Ah, the good life. You made your millions or billions. Now it is time to kick back, relax by the pool…and manage your costly and complicated family office.

Family offices are must-haves for Upper Richistanis. If you have $100 million or more, chances are you’ll need a family office to manage your investments, travel plans, philanthropy, political activities, bill-paying and estate plans. That’s not to mention the multiple homes and wives. If the lives of today’s Upper Richistanis are businesses, the family office is corporate headquarters.

“I have four people (in the office) and five people at the house and I don?t even have a job,” says AOL founder James V. Kimsey (left), in an article in the Washington Post. “Why it takes that many people to sustain me is hard to explain.”

To help answer that question, The Post article by Thomas Heath plumbs the inner workings of Mr. Kimsey?s family office. (Richistan Note: When I met Mr. Kimsey at a Richistan reading in D.C. last summer, he had a great line about rich people having three basic choices when it comes to deciding what to do with their money. “You give it to your kids and ruin their lives, you can waste it on buying lots of stuff, or you can give it to charity.” He was leaning toward the last one).

Mr. Kimsey?s staff includes:

The Chief of Staff–Peter Kirsch, a Marquette grad, is Chief of Staff in the Office of James V. Kimsey. He coordinates investments, requests for money, philanthropic giving, home renovations and meetings with politicians and CEOs.

Part gatekeeper, part investment manager, he is known as “Dr. No,” since he says “no” so often. He also checks in with Mr. Kimsey’s house staff–a separate army of chauffeurs, housekeepers, cooks and engineers.

The Accounting Manager–Hired from the wealth-management division of Legg Mason, Mr. Weir’s job is to “follow the money.”

The Scheduler–Nancy Merritt, a former staffer on Capitol Hill, has the mission of getting Mr. Kimsey’s daily schedule “under control.” Mr. Kimsey calls her “my nanny.”

“She organizes my romantic life,” says Mr. Kimsey, a 68-year-old divorcee. “My girlfriends think I’m a much more sensitive, caring guy since Nancy has been with me.”

In February I wrote about scapegoating at work after noticing that the issue was coming up more and more with my coaching clients. It struck me that scapegoating had become a widespread and growing problem which was posing significant career implications for the victim.

What I hadn’t realised was just how endemic the phenomenon appears to be - as the comments the post attracted - and continues to attract over a month later - from people around the world. It appears to be happening every day, to a whole range of people, at all levels and in all sorts of companies, from India to Africa, Asia, the U.S., and Europe.

Here are some of the comments from people who have either been made scapegoats themselves or who have observed others suffering the same fate at the hands of their managers. I have grouped them under themes in order to try to make more sense of the phenomenon, plus a couple of questions at the end that remain unanswered for our commentators. My sincere thanks to everyone who sent in their comments and suggestions - from personal experiences to practical ways of dealing with scapegoating and suggestions for reading material. (I recognize this is very long, but that demonstrates how important many of you found this topic.)

Prevalence of scapegoating
This is one of the facts in professional life.(Anon)
One can find this vice practised all over the world. (Audrene Loke )
Scapegoating is becoming the ‘norm’ in the corporate world (Anon)
It is very common in small start-ups when it is all about the interests and directions of the CEO (L)
I don’t believe there are managers out there who haven’t been targeted as scapecoat one time or another throughout their professional career. ( A Wong)
Scapgoating is well known in the healthcare industry (Dinesh Patel)
This is schoolyard bullying in a corporate suit. (T.L. Scott)
I know of endless number of cases wherein managers have damaged the self-esteem of their subordinates. (Uma Arora)

Who is scapegoated?
Successful senior executives (Angela Blackburn/Kate)
Whole teams ( Anon)
Foreign-born engineers in Silicon Valley (Miai)
Junior staff (Amitava Mukherjee)
Quiet people who get on with their jobs (Anonymous)
All levels and in all functions of any organization. (Farooq Ahmed)
A new senior manager dismissing a reportee manager: “I don’t like her; it’s chemical”. (Out Loud)
Inter-departmental in large corporates (Virender Vaira)
Generally to a ‘nobody’. (Vijay)
People with as much as 30-40 years of experience. (pm)
People who do not have a voice.(pm)
Green employees with little or no experience (Oluwafemi Abioye)

By whom?
The boss (Anon)
The CEO (Anonymous)
Brilliant, well educated and successful young executives who grossly abuse their power and authority with no negative consequences (Angela Blackburn)
Those who are more visible to senior management and have more say (Vijay)
Above-board staff who have played politics - seeming them as a sincere, trustworthy and ever performing staff… (Oluwafemi Abioye)

When?
When an unfavourable result occurs and performance is poor (Mike Sewell)
When a new person has taken over as boss.( Anisur Rahman )
Whenever there’s a change - a new person is hired, a merger, a change in existing responsibilities or some other performance based initiatives. (LH Wong)

Why?
[This is] an old and very human tendency. Scapegoating exists in families, among friends, partners and as described above at the work place. Always has. (Mahadevan Sundarraj)
Globally we have lots of wrong pegs in wrong holes in terms of leadership - until leadership qualities are addressed the ugly incidence will continue to spread like cancer in our work environment. (Oluwafemi Abioye)
Less focus on hard work, more focus on quick progression and higher rewards leads to the short cuts. More focus/pressures on results and less focus on the route adopted to attain the results. (Farooq Ahmed)
All the actions are driven by the fear of what the result will be & how the boss will take the meaning. (Anon)
Scapegoating is often resorted by people with a herd mentality (Anonymous)
To create confusion and chaos, to blame rather than fix the problem itself. (Gyan Chand)
Pressures and desires to survive & compete, leading to manupulative tendencies (Virender Vaira)
So an individual may remain in good books of their superiors. (Pm)
Because of the inability or inefficiency of the boss to lead from the front and take onus of his / team resposibilities. (Arun)
Management playing a polical game, pitching one race group against the other. (miai)

Effects of scapegoating
Once scapegoating is observed and condoned, it will spread like fire, demotivate hard working employees who play by the rules and morale will spiral downwards. (Lena Lim )
Solid organisations stand to lose excellent staff thru this unethical practise. (Audrene Loke)
In many cases it takes people months and sometimes years to recover and reconstruct themselves from the damage. (Uma Arora)
10 years on I have not recovered - even today I am suffering because of this and unable to come out of this in my professional life. (Prasanna Kumar)
“Skin saving” attitudes [prevail rather than] than a real work (Jayant)
I was scapegoated by my CEO. I was the star performer now I am in therapy. This is a truly detrimental practice but its sadly the truth in business. (Anonymous)
Many workplace psychological crimes go unreported - the victims and oppressors stay quiet because they don’t want to risk their jobs. (Uma Arora)

What should managers do?
The same techniques we teach our children to use when dealing with bullying apply here. Regardless of whether we are the bullied or the bystander, staying clear, staying silent only supports the behavior. (T.L. Scott)
“Each manager or leader should at least communicate with two levels below him” or may be three levels. (Farooq Ahmed)
There should be something called organizational journalism - people should have a free voice to express their views at all levels so that before someone tries to make a scapegoat, it gets viewed in a very negative light by all concerned.(Uma Arora)
This would be typical issue for internal audit as shareholder’s value being destroyed by either team, CEO, who ever. (Martin Skakala)
Build trust and exercise ethical behavior at all times. It starts from the top. Remove the scapegoater if identified and proven, this person is neither a team player, nor does he or she has interests of the organisation as a whole, but only that of himself (Lena Lim)
Blame-placing should be discoraged - fixing problems is more important than finger pointing. (Jim Wile)
Regular 360 degrees feedback will go a long way in ensuring that such instances, if any are not left under the cover before the annual review / appraisal cycle. (arun)
Management has a role to play in being explicit about accountabiltiies and managing both the team and individuals. It is management’s responsibility to have a real, objective understanding of the performance and people issues behind unsatisfactory results. (Mike Sewell)
Managers should have an insight of the situation and try to investigate causes that lead to an individual be scapegoated. (Anonymous)
A cross-functional team should be put in place to examine such incidents to identify the scapegoater and he/she should either be eliminated or kept on strong vigil to avoid further damage. (Amitava Mukherjee)
Being specific and demonstrating visible and ‘public’ attempts to rectify the situation are advisable. (TL Scott)
Incorporate ethics and leadership courses more effectively into our schools, beginning in high school all the way through grad school. (Angela Blackburn)
Managers need to be more skilled and committed to spotting and stopping bad behaviors at the onset. (LH Wong)

What should victims do?
Keep good records of everything, and I mean everything, that you’ve done during the course of your work day…. from telephone conversation to e-mails to any other written documents. (A Wong)
Quiet, consistant, firm, ethical behavior has rewards greater the the price paid. Have a plan not to be a victim and hold to your standards! (Rick Lorenz)
Sometimes the best thing is to get out of Dodge. Some organizations are toxic. (Rick Maurer)
Don’t allow yourself to become a victim.Trust your instincts and never, never stop networking so that you do not feel trapped in a position that may negatively impact your self confidence and long term success. (Angela Blackburn)
Remaining can eat away at the employee’s sense of self-worth. When the only feedback you get is negative, it’s hard to keep remembering that it isn’t you. (Rick Maurer)

Purushotham Kumar V has this great outline of steps to take:
One should not only be good, but also be smart enough to prevent being scapegoating target. In my view, the following can be the steps to deal with scapegoating:
1. Build trust and confidence with peers, superiors, manager and manger’s manager.
2. Keep eyes wide open: observe who have the attitude to blame others when things fall apart, can be very minor situations. Those who take personal responsibility for failures are trust worthy folks.
3. Build protective fence from blamers, because these will be the potential candidates for scapegoaters. The protective fence includes building visibility, trust and confidence with the potential scapegoater’s manager, peers and other infulential folks in the upward hierarchy.
4. Maintain all documentation and evidence for all good work, communication, interactions with potential scapegoater. Maintain memo / document minutes by asking directed questions.
5. Communicate and attempt build positive relationship with the potential scapegoater. Try understand his/her perspective and analyze what you can do to bridge the gap.
6. When scapegoating seems peaking beyond acceptable threshold, raise the alarm, expose the scapegoater, use some of the documentation and evidence (still save some for later use, just anticipating counter moves by the scapegoater’s supporting party), invoke witness and support from the scapegoaters superiors and peers. Do some social service by doing your best to ensure the scapegoater does not continue in the environment.
7. If the upward hierarchy environment is hopeless, remove yourself from the environment before situation lands you as a scapegoat.

Last but not least, sympathy will only bury the victim into the problem. Let each target ask him/herself “what in me allowed scapegoating”.

I’d like to open up the debate again by building on these questions:
* Why is scapegoating happening so much now?
* Who are the targets and why?
* What are managers’ responsibilities?
* What can the victims do?
* What can the rest of us do about it?

Three respondents also have further questions:
* Diana: How does the scapegoater choose his or her victim? What is the profile of the victim? Male or female?
* Mayra Coppin: When this occurs in a direct reporting relationship, what are the most effective responses?
* Jim Wile: What about management’s involvement in and encouragement of scapegoating?

Let’s get to the bottom of this issue and see if we can construct some more useful, pracical approaches to ensure it doesn’t affect too many more individuals, teams and companies. I look forward to hearing from you.

Read all of Gill Corkindale’s Letter from London posts.

Almost a year ago I wrote a post about the Bain list of management tools. Today I saw a list from a CIO Insight survey, described by my friend Allan Alter and based on a survey of 188 IT executives. The two lists had something in common: the same stuff keeps coming up.

Business process reengineering was the most commonly-used management tool in the CIO Insight list, and in the top ten for Bain. I don’t quite get this one, since the companies I work with are not doing business process reengineering they way I understand it. The respondents must be using a very broad definition of business process management (although they presumably don’t include Six Sigma and TQM, which were other tools explicitly listed further down in popularity).

The process-oriented tools weren’t the only persistent ones in both lists. Benchmarking, balanced scorecards, core competency analysis, and scenario planning were also pretty popular in both surveys. I suspect that if the CIO Insight folks had asked about more of the tools that Bain had surveyed for, they would have had even more old chestnut tools in common. Read more »

My hope in this presidential election is that more attention would be devoted to how we are going to make a living in the future. The United States was once the world’s leader in knowledge work: science, technology, engineering, analytics, and the application of computers and communications to business. While we still do reasonably well in some of those categories, few would debate that our lead is slipping. Our students are not well-educated, our science policies have been ineffective at best, and our companies no longer lead the world in basic research. Several other countries, from China to Ireland, have focused much more on competing in the knowledge economy than the United States. Our companies increasingly look offshore for knowledge-intensive work and workers.

The question of how to return our competitive edge has no simple answers, but we do know the categories. Candidates who care about how the U.S. fares in the knowledge economy emphasize funding for science, better education for children as well as for retraining adults, widespread availability of technology and Internet access, and a renewed emphasis on science and technology within our society. The more aggressive candidates venture into the tricky territory of “industrial policy,” picking industry winners for investment and policy support. Perhaps needless to say, these are more Democratic issues than Republican ones. Republicans, including our current president, have largely assumed that the market would solve these problems for us. So far it hasn’t.

Among the current candidates, Hillary Clinton and Barack Obama are much more focused on this set of issues than John McCain, but they are still sometimes vague on how to rebuild our knowledge economy. They both echo Tom Friedman in calling for “green tech” (Hillary calls it “clean tech”) as a focus of government and private sector investment. However, they don’t say which green areas they’ll emphasize, and we now know that some (e.g. corn-based ethanol) are dead ends. Both emphasize education, although just how they will turn around our disastrous primary education environment is unclear. Clinton, for example, pledges to “cut the minority dropout rate in half,” but she doesn’t say how she’ll achieve this admirable goal.

Neither Democrat says much about adult retraining. Both want to expand broadband availability, which is a no-brainer. Neither have a comprehensive policy on which industries they would try to nourish beyond “green,” although Clinton intriguingly mentions “non-health applications of biotech”—what’s wrong with health?—and “e-science,” which her website defines as “research that links Internet-based tools, global collaboration, supercomputers, high-speed networks, and software for simulation and visualization.” Overall, Clinton seems to have an advantage in specificity, which is consistent with her wonkish overall campaign.
Roughly 90% of the economy sections on McCain’s website are devoted to tax reduction and pledges not to raise taxes, with little content about economic competitiveness. The website simply notes: “We must be a nation committed to competitiveness and opportunity.” Enough said, apparently.

These issues are critical to our future economic viability. If we don’t address them, we’ll slide into economic mediocrity and long-term decline. If we can crack them, we’ll be on top of the world, and it will be a much better place for our scientific and environmental leadership. Let’s get busy!

I was never a big fan of Six Sigma. As approaches to business process improvement and management go, it always had some glaring shortcomings. First, there was all the statistical mumbo-jumbo it implied — but seldom delivered on in most companies’ implementations. Second, it didn’t incorporate information technology — arguably the most powerful force available for improving (or screwing up) processes — in any way. Third, it was overly elitist. Instead of relying on Six Sigma expert “black belts” do the process analysis and design, every employee should be a process improver, as I argued last week. Fourth, it really only enabled incremental improvement, not radical breakthroughs. Fifth and last, it wasn’t a good fit for innovation-oriented work. Even Jack Welch now admits that it shouldn’t be used everywhere in a company, but I might argue that it should only be used in product manufacturing, where the idea of reducing defects to one in six standard deviations really makes sense.

So what’s the best alternative to Six Sigma for process improvement? Well, there really is no one alternative that’s best for all processes and circumstances. Companies really need a combination of tools and approaches. The best companies in process management already have such a combination. You hear about Lean Six Sigma, which is a combination of some of the lean approaches found in the Toyota Production System and Six Sigma, but actually the mix should be even broader. Johnson & Johnson, for example, in its “Process Excellence” program, also adds a component involving breakthrough change. Even Motorola, where Six Sigma was born, also incorporates a method for creating breakthrough process improvements.

Companies should also incorporate some techniques for combining process change with the information systems they’re installing. Business process reengineering is the only process improvement approach that’s really had this focus in any substantial way, but it was flawed in other respects and isn’t a go-it-alone method of choice either. At Air Products and Chemicals, which has had one of the most successful process change programs in recent years, the company employed a hybrid approach to process change that closely matched the SAP system it was putting in at the time. Shell has a major effort underway to put in a common version of SAP and improve processes at the same time. It isn’t easy to change both things at once, but it’s silly to change processes and ignore IT.

I hope that when companies start getting excited again about process improvement, they resist one method for doing so. A hybrid, combined approach is really the only approach that makes any sense. In religion many people worship only one god, but in process management we should all be pantheists.

Read all of Tom Davenport’s “Next Big Thing” posts.

Coming soon from John Quelch: Greater Good: How Good Marketing Makes for Better Democracy (Hardcover)

Many business-to-business (B2B) CEOs view marketing as the domain of consumer goods brands. They are wrong. Among Interbrand’s 10 most valuable global brands, we find Microsoft, Intel, IBM and GE. All generate far more B2B revenues than sales to end consumers.

An HBS research team recently conducted a study of top B2B global brands. They shared the following five characteristics:

1. The CEO is a willing brand cheerleader, loves the brand heritage and is a great storyteller. The CMO sees his or her purpose as helping the CEO achieve this role.

2. The CEO understands that building brand reputation reduces commercial risk, insulates the company in a crisis and provides the common purpose that can bond all the company’s stakeholders.

3. Efforts are focused on a single, global corporate brand rather than individual product brands.

4. The payback on marketing expenditures is measured rigorously to the satisfaction of the hard-nosed engineers and finance staff who run the typical B2B enterprise.

5. Coordination of company websites worldwide to present a consistent face to stakeholders is the best way to get control of marketing communications that may have become too decentralized.

Why should brand-building be important to B2B CEOs?

First, most B2B marketers have to address thousands of small businesses as well as enterprise customers. They cannot do so economically using the traditional direct sales force.

Second, if left unattended, individual managers will each do their own adhoc marketing. The result will be a hodgepodge of corporate logos, taglines and packaging. Customers will be confused and the company will look disorganized.

Third, B2B marketers are realizing that developing brand awareness among their customers’ customers can capture a larger share of channel margins and build loyalty that can protect them against lower-priced competitors.

Consider these examples:

Intel is the ultimate ingredient brand. Zero sales to end consumers yet Intel built a consumer demand pull for its chips that required every PC manufacturer to incorporate them and to advertise Intel Inside on their products and in their ads. Other ingredient brands include Goretex, Teflon and even the Boeing 787 Dreamliner (as a differentiating ingredient for early adopter airlines).

GE and Microsoft are hybrid brands with some direct-to-consumer sales that have helped to build the reputations of what are primarily B2B firms. But these enterprises, although selling to businesses, want to be in touch with end consumers, with their aspirations and their needs. That is a source of competitive advantage in driving their innovation agendas.

Accenture sells nothing to consumers. But its “Performance Delivered” campaign, backed by the advertising presence of Tiger Woods, has created a positive awareness of the brand among hundreds of thousands of people who may be working for the enterprises to which Accenture consults (or is seeking to consult). And the motivational value of inviting top customers, prospects and employees to golf events involving Tiger cannot be underestimated.

Would Dupont’s shareholder value be the same today if it had not made consumers aware of Nylon, Lycra and Stainmaster and linked these innovations to the Dupont name? Definitely not.

Do you think brand-building is essential for B2B companies? Have you seen other characteristics of leadership in smartly branded B2B companies?

MORE ON BRAND BUILDING:
Building A+ Brands (HBR Article Collection)
Building Brand: A Road Map (HMU Article)
Branding from the Inside Out, and from the Outside In (HMU Article)

What is Six Sigma?

The concepts surrounding the drive to Six Sigma quality are essentially those of statistics and probability. In simple language, these concepts boil down to, “How confident can I be that what I planned to happen actually will happen?” Basically, the concept of Six Sigma deals with measuring and improving how close we come to delivering on what we planned to do. 

Anything we do varies, even if only slightly, from the plan. Since no result can exactly match our intention, we usually think in terms of ranges of acceptability for whatever we plan to do. Those ranges of acceptability (or tolerance limits) respond to the intended use of the product of our labors–the needs and expectations of the customer. 

Here’s an example. Consider how your tolerance limits might be structured to respond to customer expectations in these two instructions: 

Read more »