public rhetoric

My in-box is a Petri dish of engaged workforce issues. I see inquiries ranging from business owners wanting advice on how to cultivate engaged workforces to employees wanting to know how they can influence their bosses to include them, and everything in between. At some level, even the most autocratic boss recognizes that employees who care about doing a good job deliver more profit than employees who don’t. But how do we cultivate it? The answers involve every aspect of your business, but let’s focus on a narrow area of great importance for today’s post.

Imagine for a moment that you have taken a two-week culinary class at one of the most prestigious cooking schools in the country. Now you’re home, and hosting a dinner party for your best friends (who know where you’ve been and are expecting a pretty great meal). Do you go to Wal-Mart to buy the ingredients for dinner? Probably not.

There is nothing more important than the raw ingredients we start with in business, yet there is an astounding lack of understanding regarding how to hire them. This is true at all levels, by the way. Fortune 100 companies have access to the best B-school talent (I read somewhere that McKinsey & Co. had hired 10% of the 2003 Harvard MBA graduating class), so presumably they have access to the ‘best’ people. Yet in the past eight years there has been increasing demand for the B-schools to alter their curriculum, because the graduates they are turning out have little or no interpersonal skills. Business skills are important, but they aren’t the only determining factor.

Besides, many of the people we need to hire don’t require advanced or lower college degrees. Some of the positions for which we need to hire require certificates or special training, and some of them require no training at all other than the training we provide (another topic for sure). The ability to hire the best people is one of the most important, most under-rated, most misunderstood skills in the pantheon of business knowledge. Let’s demystify a portion of it right now by talking about the 11 most important questions you can ask in an employment interview.

1. Describe the most creative thing you have done in the past year. If you want engaged employees, you want people who consider their own lives to be interesting and worth engaging in! What you’re looking for in this answer is (a) the ability to choose something quickly and (b) a degree of enthusiasm about the creative pursuit.
2. What would their peers say about them? Ask them to imagine for a moment that in your search for a reference you went, not to their old boss or HR department (or teachers, if you are interviewing a very young person), but to their peers. You are looking for a sense of how they function in a team and whether they are conscious of their impact on others at their level. Most people have a sense of how to defer to authority, so true interpersonal skills and deficiencies tend to show up at the team level.
3. Please describe your decision-making approach. Ask them first to describe how they go about making a difficult decision (you may want to use an example, such as buying a car or buying a house). Then ask them to describe their decision-making approach in comparison with their peers.  Are they:
        [ ] Decisive and quick
        [ ] Sometimes too quick
        [ ] Very thorough
        [ ] Sometimes too slow
        [ ] Intuitive
        [ ] Inclined to go purely with facts
        [ ] Inclined to involve many people
        [ ] Inclined to involve few people
4. When presented with a new idea or skill that you must master, how do you go about learning it? No one learning style (visual, auditory, kinesthetic) is superior to another, and most people can’t tell you which one they favor. What you are looking for is that the individual understands how they go about mastering something, because this indicates whether they will be a self-managed learner.
5. Please describe a situation in which you were pressured to compromise your integrity, and how you handled it. Any person old enough to have a work permit has had at least one situation like this. You are looking for how well formed their ethical thinking is. Contrary to popular thought, much of our ethical development occurs in our late teens and young adulthood – not in our childhood. So be prepared for young adults with only a fuzzy grasp on ethics, and look for indications that the young adult is interested and trainable.
6. Other than your parents and grandparents, who have your greatest influences been? The answer to this question reveals what type of mentorship this person gravitates to – if any. People who won’t or can’t learn from others will be difficult to train and develop over time.
7. Five Strengths/Five Weaknesses. You know that question “tell me one weakness you have?” Get rid of it. 97% of the time you’ll get some smarmy response regarding how they are a workaholic or a perfectionist. Instead, take a hint from Marcus Buckingham and ask “can you tell me five of your strengths and five of your weaknesses?” Sure, you may get perfectionist and workaholic as two of their weaknesses, but they’ll have to work harder for the other three. This answer provides tremendous insight regarding how self-aware this person is and whether or not they are capable of and willing to be honest and a bit vulnerable.
8. Please describe your most significant accomplishment in your career to date. The answer to this question reveals character, personality, ability to learn, team skills, ability to accomplish results, pace, attitude, capability and potential. Look for results achieved and the process used to achieve results, and try to get a good understanding of the environment in which the accomplishment took place. If you are hiring a young person, let them answer this in terms of a school, camp, or other group accomplishment.
9. Prepare a job-specific, realistic problem that you will be dealing with in the exact job for which the candidate is interviewing.  Describe the problem in some detail, akin to a math story problem. Then ask the candidate “How would you handle the task if you were to get the job?”  Listen to their answer carefully, and if they haven’t already addressed these things, prompt them for:     [ ] How would they go about organizing it
        [ ] What resources would they need
        [ ] What would they do in the first few weeks
        [ ] What problems would they expect to encounter
        [ ] How would you plan it
        [ ] How long would it take
        [ ] What would they do first
10. Describe five things about the training, communication, or atmosphere of this company that would need to be present in order for you to feel satisfied and successful working for us. You can’t find the “right” employee if you don’t know what that means – and the reverse is true for your job candidates. You are looking for indications that the candidate is conscious of their role in achieving a good fit. If they are going to be entirely passive in this regard, they certainly won’t be engaged.
11. How would you finish the statement “People are . . .?”  Never ask this question until very late in the interview process. You want your candidate to be fairly relaxed and feeling like it’s nearly over. The reason this question is powerful is reflected in the saying as above, so below. Even if the interviewee has been conning you with socially appropriate answers (which hopefully you have been able to pick up on), their answer will reflect their general opinions about others and some truth about themselves. As with everything else, though, be sure to interpret their answer in context! I once had a guy respond immediately with the answer “people are dishonest!” Did that mean he was dishonest? Not at all. He was a retired FBI officer, and his answer reflected all his years of experience.

With these 11 questions you are assessing the candidate’s team, decision-making, learning, and problem-solving skills, their ethics and character, self-awareness, motivation, and general outlook. But please don’t assume these 11 questions represent a complete interview! They are just 11 questions that you should be certain to ask, in addition to the questions you will be asking regarding qualifications and specific job requirements.

I am a strong proponent of vigorous and lengthy interviews that explore granular detail about a person’s past education and job history, as well as a careful study of their personal characteristics. The interview process I designed for professional level candidates lasts a full day. When candidates register surprise at the length of time the interviewer wants to spend with them, I advise the interviewer to remind them that, if hired, they would likely spend years of their lives working together. Given the importance of everyone’s time, it is well worth the expenditure of one day to ensure a good fit.

Finally, don’t go to the effort of seeking employees who want to be – and are capable of being – engaged if you’re not going to encourage and reward that behavior. You’ll be wasting your time and theirs.  Just remember this aphorism . . . Be careful what you ask for, because that’s what you’ll get!

(c) Andrea M. Hill, 2007

I received lots of email on yesterday’s post, mostly breaking down into two camps – Camp A says it’s impossible to have a management team that develops trust and open communication, because politics will always get in the way, and Camp B says management teams aren’t the problem – indecisive and/or authoritative leadership is. Of the two types, people seem to far prefer authoritative leadership over indecisive.

There were some inquiries asking which one thing could make a management team noticeably more effective, and some curiosity about my comment about making meetings matter. In fact, meetings can contribute significantly to management effectiveness.

Don’t guffaw now. I know very few people ever get to sit in a meeting that isn’t a complete waste of time. But ineffective meetings are one of the easiest management nightmares to fix, because the fix is 80% process and 20% willingness.

Start with an agenda. That’s original, right? But bear with me for a moment. Here are a few quick steps for a better meeting:

1. Ask for agenda items in advance

2. Ask how long each agenda item is expected to take

3. Ask what the expected outcome is for each agenda item. This one is tricky. This doesn’t mean that the person looking for approval for a budgetary item lists “approval of budgetary item” as the expected outcome. This means that the outcome will be “information sharing only,” or “a discussion to get everyone’s opinion prior to making a decision,” or “a final decision,” or “an agreement whether or not to pursue further research,” an “agreement about whether or not to shelve the project,” etc. Attendees need to know what is expected of them in terms of contribution.

4. Ask who is responsible for keeping that agenda item within the time frame and on track to achieve the objective.

5. Prioritize the agenda items – most important first to least important last.

6. Post the agenda (or pass out the agenda at the beginning of the meeting) with all of those details listed. It’s just a little 4-column form with Agenda Item/Time/Outcome/Responsible Party at the top.

7. NEVER schedule a meeting with more agenda items than time available. Be careful with this one! People will start underestimating the time their agenda items will take, so you have to watch out for this effect. If your agenda items exceed the meeting time available, push lower priority items to the next meeting or ask attendees in advance if the meeting should be scheduled for a longer time frame.

8. Identify who the meeting facilitator is. This should not necessarily be the most senior person at the meeting! This should be the person with the best facilitation skills, who can use respectful humor combined with prodding to keep the meeting on track.

9. Always have a minute taker! Meetings without minutes are like vows made while under the influence – they just don’t stick.

10. Never leave an agenda item without a resolution. If the resolution is that more information is needed, then schedule who is doing what by when. Every attendee’s goal for the meeting should be to achieve the desired outcomes listed on the agenda.

11. At the end of the meeting, before anyone leaves the room, review the decisions made and actions assigned during the meeting. An action without a responsible party attached isn’t going to get done.

Regarding point number 3 – why is it so important to list the desired outcome? What frequently happens in meetings is that people don’t know what they are supposed to do. One of my past clients was having terrible meetings and his management team was frustrated with him. I sat in on a meeting and realized that what my client wanted was input so he could make a decision, and what the management team thought he wanted was a decision. So the management team would recommend a decision, the client would become frustrated because he wasn’t ready to make the decision, and everyone would get defensive.

I suggested that he be clear with the group regarding his expectations, and say “I’m going to make this decision on my own, but I want to make it fully informed of your input and ideas. So this agenda item is meant to be a rich discussion presenting all the viewpoints, and then I’ll take it all under consideration and let you know my decision next week.”

At first my client was worried about this approach. While he had every intention of making the decision on his own, his worry was that it wasn’t politic to be so obvious that he was going to make the decision on his own. I assured him that people would much rather be told the truth than to feel like he was yanking their chain, and to give it a try. It worked like a charm. Did a few people grumble later? Probably. But his leadership was clear and everyone benefited from the (much) more productive meeting.

Too often people schedule agenda items for which they are not clear themselves what they expect to achieve. Forcing them to think about this before the meeting makes a huge difference in meeting effectiveness.

Now let’s look at point number 8. What exactly does on track mean? On track means the discussion is appropriate to arrive at the identified desired outcome. A number of derailments can present themselves along the way – some acceptable, some not.

• New Item: If someone brings up a topic that is related but not necessary to achieve the desired outcome, write it on the whiteboard (oh, by the way, NEVER have a meeting without a whiteboard. You need to write agreements and check off agenda items visibly, or you will have a helluva time keeping the meeting on track) – write the related-but-not-necessary idea off to the side somewhere on the whiteboard, and tell the attendees you are putting it ‘in the bank.’ When you review the action items from the meeting, ask if the items in the bank need to be on a future agenda, and who will be responsible for them.

• Argument: This never happens, right? If two parties in the meeting get into an argument, let them try to work it out for a few moments. As long as they aren’t getting personal and are articulating the points of conflict clearly, you might be OK. But as soon as entrenchment seems to take hold, or the argument gets nasty, you need to bench the argument and give the arguers time to cool off. An argument with emotion attached can derail an entire meeting, which isn’t productive. If the arguers can resume their agenda item with cooler heads before the end of the meeting, fine. If not, ask them to convene a private meeting between the two of them and work out an acceptable solution to present – together – to the next meeting. It’s amazing how productive some arguers can become once there is no longer an audience for their posturing.

• New Information: What about when the group comes up with something that really needs to be discussed, but wasn’t considered when the agenda item was initiated? Don’t sacrifice content for the sake of keeping a meeting on track! The facilitator needs to be able to recognize when an important idea is forming. At that point, his job is to say, “it looks like this is important, and it wasn’t allotted time on this agenda. Should we reprioritize the agenda items now to allow the conversation to take place, should we extend the time allotted for the meeting today, or should we push this discussion to its own meeting? This provides clarity to the group, allows for schedules, interests, and other agenda items to be considered, and allows the conversation to take place.

There are a lot of other ways to make meetings more powerful, to develop strong facilitators (sometimes out of the most surprising people!), and to become more effective as a management team. Did I say at the beginning of this post that this was going to be quick? Sorry. It wasn’t. But I’m sure it was less interminable than some of the meetings you’re attending!

(c) Andrea M. Hill, 2007

Business theorists love to argue about the difference between management and leadership. I agree with Jim Collins’ assessment that one of the steps on the way to becoming a strong leader is to first have command of excellent management skills. Some people never go beyond manager to leader, and that’s fine, because being a manager is worthy work. But anyone who thinks they can be a leader without successful management experience is fooling themselves. That’s like trying to do Algebra III without having first memorized the multiplication tables. 

A leader’s biggest job is to get the management team engaged, which requires mastery of management skills combined with strategic vision and the willingness and ability to guide and develop others.

A company I am working with wants help building a more cohesive management team. I always start with this question: “What is the problem or situation that caused you to seek outside help?”

Client: “Well, it just seems like our management team doesn’t get along very well.”

Me: “Are they hostile?”

Client: “No. Well, not most of them. They get along in small groups. Sometimes some of the individuals are hostile to others, but there’s no general sense of hostility.”

Me: “Are they capable of tackling business objectives together?”

Client: “If they all agreed with it in the first place.”

Me: “How often does that happen?”

Client: “Not very often. Well, I can’t really tell. I suspect most of the talking happens outside our management meetings.”

Me: “What would ‘cohesive’ look like to you? What would you like to get out of this?

Client: “I’m not even sure I know. I just know there has to be a better way to do this.”

There is a better way. It’s not easy, and if anyone thinks it’s going to happen over a period of months, they’ll be sorely disappointed. But building a management team that works well together is both possible and rewarding. Key elements to consider when developing your high-performance team include:

1. Culture.  Know your business proposition and culture. If you have established your business as a technology and product leader, you need to build a management team capable of healthy competition. If you have established your business as a customer relationship company, then you need a management team that can collaborate. If you are a low price leader, then you need to build a management team that can carefully control the organization. If you don’t get this first element right, none of the other elements will pay off to their full potential.

2. Know Your Management Team’s Individual Qualities.  Most leaders don’t get to start their management teams from scratch. If they did, they would hire people who had strong personal characteristics related to the business proposition types above. Awareness of each management team member’s strengths and weaknesses – not just in terms of professional skill, but in terms of relevant cultural characteristics and interpersonal abilities – is essential. Most people can work in more than one type of culture. Leadership’s responsibility is to clarify what the culture is and model it.  CAVEAT:  Mind the highly destructive person in your management midst. They encourage cliques as a way to build their own power. They are cynical, criticize everything they didn’t have a hand in creating, and they believe they are smarter than everyone else (how do you know this? They have a tendency to say it out loud). They encourage others to participate in bad behavior then sit back and watch the results. They are poison. You can’t start from scratch, but you can get rid of that one person and watch how fast the personality of your management team changes.

3. Honesty and Openness.  Forget the management retreat with ropes course and trust falls – those things don’t work. This is the step that takes a while. You say what you want and you model it. Start by being honest with your management team. Let them know what you want to create – in terms of culture, team behavior, and achievement – and get them talking about it. This does not happen in one meeting! Keep ‘management culture’ on the agenda, and promote regular discussions about how the team is progressing toward the vision you have established.

4. Communication Ground Rules.  Set them. Debate is healthy and important, but make agreements with the group regarding what the ground rules will be to ensure everyone is treated with dignity and respect. Make it clear that crossing the line will result in a time out. A very important ground rule for the leader is to make sure that when someone crosses the line and gets called on it that IS the repercussion. Why? Because at first – particularly if your management team has a habit of dirty arguments – they won’t know how to follow the new ground rules. If they can stay loose (i.e., not afraid or cynical), they will pick up the new behaviors quickly. But if the new situation is threatening, you’ll just replace dirty arguments with repression. You may need to have a conversation with one or two folks if they repeatedly have time-outs called on them, but you will be surprised at how quickly the nature of debate in your management team changes.  Some people will begin to participate that opted out before, and others will make it a little safer than they once did.

5. Business Clarity.  I’m trying not to write a book here, so I’m condensing points 5 through 10 or 15 into one thought. If your vision, strategy, organizational design and control methods aren’t well developed, all the openness, communication ground rules and healthy human beings in the world won’t give you a cohesive management team. There has to be a clear plan, and you have to follow it and continuously review it. Have you ever noticed how your children start fighting on a rainy day? It’s because they’re bored and they have nothing else to do. This is true in businesses as well. When people don’t have a clear sense of where they are going and how they are going to get there they disintegrate into camps that bicker and do other dysfunctional things. Business clarity is the responsibility of the leader. It can be contributed to by the group, but every social structure craves leadership.

6. Practice Success.  Never leave a meeting with decisions un-made and direction unclear. This throws fuel on the fire of dysfunction. Even if your decision is akin to “OK, we don’t have enough information to make a decision. So, who is responsible for developing answers to A., B., and C., and on what day will each of you have your work done?” – that’s action and that’s success. The best way for a management team to become cohesive is for them to be successful working together – and effective management meetings can be a forum for that (though I realize many people can’t even picture an effective management meeting).  Get your team members working together on projects, but make sure you provide clear expectations and direction. If you don’t, they’ll go off and flounder with one another, followed by one of those rainy-day experiences.

Getting a management team engaged is both financially and personally rewarding. The concepts described here are only the barest bones of an explanation in how to achieve this. But you can certainly start here.

(c) Andrea M. Hill, 2007

Buying or making one product and selling it at a good margin does not a business make. Well, that’s not entirely true. If you’re George Steinbrenner and you can sell the Yankees for $1.5 billion after buying it for $10 million – even if it was some 35 years ago – that’s not a bad deal. But for the rest of us mere mortals who don’t live on the back pages of the tabloids, velocity, multipliers and marginal utilities matter.

The rate at which cash moves through the system is called “throughput,” and it’s the single biggest driver for business profitability and cash flow (Goldratt, 1990). Evoking Ram Charan in my posting yesterday got me thinking about his favorite example. As I mentioned, he compares Harvard MBAs to third world street vendors and finds the MBAs lacking. In the example he uses, he describes how a street vendor intuitively knows not just how much they buy and sell their goods for, but how many times they must buy and sell those goods, and at what margins, to generate enough cash to feed their families.

The average uneducated third world street vendor can rapidly calculate not only the margin, but the velocity needed, to be a sufficiently profitable business. If they can buy and sell 10 baskets of apples 3 times per week and sell them at a 10% profit, they net $3.00. But if they can buy and sell 10 baskets of apples 7 times per week at a 5% profit, they net $3.50. That’s nearly a 17% increase over their higher margin “opportunity.”

OK, most Harvard grads understand this point. But what a lot of business people don’t get is the next idea, which doesn’t seem to elude third world street vendors one bit.

You see, the apple seller realizes that they can keep selling apples at the velocities and margins described above – after all, people always need apples. But say they recognize that what is really in demand a few times each year are oranges. The apple seller doesn’t have the capital to sell both oranges and apples. But the opportunity is in oranges, and even though the apple seller is called “The Apple Seller,” which is a pretty significant personal identity connection to one’s business, do they stick to apples out of emotion or devotion? Heck no. They have to face their hungry children at night. They switch to oranges (or Nike tennis shoes, or batteries, or chicken jerky) because the opportunity is better there and they recognize they do not have enough resources to invest in weaker opportunities when stronger opportunities are present.

This is the part the MBA students (and most owners of business) don’t get. It comes from marginalist theory, and it says that in an economy, the marginal utility of a quantity is related to the best good or service that can be purchased with available currency. Of course, if you have unlimited resources, it doesn’t matter, does it? You can splurge your resources on limited profitability and limited velocity (which is more often the culprit) goods because you have more than enough currency to invest in the rest of your business.

But as I said at the beginning of the article, back to the rest of us mere mortals. Say we have a good (or, in my case, a service) that we love to sell. It suits our identity, our personality, and it’s fun for us. We love it, so why wouldn’t everyone else? And besides, we make some money on it. And all profit dollars are the same, right?  Wrong!  Wrong wrong wrong wrong wrong! We don’t have unlimited resources. To be successful businesspeople we must honor the marginal utility of our currency and only invest our dollars in the items that will provide the sheer throughput to generate more wealth.

When we are George Steinbrenner and have, perhaps not as much money as Bill Gates, but way more than enough to never worry about money again, we can invest in personal pleasures and pretend it’s business. But barring that level of liquidity and comfort, only constant attention to velocity and marginal utility will allow us to sleep well at night.

Goldratt, E. M. (1990). What is this thing called theory of constraints and how should it be implemented? Croton-on-Hudson, NY: North River Press.

(c) Andrea M. Hill, 2007

We bought a new used car for our son the other day, his first. I set the lowest budget I could set while still finding something safe, and started prowling the newspapers and Craigslist looking for my ideal buy. After weeks of distraction, escalating distrust of other humans, and a really scary fully armed guy named Hamid (why would you show up to meet a potential buyer of your Mazda 3-series truck fully armed???), I did what I have done for the last 10 cars. I went up to Beaver Toyota in Santa Fe, spent a bit more than planned, and bought a car in less than one hour.

I told our salesperson the story and he laughed, because he remembers me telling a nearly identical story back when we bought our daughter her car five years ago. I’m not sure why I shopped around first – maybe to convince myself I’d tried to find something less expensive. But I trust Beaver Toyota, and that’s where I always end up.

The service manager Frank always remembers me and my family, even though he only sees us once or twice a year. Alan and Aspen and Audrey (I’m sure they hire salespeople that start with other letters) have been incredibly honest and fair with us. The general manager Matt is a real person who comes out and meets with customers and demonstrates that he cares about what we have to say.

We’re not the only devotees of Beaver Toyota. They enjoy cult status throughout much of the state because they treat their customers so well. I can’t imagine they even need to advertise – their referral business must be astounding. But they are doing something that violates the brand they have so carefully created, and it’s worth considering.

About four weeks ago my phone rang, and I answered it, and a recorded voice said “while you were out the following message was left for you.” Then a recording of the voice of the Matt (the GM at Beaver Toyota) came on, reminding me that the lease on my Avalon was almost up and how much they want to be our dealer of choice when the time comes to turn it in. It was clearly a pre-recorded piece of marketing.

Yesterday I got the same sort of call. The GMs voice comes on (after the “while you were out” intro) and thanks me for purchasing our car at Beaver Toyota. All I could think of was that it would be better not to get a call at all than to get a pre-recorded message that required no actual consideration by any person at the dealership.

I will continue to buy cars from Beaver Toyota, because they are so good. But why are they doing fake customer attention when their real customer attention is so beyond the pale? This dissonance is an example of what happens when even one detail of your operations, sales, or marketing fails to be consistent with the brand you have created.

(c) Andrea M. Hill, 2007

You may remember Malden Mills, the maker of Polartec who suffered a catastrophic fire in the mid-90s and made headlines for spending millions protecting its employees and the town from economic disaster. At a time when American business was becoming known for looking for every possible opportunity to move their plants to Mexico and China, Malden Mills’ owner Aaron Feuerstein believed wholeheartedly that if he could just keep the company growing enough to create new opportunities for workers displaced by lower labor rates and new technology, he could keep his manufacturing in the United States.

Hindsight, of course, is not 20/20 (why do people always think it is? Hindsight is still cluttered by the filters of our interpretations, the information we’ve allowed to get in, and the information we’ve refused to process. But I digress). Malden Mills went through three rounds of bankruptcy, and ultimately was sold to private equity group Crysalis Capital Partners, L.P. in early May of 2007. For now, they’ve negotiated a 3 ½ year agreement with the unions to keep the two U.S. plants open and the workers employed.

All profiles of Mr. Feuerstein indicate he is a deeply ethical man, and I can’t find any evidence of people observing him to be less than intelligent or astute. But still, everyone wondered why he was spending so much money – and (hindsight again) putting the whole company at risk of bankruptcy. Some believed Feuerstein was a folk hero, and some believed he was a self-righteous fool, but the truth was more complicated than either view.

In an article in Fortune Magazine presciently titled Not a Fool, Not a Saint, author Thomas Teal wrote, “It’s here he (Feuerstein) has shown his real genius. Any idiot with a strong enough stomach can make quick money, sometimes a lot of it, by slashing costs and milking customers, employees, or a company’s reputation. But clearly that’s not the way to make a lot of money for a long time. The way to do that is to create so much value that your customers wouldn’t dream of looking for another supplier. Indeed, the idea is to build a value creation system of superior products, service, teamwork, productivity, and cooperation with the buyer. Reduced to its essence, that means superior technology and superior employees.” (p. 203).

This description of value creation is at the heart of the concept of branding, and it’s the heart of branding that business still does not understand well enough. As I’ve mentioned before, branding is far more than an expensive ad campaign and protection of an image. Branding is the alignment of all the elements of an organization to create a compellingly consistent experience for customers.

From what I can tell, what Feuerstein failed to master in the coming years was the alignment of leadership and management with the business drivers necessary to complete their recovery. His subsequent bankruptcies have been generally blamed on overbuilding following the fire. But why did the overleveraging occur?

Most companies use debt to finance operations, and it’s smart to do so. Under-leveraging can cause a company to increase its equity without successfully investing in its long-term value. The decision to use debt for the purpose of growth (which was Feuerstein’s stated goal) should have been accompanied by strenuous management planning and research, challenging their own ideas, and developing a plan for the most bulletproof operational deployment of debt they could develop. It should also have been accompanied by divestment of any non-performing units to ensure the debt injection wasn’t wasted shoring up ventures that lacked adequate potential.

I don’t know that these things weren’t done. I’ve searched for creditable case studies on the internal operations of Malden Mills between 1996 and 2006 and I haven’t found any. Excellent planning and execution don’t provide ironclad guarantees of business success in a world that throws healthy doses of chance at us on a regular basis. But the potential for success is bestowed much more liberally on those businesses that know how to plan and align than those that don’t.

This is the point at which Branding 3.0 begins. Branding 2.0 is being hailed as the flowering of brand’s promise, but it’s still pretty superficial out there. The ingredients necessary to achieve a brand’s promise (or, in the case of Malden Mills, recovery) don’t have to do with public recognition or warm fuzzy feelings. The ingredients are those necessary to create staying power.

(1) Building a leadership and management group from the best ingredients you can find (inter-personal and professional skills required),

(2) crafting or refining strategy so the focus is clear, unarguable, and can be communicated like a virus throughout the organization,

(3) making sure the business organization (department alignments, roles and responsibilities, and physical space) is designed to serve the strategy so no policy worms or hidden agendas can develop enough power to nudge the organization off its course,

(4) establishing metric and incentive controls to drive performance according to the needs of the strategy – again, mitigating the influence of undermining agendas and the less-sinister-but-just-as-deadly blight of uninformed action, and

(5) having the skill and discipline to lead and manage (both are necessary) the organization to achieve its goals.

The Fortune article had it right. To “create so much value that your customers wouldn’t dream of looking for another supplier. . . to build a value creation system of superior products, service, teamwork, productivity, and cooperation with the buyer” is the promised land for corporate America. It’s not sexy. It doesn’t get you dinners at fancy restaurants and tickets to major league sporting events by media salespeople. It’s not easy. It requires tremendous discipline. But for organizations who know how to get their management in alignment with their vision of success, it creates two compelling opportunities.

First, profit. Which leads to (second) the ability to do the right things for the employees and communities who rely on your business for financial well-being. Yes, right action begets right action. But this saying is too often interpreted solely in its altruistic sense. The right action of which I speak is the right management, right planning and right leadership action necessary to run a profitable business that will fund the rest of our altruistic notions.

Teal, T. (1996). Not a fool, not a saint. Fortune, (Nov. 11, 1996) 134, 201, 201 203.

(c) Andrea M. Hill, 2007

I spent yesterday at a local spa, working out the kinks, of which there were a lot more than I realized. I started going to that spa when they opened six or seven years ago, and back then, the owner gave me a tour. It was the kind of tour all of us would give if we had just spent nearly a million dollars building our dream business. Yes, it was a tour of the facilities, but really, it was an excursion through all of her hopes and expectations.

I remember her focus on building a European spa with the peaceful visual, audio and olfactory stimulation a person wants when they set aside time and money to unwind. She had splurged on tapestries and paint, sound systems and furniture, products and linens. It was over-the-top ornate, and as she described what she was trying to accomplish, it made complete sense. I really enjoyed that tour, and her enthusiasm for what she wanted to create for her customers.

Over the years I have noticed a slight, ongoing decline in her standards. The robes have become frayed and have not been replaced, nor have the towels, which have become thin. The Kleenex boxes in the ladies’ lounge are the industrial type, hard on the skin and hard on the eye. The paint is peeling in a number of places, and has not been repaired. A hair dryer broke but was left hanging on the wall. Shower heads are gummed with hard water which affects them mechanically and visually. Of greater concern are the people. Good massage therapists and aestheticians don’t last long . The practitioners who stay convey both overtly and covertly their dissatisfaction with their jobs.

What happened? Two things. First, the owner doesn’t understand that the primary responsibility of any business owner is to provide excellent, confidence-building leadership to their staff, whom they must treat with great regard. Second, she doesn’t understand that it’s all the little details that count.

I got a whiff of the leadership faltering within the first year or two. After building this magnificent spa – and getting her contractor’s license to do it – the owner was swept up with a passion for building and decided to start building houses. Taking her eye off her core revenue driver, she left the spa group to a succession of store managers who were unable to provide anything but day-to-day firefighting. This particular owner is capable of leadership but not providing it (IMHO). Some owners aren’t even capable of leadership – in which case they need to recognize that honestly and put someone in place who is. There’s another reality that goes with leadership, and that’s that the people who work for you clamor for your attention and development at all times. If you’re not in the trenches with them, appreciating them as humans and seeing directly what they do well and where they could improve, they become no more than a bunch of people who want to suck your payroll budget dry every two weeks and your energy dry every day. The ability to appreciate people is not equal among all business leaders, but even someone who is capable of it will not be able to adequately demonstrate it if they don’t know their people well. 

Now to the details. Have you ever been in a home that was well built with nice flowing lines and energy movement, and then noticed that the cheapest faucet and light fixtures were used? Or that the molding wasn’t completed in some places? Have you ever been to a lovely dinner party where great attention was paid to place settings and ambiance, but the food was clearly substandard? It’s the details that affect our impressions and experiences, and businesses forget this at their own risk.

The critical details differ from business to business. If a business chooses lowest-price-always as its business proposition, then details around store set-up have to reinforce the impression that everything is dedicated to keeping prices down. Putting plush waiting areas and expensive fixtures around the store will cause consumers to wonder how much lower their prices could have been. If a business chooses product superiority as their business proposition, failing to hire an appropriate industrial designer could tank the product even if the insides are great. And if a business chooses customer intimacy as its business proposition (really, the only strong option for a spa), then fails to pay appropriate attention to things like plushness of towels and softness of Kleenex, the substandard aspects of the experience will register with customers whether they realize that’s what they’re doing or not.

Will the spa stay in business? Yes, I think it will. Will they make money? Yes, probably even that. But will they achieve their true potential in earnings and customer retention? Likely not. And that’s unfortunate, because the idea is a good one.

Let’s not run around with our standards slips showing. Know what the important details are, and invest in them. The results will astound you.

(c) Andrea M. Hill, 2007