Category Archives: Corporate

Is Your CPO the Next CEO Candidate?

Supply and Demand Chain Executive recently ran an interesting article on forging a dynamic, enduring and energetic supply chain: developing supply chain-rooted CEOs that outlined 5 attributes of great CEOs, 10 questions to ask about the organization, 10 reasons to invest in internal leadership talent, and 10 areas to develop great leadership skills.

According to the authors, the following 10 areas are key developmental areas for leadership and, thus, critical for the CPO to master if she is to become the company’s next CEO.

  1. Business Acumen
    The CPO must understand the fundamentals of how money is made within the company and industry, the needs and wants of cusotmers and stakeholders, and the competitive and market dynamics that drive change and opportunity.
  2. Work Ethic
    The CPO must put the time in to prepare herself for the next step and stand out.
  3. Networking Skills
    The CPO must build a network of supporters and influencers, give more than she gets, stay connected, and build internal and external advocacy.
  4. Results Oriented
    The CPO must earn her stripes by consistently delivering results that drive the respect and recognition of others.
  5. Permeability
    The CPO must have the ability to collect and synthesize multi-directional data across critical domains and be willing to constantly share knowledge.
  6. People Skills
    The CPO must be able to get the most out of people.
  7. Decision Making
    The CPO must be cool under fire and be able to make critical and controversial decisions when required.
  8. Lateral Development
    The CPO must be open to lateral moves which are stepping stones on the path to the CEO spot, such as CFO or COO.
  9. Continuous Learning
    The CPO must be willing to learn continuously and demonstrate such willingness.
  10. Legacy Building
    The CPO must have built a Supply Management organization that is capable of standing on its own and shining if the CPO moves on.

SI has to agree. A CPO will need to have all of these skills and qualities to take on the CEO role. But is it enough to get her the job? As Bob continually points out, a CPO must speak the language of the CFO. It’s more than just business acumen, it’s talking like you belong in the role. And while work ethic is highly regarded, it’s results that count. If the CPO is constantly putting in 80 hour weeks but not meeting her goals, she will look ill-fit, or slow. And while Networking and People skills are well regarded, the decision ultimately comes down to a small board of directors — if they do not think she’s the right candidate, it doesn’t matter how much internal support she has. And while permeability is admired, it’s seen as tactical as the organization can always hire an analyst to synthesize the data. It’s the ability to make good decisions based on the data and information available that is admired most. And it’s not always the legacy the CPO has built, but the legacy the board thinks the CPO could build as a CEO that ultimately influences the final decisions.

It’s a tough call to say which skill set is the right skill set and what is required to get the CPO into the top spot. Are there any other viewpoints out there that could shed some more light on the subject?

Opportunities for Transportation and Logistics Operators Part II

In addition to the presentation of 18 theses around the continued scarcity of energy resources, Volume 1 of the Transportation & Logistics 2030 report on how supply chains will evolve in an energy-constrained, low-carbon world by PriceWaterhouseCoopers and the Supply Chain Management Institute also identified some (emerging) opportunities for transportation and logistics operations that are worth close scrutiny by any provider looking to differentiate themselves in the marketplace.

The report provided opportunities in four areas:

  • Products & Services
  • Finance & Accounting
  • Processes & Organization
  • Strategy & Policy

Today, we’re going to overview the process, organization, strategy, and policy opportunities.

Processes & Organization

  • Innovation Management
    Innovation management has not yet been systematically implemented by the majority of logistics companies and offers a significant opportunity for substantial benefits for operations of all sizes.
  • Scenario Culture
    Companies that “think in scenarios” and plan for “alternate” futures can make decisions that maximize their likelihood of success.
  • Research Cooperation along the Supply Chain
    Research efficiency can be significantly enhanced by the participating in research initiatives.
  • CO2 Driven Supply Chains
    Companies may be able to realize competitive advantages over the long-term by reducing CO2 emissions in their processes, documenting such reductions, and actively promoting them to the marketplace.
  • Total Emissions Management
    Leading companies that have already implemented total emissions monitoring systems can take actions to reduce their total emissions and gain additional customers by way of their reduced environmental footprint.

Strategy & Policy

  • Local Patriot
    As consumers demand more locally produced products, those logistics companies that focus on efficient “local” transportation could be the the preferred partner for “local” companies.
  • Corporate Social Responsibility & Ethics
    Logistics companies that develop expertise in the design and implementation of sustainable supply chains will be able to differentiate themselves and win more customers through combined transportation and consulting services.
  • High Tech Logistics
    High-tech logistics providers that provide the latest technology for interaction will gain prominence among customers looking for more visibility into, and control over, their supply chains.
  • Home Delivery Specialist
    Logistics service providers who are able to develop a full,flexible palette of intelligent city solutions which fulfill any newtraffic restrictions could find a promising market as homedelivery specialists.

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Has Google Taught Us Well?

A recent article over on Fortune by Ken Auletta lists 10 things Google has taught us. Now, it’s obvious the 10 lessons provide a path to success (as you just have to look at where Google stands), but did Google teach us well? Before we can answer that, we have to review the 10 lessons.

  1. Passion Wins
    Larry Page and Sergey Brin are involved with Google full-time, unlike Jerry Yang and David Filo of Yahoo. They see Google as a defining company and give it everything they’ve got.
  2. Focus is Required
    The founders never let themselves get defocused by the crowd or the other 100 good ideas that they could be working on.
  3. Vision is Required Too
    Page and Brin want to make “all the world’s information available”. That’s quite a vision!
  4. A Team Culture is Vital
    Google’s allocation of 20% of employee time to projects of their own choice give employees a sense of proprietorship.
  5. Treat Engineers as Kings
    For most Valley companies, engineers are the equivalent of the television writer, a dime a dozen. Not at Google.
  6. Treat Customers Like a King
    Google is among the world’s most trusted brands because it conveys a sense that the user comes first. Google services are free and user friendly.
  7. Every Company is a Frenemy
    Google understands that a medium like the internet blurs the borders between companies, sometimes making it more difficult to sight a potential rival or to distinguish between ally and foe.
  8. Don’t Ignore the Human Factor
    Google has been wise in winning the trust of its users, in building a team culture, and in thinking long-term. But when you start from a blanket assumption that the old ways of doing things are probably wrong, as Google does, you’re bound to make unwise mistakes. Page was unwise to assume Google could immediately digitize all books, just as Google was wrong to assume that it could devise formulas to better sell ads for newspapers and broadcast radio, two efforts it has since abandoned.
  9. There Are No Certitudes
    There is nothing about the Google model that makes them invulnerable. While they made it big as a search engine, the money they’ve poured into new ventures like YouTube, Android, and cloud-computing has not yet paid off.
  10. Life is Long But Time is Short
    You need to think and act quickly and move with the markets, which will change many times over your life time.

So has Google taught us well? Yes, they have. In fact, they have taught us very well. All the lessons apply to your supply chain. Specifically:

  1. Passion Wins
    In order to build a better supply chain than your competitor, you have to work long and hard. This will require passion.
  2. Focus is Required
    Since the average, well-planned, supply chain transformation takes 18 to 36 months in a large multi-national, you need unwavering focus so you don’t get led astray.
  3. Vision is Required Too
    You have to see the end result to get there.
  4. A Team Culture is Vital
    Success will require the commitment of a cross-functional team that represents every unit of the business.
  5. Treat Engineers as Kings
    Your supply chain professionals, who are re-engineering the supply chain, need to have the full support of the C-suite who need to treat them like Kings for the value their efforts can bring.
  6. Treat Customers Like a King
    Since sourcing / procurement / supply chain needs the support of the other internal divisions of the company, their “customers”, they need to treat their customers like a king if they want to make big wins.
  7. Every Company is a Frenemy
    Your supply advantage today could be a supply risk tomorrow without the right IP protection when your contract manufacturer starts working for your direct competitor.
  8. Don’t Ignore the Human Factor
    The projects with the largest returns won’t succeed if everyone isn’t on board.
  9. There Are No Certitudes
    The markets are changing. The perfect supply chain today will not be the perfect supply chain tomorrow. You will have to improve continuously.
  10. Life is Long But Time is Short
    Especially where consumer products are concerned.

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How to Insure Your Employees (Re)Connect with the Business

A recent article in Industry Week presented ten tips from Watson Wyatt that were designed to help you help your employees reconnect with the business in these troubled times. They weren’t bad, and are definitely worth a review (if you add a little flair). In the doctor‘s words, they are:

  1. Ditch the Dotted Lines
    The organizational structure should be crystal clear. Every employee should understand their role and how they contribute to organizational success.
  2. Cut the Crap
    Be honest about the situation. You might think otherwise, but an average employee can smell B.S. a mile away.
  3. Lead-line the Golden Parachutes
    Make sure executive compensation is in alignment and dependent upon the executives driving value to the business. Remember, while few people will have a problem with a 2M bonus to a CEO who increases profits by 20M (as long as all the contributors are justly rewarded as well), you can bet no one will agree with a 2M bonus to a CEO that led the business to a 20M loss.
  4. Sink Signature-based Sales Commissions
    A salesperson shouldn’t get a 1M cheque for signing a 10M contract. They should get the 1M cheque for delivering 10M of profitable revenue to the business. This means that they should be selling software and services aligned with the business and making sure that the customer stays happy and actually pays the business the 10M. Considered structured plans that give, say, 25% each time a revenue target is realized (such as first payment, second payment, etc. or every quarter the customer remains).
  5. Pitch Performance Penalties
    Review performance management and make sure you’re focussing on measures that contribute to success. For example, number of calls per day and number of bugs fixed are NOT good measures. The first entices customer service reps to get the customer off the phone as soon as possible, which leads to repeat calls when the problem doesn’t get resolved, and the second entices programmers to put easily fixable bugs in their code.
  6. Weed out the Weak
    Make sure you focus on the key talent that contributes to your organizational success and that the Wallys are the first to go when cuts are made.
  7. Trash the Touchy-Feely Awards
    You should only be rewarding exceptional performance, not the norm. Otherwise, what incentive does anyone have to truly excel? (Personally, I hate this “everyone should get a reward” crap that has infiltrated our society in recent years. It’s inspiring a culture of lazy lolly-gaggers. While it would be nice if everyone was capable, you should have to work for it!)
  8. Pitch the Proctologist
    The reports he finds with his flashlight are rubbish. Get a real data analysis system and base decisions on facts and analysis, not on gut-feel and emotion.
  9. Discard the Dunce-Hat
    If anyone needs it, they shouldn’t be working for you. Instead, make sure you understand where the critical roles and skills are and do what you can to support them.
  10. Abdicate the “Me-Too” Attitude
    A business needs leaders, not followers. Who cares what your golf-buddies are doing. You need to figure out where you business needs to go, how you’re going to get it there, and lead your employees out of the dark and into the light.

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Individuals Do Matter, Even if Statistics Says they Don’t

A recent article in the Harvard Business Review, which purported to tell us when individuals don’t matter, stated that under the right conditions, groups — whether ant colonies, markets, or corporations — can be smarter than any of their members in an effort to apply swarm theory to corporate performance. This is because, in complex adaptive systems, hard-to-predict behaviors emerge from the interaction of the individuals.

The article says that executives make three common mistakes to demonstrate that they don’t grasp how complex systems work. A complex system cannot be understood or managed with a focus on a few key parts, or individuals. It needs to be analyzed as a whole, and this is where many people executives fall short and, according to the author, make the following errors:

  1. They extrapolate individual behaviour to explain collective behaviour.
    Wall street believed that EPS was key to a stock price, but then financial economists concluded that cash flow drove the stock price. The economists, who focussed on how the market behaved, turned out to be more accurate.
  2. They don’t understand that changing one component of a system may have unintended consequences for the whole.
    For example, the collapse of Lehman Brothers, which had losses larger than expected, roiled global financial markets, increased risk aversion, and even parts of the market that were supposed to be unrelated, like money market funds, were jolted.
  3. They prize standout individuals while ignoring how much they draw on their surroundings for support.
    The example given is how many sports teams will hire a star in an effort to quickly improve team results but then see little or no improvement because the newly transplanted star is separated from the people, structures, and norms that made her great in the first place.

    As someone who has worked primarily with smaller business and start-ups in my career, I have seen this way too many times. “We’re going to hire Mr. Big Shot because he ran the top performing team at Great Success Co. that generated 10M in annual savings” even though he’s never worked at a small company, never sold point solutions, never worked in the vertical, and we have a candidate who used to sell a similar solution for a similar sized competitor who is well educated, experienced, sociable, hard working, and comes with a go-getter attitude. As (I) expected, it turns out Mr. Big Shot was actually Mr. Hot Air who only succeeded in alienating the good people the company already had, who then took other jobs at their first opportunity, because Mr. Big Shot couldn’t survive without a hard-working team who did all his work for him and made him look good in exchange for the little rewards he would throw their way from the big discretionary budget he kept to keep his team happy.

This last point brings me to my main point. Even though, as the author notes, wrong assumptions about the relevance of individual agents to the behaviour of a complex adaptive system will kill your corporate performance, it’s also true that the wrong individual can significantly disrupt the system you have in place and have an effect that is more detrimental on your system than you might think any single individual could. Which is why individuals do matter. Even though it is collective effort from a focussed team that mutually trusts each other that builds an organization, it only takes a single individual to tear it apart. Remember that the next time you get all hot and bothered for an organizational superstar.

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