Tag: culture

Tale of Two Cities

tomkapostasy4 Comments

In a recent speech at the Carmel Rotary Club, Indianapolis Star editor Dennis Ryerson warned the audience of the risk of a central city meltdown in Indianapolis as he had observed in Cleveland 20 years ago.  As someone who has lived in each region for more than 20 years, this prompted me to collect some historical statistics and speculate on the differential success of these two mid-sized Midwest areas.

In 1900, Indy was two-thirds the size of Cleveland, which at 654,000 people, was the nation’s seventh or eighth largest urban area by various definitions.  Indianapolis was in the 21st-25th range.

By 1930, Cleveland had grown by an astonishing 173%, adding 1.1 million people for a total of 1.8 million, reaching a peak national ranking of 6th to 8th.  Indianapolis was the turtle in this race, adding a mere 200,000 residents to grow by 50% to reach Cleveland’s 1900 650,000 population level, while maintaining a 21st-25th highest population ranking.

By 1960, Cleveland had added another one million residents (50%), reaching 2.7 million residents and maintaining a top 10 population ranking.  Indianapolis grew a little faster on a percentage basis, adding 400,000 residents to reach the 1.1 million population level.  Its national population rank slid to 26th as Sunbelt and west coast cities began to grow.

In the next five decades to 2009, Indianapolis continued its modest 1-1.5% annual growth rate, adding 750,000 residents to reach a population of 1.8M, while sliding to 34th place in the national metro population rankings.  Cleveland reached a peak population of 3M in 1970 before declining to 2.8M in 2009, good for a 26th place metro population ranking. 

In summary, Cleveland grew by 1 million people from 1900-1930 and from 1930-1960, but added ZERO population in the next 50 years!   Indianapolis added a quarter, half and three-quarters of a million people in those 3 periods.  What could possibly account for these divergent trends in cities located only 300 miles apart?

The locations are not very different.  Indy claims to be the “crossroads of America”, while Cleveland has said it is “the best location in the nation”.  Cleveland is on the New York to Chicago train line, the Great Lakes and interstates I-80, I-90 and I-77.  Indy boasts I-70, I-65, I-74 and I-69 interstate access.  Indy has leveraged its location and lower labor costs to become a greater distribution hub.  Cleveland has enjoyed a decade as a mini-hub for Continental, while Indy once served as a minor USAir hub.  Both cities have attracted rural residents from a 100 mile circle, but Cleveland’s area is only half as large due to Lake Erie.

Both cities had strong historic banking companies.  All of the Indy companies are gone.  Cleveland maintained National City Bank and KeyCorp as major banks through most of the period.

Cleveland has maintained a large Fortune 500 headquarters lead.  Firestone, Republic Steel, Uniroyal, Goodrich. TRW, Std Oil, White Motor, Eaton, Sherwin-Williams, Cleveland-Cliffs, Hanna Mining and Reliance Electric appeared in the 1960 list.  Cleveland had grown from 12 to 15 firms by 2009, adding Progressive Insurance, National City, KeyCorp, Parker-Hannifin, PolyOne, Lubrizol and Travel Centers of America.  Indy had 5 firms in 1960: RCA, Lilly, Curtis Publishing, Stokely Van Camp and Inland Containers.  It maintained only Lilly, WellPoint and Conseco in 2009.

On the professional sports scene, Cleveland has maintained football and baseball teams, while adding basketball, but dropping the second level hockey Barons.  Indy added the Colts and moved the Pacers from the ABA to the NBA.  Indy has successfully pursued an amateur sports strategy, attracting the Pan-Am games, the NCAA and many collegiate tournaments.

The cities share historical strengths in their art museums and orchestras, with Cleveland’s ranked higher.  Indy has added the Children’s Museum and Eiteljorg Museum, while Cleveland added the Rock n Roll Hall of Fame museum and lost the Salvador Dali museum.  Neither city has a major state university, with IUPUI and Cleveland State growing in parallel.  Cleveland has Case Western Reserve as a local research university.  Greater Cleveland has a much stronger community college system.  The Cleveland Playhouse and theatre groups offer more than Indy’s scene.  Cleveland’s Coventry/University Heights area is more vibrant than Indy’s Broad Ripple.  Cleveland adopted Michael Stanley while Indy embraced John Mellencamp.

Both cities focused on manufacturing for growth, especially automotive and metal forming manufacturing.  Cleveland had a greater emphasis on basic manufacturing in steel, rubber and plastics.  Indianapolis attracted a significant amount of investment from Japanese manufacturers.  Indianapolis’ health care industry has benefited from Lilly, Roche and IU, while Cleveland has leveraged CWRU University Hospitals and the Cleveland Clinic.

Net, net, Cleveland should have continued to grow slightly faster based on the factors above.  The drivers for Indianapolis’ positive differential growth include:

Better public relations regarding momentum.  Cleveland’s river fire and “mistake on the lake” moniker have hurt.  Indy was able to overcome the “naptown” label through continued positive growth and publicity.

Indianapolis and Indiana have maintained a low tax and low service environment conducive to business investment.

Indy has benefited from being the state capital and the only large city in Indiana, while Cleveland has battled Columbus and Cincinnati for state leadership.

Indianapolis has avoided major racial conflicts.  The 1966 Hough riots in Cleveland contrast with the calming Bobby Kennedy speech after Martin Luther King’s 1968 assassination.

Indianapolis public schools have not fallen as far as IPS.  Busing and white flight had a bigger negative impact in Cleveland where a more established Catholic school system option existed.

Downtown Indianapolis has recovered based upon major public and private investment in the Circle Center Mall, convention center and sports arenas.  Cleveland’s investment in the Brown’s stadium, Jacobs Field, Cavaliers arena, major office buildings and “the flats” has never reached the critical mass required for downtown growth.  Indianapolis’ downtown residential growth has been modest, but adequate.

Indianapolis pioneered the concept of uni-gov, merging the city into the county.  Cleveland has remained an island within Cuyahoga County and a small island within the metro area. 

Indianapolis civic leaders found a variety of ways to preserve and grow the central city and avoid having widespread areas of decay.  As Mr. Ryerson noted, this strategy will be more difficult to maintain as the surrounding counties grow at the expense of Marion County.  Both cities could benefit from some degree of regional government and taxing authority that aligns the interests of suburbs with the central city.

  Cleveland Indy  
  7 counties 9 counties  
       
1900          654         429 66%
1910          913         489 54%
1920       1,426         569 40%
1930       1,784         656 37%
1940       1,817         702 39%
1950       2,154         829 38%
1960       2,734       1,071 39%
1970       3,000       1,248 42%
1980       2,833       1,305 46%
1990       2,759       1,381 50%
2000       2,844       1,605 56%
2009       2,791       1,824 65%
       
1900-30       1,130         227  
  173% 53%  
       
1930-60          950         415  
  53% 63%  
       
1960-2009            57         753  
  2% 70%  

Project Opportunity Analysis Template

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    Opportunity Analysis – Name of Project
     
    1. Key Strategic Priority Areas/Critical Success Factors
10 A Creatively addresses more than one of the nine key strategic priority areas.
7 B Directly targets a significant improvement in one key strategic priority area.
3 C Contributes to the achievement of one key strategic priority area.
  D Provides benefits, but does not address any of the nine key strategic priority areas.
     
    2. Annual Strategic Plan
10 A An integral and significant preplanned component of the annual strategic plan.
7 B An initiative within the annual plan.
3 C Consistent with focus areas of the plan, but not defined as a planned initiative.
  D Provides benefits, but is not connected to the initiatives defined in the plan.
     
    3. Mission, Vision and Precepts 
10 A Creatively addresses more than one precept or component of the mission.
7 B Directly targets a precept or component of the mission.
3 C Contributes to a precept or component of the mission.
  D Provides benefits, but the connection to the mission and precepts is weak.
     
    4. Long-term Strategic Plan
5 A Creatively addresses more than one goal of the plan.
4 B Directly targets a significant improvement in one goal of the plan.
2 C Contributes to the achievement of one goal of the plan.
  D Provides benefits, but does not address specific goals of the plan.
     
    5. Program/Product Portfolio
5 A Builds on an existing area of strength, leveraging a core competency.
4 B Provides services the organization has targeted for growth or improvement.
2 C Addresses an area of weakness considered critical to portfolio of services.
  D Serves a new area, a weak area, or one that de-emphasized.
     
    6. Customer(s) Served
5 A Targeted to serve an existing primary customer group.
4 B Serves a customer group which has been identified for growth potential.
2 C Serves a secondary customer group, by leveraging an existing program.
  D Serves a secondary customer group or channel,  which others could serve as well.
     
    7. Proven Demand for this Service
5 A Members, customers and sponsors have paid for this program before.
4 B Marketing research and tests indicate that this is a top priority service.
2 C Marketing research supports some demand, but dollar value is unproven.
  D Some constituents demand this service, but no research or market proof.
     
    8. Brand Consistency
5 A Service reinforces key brand messages and is promoted with existing vehicles.
4 B Service is consistent with key brand messages, but requires separate promotion.
2 C Service connects with some brand messages and requires separate promotion.
  D Service is not consistent with key brand messages.
     
    9. Delivery Channel Environment
5 A Reinforces historical and current programs and values in delivery organizations..
4 B Consistent with historical programs and values in delivery organizations.
2 C Some degree of innovation or stretch that may be a concern to some players.
  D Innovative program designed to introduce change for delivery partners.
     
    10. Financial Resources
5 A Earns a financial payback of investment in one year or less.
4 B Earns a financial payback in two years or less.
2 C Breaks even in more than 2 years, but provides significant qualitative benefits.
  D Qualitative benefits are deemed to exceed quantitative costs.
     
    11. Sponsor/Funding Resources
5 A Creates a strong opportunity to attract new sponsors and contributions.
4 B An attractive project 80% likely funded in a year, without harming programs.
2 C More than 50% funding chance, but may compete with existing programs.
  D Less than a 50% funding chance or clearly competes with existing programs.
     
    12. Information Technology
5 A Uses existing capabilities without modification.
4 B Uses existing or planned strong capabilities with minor enhancements.
2 C Uses existing capabilities, but requires development outside of current plans.
  D Requires pioneering development work to provide appropriate service.
     
    13. Delivery/Operations/Processing Capabilities
5 A Uses existing strong capabilities without modification.
4 B Uses existing strong capabilities with minor enhancements.
2 C Uses existing capabilities, but requires significant development.
  D Requires pioneering development work to provide appropriate service.
     
    14. Human Resources
5 A Service can be provided by existing staff and structure.
4 B Service requires some additions to staff in existing categories.
2 C Service requires new staff skills and minor adjustments to structure.
  D Service requires major initiatives in recruiting, retention and structure.
     
    15. Monitoring and Evaluation
5 A Success is easily measured by existing measurement and evaluation tools.
4 B Success can be measured with only minor enhancements to current system.
2 C Success can be measured, but will require adjustments to existing measures.
  D Success is difficult, if not cost prohibitive, to measure directly.

Role of Corporate Culture

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In the years since World War II, the organizational environment has changed from
 one of static, mechanical efficiency optimization to another of dynamic, organic,
 effectiveness evolution.  Global competition, innovation and limited resources in the
 face of a growing and wealthier world population have lead to non-stop, disruptive
 change in all industries.  This change is accelerating, impacting all organizations
 which now need to improve their activities or face extinction.  
 
 In addition to competitive industry threats, organizations must compete for highly
 qualified staff as never before. The increased requirements for success mean that
 there are more organizations pursuing a limited number of high potential employees. 
 Increased organizational demands for mastery level skills, flexibility, innovation,
 accountability, teamwork, tolerance, self-control, service, self-motivation and loyalty
 have outstripped the ability of labor markets to provide these new versions of the ideal
 employee.  Organizations with the greatest needs and resources are providing
 compensation and work environments to attract, motivate and retain these
 individuals.
 
 There is a growing consensus by thought leaders  that  success requires:
 
 A. Innovation
 
 The ability to digest changes by staff members at all levels and functions.
 The ability for all staff to innovate and apply innovations made elsewhere.
 A customer focus that shapes decisions and relations that first meet external needs.
 
 B. Best Human Resources
 
 Access to the very best human resources at all levels and functions (inside, outside)
 A work environment that is attractive to the very best human resources.
 Cost-effective recruiting/retention of high value employees, contractors,  suppliers.
 Staff members whose value-added assets and results grow by 5% annually.
 Embracing diverse talents, perspectives and cultures in decisions and practices.
 
 C. Cost-Effective Use of Resources
 
 Best use of all resources by matching talents and experience to needs.
 Best use of resources through developmental delegation focused on results.
 Best use of leadership, management and professional roles.
 Synergy from combining complementary talents to produce breakthrough results.
 
 D. Alignment Within Complex Systems
 
 Engaged, self-motivated staff with a minimum of management overhead costs.
 Shared accountability, reducing the need for oversight and measurements. 
 Complex processes that connect many individuals, departments or organizations.
 Systems that motivate achievement, rather than attempt to control behavior.
 Less detailed planning/forecasting, with more capacity for adapting to situations.
 Commitment to a team, organization or mission that motivates personal effort.
 Alignment of global supply chains, without fully integrated planning systems.
 Elimination of waste, duplication and conflict through coordination mechanisms.
 
 Overall Strategies
 
 Organizations that are able to evolve and adapt in a challenging competitive
 environment must have several complementary overall strategies, including:
 
 Effective Strategic Plans … 
 … clearly defining direction, evaluating situations and choosing priority actions.
 Human Resources … 
  … attracted, engaged and motivated by a true commitment to win-win results.
 Leadership … 
 … to set direction, coordinate plans, engage staff, serve customers and inspire.
 Resources … 
 … financial, supplier, brand, processes, patents, intangible and tangible assets.
 Performance Management Systems …
 … planning, reporting and improving systems.
 Culture … 
 … a set of values/expectations that create alignment and motivate optimal results.
 
 Culture
 
 A well-defined organizational culture honestly reflects the expectations of staff
 members for each other and for the organization as a whole.  A set of values defines
 what is expected in terms of behaviors and habits, and what is deemed
 unacceptable behavior.  These values are consistent with the organization’s history,
 customers, experience, strategy and institutional features.  A well-defined culture is
 internally consistent.  It captures the history and expectations of the organization.
 
 An effective organizational culture supports the drivers of success.  It promotes
 innovation and change management.  It values and rewards high performers.  It
 embraces cost-effective practices, especially in terms of delegation which
 empowers strong employees.  Finally, it honors accountability and promotes the
 ability and commitment of staff members to create alignment as an intrinsic part of
 their daily work.
 
 In the end, an organizational culture serves to make explicit the bargain between
 employee and organization in a challenging environment.  Organizations are
 modifying the way they do business to attract, engage, motivate and empower
 individuals who can create the most value.  In return for a commitment to the
 organization and the benefit of their services, employees are provided with an
 environment that maximizes their personal growth, rewards and market value.  
 
 Different organizations select different individual values to define the essence of their
 ideal or preferred cultures. Taken as a collection of values, they clearly provide an
 answer to the question, “what is it like to work at …?” The values represent ideals,
 both of staff and organizational attainment.  They describe what employees want to
 be like, what they aspire to show at their best.  Organizations can slowly change their
 values if they find that the existing set is inadequate to meet the needs for survival. 
 This is a slow process, requiring very significant investment in selecting, defining,
 complementing and implementing.
 
 As an ideal system that coordinates and controls behavior, cultures and values in
 organizations are like those in other social institutions: families, churches,
 communities and clubs.  They are effective only when the members believe in them. 
 This means that leaders are held to a high standard.  It means that trust is essential. 
 It means that individuals must have personal relations with others and that emotions
 matter.  Inconsistent messages or behavior can rapidly undermine commitment. 
 Like an emotional bank account, organizational values can be a reservoir of goodwill
 or an overdrawn checking account.  Directors, management and staff are required to
 hold each other accountable or the values and culture can quickly become
 worthless.
 
 In addition to setting an example in their personal behavior and creating an
 environment of trust, senior managers are responsible for ensuring that
 complementary policies, procedures, processes and plans are consistent with the
 organization’s values.  The primary focus is on human resources systems for
 recruiting, performance management, training, advancement and benefits.  Systems
 for planning, measurement and control are equally important.  Managers must also
 commit to enhanced communication to ensure that consistency is understood or
 inconsistencies addressed.  In addition, managers must operate consistently,
 holding all to the same standards. Managers must develop open, constructive
 relationships with their bosses, peers and staff which allow for constructive
 communication to address situations that appear to challenge the organization’s
 values.
 
 Summary
 
 The demands on organizations are greater today than ever before.  Organizations are
 concluding that global competition, innovation and competition for the best staff will
 continue.  To survive in this environment, they are adjusting their structures to
 promote innovation, best human resources, cost-effective use of resources and
 alignment within complex systems.  A key strategy is to define a set of values which
 comprise the organization’s culture and expectations.  By formally defining their ideal
 values and committing the organization to operating in accord with these values, they
 are seeking to attract, engage and retain the best employees, who are then motivated
 and aligned to produce the greatest results for the organization.  This organizational
 effectiveness strategy is being adopted and refined in all industries with increasing
 success.  It is not the easiest strategy, but it promises the greatest individual and
 organizational rewards to those who can commit to living up to the high standards of
 an ideal culture.

ROI on Personality Styles

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In a world of non-stop change, financial managers agree that “alignment” is the most difficult challenge faced by most organizations.  Through time, more equal access to all other resources has grown: materials, suppliers, facilities, financing, technology, products, entrepreneurs and human resources.

 Organizations have used a variety of methods to create alignment.  Military command and control, strategic planning, portfolio management and process management in various forms have been tried with mixed success.  In some static environments with less technology change, less competition and simpler processes, these approaches have worked well.  In the highly specialized, global, decentralized, changing, virtual world of today, many organizations have concluded that alignment can best be achieved through defining, shaping and reinforcing their corporate culture.

 A critical element in any corporate culture initiative is helping all staff members to have the self-awareness and other-awareness to manage their relations with others.

 My favorite introduction to self-awareness and paradigms is through the fable of “The Blind Men and the Elephant”.

 http://www.peacecorps.gov/wws/stories/stories.cfm?psid=110

 Individual blind men conclude on the basis of their personal investigations that an elephant “IS” a wall, a snake, a spear, a cow, a magic carpet or an old rope.  The moral is that an elephant is more than the sum of his parts.  Attempts to generalize from limited information or paradigms are doomed to failure.  The blind men can see neither the forest, nor the trees.  Many individuals have these same blind spots.  They are unable to see the big picture and they passionately hold onto their world view because they are not aware of the possibility of another approach.

 To help staff members with the personal growth needed to overcome this limitation, many organizations implement a personality styles program.  Myers-Briggs, DISC, Predictive Index, Gallup Strengthsfinders and a dozen others can be used to help all staff understand a few key results and begin to practice seeing the world from multiple perspectives, even forming the habit of expecting to employ multiple perspectives.

 These programs deliver 5 main lessons.  Individuals tend to behave in their own patterns or styles, which can be described.  No pattern is inherently better or worse, except as a means for completing certain responsibilities.  Personal styles make individuals especially effective in functions (accounting, sales, design, or engineering) that match their natural talents.  Individuals are not limited by their styles, but these habitual behaviors are more natural and using other complementary styles requires significant effort.  Since organizations have many functions and individuals with different styles, it is necessary for all staff members to be aware of their styles, recognize the styles of others and learn how to flex their styles to get along with others.

 Since these programs have been implemented many times in most firms across 30 years, one might expect that self-awareness would be the norm, followed by cross-functional cooperation and sophisticated used of different perspectives.  Unfortunately, many of these programs have not delivered the desired results.

 For personality styles programs to build self-awareness, complement corporate cultures, align teams and deliver results, firms need to invest more resources.

 1)      All managers, beginning at the top, need deep training, evaluation and feedback.

2)      All staff require experiential learning, examples, reinforcement and consistent guidance.

3)      Firms need to use the tool everywhere to create the skills, habits and expectations: training, hiring, promotions, cross-teams, planning, performance evaluations, etc.

4)      Firms need to break down the functional barriers and require a mix of styles in each function, job rotation for managers and cross-team experience for everyone.

5)      The personality styles tool, profiles and understanding needs to become part of the culture.  This is the language we use.  These are the stories we use.  These are the executives we use as examples of this style.

 Invest the resources to create a real asset for your organization.  Half of an investment produces little return.

The Effective CFO: Black and White!

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A friend of mine has been a highly successful CFO with middle market companies for 25 years.  I pondered what made him succeed in a variety of companies and industries.

 He’s professionally competent and intellectually curious.  He’s always had a large professional network.  He is a good listener and is especially skilled at cutting through ambiguous or complex situations to identify the core problem or most promising solution.  He understands the basis for business success in his industry and he’s a good negotiator.

 On the other hand, he’s sometimes overly direct, not a technical leader in the CPA profession, not someone who automatically attracts the spotlight, doesn’t outsmart the quantitative business analysts and doesn’t often lead cross-functional projects.

 I think he succeeds because he has established a role and the skills to guide all key players to honestly confront the gray reality of situations.  He offers the financial perspective, but is just as quick to insert a sales, strategy or cultural viewpoint.  He ensures that risk versus return is considered through numbers, stories and analogies.  He contrasts short-term with long-term factors.  He plays devil’s advocate as needed to derail quick decisions or to shore up support for a tough alternative that must be chosen.

 In addition to these decision making skills, he has the wisdom, courage and skills to anticipate the perspectives of the key roles and to guide players into greater self-awareness and understanding of other perspectives.

 He helps finance, accounting, HR and IT staff to see that the fully integrated system and a 1,000 page policy and procedure document, without exceptions, is probably too structured.  He encourages engineers and six sigma black belts to reduce variation and to consider financial and strategic implications.

 He works with entrepreneurial owners to support change and risk taking, but to also gauge how much can be digested, how it can be hedged and what an ideal portfolio looks like.

 He works with boards and shareholders to understand that stock values do not always go up in a predictable manner, unless the books have been “managed”.  The long-term growth in shareholder value includes short-term fluctuations.

 He works with IT, engineering and product developers to have resources, time and authority to learn, experiment and develop new products – within a framework of long-term evaluation.

 He provides sales and marketing teams with the freedom and flexibility to meet company goals, but ensures that measures of final results are fair and the system can’t be beat.

 The effective CFO serves as a fulcrum in Jim Collins’ world of “both/and”.  Stakeholders and role players must be able to leverage their talents and preferred styles AND the contrasting factors which must also be considered for long run success.  CFO’s need to be more than gray; they need to be both black AND white.