How Do You Make Business Decisions?

This BRIEF blog post at the Harvard Business Review website demonstrates that our business decisions now need to take into account more than just the maximization of profits and shareholder value. What factors relative to the greater good ought to be factored into the business choices you make? Can you make a decision that not only benefits your business economically, but also helps others? This might be the new business paradigm. http://bit.ly/zuqrvA

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To Make Change We Must Do It Ourselves Using Constructive Capitalism

My column from today’s Nashua Telegraph……

This isn’t going to be a depressing column, I swear. I must say though, that prior to last week, I had accumulated a substantial amount of angst in my pants. A lot of this angst stemmed from a gut feeling that most of us are, for lack of a better word, stuck. Our government is stuck, ravaged by partisanship. Our economy is stuck, awash in government debt. Throw in a dash of creeping realization that it really doesn’t matter who we elect as president, and you have a snapshot of my psyche in recent days.

Then last week, during my travels in the Twitterverse, I stumbled on Umair Haque. Haque, a Harvard business review blogger and one of those economist/thinkers, had posted a Tweet that went something like this: “If you’re waiting for the government or Wall Street to change the rules, you’re wasting your time. They’ve already changed them, and they like them the way they are.” Forgive me for paraphrasing, but the ephemeral nature of Twitter leaves me no choice. Read More »

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At this company everybody’s a boss, and nobody’s a boss!

My column from the Nashua Telegraph, January 18, 2012 – At Morning Star, Everybody’s a Boss, and Nobody’s a Boss

I have never had the pleasure of working in a large organization with lots of managers. Now that I think of it, I have really never had a boss. But in my law practice I work with lots of companies and lots of company employees.  I hear their stories, and I sometimes wonder whether managers are good for business. Are they really necessary, or are they just the building blocks of bureaucracy?

When I look at companies that have a lot of managers, I usually see hierarchical organizations with a “top-down” management system. The power is vested in managers higher up the food chain. There may be talk of empowering the worker bees, but for the most part I don’t buy it. The power stays at the top. In companies with top-down management, key decisions tend to be made by one overly empowered individual who is often isolated from the workers. That sort of decision-making can lead to decisions that are impractical. What looks good from the top of the pyramid can look silly to those at the bottom.

So all of this begs an interesting question:  Could a company exist without managers? Would it be possible for a company to maintain the high level of coordination that success demands without the structure provided by managers? Believe it or not, there is at least one company out there that operates in that fashion, and it is thriving.

Gary Hamel is a professor at Harvard Business School. In the December issue of the Harvard Business Review, Hamel authored an article entitled, “First, Let’s Fire All the Managers.” In it he focuses on the Morning Star Company, a $700 million dollar tomato processing company located in California.  At the Morning Star Company, Hamel writes, all 400 employees “are ridiculously empowered yet work together like members of a carefully choreographed dance team.”  The company has no managers, and no bosses. In fact, employees are not even employees. At Morning Star, they are “colleagues.”

Unlike other companies, Morning Star’s culture is completely rooted in self-management. They have taken the bureaucratic structure of most companies, crushed it, and thrown it out the window. The key to operations at Morning Star is the personal mission statement. Every year, each colleague must write a personal mission statement that sets forth how he or she will contribute to the company’s overall objective of “producing tomato products and services which consistently achieve the quality and service expectations of our customers.”  The colleague is then responsible for accomplishing the mission. Workers at Morning Star are driven by their mission statements, not by their bosses.

In addition, each year every colleague negotiates a Colleague Letter of Understanding with other colleagues who will be most impacted by the objectives set forth in their personal mission statement. These CLOU’s, as they are called, are what govern the relationships between Morning Star’s employees. They provide Morning Star with structure. But by design, the CLOU’s change from year to year, reflecting the changing priorities and issues facing the company.  Chris Rufer, the founder and president of the company, analogizes the company’s structure, such as it is, as being similar to clouds, of all things. “Clouds form and go away because atmospheric conditions, temperatures, and humidity cause molecules of water to condense or vaporize. Organizations should be the same; structures need to appear and disappear based on the forces that are acting on the organization,” Rufer says.

That analogy is not only spot on, but evidences what are perhaps the greatest advantages provided by the Morning Star model: extreme flexibility and nimbleness.  At Morning Star, departments literally come and go, like clouds. This is a much needed and radical departure from what goes on at most companies. Who among us has not experienced organizations in both the for-profit and non-profit worlds that are hamstrung by standing committees and bureaucracies that are inflexible?  Standing committees and bureaucracies often have one reason for existing, and that reason is because they always have existed. The self-management structure at Morning Star would never tolerate such nonsense.

Even compensation at Morning Star is peer-based. Every year colleagues prepare written self-assessments of their performance based on their personal mission statement. Several compensation committees are then elected by colleagues from across the entire company. Those groups then evaluate the self-assessments and set compensation levels that endeavor to align pay with the value being added to the company by each colleague.

There is no doubt that for Morning Star, the self-management structure is working. But it is not without challenges and drawbacks. Hamel points out in his article that employees who have worked in traditional companies have a tough time adjusting to the model. It takes a long time for new employees to fit in. Because there is no corporate ladder to climb, employees can find it difficult to evaluate their performance relative to their peers. At Morning Star, more responsibility is the equivalent of a bigger title. That unusual metric makes it tough for those employees who might want to leave the company for another opportunity.

Growth is another concern. While the company has grown much faster than the industry average, for obvious reasons it does not want to abandon its culture. This makes growth through acquisitions a difficult path to follow. But the advantages of the Morning Star structure still seem to outweigh the disadvantages, particularly for companies in the small to medium-size category.

Hamel concludes that colleagues at Morning Star benefit from a simple recipe for initiative. Their roles are defined broadly, they have the authority to act, and they get lots of recognition when they help others. They drive the bus. Colleagues also develop better and broader skill sets. Because there are no senior managers, the colleagues all become experts. Because there are no bosses, there are no fall guys. Accountability tends not to be an issue. The organization is extraordinarily flexible. Because key decisions are not escalated to company bosses, they get made in context, and they get made after debate and input from a number of colleagues. That leads to better outcomes. Finally, the colleagues simply get along better than employees at most companies. Because colleagues are not competing for promotions, there is much less backstabbing. All of their energy is directed toward doing their best and helping their colleagues.

Hamel’s article is well worth the money you will have to pay to HBR to obtain a copy. It even contains tips for implementing the Morning Star culture in your organization. The good news is that to do so, you don’t need to fire all the managers. All you need to do is make sure that every employee understands that from now on everyone will be a manager. What could be simpler than that?

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Collaborative Law Approach Applies in Business Cases Too

From the Nashua Telegraph, December 21, 2012…..

I was fortunate to have great mentors in the early years of my legal career. One of them was Sherm Horton, a legendary Nashua lawyer who ultimately served as a New Hampshire Supreme Court Justice. Sherm was a brilliant business lawyer. He knew corporate and commercial law inside and out. He also understood how to handle people, and how to help them solve problems.

Sherm generally avoided doing divorce work. Nonetheless, when one of his friends found himself in the throes of a divorce, he would often call Sherm for guidance. On many occasions I sat in a conference room with Sherm and heard him offer his friends the same advice: “Ask her what she wants, and see if you can find a way to give it to her.” At first the recipient of the advice might resist. Eventually, and sometimes after spending a lot of time and money in court, they came around to Sherm’s way of thinking.

To me, as a young lawyer, that advice sounded awfully simplistic. Just give her what she wants? It seemed absurd. But as always seemed to be the case with Sherm, there was a lot more meaning in that statement than met the eye. I eventually figured out what he was really telling his friends in that simple statement. He was telling them that regardless of how hostile the situation had become, they would always have a relationship with their former spouses. This was especially true if, as in most cases, the couple had children. He was telling them to handle the divorce in a manner that would do the least damage to the relationship. He was telling them to get divorced in a way that minimized the damage to their children. He was telling them that divorce ought not to be a war between enemies that is fought to the death. Divorce, in Sherm’s view, was a problem that needed solving. He favored a more collaborative approach to the issue.

Thankfully, that sort of approach is becoming more prevalent in divorce cases today. It is embodied in the Collaborative Practice movement.  New Hampshire citizens are now fortunate to have access to the Collaborative Law Alliance, a group of New Hampshire lawyers who have been trained in Collaborative Practice, and who use Collaborative Practice as a tool to help clients solve legal problems without resorting to litigation.

How does Collaborative Practice work? It starts with an agreement between the parties that they will not go to court to resolve their dispute. That agreement is signed not only by the parties, but by their lawyers and other professionals that may be involved in the collaborative process. Together they take a “no court” pledge, of sorts. They commit to the process and back that commitment up by agreeing that should the process fail to produce an agreement, none of them will represent their clients if litigation ensues. This produces a powerful incentive for all parties to work together to negotiate an agreement. This incentive is completely different from the incentives typically present in litigation, where victory, sometimes at all costs, tends to drive the proceedings.

Another advantage of using Collaborative Practice to resolve a dispute is that the parties control the process. They, together with their lawyers and other advisors, can set the schedules and make the rules. In many cases handled in this fashion there is no need for even hearings. In divorce cases, for example, the parties can fashion an agreement that gets filed with the court and the divorce can be granted by the Judge without any need to even meet with the parties. That can save time and expense, and spares the parties the stress that accompanies court appearances.

Collaborative Practice has value beyond just divorce cases as well. It is being used with success in probate cases, in employment cases and in landlord tenant matters. It should begin to emerge in the business world as well. It can be a valuable dispute resolution tool in any case where there are relationships between the parties that ought to survive the dispute at hand.

Most business cases fall into this category. Companies most often have disputes with employees, suppliers, vendors and customers. In each of these categories, the parties might be best served by a process that gives the parties the best chance of salvaging the relationship at the end of the case. Mediation is acknowledged to be an effective dispute resolution process in this regard. Resolving a dispute using Collaborative Practice might work even better. Both are voluntary processes, but mediation lacks the leverage provided by the agreement among the parties and the “no court” pledge. In mediation there is always the risk that one party is not truly committed to the process or making an agreement to resolve the dispute.

To learn more about how you might use Collaborative Practice to resolve a dispute, you can begin on the Internet. There is wealth of information to be found at www.collaborativepractice.com. For information on the New Hampshire Collaborative Law Alliance and to view of a list of New Hampshire attorneys who are trained and qualified in Collaborative Practice see their website at www.collaborativelawnh.org. We should be seeing a lot more of it in the future.

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Early Lessons from Penn State Scandal

My column from The Nashua Telegraph, November 16, 2011……

As the world knows by now, Penn State University is embroiled in a horrible scandal. The complete story is just beginning to emerge, and things are understandably going to get worse as the investigations of misconduct proceed. But the story has already given rise to a number of lessons. Here are just a few.

Lesson One: We all need to be vigilant in looking out for serial child molesters. Read More »

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No Good Foundation for Closing Superior Court in Nashua

My column from the Opinions section of the Nashua Telegraph on Sunday, October 30, 2011………

As most of you know, the New Hampshire Legislature will soon vote on a bill that would permanently close the superior court for the southern district of Hillsborough County.

Should the bill pass, it would mean the end of jury trials, criminal trials and virtually all business and commercial cases in Nashua. Should the bill pass, those cases forevermore would be adjudicated in superior court in Manchester.

This bill represents a major governmental policy decision that would have a significant long-term impact on Greater Nashua. In light of that fact, common sense says the decision ought to be made deliberately, thoughtfully and with input from the communities that would be impacted. Read More »

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Great Businesses Still Build One Customer at a Time

Are you familiar with Groupon? If you are a savvy Web shopper, the answer to that question is probably “yes”. Groupon was founded in late 2008 in Chicago, and for a couple of years grew like mad and was a red hot Internet company.  At the end of 2010, Google offered to buy Groupon for $6 billion. Amazingly, Groupon turned them down.

Groupon is essentially an online coupon company. It works something like this. Let’s say I own a beauty salon. I could make a deal with Groupon where they advertise to their email subscribers a one day sale at my salon where Groupon coupon holders can get a massage for half price. I then pay a portion of the revenue generated by the coupon back to Groupon. Those repayment rates vary, but can be as much as fifty percent of the generated revenue. Read More »

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Deficit reduction, systemic reforms needed to fix business

My column from the Nashua Telegraph, September 21, 2011

How’s business?

It seems like I have that conversation about 20 times a day. My clients ask me. I ask them. My friends ask me. I ask them. My family asks me. I ask them, too. The answer is pretty much the same for everyone: business is up and down.

Business really isn’t awful, but it isn’t great either. It isn’t steady, and it isn’t predictable. That makes it hard to plan, and without the ability to plan, it’s hard for businesses to grow and hire. This is not good news for the unemployed. That’s just where we are.

I don’t think one needs to be a financial guru to see how we got into this jam either. Real wages for the American middle class adjusted for inflation have decreased since 2000. But during that time, the real estate market boomed. The housing market provided homeowners with easy access to credit, and the American consumer did what it does best. It spent. But since the crash of the housing market, the American consumer has made a behavioral adjustment. Consumers are paying cash, or not purchasing at all. It’s no wonder the recovery stinks. Read More »

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Scaredy Cats

Really now, should we be surprised by the histrionics in Washington D.C.? It seems to me this stalemate has been a long time in the making. Political partisanship has been on the upswing since George W. Bush was first elected. Obama has made it worse. When I hover above Congress, I look down and see a huge gap between politicians on the left and those on the right. The middle is empty. Ironically, that unrepresented middle section is where most of us reside. That’s what makes this so frustrating.

The problem really isn’t the system. The system worked just fine. From a legislative standpoint, this has proceeded a lot like what the framer’s had in mind when they made separation of powers an essential component of our system of government. It’s all about checks and balances. Neither party has the votes to do what they would like to do. The President reaps what he’s sewn. He has not a shred of bipartisan credibility that might permit him to intervene effectively. Read More »

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Ethical Blind Spots

My column from the Nashua Telegraph today, July 29, 2011…..

Are we as ethical as we think we are?

An important new book by Tufts University professor and Harvard Program on Negotiation mainstay Max H. Bazerman and Notre Dame professor Ann E. Tenbrunsel says probably not. In “Blind Spots – Why We Fail to Do What’s Right and What to Do About It,” Bazerman and Tenbrunsel make a convincing case that a significant gap exists between how ethical we think we are and how ethical we actually are. They label these gaps “ethical blind spots,” and for better or worse, we all have a bunch of them. Read More »

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