Tuesday, December 27, 2011

Medical Device company CEO: "Too often we choose to believe in an optimistic scenario"

Adam Bryant's Corner Office column in the Sunday New York Times serves up some great lessons drawn from making and thinking about mistakes. Here are some from Mazor Robotics CEO Ori Hadomi, first about creating an environment that encourages people to report mistakes and then tries hard to learn from them:

I believe that it is much more dangerous not to report mistakes than it is to make mistakes in the first place. It’s natural that we make mistakes. The question is, what do we do with these mistakes as an organization? Do we repeat the mistakes? Do we learn from them? Do we investigate them and implement a solution?...

Hadomi also conducts a structured review of the main mistakes made in the past year, used to inform objectives for the coming year. This is something we've advocated and it's great to see a company institutionalize this process:

We have a very structured process of how we communicate and set expectations and define objectives. In general, I believe people perform best when they know where they are heading. I don’t like a culture where people are surprised. I feel that most people want to have some certainty about where they’re heading and where the organization is heading. So we have a process that begins with the management team defining the objectives for next year.

But before we set the objectives we have a tradition where we define the five biggest mistakes we made last year — and we’ll focus on the big ones, not the small ones. And every year we look to see if there is something common among these mistakes. Then we set the objectives for next year.

Q. What are some of the patterns you’ve seen in the mistakes?

A. One of the most obvious mistakes we found is that too often we choose to believe in an optimistic scenario — we think too positively. Positive thinking is important to a certain extent when you want to motivate people, when you want to show them possibilities for the future. But it’s very dangerous when you plan based on that. So one of our takeaways from that was to appoint one of the executive members as a devil’s advocate.

Q. Really?

A. He’s actually very challenging and he knows how to ask the right questions. He really makes sure to say to me, “Let’s be more humble with our assumptions.”

Thursday, December 22, 2011

Those you promote are also role models

Another story from "What to Ask the Person in the Mirror," by Robert Steven Kaplan. This story demonstrates that leader role modeling extends beyond what she does down to the people she picks as lieutenants.
The CEO of a Professional Services firm was in the midst of attempting a strategic repositioning of his company. His objective was to expand the services his company provided and move into new advisory businesses that were adjacent to the company's traditional business. I thought the strategy made a lot of sense and was consistent with the firm's distinctive competencies, and that there was a terrific market opportunity to provide these additional services to the firm's clients.

From my firsthand observations, I believed that this leader was an excellent role model. He not only articulated the central values and vision for the firm, but also was very scrupulous about leading from the front - that is, making sure that his behavior was consistent and exemplified the qualities that he wanted his leaders to exhibit in this firm: commitment to excellence, putting the client's interests first, coaching and mentoring top talent, and establishing an atmosphere of fairness.

Despite these built-in advantages, he was struggling to figure out how to execute the strategic repositioning that he had been advocating. He had personally chosen his senior lieutenants since he had become CEO two years earlier. He himself had always been a superb producer before becoming the firm's leader, and he naturally gravitated toward promoting other producers - that is, people like him - into key senior roles. In other words, when he made promotion decisions, he was willing to overlook shortcomings in his people's leadership skills, coaching skills, and moral compasses because he valued revenue generation far above these other attributes. Initially, this seemed to work; but over time, voluntary turnover among the top-performing quartile of professionals began to increase, and it became more difficult to move professionals between divisions.

I suggested that he ask his head of HR to interview a number of midlevel managers to learn more about the increased turnover. I also suggested that the HR head do exit interviews … to find out the reasons behind the departures. Finally, I suggested that he add some interviews with midlevel managers who hadn't left the company - yet. I agreed to meet with the head of HR first, to debrief what he learned, and then join him for a meeting with the CEO.

The HR head … heard that while the CEO espoused values of fairness and valuing the employee, the division heads he had put in place sent very different signals, indeed. No amount of speeches from the CEO or exemplary behavior on his part could make up for the behavior of his key subordinates. The constant refrain encountered by the HR head was that production is the be-all and end-all at this company. If that wasn't the case, why did the CEO fail to choose subordinates who exhibited the behaviors he was touting? Why did he always go for the producers?

The midlevel employees who had remained with the company were quite cynical about the new strategic initiatives and didn't want to sign up for them. While these new directions might make strategic sense for the company, they involved a substantial degree of risk. In particular, years would have to pass before production in the new businesses reaches the same level as in the existing businesses. And if production was the critical metric - as evidenced by all those promotion decisions - why should someone who was succeeding at an existing position decide to move, and thereby incur a risk? It also emerged that the division heads were actively discouraging key subordinates from moving into these new areas, because losing them might detract from production in their own divisions.

The CEO… was quite disturbed by this feedback. I encouraged him to first actively coach his key subordinates on what he expected of them. He should explicitly expand the criteria for compensation to include factors other than pure production. He should assure people who were transferring to the new areas that he would personally watch over their compensation and career progress. (pp 177-180)

Reprinted by permission of Harvard Business Review Press. Excerpted from "What To Ask The Person In The Mirror: Critical Questions for Becoming a More Effective Leader and Reaching Your Potential," by Robert Steven Kaplan, Copyright (c) 2011 Robert Steven Kaplan; All Rights Reserved.

This leader changed his behavior to be a better role model. Yet he had promoted people like himself, with the same strengths and weaknesses, and when the organization needed to change, these subordinates were the impediment to doing so. Another reason that developing a diverse team is better - you can change more readily when needed.

Wednesday, December 21, 2011

Leaders' actions speak far louder than their words

Here's another story about CEO as role model and the mistakes that can create. It is by Paul Anderson, former CEO of BHP Billiton:

After I spent about a year at BHP Billiton, ...profitability was up, and our efficiency was up; we were getting great productivity. You could look at almost any measure, and it was positive. Except safety. Safety had actually gone down a little bit.

I was very vexed by this, and I kept asking the head of the safety group, "What is it? Why isn't the organization embracing a safety culture, and why can't we seem to improve our safety performance?"

After beating around the bush for a while, he finally blurted it out. He said, "Well, you're the problem."

I said, "I'm the problem? I'm a real proponent of safety; we've got it right in our charter; I can't imagine a higher objective for the company; I can't imagine anything going before it."

He said, "Well, you're a lousy role model - just look at what you're doing."

I replied, "Lousy role model - what do you mean?"

He said, "You know, people notice that when you come to work you jaywalk across the street; you don't go to the corner. People notice that when you're out visiting a plant, if you're wearing dark safety glasses and you come inside, you take off the dark glasses even if you don't have a pair of clear safety glasses to replace them with and you're still in an area where you need them. They notice that when you go up and down steps you don't hold onto the handrail, which is the standard practice we have here. They notice that you don't park your car backward in a parking space which, again, is the safety standard that we have. You're just basically a lousy role model."

Of course, that took me a little aback. But he went on and said, "when you go to visit a manager, the first thing you ask is, 'How are you doing against budget?' You start asking financial questions; you don't start with, 'How is your safety program? What results have you had over the last year? What are your two or three safety issues that you have here?' So, people assume you're not particularly interested in safety. And in fact, they're focusing on everything but safety because you haven't really highlighted it."

That really struck me. I had never been in a situation where I was so clearly scrutinized as a role model and where safety was so important, because this was primarily a mining operation and steel mills, and very much an industrial setting. I realized that not only was I being scrutinized on the job, but also I was being scrutinized off it, too. One of the things that the head of the safety group said was, "People know you don't like to wear a helmet when you ride a motorcycle." And I thought, "Well, what's that got to do with anything?" But if you don't display these values in your personal life, then you obviously don't really embrace the values. It really drove home the point. Somebody once said, "Good leadership is doing the right thing, even when no one's looking." I realized that, actually, somebody is looking....

The key point I got out of that experience was that you are a role model 100 percent of the time. When you're the CEO of a company, you can't separate your personal life from your professional life. People learn what you do in your personal life; they follow what's going on; they watch you in situations where you might even thing you're not being watched. And if you don't walk the talk, they pick that up in a heartbeat. They sense very quickly whether your words and your actions are tied together, and if you don't match your words with your actions, the organization basically discards your words.

Reprinted by permission of Harvard Business Press. Excerpted from Lessons Learned: Straight Talk from the World’s Top Business Leaders--Communicating Clearly. Copyright (c) 2009 Fifty Lessons Limited; All Rights Reserved.

Friday, December 16, 2011

Get promoted, don't change your behavior - a mistake

This story is from "What to Ask the Person in the Mirror," by Robert Steven Kaplan, which discusses how to manage the complexities of senior leadership - not the complexities of business, but those of interpersonal skills, mentoring, communication and role modeling.

The CEO of a large consulting firm wanted advice regarding certain pressing strategy and leadership issues. He had spent thirty years at this company before recently being promoted to CEO. I had known him during my own career in investment banking, and had advised him at various points during his upward career climb. I liked him very much. He was always very bright and insightful. He had a very dry, sometimes off-color sense of humor. He had always been a bit of a cynic, but that was a humorous and generally appealing part of his personality.

The company was very large and - give its size and place in its industry - very high profile. The CEO called me one day and got right to the point. He was off to a "rough start" at the company, he said. First, he had done an in-person meeting with institutional investors and sell-side analysts, and he didn't think it had gone very well. In addition, he wasn't sure he had been approaching his direct reporters and company employees in the right way.... He asked whether, as a favor, I would meet with two or three of his direct reports and ask how they thought he was doing....

What I learned was that these direct reports had been thrilled that he had been named CEO. Having said this, they had expected him to recognize that he needed to behave differently now that he was CEO. The cynicism they used to enjoy now seemed inappropriate, and they wished he would stop it. For example, they didn't want him using the company town hall meetings as an opportunity to make cynical comments. They wanted their own subordinates to be idealistic about the company, and that required the CEO to show he was a "true believer." Even if it was only a role, they told me, they expected him to play it!

There was more - mostly variations on the theme of his new role. They wanted him to drop the off-color jokes, even in private settings. They thought that he needed to get in earlier in the morning. True, he had always been a late arriver - it had been the subject of much friendly banter, over the years - but they believed that because he was now the CEO, his tardiness was sending a bad signal to employees.... They suggested that he should think about driving a less flashy car to work and be a bit more mindful of his dress, even on casual Fridays. In short, they wanted him to look and act like the CEO of a conservative company.

When I sat down with my friend and relayed all of this news to him, he was both amused and perturbed. He explained that, for the past thirty years, he had never gotten any such feedback; now, all of a sudden, everybody had an opinion of how he dressed? He confessed that he thought the comments were off base, even ridiculous - and besides, how was he supposed to change his act at this stage in his life?

We had been friends for several years, so I felt free to talk to him in a fairly blunt way. He had to realize, I said, that he had made a major transition: from a 180-pound senior executive to the 800-pound gorilla the embodied the hopes, dreams, and aspirations of thousands of people. Like it or not, his every move would be closely observed, for the rest of his career. His statements would be parsed internally and externally. His moods would be observed, tracked, interpreted. How he behaved in restaurants, how he talked to the custodial staff, how he dealt with employees across the company - all would be closely scrutinized henceforth for clues to his character.

In short, he had become "role model in chief," and - I told him - this was part and parcel of accepting the job as CEO. Sure, he might feel the same as he did four months earlier, but to everyone around him, he was not the same. His words and actions all had more weight. Yes, he needed to be himself, but he also needed to recalibrate his behavior, taking into account his new weight and strength....

The good news is that, over a period of time, he took all of this feedback on board and eventually became quite comfortable with his new reality. But it definitely required a change in his mind-set.


I noticed something of this issue in my own experience, when I was hired as a senior executive in a tech company some years ago. I soon learned that the time I arrived in the morning became a subject of discussion around the office. My first reaction was to point out that I was usually the last one to leave except for the night operations team. But the point was that people looked to me as a role model. In this company, people arrived at 8am, and a VP arriving at 8:30 or 8:45 was notable.

The transition from individual contributor and manager causes the same need to recalibrate. You are allowed to criticize management, strategy, direction, etc., when you are an engineer. It's part of the camaraderie of the workplace. But when you are promoted, you are management. The same criticism sends a very different signal - that of disloyalty or lack of commitment. Take it from a cynic!

So, if you like the way you are, and you get moved up into a new level of the organization, prepare to change anyway.

Thursday, December 15, 2011

Learning by experience: "I would not leave until they would teach me what I was doing wrong"

There's a nice little learning story from Daniel Lubetzky, who started KIND, the snack food company. In this Wall Street Journal interview about growing his business, he describes how he learned to sell to grocery store owners and managers:

WSJ: What experience did you have in food manufacturing prior to launching Kind?

Mr. Lubetzky: Kind evolved out of my first company, PeaceWorks, [an importer and manufacturer of Mediterranean spreads] which I started in 1993. At that time, I had no training in the food industry whatsoever. I took my legal briefcase and filled it up with jars of my company's spreads and I would go store by store. They would tell me 'Get out! You have no idea what you're doing.' I would not leave until they would teach me what I was doing wrong.

This says something important about rejection. It's OK to be rejected, or to fail, if you get something out of it. In Lubetzky's case, he got a graduate-level course in retail and selling. If Lubetzky had simply left a store after being told to get out, he wouldn't have learned what to do differently, he wouldn't have had the incentive to keep "learning," and he certainly wouldn't have ended up where he is today.

Friday, December 9, 2011

When something goes wrong, the mistake is "not reacting to the opportunity"

Vibraphonist Stefon Harris, in a TED Talk, discusses how jazz music deals with mistakes. (See video below.) Unexpected events, Harris says, are opportunities - they only become mistakes if we don't react to them. This is a very interesting way of summarizing many of the ideas on this site.

Says Harris, "A mistake, from the perspective of a jazz musician...we don't really see it as a mistake. The only mistake is that I'm not able to perceive what someone else did. Every mistake is an opportunity in jazz." He demonstrates by playing in a certain key and asking the keyboardist to play a note not in that key.

After the wrong note, the band keeps at the same theme, and the note stands out like an unanswered call. "Hello, I'm here, please acknowledge." Nothing. Harris says the mistake was not the note, but that "we didn't react to it. It was an opportunity that was missed."

Then they play again, and the band shifts after the gnarly note comes in. Harris moves the key of the song, the drummer changes tempo. That wrong note sounds right all of a sudden. It sounds like, well, jazz.

A related riff appeared in the Times, which profiled Mr. Boyd E. Dunlop an 85-year-old jazz pianist from Buffalo who was rediscovered in the nursing home he lived in ("An Aging Pianist Finds A New Audience"). Mr. Dunlop's opportunity was to coax some music out of a broken-down old piano:



Mr. Dunlop arrived at the brown-brick nursing home nearly four years ago, a strong-willed but slightly bent half-note. He had 50 cents in his pocket, too much sugar in his blood, and a need to be around others. He liked to sit in the lobby and greet people, especially the women.

After a while, Mr. Dunlop let it be known that he was a musician. This did not distinguish him in a place where someone might claim to be a retired concert violinist or President Obama’s mother, and, in the first case at least, be telling the truth. Also, music here usually meant something to be endured — the weekly sing-along, say, with a resident armed with his own electric keyboard.

The broken cafeteria piano was a tease that Mr. Dunlop could not resist. He played when no one else was around, between meals, early and late. He learned how to dodge the piano’s flaws, how to elongate the good notes and suffocate the bad....

In the spring of 2010, a freelance photographer named Brendan Bannon arrived to discuss an art project with nursing home administrators — and Mr. Dunlop greeted him at the door. Mr. Bannon is balding, so Mr. Dunlop assumed for some reason that he was a doctor. “Hey doc!” he shouted. “Take my temperature.”

A bond quickly developed, and before long Mr. Dunlop invited his new friend to hear him play what he referred to as “that thing they call a piano.” Mr. Bannon, who knows his Mingus from his Monk, could not believe the distinctive, vital music emanating from a tapped-out piano missing a few keys.

“He was a beautiful player,” Mr. Bannon says. “He was making it work even though it was out of tune.”

When all you have is a broken piano, if you want to play, you make it work. We can create mistakes by kicking something off and then not paying attention to how the world reacts around the idea - customers, co-workers, etc. Or, like Harris, and Mr. Dunlop, we can sense and respond - put something out there, then listen, then adjust.

Remember, there are no wrong notes in jazz. So how do we react when life throws things at us that upend our best-laid plans?

Wednesday, December 7, 2011

Charlie Crystle: when it comes to a cash, verify the numbers

Here's a great story from Charlie Crystle, one of the greatest tech entrepreneurs in Central PA (yes, there are some here in Silicon Pasture!). It's from his Digging In blog, essential reading if you're interested in starting a tech business here or anywhere.

Managing cash flow is an important practice to get to know early. It's pretty simple: you have your known ongoing expenses, known revenue (or not), and known investment (or not). You have to manage your cash--the combination of investment and revenue--to cover the expenses on an ongoing basis.

That's why hiring someone early on is such a big commitment. You're asking them to change their lives on your behalf, so you damn well better be able to make payroll.

I blew that in a big way once; I thought I had a certain amount of cash, and knew I had to contract the company to make the cash last, but then I got an email from my right-hand man informing me he had made a mistake--by $200,000. Oops is right. We laid 10 people off the following Tuesday.

Which raises another point: you're the leader, the CEO--you need to verify the numbers. I failed to do that, though my practice prior to that year was to know everything about finances. It was a mistake I still regret today.

[Remember, regret is not necessarily a bad thing.]

Tuesday, December 6, 2011

Tim Berry audio story: leaving a consulting firm to write books

In 2010, I had a long conversation with Palo Alto Software founder (and superb blogger) Tim Berry about mistakes. (The entire discussion can be found here.) He related one story about leaving a comfortable job in a consulting firm for a life as a freelance writer of computer books. Things turned out very differently from his plan, but not in a bad way. A "brilliant mistake," perhaps?

Tim Berry: leaving a consulting firm to write books (mp3 - 4:19) - right-click to download.


One of the dumbest things I did had really good serendipitous results. So I can easily think of a mistake that I deserved to have suffered for but instead it worked out very well.

I left Creative Strategies; the entrepreneurial compensation wasn't enough for me. I really wanted to do more. This was a time - this was 1983 - when Stewart Brand had just won a $100,000 advance for the Whole Earth Catalog. And there I was, having a fancy MBA, I had fallen in love with computers. I built my first computer; I became very computer literate. I could program hex memory. But I had been a journalist; I could also write. The crazy mistake I made was leaving Creative Strategies on purpose in order to write computer books to seek my fortune.

And that was a horrible mistake, because Stewart Brand's $100,000 advance was an aberration; it was a moment in history that didn't repeat itself.

So there I was, with 4 children, a good strong marriage; we are still married, 40 years later, so at least we had that. I had left a high paying job to write these books. (I was on contract for three books which I eventually wrote and got published.)

The mistake turned to a serendipity event. About three months after I left from Creative Strategies, I got a call from the GM of Apple Latin America who had been my best and most favorite client while I was at Creative Strategies. He said, "Tim, I need you to go to Venezuela to do a market study." I can remember this conversation almost exactly as it occurred.

I said, "Hector, I left Creative Strategies. I'm in a home office, writing computer books."

And Hector said, "Tim, don't be an idiot. I never liked paying Creative Strategies for your work. It was just you I was hiring. I'm delighted to just pay you directly. Now seriously, how soon can you get to Venezuela?"

Leaving a good job to write computer books was a stupid mistake that had a very nice end result. And I'm not that dumb, because at that point in the conversation I said, "I'll call you back in five minutes." Then I got on the phone and booked tickets and went off to Venezuela. And in the next 2 weeks, I wrote a market study for Apple Latin America that created an invoice that was more than the total I got for the 3 books I wrote. And I did it in two weeks. I realized that consulting was going to generate the real revenue in the family, whether or not I was a vice president.

So there's a mistake that turned out well.

Monday, December 5, 2011

Best Books of the Year 2011









Friday, December 2, 2011

Cy Young/MVP winner Justin Verlander learns to avoid vanity license plates

A light post for a Friday. This is from Dan Patrick's interview in Sports Illustrated with Justin Verlander, who recently won both the Cy Young Award (best pitcher)and Most Valuable Player Award from Major League Baseball:

JV: The only time I was embarrassed was as a rookie. I still get a lot of grief to this day about this and rightfully so: My dad got me a [car] in high school with a license plate that said BRNGN IT.

DP: You were Nuke LaLoosh from Bull Durham?

JV: Yeah, I was Nuke LaLoosh. I came into the clubhouse with that license plate. We had some veterans who just wore me out about it.

DP: How about CYMVP for your next license plate?

JV: I've learned from my mistakes. I'm not going to have a vanity plate—just typical letters and numbers.

Kathryn Schulz discusses the importance of regret

Kathryn Schulz (author of "Being Wrong: Adventures in the Margin of Error") has a great TED Talk covering regret - why it's painful, and why it's necessary. Knowing that the absence of regret is a trait of psychopaths is one reason why we shouldn't feel too bad when we, you know, feel bad about something we've done. Schulz had a prior talk which we posted on earlier in the year.

Thursday, December 1, 2011

Dan Frommer shares one of his bad predictions

Predictions are fun to make and usually fun to forget. It's so easy to write about what you think will happen, and awkward or painful to look back and compare that to what really took place.

Dan Frommer of the cool SplatF blog took himself to task for an old prediction about how Palm and Flash could create a powerhouse mobile partnership ("The Dumbest Thing I've Ever Written About Flash"). Here's what he wrote in 2007 in Business Insider:


And here's the November 2011 view (after Palm had been purchased by HP and then set adrift, and Adobe announced that it would no longer develop Flash for mobile):


Bad predictions are eight for a dollar in the tech world, but a sense of humor and self-reflection, as Frommer practices here, are much rarer commodities.