Specialty Medical Chemical

The Harvard Business School’s case study of SMC brought to light some extremely common issues relative to business management.  While the management team appeared to have things under control from a high level view, there were many underlying problems that needed to be addressed. 

The first and perhaps most troubling management issue was the competition between department heads.  It appears that rather than working as a team, managers were territorial and competed to protect their territories rather than working as a team to build toward a common goal.  While there is no “I” in “team”, there are two in “idiot”.  Sorry bad joke.  It should go without saying that a team cannot survive internal competition.  Only by working together can a team win.

Another major problem was the lack of management talent present in the company.  There are two possible solutions to this dilemma.  If you believe that talent is malleable, then training becomes a very important tool.  If you believe that people either have it or they don’t, it’s time to start looking for new leaders.  I tend to subscribe to the idea that most things can be learned, and you need only find people with the right type of attitude.  This may still make it necessary to look for new leaders, as attitudes are tough to change.  A big problem with SMC in this study was that people were so entrenched into their jobs as they existed, and so bent on maintaining the status quo that the idea of change was very uncomfortable for them.  While last week’s blog pointed out that comfortable people provide better service, there is a point when people can become too comfortable.  At this point sometimes a shakeup is necessary to see who floats to the top, and who sinks.  As was pointed out in the study, some shake up was necessary to get things moving in the desired direction.  I’m not suggesting whole sale firings, but perhaps job changes, or cross training would have been helpful. 

The thing I found most amusing about SMC was the ineffectual evaluation system they were using.  Even though it was obvious to the new CEO several of the managers weren’t doing an excellent job, their evaluations portrayed them as excellent managers as did their salaries.  It just renews a frustration I’ve had for years.  Evaluations are a waste of time for everyone involved unless they are tied to something extremely specific.  No one likes doing them.  No one likes receiving them.  They accomplish little and waste ton of time.  Why do we do them?  Well that’s easy.  We do them because we’ve always done them.  How’s that for circular reasoning?  The SMC case study proves why a huge percentage of evaluation systems are a waste of effort.  Looking back at the evaluations was of little use to the new CEO in finding out what type of team he had.  Everyone was excellent and at the top of their pay scale, yet the company’s growth was declining.   How can that be?  I’ve not worked through the details yet, but I’ve been thinking that a consistent mentoring program would replace annual / semi-annual evaluation systems very well.  Rather than patting someone on the back or coaching them up once or twice a year, there would be a continual coaching mechanism where feedback was given consistently.  However, that is another topic for another day.  All in all, the CEO came into a company that needed a lot of adjustments.  But he was going about it the right way, and that’s what was important.

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Southwest Airlines: Stanford Case

“If you’re comfortable, you’re smiling more and you give btter service”.  It’s amazing that more companies don’t realize this obvious truth.  We do so many things to be politically correct, that we take all the fun out of the 1/3 of our lives that we call our job.  I don’t much care about political correctness.  I mean, we should be polite and cognizant of other people’s feelings, but why do we waste so much time forcing everyone to behave by the same standards?  Is it for the customers? I don’t think so.  Who does it really benefit?  Wouldn’t we be better served by letting people be themselves at work, and allowing them to use their own creativity to differentiate us from our competitors?  This isn’t a rhetorical question, I really would like to know why we can’t have innocent fun at work, instead of the stifling corporate environments that seem to pervade our society.   Obviously you can’t get too carried away, but who says a little innocent fun isn’t just what’s needed in the workplace?  Maybe that’s why we so commonly look back at our high school and college days as the best years of our lives.  It’s because we had fun, and we didn’t waste our time worrying about who is going to be offended by this or that.  It bit us on occasion, but so what.  It was still fun!

So the point of all this is that very few companies really make an attempt to make the workplace fun.  Southwest Airlines is one such company.  The mantra of excellent customer service has been taken to a new level at SWA.  They go out of their way to treat customers like valued partners.  The Stanford case study mentioned one employee taking care of a passenger’s dog for two weeks because the passenger couldn’t take the dog with him on vacation.  WOW!  The employees, whom the airline also views as cusomers, go out of their way to make passengers happy because that is the highest tenant of their coporate culture.  So not only do they value having fun, but the employees make decisions on their own to take care of customers in a real, tangible way.

That really brings me to the thrust of the study.  The corporate culture at SWA is something they view as a corporate asset.  They guard their culture because they know that it’s the key to their continued success.  They do this by hiring the right people based on attitude, and by training their employees in a way that reinforces the culture.  The previous CEO, Herb Kelleher was a large driving force behind this success.  After reading about him in the study and online, it seems to me this guy was one of a kind.  His low pay and “people first” attitude make you admire what he did.  He was wildly successful, but didn’t let it go to his head.  He was the kind of guy you want to work for; one that cares about the person first and the position second.  While he’s since stepped down as CEO, his legacy lives on in the form of SWA’s corporate culture.  His “fun first” mindset and personable outlook have created a great company where people want to work.  I believe it’s keeping employees happy that really differentiates a great company from a run of the mill employer.

Chapter 4 Extra Reading

“To a United Pilot, The Friendly Skies Are a Point of Pride”
Wall Street Journal, August 28th, 2007. 

I grew up hearing that “the customer is always right”.   Having worked in many customer facing jobs, I can tell you that the customer is NOT always right, but they are always the customer.  It seems that a good portion of American businesses no longer  adhere to the ethic of excellent customer service.  I mean you hear the terms “value add”, “post sales support” and other nonsense thrown around in business meetings or advertising brochures, but they quite often boil down to nothing more than marketing speak to get salesmen and audience.  I’m not suggesting that selling is bad, but when you use customer service as a differentiator, whether or not you do truly excel, the message gets lost in the over-marketing trash heap of today’s advertising.  It used to be that a company’s customer service would speak for itself, but now it’s either a differentiator or a punch line.  For this reason I find the truly customer-focused actions of Capt. Denny Flanagan of United Airlines exceptional.

As the Wall Street Journal article mentions, Capt. Flanagan went way out of his way to make flying a fun experience for his passengers.  Imagine that, fun flying!!  Apparently Capt. Flanagan has adopted several tricks to make the experience of flying with United something more than a bus trip at 30,000 feet.  He takes pictures of people’s pets when brought aboard to comfort the customer.  Additionally he calls the parents of unaccompanied children to reassure them that the children are safe and sound aboard his plane.  He even raffles off bottles of wine, keeps passengers updated, and goes out of his way to make sure that all are at ease during the flight.  If you’ve ever flown with United, you KNOW this isn’t the norm. 

So, in the spirit of positive reinforcement, we salute you Capt. Denny Flanagan.  Thanks for showing us what real customer service looks like.  It’s been a while since we’ve seen it.  Keep up the good work!!!

 “Rules of Engagement”
The Journal Report, October 1st, 2007.

One of the few buzzwords we actually have affinity for is “employee engagement”; as long as companies don’t just use it as a buzzword, but have a real desire to engage their employees.  The idea is to increase workplace quality such that the employee is freed from some of their personal life stress.  As the article points out, until recently many companies cared little for the personal lives of their employees, expecting them to be kept separate from their professional lives.  Sort of a professional dissociative identity thing?  Horrible joke I know, but expecting employees to focus 100% on their jobs with havoc at home is pretty naive. 

When employee engagement first started with Xerox and later with Google, before there was a buzzword for it, companies began to realize the rewards of treating employees as valued members of a team, rather than “human assets”.  As the article pointed out, change of this nature in the workplace leads to increased profits for the company.  When people are free to deal with their personal lives they tend to more than make up for it in their professional lives.  They work harder, work smarter, and treat the customers better. The study by Towers Perrin of 41 employers found that companies that consistently engage their employees realized a 3.74% increase in operating profit over 3 years, while companies that did so poorly saw a 2% decline.  There are more studies in the article which all said the same thing.  Treating your employees as valued members versus the old style production line model, leads to increased profits and better workforce attitudes. 

As quoted from the article, “A growing body of research is finally proving what advocates of workplace quality have known for decades: that the human beings who execute the goals of business are more than just cogs in a wheel.  Truly engaging them can have an almost magical effect on the bottom line”.  It’s an effect you can truly take to the bank.

Chapter 3 Extra Reading

Bob Sutton’s Blog – “Work Matters”

I’ve always hated the expression “nature versus nurture”.  However, the idea behind the expression does provide good food for thought.  So I was happy to see Lewin’s formula, B=f(P,E) in business school.  The formula says that a person’s behavior is a product of both the person (as they were born) and the environment in which they live.  I’ve always leaned toward the idea that our environment shapes us.  The ideologies that we submit ourselves to tend to have a great impact on who we become.  This is greatly exemplified  in Bob Sutton’s blog “Work Matters” when he discusses the question of whether a person can get smarter or are they locked into an unchangeable IQ with which they were born.

Raw cognitive ability has often been tied to IQ.  A person’s IQ has often been identified (correctly or incorrectly) as the level of intelligence that a person has innately.  However, some more recent studies have shown that people who believe (or are taught) that they can get smarter, very often do.  I actually find this to be a pretty incredible fact.  If by working hard and exercising your mind you can actually become more intelligent, then we all ought to be learning and training our minds for our entire life.  It’s kind of like what your parents used to say, “you can accomplish anything you put your mind to”.   It always sounded like someone’s mother trying to push them to try harder in school, and nothing more.  But it appears that idea had much more merit to it than originally thought. 

The studies quoted in the article actually show that people who were told that intelligence is “malleable” and that they can become smarter, actually do indeed become smarter and better at what they do.  It also showed that being bad at something when you first try doesn’t mean you lack intelligence, or the ability to become better at it.  It shows that we as humans can always get smarter and do better.  The main thing here is that it leaves us all without excuse.  It appears that if you don’t get smarter during the course of your life, it’s simply because you either believe that IQ is fixed (which can be re-taught) or that you simply didn’t try hard enough.  This gives us a much different picture of humanity.  No one is beyond help.  No one is too dumb to better their circumstances.  And no one is less than someone else by the nature of their innate gifts.  Different yes, but less, no.  The desire to keep learning may one day be the one thing that separates us from each other. 

Dweck’s Article – “Can Personality Be Changed?”

Dweck’s article continues along the lines of fixed versus malleable theory regarding personalities.  It seems to me pretty revolutionary that simply thinking of yourself in one context versus another can change not only your method of interaction with the world around you, but also your ability comprehend it.  Believing that your personality and level of intelligence can change just because you believe it can, sounds so simplistic, but the reality is anything but. 

Based on our natural tendencies and the environment in which we mature, we can possess either a fixed or malleable view of personality and intelligence.  That is, is it possible to change, or are stuck with that which was born in us.  It appears from the studies that both are true and they are at least partially dependent on which view you hold.  As the studies show, your ability to change is merely a function of your belief in that ability. 

The interesting thing is that even if you hold to the fixed (entity) theory, you can be taught otherwise.  People who believe in the malleable (incremental) theory not only become smarter, but they are more open to challenges and able to handle failure better.  It’s even possible to teach these theories by the type of praise you give someone.  As an example, praising someone for how “smart” they are tends to reinforce the entity theory.  However, praising someone for the effort that they put in, tends to reinforce incremental theory.  I find it fascinating that you can have such an impact on someone just by giving them the correct positive feedback.  I guess “positive reenforcement” is another one of those old-school ideas that really had merit.

All in all, the moral of the story is to keep trying, keep working.  Self improvement is a process, not a destination.