Monthly Archives: September 2016

Described the workplace immediately

Restructuring initiatives can have a debilitating effect on the hearts and minds of employees, affecting those who stay as well as those who are let go. In our work with dozens of organizations implementing sweeping cost-cutting programs, we have observed firsthand the turmoil that employees experience — and how frequently their needs are forgotten during the crucial work of planning for the transformation.

But what if the restructuring were more than a slash and burn? What if it appealed to hope instead of fear? What if it not only promised, but actually delivered, a stronger company and a better place to work? Cost management is effective only when it leads to a less sclerotic, more aspirational enterprise — one without suffocating bureaucracy or micromanagement, in which initiative and entrepreneurship are encouraged and rewarded, internal processes serve the customers and employees instead of “the process” itself, and the company outperforms the competition consistently. If the restructuring doesn’t help the company get stronger — if it doesn’t lead to a better way of working for everyone in it — then it probably wasn’t worth conducting the exercise in the first place, because the effects won’t last.

Company leaders embarking on a cost management effort therefore face two challenges. First, they have to make the right sort of promise to employees: that cost reductions will be not only fair, but also productive. This transformation is not intended simply to permit the company to survive a few more years — it is intended to set the company on a path to greater prosperity and thus better jobs for those who remain.

Second, leaders have to deliver. They can’t just embark on a project out of desperation. They have to have a credible way to move the company forward, and to make cuts that will serve that goal. The only way to accomplish this is to start with strategy — to have a clear idea of which activities are truly critical to the company’s success, and which are distractions or merely nice to have — and to follow through by cutting costs to grow stronger.

To be sure, many in your company — not just employees, but some senior executives as well — will remain skeptical throughout the early stages of the process. They know that cost cutting means layoffs, and that these are devastating to both individuals and teams. You can’t convince them in advance that you will handle the process differently in the future than your company has handled it in the past, and few companies have a good track record in this domain.

The feelings stirred up by an announcement of a cost-cutting action are powerful, and to help people see beyond them, you’ll need to enlist the help of your middle and frontline managers. It’s easy to overlook the important role these individuals play as the restructuring unfolds. It falls to them to communicate the rationale for the restructuring, to keep morale as high as possible during the transition, and eventually to lead their part of the organization to working in a different way. They need your support. Empower them to communicate and lead, not to just passively watch their departments be trimmed without a rationale. They can help their people understand the reasons for the particular choices that were made, and realize that the company, and by extension most employees, will ultimately be better off as a result. In so doing, these managers can earn their people’s trust by helping them see that becoming more efficient and effective is both a path for survival and a better way to operate.

One shoulder and a devil

The angel works to guide Starbucks toward its better instincts: to retain the vision that impresario Howard Schultz had of re-creating a European café for an American (and now a worldwide) clientele, a “third place” that’s neither work nor home, where you can take your time, and where you pay more for coffee than you would at the deli down the street.

On the other shoulder, a devil whispers of the temptations of growth. The desire to grow pulls Starbucks, and all companies, toward the logic of scale — repeatability, robust processes, efficiency, speed. Growth in and of itself is a good thing; but it can go wrong if growth and scale come at the expense of vision, identity, or customer experience.

Few companies have resolved the tension between identity and growth as successfully as Starbucks. So as Schultz prepares to leaves the CEO post to head up the company’s new, ultra-upscale Starbucks Reserve venture, it’s worth reflecting on what he has accomplished — not just for coffee drinkers but for business thinkers — and why his vision can endure beyond his tenure.

 

Beyond Beans

Schultz was a master of what is now called service design long before the phrase came to be. Like the cafés Schultz sought to emulate, service design — what a business does to set and meet the expectations of the customers it wants — has its roots is Europe.

Everything about Starbucks — from the Italian names for small, medium, and large-size drinks to a carefully considered counter height that lets you see the baristas work to hundreds of combinations like half-caf-latte-with-two-shots that let you personalize your beverage to the nth degree — was designed to make the customer slow down and smell the coffee, in a distinctly European way.

First to rebound after the financial

The conventional wisdom within the banking industry about its troubles since the recent global financial crisis goes something like this: Rightly or wrongly, regulators imposed new rules that forced banks, particularly in the U.S. and Europe, to adopt new, less risky (and less rewarding) business strategies. The challenges of enforced constraint were exacerbated by macroeconomic developments, lack of customer trust, new digital technologies, and upstart financial technology–oriented competition — in other words, by external factors the banks had little ability to influence.

But the most critical factor constraining banks after the financial crisis was not external at all. It was the banks’ own strategy. When they took steps to become coherent, they began to recover and thrive.

A study conducted by Strategy&, PwC’s strategy consulting group, analyzed banking performance during and after the financial crisis. We found a strong correlation between strategic coherence, performance, and recovery. (Coherence, in this context, means the degree of alignment among a company’s strategy, its capabilities, and the portfolio of products and services it offers.) Among the 17 large banks that we studied, all based in Europe or North America with operations around the world, the most coherent in 2007 were the most stable performers throughout the seven years that followed. As for the rest, those that moved decisively after the crisis to become more coherent saw the greatest performance improvement. Other banks — those that took either tentative steps or none at all — took longer to recover.

In studies of coherence in business — such as Strategy That Works, by Paul Leinwand and Cesare Mainardi (Harvard Business Review Press, 2016) — it’s rare to hear financial-services companies mentioned. So we set out to explore whether coherence could make a difference in banking. The answer appears to be a resounding yes.

The competency of relationship building

When we talk about the competency of relationship-building in the world of business, we are referring to building strong relationships with partners and clients – about using interpersonal skills to network in an effective way.

 

What does a competent relationship-builder do?

Somebody who is competent at relationship-building focuses on understanding the needs of the client and getting the best possible results. This competency promotes an ethic of client service and so an understanding and anticipation of a client’s changing needs is essential. Stress and conflict are other issues that a competent relationship-builder will manage – keeping composed and acting as mediator when conflicts arise.

 

How can I start to develop the competency of relationship-building?

First identify the business plan goals of your department and decide what your role is going to be in helping to achieve those goals. You will need to study the business plan and learn as much as possible about your clients’ activities, interests and needs. This information might be available in their own annual reports or in client surveys conducted by your company. Talking to your clients about how you can best meet their needs is also a sensible first step to take.

 

Seven steps to becoming an effective relationship-builder:

  1. Draw up a plan of what you need to do in order to give your clients what they want. Discuss your ideas with your line manager and then do what is necessary to implement the plan.
  2. When the plan has been set in motion, schedule regular meetings with your line manager to review the progress that you are making and make any necessary adjustments.
  3. When you are working as part of a team or group within a department or a company it is important to assess your contribution to the group’s work. Think about how your efforts help or hinder progress.
  4. Make a weekly analysis of your commitments. Set yourself a goal for each week so that you follow them through. Make an effort to do what you say you are going to do – and also, to do it by the time that you say it will be done. If you get into the habit of doing this it will become like second nature.
  5. Build up a file of contacts and classify them in a way that is meaningful for your particular work context. Then you will know exactly who to call with any queries or when you need information.