Winning: The Answers: Confronting 74 of the Toughest Questions in Business Today (11 page)

I
t’s so easy to hate matrixes, isn’t it? If there is one thing practically everyone in business can agree on, it’s that they sound great in theory but are hell to put into practice.

Count us in. We sure prefer pure P & L businesses. They’re built on clear reporting relationships, making each individual accountable for his or her results. They make strategic focus and resource allocation easier. They’re better training grounds for developing general managers. And they’re definitely better when it comes to creating new businesses out of the old; in P & L structures, start-up champions just have an easier time getting heard.

Meanwhile, matrixes, for all their good intentions, can be exercises in frustration. Their biggest problem: sucking the clarity right out of organizations. Any time you have someone reporting to two bosses, chances are accountability will get muddled. Matrixes are filled with dotted-line relationships. The result can be all sorts of mischief, from power plays to miscommunications. At the same time, matrixes often put well-meaning people at total cross-purposes. One classic matrix scenario involves a manufacturing manager trying to make his overall inventory budget at the expense of a product manager with a hot new widget who is crying for availability. No wonder matrixes tend to enervate the people who work in them—ambiguity and loggerheads have a way of doing that.

But if matrixes were all bad, they’d be as extinct as dinosaurs by now, and they’re not.

Matrixes have two main advantages. The first is that they create a well of superior expertise that many product lines can draw on. Take, for example, a jet engine company with several different engine types. In a P & L situation, each engine type would have its own metallurgist. But none of these individuals would likely be of the caliber of specialists working in a matrix organization. Why? Because functional organizations—with their pay, visibility, and prestige—are just better able to attract high-level talent.

The second advantage of a matrix is financial. With their larger orders, the heads of manufacturing and marketing in a matrix are far better equipped to drive a hard bargain with suppliers and distributors than the heads of individual P & L businesses. They just have more negotiating power.

So, while working in a matrix can sometimes be maddening, the structure’s benefits cannot be denied. From your question, it’s difficult to tell exactly why the experience has been so negative for you. Perhaps, as you imply, it has something to do with management. That wouldn’t surprise us; matrixes are harder to run than pure P & L businesses. They require a higher comfort level with ambiguity. Further, they require a higher level of trust. That is, the people in the product lines have to believe to their toes that the people in the functions are working for the business’s overall goal, not just to make their own numbers.

Bottom line: matrixes may never be as great in practice as they are in theory, and they will never be as easy to work in as a pure P & L, but don’t give up on them altogether.

When leaders build trust and push hard to ensure as much clarity as possible, matrixes do work.

Y
ou really have two choices. Either tell your bosses, “Charlie made that terrific decision based on his tried-and-true gut instinct,” or, if Charlie’s gut is fifty-fifty at best, ask him to stop making decisions that way.

Look, as a general rule, gut instinct is nothing to be ashamed of. Quite the opposite. It’s really just pattern recognition, isn’t it? You’ve seen something so many times over your life or career, you just get what’s going on this time. Gut instinct, in other words, is a deep, perhaps even subconscious, familiarity—the kind of knowing that tells you anything from, “Go for it
now
,” to “No way—
not ever
.” Although we would wager the most common gut call falls in between the two—the “uh-oh” response, in which your stomach informs you that something is not right and you should figure out what it is.

The trick with gut, of course, is to know when to trust it. That’s an easy call when you discover, over time, that your gut is usually right. But such confidence can take years of trial and error.

Until that point, we suggest this rule of thumb: gut calls are usually pretty helpful when it comes to looking at deals and less so when it comes to picking people.

No, we’re not mixing them up. Even though deals come to you with all sorts of data analysis and detailed quantitative predictions, and people decisions seem so much more qualitative, the numbers in deal books are really just projections. Sometimes those projections are reasonable, but in other cases, they’re little more than wishful thinking. When have you ever been presented with a deal with a projected discounted rate of return less than 20 percent? You haven’t! Again, sometimes that’s because a deal is great. But other times that’s because the people proposing the deal have adjusted the investment’s residual value to make the returns reflect their hopes and prayers.

So, when it comes to looking at deals, consider the numbers—of course. But make sure your gut plays a big role in the final call as well. Say you’ve been asked to invest in a new office building, but visiting the city, you see cranes in every direction. The deal’s numbers are perfect, you’re told; you simply
can’t
lose. But your gut tells you otherwise—that overcapacity is about a year away and the “perfect” investment is about to be worth sixty cents on the dollar. You’ve got few facts, but you have the uh-oh response.

More often than not, that means you should kill the deal, even if it infuriates the so-called rational thinkers on the case. Odds are, they’ll give you credit for prophetic thinking down the road (although probably with less public gusto than you’d like).

By contrast, relying on your gut during hiring isn’t always a great idea. The reason: our gut often makes us fall in love with a candidate too quickly. We see a perfect résumé with prestigious schools and great experience. We see a likable individual who says all the right things in the interview. And even though we don’t admit it, too often we also see a person who can quickly make a problem go away, namely, a big, open, gaping position. So, with our gut hurrying us along, we rush to seal the deal.

We see this dynamic in action all the time when people call us for references. They start off by firmly stating that they only want an unvarnished view of the candidate in question, but as we start to give it to them, we can feel them begin to wither. Their voices tighten; it’s almost as if they’re saying, “Oh, please don’t tell me that! All I really wanted from you was a stamp of approval!” They can’t get off the phone fast enough.

So, when it comes to hiring decisions, you may want to ask your people to muster up the discipline to doubt and double-check their gut, and you should too. That means dig for extra data about every candidate. Go beyond the résumé. And yes, make reference calls—and make sure to force yourself to listen, especially to mixed messages and unpleasant insights.

Overall, however, gut calls do play a real role in business—and a good one. Don’t worry too much about explaining that to your bosses and shareholders. They use theirs too.

G
ood news. You’re halfway there because you realize that great salespeople are different from you, us, and most everyone. In fact, they’re a breed apart.

Which is not to say that salespeople shouldn’t have the qualities you look for in every hire—integrity, intelligence, positive energy, decisiveness, and the ability to execute. It’s just that they need other qualities as well—four to be exact.

The first is enormous empathy. Great salespeople
feel
for their customers. They understand their needs and pressures; they
get
the challenges of their business. They see every deal through the customer’s eyes. Yes, they represent the company, and yes, they want to make it profitable. But they are geniuses at balancing the interests of the company and the interests of the customer so that, even at the end of difficult negotiations, both sides describe the process as more than fair.

Not surprisingly, then, the second quality of great salespeople is trustworthiness. Their word is good; their handshake means something. They see every sale as part of a long-term relationship, and customers usually respond in kind.

Third, great salespeople have a powerful mixture of drive, courage, and self-confidence. Cold calls are brutal. No one likes making them. But the best salespeople want to grow the business so badly that they dive into them relentlessly, day after day, and they have the inner strength not to take inevitable rejections personally. They just take a deep breath and move on.

Finally, the best salespeople hate the “postman” model of doing business. No offense to letter carriers! It’s their job to deliver mail along a set route every day. And great salespeople certainly do a version of that too, selling current products to current customers. But they can’t help themselves—they also love to go off-road in search of product and customer opportunities. The best salespeople, for instance, think it’s part of their job to regularly bring ideas home from the outer reaches, saying things like, “You know, if we could make XYZ, we could capture a whole new market out there.”

In that way, then, the best salespeople
are
just like you. Revenue growth is at the top of
their
to-do list.

Unlike you, or any boss for that matter, concerned with every variety of other organizational matters, revenue growth is also at the middle and bottom.

And that’s what makes great salespeople so special—and so valuable.

S
urely you know the old saying “No good deed goes unpunished.” Well, you might be using it yourself very soon.

Not to disparage transparency! In general, the more information you share with employees about costs and other competitive challenges, the better. It’s as you suggest—when people know what they’re up against, they can feel a greater sense of ownership and urgency, often sparking homegrown improvements in processes and productivity. And the sense that “we’re all in this together” can certainly jump-start teamwork and innovation.

But…

There are real perils involved with opening the books, the main one being that it’s very hard to open them just a little bit. Once you start “exposing” costs to have them make sense, you need to expose revenues and profits as well.

So, are you sure you’re comfortable with the team knowing how much the business makes? They will naturally compare that number to what they make, and eventually they will be able to extrapolate how much of the pie you have—and they don’t.

That gap may very well be something you’re willing or even proud to explain. If so, then there’s probably no downside to sharing financial details with your team. But remember that every employee, no matter what size the company, has a personal pay scale in his head that estimates what he and every one of his coworkers is worth based on their output and performance. If you get the sense that your information spree will upend those notions, then leave this particular deed undone for now, and try to find other, perhaps less perilous ways to get your team to care about work the way you do.