Right Focus: Lessons from a leadership workshop

“All of you had the wrong focus”

A two day leadership workshop, having participants from across the globe, ended with the above statement being made by company’s MD.

How is it possible, we thought; we had all made profits!

We carried on… “Oh, all these workshops are designed in such a way that in the end, everyone wins. Victory is for giving a feel -good factor to the participants”. But was there sense in the statement? In hindsight, there was a lot of sense. Let’s tell you why.

The workshop was designed around an outsourcing business scenario. The storyline we were given was:

A US government agency wanted to create more business and job opportunities in the market, and wanted to give a contract of manufacturing small boxes of different material (wood, steel etc) to third party vendors. The agency invited entrepreneurs to bid for the project. Entrepreneurs were required to register a company before submitting the proposal. The registration department had put some preconditions such as setting up of a few basic departments before submitting the registration application. For the purpose of the 2-day workshop, every hour was equivalent to a month.

First, some (say five) participants were selected to be the entrepreneurs / CEOs secretly by the workshop panel. All the entrepreneurs  started the required recruitment to build mandatory capacity and capability for registering their companies. The COO, CFO and other employees (all positions allocated to the rest of the participants by the workshop panel) were hired by the entrepreneurs after agreeing on salary/ stakes etc.

The next step involved presenting a case to equity investors for raising the required capital, so that relevant hiring could be completed and company could be registered by paying the stipulated registration fees. Although this step was not very easy, the workshop panel made it bit easier for letting the participant to at least register their companies and move forward.

Once the registration was done, the individual companies started building capacity before submitting the proposals to the client. This step again required some investments, and this time, the companies prepared detailed and stronger business cases and progress dashboards for presenting to the investors.  By that time, four hours i.e. four months had passed, and the companies were under further pressure of paying salaries and government bills (taxes, insurances etc).  An addition to the situation was the requirement to submit the quarterly financial reports “audited by designated agencies” to the government i.e. more money was required. All the companies were trying hard to raise capital, and were constantly developing relationships with the investors – Investors were Gods on the Ground.

Ah ha… some of the companies developed a bit of capacity and approached the client; they got a few small orders from the client. Moments to celebrate – companies were in a better position to approach investors again for raising more capital to fulfill the orders. Yes! More money, success was nearby!

Nope – four more hours i.e. four months went by. Alas.

The new bucket of cash given by investors was just sufficient to pay salaries, government bills and quarterly auditors’ fees. Not to worry – keep growing your relationships with the investors; relationships are the blessings. But the blessings were not working; although investors were pumping in the money based on relationships, progress, growth, potential etc, the situation was not improving.

Then a miracle happened – free contract size announced by the government agency i.e. based on company’s capacity and capability, any number of boxes could be supplied (ranging from 1 box to n boxes, where n could be any number really).

Wow! Everybody started making money, and everybody started scaling up as there was unlimited demand from the client.

 Well, everybody was rich by the end of the workshop – Happy Ending!

Then a session to analyze the entire exercise started. Executives started commenting about individual companies’ performances, right/ wrong strategies and good/ bad execution. Also, they started giving feedback to individuals in different capacities e.g. a person who acted as a CFO of a company was told about the gaps in his practice.

Now, the time had reached when the MD of our company was asked to comment about the entire exercise. After making general comments such as an amazing event, good participation etc, he said, “All of you had the wrong focus. It is not the investor who generates money for a company, but it is the client who makes an enterprise big. Sadly, the client was the most ignored person in this entire workshop. Forget this workshop: even in reality, very soon the companies lose customer centricity, and only the wrong focuses are left.”

Do we all know that customer centricity needs to be the top most focus? Of course we do, but do we all REALLY stay focused? 

‘God Syndrome’ and how it affects your organization

One banana skin for the Entrepreneur and Senior Executive is the “God Syndrome” as I call it.

Let me explain. Have you ever played computer games? Amongst many modes in which a user / player can play a game is in the ‘God’ mode. Wikipedia defines this as “In health-based video games, god mode, infinite health or infinite life, is a game mechanic or cheat that prevents a playing character from being harmed, sustaining damage, and ultimately, dying. By contrast, invincibility or invulnerability is a usually temporary instance of this effect, obtainable in games with it as a power-up.” In other words, you are infallible. You cannot make mistakes.

Now converting this to a corporate scenario, the “God Syndrome” is a malaise, mostly from the entrepreneur or a very senior / knowledgeable resource, where (s)he gets stuck in the “I cannot be wrong” vortex. Now you’d say, this can be a good thing; conviction is a positive trait. Right?

Let’s just step back a little. Conviction and the God Syndrome are not the same thing, though an extreme sense of conviction, allied with the power to implement what ‘you’ feel is right, can lead to this sense of infallibility. Especially for an entrepreneur.

You are the visionary, you have the idea, you have got the funding, have built up the organization from scratch… this breeds arrogance. This diminishes, and in time completely erodes the ability to listen. To learn, too. And as we know, the organization that has stopped learning, is the organization that has stopped growing.

Also, this demotivates other innovative people, who one day were attracted to your vision and flocked to work for you…. If you are always right, the only ones in your organization who will live and prosper will be order-takers. The disruptives, the game-changers will either get demotivated, or move out. For the creative and the innovative, a job done well is not enough of a stimulant. Salary, big bonuses are not enough of a stimulant. You, the leader, would absolutely require to let them think on the job, and allow them a platform where their ideas are heard. Heard for the quality of the idea, rather than other factors… rank etc.

Entrepreneurs should be wary of this. At times, all that others in your firm want is to be listened, and to be given their due importance. Listening does not demean the leader, listening makes a leader a better leader. Also remember, most importantly, listening is not the same as buying in. John P Kotter, in his book ‘Buy-In’ speaks about passive agreement, which sometimes is worse than disagreement. You can see disagreement, therefore you can work on it. Passive agreement is a malaise you cannot see. And you, as an entrepreneur would rather have disagreeing voices than passive agreements.

Cognitive Biases and Management Decision Making –part 1

During a performance appraisal session, one of the managers in the room was promoting his employee. This individual employee had completed his most recent assignment before the deadline and to the liking of the customer. The person certainly deserved credit and most in the room, rated him high. However, no one ever questioned whether the employee was a consistent high performer over past one year.
Most managers, being as human we are, ( some may debate that about his/her direct supervisor) are prone to such behavioural biases. In the earlier paragraph, the entire term suffered from what we call as “recency bias”. We get carried away by more recent events during our decision making process.

In this discussion, which I intend to write as a short series of articles, I would like to touch upon few of such behavioural biases and how they impact managerial decision making. So let us get going.

We tend to hold on to our losses for too long and cash our gains very quickly. Why not cut our losses quickly ? We believe that the loss making propositions will magically become profitable one fine morning!! You have probably experienced it… while debating whether to sell when the stock market tanks and goes for a nose dive. Is it the same reason why managers hold on to projects that are not going anywhere? They continue to invest company’s resources in projects which yield nothing until they are forced to shut them down. Such “loss aversion” or “escalation of commitment” could be completely avoided only if we did not suffer from such inherent biases as humans.

Let us shift gears and discuss about delivering bad news to our people. How would you communicate layoff decision for a large group ? Do you do it in one go or tend to deliver small doses of it hoping to ease the pain? Imagine the nurse slowly pulling out the bandage from a dressed wound. Thankfully they pull it off in one go. The rapid pull triggers a sharp spike of pain. But isn’t making it a slow process more painful? We tend to often pull the bandage slowly by spreading the layoff over multiple months or quarters. I am not arguing against cases where you may want few people to stay for some time for an ongoing project!! Often management inflicting such pain to the organization over long period results in a sick organization with low motivation and energy.
In the next part, we will look at influences of biases such as “halo effect” and “framing”.

Meanwhile let us continue with our effort to behave both human and rational beings….

The “Rich” vs “King” analogy

If you, as an entrepreneur or a budding entrepreneur, do not read Noam Wasserman’s blog, you are missing something.

Do read this piece on the “Rich” vs “King” concepts for entrepreneurs. You know, neither Rich, nor King, as concepts, are poor unless they are not in tune with the nature of the organization or its founders.

What you should remember, my entrepreneur friend, is to ensure that the monster you are creating, is your monster. Find out your true vision about yourself behind setting up the organization, stick to it, and build the organization from that starting point.

And no, you cannot have your pie and eat it too.

You are a decision maker, you claim.

So Decide!