyone knows the answer. Good luck.

 

Copyright (c) 2021, Marc A. Borrelli

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