In my previous post, I outlined the reasons that “small” is the word to focus on as you grow your company.  This post focuses on strategies and tactics to help your growing (large) business keep the best attributes a high performing small business.

• Develop a robust culture.  A large company that wants to act (agile, innovative, quick) like a small one needs to have a well-defined culture that ensures that its participants live the values of the company without the need to be constantly supervised.
  • Ethics—every employee needs to understand the difference between right and wrong and fully appreciate the need for the highest ethical standards.  This may seem gratuitous, but let me assure you it is not.  Throughout my career, I have seen good people who have gotten caught up doing things that they shouldn’t have.  Sometimes, it was a mistake an inch at a time and others it was the lack of thinking through the consequences of actions that they ultimately took.

And, acting ethically relates to how they do their jobs (interact with the company and fellow employees) and how they treat their clients, whether internal or external.  The more time spent on policing employee’s actions (unproductive effort), the less time spent on making the business successful.

Pat Allin has always maintained that people know “the rules” and that they don’t need to be written down and he ran Textura very successfully without an “Employee Handbook”.  While I generally agree with him, I would probably be more inclined to provide an outline of “How we Expect our Employees to Behave”, but it would be based on articulating principles rather than laying out rules.

• • Respect for all the players—it is extremely difficult to both excel and innovate without a diverse workforce.  The best ideas are identified and developed when multiple points of view are considered.  Dealing in a diverse environment is, by definition, not always comfortable.  It takes strength of character to consider and possibly accept other points of view and shows a real lack of respect not to acknowledge that there might be other viable ways of thinking.  Yet we see, again and again, situations where intolerance of differences in the way people approach their work (often driven by who they are and how/where they were raised) poisons what might otherwise be successful organizations.

You might wonder about my somewhat unconventional articulation of the need for showing respect to others, but I am arguing that respect is easy in a homogeneous environment but only really becomes an issue when people need to deal with others whose point of view is different than theirs.

I close this section by reminding you of F. Scott Fitzgerald’s quote:  “The test of a first rate intelligence is the ability to hold to opposing ideas in mind at the same time and still retain the ability to function”.

• • An obsession with your clients— the clients pay the bills.  This dimension of culture has several facets; 1) you need to understand your clients.  Unless you understand there is no way that you will be able to produce products or deliver services that delight them; 2) you need to be prepared to understand the difference between what the client “wants” and what they “need”.  And, when necessary, you need to be skilled enough to convince them that what they need is more important than what they want; and 3) the obsession must be from a distance.  While it is essential that you understand you clients, you must maintain an objectivity that allows you to see your clients as they are so that you can see their flaws, appreciate the opportunities the future offers (both what might be and should be), prepare them for it (sometimes called change management) and help them to wholeheartedly embrace it as they move towards it.  It doesn’t matter whether you are providing a service or a product, the same rules apply.
  • Teamwork— teams can achieve so much more than individuals.  And, businesses that deploy and use teams effectively are more productive, innovative and therefore successful.  And, one of the miracles of small companies is how well a small group of individuals can work together to literally change the world. 
  • Do the right things/Do things right—While some might have liked me to put this under the ethics umbrella, I believe that it is important enough to have its own category.  Doing the right things are so important.  It touches every aspect of the business from how you treat your fellow workers, to how you deal with your clients and how you deal with your employees.  I am reminded of Pat Allin’s decision, when Textura went public, to make substantial grants to employees who had stuck with Textura through the lean times and help in so many important ways to make Textura successful.  Pat didn’t need to do that.  No one would have noticed if he hadn’t and it took some effort to make happen, but he did it—and he did it because it was the right thing to do.

Under the do things right category is less of an admonishment (regarding the tendency of businesses to take shortcuts) than a suggestion that if you are going to make cutting corners (knowing that there are times it has to be done) as painful a process as you possibly can.  This is not permission to cut corners, but a suggestion that you really understand the implications when you HAVE to make the decision to cut them.  And, only to cut corners when there really is no other choice.

Embracing these attributes enables the growing and already large company to work effectively and efficiently without the need for multiple layers of management.  That goes a long way towards the goal of keeping that small company feeling.  This along with the other attributes that I outline promote a company that thinks small but leverages the

• Run your business in a way that rigorously requires that  “authority”, “responsibility”, and “accountability” are words to live by—the is one of the foundational elements of any organization that intends to empower its employees and let them work independently towards a common goal.  If you are going to run your large business like a small one, you must give your managers the authority to achieve the goals and objectives you set for them.  If you don’t, they will spend too much time getting “upper management buy-in” and too little time getting the job done.

If you are going to give people authority, you make them responsible for their actions.  If they are not responsible for the actions they take, you can’t hold them accountable.  And, accountability is key.  Accountability means not only penalizing failure, but also rewarding success.  Without the three legs stood up in this bullet point, it is nearly impossible to get a large organization to act like a small one.

• Decide what each part of the organization is going to do—central vs. local—this is so important. Large organizations exist for a number of reasons.
  • Economies of scale;
  • Ability to invest in big ideas;
  • Market coverage;
  • Brand building and recognition.

But, they by definition have many parts and understanding what is going to be done locally and what is going to be done centrally helps everyone know what they should be concentrating on (because they are best positioned for those tasks) and what other will take care of—because they are best equipped to handle them.

Generally, delivery oriented tasks (things that are close to the customer) should be handled locally.  And, things that can effectively be leveraged across many local operating units should be done centrally.  At Price Waterhouse, the local units delivered services to the customers.  PW’s market strategy and the methodologies that supported delivery of the strategy were developed centrally with plenty of input from the field.  This meant that the local operating units could play way above their weight  because they could concentrate on delivery while counting on the larger organization to provide them with the resources (leveraging the thought leadership, methodologies and marketing that was done centrally) necessary to delivery complex solutions to their clients.

• Set up clear objectives regarding what the organization is going to do and how they are going to do it— large organizations are there for a reason.  With size come certain capabilities that small organizations just can effectively deliver.  But, if the large organization is going to be successful as one that operates like a small business (agile, innovative and quick) everyone in the organization must be (and this is critical) willing and able to leverage the resources of the larger organization.  That means that the participants (as individuals and members of teams that constitute the larger organization) must be marching to the same drummer.  And, this only happens when:
  • The goals and objectives make sense;
  • They are well communicated;
  • The participants have the requisite training to understand and execute on the business plan as laid out in the goals and objectives;
  • There are consequences for doing a good or bad job.
• Keep the organization flat— I probably shouldn’t even have to say this, but multilayer, hierarchical organizations are anathema to the idea of working small.  Multilayer hierarchical organizations imply top down management where ideas and permission to act need to move up and down the hierarchy which is just the opposite of what we are trying to achieve with the principles I have outlined above.

So, it is vitally important that the organizations culture nurtures behaviors like the ones outlined above and have the training and experience to execute in a way that is consistent with these principles.  I have run considerably over the limit I set for myself for these posts and still feel that I haven’t done the subject justice.  But, it is a start and it does (at a survey level) cover the ground.

I am likely to cover some of the subjects outlined above in future posts, so stay tuned.

Copyright 2017 Howard Niden

— you can find this (days earlier) and other posts at www.niden.com

Critical thinking promotes the development of well supported opinions which facilitate making good decisions and taking actions.  Critical thinking is based on a repeatable and reliable (in terms of consistently promoting good outcomes) methodology.  The process should be disciplined, i.e. it must be:

• Rational— based on reason, facts and logic.
• Informed/Evidence Driven— based on verifiable facts.
• Open minded— willing to consider all points of view as inputs to the process.
• Explainable— if you can’t explain how you reached your conclusions, the process is flawed.
• Reproducible— other people must be able to go through the same process and get to the same end-point.

Critical thinking requires that the individual has the competence to understand and interpret the evidence that provides the input to the critical thinking process.  As such critical thinking requires a rigorous approach to:

• Identifying a situation that merits an investment of one’s time. Not every subject requires or even merits critical thinking.  And, we don’t have the time or energy to spend time on topics that don’t merit the effort;
• Evaluating the facts. This is often the most time-consuming portion of critical thinking and requires a thorough review of the situation, gathering the information necessary to do a proper evaluation.
• Understanding of the facts. And a rote understanding is not sufficient.  Understanding the substance and context what we are really looking for.  My favorite example is the Moldboard Plow.  There are interesting engineering characteristics associated with the plow, it has a unique look and it is efficient.  To look at it you wouldn’t realize that it changed the course of human history.  I refer those that are interested in understanding why to William McNeill’s The Rise of the West. 
• Making a decision or set of decisions. Good decisions rely on good information and a rigorous approach to reviewing, weighing and interpreting the facts in the context of the current (often influenced by a knowledge of the history—more facts!) situation.  I would like to reiterate that it is important that the decision-maker have the competence (either themselves or from trusted advisors) to correctly interpret the facts; and
• Acting upon them.  I would argue that this last item, which involves taking affirmative action, is the reason for critical thinking, i.e. if you don’t act (or explicitly, based on the first 4 steps outlined above, decide not to) your investment in critical thinking is wasted.

What are the alternatives to critical thought:

• Heuristics— heuristics can be thought of as rules of thumb. They substitute for critical thinking when one runs into the same situation again and again.  Once a pattern can be discerned, a simple rule substitutes for the more rigorous (time and energy consuming) process associated with critical thought. 
• Analytical thinking with a Cognitive Bias—this often masquerades as critical thinking. It is driven by a desire to get to a predetermined finding irrespective of the facts.  It often disregards, misinterprets or makes up facts to support its predefined outcome.  And, it may be overly (I say overly, because all thinking is influenced to some extent by emotion) influenced by emotional considerations.
• Impulsive Decision-making. This has many of the same general characteristics as Analytical thinking with a cognitive bias, but dispenses with the pretense of using facts or analytics.  This approach to decision-making is often referred to as being based on gut instinct.

I outline these alternatives, because, more and more, they are being substituted for critical thinking and understanding their shortcomings helps to reinforce the power of a more rigorous approach to thinking and making good decisions:

• Heuristics— This approach is effective when it is used appropriately. One must pay attention to ensure that the situation to which it is being applied is the same as the situation for which it was developed.  So, even here some of the attributes of critical thinking must be applied to produce good outcomes.
• Analytical thinking with a Cognitive Bias— takes facts and consistency, logic out of the decision-making equation. This make decisions potentially inconsistent and fundamentally unpredictable because the practitioner of analytical thinking with a cognitive bias isn’t constrained by having to reconcile their thinking (facts or approach to decision making) across subject areas or time.
• Impulsive Decision-making—same as above, but with even less constraint on consistency or predictability.

As I think about the last two alternatives (bulleted directly above) to critical thinking I am reminded of a quote by Daniel Patrick Moynihan: “Everyone is entitled to his own opinion, but not his own facts.”

Moving forward.  If you don’t believe that better decisions are made using a rigorous methodology built around facts and logic, learn more about the OODA-loop.  The OODA-loop (Observe, Orient, Decide, Act) was developed by the US Air Force for its fighter pilots.  The methodology is based on taking facts (observe), understanding their meaning (orient), making a decision (decide) and doing something about it (act).

And, the fighter pilots who used the OODA-loop performed statistically better than those who didn’t use it.  They also, importantly, achieved a 10 to 1 kill ratio against enemy pilots (who were equipped with more capable jets) who also didn’t use the methodology.

Let me be clear, I know that there are more to decisions than facts and numbers.  Other inputs include one’s judgment, worldview (moral compass, values, etc.), experience and understanding of human nature.  But, having an approach and going through a process which validates the numbers and facts and then carefully applies the subjective mask in the decision-making process provides a let of rigor that provides a level of validation to the decision.

In closing let me make two points:

• Two people both applying the same critical thinking methodology will not necessarily come to the same conclusion and take the same action. This is because as stated above, not all inputs to a decision are facts.  Opinion, values, experience and how one weights the facts also play a role in decision-making.  So, the use of critical thinking does not result in everyone agreeing on the answers.
• The likelihood that two individuals who have both used discipline critical thinking to form their opinions (as a prelude to making decisions and taking actions) will be able to easily identify where their differences are and be able to discuss them rationally is much higher than if they had not employed critical thinking. And, this is something that is both very important and (more and more) generally missing from discourse on the most critical of issues that we face.

Once one becomes used to applying the discipline of critical thinking, it becomes a regular part of every decision that one makes, even if one decides not to apply a fully rigorous application of critical thinking to a given situation.  Why is this.  I believe that it feels good to have a support (coming out of a disciplined process) for one’s decision-making.  And, “feels good” is a legitimate reason to do something.  But more than that, being able to provide a rational, well informed reason for an action makes it easier to justify (to yourself or others) if that should become necessary.

Copyright 2017 Howard Niden