Bob MacDonald on Business

Sage Advice for Superior Business Management

Bob MacDonald on Business header image 1

Bureaucracy Can’t Be Eliminated—But It Can Be Beaten

August 30th, 2015 · 2 Comments

The very intransigence that gives bureaucracy its power is also the weakness that allows it to be circumvented.

Bureaucracy is presented as a benign way to bring order out of chaos, but often that is just a subterfuge for a variety of darker objectives. A key goal of Bob MacDonaldbureaucracy is to enable those who have done things a certain way to make sure others do it the same way. In other words, bureaucracy often becomes a tool used by those in power to keep others from coming to power. For the lazy or incompetent, bureaucracy offers security against urgency and a shelter from accountability. As a result, those entangled in an entrenched bureaucracy find that any effort to bring about creativity or innovation can feel like trying to roller-blade through a swamp.

But there is hope when it comes to confronting bureaucracy. While it is not possible to eradicate bureaucracy, it is possible to outwit it. Here’s how.

The strength of bureaucracy – inflexibility – is also its greatest weakness. Bureaucracy does not deal well with ideas and actions that are outside the norm. When confronted with anything different, bureaucracy becomes even more rigid and responds by either attempting to ignore the threat or by becoming even more inward-looking. This reaction provides the creative innovator with the opportunity to “end-run” bureaucracy. To “end-run” bureaucracy means to avoid its strengths – blocking new ideas and actions that start at the bottom – and instead, attack its weakness which is resisting actions that come from the top down.

Putting the “End-Run” Strategy to Work for You

Let me offer a couple examples of how the “end-run” strategy might work for you as you battle bureaucracy.

In September of 1950, the Korean War was at its height and going badly for American forces and its South Korean allies. Several hundred thousand North Korean soldiers had formed a rigid line and had pinned down Allied forces at Pusan, threatening to push them into the sea. It would have been sheer futility to attack the North Koreans head-on; that was the very core of their strength. Instead, General Douglas MacArthur (against the wishes of the bureaucrats in the Pentagon) loaded 75,000 Allied soldiers on some 300 ships and sailed them north on an “end-run” around the entrenched North Koreans and invaded the port city of Inchon in North Korea.

Inchon was lightly defended because the North Korean military leaders were too inflexible (bureaucratic) in their thinking to anticipate such an attack. Once in control of Inchon, MacArthur’s forces were in position to cut the supply-lines to the North Korean forces in the south and within two weeks Seoul, the capital of South Korea was liberated and the North Korean army was forced to retreat back to North Korea. I know this is a war story, but in its own way battling bureaucracy is a “war” and there are parallel strategies for fighting bureaucracy that can be just as effective as MacArthur’s “end-run.”

In no way was it as important or as dramatic as MacArthur’s action in Korea, but 30 years later I applied my own “end-run” strategy to fight bureaucracy. I had just been appointed president and CEO of ITT Life Insurance Company in Minneapolis. ITT Life was a small, failing company owned by Hartford Insurance. (Hartford was itself owned by the conglomerate ITT.)

Hartford had charged me with the task of revitalizing and growing ITT Life with the clear message that if that did not happen, the company would be dismantled. Accepting the challenge would have been fine except for the fact that Hartford was (and is) the poster-child for corporate bureaucracy. Hartford has more than once gagged on its own vomit of bureaucracy.

The problem was not just developing strategies and plans to grow ITT Life; even more challenging was figuring out how to get the bureaucracy of Hartford to approve the plans. What evolved was a double “end-run” strategy; to end-run both the insurance industry and the bureaucracy of Hartford.

When it came to the entrenched insurance industry it was obvious that ITT Life could not compete with the established companies so the strategy was to compete against TheHartfordthem by attacking the traditional products of the industry and offering creative, new alternatives. Going against the insurance industry was challenging enough, but it paled by comparison when it came to seeking approval for these plans by the Hartford bureaucracy. The only hope for these plans was an “end-run” around the strength of the Hartford bureaucracy.

Hit Bureaucracy Where It’s Not

What gives organizational bureaucracy its strength is layer upon exhausting layer of review and approval needed for a new idea to go forward. Each layer is a formidable defense against the threat of doing something new or different. The bureaucratic defense of sameness starts at the very lowest levels of the organization, forcing any new idea or innovation to run a gauntlet of skepticism and rejection designed to kill anything that is different.

At the same time, this strength is also bureaucracy’s greatest weakness. Ideas that come down from the top of an organization can short-circuit the power of the bureaucracy. This means that the higher you can go in an organization before your ideas are challenged, the better chance you have to beat bureaucracy. Top-down actions don’t eliminate bureaucracy, but they weaken it to the point that it can be overcome.

Our strategy at ITT Life was to bypass the Hartford bureaucracy by taking our marketing plans and ideas to the highest possible levels at Hartford and even the parent company ITT. As we developed our business plan for review by the lower levels of Hartford’s bureaucracy we didn’t lie to them. Instead, we outlined the plans only in general terms (which is typical of bureaucratic business plans), without real specifics, which we knew would not be approved.

When the time came to present our plans it was part of a large annual “planning meeting” where all of the Hartford subsidiaries presented their business plans for formal approval by the CEO and senior officers of the Hartford as well as the CEO and senior officers of ITT. It was at this meeting that we sprung our “end-run” around the bureaucracy. For the first time we explained in full detail what the general words in our plan really meant. In short, we explained that we were going grow ITT Life by aggressively attacking the traditions of the life insurance industry.

We had two advantages by using this approach to circumvent the Hartford bureaucracy: The senior executives at the meeting assumed that the bureaucrats had approved these plans or they would not be presented at the meeting. Secondly, Hartford is primarily a property and casualty – not life insurance – company, and its executives had little experience or concern with life insurance. The result was that our “end-run” worked and out plans were approved. The approval of these plans at the highest level of the organization gave us license to aggressively resist the bureaucracy that we knew would not give up.

Needless to say, the Hartford bureaucracy was less than pleased with me, and the innovative advertising campaign that buttressed our maverick approach. But alas, they Whole_Lifewere handcuffed and unable to do diddly squat about it. The bureaucrats did not want to admit to senior management that they had been unaware of our plans; that would make them look like they were hopelessly out of the loop. And the bureaucrats did not want to be seen resisting plans specifically approved by both the Hartford and ITT CEOs. Since the bureaucrats knew they could not stop us with a frontal attack, they were left with only the hope that our efforts would fail and they could then take their retribution. How ironical that the bureaucrats assumed the position of wanting to see actions that would ultimately benefit the Hartford fail; but their interest was only in protecting their turf.

Fortunately, the strategy worked and ITT Life began to grow and prosper. ITT Life’s advertising like that above created a firestorm in the industry that translated into increased sales and profits. The bureaucrats were thwarted, but they were not happy.

What we learn from this . . .

Bureaucracy cannot be eliminated; like death and taxes it will always be with us. But bureaucracy can be circumvented by figuring out how to “end-run” it by avoiding its strengths and attacking its weakness. The strength of bureaucracy is its inflexibility and its ability to block ideas from the bottom up. With creativity, flexibility and making an “end-run” around bureaucracy to higher levels in the organization, there is an opportunity to beat bureaucracy.

PDF Creator    Send article as PDF   

→ 2 CommentsTags: Business Management

“Copycats” Validate the Value and Need for Real Leaders

August 23rd, 2015 · 5 Comments

You know you are on the right path when those who most vociferously opposed your ideas and actions begin to echo and copy them.

We live in a political and business world dedicated to making “being different” difficult. This is human nature because we humans tend to function with a herd mentality, believing consistency and compliance with existing standards is safer, easier and less threatening. People resist having “difference” introduced into the equation because it creates change that forces them out of their comfort-zone. The irony is that once this “difference” is validated as the new standard, those who at first opposed it rush to copy and accept it so they don’t feel different.

This reaction is called the “copycat syndrome.” And if you are one who seeks to be a leader or change the status quo, it is important to understand the “copycat syndrome,” because it is the best way to know if your ideas are Copygaining traction.

When others begin to copy your concepts or actions, it confirms that what you are doing is making a difference. It is one thing for those who support you to adopt your positions, but when those who most stridently ridiculed and opposed your ideas and actions begin to copycat them, it is a clear sign your ideas are changing the way people think and act.

Presidential Campaign is the Tool that Just Keeps Teaching

A number of recent blogs have focused on the emerging 2016 presidential campaign because the happenings in the nomination contest offer a wonderful real-time laboratory that can help us learn to be successful, better communicators and more effective leaders in our own life and career. Here we have 20-some people who seek the ultimate level of leadership in our country putting their critical thinking, leadership and communication skills (or lack thereof) out there for us to study. So far, the 2016 presidential campaign has been a learning gift that never stops giving.

This past week we have been witness to the “copycat syndrome” in full bloom. When Donald Trump announced his entrance into the race he was ridiculed by the media and ignored by the other candidates, because he was so different and outside the norm of  “the accepted” model for presidential candidates.

We all know what happened after that. In very short order, Trump, as they say, “sucked the air out of the campaign.” As Trump has modestly said, “It’s has become the summer of Trump.” And he is right. Not only has his lead ballooned in all the polls, he also has come to dominate the media coverage of the campaign. I would hazard a guess that as much as 90 percent of the mainstream media coverage of the campaign has focused on Trump.

Just one example of how Trump has come to dominate and overwhelm the other candidates was on display last Wednesday when Trump and the establishment candidate Jeb Bush held simultaneous “Town Hall” meetings in New Hampshire, barely 10 miles apart. CNN, FOX News and MSNBC each carried Trump’s preceding press conference and “Town Hall” meeting (attended by about 3,000) live. Bush’s comments at his meeting (attended by about 150) occasionally flicked on the screen for, at most, 10 to 15 seconds. And no wonder. Trump’s crowd was raucous, involved, animated and enthusiastic (and arguably more newsworthy) while those attending the Bush meeting exhibited all the excitement of a group of people sitting in a dentist’s office waiting to be called into the chair for a root-canal.

The reaction of other candidates to Trump’s out-of-the-box campaign has gone from disdain to desperation. Taking note of how Trump’s different approach to the campaign and bombastic style has worked so well for him, most of the candidates have moved into copycat mode. We’ve seen Cruz, Huckabee, Rubio and Paul rush out with copycat type outlandish quotes and claims, attempting to steal some of the Trump media spotlight. Their logic seemed simple enough: if it worked for Trump, it should work for them, too. Trump was ridiculed for wanting to build a wall to keep illegal immigrants out of the country and now every other candidate is claiming they have always wanted to build a wall. Trump called for repealing application of the “natural born citizen” clause of the Constitution when it comes to children of illegal immigrants. (Something that is not legally possible without an amendment to the Constitution.) So far, seven other candidates (including Jeb Bush) have announced that this was their idea all along.

I could go on with numerous other examples, but the point is that no matter how far outside the mainstream of accepted thinking your ideas and actions may be, you will know you are on the right track when the critics and naysayers begin to fall prey to the copycat USATodaysyndrome. There is another residue of the copycat syndrome. When members of the establishment begin to copy the ideas and actions of the interloper, it bestows credibility on the outlier. Trump continues to dominate the presidential campaign, not so much because of what he is saying now, but because the establishment candidates are now in copycat mode and that gives his ideas and actions credibility; making him look like a leader and giving people a license to vote for him. As evidence of this result, get a load of USA TODAY’s lead headline on August 19th : “TRUMP’S IDEAS NOT SO RADICAL.The sub-headline was, “In GOP circles, much of immigration plan is echoed by rivals, party, voters.”

Not all Copycatting is Good Copycatting

It is important to note that when the copycat syndrome is triggered, it does not mean that the new ideas and actions are the right thing to do, but it is simply confirmation of the herd mentality of many who are afraid to be left behind. Bad things can happen when people lose the ability to think rationally and blindly copycat ideas and actions, simply because they seem to be working for others. This is one of the reasons why the idea of “peer-group comparisons” and “best practices” pose such a threat to creativity and innovation; they turn followers into copycats.

The “Great Recession” of 2008 was, in large measure, triggered by the copycat syndrome. Sub-prime lending – especially mortgages – was never an accepted practice of mainstream banks, but when a few banks began the skim the cream off the top, all the banks rushed in exhibiting herd mentality to copy what others were doing. Then, a few investment companies began to offer new product offerings such as collateralized debt obligations, mortgage-backed securities and credit default swaps and soon these little understood, complex products were being copied and sold by the entire industry. We know all too well how catastrophic this form of copycatting was.

Today we are seeing the same herd mentality creating the copycat mentality in those seeking to compete with Trump to secure the Republican nomination. It is still to be determined if Trump is leading them to victory or destruction.

And the point is …

If your efforts to provide leadership or change the status quo are met with initial rejection and even ridicule, don’t be discouraged. First of all take it as a compliment, because if your ideas are not met with early resistance or viewed as a threat, they are probably not far enough outside the mainstream to make a difference.

If you remain consistent and committed to your vision, continued criticism will confirm that you are out ahead of the herd and when others begin to copycat your ideas and actions, you will know that you are making a difference. And it is making a difference that establishes you as a leader and cements your ultimate success.

PDF24 Creator    Send article as PDF   

→ 5 CommentsTags: Business Management

What We Have Here is a Failure to Communicate

August 16th, 2015 · 10 Comments

Communication is essential to leadership and failure to communicate dooms any effort.

We all know the famous line, “What we’ve got here is . . . failure to communicate,” spoken by the prison warden (Strother Martin) in the 1967 Paul Newman movie, Cool Hand Luke. Almost 50 years later the line is even more poignant when applied to the nascent 2016 presidential campaign.

With the notable exception of two candidates, those running for the Republican and Democrat TrumpBN-IE182_sabder_J_20150429214723nominations are frustrated by their failure to gain what is called “traction” with voters. Despite their best efforts, the establishment candidates languish in the polls and are starved for attention. At the same time, against all odds, two candidates – Donald Trump and Bernie Sanders – float to the top of the polls in their respective Parties.

What’s happening here? What’s happening here is simple – we have a failure to communicate. Most of the individuals running for president are telling people what they think they want to hear, but are failing to actually communicate with the voter. Communication is not just telling someone something.  Real communicators, as the 1980s AT&T commercials encouraged, have the power to “Reach out and Touch Someone.” (Of course in today’s politically correct world, if you were to actually follow AT&T’s suggestion to reach out and touch someone, you would be sued for sexual harassment.) But the point is that real communication allows the leader to reach out and touch the hearts and minds of people; it educates, inspires, motivates and moves people to action. All else is simply babble.

The Power of Communication Skills

Communication is not leadership, but it is an essential tool of leadership. Without the ability to effectively communicate – to connect with people – the leader becomes powerless. Conversely, the effective use of the power of communication has the potential to bestow leadership; even upon the most unlikely of leaders.

The “experts” are discounting Donald Trump’s run for president because they see him as just a hyped-up “television personality.” Do you recall the name of the last “television personality” to run for president, only to have his chances poo-pooed by the experts? His name was Ronald Reagan. And after his election, what phrase was used to describe Reagan’s leadership style? He was called “the great communicator.” Reagan was a master at communication and could connect with people because he had the ability to take complicated issues and put them in terms that people could understand; and it got him elected President.

The early stages of the 2016 presidential election offer stark evidence of the power that can be gained when one is an effective communicator; and conversely when not. Do you get all tingly and pumped-up when Jeb Bush or Hillary Clinton give a speech? Do the words of Rand Paul or Scott Walker drive you to the barricades or to distraction? Trump was only too pleased to point out that over 24 million people (the most of any primary debate in history) tuned in to watch the first campaign debate. The question Trump posed was, “Do you think they tuned in to watch Jeb Bush?” Like him or loathe him, the outsized response to Trump, in comparison to all the other candidates, is not because of his specific plans or proposals – because he has none – but because he simply connects with people.

To reinforce this point, a New Hampshire “focus group” of Republicans were asked the number one reason to support Trump. The reason most often mentioned was because “he is one of us.” These peopled expressed this “connection” with a guy who constantly flaunts his wealth, “elite education” and high-powered friends. Can you imagine any group of voters pledging support for Hillary Clinton because, “She is one of us”?

Don’t make the mistake of thinking that to be an effective communicator requires the outlandish, bombastic style exhibited by Trump; that is just a style that works for him, but other styles can work just as well. When Bernie Sanders, the Independent senator from Vermont, entered the race for the

U.S. Secretary of State Hillary Clinton delivers remarks at the State Department in Washington on the deaths of U.S. embassy staff in Benghazi in this September 12, 2012 file photo. Clinton said December 19, 2012, she accepted the findings of an independent panel that faulted the State Department over the deadly September attack and had ordered widespread changes to bolster US. Diplomatic security overseas. REUTERS/Gary Cameron/Files   (UNITED STATES - Tags: POLITICS CIVIL UNREST)

Democratic nomination against Hillary Clinton the odds against his success were even higher than those for Trump. Not only was Clinton the overwhelming presumptive candidate, but unlike Trump, Sanders had virtually zero name recognition, was not wealthy and has a frumpy appearance, combined with a rather retiring – almost shy – way of speaking. On top of it all, Sanders is an admitted Socialist. Despite these apparent deficiencies Sanders has steadily risen in the polls; to the point that he now leads Hillary in New Hampshire and is close on her heels in Iowa. Maybe even more surprising is that the crowds who come to hear Sanders speak are even larger than those that show up for Trump.

What all this comes down to is that if you are an effective communicator – can connect with the people you want to lead – even if the people don’t agree with you on all issues, they are still willing to follow your leadership because they feel connected.

On Becoming Your Own Great Communicator

If you seek to be a successful leader, you can start by learning to be an effective communicator. Real communication is a process of interaction that sends a message of respect, inspiration and motivation as much as it imparts information. Helping those who you want to follow you to understand why something is being done, not just what is being done is the type of communication that creates a connection between the leader and the followers.

Leaders who are good communicators build alliances, never stop painting the vision, create a clear sense of purpose and an urgency to achieve the objective and do so in a way that brings together all the followers. In essence, soon the followers begin to adopt the message and vision of the leader as their own.

If communication is to be effective, it must be open, constant and consistent. Real communication is not something the leader strategizes or plots out; like politicians checking the latest polls before saying anything. Open and honest communication that connects with followers is not a process or a procedure but is something the leader lives. When Trump says something that may be outrageous, the reaction of his critics is, “That is just Trump being Trump.” Being open, constant and consistent can’t be faked and if a leader cannot be that way in every way, there will be a failure to communicate; leading to rejection of the wannabe leader. That is why most of the candidates for the presidential nomination are being “Trumped” and “Berned.”

PDF Printer    Send article as PDF   

→ 10 CommentsTags: Business Management