Making Things Happen

The Margin Manager's most valuable asset is often his or her ability to make positive things happen.

The realization of positive results - of any size, strength, or dimension - move a margin initiative forward. The margin manager initially doesn't need to land the perfect project or develop a program of corporate revenue significance. He or she simply needs to demonstrate that something can be done. Margin managers in the should strive to create a series of small but strategic victories in the early stages of an initiative.

The advantages of starting small include:

1. Small ventures are easy to capitalize.
2. Margin managers can launch multiple small efforts simultaneously - using diversification to reduce the risk of initiative failure.
3. Small efforts have shorter lead times so positive results are seen quickly.
   

Successful margin leaders identify and capitalize on small initial opportunities. These victories build positive momentum early. They stimulate further investment and increase partner engagement - both of which will be needed for larger ventures down the road.

This approach requires the "scrapper" instinct - the fighter who pulls victory out of whatever unpromising circumstances present themselves. There is little place here for the "general" who wishes to sit in the command tent and marshal forces for grand strategies.

Get out there and do something. Virtually any real result is better than a handful of strategic papers and plans.

The Value of Forward Movement

Margin managers can receive the benefits of positive momentum even in the early stages of an initiative.

I recently achieved a contract win with a new client in new market - the second in a span of a few months. While the response to the first win was decidedly muted, the second has created more waves. Both wins represent new footholds in markets where the company is trying to expand. The difference in the response is a growing sense of momentum.

While two wins hardly represent a trend, the progress is a noticeable improvement over previous periods. Even at this early stage, I can see the power of forward momentum start to emerge and the hard period of building networks, recruiting partners, and scouting opportunities is beginning to pay off. For example, this past week a company manager contacted me with a new business idea for the international market and an external partner approached me with a business opportunity. In the past, I have always had to sell new ideas to them.

As I continue the hard work of identifying and pursuing new opportunities, these more strategic efforts are adding depth and volume. The program is starting to mature. It is possible that I have passed the important milestone between the Test Phase and the Ramp-up Phase.

Negative Results from Poorly Managed Incentives

Companies with weak performance measurement systems create inhospitable corporate margins.

Author Daniel H. Pink, in his book Drive: The Surprising Truth About What Motivates Us, describes how poorly designed incentive structures can lead to destructive employee behavior. Personnel will seek to achieve their goals by the easiest and quickest means possible. This path is rarely through the corporate margin where significant longer-term value creation is realized.

Company incentives built exclusively on short-term metrics, such as revenue or sales targets, encourage a narrow-minded focus on achieving near-term ROI at the sacrifice of longer-term value development and client satisfaction. Managers will undermine long-term growth to achieve short-term internal performance targets.

Organizations should build incentive structures that provide rewards for intermediate actions which lead to the desired end-state objectives (e.g. revenue, profit, etc.). For example, rewards could be tied to customer satisfaction as measured by client feedback surveys, new client acquisition, and contracts gained in emerging market sectors. While these intermediate actions may not achieve much in terms of near-term bottom line results, their impact is critical for business success in the longer term. A small contract in an emerging market sector may be more strategically important for the firm than a large contract in an established market. Firms need to recognize and reward these results differently to reflect their strategic differences.

Providing incentives for intermediate actions is critical for encouraging behaviors that lead to long-term growth and value creation. Companies which provide these types of intermediate incentives create an environment which sustains positive margin initiative risk-taking. Without these incentives, few programs will be able to marshal the resources to maintain margin activities which require multiple business cycles to mature.

Momentum Matters

Margin leaders need to balance big potential payoffs with the strategic value of smaller, quick wins.

Margin initiatives begin as untested theories and grow into proven business models. Strategies that require long periods of time and significant resource investment are less likely to succeed in the margin than strategies which can build on short-term wins. While small, these successes build the trust of initiative partners, stakeholders, and investors by providing proof-of-concept evidence that the overall strategy can be successful on a larger scale.

Many margin managers make the mistake of putting all their resources into one large effort. The high payoff is tempting, but gambling on big wins rarely achieves long-term success. While a win may catapult the leader and the initiative to a new level, a loss can close the initiative down completely. In addition, the likelihood of a repeat performance is low while the expectations have been set high.

Small wins not only create a history of success, they build capabilities and experience through the application of lessons learned. This internal growth sets the stage for tackling larger projects and increases the likelihood of success. In addition, any failure is weighed against the longer history of successful value creation. Going after a big solo win should only be attempted when the conditions are highly favorable.

The Language of Results

In the end, only corporately-recognized results matter.

The ultimate goal of every margin initiative is the achievement of corporately-recognized value. Operating outside the boundaries of traditional business practice, these projects must mature until they are incorporated into the corporate structure to which they are affiliated if they are to accomplish anything. Value creation is only achieved by re-integrating with the organization.

Until that happens, initiatives in the margin often produce non-standard results. Unrecognized in corporate performance measurement systems, these results may be vital to the success of the initiative but account for little within the organization as a whole. It is only when the initiative begins to produce officially accepted results that margin activities receive recognition and the margin leader is rewarded.

The margin leader's business theories may be sound, his strategy excellent, his business plans exceptional, and his execution of them brilliant, but he will not have achieved anything until he produces results the corporation accepts - whatever that may be. This is true regardless of the value, wisdom, or sanity of the corporate strategy and performance standards. They may be industry best practice or completely arcane, but the margin leader - as part of that system - will be measured by that system. Unless he seeks only self gratification or some form of external recognition, his performance will ultimately be judged by his ability to produce corporately-recognized results.

With this in mind, margin leaders should align their strategies to ultimately achieve corporate priorities. They should also seek out organizations whose corporate priorities align with sound business practices. The greater the gap between corporately-recognized performance measures and typical early-stage performance results, the greater the challenge in building successful margin initiatives.

Running Out of Time

Margin leaders may need to buy time for margin initiatives to succeed.

Time in the margin is limited. The lag time between the start of a margin initiative and its maturing into a formally recognized program may be too long for the patience of corporate executives. As time runs out, additional requirements and constraints imposed by the formal organization will inhibit progress and further reduce the likelihood of success - ultimately leading to initiative failure.

Margin leaders must balance the demands of unrecognized strategic activities with the need for formally-recognized performance measures. Corporately-accepted signs of progress may not be strategic to accomplishing margin initiative goals and can actually distract from achieving real progress. However, margin leaders must use these indicators of success to push back the organizational entanglements which hamper success and buy the time needed for margin initiatives to mature.

While these efforts may temporarily delay preemptive initiative closure, managers in the margin must make rapid progress. They must find ways to accelerate development cycles to speed up the realization of results. This will rarely be pretty. Margin leaders might need to move forward with the trial of an effort not yet ready or proven, increasing risks while lowering valuable preparation time. They may need to pursue opportunities under sub-optimal conditions. Alternatively, they may need to pursue the wrong, but accepted opportunities at the cost strategic margin wins.

Top-down pressure exists throughout the life of a margin initiative. It is when those pressures start to consistently increase that margin leaders must consider methods of delaying negative corporate action while accelerating initiative progress. However, this should be taken as a sign that time is running out.

The longer this situation persists the less likely the margin initiative will be successful. The increasingly risky and non-optimized efforts reduce the chances of success while keeping corporate actions at bay consumes valuable resources. Over time, this feeds a downward spiral to disaster. Only three exits are possible:

1. Corporate closure of the initiative,
2. Abandonment of the initiative by the manager, or
   
3. Initiative success through the achievement of corporately-recognized results.

If you cannot achieve exit option #3, consider taking #2 as #1 is inevitable and fast approaching.

Essential Skills: Action

Action drives success in the margin.

Many people will have opinions on the prospects and outcomes of a margin initiative. Critics will point out weaknesses in the approach and belittle accomplishments as if they could achieve more in your shoes. However, nothing speaks loader than action.

Get things done in the margin and your results will eventually quiet the critics. Action proves strategies. Action builds programs. Action creates value.

"People may doubt what you say, but they will believe what you do." - Lewis Cass

"As I grow older I pay less attention to what men say. I just watch what they do." - Andrew Carnegie

"Action will remove the doubts that theory cannot solve." - Tehyi Hsieh

"Ironically, making a statement with words is the least effective method." - Grey Livingston

"Trust only movement. Life happens at the level of events, not of words." - Alfred Adler

(from Quote Garden: www.quotegarden.com)

Viewpoint: Healthy Identity

A healthy self-image is essential for survival in the margin.

David Sandler, founder of the Sandler Sales Institute and creator of the Sandler Selling System, wrote and taught extensively on success in the selling business. One of the keys to success as a salesperson he identified in his book You Can't Teach a Kid to Ride a Bike at a Seminar: The Sandler Sales Institute's 7-Step System for Successful Selling is to maintain a healthy self-image or self concept.

Salespeople must constantly face rejection. Successful salesmen and women separate what they do from who they are. They realize their intrinsic worth isn't dependent on their performance. As a result, they are able to face the numerous failures and rejections salespeople must face daily without loss of steam.

Margin managers also confront a challenging work environment. Like salespeople, these leaders must develop a healthy self-image or identity to thrive in the margin.

Mr. Sandler recommends that people monitor their self perception (how you feel about yourself) and plan activities that will protect and reinforce your self-image on a daily basis. He recommends keeping a daily journal or log that tracks your performance/role "score" and your identify/self-image "score" along with a to-do list that includes both work assignments and self-image builders. Proactively addressing your inner health ensures the emotional stability needed for superior performance in the margin.

Essential Skills: Endurance

Margin leaders must have the internal fortitude to endure for long hull.

Life is the margin is rough. Margin leaders face a constant pressure to perform. They must delivery results quickly against long odds. Few individuals can sustain operations in this environment.

Looking back on my career, I can remember certain individuals who were in the margin, but moved out and others who refused to enter in the first place. When times get hard, I think how comfortable it would be to move into a position within the bounds of normal business operations. Those are times when I need a reminder of why I'm here and the results that can come from just showing up every day.

Below are some quotes on the theme of endurance.

"Perseverance is the hard work you do after you get tired of doing the hard work you already did." - Newt Gingrich

"The greatest oak was once a little nut who held its ground." - Author Unknown

"Fall seven times, stand up eight." - Japanese Proverb

"One may go a long way after one is tired." - French Proverb

"Our greatest glory is not in never failing, but in rising up every time we fail." - Ralph Waldo Emerson

"Difficult things take a long time, impossible things a little longer." - André A. Jackson

(from Quote Garden: http://www.quotegarden.com/)

Essential Skills: Managing a Disaster

Margin leaders must sometimes deal with no-win situations.

Leaders in the margin are more likely to find themselves at the helm of a failed initiative than traditional managers. An initiative may have looked promising early on, but new information gathered along the way or initial results from activities may alter the assessment. While wise margin leaders can often avoid clearly hopeless causes, the high-risk environment guarantees that, occasionally, margin leaders must navigate through a flawed situation with as much grace as possible. Various strategies can be employed to deal with this situation, but the primary objective should be to move on to projects with higher chances of success as quickly as possible while maintaining the important relationships that hold margin efforts together.

Stick to it. In the face of a disaster, one tactic is to see it through whatever the cost - time, expense, effort, political capital, etc. This demonstrates that you have done everything in your power to make it work and may be the more politically acceptable means of dealing with a challenging situation. Organizations and partners tend to respect the individual who does everything he or she can to achieve a result against difficult odds. Any resulting failure can be attributed to external factors (e.g. "The market wasn't right."). However, this tactic can backfire if, after expending everything you have, it fails dramatically. Partners will question the leader's judgment and capabilities. This negative effect is compounded when the leader attempts new initiatives as partners will be significantly less willing to follow the leader into future initiatives having sunk their own resources into a failed activity.

Call it quits. Another approach is to tie off the effort. While all costs incurred up to that point are immediately lost with no hope of return on the investment, it avoids the continued expenditure of resources on a low/no-probability effort. This is easier to do early in the life of a project when expended resources are less than the projected expenditures to come. However, while some may respect the decision, other partners (particularly those who have already contributed significant resources) may strongly react and their involvement in future efforts may be curtailed. With this option, failure is more likely to be attributed to internal factors (e.g. "He just didn't have the ability to pull it off"). This tactic may also be seen as a leadership failure by those who always default to the "Stick to it" option. Calling it quits is easier to apply if the leader/initiative has other successes to point to, offers other opportunities in the future, and can explain the decision from within a larger context. In this situation, the outcome is more clearly the result of good decision-making skills than leadership failure.

Sidestep. In some instances, past efforts can be tied to future opportunities despite a current failure. Resources developed, contacts made, and lessons learned during the current, failed project will help the team pursue new opportunities in related fields. A margin leader can sometimes shift the team from one project to another that is related, recovering a portion of the resources invested to date in the failed project. The success of this tactic depends on how many of the committed resources can be transferred, the probability of success for the new project, and the cause of failure. Moving everyone from one failed project to another with equally-poor fundamentals merely postpones the disaster.

Applying any of the above tactics is easier when the leader has a proven track record of success to point to and an organizational culture that accepts risk and failure as a natural part of the business growth process. Lacking both, a margin leader has little choice but to apply the "Stick to it" approach.

Practicum: Performance Evaluation in the Margin

New performance measures need to be developed to evaluate the success of margin initiatives.

Applying traditional performance metrics to margin initiatives is a mistake in terms of corporate strategy. It undervalues the contributions of those working margin initiatives - the same personnel/initiatives that drive the creation of new corporate value. At the same time, it motivates margin leaders to pursue opportunities which may align better with established performance metrics but can only be undertaken at greater risk. These leaders will contribute less resources to the strategic wins which can build longer-term success to pursue higher-risk, short-term gains.

One way to deal with is this performance measurement challenge is to create a separate set of performance measures specifically designed for early-stage initiatives and programs. These metrics could emphasize market entry tactics such as contracts with new clients, business in new markets or industries, etc. Organizationally, the company would need to categorize initiatives by a "traditional or margin" classification to know which set of metrics should be applied.

Another approach is to diversify the common set of performance metrics used across the organization to allow multiple pathways to success. A small contract with a new client organization may be more valuable to the organization in the longer term than a larger contract with an established client. A refined set of performance metrics, for example, could assign greater per-dollar value to contracts with first-time clients. Alternatively, the organization could track the number of new client contracts obtained. By allowing multiple pathways to success and diversifying the metric set, organizations can encourage long-term strategic activities and margin initiatives without needing separate classifications.

Companies that incorporate performance measures friendly to margin initiatives can better align long-term strategy goals with corporate activities. Firms that say they want to diversify or move into new markets but continue to reward performance based on focused revenue-driven metrics fail to recognize that pioneering into new areas is different than maintaining an established program. Instead of achieving their goals, these firms create disincentives for activities which will lead to long-term growth.

Practicum: Premature Project Maturity Acceleration

You will encounter problems if you accelerate the development of a margin initiative too quickly.

A common error in the margin is to push forward too quickly. This is typically the result of an attempt to gain resources, recognition, or status before the time is right. For example, a manager may be under pressure to produce documented results or improve his or her status to achieve a promotion or raise. If your best efforts are under-the-radar, it can be challenging to get the recognition needed to progress your career.

One common premature acceleration point appears to be moving from the Idea Stage to the Ramp Up Stage without first doing a smaller scale test in the Test Stage. The Test Stage is a critical step where initial connections and relationships are built, successful practices developed, and the confidence of the team is bolstered. Leapfrogging this step requires either significant positional authority or large expenditures of political capital to secure the resource investments and team commitments needed to expand operations in a completely untested field. Implementing your first test of the business idea across multiple engagements or significant scope increases the risk of failure. Team members must learn their roles in a high pressure situation. If insufficient resources are acquired, everyone will be stretched too thin.

A second common premature acceleration point is between the Test or Ramp Up Stages and Inculcation. In this case, the manager is seeking to legitimize and integrate an initiative into the corporate structure before the participants fully understand what makes it successful. One result may be that the corporate machine incorporates the activity quickly, but without the lessons learned and best practices. The inefficiencies yet to be worked out are codified and effectiveness remains sub-optimal. The entire effort is deemed too costly to maintain.

A steady approach to maturing initiatives in the margin allows essential processes to take place. Skipping steps is costly.

Practicum: Status of My Projects

I compare my current work portfolio against the Margin Maturity Model (M3).

Having loosely defined the Margin Maturity Model (M3), I thought it would be a helpful exercise to place a few of my various projects and initiatives in the margin along that continuium. Here are the results:

• Large NATO Project (5 - Inculcation): Over the past 6 months I have transitioned all my responsibilities to support personnel and now fulfill a project assurance function.
• A NATO Service (3 - Ramp-up): I have reached out across the organization to expand the volume of our activity in this area, build a team, and systematically address new opportunties.
• A NATO IT Market Segment (2 - Test): I've pulled together key internal/external players to address two opportunities in this segment.
• An International Energy Market Segment (1 - Idea): I'm exploring two near-term opportunities while making internal/external connections and conducting research.
• A European Environmental Market Segment (1 - Idea): I've conducted background research, made a few key connections, and tracked opportunities but have not moved to test our ability to compete in the market.

Overall, my portfolio is currently biased toward the early stages of the M3 - we could call that a "high margin" mix. With the most mature initiative moving out of the mix altogether, it is easy to see the vulnerability of this position. There is high risk and few resources in stages 1 and 2. My challenge is to rapidly mature one or two initiatives.

Theory: Group Theory and Margin Project Evolution

The Early Margin Maturity Model (M3) is similar to a theory of group development proposed in the 1960s.

In my previous post, I speculated on the maturation of margin initiatives and identified several key stages. Upon further reflection, I realized I had seen this before as a group development theory. The theory postulated by Tuckman in 1965 and cited extensively has five stages:

1. Forming
2. Storming
3. Norming
4. Performing
5. Adjourning

The constructs are very similar, but the application in the M3 is broader. The Forming/Storming/Norming/Performing concept deals specifically with group orientation, development, and performance whereas the M3 includes elements of business startup/entrepreneur models that focus on activity and objectives. In addition, the group development theory looks at a group evolving with a steady number of participants while within the M3 the team may start with only 1-2 people and grow significantly as the effort matures.

Still, this theory has practical application in managing teams in the margin as you guide them through the M3 process. In the early stages of a new initiative the team you put together may be new contacts within the organization. Traditional managers will chafe against new ad hoc tactics. In the high-risk environment, stakeholders will seek to push their own agendas. Margin managers must expertly address concerns, bring cohesion, resolve conflicts, secure commitments, and manage responses to failure and setbacks.

As the initiative matures, relationships grow stronger. Some benefits are realized and team members share a common bond in creating something new. Stakeholders require less prodding to contribute to the project's objectives. Communication becomes easier. Managers in these later stages of a margin initiative must lead the way in identifying lessons learned and applying them to improve team performance. They must help the team identify and celebrate successes, refine roles and responsibilities, and tighten the group's understanding of the mission.

The following provides a crosswalk between Tuckman's group theory and the M3.

1. Idea - Early Forming
   
2. Test - Forming
   
3. Ramp-up - Storming to Early Norming
   
4. Codify - Norming and Performing
   
5. Inculcation - Performing (and Adjourning via transitioning responsibilities)
   

(For more on Tuckman's group theory see: http://www.infed.org/thinkers/tuckman.htm)

Theory: Early Margin Maturity Model (M3)

Margin initiatives follow a recognizable pattern. Tracking initiatives across this pattern assists in effective planning.

This may be a little premature, but initiatives undertaken in the margins of corporate practice have seem to follow a recognizable pattern. They grow from nothing into semi-recognized efforts and finally become official, corporately-sponsored activities. Below is my initial take on the major stages along this continuum.

1. Idea - Before anything happens, an operation outside the margins of the organization begins as an idea. "Hey, what if we did this?"
2. Test - Initial activities are usually exploratory. "Let's see if this works."
3. Ramp-up - If the test produces some positive results, it is time to invest. Initial activities are expanded, often with little refinement. "Wow, I wonder if we can do that again?"
4. Codify - As activity levels expand, more information is available to refine operations and standardize practices. "How about if we did it this way?"
5. Inculcation - Institutional pressures from heightened activity volumes and a growing track record of success push the effort into standard operational swim lanes. "This should really be part of the XYZ division."

Serial margin managers, such as myself, begin to outsource the effort by stage 5 where traditional management functions are required so that we can focus on other initiatives maturing in stages 1-4.

Essential Skills: Efficiency

Scarcity in the margins forces leaders to maximize efficiency.

The margins are resource scarce work environments. Long term margin managers learn how to do more with less - working efficiently to get essential tasks done quickly. Managers operating within traditional structures, by contrast, grow accustomed to resource availability - utilizing assets ensure quality.

One of the most difficult aspects of working with traditional managers on margin initiatives is their inability to reduce quality to gain speed. Often, they are unable to trade a "top quality" position for a "good enough" solution. Personnel who consistently work in resource intensive environments become so used to holding each project to the highest professional standards that they label anything less than the best simply "not doable".

Leaders in the margins must master the 80% solution. Often it is that remaining 20% that pushes a 2-week task into 4 weeks, the 1 hour meeting into 2 hours, or the $5,000 effort into a $10,000 effort. Client or stakeholder requirements rather than internal/artificial standards or expectations should drive solution development. Margin leaders need to be in tune with client expectations in order to source initiatives efficiently. They must also help translate those expectations for traditional managers/team members when working collaboratively to ensure buy-in for the 80% solution approach.

Practicum: On the Weakness of Coalitions

While necessary, coalitions are inherently weak structures for getting work done. Here are some tips to make them more successful.

Managers in the margin must work collaboratively with other divisions and individuals to achieve desired objectives. Managing coalitions, however, is less straightforward than managing within the organizational hierarchy. You are dependent upon the inputs of others yet largely unable to control how, when, and in what condition those inputs will be delivered. This situation is further exacerbated if those inputs are needed from individuals senior to you.

I have found that, even if it is in their own self interest, margin activities are 2nd-priority activities for traditional managers (or 3rd or 4th or...). They are undertaken in addition to what they are normally required to do. Without a corporate mandate or "borrowed" senior executive authority it is often extremely challenging to get coalition partners to perform at a satisfactory level of quality.

To ensure acceptable participation, the following appears to work:

• Clearly define what is required. Be very specific on what you need and when you need it. Never assume they will do what is required in a timely fashion. Spell out how quality will be measured (e.g. "a 3-page executive summary covering X, Y, and Z", "identify all resources required using a WBS with personnel and hours assigned to each task item", etc.).
• Leverage peer pressure. Everyone in the coalition is dependent on everyone else. Making assignments public and holding people accountable to the group provides peer pressure. Often, publishing a to-do list of action items identified during a meeting can accomplish this. It is somewhat embarrassing to be the only person in the group who didn't get their share of the work done from the previous meeting.
  
• Leverage authority. Secure the buy in of somebody above the person you require inputs from. They can then assign the work - a task that costs them next to nothing and can be accomplished quickly. Your tasks then fall within the traditional lines of authority for the person or people doing the actual work. This is less effective when dealing with high-level managers and directors...or your own boss.
• Check on progress. Your task will likely drop from their minds until the deadline approaches. Check in halfway between the start date and the deadline and then again halfway between the first check in and the final deadline. These are critical periods in the natural life of any project where efforts are renewed with greater earnestness. Expect little to be accomplished by the first check in, but by the second you should see some progress - perhaps 50% completed. If they miss these milestones, it is likely their work will not be done when needed.
• Do their work for them. While this usually isn't optimal and sometimes impossible, it is a good strategy when you need stakeholder buy-in but little actual support. Complete as much of their activity as possible to "get them started" or set their deadline far enough in advance that you have time to rework whatever it is they were supposed to do.
• Build relationships. People are more likely to go the extra mile for you if you have built a longer-term relationship. If you've given them a good effort in the past or have worked together before, they are more likely to step up and do a good job for you now.
  
• Be successful. People are more willing to voluntarily do additional work if the chance of success is high. Having a successful track record encourages others to trust that your current endeavor is likely to succeed and that the personal benefits they are seeking from the initiative will be realized.
  

Essential Skills: Courage

Margin leaders require personal and professional courage.

Leaders in the margin face higher risks than their counterparts in more stable divisions of the corporation. While some risks can be mitigated and others reduced, such as through diversification, they cannot be eliminated. In the extreme, these risks threaten not only business performance but the leader's personal life. Deals gone bad in business can damage careers, income, and family situations.

Coming over to Europe from the US with a company inexperienced in international relocations to take a position in an emerging business practice was a big risk - not only professionally, but personally as well. July 9th will represent our first full year in Europe. We have taken some hits and experienced many highs.

This next year is full of risks professionally and, by extension, personally as well. Will I come to regret this move? Will the price we pay be more than the benefits we receive? I don't know. How does one continue to progress forward in the face of these questions? I guess that's courage.

Here are some quotes on the subject of courage to keep it up this next month:

"One man with courage makes a majority." - Andrew Jackson

"Courage doesn't always roar. Sometimes courage is the little voice at the end of the day that says I'll try again tomorrow." - Mary Anne Radmacher

"Courage is not simply one of the virtues, but the form of every virtue at the testing point." - C.S. Lewis

"The courage of life is often a less dramatic spectacle than the courage of a final moment; but it is no less a magnificent mixture of triumph and tragedy." - John F. Kennedy

"It is easy to be brave from a safe distance." - Aesop

"In the beginning of a change, the patriot is a scarce man, and brave, and hated and scorned. When his cause succeeds, the timid join him, for then it costs nothing to be a patriot." - Mark Twain

(from Quote Garden: http://www.quotegarden.com/)

Viewpoint: Success through Focus or Diversification?

Diversification must be constrained by strategic focus.

In my last post, I advocated for diversifying your work portfolio while working in the margin to mitigate risk. A recent article from Businessweek, however, offers an important counterpoint - the need to focus.

Apple's Startup Culture (Merchant, June 2010) describes how Steve Jobs resurrected Apple and drove the company's market cap to #1, passing competitor Microsoft, over a 10-year period. The key, according to the author, was the creation of a startup mentality. Singular focus is cited as the first critical element of that culture.

"He refocused the strategy to be about one thing. That meant he killed off even good things...he made the decision to shut down big portions of revenue-generating businesses...because they didn't fit with his vision for the company. Some people thought we was crazy. But he was being extremely clear, and in doing so, he "MurderBoarded"-eliminated many options to get on cohesive strategy-his way to greatness."

To achieve success, leaders must limit diversification. While diversification protects against risk, spreading yourself too thin across too many sectors will ultimately undermine all your efforts. Leaders must assume the risk inherent in specialization to achieve greatness.

So, how do you find a balance between focus and diversification? You must assess risk, rewards, and resources to find the answer.

(See: http://www.businessweek.com/innovate/content/jun2010/id20100610_525759.htm?link_position=link2)

Practicum: The Role of Chance in Success

What role does fate have in success? John C. Maxwell only touches on the subject in The 21 Irrefutable Laws of Leadership, but it would seem that fate, chance, or providence (take your pick) is a significant part of the leadership success equation. There are efforts you put a lot of time into that just fizzle, but then serendipitously a chance encounter results in a big win.

There was a recent proposal that I worked on which required a lot of effort. We (seemingly) did everything right. Our proposal beat the competition, but then the bid was cut. Nobody won. Around the same time, a cold call (actually it was an email) to the right contact and I come up with a success. Why did one thing work while the other thing failed? It reminds me of verse.

"Sow your seed in the morning and at evening let not your hands be idle for you do not know which will succeed, whether this or that, or whether both will do equally well. "

- Ecclesiastes 11:6

Chance plays a bigger role in the margins where more risk is involved. Within the safer, well demarcated zones of the organization it is much easier to control success factors - to know the risks and mitigate them. In the margin, chance events are magnified for good or ill. Perhaps the best strategy is that provided in the verse - keep a diversified portfolio.

Viewpoint: White Space Information Brokers

A 2007 article from McKinsey Quarterly highlights the role of white space social networks in corporate operations. Of particular importance is the broker who strategically connects business units across organizational silos.

"Brokers who serve as bridges across a number of subgroups within networks are often quite influential. 'Bridging' relationships uniquely position brokers to knit together an entire network and often make these interactions the most efficient means of gathering and disseminating information in a high-touch way."

Leaders who manage in the margins often fill this type of information and relationship brokerage role. In my business development capacity targeting a new region, I often find myself linking business units back in the US. For example, a recent response to a client request for information required me bring together information from our IT, Environmental Services, and Training divisions. For another effort, I'm combining Training and Logistics capabilities.

Successful brokerage activities require not only strong communication and team building skill sets, they require tenure. Becoming an organizational information broker doesn't happen overnight. Longevity provides opportunities to develop diverse and lasting connections which can be used for new initiatives.

(read more here: http://www.mckinseyquarterly.com/The_role_of_networks_in_organizational_change_1989)

Practicum: Are "Hunter" Skills Hardwired?

We recently acquired a kitten. He likes play and pounce, particularly at night. I did some research and his nocturnal hyper-activity coincides with his ancestor's need to hunt for food. Indeed, his "play" basically revolves around sneaking, pouncing, clawing, and biting various items. At 2 months, his hunter instincts are hardwired in.

This is not unlike what we can observe in the workplace. While many managers are comfortable within the sheltered walls of organizational hierarchies, budget lines, and positional power, some exhibit hunter instincts - constantly hungry for the next challenge. Working together on a project operating in the margin is often a frustrating experience for the hunter. The non-hunter answer to every suggestion begins with "no".

However, kids are natural margin managers. They are constantly exploring, creating, and testing the boundaries of what is possible. We, like our new kitten, are hardwired for hunting. As we grow up, we are rewarded for conformity, standardization, and institutional compliance. These are all needed to operate effectively as a group, but organizations and individuals should never lose the ability to work creatively outside the lines.

Practicum: Value Hard to Quantify

Sometimes, margin managers struggle to quantify their contributions because they fall outside normal business valuations. For example, generating $1M in new business inside a traditional pipeline with established clients will not be as challenging as bringing in $1M in new business when you are pioneering a new market. If you're evaluated on how much you bring in - bottom line - then you have an uphill road to climb.

This happened to me last week during my annual review. I've been with the same company for 10 years and they've treated me well - very well. However, this last review was my weakest ever. My international move (US to Belgium) took a bite out of my performance, but the evaluation process didn't make tolerances for the adjustment. How do you quantify "adjusting to a new culture"? What value do you put on "learning an entirely new client base"?

Given the long cycle in government contracting (my industry), the results will follow in time. My new skills, capabilities, and knowledge will begin to pay dividends over this next year and beyond as I make it over the most difficult part of the learning curve. As a manager operating in the margins of the company, this is part of the risk I take. Increased risk leading to increased reward...at least eventually.

Essential Skills: Building Alliances to Secure Resources

While traditional managers combine assigned tasks with appropriate resource allocation, leaders operating in the margins of corporate activity function in a resource scarce environment. Margin leaders rarely have the authority to directly appropriate the resources they need, yet initiatives still require assets (human, capital, knowledge, equipment, etc.).

Managing in the margin requires leaders to form alliances with asset holders in other divisions or even external to the company to source projects. How? By identifying what value they can derive from the investment and building rapport and trust.

First, partners need to know they will receive something back that is greater than what they are being asked to give as few people will part with anything of value for sake of corporate advantage or the "greater good". This could be direct ROI in the form of revenue, but just as effective are indirect benefits such as corporate recognition or new skill development that can lead to heightened prestige within the company or a raise.

Second, managers in the margin must develop rapport and trust to create and sustain partnerships. Proven success, likability, and position can all come into play in maturing the bonds that will keep people in the game when things get rough.

By combining benefits, trust, and rapport, margin managers can bring together alliance networks that have the resources to implement new programs.

Viewpoint: Companies Seeking Creative Leaders

There is an increasing demand for leaders who manage in the margin. A recent BusinessWeek article entitled What Chief Executives Really Want (Frank Kern, May 18, 2010) suggests corporations are increasingly turning to leaders with traditional "margin manager" skill sets. IBM's Institute for Business Value conducted the survey of 1,500 chief executives which found CEOs seek creativity above all other qualities for leadership positions. According to the article, creativity is desired as leaders confront an increasingly complex global marketplace.

"CEOs have seized upon creativity as the necessary element for enterprises that must reinvent their customer relationships and achieve greater operational dexterity....As CEOs tell us that fully one-fifth of revenues will have to come from new sources, they are recognizing the requirement to break with existing assumptions, methods, and best practices."

Leaders adept at managing in the margins are well versed in the disruptive creativity required by global corporations. We break up the status quo with new, fresh ideas for improving performance. We pick apart traditional ways of doing things to explore new markets and business opportunities. We understand how to manage the inherent risks of new ventures.

"Something significant is afoot in the corporate world. In response to powerful external pressures and the opportunities that accompany them, CEOs are signaling a new direction. They are telling us that a world of increasing complexity will give rise to a new generation of leaders that make creativity the path forward for successful enterprises."

If the researchers are correct, the labor market for leaders who can manage in the margins can only get stronger.

(see: http://www.businessweek.com/innovate/content/may2010/id20100517_190221.htm)