DN Debatt translation "Many corporate leaders just aren't good enough in the crisis"

There were quite a few of you that wrote to me and ask me to translate my debate article in Dagens Nyheter (Daily News) one of Swedens largest daily newspapers. Obviously, the article is written of a Swedish public but I am afraid the problems I highlight are equally challenging in many other countries. The article came out today and has already generated quite a bit of attention. If you would like to view the original Swedish article go to: http://www.dn.se/opinion/debatt/manga-som-leder-foretag-haller-inte-mattet-i-krisen-1.917974

Following is my own fast and more or less direct translation of the article:

”Many corporate leaders just aren't good enough in the crisis”

Experienced businessman criticizes corporate leaders: The crises cannot be solved by reducing head-count. Desperate cost-cutting does not improve a company’s long-term profitability. Head-count reductions almost always lead to reduced customer benefit and therefore to weaker competitive advantage. Far too many companies spend money on firing employees and then in a couple years they spend even more money recruiting new ones. Those companies that invest in developing their employee’s competence now will be much stronger when the current economic cycle turns up again, writes Kelly Odell who recently resigned as sales director for Volvo Cars.

I can keep quite any longer. After many years in leading positions in Swedish companies, I can only come to the conclusion that many of the leaders of our important companies just aren’t good enough. I recently read in ”Dagens Industri” (Sweden’s leading daily business newspaper) that ”Swedish companies are the most pessimistic in Europe” and ”Over half of Swedish managers expect more head-count reductions in their own organizations this year”. In my opinion many corporate leaders lack vision and in often even backbone.

The answer to weaker profitability is not necessarily head-count reductions. The answer may not even be saving money. These actions are typically only necessary if you have to maximize your results in the nearest quarter. If, on the other hand, you goal is to maximize profitability over a longer time frame the best thing to do may be to spend more money and invest in developing the competence of those employees who may not be needed in the operations at the moment.

No matter how dark things look at the moment, the long-term trend is that there will be a shortage of employees (not jobs). Many companies spend money on firing employees and then in a couple years they spend even more money recruiting new ones.

Those of us that have been around for a while know that at the end of each economic down-turn there are companies that emerge stronger and better prepared for the future because they invested themselves out of the crises. The same thing will happen after this economic crisis.
Some companies will disappear, some will survive and a few will bloom. The ones that manage best will be those that have a clear vision of what they want to achieve that will create real value for their customers. They are companies who stand by their core values even in times of crisis.
Some companies seem willing to do whatever it takes to survive, but the best companies and the best leaders would rather let their businesses go bankrupt than be forced to give up their core values. Take a look at many companies’ homepages and you will read high-flying visions and value statements declaring that our employees are our most important resource and expressions of customer centricity. But what happens when things get tough? The most important resource (the employees) at many companies is divested at the lowest possible cost and the ones who remain get no training or education. This leads, almost without exception to reduced value for the customer. For example, there are few large Swedish companies that don’t have longer waiting times for phone calls to their customer service as a result of the current economic crisis.

Some will think my views are naïve. Some will say that companies are bleeding and radical actions must be taken for the best of the company and for society. This may be true for some of our companies, but maybe we should ask ourselves how these companies ended up in a crisis in the first place. Where are their reserves? Were corporate leaders not aware that strong economic cycles are followed by weak cycles?

Even if I don’t expect anyone to know exactly when an economic cycle will change or how deep they will be, everyone knows these cycles exist. Some of our companies were in difficult situations even before the current financial crisis arose. For these companies the events of last fall were just an additional burden to carry. Many other companies on the other hand have made a great deal of money during many years for their owners during a long and strong economic high. Where is that money now? Didn’t anyone put away something for the winter?

Firemen, the polis and the military all know that you should plan and train for crisis when there isn’t a crisis. Have our companies done their scenario planning? What will we do if/when the economy declines? Do we have the resources to get buy? How will we manage our employees? I know from my own experience that many have not prepared at all.

Now more than ever we should focus on becoming more effective in our businesses not just on lowering costs. Reduced profitability is a normal symptom of economic downturns.
Possibly the most common reaction is cost-cutting. Cost-cutting is relatively simple to do and can solve short-term cash- flow needs, but in itself, cost-cutting does not improve the company’s situation for the future. The question we need to focus on is how to improve return on investment.

There is a direct correlation between the perceived customer benefit you create and the customer’s willingness to pay for it. Therefore we should think about how to create the greatest possible customer benefit with the least possible resources. What is really important for the customer? How well do we meet and exceed our customers’ expectations? How can we change our offer, processes or behavior to increase customer value with fewer resources? Hunting costs is easy but creating extremely cost-effective companies is difficult, very difficult. That is why far too many companies focus on saving money in a crisis without reflecting on what impact the cost savings will have on the organization. I have seen at close range repeated examples where we send 10% of the workforce home but we don’t send 10% of the work home. We have also not defined new ways of working that make it possible to get everything done with fewer resources. The truth is that you often don’t have time or competence to address those challenges.
It is also interesting to note that HR-managers in the USA are almost as pessimistic as their Swedish colleagues. My homeland, the USA, is also the home of (what Swedes call) “quarterly capitalism” and Sweden is often quick to jump on the latest management trends from the USA. Is it possible that we have adopted this American practice even stronger than they have? I have worked all over Europe and seen that central and southern European companies have a more long-term perspective especially with regard to financial planning in contrast to the Anglo-Saxon countries and Sweden.

Sweden’s corporate leaders have not created the current global economic crises on their own, but together we have unconsciously, and in cooperation with other business leaders and owners around the world, contributed to making the crisis worse.

Kelly Odell

Many of our corporate leaders just aren't good enough!

The following link goes to a debate article I had in DN Debatt. The debate page in one of Sweden's largest daily papers. Unfortunately, for those who don't speak Swedish you wont understand it. Maybe I will get around to translating it for you.
http://www.dn.se/opinion/debatt/manga-som-leder-foretag-haller-inte-mattet-i-krisen-1.917974

Looking for a Good Benchmark? Try QlikTech

I just spent an afternoon leading a workshop with one of the most interesting companies I have been involved with in a very long time. The company is called QlikTech (http://www.qlikview.com/) and if you haven´t heard of them yet , you will and the sooner the better for your own sake. QlikTech impressed me for two main reasons: The Product and The People.

The Product
QlikTech has a software product called QlikView that is as powerful as it is simple. As far as I am concerned QlikView is the premier business intelligence software on the market today. Those of you who have followed me or my blog know that I have been around and I have seen some good BI software solutions and lots of bad ones. Oddly, most of the good ones I have seen have been “homemade” . Whether or not these BI applications are “homemade” or purchased from a software supplier most of them are either not flexible or very expensive or often both.

QlikView puts information (and analysis tools) in the hands of the people in a way that is easy to comprehend so that your employees brain cells can work on analyzing data and solving problems instead of trying to compile and understand the data. In a time when most of us are used to application roll-outs that take weeks, months or even years QlikView takes days. Many companies still spend more man-hours creating reports than actually using them but not with QlikView. In fact, it will probably take less time for a manager to create their own report with QlikView than it would take them to ask someone else to do it.

The People
The second thing that impressed me about QlikTech was the quality of the organization. In my working life I have had the opportunity to peek behind the curtains of many different companies and organizations. It is not often I run into a company that is truly and consistently striving to walk the talk in the way that QlikTech is doing. Don’t get me wrong, with the kind of radical growth they have had, going from a start-up to a major player in the global Business Intelligence software arena they have had their growing pains. The difference is that they are seriously addressing the difficult cultural issues and not just paying them lip-service.

The group I met was what QlikTech call their Veterans. In their terminology that means they have been employed about 5 years or more. Veterans they may be but hardly old-timers by most company standards. Nonetheless, these Veterans were part of the company at a time when the whole company could sit around a table and drink coffee together. Today they have employees spread all around the world and you would need a coffee table the size of a football field to get everyone around it. QlikTech is working consciously (and successfully) with managing their corporate culture instead of just letting the culture happen. They are listening closely to and acting on employee concerns and ideas. They are striving to keep in touch with their entrepreneurial roots while embracing the benefits of growth and profitability.

In short, keep your eye on QlikTech and if and when they get listed on a stock-market somewhere I am going to be first in line to buy some shares. This is a company that is going places.

Ten Commandments of Change

I. Remember that change is inevitable.

II. Change is in itself neither good nor bad! Some changes affect us positively, some negatively and some not at all.

III. There are primarily three types of change:
a. Those changes we initiate ourselves
b. Those changes we did not initiate but over which we have great influence
c. Those changes we did not initiate and over which we have little or no control

IV. You control your destiny! Although we cannot always directly influence change we can influence on how the change affects our lives through our attitudes and actions.

V. The Paradox of Change: The outcome of change is difficult to foresee. Sometimes those changes that appear to be most negative in the short-term bring the most long-term benefit and those changes that seem most desirable in the short-term are not necessarily best for us in the long-term.

VI. Therefore, never initiate change simply for the sake of change! Change should only be initiated when absolutely necessary with a real desire to make things better!

VII. The three fundamental questions driving change:
a. Where am I now? (It is ok to be happy where you are!)
b. Where do I want to be? (You don’t necessarily have to change anything!)
c. How do I get there? (Go back and re-think the first two points before developing your plan of action!)

VIII. Base you decisions on facts. Intuition is better than no information at all but facts are always better.

IX. Don’t worry if you don’t succeed the first time. Change is difficult but it is never too late to try again!

X. Be persistent! Those who succeed are not those who never fail, they are the ones who never give up!