Bob MacDonald on Business

Sage Advice for Superior Business Management

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The Rules Rule!

November 2nd, 2014 · Business Management, Effective Leadership

The Upside: Rules mandate stability and conformity – eliminating disorder.

The Downside: Rules mandate stability and conformity – eliminating resourcefulness.

Rules. They’ve always been with us. In fact, when archeologists found evidence of the first written language deep in a cave in Mesopotamia (circa 3200 B.C.)  it’s reported the researchers translated that primitive attempt to communicate as follows: “No writing on this wall!” With one primitive scrawl, rules were born. And they’re not going away.

Not only have rules existed since man dragged his knuckles across the African savannah, the more advanced man and his Rules1activities have become, the more copious and cumbersome are the rules that decree how to go along to get along.

Nowhere is that more true than in modern business where rules are especially rampant. As companies become successful, rules governing process and procedure are implemented in an effort to codify those activities that initially helped the company grow. And the more a company grows, the more rules it institutes.

The crippling residue of this “race to rules” is, you guessed it, bureaucracy, that mindless web of institutionalized dictums that dictate employee behavior and company procedures with almost robotic precision. All of which leads one to ask, do we need these rules? Are they effective?

The answer to both questions is “yes.” Rules are necessary and can be very beneficial because they promote structure, organization, conformity and consistency. Rules also help coordinate the activities of different departments into one, unified, dynamic whole. Without rules chaos would surely follow.

Sometimes a little chaos is fine. But there is a downside and contradiction inherent in these rules: The more numerous and effective they are, the more they stifle innovation, creativity and risk-taking, all valuable employee attributes necessary for a company to attain and retain success.


The trouble is, rules can evolve into an endless river of paperwork that can clog the system and block any new thought or action. Then, before you know it, employees obey rules simply out of tradition. Their unspoken inner mantra is, “That’s the way we have always done it. Don’t ask questions.” Complying with the rules becomes the sole objective, rather than performance and progress.

Certainly rules can stave off enduring chaos, but there are also times when chaos is welcome since it can breed progress. What’s need is the ability to understand and channel that chaos into a positive force can often mean the difference between success and failure for a leader and a company. The real question is how that fine line can be drawn.

This conflict between the rules of conformity and the freedom of creativity calls for a delicate balance that is rarely resolved in the business world. The rules of conformity (and those who support them) almost always end up winning even if the company loses.

The successful leader discovers that, in practice, there are two kinds of rules:

“Rules of direction”
“Rules of performance”

Rules of direction dictate to people exactly what the task is and how to perform it to achieve a specific objective. On the other hand, rules of performance set forth the objective and define guidelines outlining what the organization will and will not do to achieve it. The striking difference is that the latter allows those charged with achieving the objective the freedom to determine the what and how part. Both rules promote structure and organization, but only the rules of performance allow for any innovation or creativity.

The Successful Approach is to Wisely Use Both Rules

My belief is that for a leader and a company to be successful, both types of rules need to be employed. There are certain repetitive functions that require constancy and consistency, but there are other activities that demand flexibility and freedom of action. The key is to be able to mix and match these two rules in a way that neither fosters chaos nor suppresses innovation.

This can be accomplished when you understand the difference between “dictates” and “guidelines.” Rules that dictate are for those you don’t trust. Guidelines are for those you respect. Give a person a rule and you take away thought. Give a person a guideline and you stimulate responsibility.

When I was working for the life insurance company, LifeUSA, we established “guidelines” for company direction and “rules of performance” for each department. The guidelines were simple and wide-ranging and once they were established for the company and each department agreed to the rules of performance, employees were free to figure out the best way to achieve the objective and implement their plans.

RulesHere is how to link these two crucial rules.

Obviously the overriding objective was for the company to survive and be successful. The “guiding operational principles” established to achieve the objective were that the company would never give up control of distribution, product development, administrative support (IT) or customer service.

Can you identify the rules implicit in these guidelines? They were simple but clear: We would sell our policies only through sales-agents tied directly to the company. No bankers or investment firms. Products would be priced and developed by internal actuaries who understood the philosophies of the company. Technical and administrative support and services would not be outsourced to a company over which we had no control. When a policyholder called our customer service, they would not be switched to someone in India.

Imagine the freedom! Once these company guidelines were communicated and agreed to, each department was empowered to develop its own “rules of performance” that outlined actions that would be taken to perform its designated function. The departments could develop any process or procedure thought to be most effective, just so long as they did not violate the established guidelines of the company.

Under this type of bifurcated rule system there was both control and freedom. Management had established guidelines that could not be violated and individuals had the freedom to offer and decide the best course of action to achieve the overall objective. It all comes down to a simple – but workable – philosophy. Rules of direction ruin. Rules of performance guide.

And the Moral of the Story …

You can’t avoid the rule that you are going to have to live with rules, but that does not mean that you can’t make rules work for you. The key to being a successful leader depends on understanding the different types of rules and the strength and weakness of each. Successful leaders realize that rules of direction send a clear signal of lack of trust, but when a leader has the confidence to rely on rules of performance, a message of respect and trust is communicated to the followers. And trust given will be trust returned; something essential for any leader to be successful. That’s the rule.

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Halloween Ghouls, Goblins and Goofs

October 26th, 2014 · Blog, Personalities in the News, Politics and Politicians Gone Awry

Sage advice to help you decide who or what you want to be this Halloween.

It is “Trick or Treat” time again. And for all of us who are not members of Congress, where every day seems like trick or treat, we have to decide what we are going to wear as a costume for our Halloween night out.

IMG950118Of course, if you were in Key West with me, your decision would be easy. During the Halloween “Fantasy Fest” (think of Mardi Gras gone bad) happening now in Key West, the most popular dress-up-and-go-out Halloween outfit is your birthday suit. The problem is that for many, their birthday suit sags in all the wrong places. Of course, that makes it even scarier when you see it. You almost don’t dare look.

If you are not into the costume thing but still want to have some ghoulish fun you could go to a Halloween party and about half-way through, start greeting and hugging everyone but admit you’re not feeling too well and describe Ebola-like symptoms.

If you are still undecided about your Halloween attire, take into account that popular regalia for adults (and we’re all adults here, aren’t we?) is to dress up like their favorite celebrity or political leader, so here are some suggestions that might help you out.

Barack Obama – Be the “ghost of leadership lost.” You could run around making aggressive and threatening noises. Then when people snicker and ignore you, you could just go on to the next house.

Joe Biden – Go out as an organ grinder’s monkey. You would have this cute little jacket (but no pants). You could jump up and down at the end of your leash, chattering away, but in a way that no one can understand what you’re saying.

Ray Rice – Simple but effective costume – just wear a wife-beater shirt.

Chris Christie – A no-brainer here: Dress as the “Stay-Puff Marshmallow Man” from Ghostbusters. Just make sure you don’t have to go through a tunnel on the way to the party.michele-bachmann-corndog

Michele Bachmann – Go to the party and offer an alternative to those who think Sarah Palin is too cerebral and rational. To complete the look, walk around nibbling on a foot-long corn dog on a stick.

Mitt Romney – Just dress up as a plastic mannequin with painted black hair (just like that Ronco infomercial). You can enhance the effect by spouting off-hand comments that make you appear to be a non-caring, out-of-touch elitist rich guy.

Adrian Peterson — Just wander around the party with a tree-switch threatening to discipline revelers (preferably those under age 8) who make too much noise.

Hillary Clinton – There are sooooo many options here: You could go as the erstwhile stalking girlfriend who just won’t go away, despite the fact you have moved on. Another option might be to dress as a scratched record (for my younger readers that would be like a damaged CD) that keeps playing the same song over and over and over again (“Why don’t you do right? … like some other men do.”) Do you think going as the “Wicked Witch of DC” would be too obvious?

Sarah Palin – Dress up as a carved-out empty pumpkin-head with a dim candle lighting up your face. By the way did you see Sarah’s Tweet letting us know that she was “praying for the people of Ebola”?

Ted Cruz (senator from Texas)Go out and present yourself as a cross-dressing male Sarah Palin.

rick-perry-gun-photoRick Perry – There are three costumes you could wear: A dumb cowboy who carries a gun and wears horned-rimmed glasses. A guy who is opposed to same sex marriage because he says that gets boring. And … Oh, I forget the third one.

Fox News and MSNBC – Go up to anyone at the party and as you talk distort, mislead and twist everything you see and hear.

CNN – Spend the entire night at the party running around yelling at the top of your voice BREAKING NEWS! BREAKING NEWS! BREAKING NEWS!

Mike Huckabee – Dress up as a fat, guitar-playing Jesus and claim that you are the second coming.

Now, I know there are a lot of other costumes you could wear for your Halloween party, but these are just a few suggestions to get you thinking. I would love to hear some of your thoughts and ideas.

Have a scary and fun time. I know we will in Key West!

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Teams Don’t Lead … Leaders Lead

October 19th, 2014 · Business Management, Politics and Politicians Gone Awry

Consensus is what you seek when you don’t really know what you seek.

After almost six years in the White House President Obama has consistently demonstrated a proclivity to deal with any problem or crisis by seeking a solution based on consensus and coalition. This has resulted in the impression – true or not – of Obama as a ponderous, indecisive and ineffective leader.

Considering Obama’s background as a constitutional lawyer, community organizer and even U.S. senator, it should not be a Obamasurprise that as president he would adopt this collegial, deliberative approach to problem solving. These qualities of consensus building and collaboration can be effective when confronting a problem – indeed are often required – when one lacks clear executive power, but they are ineffective ways to demonstrate the leadership demanded of those vested with power.

Rightly or wrongly, the American people expect their president to lead, not mediate. When it comes to leadership –especially political leadership – the dependence on consensus-building and coalition to set an objective or solve a problem are perceived to be signs of waffling and weakness, not resolve and confidence. It is one of the reasons why – having experienced power and its use in the public arena – state governors and military leaders have tended to be more effective presidents.

Same Old, Same Old

No matter what challenge or crisis that has confronted Obama – health care, immigration, Iraq, Afghanistan, the “Arab Spring,” Libya, Syria and now ISIS – the approach has been the same. He has offered the words of a leader, but the actions of a manager; and a bureaucratic one at that. In effect, Obama has made the most damaging mistake a leader can make and that is to promise more than can be delivered and to deliver less than has been promised. Those who seek to lead or are in positions of leadership must understand that it is the communication of a clear, consistent vision, combined with a focused commitment to a specific plan of action that creates the aura of leadership. In other words, to be successful, leaders must give followers a reason to follow.

Don’t get me wrong here, consensus and coalition are important tools in a leader’s arsenal, but they should never be used by a leader to determine what should be done; they are only effective when used to develop a plan for how the objective is achieved. Teams can be of value in determining actions needed to meet the goals of a plan, but they are ineffective at creating a plan. Teams don’t lead, leaders lead.


Examples of Obama’s inability to demonstrate clear, focused leadership – especially in foreign affairs – are too legion to list fully. After calling for and promising support for the expansion of democracy in the Middle-east and then standing on the sidelines as the tumultuous “Arab Spring” exploded, Obama gave the perception of out-of-touch leadership. The often repeated promise that Syrian leader Bashar al-Assad “must and will go,” and yet unwilling to take specific actions to achieve that end, only send a message of confusion and weakness. Remember the infamous “don’t cross this red-line or you will be sorry” message to al-Assad? And then when the line was crossed, Obama blinked and rushed for “consensus” from both friends and enemies to decide what to do. He had offered strong words, but his actions signaled vacillation and weakness of resolve. That is not the way to project strong, confident leadership! The irony is that this opened the door for Russia’s Putin to take the lead and receive the credit for solving the problem.

The projection of weakness always emboldens bullies. One has to wonder if Obama had a reputation for saying what he means and doing what he says, would Putin and Russia have at least thought twice about the incursion into the Ukraine and annexation of Crimea? Did Obama’s often repeated declaration that “the war in Iraq was over” and America would not be involved again embolden ISIS to act?

The threat from ISIS and how to confront it is just the latest example of Obama’s reliance on consensus and coalition that creates the image of confused weak leadership. He calls for the “total destruction” of ISIS, (which is probably impossible, short of nuclear war) but in the same speech limits the involvement of American power to do so and calls on other countries to step up with plans and actions. Obama then directs the arming of rebel groups in Syria to fight ISIA. The very same groups he refused to arm to fight al-Assad, because they were too dangerous to American interests. This does not portray an image – or reality – of clear, consistent leadership. Is it any wonder that other countries are standing back and doing nothing? Can you explain what Obama’s plan for the “total destruction” of ISIS is? That’s the problem, neither can he!

In fairness, any problem presented to a president is complex. There are no easy solutions and Obama is certainly not the first president who has failed to resolve the issues. But there are lessons here that any leader can learn. You can’t portray the image or reality of a strong leader by unequivocally stating that “American troops will not be involved” and then equivocating by slowly but surely creeping back into a war.

The responsibility of the leader – if they want to lead – is to develop, communicate and be committed to a vision that is reasoned, clear and achievable. What confidence will a leader engender by going to the followers and asking: What should we do? The ability to create a consensus and to enlist the support of others are valuable talents for a leader to develop, but they should be used to determine how to do something, not what to do.

Another lesson a leader can learn by observing Obama’s leadership style (or lack thereof) is the value of consistency. Nothing destroys the credibility of a leader faster than saying one thing and then failing to consistently – even stubbornly – stick to what was committed. We have seen the impact on the leadership perception of Obama when his only consistency has been to make commitment and then fail to stick to it. People may not – and really don’t have to – agree with the decision the leader has made, but when they can rely on the unwavering steadfastness of that decision, they will know what to do. Without that decisiveness, followers tend to be immobilized, waiting for the next change.

Reagan1And if you need an example of unremitting presidential decisiveness, recall Ronald Reagan’s leadership when in 1981 he fired virtually all 11,000 of the nation’s striking air traffic controllers. You may disagree with his decision, but you have to admire Reagan’s leadership on this issue and steadfast resolve to stand behind his decision which became viewed as “one of the most important events in late twentieth century U.S. labor history”.

That’s why weak leaders are so contemptuous; they hide behind “consensus and coalition” because this approach to a problem can tamp it down and delay making the tough decisions that will ultimately resolve the problem. This approach may hide a crisis, but the crisis will always return. And when it does, a new leader has probably been installed to meet it.

And the Moral of the Story …

The lesson here is that if you seek to be a leader – at any level – then you have to be willing to lead. As Obama has learned (or should have), leading is not following. The leader must be willing to stand up, stand out and even stand alone to identify, communicate and commit to a clear, attainable vision to problem solving and success. Only after that has been accomplished can consensus and coalition be used as tools to reach the desired objective.

The only path to success as a leader is to first understand that leaders lead and teams follow.

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