What We Can Learn from the HOGS

"In times of drastic change, it is the learners who will inherit the earth.  The learned will be perfectly positioned for a world that no longer exists."  Swarthmore College's 2009 Lax Conference's keynote speaker Richard Teerlink started his presentation with this quote from Eric Hoffer.  

Teerlink led Harley-Davidson's fabled turnaround, fueled in part by his belief that people are the most important resource in any company.  Teerlink was CFO, CEO, and Chairman of the Board of Harley-Davidson during the time it went from the stepchild of a public company to private ownership by 13 managers carrying $40 million of debt to its reemergence as a public darling again.

How did they do it?  At the time of HD's privatization, the Japanese dominated the motorcycle industry, and HD's board had to make some tough decisions: they laid off 40% of the workforce--all at once, Teerlink points out, so that fear would not weaken the remaining group; cut compensation of the rest of the employees; killed an expensive new development project; reduced their dealer network; asked suppliers for reductions; eliminated all the Senior Vice-Presidents so that responsibility would be pushed down further in the ranks, with more direct reporting to top management and fewer silos; and collaborated with employees, dealers and customers to enhance the HOG experience. 

Teerlink says that as with all major shakeups HD made some dumb decisions but learned to reverse course quickly.  An advertising campaign was launched that honestly acknowledged past weaknesses and promised owners a different experience.  And the company delivered. 

Teerlink emphasized to HD employees that they were not selling machinery, but an emotional experience, one that offered entertainment and a community.  Thus the HOGS--Harley Owners Group--was born, with networking, social events and riding support (fly and ride, for example) offered nationwide. 

The premise that "people are an organization's only sustainable competitive advantage" drove Teerlink's transformation of HD.  His book, "More Than a Motorcycle: The Leadership Journey of Harley-Davidson," chronicles how he brought that premise into reality.

At a time when law firms are facing some of the most challenging marketing conditions of all time, we might do well to learn a few things from the people who brought us the HOGS.

Seafaring through the Recession of 2009

In the April 20, 2009 issue of The New Yorker, James Surowiecki recalls that during the Depression (the one in the 1930s) Kellogg and Post, but primarily Post, dominated the cereal market. In response to uncertainty, Post reined in expenses and cut back on advertising. Kellogg, on the other hand, doubled its marketing budget. “By 1933, even as the economy cratered, Kellogg’s profits had risen almost thirty percent and it had become what it remains today: the industry’s dominant player.”

 

During hard times, Surowiecki points out, most businesses act like Post in order to preserve what they have. “But there’s a trade-off: numerous studies have shown that companies that keep spending on acquisition, advertising, and R. & D. during recessions do significantly better than those which make big cuts.” They also maintain those gains well into recovery. “[R]ecessions create more opportunity for challengers, not less.” 

 

Why do most businesses insist, then, on pulling back? Surowiecki suggests the uncertainty that so dominates recessions makes any business outcome calculations unlikely to be reliable. Unable to gauge risk, managers forego the gamble.

 

Certainly there are managers who risk “sinking the boat” by boldly forging ahead, but there are others who “miss the boat” by failing to do so.

Three Degrees of Influence

How far does your influence reach?  The February 2009 Harvard Business Review reported research by Nicholas Christakis and James Fowler indicating that while all kinds of behavior and attitudes spread through social engagement, with each additional degree of separation a person's influence progressively diminishes.  Those beyond three degrees of separation no longer exert influence. For example, a person is 14% likelier to be happy if his or her friends are happy, 10% likelier if the friends' friends are happy, and 5% likelier if the friends of those friends' friends are happy. By the fourth degree of separation, there is no longer any increase. 

What this means in the organizational setting is that firm-wide buy-in--necessary for effectuating change, sustaining a culture and steering a strategic path, among other things--requires that the message permeate the organization to a greater extent than we might have earlier thought necessary.  

In smaller firms, top management has to personally and effectively persuade at least one-fourth of the firm, on the assumption that the personal involvement of that quarter with those around them will effectively influence the others.  In the biggest firms, management must carefully calculate where the spheres of influence are and reach into those various groups to recruit ambassadors who will then bring the message to those within each circle, so as to eventually impact the whole firm. 

Particularly given the recent growth in firm size and increase in tiers, relying on the simple top-down approach means that the management committee may not reach far enough across or down to effectively enlist everyone.  The result can be alienated groups--young associates, non-equity partners, even senior partners--who haven't gotten the word and make firm goals doubly hard, if not impossible, to reach.

This research, like others, emphasizes the importance of personal relationships in cementing the cohesion of a firm, regardless of its strategic direction.  While not all firms can afford a managing partner who devotes full-time to firm management and individual relationships, those firms who can't should carefully ascertain that managers and their surrogates are engaging all components of  the firm.

Building Teams that Work

Collaboration in the form of teamwork may be the 21st Century's technology, in that it promises strides in greater productivity--but only when done well.  It can also veer from chaos to constipation. David Maister's famous article Are Law Firms Manageable? questions whether lawyers can make the transition from "a managerial approach based on partner autonomy to new approaches that can create a well-coordinated set of team players." Well, can we?

After seeing double digit increases in firms that have implemented team systems--management, marketing,  industry and client teams--and an increase in work satisfaction among team members, an initial question many interested law firms have is how to go about setting up and managing teams.  Luckily, research provides some guidance that can help firms successfully achieve productive teamwork.  The following is a summary of Muir's presentation on effective teamwork at Swarthmore College's 2009 Lax Conference.

In 1965 Bruce Tuckman, an organizational psychologist, established modern team theory, refined most recently by Dr. Susan Wheelan, professor of Psychological Studies and Faculty Director of the Training and Development Center at Temple University.

The stages of teamwork, according to these models, are 1) forming, 2) storming, 3) norming, and 4) performing.  The forming stage, even among lawyers, can be marked by tentative and polite accommodation.  Unsure of their roles and the leader's competence, team participants need the leader to be clear, directive and highly structured during this first stage. This is not the time for a consensual  "Well, what do you think we should do?" approach.  Also, if you have the luxury of choosing team members, choosing those who are different from each other in their attitudes and skills and who are able to articulate and, when appropriate, stick by their opinions produces the best mix for a team. See our entry Promoting an Effective Board or Management Group for additional discussion of what attributes to look for in team members and how to promote their best contribution.

During the second, storming stage, the politeness wears thin and team members, particularly lawyers, will test the leader and stake out their positions with each other to determine what their authority and parameters will be.  Conflict is often a result.  This is a positive development.  Handled well, the team will learn from experience that it is safe to engage in conflict, and that issues can be settled without lasting acrimony or division, even if it requires agreeing to disagree.  This is the basis on which trust and respect is established.  Leaders are often criticized during this stage (and sometimes asked to step down) as much because of their role as because of their personal attributes or performance.  Leaders who can keep from reacting defensively will avoid exacerbating and prolonging this stage, which, being awkward and uncomfortable, helps propel the group to resolve their differences and move forward into the next stage.  Leaders should emphasize during this stage the importance of keeping debate, which is useful, focused on the issues and not the personalities involved.

During the third, norming stage, based on the higher level of trust achieved during the 2nd stage, the group's goals are revised and a division of labor, with clear roles, is determined. The problem in law firms is that often lawyers don't make it out of stage 2.  Tenacious about protecting their authority and unwilling to trust those in a leadership role or those to whom work must be delegated, these lawyers can keep the team locked in unnecessary meetings and conflict, which may feel to them more like sport than discomfort.  Yet it is only in stage 3 that delegation becomes effective and the individuals are freed up to do their part of the team's work.

Stage 4 is performing, which is the highly productive stage that teams are made for.  At this point, if members are added or removed, or the goals or delegation changes significantly, the team may regress back to an earlier stage and have to work its way through the process again.

Goals that are most amenable to team accomplishment are ones that require collective action, i.e. those which no one person could accomplish on his/her own, and that are meaningful, even inspiring.  The most effective teams have an emotional commitment to the goal, so framing goals as being in the individual team members' interests is vital. 

Team goals should be specific, measurable and attainable, with a real deadline that allows the team's work to culminate in a completed project.  Ongoing timeframes make it difficult to maintain team motivation and momentum.

Ideally, team members spend about 75% of the team time on accomplishing their tasks and 25% on participating in the team process, i.e. attending status meetings, maintaining group relations and performing housekeeping tasks. Procedure can be important.  For example, lawyers are largely introverts who need time to formulate their opinions, so distributing an agenda in advance of a meeting and not requiring decisions to be made at the meeting allows them to both prepare for discussion and come to a reasoned conclusion afterward.

OK everyone, team up!