The Uncertainty Epidemic

There’s an uncertainty epidemic going around corporate America.

The road continues but...

The road continues but…

It is becoming a downward spiral of uncertainty, almost an emotional recession. The biggest uncertainty may be how corporate leaders will respond to this.

What’s happening inside some companies is scary. The tone sounds uncomfortably like the tone during the Great Recession. My email inbox is filled with people who still have jobs but not for long, those who’ve lost jobs, or those who have jobs but no confidence in their employer or their job security. This isn’t limited to any one sector. Sure, I’ve heard from folks in oil & gas, and in mining. But I’ve also heard from people in transportation, manufacturing, technology, consumer goods and B2B services.

I could be wrong, but I’ll bet these folks are not at their creative and productive best. They’re not coming up with the ideas or delivering the results that will help pull their companies out of this malaise. Focused on short-term numbers, some senior executives are managing brilliantly but failing to lead. That failure of leadership has made them part of the problem, not the solution. Leaders are spreading the epidemic of uncertainty, not containing or solving it.

From the corporate perspective, the uncertainty itself is understandable. Business fundamentals are weak, not bad; but spending and jobs are being slashed. This has the potential to drive the fundamentals from weak to bad, in a self-fulfilling prophecy.

In some ways, the uncertainty epidemic is a rational response to macro-economic and macro-political news. There’s a lot of bad news, a lot of hard questions, and very little good news. The hardest question is “Where will demand growth come from?” No one has a good answer to that. All the conventional answers are used up. Many American consumers sat out the holiday retail season. China has stopped driving growth and creates new causes for worry every day. Europe keeps getting new challenges (like a million refugees) piled on top of a still-incomplete recovery and a tottering EU. When China slows, Africa and Australia come to a screeching halt. South America is retreating into its historic stagflation. Oil prices are a perfect embodiment of the epidemic: we seem to have gotten the costs of lower prices (regional and sectoral collapses) without the stimulus benefits.

Government tools and actions provide no solace. In the US, a presidential campaign like no other conflates personalities, partisanship and policy. It’s like watching a train wreck – except you’re on the train. No one can sit in the US, watch the news or debates, and have great faith that economic solutions will come out of the next combination of President and Congress (and certainly nothing will get done in the next year while this plays out). Fiscal policy is hardly likely to be used to stimulate growth in most of the world, given budgets, demands and deficit hawks. And monetary policy? When US rates just went up – to 0.5% – and Japan is already offering negative interest rates, there’s not much room left.

The question is, how do leaders respond to this uncertainty?

Maybe it’s time for leaders to remember the lessons of the Great Recession. That’s true both for those who lead from above, from the board or C-suite and those who lead from below, from the tattered remnants of middle management.

If you play any kind of leadership role in your company, ask yourself:

  1. Am I visible?  Don’t hide. Don’t travel the world from meeting to meeting while avoiding your own people.  Stop and talk with them.  You’d be amazed how fast word will get around.  In a world of social media, the best way to have impact is to start being social; the media part will catch on quickly.
  2. Am I being transparent? Nothing sucks morale out of an organization like people disappearing without notice.  Finding out that your colleagues left by having your email to them kicked back is not helpful or constructive. Finding out about leadership changes by seeing who has been Photoshopped out of the picture on the company intranet feels like North Korea, not like a healthy company with a good future.
  3. Am I simplifying or just cutting?  It’s easier to cut budgets or people.  It’s harder to cut processes. Cutting staff and budgets while leaving all the processes intact is self-defeating.  It leaves fewer people working harder to do things that may not need to be done.  Use this uncertain period as an opportunity to clean out that bureaucratic clutter and clean up your processes.
  4. Am I focusing on the future? Don’t deny the present uncertainties, but put time and effort into thinking about the future – and be visible when you do it.  Give your people a reason to believe there is a future.  The lesson of the Great Recession is clear: if you wait until the time is right to think about the future, it’s too late.  Your competitors will have gotten there first – and kept their best people in the process.
  5. Am I supporting my line managers? They didn’t get you into this, but you’ll need them to get you out of it.  Every time you ignore one of the lessons above, you make it harder on your managers who have to suck up the budget cuts, look people in the eye and tell them that their pay has been frozen – or that they are laid off – and still deliver results.  Give them tools not more burdens.  Help them reduce their bureaucratic load, and help them motivate their people.  Lead, don’t just manage.

None of that will change the macro-uncertainties. But it can make a real difference in whether you avoid the emotional recession, keep your best people and survive this epidemic of uncertainty.

[Opinions on this site are solely those of Scott Nadler and do not necessarily represent views of Nadler Strategy’s clients or partners. To share this post, see additional posts on Scott’s blog or subscribe please go to nadlerstrategy.com.] 

New home: Nadler Strategy LLC

Dec 2015 LogoI am pleased to announce that my full-time professional home is now Nadler Strategy LLC.

A few years ago, I viewed this possibility with fear and dread.  The idea of “going out on my own” after turning 60 seemed daunting, if not outright crazy.

A great friend helped me focus on what I feared: the risk of no corporate employer, and the loneliness of truly being alone professionally. He helped me look at the opportunities instead of the fears. By managing my projects and platforms as a portfolio, I could reduce the risk substantially.  With the chance to work more flexibly and choose my projects, I could become more closely connected with great colleagues, both old and new.

Now, this is something I’m approaching with excitement. With the turning of the year, I wrapped up a great 20-year run with ERM.  I launched this stage almost a year ago, when I began to work from multiple platforms. Much of 2015 was spent testing, learning and developing new approaches and connections. I found a number of intriguing opportunities beyond the corporate consulting model.  I found I was better connected and less alone than before.

It’s now time to move into that world full-time. I’m looking forward to offering strategy, sustainability, facilitation and coaching services through the Nadler Strategy platform.

I will continue to work from other platforms as well:

Other opportunities and collaborations are taking shape.  I’ll explore those in future blogs and as they ripen. Until then, please feel free to follow me on Twitter or Facebook or visit my web site.

Best wishes for a happy healthy and productive new year.

[Opinions on this site are solely those of Scott Nadler and do not necessarily represent views of Nadler Strategy’s clients or partners. To share this post, see additional posts on Scott’s blog or subscribe please go to nadlerstrategy.com.]

Kochleffels of the world, unite!

My Midwestern American Methodist wife loves Yiddish. From the day she discovered she was a shiksa, her two favorite words in any language may be tchotchke and zaftig.

She says she likes the onomatopoeiac nature of it: words sound like what they mean. Personally, I think she likes the gentle ruthlessness of Yiddish. Its combination of honesty, irony and the absence of malice taps into three of her favorite things.

IMG_1859We’ve just added a new Yiddish term to our family vocabulary: kochleffel. I encountered the term in a New York Times article last week. The article quoted actor Rob Reiner describing TV trail-blazer Norman Lear as “a ‘kochleffel,’ a Yiddish term meaning ‘pot stirrer.’” I immediately went to my Yiddish mentor – my mother, who was born in New York City but whose native language was Yiddish. She reported: “Koch is to cook. Leffel is a spoon. Referring to a person it is one who can stir things up.  It is a compliment. Applies to one who gets things going.”

I’m fascinated by the gentle, positive tone of kochleffel. We are so focused on conflict and upheaval these days. We have the revived interest in Schumpeter’s creative destruction. We have Clayton Christensen’s disruptive innovation. The Hegelian dialectic requires its conflict between thesis and antithesis before a new synthesis can emerge. Even non-violence and passive resistance are largely defined by the violence and aggression they defy. History seems filled with examples where seemingly some have to tear down before others can rebuild.

Kochleffel is such a different metaphor. In fact, it’s a different world view. It says, stir, not whip. Use a spoon, not a knife. Stir it up, not burn it down. It can be effective; it’s not like someone can come along and unstir the soup. Timing matters too: stirring the soup is a lot more effective when there is some heat applied.

Stir things up without breaking them down. Not a bad change model. If nothing else, a reminder to keep a good spoon in the toolbox, along with the knives, hammers, crowbars and levers.

[Scott Nadler is a Senior Partner at ERM.  To share this post, see additional posts on Scott’s blog or to subscribe please go to snadler.com. Opinions on this site are solely those of Scott Nadler and do not necessarily represent views of those quoted or cited, ERM, its partners or clients.]

I was wrong about CSR/sustainability reporting

I’ve been skeptical about the value of CSR/sustainability reporting.  I now have to admit I was wrong. Partly.

For years, I viewed reporting as a necessary evil: necessary for transparency and meeting stakeholder expectations, but evil in terms of disproportionate effort and dysfunctional impacts on strategy.

I’m not opposed to reporting.  Going back to the first corporate environmental reports in the 1980s, doing a report has been a great way to hold up a mirror for senior management, helping (or forcing) them to see how their company looks from the outside in. (Disclosure: ERM is one of the world’s leading providers of EHS/CSR/Sustainability reporting services.)

But I have been wary. In an early blog, one of my new year’s resolutions was:

4. Don’t confuse reporting with doing. Transparency is important, but results are more important.

Many readers agreed, saying “too much time spent chasing data to report has led to putting off long term strategizing,” or noting:  “I liked #4 a lot as reporting can take an inordinate amount of time!” I’ve echoed those sentiments over the years.  I’ve frequently urged clients: “Don’t let the reporting tail wag the performance dog.” I often quote a client who said: “I’m afraid my reporting is writing checks that my performance can’t cash.”

Now, though, I’m seeing companies use the reporting process as an incredible strategic tool, as a lever to raise the strategic discussion in their company.  What’s changed?

Fundamentally, the reporting process (in some companies) has changed from peer competition and branding, to a truly strategic process admittedly with branding implications.  Give credit to evolving GRI guidelines, growing analyst attention, and simply the maturing of the art form. Give some credit also to the great subversive work of the green whisperers.

In the past, the reporting process juggled several questions:

  • What do we want to talk about?
  • What good pictures, stories and data do we have that we can use?
  • Who – if anyone – is listening?
  • What do the loudest stakeholders want to hear about?

Increasingly, the process revolves around four very different questions:Reporting-Process (1)

1. What matters?

“Materiality” has finally gotten serious. It has become a true business risk process, asking “what matters to the business?” and “what matters to the stakeholders who matter to the business?”

2. What do we do about “what matters”?

This is the real strategic opportunity. You don’t have to just lunge from materiality to writing any more. This is a huge change.  This step can drive deep questions of goals, priorities, and performance.

3. What do we say about what we do?

You have to talk about “what matters,” but more to the point you have to talk about what you’re doing about the issues that emerged from question #1.

4. What do we do with what we say?

In some companies the emphasis is shifting from “the report” to “communication and reporting.” It’s a process now, not an event.  As one colleague pointed out, “We focus on who owns each chapter of the report going into the process.  We don’t talk about who owns each section coming out of the report.” That’s the emerging challenge: integrating the annual document into an on-going process of communicating with (not just to or at) stakeholders, both inside and outside the company.

Is the process perfect now? No.  Can it still take too much time and attention? Yes. Can the tail still wag the dog? Sure.

But the trend is going the right way. Some companies are using the reporting process to drive deep discussions of business risk, prioritize actions, and stimulate on-going dialog. In some cases, this is an evolution in the companies who were already leaders.  In other cases, it’s a “leapfrog” opportunity for companies who are coming late to the game: they are starting out with a focus on strategy, rather than having to unlearn or dismantle a document-driven, communications-only process.

“Necessary” is increasingly trumping “evil.” I guess I was wrong.

[Scott Nadler is a Senior Partner at ERM.  To share this post, see additional posts on Scott’s blog or subscribe please go to snadler.com. Opinions on this site are solely those of Scott Nadler and do not necessarily represent views of those quoted or cited, ERM, its partners or clients.] 

Sitting here in (strategic) limbo…

Many of us are sitting here in limbo (with all due respect to the reggae management guru Jimmy Cliff).  Senior management faces an uncertain and uncomfortable economic outlook.  It’s not a recession, but it’s not really a recovery. It’s… limbo.

In response, many companies are trying to continue growing, but caution and even hesitation are growing too.  The feeling is far from smooth.  Companies aren’t taking their foot entirely off the accelerator.  But the other foot is simultaneously starting to tap the brakes.  Inside many companies, you can feel the friction, the drag, even some jerky starts-and-stops.

So what are EHS/Sustainability leaders supposed to do in this strategic limbo?  While they are “…waiting for the tide to turn… waiting for the dice to roll”?  Charging ahead seems risky.  But sitting still – and perhaps becoming a sitting target for cost-cutters – is even riskier.

Some EHS/S leaders are taking advantage of this strategic pause to refresh their programs and teams.  As I explained in a new article in the on-line EHS Journal, they’re taking five concrete steps:

  • Look backward: catch up with the changes that came at you too quickly.
  • Look forward: think about what’s coming.
  • Look to the bottom line: think about how you help the company make money.
  • Look inside your program: in light of the past transactions, future scenarios, and bottom-line impacts, what does your program need to do?
  • Look at your people: all of these actions may give you new insight into what your group needs to do and, therefore, what you need out of your team.

A client used this 5-step approach yesterday to help define his strategic priorities. We produced a practical action plan that will help him break out of strategic limbo – and may yield important improvements in his EHS/S programs in the coming year.

For the full article, and more insight into what some companies are doing, check out “Is Your Strategy on Pause?”

[Opinions on this site are solely those of Scott Nadler and do not necessarily represent views of ERM, its partners or clients.]

Which comes first: strategy or capacity?

That’s the chicken-and-egg dilemma most strategists face sooner or later: Do you develop the strategy you need, despite lacking the capacity to implement that strategy?  Or do you develop the strategy that you can implement, even if it’s not really the strategy you need? And how do you tell your CEO that you could have a brilliant strategy but it would require massive changes to build capacity? As companies emerge from the recession and struggle to thrive in an uncertain and uneven recovery, this dilemma is becoming acute.

It would be nice if you could do this in stages: first develop the right strategy for your organization, then neatly build the capacity the strategy requires, and only then implement the strategy.  That’s how the books say to do it.  And if time and resources allow, that’s certainly the best way to go.

In reality, there are a lot of reasons why you may not have that luxury:

  • You may have no resources.  The capacity issues may be in your own organization: Do you have the right people for the strategy you may need?  Perhaps not, but you have the people you have. In corporate EHS groups, that means they’re probably technical people, probably strong in compliance with US regulatory requirements. Your strategic needs, though, may be international, supply chain upstream or product issues downstream. Your team may have been great for the last decade’s needs, but for the next decade?  Not so much.  But budgets are tight.  You may not be able to add staff. Even if you make the difficult decision to lay off your own people to make room for new hires, you may not be able to keep the headcount.
  • You may have no leverage.  Some things are just outside your control.   The capacity issues may be above you: Does your company have the right senior team for the strategy you need?  Do you have a great financial control/execution team when you need a team of inspirational leaders?  Do you have the generals to fight the last war?  If so, you’re not likely to have much chance to change that.
  • You may have no time.  Turmoil (like recessions and recoveries), transitions, transactions or even transgressions may all require a change in strategy NOW.  Your only choice is to work with what you have.

As the saying goes, sometimes you have to go to war with the army you have, not the army you want.  (We won’t explore the source of that quote right now.) So what do you do?

  • Go with the best achievable strategy considering the capacity you have.  This will be frustrating but at times it may be necessary.  A good strategy you can implement is better than a perfect one on the shelf.
  • Use the strategy development process to educate and expand the capacity of the team you have.  You can’t coach height but can teach people to jump higher and to find ladders.  Interestingly, this approach sometimes can work both looking upward in the organization or downward.
  • Use the strategy implementation process to change out roles if not people.  If people buy into the strategy, they may be willing to buy into a redistribution of roles and responsibilities to implement that strategy – a redistribution that may put people in the roles they’re best suited to play.

It’s also useful to keep a little bit of skepticism about capacity for yourself.  If you and your senior management disagree about your assessment of strategy and capacity, don’t assume that you’re right and senior management is wrong. CEOs are usually pretty smart and didn’t get where they are without a strategy of their own – as well as shrewd assessments of capacity.  If the CEO disagrees with your strategic trade-off, don’t assume it’s because the CEO doesn’t have the capacity to understand or implement your strategy.  The CEO may understand exactly what you mean and be perfectly able to carry it out, but just choose not to.  Making those choices about what NOT to do is part of what got CEOs where they are.

Of course, CEOs often bring some caution to their role that can frustrate strategists.  As one CEO told me when I proposed a growth strategy that was more aggressive than felt comfortable to him: “They usually only let you run one of these things once in your life, and even that’s not guaranteed.  If you get that chance, you really don’t want to screw it up.”

There is no perfect answer to the strategy-and-capacity question.  But asking the question is better than charging ahead blindly.

Aspirational Spring

I’ve changed the banner photo on my web site to an early spring picture, perhaps prematurely.

It’s a sunny 60-degree day in Chicago – in March.  Is that a sign that winter is over?  Is the worst behind us? Can we assume that growth and better times are close at hand?  Or am I jinxing myself by thinking about spring?

Those are the same questions we’re all facing with the economy now.  We’ve had some positive signs.  There are some early indications of growth.  We’d like to think that the worst is behind us.

What we think about the physical climate doesn’t actually change the weather, of course.  That’s not so clear on the economic side.  What we think about the financial climate influences our personal and corporate decisions on spending, saving and investing.  And that all has a very direct impact on what happens with the economy.

We can’t just set this aside in the business world.  There, we have no “do nothing” option.  We can’t just shrug and wait to see what the next few months bring.  We have to make decisions about programs and budgets and products and services.  Either we take some chances and invest for growth (and help make it happen), or sit on the sidelines and condemn ourselves to another round of cost cutting and prayer.

I vote for taking some risks and going for more growth.  With caution, of course.  After all, I’m not putting my Chicago winter gloves and boots in the back of the closet yet either.

[Opinions on this site are solely those of Scott Nadler and do not necessarily represent views of ERM, its partners or clients.]

Turning strategy into action: Getting the experience part right

Turning strategy into action is an overwhelmingly logical process.  Except for the 75% of it that’s emotional.

Over the last two weeks, I’ve been involved in three separate conversations around the “strategy to action” process.  (Two were with clients, one inside ERM.) In each case, a big group session was planned to kick off the next step of the process. In each case, the process sponsors wrestled with two big challenges:

  • Aiming for too many outcomes.  We get greedy.  We want to get everything accomplished at once.  As we get more demands on travel budgets and schedules, face-to-face time becomes scarcer and more valuable. The natural reaction is to load everything into the agenda and get everything done in one meeting.  That produces an over-crowded, over-ambitious agenda that spins participants from topic to topic with more speed than substance. Which, in turn, makes the face time more frustrating and less productive.
  • Forgetting about the experience as we focus on the outcomes.  Outcomes are  important, but the participants are people, not cogs or chips.  Bad human experience seldom produces good outcomes.  Bad experience is even less likely to create learning, commitment, effective co-creation or an on-going community.

These aren’t new thoughts.  We’ve all had them, usually while sitting through a painful meeting someone else planned.  Think about the last one of these you sat through. The planner’s desired outcome was probably a laundry list of objectives.  Your desired outcomes were probably simpler: don’t get embarrassed, don’t pick up new assignments, and maybe get some other useful work done while no one’s looking.

These aren’t original thoughts.  Others have spelled them out before me.  Most notably, late last year my friend and strategy colleague Francis Gouillart wrote an eloquent plea for “Human experience before process, please” that’s well worth reading.

The challenge is to remember to scale down our objectives and scale up our attention to the human experience when we are the ones planning the process:

  • Do we know what the one most important outcome is?  What do we really need participants to know, understand, believe or do differently as a result of the process?  (If we don’t know that, why are we asking people to participate?)
  • Do we respect and value the experience participants bring with them to a session? Do we recognize their experience and give participants a chance to apply it to our process?
  • Does the process create the right experience?  Do we give people a chance to share insights and influence the outcome, or do we make them a passive audience?
  • Is the experience being provided at the right stage of the process?  Are we bringing people in to swallow a predetermined, precooked outcome?  Or are we giving them a chance to help choose the menu and cook the meal?

Maybe there’s a golden rule of process: Design the experience for others as you would have others design the experience for you.

[Opinions on this site are solely my own and do not necessarily represent the views of ERM, its partners or clients.]