"Leader show your worth!" by Siegfried W Andersen 2009

1. IT IS TIME FOR CHANGE
DEMONSTRATE YOUR WORTH AS A BUSINESS LEADER
It is an unfortunate truth that only the fittest will survive. This applies to both corporations and
managers. Weak managers hire too many people, which destroy jobs because the productivity
decreases. Good managers are in high demand, because they increase productivity. Therefore,
these good managers are in short supply. Excellent managers are rare exceptions; they improve
productivity even further. Excellent managers believe in Yes-Win scenario’s only.
I would like to bring a couple of things to the table of the credit crunch. Change the focus from
delusions, manias and panic to solutions, facts and the “New Norm” – which, by the way, is
already there. Changing the focus can be done quickly. It demands that executives establish new
targets and KPI’s, look ahead with foresight, take initiatives and stay reliable. The job of the
leader is to align to the “New Norm”, find new fields where to sow the seeds of opportunities and
allow their employees to harvest.
To create hope for prosperity and wealth is a job for bold and honest business leaders.
Organizations deliver great results when executives with good manners can stimulate employee
energy, confidence in their capabilities and expectations of increased outcomes.
There is a big gap between the rhetoric of change and the efforts to get it done. So, pull up your
sleeves, work right from the start, do what has to be done, and do it with optimism. Work for
simplicity and go for short-term successes. Do not hesitate, think bigger and better, act fast and
with prudence, modesty and tenacity. All this will induce prosperity and hope, and put your
company back on an improved profit scheme. The sooner you start, the sooner you will arrive.
First: Take a firm look at your managing concept or master plan for change. That master plan
must define all the fundamental elements to get your organization to work differently. For
example: what are your fundamental metrics for?
1. Growing the business - M&A or organic growth? At what market to book value?
2. Performance - is that based on Return on Capital or Return on Talent?
3. Directing leaders and managers - how will this influence the KPI’s?
The fundamentals, the related master plan and KPI’s must be in place before a series of initiatives
can be launched in an effort to achieve new business goals. Just for a moment, let us put our
focus on something that does not cost anything: effort, velocity, trust and confidence to increase

2. profit per employee. Therefore, focus on individuals - individuals as employees, individuals as
customers, individuals as suppliers and individuals as shareholders.
Employees. Profit per employee must increase. How is this accomplished? Begin by placing a
ban on all No-Win scenarios, EBIT, one year budgets and strategic planning. Instead make plans
from one week to the next eight weeks ahead. Review every week for progress made and align
employees and tasks to reality and facts. Increase your speed and energy by demanding more
results from your managers, not to be delivered tomorrow or next week – but today! Let this be
your new vision for performance: “Exceed last weeks performance every week for the next 250
weeks”.
Many executives appear to believe in creative monopoly. They think there are only a few
executives at the top of the organization who are the truly clever and creative ones, where most
other employees are not. Allow your staff to innovate the way they perform. Mr. Konosuke
Matsushita, from Matsushita Group and Mr. Shigeo Shingo from Toyota has shown us the
pathway to really push innovation and mind power inside an organization aiming at a progressive
prosperity.
Train the common worker in business innovation and watch their ability to mobilize their
intelligence for creative and profitable change. Let them be activists shaking up the organization.
Ask for a list containing 25 PIP’s - Performance Improvement Points. Allocate money and give
them their own time to innovate working processes. Observe with amazement how much
improvement you will receive in return. No company can afford the waste of a single employee’s
imagination and intellectual power. Profit is a function of competencies rather than position. But
the paradox is that a downturn is needed to make the collective shift and move forward.
Customers. Peter F Drucker wrote in his book titled Challenges for the 21st Century; “One cannot
manage change. One can only be ahead of it”. In a downturn, the foundation for making business
changes is inevitably fast and unpredictable. Irrespective of the dynamic of the change, business
has to go on. Leaders look for new ways of doing business and changing the game of the past. In
this process there is an overwhelming need for work to be done. Align to the “New Norm”
outside the company and create links to the inside organization.
This emphasizes the important need for business executives to manage the business on the inside
and lead the business on the outside. Leading the business on the outside means changing the
game of your business by focusing on profitable innovations that the customer will appreciate.
Permit customers to work inside your organization together with your employees. Encourage
employees to talk with the customers, recognize what it is the customer wants your staff to
understand about their own business and help them to achieve their goals.
Coach your employees to listen and understand the needs of your customers. Every employee
must understand that the company is required to win the customers’ value equation everyday. The
few critical moments of truth are when the customers choose and utilize your product or service.
Equally important is that the delivered product or service must be an enhanced and memorable
experience. How many know this and actually act on this knowledge in today’s business world?
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3. The customer is the Boss. This is a known fact, but only few act on that knowledge in this sudden
downturn. First because customers disappear and secondly, because executives reach their
frustration level and start losing hope, talking about No-Win scenarios, saving costs and laying
employees off. The natural reaction of an employee will then be to turn on their defensive mode,
which in turn blurs their judgement. They start dreaming about a reality that does not exist,
instead of adapting to the change and aligning the company to the “New Norm” reality.
Suppliers. Repair the broken procurement process. Too many employees experience that the
relationship to suppliers is merely transactional and nothing beyond that. This process can easily
be improved. Make friends with your suppliers. They are not your enemies, but win-win
partners. Teach your suppliers about your business and how they can best service your company.
You will be surprised to see how much can be improved at no cost to the company.
For a company to deliver as promised depends not only on your own staff, but also on your
suppliers. Share your business plans with your suppliers; make plans for how to improve the
relationship and productivity of both the suppliers and your business. Build up joint values that
are useful when negotiating price, terms and conditions. Be sincere and honest as both parties
need to make a profitable relationship. This process is effective as it puts your customers both in
front and centre and your suppliers deliver better value.
The proof of the value of good partnerships with your suppliers lies in the consistently strong
business and financial results for all involved – customers, suppliers and your company.
Shareholders. These are individuals who have invested more money in you, than your own father
was ever willing to do. Remember that the shareholders respect you; they trust you and have
confidence in you. Treat them with dignity and respect. Promise them organic growth and a
strong brand name. Assure them a market to book value ratio of 4.0 in 250 weeks from now – and
deliver. This will only cost in effort, not in cash. Tell this to the analysts and they will be curious
and inspired by your company. Good relationships with analysts are critical and you just may
need them on your side one day.
Try to understand the needs and wants of your shareholders, investors and the analysts, and
deliver just that. Explain the executive’s long-term thinking and the investment plans as clear and
simple as possible. This group of people are often very interested in your company, how the
company is doing and future expectations of your company. A few of them might even be your
own employees or suppliers.
Second: Simplicity, entrepreneurship and noble leadership. In the ‘good old days’, Mr.
Johannes Poulsen, former CEO of Vestas, Denmark had a saying: “When 80 men can make one
windmill in four weeks, how long does it then take to produce two windmills?” Take a guess.
“Four weeks. They won’t get one day more.” As a result, they must do their work at twice the
speed! Got it!
Recall the moments of vigilance from the past. The time where there was less talk and more
accomplishments. Action and simplicity was your truism, supported by speed, energy, fun and
self-confidence, all kept on track by a Yes-Win scenario: “We will win - for our Customers.”
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4. Abandon every ounce of unnecessary burden, rules and bureaucracy, so your company can run
for its life during the downturn. In an effort to demonstrate this, move your own office to a
smaller area – right at the “frontline” and convert you old office to a “command center” for
energetic sales people. Sell your company car, and buy a small used car. This will show your
organization that the time for a change is now and things are happening.
When you lead your company through crisis and uncertainty, you ask for change when the way is
paved with rough examples of the nature of high risk leadership. The characteristics of leadership
by example, team building and the spirit needed to overcome great obstacles and sustain a team
under stress, are well defined. Before you can inspire people to change, your own thoughts and
actions must change. Before you can ask for the ultimate effort from your staff, your efforts must
be exhausted. In order to convince your employees, you yourself must believe. When the tasks
look overwhelmingly impossible, you yourself must be invincible.
Third: Investments in training and technology. It should be noted that business investments are
the first to recover from any recession. Executives are aiming at productivity gains. That will
happen again, so be prepared when investments take off.
The old assumption that investments in training would transform poor management practice into
good management practice and thus improve productivity has proved correct according to a new
scientific study. Measure Return On Capital Employed – ROCE. Weak management practices
result in poor financial performance; good management practices outperform significantly the
financial performance for a sector; and excellent management practices outperforms competition
by a factor two or more. Hence, there is a positive correlation between a good management
practice and a good financial performance.
The study also shows that competitive intensity within a sector increases when productivity
increases. This means that there is also a positive correlation between increased productivity and
competitive intensiveness. Thus, excellent management practices increase the probability that a
company will end up a winner.
Weak, good or excellent management practices are defined by the correct use of three simple, but
in this context, very important management tools:
1. Lean & Six Sigma - minimize waste and create flawless operations in the entire supply
chain including administration.
2. Talent Management - attract and retain high-caliber employees and make the so called
common employee into a talented employee.
3. Performance Management - reward employees who meet or exceed set goals, and who
improve the attitude and behavior across the organization.
There is more to transform good managers into excellent managers, and good ROCE into
excellent ROCE:
4. Leading leaders and managers which ensure that a specific guiding human philosophy is
followed throughout the organization.
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5. 5. Leading the Business Culture being the core values that support the entire business
process and stabilize the integrity of the company.
6. Leading Technology which ensures that technology is used where it makes sense, both as
product technology, production technology and as information technology.
7. Leading Growth which ensures that all emphasis for growth is clearly understood and
optimized.
8. Leading Brands to ensure that any intangible asset is created, protected and utilized to its
maximum.
The fastest way to gain productivity and intensify competitiveness is to make an investment in
management training, and often it is far less expensive than investing in machinery and
technology. Alone, the implementation of a good management practice can be done within a
month. Implementing new systems and new technology are measured in years. The
implementation of a new solid management practice can increase both revenue and profit with
more than 20 percent within a year.
New technology can change the game of an entire industry globally, and make a quantum leap in
productivity and thereby competitiveness. The next tech revolution will come from nano-, bio-
and computer technology. It will be rushed through to new products, new services and new
information- and production technology at an unthinkable speed. This will cast the foundation for
the wealth creation for the next one hundred years, but this will be expensive and come at a high
cost.
Where will the money come from? Household assets are down with as much as 35% all over the
world. Households will, therefore, save their money in saving accounts for years to come. There
are no other options, because households cannot borrow money to the same extent as was
possible in the past. This will support big investments in the future. This may take a while, but the
money will be there in due course.
Fourth: Cutting prices will increase consumer spending, and consumer spending will definitely
help the economy back on track. The effort to fix this challenge is heavily underestimated, and it
is the core of the executive business leader’s battle field.
Cost reductions in any corner of the business are the foundation for cutting prices and remaining
profitable. That is common sense. What is not common sense, however, is to identify leaders in
the organization, who are capable of designing and executing immediate changes that secure
bigger margins from sales, procurement, production, stock, delivery, quality, service and/or
safety. And for your own sake, get the products out of the R&D labs. Put energy into a few, or all
of them. But first and foremost stop talking about it and take action.
What also needs to be learned as it does not come naturally, is a middle managers ability to enrich
their people, energize them, ‘accelerate’ them, and nurture their confidence. What is also not
common sense is that middle managers often don’t have a clue about what drives the business and
how they can simplify the complexity of the processes. Teach them what is of highest importance
and what is less important.
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6. CONCLUSION
Executive Business Leaders who use the above four action parameters, will be able to increase
wages, salaries and even be able to pay out bonuses to their high performers, based on
productivity gains and a couple of convincing competitive advantages.
This can only be done by talented employees - talent in a broad sense. Therefore, focus on profit
per employee in a staff intensive and less capital intensive businesses. This will tell you more
about productivity than return on capital. If you are in a business where productivity can no
longer be improved, you might be able to replicate your business to new regions, and use this as a
method to improve the number of people to maximize profit.
As an Executive Business Leader, you hold the golden key to prosperity for all. The “New Norm”
is already here to be maintained by competent, knowledgeable Excellent Business Leaders with a
well trained “army” of brilliant workers. Pull up your sleeves and deliver. The time is now for
improved results.
Copenhagen, Denmark
October 2009
Siegfried W Andersen
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