Posted on

Working with McKinsey – Smart people

I have had the fortune over the years to work alongside consultants at McKinsey & Co, both on project teams and as a member of the faculty for one of their training programmes.

McKinsey is just about the highest ranked consulting firm in the world, and charges just aboutthe highest rates to its clients.

One of the justifications that the firm has for charging the rates is does is that they hire the best and the brightest through an exhaustive process that begins with recruiting at the very best schools of all kinds. While they traditionally have hired business school graduates, they also now take people from all academic backgrounds, including doctors, lawyers and engineers.

What I have found, is the one thing they all have in common is what McKinsey people call “smart.” The highest compliment that one can get from another McKinsey-ite is that “he/she is _really_ smart.”

This particular evaluation has always struck me as a bit peculiar, but not only because McKinsey is the first place that I heard it.

In other workplaces, I have heard other values being expressed: “he/she is really nice” or “he/she is really cool” or “he/she is really down to earth.”

But “smart” as the single most important attribute still sounds a bit strange to me.

Why so?

Maybe because I think that being smart is just not enough, if it ever was. Someone who is smart is able to do well on exams, solve complex problems, get good scores on tests, learn abstract theories, and do other IQ-based tasks with ease. They may even be articulate, well-spoken and have a tremendous vocabulary.

However, that is very different than having a high EQ – Emotional Quotient – which is defined very differently, and I think, perhaps even more important that just being smart.

From Daniel Goleman’s book on Emotional Quotient, he defined 5 emotional competencies:

  1. The ability to identify and name one’s emotional states and to understand the link between emotions, thought and action.
  2. The capacity to manage one’s emotional states — to control emotions or to shift undesirable emotional states to more adequate ones.
  3. The ability to enter into emotional states (at will) associated with a drive to achieve and be successful.
  4. The capacity to read, be sensitive to, and influence other people’s emotions.
  5. The ability to enter and sustain satisfactory interpersonal relationships.

These are not God-given skills, and thankfully they are unlike IQ-based skills in that they can be learned and developed.

In fact, the most potent consultants at McKinsey seem to be the ones who are committed to developing these competencies throughout their careers.

They might be the smartest McKinsey-ites of all.

P.S. To those who have been around the firm, the picture above is frighteningly typical!

Posted on

More on a Likkle Man

Growing from being a Likkle Man performing a service or selling a product in the Caribbean means more than just expanding the top or revenue line of the business.

The pathway for growth must include some basics – there has to be a market, and there has to be some basic means of supplying it.

Beyond these basics, there must exist a company that is able to provide what the market needs. This is where the Likkle Man typically runs into problems, and has no clue how to get himself out of it.

A business can grow by just being in the right place at the right time – in other words, from luck. A friend of mine just happened to be selling roller-blades in Austin Texas, when no-one knew what they were. Then, all of a sudden one Christmas, everyone had to have one under the tree and she sold enough roller-blades to make a tidy profit.

However, most companies are not lucky. Their growth comes from careful cultivation of a market, and the organic growth of their capabilities to meet that market.

In one sense, my friend from Austin was “lucky.” However, she also told me that she spent several months giving away free classes in roller-blading at a time when no-one was interested in the sport. In other words, she systematically created the demand for the product by giving people an experience of it, at a time when no-one would pay for the classes.

She gradually built up an organization that could take advantage of the sudden demand that kicked off what became national fad.

And that is what the Likkle Man must do – build up an organization that will enable his company to create demand and take advantage of it. This is where the Jamaican entrepreneur is weak.

Based on my experience working in the region and beyond I would say that we Jamaicans have no problems dreaming big, and envisioning what a business idea can become. The challenge comes when the dreams must be translated into an organization that must deliver the product or service reliably.

The typical entrepreneur’s approach is to do it all themselves, and then hopefully find someone else who is willing to learn to do it themselves to pass it on to (often an heir). However, the problem with this approach, unknown to many entrepreneurs is that this approach keeps the company at about the same small size.

While there is nothing wrong with being a Likkle Man forever, a lack of growth does less than it could for owners, employees, customers and countries. Most company owners are not interested in remaining small.

However, it is fair to say that they do not know what it takes to grow and develop their organizations to be anything other than small.

The good news is that this is one of the skills of entrepreneurship that can be taught. The work done by Michael Gerber, author of The eMyth books, is a method that I continue to use years after reading his original book, and has the simplest and best prescription on how to develop an organization over time.

Even a Likkle Man who has no desire to grow can use these skills.

When we Caribbean people ask someone if they know a Likkle Man, what we are asking for is only a lower price, not a lower standard of product or service. A Likkle Man such as a shoemaker who operates out of a converted container (like the one I used 3 weeks ago) can use Geber’s techniques to consistently maintain extremely high standards that cause customers to keep coming back, and referring others.

In our region, there is nothing like a high standard to attract attention from customers. This is unfortunate, because so very few businesses are able to produce anything at a high standard.

On the other hand, it makes for lots of low-picking fruit. When the market is used to low standards, a higher standard comes as a welcome surprise, and even a shock. In many of my blogs, I have written about the presence of higher and lower standards indirectly.

The ongoing quest for higher standards of product and service delivery are critical to the entrepreneur’s goals of revenue expansion, market growth and greater profits. This quest is also important to countries, such as Jamaica, that have high unemployment and years of stagnant GDP.

This is where all Caribbean need to be very, very careful to empower the Likkle Man, but demand that he deliver at an ever-increasingly high standard. Perhaps we have failed ourselves by not demanding more.

Posted on

A Likkle Man

Here in the region, we delight in finding a “likkle man” who can do something at a fraction of the cost of a much bigger player, at the same perceived level of quality.

Shoes need to be repaired? Take it to the likkle man on the corner. Oil in the car needs to be changed? Take it to the likkle man down the lane.

Empowering the likkle man is an everyday form of rebellion, perhaps going back to plantation days when holding back business from Massa was an imperative. Giving it to the likkle man kept the business in the community.

However, giving business to the small man is only the beginning, and unfortunately, we in the Caribbean are very weak in helping the likkle men around us to turn into big men. We don’t challenge them to achieve high standards.

That is not to say that they are not able to produce samples of high quality. In Jamaica in particular, we have hundreds of artisans in the arts, for example, who are incredibly ingenious.

The problem is that we mistake the importance of technical ability, and vastly underestimate the importance of entrepreneurial ability. Our schools are organized to produce technicians in all fields, and from age 16 a student must narrow down their course of formal study (for life in most cases) to four subject areas and General Paper.

The truth is that educating another lawyer, doctor or accountant is unlikely to contribute much to our GDP. Narrow technical abilities are admirable, but nowhere near as vital to countries in which the large mass of people cannot afford to use them.

What most developing countries need are not more professionals with masters degrees in contract law, but more entrepreneurs who are willing to hire ever increasing numbers of ordinary people.

In the Caribbean, we have developed First World values that have no basis. In other words, we cannot afford to produce more and more sophisticated cardiologists, when the people who need them are selling icy-mints and steering-wheel covers on the corner.

What would it be like if we as a society were to value entrepreneurs, and determined to make their way easy?

What if that ingredient were to be taught in schools as a subject? Included in every profession as a subject to be studied? There could be subjects in medical school, engineering school and law school on starting and running successful small and mid-sized companies.

What would it be like to know that in the bigger picture, the company that creates opportunities for others enables all professions to thrive, all families to eat, and all children to be educated?

As an engineer who started his own company with little or no formal training in entrepreneurship, I made far too many mistakes that could have been avoided. When I graduated, I had no idea I would end up owning my own company, and it was not until my father started his that I could imagine that it was something I ever wanted to do. That was 14 years ago.

It is about time that we not only loved our likkle men, but gave them the environment that they deserve to grow from being likkle. It is about time we gave them the laws they need to be successful, and about time we gave them the support they require to hire the unemployed youths who sit around our corners deciding each day whether or not to join the local gang or not.

Posted on

A Real Blitz

For the past month or so I have been trying to call Cable and Wireless here in Jamaica to cancel my DSL service.

It happens to come at a time when the competition is heating up, as a new service called Flow is about to offer cable, DSL and local phone service bundled in one. In anticipation, C&W has been ramping up its advertising, with full page ads in the press and online.

When I say, I have been “trying to call” I mean that I have been calling their lines to try and reach someone. Anyone.

I can reach no-one. Once I spent 120 minutes on the phone, with headset on … determined that I would get through. A pre-arranged phone appointment forced me off.

At other times I have called only to hear from a pre-recorded voice that “our circuits are busy.”

This last time, the phone just rang without an answer.

Is it any wonder that I am going to try a different company?

I wonder if the people doing the advertising have any idea that they are producing more and more upset customers with their slick ads convincing customers to call their 888 number?

Posted on

Values Interventions part 4

Now and then we are called in to work on a company’s values, and our most important advice (that most have not heard before) has little to do with the actual values themselves.

I had reason to revisit my thinking on the topic (originally done with Amie Devero) after I received the following email from Trisha Dagg (trishadagg@internode.on.net), a consultant with a firm called Blueprints. She said:

I first came across your consulting company when I read an article by Amie Devero … entitled: Corporate Values, Stimulus for the Bottom Line. She had outlined some traits or strategies that a values-based company possesses, including values that drive behavior. I am doing some research on values enactment in organizations and I am currently looking to find out about tools/methods that organizations are using to train in values and align behaviors with corporate values. There is not a lot of literature on the topic – many organizations say they live their values but it is hard to find out the “how”. I have come across a few methods such as: values specific codes of conduct, values-based interviewing and performance appraisals, and a few tools such as role-playing and card games to help align values and behaviors. I was hoping you could tell me if you have done any interventions that are specifically geared to aligning values and behaviors. What sorts of tools you used, how did you measure results?, etc.

My response to her was simple — firms that are living their values are the ones spending the most time questioning where these same values are missing, and what must be done to fill the gap.

By contrast, beware the company that spends most of its time boasting about how “value-driven” it is.

In this context, the actual values themselves do not really matter, as they offer a mere starting point. When they are chosen, or developed, the one or two days that is spent developing the list represent less than 20 hours or so of focused group effort. During this time, people’s understanding of what they want for the organization begins to align, and they begin to move towards a common language that expresses this end state.

However, this is just a warm-up activity.

The practice that the company must undertake involves a continual examination, deliberation and closing of the gap. This practice is what mastering values is all about.

As the company practices, it gets better in a few critical areas:

  1. The employees deepen their joint understanding of what they really want, and learn better ways to articulate it clearly. “Integrity” for example, a very popular value appearing on many corporations’ values list, might very well mean something very different for any pair of employees.
  2. The company becomes more skillful at noticing the gap. It is likely that specific gaps that exist will be noticed by only a handful at first. Over time, they will hopefully be able to enlist others in seeing what they see, but the process in moving from individual inspiration to group understanding is a perilous and risky one.

    Arguably, there were employees at Enron who saw trouble brewing and were willing to say so, but the company’s culture would not allow their protests to develop along the pathway from realization to action.

  3. The company develops multiple ways of closing the gap. When a critical mass of people noticing that the gap exists develops, then taking action to close the gap is the natural outcome.


These three capabilities are what we call “living the values.” It involves a continual shedding of the idea that “we have arrived” and encourages the natural evolution of values, which are merely an intangible set of agreed upon ideals. Given that values are merely an element of language, then only further talking and listening (i.e. conversation) will produce the shedding and evolving that is required to be “living” the values.

This takes courage.

For some, it means taking the risk of being fired, as they flirt with that invisible line beyond which “everyone” agrees no-one should go. Usually, it is just easier to go with the flow, give up any heartfelt belief in the values, and retreat into resignation and cynicism. That is the easy path.

The road less travelled, however, is the one that every company needs its employees to be willing to take. Companies need employees who are willing to believe, and are open to taking risks on behalf of their beliefs.

If enough of these employees existed at either Enron or Arthur Anderson, we would instead be talking about the corporate leadership that they provide in living their values. However, it would not be because their magic list of values is superior to anyone else’s.

Instead, we would know about the courage that their people have to take risks for what they believe in, and the great job each company does in encouraging this vital character trait.

Values interventions, therefore, have more to do with encouraging employees to believe, be courageous and take risks. That is the critical missing element and the one that interventions need to focus on more than anything else. There is no single prescription for how to build this element as each company is different, and the activities to be undertaken range from individual coaching to large group sessions.

The most successful interventions are self-generating as they produce individuals who continually push the company’s limits on what can be questioned, including the question of whether or not there should even be a “magic list of values.” At that point, the actual values do not even matter. It is the way of living that counts.

Posted on

CAP: Planning for a Culture

While it is clear that the Human Resource (HR) function was not used to help plan the acquisitions included in the study, the question still remains: what are some of the things HR would do, if asked?

One key action would be to lead the development of an “Acquisition Philosophy” by the deal team.

There are many approaches that can be taken to undertaking an acquisition. Usually, the company being taken over is at least an average performer, although the majority of the companies included in the study were either failing or had already failed.

Obviously, the acquiring company is making the investment or purchase with the belief that their ownership will make the critical difference in the performance of the company. If this belief were not true, then it is reasonable to assume that the acquisition would not take place. After all, even a successful company would not allow its shares to be taken over in an acquisition unless there was some premium paid. Acquisitions involve significant costs and risks, and no stock-holder in his right mind would undertake either unless he were being duly compensated.

Turning a mere stock-purchase into a successful acquisition, however, has much more to do with the way in which the culture of the acquisition is integrated than the price paid. Our research showed that within the companies we researched, there were widely differing views on the Acquisition Philosophy to be used.

The Acquisition Philosophy has to do with a decision as to what precise combination of vision, mission, values and leadership to bring to the new company to turn it into a financial success in the mid to long term. The Philosophy created has everything to do with a sound understanding of the culture that prevails in the target company, and what interventions need to be created to make it successful.

Different scenarios call for very different Philosophies.

For example:

Example 1: A company being acquired was a combination of entities that had formerly competed, and had all failed financially. The parent company decided to create a culture in the acquired company that was a modified version of the culture found in the parent’s company. The new firm was formed around the same values, vision and mission of the parent, with small changes to account for differences in national culture. The leadership came from the parent company.

Example 2: A very successful company was taken over to help expand the market share of the acquiring company. The Philosophy created was to keep the company intact, and to keep the ownership in the background as much as possible, hoping that the success would continue.

Example 3: A company did not know to create an Acquisition Philosophy, and did not address the new culture of the company and how it would effect integration, except to mention it in passing comments. The company fought fires as they came up in the form of strikes, poor results and a rotating door of successive of leaders, none of whom were groomed for the job.

In our research done in 2001-2, the companies studied came closer to Example 3 than any other. The lack of a coherent Philosophy left them vulnerable and without adequate plans for the many surprises that came once the acquisitions were completed. A complete Acquisition Philosophy may have included the following decisions:

  • Does the acquired company require a new culture, replete with new values, vision and mission that is new and distinct?
  • Or, should the new culture just be the same as the parent company?
  • Is there an intention to have local executive leadership? What will be done to develop it?
  • If a culture change is required, how will it be affected?
  • Will the new company be run by a local board or by the parent company? What are the lines of accountability?
  • Will profits be repatriated to the parent company / country?
  • Is the parent company willing to learn from the acquired company and change its culture accordingly?
  • What will be done (or not done) to send a message to the employees that the change is a positive one, and what is the plan for motivating them and communicating in a way that reduces rumour-driven anxiety?
  • What will be done to help the people in the acquired company bring closure to their past successes and failures?

While the above list may appear formidable, our experience in assisting companies in transforming their cultures tells us that it is more important that the company’s executives come to agreement. It is a fact that there will be surprises and unforeseen events that the executive team will need to react to, and their Acquisition Philosophy can be used to guide them in making the joint decisions that are required.

Doing a perfect job on all the above points is much less important, and cannot be done by anyone other than the players accountable for the acquisition being a success.

A set of Acquisition Values can be developed in conjunction with the deal team, and the implementation team to guide the way in which they acquisition activities are executed. For example, at one company the directors steadfastly denied rumours that an acquisition was being considered.

A week later, they announced that there was in fact an acquisition underway. Instantly, everyone knew that they had lied, yet the fact was never addressed openly. Of course, it was talked about quietly for years after the fact and used as evidence as to why the company’s leadership could not be trusted. A serious commitment to an Acquisition Value such as “transparency” may have guided the team to a different set of behaviours, or to at least a dialogue to resolve the public discrepancy.

Posted on

CAP: A Sense of Regret

One of the anomalies we found during the research was a sense of regret in each of the companies studied that the desired synergies did not transpire, in spite of their best attempts.

Synergies were seen as critically important. One of the ways in which this synergy would be measured would be through cost savings, and while there was an average of 83% agreement that cost savings were important, there was only 63% agreement that cost savings were actually accomplished. Most of those came from downsizing after the merger was complete, rather than any other method.

Meanwhile, the companies clearly saw the importance of the cultural fit, as shown by the following:

  • Cultural issues will affect synergies: 85% or 93% (the question was repeated)

Yet, the execution was done quite differently.

In response to the survey questions regarding the pre-deal phase, the following responses were received (with 0 indicating Disagree, and 100 representing Definitely Agree):

How much value did your company place on the following items in the pre-deal phase?

  • Identifying issues and preparing a rigorous plan for conducting the due diligence stage: 86%
  • Assessing the people. Organizational and cultural fit, and the related risks entailed in various combinations: 63%

They were unable to focus on the cultural aspects of due diligence. For different reasons, each of them found themselves working against the clock and focused solely on the short-term objective of being successful at the right price while raising the capital needed.

In some cases, the leadership of the new entity did not create an environment in which synergy was a priority. In some cases the new leadership of the company was more interested in establishing control over the new entity. In others, the leadership tried to protect what had been a winning formula when the difference in national and corporate culture turned out to significant. And in another, the new entity showed only a change in ownership, but no significant change in cost structure, company name, brand or leadership.

At the time of the study, there was no evidence of the kind of cooperation that results in real synergy either through shared talent, intellectual property, technical know-how or consolidation of important functions. There was a feeling expressed that not enough was understood or put in place with respect to the new national culture, corporate culture and kind of leadership required to accomplish this critical goal.

With respect to the issue of how the HR function could have been used, respondents were asked the following: To what degree was HR used to educate the “deal team” about potential people, organizational and cultural risks? The answer was a mere 40%. It seems that in retrospect, they either wish they had done so, or wished that they could have done so, by virtue of having the right expertise at their disposal.

Posted on

CAP: A Difference in Perspective

As mentioned in a prior post, the CAP survey results showed that executives desired specific HR-related expertise that they did not believe they had in-house.

At the same time, our surveys demonstrated that there was a significant discrepancy between the perspectives of HR professionals versus other executives involved in the acquisitions under study. Specifically, this difference showed up in response to the question: “What is the right role for HR?”

In analysing the results, we noticed that there was a difference between the two groups, in answers to the following questions. (NB: A 100 point scale was used ranging from 100 / Agree to 0/Disagree. )

What is the right role for HR?

  • Strategic Business Partner: The HR response was 20 points higher (than that of non-HR executives)
  • Advisor to Executive Management: The HR response was virtually the same
  • HR Functional Expert and Implementer: The HR response was virtually the same
  • Project Manager and Thought Leader: The HR response was 13 points higher
  • Steward of the HR Functions: The HR response was 33 points lower
  • Employee Champion/Advisor: The HR response was 21 points lower

While executives seemed to want the higher-level expertise that most would associate as being HR-related, they had a different opinion. They clearly wanted and needed the skills, but they had a hard time seeing it emanating from the HR function.

The widespread nature of the observation (backed up in the interviews) indicates that this is a challenge for the profession in the region, and is not a problem related to a small set of individual practitioners. The truth is, our observation was that HR professionals were not equipped to answer the questions that CEO’s might ask when it comes to M&A’s, such as:

  • how does our company’s culture compare against those across the region?
  • what is the difference between acquiring similar companies in Trinidad vs. Guyana?
  • what are the best practices in integrating two different corporate cultures in the region?
  • who are the HR professionals you know in Belize that could be candidates for an acquisition in that country?
  • how deep is our talent pool and is it sufficient to provide the executive leadership we require to undertake one acquisition per year for the next 6 years?

These are sample questions, but they together comprise the essence of the kinds of questions that Caribbean CEO’s leading M&A’s have that, at present, most HR executives are not equipped to answer.

This is not to cast blame on those HR executives who were in the study. The data and the studies from which HR executives would glean answers to these questions just have not been done, the books have not been published, the blogs have not been written and the discussions have not been had.

Hopefully, CAP might make a useful contribution and a difference.

Posted on

CAP: A Search for Expertise

The in-depth conversations that made up the bulk of the interviews conducted in the study were probably the richest part of the experience.

One of the strongest and most disturbing points was the need by executives to have particular distinct competencies at their disposal. Given that the study focused on distinguishing best practices in the implementation of acquisitions, the focus of these competencies are most likely to be found in the HR function.

One response stands out in connection with the following question:
What is the importance to accomplish M&A’’s….. in the area of:
Expertise with people/organization/culture integration? On a scale of 0 to 100, with 0 indicating disagreement, and 0 indicating full agreement, the score given was 94%.

When asked what the current level of capability was to accomplish M&A’s with their organization in the same area, the response fell to 62%.

Our research showed that while executives were looking for this particular expertise in “people/organization/culture integration”, they were steadfast in not looking to their current HR executives and managers for that support.

This dichotomy showed up all throughout the study: a refreshing sensitivity to cultural differences and the need to account for difference in corporate and national culture, coupled with a lack of faith in the HR expertise on staff to provide what they said was needed. We connected that with a variety of roots causes, all of which were mentioned in the interviews:

  • A historical bias to view HR as little more than “Personnel.” In this case the HR executive would have to take the lead in changing the popular perception.
  • An uneasiness with their HR department’s ability and competence to play a strategic role
  • The inability of the HR department to effectively get itself into the fast-moving waters of an acquisition process
  • A failure of the HR leader to clearly establish their knowledge and expertise in the area of M&A’s before the opportunity came up

A deeper investigation of the exact cause would be the subject of a different study.

Posted on

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).