Converging The 3 Biggest Management Issues of 2013

The 2013 economic indicators don’t look great!  We’re heading over a “fiscal cliff” in the US while we wait for “European contagion” as the economic engines in BRIC slow down.  

What’s a business to do?  Is this a perfect storm, or a perfect opportunity?  Will businesses sit on the sidelines and hoard cash or will they get back in the game and take risks?  We’ll know the answer in a year.

In the interim whether organizations decide to sit this one out or move forward they cannot protect themselves from three major issues:

Employee Engagement
You pick the number, but employee engagement is at all time lows and there is no reason to reverse the trend. 

Customer Loyalty
This is on the same path as employee engagement. Technology has put customers in charge of brands. 

Innovation 
Ideas are the lifeblood of an organization’s health and relevance, but “survival management” has stifled the free flow of new ideas.

These three issues are not separate; they cannot be addressed individually; they must be addressed as one.

In my consulting over recent years I have learned that: 

... employees don’t work for their organizations anymore; they work for their customers.  

It is folly to admonish employees with pleas of profitability, bonuses, and shareholder value.  It is equal folly to believe that cosmetic changes and better communication will overcome the engagement malaise.  We have demonstrated to employees that the business doesn’t want to make a commitment to them.  Employees are now reciprocating. 

When I talk with employees they show their passion and energy when they talk about “their” customers.  When left alone (I’m avoiding the overused, yet appropriate word “empowerment”) employees will work diligently to provide the best experience for their customers.  Similarly, when I talk with customers they often harbor dislike for the amorphous organizational entity but lasting admiration for the employee who made things right.

Innovation is the nexus of employee engagement and customer loyalty; however, 

we don’t build organizations for innovation, we build them for efficiency and consistency of delivery.  

In effect organizations work hard to prevent the natural alliance between employees and customers.  

Now I’m not naïve, I recognize that some times employees are bad (and should be dismissed) and sometimes we don’t want employees to think (for example when they must comply with laws and regulations).  Employees understand this.  What they don’t understand is the organization’s orthodoxies and internal controls that prevent the application of common sense in a customer situation.  

Equally, when I talk with CEO’s they want the same thing.  They want employees to act reasonably in serving their customers.  They want employees to offer up ideas that will change orthodoxies and bend internal controls in the service of customers.

So why don’t CEO’s and employees get their way?  Well because there are well meaning layers of management, systems, and procedures that get in the way.  No one is malicious, but the result is disastrous.  The opportunity for a virtuous cycle of: employee->innovation->customer turns into a death spiral of: employee disengagement -> customer defection.

It doesn’t need to be like this.  Human Resources, Customer Experience, and Innovation functions need to look at this problem from the customer point of view.  They need to ask the question:

... how do we unleash ideas from all employees so we can provide our best customer experience?

In 2013 organizations need to build hope into their workforce and “wow” into their customers.  

Hostess: Management Duplicity On A Twinkie

Are you kidding me?  Has management in the US come to this?  

Seriously.  I thought the strength of America was ingenuity.  Innovation.  Being the best.  

Have you been following the Hostess-Twinkie debacle?  As the media reports it, you’d think that the 18,000 unionized employees are reveling in some form of sadomasochism as they bring down the house of Hostess.  Apparently these employees believe that losing their jobs is a small price if they succeed in punishing management.

Let’s take a brief look at the context for this story.  Yes, Hostess is in Chapter 11 and wants to liquidate if the courts allow it; however, this isn’t their first bankruptcy.  Oh no, this is becoming a core competence for Hostess.  Their first experience was in 2004 and when they surfaced in 2009 – are you ready for this – they had lower sales and higher debt.  

What Did Management Do While In Chapter 11?  
Well, employees took $110 million in annual cuts, but prior to the current filing in January there still were 372 separate collective bargaining agreements; 80 health plans; pensions; and some heavy work rules.  So how much restructuring did management actually do the first time?

Now the clock has turned and employees are told that to save their jobs they need to take an 8% cut in pay and 17% in health benefits.  About 2/3^rds of the employees agreed; however, 1/3^rd went on strike claiming, “it’s not our fault!”  

I don’t know where all of this will end up.  Certainly the unions have some culpability, but what about management?  What has management been doing for the last decade?  Certainly not managing.

A Benchmark - Innovation
I want to throw out one benchmark - the benchmark of innovation.  You know that quality that is naturally imbued in all Americans with the title of “manager;” that quality that built America and separates it from the rest of the world.

Here’s a startling assertion that was reported in a national newspaper: since 2009 Hostess introduced one innovation in its product line: Nature’s Pride bread.  One of its competitors, Grupo Bimbo introduced 1300; everything from flatbreads to health foods.  That’s right the innovation ratio is 1:1300.  Oh yeah, Bimbo’s employees are also unionized, but paid about $6,000/year more than comparable employees at Hostess.

So let me ask that question again: “What has management been doing at Hostess?”

Success Was Not A Mystery
Like most companies, the business conditions at Hostess were not a mystery.  The needs of Hostess customer’s shifted as the market became more “health and additive” conscious.  People still wanted Twinkies, but they wanted nutritious snacks too!  

How did Hostess miss this?  Yes, it took on new debt while in bankruptcy, but the company was expected to grow into the debt – not lose $1 billion in revenue.  Apparently management had no vision.  Apparently it had its hands firmly on the controls of internal financial management while it lost its grip on the external market, competition, and customers.

Whatever management was doing, it clearly wasn’t managing.  Now a lot of people could be hurt: owners, creditors, and employees.

Management Must Own It's Actions
It's time that Hostess management stands up and says “mea culpa.”  It's time they admit that they missed the winds of change.  It's time they recognize that lack of Innovation caused their demise.

Change Management & the US Election

Does He Have The Answer?

Well, I'm glad that’s over.  After several years and over $2 billion dollars Americans finally elected the President of Ohio.   


Will the post 2012 election finally address issues in the US electoral process, such as:

• Disenfranchisement
• Administration
• Outcome

I think the answers are: no; yes; and maybe.  Let me explain.

Disenfranchisement – the anachronism of the Electoral College

The unsustainability of this relic is now obvious.  The two parties spent about a billion dollars each trying to sway a very few electors in about half a dozen swing states. 

The spending sweep stakes winner this year seemed to be Ohio and its 18 electoral votes.  I live in Texas.  It has 38 electoral votes.  If it wasn’t for the evening news citizens of Texas wouldn’t have known this to be an election year.  Texas, for the moment, is bright red Republican.  Why waste campaign effort when you know the answer?

The Electoral College not only ignores vast numbers of voters, it also treats then differently.  Because it is based in proportional representation rather than per capita, each vote in Wyoming is more than twice as powerful as those in California.

Isn’t it time to get past “states-rights” in a national election for President?  I think so, but I don’t see it happening any time soon.  Who has the political will to take on this monster?

Administration – joining the world of Developed Nations

Administration of federal elections is a third world business in the US.  I’m astounded when I hear that American delegates participate in election oversight in developing nations.  This is America at the height of arrogance.

As I understand it, “elections” are the right of the states – through their partisan Attorney General down to each county – it is not an exaggeration to say that each of America’s 13,000 counties runs its own election.  Yet, “voting” in US federal elections is within the purview of the federal government.

The current state control of “elections” makes the system wide open to partisan abuse that starts with gerrymandering and runs through any manner of voting restrictions from when, where, and how you can vote.  In highly contested counties there is a lot of formal and even informal pressure that can be put on blocks of voters. 

If a tenant of democracy is voter participation then the US federal election is not a model.

In future election cycles is it possible that the US Congress will use its “voting” responsibility to make change in how the election is run?  Will the US do what most mature democracies do?  Is it possible that the US will establish an independent federal election commission to prescribe: standard voting days and hours, consistent ballot formats, and a single voting technology. 

Citizen should not feel suppressed.  Making changes is not a mystery.  Best practice models for election administration abound.  All the US needs to do is to look north to my native Canada where Canadians figured this out years ago.

Outcome – does the Vote really Matter?

This is the core question.  Do the mechanics of elections matter.  Is it important whether we have proportional or per capita representation?  Does it matter whether elections are fair?

This question is central to optimism and the defeat of cynicism in the US today.  Does the voice of the people matter; or will powerful vested interests maintain the policy gridlock of polarization?

There is urgency in America today.  It is faced with huge issues, and the world is watching to see how well it does.  The “fiscal cliff” is looming and behind that is a national debt that needs to be pared.  Success correlates with economic revival; failure correlates with depression. 

This is a test for change management.  Everyone knows the game; but can the players get out of their own way.  Is there room for collaboration that leads to resolution?  Was the voice of the electorate strong enough?  Maybe?

For me the final words for this election go to the political philosopher John Stuart Mill:  “In all intellectual debates, both sides tend to be correct in what they affirm, and wrong in what they deny.”