Ichak Kalderon Adizes's Blog: Insights Blog, page 36

Marriage as a School

This specific blog is probably going to get me in hot water. Again. And I have to remind myself that I have to be what I am with no fear and pretentions. Just be and learn from criticism. I mean constructive criticism.

So, here it is.

One grows a lot in marriage. Through a lot of conflicts. Through resolving a lot of interpersonal stylistic issues.

One learns to be patient. Learn to wait and wait and wait for your wife to do all her make up and be ready to leave the house. Or for your husband to stop watching that football game.

One learns tolerance, and to sometimes accept what one does not like because the other person does like it.

You learn to pretend too. If you are asked by your spouse to give feedback on how she looks in her dress, you better tell her that she looks fabulous although you are not too excited with the color of the jumper she is testing.

Why pretend? Because she is not asking for your opinion, she is asking for reinforcement that she made the right decision. If you tell her what you truly think, you might get criticized that you have no taste and no idea what is right or wrong. The same applies to when he asks her what she thinks of his new car.

You learn to let your husband drive in circles refusing to listen to your instructions, although you know the direction perfectly well. Patience. Tolerance. Space.

You learn to take it when the spouse gets angry. To not react. Swallow your pride and deal with the issue when “the storm is over.”

You learn too how to deal with a grown up man who at times behaves in a childish manner; all he cares for is food, drink, sex and comfort.

One learns to deal with a hurt masculine ego, how to deal with it in a way that does not hurt the ego although it needs to get hurt.

Yes, yes, marriage is an ongoing class, and you are being tested in real time, all the time.

It is an ongoing class with stern teachers. Each one is a teacher to the other. We are students and teachers at the same time. Tough.

Some do not make it. They flunk the tests and repeat the class over and over again. I mean re-marry multiple times looking for the perfect spouse which obviously does not exist. It is tantamount to looking for a university where you learn nothing. Or they drop the class or the “marriage university” all together and get divorced. Some do not enroll in this university to start with. They never marry.

These are the people that never grow up. Never mature and never understand that life is ongoing learning, and real learning comes with the pain of solving real issues in real time with real people.

Is there a time when one graduates, and there is no more pain i.e. no more learning? I do not think so.

You can graduate from a class, i.e. you have learned your lesson on a certain topic, but school continues and along the way you get enrolled, whether you like it or not, in a new class. New conflict. New problems.

You graduate from this school when the classes are review classes: You learned whatever there was to learn, and now you just have review sessions; you have dealt with the issues before. Learned your lesson, learned what can and cannot be changed and learned to live with what cannot be changed.

But not all people suffer. There are those who enjoy the learning. The growing. They love to learn and to teach, and love to enrich each other.

When does that happen? When there is mutual trust and respect in a marriage. When that happens, disagreements and conflicts are an opportunity to learn, enrich and support each other. Spouses do not take the conflict personally. They realize here is another opportunity for me grow up and learn something new.

Without mutual trust and respect, learning is painful and feels like a punishment.

Just thinking.

Sincerely,

Ichak Kalderon Adizes

The Economic Growth Fallacy

I am reading a book, The Great Degeneration, by a prominent Harvard professor[1]. In it, he analyzes the decline of the West as measured by economic growth. Our economies are stagnating, he claims.

I have no disagreement with his facts. I am, however, uncomfortable with his conclusions. His starting point is that economic stagnation is a bad thing.  I disagree. More is not always better.  It depends where you are on the Lifecycle.  For a start-up company, just as for a growing child, or for an emerging economy, more IS better. No question. But for a company in post Go-Go, or for a grown person, and for a nation with what I would call a “saturated economy,” more is not always “more.” It often ends up being less. There is more in one thing but less in something else. On the margin, what we gain in one field is much less than what we lose on the other field.

What am I referring to?

I have noticed that in developed economies the standard of living keeps rising while the quality of life is going down. Men and women are chasing after more and more economic wellness, but have less and less time to enjoy what they already have.  We have more possessions but with more stress. I witness more laughter in one day in developing countries than in a whole year in a developed country.

If we place quality of life on the vertical axis and economic growth on the horizontal axis, the curve that shows the relation of the two variables will be, say, a normal distribution. It will not be linear, ascending up and up forever.

A “saturated economy” to me is one where, on the margins, one more unit of economic wellness produces one less unit of quality of life.  Do we need in America one hundred different versions of bread? And indeed the enormous choices in almost everything? And planned obsolescence? What a tremendous cost we pay for this abundance in human energy to produce and distribute it

Emerging economies need more of what they already have because they have so little. But why us?  Economic stagnation, a halt to chasing growth as if it were a necessity, is exactly what we need.

What should be our new goal then? Improving our quality of life.

Years ago while I was driving along the coast from San Diego, California to Los Angeles, and as I was gazing out the window, I had an insight about the past and the possible future of civilization.  First I saw agricultural fields. Then there were chimneys. Then I reached Laguna Beach, a small picturesque town populated mainly by artists, many of whom live quite modestly, enjoying their leisure time.

This is it, I said to myself. This is the future. This is how it should be: Take early retirement. When you are young, earn enough for food and shelter to feel secure in old age, and when you reach your saturation point, stop working for more money. That is when you should start working to secure free time to grow emotionally, socially, and artistically.

Once I had a client who challenged consultants and economic theory. He said to me that he disagreed with consultants who constantly preach growth, and who tell him that he needs to grow more. He is happy to be a hundred million dollar company forever, he said.  It is good enough for him because he wants to enjoy his life, his free time and his family.

Current strategic theory tells us that if we do not grow we die. Not true. We need to change, yes, but change does not necessarily mean to grow.

A company needs to change.  Granted, it needs to adapt to a changing environment. If it does not do so it becomes irrelevant and will be abandoned by its customers and die.

OK, but change does not necessarily mean growth in the quantity. It can mean growth in the quality.  “Bigger is not necessarily better.”  “Better can be more, but in quality of life…..”

It is possible for a person or family to say “We have enough. Now let us enjoy what we have.”  The same can apply to a company that can decide that its present size meets its needs, and it will now focus on striving continuously to be the best it can be at its present scale. For that, it will constantly change and improve on what it does, how and why.

But this idea or principle does not apply only to people or companies. It can apply to society as well.

The nation can concentrate on “better” national quality of life: freer time, more art, culture, sports, mental and physical health improvement, less crime, less mental diseases, better education. There is so much more to life than how much we have not only for a person, family or a company, but for the nation as well.

Take unemployment.  One way to solve it, of course, is to have MORE ECONOMIC activity. So we are back into “more is better.” But what if we change our goals, so that we emphasize the importance and necessity of maintaining a higher quality of life? How then might we solve unemployment?

Have job sharing. Then the weekend for people will consist of four or three days rather than only two. Play more.  Work less.  More people will work but less. But then people will earn less money, you might reasonably say. That is exactly the idea. It is not necessary to have more. Just enough.

Why does the USA have to be the economic powerhouse of the world?  Why can it not be a country with the best quality of life, complete with art, sports, and time and space for self-growth?

Post-industrial society should not stand for more economic growth. We need to change goals as we move up the Lifecycle curve. Not only in personal and corporate life, but also in national policy.

Just thinking.

Sincerely,

Ichak Kalderon Adizes

 

[1] Ferguson, N. The Great Degeneration: How Institutions Decay and Economies Die. New York: Penguin Press HC, 2013.

How to Compete with E-Commerce

By now it is old news that Amazon “killed” the bookstores. We all know that bookstores are closing left and right. It is easier to buy books on the internet.

The banking industry is in trouble too. Mobile banking is on the rise and those banks that lag behind, which fail to become mobile, will inevitably disappear.

But the impact of the internet is far greater, way beyond books and banking. I have only to look no farther than my family. My daughter buys all her food products in volume through the internet, while my wife recently bought our college age son’s apartment furniture, not in a department store, but, yes, on the internet.

It does not stop there. No one goes to rent a movie from Blockbuster anymore. Netflix and other internet services have taken over. And Blockbuster is gone.

This is a revolution, and more companies will bite the dust because of it. And they will be replaced by an internet service.

What to do?

The first solution is an obvious one: join the party. Build your own e-store to sell your products on the internet.

Is that enough? Maybe. If it is not enough, and you want to have a face to face presence while engaging in live selling, then you must find an answer that challenges the competition in this new medium.

What should it be? Widen the product line? I do not think so. Because it does not have space limitations, the internet can provide an even bigger portfolio of products.

Cheaper priced products? The internet can match, if not undermine, this strategy. Its costs are lower since it does not require expensive real estate and it is reaching out to a massive mass market.

Better, faster service? The internet has a competitive advantage here as well. It can organize distribution and fulfillment far more effectively, and interference from the human element (and the concomitant errors) is minimized.

What to do then? What is it that face to face real time selling can provide that the internet can not?

An EXPERIENCE.

Take movie houses. There was panic when television became ubiquitous. The fear was that the movie houses would go bankrupt and disappear since anyone could now watch films from the comfort of his or her home.

Now if you want to see a movie you can stay home and save yourself the pain of driving and fighting traffic in an effort to reach the cinema. And there is no need to search or pay for parking.

So what happened? Movie theaters converted themselves into cinema compounds with multiple projection halls that provide extra service: You have a very comfortable chair and a button to summon a waiter who will serve you drinks and some food. The screens are enormous, and there is surround sound second to none.

Going to the movies now consists of more than watching a movie that is available at your home. It provides an experience you cannot have at home.

I would go even one step further.  If it were me running the cinema company, I would have in the cinema compound a first class restaurant and live jazz music so that people could eat before the movie starts, or head for drinks and food afterward.

I would add multiple booths in the lobby. One with an astrologer. Another one with a palm reader. A third one who reads coffee deposits from your mug while a fourth analyzes your physiognomy.  So when you go to the cinema you are going to have a unique experience, one that adds up to more than simply watching a movie.

If you want to compete with internet sales beyond just having your own internet channel, then think long and hard about ways in which you can make your outlet an experience.

Southwestern Airlines tried something along those lines. It made flying an experience. The more exciting and engaging the experience, the more likely the clients will prefer your delivery to that of the anemic internet.

Just thinking.

Sincerely,

Dr. Ichak Kalderon Adizes

Father-Son Conflicts

It is apparently never too late to learn something new. And crucial. And I just learned something, which I recognize is critical.

Although it should not have come as a surprise to me, I was recently surprised when I heard how difficult and incredibly debilitating it was to be the son of a famous or successful person.

My thinking always has been built around the idea that it is good and desirable to expose my sons to my work, and provide them with a behavioral model. So I took them to my lectures and even to my consulting assignments.

What a mistake.

Apparently every son wants (in many instances needs) to be better than his father.  And if the father is famous and very successful it sets the bar very, very high for the children. And if they feel incapable of reaching, let alone surpassing, that particular bar, it is debilitating.

Where did I learn this?

I was recently at an event talking to the son of a person leading the event, a very famous person, who I think it is better if I protect his identity for the sake of the son.  His son was telling me and my son, who was visiting with me, how difficult it is to be the son of this famous person.

First, he does not have a father like anyone else. He has to share this father with more than one hundred thousand people, and in turn receives only a few crumbs of attention.  Furthermore, he often feels like a failure because he cannot approach anywhere near what his father has achieved. Moreover, the father apparently is successful because he holds high standards at work and has very high expectations. When these are applied to the son, he is constantly under the microscope being evaluated and usually criticized.

The son did not say this to me in so many words, but that feeling and sentiment were clearly communicated.

I was listening, and then I turned to my son and hesitantly asked him if this made sense to him. I expected kudos for taking him on my assignments and giving him such great exposure, and that our case was different.  Instead, I got a surprise.

He looked at me very puzzled. “What? Don’t you understand how difficult it is to be YOUR son?”

I probably should have known better. But the truth be told I had no idea he had it tough being my son. I travel a lot and am frequently not at home. True, I have carved out a life and a career that could be defined as successful.  Hundreds of people come to my lectures.  I was proud that my son observed it all and knew of my success. That was the idea. To give him a model to emulate.

And now, suddenly, I recognized that I was wrong. Trying to give him a behavioral model in this way was not the right thing to do. Unknowingly, I was setting the bar too high for him. Furthermore, he said that I am never satisfied with his achievements and constantly criticize. Whoa, that is true. I am never happy enough with my achievements and always strive for better and more. That is one of the reasons for my success, but when applied to my son, it is very hard on him.

My insight:  The more famous you are, the more humble a life you should lead….at least as far as your children are concerned.  And criticize yourself as much as you want but leave those close to you alone. Close one eye…..keep your success to yourself and do not act at home the way you do at work.

I do not know how children of movie stars manage. But now I understand that some have to be famous stars themselves or they are miserable.  Someone told me Gandhi’s son committed suicide.  I wonder what happened to Einstein’s son?

And I wonder if daughters have the same problem with their mothers? Or at least similar ones.  And think about it, what about spouses with a very successful “other,” how does it impact them in their marriage?

Just thinking.

Ichak Kalderon Adizes

State of the World Review

I was invited by the Governor of the Moscow region present how the Adizes Institute could help improve the services the government provides its citizens and his region could serve as an example for the whole of Russia on how to rejuvenate the nation’s bureaucracy. I was given one half hour to make a presentation. My audience: the top twenty directors of the different Moscow regional administrative departments.

I followed my standard pattern: I asked everyone in the room to write down the top five problems in his or her department. Then I asked my audience which of those problems they thought could be solved by any individual. The response was the one I hear everywhere in the world: none.

Then I asked, how many of the problems listed can be solved if everyone on a team cooperates, works together? “All” was the answer. So far so good, I thought to myself. No surprises.

Then I asked the next (usual) question:  “Why should people cooperate?”  There is a general answer we almost always receive in response to that question. Namely that it is in their own self-interest to cooperate because the other person will offer his cooperation in return when it is needed. One hand washes another….no?

This time, however, I got a surprise. The Governor spoke confidently, as though the answer was self-evident. “They will cooperate because it is for the common good.” Oops, that was not in my script.

His reply left me with the following insight: What is the difference between capitalism and socialism? It is the relationship between the individual and society. The focus is different. The priorities are different.

In capitalism, the focus is on the individual. It is expected that in a perfectly operating market mechanism social good will emerge. The focus, therefore, is on fulfilling the needs of the individual or corporation. Thus the famous expression during President Eisenhower’s eight years in office (1953-1961): “What is good for General Motors is good for America.”

In socialism, the focus is reversed. It is on the society, on the totality.  Individual interests are derived from the social interest, not driving it.

If this insight is true then it seems that the creeping socialist trend in America did not start with President Obama, something he is constantly accused of by American right wing politicians. It began with President John F. Kennedy who legitimized it in his inauguration speech: “ask not what your country can do for you, ask what you can do for your country.”

That was the beginning. It opened the door to an emphasis on social good, even though its impact could affect individual interests adversely. But is socialism working?

It has failed in Europe, and today many political leaders see it as an anachronistic system.  So why is it creeping forward in America? The reason is capitalism is not working well either.

Both systems have faltered—indeed are failing— in the intensive changing environment in which we live. They are incapable of dealing effectively with the rate and complexity of change the modern world is experiencing.

Change causes disintegration (it is a centrifugal force) and the emerging disintegration requires regulation. Thus, government intervention.

But an intervention by the government—any government— is accompanied by values that govern its decision-making. If the government has a leftist orientation, its focus is on how to increase intervention (by the government of course) for the good of society while taking the focus off the good of the individual, which it is assumed will be taken care of because of the emerging common good.

If the government is driven by right wing politicians, a different set of values swings into play. Here the effort is to dismantle government intervention and focus on individual and/or corporate needs assuming that market forces will regulate the unwanted side effects of rapid change.

Neither solution is working. That it is not working can be evidenced by the declining trust of people in their elected officials, and by the declining rate of people who vote. By the occupy Wall Street or whatever syndrome. And it is accompanied by a continuous witch-hunt of leaders everywhere in the world.

No one can lead anymore without a constant debilitating criticism. We witness people everywhere taking to the streets and by doing so demonstrating their loss of trust and hope in the system.

I am speaking about both the East and the West. Leftist as well as in rightist governments.  I cannot point to a country where the populace says: “We got it. We have it. Our system works. We love our leader.”

People everywhere, in all continents; continue to search for a paradigm shift in the system of governance. What I think they—we—are looking for is a new political road or so called “third way.” Is there one?

We already know that left and right solutions do not work anymore. And that the attempted solutions increasing or decreasing government regulation have been unsuccessful. With more regulation, we seem to stifle development and innovation. The due bills of a welfare society have become prohibitive, the cost of government mushrooms and the national debt is overwhelming.

But reducing government, something those on the far right and those with a libertarian orientation propose, does not work either. Who will regulate the naturally imperfect markets; and not just markets but the emerging technologies of the day?

We must find a way that reduces government involvement, but at the same time provides the regulation that a chronically changing society needs. Is there such a system?

Yes, there is. And I strongly believe in it. It is integrated decentralization. Self-Management. Industrial Democracy. Different names for a similar economic-political system.

I believe, however, that we are not ready for a paradigm shift in our thinking. Not yet. The situation is not bad enough. When the ultimate crisis finally comes and our value system, whether it is in favor of the left or the right, more or less government finally capitulates, we will be ready to think outside of the box.

Or so I hope.

Just thinking.

Sincerely,

Dr. Ichak Kalderon Adizes

On Core Competency and Value Propositions

One of the cornerstones of strategic planning is, of course, to analyze core competencies and value propositions (what value you provide that makes your customers come to you and not to your competitors). We take that for granted. But should it be the responsibility of the CEO? Is that his role in the company?

Well, yes and no. It is his responsibility if he or she turns out to be the corporation’s strategic planner too. But the CEO has, and should have, other roles to play beyond strategic planning.

For example, assume in Company A there is someone designated to serve as a strategic planner; that’s her job assignment. Or perhaps there is even a whole department for strategic planning. What then? Granted, it is the CEO’s role to approve their strategic plans and to review the core competency of the company to determine if it is valid.

But then there is also the value proposition offered to the market. Is that correctly articulated? And, does the strategic plan take all of this into account? All these fall into the bailiwick of the CEO. It is part and parcel of his or her role. And what else?

These questions came to mind recently while I was attending a session with Stewart Resnick, the co-owner of Roll International. I had arranged for a group of my clients to visit with him so they would be exposed to a company that practices Adizes.

Stewart has been a client of the Adizes Methodology going back to when his company was dealing with $12 million in sales. That was almost forty years ago. The company’s revenue is now $3.5 billion, and it is still one hundred percent owned by him and his wife, Lynda.

For those of you who do not know Roll International, I am sure you know some of their products, such as Fiji Water and Pom Wonderful. They also control over thirty percent of the world market in pistachios, among other agricultural products, and they own probably one of the largest farms in the world.

Stewart was asked three questions by his visitors: 1) What is the company’s core competency; 2) What is the value proposition that made the company grow so well; 3) What is the source of your success, Stewart?

I admit I was extremely gratified by his answers.

“I watch alignment all the time,” he said. “That is the reason we hardly outsource. Yes, we outsource the dining area and the company restaurant, but we have our own advertising agency, our own PR, and our own consulting arm. And now we are starting our own Corporate University. That way we can control what they do, and ensure that THEY ARE ALL ALIGNED.”

I hope you have read the above paragraph slowly and carefully. The core competency he was referring to was not the raw material resources; or some technological advances that give his company an advantage; or early presence in the market; or even the strength of the brand. Their core competency is the capability to be aligned at all times.

Now why is “alignment” so important?

It is pure Adizes. If you have listened to my lectures or read any of my books, it immediately becomes obvious. That is why my chest exploded with gratification. He was practicing the Adizes Methodology without even attributing it to Adizes. It was as though he owned this concept. I loved it.

Whenever there is a change there are problems. Right?

Why? Because everything in this world is a system, including a company, and a system is by definition composed of subsystems, which again in turn are composed of their subsystems, ad infinitum.

When there is a change, the subsystems do not adjust in a synchronous way. Some subsystems change at a faster rate than others.

For instance, in a young Go-Go company, marketing and sales subsystems change on a dime, mainly because the clients demand it. They had better if they want to keep their clients. But accounting, as a subsystem, changes slowly. And human resources changes even slower.

This creates gaps in the system; gaps that turn into cracks. Those cracks are manifested by what we call “problems.”

So the faster you grow and/or change, the more problems you will have.

In order to have a SUSTAINABLE growth, which Stewart had, you need to be sure that those gaps are closed; that the subsystems are “ALIGNED.”

You make sure your supply is built, and synchronized, with the developing demand. And you, the CEO, see to it that sales do not outpace the capability to deliver and that sales and production do not create problems for finance, which needs to have working capital available to finance the growth.

Growth means change, and change means DISINTEGRATION, by definition. And the faster you grow, the more disintegration and, ergo, the more problems that confront your company.

Now back to the strategic planner. Let him or her think about what and how to capitalize on core competencies of the company. If you as a CEO are also the strategic planner, wearing that hat, then that responsibility falls to you. And if you do not have a marketing department, and you as CEO wear that hat as well, you must think about your company’s value proposition to the market.

But in the CEO “hat,” your role is to continuously integrate the various functions and not let one permanently outpace the other…Not an easy task.

I found a video that describes perfectly, in the form of an analogy, the role of the CEO.

Watch it: http://vimeo.com/62422161

Sincerely,

Dr. Ichak Kalderon Adizes

When Do We Die?

Imagine a person sitting in a room full of people debating a subject. This person does not say a word. Does not express himself even in body language.

You would say that this person is not really there. He is physically there but that is all.

Now imagine the same room with the same people debating a subject and repetitively quoting someone. Is that “someone” in the room? Not physically, but otherwise he is fully engaged and “alive.”

May I suggest there are two ways to exist: physically and interactively.

Some people pass through life unnoticed. They have been here physically, but when they perish physically, they perish totally.

We die twice: once physically and the second time when no one remembers us.

Is Buddha alive? Not physically but interactively very much so. Is Jesus Christ alive? For sure.  And Moses and even Hitler, with the rise of the neo-Nazis around the word.

How about Karl Marx? I would say he is either dead or dying.

To remain alive one has to do something memorable while physically alive. What is that something?

There is a difference between Hitler and Buddha or Jesus Christ.

One had a destructive impact. The other a constructive impact. Destructive means he preached and is still preaching destruction and hate through his work and followers. The other growth and love.

Neither can be forgotten but one is preferable to the other. And, may I also suggest that those who are presently and interactively offering love “live” longer.

However, there is more to this notion that we do not actually die. Physically yes, but interactively no.

We carry in our genes the style and physical characteristics of our ancestors. And, I suggest we also carry their fears and hopes. Which means they live through us; they are still “alive.”

There is a difference, however, between physical life and interactive life.

In physical life, we experience joy directly. Joy from the pleasure of food, intimacy, socialization, and intellectual stimulation. None of which we experience when we are only interactively present.

Or maybe, we just postulate we are not enjoying it anymore. Because none of us knows for sure what life thereafter offers?

Just thinking….

Sincerely,

Dr. Ichak Kalderon Adizes

How Change Causes Corruption

Corruption is a problem for most countries; they engage in a constant struggle to overcome it, often with little success. I know of no nation that is immune to the disease maybe Singapore or Switzerland. I am unsure. But in my travels around the world, working in different countries, I encounter the same complaint: “CORRUPTION.”

What are the causes of corruption? Why is it so wide-spread? Is it just an inborn trait in which people everywhere have corrupt value systems? Or is there more to it than that?

I believe corruption is a more complex phenomenon than simply identifying it as a failure of human values. Its roots are found elsewhere within our social system(s). Ultimately, it has to do not just with human frailty, but with CHANGE.

Take any device and expose it to drastic, severe change and what will happen? Like a piece of cloth. Pull it. Pull it some more from different directions… and what are the results? It will come apart.

It is the same with systems. They develop gaps, cracks and fissures when subject to change. During the course of repeated change, the system finally breaks down.

If we look at a nation that was once a colony, we might observe a series of multiple laws. Some date from colonial times; some are new. And, some are very, very recent and overlap with both the colonial and the so called, “new laws.” Often, the end result is major confusion as to what is right and what is wrong. We see this today in many African nations.

A similar pattern (of confusion) occurs in nations, which have had quite different political and/or economic systems over the course of their history.

Which brings us to Russia. Ruled by a Czar and a bureaucracy; followed by a violent revolution and a supreme (communist) political system with its accompanying  bureaucracy; followed in turn by a relatively peaceful revolution and a new market economy system (not very free, but still….) departing from a central planning system   and what you get is a  lot of change.

Today, Russia has three different accounting systems, all legitimate. Imagine what that can do to comparative financial results. Imagine how it impacts auditing efforts. And, now imagine in this situation how difficult or relatively easy is it to cheat or steal…

Moreover, as change accelerates anywhere in the world, collateral problems arise like pollution, urban overcrowding, transportation problems, or how to control sanitation, or regulate the quality of food production and distribution.

All of this calls for regulation. For controls. For systems of control. For permits and licenses.

Often, the systems do not change fast enough to keep up with what needs to be controlled; change outpaces the capability of people and governments to adapt to the new conditions; to develop new or improved systems. There is a constant sense of falling behind.

The result is called a bureaucracy. It can block the capability of companies to act in a changing environment that requires prompt action.

So, we have two problems caused by change for most nations (among many which are not necessarily related to this article) gaps develop (i.e. people have no clear idea what needs to be done, when it needs to be done or how to do it, and bureaucratization of the systems settles in place. The system works all right, but at a pace that is awfully slow and inefficient. Meanwhile, the needs of the market responding to change have revved up and demand a prompt response.

This is where corruption comes to play a role.

A client who needs to make the system work has to find ways to speed up the bureaucratization process; make it shorter and more efficient. How to do that seems fairly clear. Find someone who knows the ropes, who will make the system work (rapidly). And, since such a service has value for that client, he or she will be willing to pay for it. When you pay, place your money on or under the table and you have contributed to the phenomenon called “corruption.”

Take a buyer in a retail chain or someone who is in charge of buying for a government institution. Here is where one is prone to find corruption.

The suppliers try to pay a “fee” so that they can be moved to the head of the line; so that they can suddenly be the preferred supplier. A great deal of money is at stake.

The buyer in this scenario is placed in a position where he can abuse his power. He has to decide who will get the (government) contract. In effect he chooses from whom to buy. And that decision can be influenced by who pays the most under the table.

Now, please see where the problem is: the company or government agency where bribes occur. I suggest to you, it does not have a transparent system or a working audit system of purchasing practices. If it did, it would have prohibited this “under the table” transaction from happening.

It does not have a well-functioning one because much has changed over time, making the system opaque, not transparent or broken down.

In Hebrew the expression is:  “a hole in the fence calls for a thief.”

The opaqueness means lack of controls in the company which have created the conditions that can be exploited by some of its staff.

I suggest to you that the better the systems are able to function, the more transparent they are, and the more controllable, the less corruption there will be.

Here is the formula:

The more change in the country, the more bureaucracy.

The more bureaucracy within demands of a changing environment, the more corruption.

Punishing the corrupt people does not solve the problem. It might slow it down, even arrest it. However, the problem of corruption will not be ended.

It is like killing mosquitoes that carry malaria. You cannot kill them all. And, if you kill some, new ones are born. You need to dry the swamps where they breed.

We cannot punish, let alone execute all those who are corrupt.  Nor can we slow down the change that is creating the “gaps” or the bureaucratization. But, we can accelerate how we de-bureaucratize the system, and re-engineer it, so there are no longer ongoing “holes.” And continuously re-engineer the system to successfully and promptly serve the clients who depend on the system to fulfill their market needs.

For a country experiencing chronic change, I would like to see a ministry in charge of de-bureaucratization, re-systematization.  A model already exists within corporations which have systems engineering or continuous improvement departments. (This is what the Adizes Institute is dedicated to doing on both a corporate and a governmental level world-wide). It can be done. And should be done.

What is needed is: Less prosecution. More prevention.

Just thinking.

Sincerely,

Dr. Ichak Kalderon Adizes

Change and Its Repercussions for The Banking Industry

Abstract: Changes have always existed but their speed and frequency have become rather apparent. Changes are present in all areas of life, but here we focus on those happening in the banking industry. Banks are undergoing revolutionary changes and they must change or perish in their present form. The article explains why banks must change and what are the threats to both asset and liability sides they would face otherwise. Changes result in modifications of strategies, organizations and management. The article concludes that banks that are the most flexible and able to adapt will win the day.

Change has been ever-present for millions of years, ever since the Big Bang, and probably before that as well. So, what is new today that we can say about change?

What is new about change in modern life is its speed and frequency. It keeps accelerating without even a pause to let us adapt, adjust or embrace the rapid changes that continue to define us and our society.

Furthermore, change today is different from its earlier forms, not only in velocity but in its very nature. For one thing, it is multifaceted. And multidisciplinary. And very, very much interconnected. The environment itself is becoming increasingly interwoven: technological changes impact our laws which, in turn, affect our social, cultural and economic systems, and not necessarily in the same order or even in ways that coalesce smoothly and naturally.

Instead, change in one institution often topples others like falling dominos. Take the internet, for example, a technological innovation which has had profound economic repercussions.

E-commerce facilitated by the internet has replaced traditional retailing. Bookstores are closing left and right. Amazon now not only sells books, it has broadened into music and films, and beyond popular culture, to the point where it now markets whatever can be retailed, including food. It has revolutionized the retail industry.

But the internet has also had social repercussions. Traditional educational institutions find themselves threatened by new schools of learning and new forms of instruction via the internet which are growing like mushrooms.

And it does not end there. The new forms of communication have also generated popular uprisings and have helped unseat political governments. Facebook and tweeter are credited with contributing to the Arab spring by spreading information instantly, so that citizens have been galvanized into immediate action. And each situational change within the political dynamic is spread directly and at the push of a button to the ever-growing concerned populace. The new communication technology has in effect become the handmaiden of revolution.

What about the banking industry?

The business side of traditional banking has been built around the idea of taking savings and giving loans… and making a profit on the difference between what it pays for savings and what it charges for loans.

In 1982, when I was consulting for Bank of America we came to the conclusion that this scope of activity was under major threat; that banking was undergoing some important changes and if it remained static, committed exclusively to this product line, it would experience serious challenges to its survival. The prediction was proven right; one example being the bankruptcies running into billions of dollars of the savings and loans institutions a few years later.

Why did banking have to change?

On the liability side, instead of putting its money into a savings account, the public was offered many other financial opportunities to increase its economic holdings. On the asset side, suddenly there was competition from non-banking institutions such as private equity funds and the stock market, which could provide capital in place.

Threatened by both the asset and liability side, banks had to change. They converted from providing only traditional banking services into a more complex financial services corporation. Revenue was now derived from service fees, rather than only from the difference in the margins between loans and savings.

It also became clear that computerization and mobile banking could lend an unexpected flexibility to banking. A bank could now be mobile, located any place where a computer could be installed and an ATM machine made available for transactions.

These changes have had a revolutionary impact on the banking industry over the past thirty years.

For instance, Banco Azteka from Mexico, where I serve as a consultant, has trained and dispatched mobile bankers. They are men and women who come to your home, computer at hand, and offer banking services: extend personal and mortgage loans, open savings or checking accounts, and in effect bring the bank into your home.

It has become possible to place a table with a computer and a banner and establish a branch bank wherever there is traffic and people congregate. So retail chains today rent space to banks so that they can set up tables and/or counters and open for business, especially for customer credit, in places as different from the old banking structures as large food stores and pharmacies.

Banks used to look like big citadels. They were viewed as a place to safeguard money. No more. An open environment, inviting, friendly, accessible, able to provide services, had to replace the austere guardian structures of the past.

The change in strategy, in what now constitutes the financial services business instead of legacy banking business, has had an impact on the organizational structure of banks: product managers are now needed to manage different product lines and different marketing departments are suddenly necessary to manage the diverse market segments. This has created a matrix organization with all the inevitable accompanying complexities.

There are new managerial problems that need to be addressed. For example, where in the organizational structure should we centre the bank’s profit responsibility? It is complicated because there is uncertainty about the loan inventory. How solid and reliable is it? How large are the bad debts? How much of the profits should be viewed as a reserve against future losses?

Banco Azteka has made risk management responsible for the bank’s profitability. It is an innovation, and perhaps a daring one. But come to think of it, the idea makes sense. If the risk taken is too high, it will impact profitability in the long run.

The next question is the role of the branches. Where do they belong in the organizational chart? Many branches serve both the small middle market and the larger retail market; and even at times, the corporate market. In that case, where are the branches in the chart? They should not report either to small business or to retailing because they serve both. So, where?

They have to be separate from the market segment and from the product line. They become something like a retail outlet for a myriad of products. But that calls for a retraining of the branch manager. He or she is not the loan officer anymore. He or she manages a “supermarket” of services and the role has been transformed into client relations for whatever product is needed.

The banking industry is going through a revolution of sorts. Technological innovations as well as major changes in the financial industry have given banks little choice. They must change or perish in their present form.

Banks that are most flexible and able to adapt will win the day. This flexibility cannot, of course, be at the cost of violating compliance. The organizational structure of the bank needs, on one hand, strong quality control of operations, and at the same time flexibility to adapt to a fast changing environment. Not an easy assignment.

 

Sincerely,

Dr. Ichak Kalderon Adizes

Reflections from my stay in an Ashram, India

I have come to Chennai, India, to the Babuji Ashram, an Ashram of the Sahaj Marg mission, to meditate and meet Master Chariji again.

This, I believe, is my third or fourth trip to India for that purpose in seven years. I wish I would have come annually. Each time I learn something that in retrospect changes my life for the better. Deeply. Significantly.

I have reported my insights from meditation in past blogs. What did I learn this time, on the first day of my arrival?

Master Chariji is 87 years old. He is also seriously sick. His days are counted. Or may be it is months, but it does not look like he has years left. So, I wondered, what does a person who knows that his days are counted, that faces the inevitable, what does he think is really important in life.

Usually, a person in that situation, I thought, kind of evaluates his life and has insights what he could have done differently and better; he will refocus on what really counts in life so that those days that are left to live are not wasted anymore.

Sitting next to him, a privilege I cherish and value tremendously, I asked him:” Master, what is really important to you, NOW”

As I say, I expected some deep insight about life, a kernel of knowledge that I assumed a person facing death will have.

His answer: “Nothing new. The same.”

Now stop and reflect on his answer to my question: “ What is important to you now?” The answer: ”Nothing new. The same. “

Can you see how integrated this person has? He has no remorse about anything he did in his life and there is no need to change anything in the time left in his life. Truly living in the present. Past and future are all in the present. Or said differently, the past continues through the present into the future. There is no difference. He is totally at peace with himself.  Nothing needs to change. There was no waste in the past that he needs to catch up in the present before the future evaporates. What is, is.  What was meant to be, is meant to be.  Free. Free from remorse. Free from guilt. Free from wishful thinking. Free. Free to live. Free to die peacefully.

What a way to live! What a way to die!!!!!

I asked him although he looked so old and feeble and I know he was in serious pain, if I will be able to see him privately.

“If I can be of service to you yes”, he said.

Wait a moment…he guy is dying, and he is going to give me the scarce minutes left to serve me or anyone else!!!

Is that what life is about, than?

Stop and think. Stop and reflect: what else is life about? Is that a waste to be of utility to others? In those remaining days of ones life, most people, I think, would rather serve themselves? Old people become kind of selfish. They cherish every second of life left to be used by and for themselves. Why waste them on others?

Why was his answer different? In Sahaj Marg meditation you open your heart and that means you love. And to love is to give of yourself to others.

LIFE IS LOVE. Without love what is life all about?  And love without giving is all talk and no being.

And to love you have to stop expecting. What is meant to be, will be. No less. No more. This meditation teaches you to stop expecting and to take life as is.  Do not fight life. Live life. Loving.

Now the question is what is life? What does it mean to live?

How do you know you are alive? Is it that you can move your hands and legs? Or that you can breath? But there are people that are paralyzed that are alive and you can stop breathing for a minute and you are still alive Ah, than was Descartes right: “Since I think I am”?  I am not so sure. Some people do not think and they are alive. So what is the answer?

I said: “Since I feel, I am alive” When I stop feeling whatever I feel, when I am just a body but without a soul, there is no life for me.

But what does it mean to feel? How do you know that you feel? (Thank you Deepak.)

In order to feel, you have to be conscious.  And in order to be conscious you need to be present. Here and now. Not let your mind wonder all the time into the past or into the future.  And meditation helps you to be here and now. To be present. To be conscious and thus to feel. And thus to be alive.

Whoa. Think about it.

Working hard. Rushing from one assignment to another. In my case, jumping from one airplane to another, from one client to another, scared to waste time  …time is money, no? …… I am not present. I am not conscious. It looks like I am alive, running like a mad man, for only God knows what it is I am chasing… and the harder I fill my time with activities so I do not waste any time, the faster time flies, and I have no idea where years of my life have gone to. No time to feel. No time To Be. Thus, no time to live. To be alive.

But if meditation is so good, why don’t I do it every day? Why?

Because to sit and do nothing and let thoughts come freely to your head and not try to control them and manipulate them is HARD.

Yes, it is hard being. And very easy be busy doing.

To really live is scary. To fill your life with action so it looks like you are alive is easy.

Just reflecting

And wishing you well,

Sincerely,

Dr. Ichak Kalderon Adizes.