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Today’s Leaders Are Tomorrow’s Followers

For some reason I’ve run into too many business leaders lately who know less and less about how their businesses are being marketed on the Internet. From owners and CEOs to vice presidents and general managers, leaders (even good ones) are getting further detached from the realities of what truly drives their bottom line.

With virtually all of their customers now virtual, you would think these leaders would hunger for knowledge about digital marketing – not so. In fact, some of them seem downright fearful, and any leader afraid to learn about what makes the Web tick is destined to be a slave to the very people he is tasked with leading.

Rather than recreate the wheel, there’s a great article on the subject and how it is affecting car dealers at the automotive industry blog DealerRefresh.

Tags: Leadership Advice, leadership development, Management Training

Leadership Lessons from Cash for Clunkers

Without diving too deeply into a mini controversy from last week, let me just enlighten you with some quick facts:

• Edmunds.com estimated that the recent Cash for Clunkers program cost US taxpayers about $24,000 per incremental vehicle sold;
• The chief economist of the National Automobile Dealers Association (NADA) responded that the cost of each incremental vehicle sold was actually $4,587;
• For both analyses, an incremental vehicle sold is a sale that would not otherwise have occurred without the government’s CARS program.

Whenever I am faced with two strikingly different opinions about something, I like to follow the money. In other words: Whose opinion enriches their goals more?

A few more quick facts:

• Edmunds, a privately-owned company that has been providing mostly accurate analysis of the automotive industry for more than 43 years, reported their findings days before the NADA reported theirs;
• The White House blasted Edmunds.com, because Edmunds.com disagreed with the official government assessment of the program and painted the program as costly;
• NADA, the main lobbying arm for new car dealers in the US, agreed with the official government assessment and even went so far as to call Edmunds’ analysis “fundamentally flawed.”

Hmmm, lobbyists who call on the White House and other government officials to curry favor for their car dealer clients agree with the White House and blast an independent company who disagrees with them?

Follow the Money

More than just politics as usual, it’s actually quite disappointing that the NADA would, in our opinion, sell its integrity for the sake of a program that even the NADA’s dealer-members will admit (privately) did little to move incremental units over the long term.

In fact, dealers we’ve surveyed point out that their website traffic – which they tell us is a great indicator of consumer interest in new cars – dropped more than 30% in September and October versus the same period in 2008. (For a point-of-reference: Clunker sales ended in August.) To these dealers, this means that the CARS program “pulled ahead” units from September and beyond into July and August.

The NADA’s assessment of the program assumes no sales were pulled ahead. Not one. Zero. None. Nada (pun intended).

In their chief economist’s view, the NADA claims that auto sales for July and August would have been around 1,600,000 units without Clunkers. Actual sales for those two months totaled 2,253,963 units, leaving a difference of 653,963 units. (So far we agree with the NADA.) Divide the CARS’ $3 billion cost to taxpayers by 653,963 and you get $4,587 per car. Simple, right?

Stop Peeing on Me and Telling Me it’s Raining

There cannot be anyone with even basic macroeconomic training who buys into this simpleton analysis. As any good economist would tell you, programs like Cash for Clunkers do not operate in a vacuum. There are economic truths at work that dictate you cannot inject a significant variable (in this case the taxpayers’ $3,500 - $4,500 per car) that significantly drives up current demand for a capital good and not have some impact on future demand for that good.

Are we to believe that not one of the six hundred fifty-three thousand, nine hundred sixty-three incremental units sold in July and August would ever have been sold if not for the CARS program? Well, that’s exactly what the NADA is saying with their transparently disappointing attempt at influencing the White House, the congress and taxpayers who might be asked to support another Clunkers program in 2010.

While the Edmunds.com analysis may have overestimated the number of vehicles pulled ahead into July and August, at least they didn’t try to tell us that EVERY incremental vehicle sold over those two months was pulled ahead from a future month.

Abusing One’s Leadership Role is Never a Good Thing

This is why integrity in leadership is critical. How can we believe anything the NADA reports after this? Their objectivity, in our opinion, is nonexistent. They seem as comical as the NRA arguing for bazookas in every home or PETA rallying against fat people. They’ve quickly gone from being a respectable business organization to becoming just another special interest group. They are now a caricature of their former self.

They’ve forgotten that unlike true special interest groups, the NADA held a true leadership role in the automotive community. They served the best short- and long-term interests of their dealer-members. Now, they’ve broken the trust of anyone with a brain, causing us to question the veracity of all future pronouncements.

The leadership lesson here is simple: When given a position of leadership – whether you’re the President of the United States or the chief economist for a lobbying organization – you have a duty to lead with integrity. Abusing the trust granted to you on the basis of your position assures that you will not be trusted in the future. Your subordinates, constituents or members are not dumb, and when they know you’ve stretched the truth to fit your agenda in the past, they will begin to question the motives of your future actions, and they will no longer take you at your word.

Tags: Leadership Advice, leadership news and views, leadership observations

New York Times – Hardcover Business Best Sellers – October 2009

Yawn… Eleven months and Malcolm Gladwell’s Outliers continues to dominate the NY Times hardcover business best seller rankings. We love this book, and yet it still seems a little unbelievable that one book could remain on top of such a dynamic list for so long. (To read our review of this outstanding book, check out our July 2009 best seller rankings.)

Upon further review, we understand why Gladwell can stay at Number One: Nearly all of his challengers deliver books with no real substance, very little entertainment value, and they fill no unmet need of the book-buying public. From the boring premise of Shop Class as Soulcraft, by Matthew B. Crawford to the asininely unnecessary The 50^th Law, by 50 Cent (and Robert Greene), to the clearly miscategorized What Happy Working Mothers Know, by Cathy L. Greenberg and Barrett S. Avigdor, the NY Times business list is thin, at best.

Given the absolute drivel populating this month’s list, we simply cannot recommend anything in the Top Five not written by Gladwell. From Numbers Six to Fifteen, there is only Jim Collins’ How The Mighty Fall at Number Seven that is worthy of a leader’s time. (Might we recommend you take a look at some classically good leadership books instead?)

The Top Five – NY Times Business Hardcover Best Sellers October 2009 (to view the entire list, follow this link):

Tags: Best Sellers, Business Books

Delta Renames In-Flight Wireless Internet

Dubbed GoGo when released (see our original excited post about GoGo Wi-Fi published on January 12, 2009), it is rumored that Delta has decided to rename their in-flight wireless Internet service NoGo to signify that the service is still not available on all flights nearly nine months since its release. More importantly, GoGo is surprisingly absent from many cross-country flights (where travelers would most welcome it). “It has become clear to us that we should rename the service NoGo,” stated a fictitious Delta executive.

Okay, so this is a rumor that I’m starting, but for good reason. Today I sit on a four-hour, thirteen-minute flight from Atlanta to Orange County on a Delta 737. Once we reached 10,000 feet, I was excited to remove my laptop from its bag, power up and surf to my heart’s content.

Oops, someone forgot to install GoGo on this flight.

Makes perfect sense, right? Why would a planeload of businessmen want to check email during a cross-country flight in the middle of a weekday? My last three flights, all less than 40 minutes in total EDUT (Electronic Device Usage Time), came equipped with GoGo wireless. At just under $10 per flight, GoGo is often not worth purchasing on such short hops. On a flight like today’s, GoGo would be a welcomed bargain that would also help Delta squeeze some additional revenue from its customers.

Leaders Remember Important Lessons

I admit it: I’ve forgotten most of what I learned in college. Much of what I do remember, I have to say, I will never, ever use. I’m hopeful, of course, that I can recall the important lessons when required. The lack of GoGo Wi-Fi on today’s long flight reminds me of one of the first lessons I learned during a basic marketing course in my freshman year in college; perhaps you recall this lesson, as well: it was called The Four Ps of Marketing.

Price, Promotion, Product, Place

With regards to the GoGo rollout, Delta has done a done a decent job with three of the Ps, but they forgot all about one of them.

Price. At $9.95, the service is priced particularly well. A dollar more and they would likely lose 20-30% of their users, a dollar less and they gain nothing.

Promotion. Between the early 40% discounts and the constant bombardment of seat pocket flyers and preflight announcements I have become nearly addicted to the service.

Product. I can surf the web at 30,000 feet. ‘nuf said.

Place. Oops… it’s clear Delta didn’t think this one through. To provide the service during a quick jaunt between ATL and JAX is meaningless to consumers (and probably costly to Delta). However, to not provide the service between Atlanta and John Wayne International is downright criminal. What is Delta thinking? Obviously (as is becoming commonplace with Delta product/process rollouts) they were not.

Like the on-again/off-again Breezeway rules, Delta leadership doesn’t seem to grasp simple concepts. Is it because running an airline is so complicated? I have no doubt it’s damn tough to achieve much of what Delta has achieved, though I find it incredibly disappointing when they fail at the simplest of tasks. (As a frequent Delta flyer, I’m just hopeful they don’t screw up like this on the important stuff.)

Tags: Digression, leadership observations, Management

Keep Everyone Busy So You Can Kill Creativity

In the current economic climate (one that we’ve dubbed The Great Necession), it seems that companies are so concerned about productivity that they’re forgetting about innovation and creativity.

Whether we’re all trying to cover our asses as managers or whether we truly believe that micromanagement and piling on the busy work is the key to survival during The Great Necession, we have become obsessed with ensuring everyone still employed is constantly busy.

Understandably, many workers are doing their job and that of their laid off former coworkers; though even this doesn’t explain what we’ve observed over the past several months in workplaces across America. Too often to be a coincidence, we’ve watched in disbelief as more and more managers unnecessarily micromanage the activities of their charges in an effort to magically drive more output.

We’ve become so concerned with keeping everyone busy that we don’t leave time for our employees to be creative or creatively solve problems.

Manage the Results, Not the Activities

Often because they don’t fully understand the goals, junior managers fall into the trap of managing or micromanaging the activities of their subordinates. When desperate, even seasoned leaders will sometimes scramble to drive productivity through the micromanagement of daily activities.

The Great Necession has created more than a little desperation in the workplace.

The key to reaching your team’s goals as leaders is to clearly identify the goals and then monitor and manage the output of those contributing to the achieving of these goals. When you try to manage the inputs (the activities) instead of the outputs (the results), you most often find you’re driving fast, though in the wrong direction. Additionally, you cannot hold your subordinates accountable for the results that the overly-managed activities attain.

When you tell someone not only what to do, but also how to do it, you own the results – good or bad.

We Need Creative Problem Solving to Solve Our Current Problems

Left to their own accord, people will always find ways to do it cheaper, faster, better and safer. If you’re micromanaging their activities, you leave them no time to improve your products or processes; and thus, no time to help pull your company through the tough times.

As leaders, it rests on us to guide our companies through this economy. Your people are counting on you to do just that. It’s time to lead again: Resist the temptation and stop managing the activities and just manage the results. It’s easier. Of course, do this only if you want creative solutions to your company’s problems.

Tags: Leadership Advice, leadership development, leadership observations, Management Training, typical manager

New York Times – Hardcover Business Best Sellers – September 2009

Ten months and counting for Malcolm Gladwell’s Outliers as it continues to dominate the NY Times best seller rankings. To read our review of this outstanding book, check out our July 2009 best seller rankings.

Though not showing the staying power of Gladwell yet, two authors were able to hold their Top 5 rankings from last month: Mezrich and Ramsey. We have no comment on Ramsey’s “work,” expect to say that it likely should be moved from the NY Times business rankings. (How does dolling out credit card debt elimination advice to consumers with below average intelligence qualify as a business book?) Regarding Ben Mezrich’s The Accidental Billionaires, we can actually recommend this read for those of you looking for something with a little more entertainment than “how to” advice. We enjoyed Billionaires almost as much as we liked Mezrich’s earlier offering, Bringing Down The House, and we were pleasantly surprised that we walked away feeling we learned a little something.

We have no plans to read anything written by former Lehman VPs (A Colossal Failure of Common Sense) or how Bernanke prevented the second Great Depression (In Fed We Trust), though we do welcome your comments about these final two of this month’s Top 5.

The Top Five – NY Times Business Hardcover Best Sellers September 2009 (to view the entire list, follow this link):

Tags: Best Sellers, Business Books, Rankings

Don’t Bring It to Work – Breaking the Family Patterns That Limit Success, by Sylvia Lafair, PhD

I absolutely love it when an expert in a non-business field brings their knowledge to the business world. Whether it’s a former all-star athlete turned successful businessman (ala Julius Erving), or a rehabbed musician turned stock trader (ala Guns N’ Roses’ bassist Duff McKagan), they almost always provide interesting and important perspectives on how we conduct business, and how we lead and manage others.

One of the biggest problems in business today is that we already have all of the answers and we feel don’t need any new blood changing the way we do things. I’ve always been fascinated by the closed minded who fail to embrace or even believe that someone from the outside – armed with a fresh perspective – can make a positive impact. The fact that so many continue believe this despite the myriad of examples of outsiders who successfully bring change is nothing short of astounding. Dr. Sylvia Lafair is one such example of an outsider successfully delivering change.

Lafair, a former family therapist who now serves as the president of Creative Energy Options, Inc., brought her expertise to the business world and with it a unique point of view about office politics, leadership and workplace roles and relationships. From working with dysfunctional families to years of providing leadership training and insights into workplace behavior and relationships for corporations like Microsoft, Dr. Lafair operated in the greatest leadership laboratory of all time: The real world. In the process, she also penned a great read that captures the very essence of what’s holding so many leaders back: Their reliance on destructive family patterns. Her book, Don’t Bring It to Work, shows us that our behavior cannot exist independently from our interpersonal relationships, despite the facade we think we portray.

Charity Isn’t All That Begins At Home

If you buy in to Lafair’s premise, then virtually everything that’s holding you back at work is closely related to the role(s) you play at home. Whether you are a persecutor or pleaser at work, chances are you play this role in your personal life, as well. In fact, according to Lafair, you are basically compelled to play the same role at work that you do at home – you are simply more comfortable this way – unless you can be made aware of your behavior, understand it and then transform yourself by taking appropriate actions. (By the way, if you don’t buy in to this premise, then you’re likely a rebel at both work and at home; which means, of course, that Lafair is still right.)

Certainly, it’s not that uncomplicated; and bravo to Lafair for not trying to insinuate that we simply live in these roles and those are our only issues. Equally important to the role you play are the roles of those around you. If you are not aware that you are a slave to your personal patterns, then you are likely to have conflict with those who do not fit into your “ideal.” As Dr. Lafair puts it: “When our colleagues and bosses don’t match our expectations, we realize this in a matter of seconds, and just like that, the seeds of conflict are sewn.”

Unlike the typical easy-read coping tomes such as The Five Dysfunctions of a Team and Who Moved My Cheese, this book requires real dedication from the reader. In other words, it is not for the casual passerby who just wants to polish this or that about their behavior at the office. Just like real change, this book requires work.

The Recommendation

There is no doubt that I recommend this book, I do. My dilemma is whether it is more leadership, self-help or team dynamics. The truth is that Don’t Bring It to Work can help your personal and professional development much in the same way as Stephen Covey’s 7 Habits does. Just as 7 Habits applies as much to your home life as it does to your work life, so does Don’t Bring It to Work. And, just as Covey’s work is as much about leadership as it is about personal improvement, so is Lafair’s.

The mix of real world examples with a sometimes textbook feel (likely from the massive amount of footnoting early on) is actually very well done. I especially applaud Lafair for her inclusion of a recap called “Takeaways” at the end of each chapter. Because the concepts are sometimes very deep and the material sometimes very new to the reader, having this brief recap at the end of the chapters is very helpful.

While many can benefit from this book, I especially recommend if for two specific people: First, for the young manager who is tiring of seeing his colleagues promoted at greater frequency; and second, for the self-actualized leader who cannot seem to find anything wrong with her style or approach, yet her team is still a mess.

(To order Don’t Bring It to Work, visit Amazon.com.)

Tags: Business Books, leadership books, leadership development, Leadership Resources, Recommended Products

Leadership Decision Making and The Law of Unintended Consequences

Certainly you’ve heard the axioms “nothing happens in a vacuum” and “for every action there is a reaction” before. We’re pretty sure that every thinking adult not only understands these sayings, but also believes them to be true.

Cause and effect, means and ends, seed and fruit cannot be severed; for the effect already blooms in the cause, the end preexists in the means, the fruit in the seed – Ralph Waldo Emerson

RWE is correct, but he fails to mention that each cause actually has multiple effects; every mean leads to numerous ends; and that each seed can bear bushels of fruit. Cause and effect, like means and end, can imply both good and bad outcomes; and both scenarios – unlike the planting of a seed – often create results that are unintended and unforeseen.

The law of unintended consequences is not a new phenomenon, and it’s especially not new to government action. History has shown at every turn that government intervention, regardless of the benevolent intention, leads to numerous unforeseen and unintended consequences. Certainly, some of the outcomes are beneficial, though the vast majority are not.

The Truth about Cash for Clunkers and The Law of Unintended Consequences

In a nutshell, the US Government created a program that requires taxpayers to spend $3 billion help 750,000 people to buy a new car. The program, officially the Car Allowance Rebate System (CARS) though more commonly known as Cash for Clunkers, was created solely “to energize the economy; boost auto sales and put safer, cleaner and more fuel-efficient vehicles on the nation’s roadways” – this, according to the government’s official cars.gov website.

While nearly everyone in Washington was breaking their arms patting themselves on their collective backs after just two weeks of CARS, the truth is that this program, like all government programs, has already spawned numerous unintended consequences (and none of them positive). Here are just a few:

• Kelley Blue Book analysts are predicting a bubble in used car prices as a result of the CARS program. This means the cost for a used car is going to be higher, creating a burden on the working poor and lower middle class.
• Charities are reporting that donations of used cars are down 20% since the start of the CARS program.
• Already hurt by the economic downturn, used car lots are seeing an additional 20% drop in sales since the beginning of the program – these lots are more often owned by local businesspeople and not large corporations.
• Some independent auto repair shops – precisely the kind that would service an older car – are reporting up to 25% decreases in their business.
• Because of the increased demand for many models, car dealers are not discounting beyond the required manufacturer’s rebate. This means that all consumers are paying more for these models.
• Economists blame the drop in overall July retail sales on the CARS program; arguing that consumers spent on new cars, but cut their spending elsewhere – deepening the recession the program was meant to help stop.
• The top new model sold so far under the Cash for Clunkers program is an SUV – the Ford Escape – and two large trucks (Ford’s F-150 and Chevy’s Silverado) and a Jeep are among the Top 10 new models sold. (Hardly the pro-green movement for which the government was hoping.)
• 750,000 working automobiles will be taken out of service and replaced with 750,000 new vehicles. The process of manufacturing each new car (when you account for the acquisition of all material required) is a much more polluting proposition than driving each old car until its natural demise.

It’s clear that Cash for Clunkers will do little, if anything, to stimulate the overall economy; but what about the nation’s car dealers and manufacturers? While dealers are making more per car sold and manufacturers are seeing their inventory backlogs shrink, both of these benefits will likely be short-lived.

The increased demand created by the CARS program cannot be sustained without better economic news. The dip in overall July retail sales signals to us that the end is not as near as we had all hoped. Instead of kick-starting the US Auto Industry, Cash for Clunkers likely pulled ahead many consumers who would have purchased later this year and in 2010. This means many dealers should look for softer than expected new car sales from September through the end of the year.

For the manufacturers, it seems they never learn. Ford announced this week that as a result of the “success” of the program they are ramping up production in the US. While this should be good news for the economy, it likely signals that Ford will be cutting production more than usual this November and December. Rather than enjoying the higher prices brought on by the momentary (and sure to be short-lived) spike in demand, Ford plans to run with the standard Detroit playbook and chase demand by building more cars, trucks and SUVs in the next couple of months. It’s as if Ford is proclaiming “Forecasters be damned, the recession is over.”

…

The leadership lesson in all of this is that the world is always more complex than it seems on the surface. Whether we’re talking about the US Economy or the five people in your workgroup, there is an equilibrium that must be considered before major changes are enacted. Understanding how these changes will affect all stakeholders is an important first step towards reaching your goals; but it is only a first step.

It is equally important to make assumptions about the unintended consequences that will inevitably define the success or failure of any major project, program or transformation. While you’ll be wrong more often than you’re right, just knowing that unforeseen outcomes are expected will make you a better leader – if for no other reason than you’ll be better prepared to manage the unanticipated results.

Tags: Digression, leadership development, leadership observations, management mistakes