Bob MacDonald on Business

Sage Advice for Superior Business Management

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Sometimes the Best Boss is No Boss at All

September 7th, 2014 · Building Better Business Managers, Business Management

If you want to be successful in business, the last thing you should strive to be is a boss

Do you have any “bad boss” horror stories? If not, just wait; if you work long enough, you will. And when you have a bad boss you will know it from the angst and frustration you are forced to endure. And if that’s not bad enough, a recent Swiss study determined that those who work for a bad boss have a 40 percent greater chance of suffering a heart attack.

Bad bosses have their own individual traits any one of which they can employ to make your life miserable. They are, in a word, “bossy.” They micromanage all you do, and communicate as clearly as a monk under a vow of silence. They hoard credit in the fashion of an obsessive-possessive personality disorder and are all-American, professional blame-game players.

The University of Florida researched the phenomena of “abusive bosses” and even came up with a term to describe bad bosses; it’s called “power poisoning.” The Florida research determined that bad bosses are bent on satisfying their own need and wants, while devoting little or no attention to the needs and wants of followers. In fact, they act as if the rules do not apply to them. All of this is bad enough, but what is even worse (the heart attacks notwithstanding) is that most bad bosses don’t even know they are bad bosses; they confuse loathing with love, alienation with admiration.

Why “Bosses” Fail

Bosses who fail tend to be those who believe their job is to “be” the boss, as they mistakenly understand that role. They view their job as being a supervisor, the chief, the one in charge and superior to all others. That’s why the term often conjures up negative feelings from the rank and file: their bosses so often made them feel like underlings, peons, cogs in the machine, and worst of all, lowly subordinates. For me, the very concept of a “boss” is an anathema to effective leadership and the last thing a successful boss does is to boss people around.

From a personal perspective, there was always a feeling of failure if anyone ever responded to me by saying, “Well okay, you’re the boss.” As a “boss” your goal should always be to have those who work for you to want to do what you want them to do, because they are motivated to do so; not because you are the boss. From my observations and experience, companies would create a more productive environment, increase productivity, build loyalty and increase success if the very concept of “the boss” was eliminated. And there is evidence to validate this assumption.

A Wall Street Journal article titled “Who’s the Boss? There Isn’t One,” proves the point. In it, the editors profiled the Valve Corporation, a company that makes a conscious effort to operate in a “boss-free” environment. Valve, founded in 1996, is a highly acclaimed and successful video-game maker. The Journal article pointed out that the company is structured with a flat hierarchy where pay is often determined by peers and the workday is directed by employees themselves. The Valve website says the company has no managers or assigned projects. Instead, its 300 employees recruit colleagues to work on projects they think are worthwhile. The idea of mobility and the option to work on different projects at Valve creates a sense of flexibility and mobility among the workforce; and is symbolized by having desks mounted on wheels, allowing them to move around to form new work areas.

The WSJ article suggested that Valve may be an outlier, but pointed out the company is not alone in the effort to outsource bosses. “Companies have been flattening out their management hierarchies in recent years, eliminating layers of middle management that can create bottlenecks and slow productivity,” the article reported. “The handful that have taken the idea a step further, dispensing with most bosses entirely, say that setup helps to motivate employees and makes them more flexible, even if it means some tasks, such as decision-making and hiring can take a while.”

Frank Shipper, a management professor at Salisbury University (Salisbury, Md.), has spent two decades studying “flat management” structures and concludes these types of structures help a company stay innovative, “because ideas can come from anyone in the organization, regardless of tenure or position.”

The WSJ article identified a few very large companies that have benefited from a “boss-free zone.” General Electric was cited as a company that has run some aviation-manufacturing facilities with no foremen or shop-floor bosses. One leader, the plant manager, sets production goals and helps resolve problems that may arise, but does not “boss” the daily activity of the workers. Teams, whose members volunteer to take on various duties, meet before and after each shift to review work, set goals and address problems.

Sign of the Future?

It may not be practical to adopt a “no bosses” approach at all companies, but it is possible to create “boss free zones” within any company. I have experience with one company that encouraged employees to take it on their own to find, develop and implement ways to simplify processes and procedures within the company’s operations.

These groups were called “Work Simplification Teams,” and they were made up of volunteers from all areas of the company. The groups would get together – with no management present – to identify areas of effort, elect leaders and plan the activity. (All of this was taken on with no expectation of extra pay and in addition to their normal job responsibilities.) Once the group had completed its work, the team would present their findings and recommendations to an all-company meeting where their ideas would be questioned and discussed and then presented to management. This approach kept the company on the cutting-edge of efficiency by allowing those who are expected to do the work to determine the best way to do it.

An ancillary benefit to this approach was that it allowed younger workers to learn how to lead – not from a position of authority – but by communicating, listening and convincing others to accept their ideas. It also helped them learn to understand and respect the ideas of others; all of which enabled them to become better bosses when they became a boss.

The conclusion to be drawn by all this is that a person being a boss does not make people better, but people who are given the respect, freedom, encouragement and opportunity can make a person a better boss.

And the Moral of the Story …

The best boss is the boss who does not act like a boss. The best boss makes an effort to get out of the way, instead of in the way of those charged with doing the job. The best boss does not tell others how to do their job, but sees their job as providing the information, support, tools and encouragement to others, so they can determine the best way to do their job. The best boss does not see themselves as a boss, but as a mentor, teacher, coach and cheerleader for others. If a person in authority adopts this philosophy, they are not a boss, but a leader. Clearly, individuals and companies would be more successful when there is more of a commitment to have fewer bosses and more leaders.

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The Biggest Risk of Failure is the Unwillingness to Risk Failure

August 31st, 2014 · Building Better Business Managers

Facing the risk of failure is less threatening when one understands the difference between a risk and a gamble.

Risk permeates the drive for success like garlic in an Italian restaurant. It is the 600-pound gorilla in the success equation. And when it comes to achieving success – either as an individual in the corporate world or as an entrepreneur – risk both discourages and encourages.

The risk of failure in any effort to succeed paralyzes many, while actually empowering others. Risk reveals cowards, heroes, fools and fortune hunters all at the same time. Some equate risk with the fearsome thought of swimming among a pack of hungry sharks, while others embrace risk like a skilled lion tamer in a circus.

Risk cowers many for the simple reason that it is often highly overrated. Risk is often overestimated as a threat to success because most people equate risk-taking with gambling; they believe they are one in the same. The truth is that a risk and a gamble are not interchangeable concepts; indeed they are antonyms not synonyms. The only connection between a risk and a gamble is that the ultimate outcome is unknown.

The Certainty of Uncertainty

By its nature, risk is something with an uncertain conclusion, but with experience, planning and management, it can be mitigated and the outcome influenced. On the other hand, a gamble has an half-domeunknown outcome that is impervious to external influence. In short, a risk can be managed but a gamble cannot. There may be risk for an experienced, highly trained rock climber to attempt to scale the northwest face of Half Dome in Yosemite Park, but for those who have no experience, planning or training, such an effort would be a pure gamble; and as with any gamble, failure becomes a virtual certainty.

The key philosophical difference between those who shrink from risk and those who embrace it is that the former seek certainty, while the latter are willing to accept uncertainty. Risk takers can live with uncertainty, because they understand that while risks can’t be eliminated, it can be managed.

The irony is that those who are uncomfortable with the uncertainty of risk often are taking the biggest gamble, because they abdicate any possible control of the outcome. Those who are motivated to accept risk understand that the reward for accepting uncertainty is significantly greater than the penalty for failure.

Many also fail to take into account that risk is relative. They tend to see risk as solitary and in a vacuum, but often risk is interrelated to other actions. Sometimes not taking a risk creates an even greater risk that few take note of in their deliberations.

A Personal Report

In 1987 I was president and CEO of ITT Life Insurance (a subsidiary of the Hartford). By all accounts this was a great job. To those on the outside, the position offered power, prestige and great compensation; it was a sign of my personal success. And yet, I walked away from all this “success and security” to join with others in an effort to start a new company. Friends and family – including my parents – uniformly questioned my sensibilities in taking the risk – in their minds a gamble – to walk away from what seemed a safe and secure situation.

From my perspective the risk was relative. For me it would have been more of a risk – really a gamble – to stay at ITT Life, trapped in the stultifying, suffocating bureaucratic culture of the Hartford. While others viewed my escape from the cocoon of the bureaucratic security at Hartford as a pure gamble, my analysis convinced me that the real gamble would be to stay put. The alternative of striking out on my own was a manageable risk that offered far greater rewards and, in reality, less downside risk if I failed. At least I could influence the outcome; whereas at Hartford I would be at the mercy of events I could not control. (That is unless I was willing to sell my soul to the bureaucrats, which would have been an even greater risk.)

Besides, having spent over two decades in the life insurance industry I was comfortable with my knowledge of the business. I recognized an industry in the midst of fundamental change and had a plan to convert the upheaval into opportunity. This meant that a risk not taken – to leave Hartford – would have been the biggest risk of all.

Those who ultimately achieve success in their careers do so by first learning to distinguish the difference between a risk and a gamble. They do not pin their future hopes on the randomness of a symbolic turn of a card or a roll of the dice in their career. Instead, they became a risk manager, by assiduously studying hazards to success and developing ways to minimize them as much as possible. The person addicted to taking a gamble, whether in a Las Vegas casino or by attempting half-baked business ventures, always loses in the long run, and loses big. A person who is prepared and willing to accept reasoned risk-taking will sometimes lose as well, but they will win more times than they lose, and the wins will always be bigger than the losses.

In the end, success boils down to the individual’s experience and ability to accept and manage the risks that are the prelude to any success. Every time a cardiologist performs heart surgery, there is a risk of failure. It is the doctor’s knowledge, experience and training that reduces the risk to acceptable levels.

When you come down to it, the odds for or against success are meaningless. Sure, 93 percent of all new businesses will fail, but that only tells part of the story. The vast majority of those who failed did not understand the difference between a risk and a gamble, and as a result were unprepared to succeed. The secret is to figure out how to be one of those seven percent who learn how to mitigate risk and be prepared for success. You’ve probably heard the popular saying, “Fortune smiles on the prepared.” It was Louis Pasteur who said, “Chance favors the prepared mind.” (Sara Palin is the exception that proves the point in that, “Chance favors the impaired mind.”) We may not always win, but the chances for winning are enhanced when we can recognize the difference between a risk and a gamble and when we are prepared to deal with risk. Those are things failures all fail to do.

Certainly success has been achieved by those who were oblivious to risk, but when that happens, in falls more into the category of the gamble taken to win the lottery. It can happen, but do you want to stake your future on that approach?

Likewise, sloppy risk management can sometimes be worse that just taking a gamble on the future, because such an effort offers a false sense of security. There will always be something unanticipated that will happen and unless you are prepared to manage this risk, it becomes no more than a gamble. Mitigating risk depends on identifying the specific risk, analyzing options available to meet it and taking specific action to overcome it. There is no gamble in facing risk with that attitude and approach.



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Bureaucracy is the Ebola Virus of the Business World

August 24th, 2014 · Business Management

Once a business is infected by bureaucracy, very few survive, let alone thrive.

Everyone likes to rail against the stultifying impact of bureaucracy, but most believe that, like an Ebola virus, once a business culture is infected, nothing can be done about it, so they just shrug their collective shoulders and accept their fate.

That’s a shame. Because by doing the right things at the right time, bureaucracy, just like the Ebola virus, can be defeated. But also like Ebola, if the virus of bureaucracy is not eradicated, or at least contained, it can kill anything it touches.

Breaking Free from the Bureaucratic Straightjacket

The striking thing is that inoculating yourself against the ills of bureaucracy is a fairly straightforward process and it’s almost always effective. While you might not be able to eliminate the plague of bureaucracy, you certainly can become immune to it and still function effectively, even in its midst.bureaucrat_2

There are a number of actions that  savvy businessmen and women have learned to confront bureaucracy—the Ebola of business. The first thing to understand is that the intensity of bureaucratic resistance to a new idea or action is in direct proportion to the potential benefit for the business. In other words, the more opposition your proposed initiative generates within an organization, the more you should be encouraged to pursue it, because it likely is a good idea.

Remember that a bureaucracy exists in an organization to protect the status quo of its existing business model. The philosophy is simple: The organization would not have grown large enough to be bureaucratic if its business model had not been a success, so everything must be done to protect and preserve “the way we have always done it.”

The trouble is, you can’t beat an entrenched bureaucracy by butting heads with it. But you can circumvent its power by going around it. And when you find yourself trapped in a bureaucracy, look for ways to beat it without attacking it.

A Lesson from History

Remember the highly fortified Maginot Line constructed by the French before World War II? This string of concrete obstacles, fortifications and weapons was installed to thwart the advance of the Germans during the 1930s. But surprise, surprise! Rather than attack the French line head-on, the Germans simply went around the formidable barriers and rendered them irrelevant.

The trick to beating a bureaucratic Maginot Line is to outflank the existing business model as much as possible, while still allowing the bureaucrats to believe the ultimate result and control rests within their power. This may seem conflicting – if not confusing mumbo-jumbo – but in reality this “end-around” strategy can be simple.

How 3M Outgrew its Bureaucratic Leanings

3M is a fantastically successful company. But along the way from its meager beginnings in 1902 as a manufacturer of sand paper, it also developed a  famously bureaucratic culture. And because of that bureaucracy, the flow of new products virtually dried up.

In an effort to thwart the embedded bureaucracy, the management of 3M fortuitously decided that new product ideas should be explored outside the existing business model. The company allowed those pushing the new ideas to set up small, independent “companies” to delve into and develop new product ideas.

Since these initiatives were set up outside the existing “business model” they were not a threat to the company bureaucrats who were likewise virtually helpless to stop them. Yet, because they were still part of 3M, the bureaucrats felt that ultimately they would have control.

As a result, some of the most creative and profitable ideas that have helped 3M continue to be successful have come from “outside” the company. Small wonder the company that started as a manufacturer of industrial abrasives now sells some 55,000 different products worldwide, from dental implants to Post-it notes.

Seek approval for your idea or plan at the highest possible level within the organization.

The security system for bureaucratic control of an organization is based upon layer upon layer of approval and checkpoints that become a “black hole,” from which no idea can escape. The way to avoid the roadblocks of bureaucracy and not get sucked into the black hole is to make your proposal as far up the power-pyramid as possible.

When as president of ITT Life – a subsidiary of Hartford Insurance – I developed a marketing plan that was in diametric conflict with the Hartford business model. (I wanted to compete against the other insurance companies, rather than with them for business.) If I had followed the process and procedure of the Hartford bureaucracy, my plan would have been immediately sucked into the black hole, never to be seen again.

Instead, I waited until the annual “business planning” meeting. This was a large, long meeting in which all the subsidiaries of Hartford presented their business plans to the CEO and senior management of the Hartford. It was at this meeting that I sprung my plan. Needless to say, all the staff bureaucrats attending the meeting were a tad bit upset since this was the first time they had heard of the plan. But this meeting was not a place for the bureaucrats to raise a protest. (For one thing, they did not know how the CEO would react and they certainly didn’t want to be on the wrong side his opinion.)

Bear in mind, my only objective at that meeting was to receive the CEO’s acceptance of the concept of my plan, not the details. Once the concept of the plan had been approved by the CEO (he had assumed the bureaucrats had reviewed the details) the path was not cleared for our actions, but it gave us powerful ammunition to fight the good fight with the bureaucrats.

Agreement from the “bigwigs (at least bigger wigs than you are) on you concept is all the license you need to battle the bureaucrats over the details. No true-blue bureaucrat ever wants to appear to be in a position of disagreeing with those at levels above him or her. As a result, the more levels of bureaucratic roadblocks you can outflank to present your idea to higher levels of the company, the more chance you have to beat bureaucracy and be successful.

Always allow the bureaucrats to believe they are still in control.

I call this the “Br’er Rabbit” strategy because your success rests on being a trickster who wins using wits rather than brawn. Use your wits and planning to overcome those who seek to block your plans. In simple terms, never get in a planning (or pissing) session with bureaucrats. Remember, your objective and those of the bureaucrat are invariably in direct conflict. The way to resolve this conflict is to present the bureaucrat with a plan and what appear to be various options. Bureaucrats are less threatened and can sometimes even help, when you lay out specific plans and offer them the right to be involved. And if you do it right, whatever option they pick you can live with because you have selected the choices.

Once the concept has been approved, be relentless moving forward without waiting to gain agreement on the details.

If you live and operate in a bureaucratic world, you will never ever receive final sign-off on the details, so don’t waste your time waiting. The Bureaucracymantra for the bureaucrat is, “Okay, we approve what you are doing, but we just need you to make a few changes and everything will be fine.” Don’t believe it. There will always, always be “just one more thing.”

The best way of avoiding being bogged down in a debate over details is to move forward under the assumption of implied consent. You know the old saying about keeping one step ahead of the sheriff? Well, if you are to be successful fighting bureaucracy, the same logic needs to apply. You have to constantly keep one step ahead of the bureaucrats. If you let them catch up or get ahead of you, they will build roadblocks. If you keep them in your dust, all they can do is shake their fists at you.

And the Moral of the Story …

Never forget that bureaucrats never give up. Bureaucrats have nothing to do but be bureaucrats. If they stop trying to do nothing, they will have nothing to do. Bureaucrats are more dangerous than a jilted lover who works in a gun store. A good bureaucrat is nothing if not relentless. Understand that they have more resiliency and comeback power than crabgrass on steroids. The only way to outflank them is to be even more determined and resilient.

Never talk yourself into believing that you can eradicate the Ebola virus of bureaucracy, but you do have the power to take simple actions that allow you to circumvent and contain it. But to do so you have to be just as committed – if not more so – to getting something accomplished as bureaucrats who define accomplishment as doing nothing.

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