SOPs for 2018 and Beyond – Start Improving Now!

Many of us have a procedures manual that sits on a desk somewhere, collecting dust and probably only used when a new employee comes on board.  At a previous company we had one that was called Big Red.  It was in a 3-inch red binder (hence the name) and it was so detailed that it included specific screens, keystrokes and entry fields for many processes.  It should have been a great resource, especially for new hires, people covering for vacations or for those processes that only happened a couple of times a year (such as inventory counts or year end processes). The problem was that it was a static document and a lot of the time it showed how a process “should” be done, not how it was done.  Missing would be things like customer-specific items (such as company A requires a consolidated invoice).  They can also be lagging people finding a better way to do something, making some pages out of date as soon as they are published and distributed.

The reality is that unless you are ISO certified it is unlikely that you are doing many reviews or audits of your SOPs.  It can easily happen – most of us run lean staffing levels, there is always something customer-related that is “top priority” and various other reasons that cause us to push a review off.    However, if you are trying to maintain a culture of continuous improvement failing to update your SOPs is a lost opportunity.

Think of the changes that could happen in a year.  Upgrades to any of your ERP, Accounting, HR, Payroll or Shop systems.  New regulations that may require different record keeping. New customer requirements that have been implemented across the board.  New training that has shown employees a better way to do something.  These are just a few examples, we can all think of many more.  Now think of how many are documented.  How many of those are handled by only a single person? Now what happens if that person leaves the organization?  So why is the SOP review considered to be something that can be put off yet again?

So how do we make sure that our SOP documents are effect and up to date?  Consider having them on an intranet site that is only accessible to your employees.  This will help make it more easily accessible, which should result in it being accessed more often.  Being more visible should result in discrepancies being identified more often and more quickly.

When writing your SOP, make it as detailed as possible.  An SOP should be something that you can give to almost anyone within your organization so that they could take over the process and complete it.  One of the best ways is to have a few different views of the process with each one getting progressively more detailed.

Step One – Flowcharting

Show the process as part of a flowchart.  Allow the audience to see how that one process fits into the larger organization.  Many processes may seem trivial or “just busywork” to the person doing the tasks.  By displaying how that process fits into the larger picture, you can increase employee satisfaction by showing them that a group of tasks helps to contribute to customer satisfaction and the company’s success.  Alternatively, the diagram may bring to attention processes and tasks that do not contribute value and are candidates for either re-engineering or elimination.  If the process is to satisfy the requirements of a small number of customers, now would be the time to have your account managers approach those customers to ensure that the process is still being used or perhaps needs modification.  There is no use trying to optimize a process only to find out that the audience for it has changed their requirements.

Being as detailed as possible will assist in doing an optimization for two reasons – one, it allows an auditor to identify unnecessary tasks; and two, it forces you to check if those are still the required steps.  As an example, an accounting process may call for 8 tasks to occur in a specific sequence.  However, your accounting software has been recently updated and three of those tasks are no longer needed because they can now happen as part of a single command instead of running them individually.  The new SOP should reflect the reduced number of steps.

Step 2 – Checklists

The next step is to create a checklist that provides more detail than the flowchart.  This should have enough detail that an experienced operator will understand what steps are required, but not quite enough that a new employee would be able to do the process without additional information.  For example, a very simple invoicing process may look like this:

  • Ensure that all documents and data for the billing period have been entered
  • Ensure that all required documents have been scanned into the system
  • Perform the invoice run
  • Determine how the customer wants their invoices and either e-mail them or print and mail them

At this point assume that the process will be performed by a competent employee and this document is just to assist them in assuring that all parts of the process are carried out.  If they have not already been involved, make sure that all the relevant stakeholders are onboard with the process as it is currently documented.  This allows them to buy into the process and identify and redundancies or improvements.  Identify pain points within the process.  Know where things currently break down and determine with the stakeholders how to correct them.

Step 3 – A Detailed SOP

The last step is put together a detailed document that spells out all the tasks and sub-tasks that go into that process.  This is where you document specific screens, fields to be entered, etc. This document provides enough detail that a new employee could use it to complete either a process or some of the tasks that make up that process.  An example of a task from above could look like this:

  • Log into Dispatch system
  • Go to Invoicing module
  • Run XYZ report to identify any missing information
  • If no missing information, go to 6.1.11 performing a billing run
  • If there is any missing information go to trip screen, etc.

Getting into this level of detail will further allow the identification of changed or redundant steps.  It also provides a high degree of risk management because the knowledge of how to run a process is fully documented.  This means that if an employee has an accident and is on short or long-term disability, or just goes on vacation, how they performed their job is not just stored in their head.  Another employee will be able to step in and backfill for them.  It also allows for easier transitions when an employee is transferred or promoted.  Having a detailed document means that the new person does not need to take notes (because they can easily access the document) and can focus on learning the task instead of writing things down.

A few final tips:

  • Use simple and easy to understand language in all steps.
  • If jargon or specialized terms must be used, provide a definition for the reader.
  • Keep sentences short or use point form, especially in the most detailed document.
  • Use the active voice. Utilize terms like “identify”, “direct”, “evaluate” or “review” to get the point across without requiring interpretation
  • Avoid ambiguity, such as using terms like “periodic”, “typical” or “should” as they do not give any consistent direction or execution
  • Be careful around important terms. Remember that “may” allows the user to decide. “Must” is always mandatory and “should” is always conditional. Make certain to use the proper term!
  • Use bulleted items or lists to focus attention and slow the reader’s pace. Long dense paragraphs are more likely to be either ignored or only skimmed over. Make it so that people can scan the document to quickly find the information that they need.
  • Use revision numbers and archive previous versions. This ensures that should you ever have to go back to (or defend) a previous process you have the necessary documentation.
  • At the same time, ensure that employees only have access to the most current documentation. You don’t want to make changes to a process only to find out later that an employee was using an out of date document.
  • Use a consistent format for all processes. Having your operations team use one format and accounting using another will just lead to confusion and time will be wasted by having to figure out how the other team formatted things.

The final thing is must be a living document that someone is the process owner and then updates it whenever situations change (such as software updates, regulatory changes, etc.).  Concurrently the process owner should be looking for redundancies and efficiencies every time the document is reviewed.  In the end you should get more done with less wasted effort, resulting in not only an improved bottom line but also in more satisfied employees who know that they are contributing value.

The Top Five Leadership “Don’t Do’s” When You Are Focusing on Reducing Employee Turnover

  1. Here is a harsh reality: you simply stating that the company is going to take on and beat employee turnover will at best be received with reluctant hesitation and/or apathy. This should not come as a shock but if you are approaching 100% turnover (or higher), it is not likely that your people believe too much of what your management team is saying. So why not look for (or create) a bell weather moment? Winston Churchill was credited with saying “never waste a good crisis”. You should pick when to reveal your company’s new retention initiative wisely. If you can tie it to a critical event, good or bad, then you need to determine out how to do that. In my past we decided to train all the “inside the walls” employees on customer service. When people start to realize how their actions affect those around them they start to quickly get the picture. When we finished the training, retention was a natural extension and the transition was easy.
  2. Do not take the issue of your company’s high turnover on as a challenge until you can wrap your head around the fact that you did everything necessary to cause the turnover you have now. The point here is that if you don’t take ownership of the issues neither will your people. Excuses for turnover are far too common and easy to come by. We have all heard them repeatedly over the years. Remember that the blame game does not solve anything. The only way to get off to a good start is to state that you’re determined to turn the corner on your company’s turnover and that from now on the responsibility for every employee that leaves or is fired from your company is on you and your people. There is an opportunity learn from every single failure. Take that failure personally. No one goes to work in the morning with the intention of failing. These are people’s families that we are messing with.
  3. Don’t keep your people in the dark about what you’re doing. Use every channel possible to let them know what is going on in your business. For your company to turn the corner on driver turnover you will need the assistance of everyone in the business. What is discussed must be the priority. Think about this: I give you information because I trust you, I value your input and I need your help. I don’t share information because I don’t particularly care about your opinion and I don’t think your input will bring value to this initiative. Want your people to be more engaged when they come to work? Let them become part of the solution, share as much information with them as possible and then ask them for their help.
  4. Do not try and impose your own personal values on people. If you or your senior managers developed a value statement and then took it to your people and expected them to respond positively to that statement, then you are in trouble – it just won’t work. A strong values statement can be the cornerstone of your retention objectives but only if it reflects your collective values and that you plan on following through with it. Here is the question to pose to your people – what would your perfect company look like? One paragraph from each person is all that is needed. Do it as a team that is working towards a common purpose.
  5. Do not get impatient. This is change and change will scare people. However, being patient does not mean turning a blind eye to behaviour that is counter to the company’s goals. Being patient means coaching and walking the walk. If that individual who refuses to change crosses the line again and again you will have to take the steps necessary to get the right people in those roles. These are tough decisions, but they are entirely necessary for you to succeed. Stay determined!

Don’t Fall Asleep at the Wheel – Keeping Your Business Plan Up to Date

We all create annual business plans, and then attempt to get our proforma budgets in line.  But how many of us revisit those plans on a regular basis?  Are we monitoring the environment for changes that could impact us – a change in minimum wage, a new entrant into the marketplace, or a disruptive technology that catches us napping. Not planning for developments from competitors or governments can put your plan, or possibly even your business, at risk.

Reality check – there just isn’t enough time in the day to monitor every environmental risk that could impact us.  That’s why we belong to industry associations, subscribe to newsletters, and follow blogs.  These act as our early warning systems for new things coming on the horizon.  There is no way that any of us can keep up with all the changing regulations that the various levels of government impose on us.  Some are in response to emergency situations and get pushed on us with little notice.  Others (such as the ELD mandate) are publicized years in advance, and have lengthy implementation periods before enforcement begins.

So, lets look at some things that we can control ourselves.  Let’s start with your target market – have you really spelled out what it is?  What is your preferred network? Your hot lanes? How will these affect your retention efforts? Have you spent enough time doing your research so that you know what your customers really want and value?  And even if you did that once, have you revisited those assumptions to make sure that they are still valid?  If you have the target market right, have you crafted your marketing and sales efforts to appeal to the needs of your current and potential customers. With 10-25% unseated percentages, and 250% over-capacity. It’s easy to fall into the trap of forgetting that the economic tables will eventually turn, and you’d be wise to heed one of Warren Buffett’s famous warnings – ‘only when the tide goes out do you discover who has been swimming naked’. Now is the time to make those technological investments, get lean, build that competitive advantage.

Next, what sort of branding have you done?  Have you positioned yourself as a premium provider, or are you competing purely on price, effectively telling the market that you are a commodity?  Playing the low-price game will eventually put you out of business.  Similarly, have you focused on a market niche or are you trying to be everything for everyone?   If you want to be a premium player, then you need to focus on parts of the market where you provide real value and can command a higher price.  Think of the mistake that Cadillac made in the early 1980’s with the Cimarron.  At that time Cadillac was known for large luxury vehicles like the Fleetwood Brougham or the Eldorado.  The Cimarron was essentially a rebadged Chevrolet Cavalier with leather seats and a Cadillac logo on it, poor performance and a significantly more expensive price tag than its sister vehicles.  By trying to compete against some of the smaller luxury import models Cadillac rushed the Cimarron to market with a vehicle that didn’t meet the needs of those buyers.  They misread both the threat and what buyers wanted – they even had a four speed as the base transmission, not exactly something that your average Cadillac buyer wanted at that time.

A more recent example was Build-A-Bear’s “pay your age” fiasco.  For those of you that aren’t familiar with Build-A-Bear, they take buying a stuffed animal to a higher level.  The child gets to pick out what one they want, gets to custom fill it and then picks from hundreds of outfits and accessories to customize their new friend.  And guess what, they were able to charge a premium because of the customer experience.  Pay your age has probably put that premium image at risk.  Why? Partially because they failed (massively) to deliver – by 11AM most malls had forced the stores to shut down because of the large lineups.  But also, because now they have put the thought into the minds of parents and grandparents that $1 to $10 is all that they really should cost!    In one poorly thought out and even more poorly executed swoop some major damage was done to their brand image.

Your reputation is something that could take a hit, especially with social media sites where some people have no concerns about sharing negative opinions.  Unfortunately, you really must wow someone to get them to put up something positive about your business, but all it takes is one little slip up (and it probably seemed like something insignificant to your employee) to have someone start a rant against your company.  We all need to be monitoring social media constantly and be prepared to give some honest and real answers when someone posts criticism or something that is plain old nasty.  It’s going to hurt but if you respond in a thoughtful and respectful way you will be on track towards regaining people’s trust.

The last risk we will look at is having too much of your sales tied up in one place – whether it is one customer or with one salesperson.  Too much concentration, regardless if it is internal or external, is not good.  Relying too much on one customer puts you at too much risk of something like a management or ownership change causing a serious reduction in your volumes.  Even worse is if they go into bankruptcy leaving you not only with lower volume but also with the potential of your receivables from them only being worth pennies on the dollar.  A similar risk occurs if you rely too heavily on one salesperson.  She manages your top five accounts and is very hands-on with them.  Now what if she moves to one of your competitors?  If she has such a great relationship with those customers, will you be able to overcome that to keep them?  Depending on your state, courts may be reluctant to enforce non-compete clauses for much more than 6-12 months (if at all).  You had better have a backup plan for either of these scenarios.

These examples only scratch the surface of the risks that your company could face and that you really should have a plan “B” for.  Depending on your local market, there may be others that are more important, but these will give you a start.  Don’t try to cover off every possible risk – the idea is not to make this the full-time job for a team.  Devise realistic probabilities of any of these risks happening and what the potential cost would be.  Determine what a realistic number of threats that you should (or can) mitigate against and start from there.  However, ensure that these probabilities are reviewed on a regular basis so that new threats are being considered and any old ones reviewed to see if they are still relevant.  It’s sort of like insurance, you hope you never need it, but you will feel significantly better if you already have a plan should any of those threats become real.

Safety – It’s Our Number One Priority

As the new school year is approaching many of our terminals are a hive of activity.  Whether it is doing preventative maintenance services and checks on our school bus fleets, training new drivers or reviewing policies and procedures with our returning staff, the common theme is the importance of safety in our industry.

A school district in Merced, California ran a training session in 2011 where they reviewed a crash that happened in 1931 and claimed the lives of seven students and the driver (see the full article here).  While the technology we use may be different today, there are a lot of items that our drivers deal with every day.  The training session brought in one of the few remaining survivors (he was 88 in 2011) from the crash to allow the drivers to hear first-hand what such a crash is like and how it affects the survivors.

On May 7, 1931, driver Floyd Cregger was transporting a total of 57 passengers from several elementary schools in Merced.  Cregger had a clean 5-year record of driving with no accidents and he had driven over the rail crossing more than 3,500 times.  Neighbours near the site told investigators that they had never seen Cregger make the crossing without coming to a complete stop.  The statement Cregger made before he passed away indicated that he had stopped 10 feet back of the crossing before proceeding.  He said that the wigwag signal was not swinging, and he did not see the train until it hit the bus (the bus had been recently serviced and was in good condition – a fact verified afterwards by crash investigators).

The key take-away from his statement was that he was not accustomed to expect a train at the time he crossed the tracks – the freight train was not running according to schedule that day.  How many times have any of us relied on what we consider to be the “normal schedule” while driving or other activities?  Most of the time our instincts are correct and nothing bad happens.  However, we all are carrying precious cargo and it is imperative that we always follow all safety procedures.  The responsibility for this starts with us as leaders – if we are not leading by example then we should not be surprised when our employees take shortcuts.

The bus had only picked up its last passenger seven minutes before the accident.  After stopping 10 feet in front of the crossing (California law at the time), the driver had just reached the middle of the crossing when it was struck in the middle, pushing it 40 feet down the tracks before it rolled over.  The bus had been overloaded with 57 students (there were seats for 35).  Survivor Jesse Gaines recalled hearing the screams and cries of the other children on the bus – seven of them died because of the crash.

The fireman on the train stated that he was watching the bus as it was moving towards the crossing.  He jerked the whistle as the bus was a mere 20 feet away.  The engineer stated that the bell on the engine had been ringing for 2 miles before the crossing and that he was only going 15 miles per hour at the time.

One of the passengers said that he saw the wigwag signal moving.  This fact was reinforced by numerous witnesses, including the father of an 8-year old passenger who saw his daughter fly out of the bus and land 30 feet away.  The girl was seriously injured but did survive.

The key lesson here is that regardless of which sector of the industry that we operate in – school buses, motor coaches, activity vehicles or contracted public transit – our driver’s attention to their surroundings and to following proper procedures is crucial to ensuring that our passengers get home safely every time they use our services.  In this case the driver assumed that there would not be a train passing at that time and that blinded him to the warning signals – the wigwag, the bell and even the whistle.  Driver inattention was the root cause of this tragedy, at the cost of 8 lives!  Imagine being that father, watching YOUR child fly through the air because someone was not paying attention.

Every day, each member of our teams has an obligation to make the safety of our passengers our number one job.  This crash from 87 years ago acts as a stark reminder of why that is the case.  Our drivers can’t control the actions of the other members of the driving public (as proven by the April crash that claimed the lives of 16 members of the Humboldt Broncos), but we can all make certain that we do everything in our power to make preventable accidents not happen.

Stay safe and bring them all home.

Prioritize and Profit

Any successful executive will tell you that prioritization is one of the key elements to success in business, and in life. Unfortunately, prioritization is easier said than done. During the course of the day, I speak to an average of 10 executives from small to mid-sized transportation companies throughout North America. One of the most surprising, and consistent situations that I notice every day is that many of these executives are ‘covering’ for one of their employees/colleagues.

The tasks they are covering a range from financial reporting, dispatching, and even driving a bus. Don’t get me wrong, I think it is an incredibly powerful tool for company culture when the boss shows that they are willing to roll up their sleeves and get dirty with his/her colleagues. However, I believe this happens too frequently in all businesses, and there is an opportunity cost to this behaviour.

As an executive or an entrepreneur, letting go of the reins in certain ‘comfort zones’ is a very difficult task. However, it is absolutely necessary to build the value of your company. Your time is valuable. Instead of covering for your Accounts Payable person, perhaps it might be better to call your top shippers to see if there are additional business opportunities available. Instead of spending your time in the shop, perhaps your time may be better spent negotiating a better fuel program, or service contacts.

In order to optimize your time and the value of your business, you MUST attach an hourly value to your time. You already know what your employees/colleagues are making. From the outside looking in, it doesn’t make sense to replace (albeit temporarily) a $20/hour job, with a $200/hour executive. Again, demonstrating to your team that no task is beneath you is valuable. However, if this behaviour is consistent and prolonged it can stall or erode the growth of your company.

With respect to prioritization, one of my business heroes is Warren Buffett (I highly recommend picking up a copy of Buffett: The Making of an American Capitalist by Roger Lowenstein, he uses a very simple process for prioritization and focus, called the “Two List Strategy”:

1. List your Top 25 Priorities or Career Goals
2. Circle your Top 5
3. Avoid the other 20 “At All Costs”

Hard to argue with someone as successful as Buffett. A pretty simple, but powerful exercise for moving your business and your career at a higher trajectory…..

In closing, here’s a great video from Simon Sinek: “How Great Leaders Inspire Action”

Time to Look for a New Home – Have You Outgrown Your Terminal?

It’s Monday morning and the yard is packed.  The sound of 40 buses running while the drivers do their circle checks has caused you to get yet another neighbour complaining about the noise.  Your shop is repairing yet another hood and bumper that were hit by someone trying to back into too small of a space.  And now Jimmy is coming into the office all steamed up because his parking spot is blocked in and there is no way he’s going to make his run on time.  Oh, and the dispatcher is running late because of more construction on the Interstate and the surface streets are full of people trying to bypass the mess.  As you get yet another cup of coffee and start to wonder if maybe it’s time to look for a new yard.

Now don’t get me wrong, growth is a good thing (if it is profitable of course).  Unfortunately, it sometimes means that the terminal that you have already paid off has become too small.  Maybe it’s a block building that can’t be easily expanded to increase your shop.  Even if it is curtain wall construction, perhaps the perimeter wall is already too close to the fence.  Maybe you are just land locked and the person with the empty lot around the corner wants too much for it.

Alternatively, you may have recently lost one of your school districts because they are forever asking you to “sharpen the pencil”, playing you off against Fly by Night Bus Lines and treating your services like a commodity to the point that they are causing a negative return.  Perhaps in the latest negotiations the bulk of your work is now on the other side of the state.

Regardless of why your business has changed, there will come a time when you think about moving to a new location.  Before you pick up the phone and call a real estate agent you need to create a list of must haves, nice to haves and any show stoppers.  Examples could include:

  • Easy highway access to reduce deadhead and travel time
  • Close to your major customers
  • Access to public transit or a relatively short commute so that is not a constraint to hiring staff
  • Close to where you drivers live so that does not give them a reason to leave

Sometimes you will have to do trade-offs.  If one of your major customers is a school board in Marietta, GA then you will not want to put a terminal down in Forest Park, near the Atlanta Airport.  It may cost you more upfront to be in the north end but the payback of drivers not losing an hour or two each trip running through (or around) Atlanta could be huge.

You might want to start by looking for an existing facility.  The best option is a terminal that someone else is selling.  Terminals are an unusual beast – the building may not need to be large but there must be a lot of open land available for parking and maneuvering equipment. You will likely have to do some renovations to make it fit your needs but at a minimum you should not run into any zoning issues.  If you are not certain what your longer-term needs will be, sharing a yard with another company through renting their unneeded space could be an option.  However, keep in mind that if that company experiences growth you may be asked to move again.

If you want to build a new facility, keep zoning at the top of your mind.  There are a lot of municipalities that are outright hostile to our industry.  Part of the problem is terminal buildings tend to be small relative to the size of the lot (generally less than 20%).  That will result in a lower property tax bill compared to a warehouse that covers 75% of the lot.  Check the local bylaws in case they require a minimum percentage of building footprint to the size of the lot.

Avoid irregular shaped lots if possible.  A rectangular lot will maximize the amount of equipment parking.  A pie shaped lot will end up with areas that are no good for parking buses other than older equipment that has not yet been sold.

Another consideration is what neighbours you will have.  You don’t want many houses nearby as they will probably make noise complaints to the municipality.  I once had an inherited facility in a mixed residential/industrial area.  I could count on at least one phone call a week complaining about the backup alarms waking them up at 5:30-6:00 in the morning when the buses started heading out on their routes. You may be forced to put in fences or berms to abate the noise, adding to your overheads and detracting from your ROI.

Another consideration is the existing grade and soil composition of the land.  You are going to have to do some grading to put down the appropriate aggregate and then compact it.  You will want to avoid having to build up areas so that water is not going to pool or require additional drainage.  Also, how stable is the soil – is it heavy compacted clay or is it sand? The site preparation work could be your largest expense, so you will want to find properties that naturally minimalize it.

Finally, what sort of utilities are already servicing the land you are looking at?  Is it a fully serviced lot or will you be required to bring in the utilities at your own expense?  What utilities are available?  For example, what sort of internet connections are in the area?  If you are using cloud-based technologies, will you have enough bandwidth available?  If you’re planning for the future, fiber should be a priority.  What sort of right of way is available if you need to service the property yourself?  For example, does a specific utility have the exclusive rights to the poles in the area?  You could end up needing to trench or drill conduit to bring in electricity, telephone or fibre optics lines even though there may be poles on the property already. Is water and sewage available or will you need to drill a well or use a septic tank?

As you can see there are a lot of things to consider before you even think about hiring an architect to design the building.  There’s a lot that could go wrong in this process.  Make sure you are using a real estate agent who understands industrial/commercial or have a consultant who can walk you through the process.  There’s a lot of work before you even get a shovel in the ground.  There will always be something that pops up during the process but avoiding as many of them before the purchase can keep the project on its timeline and keep it within budget.

Be a Disrupter (Before Someone Else Eats Your Lunch!)

Among the many newsletters I receive each day there was one that caught my eye this morning.  There was an article on Amazon and how their ambitions on the supply chain should have logistics companies worried.  E-commerce has been steadily gaining market share from traditional bricks and mortar retailers, nor accounting for 9.5% of the total US retail market.  Another article I read last night talked about how grocery stores are facing tighter margins and reduced earnings because of things like Amazon buying Whole Foods and selling more groceries online as well as the rise of online services that make it easy for any small restaurant to allow for internet or app based ordering and pooled deliveries.  Millennials are just not buying cars the way other generations did, but they are more comfortable with the idea of ordering what they want from their phone.  Some traditional retailers are turning to offering delivery to meet this trend.  Some retailers will innovate, but others will follow in the fate of retailers like Sears, Toys R Us and Circuit City into massive store closures or bankruptcy.

Let’s face it, most of us are busy enough trying to meet our short to medium term business objectives.  Who has time to find the next big technology or trend in our industry?  And besides, being the leader can be a risky thing.  It’s never fun to put your career on the line for a relatively untested idea. What if you guess wrong?  Why not let those small start-ups live on the bleeding edge while you sit back and wait to see what ideas gain traction?

We need to make sure that there is a culture of Intrapreneurship in our organizations.  We all have red tape and redundant processes that are “the way we have always done things”.   Our managers and staff need to be empowered to question those processes and be encouraged to come up with alternatives that we support and allow to be experimented with.  I don’t mean letting them just try anything – customers can not be negatively impacted.  At the same time, front line managers must be given some leeway to green light ideas that can be quickly executed.  Nothing stifles creativity more than having a drawn-out process where all changes need to work their way up to senior management and then back down again.  Give your functional managers the ability to approve experiments within a reasonable boundary so that these trials can happen quickly.  Some projects will have impacts across the organization or be capital intensive enough that senior management needs to be involved but look at ways that the process can be shortened.  Smaller companies with a flatter structure will be acting on these sorts of ideas more quickly and start taking your customers away as a result.

Intrapreneurship needs to be something that we build into the recruiting process.  Offering the ability to create new businesses can give you a significant advantage when it comes to hiring the best and the brightest.  This is a strategy that companies like P&G and Google have used for years.  Offering the freedom to have ideas supported (and later rewarded) can provide a way to attract better new hires than just throwing more money at them.

One thing to keep in mind is most of these ideas and improvements will not be big, especially not at first.  How many start ups get to huge valuations within the first year?  Almost none of them!  And many that do become successful probably would not get approved in the typical corporate review process.  Think of many of the great baseball teams – how many of them rely solely on the home run to win pennants?  If that was the way to do it, then this year’s New York Yankees should be miles ahead in the AL East with their new incarnation of the Murderer’s Row.  Unfortunately for them, they are sitting 4.5 games back of the Red Sox.  You are going to get better results relying on small ball to get runs and then when a home run does come around it is just a bonus.  And don’t to try to force things.  In Thursday’s game between the Yankees and the Royals, veteran KC player Alex Gordon ignored the stop signal at third, tried to create a run and got gunned down at home for the final out of the game.  The same thing can happen to your business when it only tries for the next “big” thing.  The reality is that none of us know what that will be (and if you really do know what it is, why aren’t you already doing it?) Encourage those smaller improvements – streamline your billing process, find a way to do routing better.  Those smaller things will add to the bottom line and give you the resources to fund the big ones when they appear.  Besides, having several smaller bets means that failure on any one of them will not threaten your business but going all in on a potentially big one could.  At the end of the day, innovation is like portfolio theory.  By diversifying your holdings, you reduce the overall risk profile.  Most disrupters stated as a small idea that ended up growing beyond what it’s creator hoped for.  So, encourage that innovation within your company and pay attention to what’s going on around you.  That way you remain nimble enough that if someone else does start to eye your lunch you can create and implement solutions that allow you to remain differentiated from the rest of the market.  It’s not going to be easy to give up some of that control, but it will be significantly less painful to give it up on a small initiative than it would be to have to bring in something big because that’s the way the market has gone while you stood pat.

Mentorship: The Best Education

Within the last two weeks I said goodbye to a great friend, and mentor. Gabe was in the prime of his life; a world traveler, a respected entrepreneur and a compassionate human being. Am still processing his passing, and it’s surreal scrolling through the many text messages we sent to each other.  Gabe had very strong opinions, and many ingrained habits and principles. Some I wholeheartedly agreed with, and others I simply respected. He had an impact on my life, without a doubt. I was lucky enough to spend a day with him prior to his passing, and I told him how much he meant to me.

This sad moment also provided a time for contemplation about all the people who’ve been my mentors over the years (whether they knew it or not). When I visualize a timeline of my life, there are certain ‘eras’, and during those times there was always at least one person who I looked up to, and in turn provided both direct and indirect feedback, this feedback changed everything. In fact, I kind of feel like Forrest Gump sometimes, for being so lucky to connect and learn from such a dynamic group of individuals. The great thing about mentors is that they are normally connected to a role or activity your involved with during certain segments of your life. In order words, they not only can provide parts of the ‘operating system’ for navigating your way through life (the strategic), they will most likely impart practical and tactical knowledge that can catapult you in your career or another pursuit. The added advantage of mentors is it normally does require any direct cost. Mentors are the form of education with the highest return on investment.

In the whirlwind of business, it’s easy to forget the importance of quality mentoring with respect to employee development. The mentors are, naturally, being pulled in a million directions. The ‘mentees’ who can most benefit from mentorship are being thrown into the deep end, sometimes without a life jacket. I don’t want to generalize, as I know there are many companies doing a fantastic job with formal mentoring programs. However, they are the exception, not the rule. More companies need to stop giving lip service to the word ‘mentorship’. Stop paying a third party to do something you can better internally, with an emotional connection like no other.

If you’re successful in life or business, some part (small or large) of your success can be linked directly to a little bit of luck, and a connection to some person (or persons) that changed the direction of the arrow on your compass. Conversely, the probability is high that there is someone in your work or life bubble that admires you, and could benefit significantly from just a little bit more of your time. Give them that time, the return on investment doesn’t just accrue to them – it comes back to you.

For a great summer read, and to put the importance of mentors in proper context, I highly recommend the book HillBilly Elegy, by JD Vance. In summary, this book not only provides insight into the strength and enduring nature of ingrained cultural norms and habits (the good and the bad), it also reinforces the significance of mentors in changing the course of peoples lives, and future generations. The author’s ‘Mamaw’ was that person. Mamaw didn’t just change the course of author’s life, she changed the lives of his children, grandchildren etc. That’s my kind of compound interest.

In closing out this post, I want to take the time to say thank-you to all my mentors, past, present and future. These men and women are the true professors of my life. The degrees and designations are meaningless in comparison to the education which they have (and will have) given me.

Keystone Habits: What are yours?

Four years ago, I read a book entitled The Power of Habit: Why We Do What We Do in Life and Business by Charles Duhigg. I have since re-read this powerful book four times, and purchased a couple of the books cited by Duhigg in the book itself. It introduces the reader to the concept of Keystone Habits. Keystone Habits can be defined as foundational habits which have the power to transform nearly every facet of your business (and perhaps your life).

As an example of a corporate Keystone Habit, Duhigg details the tenure of Paul O’Neill at the helm of Alcoa (the world’s third largest producer of Aluminum at the time). When Mr. O’Neil joined Alcoa in 1987, the company had suffered through a long period of stagnation, and appeared to be on the patch to succumb to the increasing pressures of global market place. Obviously, this put O’Neill under immense pressure to deliver results.

However, Mr. O’Neill quickly figured out that in order to stimulate growth, profits, and employee morale, he had to find a way to motivate the entire company aside from typical financial incentives. In his first public analyst meeting, instead of focusing on the regular ratios, projections and competitive discussions, Mr. O’Neill decided to focus on something which can now be described as a ‘Keystone Habit’, and that was Worker Safety. He told the group of analysts that instead of focusing his attention on margins, input hedging (and stock price), he intended to transform the company into one of the safest companies in America. The goal – Zero Injuries.

Obviously, the analysts in attendance were skeptical (and puzzled), as was most of Wall Street. In hindsight, many didn’t realize that this focus, had the effect of uniting everyone from the Boardroom to the Factory Floor. The results? During his tenure from 1987 to 1999, Alcoa’s market value rose from $3 billion to $27 billion, while net income rose from $200 million to $1.84 billion. Better yet, Mr. O’Neill successfully transformed the company into one of the safest industrial organizations in the world!

What can we learn from this? When companies go through the process of developing its Mission, Vision, and Values, typically at least one important stakeholder group is left out of the mix (either directly or indirectly). Customers, Employees and Shareholders should all be ‘captured’ in corporate goals and missions. Further, the majority of corporate mission statements are excruciatingly vague, in essence they become placeholder text (in fact, if you google some of them – they are placeholder text). What if your company decided to scrap that vague mission statement and focus on something that is not only going to drive profits, but also employee purpose and customer satisfaction?

Here are some examples of mission statements from some leading North American Transportation companies:

  • “You’re Safe With Me”
  • “Safety: An Obligation Without Compromise”
  • “Work Safe = Home Safe”
  • “We own it. Every mile. Every job. Every day.”
  • “Delivering On Our Promises”

These are just a few examples I could find. Does your mission need updating? Are your daily, weekly and monthly habits in need of retooling? The start of a brand new year is a great opportunity for that.

Turn Mistakes into Compound Interest for your Business

We all strive for the golden ring of Six Sigma, and making as few errors as possible.  Making mistakes has become taboo as we compete in the global marketplace against German and Japanese firms that emphasize efficiency, consistency and reliability.  But what if that quest is stifling entrepreneurialism and innovation?   What if creating an atmosphere where employees are afraid of making mistakes is costing us on the bottom line?

Let’s face it, all of us have made mistakes throughout our careers.  Most them were small and easily corrected, but some may have been huge and had immense repercussions.  At the end of the day we are all humans and imperfect beings.  What’s more important is asking the question – did we learn from the experiences to ensure that we didn’t make the same mistake twice? How capable are we of introspection? The old saying “Fool me once, shame on you. Fool me twice – shame on me” comes to mind here.  For many of us it was our reaction to our mistakes (or the mistakes of others) that proved our worth and moved us forward.  The legendary UCLA basketball coach John Wooden once said “If you are not making mistakes then you’re not doing anything.”  So, if learning from those errors helped you in your career, don’t you owe your employees some leeway to make mistakes as well?

Yes, there are certain positions, tasks, or customers that you have no room for error – making a calculation error on the budget or overcharging your largest customer on fuel surcharge are examples of mission-critical errors.  However, each business has areas where perfection isn’t necessary and doesn’t pose a real threat.  We have previously discussed Kanban systems of continuous improvement.  Implicit in the concept of improvement is the possibility of being wrong occasionally.  Amy Rees Anderson in a 2013 Forbes article put it this way – “mistakes are not failures, they are simply the process of eliminating ways that won’t work, in order to come closer to the ways that will.”

Making a mistake means that the employee went outside of their comfort zone and entered a state of learning, which is where new discoveries are made, and lessons are learned.  However, many of us are reluctant to allow employees to make mistakes and the root cause tends to be a lack of trust.  That comes from two sources.

The first one is our own belief in being better at running all facets of our business than anyone else.  Why else do we all carry our phones with us on vacation and constantly monitoring and checking our e-mail?  It’s rooted in the belief that we are better at making decisions than everyone else.  It’s that attitude that’s holding leaders back from becoming greater leaders.  We can’t run successful businesses if we insist on doing everything ourselves.  Let’s face it, there are only 24 hours in a day and eventually we must sleep.  Short bursts of being a hero are possible, but it can’t be sustained over the long run.  Eventually we get tired and need to be recharged.

I was recently talking with a regional VP of a major bank who had just come back from a vacation.  She told me that for the first time ever she did not bring her phone with her on a trip.  A week before leaving she gave her people notice that she was only available by email up until a certain date and that any emails received while she was away would just be deleted.  Her reasoning was she had a team below her that she had empowered to make decisions and she trusted them to do so.  I spoke with her three days after she had come back, and she still felt rested!  How many of us have come back from a vacation only to feel like we had not even gone away?

The second reason for not trusting people to make mistakes stems from how we hire people.  Sometimes we just take the first reasonable candidate to fill the short term need instead of putting an emphasis on trustworthiness during the interview process and setting the expectations from the start.  Yes, it is painful to have to use existing staff to backfill vacancies but if you are just taking the first warm body that seems capable for the job, is it any wonder that we don’t trust them to make decisions, much less make mistakes?

We can all start by setting a culture where a degree of risk taking is acceptable.  Obviously, a VP is going to have more leeway than a customer service representative.  Given that constraint we need to make certain that we allow some room for experimentation so that a culture of continuous improvement can take place.  So how do we do that?

First, encourage people to own their mistakes and learn from them.  That means not lowering the boom on them whenever an error happens.  Do that and they will never develop the habit of looking objectively at the mistake, recognizing what they did wrong and understanding why that choice was the wrong thing to do.  Let them hold themselves accountable for their mistakes and acknowledge them.  If they are more worried about getting ripped into because of a mistake, then they will just hide them and never learn from them.  This will also result in you only knowing about mistakes when they become large and potentially costly instead of when they are small and easily fixed.

Second, make sure that the person who makes the mistake either fixes them or at least is involved in the correction.  I once heard someone say that lessons aren’t lessons unless they hurt a little bit.  Keep in mind that for most people the self-induced shame of having messed up is probably enough, you probably aren’t going to help things by piling it on, especially if it is a relatively small issue.

Finally, work with that person to develop safeguards to ensure that the same mistake will not get repeated.  Do a root cause analysis with that person so that they get an insight into what went sideways and why.  Most of your employees are more than smart enough to determine the root cause, they just might need some help with the framework.  By going through that process, they will gain insights that they can use in the future to start catching errors before they happen.  And guess what, an employee that can do that means better decision making in the future and just maybe you can join that bank VP in taking a vacation where you come back rested or even just go home at night and not feel that you need to constantly monitor things.  By being able to let people take on those new responsibilities you are going to free your own time up to take on items that will either grow your business or just contribute more to the bottom line.  Making mistakes – who thought that it would be a win-win proposition?