00:09 Robert Kaplan: Let's take some questions. Now, I've zipped through this quickly but it's just to give you the idea of the premise, yes sir. Yes, and use the microphone, I'm supposed to say.
00:21 Audience Member: When you mentioned priorities, a lot of companies may have goals like top three goals, top four goals, do you find that sometimes people are using that as well or the goals are more vague?
00:31 Kaplan: Yeah, so here is the problem. For many companies, there's confu... There are goals and then there's how we add value and what are the tasks we must do well. So for example, goal is we wanna be number one or wanna be leading market share, for example. And my concern is many companies use goals, they talk about goals but those are outcomes. It would be as if we're coaching a basketball team and might... I say to you, "I'd like you to score more points than the other team, please. Good luck have a great game." You would never do that, right? You would say, "We've gotta block out, we've gotta watch our shots, we've gotta pass the... " You talk about a lot of fundamental things we must do well if we're gonna score more points than the other team. And so, all I'm saying is break it down into what those things are, that's gonna allow you score more points. So goals, goals tend to be outcomes is my only fear. Does that make sense?
01:31 Audience Member: Sure.
01:33 Kaplan: Does that answer your question?
01:34 Audience Member: Yeah.
01:35 Kaplan: Okay, others. Yup, here comes one. Yes? No? Or he's leaving.
01:44 Audience Member: I'm not leaving.
01:45 Kaplan: Okay. Then, it's gonna be a question.
01:48 Audience Member: Yes, it is. You mentioned bringing in your direct reports and asking them to share... I'm sorry, you're not hearing me? You mentioned bringing in your direct reports and asking them to tell you what their vision was and what their value was for and that's where may be I got a little confused there.
02:01 Kaplan: Yeah, let me explain that.
02:02 Audience Member: I'm curious, shouldn't it bleed down from the top, I mean they can't be out of alignment with yours.
02:06 Kaplan: Okay. So let's go through a few parts of this. What do you do with your subords? Number one, my own view is... First of all, you do have to come up with a vision and priorities. The question is are you, do you have enough information to do it? For some leaders, you do, and you have to be the judge of that. In other cases, may be you've got a sprawling organization now where they're covering customers and if they are, you can't know everything. If that's the case I might go out and interview my own people and then I'll come up with vision and priorities but only with their input. The part I do want you to do one-on-one with your people is the following, two parts. One, get advise on strengths, your strengths and weaknesses. Can you write down your own strengths and weaknesses and what you ought to be doing. You'll get some fabulous advise but that's very specific to you but there has to be trust to do that.
03:03 Kaplan: And second, I would argue, you need sort of a tune up every year or two, where you wanna look at your business with a clean sheet of paper. If you've got the emotional objectivity to do that, great. And may be you go out and re-interview people and see if you're still on track. Sometimes I found, 'cause my business was... Got so big, that in fact I had my top lieutenants to do this assignment. 'Cause I find they might even be willing to ask questions that I don't even realize I'm not willing to ask. Or people are afraid that I've got a sacred cow, or "Gee, Rob built this business, what am I gonna tell him to dismantle it?" I can't do that where they might be willing to say it to your lieutenants. But that's a function of... That's got to be a judgment call for you. You may not need to do that.
03:46 Audience Member: Can you ask... I'm sorry.
03:48 Kaplan: What?
03:48 Audience Member: Can you ask your customers?
03:49 Kaplan: Yeah, ask whoever... My advise is, I'd say that what's the difference between a good leader and a great leader? Openness to learning? Ask whoever you need to ask. And by the way, I don't ask customers their opinion just for the fun, for the sake of it. And what... Maybe you just need to go on enough clients calls yourself or your people. You get a feel for what's going on and why you're in the meeting talking about their situation. You ask them a few other questions but you need to, you need to be close enough to the business or work through your people enough that you got your finger on the poles to what your customers are thinking. And why? 'Cause I wanna go back to, "Are we adding value?" Is this really... I think we have this distinctive competence or competencies, maybe customers don't think so anymore. And typically, when I ask most business leaders, "How's your business doing?" The first thing that comes in their mind and I'm guilty of this too, "Am I making money or not?" That's the first thing I think. Market share and are we making money? And truthfully, more on, "Are we making money.? My experience is your business begins to erode usually X number of months or years in advance of when the profit turns down.
04:54 Kaplan: By the time your profit turns down, it's usually a result of two or three years of eroding value-added and erosion of your distinctive competence. And so, what I'm trying to do is be out ahead of it because profit doesn't always tell the story. But this business of margin squeeze, like I was talking to a gentlemen in the corner here, he told me about what his margins are. They're very, very thin. Now, maybe it's because the business is... Doesn't have the credibility yet to charge or maybe there's something with the value they're adding that they need to think of other adjacencies 'cause those margins are too thin, given how well he thinks they're doing in terms of market share. But I don't have the answer, but I do know you need to ask the question. And engage your people, 'cause you'll be shocked, they may have some brilliant insights that will surprise you and it happens all the time. The problem is a lot of the brilliant ideas in your company, you're sitting there and you don't access them. That's a waste and your people go to sleep 'cause they figure you're not interested in their view, so they stop thinking. Okay? Thanks everybody.