Six steps to effective cost management.

Effective Cost Management.

Abstract- Reckless, short-sighted cost-cutting will not necessarily benefit a company and quite often can have a negative impact in the medium or long-term. What is needed is cost management, which differs from cost control in that it is aproactive process that focuses on the elimination of waste in business processes and procedures. Cost management, as such, is a strategic process that stresses the optimization of efficiency. Among others, this approach requires strong leadership skills, since managers need to improve customer satisfaction while boosting profitability. Six steps to effective cost management are provided. These are understanding the cost-revenue structure of a business, minimizing interdepartmental conflicts, involving workers in decision making, increasing effectiveness, and measuring cost judgments against a long-term strategic plan.

But cost cutting is not always the answer. Cost cutting will usually fail to produce long-term results and will likely harm the company. Cost cutting is short sighted and random and is not based on the company's business strategy. It is usually a reaction to immediate problems and not well thought out. While cutting costs will appease a short-term need, the process will have to be repeated in the near future because the real problems were not solved, only the symptoms were dealt with.

What companies really need to be doing is managing their costs. Managing costs does not focus on cost cutting, it entails waste elimination. When companies cut costs, they wind up hindering their development and growth. Managing costs focuses on eliminating unnecessary expenditures (waste) while focusing resources on the customers. It is estimated that most companies are wasting about 30% of their expenditures on items that do not have any impact upon their customers.

Cost Management Steps

The managing of a company's cost structure is consciously choosing to invest in selected expenditures that will achieve a specific revenue system. This is a proactive process, whereas cost cutting is a reactive process. Managing costs is inherently more effective. This effectiveness involves doing the things that optimize the results of a company's overall activities. Reactive cost cutting may add some efficiency, but it does not optimize the company's business process or its results.

Cost management is a strategic process that focuses on the customer and on profitability. The six steps to effective cost management are:

* Understand what causes the cost and revenue structure of the business

* Understand and reduce interfunctional complexity

* Provide the tools to manage costs

* Involve employees in decisions

* Increase effectiveness and continuously improve costs

* Measure decisions against the strategic business plan

Understand What Causes the Cost and Revenue Structure of the Business. This is the most critical item in cost management. Many companies do not have accurate information on what their true costs are. A company must first identify exactly where its revenue comes from--products, services, customers, and sales channels. Next, a company must identify the specific costs that produce its revenue stream. Finally, a company must identify overhead costs and costs not directly linked to revenue generation. Salesmen's commissions can easily be linked to revenue, but this link is not as direct for office supplies. Nevertheless, office supplies are needed somewhere during the sales process.

Understand and Reduce Interfunctional Complexity. In any organization, the way any one department operates is influenced by other parts of the company. For example, marketing has an influence on inventory levels, which effect warehousing and transportation costs. The complex cause- and-effect relationships must be sorted out. Reducing complexity means constantly questioning why work is done, and how it can be done more efficiently. A basic flow chart of the company's work flow can be very helpful in understanding how things actually get done. It will probably also show that there are a number of extra, unnecessary steps involved in the company's processes. Look for ways to get the right information to those who need it as quickly as possible. The sales department needs to know what products are not selling--daily, not just at the end of the month. The production people need to know what products are selling so that they can produce what is wanted by the customers. In many companies, the production people get this information once a month-- enough time to have wasted a month producing the wrong products.

Providing the Tools to Manage Costs. Provide the skills (i.e. decision- making, problem-solving, team-building, and other thinking skills) that will enable employees to better understand how to control costs, improve quality and productivity, and enhance performance. Most people want to do a good job. When a company invests in their employees by educating them, the employees will be better able to do a good job.

Involve Employees in Decisions. Employees will need to understand the company's objectives and have accurate cost information. Soliciting input from the employees will not only give management a better understanding, but it will give employees more incentive to become involved. Companies that actively solicit suggestions from their employees will undoubtedly find better and more cost effective ways to do things. When someone works with it everyday, they will have insight into the work and possibly how to do it better. Ask employees how they would do it better.

Increase Effectiveness and Continuously Improve Costs. Redefine the company's cost structure to select the costs that generate profit. Cost management must become standard operating procedure. Management and employees must be constantly identifying opportunities for eliminating or reducing unprofitable work. When a company only incurs costs that are specifically linked (with reasonable overhead) to revenues, they will be maximizing their profitability. A company may need to eliminate departments, or it may need to consolidate or even expand departments based upon where their spending generates revenue.

Measure Decisions Against the Strategic Business Plan. Every company needs to have a long-term business strategy. Cost management should be part of the strategy and be influenced by the strategy. Cost decisions should be measured against the company's strategy, rather than a current short-term situation. A company should not buy an excessive amount of inventory because the manufacturer has lowered the price to get rid of it. The company should be buying the amount it needs to satisfy its customers.

Controlling costs through short-term cost cutting leads a company to unprofitability. Cost management will ensure long-term growth and profitability.

Reference:
Godey, Jim

What the Best Bosses Do

What the Best Bosses Do?

Inspire Others to Peak Performance

A transformational leader is one who excites and inspires people to perform far beyond their own expectations of themselves. Transformational leaders practice certain behaviors that cause their people to feel stronger, happier, more confident and more committed.

Delegate Responsibility

The first of these behaviors is the delegation of high levels of responsibility for results. Transformational leaders pick the right people, match them to the right jobs, achieve mutual clarity on the desired results and then they get out of the way and leave the individual with maximum freedom to perform.

Let People Do Their Work

Lao-Tse, the great Chinese philosopher, had this idea when he wrote, "A leader is best when people barely know he exists... when his work is done, his aim fulfilled, they will say, 'We did this ourselves.'"

In a recent study, thousands of people were asked to describe their best bosses. Over and over, the respondents said things like, "I hardly saw him" or "He left me alone" or "He gave me complete freedom to do the job."

Give Them Freedom

There is something liberating and empowering to know that you've been entrusted with a major responsibility and that you've been given the freedom to fulfill it. When the right person has been matched with the right job, the conditions for exceptional performance have been created.

Confidently Expect Success

Another behavior of transformational leaders is their confident attitude of positive expectations. They radiate a belief in themselves and in the ability of their subordinates to succeed. They know that the leader sets the psychological tone for the whole organization, so they consciously project a positive attitude no matter how distressing the external situation may appear. They are in complete control of themselves and their emotions.

Action Exercises

First, delegate complete responsibility for results to your subordinates. Discuss and agree on exactly what is to be done, when it is to be done and to what standard. Then, get out of the way and let them perform.

Second, express complete confidence in your subordinate's ability to do an excellent job. Radiate an attitude of confident expectations. Even if you have personal doubts, never let them be seen by others. This is the role of leadership.

Reference:
Brian Tracy

Learning Organisations...

Remember the Basics

It seems that whenever there's a new technology platform, learning organizations get so excited they end up forgetting the basics. As Second Life grows in popularity, companies cannot afford to make this mistake. As with any other training, you still must identify the purpose of the learning before developing a program so that purpose and design align.

"Our experience shows that when people complain about learning curve, [it's] not a complaint about learning curve, but a complaint about instructional design," said Alex Heiphetz, CEO of AHG Inc., which specializes in developing tools and simulations for training and education. "[Employees] do not walk into Second Life to learn how to walk [or] how to fly."

"They walk in to better their communication skills or to better their sales skills. You design [your training] to concentrate on the skills that people need in their workplace, not on the skills that people need to navigate in Second Life."

To flatten the learning curve in Second Life, provide your trainees with multiple ways of getting from one location to another. Eventually, through experience, trainees will pick up the basics for navigating in Second Life.

"If I walk into Second Life and I need to start a communication simulation, there are three ways I can get from here to there," Heiphetz said. "I can walk or I can fly - all things that require learning - or I can teleport there [by clicking a button]. You need to create simulations in such a manner that the instructional design will support the purposes of your training."

For example, in educating an employee about how to run an annual review, training should not focus on the basics of getting around in Second Life, but instead on that specific task.

"If you have an [employee] and you want to educate him or her about how to run an annual review, the training should not involve actions outside of how to talk to an employee, how to deal with difficult people or how to clam somebody down," Heiphetz said.

But there may be situations in which employees need to understand how Second Life works. And this is why it's important to identify the purpose of learning before creating a program.

"If the same employee is manning your recruitment center and there is a [prospective recruit], and your employee needs to talk to him and maybe show him something [in Second Life], Second Life skills would be much more important for your employee [to learn]," Heiphetz said. "You really need to concentrate on what you want to achieve."

Second Life has proven to be an invaluable resource for organizations such as IBM, Microsoft, Michelin and others.

"It's a fantastic platform for learning," Heiphetz said. "You can create simulations that immerse people in an environment, and the savings are enormous."

Reference:
Lindsay Edmonds Wickman
[About the Author: Lindsay Edmonds Wickman is an associate editor for Chief Learning Officer magazine.]

The Google Way...

Marissa Mayer, Google's vice president of search products and user experience, is a tall, blond 32-year-old with two Stanford degrees in computer science. She's also Google's high priestess of simplicity.

Here she shares the rules that give the search giant its innovative edge

1. Innovation, not instant perfection

"There are two different types of programmers. Some like to code for months or even years, and hope they will have built the perfect product. That's castle building. Companies work this way, too. Apple is great at it. If you get it right and you've built just the perfect thing, you get this worldwide 'Wow!' The problem is, if you get it wrong, you get a thud, a thud in which you've spent, like, five years and 100 people on something the market doesn't want."

"Others prefer to have something working at the end of the day, something to refine and improve the next day. That's what we do: our 'launch early and often' strategy. The hardest part about indoctrinating people into our culture is when engineers show me a prototype and I'm like, 'Great, let's go!' They'll say, 'Oh, no, it's not ready.

It's not up to Google standards. This doesn't look like a Google product yet.' They want to castle-build and do all these other features and make it all perfect."

"I tell them, 'The Googly thing is to launch it early on Google Labs and then iterate, learning what the market wants--and making it great.' The beauty of experimenting in this way is that you never get too far from what the market wants. The market pulls you back."

2. Ideas come from everywhere

"We have this great internal list where people post new ideas and everyone can go on and see them. It's like a voting pool where you can say how good or bad you think an idea is. Those comments lead to new ideas."

3. A license to pursue your dreams

"Since around 2000, we let engineers spend 20% of their time working on whatever they want, and we trust that they'll build interesting things. After September 11, one of our researchers, Krishna Bharat, would go to 10 or 15 news sites each day looking for information about the case. And he thought, Why don't I write a program to do this? So Krishna, who's an expert in artificial intelligence, used a Web crawler to cluster articles."

"He later emailed it around the company. My office mate and I got it, and we were like, 'This isn't just a cool little tool for Krishna. We could add more sources and build this into a great product.' That's how Google News came about. Krishna did not intend to build a product, but he accidentally gave us the idea for one."

"We let engineers spend 20% of their time working on whatever they want, and we trust that they'll build interesting things."

4. Morph projects don't kill them

"Eric [Schmidt, CEO] made this observation to me once, which I think is accurate: Any project that is good enough to make it to Labs probably has a kernel of something interesting in there somewhere, even if the market doesn't respond to it. It's our job to take the product and morph it into something that the market needs."

5. Share as much information as you can

"People are blown away by the information you can get on MOMA, our intranet. Because there is so much information shared across the company, employees have insight into what's happening with the business and what's important."

"We also have people do things like Snippets. Every Monday, all the employees write an email that has five to seven bullet points on what you did the previous week. Being a search company, we take all the emails and make a giant Web page and index them."

"If you're wondering, 'Who's working on maps?' you can find out. It allows us to share what we know across the whole company, and it reduces duplication."

6. Users, users, users

"I used to call this 'Users, Not Money.' We believe that if we focus on the users, the money will come. In a truly virtual business, if you're successful, you'll be working at something that's so necessary people will pay for it in subscription form. Or you'll have so many users that advertisers will pay to sponsor the site."

7. Data is apolitical

"When I meet people who run design at other organizations, they're always like, 'Design is one of the most political areas of the company. This designer likes green and that one likes purple, and whose design gets picked? The one who buddies up to the boss.'

Some companies think of design as an art. We think of design as a science. It doesn't matter who is the favorite or how much you like this aesthetic versus that aesthetic. It all comes down to data. Run a 1% test [on 1% of the audience] and whichever design does best against the user-happiness metrics over a two-week period is the one we launch. We have a very academic environment where we're looking at data all the time.

We probably have somewhere between 50 and 100 experiments running on live traffic, everything from the default number of results to underlined links to how big an arrow should be. We're trying all those different things."

8. Creativity loves constraints

"This is one of my favorites. People think of creativity as this sort of unbridled thing, but engineers thrive on constraints. They love to think their way out of that little box: 'We know you said it was impossible, but we're going to do this, this, and that to get us there.'"

9. You're brilliant? We're hiring

"When I was a grad student at Stanford, I saw that phrase on a flyer for another company in the basement of the computer-science building. It made me stop dead in my tracks and laugh out loud."

"A couple of months later, I'm working at Google, and the engineers were asked to write job ads for engineers. We had a contest. I put, 'You're brilliant? We're hiring. Come work at Google,' and got eight times the click rate that anyone else got.

"Google now has a thousand times as many people as when I started, which is just staggering to me. What's remarkable, though, is what hasn't changed--the types of people who work here and the types of things that they like to work on. It's almost identical to the first 20 or so of us at Google."

"There is this amazing element to the culture of wanting to work on big problems that matter, wanting to do great things for the world, believing that we can build a successful business without compromising our standards and values."

"If I'm an entrepreneur and I want to start a Web site, I need a billing system. Oh, there's Google Checkout. I need a mapping function. Oh, there's Google Maps. Okay, I need to monetize. There's Google AdSense, right? I need a user name and password-authentication system. There's Google Accounts."

"This is just way easier than going out and trying to create all of that from scratch. That's how we're going to stay innovative. We're going to continue to attract entrepreneurs who say, 'I found an idea, and I can go to Google and have a demo in a month and be launched in six.

Inspire Minds to Change Lives

Ratan Tata's words of inspiration - Inspire minds to change lives

On Courage: I am, unfortunately, a person who has often said: You put a gun to my head and pull the trigger or take the gun away, I won't move my head. 

On Successful People: I admire people who are very successful. But if that success has been achieved through too much ruthlessness, then I may admire that person, but I can't respect him. 

On Leadership: It is easy to become a number one player, but it is difficult to remain number one. So, we will have to fight with a view to remain number one. 

On Nano: This project (the Nano) has proven to everyone that if you really set yourself to doing something, you actually can do it.

On the Need to think Big: We have been. . . thinking small. And if we look around us, countries like China have grown so much by thinking big. I would urge that we all, in the coming years, think big, think of doing things not in small increments, not in small deltas, but seemingly impossible things. But nothing is impossible if you really set out to do so. And we act boldly. Because it is this thinking big and acting boldly that will move India up in a manner different from where it is today. 

On Risk: Risk is a necessary part of business philosophy. You can be risk-averse and take no risks, in which case you will have a certain trajectory in terms of your growth. Or you can, while being prudent, take greater risk in order to grow faster. 

On Risk: I view risk as an ability to be where no one has been before. I view risk to be an issue of thinking big, something we did not do previously. We did everything in small increments so we always lagged behind. But the crucial question is: can we venture putting a man on the moon or risk billions of rupees on a really way-out, advanced project in, say, superconductors? Do you restrict your risk to something close to your heart? 

On Employees: The way to hold employees today is to make their work and their day-to-day activities in the company exciting enough for them to stay. Not everyone will stay, but I think if we can empower more people and are willing to pass on the responsibility for that, and if people are satisfied and motivated, there's less chance of them wanting to leave and go to a competitor. 

On Low-Cost Products: It should not be, cannot be, that low-cost products come to mean inferior or sub-standard products and services; definitely not. The aim is to create products for that larger segment — good and robust products that we are able to produce innovatively and get to the marketplace at lower costs. 

On Customers: We should be treating the customer in the same way that we would want to be treated as customers. 

On Innovation:Barriers to innovation are usually in the mind. 

On Customers:There was a need to re-focus and look at how your customer sees you, and to pay more attention to what the customer wants rather than what you think she wants. Are you really the most cost effective producer? Are you aggressive enough to grab marketshare? Will you endeavour to dip your toe in the water and do something that you haven't done before? 

On Innovation:If you are a little innovative or a little bit of a gambler, and you make a product which is either ahead of its time or has an evolutionary design, or has features that work into a person's perception, then you have an acceptable product. 

On Questioning:I kept saying, please question the unquestionable. I tried to tell our younger managers just don't accept something that was done in the past, don't accept something as a holy cow. . . go question it. That was less of a problem than getting our senior managers not to tell the younger managers, 'Look young man, don't question me.' 

On Speed:Today, the world does not afford you to luxury of being a slow mover. Nor are there any holy cows. We have to be aggressive, be far-sighted enough to look into the future and we also have to be pragmatic enough to say that if we really are not in a leadership position in a particular business, we should look at exiting that business. 

On Icons:The kind of company one would want to emulate is one where products and technology are at the leading edge, dealings with customers are very fair, services are of a high order, and business ethics are transparent and straightforward. A less tangible issue involves the work environment, which should not be one where you are stressed and driven to the point of being drugged.

On Introspection:All companies need to keep looking at their business definition and, possibly from time to time, to see if that definition needs to be redefined. If you take the example of Tata Steel, they could say that they are a steel company and find themselves in a shrinking market where steel is under threat of being replaced by some other material. The question is: what do we call ourselves? One view was that steel is a material, so can we be a materials company? We don't have to be in all materials, but can we be in composites, can we be in plastics, laminates, etc? The automotive business needs to think similarly, and so does the chemicals business. We have to keep looking at ourselves and asking: what is our business?

On Innovation: My outlook on R&D is that it is an absolutely necessary thing for us to do. And I don't think we are doing enough. The point is not just spending money; it's how many patents you file, your innovation rate and your product development. . . If today you were to give everybody a mandate that they can spend 3 per cent of their revenue on R&D, assuming they can spare the money, I don't think many companies would know the what, where and how of spending that kind of money, other than to put up an R&D place and buy lots of equipment.

On Customer Relationship: Where we have direct dealings with our customers, it is important that, at the middle-management levels, they are shown courtesy, dealt with fairly, and made to feel that they are receiving the attention they deserve. The interface with the customer should be a seamless one.

On Risk: There have been occasions where I have been a risk-taker. Perhaps more than some, and less so than certain others. It is a question of where you view that from. I have never been a real gambler in the sense, that some successful businessmen have been.

On Ethics: What worries me is that the threshold of acceptability or the line between acceptability and non-acceptability in terms of values, business ethics, etc, is blurring.

On Success: I would not consider myself to have been tremendously successful or as having failed tremendously. I would say I have been moderately successful because there have been changes.

On Survival: The strong live and the weak die. There is some bloodshed, and out of it emerges a much leaner industry, which tends to survive.

On Challenges: If there are challenges thrown across and those challenges are difficult then some interesting, innovative solutions will come. If you don't have those challenges then, I think, the tendency is go on to say that whatever will happen, will take place in small deltas.

On Planning: We never really plan big. We are not in keeping with what is happening around us. When you go to other countries around us you see it visibly that we are just back in time. And yet we have so much to offer.

On Commitment: We have to clamp down on deviations from commitments. For ensuring greater commitment to performance, we also need to have a system which rewards performers and punishes those who don't perform.

On Risk: We have is to be less risk-averse. We have been a very conservative house and we have been applauded for our conservatism but today we need to take more risk. We don't need to be flamboyant or cavalier but we need to be less conservative than we have been.

On the Future: One hundred years from now, I expect the Tatas to be much bigger than it is now. More importantly, I hope the Group comes to be regarded as being the best in India. . . best in the manner in which we operate, best in the products we deliver, and best in our value systems and ethics. Having said that, I hope that a hundred years from now we will spread our wings far beyond India.

On Resistance: You will probably find the resistance (to change) more from those who haven't been doing well.

On Change: Change is seen to be needed, and fast, so long as it does not affect me. We want to see change but if you suddenly tell me that I am the company that has to go, or has to be cut in half, or three of my businesses have to be hived off, then all of a sudden, the very person who made the noise about change is now saying, 'You don't have to do this.'

On Humility: I would hope that as people who might take an elite position, would be considered amongst the elite in the country, you will always display humility in the manner in which you deal with your fellowmen, both in your company and in the country and you will continue to have passion in the areas in which you will work.

On Doubt: On many, many occasions you would have doubts on whether what you are pursuing is the right thing. But if you do believe in what you are trying to do and you pursue it and stay with it in a determined manner, I am quite sure you will succeed.

On Problems: There are solutions for most problems. The barriers and roadblocks that we face are usually of our own making and these can only be demolished by having the determination to find a solution, even contrary to the conventional wisdom that prevails around us, by breaking tradition.

The Birth of Hugh Marston Hefner: Founder Playboy.

At 80 years old, Hugh Hefner has had an impressive career building a multi-million dollar industry and living the life of his dreams, all the while pushing the limits of and revolutionizing the American publishing industry. How did he manage to achieve all this? “You stay in touch with the boy who dreamed impossible dreams,” he says.

Those dreams began on April 9, 1926 when Hugh Hefner was born in Chicago, Illinois to teacher parents Glenn and Grace Hefner. Both conservative Protestants, Hefner grew up in a very traditional household. He recalls of his early years, “I was a very idealistic, very romantic kid in a very typically Midwestern Methodist repressed home.” It was precisely this repression that sparked the creative and rebellious side of Hefner. He notes that there were never any displays of affection between his parents, forcing him to escape to “dreams and fantasies produced, by and large, by the music and the movies of the ‘30s.” 

A student at Sayre Elementary School and later Steinmetz High School in Chicago, Hefner was never more than an average student. Although he had been tested and found to have an extremely high IQ of 152, Hefner was too busily distracted by his extracurricular activities to focus on academics. In addition to being president of the student council, Hefner also founded a school newspaper and created his own comic strip called Hef, which humorously detailed many of the real-life events that Hefner was experiencing in his own school life. 

It was at the age of 16 when the man the world now knows as ‘Hef’ was born. Hefner was in love. “She was working at a drugstore that summer – my summer of ’42,” he recalls. “I would go and pick her up and take her bowling or dancing…that was a very sweet and delicious time for me.” But, Hefner found himself rejected by this girl that he adored. Determined never to know failure again, Hefner reinvented himself from head to toe as ‘Hef’, a charismatic, charming and popular man.

After graduating in 1944, Hefner enlisted in the Army, serving as Infantry Clerk as well as drawing cartoons for various Army newspapers. He was released in 1946 and pursued his bachelor degree at the University of Illinois, where he also spent time drawing cartoons for the Daily Illini and editing the campus humour magazine Shaft. He received his degree after just 2 ½ years and began shopping around his ideas for a cartoon strip. 

Unable to find a buyer, Hefner was forced to take up unrelated jobs at the Chicago Carton Company and the Carson, Pirie, Scott department store. He was unwilling to give up his interest in publishing and finally landed a job as a promotion copywriter at Esquire magazine. It was here where Hefner learned the ins and outs of the publishing business. In what seemed to be a stroke of bad luck for Hefner, Esquire subsequently moved its offices to New York, leaving him unemployed. But, again unwilling to give up, Hefner decided to create his own magazine. Armed with just $8,000, Hefner was about to embark upon an unforgettable career. 

For more Learning Check out:

The Birth 0f Hugh Marston Hefner 

Why the Best Leaders Are the Best Leaders

The Best Leaders

From 1996 to 2007, manager Joe Torre led the New York Yankees to the playoffs every year - winning an astounding 17 series in the post-season. Over those same 12 years, the Los Angeles Dodgers did not win a single playoff series. This past season, Torre departed New York to coach the Dodgers. The result? The Dodgers won their first post-season series in 20 years, while the Yankees missed the playoffs altogether.

Ask Yankees and Dodgers fans, and they will tell you that Joe Torre's leadership matters. However, they may not be able to tell you exactly why Joe Torre is an excellent leader. What's true of the fans in New York and Los Angeles is true for many of us. We experience the effects of leadership without understanding the cause.

In this article, I hope to make plain why the best leaders are the best leaders. In a nutshell, remarkable leaders give their best to their people, and get the best from their people. Let's look at how this happens.

The Best Leaders Give Their Best to Their People By...

1) GROWING

People naturally follow leaders they respect as being more advanced than they are. For this reason, personal growth is directly proportional to influence. If you desire to gain followers, then pay the price of getting better.

To give people your best, you have to elevate your leadership capacity. Consider the metaphor of walking up a narrow staircase - you can only go as fast as the person in front of you. When leaders stop growing, they quit climbing and impede the progress of everyone following them. However, when leaders grow, they ascend the stairs and create space for those behind them to climb higher.

Personal growth involves challenging yourself, and pushing beyond the realm of comfort. When is the last time you did something for the first time? How long has it been since you felt in over your head?

2) SERVING

"Only a life lived for others is a life worthwhile."

~ Albert Einstein

Serving others is an attitude issue. Unfortunately, many leaders operate under a king-of-the-hill mentality. They attempt to pull down anyone above them in order to secure the top spot for themselves. In doing so, they clutch at power, grapple for control of company resources, and strive to dominate others. Seeing relationships as win-lose propositions, they ultimately burn bridges and isolate themselves.

The best leaders take an entirely different approach. Rather than dragging down anyone who threatens their position, they extend a hand to lift the performance of teammates and coworkers. They function with a mindset of abundance as opposed to an attitude of scarcity, and they wield their influence to prop others up rather than to elevate themselves. Over time, they are honored for the contributions they have made to the lives around them.

All leaders serve. Sadly, some serve only themselves. Serving is a motives issue, and the crux of the matter boils down to a simple question: "Who?" Does a politician serve the public or his pocketbook? Does a CEO serve to benefit her shareholders or to support her lifestyle? The best leaders set a tone by serving and prove they are deserving of being out in front.

3) MODELING

Growing leaders have something to share; serving leaders have something to give; modeling leaders have something to show. As V.J. Featherstone said, "Leaders tell, but never teach, until they practice what they preach." The best leaders embody their values. Their passion exudes from every pore and demands respect.

The Best Leaders Get the Best from Their People By...

1) LISTENING

The smartest leaders realize the limitations of their wisdom, and they listen to their people in order to capture invaluable insights. However, leaders don't just listen to gain knowledge, they also listen to give their people permission: permission to challenge the process, permission to test assumptions; and permission to take risks. Nothing turns off an up-and-coming leader like the deaf ear of a superior. The best leaders don't simply listen to incoming ideas; they proactively draw them out of their people. They listen actively, not passively.

2) RELATING

Leaders touch a heart before they ask for a hand. To touch a heart, a leader has to be open to disclosing his or her identity by sharing personal stories and owning up to professional weaknesses. Mysterious or aloof leaders may be successful decision-makers, but they won't get the heartfelt loyalty that comes from authentic relationships.

As simple as it sounds, making a person feel known correlates powerfully to their job satisfaction. In fact, Patrick Lencioni lists anonymity as one of the top indicators of a miserable job. Leaders dignify their people by studying their interests, learning about their families, and finding out their hobbies. Conscious of the power of connection, the best leaders refuse to be barricaded inside of an office, and they take responsibility for relating with others on a regular basis.

3) TEACHING

Gifted teachers have a way of making students out of disinterested bystanders. The best leaders have an infectious thirst for knowledge, and they take pride in cultivating knowledge of their craft and awareness of their industry. A leader's teaching ability depends upon ongoing personal growth. As Howard Hendricks said, "If you stop growing today, you stop teaching tomorrow."

4) DEVELOPING

The best leaders understand the differences between training people for tasks and developing people to be better leaders. 

• Training Developing
  
• Focus is on the job
  
• Adds value to specific things
  
• Helpful for a short time
  
• Changes a performance Focus is on the person
  
• Adds value to everything
  
• Helpful for a lifetime
  
• Change the performer

The best leaders view their people as appreciable assets and prioritize investing in the talent on their teams.

5) MOTIVATING

After one of my presentations, an audience member approached me who was visibly indignant about my speech. "Why is motivation last on the list?" he demanded. "Well," I replied, "because if you listen, relate, teach, and develop your people, then they will be motivated!"

Sustained motivation comes by creating the right environment for your people and by doing the right things consistently to nurture them. Consider a flower. It cannot grow in the Arctic; it requires a climate conducive to growth. Yet, even in the right environment, the flower must be planted in hospitable soil, exposed to sunlight, watered, and freed of weeds.

REVIEW

The Best Leaders Give Their Best to Their People by...

1. Growing 2. Serving 3. Modeling

The Best Leaders Get the Best From Their People by...

1. Listening 2. Relating 3. Teaching 4. Developing 5. Motivating 

Reference:

Dr. John C. Maxwell

John C. Maxwell is an internationally recognized leadership expert, speaker, and author who has sold over 16 million books. His organizations have trained more than 2 million leaders worldwide. Dr. Maxwell is the founder of EQUIP and INJOY Stewardship Services. Every year he speaks to Fortune 500 companies, international government leaders, and audiences as diverse as the United States Military Academy at West Point, the National Football League, and ambassadors at the United Nations. A New York Times , Wall Street Journal , and Business Week best-selling author, Maxwell was named the World's Top Leadership Guru by Leadershipgurus.net. He was also one of only 25 authors and artists named to Amazon.com's 10th Anniversary Hall of Fame. Three of his books, The 21 Irrefutable Laws of Leadership , Developing the Leader Within You , and The 21 Indispensable Qualities of a Leader have each sold over a million copies

Interview with Guy Kawasaki. Next Gen Entrepreneur

He is Silicon Valley's original evangelist but that’s just one of Guy Kawasaki’s avatars. His others include being an entrepreneur, a venture capitalist, a sought after speaker, a blogger, a columnist, a best selling author — and during an interview, an excellent raconteur.

In his 25 years as a Silicon-Valley watcher, the 54 year old managing director of Garage Technology Ventures has seen trends come and go, fortunes made and unmade and in the journey, he himself made some costly mistakes (he was offered the CEO’s job at an internet company by Michael Moritz in 1995 and he refused it. The company’s name was Yahoo!). But trust a man of his ability and humility to distill all the ensuing learnings into remarkable insights and then pepper these with anecdotes to conjure up a racy account that is lapped up by the readers of his books — and the audience, if he is speaking. His tome on startups, The Art Of The Start, is considered a Bible among entrepreneurs.

In Mumbai recently to speak at a SAS leadership conference, he held the audience rapt — and occassionally in splits —with his witty remarks and suppositions (I believe in god as there is no other explanation for Apple’s existence till now). He confessed he loved India, and Mumbai especially, and during his visit, he happened to visit a Ganesh pandal decked in full glory and came back mesmerised by the sheer number of people and the ensuing madness. “It’s the Super Bowl for you guys’, he noted. The children peddling the latest best sellers at traffic lights at one tenth of their original prices had him wondering whether they already had his soon to be released book Reality Check: The Irreverent Guide to Outsmarting, Outmanaging & Outmarketing your Competition. “They are India’s very own Amazon.com,” he said. 

But the crowning glory of his Mumbai trip was a visit to Dhobhi Ghat that set him wondering about the ‘business analytics’ involved. “How can you send a pair of jeans there and get the same one back,” he wondered. “And that too without RFID chips, no barcode scanner,” he said. Well, its innovation at work Mr Kawasaki, Indian style. India still managed to surprise him and it takes a lot to surprise a man who has had pitches made to him about buying out Israel! In a candid interview with CD, Kawasaki discussed innovation, the art of entrepreneurship and Apple, where he was once Macintosh’s chief storyteller. Here’s Kawasaki unplugged:

What gives Apple that Midas touch?

Somehow that company has it in its DNA to create products that people see as extensions of themselves. I think that this is (points to his Apple notebook) something that makes me more productive and creative. People view iPods as something that makes them happy and iPhones as products that make people more productive … even though for a short while with that battery. While the battery is good you are more productive (laughs). I think it will be difficult to find someone who says my Vista machine makes me more creative and productive. It’s hard to imagine that conversation. Having said that Microsoft has 95% marketshare, so maybe that’s why you care about what people say, but that’s the difference.

What part of that ‘specialness’ is Steve Jobs himself?

One hundred and five per cent. Obviously, he has bright people working for him, but he attracts bright people. I don’t know where the company will be without him. In a sense he is to Apple what Lee Kuan Yew is to Singapore.

Can you trace any commonality between revolutionary companies like Apple, Mircosoft, and Google?

Yes, the commonality is completely contrary to most people’s idea of venture capital. Which is every one of the mentioned companies had two co-founders who were not proven. They were nerds. So Google was founded by two Phd students in computer science, and Steve was a college dropout.

The Start-Up Artist

Bill Gates was also a dropout. It was not like Bill Gates was VP of say Data General and decided to write personal computer software. Looking at these companies, you should invest in unproven teams, in unproven markets, and unproven technologies. Contrary to what VCs say, which is invest in proven teams, proven markets, and proven technologies. That’s the digital divide (laughs).

Every company is on the innovation bandwagon, but why have none of them been able to replicate Applestyle innovation?

Some of this is due to the financial structure. Most of the companies that are publicly traded have to show good financial results in 90 days and most of the innovation cannot take place in the 90 days. And number two — Apple is a rare exception — as you grow larger it becomes harder to innovate. The larger you get, the more the installed base, the more infrastructure you have. There are 26 million people out there saying build a better Macintosh and who are you to say I will build something different. That’s why it takes a Steve Jobs who doesn’t care — 26 million people say this, and he goes and builds an iPod. It’s very hard to do.

What stage of the entrepreneurship cycle do you think we in India are?

I haven’t been in India long enough to say. Statistically there should be four Steve Jobs in India because we have 300 million people, and you have 1.2 billion. So there are four Steve Jobs in India. You just have to find them.

A programmer in India shouldn’t want to be just a recipient of American outsourced work. That’s not entrepreneurship. The Indian entrepreneurs should not say I want American outsourced work or I will build an Indian version of Youtube, Flickr, or Twitter. The product should be such that people in Silicon Valley say I am an American version of this thing that they built in India. And I can’t think of any such example.

Who would you blame more for the internet fiasco in early 2000s, the entrepreneurs or the VCs?

It was no one’s fault. Life is cyclical, it goes through a growth phase and there is a death phase. Not everyone died, right? I would make a call that the world is a better place today because of an amazon.com. So it was a great biological experiment, most of the life-forms died, but some lived. The ones that survived are doing great. Yes, there was a lot of waste, yes, there was a lot of stupidity but fact is that people can now say that pets.com was a stupid idea. I will tell you that when people were starting Yahoo, Google, and Cisco, somebody was saying that’s a stupid idea. So it’s very easy for us to say what went wrong now. A very good example is Webvan (a defunct web grocery business); now we can say it was a bad idea of supplying celery to the doorstep and that $200 million went down the drain. Sitting here I can tell you it’s a flip of a coin whether Webvan was going to be a success or not. We could easily be saying that Webvan changed the world. So the message is you just don’t know. Since you don’t know you as an entrepreneur can try and if you fail you fail.

What’s your take on Web 2.0?

I don’t know what that means. People call me to attend Web 3.0 conferences and I tell them I don’t know what even 2.0 is. My comment to these kinds of labels is that I don’t think that any customer wakes up in the morning and says I need a Web 2.0 application. They may say I need something to balance my cheque-book, I need something to manage my inventory, I need to create a personal profile. I can understand that; but nobody wakes up and says I want a Web 2.0 experience today.

What are the few steps that an entrepreneur should get right?

Prototyping is the first thing. That’s the first, second, third, fourth, and fifth thing. The sixth thing is to write a business plan. And don’t even think of the exit plans, it’s a joke. Statistically, the logical exit plan is bankruptcy. Entrepreneurs should focus on the prototype because a prototype will tell you whether people will use the product/service or not. It proves to the investor whether you are serious or not. It enables you to find out whether customers want it or not. Prototype is the key, not the business plan and definitely not the research either.

A lot of companies seem to be promoting the concept of Intrapreneurs aggressively and it hasn’t lead to something very substantial. What seems to be the problem?

Some of it works. In the US, when people talk about great examples of intrapreneurship; one of the most cited examples is 3M sticky notes. But that was 30 years ago. Tell me that in last 30 years all you have is stickies. It’s not easy. For all factors, in a publicly traded large company all that the sales force hears from the customers is that we want better, faster, cheaper existing products. So, in a sense you don’t have to listen to your customers, they will always ask for better, faster, cheaper products. No one will say I am an Apple II customer, create something that that will make my existing product obsolete. Nobody says that … and that’s why it’s hard to jump curves for companies.

A practical problem that entrepreneurs face is too much advice. VC’s, peers, bloggers, i-bankers, everyone is doling out advice. How does one segregate bad advice from the good?

As a general rule of thumb do the opposite of what a venture capitalist says. If he says go for market share, do the opposite. If he says build infrastructure because you need to service your best customers better; don’t. You will end up spending precious dollars on IT staff and other things. If the VC says outsource to Bangalore; do it internally. Generally speaking, it’s pretty good advice to do the opposite of what VCs tell you.

Article Resource:

Author: Vinod Mahanta is the Chief Editor in the The Economic Times, Mumbai and the article appeared in one of their successful columns Guru Speak dated: 19th Sept 2008.