A Leadership Style User Manual

A Leadership Style User Manual

In the interview above, Adam referred back to one of the more provocative ideas that arose from his hundreds of Corner Office interviews with top leaders, a Manager’s User Manual. Basically, how great would it be if managers wrote a “user manual” about their leadership style, in which they explain some of their unique preferences and quirks to the people they’re managing?

You’ve in charge of a new department, and your reports are wondering what you’re like — your pet peeves, your quirks, and what it takes to earn a couple of gold stars from you. Over a year, they will figure these things out through trial and error, through observation, and maybe through some awkward conversations, you have with them about something they’ve done or haven’t done.

If you buy a car or a new TV, it comes with an instruction manual; however, we humans don’t, and we have to work with people who may have never worked with us before. As we don’t know how each person works, we what worked in the past, but that is not guaranteed to get optimal results. So why not shorten that inevitable learning curve, and let people know what you’re like right up front?

Here is an outline of how to produce a Leadership User Manual.

 

Step 1 – Rough Cut

Take no more than an hour and answer these questions with the first thing that comes to mind.

  • What is your style?

  • When do you like people to approach you, and how?

  • What do you value?

  • How do you like people to communicate with you?

  • How do you make decisions?

  • How can people help you?

  • What will you not tolerate in others?

 

Step Two: First Draft

From the above, you have a rough draft, so now you need to add depth and smooth it out. First, use some other tools to help you refine your manual. Look for clues in assessments you have done in the past. Myers Briggs? Strength Finder? Also, re-read your performance reviews from the last few years for clues.

 

Step Three: Input & Workshop

Ask your colleagues to answer the questions in step one about you. Ideally, this together around a table rather than over email so that group feedback is incorporated. What is their impression? Once you have their feedback, incorporate it into yours and then share your draft and ask for feedback on what they find accurate, off, or not clear.

 

Step Four: Finalize

Based on the inputs from your colleagues, make a final edit.

 

Step Five: Revise

Once a year, dust your manual off and see if it still feels accurate to you and your colleagues. Any new insights?

 

An Example

Abby Falik, Founder and CEO of Global Citizen Year, did this and posted her User Manual on LinkedIn. It is below:

My style 

  • I’ve been hard-wired as an entrepreneur since I was a kid.

  • I hover in ambiguity and possibility and am most energized when I’m connecting dots/people/resources that translate challenges into opportunities. I am always scanning for information to feed ideas in my mind and typically do my best thinking out loud.

  • My high expectations are matched by my commitment to support people in meeting them. I believe in giving people freedom, flexibility, and “stretch” assignments, and equipping them with the tools they need to uncover and develop their potential.

  • I’m determined to prevent my attention from being hijacked by technology. I never open my computer until I’ve written my quick list of what I intend to do; I hide my inbox to help me focus, and I’ve tried to take control of my phone by removing everything that’s not a “tool” from my home screen.

What I value 

  • I value resourcefulness and proactivity.  Be smart, move fast, and pivot quickly. Ask forgiveness rather than permission.

  • I’m obsessed with efficiency: I touch each email only once (respond, delete, delegate, or delay), and live by the law of 80/20 – often prioritizing promptness (i.e. 24-hour rule in following up on a meeting) over perfection. I start each day by “eating my frog” when my energy and attention are fresh.

  • I expect my teammates to value efficiency, as well. Before doing something “the way it’s always been done,” scan for an easier, cheaper, simpler way to maximize your “return on effort.” Before starting something from scratch, ask if it’s already been tried.

  • I value scrappiness and feel an obligation to our staff, Fellows, partners, and donors to focus our limited time and resources on the “real good” vs. the “feel good.”

  • I believe work-life alignment matters more than work-life balance, and that strategic self-care – whether sleeping enough, leaving work early to exercise, meditate, or spend time in nature – is the key ingredient to becoming our best, most productive and happy selves. I am religious about spending time unplugged – a day a week, and a few weeks a year.

What I don’t have the patience for

  • If you make a mistake or something is heading off the rails, tell me before the crash. Failure is great (as long as you learn quickly); surprises are not.

  • I get antsy with hypothetical musings and over-analysis. I learn best through experience and experimentation and have a strong bias toward action.

  • I default to trust, but if my confidence is shaken, it’s hard to rebuild. Ways to lose my trust: not following through, withholding important information, avoiding hard conversations, or treating others with disrespect.

  • I am turned off by entitlement, boredom and taking things for granted – it’s a privilege to do what we do, and it’s our joyful responsibility to take our work seriously, but not ourselves!

How best to communicate with me 

  • Be crisp.  Start with the headlines. I prefer bullet points to prose, and .PPT to .DOC.

  • I love to solve problems, remove barriers and help others move the ball forward.  Come to me not just with problems, but with plausible solutions and your recommended course of action.

  • I value authenticity, honesty, and transparency. If I say something you disagree with, tell me. I am hungry to be challenged in thoughtful and constructive ways. I respect people who have the right blend of confidence and humility to know when to question someone (even the boss!), and when to defer to another’s expertise.

How to help me

  • I move quickly and don’t always catch every detail (except when it comes to our brand and communications where I’m a painstaking perfectionist).  I appreciate help making sure the details are covered and flagging for me any that need my attention.

  • Nudge me when it’s time to start or end a meeting – but have (some) patience with my flexible approach to time.

  • Tell me what I need to know, not what you think I want to hear.

What people misunderstand about me

  • I am an introvert, posing as a professional extrovert.  Don’t confuse my tendency to work alone in my office with being disengaged.  My door’s always open.

  • I speak with conviction, but I’m not set in my thinking. I’m open-minded and always delighted to be shown a better way.  I make decisions quickly, but if you give me reasoning or data that points in another direction, I’ll happily change course.

Finally, I may be the boss, but I’m also a person, a teammate and a messy work-in-progress. I’m committed to always getting better at my job, and becoming a wiser, kinder and more impactful human.

CEOs and leaders have gotten very positive feedback from their colleagues and subordinates who have received these user manuals. Shouldn’t you consider preparing yours?

 

© 2019 Marc Borrelli All Rights Reserved

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Wicked! The Queen Lost at Martian Tennis Again, You Shouldn’t

Wicked! The Queen Lost at Martian Tennis Again, You Shouldn’t

Many, if not most, people draw from experience to solve problems, and they do it very effectively. They look at a situation, draw on their expertise, and execute. If you were to ask them, they might even say that they do it without thinking, they are on autopilot. While this works very well in many areas, we find that it doesn’t work in all. They are specialists and excellent at what they do. So why does it go Wrong?

 

The Queen

My wife and I binge watch the Crown on Netflix, as she loves it, and I, as a Brit, enjoy it as it brings back many memories of the times I lived in England and ex-colonies. However, watching the episode on the Aberfan mining disaster in Season 3, I suddenly reflected on several situations that have all caused significant issues for the Queen.

 

Aberfan Mining Disaster

Aberfan is a Welsh mining town, and on October 21, 1966, after heavy rains, a landslide of liquified coal waste descended a mountain slope above the town. The mudslide decimated several farm cottages and the Pantglas Junior School resulting in the death of 133 people, mainly children. The Queen delayed her appearance there, despite advice to the contrary. Royal biographer Sally Bechdel Smith claimed this was because the Queen feared her presence would be a distraction to the rescue efforts. Members of the Queen’s inner circle at the time have said the Queen does regret not visiting sooner. “I think she felt in hindsight that she might have gone there a little earlier,” said Sir William Heseltine, who worked in the royal press office at the time. “It was a sort of lesson for us that you need to show sympathy and to be there on the spot, which I think people craved from her.”

  

Death of Princess Diana

Following her divorce from Prince Charles, Princess Diana had started dating Dodi Al-Fayed, son of Harrod’s owner Mohammed Al-Fayed in the summer of 1997. Paparazzi were following the celebrity couple in Paris in the early hours of Sunday, August 31, 1997, when their car crashed and they were both killed. Prince Charles, Prince Philip, and the Queen were first to receive the news, and their reaction was one of “dazed bewilderment,” according to royal expert and author Ingrid Seward. The royal family, holidaying at Balmoral, had no idea of the crisis that was about to overwhelm them when they received the news. The British public’s reaction to Princess Diana’s death was unlike anything the Royal Family or the country had ever seen. Mourners left thousands of floral tributes and messages at the gates of Buckingham Palace. Diana’s fans held candlelit vigils and wanted the flag above Buckingham Palace to be raised to half-mast to honor the princess. While against royal protocol, the Royal Family eventually caved to mounting public pressure and pandered to the demand. Furthermore, in an unprecedented Royal move, Princess Diana was even given a state funeral, which thousands of mourners turned out to watch.

  

Prince Andrew’s recent interview on BBC

Prince Andrew appeared on the BBC recently to clear his relationship with Jeffrey Epstein and disabuse the notion that he had had sex with a minor provided by Epstein. Many thought that the interview was a bad idea; however, he proceeded, and it was an unmitigated disaster. As a result, Prince Andrew is stepping down from all Royal engagements and has lost most of the corporate support for his various charities.

Looking at these three cases, the commonality in all of them are:

 

  • A Bad Situation 
  • A Royal Response that is Inappropriate for the Time
  • A Public Reaction which damages the Royal image/brand

With hindsight, it may be easy to say that the Queen and her advisors should have known better, but is that the case? The issue, I would argue, is that the Queen and her advisors are all specialists at the Crown.

We have all heard of the 10,000-Hour Rule made famous by Malcolm Gladwell in Outliers! The claim is that greatness requires enormous time, 10,000 hours of practice. The Queen was brought up to be Queen; she knew all that she needed to know about being Queen. Her advisors, over the years, were well-educated people with great diplomatic backgrounds.

At the time of the Aberfan disaster, her private secretary was Baron Michael Adeane, who had attended Eton and Cambridge. Baron Adeane had been an aide-de-camp to the Governor-General of Canada for two years. He served in World War II and afterward was Assistant Private Secretary to King George VI and Queen Elizabeth for seven years before becoming Queen Elizabeth’s Private Secretary. Baron Adeane was a member of the Privy Council, a body of advisors to the sovereign who comprises mainly of senior politicians. Thus, he knew the role of the Monarch and what the country expected, but he failed.

When Princess Diana died, the Queen’s private secretary was Baron Robert Fellowes, who was also Diana’s brother in law. Baron Fellowes attended Eton and then joined the Scot Guards, after which he entered the banking industry where he was a managing director of Allen and Harvey and Ross for 11 years. He was then recruited to join as Assistant Private Secretary in 1977 and finally became Private Secretary to the Queen in 1990. Again someone who knew the role, the country, the people, and was prepared for his job.

There is no need to go through the latest situation as I am sure the advisors to Prince Andrew were as equally well trained and prepared.

These men had the 10,000 hours of training, they were well educated, they knew their jobs, but it all went wrong. Why?

 

Range

Research by Daniel Kahneman identified two kinds of environments:

  • Kind: where a learner improves simply by engaging in the activity and trying to do better, the rules are known, with repeatable patterns. Examples of Kind Environments are Chess and Golf.

  • Wicked: where experience doesn’t improve the results of the specialist because the rules of the game are often unclear or incomplete, there may be no repeating patterns, and often feedback is delayed. Examples of Wicked Environments are emergency rooms, insurgencies.

David Epstein’s recent book, Range, Why Generalists Triumph in a Specialized World, defines Wicked environments as “Martian Tennis.” You can see the players on the court with balls and rackets, but nobody has shared the rules. It’s Martian, so even how things operate in the environment is different. It is up to you derive the rules, and they are subject to change at any time without notice. “

Thus, in all these situations, the Queen and her advisors were playing Martian tennis. The rules had changed; the public expected new things from her, and what worked no longer did so. It was not that she and her advisors were wrong; it was that they were playing the wrong game.

Unfortunately, most of the world is more like Martian tennis than Chess, and that in most fields—especially those that are complex and unpredictable—generalists, not specialists, are primed to excel. According to Epstein to succeed in a Wicked Environment; we don’t need specialists, we need generalists, who juggle many interests rather than focusing on one and who are more creative, more agile, and able to make connections between all their area of interest.

Thus when looking for people to lead or advise at top levels, we need to look for people with Range and generalists that can succeed in these Wicked Environments. Ideally we want polymaths, but failing that I would suggest the following three things business leaders can do when looking to hire people with range:

  1. Variety. Look for variety in what the person’s interests and activities. Epstein notes that Noble Laureates are more likely to play musical instruments or act than non Noble Laureates.
  2. Experimentation. Look for people who have tried many things before specializing. Not necessarily people who have tried many things and given up, but who have completed them but then changed direction as they seek to maximizing what economists call “match quality,” or the degree of fit.
  3. Don’t seek precocity. You don’t want someone who has done this all their life from an early age. Those people suffer “fadeout” and have not range when shown something outside their expertise.

Along the same lines, James Carse, the NYU professor and religious scholar has identified two types of games:

  • Finite games have known players, fixed rules, a clear end. The purpose is to win. Like a football game.

  • Infinite games have known and unknown players who shift around. Rules change, and there’s no finish line. Also like a football game.

The problem, according Simon Sinek, is that too many companies think they’re in a finite game. You can’t “win” business, and approaching it like you can could open you up to failure. In Sinek’s new book, The Infinite Game, he offers a framework for individuals, groups, and organizations to shift their thinking and practices to play an infinite game. From a local police department to the Fortune 500, he shows who’s done this successfully…and who’s failed.

As I have reflected on Range and The Infinite Game, it reminds me of the The Wisdom of Crowds, where I think the Crowd recreates Epstein’s range. For wise crowds to outperform irrational ones, these critical criteria are needed:

Criteria Description
Diversity of Opinion Each person should have private information even if it’s just an eccentric interpretation of the known facts.
Independance People’s opinions aren’t determined by the opinions of those around them.
Decentralization People are able to specialize and draw on local knowledge.
Aggregation Some mechanism exists for turning private judgements into a collective decision.
Trust Each person trusts the collective group to be fair.

The three conditions for a group to be intelligent are diversity, independence, and decentralization, and the best decisions are a product of disagreement and contest. There is no need to chase the expert.

However, the authors note that Crowds produce terrible judgment when the members of the crowd were too conscious of the opinions of others and began to emulate each other and conform rather than think differently. If the decision-making environment is not set up to accept the crowd, the benefits of individual judgments and private information are lost, and that the Crowd can only do as well as its smartest member, rather than perform better. In looking at historical failures of Crowds, the first item he identified was Homogeneity – the lack of sufficient diversity within a Crowd to ensure enough variance in approach, thought process, and private information.

Looking at the Queen and her advisors, they had all come up through the same system, schools, and training. There was too much homogeneity.

So what does this mean for business? Since most of the world is not on the Kind end of the Spectrum, especially not in the fast-changing business world, CEOs have to either hire people with range or ensure that the C-Suite has enough diversity to operate as “great crowd.” They learn beyond practice and assimilate lessons that might even contradict their own direct experience.

May you win at Martian Tennis!

 

© 2019 Marc Borrelli All Rights Reserved

 

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Shareholder Value, What is its Role?

Shareholder Value, What is its Role?

To the shock and horror of many in the business community, top CEOs from the Business Roundtable stated two weeks ago that Shareholder Value is not Everything. These CEOs, including the leaders of Apple and JPMorgan Chase, argued that companies must also invest in employees and deliver value to customers.

The Business Roundtable is trying to redefine the role of business in society — and how an increasingly skeptical public perceives companies. Breaking with decades of the Friedman Doctrine, which holds that a firm’s only responsibility is to its shareholders, the Business Roundtable stated that companies should no longer advance only the interests of shareholders. Instead, companies must also invest in their employees, protect the environment, and deal fairly and ethically with their suppliers.

This shift in corporate ideology comes at a moment of increasing tension in corporate America, as big companies face mounting discontent over income inequality, harmful products, and poor working conditions.

There have been many arguments for and against this stand, i.e., Why Maximizing Shareholder Value Is Finally Dying, Corporations Can Shun Shareholders, But Not Profits, Stakeholder Capitalism Will Fail If It’s Just Talk, and We must Rethink the Purpose of the Corporation.

Personally, however, I think that this is a move in the right direction for the following reasons.

The Friedman Doctrine is backward.

Shareholder value is the result of corporate purpose and Mission and cannot be the purpose and Mission. Simon Senik’s “Start with Why,” in my opinion, best describes how to develop a corporate mission. An example of what happens when a company game up is mission and followed the Friedman Doctrine was Imperial Chemical Industries, who changed its mission from “We aim to be the finest chemical company in the world“ to “We aim to Maximize Shareholder Value“ in the 1990s. Prior to the change, ICI was considered one of the finest companies in Britain, today it no longer exists having been slowly sold off many parts to repay its debt before finally being sold to AkzoNobel in 2008.

 

Few stakeholders within the organization.

If the maximization of shareholder value is the corporate Mission, then there are few within the organization, other than some high-level employees, who have a stake in the Mission. Working to increase the wealth of others is not something most employees get behind. It reminds me of the old joke:

Employee: “Nice new car, boss”

Boss: “Well, if you set yourself targets, work hard, stay focused, next year I’ll be able to buy an even better one.”

Employees are only attracted to the company with this mission by what they will get, i.e., money or career advancement, so there is little commitment to the organization. If the expected benefits aren’t delivered or someone else offers more money, the employees will move on, increasing employee turnover. As a result, with few employees embracing the Mission and no other purpose, nothing is of importance to quality, service, and profits fall, decreasing brand value and shareholder value. Employees who embrace the Mission and are satisfied will serve customers better, increasing brand value. Employee happiness and business success are linked.

 

Few stakeholders outside the organization.

If the employees see no value in the Mission, customers and suppliers don’t. If the Mission is only to make money, customers and suppliers understand the Mission as a goal of extracting more value from them. Thus, they move from commitment to the organization (i.e., putting an Apple sticker on your car) to engaging with the company because there is no better alternative. If the company gets into financial trouble, they are less likely to support it, but rather let it fail. Working with suppliers is a relationship with the power moves back and forth and both parties treat it with care knowing they will be on the receiving end at some point. However, if shareholder value maximization is the only goal of the organization, suppliers abandon that relationship knowing the company has in its behavior.

 

Lack of Investment in Interesting products.

The Friedman Doctrine has led to many companies killing off research centers, which generated great benefits unidentified at the start. Ten years ago, the majority of technology products were offshoots from two places, Xerox Parc and Bell Labs, both of which no longer exist because of the Friedman doctrine. Between share buybacks and dividends, corporate investment in new areas has fallen. Google, SpaceX, and a few other companies have stepped into this space, but it is far more limited, thus limiting the future growth potential for the US.

 

Lack of Training.

Thirty years ago, when I graduated from college, many companies had training programs which took in graduates and trained them over several years. These programs knew that most of the trainees would leave the organization and thus canceled under the Friedman Doctrine. However, I would argue that these programs had three positive results:

  1. Well Trained Employees. A common complaint today is that graduates don’t know anything; however, I would say we didn’t know more, but we benefited from such programs.
  2. Loyalty to the Organization. Employees who moved on had developed a commitment to the organization that had trained them. Over the years they referred work to it and would engage with that company because of the feeling towards it.
  3. The camaraderie with their fellow trainees. Employees who went through the training program built a camaraderie with their fellow cohorts, which lasted a lifetime. I have met many accountants who came through the training programs provided by Arthur Anderson and still talk about their classmates and the connections they made. This camaraderie further built referral networks that benefited those that stayed behind and the training organization.

 

Lack of Integrity.

I recently heard Kirk Lippold‘s definition of integrity, which is:

“Integrity defines leadership. Without uncompromising integrity, failure becomes the natural default to success. It’s not just doing the right thing at the right time for the right reasons, even if no one is looking. That’s ethics. Integrity is doing all those ethical things regardless of the consequences.”

If the Mission is to maximize shareholder value, then I believe the organization develops a modus operandi of maximizing profit as the proxy for shareholder value. Since profit is measured monthly and quarterly, the corporate focus becomes more short term and undertakes anything to cut costs and maximize revenue. Thus, companies lose their integrity, sacrificing what makes them special for money, and losing customer loyalty and brand value. Recent examples of this would be Wells Fargo fake accounts scandal, and the Boeing and the 737 Max. An example of long term brand damage is the Sun Newspaper and Liverpool boycott, and many others. For a an example at what lack integrity can do see The Whistleblower (trailer is below) which based on a true story. Thus to quote Timothy 6:10, “For the love of money is the root of all evil.”

An example of a Mission leading shareholder value is Johnson & Johnson’s response at the time of the Tylenol recall. J&J’s Mission is to “. . . solutions that create a better, healthier world.” Living that Mission, created goodwill and tremendous brand loyalty within the US. A company’s brand is its reputation, and damage done takes a very long time to recover, destroying shareholder value.

Therefore, I think that the Business Roundtable is correct; Shareholder Value cannot be the purpose of the organization. If the company focuses on its Mission and engages its employees, customers, and suppliers, increases in shareholder value should result. Shareholder value should be measured, and companies should see how they are doing, but it is one metric and should not be the purpose. Further, in my opinion, the Friedman doctrine has done untold damage to the US over the years. Private Equity Groups, which own over $2.5 trillion of companies globally, primary focus on Shareholder Value has had mixed, if not harmful, results for their investment companies.

 

© 2019 Marc Borrelli All Rights Reserved

Recent Posts

The Downfall of Boeing: A Lesson in Core Values

The Downfall of Boeing: A Lesson in Core Values

Boeing’s 737 Max issues highlighted the company’s sacrifice of safety for financial performance, resulting in a tarnished reputation. The prioritization of profit over core values also damaged the FAA’s credibility and revealed a lack of accountability for top executives. This downfall serves as a reminder of the importance of maintaining core values and prioritizing them over short-term financial gains.

Resolutions, Here We Go Again.

Resolutions, Here We Go Again.

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The War for Talent: 5 Ways to Attract the Best Employees

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Are you killing your firm’s WFH productivity?

Are you killing your firm’s WFH productivity?

Productivity remained during WFH with COVID. However, further analysis found that hourly productivity fell and was compensated for by employees working more hours. What was the culprit – Meetings. Want to increase productivity, have fewer meetings.

The Inability to Deal with Unexpected Events = Failed Leadership

The Inability to Deal with Unexpected Events = Failed Leadership

In the last week, we have seen two examples of failed leadership out of the same industry – the airline industry.

First, there is Delta Airlines and its 3,500+ canceled flights due to the storms that passed through the Southeastern US last Wednesday. Now the inclement weather is not the airline’s fault, and few of us would want them flying in dangerous conditions; however, it is how the airline responds to that situation reflects on its weaknesses and those of its management. From what is appearing in the press:

  • Five days later, flights still being canceled;

  • From Wednesday until sometime on Friday wait times at Delta’s call center were over three hours;

  • When travelers did get through they could not get information on their situation;

  • Passengers stranded overnight in airports because of insufficient hotel rooms and no knowledge as to when they might be leaving;

  • Planes were stranded and could not get moved to the right gates;

  • Stranded Crews, uninformed as to their situation, and when they did often get to the right gate and plane, had worked too long to be able to work for the flight, thus requiring a new crew;

  • Crews informed that the airline was no longer making reservations for them in cities as it was overwhelmed, and they were on their own, and the airline would reimburse them; however, some younger staff could not afford to pay for hotels and so were sleeping in airports;

  • Delta had no agreements with some the other leading carriers to transfer stranded passengers to their flights to assist in moving the backlog; and

  • Pathetic apologies from Delta’s management.

Of course, Delta will undoubtedly recover from this debacle. However, to ensure that there is salt in the wound, Delta made two announcements. They were making the SkyMiles program less generous, and replacing many of the chairs in the concourses next to their gates with smaller, harder, plastic ones so passengers can appreciate the TLC the company feels for them.

Not to be upstaged by Delta, and in the time-honored tradition of “Here hold my beer” on Sunday, United Airlines decided that it needed four volunteers from a flight to get off as they need to provide the seats to United crew. None of the passengers were willing to accept United “kind offers of compensation,” so the company selected four passengers at random and took them off the flight. One passenger refused, so security dragged him bloodied over the seats, down the passageway, and out of the plane upsetting many passengers.

The video has gone viral on social media and watched over 250million times according to some reports. Initially, United apologized for the overbooked situation. However, United’s CEO, Oscar Munoz, did not apologize for the handling of the passenger, or as he termed it, “re-accommodate these customers.” In an email to employees, he doubled down on the situation supporting the company’s actions and blaming the passenger for the entire episode. As the backlash grew against United, Mr. Munoz made more vague apologies before finally stating that “I continue to be disturbed by what happened on this flight and I deeply apologize to the customer forcibly removed and to all the customers aboard,” . . . “I want you to know that we take full responsibility, and we will work to make it right.”

Unfortunately, Mr. Munoz was brought in to fix United service problems about eighteen months ago, so apparently, that effort has made little progress. Also, Mr. Munoz’s support of the employees is consistent with United’s general attitude to its customers. From other articles appearing at the moment, United is an equal opportunity abuser, threatening to put a first-class passenger in handcuffs if he did not give up his seat to a higher priority passenger. The culture of we are right and you the passenger are always wrong and to be abused is failed leadership of the worst kind. Initially, the market reacted negatively to the news but has recovered as investors realize that there will be little impact on United. The share price at the close today (4/12) is down about 2.2% reflect a drop in United’s value of approximately $0.5bn.

It is within United’s rights as a carrier to remove anyone for any reason from a flight, and if they resist, forcibly remove them if necessary. Thus there will be no recourse against the airline legally as a result of this. Will there be a consumer backlash against United? No, for the same reasons, there won’t be one against Delta. The US carriers are effective monopolies in their markets; Delta has 81% of the gates in Atlanta and goes to great lengths to ensure other carriers, i.e., Jet Blue do not come in. Monopoly can treat their customers any way they like as the customer does not have a choice – think of the way utilities make you wait at your home for half a day for a technician to show up to connect you. However, this behavior reflects that the US carriers are closer to the RyanAir than Singapore Airlines when it comes to service while charging a Singapore Airlines price. It always amuses me that Delta boasts that it selected the best Business Airline because I have to wonder by who, obviously, no one that has flown internationally on other airlines.

However, I digress. Let’s return the failure of leadership. It is my experience that all organizations, like people, make mistakes. However, successful organizations and individuals are those that recognize the mistakes early and correct their behavior. Taking two great business quotes:

“Culture eats strategy for breakfast” Mark Fields

“Everyone has a plan ’till they get punched in the mouth.” Mike Tyson

It is the culture that deals with the unexpected, not strategies and plans.

Thus the role of leadership is to create a culture within the organization to deal effectively with unexpected change. In the case of Delta, it is evident in the ensuing chaos of the last week that the company is not set up for sudden change. After the IT disaster that befell the company last year, one would have thought they would have a better grip on it, but it seems that Delta did not take advantage of that situation to learn how to deal effectively with the unexpected.

United, having oversold the flight and needing to move some crew to another location, had not allowed for such a situation. This situation was a failure of planning. However, rather than solve the failure to plan, they decide to take the easy solution of removing someone from the flight, but when one passenger did not want to go, the staff make the tagline “the friendly skies” late-night comedy fodder for years to come.

Most of us do not have companies that exist in monopolies, where we can abuse customers as they have no choice. Our clients are fickle, and a social media storm like those Delta and United experienced would put us out of business. Thus we must teach our employees how to deal with the unexpected and give them the decision making authority to do it. They need to understand the objectives and the mission of the organization to ensure the decisions they take to align with the company’s goals, but mainly to ensure that when the unexpected happens, the whole place does not become the Titanic. Also, we need to teach them how to keep customers happy. Ritz Carlton Hotels used to have a policy that anyone in a hotel, from the bellman up, was allowed to spend up to $1,000 no questions to cure a customer complaint. That built a reputation for fantastic service and guest satisfaction, which Ritz still enjoys to this day and keeps the customer returning.

The US carriers will continue to provide inferior service, in the tradition of Basil Fawlty, until such times as competition threatens them into realizing it is the customer that matters, and excellent service is essential. However, until then, expect more incidents like we have seen over the last week because, as any parent will know, without consequences, there is no change in behavior.

 

© 2017 Marc Borrelli All Rights Reserved

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What Potential Buyers Look for in a Management Team

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A couple of weeks ago, CEO Exclusive Radio had me as a guest, and I was asked, among other things, about what buyers look for in a management team. So, if you’re a CEO/Owner getting ready to sell your business, here are four key points.

1. Make sure that your team knows your business strategy and everything about it. Strategies cannot live in the CEO’s mind, where, unfortunately, many reside in smaller companies. Your team needs to all speak to it as “one” and understand how to execute it. Provide a clear strategy everyone can understand. It will be better than an overreaching complex set of impossible goals.

2. Is your team “navy seal” trained to cover any gaps if you’re not around? If the team has been taking direction a majority of the time, how will they be of value to a new owner? Buyers are willing to take “economic” risk but not “operational” risk and thus are looking at a team that can deal effectively with adversity. Make sure everyone on the team can explain their critical role, as well as those of others on the management team to any potential buyer. They should be comfortable with the buyer’s discovery team discussing how your business is growing and how it’s profitable.

3. The company mission must be a goal your management team understands. Communicate to all regardless of their role and ensure they know their responsibility for the bottom line so they can make it happen at every turn, whether you are there or not. If they are salesmen, do they only know how to sell? Be aware that a killer sales team may not hold the same value to a potential buyer. A new owner will need a business with a complete and diverse management team that runs like a well-oiled machine. Having to replace the management team reduces the value to the buyer.

4. Inform your team early in the decision process, so they have a reason to stay through the merger or sale. Give them a reason to stay. Clean out any staff that doesn’t meld with the idea of a transaction and how they can contribute to the growth and profit possibilities. Every team member must be on board and be able to act as a spokesperson for the company in a positive way. New owners want to come into an environment where HR doesn’t have to solve problems from the get-go.

Listen to a quick clip: Soundcloud

Listen to the whole show: Wholeshow

If you would like a copy of my Due Diligence List, please contact me at marc@marcborrelli.com.

 

© 2015 Marc Borrelli All Rights Reserved

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