Harley's Blog

J.P. Morgan once famously said that “a person has two reasons for what they do: A good reason and the real reason”.  And while there can be no doubt as to how successful Mr. Morgan became I do doubt whether his famous saying has had the desired impact on those that need to hear it most. 

The ‘good’ reason is usually based upon order and logic and commonsense. It is communicated confidently to all those willing to hear. While the ‘real’ reason is usually based upon passion and the desire for risk, adventure and fun. 

Recently, I have been struggling with how to find the best way to convince a group of very intelligent and highly experienced managers to step out of their comfort zones and to see that the serious challenges they are facing cannot be overcome by trying to apply the same logic and reasoning that got their company into the mess in the first place; and that the ‘good’ reason is not the one that will inspire their colleagues to help them out of it.    

The Economist Brian Arthur said “making decisions based on the habits of past experience is no longer optimal—or wise.”  Personally I find that a serious understatement. I believe that in order to break free from our tried and trusted ways we need to have the guts to accept that the business models of yesteryear simply do not apply anymore.  

If we are to achieve any kind of success at all in the new world then we need to take decisions based upon what we can see on the horizon rather than what immediately surrounds us. We need to move forward with a profound sense of purpose, with clarity of vision and a pioneering sense of daring.  

Kodak is going to the wall and it shouldn’t be.  Until fairly recently it had plenty of money, loads of highly skilled, intelligent people; access to markets and networks, filing cabinets full of patents, plans and great ideas.  But what did the executive committee do?  They gambled the company’s future on the false notion that, just because they invented a camera for the masses and then went on to produce world class industrial printing machines, perhaps they could somehow dominate the consumer market with Kodak printers too.  They honestly believed that somehow the mighty competition would politely step aside and let it happen. And where would they try and sell these very cheap desktop printers?  Via their existing photographic dealers and retail outlets!  

You only have to look at any high street camera shop and you will see the hopeless lack of vision they are all suffering from.  Tired products on emptying shelves with only a vain hope that somehow the phone manufactures will stop improving their built in cameras and that someone will come into their shop on the weekend and want to buy something they still have left in stock at a price way above what is available on the internet.

Right now, the very foundations on which we all do business are changing so fast that we have no choice other than to rely upon the wisdom that we have accumulated over the years; not to guide our decision process, but to give us the confidence to think outwardly and positively. In short we need to embrace the real reason for doing things and not kid ourselves by our ‘fail safe’ arguments.

So the next time you have to convince someone of the way forward, forget the usual bullshit arguments and talk about the challenge ahead and the energy and dedication that will be needed to achieve it.  For nothing in life ever worth achieving was done out of purely ‘good’ and logical reasons alone. We all know that the hidden agenda is the one worth unearthing and celebrating, because if we are honest with ourselves it is the only one that can fire enough passion to make things happen!

Have a good week,

Harley

PS: To be fair to Brian Arthur, I have taken his quote out of context in order to make a point (see more here).  

There’s been so much talk recently about excessive pay deals for CEO’s and their executive teams that I felt it necessary to look at the topic from a slightly different angle; the one of change management.  

Fact: Over the last thirty years the western business world has witnessed average year on year rises in executive pay in excess of employee pay. During the last ten years this disproportionate growth has shown signs of becoming exponential. Deductive logic tells us that if this continues unabated it will begin to pose a real threat to the stability of our business structures and economy.

In difficult times, human nature indicates that the majority of people are inclined to form into likeminded groups, seeking safety in what they know, rather than engaging in creative open debate to establish new alternatives.  Assuming this is to be the case then in the near future we are likely to witness serious unrest; not necessarily between the radical left and ‘The Management’ but between a much larger generic group and a number of standalone executive teams that are seen to be pushing the envelope too far.  

However, the key obstacle to resolving this problem is that it is focused around an emotional debate based upon extremely complex concepts such as ‘fairness’ & ‘value’. One way of beginning to tackle it is to try to apply a classic change management approach called ‘suspension’. 

The idea of ‘suspension’ is to temporarily put aside one’s own view on the matter in question in order to open one’s mind to not only the views of others but, more importantly, to allow the possible formation of completely new ideas and concepts. In practice ‘suspension’ is far from easy to achieve but people that often use the technique, soon begin to master it and discover its effectiveness. Let me show you how it works by applying it to the executive pay debate, albeit on a very superficial level.

Firstly we need to identify the most emotional element of the argument, in this case, the topic of executive pay itself. Then we need to park all our pre-conceived notions of it in an imaginary lead-lined box and put it to one side. Having done that we need to examine the remaining question; how to attract and retain the right caliber of people to steer our corporations based upon new criteria? Here it goes…

Let’s assume that an international hotel chain is looking for a new Chief Executive Officer.  One can imagine that there must be thousands of people in the world that have an exceptional talent for high quality strategic thinking and reliable decision making. And that of these people, there must be literally hundreds that also have the necessary knowledge and experience to perform the role to the required standard.  (Note: we may also have to temporarily suspend our pre-conceptions on what experience is actually required, especially because job descriptions are often written in such a way as to deliberately restrict them to apply to only a handful of possible candidates).

Because there are numerous scientific studies supporting the belief that the majority of people are not driven by money as their primary motivator, I feel it is safe to assume that the majority of our international hotel chain CEO candidates would be very motivated to take on the vacant role based upon the job content alone.

We will, of course, need to apply a number of ‘scenario’ techniques where we imagine in some detail possible outcomes of taking a radical line towards the recruitment of our CEO and assess their impacts and what safety measures would be needed to safeguard the shareholder value of our group.

Now let’s re-introduce the emotive ‘pay’ topic. The complexity that is added typically hovers around the change manager’s biggest hurdle: ‘fear’. Fear, for example, of how it could be that a Chief Executive could settle for an award significantly less than his or her fellow executive colleagues; fear of the established view that ‘cheaper’ is somehow inferior. Fear that the status quo would be replaced with a dangerous unknown that could spark an uncharted course of events? And so forth…

History shows us that radical change in common belief systems usually happens in one of two ways. Either by a gradual acceptance of new truths and value sets, driven by need and opportunity (in much the same way that the ‘green‘ debate is taking central stage as it becomes embedded in both a financial and political context).  Or by extreme physical intervention. The second way is thankfully unlikely at this stage, and as we know already, mostly results in replacing one complex situation with an even bigger and more unsatisfactory one. 

In summary, I believe that the present economic climate could prove the necessary catalyst for changing the way executive pay is calculated for some companies, especially if it continues to worsen. However in order for this to happen, a new collective vision of proportionate fairness would be needed to replace our existing value sets. The vision would need to be expressible in some kind simple mathematical formula such as: ‘no one person in any organization should be paid more than ‘X’ times that of the average employee’, for example.  But to be honest, statistically, changing something so emotive and so complex right across the multi-national enterprise globe does seem rather unrealistic, even if it might appear very desirable to some.

Have a nice week,

Harley

Just like at the races, the gates are open and we’re off again on another flat out year.  Holidays are over, for those that had one, and New Years’ resolutions are all but nearly forgotten.  To be honest, I have not even made mine yet.

I am looking forward to 2012. I have a new assignment, a new pattern of working (more time for myself) and a nice cleaned up office space to motivate creative thought.  I like to start each year with a clear desk. No untidy papers, no mess to distract the eye, no curled up Post-It notes reminding me of ancient tasks still awaiting my attention.

If we are to offer quality advice and constructive support to our clients and colleagues, then both our personal emotional and physical wellbeing need to be in balance. Let’s face it, if they are not in the calm of the beginning of the New Year, then honestly speaking, when will they be?

The good news is that we have until the 23rd. of January until the Chinese year of the Dragon begins, so we still have time to go through last year’s papers making sure they are put to bed once and for all. If you didn’t know already, the dragon signifies success and happiness, which I guess everyone needs right now? 

So it is with the dragon in mind that I would like to focus my New Year’s wish to all my blog readers around the world. May he or she bring you a year of success and happiness: Success in everything you do and happiness from the satisfaction that it brings. 

As I mentioned in last week’s blog, success is what you make it.  Only you can determine what it means for you. We need to set our own standards and criteria for success and just hope that they meet the expectations of others.

Best wishes and have a nice week,

Harley

Ask any young adult what they need more from their employer and they will most likely tell you ‘money’. After all they need it the most: Money to buy or build a house, money for a new family car, for the children’s upkeep and education, for paying their taxes and extra insurances, just in case they die before they get old.

When you think about it, our EU remuneration rules are really upside down.  When you turn fifty the demands on your cash seem to die away. One day you look in your bank account and notice some money in there! And when you look more closely, your monthly statements indicate that you have a steady trend of more cash coming in than going out! So what do us middies do?  We look for wonderful things to buy like Mont Blanc fountain pens, and Luis Vuitton bags for our partners. We take weekend city trips and look for ways to compensate for the fact that we’re getting older.

But seriously, there is a kind of discriminatory madness that lingers on from olden times, the Belgians call it ‘Ancieniteit’ or ‘length of service’ or ‘seniority’ as some Brits like to refer to it.  Basically it means getting paid more for the length of time you have been doing it.  I have no problem paying people for the job they do but what is the sense of paying people more, simply because they have been doing it for longer?  If the tasks you do and the responsibilities you have are the same as a younger person, why would you pay an older person more?  And then there are the mad redundancy terms.  The longer someone works for a company, the more expensive it is to release them.  We make our older employees too expensive to replace, while the young ones struggle to make ends meet. 

In my next company I want to employ loads of young people and pay them over the top wages, thereby getting the very best choice of the bunch.  They won’t care about a thirty year career path and they shouldn’t need to anyway.  Who knows what the world will look like in thirty years and what company today can honestly guarantee anyone a ‘secure career’.  Even the words ‘secure career’ fill me with dread.  

Young people have piles of energy, enthusiasm and open minds for change and new ideas. To manage them I’ll find some retired managers (preferably in their late sixties to mid-seventies) that do not want to sit on the scrap heap but would rather be out there demonstrating their management and motivational techniques.  Who knows they may even have some wisdom to share?

But what should we do with the forty five to sixty five year olds? Perhaps we should give them early retirement, so they can go out and explore life before they are too old; doing what they always dreamed of?  Or perhaps we should encourage them to do voluntary work oversees in under developed countries?   In any case, when they are ready, they can re-apply for open positions, safe in the knowledge that they will not be priced out of the job market because it will be the youngsters getting the high salaries.

Not sure how all this would work in practice, but I am ready to give it some thought over a nice bottle Pomerol this Christmas.  In any case it’s bound to create a lively debate at the dinner table!

Enjoy your Christmas break,

Harley