This book*
presents the author’s model for organizational and managerial success, focusing
on “soft” or qualitative factors.
Karlgaard is the publisher of Forbes magazine and had access to many
well-known, successful firms and their executives for his research. The book is aimed at managers in dynamic,
highly competitive industries but it contains many observations about successful
organizations that can be applied in the nuclear industry and to safety culture
(SC).
The Overall Model
Karlgaard’s
model of a business is an equilateral triangle—its base is strategy, one edge contains
the “hard” factors and the other edge the “soft” factors. All are necessary to create long-lasting
organizational success but the first two are quickly dealt with in this book.
An
appropriate and effective strategy is
indispensable for survival and success.
Strategy considers markets, customers, competitors, substitutes and
disrupters (usually technological). For
nuclear, we should add regulators and the existence and actions of anti-nuclear
factions.
The hard edge is about executing strategy and
managing to the numbers. Hard factors include
speed, cost, supply chain, logistics and capital efficiency, all described and
measured in the no-nonsense language and metrics of finance and engineering. The hard edge often gets the lion’s share of
resources because it is easier to quantify and has faster, more visible ROI. Hard edge thinking can lead to a secret
belief in top-down management and a slavish focus on KPIs (e.g., the ROP?) and
bottom lines. (p. 27) This chapter
closes with a frank warning: “At worst, hard-edge success can also trap you
into legacy technology, techniques, and thinking.” (p. 34)
The Soft Edge
The soft
edge consists of trust, smarts, teams, taste and story. A strong soft edge leads to more committed
employees and an increased ability to ride out a strategic mistake or major
disruption. Excellence in soft edge
performance requires grit, courage, passion and purpose. (p.17)
Trust
The
discussion on trust should be familiar to Safetymatters readers. Following are some of Karlgaard’s key
observations: “[T]rust begins with culture and values. . . . underlies
effective working relationships . . . [and] underpins innovation by
facilitating learning and experimentation. (pp. 11-12) Trust is “confidence in a person, group, or
system when there’s risk and uncertainty.” (p. 39) Internal trust “is created through
management’s credibility and the respect with which employees feel they’re
treated.” (p. 40) Trust creates grit,
the willingness to persevere after experiencing failure or hardship. “[T]rust isn’t based on what the company is
doing; it’s based on what its leaders are doing.” (p. 53) Leaders need to be self-aware of the impact
of their actions, demonstrate real concern, be predictable and exhibit
integrity. They need to avoid a
fear-based culture and support open, candid communications and tolerance of
honest mistakes. Trust can be improved
with visual analytics that create a common language across the company. (p. 64)
Smarts
This is not
what you might think it is, viz., a high IQ.
Business smarts are the ability to learn through adaptation, a process
that can be accelerated by searching out mentors, seeing failures as learning
opportunities and adapting ideas from outside one’s own field. (p. 80) A culture that punishes people for mistakes
and refuses to consider ideas from outside is only making it tougher to succeed
in the long-run and avoid surprise disruptions.
Smart companies run a little bit scared, a behavior observed in High
Reliability Organizations.
Teams
Most
companies use teams to attack major problems or develop initiatives. The culture must value team members with
differing views and divergent perspectives.
Tactics include seeking common ground that all employees share, e.g.,
the desire to learn more and be better, and promoting “good conflict” that
focuses on business issues, not personalities.
Leaders should set clear expectations of high performance for teams,
push them hard and keep them slightly scared so they remain alert and avoid
complacency.
Taste
Taste is
the part of product design and presentation that ties function and form with
meaning, i.e., the associations customers experience with a product. Think how Apple product users feel smarter
than the rest of us. Taste is definitely
important for consumer products but I am unable to relate it to SC.
Story
A “story”
is how a company or organization describes its past, its current purpose and
its future aspirations. The story can,
among other things, strengthen culture by encouraging collective responsibility
for organizational performance.
Articulating the story is an essential duty for senior managers, i.e., it
is a responsibility of leadership.
Our Perspective
Soft edge
skills are required for creating long-term differentiation in competitive
markets; they don’t all have to be razor-sharp to succeed in the nuclear
industry. However, two attributes of the
soft edge, trust and story, are essential to building and maintaining a
strong SC.
For years,
we have been saying that trust is a key input into SC strength. Trust arises from applying basic management
principles articulated by Peter Drucker, viz., meaningful work and respect for
the individual. Trust has to be earned
and cannot be demanded. The tolerance
for honest mistakes suggests a “just culture.”
One way to build trust is by publishing reports, e.g., SC assessment
findings, in a format that makes them easy to understand and allows performance
comparisons across different organizational units.
A credible,
understandable story is also essential to build a culture of community and
shared responsibility. And a story is
not really optional for an organization.
If top management doesn’t provide one, then other organizational
elements (departments and/or members) will.
Most people want to know why their company exists, where it’s going and
how they will be affected.
The advice
on smarts and teams is also useful if one truly wants to build a learning
organization.
Bottom line:
You don’t have to run out and buy this book but don’t be surprised if you see
on the business bookshelves of colleagues or friends.
* R. Karlgaard, The Soft Edge: Where Great Companies Find Lasting Success (San
Francisco, CA: Jossey-Bass, 2014). For
more information, see Karlgaard’s website.
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