Make Room for the Big Picture

Most leaders recognize the need to think strategically about the future. But many fail to dedicate the proper time and attention to doing it. Thinking about the big picture is not as simple as clearing your calendar and turning off your devices. Here are two things you also need to do:

• Clear the deck. Don't try to do everything. Say no to administrative tasks and unnecessary meetings. Ask your team for help so that you can find the time.
• Percolate. Think of the last time you had a great idea. Were you under pressure? More likely it came when you gave it time to gel. Don't force ideas; give yourself time and space to ruminate.

Attributes of great place

1. Design working environments that are safe, comfortable and appealing to work in. In offices, include a range of physical spaces that allow for privacy, collaboration, and simply hanging out.
2. Provide healthy, high quality food, at the lowest possible prices, including in vending machines.
3. Create places for employees to rest and renew during the course of the working day and encourage them to take intermittent breaks. Ideally, leaders would permit afternoon naps, which fuel higher productivity in the several hours that follow.
4. Offer a well equipped gym and other facilities that encourage employees to move physically and stay fit. Provide incentives for employees to use the facilities, including during the work day as a source of renewal.
5. Define clear and specific expectations for what success looks like in any given job. Then, treat employees as adults by giving them as much autonomy as possible to choose when they work, where they do their work, and how best to get it accomplished.
6. Institute two-way performance reviews, so that employees not only receive regular feedback about how they're doing, in ways that support their growth, but are also given the opportunity to provide feedback to their supervisors, anonymously if they so choose, to avoid recrimination.
7. Hold leaders and managers accountable for treating all employees with respect and care, all of the time, and encourage them to regularly recognize those they supervise for the positive contributions they make.
8. Create policies that encourage employees to set aside time to focus without interruption on their most important priorities, including long-term projects and more strategic and creative thinking. Ideally, give them a designated amount of time to pursue projects they're especially passionate about and which have the potential to add value to the company.
9. Provide employees with ongoing opportunities and incentives to learn, develop and grow, both in establishing new job-specific hard skills, as well as softer skills that serve them well as individuals, and as managers and leaders.
10. Stand for something beyond simply increasing profits. Create products or provide services or serve causes that clearly add value in the world, making it possible for employees to derive a sense of meaning from their work, and to feel good about the companies for which they work

Welcome to the new Bluesky Blog

Dear CEO’s

We at Blue Sky have always been deliberating on how to provide more value to our association and while we continue to power your enterprise on several fronts, we are adding one more value service to this bouquet. I believe each of us is driving a successful and high powered organization. Possibly in this ambitious pursuit, we may inevitably get so obsessed with the process of building that we blind ourselves to learning and knowledge beyond the perimeter of our sphere.

The Bluesky Corner office Blog is a hub where relevant information and insightful learning is uploaded at regular frequency which will not only be useful for your personal enhancement of knowledge but could have some useful takeaways and learning’s to run your corporation more effectively also a centre where exchange of views with other CEO’s within the Bluesky fold are possible. I would encourage each member to be as participative as possible and make this blog rich with learning’s.

Alternatively if you have any interesting articles or information you would like to share, please feel free to send the same to either Shruti at shruti@bluesky-hr.com or myself at d.vaz@bluesky-hr.com who will be the moderators for the blog.

The URL for the blog is http://www.bluesky-corneroffice.blogspot.com/. You may join in as a member or merely comment on each posting, though we would love to have you as a regular member. For this purpose you will need to login using a gmail id/yahoo or twitter.

Drop us an email if you have any queries or difficulties in loging in.

Separately let us have your comments and suggestion on this initiative.

Don

Three Traits Every CEO Needs

No matter how successful or seemingly secure any business appears, there are no longer periods of calm seas for leaders in any industry. A broad statistic reinforces this fact emphatically: More than half the companies that were industry leaders in 1955 were still industry leaders in 1990. But more than two-thirds of 1990 industry leaders no longer existed by 2004.

Leaders today need to be at home navigating a ship through 40-foot waves — oceans that will never again be serene — and still be able to guide their crew safely from port to port. They must remain highly effective in an environment of extraordinary, ongoing stress.

In researching my new book, Better Under Pressure, my colleagues and I sought to identify the qualities that define leaders who excel in this environment of duress. We gathered performance data for approximately 200 candidates being assessed for the CEO role at major U.S. corporations. These candidates were divided into three groups, with the top-performing quartile labeled "highly successful," the middle two quartiles characterized as "average performers," and the bottom quartile as "highly ineffective."

What emerged was startling. Certain attributes — three in particular — were highly consistent within the top performers, regardless of industry or job type. Clearly, this mental architecture was responsible for the execution ability of the most effective executives operating under pressure. What's more, these attributes were almost totally absent among the bottom-performing quartile.

To further my investigation, I then conducted in-depth psychological interviews with more than 60 current and retired CEOs to help clarify the role each of these factors played in their leadership. One core conclusion emerged: the best CEOs had been, and continued to be, distinguished by their ability to manifest the very best from their workforce. In my interviews with the CEOs, it became even clearer that the three attributes had become even more important by the beginning of the 21st century.

To perform their best in today's turbulent atmosphere, leaders must possess this highly unusual set of three traits that often run counter to natural human behavior. These attributes are catalysts for the mastery displayed by the world's best CEOs — and, together, they add up to a new definition of leadership:

1. Realistic optimism. Leaders with this trait possess confidence without self-delusion or irrationality. They pursue audacious goals, which others would typically view as impossible pipedreams, while at the same time remaining aware of the magnitude of the challenges confronting them and the difficulties that lie ahead.
2. Subservience to purpose. Leaders with this ability see their professional goal as so profound in importance that their lives become measured in value by how much they contribute to furthering that goal. What is more, they must be pursuing a professional goal in order to feel a purpose for living. In essence, that goal is their master and their reason for being. They do not ruminate about their purpose, because their mind finds satisfaction in its occupation with their goal. Their level of dedication to their work is a direct result of the extraordinary, remarkable importance they place on their goal.
3. Finding order in chaos. Leaders with this trait find taking on multidimensional problems invigorating, and their ability to bring clarity to quandaries that baffle others makes their contributions invaluable.

In my work assessing candidates for CEO positions in the country's top companies, I look for people who demonstrate all three capabilities. No organization should hire or promote into a leadership job someone who doesn't have the full suite, and each is a must-have for any aspiring leader today.

The good news is that these three capabilities can be learned. People can change. By learning about these attributes, you can become aware of them and choose to build them in yourself. And this can help you bring out the best in those you lead.

Real leadership is recursive: It's a continuous process that starts with a leader and is echoed in that leader's people. My research has shown that the best leaders work with the people they lead to seek their mutual maximum potential together; they co-create their success.

Leaders who embody realistic optimism, subservience to purpose, and the ability to find order in chaos can use these catalysts to craft contexts in which they and others can realize potential. We are all born with an innate urge for triumph, but are not born aware of this need or how to meet it. It is up to a leader to create a work environment in which every employee can experience the deep satisfaction of triumphing in pursuit of a worthy goal.

The most critical responsibility leaders have is to help their people flip the switch of engagement toward realizing their potential as human beings. When leaders create a context for people to realize their potential, they create a virtuous cycle that elicits people's best selves — the selves that induce the gratification we all feel when we overcome significant challenges and realize our potential.

This is how a leader creates an organization that harnesses the utmost effort and resiliency from all employees. In today's business environment of ever-escalating competition, such an organization is the only kind that is built to survive.

Justin Menkes is an acclaimed author and expert in the field of C-suite talent evaluation. His latest book, Better Under Pressure, was just released by Harvard Business Review Press.

Leave your Feelings Outside the Corner Room

Courtesy- Bluesky Knowledge Centre

Investment bankers love to point out that promoters should not get emotionally attached to their start-ups.Thats easier said than done when you have nurtured a business or people over decades.Still,India Inc is learning to take hard decisions with the sole objective of creating value,say Kala Vijayraghavan & Kausik Datta

When Dilip Dandekar opted to sell a majority stake in Mumbai-based Camlin to Kokuyo of Japan the announcement was made on Monday it was one of the most difficult decisions of his life.After all,the 59-year-old chairman and managing director of the colour and school stationery maker was easing his grip on the family jewel his father had set up eight decades ago.It was a tough decision and,after deliberating for over a year,we decided to induct a strong partner, says Dandekar.Still in Mumbai,another feisty owner of one of Indias most renowned names in fast-moving consumer goods,who does not want to be quoted,is in a dilemma.The first-generation entrepreneur would love to have his daughter take over the reins of the business yet he wouldnt like to thrust it on her.If she is not inclined,it will be bad for both, he shrugs.In a recent conversation with his daughter the patriarch told her: If I can sell the brand today I will get a much better price for it than you will. Thats not all he told her.But the money will not appreciate as much as the value of the brand will, he added.The builder of the brand is in an unenviable predicament: His heart tells him the show must go on and stay in the family.His mind,however,raises the doubt about whether his daughter will have as much fire in the belly as he did.Investment bankers will be glad to make the point that owners should never get emotionally attached to their businesses.And that when a lucrative opportunity comes along,they should go ahead and clinically clinch the deal.Just as Camlin did it needed fresh capital and modern technology to get to the next level.Not all entrepreneurs are so willing to let go not when theyve painstakingly built a business with their sweat and tears.However,emotional attachment to an asset can be a dangerous obstacle to creation of value.Increasingly,business owners are finding themselves caught between reason and emotion.And theres little choice when you have shareholders to answer to but to let the former prevail.Emotion threatens to play a spoiler in numerous situations and its not always just about assets but also about people.What,for instance,if a professional is more suitable to take over the reins than a less competent blood relative Or,what if a choice has to be made between two equals in experience and ability And then there is the question of employees what if they have been with the business right from the time it was a fledgling but are not needed any more;should they be clinically dealt with,with the good work and goodwill of the past forgotten

THE RIGHT MIX

From professionally-run organisations to family-run groups,a large section of India Inc is grappling with how to keep emotions out of boardroom and corner room decisions.Says Gurcharan Das,a former CEO of Procter & Gamble who is now a management guru and author of The Difficulty of Being Good: Smart companies are beginning to learn the importance of having enough empathy to handle situations correctly by ensuring the right mix of emotions and rationality. The empathy Das talks about is vital when organisations have to make critical but delicate changes at the top.A few months ago when Wipro chairman Azim Premji decided to do away with his joint CEOs,the decision invited brickbats for two reasons: One,as an analyst points out on condition of anonymity: If there was an issue of performance,the entire board needed to be fired,not just the two CEOs.The second aspect,however,is a more sensitive matter even assuming the decision was the right one,the episode could have been handled with more tact.A person close to Girish Paranjpe,one of the CEOs who lost his job,says Paranjpe was extremely hurt by the decision and felt the organisation could have handled the issue better. Says Milind Sarwate,head of HR at consumer goods company Marico: There is still plenty of surprise involved in Indian companies when top managers are fired. He feels employees should be regularly given feedback of their productivity and performance so that they have a back-up plan for their career and life.We need to understand that organisations are about people, adds Sarwate.

BRING IN THE PROFESSIONALS

Boards and promoters also find themselves torn when they have to decide between meritocracy and seniority,the former being a more rational premise of the two to go by.TV Mohandas Pai,a longterm Infosys hand and head of human resources,quit recently after being passed over for the top job.He subsequently said it was incorrect of the company to give importance to seniority over meritocracy when it comes to senior positions.Pai was referring to Infosys policy of giving each of its co-founders a shot at the CEO job.Pai,who joined in 1994,thus lost out.You cant blame the former CFO and HR head of Infosys if he felt strongly for an organisation he helped built and worked with for 17 years.But then in business,as Kishore Biyani,founder of Future Group,points out: You have to use both logic and emotion. Thats exactly what he is attempting to do in his family business that revolves around organised retailing.As far as Biyani is concerned,a person who can do the most damage to an organisation is the one who built it.He could do so by crowding the business with family members rather than professionals.Biyani says he wants to avoid that trap.The business has to survive beyond me.Ultimately the person who creates a business can also destroy it and so the business has to be protected from him too, he says.The point Biyani is trying to make that having built an organisation,he now has the bigger responsibility of protecting it.Over 200 million people come to my store,and some 60,000 people work with us.So there is a larger responsibility involved the business has to be above me, says Biyani.Biyani,whose Future Group includes Pantaloon Retail Indias largest organised retailer has directed family members to let professionals run the business.This has left some of the family unhappy.Rakesh Biyani,a cousin of Kishore,was initially said to have been less than enthusiastic about a decision to move to a newlycreated entity called the Family Business Board,leaving the coast clear for professionals.The founder,for his part,was clear about the road ahead.I do not think family members have to be involved in day-to-day operations of our business or be accountable for profit and loss.Instead,family members will play the role of mentors in the business, Biyani said.

TOUGH DECISIONS

The greater good of continuity would have convinced Dandekar to sell equity in a company started by his father in 1931 to sell liquid and tablet inks.The legacy of the brand wouldnt have made Dandekars task easy.He had grown up hearing stories of how his father converted the family kitchen into a laboratory in the evenings for want of a proper manufacturing place;of how he changed the firms logo from a horse to a camel (because a fountain pen stores ink in a manner similar to a camel who stores water ); and how his father combined the words camel and ink to christen his company Camlin.That the second-generation Dandekar was associated with the company for 40 years he grew from trainee to CMD would have only heightened his sense of belonging to the company.Rahul Bajaj would know all about that.Since the 1970s,Bajaj Auto reigned supreme in the scooters market,with Bajaj Chetak being the blockbuster brand that consumers were willing to wait years for.Then,the multinationals came in,chipped away at Bajajs share,and created a shift towards motorcycles.Bajaj Auto was slow in reacting to the shift,and analysts attribute that to the senior Bajajs attachment to scooters.And when the chairmans son decided to exit scooters a few years after he took over as managing director,Rahul says he was not only not convinced by the move but was hurt by it,too.Rajiv is reported to have countered : I care less for the solution from emotions,I believe more in the magic of logic. Rahul says,We publicly disagreed on the subject but company decisions are taken by the managing director and not the chairman. Rahul Bajajs short point is that business has to work with both logic and emotions.Without logic the business will go to the dogs,and without emotions it will be made of stone. By selling a majority stake to Kokuyo,the Dandekars would seem to have got the balance of logic and emotion right.The Dandekar family had two options, says Nitin Potdar,M&A partner,J Sagar & Associate,a legal firm.They could have outright sold the company and walked away with their money.Or,they could have sold a majority stake to a strong industry player which could take the company to the next level even as they hold on to a small stake, adds Potdar,who advised the family on the transaction.Between the various family factions,both options have been exercised.While one faction of the company not directly involved in the business will cash out,another group will continue to hold a small stake;and Dilip and nephew Shriram will hold on to their shares and continue as chairman and executive director,respectively (the Dandekar family will hold 13% once the transaction is complete).

PULL THE PLUG,RUTHLESSLY

The Dandekars could be a rare case of a business family that has sold a majority stake but where the family still hopes to play a significant role.In fact,that role extends beyond Dilip into the next generation (the third).I have given my son Rahul the liberty to pick a career outside.But he chose to join Camlin, says the chairman.A post-graduate in economics,Rahul joined the sales and marketing department last year. Dilips daughter also works with Camlin. Sometimes, even after an asset is sold away,an emotion still stays back that of regret.When the Shah family of the Anchor Group sold its electrical switches operation in 2007 to Panasonic for Rs 2,000 crore,the valuation stunned everyone.Except the Shahs,who decided to walk away with the stash on a cloud of euphoria.Today,the Anchor Group is wondering what on earth made them sell.Says director Hemang Shah: Even today we keep wondering why we sold a brand that we had built with passion over 40 years.I will sincerely advise people not to sell their business unless absolutely necessary. The Shahs are now trying to create a new brand to fill the void.They will soon launch switches branded GreatWhite to challenge the brand they created four decades ago.In sharp contrast,KK Modi,father of Lalit Modi of IPL fame and chairman of Godfrey Phillips India,is pragmatic about the sell option.Modi has made legal provisions to sell his over Rs 4,000 crore empire,which spans from cigarettes to chemicals,if the heirs fail to reach a consensus on a successor.Every entrepreneur would want to ensure that the business stays in the family for generations.But I do believe that division of assets leads to a loss of energy and is not healthy from a growth perspective, says Modi.In that case,my view is: Get the highest valuation for the entire enterprise and share the proceeds, he adds.Such pragmatism can also go a long way in cutting losses and moving on.Consider for instance,the process of drug discovery in the pharma sector.A high-risk gambit,companies often invest for years across several stages of trials only to realise that the molecule has no hope of making it to market as a drug.In such cases,it is imperative that the promoter is able to pull the plug quickly and ruthlessly.If you fall in love with a molecule you have a serious problem.Then you keep on pouring money behind something that is never going to take off, says Glenn Saldanha,MD & CEO,Glenmark Pharma.Saldanha adds that is where his role as CEO is critical.The scientists get completely attached and that's where I come in to make an objective decision. If you cant be that objective,accept what you are and work around it,accordingly that would be Ramesh Chauhans credo.The chairman of Bisleri International says since he is very emotional,he never takes decisions that can affect the profit & loss account. He adds that he choked and wept in the presence of Coca-Colas board in 1993 when he sold iconic brands Gold Spot and Thums Up.Yet,at the end of the day hard-nosed commerce did prevail over sentiment.

Emotion Gets In the Way When

A promoter has to decide on a business he has fostered for years because there are no enthusiastic successors within the family. A next-generation member of the family feels that the business the patriarch has founded and nurtured for years has no future A promoter has to choose a professional over a family member because the former is more competent to run the business. Promoters have to choose a successor between two equals he may like one although the other is more suited for the job Employees who have grown along with the
business almost like a family have become redundant in the new scheme of things.

It's Time to Fire Some of Your Customers - Anthony Tjan - Harvard Business Review

It's Time to Fire Some of Your Customers - Anthony Tjan - Harvard Business Review

As we move into volatile times (again), business leaders more than ever need to maniacally focus on the few customers that matter most to them — and spend much less time on the rest. The customer may always be right, but not every customer is right for you.

Some years ago, when our venture firm was starting one of its first retail ventures, I met with a highly successful CEO in the retail services industry to better understand how he did so well across all of his stores (he had some mind-blowing numbers). It was abundantly clear when you walked into any of his stores that his customers were genuinely delighted. I asked him for his secret. His response surprised me and has therefore stuck with me: "When we open a new location we quickly grow to a database of 8,000 customer names — and then work hard to get it down to 1,500 names."

At first I was taken aback, as it seems counter-intuitive to shrink rather than build your customer base. Upon a little reflection, however, it made absolute sense: ultimately, business is not about growing revenue, but about growing profitable revenue with the right target customer. To get that right customer, you sometimes need to start by casting a wider net, figuring out which customers are the most attractive, and then temporarily shrinking the business before you grow it again. With each iteration, you get smarter and more targeted towards the ideal customer profile.

By focusing on customers with the highest potential in terms of repeat purchases and larger average transactions, one is able to create a more successful business because marketing and customer service efforts (and costs) can be allocated where they matter most. But for many CEOs and founders, the mandate for growth creates a bias for quantity of revenue over quality of revenue. At our venture firm, when we evaluate a business model we think very differently about a dollar of revenue with a high probability of recurrence (i.e. a customer who will buy again, making it high quality revenue) versus dollars of revenue that need to be constantly be replaced with new customers. We believe the threshold for a high-quality-of-revenue business is a revenue recurrence rate of over 85%, meaning losing no more than 15% of a customer base each year. Such businesses have higher predictability in their business model and greater leverage in their sales, marketing, and customer service. A higher quality of revenue means a better long-term business.

If you look hard at who is buying your wares, you can quickly get a sense of where the money is coming from and where your money is being spent. Some businesses exhibit the classic 80/20 rule, with their top 20 percent of customers making up 80 percent of the revenue. We have also seen a good number of firms with even more skewed revenue distributions that are closer to 90/10. Yet organizational efforts and resources are often poorly mapped to, or unaligned with, that revenue distribution pattern. In fact, it is often the opposite. That is, the bottom customer quartiles take disproportionately from a company's sales, marketing, and customer service resources. Some of the most challenging customers are those who in the "low-middle" bucket, buying relatively little, but needing very high touch and maintenance.

Why do so many of us fall into the trap of spreading our efforts evenly across our customer base, or even skewing them towards the lowest-potential customers? It is tempting to embrace every customer equally — and we naturally want to understand why the lower customer deciles are not behaving like the higher deciles. We want to believe that we can nurture and develop all customers to reach high potential levels over time. However, in the companies in which we have been involved, the data do not support that thesis. It is always tougher to change customer behavior than to find new customers similar to your existing top-buyer profiles.

The top priority for a business that wants high quality of revenues starts with understanding everything possible about the top customers. Drill deep to understand their demographics, psychographic, and purchase behavior preferences of your "super loyalists." Where do they come from? What is their attitudinal profile and what bundles of goods do they like best and at what price? Getting an intimate clustering of your top customer base is the foundation for a high-quality-of-revenue business.

By directing more customer acquisition and loyalty costs towards that top cohort, you will be implicitly de-focusing or "firing in advance" the less valuable customer segments. Yes, the term "fire" is a little melodramatic, but it is a clear reminder that limited resources need to be carefully allocated — and that just because you sell something to someone it does not necessarily mean it is a good thing.

Firing your customer does not mean to literally bar the door, but to set conditions whereby lower- priority customers self-select out and higher-potential ones self-select in. For example, for many businesses, first purchase order size is a good leading indicator of future purchases. If you knew that $50 was the average of your top loyalists and $30 was the average of lower tiers, you could simply raise minimum price on an opening order, or only offer free shipping on orders of $50 or above. As another example, for current customers who spend little but cost dearly in terms of customer support or other costs, consider a new pricing structure where higher support services are only free for accounts of a certain size. In effect, you can offer customers the choice to become profitable cohorts or to leave.

Your top-cohort customers are super fans who have voted with their wallets. They are the ones who will recommend you more often than other customers and would miss you most if you no longer existed. Find more people like them, and spend less time trying to turn others into people like them. Thank your best customers to death for their great patronage and worry less about — or simple "fire" — the others.