A Tale
Here’s a tale of a new CEO, hired to get an organization out of trouble. Basically, results are bad and both customers and employees turn away. The company is near a collapse.
So what will you do?
The first thing I will do is listen to people, both employees and customers. The operational results have been bad for years and the company has been selling assets and used accounting tricks to pimp the results. But usually customers and employees know what’s wrong and what needs to be done.
So how will you do that? There seems to be a high urgency.
True. So I am walking around asking people what they think, what they’re doing. We need to focus on things that will restore trust and get us back on the tracks.
Will you cut costs?
Undoubtedly we need to focus on a healthy relationship between our revenue and our costs. But cutting blindly and linearly does not work. You tend to cut in the wrong places. It’s like chemo, it attacks the disease but it destroys other things as well. So I will make a plan to see how we can do that together with the leadership team with as target to restore our profitability and therefore the trust of our investors.
And next?
We’ll have to engage the workforce. That’s why I am asking them for proposals. It’s incredible how many good ideas they have to improve our connection with our customers and to improve operational efficiency.
How do you know it works?
Actually, I don’t. Or better, there’s always a risk. But this approach has worked in the previous companies I have worked for. So why would it not work here? The answer does not lie outside the customers and the employees. Most of the stuff we need to know, they know.
How will you go about this plan?
I have created a task force called the “Energy Team”. These people will look for sources of energy within the company. They will help people to focus on what they have to do. But they’ll have total into consideration the many frictions that will occur. There are going to be many changes.
When I talk to people, what I hear is that they don’t know where the company is going.
Yes, there was a lack of vision, and we know the stakes are high. We have to come back to an EBITDA of 5% this year, 8% next year and 10% in 2021. And we’ll need a high single digit growth already this year. But that’s the result of the hard work of many people to convince our customers that our services are what they need. So the vision is not about finance. The vision is about how we can be relevant in these changing markets.
How will you know people will go for that?
Given the poor performance of the past few years, these targets are ambitious. And the board wants us to deliver. That’s why I am here. So let there be no doubt that we’ll do what it takes to become one of the best in our industry again. People will understand that there is no other way.
Wow. That sounds like a threat.
It’s not. These are just the brutal facts. People tell me they knew we could not go on like this. They see the urgency. But they also come with solutions, proposals. I have met people who love their jobs and who want to go a long way in helping their customers. People want to do a good job. That’s how people function.
I hear people are starting to leave. Your attrition rates are increasing.
I know. And that worries me. I can understand that some people who feel insecure are leaving. That’s the damage that has been done in the past. Finding other people is not that easy. The labour market is tight and we have to train them. So I focus a lot on spending as much time with people and their leaders to give them the perspective they need, without overpromising anything. We’ll have to do it together.
And how does it work?
That’s a broad question. But I believe in reciprocity. Every time you give something, you create goodwill. Helping people to perform, to progress, to grow helps them to become powerful individuals. If you give people see they can trust you. The real source of energy in any company is the trust people have in the leadership team, the future and in themselves. In all of this, we need to be people-centric.
And what about investors and customers?
The Germans used to have their Rheinland model. It’s my belief that an organization will only function when the needs of stakeholders are met in a balanced way. You cannot go on and satisfying people without delivering on the targets. And you cannot focus only on results without taking into consideration the needs of the people.
And let’s never forget our customers. Investors and employees cannot exist when the company is not relevant for the customer. That’s why I see the customer as the linking force within our company. If the customer has to do a lot of effort to do business with us because we have lousy systems and demotivated people, they will turn their back. So whatever we do, we must be relevant to our customers.
So, how will you convince the customers?
Like many companies, we don’t talk enough with our customers. actually they deserve a seat on the board. So we’ll listen to our customers and we will act upon their needs. Too long the company has had an introverted perspective. We’ll turn that around and we’ll listen to our customers more than ever. Next we’ll make sure that we get the basics right. Our customer must feel that we can deliver the quality he needs in the services he wants. Only then we can look at other opportunities.
My customer experience manager gave me a book called “The best service is no service”. People misunderstand that book. They only remember the title. I believe that if the customer does not feel the need to contact us, because everything is taking care of, we have a clear win-win situation. Believe me, there is nobody in the world who knows more about service than our customer experience manager. She thinks customer 24/7.
And how will you motivate your employees?
There’s one thing I know. Most people want to do well. They take pride in being able to do a good job. Very often people serve their customers in spite of the support they get from within. So we’ll have to fix that. But they will tell what needs to be fixed. And we cannot do everything in one day. Some proposals they make are impossible to do now. But we’ll make sure that everyone understands why we take a decision, even the difficult ones.
Marissa Meyer asked Yahoo Employees to stop working from home and return to the office.
I think Yahoo is a good example of a company that lost its way. What she did is give a message that said that employees were not trustworthy. And probably some of them were not. But instead of recalibrating people who are not respectful, and investing in stronger leadership, she took a draconian measure. In this company, people will have to change their ways too. But we’ll install a culture of trust.
How does one install a culture?
Culture is not like the operating system of a computer. We cannot upgrade. It’s not enough to add some code and rewrite some other code. Culture is about behaviour. We’ll have to get rid of bad habits and we will install new habits. And it starts from the top.
For instance, this company has a habit of gathering people only twice a year to discuss the results. We’ll have to increase the frequency of info-sessions. I want everyone to know what we are doing and what the results are. That takes more than a great intranet-site.
I have also noticed that people have a second job to earn some more money. I am not against that, but I’ll ask them to be available to go the extra mile.
I will ask my management team to be exemplary and leave no doubt that they are among the people to help them progress. Their job is to make people successful. Culture trickles down.
A next example is training. We will have to reduce training costs, which is not so good. But I have learnt from my HR people that the high training budget did not yield returns. It was a habit to spend money on expensive and luxurious trainings, but without a clear vision. So I want people to learn and to experiment instead. We’ll have to make sure our people are the best in their field.
And to come back to Yahoo, working from home is not the easiest way to work. It requires a lot of discipline. But I trust most people are worthy of the trust. And those who are not, should not be left in temptation.
What’s in it for the people?
They’ll have a great job with a lot of responsibilities and the satisfaction of doing something meaningful. And I hope they will be proud of the financial results too. Their contribution counts. If they see that our values matter and that we can reach our targets too, … what else can we do?
About Strategy Execution
At otolith we know that strategy execution is determined by leadership behaviour. Leaders are put under a lot of pressure to deliver, especially in times of crisis. The above example is fiction, and any resemblance to existing people is coincidental. But you might recognise some behaviours. There are different ways to achieve results and to execute a strategy. The way as described above has the advantage that it is clear. And it might work. But collateral damage will be (unnecessarily) high.
There are other ways to build and execute a strategy. If you want to talk about it, get back to us.
Otolith – david@otolith.be
