Why Do Strategies Fail?

Strategy Doesn’t’ Matter?   Part 4

With the pace of change in today’s business and technology, it would be nearly impossible for top Leadership to be too strategic, unless it isolates leadership from what the organization actually does.   Leadership must know where they are, their base line, why and where they are going and its effects.  Providing it’s a good strategy, the execution plan must determine if it can be successfully implemented and how.  This is what top leadership is hired and paid to do! There is no more crucial function than change strategy and it becomes more critical the larger and more diverse the company grows.

Implementation is the hands on work, oversight and due diligence.  However, undertaking a strategy change must represent more than an idea or feeling.  It needs to be backed up with data and facts.  Many strategy makers are also assigned a role in developing the execution plan for implementation.  The larger the company the more difficult implementation becomes and the greater the need for the right strategy coupled with a successful execution plan. 

The biggest roadblocks to successfully implementing any plan are the leaders in charge of and the management implementing it.  Not knowing or understanding your own organizational capabilities, limitations and/or motivations is foolish.  Unfortunately, most companies have let managers manage their areas devoid of real and consistent cultural leadership and oversight.  Management culture defines the what, how and why management exists in the first place…. the basic building blocks and backbone of the company’s cultural essence or identity, the organization’s DNA. 

Without a leader, or group of cultural leaders, who value(s) certain actions and beliefs, who do certain things in a certain way and behave in ways that help the group succeed, the culture of the company becomes whatever each department manager thinks and manages it to be.  This is the “My way (or the highway)” culture, full of favoritism, secrecy, intrigue, anger, infighting and poisonous as well as (usually) illegal people policies and practices.  This type of management culture will doom even a good strategy. 

Next: My way (or the highway) management culture fails.  Why?

Talbots and JC Penney - Two Failed $BBillion Strategies ?

Strategy Doesn’t’ Matter?   Part 3

The first is the recently ended Talbot’s saga under the leadership of Trudy Sullivan.  In 5 years this CEO oversaw a race to the bottom of a highly regarded mature/professional women’s apparel retailer.  Stock plummeted from $22 to $1.50/share, while she received bonuses every year.  In mid-2012, Talbot’s was purchased by a private venture equity firm, Sycamore Partners, for $2.75/share, or somewhere within the range of $197- $369Million on sales of $1.4Billion!  This represents the lowest price to sales ratio ever paid for a retail company…. in history!  

Apparently unable to exist without the kind of leadership that got them there, after resigning as CEO in December of 2011, the same Trudy Sullivan remained as one of the board’s negotiators.  The result:  Shareholders received $2.75/share - 10% less than the $3.05 offered in early 2012 or $2.95/share originally offered in 2011.  As Motley Fool said, “That's right, in true George Costanza fashion, they held out for less money!”

Speaking of less money, the other story opens with Yahoo Finance reporting JC Penneys made it to the top of the most hated companies in the U.S.  This is the JC Penney saga under ex-Apple president, Ron Johnson.   2012 annual sales have fallen by 24.8% to $12.98 billion and the stock has plummeted from near 62% to around $15/share.  JCP is now valued at $3.3 billion, down from almost $8 billion last year.

When hired Johnson reportedly bought $50,000,000 in shares at just under $30/share.  Although this was both pro-Johnson faith and a pro-Johnson/JCP 6 year equity gesture, why would any individual want to lose $25,000,000+, even on paper?  For that matter, how many could?  We will have to wait and see if his strategy works.  So far it doesn’t appear to have been well designed, unless the plan was to lose $Billions!

An accompaniment to the (so far) failing retail strategy was the expected ousting of Michael Theilmann, the former Exec. VP and Chief HR and Administrative Officer.   As a follower of JCP, one of the bright spots within JCP’s recession performance – where most retailers performed poorly - was the noticeable upgrade in positive, helpful and smiling floor and management people.    

Where these apparently successful People policies will go under Dan Walker, new CTO and former Apple CTO with Steve Jobs and Ron Johnson, is only one of the sagas to be played out.  As of this post, JCP will have shed 25,000 people since Ron Johnson took over.  Apple products are the most highly esteemed and sought after tech products in the world.  New products and upgrades create a stampede of interest.  This is not the retail apparel and department store world.  Only time will tell if the Johnson and/or Walker strategies will be successful.

Next: Why do Strategies Fail?

A New Strategy or a Good Strategy?

Strategy Doesn’t Matter?    Part 2

We’ve all heard the endless stories:  business leaders lament the lack of profit, slow growth, slow economy, European troubles, need to streamline, become more efficient ….  Human Resources lament the lack of influence, no seat at the table, restricted budgets, being relegated to processes, report generation, lack of top leadership’s support to change things…. Business and HR both talk of the lack of qualified people, rate of turnover, bad hires, lack of engagement, lack of interest, poor work attitudes, efficiency or job performance, distracted workers and terrible work habits ….Unless you like these results and you and your company are willing to endure, a good new culture strategy is needed.

Good strategy formation requires you look at your organization from its managerial, employee and/or customer point of view!   Truly successful customer driven organizations have always had the customer/consumer, and their employee’s interaction with those customers, as the top influencers of organizational plans.  Compare this to - or versus – the lip service most companies give to customer service by viewing customers and employees as top down organizations do.  Only those truly comprehending the keys to successful strategy implementation have bothered to get to know their organizational capabilities, limitations, motivations, the feelings of its own people and their consumer/customer base as a basis for forming that successful strategy.

Most companies fail to investigate, study, collect data and assign a proper value to customer’s or consumer’s views, as well as their employee’s direct interaction with those customers.  Without this essential priority in formulating a great strategy, tremendous waste occurs, as described by John Stumpf.  This same waste is mentioned by Brenton Van Breda, in his, “STRATEGIC PLANNING:  A practical approach to developing strategic plans and achieving objectives” https://www.box.com/shared/git0raxd2h.  For those unfamiliar with, looking for a simple outline for, or a compressed version of, a strategy formulation process, I think you will find it very interesting.  For more detailed strategy formulation processes (104 pages) try these slideshare presentations from drawpack.com:

http://www.slideshare.net/anicalena/strategic-management-business-presentation-slides

Thanks John and Brenton

To those of us in retail following what bad strategy, plans and outcomes look like, two recent highly visible overarching strategy change examples have played out or are being played out for all to see:

Next: Two Failed $Billion+ Strategies - Talbots and JC Penney

Strategy Doesn’t Matter?

In December of 2012 John Kotter wrote in Forbes, “Your Corporate Strategy: It Just Doesn't Matter”

According to John Stumpf, CEO of Wells Fargo, a successful strategy is all about execution. “It’s how you hire, how you inspire, your culture, how you reward, how you celebrate victories, how you deal with disappointments. This is easy to talk about, but it is all in the execution.” Otherwise, “it just doesn’t matter.”
"What does NOT work in changing a culture?”  Stumpf goes on.  “Some group decides what the new culture should be. It turns a list of values over to the communications or HR departments with the order that they tell people what the new culture is. They cascade the message down the hierarchy, and little to nothing changes.”  Thank you, John and John

http://www.forbes.com/sites/johnkotter/2012/12/17/your-corporate-strategy-it-just-doesnt-matter/

Wait!!!  Strategy doesn’t matter!?!?!?  No…. how the strategy is executed is what matters (assuming it’s a good strategy).   Companies waste a tremendous amount of time, effort, money and resources in strategic definition and plans without, or a failure to have, a comprehensive tactical implementation plan.  Strategy alone will remain encapsulated, isolated and fail to change the organization. 

Most companies forget to define THE critical step in the strategy implementation….the execution plan.   This is not the implementation itself, but how to implement the strategy.  Some will say it is part of strategy development or implementation, and it might be depending on the leadership, but it is a unique process.  It requires defining an implementation strategy.

The larger and/or more locations involved the more complex implementation becomes.  Instead of being able to “just do it”, various rollout stages and evaluations must take place so problems are minimized, reception is gauged and success of the roll-out is optimized.  Large global and/or geographically dispersed companies require multiple layers of data and need to address language and cultural barriers, geographical/cultural norms and agendas, management training, grading, refining, re-training and goal orientation/attainment for success.

In its simplest format the execution strategy determines “If it can, how it can, through whom and by what means the strategy can be implemented?”

·    How and in what format is the strategy to be consistently implemented? 

·    Who will be in charge/responsible? 

·    Who will implement it and the time frame or calendar for implementation?  

·    What are the criteria, waypoints or benchmarks to track its implementation?

·    Is the implementation being positively or negatively received?

·    Do changes need to be made to succeed (grading and improvement)?  

·    How will we know if it is successful (the proof or data feedback)?
 

This is the first of almost 30 cumulative posts dealing with strategy, HR/Talent/People, what’s happened, recognizing where you are, change, growth and developing simple solutions to start moving you/your company forward.   Please join me as we walk the HR and Employment Culture Jungle.

Next: Decisions - a new strategy or a good strategy?

How we got here

I have great faith in our newest working generation’s sense of community, fairness, intelligence, and connectedness.  I hope this trust and faith is not misplaced because the American worker needs help.  U.S. business and industry need the same type of help, because people as a business in not mutually exclusive of great profits or a booming economy.  In fact our history will support, when people earn a share of profits through higher wages and benefits, profits and the economy booms.  Only during the last decade+ was a booming stock market not the result of a booming economy that benefited all. 

Wall Street was freed to operate without oversight and regulation beginning in 1999, with passage of the GLM Act repealing parts of the Glass-Steagal Act of 1933 and the The Bank Holding Act of 1956 (acts establishing consumer protections and oversight of banks, investment bankers and insurance companies). The stock market soared to a level unimagined.  Of course it was a false boom, benefiting very few and collapsing just as it had during the run up to the Great Depression.  Our economy is recovering very slowly, but masking this recovery is another booming stock market without a booming economy, fueled by the same Wall Streeters doing the same things and producing profits for the very same few. 

They produce profit from manipulation of pricing and money and produce nothing, not products, manufacturing, services, good consumer wages or jobs.  They care nothing of worker’s rights and laws.  They care nothing of employment or unemployment.  They care nothing of the economy. They care only about their own profits.  They only care about the law when they get caught.  Furthermore, Wall Street’s Banks, Investment Banks and Insurance Entities recently found it is O.K. to illegally make $Trillions. After putting our economy on the brink as well as a host of retirement funds, cities, states and even other countries, when they had to pay up, the American taxpayer got the bill and their fines and penalties so far have been a paltry $2Billion!  Not one, C-level executive has ever been charged or prosecuted!  If you seldom, or never, get caught it is simple finance:  paying fines, some back amounts and legal fees, is just cheaper than paying what the law requires and demands along the way.  Sound familiar?

Again, we are beginning to see these same Wall Street results….high prices for commodities necessary throughout the world….oil, energy, gold, copper, corn to name just a few. There are no shortages, just perceptions. Wall Street does nothing to produce it and nothing to protect it.  They do nothing but trade and manipulate its value in a game just like a casino.  And, like all gambling, few players win, most loose and only the house, those controlling the rules, win long term!

"Merchants have no country.  The mere spot they stand on does not constitute so strong an attachment as that from which they draw their gains."

--Thomas Jefferson to Horatio Gates Spafford, 17 Mar. 1817

Much like Wall Street’s view of regulations, for 30+ years employers have made the case for the related notion (started  by the Automobile industry) that worker rights, unions, wages, benefits and legal requirements (laws) are the root of their profit problems and getting rid of them the solution.  If this were true why do UPS and Southwest Airlines (to name but a few) remain profitable and successful EU nations and Canada remain competitive with the highest employer/employee taxation rates and the most generous employee protections, wages, benefits and security in the world?  If this were true why did the greatest economic boom in U.S. history occur during the most active period of Labor and Wage and Hour legal activity - the late ‘40s through the ‘70s?  

Our country’s greatest competition is not with China, Bangladesh, Myanmar, Malaysia or any other Low Cost Country (LCC). We are competing with and against our self.  We are in competition with conflicting national business, legal and people politics and wisdom.   We are in competition with policies and incentives rewarding employers for working and manufacturing outside our country and taking work, business, profits and taxes away from our own nation benefiting all citizens. We are competing with our own sense of national identity vs. those of the Banks and Wall Street 

Eventually the world will run out of, and is already running low on, low labor cost countries.  Long shipping distances, rising fuel costs, the needs for safety, security, health, educated workers, employees who work ethically with efficiency, dependability and reliably, plus a resurgence of a certain nationalism (Made in the U.S.A.), have already begun to outweigh the desire and need for simple low labor costs.  As the economy and employment recovers the need for the disposed U.S. worker will create a paradigm shift in people as a business, not seen in the U.S. for decades.  In fact it has already begun.  Most employers don’t understand this yet, because theirs is a short sighted strategy of profit not longevity and people. 

Just as the army goes on its stomach so industry and business goes on its people!

Next installment:  Abbreviated re-postings of the “Black Hole”

People as a Business Cycle.

The issue of "People as a Business" has historically cycled. However, never in all my professional life have I observed a time when so many work environments are so poisonous and unsupportive of their own employees or those looking for work.  In mastering the technical, metrics and efficiency, it seems we have destroyed the positive work culture.  Most of the time HR supports and leads these efforts.  I now believe they are inversely correlated.

Today we are witnessing the resumption of a battle pitting fundamental employee legal rights and fair treatment against dereliction of duty in federal enforcement and the apparent willful disregard for federal and state employment laws by employers.  More and more employees are finding a voice and speaking out.  Many are demanding union representation because they are alone with no one to support them!  Where else can they turn?

Employees can no longer count on support from HR, who keeps calling for a “seat at the table”.  HR apparently wants to be a part of the anti-people and negative work culture policy decision making, right alongside the business leaders and C-suite executives.  The “business partnership” HR constantly strives to attain and/or justify, must come with an actual say in the day to day business decisions affecting its people.   If not, it is as meaningless as voluntary compliance.

HR must be the partner that guards and facilitates the fair, legal and ethical treatment of its people, and thus protecting the company.  They need to stop rubber stamping so-called business decisions adversely affecting their employee populations.  If HR acted as a people guardian we wouldn’t be seeing 70-90% FLSA non-compliance, skyrocketing employment legal complaints and work environments reinforcing lack of engagement, poor performance, bad morale, “The Black Hole” or bad management and practices.
   
After witnessing employer’s treatment of their parents and grandparents over the last 20+ years I believe it will be our newest generations of workers who will insist on fair and legal employee treatment and federal employment law enforcement.  Pre-boomers, Boomers, Gen X and early Millennials must bear a majority of the responsibility for today's current anti-employee culture.  By not speaking out and not promoting the positive, legal and protected work culture, over the last 30-40 years, the work place has slowly degraded to its present state.    The newest workers will not tolerate the same treatment and don’t.  Unlike those in their last working years, unable to retire and fearful of being unemployed, the newest generations have little fear, don’t trust employers and go public. They will not work as their parents or grandparents having seen how that work and loyalty was rewarded

I don’t think this movement will be going away.  The current administration seems to have found their position and has been marching legally on those who violate employee law.   However, if our recent history is any indication, it will not be long lived. We can only hope fair, legal and ethical employee treatment will again become more normal because workers will demand it. We know from our working history and the last 30+ years it will not be given! The question is who will represent them?  Will it be HR and the employer, a private employment legal firm, a union or the government?  It is ours to choose.

I am firmly convinced companies valuing people as their business are already winning during this economy.  Others who come to embrace people as their business will win the coming battle for quality talent, products, service, customers and profits.   I am also firmly convinced our nation’s health, economy and future depends upon it.  I know mine does.

Next Installment:  How we got here

U.S. worker protections in today’s workplace

In talking to companies, executives, attorneys, unions and workers I have heard the strangest stories, both hilarious and tragic, but true!  These endless perplexing stories are so universal with legal results so predictable I have concluded current training and education is rendering most companies willfully, civilly and/or criminally ignorant and negligent!  The DOL understands this.   A booming private employment law legal niche knows this as well.

If HR management does indeed know better, but is not protecting both the employee and the employer from willful violation of the law, it probably follows they are either ignorant of the law, fearful of their own job security or both.  If not, they have become part of the problem not the solution.  Just look at the long litany of Walmart settlements, and potentially the nation’s largest class action suit moving forward this year with estimated liability into $Billions.

Three very recent true stories will give impact to my points:

1)      A company attorney for a Fortune 100 company received a phone call from a degreed and certified HR Manager of 5+ years regarding the classification of a group of workers as non-exempt.  The HR Manager didn’t want to classify this group of salaried people as exempt because they (and their boss) didn’t want to pay them overtime.   They asked for help in reinforcing this position (making the case) and keeping them non-exempt to avoid overtime payments! (If you need this explained, drop me an email.)

2)      Another Fortune 500 employee, after years of working the same job with the same title and performing the same functions, was told, after a careful review of those functions, they were going to be reclassified as salaried non-exempt and would be paid overtime beginning on a future date.  Further questions and answers indicated they would not be paid retroactively.  Although they were not intimidated or threatened in any way, the employee decided they would not run the risk of being fired for questioning management regarding past overtime pay.  (If you need this explained, drop me an email.)

3)      When a very large privately held company asked for help in determining a “best” course of action to address problems in their handling of employee problems and complaints, they were asked why they thought they had a problem. They explained they had received notice of a DOL class action suit regarding violation of the FLSA in an overtime pay complaint, AND, they had been notified the results of an EEOC investigation and the EEOC was filing suit for sexual harassment and violation of the equal pay for equal work statutes.  When asked what policy or procedure the company had in place offering safe harbor to address employee issues and problems the company answered:  “Safe harbors are handled by the Benefits Department and those overseeing our 401K plans.” ??? (If the reference eludes you, drop me an email.)

These stories are from large companies who can afford the best information, training and legal advice available.  What is occurring within smaller companies is far more disturbing from a worker and employer liability standpoint.  These issues are being investigated, tried and settled every week!  2012 may be a $Billion+ settlement year representing the continued 30 – 50% annual increase in DOL and EEOC claims and settlements over the last 10 years. 
Many ask, "Why is this happening now?"  The answer is simple.  It isn’t new! It has been going on for decades! However, civil suit vs. federal enforcement is the relatively new wrinkle during the last 20+ years. 

Civil law suits became a private legal gold mine when preceding U.S. administrations deemed enforcement unnecessary, a low priority, refused to adequately fund enforcement and/or appointed department heads sympathetic to non-enforcement policies. Without federal enforcement individual workers had to and began filing civil suits.  Most civil suits are settled out of court, secretly, non- publicly and with non-disclosure agreements.  Civil judgments against employers usually take place just as quietly and may even get sealed.  They are just now becoming more visible because government judicial and departmental proceedings are a matter of public record!  Defense costs, judgments and publicity from federal legal enforcement of employment laws and for back wages, fines, possible criminal actions and the corresponding loss of reputation and image through bad press is a business’s worst nightmare.

The appearance of “newness” for these actions has also been explained as the result of unprecedented unemployment giving former disgruntled and laid off worker’s the freedom from fear and time to file complaints.   The employer-employee atmosphere created by the preceding decades of federal non-enforcement, worker abuse, neglect, unfunded pensions, non-communication and disposability is listed as a related reason we are seeing the visible rise in employment cases.  Another is our newer workers communicating endlessly, texting and tweeting anger, frustration, problems, complaints, solutions, legal opinions and perceptions to virtually anyone.  Consequently, legal employment questions and information is simply more available than ever before, instantly.

Recent state administrative and legislative actions in Wisconsin, Michigan, Indiana and Ohio, have also pushed this 30+ year employee rights trend into the spotlight.  Supported by all generations working together and organized through today’s lightning fast communications, rallies, union meetings and recall petition efforts have culminated in examples of what successful and visible employment rights protests can achieve. As of this writing 13 other states have followed a similar pattern.  It also serves as a glaring example of what fair, ethical and legal treatment of working populations can hope to avoid! 
Next Installment:  Why we got here