Organisation : Mirror, Mirror on the Wall; Facing Corporate Reality
A bottom-line oriented, business catalyst, Tom Fitzgerald is a CEO coach and consulting management engineer. Specializes in corporate renewal, preemptive turnaround and effecting major and sustained improvements in profitability, performance and growth.
He is also an accomplished writer and speaker. He is a regular contributor to national and international business magazines like American Banker, CEO Refresher, The Journal of The Turnaround Management Association, Corporate Renewal, The Professional Journal, Association Management, The Forum and others. Over the years he has spoken before hundreds of CEOs and senior managers in environments both pragmatic and academic.
By education, a physicist. By birth, Irish. By instinct and experience, a business catalyst.
Within a company, no great change can happen, no substantial performance increase can be achieved unless and until that company faces clearly and fearlessly what it really is today.
- Yet, the real drivers of corporate performance are mostly ignored. Partly because they are not known, partly because managers are afraid to look.
- Less than 30% of the factors that drive the success of the company appear in traditional analyses. And these are often more result than cause, more ephemeral than enduring.
- The other 70% of corporate drivers are not addressed. Most of these exist within the hidden emotional life of the company.
- At some level, successful leaders are aware of these drivers and cause them to change, to transform. For example, in turnarounds new CEOs intuitively change the entire dynamics of the company as part of the transformation. Inspired new CEOs do this too.
- But neither desperation nor inspiration are needed. Companies can be transformed. And the first step is to identify the motive forces, the real drivers of success.
- From hands on experience with scores of organizations the writer describes some of the more important of these drivers and their effects on performance.
It was not pornography, well not exactly, though it did fascinate. And it dealt with primal urge, and potency and creation and genesis. And it did inspire guilt and caused each of them a kind of embarrassment that others should see them looking, like voyeurs. Even Harry, who had spent hours with it, found it so.
No it was not pornography. But they sat there, fascinated, silent and ashamed, just staring... Harry did not speak. He waited.
George said again: "But it can't be that bad. We're doing all right." He had said it at least ten times that morning. But now it was empty of denial. Just a reflex. The silence stretched.
Eventually (it seemed forever in the silence but it was just moments) George spoke again: "This must be who we are. God help us!" A sentiment that Harry shared. He had said much the same the night before as he studied the picture.
And there it was, staring them in the face, writ large upon the wall. Not deniable now; for they had tried repeatedly that morning to deny it and they had failed.
They were an accident waiting to happen.
Harry was the CEO. George, the CFO. They, with the other seven were the management team. The company was System Tech.
They were looking at their company as they had never seen it before. Never so completely nor so clear. In the cold, implacable mirror of their own answers, of their own words. Naked it lay, without disguise. Everything on shameless view, not just the usual financials or even the unobtrusive measures. But its demons, its drives, its motivations, the very wellsprings of its performance. Even the secrets they had known but had never spoken of. And secrets too they had not know.
They were an accident waiting to happen. They really were.
George said again, a little plaintively and still puzzled: "But we're making money, aren’t we!?"
This time Harry responded: "Yes! But for how long? It hasn’t shown much yet, but one bad blow and we’re in trouble. We're fragile in ways I hadn't imagined. And the economy is beginning to slow"
He lapsed into silence again, letting it work. And waited...
Until just a few years ago, this in-depth illumination of the heart and soul of a company would never have been possible; the instruments did not exist. Nor did the techniques for transmuting the understanding gained into commitment or the knowledge gained into action. (Such clear vision, such intense drive to action, usually happens only in extreme financial crisis.) But Harry and his team did look deeply in and saw what was really there. And did so without fear. Caused change, great change. And without danger.
Within a company, no great change can happen, no substantial performance increase can be achieved unless and until that company faces fearlessly (fearfully will do at a pinch) and clearly what it is today, especially its inner life. That life that drives performance and results.
Yet, less than 10% of the factors that truly drive corporate performance appear in traditional business analyses. And even those that do are often mere unobtrusive measures of performance and not causes.
The other 90% are not addressed at all, perhaps because they are not known, perhaps because managers are afraid to look. But for whatever reason the real drivers of corporate performance are ignored.
There are three broad categories of factors that describe a company:
The Usual. Those that commonly appear on the financials and management reports; these we all know.
The Leading Performance Indicators. The early warning signs that are the unobtrusive results of performance; examples might be Cash Flow or Market Share. There are more than 50 or these leading performance indicators. They can be measured objectively either by company people or by outsiders.
The Behavior/Performance Drivers, those factors that are the cause and motivation of the behavior of managers and the performance of the company.
There are, in all, more than a hundred of these Behavior/Performance Drivers: From Assertiveness, through Morale, to Zeal. And all of them are causes, motive factors, forcing functions. They effect individual behavior directly and immediately, corporate performance indirectly and quickly and bottom line soon after that.
For, when a driver is changed, individual behavior is changed. When behavior is changed, performance is changed. When performance is changed, so is the bottom-line.
Everyone on Harry’s team was familiar with the financials so they touched on them only briefly. Then they dealt with the Leading Performance indicators They had been evaluated by senior staff and confirmed, for the most part, by their CPA firm. They showed some problems just underneath the surface, just below the P&L threshold. But discussions on these did not lead to any emotional drive to do anything about them - by anyone except Harry. At least he liked to think the motivated him. Somehow, it is the nature of these indicators not to touch the soul or the emotions of managers; nor to impel action.
Then they addressed the drivers.
In world class companies, very few of these drivers (usually less than a dozen) show problems. And then at just moderate levels. Overtly troubled companies, companies that have been experiencing distress for some time show many more, as many as sixty or seventy and at high levels of intensity. So also do companies that are about to have problems.
They had measured a hundred and twenty of these drivers and Harry and his team had identified problems in more than fifty. Twenty of those were three star events or greater. And five turned out to be gut issues. Issues that were sucking the energy and drive and creativity out of the company and out of its managers. Issues that had been growing, unseen, in the soul of the company. Issues that had to be dealt with, not just intellectually, but emotionally. And not just by the managers individually but by the team as a whole, by the very company itself.
Three of these five issues were in the top ten of (un)popular corporate cancers. Two were unusual but to this company absolutely critical if the company were to move on. They were:
Other, lesser issues included:
Sharing of Corporate Vision
The process of addressing and resolving corporate issues, both gut and lesser, is dealt with elsewhere. (See our web for more information.) Suffice it to say here, it was done well and the key issues were resolved within just two days. Within two weeks the other management ranks were involved and two weeks later the changed behavior of management had begun to show in performance.
Changing the drivers had changed the indicators. For example, in Harry’s case, changing the Communications driver changed the Cash Flow indicator, amongst others. Another example, changing the Sharing of Corporate Vision driver reduced the Absenteeism indicator. And naturally, changing the indicators changed the bottom line.
One year later, having dodged a bullet that could have and would have hurt them badly, they showed a 10% increase in profits. The return on the investment they had made in their "mirror" was 50:1.
The "mirror" is without mystery: The diagnostic instruments, once seen, are immediately understood; the process of looking, of addressing the issues, once it is experienced, is so profoundly simple it can be led by any manager.
And there is no magic; except in the results.
Mirror! Mirror! On the Wall!
Who is the fairest one of all?
©T. FitzGerald, 2000 Visit the website www.managementconsultants.com
©T. FitzGerald, 2000
Visit the website www.managementconsultants.com