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"Knowledge comes, but wisdom
lingers."
—Alfred Lord Tennyson
We are told that a wise counselor judges things as they are, not as they are said or acclaimed to be.
Suppose it were
necessary to sum up the life and works of Irish-born author and social
philosopher Charles Handy, who passed on December 13, 2024, at 92. His mission, simply stated, was to get top management to question conventional wisdom and consider the moral implications of their strategies.
Handy's disciplines included choosing his words carefully.
"... he employed the Socratic method of inquiry to learn about those seeking help and the nature of their problems."
A Fortune magazine article published on October 31, 1994, was retrieved. That six-page cover story with photos gives the reader a close look at Oxford and MIT-educated Charles Handy's
thinking, at least to the age of 62.
Adding another 30 years of advising diverse groups, such as PepsiCo, BP, Silicon Valley start-ups, and the Save the Children's Foundation, means that more than half a century of sound management thought has been shared privately and publicly in Handy's 23 books.
An engagement with Charles Handy, the son of a Protestant clergyman and the only layman to deliver a religious Thought for the Day on the BBC, began with a required visit to his 19th-century apartment in suburban southwest London. There, he employed the Socratic method of inquiry to learn about those seeking help and the nature of their problems.
Discontinuous
thinking
The Age of
Unreason was
my first Charles Handy book, and it was filled with fresh ideas. Published in 1989, it forecasted faster and more unpredictable change, which would materialize in the form of the
internet, terrorism, smartphones, the COVID-19 pandemic, and artificial
intelligence.
In his
"shamrock organization," Handy envisioned a corporate headquarters that would shrink, with more tasks outsourced. The shamrock design has three types of
workers: a core of permanent employees, a group of contract workers, and a
flexible labor force. The criticism is that flexible but casual workforces
often lack the discipline of on-site supervision and exhibit a loss of
corporate culture.
Handy also foresaw
that associates may not stay with one company for a lifetime but would have a "portfolio"
of experiences, including entrepreneurial opportunities.
"My job is to be ten years ahead, which is why many people tend to say I'm stupid," says Handy to Fortune reporter Carla Rapoport. How do you associate a self-disparaging term with someone who sold two million books and commanded respect and high fees from global clients?
Yet, Charles Handy admitted to making mistakes throughout his career.
That learning process would culminate in "decent doubt" and being open to the possibility of wrong decisions and alternative perspectives. Handy believed that questioning one's assumptions helps reduce the impact of potential mistakes.
His teaching used
management metaphors. For example, the sloping lines of a sigmoid curve indicate that companies will eventually fail if they do not adapt and reinvent themselves during
good times.
The book brought
Handy to the attention of leaders everywhere. He believed that discontinuous
change necessitated discontinuous thinking about profound social and economic shifts, and that the past was an unreliable guide for navigating what comes
next.
A designed future
The New York Times obituary highlighted how Handy
envisioned decentralized, community-oriented "federal organizations"
in which a small corporate headquarters served the needs of diverse and
far-flung business units. The corporate center would retain key financial
control, while the creative and production energy would be centered among workers close to
the customers.
Handy taught that corporations should be viewed as communities of individuals who need to be nurtured and inspired by a worthy purpose, rather than machines to be re-engineered. Getting bigger didn't have to be the goal; getting better was enough.
"I truly believe that managing people, instead of leading them, is wrong ..."
"Why are
villages and platoons better than mass organizations? Because they are human
scale. They allow you to be a person, not a cog. Already, young people are
turning away from the traditional pyramid organizations in which you clamber
your way up the hierarchy over the years. The world of work is increasingly
going to realize that small is better," said Handy at age 87, writing to
his four grandchildren in 21 Letters on Life and Its Challenges.
The purpose of the book was to help them with life's choices.
What didn't he do?
Handy said he struggled
with management responsibilities while working at Shell. That may explain why the one
thing he couldn't do was teach people to manage. That would only come with
practice, if at all.
"I truly believe that managing people, instead of leading them, is wrong and has resulted in too many dysfunctional and unhappy workplaces. People are more than a human resource," Handy wrote in 21 Letters.
He also
avoided prescribing behavior. "In most human situations, there is no
textbook answer. You have to make your own judgments most of the
time," Handy observed.
Upon further reflection
Charles Handy said the following—
A favorite Handy quote:
"The companies that survive the longest are the ones that work out what they uniquely can give to the world—not just growth or money but their excellence, respect for others, and ability to make people happy. Some call those things a soul."
A loss of light and love
In 1960, at a party in Kuala Lumpur, Charles Handy met his future wife, Elizabeth Ann Hill, who worked for the British High Commission in Singapore. She became a successful professional photographer, Mr. Handy's agent, and business manager.
In 2018, Elizabeth Handy was killed in
an automobile accident in Norfolk County, England. Mr. Handy was driving their
car.
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" ... studying religion is more prudent than trying to predict its future."
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—Jefferson Fisher
What contributes to CEO failure?
"How do CEOs blow it? More than any other way by failure to put the right people in the right jobs—and the related failure to fix people problems in time," says Ram Charan and Geoffrey Colvin in a timeless FORTUNE magazine article published in June 1999.
"Specifically, failed CEOs are often unable to deal with a few key subordinates whose sustained poor performance deeply harms the company. Everyone around the leader knows about these problems, but their opinions are ignored," the writers added.
CEOs know there's a problem, but they suppress it.
The article concludes that the failure is one of emotional strength.
Defining self-control
Self-control plays three vital roles: thinking before acting, controlling disruptive emotions and impulses, and saying "no" to temptation. However important this characteristic is, it's often overlooked when hiring.
Dr. Christopher Barnes from the University of Washington reports that self-control varies over time within the same person.
The studies point in these directions:
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© Skechers |
--Sun Tzu
Howie Long is an NFL All-Pro defensive end and Hall of Famer who played 13 seasons for the Los Angeles and Oakland Raiders. Long is now a studio analyst for Fox Network's NFL coverage.
While preparing to write the February Strategist Post, Long appeared in a larger-than-life display advertisement that took up one-third of page 5 in Section 1 of a recent edition of the Orlando Sentinel newspaper.
In the ad, he wears a white T-shirt, light grey khaki pants, and a navy letterman's jacket. The 6' 5" former tight end and defensive lineman from Villanova University holds a college football (the one with stripes) in both hands and wears dark grey, hands-free, slip-in Skechers shoes (similar in style to the one above).
The copy reads, "No bending over. No touching shoes. Just step in and go."
Howie Long's endorsement and those of other football stars, including Joe Montana, golfer Brooke Henderson, and entertainment figures like Martha Stewart, Willie Nelson, and Snoop Dog, have helped make Skechers--a Fortune 500© company with global sales of $9 billion in 2024--the third-best-selling shoe behind Nike and Adidas.
Skechers backstory
How did a footwear brand based in Manhattan Beach, California, come to offer over 900 shoe styles and have 5,000 stores in 120 countries without generating much media attention?
The correct answer is slowly.
In 1983, Skechers founder Robert Greenberg and his son, Michael, started L.A. Gear (with endorsements from Wayne Gretzky and Kareem-Abduhl-Jabbar) after an unsuccessful attempt to sell roller skates. Skechers emerged after the Greenbergs left L.A. Gear in 1992 over a dispute with the board of directors. The original plan was to distribute Dr. Martens's shoes, but that arrangement left the Greenbergs with little say about product development and quality control.
They really wanted their own shoe--and control over its fate in their hands.
The strategic concept
A careful reading of Skechers' history shows that the Greenbergs, with Robert, now 84, as chair and Michael as president, learned from their decade-long experiences that to be successful, one must concentrate on a few things and do them well.
Product innovation (comfort technology) is the driving force behind style, quality, and affordability. Together, they create a brand identity that must be carefully guarded, and that's what the Greenbergs do: guard the brand.
Packaging the strategic idea is one thing. Executing is another.
Marketing plays an important role with generous ad spaces, glossy magazines, large billboards, and television advertisements featuring celebrities wearing Skechers shoes.
Despite the more contemporary ad campaigns, Skechers still has an image problem, reinforced by ads like the one with Howie Long. They're associated with selling "old people's shoes." (I have a pair of Skechers and their slip-in golf shoes, which is an unpaid endorsement.)
Product diversification continues across new markets. Skechers is expanding into team sports like soccer and basketball.
Harry Kane of England's national soccer team has a lifetime endorsement deal for Skechers' soccer cleats. The NBA's Joel Embiid of the Philadelphia 76ers and Julius Randle of the New York Nicks endorse basketball shoes.
Filling in the holes
An important lesson about Greenberg's achievement is that they found market gaps--young professional athletes, women, families with children, new lifestyles, and, yes, older adults--and are filling them in. Skechers now offers a pickleball shoe made of Goodyear rubber that retails for $115.
What's common to all products? The calculated idea that comfort, style, quality, and affordability are a winning combination.
Skechers got a boost from Nike*, which closed its stores after the pandemic to focus on wholesaling and direct-to-consumer sales. Nike's price points don't often go below $100, while Skechers offers a variety of styles for less. Their GORUN shoe sells for $45 at Walmart. Children's shoes are around $30 on Amazon, which appeals to price-conscious parents.
In addition to being helped by other shoe companies that stick to their specialties, such as Hoka, which markets to hardcore runners, Skechers is benefiting from cultural changes: people wearing sneakers and sports apparel for non-sports occasions, like the office and social occasions.
Sometimes, a strategy needs a break from the competition or marketplace to succeed.
An original work
Robert and Michael Greenberg have built a remarkable business, but they would be the first to say they haven't done it alone. Any creative idea pursuing that much growth requires others to achieve its aims. Widespread knowledge among associates of how Skechers differs and why is fundamental to its financial fortune.
No idea or business constructed by human powers endures forever in its original form. Maintaining product innovation as Skechers' heart and soul while profitably seizing the right opportunities is an investment in its future but not a guarantee.
*Nike is suing Skechers for design infringement. Skechers said it will "vigorously" defend the 2023 patent suit.
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"The sinkhole of change is communication and motivation. It's where change projects go to die."
--Nancy Rothbard, Ph.D.
Bayer, the German conglomerate that invented aspirin in its earliest days, is trying to reinvent itself.
CEO Bill Anderson is one year into restructuring the company's pharma commercial team in response to a crushing €34.5 billion debt, the litigation-intensive $63 billion acquisition of Monsanto, the parent company of the Roundup weed killer, and the upcoming loss of exclusivity for the blood-clot medication Xarelto.
Bayer, also home to Flinstone vitamins and Alka-Seltzer, eliminated managers and annual budgets, which Anderson calls the "belly of the beast of bureaucracy," and asked staff to organize themselves into 90-day "sprints" in self-directed teams.
"Dynamic Shared Ownership" (DSO) proposes reducing bureaucracy, accelerating decision-making, bringing employees and customers closer together, improving overall operational performance, and radically realigning Bayer's internal culture.
"The beauty of this system is we're not perfecting it before we start," says Christine Roth, head of global commercialization at Bayer's pharmaceutical division. "We're getting to a good place where we can start to experiment and go. And we will learn to adjust as we go," Roth emphasized.
The DSO plan works and becomes a Harvard Case Study on transformation or falls into the heavily populated category of failed corporate change, where nearly 70 percent end up. Or something in between.
Under Bayer's circumstances, doing nothing is not an option.
The role of culture
Dr. James O'Toole, author of Leading Change and former program director at The Aspen Institute, defines culture as a system of beliefs and actions that characterizes a particular group. He includes shared ideas, customs, assumptions, expectations, philosophy, traditions, mores, and values in that definition.
Historically, grasping corporate culture resulted from in-person socialization, close observations of behavior, and conversations with peers and supervisors. Informal mentoring played a big role in the assimilation process.
Can what was once learned on-site be interpreted virtually?
The Iceberg graphic shows that the more heavily promoted values at the top, such as vision, strategy, and goals, may have less influence than originally thought. Stories, unwritten rules, and traditions at the bottom may impact culture more. Will the approximately 90 percent unseen volume of the iceberg retain its influence in hybrid work cultures?
Change is hard but possible
What have we learned in a half-century of studying organizational dynamics? The critical importance of everyday relationships. That's a quality you can't do without. Credibility doesn't show up at the last minute when change needs to happen, or a crisis occurs. It's there, or it's not.
There's a huge difference between nurtured and neglected bureaucracies. The former are healthy and adaptive, while the latter struggle to achieve common goals.
What drives sweeping change?
An existential threat, such as debt at Bayer or catastrophic accidents involving Boeing planes in 2018 and 2019, killing 346 passengers and crew that grounded the 737 Max jets.
"Top management teams that are diverse in time orientation, tenure, and experience increase the probability of strategic change," says Success with Change author Patricia McLagan.
Anticipating something new
There are three pre-conditions for effective change:
The first is trust.
Dr O'Toole writes: "Trust is created by leaders' manifest respect for their followers."
"People have to believe in you and what you are trying to do," says Paul Brown with FTI Consulting.
Therefore, mutual trust is necessary.
Secondly, leadership has to gauge the capacity to change. Restructurings or turnarounds can't happen without building on existing capacity. You bring change by working with the system; you can't pretend the system doesn't exist.
Finally, anticipate people's concerns. They are not only predictable but also addressable. Sometimes, resistance identifies alternative options and produces better results. Associates don't actually resist change; they simply resist being controlled.
Improving the chances of success
Make a case for change: Explain your motivations to employees repeatedly and in detail. Take the time to build a compelling case. Allow for questions and feedback. Announcing change isn't the same as implementing it. Show everyone where the enterprise is, where it should go next, and how to get there by working collaboratively. A realistic timeline helps.
Involve associates from the beginning. Credit them for being smart and include them in every stage. People don't want to be sold on change. They want to understand it and participate in making it happen. Deliberately engage their hearts and minds. Let them influence its nature and direction. Those directly affected by these decisions need time to make the required transitions. Implementation happens here.
Maintain integrity throughout the process. Proposals and the leaders who sponsor them aren't perfect. Acknowledging this upfront is an act of humility, not weakness. If leadership communicates probabilities instead of certainty, much can be said. Updating formal and informal channels with the latest information is better than rumor-filled vacuums. Progress, more than success, is the measuring stick of change.
Remember that cultural icebergs are mainly below the surface.
Sources: Controlling the Perils of Change, Mary Lee Olson, T + D Magazine, 2008; The Irrational Side of Management, McKinsey Quarterly, 2013; Partners In Change, Paul B. Brown, Inc., 2001; Leading Change, James O'Toole; Jossey-Bass, 1995, Cracking the Code of Change, Nitin Nohria and Michael Beer, Harvard Business Review, 2000; Success with Change, Patricia McLagan, T +D Magazine, 2002-2003; The Change Monster, Jeanie Daniel Duck, Crown, 2002; Communicating Change, TJ Larkin and Sandra Larkin, McGraw-Hill 1994.
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"The average investor buys high and sells low."
--Ray Dalio
The chairman of Vector Economics, Sam Savage, shares the story of a statistician who drowns while fording a river that he calculates is, on average, three feet deep. "If he were alive to tell the tale, he would expound on the 'flaw of averages,' which simply states that plans based on assumptions about average conditions usually go wrong.""I was a math (statistics) major in college. One part of that coursework was a section on how to tell if someone was lying using statistics. It was eye-opening, and averages were among the best ways to mislead. A professor would say, 'If you put one foot in ice cold water and the other foot in boiling water on average, it would be just right.'
"Averages (means, modes, arithmetic, etc) are valuable, but one must look carefully at what they say. Unfortunately, people often have a point of view, and statistics are simply a way to prove their point, not help them gain insight into data," Hewitt concluded.
What specifically should concern us about averages?
The problem with averages is that they can easily obscure the reality of the situation.
"While averages can provide a simple summary of complex data, they can also distort reality, hiding important variations and nuances with the data," writes Reagan Pannell, CEO of Leanscape. "Averages can be useful for providing a quick snapshot, but they mustn't be the sole metric relied upon for decision-making or understanding a situation," he adds.
Some examples
Think of baseball batting averages, which Sabermetrics considers a weak performance measure. On-base plus Slugging (OPS) may be a better way to judge a batter's value to their team, but do fans know what that stat means? Do they even care?
This is likely since that definition relies on a single 'average' value and can ignore individual differences and complexities.
Beware these conditions
Circumstances to avoid:
What can we learn?
Consultant Pennell believes we should look beyond averages.
"Consider data distribution, the outliers, and other measures like median and mean. Understanding the range and variance can also provide insights into the spread and inconsistency of data."
Pennell balances the scale:
1. Averages are not inherently bad. They do offer a quick snapshot of data and simplify complex datasets.
2. Use averages as a starting point, but explore other statistical measures.
3. Beware of outliers, as they can significantly skew your average and create a misleading data representation.
4. Tools like AI can provide valuable insights beyond the average, though you should never remove the human mind when analyzing data.
Coin of the realm
Sam Savage, whom we quoted initially, is also the author of The Flaw of Averages. Instead of saying, "Give me a number for my report," he believes every executive should say, "Give me a distribution for my simulation."
If followed, Savage's advice could improve planning and outcomes and establish a more credible standard of leadership.
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