01 June 2019

A Nightly Logistics Ballet

There's an up-close look at the increasing speed of the logistics business in the May/June issue of Chief Executive magazine featuring FedEx, founded in 1971 as Federal Express by Frederick Smith.    

Rising expectations for immediate commercial gratification, especially among younger households, are pushing logistics and supply chain management to new levels of performance--aided by robots doing repetitive tasks.  

"Organizational culture contributes to FedEx success," Richard Smith, CEO of FedEx Logistics is quoted as saying.  "You must be able to pivot quickly and nimbly shift strategy to delight the customer in the face of inevitable surprises," he added.  

Adapting when necessary

FedEx announced this month that it would begin Sunday delivery to most U.S. homes.  That decision comes amid significant changes in online shopping patterns.   

Additionally, FedEx said it planned to hire about 700 flexible part-time Express drivers in 160 residential and rural domestic markets, responding to mounting pressure from Amazon on traditional delivery services such as FedEx and UPS. 

While leadership and strategy get more attention, the daily routine shows what an organization is made of in terms of experience, processes, and results.

The evening sort

The next time you review internal collaboration to see if it's functioning properly, consider the following operational complexity . . .  

At the FedEx World Hub in Memphis, Tennessee, at what's referred to as the "evening sort," an intricate ballet is performed each evening.  

The sort involves:

-84 miles of conveyor belts

-150 cargo jets

-7,000 employees

-1.5 million packages

The simple goal?  Making sure your package, and mine gets to where it needs to go.

And 24 hours later FedEx crews do the evening sort all over again.

The next day

According to the FedEx website the company covers every U. S. street address and services more than 220 countries and territories.  Air-ground express service flows through 650 airports worldwide with just over 600 aircraft in the FedEx fleet.   

In addition to the late night staff in Memphis, it's up to more than 240,000 team members globally to make the pick-up and delivery cycle work every day. 

What's a key factor for success in prompt delivery?  An easy-to-read house or business address on the premises.

Choreography

Ballet dancers make what they do look easy when in fact, it's one of the hardest tasks to perform.  Just ask any associate working the night shift at FedEx.*


*No doubt similar efforts are put forth by employees at United Parcel Service (UPS) and the United States Postal Service (USPS).




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(C) Bredholt & Co.






01 May 2019

A Mind That Is Still

"Few things are brought to a successful issue by impetuous desire, but most by calm and prudent forethought."

--Thucydides 

It was announced recently that James A. Forese, current president of Citigroup, will be retiring.  After 34 years at Citigroup, The Wall Street Journal reported Mr. Forese, age 56, and also head of the bank's Institutional Client Group was leaving after spending nearly a decade helping clean up from the spending crisis that contributed to the Great Recession.

Tributes to the man

What caught our attention is the way in which some of Mr. Forese's colleagues described the man who had risen to the No. 2 position at the 3rd largest bank in the U.S.  

Keep in mind the context of the mid-2000s--it felt as though the business world, as we knew it, was coming to an end.  The housing bubble burst.  Credit markets froze.  Big companies like General Motors, Lehman Brothers, and Washington Mutual went bankrupt.   Nearly 700 hundred thousand people a month were losing their jobs.  

So how did Mr. Forese perform in a time of extreme duress?

"We would not be the company we are without his stewardship," Citigroup CEO Michael Corbat said in a company-wide memo.

Another person added, "He (Jamie Forese) is known for being even-keeled and willing to speak his mind."  

One former Citigroup executive, Tom Obermaier, offered that Jamie Forese was a "voice of calm" during the 2008 financial crisis.  "When everybody in many respects was in the classic Citi game of pointing fingers, Jamie got everybody in line, calmed everybody down," Mr. Obermaier was quoted as saying.

How executives are described in their departure says a lot about who they are as a person, not just their accomplishments.    

When your time is up, what will they say about you?

How we think

Mr. Forese's response to such a difficult moment reminds us of the writings of James Allen and the idea that inner thoughts determine outward behaviors.  Here is what Allen says:

1.  The calmness of mind is one of the beautiful jewels of wisdom.  It is the result of long and patient effort in self-control.  Its presence is an indication of ripened experience, and of a more than ordinary knowledge of laws and operations of thought.

2.  A person becomes calm in the measure that they understand themselves as a thought-evolving being.   Knowledge necessitates the understanding of others.  When we see more clearly the internal relations of things then we cease to fuss and fume and worry and grieve, and remain poised, steadfast, serene.

3.  Keep your hand firmly upon the helm of thought.  Self-control is a strength; Right Thought is mastery; Calmness is power.  Source:  As A Man Thinketh, James Allen

Connected with reality

A measure of one's temperament often overlooked in the hiring process contributes significantly to a leader's success.  With dissolving behavioral norms, and markets upended by technology and demographics, how important it is to have at least one person in the room with a non-anxious presence.

To underscore that point--in the midst of the worst financial crisis since the Great Depression Citigroup seems to have benefited greatly from Jamie Forese's experience, and a mind that was still.     



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(C) Bredholt & Co.

01 April 2019

Uncommon Friends

"One loyal friend is worth ten thousand relatives."

--Euripides

No matter where we lived growing up in Michigan our home was filled with conversations, mostly around the dinner table.  Even after the arrival of a black and white Silvertone television from Sears, Roebuck and Company in the late 1950s, talking face-to-face was a priority for our family.  

My mother had culinary gifts which were a draw for a host of friends, neighbors, and dad's parishioners, around an oft-crowded mahogany dining room table (which now sits in our Florida home).  On those special occasions, time stood still.     

That sort of table talk can best be described as story-filled exchanges among older adults who enjoyed politics, religion, and sports.  Those same topics still show up when three generations of our family gather during the holiday season.     

It's from the early years we learned the value of carefully sharing ideas among close friends.  

Sitting on the porch 

In March long-time friends and high school classmates, Dave and Linda Johnson took Chris and me to the Edison-Ford winter estates.  Nearly 25 years have passed since we were in Ft. Myers, Florida in that beautifully landscaped setting on palm tree-lined McGregor Boulevard, next to the Caloosahatchee River. 

Thomas A. Edison first visited this part of the Southeastern U.S. in 1885 and while there, purchased the site that would become his winter home and laboratory. 

Henry Ford, the founder of Ford Motor Company, purchased the adjoining property in 1916.  


Image result for images edison ford and firestone in color
(L-R) Henry Ford, Thomas A. Edison, Harvey S. Firestone
on the front porch of the Edison laboratory in
Ft. Myers, Florida Circa 1930 (C) Edison Estate

Edison, Ford, and Harvey S. Firestone, founder of the Firestone Tire and Rubber Co., whose winter home was in Palm Beach, Florida, became "uncommon friends" spending time together in sunny Florida.  Their f
avorite places to sit and talk were the Edison and Ford covered porches.  

Our tour guide pointed out that none of the three great minds were "inventors" as such, something I had not thought about.  Innovators, not inventors, may be a better word to describe these seasonal friends, the guide offered.   

To illustrate--

o In 1800 Alessandro Volta developed the first practical method for generating electricity--the battery.  English chemist, Humphry Davy, produced the first electric lamp that same year.  What Thomas Edison did in 1879 was surpass his competition by producing a practical and inexpensive carbon-filament light bulb.  

o Henry Ford didn't invent the automobile--that was probably Karl Benz in 1885 or 1886.  What Ford did was find a way to mass produce the Model T car and sell 11,000 of them in 1908-09, raising $9 million to secure and expand the business.   

o John Boyd Dunlop, a Scottish inventor, first patented the air-filled tire in 1887.  Harvey Firestone saw the potential for marketing tires to automobile companies and started a company in 1890 to do just that.

One conversation during World War I led Edison to partner with Ford and Firestone to find a rubber tree plant that could grow quickly in the U.S. removing dependence on foreign rubber.  They each contributed $25,000 ($630,000 in current dollars) to organize the Edison Botanic Research Corporation and create a domestic supply of rubber. 

What did Edison find? After testing 17,000 plant samples he discovered a source in the plentiful Goldenrods, flowering plants in the aster family. 

If around today these industrial innovators would likely be talking about artificial intelligence and autonomous vehicles.  Robotics and new sources of energy.  Or the unintended consequences of radial tires (they last too long).  

I doubt their conversations would be considered small talk.  

The wisdom of good friends

Who are your uncommon friends?  How often do you converse at length about things that matter most to each of you?    

Irrespective of Facebook's notion of "friending," real friends are few, and deep conversations rare.

You may not be able to sit on a porch in a botanical garden like Edison, Ford, and Firestone, but in a business culture where individuals tend to over-schedule themselves, there's wisdom in making time to be among exceptional friends.  The greater your responsibility the more you need to be around those who can be trusted, especially when thinking out loud.  

In the right settings, face-to-face conversations are sources of laughter, meaning, and encouragement.  Who knows, under those circumstances, a transformative idea could even emerge. 



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(C) Bredholt & Co.

01 March 2019

The Portable Bubble

"If you are not being challenged in your thoughts, then you are not aware of what others who are different than you are thinking."   

--Mary Charleson


Larry Culp, the new CEO of General Electric (GE), had a successful run in the same position at Danaher Corp.  The market capitalization of Danaher grew to $50 billion from $9.7 billion during his 14 year term.   One of the management practices Mr. Culp employed at the global science and technology company was to spend time in the field.  Making himself available to workers as he toured various operations was his way of learning about matters first hand. 

GE laid off 30,000 employees in 2018 so there will be fewer associates for Mr. Culp to talk with as he makes his rounds.

At The Home Depot, members of the Board of Directors "regularly visit stores and engage in the operational review of stores throughout the year," according to the company's website.

Peter Magowan, who headed up Safeway, and later purchased the San Francisco Giants along with other investors in 1992, avoided the owners suite choosing instead to sit in the stands to experience the game with fans.  He did that while wearing a suit.    

Keep moving

In the 1980s "Management by Walking (or Wondering) Around," a term coined by Tom Peters, described the way in which Bill Hewlett and David Packard ran their computer company.  The idea of stopping by to talk face-to-face with employees, to get a sense of how things are going, and hear what they are thinking, has a lot value if done properly.  

That's certainly one way to keep from being enveloped by a corporate echo chamber where everyone thinks alike.  

Bubbles are portable, meaning it's possible to stay in one even while traveling.  Direct reports and executive staff often arrange schedules that make leaders visible, but unreachable.  When out and about it's important for top management to insist on engaging with those who run the business every day.  

Getting fresh air

Hal Gregerson, Executive Director of the MIT Leadership Center, has written extensively about executive bubbles.  "The greatest responsibility of a CEO is to recognize whether (the company) requires a major change in direction," Gregerson writes.  

How does one undertake that assessment without a free flow of ideas from different perspectives?  

Dr. Gregerson's interviews with CEOs highlight two disturbing themes: "People telling you what they think you want to hear; and people being fearful to tell you things they believe you don't want to hear."   

Nandan Nilekani, a co-founder of Infosys, says you have to guard against a "good news cocoon."  

What can a CEO do?

Are you insulated from information critical to your work?  To find out, ask yourself these questions:  

1.  How many barriers do people have to cross to talk directly with you?

2. How much of your typical workweek is spent outside your office or headquarters?

3. When was the last time you were dead wrong about something at work?

4. How quickly did you uncover your last mistake?  How fast did you change course?

5. How often do people ask you uncomfortable questions at work?

6. How often do you talk with people who make you feel uncomfortable?

7. How many questions do you ask versus statements do you make in typical conversations?

8. How often do you wait silently for others to answer your questions?

9. How many times this week have you said, "I don't know" in response to a question?


Source:  "Bursting the CEO Bubble"  


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01 February 2019

2030


"There's no such place as far away."

--Richard Bach


There are 
10 years, 11 months  (3,987 days ) between 1 February 2019 and 1 January 2030.  While that may seem like a great distance, it really isn't.  The year 2030 is closer than you think.  
    
Since we perceive time speeding up as we age, take a moment to consider the following:

Leadership

1. How old are you now?

2. How old will you be in 2030?

3. Who is likely to be leading the business in 2030?

4. What is the current average age of your management team?

5. What is likely to be the average age of your management team in 2030?

Associates

6. What is the average age of your workforce now?

7. What is likely to be the average age of your workforce in 2030?

8. What is the primary source of your employees today?

9. What is likely to be the primary source of employees in 2030?


Customers

10. What is the current average age of your best customers, members, or donors?

11. What is likely to be the average age of your best customers, members, or donors in 2030?

12. What are the sources of your best customers, members, or donors?

13. How long did it take to develop those relationships?

14. Where will your best customers, members, or donors likely come from in 2030?


Paying too much attention to technological innovation, and not enough to relationships, tends to obscure the importance of demographics.  Fortunately, consistencies in behavior are more traceable than differences.  At the deepest levels of the human spirit people are quite predictable.  

Which is why in some ways 2030 is already here.          



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(C) Bredholt & Co.  




01 January 2019

Creating a Corporate Strategy


"The essence of strategy is choosing what not to do."

--Professor Michael Porter

Here's something to think about as a new year gets underway:

Does your business have a corporate strategy, defined as the desired future and a way to make it happen?  Is it clearly communicated and understood? Do the assumptions on which the strategy is based fit current reality? 

And is there congruency between the corporate and business unit strategies? Units need their own strategy, as do staffs. However, corporate should go first.    

The goal is an alignment of corporate, unit, and staff without which results are substantially lessened.

Getting started with the process can be challenging but having the right people involved is critical to the outcome.  With no one way to create a strategy (looking ahead and reasoning back), there are options to consider:

Option A (Predictive Strategy)

Premise:

The world is going to look like this--frame the corporate strategy for that future. 2
  • A message, theme or direction (20%)  
  • Implementation (80%)

Option B (Non-predictive strategy)

Premise:

We don't know what the world is going to look like.  Therefore we need a strategy or set of strategies that can be successful almost irrespective of what the world looks like. 3
  • A message, theme or direction (20%)  
  • Implementation (80%)  

Center of the earth

More than a few corporate strategies are rushed into creation, often by-passing the "core."  

If we begin at the center or with the purpose (why?) then there's a better chance the blank spaces get filled in with what makes sense.    

So what's a core idea?

It's a simple articulation of the original purpose or innermost reason for being. It forms the basis of an organization's culture. 

A core idea is central to what you're about.  It's not a mission statement; it's what you want to accomplish; a positive goal that can be realized at any time.

Some illustrations:  

o   Taking Wall Street to Main Street--Merrill Lynch
o   Technology married with liberal arts--Apple
o   Developing leaders of character--West Point

The right way to communicate a core is to embody or personify it.

No organization should assume current employees or management teams know what's in the core.  That means conversations, development programs, and on-boarding should include references to an organization's history and unique sense of purpose.   

A neglected idea

Borrowing from game theory we consider an overlooked, but valuable concept--having a dominant strategy. 

"In general someone has a dominant strategy when they have one course of action that outperforms all others no matter what competitors do.  If someone has such a strategy, their decisions become very simple; they can choose the dominant strategy without worrying about a rival's moves.  

Therefore, it is the first thing one should seek." 4

We learn that dominance in the term "dominant strategy" is superiority over another of your potential strategies (make a list), not of your business over a competitor.   

Avoiding common errors

After nearly five decades of observation, experience, and study, we note the following recurring problems facing CEOs when it comes to corporate strategy:

-Not being clear.

-Giving up too soon.  

-Building a strategy that's easily reversible.  

-Utterances and actions that don't match.

-Failing to have the right people in the right places at the right times.

(See our blog post, The Struggle with Strategy).

The speed of light

A year goes by quickly.  

What will you pay attention to over the next 12 months to ensure the business, under your watch, is moving in the right direction?  If it is, how to maintain momentum.  If not, how to adapt in order to regain momentum.  

No matter the analytics, the rare corporate strategy that works for any length of time is ultimately a series of judgment calls.  When it comes to thinking strategically, quoting Thoreau, "It's not what you look at that matters, it's what you see.         


1 Benjamin B. Tregoe and John W. Zimmerman

2 Philippe Silberzahn
3 Ibid
4 Avinash K. Dixit and Barry J. Nalebuff


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(C) Bredholt & Co.















01 December 2018

With Peace on Earth

I Heard the Bells on Christmas Day

by Henry Wadsworth Longfellow 


Image result for images of henry wadsworth longfellow
Henry Wadsworth Longfellow
(1807-1882)
I heard the bells on Christmas Day
Their old, familiar carols play,
And wild and sweet
The words repeat
Of peace on earth, good-will to men!

And thought how, as the day had come,
The belfries of all Christendom
Had rolled along
The unbroken song
Of peace on earth, good-will to men!

Till, ringing, singing on its way,
The world revolved from night to day
A voice, a chime,
A chant sublime

Then from each black, accursed mouth,
The cannon thundered in the South,
And with the sound
The carols drowned
Of peace on earth, good-will to men!

It was as if an earthquake rent
The hearth-stones of a continent,
And made forlorn
The households born
Of peace on earth, good-will to men!

And in despair I bowed my head;
"There is no peace on earth," I said;
"For hate is strong
And mocks the song
Of peace on earth, good-will to men!"

Then pealed the bells more loud and deep:
"God is not dead; nor doth he sleep!
The Wrong shall fail,
The Right prevail,
With peace on earth, good-will to men!"


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(C) Bredholt & Co.