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By The Numbers – Management Strategies That Don’t Add Up

Post Date: March 15th, 2010

A Phoenix Business Journal Article

By George Cappannelli

Obsessive! Compulsive! Excessive!  These three words describe what has become our all-pervasive addiction to leading by the numbers.   Yes, we are experiencing a crisis of confidence as a result of some shoddy accounting practices exercised in some companies.  Yes, Wall Street is cutting less slack than usual to those who falter.  In fact, the slightest dip in any of the half dozen indicators that the money boys use to evaluate an organization’s strength and you could be in trouble.  But no matter how great the challenges, no matter how difficult the times, our myopic focus on leading by the numbers still doesn’t lead us to healthy, profitable organizations.  

Numbers give us valuable short-term feedback.  They track sales, evaluate the cost of goods and services, identify trends in production and delivery cycles, and anomalies in the market.  So I am not against numbers.  It’s just that my experience over the last 25 years with a number of the leading Fortune 500 companies, government agencies and national associations and the people who run them has demonstrated that numbers do not give us an accurate reading of many of the essential factors that determine an organization’s success.

When Seneca, The Roman, said, “If you don’t know the harbor you are heading for, no wind is the right wind,” he was telling us that having a clear sense of one’s destination (what we today call ‘a well defined vision/purpose’) is necessary if one wants to avoid the obstacles and take advantage of the opportunities along the way. 

What has this got to do with the contention that leading by the numbers doesn’t get the job done?  Well, if a captain of a ship were to only pay attention to the numbers in a course heading, we can be sure they will have a lot of challenges at sea. If, however, a captain considers weather conditions, the direction of the current, the movement of other ships, the readiness of various onboard departments and, above all, the morale of the crew, their voyage has a much larger possibility of being successful.  Can a business succeed without paying attention to these factors?  Occasionally.  But under these conditions, the outcome will rest primarily in the hands of Fate and Luck – two allies one is always grateful for but rarely what one wants to bet the farm on.

What are the elements – in addition to numbers – you need to pay attention to in evaluating your organization’s viability?  In our new book, Say Yes To Change, we identify a number of factors.  Here are 10 we think are particularly important:

1.  Organization-wide understanding and alignment on vision and purpose.  
2.  Trust between leadership and employees.  
3.  Effective communication between all stakeholders within the organization. 
4.  Receptivity to learning – including openness to new technologies and new methodologies.  
5.  Constant acknowledgement and celebration at all levels.  
6.  Effective teaming at every level of the organization.  
7.  Sufficient investment in skill development and training. 
8.  Clearly defined roles and responsibilities.  
9.  A good balance between professional and personal lives.    
10. And above all! A deep commitment to continuous improvement that focuses on providing customers with unique value at appropriate and reasonable costs.  

How can your organization shift its focus from leading exclusively by the numbers to leading by these 10 factors?   Step One – utilize your love of numbers to evaluate how your organization is doing in each of these areas by giving each a score on a scale of 1 to 10.  Where your score is 8 or below, you have some work to do!

What kind of work?  Brainstorm for solutions with your team in each area where your score is low.   Invite the input of people at other levels of the organization as well. Remember, there is no problem you face that the ‘collective wisdom’ in your organization cannot solve. Invest in training and education.  Benchmark the best organizations in your field.  Be open to new methods and answers (even those that are not your idea). Assemble cross-functional teams to identify problems and develop new solutions.   Implement continuous improvement strategies.  Hire consultants who have solid track records and avoid those who want to ride off into the sunset before the doing gets done.  

What else?  Demonstrate courage when confronted with impatience from your senior management, stockholders or board.  Remind them and your people that it takes time for a ship to come to a new course after the orders are given.  In short, avoid changing directions so often that you leave a wake behind your ship that looks like the meandering of a drunken mariner.  That means putting long-term as well as short-term criteria for success in your organization’s playbook.   It also means remembering that leading by the numbers might make your company look good -for a quarter or two; it might even help you personally to chalk up enough points to get a lucrative new job offer – before the proverbial “stuff” hits the fan.   But in the end numbers, by themselves, just don’t add up to long-term productivity and profitability and, above all, to a legacy that you will be proud of!

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