The following column, which appears in every other issue, presents a counter-conventional look at contemporary advertising and marketing.
This is a tough time to be a chief executive officer.
The intensity of competition requires fanatical devotion to the bottom line.
At the same time, the customer, the consumer, the employee, all require a deft touch to inspire quality, service and loyalty.
The hard skills of financial management, usually cold and quantitative, must be interwoven with the soft skills of inspiration, usually warm and personal.
Management theory has always preached focus, stressed consistency.
But real success in today’s chaotic business climate seems to require the schizophrenic ability to drive hard, yet play, to lead with single vision, yet empower with multiple executions.
It was not supposed to be this hard.
Until recently, ceos may have had vision, but they could get away with simply setting goals. Target revenue, profit and marketshare, then hold people’s feet to the fire to deliver.
Repeat every fiscal. And then choose a successor.
Firing after firing
Even companies that have dominated their industries are no longer able to control execution to such a degree, and the result has been firing after firing of red-faced ceos.
Stemple at General Motors. Ackers at ibm. Robinson at American Express. Lego at Westinghouse.
The net effect is that, not only are ceos less secure everywhere, they are also redefining the skill-set necessary to the job.
The bottom line remains the bottom line. Without profit, business dies.
However, the progressive ceo is learning to understand finance in a new way. Mastering cost-control and managing revenue are not enough.
The ceo must become expert at understanding how non-financial dimensions affect profitability. The value of service. The value of innovation. The value of trust and credibility.
It is easy to forget that in the mid-1980s, gm and ibm were reporting record, multi-billion-dollar profits. They were the toast of the financial community.
What the numbers concealed was the hardened arteries within both organizations, which stifled creativity and ignored the changing needs of the customer.
People do what is measured, so the task is to measure more than finance. Smart companies, such as ncr, are now measuring customer satisfaction with the same diligence, the same goal-setting discipline, that used to be exclusively applied to revenue.
With such data, year-end results provide an indication of the psychic, as well as financial, health of an organization.
The very soul of leadership is changing. The power of the ceo was based on total control. Plans were an expression of that control. And organizational structures were instruments for executing it.
Now, in a marketplace of chaotic, global competition, control has actually become an impediment to success. Control is rigid, especially when serving the customer demands flexibility, responsiveness and customization.
Many companies are dismantling the organizational pyramid, dedicating themselves with renewed vigor to missions of ‘serving the customer with quality and excellence.’
Yet, despite the well-intentioned rhetoric, few companies have achieved a competitive breakthrough.
The problem remains that companies, and the ceos that lead them, have not surrendered the skills of control. They have not yet embraced the magical potential of ambiguity.
I hate to pick on ibm, but fallen icons of excellence deserve study.
During the last few years, ibm has not stood still – it has restructured almost yearly.
One such restructuring, formulated on the principles of greater accountability, created near autonomous business units for mainframes, pcs, software services, etc.
This structure did not work because it only magnified control. Managers with more personal accountability were even more dedicated to their machines, removing them even further from customers who, above all, wanted flexibility, affordability and user-friendliness.
It is ironic that in restructuring to leverage a strength, ibm may have accelerated its deconstruction. The humbling lesson is that the only strength any company can leverage is something that a customer values. And this is the opportunity latent in ambiguity.
An excellent article by James B. Stewart in a recent issue of The New Yorker contrasts the fall of ibm with the revitalization of u.s. telecommunications giant at&t.
Anti-trust suit
nterestingly, at&t was deconstructed by the u.s. Justice Department as a consequence of a prolonged anti-trust suit.
The structure remaining after the forced dismemberment did not make business sense.
The managers picking up the pieces struggled for a while, and finally refashioned the organization, not around product lines, but around the customer.
Robert Allen, ceo at at&t, says:
‘We were forced by the divestiture to make changes that probably were good for us.’
Out of chaos and ambiguity, new opportunities have emerged that at&t’s traditional planners would never have seen, never have targetted.
It may be the real role of the ceo in today’s business climate is to recreate for his or her company the accidental insights which have befallen at&t.
John Dalla Costa is an author and consultant to senior business executives. His first book, Meditations on Business: Why Business As Usual Won’t Work Anymore, came out in 1991 and he is hard at work on a second. Dalla Costa spent 16 years in advertising and heads a new company called Catalysis, which provides strategic counsel to ceos and senior managers.
