Wild Dog Barking

The CEO as the chief strategist, visionary and leader.

“Leadership is not about sitting in your office and dreaming up strategy.  It is about touching your organization through values, personal presence and relationships.”  Jack Welch, Chairman, General Electric Co.

There are both tactical and strategic ceo’s.  Whether the CEO is one or the other, s/he is always looked upon as the chief strategist.  The CEO is always the one person who can speak for the entire organization and no major changes within the company can ever be made without him or her.  Being a CEO of any company today has become a more demanding job than ever before.  The massive volatility and rapidity of change combined with the speed of the communications revolution can be quite taxing.   And just as the company is in constant motion, so must be the CEO.  Both the company and the CEO must constantly be reinventing and renewing themselves on the fly.  As former GE Chairman Jack Welch so aptly put it, “You have to change the tires while the car’s still moving.”

“The dogmas of the quiet past are inadequate to the stormy present.  As our case is new so we must think a new and act a new.  We must disenthrall ourselves and then we shall save our country.”  A. Lincoln

Whether tactical or strategic, all CEO’s must be restless, impatient, never content and above all, focused.   What differentiates the strategic from the tactical leader is that the strategic leader knows the principles s/he wants to follow and inspires others to pursue those principles with him or her.  “Important principles may and must be inflexible.” Said Lincoln in his last public address. Strategic leaders serve as powerful role models whose actions and personal energy demonstrate the desired behaviors.  Their behavior and standards are above reproach.  Through their commitment, effectiveness and consistency, strategic leaders build a personal bond between themselves and the organization.  They provide a psychological focal point for the energies, hopes and aspirations of their people.

Keep in mind, too that strategic leadership is not infallible.  There are always policy failures.  The difference is that in spite of failure the strategic leader never loses sight of the real goal.  Countries can survive a tactical leader.  Companies cannot.

Strategic planning then becomes the guide for the strategic CEO.  It enables the company to look at the chain of cause and effect over time. It is a planning process that lets you fight on two fronts simultaneously.  It allows you to confront today’s challenges while probing tomorrow’s opportunities and preparing for tomorrow’s predictable problems.  And like the organization itself, the plan is in constant motion.  It too must be flexible enough to be reviewed, reinvented and renewed on the fly.   Whether the plan holds together for a quarter of a year or a quarter century, it is the planning process that allows the strategic management team to look at alternatives.  It develops the mindset for and encourages opportunity management.  Yes, there is always the outside chance that an asteroid will come out of nowhere, completely undetected, and slam into your company, your market space or even your entire industry.  Your plan may be obsolete and your company changed forever as a result of it.  But with a planning process in place you can revise and rebuild quickly.

What was important yesterday, may no longer be important today, or especially tomorrow.

CEO’s are well aware that listening and responding to their customers’ needs, however quickly and precisely, is not sufficient for shaping the future of an industry, warding off disruptive technologies, creating major new market opportunities, or attracting the attention of new groups of customers.  There is a need to be out well ahead of your current and future customers.  Your customer’s of today only know their immediate needs and tend to merely ask for refinements – faster, better, cheaper – of what they already have.  By staying such a course, a company, or an entire industry for that matter, will merely plod along making improvements to what currently exists – until some outsider or some new revolutionary technology comes along and changes everything.  Like Federal Express and UPS did.  Before them, every major company had its own shipping department and a fleet of trucks.  The trucks are gone and so is the expense and aggravation of maintaining them.  Did anyone ever ask for a Federal Express or UPS? No.  Or Southwest Airlines.  Before their arrival you either drove or took a bus to the places they fly to.  Rather than take on the airline industry they have successfully revolutionized the ground transportation industry.  Did anyone demand they do that?  No.  How about Quiken’s Intuit.  Its primary competitor was not the computer, it was the pencil.  They saw a need for speed, accuracy, simplicity and low price and filled it.  Was anyone pounding on their door asking them to hurry up?  No. For that matter, who asked for the electric light bulb, or continuous aim gunfire aboard ships?  No one.  Was anyone seen demanding the PC, CD, DVD, the Blackberry, iPhone, iPod, Twitter, Facebook, LinkedIn, eBay, or Amazon.com?  Again, no.  None of us know what someone or some new technology can do for us until we learn about it and see it first hand.  But once we do, nothing is ever the same again.

“It’s not where we stand, but what direction are we heading.”  Oliver Wendell Holmes

There are at least twenty technologies and thirty new tools out there for you to use.  Because our peripheral vision is normally confined to our own immediate areas, we are too often unaware of these technologies and tools being used elsewhere in other industries.  Yet, if applied to your product, service or industry they could actually prove to be revolutionary.  In the words of Wm. Faulkner, “don’t bother being better than your contemporaries or predecessors. Try to be better than yourself.”  Quit watching your competitors and move ahead.  Create new offerings, redefine, reinvent and renew.  Keep your eyes, ears and mind open to what is out there.  Go beyond the markets and industries you are currently serving. The only way to predict the future is to invent it.  If you don’t like the way the game is being played, change the rules.  Don’t lose yourself in what you already know.  Give your customers something that they don’t know about because it didn’t even exist until you just created it (whether in your mind, on paper or as a tangible item).  Fighting tomorrow’s battles with today’s products and services is eventually going to be a losing proposition.

In no particular order, a list of recommendations for accomplishing all of the above is listed below.  Reading the list is one thing.  Actual implementation, execution and follow through is quite another.

Dream

Dare

Think

Believe

Be honest enough with yourself to discern your own realities

Achieve actual disclosure

Anticipate an accurate future of your company

Share the dream

Communicate, communicate, communicate

Take appropriate actions to ensure that the vision becomes reality

Do not allow outsiders to shape your future for you

Involve, inform and inspire your people

Use all available technology and your uniqueness to either distance yourself from your competitors, or eliminate them completely

Shift from crisis management to opportunity management

Focus on your customers’ future needs

Focus on your customers’ customers’ future

Prevent tomorrow’s predictable problems from ever occurring

Remain committed

Hold true to your values

Be curious

Be open to new ideas and other ways of doing things

Be consistent

Be flexible

Be aware

Keep in mind that the future remains an invisible place only until you start thinking about it. The result of NOT thinking about it and NOT doing something to shape it can cost you dearly.  It could, in the end, lead to your ultimate demise, if not extinction.

Would love to hear your thoughts and comments on this.  jaltfeld@altfeldinc.com

Thank you!

By Jim Altfeld

Nearly fifty years ago, Bob Dylan sang “The Times They Are a Changing”.

Only, no one, not even Bob Dylan could have anticipated just how powerful, long term  and constant that change would be.  Today, change happens so fast, so dramatically and at such a dramatic rate that many are predicting that much of all current knowledge and accepted practices will be obsolete within the next five years. Furthermore, the current life span of new technology that is already down to 18 months will continue to grow shorter.

Whether we like it or not, we are living in an Alice in Wonderland world.  What we thought were croquet mallets were actually flamingos.  Playing cards change suit before our eyes and then get up and walk away from us.  And just like Alice experienced in her croquet tournament, the rules keep changing.  Actually, the game itself keeps changing.  Nothing is constant.  Everything is in flux and a lot at first glance, seems to be unpredictable.  We get the feeling that any resemblance of today’s world to the past is merely coincidental.  And as a result, we share the same frustrations and same fears that Alice did.

As my father used to remind me, “life is what happens to you while you’re making other plans.”  None of us can control the unexpected, but we can control our response to it.  We must not resist the unexpected by holding steadfastly to our original plan.  Sticking to conventional formula leads only to extinction.  We need to remain flexible and to move with the change.  It is imperative that we maintain a constant vigil for the unexpected and deal with it making up the rules as we go.

In the movie Fracture, Anthony Hopkins proved the unexpected can sometimes prove deadly.  It could be a new technology that suddenly makes you obsolete.  It could be an old technology used in a new way that causes you to lose business.  Or worse, it could be a disease, bug, scandal, flaw, death or tampering that could put you out of business .  For instance, when scientists cloned sheep, our reaction to it was under-whelming at best.  We are so bombarded with change, that we’ve become immune to it.  That something even that resounding has no effect on us.  It does on the pharmaceutical companies, however.  As a result of that sheep and the study of gene therapy, the day will come when disease will not be cured from the outside in with pharmaceuticals, but from the inside by our own bodies.  Instead of large pharmaceutical companies manufacturing pills, there will be herds of disease specific cows producing milk with the right dna combination to cure specific diseases.   Or, sometimes the unexpected can be a revolutionizing but friendly opportunity (and a threat only if viewed that way) like the internet and social media.

Way back in 1990, Robert D. Tuttle, then CEO of SPX Corp. was quoted as saying, “It is not an exaggeration to say that more scientific and technical advances will happen in the next year, than happened in the entire decade of the ‘70’s.”  Is that what we will be saying in 2010 about the first decade of the ‘00s?

We used to be able to use technology to ward off our competitors.  You could introduce a new product and know it would be years before anyone would introduce a better one, especially one based on “state-of-the-art” technology.  Not anymore.  Today, state-of-the-art is down to “state-of-the-nanosecond.”  It is an entirely new ball game.

“If I take care of the present, the future will take care of itself.”

A philosophy that can kill you.

Scientists believe that millions of years ago a giant asteroid struck the earth and completely wiped out the dinosaurs.  The dinosaurs were busy taking care of the present. They had no concept of a future beyond the now.  As a result, they remained fat, dumb and content for as long as they could.  But what actually proved to be their demise was something OUTSIDE of their peripheral vision.  The same holds true today.  Look at the Internet and social media.  Who saw it coming?  Very few of us.  You could have taken care of the day to day stuff and been on top of it, but all of a sudden you are living in an “Alice in Wonderland” world.  Everything has changed and you’ve never even left your office, much less the planet.  The way things used to be done aren’t done that way anymore.  The future that you thought would exist for you exists no longer.  Not only has everything changed, everything continues to change!  It’s downright volatile.  You can just stand still and feel like you’re in a different world.  The trick then is to look to the future and determine proactively what your company will look like when it and maybe you, get there.

Sure we have vision, we just can’t see.

Unfortunately, history has shown us it is not quite that simple.  Just being smart enough to look out into the future is only the half of it.  The other half has to do with your mindset while you are looking.  IBM, Sears, the Encyclopedia Britannica and Barnes & Noble were all at the top of their game and quite brilliant when they looked toward the future.  They were the T-Rex’s of their respective industries.  But none of them ever saw their own impending asteroids.  None of them chose to see them.  They were all overly confident and content.  They were complacent and suffering from structural inertia – a built-in resistance to change.  These companies were all betting their futures on the fact that the future would be a continuation of the present.  And from a historical perspective, it’s really old news.  Look back to the $750 Million vacuum tubes market of the 50’s.  In a last great act of defiance, both RCA and Sylvania chose to stay with tubes in spite of the introduction of the transistor.  Or the Swiss!  They not only had the reputation as the watchmakers of the world, but they actually invented quartz technology.  They had it but never used it.  Seiko ran with it and the rest is history.

Today, in the scientific world, thanks to new and more powerful telescopes being launched into space, astronomers are now discovering about one new planet every month.  They are even able to watch planets form.  One interesting discovery that will probably not affect any of us living today, was made by a group of astronomers, who are probably the best at looking to the future.  They recently identified an enormous asteroid that is expected to slam into the earth in about a thousand years (you may have seen the movie a few years back).  Not only are they aware of the threat, but they have already begun making plans to do something about it.  Talk about eliminating tomorrow’s problems, today.

Like it or not, the future is coming at us like an enormous wave.  It is unrelenting.  It seems to come faster and faster with each wave larger and more powerful than the one preceding it.  Our ability to adapt quickly to not only the changes in the markets we serve, but the changing needs, wants and desires of the customers within those markets, will determine our survival.

Start looking for tomorrow’s opportunities, today.

The late Walt Kelly once wrote, “We have met the enemy and he is us.”  To paraphrase that, “We have met Alice in Wonderland and she is us.”  The times they are a changin’ and the change is constant.  The change each of you reading this article needs to make, if you haven’t already, is to become visionaries.  To look beyond today and start thinking outside the rules.

To witness what I’m talking about first hand, simply watch a group of children play a game.  They spend as much time arguing about the rules, as they do playing the game.  The rules are never cast in stone.  The boundaries are never secure and even the roles of the players are always in question.  Kids are constantly creating and re-creating, never allowing themselves to be bogged down or constrained by some old, established guideline.  They are constantly redesigning the game to fit their needs.

The same needs to hold true in business.  We need to think outside the lines.  By going outside certain parameters, daring to stray beyond certain boundaries, and playing flexible roles under breakable rules, we can stimulate innovation and encourage visionary thinking.  Consider your own product or service.  It is seldom if ever used in a vacuum.  If your customer has an objective, how can your product or service help him or her attain it? Is purchasing your product or service merely satisfying a sub-objective that contributes to yet a larger main objective?  Can you help them meet their main objective?  How do you transform your customer from a caterpillar to a butterfly?  How do you make doing business with you, not just purchasing from you, a wonderful and memorable experience?  (Making it a terrible and memorable experience is easy.  Just treat the customer badly.)  What opportunities and untapped values exist beyond the bounds of your product or service of which you can take advantage? What does the customer have to do before making the purchase and using your product or service?  What does the customer have to go through after making the purchase but before using it?  What is his/her experience when they actually put your product or service to use?  And, what experiences does s/he have they do?  The real question then becomes “What business are you in?”

Next, the playing field itself needs to be changed.  Why play on a level playing field with everyone else?  The trick is to hold the high ground, get the advantage, anticipate, prepare and distance yourself from your competition.  You want to position yourself to make the most of these changes.  Which means you must anticipate them as best you can while simultaneously remaining flexible enough to deal with the force of the unexpected.  Change and the unexpected –  The only two elements you can be absolutely certain of throughout the new millennium.

Unless you are clear about where you are going, any direction is fine.

As we face our “Alice in Wonderland” futures and look beyond today, all of us really do have the ability to begin seizing control of it.  Unfortunately, as business owners, ceo’s, presidents, vice presidents, and managers we constantly fall prey to crisis management.  We get caught up in the day to day challenges that prevent and delay us from taking control of our future.  All too often we find ourselves becoming so entrenched in crisis management that it becomes nearly impossible to even think about solving and/or preventing tomorrow’s predictable problems.  (Remember the asteroid.)  Finding the time to envision your future may be difficult, but it is more of a necessity than ever before, and in most cases, it is far easier to do than having to react to an unexpected reality.  Much like the old Fram filter commercial when the mechanic said, “You can pay me now, or pay me later.”  There are those who make things happen, those who watch things happen, and those who wonder what happened.  Waiting, watching and wondering is a formula for disaster.  Taking appropriate actions, on the other hand, and make things happen is the only way to ensure that the future you envision for you company will be achieved.  You must also make certain that your employees at every level are living that vision you’ve created.

And Other Not So Trivial Matters

By Jim Altfeld

I can’t think of anything much sadder than the words Schopenhauer spoke when he said, It is bad today and every day will get worse until the worst of all happens. Tied closely to that are the words of the faithful pessimists who believe in an afterlife, It will be over soon and there is a perfect life waiting for me in Heaven. My reply to this, “Perhaps.  But, then again, perhaps not.” All any of us know for certain is the life we have right now.  The very one you and I are living.  All I am saying is that we need to take this life seriously, which includes our actions, the decisions we make and the choices we make.

Consider the idea of Eternal Re-Occurrence.  Consider, instead of an afterlife, instead of reincarnation, having to relive every moment of your entire life, with all the joy, pain, ecstasy, agony, hurt, disappointments, thrills, suffering etc. included, over and over and over again.  How would you live your life then?  How would you look at the decisions you make and the choices you’ve made knowing that you will forever, relive the consequences of those decisions ad infinitum?

Add one more thing to the scenario of Eternal Re-Occurrence. Do you live your life in the manner you live it for fear of having to face your Maker and increase your chances of getting into Heaven?  Or, do you live a life of good values and high morals because of who you are?  Indulge me in this and humor me.  Let’s stick with the idea of Eternal Re-Occurrence and eliminate any idea of an afterlife.   What if, what you did and the way you acted in life became a universal law of nature for everyone else to follow? What if your actions and the things you did became a moral maxim?  How would you act then?

Ok, so I now at least have you thinking.  Let’s try this.  Remember when, as a child, teenager, young adult, and for some us, just last week being asked, “What do you want to be when you grow up?” And what was your response?  A policeman, fireman, ballet dancer, doctor, lawyer, bank president, rich by the time you’re 30, etc., etc.   Before you ever gave your answer, did you ever consider the real you and the things that drove and drive the real you?  Did you take into consideration the things the real you is passionate about?  Or, did you just give an answer that was either programmed into you or what you thought those asking the questions wanted to hear?  I ask you, are you now doing what you love to do?  Are you following your passions, or are you doing what you think others think you ought to be doing? Does a rose bloom for us to admire or for its own sake?

Consider this statement: I Want to be Happy! From what I’ve seen in my past sixty years, most of us pursue happiness, (a right granted to all U.S. Citizens by the U.S. Constitution), as though it were some commodity, wrapped up like a Christmas present, waiting to be found by anyone who has the where with all to find it.  And then when we do find it, the happiness we experience is so damn brief.  What it turns out to be, as Goethe explains, is our going from desire, to satisfaction and soon back to desire again.  The point being that this type of happiness is not real happiness.  Rather it is fleeting and merely temporary satisfaction.

So, the question remains, just where does one find happiness?  According to Aristotle, the “Contemplative Life” (Bios Thoretikos) a divine activity resulting in the truest form of happiness and the highest life of all, was the way to go.  I don’t necessarily disagree with him. I believe that happiness comes in the form of self-forgetfulness.  It seems that whenever happiness does occur, I find myself lost and completely immersed in something or someone outside myself and something so much larger than myself.  So much so, that I not only seem to forget about myself and time, but I actually travel beyond and outside of myself in the process.  It is as though I no longer matter.  I no longer focus on me.

I know for a fact that that has happened, but just where in the hell did I find that feeling of happiness and how do I find it again on a continuous, constant and steady basis!?!  The answer lies in identifying and following those things that drive you!  You find happiness in your passions.  Passions can make you forget about yourself and can make time literally stand still.

When John Wesley, the cofounder of the Methodist Church was asked how he was able to attract such large crowds with his preaching, he said “I simply set myself on fire and people come to watch me burn.”  Now that’s what I call passion!

Passion not only affects you, but those around you.

Passion:

• Invigorates
• Inspires
• Sustains
• Comforts
• Initiates
• Completes
• Enhances

Yeah, but I wasn’t born with the advantages some others were born with. Ok, I’ll give you that.  But, give me this…. Each of us is born with advantages, disadvantages, certain aptitudes, certain IQs, as well as physical and mental strengths, weaknesses and disabilities. Some are born healthier than others.  The challenge is to make the best out of what you were given.

Once again, referring to Aristotle, he believed that everything is programmed toward a particular end and purpose.  Aristotle believed that the acorn, for example, was programmed to becoming an oak tree with its entire being devoted to achieving that end.  For man, we are programmed not only to reproduce and keep the species going, but also to ascend ourselves.  As individuals, each of us has, or should have, our own unique purpose and chief aim.

I find it almost uncanny how each and every one of us arrive in this world with inherent gifts. As humans, each of us has a nature about us.  Each of us has limits and potentials.   Then, for whatever reason, we spend the first half of our lives abandoning them or letting others disillusion us about them.  As young people, we are surrounded by expectations that may have little to do with who we really are.  Too often, the expectations of us are held by people who are not trying to discern who we really are, but to fit us into slots.  And, all too often, it is their slots they are trying to fit us in.  If we’re fortunate enough, we then spend the second half of our lives trying to recover from the first half and reclaim the gift or gifts we once had.

Ability determines what you can do.

Aptitude determines what you can learn to do.

Aspiration determines what you hope to do.

Attitude determines what you believe you can do.

But passion determines what you want to do!

The trick, it seems, is to know yourself and the limitations, capabilities and potential that are part of your individual nature.  If you seek out a life without understanding yourself and your own nature – your own limitations, capabilities and potential – you place yourself on the road to possible failure by putting yourself in life situations that your nature is not meant to handle.  Much like a certain material is meant for specific applications, only.  Should you use the material in an application it was not meant for and the material is doomed to failure.

Our deepest calling in life is to grow into our own authentic true self, whether or not it conforms to some image of who we, or someone else thinks we OUGHT to be.  In other words, by not knowing and understanding who we are, we can go through life wearing one or any number of false masks.  We fall prey to what some philosophical men call Oughtiveness.  “You know what you ought to do?”  “You know what you ought to be?”  “You really ought to….” You become what someone or even yourself has convinced yourself, you ought to be, instead of what you really are.   That includes what I consider to be the worst-case scenario, which is wearing someone else’s mask you may have picked up along the way and leading their life instead of your own.

My point being that by not understanding self, not knowing your own nature, not taking the necessary time to determine your personal chief aim in life, one winds up living an ungrounded life.  As a result, one finds him or her self-conforming to a false image and a false sense of self.  And, you can go through life wearing false masks or someone else’s mask without ever getting the opportunity to wear the mask that truly represents you.  The tragedy is that you go through life portraying yourself as someone you really are not, based upon the misconception that this is the someone you think you ought to be, when in fact you really are not that person at all.  Or, in the words of McAnnula, “It is perfectly all right to try to be everything you cannot be when you find that you cannot be everything that you are.”

Which brings me to this:  Become Who You Are!  According to Erich Fromm, Man’s main task in life is to give birth to himself, to become what he potentially is.  For far too many of us, we do nothing but run, never allowing ourselves to reflect on where we’re running to or what we’re running for.   Life goes on no matter what we do, but personal growth and development happen only if we allow it to happen and then choose wisely.

To become who you are, you first must understand what you have.  Then, it is up to you to decide what you will do with what you have.  The choice is yours.  Do you become an advice-rejecting complainer and a couch potato, or do you become exceptional?  As I pointed out earlier with Eternal Re-Occurrence, it is up to you to be responsible and held accountable for your actions, your decisions and your choices.  You made them, you allowed things to happen and you cannot blame others for them.  The choice is our own to make.  Be a hapless victim or an active participant.

According to Heidegger, the inauthentic life is a life lead unaware.  It is an unconscious life of white water river rafting. In an authentic life I am aware and fully conscious.  I am in a state of enlightenment.  I am my own witness to my own events.

Belief follows need.

What we see and how we interpret what we see confirms what we believe.  And, what we believe shapes what we see.  Right or wrong, true or false, we believe those things we need to believe in order to support our beliefs.  Do I believe what I believe because of what has been instilled in me, or do I believe what I believe because of who I am?  I firmly believe that by being aware of who I am, I am far more aware of what I truly believe.

To lead a life of awareness and authenticity, means being conscious of who we are, what we are doing, why we are acting or reacting the way we are and knowing we are a particle of energy that helps comprise that ocean of energy called Life!  Simply stated, what we are is determined by what we think.  What we think is often a result of what we’ve experienced.  Our experiences are based upon those things to which we are exposed. And the experiences we expose ourselves to are based upon who we are.

Let me ask you this: Have you ever heard the expression you are what you eat?  I don’t know about you, but I am not what I eat. I am not a peanut butter and jelly sandwich!   What I eat is determined by who I am.  I am not my job, either, nor am I my life’s situations, and I am not my experiences. I have the job I have, I have the experiences I have and I have the life situations I have because of who I am.

Whether you believe this or not, life truly IS exciting, or at least it should be.  Life is also scary.  It can also be cruel.  And, without a doubt, it is always dangerous.  To live life fully requires taking risks.  To live it in fear, you can shun it, hide from it and waste it.  You can hide on your couch, buy a bigger TV, not venture out and take no risks.  And what a tragic waste of a human being that is?

Even worse may be discovering that you have just spent the greater part of your life and a great deal of energy on things that, in the bigger picture, were really not very useful or important.

For life to be an extension of yourself and a way to be ourselves, you must deal with life in the present. To do that, however, means saying YES to life.  I accept death and all that comes with it.  I accept that death is the impossibility of all future possibilities.  I accept that death takes away all that I ever had and all that I will ever have.  But, death also plays a crucial role in our awareness of life.  It reminds us that existence cannot be postponed.  It is through death that we see what is at stake.  Any confrontation with death can lead me to rearrange my priorities.  Death is, or can be, wonderful at providing us humans with a greater appreciation of life.  But what if death comes before your real life has started.  How tragic would that be?

Which is why I find it ever so important to enthusiastically say, YES to life.

On the flip side of that same coin, I feel strongly that death is not necessarily The End, nor is it final.  I firmly believe that each of us can live on long after our death and achieve immortality.  We can become immortal through our children and our children’s children.  We can become immortal by having a building named for us, planting a tree, writing a great book, and through our works.  It is all about giving meaning to one’s life.  For, giving meaning to one’s life means going beyond one’s life.

What you are and what you believe you can be goes on well after your death.  Become who you are is about making something out of what you have and what you’ve been given.  To become who you are, however, requires you to LOVE who you are.  Love what you have to work with and make something beautiful and exceptional out of it.  Give shape to yourself.  Create yourself.  Take what you have and make the most out of it.  Play off other people to grow and develop yourself.  Transcend who you are.  Aspire to be more.   Perform a transfiguration!

In the Myth of Sisyphus, Sisyphus was forever condemned to roll a rock up the top of a mountain.  When it would roll back down the other side, he would resume the task, over and over and over again.  The beauty of Sisyphus is that he didn’t bitch and complain.  He didn’t hate himself or the life to which he had been condemned.  Instead, he took it upon himself to know the rock and understand the mountain.  He used the knowledge he acquired to grow, develop and better understand himself, all of which enabled him to become who he was. It allowed him to transcend himself. You and I have the same choice.  We can either, bitch and complain about the hand we’ve been dealt, or can use it to our best ablilties.

I, for one, believe in living life, every day of it, in a perpetual state of wonderment.  And instead of cursing life, be forever grateful for the precious gift of sheer existence.  We’re here.  We’re here right now and what a wonderful opportunity it is to be here!!

I don’t marvel about the way things are, but that they are.  I am not only mindful of the fragility of my being, but too, the responsibility for my own being.  To become who I am means having to be in touch with my own self-creation.

Recognize that no matter how close you, me or any other human being gets to other people, it all comes down to our facing life alone.  For me, that means facing the basic issue of my life and my death and thereby living my life more honestly and being less caught up in the trivialities.  It also means learning that I must take the ultimate responsibility for the way I live my life no matter how much guidance, encouragement and support I get from others.

Which leads me to yet another one of life’s rules.  Regardless of the situation in which you find yourself we all have three choices.  We either come to accept what is, change what is, or walk away from it.  And even in choosing to accept it, you have a choice.  You can accept the reality of things for what it is, (not being in denial) and then elect to change it.

I leave you with these three final thoughts and a pledge:

1. Uncertainty, death and impermanence exist and we must all learn to co-exist with each of them.
2. The measure of your life will be the measure of your courage, contribution, trust, and how much you give back.
3. If you do not take responsibility for your own predicament, you can never expect to change.

Your Pledge to Yourself:

I, ________________, from this day forward, shall no longer accept sorrow, disappointment and victimization to play a part in my life’s situations.  Nor shall I any longer consider myself responsible for fulfilling the lives of others.  I shall instead focus upon the birth of my true self, coming to know that I am life itself, and that I am far more than a mere composite of my past experiences and my life’s situations.

Signed by                                                             Date

Thank you for your time, interest and consideration.  Your feedback is greatly welcomed.

Jim Altfeld

jaltfeld@altfeldinc.com

www.altfeldinc.com/blog

TOPGRADING BEGINS AND ENDS WITH YOUR COMPANY’S CULTURE.

By Jim Altfeld

First and foremost, no company can attract and retain top talent if the company’s culture is going to grind them down, eat them up and spit them out. For example, authoritarian, tightly controlled companies need not bother looking for top talent because they will only stifle and snuff them out like a candle.  Also any company that accepts mediocrity, has few if any measurements in place, holds almost no one accountable, gives cursory annual reviews and does not deal with its non-productive personnel should not be seeking top talent, either.

Therefore, the first step in attracting and retaining top talent is to identify your own company’s culture.  Unfortunately, most small to mid-size companies give little thought to their company’s culture.  It just seems to grow, develop, form and shape itself on its own.  Every company has a culture but not every company knows what it is.

If, after assessing and evaluating your company’s culture you discover that it fosters, encourages and rewards a sense of inquiry and a continuous quest to make things better, your company has a great chance of attracting and retaining top talent.  If you find that you’ve created a learning institution that generates a passion for learning how to do something new, you’ve probably already have top talent beating a path to your company’s door.

Every business has a choice.  It can either be a company consisting of a group of individuals who come to work, punch in, do their job and go home, or it can be a coalition of people with common goals and interests.  The truly great and world class companies that are known for attracting and retaining top talent have created cultures that binds their people together.

Why so much importance needs to be placed upon your company’s culture?  Because it defines not only jobs, roles and rules for proper behavior; it also sets goals and establishes what counts as success. It provides the company with a sense of identity, stability, organizational boundaries and acts as a guide for the types of behavior that will and will not be tolerated.  By establishing these boundaries, your people can gauge the appropriateness of their corporate thoughts, behaviors and actions.  They can determine the norms and values from your cultural rules and beliefs.  And, they can make decisions that positively affect the company.

If your goal is to attract and retain top talent, you company’s culture should generate a shared feeling that its goals and objectives are worth the effort, sacrifice and toil by those who work in it  It’s that “Purpose Beyond Profit” that every company has. The excitement and passion instilled within these great companies has little to do with money, profits, increased sales or market share.  They have created something far greater than that.  Profit, increased sales and greater market share will normally come as a result of it, but it is not what is driving the passion.  There is a tremendous sense of giving, sharing, learning, teaching and personal growth and development going on.  It is that sense of personal growth, mentoring, wanting to know more, wanting to do more and wanting to contribute that has become the spirit, or deeply felt emotion within these companies. Like a tornado or hurricane, they pull in and attract those who want to be a part of it and spit out those who don’t.  There will be A and B players beating a path to your door to get in.

But all of that comes as a result of the company’s willingness to share and a willingness to make information available.  It comes from having wide open communication and encouraging cooperation and collaboration throughout the business.  It stems from the company’s desire to become horizontally integrated, strategically aligned and customer focused.  It comes from having that type of culture and a passion to become truly World Class.  For that matter, when you get right down to it, World Class Performance is predicated on World Class Trust.  And trust is a result of open-ness and the sharing of information, experience and expertise.

Accomplishing all of the above will require you to:

·     Equip your people to make decisions by clearly defining your company’s culture

·     Align the systems, policies, practices and procedures with your values  (just like the systems, polices, practices and procedures you set for your children).

·     Measure, reward and recognize people who protect and promote the culture.

·     Indoctrinate new employees into your culture through one on one teaching and education (at Nickelodeon, all new employees get a Welcome Wagon package).

·     Make the values and your culture center stage (Don’t hide your photos in an album.  Display them on a bulletin board.  Have a photo gallery showing the years and your people).

·     Hire the right talent.

Next, the company next needs to determine what its values really are.  What do you look for in yourselves, your people and those you hire?  What are the primary beliefs, traits and characteristics that the company holds near and dear?  For instance, if integrity is a value, it means that anyone working in the company must have it, without exception.  The values must be made clear to everyone in the company and everyone must believe in them and live them, from the top down and the bottom up.  These must be shared beliefs, with all non-believers extricated from the company to avoid disharmony and disruption.  To make this picture a bit more lucid, imagine if you will a woodpecker on board Noah’s ark drilling holes in the bow.  You can forget about a Hegel’s Dialectic and arriving at any type of synthesis.  It is going to get ugly and completely disruptive.  It is the same in business.  Either everyone believes in the values and the culture of the company or at some point in time, it is going to get ugly.

As long as everyone throughout the company knows and understands the values of the company and what is expected of them regarding those values, there is far less chance of someone doing something contrary to the company’s beliefs.

Finally, you need to determine the type of top talent you are looking to recruit.  Management must set distinct goals for all positions and measure each individual’s performance.  Through this process management can then identify the high and low performers.  Management must also establish a set of competencies required of their managers that includes the skills and behaviors expected.

Create a criteria for each job and determine what would be the highest score required to fill the job with a high quality player.  Be professional.  Be prepared.  Be able to hand them a job descriptions with expectations, goals and objectives.  High quality players want to know first and foremost that you have your act together and that you will be able to challenge them for the long haul, and that they will be actively involved and a contributor to the business.

One of the greatest challenges you’ll face in trying to continuously upgrade your talent pool will be improving and replacing the lowest performers while raising everyone’s game.  To ensure this, the leadership of the business must hold their managers accountable for building a strong talent pool.

“My main job was developing talent”, said GE’s Jack Welch.  “I was a gardener providing water and other nourishment to our top 750 people.  Of course, I had to pull out some weeds, too.”

Five Keys to Successful Top Grading:

1. Make talent management a critical part of every manager’s job
2. Provide a compelling reason for an A or B player to want to join and stay with the company
3. Inject high performers throughout the company in every area and improve or eliminate the non-performers.
4. Implement stretch goals, candid feedback, coaching, mentoring and open communications to grow management’s talents
5. Confirm each individual’s unique contributions to the company and each person’s performance.

If you can create an extraordinary system, operated by involved, informed, inspired and extraordinary talent, you can count on their producing extraordinary, exceptional and world class results.  The choice is yours.

I have been literally blown away by the amount of on line courses and learning resources available via the Internet.  And what’s really wonderful is that it is EXPLODING!!  Here’s a list of those I’ve uncovered, so far!  Enjoy!!

http://education-portal.com/articles/Universities_with_the_Best_Free_Online_Courses.html

http://www.youtubeedu.com

http://www.itunesu.com

http://p2pu.org

http://www.inigral.com

http://www.learnoutloud.com

http://www.edufire.com

http://www.ocwconsortium.org

http://www.flatworldknowledge.com

http://www.wgu.edu

Leadership is the ability to establish and manage a creative climate where continuous improvement, teamwork, accountability and a commitment to the customer are fostered and rewarded; where people are self-motivated toward the successful achievement of long term, constructive  goals in an environment of mutual respect that is compatible with their personal values.

The Break Down:

Ability

The know-how, knowledge, experience, capability and expertise to lead and manage a department.  The ability to grow and develop the department and the people.

Creative Climate

A free-thinking environment that encourages and rewards new thoughts, new ideas, or at least a re-arranging of the old, not just living with what exists.

Continuous Improvement

Never satisfied. Always looking to improve the company, each department, every system and process, and every employee. Extraordinary systems and processes operated by informed (communication), involved (cooperation) and inspired (collaboration) people produce extraordinary results.

Teamwork

A team is a small number of people with complementary skills who are committed to a common purpose, focused on a set of performance goals, and agree upon how they will work together to accomplish their purpose, while holding themselves and each other accountable. Understanding what individual team members value on the job can improve working relationships and organizational effectiveness.  Values drive team members’ behavior.  Values determine what motivates members and what demoralizes them, what affects their decision-making and what drives their responses to other members, management, the customer and their work.  For a team to function well, the members must individually function well and the performance of each person should act as a catalyst for the others.

Accountability

Holding your people accountable and measuring their performance are essential.  However, before doing so, first clarify what they are being held accountable for and on what specific performance results you are measuring them.  People need to understand their roles, responsibilities and the results expected of them.  Doing that requires a great deal of communication and effort that in the long run, pays tremendous dividends.

Commitment to the Customer

1.  Only satisfied customers can provide job security.

2.  Without a top line, there is no bottom line.  Customers want real value.  They want to know that what they buy from us achieves the results they were expecting. They also want answers at that moment of truth when they have a question, problem, challenge or issue.  Our job in servicing the customer is to think of ourselves as servants, paying close attention to their needs

and exceeding their expectations.  The easiest way to turn service into a memorable encounter of the unpleasant kind is to provide poor service and treat the customer badly.  Which is why we must focus on the customer and place him or her at the very center of the company’s universe.

Self-Motivated

Not fearful of going forward. Not fearful of rising above the radar.

Successful Achievement

Key word here is successful.  Everyone has to be expected to actually accomplish what they set out to do.  Close, or almost is neither acceptable nor successful.  Which is why the goals are so important.  One project may have five goals within it.  Is it a failure if you get four of the five?  It is if the one you missed was the primary goal.

Long-Term

Thinking beyond today, tomorrow or next week.  Thinking strategically, not just tactically.  Having bi-focal thinking, by keeping an eye on today while thinking and planning for tomorrow.

Constructive Goals

Establishing focus and direction.  Holding people accountable based upon mutually established goals, objectives and milestones.  Determining specifically what it is that we want to achieve, by when, and in what order, then holding your people accountable for getting it done.  Determine what information is needed from your people and have them report their progress on an on- going, formalized basis. Determine what information your people need from you.  Establish formalized meetings with a genuine purpose, assignments, begin and end times and follow up.

Mutual Respect

Not necessarily liking one another, but working together knowing what contribution each and every other member of the team is making and can be counted upon to make.  Respect is gained through knowledge about one another.  Too many people have no idea what another person does or is doing.

Compatible with their Personal Values

There is management by objective, but there is also management by values. By combining the two, your people are never in doubt as to what to do and what not to do.  By establishing the objective s , they know on what they will be measured and rewarded.  By establishing company values and adhering to them in a consistent and uncompromising manner, there is no doubt as what is the right decision and what would be the wrong decision.  If an employe e ’s personal values are not in line with that of the company, then they eventually have to find another church to pray in.

ALTFELD, INC.

Strategic Planning, Marketing

and Sales Consultants

(818) 953-4054 • Fax: (818) 953-4037

Website: www.altfeldinc.com •  E-Mail: jaltfeld@altfeldinc.com

The average person can speak at the rate of 160 to 200 words per minute.

The average mind is capable of processing at least four or five times as many words in that same period of time.

What significance does this have when it comes to listening?

Plenty!!

It means that our thinking can get way ahead of what the other person is saying and our brain will start to wander as our emotions begin to take over.

Example:

You’re all stressed out and your mind is racing.  As a result, you try to look at a person talking, but you are actually thinking about what you are suppose to be doing later in the day, the dinner you had last night, where you’re suppose to be next and did you flush the toilet this morning before you left home.

Why we even bother to listen:

a.    Want to make a positive impression

b.    Want to advance the relationship

c.     Want to show that we care

d.    We have a real need to know what the person is telling us

LISTENING IS REALLY HARD WORK!

We were given two ears and only one mouth because listening is twice as hard as talking.

“Listening is not done by the ears, but by the mind.  We hear sounds, but we listen to meaning.”  W. Meissner

Listening is a basic and extremely important human activity.  It enables us to better understand and respond to situations as well as to others.  To be effective at whatever it is you do, being able to listen well is going to be a major determinant factor.

Listening is a communicative dance called “interactive synchrony” where the listener follows and sometime imitates the body language of the speaker.

By carefully listening, you are not only receiving information but you are also continuously trying to make sense of what is being said.  Understand going in that the speaker’s state of mind is different than your state of mind.  The same holds true if you are the listener and the roles are reversed.

Good listening requires mentalizing, which refers to the capacity to think and make inferences about people and their behaviors.  It is the ability to make sense of the other person as well as his or her behavior and your relationship with one another.  For example, whenever you nod or have a concerned look based upon what the other person has said, you are letting that person know you are making sense out of what s/he is telling you.

There is a difference however, between mentalizing and empathizing.  Mentalizing is a cognitive skill.  Empathizing is about appreciating and understanding the feelings of others.  Empathy is an emotional knowing rather than mentalizing, which is an intellectual understanding.

Listening is far more than just listening to words spoken.  It is an active process of discerning and interpreting the meaning of those words.

The ultimate is to listen to someone with an open mind.  To clear our minds and listen without memory or desire.  To make our minds neutral or empty.  Which of course is an illusion and is never going to happen.  If self-centered listening is all about you, then you need to consciously enter into the listening relationship as a self-decentered listener knowing you will never clear your head completely, but you can at least focus more on the other person.

Listening requires constant concentration and a conscientious effort.

Listening is a conscious activity based upon:

• Attitude
• Attention
• Adjustment

A Positive Attitude paves the way for you to be open minded

Paying Attention lets you process what you are hearing

By being adjustable, be flexible and adaptable you can stay with the conversation even if it takes a different course than you thought it would.

REMEMBER:

When you truly listen to a person, it makes THEM more interested in listening to YOU!

LISTENING BUILDS TRUST!!

• People are much more inclined to trust a person who shows respect for them and for what they say
• People are much more likely to trust you if you’ve listened carefully and helpfully to their problems instead of you trying to tell them what their problems are
• The more people tell you the more they trust you.

Effective communication exists between two people when the receiver interprets and understands the sender’s message in the same way the sender intended it.

There is a big difference between merely hearing the words and actually listening for the message.

By Listening:

You come to understand what the person is thinking or feeling

You are able to stand in their shoes, seeing through their eyes and listening through their ears.

You come to understand their perspective

You are actively involved in the communication process.

What is it that you need to become a good listener?

Number 1:

Be engaged and stay in the room

• Do not allow your mind to wander
• Do not be preoccupied
• Understand it is a forced engagement to actively listen

(Talk About This as a Group)

Number 2:

Have an open mind

• Be empathic and nonjudgmental
• Don’t just listen to respond
• Don’t be more interested in your own point of view than in understanding or exploring someone else’s view
• Don’t be so interested in what YOU have to say that you listen mainly to find an opening to get the floor
• Don’t listen to your own personal beliefs about what is being said.
• Don’t have an opinion, form an opinion
• Concentrate on what the person is saying
• Ask for clarification when you know you do not understand

Remember:

You can be accepting and respectful of the person and their feelings and beliefs without invalidating or giving up your own position, or without agreeing with the accuracy and validity of their view.

Question and Repeat Back

• Questioning and listening are joined at the hip.
• Questioning, paraphrasing and clarifying clearly demonstrates that you were listening and lets the speaker know that you understand or don’t understand the message they are giving.
• Ask open ended, probing questions to confirm you are engaged
• By forcing yourself to ask questions, you have to force yourself to listen intently.
• Take notes as necessary.  This too forces you to listen.

Eye Contact, Body Language and Mannerisms

• Eye contact is critical in demonstrating that you are listening
• So does nodding, leaning forward and making encouraging signs and comments.
• Looking at your watch or people walking by is not sending a good message
• Crossing your arms and looking judgmental does not send a good message, either.

SALES LISTENING

During the first encounter with a prospective customer, you both have an imperfect understanding of each other.  Which is why you should view yourself as a problem s o l v e r.  In doing so, your job is to uncover the prospect’s underlying concerns, interests, preferences and needs.

To truly accomplish this, you need to gather as much information about the prospective customer as you can.  Discover his or her beliefs, motives, attitudes and values.  The problem is that in reality, all of us never quite see things as they really are.  We see and hear things as we are.  We become captives of our own brain.  To overcome this, we need to first acknowledge this premise, make a conscientious effort to overcome it and then discern the true realities.

We provoke, inquire and challenge.

We let the prospect talk and provide us with the information we need to make a

sound decision.  We allow him to be in charge of the conversation until such time

as we have all of the facts.  This is not a race and the only time limit is the

amount of time the prospect has available to speak with you.  Taking your time

and being thorough is far more important than trying to ram our service down the

prospect’s throat.

You and the buyer are interdependent.

Your task is to create a synergistic situation that what is good for the buyer is

good for you and what is good for you is good for the buyer.  Bring the prospect to a place of discovery, not your answers.

Enter into the conversation:

• Knowing what you know

• Knowing what you know you don’t know

• Trying to figure out what you don’t know you don’t know

“Mr. Smith, is this a good time for us to speak?”

“What specifically do you need from us to make your current situation right?”

1. What is his current situation?  What is in place now?

2. Where is it he wants to go?

3. What have they tried already?

4. What prevented it from being successful?

5. What part of it worked and what part did not work?

6. What changes were made?

7. What changes were attempted?

8. Who was involved?

9. Who prevented what from happening and why?

10. What course of action did they follow?

11. What is it not working to the degree they want things to work?

12. How do they intend to get there?

13. What has prevented them from getting there before now?

14. How will they know they’ve achieved or accomplished what they want to do?

15. Is what they say they want to accomplish truly what needs to be accomplished and how do they know that?

16. Who needs to be involved to make that happen?

17.  What is the political lay of the land regarding this project?

18. What criteria will they be using in their selection process?

19. How will they know that either you or your competition will be the answer.

20. What kind of support or proof will they need?

Be Curious!! Don’t Sell!! Ask your questions, probe, prod, provoke, challenge and above all else… LISTEN!

Listening: An Important Factor in Building Trust and Rapport

Golda Meir once said, “You cannot shake hands with a clenched fist.”

The greatest compliment you can pay someone is to genuinely listen to him or

her. Listening is the key to building trust.

Three important factors:

1. I am much more inclined to trust a person who shows respect for me and for

what I say.

2. I am much more likely to trust you if you’ve listened carefully and helpfully to

my problems than if you’ve tried to tell me what my problems are.

3. The more I’ve told you, the more I trust you.

Listen More, Talk Less

A recent survey of 432 corporate buyers found that 87%of the respondents

said sales people don’t ask enough questions about their needs and 49%

reported that sales people just “talk too much..”

No one was ever fired or reprimanded for listening too much.

“Man, that guy just listens too much. He just can’t keep his ears shut!”

You cannot and must not assume that the prospect is telling you all that there is to be told.  If you assume anything, you must assume that he is either forgetting

something, left something out, or never considered something else in the first place.

It is your job to make the prospect think.

It is your job to challenge him.

It is your job to provoke him.

Concentration on the customer rather than your services is of utmost importance.

It is the key to closing any sale.  Anyone is always more apt to buy a product

when they can see that it matches their specific requirements.  Especially when

there were some requirements that the buyer would have overlooked had it not

been for you.

When Encountering a Prospect:

First off, you should begin by asking questions even if you think you know the

answers.  Not only listen to what they are saying, but convey that you are

engaged in active listening.

Second, write down what they are saying.  Take Notes!  People want to be in a

relationship with those who respect their point of view.

Third, while taking notes, pause occasionally to read back to them what you

have written.

Fourth, let them do all the talking and do not interrupt them until they are finished

or have a question for you.

Fifth, try to control your words and reactions.  Be humble.  “I think I understand

your position on this, but from my narrow perspective, as limited as it may be

about your particular situation, I see it this way…”

Finally, never argue or debate with them.

See every sale situation as a cross-cultural encounter where you start out

sensitive to their perspective even if it should differ from yours.  Gather

intelligence with the attitude of knowing that individuals not only reveal, but

conceal information – sometimes intentionally, sometimes not.

As a national average, 60% of the cost to manufacture is attributable to purchased materials.  If the purchasing function controls over 60% of the costs in a product, then resources and talent must be focused on this function if the business is to stay healthy.

What should be emphasized is the establishment of business relationships and arrangements with suppliers as a primary task and satisfaction as a primary measurement.  Emphasis on placing purchase orders and on expediting delivery should be minimized.

• Can today’s suppliers grow with us and supply the technologies and capacity required for our future needs?
• What strategic alliances with suppliers will be required in the future?
• What roles will price and quality play in the product sourcing decisions of the future?

Purchasing establishes and maintains the supplier base, seeing to it that adequate capacity and quality are available and that the level of service and price are optimal.  To accomplish that requires purchasing to develop your suppliers.  You need suppliers who are dependent upon your company’s success and are willing to work closely with you.

Lean and Inventory Management

The only good reason for maintaining inventory is that conditions exist that make it less costly to have it than not to have it.  If a supplier doesn’t deliver on time, extra inventory compensates for the problem and allows operations to continue.  It also makes us an enabler and sends a wrong signal to the supplier.  Inventory is a RESULT and very expensive.  Inventory simply hides problems.  Drain the inventory and expose the problems.  Now you can deal with them.

Problems covered by inventory:

• Unpredictable customer demand
• Inaccurate forecasts
• Low process yields, scrap, rework
• Incoming materials rejects
• Unreliable supplier deliveries
• Equipment availability
• Missed production schedules
• Field failures, customer returns

Fact:  The longer the lead-time the greater the need for more inventory and the greater the costs.

Fact:  The longer inventory sits, the harder it is to move.

Fact:  The cost of carrying inventory has been looked upon by accounting as strictly a dollar item based upon what you paid for it.  The TRUTH is, you are looking at roughly 75%/year of the purchase price, or 1.5% per week.

We keep trying to solve problems with increased inventory.  And price increases are only an enabler for the habit.  The only way to reduce inventory is reduce the lead-time.  The only way to reduce the lead-time is to reduce your process cycle time.  The way to do that is to reduce your set up time.

The Problem with Inventory:

• When the market or technology changes, all you have is worthless inventory.
• It is expensive to hold on to
• It requires support resources of people, systems, equipment and transactions
• It is difficult to work around
• Eventually it becomes not worth what you paid for it
• It can be a coping mechanism that hides the real problems

The Cost of Carrying Inventory

Recognized Costs Approximate % per Year

Interest rate of money                                                                                    5 – 10%

Taxes                                                                                                             2 – 5%

Insurance                                                                                                2 – 3%

Space (occupancy + utilities)                                                                             5%

Obsolescence reserve                                                                                    7 – 20%

Total                                                                                                            20 – 30%

Unrecognized Costs

Personnel                                                                                                10 – 15%

Capital equipment                                                                                     5 – 10%

Computation Costs (hardware + transactions)                                                3%

Secondary quality costs (reinspection)                                                5 – 10%

Rework, handling damage, additional costs                                                5 – 10%

Total:                                                                                                            50 – 75%

References:  The Supply Management Handbook, 7^th ed., McGraw Hill, The Institute of Supply Management; and Profitable Purchasing, Leading Manufacturing Excellence, John Wiley & Sons.

The hidden cost of inventory is massive.

Factors included in determining Inventory Carrying Costs:

• Cost of money
• Obsolescence or Scrap
• Space
• Taxes
• Insurance
• Personnel
• Handling
• Storage
• Overhead Allocations
• Equipment
• Lost Opportunity
• Inflation
• Rework
• Service Costs
• Currency Devaluation
• Packaging Materials

We need to move from Supplier Managed Inventories to

Supplier Managed Deliveries

• Identify the demand
• Produce and deliver to that demand
• Deliver to point of use
• Monitor and adjust to usage

Let our suppliers become Bread or Milk Men restocking as they see fit.

LOOK AT THE PRODUCTS YOU PURCHASE NOT BY PRICE BUT BY PRIORITY.

You have A, B, and C Items.  An A item is one that is extremely critical and will shut you down.  Price does not matter.  It’s the criticality of the item.

Sell what your are producing at the time you produce it.  Get rid of inventory by eliminating lead times.

If it cost 1.5% per week to hold something, the very same number applies to the manufacturer, the distributor and the customer.

It all comes down to the supplier’s lead time versus when you need it, versus the price of inventory.

The point is that the item may appear to be less expensive than the competition, but their lead time can really cost you.

In working with a supplier, why not have them ship to you out of inventory for the first 4 months.  Afterward, they have to ship directly off their manufacturing line.

Elements of Lean Purchasing

• Collapsed cycle times
• Speed replaces inventories
• Direct links to top suppliers
• Appropriate quality for the particular application is a given
• Direct user/provider interface
• The deeper the supply chain, the better

Elements of a Good Supplier

• Has minimized cycle times
• Quality is appropriate – Cpk 2-4 (process capability)
• Owns logistics – transport & POU deliveries
• Assists in the design of components/products
• Knows your business/customers
• Knows why they are profitable
• Is a technology leader in their field
• Prices based on a superior process
• Personnel turnover <5% per year

Example:

Let’s say you have a product that takes 12 minutes to produce, but it has an 8-week lead time.  To determine the Velocity ratio you would do the following:

60 (minutes) x 8 (hours) x 5 (days) x 8 (weeks) = 19,200 minutes ÷ 12 minutes = 1:1600

The question becomes, if it takes 12 minutes to produce a part, why is there an 8 week lead time?

Just as we took a look at our OMC, our suppliers need to do the same.  They have to get their Process Cycle Time reduced.  To do that means reducing WIP while increasing output.  Furthermore, by making everything happen faster, you also improve cash flow.  Because the faster it all happens, the faster you get paid.

Exercise:

The Gazorp Manufacturing Company is a 15 year old, publicly traded company.  It manufactures smoke and carbon monoxide detectors for homes, offices, institutions, and public buildings.  It sells to retail outlets, electrical distributors, and construction contractors.  Gordon has no sales staff.  They sell solely through independent sales agents.

Last year sales: $176MM

Last year costs:

Direct Labor                                                            $11MM

Material                                                            $80MM

Overhead                                                            $40MM

Sales & Commissions                                                $20MM

Taxes                                                                        $14MM

Net Profit                                                            $11MM

The year’s beginning inventory was $23MM and the ending inventory was $19MM.  The quoted lead time for new production is eight weeks.  Actual process cycle time is 6 hours (the plant works five days per week with one eight hour shift per day).  The company is ISO 9000-2004 compliant.  Their cost of all quality activities is $8MM of the $40MM overhead and $6MM of the Sales and Commissions.

• What is their manufacturing velocity?
• What are the inventory turns at year end?
• What is their PONC (as a percent of sales)?
• What is their PAT percentage?

We need to stop doing business on the terms of our suppliers:

• Their lead times
• Their costs
• Their quality
• Their policies
  • You cannot afford it
  • You are dealing with hundreds of different commercial terms
  • You are the customer

It is time we made some demands and issue orders with our terms:

• Affordable prices at any volume
• Required lead times  (Mr. Supplier, I can no longer afford the lead times you’ve given me.)
• Process capability  (Does it match our needs?  What do we say about quality on our purchase order.  How good does the product being delivered by the supplier need to be?  How often does it have to look like the print?  And what happens if it doesn’t?
• Technical assistance
• Service, returns, response times  (How long can we afford to give them to rectify a situation?  Minutes, hours, days?  What is our policy?  Do we state right on our purchase order that if the product is bad, you have exactly 24 hours to deal with it, replace it, or we dump it and don’t pay you for it?)
• Packaging, standard counts (Why are we doing things the supplier should already be doing for us?  What do we consider a standard container and a standard count?)
• Transportation/delivery terms  (When is delivery actually completed?)
• Payment terms

Perhaps it’s time to challenge your own purchasing department by asking them:

• Do we know the level of quality we require in specific terms?  How good does it have to be?  How good is good?
• Are our blueprints and spec a reflection of our true needs?
• Do we know what a process in control looks like?  Can we fairly evaluate a supplier’s process?
• Is there a correlation between the supplier’s quality system and ours?
• Are we willing and able to assist the supplier?
• Is the certification looked upon as the beginning of the quality process or the end?
• Do we have the sustaining power to make quality a life long process?
• What are the quality targets WE have set for the products we buy and sell?  Cpk 1?  Cpk2?  Or, Mil Std. 105?
• What is our supplier’s plan to improve the quality of his product line and reduce his lead times to meet our needs?
• What is the supplier’s cost of non-conformance?  Remember that it can be as much as 25% of the cost to produce.
• What is their manufacturing cycle time and ratio?  What’s their plan to improve upon it?  Remember:  The right product delivered at the wrong time is a wrong product.
• When will the supplier eliminate the need for our incoming inspection of his product?
• When will we have the confidence to do that?
• When will we begin introducing more errors by inspecting than by accepting the goods without inspection?
• When can we begin reducing the unnecessary inspection overhead?
• When will we begin using inspection only to correlate data?

We must demand from each of our suppliers that they inform us whenever they:

• Change their manufacturing processes or equipment
• Change ownership or make significant management changes
• Change their raw material suppliers
• Change their technology

Things to consider:

• Lead time should only be incurred on an initial order
• Repeat orders should utilize
  • Requirements Contracts for Direct Material
  • Systems Contracts for MRO
• Minimum orders are the suppliers’ set up time problem
• Lead time is a choice the supplier makes

The time has come for us to be thinking in terms of Contribution to Profit instead of Controlling Costs.

If Purchasing Wants to Become Lean:

• Buy from lean suppliers
• Key suppliers must have lead times no greater than your needs
• Each week of lead time costs you 1.5% per week of the price
• Suppliers cannot hide behind inventory
• Suppliers’ quality system must match your product needs
• Purchasing must buy affordable cost
• Contribution to profit- not PPV (Purchase Price Variance), cost reduction

Recommendation:

Invite the OWNERS of your top 20 suppliers, or the highest official person you can, to your company for lunch.  Explain to them what your company is all about and where your company is going.  Explain to them what we need from them to help us get from where we are now to where it is we need to be.  Educate them on Lean if they aren’t already.  Ask them to declare who wants to come with us right then, there and now.

Explain to them that you are seeking a business partner.  That you want a business strategy not an individual package with each supplier.  Then hold a one day seminar at the suppliers site talking to their employees about LEAN.

A key role of purchasing is to build roads of communication between your company and your suppliers.  In doing so, you must:

-  Define Quality.  What is it?

-  Listen to suppliers’ issues

-  Resolve historic issues – engineering, personnel, broken promises, singed fingers, etc.

-  Establish lines of communications – people systems

-  Agree on quality definitions

Should the concept of Lean Purchasing interest you, contact SME to attend the next Lean Purchasing Course in nearest you.  Or, if you would like the concept of Lean Manufacturing explained and introduced to your employees, contact Jim Altfeld at jaltfeld@altfeldinc.com or call 1 800 397 0010 for his introduction to Lean.

Answers to the Gazorp Manufacturing Exercise:

What is their manufacturing velocity:

60 x 8 x 5 x 6 = 19,200 ÷ 6 hours (360 minutes) = 53.3

(Amount of time the plant works per week) 60 minutes x 8 hours x 5 days x 6 weeks lead time ÷ time to produce = Velocity

What are the inventory turns at year end: 131 ÷ 19 = 6.9

IT = Annual Cost of Sales ÷ Dollar Value of Inventory

(Direct Labor + Material + Overhead) ÷ Ending Inventory

Annual Cost of Sales = Standard Cost x Total Forecast or Total Units Sold ÷ Total Invested Inventory

What is their PONC (as a percent of sales): 176 ÷ (6 + = 8%

Sales ÷ Quality Activity Costs  = PONC

What is their PAT percentage: 176 ÷ 11 = 6.25%

Sales ÷ Net Profit = PAT

The Entrepreneurial Employee™
By Jim Altfeld

Part II

Premise: First and foremost, The Entrepreneurial Employee ain’t you! What is meant by that is that the Entrepreneurial Employee may often “think” about leaving and striking out on their own, but they won’t. Why? Because as was stated in Part I, they lack the following:

A. The passion, guts and determination to actually seize upon an opportunity and strike out on their own.
B. The confidence and optimism to think that they will succeed regardless of a lack of resources, either controlled or available.
C. The guts it takes to bear the risk of uncertainty in any economy.

What they do have going for them are these attributes:

D. They really do want to be masters of their own fate. They want to control their own destiny, shape their own future and set their own course.
E. They have the ability to actually see an opportunity.
F. They are participants and players, not spectators and fans. They know how to get their feet wet and their hands dirty and don’t think twice about doing either.
G. They are calculated risk takers, not reckless gamblers.
H. They have a great passion and enthusiasm for what they do.

Simply stated, the Entrepreneurial Employee is not looking to go off and create his own thing. The EE is not looking to use your company as a stepping-stone to start his own thing. S/he wants to own, operate and run your business! The Entrepreneurial Employee is everything you are, minus the guts! Without question, the EE is a rare find, can be a tremendous asset, and can become your eventual successor if you allow it to happen. If you are fortunate enough to find one, you should cultivate, nurture, grow and develop them in hopes that they really will never leave.

Your Challenge:

Foster an environment that inspires your EEs to achieve their fullest potential and create a culture in which they can thrive.

The Situation:

The first thing about an EE is that they do not want to be lead. They are very mobile, in demand, and are not waiting around to collect their pensions. They know what they’re worth, they know their value and they expect you to know it, too.

Secondly, EE’s are organizationally, very astute. They know how the company is being lead and the strategic direction it is taking.

Third, they are not driven by titles and promotions. It isn’t that they don’t care about status, it’s just that they are intrinsically motivated and are not all that excited about any extrinsic motivation you can offer them. Actually, an extrinsic motivation could actually diminish their own intrinsic motivation. Don’t do it.

Fourth, is that they want instant access to the top decision maker, who is usually the CEO or owner (you). They are aware of their importance to the company, so when they have something important to say, they want to be able to say it to the top.

Fifth, they make a point of staying well connected. Their network is normally very impressive and who they know can be almost as important as what they know.

Points six, seven and eight are the most difficult for a CEO/Owner to deal with. Six, the EE has a very low threshold for boredom. As a result, the onus is on you have to make certain they are being inspired, challenged and engaged, or you are sure to lose them.

Seven, the EE wants to be in control of the decision making that includes the resources s/he will need to successfully get the job done. This means your having to let go and getting the hell out of the way.

Eight, the EE probably won’t say Thank You or show any real sign of appreciation, which can be hard for a CEO/Owner to stomach. There is also a good chance s/he will not recognize your leadership, because they don’t like being lead. Which means you may have to go out of your way to make the independent EE understand his or her interdependence. Or, as Dirty Harry once said, “A man’s gotta know his limitations.”

Overall, the best way to keep an EE is to create an environment where the EE can be independent while being interdependent. An environment that encourages them to experiment, play and even fail.

The real challenge you will face as a CEO/Owner is to quietly demonstrate your expertise, guidance and authority while protecting the EE, sometimes from him or herself. But, without a doubt, you will not only see the EE flourish, but so will your company.

With the economy continuing to struggle, the onus increasingly falls on the leadership of companies for their survival. The fact is that “leadership” – which includes providing answers, direction and vision for the business – can no longer come from only one or two individuals such as the CEO, president or executive council. It must come from every manager and supervisor as well.

While it is true that leadership and management are not the same thing, the concepts certainly do overlap. In most cases, running the business operations is the role of management, but building and growing the business requires leadership. The key aspects of management include planning, budgeting, organizing, staffing, controlling and problem solving. Its function is to keep systems and processes running as smoothly as possible and making certain that the right people are in the right place. Leadership, on the other hand, defines what the future of the business should look like. It strategically aligns the people and departments with that vision through interaction, interdependence and horizontal integration. Leadership gets everyone pulling on the same rope in the same direction. It informs, involves and inspires its followers to succeed and to overcome obstacles. It is about communication and cooperation. Leadership is what originally creates the business and continuously provides direction. It involves the constant tweaking and adapting of the enterprise to deal with the changes and impermanence it will face throughout its life. Therefore, management keeps the organization under control and produces results. Leadership produces change. The true art to leadership is the ability to determine the right paths to take and then to inspire people to help you carry them out.

In a recent conversation with a general manager, I asked him if he manages or leads. He answered, “Yes, to both questions. Around here, I’m the only guy who is responsible. If my people don’t know what to do when they run into a situation, I’m usually too far away, too busy or unavailable to tell them. My job is to make sure they know. What they do depends on the situation they’re facing and only they can judge that. If they have to passively await orders from me, they’ve lost their ability to help. If I have to tell them what to do, it’s way too late. The responsibility is always mine, but the decision lies with whoever is on the spot. And making a decision requires as much courage as it does judgment. The way I look at it is that either they accept responsibility, learn to make decisions and become leaders, or they’re going to require a lot of supervision. And that to me is not only unproductive, but one helluva waste of time.”

Whether it involves management or leadership, everyone within the company, regardless of their rank or position, must have a clear understanding of where the company is going and what they can do to help get it there. What managers can do as leaders is to plan and to set priorities, to earn the trust of their followers and to motivate them to want to see the plan succeed. They must have the courage to make decisions, determine the right things to do and then ensure that they are done right.

Leaders must help people believe that the cause is just and worth fighting for. That they can be effective, that the goals set forth are achievable and that there is a better future ahead of them if they can just accomplish what they have set out to do.

Managers and supervisors must learn to be proactive. They must understand the overall strategy, help develop and implement the operating plan, manage and tweak the plan to ensure that it succeeds and proactively anticipate what to do next.

What Exactly Is a Leader?

Leaders are those responsible for making the right decisions and doing the right things. Their first priority is to build the business, not to run the business. They set a course and a direction for the company. They know where their business is going and where it must go. They control their own destiny and do not allow the “business gods” to determine the future of the company they are leading. Leaders don’t think themselves into a new way of acting; they act themselves into a new way of thinking. They know that they get from their people the very same behavior that they themselves exhibit and tolerate. They establish the company’s culture based on primary values that define what gets accepted, respected and rewarded. They leave little doubt as to what is valued, recognized and tolerated and what is not. They create a climate in which there is tremendous pride in making significant contributions to shared goals. They encourage and foster the concept of “renewal” and continuous improvement. Leaders are self-confident. They are not afraid to hire people with talents far superior to their own. They build strong, dynamic and passionate executive management teams consisting of the best and the brightest that the company can afford – because leaders know they cannot get the company from where it is now to where it needs to be, without such a team. Leaders ensure that the right people are in key, pivotal places; people who can help move the company forward. They make recruitment an ongoing and essential part of the company’s culture. They ensure that clearly defined goals and priorities are established, and policies are in writing. Leaders ensure that the right systems and processes are in place to make the company run efficiently and effectively. Leaders ensure that management understands those systems and processes. They ensure that the company is strategically aligned from the top down and the bottom up — that everyone understands their roles, responsibilities, job functions and contributions toward keeping the company moving forward and on course. Leaders ensure that their people and themselves continue to grow and become more valuable to the company and the customers. They inform, involve, inspire and challenge their people while holding everyone accountable. Leaders put measurements in place and make it clear what is expected of everyone. They deliver on their promises so that things get done at every level and in every department of the company. They let their people know what is going on while letting their people’s voices be heard. Leaders endorse the concept of “synergy” – that what is good for the whole is good for the individual and vice versa. They understand that the more teamwork there is, the more their people will come to rely upon and trust one another. Leaders know that the greater their people become the greater they themselves become and the greater the company becomes. Leaders understand that titles are given and with that comes subordination, but leadership is earned — that leadership is bestowed upon them by their followers and as a result they must earn their followers, not just accept subordinates. Leaders are authentic and consistent. There is never doubt about who they are or what they stand for. They build trust and get “buy in” through their own actions and the culture of the company. They teach and build with a book in one hand and a brick in the other. They motivate and energize others. Leaders are open to new ideas regardless of their source. Leaders are judgmental and decisive because they have to be. Leaders are courageous. They have a need to achieve and are not afraid to take risks. Leaders never give up, but they always know when to get out of the way.