Thursday, April 19, 2018

What is Strategy?

Throughout my career I have seen tactics, objectives and goals be considered strategy and they are not! How does your company win in the market, beat your competitors, what makes customers want to choose you? That is strategy not what you hope to achieve or what program you are going to implement next month to drive sales. Its the big, structural things that are at the core of what you do to win...that is strategy...the things that guide your decision making and focus...what you are working on, where you invest, where you staff, etc...where you spend your time and money.

Monday, April 2, 2018

CEO Net Present Value

Chicago & Washington DC
Egon Zehnder International, Inc.

There are substantial parallels between examining a CEO candidate and calculating the NPV of a capital expenditure. Much like a capital equipment investment project, every CEO candidate carries a certain capacity to create value, as well as a bundle of execution risks that might impede actual value creation. Boards can calculate CEO NPV by gauging a CEO candidate’s projected value creation, discounted by his or her leadership risks:
Projected Value Creation is analogous to the numerator representing cash flows found in the classic NPV equation. The CEO NPV denominator – Leadership Risks – anticipates what could limit the value the CEO will actually deliver, and is analogous to the discount rate denominator in traditional NPV.
So how does one define the numerator and denominator to calculate CEO NPV?

Projected value creation

Projected Value Creation depends largely on the CEOs capacity to create a performance culture that permeates the entire company. In a previous work, we examined how companies can create a true high-performance culture.3 Such companies consistently do three things:
  1. Adhere to a performance ethic that combines the ambition to do the unthinkable and the discipline to deliver the nearly impossible
  2. Exercise a passion for renewal in the business, products, the organization and its people
  3. Liberate the right leaders to get on with the business of the company
These keys to creating a high-performance culture provide a sound template for assessing CEO candidates, gauging the correlated leadership strengths and limitations by asking:
  • Are they fiercely ambitious and rigorously disciplined?
  • Can they reinvent continually? Do they push the organization into new spaces by disrupting the organization and the industry?
  • Can they “get out of the way” and let their teams create extraordinary outcomes?

Leadership risks

Conventional wisdom holds that the risk of a CEO appointment bears direct relation to the CEO’s experience base. For instance, CEOs making dramatic transitions across industries or cultures are intuitively presumed to be riskier choices. This way of thinking does carry a certain face validity. Boards have reason to favor candidates who are proven in situations analogous to those the company anticipates. Particular “formative” or “must-have” experiences such as managing a turnaround, launching a new market expansion, or shepherding a merger can yield knowledge and insights that can only be gained by having been there and done that.
However, our work suggests that the risks and limitations of CEO appointment more closely correlate to how an executive processes experiences than on the experiences themselves. Humility and flexibility are especially crucial traits in a CEO.
Humble leaders “know what they don’t know” and are willing to ask for the counsel of others – meaningfully mitigating risk. If you look across many of the great corporate disasters, you will often find at the helm a CEO who lacked the humility to say that they did not understand something, or to admit that they’d made a mistake.

Should anyone hesitate to appoint a CEO with aptitudes and strengths known to drive performance in practically any industry?

Leaders with a high degree of flexibility – ability to change – can make even sharp transitions with grace and aplomb. Flexibility can be considered “part 2” of humility, which allows the CEO to see that change is needed, while flexibility is the willingness to then make that change. If leaders have the right degree of flexibility, this can significantly broaden the impact of their experiences. Leveraging previous learning to do things differently means organizations are not exposed to the risk of redeployment of a previously unsuccessful (or even partly successful) approach. Viewed through this lens, Louis Gerstner’s NPV “discount rate” was fundamentally low, even though he repeatedly led companies in industries where he had little direct experience. Should anyone hesitate to appoint Louis Gerstner, a CEO with aptitudes and strengths known to drive performance in practically any industry? In sum, CEO NPV gauges candidates’ projected value creation in terms of their ability to create a performance culture, “discounted” by gaps in their personal humility, flexibility, and experience:

Certain of a candidate’s potential derailers can likely be mitigated, once they have been brought more fully into view. However, when the analysis reveals an inherent lack of mental flexibility and humility, the board should recognize that such deficits are not easily erased.
Recognizing that humility and flexibility are keys to reducing leadership risks can dramatically change the board’s view of CEO candidates who they previously saw as a “safe pair of hands.” In truth, a CEO candidate who has had a long career at a particular firm may actually be a risky choice if they do not also have the requisite humility and flexibility to shift their approach in the face of a disrupted environment.

Prudent audacity

Should this calculation of CEO projected value be the sole basis for CEO selection? Hardly. But a rigorous analysis of each candidate’s projected value impact can counter the dangers of illusory safety by also allowing a measure of prudent audacity.
To better understand how this CEO NPV methodology might work in the real world, consider the following scenario, illustrated in a graph contrasting the expected trajectories of two CEO candidates.
“Low Risk” CEO is a candidate with ambitions and experience that feel directly on point for the role. Accordingly, his discount rate is lower early on, leading to an initially higher present value. However, “Low Risk” CEO is not particularly agile-minded or open to learning from experience and has a background of solid but middling performance. This substantially limits his upside and elevates his discount rate over time, as the future is bound to bring unprecedented opportunities and challenges.

In contrast, “High NPV” CEO has a higher discount rate early on, as her experience has not prepared her as fully for the role, but those risk factors fall sharply as she gains deep understanding of the business and as her ability to absorb information, rapidly adapt, and execute against ambitious goals all take center stage. The slightly higher risk early in her projected tenure is more than offset by her much higher potential value creation over time. CEO NPV analysis has “flipped the script” on what it means to make a safe choice, because it is now clear that “Low Risk” CEO has the potential to squander a great deal of value while delivering little in the way of added security.

Raise the bar

A CEO is the most complex and consequential asset a company will finance. As such, it is understandable that boards instinctively strive to minimize risk. The NPV analysis described above will often reveal that an unconventional CEO candidate is actually the safe bet.
Most importantly, CEO NPV helps boards raise the bar for CEO performance – and raising the bar is absolutely imperative. In a disrupted world, a new CEO may soon face radically different challenges than those faced by the incumbent. That means the “conservative” candidate may be the most risky choice.

Thursday, March 29, 2018

How Ergonomics Makes for a Healthier Workplace
When it comes to workplace health, ergonomics can't be overlooked

In a book published in 2014, Dr. James Levine, a professor of medicine at the U.S.-based Mayo Clinic, wrote that sitting is “more dangerous than smoking, kills more people than HIV, and is more treacherous than parachuting.” He noted that because people expend very little energy while sitting, they are at risk for weight gain, diabetes, heart attacks, and even cancer.

His book, Get Up!: Why Your Chair is Killing You and What You Can Do About It, sparked widespread interest in standing workstations. But studies have shown that standing for a prolonged period of time poses health risks too — it can lead to sore backs and feet, and varicose veins.

That same year, a study was conducted at Sony Pictures Enter­tainment with 50 employees who used ergonomic sit-stand workstations for five weeks. The switch to these adjustable-height desks resulted in a drop in body fat and blood pressure, as well as a spike in good cholesterol and fasting glucose.
When the study ended, each participant chose to keep the sit-stand desks, which were provided by Workrite, a California-based company that designs and manufactures ergo­nomic workstations and accessories.

That study was one of several that confirmed that ergonomics, the beneficial design and arrangement of workplaces, played a key role in health and wellness. Sit-stand desks have become increasingly popular in recent years, as they allow users to change position frequently throughout the day.

“When Levine’s book came out, people started to recognize the importance of movement, and that led to a big change in North American workplaces,” explains Workrite President Charles Lawrence. “Before then, ergonomic desks were only popular among progressive tech companies.”

Lawrence has noticed a surge of interest in monitor arms, which allow users to customize the position of their computer screens to prevent neck, shoulder, and eye strain.
Workrite has sold sit-stand desks for almost two decades and is a pioneer in ergonomic design. “Some of our competitors sell ergonomic products alongside furniture, but these products are more like medical devices,” says Lawrence, adding that his salespeople are specially trained in ergonomics and are familiar with every product in the company’s extensive inventory.

All employees — whether working in hospitals or warehouses — benefit from ergonomic equipment, design, and practices. By improving and supporting their workers’ health, employers make workplaces healthier and, ultimately, more efficient. “There is a lot of scientific evidence that shows the importance of ergonomics,” says Lawrence. “Anything companies can do to help their employees on the journey to good health would be great.”

Sunday, March 18, 2018

Career Advice and Leadership Philosophy from Charlie Lawrence

It was my pleasure to share some of the lessons learned and insight from my career and time at Workrite Ergonomics, GE, Masco and others with Sarah Scudder and Nicole Smartt of Star Staffing for their podcast Career Conversations. Thanks Ladies it was fun and I hope helpful to your listeners.

Sunday, February 4, 2018



What You Should Know Before You Take A Stand

by Charlie Lawrence, President Workrite Ergonomics


Unless you live under a rock you have probably heard that “Sitting is the New Smoking” or maybe that “Your Chair is Killing You.” We can thank James Levine of the Mayo Clinic for really bringing this subject into the spotlight back in 2014 when he published his research on NEAT, Non-Exercise Activity Thermogenesis. NEAT is the energy expended for everything we do that is not sleeping, eating or sports-like exercise.
Dr. Levine was able to stimulate awareness around the fact that we sit a lot and that it is affecting all civilized societies. We sit during our morning commute, we sit at our desk, we sit in meetings, we sit at lunch, we drive home, we sit at the dinner table or restaurant, and then we sit and watch TV. And then we do it again the next day, and the next day… you get the point!
This societal pattern has emerged as we have moved out of the industrial revolution where we worked in factories and were on our feet much more often. This was preceded by the agrarian period where we were doing back breaking work in the fields. Fast forward to today where we have become an information based society resulting in many of us sitting at desks all day and not benefitting from the physical movement of working in the field or in a factory.
Dr. Levine has said, “Chair-living has proven so enticing that we have forsaken our legs. It is now time to find ways to get us back onto our legs.” Where this research really got Dr. Levine’s attention was the correlation between the lack of movement over several generations and the dramatic increase in obesity, high blood pressure, diabetes and other potentially very damaging health issues… all good reasons to think seriously about this subject!
The Scandinavians caught on to this some time ago. As an example, in Denmark the government has mandated that all office workers must have a height adjustable desk (sometimes called a standing desk… more on this later). In the early 1980’s some very early adopters began experimenting with these new desks but they were generally considered odd or not practical and, of course, back then having a desk job was a privilege and sitting all day was thought to be one of the benefits of getting an education… this falls into the category of unintended consequences!

Follow the link below to the complete whitepaper - you will be glad you did!

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