How can you stop short term choices from crippling long-term value?


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As more bad news about Wells Fargo’s practices emerge,  the stain transcends CEO Stumpf’s  reputation. Warren Buffett opted to wait and comment knowing that he himself needs time to sort through his own internal review process.

It’s not just Stumpf who needs to believe that the “cancer “found in the retail bank was its source. The Gr8 prorgram setting very high bars for growth with 8 interconnected accounts per customer delivered results but discovery of the ill effects  proceeded much slower.  It took years and then the decision to remove the malignancy—firing of low level employees and managers—what made management believe this toxic behavior didn’t spread?

Well that’s naïve, if not ridiculous, isn’t it? Elizabeth Warren made clear that an organization must remain accountable to its customers more than its shareholders, no matter how large or successful it becomes. Somewhere along the line Wells Fargo, Samsung, Chipotle, VW, and GM all made similar high profile mistakes.

Speed to market may appear an appropriate competitive response but not if short-cutting quality results in shortchanging business value.

Bottom line the antenna in a business can’t be only tuned in for reward especially since it often means the business misses the risk signals. The obsession for rapid growth isn’t just blinding good judgment shows in ignorance of the environment and its complexity.

Interconnected digital networks absolutely create a speed advantage. But speed needs to be managed, and adjustments made to acknowledge the additional risk it creates. Ask the NASCAR drivers what precautions they take that are absent in other environments, or the Samsung engineers who knew they hadn’t done enough testing to properly advise the risk management team with information that prepared them for the inevitable fire.

Pull not push

The Internet made it easier than ever for consumers to find anything, anywhere, and at anytime. Businesses and sales people need to adjust and adapt to accommodate these more informed buyers. At the same time management goals or quotas must recognize changes in the environment, but looking more broadly at the inevitable interactions and the change in likelihood that they will occur.

It may be a cliché, but it isn’t true that what got you here will get you farther. What worked in the past works differently today and will work in another way in the future. The trick is to find the part that is essential and remains critical. Water does seep to the lowest level, but technology advances have created stronger more resilient and resistant containment mechanisms that alter the impact.  Don’t wait to understand them until it’s too late.

Start by answering these questions to the satisfaction of your leadership team and board.

  • How does your management team leveraging or limiting the new levers of change?
  • How does social media, sensor networks, big data and cloud computing alter the behavior of your customers?
  • What risks to your bottom line do they introduce?
  • What steps have you taken to mitigate and or adjust your targets to assimilate them?
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How Framestretching adds clarity


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This morning on Twitter @Bedtimemath posted the image above with the caption that read: “A natural distribution spotted in the wild! The wear on a weight machine reveals where people place its pin.

Though we experience life using multiple senses-sound, taste, touch,scent and sight, how much do we actually use to understand our place and actions?  Consider this two dimensional picture, the visual more than likely drives the meaning we make. Did the words add any more meaning to what you understood in looking at the picture?

Last Friday, the strategy discussion I lead monthly talked about visual thinking and I realized how readily my business training reduces most if not all of the perceptions available through my five senses down to only one or two.

At work, we use words or numbers and rarely put both together as well as this tweet and accompanying image.  This visual asks you to interpret the worn out paint or coating and recognize a normal distribution , which is a statistical explanation that adds another dimension to our understanding.

Could you plot a graph with the information you obnormal-sampleserve?  How about wear vs. weight?  That’s only two dimensions, with weight values on the x or horizontal access, and wear shown on the Y or vertical access.  It might look like the two dimensional graph on the right.

Does this representation tell you anything more than  the original image? I assigned numeric values to the different amount of chipped coating. Do you connect the current location of the weight on the machine as  170 across and  estimate as I did 20 up?

Both image and graph show, but don’t tell as much as we assume.

Where’s the context? Do you know the amount of time it took for the paint to chip or relative distance between observations, or usage of the machine itself?  We know nothing about the users of the machine, or its location and yet we do don’t we? The rust itself takes time to form and we can infer that more users choose at least 50 pounds, and the most users 90 pounds.

More than meets the eye

Next time you view a two dimensional graph–ask yourself what’s missing?  Try to voice and articulate the context that you’ve assumed. Yes even if you do it alone, as hearing your thoughts activates different processing.  When you do it in the company of others you will be surprised at the differences in your understanding.

I happened to see that DataScope analytics, a Chicago Based Data science firm had posted a request under data science on Reddit.  They asked “What data skills do you wish non-data people you worked with (e.g. managers, PMs, marketing, HR, etc.) have?  The responses on Reddit were quite fascinating.

Personally, I couldn’t help but notice how the replies typified the  constant challenge and struggle that any information or data presents to everyone.  What does the data mean, what is it’s significance?

The same themes arose in the conversation among business people exploring the challenges of visualizing data, in which we quicly recognized that few people see the appearance of data and instinctively look to explore it, versus others whose interest in data are for the sole purposes of confirming what they know.

The questions and process with which anyone approaches data obviously informs how it gets used and thus represented too.  Too often we use only one or two dimensions as suggested by the graph of the interpretation of the photograph.  I created the variable wear based on my interpretation of frequency approximated by the degree of chipped paint.

In contrast, the two dimensions suggest more than they reveal about how the world works.  Economists, for example, plot  supply and demand curves that look like a large X.  Supply being the first line that descends vertically, and demand the second line that Ascends.  The vertical access is Price and the horizontal access quantity.

What else is  assumed in this representation?  Geography? Time?  what about probability and or frequency?  Accuracy or specific observations as in the photograph are not the point of the representation.  It’s merely to create a general understanding of the relationship between price and quantity from two different perspectives.

The economists are exploring  and not predicting behavior, they are merely seeking ot make sense of the world not necessarily profit from it.

Further explorations that southt to clarify the assumptions led to the evolution of the  behavioral economists and  their additional perspective enahances general  understanding  of people’s beyond the one dimensional buyer or seller role and expanded the representation.  The inclusion of additional dimensions of probability also introduce additional complexity in exchange for greater understanding.

My own training as an analyst has led me to begin with exploration, and interrogate rather than merely to extend or convert  the representations. There’s always ore than meets the eye when it comes to understanding what we see.

 

 

 

Insight, the counter factual to what we know


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A belated response to a package I unexpectedly left for a friend who apologized for not acknowledging its arrival sooner. ended with

” more importantly , I am at a loss for words.  Truly I don’t know what to say . ”

My return reply was this:

Its ok,

“it’s possible to talk about something and have the words themselves not be very telling”

associations ..the dog that didn’t bark?
I stole the quote, but it’s applicable
We live in strange times, and life is strange.
Obviously i was feeling a bit spunky…just looking at the word, makes me laugh.

to exchanges robbed of words but positive sentiments
you are very welcome.

His response:

“Riddle me this.”

I share this as example of human to human conversations.
There’s no chance that a cheeky chatbot would have written such a response. It’s why people are less predictable, making their every move less certain and the exciting part–capable of learning–both to be good or to be bad.

This was my reply.

riddle suggests you want an answer,
don’t have a personal one,
here’s what I’ve been reading and thinking
One. Roger Schank’s latest blasts courtesy reminder from another cognitive scientist acquaintance I made recently:
(Roger writes some great pieces on this…if you find it interesting as I do, here’s another series
Two, the dog that doesn’t bark? Shorthand for a famous turn of the phrase by Conan Doyle ascribed to Sherlock holmes seeking to solve a crime in which it was the absence of information that he cleverly used to solve the crime.  (see the short story  The Adventure of Silver Blaze). He collected the data, framed it in context to get information and then  use the counterfactual to obtain the insight.  What happened, what did you see or hear? When do dogs not bark?  when they recognize someone they know, so obviously it was the trainer….
[note this reference appears in The Big Short  too…great movie!]
Three, Comment I noticed by Leda Glyptis who is now at Sapient…what a great bio!
Extracting value from a wealth of structured and unstructured data, however, is not as much a technical problem, as a business problem. Technical heavy lifting will undeniably be needed to get you from having a ‘data lake’ to being a data-driven organisation but fundamentally: saying ‘there are 10,000 species of snake in the world’ is data; ‘there’s one under your seat’ is information; ‘it is asleep right now, so you can get up and walk away’ is actionable insight.

The whole interview is here:   http://www.femtechleaders.com/europe/leda-glyptis/

My point –make the time to be human, take the time to notice and connect to more of what you know.  The payoff? Surprising insights will be yours

 

How Doing, stopped my was and they thinking


I suppose, in highschool I first imagined being a writer, but I never committed.Adjusting Sensibility allows me the opportunity to practice, rehearse and communicate more effectively.

This morning Bruce Kasanoff’s  suggested “repetition is powerful, use it wisely.” It was a point I emphasized in my Goldilocks is a genius talk last week.  After spending my weekend struggling to write, it also reminded me that practice  always helps, but it’s not enough.

Purpose matters, and the ability to see differences yourself that yields progress.

I never learned grammar rules well. They annoyed me, they got in the way of my thinking aloud and desire to be creative, and imaginative in my writing.  Today, I read a note aobut courage and another about It’s more likley that unconsciously I was insecure, less confident about everything.  I did many things, and the easy stuff that came and most naturally, happened out of school in organizations and with people.

Today, maybe there’s a university that grants degrees in leadership, especially since so many claim to be effective teaching the subject. Personally, I fought taking on the mantle and continue to enjoy being a collaborator. I now know that leadership terrifies me, becasue I beleive leaders need to be clear in their vision, confident in their situational assessment and unwavering in their commitment to their team and the mission.

Several  times I held project and team leadership responsibilities, I found myself sabotaged. My team didn’t challenge me or push back, it was my associates and peers in other roles or parts of the organization, and even at times my own boss.It wasn’t that they disagreed. More often it was the changes that the success of my intiaitve implied for them, changes they didn’t want to make, even if the changes actively improved the organization’s positioning.  Now occassionally, they had better sight lines than I did. Just as often however they didn’t want to ponder the implications and preferred to shut down the intitiave, impede changesthat disrupted the smooth steady flow of their own projects.

Professionally, and personally, I had been taught not to speak out of turn, and that it was best to find the right time and place to raise objections.  In other words, a public meeting may not be the first time to challenge a colleague or a superior.

Many people are surprised most by the passion and persistence that occassionally emerges when I do feel in command of my subject. It rouses and inspires them.  Unfortuanately I don’t feel that consistently, so many who know me, see and experience something else. That voice needs confidence to speak, it needs purpose.  I may love an idea but until I know what to do with it, then it’s just a vague notion.

At present, in particular this post, I decided to share how using my voice in prose also helped me overcome confusion and reconcile inconsistencies in my thoughts and actions.

It’s not what you know, but what you practice that counts

Grammar annoyed me. It was a dull subject with seemingly annoying rules and my bad experiences stopped me from learning. I did well in school but not as well in English, becasue I  never fully assimilated the basic lessons. Rather than learning how to improve, I got angry at all my mistakes and lost my confidence and along the way muffled my voice too.

I recognized great writers by thir prose and persuasive narrative but never saw the effects of the underlying grammar unless, the author exaggerated it for affect.  My inability to see these signs meant I didn’t try and work them out for myself until decades later.  My writing remained less effective, less convincing and less committed.

In contrast, my graduate professor in statistics challenged my lack of commitment to learning and excelling in her classs.  I spent hours in the math library learning the notation to keep up with the matrix algebra that execeeded my formal math studies in basic calculus. I learned to feel the different effects that only practice produces. Likelihood tests and probability colors my thinking and establishes clarity that today I appreciate as akin to the effects of active prose.

Our will, our intention and our purpose expresses the likelihood of our followthrough.My senior year in highschool I took an advanced literature course from an english teacher my oldest brother revered. I like to think she drummed out the word I from my prose.

For decades, the pronoun One replaced I. Yes, it was gender neutral and I think that was its one saving grace. In additio to the distance it added to my voice, I no longer expressed my thoguhts or feelings but rather the thoughts, feelings or actions by those omnipresent, or omnicient–the ones.

It’s fine to use third person. After all, this voice appears most most commonly in storytales. Goldilocks does, so do the bears, and so does Red Riding Hood, Hansel and Gretel every other character. What makes the story work for me is it’s use of active voice, that allows the reader to play along AS IF they too were that character. It’s in the active, direct prose that I now recognize but missed understanding and thus failed to practice.

More directly, my present experiences and payment for writing made me up my game.  It made me commit to learning and understanding.

Let me correct that. The faith of the marketer who offered me the job, in fairness had seen some of my writing but he also demonstrated the value of great prose.  After submitting a very hasty first draft long on creativity and very short on grammar, I got a single request.

“Tighten it up.”

I had no idea what they meant,what I needed to change or where to begin. The last thing I needed to do was show my incompetence, so  I turned to my colleagues of experienced writers to guide me.

One buddy asked “what’s your process?” I couldn’t answer that questions which led to a series of additional questions on both sides. The more I didn’t know the sooner I realized the depth of my inexperience.  The downside of blogging? It’s the absence of direct feedback that makes you a better writer.  Conceptually I knew about thesis statements but had never consciously tried to use them in a cogent, organized fashion.

Suddenly, years of prompts and suggestions made by lawyers and other active readers of my writring flooded back to me.  My arguments were delayed, I had been a weak communicator becasue I overwhelemed the reader with detail and never disclosed my purpose clearly up front.

After struggling mightily alone, a friendly call arrived just in time.  Another friend and occassional collaborator offerd to coach me through.  She held my hand, read my prose and succinctly pointed to examples of indirect reasoning and endless rationalization; that could be summarized in a short direct phrase. She helped me see how my sentences would benefit from  better grammar practices.  Her beautuiful quick examples used the active voice. Another lightbulb helped me see more clearly what I needed to do and how to do it too!

Suddenly, I could see my poor grammar, my awkward phrasing, and my habits encircling  a point and take the steps needed to correct them.

Tighten became a directive for simplicity. I could see where I confused presenting a fact and thinking aloud. My readers didn’t benefit from learning  my situation that led up to the analysis, they cared about the analysis.

In closing, it’s easy to read good writing and it’s easy to understand too. If you know what you want to say, then you can write it, and you shouldn’t be shy about it either.

If you don’t then whatever you write will waste yhour reader’s time.

Blogs are fine for thinking out loud, exploring what you want to say. Do yourself and your readers a favor, before you hit publish, take your closing points and put them at the top.  Then reread to be sure the prose you keep follows and supports that point.

Aat the very least, maybe, like me, it will allow you the practice needed to improve your writing.  Why else do you blog, if not to communicate your thinking more effectively?

 

Refreshing Core Values


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Remember the  expression built to last? It was an expression that my grandparents used to differntiate value.  What I saw as an old tool, or piece of basic furniture or clothing they valued.  The phrase also describes capabilities and inherent qualities that stand up, endure over time surviving changing conditions.

The ups and downs of the stock market represent value differently. Analysts love to pounce on companies when they stumble. The bigger the company the better the blunder and the better for the Bears.  Retail food and department stores currently appear to be under heavy fire these days, even brands and companies that dominated their industry.

So what value should you seek? Investors seek returns but don’t always consider the long term costs, do they? Does sustainability really matter?

I suspect some of these thoughts  led Jim Collins and Jerry Porras to title their 1994 book Built to Last (BTL). Sure they may have thought to follow the example and success path set by Tom Peters and Robert Waterman  whose titled 1982 research project  In search of Excellence also became a best seller.

Sadly, in writing the book Collins and Porras did what other well-meaning authors do. They put a priority on pithy copy over substantive analysis. In short, they wrote great stories.  In fact they went so far as to feature the CEO as leader/hero.  Their research (see sidebar) to distill what made companies visionary  was refashioned into a great read.  Nothing wrong with a great read, unless the reader confuses the story for prescriptive advice and your analysis turns out to be a bit superficial.  If you think I’m being harsh, consider these comments:

Martin Maneker, Collins and Porras publisher put it this way in the Daily Beast in 2009

“the heart of the Good to Great philosophy is that disciplined people, engaged in disciplined thought and taking disciplined action, have the greatest chance at success.”

Or in Collins own words on his website  posted in May 2009 about his book Why the Mighty Fall :

“[Porras and I were ]discussing the possibility of a project on corporate decline, in part because some of the great companies we’d profiled in the books Good to Great and Built to Last had subsequently lost their positions of prominence. On one level this fact didn’t cause much angst; just because a company falls doesn’t invalidate what we can learn by studying that company when it was at its historical best.”

Or Consider  Fast Company’s look at BTL 10 years post publication written in 2004:

“ at least 7 of BTL‘s original 18 companies have stumbled (8 if you’re cynical about HP) — scarcely better than the results you’d get by flipping a coin.”

In other words, the fundamentals that stand the test of time more likely due to discipline or luck. Sorry that it’s not the five that Collins and Porras research efforts describe.

So why did Jennifer Reingold and Ryan Underwood in their Fast Company retrospective review of this highly influential business book try to salvage its essence? For the same reason that these books continue to inspire and continue to be best sellers.  The Fast Company authors looked beyond the company profiles and focused on the stated principles.

As pointed out earlier, Collins and Porras in later editions had to qualify their original findings in the preface. Collins’ later writing also back pedals with post mortems describing how his BTL companies had lost their way.

I’m not the first to question the relevance of the principles to demonstrate the thesis of the book. In fact Collins was well aware of the criticisms leveled at Peters research, and why they adopted matched pair design for their own research.

What bothers me is how story telling hijacked the writers’ judgment.  For example, why use distinctive new prose when citing the principles?  The better to make believers and best sellers, that’s why.

Long before social media, Collins understood the power of language. Catchy language could  impress the ideas on his reader but also fuel fan sales, and  “word of mouth.”  Consider one of his most famous original phrasings:

“A Big Hairy Audacious Goal, or BHAG, a long-term vision that is supposed to be so daring in its scope as to seem impossible. “

It’s in these language choices that I begin to feel the book tilt.  BHAGs  conjure really ugly images.  Who, other than a hero, would dare to take on something ugly? Personally, my criticisms side with Reingold and Underwood.  Even by 2004, the BTL principles seemed less relevant in the face of massive consolidation, global outsourcing or even disruption that shifted the business environment.  But the descriptive principles they coined failed to capture the essence of deeper qualities that underlay any organizations success, ones my grandparents would recognize.  I’m talking about  people believing in people.

Recently, I attended a local meeting of the Private Directors Association. I heard a panel of three CEOS talk about their 100 year old companies.

At the close, each of the CEOs identified factors they thought helped them survive. Profitability never made their list, nor did any pithy phrases tumble from their lips.  The single repeated understanding described their commitment to people and values.  Not only have these companies experienced low employee turnover over the life of the company, they shared unusual views about proper compensation and invested heavily in training.  For two of the three, visible diversity on their boards had been a conscious decision in the most recent period.

Another notable common thread described their recognition of business value–that goods and services they offered should always exceed the price customers paid.

Pride of ownership too dominated  and was demonstrably evident in each of these companies successes though  Mead&Hunt now employee owned and operated, and the other two remain family owned and operated.  Each and every company pointed out their expectation of modest returns and willing attitudes toward change and adaptation.

In other words, missing from the conversation was the idea that any of them expected to use the business as a vehicle for generating great wealth.

A friend pointed out that mid-market company values, at least evident in the mid-west,  don’t seem to match those of corporate America.  I wouldn’t go that far. Particularly since these companies were all privately owned, its difficult to measure them using the criteria that BTL employed– 10x returns on stock price.  Not a one would be considered leaders in their industry.  Even Mead & Hunt which is employee owned understands that returns on their own capital rely directly on production and interaction with customers and not financial shell games.

Kevin Boyle, the CEO of Schulze & Burch, “the biggest baker of toasted pastries in the US” typified the distinctive attitude of these companies.  Here’s how he answered an investment banker’s inquiry about how  growing valuations and M&A affected his business.   “Keep doing what you’re doing,” Boyle said, “it’s good for me and keeps my cost of capital down, and also minimizes my competition.”

Had to laugh at that.

If you are curious Wikipedia’s list of the oldest  surviving companies found many that began before 1300  and not surprisingly they were primarily service businesses, and remain small– as in less than 300 employees.  This list https://en.wikipedia.org/wiki/List_of_oldest_companies

Goldilocks can help you face your challenges, will you let her?


photo (1)What’s the story? Today’s headlines continue to be filled with a persistent recurring behavior symptomatic of leadership failures.  Most of us are familiar with storybook tales and parables that remind us of particular lessons. No one wants to be The boy who cried wolf. Cinderella teaches us not to give up hope, and I’m sure you have an equally simple take away for the story of Goldilocks, aka the story of the three bears.

Have you considered using simple stories, and in particular the tale of Goldilocks,  to lead differently? 

I’m actually heartened by Mary T. Barra, because I think she gets this lesson. Today’s New York Times report on the ignition switch investigation suggests that unlike her predecessors, she pursued a different approach. This stands in sharp contrast to last week’s New York Times story Business school Disrupted where Jerry Useem offers a glimpse into Harvard Business school‘s decision-making around digital, online education.

How IS it possible that one of the most premier academic institutions in the world–with articulate thought leaders on key business issues related to Strategy, Disruption and Innovation– continue to cling to their old ways, unable to effectively transform themselves?  I’m not interested in their offering per se.  Their decision options resemble those of Fortune 500 business leaders when surveyed.  They find it difficult to pursue a path toward transformation, though failing to try, often cripples their organization’s ability to sustain value and/or their competitive advantage.

I see the decision dilemma as actually two stories. One, the tale of a lizard, or chameleon, and the second the universal tale of Goldilocks.

Steve Jobs sittingSteve Jobs, from what I’ve read, understood how to lead like a chameleon. By association the story of Apple throughout its tumultuous history can easily be interpreted as a lizard’s tale. Academics, however like many cogent, intelligent thought leaders resemble Goldilocks. Their training, the PhD process itself promotes competition, neither intentional antagonism or collaboration. Individual researchers training emphasizes objectivity, perhaps fearlessness, definitely curiosity. Still academics produce results relative to existing thought using an established process.  These predictable outcomes rarely achieve or encourage breakthroughs in understanding.  Occasionally, this process model when most forcefully applied manages to create disruption in existing domains. Leaders in these established environments rely on orderliness, offsite planning and reflective discourse. Failure to challenge their process makes them vulnerable to outside breaches that create havoc at multiple levels within their hallowed institutions and the underlying operating models their continued existence depends. Basic physics teaches that a body at rest stays at rest.  This lesson exemplifies the impact of complacency and comfort, and the necessity to avoid them at ALL costs.

Goldilocks isn’t a morality tale

Adaptation came easily for Steve Jobs , though in many ways he also behaved like a Goldilocks. Constantly moving and sampling new things until he seized on an idea that resonated with his core principles—simplicity , quality and durability, as in built-to-last. His passion for these principles when wrapped around an idea supported peer learning that enabled development of a powerful culture that made his ideas tangible. The Steve Jobs in Walter Isaacson’s book both hungered for new ideas, and was steadfast in his resilience. These qualities resemble chameleons, making it possible to adapt quickly to subtle changes happening in their environment. These thick-skinned qualities made him  tough, capable of weathering transitions and nurturing— both necessary to support transformation and sufficient to support sustainability.   The verdict remains out for Apple itself.

Goldilocks adapts too.  She makes do with what she finds but she herself never undergoes any transition. She changes her environment, it doesn’t change her. Her existence also depends on encounters with normally distributed choices. The variance around the norm makes her choices rational and predictable.  This may explain why her innocence makes us lose sight of the disturbances she leaves behind.

I don’t know what personality profile Goldilocks fits exactly. It’s why I believe today’s popular assessment tools used by many companies in their hiring practices to find cultural fit ultimately don’t matter.  How exactly do profiles help an organization survive? Leaders who worry about identifying Goldilocks may be missing what I find to be the more critical perspective in the story.

What about the story of Goldilocks resonates and endures? (see post two)

Personally, I think on some level, each of us behaves like Goldilocks.  We are often unaware of how our choices create a wake or disturb the system for those who follow. We prefer to limit the number of choices. Fewer options allow us to focus and ultimately find the points of contrast most relevant, or good enough for us now. Once we make the choice, we can keep going,  gain additional experience and be ready for the next opportunity we meet.

Goldilocks always finds a suitable, generally satisfying choice after sampling all of them. What would she do in a complex situation where the choices exceed her ability to sample? The absent inhabitants of her found environment don’t stop her from seizing the opportunity or indulging her curiosity.  Why doesn’t she hesitate or allow uncertainty to get in her way? When the Bears do return, Goldilocks flees and the narrative ends.

Of course, our experiences allow us to imagine the internal voices that often stop us from pursuing what we recognize could create difficulties for others.  A verbal exchange of assumptions often proves surprising and reveals greater diversity in perspective than any of us imagine. These behaviors Leaders need to cultivate and question when presented with Goldilocks canned results.

Ask Mary T. Barra if the risks were worth the time her predecessors saved shutting down alternative thoughts, questions left unspoken and open issues under examined? Does complacency in your process overrule critical thinking and exchange among peers of diverse perspectives? Should PhDs be reviewed only by the experts in their own domain? What are the principles that every report and process should adhere?

The challenge for management and leadership isn’t to isolate Goldilocks, but to encourage and nurture transformations and mindfulness .

Create value by sticking to principles and collaborating


I’ve been reading and writing a lot about creating value.  Value creation is what sustains our spirits as well as insuring us a livelihood. It preserves quality in our relationships as well as justifying our existence.

Does creating “shared value” accomplish the same thing?  creating value

A recent headline in the Financial Times challenged the premise of Michael Porter and Mark Kramer’s ideas on creating shared values caught my attention.  Corporate Shared Value, (CSV) conceptually seeks to align social impact and company success.  A very noble goal, akin to what John Mackey, the CEO of whole foods describes as Conscious Capitalism.  Andrew Crane’s Financial Times article merely wishes the CSV theory found its way into execution and not corporate report window dressing and lip service.

15 years ago, Frederick F. Reichheld  and Thomas Teal working for Bain Capital discovered that too few growth strategies successfully drove profits and explained competitive advantage. Since the traditional profit drivers failed to explain the discrepancy in performance, they turned to study costs.  Their research delved into a firm’s relationship between customer duration and its cash flow  and found the relationship also differentiated advantage. As they had eliminated one metric after another their discovery proved that value starts with building loyalty, growth follows and then profits result. Dual loyalty, they explained isn’t merely the reciprocal relationship between a firm’s leadership and its customers.  The duality extends to employees and includes relationships with investors.The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value published in 2001, detailed this research.  For businesses to focus and sustain this value creation process, the authors recognized would require fundamental changes in business practices including new ownership structures.

Porter and Kramer’s CSV theory in part recognizes a similar fundamental shift in business practices.  Their focus seeks to compensate for the historic failure of accounting balance sheets to report and record shared value as an asset.  Is it an output, or is Shared Value part of a  larger social movement?

Mark Cheng, Director of Ashoka UK and Ashoka’s senior advisor on social finance  explains the challenges in this article that appeared in Forbes, How Philanthropists And Investors Can Work Together To Create Social Change. He suggests, that trying to build a social innovation isn’t a company but a social movement and that’s why it requires very different investments.

To change consumer behavior whether you plan to build a new market or a social movement requires organizations to earn people’s loyalty to principles.  Reichhold and Teal explain these learnings as necessary to properly differentiate between creating measurable value and creating profits.  Porter and Kramer hope businesses will value social progress, but this alone won’t re-legitimize a business. A verbal commitment to value can’t create the cost-benefit advantages necessary to sustain the firm.

Social forces of loyalty can and often do bind customers, employees and investors. Indeed they serve as measures of  cash flow and indicate a company’s ability to deliver superior value. The interlocking set of a firm’s operating principles creates both a cause and effect which satisfies, inspires and engages all stakeholders to sustain the firm.

Alternatively, a collective solution and collaborative mindset that aligns around a broader set of principles or values clearly stated presents an opportunity to create shared value. Because the concept of shared value offers people the means to take part with the resources of a firm, these mechanisms also share in, and contribute to, the success of the wider social movement.

Cheng explains that different funders should rightly have different roles.  A social business partnership between a business enterprise and an NGO doesn’t have to compromise or tradeoff its economic goals for the benefit of social good.  Using philanthropic funds to cover start-up costs for the shared venture and utilizing the distribution prowess of the corporate entity is one way to make win-win social impact possible.

Social progress is difficult to achieve by a single player, however a shared operating model based on sound principles can be adopted and replicated to spread the changes more widely.  The goal for the business may be self-interest,  where self-preservation will be a result of its underlying value creation principles and relationships.

Manage your opportunity: Mine and Mind wider meanings


It’s not just a generational thing, there are so many more places to go than any of us have time or interest. Oh, I just meant on-line. Whether you do or don’t bother with Facebook,  or seek wisdom browsing  social sites, every place on-line data mining traps lie in wait.  Search tools once brought great excitement. At the tip of your fingers, one box combined the knowledge of encyclopedia, yellow pages and the shopkeepers of the world. Today, I wonder,  search and its promise of the information revolution resembles a trap and less a portal to discovery.  Personalization and customizing the experience takes priority over serendipity and pure exploration. That’s the clarion bell signaling opportunity and let me share my own cursory take.

English: The three biggest web search engines

English: The three biggest web search engines (Photo credit: Wikipedia)

The trend lines all show mobile apps displacing Google search. By the way, so do my browser’s add-on buttons. Still, old habits are hard to break. Bing and Yahoo, sure they keep trying, but Google’s continuous upgrades still deliver  personally satisfying search results faster. Their under the hood tracking of my past choices and search history increase their predictive precision.  I’m a statistical geek at heart and so I miss the old Google, that shared the probability score on every result. Today, for kicks I typed “Yahoo” into my browser’s Google search box. and these numbers appeared above the search:  1,200 personal results. 4,430,000,000 other results.

Ironic, to discover 4.4 trillion requests made to Google to find Yahoo doesn’t it?

These numbers illustrate Google’s additional value–their search provide me an opportunity to put my search into a broader context.  In this case the numbers led to an insight, how I can quantify and size a search word’s popularity. I can measure a meme or popular thought’s magnitude. I was on a roll, what other meanings or associations might these search placed terms hold?

My browser (Firefox) search box dynamically lists offers suggestions to help me refine my search.  As I begin to type, additional search terms appear ranked by popular preferences. The phrases anticipate  and nudge me to narrow down my intention, refine the Yahoo search from 4.4Trillion results.  The drop down menu offers 10 suggestions: mail, my.yahoo.mail (the address that I’ve used to get my mail), finance, news, sports,  answers etc.

Hmm.. imagine using the old yellow pages. Organized by category, the listings appear alphabetically.  Google and the rest of the search engines never worked that way. If I try, using the category Restaurant, I get

1,250 personal results. 364,000,000 other results

What do these numbers mean?  Looking over the first few results in the search output  and accompanying map, I’m shown a neighborhood where I used to live 30 years ago and visit occasionally. Before wondering why that neighborhood popped up I compared Google’s competitors.

Bing returned 50,100,000 results and Yahoo reported 48,500,000 results. These are not small discrepancies and may explain why Google remains #1 not just in my preference stack but apparently for the world too.  But there’s more.

Ambiguity the new opportunity

The habits Google encourages and its customized learning of personal preferences  revolutionized how people spend their holidays, shop, work and play.  For the last several years Venture Beat reported in January that Google grew its “semantic network” to at least 570 million objects and 18 billion facts .

In the hands of marketers, the more numerous, diverse associations attached to an idea or phrase makes good business.  The variation allows room to play off nuanced differences and at the same time drill down to find the universal or shared meanings that bring different community segments together.  Once established, shared meaning offers a foundation upon which new experiences and associations can be built,  It can also segregate individuals into subgroups based on mutual understandings. Consider the difference between  word slang  and its normal usage as in  Bad. What associations come to mind, reflects all the nuances of your interests and the company you keep. The same word carries multiple definitions and its usage varies within different populations.  Google ad words and SEO allows marketers placement based on the nuanced choice of their target market.

So how did Bing challenge the space  or more importantly what inherently does its value proposition offer? Bing displays results in three distinct columns: the traditional search , a second column of paid advertisers and the third Facebook’s search results. It may be nice to differential but I’m not sure I understand the benefits.  Or if I did, I’d use Bing more.

Historically, the search service results listed in order of frequency of association or popularity. The resulting match returns ranked sites whose keywords had greater influence in  that particular domain. To effectively compete, I’d need to use the same key words to get my ideas on the inside of information sharing circle.  This is the old Buzz game, I want people to talk up a particular topic or a brand, the idea needs to insert itself into the conversation, right? Google still helps you see the trend lines behind the scenes, which words are trending over time, when and where.

Extrapolation from the past ain’t  foresight

Which approach develops foresight? How can someone track the spread of ideas or get a true bead on what’s coming next?

Yes foresight not insight, as in opportunity creation and positioning for advantage. Tools to find and understand emerging customer trends requires something else. It requires context. Let me introduce Crawdad Software. Their process follows a  patented system called Centering Resonance Analysis (CRA; Corman, Kuhn, McPhee, & Dooley, 2002). It  differs from traditional inquiry methods that deliver results based on word frequency. CRA’s Latent semantic analysis,”uses computational linguistics to model a text as a network of words…its grammatical rules understand how words take meaning from context. Whereas word frequency methods create insight based on a “pile of words”, CRA creates insight through applying network analysis.”  The following is an example of Aesop’s fables courtesy of Kevin Dooley, CEO of Crawdad.

Network analysis?  

Which matters, who does the sharing or what exactly they share and why. Which words they use turn out to be useful to understanding and predicting reactions.  That’s the association that triggers action.  The map above illustrates how naturally Aesop comes to mind when the word fable appears.  But notice how many additional words appear too.

Imagine a leading manufacturer’s #1 product, also leads in its category, suddenly loses ground to another competitor. It failed to notice an opportunity and  others stepped in to their space. Foresight capability, like radar, offers early warning signs of a new attraction or distraction drawing interest in your field of operation.

Once people talk about an idea, understanding who does the talking is as important as why there’s talk at all. Semantic analysis techniques assess the context, meaning and relational significance of this new idea. Whether outside or inside, social media listening posts require additional intelligence to be useful.  Sure, there’s added value to Google’s intelligent semantics.

Example of search term semantics

Bear 622,000,000
Bears 266,000,000
bear with me 276,000,000
bear witness 7,560,000

Its methods borrow from Crawdad, but its output sure doesn’t.  I assembled the table above manually.  In March, I discovered  IBM Data Analytics offers semantic sentiment analysis along the lines illustrated above. They  plan to put the results in the cloud  this summer and make it more widely available, or at least platform neutral for subscribers. So I am not able to create a comparison for you,or even an illustration.

All of these tools offer greater opportunities. Numerous data-mining tools, and increasing integration of social media into knowledge management functions, dashboards and automated evaluation systems makes trivial the opening description of what’s going on with search.  Getting a bead on what’s next  however won’t matter unless you are capable, resilient and flexible enough to adapt and make use of that knowledge ahead and better than others.

The understanding of diverse associations makes sense to marketers who understand what to do with them. The challenge is to help more people within your organization understand what to do with this information.  IBM shared these competencies at their Analytics summit last week.

Social Media Analytics is about Business
Marketing   Human Resources   Risk Management
1. Brand Reputation 1.Company Reputation 1.Partner Reputation
2.Messaging 2.Attracting key professional talent 2.Union members wants
3.Campaign Management 3.Attracting College talent 3.Identify key managers online conversations
4.Competitive Positioning 4.Identifying key reasons for attrition 4.Reputational risk
5.Identification of key Influencers 5.Identification of key Influencers 5.Impact of my customer’s reputation

Conclusion

The world doesn’t really get any more complicated, just more diverse. We keep adding new words, new phrases and at the same time, adding new meanings to old words and phrases. Survival depends on proper interpretation, how well we understand others and how well they understand us. I suggest there’s great value that we leave on the table when we let ambiguity get the best of us.  Take time to verify others understanding, don’t merely respond based on assumption that is unless you plan to seek forgiveness every time.  Start listening fully first, learn what others understand, not just what but why their expectations exist and then choose whether to adapt or to share back.

Understanding ain’t believing and yes there are economic consequences!


This is a "thought bubble". It is an...

Recently, I came across this academic article differentiating belief and understanding and it triggered an explosion of thoughts.   When I teach, I  often encounter students who fail to grasp the topic and naturally their puzzled looks make me try to explain the idea again, differently.  I  never considered the possibility it wasn’t  my explanation that confused them, but maybe the ideas themselves.

Lost in Space

Our brains are wired to discard irrelevant information and to some degree if the new information doesn’t jive with what we know or believe–the ultimate cognitive dissonance occurs. Or as the Lost in Space robot would say: “That does not compute!”

As a teacher, I found the article unsettling on multiple levels.  First, because I never considered the potential conflict when preparing my lessons.  Second, what I confirmed talking to a High school math teacher in a large public school in Berwyn, IL:  Teaching helps students meet standards not to understand.

Personally, my limited experience as a public school teacher proved deeply challenging. In choosing to help students understand  not merely to pass.  I taught a vastly diverse population of 4th graders in a suburban Chicago classroom.  Student  IQs ranged from 5-95% on the chart, and the socio economic status of their families were equally diverse with many receiving subsidized breakfast and lunch. One student was severely ADHD, had lost his mother and his medication was constantly being adjusted. I had my hands full and could never figure out how to insure that every kid understood.

My own preference for immersive learning as a young student, in which my students allowed us to  play it out and learn by doing made school fun.  An approach, I actively sought to replicate in my teaching.  Returning to study education later in life, I was first dumbfounded to learn that so little was understood about effective teaching methods.  This isn’t really as mysterious a problem as I pose.  One of the oldest professions remains mysterious becasue the  purpose or objectives of education continue to evolve.  Sure there is wide agreement that everyone should have a command of the basics, the three Rs–Reading wRiting and aRithmetic.  How do you measure competency in these subjects?  what methods make it possible for students to gain competency or even mastery? If you have had a child in school, then you are familiar that new methods continue to be introduced.  Similarly, schools are held accountable to new standards and competency measurements.  Yes, the rules for private and charter schools differ from those demanded by the public.
Surprise, understanding information and knowing something are not the same thing. There are somethings you understand but could never articulate and vice versa some things you know but don’t necessarily understand.  For example, we know or learn how to drive without ever understanding how the car we drive actually works.  We may understand what someone else may be feeling without knowing precisely.
The areas where our understanding and knowledge most align come from ideas that involve multi-sensory learning experiences. It’s one thing to watch someone do something or find the results and another to reproduce them.  I can watch Tiger Woods, study his swing, stance and then when I attempt to hit the ball I discover just how much I don’t know.
This post won’t be able to address the issues fully.  I’m wondering where and how we might be able to resolve some of these contradictions and do it to help more people achieve. Sure high scores matter, but don’t we also want higher understanding that makes it possible for more people to solve more problems  when and where ever they encounter them? Teaching for understanding should count, in fact it’s a great book too!  But I’m also making a quick case for multi-sensory learning that allows more of us to connect what we know to things we understand.
Take history.  The recent Steven Spielberg movie on Abraham Lincoln attempted to show us more of the reality of the politics during the Civil War, but it also brought to life the words Americans are frequently taught.  We know about the civil war, we know that it was about slavery and we may know the Gettysburg address too.  But how does knowing that help me understand the world I encounter today?  How does learning history help me?
Imagine  learning history by role play? Being asked to study and recite the lines of Gettysberg address makes it easier for us to recall them and ponder them. Playing out the issues allows us to wire our brain to make our own meaning, personalize the lessons to connect to our pre-existing experiences.  The challenge may be that owning and personalizing the results takes time but it also complicates the  expectation of a singular correct answer or take on history.  Personalized meaning may prove more useful, stickier and authentic but it makes passing a standardized test much more difficult.
In fact, the accumulation of specific representations of  ideas and details are the only measures of learning that society at large respects and values. Today we value a passing grade and top performance measurable on a singular dimension.  Daniel Goleman‘s work on multiple intelligences increased the appreciation of talents beyond traditional accumulation of facts, but don’t celebrate them as equal achievements. High scoring SAT,  ACT and GPA scores open doors to further academic study and elite higher education opportunities.
This little monograph published in 2006 warrants more attention. In part, our system reflects the consequences of  the larger failure by the education system to differentiate student responses based on their belief and understanding versus answering according to the expectation of the testers.  The consequences of teachers teaching students to pass the test  may help some students further their schooling and many of them may gain understanding in the process.  But what about the others , where school material doesn’t match their knowledge of what matters  outside of school?   Teaching without understanding fails them and represents a failure of the investments to realize the returns of a capable society.
But there’s more.  Personally, this piece opened two divergent avenues of thought.  One,  given the growing research into the workings of the human brain how might cognitive processes  guide our behavior in the face of two truths. Two, findings by the economist James Heckmann whose work focuses on the development of human skills, abilities and health capacities for example demonstrate  the different values of those who graduate highschool and those that pass the GRE.

Two truths

T​he concept of holding two truths at once parallels the paradox of knowing what is right and yet believing it wrong​.

The FMRI of psychopaths who suffer from false delusions or paranoia, found their brain processes to differ from the general population. Interestingly, FMRI scans of democrats and republicans show each population to process information differently.  Both research illustrates the power and influence of different beliefs and explain the differences in our thinking and actions.  The reconciliation or rationalization process literally works differently based on early wiring of beliefs.
Carol Dweck, a noted childhood development scholar’s research explores the opportunities that emerge to rewire in adolescence.  Writing a response for the Boston review to research by James Heckmann that emphasized the value of larger emphasis on interventions to foster huma skills ad capacities, she writes:
“The success of the adolescent interventions derives from their laser-like focus on particular non-cognitive factors and the beliefs that underlie them—knowledge stemming from psychological theory.”
I often explain that my life changed when I began graduate work at the University of Chicago​.  I discovered what thinking felt like relative to merely learning.  I experienced integration of knowledge I was accumulating, the adding to and reconciling of my previous understandings with new, deeper understanding  of how things worked.
Many things I believe don’t require me to defend or explain.The best explanation I can muster extends from the recognition by the researchers on the primacy of self-centered meaning making.  My truth, what I know and what I believe begins with discovery.  The child who asks incessantly why seeks to make more sense of what they encounter.  The information they receive forms a foundation that like the sand on the beach slowly gets replaced with each new wave of information.  The emotional issues that cloud our thinking
 I’m sharing this article with the hope that you may have some additional insight into the topic or further my own knowledge surrounding  the significance of reconciling belief and understanding.

 

To win the game, we have to change the game


I can’t imagine the pressure on a CEOs when their organization misses the targets t120918053535-out24-shareholder-value-gallery-horizontalhey set for themselves.  How can they not take the failure personally?  More importantly, how do they turn the fail into opportunity?  Frequently, they publicly declare to the world renewed commitment to their strategy, reassure everyone that  management  knows what it’s doing and asks stakeholders to have a little faith.

A glorious future beats a glorious past.

This past week, Warren Buffet of Berkshire Hathaway released his annual shareholder letter and so did another hedge fund billionaire, Edward Lampert, the Chairman and now Chief executive of Sears Holdings comments.  2012 was tough on both companies.

Buffett reminded shareholders of his long-term management contribution:

“Over the last 48 years (that is, since present management took over), book value has grown from $19 to $114,214, a rate of 19.7% compounded annually.”

Lampert acknowledged his pride in the company associates for their resiliency in 2012 and then expressed the following:

“After reporting poor results for 2011, culminating in a very poor fourth quarter, we declared that we would take significant actions in 2012 to restore confidence in and financial stability to the company, while, at the same time, remaining focused on transforming Sears Holdings and creating long-term value for our shareholders.”

The vast differences between the diverse portfolio holdings of one  make comparisons to a single narrow industry portfolio holding company difficult, but it’s the philosophy of these two successful financiers that caught my attention.  Buffet’s reputation and success remains untarnished as he acknowledges sub par performance, meaning below the returns of the S&P 500.  Likewise, Lampert’s nod from his board to take the CEO reigns indicates their great faith in his judgment.

Both of these leaders inspire others to believe but how much do they expect shareholders to understand?  Rereading both of their letters, a wonderful clarity of mission and dedication to longstanding strategies can’t be missed.

Buffett draws readers attention to three elements that unlock the portfolio’s Intrinsic business value: one qualitative and two quantitative measures–per-share investments and per-share pre-tax earnings from businesses other than insurance and investment.

Lampert talks about creating long-term business value with an interesting description of EBITDA.  He shares an analysis of  value added by closing non-performing stores that reduced investment in non-performing stores but provided upside when the real estate sold.

An initial read shows just how similarly these two financial wizards think.  But who needs inspiration? How will sharing beliefs in these fundamental principles help hold the relative  position?

Which rubber and which road matter

Theory doesn’t always make for good practice and now matter what plans you make, until put into motion it’s impossible to know the results. The best predictors can’t incorporate every possible condition and inevitably some expectations go unrealized.

That’s where belief really counts. Funny, ever wonder why people believe what they believe?  It turns out that believing doesn’t require understanding; but it does color our interpretation.  Make believe, the imaginary is anything but real. Our beliefs and the way we interpret or make meaning of our reality is largely but not exclusively determined by the most recent experience and current context. This is the Halo effect at work which predisposes us to favor what we believe and what we first hear or see.  No experience? Ambiguity gets resolved unconsciously, consistent with context.

The more diverse  and numerous our experiences, the greater the number of differences or nuances in our understanding which results in unpredictable results.

Change the frame or limit the context of shareholder value to  financial expressions like EBITDA will reduce the variance in meaning. Formulas and standard accounting practices assure investors of an equivalence which makes EBITDA meaningful regardless of their depth of understanding, while also increasing the power of their belief in the financial measure to provide great meaning.

But accepting an idea doesn’t mean we believe it. Ever take a test that resulted in a wrong answer?  Perhaps, you asked why your answer was wrong, convinced you had it right.  Maybe your answer didn’t match the expected answer and so the first evaluation was incomplete.  Your answer didn’t make sense to the grader though it was still correct. An equilateral is both a square and a rectangle. Since different experiences lead to different beliefs both generate even greater diversity of understanding.

Big ambiguous ideas like shareholder value may be easy to believe but harder to understand and harder still to set clear, consistent actions into motion.Easy to measure share holder value at a point in time, but CEOs tasked to deliver it going forward need to provide greater clarity, less ambiguous and more specific associations and not risk letting recent experiences or context prove its meaning. What actions does the CEO wish to inspire, what associations does their message need to imply or offer guarantee?

Shares imply ownership and the value suggest material wealth.  For Berkshire Hathaway, a shareholder owns parts of lots of different companies with an assurance based on Buffets statements and reputation that their wealth will grow.  For Sears Holdings? Shareholders own a portion of physical tangible business components that are much harder to guarantee growth.

Align beliefs with understanding

If I yell Fire, everyone reacts almost immediately and reaches the same conclusion–flight.  There’s no visible delay between the declared message and the actions it produces.  The brain wastes no time finding the best match and cues our nervous system and muscles to respond.  No conscious awareness of decision or choice seems at play, move first,  think later. The instantaneous assessment of the environment places Fire in context, and fits a pattern in our memory, and a complete script presents itself making our next moves clear.  We are off following it without questioning its veracity, or applicability. We pay attention to what the script tells us not the ambient information surrounding us, unless of course that information boldly interferes with the expectation found in the script.

Simple question, which scenario came to mind for you?

1. I yell fire when the tinder in the hearth finally catches, and you left the fire pit at the campground to go find matches or more kindling nearby.

2. I’m cooking over a grill and yell Fire when the grease from the chicken has dripped off the foil, landing on the hot coals.

3. I yell fire when I smell something burning and see smoke in great quantities billow around the curtain on the stage in front of us.

I’m betting that your imagination took you to scenario three, the one that represents a scary, fearful situation. Especially since the idea was raised in a wider discussion of shareholder value or returns, a topic that triggers a similar set of automatic reactions depending on the experience or understanding of the listener.

The financial media pundits provide language that makes sense to their readers without appealing to the experience or context of employees or customers.  Our word choices even with the best of intentions don’t guarantee translation of similar expectations and in the case of shareholder value don’t make it easy to make a move without understanding more.

Leaders use of language creates expectations across a diverse set of audiences with vastly different understanding.  To get the people in your organization to produce the necessary EBITDA should the burden of understanding be drilled down to the lowest level of the organization?  Telling them about the challenge or demanding the performance may set the expectation, but leadership needs to do more.  They need to engage in the language and experiences that will trigger the scripts and make it possible for employees to believe their doings and their actions help. I have faith that Lampert is on the task.  It was his words that inspired this post.  His articulation of the convergence of new behaviors made possible by technology supported knowledge, a  complex transformation experience currently shared by many businesses.

Lampert isn’t the only one with an offensive strategy attempting to get out ahead of the curve.  JCPenney, Best Buy and now Barnes & Noble are all experiencing the loss of faith by shareholders that parallels the lost faith of their customers and employees.  As Buffet remarked in his letter, this is not a time for waiting.

“The risks of being out of the game are huge compared to the risks of being in it.”

Lampert’s plans?

“…we will use technology and training to encourage and embrace feedback to improve and make it much more transparent to everyone, thereby increasing accountability at the store and associate level.”

Both of these successful men know what can happen when you yell Fire.  Let’s just hope that the script that gets activated keeps their stakeholders on the same page.  Challenging but not impossible.