Fragile Giants (2)

This is how a team falls apart: Remove a key player, and the social bonds that keep their friends on the job weaken. Before you know it, you've got a group of employees collecting paychecks, not a team working for a goal. Bugs go unfixed; servers crash; the design becomes ugly; and users flee. This could well happen to Flickr. Back up your photos now!

If that happens, what it tells us is that the culture of Flickr was always illusory — one built on personal ties rather than more lasting devotion to a cause. If so, the notion of exporting it to Yahoo was a delusion. That's the problem with turning a community into a commodity: Take away the people, and you have nothing left.

That is how the Valleywag blog described the layoff of a key member of the Flickr team: George Oates. It struck me how close this analysis was to my musings in Fragile Giants. Owen Thomas is talking about those same elusive values that take a company from Good to Great, whether a giant or not.

I disagree with Owen on the value of devotion to a cause as opposed to personal ties. I don't think that principles alone fire the human spirit unless they come in human form. We really need living, breathing principles that can show us the way past obstacles and help us see our potential. In other words, devotion alone is not enough. We need a leader, preferably one as principled as (s)he is charismatic.

I also wouldn't call the culture of Flickr illusory, but I would call it fragile.

Fragile Giants

When I looked up "Business Management" on the Amazon web site, I was greeted with more than 171,000 titles. How do you decide which ones are worth while? What I do is wait. Most of the management books I read are five or six years old. If they are still recommended by my friends after the buzzwords have died away, then I will crack the cover. Using this system I completely avoided TQM. Don't even ask me what it stands for!

My latest read is Good to Great by Jim Collins (2001, Harper). It is a rigorously researched study into what creates lasting success in companies. Now, here's the other reason why I read old business books: you get the benefit of 20/20 hindsight when looking at the company examples they use. For example, the companies cited in Good to Great include Fannie Mae, Freddie Mac and Circuit City. Just take a look at their share prices now!

I know that sounds like a cheap shot, and I don't mean to pour cold water on Collins' excellent research. The fact that some of his examples would no longer be classified as great companies does not invalidate the research. No, for me the lesson is that companies, even the huge great companies, are fragile. Their golden towers can be breached, and all it might take is a string of bad years, a major lawsuit or a technological innovation in a competitor's hands.

Value Your Values

Collins goes to great lengths to identify the keys to a great company. I'm not going to repeat them here, because they are meaningless without the accompanying analysis, but he does say that corporate values are one of them. He is careful to say that different great companies have achieved success with different values. For example, not every great company is customer centric or believes in a high quality product.

My point is that once you've found that sweet spot, hang onto it for dear life. Train everyone in it. Guard it with your whole corporate existence, because what the experience of the fragile giants shows is that once those values are lost, the slide from greatness can be fast.

Creative Conflict

A friend recently quoted these words to live by: "if two people always agree, then one of them is redundant." I firmly believe that there is a role for conflict in every organization. If I, as the accountant, am the steward of the organization's financial resources, then I have to be sure that they are well deployed. Inevitably that will lead to my asking probing questions of other company managers. We will probably disagree on major points, but if we continue to respect each other and listen to each other's arguments, then the result will be a better company.

Risk

How many companies really assess the risks they face? These days, "risk management" has become a euphemism for insurance, but business risks go far beyond the perils that insurance companies are willing to write policies for. For example, did the big 3 North American automobile manufacturers assess the business risk of their product line decisions? If they did, then clearly their analysis was faulty.

I am reminded of the words of Thomas Carlyle, "To the blind, all things are sudden", as quoted by Marshall McLuhan. The position of the big 3 has been being challenged for years by smaller, more efficient foreign cars. Despite the words of the top executives when they went, cap in hand, to the Senate, the only thing that we couldn't predict was exactly when the dam would burst.

Are we accountants fulfilling our role as the voice of prudence and financial stability? Are we still respected members of the senior management team? Or are the deals being made behind our backs?

Like a Marriage

Marriage relationships mature and change over time. In the early years, you have the excitement of facing obstacles together. Even though they may have been poor and struggling, if you ask people who have been married a long time when they were happiest in their marriage, many will point to those early years. I believe working at a company that is striving for greatness can be like that. The early times are exciting. You see yourself as the proverbial David, slaying the giant. Later on, when the goals have been met, how do you keep complacency from seeping in? Apple has been accused of eating its young, by launching new products that compete head to head with the existing product line. Maybe this is to keep the managers sharp as well as the technology.

Bottom Line

At the Church, we spend a lot of management, staff and volunteer time discerning what our ongoing purpose is in the world. Why are we here? What principles and priorities should guide our actions? Whom should we help? What are we being called to do? Even if you are not a church, you would be wise to ask those questions and live by the answers.

Interesting People

It takes a lot of talent to be a consistently funny writer for your whole career, but John Cleese has done just that. I was a Monty Python fan and watched the TV show every week. I quoted Python skits in high school (Say no more!!). I watched the movies and Fawlty Towers. And now, I have started listening to his podcasts.

When Cleese is just talking to the camera, he can be quite humble. In the video podcast I watched this morning, he talked about how fortunate he was to meet so many intelligent and interesting people through Python. Then he said, ". . . which wouldn't have happened if I'd been an accountant."

Them's fightin' words!

But before I bristle with righteous indignation at the callous insult levelled at my profession, let me state that I realize that no slight to accountants was intended. With all of his royalty earnings, I expect that John could truthfully say, "Some of my best friends are accountants."

But it does raise the question of what makes an accountant (or anybody for that matter) interesting.

Here's my take. (Feel free to agree/disagree in the comments below.) When I look back to all the people I have found interesting, the thing they have mostly in common is that they knew what they wanted and had the courage to go for it.

Actually, you don't have to start an international comedy troupe to be interesting. You could even be just an accountant. All you have to do is reach down deep inside you and find a cause that resonates. Find something or someone worth dedicating your life to. That will force you to dig deep and find the personal resources you never knew you had. That will force you to look outside yourself and look to others for assistance. When you have a purpose in life, the other things just seem to fall into place and when they don't, you will find previously untapped reserves of energy to take on the challenges. Then, I guarantee that people will find you interesting, but by then you won't care. You'll be too busy following your dream.

Like the accountant in the Monty Python skit who wanted to be a lion tamer . . . hey, wait a second. Maybe Cleese does have a thing about accountants after all!

Less Numbers, More Story

Harry is one of our unit managers. His normally calm, diplomatic voice takes on a sudden energy as he leans across the table and says, "People seem to think that any mission will do. That's just not true."

Harry has a point. Missions have to resonate with the team or they will not motivate them. I have worked for a passionate leader and I really felt the difference. When he announced his vision for the company, he made sure we all knew where we could make a difference. We worked together and supported each other. There was a well defined goal that was just beyond our reach.

Those are all good things, but, as I look back on that experience now, I see it differently. It was not the goal that motivated us, but the story of The Little Company That Could. We saw ourselves as a small Canadian company competing for recognition with our much larger colleagues south of the border. It was the classic David and Goliath story, and we were determined to create a happy ending.

My current company's story is very much in my mind as I put together the book that will become the blueprint for our company's 2009 year. People don't traditionally look to budgets for inspiration, but I am out to change all that. Here's what I'm planning:

• Less Numbers, More Story - The budget will now include a narrative telling the reader what we are aiming to achieve. The detailed tables broken down by Cost Centre, Account and month that I need to import the budget into the accounting system will be sent to the Appendix. People don't read them anyway.
  
• Align with the Organization's Priorities - The accounting system breaks the organization down into units, but the Board sees the operations in terms of their priorities. The budget book will take all of the individual managers' goals and show how they fit into the Board's priorities.
• Support the Priorities with Graphics - I will use my Microsoft reporting tools to present the plans graphically, just like I promised. The reader will see that we are putting our money where our mouth is.
• Get More People Involved - Some people view budgeting as a black box: a mysterious process with results that are beyond their control. The budget book will have a section describing the process and talking about how budget adjustments were made. We will ask for more input from the people most affected by the budget and actively seek their buy-in.
  
• Use the Technology - Use the Financial Reporting Software rather than Excel for the Budget reports so that changes to the Budget ripple through all the reports, instead of relying on more fragile spreadsheet links. Use Navision (Microsoft Dynamics NAV) to track the original budget separately from subsequent transfers and updates, so that I can show both on financial reports.

There was an excellent demonstration of the power of a story in Drew McLellan's Marketing Minute today. It certainly inspired me.

The public may not be on the edge of their seats when this book is released, but I'm hoping that Harry will be.

Setting Goals

How do you work with a volunteer board to develop the Mission, Vision and Values statements for a charity in one day? You engage Fay Booker, that's how.

Last year I was invited to become the Treasurer at Ewart Angus Homes, which runs two Toronto facilities for people with Alzheimer Disease, Ewart Angus Home and Cedarhurst. The homes are based on the work of Dr. John Tooth, who found that while there was no cure for Alzheimer Disease, the dementia could be slowed down significantly if the following principles are followed:

• Residents should live in a house which as far as possible resembles the home they have lived in all their lives.
• Food must be cooked in each house.
• Each resident must have a single bedroom with private bathroom to which he or she may bring personal possessions and memorabilia.
• Residents should be able as far as possible to carry on the routines to which they have been accustomed.
• Each house must have its own secure garden in which the residents may wander safely.
• Each house must have a wet-weather wandering loop as well as provision for garden wandering in good weather.
• The number of residents in each house should be kept as small as economically practicable.

Like many charities, we have significant challenges, such as securing sustainable funding and keeping our volunteers from burning out. We also face the health care risks borne by much larger organizations, such as clinics and hospitals. We decided it was time to take a Saturday and come to grips with where we are going and how we will get there. One of our members recommended Fay.

I have been in visioning exercises run by professional facilitators before. What made this one different was:

1. Fay has current, practical experience in our industry, and
2. She was not afraid to park issues in order to keep the group's focus.

Fay knew the environment in which we operate. She had a firm command of the risks and challenges we face, so she was able to ask pointed questions that went to the heart of our operations.

Other planning sessions I have been in have been bogged down by "wordsmithing", i.e. using the group's time to craft the exact wording. Fay focused on getting the common themes and ideas down on paper, then she had an associate put them together to form a working wording. We were thus able to push forward and leave the fine tuning for another day.

The result was that we actually finished a little early and all took away a plan to convert our good intentions into concrete actions. That reminds me, we have a Board meeting tomorrow and I have things to prepare . . .

Business Goals & Drivers

"What are your business goals? What drives your company?" These might seem to be odd questions for someone implementing your accounting software to ask, yet the answers to them will make a major difference to the success of your new system.

The most famous acronym in goal setting is "SMART":

• S - Specific
• M - Measurable
• A - Attainable
• R - Realistic
• T - Timebound

Let's focus on Measurable. If you know what your goals are, you can ensure that your accounting system is set up to measure them. For example, let's say that one of your goals is to get 50% of your sales from new customers and 50% from existing customers, but your accounting system just has a single account for sales. Measuring your progress towards this goal could be a tedious process of downloading all the year to date sales to a spreadsheet and then manually divided into "New" and "Existing". If you build your goal into your accounting system, you could have separate accounts for New Customer Sales and Existing Customer Sales and the invoices could be coded properly at the time of sale so that it becomes easy to monitor your success.

Business drivers are also an important part of system design. Simply put, they are the economic events which have a profound effect on your results, such as changing exchange rates or fluctuating commodity prices. When a client manager said to me, if our costs go over budget, it will be due to these four things, I was delighted, because I could make sure that separate accounts were created in each of those four areas so their effect could be isolated and analyzed.

What drives your business and how do you measure success?