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The EMyth and the myths it dispels


I was so, so very lucky to happen to run into the newest book from Michael Gerber last December, while browsing in a bookstore, entitled EMyth Mastery.

For anyone who is contemplating starting their own business, any of the EMyth books should be required reading as the author does an excellent job of describing what it takes to start a successful company for the long-term. The irony is that very few people truly understand what it means to be an entrepreneur, or what it is that entrepreneurs actually do on a daily basis.

Essentially, most people think that if you do something well, and enjoy doing it, that starting a business doing that thing is a natural next step that should be encouraged.

Knowing what I know now, after 13 years of running my own firm, I would discourage those who think that that is all that is required. Their ignorance will only hurt them.

What most people do NOT appreciate is that there is a distinction between working IN your company and working ON your company that I am only still grappling to appreciate.

Working IN your company means, in the simple example of a roti shop: making and selling rotis.

Working ON your company means setting up the operations processes, policies and turn-key applications that are basically required to make any company successful, and must be customized to make your own company viable over a period of years. For example, the roti vendor would have to develop a standard process, manual and teaching method to standardize the method of making rotis so that

  1. they are made the same way each time
  2. they can be taught and re-taught the same way
  3. they could one day form the basis for expansion

Case in point: it was Ray Kroc’s genius for building a viable, expandable business that turned the store he bought from the McDonalds’ brothers into a multi-billion dollar empire.

The big myth about starting a business is that, for example, it’s the quality of the rotis that will make the business succeed. While that’s important, it’s just not true. Instead, it’s the quality of the business itself (and how it is run) that is much, much more important.

I’ve spent the last month re-tooling my own company and writing manuals for doing just about everything that I think is important. The areas that I have created for Framework Consulting are:

  • Enterprise Leadership
  • Management
  • Financial Leadership
  • Client Fulfillment
  • Lead Generation
  • Lead Conversion
  • Thought Leadership*
  • Marketing

* this is one that I added to the standard set that Gerber recommends.

I had to do quite a bit of reworking of his original ideas to fit my kind of business, but his basic thinking is still the best advice around for small business owners

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CAP: Talent Development

One of the important findings of the research we conducted in the Caribbean Acquisition Project (CAP) is how little was done prior to each of the acquisitions to develop managerial talent.

The reason that there were no more than only one or two companies in the project came from an unfortunate series of failures in the Jamaican financial sector in the early 1990’s. Several companies were taken over by Barbadian and Trinidadian companies in response to tenders that were put out by the government of Jamaica.

At some level, each of the companies was responding to a once-in-a-lifetime opportunity to purchase assets and increase their customer base in a new territory in the region. For each company in the study, there was no well-developed acquisition strategy that they were executing. Instead, they were invited to submit bids, against a particular deadline.

None of the companies involved had a reputation for being facile at executing acquisitions.

Instead, they scrambled to put together their bids and to secure the financial funding and background information to make the deal a reality. This they did successfully, but there were several casualties of this situation that were seen in all the companies studied.

Once the companies were awarded the right to execute the acquisition, they had to face the difficult question of who would lead the new entity. It was as if it was a case of “be careful of what you ask for, because you might just get it.

Obviously, continuing with the prior management had its risks, even if the company was one of the few successful ones.

The problem was that there were no “spare” executives to lead the newly acquired company, and bringing in a new executive to lead the entity seemed to be a recipe for failure. The responses showed this grim reality. In response to the following questions, the responses received were as follows (on a scale of 0/disagree to definitely agree).

  • There is a process that will reliably develop managerial talent to ensure the success of future acquisitions — 50%
  • There are sufficient policies to allow easy movement of personnel between current and future subsidiaries — 47%
  • There is sufficient talent for the company to undertake another acquisition successfully — 59%

(Due to the small size of the sample, and a promise to protect the confidentiality of the companies in the study, I cannot go into the details of specific examples. )

Suffice it to say, each of the companies, upon further investigation, was found to have neither a succession plan nor a management development program when the acquisition was executed.

Furthermore, there was a considerable difference of opinion within some of the companies studied as to the philosophy to be employed in the post-acquisition on the following questions:

  • Should the new company be left to develop its own culture, or adopt the culture of the new parent company, which presumably is a more effective one?
  • Should the new leadership of the company be from the new country?
  • If a temporary executive is used, who should that person be and who should be the replacement?

There were divergent views on the above, the results being that most companies did nothing at all. In many of the cases studied, this misstep has ramifications even several years later.

The truth is, each company was experiencing the consequences of an underinvestment in its senior management development. This effectively prevented the company from undertaking even a single acquisition properly, from the point of view of its leadership.

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CAP: An Early Surprise

As promised in a prior entry, I’ll be building up the paper I’m writing through the more informal mechanism of blogging.

The first surprise is that the data is much richer than I remember. It’s been three years since I last went through the 5000+ data points that were collected in the surveys, and while the findings can’t said to be statistically significant, they are infinitely better than working with just a gut feel.

One of the findings that I’ve discovered confirms a suspicion of mine, which is that we Caribbean business-people live under a peculiar misconception that our territory or country is worse than others.

The survey showed that in response to the statement: Jamaicans as a people are more difficult to deal with (than people in the respondent’s home country), there was a 33 point difference in the responses. Outsiders felt that Jamaicans were just about average, scoring only 45 points on a scale of 1 to 100, with 100 being “Definitely Agree” and 0 being “Disagree.”

On the other hand, Jamaicans scored the response at 66 points.

The same trend continued in response to other questions:

  • Unions in Jamaica are harder to deal with (56 to 69 points)
  • Laws regarding employment are easier on the employee (58 to 80 points)
  • Business practices are more mature than in Jamaica (58 to 73 points)

In each case, the Jamaican response (from executives) was markedly more pessimistic. Without having any empirical evidence, but having the experience of extensive work in each of the three countries involved (Trinidad, Jamaica and Barbados) I would say that a given set of executives from any country (without significant first-hand foreign work experience) would respond the same way.

In other words, the point differences indicate that this is a matter of self-esteem for the executives concerned. I imagine that this matter is only resolved when there is some direct evidence with which to compare one’s home country.

One of the frequent conversations I hear here in Jamaica, is one of frustration, in which a particular situation is blamed on some local or cultural failure. Often, from my point of view, it is nothing of the sort.

Often, there are numerous examples to which I have had first-hand exposure that show that the situation is not a local one, but is one that is either global or common to all developing countries.

For example, some Jamaicans talk about the traffic in Jamaica as if it is the worst on the planet. Here in CARICOM, however, Trinidadian traffic gets so bad at times that patrons are unable to attend a fete that ends at 4:30am because the traffic is congested enough to render the ticket useless (it happened this past weekend yet again).

Some would counter by arguing that the Jamaican driver is among the worst.

While I can’t prove this, I have been driven hundreds of times through the streets of Caracas, and can testify that I would never drive there, for fear of my dear life being lost in the mayhem I witnessed. I imagine that Caracas is only one of many cities of its ilk, and the streets of Kingston offer no comparison.

I can only think that the Caribbean Single Market (CSM) will help to resolve some of the ignorance that comes from a lack of “working exposure” (as opposed to “vacation exposure” from which little can be learned).

Perhaps the issues of self-esteem will go away when with an increase in commerce comes an understanding that much of what we experience in the CSM has less to do with territorial shortcomings, and more to do with historical forces, most of which are related to how our countries were under-developed by Britain.
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On Caribbean Acquisitions

In 2001-2002 Framework Consulting conceived and executed the Caribbean Acquisition Project, a survey of 7 Jamaican companies that had been acquired by foreign entities. Given the historical failure of mergers and acquisitions to create new value (estimated at between 60-80% of cases), we felt that there was a unique opportunity to take advantage of the number of acquisitions taking place to learn some valuable lessons. Hopefully, the lessons learned could be shared with other companies.

Specifically, we were interested in finding out how companies were planning for the hardest phase of M&A’s — post-acquisition/integration. Many prior studies have shown that the cultural and organizational issues are the most difficult, and the ones that make or break acquisitions. Therefore, the Human Resource function has an important role to play, and our hypothesis was that the way the HR function was used or not used had something to do with the future success of the acquisition.

Several companies were approached — there were ten companies that were thought to be possible candidates at first. Five consented to be surveyed for the empirical part of the study, while informal and public data was gathered on the others. Each of them were outright acquisitions, rather than mergers. (Incidentally, there is a paper from our website entitled ‘Equal/Shmequal: It’s never a Merger of Equals” in which Amie Devero argues that Mergers always turn into Acquisitions.)

Now that I am in the process of writing up the results for publication, I am faced with a mountain of data, and no easy way to classify the findings that were discovered. It’s easily a case of having too many options to choose from, yet the complicating factors do make the choice that much more difficult.

The greatest complicating factor is that it is devilishly difficult, even years later, to prove that a company was successful or not successful based on the practices they used. The number of companies in the study is so small that statistically valid comparisons cannot be made to draw general conclusions. Also, the variety of companies in the study is so broad that direct comparisons are not possible.

While it is true that certain companies are enjoying greater success than others, even the successes have been uneven, and tend to depend on when the line is drawn to determine success. In a small data set such as the one I am working with, it makes things difficult.

Furthermore, the fact that different executives were interviewed for the study meant that while a good deal of useful information was gathered, in several companies there was no consensus view. In other words, the opinions were wide and varied and there is no way to reliably create something like a statistically “average” response for each company.

So, how best to proceed?

At one level there are the basic questions that the study set out to answer, and there is a mix of empirical and anecdotal information to back up the answers derived.

At another level there are the surprises — the discoveries that we didn’t expect. To be rigorous, this means going back and adding the questions in the form of new hypotheses and testing them against any empirical and anecdotal date we can find.

As I go through the process, I’ll share the early results — after all, in the age of blogging, information shared early will help fulfill the goals of the project long before the book for which it is intended is published (in 2007, hopefully).

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“Being Positive” — A recipe for failure

It used to be that the advice given to a new manager to “be positive” was good advice.

In fact, there was a time when movies used to be all about good things, and rarely attempted to get into the nitty-gritty underside of everyday life.

However, times have changed, and someone who attempts to “focus on the positive” is regarded with a well-earned sense of suspicion. This suspicion deepens, and eventually hardens into cynicism when times get difficult. Why is this?

Well, when the chips are down people who try to focus on the positive exclusively, eventually come to be seen as dangerous, because they tend to ignore reality in their attempt to be upbeat. And today’s followers, whether it be in politics, corporations or sports are more tuned in than ever into the nitty-gritty reality of life.

Blame television, the movies, video games, the news media… whatever. I prefer to think that there is an unwillingness to overlook the raw unvarnished truth, and that that is a sign of maturity and growing consciousness that I can see at work here in the Caribbean.

The message that is hard to swallow here is that the truth that people hunger to hear the most from leaders is not how a situation is a mess (although that may be true). Instead, they want to hear from the leader where they realize that they have contributed to the mess themselves, and have now had some kind of insight from which they can glean some hope.

This degree of authenticity is fast becoming the new currency of leadership.

Some are seemingly rich in it — Oprah’s apology after defending the author James Frey’s lies comes to mind.

Others are poor — George Bush’s inability to be able to remember any mistakes he has made on several public occasions comes to mind. PJ Patterson’s insistence on “solid achievements” in areas of minor interest, and inability to take responsibility for failures also comes to mind.

The psychologist Carl Jung said “Everyone carries a shadow and the less it is embodied in the individual’s conscious life the blacker and denser it is. At all counts, it forms unconscious snag, thwarting our most well-meant intentions.”

I would add to that and say that the harder a public figure tries to look good, the worse they look. Why? The tactic that most use is to try to find ways emphasize their good sides and play down their bad (i.e. shadow).

However, a leader that plays down his bad size as bluntly as Bush and PJ do only seem to drive up the suspicion of those listening that they are either

  1. hiding the fact that they know they have major failures
  2. are unaware of the fact that they have major failures

As we enter 2006, and as people increasingly insist on “Keeping it Real” this style of leadership is sounding more and more hollow.

The leaders of the future will not only know that they have a shadow, but they will have the courage to openly talk about it. The more they talk about it, the more people will recognize themselves and be able to relate to the leader, and if the leader can show that they have found a way beyond their shadow, that will inspire people more than any “positive talk” can.

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Business Week published an interesting article related to this topic available here.

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Going Wiki


Framework is becoming more and more wiki.

And, no, wiki has nothing to do with witchcraft (that’s “Wicca.”)

Instead, wiki refers to online collaboration – a way of creating new knowledge, meaning and information using internet based tools that allow up to millions of people to work together to share information in ways the benefit everyone.

For example, Wikipaedia is probably the best known application. Wikipaedia is an online encyclopaedia that is owned by millions of contributors, and therefore does not rely on the specialized knowledge of a handful of “experts.” This is an eminently good thing, as I can vividly recall going on a boring shopping trip with a friend in the U.S., and finding a very old encyclopaedia from 1907 or so.

It was fascinating.

I was flipping around the pages until I got to the entry for “Negro.” It had a line picture of something that looked like a cross between the ugliest black man I have ever seen and a massive ape. Furthermore, the explanation ran something like this:

“Negro: an inferior human, typically characterized by lazy, shiftless behaviour.”

It went on in this vein for an entire column. So much for the “experts” of that time.

After months of hunting around I finally found a wiki application that we could use on Framework projects. The application is PBwiki (the PB stands for peanut butter… of course.) The link to their tour is here and the home page on the site is www.pbwiki.com.

I recommend the application for its ease of use and everyday pricing (some of the alternatives were ridiculous). It is quite easy to use, in keeping with the democratic of those of us who are “going wiki.”

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Using Video to See the Man in the Mirror

Recently, I committed to co-writing a chapter for publication on a technique my firm has been using to work with senior managers in one world-wide company, and also a well-known Caribbean conglomerate. The training technique is one that can be high-risk for the person leading the session, as it involves delivering live feedback in a public session and encouraging other participants to do the same. At the same time, participants have reported that they are able to give and receive more real-time feedback than they ever have before, and some actually demonstrate the new skills they have learned during the training.

As a precursor to writing my portion of the final paper, I thought I ‘d express my thoughts in this blog, as a way of saying a few things about how the process works.
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One of the principles used in our training is to make training as real as possible for those with whom we are intervening. “Making it real” entails doing as little “theorizing”as possible, and engendering as much truthful confrontation as possible, while directing the confrontation towards action-based commitments. In short, we provoke “Action, Not Ah Bag Ah Mout” in the hope that practice will make perfect, rather than further explanations and rationales.

The area that we focus on in this training is that of Critical Confrontations, and the specific training we have the most experience with is in training managers to engage in effective feedback conversations with their employees.

Most training in feedback involves at the least some mention of the principles on how to best frame the right words. These principles are reasonably well known, and there are several excellent texts that describe the “right” approach to use. In most of our training sessions with executives, the majority have been exposed to these ideas prior to the sessions themselves. Furthermore, most training has evolved to the point where each participant is given an opportunity to practice these principles, usually using generic examples.

In our work with Caribbean executives, we have adapted an approach that was first pioneered by a colleague of mine, Grady McGonagill, and perfected at several international companies. In this approach, the following process is followed.

The Training Process

Before the training starts, up to 10 customized cases are developed based on the client’s culture, needs and kind of business. Many are based on actual events, or issues that involve some emotional content.

  1. Participants are divided into groups of 4-6 for training periods of 5-7 hours each
  2. Cases are selected depending on the group being trained
  3. A curriculum is developed to address the training needs, focusing on demonstrable behaviours rather than vague nostrums (such as “be positive”)
  4. At the start of the training itself, the theoretical principles of good feedback are shared
  5. Dyads are formed to give each participant an opportunity to play the role of Manager and Subordinate, and the Manager is given the choice of cases to work on
  6. Managers and Subordinates are given written one-page scenarios that describe the case and their role in the situation
  7. A 5-10 minute interaction between the Manager and Subordinate is video-taped without interruption
  8. The tape is reviewed by the group, and stopped frequently to give the group an opportunity to coach the Manager on his/her “performance”
  9. The Subordinate provides direct evidence of the experience
  10. The group looks for opportunities to deepen the theoretical principles of good feedback
  11. The group continues until every member has had an opportunity to play the role of Manager and Subordinate

New Elements

The following training elements are included in this training that are normally not included in this kind of training:

  • cases built on real-life issues
  • giving public feedback in real-time from the participants and the facilitator, using the principles bring learned
  • using a recorded video-tape as an impartial and factual basis for feedback (rather than memory)
  • asking the Subordinate to share their emotional state at different points
  • using recorded behaviour to “prove” that the principles work, demonstrate how difficult they are to use effectively, and to refine the group’s understanding
  • offering multiple opportunities for trainees to use the coaching being given on the spot in a repeat “performance”

These elements are quite difficult to incorporate effectively and precisely, as the facilitator must be seamlessly competent in a variety of disciplines, not the least of which is the ability to operate and trouble-shoot video-recording equipment.

Results
The public goals of the workshop are quite modest, yet it regularly accomplishes much more than advertised. Trainees are often able to demonstrate a solid progression of increasingly skilled behaviours during the few hours of the training, and are able to receive and use the coaching given from the group to make immediate changes. The knowledge that they increase their effectiveness that quickly in a difficult area some focused practice and coaching is one of the tremendous benefits, even for observers of the process. Anyone can improve, given the right conditions in which to do so.

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An Article that Resonates

A recent article published in Business Week caught my attention. It is entitled “The Secret of Oprah’s Success” and deals with some of the principles of communication that has made Oprah successful.

I found that the article echoes much of what we have been working on in our firm in terms of the kind of communication that is most likely to connect with employees.

One of the books that stuck with me when written years ago, although it is quite outdated, is called “You Are the Message”. The premise was that the best way to communicate was to be authentic, and this article (and the principles we work with) have only built on that idea.

The article is an important one, and makes me think that I should get the book, and this may be the first that actually builds on what Ailes wrote back in the early 1990’s.

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Management, Caribbean Style

Working here in the Caribbean sometimes has an “Alice in Wonderland” feel to it.

That feeling returned when I read the recent reports of two SuperPlus employees being beaten by their managers.

Here are the relevant links to the story:

http://www.jamaicaobserver.com/1
http://www.jamaicaobserver.com/2
http://www.jamaica-gleaner.com/3
http://www.jamaica-gleaner.com/4

Apparently, two employees were caught stealing liquor from the store in Mandeville. They were taken by a group of managers (and including at least one senior manager) to the home of one of the managers. They were bound up, and brutally beaten with a pickaxe and even bitten by a dog.

A demonstration ensued, during which placards were displayed calling for “justice.”

In response, the CEO of SuperPlus, Wayne Chen, (whose younger brother’s home is alleged to be the scene of the crime) responded with the following, from the Gleaner:

Yesterday, Wayne Chen, CEO of Super Plus Food Stores, described the alleged beatings as “unfortunate and regrettable”. In a statement, he said: “Super Plus Food Stores, as standard policy, treats with utmost importance, the welfare and well-being of its employees. The organisation does not condone, encourage or engage in any form of abuse of its employees.”

Mr. Chen promised that Super Plus would cooperate fully with the police to ensure the swift resolution of the matter. He added: “Super Plus Food Stores has a long history of excellent employee/management relations. Depending on the outcome of these investigations, Super Plus Food Stores will do what is necessary to ensure that its substantial record of employee development and welfare is maintained.”

As of today, the SuperPlus website: www.superplusfoods.com has no mention of the incident, and nothing has been said publicly of the incident by the CEO (that I can find). This chain is the largest of its kind in Jamaica with almost 40 branches.

There is a lot that can be said about this, including the non-reaction of the company’s owners, and how best to respond to crises such as this. The text-book answer given by the CEO was as insensitive and remote as those given by other CEO’s in a similar position at Enron, Ford or Arthur Andersen. The lack of further public communication speaks volumes.

One can only imagine the impact on the workers, who in true Jamaican style, have taken to the streets in protest. While this may not ever have happened in Trinidad or Barbados, the response was predictably quick, and angry and featured a call for justice.

There is nothing like a perceived injustice to get Jamaicans riled up, and into the streets with placards, taking industrial action and forming unions. A few years ago, a well-liked Vice President at Cable and Wireless was fired and this was quickly followed by a demonstration and the usual placards. He was not unionized, but the feeling to right an injustice is a strong one.

In the case of SuperPlus, I imagine that the CEO is scrambling to find a suitable way to respond. Unfortunately, in our Caribbean society, inertia can cause us to return to business as usual in an instant, just because it is the path of least resistance. After all, what does produce have to do with an employee beating?

In fact, the prevalence of vigilante justice and mob-beating in Jamaica makes me think that there may be many who are sympathetic to the “managerial beaters” and support what they did. Down the street on Constant Spring Road, I can just make out a spot where a man was killed by a mob after throwing acid on a female worker at the Tax Office one morning. It all happened about 50 yards from the police station up the road, and several of her co-workers apparently were involved.

On the other hand, we have the employees of SuperPlus, who I imagine are traumatized. I don’t know what kind of management intervention to make in a case like this, but I am sure that working at SuperPlus will never be the same again.

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Digicel Woes in Trinidad

The following article was printed in the Jamaica Daily Gleaner, and I thought it was a useful follow-up to my prior post:

http://www.jamaica-gleaner.com/gleaner/20060203/social/social3.html

Digicel woos T&T’s media
published: Friday | February 3, 2006

Barbara Ellington, Lifestyle Editor


Digicel’s head of public relations, Maureen Rabbitt, chats with Marlan Hopkinson of Trinidad’s Power 106 I95 FM. Mr. Hopkinson was one of five media representatives from the twin-island republic who visited the island as guests of Digicel last week. – RUDOLPH BROWN/CHIEF PHOTOGRAPHER

DIGICEL JAMAICA Limited last week hosted a five-member delegation of print and electronic media journalists from Trinidad and Tobago. The purpose of the visit was to give the journalists a first-hand look at their Jamaican operations and high level of acceptance it receives from the population.

When they return to Trinidad they will then be in a position to report to Trinidad on their findings about Digicel, who are currently waiting on interconnectivity licence to operate in Trinidad. They hope to be up and running in the twin-island state by April this year.

Since Digital’s entry into the Jamaican telecommunications landscape just under five years ago, they have aggressively gone after majority market share and toppled the previous monopoly owner Cable and Wireless from their number one spot. They have since gained a foothold in several other islands and last year bought Cingulair’s share of the Caribbean cellular market.

SEEN AS AGGRESSIVE

But the road to success in Trinidad has not yet been duplicated, particularly because Digicel is seen as aggressive and TSTT, the reigning cellular provider, is seen as an institution.

“Trinidadians have the attitude that ‘we have problems with TSTT, but it’s ours, so ease off, Digicel’,” Marlan Hopkinson of radio I95 FM told The Gleaner.

Mr. Hopkinson said further that TSTT has embarked on a massive multimillion-dollar campaign, using popular personalities to spread anti-Digicel rhetoric.

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I somehow don’t think that Digicel is seen, or has tried to portray itself, as a Caribbean institution. In the Trinidadian press, the descriptions of Digicel have said more about its obviously Irish roots and ownership, than the fact that the company was started in Jamaica by Irish entrepreneurs.

Also, Digicel (as far as I can tell from the outside) seems intent on hiring non-Caribbean nationals to its highest positions across the region, and therefore keeps reinforcing the image that it is an Irish company. In Trinidad, the whole Irish/Jamaican combination has not gone down well. It only added fuel to the fire created by the mess that the company made in the West Indies cricket sponsorship debacle.

A recent article I read (that I now cannot find) predicted that Digicel will not come close to gaining the kind of market share it did in Jamaica. We shall see.