Live Mentoring Session #2: Driving value

Episode #90 Live Mentoring Session #2: Driving value

Marty Moore:

Hey there, and welcome to Episode #90 of the No Bullsh!t Leadership podcast. This week’s episode: Live Mentoring Session #2: Driving value. We’ve had some fantastic feedback on our first live mentoring session that was released a few weeks ago as Episode #87, so we’ve decided to continue this theme and bring more of these in-depth conversations to you. It’s purely coincidental that our first live mentoring session was with a woman named Emma, and this session is with a gentleman named Martin, completely unintentional and hopefully not too confusing for you. These sessions are intentionally raw and spontaneous, and in these pandemic times we’re recording the sessions over Zoom, so it’s not the studio quality production you’re used to. This episode is an excerpt I had from a mentoring session I had a few weeks ago with Martin Bishop.

Now Martin’s Chief Operating Officer for a transport company based in Australia, and he also sits on the advisory board of the Macquarie Business School’s online MBA programme as an industry advisor. CEO magazine has recently ranked the programme as the number one online MBA in Australia, and number six globally. For context, in this fast moving world to give you an idea of where we are-up to in pandemic terms, we held this conversation in Australia in mid April, so it was a few weeks into the lockdown. In this session, we explore how to ensure that you have the whole organisation from top to bottom focused on the highest value work. And then we explore how to reprioritize the work programme as the landscape shifts. So let’s get into it! Over to you, Martin.

Martin Bishop:

So you know, as part of our Leadership Beyond the Theory course, you discuss activity versus value, and simplicity and focus as the core methodologies for driving value out of the overall business. You described simplifying the workload and focusing only on the work generates overall value to the business. So, what have you found is the ideal methodology for prioritisation of the workload vs. doing the work you’re most familiar with that needs to be done. Now just to give you some background on that question. When you think about it, from a leader’s standpoint, they’re removed two, three layers away, so they don’t really have a full understanding of what the work is, their understanding of the work that is set in their mind of how important. And then conversely, if you’re asking the team that’s removed two, three layers below about ranking it, you may have some frontline leaders who are essentially removing some of that workload cause they don’t see the flow on effect. So how do you balance those two out for the team at the very bottom who’s the most familiar with the work?

Marty Moore:

Yeah, okay. That’s a really good question, Martin. And when you talk about the layers inside the organisation, that’s what makes it hard. So if you’ve got a very small organisation where you only have really someone at the top and a bunch of people working directly for them, it’s very easy to control the flow of work. And what you actually focus on at any point in time, even though there’s a lot of duplication in that, normally.

But, when you start thinking about how you actually get the value drivers through the organisation, it has to happen at every single level. So when you originally asked the question about, how do you know when you’ve got three layers between you and what’s going on, that’s the reason you’re paying those leaders in between you and the frontline workforce. So for example, you have to work, in my view, both top down and bottom up. Defining value is really difficult because value comes in all sorts of different forms, as you know. So, you can have value that comes from a financial return, from a given project or investment. But you also have value that comes from, let’s say creating a safer environment for your people to operate in.

So in a transport and logistics business, obviously you’re working with heavy machinery, you’re working with forklift trucks, all sorts of things in being able to get the job done. And how much value comes from making it safer, so do you experience less injuries for your people? You reduce the likelihood of a serious injury or fatality, that’s value as well. But because they’re two very different things, you can’t compare apples and apples. You’re comparing meat and fish, you’re comparing dog and horse, you’re not comparing the same thing, which is why it’s hard to separate out. So I always talk about getting real clarity at the highest level in the organisation about what drives the value for the organisation. And everything else layer-by-layer has to plug into that. Now, if you haven’t got real clarity at the top about what drives value, it’s really difficult for the people between the highest level of the organisation, whether it’s the top team CEO and direct report executives, whether it’s the board, it’s very, very hard to make that make sense for the leaders below.

So let me just give you an example. Very simple one. So let’s say profitability. In most businesses it would be a key driver. And with profitability it’s made up of two things: revenue and cost, just in its simplest form. And so there are going to be people all through the layers in the organisation that contribute to acquiring revenue, and there are also going to be a bunch of people in the organisation who add to the cost-base without directly influencing the revenue. So the most important thing is to make it clear to each of those individuals through their direct manager – their direct leader is the one that they see the world’s eyes through. When you look at that, they’re the ones that have to say for you today, here’s what you’re going to do to add value to the organisation. But they’ve got to describe it in very, very concrete terms. And at the top of the organisation, the things that you might choose to do strategically to drive greater revenue or reduce costs, maybe completely invisible at the frontline level, but the frontline supervisor who’s accountable for those people has to make it clear to them what they do. Does that make sense?

Martin Bishop:

It does make sense. How do you find it’s best to balance what the frontline leaders may see as a short-term value, versus the long-term strategic value in their mind, say other prioritisation rank?

Marty Moore:

Yeah. The short term, long term thing is really interesting because even at the most senior levels of organisations, short-termism is the order of the day. And even the most senior executives think about the next quarter or the next half-yearly reporting cycle of the next annual reporting cycle because that’s what they judged upon. And because the lifespan of executives has become much shorter over the last 10 to 15 years, that drives the thinking about, “I’ve gotta make my numbers, I’ve gotta make my numbers.” And so they’ll do not just things that focus specifically on short-term value, but also make a lot of trade-offs, sometimes very poor decisions, and sometimes that ride rough-shot over the organisation’s values to make their short term objectives.

So this is a malaise that I have no answers to, but that’s sort of part of what’s going on in the corporate world today. But let me come back to your question specifically, balancing that strategic angle with what has to be done day-to-day. So there’s a couple of views of this. At the highest level of the organisation, you’re looking at what’s going to create value in the three-to-five year timeframe roughly at least, you know, so you’re sort of looking out for that and you’ll be thinking of initiatives like, in the next three years, what other firms should we be looking to acquire to get the growth that we need in our market? And doing that sort of strategic analysis of what will create value for the firm overall.

But on a day to day basis, you’ve got to satisfy customer orders and requirements. And so at that very front level of the organisation, it’s almost immaterial what’s happening with that strategic end, because the day-to-day stuff takes precedence. And it has to, if you’ve got customers to serve. And so at different levels you’re focusing on different things. And this is one of the most important concepts of working at level. The reason they have the different layers in an organisation is not just because you want to pay people more money. And it’s not just because of controlling the workload in a certain span of control. It’s also that at every level the job is different. You’re focusing on different things, different times horizons, and different outcomes that you need. And so it’s that thinking about the level I’m at and what my objectives are, that’s going to give you the answer to how detailed should I be? How do I know what creates value at my level, and how can I get control of the workload so that I’m stripping out all of that non-value adding activity and only doing the stuff that truly adds value.

Martin Bishop:

So would you say it’s a good idea from the priority ranking standpoint to look at time horizon? So when you’re setting the priority ranking of a senior manager, it’s this and when you’re setting the priority ranking frontline leader, it’s along this line?

Marty Moore:

Yeah, absolutely. Cause they’ll focus on their time horizon, or they should. Now, most people focus on a time horizon actually much shorter than the layer they work at. So when I was CEO at CS Energy, obviously my job was to focus five years and beyond for the sustainability of the organisation. But they were weeks where I wasn’t focusing more than five hours out.

And you know, that happens in the run of play, right? And so you’re constantly shifting and trying to push your thinking to the longest range time horizon of your role. But very often you’re dragged back into the day-to-day. And that’s probably one of the most common issues with executives at all levels, that getting dragged back into detail, the alligators nipping at your heels each day.

Martin Bishop:

Fair enough. So you think it might be worthwhile to at least communicate your long-term strategies and the prioritisation, but then focusing on the frontline leaders, say this is your priorities, but I want you to understand, so they kind of brought into the why, why are they focusing on these prioritised tasks? Because it leads to this ultimate outcome.

Marty Moore:

Exactly. And don’t forget that the whole value focus equation has to be done at every level. So for example, let’s say I’m a frontline supervisor and I’ve got a mechanical maintenance team that works for me. My job is to make sure that they’re not doing stuff that wastes time. So for mine, okay, if I’m down at that level, working in the front line, I would say I really want to improve the tool time of my team. The tool time being of course, how much time do I actually spend on the tools doing productive work as opposed to planning sitting in meetings, you know, doing administrative work, having a smoko break, whatever. And so you might have tools –

Martin Bishop:

Looking for tools.

Marty Moore:

Looking for tools. Exactly. Exactly. Or waiting for safety permits to come through before you can start a job or whatever those bottlenecks are. And so that’s really just like in manufacturing sectors when you’re talking about that theory of constraints, your job might be about how do I remove all these constraints to productivity that my team experiences?

And as you said before, Martin, that’s what people at that level actually understand the best. They know where they’re wasting their time, they know where their holdups and bottlenecks are. You don’t. So the job of that team leader is to say, alright, let’s work out a way to make this more efficient. Our benchmarks tell us we should be getting, you know, 63% tool time in this particular type of industry. And at the moment we’re getting 31%. So we’ve got a big gap to bridge and this is not theoretical. These are our competitors. Benchmarks aren’t just a number that comes out of some research. This is what our competitors are doing. So if we want to compete, we’re going to need to improve our tool times. So that’s just one example of how you might really factor in that day-to-day, value over activity or that non-value adding activity that springs up.

Martin Bishop:

My thoughts were, look, you sit down with a team, you prioritise their workload, you set a strategy in place and all of a sudden something comes out of left field, completely unexpected, and then all of a sudden the organisation’s got to reprioritize. Maybe their focus was, you know, we have to focus on this key strategic account, and now that strategic account is completely off the table. But how do you put contingencies, plans in place and priorities in place for stuff that may come way out of left field?

Marty Moore:

Right? So in these, in these pandemic times, you’ve really got to go back to the highest order things. So what is it that’s going to get our company to survive as we come through this crisis? And there’s a hell of a lot of unknown there, of course, as we’re aware. So how long are we going to be in virtual lockdown in Australia? Well who knows? It’s at least another two months. Is it 12 months? Possibly. So really all you’re talking about doing is the scenario planning that says here’s what will happen if, and here’s how we need to respond to if, and so you can paint these different scenarios even if you just start with those two bookends, right? Worst case scenario, best case scenario.

Marty Moore:

Part of that has to be how are we making money? What’s important to our customers? Which of our customers are going to be impacted? What parts of the supply chain are most at risk? What parts of the supply chain have the opportunities, and so forth. So I think at a very global level, just getting a really good understanding of what those big levers are that you can pull as an organisation. And then as the decisions that you have zero control over, start to roll out and become more apparent, you can shift towards, okay, we’re seeing this emerging here, this is the action that we need to take based on what we think a future environment looks like, it looks like this scenario is more likely than that scenario.

So it’s getting that scenario planning done. And once you’ve got that, that should be a roadmap for pretty much everything else you do. So you should understand intimately what your cash flow is of course, in any size business, what your cash flow is like, what the constraints are on that, what you’re going to do with you people, what they should be focusing on. Because for the next little while you want to focus very much on the things that are going to make your business survive, in a time when most businesses are bleeding. And use that as the guide for what you do at the lower levels. So complete trenches of activity will just stop, just automatically because they are not the highest value thing that is going to get you through this.

But other things you might find opportunities where you say, alright, let’s dedicate some resource over here because it’s a no regrets move where you can actually get stuck into this, and, we can actually grow this part of the business right now because there’s an opportunity there. So I’d imagine there are both ends of the spectrum for your business at the moment?

Martin Bishop:

Yeah, absolutely. Now my original thinking was I was actually in the middle of priority ranking workload from some of my teams and you know, it was going through and saying, here’s the strategy we’re going to go with, here’s where I want you to focus your energy on, et cetera, et cetera. And then all of a sudden you’ve got this weaker environment come into play. A lot of that got thrown out the window, and we basically had to go back and reprioritize. So my question was more along the lines of without having that priority ranking fatigue or that, “Oh, this is a new pet project for the big boss that we’ve got to do”, and spend significant amount of effort and time on the team trying to figure out what their currently working on, what’s the highest priority and where’s the most return on investment for the organisation. It goes out the window. Now you’ve got to reprioritize.

Marty Moore:

Right. So it sounds like you’re way ahead of most, Martin, because at least you’ve got that ranked list in priority order of the things that create the most value. And that’s your Bible, that’s your living, breathing roadmap to what you’re doing at any point in time. The danger comes of course when you feel like it’s knee jerking and things are dropping in and out very, very quickly. So to control that I find it’s important just to have review points. So if you’ve got someone above you who’s – and I’m not saying that they are, of course you haven’t indicated that – but if you’ve got someone above you who’s knee jerking and throwing stuff at you, basically as every news bulletin comes out on the morning news, and they decide they want to do something different, that’s just not going to cut it.

So part of your job is going to be to push back to say, come on cool heads, calmness, let’s analyse this properly. But you’ve got the roadmap, you’ve got, here’s our ranked order: one, two, three, four, five, anything that pops up, you weigh that up against your existing roadmap. So it’s a case of, is this more important than the thing that we’ve currently got at number three, or is it more important than the thing we’ve currently got at number seven. Well, if it is, we’ve got to find a way to reprioritize and get that done. Maybe something else falls off the edge of the table. But that’s how we’ve got to do this process, based on what we already have. Now, unless you’re completely throwing out that ranked list, which would surprise me. If you’re throwing out the rank list altogether it probably means you didn’t do it the right way in the first place. Because if those are the things that truly drive value for your organisation, a lot of those should be timeless in terms of their ability to still drive value under different circumstances. Is that right?

Martin Bishop:

Yeah. Look, I guess from my current role where we were focusing before where I thought was an important thing to get this, this client represents 30% of our business. We need to put as much effort into this aspect of it. And now all of a sudden you have this new environment come into play, and this other area has grown significantly. So we’ve dropped off in this area. So now you’re saying, “Okay, stop focusing on this client. Now we need to focus on this.” Focus on making sure that we can provide the most value to our customers overall, and how can we get rid of some of the other stuff that isn’t really high in value because this new area has had a significant growth and we can’t deal with those other things right now.

Marty Moore:

Right. So you’re really only shifting resources to different customer loads and demands. Is that right?

Martin Bishop:

Well, that’s just one aspect. I mean, that was just one example. Say, for instance, in our business, I’d say month-on-month, we’ve seen a 20% increase in our business from March to April. The company has been doing a 30% year-on-year growth for the last eight years I believe. But from March to April, we’ve had significant growth. Now that’s not to say some customers in some areas that we focus – we’ve got stuff that does interstate, and we have stuff that’s local and we have stuff that we’re third party logistics for. Some areas have completely fallen off. Especially the local service we provide to restaurants, et cetera, et cetera. Or some others areas have just gone absolutely ballistic where we were, we focused on like the wholesale food and alcohol business.

So it has been a little bit of one customer to the other, but it’s also been entire areas of our business. Say Sydney for instance, the third party logistics focus was very focused on retail. Now that’s kind of fallen off map and we have to really kind of re-juggle things out. And that’s where I was working on focusing on some priority tasks, we need you to focus more on retail and now we’re out scrambling on this new development, it’s a completely different shift.

Marty Moore:

Totally. But it is a shift in trend. It’s not just a little, you know, we get a jump by you, we’re going to jump over there and then we get to jump into here. It’s very much a predictable trend based on what we know isolation lockdown is going to look like. So you’ve sort of got this emerging trend for the business that says, in the meantime here’s where I’m going to need to put my resources because that’s our growth areas, and that’s just shifting with any strategy that says we’re finding growth here. Let’s move towards that growth and capture it.

The only thing you have to bear in the back of your mind is, at some point in time the other businesses will come back, and you need to be ready to support those as well, because there’s going to be an opportunity there. So when you start thinking about your workforce planning, and whether certain people are stood down or transferred across to a different division, or have different priorities. And does this also affect the asset utilisation? So you have some assets that now will be more idle because of their asset class, than others that will sort of be ramping up?

Martin Bishop:

Yeah. I wouldn’t use the word idle in our business this minute, we’ve actually been hiring, but yeah it’s absolutely, it’s basically a completely different focus. So previously we’re focused on these assets, we’re going to do this, we quickly made some decisions on how to reallocate those assets. Did a lot of working closely with customers to make sure that we’re getting the best utilisation possible out of that. But some areas our business has been going up on an upward trajectory, other ones are going with a downwards trajectory and we’re just shifting resources around.

Marty Moore:

You’ve been able to get some asset reassignments so you haven’t had to park them up.

Martin Bishop:

100%.

Marty Moore:

Okay that’s great. As long as you can re-allocate them to other tasks, that’s great. So that’s good. Right?

Martin Bishop:

Yeah it is. It is actually good. As a general rule, most of those assets are fully utilised.

Marty Moore:

Alright, so that brings us to the end of Episode #90. Please drop us a line and let us know if you’re enjoying the change up in format and if you’d like to hear some more of my live mentoring sessions. Thanks again for joining us and remember at Your CEO Mentor, our purpose is to improve the quality of leaders globally, so please take a few minutes to rate and review the podcast or share it with your network. I look forward to next week’s episode, “Leading people older than you.” Until then, I know you’ll take every opportunity you can to be a No Bullsh!t Leader.