federal signal

On John Adams

I recently finished reading John Adams by David McCullough.

Below are key excerpts from this book that I found to be particularly insightful:

In truth, he was extremely proud of his descent from “a line of virtuous, independent New England farmers.” That virtue and independence were among the highest of mortal attainments, John Adams never doubted. The New England farmer was his own man who owned his own land, a freeholder, and thus the equal of anyone.

And liberty cannot be preserved without a general knowledge among the people who have a right from the frame of their nature to knowledge, as their great Creator who does nothing in vain, has given them understandings and a desire to know. But besides this they have a right, an indisputable, unalienable, indefeasible divine right to the most dreaded and envied kind of knowledge, I mean of the characters and conduct of their rulers.

If, by supporting the rights of mankind, and of invincible truth, I shall contribute to save from the agonies of death one unfortunate victim of tyranny, or of ignorance, equally fatal, his blessings and years of transport will be sufficient consolation to me for the contempt of all mankind.

The preservation of liberty depends upon the intellectual and moral character of the people. As long as knowledge and virtue are diffused generally among the body of a nation, it is impossible they should be enslaved.

Few Americans ever achieved so much of such value and consequence to their country in so little time. Above all, with his sense of urgency anc unrelenting drive, Adams made the Declaration of Independence happen when it did. Had it come later, the course of events could have gone very differently.

Years later, in a letter to Thomas Jefferson, Adams would describe the voyage on the Boston as symbolic of his whole life. The raging seas he has passed through, he seemed to be saying, were like the times they lived in, and he was at the mercy of the times no less than the seas. Possibly he saw, too, in the presence of John Quincy, how directly his determination to dare such seas affected his family and how much, with his devotion to the cause of America, he had put at risk beyond his own life. Besides, as he may also have seen, the voyage had demonstrated how better suited he was for action than for smooth sailing with little to do.

To Thomas Jefferson, Adams would one day write, “My friend, you and 1 have lived in serious times.” And of all the serious events of the exceedingly eventful eighteenth century, none compared to the arrival upon the world stage of the new, independent United States of America. Adams’s part in Holland and at Paris had been profound. As time would tell, the treaty that he, Franklin, and Jay had made was as advantageous to their country as any in history. It would be said they had won the greatest victory in the annals of American diplomacy.

The role of the executive Adams was emphatic. If there is one central truth to be collected from the history of all ages, it is this: that the people’s rights and liberties, and the democratical mixture in a constitution, can never be preserved without a Strong executive, or, in other words, without separating the executive from the legislative power. If the executive power, or any considerable part of it, is left in the hands of an aristocratical or democratical assembly, it will corrupt the legislature as necessarily as rust corrupts iron, or as arsenic poisons the human body; and when the legislature is corrupted, the people are undone.

The only way to keep us from setting up for ourselves is to disunite us,” young schoolmaster Adams had written in his percipient letter to Nathan Webb, and to Adams now, as to others, dissolution remained the greatest single threat to the American experiment. “The fate of this government,” he would write from New York to his former law clerk, William Tudor, “depends absolutely upon raising it above the state governments.’ The first line of the Constitution made the point, “We the people, in order to form a more perfect union.’

‘o Adams the outcome was proof of how potent party spirit and party organization had become, and the most prominent was Burr’s campaign in New York. Washington, in his Farewell Address, had warned against disunion, permanent alliances with other nations, and “the baneful effects of the spirit of party.” Adams could rightly claim to have held to the ideals of union and neutrality, but his unrelenting independence—his desire to be a President above party—had cost him dearly.

In turbulent, dangerous times he had held to a remarkably steady course. He had shown that a strong defense and a desire for peace were not mutually exclusive, but compatible and greatly in the national interest.

In fundamental ways each proved consistently true to his nature they were in what they wrote as they had been through life. Jefferson was far more guarded and circumspect, better organized, dispassionate, more mannered, and refused ever to argue. Adams was warm, loquacious. more personal and opinionated, often humorous and willing to poke fun at himself. When Jefferson wrote of various self-appointed seers and mystics who had taken up his time as president, Adams claimed to have lad no problem with such people. “They all assumed the character of ambassadors extraordinary from the Almighty, but as I required miracles in proof of their credentials, and they did not perform any, I never gave public audience to any of them.”

I do not believe that Mr. Jefferson ever hated me. On the contrary, I believe he always liked me: but he detested Hamilton and my whole administration. Then he wished to be President of the United States, and I stood in his way. So he did everything that he could to pull me down. But if I should quarrel with him for that, I might quarrel with every man I have had anything to do with in life. This is human nature…. I forgive all my enemies and hope they may find mercy in Heaven. Mr. Jefferson and I have grown old and retired from public life. So we are upon our ancient terms of goodwill.

On a concluding note:

That John Adams and Thomas Jefferson had died on the same day. and that it was, of all days, the Fourth of July, could not be seen as a mere coincidence: it was a “visible and palpable” manifestation of “Divine favor,” wrote John Quincy in his diary that night, expressing what was felt and would be said again and again everywhere the news spread.

A highly recommended read in the areas of history and leadership.

 

 

 

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On The Alchemy Of Growth

I recently finished reading the Alchemy of Growth – Practical Insights For Building The Enduring Enterprise – by Mehrdad Baghai, Stephen Coley and David White. This book was referenced during a recent CIO conference I attended.

Below are key excerpts from the book that I found particularly insightful:

1- “Growth’s transformative power is akin to the alchemy of old. Always a mystery, alchemy’s magical blend of science, philosophy, art, and spirituality held secrets that even its practitioners found difficult to penetrate. Still, they were all drawn to its alluring aim: to transform the everyday into the exalted. The pursuit of corporate growth has prompted a similar reaction in the field of management. Although excited by growth’s promise, executives are uncertain about how to capture it. Feeling ill equipped to lead a growth charge, many seek a approach that shows them how they can actually attain and sustain growth. This book is addressed to them. It attempts to arm business leaders for growth by laying out a proven practical framework for the holistic management of a growing enterprise. The ideas and approaches suggested here are applicable to businesses and business units of all sizes, in all locations. They are intended to provide guidance to all levels of business leadership.”

2- “Our research makes it clear that very few companies sustain above-average growth for their industry year after year. Indeed, some of the companies we studied have already suffered slowdowns, and we fully expect more to do so. But these setbacks do not detract ft-om the lessons to be learned from the sustained phases of growth; indeed, they serve to reinforce the need for new approaches to help executives keep growth going. Our own approach has been specifically developed to help companies grow throughout the business cycle – not only sailing through the upswings, but also maintaining growth during the downturns.”

3- “Horizon 1 encompasses the businesses that are at the heart of an organization – those that customers and stock analysts most readily identify with the corporate name. In successful companies, these businesses usually account for the lion’s share of profits and cash flow. Horizon 1 businesses are critical to near-term performance, and the cash they generate and the skills they nurture provide resources for growth. They usually have some growth potential left, but will eventually flatten out and decline. Without the support of a successful horizon 1, initiatives in horizons 2 and 3 are likely to stagnate and die. Management’s primary challenge in horizon 1 is to shore up competitive positions and capture what potential remains in the core businesses. Even when these are mature, continuing innovation can incrementally extend their growth and profitability. Traditional sales force stimulation programs, product extensions, and marketing changes can aim contribute. Restructuring, productivity enhancement, and cost reduction measures will also help maintain healthy performance for as long as possible.”

4- “Horizon 2 comprises businesses on the rise: fast-moving, entrepreneurial ventures in which a concept is taking root or growth is accelerating. The emerging stars of the company, these businesses are attracting investors’ attention. They could transform their company, but not without considerable investment. Though substantial profits may be four or five years away, they have customers and revenue, and may already generate some profit. More important, they are expected to become as profitable as horizon 1 businesses in time. Horizon 2 initiatives are usually characterized by a single-minded drive to increase revenue and market share. They need continuing investment to finance rollouts or otherwise accelerate the expansion of the business. In a few years, horizon 2 initiatives should complement or replace a company’s current core businesses. They may represent either extensions of these businesses or moves in new directions. Horizon 2 is about building new streams of revenue.That takes time and demands new skills. Without horizon 2 businesses, a company’s growth will slow and ultimately stall. A good growth company needs to have several of these emerging businesses “on the boil,” working to convert promising ideas into future earnings generators.

5- “Horizon 3 contains the seeds of tomorrow’s businesses – options on fiiture opportunities. Although embryonic, horizon 3 options are more than ideas; they are real activities and investments, however small. They are the research projects, test-market pilots, alliances, minority stakes, and memoranda of understanding that mark the first steps toward actual businesses, even though they may not produce profits for a decade, if ever. Should they prove successful, they will be expected to reach horizon 1 levels of profitability. A company that thinks it has a promising horizon 3 just because it compiles a long list of whiteboard ideas at a management retreat is fooling itself. Without deliberate initiatives to develop good ideas into horizon 3 opportunities, a company’s long-term growth prospects will fade. The options in horizon 3 are rarely proven opportunities, but they need to be promising and to have the support of management. Building successful businesses means seeding numerous options. Some will fail for internal reasons; others will fall victim to shifting industry winds. Most will never grow to become successful new businesses. Given these odds, a great deal of horizon 3 activity is needed to cover the multitude of possible futures. A company’s goal should be to keep he option to play without committing too much capital or other resources. The challenge is to nurture promising options while ruthlessly excising those with diminishing potential.”

6- “The three horizons can be used to promote growth in three ways. First, as a diagnostic tool, the three horizons can help managers assess the prospects for growth at any level in an organization and reveal possible gaps in the volume and consistency of new profit sources. Second, as a language, the three horizons approach offers a coherent way to communicate with employees and investors. Its simple terminology makes it easier for both groups to understand and discuss corporate priorities.”

7- “An excessive focus on growth can be just as much a problem as because they have failed to fill their business creation pipeline. others lose the right to grow when they become obsessed with new businesses. The novelty of these opportunities can be so exciting that managers take their eyes off horizon 1, forgetting that it must be maintained in order to provide the financial capacity to drive growth.”

8- “Another troublesome pattern occurs when companies have strong horizon 1 businesses and lots of ideas in horizon 3, but few people working to turn these ideas into real businesses. No matter how exciting the ideas may be, horizon 2 will remain empty until businesses are built. A company can find itself in an insidious situation as promising horizon 3 options lull it into a false sense of security. To complicate matters, these options can also inflate market expectations for growth far beyond the company’s capacity to meet them. As the gap between market expectations and the company’s actual growth widens, a steep fall in stock price becomes more likely.”

9- “If there are no hard and fast numbers to determine ideal balance across the three horizons, how should you define it? The standard is simple: balance means having the next engine of growth ready when it is needed. Applying the standard, however, is far from simple. The definition of balance varies from company to company. Consider the following factors: Pace of industry evolution…Degree of uncertainty…Managerial and financial capacity…Shareholder expectations.”

10- “Pruning the portfolio of businesses through divestment creates capacity for growth. Although a business unit may still be earning adequate profits, these must be weighed against the opportunity costs of management distraction and competition for resources. Management attention and other resources are often more productively focused on growth opportunities than on businesses with limited potential…Shedding unsatisfactory businesses has the added benefit of signaling strategic intent to both stock markets and employees. Conversely, not pruning increasingly irrelevant businesses can send mixed messages about a company’s direction and resolve to grow.”

11- “In our work, we have looked for ways to open managers’ eyes to hidden opportunities. To this end, we have developed a tool that we call the “seven degrees of freedom.” By systematically addressing each degree of freedom in turn. managers can learn to think more broadly about growth opportunities in their businesses.  1. How could we increase sales to the same customers with the same product mix? 2. How could we extend the business by selling existing products to new customers? 3. How could we grow by introducing new products and services? 4. How could we expand sales by developing better delivery systems for customers? 5. How and where could we expand into new geographies? 6. How much could we grow by changing the industry structure through acquisitions or alliances? 7. What opportunities are there outside existing Industry boundaries?”

12- “Companies are right to be cautious about pursuing growth initiatives. But to let due caution prevent them considering unusual ideas is foolish. Collins and Porras strike the right balance: “We’re not saying that evolutionary progress equals wanton diversification…. Nor are we laying that the concept of ‘stick to the knitting’ makes no sense. The real question is: What is the ‘knitting’ in a visionary company?””

13- “Whether the process is top-down or bottom-up is beside the point. It is not just the breadth of involvement that matters. but the breadth of the search. In the end, whatever the process used and resources deployed, finding attractive opportunities is always as much art as science.”

14- “Executives who want to develop horizon 3 options into core profit engines face two big problems: market uncertainty and gaps in their skills, assets, and relationships. We have found that successful growers typically address these problems by taking not bold leaps, but a series of measured steps. Each step takes them a little closer to their ultimate :es money in its own right, and adds capabilities that prepare them for further opportunities. When these growers look back on what they have achieved, they see not a chaotic zigzag but a distinctive staircase pattern.”

15- “No formula can substitute for managerial iudement. Even so analysis of more than 100 growth staircases reveals a consistent pattern. Virtually all successful staircases proceed in four phases: seeding the initial growth options; testing the the business model; replicating and extending the business; and managing for profitability.”

16- “Even when there is strong capability building at each step, migrating an idea from a horizon 3 option to an emerging horizon 2 enterprise and on to a horizon 1 core business is tricky. The advantage of taking many small steps rather than a few big leaps is that it helps companies manage the risks that arise on two fronts. First, market uncertainty makes it impossible to predict the success of a business: for every great idea, there are many that will fail. Second, new businesses call for capabilities that a company does not yet have; without them, the promise these businesses hold out will not be realized.”

17- “A broader definition of capability is required that includes all resources useful in gaining competitive advantage. In addition to operational skill, our definition of capability includes three other classes of resources: privileged assets, growth-enabling skills, and special relationships.”

18- “Only by differentiating their management systems across the three horizons can corporations avoid the barriers to growth that most systems inadvertently perpetuate.If all managers are evaluated purely on the profitability of their businesses – a good measure of horizon 1 performance – they will have little appetite for building horizon 2 enterprises. If some leadership time is not systematically reserved for building fledgling businesses, the needs of the core business will consume all managers’ days and nights, and they simply will not have a free moment to build horizons 2 and 3.”

19- “Horizon 1 operators: Deep functional and/or industry expertise Strong drive to hit targets and meet plans consistently, Discipline; Horizon 2 Business builders: Entrepreneurial desire to create, Comfort with ambiguity,  Top-line-focused, sharp decision makers ; Horizon 3 Visionaries: Champions, Unconventional thinkers”

20- “Our research indicates that about three-quarters of the companies that sustain high growth and high shareholder returns make acquisition a critical component of their growth strategies. They frequently acquire other companies – often up to five a year – to further the development of their growth staircases.”

Regards,

Omar Halabieh

The Alchemy of Growth