management

On Common Sense on Mutual Funds

I recently finished reading Common Sense on Mutual Funds – New Imperatives for the Intelligent Investor – by John C. Bogle.

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

Investing is an act of faith. We entrust our capital to corporate stewards in the faith—at least with the hope—that their efforts will generate high rates of return on our investments. When we purchase corporate America’s stocks and bonds, we are professing our faith that the long-term success of the U.S. economy and the nation’s financial markets will continue in the future.

To state the obvious, the long-term investor who pays least has the greatest opportunity to earn most of the real return provided by the stock market.

In my view, market timing and rapid turnover—both by and for mutual fund investors—betray both a lack of understanding of the economics of investing and an infatuation with the process of investing.

My guidelines also respect what I call the four dimensions of investing: (1) return, (2) risk, (3) cost, and (4) time. When you select your portfolio’s long-term allocation to stocks and bonds, you must make a decision about the real returns you can expect to earn and the risks to which your portfolio will be exposed. You must also consider the costs of investing that you will incur. Costs will tend to reduce your return and/or increase the risks you must take. Think of return, risk, and cost as the three spatial dimensions—the length, breadth, and width—of a cube. Then think of time as the temporal fourth dimension that interplays with each of the other three. For instance, if your time horizon is long, you can afford to take more risk than if your horizon is short, and vice versa.

Rule 1: Select Low-Cost Funds…Rule 2: Consider Carefully the Added Costs of Advice…Rule 3: Do Not Overrate Past Fund Performance…Rule 4: Use Past Performance to Determine Consistency and Risk…Rule 5: Beware of Stars…Rule 6: Beware of Asset Size…Rule 7: Don’t Own Too Many Funds…Rule 8: Buy Your Fund Portfolio—And Hold It.

No matter what fund style you seek, you should emphasize low-cost funds and eschew high-cost funds. And, for the best bet of all, you should consider indexing in whichever style category you want to include.

There are three major reasons why large size inhibits the achievement of superior returns: the universe of stocks available for a fund’s portfolio declines; transaction costs increase; and portfolio management becomes increasingly structured, group-oriented, and less reliant on savvy individuals.

Four principal problems are created by this overemphasis on marketing. First, it costs mutual fund shareholders a great deal of money— billions of dollars of extra fund expenses—which reduces the returns received by shareholders. Second, these large expenditures not only offer no countervailing benefit in terms of shareholder returns, but, to the extent they succeed in bringing additional assets into the funds, have a powerful tendency to further reduce fund returns. Third, mutual funds are too often hyped and hawked, and trusting investors may be imperiled by the risks assumed by, and deluded about the potential returns of, the funds. Lastly, and perhaps most significant of all, the distribution drive alters the relationship between investors and funds. Rather than being perceived as an owner oi the fund, the shareholder is perceived as a mere customer of the adviser.

On a closing note, on leadership:

To wrap up this litany, I put before you—both tentatively and humbly—a final attribute of leadership: courage. Sometimes, an enterprise has to dig down deep and have the courage of its convictions—to “press on,” regardless of adversity or scorn. Vanguard has been a truly contrarian firm in its mutual structure, in its drive for low costs and a fair shake for investors, in its conservative investment philosophy, in market index funds, and in shunning hot products, marketing gimmicks, and the carpet-bombing approach to advertising so abundantly evident elsewhere in this industry today. Sometimes, it takes a lot of courage to stay the course when fickle taste is in the saddle, but we have stood by our conviction: In the long run, when there is a gap between perception and reality, it is only a matter of time until reality carries the day.

A recommended read in the areas of investing and leadership.

Advertisements

On Radical Edge

I just finished reading Radical Edge – Stoke Your Business, Amp Your Life, And Change The World – by Steve Farber.

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

1- “If you assume that you can learn from anyone—if you assume that you must learn from everyone—then everyone becomes a great teacher for you. Even if someone’s a slime-sucking scumbag of a leech they qualify for greatness if you can learn something from them.”

2- “Scan—just like you were a computer scanner. Your scanner just copies; it doesn’t comment, it doesn’t offer an opinion, it doesn’t tell you you’re stupid for time on that photo of the girl you met while v all were dancin’ on the bar at Jimmy Love’s. Just scan your environment and record what you see. Scan the bestseller lists and notice what people are reading; scan the magazine racks and pick up publications that don’t interest you—like, I dunno, The Tattoo Review or Graffiti Today, scan the weekly TV-show rankings; scan the headlines of the daily paper in 20 different cities; scan the room that you’re sitting in; scan the crowd as you’re toolin’ down the street during your lunch break. Then, every so often, write down what you’re seeing in your WUP. Write down your observations of subcultures that are entirely alien to you and trends in the tastes of the popular culture. Capture little idea-snapshots of natural, political, and social phenomena. Scan, scan, scan. Look at everything going on around you and write your observations in the pad…After collecting your observations for a while you stop, read it over, and give it some reflection. What are the implications of this? What can I earn from that? Why are so many people doing X, and what might that mean for all of us?…Talk About it…With everyone…Or everyone that matters, anyway. Talk about your observations and ideas with your team, for example. ‘Here’s what- I’m noticin’. What are you seeing?’ That kind of thing. Just kick it around and see where the discussion takes you—see what happens over time.”

3- “When inspiration strikes, when a new bona fide really great idea presents itself…You have to do it; that’s number six. That’s when the talking comes to a screeching halt and audacious action takes over. Kelleher and King went from idea to Southwest’s first route map on the back of that napkin. In other words. my man, I am expecting you to stick your neck out and try something new in your business. Got it?”

4- “This is how you stoke the fires of your success, Cam: by doing what you love in the service of people you love, who in turn, love what you do for them…I may not have the capacity to love everyone, but I certainly do have the capacity to act as though I do and to run my business accordingly. And if I and my team can really do that, then no other business in my market space can come close to the experience that we give our customers.”

5- “So, instead, she treats every customer encounter as an exercise in fascination.”

6- “”Your business, your personal life, and your effect on the world,” she said. “When you’re hitting on those three cylinders simultaneously, you’ve achieved The Radical Edge and life takes on an entirely new level of meaning.”

7- “If you really want to stoke your business till it burns so bright that everyone will take notice, there are two things you must be with complete abandon…One: be deeply fascinated by the life of every person—customer, employee, colleague—your business touches; and two: be deeply grateful for who they are and what they do…It all starts with the heart, Cam. If you develop a sincere love for people, you’ll automatically be fascinated with and grateful for them. If you’re fascinated with them, you’ll discover how to add value to their lives; and if you’re genuinely grateful for their patronage, partnership, or friendship you’ll show them in ways that are sincere and meaningful. Those are the essential elements of a fabulously productive business relationship—or any relationship, for that matter.”

8- “That old saving, ‘it’s not personal; it’s business’ is just plain false. Business is personal, personal, personal,” she tapped three times on the linoleum table top for emphasis. “And,” she twinkled, “is there anything in the human experience more personal than love?”…I regarded that a rhetorical question. Love is your leverage,” Agnes said. “And if you’re observant, if you stay fascinated and grateful, love will hand you your competitive advantage on a solid gold platter.””

9- “We don’t consider ourselves to be naive or idealistical though others certainly may. We are pragmatists of the highest order: we believe there is nothing more eminently practical than looking at the world, asking ‘how can this be better?’ and then holding ourselves personally accountable for getting it done.”

10- “There are four change the-world guidelines that we’ve agreed on so far, but we’re always open to more, and I’m sure we’re missing more than a few things. Let me spell them out for you…The first is to define what you mean by ‘world,’ and get clear on how you want that world to be different from the current reality. ‘World’ doesn’t have to mean the very fabric of human existence, although it certainly could be. It could be the world of your customers, neighborhood, industry—or the world of one person, for that matter. You define it for yourself…Second guideline is…act as though our every action has a direct impact on the world. In other words, you should perform every deed as if it will either improve the world or damage it…Third…Don’t judge yourself based on the outcome of your efforts…Meaning you cannot ultimately control the end results. You do everything you can, you do your homework and your research, and you enlist the people you need to get the job done-whatever it is…What’s the last one?…Never-never, ever—try to do it alone.”

11- “But it’s not about finding your frequency by ruling out everything else on the contrary, it’s about finding the frequency that includes all those other important values and ideals. The very act of trying to wrap it all together is what’s really important, because to do that you have to get very clear on what you mean by each value and principle. You have to define, think through, and understand each to its core, and evaluate your life against each one. The clearer you get, the closer you get to the frequency that pulsates through your life and characterizes who you really are.”

Regards,

Omar Halabieh

Radical Edge

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

On Made In Japan

I recently finished reading Made In Japan – Akio Morita and SONY – by Akio Morito with Edwin M. Reingold and Mitsuko Shumomura.

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

1- “I have always believed that a trademark is the life of an enterprise and that it must be protected boldly. A trademark and a company name are not just clever gimmicks—they carry responsibility and guarantee the quality of the product. If someone tries to get a free ride on the reputation and i the ability of another who has worked to build up public trust.”

2- “In the beginning, when our track record for success was not established, our competitors would take a very cautious wait-and-see attitude while we marketed and developed a new product. In the early days, we would often have the market to ourselves for a year or more before the other companies would be convinced that the product would be a success. And we made a lot of money, having the market all to ourselves. But as we became more successful and our track record became clearer, the others waited a shorter and shorter time before jumping in. Now we barely get a three-month head start on some products before the others enter the market to compete with us with their own version of the product we innovated. It is flattering in a way, but it is expensive. We have to keep a premium on innovation.”

3- “My point in digressing to tell this story is simple: I do not believe that any amount of market research could have told us that the Sony Walkman sensational hit that would spawn many imitators. And yet this small item has literally changed the music-listening habits of millions of people all around the world.”

4- “It was this kind of innovation that Ibuka had in mind when we wrote a kind of prospectus and philosophical statement for our company in the very beginning: “If it were possible to establish conditions where persons could become united with a firm spirit of teamwork and exercise to their hearts’ desire their technological capacity,” he wrote, “then such an organization could bring untold pleasure and untold benefits.” He was thinking about industrial creativity, something that is done with teamwork to create new and worthwhile products. Machines and computers cannot be creative in themselves, because creativity requires something more than the processing of existing information. It requires human thought, spontaneous intuition, and a lot of courage, and we had plenty of that in our early days and still do.”

5- “My view was that you must first learn the market.. learn how to sell to it, and build up your corporate confidence before you commit yourself. And when you have confidence, you should commit yourself wholeheartedly.”

6- “…no matter how good or successful you are or how clever or crafty, your business and its future are in the hands of the people you hire. To put it a bit more dramatically, the fate of your business is actually in the hands of the youngest recruit on the staff.”

7- “When most Japanese companies talk about cooperation or consensus, it usually means the elimination of individuality. At our company we are challenged to bring our ideas out into the open. If they clash with others, so much the better, because out of it may come something good at a higher level. Many Japanese companies like to use the words cooperation and consensus because they dislike individualistic employees. When I am asked, and sometimes when I am not, I say that a manager who talks too much about cooperation is one who is saying he doesn’t have the ability to utilize excellent individuals and their ideas and put their ideas in harmony. If my company is successful, it is largely because our managers do have that ability.”

8- “Management officers, knowing that the company’s ordinary business is being done by energetic and enthusiastic younger employees, can devote their energy and effort to planning the future of the company. With is in mind, we think it is unwise and unnecessary to define individual responsibility too clearly, because everyone is taught to act like a family member ready to do what is necessary. If something goes wrong it is considered bad taste for management to inquire who made the mistake. That may seem dangerous, if not silly, but it makes sense to us.”

9- “I cannot understand why there is anything good in laying off people. If management takes the risk and responsibility of hiring personnel, then it is management’s ongoing responsibility to keep them employed. The employee does not have the prime responsibility in this decision, so when a recession comes. why should the employee have to suffer for the management decision to hire him? Therefore, in times of boom we are very careful about increasing our personnel. Once we have hired people, we try to make them understand our concept of a fate-sharing body and how if a recession comes the company is willing to sacrifice profit to keep them in the company.”

10- “What you are showing to your employees is not that you are an artist who performs by himself on the high wire, but you are showing them how you are attempting to attract a large number of people to follow you willingly and with enthusiasm to contribute to the success of the company. If you can do that, the bottom line will take  care of itself.”

11- “It may sound curious, but I learned that an enemy of this innovation could be your own sales organization if it has too much power, because very often these organizations discourage innovation. When you make innovative new products, you must re-educate the sales force about them so the salesmen can educate and sell the public. This is expensive; it means investing sufficient money in R&D and new facilities and advertising and promotion. And it also means making some popular and profitable items obsolete, often the items you can make the most profit on because your development costs are paid for and these products have become easy for your salesmen to sell.”

12- “The primary function of management is decision-making and that means professional knowledge of technology and the ability to foresee the future direction or trends of technology. I believe a manager must have a wide range of general knowledge covering his own business field. It also helps to have a special sense, generated by knowledge and experience—a feel for the business that goes beyond the facts and figures—and this intuitiveness is a gift only human beings can have.”

13- “Next to lawyers, I think these people are the most overused and misused businessmen on the scene in the United States and Japan. I use consultants selectively and have found the best ones can do valuable information gathering and market analysis. But their use can be brought to ridiculous extremes, and it has been.”

14- “I think one of the main advantages of the Japanese system of management over the American or the Western system in general is this sense of corporate philosophy. Even if a new executive takes over he cannot change that. In Japan the long-range planning system and the junior management proposal system guarantee that the relationship between top management and junior management remains very close and that over the years they can formulate a specific program of action that the years they can formulate a specific program of action that will maintain the philosophy of the company. It also may explain why in the initial stages progress is very slow in a Japanese company. But once the company communicates its philosophy to all employees, the company has great strength and flexibility.”

15- “My point is that it is unwise merely to do something different and then rest on your laurels. You have to do something to make a business out of a new development, and that requires that you keep updating the product and staying ahead of the market.”

16- “My prediction is that we can enjoy our lives with less energy, less of the old materials, fewer resources, more recycling, and have more of the essentials for a happy and productive life than ever. Some people in the world, especially the Americans, will have  to learn something of the meaning and spirit of mottainai and conserve more. Step by step, year by year, we must all learn how to be more skillful and efficient in using our resources economically. We must recycle more. As to the expanding populations, that will be a challenge to everyone, for they will have to be fed. clothed, and educated. But as the standard of living of a people increases, the population tends to level off, people live a different way, acquire different tastes and preferences, and develop their own technologies for survival.”

17- “I believe there is a bright future ahead for mankind, and that future holds exciting technological advances that will enrich the lives of everybody on the planet. Only by expanding world trade and stimulating more production can we take advantage of the possibilities that lie before us. We in the free world can do great things. We proved it in Japan by changing the image of the words “Made in Japan” from something shoddy to something fine. But for a single nation or a few nations to have accomplished this is not enough. My vision of the future is of an exciting world of superior goods and services, where every nation’s stamp of origin is a symbol of quality, and where all are competing for the consumers’ hard-earned money at fair prices that reflect appropriate rates of exchange. I believe such a world is within our grasp. The challenge is great; success depends only on the strength of our will.”

Regards,

Omar Halabieh

Made In Japan

On The Southwest Airlines Way

I recently finished reading The Southwest Airlines Way – Using the Power of Relationships to Achieve High Performance – by Jody Hoffer Gittell.

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

1- “How did this remarkable transformation occur? How did Southwest grow from an idiosyncratic Texas airline to an organization that managers all over the world are seeking to emulate? Efficiency…Quality…Controlled Growth Demand for Reliable Low-Fare Travel…Competitive Threats…Success Factors—Leadership, Culture, Strategy, and Coordination.”

2- “However, leadership is not confined to the CEO. Leadership is better understood as a process that can take place at any level of an organization.^ Indeed, leadership is needed in today’s organizations to motivate, support, and enable employees to work together in support of a set of shared goals.”

3- “In their classic book on organizations, James March and Herbert Simon’ describe the potentially disintegrative effects when employees in an organization pursue their owm functional goals without reference to the over-arching goals of the larger work process. Shared goals play an especially important role when different functions are involved in delivering the same service.”

4- “The three conditions that increase the need for relational coordination—reciprocal interdependence, uncertainty, and time constraints— are increasingly common in the service economy of today. As advanced economies have shifted from a manufacturing to a service focus, work settings that require relational coordination have become increasingly common. Many service operations are characterized by reciprocal interdependence, requiring iterative interactions among service providers rather than the sequential handoffs performed by workers on production lines. Many service operations also have high levels of uncertainty relative to manufacturing due to the difficulty of buffering service operations from the external environment and from differences in customers themselves. Finally, most service settings are highly time-constrained; they are designed to provide a service to customers, real time, simultaneous with the demand, without imposing excessive waiting times on customers.”

5- “Not every leader of a successful organization must be charismatic. What successful organizations do need from each of their leaders, however, is credibility— the ability to inspire trust; and caring—the ability to inspire a belief by employees that their leaders care deeply about their well-being.”

6- “Leadership is better understood as a process that can take place at any level of the organization.”^ Indeed, leadership at the front line can play a critical role in organizational success. Rather than undermining coordination among frontline employees, supervisors play a valuable role in strengthening coordination through day-to-day coaching and counseling.”

7- “Increasingly, jobs require not only functional expertise but also relational competence—the ability to interact with others to accomplish common goals. Indeed, people who perform jobs that require high levels of functional expertise also tend to need high levels of relational competence to integrate their work with the work of fellow employees. Organizations like Southwest Airlines that recognize the importance of relational competence, look diligently for employees who have it, then develop it to even higher levels through training, will have a distinct performance advantage over organizations that do not.”

8- “Organizations should proactively seek out conflicts rather than allowing them to fester. Then managers should bring the parties together to better understand each other’s perspective. If organizations do not identify and resolve cross-functional conflicts, those conflicts will weaken critical relationships of shared goals, shared knowledge, and mutual respect. When managers treat cross-functional conflict as an occasion for learning, they strengthen relationships between employees and boost performance of the work processes in which those employees are engaged.”

9- “The energy and learning that employees gain from building strong family and community ties can be brought into the workplace and leveraged to achieve stronger working relationships and better organizational performance. Organizations should therefore be vigilant to ensure that relationships at work do not overwhelm and undermine the family and community relationships that are needed to sustain strong working relationships.”

10- “Though information technology can be a facilitator, it is not expected to be an effective substitute. When a job is mediated largely through a computer or a telephone, an important element of social interaction is lost. The loss of social interaction weakens relationships, and weakens critical performance parameters. These limitations on the effective use of information technology exist because coordination is not simply about the transfer of information. Instead, coordination requires the construction of shared meaning in order to facilitate collective action. As we see at Southwest Airlines, boundary spanners can play this role, building relationships of shared goals, shared knowledge, and mutual respect across functional boundaries.”

11- “Traditional measurement systems are flawed because they orient employee attention toward functional rather than cross-functional outcomes and because they provide inadequate information for learning.’ To orient employees toward cross-functional outcomes and to provide more useful feedback about what to do, cross-functional performance measures should be used to supplement traditional functional measurement systems.”

12- “We have seen in this chapter the importance of flexible jobs for building strong relationships and high performance.”

13- “At Southwest Airlines, respectful relationships between company management and the unions chosen by frontline employees appear to set the tone for respectful relationships throughout the company.As Southwest’s leaders pointed out on several occasions, however, positive labor/management relations are not achieved once and for all. Rather they have to be reproduced every day.”

14- “Southwest’s partnership approach is radically different from the traditional approach to supplier relations. In the old model, organizations were independent parties who transacted with each other at arm’s-length through formal contracts, keeping information close to the chest. Cooperation occurred only within organizations, while careful arm’s-length negotiation with minimal information sharing was the normal mode for dealing with parties external to the organization.^ But when there is more uncertainty in the environment, there is much more that organizations can learn from one another. Because of the benefits of learning, both parties have more to gain than to lose from the sharing of information. Although there may be doubt and mistrust at the outset, “nee the cooperative exploration of ambiguity begins, the returns to the partners from further joint discoveries are so great that it pays to keep cooperating.” Ultimately, this ability to partner is an acquired skill like any other, and one with potentially significant effects on organizational success”.

Regards,

Omar Halabieh

The Southwest Airlines Way

On Discovering The Soul Of Service

I recently finished reading Discovering The Soul Of Service – The Nine Drivers of Sustainable Business Success – by Leonard L. Berry.

Leonard summarizes the main premise of this book as: “My purpose in this book is to identify, describe, and illustrate the underlying drivers of sustainable success in service businesses. Creating a successful service operation is unquestionably a difficult task. However, sustaining success can be even more difficult. Services are performances, and the challenge of sustaining the performers’ energy, commitment, skills, and knowledge day after day, week after week. month after month, year after year—especially as the organization grows and becomes more complex—is daunting. The greater the involvement of people in creating value for customers, the greater the challenge. This is a book on the lessons 14 outstanding service companies teach about sustainable success. And the lessons they teach are clear indeed. Although the sample companies differ on the outside – the nature, size, and structure of their businesses—to a remarkable degree they are the same on the inside, sharing the drivers of their ongoing success.”

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

1- “Three specific challenges in sustaining success are accentuated in enterprises that create value for customers primarily through services. The more labor-intensive the services, the greater the challenges of: operating effectively while growing rapidly, operating effectively when competing on price, retaining the initial entrepreneurial spirit of the younger, smaller company.”

2- “A set of core values permeates the high-performance service companies studied for this book. These values are remarkably consistent among the companies. The values of excellence, innovation, joy, teamwork, respect, integrity, and social profit underlie the ongoing success of the sample firms. Unchanging, these core ideals, principles. and philosophies define the very soul of these dynamic companies.”

3- “Values-driven leaders continually convey by their words and actions the meaning of success. They not only make palpable the dream (where we are going, why we are going there), they define the indicators of progress (how we know we are getting there). A key factor in sustaining success is combining a compelling dream that inspires commitment with a success definition that is reinforcing rather than contradicting.”

4- “A smaller group of companies has been able to sustain high levels of service performance and continue to improve. What they hold in common is a strong set of values that tap into employees’ own core values, and a strong set of leaders who teach model, and cultivate the values. Values-driven leadership sustains the high discretionary efforts of human beings to individually and collaboratively achieve and gives root to the eight other success drivers § discussed in the remainder of this book.”

5- “Brilliant strategy is insufficient to drive sustained success. The total product that customers experience from a company is its strategy executed. A poorly executed strategy openly invites competitors to imitate the strategy, execute better, and take away the business. Excellent service companies not only have focused strategies, but they also focus on execution. They continually raise their standards of service delivery and constantly strive for perceived superiority over competitors.”

6- “Control of destiny is largely attitudinal. If sufficiently determined. companies need not relinquish control of their future to other parties. If they do not allow the lure of growth to impede operational effectiveness, if they stay totally focused on creating superior  value for customers, if they continually strive to get better than they are— companies can control their future.”

7- “Trust-based customer relationships honor these friendship rules. Excellent service companies may not have a personal relationship with their customers, but they are effective in personalizing service transactions and counteracting the anonymity that customers so often experience with companies. Relationship companies look for ways to please their customers, to do something extra or special for them, just as friends would do for one another. As in friendships, relationship companies do not take advantage of customers. They respect, honor, and trust them. They value the relationship and invest time, effort, and money in strengthening it.”

8- “Customers can teach companies how they want to be served. Relationship companies that capture and use this knowledge make it more difficult for customers to leave the relationship.”

9- “The initial days and weeks of employment offer a wide-open window for learning about the company’s values, traditions, history, strategy, customers. competitors, policies, and procedures. Like actors on a stage, service providers need to know the play; to perform their role well, they need to know where their part fits in the overall performance.”

10- “How can service companies that depend on energized, resourceful. committed people to deliver value to customers reap the benefits of smallness when no longer small? The answer lies in a blend of values-driven leadership, innovative structure, customer- and employee-focused information technology, and ownership attitudes.”

11- “The sample companies are strategic in their generosity. They not only are extraordinarily generous, they are effectively generous. Rather than giving for the sake of giving, they invest with a plan in mind, with 1 long-term goal. Rather than spreading their resources thinly in numerous initiatives, they concentrate their resources to have a powerful impact and make a meaningful difference. Rather than investing time, energy, and money outside the mainstream of their business, they invest in concert with the business’s overall purpose and strategy. Thus, generous acts not only benefit society, they benefit the company too, seating a stronger company and enabling more generous acts in the future.”

12- “Values-Driven Leadership: Humane organizational values sustain human excellence. Stable leadership stabilizes values. Values-driven leadership propels all other success sustainers…Strategic Focus: Constancy of purpose leads customer value creation. Strategic focus inspires innovation…Executional Excellence: A well-executed strategy diminishes opportunity for competitors. Attracting great people is the first rule of execution…Control of Destiny: Pursue success on your own terms…Trust-Based Relationships: Sustaining service success requires trust…Investment in Employee Success: Investing in the performer contributes to the performance…Acting Small: In services, acting small is big. High touch and high tech are mutually supportive…Brand Cultivation: Branding the company means performing the service…Generosity: Generosity drives service success.”

 

Regards,

Omar Halabieh

Discovering The Soul Of Service

On I Love You More Than My Dog

I recently finished reading “I Love You More Than My Dog” Five Decisions That Drive Extreme Customer Loyalty in Good Times and Bad by Jeanne Bliss.

Below are key excerpts summarizing the main concepts advanced by the book:

1- “Your decisions reveal who you are and what you value…When you make a decision, it results in an action. And the accumulation of those decisions and actions become how people describe you and think of you. It becomes your “story.””

2- “The Five Decisions Made by Beloved Companies: DECISION 1: Beloved Companies Decide to Believe. DECISION 2: Beloved Companies Decide with Clarity of Purpose. DECISION 3: Beloved Companies Decide to Be Real. DECISION 4: Beloved Companies Decide to Be There. DECISION 5: Beloved Companies Decide to Say Sorry.”

3- “Companies have been able to suspend the cynicism. They have diminished the rules. And instead, they have decided to believe: in the good judgment of the people they hire. that trust is reciprocated between companies and their customers. in the honesty and integrity of their customers. that honoring the intelligence of employees grows their business.”

4- “Decide with clarity of purpose…Beloved companies take the time to be clear about what their unique promise is for their customers’ lives. They use this clarity hen they make decisions so they align to this purpose, to this promise. Clarity of purpose guides choices and unites the organization. It elevates people’s work from executing tasks to delivering experiences customers will want to repeat and tell others about.”

5- “Decide to be real…Beloved companies establish lasting bonds with customers—by deciding to blend their personalities with their business decisions. In the beloved companies: Leaders blend who they are as people with how they lead. Business decisions combine purpose and passion. Leaders give employees behaviors to model and permission to be ‘real.” Relationships are between people who share the same values.”

6- “Decide to be there…companies were able to reach uncommon decisions that connected them with customers because they: Imagined their customers’ lives. Were clear on their purpose for delivering a solution to their lives. Built their experience from the customers’ point of view. Executed with operational reliability.”

7- “Decide to say sorry…Aaron Lazare, author of On Apology, says, “The apology is a powerful and constructive form of conflict resolution, embedded, in modified form, in religion and the judicial system. It is a method of social hearing that as grown in importance as our way of living together on our planet undergoes radical change.” Moral of the story: a good apology trumps the legal system. As long as the apology is sincere and the effort to make amends is genuine…Your apology must: Be genuine. Restore confidence in being associated with you. Honor those harmed. Explain and work to resolve the problem. Be delivered swiftly and with humility.”

8- “Beloved companies shed their fancy packaging and break down the barriers of ” big company, little customer.” The relationship is between people who share the same values and revel in each other’s foibles, quirks, and spirit. And that’s what draws them to each other. Beloved companies decide to create a safe place where the personality and creativity of  of people come through. It makes them beloved to customers who gravitate to their particular brand of humanity.”

Regards,

Omar Halabieh

I Love You More Than My Dog

On Who Says Elephants Can’t Dance

I recently read Who Says Elephants Can’t Dance? Inside IBM’s Historic Turnaround by Louis V. Gerstner, Jr.

Below are key excerpts that I found particularly insightful in this book, detailing the turnaround that Louis Gerstner engineered at IBM in the 1990s:

1- “Thus began a lifelong process of trying to build organizations that allows for hierarchy but at he same time bring people together for problem solving, regardless of where they are positioned within the organization.”

2- “I went on to summarize my management philosophy and practice: I manage by principle, not procedure. The marketplace dictates everything we should do. I’m a big believer in quality, strong competitive strategies and plans, teamwork, payoff for performance, and ethical responsibility. I look for people who work to solve problems and help colleagues. I sack politicians. I am heavily involved in strategy; the rest is yours to implement. Just keep me informed in an informal way. Don’t hide bad information—1 hate surprises. Don’t try to blow things by me. Solve problems laterally; don’t keep bringing them up the line. Move fast. If we make mistakes, let them be because we are too fast rather than too slow. Hierarchy means very little to me. Let’s put together in meetings the people who can help solve a problem, regardless of position. Reduce committees and meetings to a minimum. No committee decision making. Let’s have lots of candid, straightforward communications. I don’t completely understand the technology. I’ll need to learn it. but don’t expect me to master it. The unit leaders must be the translators into business terms for me.”

3- “After all the customer and employee and industry meetings, as well as weekend and air travel reflection, I was indeed ready to make four critical decisions: Keep the company together. Change our fundamental economic model. Reengineer how we did business. Sell underproductive assets in order to raise cash.”

4- “I’ve had a lot of experience turning around troubled companies, and one of the first things I learned was that whatever hard or painful things you have to do, do them quickly and make sure everyone knows what you are doing and why.”

5- “The sine qua non of any successful corporate transformation is public acknowledgment of the existence of a crisis. If e So there must be a crisis, and it is the job of the CEO to define and communicate that crisis, its magnitude, its severity, and its impact. Just as important, the CEO must also be able to communicate how to end the crisis—the new strategy, the new company model, the new culture. All of this takes enormous commitment from the CEO to communicate, communicate, and communicate some more.”

6- “What drives IBM’s unique complexity is twofold. First, every institution and almost every individual is an actual or potential customer of IBM. In The second complexity factor is the rate and pace of the underlying technology.”

7- “All of our efforts to save IBM—through right-sizing i and reengineering and creating strategy and boosting morale and all the rest—would have been for naught if, while we were hard at work on the other things, the IBM brand fell apart. I have always believed a successful company must have a customer/market•lace orientation and a strong marketing organization. That’s why my second step in creating a global enterprise had to be to fix and focus IBM’s marketing efforts.”

8- “We made four major changes to our compensation system…This was all about pay for performance, not loyalty or tenure. It was all about differentiation: Differentiate our overall pay based on the marketplace; differentiate our increases based on individual performance and pay in the marketplace; differentiate our bonuses based business performance and individual contributions; and differentiate our stock-option awards based on the critical skills of the individual and our risk of loss to competition.”

9- “I wanted IBMers to think and act like long-term shareholders to feel the pressure from the marketplace to deploy assets and forge strategies that create competitive advantage. The market, over time, represents a brutally honest evaluator of relative performance, and what I needed was a strong incentive for IBMers to look at their company from the outside in.”

10- “The skills required in managing services processes are very different from those that drive successful product companies. We had no experience building a labor-based business inside an asset-intensive company. We were expert at managing factories and developing technologies. We understood cost of goods and inventory turns and manufacturing. But a human-intensive services business is entirely different. In services you don’t make a product and then sell it. You sell a capability. You sell knowledge. You create it at the same time you deliver it. The business model is different. The economics are entirely different.”

11- “My point is that all of the assets that the company needed to succeed were in place. But in every case—hardware, technology, software, even services—all of these capabilities were part of a business model that had fallen wildly out of step with marketplace realities…The implications of this kind of leap to a company’s economic model can be devastating. In IBM’s case it meant the collapse of gross profit margins and the attendant changes we had to engineer to lower our cost structure without compromising our effectiveness. Yet the hardest part of these decisions was neither the technological nor economic transformations required. It was changing the culture—the mindset and instincts of hundreds of thousands of people who had grown up in an undeniably successful company, but one that had tor decades been immune to normal competitive and economic forces. The challenge was making that workforce live, compete, and win in the real world. It was like taking a lion raised for all of its life in captivity and suddenly teaching it to survive in the jungle.”

12- “You’ve probably found, as I have, that most companies say their cultures are about the same things—outstanding customer service. excellence, teamwork, shareholder value, responsible corporate behavior, and integrity. But, of course, these kinds of values don’t necessarily translate into the same kind of behavior in all companies—how people actually go about their work, how they interact with one another, what motivates them. That’s because, as with national cultures. most of the really important rules aren’t written down anywhere.”

13- “In comparison, changing the attitude and behavior of hundreds of thousands of people is very, very hard to accomplish. Business schools don’t teach you how to do it. You can’t lead the revolution from the splendid isolation of corporate headquarters. You can’t simply give a couple of speeches or write a new credo for the company and declare that the new culture has taken hold. You can’t mandate it, :an’t engineer it. What you can do is create the conditions for transformation. You can provide incentives. You can define the marketplace realities and goals. But then you have to trust. In fact, in the end, management doesn’t change culture. Management invites the workforce itself to change the culture.”

14- “Thee work-a-day world of business isn’t about fads or miracles. There are fundamentals that characterize successful enterprises anc successful executives. They are focused. They are superb at execution. They abound with personal leadership.”

15- “At the end of the day a successful, focused enterprise is one that has developed a deep understanding of its customers’ needs, its competitive environment, and its economic realities. This comprehensive analysis must then form the basis for specific strategies :hat are translated into day-to-day execution.”

16- “Earlier in this section I mentioned that in every industry it is possible to identify the five or six key success factors that drive leadership performance. The best companies in an industry build processes that allow them to outperform their competitors vis-a-vis these success factors.”

17- “This next generation of leaders—in both the public and private sectors—will have to expand its thinking around a set of economic, political, and social considerations. These leaders will be: Much more able to deal with the relentless, discontinuous change that this technology is creating. Much more global in outlook and practice. Much more able to strike an appropriate balance between the instinct for cultural preservation and the promise of regional or global cooperation. Much more able to embrace the fact that the world is moving to a model in which the “default” in every endeavor will be openness and integration, not isolation.”

Regards,

Omar Halabieh

Who Says Elephants Can’t Dance?

On Leadership Passages

I recently finished reading Leadership Passages – The Personal and Professional Transitions that Make or Break a Leader by David L. Dotlich, James L. Noel and Norman Walker.

As best summarized by the authors: “We have selected thirteen passages to describe in this book…we have chosen the thirteen that senior leaders mention most often and describe as particularly compelling or intense. If you work ling enough, you will experience many of these passages, perhaps all of them. When you do, you will find them to be emotionally, intellectually, and even spiritually intense. And they are passages because as the world indicates, they take you from one place to another you see the world and yourself differently after you’ve gone through the events and emotional states that define each passage…Our goal is to help you understand, learn from, and navigate the passages successfully. If you do, you will dramatically increase your leadership effectiveness. If you don’t, you’ll risk bypassing the most important leadership development experience you can face: your own life.”

Below are key excerpts from the book that summarize the main points:

1- “Although, everyone experiences adversity and diversity in unique ways, the general nature of these experiences can be predicted and prepared for. When you know the passages you will encounter, you’re better able to maximize their value as learning tools…they’re organized according to the four quadrants of the matrix: (1) diversity of work experiences, (2) work adversity, (3) diversity of life experiences, and (4) life adversity.”

2- “Ultimately, the way we use our skills, obtain results, or establish relationships is contingent on our internal awareness of who we are. If we’re blind to our weak spots, they’re bound to trip us up.”

3- “Without a failure or two along the way, leaders never have to move out of their comfort zones, adjust their identities, or develop their capacity for compassion…Failure, though, can also deepen you. It gives you a sense of your own fallibility and forces you to reassess your point of view.”

4- “Companies therefore need to be proactive in helping their new executives deal with this passage; the first thing they should do is counsel them on the implicit rules of the culture and how to maximize the impact of their entry and minimize the cultural upheaval…follow this five-step method to learn and grow as you move through the passage: 1) Identify the gap between the company’s intention and your experience…2) Focus on your boss and learn to read him accurately…3) Build a coalition that stretches throughout the organization…4) Diagnose the culture yourself…5) Create a time-focused vision of what you want to accomplish.”

5- “Challenges for First-Time leaders: 1) Losing an Identity…2) Seeing your Star Dim…3) Balancing People and Tasks. The Normality of Struggle: 1) Reflect and talk about the feedback your receive…2) Heed your instincts…3) Make the time to focus on people…4) Grasp the network of influence and politics…5) Don’t abuse your power. 6) Do the right thing, but don’t be convinced you always know what the right thing is.”

6- “The Role of Paradox in Business: 1) Value the unfamiliar…2) Display a hang-in-there mentality…3) Accept the paradoxical nature of work.”

7- “Four Dos in Dealing with Failure: 1) Examine your decisions that catalyzed the failure…2) Talk to your boss, a coach, or some other trusted adviser about this incident…3) Reflect on what you might do differently in the future…4) Summon the energy to persevere.”

8- “A bad boss or peer is a reverse role model – one you can use to guide yourself away from counterproductive actions and attitudes. To take advantage of these three learnings, we recommend the following steps: 1) Choose an interpersonal strategy to manage the relationship…2) Ask yourself what your reaction to a boss or peer says about you…3) Define your values.”

9- “How to Grow from Being Diminished: 1) Refuse to allow the event define you…2) Understand why it happened…3) Use your support network…4) Develop a “what next” strategy.”

10- “Learning More Than How To Keep Your Job (in an M&A): 1) Figure out new rules quickly and start playing by them…2) Remain a strong leader despite your sense of vulnerability…3) Transcend the politics while focusing on the mission…4) Maintain an open mind…5) Create a new network. Growing as a Company Changes: 1) Determine if you should remain with the new company… 2) Work at assessing and expressing how you feel about the merger or acquisition…3) Reconnect to the company…4) Keep the lines of communication open with your direct reports…5) Be patient.”

11- “How to Take Advantage of a Once-in-a-Lifetime Opportunity (living in a different country or culture)…1) Adopt an adventurer’s mind-set…2) Learn first; teach second…3) Function effectively without knowing the rules or how to behave.”

12- “Finding a Meaningful Balance Between Work and Family…1) Let your values be your work-family guide. 2) Involve your partner early on in your decisions about work and family…3) Monitor your attitude towards success.”

13- “How to Manage Upheaval: 1) Reveal your vulnerabilities…2) Be authentic…3) Accept fate and move on.”

14- “Leadership Development Is About Experiences: 1) Stretch assignments 2) Education 3) Key Relationships 4) Outside activities 5) Coaching 6) Diverse experiences 7) Living abroad 8) Feedback 9) Selection and Staffing.”

15- “An Eight-Step Survive-And-Thrive Guide: 1) Learn Resilience…2) Accept Personal Responsibility…3) Reflect…4) Seek support from your partner, family, friends, and professionals…5) Develop and Use a Professional Network…6) Seek Refuge…7) Gain Perspective…8) Take Risks.”

16- “The thirteen predictable, intense passages can certainly be stressful, confusing, and emotionally volatile periods in your life. They are also the foundation with which you can become stronger, more humane, and more effective leader. With insight, reflection, and a strong dose of self-forgiveness, you can turn the experiences of your life and career into personal growth for yourself and for others.”

Regards,

Omar Halabieh

Leadership Passages

On Executive Thinking

I recently finished reading Executive Thinking by Leslie L. Kossoff.

Below are thirteen key lessons, in the form of excerpts form the book, that I found particularly insightful:

1) “The executive must be able to speak to his vision clearly and charismatically in order for others to know where it is that he sees the organization going and why. That clear, exciting picture is the one that must be communicated, translated, and demonstrated to the rest of the organization through the actions and words of the executive and his executive and management staff.”

2) “Executive Thinking is not conventional thinking, nor is it a conventional organizational process. It is one in which, based on the dream of the executive, everyone becomes involved as an active participant in the shared dream. It is both tangible and amorphous. It is both process and result. It is the life and breath of the organization.”

3) “The executive must realize that, because his dream is iterative and evolutionary, there will never be a time when it is finished.”

4) “Knowingly or not, executives form their organization in their own image. The importance for the executive is to realize that the organization adopts what it believes to be that image. This puts a particular onus on the executive to be aware of the image he is projecting and to understand that the members of the organization are looking to him to determine the image and actions they must project.”

5) “It is useful for the executive to think of the dynamics within the organization not as competitive or adversarial activities, but as a dance. In so doing, the previously competitive and adversarial actions become part of a larger choreography wherein each person performs his steps while always knowing that his part is a part of the larger dance. That choreography is designed and determined by the executive.”

6) “As humans we are not limited to seeing things in one particular way. We choose to see things in a way that is most familiar to us. We develop thinking processes that keep us from seeing all that there is to see. We limit ourselves by not looking for or accepting the potential that is presented to us. But, just as thinking is a skill, our thinking paths can be altered and added to.”

7) “There are five trust-building behaviors that must be demonstrated. They are respect, reciprocity, consistency, integrity and involvement. Each is equally important. Unless each behavior is manifest, the model will not work. It may have some success, but ultimately it will falter and possibly fail.”

8) “Executive Thinking makes it worthwhile for individuals to challenge their previously held beliefs. Each individual sees that her participation in the system works not only to the benefit of the organization but to her own benefit as well.”

9) “The dream must be positioned so that its intent is clear and its outcome are of benefit to everyone. In this way, it becomes more than just the dream of the executive. It becomes the dream of each and every associate throughout the organization. The paradox of empowerment is that the stronger the executive and his direction and management of the organization, the more empowered the associates can be.”

10) “One of the problems that might well be encountered is the mistaken impression that a participative organization is a tolerant organization. This is and must be patently untrue. There can be no tolerance for behaviors that are not in keeping with the goals, expectations, and commitments of the organization to its associates and to its stakeholders.”

11) “Executive Thinking is a balance between action and results. Problems occur only when and if the process is wholly biased toward one or the other. Action must occur in the form of thinking and the actions that ensue as a result of that thinking. Results occur based on thinking and actions taken.”

12) “Decisions are made using the dream as the context. Actions taken are assessed both while in progress and after the fact to determine whether all the factors were adequately considered. Analyzing and applying lessons learned becomes an operating norm for the organization, both for those decisions that worked and for those decisions that did not work as expected.”

13) “Executive Thinking, however, is the greatest legacy that the executive can leave the enterprise. Through his commitment and actions he will have taught the organization how to dream…Thinking will have become a norm.”

Regards,

Omar Halabieh

Executive Thinking