The Right and Left Brain Blog

Clearly our business, social and political environments are besieged by crises. However, the solutions are more piecemeal, insufficient, and fraught with unacknowledged consequences than we want to admit. This is particularly evident with the scandals involving the Illinois Governor and financier Madeoff who stole up to $50 billion. While everyone voices outrage, the process of resolving these issues could take months or years. If we started throwing these kinds of criminals in jail with no bail like many petty criminals, it might get quicker resolution and deter copy cat crooks. There is simply a lack of leadership and cooperation among leaders to develop firm and decisive actions instead of self-serving rhetoric.

This same lack of real action is evident on other fronts:

• Everyone is waiting for the new stimulus package to save the world just like we were told the $700 billion bailout would. However, there are all kinds of excuses for not discussing details. It is clear from early proposals that issues like creating pork, the consequences of simply printing money, timing of job creation and the amount spent on products rather than jobs will be secondary to the hype of the program.

• The lack of progress resolving auto, housing, and financial institutions issues becomes more evident every day. It is clear that the public and government continue to be misled by the depth of the problems as evidenced by the increased costs of all the programs. In addition, the solutions of the institutions involved in these crises seem mostly designed to obtain federal bailouts. We see the same executives who caused the problems trying to solve them, there is little restructuring of these institutions, and most of all little sale of assets or downsizing to be more competitive in the new economy.

In short, it is a new world and organizations need to accept the current environment as a test for the future. Flexibility, speed, and innovation will replace yesterday’s methods. Most of the rhetoric is old solutions by entrenched players. Real change is simply not evident.

In the fast few days I have been besieged by bright, exciting people being really stressed out and somewhat paranoid about everything. They are worried about being laid off, money, the future, etc. Their bosses seem to be relentless critics and every comment is intercepted as a threat. They are in panic over adjusting their financial lifestyle. Cooperation with co-workers is at least perceived to being replaced by every man for himself. The most interesting common feeling is “I am extending myself for everyone and getting nothing in return.”

While many of these feelings may be real, they are simply not productive. We need a balance between reality, paranoia and action and positive thinking. Some suggestions for creating a better feeling are as follows:

• The easiest and most positive things we can do to create a positive culture is to say thank you, care about people and be supportive with praise and encouragement . Why do some of the same managers who are supportive with their kids and family go to work and just spend the whole day criticizing everything?

• We need to encourage open communication, realism, and problem solving. Assessing the situation, having discussions with bosses, having discussions with outside and inside colleagues can all be useful.

• Develop some small positive steps. This may require making a decision to fight for your current position or simply look for a new job. It definitely requires a new perspective and not doing anything.

In summary, we need to separate the reality from the paranoia. Many perceptions are simply a function of the times. One of the best lessons I learned about this was when I was 10 years old going to school with my father and Uncle Harry.

My mother would always complain to my father at breakfast that his tie was dirty or his shirt didn’t match or something. Every day, whatever my mother told my father, he would criticize my Uncle Harry while driving me to school. Uncle Harry would then be upset about what in fact was a random comment applied to him.

I found the same thing happens in our lives. Someone is having a bad day about work, their personal lives or home and it just filters down and across the organization for the whole day. How often do we say, “watch out for the boss, he is in a mean mood,” and then get personally upset when we are part of a more general attack. Try both understanding the comments and trying to be a little positive in this stressful period.

There is a term in economics that many of us learned but everyone virtually forget in recent years. Ignoring this term is responsible for causing much of the current crises. The term is “ceteris paribus.” If you ever took an economics course these words are in every course and spoken in the first week or so. After those words you will see problems, lectures and formulas with all kinds of complex and impressive analytical tools that ignore them.

“Ceteris parabis” means all things being equal. In other words, this phrase becomes an excuse for all the assumptions that the formulas etc. ignore or can’t analyze if the results turn out incorrect. These include political change, social conditions, weather, other changes, scientific accomplishments etc. that may have more impact on outcomes than the variables that the extensive models analyze “ad nauseum.” For example, think of the predicative uselessness of economic or political models before 9/11 or the Iraq war.

Nowhere were wrong assumptions more apparent than in the results of the housing boom in 2000-2006.

• Home owners got cheap homes with low interest.
• Rules such as face-to-face meetings with lenders and buyers and appraisals were reduced.
• Builders got to build homes, employ people and sell the homes profitably.
• Banks got to lend money with low interest and earn significant fees.
• Traders were able to bundle the mortgages and earn more fees and interest.
• The government liked the economic growth and continued to foster and guarantee cheap loans.
• Housing values would continue to increase.
• Cheaper interest, lower down payments, lower standards, inflated housing starts etc. all followed the belief that housing prices would not decline.
• Everyone was a winner and seemed to think it would last forever.

What happened? There were two critical assumptions that were ignored in the housing mess.

• Individuals were allowed to pursue individual bonuses and commissions without regard to risk or organizational goals. With the opportunity to make millions based on individual performances, the financial executives acted normally in pursuing excess risk. What was wrong was that their organizations and financial regulators allowed them to ignore long-term risk and organizational goals.

• The second mistake was simply ignoring information and risk. Everyone had information that credit requirements became too lax and that all of the growth was based on the assumption that housing prices and demand would never reduce. In addition, as the securities were packaged and retarded, the oversight became less and less. Finally , any analysis of housing prices showed that an illogical bubble occurred that was contrary to long term trends or supply and demand.

The net result was that institutions like Lehman Brothers, Merrill Lynch and Bear Stearns no longer exist and many others are severely impacted. However, simply following normal financial procedures could have avoided much of the mess.

The “catch 22″ of “Be all that you can be” is the environment. We all learn and believe that we can succeed at anything and be anything with training, hard work, experience and a pursuit of excellence. Unfortunately, we live in a very complex personal, organizational and external world.

A critical current impact of the environment is, presumably, surprise external events. The first decade of this century has already experienced more of these than probably any time in history. 9/11, China, housing boom, financial crises of 2008, Katrina, Google, aging of baby boomers, global warming , are simply examples of events that have dramatically affected our society . I am not arguing the causes, solutions or impact of these individual events. What is important here is that they seem to be happening at an increasing rate and dramatically affect our daily lives and society. Rather than be shocked by each one of these, we need to recognize that they are occurring, are unpredictable and that we need to develop mechanisms to cope with them on an individual and social level.

Dealing with the changing environment is highly complex but has some fairly simple prescriptions:

• While we are frequently surprised by environmental factors, many are somewhat predictable and can be prepared for. On a number of different levels, factors like global warming, aging of the population, product life cycles, technology changes, and the Internet are highly predictable. What is frequently missing is recognizing and dealing with them.

• For those that aren’t, we need to recognize that they will happen and remain calm. Rudy Giuliani will always be remembered for his efforts to keep the country calm and get back to normal during that tragic period. Similarly, with job loss, takeover etc. doing one’s job or starting a search is frequently the best strategy rather than just panicking or taking drastic steps.

• The next recommendation is to recognize the change and develop speedy solutions. The increase in security precautions after 9/11 is an example. Similarly, developing a plan and understanding changes are critical to long-term success. Car companies and financial institutions have simply been abysmal at describing the issues and developing new solutions

• Finally, environmental changes frequently require much greater collaboration as they involve a number of parameters. Two different aspects are particularly needed. One is the need to recognize potential negative factors in a situation. The second is to recognize how different factors of a decision can be affected. While the severity was much less, the collaboration on Gustav in New Orleans compared to Katrina is the kind of collaboration and planning necessary to deal with these events.

The lack of understanding goals is a critical factor in management errors. We frequently think of goals like sports, where winning is presumably everything.

However even in sports, finances, long-term development, ethics, point spreads etc. can affect the winning goal. For organizations and individuals, the issues are even more complex.

• In most efforts and organizations, there are multiple goals and demands. Prioritization, comparison and measurement become critical issues. If goals are too simple they can ignore many aspects of a situation but if there are too many, there can be a lack of focus. We also frequently focus on measurement and may ignore more subjective goals. Educational goals such as test scores versus social development face this problem every day.

• Short term versus long term goals is the best example where goals may be conflicting. Much of the financial crises in 2008 were a function of short term greed versus long term rationality. I knew there was something wrong with the model when a young very talented graphic artist quit our company to sell mortgages to potentially make twice as much money. He had zero skills, interest, capability or experience in mortgages but the short-term lure was to enticing.

• The level of goals can also change. On one hand goals need to be realistic so that they can be achieved and not strain operational, financial or organizational resources. On the other hand, there needs to be some stretch to provide some challenge and growth. In particular, virtually every organization needs to downsize their goals for the next year or so at least. .

A very complex analytical tool, linear programming, provides a rather simple tool for examining goals. While few people understand the math of linear programming or its applicability, the logical model is very insightful. First, you simply detail the various goals and priorities .Second, you list the constraints. Going through the exercise in even a simple subjective manner forces one to understand the goals, consider the trade-offs and understand the barriers.

A major dilemma in our day-to-day experiences is that we all want to be effective at whatever we are doing. Few of us start our days saying “I am going to do a lousy job today,” I am going to be a lousy parent today,” or “I am going to make my day miserable.” However, many times our aspirations, goals, efforts, etc. become frustrated. Two diverse examples of excellence illustrate how it can be achieved.

An article in Fortune Magazine on the most powerful women in business (October 13, 2008) illustrates how people are achieving excellence. Only 2 of the women were over 60 years old but 20 were under 50 and 3 under 40. The article emphasizes the intelligence, skills and networking of these leaders. In other words the authoritative , “good old boy” work your way up executive is being replaced with the people with superb capabilities and the ability to bring people together to achieve success.

The most interesting aspect is where they work. In general, they are more prevalent in consumer products, health and the internet than the economy as a whole. This may be a caused by growing industries that are more open to women. However, they are also more prevalent in heading up key groups such as international or technology than traditional business executives. Fifteen of them are in untraditional or emerging companies like Google, Yahoo, Facebook, Harpo and TJX. These women simply seek out and take advantage of opportunities in exciting environments rather being held back in more traditional companies like autos, manufacturing or banks.

On the opposite end of the spectrum is the experience of many companies in creating excellent customer service. While many consumers complain about poor quality, “I got you,” return polices, unhelpful agents, delays etc. there are some companies that have built their reputations on excellent customer service. Land’s End, Ritz Carlton Hotels, Nordstrom and L.L.Bean are prominent examples. There are several common factors in these diverse companies that illustrate the components of excellence:

• The first aspect is a commitment to excellent customer service that pervades their statements and execution throughout the organization.

• What is sometimes missed is the impact the commitment has throughout the companies in developing excellent practices. In order to offer unlimited returns you need to exercise excellent quality. Service companies like Nordstrom and Ritz Carlton both recruit and train staff to be excellent. Companies like Google offer sales and analytical tools to help clients achieve better results.

• Excellent and empowered people are a requirement for excellence in customer service. Most consumers are honest and if companies are preoccupied with the few cheaters, they will not satisfy many legitimate complaints. In contrast empowering employees both encourages satisfied customers and motivates employees that they can experience success.

• Finally, excellent customer service involves respect. Many of these jobs are repetitive and stressful. However, training, rewards and simple recognition provide pride and performance in these functions. One of the most useful efforts I experienced was having general management listen in on customer service phone calls.

It is not impossible to achieve excellence. It just takes careful planning, awareness, and execution.

If you love what you do, you’ll always do what you love. And if you’re doing what you love, you’re going to become very good at it. And this is a country that rewards excellence.
– Billy Joel, Syracuse University commencement speech, May 2006

One of the biggest contradictions in our current economic crisis is the need for survival versus the need for innovation, entrepreneurship, new structures and excitement about our organizations. Unfortunately many of the survival tactics are drowning the element that can produce real change: Passion.

Change or passion requires energy, personal commitment, ignoring barriers, and confidence of individuals that exemplify passion. Organizations need the confidence and curiousness of toddlers growing up to ignore obstacles, develop new exciting methods and believe that anything can be possible. Unfortunately our environment is fostering the exact opposite culture:

• First is the fear of failure, layoffs, job insecurity and rumors. Because organizations refuse to develop realistic plans and execute them, more time is spent lamenting the problems than developing solutions.

• Second, outsiders are brought in to do the dirty work or to save face for Boards, governments, banks, investment bankers or other overseeing structures. Does it really make sense to spend millions of dollars on consultants who have no clue about a business to determine who will be laid off? Why not tell the organization the truth, which they know anyway and let them develop plans to save their companies, departments and jobs.

• We ignore or hide what we know. In general, old strategies are simply warmed up rather than really encouraging new solutions or structures.

• For the most part, the same management and Boards that caused the problems take responsibility for the changes and retain their pay structure while firing the firing the people who only execute.

• We ignore the reality that passion and innovation requires a deviation from the norm, which can become difficult to understand and accept. It requires an acceptance of new methods, processes and ideas.

• Innovation also requires a focus that may leave some other requirements unattended. Thus, it frequently requires tolerance that that the end justifies the means. The key to achieving tolerance to overcome these barriers is confidence, which is currently being undermined with oversight, fear and uncertainty.

• Innovation and change also require support and success to breed success with their energy, openness, and resources to succeed. However, banks and other parties seem to be demanding immediate solutions and change plans more than the weather.

In summary, what passion and innovation require as Emerson says is “to believe your own thought, to believe that what is true for you in your private heart is true for all men - that is genius. Organizations like Wegmans, Wal-Mart and Google have are a total commitment that creates the passion. They worry more about achieving a total result and impact than developing and enforcing rules or creating rigid structures.

“Unless you know where you are going any road will take you there,” Theodore Leavitt

We all understand the importance of goals, purpose and direction in establishing commitment, success, teamwork and coordination. Somehow, between that understanding and the execution, things go awry. Two different examples will illustrate success, failure and the importance of goals and measurement.

One of the key mantras of success of a relatively new industry, direct marketing, has been the focus on setting goals and measurement. Next to “crackberries” Google Analytics has probably been next most addictive business tool. With that and other direct marketing tools, you can instantly measure and observe results. The complexity and results of measuring sales, response rates, paths, cost per order, click through rates, page views, etc is impressive and can be done on a daily or hourly basis.

The technology and structure of this business accommodate this type of goal setting and measurement. Even in this industry goals and measurement can become complex. Terms like lifetime value, competing tradeoffs, multiple causes etc. all can make goals and measurement more complex.

However, compare this to the medical profession and others and the difficulties are obvious. While doctors struggle with life and death decisions every day there is little guidance on goals, costs, or probabilities. In particular, differing circumstances such as age, pain, quality of life frequently seem secondary in these discussions. Most important efforts to establish real health criteria or measurement except in experimental situations are still fairly crude. Most of the data still lies only in individual doctor’s written manila folders rather than usable databases. Everyone agrees and tests have proven that medical databases dramatically improve health care and reduce costs. Yet there is little major effort underway to make this effort universal.

Increased diversity is a major evolving issue in culture. This is particularly with regards to sex, age and race:

• Since 1960, the civilian labor force over 16 years old has grown from about 70 million to 150 million or 111%. However, women in the work force grew from 23 million to about 71 million or over 200%. They now represent 46% of the labor force compared to 33% in 1960.

• Between 1980 and 2007, the number of workers over 45 years old increased from about 33 to 40%, and this trend will accelerate in the next 20 years.

• Since 1990, the white population has decreased from 80% to 75% and is also expected to continue to decline over the next several years.

In summary, in 1960, the labor force was dominated by 21-45 year old white males. Today, we have a much more diverse labor force by age, sex and race. That requires an entirely different structure of practices, strategies and culture. As a generalization, baby boomers are the largest population group, and have led changes in the society during the last 30 years. This group of managers is whiter, more male, worked their ways up in the organization, stayed in 1-3 companies and is more company- than profession-loyal.

In contrast, 25-40 year olds frequently view themselves as more entitled. They have more professional skills, which may not be understood or appreciated by their older managers. They are more diverse in terms of sex, race, social preferences etc. They expect significant raises and promotions in short time periods and will leave if they don’t get it. Finally, they are less willing to accept boring tasks, or work without understanding or reason.

These differences require dramatic adjustments. Differences in respect, reviews understanding etc. are all affected by these cultural differences. For example, older workers feel younger workers lack the experience necessary to succeed and may resent reporting to a younger manager. In contrast, younger managers may feel underutilized or appreciated because older managers don’t understand their professional skills particularly with respect to computers and the internet.

There are differences in other areas. Religious, age, motivation, regional, family and income differences are all having a dramatic impact on developing and managing the culture. For example, time off for various religious and national holidays becomes a problem in many organizations. On a less serious note, I noticed New York City closes on the first flake of snow while cities like Milwaukee never seem to close.

No matter what the differences, it’s important that you are aware of them and how they play into your organization and its needs.

The most effective leadership and motivation I have witnessed occurs every day with a parent teaching a child to ride a two wheeler.

• First, you can’t teach a child until they are ready and want to learn. While these vary in intensity and levels, the child must have the physical skills, the desire to learn and the confidence that they can learn before they are successful.
• Everything in the process is geared towards giving the child experience, confidence, support and success. The child and the process are usually the focus of the experience. The parent runs up and down the street, without worrying about getting tired, giving the child confidence and support.

• When the child falls, the parent takes the responsibility and supports another try.

• When success is finally achieved, the child gets all the credit and applause while the parents are trying to recover from doing much of the work.

Despite all the books and research, leadership and motivation are simple. As evidenced by the bicycle example they involve building support, experience and confidence. This has been supported from writings and research ranging from Pygmalion, to Rothlegberger, to McGregor, to Peters. What is difficult is the execution and some of that is even easy.

For some reason time, stress, pressure, priorities, etc. cause us to forget everyday decency. As a result, the simple impact of every day courtesy, politeness, concern, and understanding are vastly underestimated as ways to develop leadership and motivation. For example, some simple everyday phrases that are used infrequently could vastly improve organizational effectiveness:

• Please
• Thank you
• You did a good job
• How are you doing?

These simple phrases can do a lot to take the edge off a situation or simply demonstrate that human feelings are important. They provide a sense of support and caring. They also take the edge of the pressure of today’s stressful environment.