Wageflation and the Talent Wars

Why are so many employers complaining about the availability of talented workers and the cost of hiring them? Government statistics indicate that real, inflation-adjusted wages are now below 1986 levels. In 2012, the Federal Reserve tracked both an all time high in want ads, along with an all time high in the long-term unemployed, especially among recent college graduates. How can we have both a surplus and a shortage at the same time?

unemployedThe talent wars are heating up. There are three major reasons why things will continue to get tougher for employers at one end of the spectrum, and for some workers at the other.

1. Demographics: As Boomers retire, the generation that follows (GenX) has about half the birthrate from the early 20-teens to the late 2020s, meaning that for every 8,000 Boomers who hit 65 years old daily, there are about 4,000 people reaching age 45. Supply and demand alone will drive pricing for the top echelon of workers.

2. Disparity: The Gini coefficient measures the gap between rich and poor by country, and it is widening in all of the industrialized economies. Technology is replacing mid-level white collar workers (salespeople, data entry,  customer service). Those who lose a task-based job seldom move up into a higher knowledge or decision making position. They more frequently have to settle for lower-paying task-based  employment. So wages decrease for the semi-skilled, while they increase for the highly skilled.

3. Disconnection: I’ve written before about the “Follow your passion” mantra. I have no statistics handy, but we all know that unemployment for college graduates is worse among the psychology and sociology majors than it is for engineers. The higher education system is built to generate revenue from kids sitting in big lecture halls, who support the institutions’ research and academic stars. I identified this gap between the workers that business seeks and those our education system produces as the major issue for employers over the coming decades in my interview with Bob Morris a few weeks ago.

So on one end of the scale, average wages are declining for workers, even those with degrees, who are underemployed in relation to their skills. On the other end we have increasing competition for those whose skill-set is in demand, from electricians and engineers to managers and executives.

That is why I hear complaints such as “He just got his engineering degree. I’ve hired those kids for years at $45,000. I offered this one 70K, and he turned me down for another job that paid 90!” It will get worse.

Small business has always been the training ground for employees entering the workforce. We take people with a specific skill set, and teach them general job skills like showing up on time, following directions and getting along with coworkers. As partial compensation for that investment, we’ve been able to pay “entry level” wages. The challenge going forward will be how we sustain higher pay scales based on the specific skills, while still bearing the cost of general job training.

NOTE: I regularly use these pages discuss a business owner’s challenges in maintaining balance between work and life. After 6 years of dedicated weekly posting, I am going to take some of my own advice. My wife Leila and I are celebrating 4 decades together by taking something that is longer than a vacation, although not quite long enough to be called a sabbatical. I’ll see you in a month.


Posted in Customer Relations, Economic Trends, Entrepreneurship, Leadership, Managing Employees, Strategy and Planning | Tagged , , , , , , , , , , , , | 2 Comments

2 Responses to Wageflation and the Talent Wars

  1. John H. says:

    One very important contributor to the high wage expectation is the enormous levels of student loan dept new entries to the workforce bring with them. My friend, an experienced engineer out of work for a year, was recently offered a job at $20 an hour. He requested $24, largely because at $20/hour and a relocation to suburban DC he couldn’t have made ends meet. His prospective employer passed, and cited the position as being done away with.

    What happens to our spending-driven national economy with graduates saddled with life-long levels of college loan debt? What happens to home sales?

    More importantly, what happens to future generations in terms of saving for college for their children,l and what appears to be a self full-filling prophecy for generations to come?

    • John F. Dini says:

      Great point John. We are proud of our “lifestyle” as Americans, but we have also put ourselves in hock over the last 50 years on every level. Every parent I know who makes the college visit rounds is shocked at the level of creature comforts that are now considered standard for student living. Those apartments, on campus eateries and mega fitness centers were built on $1.6 trillion in student debt. It really isn’t sustainable.

      BTW: There are 2 million Americans over 60 years old who still have outstanding student loans, and 140,000 are having their Social Security payments garnished.

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Reputations are Sticky

“We have a great reputation in our industry.” In thousands of hours of coaching and facilitating I’ve never heard a business owner say “We have a lousy reputation.”

Customer FeedbackThe myopia of working hard to deliver a product or service leads us all to the belief that customers and vendors understand the effort we put in and appreciate it. How do you validate your reputation objectively?

ABC television has released its NBA schedule for the coming year. The Cleveland Cavaliers, although almost a completely new team (albeit with LeBron James) have five national dates. The Oklahoma Thunder also has five, obviously due to MVP Kevin Durant, and despite the fact that they’ve been ousted from the playoffs by San Antonio in two of the last three years. The reigning champion Spurs will be on the air twice, and one of those dates is Christmas Day as part of a five game marathon.

Why? Because the Spurs are boring. They are at or near the top of the league in most offensive categories, with dazzling assists and three-pointers galore. NBA Commissioner David Silver has proclaimed their performance in the 2014 finals as the best basketball he’s ever seen. They won the championship by the widest scoring margin in history.

But to the casual basketball fan, the core of the television audience, they are boring, defensive stoppers in low-scoring games. That is a reputation built a decade ago, when they won their first three championships to miserable viewership ratings. Reputations stick, and television networks aren’t in the business of reeducating their viewers.

Many years ago I sold auto parts to independent repair shops. My employer was often in a cash bind, and we needed to sell what we had in stock. A mechanic would call for shock absorbers. “We don’t have those,” I’d say, “but we have some great deals on air filters today. Why don’t you stock up?” It always seemed that what we had, everyone else had as well, so we’d haggle price to make a sale.

Years after I had moved on I ran across a friendly competitor. I mentioned to him how hard it was to meet our margin targets, because everyone else seemed to sell for a lower price. “Are you kidding?” he responded. “Every shop in the country knew that you guys would do anything for a sale. Whatever you had in stock drove the price down for everyone.”

I was shocked. I thought we were the class of the industry, but we were perceived by our competitors and customers as the bottom feeders.

Customer surveys are valuable, but you have to assume some bias because the respondents are already doing business with you. Validate your reputation in the marketplace by asking people who are objective. Query your vendors’ salespeople as to what the competition says about you. Ask customers who don’t do business with you, or who don’t do business with you any more, why they choose the competitor and not you.

Reputation is important. Make sure you know what yours really is.

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One Response to Reputations are Sticky

  1. Great topic. This is a continuing problem with most businesses. They have blinders for their own reputations or they don’t really want to know the answer to the question from former customers or people who’ve never bought. Asking the really hard questions is never comfortable.

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My Interview with Bob Morris: Part II

Robert Morris is the number one reviewer of business books for Amazon.com. A few weeks ago he posted a great review of Hunting in a Farmer’s World, and asked if he could interview me.

Bob MorrisBob’s questions were really fun, and the interview went rather long. To my surprise, he is publishing the entire thing in two parts. Here is the second half.

Morris: When and why did you decide to write Hunting in a Farmer’s World?

Dini: I started out writing a book about the culture in a small company. The original analogy was going to be a Tribe. As I thought through the stories I wanted to tell, I realized that I wasn’t thinking about culture. I was really thinking about the character of the people who create cultures; the founders and owners of small businesses. It really doesn’t matter how many employees they have, their thinking is always dominated by a sense of personal responsibility for all stakeholders, and the knowledge that, regardless of the resources that are (or more often aren’t) available, failure is not an option. They work without a net. If they screw up, it isn’t merely a missed budget or a couple of points off the stock price. Their failure means that their families and their customers as well as employees and their families are all going to suffer.

Morris: Were there any head-snapping revelations while writing it? Please explain.

Dini: I had read Thom Hartmann’s book on ADD in the 90s, Attention Deficit Disorder: A Different Perception, and thought then that his description of hunters applied very well to the entrepreneurs I work with. I came across it again when cleaning up my bookshelves at home, and realized that what I was discussing in the book was really the thinking process of entrepreneurs. To go back to Simon Sinek’s work again, I suddenly understood that I wasn’t writing about how entrepreneurs behave, I was writing about why they behave that way. Once I locked in on the hunting analogy, the rest came pretty quickly.

Morris: To what extent (if any) does the book in final form differ significantly from what you originally envisioned?

Dini: I could have prattled on and on with great stories about terrific people. I realized that I would wind up with a book that would leave many entrepreneurs saying “Great. So now I understand why I hate farming, but why didn’t he tell me what to do about it?” I went back and rewrote the middle section about the things I’ve seen owners do that allowed them to run good businesses without getting bogged down in farming tasks.

Morris: What are the most significant differences between hunters and farmers?

Dini: Hunters hunt. They can’t help it, and it isn’t always the best thing for them or their companies. I talk a bit in the book about how dangerous they can be to an organization when bored or underutilized. They tend to approach the world from a perspective of what they want it to be, while farmers deal with what is. Make no mistake, hunters kept humanity alive for thousands of years, but farmers allowed us to settle in one place and build civilizations. One of the things I hope comes out of the book is that they are complementary talents. If people accept each other’s tendencies, they can form tremendously effective teams.

Morris: To what extent do the Welch comments (quoted in Part 1) express what you call “the hunter’s mindset”? Please explain.

Dini: I think that corporate executives have the Hunter’s Mindset as much as any entrepreneur. If you read them again, Welch’s comments aren’t about differences in perspective as much as they are about size and scale. He is right, smaller businesses have short lines of communication, direct influence by the CEO, and the resulting ability to be nimble. That’s because they are small. I think his is as much a logistical observation as a cultural one.

Morris: To what extent is that mindset relevant to the challenges that a “farmer” faces? Please explain.

Dini: Hunters tend to think that everyone should hunt. We developed a fun quiz, “Are you a Hunter or a Farmer?” for the book’s website. [Please click here.] When we tested it, people tended to be unhappy about getting a Farmer result. We rewrote it several times to make it as objective, as neutral as we could. There isn’t anything wrong with being a farmer, but we are all biased towards that Great Man view of the solitary hunter. We are inundated with media that puts hunters on a pedestal (Bruce Willis, Mel Gibson, Harrison Ford), and frankly, so does my book. It is human nature to think that if something is good, anything else is less good. Farmers don’t get enough credit for “only” making things work.

A number of films portray the sometimes violent confrontations between farmer and ranchers, and Shane is among the best of them. In your opinion, how relevant is that film to the material in your book?

Dini: Wow! You picked another of my favorites. Jack Schaefer’s book was the first I ever bought for myself. (It was 35 cents in paperback.) The whole concept of an eminently capable hero who chooses not to use his skills unless he has to taught me that being impressive or showing leadership can be as much about what you don’t do as what you do. The ranchers were only trying to protect their ability to raise cattle. I never saw the objective as evil, but rather their greed, the zero sum game of “I can only be happy if I have it all and you have nothing.”

By the way, Alan Ladd was way too short, too blonde and too buckskinned to be the Shane that I read about. Did you know that they had to dig trenches for Jean Arthur to walk in so she didn’t tower over Ladd? Now I can’t watch the movie without noticing that every scene that they have together is shot from the waist up.

Morris: For millennia, hunters searched for food to survive. Who are today’s hunters and what is it that they seek?

Dini: I think a hunter today is anyone who shoulders the personal responsibility of providing for others, especially those who do it without a net. Most folks begin an action with the thought of a fallback objective if it fails. Hunters don’t have much of a plan B. That doesn’t mean they succeed every time, but they only see setbacks, outcomes that temporarily delay reaching the goal. The plan changes, but the objective doesn’t.

Morris: In terms of their respective functions, it seems to me that in today’s business world, many (if not most) organizations need both hunters and farmers and there seems to be many more farmers than hunters. Your emphasis on the hunter’s mindset suggests that how people think, the way they see the world and their place in it — rather than what they [begin italics] do [end italics] — determines whether they are a hunter or a farmer. Is that a fair assessment? Please explain.

Dini: Absolutely. I think hunters really are born that way. Even when I was an employee, I always felt that my personal skills were being sold on the employment market. When I am interviewing entrepreneurs, many tell stories about their childhood enterprises. They performed a chore for a neighbor, and immediately connected the dots about how many other neighbors would pay to have that chore done. It isn’t surprising that many entrepreneurs went into business for themselves because they saw an opportunity that their former employer was missing.

Morris: Also, is it a fair assessment to suggest that hunters tend to challenge the status quo and farmers tend to defend it? Please explain.

Dini: I’m not so sure about that. It is more complicated. Hunters challenge things that get in their way. The Hollywood Hero stereotype is “You can take my badge and gun, but I won’t stop working the case.” That may not be a good idea, but hunters tend to put their own goals first. Farmers clearly have the ability to change systems, but they do it incrementally. Hunters are more likely to blow it up.

Morris: I just read Michael Malone’s new book, The Intel Trinity. He focuses much of his attention on three men: Robert Noyce, Gordon Moore, and Andrew Grove. Together, they built what became “the most important company in the world” for almost four decades. There are times when, in my opinion, each of the three demonstrates the hunter’s mindset, other times the farmer’s mindset. They engage whichever is more appropriate to the given situation. In today’s business world, I think CEOs need to master both mindsets. What do you think?

Dini: I like Daniel Goleman’s work on situational leadership styles. Few really successful people, particularly those who are consistently successful over a long time, do it with one approach to every problem. There are times when a good commander says “Let’s take this hill!” and other times when he says “Let’s hunker down and figure out what is going on here.” Effective partnerships are most often between two players who have differing perspectives. With three, the dynamic is much more complex. If the partners don’t shift their mindsets for different situations, they can fall into a pattern of constant disagreement.

Joshua Wolf Shenk wrote a great article in The Atlantic about Lennon and McCartney. John was a hunter, and Paul much more of a farmer. Their greatness grew from their ability to switch roles when necessary. They pulled the best out of the relationship by supporting each other’s natural tendencies, but also by stepping into the other partner’s shoes when the situation demanded it.

Morris: In my review of your book for various Amazon websites, I point out that several books published in recent years examine the complicated relationships between leaders and followers. The U.S. Marine Corps offers an excellent case in point. It has, heaven knows, a crystal clear chain of command but a general will defer to the expertise of a private when an important decision must be made if the private has better information, sharper skills, etc. to answer a question or solve a problem. Hard-charging entrepreneurs such as Steve Jobs may chew up people like a rolling ball of butcher knives but will defer to better-informed and better-qualified managers in a comparable situation.

Your own thoughts about all this?

Dini: Jobs was brilliant, but as you’ve probably guessed by now leaders who don’t value their people aren’t my favorites. Apple’s products are innovative, but I don’t use them because I dislike the arrogance of their closed universe, and the level of control they demand over it. That clearly reflects Jobs’ attitude. A general may accept a private’s knowledge in a given situation, but he doesn’t bring privates into every strategy meeting. In the absence of a true genius (and Jobs was one) who can see farther than everyone else, most organizations have to rely on the brainpower of a group of people who are informed, experienced, and buy into the same vision. Within practical limits, the bigger that group is, the better the decisions will be.

Morris: I agree while pointing out that Jobs valued those who were insanely talented. I never thought he was a great leader and still don’t. Great leaders inspire ordinary people to achieve extraordinary results.

Of all the great entrepreneurs throughout history, with which one would you most want to share an evening of conversation if it were possible? Why?

Dini: I have always had a favorite – Benjamin Franklin. I think his scientific vision was broad enough to understand the amazing world that electricity has brought us, and his business sense would love all its applications. Other than that, he was a master diplomat and a great negotiator, a raconteur and lover of fine food and drink, so we could anticipate a most entertaining evening!

Morris: Walter Isaacson refers to Franklin as “America’s first yuppie.” If you were asked to speak at an elementary school graduation ceremony and explain why innovative thinking is important to personal growth as well as one’s career (no matter what it turns out to be), that would be your key points?

Dini: This may be your most difficult question. Elementary-age kids are innovators by necessity. Everything is new to them, so they make up the solutions. Their lives are one big journey of discovery. I don’t know that I would address innovation by name. It’s an abstract concept, and most adults struggle with it. I’d tell them to never stop asking “Why?” and “How?” about everything. If they practice asking the questions long enough to get them ingrained, some of them will grow up to ask “What if…?”

Morris: Let’s say that a CEO has read and then (hopefully) re-read Hunting in a Farmer’s World and is now determined to establish or strengthen a workplace culture within which an entrepreneurial spirit is most likely to thrive. Where to begin?

Dini: It starts with accountability, not just for the CEO, but for everyone who wants to have a say. In large organizations, you can succeed for a long time just because you are on the right teams, or are in a hot division. Those people tend to fall out of the race when they have to put their own fingerprint on decisions. Whether you are leading hunters or farmers (probably both), your culture starts with how much people take responsibility (and credit) for their own actions. The CEO, in turn, needs to accept setbacks as part of the developmental process. The best entrepreneurial cultures are those where people aren’t afraid to make mistakes.

Morris: For more than 25 years, it has been my great pleasure as well as privilege to work closely with the owner/CEOs of hundreds of small companies, those with $20-million or less in annual sales. In your opinion, of all the material you provide in Hunting in a Farmer’s World, which do you think will be of greatest value to leaders in small companies? Please explain.

Dini: Develop a second in command whom you trust implicitly, and who is good at the things you don’t like to do. Too many small business owners are attracted to a “mini-me” because they are lonely, and having a like mind around is comforting. They don’t understand that a balancing influence, in most cases a farmer, frees them to be even more effective.

Morris: Which question had you hoped to be asked during this interview – but weren’t – and what is your response to it?

Dini: How’s this?

Q: “How does it feel to be on the New York Times bestseller list?”
A: “I don’t know, but I’d sure like to find out!”


In business, everyone is either a Hunter or a Farmer. Which one are you? Take the quiz. www.hiafw.com  book


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You Shouldn’t be Your Own Second in Command

Business owners are accustomed to wearing many hats, and many don’t have the financial resources or personnel to field a full management team. The owner winds up wearing one or more functional hats in addition to that of the CEO.

If you have managers in several areas, one usually assumes the mantle of Second-in-Command (SIC). He or she provides leadership in your absence, and assumes decision making responsibility. Whether that person is a true SIC depends on how many roles he or she can fill when needed.

Circular Organization ChartThis is a circular organizational chart. It’s a different way of looking at the management responsibilities in your company. In the second circle, outside the CEO, are the functional areas of running the business. You company may combine a few (like finance and HR), or have one or two more (such as R&D.) The point is to illustrate that the responsibility for day to day supervision and direction gravitates to the center. Each functional area that isn’t assigned to a specific manager becomes the CEO’s by default.

The more that you spend your time in a functional area, the less time you have to be CEO. Just as important, if you are working full time in one or more areas (sales, operations) then it is unlikely that you have any time to back up the others if an employee leaves or is incapacitated.

Most small business owners, especially founders of companies, are utility infielders. They began by doing everything, and can still handle most functions when necessary. That isn’t unexpected, and it is often necessary to be every manager’s backup.

Further, businesses with less than 50 employees usually can’t afford a President; someone who serves as the first option to cover every functional position, and who leaves the CEO to full-time CEO duties. Until you reach that level, one of the functional managers in the second circle has to serve as your SIC.

Determining whether you have a real Second-in-Command starts with discussing who bears responsibility for gaps in other functional areas. Too often the CEO has one (in this chart lets take sales) and the presumed SIC (a Controller in Finance, for example) another. The unspoken assumption is usually that a vacancy in any other area automatically becomes the CEO’s. The so-called SIC is unwilling or incapable of stepping in anywhere but his or her own specific area of responsibility.

That isn’t a Second-in-Command. That’s a manager who is merely first among equals. Being the CEO is a real job. It can’t just be shunted aside every time there is an operational need. There should be clear delineation between the two of you as to which roles each is expected to back up. Until you have a key manager who specifically understands that covering other areas of management when needed is a part of the job, you will remain your own Second In Command.

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My Interview with Robert Morris: Part 1

Robert Morris is the number one reviewer of business books for Amazon.com. A few weeks ago he posted a great review of Hunting in a Farmer’s World, and asked if he could interview me.

Bob MorrisBob’s questions were really fun, and the interview went rather long. To my surprise, he is publishing the entire thing in two parts. Here is the first half.

Morris: Before discussing Hunting in a Farmer’s World, a few general questions. First, who has had the greatest influence on your personal growth? How so?

Dini: Clearly my Dad. He was in industrial packaging sales. Every night at the dinner table was a seminar in how to solve customer problems, and do it ethically in an environment where ethics were too easily forgotten. (Think Mad Men) He was a high performer, but his standards came before everything else. It’s how I learned that sales was all about helping people with their problems. If he didn’t have a solution, he would direct the customer to a competitor. In turn, the customer would look for future opportunities to do business with him.

Morris: The greatest impact on your professional development? How so?

Dini: This is better answered in the negative. I’ve never had a mentor. I often wonder how things could have turned out if I’d had the opportunity to work under someone who would have tutored me. Because of that, I try hard to focus on finding out what my employees want for their futures, and allowing them the flexibility to pursue their personal visions through or alongside their work.

Morris: Years ago, was there a turning point (if not an epiphany) that set you on the career course you continue to follow? Please explain.

Dini: In my early 30s, I quit my sales job in New Jersey to start a company, with financing promised by a customer. He didn’t come through, teaching me a valuable lesson about making sure of things before I act on them. I was at loose ends when my former employer called. They had been acquired, and the new owners offered me an equity position if I could turn around their California operation. I’ve signed my own paycheck since.

Morris: To what extent has your formal education been invaluable to what you have accomplished in life thus far?

Dini: I dropped out of college about halfway to a degree in English. When I returned to night school, I majored in accounting. My English courses all became electives, so I had four years of night classes in required accounting courses. I never wanted to be an accountant, but understanding how a business works always starts with the numbers. Having that type of long-term immersion ingrained a knowledge base that pays off every day.

Morris: What do you know now about the business world that you wish you knew when you when to work full-time for the first time? Why?

Dini: I think the whole concept of a career path escaped me. I took jobs because I had to eat, and advanced because I had talent; but the idea of setting a long term goal, or of thinking about the next step never occurred to me. Once I became a business owner, I struggled with strategy and planning to reach objectives. I do more of it now, but it still isn’t instinctive. A mentor would hopefully have taught me how better to step back and consider the bigger picture.

Morris: Of all the films that you have seen, which – in your opinion – best dramatizes important business principles? Please explain.

Dini: I recently came across a presentation from the Army War College using the film Twelve O’Clock High (1954) with Gregory Peck as an illustration of how a leader has to change roles as his team develops. It was excellent, and I’m using it in a management course that I teach.

Morris: From which non-business book have you learned the most valuable lessons about business? Please explain.

Dini: I’ve read Any Rand’s Atlas Shrugged five times. I return to it periodically to remind myself that other people (outside my family) don’t have a right to appropriate my efforts. I still do far too much work for free, but I like to help people and that’s entirely my choice.

Morris: Here are several of my favorite quotations to which I ask you to respond. First, from Lao-tse’s Tao Te Chin:

“Learn from the people
Plan with the people
Begin with what they have
Build on what they know
Of the best leaders
When the task is accomplished
The people will remark
We have done it ourselves.”

Dini: Absolutely. One of the nice things about being an entrepreneur is that I don’t have to grab credit for what the team accomplishes. As a business coach, it’s always a thrill when an owner tells me “I wasn’t available, and my people took care of it without me!” It’s tough getting employees to believe that you are just as happy, or happier, to see them succeed without you.

Morris: From Howard Aiken: “Don’t worry about people stealing your ideas. If your ideas are any good, you’ll have to ram them down people’s throats.”

Dini: There is truth in that, but I’ve practiced a habit of saying “I have an idea,” rather than “I have a great idea.” Once you’ve declared your own idea as terrific, you are immediately disposed to defend it. Most ideas could use a bit of improvement, and that comes easier when people don’t feel they are attacking something you’ve put a lot of emotional stock in.

Morris: From Richard Dawkins: “Yesterday’s dangerous idea is today’s orthodoxy and tomorrow’s cliché.”

Dini: Well, as Huey Lewis said, “Sometimes bad is bad.” Dangerous ideas can bring surprising results, but often we don’t like the surprise. Hindsight lets us view the dangerous ideas that worked as obvious, especially if they grow into orthodoxy and clichés, but we tend to forget the ones that were just bad ideas.

Morris: From Isaac Asimov: “The most exciting phrase to hear in science, the one that heralds the most discoveries, is not “Eureka!” (I found it!) but ‘That’s odd….’”

Dini: Many years ago, I had the opportunity to sit with about a dozen students and Dr. Azimov for a few hours. Similar to your quotation, one student asked him “What do you think of the quote “If a writer had predicted automobiles, another would have predicted traffic jams?” Dr. Asimov loudly yelled “WHO SAID THAT?” The stammering student admitted that he didn’t know, to which Asimov puffed up his chest and announced, “I said that!”. His mantra was to question everything. A critical part of every CEOs job is to be asking “What if…?” every day.

Morris: Finally, from Peter Drucker: “There is surely nothing quite so useless as doing with great efficiency what should not be done at all.”

Dini: That goes to asking “What if…?” again. Many CEOs think that Management by Walking Around (MBWA) is to make sure that people are doing what they were told to do. I’ve always thought it was to see if people are doing things they don’t need to be doing.

Morris: In one of Tom Davenport’s recent books, Judgment Calls, he and co-author Brooke Manville offer “an antidote for the Great Man theory of decision making and organizational performance”: organizational judgment. That is, “the collective capacity to make good calls and wise moves when the need for them exceeds the scope of any single leader’s direct control.” What do you think?

Dini: In the Alternative Board, I’ve facilitated over 800 peer group meetings of business owners over the last 18 years. One of the most valuable things that regularly occur in these meetings is when an owner announces an important decision for his company. His logic and analysis is sound, but someone will ask “What if the result is…” (It’s that “What if…?” question again.) A single comment will start a whole new avenue of thought, and the planned action or its implementation is frequently very different by the end of the conversation. Any great leader cultivates the ability to listen. When you have the authority to make a call, and a track record of making the right one, it becomes too easy to think that you have some special intellectual ability that others don’t possess. That’s seldom the case. All ideas benefit from being put under someone else’s magnifying glass.

Morris: Here’s a brief excerpt from Paul Schoemaker’s latest book, Brilliant Mistakes: “The key question companies need to address is not ‘Should we make mistakes?’ but rather Which mistakes should we make in order to test our deeply held assumptions?’” Your response?

Dini: The greatest ideas and advancements come from failures. If we try something and it succeeds, we usually leave it alone. It is only when things don’t turn out as planned that we improve.

Morris: In your opinion, why do so many C-level executives seem to have such a difficult time delegating work to others?

Dini: Reaching the top echelons of any organization requires high performance. Many of those who get there grow frustrated because the people around them can’t perform at their level. They can take the time to teach and coach, but it is quicker and (they think) more efficient to do it themselves. Who gets more accomplished, ten people who each do something 80% as well as you, or you? C-Level execs know that they shouldn’t be on the factory floor assembling widgets, but when it comes to knowledge work they frequently set the bar too low when deciding what is worth their time.

Morris: The greatest leaders throughout history (with rare exception) were great storytellers. What do you make of that?

Dini: Storytelling was the first form of mass communication. We are instinctively inclined to give stories weight, as they are how we learn from childhood on. I joke that my favorite bedtime stories started “Jack McCarthy was looking out the window of his corner office, wondering where the plan had gone wrong.” That’s stretching it a bit, but illustrating by putting a lesson in the context of a real person in a real place lets the reader (or listener) visualize the scenario. It sticks so much better than an abstract discussion. That’s why my books are filled with stories of real people, rather than “consulting wisdom.”

Morris: Most change initiatives either fail or fall far short of original (perhaps unrealistic) expectations. More often than not, resistance is cultural in nature, the result of what James O’Toole so aptly characterizes as “the ideology of comfort and the tyranny of custom.”

Here’s my question: How best to avoid or overcome such resistance?

Dini: A Japanese CEO once told me about their ringi process of widespread input on decision-making. He said that American CEOs grew frustrated with the length of time it took to bring so many people into the decision circle, and boasted that they were the sole decision makers for their organizations. He had noticed, however, that once an agreement was reached, the Japanese company moved directly into implementation, while the American CEO spent the first few months trying to get everyone on board with “his” decision. Change initiatives are too often hatched in a bubble, and die from a lack of buy-in among the people who are being asked to make the change.

Morris: In recent years, there has been criticism, sometimes severe criticism of M.B.A. programs, even those offered by the most prestigious business schools. In your opinion, in which area is there the greatest need for immediate improvement? Any suggestions?

Dini: MBA programs, like all of higher education, have become trapped in bureaucracy. Textbooks tend to be written about large organizations, and the cycle of research, writing, publishing and acceptance into classrooms takes years. Some entrepreneurship programs are inviting young, successful CEOs to lecture, but they tend to be focused on tech millionaires. I’d like to see more focus on the mid-market companies that create most of the jobs. Perhaps include a practicum where students take a well-run company and try to generate measureable improvement without the capital and other resources that very large organizations can deploy. It isn’t easy.

Morris: Looking ahead (let’s say) 3-5 years, what do you think will be the greatest challenge that CEOs will face? Any Advice?

Dini: The mismatch between education and the talent needs of business. Skilled tradespeople are ageing rapidly as a group, and we are producing far too few engineers and scientists. We feel the pinch already. In five years it will be worse, but in ten it will be critical. Demographics can’t be changed in that short of a time. Businesses, especially small businesses, have always been the trainers of last resort for early-career employees. I think that role will grow. The CEO’s challenge is going to be how to develop employees’ skills without just making them a more valuable commodity for a competitor.

Morris: Years ago at one of GE’s annual meetings, then chairman and CEO, Jack Welch, explained why he admired small companies:

“For one, they communicate better. Without the din and prattle of bureaucracy, people listen as well as talk; and since there are fewer of them they generally know and understand each other. Second, small companies move faster. They know the penalties for hesitation in the marketplace. Third, in small companies, with fewer layers and less camouflage, the leaders show up very clearly on the screen. Their performance and its impact are clear to everyone. And, finally, smaller companies waste less. They spend less time in endless reviews and approvals and politics and paper drills. They have fewer people; therefore they can only do the important things. Their people are free to direct their energy and attention toward the marketplace rather than fighting bureaucracy.”

Here’s my question: Which of his comments do you consider most important to leaders in Fortune 100 companies? Please explain.

Dini: All true but, as a lifelong small-company guy, I look at Fortune 100 companies and can’t see what they might do to be more nimble or less bureaucratic. A CEO’s primary job is to communicate the vision to everyone. As Simon Sinek says, “Why are we doing this?” When you have thousands of employees, standardization is a necessity, and I think the creep from following the vision to following the rules is inevitable. You could work in much smaller units, but surrendering economies of scale wouldn’t please the financial markets, and probably would lead pretty quickly to a new CEO.

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