Category Archives: Leadership Observations

Assorted musings about miscellaneuos observations in the world of management and leadership.

From GoGo to NoGo, Delta Stubs Their ToeToe

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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.)

The Truth about Cash for Clunkers

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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.

Cash 4 Clunkers Causes Conservatives 2 Clamber 4 Gov’ment Cheese

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Cash 4 Clunkers Causes Conservatives 2 Clamber 4 Gov’ment Cheese

An interesting sociological experiment and a great leadership lesson has emerged from the US Government’s Cash For Clunkers program: We observed the previously fiscally-conservative put their hands way out, looking for their version of Government Cheese.




It is difficult to get a man to understand something, when his salary depends upon his not understanding it.

We love using this quote by Upton Sinclair because it explains so much about how humans, even staunchly conservative ones, act when money is involved. We understand why so many car dealers are fiscally conservative: They want to keep their hard-earned money in their pockets and not in the government’s. We get it, and we agree with them. What’s interesting here, however, is the nation’s car dealers – mostly old, rich white guys – argue against virtually every welfare program and any government involvement in their businesses. But, when it’s their turn to suck from the government teat, they will knock you and me down to get theirs.

No one doubts that without the collective efforts of NADA member dealers …, the cash-for-clunkers program would not exist today. – National Automobile Dealers Association Chairman John McEleney

We certainly don’t doubt it. It seems that greed trumps principle. The same businessmen and women who routinely vote against liberal candidates were salivating last week while lobbying for President Obama and the Democratically-controlled Senate to pass legislation putting another two-billion tax dollars in their pockets. Do they have any sense of who will pay for this? Do they care?

WIIFM – What’s In It For Me?

Not that we expected the nation’s car dealers to react any differently than virtually anyone else would, we just thought it was interesting what strange bedfellows can be made when there’s something in it for someone. In a weird way we half expected that at least the conservative members of the NADA to remain so… Wow, are we naïve.

Young Managers Working in a Small Business: What Can They Do To Get Respect From Below and Above?

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For Young Managers, it’s not Just About Gaining the Respect of Subordinates

One of the most common questions from our readers concerns how they as younger managers can lead older subordinates – all while maintaining respect and sanity. Where we felt we could help, we’ve provided these youthful leaders advice and guidance as recently as last month when we responded to a question posed by a reader named Sourabh from Mumbai, IN. He was curious how he could convince a firm he was interviewing with to hire him despite his age. Prior to that, we’ve explored possibilities for other young leaders in responses dealing with young business owners, leading grizzled older subordinates, and also how a young manager can keep from being run over. Recently, a new reader found our site and posed her own questions after exploring our advice about how a first time manager can gain respect:

Hi, I stumbled across this site as I was searching for some help. … I am not only the manager but the youngest technician at my company. … I work in a small family owned salon where everyone is on top of each other all the time. Here are my concerns that I am hoping you will be able to help me with:

As I mentioned, I am the manager of the salon but unfortunately I don’t get any respect from some of the older employees as well as the employees that are around my age (25). It seems that no matter what I ask them to do or how I say it, as soon as my back is turned I am a “bitch” etc. My requests usually go ignored until the very few times I have yelled at my employees. Which trust me is not many. I have worked for people that were demeaning and constantly yelling and my goal when getting this position was to be assertive but fair and never intimidating. It is getting to the point where if things don’t change I might snap.

I know I am young but I put in more paid and unpaid hours into the salon than any other employee. I work really hard to make us the thriving spa we are becoming and it frustrates me when people cannot reciprocate. I spend the majority of my time (when I am not with my own clients) ordering the supplies that the techs need, coming up with marketing ideas to make their books more solid, building our website, etc. But all I get back is arguments over why they have to do this special for the price I gave them when they want to charge more, or complaints when things they need aren’t ordered (they usually don’t tell me what they need I have to figure it out myself).


I am becoming resentful because I feel like I am constantly doing for them with no respect being given back to me. With the employees that are my age I am just blatantly ignored or told I am being a bitch. But when everyone wants something i.e. to leave early or come in late the next day all the sudden they are calling me “Miss Manager…”

How do I get the respect I not only desire but deserve?

My boss is way too nice to everyone. It really is out of control. I love her and consider her a great friend but at the same time my role as manager has been blurred by her as well. Sometimes I feel like I am not the manager just her personal assistant. She doesn’t want me to reprimand employees when it needs to happen.

How do I establish with her what my role as manager is?

I have asked her this question before with no real answer. I don’t think it’s fair for me to be telling the staff what to do but unable to say anything when things are not getting done. It would be one thing if she dealt with the issues but she is way too nice for that. I get upset because the employees take advantage of her and I don’t like watching that happen without being able to do anything about it.

Please help!!! – MM, USA

Ms. MM, may we call you M? Our apologies on the length of time it took to effort a response, but your questions were so specific and your situation so intriguing that we wanted to ensure we got this one right. (Not that we don’t try to answer all questions correctly, it’s just that you so completely described your issues that we felt compelled to reciprocate just as completely.)

We’ll tackle your issues and questions one at a time, and in the order you presented them…

I work in a small family owned salon where everyone is on top of each other all the time.

It’s always easier to manage large than it is to manage small. We often laugh when we hear about the tremendous “leadership” provided by this Fortune 500 CEO or that one – when you’re armed with a seemingly unlimited budget, surrounded by Yale and Harvard MBAs and staffed with more Administrative Assistants than Congress, you’re going to have very little trouble executing – provided, of course, that you have a brain, a plan and your ego in check.

Contrast this to a young manager trying to get the most from a group of high school graduates and having to do all the heavy lifting herself. It’s clearly easier to manage large and we feel your pain, MM.

It seems that no matter what I ask them to do or how I say it, as soon as my back is turned I am a “bitch” etc. My requests usually go ignored until the very few times I have yelled at my employees.

On the surface, it seems to us that there is no consequence for either insubordination or inaction by the employees. People yell when they are out of options, and if there were consequences at your workplace, you would certainly never have to yell.

Our advice here is two-fold. First, never yell again. When you lose your cool with someone you are telling the world that you are not in control and that you can be controlled by others. In your case, you are ceding your power to your employees and they are likely getting a big laugh at your expense. Second, it’s time to sit down with the owner and create your version of an operations manual. This manual need not be fancy, but it must detail the policies and procedures for the company, and especially the consequences for poor behavior. (Of course, no business rules are worthwhile if they’re not enforced.)

I work really hard to make us the thriving spa we are becoming and it frustrates me when people cannot reciprocate. I spend the majority of my time (when I am not with my own clients) ordering the supplies that the techs need, coming up with marketing ideas to make their books more solid, building our website, etc. But all I get back is arguments…

This piece of advice is probably going to seem odd, but it might be time to empower this team to make many of their own decisions. Where possible, ask the techs to carry some of the weight. For example, if you like to order supplies on Fridays, then create and distribute a simple Supply Order Form to everyone on Wednesday, and ask them to tell you what they need by Thursday night. Those who fail to order the proper quantities and run out could be docked the express shipping charges or the retail price difference required to get their supplies in on time.

For the marketing decisions, encourage all complainers to provide you with what they would like to see next month. Do this in a non-confrontational, sincere manner in front of everyone, and be sure to give serious thought to their ideas. If you choose to implement one of their marketing schemes, be sure to let everyone know before, during and after the promotion that the idea came from so-and-so by thanking them regularly. They will likely take ownership and do everything in their power to make sure it is a success.

But when everyone wants something i.e. to leave early or come in late the next day all the sudden they are calling me “Miss Manager…”

There’s a Latin term that applies to this situation, M: Quid pro quo. Literally, this means “something for something,” and in business it means “scratch my back and I’ll scratch yours.” Each time one of your charges is looking for a special favor, you have a golden opportunity to do some coaching.

If the employee is the loyal, hardworking sort, then you grant their favor (when possible) and you reinforce their good behavior by saying something like “I have no problem letting someone who accomplishes so much go home early now and then.”

When the person requesting the favor is someone who has made your life miserable, you should take time to explain some of your needs before deciding whether or not to grant their request. For example, you might say something like “I appreciate that you would like to arrive late tomorrow, though I think you’d agree that allowing special treatment to someone who rarely cleans up their own work station sends a bad signal to the rest of the team. If you were in my shoes, what would you do?”

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How do I get the respect I not only desire but deserve?

This, M, might be the real question. Certainly, we feel that if you’re able to incorporate the advice we’ve provided so far, you will begin to build respect with your team. Of course, respect is a lot like love: The more you give, the more you get.

Make a pact with yourself to begin each day by respecting your team. This means listening to their ideas (especially the hair-brained ones), and soliciting their opinions about the company’s direction on issues that are important to them (even if you don’t care). As you begin to respect them, they will (eventually) begin to respect you.

While this is a great first step, the behavior of your team could very well be only a symptom of the real problem. From what we can gather from your comments, the underlying problem you face likely has more to do with your relationship with the owner than it does your relationship with your team.

The Real Question is How to Gain the Owner’s Respect

Let’s get some facts about someone who owns their own company on the table: Right or wrong, the owner is the boss. The goal of every company is to make money for the owner. If the owner is crazy and wants you to waste money, for example, you have two choices: Get another job or waste the money. It’s not passive aggressive behavior to give the owner what they want – even if it’s not in their best interest. This is not to say that you shouldn’t attempt to do what’s right; though in the end the owner is the owner and you are just an employee. If the owner wants to allow people to take advantage of her, that is her prerogative (and not your concern). Like the customer, the owner is not always right, but they are always the owner.

M, your issues may appear like they start and end with your subordinates, but in fact, they seem to be caused by the company owner. In our opinion, you are suffering from a lack of respect for your leadership from your boss; and this lack of respect transfers onto your fellow employees. Now, before you march into her office and demand some R-E-S-P-E-C-T, you need to understand that the owner’s behavior is consistent with someone who wants to please everyone. In her effort to please her employees, she is unwittingly minimizing your authority.

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How do I establish with her what my role as manager is?

While the owner certainly thinks you’re qualified, she has likely been continually undercutting you since the day you were promoted – and all of this undermining was occurring without her knowledge. She possibly has no idea what she’s doing, and that’s why we think it might be time to have a very serious, though friendly, meeting with her.

We suggest you seek the guidance of others before acting, though our advice is to sit down with the owner at an offsite location (to minimize distractions) and to ask her a few pointed questions. In a concerned, friendly tone, you may want to ask her:

  • Do you value me as a leader?
  • Do you believe I possess the necessary skills to manage the team?
  • Do you think I am capable of growing the business?
  • What are your expectations of my roles and responsibilities?
  • What are your goals for the business and how do you see my role in that?

Based on her answers to these questions, you should know where you stand. If the meeting is going well, you may want to finish with a simple statement about how much you love working for her, how much you respect her, but how you sometimes believe her leadership style is diminishing your effectiveness as a manager. Explain to her that in order for there to be rules, there must be consequences. Without consequences, or her backing, you will not have the respect of the employees.

Not surprisingly, once the owner begins to respect your leadership, so will the employees. Unfortunately, this reverse is also true (as you discover every day). On the bright side, if your boss chooses to keep the status quo, you can mimic her style and become “too nice” in an effort to win over your charges. Because it’s always easier to change your style from “strict” to “relaxed” than the other way around, you stand a good chance of still becoming a semi-effective leader even without your boss’ respect.

Leadership Lessons from the US Government and the Cash for Clunkers Program

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Cash for Clunkers: What we can learn about Leadership from Bureaucrats?

Whether you agree or disagree that the US Government should be in the business of incentivizing the populace to buy new cars, the fact is that the so-called “cash for clunkers” program simply demonstrates that our government, like all governments, does not employ an overabundance of thoughtful leaders.

If the goal of the program, also known as the Car Allowance Rebate System (CARS), was to encourage the sale of 200,000 new vehicles, then it has been a smashing success. In fact, the one billion dollar program that was scheduled to run for the next three months ran out of money in less than a week. Oops.

“It has succeeded well beyond our expectations and all expectations,” commented President Barack Obama.

Thoughtful Leaders “Do the Math”

Just who in our government was setting these expectations? We all knew the program, which pays dealers up to $4,500 per vehicle to junk old cars traded in for new fuel-efficient cars, only had enough money for about 200,000 such transactions.

  • There are roughly 20,000 new car dealers in the US.
  • That equates to 10 clunker deals per dealer.
  • The average dealer can sell 10 cars in about 3 hours.

We’re actually surprised the program lasted as long as it did given that the demand for new cars in the US has been depressed for more than a year. One could argue that the US auto industry, which is currently selling about 500,000 fewer new cars each month that it did just two years ago, has more pent up demand than the housing market. Prior to the Cash for Clunkers program, you were more likely to catch the Swine Flu than you were to get New Car Fever.


Now, for the Real Ugly Truth about CARS

It’s clear we didn’t plan well enough for the execution phase of this program. Not only did the government drastically underestimate the potential acceptance of CARS, but they’ve been failing (unsurprisingly) to keep up with the very basics of their own program.

Just a couple of quick examples:

TheManager signed up weeks ago at the Cars.gov website to be alerted when there were updates to the program. By our tally there have been dozens of such updates, though we’ve received none of the promised email communications. No biggie, and certainly not surprising.

Now we learn that the website created by the feds to handle dealers’ claim submissions has taken up to an hour to process each transaction. Additionally, there are reports of repeated rejections as dealers spend countless hours submitting and resubmitting data. A little more of biggie, but again, not surprising.

So, who are we Entrusting with CARS?

Let’s not forget that this is program between the government (think: no accountability) and car dealers (think: Rudy Russo in Used Cars). You wouldn’t trust either of these groups to babysit your kids let alone run a now multi-billion dollar program designed to make the world more fuel-efficient. (Congress added $2 billion to the program today.)

Seriously, there are great people who work for the US Government and there are certainly great people who manage and own new car dealerships in America… there just aren’t enough of them in either profession.

The CARS program requires that the clunker “be crushed or shredded so that it will not be resold for use in the United States or elsewhere as an automobile. The entity crushing or shredding the vehicles in this manner will be allowed to sell some parts of the vehicle prior to crushing or shredding it, but these parts cannot include the engine or the drive train.”

Who will inspect this crushing and shredding? Who will ensure that none of these vehicles is resold inside or outside of the US? Who will ensure that no unscrupulous dealers submit false claims? If we are relying on the goodness of mankind to ensure everyone, including the government and car dealers, does the right thing then we are being more than a little naïve.

Thoughtful leaders, of course, take pride in not being naïve. The government could certainly use a few more thoughtful leaders.

Leadership Lessons from Barack Obama

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What Business Leaders Can Learn from Obama’s Bad Week

Wow, what a week for the Leader of the Free World. Just as his something-for-nothing-health-care-plan was starting to lose steam on Capitol Hill, one of his friends breaks into his own home, gets lippy with a cop and gets arrested.

In his typical “you never want to let a serious crisis go to waste” fashion, Barack Obama took a page from previous US Presidents and tried to deflect criticism of his health plan with some presidential sleight of hand. Claiming a decorated police officer acted stupidly in arresting his pal Henry Louis Gates, Obama just might have uttered the dumbest thing he’s said since taking office. Thankfully, he’s provided us with a couple of truly basic lessons for business leaders in the process.

Leaders Make Sure Their Feet Are Clear of Their Mouths Before Speaking

“I don’t know all the facts.” Barack Obama stated as he began to weigh-in on Gatesgate during his nationally televised health care press conference on Wednesday.




Leaders know that this is where they should stop commenting. Leaders understand that it’s important to get all the facts before speaking – especially on topics that could be inflammatory.

“… the Cambridge Police acted stupidly in arresting somebody when there was already proof that they were in their own home,” Obama continued later in his misinformed opinion “… there is a long history in this country of African Americans and Latinos being stopped by law enforcement disproportionately. That’s just a fact.”

Clearly, Obama has never seen an episode of Cops, where nearly everyone is arrested in their own homes. The most misguided takeaway of President Obama’s declaration on Gatesgate is that he equated this incident with the stereotypical racist white cop, and even tried to make what happened in Cambridge a microcosm of race relations in America.

You Move Too Quickly

If you’re wondering what that stuff is dripping off the President’s mug, it’s egg. It seems Obama not only spoke without knowing the facts – as the facts came out it became increasingly clear that we had a belligerent old man who was disrespectful of the very police who were called to his home to investigate a possible burglary – he basically called one of the most colorblind policemen in Massachusetts a racist. Boy, I bet he wishes he’d known that before he opened his mouth.

Cambridge Police Sergeant James Crowley, as you may already know, not only teaches academy plebes on how to avoid racial profiling, but he just happens to be the brave officer who performed mouth-to-mouth resuscitation on Reggie Lewis in 1993. Lewis, you see, was black; and Crowley didn’t care as he tried to save the young man’s life.

The President should be calling for other police departments to hire more men like Crowley instead of continuing to second-guess the officer’s actions. Leaders, at this point, would know enough to apologize and explain they spoke too quickly. Even as recently as today, Obama has continued to lay much of the blame at Crowley’s feet. The American People – just as your subordinates would if you were lying to them – aren’t buying it.

What’s The Rush?

The real leadership lesson we expected to learn this week centered on the Obama Health Care Reform Plan. We were looking for the reason that the White House and certain members of congress seemed so adamant about passing the measure before the August break. The plan is one of the most costly pieces of legislation ever to be proposed, and would (by all accounts) change the way most of us access doctors and hospitals forever.

So what’s the rush? Leaders know that getting it right is always, always, always better than getting it fast. That’s not to say that leaders believe in ready, aim, aim, aim…. On the contrary, leaders are all about quick action – they just don’t take this action without understanding the pros, cons and consequences.

One thousand, one hundred and eighteen. That’s the number of pages in the Health Care Reform Bill Obama wants passed this month. With all that’s happening in the economy – and with the trillions already pledged to stimulating it – asking congress to okay a bill that would commit trillions more without expecting them to both read and understand it is unconscionable – and not very leader-like.

Measure Twice, Cut Once

Obama and the congressional leadership should take a page from careful carpenters and make certain they understand the ramifications of all aspects of the bill before signing on. (It’s quite possible President Obama hasn’t even read the bill in its entirety.)

Obama, however, wants everyone in America (especially the congress) to look the other way and let his plan go into effect. Why, we ask? What’s the rush? If health care is so important to Barack Obama, shouldn’t we make sure we get it right the first time?

We’re not even talking about debating the merits of the plan the President has laid out – it could very well be perfect for America – we just want to know that if health care is so important to the President, why did it take him six months to name a Surgeon General? (And why does she seem so overweight and under-qualified?)

Therein lies the leadership lesson. Leaders’ actions speak louder than leaders’ words – and true leaders know this. That’s why true leaders would never try to shove something down their charges’ throats. Instead, true leaders provide the facts, gain consensus and mentor as their teams do the right things. We wish Obama would do the same.

Leadership Lessons from the NBA – When Bold Moves are Required, Leaders Don’t Care About Popularity

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Leadership Lessons from the NBA – The Surprisingly Aware Richard Jefferson

Weeks after being acquired by the San Antonio Spurs, star NBA forward Richard Jefferson was scheduled to marry his redundantly named fiancé, Kesha Ni’Cole Nichols, last Saturday. As you’ve likely heard, Jefferson, late of the New Jersey Nets, got cold feet and called the wedding off just hours before he was scheduled to become Mr. Ni’Cole Nichols.




While most in the blogosphere have lined up to crucify Jefferson for his last minute email to Nichols calling off the nuptials, the editors of AskTheManager.com believe he showed great leadership in recognizing a bad decision and rectifying it before it was too late. (Of course, there are reports he spent more than $2 million on the wedding that never happened, so we’re not entirely sure he couldn’t have made the decision a few weeks earlier.)

Leaders Make Decisive Moves

While Jefferson spent more than $2 million on the ceremony, he likely saved himself millions more by avoiding the inevitable divorce from KNN. Many have called him a coward, though we call him bold.

A coward, you see, wouldn’t want to face his fiancé, her family, his family, their friends and the rest of the world with the embarrassing news that he made a bad decision in asking her to marry him. A coward, you see, would live with his bad decision and compound it with more and more bad decisions for the rest of his life. Leaders are bold enough and comfortable enough with their own abilities to say “I screwed up, and this is how I’m going to fix it.”

Leaders Do What’s Right

The popular move for Jefferson would have been to go through with the wedding and make the best of a bad marriage. Certainly millions of others before him have done just that. Jefferson, for whatever reason, stepped up and did what was right – that’s what leaders do. Leaders care about popularity only when it doesn’t get in the way of what is right, and marrying someone you just don’t love isn’t right.

Gaming and Cheating in Business – Why Companies Always Lose When They Cut Corners

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The Short Term or the Long Term

I’m often asked by young managers whether a given decision should be made for the short-term or the long-term well-being of a company; and I always give the same answer: both. No matter what the issue is, the ultimate decision should weigh the pros, cons and consequences over both the long and short terms.

That is not to say that I think that both are equally important – on the contrary – there is no doubt that the long-term health of a company is always more important than the company’s short-term health. Always. Always. Always. And, before you argue that without short-term strength a company will not have a long term; I’ll concede that you are right… and that you just proved my point.

Short-Term Health v. Long-Term Health

While the argument for short-term health versus long-term health may rage in your office, the truth is that no decisions ever really come down to an either/or – it is not a simple dichotomy. Sound company decisions always weigh long-term health against some potential short-term gain or loss. For example: do we take the gain today knowing that we will lose something (but not everything) in the future?

A decision made in favor of a company’s short-term viability so that this same company can be around in the future is indeed a decision made for both the short and long term. I would argue, in fact, that the company’s long-term health was likely the primary deciding factor in choosing the short-term strategy. You simply cannot make short-term decisions that disregard the company’s long-term well-being and expect to be in business in the future.

Short-Term Health v. Short-Term Wealth

Is it short-term health or short-term wealth you seek? Before you tell me that the two are never mutually exclusive, let’s ask the former executives of Lehman Brothers.

Because nearly all of us are paid more on the short-term outcomes we drive for our companies rather than what we provide over the long term, it is easy to see why some companies will game and cheat to maximize short-term revenue at the sake of long-term viability.

“It is difficult to get a man to understand something, when his salary depends upon his not understanding it.”

We’ve previously shared this Upton Sinclair quote and it is as fitting in this context as it was in earlier posts. Why would middle managers even begin to try and understand the importance of a company’s long-term viability when 99% of their compensation is related to the short term? We should not be surprised, then, that many companies – and even whole industries – routinely mortgage their futures for the sake of a few dollars today. (Mortgage indeed.)




Gamers and Cheaters – Hall of Shame

While there are a number of industries that routinely cut corners to drive a few short-term dollars to their bottom lines (the banking and casual dining industries come to mind immediately), we decided to focus the remainder of this article on two specific industries that habitually game and cheat, and still don’t get it.

The first industry is known in the automotive business as “Third Party Lead Aggregators.” Basically, these companies acquire contact information from consumers who are reportedly in the market for a car, then sell these as leads to automotive dealers.

Because the aggregators sell leads at a fixed price to car dealers, though purchase the leads from their affiliates and the open market at variable prices, the push to achieve a suitable margin (in the short term) means that the aggregators must purchase a significant number of lower priced, lower quality leads to mix in with a few higher priced, higher quality leads. While this behavior results in greater short-term profits, it comes with an increase in customer churn and a reduction of long-term loyalty.

Think of it as watering down the lobster bisque. In the short term you make more money, though over the long run people stop coming to your restaurant.

What About Watering Down the Herbicide?

There’s actually an acceptable practice in business for cheating and gaming one’s customers known as the Least Noticeable Difference (LND). This is a product strategy that involves improving gross margin via minute degradations to the size or ingredient quality of a product. The key is to ensure that the quality or size is reduced just enough so that most consumers will never notice.

The other cheating industry we wish to highlight is one that seems to thrive on making LND changes (on a weekly basis). Welcome to the lawn service business. This industry is dominated by national players like TruGreen ChemLawn, Scott’s and ServiceMagic; but also populated by countless local players with such creative and fun names as Grasshopper Lawn Service and Bizzy Bee Lawn Care.

You can’t blame this group for cheating. All of their customers live in nice homes and hire someone else to cut their lawns and kill their weeds – i.e., they’re not really paying attention. Additionally, much of the work in this industry involves spraying a clear liquid on grass; the results of which are not realized for weeks. Who wouldn’t be tempted to cheat and water down the herbicide?

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Over the last few weeks the crab grass began to spread (again) in our yard. As we seem to have to do every few months, we called our lawn service to complain. What did they do? The same thing they always do: They apologized profusely, blamed it on the “increase in rain” and promised to come out “tomorrow and treat the lawn again, for free.”

“Not good enough,” I replied. “You’re fired.”

While most of their customers are probably fooled by their reactionary customer service and gladly allow them to continue, we simply could not reward this gaming and cheating behavior any longer. The truth is they simply don’t use enough herbicide during their weekly treatments to be effective, and they know it. They’ve watered it down to maximize their margins and they’re crossing their fingers that you’ll never notice. If you do, they simply apologize and “give” you an immediate treatment for “free.” What they’re actually giving you in this one-time treatment is something they should have been giving you all along: Quality.

LNDs: No One Can Eat Just One

Used once, an LND strategy can be an effective way to make a nice short term improvement to profits. Unfortunately we generally assume (incorrectly) that we will make these changes only when most customers will likely never notice. Like crack cocaine or Lay’s Potato Chips, we sometimes become so addicted to making these LNDs that we can’t stop until it’s too late. Our customers have left us and they’re not coming back.

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Make no mistake, we’re not naïve. We understand that there are plenty of business gamers and cheaters who are successfully pulling the wool over the eyes of their gullible customers every day – and have done so for years. Whether it’s from collusion or a lack of competition in their industry, these businesses have (so far) been able to operate in a vacuum; living high on the hog via a long series of short-term decisions.

Odds are that this cannot last; that the customers will revolt or a new competitor will enter the fray offering real value. Whatever happens, rest assured that it will indeed happen, and that by the time the gamers and cheaters realize it, it will likely be too late. (At least that’s what we hope.)