Measuring Success: How IT Helps and Hinders the Quest for Value

By Michael Williams, PhD, and Samuel L. Seaman, PhD
Pepperdine University - The Graziadio Business Report

The success of any great moral enterprise does not depend upon numbers.
William Lloyd Garrison


Since the development of the abacus in ancient China, humankind has searched relentlessly for numerical approaches to informed decision making. That progression quickened with the development in 1946 of the world’s first electronic numerical integrator and digital computer (ENIAC),[1 ] developed by Army Ordnance to compute World War II ballistic firing tables. Many view the ENIAC as the first practical electronic computer. Since then, we have witnessed a steady, exponential increase in computing power and network bandwidth, along with a simultaneous decrease in both size and cost of computing power.


Gordon Moore’s 1965 prediction that computing power would essentially double every 18 to 24 months for the same cost has, astonishingly, held true. Attempting to capitalize on these vast improvements in computer performance, businesses developed powerful decision support systems and collected even more numbers (i.e., data). And now, those information technologies allow business managers to digitize, classify, and evaluate hundreds of strategic variables, providing them with quick and accurate solutions to common business problems.


While this capability is clearly a benefit to decision-makers, it can also create inherent risk—namely, that variables easiest to measure and track via information technology and quantitative models can assume greater importance than they deserve. Sometimes, what is critical is also difficult, if not impossible, to measure and, unfortunately, tends not to be considered in the final analysis. In this article we discuss some of the extraordinary benefits that IT and quantitative analysis bring to the decision-making process, and we also challenge the reader to consider, thoughtfully, the inherent risk of reducing complex decisions to measurable, or calculable mathematical models.


How IT and Numbers Can Help Us


Information technologies have, undeniably, had a positive impact on economic growth over the last century. One need look no further than a daily newspaper to see that information technology has radically changed today’s cultures and the way people think. Advanced information systems and networks enable the nearly immediate transmission of digital information in such forms as photographs, streaming video, graphs, numerical indices, financial facts, market analyses, expected values, etc. All of this information flows through and nourishes the global economy as blood does the human body. Numbers, the information systems in which those numbers are stored, and the analytical procedures we use to make sense of those numbers are fundamental to progress in modern societies.


This constant flow of information has at least three distinct advantages for business. It provides 1) an increased awareness of opportunities, 2) an increased awareness of inefficiencies, and 3) an increased ability to predict, monitor, and track performance. Information technologies make it possible for managers to identify opportunities in the form of emerging markets, demand for new products, and new customer service initiatives.


For example, premium ice cream company Cold Stone Creamery has a difficult product mix. The staple of their product line is a collection of ice cream dishes recommended by the store. However, by allowing customers to mix and match “add-ins” such as chocolate chips, fresh strawberries, and sour gummy worms into their choice of ice cream flavors, Cold Stone Creamery has an almost limitless set of possible product combinations. Unfortunately, the legacy IT systems at Cold Stone Creamery were not able to record what add-ins were mixed with which flavors. By integrating a new Customer Relationship Management (CRM) system, the company is now able to quickly identify new trends in flavor mixes from their broad base of customers and offer these new flavors as in-store recommendations for new customers. This “sense-and-respond” capability has contributed to Cold Stone Creamery’s dramatic growth from one to 12,000 stores in ten years.[2 ]


Information Technologies Help Eliminate Inefficiencies, Track Performance


The application of information technologies also permits business organizations to identify and replace established processes that are embedded with inefficiencies. An exciting example of this technology is known as “business intelligence” (BI). BI methodologies make it possible for firms to measure, collect, analyze and act on information on a grand scale. An example of the benefits of BI can be seen at Continental Airlines, whose various BI initiatives have saved the organization more than $500 million over the past six years.[3 ] Continental’s COO, Larry Kellner, argues that “BI is critical to the accomplishment of our business strategy and has created significant business benefits.”


Information systems such as their “Demand-driven Dispatch” system have helped Continental become a more efficient organization. Prior to developing the Demand–driven Dispatch system, Continental rarely changed flight schedules, plane assignments, or maintenance routines. This inflexibility led to frequent inefficiencies in the form of oversold flights, empty planes and frustrated customers. However, with the Demand-driven Dispatch system, Continental now combines data from revenue forecasts with flight schedule information to identify promising new sources of additional revenue. For instance, the system might recommend larger planes for routes with high demand, or a reduction in the number of flights on unprofitable routes. These systems have helped Continental increase performance since 1996 when they were rated among the “worst” of major U.S. air carriers.


Finally, information technologies have increased a firm’s ability to predict, monitor, and track performance. A powerful example of this capability surfaced in the fall of 2005 as America watched various U.S. agencies forecast the path, strength, and potential for peril of hurricanes Katrina in Louisiana and Mississippi and Rita in Texas. Days before the storms came ashore, analysts were able to assess risks and warn inhabitants in areas that would likely be affected. Such capabilities were unheard of just a decade or two ago.


These advances have been possible only because of the ongoing development and application of IT resources. Undoubtedly business has benefited greatly from rational judgments based on “hard evidence,” i.e. numbers, rather than on “gut reactions”, intuition, or myths.


What Numbers Cannot Measure


Where is the life we have lost in living? Where is the wisdom we have lost in knowledge? Where is the knowledge we have lost in information?
T. S. Eliot


When one recognizes the extraordinary value to business of numbers and the information systems that store them, it is easy to see why the maxim at our headiest consulting firms goes something like this: “If it can be performed, it can be measured. If it can be measured, it can be managed.” We ascribe inordinate importance to numbers in our personal and professional lives. Professional presentations usually include charts, summary statistics, financial projections, and expected monetary values. Every day it seems that someone in the media or government proffers a number that will help us better comprehend our world. We saw this recently in the U.S. when the hurricanes threatened. The National Weather Service immediately queried their information systems looking for the numbers that would help them select an optimum strategy.


Our infatuation with numbers has been described most eloquently by Antoine de Saint-Exupéry:


Grown-ups love figures. When you tell them you’ve made a new friend, they never ask you any questions about essential matters. They never say to you “What does his voice sound like? What games does he love best? Does he collect butterflies?” Instead they demand “How old is he? How much does he weigh? How much money does his father make?” Only from these figures do they think they have learned anything about him.[4]


Why then, in spite of all the counting, do we continue to find ourselves disillusioned, confused, and surprised by the “unexpected.” Saint-Exupéry observed that perhaps it is because numbers neither capture everything of importance, nor do they tell the whole story. This is especially true when we insist upon relying on numbers to the exclusion of good judgment or intuition, or when we find that we have asked the wrong questions and therefore have collected the wrong data. In fact, the relative simplicity with which many variables can be identified, measured, and tracked with IT may hinder effective decision making. Decision makers may erroneously choose to focus their attention on the easily measured variables and models rather than giving adequate attention to those elements of a decision that are difficult—even impossible—to measure. While this decision-making strategy may lead to a mathematically optimal solution, it may not suggest the wise or prudent response.


We described above how Cold Stone Creamery, Continental Airlines, and the National Weather Service use information technologies to identify new opportunities, isolate inefficiencies, and predict, monitor, and track performance. Many companies have followed suit, creating massive data warehouses of customer-based information on what products their customers buy, how often they buy those products, and the stores from which they purchase the products. Yet a true understanding of how their customers came to make those decisions is still anyone’s guess.


Such “measurement above meaning”[5 ] is not necessarily an asset; neither does it lead to good decision making. As Fortune columnist Michael Schrage argues, “just because single, left-handed, blond customers who drive Volvos purchase 1,450 percent more widgets on alternative Thursdays than do their married, non-blond, right-handed, domestic car-driving counterparts does not a marketing epiphany make.”[6 ]


Managers must realize that often the number crunching, the cost/benefit analyses, and the net present value calculations can be of great value; but they can also leave us wanting. In the final analysis—after the numbers have been counted, the information systems built, the predictions made—the ultimate success of a strategic decision may well depend on factors that have escaped measure. For many of the terribly complex problems that managers encounter, cannot be solved using the information from numbers alone. In those circumstances, intuition, profound process knowledge, sound judgment, moral reasoning, and the zeal for managing people will also be essential.


Summary


When one considers the tremendous capabilities of information technology, it is easy to see why IT professionals place great value on numbers. Indeed, business strategists from all disciplines, including the authors of this article, have championed this very noble cause.


Encouraged by the many successes, however, we have perhaps put too much emphasis on the value of measurable information. In our haste to measure performance and manage uncertainty, we have been slow to recognize that the information we collect, manipulate, and analyze often has limited value. For example, society is well served by the increases in information technology that enables experts to simulate a variety of hurricane scenarios and prioritize levee construction projects based upon estimates of potential damage.


However, once the simulations are complete and the numbers are “in,” it us up to leaders with strong resolution, sound judgment and moral reasoning to weigh the immeasurable costs of human life and well-being that can be affected by a natural disaster and to make the difficult—and morally weighty—decisions about which projects to fund. It is difficult when building mathematical models or information technologies, to place value on some very important things—the elderly that were left behind, the children separated from their parents, or the untoward effects of pollutants on the environment. Unfortunately, because these “values” can not be easily measured nor included in a simulation model, they tend to be ignored. And, if they are ignored, we not only risk making poor decisions, we also are in danger of creating a world where only those values that can be “seen” will matter. We endorse numbers, and urge our readers to use them.


We also recognize, however, as Peter Drucker points out, tools and concepts are mutually interdependent. That is, the tools we use to analyze our business often force us to see our business differently. As our tools develop and change, so do our businesses.[7 ] To see rightly, then, we need to look beyond the numbers; calling upon a broader set of values, and making sure that we have asked the right questions, created metrics with meaning, and made judgments that were based on both mathematical and moral reasoning.


[1] Meik, Martin H. (1961) The ENIAC Story – Retrieved from the World Wide Web: 10-6-05 http://ftp.arl.mil/~mike/comphist/eniac-story.html.
[2] Schuman, E., (2005). From Gooey Designs to GUI, IT Helps Ice Cream Chain Deliver, CIO Insight, September.
[3] Anderson-Lehman, R., Watson, H.J., Wixom, B., & Hoffer, J. (2004) Continental Airlines Flies High with Real-Time Business Intelligence. MIS Quarterly Executive. 3 (4): 163-176.
[4] Saint-Exupéry, A. (1993). The Little Prince, translated by Katherine Woods. New York, NY: Harcourt Brace Jovanovich.
[5] Schultze, Q. (2002). Habits of the High-Tech Heart, Grand Rapids, MI: Baker Academic Press.
[6] Schrage, M. (1999). “Sixteen Tons of Information Overload,” Fortune, August: 244.
[7] Drucker, P.F. (1998). “The Information Executives Truly Need,” Harvard Business Review, February, 73 (1): 54-62.

Additional Information:

This article appears by kind permission of the publishers of The Graziadio Business Report, The George L. Graziadio School of Business & Management, Pepperdine University.

Dr. Michael Williams is an assistant professor of Information Systems at the Graziadio School of Business and Management at Pepperdine University. Dr. Williams earned a PhD in Information Systems from the Kelley School of Business at Indiana University. He received an MDiv and an MA from Abilene Christian University. Prior to entering academe, Dr. Williams was an IT consultant in the Washington, D.C. area. michael.williams@pepperdine.edu

Dr. Samuel L. Seaman is a professor in the Decision Science discipline in the Graziadio School of Business & Management at Pepperdine University, where he teaches graduate business courses in applied statistics and evidence based decision analysis. His research and consulting interests generally focus on the application of mathematical models to practical dilemmas in business, healthcare, and the not-for-profit sector. Whenever possible, he also contemplates the theoretical--searching passionately for a linearly optimal solution to the “Particle/Wave Duality Paradox” in his lab at Malibu’s Surfrider Beach. samuel.seaman@pepperdine.edu

Limitations live only in our minds. But if we use our imaginations, our possibilities become limitless.

Jamie Paolinetti

The Market-Valued Model: A New Paradigm for HR

Learn a new model for valuing your work, one that moves away from all that jargon about “HR as a profit center” and presents HR as a supplier of necessary expertise that helps the core business to be successful.
By Kevin Herring
W hat is the value of a human resource department? What led Bank of America, BP Amoco, and others to transfer all HR activities to an outside vendor? What is the future of HR and what role should it play in business? These are questions on the minds of human resource professionals and executives alike, and the answers are not to be found in traditional models of human resource staffs. In fact, the very survival of human resources hinges on the ability to shift to a new model.

The traditional view
The role of HR has been described as personnel administrator, corporate conscience, trainer, legal guardian, corporate communicator, employee ombudsman, and labor placater. Recently, the designation strategic partner has come into vogue to imply greater alignment of HR activities with business requirements, although HR activities still center mostly on the traditional roles of hiring, firing, and administering rewards.

Consequently, most methods of quantifying the value of HR are directed at these transactional activities. For example, common approaches to measuring HR value include activity tracking, costing, benchmarking, surveying client satisfaction, and measuring HR as a "profit center."

A new approach
Although the various methods for valuing HR departments are useful, they fail to account for the business of the business. In other words, the company's purpose is to successfully produce, deliver, and/or sell a particular product or service, not to engage in efficient HR practices. Human resource departments exist to support the organization in achieving its objectives and can do so by finding ways to create improved business results.

This is the new model of HR value. It identifies the HR department as potentially a market-valued resource to the organization. In the market-valued role, HR professionals recognize that their value is based on marketplace perception, which is, in most cases, based on the experience of those in the core business.

Human resource departments must embrace the concept of being subject to market pressures.

They must be prepared to demonstrate high market value. To do so, they need to actively seek opportunities to help the core business resolve problems, improve results, and reach objectives.

An HR focus on the core business acts as a kind of low center of gravity, keeping HR close to the real issues of the day-to-day business and creating greater quantifiable results. For example, instead of seeking methods to administer and track performance management activities efficiently, a market-valued HR professional might help core workers obtain customer feedback in order to respond more effectively to customer needs.

Or, rather than creating another leadership development program, market-valued HR staff will work on creating knowledgeable employees who act to eliminate production bottlenecks.

In other words, in place of activities with weak relationships to the bottom line, HR can serve the core business by using its expertise to directly address business needs.

To become a market-valued resource, HR professionals must do three things:

First, they must strategically partner with internal business people, aligning themselves with operations and its purposes. Knowing the business is a precursor to becoming a partner, and becoming a partner is vital to having an impact on the business.

Partnership in the true sense of the word implies ownership and risk. A business arrangement with no risk to one party and considerable risk to the other is not a partnership at all. Partners share in the decisions and the risk. This means that human resource personnel must be willing to put themselves at risk, just as their clients do in the marketplace. For example, HR can pay, out of its own budget, the cost of a consultant if objectives are not met.

Second, as described above, HR needs to focus on business problems rather than HR activities. Demonstrating the value of HR by rolling out elaborate training programs or hiring policies may do little to address the business needs of the production group.

The business problems faced daily in production are things like machine availability, customer response time, retooling time, marketplace demands, production bottlenecks, quality issues, production costs, shareholder value, and production efficiency. In a market-valued approach, the business gains value when these issues are addressed.

Third, HR must assess its impact on the business in terms of measurable results rather than in activity efficiencies and costs. It is useful to show the dollar savings in advertising as a result of innovative recruitment methods, but the true value of HR is measured in bottom-line business results, such as a 20 percent decrease in retooling time, a new and innovative response to the marketplace, a 15 percent improvement in quality, or a 25percent increase in company stock price. These are the outcomes that demonstrate the value of HR.

Becoming a market-valued HR practitioner
Human resources, training, and other support departments can gain market value in a company by adhering to some simple guidelines for working with "clients" from the core business.

Determine the key issues. Find out what the needs of the business are. One way is through HR metrics that may point to high turnover, low retention for first-year employees, or morale issues in a particular department. Further analysis should reveal root causes that HR can address.

A second, more powerful approach is to directly find out from operations or the core business which issues concern them most, without regard to whether or not the issues fit into the realm of HR. This is where HR can truly have an impact. Core-business employees constantly wrestle with issues that frustrate them in their efforts to reach production or financial targets. Since revenue is generated at this level, anything that addresses improvement to the product or service, cost, or response to the customer is an opportunity to add value.

Determine the impact on the business. To understand the difficult issues facing a department or work group, try to see how the problem, unresolved, affects the business. Is it creating quality problems? Are people working inefficiently? Are decisions avoided, and if so, with what result? Are products being rejected or reworked? In other words, what price is the organization paying for these problems? This becomes the basis for HR's work, and the way HR shows its value.

Develop collaborative solutions. Once HR has defined the problem, and can see its business impact, it can then turn to its own storehouses of knowledge, skills, and abilities to determine how it might be able to help. This is in contrast to its traditional role, in which HR personnel, who unilaterally identify the problem, define the solution, and mandate actions for the target group without regard to whether or not they are addressing the needs of the business.

Using HR skills to develop solutions with the client, while resisting the temptation to mandate, will increase the client's ownership of and commitment to a solution. That increases the likelihood of success.

Establish measurable outcomes. If Step 2 is done well, the outcomes to measure should become apparent. If the business problem necessitates the reworking of products, then measuring that rework (before and after the changes are instituted) is the way to see if the intervention is having an effect. Likewise, if people are working inefficiently, then a measure of efficiency is in order.

Demonstrating hard-number results in these areas allows HR to set itself apart from those following benchmarking or profit-center models, and it establishes solid value for HR in the minds of those in the core business.

Assess effectiveness. This is not a one-time, post-implementation step, but rather an ongoing process of meeting with the core-business "client" to discuss progress, problems, and needs. It is where the adjusting, fine-tuning, and regrouping occurs. It ensures that the focus remains on identified business outcomes and the results that can be achieved.

The new market-valued model presents HR as a supplier of necessary expertise that helps the core business to be successful. As such HR continuously provides answers to real business problems to maintain a reason to exist inside the organization. HR and other staff support departments that are committed to having an impact on the core business can establish themselves as market-valued departments that are indispensable to the success of any organization.

For more information:

"The Future of Staff Groups: Daring to Distribute Power and Capacity," by Joel P. Henning. Berrett-Koehler Publishers, Inc., 1997.

"Delivering Results: A New Mandate for Human Resource Professionals," edited by Dave Ulrich. Harvard Business School Press, 1998.

"Results-Based Leadership," by Dave Ulrich, Jack Zenger, and Norm Smallwood, Harvard Business School Press, 1999.
Kevin Herring is President of Ascent Management Consulting. He consults to HR and other staff groups on how to become market-valued contributors. Kevin can be reached at 520/742-7300 or by e-mail at kevinh@ascentmgt.com.
Next Article: 1. Studies in Market-Valued HR
With the help of HR, one company produced at a lower cost, and another was able to meet sales expectations.

Seven Steps Before Strategy

In the rush to get a seat at the corporate table, some HR professionals skip the basics. That ruins HR's credibility and holds it back. Here's what you must do before you can strategize.
By Bruce N. Pfau, Ph.D and Bonnie Bell Cundiff, Ph.D
HR deserves a seat at the table. HR must be the champion of change.

How many times have we heard these tired phrases?

In recent years, human resources professionals have been told that their rightful place is as a senior company officer at the top of an organization. Tasks associated with what once was known as "personnel administration" have become the objects of scorn, while activities thought to position HR managers as "strategic partners" have been encouraged and applauded.

Many in HR have taken this message to heart. They are striving to focus on strategy, to participate in decision-making at the highest levels of their organizations, and to elicit respect from other members of the senior management team.

Unfortunately, they are failing. Despite their best efforts, many are still blocked from the head table or only grudgingly given a seat. They find themselves too weak politically to be champions of organization transformation. And they find themselves in a constant battle to prove their worth and to have any influence in key decisions. While this is due, in part, to slow-to-change attitudes toward HR from other areas of the organization, HR also must accept responsibility.

The recent emphasis on strategy at the expense of operations has hurt HR. In their rush to become strategists, HR executives and managers have dropped the ball on some fundamental aspects of HR. This has allowed those predisposed to diminishing the role of HR to point to shoddy basics as evidence of limited abilities.

Does this mean that HR professionals should abandon strategic activities and return to the days of "administrivia"? No. It simply means that HR executives and managers must try harder to find the delicate balance between day-to-day operations and big-picture initiatives. While HR professionals ultimately should be focused on strategy, they must make sure that the basics of the job are taken care of first.

Ultimately, there is a hierarchy of roles and priorities that must be followed--moving from the smooth execution of the basics of HR to the assumption of a seat at the table to, finally, becoming a champion of change. Following this path lets HR professionals avoid the fate of one executive who tried to advise an internal client about manpower issues. The line manager reacted with scorn, asking, "How about getting my open-position requisitions filled before giving me advice on strategic staffing issues?"

The seven steps
Taking care of the basics means taking steps to increase efficiency, streamline operations, link individuals and activities to organizational objectives, and establish sound relationships with multiple stakeholders. The following seven steps will help assure that both the basic and strategic HR needs of organizations can be met:
Get rid of what’s unnecessary
Automate
Assess stakeholder satisfaction
Communicate regularly with stakeholders
Redefine "strategic"
Practice what you preach
Spread the word

Step 1: Get rid of what’s unnecessary
A common complaint from HR managers juggling basic HR operations and strategic thinking is that there isn’t enough time to do both. With staff and budget cuts forcing organizations to do more with less, this balancing act is becoming even more difficult.

The solution is simple. Get rid of HR programs and practices that aren’t adding value to the organization’s bottom line.

We recognize that this is easier said than done. Jettisoning HR programs and practices requires HR managers to know which activities are contributing to shareholder value and which are not. It means they must have the courage to admit that certain practices do not work. And it means recognizing that just because a program is touted by conventional wisdom as a "must-have," that doesn’t mean it’s right for their organization.

The availability of new research is making this process less complicated. The Watson Wyatt 2001 Human Capital Index establishes exactly which human-capital practices have the greatest impact on shareholder value. For example, effectively implementing a specific set of recruiting practices is associated with a significant increase in shareholder value. Among the practices included in this category are those associated with hiring people who can hit the ground running, involving employees in the hiring process, treating people evenhandedly, and approaching recruiting and retention as mission-critical.

On the other hand, the HCI study also throws a cautionary flag in front of some popular HR practices. Three practices in particular--360-degree reviews, developmental training, and the use of HR technologies with "softer" goals in mind such as culture change and enhanced communication--were associated in the study with a decrease in financial performance. While there may be nothing inherently wrong with these practices, many organizations implement them in ways that decrease, rather than increase, shareholder value.

HR executives and managers must take a hard look at their programs and practices to evaluate which ones are adding value and which ones are not. By focusing only on core practices proven to add value, HR professionals free up time and resources previously invested in delivering programs that bring marginal returns.

Step 2: Automate
Forty years ago, HR staffers kept employee records on index cards. Fortunately, those days are gone. Today, HR should be using technology to automate administrative transactions and to provide efficient, user-friendly self-service systems to employees and managers alike.

Achievement of these goals is dependent on good execution of carefully crafted HR technology plans. When HR technologies first became widely available several years ago, many companies implemented as many eHR applications as they could and made them available to as many employees as possible through e-mail, voice mail, Interactive Voice Response systems, the company intranet, the public Internet, and HR service centers. The assumption was that the faster an organization moved its traditional HR services into an eHR environment, the more efficient HR would become and the more satisfied employees would be with HR services.

However, our research shows that getting results has more to do with a properly focused eHR strategy than with the speed or extent of an organization’s eHR progression. Technology must be implemented with a clear objective in mind, and that objective must be tied to hard business outcomes. Using HR technologies to reduce costs is associated with an increase in shareholder value, for example. Similarly, using HR technologies to upgrade service or improve transaction integrity or accuracy also can boost the bottom line.

Unfortunately, implementing HR technology for "softer" reasons has the opposite effect. Using HR technologies to enhance communication, for example, is associated with a decrease in shareholder value, as is using technology to promote culture change.

The task for HR is to figure out what can and should be automated, establish quantifiable objectives, draw up a plan to meet them, and carefully execute the plan. Specific steps in this process should include:

Understanding and leveraging the link between eHR and business strategy. HR services and systems must be viewed in the context of helping to achieve company objectives.

Quantifying the current cost of delivering HR services. HR groups must know where they are today before they can identify opportunities for cost control and project expected cost-savings.

Defining how eHR will change the delivery of HR services. This means establishing a vision and articulating what that vision will mean in terms of people, process, and technology.

Working closely with the finance side of the organization to develop the required analysis. Typically, this includes a business case containing a combination of measures, such as net present value, rate of return, and payback period.

Establishing measures/targets to maintain focus and assess progress. As the saying goes, "What gets measured gets done."

Step 3: Assess stakeholder satisfaction
Just because an HR group believes its activities are going well, that does not mean others share the same view. Consider data from the Watson Wyatt WorkUSA 2002 study of employee attitudes and opinions. Only half--48 percent--of participants rated the effectiveness of their organizations’ HR functions favorably.

HR executives and managers at every organization should know where they stand in the eyes of their stakeholders, including senior executives, line managers, and employees. What are they doing well? Which areas need work? How are they viewed by the majority? As administrative implementers? Strategic planners? Facilitators? Obstacles to progress?

Armed with this information, HR professionals can evaluate their roles in the context of what their organizations want and need from their HR departments.

Step 4: Communicate regularly with stakeholders
The truth is that most stakeholders in an organization don’t really care whether HR has a seat at the table or not. They just want their HR needs met.

Consider line managers. They want to see their staffing requirements fulfilled. They want the HRMS to be accurate and up-to-date. They want a compensation system that is easy to understand and lets them reward (and keep) their key talent. In short, they want to see the trains running on time.

When you make changes to the HR process that appear to eliminate HR duties , you might at the same time create confusion and concern among line managers and others in the company. Who will take care of the duties? How will the work get done? In addition, line managers often are unaware of the importance of specific HR processes. A program or practice they dismiss as a waste of time may actually bring significant value to the organization.

The solution is frequent and effective communication. By communicating regularly with stakeholders, HR executives can show them why certain practices and programs are essential. They can explain to stakeholders why changes such as automation of the performance-management system or introduction of self-service benefits administration are being made. And they can make the business case for them--pointing out advantages related to cost, efficiency, accuracy, and ease of use.

By making communication with stakeholders about proposed changes de rigueur, HR managers and executives can alleviate any concerns the stakeholders might have and develop a contract with HR’s customers that covers the organization’s human-capital priorities.

Ultimately, the key to establishing trust in the HR function is helping stakeholders understand the competitive and strategic human-capital issues facing their organizations and explaining the rationale behind change-related decisions.

Step 5: Redefine "strategic"
Let’s face it. It’s just not realistic for every person working in HR to be focused solely on strategy. If every HR executive, manager, associate, and assistant eschewed administration for strategy, the result would be certain disaster.

Still, everyone wants to be seen as a strategist. With the mantra "think strategic" echoing in their ears, few HR managers are willing to define themselves as anything but strategic partners.

The solution to this problem lies in broadening the definition of "strategic" to encompass both the formulation of strategy and the execution of strategy to accomplish organizational goals. During the past few years, many of the people who focused on strategy at the expense of operational success did so because they saw no connection between their operational duties and the success of their organizations. They wanted to "make a difference" and believed the only way to do so was to become part of the decision-making process.

To solve this problem, organizations must clearly define roles and expectations for people in HR-related positions. The percentage of each person’s time likely to be spent formulating strategy versus executing it should be calculated, and it should be made clear that meeting operational objectives is considered a top priority.

At the same time, steps should be taken to clarify for HR professionals in all positions how their work affects the bottom line. We call this "line of sight"--showing employees that their individual contributions do have a measurable effect on their companies’ ability to meet business goals.

The best way to accomplish line of sight is through a strategy-mapping process. In the first stage, assess the primary business strategies. What are the business objectives of the organization? The division? The department?

Next, identify the operational plans necessary to execute these objectives. How will the business strategies be carried out? By whom? With what resources? In what time frame?

After the objectives and processes have been established, you can determine the human-capital requirements for executing the plans. Questions to ask include: What type of culture will we need? What type of work experiences will we have to offer in order to acquire top talent? How will our compensation and benefits practices change? Once you know the HR requirements, technological resources can then be evaluated and allocated to support the needed HR programs by reducing administration and maximizing existing resources.

With this knowledge, HR executives can show members of the HR staff where they fit in and how they can contribute to the achievement of business objectives.

Step 6: Practice what you preach
Getting the HR house in order is important from an efficiency standpoint, but it also is crucial for establishing credibility within the company. Few line managers are going to be willing to test out new practices such as flexible work arrangements or automated performance-management systems if the HR group exempts itself from practices it asks others to accept.

By modeling behaviors and processes that can be implemented throughout the company, HR can be a testing ground to work out the kinks in new activities and as a showcase for good employment practices.

Step 7: Spread the word
While the HR literature may be filled with articles and editorials celebrating the importance of human capital and its management, few people outside the field of HR are widely exposed to that message.

There are some signs that this is changing. Key newspapers and national business magazines regularly feature pieces on the handling of human-capital issues. And companies are finding that it pays off to position themselves publicly as good places to work.

HR executives and managers should emphasize this growing respect for human capital by showing line managers, senior management, and investors the strong link between superior human-capital practices and increased shareholder value. Three key findings from the HCI study can be used to make this case:

Superior human-capital practices are leading--not lagging--indicators of financial performance. This means that effective human-capital practices drive positive business outcomes more than positive business outcomes lead to good HR practices. Changes made now will help companies recover more quickly and emerge stronger when the economy rebounds.

Shareholder returns are three times higher at companies with superior human-capital practices than at companies with weak practices. During the boom years of the late 1990s, that difference was significant, but not nearly as large. It’s even more important to focus on human-capital superiority in tough times.

Not all human-capital practices are created equal. Some create a lot of value. Others actually diminish it. Companies must examine programs and practices to ensure they are adding to shareholder value.

Just because HR experts say HR executives and managers deserve a seat at the table, that doesn’t make it so. HR professionals must evaluate for themselves their track record in meeting stakeholders’ operational expectations. No matter how brilliant their strategic thinking, unless the basic HR needs of their organizations are satisfied, HR professionals will not be viewed as full members of the organizational team.

Workforce, November 2002, pp. 40-44

THE SUREST WAY TO PROMOTE YOURSELF IS TO HELP OTHERS GET AHEAD.

When you go out of your way to help others get ahead, it is inevitable that they will reciprocate. When you genuinely wish others well, even though you may feel a little envious that they are advancing faster than you or gaining more recognition, they will respond accordingly. Your good deeds will encourage them to do likewise. You may never know how many people have recommended you for a job, or a promotion, or helped you in some other way because you aided them when they needed it most.

This positive message is brought to you by the Napoleon Hill Foundation. Visit us at http://www.naphill.org. We encourage you to forward this to friends and family. They can sign up for this free service at our web site. If you would like to stop receiving these thoughts, please go to http://www.naphill.org/thought-unsubscribe.asp

It’s Not Just About Sales Goals

by Michelle Nichols

Feeling stuck? Batteries low? Need a motivational shot in the arm? Try setting a Big Hairy Goal for yourself!

You probably have plenty of sales goals, but do you have a Big Hairy Goal? Every salesperson should. A BHG is a goal that is so far from where you are in your career now that you will have to push yourself incredibly hard to achieve it. You’ll know you’ve created a real BHG because it will inspire you and get your creative juices flowing. The downside is that you can’t reach it quickly. It will take months or years of struggling before you can declare to the world, “I did it!”

It is easy to get discouraged while you are working toward a BHG. If this happens, evaluate if your goal or your approach to reaching it needs modification. If your goal is to sell $1 million worth of leisure suits a year or your closing ratio is inexplicably decreasing, you may need to rethink your plan. However, if your goal and approach are still valid, then hang in there! Perseverance is the magic ingredient that separates those who set big goals from those who accomplish them.

Salesman-turned-Olympian-turned-professional speaker Ruben Gonzalez embodies perseverance. During his career selling copiers, he personally cold-called every office on every floor of every building in downtown Houston—twice, he says. That’s perseverance. He’d start at the highest floor of each building each time because he wanted to “start selling at the top.” For two years, his daily recipe for success was cold-calling for three hours every morning and following up on the phone for the rest of the day. As a result, he was consistently a top salesperson in his office.

NO QUITTING. When I first heard Gonzalez’ cold-calling story, I wondered what kind of a nutball would put himself through that much pain. But once I heard the rest of his story, I gave him my full respect as a salesperson and a competitor.

In his book, The Courage to Succeed: Success Secrets of an Unlikely Three-Time Olympian (Aspen Press, December, 2004), Gonzalez describes how he applied his maniacal perseverance to sports when he decided he wanted to compete in the Olympics. At 21, the age when most people are leaving this level of competition, Gonzalez began looking for a sport in which he could qualify. He was only an average athlete, so he needed to choose an event that required another quality he already possessed. He chose the luge, even though he had never seen it performed. His logic was that luging was known for the many injuries it caused and therefore had a high quitting rate. He figured that gave him the best chance to move up the ranks to qualify for the Olympics.

Four years later, he competed in the 1988 Olympics in Calgary. He went on to luge in the Olympics in Albertville in 1992 and Salt Lake City in 2002.

Here are six lessons I’ve learned from Gonzalez on how to develop and achieve your own Big Hairy Goals:

1. Ask yourself honestly: Is this a wish, a dream, or a BHG?
A wish is hoping that the phone will ring and someone wants to buy a lot of whatever you sell at top price with speedy payment. A dream is something you are ready to make happen. A dream becomes a BHG after you’ve done your research, gotten some experience, and produced a step-by-step plan that will make it come true.

2. Tell yourself that quitting is not an option.
If you quit, you’ve guaranteed that you’ve lost. Mentally close the door to quitting. Put yourself in a position where you have no choice but to move forward toward your BHG. I have a sign over my desk that says, “There is a way. Find it.” It helps me be unstoppable because it keeps my focus on my actions and wards off any thoughts of self-pity.

3. Hang in there and keep fighting.
Gonzalez told me that if you don’t quit, success is just a matter of time. He proved this with his success selling copiers and in luging.

4. Surround yourself with successful people.
If you hang around with people who have a more positive attitude than you, you will naturally pick up their habits in behavior and thinking. You can also benefit from reading biographies of winners. The opposite is also true, so don’t spend too much time with folks who are constantly negative.

5. Gonzalez says the path to reaching a BHG boils down to this: First, you dream. Then you struggle. Finally, you emerge victorious.
When things aren’t going your way, tell yourself that you’re in the “struggle” phase of the process. This is a natural step in reaching big goals. It helps separate the quitters from those who persevere no matter what.

6. Stay focused.
When Plan A doesn’t seem to be working, it’s easy to want to start a second, parallel plan. Resist that urge. Instead, either modify your original plan or sell yourself on why it’s still the best way to reach your goal and double your efforts.

Gonzalez proved that if you are willing to do whatever it takes for as long as it takes, success is just a matter of time. So when you feel stuck in your progress toward a BHG, persevere. Happy selling!


Michelle Nichols is a sales speaker, trainer, and consultant based in Reno, Nevada. Visit her website at SavvySelling.com

http://www.thelugeman.com/motivational_speaker_businessweek.htm

Leadership as the Starting Point of Strategy

Leadership as the Starting Point of Strategy
By Tsun-yan Hsieh and Sara Yik
McKinsey Quarterly


Even the best strategy can fail if a corporation doesn’t have a cadre of leaders with the right capabilities at the right levels of the organization.

When it comes time to implement a strategy, many companies find themselves stymied at the point of execution. Having identified the opportunities within their reach, they watch as the results fall short of their aspirations. Too few companies recognize the reason.

Mismatched capabilities, poor asset configurations, and inadequate executioncan all play their part in undermining a company's strategic objectives. Although well-regarded corporations tend to keep these pitfalls squarely in their sights, in our experience far fewer companies recognize the leadership capacity that new strategies will require, let alone treat leadership as the starting point of strategy. This oversight condemns many such endeavors to disappointment.

What do we mean by "leadership"? Whereas good managers deliver predictable results as promised, as well as occasional incremental improvements, leaders generate breakthroughs in performance. They create something that wasn't there before by launching a new product, by entering a new market,or by more quickly attaining better operational performance at lower cost, for example. A company's leadership reaches well beyond a few good men and women at the top. It typically includes the 3 to 5 percent of employees throughout the organization who can deliver breakthroughs in performance.

Since bold strategies often require breakthroughs along a number of fronts,a company needs stronger and more dominant leadership at all levels if these strategies are to succeed. A defining M&A transaction, for example, requires leadership throughout an organization's business units and functions in order to piece together best practices and wring out synergies while striving to carry on business as usual. In addition, leaders throughout both companies must transcend the technical tasks of the merger to rally the spirits of employees and to communicate a higher purpose.

As the number of strategic dimensions and corresponding initiatives increases, so does the pressure on leadership. Not surprisingly, our work in many industries with companies of all sizes has shown that high-performers, especially those with lofty aspirations, have the most difficulty meeting their leadership needs. Of course, companies that perform poorly are also lacking in leadership capacity. The higher a company's aspirations or the more radical its shift in strategic direction, the larger the leadership gap. This rule holds true for high performers and laggards alike.

The consequences of inattention

Most CEOs will agree that leadership is important, yet few assess their leadership gap precisely. Fewer still build an engine to develop the right quantity of leaders with the right mix of capabilities, at the right time, to match opportunities.

If the number of leaders needed to achieve a strategic goal—for example, expanding current operations or developing new businesses—were set against the number of existing leaders, a company could uncover the numeric leadership gap it must address. Even if an organization has enough leaders, it may discover a shortfall in their capabilities. A company expanding internationally, for example, could find that its current leaders lacked the cultural sensitivity to operate in unfamiliar geographies. Or a corporation entering new markets could find it had too many engineers and not enough business builders.

The failure to assess leadership capacity systematically before launching strategic initiatives can leave top executives scrambling to fill gaps at the last minute—with significant consequences.

In the short term, companies that undertake new strategies without the right leaders in place are forced to burden their existing ones with additional responsibilities. As such leaders take on the new challenges, the demands from day-to-day operations invariably increase, leaving less time for other tasks. Often these leaders drop the activities with less tangible outcomes, such as staff development, for which the effects are not immediately evident. If a company stretches its existing leaders too far, their overall effectiveness takes a nosedive. From the start, this trade-off compromises strategic objectives. Companies executing strategies under these circumstances assume either that they can get by with suboptimal leadership or that achieving just part of their initial objectives will capture a corresponding percentage of the strategy's net present value. We know from experience that these assumptions can be fatally wrong: one critical misstep can jeopardize the entire investment.

In the longer term, a persistent leadership gap will be responsible for an inexorable decline in the number and quality of leaders. Companies create a vicious cycle in which good leaders become overextended or are moved haphazardly and thus have less time to develop younger talent. The day will come when they hand over the reins to a less experienced, ill-prepared group of successors. Left unchecked, this cycle can ultimately put the company's core operations and strategic growth at risk.

Leadership first

Given the severe consequences of a leadership gap—the best-planned strategy is no more than wishful thinking if it can't be translated from concept to reality—why do so many companies discover their leadership shortfall only when executing their strategies? This question raises another, more fundamental one regarding strategy and leadership: which is the chicken and which is the egg? Companies have taken a number of useful approaches to this puzzle.

One successful US conglomerate with global operations routinely holds discussions that integrate both strategy and leadership. Any consideration of a strategic initiative invariably includes the question, "Who exactly will get this done?" If the company does not have a sufficient number of the right leaders, the plan does not proceed.

Another approach is to weigh a corporation's strategic options against its ability to launch new businesses, new approaches, and other forms of breakthrough performance—in other words, its leadership. Consider, for example, the global-expansion strategy for a successful resource company. The effort included identifying the leadership required to drive breakthrough performance over five years in areas such as running and expanding existing businesses, developing new ones, renovating corporate processes such as risk management, and providing overall change leadership. The company then gauged its leadership gap by comparing these requirements with the qualities of its current leadership bench. It made a number of strategic decisions to determine, among other things, which path was best for realizing the strategy, whether to revise its aspirations, and whether to develop leaders internally or hire them from outside.

A third approach is to plan the path toward a predetermined strategic goal by taking into account the quantity, timing, and mix of leaders that the various alternatives require. Companies using this framework may rule out some possibilities if developing the requisite depth of leadership is unrealistic in the time frame dictated by the marketplace. A leading food company in Asia, for example, aspired to become the dominant regional player. With five strong national brands, it had at least three clear options for how to achieve that goal: take a cautious approach by launching one brand as a pilot in each overseas market before introducing other brands; focus on China by building a beachhead with one brand in a single city, then sequentially rolling that brand out region by region within China; or, finally, acquire a player in one regional Chinese market, thus gaining outlets and local expertise, and use this opening to roll out all five brands to more markets in China over time.

While many factors, including the company's appetite for risk, weigh on these decisions, in this case each option had distinct leadership requirements. The first, for example, would initially require at least five to ten well-rounded leaders—entrepreneurs capable of establishing local networks, operating under unfamiliar conditions, and managing all five brands. The second option called for a business builder who was deeply familiar with the beachhead city to direct a team of four to six emerging leaders who could spearhead the subsequent expansion. A business-development leader would also be helpful in seeking an alliance partner to speed up the company's pace and bolster its confidence during the regional expansion. The third possibility, by contrast, would immediately require an expert to structure, valuate, and negotiate deals and, in the medium term, a few executives capable of operating in each of the regional Chinese markets. After the company critically reviewed its current and potential leaders, it made the decision to adopt the third of those options.

These three cases illustrate how thinking about leadership up front can affect a strategy's direction, path, and outcome. But can a company bring leadership considerations into its strategic discussions even earlier, before it chooses a general direction? To do so, the company must think rigorously about its current leadership pool—the types of leaders and their mix of capabilities—and lay out the strategy accordingly. If a manufacturer's strong suit is leaders with superb marketing capabilities, for example, a market-driven strategy would be implied and might include selling another manufacturer's products. Taken to this level, leadership becomes the true starting point for strategy.

Filling the gap

A clear picture of the leadership gap can help guide strategic thinking, but to retain as many options as possible, companies must also consider ways to fill that gap. To reduce the risk of strategic failure, they need to direct their approach to leadership with three time horizons in mind.

Long term: Position

Companies need to position themselves today to meet their strategic objectives during the next three to five years. In an 18-month period, for example, a South Korean consumer goods company successfully expanded its core business into Japan, where it diversified into noncore sectors such as low-cost lodging. It achieved such deep penetration of this notoriously closed and mature market so quickly by building its leadership bench in advance. At least five years before the initiative's launch, the company began hiring managers and sending them to Japan—through exchanges with friendly Japanese partners—thereby creating a cadre of South Korean leaders trained to operate in Japan.

In many of Asia's key growth markets, local leaders with a global perspective are highly sought after and often unavailable at almost any price. Returning nationals, typically trained in Europe or the United States, may be another option, but many companies have found these prospects to be expensive and lacking in the tacit knowledge needed to operate successfully in the cultures of many corporations—and the industries they compete in. A company must hire and groom potential leaders as much as a decade or more ahead of market need and then help them build the internal networks necessary for long-term success.

To cite another example, for decades a US financial-services giant systematically hired the best global talent, regardless of the market, and rotated these leaders through every critical aspect of its operations. This investment in human assets paid off handsomely. In most of the new economies the company enters, it enjoys an almost unparalleled ability to field full-service teams with strong leaders in the vanguard. Competitors, by contrast, are forced to expand more selectively or to offer expensive packages to lure top talent.

Medium term: Cultivate

Companies must also begin cultivating leaders for specific roles one to two years down the road. This effort requires recognizing the skills, behavior, and mind-set that leaders must possess to be prepared for future roles. Many executives spend years building their technical skills and industry knowledge but rarely develop expertise in areas such as managing stakeholders and building networks. In a prominent resources company, for example, top executives identified potential successors for key leadership positions. It highlighted the measures needed to bring each one up to speed, including counseling, training, and new assignments, by considering individual profiles (strengths and weaknesses, past experience, and skills) as well as the key success factors for upcoming leadership positions (industry or functional expertise, personal or change-management skills, and local knowledge).

Another company informed appointees of their next assignment six months ahead of time and then enrolled them in self-directed preparatory programs. All of the leaders wrote a personal-development contract related to the challenges of the new role and created a list of learning opportunities and developmental activities that would prepare them for their new responsibilities. These tasks could include, for instance, seeking advice from veterans or drawing up a plan for the first 100 days in the new role. The company also provided four categories of learning modules: "lead self," for self-awareness, skill mastery, and developmental planning; "lead others," for getting the best performance from colleagues in specific settings; "lead context," for understanding and identifying trends in the competitive environment; and "lead change," for aligning key stakeholders, steering the organization to breakthroughs, and challenging conventional approaches and thinking.

Short term: Match

Job experiences and stretch assignments are the primary development vehicles for leaders. Opportunities to achieve performance breakthroughs are critical not just for reaching a company's performance goals but also for developing its best people. Unfortunately, corporations that are particularly risk-averse often match their people to opportunities by looking at track records and job experiences, which they see as indicators of future performance. But such an approach is unlikely to succeed, since the experience and skills needed for earlier successes are not necessarily precursors for those required to achieve performance breakthroughs in subsequent opportunities.

A better approach is to use corporate-performance objectives and personal-development goals to match current and potential leaders with opportunities. This multifaceted approach uncovers a better fit between the individual and the opportunity. For this process to be successful, top managers need to acquire a holistic understanding of each individual, including professional abilities, such as leadership qualities, track record, and potential, as well as key personal traits, such as style and preferences, character and motivation, and current attitudes and mind-set. Companies can assess these qualities through information—objective and subjective—from superiors, peers, mentors, and other sources.

To help leaders develop throughout any of these three time horizons, a company must first accurately identify who its leaders are and then convince them of an opportunity's potential. Companies often underestimate this challenge. Top managers typically assume they know which of their best people are willing and able to take on new challenges, but the reality is often very different. At one multinational corporation with an ambitious growth agenda, the CEO asked the 20 members of his management committee for written nominations to fill leadership positions for 30 initiatives. Most committee members couldn't confidently name more than five to ten candidates, and large overlaps existed among the members' lists. Each had nominated the "usual suspects"—managers who were well known in the executive suites. If the company pursued all 30 initiatives simultaneously, it would overload these candidates while denying other potential leaders the chance to develop and shine. Corporations must instead look out along the three time horizons we have described to build a more systematic leadership engine.

Strategy will not succeed in a void, and leadership often makes the difference between merely reaching for great opportunities and actually realizing their potential. Top managers must assess their company's leadership gap and find ways to close it over the short, medium, and long term. Better still, they should integrate leadership with strategy development and thoughtfully match their portfolio of leaders with opportunities.

About the Authors

Tsun-yan Hsieh is a director and Sara Yik is a consultant in McKinsey's Singapore office.

http://www.bettermanagement.com/library/library.aspx?l=14262

A Humanitarian Leader on the World Stage

by Jim Citrin

People all over the world recognize Bono. The Irish musician turned diplomat and philanthropist has transcended his rock-music roots to become a driving force in global economic policymaking, and a world leader in the war against AIDS in Africa.

How did he transform himself from musician to humanitarian leader? And what relevance does his experience have for you?

A Musician's Calling

Bono is a powerful role model due, in large part, of course, to the impact he makes through his dedicated efforts around the world. But Bono's influence extends beyond the causes he embraces and the work he does.

While many people would like to help solve the world's most important and intractable problems, such as curing a raging epidemic or eliminating poverty, it's not immediately obvious how exactly to do that. So what's the relevant lesson from Bono's example? Simply put, he sets an example for making the utmost of the hand he's been dealt.

We all wonder how, given the context of our work and lives, we can most creatively, energetically, and effectively apply our natural talents to make a positive impact on others. I don't think I've ever met anyone who so thoroughly addresses this question and utilizes his skills and station in life as Bono (or, to use his given name, Paul Hewson) does. "All of us want our lives to count," he told me in a private conversation recently. "Music for me was always about changing the world."

Taking a Different Path

From the start, Bono's band, U2, has been committed to addressing important issues facing the world. Starting in the early 1980s, the group's tours had cause-related sponsors -- Greenpeace, Amnesty International, and Nelson Mandela to name a few.

In 1985, U2 played in the Live Aid concert to raise money for famine-stricken Ethiopia. While that wasn't unique -- just about every other major band played the concert -- Bono actually wanted to understand the real problem around which they were rallying. So later that year, he and his wife, Ali, traveled to the African country and spent several months living and working in a refugee camp.

This is where Bono's path diverged from that of other well-intentioned celebrities across the entertainment landscape. While they made cameo appearances and public-service announcements, Bono immersed himself in the economics and policymaking apparatus of debt relief.

Bono's never been shy about leveraging his fame for access to the world's most influential people, including James Wolfensohn, a former head of the World Bank; Paul Volcker, onetime leader of the Federal Reserve; and Jeffrey D. Sachs, an economics professor and director of the Earth Institute at Columbia University. What impresses these leaders most is how deeply Bono understands capital markets, debt instruments, and who the key decision-makers are.

A Red-Hot Initiative

The latest product of Bono's creative energies is Product (RED), an innovative approach to fighting AIDS in Africa developed with activist Bobby Shriver in 2006.

Designed to find a new approach outside of traditional philanthropic channels to engage the private sector and consumers and raise cause-related funds, the project has resulted in a proliferation of products sharing a deep crimson hue. These include the Red Apple iPod, Red Motorola Razr, Red Gap Jeans, and American Express Red Card.

Just as he did with debt relief, Bono schooled himself on the science and pharmacology of HIV and the AIDS epidemic for Product (RED). Medical and health-care experts comment that he knows as much on the subject as any scientific journal editor, and when Bono talks about Product (RED) his insights about marketing budgets, consumer demand, and the business model are as sound as any chief executive or venture capitalist.

Bridging a Divide

When asked how such a project could possibly work, Bono explains that it's a function of where the science has progressed regarding AIDS treatment and the power of the marketplace to channel resources. "AIDS is no longer a death sentence," he says. "Just two pills a day will bring someone who is at death's door back to a full life. These pills, which are available at the corner drugstore, cost less than a dollar a day."

But since the poorest people in Africa earn less than a dollar a day, they can't afford to buy the medicine and they die, at the alarming rate of 6,500 people a day. "It's unnecessary," Bono says. "It's insane."

A key part of the motivation for picking the issue of AIDS in Africa is that it's an entirely winnable "war" -- the medicine is inexpensive and readily available. But while people want to help, they aren't necessarily prepared to go out of their way or spend extra money to do so.

On the flip side, companies would like to wrap their brands into the conscientious consumerism that's driving billions of dollars of purchasing power, but competition and shareholder activism are so acute that they can't afford meaningful corporate contributions to even the most important causes.

Bono's leadership genius is in devising a way for consumers to go about their normal lives and make purchasing choices that meet their needs while appealing to their desire to help, and for companies to win more business thereby funding the dollars they direct to pay for inexpensive medicine to solve Africa's AIDS crisis.

Indisputably Inspiring

Both times I met with Bono, I mused that if he weren't a rock star and diplomatic world-changer, he could easily be a great corporate chief executive officer.

He leads by example. No one works harder or delves as deeply into issues and data as he does. He surrounds himself with the best people, is an extraordinary listener, and takes advice extremely well. He understands economics, markets, consumers, media, and regulation. And he has a dynamism that attracts and inspires just about everyone he meets.

Some may question the efficacy of Product (RED). Can a for-profit enterprise really do good? How much money will ultimately be generated to pay for medicine for the people in need?

Others may question Bono's motives. After all, he's already been a Time magazine Person of the Year -- maybe he's simply interested in winning a Nobel Peace Prize. While that may be, it's indisputable that his passion for curing AIDS in Africa is genuine. One only has to spend time with him to appreciate how devoted he is to this cause.

The key lesson to take away from Bono's example is this: If an individual with a sharp mind, a dynamic personality, amazing musical skills, and a desire to make the world a better place can have such a far-reaching positive impact, it makes you wonder what else you can do.


http://finance.yahoo.com/expert/article/leadership/24257

Five Essentials for a Winning New Year

by Jim Citrin

This week, over 100 million Americans will make a New Year's resolution. Most such resolutions never take hold because they're established at the last minute and are ill-conceived or poorly planned.

But thanks to Chris Carmichael, the world's most famous cycling coach, and his partner, Jim Rutberg, you only have to make one resolution this year to make a concrete positive change in your life: Read their new book, 5 Essentials for a Winning Life: The Nutrition, Fitness, and Life Plan for Discovering the Champion Within.

Forty and Feeling It

Chris is founder and chief executive of Carmichael Training Systems, Inc. (CTS), and personal coach to Lance Armstrong (whom you probably don't need to be reminded successfully survived cancer and won the Tour de France a record seven times).

Named the U.S. Olympic Committee's Coach of the Year in 1999, Chris formed CTS in 2000 after spending more than two decades as a cyclist. A member of both the 1984 Olympic team and the first American team to compete in the Tour de France in 1986, Chris now leads an organization that works with professional athletes across multiple sports and business leaders across multiple industries on personal fitness, nutrition, and life coaching.

Chris described the spark of inspiration behind his new book in an interview for this column. "When Lance won the Tour for the second time in 2000, he sent me a yellow jersey with the inscription, ‘Damn, you're getting old ... and you look it.'

"I had just turned 40 and started the company. It didn't really sink in right when I got it, but when I looked at it hanging in my office I wondered, ‘What's happened to me? Everything I've stood for, leading a high-performance life, has disappeared.' I was 20 pounds overweight, disconnected from my family, and taking calls on my cell at the dinner table. I decided that this is not the way I wanted to live my life."

A Holistic Approach

Carmichael pointed out that this same phenomenon could happen to anyone, especially someone in business in the peak of their career. So he resolved to take control of his life and get back the winning ways that he had worked so hard to figure out for others. Developing the book was his action plan.

"When Lance was coming back from cancer," Chris explained, "I changed how I coached athletes, taking a holistic approach rather than just focusing on conditioning work. I wanted to make sure that this was the model I was following myself and with this book."

That's also what CTS does with the elite athletes with whom it works. Carmichael discovered that the holistic approach is not only effective for elite athletes, but for everyone. And the need is more important than ever.

Thirty percent of Americans are obese and the number is growing. As more and more people become out of shape and overweight, there are more and more diet and fitness books out each year. "We know it doesn't work," Chris says, "so we needed to do something differently."

Elite Results for All

One of the things Carmichael and Rutberg did in researching the book was to select 25 people at random and lead them through the program to prove its efficacy.

"I had a great deal of confidence that what we do works at the elite level of the Tour de France, playing for the Stanley Cup, competing in the Hawaii Ironman, or racing in Nascar events," Chris says. "We needed to determine that it also worked for regular people."

How did this work out? "Not only did they lose weight and achieve better conditioning, they became markedly more energetic, and reported being more engaged with their kids and spouses.

"Those are the things that create fundamental behavioral change versus just losing weight."

Work and the Other Essentials

In order of importance, Carmichael's five essentials are fitness, nutrition, career, relationships, and health. "You have to be strong in all five dimensions to really make a transformation and live a winning life," he says. "They allow you to achieve balance in your life."

How exactly are careers supported by the other four essentials?

"It's pretty clear that performance in the workplace relates to being healthy, fit, and well conditioned," Chris says. "In today's highly charged and competitive workplace, you need to be able to handle the rigors of demanding work, high stress levels, and frequent business travel.

"You have to arrive sharp, and be on your ‘A' game and ready to go. You also need to find a respite where you can clear your mind on the one hand and also drill into complex problems on the other hand. Exercise and nutrition help you to do both."

Carmichael also believes that people who are fit earn more respect at work and are more likely to be selected for the most important positions or assignments. "Consciously or not, hiring managers ask themselves if a person they are considering can handle the rigors of the job," he says. "When it comes down to two candidates with equal resumes and brains, the fit person will get the job every time."

Relationships are also essential for long-term career success. "When you're committed and engaged in your relationships, it allows you more support in the workplace," Chris says. "It's important to be able to allow your professional success to penetrate to the rest of your life. If you're disconnected and don't share the successes or the anxiety, your whole work life becomes dull."

Simple Changes to Make Today

According to Carmichael and Rutberg's book, the concrete changes you need to make today are:
Establish consistency in your fitness: Consistency is the watchword. Find 20 to 30 minutes a day to be active. Go out for a walk, take a jog, do indoor cycling. The key is doing it every day.

Cut the clutter from your diet: Eliminate things like fancy coffee drinks, and stick close to the source with whole foods. Eliminate trans fats and high fructose corn syrup (read food labels). Limit alcohol consumption and carbonated beverages (the average American drinks 40 gallons of soda a year).

Behave as a role model for others in your career: In leadership, your actions speak louder than your words.

Nurture your important relationships: Write down who your most important relationships are with and what's most valuable about them. Read these notes regularly.

Get the recommended health screenings: Men are especially lax in this area, and typically don't go to the doctor until a symptom is severe or they are nagged by their spouse. Early detection can increase life-threatening diseases by 50 percent. So make an appointment today to get your health screened.

Follow Chris Carmichael's essentials and you'll be assured that 2007 is the best year yet.


http://finance.yahoo.com/expert/article/leadership/19029;_ylt=AotiehTZW.0m2ErqTCbHpvdHt9IF

The Ten Tools of Profitable Revenue Growth

1. Revenue growth is everyone's business, so make it part of everyone's daily work routine. Every employee wants to be part of a company's growth agenda, but most don't know how. Managers need to provide them with both information and tools, starting with making revenue growth an inherent part of daily conversations, meetings, and presentations.

Just as everyone participates in cost reduction, so must everyone be engaged in the growth agenda of the business. Every contact of every employee with a customer is an opportunity for revenue growth: The people answering the phones in the callcenter can provide valuable information on unmet customer needs. The appliance repair person can discover patterns and timing of demand for replacement of appliances. Salespeople can extract market intelligence and ensure that it is communicated to the product development, operations, and service departments. Logistics people, through on-time deliveries, can help stores avoid stock-outs, thus enhancing customer satisfaction, an important foundation of future revenue growth.

The fruits of these efforts for revenue growth energize people and enhance their self-confidence. Growth taps into all their latent energy to generate ideas that can carry the organization to higher levels of growth. Growth truly is everyone's business, not something that is solely the concern of management. Every employee at every level can be doing something for a customer.

2. Hit many singles and doubles, not just home runs. While home runs provide the opportunity for a quantum increase in the growth trajectory, they are unpredictable and don't happen all the time. Singles and doubles, however, can happen every day of the year. They result from a determined, day-in and day-out improvement in the activities and social processes of a company; they form the drivers of profitable revenue growth.

Increasing revenues through singles and doubles build a growth mind-set throughout the business, so that when the opportunity for a home run does come along, you'll be better prepared to take advantage of it.

For example, Dell's efforts, beginning in 1993, to improve inventory turns to use less cash and reduce price and product obsolescence began as a single. The company's initial goal was to increase inventory turns, which were averaging six a year, to ten. Over the last ten years, Dell has continuously improved the totality of its supply chain so that its inventory turns over one hundred times a year, or once less than every four days. The result is higher revenue growth and what has become a lethal competitive weapon against all PC manufacturers. In addition, this supply chain enables Dell to accelerate revenue growth by entering into new market opportunities like printers, servers, and storage.

3. Seek good growth and avoid bad growth. A framework for distinguishing good from bad growth is a crucial element in generating revenue growth. Good growth not only increases revenues but improves profits, is sustainable over time, and does not use unacceptable levels of capital. It is also primarily organic (internally generated) and based on differentiated products and services that fill new or unmet needs, creating value for customers.

The ability to generate internal growth separates leaders who build their businesses on a solid foundation of long-term profitable growth from those who, through acquisitions and financial engineering, increase revenues like crazy but who create that growth on shaky footings that ultimately crumble. Many acquisitions provide a one-shot improvement, as duplicative costs are removed from the combined companies. But few, if any, demonstrate any significant improvement in the rate of growth of revenues.

4. Dispel the myths that inhibit both people and organizations from growing. An important part of any leader's role is to realistically confront excuses such as: "We are in a no-growth industry, and no one is growing"; "Customers are buying only on price"; or "The distributors are the ones in direct contact with retailers, and there's not much I can do." Every leader needs a growth agenda and the ability to communicate an urgency about the need to increase revenues and build the business so that action-oriented people within the organization find out what needs to be done today.

5. Turn the idea of productivity on its head by increasing revenue productivity. The old saw says "we have to do more with less." The problem, though, is that the focus is usually on the "less" and the "more" rarely happens. Revenue productivity is a tool for getting that elusive "more" by actively and creatively searching for ideas for revenue growth without using a disproportionate amount of resources. It shows how to invest your current level of resources in a way that leads to increased sales by analyzing everything a business does, from the seemingly mundane to the vitally important.

6. Develop and implement a growth budget. All companies have a budget. It is, however, astonishing how little detail about revenue and sources of revenue growth you can find there. Almost all of the lines in the budget are cost-related. Few, if any, identify resources explicitly earmarked for growth. The growth budget provides a foundation that will allow a company to increase revenues instead of just talking about it. It includes all critical actions over the short, medium, and long terms that require resources to achieve revenue growth goals. And there is follow-through that includes rewards for success and penalties for poor performance.

7. Beef up upstream marketing. One of the key missing links for generating revenue growth at most companies is upstream marketing. What most people visualize as marketing involves advertising, promotion, brand-building, and communicating with customers through public relations, trade shows, and instore displays. Those activities are obviously of great importance but primarily "downstream" in nature — that is, they enhance the acceptance of a product or service that already exists. Upstream marketing, on the other hand, takes place at a much earlier stage by developing a clear market segmentation map and then identifying and precisely defining which customer segments to focus on. It analyzes how the end-user uses the product or service and what competitive advantage will be required to win the customer and at what price points.

8. Understand how to do effective cross-selling (or value/solutions selling). Cross-selling can be a significant source of revenue growth, but most companies approach it from exactly the wrong perspective. They start by saying, "What else can we sell to our existing customer base?" However, instead of looking inside-out your organization, you need to look outside-in. Successful cross-selling starts by selecting a segment of customers and then working backward to define precisely the mix of products and services they need and creatively shaping a value proposition unique to them. Effective cross-selling ensures the proposition is presented to the right decision makers in the language of the customer and spells out the financial, physical, and post-purchase benefits of the offering.

9. Create a social engine to accelerate revenue growth. Every organization is a social system, the center of which is a way of thinking and acting that sets both day-to-day actions and the long-term agenda. When an organization has an explicit growth agenda understood by everyone, growth becomes a central focus — a social engine — during formal meetings as well as informal discussions. The social engine is then fueled by growth ideas as one growth initiative builds on another. People at all levels then see growth as everyone's job. The social engine and its associated tools provide the mechanism for making revenue growth a reality by developing a laser-sharp focus, aligning individual silo priorities and making the right tradeoffs.

10. Operationalize innovation by converting ideas into revenue growth. Innovation is not the private property of lone geniuses working apart from the mainstream of the business. In any company of reasonable size, innovation is a social process that requires collaboration and communication for idea generation, selecting those ideas for revenue growth that are to be funded, and shaping those ideas into product prototypes and launching them into the marketplace.

The tools that have been outlined are the foundation of your program for future revenue growth. But remember what we said earlier Revenue growth and productivity improvement are not conflicting goals. To keep the revenue growth engine running, you must have a disciplined day-in and day-out program of cost productivity improvement. Not only is it imperative for competitive advantage, it provides the findings for future growth.

http://www.ram-charan.com/profitable_growth_excerpt.htm

Six Attributes of Successful L-E-A-D-E-R-ship

Date: Feb 12, 2003 - 12:53 PM
Six Attributes of Successful L-E-A-D-E-R-ship

Written by: Victor A. Teplitzky, MSOD, PMP, PhD

Does leadership have an effect on project success?
Is there a difference between management and leadership?
Can leadership be learned?

The answer to all these questions is yes.

In this article, I look at six essential attributes of project leadership. This is not a complete list, but one that provides a good jump start to successful project leadership.

1. Lateral Thinking

The first essential attribute, lateral thinking, represents a variety of methods to get us out of our �usual way of thinking.� In essence, lateral thinking breaks down the instilled and predetermined patterns we often employ when working on a problem.

Through lateral thinking, project managers try different perceptions, concepts, and points of entry. They consider multiple possibilities and approaches instead of a single approach.

The variety of perspectives used in lateral thinking allows us to solve difficult project challenges more successfully.

2. Empowerment

Often, there is little recognition given to people who spend time solving elementary problems. And yet, it�s those problems that can plant the seed for bigger, more complex problems.

Typically, and because of preset leadership attitudes, employees develop the habit of ignoring an issue until it becomes unmanageable. Often, leaders seek to go on record for being a problem solver.

Empowered project teams counter this attitude. They focus on getting the job done while solving or preventing problems while the problems are still nascent.

The ultimate paradox of project leadership power is that, to be an effective leader, project managers must develop all team members into leaders.

In this way, processes (such as relationships and the issues of leadership) and empowerment become important. Successful leaders are able to motivate, energize, and empower others. When people are excited and empowered, it affects both their task initiation and task persistence.

In other words, empowered people get more involved, take on more difficult situations, and act more confidently.

3. Active Optimism

The third essential attribute is optimism.

Leaders are optimistic. They think positively. Positive thinking is more than just avoiding negative emotions. It translates into actions that are forward thinking and involved. When negative events happen, excellent project leaders focus on the positive aspects of the event. They look at a problem as an opportunity for learning and team development�for the team and for themselves.

4. Determination to Improve

On-going self-assessment and self-evaluation are critical exercises for ensuring that your project is meeting its objectives and generating a positive impact.

A strong determination to constantly improve is simple idea. Just ask, �What can I/we do even better?�

By asking this question, leaders focus on challenging themselves and project team members. Further, it sets on-going self-evaluation and achievement into motion. In turn, this focus on continuous process improvement reaps results.

5. Encouragement of delegation

Delegation is one of the most important roles of your job as a leader. Your primary job isn�t to execute but rather to motivate and accomplish tasks through your project team members. Delegation of tasks and authority means less time spent on fighting fires and correcting errors and more time on vision development, motivation, project change control, and goal setting.

Delegating relieves time-pressures. It provides your team members with an opportunity to expand their decision making and problem solving skills and encourages creativity and initiative. This, while motivating them to achieve their potential.

In addition, delegation forces you to spend time with your team members, thus developing interpersonal relationships. Your feedback and attention will encourage your team to attain higher levels of responsibility. Delegation helps set performance standards based on team member�rather than purely on their activity. As a leader who encourages delegation, you will be able to step back and look at the bigger picture rather than being caught up in the minutia of the project.

6. Real potential

To meet future challenges, leaders must be inspired by real potential and strategies for the future.

Only then can they set a vision with reasonable goals and promote the process of developing effective strategies to achieve them. Considering the organization�s potential and future enables leaders to think constructively about what could be and what would be necessary to achieving a vision. Proactive and realistic �future-oriented� thinking can lead to greater project success. For leaders, a successful future requires real planning now.

In summary, a successful project leader is one who considers:

Lateral thinking
Empowerment
Active optimism
Determination to Improve
Encouragement of delegation
Real potential

Victor Teplitzky is an independent consultant and works with government and private organizations internationally. Through his unique combination of Industrial Engineering, Organization Development and Project Management he is able to help client organizations achieve success. For more information please visit www.deltaconsultingnetwork.com or e-mail Victor at victor@deltaconsultingnetwork.com

The Five Skills of a Breakthrough Leader

 
By Surinder Kumar and Bart Sayle

How does a $2 billion dollar company become a $5 billion company in a few years? Why do some companies excel at innovation and demonstrate exceptional generational growth while others fail to sustain the growth engine? In their upcoming book Riding the Blue Train (Portfolio, 2006), authors Bart Sayle, CEO of The Breakthrough Group, and Surinder Kumar, Chief Innovation Officer for the Wm. Wrigley Jr. Company, contend that the key to exceptional business is exceptional people, and to build the business, you must build the people.

Great business leaders, they say, consistently exhibit exceptional personal power—an inordinate ability to turn insights, inspiration and intentions into reality without controlling, manipulating or dominating their people. In the process, they build exceptionally talented people who build businesses with sustainable, generational growth.

These leaders have five specific traits that distinguish them as “breakthrough leaders."

DISTINCTION #1: BREAKTHROUGH LEADERS LEAD PEOPLE BY ENROLLMENT AND ENGAGEMENT

Breakthrough leaders lead people, not companies. They recognize that leading, motivating, and coaching is about the people and not about an organization. Understanding what drives individual behavior is important, as is recognizing how to motivate and inspire. The breakthrough leader observes others and knows that ultimately, people want to lead their own lives. Employees want to be empowered and inspired, but they want to travel their own journey.

A breakthrough leader’s power does not come from title or authority, it comes from authenticity and the ability to relate to people, enroll them in the journey and engage their energies and emotions in the goals of the organization. The breakthrough leader works to inspire and empower the individual, and that means being flexible enough to relate at many different levels—even when the individual in question rebels against authority.

These leaders lead from the front with words and actions that are congruent. They recognize that you can’t lead from the back and have a clear understanding of what’s going on in the trenches. To be effective, the leader needs to be in front of the customer and in front of and with the employees. The breakthrough leader understands generational, cultural and individual differences and intrinsic desires, because they lead people, not processes or organizations.

DISTINCTION #2: BREAKTHROUGH LEADERS LIVE THE VISION NOW

Breakthrough leaders know that “the vision” doesn’t exist in some far-off future. The vision is where you come from each day. It is how you think, and how you act. Living the vision means making an intentional effort to achieve goals now and bring the future into the present.

These leaders live in alignment with their vision. They think the vision, act the vision, and communicate the vision. If a leader’s goal were to create an environmentally friendly company, that leader would do everything possible to personify that vision immediately, even if it will take years to bring the vision to fruition completely. Office supplies, cleaning products, plants in the lobby, and even the food served in the company cafeteria would reflect the vision. The leader’s personal choices, from his clothing to the car he drove, would symbolize his commitment to the vision.

DISTINCTION #3: BREAKTHROUGH LEADERS RAISE STANDARDS

Breakthrough leaders set “impossibly high” standards for themselves. They understand that they need to demand more from themselves than they do from the people they lead. This goes beyond the simple notion of being a good role model. The breakthrough leader believes that anything is possible; therefore, he consistently strives to achieve the impossible.

A common mistake a new leader makes is to continue to operate at the level that got him to his current position. They assume they’re already “good enough,” not realizing that the new promotion requires an entirely new level of standards. This leads to their slippage into “Business-as-Usual” mode without raising their own standards. When a leader fails to raise his own standards, he lowers the standards for the entire organization. By showing that there’s never a point where one gets to rest on one’s laurels, the breakthrough leader sets the example that continual growth is an essential part of the company’s culture.

DISTINCTION #4: BREAKTHROUGH LEADERS ARE LEADERS, MANAGERS AND COACHES

Breakthrough leaders shift between three roles: leader, manager and coach. They lead people, manage “stuff” and coach performance. When leaders collapse those roles into one, they don’t live up to their breakthrough potential. The roles become jumbled with none of them done to their maximum level.

For instance, we have seen many executives putting every task on their “to do” list, operating as if they can manage every task. This type of leadership disempowers the organization. It doesn’t take people skills to manage paper and projects (stuff). However, it does take people skills to work with people. They are different jobs. When a leader acts as a manager, he should be working on timelines, projects and deadlines—not developing staff. People cannot be managed; they can be led and inspired. They manage themselves. A leader manages the tools, environment and processes around people to help them succeed and empowers staff by giving them the tools and skills to manage themselves.

When a leader is working with his team and sees a performance issue, his role at that point is coaching. Again, this is a different function. It requires one-on-one attention, perhaps reinforcing a vision, providing help developing skills or making sure the employee is in alignment with the overall goals of the company.

Great leaders understand the distinction between leader, manager, and coach and they sharpen their skills to become good at all three.

DISTINCTION #5: BREAKTHROUGH LEADERS CREATE LEADERS

The role of the breakthrough leader is to create more leaders, not followers. A company with one powerful leader and a collection of acolytes is limited regardless of the leader’s vision and talents. A breakthrough company needs people at every level who can lead in alignment with the company’s vision.

Creating leaders entails a certain amount of openness and self-assurance from the Breakthrough Leader. Someone who feels threatened by the growth of the people who work for him is likely to stunt that growth. What the breakthrough leader understands is that the organization’s overall success is a reflection of his leadership. A team that produces great results, growth and innovation shows that the head of that team is a superb leader.


Author Bios:
Dr. Surinder Kumar, Ph.D., is the Chief Innovation Officer of the Wm. Wrigley Jr. Company in Chicago. Dr. Kumar is a member of the Executive Leadership Team at Wrigley and directs the team that creates innovative new products for worldwide markets.

Dr. Bart Sayle, Ph.D., is a highly sought-after business advisor, speaker and CEO coach and is the creator of The Breakthrough Process, now being used by Fortune 500 companies worldwide.