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The risk of competency

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If you are a marketing person, executive, business owner, or entrepreneur  and you are not reading Seth Godin’s blog then you are missing out on a lot.

What is Competency?

Everyone knows what “competency” is – until you take the time to put some precision around the meaning.  Seth wrote about competency a while back.  The impetus was some construction work that was being done on his home.  Seth hired a competent architect and a competent contractor but didn’t get what he wanted.  So why couldn’t these competent people produce the results that Seth expected?  Simple answer, they were too competent in their work.  (Read Seth’s story at the end of this posting)

From Seth’s perspective, here is the upshot on competency.

1. Competent people can be a liability.  If competency is defined in terms of standard processes, repeatability, reliability, and predictable outcomes then competent people can become your worst nightmare.  Why?  Competent people resist change.  Competent people resist change because changing things takes away from exactly what competent people are known for – producing predictable outcomes in reliable, standard, and repeatable ways.  If there is a high rate of change then there is uncertainty and risk.  If there is uncertainty and risk then producing, reliable, standard outcomes is in jeopardy.

2. The confusion of speed and velocity.  To understand what Seth is getting at here you need to remember some high school physics.  Velocity is multi-dimensional.  That is, it has a component of direction and speed.  Speed, in the sense that Seth is using it lacks this dimensionality and rate of change of direction.  That being said, competent people confuse velocity with speed in that they simply “go fast” without adapting to changing circumstances.  Another way to understand “changing circumstances” is the idea of  marketplace innovation by competitors and changing consumer demand.  To compete you need speed as well as direction.  Competent people don’t like changing direction; it upsets the standard way of doing things repeated over and over again that has led to success in the past.

3. Lack of brute force “will to change” by competent people.  Again, another theme on change and the inability of  folks to deal with change; they lack the will to take the risk to embrace change that would make them and their company more successful.  It is easier and safer to continue to do things the way that has worked in the past.  But not having the will to adapt at the required rate of change will lead to failure.  (Think of Block Buster and Netflix or Borders Books and Amazon.  Block Buster and Borders were incumbents in the industry; they did things they way they always did things even  into the age of disruption caused by the Internet.  Amazon and Netflix seized the opportunity and took away their customers by embracing a change to the traditional bookseller and video rental business model.)

You can read an excerpt from Seth’s thoughts on Competency at the end of this posting

Here are a few things to think about when you read it.

Things to Consider on Seth’s definition of Competency

First, think about how a large company actually operates.  First and foremost it needs to carry on operations.  To carry on operations you really do need competent managers and technicians.  And by this I mean exactly what Seth says is a liability.  That is, those people (managers and technicians) that can produce predictable, reliable, standard outcomes over and over again; day after day; quarter after quarter.  Daily operations is at the heart of a company.

You need the senior executive team (and the board of directors) to watch over strategy.  There is a lot to this.   It is going to make or break the company in a high-velocity environment like technology.  A public company makes a quarterly earnings forecast.  Every 12 weeks the senior executives are going to stand before the shareholders and analysts and be accountable in a very public way for the performance of the company.  Think about this.  If a 20 billion dollar company is projected to grow 3% then that’s 600 million dollars in new revenue.  Where is that going to come from?  Global market expansion?  New products or services?  Organic Growth?  Higher margins?  New customer segments?  Where, and who will find this new revenue?

Of course you want competent executives as well as competent managers and technicians.

Competency as the ability to deliver job-role specific results

It comes down to the way you define competence.  If you define competence in terms of results then that works.  If you define competence in terms of a practice (how things are done), as Seth does, then you are in trouble.

The competency of executives

A competent executive team is going to produce “reliable” results insofar as they meet (or exceed) their quarterly earnings guidance and analysts expectations from quarter to quarter.  These folks are going to zig and zag (Velocity – see below) as much as needed to produce the expected outcome.   No one gets to an executive position (or stays there for long)  in a public company without taking risks, dealing with uncertainty, and pursing innovation to the end goal of meeting earnings and growth expectations.  And all of this is, front and center, the ability to deal with change.  Adaptability, innovation, taking risks, and managing change is central to any executive position.

If you look at Apple for example, there has been so much change in that company that it would make managers and technicians heads spin – not to mention unsettling the loyal Macintosh computer users when Jobs accounced the iPod and iPhone.  Apple changed its name from “Apple Computer” to just “Apple” to reflect the redefinition of the business(es) that it was in.  Apple created new markets and was a game changer in the music industry.  Apple is known for its innovation and ability to change and adapt.

The competency of managers and technicians

So, everyone has to produce the outcomes expected.  Do you really want managers or technicians to innovate at a strategic level while the company is depending on them for reliable, predictable operations?  Not really.  In a sense, this might be good: ” As we’ve turned human beings into competent components of the giant network known as American business, we’ve also erected huge barriers to change.”  

Erecting barriers to change (“follow the process”) is good at the level of manager and technician if: a) that change is unmanaged. b) if the change is going to negatively disrupt the ongoing operations of the business.  Recommendations for change can flow up from managers and technicians but only implemented after vetting.  Many times, managers and technicians do not see the “big picture” of how all the pieces of a company fit together.  In this case, what might be good at a local level may cause negative impacts elsewhere.  Sometimes, “barriers to change” are a good thing – especially with regard to corporate operations.

The conflicts of executives, managers, and technicians with regard to change

The key is to get the right people in the right positions in a company.  One of the differentiators of people is their ability and comfort level to take risks and deal with change.  I think Michael Gerber nailed the distinction of Entrepreneur (read as Executive), Manger, and Technician in the way these folks deal with change, risk, and uncertainly. 

As Gerber accurately points out, there is conflict in every company among executives, managers, and technicians.  Why?  Simply because of the ability or inability of particular individuals  to navigate some of these dichotomies: visionary vs pragmatic; future vs past; change vs status quo; planning vs doing; thinking as productivity vs doing as productivity; abstractions vs concrete; and so on.

Read Gerber’s taxonomy here – https://frrl.files.wordpress.com/2011/06/gerber_emyth.pdf

The challenge for any company is to wrangle the personalities in these roles: executive, managers, technicians.  Executives really don’t need to become incompetent (in the sense the Seth uses it) to embrace change – that should be part of their competency as executives – to adapt through change.  In fact, to lead organizational change proactively or in response to changes in the external environment.

Seth’s story is really about a small business where the roles of executive, manager, and technician are not highly differentiated – it may be one person in a small business.  And this really is the point of Michael Gerber’s book: The E-Myth.  That most small businesses fail (or under perform) because the business owner does not have the proper balance of perspectives of executive, manager, and technician.  In Seth’s story, if the architect and contractor had more of an executive perspective then Seth may of been more successful at getting the results he expected.

From some of Seth’s writings on Competence

Our criteria for the project were, in order, “fast,” “good,” and “cheap.” We were clear about our goals. We set specific dates, and we delivered our objectives in writing. Unfortunately, our contractor and our architect had built their reputations, the center of their competency, around “good”.  “Fast” was not a concept that they really understood. Try as we might, argue as we did, nothing would change their focus.

Order windows before the building permit comes through?  To radical. Have two teams working on the project at the same time—one up stairs, the other in the basement?  “‘Well, I guess some might do it that way, but you hired us for our reputation. So you’ve got to trust that our way is the best way.”  If these guys were building a skyscraper, it would take them forty years to complete it.

Every situation has a silver lining, and mine was that I got a big insight into what competence is.

Competent people have a predictable, reliable process for solving a particular set of problems. They solve a problem the same way, every time. That’s what makes them reliable. That’s what makes them competent. Competent people are quite proud of the status and success that they get out of being competent. They like being competent. They guard their competence, and they work hard to maintain it… 

That’s who they are, and sometimes that’s all they’ve got. No wonder they’re not in a hurry to rock the boat.  Just think of the risks that come with embracing anything other.

Over the past twenty to thirty years, we’ve witnessed an amazing shift in American business… As we’ve turned human beings into competent components of the giant network known as American business, we’ve also erected huge barriers to change. In fact, competence is the enemy of change!  Competent people resist change. Why? Because change threatens to make them less competent. And competent people like being competent.  Change means a temporary or permanent threat to their competence.

But among the competent of all: the ones who will do everything in their power to flight the next round of necessary changes, because they’re in love with their  new-found competence. Some of the companies that have radically redefined their industries are already seeing rough times.  Netscape lost its way and blew a huge lead, not because of Microsoft but because Netscape’s own rapid success caused the company to stop innovating.  Netscape did a totally competent job of working to leverage its lead—but competence was exactly what brought the company down.

The newly competent in Silicon Valley and elsewhere are guilty of another common  mistake: They confuse speed with velocity. The culture of these revolutionary companies is to sprint as fast as possible—all the time, Cars fill the parking lots at these companies on weekends. Want to reach someone in an office cubicle? Call at 10:00 PM. One woman I met last week lists seven different ways to contact her on her business cards

But this embrace of hard work and moving fast for fasts’ sake misses the point. It doesn’t take a lot of time to change your business plan radically, to reinvent your marketing proposition totally, or to redesign the way you deal with consumers completely. No, it doesn’t take time; it takes will.

The will to change. the will to take a risk. The will to become incompetent—at least for a while. Velocity is a company’s ability to zig and zag and zoom—to make significant changes when significant changes are necessary. And you can have velocity without speed: Driving around in circles may make your speedometer look impressive; buy it won’t get you across the country very fast.

Give me five serially incompetent nine-to-five executives with a focus on velocity, and I can change the world—over and over again.

Resources:

A summary of the E-Myth – http://www.carrollbiz.org/SBDC/resources/E_MythRevised.pdf
(cached copy – https://frrl.files.wordpress.com/2011/06/e_mythrevised_summary.pdf )

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Written by frrl

June 12, 2011 at 8:55 am

Posted in Uncategorized

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