Monday STAND TO!

By Richard Martin, Expert in Business Readiness and Exploiting Change

Do you try to mould your future and create the conditions for your success, or do you instead remain passive while others seize the initiative?

The whole point of Business Readiness is to “take the bull by the horns” and shape your competitive battle space for you and your customers. This isn’t simple P&P (preparation and planning). It’s about vigilance, preparedness, and robustness so you see, assess, respond, act, and pounce on opportunities before others see them.
Situational Awareness
Step 1 of the Business Readiness Process (BRP) is…

Vigilance through constant Situational Awareness. Situational awareness requires systems, procedures, and mindset to be on the lookout for changes and trends at all levels–strategic, operational, tactical–of your business and organizational environment. This includes keeping eyes on:

  • Changing customer needs and wants
  • Changing political, social, demographic, cultural milieu
  • Technology, finance, economic factors, etc.
  • Competitors and other stakeholders, including changing alliances, support, and opposition to your goals and strategies
Think of how effective non-business opposition to Keystone XL,
Northern Gateway, and other pipelines has been.
Could this have been anticipated?
Could the companies involved have managed the situation better?
Could they have assessed their courses of action better?
You need…
  1. A consistent and constant watch and evaluation system.
  2. A method and the right mindset and motivation in you and your people.
  3. To decide if this changes your mission and objectives or whether you need to update them.
It starts at the top. If you’re not open to change and ignore signs of imminent disruption, how can you expect your team members to be engaged and motivated for it?
Business Readiness Process (BRP)
1.     Ensure vigilance through situational awareness.
2.     Do preliminary assessment of tasks and time.
3.     Activate organization or team.
4.     Conduct reconnaissance.
5.     Do detailed situational estimate.
6.     Conduct wargame and decide on optimal course(s) of action.
7.     Perform risk management and contingency planning.
8.     Communicate plan and issue direction.
9.     Build organizational robustness.
10.   Ensure operational continuity.
11.   Lead and control execution.
12.   Assess performance.


Did you know that an infantry battalion only needs about 3 to 4 hours of prep and planning time to be battle ready? What are you waiting for to get the same benefits for your outfit?
Feel free to contact me at any time to discuss your objectives and needs.
And remember… STAND TO!!!

© 2016 Alcera Consulting Inc.

This article may be forwarded, reproduced, or otherwise referenced for non-commercial use with proper attribution. All other rights are reserved and explicit permission is required for commercial use.

The profession of arms is concerned with the legal, rational application of force to the resolution of a social or political problem. If you are going to rationally apply force, then you will necessarily be directing missions that are risky for those you are leading and the ones you wish to influence through force. The rational application of force therefore requires rational leadership.

But here’s the rub. When you get right down to it, there is nothing less rational than asking people to put themselves in harm’s way for the good of someone else. Evolution has endowed us all with a survival instinct. We have a propensity to avoid life-threatening danger, if at all possible. How do you get people to go against their deepest instincts—and interests—in order to achieve someone else’s objectives?

The military takes a very pragmatic approach to leadership and leadership development. When I was a young cadet, training to become an infantry officer, we learned a set of basic principles to guide in our leadership.

  1. Achieve professional competence.
  2. Appreciate your own strengths and limitations and pursue self-improvement.
  3. Seek and accept responsibility.
  4. Lead by example.
  5. Make sure that your followers know your meaning and intent, and then lead them to the accomplishment of the mission.
  6. Know your followers and promote their welfare.
  7. Develop the leadership potential of your followers.
  8. Make sound and timely decisions.
  9. Train your followers as a team and employ them to their capabilities.
  10. Keep your followers informed of the mission, the changing situation, and the overall picture.

In addition to inculcating these principles, the military approach to leadership development focuses heavily on the “nuts and bolts” of leadership and influence. I call this the competence-based philosophy of leadership development. In a nutshell, officer candidates and rank and file soldiers who have been selected for development are put through grueling training that builds planning, decision-making and directing skills. The military hierarchy does not rely only on character traits and willingness to take charge, but also seeks to impart the specific skills and knowledge required to command.

The underlying assumption of competence-based leadership is that soldiers will follow their leaders if they have confidence in their abilities and judgment. Confidence is directly related to the leader’s abilities to make sound plans, give clear and specific direction to followers, and to exercise rational powers and decision-making even under extreme conditions. The military training system therefore takes a fairly mechanistic approach in imparting these competencies. Instead of simply haranguing trainees or giving them rousing speeches—although those are sometimes required—leadership instructors focus on the processes of situational analysis, problem solving, planning, and organizing. Military forces the world over have created standardized approaches for all aspects of the leader’s job, from how to analyze the enemy’s likely actions and intentions, to assessing the tactical value of ground, logistical requirements, personnel needs, ammunition calculations, etc. There are also standardized processes and templates to follow for tactical planning and giving orders and direction. Everything that a leader has to do has been broken down into discrete steps. The focus of leadership training and professional development is on acquiring the knowledge, skills and attitudes to apply these processes and methodologies in all circumstances. In the final analysis, conflict is too dangerous and important to be left to the vagaries of personality and natural talent. Leadership trainees are assessed against these requirements and must be able to implement them to a reasonable standard before official promotion and appointment to command.

I’ll have much more to say about all of these leadership principles and processes as the book progresses. The key point though is that leadership can be developed. Some people have more natural talent than others. Also, some people have more of the “right stuff” to progress through the ranks and be entrusted with very high levels of responsibility. However, no matter what the command level—tactical, operational, or strategic—leadership is fundamentally the same in form and philosophy. It is the content and complexity of the leadership and command challenges that change as hierarchical and operational responsibilities widen in scope and deepen in impact.

© 2016 Richard Martin. Reproduction, forwarding and quotes permitted with proper attribution.

In my last two posts under “Ideas” I introduced the concepts of the S-curve and Power Law (a.k.a. Pareto’s Law, Zipf’s Law, or the 80/20 rule).

In this post I discuss the concept of self-similarity. I view it as an adjunct to the S-curve and Power Law that multiplies their effectiveness for anticipating change and other dynamic interactions in society, businesses, and other forms of organization.

According to Wikipedia: “In mathematics, a self-similar object is exactly or approximately similar to a part of itself (i.e. the whole has the same shape as one or more of the parts). Many objects in the real world, such as coastlines, are statistically self-similar: parts of them show the same statistical properties at many scales.” The term fractal is also frequently used to characterize self-similar structures.

Furthermore, self-similarity is characterized by scale invariance. Again according to Wikipedia: “In physics, mathematics, statistics, and economics, scale invariance is a feature of objects or laws that do not change if scales of length, energy, or other variables, are multiplied by a common factor.

(My emphasis in both quotes.)

In practice, this means that it is difficult or even impossible for an observer to detect the system level depicted just by looking at a picture. As mentioned above, coastlines are the paradigmatic illustration of this phenomenon. You can look at satellite image of a coastline at various scales and, barring the presence of a scale indicator (e.g. a boat or a human on the picture), you can’t determine the scale with any certainty. Moreover, this is also a statistical effect, as the underlying math is the same or very similar at all levels of magnification.

There are many phenomena in nature and society with this characteristic structure. However, for business and strategy, the most crucial realization comes from the self-similar (or fractal) nature of power curves and s-curves. Take any distribution governed by a power law. If you hone in on any particular segment of the distribution, you find that it is also governed by essentially the same power law. In other words, the distribution looks basically the same at all levels of magnification, or scale. The follow diagram shows this effect.

self-similarity-in-power-laws

No matter what you’re measuring or tracking–it could be total sales, the performance of your salespeople, the relative impact of your clients–you are likely to notice a power law working at all scales. This was illustrated in my Power Law article last week by the example of real estate agents in the Greater Toronto area. I’ve reproduced those two graphs here, as they show how a power law is in evidence at two different scales.

treb-6-and-under treb-gif

Although not as stark at the level of agents with only 0 to 6 deals, we can see that the two scales are broadly similar. What about practical applications? Well, for one, we can see that the effect is likely to be similar at all levels and in all categories of agents. For instance, if you break out each category (7-12 deals all the way to 201 plus deals), you will probably find the same pattern. A small number of top performers skewing the results of the group upward.

This type of distribution plays havoc with our basic assumptions of normally distributed performance or effects. If we were to assume a normal distribution (Gaussian distribution in technical statistical terms) for real estate agents, we could easily be fooled into thinking that there is an “average” performance, a “typical” real estate agent. But this could not be further from the truth. In a normal distribution, the mode, median, and mean are all very close to having the same value. This means that the arithmetic mean could give a false understanding of the performance distribution for a sales group. In actuality, the mode (most frequent value), median (the middle value), and the actual mean could be different, with the latter possibly heavily skewed in the direction of the highest performing class of sales people. This is what we see with the distributions of real estate agents above.

Would the arithmetic mean of this distribution truly represent the average or typical performance of a real estate agent in the Greater Toronto area? Obviously not. If we look at the numbers of deals, 0-6 is the modal value, and represents about 50% of the total number of agents! This means that the largest number of real estate agents are actually sluggish performers, and even don’t participate in any deals at all! If you’re looking, say, to providing products and services to real estate agents–at least in the Greater Toronto area in 2011–then you’d be better to look at the actual performance distribution at varying scales so you can segment the market properly.

These relationships tend to hold across time and space for any particular phenomenon. We can safely assume that the distribution of real estate agent performance is broadly similar no matter when and where you build your sample. While it’s ultimately a question for empirical investigation, in my experience, self-similar power laws are ubiquitous in market dynamics and human performance. You can apply this insight to all market and performance numbers and you will get similar results. This enables much better analysis, planning, and strategy to gain and sustain a competitive edge.

I’ll explore scale-invariance and self-similarity in s-curves in my next “Ideas” post. In subsequent ones I’ll also look at the broader implications of self-similarity, particular as they relate to hierarchy in organizations, specifically what I call “nested hierarchical planning” and “nested hierarchical vigilance.”

© 2016 Alcera Consulting Inc. This article may be forwarded, reproduced, or otherwise referenced for non-commercial use with proper attribution. All other rights are reserved and explicit permission is required for commercial use.

Monday STAND TO!

By Richard Martin, Expert in Business Readiness and Exploiting Change

Military readiness is the the capacity to exploit change in order to achieve strategic, operational, and tactical objectives.

By extension, business readiness is the capacity to exploit change for strategic, operational, and tactical business objectives.

The business readiness procedure is the the concrete instantiation of this standpoint as it provides the framework, tools, and mindset to exploit change for the achievement of business goals of all types and at all levels. The following list gives each step of the BRP, and I will provide additional insight and examples into each in subsequent issues of STAND TO!

Business Readiness Procedure (BRP)

  1. Maintain situational awareness.
  2. (Re)analyze your mission.
  3. Do a time appreciation.
  4. Activate/mobilize your organization or team.
  5. Conduct reconnaissance.
  6. Do your estimate of the situation.
  7. Compare friendly and opposing scenarios and decide on the optimal solution.
  8. Perform risk analysis and contingency planning of your selected solution.
  9. Communicate your plan and issue clear direction.
  10. Supervise preparations and the build up for implementation.
  11. Lead and control the execution of the plan.
  12. Assess, adjust, and adapt.

Did you know that an infantry battalion only needs about 3 to 4 hours of prep and planning time to be battle ready? What are you waiting for to get the same benefits for your outfit?

Feel free to contact me at any time to discuss your objectives and needs.

And remember… STAND TO!!!

© 2016 Alcera Consulting Inc.

This article may be forwarded, reproduced, or otherwise referenced for non-commercial use with proper attribution. All other rights are reserved and explicit permission is required for commercial use.

Before we go any further, it will be helpful to define exactly what I mean by leadership. Whenever I’m facilitating a strategy retreat, working with an executive on developing her leadership competencies, or just in a discussion with a prospect or client, the question inevitably comes up as to what the (or my) definition of leadership is. If I’m conducting training or teaching, I usually turn the question around and ask the trainees or students what their definition of leadership is. When this happens, I always find that the answers cover a range of individual and group behaviors. However, the common element in these answers always has some combination of the following:

  • A leader provides a vision of the future.
  • A leader makes decisions.
  • A leader illuminate the way forward.
  • A leader sets the example.
  • A leader tells people what to do, and sometimes how to do it.
  • A leader inspires and motivates others.

All of these definitions are true, and they all point to a few critical ingredients of leadership. First, there must be a goal. Second, there must be a range of options for how to proceed, and a certain level of uncertainty and risk. Third, the leader must inspire and motivate. Lastly, leaders have to lead; they have to set the example.

But when all is said and done, my favorite definition of leadership is the one I learned in the army:

Leadership is the art of influencing others in the accomplishment of a mission.

This definition is simple, perhaps deceptively so, but it encapsulates all of the elements of leadership that are salient to getting others to behave in a certain way in order to achieve a favored goal. Notice that this definition says nothing about providing a vision, making decisions, motivating others, or telling people what to do. There is no hint of coercion or authority, nor is there any indication that one should use any particular form of influence.

This definition also states that leadership is an art. There may be a certain amount of science and knowledge involved in leading, but ultimately it is more about honing a craft and applying the right skills and mindset than finding and applying the right formula. A good leader is a kind of artisan, honing his craft through diligent practice and experiential learning.

Another keyword in this definition of leadership is influence. Effective leaders use a range of approaches to influence others, from extreme “asking” to extreme “telling.” Sometimes a light touch is needed and a leader must influence by rational argument and evidence. At other times, the leader must get out in front and charge headfirst into enemy fire, hoping that the followers will follow. In some situations, leaders can ask for advice and get everyone to participate in problem solving and decision-making democratically. In others, the leader must be harsh and use threats and coercion to command obedience. It all depends on the leader’s objectives, the needs of the organization, the nature of the mission, and the skills, knowledge, attitudes, and emotional states of the followers. There is no magic recipe, and the more methods a leader has at her disposal to get others to follow her, the greater her range of effectiveness.

The final important element in this definition of leadership is that there is a mission. Leadership is only exercised in the context of some form of purpose or goal. If you’re just trying to influence others to like you or to hang out with you, there is nothing wrong with that. But that isn’t leadership. Leadership is goal-oriented.

© 2016 Richard Martin. Reproduction, forwarding and quotes permitted with proper attribution.

The “Power Law” is one of the most useful concepts for making predictions and decisions in business and management.

The power law shows how two variables–one dependent, the other independent–covary. Mathematically, one varies as a function of the other by being raised to a certain power (exponent).

The following diagram shows this type of relationship. Often these are depicted on log or log-log graphs, but I show the “power curve” as an asymptote on both axes of the graph to highlight the non-linearity of the relationship between the two variables.

power-law-basic

A concrete example will help. The great majority of earthquakes are of very low magnitude. High magnitude earthquakes are much rarer than low magnitude earthquakes. In fact, their magnitude varies in inverse exponential proportion to the total number of earthquakes. In practice, this means that there are literally thousands of earthquakes every day around the world, but magnitude 6, 7, and 8 ones are much rarer. The most powerful earthquakes of all, over 9 on the Richter, scale are very rare. They can happen only a few times a century, or even less. This doesn’t mean that the magnitude of any particular earthquake can be predicted. It does however imply that given a sufficiently large sample, we will eventually see a frequency-magnitude distribution that resembles the graph above.

This type of relationship is ubiquitous in nature, and that includes our human and social natures. There was a whole book written on this topic–The Long Tail, by Chris Anderson–with emphasis on the right side of the graph. In his book, Anderson described how the internet has made many businesses or ideas viable which would not previously even have been known. He called this the long tail because there are musicians, artists, artisans, crafts workers, professionals, etc. who can provide their productions and services to people around the world, even though they can’t compete with the more traditional providers who dominate markets by occupying the left side of the power curve. This makes for much more diversity and many more opportunities to get known and appreciated, and to develop a following because it lowers traditional barriers to entry and long-term viability.

This type of relationship is also depicted in the following diagram. I show the relationship between number of clients and the number purchases, interactions, or value of each category of client that characterizes the market and product distributions of most, if not all, companies (including my own clients).

power-law-of-clients-and-value

For instance, I’ve been working with a banking client. This graph shows the relationship between number of clients and the number of products/services that each client has with the bank. The total market size for this bank is about 80,000 potential users of its services. Of these potential users of its services, the great majority, about 85 %, have no business relationship with the bank. Of the 13,000 or so that do use the bank’s services, the majority only use less than 3 of over 20 products and services. As we move to the right, there are less clients, but their interactions with the bank are more intensive. In other words, there are are many fewer clients in categories to the right, but they use many more of the bank’s services, which in turn generate much greater value. On the other hand, there are no actual clients who do all of their banking and meet all of their financial needs and objectives, much less use all of the bank’s services. This is why we can depict the lower right part of the curve as an asymptote. You never actually reach complete saturation or use.

We’ve all noticed these types of power-law relationships in our professional and personal lives, our management and business experiences, and even in some natural phenomena. This relationship is often referred to as the 80/20 law, Pareto’s Law, or Zipf’s Law. It shows up in such truisms as: 80 % of my problems are caused by 20 % (rates can vary) of my people; most of my sales and profits come from a small number of sales reps; only a few of my clients provide most of my revenue and profits; this product category accounts for 45 % of my sales, but 70 % of my profits; etc., etc.

The following diagram is a further illustration of the principle. It comes from an online article by Mark McLean of the Toronto Real Estate Board (TREB) and shows an almost perfect example of a power-law distribution in the number of deals done by different categories of real estate agents who are members of TREB.  We can see that only a very small number of agents in TREB can be considered highly successful, prolific even.

treb-gif

Of those agents having completed 6 or less deals in a year, a similar relationship holds, although it’s less stark:

treb-6-and-under

Whatever we wish to call them, power-law distributions and relationships underlie much of the correlations and dynamics that surround us. We can use them in making general predictions and, along with the S-curve phenomenon I described in a previous post, we have two very powerful tools and concepts for understanding the world around us. Moreover, power laws and S-curves are not only ubiquitous, they tend to show what’s called “self-similarity,” or a fractal pattern. I’ll discuss that third powerful concept next week.

© 2016 Alcera Consulting Inc.

This article may be forwarded, reproduced, or otherwise referenced for non-commercial use with proper attribution. All other rights are reserved and explicit permission is required for commercial use.

Monday STAND TO!

By Richard Martin, Expert in Business Readiness and Exploiting Change

“Stand to!” is the order given to put troops in a high state of readiness. It comes from the trenches of the First World War, when forces on both sides would stand ready for action at the parapets just before dawn and just after dusk in case of surprise enemy attack. The practice continues to this day, although adapted to the realities of modern warfare and conflict. The order to “stand to!” encapsulates the whole theory and practice of military readiness, which is about awareness, anticipation, and preparation before, during, and after operations, in war and in peace.

It’s time for a change. My book Brilliant Manoeuvres came out in the fall of 2012 and since then I’ve been issuing Brilliant Manoeuvres just about every Monday morning to help, you, my faithful readers manoeuvre successfully to achieve outstanding growth in your business and leadership capacity.

I’ve decided to change my focus to generating and building your business readiness. This is also in line with my latest writing project, tentatively titled, Stand To! Military Readiness Principles to Thrive in Business and Propel Your Growth.

Why is military readiness relevant for business? In my practice as a business consultant, I’ve noticed that many, if not most, executives and entrepreneurs are well prepared to fight the last war, but not well positioned to fight the current one, much less the next one. They frequently have limited situational awareness, poorly adapted decision-making, planning, and communication processes, and are sluggish in leveraging opportunities, responding to threats, and mitigating risks. After all, change is permanent; the real question is whether a business can exploit it and shape it to its advantage, whether it is positioned to seize and maintain the initiative or to reel from successive blows of evolving markets and competition.

From Awareness to Robustness–What Is Business Readiness?

Business readiness is the capacity to exploit change by maximizing opportunities and minimizing risks and threats in order to grow and thrive.

The first level of business readiness is situational awareness, which I define as the ability to discern an organizational shock or environmental change that may lead to crisis, and to take a measured approach to avoiding, leveraging, or resolving it.

The second level of business readiness is preparedness. A well prepared organization is one which has identified a number of risks and threats beforehand and has taken measures to mitigate or even eliminate some of these through active prevention. Many organizations have contingency plans to deal with various disasters, emergencies, and crises due to technological or natural hazards. The quintessential ready organization is the fire department, which has a well-defined set of threats and risks and is structured, trained, and equipped exactly for that purpose. There are others, however, such as airports, hospitals and other health-care facilities, law enforcement agencies, etc. Firms such as builders, manufacturers and mining companies also must have plans and procedures in place to deal with accidents, technological hazards, competition, and socio-political opposition.

The highest level of business readiness is robustness, which I define as the ability to absorb change and shocks by shaping the environment and leveraging the inevitable risks, threats, and uncertainty. Not many organizations operate at this level of readiness. Military forces come to mind as singularly robust and they can be used in a number of areas beyond combat because of their built in resiliency, flexibility, and access to logistical and human resources anywhere, at any time. While they can provide a useful example of what is possible, the reality is that most organizations are currently not very capable in this regard.

What all of these levels have in common is a certain level of resiliency, the ability to bounce back from adversity and shock and to continue functioning adequately. Further to that, however, situational awarenesspreparedness, and robustness are functions of increasing flexibilityredundancy, risk-taking, resourcefulness, and individual/collective initiative. All of these capabilities can be built into an organization and inculcated into its leadership and employees.

I hope you’ll join me as I develop this theme over the coming weeks and months. Feel free to contact me at any time with suggestions, questions, or comments.

And remember… STAND TO!!!

© 2016 Richard Martin. Reproduction, forwarding, and quotes are permitted with proper attribution.