Defining an organization’s culture as a “Family” culture reflects tolerance to subpar performance. Rather focus on those characteristics of a “family” culture that you want.
We all know the flight attendant’s instructions to “put your oxygen mask on first,” before helping others. Why is this an essential rule for ensuring survival? Because if you run out of oxygen yourself, you can’t help anyone else with their oxygen mask.
In a corporate environment, I consider this to ensure that the business model and processes are working before embarking on a new venture, product, or market. With COVID, I see several CEOs, moving their organizations in new directions without the company having its core culture, business model, and processes working. With COVID, all CEOs are now what Ben Horowitz referred to as “Wartime CEOs.” To understand the difference, read Horowitz’s Peacetime CEO/Wartime CEO. However, as a wartime CEO, you need a robust organization framework to provide the agility to win.
Without a robust framework, it will be difficult to:
- know what is driving any change in performance;
- push decision making down the chain of command;
- be agile in responding to market conditions; and
- make informed decisions.
Many companies have problems with their culture, business model, processes, or just the wrong employees. As I have said before, COVID is ripping back the curtain and exposing these weaknesses. Business leaders don’t have the luxury of ignoring them anymore.
Many CEOs I know have avoided addressing the problems within their organizations for years as the growing economy helped paper over them, and I think they hoped the issues would right themselves with time. This failing to deal with the difficult choices is a failure by these leaders because dealing with hard decisions is why they get paid the big bucks. As Ben Horowitz so aptly put it, CEOs make decisions that not everyone agrees with, because if everyone agreed, then they wouldn’t need the CEO. Now is the time for many business leaders to face those hard decisions and do what is right for the organization.
Examples I see are that plague some companies are:
- Wrong people in the jobs they have. They need to be moved
- No core values or corporate culture. During COVID there are more crises because “the employees are not stepping up.” This will get worse.
- Bad financial reporting. You can’t change direction and know the results if your financials are 6+ months late or usually wrong.
- No idea about the underlying product or service costs. Thus focusing on nonprofitable items and clients during a cash crunch.
- Headquarters in another country has to approve all online content and publish the website and online stores; however, they are distracted and don’t understand the U.S. market. In this instance, there is no agility, which is essential.
If you are struggling with this, I would recommend joining a Peer Group like Vistage and presenting the issue to your Peers. When I was a Vistage member, I found the advice was what I deep down usually knew was needed, but hearing it from my Peers provided me no choice but to commit to something I was avoiding. Also, I would have to do it, as I could not face them again, having committed to doing it, but then backing out. As I tell Vistage prospects, “there is no public flogging in Vistage, but monthly humiliation in front of your peers may be worse!”
While COVID is creating chaos in many companies, business leaders need to ensure they have repaired their underlying problems first before trying to adapt. As the old French proverb says, “A stitch in time saves nine.”
Copyright (c) 2020, Marc A. Borrelli
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As we emerge from COVID, the current employment environment makes me think of a surfing concept: “Being Caught Inside When a Big Set Comes Through.” Basically, the phrase refers to when you paddle like crazy to escape the crash of one wave, only to find that the next wave in the set is even bigger—and you’re exhausted. 2020 was the first wave, leaving us tired and low. But looking forward, there are major challenges looming on the horizon as business picks up in 2021. You are already asking a lot of your employees, who are working flat out and dealing with stress until you are able to hire more. But everyone is looking for employees right now, and hiring and retention for your organization is growing more difficult.
“Why don’t they use common sense?!” You may have said this phrase yourself, or heard it with your managers, when discussing an employee’s actions. However, the frustrated appeal to “common sense” doesn’t actually make any meaningful change in your organization. We all make decisions based on the information we have and the guides we have to use. So if the wrong decisions are being made in your organization, it’s time to examine the tools you give decision-makers.
You can only determine profitability when you know your costs. I’ve discussed before that you should price according to value, not hours. However, you still need to know your costs to understand the minimum pricing and how it is performing. Do you consider each jobs’ profitability when you price new jobs? Do you know what you should be charging to ensure you hit your profit targets? These discussions about a company’s profitability, and what measure drives profit, are critical for your organization.
If you were starting your business today, what would you do differently? This thought-provoking question is a valuable exercise, especially when it brings up the idea of “sunk costs” and how they limit us. A sunk cost is a payment or investment that has already been made. Since it is unrecoverable no matter what, a sunk cost shouldn’t be factored into any future decisions. However, we’re all familiar with the sunk cost fallacy: behavior driven by a past expenditure that isn’t recoupable, regardless of future actions.
Bringing clarity to your organization is a common theme on The Disruption! blog. Defining your business model is a worthwhile exercise for any leadership team. But how do you even begin to bring clarity into your operations? If you’re looking for a place to start, Josh Kaufman’s “Five Parts of Every Business” offers an excellent framework. Kaufman defines five parts of every business model that all flow into the next, breaking it down into Value Creation, Marketing, Sales, Value Delivery, and Finance.