Pragmatism and Hope

The Cape Town good news continues. This week the Goodman Gallery announced it would be hosting a show with the famed Ghanian sculptor, El Anatsui. The show, entitled Freedom, is a rare opportunity for South African audiences to see work that is typically only shown to Northern hemisphere patrons.

Last week, I told you that I struggled to write to you. As it turns out, in that struggle I inadvertently stumbled over a seemingly useful combination of themes.

The world is in a state of profound turbulence. It comes in the context of a larger sweep of time that has been, at best, disturbing. Some of us will point to the start of COVID, others might point to the rise of right-wing populism in the last decade, others of us might point back further to the mid-1970s and the systematic dismantling of key parts of the state. Regardless of where we start, there can be no doubt that this moment right now is, in the words of the millennials, a lot! Frankly, though, we’re here, we are in this time, right now. We have to live with it and lead in it. I’m here, you’re here, we’re here and so we may as well get on with building a world that we want.

In this context, in order to create possibility, we need pragmatic action and hope. Last week’s operational excellence, vulnerability, and loving-kindness are expressions of that combination. Today we return to those themes.

/ STRATEGY

I am always a little cautious about introducing the idea of cost-cutting. Too often, it is indiscriminate and does more damage than good. Yet, the reality of this moment is one of rising costs. Both for ourselves and our organisations, we will need to find ways to manage costs.

Vinay Couto, John Plansky and Deniz Caglar’s Fit For Growth starts with a cautionary tale – the demise of Circuit City. At one point in its life, Circuit City was run so well that it featured in Jim Collins’ Good to Great.

Couto, et al, note that “Circuit City flourished for decades with a commissioned sales force trained to hand-sell expensive and complicated home entertainment systems and appliances, along with extended service plans”.

In 2000, it was ranked in the top 200 of the Fortune 500, had nearly 700 stores and 60,000 employees. On March 8, 2009, the last Circuit City closed its door. This great company was gone.

What happened? From the late 1990s, Circuit City came under increasing pressure first from Best Buy and then from Amazon. In responding they lost their way.

They were a company that had been built on high-touch, high expertise customer experience. What did they do? They exited the consumer appliance business. They scrapped an investment to remodel stores to make them more consumer-friendly. Catastrophically, in 2003, they retrenched thousands of their most experienced sales staff replacing them with inexperienced hourly employees. Simultaneously they initiated $1 billion stock buyback depleting cash reserves. When the 2008 recession hit, they had nothing to help them weather the storm. They sank.

Pause here for a second. Look at the above story again. They cut costs. They reduced expenditure. They still sank. Why? Because they did so indiscriminately without due regard for what made them unique.

The Fit for Growth authors define costs as, “… an outcome of the choice you make about where to invest your resources.”

Read that again. Although it can often feel that way, costs aren’t magical forces that appear randomly in your business or life. Costs are a choice. Costs reflect decisions that you’ve made (or haven’t) for your business and your life.

My favourite way of assessing a company’s strategy is to look at its financial statements. Forget the words, take a look at how it spends its money. The same is true for yourself. Take a look at how you spend your money and time. That is your strategy.

Couto, Plansky and Caglar suggest you ask three diagnostic questions:

1. What are your differentiating capabilities that enable your growth?
2. What are the resources – which determine your costs – that you need to deploy to sustain and strengthen those capabilities?
3. How does your organisation enable and reinforce those capabilities?

 

If you’re uncertain about your differentiating capabilities, start by asking your most experienced staff members what they think they are. Then check with customers – do your customers choose you and value you for what you think are your strengths? Finally, take a look at your competitors. What do they do well? What do you do better? Triangulating those results will give you good insight.

Write out your differentiating characteristics. Read them. Are they sufficiently specific? Marketing is not a differentiating characteristic. Marketing to middle-income customers using digital assets is. Get detailed.

When looking for cost reduction opportunities, the Fit for Growth team suggest we look in three areas:

• What do we do? (The choices about our portfolio of activities and capabilities that we’re investing in).
• Where we do it? (How we organise and locate our operations).
• How we do it and how well do we do it? (The domain of operational excellence. See last week’s letter).

 

I can’t do justice to two hundred pages of detailed explanation of how to approach each area, so I’ll leave you with this final thought.

In the pursuit of growth, we often add complexity. Complexity can take many forms – category, product, customer, channel, geographic. Each complexity ripples through the business, driving supply chain, marketing, research, and service costs. Note though complexity is not all necessarily bad, some adds capability and profitability. The key is to identify complexity that fails to add value or reduces profitability. The authors suggest assuming that there is complexity that can be rationalised AND that you ‘avoid boiling the ocean’. Again, look for the opportunity and be specific.

The authors note that “Fit for Growth companies manage their costs not only tightly, but also thoughtfully; they recognise that not all costs are bad. Indeed, costs that strengthen a company’s differentiating capabilities are good costs. These companies sometimes may even increase good costs, while rigorously managing the rest of the cost structure.”

We can apply these principles to our personal lives. Reread that paragraph replacing ‘company’ with ‘people’, it’ll spark some thoughts about the household budget.

/ SELF

There can be no doubt that the last two years have been profoundly traumatic. We have all lost people we love. Many of us have been ill. Some of us continue to experience symptoms of some form or another. Around us those who, seemingly erroneously, carry the nomenclature of ‘leader’ make baffling decisions. It feels fair to use the trauma to describe much of our experience.

Sharon Salzberg is a leading teacher of Buddhism, mindfulness, meditation, and the author of eleven books. She also hosts the Metta Hour podcast, and in this episode with Thomas Hübl discussed the healing and integration of trauma. I found it profoundly helpful in understanding our experiences and what will help.

Hübl describes trauma as being inside a house with a cracked window. It obscures our vision, our experience of the world that is ‘out there’. We are unable to fully engage with the world because ‘trauma reduces our perception of the world’.

He reflects that trauma results in a fragmentation of ourselves. The fragmentation happens when we’re overwhelmed, when our minds, bodies, souls, can’t deal with what we’re experiencing and so we fragment in order to protect ourselves. However, the fragmentation has consequences. We become simultaneously hyper-reactive and numb. Experiencing trauma means that ‘we over-react, and we don’t feel’.

A lot of Hübl’s work is with collective trauma, the trauma experienced by entire peoples, and this dichotomy of both over-reacting and being numb resonates deeply with the South African experience. He notes that the traumatised parts of us (or parts of our communities) are ‘hostages in space and time’, they are frozen in the moment of trauma. Fragmented, frozen, numb, and hyper-reactive, trauma reduces our possibility to fully see the world, to truly engage with it and therefore we are necessarily less creative, less-resourced, less effective.

Hübl and Salzberg note that the basic building block of the human experience is “I feel you feeling me. And I feel how you feel me.” Being able to offer someone empathetic and attuned relation reduces trauma, creates the possibility for reintegration and healing – ‘presence and relation are the two main remedies to trauma’.

This also applies to our personal lives. The contemplative traditions are a process of connecting with and listening to ourselves. Through meditation, journaling, or other forms of contemplation, we give ourselves presence and relation, we increase integration, we see our worlds more clearly, we can act more effectively. It can be as simple as pausing at the end of the day and asking yourself “What am I feeling right now?”

We can give relation, presence, and therefore healing, to each other. Every single moment brings the possibility to build relationships and community. By being mindful in each moment, by making an effort to truly see the other person, by bringing them our presence to relate to them, ensuring that they experience us, treating them with respect, we can all contribute to lessening the trauma of this moment and the past.

Isn’t that beautiful? By intentionally connecting with ourselves, by intentionally connecting with others, we can create healing, which leads to integration, which leads to creativity, which generates possibilities.

/ SOUL

Sometimes, the idea of adding a meditation, or even just stopping, feels too much. It’s easier to keep rushing. Yes, the window is cracked, but who’s got time to replace it?

With that in mind, I love this story. A student approaches a master and asks “Master, what is Zen?”

The master answers “Zen is eating when you eat, working when you work, and resting when you rest.” Don’t add, just be present.

And if that feels impossible, then take 90 seconds to watch Salzberg’s Street Loving Kindness and see if you can bring that to your week.

I wish you Zen for the week ahead.

Karl

PS: You can subscribe to this letter here. My coaching practice is fully booked until the end of May. If you’re interested in working with me, I have a few slots left available that start in June.