Monday, November 17, 2008

Lessons in business and insanity

Guys Comments

If you do what you have always done you will get what you have always had because it is pure insanity to do the same things and repeat the same habits over and over again and expect different results – sound familiar?

Let us talk about GM Saturn. GM had the chance to create something unique – a business based on a new model and yet was unwilling to change to make it work. Saturn was created to understand how the Japanese made cars – ironic when you consider they followed an American’s suggestion and that American approached the US manufacturers first and was told you are crazy so Japan asked him to come and help them and they listened the had the answer first and did not want to listen wanting instead to do what they have always done guess what happened?

Even now to them the choice seemed as simple as do we have this division that does not function like our others and is loosing money or do we convert it and make it a division of GM like the other ones?

Has anyone figured out where I am going yet and can anyone see the problem yet?

Let me start with a part of it the initial premise – to make a division to understand how the Japanese model works (their model is not purely Japanese and the premise is flawed – more on that later). As you know GM opted to make Saturn like its other divisions incorporating and follow the flawed model that was broken to begin with after all what sense would it make to do radical things like:

  • Tie bonuses to customer satisfaction
  • Send R&D out into field to ask customers what you like and want
  • Reduce total overhead to 20% of company and executive salaries being no more and 21-25% of payroll
  • Asking line workers what their ideas are to increase efficiency and improve safety
  • Eliminating executive bonuses and privileges
  • Giving everyone gain sharing bonuses tied to company performance or all functions
  • Asking customers past and current – what do you want to see
  • Being humble enough to understand they are in business to serve the client the clients do not exist to give them money
  • Understanding that it is only when you ask the right question will you get the right answer

Starting to see where I am going.

  • The question with Saturn should have been – how can we create a business division that is profitable because it understands and provides the customers the best values in the cars and services they want from us as an auto maker and then how can we take those lessons and use them to fix GM?

Business is personal because it is run by people. People are very predictable because what they do without fail is revert to what is familiar instead of what is best.

How does this apply to a small (or any sized) business especially yours

  • You exist to service the clients
  • What you need to do is often the opposite of what you want to do – example – when money tight traditionally accepted behavior says – cut down on expenses and fire people when you should be marketing more, doing customer satisfaction surveys, and finding out what customers need and increasing your exposure to increase your chances of creating new revenue
  • Making commitments and then citing excuses as to why you or your company failed to live up to what you promised a client
  • Copying other companies or people – the blind following the blind – instead of being an original or an innovator
  • Not understanding the being likes is not a requirement, being respected is and the true bonus is when someone respects you and likes you and your company not the other way around
  • Assuming you know what is best or are someone better than your client or are entitled due to birth, family, past education or maybe you inherited your company
  • Lacking humility – asking for help but being unwilling to change the habits and behaviors that brought your company to failure in the first place
  • Taking the revenue from your company and spending it on yourself instead of investing it back into the company to better serve your clients
  • Believing your own hype or greatness and failing to realize no one is self made – everyone had someone help or take interest in the more their company
  • Surrounding yourself with people (leadership) who enable your dysfunction and poor choices instead of challenge you (think president Bush) but businesses and people do it all of the time – push away people who challenge and try to help them and embrace those who are along for the ride and who are more than willing to crash them into the ground and leave when they do
  • Not listening to following the advice of your mentors and those helping you
  • Running from problems and challenges instead of dealing with the root cause (remember as a business you are paid to solve problems for your client so you should by extension be able to solve your own company’s problems or be willing to seek help to do so) - you and your business should always being solution oriented
  • Creating arbitrary rules and limitations what what you can and cannot do that have nothing to do with servicing your clients or living up to your mission and being unwilling to change (extreme example - I will never work with purple haired people who live in ____ or we can never do this because ____) - instead of asking what does my client want me to do
  • Not having your priorities in order (enough said)
  • Believing the accepted school of thought that the sole purpose of business is to make money instead of understanding money is a byproduct of services the clients effectively

Are you seeing how all of this ties together yet?

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