Ignite Business Growth with Productivity

March 16th, 2012

A top concern of CEOs is business growth and strategies that produce the greatest impact with the least amount of risk and effort.  One of the most overlooked strategies is productivity improvement.  Focusing on processes, enabling technology, employee performance and retention can have a significant impact on growth without the need for significant capital investment.

Processes change over time as new people adapt them to the way they work, leading to unrecognized inefficiencies. Calling teams together to review and streamline their processes creates savings by reducing cycle time, increasing capacity or eliminating waste. This is a good time to focus on product quality, something that will directly improve sales and customer referrals.

Information technology provides both a big picture and a detailed view of all aspects of your operations. Companies like Wal-Mart have discovered new insights and control that keeps costs low and product availability high. This gives them a huge cost advantage over their competition. New social media tools can help develop stronger relationships with your customers.

Investing in your employees can return significant value in productivity. There are four main opportunities: accelerating new hire competency, retention, increasing workforce performance and minimizing risk of knowledge loss from departing high-level employees.

You have two goals with new hires: building their knowledge and skills about “how to get work done here” and retaining them for more than a year or two. Accelerating competency cuts the time needed to generate positive cash flow and produces increasing revenue each year.

Retaining employees is becoming a major problem in today’s market as over 80% of employees may be thinking about leaving their current jobs2. Turnover is expensive. Studies have reported costs of 30-50% of the annual salary to replace entry-level employees, and 300% or more for specialized, high level employees and managers3. My experience is that investing in employee development can significantly increase retention.

What if all of your employees could perform at levels closer to the best? Managers know their top performers. There are straightforward ways to help your experts identify details of how they work and then mentor others to spread knowledge and increases capabilities. Reinforcing these behaviors can lead to a more collaborative culture and significant gains in productivity.

Do you have highly skilled employees with unique expertise? It is a good practice to develop succession plans for them that provides enough time for shadowing and mentoring .When you only have a few months there are ways to elicit the essential expertise. Your successor won’t be performing at the expert’s level, but will have a great head start on recognizing and handling the most critical situations.

So, where should you start? One suggestion is a business growth opportunity assessment covering areas of marketing, customer relationship, productivity, innovation, cost reduction and talent development. This will help you develop your own risk-prioritized opportunities to take your business to the next level.

  1. How to Increase Your Profits – A Checklist
  2. 84% of Workers Looking to Leave Jobs, CBS
  3. Costs of Employee Turnover, AARP, 2011

What Keeps Your CEO Awake?

January 16th, 2012

Annual surveys by The Conference Board (CB) and PricewaterhouseCoopers (PwC) ask hundreds of CEOs to identify their top business priorities. In 2011, both surveys found very similar results. The Conference Board identified and ranked the following priorities:

  1. Business growth
  2. Talent development
  3. Cost optimization
  4. Innovation
  5. Government regulations

It is not surprising that all of the challenges relate to business growth. Talent, cost and innovation are clearly sources for both top and bottom line growth in both revenue and markets. Government regulation varies widely on a global scale; it can create obstacles or provide assistance.

The CB survey also asked about specific strategies that CEOs planned to implement for each challenge. As summarized below, strategies focus on business elements ranging from products and services to processes, business models and organization structure. Talent management and innovation are common themes. Effective execution will require alignment, coordination and teamwork across multiple business units and corporate functions.

Top Strategies for U.S. CEOs

Business growth relies on new ideas, new products and new markets, all of which are dependent on people with the right skills, experience and relationships. Strategies include: introducing innovation and new value propositions, entering or expanding into new customer segments and entering or expanding into emerging markets.

Talent development processes are recognized as key business strategies for the entire workforce. Strategies include: improving leadership development programs to grow talent internally; enhancing effectiveness of the senior management team; providing employee training and development and improving leadership succession planning. Employee skills and experience at all levels need to be aligned with innovation and productivity goals.

Cost Optimization in the form of continual improvements in processes and productivity are critical to dealing with rapid change, increased competition and sustainable long-term growth.  Strategies include: redesigning business processes, improving employee productivity, investing in new technologies and automation and achieving economies of scale. Outsourcing and downsizing rank far down the list.

Innovation is another critical driver of business growth that focuses on culture, talent, technology and strategic partnerships. Strategies include: applying new technologies (e.g., product, process, and information); fostering entrepreneurship, innovation, and appropriate risk taking; engaging in strategic alliances with customers, suppliers, and/or other business partners and finding, engaging, and motivating key talent. Strong, consistent leadership is necessary to build a culture that can balance the short-term focus on cost and productivity with the longer-term rewards and risk-taking necessary for innovation.

The PwC survey presents additional insights on growth, talent and innovation. As the global economy picks up, business growth is targeting increased revenues in regions where recoveries are strong. CEOs identified three focal points to drive strategic change internationally: innovation, talent and a shared agenda with government.

Strategies for managing talent are seeing the largest increase in effort as “66% of CEOs report that a lack of the right skills is their biggest challenge.” Compared to the last few years of cost cutting, lower hiring and less than anticipated retirement, companies are now seeing shortages of people with the right skills, particularly in their target international markets. PwC’s report draws the following conclusions:

  • The talent crisis is here and is threatening business growth and prosperity.
  • There is a lack of understanding of what talent management really means and how to create a sustainable talent pipeline for the long term.
  • Many companies do not know who their key talent is and whether existing incentive models sufficiently reduce the risks and impact of losing that talent.
  • Only the most forward looking companies are executing processes most likely to deliver real competitive advantage. Most are doing what they’ve always done, which may not be good enough.
  • The HR function will be a critical business partner in achieving long-term growth. They need to be accountable for the strategic thinking about human capital and for helping business units execute necessary actions.

The PwC report also contains an in-depth assessment of innovation practices. That section establishes the imperative for innovation; it highlights several management misconceptions and how to correct them and it describes how to set the stage for success.

Today’s CEOs are facing significant challenges and strenuous competition in achieving desired business growth. Forces such as globalization and information technology have leveled the business playing field. People will be the major differentiator. Talent and skills, workforce performance, productivity and innovation supported by a culture that develops and rewards employees and creates successful partnerships are common threads that connect the top priority challenges and strategies. Successful, sustained efforts in these areas will require strong, consistent and visionary leadership.

References:

  • “The Conference Board CEO Challenge 2011: Fueling Business Growth with Innovation and Talent Development”, The Conference Board, 2011
  • “14th Annual CEO Survey”, PricewaterhouseCoopers, 2011

Is Knowledge Really Manageable?

January 10th, 2012

The question: “What Is Knowledge Management?” has been a perennial and controversial topic for more than twenty years.  New practitioners look for a good foundation for their work while business leaders want to understand the value proposition.

One issue is that the KM discipline has three focus areas: processes, behaviors and technology. Like the old story of the blind men and the elephant, vendors, consultants and internal practitioners touch the subject with different mindsets. A large faction worries about “the best tool” while others focus on alignment with business strategies or shaping behaviors. All are necessary. A hard core claims that you can’t even manage knowledge, only information.

Let’s look at the terms “knowledge” and “management”. My favorite definition of knowledge is: A human capability resulting from an understanding of and interpretation within a context of information, principles and experience that enables effective action. This definition has three key elements: human, action and context.

Context is our personal mental model. It includes the principles we’ve learned through formal education and explicit rules of thumb gained from experience. However, much of our experience remains unorganized as tacit stimulus and response patterns created over years of practice.

Think of context as an infinite puzzle. As we learn from our experiences or those conveyed by our colleagues we convert information to new knowledge pieces. A larger context has significant value. It enables a more complete situation analysis and provides more alternatives to consider for effective action. A more complete picture makes it easier to identify what you don’t know so that you can fill the gaps. It also enables us to make novel connections that lead to innovative ideas.

Learning represents the processes we use to expand our knowledge. The fastest and best way to learn is through conversation with someone having the knowledge we need. This process allows the learner to ask questions that smooth rough edges to help fit the new information or practice into their own context.

Alternatively, experts who are able to clearly articulate portions of their context can create documents that are explicit representations of their principles, facts or practices. If the learner’s context has sufficient background, the new ideas can be rapidly incorporated. If not, the document may not make sense and the learner will need to think about and actively practice with the new concepts before converting them to operational knowledge.

Conversations and written documents are two forms of information. Both are practical ways for a person or group to transfer what they “know” to others. But information only becomes knowledge when a person’s context can make sense of it. Without that foundation, the information may be meaningless or even used incorrectly. Context helps explain why knowledge is a human capability and why websites can only contain information.

A definition of management is: The organization and coordination of the activities of a group of people to achieve desired goals and objectives. The key term is “activities”. People and activities are tangible and observable. In the same way, information is tangible with observable activities such as creation and organization. Information can be managed. Knowledge and the mental processes that create it are much less tangible. Literally, “managing” knowledge is a very difficult objective.

On the other hand, we can effectively manage the transfer or flow of knowledge from person to person through activities such as teaching, mentoring and targeted work assignments. To me, this is the essence of the practice of knowledge management. I’ll have much more to share on this topic in future posts.

Book Review – That Used To Be Us

January 10th, 2012

That Used to Be Us”, by Thomas L. Friedman and Michael Mandelbaum, Farrar, Straus and Giroux (2011)

(Listen to the authors’ introduction)

America, considered the world’s dominant political, economic, cultural and philanthropic force for most of the twentieth century, is struggling to remain a superpower. Since the end of the Cold War, the nature of life and work has changed slowly but relentlessly. Friedman and Mandelbaum recount the many alterations: we’ve outsourced much of our blue collar manufacturing jobs, other countries now supply talented white collar resources at lower cost, infrastructure is crumbling, and a partisan legislature is largely paralyzed – forgetting how to compromise but not how to spend. Progress is slowing to a crawl; we’ve lost our focus and our optimism is turning into frustration. We’re lamenting: “That used to be us” while China is striving to take our place.

The authors identify four major forces responsible for changing the playing field: globalization, information technology, soaring budget deficits and the energy demand and climate change imbalance. Most of us seem to have been caught by surprise. It took decades to get to the current state. There aren’t any quick solutions.

The authors recommend a package of long-term actions including: political compromise on regulation, immigration, taxes and spending; accepting the reality of global warming; reducing our reliance on fossil fuels and achieving major changes in the education system.

A focus on knowledge and knowledge transfer is an important factor. Millennials are entering the workforce with suboptimal math, science and critical thinking skills. Older generations need to be reskilled as their jobs have changed due to globalization and digital technologies. Policies and shaping behaviors affecting learning, saving and entrepreneurialism need to be priorities.

The problems and proposed solutions are not new. But Friedman and Mandelbaum have done an excellent and comprehensive job organizing and reporting the story. Right now it is hard to see how we can escape from our current short-term focus to begin planning meaningful, long-term change.  The authors suggest creating a new “national challenge” such as green energy as we did successfully with the “space race” in the 50’s and 60’s. That idea nicely addresses many of the forces we must manage.

The authors are optimistic that there is time to make a difference. It is certainly a cause that impacts each one of us.

Hazards of Multi-Tasking

January 10th, 2012

Bad News About Multi-tasking (Michael Lovitch)

Do you sit in meetings where people have their laptops open, responding to email or IM? Do they say, “Can you repeat that?” when asked for comments?

This article presents the scary idea that multi-tasking negatively affects performance and can actually lower your ability to pay attention and juggle tasks.

What to do with best practices

January 10th, 2012

Best Practices – Love ‘Em and Hate ‘Em , YouTube video with Tom Peters explaining that following best practices as a business strategy can be effective … or not.

Social Network Analysis Practitioners

January 10th, 2012

Interested in social network analysis? This methodology provides an excellent way to map the invisible flows of knowledge, influence and work to see what is actually happening in organizations and processes. Here’s a list of practitioners collected by John Maloney.

Where is KM going?

January 10th, 2012

Most crucial trends in KM captures thoughts on the future of knowledge management. Started by Arno Boersma (CKO Forum – LinkedIn) Note: you may have to paste this link once you’ve logged on to LinkedIn.

Retaining a Manager’s Knowledge

January 10th, 2012

How can you retain the knowledge of a departing manager? – a set of practical ideas and wishful thinking. Started by Jayne Musumba (LinkedIn)

KM Concept Map

January 10th, 2012

The KM Meta Model, an online concept map shows the factors that drive successful KM programs and the ways in which those drivers impact an organization. Created by Brian Moon and David Griffiths (LinkedIn)