Studies show that 75% – 96% of all business failures involve human error. Be that as it may, human error is not the cause of failure but the symptom of a failing system.

A Global Chief Executive Officer study revealed a commonly held belief that a rapid escalation of “complexity” is the biggest challenge confronting businesses today, who are inadequately equipped to cope effectively with this present and growing challenge.

Creativity has been identified as the solution of choice to increase system-level innovation and dexterity.

Of all desirable leadership qualities identified in the study, ranging from “Creativity” to “Fairness”, none identified understanding Business Systems!?

Multi-year studies show that:

• CEO-Tenure has dropped from 8.1 years to 6.3 years.
• Early CEO dismissal for under-performance is up.
• Frequency and success rate of shareholder derivative suits aimed at replacing executives is up.

Do you thing that there is correlation or even causality between:

• Knowledge of business systems?
• Being challenged by complexity?
• Shorter tenure at the top?

How do you rank the probability of executives being successful with creativity on a system level when being confounded by the complexity of their own business system?

They found that the most pressing challenges facing CEOs today are:

• Coping with change
• Increased complexity

The interviewed leaders identified Creativity as the most important leadership quality for coping with change in an increasingly complex environment.

Unfortunately, there’s no Dummy’s Guide, or Best Practice to becoming creative. Just as much Art schools do not produce artists, Business schools do not produce creative leaders. Art and business Schooling only provide the component parts, each with their own theories and methodologies. The component parts of a business are business functions or processes such as Finance, Branding, Information Technology, Logistics, Marketing, Leadership or Social Media. Each component part has its own tools of the trade.

The magic with which one organizes or arranges component parts into a business system or network is called creativity. Creativity is a form of craftsmanship; knowing which combinations of component parts has structural integrity given a certain environment and which combinations will fail that critical test.

ONLY the BEST

Curricula of business education, the questions business people ask online in a forum such as LinkedIn and advise given in blog posts or other articles suggest that leaders are only interested in collecting the right component parts while trusting that implementation (read organizing and arranging) will magically take care of itself.

Everything, even human beings, is reduced to component parts and classified according to their inherent commodity specifications. The advantage of specs is that you eliminate qualitative data and now only have to deal with quantitative data. Quantitative data can be compared and ranked as if they are fully interchangeable within any industry, any business, any Geo-Political environment, and any Socio-Economic situation, now and in the future; very efficient.

As a result, professional conversations tend to revolve around the following pursuits:

• Which component part is more important than another?
• What are the top # of steps/mistakes/secrets/characteristics/etc. of any component part or to achieve any specific desired outcome?
• Which tool to use for addressing a specific symptom?

My mind conjures up this image of a business-improvement store with numbered isles and shelves filled with component parts and tools. I see leaders shopping for the cheapest, best, fastest, most efficient component parts and tools, filling a cart and pushing it to the check-out counter.

CONNECTING the DOTS

Complexity is the result of relationships and interdependencies among component parts and the tight coupling of scarce resources that actually perform the intended business functions, such as people and computer systems. Every additional resource, component part or function ads to the complexity.

Therefore, the challenge that complexity poses to leaders is the interaction among component parts. How a business performs is thus dependent on relationships and interdependencies among component parts. One can invest in only the very best of component parts but when they fail to interact with each other properly, the business system will perform poorly due to unnecessary friction and conflict.

KEY to CREATIVITY

Creativity is the art of organizing component parts and directing them intelligently towards the realization of a business’ purpose. Creativity is thus concerned with relationships between means & ends and cause & effect, which require the perception of a business as a singular, unique, integrated and open network of component parts. An interesting characteristic of craftsmen is that they truly KNOW their tools; they need fewer of them and realize better results than any apprentice equipped with the latest and greatest could ever wish for. When one asks them about that you’ll find out that they just don’t know any better; for them there’s just one way to do it; the Right way!

In other words, leaders need to appreciate the character and nature of the business system for which they are responsible. How a business system or network behaves is all about the interactions among people, processes and technology; in THAT order. Remember that neither tools nor technology make a business succeed but people do and people use their minds. Creativity, how one organizes and directs component parts and wield one’s tools, is a mind game for which there are no best practices. When it LOOKS good it seems to have integrity.

The first step towards creative leadership is studying the character and nature of a business system so that you’ll know instinctively what it is doing at any time and what action is required in order to meet a set performance. Pilots call that study basic Stick & Rudder skills, which is far more realistic, and far more likely to save lives than any heroic measure. And yet, over 80% of all errors are skill based. We need more true craftsmen at the top of a buiness!

What will solve our problems, and Einstein already gave us the answer, is changing our level of thinking; questioning what we belief is right, true or valid. This quality is otherwise known as creativity and innovation. Whereas biological organizations put innovation and creativity at the “top” of the hierarchy (in the brain), most human-made organizations (such as corporations or nations) become increasingly rigid toward the top; anxiously holding on to the same level of thinking that created their trouble in the first place.

This self-imposed rigidity shows up in all sorts of unintended and unwanted symptoms, ranging from disappointing bottom line results, to a lack of employee engagement, the “War-for-Talent”, high cost of production, low customer-loyalty and fierce price-competition that erodes profitability and ultimately the viability of a business. Second chances provided by a Merger and Acquisition transaction become just a stay of execution when the acquiring business is governed by a similar level of thinking as that of the acquired company.

Significant problems arise from failures to adapt timely and adequately to unexpected and unanticipated events that create new and unforeseen circumstances. These problems cause changes in normal operating conditions that tend to be persistent and recurring when you least expect it or have the leeway to deal with successfully.

The character and nature of changes to normal operating conditions is enterprise-wide; it takes no notice of any departmental boundaries. This cross-over effect is particularly severe in complex organizations, which (computerized) complexly interdependent and tightly coupled processes can cause new symptoms elsewhere within the network.

Therefore, enterprise-wide change initiatives are the responsibility of top management; people who can exercise ultimate authority for conducting change initiatives and who therefore assume ultimately responsible for the success of the business as a whole.

Leaving it up to individual department managers each with their own limited authority and responsibility will only create conflicts of interest and unnecessary friction.

In order to solve enterprise-wide problems, top management must be capable of explaining why a business does as it does and why it does not generate the intended results or, if it generates these unwanted results, then what actions is the business actually performing?

This is important because once you understand the root of an organization’s dysfunctional behavior, you do not need to explore its countless manifestations.

Appreciation for the business system under one’s command and control -insight into the relationships between means & ends and cause & effect- enables leaders to adapt and adjust to new and unforeseen circumstances as they unfold. This ability of leading a business back onto its intended path in the direction of its intended destination is CEO Effectiveness.

CEO Effectiveness is not a tool, best-practice, theory, ideology or dogma. It is the perception of the environment in which we live; the moral compass of our values -that what we believe to be self-evident:

• Stewardship:                         The moral WILL to do what is right.
• Craftsmanship:                    The moral SKILL to find out what IS the right thing to do.

Our moral compass is guided by the laws of META-physics, contrary to science which is guided by the laws of physics. The laws of physics will produce the same result under similar conditions, which is evidently not the case for significant problems in business. How we perceive a business system and its environment changes the outcome of our actions, and each significant problem requires its own Authentic Solution.

Changing our perception is a journey that transforms what we believe to be true and valid. Only when we come from a different departure point can we obtain different results. When you want to stop performing the same ineffective activities over-and-over again because they result in the same unintended and unwanted results, you’d better change your mind!

When you find yourself in a leadership position today, you probably have acquired over time enough knowledge about WHAT and HOW to conduct routine operations. However, dealing with change demands that you know the WHY of applying what you know and how to do it; organizing what you know and directing it towards creating Authentic Solutions.

Only when you can account for your decisions, when you can explain succinctly why you acted as you did will you experience Peace-of-Mind; the knowledge that you acted with integrity in accordance with your moral compass.

Which way will you go:  DO more and better of the same or THINK differently about what you believe to be self-evident?  It’s your call!

1. The idea or conviction of one’s own beliefs about what is possible (= vision).
2. A meeting place for testing one’s ingenuity against that of rivals.
3. Sporting the best performing vehicle they can bring to the race at any given time.
4. Employing the best driver to lead the team to victory.
5. Employing the best support team to produce and deliver success.
6. Insight into the capacity and capability of their vehicle (and that of others).
7. Attracting the best financiers who believe in realizing that belief of what is possible.

So without a vehicle, you cannot realize your dream. You can dream about testing your capabilities against rivals all you want, and talk about racing all day long and even registering for a race, but without a vehicle, you’re not even getting to the starting line. The least you need is a jalopy.

It’s needless to say that the outcome of every single race is determined by the capabilities of the vehicles that enter the race, that of their drivers and the interaction between a driver and his/her vehicle. So, how do you measure performance during the race apart from lap time? Well, there’s the instrument panel with multiple gauges that provide you with read outs for speed, engine revolutions, oil pressure, oil temperature, engine temperature and fuel consumption.

Furthermore, the performance of even the best vehicle in the world is limited by the abilities of its driver. In turn, the performance of even the best driver in the world is limited by the capabilities of his/her vehicle and that of its mechanics.

Top performance depends on:

• The ability of organizing every single aspect of racing into a single competitive force. Organizing requires trade-off decisions among equally desirable properties; choosing more of one at the expense of something else. For example, will you hire a better but more expensive driver or invest in a set of brand new tires? However, “Gold-plating” one single component part of a vehicle is a waste of resources because success depends on how the vehicle performs as an integrated whole. Optimizing a single component part far beyond the over-all standard of the vehicle will only command a marginal rate of return. Furthermore, any trade-off decision to deliberately apply lower standards of craftsmanship or safety for one or more component parts of the vehicle is a form of predatory cultivation, which compromises top-performance of the vehicle as a whole.
• The ability to intelligently directing that force towards the realization of one’s dream. All employees, including all executives, need to be united in achieving this one vision. In order to take ownership of the idea, everyone needs to agree on the definition of winning and therefore understand what’s expected of them as a team and thus of each and every one individually. Neither micro-management nor zero-tolerance policies are an option when unleashing the full might of one’s force.

Hence, you can only achieve first place, receive the coveted trophy and collect the prize money through compliance with the objective of the sport; complete the fixed number of laps without any safety violations in the least amount of time with an authorized vehicle.

The trophy and prize money represent the accolades and distinction for a job well done. Stealing the prize money and trophy or making a replica of the trophy does not bring you the honor and distinction that is earned by winning the race. However, the winner of the race will always be the winner, with or without trophy and prize money; period!

Being in business is no different and yet management education prescribes different principles. Instead of encouraging leaders to comply with the objective of business, giving buyers more in use-value than you take from them in cash-value, they teach the opposite. They emphasize making money, by teaching best practices that restrict allocation of resources that would increase a business system’s capacity and capability to serve clients, force employees to do more with less and undermine rivals!

Justifying the sports analogy

A)     Every business starts with an idea or a vision of improving the lives of other people and giving the entrepreneur the satisfaction of fathering that idea and bringing it to life.

B)     The success of an idea can only be ascertained in a place where demand and supply meet. In other words, in the absence of an audience to demonstrate the uniqueness of your products or services, you have no chance of being recognized for your abilities. Without recognition for your achievement, you will not be rewarded.

C)     The purpose of any business system is to realize the dream. A business system is thus a vehicle for demonstrating your unique abilities; if you have no vehicle you cannot race and will receive no accolades, no trophy and no prize money. The purpose of a business system is thus to run the race in order to qualify for the opportunity of winning.

D)     Business systems like vehicles are impartial regarding their performance and deployment. That means they function according to how they were designed, built, implemented, maintained and managed. In other words, a business system functions according to its Business Governance. Given the importance of business governance, any system requires a single person to assume ultimate responsibility for the success and failure of the system and therefore be granted the right to exercise ultimate authority for governing the system. That person is the driver of a business system.

E)      No system designs, builds, implements, maintains or manages itself; it requires a support team that can draw upon multiple areas of expertise. These areas of expertise need to be organized and intelligently directed at achieving a unifying vision of service to others.

F)      Business systems would perform better when their governance is guided by measurements of their capacity and capability like in a car instead of financial measurements. Imagine a racing car which dashboard provides read outs for the team’s, Accounts Payable, Accounts Receivable, Return on Investment or Price/Earning ratio. What is the benefit of that information to the driver for winning this race or the next? Financials are important but not for improving the capacity and capability of the system under your command & control. Furthermore, no performance can exceed that what the system is physically capable of demonstrating. So, don’t set unrealistic goals!

G)     Investors in a business provide financial support for the realization of a unifying vision of service to others, and they’d better back a vision in which they firmly believe. After all, their Return on Investment is directly linked to the purpose of that business system. If they don’t subscribe to the purpose of a business system, they should not bet their money on its success either. Therefore, it is unrealistic to expect that every trade-off decision would be measured against the realization of any purpose other than creating use-value for others. How many clients do you know that are inspired to do business with you when explaining that the purpose of your business is to give them less in use-value than you take from them in cash-value? Profits are the accolades, trophy or prize money that one receives in recognition by your clients for a job well done!

Independent C-Level Thinking

Leadership is like a golf game where you play against yourself in moving the ball from the tee box to the hole. However, business is a team-sport. So, as a business leader you’d better take heed of what General George S. Patton US Army said: “Never tell people HOW to do things. Tell them WHAT to do and they will surprise you with their ingenuity.”

This adage not only applies to subordinates but also to their leaders. After all, ingenuity is the power of creative imagination; a skill set or aptness in organizing knowledge into a force and directing that force intelligently towards the realization of a unifying vision of service to others.

Therefore, leaders who rely on strict adherence to best practices for leading their team to victory are lacking ingenuity and thus authenticity. Col. John R. Boyd, USAF said that: “leadership implies the art of inspiring people to enthusiastically take action toward the achievement of uncommon goals.” Success at the art of inspiring people depends on a leader’s authenticity, which cannot be outsourced! There is no best practice for being Authentic.

Our expertise is describing the principles that govern the cause and effect relationship between a business system’s component parts. Once we have identified the component parts at your disposal and shown you their intricate relationships and interdependencies, you can unleash your unique creative imagination for organizing resources into a competitive force and directing that force intelligently towards the successful realization of a unifying vision.

Your Take-Away Lessons

We learned that even the best leader needs a vehicle, or business system, in order to BE in business. The success of any vehicle depends on it’s leader’s ingenuity to organize the many component parts, such as marketing, sales, leadership and finance, into an integrated force. Most competing forces contain the same component parts that are obtained from the same Original Equipment Manufacturers, and its work force is educated and trained by the same institutions for management education. The difference between forces is in their organization; how the component parts works together as a singular, unique, integrated and open system.

Unfortunately, the current dominant thought of management education teaches leaders how to commit predatory cultivation on the vehicle under their command and control. This happens when the next available step in operational efficiency must be obtained from lowering the standards for quality and safety, which cannot fail to result in poor design, incorrect implementation, deferred maintenance and careless management. Therefore, collapse is a failure to adapt to variations in the business system’s capacity and work-load or its surrounding market-conditions. Collapse is often times self inflicted.

We also learned that the prerequisite for success is defining a unifying vision of service to others and unleashing the force of integrated knowledge towards the realization of that vision.

In conclusion, no matter what you want to achieve in business, you’ll need a vehicle to make it happen. Therefore, cherish your business like a NASCAR vehicle so that you can have peace of mind when pushing it to the limits of its performance envelop.

Dr. Albert Einstein said that everything should be made as simple as possible but not one bit simpler. So, how does that apply to contemplating the design of a jet engine? Well, it does not take an engineering degree to understand the rudimentary principle of the jet engine and thus to feel deep appreciation for the elegance of its design.The following simplification of a rather complex unit also provides a valuable teaching moment for executive decision makers.

Imagine a shaft that has a compressor on one end and a turbine on the other. The compressor compresses the cold outside air into a hot gas and forces it into a combustion chamber located between the compressor and the turbine, where fuel is injected. As a result, the mixture combusts, heat up and therefore expands thus creating thrust that exits the engine through the turbine, pushing the aircraft forward. Notice the magic of the jet engine; hot air leaving the combustion chamber drives the turbine and thereby the compressor, forcing cold air into the combustion chamber. Compressor and turbine are interdependent of each other because they are mounted on the same shaft; one cannot work without the other! However, the system needs an outside force in order to get started.

The effectiveness of decision makers at the controls of business systems or engines of our economy is no different. Here are three examples of business aspects mounted on one and the same drive shaft:

• Leadership on one end and appreciation for the character and nature of a business system on the other.

Leadership without understanding and valuing of the business system under one’s command and control is merely trial and error. Appreciation for the system will prompt a leadership style that is most effective for the situation at hand.

• Solving business challenges on one end and solving personal challenges on the other.

The authenticity of any solutions to a business challenge hinges upon the extent at which a decision maker grasps the root cause of the problem him/herself. Confusion about the situation at hand and therefore the cause and effect relationships of various proposed solution alternatives reduces a decision maker’s effectiveness significantly. Decisions that give a decision maker peace-of-mind tend to be better business solutions.

• Business governance on one end and business processes on the other.

Effective governance originates from understanding the requirements of the processes under one’s command and control. Effectiveness of processes depends on how they are organized and guided or governed.

You may want to ask about that outside force to get the engine started. That force is what I call “Anticipated Outcome” or quality; it is the driving force behind you starting the business in the first place and why you keep getting at it against all odds. I bet making money is not it!

Now that we understand and appreciate that engines and businesses are singular, unique, integrated and open systems, let me end this posting with a heartfelt plea to resist the inexplicable urge of writers in forums such as LinkedIn groups for ranking everything and anything. What is it that they do not understand about the idea of “interconnectedness”? Next time, when confronted with the request to rank interconnected aspects of a business system, please ignore the question because the ensuing discussion will be like a broken pencil: POINTLESS!

If everything inside your business were running like clockwork, wouldn’t you be on the golf course, out surfing, or sipping margaritas with friends?

The fact that you’re reading this article is because you’re still looking for answers to the significant, persistent and recurring problems that pose a direct challenge to you personally as a leader! Don’t panic, because you’re not the only one; our management education has failed us all.

In the good old days, one could get away with an excuse such as a changing trend in consumer behavior, the longer than expected adoption cycle of a state of the art computer platform, or just the unpredictability of a global economy.

Today, Boards have become less lenient towards CEOs when it comes to under performance. As a result, CEO tenure has dropped and shareholder derivative suits are increasingly successful at replacing a CEO. How effective are you at solving those recurring and persistent problems, let alone when confronted with new or unforeseen circumstances?

Given the fact that about every business has seen their room for maneuver shrink, every executive decision maker has seen its margin for error reduced. In conclusion, executives face more uncertainty, more accountability, and less tolerance for mistakes. Today’s business climate demands higher CEO-Effectiveness than ever before, and that’s what made me believe that you would want to read this article.

Before investing in the next solution aimed at the many significant, persistent and recurring challenges to profitability and sustainability, be reminded that whatever one intents to achieve in business, it can only be realized with and through the business system under one’s command and control. There’s no other way!

Any solution that promises an immediate contribution to the bottom line through more automation, higher efficiency, faster production, real-time information, or any other best practice on topics such as global leadership, strategic planning, branding, or social media, is just an investment in doing more and better of the same. Then, no wonder that the same challenges persist or keep coming back again-and again. There shouldn’t be any surprise!

If you are serious in your desire for a different outcome, then change the system; change the structure with which the organs of your organization are connected; how they relate and interact with each other.

In order to bring about such physical change, you must start embracing the transformation of your own thought patterns by studying patterns that disrupt business as usual. For example:

√                    Leading with creativity and innovation instead of following best practices.

√                    Increasing CEO Effectiveness instead of obsessing about organizational efficiency.

√                    Developing a system’s capacity and capability instead of growing it in size or number.

√                    Fostering adaptability to new and unforeseen circumstances instead of pursuing the quest for certainty.

√                    Focusing on change management instead of persisting in routine or business as usual.

Instead of trying to keep up with the latest techniques, skills and tricks, why not invest your time and money in learning the principles that govern any business system in good and bad economic times? Would you rather enjoy peace of mind or endure decisional conflict and stress about your personal performance and thus tenure! It’s a choice and it’s yours to make. What will you commit to doing next?

Clarity of WHY

I believe that for every random cost-cutting measure there is a viable SOLUTION ALTERNATIVE that not only makes a business profitable but also sustainable and respectful of humanity at the same time. Treating humanity as a bargaining chip for higher net-profits incites moral crises*!

Discipline of HOW

The way decision-makers find solution alternatives that improve their circumstances is through opening their hearts and minds to new and unfamiliar sources of knowledge and expertise; in other words, through MORAL INTERACTION with:

• Others whose trust and confidence they cherish
• Others outside their own sphere of influence
• Unfolding disruptive events

Consistency of WHAT

In order for decision-makers to open their hearts and minds, we deliberately CREATE OPPORTUNITIES for moral interaction in the form of Master minds, Presentations, Training, Coaching and Consulting. Participants will acquire the unique skill set of ORGANIZING specialized knowledge into a singular, unique, integrated and open business system and DIRECTING that force intelligently towards the realization of a unifying vision of service to others. This skill set is known as “THE MISSING LINK IN THE VALUE CHAIN™”.

Invitation

The CEO-Adventure is a top-down grass roots’ movement for forward thinking current and future executives worldwide that feel compelled to address the moral crises of today. If this program resonates with you, then this program describes who you are and we want to hear from you today! Call (858) 344-1137

____________________

*  A departure from the generally accepted cultural codes of conduct or standards of behavior that constrain, as well as sustain and focus, our emotional/intellectual responses.

• How to Increase Sales
• How to Raise Prices
• How to Lower Cost

IF making money is all that you care about, then why not sell the whole kit and kaboodle and invest the proceeds? Why else would anyone want to put up with employees, unions, Federal and State regulations, landlords, clients, you name it? Could it be that there is a driving force that’s bigger that all that possible aggravation?

Clarification:

There is only one legal business whose purpose is to make money; The US Mint.

Their business system is specifically set up to print and mint legal tender.

In other words, the purpose of their business system is to actually make money. All other businesses have to EARN money.

How to EARN money?

Businesses EARN money in exchange for goods or services.

If you are the sole provider of a good or service in a market then people have no choice but to buy from you or choose to forego the benefits of your goods or services. As a monopolist or oligopolist you can pass on your inefficiencies to your buyers in the form of a higher price. As a buyer, your only choice is to buy or not to buy. Furthermore, you will also have to put up with any lack of effectiveness or stop patronizing that business altogether.

However, most of the time you are not the only supplier; there are others providing similar or substitute products and services to your market place. Now you’ll have to compete for buyers’ favor. After all, buyers determine where they spend their money; not you nor your competitors. Indeed, you’re not battling the competition, but pleasing the buyers.

Because you cannot please every buyer all the time, you need to specialize or niche your value proposition. You will attract those buyers that believe what you believe. Those buyers become your loyal customers who need little incentive to buy from you time and again. Price is not an important issue in their purchasing decision, although they might try a rivaling product or service when enticed by a special promotion. But when that product fails to meet the buyer’s expectation, it will also fail to win over his/her patronage. In poor economic times, having built a loyal customer base is priceless.

Downward Spiral

What is more efficient, building a loyal customer base or having to incentivize every sale you want to make? Offering discounts and rebates drain profit margins, which is especially painful in a poor economic climate. Compensating for this loss of income by cutting benefits from the value proposition makes you even less attractive than before. As a result, you risk loosing loyal customers over selling a lesser product for the same price. So, you lower your price or increase the quantity and both reduce your profit margin. How long can you keep up this downward spiral?

What People Want

You can fool some people some of the time, but you cannot fool all people all the time. People want the biggest bang for their buck. So, obtain your operational efficiency from raising the quality of your production and delivery system rather than eliminating benefits from your value proposition; using inferior ingredients or lowering quantity per delivery.

Raising quality of production and delivery raises product or service quality. Such products and services perform better within the client’s setting and thus increases satisfaction. Satisfied customers are your best advertising and public relations you can buy.

Also, employees take pride in doing their job well; it gives them satisfaction and makes them engaged and loyal employees who have your best interest at heart. Key talents that are dissatisfied will leave your employ and leave you to fight the War for Talent.

Furthermore, higher quality products and services require less rework and incur fewer warranty claims. Every activity that needs to be done outside the standard production and delivery routine is exponentially more expensive.

Realizing a Unifying Vision

Do you remember why you went into business? Didn’t you have a splendid idea based on a vision for the future? You wanted to produce something that you were proud of and to that end you designed, built, implemented, maintained and managed a business system that could realize that vision for you, right? So, what’s the purpose of your business system? You’ve got it, realizing a vision!

Now that you have grown your business to where it is today, you are closer to realizing that vision. In the process you earned money, including a profit margin that paid for that growth. Therefore, your best employees are those that share in your vision; when they believe what you believe then everyone is united in working on the same cause. Have you ever met any one who is excited to get up every morning with the prospect of making money for someone else in return for being treated as a low-price fungible commodity; an expense item? I know I haven’t!

Conclusion

If you want to improve your top- and bottom line results, you’d better improve the quality of your production and service delivery because it will lower your cost, increase your loyal customer base and win the war on talent. Why does Management Education make business so difficult and hard to comprehend? It’s not about the money; money is the reward for a job well done. So, create a quality business system for doing a quality job, delivering quality goods and services that satisfy the needs of all stakeholders and Bob’s your uncle!

I want to tell you a little story but forgive me for stripping away all elaborations that serve the purpose of dressing it up and making it more palpable than it actually is. So, here we go.

Once upon a time a family of five was living in a nice and comfortable house in the suburbs. After many years of great service to the family, the house started to leak and now, every time it rains, unexpected things start to happen. No, not only the obvious such as wet carpets, furniture and beds, but wall paper peeling off the wall; plaster falling from the ceiling over the diner table, landing right in your soup splashing your clean shirt. Doors are buckling and getting jammed. As a result, you have to yank the door open and kick it shut. The more it aggravates you, the harder you kick it shut and the harder you must now yank the door handle to open that damn door. Eventually the door handle comes off and the bottom part of the door collects scuff marks. Water is seeping in between the walls and the moisture causes the wood to rot, damaging the structural integrity of the house. Floors are sagging which puts pressure on the window frames that cause the pane to crack or shatter. Mould forms which undermine the immunity of everyone living in the house. This sets off a chain reaction in its own right. Electrical systems fail because the moisture corrodes the wires and causes shorts. So, every time it rains the lights go and you live in the dark. As a result, no one really feels secure inside that house; you simply don’t know what’s going to happen next and when it will strike. Well, that’s not true because Murphy’s Law says that it will happen when you least expect it and when you are most defenseless.

So one day you wake up and realize that its time for action. You re-apply wall paper but now with water resistant glue; repaint the door with mould resistant paint; buy water tight bed-spreads; replace the electric ceiling lights with oil lamps and you tile the downstairs floor. This is progress, because every time it rains, your bed stays dry, the light stays on and the floor does not absorb moisture and is easy to clean with a mop! Doing something has made you feel good.

The moral of the story is that what you spent over time on many small-ticket items ends up costing you more than spending money on fixing just one big-ticket item such as the roof. Furthermore, fixing the roof once and for all gives peace of mind to everyone; no more surprises. All you needed to do was go to the source of your trouble, in this story a bad roof due to poor construction, poor maintenance or simply age. Don’t blame the climate for your trouble and misfortune.

As with most stories, they seem so unreal. This does not happen in real life, or does it? The economic climate produces a lot of rain and we keep fixing symptoms; the wet furniture, the stuck door, etc. We use empty slogans such as “We need to do More with Less”. Well that’s fine and dandy but don’t expect your clients to remain loyal. Don’t expect your employees to be inspired and engaged and thus loyal. If you cannot hold on to your clients, you need to attract new clients all the time for every sale you make. You need to lure them away from rivaling offerings and give them incentives to try your products and services at least once. That costs money which comes straight out of your profit margin. But hey, “touch times require touch measures” and so we cut again; making the product and service experience for buyers less appealing while expecting to sell it for the same price. Who are we kidding? Certainly not your employees. By now you have undermined moral and lost your loyal key talent because they don’t agree with your policies. Once those few people that were holding your business together have left, you are receiving one surprise after the other when you least expect it and are most vulnerable. In other words, the structural integrity of your business is gone and collapse becomes inevitable. Do you recognize the pattern? Just like in the story!

We live in pivotal times that require CHANGE and all we seem to focus on is plugging the holes and yes, many businesses are more than happy to sell you anything to cover-up those symptoms more efficiently than before and at a lower cost than overhauling the business system. These are the penny-wise and pound-foolish policies that cost you your key talents.

Remember this: these chains of events are not the cause of failure but the symptoms of a failing business system. Your problems are produced by your current business system and not by anything else. Yes, I know that people make mistakes but instead of trying to change the human condition, why not change the conditions under which humans work?

You’re absolutely right that this level of thinking is not mainstream and in this rainy economic climate, you don’t even want to be in the mainstream where everyone is facing the same trouble because they are holding on to the same faulty lines of reasoning that are still sold by most business educators today. Don’t blame them either because as long as you demand their services they will cater to your needs!

You were taught how to grow a business but not how to enhance your power to adjust and change in order to cope with new and unexpected circumstances. If you are befuddled and bewildered by unexpected events that keep taking you by surprise, then now is the time to learn how to cope with those new and unexpected events by empowering yourself to adjust and change! Ask me HOW today by calling (858) 344-1137

The solo-entrepreneur exercises a leadership style that is very much hands-on whereas a CEO must lead by remote control; working the intermediary technology that connects the many hierarchical layers that s/he wants to influence. As a result, feed back information gets translated and thus filtered according to what lower ranking officers believe is the nature and format in which the CEO wants to receive it. On the other hand, the Control & Command information has to be sent down the hierarchy where lower ranking officers translate the CEO’s intentions into what they believe are the appropriate goals and activities. Needless to say that critical information is lost in translation and stripped of its sensitivity.

CEO-Effectiveness™

The current dominant paradigm for solving problems is doing more and better of the same, which translates for the above challenge into more and better communication- and leadership skills. However, I believe that the root cause of poor CEO-Effectiveness™ originates neither from a CEOs proficiency at Communicating nor Leadership. Just, think about the old adage from Information Technology: “Rubbish in, Rubbish out”. This implies that the business system at your Command & Control functions only as a means to an end. Therefore, no investment in tools that are used for relaying your messages and directing the business on your chosen strategic path will enhance CEO-Effectiveness.

Communication and leadership skills are merely tools for the realization of a compelling vision of service to others, and their purpose is to improve its EFFICIENCY, not its EFFECTIVENESS. In other words, CRAFTSMANSHIP, how you use the tools at your disposal, with a clear vision of what you want to accomplish with the resources at hand, is more important than the number or the quality of the tools in your toolbox! In other words, collecting the best carpentry tools on the market does not make one a carpenter; learning carpentry will! Besides, the sharpest tool is inherently dangerous to those who do not know its purpose nor the specific goal for the realization of which they want to deploy it.

I believe that the root cause of poor CEO-Effectiveness™ at the “carpentry of a business” is a lack of insight, understanding and appreciation of the multitude of interdependent functions that people perform on a daily basis, in order to make the business run as a singular, unique, integrated and open system. As a result, many CEOs are oblivious to the fact that nearly all of their decisions for solving one specific problem cut straight across the value chain, with consequences for multiple silos of specialized knowledge. As a result, there are too many examples of well intended decisions with unintended consequences that have been undermining a business’ profitability and sustainability. As a matter of fact, most businesses are destroyed from within.

Ultimate Responsibility

President Harry Truman had a sign on his desk that read “The Buck Stops Here”. That’s exactly what ultimate responsibility means. For a solo entrepreneur, growing a business implies that more tasks must be delegated to others. The object of delegation is the authority for making decisions related to those tasks, but the responsibility for the consequences of delegating tasks remains ultimately with the person doing the delegating.

A CEO is thus responsible for the entire value chain, which raises the question of what qualifies or prepares a person for accepting such a hefty charge. Characteristic of a CEO position is the need to formulate an agenda and show results within six years; the current average CEO-tenure. However, up to 50% of a CEO’s time is taken up with external affairs or community relations, which emphasizes the need for CEO-effectiveness; you only get one shot at demonstrating the soundness of your Command & Control over the entire value chain.

Management Education

Management education focuses on transferring specialized knowledge in routine activities that fall within a chosen area of expertise, such as leadership, marketing or finance. There are specific curricula for various under-graduate-, graduate-, and post-graduate degrees that differentiate themselves according to scope and level of detail. Characteristic of a more advanced curriculum is that students must choose a narrower scope, a.k.a. a major, which deals with the same topic but at a higher level of detail. Scope can also narrow down on the position within a business, in particular that of an executive. These programs tend to favor expertise in leadership, finance, marketing, corporate governance or human resources, but none of them specialize on assuming ultimate responsibility for the entire value chain.

Now, the real test of CEO effectiveness happens during turbulent economic times and when changing strategic direction. The operative word here is CHANGE as opposed to ROUTINE. You know that it’s time for change when routine activities are not delivering the intended results. Since 94% of all results are systemic in nature, any successful CEO must demonstrate his or her effectiveness at Command & Control over the entire value chain; i.e. the entire system, which includes all silos of specialized knowledge. Ultimate responsibility over the entire value chain is what sets the CEO position apart from any other executive role.

We learned from Henry Ford that no executive should be required to possess specialized knowledge in every area of expertise; that’s why he created a master mind of many material experts that he could ask for advice. Instead, s/he must know how to organize specialized knowledge and how to direct that knowledge throughout the value chain toward the realization of a compelling vision of service to others.

This ability of organizing and directing knowledge is The Missing Link in the Value Chain™ and CEOs are forced to acquire this critical mind- and skill set by osmosis. They are left to their own devices because no system of management education offers a curriculum that specializes in organizing and directing the specialized knowledge that a CEO has already acquired, that which is possessed by employees throughout the organization, or that can be obtained form third-party experts. CEOs must learn it all on the job without a genuine mentor to show him/her the ropes, because no-one else in the C-suite shares a similar level of ultimate responsibility and ultimate authority. The pressure to perform is on!

In Conclusion

I have chosen as my mission in life to eliminate a CEO’s need for having to learn by osmosis and to make the curriculum of The Missing Link in the Value Chain™ available to current and future CEOs worldwide.

The benefit of The Missing Link in the Value Chain™ is that it inspires Creativity and Innovation for the urgently needed Self-Renewal and Re-Invention of current business systems worldwide, which is the inevitable result from organizing and directing knowledge after it has been acquired.

Participants in the program will learn from the people that:

• Have helped the US Air Force reduce Human Error,
• Make the US Marine Corp highly maneuverable,
• Turn quality into a strategic weapon,
• and many others showing how to inspire a work force and engage their human intellect.

These sources of specialized knowledge have been around for decades and have made many organizations very successful. However, it takes Stewardship, the moral will to do the right thing, and Craftsmanship, the moral skill to figure out what the right thing is, these are the key components of CEO-Effectiveness, to recognize the possibilities and opportunities that these tools can generate for making a business profitable, sustainable and respectful of humanity. That’s why CEO-Effectiveness is crucial to your success.

Ask me about how I can enhance your CEO-Effectiveness at making tough strategic decisions in less time, with less resistance to change while giving you the satisfaction of Peace of Mind.