Operations and the Execution Oriented Leader
Leaders provide vision – and they also make sure things get done.
What’s a leader’s role in ensuring that operations are actually carried out? What does it mean to be an Execution-Oriented Leader? Guests were Yacov Wrocherinsky, CEO of Infinity Info Systems in New York City, and operations expert Jim Grew (www.grewco.biz).
Some key points that arose during my interview with Yacov:
- Execution depends on clear vision
- You must remain flexible about methods, even while you are constant regarding your purpose
- Your vision must be closely tied to a realistic and detailed understanding of your customer
- Your path forward depends on a realistic assessment of your people and their skills, and the organizational culture
Especially in the current economy, it is vital for leaders to be the conduits of information — or the enablers of information flow — ensuring that employees at all levels are listening directly and closely to what customers need.
Yacov believes that a vital part of being execution-oriented is to use KPIs or Key Performance Indicators. His company is run with them.
Each business discipline — finance, professional services, customer service, sales, product development, marketing — has its own KPIs that define what a good job is in that discipline. These are measured every week, and the top managers meet to discuss them every week.
They also review the company strategy once every month, to ensure that it is still a good fit to reality and what they are constantly learning from their customers, as well as what they’re learning from the metrics.
Once a quarter, they spend an entire day revisiting the strategy. And once a year they reinvent the strategy based on the experiences of the past year.
At Infinity, Yacov and his team have created an entire discipline around the use of KPI’s and metrics, and have been able to formalize it and turn it into a service offering that they now make available to their customers.
The whole purpose of the KPIs and the metrics is to create a clear and detailed vision of what success looks like.
How do I turn my vision into KPIs?
Developing good KPIs is an iterative and collaborative process. Listening to Yacov, here are my recommendations:
- Get advice from trusted outsiders
- Involve the team being measured on how they will be measured
- Refine the metrics over time
- Be sure to include obvious ones like profitability
Most industries and discipline areas have some standard KPIs that have become generally accepted. These include:
- retention and turnover of employees
- growth and learning
- measurable inventory of skills
- receivables outstanding
- cash flow
- when products are shipped or delivered versus when they are ordered
If you cannot measure it, you cannot manage it. And you cannot measure it if you have not defined it.
Yacov strongly believes that a crucial element in good performance is effective coaching. This is the strongest statement I’ve yet heard on this program that the CEO must have a coach — Yacov believes it is not optional.
Ensure that each key leader, and especially the CEO, has a coach — because the coach is able to help reveal what is in that person’s blind spots, because the coach can provide a sense of perspective, and because the coach is uniquely situated to provide trusted advice. That’s because the coach’s only agenda is to improve the performance of the person being coached. That cannot be said of anybody else in the organization.
If you are the CEO, building a successful organization, then you are looking for people who will challenge you, and people who will be strong in the areas where you are not strong. Nobody is strong in all areas, and as Joseph Folkman pointed out in our “Who Cares about Vision?” Episode (see blog post here), strong leaders are not characterized by the absence of weakness — they are characterized by the presence of crucial strengths. A leader can be highly effective even with weaknesses, provided he has trusted people, positioned and empowered to backfill those weaknesses.
In addition to having KPIs and measuring the business, Yacov believes in constant communication — communicating the good news, communicating the bad news, communicating constantly.
One payoff of good communication is it helps everyone maintain focus. Clear focus becomes a competitive advantage in a distracting and demoralizing economy like we have right now.
Yacov’s firm has 95% retention, which he attributes to their strong positive culture of sharing and recognizing victories, as well as including families in company events. A crucial aspect is keeping a positive attitude. A leader has to stay positive; a leader has to remain focused on the goal.
Bad news has to be communicated quickly and clearly. People deserve to know what’s going on, and it helps them when they can see that you as a leader know what’s going on and are facing it directly.
At the time you communicate the bad news, or very soon thereafter, you need to know what contingency plans are and you need to tell your people how you’re going to address the bad situation, in order to bring the company back on track.
To stay on top of operations, to be able to execute, you need to have a plan, and you need to have contingency plans.
My second guest was Jim Grew, an operations expert based in Portland, Oregon. Jim works frequently in manufacturing environments, and his advice reflects that.
Jim related that, about 14 years ago, a friend of his named Bob Pene told him over beers that he was an operations guy, so why didn’t he just go and do that? The advice “rang true” and Jim took that path. This highlights for Jim the need for a “wingman” — Jim can’t see it all himself and needs help — advice that echoes Yacov’s advice to get a coach.
Having a trusted person, one who can help you see what you don’t see, is a multiplier of your effectiveness.
All the vision in the world won’t add up to a paycheck unless you go out and get things done. How do you take a vision and turn it into something that people can act on?
Jim believes you need a leadership team who understands that each of them wears two hats — one is about leading your department, and the other is about achieving success for the entire organization, including the P&L. You should have about a three year time horizon for your operational planning.
The Leadership Team should answer the question, “What do we want this company to look like three years from today?” And describe that future in very specific terms, including profitability, including labor efficiency, approach to paying people, and hitting all the major (measurable) dimensions of the organization. We want to describe what we are going to look like in three years, as crisply as possible. And then answer the question “What are we going to do this year to make that a reality?” And then translates that into standard goal language — Who, What, When — and turn that into specific assignments and targets by quarter.
Then, translate that into specific goals for each individual worker, where their jobs are suitable for that.
And finally, in real time, Jim keeps track of those numbers (or rather the organization does). The department managers get together every morning to review the numbers from the previous day. The conversation is, what happened yesterday, and what are we facing today? That meeting is 15 minutes long, and is between eight and 14 people.
It is a standard and rigid agenda that never changes:
- How did we do yesterday? Read the numbers (one minute)
- What is the work in front of us? What are the problems?
If the problem can be solved in one minute, solve it there in the meeting. Is it will take longer, “see me after class” — in other words, set up a second meeting to deal with that problem. This ensures that the 15 minute meeting never runs late, and is usually over in 10 or 12.
Jim has introduced this meeting approach with five different teams, and inevitably they react by saying that it’s a waste of time and won’t work. In six months, they cannot imagine living without it.
Once the meetings are established, Jim is not leading them, he’s just watching them. The meetings are run by the team leader, and Jim is there as an observer. He usually shows up a few minutes late, deliberately, to reinforce the fact that this is not his meeting.
Another important rule to Jim has introduced is that, if the meeting starts at 8:30, you need to be there at 8:25. And you do nothing formal during that five minutes — you do not start the meeting early. This provides vital networking time for the people in the group to connect and problem-solve in advance of the meeting.
What typically happens is, everyone sees the numbers and knows what the problems are, and the two guys who are going to be the ones to fix the problem will use that five minutes to get their heads together and figure out what they’re going to do. Then, during the meeting with the problem is mentioned, they can say “We already figured out what we’re going to do” and share their plan with the team.
What if I don’t know what my targets and metrics ought to be?
One crucial aspect for good execution metrics is to differentiate between financial numbers and operating numbers. Financial numbers are obvious — profitability, cash flow, income, expenses, margins, etc. Financial numbers are measured less often than Operating numbers, which in many industries are done daily.
To develop good operating metrics, ask yourself what matters to the customer. Did the customer get the desired thing on time, with quality, at a good price?
We worked all day yesterday — what did we do? I was here all day — did anything come of it?
Jim believes they are three basic measures you can make about any business activity:
- some simple measure of each department’s activity, boxes or pounds or dollars or phone calls or something
- was it on time or was it late?
- was there a problem with quality, or not?
Managing sales is even easier, because managing sales — not getting the sales, but managing the sales process and pipeline — is a production process. And like any other production process, you measure your inputs, you measure all along the series of related intermediate steps, and you measure your outputs.
Therefore, any time you want to set up metrics, you start with “What did we do yesterday?”
Then you measure time and quality, and what matters to the customer.
Then you measure no more than three other things — not ten, and not a 40-by-40 matrix.
The purpose of metrics is to influence behaviors. So ultimately you start measuring by measuring — you learn the path by walking the path.
Initially, some of your measurements may not be very good, and that has to be okay. They’re probably 10 different ways to measure quality of a process, and the first couple you try may not work all that well. So, you learn that and you improve. Go ahead and pick one, and pretty quickly your staff and your customers will tell you if it’s working or not.
I asked Jim about conveying good and bad news to people, and how he thinks that should be done. He thinks the numbers tell the story for everyone to see. Most people are adults and want to do a good job. Make all of the numbers available to everyone in the company (except perhaps for a few sensitive numbers).
Something you might not bother to report every week could be your cost for a commodity, when you negotiate that once a year, and then the price is set and does not change week by week. There is no point in reporting that.
When you have a bad outcome, there are three classes of things that you can blame: circumstances, people, or systems. I asked Jim, which of those he starts with — unsurprisingly, he starts with systems.
“I would start with either the person or the team that had the biggest impact on the result, and asked them what happened, and listen. Because the first thing I want to know is, what is in their head. Because if the picture in their head is incorrect, I should be able to produce data to show them how to correct their picture. Until we are aligned, the conversation is just talk. And by asking the question, I convey my belief that they are willing to work on the problem. They don’t have to know all the answers — they do have to be willing to work.”
“Once you’ve found your cause, you ask ‘What do we need?’ And then you ask ‘What will it take?'”
And, like Toyota’s ‘Five Whys’ you keep asking ‘What will it take?’ as a way to break down other people’s preconceptions about “what we won’t do here.”
We then discussed formal After-Action Reviews (as described in the book Flawless Execution). While that is not something Jim would necessarily use with his manufacturing production staff who may not need so formal a process, he saw a possible use for that with his engineering team.
What is the key lesson for getting good execution?
Clear daily metrics that are reported always on time.