Tag Archives: Business organizations

Understanding Organizations: The Second Attribute of Positive Leaders

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Mastery of applied organizational theory is as vital to the success of leadership as knowledge of the piano is to the accomplished pianist. Organizations are the medium in which men and women function in society – they are the playing fields of life and business.

Positive leaders understand organizations in all of their complexity and are accomplished artists in both macro- and micro-organizational theory. Most managers possess, or at least utilize, only a rudimentary understanding of organizations. They are like novice personal computer users. They can stumble their way through a few application programs but their lack of in-depth understanding of the computer and its software keeps them from using more than a fraction of the machine’s capability. Occasionally they actually threaten or damage the system by utilizing it improperly or counter-productively.

At the macro level the positive leader is a student of organizational theory and devotes a significant amount of time keeping up with the literature of the field. At the micro level he or she is intimately in tune with his or her own organization, with its mission and vision; its products and/or services and the specific customer needs that these products and services fulfill; with its people, its personality and subcultures; with its supply chain; its metrics; and, with its informal power structures. The leader spends a significant amount of time out in the organization, and with its supply chain partners, listening, talking, and getting involved with people.

When confronted with the decision of choosing future leaders, from among its talented individuals, organizations must often choose between men and women with demonstrated leadership skills versus those with great technical knowledge and with familiarity with the local organization. Many people have technical expertise and local experience while only select few possess demonstrated leadership ability. Further, although leadership skills can be taught, it’s much easier to teach the technical and local aspects of an organization.

Organizations would do well to choose managers and supervisors on the basis of their demonstrated leadership ability. Organizations are also well-advised to make significant investments in the leadership development of its talented men and women, early in their careers. That being said, the most talented leaders will not achieve their optimal potential unless they make a relentless commitment to become masters of organizational theory and application at both the macro and micro levels.

Organizations typically promote their best workers to leadership positions. Just because an employee is at the top of the list of technical performers does not mean that they would make good managers and supervisors unless the organization has made an effort to prepare them for not only the role of leader but also for the transition from technical expert to formal leader. Often, people appointed to leadership positions on the basis of their technical excellence become unhappy and disillusioned with their new role. They were happier in a role in which they were valued for their technical expertise but rarely are they able to walk away. Often such promotions are the only way to move up the compensation ladder in an organization. Walking away from the disappointing leadership role may mean relinquishing the raise as well as losing face because they were unsuccessful.

If the organization has made an investment in leadership development of their best people prior to promoting them they will have identified those who will and will not be both happy and successful in a leadership role. For that reason, in addition to a focus on leadership development, the most successful organizations find a way to elevate the compensation of their technical stars to levels comparable to what they might have earned had they been given leadership responsibility. There is no rule that says that technical stars must not earn as much or more than their supervisors and managers.

One the other side of the equation, it is imperative that people who are appointed to leadership positions because of their demonstrated leadership ability rather than technical expertise make a commitment to ongoing development of their technical knowledge. They may not have to perform technical tasks as well as their technically-accomplished employees but the need to understand the technical aspects of the work every bit as much. They must also be able to teach new employees how to become technically competent.

Customer Satisfaction: the Fourth Cornerstone of the Theory of Positive Leadership

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Business organizations exist to satisfy customers and embracing this credo serves as the fourth and final cornerstone of the philosophical foundation or our Theory of Positive Leadership.

If you are thinking:

“Duh! Aren’t we stating the obvious?”

you would be correct. Sometimes, however, it is critical that we state the obvious. Very often, things go wrong in organizations because we take our assumptions for granted. Over time, our assumptions tend to become blurred. One of our most fundamental assumptions is the order in which our customers can be found on our list of priorities.

Try this experiment. The next time you are in a room full of business men and women, ask them this simple question:

Do businesses exist to make money or do they exist to satisfy customers?

I have yet to ask this question without it sparking a very interesting and sometimes heated debate.

Many will insist that business organizations exist to make money. While there is no doubt that all business investments are made for the purpose of earning a return on one’s investment, once we choose our marketplace, everything changes. Once we have chosen a customer base (identified a population of customers with unmet needs or wants) and have identified the products and/or services we intend to produce (in order to satisfy those wants and needs) our ongoing purpose has irrevocably changed.

We now exist to satisfy our customers thus insuring their willingness to pay a fair price for that which we offer to sell. How much we make is nothing more than the way we keep score; the way we measure our success in satisfying our customers. Let’s restate this: the money our customer pays us is, now, nothing more than a function of the level of satisfaction they have with, first, our products and services and, secondly, with our performance as a valued and reliable supplier.

The day our customers begin to suspect that their satisfaction is secondary to our desire to make money, is the day we are at risk of losing that customer. Don’t misunderstand. Our customers understand that we have to make a profit just like we understand that our suppliers must make a profit. Neither we nor they want to think, however, that our suppliers would be willing to sacrifice the quality for which we have agreed to pay for a higher profit margin.

When a business leader chooses to sacrifice quality in order to make an extra buck, he or she has taken the first step down the precipitous path of inevitable failure. Think about your favorite restaurant, for example. You’ve become a regular customer because you have enjoyed the high quality of their menu, ambiance, and service over a period of many years. No doubt, you recommend the restaurant to your friends, family, and business associates, and also to people who might be new residents of your community or maybe are just visiting. You do not make such recommendations lightly; you do so only because you have a high level of confidence in the quality of experience your friends and colleagues can expect to enjoy.

Imagine a scenario when, on your next visit, you walk away disappointed in your dining experience. You certainly will not give up on your favorite place on the basis of one bad experience but it will start you thinking. How many bad experiences will you be willing to tolerate before you begin to downgrade that restaurant on your list of favorites. How many bad experiences before you stop recommending the establishment to other people? How many bad experiences before you stop eating at a place of which you have such fond memories? Very often when such a stream of events occur, it is because the ownership opted to cut back on the cost of producing your favorite selections from their menu; or when they lower their expectations of the staff who service their patrons and it does not just happen to restaurants. It can happen to manufacturers, healthcare providers, providers of any professional service, or retailers of any product or services. This is what happens when a business in any venue switches its focus to profits in lieu of customer satisfaction.

Successful businesses, on the other hand, as evidenced by the powerful positive leaders who guide them, possess a relentlessly passionate commitment to the satisfaction of their customers and this commitment drives every single thing they do and say. This commitment is a major component of the values of the organization and serves as the focal point for both vision and mission.

Plain and simple, businesses exist to satisfy customers. It is also a lesson that government and not-for-profit agencies would do well to remember. If you have any doubts, just think about what is happening with United States Postal Service.

People Are Our Most Important Resource, The Third Cornerstone of Positive Leadership

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The third philosophical cornerstone of our Theory of Positive Leadership is a commitment to the belief that people are the most important resource/asset of any organization. Organizations exist to serve people, whether individually or corporately. Business organizations exist to serve customers and other organizations such as not-for-profit agencies and departments or agencies of government exist to serve a constituency.

Organizations employ many different kinds of assets in the production of their products and services. Those assets include land, buildings, equipment, information, and technology in addition to people but it is people that are paramount. Nothing illustrates this more definitively that the knowledge that the very value of each of the other assets is measured in terms of their utility to people. It takes human energy to put all other assets to work for a meaningful purpose.

Interestingly, accounting practices allow us to treat non-human resources as depreciable assets but requires us to treat wages and salaries of a cost. This contributes, I believe, to the tendency of executives to think of people and their wages and salaries as a cost of doing business rather than as an investment in a valuable asset without which it would be impossible to do business.

One of the things that distinguish powerful positive leaders from their less successful counterparts is that everything these men and women do conveys clearly and unequivocally that the people of their organization are the most important asset – an invaluable resource.

Peter Drucker writes, “organizations that fail to develop their people, fail in the long run.”
Positive organizations relentlessly invest in the development of their people by insuring that their people:

• Receive ongoing training of a meaningful kind,
• Receive clear expectations
• Are supported by performance management systems that give ongoing positive feedback
• Work in an environment that is safe both physically and emotionally
• Enjoy compensation and benefit packages are not only competitive in the marketplace but that also reward excellence.
• Have the tools and resources necessary for the successful performance of their work
• Feel that they have some control over their own success, and
• Are full participants in the process of delivering exemplary quality.

Positive leaders also recognize that the members of their organization are not the only people who are critical to the ongoing success of their venture. Positive leaders understand that their ultimate success depends on all members of their supply chain and they work to create a culture of interdependence, partnership, and abundance mentality that spans the entire supply chain population.

Exponential Thinking

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How do you teach yourself and your people to think exponentially? Exponential thinking is often referred to as “thinking outside the box” or “creative thinking”. While the phrase “thinking outside the box” has become cliché, the activity of expanding one’s paradigms and thinking creatively is a critical skill that powerful, positive leaders rely on to manage their organizations and to make a difference in their personal lives and community.

We live in a multi-dimensional, interdependent world in which events about which we may be unaware or that seem disconnected to us still impact our lives and businesses. The most effective leaders are tuned into the world around them, fully aware of the interdependencies. These men and women recognize how easy it becomes for people who are immersed in their daily work activity to lose sight of events taking place around them.

“Systems Thinking,” a term used by Peter Senge in his best-selling book, The Fifth Discipline , teaches us how to step back to a point from which we can examine our world, our lives, and our organizations as an integral whole. This perspective enables us not only to see the broad forces that influence our activity but also to see how what we do influences the whole in ways that may not be apparent to us. Under a systems thinking approach we are able to examine our basic assumptions about the world in which we live and work and about why we do the things we do the way we do them.

What all organizations must do is to periodically stop and re-examine where they are going and how far they have come. Is our mission still important? Are our goals and objectives still appropriate given the changes that have taken place in our industry, in our supply chain, or in our world in general? Have any of the things that have changed in our environment also altered the needs of our customers? That such changes, unnoticed, can have a devastating impact on a business organization’s future is bad enough. Just as importantly, these changes often create new opportunities for the alert and the innovative.

Creating an organization in which all members are engaged in a learning process, and in which they are encouraged to develop and share new ideas can pay enormous dividends. Senge refers to such entities as “learning organizations.” Many quality systems have been designed to function as an integrated part of the production process in order to facilitate continuous improvement. Only a special few, however, actually make the effort and investment to teach people how to think exponentially and then reward them for sharing.

What we have learned is that continuous improvement is insufficient for the dynamic world in which we live and do business. What is needed is “relentless improvement” in an environment in which people at all levels of the organization have been taught to accept responsibility for exceeding the customer’s expectations. Acceptance of such responsibility is the purest form of positive leadership. Most organizations are blessed with a small number of individuals who are natural leaders, irrespective of their titles and formal authority. The challenge of executive leaders who wish to infuse their organizations with positive leadership and exponential thinking requires, first, that those executives are, themselves, positive leaders and, second, that they make a relentless commitment to developing the leadership skills of their people.

Positive leadership is more than just a skill that people with titles keep tucked away in their portfolios. Positive leadership is a craft that must be practiced daily and one of the tools utilized by such craftspersons is exponential thinking. In one organization with which I was involve, we encouraged exponential thinking by including what we then called “continuous improvement” as one of the criteria by which employees at all levels of the organization were evaluated in the company’s “integrated performance management system” One of the best ways to build creativity into your organization is to be creative in developing ways to encourage, celebrate, and reward exponential thinking on the part of your people.