The Rule of Three

During my consulting days, one of my partners would begin every presentation to our clients–mostly managers and senior executives–by suggesting three areas for discussion. Good advising involves listening, as well as proselytizing. But if too many issues are on the table, the purpose of a meeting can get lost.

When making his points, my partner would always hold up three fingers. He had a full ten, but he knew, even in good times, executives and management teams need to focus on what’s important. I call it “the rule of three.”

I've always struggled with management books that create long lists of “to do’s” for managers; I would rather follow the rule of three. At a time when turbulence is caused both by a health pandemic and recession-like economics, managers don’t have time for intellectual pursuits and long lists.

Corporate learning leaders have to elevate their game and walk in the shoes of those managers, helping shape an understanding of what’s important and develop programs that support areas of focus–no more than three. Here are my choices for focus during these turbulent times.

Maintain Strength in Those Parts of the Organization That are Critical to Operational Excellence

Since my early writing on work process change, I live in fear of what one senior executive once told me: “Here at our company, we really don’t know how to do work process change, so we just downsize parts of our organization and leave it to the people who are left to figure out how to do their work differently.” It was his company’s version of change management.

Regretfully, I've seen this practice in many companies, sometimes driven by the desire to improve profits or by tough economic times, like the one we're now in. The action is often simply, but painfully, executed; e.g., a 10% reduction in staff across all operations. As a matter of survival, that’s what is going on now in almost every enterprise I know. And often the reduction in force (RIF) is greater than 10%.

My suggestion is a simple one. Just take a day before you act and ask: What parts of our operations are most important to our customers and maintaining operational excellence? And how do we preserve those? This requires understanding the uniqueness of your business and what your customers really value.

This won’t reduce the pain of a reduction in staff, but it will more likely assure that the people who are left can succeed in maintaining the strengths of the business. In a strange way, turbulent times may help reveal what’s operationally important–and make the heretofore overused phrase, “change or die” real. But across the board, staff reductions may just make your enterprise weaker.

Find Resources and Capacity to Support Change

It may seem counterintuitive as you're downsizing or eliminating parts of your organization, but try to protect some resources and capacity to support future changes. In good times, we've been calling this “agility.” But now, capacity to change may be required both to survive and take advantage of opportunity.

There may be no better example of doing this than what’s been happening in retailing during this turbulence. The Amazons and Walmarts were well prepared to deal with the masses of consumers who now shop from home. These companies had already built the digital platforms and logistics to operate in the midst of a pandemic.

But it was interesting to watch Walmart’s ability to go further and provide curbside pickups. A digital platform was quickly launched to allow consumers to schedule a pickup date and time, select items from a menu of consumer products, pay with a credit card and specify the vehicle that would journey to the store. If a product wasn't in stock, the consumer is notified and has the option of accepting or rejecting the substitute product.

The consumer is next notified by text or email when his or her order is ready, drives to the store’s parking lot, is directed by signs to a special pickup area, selects a numbered parking space, makes a call to Walmart to confirm the space and a masked service person places the full order in the consumer’s vehicle.

Of course, restaurants have been adopting similar processes for “take out” at a much smaller scale. The wonder of Walmart is the scale and speed with which these new processes were adopted. Walmart had maintained the capacity to make further changes and adapt to emerging market needs.

Now all “industries” are being challenged to adapt to the new reality. Every day, the news reports on how educational institutions must change. Institutions that have the resources may even emerge stronger. But the changes will require a redirection of resources.

In 1996, the late management thinker C. K. Prahalad wrote in the Drucker Foundation’s book, The Organization of the Future, organizations must “create a flexible system that can reconfigure resources to address emerging opportunities. In most firms the organization becomes an impediment to proactive and rapid response to the marketplace.” Those words have never been more relevant than today.

Use Cash Wisely

I've often been asked, “When does a new enterprise fail?” The answer is simple: when it runs out of cash–or the ability to find more of it. Entrepreneurs never want to give up. They want their idea to grow into a real enterprise.

But cheap money has enabled new companies to operate for too long without being profitable. They never developed the operating disciplines to become sustainable businesses. The mantra in the world of entrepreneurship had become “grow to sell,” not "grow to survive" in turbulent times. We're now at a moment of truth: Is there a sustainable business here? Can it generate the cash to keep itself going?

This is also true for cash poor large companies, referred to in a recent Wall Street Journal article as “zombies”. These are companies whose operating model was kept going by cheap money. You can see them falling by the wayside now, from big name retailers to shale oil prospectors.

L&D at the Crossroads

What does all this mean for the L&D organization? Answer: As companies struggle to adapt and preserve cash, L&D leaders will feel mounting pressure on their budgets and programs.

Slashing and cutting for the sake of the numbers rather than to strengthen the organization is an all-to-common knee-jerk reaction to sudden economic turnabouts. Peter Drucker called this “amputation before diagnosis.”

Drucker-Inspired Questions L&D Leaders Must Now Ask & Answer

L&D leaders must realize their role in the organization is evolving, and as its responsibilities change, so too must the L&D organization itself.

In his disciplined and basic style, Drucker would have asked every L&D organization to answer the following three questions:

• What is the function of our L&D organization?
• Given what we now know about the condition of our company’s business, customers, and markets, are our current training/learning initiatives still relevant?
• If the mission of our L&D organization is still vital, how should that mission best be carried out? And if many of our learning/training programs are not vital, what new programs should be designed, developed, implemented to provide the skills needed to manage in turbulent environments?

These turbulent times will provide challenge and opportunity for everyone. Find the three things that will be important for you and your company to do.

Come to our three-part Running Training Like a Business virtual conference and hear directly from Jim why many of today's organizational structures are no longer effective given today's new realities. Stay tuned for more details!