Thursday, February 19, 2015

Noticing Essentials

I love to read articles in LinkedIn, with special interest in learning new and interesting details.  It occurred to me this morning, however, that we sometimes need to focus on basics, and make sure we cover the essentials of a plan before we move on to details.

Early in my career, I was a manager for a movie theater chain.  Our little chain was acquired by a huge international corporation, which then set out on an ambitious expansion plan.  Accordingly, the company built a new flagship theater, spending millions of dollars on a location which, over the next decade, lost millions of dollars.  Managers had tried to warn the head office that the location chosen was not suited to an upscale location, but we were ignored.  No demographic studies were done to confirm assumptions regarding market share or growth potential.  The new location was beautiful and impressive, but was also built in a declining neighborhood where crime was becoming a problem and away from most of the people who would be interested in a new movie theater.  The new location also failed to offer any of the amenities that Houstonians wanted in their movie experience.  The location started with limited customer interest and declined from there.

The same chain opened another location, which I managed, also a flagship project.  This one was much more successful, since it was near upscale shopping and close to Westheimer, one of Houston’s busiest roads.  We were profitable from day one, with large crowds and lots of support even in the slow months.  But the chain made mistakes again, starting with a corporate decision to replace senior managers with younger, cheaper managers.  This led to mistakes by inexperienced managers who did not know how to prepare for crisis or plan beyond the immediate future.  Simple projection of concession stock to avoid running out or losing stock to spoilage was not done, because the old managers were replaced before they could train the new managers in even these simple practices, which damaged customer satisfaction and chased away patrons. 

And then there was the foundation problem.  To save money, the chain had refused to use a Houston architect, choosing instead to use the same guys who designed their Canada locations.  Unfortunately, the ground in Houston is very different from the ground in, say, Toronto, and weight load distribution and weathering were not properly considered.  This led to immediate problems with basement flooding, and eventually resulted in the building failure as the foundation cracked along the east wall … all the way from the front to the back.   The foundation problem was first denied, then ignored, then forced the building to be condemned.

I can’t say how much the failure to plan for these two locations had to do with the eventual collapse of the business, but I can say that from my vantage point I observed that the company put a lot of effort into details while ignoring basic, fundamental needs and priorities.  Those years taught me about the critical importance of making sure I start with what I need, only adding extra expense and complexity where it helps my team be more effective and achieve our goals.

It’s easy to read articles like this and tell yourself you won’t make those foolish assumptions and focus on image rather than substance.  But what started me thinking about the need to watch out for glitter and gloss, was the fact that so many of the photos that show up in The Pulse, show attractive models more than real employees, and ideals more than the nitty-gritty of real-world work.  That’s why I have a photo of a pair of sensible shoes.  No one gets excited over a pair of plain work shoes, but it’s very important to make sure you have a good solid grip on things.  It may not wow anyone that you first pay attention to stability and good sense, but it may well prevent you having to explain a fall from wearing something silly.  In the same way, no one is likely to hand out awards for testing assumptions and making sure you cover the essentials first and surest … but you are performing a vital service to your company by doing that work.

Monday, February 16, 2015

How to Kill Your Company: Peavey’s Appalling Performance on National TV

My wife is a big fan of the TV show ‘Undercover Boss’.  This is because the show generally portrays the human side of executives, who work in disguise alongside regular employees and later praise and reward their people with bonuses, promotions, and process improvements.  Sometimes the show strains to present the business in a favorable light, but at least the owners and bosses understand that the show is a great opportunity to build the brand and improve the health of their company culture.

Until last night.

Last night’s episode focused on Courtland Gray, Chief Operating Officer and heir-to-the-throne of Peavey Electronics.   It started off with the nominal premise – Courtland was being groomed to take over the top job from Hartley Peavey, who planned to retire, and he wanted to get a sense of how things were really going in his company.  Courtland put on a disguise and took a fake name, and visited several locations to check his employees’ work quality and morale.

There were warning signs early on, that Courtland was not the right guy for the job.  Courtland enjoys hobbies in his free time which include beekeeping.  This was telling, since Courtland remarked to the crew filming him how much better he thought things would be, if his company ran like a beehive, not realizing the elitist and condescending arrogance his comment displayed.  Sadly, by the time the show ended that remark would be reinforced by Courtland’s other statements and actions.   He really is that arrogant.

At Courtland’s first stop, he discovered that Peavey equipment – pretty much all of it – had quality issues.  He was offended by the crowd’s consensus that Peavey products were shoddy, but he made no note to establish better Quality Control.  Since the introduction noted that Peavey was suffering in the market, the discovery of his brand’s unpopularity could have been an opportunity to regain market share and customer support by focusing on better quality, but Courtland paid no attention at all to this possibility.  He focused only on marketing the brand, not improving the product.
At his next stop, Teresa - a veteran employee with over two decades with excellent skills and whose work is praised by Courtland - complained about worries about job security and the fact that she had not received a raise in eight years.   Michael, another employee whose work Courtland praised noted that he had turned in two-week notice because he had received a better offer – he loved working at Peavey but needed more money to take care of his family.  Courtland made sympathetic noises to the employees, but to the camera complained that the employees ‘did not see the big picture’.  It should also be noted that manufacturing resources and processes were far behind the times and insufficient to the targeted goals.  Even a casual observation showed that Peavey was not providing the necessary tools and resources for employees to accomplish the work targets set for them.  Even in 2015, Peavey had employees hand-soldering circuit boards and manually building boxes made from cheap particle board.  

There is a point in every episode of ‘Undercover Boss’, where the boss reveals his identity to the employees and rewards the good guys.  Courtland certainly goes through the motions, promising raises and money to help the family and vacation time.  But CBS revealed that this episode was different.  In the follow-up section, the show notes that Courtland is ‘trying’ to get the bonuses and rewards he promised … meaning he has not kept his promise for four months and may never come through on his word.  Worse, more layoffs have been made, including Teresa and Michael.   Courtland actually smiles about giving 60 days to the employees, as if he had not assured the employees that this would not happen.  Teresa coldly observes that when the layoff notices came, Courtland and Hartley were nowhere to be found – it was just someone sent down from HR.  While layoffs are a sad fact of life in the modern world, the manner and timing of this one suggests that the executives at Peavey have no real sympathy for the pain caused by their decision, and what’s more they are too cowardly to at least deliver that bad news in person.  The episode reeked of executive arrogance, incompetence, cowardice, and greed, especially since Hartley’s comments and appearances indicated he fully supported Courtland’s behavior. 
Any one element of this episode would have been bad enough.   But the total episode was practically a guide of things to avoid in running a business:

  •         Executives had no interest in improving quality issues;
  •         Executives did not value the individual skills and experience of their employees;
  •         Executives would not provide adequate resources, even when doing so would increase both productivity and morale;
  •         Executives made promises they did not keep;
  •         Executives made assurances knowing layoffs were coming;
  •         Executives went into hiding when bad news was delivered; and
  •         Executives displayed all of these faults on national television.

There were, I suspect, some people who greatly enjoyed this episode of ‘Undercover Boss’.  Namely, the competitors of Peavey Electronics, who should expect a benefit as potential customers flee the disgraced Peavey name.  Skimming through the Internet this morning, I found several forums where outrage among guitar, microphone, and electronic accessories users is already strong.  It almost seems as if Courtland was trying to tank the company, since every statement and behavior seemed to be the worst choice when selling the brand.  Sadly, I believe he was simply that far from reality.  

There is a grim lesson there for any boss who believes he or she knows everything necessary to make their company succeed, and it starts with the need to be humble and respect the people who make the actual product.  One final comment I have about Courtland, is that he showed no aptitude whatsoever in actually making the product.  He can’t make the product, he can’t improve the product, and he can’t take care of the people who do make and improve the product.  Courtland Gray is worse than useless, and we should all seek to avoid that fate by making sure we learn from, listen to, and respect the people in our teams.