Tag: wal-mart

Categories
BLG Leadership Insights

Leadership & Moral Purpose: Siegmund Warburg

The most successful organizations, over time, are those in which people act consistently and decisively while innovating and building high-quality relationships. The task of leadership is to stimulate these kinds of actions, reliably and continually.

Pragmatic leaders deploy in some iteration a motivational tool that moves a team or an organization forward. This tool can, in cases, be refereed to as a  “moral purpose” according to Nikos Mourkogiannis in his article, The Realist’s Guide to Moral Purpose.

Mourkogiannas defines moral purpose as a value “that, when articulated, appeals to the innate sense held by some individuals of what are right and what is worthwhile.” For example, by all accounts, Sam Walton was an incredibly shrewd businessman, but at Wal-Mart, making money was secondary to another moral purpose: selling high quality products at the lowest possible price. He made his team feel that their work was worthwhile, by emphasizing the social benefits of families having more money to save and spend.

Moral purpose also allowed Siegmund Warburg to build his financial firm, S.G Warburg, into one of the top merchant banks in Europe after World War II. When Warburg molded his firm he tried his best to teach his employees with five pillars of good business: support pioneering advances, possess moral standing, earn a reputation for efficiency and high quality brain work, and make connections with personnel and organizations.

His emphasis on service and loyalty over pure profit spurred him to pioneer open-plan offices and create a corporate democracy. S.G. Warburg & Co. would take on a client only if every senior executive agreed. This moral purpose helped inspire great loyalty at S.G. Warburg. So much so that Warburg bankers worked longer hours than their rivals (at Warburg & Co. the work day began promptly at 8am…the crack of dawn for investment bankers in those days).

Mr. Warburg’s referred to his manner of business as “haute banque.” He strove for heroism directly inspired by the writings of Friedrich Nietzsche and possessed the moral purpose of creating an aristocracy of elite financiers who would bring, as he put it, “the diverse potentialities of the human being to their highest possible level.” The drive to provide efficiency and stability gave him and his firm capabilities that their competitors could not even begin to emulate

Warburg’s bank thrived by sustaining its morals and reputation. In today’s age when Goldman Sachs and their ilk pursue profit at the risk of damaging client relationships and at a time when bankers and legislators contemplate the future of “high finance,” they would be well advised to follow Warburg’s five principles, and remember it’s not always about the money.

Categories
BLG Leadership Insights

Data Delusions

We’re all over-loaded with information–even if it’s synthesized to one degree or another. The idea that analysis of data leads to optimal strategic decisions keeps the organizational appetite for new data sources strong. Managers are required to find new data, new methods of capturing it, and make decisions that are steeped in its ultimate analysis. When someone wants to challenge your position on a topic or a decision you may find them asking, “Well what does the data tell us?” It sounds rational, but is it applicable? Can we always back up organizational decisions with numbers, data, and forecasting?

If your organization is anything like mine, they will report out monthly or bi-weekly figures of some kind. New York City has the Mayor’s Management Report, which combines indicators (critical/non-critical) from every division at every City agency. I thought my agency’s section was dense, until I attempted to digest the entire City snapshot for a two-week reporting period. For a taste, visit NYCStat, the City’s portal for performance-related data.

If that perspective is too global for you, take a look at the unread magazines piling up on your windowsill or reading table, or scroll back through all of your unread (partially-read) e-mails and then rate your own data management capabilities.

My examples pale in comparison to information juggernauts like Google and Wal-Mart, but everyone is getting in the game. As the Economist reports, “Companies are collecting more data than ever before. In the past they were kept in different systems that were unable to talk to each other, such as finance, human resources or customer management. Now the systems are being linked, and companies are using data-mining techniques to get a complete picture of their operations—‘a single version of the truth’, as the industry likes to call it. That allows firms to operate more efficiently, pick out trends and improve their forecasting.”

In an Economist special report, aptly titled The Data Deluge, we learn some astounding figures, “According to one estimate, mankind created 150 exabytes (billion gigabytes) of data in 2005. This year, it will create 1,200 exabytes.” What this will mean for managers the Economist says, “Merely keeping up with this flood, and storing the bits that might be useful, is difficult enough. Analyzing it, to spot patterns and extract useful information, is harder still.”

It’s no surprise that the Economist and others are arguing that “business decisions will increasingly be made, or at least corroborated, on the basis of computer algorithms rather than individual hunches. This creates a need for managers who are more comfortable with data, but statistics courses in business schools are not popular.” Could this lead the way to the new scientific management, in which crunched and processed information dictates the decisions that managers make?

What effect will this have on the debates about decision-making and managers’ ability to optimize? Can more data help us move closer to optimal choices? Maybe not, but it can probably help push along convincing studies that demonstrate that fact.

Will the advantages of aggregation help us see more clearly by highlighting smaller distinctions across larger data sets or will reality elude us hidden within a forest of statistics? It has always been the case that the recognition of importance in data (i.e. information) has offered organizations the competitive advantage. The ability to turn data dumps into useful information will give businesses and individuals the competitive advantage as they seek to further their agendas. There seems to be little room left for the non-believer in the unfaultable virtues of figures.

Additionally, what effect will the new manipulations of data have on business models and business structures? Retail giants like Wal-Mart are revolutionizing their relationship with suppliers and customers. As the Economist reports, “The [data decoding] technology enabled Wal-Mart to change the business model of retailing. In some cases it leaves stock management in the hands of its suppliers and does not take ownership of the products until the moment they are sold. This allows it to shed inventory risk and reduce its costs. In essence, the shelves in its shops are a highly efficiently managed depot.”

Which industries will next utilize new technologies like cloud-computing or open-source software to change the way HR supports and interacts with other divisions? Data mining and forecasting doesn’t stop at product analysis. According to the Economist, it can go much further,“As more corporate functions, such as human resources or sales, are managed over a network, companies can see patterns across the whole of the business and share their information more easily.”

Managers will be receiving more and more information and will be asked to make strategic decisions that are demonstrably based in the analysis of the data. Organizational management theories need to help and start getting involved in bigger ways.

And yet what is still the biggest hurdle for organizations? How can we prevent the next financial crisis? How can we foil tomorrow’s terrorist plot? How can we make organizational management more lean and effective?

Better data.

Photo Credit:

http://www.flickr.com/photos/untitledprojects/ / CC BY-NC-SA 2.0
Categories
BLG Leadership Insights Leadership On the Edge

Leadership Link Round-Up: June 1-5

Categories
BLG Leadership Insights

Small Town, Small Businesses, and Being Proactive

Small businesses on Main Street are always challenged by the economy.  Small businesses are a bit quieter then they were a few years ago and now the challenge for small-town business leaders is to be creatively proactive. However, our capacity to be proactive, as shown in this story, is all too often restricted by the business we’re in. While sustaining a business in a small town is part of an idealized American dream, increasingly it is becoming a pursuit demanding extraordinary proactive efforts.

***

Saugerties NY, 90 miles from NYC, is about as pleasant as breakfast in bed. The quaint downtown area houses the standard variety of coffee, bike, and book shops and hides them safely from the Wal-Marts and K-Marts of suburban America.

Years ago downtown USA was forced to duke it out with malls and ‘mega-shopping centers’. Sadly, downtown areas lost and were relegated to selling niche products and services to an increasingly price-conscience consumer.

The small downtown businesses that survived the explosion of Wal-Marts and their ilk have enjoyed a steady stream of business for the past 6 years due to a booming economy. Now, the good times have checked out and left small-town business owners in a pinch that’s forcing them to get creative or get out.

John has been the part-owner of English Gardens, a beautiful antique and custom picture framing store in downtown Saugerties NY, for over 15 years. He reports, “For the past 5 to 10 years every store was full. ‘For Rent’ signs were in windows for only 5 minutes. Now it’s months.” John, like many small business owners in Saugerties, must survive while America’s economy shakes.

Ads taken out in the local downtown business brochure, published by the Saugerties’ Business Association, and the local paper have proved to be of little use for John because “locals aren’t coming in….Most of the [phone] numbers I get are from 518 or 212 [Manhattan] area codes.”

Weekenders and seasonal residents drive John’s framing business while locals will oftentimes stumble into his store and report, ” ‘We live just up the street and we’ve never been here or even seen this place!'”

The lack of local support and the increase in thrifty tourists and part-time residents has led small business owners in Saugerties to lament, like John, “It’s the slowest it’s ever been.”

John says it’s increasingly hard to find hope, citing the fact that his business only helps pay for 20 percent of his living expenses: “I’m not the only store owner down here who has to rely on other sources of income…At one point it was possible…not now.”

However, John can do little to advertise and sell his goods since he is operating a niche business in a small town. His unique location forces him to tend shop for an increasingly slower stream of customers and he can’t find the time or the resources to advertise out-of-town.

John hopes that he can ride out the recession by cutting business costs and operating as efficiently as possible. John and his business partner have the determination and business savvy to do just that and won’t be putting up an “out of business” sign up anytime soon.

***

Across the street from English Gardens sits one of Saugerties’ newer downtown businesses, Michael Nelson’s Photography Gallery and Studio. The studio sells museum-quality photographs while hosting and exhibiting various artists and art shows. Michael says that since the economy is so bleak his business “would never be able to rely on the local economy…It would be too hard.”

Michael, a successful freelance photographer for over 35 years, quickly realized that his business model needed to be diversified quickly in order to survive in Saugerties’ downtown area. Michael says that he tries “to get my fingers into as many pies as possible” so he can not only attract revenue but develop skills as the economy shrinks.

His business philosophy is proving advantageous. Photographers in NYC and other cities are unfortunately hemmed into selling a niche service and can’t afford to develop new skills since they have to fight constantly for evaporating business. Michael doesn’t envy his counterparts in bigger cities, “They are trapped. Here [in Saugerties] you are more desperate for work,” which helps him to think outside of the box and drum up unique business ideas.

The recent economic downturn hasn’t scared Michael–instead it has given him time to expand his artistic offerings to include video interviewing, editing, photography services, selling prints, and heading up photography workshops in the community. Michael has even created his own website, www.tellyourstory.tv, which collects and showcases interviews from various full-time artists. Michael’s new services are offered to clients all across New York and throughout the country–he is not limiting his potential client base.

Michael feels that “when we’re too busy, we can’t plan; we can’t develop quickly.” He goes on to note that trying times are about “starting new projects” and not fretting.

However, Michael isn’t exactly all blue skies, “I’m experienced, not an optimist.” The point here is that although his business is going through an economic slump, his experience has taught him that “recessions aren’t forever.” The best thing to do in during a downturn is to put your head down and develop new ideas, skills, and identify new streams of business.

***

The nature of Michael’s work and his area of expertise gives him many creative avenues to explore. However, for small business owners focused on specialized retail sales, like English Gardens, it’s harder to effect change on an already tight budget.

Looking at Michael’s photo studio and John’s antique store we’re confronted with two different business models that are forced to make challenging calls in the face of a shrinking economy. Michael has chosen to proactively seek out new business by adding to his skill set whereas John is forced to hunker down and think of creative ways to save and sell. However, both owners have the instinctive confidence to support their store and services.

The businesses we’ve looked at are struggling to stay open but their confidence keeps them afloat, hopeful, and in the black. By taking confidence in your products, services, and survival skills, it is possible to become a successful, competent, business owner and leader.

As the economy shrinks and grows, small business owners and leaders can’t do anything to control the external situation. Yet, smart business owners and leaders won’t let economic dips and dramatic rises let them lose focus on what’s most important: the products and services being offered. Such sharp vision will supply business owners with confidence that isn’t be based on the mood of the Federal Reserve Chairman.