Kerzner Project Management Maturity Model

Kerzner Project Management Maturity Model Online Assessment
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How’s the health of project management in your organization?
Just like a physical from a doctor you trust, the Kerzner Project Management Maturity Assessment Tool diagnoses the health of project management in your organization. It identifies strategic strengths and weaknesses and then creates a prescriptive action plan for improving the health of your PM efforts. It allows you to objectively assess your project management capabilities against key knowledge areas of the PMBOK® Guide. And it's all done online, which means it’s easy for employees to access and execute. Scoring is automatic and instantaneous.

Developed by Dr. Harold Kerzner
The assessment framework is based on Dr. Harold Kerzner’s five-level project management maturity model. Several years in development, the Kerzner maturity model is the result of real-life application within a number of world-class organizations. The tool has been industry validated and is fully aligned with the PMBOK® Guide. Dr. Kerzner is widely regarded as one of the world’s most knowledgeable authorities on project management strategies and methodologies. This online version of the Kerzner maturity model was developed under the overall direction of Howland Blackiston, Executive Vice President of International Institute for Learning. Some additional content was provided by Tom Block.

Here’s how it works
Employees who are invited to take the assessment answer a series of multiple-choice questions. There are a total of 183 questions, broken down by five levels of maturity. The resulting scores provide a candid look at project management within your organization. The tool also gives you a professional analysis of the scores and offers specific suggestions for what your company needs to do differently than they are doing now. Discover where additional training is needed. See whether or not your implementation of project management is successful.

Get answers to strategically important questions
How effective are PM efforts in our organization?
How well has PM been integrated into our business?
Is PM a competitive strategy for higher quality & greater customer satisfaction?
Are we using the right methods and tools?
Is there a homogeneous approach to PM in our organization?
What should we do to advance to higher levels of PM maturity?
Have we reached levels of PM maturity that are competitive in the marketplace?
Close the gap between you and the competition.
Use the Kerzner PM Maturity Online Assessment Tool to become more competitive.
Get an instant and objective analysis of your organization’s strengths and weaknesses as they relate to each level of the PM maturity model. The tool also provides a comparison of results to other organizations.
Scoring provides accurate comparison with objective industry standards
The tool is fully aligned with the PMBOK® Guide
Password protected and secure, results are kept strictly confidential
Allows blind comparisons with companies your size, with others in your industry, or with everyone who has taken the assessment
Helps you recognize your competitive strengths & weaknesses
Identifies goals to feed into your organization’s strategic planning for project management

Use this assessment to “sell” project management
If you are having difficulty selling project management in your organization, let the objective assessment results do the talking for you. Management will see how your organization’s project management efforts actually compare to other companies within and outside of your industry. Put an end to debates and speculation regarding your strengths and weaknesses. Instead, spend time and resources on agreeing how you can achieve superior levels of project management maturity.

The online format is fast, automatic and easy to use
The assessment tool is available online, which means it’s easy to access and use throughout your organization. Scoring and analysis is automatic and instantaneous. We will create a private and secure URL so that your employees can access this tool from any computer. You can filter assessment results by business unit, division, job function or even geographic location -- whatever filtering criteria are the most strategically important to your organization. This filtering allows you to compare scores between groups to see which areas of your business are doing well, and which need improvement. At each level of the assessment, the tool provides individual users with a detailed breakdown of their scores and a blind-comparison of the organization’s results to all other companies that have taken the assessment. You can even see how your company’s overall scores compare to other companies in similar industries.

Executive interface monitors results
We will set up an “Executive Interface” page for your organization. This handy feature allows designated managers to continually monitor your organization’s assessment results. Managers can sort scores by the filtering criteria, and compare results within the company as well as outside of the company. They can even view the scores of individual participants within the company. To find out how to license this product for your organization, click here to contact the IIL office nearest you.

Who should take this assessment?
This Assessment Tool is applicable to all industries. It’s valuable to a wide array of users, including: project managers, members of the project office, project team members; individuals preparing for the PMP certification exam, project sponsors, corporate trainers, stakeholders, customers (internal and external), university students, consultants, functional or line managers, and focus group leaders. The broader the participation within a company, the more objective the assessment results.

Ready to give it a test run?
Click here to view a demo of the Kerzner Project Management Maturity Online Assessment Tool. For additional information on this tool, or to discuss how we can activate this tool for use in your organization, click here to contact the IIL office nearest you, or email our PM Maturity Assessment Team at assessment@iil.com.

Kerzner's Five Levels of Project Management Maturity

LEVEL 1: Common Language (80 questions)
At this level of maturity the organization first recognizes the importance of project management. Level 1 is based upon knowledge of the fundamental principles of project management and the associated terminology. Level 1 can be fulfilled through a good understanding of the guide to the project management body of knowledge (PMBOK® Guide) prepared by the Project Management Institute (PMI®). Level 1 of the assessment will evaluate your own knowledge of project management and the degree to which your organization understands the fundamental concepts of project management.

LEVEL 2: Common Processes (20 questions)
At this level of maturity the organization makes a concerted effort to use project management and to develop processes and methodologies to support its effective use. The organization realizes that common methodologies and processes are needed such that managerial success on one project can be replicated to other projects. Also apparent in this Level is the fact that certain behavioral expectations of organizational personnel are necessary for the repetitive execution of the methodology. Level 2 of the assessment will evaluate how effectively your organization has achieved common processes for project management.

LEVEL 3: Singular Methodology (42 questions)
At this level of maturity the organization recognizes that synergism and process control can best be achieved through the development of a singular methodology rather than by using multiple methodologies. Companies that have reached Level 3 are totally committed to the concept of project management. Level 3 of the assessment will evaluate how committed your organization is and whether you have adopted a singular project management methodology.

LEVEL 4: Benchmarking (25 questions)
At this level of maturity the organization uses benchmarking to continuously compare project management practices to recognized leaders to gain information to help them improve their performance. Benchmarking is a continuous effort of analysis and evaluation. For project management benchmarking, the critical success factors are usually the key business processes and how they are integrated. If these key success factors do not exist, then the organization’s efforts are hindered. Level 4 of the assessment will determine to what degree your organization is using a structured approach to benchmarking.

LEVEL 5: Continuous Improvement (16 questions)
At this level of maturity, the organization evaluates the information learned during benchmarking and implements the changes necessary to improve the project management process. The organization realizes that excellence in project management is a never-ending journey. Level 5 of the assessment will determine if your organization has embraced continuous improvement and has reached an advanced state of project management maturity.

Back to the Kerzner Maturity Model Overview Page >

Delivering nonstop excellence on the job

What's the secret to delivering nonstop excellence on the job and pushing your company to unprecedented heights of performance? It's relentless creativity-a team's ability to continually innovate ideas for breakthrough products, services, and ways of doing business and to extract opportunity from uncertainty.

Through innovation, you and your team position your company at the head of the pack and keep it there-no matter what's going on in the competitive landscape.

In this 75-minute virtual seminar, innovation expert Scott Anthony joins with special guest Vijay Govindarajan-renowned strategy expert, business professor, international bestselling author, and Chief Innovation Consultant at General Electric. Together, Scott and Vijay answer your questions about how to relentlessly drive creativity in your team.


From: Becky Blackburn (Becky.Blackburn@GreatManager.com)

Eliminate Negative Thoughts

Hi Agung,


Negative Thinking is really a waste of time and energy...

I know everybody has negative thoughts but there's a huge difference
between someone who has negative thoughts and a chronic negative thinker.

Negative Thinkers don't get much done... they may want to accomplish a
lot but the negative thinking patterns stop in their tracks.

But this can be changed.

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Instead, you can turn things around and become a positive thinker... the kind
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Eliminate Negative Thoughts

Negative thoughts really have no purpose. They don't make you feel good
and instead can often lead to anger, frustration, procrastination and will
destroy relationships and make you miserable.

Meaningless thoughts, the kind where you worry for no reason, serve
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A mind filled with optimism and positive thinking is a mind that's geared to
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So let's change those negative thoughts. Let's get rid of them and
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We need to have thoughts that help you achieve your goals, make you feel
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The first step is to change those negative thoughts as soon as you notice them.

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At any point during the day when ever you have a free moment -
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Replace those thoughts with positive thoughts.

Pay attention to your thoughts.
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Try it for a full week and see how you feel...

Your thoughts and beliefs are the fuels that drive your subconscious.
Feed your subconscious negative thoughts and negative beliefs and
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Start changing your thoughts today.
Begin directing your mind and subconscious mind to help you live
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Eliminate any negative attitudes

If you have a negative or bad attitude, if you try to be difficult
or demanding - it's time to change those attitudes.

Why?

Because they don't work for you.

Sure you may think that being demanding works for you - but it
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Be open to any and all possibilities. A closed mind closes the door
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A negative attitude certainly doesn't work for you - so why keep it.

Start creating a positive attitude by simply changing your thoughts
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Look at all the possibilities, and focus on the positive aspects.
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you begin creating a positive lifestyle. Get started today. Visit:
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You can eliminate the negative thoughts.
You can get rid of the junk in your head.
You can begin to improve your life and achieve your goals.
Start eliminating those negative thoughts today.
Start changing your attitude and begin creating the life you want today.
Make this your time to shine. Visit:
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"I feel like a new person. I've been working with your course for
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Here's to your success.
Start creating the life you want. Visit:
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Sincerely,
Karim Hajee
Creating Power
PS: Remember if you don't do anything - if you don't change the way
your mind works and direct your subconscious mind to create the
life you want - everything stays the same - nothing changes. This
is your life - make the most of it - begin working with the power
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The Purpose Linked Organization

The Purpose Linked Organization
How Passionate Leaders Inspire Winning Teams and Great Results

By:Alaina Love, Marc Cugnon
Date:May 4, 2009
Format:Hardback, 256 pages


ISBN:0071624708 / 9780071624701

Overview


Meet the indispensable people who can bring your organization to that crucial next level.
How many can you recognize?
And where do you fit in?

The Builder: Creating a strong sense of urgency to deliver results, they’re the driving force of a growing business

The Connector: Born communicators, adept at negotiation and relationship-building

The Conceiver: These “intellectual acrobats” think outside the box, imagine new possibilities, and contribute to innovation

The Altruist: On the lookout to raise your organization’s profile while benefiting the world at large

Leadership development experts Alaina Love and Marc Cugnon have identified ten such “Passion Profile Archetypes,” and in The Purpose Linked Organization, you’ll learn the strengths, vulnerabilities, and proper care and feeding of them all.

Authors Love and Cugnon offer easily implementable ways to channel the power of each individual’s passions in a positive, purposeful direction. You’ll understand how to link skills, values, and passions to performance—and how doing so will bring the results your organization can’t afford to be without.

Just as important, you’ll be able to confidently assess your own purpose and passions so thatyour own organizational role will be as engaging, fulfilling, and productive as possible. Most employees spend more than 84,000 hours of their lives at work. When that time is personally meaningful, great things can happen, which will enrich your organization, the customers it serves, and even society as a whole.

Table of contents

Introduction
PART ONE: PURPOSE AND PASSION
1: Why Passion and Purpose Matter
2: Everyone Has a Passion Profile
PART TWO: THE PASSION PROFILES
3: The Builder
4: The Conceiver
5: The Connector
6: The Creator
7: The Discoverer
8: The Processor
9: The Transformer
10: The Altruist
11: The Healer

PART THREE: PUTTING PASSION AND PURPOSE TO WORK
13: Getting Results through Passion and Purpose
14: How Great Leaders Leverage Passion
Biographical note

Alaina Love, SPHR, is president and cofounder
of Purpose Linked Consulting and
the creator and author of many of the firm’s
leadership workshops and assessment tools.
Formerly a human resources executive at multinational
corporations, Love now provides
leadership, team, and organizational development
services to Fortune 500 firms, private
companies, hospitals, and universities.

Marc Cugnon is CEO and cofounder of
Purpose Linked Consulting. With over three
decades of experience as a senior executive in
the pharmaceutical industry, he now provides
leadership development, strategic planning,
and marketing consultation services to large
firms, small businesses, and international
universities.
Back cover copy

FREE WITH YOUR PURCHASE:
Exclusive access to “The Passion Profiler,” an online tool
for identifying your Passion Archetypes—your individual
strengths, vulnerabilities, and capacity for achievement, as
well as those of every member of your organization.

Work without passion and purpose?
Don’t you and your organization deserve better?

“Grow your business and inspire your team with the secrets of
purpose and passion in this highly practical book.”
—Marshall Goldsmith, bestselling author of
What Got You Here Won’t Get You There

“Smart leaders understand that productivity and innovation would be
greatly increased if only they could fully engage their people by putting
them in jobs that match their passions and talents; but how? The Purpose
Linked Organization provides a novel, practical, and no-nonsense
approach to help leaders accomplish that goal.”
—Henri Lipmanowicz, former president of Merck,
Intercontinental Region and Japan; chairman and cofounder of Plexus Institute

“This book is timely and essential for developing passionate leaders.”
—Virgil L. Smith, vice president, Gannett Co., Inc.

“If you’re a business leader searching for better ways to
develop your organization’s talent . . . don’t miss this book!”
—Joseph Pieroni, CEO, Daiichi-Sankyo

“Love and Cugnon offer leaders the missing link for boosting employee
performance beyond the level that skills and competence alone will allow.”
—Patricia O’Connell, management editor, BusinessWeek

Chasing the Rabbit

Chasing the Rabbit:How Market Leaders Outdistance the Competition and How Great Companies Can Catch Up and Win,

by Author Steven Spear
Foreword-Clay Christensen

The term theory gets a bum rap among most managers because managers are practical people and theory normally is associated with the word theoretical, which has a connotation of impracticality. However, a good theory is consummately practical because a well-researched theory is a contingent statement of what causes what and why. The law of gravity, for example, actually is a theory. It is extremely useful because it allows us to predict in advance, without having to collect experimental data, that if we step off a cliff, we will fall. Good theories allow us to predict the result of an action accurately.

Even though most managers do not think of themselves as being theory-driven, they are in reality voracious consumers of theory. Every time managers make a plan or take an action, it is based on some theory or mental model in the back of their minds that leads them to believe that the action being taken will lead to the desired result. The problem is that managers are rarely aware of the theories they are using and often use the wrong theories for the situations in which they find themselves. It is the absence of conscious, trustworthy theories of cause and effect that makes success in building successful businesses seem random.

Because of the central role good theories play in bringing predictability to management and innovation, I’ve spent a good portion of my academic career studying what good theories are: How can I tell a good theory from a bad one when I’m looking at it? I’ve tried to help researchers learn how to build valid theories that managers can rely on so that their actions have the desired effects. Unfortunately, as our understanding of the theory-building process has coalesced, the report card on most of those who research and write about management has been abysmal. The preponderance of what is written for managers about management is bad theory and should not be trusted. I’m not the only one who has reached this conclusion: Professors Jeffrey Pfeffer and Robert Sutton at Stanford and the late Professor Sumantra Ghoshal of the London Business School have written eloquently about this problem. Professor Phil Rosenzweig at the Institute for Management Development in Lausanne recently published The Halo Effect, a scathing, cogent, and compelling indictment of most management research.

A happy and humble young man named Steve Spear walked into this paucity of sound management theory about 12 years ago as a doctoral student at the Harvard Business School. He was fortunate to have been taken under the wing of Professor H. Kent Bowen, one of the world’s foremost materials scientists, for whom the scientific method of building robust theory was second nature and whose discouragement with the state of management research mirrored my own. The puzzle Bowen and Spear decided to unravel was intriguing. Despite Toyota’s openness and all that had been written about the “secrets” to its success, no other company had been able to replicate Toyota’s achievements in profitably making its cars continuously better and cheaper (when adjusted for quality and performance improvements). Their hunch, which proved right, was that prior students of Toyota’s methods had observed “artifacts” of the system such as lean (low-inventory) manufacturing and just-in-time “pull” scheduling of production. However, those researchers were measuring correlations between a factory’s possession of those attributes and its performance. No scholar had unearthed the causal mechanism that led to what Steve ultimately termed a self-improving system.

Whereas many business researchers prefer to collect data from the Internet or from easily accessed databases so that they can analyze the data in the comfort of their offices, Steve essentially got himself employed in the factories of Toyota and its suppliers and competitors to learn from the inside out and answer the question, “How do these guys think when they design and improve a process?” Steve’s interest wasn’t just in fabrication and assembly processes. It spanned processes such as training people, designing products, building management strength, and maintaining equipment as well. Every evening, Steve returned to his room and painstakingly chronicled everything he had observed.

Out of that extraordinary detail, Steve distilled the mental models and frameworks that the people at Toyota instinctively followed when they designed, used, and improved a process of any sort. Those things weren’t written down anywhere, yet people seemed instinctively to follow them as if the rules were tattooed on the backs of their hands. Nobody—not even Toyota’s most senior managers—could articulate those cultureembedded instincts. Yet when Steve described them, they instantly agreed that those instincts were guiding their actions. Steve had uncovered the fundamental causal mechanisms underlying the success of the Toyota Production System. I honestly think that history will judge Steve Spear’s doctoral thesis to have been the finest, most impactful thesis ever written at the Harvard Business School, and that includes my own doctoral work on the phenomenon known as “disruptive technology.”

We were blessed that the Harvard Business School invited Steve to join the faculty so that Professor Bowen and I could continue working with him as a colleague.

As the great historian of science Thomas Kuhn taught, the key to developing a theory that is valid internally and externally is to seek anomalies, to find instances in which the present explanation of causality does not yield the results that the theory predicts. In contrast to researchers who believe that a theory is strengthened by the finding of more and more examples in which the theory works to get ever-higher levels of statistical significance, the scientific method requires researchers to search for instances in which the theory does not work. That is what Steve did next.

To this point, those who had studied the artifacts of Toyota’s system had convinced us that the system was useful only in industries in which physically discrete products are manufactured. In an anomaly-seeking mode, Professor Bowen and Steve decided to see if the frameworks they had uncovered, which came to be called the “DNA of the Toyota Production System,” could lead to similar results in a dangerous, complicated, capital-intensive process industry such as aluminum production, which is about as far from the assembly of transmissions as one can get. There was nothing to study passively in this stage of Steve’s research, because no company besides Toyota was following those rules. Therefore, Spear and Bowen taught the rules to the executives at Alcoa and helped them teach and reteach them throughout their company. The management then applied the rules to the redesign of all sorts of processes in the company under the name of the Alcoa Business System (ABS). The results were astounding. In an industry in which nobody had thought that Toyota’s methods were applicable, the company continues to report that its annual savings from applying ABS exceed $1 billion. Because Steve had gone beyond observing the statistical correlation between attributes and outcomes and had articulated the fundamental engine of causality; the rules worked like a charm in this polar-opposite industry.

To help with Steve’s ongoing efforts to find a very different industry in which the Toyota DNA would prove not to be useful, Bowen and I next invited him to go to the other edge of the world with the following challenge: “The causal mechanism—the rules—clearly works in making cars, mattresses, and aluminum. I bet it doesn’t work in managing a horrifically complicated service business such as a hospital.” We then opened a few doors for him. Steve taught administrators in a small Boston-area hospital and then those in much larger ones in Pittsburgh what those rules are. He helped them teach their employees how to design processes that follow the rules and how to improve them with great haste when the initial design shows itself to be flawed. Again, the results were astounding in terms of errors avoided, costs reduced, and lives saved. Remarkably, Steve discovered that employees in those institutions were much happier working within the rules than without them because the rules made it easy for them to fix the broken processes that had made their work lives so frustrating.

Compared with the problems most people deal with, the contexts in which Steve has developed, refined, and tested his theories of continuously improving processes were bafflingly complex. Cars are made from 10,000 components, meaning that hundreds of thousands of things can go wrong. Aluminum is made with massive pieces of equipment that cost tens of millions of dollars and operate at temperatures, pressures, voltages, and speeds that aren’t just dangerous but take place at the edge of what the laws of chemistry and physics define as possible. Hospitals try to coordinate the work of thousands of people to save thousands of lives from a nearly infinite variety of medical conditions. Rather than proposing complex solutions to those complex systems, Steve breaks down the complexity. All these systems, at the “atomic” level, consist of activities, connections, and pathways. You get them right, and even unfathomably complex systems become high performing and self-improving. Steve did research by teaching people to take action, and the quality of his theories was measured in the billions of dollars in additional profits that have been earned, the accidents that have been avoided, and the lives that have been saved that would not have been if his rules had not been followed.

Steve continues to improve his understanding by searching for companies and industries in which the rules do not work, but so far he has been “disappointed.” The rules seem to be very broadly applicable principles of management. They are the causal mechanisms that, when followed, cause a company’s processes to keep doing better and better, whether they are processes for understanding customers, designing products that address customers’ needs, or making products at ever increasing levels of quality and ever-decreasing cost.

This book is not the sort of easy, entertaining paperback you can buy in the San Francisco airport and finish by the time you land in Boston. There’s no fluff here, no simple silver-bullet solutions to all your problems. But this is probably the most insightful book about quality and process that has ever been written. Steve Spear’s research passes every litmus test for good management theory. It is internally valid, meaning that its conclusions derive unambiguously from its premises and that all other plausible alternative explanations have been ruled out. It is externally valid in that it is applicable to companies in a broad range of industries that are very different from one another. What’s truly remarkable is that the validity of these ideas was not established by applying them to other data sets from the past. Instead, it was verified by applying these causal rules in companies that were not performing remarkably well and then seeing the quality, cost, and profitability of those companies’ products and services improve continuously as they learned to follow the rules. Thus, Steve can teach us not just what to do but how to do it. I count having been one of Steve Spear’s colleagues and advisers to be one of my foremost credentials.

I hope that from the pages of this book you’ll be able to learn from Steve even a fraction of the valuable insights I’ve gotten as I’ve worked with him. In his field he has no peers.

Clayton M. Christensen
The Robert and Jane Cizik
Professor of Business Administration
Harvard Business School
Boston, MA
July 2008

http://chasingtherabbitbook.mhprofessional.com/apps/ab/foreword-by-clayton-christensen/
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Overview


Winner of the Shingo Prize for Research and Professional Publication, 2009

How can companies perform so well that their industry counterparts are competitors in name only? Although they operate in the same industry, serve the same market, and even use the same suppliers, these “rabbits” lead the race and, more importantly, continually widen their lead. In Chasing the Rabbit, Steven J. Spear describes what sets high-velocity, market-leading organizations apart and explains how you can lead the pack in your industry.

Spear examines the internal operations of dominant organizations, including Toyota, Alcoa, Pratt & Whitney, the US Navy's Nuclear Power Program, and top-tier teaching hospitals--organizations operating in vastly differing industries, but which share one thing in common: the skillful management of complex internal systems that generates constant, almost automatic self-improvement at rates faster, durations longer, and breadths wider than anyone else musters. As a result, each enjoys a level of profitability, quality, efficiency, reliability, and agility unmatched by rivals. Chasing the Rabbit shows how to:
Build a system of “dynamic discovery” designed to reveal operational problems and weaknesses
Attack and solve problems at the time and in the place where they occur, converting weaknesses into strengths
Disseminate knowledge gained from solving local problems throughout the company as a whole
Create managers invested in the process of continual innovation

Whatever kind of company you operate--from technology to finance to healthcare--mastery of these four key capabilities will put you on the fast track to operational excellence, where you will generate faster, better results using less capital and fewer resources. Apply the lessons of Steven J. Spear's and leave the competition in the dust.

Table of contents

1. Why We Need an Operations-Based Model of Competition
2. Competing through Capabilities + “Lean Manufacturing” and Its Discontents)
3. Managing Organizations to be the Ultimate Learning Machines: Capabilities of the Operationally Superlative
4. Capability 1: Designing Processes As Experiments to Reveal Problems
5. Capability 2: Solving Problems Experimentally to Generate Knowledge: Don’t Think, Do (Don’t Tweak)
6. Capability 3: Sharing Knowledge through Collaborative, Experimental Problem-Solving
7. Capability 4: Developing People through Coached Problem-Solving
8. Getting Started—Creating a Context Conducive to Experimental Learning
Biographical note

Steven J. Spear, four-time winner of the Shingo Prize and recipient of the McKinsey Award, is a senior lecturer at MIT and former assistant professor at Harvard. A senior fellow at the Institute for Healthcare Improvement, he is the author of numerous articles appearing in academic and trade publications, including the Harvard Business Review and The New York Times.
Back cover copy

Sprint to the lead in your industry--and stay there!

"Chasing the Rabbit contains ideas that form the basis for structured continuous learning and improvement in every aspect of our lives. While this book is tailored to business leaders, it should be read by high school seniors, college students, and those already in the workforce. With the broad societal application of these ideas, we can achieve levels of accomplishment not even imagined by most people."
The Honorable Paul H. O'Neill
Former CEO and Chairman, Alcoa
Former Secretary of the Treasury

"Some firms outperform competitors in many ways at once--cost, speed, innovation, service. How? Steve Spear opened my eyes to the secret of systemizing innovation: taking it from the occasional, unpredictable 'stroke of genius' to something you and your people do month-in, month-out to outdistance rivals."
Scott D. Cook
Founder & Chairman of the Executive Committee
Intuit, Inc.

"Steven Spear connects a deep study of systems with practical management insights and does it better than any organizational scholar I know. Chasing the Rabbit is a profoundly important book that will challenge and inspire executives in all industries to think more clearly about the technical and social foundations of organizational excellence."
Donald M. Berwick, MD, MPP
President and CEO
Institute for Healthcare Improvement

http://www.mhprofessional.com/product.php?isbn=0071499881

When in doubt, do: Behaving innovatively…

When in doubt, do: Behaving innovatively…
Posted by steven_spear | Under Business Strategy, Innovation, high velocity organizations, organizational learning
Friday Jul 17, 2009

When confronted with a problem, the natural inclination is to try and figure out an answer. Furrowed brow, eyes squinted, and shoulders hunched over a computer keyboard are the common postures and expressions–static, tense, and intense. Oddly enough, this is not true in the most innovative organizations. When they have a problem, there is seemingly a kinetic frenzy, people trying one idea after another. Why? They believe that if they have a problem, it is because they don’t understand a situation and no amount of thinking will improve their understanding. Only by acting will they get new data or new perspective and hence new insight.

The risk, you’re thinking, is that if you do when in doubt, you can make a big huge mistake. That’s right, which is why the most innovative drive themselves towards trials, tests, prototypes, and simulations that are ever quicker, cheaper, less intrusive, and less disruptive. That makes it safe to make mistakes. And it is only by getting things wrong that they can learn their way to getting things right.

There is an outstanding example in the news of NASA behaving innovatively (”For Mars Rover, Really Remote Roadside Assistance,” Robert Lee Hotz, Wall Street Journal, July 17, 2009). One of the Mars rovers is stuck in the sand. Rather than give up and abandon the mission or try sending instructions at the risk of stranding the rover even further, the rover team has taken a duplicate, created a facsimile ’sand box’ on Earth and their trying dozens if not hundreds of variations on getting the duplicate rover out its trap before sending instructions to the real rover 250 million miles away.

(For more examples of ‘behaving innovatively,’ please see the Navy nuclear propulsion example in Chapter 5 of Chasing the Rabbit and the several examples in Chapters 7 and 9.)

How to Become a Master Persuader

How to Become a Master Persuader

by Eric Schurenberg | Jul 7, 2009 | 0 Comments

Professor G. Richard Shell, University of Pennsylvania

Maybe, as Richard Shell says, persuasion is an art, not a science. But if it ever becomes the latter, he’ll be its Isaac Newton. The Wharton professor of law and business ethics has devoted his career to dissecting and cataloging the elements that help people in business get their colleagues to see things their way. Three times a year, he and a colleague spend 10 grueling 14-hour days locked in a seminar with 35 of the world’s most adept negotiators, analyzing what makes them so persuasive, and trying to help them become even better. This negotiating boot camp is the Executive Negotiation Workshop at the Wharton School; recent students include the FBI’s chief hostage negotiator and a university president preparing for a knockdown, drag-out battle to restructure a major collegiate athletic conference.




The son of a Marine general (which may account for his seminar’s boot-camp aspects), Shell is the author of two books on convincing people to do what you want. He succeeded in persuading MoneyWatch.com Editor in Chief Eric Schurenberg to discuss his most recent one, The Art of Woo.
There have been a lot of books about persuading, from Getting to Yes to Getting Your Way. What makes the Art of Woo different?

From our negotiation work at Wharton, we discovered that over 50 percent of people who come to negotiation courses are really trying to solve problems internally, within organizations. So the book is directed specifically at how to be effective at persuading people within a complex organization.

I was struck at the book’s emphasis on character as one of the keys to being persuasive. Now, there are lots of people with very little character who can be very persuasive. Why do you think character is key?

My co-author, Mario Moussa, and I made that point out of a certain sense of responsibility. Persuasion tools are sort of like nuclear power: They can be used for good or for evil. And we wanted to make sure that we wrote a book that would help people use them for good. But you’re right ... some of the world’s master persuaders are con artists.
And being credible obviously is important to winning people over.

The trick, unfortunately, is that the con artist also is an expert at credibility. Bernie Madoff had a 20-year run, and he was a crook.
What do most people do wrong when they set out to win people over?

The principle mistake is to assume the other person shares your internal frame of reference. So, rather than considering the audience and their point of view, you really just go after them — you sell — in the classic hard sell. Most effective persuaders are balanced between their passion for their own ideas and an awareness of how the person on the other side is most likely to be able to hear what they’re saying.
I’m going to name a few prominent people, and I’d like you to give them a review of how effective they are at the art of woo. Let’s start with President Obama.

Well, that one’s easy. President Obama is a woo master. His ability to show passion and commitment but at the same time to craft a message that the audience will be particularly likely to hear — that balance factor — is just exquisite. Of course, he has a lot of people helping him, but I think he was a born persuader. From his autobiography, it’s clear to me that he came by this skill the hard way. In his youth, he really had to go through a lot of self-examination of his own identity. And that, I think, made him acutely aware of the social environments that he’s in. It enabled him to strike this balance in a particularly effective and consistent way.
OK, good. Now, here’s a person who’s probably not a born persuader but is thrust into a position of having to persuade: Ben Bernanke.

There are two extremes in persuasion. There are people who are too focused on their audience, kind of Slick Willie types. And then there are people who are totally unaware of their audience, and they are kind of curmudgeons. Ben Bernanke is a little closer to the curmudgeon side, but in a way that’s the perfect persuasion style to be adopting in his particular political role. People want to hear what he’s thinking, and they don’t want to see him crafting a message for different audiences. They want to hear the voice of authority, and I think he’s been pretty effective in using that voice.
Jim Cramer.

We have a type of person we profile in the book called the “Driver.” The Driver is a combination of extreme extroversion and extreme self-orientation, and I think Jim Cramer is about as far towards a Driver as you can get. Very, very loud and very, very self-oriented. You know exactly where he’s coming from and what he’s saying, but you have to do all the adjusting.
Do you have a character called the Terminator? How would you review Governor Schwarzenegger?

You know, Schwarzenegger is a very interesting case, because he was trained as an actor. Like Ronald Reagan, I think he has a certain capacity to be audience-oriented. But he was an actor for a particular type of role, which was a Terminator type of role, a very obvious, self-oriented role, and I think he’s stuck with that. So, he’s more on the Bernanke side, but with a little more craftiness. But, of course, there’s a limit to persuasion skills. When you’re in a bankrupt economy and your state has no tax revenues, it really doesn’t matter how persuasive you are, you’ve just got a big problem.
You’ve talked a lot about how to persuade people. What’s your advice on how to resist persuasion?

The best antidote to persuasion is a skeptical attitude. People who get persuaded [to do things they regret] tend to get caught up in ideas that appeal to their self-interest or hold out the promise of a simple solution to a big problem. The best antidote to that is critical thinking. Or a good spouse.
You define half a dozen different styles of persuasion in the book. Is one more effective than the other?

Whatever your style is, it can be effective. It all depends on the fit with the person across the table and the circumstances. I think it’s harder for someone audience-oriented — the Slick Willie type — to become more authentic than it is for someone who leans toward authenticity — the curmudgeon type — to become more audience-oriented.
Why?

Social awareness is drummed into us from an early age. We’re taught to fit in with the crowd, to not rock the boat. It’s very deeply ingrained. [As a result], playing to the audience, when extreme, is a hard habit to break. By comparison, it’s relatively easy to say to someone who’s not so sensitive to an audience, “You know, you ought to tailor your approach to the audience a bit more. Talk to the salespeople this way and the engineers that way.” Such a person may never be smooth, but he or she can make the effort. People generally give you credit if they can see you’re making an effort.
You make the point that it’s important to know which kind of persuader you are.

That’s one of the key questions. Who are you? Who’s the other person? What does the situation call for? You have to know yourself so you can allow for the distortions in your own lens. If you’ve ever been in an interview and said something that just caused a wall to come down over the other person’s face, it’s because you’ve contradicted one of their core beliefs or said something against their interests.

Whether you sell the idea in the end depends on a lot of things, including whether the idea is any good. But a lot of the art of persuading is in removing barriers that you can’t see — unless you know to look for them — that keep your idea from ever really being heard.

GIVE THANKS

GIVE THANKS =

G ive Him thanks in everything
I n plenty or lack - content
V oice of gratitude
E xpress with passion

T ruly life is full of colours &
H ow beautiful
A nd so rich!
N ow let us
K eep on rejoicing
S ing His praise!

Sing to "GIVE THANKS" tune

Why You Need to Fail

Why You Need to Fail

5:51 PM Monday July 6, 2009

Tags:Managing yourself


"Peter, I'd like you to stay for a minute after class." Calvin teaches my favorite body conditioning class at the gym.

"What'd I do?" I asked him.

"It's what you didn't do."

"What didn't I do?"

"Fail."

"You kept me after class for not failing?"

"This," he began to mimic my casual weight lifting style, using weights that were obviously too light, "is not going to get you anywhere. A muscle only grows if you work it till it fails. You need to use more challenging weights. You need to fail."

Calvin's onto something.

Every time I ask a room of executives to list the top five moments their career took a leap forward — not just a step, but a leap — failure is always on the list. For some it was the loss of a job. For others it was a project gone bad. And for others still it was the failure of a larger system, like an economic downturn, that required them to step up.

Yet most of us spend a tremendous effort trying to avoid even the possibility of failure.

According to Dr. Carol Dweck, professor at Stanford University, we have a mindset problem. Dweck has done a tremendous amount of research to understand what makes someone give up in the face of adversity versus strive to overcome it.

It turns out the answer is deceptively simple. It's all in your head.

If you believe that your talents are inborn or fixed, then you will try to avoid failure at all costs because failure is proof of your limitation. People with a fixed mindset like to solve the same problems over and over again. It reinforces their sense of competence.

Children with fixed mindsets would rather redo an easy jigsaw puzzle than try a harder one. Students with fixed mindsets would rather not learn new languages. CEOs with fixed mindsets will surround themselves with people who agree with them. They feel smart when they get it right.

But if you believe your talent grows with persistence and effort, then you seek failure as an opportunity to improve. People with a growth mindset feel smart when they're learning, not when they're flawless.

Michael Jordan, arguably the world's best basketball player, has a growth mindset. Most successful people do. In high school he was cut from the basketball team but that obviously didn't discourage him: "I've missed more than 9,000 shots in my career, I've lost almost 300 games. Twenty-six times I've been trusted to take the game wining shot and missed. I've failed over and over and over again in my life. And that is why I succeed."

If you have a growth mindset, then you use your failures to improve. If you have a fixed mindset, you may never fail, but neither do you learn or grow.

In business, we have to be discriminating about when we choose to challenge ourselves. In high risk, high leverage situations, it's better to stay within your current capability. In lower risk situations, where the consequences of failure are less, better to push the envelope. The important point is to know that pushing the envelope, that failing, is how you learn and grow and succeed. It's your opportunity.

Here's the good news: you can change your success by changing your mindset. When Dweck trained children to view themselves as capable of growing their intelligence, they worked harder, more persistently, and with greater success on math problems they had previously abandoned as unsolvable.

A growth mindset is the secret to maximizing potential. Want to grow your staff? Give them tasks above their ability. They don't think they could do it? Tell them you expect them to work at it for a while, struggle with it. That it will take more time than the tasks they're used to doing. That you expect they'll make some mistakes along the way. But you know they could do it.

Want to increase your own performance? Set high goals where you have a 50-70% chance of success. According to Psychologist and Harvard researcher the late David McClelland, that's the sweet spot for high achievers. Then, when you fail half the time, figure out what you should do differently and try again. That's practice. And according to recent studies, 10,000 hours of that kind of practice will make you an expert in anything. No matter where you start.

The next class I did with Calvin, I doubled the weight I was using. Yeah, that's right. Unfortunately, that gave me tendonitis in my elbow, which I'm nursing with rest and ice. Sometimes you can even fail when you're trying to fail.

Hey, I'm learning.

--------------------------------------
Peter Bregman speaks, writes, and consults about how to lead and how to live. He is the CEO of Bregman Partners, Inc., a global management consulting firm, and advises CEOs and their leadership teams. He is the author of Point B: A Short Guide To Leading a Big Change. You can sign up to be notified when he writes a new post or email him at pbregman@bregmanpartners.com.

Focus on What Matters the Most to You

Focus on What Matters the Most to You
By Stew Friedman (Better Leader, Richer Life)


I spent a good chunk of my summer travelling the country, speaking about work and how to make it fit with the rest of life in ways that are good both for companies and the people employed by them. I talked to thousands of people. I listened closely to the pulse of American business. There's much pain. Too many people feel overwhelmed, disconnected, pessimistic, and without purpose other than mere survival. Demand for change s surely the order of the day.)

As I step into my 25th year teaching at the Wharton School, I'm struck by how much about the world of work is not the same as it was when I started. For instance, it used to be that the sun's relationship to the earth was what determined when you worked and when you didn't. Thanks to the revolution in digital technology, this is no longer true for most people I meet. It's now up to each one of us to decide when to turn it on and when to turn it off. New tools promise freedom from time and space, but it's just dawning on most of us that we need to learn new psychological and social technologies, too, to avoid drowning in the deluge of non-stop pressures that come at us through the tethers we call iPhone and Blackberry.

People entering the workforce in 2008 want different things from what my generation wanted on arrival. Since I started at Wharton, I've been occasionally asking students this: How many of you plan to work in the same company when you retire as when you graduate? About two-thirds responded affirmatively way back when. But only two in a recent class of 65 said this was their plan; both were heirs to major fortunes.

How do we now define success? It's more likely to be about leaving a lighter footprint than about piling up more toys, more about living a rich and full life than about beating up the other guy. Peace, love, and understanding aren't so funny anymore--they're legitimate aspirations people want to pursue through meaningful work. Greed and competition were '80's cool. Green and collaboration are '08's cool.

The good news is that some employers have learned that people perform better in their jobs when they are doing what they believe matters to the world in some way and they have a hand in figuring out how to get it done. The more of your life you can bring into your work--and the more you feel you can contribute to people and projects you really care about--the happier and more productive at work you're likely to be.

What I've learned boils down to this: In work, as in love, you've got to follow your heart.
These words are so easy for an old geezer to say, but so hard for most people to enact. My research shows, however, that there are a few simple principles that can help. Be real, by acting with authenticity and clarifying what's important; be whole, by acting with integrity and respecting all aspects of life; and be innovative, by acting with creativity and experimenting with what you do and how you do it. More good news: Anyone can get better at bringing these principles to life and so perform better in all parts of their lives. You just have to make the effort to learn and then enlist others to push and encourage you.

These are hard times. So it's more important than ever to focus on what matters most. Doing so increases the chances that you'll come through with both your soul and your wallet holding something of value. You'll be spending your precious time more intelligently--better aligned with your personal values, using more of your natural talents to pursue goals to which you're genuinely committed.

As we in the U.S. celebrate Labor Day, and as we take a moment to reflect on the work of our lives, ask whether and how your work makes sense in the bigger picture of your life, your world. If it doesn't, take one small step toward making it so. Make a move that doesn't require permission and that aims to make things better not just for you but for people around you at work, at home, and in your community. I'll bet that if you do you'll feel better, you'll perform better according to the standards of people who evaluate you, and--especially in 2008, this year of great hope for substantive change--you'll find others who want to help you go further.

Great Communicators Are Great Explainers

Great Communicators Are Great Explainers

11:37 AM Monday June 22, 2009

Tags:Communication, Leadership


In the months since Barack Obama has taken office, a curious thing has occurred in his communication style. He has toned down the rhetoric and geared up the details. As Don Baer who once worked for President Bill Clinton put it, Obama is now "the Great Explainer."

In doing so, Obama is following in the tradition of a previous president, Franklin Roosevelt. At his best, Roosevelt, either on radio or to the press, took on the role of a trusted friend explaining things in simple terms so that anyone could understand them. For example, Roosevelt compared the U.S. program of Lend Lease to Britain in 1941 to a neighbor lending a garden hose to a neighbor trying to put out a house fire.

Explanation is a key attribute of leadership communications. Leaders know to inject their communications with verve and enthusiasm as a means of persuasion, but they also need to include an explanation for the excitement. What does it mean and why are we doing it are critical questions that every leader must answer with straightforward explanations. Here are three ways to become an effective explainer.

Define what it is. The purpose of an explanation is to describe the issue, the initiative, or the problem. For example, if you are pushing for cost reductions, explain why they are necessary and what they will entail. Put the cost reductions into the context of business operations. Be certain to explicate the benefits.

Define what it isn't. Here is where the leader moves into the "never assume mode." Be clear to define the exclusions. For example, returning to our cost reduction issue, if you are asking for reductions in costs, not people, be explicit. Otherwise employees will assume they are being axed. Leave no room for assumptions. This is not simply true for potential layoffs but for any business issue.

Define what you want people to do. This becomes an opportunity to issue the call for action. Establishing expectations is critical. Cost reductions mean employees will have to do more with less; explain what that will entail in clear and precise terms. Leaders can also use the expectations step as a challenge for people to think and do differently. Your explanation then takes on broader significance.

Good explainers need to be careful, however, not to overdo the details. In a town hall meeting format, the leader sketches the facts and supports them with data points. Dwelling too long on a single point, or points, risks not simply boring the audience but confusing them. Save detailed explanations, which are necessary, for written documentation or team meetings. The latter presents an opportunity for the next level of leaders to translate the communications into action steps.

As such, detailed explanations work well in face-to-face situations, or in team meetings. They become opportunities to elaborate on possibilities. More important, they also allow individuals to offer their feedback, something that typically cannot occur in large-scale town hall events. The explanation becomes an invitation for discussion, and skillful leaders use it to communicate not simply facts, but also to engage support for their ideas.

One final point. Explanations may include aspirations. On March 31, 1945, Franklin Roosevelt gave a briefing to Congress on his meeting with Churchill and Stalin at Yalta in which the future of post-War Europe was discussed.

During the course of his presentation to Congress, as H.W. Brands writes in a brilliant new biography of Roosevelt, Traitor to His Class, the President, only weeks from death, mused momentarily to talk about the need for enduring peace. "Twenty-five years ago, American fighting men [in reference to World War I] looked to the world to finish the work of peace for which they fought and suffered. We failed them then. We cannot fail them again."

FDR, like all good leaders, knew how to close a good explanation with an equally good challenge; it puts people on notice and gives them a reason for action.


John Baldoni is a leadership consultant, coach, and speaker. His work centers on how leaders can use their authority, communications and presence to build trust and drive results. He is the author of six books on leadership, including Lead By Example, 50 Ways Great Leaders Inspire Results. In 2007 John was named one of the world’s top 30 leadership gurus by Leadership Gurus International. For more on John and his work, visit www.johnbaldoni.com.

Follow John on Twitter: twitter.com/johnbaldoni

A Good Way to Change a Corporate Culture

A Good Way to Change a Corporate Culture

1:53 PM Thursday June 25, 2009

Tags:Change management, Organizational culture


"I'd like to talk to you about a big project," the woman told me on the phone. "We need to change our culture."

She was a senior leader in a professional services firm, where people really are their most important asset. Only it turns out the people weren't so happy. Theirs was a very successful firm with high revenues, great clients, and hard working employees. But employee satisfaction was abysmally low and turnover rates were staggeringly high. Employees were performing, they just weren't staying.

This firm had developed a reputation for being a terrible place to work. When I met with the head of the firm, he illustrated the problem with a personal example. Just recently, he told me, a client meeting had been scheduled on the day one of his employees was getting married. "I told her she needed to be there. That the meeting was early enough and she could still get to her wedding on time."

He paused and then continued, "I'm not proud of that story, but it's how we've always operated the firm." Then he looked at me, "So, Peter, how do you change the culture of a company?"

Such a simple question. I wanted to give him a simple answer.

But a culture is a complex system with a multitude of interrelated processes and mechanisms that keep it humming along.

Performance reviews and training programs define the firm's expectations. Financial reward systems reinforce them. Memos and communications highlight what's important. And senior leadership actions — promotions for people who toe the line and a dead end career for those who don't — emphasize the firm's priorities.

In most organizations these elements develop unconsciously and organically to create a system that, while not always ideal, works. To change the culture is awkward, self-conscious, and complex. It's better to avoid it if possible.

"Why do you want to change the culture?" I asked him. "The firm seems successful. Highly profitable. The culture seems to be working to support those goals. Why not keep it?"

He had to think for a few moments. "It's not sustainable. Eventually we'll lose our best people. No one will want to work here." And then he paused. "I won't want to work here."

That was good enough for me. But maybe not for everyone else. They'd spent years playing the game by a certain set of rules and they were playing to win. Now the head of the firm wanted to change the rules mid-game. Not easy to do. And not particularly subtle. We'd have to consciously change all the elements that have developed over decades to make up the system.

Or would we? In the late 1970s, University of Illinois researcher Leann Lipps Birch conducted a series of experiments on children to see what would get them to eat vegetables they disliked. This is a high bar. We're not talking about simply eating more vegetables. We're talking about eating specific vegetables, the ones they didn't like.

You could tell the children you expect them to eat their vegetables. And reward them with ice cream if they did. You could explain all the reasons why eating their vegetables is good for them. And you could eat your own vegetables as a good role model. Those things might help.

But Birch found one thing that worked predictably. She put a child who didn't like peas at a table with several other children who did. Within a meal or two, the pea-hater was eating peas like the pea-lovers.

Peer pressure.

We tend to conform to the behavior of the people around us. Which is what makes culture change particularly challenging because everyone is conforming to the current culture. Sometimes though, the problem contains the solution.

"Stories." I said to the head of the firm.

"Excuse me?" he responded.

"You change a culture with stories. Right now your stories are about how hard you work people. Like the woman you forced to work on her wedding day. You may not be proud of it, but it's the story you tell. That story conveys your culture simply and reliably. And I'm certain you're not the only one who tells it. You can be sure the bride tells it. And all her friends. If you want to change the culture, you have to change the stories."

I told him not to change the performance review system, the rewards packages, the training programs. Don't change anything. Not yet anyway. For now, just change the stories. For a while there will be a disconnect between the new stories and the entrenched systems promoting the old culture. And that disconnect will create tension. Tension that can be harnessed to create mechanisms to support the new stories.

To start a culture change all we need to do is two simple things:

Do dramatic story-worthy things that represent the culture we want to create. Then let other people tell stories about it.

Find other people who do story-worthy things that represent the culture we want to create. Then tell stories about them.


For example, if you want to create a faster moving, less perfectionist culture, instead of berating someone for sending an email without proper capitalization, send out a memo with typos in it.

Or if you want managers and employees to communicate more effectively, stop checking your computer in the middle of a conversation every time the new message sound beeps. Instead, put your computer to sleep when they walk in your office.

Or if you're trying to create a more employee-focused culture, instead of making the bride work on her wedding day, give her the week off.

We live by stories. We tell them, repeat them, listen to them carefully, and act in accordance with them.

We can change our stories and be changed by them.

*I've changed a couple of details in this story to protect the organization's identity.


Peter Bregman speaks, writes, and consults about how to lead and how to live. He is the CEO of Bregman Partners, Inc., a global management consulting firm, and advises CEOs and their leadership teams. He is the author of Point B: A Short Guide To Leading a Big Change. You can sign up to be notified when he writes a new post or email him at pbregman@bregmanpartners.com.

Asian Market Power: The Next Step in Globalization

Asian Market Power: The Next Step in Globalization

9:18 AM Monday June 15, 2009
by Semil Shah

Tags:China, Global business, India


In early 2008, when U.S. markets began to slide but Asian markets held steady, analysts worldwide asserted that western economies were decoupled from those in emerging markets, namely China and India. The crisis, it seemed one year ago, was a problem created by and for those in the west. As 2008 ended and 2009 began, however, growth rates in China and India, while still impressive, did not meet expectations. Decoupling theorists, tails between their legs, rushed to offer different explanations of the economic conditions, and while, yes, Asia felt the pain of the recession caused by the west, they are now emergent again, reaping the benefits of their own stimulus plans, proving perhaps that the decouplists were on to something. And now, as China and India lead Asia -- and the world -- into recovery, it's fair to wonder if the next step in globalization will be governed by a new set of economic rules that are not Euro-centric but instead devised in Beijing and Bombay.

The economies of China and, to a slightly lesser degree, India account for the majority of Asian economic growth today. As their growth regains momentum in the east, western economies are headed for a slower and less-pronounced recovery. These dynamics will enable the Asian economies to amass more and more market power which, over time, they are likely to assert in creative, novel ways that could significantly impact the future arc of global business:

I. Currency market power: Western efforts to exert influence over currency valuations (mainly the Chinese RMB) will continue to fall on deaf ears, a condition which could have negative long-term effects on western manufacturing.

II. Energy market power: China and India are growing at paces that require vast, diverse supplies of energy; their race for resources will drive up world prices and create strong incentives for their indigenous global firms to scour the globe for the best deals.

III. Increased power of indigenous firms: Conglomerates born in China and India, such as Chinese state-owned enterprises and Tata Sons, for instance, are flush with cash and primed to deepen their existing roots in high-growth markets such as Africa, the Middle East, and Central Europe, and even the west through mergers, acquisitions, and spin-offs. Western incumbents will have no choice but to factor these companies into their own competitive threat analyses.

IV. Government power: Many credit China's massive 2008 stimulus, which was twice as large as the United States' (as a percentage of GDP), to paving the way to its recovery. Both China and India have significant infrastructure needs, so it's safe to assume both governments will continue to allocate GDP for this development. Therefore, consumer demand will follow.

V. Consumer power: Buoyed by more government-sponsored stimulus, citizens in emerging markets will grow more comfortable with spending their savings, and this spending could perhaps be accelerated with the introduction of personal loan financing and state-sponsored retirement programs. The growing Chinese and Indian consumer markets will be the base source of this new Asian market power, where the majority of global firms, in order to survive, have no choice other than to create products and services these emergent players want.

Organized in such a framework, the potential for a new Asian economic order may alarm many, but none of these trends should strike anyone as surprising. While capitalism as our collective system of governance is here to stay, the luxury of writing the rules is bound to shift with the ownership of capital as it has over centuries, from Alexandria to Rome, from Florence to London, and now from New York to China and India. Western firms would be wise to acknowledge these slow yet tectonic shifts and adjust their long-term global strategies accordingly. Those failing to do so may not survive -- or they may become acquisition targets.

Semil Shah is a Principal at India Strategy Consulting, a boutique services firm that advises small and medium enterprises and global universities on how to approach India strategically. Semil is also a Principal at de Novo Labs, which takes equity positions in clients' start up ventures relating to India. Prior to founding these firms, Semil spent four years as a director of business development and project management for the National Center for Employee Ownership in the San Francisco Bay Area, where he consulted to employee-owned businesses, completed research for the National Bureau of Economic Research, and co-authored a book on nontraditional applications of employee ownership. You can follow Semil on Twitter at www.twitter.com/semilshah.

The Fallacy of Financial Metrics

The Fallacy of Financial Metrics

5:45 PM Monday June 8, 2009

Tags:Finance, Operations, Organizational culture


In both entrepreneurial and larger companies, we too often spend time focusing on the desired financial performance target, rather than the inputs that drive those numbers. Because boards, investors and management demand an objective way to measure performance, we often go right to the result without focusing on what caused those results.

Financial performance is a result, a by-product, a consequence of something else. The financial "numbers" ultimately represent the scorecard we care about, but they do not help us understand how to score. When we ask management teams what are the most important drivers (or what we call operating metrics) of their financial results, I usually see one of two reactions: a) a dog in front of the television blank stare or b) a further breakdown of financial results: "sales on the West Coast drove the results." When pressed further, we may get even further sales breakdowns which tell us little. As my partner, Dick Harrington, says, "We end up slicing baloney with a scalpel" and are talking too much about the "what" without getting the "why."

Operating metrics are the inputs that correlate or drive the desired results of a business. If you focus on the inputs, you need to worry less about the financial outputs. Examples of inputs include customer convenience, product quality, customer retention, or customer referral rate.

Let me provide a couple of concrete examples. In many of our retail or restaurant investments, we espouse a value proposition of convenience. The more convenient we can make the experience, the happier the customer will be, and the more likely we will have customer repeat and referral, meaning not just higher revenues but higher quality of revenues. How does convenience translate into a measurable operating metric? As a proxy for convenience we measure metrics such as turn-away rates and wait times for service. That is, when a prospective patron walks in or makes a call for a reservation how often do we turn them away because we are full or short-staffed? We want that turn-away number as low as possible to reinforce convenience. If we detect a repeat issue we can see how to solve it, perhaps through improved reservations systems or increased staffing. Other metrics we might measure include weekly cleanliness scores, customer loyalty, and periodic customer satisfaction reviews. Of course we will look at these operating metrics alongside the financial and more quantitative results, but again--the point is to uncover the correlation between operating drivers and financial outcomes.

Businesses need to focus on the 3-5 metrics that represent the most important drivers of value creation. It helps align an organization towards doing the right thing in a repeatable and scalable manner. When you just ask a team to chase results on a plan, you may never be sure what drove that result even if you are successful. There is a difference between having a good year of numbers and a sustainable business model that allows for more predictable year-over-year results. From a managerial tool perspective, a weekly or monthly dashboard that highlights not just the financial results, but also the operating metrics is smarter and more actionable. A dashboard with operating metrics serves effectively as an exception-based report where you look for deviations from the norm of operating metric levels and then consider whether the issue is systemic or one-off.

It is true that people behave based on what they are measured by. Here are some guidelines on setting a culture driven by operating metrics and measuring your team on the right stuff:

1. Ensure management understands the difference between operating metrics and financial metrics - operating inputs versus financial ratios. The latter is for number-crunching analysts to focus on, the former is for managers and it is what will make the latter automatic.

2. Clearly communicate across the organization a small number of the most important operating metrics. It takes some thought to filter through the many possible inputs / operating metrics, but pick only the 3-5 that have the highest correlation to the desired financial goals.

3. Regularly review an operating metric dashboard, but focus on exceptions. You'll be able to scan the health of your business very quickly. In an earlier blog, I interviewed superstar Oprah doctor and cardiac surgeon Mehmet Oz, and discussed the vitals for good personal health. Indeed, an excellent analogy is that operating metrics should represent the blood pressure and cholesterol levels of a company. Focus on the right ones, regularly measure them, and if they are out of whack, do something before your company has a heart attack.

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Anthony (Tony) Tjan is CEO, Managing Partner and Founder of Cue Ball, a venture and early growth equity firm investing in the information media and consumer sectors. As an entrepreneur, investor, and senior advisor, Mr. Tjan has become a recognized idea generator and business builder. Most recently, he was Senior Partner with The Parthenon Group, a leading strategy consulting firm where he continues to serve as Vice Chairman. He was also a long-standing special advisor to Richard Harrington, the former CEO of Thomson Reuters Corporation (NYSE: TRI), the world’s largest information services company. Harrington recently joined Cue Ball as Chairman and General Partner.

Tjan is perhaps best known for founding one of the pioneering Internet firms, ZEFER (now an NEC subsidiary), a company that led the architecture and launch of several of the earliest large scale commercial websites and online applications. Mr. Tjan started his career with McKinsey and Company where he focused on consumer and media clients and is one of the World Economic Forum’s Global Leaders for Tomorrow. He sits on the boards of CX Media (TSE: CX), Knovel, Epic Burger, MiniLuxe, and From the Top.

Mr. Tjan holds an A.B. degree from Harvard College, M.B.A from Harvard Business School and was a Fellow at the Harvard Kennedy School of Government.

You can follow Tony Tjan on Twitter at www.twitter.com/anthonytjan