First up today is a review from Knowledge @ Wharton Of Dov Seidman’s HOW: Why How We Do Anything Means Everything … in Business (and in Life). The book focuses on building a corporate culture where “”how” matters more than “what” in business, and how “should” matters more than “can.”" Seidman believes that “companies and their people can operate in both a principled and profitable way.” He believes that “A leading company should be a company of leaders.”

Next, and interesting interview on IT World with CIO Tony Scott who is charged with creating a culture of innovation a la Google at Microsoft—wow, talk about a challenge!

Third, a look at Charles Liang, co-founder and chief executive of $600 million Super Micro Computer, a 15-year-old computer maker with 850 employees. Liang is a one-man management band, so the big question is what happens if he goes poof?

Finally, from Business Week, the opportunity to nominate your choice for the best—or worst—Manager of the Year. The worst category offers the most opportunity, but for a greater challenge think about who deserves best. Please share your nominations here, too.

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Yesterday I mentioned four basic traits of good culture. Today I want to talk about another one that many people, especially those running startups and small companies, often don’t like and don’t implement.

Process.

The problem is that people frequently confuse process and bureaucracy.

• Process is good—it helps to get things done smoothly and efficiently.

• Bureaucracy is bad—it’s process calcified, convoluted, politically corrupted, or just plain unnecessary.

The hallmarks of good process are

• easy-to-use and flexible method of accomplishing various business functions; and
• informal without being haphazard, and neither ambiguous or confusing.

Occasional surveys (internally asking staff and externally asking vendors and customers how things are working) alert you to when processes start to mutate. By creating a skeletal process and a corresponding graphic in areas where it is needed (financial controls, hiring, purchasing, etc.), you lay the framework for your growth in the future, no matter how hectic.

Bureaucracy stems from people, be it a CEO or first level supervisor, who believes that her staff is so incompetent that it is necessary to spell out exactly how every individual action, no matter how small, needs to be done.

To correct this, the manager responsible must

• must recognize and take responsibility;
• reduce his own insecurity;
• increase his belief in his current staff; and whenever possible
• hire people he thinks are smarter than himself!

Bureaucracy is also fed by people’s fear of change, “We’ve always done it like that.” and similar comments are dead giveaways.

Another significant factor that contributes to unnecessary bureaucracy is the failure to align responsibility and authority.

If a person has the responsibility to get something done (design a product, create a Human Resources department, meet a sales quota), she should have enough authority (spend money, hire people, negotiate with outside vendors) to get the job done.

Giving people responsibility without concomitant authority forces them to constantly ask their superiors for permission, thus reducing productivity, and lowering moral.

The final, and most important difference between process and bureaucracy is that people like working for companies with good process in place, and hate working for those mired in bureaucracy.

But not for long—they leave—making bureaucracy-eradication a major tool in the culture and retention game.

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A lot has changed since I started RampUp Solutions a decade ago. Back then, getting a CEO to discuss corporate culture ranged from difficult to impossible in direct proportion to the size of the company.

Bosses often viewed culture as an abstract concept, a creation of consultants to increase billable hours, but not something that would/could impact on the bottom line.

But that was then, this is now.

“82 per cent of [Canadian] executives surveyed said culture has a strong, or very strong, impact on their company’s performance.”

Meanwhile, in the lower 48, from a new study on innovation, “Corporate culture is, above all, the most important factor in driving innovation,” said Rajesh Chandy, a professor of marketing at the University of Minnesota’s Carlson School of Management and a charter member of the U.S. Department of Commerce’s Advisory Committee on Measuring Innovation in the 21st Century Economy”

Innovation and healthy bottom lines go hand in hand. While innovation may not be the quick bottom line fix that layoffs and other cost cutting actions are, it is the preferred choice of CEOs who understand that surviving isn’t enough.

What weight do other factors have in driving innovation?

“…among traditional drivers of innovation such as government policy, labor, capital and culture at the country level, the strongest driver of radical innovation across nations is corporate culture.”

Chandy goes on to say, “It is important to realize that all innovative companies look alike. They share a common culture no matter where they are located.”

Nearly three years ago I wrote about what people want and don’t want and it hasn’t changed much, if at all.

There are many cultural traits to consider, but here are the four basics that are required, although the words used to describe them keep changing, if you want to foster a culture of innovation.

• Open, honest, constant communications
• Never kill the messenger
• Accept and act on input from all levels
• Walk your talk

And the next time someone tells you that corporate culture is a myth composed of smoke and mirrors, remind them that there are still people out there who believe the Earth is flat.

Click for a direct download of “Radical Innovation in Firms Across Nations: The Pre-eminence of Corporate Culture.”

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I wrote a couple of posts about Senator Ted Stevens, King of Pork—more than 3.4 billion dollars worth—and Senator Ted Stevens, convicted felon—all seven counts.

So I thought it only fair to add another chapter just in case you hadn’t kept up.

Stevens was up for re-election and as soon as the conviction was announced he flew straight back to Alaska to campaign.

He refused to resign from the Senate, said he would appeal his conviction and was reelected by a 1% margin—given to him by old (over 30) guys.

Now, I’d always heard that convicted felons had to jump through various hoops, depending on which state they lived in, if they wanted to vote.

So what about Alaska?

“Alaska law states that convicted felons are barred from voting if their crime is one of “moral turpitude,” which in Alaska includes a wide swath of illegal activities.”Receiving a bribe” is listed among them…the Alaska Division of Elections announced that the senator’s crimes were, in fact, of moral turpitude but that a guilty verdict wasn’t enough to make him a convicted felon for purposes of voting.

State law does stipulate that a candidate for the Senate must be a registered voter—and thus not a felon who committed acts of moral turpitude—when he files for the office. But Stevens had not yet been found guilty when he filed.”

Makes your head spin.

There are two things I’m taking away from this.

The first is a question; if a ‘normal’ Alaskan was convicted of moral turpitude would he just continue merrily on his way?

And the second is that this is pretty graphic proof that, to a majority of voters, pork and familiarity trumps ethics any day.

Not that any of this matters. In his final days, George W. will pardon Uncle Ted just as he pardoned Scooter.

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With the economy in turmoil and companies laying off right and left it’s easy for manager’s to lose sight of one of their prime responsibilities—preventing/reducing turnover.

Retention is even more critical when layoffs are happening, since the need for productivity goes up, not down.

A couple of years ago I wrote a post that I think will be even more useful now, so here it is again.

As a manager, who are your customers?

Customer service is a major topic these days, as is employee retention, but do they really have anything in common? You bet!

No matter your position, from CEO to team leader, your people are your customers.

That’s right, customers. That makes you an ESM—employee service manager.

Why do you service your people? To help them achieve their full potential;

• assure high productivity;
• lower turnover; and
• create an environment that’s a talent magnet.

How do you service your people? By

• cultivating the kind of MAP that truly values people and understands how important it is to manifest that;
• offering high-grade professional challenges to all your people and, then, making sure that they have the resources and all the information necessary to achieve success;
• fostering fairness so that people know they are evaluated on their merits and favoritism plays no part; and always walking your talk and living up to your commitments.

What’s in it for you?

• Better reviews, promotions and raises;
• increased professional development;
• less turnover and easier staffing; and
  
• what goes around comes around—everything that you give your people will come back to you ten-fold!

These are, or should be, basic tenets for managers at any level—how do you grade yourself on each? How would your people grade you?

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Even before the economic meltdown you heard constantly about all the reasons you needed to do things differently; all the problems inherent in hiring managing a four-generational workforce; all the new technology you needed in order to succeed.

In short, all the changes coming up, down and around the pike.

And as everyone know, change isn’t easy.

A few months ago IBM produced and excellent research study called The Enterprise of the Future (requires free registration), which was the basis of a series I wrote at Leadership Turn.

There’a new module out called Making Change Work and it offers up some interesting stats.

“Over a two-year period, the percentage of CEOs expecting substantial change climbed from 65 percent in 2006 to 83 percent in 2008 but those reporting they had successfully managed change in the past rose just 4 percentage points, up from 57 percent in 2006 to 61 percent in 2008… The major obstacles to implementing change in an enterprise are centered on people and corporate culture. Nearly 60 percent of the executives and project managers surveyed say changing mind sets and attitudes is the biggest challenge to implementing change in an enterprise, followed by corporate culture at 49 percent. These challenges were flagged as more important than shortage of resources, highlighting that these problems are seen as inherently more difficult to solve even if given sufficient resources. “

Lots of advice on inaugurating change and how to make it happen smoothly, but I think that this study is a great place to start. It has four sections

• Real Insights, Real Actions
• Solid Methods, Solid Benefits
• Better Skills, Better Change
• Right Investment, Right Impact

packed with solid information and useful information on what global bosses are doing.

The information is useful whether your company is global or local, because you’re both dealing with the same problems—people and the need to change corporate culture in order to survive and thrive.

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If we wait for them to fix it nothing will happen.

Only WE can change it.

Don’t miss my other WW: leadership fools means poverty rules

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Dan McCarthy, a very cool guy who is head of leadership and management development at Paychex and writes a great blog on leadership and management issues, included me in his current edition of the Leadership Development Carnival. The best part is that the content applies to all parts of life, no matter what you do.

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As mentioned yesterday, clients are pushing law firms into increasingly diverse hiring that more accurately reflects today’s juries—forcing change into hide-bound corporate cultures that need to hang onto women. And, with the exception of a few firms, the general progress proceeds at a glacial pace.

So, how are women doing on the financial front? Not so good.

“Researchers…studied bonuses paid to 96 pairs of executive-level men and women in Britain with similar experience. Women, they found, were rewarded less for improved results. Indeed, when the worst-performing companies began doing very well, men’s bonuses rose 263% on average, vs. 4% for women.”

Women are gaining—just a 259% difference.

Over on this side of the pond it turns out that chauvinism is what really pays according to a study published in the September, 2008 issue of the Journal of Applied Psychology.

Researchers followed 12,686 people, aged 14 to 22 at the start of the study, with a 60% retention rate, for 26 years.

“Their analyses showed that men in the study who said they had more traditional gender role attitudes made an average of about $8,500 more annually than those who had less traditional attitudes… Women who held more traditional views about gender roles made an average of $1,500 less annually than the women with more egalitarian views.”

Not a pretty picture.

But four years ago, the McKinsey Leadership Project (requires free registration) was created to help women both internally and externally.

“A new approach to leadership can help women become more self-confident and effective business leaders.”

Granted, these are women from the top, strong and well-educated no matter what their original background, but it still offers pointers for all.

McKinsey calls it model centered leadership, derived from the interviews and other research, distilled into five broad, interrelated concepts…

• meaning, or finding your strengths and putting them to work in the service of an inspiring purpose;

• managing energy, or knowing where your energy comes from, where it goes, and what you can do to manage it;

• positive framing, or adopting a more constructive way to view your world, expand your horizons, and gain the resilience to move ahead even when bad things happen;

• connecting, or identifying who can help you grow, building stronger relationships, and increasing your sense of belonging; and

• engaging, or finding your voice, becoming self-reliant and confident by accepting opportunities and the inherent risks they bring, and collaborating with others.

Does it have value for you? Yes!

Does it offer anything to you if you’re not a woman? Absolutely.

None of this will change the world, but as long as you understand that leadership isn’t positional you can apply these skills throughout your world to help you create a fuller, more rewarding life.

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This is part 1 in an ongoing discussion.
Evolution may be one of the most powerful forces in the world. It is certainly one of the most peculiar natural forces, with the unusual characteristic of being a long-term, natural statistical process with no particular goal. Because it is statistical it is not as dependable as the law of gravity. Because it is statistical, it operates over thousands of trials, so it operates over long time scales – often millions of years. It does not have any particular goal, but it does seem to move in particular directions. Finally, it operates with a very simple set of rules, needing only some life and three actions to work its magic:

• Replication (Reproduction)
• Variation (Mutation)
• Selection (Survival)

Evolution starts the survivors of the last generation and uses them to produce the next generation. Replication is very good, but not perfect, so a few variations creep in. This new generation, with its variations, competes in the environment. The survivors then seed the next generation. While this process appears almost trivial, over millions of generations (or statistical trials) the random process of evolution has created some amazing forms of life, including people who are reading and writing this blog.

If evolution is so powerful, can we use its basic principles to drive improvements in a business? Yes, but the deeper question is how. Before digging into that question, let’s investigate three environmental conditions required for evolution to operate.

• Evolution requires many trials in each generation, because it is a random process. Fail often.
• Evolution operates only over a large number of generations. Fail fast.
• The external selection criteria (the measure of fitness) must be stable over many generations.

In short, evolution won’t work in any environment that does not provide these three conditions. Some operations within a business might provide these conditions, while other business operations might not.

Celebrate Failure—Fail fast, fail often.

In the late nineties (in the last century), many business books and business consultants preached about “celebrating failure.” One popular expert took the concept even further, exhorting his readers to “fail fast, and fail often.” Little did he know he was advocating an evolutionary approach to business. While it makes no sense to celebrate failure per se, it does make sense to celebrate failures which identify dead-end paths. The quicker a company can explore and eliminate opportunities, the quicker it will find good opportunities to exploit. A business seeks successful markets, successful products and successful customers. In the search for these successes a business will encounter many dead-ends, or failures. Failing fast and failing often will accelerate the discovery of the successful markets and products. In evolutionary terms, the business will discover survivable niches in its environment only as rapidly as it explores its business environment. Therefore, don’t celebrate failure, but work hard to fail fast and often.

Evolution has a high failure rate at every level. Within a single generation, very few of the members survive to propagate. Of all the acorns an oak tree grows, almost none actually grow to be another oak. Most don’t even survive to become a sprout. Within each single generation, evolution fulfills the exhortation to “fail often.”

Evolution also prefers to “fail fast.” In the mammal kingdom, evolution starts a new generation every year for large animals, even if an individual mammal may survive many years. But evolution is not locked into the annual calendar. At the bacteria level, evolution can starts a new generation every few hours or so. In a business what are the natural generation time cycles for various operations? How can a business accelerate its generational cycles to “fail faster?”

Selection Criteria – External, not Internal

Evolution simply provides the experiments, by creating variations. The environment provides the selection criteria that pick the winners. Each species “discovers” these environmental selection criteria by watching which the variations survive. Each of these variations contributes a small amount of improved survivability to the species.  It is critical to understand that the selection criteria are not provided internally, by a president, business owner, or central planner. The business must discover the natural selection criteria in its environment—its customers, competitors, suppliers, and partners. This is particularly difficult for most businesses because, as business leaders and owners, we think we should “lead” the business.

In addition to being hidden in the environment, selection criteria also change over time, usually slowly, but sometimes suddenly. Dinosaurs thrived largely unchanged for hundreds of millions of years. Over that time the environment changed little, so the selection criteria for survival changed very little. Dinosaurs, already pretty good at surviving in a hot, humid environment, continued to thrive while evolution made only small changes at the margins. However, a sudden cataclysm (huge meteor, giant sunspot, massive volcanic eruption or something else?) changed the environment almost instantly. Hot and humid switched to cool and dry. Swamps dried up, plants changed and selection criteria for survival changed accordingly, faster than dinosaurs could adjust. A previously marginal species—prototype mammals—had the unusual ability to regulate its body temperature internally. While dinosaurs could not stay warm in the new environment, the prototype mammals thrived.

Several million years later, we are reading and writing business blogs. In this environment of constant change, the selection criteria for survival in business change swiftly, sometimes overnight.

Business leaders and owners have great difficulty in discovering the selection criteria for business survival. Even worse, when a business leader finally does “get it right,” the criteria for business survival change, leaving the business leaders leading furiously in the wrong direction.

So, what do we do? The good news is that business leaders are not evolving into extinction. But, the requirements for business success are evolving, swiftly.

Are you leading your company into extinction?

Tune in next week as we explore in depth how a business can evolve toward success.

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