Archive for the ‘General’ Category

“Back to the Future: Seven Timeless Lessons for Organizational Success” by Dr. Chris Bart, FCA

Tuesday, July 10th, 2012

LESSON 7. Lead By Example

Finally, there is no question that if senior managers want the best performance out of their employees, they must perform well themselves.  Every action must reflect the priorities they want their staff to emulate. Leaders should take no actions without judging how others will interpret them or without assessing the impact those actions will have on others.

I know of one CEO who, on his first day on the job, asked for a pencil holder for his desk.  His secretary showed up several hours later with a really spiffy looking one – obviously manufactured specifically to grace the desk of some grand poobah.  When he found out how much it cost, the CEO immediately ordered her to take it back and get him a coffee cup for his pencils. By the end of the day, the story had spread like wildfire through the 400-person organization.  “You could be sure that I didn’t get any gold-plated proposals after that happened,” he remarked to me months later.

Understanding the effects of your actions on your company is essential to long term success.  Leading by example becomes the means by which younger, aspiring members can acquire wisdom and learn what they need to get ahead, to be respected, and to get rewarded. More importantly, leading by positive example helps to create, instill, and reinforce a company value system that will continue to influence lower level manager behaviors long after the leader has died (Thomas Watson at IBM; May Kay), retired (Alfred Sloan at General Motors), or simply moved farther away from the grassroots operations as the organization grows (Phil Knight at Nike).

Senior managers, therefore, need to recognize that subordinate managers are watching them closely and are eager to follow the direction and example of their superiors.  In the corporate context, imitation becomes more than just flattery: it is the essence of learning.

Before you can learn any new lessons, it’s important to first master the old ones.  Beware the consultant or guru bearing the latest flavor-of-the-month management wisdom.  The seven lessons I’ve presented here have shown, in my experience, to be the most important for continued organizational success.  By mastering and using them, many of the problems organizations face would either be drastically diminished or eliminated.

I challenge you to test your own management practices against these lessons as an indicator of your firm’s current and future performance.  Good luck!

“Back to the Future: Seven Timeless Lessons for Organizational Success” by Dr. Chris Bart, FCA

Sunday, July 8th, 2012

LESSON 6. Avoid Competing On Price

There are only two ways of actively competing for customers (i.e., taking away share) in mature markets: offering a comparable or identical service at a price lower than the competition, or finding a way to differentiate the product or service either at the accepted market price or in such a way that a premium price is justified.  In almost all circumstances, differentiation (through innovation) is the preferred route, as low-price strategies tend not to provide a sustainable competitive advantage.

The only time it makes sense for a firm to launch a price war is when it is confident that already- weakened competitors will collapse under the strain.  Remember the Cola Wars? In the 1970s and 1980s, giants Coke and Pepsi temporarily battled it out on lower prices, but when it was all over, their relative competitive positions remained unchanged. Smaller companies, however, went out of business during this time since, unlike Coca Cola, they didn’t have hundreds of millions of dollars with which to defend themselves against the “Pepsi Challenge”. In such scenarios, most “victim firms”, sensing a loss in their market share, will respond rapidly to the price reductions and then aggressively work on their own cost reduction programs to restore margins.  Therein lies the lack of attractiveness of this approach. A similar situation is unfolding among the world’s airlines.

By contrast, a differentiation strategy avoids almost all problems associated with a lower price one.  By changing the rules of the game through differentiation, a company can neutralize competitors or remove them from the playing field outright, usually for a considerable period of time.  This is now often referred to as a ‘blue ocean strategy’. Canon accomplished this when it decided to sell its photocopier machines through distributors rather than mimic Xerox’s direct sales model.  CNN did the same when it concentrated on television news and marketing itself globally through cable companies instead of emulating domestic broadcasters.  Wal-Mart, too, changed the rules by initially opening in rural locations rather than those big cities where discount retailers concentrated their energies.  And the stronger the differentiation, the more difficult it is for competitors to match your offerings. Just ask Research in Motion as they struggle to catch up with Apple, which at this point they probably never will.

“Back to the Future: Seven Timeless Lessons for Organizational Success” by Dr. Chris Bart, FCA

Friday, July 6th, 2012

LESSON 5. Constantly Communicate the Strategy (and what It means) To the Troops

Even after setting priorities, avoiding distraction, and satisfying multiple stakeholder needs, most senior managers are still reluctant to discuss their goals, strategies, and expectations openly and frequently. Some believe their staff will simply figure it out, akin to asking troops to charge into battle without knowing the risks, the face of the enemy, or understanding the mission objectives.  Other business leaders feel they only need to communicate their objectives once without reminders, a practice that prompted former General Motors CEO Roger Smith to confess the following prior to the end of his career with that company:

“If I had an opportunity to do everything over again…I sure wish I’d done a better job of communicating with GM people.  I’d do that differently and make sure they understood and shared my vision for the company. Then they would have known why I was tearing the place up, taking out whole divisions, changing our whole production structure.  If people understand the “why”, they’ll work at it….I never got that across.”

As any high school teacher or junior sports coach knows, repetition of the lesson and repeating the drills drive the message home.  In business, open and frequent communication of goals, strategy, and expectations is critical for keeping an organization focused on its priorities.  At the minimum, it reminds senior management itself about what it is trying to accomplish.  So, follow the KISS principle: “Keep it simple and straightforward”.  If the company is focused, doing so should be relatively easy.

“Back to the Future: Seven Timeless Lessons for Organizational Success” by Dr. Chris Bart, FCA

Wednesday, July 4th, 2012

LESSON 4. Know Why You Exist

Most private corporations think they exist only to make profits.  As vital as profits may be to exist, it’s important for companies to consider where those profits come from and how they are created. The answer lies with the various stakeholders whose interests and needs the firm must satisfy if it is going to earn their loyalty and support. Let’s start with customers.  Unless an organization is able to “trade” with its customers, to meet and exceed their needs on a 24/7 basis, those customers will fly into the arms of the competition and in a while it will cease to exist. Yet research shows that fewer than 5% of private sector firms and almost no not-for-profits proactively anticipate customer needs or work diligently and proactively to solve their problems.  To survive, companies need to embrace this perspective.

Employees are the next major, and most important, stakeholder group, and yet its amazing how most companies do not recognize their own workers as such. Most managers don’t ask their employees about job satisfaction or work environment because, incredibly, they fear the conversation will mean having to pay them higher wages, despite countless studies showing that money is a low priority for most employees.  For employees, what matters most is respect, recognition, social interaction, and the absence of boredom. Yet many firms fail to “engage” with their employees in this manner.

The third most important stakeholder is society.  Much-admired General Electric CEO Jack Welch stated long ago that the secret of survival was for firms “to make products of the highest quality and offer them to customers at the lowest price while acting in an environmentally responsible and sensitive manner.” He’s right. Those who respond first to the demands of their stakeholders have such a superior marketplace advantage that they will actually make it almost impossible for their competitors to catch up.

“Back to the Future: Seven Timeless Lessons for Organizational Success” by Dr. Chris Bart, FCA

Monday, July 2nd, 2012

LESSON 3. Blame Yourself

When problems arise, management and staff frequently provide a litany of reasons why setbacks are somebody else’s doing.  Managers blame subordinates, subordinates blame their bosses, everyone blames the competition and the government.  Sometimes they even blame the customer. Many organizations spend far too much time blaming others when they need to look at the problems they can actually control. I recommend that for every new challenge your company encounters, each staff member needs to think, “This is my fault, so what can I do about it?” Companies should look within for creative solutions rather than blaming outside forces for its troubles. One savvy organization I know uses the following technique to encourage a steady flow of ideas from which the best ones are culled to solve problems and make improvements. It simply pays its employees a “bounty” of $20 for “A-type” ideas and $5 for “B-type” ideas.  All ideas a paid for. Last year its 42 employees contributed 5,000 ideas for which they received $50,000 in bounties.  Although only 1,500 ideas were implemented, the firm estimates a return of nearly $7 million dollars! Any organization can implement this remarkably simple procedure in short order.

“Back to the Future: Seven Timeless Lessons for Organizational Success” by Dr. Chris Bart, FCA

Saturday, June 30th, 2012

LESSON 2. Don’t Get Distracted

Though similar to the first lesson, this one requires special attention, since distractions do arise that can throw the company off its game plan.  While it is vital to respond and adapt to change, too often management uses unforeseen events to abandon the original plan rather than work around them. Sometimes it’s simply that managers become lazy. Rather than looking for ways to defeat the competition into oblivion through innovation and superior execution, they look for something new to do. They start diversifying, they look for acquisitions. But as Robert Campeau (an excellent real estate developer, but a poor retail merchant), Donald Trump (another excellent real estate developer, but a poor airline, hotel, and casino owner) and Conrad Black (an excellent newspaper publisher, but a poor food merchant and farm equipment manager) learned through bitter experiences, sometimes what an organization is doing is all it can ever do, and it isn’t all that bad, either. Stay the course and double up efforts.

“Back to the Future: Seven Timeless Lessons for Organizational Success” by Dr. Chris Bart, FCA

Thursday, June 28th, 2012

Staying abreast of the latest management wisdom is one of the greatest challenges any manager can face.  With so much fad management “wisdom” being published, it’s easy to lose sight of the importance of mastering the basics.  When the dust settles, a few timeless principles, rather than trendy techniques, will bring long-term success to your organization.  Allow me, then, over the next few weeks to share with you seven of the most important and fundamental management lessons that will help your business survive and thrive.

LESSON 1. Focus On What’s Really Important, Right Now.

While every organization must do everything well, it’s often impossible to excel at everything all at once. Successful companies figure out how to succeed by accomplishing big goals with excellence, but one step at a time.  By prioritizing high quality machine performance over low cost, Japanese construction manufacturer Komatsu reduced its warranty claims by 70% in three years.  Only after they achieved global quality standards did they focus on cost-reduction, and though this strategy involved many short-term sacrifices, Komatsu eventually became #2 in its industry. Therefore, convince your firm’s directors to embrace a gradualist approach by showing them how long-term benefits will vastly outweigh the short-term sacrifices of doing things one step at a time.


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Chris Bart Quoted In An Article by Ashante Infantry,

Wednesday, May 16th, 2012

Below is the article by Ashante Infantry from May 14, 2012, in which Chris Bart was quoted.


Chris Bart Quoted in an Opinion Piece by Jahan Zeb,

Thursday, May 3rd, 2012

Below is the article by Jahan Zeb from May 1, 2012, in which Chris Bart was quoted.  



Charities and Good Governance

Friday, February 10th, 2012

Recently the Toronto Star posted an article entitled, “Audit of Charities Encounters Resistance.” The opening line read as follows: “Nineteen of Canada’s 100 largest charities do not release their full audited financial statements to the public and refused to provide them to an independent agency that evaluates charities.” The article listed a number of well known charities, here are but a few:

War Amps of Canada

Children’s Wish Foundation

Canadian Cancer Society

The Royal Ontario Museum

While it is commonly known that Canadian charities are not legally bound to disclose their audited financial statements, the question remains: Do they have an ethical or moral obligation to do so? The answer is yes.

Many assume that because an organization is not for profit in nature it will have in place organizational strategies that are ethically guided and based on the principles of good governance. Having said this, perhaps it’s time to remind Canadian charities of a fundamental principle of good governance: there must be a high degree of accountability and transparency in their operations and finances. To be accountable, charities must especially be willing to provide information of different types to their various stakeholders. This includes their mission, their front-line activities, and their sources and uses of donated funds.

Most charities can only succeed in achieving their mission by receiving financial donations from the public. In order to continue to do so, they must maintain a high level of public trust. How do these organizations expect to instil trust by society when they outright refuse to publish their financials? It only makes sense that charitable donors have the right to know how their money is being spent. They need to know what portion of a charity’s income actually reaches the end cause as opposed to being absorbed by management salaries, marketing activities and “reserves”. By failing to make public their financial information, charitable organizations are clearly undermining some of the most basic principles of good governance. In fact, when you think about it, charities are really owned by society. And so, society – the public – should therefore have access to the charity’s financial accounts.

Why some charitable organizations refuse to disclose their financial statements is a loaded question. Accordingly, we need to be careful not to jump the gun and simply assume that when this happens, such organizations are engaged in devilish and unethical practices. Perhaps their boards have simply not yet considered the benefits and obligation in doing so. For the most part, Canadians continue to trust their charitable organizations. However, over the course of the next few years, Canadians must continue to push for greater financial transparency. Wise charitable organizations, in turn, will not view this as a necessary evil but rather as an opportunity to reassure donors and reinforce the very high level of trust that society places in them.