01 April 2020

Managing the COVID-19 Transitions

"It's not the change that gets you, it's the transition."

--Dr. William Bridges

At the beginning of recent video and conference calls those in positions of corporate leadership or direct supervision are asking their colleagues a very important question--"How are you doing?"

It's a personal inquiry indicating a level of human concern that underlies the health and strength of our relationships in spite of social distancing.   

Images posted online or in print publications are a reminder of how a younger generation is now in positions of top management or owners of companies.  They feel responsible for the health and safety of their employees during this global crisis, dealing with a threat to millions of livelihoods that is not of their own making.

Dealing with sudden adversity

Professor Marvin Minsky from MIT used to say, "We don't know how to do something unless we know how to do it more than way." 

One example of Dr. Minsky's idea is Ventec Life Systems teaming with General Motors to produce up to 10,000 critical care ventilators per month beginning in May of this year.  That's when manufacturing will be ramped up at a currently closed GM plant in Kokomo, Indiana.  This is a partnership between Ventec's technology and GM's assembly experience. 

While the medical and scientific professions seek to slow the spread and overtake the deadly virus known as COVID-19, we must concern ourselves with how to go about our life and business in new ways under safety guidelines from local, state and federal officials.  (Centers for Disease Control Guidelines)  

For now, business strategy (e.g., Ventec/GM), and public health policy are inextricably linked.

The disappearance of the known

The headlines are about infectious disease and its economic impact.  However, the underlying story is about the serious loss of what four weeks ago was taken for granted--health and work in a robust economy; the ability to travel at will for business or leisure; or attend a worship service.  

All team sports are on hold until further notice.

Most of what I learned about change--and the transitions that follow--come from the late Dr. William Bridges. The teaching was theoretical in the beginning but soon turned practical shedding light on personal experiences.  

Change, Dr. Bridges said, was external and transition internal.  He used the terms "endings" and "beginnings" not stop and start.  A "neutral zone" was inserted for processing and renewal.  And his writing's reminded us that everyone goes through a transition at their own speed.

Bridges Transition Model | William Bridges Associates

If the external change is losing loved ones, access to freedoms, or work itself, then the internal transitions to be addressed are the emotional and psychological responses to those extremely difficult, sometimes heartbreaking developments, that follow.  

All this in the context of a global shock to economic, social and health care systems that arrived in days, not months or years.  Who had a global pandemic in their contingency plans?  

One way to gain insight into what people are going through, especially small business owners and their workers, is to understand transition or what's going on inside in response to transformative change.  How does someone who was cutting hair days just a few days ago, but can no longer do so, pay their bills?  How does an enterprise make payroll without an income?

How fast will appropriated government funds get to the neediest persons and businesses?  

Finding ways to deal with those realities is necessary in order for individuals and families to recover and move ahead with their lives.  There's nothing easy about succeeding at that task but the right actions speak louder than words.  

Crossing a great divide

In the coming weeks and months, living under varying public policy guidelines, consider the following for personal or corporate discussions--

-What's our assessment of the current crisis, and what does it mean for our business? (Keep asking that question.)  

-What are we losing?  

-What's not over?  What should we think about holding onto?  

-How much of "normal" is likely to return and when can we know?

-In the midst of a crisis, how does one think with a clear mind?

-What are the more reliable sources of information for our business and employees?  

-How do we communicate with clarity and consistency and how frequently?  

A crisis requires moral leadership

During a period of reordering, it's our responsibility to identify and keep alive those things of greatest value such as one's faith; commitment to family; good character; a strong work ethic; and service to others.  These values are irreplaceable.   

As in all catastrophes, including outbreaks and wars, we'll get through this by showing courage and a selfless spirit, both of which are inspiringly on display in doctors, nurses, first responders, and others who serve at great risk for the benefit of all.    

Stay well.


(C) Bredholt & Co. 

01 March 2020

Getting the Right People on the Right Page

"No doubt, unity is something to be desired, to be striven for, but it cannot be willed by mere declarations."

--Theodore Bikel 

When was the last time you considered getting everyone on the same imaginary page?  Have you ever thought that employing this overworked phrase can do more harm than good?  

That approach and its enforcement often remove much-needed diversity of thought. Too many of the same kinds of people, too close together, limit a groups' ability to make difficult decisions.   

There are considerations that come with unity.  One benefit is consolidating time and energy around common goals--assuming they're the right ones.  This is a potentially productive way to use limited resources to achieve the desired results.  

And this concept works best if colleagues are literally scattered with some keeping watch on the periphery.  Those on the edge play a critical role in looking out for the business.  In the center, one is less likely to know about changes that are materializing but not yet fully formed.  
Image result for image of a blank sheet of paper
The right page?
However, if everyone is huddled on the wrong page, then you run a risk of the page folding. (See J. C. Penney)

The leadership agenda

The purpose of this post is to suggest that a leader gains a great deal of momentum at the outset by understanding and communicating what's most important to the enterprise.  To accomplish that task those at the top should begin by coming to terms with what needs to be done, not necessarily what they want to do.  For example, the coronavirus may force many to adapt quickly as circumstances change beyond anyone's control.  

Thinking strategically may work best when divided into two parts.  The leader begins with a sense of purpose and direction then opens up the process having it informed and owned by the experiences of others.  

To help get there we created "The Leadership Agenda," a tool that makes a person accountable for their ideas and implementation through those around them. 

What does the agenda include?

Here are some suggestions--

o  Core idea. Why this organization?

Desired future.  And how to get there.

Priorities.  No more than three with a clear #1.

-With a person responsible for each.

Main message.  A stump speech in plain language. 

Critical issues.  Three in rank order.  

-With a person responsible for each. 

Operational assessment.  

1. What needs changing or reorienting to support the strategic direction?

2. What has run its course or is not working and needs to be abandoned?

3. What is not working and needs fixing?

4. What are we not doing that needs initiating?

Positive outcomes 

Until individuals responsible for strategic decisions are clear in their own minds as to the main goal, a crowded page tends to be counterproductive.  That picture increases the possibility of confusion and danger of going in the wrong direction.  

If execution happens it's because the right people, are on the right page, going in the right direction. (See Microsoft)

Prompts to help our thinking

To receive a free copy of "The Leadership Agenda" template send a note to:

rbredholt@strategist.com.  Put "Agenda" in the subject line.  

This simple tool requires a quiet mind and a No. 2 pencil to clarify your organization's direction.


© Bredholt & Co.

01 February 2020

Where Was the Board?

"The first principle is that you must not fool yourself and you are the easiest person to fool."

--Richard Feynman, Nobel Prize in Physics (1965)

There were over 1,400 CEOs who left their jobs in the period January through November 2019 according to Challenger, Gray & Christmas.  Just days ago IBM announced Chief Executive Ginni Rometty was leaving.  IBM said she was "stepping down" after eight years in that position.        

A tally of board member departures is harder to find.  

It's safe to say there's more pressure on executive leadership than governance when it comes to performance.   In baseball, owners fire the managers and trade the players.  (Just ask the Houston Astros, Boston Red Sox, and New York Mets.)  

Who evaluates governance and its performance?  

Where boards are falling short

In a survey of 772 directors, "a mere 34% of those responding agreed that the board on which they served fully understood their companies' strategy.  Only 22% said their boards were completely aware of how their firms created value, and just 16% claimed that their boards had a strong understanding of the dynamics of their firms' industries."  (McKinsey & Company, 2013)

Another McKinsey study of 604 C-suite executives and directors worldwide said that the primary source of pressure for short-term performance and underemphasis on long-term value originated in the boardroom.  (McKinsey & Company, 2014)

When things go wrong

The expectations of a director's fiduciary duty in legal terms is "loyalty (placing the organization's interests ahead of one's own) and prudence (applying proper care, skill, and diligence to decisions)."

Here are three examples where an absence of proper oversight and complex working relationships contributed to far-reaching personal and organizational misdeeds:

Case Study:  WorldCom

At one time WorldCom was the second-largest long-distance telephone company in the U.S., after AT & T.  In 1997 WorldCom merged with MCI Communications, a $37 billion deal which was the largest merger to that point.  A proposed merger between MCI and Sprint in 1999 valued at $129 billion was opposed by the U.S. Department of Justice and didn't go through.  

In that same year, with declining stock prices, WorldCom began using fraudulent accounting methods to disguise its decreasing earnings to maintain the price of WorldCom stock.  The fraud was initially estimated at $3.8 billion.  Internal auditors revealed the scandal to the company's audit committee and 11-member board of directors in 2002.  The board immediately removed the executives responsible for the scheme.  

On July 21, 2002, WorldCom filed for Chapter 11 bankruptcy protection.  

On March 15, 2005, Bernard Ebbers, former chairman, and CEO was found guilty of fraud, conspiracy and filing false documents related to the $11 billion accounting scandal. Mr.  Ebbers was sentenced to a prison term of 25 years at the age of 63.  He died February 2, 2020, at the age of 78 after being released from prison for deteriorating health.

The CFO Scott Sullivan and controller, David Meyers, entered guilty pleas to securities fraud and other charges.  

Case Study:  Wells Fargo Bank

Beginning in 2016, Wells Fargo Bank engaged in an account fraud scandal by creating millions of fraudulent checking and savings accounts on behalf of the banks' customers without their consent.

The U.S. Consumer Financial Protection Bureau fined Wells Fargo Bank $185 million as a result of the illegal activity.  Additional civil and criminal suits were nearing $2.7 billion at the end of 2018.  

Approximately 5,300 employees were fired for this cross-selling scheme.  And former CEO, John Stumpf, was barred from the banking industry by the Office of the Comptroller of the Currency and forced to pay $17.5 million in penalties for failing to prevent the creation of fake accounts at Wells Fargo.  

An independent investigation report released in 2017 caused quite a stir.  The Los Angeles Times called the report a "whitewash" for the directors.  The San Franciso Chronicle labeled it "a perfunctory ... legal cover for the directors."    

The U.S. government recently announced that Wells Fargo had agreed to pay $3 billion to settle charges that the bank engaged in fraudulent sales practices for more than a decade.  

Case Study:  Willow Creek Community Church

The nondenominational megachurch located in South Barrington, Illinois (35 miles northwest of downtown Chicago) was founded on October 12, 1975, by Bill and Lynne Hybels also Dave Holmbo.  Additionally, Rev. Hybels created the Willow Creek Association and Global Leadership Summit which have influenced pastors and lay leaders around the world.  

As of December 2018, the church reported weekend average attendance of 24,000 at eight locations in the Chicago area.  

Here's a timeline for Willow Creek's unraveling:  

-March 23, 2018, the Chicago Tribune reports detailed allegations of sexual misconduct by Pastor Hybels.  The Tribune also published that an internal review conducted by the Elders led to no findings of misconduct.  Three leaders of the Willow Creek Association's board resigned over what they believed to be an insufficient inquiry.  Rev. Hybels denied the allegations.

-April 20, 2018, Bill Hybels announces his immediate retirement as lead pastor of Willow Creek Community Church, initially slated for October of the same year.  Steve Gillen, the pastor of the North Shore campus, was named interim senior pastor.*  

-April 21, 2018, the Chicago Tribune and Christianity Today reported more misconduct allegations, not in the original investigation.

-August 5, 2018, The New York Times reported about another victim not included in previous investigations.  Co-lead pastor Steve Carter resigned that same day.

-August 8, 2018, the entire Elder Board and Co-lead pastor, Heather Larson resigned following a joint apology for mishandling the investigation.  

-In September 2018 Willow Creek Community Church and Willow Creek Association announced the formation of an Independent Advisory Group (IAG) to investigate the allegations against founder, Bill Hybels.  

A six-month independent review was conducted by four evangelical leaders--Jo Anne Lyon, general superintendent emerita, The Wesleyan Church; Gary Walter, past president, Evangelical Covenant Church; Margaret Diddams, provost, Wheaton College; and Leith Anderson, president, National Association of Evangelicals.

According to Religious News Service, the report, completed in February 2019, found the accuser's allegations against Rev. Hybels to be credible.  The IAG study also found that the Elders and Willow Creek Association leadership failed to hold him accountable. 

What can we learn?

1. There's immense pressure on leaders in business and the nonprofit sector to succeed.  However, those demands in no way justify illegal or unethical behavior.  

2. Boards impact organizational culture the most by the leadership they put in place.       

3. "Why am I here," and "What difference do I make?" are questions often asked by new board members.  All three case studies needed boards who understood their role as taking care of what belongs to others.  

4. The lessons of a bad experience can evaporate when wholesale personnel changes are made following a crisis.  WorldCom went away.  Wells Fargo Bank and Willow Creek Community Church still exist.  Who is responsible for institutionalizing lessons learned?  

5. Under the right circumstances, anyone can be fooled.  

*The Elders announced on January 30, 2020, that Rev. Steve Gillen, interim senior pastor, is leaving in March of this year.  The search for a permanent senior pastor at Willow Creek continues as the Elders released the two finalists they were considering for the role.  (www.willowcreek.org)


© Bredholt & Co.    


01 January 2020

The Strategic Mind

"It is a process of diverting one's scattered forces into one powerful channel."

--James Allen

Did you happen to shop at Target over the Christmas holidays?  I went to one of their stores a few weeks ago to purchase an item and was pleasantly surprised by a redesigned interior--everything from attractive gray wood flooring; neatly stocked shelves; deliberately locating women's apparel closer to the front entrance, but especially the spotlights and circular lighting making the Big Box store glimmer with a new look.  

And that's one of the messages Target is wanting to send to the marketplace.   

At least some of the physical components of a turnaround by Target's CEO Brian Cornell and the leadership team were right before my very eyes.  

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(C) Target Corporation

In 2017, up against giants Walmart ($514 billion revenue) and Amazon ($232 billion revenue), Target's board and top management bet $7 billion that more affluent shoppers still want an in-store experience provided the environment and customer service were inviting enough. As a part of recreating itself Target ($75 billion revenue) raised wages for a large number of its 320,000 employees as "guest" and "team member" satisfaction are one and the same.  

Developing a corporate strategy and implementing it close to the original plan is something to behold.  Few leaders pull that off as looking ahead and seeing short is hard to do.

The leadership agenda

Reversing direction requires clear priorities. What made up the centerpieces of Mr. Cornell's leadership agenda? *

o  Spruced-up stores.  Better lighting and longer sightlines. By 2020 almost 1,000 stores (out of 1,800) will have the new look.

o  Integrated e-sales.  An upgrade to store locations makes it possible to pick up online orders near your home.  About 80% of Target's e-commerce sales involve the stores.  

o  Speedier delivery. Rather than building capacity from scratch, which would have taken a lot of time, Target bought Shipt and Grand Junction to allow for faster deliveries.  

o  Fresher brands.  New and more profitable store brands, 20 at last count, earn higher margins and appeal to younger households.  

o  Selective tech. The goal with tech was practical and immediate payoff so experimentation was pushed aside.  

Is yours a strategic mind? 

Long before the first piece of flooring was laid, or lighting hung, someone had to have an idea as to what a refurbishing could look like, and how that investment might change Target's direction.  

How else would a leader be able to communicate the main goal?  

Author Henry Mintzberg once observed that strategic thinking was "seeing."  The strategic mind sees ahead, of that, there's no doubt.  The greater question is how do they see ahead?  

Here are five ways of strategic thinking that Dr. Mintzberg uses to qualify a leader as having a strategic mind:

1. You cannot see ahead unless you can see behind. Any good vision of the future has to be rooted in the past.

2. Strategic thinkers have to find the gem of an idea that changes their organization.  That comes from a lot of digging which is where gems are found.  There's no big picture ready for seeing; each strategist has to construct his or her own. 

3. Strategic thinkers see differently from other people.  They pick out the precious gems that others miss.  They challenge conventional wisdom--the recipe, the traditional strategy--and thereby distinguish their businesses. 

4. Creative ideas have to be placed into context, to be seen in a world that is to unfold.  Seeing beyond constructs the future--it invents a world that would not otherwise be.

5. For a thinker to deserve the label "strategic," he or she must be able to see it through, (something only about 10% of leaders appear able to do according to a global study by PwC).   

What's held in common

If there's one leadership tactic that improves a strategy's chance of success it's this:

The more an organization shares in common the less likely personal interests will prevail.  The less an organization shares in common the more likely personal interests will prevail.

An absence of common understanding can cause a corporate-wide initiative to get off to a false start.  Therefore it's well worth the time and effort to engage employees, customers, and vendors early on. Workforce studies consistently show that individuals at all levels rarely understand the purpose and strategy they are expected to fulfill.  

You can believe there were a lot of experience-based judgments to determine the direction that Target has chosen.  That said, no one can know everything from the beginning.  The real learning is in the doing, now underway. 

Is the strategy working? 

Like most large enterprises, some things work and others don't.  

Target reported sluggish holiday sales with toys and electronics a disappointment.  "We faced challenges throughout November and December in key seasonal merchandise categories and our holiday sales did not meet our expectations," Chief Executive Brian Cornell said. 

However, Simeon Gutman, a retail analyst at Morgan Stanely, said: "Target's ability to manage the business well through weaker sales is the silver lining."    

*Published in FORTUNE Magazine, September 2019.  


© Bredholt & Co.