An Olympic Lesson in Compensation Alignment

The 2012 Olympic Games are over.  It was an inspiring 17 days, filled with accomplishment and emotion.  It was also filled with great lessons on Strategy Execution, including one of the best on Aligning Compensation and how the right compensation model drives desired behaviors. 

Think about the medals.  Is there any better example of an aligned compensation model than a gold medal?  It’s so very simple: If one performs better than one’s peers, one earns a medal (and the others don’t!).

Lesson One:            Keep it simple

Even in the most complicated of sports, like decathlon or gymnastics, the medal-based compensation model didn’t change. Yet the behaviors sure did!  You didn’t see Missy Franklin practicing the shot put, Gabby Douglas kayaking, or Ashton Eaton on the balance beam.  But why?  Each of those behaviors earned someone a gold medal.  The answer, of course, is to align compensation that drive behaviors relevant and important to each individual’s responsibilities.

The key is clarity of expectations.  Each “job” (or, in this case, Olympic event) has its own unique set of metrics.  Ashton Eaton, the gold medalist in the decathlon,  wasn’t going to be measured on his balance beam performance.  Nor did he (or his manager, er, coach) believe that practicing the balance beam was going to enhance his ability to perform on those activities where he was going to be measured. So – understandably and appropriately – Ashton only focused on those activities that would directly contribute to his success. 

Lesson Two:             Clear expectations

Lesson Three:          

Measure behaviors that make a difference

Because of the uniqueness of his job, the behaviors that would lead to his success were not the same as those that would lead to Missy’s or Gabby’s. 

Lesson Four: 

Make sure the behaviors being measured drive the desired result.

(Quick Quiz:  What are the ten sports that make up the decathlon?  Your answer is here). 

Last, note the simplicity of the compensation model as opposed to the complexity of the metrics.  Nobody won 1/3 medal in the vault because they had the best landing while someone else won 1/3 for having the best “in air” maneuver.  No – the person who received the gold medal had the highest combined score for ALL the metrics.  They couldn’t ignore one skill and focus on the others; they had to practice and be good at all components being measured to receive the desired “compensation.” Perhaps a better example is to stay with the decathlon:  There are no medals given in that sport to the person who wins each individual component.  The only medals are given for total scores at the end of all ten elements.

Lesson Five:        

Keep the reward simple – and make sure it is based on ALL of the behaviors you want to encourage.

Bottom line:  If you want world-class Strategy Execution, make sure

1)         Keep it simple

2)         The rewards are clear

3)         The desired behaviors are clear

4)         How the behaviors will be measured is clear

5)         Rewards aligned fully with desired behaviors

…and get out of the way.

Everyone can use a little luck (and help)

It has been a long-held belief that hard work and talent are important to succeed, yet a little luck is necessary as well.  Here's a new study, as noted in the New York Times that supports the hypothesis:  

Luck vs. Skill: Seeking the Secret of Your Success

http://www.nytimes.com/2012/08/05/business/of-luck-and-success-economic-view.html

Is it possible to "make" your own luck?  To a degree, yes.  You can work hard and be prepared.  You can think through alternatives scenarios and take appropriate actions.  You can "be in the right place at the right time."

But luck is, well, luck.  Is the perfect business partner (who you don't yet know) invited to the same event as you?  Does the right person introduce you?  Is your "perfect match" in the mood to hear what you have to say? 

No matter how completely you analyze everything, it is a simple truth that you cannot think through every possible scenario.  Even if you could, there are always variables outside of your (or anyone's) control.  When one of those variables break against you, you know it's bad luck:  

"We were supposed to meet for lunch, but an accident kept me from getting to the restaurant on time.  We couldn't reschedule for over a month - and by that time, we had lost the chance."

So what do you call it when everything lines up, and breaks in your favor?

Recognize and appreciate the role luck plays (or has played) in your success.  Pay it forward.  Think about whom you know who could benefit from a little kindness, generosity - or good luck.  Do your best to give it to them.  Today. 

The Dog Days and the Top Dog

Here’s a quick read you’ll like.  It’s perfect for what frequently are called “the dog days of summer.” Makes it a good time to talk about another dog: the “top dog,” and his or her role in driving successful Strategy Execution.

It’s an interesting post with good suggestions, yet, at core, based on a common (and major) misconception.  The author implies that CEOs (the “Top Dogs” referenced earlier) have the option of "relegating" (strange choice of word. Does he mean delegating?) strategy execution.  Not true - at least, not if the CEO wants to succeed.

How Smart Leaders Translate Strategy into Execution

http://bit.ly/MAThZU

One can use others to support the execution process.  The CEO must own and lead.

I’d be happy to talk through why CEO’s (or whoever the Top Dog is in the organization executing the strategy) have to own Strategy Execution, should you like. It’s one of the core principles at RedZone.

Enjoy your “dog days.”  Stay cool.  Let’s speak soon.

The Danger of Good Ideas

Every once in a while, I'm brought up short and reminded of key strategy execution and change management "basics."  Yesterday was such a day. I led a large meeting with much presentation and some discussion.  In general, the mood was good and post-meeting comments were positive.

Then I got "the email."  This is the note (not addressed directly to me but sent to a senior associate) that questioned much of what we were doing. The note was respectful, thoughtful, and included many positive comments and sincere suggestions.  In short, it was the most dangerous kind of message.

Thoughtful messages with good suggestions are hard to simply reject. They require a response. In fact, many of the ideas require careful consideration.   That's where the danger creeps in.

It is most difficult to differentiate between a good suggestion in support of the vision of an initiative and a good suggestion that leads the effort astray. The differences are subtle.  In these cases, one must revert to the vision clarity documents created at the beginning of the initiative (you did create them, didn't you?) and "draw the straight line" from where you are today to the end goals.  If the suggestion is fully aligned with the goal, it may well be worth pursuing. If it is not - it must be rejected.

You must also decide what to do with the person who presented the good idea. Is this someone who truly believes and agrees with the direction and goals of the initiative and just looking for a different way to get there?  That person is a "keeper."  Or is this a person who, at core, really thinks that the direction is "okay," but could be better if it were tweaked just a little bit? That person is a danger and must be addressed very directly. 

This is very, very typical in strategy execution. There are several common metaphors. The reason the metaphors are so common is because the situation they describe happen so frequently:  "It's like herding cats" or "If this person isn't on the bus, she needs to be off (or under) it."  These metaphors describe the challenges of keeping people aligned and focused on the stated goals.  

There's another concept that Steve Jobs wrote about and I believe completely: You need the strength of conviction to say "no" over and over again.  It's not the bad ideas that hurt you – they're easy to reject.  It's the good ideas that can kill you – modify your scope, change your focus, get you off course.  It's also called "death by a thousand cuts."  No one small adjustment kills – but a thousand little ones do.

Our job in strategy execution and change management is to say "thanks, but no" - and keep moving in the direction we've defined.

A Marketing Lesson on St. Patrick's Day

Welcome to St. Patty’s Day!  We went out last night and stopped in an Irish pub on the way home (yes, our mature attempt to avoid today’s lunacy).  It’s St. Patrick Day posters had the following line, promoting it’s St. Patrick’s Day “services:”

“You can’t drink all day if you don’t start in the morning.”

What a brilliant marketing statement, focused on the day purely from the perspective of its customers.  God help them.

A business should be focused completely on making its customer’s happy.  Everything else will follow.  Here’s a small excerpt from Steve Denning’s latest blog:

“What Goldman and other firms haven’t grasped is that once a firm adopts 20^th Century thinking and single-mindedly pursues shareholder value, it gets drawn into doing things that actually undermine long-term shareholder value, by pursuing “bad profits”, by exploiting customers in ways that ultimately destroy customer loyalty and encouraging self-serving behavior among the employees.”

I recommend Steve a lot. PLEASE read this and find out why. Promise it will be worth your time. http://onforb.es/FRGbwS

RedZone agrees. We’re all about making our clients happy.  If you know a company that would benefit from RedZone’s professional, cost-effective, strategy execution support, please send them my way.

Check. Your move.

What do these lines, letters, and numbers mean to you?

1. e4 e5
2. Nf3 d6
3. d4 Bg4
4. d4xe5 Bxf3
5. Qxf3 d6xe5
6. Bc4 Nf6
7. Qb3 Qe7

It's "Chess" notation.  Specifically, "Algebraic notation is a method for recording and describing the moves in a game of chess" (as explained here: http://en.wikipedia.org/wiki/Algebraic_notation_(chess)).

One of the most important elements of successful Strategy Execution is also core to the game of chess.  Yet, perhaps because it's so obvious, it's rarely talked about.  That element?  The need to anticipate.

So obvious, so important.  Strategy Execution requires leaders to think ahead, to anticipate the challenges that those impacted by the change may throw into the path.  These hurdles will take many forms.  Some people will find "factual" reasons why the new approach is wrong.  Others will take longer to complete tasks than planned.  Some will "demonstrate" how the new strategy doesn't work; Others will "hunker down," and just not follow through until forced.  Resistant people will find very creative ways to gum up the works - sometimes without even realizing they're doing it!

The superb chess player is always looking steps ahead, anticipating his opponents next move, then the next, and the next.  The player looks at many alternatives, scenarios, and options, trying to assure that whatever the opponent does, he has a move prepared to counter.  (For an interesting look at today's best, and perhaps one of the best the world has ever seen, check out http://ti.me/xwCsvq, a Time magazine article about Magnus Carlsen).

Magnus Carlsen (photo courtesy Time.com)

It is the job of leaders to know - from the start - that these challenges will show up, and to think through - regularly, throughout the process - how those challenges will be addressed.

One of the advantages of anticipating these threats early and often is that it buys time. It is much easier to think through implications and develop appropriate responses to a challenge well in advance than it is when the problem occurs suddenly, unexpectedly, at a very sensitive moment.

There are many ways to identify and mitigate "Threats to Success."  Some work better than others.  Without doubt, they all work better when coupled with adequate thinking time.

Think ahead.  Anticipate.

34.  Qh8#

Checkmate.

The Customer Is Always - The Customer.

So many organizations say "The Customer is always Right."  Others won't take a step forward on a new product or service without extensive market research and assurances from its major customers that it likes the new product and will buy it.

That's a real risk.  Too much effort is focused on whether CURRENT customers see the new offering as a step forward TODAY.  It's irrelevant.  Although I agree completely with the concept of establishing whether there is a market for a product or service, one should never confuse innovation with having a single-minded focus on what the customer tells us it wants.  

Michael Porter says: "... If you listen to every customer and do what they ask you to do, you can't have a strategy....Strategy is not about making every customer happy. When you've got your strategist's hat on, you want to decide which customers and which needs you want to meet. As to the other customers and the other needs, well, you just have to get over the fact that you will disappoint them, because that's actually a good thing. " (http://hbswk.hbs.edu/item/6737.html)

Another voice - Mark Cuban - Don’t Listen to Your Customers: "I'm working with a company that at one point had a product that was not only best in its class, but also technically far ahead of its competition. It created a better way of offering its service, and customers loved it and paid for it.

"Then it made a fatal mistake. It asked its customers what features they wanted to see in the product, and they delivered on those features. Unfortunately for this company, its competitors didn't ask customers what they wanted. Instead, they had a vision of ways that business could be done differently and, as a result, better. Customers didn't really see the value or need until they saw the new product. When they tried it, they loved it."  ( http://www.entrepreneur.com/article/222501)

Finally, from Steve Jobs:  

"It's really hard to design products by focus groups. A lot of times, people don't know what they want until you show it to them." As quoted in BusinessWeek (25 May 1998)

"You can't just ask customers what they want and then try to give that to them. By the time you get it built, they'll want something new." -  Interview with Inc. Magazine for its "The Entrepreneur of the Decade Award" (1 April 1989)

(And here is a slightly longer blog that discusses Steve Jobs' concepts very well in a B2B service environment - it's worth the read: http://www.techjournalsouth.com/2011/06/resisting-the-steve-jobs-%E2%80%9Cinnovation-temptation%E2%80%9D-in-new-b2b-products/)

Customer input is critical.  Customer focus?  Absolutely.  Customer dictated?  Not so much.