Ready, Aim....Follow Through

My fiancée and I recently completed a hand gun training and safety course. Our instructor, Craig Turner, is a police officer. Mr. Turner also teaches other police officers how to shoot hand guns.

Mr. Turner taught us the basics of hand gun safety. Important concepts, such as, the gun is always loaded. Know what is in back of your target. Your finger doesn’t go on the trigger until you are going to shoot. And know, when you pull the trigger, you are going to do some serious damage.

From a technical standpoint, Mr. Turner taught us the concept of “ready, aim, fire and follow through.” In business, we have heard of “ready, aim, fire” or, if you prefer or you’re Ross Perot, “ready, fire, aim.” Even though the trigger had already been pulled and the bullet was in the process of exiting the barrel of the gun, it was follow through that made all the difference in the accuracy of the shot.

The similarities in business are striking. Business leaders spend countless hours on planning. They might bring in a facilitator, hold off-site planning sessions, and come back with something akin to a leather bound business plan….that never gets implemented. Like with hand guns, it is the “follow through” that differentiates companies that get things done from those that simply dither along through another useless planning cycle.

So why is getting things done so difficult in a typical organization. B. Chuck Ames, president of Reliance Electric Company described one of the problems of failed execution this way in the article Basic Management Concepts.

“No one should ever be pressured (or allow themselves to be pressured) into making unrealistic commitments. But once commitments are made, they should always be fulfilled. The good manager knows that most commitments are broken because of a sloppy attitude that always manages to find a rationale for failure. For this reason, good managers insist that all commitments be met. It makes no difference whether the commitment seems trivial, e.g. to return a phone call or pass on certain information by a certain time – or crucial, e.g. to meet a project completion date or achieve planned sales or earnings results. It must be met once it has been made.”

To shoot better or get things done in business, follow through is omnipotent. If you would like a copy of the complete B. Chuck Ames article or Mr. Turner’s phone number, please contact me. I will be sure to follow though on your request.

Are CEOs Idiots?

Kodak’s CEO tells 17,000 employees the only option for the 131 year-old company is to file for Chapter 11 bankruptcy protection. The company had 64,000 employees in 2003. Research In Motion fires its co-CEOs after the maker of BlackBerry loses $30 billion in market cap. Sony, Panasonic and Sharp, the trifecta of the Japanese consumer electronic industry, lost a combined $17 billion in 2011. Are the CEOs of these once great companies total idiots?

Before going too far, let’s add some local flavor to the stew. What the heck happened to the likes of some of these local boys?

- Joseph Schlitz Brewing Company

- Allis-Chalmers Manufacturing Company

- Schuster’s Department Stores

- Strong Funds

- Midwest Express Airlines

- M&I Marshall & Ilsley Bank

- Please insert your favorite corporate debacle here.

Were the CEOs idiots? How did these fabulous business blunders occur? We may never know exactly. But here are a few suggestions.

- Bad Strategy. In the end, what was Midwest Express anyway? A high-end, “best care in the air” corporate travel airline or a no frills, discount alternative to a bus? Customers were confused. Employees were confused. Vendors confused. Shareholders? Confused and left holding the lost luggage.

- Rotten Execution. In an effort to cost cut its way to prosperity, “the beer that made Milwaukee famous” changed the brewing process and started using cheaper ingredients. Not only did the reformulation change the flavor and consistency of the beer, the new Schlitz had a shelf life of about a day and half. Customers noticed. Can you say Budweiser?

- Blame Game. “We were making so much money, we just couldn’t quit.” Those pesky housing bubbles in Arizona and Florida were the problem. What a nice, conservative mid-western company from Milwaukee was doing in high risk, high reward ventures way outside its market area is another question. But for crying out loud, the M&I was a bank!

- Trends…Unforeseen, Denied, Misunderstood and Delusional. Kodak is an easy target here. An electrical engineer at Kodak literally invented digital image capture technology in the mid-1970s. How did the six Kodak CEOs since the ‘70s screw it up so badly?

The four bullet points listed above are certainly not all encompassing. And there is almost always more than one reason for the failure of the CEO to respond appropriately to the challenges of running a business successfully over a long period of time. How to improve the odds? Some suggestions.

- The Reality Check. My guess is the CEOs of some of these failed companies would have been better served with a strong board of directors that knew when and how to challenge the strategic thinking of the CEO. Absent a board, some CEO peer groups, like TEC, are designed to “question the answers” of the CEO. One of my TEC members employs a designated “BS Detector,” from outside the company during the strategic planning process to help the group avoid delusional thinking.

- People. People get things done. Weak management teams don’t. Failure to put the right people in the right jobs is bad. Failure to deal with people problems – fast - is worse. Jim Collins’ bus analogy of the right people in the right seats is well known. It should be pointed out, however, that CEOs need to get the wrong people out of the seats and off the bus before the new folks can get on. CEOs usually have an inner sense about weak people on their teams. They sometimes refuse to see it and deal with it in a timely fashion.

- An Intentional Culture. There is a real nice company down in Racine, Wisconsin that does not allow its people to say stuff like “I didn’t make plan because of (fill in the blank).” Or “I failed to fulfill my commitment due to (some circumstance beyond my control).” Realistic commitments that are made, are kept. No excuses. One TEC member CEO eliminated the words “hope” and “luck” from his company’s corporate lexicon, as well.

- Apply The Trends to Your Business. TEC Resource Specialist Adam Hartung suggests analyzing the mega trends eight years out. He recommends the intentional creation of “white space” disconnected from the business for innovative thinking. Get people outside the box. Then, have them think.

Truth be told, even the CEOs who really mess up aren’t idiots. CEOs are people. They make mistakes. They fail sometimes. Some learn and get better. Some don’t. But as long as we have human beings running corporations, there will be room for improvement.

CEOs and Divorce

I have a couple of divorces going on now. Over the years, it seemed to me that I had a divorce going on with at least one of my members at any given point in time. With three TEC groups and 45 members in total, one might expect some “normal” percentage of member marriages to be headed for the rocks.

I wondered, however, if CEOs were more likely to experience failed marriages. The stress of the job. The time commitment. The travel. The temptations. Might they all add up to a higher percentage of divorce among CEOs?

An informal survey of my colleagues, however, revealed no evidence to support the proposition. It was, by and large, the position of other TEC chairs that CEOs were no more or less likely to have a marriage end in divorce. It also appeared that a fair number of CEOs remained in unhappy marriages. This would be similar, I suspect, to the married population as a whole.

There was, however, one common thread among CEOs of privately held companies whose marriages had failed. It was the almost desperate need on the part of the CEO to “keep the company.”

When it came to splitting assets and negotiating marital property settlements, the desire of the CEO to retain his or her company appeared almost as strong as child custody rights. In many cases, CEOs seemingly ignored the valuation of the company and the recommendations their advisors. In the end, they wanted to keep the company. It was, after all, their baby.

The implications? Good divorce attorneys on both sides probably are well aware of the save-the-company phenomenon. It is certainly healthy for the CEO to recognize this financially irrational desire. With the supercharged emotion of a divorce, rational thinking has been known, sometimes, to take the back seat.

Competent legal advice and strategy can help. Trusted advisors, like the peers in a TEC group, can assist. In the end, however, it is the CEO in the divorce who must come to terms with the reality of a fair marital property settlement and the need to keep the company. The evidence suggests that even in divorce, reality always wins.

Williston

Several TEC members have been making money in Williston. Some are participating as subcontract suppliers to tier one vendors who are already there. Other TEC member firms are (literally) on the ground, building roads and providing staffing services. Still others are working on waste water treatment alternatives for the process known as "fracking."

An impressive example of a TEC member firm who anticipated the boom in Williston, is an old line, made in America, metal fabricating and manufacturing company located in a suburb of Milwaukee. Through a rigorous strategic planning process, the company identified specific energy related markets as opportunities that took advantage of their strengths. They calculated they could shore up their identified weaknesses, apply some resources in terms of people and money and enter a new market. This piece of the strategic planning process was initiated in 2007. It was tweaked every year along the way.

In hindsight, it looks easy. Identify your strengths and weaknesses. See the opportunities and threats. Apply some resource. Voila. Williston.

Not exactly. It took the commitment of the CEO to spend real money on the planning process, when everyone else in the company was "too busy to plan." A recession was looming. Time to hunker down. Well, yes and no.

By definition, the strategic planning process is taking the organization "out there" somewhere. When management is doing strategic work, there are no immediate results to give the leadership team feedback relative to the intended course of direction. It is, a leap of faith. A belief that the process will save the day. It requires courage. It requires leadership.

The alternatives? Most organizations end up slogging it out with a plethora of competitors...known and unknown. They fight for market share. They offer lower and lower prices to compete. They commoditize their products and services. They don't make much money.

Call it a Blue Ocean or Williston. "Out there," there are new markets. "Out there," there is more than enough to go around.

Inspiration on 27th Street

TEC 33 member, Gary Wenzel, hosted a meeting of TEC 31 recently. TEC 31 is a new group going through the forming, storming and norming process. I asked Gary to host the meeting at his company to give the members of this new TEC group a glimpse of "the possible."

Gary Wenzel is president of Capitol Stampings Company. The plant is located at 27th Street and North Avenue in Milwaukee. Gary was part of an ownership group that purchased Capitol Stampings out of receivership in 2005. The plant was originally constructed by Steeltech in 1990. Steeltech went bust in 1999.

Capitol Stampings currently employs 85 full time workers. Most of the workers are from the neighborhood. The workers earn a family supporting wage. They have decent benefits. Their jobs, based on performance, are reasonably secure.

When Gary arrived in 2005, customers were rejecting 7000 Parts Per Million. Not good if you are trying to earn more work from existing or new customers. The people at Capitol Stampings worked to reduce bad parts to the current 500 PPM. 500 PPM is world class and low enough to garner an audience with some highly desirable OEM customers. More business followed.

How did this happen? Gary explained several cultural shifts that occurred over the years at Capitol Stampings. They needed African Americans to work with Hispanics to work with Caucasians. The new management team set clear performance expectations. They started treating all employees fairly and impartially. They terminated some people who were unable to align with the new culture. The leadership team was consistent. And, they persisted when the inevitable challenges might have pushed them off course.

The "new management team" was comprised of several people from the outside, like Mike Krajna, Ron Zeronis and Scott Wise. It also included several people from the inside, like Dan Hewitt and John Willmering. Gary worked to find the right seats on the bus for this blend of the right people.

The members of TEC 31 were inspired by the blend of new technology; new and old equipment; and people....people who energized this factory on 27th and North. The place was rocking. They were making money. And, they were accomplishing a mission that had more to do with reviving a neighborhood than anyone who wasn't part of it could hope to understand.

The Capitol Stampings story can be an inspiration to all of us who believe that business is one of the keys to creating "the possible." Well done to Gary Wenzel, his leadership team and the people of Capitol Stampings who are accomplishing this in-process transformation.

Lawrence E. Johnson

I met Larry Johnson in the mid-70's. He was recruited by a small, family owned company as part of a transition to a professional management team. I worked in inside sales at the time. I was part of the home grown talent, which meant I had very little exposure to the tools and ways of a professional manager.

Larry was with Honeywell prior to joining our firm. He was part of their avionics group at the time, yet came to our low tech, high energy firm. Some years later, I asked him why he joined a relatively small company in Milwaukee when he could have gone almost anywhere in the corporate world. He said it felt better to be a "bigger fish in a smaller pond." And, it worked.

Larry and the others he recruited to join the company helped turn a nice little, profitable company into a very attractive, highly profitable company. The company was eventually acquired by Reliance Electric. Reliance was a $1.5 billion publicly traded company headquartered in Cleveland. We had become a really professionally managed organization by then.

After the the Reliance deal, Larry became president of our still relatively small company. I left in 1980 to join a firm involved in mergers and acquisitions. Larry left a few years later to head up another nice little, privately owned firm in Watertown. He helped that firm grow, as well. The firm was eventually sold, at a handsome multiple of EBITDA, I suspect.

Larry then became president of the Kelly Company in Milwaukee. After a period of time, he bought the company, bringing several of his senior managers along for the ride. He sold the company in 1999.

Just before the deal closed, Larry was diagnosed with Parkinson's Disease. A while later, he came up with prostate cancer. My friend, who had made a lot of money for other people, finally had some real money of his own. He knew the quality of his life would never be the same.

I became Larry's brother-in-law when I married Larry's wife's sister. We all travelled together. Played golf. Ate really well. Went fishing. We talked about business. We talked about life.

Larry died on Saturday, October 22nd.

I have been using Larry's "professional management training" throughout my career and, perhaps most importantly, for the past 16 years of my TEC life. My members have heard Larry Johnson speaking to them along the way. His legacy will live well beyond what he might have imagined when he came to Milwaukee from Minneapolis 35 years ago. It lives on in all of us.

Armed & Dangerous

I settled in to prepare for a meeting of TEC 44 last month. I intended to review the issues the group's members wanted to bring to the table and other agenda items that needed to be covered during our meeting.

As I got ready, I noted a flurry of e-mails suggesting the group had taken control of the agenda. Two members sent written copies of their "issues" to the group. One member advised he was ill and unable to attend. Two others sent their "accountabilities" from the prior meeting. Everyone sent their Z-Factor Score. I was left with very little to do.

At the TEC meeting the next day the members of TEC 44 continued to take control of the process. The group introduced a new accountability protocol. The members worked a remarkably difficult issue without much intervention from the chair. They remained after the meeting ended to discuss what they had experienced during the day.

TEC 44 had become "Armed & Dangerous." Armed & Dangerous is a concept developed by TEC Resource Specialist, Don Schmincke. Schmincke segmented TEC groups into three categories of health. The least effective segment, the "Seminar Club," almost totally relied on the leader to create value. An improvement was the "Shared Destiny" group which took a modicum of responsibility for its own performance, but continued to rely on the chair to provide value. According to Schmincke, the Armed & Dangerous group was the highest performing group, taking full responsibility for group health and effectiveness.

In addition to TEC groups, Don Schmincke's concept of group behavior applies to management teams and groups of all forms. If you are interested in an outline from Don Schmincke on how to create teams that are "Armed & Dangerous," please let me know. From a group leader's perspective, it is way less work and way more productive.