Vision

Vision is one of those overused words in management. It is a basic element of leadership. It is a question asked of any new leader. It spans corporate, nonprofit and governmental environments.

So do we really understand what is meant by vision. We hear comments like, "She is a visionary leader." But what does that mean.

Sometimes we confuse vision with change. Simply because a leader brings change does not mean that he or she has vision. Sometimes change is good and sometimes it is bad. Vision has to do with how the organization or entity will look in the future. It may involve a great deal of change or little change.

To be effective, the vision must be understood and owned by the key stakeholders in the organization. If it is only the leader's vision, it will fail.

In order to be shared, it must be clearly articulated. A vivid picture must be painted so that people can grasp and evaluate, and ultimately reject or embrace the future described in the vision.

And, the vision must align with the purpose or mission of the organization and meet needs of customers whom the organization serves. Otherwise, it is likely to be only a dream of the leader and may be destined to turn into a nightmare.

So, vision is a clearly defined and articulated picture of the future that is shared by the key organizational stakeholders, aligns with the organization's mission, and meets needs of the organization's customers.

When there is a well crafted, shared vision, it is very powerful and deserves the attention that it has received. It becomes the guiding light for the organization.

Bureaucratic Vs. Organic Organizations

The arrival of bureaucracies was a great advancement for organzations, just as the assemby line was a breakthrough for manufacturing. It allowed for work to be done in a uniform and efficient manner.

Today, however, we often decry the bureaucratic form of organization and advocate for the more nimble, organic form of organization. So which is better?

If the work is routine, repetitive and fairly simple, bureaucracis wook pretty well. You can take unskilled workers, put them in specific roles with clearly defined tasks, and produce consistent results.

For example, maybe you receive thousands of written requests for information on "A", "B" or "C". You set up twenty employees who read the requests and return "Form A" if the request is for "A", "Form B" if the request is for "B", and the same with "C". The process flows smoothly as long as the requests are for A, B or C.

The problem comes when the request is for "X", or maybe a variation on "B". The organization simply is not capable of handling the request. A response likly will go back to the requester in the form of a pre-printed cover sheet with check boxes and a check beside "Could not fulfill request", or at best the request will be passed up to someone higher in the bureauracy.

The employee receiving the request does not have the knowledge or authority to think outside of the "box". They are taught to follow strict rules and regulation, not to think--that is the nature of bureauracies. While this tended to work in days when getting a response in a week or two was the norm, it is totally unacceptable in todays complex world characterized by instant communication.

So how does the process work in an organic organization? First, the standard requests are automated. Employees design and set up the systems, but the responses are automated. When there is a request that does not fit the system, it will be kicked out to a person. If it is a nimble, organic organization, that person will have both the training and authority to analyze the request and respond appropriately.

Nimble, organic, empowered organizations are essential in today's high-speed, information intense environment. Unfortunately, some of our organizations have not kept pace. Many government organizations and some large corporations are prime examples.

If the environment is fast paced and complex, the organization must be nimble, empowered and capable of dealing with complexity

The Entrepreneur's Emotional Roller Coaster

My wife is getting a Master's in Professional Counseling, so I hear a lot about psychological conditions and diagnoses. But I have not heard her talk about Entrepreneurs Emotional Roller Coaster. I don't think it is an official diagnosis, but I know it is real.

The emotional trauma of being an entrepreneur is really tough. There is the high of the new idea. The idea hits you while you are driving or in an important meeting. It is not that it came to you out of the blue, because you have been thinking about the idea for some time. But in an instance it clicks. And it is so clear and so obvious. You've got it. It is a winner.

For the next few days you have a hard time thinking about anything else. You refine the idea a little more. You start calculating the revenue for the first couple of years. And then you do a multiple of EBITDA and start thinking about the world travel you will be able to do--and all the other new business you will be able to start. It is a real high.

Then you go online and find almost exactly the same idea that someone else is doing. It hits you like a two by four. Wow. How could they have come up with something so similar. Then you think about it some more and realize that you do have a unique angle.

Then you start working on the business plan and raising capital. At first it is exciting and exhilarating. When you are on draft seven, however, is starts to get tedious. You wonder how each potential investor can come up with a unique question that requires you to do in depth research--do they get together and plan the harassment.

When you realize that the seventeenth investor you meet with really gets it, it is such a relief and another high. This is an influential investor and if he invests, you are confident that at least three others will invest also. You start calculating the multiple of EBITDA again.

Then, just before this investor plans to execute the documents and write the check, the CEO of one of his other investments becomes gravely ill. And of course the investor decides that he has to put his focus on that company. He does not have time to do any new investments. Just how close can you get, and how low can you feel?

You start thinking about having to get a real job, and you really start feeling bad. Then out of the blue a friend of a friend calls and wants to meet . . .

Let's just call it EERC--Entrepreneurs Emotional Roller Coaster.

Organizational Insanity Revisited

Organizational insanity is on my mind a lot lately.

This week I received a notification that I owed a penalty of almost $6,000 on my Franchise and Excise Taxes for one of the businesses I have. Since the amount paid was correct and the payment was made on time, I was a little confused. But of course I shouldn't have been!

I called the state and was told that I had not paid estimated taxes. I checked with my accountants and they thought, as did I, that we had paid estimated taxes as we should. My accountants then called the state and of course were told a different story. Shocking!

As it turns out, the state is saying that I signed a form in 2007 agreeing to pay electronically, and that if you sign the form, ALL future taxes have to be paid electronically.

Of course that is not true, since in 2008 I paid by check and there was no notice and no penalty. But this year, even though I paid the correct amount and on time, I received a penalty of almost $6,000 because I mailed in a check.

Maybe I filled out the form but I don't remember--it is not what I wake up every morning thinking about. It does not add value to anyone--ops, maybe it does. It certainly does not add to my bottom line. Even if I filled it out, I probably would not have related it to the April 15 annual filing.

Maybe I am crazy, but a $6,000 penalty for taxes filed in the correct amount and on time by check instead of electronically is insane!

But wait, this is the same organization that gives you the option of filing your Annual Report online and paying online, BUT you are charged a service fee for filing online instead of sending a paper form through the mail. Now maybe I am just misinformed, but it seems like I have heard something about electronic filing costing less, rather than more.

Before I have to go check my blood pressure, let me address how smart people working in an organization can become so dumb. I believe there are several reasons and will address a few of them here.

1. They are not as smart as we thought--just kidding, sort of!
2. They lose sight of the ultimate customer and focus internally. Internal customers have different needs than external customers. In large, bureaucratic organizations, one need is to comply with every rule and regulation. And there are other needs that vary with circumstances. Right now most states need, or feel like they need, every penny they can get their hands on.
3. They tend to migrate toward complexity which results in inefficiency, waste and bad decisions. When organizations start, they are generally pretty simple, logical and are set up to serve the customer. Then something goes wrong, and another action or step is created to be sure it does not happen again. Then another and another. It doesn't take long until what originally took three steps now takes fifty-two. For those familiar with the work of W. Edwards Deming, this is a result of what he called tampering--changing the system when you should just address the immediate problem.
4. On the other hand, they often work in a system that is not capable of processing the complexity in the environment. They are set up to respond "A", "B", or "C". If they get a question that does not fit any of the three options, you are out of luck and they appear to be insane. I have experienced this problem with two other organizations recently. I ask questions and the people responding literally have a cover sheet with responses. They put a check mark next to one of the boxes and send it back to me. It doesn't seem to matter that I would write a full page explanation of my unique situation, the response comes back with one of the boxes checked. They do not have the training or authority to literally think "outside the boxes", and address the complex questions I have.

I am sure there are others, but this is a start. The amazing thing is that what appears to be insane to us--and it really is--makes sense to those inside the organization, at least much of the time.

I must admit a sane explanation for paying a service fee on electronic filing versus paper filing is challenging, but I expect inside the organization it went something like this, "We are saving businesses postage and maybe time, so they should be willing to pay a little more to file electronically. And we may get promotions for figuring out a way to generate more revenue without raising the annual fee or taxes. Wow, what a great idea!"

Of course those of us who are the ultimate customers of that organization probably think that electronic filing probably saves the state somewhere around $25 to $35 per annual report in processing cost. And it might make sense to charge no more or maybe even less to file electronically.

But then that would be sane!

Is a Business Plan Really Necessary?

It takes a lot of time and effort to write good business plan. Sometimes I wonder if all that time and effort could be better spent actually starting the business rather than researching and writing and editing. It really is a lot of work.

It clearly depends on the nature of the business you are starting. Actually I am doing both now--starting one business without a plan and one with a plan, or should I say trying to start them. It is never a given that they will get off the ground.

Remember rapid cycle failure. Instead of spending months writing a business plan, sometimes it is better to lay out your plan in a simple concept paper--three or four pages. Scoping out what you plan to do helps you think through the process and is highly recommended.

Then get to it. If it seems like it is beginning to work, you can always go back an write a detailed plan. If not, you have not wasted a lot of time.

If your business requires capital that you are going to ask others to put into the company, unless it is a small amount coming from close family and friends, a business plan is a must. People who invest want to know that you have very carefully thought through the concept and have looked at every important aspect of the business.

Can you clearly describe what you plan to do? What is your product or service? Who are the customers? Who is the competition? What is the experience of the management team? What do the financials look like? How much capital is required? How do I get paid back? What are the risks?

You have to be able to answer each of these, plus a few others thrown in for good measure, in great detail. Now that doesn't mean that the investor will always read the complete business plan, but you better be prepared to answer any questions that is asked. The business plan is critical in your preparation for this important exam.

When I write or read a business plan, the one thing I know for sure is that the business will not turn out exactly as the plan projects. But it is a road map and critical planning tool.

So, if you do not need outside investors, write a concept paper and spend your time starting the business. Do not waste months writing a detailed plan.

If you need investors, write the plan. Do the research and learn the material. The test is not the quality of the plan. The test is do you know the business well enough and are you experienced enough to make the right adaptations when the plan falls apart.

You are the plan--not the document--and you are the focus of investors interest!

Stress Test for Entrepreneurs

If Stress Tests are able to tell us if a bank can survive tough times, then maybe entrepreneurs should take a stress test before starting a new venture. And if current trends continue, the government may require such a test before we are allowed to start a new venture!

So, what would a Stress Test for Entrepreneurs look like? Here are a few sample questions:

1. Do you have a clear idea of what you want to do and are you committed to sticking to it until it succeeds or fails? If the answer is yes, you fail the stress test. To be a successful entrepreneur, you have to have a clear idea of what you want to do and then make adjustments as you begin to implement. That does not mean reacting to every event but it does mean learning and adapting. The one thing you can be sure of, no new venture looks exactly like the business plan that was originally drafted.
2. Do you have financial resources to survive while you learn and adapt the plan until it is profitable? The correct answer is of course "yes". There is no shortage of good ideas. The problem is that most do not work as planned initially. A good entrepreneur, given enough time, is capable of solving the puzzle. Unfortunately, what often happens is that we run out of money and resources before we get there?
3. Are you prepared for rejection, criticism and failure? Again, the answer better be yes. Entrepreneurship involves selling--selling the idea to investors, to future employees and of course customers. And maybe most importantly, to friends and family. While you think the idea is brilliant, you will get many more "No's" than "Yes's". Entrepreneurship is heroic until it looks like it may fail, and then people start to question your judgement--why are you putting yourself or your family at risk? And, of course the odds are not necessarily in your favor.
4. Is your idea potentially a billion dollar venture? If you answer yes, again you fail. First of all, if you think your idea is likely to create a billion dollar venture, you probably need counseling for grandiose thinking. Sure, we are told to thank big and we should. But we also have to be in the real world. Do you know the odds of a new venture turning into a multimillion dollar business much less a billion dollar business? You have a much better chance of being successful with a small idea, maybe even several small ideas. Only the most experienced entrepreneurs with proven track records are able to secure the resources to run with big ideas.
5. Is the pain of Not doing it greater than the pain of Doing it? The correct answer is yes. This, of course, is fundamental to basically all decisions we make, but especially true for entrepreneurs. There will be pain in the process. The question is, will there be more pain and regret in not doing it? For many of us, the rewards that come from adventure and following our dreams outweigh the risks.

OK, how did you do? Entrepreneurship is not for everyone. We all should carefully assess ourselves and our current life situation before taking the plunge.

Organizational Insanity

Most of us are all too familiar with the definition of insanity commonly used in organizational settings--continuing to do the same thing and expecting different results. Unfortunately it is too common and too true.

But today I would like to speak to another type of organizational insanity. It may be more prevalent and more destructive. As customers and stakeholders, we deal with it almost every day.

Shall we call it "internal organizational intellectual delusion"? Or "organizational insanity"? Or just"stupid"? My mother wouldn't like stupid so I think we will go with organizational insanity!

It is probably most notable in large bureaucratic organizations, but occurs in organizations of all sizes and in every industry. Just because you are in a small, nimble, organic and maybe virtual organization, it does not mean that you are free from organizational insanity.

How do you know if your organization suffers from this illness? There is a very telling and clear symptom--the people in the organization do totally insane things on a routine basis and sincerely believe that what they are doing makes sense.

It is important to note that this is an organizational malady. If the same people were outside the organization they would immediately recognize that what they were doing is insane.

Each of us could probably point to hundreds of examples. The government is of course ripe with examples.

Shall we start with the recent bailout funds that involved spending billions of taxpayer dollars in a bill thousands of pages long that was passed by congress without reading or knowing what was in the bill. Now whether you supported or didn't support the bailout, that is insane.

I recently heard a congressman sincerely and passionately defend his support for and leadership on a bill involving substantial taxpayer dollars and he admitted that he did not know what was in the bill. That is insane but seemed to make perfect sense to him.

The IRS has a tax code that is thousands of pages long. You may have tried to file your own taxes and gotten to one of those lines that says subtract line 47B from line 32A on Form 1372 and multiply by .0375. If you contact an IRS representative for an assistance, they will walk you through a five minute explanation, plus point to the five additional forms that you were not aware that you need to fill out. That is insane but is perfectly logical to the person on the other end of the line.

OK, enough with the government, what about the health insurance company I currently am dealing with. I am told by the representative of the company that my fax was received one day, was logged the next, would take 5 to 7 days to process and then they would send me a letter letting me know the results. I am very concerned about whether my daughter has coverage, and when I ask if they could call me or send me an email, the response, even though we were on the phone talking--I know they have phones--was NO. That is insane but made sense to the person I was talking to.

What do you hate most about going to the doctor? I guess it could be a lot of things, but most of us hate waiting. So what do doctors and hospitals do--they build Waiting Rooms! They design "waiting" into the system! Talk to almost any healthcare professional--smart people--and they will give you a ten minute explanation of why it has to be that way. That is insane!

Newspapers run editorials on global warming, the green movement, sustainability end environmental friendliness in "paper" editions. And they must believe it makes sense or they wouldn't keep doing it, right? That is insane.

Does your organization have any symptoms of organisational insanity? That may be an "insane" question, because it is virtually impossible for someone in an organization to recognize symptoms--there is always an logical explanation!

In later posts we will talk about those explanations and ways to address the dreaded organizational insanity.