In this case, an equipment manufacturing company had been family owned and operated for many years and had a typical, family owned, collegial culture. The president knew most people on a first name basis. There was a welcoming, team atmosphere wherever they were located. Regional offices were free to try new marketing, sales and service approaches. The results, good and bad, were shared across the company. Under the family’s leadership, there had been consistent growth in their market share, revenue, and bottom line. And then the family sold the business.
Thanks to D.W. for the details on this case.
The business was taken over by an investment company that was looking to dramatically increase returns. They replaced the senior management with their own people, put new budgets and targets in place, and then waited for the expected increase in profits to arrive. After positive returns through the honeymoon period, about nine months long, sales and revenues started to decline in most of its markets.
After another nine months of declining results, with pressure from the board mounting, the CEO acted. Already three months into the fiscal year, performance against plan was abysmal. The CEO scheduled a two-day offsite meeting with his executive team and regional managers in an exotic, far off location. The first day was devoted to a state of the nation address from the CEO, updates from each of the vice presidents and a keynote speech on some obscure and mostly irrelevant topic. The morning of the second day was devoted to an update from each of the regional managers. The afternoon was to be a forward looking session to develop an action plan to reverse the company’s declining fortunes and garner commitment to make it happen.
The goal of the offsite meeting was to develop a plan to reverse the company’s falling fortunes, to achieve the year’s objectives with only nine months to go, and obtain commitment from the regional managers to their local targets.
The Regional Manager’s Update
On the morning of the second day, the CEO opened the session with a summary of his state of the nation speech from the previous day. The agenda for the session included an update from each of the nine regional managers covering how they were doing against plan, what they were going to do to make plan over the rest of the year or, if they were meeting or exceeding plan, and to share the secrets of their success.
The CEO pointed to Jack, the first regional manager on this left.
“Well,” said Jack, “We haven’t had a very good first quarter. We’ve missed our revenue targets, and we’ve lost some customers, so our market share numbers are down as well. Things are very tight right now. But, we have confronted all our distributors and told them to get any orders they see for the rest of the year and submit them now. We’ve offered a commission incentive for any orders they submit this quarter.”
The CEO was pumped. “Great work Jack. We’re looking for a solid turnaround in your region next quarter”. He then looked to Thomas, the regional manager sitting beside Jack, to give an update. Thomas essentially repeated Jack’s story - sales were down, lost some customers, times were tight. But Thomas hadn’t put pressure on the distributors to book future orders, and he hadn’t sweetened commissions as an inducement. The CEO wasn’t happy and he suggested Thomas give serious consideration to Jack’s approach.
The CEO then looked to the next regional manager at the table, the one who handled the Canadian region. We’ll call him the Lion because of his large curly mane, his pearly white teeth and the fact he “serviced his pride” superbly, figuratively speaking (he was one of the two managers who had actually made his budget and looked to be in good shape). The CEO asked him to share the secrets of his success with the rest of the team.
The Lion paused, looked around the room, and said “It’s all about the orgasm.” He paused again.
The CEO was annoyed. “What the hell do you mean by that?”
First, some background on the Lion. He had been in the business for 20 years and had been the manager of the Canadian region for twelve years. During that time he had grown the business from less than 30% of the market to almost 60%. He had a great rapport with his distributors and their clients and played a leading role in the industry association. His region was the company’s most successful on all measures.
His first encounter with the company’s new management team came when his new boss emailed him his new targets for the year. No discussion, no negotiation, no warning. Just “here are your new numbers”. The Lion looked at the new targets and realized that he would have to achieve close to 90% market share to make them. That wasn’t going to happen. So he called his new boss, a mid-30’s MBA with absolutely no experience, knowledge, or interest in the industry and explained the reality of the situation. His new boss wouldn’t budge. It seems the number crunchers had figured out what kind of revenues the company needed and what kind of expenses they could afford to achieve their return on equity targets. Those totals were divvied up among the VP’s who apportioned them across their regions. The Lion’s VP insisted he had no choice. Those were the numbers.
So the Lion called the CEO, introduced himself and explained the situation. After some deliberation, the CEO agreed with the Lion and accepted the numbers the Lion proposed. Needless to say, the Lion’s new boss was not happy and there was some consternation among the number crunchers that their wonderful formula had been messed with, by their fearless leader no less.
So, back to the meeting. The Lion responded to the CEO’s challenge, repeating his message “It’s all about the orgasm. It works this way. When you have two people working together, they both need to get some pleasure, some enjoyment out of the relationship. If one of the participants walks away feeling great and the other feels they got screwed, the relationship isn’t going to work for very long. When I work with my staff, my distributors and their clients, I want them to feel orgasmic about our relationship. I want them to feel good, to be happy, to trust me as I trust them, to smile when they hear my name.”
You can imagine the reaction. There was a stunned silence in the room. Then the CEO commented that he wasn’t sure how that comment was going to be very helpful to the other managers and asked the next manager in line for his report. They finally got to the other regional manager who was meeting his targets and he echoed the message the Lion had delivered, without the colourful language of course.
The afternoon session to develop an action plan to achieve the year’s targets was orchestrated by the CEO. While the Lion and the other successful regional manager tried to offer concrete suggestions, the CEO was focused on the approach Jack was taking, to pressure the distributors to book future orders and sweeten the commissions. The meeting continued to its planned conclusion and the participants departed for their home regions to pursue the limited action plans that came out of the meeting.
As you might have expected, the company didn’t make its targets that year. The CEO was let go along with two of the new VP’s. The plan they adopted at the meeting, to pressure distributors to book future orders, simply cannibalized order activity from future quarters. Three of the regional managers left the company to join competitors, including the Lion. He had been pursued by one of his competitors for a couple of years and found he could no longer say no to their overtures. They shared the same values, they had a competitive product line that he was comfortable endorsing, and they were after his distributors and their clients. In four years, the Lion took his new company’s market share from 15% to almost 40%. Of course, most of that growth came at the expense of his old employer.
How a Great Leader Could Have Helped
The CEO didn’t have to wait until the off-site meeting to find out what was wrong and figure out how to fix the problem. He had two successful regional managers who had great track records and knew what they were doing and why. He could have leveraged their expertise to help the other regional managers turn their operations around. It may not have helped him achieve the current year’s targets, but it would have built a foundation for future success.
Instead, he chose the bully approach – bully his VP’s to beat up his regional managers to beat up their distributors to bully their clients. It was all about his numbers. It should have been about the distributers’ businesses and their clients’ businesses. The regional managers weren’t feeling the love, nor were their distributors.
This case reminds me of a program I watched recently on TV about being happy. It featured Shawn Anchor, founder and CEO of GoodThinkInc and author of the Happiness Advantage. Apparently happiness is a state of mind that we can choose, or not. Some businesses have actually introduced happiness programs and have experienced significant improvements in productivity, sales, customer and staff satisfaction. It seems all one needs to do to improve one’s happiness is, once a day, thank or praise someone, express gratitude for something personal, and meditate for two minutes. Now that would have been so much easier! The CEO and his VP’s might even have retained their jobs.
So, if you find yourself in a similar situation, as either the bully-er or bully-ee, put these points on your checklist of things to do in future endeavors so you too can be a Great Leader. And remember, use Project Pre-Check’s three building blocks covering stakeholder, the engagement and collaboration process, and decision area best practices right up front so you don’t overlook these key success factors.
Finally, if you have a project experience, either good or bad, past or present, that you’d like to have examined through the Project Pre-Check lens and published in this blog, don’t be shy! Send me the details and we’ll chat. I’ll write it up and, when you’re happy with the results, Project Times will post it so others can learn from your insights. Thanks
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