Hidden in Plain View

Adobe

"There can be no keener revelation about a society's soul than the way it treats its children."

—Nelson Mandela

Nearly every successful business or nonprofit that endures over time begins with a simple yet profound idea.

Such is the case of Charles Edward Merrill, who, in 1914, founded what is now known as Merrill Lynch. According to historical sources, Merrill was among the first New York stockbrokers to recognize the importance of selling stocks and bonds to small investors by providing simple, conservative, and sound financial advice.

Looking to grow his brokerage business, he decides to locate offices closer to potential customers west of New York's Hudson River.

Summarizing Merrill's core idea, he took Wall Street to Main Street.

And did so by looking for external opportunities in an expanding country in the early part of the 20th century.  A lesson here is that change is what you choose to make of it.  What seemed hidden to others in the financial industry, a rising USA middle class became obvious to Merrill. 

His death in 1956 prompted a tribute in the New York Times concerning his "provocative ideas about how to interest the little and often Wall Street-shy man in acquiring a stake in his country's economy. Mr. Merrill was a frequent and firm spokesman for the importance of a free capital market in this nation of free enterprise."

After nearly going out of business during the recent "Great Recession," Merrill Lynch is now the wealth management division of Bank of America. With over 15,000 financial advisors and $2.2 trillion in client assets, it is the world's largest brokerage.

In the late 1990's, André Briend, a French pediatric nutritionist, walks into the kitchen of his home one morning where the children are eating breakfast. On the table is a jar of the chocolate spread, Nutella.

For some time, Briend and a host of others had been seeking practical solutions to malnutrition, especially in Sub-Saharan Africa.

Milk spoils. Water is often contaminated. A mother who leaves her children to find food in other villages poses safety risks for those left behind.

What to do?

For Briend, the answer to these challenges could be in the Nutella sitting on the table, in plain view. From this "aha" moment, watching his kids eat breakfast would come a product with a funny name, Plumpy’nut.

Plumpy’nut consists of a peanut-based paste, with sugar, vegetable fat, and skimmed milk powder, enriched with vitamins and minerals. It is available in 92g foil wrappers, which provide 500 calories. The product can be used for up to 24 months after the date of manufacture without refrigeration.

As a ready-to-use food, Plumpy’nut requires no preparation, no dilution in water, and no cooking; it can be consumed directly from the wrapper. A daily dose costs $1 and is manufactured in several African countries, including Niger, Mozambique, and Malawi. It is also being produced in Rhode Island under the name Edesia Global Nutrition Solutions.

According to the manufacturer, Nutriset, the product can be used at home without any preparation, under the supervision of the mother or another family member. Plumpy’nut makes it possible to treat the majority of children with severe acute malnutrition without hospitalization. More malnourished children can be treated with regularity, thereby improving the recovery rate.

In 2005, Doctors Without Borders distributed Plumpy’nut to 60,000 children with severe acute malnutrition during the famine in Niger. Ninety percent completely recovered, and only 3 percent died. Unfortunately, according to the United Nations, the product reaches only 10 to 15 percent of those who need it due to logistical and budgetary constraints.

Where are you looking for opportunities? Customers? Non-customers? Business networks? Your employees?  Are you giving time to new ideas?  Or improving current operations?  Where could you do good and do well at the same time?

Perhaps the next profitable idea is just over the river or on the kitchen table, hidden in plain view.

Strategist.com

© Bredholt & Co.

What's Missing?

"Missing pieces do more than complete the puzzle. They fill in an empty space."

--Luanne Rice

Is it possible that organizations of all types have fewer of the right kind of leaders today than nearly 20 years ago? I'm referring to those individuals who exhibit a good balance of experience, personal depth, emotional strength, and administrative discipline.

If this is true, why?

To begin, is there too much attention paid to the latest fads and not enough to the discipline of leadership itself? Being a leader is meaningful but hard work no matter the situation.

Another possible answer to our original question lies in the failure of leaders to learn from their experiences. Someone once said that those who are not open to counsel can’t be helped. Often development programs are offset when individual responsibility to keep learning disappears.

The person most responsible for development is the leader, not the educator or trainer.

What’s missing that often undermines well-intended people?

The first absent piece tends to be …

• Trust

It’s difficult if not impossible for people to follow someone whom they don’t trust.

You have to offer reasonable grounds for belief. This is true in your first assignment or as a seasoned executive. Relationships are built on trust. Call it authenticity or transparency if you like. But substance is a must.

Are people sometimes misled by leadership?

Yes. 

To paraphrase Abraham Lincoln, “You can’t fool all of the people all of the time.” Weakness in character is revealed at some point, often in a crisis. Sometimes the damage is not repairable.

Maybe a coach is what you need. Timely interventions by trusted individuals may be more important than formal reviews separated by long intervals. Few, however, change their behavior with coaching alone. It takes self-discipline and practice to reverse course. Even then it's an uphill climb. 

One way to understand credibility or trust is to think about what impresses you. 

Those with measured words and consistent behavior are impressive. Why? Because the combination of these two qualities is rare.

Another missing piece is …

• Communication

Here we are referring to interpersonal or social communication, not necessarily oratory or elocution. Most of a leader’s communication is one-on-one or in small groups. Businesses are social systems. An overlooked tool is conversation.

The writer, Alan Barker, put it this way:

“Conversation is your primary management tool. It’s how you build relationships with colleagues and others. It's how you come to understand what people think and how they feel. The conversation is the way you influence others and are influenced by them. It’s how you solve problems, cooperate with others, and create new opportunities.”

That's good advice.

Two-thirds of any conversation is listening and listening is hard work.

Why?

While someone else is talking we often keep our brain in gear waiting for just the right time to speak again. By this posture, we hear little of what the other person has to say. Many gain leadership positions despite being poor listeners. How this happens is a mystery. 

When is the last time you really paid attention to colleagues, staff, customers, or board members?

Is two-way communication a missing piece? Then consider asking good questions to find out what interests others. It’s one thing to know about your people. It’s another to know your people. Understanding that difference improves and strengthens relationships.

There there's …

• Cooperation

The buzzword is "collaboration" but associates value someone who is cooperative. 

If you're trying to build a great enterprise it’s going to take the right people laboring together to achieve common goals. Are you comfortable with strong and gifted associates?

While the task determines the form of cooperation here's a practical way to begin. Start by asking people what you can do to help them. Learn to cooperate with others, first. Then see if there's a difference when asking for their help in getting something done on your list.

And finally ...

• Manners

Author, Jordan Mitchell, sums it up this way: "Good behavior, etiquette, and simply being polite positively impact everyone around you, and the advantages of that are countless." 

It takes self-awareness, but just one missing piece can fill an empty space and make a significant difference in your life.

Strategist.com

(C) Bredholt & Co.

Leadership Agenda: Best Buy Co.

It seemed like the best of all worlds for Best Buy stores. There was good news in a slow economy.  Circuit City, its chief competitor, was going out of business. The conditions were right for Best Buy to continue expanding, now with its major competitor gone from the scene.

However, if something seems too good to be true, it probably is.

While the competitive retail landscape was changing so was the consumer and their options for purchasing electronic equipment. Households have increasing confidence to purchase big ticket items from their computer screens, Pads, and smartphones.

What happened?

The Internet remains a potentially destructive force for nearly all companies, even those with a strong physical presence. Note the closing of 200 Border's Book Stores. Amazon.com Inc. is getting stronger by offering an increasing number of products while collecting limited sales tax. 

Its shipping options are also more attractive.

What was a plus yesterday (large stores nearby) now appears to be a liability (overhead).

It was announced recently that Best Buy will "shrink" its "big-box" strategy.

What will the new design look like? Here is CEO Brian Dunn's revised leadership agenda:

• Position Best Buy to aggressively compete against Amazon.com
• Rapidly escalate opening smaller stores focusing on smartphones (having 600 to 800 Best Buy Mobile stores in five years)
• Close some existing stores thereby reducing square footage costs
• Negotiate smaller leases with landlords
• Lobby for change in U.S. tax laws forcing online retailers to collect sales taxes.

strategist.com

(C) Bredholt & Co.

Leadership Agenda: Estée Lauder Companies

Here is a look at the "leadership agenda" for Fabrizio Freda, President and Chief Executive Officer, The Estée Lauder Companies, a position he assumed on July 1, 2009.  

In this role, he is responsible for developing and achieving the Company’s overall vision, strategy, financial objectives, and investment priorities. Mr. Freda is a member of the Company’s Board of Directors.

The company website says that "Mr. Freda was a key architect of the Company’s long-term strategic plan, which is focused on gaining market share in the global prestige beauty industry and generating sustainable, profitable growth."

Mr. Freda's Leadership Agenda:

• Prioritizing resources to the most promising opportunities
• Making further investments in consumer knowledge
• Driving innovation and creativity through products and services
• Expanding the Company’s distribution and geographic penetration 
• Greater integration across the Company’s brands, regions, and functions to create cost efficiencies and leverage scale

strategist.com

(C) Bredholt & Co.

Learning to Say "No"

A note recently came from a friend who is taking on a new assignment.  He asked for any advice we might have to help him get off to a good start.  Our standard response to this type of inquiry is generally three-fold: 

• Understand the limitations of the job
• Take time to listen
• Learn to say "no" most of the time

We were reminded of this last point about saying "no" while reading the 2010 letter to Berkshire Hathaway shareholders from its Chairman and CEO, Warren Buffett.  (Mr. Buffett is one of those rare individuals whose persona is greater than any title).     

People often think of successful leaders as those who are capable of doing almost anything.  But this is where the publicity gets in the way of reality. In fact, those at the top who achieve something significant in corporate life get there by deciding what their companies will not do.

Early in my management career, I learned the hard way that not every opportunity is strategic.  I went after things that were not always a good fit for the goals and culture of the businesses in my portfolio.  Saying "yes" too often was counter-productive.    

Is there a right sequence for good decisions?   If so, where do you start?

It begins with a leader being in touch with themselves, first.  Having a sense of purpose and values; being realistic about the situation they face; avoiding any form of self-deception which is the greatest deception of all.  This is a person who is best described as a realistic optimist.

Only after this centeredness is in place can a leader take on the unending demands of an organization (large or small) and pursue the right opportunities--especially those having to do with getting the right people in the right place at the right time.

This describes the brilliant, but imperfect allocator of capital, affectionately known as the "Oracle of Omaha."

After finishing "The Snowball," Buffett's authorized biography by Alice Schroeder, I was struck by the fact that Berkshire Hathaway, and its portfolio of diverse investments, is a reflection of how Mr. Buffett sees the world--not just a value investment philosophy taught by Benjamin Graham, one of his professors at Columbia University.

In the shareholder letter, Mr. Buffett writes that he has "reloaded his elephant gun" with some of the $38 billion in cash and cash equivalents (he prefers keeping at least $20 billion on hand just in case) and is "itchy" to make some big game acquisitions.  

Based on what business criteria?

1. Big industrial businesses with near monopoly positions and solid sales growth
2. At least $75 million in pre-tax income
3. Market values of about $5 billion to $20 billion

Following Buffett in the press or from the scores of lengthy articles and books written about him will lead you to one conclusion:  This three-point filtering mechanism emanates not from a computer or calculator but from his extensive experience with people and business. 

Buffett places a premium on owning businesses where he has a high level of comfort or understanding.  This helps explain why "technology" is not on Berkshire Hathaway's short list of possible acquisitions.

Stating the obvious:

The criteria for future investments listed in the current shareholder letter leave out more than it lets in.

In the 2009 shareholder letter, Mr. Buffett wrote about Berkshire Hathaway's philosophy for making decisions and investments.  This is what he and Charlie Munger, his long-time business partner, try to live by.  It came under the heading, "What We Don't Do:"

Long ago, Charlie laid out his strongest ambition: “All I want to know is where I’m going to die, so I’ll never go there.” That bit of wisdom was inspired by Jacobi, the great Prussian mathematician, who counseled “Invert, always invert” as an aid to solving difficult problems. 

Here are a few examples of how we apply Charlie’s thinking at Berkshire... 

• Charlie and I avoid businesses whose futures we can’t evaluate, no matter how exciting their products may be.
• We will never become dependent on the kindness of strangers. Too-big-to-fail is not a fallback position at Berkshire.
• We tend to let our many subsidiaries operate on their own, without our supervising and monitoring them to any degree.
• We make no attempt to woo Wall Street. Investors who buy and sell based on media or analyst commentary are not for us.

This pattern of knowing what to exclude is a key factor in Mr. Buffett's long-term success.

Do you have a list of things the organization won't do?  Are they written down?  Do others know what they are?

Learning to say "no" most of the time is an overlooked practice of high-achieving individuals.  It's a behavior worth considering if success is a personal and corporate goal.

strategist.com 

(C) Bredholt & Co.

Getting a Good Fit

It was announced recently that Time Warner Inc. had forced out Jack Griffin, chief executive of the media company's Time Inc. publishing unit after less than six months on the job.  This is according to an article in the Wall Street Journal.

The main reason for this separation coming from inside the company seems to be a lack of "fit" between Mr. Griffin and Time.  So Jeff Bewkes, CEO of the parent company, decided to cut his losses and let Mr. Griffin go.

One of the more important things not on any resume' is "chemistry."  This partially explains why companies, even those who take their time in succession, often fail to ask the right questions.  Will this person fit culturally?  Organizationally?  Alongside current management?  With the board?  With our customers? 

Is there such a thing as a perfect fit?  Once in a great while.  Most of the time a more realistic succession goal is a close fit.

Sometimes the situation requires an incoming leader to be different from the current culture, especially in a turnaround situation.  I often think of Lou Gerstner going to IBM in the 1990s amid that crisis.  He was a one-man "counter-culture."

With the help of a lot of people in the company, Mr. Gerstner led one of the great recoveries in the history of business.  The inside story is told with clarity in his book, "Who Says Elephants Can't Dance?"  http://www.amazon.com/

From press reports, it sounds as though Mr. Griffin had a mixed bag of things going against him:

• He succeeds a long-time executive, Ann Moore, who was there for more than 30 years.
• His behavior is described as "imperious."
• Early meetings were called, some starting at 7:30 a.m.
• There was a clash of personalities and styles.
• An over-reliance on outside consultants.
• A refashioning of sales and marketing to reflect his former company, Meredith Corp.

We look forward to hearing his side of the story, and there are always two sides.

Short-tenures often follow long ones like Ms. Moore.  Why?  It is primarily due to a period of transition.  Businesses need to work their way through the process of changing leaders. The price for this transition is often paid by the person willing to take on an assignment of this kind.  That is why "interims" are appropriate in certain circumstances.

Some of the blame for Mr. Griffin not working out belongs to Time Warner.   What were the expectations?  How thorough was the vetting process?   Who signed off on the hire?   

The biggest predictor of future behavior is frequent past behavior--so an "imperious" nature should not have been a surprise.   

This termination shows how even big corporations with all the right HR resources can come up short. 

The takeaway is how quickly Time Warner moved to correct the mistake--six months.  Failing to deal directly with problem executives is the number one reason for CEO failure according to best-selling author and consultant, Ram Charan.  Mr. Bewkes, the CEO of Time Warner, decided Mr. Griffin was not a good fit, decided not to provide coaching, and acted promptly to change course.

What's the application for your organization?

 

strategist.com

(C) Bredholt & Co.

What Strategy Is

"...If you are not genuinely pained by the risk involved in your strategic choices, it's not much of a strategy."  --Reed Hastings, CEO, Netflix 

Strategy is about making choices. 

The above quote from Reed Hastings puts an important qualifier on what it requires when it comes time to make strategic decisions inside your organization--you have to feel some "pain" in the process.

If it is little or no pain then maybe the choices being made are not all that strategic. 

Two individuals who helped me think about this subject over the years are Ram Charan and Michel Robert.  Both narrowed strategy down to choices or building blocks--what to be, whom to serve, what to offer, etc. Often led by something that becomes a driving force (customer service), but is complemented by other things (quality products and distribution).

The decision by Apple to focus on design and technology.   Southwest Airlines chose to fly one type of aircraft--the B 737 (although this is likely to change with the acquisition of Air Tran Airways).  McDonalds saying "no" to pizza.  The company bought Donatos Pizza in 1999 and sold it back to the founders in 2003.   

So what else is strategy?

It is about choices plus a mixture of other things. It’s a term that, as someone noted, “weaves a complex web of ideas, insights, experiences, goals, expertise, memories, perceptions and expectations all of which provide general guidance to specific actions in pursuit of particular ends.”

An easy way to remember this concept is to think of strategy as what the organization wants to be—a picture of how the organization could look at some point in the future.  Therefore communication plays a central role in this process.

The strategy includes the framework (criteria) for making choices that determine the nature and direction of the organization.

The pre-condition of formulating a strategy is a clear understanding of the goal. No amount of strategizing or planning compensates for an idea of the end sought. 

No amount of strategizing or planning compensates for the absence of a clear and widespread understanding of the ends sought. 

When in doubt, think “results.”

The risk of not being clear includes missed opportunities, fragmented and wasted effort, and working at cross purposes.

How an organization gets to where it wants to go is integral to the process.  More time should be spent on implementation than on strategy formulation.  Strategy is successful execution.

There also needs to be congruence between corporate strategy and the strategies of others within the organization. Congruence does not mean that business units are pre-empted from having their own strategy.   A large organization is too complex, and too diversified to be a monolith.

While others within the organization require their own strategies these must complement one another and be supportive of the corporate strategy.

I read once that staffs tend to be the "wild card." Without direction and accountability, they can go off in their own direction—and will without clear expectations.   Without this congruence among staff, resources are often misaligned and results postponed or lessened.

The highest arc of strategy belongs to the CEO. Everything flows from this position.

The most overlooked aspects of the strategy are people and the allocation of financial resources. Get the right people first and they will identify the right strategy and hopefully make it a reality. The wrong people aren’t likely to do either very well.

Do you feel any pain in the choices being made?

strategist.com

(C) Bredholt & Co.