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)