INTRODUCTION
The Report That No One Read
Claire, an internal consultant at a Silicon Valley high tech company, was recently brought in by the CEO to lead an organizational change effort focused on driving down the escalating number of customer complaints. To tackle this problem, she put together several task forces, each one devoted to a particular part of the problem.
This project was right in Claire’s wheelhouse: she had more than ten years of experience working on this kind of customer satisfaction projects as an external consultant for one of the major management consulting firms. Her frustration in her prior job had been that she was an external consultant. She studied the problem and made recommendations to clients. But what they did with her work was up to them. Now, however, she had the CEO’s blessing and could actually make the change happen in this high powered, high visibility customer-centric project.
Claire, however, was on a tight timetable and under pressure from the CEO to move quickly. Customer complaints often lead to losing customer confidence, which leads to lost sales and market share.
On one of these teams was an engineer named Claude, and Claire stopped by his cubicle to pick him up on their way to a conference room for a meeting with the other four members of that task force. Claude’s task force aimed to streamline customer interfaces in order to improve customer satisfaction and reduce costs. Claude’s name had been suggested to Claire because his department was played a central role in the customer interface problem. So, Claire had invited Claude to join that task force, and he agreed. Claire made it clear to everyone on this project, including Claude’s task force, to give this project a high priority.
However, on that particular day, Claude looked up from his desk and said, “Uh, sorry, I’m not going to be able to make it to the meeting. I’m really swamped and got to get this report out this afternoon.” He then told Claire that this report was tied to an important goal that his boss emphasized in his last performance evaluation---getting his quarterly performance goals status reports to headquarters done on time. He wanted to please his boss and show that he took the expectations of his boss seriously. He also wanted to be in shape for promotion. So, he bailed on the task force, buckled down, and did it, checking that item off his to-do list and tucking it away as improvement evidence for his next performance review.
I’m sure he felt good about his choice of covering his bases with his boss.
What neither Claude nor his boss understood, but Claire did, was that no one at headquarters looked at those status reports any longer. They simply joined many other useless work products in the company’s cloud.
Claude, of course, had been caught in a difficult dilemma: work on Claire’s project or do what his immediate boss wanted. Although Claude could feel good about achieving his boss’s work goal for him and protecting his job, it added no value to the company at all. Although at his local level, Claude may have chosen well, from the company’s big picture perspective, Claude chose poorly.
Claude and his boss need a way out of that “lose-by-winning” dilemma. Claude won by keeping his boss happy; his boss won because he thought he was keeping some HQ staff people happy. In the end, though, they and the company really lost.
There are millions like Claude who make choices about what to work on every day. They work hard day-in and day-out, but much of that hard work is wasted because it contributes little to company success. Everyone is busy (and getting busier). But “busy is easy,” and lots of furious activity doesn’t mean real progress materializes from it.
In reaction to this lack of progress, companies and their employees re-double their efforts, work longer hours, and spend less time with family and friends—only to stay in the same place or even lose ground. Neither the firms nor their employees are moving the needle much. Or, they don’t see the point to it all and just start slacking off. This is because, based on reports from employees, about 1/3 of their work has no effect on this critical path and, consequently, the company’s performance.
What are these hard-working people missing? A few common things—they lack:
a common understanding of what the organization needs to do to win in the marketplace;
a common framework to determine what action steps move the needle; and
a common language to communicate priorities and progress.
I want to change all that. This book offers a framework for understanding the employee’s and the company’s purpose, one that uncovers a fundamental missing ingredient that so often keeps companies from achieving their success targets and keeps people from attaining their desired career trajectories.
My earlier research on what separates star from average performers provided part of the answer. It isn’t about who the stars are or what personalities, education, or other traits they bring to the workplace. Instead, it is about how they work. Stars do their jobs in fundamentally different ways than their average counterparts.
After publishing How to Be A Star at Work, I consulted for many years on how to create star performers and build high-performing organizations with companies all over the world, from Fortune 500 global behemoths with hundreds of thousands of workers to Silicon Valley start-ups to family-owned small Mom-and-Pop shops.
What I have come to understand through my consulting and research is that I only got the answer to on-going low performance half-right. It is not just how the stars do their jobs that separates them from their average peers. What they do is equally important.
What we’ve learned in the following years is that the stars also distinguish themselves by what they work on. They identify what makes a difference for the company’s economic success, and then they apply their star work strategies to those tasks. Very few employees know how businesses work, get customers, or make a profit. They don’t get training on it either. Instead, they are left to pick it up by osmosis. So, they do their jobs, i.e. what their bosses tell them to do, believing that their bosses know what is right. What they don’t know is that some bosses often don’t have much more of a clue than they do.
The central problem in most companies, then, is that the employees lack a guidestar or compass for what they should be doing and what they should do first. To put it simply, there are too many people doing too much of the not-quite-right things. They (or their bosses) come to work every day with long to-do lists which they work their way through by the end of the day. They use their energy treading water while stars use theirs to win the race.
The above problem is compounded since most people work in silos. Production people only concern themselves with making the product; sales people only concentrate on getting people to buy the stuff; and accountants just worry about the financial reports. Employees often know neither what is going on in the other silos nor how the silos connect. Meanwhile, they believe that their silo and work is what is most important, often discounting the contributions of the other silos. Or, worse, they view the other silos as competition and withhold information from and cooperation with them. In many companies, it is a zero sum game where budgets and staff size are won or lost to the other silos.
Meanwhile, few people see the bigger picture as to how the silos form a whole business to actually make money. The problem is that most workers just do jobs and never lift their heads up.
Without a critical path mentality, too much individual work and organizational activity are not focused on the right thing---improving how the company connects to its customers. Surprising but true, too many employees do not even know who their most important customers are nor do they know the company’s critical path.
This book remedies this situation by laying out what the critical path is and how to get on it.
The critical path is everything that connects a company to its customers. The best companies obsessively focus on making that path shorter, faster, smarter, better, more effective, and more profitable so that customers make the company their supplier of choice.
This is what the stars do at work that other employees do not.
My latest work has uncovered the revelation that great companies and great employees dedicate themselves to the critical path between their customers and their own company as the supplier. It is the guts of the supplier’s business. Everything else, as it is said, is window dressing. Every action taken in a company must be in reference to its impact on this path.
Too many people internalized the wrong lesson from their economics class. They look at the relationship between suppliers and customers from the wrong perspective. It is not about supply and demand; rather, view it that demand leads to supply. Successful companies do not start with their product and then go looking for customers. Instead, they discover their customers’ problems, needs, or wants, and then create a product or service which the customer is happy to purchase. It is not about you or what you make and sell. The customer, what you can do for that customer, and how you create a sustainable relationship with that customer—these are the starting point of any successful endeavor.
Skeptics to demand-supply thinking will say: “Hey, Wait a minute. What about Steve Jobs. Did he care what customers wanted? Didn’t he just invent things that he wanted and then people just flocked to them? Didn’t he create the market for them?” Or: “Didn’t Henry Ford say, ‘If I had asked people what they wanted, they would have said a faster horse,’ right?”
The short answer is “No” to both myths about Jobs and Ford (though we’ll get into a longer explanation later in this book). Looking over his record, Jobs didn’t invent new products. Personal computers existed before the Apple II. MP3 players were available for four years before the iPod. The first modern cellphones were invented in 1973. Multi-function cellphones came to market 15 years before the iPhone. Jobs’ genius was re-designing those existing products with a user-friendly touch-and-feel and loaded them up with other cool features to better meet a proven market demand. Then he hyped them better than PT Barnum to increase that demand.
Similarly, Henry Ford did not invent either the car (the Model T came out over 30 years after the first car) or the assembly line for cars. (Also, no evidence exist that he ever said the quote mentioned above.) He did vastly improve the assembly line, thus driving down the cost to make it affordable to a larger market. Unfortunately, he stopped paying attention to what customers wanted. He refused to sell cars on a finance plan which would open a significantly larger market up for cars, and he did actually say that customers could have any color they wanted as long as it was black. As a result, his market share went from 66% in 1921 to 15% in 1927, as General Motors moved in and met customer demand with a better critical path. What customers wanted, it turns out, wasn’t faster horses, but better cars with acceptable financing options. Ford had to shut down his factory and re-tool it to try to catch up to General Motors and meet real customer demand. His supply-demand thinking put the company in second place, and there it stayed for almost 100 years and counting.
We mythologize that these genius inventors build supply that creates demand. The economics lesson derived from critical path thinking is that customer demand makes geniuses out of people who can grasp that demand and see how to supply products that meet it.
Finding the critical path is like having cataracts removed. Instead of the fuzzy and distorted vision, you now see clearly. When everyone within an organization gets on the critical path, the company is fully aligned for success.
As we will see throughout this book, what separates the best companies and workers from mediocre ones is their fierce determination to use the critical path to their advantage. FedEx came to dominate the express delivery business by their critical path battle cry promise to their customers: “Absolutely, positively overnight”. That slogan told every employee how to prioritize their work, i.e. do what it takes to get the customers’ packages to their destination by the next day. Consequently, FedEx wrested control of the airplane delivery business from entrenched competitors, like DHL, Air Express, and the U.S. Postal Service. Of all the organizing principles that can guide a business, the critical path is the most important. Yet very few companies understand it, let alone use it.
It all sounds simple enough—and obvious, too—like what a doctor tells an overweight patient: eat better and exercise more. But companies and employees, like these patients, want to hear a different answer.
Many large companies ask me how to make their companies more like successful Silicon Valley start-ups that disrupt industries by innovating new products/services to which raving customers flock. How do they transform their own staid businesses to weather these competitive storms so that they don’t end up a casualty? Should they allow more casual dress, bring in more ping pong tables, allow working remotely, and ditch their timecard systems? Should they hire more millennials to lead them into the future? Do they need a bigger social media presence?
These established companies are missing the point.
Successful start-ups know the big secret: they are all about the critical path because they live or die by it. Entrepreneurs have a thousand things they can do to build their business—all seemingly urgent. But figuring out key puzzles of their company’s critical path (Who are your customers? How do you produce a product or service that leads to satisfied repeat customers? How do you price it to become cash flow positive?) is essential.
For the start-up to make it before they run out of funding, the entrepreneur prioritizes every action of every day by viewing it in light of the critical path. Since they do not have a lot of time to hold their employees’ hands, they look for workers who identify with the critical path. Employees who are not contributing a lot to the critical path get replaced by employees who do. Unwavering focus on the critical path does not guarantee a billion-dollar IPO, but failure to stay on the critical path hastens an early demise.
To truly transform your company and your career—whether it’s an established company or an aspiring start-up, whether you’re a veteran of your industry or in your first “real” job, begin by locking onto your company’s critical path and your workers’ attention to it.
When you hear the term “disruption” or “disruptor,” think critical path. Every successful company that up-ends an industry does so by altering the critical path. Walmart transformed the supply chain, and Uber transformed how customers interact with the drivers who shuttle them from place to place. Even though other airlines have copied Southwest Airlines’ low-cost and hub-n-spoke strategies, they have not disrupted the industry nor Southwest’s position. Southwest continues to prosper with its customers because the company’s employees live and breathe by the critical path. It does things that its customers care about and that its competitors don’t do as well: the fastest gate turnarounds in the industry, the best at boarding quickly and with perceived fairness, the no-penalty ticket change policy, a free baggage policy, the least likely to cancel flights, no customer perceived nickel-and-diming, and the most perceived fun.
When companies adopt a critical path mindset, it changes how they view and run their businesses. The critical path becomes the guidestar that influences all decisions and subsequent actions. It provides that common framework and language necessary for everyone in the organization to achieve a common purpose.
The “Cascading” Audience
I do a lot of Executive Programs with managers from global companies, like Hewlett Packard, Bosch, FedEx, PNC Bank, Lockheed Martin, Tata, and Sony. When I share my ideas about the critical path with these companies, the following recurring pattern occurs.
A Fortune 200 energy company invited me to speak to 25 high potential upper level managers being groomed for the C-Suite. We met in a corporate classroom – them at tables; me at the front writing on the whiteboard and occasionally showing the slides. It was a roll-up the sleeves day together, not a show-me-what-you-got spectator sport.
As I laid out the principles of the critical path and applied them to their company, they immediately got it. They identified several long standing practices that were at odds with the critical path: accountants and HR people demanding that they fill out data for reports that had no bearing on their departments; reports that no one read; meetings where participants barely paid attention; meaningless, but very time consuming, performance evaluations; and people promoted for seniority rather than performance. They were excited to apply the critical path to their departments and to their own jobs.
But, when I told them that they should stop doing any work that doesn’t contribute to the critical path, they saw a major stumbling block. They wanted to know if their bosses were OK with what I was teaching them. As one said. “If I do what you’re telling us, my boss will be on my ass so fast. I’m not about to do some of this till my boss is on board.” In other words, their bosses needed to hear me before they could feel comfortable putting my ideas into practice. Like Claude in the opening example, it was risky to challenge the host of non-productive, non-consequential work and easier to go with the flow than to push for the critical path. I told them that if they could get me an audience with those bosses, I would present the critical path to them and get their reactions.
The next week, I was invited to address their bosses who bought into the program right away. But, they expressed the same concern as their subordinates. They said that the C-Suite executives needed to hear and buy into the critical path. Once again, I told them that if they could get me an audience with the CEO and his team, I’d make the case for the critical path to them. When I spoke to the CEO and top executives, they told me that everyone in the company---from front line workers to the Board of Directors needed to hear this message. Thus began a three year consulting project to transform the company and its culture around the critical path.
Employees inundate me with examples of the ways that their organizations get off or undermine the critical path. For example, think of the amount of work you do each day that keeps you from doing your most important work.
Is it reading and responding to emails, writing reports, attending unnecessary meetings, or doing make-work? Perhaps your bosses waste your time and get in the way of you and the company performing at its highest level. For many, bureaucracy is a major barrier to high performance and innovation. Do the silos in your company know what the other silos are doing and how their work is connected? Many of the employees I hear from say that playing politics is more important than performance, while others indicate that the company is far too tolerant of low performers.
The critical path not only affects a company’s success, it affects your career success.
Do you know your company’s critical path? Do you feel underutilized? Or perhaps you have been overlooked for bonuses and promotions. How much more productive could you be if you didn’t have to deal with all the unimportant stuff that gets in your way? How much could you help the company if given important critical path projects where you can demonstrate your competencies?
How to Approach This Book
This manifesto aims to create the high-level urgency and help needed for you and your company to get on the critical path. We want you and your organization to succeed—and indeed, along the critical path, these outcomes are deeply intertwined.
This book can help make that happen. However, this book is not trying to give you all the answers. Instead, with a critical path mindset, you will be able to find the correct course of action as you encounter your world of work.
This manifesto has six sections.
The Critical Path
The Critical Path Starts with Your Customers
How Companies Get off the Critical Path
Designing Organizations around the Critical Path
The Critical Path Mindset
Launching Yourself on the Critical Path
The first two sections give you a bird’s eye view of how the CEO and the management team envision the critical path. They are like mentoring sessions from a trusted senior executive teaching you overarching critical path concepts and how the critical path operates. Then, the next sections come down to ground level, showing you how companies get off the critical path and undermine their own chances for great success. You will also learn how to design and use the organizational levers to support the critical path, such as performance reviews and reward systems. Finally, the last two sections give you the personal tools to align yourself onto that path in a meaningful way. In other words, the book provides the interplay needed for a complete understanding of how a business works and what you can do to make it work better for the organization and your own career.
Each section consists of a series of critical path “lessons.” They build on each other, so reading them in order is a good idea. At the end of each lesson, I have included Critical Path Action Items: questions or exercises meant to prompt you to think about the information you have just read. In some cases, these action items are designed to do just that -- spur action. In all cases, they are meant to stimulate thought and reflection.
Once you adopt the critical path framework, it will give you a guide star for what you do in your job and why you do it. It will prioritize your yearly goals and daily activities. If done correctly, it will make you stand out as a value-adding producer who understands the business and makes the company successful.
My goals are twofold:
First: to make you and your company driven by the company’s critical path. This creates a growing group of highly satisfied customers who are willing to part with their own hard-earned cash, which then pays all of the company’s employees a handsome salary and creates a handsome profit for the company’s owners.
Second: to make you, the employee, so valuable that your employer does whatever it takes to keep you and your high-performing contributions. The company would dread losing you because it would leave such a huge hole in the organization’s ability to remain competitive.