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Newsletter: Decide Democratically, Implement Dictatorially

Feb 1, 2011 7:48:00 AM / by Tim McCarthy

Planning and implementing are different disciplines; good employers are not good listeners 24/7; a business year consists of three months of strategic planning and nine months of disciplined execution. [more]

Decide democratically and implement dictatorially were the words of Peter Schutz when he spoke at the first peer group meeting I attended in 1995.

And those words have stayed with me and become the basis for every annual plan I’ve been involved in since then.

Schutz was the CEO of Porsche AG during a big turnaround he helped engineer in the 1980’s. He’s an entertaining speaker as he opens up telling funny stories of the full-time democracy he found when he got to Porsche.

Now Peter is a big fan of democracy since he and his family fled Nazi Germany when he was a small child. But he says he learned that in business, there is a time and place for group decisions and it is not “all the time”, as many of our organizations try to do.

The best time for “group think”, he says, is during planning. The worst time is during execution.

He suggested to our peer group that we consider the point by thinking of the Porsche Racing Team at LeMans.

Let’s say there is a pit crew member who feels his insurance coverage is not sufficient. Peter says, “If he comes to us during planning, we’re all ears. We will research the options and if the company can afford it, we will improve everyone’s insurance coverage.”

But Peter says that the problem with most of our organizations is that issues are often are brought at the most inopportune times.

Let’s say the unhappy pit crew member is a tire changer and decides he wants to discuss his health insurance issue with his boss during a pit stop in the middle of LeMans.

If the pit boss is functional, he’ll of course say something like, “Stuff it and change that tire……we’ll talk about your problem another day!”

And yet, that’s not what so many of us who run organizations ethically and democratically do. Our door is open and dialogue is invited too much. Whether it’s planning season or implementing season, some of us listen kindly whenever someone asks us.

Peter says, “Think of yourself instead like the Pit Boss at LeMans.” That is, respond kindly but firmly that this is not the time for planning, this is the time to race.

My company was small and entrepreneurial at the time I heard Peter speak so I now look back and realize we were doing the OPPOSITE of his advice. That is, I was deciding dictatorially (who knew better than me?) and implementing democratically (I liked to position myself as the “good guy”.)

Let’s say I had a bank loan issue. I would study it carefully for a week or two then decide how we could solve it. Then I would tell our financial people to “go get it done.”

What I should have been doing instead of course was opening the loan issue to be studied by all of the financial people for a week or two so that we might all come up with our best collective judgment. Then, once decided, there was no more need for discussion; it was time to get the deal done.

The upshot of Schutz’ seminar was annual planning. He taught us how to use the last three months of the year to “put everything on the table for discussion.” During that period, while the company is also clearing up the last quarter of the current year’s plan, he suggested we could study any and all issues thoroughly and democratically.

Over time, the planning cycle for our company began by developing an initial budget for the following year by late September or early October. This budget was accompanied by “reasons why” and was based on what we’d seen so far in the present year.

Then we (the management) would share these preliminary budgets and plans with everyone in the company to study and come back with any thoughts they might have along with details on how the plan might best be implemented in their particular department.

By late November, the management team would create detailed budgets, timetables and work plans using what was returned to them from their associates as the basis for their work.

By December, usually just before the holidays, we would agree on the plan as a management team then present the completed plan to the entire company for final discussions.

Then on the first day of the New Year our “race at LeMans” began.

If something of importance comes up in say, February, I tried to remember to say, “That sounds valid. Let’s put that on the agenda for October planning. But for the next 10 months, we’re going to go with the current plan.”

Not easy to do, especially for a guy like me who comes up with an idea-a-day.

But it is a much more healthy approach for my, and your, organization.

And while I’m now more engaged in the “business of good” than in business, per se, I’m still always intent on winning the race.

Tags: Newsletter, Planning, Priorities, Continuous Improvement, Execution

Tim McCarthy

Written by Tim McCarthy

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