Put Your Time Where Your Mouth Is

I worked for a guy who used to say "You can tell what people value by where they spend time on".  It's true.  If you really want to drive change then you must be willing to put your time where your mouth is.  Leaders that lead by memorandum and mandates seldom achieve their desired results.  If you want to make lasting changes than you must be willing to make the investment of your time.

I learned a long time ago that if you don't make a personal investment in your initiatives you need to be prepared for a less than favorable outcome.  I had an initiative once that I thought was a really good idea.  Problem was that I hadn't put enough time into thinking it through, wasn't committed enough to put the right leadership on it and didn't spend enough time with the team working it.  In the end we avoided a complete disaster but I learned a lesson that personal involvement is a key ingredient in any successful endeavor and I haven't made that mistake twice.

If you have an initiative make sure the goals are clear, the criteria for success are well understood, the team has the right resources and leadership and that you follow through to make sure that they are making progress and helping them to solve whatever problems they encounter.  I recently had to set up an outsourcing activity and there was a lot of apprehension in the organization about why we were doing this and the capability of the organization we were out sourcing to.  In the end, we set up a true partnership that enabled us to meet our targets for project completion.  It wasn't easy and it took many hours of conference calls, face to face meetings and working with team to work out an effective process for communications.

I know some of you may believe that delegation is the hallmark of leadership.  I am not talking about micromanaging your teams but rather, providing support to them during the project or process of change.  Effectively communicating with them and actually engaging with them to ensure you understand what they need are essential to success.  If you rely on occasional reviews and written reports you run the risk of starting one of my least favorite games..  It's called "Bring Me a Rock".  Ever played?  It can be unbelievably frustrating.  It starts with the boss telling the team "Bring me a rock" and nothing else is required from the boss except that when the team returns he simply says "I'm sorry, that's the wrong rock.  Bring me another rock."  You get the picture and I think it's clear how frustrating this can be.

Living in a Fishbowl

I think that most leaders realize on some level that they need to lead by example but one my former bosses used to say that as leaders we live every day in a fishbowl.  The members of our teams are watching every move we make and are interpreting our every action.  She was right.  Leaders live in a fishbowl.  Get used to it.  If you don't walk the talk every day your team will see the insincerity of your actions like a signal flare against a dark sky.  If you preach ethics yet pad your expense accounts because no one but you will know guess again.  The people in accounting see that $1,000 dinner with several expensive bottles of wine.  Think they won't talk?  You bet they will, particularly if times are tough.

Those of you that know me personally and particularly from years back know that I can be a little (OK, more than a little) flip.  I was meeting with a design team and the lead engineer was brand new.  I was giving him a hard time about the part count and having some fun with him.  I had suggested that he could fit in more of a certain component and most of the room laughed knowing what I meant.  I failed to see that the lead engineer had taken me seriously until someone pointed out that he had taken notes on that point.  At that point I realized that my relationship with the organization had changed.  I went back to the employee with both an apology and an explanation.  I also learned to be far more careful about what I said and did.

The fact is that higher up in an organization you are, the more careful you need to be.  You need to assume that every action will be scrutinized very carefully for inconsistencies between what you say and what you do.  If you think that the rules don't apply to you, your team won't think they apply to therm.  If you are asking your team to make sacrifices you better be right there with them in making those same sacrifices.  In fact, you should be leading from the front in this respect.  Show your team that you are willing to be right there with them.  It builds your credibility as leader and can make all the difference in the morale of your team if they see that their leader is in the same boat.

I once worked for a company that entered into Chapter 11 because the CEO had made series of bad decisions and in the process had over leveraged the organization.  He flew out on the corporate jet to announce the decision to file Chapter 11 to the organization and during his announcement he denied any accountability for the financial state of the company.  Since he rarely spoke to anyone below the division GM level, there was a lot of genuine surprise at the blistering criticism he received.  We spent considerable effort trying to mitigate the damage from that one event.  Note that I deliberately chose the word mitigate because the damage was beyond repair.  He was never again allowed to address anyone below an executive level for fear of the irreparable damage he might do.

Let's face it without our teams we can not hope to be effective.  We need to realize that we need to earn their respect and trust.  The only way to do that is to walk the talk and  lead by example.  This is an enormous responsibility because it means we need to hold ourselves to a higher standard of behavior and performance than we do for our organization.  As my father said to me more than once "never ask anyone to do anything that you are not prepared to do yourself".  Good words to live by.

Rolling the Dice without Risk

I love risk but I hate gambling.  Huh?  It's true.  I love taking risks that I can have an effect on the outcome.  I mountain bike, fly air planes and SCUBA dive.  All high risk activities to be sure but while these activities may have higher personal stakes than putting your chips n the line, at least I have a pretty large say in the outcome.  Same goes for business risks.  I don't mind taking risks but I want the odds and and control in my favor.

I was just working with a client the other day and as we were discussing the move into production I started asking how much risk still remained in the design.  One of the biggest areas of risk when dealing with a contract manufacturer is in production design changes.  It opens the door for a whole slew of cost growth from unused inventory costs to production tooling and process change costs.  Startup companies often deal with the fluidity in the design as a matter of course but in order to achieve low production costs the design must be fixed.  Here in lies a dilemma.  Startups need to move fast and rapidly evolve but volume production needs to stay fixed.  How do you deal with this dichotomy?  Manage the Risk.

Let me start by saying risk management will not make all the risk go away.  I have heard people say "Risk management didn't help at all, the stuff that killed us was stuff that wasn't even on the plan."  That's right.  That's the way it's supposed to work.  To borrow a very unpopular quote from a over a decade ago "There are things we know that we don't know, these are the known unknowns and there are things we know we don't know, these are the unknown unknowns".  Sounds like gibberish?  Nope.  Risk management simply deals with what know we don't know and if manage those risks effectively, it allows frees up bandwidth to deal with things we know are unknowns and if we deal with them in an orderly fashion, it allows us the bandwidth to deal with the surprises that come up along the way.

I have a fairly simple risk management recipe that I use and it has worked.  The last company I worked for was able to effectively use it to complete it's product design in very short order.  Yes, we had surprises but we weren't hopelessly mired in a dozen fires such that the surprise ground us to a halt.

I use a risk cube to keep track of the overall risk picture.  This plots probability of occurrence on the horizontal axis and impact of risk on the vertical axis.  Most people use a relative scale of 1 to 5 to rate the probabilities and impacts.  So, the upper right corner of the cube is where all the really bad stuff lives.  In this area you are pretty sure it is going to happen and if it does, things will be bad (project will be late, cost will be high, won't meet some spec, etc).

I start by listing all risks and if you have trouble here some places to look; new developments, tight specs, short schedules, and things you have had trouble with in the past.  Once you have your list, start assessing the likelihood of them coming true and their impact to place them on the cube.  Once you have that lies above the diagonal from the upper left corner to the lower right corner needs to have a mitigation plan.  You can decide if you want to deal with lower probability/impact risks but make sure you are dealing with the critical ones.  Here is Paul's first Risk Management Law Hope is not a Plan.  That means monitoring a large risk doesn't provide any value.  You need to have a strategy.  Sometimes it is a a backup approach, sometimes it is a design change, sometimes it is early testing to identify if the risk is really there but you MUST DO SOMETHING ACTIONABLE to address any highly probable significant risk.  No exceptions. 

The next step is you must review the plan on a regular basis.  The regularity is up to you but you must do it at defined intervals.  I have found weekly works best.  The review accomplishes several things.  First, you need to track the risk reduction plans to make sure they are on track and make any adjustments as necessary.  Second, you need to formally decide to retire risks and get them off the plan if they are truly retired.  Third and finally, you need to look for any new risks.  That's right, this is a dynamic plan.   When new risks emerge, they need to be added to the plan and go through the above process.

I am working with a team that has great product and they are rapidly heading towards production.  The problem is that the last step in their plan is a large scale test.  A great thing to do but when you look at the number of high risk things they need to validate in this test, it gets a little overwhelming.  As I went through the process it became clear that they needed to do a combination of lower level testing and come up with some alternate design approaches so when they got to the system level testing most of the lower level component risks had been retired and they will be able to focus on the large scale system behavior plus any of those unknown, unknowns.

Risk management isn't some mysterious process that involves probability theory and a Ouija Board.  It is simply ranking your risks according to severity, have a plan for the significant risks and updating the plan on a regular basis.  That's it.  There is nothing more to it than that.  If you follow this simple process, I can promise you your life will get better. 

Monsters Under the Bed!

Over the years I have seen teams become paralyzed for a variety of reasons.  Some get mired down in studying problems to death, often referred to analysis paralysis.  Others suffer from one form or other of team dynamics issues.  I'd like to focus on one of my favorites, irrational fear or as I like to call it, fear of monsters under the bed.  Trust me, this can grind progress to a standstill.

I led a team responsible for developing a power conversion product and when I arrived the team was mired in a series of endless technical debates and it was very hard to sort fact from fiction.  One of the most hotly debated issues had to do with a safety requirement.  Both sides started dragging out allegations that dire consequences would result if we chose the other guys design approach.  After a particularly heated meeting I went off and did some research.  It turned out that neither side had any facts on their side.  I told them we would implement both approaches and test the performance to get real data.  I made the team sit down and decide on test criteria in advance.  As it turned out the first design worked very well but when we reviewed the data one of the guys struggled to accept the results.  I explained (as patiently as I could) that he could suggest additional testing to further validate the design but that if he could not, we were moving on.  After some period of grumbling, even he moved on.

This example is the best way I know how to deal with unknown fears.  Turn on the lights and make the alleged monsters them show themselves.  This means rigorously going after facts and making sure that when endless debates arise about concerns, that we work with our teams to get them back on fact based tierra firma.  Work with the team to first understand from a strictly fact based point of view what the concerns are, in the case I was describing above the team passionately argued that failures could result in building fires.  It turned out there was no such basis in fact and the real concern was over stress elsewhere in the system leading to premature failure.  We were chasing the wrong issue and had been for some time.

The next step is to agree on what solutions address the issues or requirements defined in the first step.  In my case, we came up with a couple of design approaches to address this particular requirement.  The next step is key.  The team needs to agree on how to validate or evaluate the various solutions.  This means they need to decide on what data must be collected and in some cases how it will be obtained to gather facts necessary to evaluate the solutions.  The final step is to use the data to evaluate the solution(s). In my case we evaluated just the first solution and since it worked we moved on for the sake of efficiency.  If you need to evaluate relative performance than, you must collect data on all solutions.  In either case it is crucial that you stick to objectively evaluating the data and do not allow emotion or allegations to drive decisions.  It's OK to allow the team to cycle back to collect more data if required, but do not let them get into analysis paralysis.  If the new data requested will not fill in a key missed step or is the result of new learnings, think twice about going back to collect more data.

We all have our rational and irrational fears.  The best way to deal with these fears is with facts.  Help your team to get past these fears by taking them head on and leading them through a fact based decision process. No mater how nasty the problem, if you stick to a rigorous fact based decision making process you will ensure the best outcome.

Intelligence vs. Experience

Over my career I have had the great fortune to work with some extraordinarily smart people.  Make no mistake about it that every organization should go after getting the smartest people they can however, intelligence is not a complete substitute for experience.  I have seen many new companies run by exceptionally bright people get into all kinds of trouble because the leadership lacked experience.

I saw a company that was introducing a brand new product into the market with all new equipment and brand new production facilities that was staffed with brand new hires.  Delays in the arrival of key equipment and materials delayed the production start and the CEO was driving for unachievable recovery plans.  Each week the factory worked hard and did its best but the gremlins in the new equipment and our ever present friend Murphy were working over time.  The end result were a host of quality and production delays that were driving the cost out of control.  The CEO compounded the situation by throwing money at capital equipment and people to pull in the delay.  During this period the company was consumed with trying to force a difficult and short lived product through an expedited and relatively limited production run.  This diverted resources away from completing the next generation product and designing a more producable product as well as solving the production equipment problems.  We spent a fortune and we might as well have taken all that money and burned it in the parking lot.  We burned through most of our operating capital and were left with a very difficult financial situation to clean up.

How did this happen?  The CEO was one of the brightest, hardest working guys you will ever meet, he had an experienced operations team and yet the outcome was not what anyone would call a success.  The issue was that the CEO despite having been successful in other ventures lacked any operational experience and had no experience with building hardware.  His experience told him that he needed to drive to scale as fast as possible.  Spending money to save time was always the right answer.  He rejected any thought of reducing the ramp rate to give the factories and the supply chain time to deal with the normal host of production problems.  The problem was that he lacked the experience with operations and had no basis for weighing the risks of rushing headlong into an unrealistic production plan.  He had no idea of the size and odds of the bet he was making.  After it was over he lamented "I had no idea it could ever cost that much to fix all this stuff".  He learned a very painful and expensive lesson.

The hard truth is that there is no substitute for experience.  The real world has a way of teaching us all the same old lessons.  Thinks that look good on spreadsheet often fall apart on the production floor.  Textbook teachings sometimes don't hold up in cruel world of customers and competition.  Theoretically sound designs fall apart when exposed to real world people and processes.  Understanding the real world constraints is essential to being able to make sound decisions and to avoid relearning some old and painful lessons.  When building your team look for a diversity of thought, brilliance but don't overlook the need for experience.

Does One Bad Apple Spoil the Bunch?

I was just reading something about "what are the best things to look for when hiring?".  Most people talked about the usual things such as hiring the best and the brightest.  Looking for experience in the industry and size of company were big recommendations as well.  Those are all good things but also organizational fit is important as well.

These days pure individual contributors are rare.  Most people need to function as a part of team and as such every team member needs to fit in to a certain extent.  I absolutely believe 100% in bringing in diversity into the team but they need to have the ability to work together.  I have seen many instances where one caustic personality spoiled the productivity of the whole team.  They can shut down creative thinking, create productivity bottlenecks and even be down right abusive.  This is lethal to any organization and the leader must deal with it promptly and effectively.

So how do you hire people that are good fits culturally?  The best way I have seen is to put together an interview slate that has superiors, peers and if it is a leadership role, subordinates.  If you are changing the chemical makeup of the organization care must be taken to select people that will give you all points of view on the candidate.  I have had to hand select interview slates to ensure that I got a view of the candidate not for the current organization but for the organization I wanted it to be.  You might be tempted to forgo having the organization interview candidates.  That is a mistake as well because they are not as likely to accept the  selected candidate.  You need the teams buy in and having them part of the process helps the acceptance process.

A healthy team is a productive team.  Certainly go out and hire the best, brightest, most diverse staff you can hire but also make sure they are good cultural fit for the organization you want it to become.  Begin your hiring with ending in mind.

Know When to Fold 'Em

In reading a comment on one of my posts yesterday an old Chris Christophersin song came to mind...  You got to know when to hold 'em, know when to fold 'em.  Know when to walk away, know when to run...

One of the challenging things, especially for new leaders, is knowing when you are pushing a bad position with a performance issue.  Nearly every first time leader makes the mistake of investing way too much time trying to make someone work out in a position they are not suited for.  Face it, most of us has done this at least once.  It's human nature we want to help people be successful.  The problem is know when it's time to move on.

I once had a very talented director level person that inherited a very caustic manager.  The manager was hard on his staff, causing turn over problems yet, was totally unwilling to accept accountability for failing to deliver.  I recommended that we move on replacing the person sooner rather than later.  The director believed he could save the person and asked for some time.  I told him I was doubtful but gave him 3 months and wished him well.  In about 2 months the director came back with a recommendation to replace the manager and we did.  We hired a very capable manager and moved the other individual back to an individual contributor role where he belonged.  The problem was while the director was trying to save the failing manager, some other key areas that needed attention suffered from lack of attention.  I felt it was worth letting the director get into a little bit of trouble to learn from the experience about pushing a bad position.

So, when should you invest?  If there are extenuating circumstances that warrant a second look or the person has been put into a development role.  I once transitioned from a fairly senior and difficult role and when we were choosing my successor my boss chose someone that was a great choice but would need some time and top cover during transition.  My boss ignored the recommendation and threw him into a very difficult situation head first.  By the time I knew there was real trouble, I couldn't intervene to save the situation.  He should have provided more support during the transition and had he done so, I believe the results could have been different.  He should have invested. 

There are other situations where projects get into trouble for various reasons beyond someones control or beyond their current capabilities.  In this case, it is wise to invest for a couple of reasons.  The obvious reason is that you will save and develop employees that have valuable experience.  Some of our greatest learnings come from bad situations.  The other reason is that it will become difficult for you to recruit a successor if they get the sense that they will not be supported in that role.  Further, the whole time they may be looking over the their shoulder as opposed to focusing on excelling at their job.  Just make sure that project performance issues do not become a trend with the person.

When should you fold 'em?  First and foremost anytime there are ethics issues.  That must be an immediate ticket out the door.  I don't care how talented they are, ethical issues can not be tolerated, not for one second.  You might be tempted to overlook them but don't.  I have seen a senior leaders overlook clear ethical violations such as sexual misconduct and misappropriation of company resources with disastrous results for both themselves and the organization.  Ethics boundaries must be rigid and uniformly enforced.  No exceptions.  Never.  Ever.

Issues surrounding truthfulness are next on the list.  Anytime you have legitimate questions about the honesty of an employee.  I had a situation once where we had a marginally performing project manager.  We tried him in several roles and he just couldn't ever be successful.  His boss kept trying to tell me how smart he was and pleading for another chance.  We both finally agreed we needed to move the project manager to role that he was better suited to.  One day, I got a call from his boss telling me that they hadn't quite got around to reassigning him and that there had been an ethics issue with the employee on the project.   The end result was the employee was terminated and the boss was moved out of management role because I could no longer trust him to follow through on an agreed plan.  I refer this as the "Pocket Veto".  Plans can change but the agreements need to change with them.  Without trust their can't be a relationship.

Performance issues get trickier.  Obviously grave judgement errors need immediate attention as far as corrective actions.  Bad behavior is another area that needs immediate attention.  Employees that violate conduct standards or are openly disrespectful need to be to be promptly dealt with.  Behavior issues seldom correct themselves.  I once worked with an employee that had a clear substance issue.  His management failed to address the problem and allowed him to travel overseas.  Overseas his pattern of behavior continued and he narrowly avoided being thrown in jail and was promptly sent home to be fired.  The company suffered a great embarrassment as well.  The point is his managers failure to address the situation placed both the company and the employee at great risk.

Issues where an employee just isn't performing require some more work to improve performance.  This isn't a license to stand back and allow sub par performance and under no circumstances should the employee be rewarded for poor performance.  The employee should be given clear feedback as to the performance issues and an opportunity to improve.   This means that the leader needs to invest some time in putting together a thoughtful and effective improvement plan as well as regularly working with the employee to improve.   If the employee either can't improve or slips back into old bad habits than the leader needs to evaluate more permanent corrective actions.

The truth is that one bad apple really can spoil the bunch.  Tolerating bad behavior or long term poor performance drags the entire organization down.  It also damages the leaders credibility.  Failing to act timely and decisively sends a message to the organization that you really aren't all that serious about your objectives or your values.

Nobody Knows the Trouble I've Seen...

It's an old spiritual song that has probably been done thousands of times by different artists.  At this stage of my career, I almost feel qualified to add my name to that last.  I've seen a lot of troubles in organizations.  Part of the reason I write this is that I hope that one or two folks gather some helpful insight.  Others may just enjoy this out of morbid curiosity.  Which ever is your motivation, thanks for reading!

For the last 15 years I have dealt with organizations that have faced one or more significant challenges.  There are a few things that I have learned over the years that seem to be constants in working an organization through difficulties and on the road to success.

The first step is to listen.  This maybe very difficult because if fires are burning every synapse in your head will be urging you to action.  Obviously, if there are urgent tactical issues that need to be addressed because the business will truly cease to function then you need to tend to those but resist the temptation to tinker with the workings of the machine until you have had a chance to talk to people from all sides.  This means not just  direct reports but all the way down into the roots in the organization.  Talk to the customers and get a sense of their issues and perceptions.  But truly listen and ask probing questions to get a complete picture of all the problems from all sides.

You also need to evaluate the capabilities of the organization and get sense for how they are operating.  The best way I have found to do this is to show up in unexpected places and observe what's going on.  Lend a hand if you can but continue to listen and observe.  This helps to give you a not only a first hand view of what's going on and how the organization operations but it allows you to see a broader cross section of the team to assess their capabilities first hand.  I walked into a situation where the team had been unable to close on a product.  I started attending every meeting I could the first week.  What I observed was the team would endlessly debate the theoretical design approaches but they lacked any concrete data.  From this I could see we had two fundamentally strong personalities that were locked in opposition and both were essentially responsible for halting progress.  The solution was relatively easy.  I worked with the team to develop multiple approaches to the key issues and then, required that prototypes be built for each approach to gather real data.  Almost immediately, we could see solutions to each problem and the progress was amazing.  I could also see that we were under utilizing key talent and it allowed me to shift responsibilities to dramatically improve the performance of the organization.

Now that you have gathered some real data you can begin doing some root cause analysis to address the performance issues of the organization.  You need to decide whether the structure works well enough as is, I am not a fan of changing an organization just for the sake of change, or it needs some fundamental changes.  You need to figure out whether you have the right people in the right jobs and if not, you need a plan for change.  Here is the first trap.  If you need to make organizational changes, you almost for  sure need to make personal changes.  Resist the urge to rearrange the deck chairs on a sinking ship.  If you need to make a change in personnel make a plan.  Figure out what changes need to be made and in what order.  Take your time and get the right people first.  I recently, was talking with a company that was seeking to improve performance in short order.  After talking with the team, it was clear that personnel and process changes were required.  The senior leadership agreed with the changes but when we talked about the pace and the order it was clear that they wanted to let natural attrition do the hard work for them.  That is a failing strategy.  If changes need to be made to bring the right skills to the order.  Make the hard decisions and do the work now.

One other tip as far as people.  You need to find what I call the "Enemies of the State".  These are the people that no matter who is in charge, are subversive and actively undermine any initiative to change.  I have worked for a couple of very proud organizations that had folks in them that were actively resisting any efforts to change from what they viewed as things that made them successful "back in the day".  These people often fail to understand how much has changed and are reacting out of a place of fear.  Talk to these folks, understand their points of view, offer them a choice about embracing the changes or, a path to get them someplace they will be better off but make it clear that subversive behavior won't be tolerated.  If it continues you need to get these people out of the organization as soon as possible.

The same exercise needs to be addressed for the organization's processes.  You need to assess the systems and processes and figure out what needs to addressed and in what order.  The trick here is to resist the urge to replicate someone else's (hopefully successful) processes.   That almost never works.  Borrow good ideas but work them into a process that your own organization will buy into and supports its needs.

You also need a public plan to move the organization forward and communicate that plan from top to bottom through the organization.  I was assigned to a program that was critical to the organization that was in deep schedule trouble.  We had to perform or, we would pay staggering liquidated damages that might have sunk the company.  I assembled the team and quickly determined we had the right talent but they were disillusioned.  They had been told for so long the schedule was unachievable that they believed it.  I immediately stood down the team for a 2 day planning exercise.  We planned backwards from the fixed end date (with contingency margins) and as we started to hit places where milestones that people said were "undoable", I started to ask them to think about if we took all the constraints away what would they need or, if they absolutely couldn't complete that milestone, what could the get done at that time and then we worked the constraints from the other side.  At the end of the two days, we had a plan and while the team wasn't fully comfortable yet, we started working the plan.  We met as a team regularly worked the status and resolved the issues that come up by jointly working to remove constraints.  Within  few weeks I could see the momentum build and when we hit our first big milestone, the team upped the momentum and we delivered with a few weeks to spare.  The key thing I learned here was get a plan and start working it.  It doesn't have to be perfect but get the team moving and tasting success.  As their confidence grows, so does their performance.

The Right Talent Makes All the Difference

As leaders one of the key responsibilities we have is to get the right people in the right job.   I used to work for a guy that said that if you don't get that right, nothing else will go right.  There is a lot of truth in that yet, many leaders struggle with this.  Why?  Because it's hard.

Recruiting the right people is difficult under the best of circumstances and downright impossible during a good economy.  But trust me, don't settle.  I once had a director level opening that we had been trying to fill for over 6 months.  The executive recruiting firm, which I was bound to use by corporate agreement, could not seem to find the right people and at some point I settled for what they could bring me.  I bowed to pressure from all sides to move on and hired one of the biggest mistakes of my life. Worse still, in a big company it takes a long time to correct a hiring mistake.  I won't make that mistake ever again. 

In my recent experience, I had to bring in some fresh talent in a hurry and in addition to bringing every recruiter we had to bear on the task, I spent nights and lunch hours scouring LinkedIn and calling old friends and colleagues.  It took what seemed like an eternity, OK it was weeks, but candidates started to emerge.  Given I was looking for a change to the chemical makeup of the organization I wanted to be sure I spent quality time with each candidate and had a different group of people evaluate them than before.  We had an issue where the organization was not aiming high enough or diverse enough.  By breaking this cycle, and yes, I had to personally intervene in the hiring recommendations, we were able to bring in much better talent.  We were able to solve problems the team had struggled with for months in a matter of weeks and for the first time ever, we were able  get a product through UL certification.  Trust me getting the right people makes all the difference in the world and is worth every second of the time investment required.

What about performance issues?  I have seen the toughest, nastiest people in the world shy away from giving people who are not performing honest and actionable feedback.  No matter how much you like or dislike a person you owe them an honest, unbiased and actionable assessment of their performance.  I played small college football and consequently I was used to the game film evaluation process where every Sunday night we would spend 3 hours watching our prior game's film and were treated to a very detailed and completely unfiltered assessment of our performance.  After a loss, the honesty could be especially blunt.  When I got into the working world I expected the same and was shocked during my first review that I heard glowing praise but no clue about what I needed to develop.  That trend persisted throughout my working career with few exceptions.

Unless you inherit an organization, in which case you get a 3 month grace period, your team should have a clear understanding of where they stand with you at all times.  If an employee, is shocked to find out they were first on the layoff list than chances are you missed more than one opportunity to give them feedback.  I would say, that the vast majority of leaders I have met struggle with the concept of providing feedback, especially when it's negative.  It's human nature not to like giving bad news but unfortunately, when accepted the leadership role, you signed up for this as part of your job.

The trick to giving feedback is to start by honestly listing the things a team member has done well and the areas that need to be improve.  This step needs to be done with complete objectivity and it starts with looking at what they were asked to do and ends with a thoroughly objective evaluation of their results.  From there the feedback should fall out.  If you don't have written, measurable objectives in place, get them now.  Without this  you will be operating from memory and that leads to subjective interpretation which makes the process harder.  You need to have things that you can look at that will give you a quantifiable picture of the employees performance that identifies their strengths and weaknesses.  

In my recent experience, one of the key team members was struggling and was refusing to accept help.  I immediately put in place some objective metrics for his performance and it instantly became clear  his performance was not up to par in a number of areas.  I spoke with the employee's manager and asked, if he was getting feedback about his performance and his boss told me, that he preferred not to bother the employee with negative feedback.  Given the importance of the role and the lack of time, I chose to intervene (after giving his manager some feedback that my expectation was that he would be giving timely feedback in the future).  It was a simple conversation to have because I had objective facts, he needed to complete these tasks by these dates and the results were missed deliveries.  To be sure, the employee tried to offer every excuse imaginable and I had to stick to my guns.  The conversation ended, with me offering the employee a choice of help or consequences.  This is the next key point.  You must offer help to rectify any deficiency.  If you fail to do this, you are missing an opportunity to improve or even, save a valuable resource.  You need to lay out a plan to help the employee improve, you need to check in with them to see how its going and in the end you need to give them feedback on how they are doing.

In the case above, the employee refused the help.  This sometimes happens and in when it does, you must enforce the consequences.  Consequences have many forms, sometimes they can be mandatory training, sometimes reassignment and sometimes termination.  Whatever the consequences are, do not waiver.  Remember, the employee was offered a choice of help or consequences and they made the choice. As a leader you must follow through with what you said you were going to do.   In this case, the employee was removed from the control of the project.  Several people warned me that this individual had all the key knowledge and if we lost them, it would kill the project.  If one person really has all the key knowledge to a project, you need to address this right away.  I have heard the, "this person is special and needs to be treated different" argument many times and it has NEVER been true.  Don't buy into it.  I didn't and guess what, once we got this person out of the line of control, we were able to resolve the key issues the project had been struggling with for months in a few weeks.  We had fresh ideas and new solutions coming forward for the first time.  The organization and the product were both better off!

The above point about failing to enforce consequences is so important, that I am going to give you a second example.  When key employees fail to improve, they will more often than not enlist help from the rest of the organization to intervene on their behalf.  When this happens, listen objectively and look for new information that may shed light on the situation but if there are no new facts, explain that you appreciate their concerns and will work to address them.  I once had a very long service employee that a PhD in a very specific area and was one of our few true experts in that field.  I received a report that he was verbally abusing younger engineers.  I spoke with his manager and learned that he had a long history of doing this and that he "always apologized".   I indicated we were not going to tolerate this behavior any longer and that we would start formal disciplinary action.  The manager expressed concern that the program manager might intervene on the employees behalf.  The employee made it public knowledge that he had "special relationships" and would use them.  I told the manager that I would deal with that and during the course of disciplinary process, the program manager and the VP of the business area both tried to intervene, telling me that that customer would be calling.  I indicated that we would continue to support the program and that I would take the customer call.  The process resulted in the termination of the employee for repeated violations of our conduct policies, the customer never called and 2 months later the program manager and his business area VP came by to say that we did the right thing.  The new engineer was doing a great job and was much easier to work with.  Trust me as difficult as these situations are, once they are over I have always been glad I followed through.

I realize this has been much longer than my usual posts but it is such an important topic, I want to summarize my points.  First, make sure you are hiring the right people.  Try to get a diversity of experience but don't settle for poor quality.  Make sure you have measurable objectives and give feedback.  Feedback needs to be timely, objective and actionable.  If there are performance issues give the employee and honest choice of help or clear consequences.  If the employee fails to accept help, then make sure to follow through on the consequences, no matter how much pressure comes from the organization.

Trouble in IPO Land and what it might mean...

I just read a great piece by Mark Cuban about the broader woes of the lack luster returns for IPO's and what it means for business in general.  Essentially, he is arguing that recent failures of IPO's have soured the market, causing lower returns which in turns does a number of bad things to the broader economy.  Over looking the fact that they are failing to generate the necessary capital and returns for their investors which is bad in and of itself there are some other serious ramifications.

One issue is that competing companies can buy up technology startups at a bargain with a couple possible outcomes expanding their product portfolio or burying the technology.  The latter has the very serious side effect of stymieing the development of viable competitors, limiting our choices as consumers and forcing us to pay more for inferior products.  I will not name names but I believe that a large provider of office software products is an example of this.  They have integrated a number of disparate products and nearly 20 years later haven't improved on them much nor, have they resolved the continuing integration issues but they have consistently raised their prices.

Another issue is that venture capital funds are feeling the pressure.  The returns have slowed and investors have been reluctant to invest.  I just spoke with a friend who works for a great VC firm who was lamenting that it took several years to close their recent fun and he was exhausted.  He went on to say in the heyday it was possible to close a fund in 12 -18 months without a lot of difficulty.  Today, it takes twice as long and more than twice the effort.  Investors are far more skeptical.

There are some who say that the last really successful IPO was Google and that was nearly 10 years ago.  In the 1990's there were a continuing stream of wildly successful IPO's but despite vast improvements in technology it has been nearly a decade since we have seen have seen a home run of an IPO.  Why is that?  I would argue that the telecom and internet bubble busts at the turn of this century was part of a trend where people became more skeptical of startups and IPO's.  A lot of wealth was lost in a very short amount of time and the aura of IPO's being a ticket to sure fire wealth was lost with it.  Used to be that IPO's were seen as such a lucrative offering that only institutional and high wealth clients had a real shot of buying at the introduction price.  Not so today.

The fact that investors have become more skeptical is a good thing.  What has not changed with these times are the exuberance of the firms that underwrite these IPOs and the stock analysts that establish their valuations.  Facebook is a great case in point.  During the roadshow leading to the offering, analysts were falling all over themselves to establish valuations between $18 and $68 above the offering price.  All this despite the company had a CEO that had no experience in public markets and demonstrated some real maturity issues in the business world.  Further, Facebook had not demonstrated how to monetize their access to people and their data.  Yet, the drum beat of wild enthusiasm continued on up to 48 hours when a major advertiser announced they were cancelling their contract for advertising because they were not seeing the promised benefits.  The analysts soldered on trying to brush off the bad news but on the first day of trading Facebook finished substantially below its offering price and continued to drop for many months eventually losing about 50% of its value before turning around.  I give Facebook and Mark Zuckerberg a lot of credit for taking the wake up call and working very hard to build a solid business plan and fundamentals.

The other story is Solyndra.  They road the tidal wave of enthusiasm for solar to an IPO.  Analysts were wildly optimistic about their future.  To be sure they had sexy technology and state of the art technology but that was as far as it went.  They had lousy fundamentals.  Their product could never compete on price.  They had better conversion efficiency but a fundamentally  expensive and non-competitive technology.  Yet, analysts overlooked this fatal flaw and continued to hype the stock and billions were lost.  The failure of Solyndra and the fallout from it was seen as the beginning of demise of the investments made in solar.  I was told by a prominent VC that today it doesn't matter how promising the idea you have might be, there is no serious money going into solar.  I can personally vouch for this statement based on my recent experience trying to raise a 3rd round for a company in that space.

Investors have been burned and they have learned to be cautious.  Companies need to do a better job at building fundamentally good businesses and demonstrating good performance.  The other part of the story is that the underwriters of IPO's and the stock analysts need to do a better job evaluating the business fundamentals.  The need to look beyond the hype and sexiness of the technology and answer the basic questions.  Will people or businesses buy it?  Will they pay more than it costs to deliver it?  Can they make money and are the conditions to make money sustainable?  Is the leadership sound and trustworthy?  Until the investment community addresses these issues we are likely to see continued skepticism from investors.  Further, if we fail to restore this confidence we may lose one of the major growth engines in our economy.

Things I Learned From My Dad

Happy Father's Day to all the fathers out there and to those of you celebrating with your fathers enjoy the day.  My own father has been gone for nearly 10 years and I was thinking for a moment about him and the things he instilled in to me.  He was born in 1914 and his father died when he was 9 of tuberculosis.  In those days there were no social safety nets and his mother had to place the children in an orphanage until he was old enough to get a job and help support the family.  He went to high school and worked to help support the family and somehow he found time to box, play basketball and baseball.  His dream was attend West Point but in the height of the depression he was rejected for having an over bite so, he enlisted in the army to help support the family.  He was assigned to the horse cavalry and boxed in golden gloves matches on Saturday nights to earn an extra $5 to send home.  He went on to a 26 year army career serving in WWII and Korea retiring as Lt. Colonel.  In his career he started riding horses and ended it working with Wernher Von Braun on the original missile defense program.

This man taught me that all things are possible given hard work.  For him failure was just simply not an option.   He began life in a world where people were required to do it for themselves.  They had to find a way to support themselves and earn every dollar the hard way.  Back in the 1970's he realized that Social Security and his various pensions would not provide the financial security that he longed for so, he scraped together some money to start buying rental property and fixing up less than desirable houses to be good homes for people.  I will point out that he used this as his opportunity to instill a strong work ethic in me as, I spent most of my youth working from dawn til dusk on these houses.  I earned every dollar of spending money I got working on these houses doing every imaginable job.  Even more importantly he taught me how to do things for myself and I have an almost infallible catalog of 1970's and early 1980's rock!

His life spanned the era from horses to missiles.  He saw the most rapid evolution in technology imaginable and he had to evolve with it.  As such he was constantly learning.  When the army transitioned from a horse cavalry to a mechanized army he transitioned from taking care of horses to taking care of tanks.  When the army needed missiles he taught himself the engineering involved in missile technology.  My two most treasured possessions are a copy of an autographed picture from Von Bruan (thanks to my brother Phil) and his notebooks from the Apollo program.  By example, I learned to embrace the fundamental principles and use those as building blocks for more complex and diverse applications.  He taught me to be constantly evolving and never to shy away from a challenge but most importantly to always embrace the basics when approaching any problem.

One of my favorite stories of my dad was when he came by for lunch at my office.  I walked in to find him sitting in my chair like he owned it. I asked, "are you comfortable dad?".  He said, "yep, this office hasn't changed since I left it when I retired".  It turns out, that very office had been his 25 years prior and no, it hadn't changed!  He went on to ask why I was late and I explained that we had some crisis.  He listened and offered some very good advice on approaching the problem.  A few weeks later I was over for dinner and told him that his advice had been spot on.  He just shrugged it off and said "son, we haven't invented a new problem in 1,000 years, we just keep recycling the old ones".  Boy, was he right.  I have encountered 1,000's of problems and yes, the technology is a little different and the programs/products change but the fundamentals of problems and methods for solving them have the same roots.

He was a man of action.  He used to tell me that there are 3 kinds of people in this world, "Those who make things happen, those who watch things happen and those who wondered what happened".  He believed you should be constantly in motion.  I was required to be in school, in a sport or working on something.  My mother didn't speak to him my entire senior year in high school because he signed the release forms so I could learn to SCUBA dive.  He was OK with me taking a risk as long as I was careful and it was something that would enable me to learn and kept me active.  To this day I can't tell you who won the last Survivor, I don't much like TV but I still have a passion for being outdoors, taking risks and loving life.

He believed in honoring your commitments to the extreme. If he gave you his word that was better than any modern written contract.  He promised to pay for my college.  He asked me to apply for some student loans because at the time the interest rates were cheaper than returns he could get elsewhere.  At the end of college I had amassed an unthinkable $10,000 in student loan debt but I figured that was less than a quarter of the total cost of my education and it was only fair for me to pay it off.  My dad started to inquire about paying the loans off and I kept putting him off about the information.  One day the bills stopped coming form the student loan servicing company.  In a panic, I called them to ask if I missed a payment to which the person responded, "sir, you paid these off last month, don't you remember".  I hung up and my next call was to him asking how he got the information.  He went through all his records and found a phone number and then started making calls and making up stories to get the information he needed to pay the loans off as he had agreed.  In then end when I thanked him what I got was an apology, he said he forgot all about the loans and had intended to pay them off as soon as I graduated.

Today dad resides in Arlington National Cemetery with many other heroes.  His greatest hero was General George S. Patton Jr. and he was lucky enough to find a home right at the end of Patton Dr.  I like to think that he and Gen. Patton are off some place sharing a good glass of Kentucky Bourbon and telling war stories.   If you find yourself visiting Arlington, and every American should, stop by and say hello.  He would appreciate it.  If you are active or retired military I promise he will respond with a crisp salute and to everyone else a smile and friendly nod.  Happy Fathers Day James G. Russell.

Signs, Signs, Everywhere there are Signs of Trouble...

A prior company I worked for put a lot of effort into performance metrics.  Don't get me wrong, I am 110% for data driven decisions and management but we spent hours debating the value of one metric vs. the other. We focused most on find the elusive leading indicator metrics, these metrics allow the soothsayers to devine out what may be happening on project or design based on their values.  Leading indicators are very rare.  The economists claim to have piles of them and really, how often do their predictions come true.  Fact is, leading indicators are rare.  To be honest the only leading indicator that truly predicted our program performance with 100% accuracy were measures of program requirements closing on time and measures of requirements changes (requirements creep).  If requirements were late or changed during the program, the program very shortly was both late and over budget.

Some of you may be scratching your head at this point.  Maybe an example will help clarify the difference between leading and lagging indicators.  Many years ago I got in our old truck and about 5 minutes after starting it, the engine temperature went all the way to the right (that's the bad direction) and the idiot light began frantically signalling SOS.  There's a clear lagging indicator that the engine had probably suffered some serious damage.  Had the car had a low coolant indicator, that would have been the elusive leading indicator I wished for.

In real life, individual metrics that are leading indicators are hard to come by.  That does not mean all is lost.  As it happens, trouble usually doesn't show up on a moments notice.  The indicators are there long before things are out of control.  The key is to first understand the true key performance indicators.  These are the ones that when they go wrong, the world comes to an end.  In the worlds I came from, the technical metrics we sweated where size, weight, and power (SWAP) and the program metrics were cost and schedule.  Sometimes there were technical performance metrics that were of particular concern that we tracked as well.   In manufacturing it's usually things like cycle time, yield, cost of goods sold, and deliver vs. plan.  Whatever your business is, you probably have your key metrics well in hand.  Now, think back to a bad time in your working life and find an example of things gone wrong.  Got it?  Good.  Now ask yourself, "Did things go to hell in a hand basket over night?"  Think hard did they really?  I'm betting the honest among you answered that question No.

The truth is more often than not, problems develop over a period of time and its the trends in our Key Performance Indicators (KPI's) that become leading indicators.   The measure of time depends on the time constant of your business.  A large aerospace program may see trends developing over months whereas a high volume factory may see trends develop over a shift.  Understanding the time constant is important so you are reacting to real trends and not just noise in the data.  Watching these trends allow you to make decisions about corrective actions long before things become a disaster.  My general rule is 2 data points in the wrong direction warrants a close look at formulating a recovery plan with a trend of 3 being the absolute limit for corrective action.  Obviously, if the indicator goes out of limits than corrective action should be implemented immediately regardless of the trend.

The above may seem obvious but I can't tell you how many times I have walked into troubled projects and when we looked at the data, it was clear the problem had been in the works for some time.  Granted, trends can be sometimes hard to spot but if you understand the time constants of your business and take data at appropriate intervals, the trends can become more apparent.  Either way, the trend is your friend.

Can we Afford Manned Spaceflight?

I absolutely support a strong space program. There is still much to be learned and a lot of this learning needs to happen outside the confines of our world.  The question is does the research require people?  The answer is mostly, No.  Most missions can be performed more cost effectively using unmanned spacecraft or, in some cases in terrestrial zero G aircraft (the Vomit Comet). 

Manned spaceflight is much more expensive than unmanned.  Why?  Physics.  You have to transport the astronauts, food, water, waste disposal, and environmental controls.  Further, man rated space requires an extra level of redundancy to meet the fail-operation, fail-safe requirements.  All that adds tremendous complexity, weight and cost.  Unmanned space craft are typically in the $100's of millions and manned spacecraft are at least an order of magnitude more expensive.

Further, we as a nation have become totally risk averse.  In the 1960's during our march to the moon, the first Apollo spacecraft suffered a devastating fire during a pre-launch check that cost the lives of 3 astronauts.  While a thorough investigation was run, the program did not stand down for years.  The space shuttle experienced 2 catastrophic loses that shut the program down for years.   Space is a dangerous business.  In the unmanned world 1% to 10% of the launches fail.  There is no reason to believe unmanned flight will be a lot better yet we as a nation have somehow lost sight of that.  (Remember that when booking your Virgin Galactic flight). If we continue to rely on manned spaceflight for critical missions it has the potential to cripple critical national space assets.  The Air Force recognized this in the late 1980's and moved away from the shuttle as a launch vehicle, returning to unmanned rockets.

The international space station program runs cost us about $150B to build and about $2B a year to support but that does not include all the costs.  Further, with the retirement of the shuttle, we are buying manned launches from Russia so, we have no way to support the station.  The space station has produced little value other than keeping the NASA astronaut core and Johnson Space Center busy.  It is basically a very expensive jobs program for very few people.

The enormous cost and corresponding lack of return on investment was recognized by the Bush administration and the Shuttle program was finally terminated and Space Station was set for termination in 2016.  Unfortunately, the Obama administration has elected to extend the life of the station to at least 2020.  Given where we are as a nation, this is an unaffordable luxury.  We need to stop wasting the funding space station and we need to focus our precious dollars on unmanned exploration.  I know this will be unpopular in Houston but we times have changed.

Aerospace and Defense ... More Important than you Might Think

In times of the great sequester there is invariably a lot of pressure to reduce spending in the DoD, Intelligence and NASA programs.  While there is no doubt there are efficiencies to be gained, these areas serve as one of our largest technology development engines.  It's important that we make these cuts wisely or, it could have a dramatic effect 10 years from now in our global competitiveness.

Don't believe me?  Let me give you a few examples.  Velcro was developed for the Apollo program as a reusable, high strength fastener as were solid state computers and LED's and host of other clever innovations we take for granted today.  How about that nifty Smart phone?  Yep, courtesy of a lot of innovation by the DoD to develop efficient digital signal processing technology that is the heart of every Coder Decoder (CoDec) in every cell phone.  Pattern recognition used in targeting and intelligence gathering applications are the father of search technologies used by Google and the like.  Composite technology developed on the Apollo and fighter programs has made its way into commercial aircraft and has resulted in 30% reductions in fuel burns with a corresponding reduction in carbon emissions.  No doubt, that commercialization has resulted in vast improvements but some big segments in our economy trace back to fundamental developments in our strong aerospace and defense sector.

You say that the commercial sector can do this more efficiently, they can but not on the scale that A&D does it.  The reason for this is that they are constantly pressed to solve some very hard problems which drives innovation across a broad spectrum.  It's true up until the 1980's IBM and Bell labs did an awful lot of great basic research that contributed across the board to the economy.  Since IBM has moved more into services they have cut back on the broad scale R&D and the break up of Bell spelled the end of Bell Labs. 

Today most companies want to see any research and development pay off in 3 to 5 years max.  This short time horizon has shifted the focus of commercial R&D from basic science that results in revolutionary ideas to engineering focused in evolutionary ideas targeted at their specific business plan.  You might be tempted to say that venture companies are pouring money into revolutionary ideas.  Nope, they want to see a return 18 to 36 months in most cases.  Not that they don't fund a lot of cool ideas but as of this year about 65% of all venture capital was going into software companies focused on developing software applications.  This by it's very nature is largely engineering focused, not research into the next big thing.

Ah, but what about the universities?  They do basic research.  Yes they do but the monies from endowments, tuitions, etc. go to fund the facilities, administration and some of the faculties salary.  The research projects are funded by corporations, NASA, DoD or other agencies associated with Intelligence gathering.  Most of the true broad scale cutting edge research is funded by guess who?  Sure industry does fund some basic research to cast a broad technology net but they can lose patience if the idea doesn't pay off rather quickly.

Problem is that we have harvested a lot of the low hanging fruit and if we want to continue to make big technological gains we need to continue to invest in basic research.  For better or worse the government is funding a lot of basic research.  Make no mistake about it.  We need to make sure we are investing wisely and hold the leaders of these organizations responsible for doing things more efficiently.  I am just arguing that when making a decision to cut back on long term research which has long term pay back vs. cutting back on administrative personnel or expenses which has short term political ramifications, that we hold our leaders accountable for doing the right thing for our future, not our present.