You are currently browsing the tag archive for the ‘economy’ tag.

I trust you’ve seen martial artists demonstrate their strength and skill by smashing a stack of bricks, blocks or boards with bare hands.

There is first a moment of intense concentration, with breathing carefully controlled. Then, in a bat of an eye, the hand comes down crashing upon the target with an incredible force, shattering an enormous stack of decidedly flesh-unfriendly objects. How do they do that?

Not surprisingly, the mental preparation has as much to do with it as the physical prowess. During the intense moments before his or her upper extremity comes down on the pile of building material, the practitioner visualizes the desired impact in a slow motion, with one crucial nuance.

You have to see the impact go beyond the immediate obstacle and deliver the blow as if you intended to hit that target. In other words, if you see five bricks in front of you,  you have to strike to smash the sixth brick sitting just below them. Don’t even think about the other five.

Business leaders can learn from martial artists and use this technique to propel their organization forward with dramatic acceleration. Set stretch goals and you will breeze by the conservatively set milestones.

Why plan for conservative growth when you can grow dramatically? Why strive to hit the $2 billion revenue mark when you can reach for $5 billion, define the strategy accordingly and leave the previously intimidating $2 billion mark in the dust?

This is how mankind planted its first step on the moon and this is how you can touch the previously unthinkable frontiers too. 

Just think of the sixth brick.

Today, GM announced some drastic steps of its Viability Plan, undertaken in a bid to restructure the company. Among other things, GM is looking to:

  • reduce its hourly US workforce from 61,000 to 40,000 by 2010
  • focus on four core brands – Chevrolet, Cadillac, Buick and GMC
  • reduce the number of US plants from 47 to 31 by 2012
  • reduce the number of US dealerships from 6,246 to 3,605 by 2010

The change is drastic, as nothing less would do, and will affect every division, department and group within the organization. The IT management at GM and the CIO Ralph Szygenda are seeing their fair share of change.

What would I do if I were the GM’s CIO today? I think my three top priorities would these:

  1. Dedicate all of my experience, knowledge and talents to the Viability Plan. Participate actively in its development and implementation and endorse it.
  2. Ensure that my IT strategy and my project portfolio are fully aligned with the direction of the company.
  3. Support my people more than ever. Communicate clearly and timely, avail myself to questions. Instill the feeling of unity and a common purpose.

I would also take a realistic look at the new requirements for this job and assess whether I am the best person to lead the GM IT at this point.

Ebay has released its annual report disclosing a 22% plunge in profits, which feels almost like a 22% increase, given the devastating performance of other market participants, such as airlines, newspapers and the automotive sector.

However, I am surprised that Ebay reported a loss. Let me explain.

A case can be made that Ebay’s core auction service is an inferior good and, hence, its consumption should rise as the income falls. In particular,

  • lessening of the disposable income amplifies bargain-seeking behavior
  • new goods seize to be affordable; have to settle for second-hand
  • the need for supplemental income causes selling of possessions no longer required or affordable
  • layoffs spur so-called “forced entrepreneurship” and some of it occurs on Ebay

In other words, Ebay’s listing revenues should have jumped up, which didn’t happen. They shouldn’t blame the bad economy for this.

The state of the business environment today can be a source of severe cognitive dissonance.

On the one hand, many a large and famous company find themselves reduced to rubble, struggling to survive, ostensibly cutting all but unavoidable expenses, laying off scores of people, radically changing their operations or pleading for financial help.

On the other hand, I get anecdotal evidence on a daily basis that if you were to look closer at the very same organizations, you would see money and time wasted everywhere in inordinate amounts. I am convinced today that the major source of this waste is middle management.

A Saturday evening outing with friends yielded several examples of such waste:

  • IT department of one of the major Canadian banks (we only have a handful of them). A manager keeping contractors on staff for months without anything for them to do. Managers and directors not communicating with their staff  at all and having no idea what their reports are working on.
  • Another large financial organization. Nepotism. People without the requisite skills hired as a courtesy to other managers for no apparent need, at the expense of shareholders.
  • One of the largest municipalities in Canada – middle management engaged in turf wars, projects in a stalemate as a result. Contractors kept on a payroll in the meantime. Millions are wasted.

When a C-level executive makes a serious mistake or commits malfeasance, or when a major project blows up, the public learns about it, laments over the waste and demands punishment. However, middle management is a much bigger crowd and while the magnitude of any given misdeed is not as large, the much greater number of occurrences creates an avalanche of waste.

If you are a senior manager, you simply must be aware of how your subordinates manage their departments and teams. This is not micromanaging or meddling, this is your direct responsibility. Are you too far removed ? Fix it today.

This was originally published as a part of my monthly newsletter in February.

Today, many organizations find it necessary to reduce staff counts. In the last month’s newsletter I pointed out that these efforts are often a misguided knee-jerk reaction. Then, I received two emails from the readers saying, in essence, “OK, we got your point, but how do we do it right if we really have to let some people go?”
These points should be helpful.
Vertical or horizontal?

Under adverse economic conditions, organizations most commonly implement “horizontal” layoffs:  every department is asked to shed a few per cent of its workforce. This is fine if you have people wandering around and looking for something to do, but on behalf of your organization’s shareholders, I hope this is not the case. The proverbial “tightening of the belt” is harmful, in my opinion, because it slows down and jeopardizes outcomes of, strategically important projects.

The much better way is to assess the organizational portfolio of projects and do one of the following:

  • Speed up, strengthen strategically important work (yes, add staff, add executive support, allocate extra funds if necessary).
  • Mothball projects that are not essential at this time – meaning that project can be picked up at a later time. Release or reassign project staff, but try to retain people who have deep knowledge of the project and will be instrumental in re-starting it in the future.
  • Cancel projects that are no longer valuable. Release or reassign project staff.

Cutting vertically, along project lines, helps the organization to re-focus on projects that are truly strategically important, that propel the company forward and position it as the leader among peers. Horizontal cuts simply strangle, leading to a curious state of organizational coma, when a company, while technically solvent, barely manages to keep its head over the water, unable to move, progress, prosper. It takes years to recover, if at all.

Vertical cuts require strong leadership, strategic thinking, sense of responsibility and an effort. Horizontal cuts are effortless – this is why they are so much more common, unfortunately.
One time or many?

Do it once in one fell swoop. When done, always communicate to the remaining staff that it is over. Nothing impedes people’s performance more than uncertainty over their jobs. Have an open honest discussion about what has happened, encourage opinions and answer any questions that arise. Then, as a group, put it behind and concentrate on new challenges.

A colleague of mine once hired a guy who had been through a year of weekly announcements over the PA system containing names of employees required to assemble in the cafeteria, on each Friday afternoon. There was no communication from the top,  people merely disappeared. The morale of employees was in the pits and so was their productivity.  I doubt that the company is still around today.


Ensure that those who leave are treated equitably. Here is what I mean:

  • Check into the packages offered and other conditions of release. DO NOT simply rely on the HR people to take care of it. The package should never be a bare minimum required by the law.
  • Offer references, suggest job search strategies and resources, and show empathy.
  • If possible, take the person out for a nice lunch.
  • Be genial at all times.

Why am I saying this? Regrettably, it’s a common occurrence that one’s former colleagues are treated worse than war criminals, escorted from premises, prohibited from collecting personal effects, made to sign all sorts of “I-promise-to-never-come-here” forms. This is abhorrent.

Remaining staff

Have a plan – what happens when those who have to go are gone? How are their responsibilities going to be divided and absorbed by those left behind? Too often, people are merely told that they have to take on new duties and left to their own devices to figure out what to do.

As a manager, you have to create the sense of direction and certainty, and support your people in doing more with less. Simply dumping new duties on them is nothing short of abdication of managerial responsibilities. Arrange for training and coaching; communicate changes to the rest of the organization; foresee and timely clear roadblocks.


There is nothing pleasant in laying people off. The reality is, each manager will likely have to do it one day.

You have probably heard about the CHAOS  study into project failures, now 15 years old but still often quoted and referred to. Since then, a few similar studies were undertaken by larger consulting companie, but they have offered little insight beyond what CHAOS report was saying.

If you read one of these studies, you will see that they go into estimating losses from derailed projects and you may notice that they only take very large projects into the considerations, those worth millions of dollars.

In my opinion, it is not the large projects that bleed money from organizations, but the smaller stuff, tens to (at most ) low hundreds of thousands in spend that can be authorized by mid-management because they “have money in the budgets to do it” .

Larger projects, which also fail spectacularly at times, are usually carefully looked into at the inception and measured agaist the strategic objectives. They usually receive enough attention from the C-level, which ensures good governance and strong sponsorship and project management. They are usually well funded. Usually is the key word in my assertions.

By contrast, smaller projects often receive little scrutiny in respect to their alignment with strategic business objectives, are often done on a whim, suffer from the lack of sponsorship, and are  poorely managed. In my experience, such projects die in droves and with little visibility, if any.

To ensure prudent cost management today, management must divorce itself from the notion that budgets are given to them to be exhausted, but this notion has to be subscribed to and instigated from the top of the organization to be successful. The seemingly insufficient trickle of waste from smaller project turns into a sea of waste which can be prevented.

… is to disregard or let your employees disregard the basics of business ethics.  Promise a client to call but don’t bother, don’t return calls from your business partner and certainly do not respond to emails from you vendor – that should do it, more swiftly now than before the economy went into the tailspin.

I respond to all emails and phone calls (less the obvious spam), despite my busy schedule, because I am running a consulting business.  I am not sure why others find it to be a problem.

Earlier today, I was driving to a lunch appointment, already once rescheduled. It is 120km drive for me one way, which I was gladly taking. About 75km in and just 1hr from the time I should be in the restaurant studying the menu, my Blackberry reports an email message. It is my counterparty’s assistant asking to reschedule. They both know I am coming out of town.

I’ll give it a benefit of a doubt and say, ok, there may have been an emergency, in which case a phone call would be appropriate. Sending an email which I may or may not receive is just  plain disrespect. The outcome is simple – it is unlikely, at this stage, that this company will be benefiting from my smarts.

Showing common courtesy and adhering to some basic rules of business ethics is not rocket science. It is good for business, it is good business.

Why not do it?

website email phone (905) 278 4753


Bookmark and Share