Chaos Theory and Business Management

“Welcome to the Jungle” goes the beginning of a song that I’ll bet your kids know and you probably air guitar along with also.  Which brings us to Chaos Theory which, when applied to business and organizations, may help us see through the uncertainty of our times.  Chaos Theory is a scientific principle describing the unpredictability of systems.  Recognized in the 1980’s it has actually been around since the mid 1800’s.  The premise is that systems reside in chaos.  A System generates energy, but without predictability or direction.  This idea of chaos theory can be applied to everything from weather to water flow to the management of organizations.

Edward Lorenz of MIT is credited with discovering one of chaos theory's fundamental principles—the Butterfly Effect.  The Butterfly Effect is named for its assertion that a butterfly flapping its wings in Tokyo can impact weather patterns in Chicago.  More broadly applied, the Butterfly Effect means that what may appear to be insignificant changes to small parts of an organization can have exponentially larger effects when put into place.

In a business world where innovation, change, competitive advantage and the impact on strategy are discussed daily, why is this idea of chaos and embracing the uniqueness of “the New” so difficult?  I believe it is because we confuse order with control.  If your company is like most, it probably looks very different than it did even just 6 months ago.  How you now compete and survive in the jungle of business will be driven at a high level on how you let your company and team members self-organize, grow and evolve.  This type of management style is critical in today’s competitive environment where we sometimes need to break it to make it better.  

As long as the change occurs within the boundaries of your company’s overall vision and culture, you should strongly benefit from the resulting creativity and innovation.  Chaos theory shows the need for effective leadership, a guiding vision, strong values, organizational beliefs, and most importantly open communication. 

Have you ever worked for a group where you were told that you could not have a conversation with a higher up or express your ideas?  Knowing a bit about Chaos Theory and Management may be some good food for thought for you.  Chaos Theory is important here for business leaders because it is critical to embrace the idea, sometimes just for the sake of the idea.  We would be wise to remember that order is in fact not control, and pulling in fresh ideas is the life blood of innovation and change.

  Innovation and change are the pillars of developing a high-functioning team.  Members of effective teams frequently change and recreate the role that each team member plays depending on the needs.  While someone may not be the formal leader, an informal leader may emerge because they know just the right way to address the need of the group.  The most successful leaders understand that it is not the organization or the individual who is most important, but the relationship between the two.

Tom Peters, one of the most influential business writers of our time, asserts that we live in "a world turned upside down," and survival depends on embracing "revolution."  According to Peters, “We must learn to love change, as much as we have hated it in the past.” 

Pick your Ally to Change the Change: BCA, US Chamber, NAM

            Change.  Not just a buzzword during the Presidential elections, but a word that rose to a frenzied mantra.  Now that the smoke is clearing from our  recent mid-term elections, we are beginning to get the clear picture that something really has changed in the collective conscience of the country, and it may not be what some in Washington had hoped for or envisioned.  It would seem that previous to the 2008 elections, it was enough to ask the civic minded person to engage and vote.  Now that is just not enough.  Gone are the days of passive involvement, and trust in leadership whether it would be corporate leadership (with a now 20% approval rating) or political leadership (with a now 11% approval.)  Enter the Watchdog.  Welcome the Self-Advocate.  All Hail the civic minded, highly engaged voter who not only shows up on Election Day, but is highly informed and ready to get involved.  

I want to share this thought with you on the heels of my participation in the recent Committee Days for the Business Council of Alabama (BCA).  Committee days are key to driving the Pro-Business Agenda that BCA supports for our state.  In their commitment to our legislative process, BCA looks to the business volunteer leadership who has led BCA for over a quarter of a century with vision, courage, integrity and commitment.  This weeks Committee days were filled with heavy hitter leadership participation from all business sectors for Alabama.  If your company supports BCA, your organization has taken a serious step toward not only civic engagement, but having personal ownership in driving the drivers of legislation and leadership. 

            Two key speakers supported the Committee days this week, and their messages were on target with the mission of BCA.  In attendance to support this event were Jay Timmons, Executive Vice President of the National Manufacturers Association (NAM) and Katie Hays, Executive Director of Congressional and Public Affairs for the US Chamber of Commerce. 

Timmons spoke to the need for “clearing the bureaucratic brush”.  According to Timmons, American companies want to compete and win in the aggressive war of competition, and do not need to be encumbered by taxes and legislation that is a functional anvil on the backs of manufacturing.  The United States is second now to Japan, but soon to be the highest in corporate tax rate with a cost to do business in the US at 17% higher than other countries.  NAM supports better policies to create jobs and bring us out of the recession, and it advocates for the Free Market System.  Timmons expressed concern that voters are less and less educated on benefits of a free market.  “We will not survive as a service economy alone, and a manufacturing economy born in innovation, advancement and competition is crucial to building tangible wealth and strength for us,” said Timmons.

Hayes gave an election recap with recognition that there is certainly a lot of new blood in office with 13 new senators and 30 new governors.  “The role of the new governors is clearly significant as they work to interpret for the state what is happening at the national level and as well they should,” said Hayes.  As we exit this week from our Lame Duck Session with only one more session this year, there is a lot to accomplish in a very short period of time.  According to Hayes and the US Chamber of Commerce, President Obama must signal openness to compromise.  If the 2001/2003 Bush tax cuts expire, we will experience one of the largest tax hikes in America’s history.  $3.8 Trillion will be placed in the government’s hands only 45 days from now unless action is taken.   There is a lot of legislation in limbo in addition to the expiring tax cuts.  Other business tax provisions that are a priority for businesses are card check legislation, climate change legislation, transportation funding (SAFETEA-LU) reauthorization, discussion of the Debt Commission's budget report suggestions, immigration legislation (the DREAM Act), cyber security bill, trade legislation, and Medicare insurance legislation. 

The list is daunting, but chins up; Washington is listening now and now is our time to change the change.  We are the small-business bloc which is code for the “hardworking voter” or the “everyman.”  It is rare to find a small business person that does not complain about competition against the Big Box Company so here is your word of caution.  Politics is now truly big business.  More money from outside groups has been spent on the 2010 midterms than was spent in 2004, which was a presidential election year.  Don’t think about this as money spent buying votes, but think instead of the broadcasters, publications, campaign ads, event companies, restaurants, and the political consultants that help to bring it all together.  It may continue to be a tough fight for the small business bloc to compete with big politics in this type of financial arena, so square up with some good allies.  BCA may be that great lineman to your business big or small when it comes to the pro-business grid iron.

Corporate Survival 101

We may be pulling out of the recession, but the army of workers that you are doing it with in your organization may have decreased dramatically. The “Less is More” strategy or “Do More with Less” mantra may have you feeling like you are on a treadmill of activity that is hard if not impossible to complete. I like to call my business strategy during these turbulent times “Selective Neglect”. It is okay to give in to the chaos, and learn to prioritize very well so that you are doing the right things right, not just succumbing to endless activity. But what happens when the months of endless piling on doesn’t seem to have an end in sight? Many workers have been tackling large workloads for months. How do you keep from loosing your swagger? How do you keep from loosing your get up and go? If routine assignments begin to take on mammoth proportions, long work hours, and relentless deadlines, take some defensive measures to prevent burn out. How do you keep on the strong track to prevent low morale and eventual reduced productivity? First pay attention to the warning signs and be honest with yourself and your coworkers. Do you:

Have trouble getting out of bed and getting out the door
Arrive late frequently
Feel withdrawn and bad about your performance
Watch the clock
Allow work stress to spill over into other areas of your life
Get into frequent disagreements with your manager or co-workers
Feel that you are making little progress in spite of great effort·
If these symptoms sound familiar, it may be time to make some changes. Here are some strategies to help you renew your enthusiasm and get your career back on track:

1. Own the Outcome, not all the workMeet with your supervisor and get a workable strategy with in a reasonable time frame. Try not to be a hero or a martyr here. Delegate and share work with others that own the outcome. Work is always easier and more fun when you share it with your team. Set some timelines and celebrate your victories together too!
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2. Assess your time management Everyone has the same 24 hours in a day so be smart with your work hours to stay on target. The way you manage your time also can affect your ability to rebound from job exhaustion. Not sure how to do this? Try keeping a diary of where you spend your time at work for a few days and break it into categories. You will probably uncover some real time wasters that you can dismiss and allow refocus for better investment.

3. Don’t Bring me DownThe OZ principles talk about keeping things positive. Do you have an issue or challenge? Certainly bring it up, but make certain that you do it with a solution in mind. The psychology of this is powerful, and it will help insure that you feel in charge and not a victim.

4. Find Your Tonto A common symptom of burnout are feelings of isolation so don’t be the Lone Ranger. I know how much we all like to think that we are indispensable, but if there is one thing that this economy and downsizing has shown us it is that everyone can do more and everyone can be replaced. This is a harsh reality, but good to know. In fact, now may be the perfect time to train someone on the skills needed to work at a higher level and then set some expectations of group performance. Asking for help does not make you a complainer when it is done in the right way.

5. Check out mentally when you need to for some down timeI guarantee the work will still be there when you get back, and yes you will be missed. Use your vacation to recharge. Take a lunch away from your work or desk, get out of the office and walk around. Time away will give a fresh perspective and separate you from some of the distracting minutia that may be causing your stress.

6. Find the FunThis is really the most vital part. Life is too short to work all the time, so put some fun into it for sure! My Team recently submitted their favorite songs that get them motivated and we had everything from AeroSmith to Big and Rich to the Beastie Boys. A Team member downloaded the music, copied it to a Team CD, and now we have music to inspire us when the chips are down. A great team theme may just give you the “Skills to pay the Bills!”

Change is the Only Certainty in Business

“May you live in interesting times,” reads the quote. How true it is to know that we are living in both interesting and changing times that have us emerging from another tumultuous year with the future for many still uncertain. Previously we have written here on the need to not just change, but to seek it out and embrace it to remain competitive. Change is both necessary and possible, and now is the time to go after it in a strategic manner. It is not just the concept of change, but a metamorphosis on such a large scale that your predecessors may not believe their eyes. In my primary industry which is the pharmaceutical sector, there is a fundamental rethinking of market research, the entire industry, and what it now means to be in healthcare. Perhaps the same may be said of your sector be it banking, retail, information or any number of business types and descriptions. In the pharmaceutical world, there is discussion of the role of evidence based medicine and the creation of niche busters, not block busters. For a highly regulated industry such as banking or pharmaceuticals, the need for clear product positioning in the marketplace has never been more important.

According to Jim Kirk of Quintiles, companies need to apply VIGOR to their marketing strategy. VIGOR is valuable, innovative, global, outstanding and responsive. Value means being the keeper of product history and data, as well as bringing value and insight to the market. Innovation means breaking with the status and running after new ways of thinking. Global doesn’t mean just emerging markets and geography, but considers the different potential audiences that may play into your market such as regulators, governments and restrictions to business. Outstanding does mean standing out. What makes you truly unique? Lastly, make the strategy responsive to include faster, smarter, resilient, cheaper, or just plain better.

The challenge remains the quest for understanding your customer at a very high level without emotion and in a service mindset. Looking at the pharmaceutical industry for example, the days of the customer just being the physician are long gone. Now industry marketers must address a plethora of customers in the mix to include insurance coverage, step edits, unemployment coverage, patient access in general to medicine, price and ability to pay, and of course clinical outcomes to name a few. If you work in a regulated industry, the list is most likely the same with just the names changed a bit.

The name of the game has always been and continues to be about efficiencies, and a fine balance between what we want and what we can afford. Are you still running the same studies in your industry that yield the same old results with little insight? Here comes that word CHANGE again. Change the way you ask the question, collect the data, or assess the outcomes. The bottom line goal is the same: Bring the voice of the customer to life. The ability to understand what the customer is doing, thinking and feeling are the only way to drive him or her to a decision and action.

Leadership for the Rest of Us

I again had the opportunity to hear US Senator Jeff Sessions discuss current affairs and take questions at an event held at Samford University this past week. As before, his insight and clarity of thought have made me seek out additional information as to the drivers behind our economy and what it can mean for small business. As Senator Sessions opined, “We need and welcome healthy, lively debate. What we do not need now is apathy.” He is so right, and as this writer has offered the challenge here on more than one occasion to please take ownership of where you collect your information. Please seek your information out in multiple sources, and preferably in person.

Gathering information in person is invaluable to understanding what someone truly means as you observe their body language with your own eyes, and listen with your own ears. Seeking out your own information to draw your own conclusions can be just the apple to keep the spin doctor away. For example, when it was suggested to Senator Sessions that we are in the middle of a healthcare debate with extreme opinions getting all the attention, and that perhaps the answer to our fiscal crisis and concerns on health care costs will be found in the middle, this is what happened. Senator Sessions stated, “Well we are at a 900 Billion deficit, now. Would you be pleased if we were at 450 Billion?” The clear point made that even the middle was not something that we can afford. More importantly, the statement was made with a small, but confident smile, sharpened with a small lean forward and to the left. No crossed legs. No pause. No looking up into the air. His message was clear. When is comes to United States debt, there is no middle ground at that level.

This message resonates as very important as the impact of the health care legislation sinks into the collective consciousness of small business owners. A level of dissatisfaction is bubbling to the surface as business owners recheck their balance sheet to see what line item needs to be juggled to pay for any potential financial obligations that the health care legislation will impart. The several companies that are now being called on the carpet to justify their dissatisfaction with a personal meeting in Washington will be watched with great expectation by this writer.

Dissatisfaction is a motivator for change, and this is true for not only changing someone’s behavior, but also changing the targets of change. People are more responsive to learning when they are moderately dissatisfied; too little, and they don’t want to bother; too much is paralyzing. Therefore, if you want to increase a group’s readiness to change, you need to manage their dissatisfaction. In Managing People: the R Factor, Allan Cohen writes that often this requires finding ways to increase dissatisfaction and can be accomplished in several ways which are often very intentional. The R factor examines roles, relationships, rewards, and rites and is the strategic and tactical method of cultivating dissatisfaction as a motivator to organizations. The status quo is a killer, and the art of managing dissatisfaction is key to driving our markets today on both the political and domestic front. Open the papers, read your online news, or listen to the TV or radio, and you can see examples of dissatisfaction everywhere. I see it as the primary driver behind the Tea Party movement and the rising expectation of transparency in business and in government. Organizational stress bubbles up when people no longer feel that they have control over their life at work. Pushing through this and leading through the change needed is critical for not just management and but all leadership. This ongoing challenge for management in business and government should be driven by educating to the growth and change needed, not testing the amount of power held or proving the level of correctness.

The answer may be found quite simply in asking yourself, “What are you measuring?” In Total Quality Management (TQM) lingo, don’t just look at your internal yardstick; look at your external yardstick too. For example, if your sales team only measures itself by improving over its own best performance, you may get passed up really quickly. Take a look at how others in your industry are performing too. This goes for government as well. How do we measure up to other states and even countries? This type of self reflection and line of thoughtful questioning may just help keep you ahead of the pack, and out in front of the herd too.

So remember, take care of your customers, or someone else will.

Managing Change and Measuring Value

In the spirit of seeing yourself as your own franchise, as the owner of your own business, or perhaps you do own your own business, here are a few thoughts on managing change.

A brief read of the business headlines can leave you feeling overwhelmed with the challenges of managing an organization, team, or running a business. It can seem that sometimes all there is to be found is a bleak and dire view. Take the personal challenge to look at the things that you can control, and one by one, make those changes.

For example, a big “item of control” is Customer Service whether it is your customer service or the customer service of your employees. Challenge yourself to take great customer service to heart, lead by example, and coach those around you to raise their level of expectation of what great customer service should look like.

But do you know what great customer service looks like? Here are a few steps to ponder to get you on your way.

Step One is to develop what you define as great customer service. Develop your own specific vision of what great looks like working with the customer’s perspective in mind. Creating a vision of customer service taps into your heart and spirit of excellence, and will allow you to uncover embedded concerns and needs that you may have overlooked. For example, what would happen if you really take the time to make your customer feel like he or she is your most important priority of the day?

Step Two is to appreciate the difference between customer satisfaction and customer loyalty. Satisfied customers are not necessarily loyal customers. According to a Gallup Survey (2002) of 36 companies in 21 industries, the difference between customer satisfaction and customer loyalty lies in creating an emotional bond with your customer. How do you do this? Pay attention to your customer contact people. Train them as to how you want them to interact with your customers. According to this same Gallup Survey, customer contact people are 4 times more important in generating customer loyalty than the product or service itself.

How do you measure customer loyalty? Ask your customers. Were you satisfied? Will you come again? Will you RECOMMEND me to someone else? Simple, direct questions will reveal much about how you conduct your business. Which leads us to Step Three, be prepared to Change how you connect with your customers. Learn what your customers want, and don’t expect that what you did last year will still hold up. Develop a deep understanding of the customer’s needs and expectations. This close connection with your customers will foster an environment where your customer will come to depend on you. And for goodness sake, learn what your competition is offering!

Lastly is Step Four: Be thoughtful and systematic about any change the you create. Decide if your change will hold up to your Vision, your environment, and your strategy.

In today’s competitive environment, you often don’t get a second chance. Make the first one count, and give it your best customer service first.

Remember, take care of your customers or someone else will.