Build Competitive Advantage Through Servant Leadership & Continuous Improvement

Build a Competitive Advantage Through Servant Leadership & Continuous Improvement

Article originally published in the Philadelphia Business Journal on October 16, 2018

CEOs are always looking for ways to differentiate their business from competition to build a competitive advantage. One of the ways to achieve this differentiation is through a servant leadership environment and a continuous improvement culture.

In an April 2013 article in The Washington Post headlined, “Servant leadership, a path to high performance,” Edward D. Hess at the University of Virginia wrote that his research found that “leaders [of high performing companies] were servants in the best sense of the word. They were people-centric, valued service to others and believed they had a duty of stewardship. Nearly all were humble and passionate operators who were deeply involved in the details of the business. … They had not forgotten what it was like to be a line employee.

“They believed that every employee should be treated with respect and have the opportunity to do meaningful work. They led by example, lived the ‘Golden Rule,’ and understood that good intentions are not enough — behaviors count. These leaders serve the organization and its multiple stakeholders. They are servant leaders.”

What Hess found is very similar to the research of Jim Collinsas presented in his iconic book “Good to Great,” in which Collins describes “Level 5 leaders [as those] who display a powerful mixture of personal humility and indomitable will.” Level 5 leaders are not the “larger than life” imperial leaders many of us are so familiar with.

Don’t think that servant leaders and Level 5 leaders hold their organizations accountable to only easily achievable goals. They set tough goals and have high-performance expectations for their employees, empower them to achieve those expectations and hold them accountable for results.

In May 2016 I wrote an article headlined, “Saxbys coffee: How treating your people right can lead to success,” in which I described Nick Bayer, founder and CEO of Saxbys, as an ardent believer in servant leadership. Bayer feels that Saxbys’ culture is the most important determinant of his company’s success.

I asked Bayer, “How do you differentiate Saxbys – why do customers come to your cafés and buy coffee?” He said, “We compete on people, not on product. Most people think that we are in the product business – we are actually in the people business. I realized that I can compete [with other companies] on people and on hospitality. People are at the core of what we do – our team members and guests.”

Bayer and his senior leadership team give significant support to their café managers. He said, “I personally am an absolute zealot of the mentality of ‘servant leadership.’ Organizations work best when they are upside down. Our café managers are the CEOs (café executive officers) of their businesses. All the people at headquarters exist to serve our café managers and their teams. We are here to help them to be better at their jobs. My expectation of them is to be servant leaders to the members of their teams. Their job is to make life better for their guests every single day.”

On the subject of empowerment, Bayer said, “We hire people with good critical judgment and empower them to make decisions. Other employers take power away from their employees. I don’t want to get in the way. I want my people making decisions. I hire people who will develop a sense of ownership in their business.”

A servant leader environment is perfect for establishing a culture of continuous improvement. In August 2014 I wrote an article headlined, “A culture of continuous improvement is no management fad …” and as the then CEO of PQ Corporation, how I used that culture to build competitive advantage.

At PQ, we dubbed our continuous improvement culture “continuous quality improvement,” or CQI. CQI was led by me and the other members of the senior leadership team, but was driven by the employees at every level within the company.

The senior leadership of the company were charged with creating an environment where employees developed a sense of ownership in that part of the business in which they worked. This cultural shift put power and responsibility into the hands of employees to initiate improvement projects, without getting upper management’s approval, which fit a servant leadership model. If an improvement idea was beyond their authority level, employees were empowered to present the idea to the individual who has the authority to approve it.

Creation of a CQI culture required training of all managers to be coaches and counselors to their staff, encouraging them to develop and implement their own improvement ideas. Training was also provided to help employees analyze data to determine the root cause of issues, so proper solutions could be identified.

By adopting CQI, PQ saved millions of dollars from ideas generated and implemented, many by the hourly workforce within our plants, using capital project funds that they themselves could spend on projects of their choosing.

Granting funds to hourly employees to be spent on capital projects brought out their creativity, encouraged them to be more proactive, and showed them in a tangible way that they mattered to the success of the company. This helped us be more competitive, and provided funds to reinvest in and grow our business.

Create an environment of servant leadership and a culture of continuous improvement to build competitive advantage. Companies who do not continually improve will be left behind. Those that do will win the competitive race in the long run.

Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker, advisor and nationally syndicated writer on leadership, entrepreneurship and corporate governance. Silverman earned a Bachelor of Science degree in chemical engineering and an MBA degree from Drexel University. He is also an alumnus of the Advanced Management Program at the Harvard Business School. He can be reached at Stan@SilvermanLeadership.com. Follow Silverman on LinkedIn here and on Twitter, @StanSilverman.

benchmarking sister operations

To Improve Results, Benchmark Sister Operations Within Your Own Organization

Article originally published in the Philadelphia Business Journal on July 23, 2018

I recently attended a conference at which the general manager of a business unit within a large company described how he was able to achieve a significant turnaround in operating results by benchmarking sister operations in his organization. He broke all accepted paradigms about what was possible. The adage, “don’t tell me it can’t be done – find a way to do it” came immediately to mind.

After his presentation, I asked how successful other general managers within his company were at applying his approach to improve the results of their business units. He responded that although he was willing to share his approach, no other general manager bothered to internally benchmark what he did to achieve the turnaround. He said there wasn’t a culture within the company to benchmark other operating units.

External benchmarking competitors is important to determine a company’s competitiveness in the marketplace and learn about best practices within the industry. However, it can be a difficult process to externally benchmark competitors due to the frequent inability to get the data that is needed.

Internally benchmarking sister operations that are achieving great results within the company is much easier. The data is available. So why isn’t it done as a matter of course?

Internal benchmarking is not part of the corporate culture

As with many other techniques to improve operating performance such as the process of continuous improvement, delivering a great customer experience or empowering employees to make decisions, internal benchmarking is not part of the leadership mindset in some organizations.

The CEO needs to be held accountable by the board to bring this mindset to the company and make it part of their culture.

Bonuses are based on business unit results and not corporate results

If there is no incentive to share what works across all business units, a huge opportunity is wasted. The shareholders don’t care about the results of individual operating units. They care about the results of the entire company.

Bonuses should be based both on individual operating unit results and corporate results, so there is an incentive for sharing what works within an operating unit with other operating units. When benchmarking improves the results of a business, it needs to be celebrated throughout the company to encourage more benchmarking.

“By helping you, I diminish my own chance for career advancement”

Unfortunately, some business unit leaders feel that they are playing a zero-sum game: “If I help to make you look good, I will not look as good.”

It needs to be made clear that in fact this attitude diminishes one’s chances of career advancement and will have a negative impact on the individual’s performance review. The desire to help others within the company will have a positive impact on one’s chances for advancement.

“It is a weakness to apply successful techniques developed by others”

Business unit leaders who feel that benchmarking others diminishes their own stature lose out on opportunities to improve their operating unit’s results and limit their chances to advance.

Using the ideas and applying the techniques of others shows you are open-minded and are not limited by the “not invented here syndrome,” which is universally frowned upon by all effective leaders.

Some business unit leaders are not comfortable with change

There is a universal expectation that all leaders will move their areas of responsibility forward and not be wedded to the status quo. Leaders who resist change shouldn’t be in their jobs and need to be replaced anyway.

Internal benchmarking and operational improvement need to be key components of any organization’s culture. It’s a source of competitive advantage.

Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker, advisor and nationally syndicated writer on leadership, entrepreneurship and corporate governance. Silverman earned a Bachelor of Science degree in chemical engineering and a MBA degree from Drexel University. He is also an alumnus of the Advanced Management Program at the Harvard Business School. He can be reached at Stan@SilvermanLeadership.com

Advice to Professional Service Providers Early in Their Careers

Advice to Professional Service Providers Early in Their Careers

Article originally published in the Philadelphia Business Journal on July 16, 2018

I recently shared advice with a financial advisor relatively new in his profession on how to be successful as he builds his business. For the purposes of this article, I will call this individual David. The advice I shared was based on my own personal experiences dealing with financial advisors and asset managers, and my leadership experience in building trust with customers and clients. I believe this advice is applicable to anyone in the professional services business.

I told David that his success would be based on his ability to differentiate himself from others in the profession. He needs to ask himself, “Why would clients want to engage me and not someone else as their financial advisor?”

It’s all about the client

How many of us have had interactions with professional service providers where we felt that their approach was not about the client, but about them?

Where their focus was on selling you a financial product of their own firm, when the product of another firm was a better fit. Where their services were only transactional in nature, and not advisory. Where once you were signed up, their contact with you was infrequent. Where the investment product generated high fees for the provider compared with other investment alternatives. Where the product was so complex, you needed a consultant to help you understand it.

Clients lose trust in financial advisors when they attempt to sell you investment products on which they make a commission, rather than suggest the best investments that fit your needs, on which no commission is earned.

I told David that he needs to always do what is best for the client, regardless of whether or not the investments he suggests earn a commission. The best situation would be never to suggest an investment in which he had a financial interest, and if he did, it needs to be fully disclosed to the client. Over the long term, this would earn the client’s trust and lead to a much longer-lasting relationship.

Network, network, network

Networking is an important part of building any successful career. It is even more important as a professional service provider. Meeting new people who may become potential clients, asking friends and colleagues for referrals and providing recommendations is important in building one’s business.

Rejection and continued persistence is part of the job. David told me of an instance in which he had pursued a potential client for some time until that client invested a portion of his assets with him. David asked the client why he decided to do business with me, and he responded, “I admire your tenacity.” Obviously, David was not annoying to the client as he pursued him. It takes a lot of emotional intelligence to know how to do this and is a major key to success in any business.

Always provide your clients with a great experience

It is human nature for some financial advisors close to retirement age to be less aggressive than in their earlier years. They may no longer be paranoid about their business, which exposes them to competitive risk. I told David this provides an opportunity to win the business of new clients who may feel that their current financial advisor is not providing a great client experience.

There is also an opportunity for a newer associate to team up with an experienced financial advisor who may no longer be as focused as they once were in providing a great client experience. David could provide that great client experience, which will help protect the more experienced financial advisor’s client base.

Honesty, trust, and reputation are everything in all businesses, but more so when you are advising people on investment decisions. The minute a client feels that you are not putting their own interests first and foremost, trust is lost, and the loss of the client will shortly follow. David agreed, and stated that this is how he was building his financial advisor business.

We all should make honesty, trust and reputation the foundations of our careers, regardless of what business we are in. Once you lose your reputation, it is nearly impossible to earn it back.

Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker, advisor and nationally syndicated writer on leadership, entrepreneurship and corporate governance. Silverman earned a Bachelor of Science degree in chemical engineering and a MBA degree from Drexel University. He is also an alumnus of the Advanced Management Program at the Harvard Business School.

Breaking Paradigms to Create Competitive Advantage

Breaking Paradigms to Create Competitive Advantage

Article originally published in the Philadelphia Business Journal on July 10, 2018

In December 2015, I wrote an article headlined, “Don’t tell me it can’t be done. Find a way.” The article is about an event that changed how I viewed the necessity of breaking paradigms to create competitive advantage. That event influenced my leadership style, and still does so today. This is an update of that article.

As the leader of your organization, how many times do you hear from employees that something can’t be done? When I am told this, I now respond, “Don’t tell me it can’t be done. Find a way to do it.”

When I was the president of my company’s Canadian subsidiary, I led the team attempting to financially justify a new manufacturing plant to supply one of our products to a small geographic market in Alberta. There were insufficient revenues and cash flow to achieve a rate of return on the investment needed to justify the plant’s construction.

The CEO of our company challenged every standard design parameter of the plant. Due to his challenge, we changed our paradigms and redesigned the plant to reduce its capital cost and the number of people needed to staff it. The rate of return increased to above the threshold to fund the investment, and we were given approval by the board to build the plant.

This new plant design became the model for future plants of its type and gave us a very significant competitive advantage in the marketplace. The thought process we went through to design the plant was foundational to the company’s subsequent continuous improvement philosophy.

As depicted in the film “Pearl Harbor,” soon after the U.S. declares war on Japan after the attack on Pearl Harbor, President Franklin Roosevelt orders the Joint Chiefs of Staff to strike back by bombing Tokyo. These military leaders offer reason after reason why it can’t be done – the U.S. long range bombers don’t have the necessary range from the nearest U.S. base on Midway Island; Russia won’t let the U.S. launch from Russian territory, etc. Roosevelt says to them, “Don’t tell me it can’t be done”.

What Roosevelt did was challenge the existing paradigms of his military leaders. He wanted them to be innovative and think out of the box. It took the assistant chief of staff for anti-submarine warfare to do so, an individual you would not necessarily expect to come up with a solution to this challenge. He proposed that B-25 bombers carrying extra fuel be launched off an aircraft carrier that would sail within a distant range of Tokyo, reducing risk to the carrier. After launch, the carrier would turn back, and after the bombing run, the planes would fly to China and land there.

This bombing mission over Tokyo is enshrined in history as the Doolittle Raid, named for Army Air Corps Lieutenant Colonel Jimmy Doolittle, who trained the pilots and led the bombing mission. Even though the bombing mission did little damage to Japan’s military capability, it provided a needed boost to American morale, and at the same time showed the Japanese that they were within the reach of American bombers.

When “something can’t be done,” there is usually a creative path forward that can achieve the result desired, or a similar result that might serve the purpose originally intended. Your corporate culture must encourage out-of-the-box thinking and risk-taking for this process to take place. Collaboration among people from different operating units, technical disciplines and business units are sometimes needed to find the path forward, as occurred when the assistant chief of staff for anti-submarine warfare came up with the idea of how to bomb Tokyo.

I have learned that if accomplishing the original goal proves to not be doable, a path can be found to accomplish 80 or 90 percent of that goal, which is better than not accomplishing it at all.

Leaders, whenever you are told something can’t be done, challenge your direct reports to find a way to do it. To those who are tasked to find that path, think outside the box and challenge existing paradigms. You will be surprised at what you can accomplish. 

Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker, advisor and nationally syndicated writer on leadership, entrepreneurship and corporate governance. Silverman earned a Bachelor of Science degree in chemical engineering and an MBA degree from Drexel University. He is also an alumnus of the Advanced Management Program at the Harvard Business School. He can be reached at Stan@SilvermanLeadership.com.