01 June 2017

Remembering Harry Handley

"Statistics are no substitute for judgment."

--Henry Clay

I recently received word that a former colleague and friend, Harry Handley, passed away. 

If I created a list of brilliant people personally known in this life Harry would be at or near the top.  Our meeting not long after I arrived in Orlando in 1982 was providential.  A company I owned, CRA Research Group, was looking for new business and to expand its services.  Prospective clients wanted greater access to database marketing information, and that was Harry's specialty.  

Obituary photo of Harry+Norris Handley, Orlando-Florida
Harry Handley (1939-2014)
Walt Disney Attractions would not be in our bio were it not for Harry's unique problem-solving skills.  His was a cluttered desk but an uncluttered mind.  

A former NASA engineer and research director for ABC network, Harry was a teacher, not just a demographer and statistician.  One of the more important lessons he taught us was to "qualify" quantitative data.  That is, understand the numbers by knowing who or what values those numbers represent.  

Time and again he used the illustration of focusing too much on large numbers (100,000) versus the qualifying characteristics of households, even if a smaller number (10,000) where the potential for profit was greater.   

Why do some businesses believe casting a wider net is better for prospecting?

Because they want to cover all the possibilities. However, that tends to be a misguided approach to marketing, and a costly one.  Attracting the right customers, not chasing the wrong customers, is a better way to go.  (See decision by General Motors' CEO Mary Barra to exit Russia, Europe and India in favor of more profitable markets.)        

My time with Harry pre-dated the Internet and social media.  It was a different era to be sure.  Yet finding the right demographics, household characteristics, and motivations for purchasing remain building blocks for successful marketing campaigns in a digital age.  

A problem with big data is that few know what to do with it.  Algorithms, where computers learn and repeat human behavior, can also magnify misbehavior.  And the automation of reasoning carries risk.   

Therefore, when appropriate, add to data the need for human judgment.

Such was the wisdom of Harry Handley.   


(C) Bredholt & Co.


01 May 2017

Making a Course Correction

"If you do not change direction, you may end up where you are heading."

--Lao Tzu

When should CEOs change strategy?   

In his book, "Strategic Thinking," George Morrisey suggests that "you change strategy whenever you determine that the one you are following is no longer likely to lead you in the appropriate direction."

Image result for images of corporate change

Organizations tend to change direction for one or more of the following reasons:

  • To pursue new opportunities
  • Fill performance gaps
  • Take advantage of new technology
  • New ownership or management
  • Respond to crises  

For some it's a matter of corporate A.D.D.--they can't stay in one place very long.

Regardless of why revisions are made, living in a digital world may shorten the lifespan of your business model (i.e., assumptions about how you plan to make money).

What can we learn from the evolution of strategies?

The bumpy road ahead

One example of how bad things were during the "great recession" ten years ago was the disastrous condition of the U.S. auto industry.  At the end of 2008 Ford Motor Company was just months from running out of cash. Congress threw the three major auto makers a taxpayer lifeline. General Motors, and what is now Fiat Chrysler, decided on a bailout. Ford chose to save itself. Even mortgaging its blue Ford oval.  

Image result for ford oval image

Alan Mulally arrived at Ford in 2006 from Boeing Commercial Airplanes where he was CEO. After an assessment of the situation he and others put together a strategy around unifying global operations, transforming a lackluster product lineup, and changing a culture of infighting and backstabbing.   This strategic roadmap, created in crisis during the now celebrated "Thursday" meetings, was not only designed to save the company but keep Ford in the hands of the Ford family.  

"One Ford" was the mantra under which employees carried out what has been described as one of the greatest comebacks in business history.

Why change Ford's strategy?

With the rise of electric and self-driving vehicles, Mr. Mulally's successor, Mark Fields, is doubling down on a "Two Fords" strategy recasting the company as an auto maker and transportation services provider.

The single mission and message of former CEO Mulally ("One Ford") is moving to a broader mission aimed at taking on new Silicon Valley competitors such as Tesla Motors, Alphabet's Google, and now, Apple.  Rumors of Amazon getting into self-driving automobiles are beginning to surface as well.

Tesla delivered 76,230 electric vehicles in 2016, is losing money, yet has a market cap of $53 billion, more than GM ($49 billion) and Ford ($44 billion), as investors are treating Tesla as a tech business, not a manufacturer.

All major auto companies, including Ford's crosstown rivals GM and Fiat Chrysler, are hedging their bets on what they believe is likely to be a very different transportation future, one not imagined in Detroit a decade ago.


On May 19, 2017, Ford's Board of Directors fired CEO Mark Fields and installed Jim Hackett, head of Ford Smart Mobility, as CEO.  Hackett was previously CEO of Steelcase, and Interim Athletic Director at his Alma Mater, the University of Michigan.

Blue light specials

Although the $155 billion department store industry has often proved its critics wrong, it appears the onsite retail shopping experience may be at a breaking point. While e-commerce has been expanding for a decade through smartphones and other devices, department stores and apparel chains are not keeping up.

Full service stores have been on the decline for two decades with consumers moving to off-price retailers such as T. J. Maxx and Dollar General which plans to open 1,000 stores this year.  

Image result for images t j maxx logo

The U.S. Labor Department reported 60,000 job losses in February and March of this year in the retail sector with major retailers scheduled to close over 3,000 stores in 2017.  That number includes chains such as Macy's, J.C. Penney, K-Mart, Sears, H.H. Gregg, and Payless Shoe Stores.

Even Polo Ralph Lauren, with its affluent customers, is not immune closing its store on Fifth Avenue in New York City due to declining sales and profits at the company. 

Why the consolidation?

Over expansion would be on the list.  Newer shopping centers. A shift in where discretionary dollars are spent--from products to services. Harried households too busy to drive to a mall. However, a major disruptor of retail is online shopping making it easier for consumers to bulk purchase non-perishable goods (diapers), and in some cases, with free delivery. All from the convenience of home.

The future could be warehouse distribution centers replacing malls, at least in urban areas.

Think Amazon.

Walmart announced last month a new discount program covering 10,000 items for customers who order online and go to the store for pickup.  That promotion expands to one million items in June of this year.

Others, like Target and Office Max, are fighting back with a combination of technology, personal service, in-store pickups, and smaller stores. Costco uses groceries to distinguish itself and does well against Amazon.  

Image result for macys logo

Macy's new CEO, Jeff Gennette, says his company is a "sea of sameness in what it sells today."  His plan--cutting back on "fashion basics" to make room for higher-priced and trendier clothing.  To cover both ends of the shopping spectrum Macy's will offer more options for bargain shoppers who are going to outlets and other discounters.

It could be that Macy's real estate ends up being worth more than its retail operations.


The sports business is not immune to changes in strategy.  Most often those decisions take place on the field of play by the team manager.  What about the front office?   

Image result for chicago cubs logo

After a 108-year wait for a World Series Championship the Chicago Cubs won it all in 2016 in one of the great series-ending finales of all time against the Cleveland Indians.   Talk about a "hey-hey!" moment to quote the late Cub's announcer, Jack Brickhouse.  

Did that long drought end with good pitching?  

Theo Epstein, the Cubs President of Baseball Operations, big on statistics during his time with the Boston Red Sox, decided to move from quantitative to qualitative methodologies.  Instead of an overeliance on analytics, Epstein went for a three-pronged, holistic approach:  (1) hiring for character, (2) limiting how data is used, and (3) building stronger relationships among the core players, thus avoiding isolation.

Together with the 2015 National League Manager of the Year, Joe Maddon, Esptein's primary focus on character proved a winning strategy for 2016--and hopefully beyond.

Back to basics

Here's breaking news--McDonald's is going to return to its original identity as an affordable fast-food chain and "stop chasing after people who will rarely eat there."

"Our greatest opportunities are at the core of our business," Chief Executive Steve Eastbrook said recently.  The tighter focus appears to be paying off with better-than-expected first quarter sales globally and in the U.S.

Image result for mcdonalds logo

McDonald's has lost around 500 million food orders in the U.S. in the past five years as it tried and failed to widen its customer base.  The company offered different menus adding more salads, snack wraps, and oatmeal, to no avail.  

Interestingly customers weren't leaving for fast-casual chains such as Panera.  They were going to other fast-food chains like Burger King.  

So the new strategy is "not to be different but be better," says corporate strategy vice president, Lucy Brady.  

McDonald's arrived at that "be better" conclusion by talking to its customers. Getting feedback (even from non-customers) is one way to help determine the right course correction.  Better to discover opinions first hand and put them into the mix than to cook up strategies in isolation, far from the dwindling crowds.

Gaining clarity on a business's true identity, as McDonald's seems to have done, is a big first step in closing the strategy-execution gap.


(C) Bredholt & Co.


01 April 2017

The Struggle with Strategy

"No worthwhile strategy can be planned without taking into account the organization's ability to execute it."

--From Execution by Larry Bossidy and Ram Charan

It's fairly common that when things go bad in corporate life there's a tendency to blame the marketplace, disruptive actions by competitors, timing, and even government regulations. Each of these factors can and do weigh against the best strategic plans.  Those plans are attempts to identify, hopefully in plain language, a desired future for the organization, and how to make it happen (strategy defined).  

Image result for images for strategy
(C) Strategy Archives

However, there may be something more important than rounding up the usual suspects.  

"The single greatest reason companies get into trouble is because CEOs are bad at strategy," says Cesare R. Mainardi, adjunct professor of strategy at the Kellogg School of Management and a former CEO of Booz & Company.   

Writing in The Wall Street Journal Professor Mainardi quotes two statistics from a global study about leadership capabilities:  

"81% of the time when major shareholder value is destroyed it's because of bad strategy decisions (Ron Johnson former CEO at J. C. Penney).  And only 8% of all executives are good at both strategy and execution--that is, betting on the right strategy and doing the right things to make it happen (Jeff Bezos current CEO at Amazon)."

Day-to-day matters

"If things go sideways it is most likely the strategy and execution decisions made day-in and day-out," Mainardi concludes.

The apparent self-deception facing an enterprise is that it often appears to be doing all the right things--with a focus on growth; pursuing excellence; reorganizing for change; and creating a lean structure.  Yet much of the time that list proves to be nothing more than imitative rhetoric.

"Conventional wisdom is actually a trap ... it creates a huge gap between a chosen strategy and the ability to deliver it," the study notes.  

In their best-selling book referenced above, Bossidy and Charan make the point that "execution requires a comprehensive understanding of a business, its people, and its environment."   It means top management is to be clear--but not too clear--about strategy, focusing on the objective while not defining the method of execution day-to-day.       

Roger Fisher, former director of the Harvard Negotiation Project, put it this way:  "Distant visions and hard work are both required, but unless what you do today is related to where you want to end up, you will never get there."     

The idea of mutual accountability for results may be too uncomfortable for some. If so, it explains, in part, why the "strategy-execution gap" is not broached more often in corporate and business unit discussions.   

Closing the gap

What are some ways to help close the strategy-execution gap?  

Professor Mainardi offers the following:

1.   Commit to an identity.  Stop endlessly chasing growth.  Invite it.  Define one's self by what one does--not just what one sells.  A truly differentiating identity is built on bespoke, difficult-to-build capabilities.    If a leader chooses to be true to his or her company's chosen identity day in and out, he or she can build an extraordinary company.

2.   Translate the strategic into the everyday.  Stop the endless benchmarking.  Focus on building the handful of unique, cross-functional capabilities that actually deliver on strategy. Leaders must roll up their sleeves and be close enough to the execution to become the architect and chief builder of the capabilities needed.

3.   Put culture to work.  Stop fighting a company's culture and blaming it for undermining strategy.  Start putting it to work instead.  No culture is perfect.  The key is to identify and leverage the parts that work in a company's favor.

4.   Cut costs to grow stronger.  Stop making the classic mistake of going lean everywhere. Most companies waste 20% to 40% of their budget on expense items that have nothing to do with their strategy.

5.   Shape the future.  Stop constantly reacting to market changes.  Agility is overrated.  It has unfortunately become code for throwing out strategy and chasing any opportunity one thinks might work.  The best way to own the future is to be the one to shape it.

In the May Strategist Blog:  A look at why CEOs change corporate strategies.


(C) Bredholt & Co.

01 March 2017

A Homecoming

While standing in line to board a Southwest Airlines flight at Orlando International Airport recently, I heard the sound of applause behind me in Terminal A concourse near our gate, 128.  

Turning around I observed about two dozen U.S. soldiers quickly disembarking their Southwest plane at gate 126.  Passengers waiting to board the outbound flight at that location were giving them a rousing ovation. 

Passengers for our flight, now looking in that direction, began applauding as well.  The display of appreciation was catching as other passengers in gate areas on both sides of the concourse were doing the same--expressing thanks to these American troops coming home.  

There was no way to tell where the service men and women were deployed but that didn't matter.   A few that were tearfully met by family members seem to indicate that wherever it was the time away was likely an extended separation.  

Image result for soldier returning home
i10s.com (C)
As the soldiers moved down the concourse other passengers, perfect strangers waiting for their flights, noticed the troops and they, too, responded with enthusiastic applause.  

What began as a spontaneous show of appreciation at one gate continued as a wave of recognition until the soldiers turned the corner, near the trams, which would take them terminal side to loved ones anxiously awaiting their safe return.

In a world of staged and superficial events, this was an impromptu and uplifting moment.  

Welcome home.


(C) Bredholt & Co.

01 February 2017


By Rudyard Kipling
Rudyard Kipling, 1865-1936

If you can keep your head when all about you
   are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you,
   But make allowance for their doubting too;
If you can wait and not be tired of waiting,
   Or being lied about don't deal in lies,
Or being hated, don't give way to hating,
   And yet don't look too good, nor talk too wise:

If you can dream--and not make dreams your master;
   If you can think--and not make thoughts your aim;
If you can meet with Triumph and Disaster
   And treat those two impostors just the same;
If you can bear to hear the truth you've spoken
   Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
   And stoop and build'em up with worn-out tools:

If you can make one heap of all your winnings
   And risk it on the turn of pitch and toss,
And lose, and start again at your beginnings
   And never breathe a word about your loss;
If you can force your heart and nerve and sinew
   To serve your turn long after they are gone,
And hold on when there is nothing in you
   Except the Will which says to them: 'Hold on!'

If you can talk with crowds and keep your virtue,
   Or walk with Kings--nor lose the common touch,
If neither foes nor loving friends can hurt you,
   If all men count with you, but none too much;
If you can fill the unforgiving minute
   With sixty seconds' worth of distance run,
Yours is the Earth and everything that's in it,
   And--which is more--you'll be a Man, my son!


(C) Bredholt & Co.

01 January 2017

Managing Agreement

Here is a management theory explained as an allegory.  See if you recognize the decision-making process which made the "Abilene Paradox" possible.

In an Abilene paradox a group of people collectively decide on a course of action that is counter to the preferences of many (or all) of the individuals in the group. It involves a common breakdown of group communication in which each member mistakenly believes that their own preferences are counter to the group's and, therefore, does not raise objections. 

A common phrase relating to the Abilene Paradox is a desire not to "rock the boat." This differs from groupthink in that the Abilene paradox is characterized by an inability to manage agreement.

Going out for dinner

The term was introduced by management expert Jerry B. Harvey in his 1974 article The Abilene Paradox: The Management of Agreement. The name of the phenomenon comes from an anecdote in the article which Harvey uses to elucidate the paradox:

On a hot afternoon visiting in Coleman, Texas, the family is comfortably playing dominoes on a porch, until the father-in-law suggests that they take a trip to Abilene [53 miles north] for dinner. 

Image result for images abilene tx city limits

The wife says, "Sounds like a great idea." The husband, despite having reservations because the drive is long and hot, thinks that his preferences must be out-of-step with the group and says, "Sounds good to me. I just hope your mother wants to go." The mother-in-law then says, "Of course I want to go. I haven't been to Abilene in a long time."

The drive is hot, dusty, and long. When they arrive at the cafeteria, the food is as bad as the drive. They arrive back home four hours later, exhausted.

One of them dishonestly says, "It was a great trip, wasn't it?" The mother-in-law says that, actually, she would rather have stayed home, but went along since the other three were so enthusiastic. 

The husband says, "I wasn't delighted to be doing what we were doing. I only went to satisfy the rest of you." The wife says, "I just went along to keep you happy. I would have had to be crazy to want to go out in the heat like that." The father-in-law then says that he only suggested it because he thought the others might be bored.

The group sits back, perplexed that they together decided to take a trip which none of them wanted. They each would have preferred to sit comfortably, but did not admit to it when they still had time to enjoy the afternoon.


Ronald Sims writes that the Abilene paradox is similar to groupthink, but differs in significant ways, including that in groupthink individuals are not acting contrary to their conscious wishes and generally feel good about the decisions the group has reached.

According to Sims, in the Abilene paradox, the individuals acting contrary to their own wishes are more likely to have negative feelings about the outcome.  In Sims' view, groupthink is a psychological phenomenon affecting clarity of thought, where in the Abilene paradox thought is unaffected.

Like groupthink theories, the Abilene paradox theory is used to illustrate that groups not only have problems managing disagreements, but that agreements may also be a problem in a poorly functioning group.

  1. Has your management team ever taken a trip to Abilene? 
  2. Why is consensus a potentially risky proposition?  
  3. What's solidly held in common where you work?  
  4. How can you build on that strength?

Source:  Jerry B. Harvey, Wikipedia ®, Ronald R. Sims


(C) Bredholt & Co.

01 December 2016

Wisdom for the Ages

"Any fool can know.  The point is to understand."

--Albert Einstein

Leadership is not for everyone even though development programs and offerings from higher education might lead us to believe the reverse is true.  In fact, many don't want to be leaders, or qualify, even as they are nudged in that direction and away from the much needed tasks of management.   

Why is this so?

One reason is that leadership, done right, is hard work.  There may be perks and occasional glamour which come with titles, but for the most part, heavy loads, especially for prolonged periods, exact a steep price--physically, mentally, and emotionally.

Another is that people tend to function in business without having developed a philosophy of life which centers on how to live.  About knowledge, truth and the meaning of life.

Answering these and other questions would seem to be a prerequisite for someone seeking a position of responsibility.  Few there are who take time to seriously consider this particular building block of character, are aware of its importance, or know how it becomes a reality in their lives.  There aren't many corporate universities offering a "philosophy" course in their curriculum. 

That's unfortunate.  

Associating with someone clear on their purpose and that of the enterprise makes for healthy relationships and a creative work environment.

What can we learn about philosophy, with a contemporary application, from those whose wisdom transcends the ages?

In their book, The Ten Golden Rules of Leadership, M. A. Soupios and Panos Mourdoukoutas, combine philosophical discernment with the pursuit of leadership in modern times:

Rule l:  "Know thyself."  (Thales)  Understand your inner world, your bright and dark sides, your personal strengths and weaknesses.  Self-comprehension is a fundamental precondition necessary for real leadership.

Rule 2:  "Office shows the person."  (Pittacus)  The assumption of authority brings out the leader's inner world.  It reveals whether the leader has undergone a process of honest self-discovery that allows for the productive application of power. 

Rule 3:  "Nurture community in the workplace."  (Plato)  Community development and positive group sentiment are virtues leaders must nurture by providing the right support, guidance, and incentives.

Rule 4:  "Do not waste energy on things you cannot change."  (Aristophanes)  Do not waste resources and energies on things you cannot control and things you cannot change.

Rule 5: "Always embrace the truth."  (Antisthenes)  Effective leaders should always embrace the truth, always encourage candid criticism throughout the organization, be skeptical of flattering appraisals, and never let authority place a wedge between them and the truth.

Rule 6: "Let competition reveal talent." (Hesiod) While knowledgeable employees can be hired in the marketplace or recruited from within, bringing their talent out and aligning it with organizational interests requires an environment that allows employees to compete with each other in a constructive rather than a destructive way.

Rule 7: "Live life by a higher code."  (Aristotle)  Dedicate yourself to a higher standard of personal conduct; don't hold grudges and ill will toward those who offend; be ready to assist those who are in need without asking something in return; remain calm in the face of crisis; dedicate yourself to principle without compromise; earn the trust, respect and admiration, of your subordinates through your character, not through the authority conferred upon you by the corporate charter; turn authority into power.

Rule 8: "Always evaluate information with a critical eye."  (The Skeptics)  Don't rely upon old premises, assertions, and theories.  Develop a critical mindset that accepts nothing at face value, certify the credibility and usefulness of critical information, analyze the context that produces critical information and the messengers that convey it, and never rush to judgments.

Rule 9: "Never underestimate the power of personal integrity."  (Sophocles)  Always set an honorable agenda; adhere to a code of professional conduct, never try to justify dishonesty and deceit; rather fail with honor than win by cheating.

Rule 10:  "Character is destiny."  (Heraclitus)  True leadership begins within, not without.

(Buy the book.)

Do we understand?

Do you have a philosophy of life, and leadership, which explains your purpose or sense of calling?  If so, what is it?  Do those around you know your philosophy?  Is it lived out for all to see?  Does it match the values and culture of your organization? 

Psychologist Lawrence Pervin, who wrote an authoritative textbook on personality psychology, framed the matter this way: "Is there a disposition to express behavior in consistent patterns of functions across a wide range of situations?"

Where do you need to improve? 

Basic beliefs--and behavior--matter, as wisdom in exercising the mantle of leadership derives from the qualities of our moral character. 


(C) Bredholt & Co.