06 October 2015

Better than Jack Welch - Frank Blake's Home Depot Transformation

Are you a fan of Jack Welch ? Many of us are.

In the 90s and early 2000s, bosses are singing praises of Jack Welch management gospels and trying to mimic his style to gain better performance and higher stock value.

What was lacking, and we were blind to that, being of one track western mindset, is that his six-signma, 4E1P, performance driven and fear driven perform or get fired, top-down, autocratic style management, only works for certain situations. We need to go back to Chinese Mindset such as of Sun Zi, to understand the situation first and then apply the right tools for the right jobs.

Here is an article, as early as 2003, that was pointing out the errors of his disciples. Jack Welch's disciples have gone forth to preach his gospel. So far, most of them are failing.

Now at 2015, we have a longer history of evaluating the disciples performance. They are only good for short-term performances at some instances only, but failed badly in the long-term.

Consider Nardelli's tensure at Home-Depot. He did well at the beginning but was bad in the longer run and was replaced by Frank Blake (Nardelli's Deputy) who go back to the basics of serving associates(employees) to serve customers with the inverted pyramid management style. If you do a search on Frank Blake and Home Depot, you can find many stories about how Blake turnaround the company using his Inverted Pyramind management style. A great one showing him how he handled the Home Depot hacked incidence is in How Home Depot CEO Frank Blake kept his legacy from being hacked. A good case study on Home Depot is here.

Andy Stanley Leadership Podcast recently has an interview with Frank Blade that talked about the inverted pyramid can be found here or here for a complete list.

Here is my mind-map summary of the conversation key points:

It seems that 6-sigma, KPIs number chasing and cost-cutting system may help improve the short term performance but may, if not careful, destroy the original culture and the people who make the company successful in the first place. Management by KPIs and fear can only achieve short term success at the expense of long term growth and sustainability. They seems unable to innovate to create greater growth. It reflects EW Deming's words, "Zero Defect does not guarantee jobs". In this article, "Who Killed Nokia? Nokia Did", the author concluded that the root reason was fear.

However, don't go to the other extreme to say that 6Sigma or TQM or KPIs are no good. No, they are needed. However, they are not enough. You need both, the right values, culture and the methods to create a lasting and successfully company.

Go for Mission, Vision and Values based culture first and then have simplified performance management systems, not just for rewards and incentives, but more importantly, for learning and improvements. 

One more thing. Keeping employees happy is not the goal. Keeping employees happy in serving the customers to accomplish the vision of the company is the goal of any business. The order is happy employees leads to happy customers and to happy owners.

If you want the whole summary in one phrase, it will be "staff before systems" or "love is more powerful than fear".

Lim Liat (c) 6 October 2015

22 September 2015

Nine Keys to Management Excellence - Gui Gu Zi's Chapter 12 Addendum

What is management? What makes good management? Management is about doing things rightly, getting things under control and making sure there is no surprises. Any surprises is an indication of something is beyond the control of management. If the management forecast a 10% growth in sales, and the actual growth is 30%, is a good surprise. But it also shows the failure of management. There is much more to telling the manager to be wise and loving. Gui Gu Zi Chapter 12 Addendum gives us nine keys, and show us the ways, to better management.
Here is the mind-map that show the nine keys with additional explanation:
1 Position 位- Secured, Steady, Upright & Calm

Know your job (position) well. Be secured and make changes steadily. Be upright and fair in the way you treat people and make decisions. Always remain calm in face of any disruptions.  The original Chinese text and the translation are given below.

    + 安徐正静,
    Secured, Steady-change, Upright and Calm.
    + 其被节先肉。
    Treat others with love and self-control and it will bring abundance.
    + 善与而不静,虚心平意以待倾损。
    Be good at giving and networking. If unrest happen, be ever ready to deal with that disruption or loss with humility, fairness & calmness.

2 Brightness 明- Information flows to you.
How can one be wise? The best way is to make sure you have all the information, then you will not be swayed by biased and partial information. So, make use of all the eyes, ears and heart (judgment of intents) of the staff and technology that you have. Let the information flow to you automatically.
Here are the original text:

    + 目贵明,耳贵聪,心贵智。
    Eyes are to see brightly/sharply. Ears are to hear clearly.
    Heart is to know wisely. (understanding the intentions and love)
    + 以天下之目视者,则无不见;
    Using the eyes of everyone, then nothing cannot be seen.
    + 以天下之耳听者,则无不闻;
    Using the ears of everyone, then nothing could not be heard.
    + 以天下之心思虑者,则无不知;
    Using the heart of everyone to think, then nothing could not be known.
    + 辐辏并进,则明不可塞。
    All the information flow to the center like the spokes of a wheel, then discernment cannot be blocked.

3 Gaining 德 Advices
How do you motivate people to willingly come forward to offer you information and advices? It is by accepting and implementing the their suggestions or advices. However, you must be discerning to know what are good and what are bad advices. Don't just reject or accept but evaluate calmly & objectively.

    + 德之术曰:勿坚而拒之,许之则防守,拒之则闭塞。
    Don't insist on rejecting it. If accept it then defend it.
    Rejection results in no suggestions but isolation.

    + 高山仰之可极,深渊度之可测,神明之德术正静,其莫之极。
    The top of high mountain can be seen.
    The depth of deep water can be measured.
    The wisdom of the gods are righteousness and calmness where there are no limits.

4 Rewards 赏 with Integrity
Promote trustworthiness by keeping promises of rewards & punishing fairly. In addition, if you have built your reputation (see 9th Key below too) of integrity and fairness, then you will not be afraid of slandering by others. Much office politics can be avoided.

    + 用赏贵信,用刑贵正。
    Rewards must be trustworthy.     Punishment must be fair
    + 赏赐贵信,必验而目之所闻见,其所不闻见者,莫不谙化矣。
    The giving of rewards are trustingly fulfilled. Let such testimonies be seen and heard. So that those who have not the first hand experience will be influenced too
    + 诚畅于天下神明,而况奸者干君。
    Let your integrity be known throughout the world.
    Then you will not be afraid of slandering by evil people to the king.

5 Seeking 问 to gain Understanding
To gain understanding of anything, one must be willing to ask and to do a thorough job of investigation. Here are the factors to gain comprehensive understandings:  Seasons, Position, People, Direction, Super&Sub-system, Future & Past, Surrounding. cf 5W1H, TRIZ 9-windows

    + 一曰天之,二曰地之,三曰人之;
    Consider the seasonal timing (When),
    the terrain/positional advantages(Where),
    the harmony of the people(Who,Whom),
    + 四方上下,左右前后,荧惑之处安在。
    the direction of north,south,east,west, up and down(super system and sub-systems),
    left & right(surrounding, less & more important), front & back(past & future), where are the problems and doubts that we not comfortable with?

6 Right Principles 因- Find Root Cause & Institutionalize them.
Evaluate and then Rewards the good and punishes the evil.

    + 心为九穷之治,君为五官之长。
    Heart is the root of healing for the body.
    King is the ruler of all the ministers. (Find the root causes & the Indian Chief)
    + 为善者,君与之赏;为非者,君与之罚。
    Those who do good, the king rewards them.
    Those who do evil, the king punishes them.
    + 君因其所以求,因与之,则不劳。
    The king deals with them according to their needs and performance.
    Following such a principle will not be tiring(efficient & effective).
    + 圣人用之,故能赏之。因之循理,故能长久。
    The sages use it and hence can appreciate it.
    Because it is reasonable/rational, hence it can last long.

7 Thorough 周 & Connected to the outside world
Be thorough and opened to manage well with understanding.

    + 人主不可不周;人主不周,则群臣生乱,家于其无常也,
    The leader of people must have prudence and thoroughness. If he is not thorough and careful, then there will be chaos/confusion among his officers and put the house in disorder.
    The in and out are not connected (isolation), then who can know what are happening. Open and close are not done properly(the analysis is bad) and the root cause cannot be know.

8 Honor 恭 Observation - Investigate & root out evil
Observe and detect the hidden evil. Train your eyes, ears & discernment.

    + 一曰长目,二曰飞耳,三曰树明。
    First is telescopic and microscopic eyesight.
    Second is powerful hearing to hear any minute noises.
    Third is clarity and discerning wisdom.

    Able to see thousands of miles away, every little hidden things, is called identifying all the evils. Then no changes in the dark cannot be known.

9 Reputation 名 of Uprightness - Protect your Brands
Reputation comes from your actions, not empty talks.

    + 循名而为贵,安而完,名实相生,反相为情,故曰名当则生于实,
    Following your reputation/brand/name is important. It brings stability and completeness. Name and the reality mutually support give rise to each other and mutually tied up in close relationship. Hence, right reputation comes from real commensurate actions.
    + 实 生于理,理生于名实之德,德生于和,和生于当。
    Reality comes from reasoning. Reasoning come from the the virtue of real reputation. Reputation comes from harmony. Harmony comes from the being just right (right fit).

In this fast changing VUCAD (Volatile, Uncertain, Complex, Ambiguous, Deceptive) world,  the greatest danger is to listen to the wrong people (those villain that want to sabotage us) and getting the wrong information. Not only we must know our job well, we must be humble and open to use technology and to motivate people to willingly give us the information and suggestions. We must build up our reputation for humilty, uprightness, fairness, trustworthiness to overcome the slanderings and get true feedbacks. We must be thorough in our investigations, objective and calm in the midst of disruptions, and then we can decide wisely to make the right decisions. We will not be easily caught surprises again.

Lim Liat (c) 22 Sep 2015