Latest "Leadership" Posts
An entrepreneur shares the 5 most important lessons he learned while undergoing through the traumatic experience of closing down his business.
My friend Richard just closed his business. He’s a smart person, creative, ethical and hard-working. It was a big blow, but he’s a positive person and now he’s back at it. I asked him to share what he learned from the experience and I found his response so encouraging I wanted to share it:
“Having closed a thirty-year old commercial plumbing contracting business that I bought from its founders in 1999, I share these lessons learned for the benefit of my fellow serial entrepreneurs.
#1. Be Careful When Choosing Partners
After previously doing two large, successful projects in partnership with another specialty trade contractor, I learned the hard way that who you select as partners matters. Really matters, as in life and death matters.
When the senior executive with whom I had done the other projects left the firm, I had no reason to think that things wouldn’t continue in the same positive manner. Unfortunately, that wasn’t the case. Not only did the new executives take $8 million of my scope of work after we secured a big hospital deal together, I ultimately had to file a lien and lawsuit for damages approximating $1 million.
#2. Don’t Wait to Deal With Problems
When my partner company started shorting my monthly draws by $30,000 to $40,000 towards the end of the project, I should have reduced payments to my vendors in kind.
Are you playing it safe? Phoning it in? Trying not lose more than you are trying to win? When you stop pushing, testing and challenging yourself, you risk a backward slide that could be permanent. It becomes permanent for the same reason they tell a thrown rider to get back on the horse. This past few weeks have included a number of stories I have heard that showed the kind of risk-taking I am talking about:
- An owner told a prospect that they had 30 days to buy or she would take the solution to the prospect’s competitor and give that competitor the market advantage. The prospect walked and their competitor is about to be market-taker.
- A sales rep called the CEO office of a Fortune 50 company, cold, to get an appointment…and got it.
- A company fired a client that represented over 10% of their revenue because of unreasonable demands. The client backed down and re-signed under favorable terms.
- Three companies landed their biggest deals ever – 8-figure deals, setting a new watermark for what is going to be possible for their future.
What is your big risk for this week? Month? Year? Are you pushing the limits of what you think is possible, or are you staying in your comfort zone? Growth happens past the limit of what you thought was possible. Grow.
For more on how to fight your fears, gain your prospects’ trust and much, much more check out my video interview with Ago here.
Learning how to delegate is crucial for a successful CEO. However, there are certain areas of your business that should always be under your control. Here are five.
There is such a push for leaders to delegate to their subordinates that it would be understandable for a business owner or CEO to think her job IS delegating. Maybe if you’re Larry Ellison or Jeff Immelt it is, but for the rest of us mortals, the job of CEO has a lot less glamor and a lot more day-to-day operational involvement.
As you grow your business, you will hire great people and should delegate as much of the business as you can and still have confidence. Having said that, there are some things that I believe you cannot delegate until you are much larger in size.
- Quality–Would you eat at a restaurant that the owner did not eat at regularly? Would you trust Steve Ballmer if he was using a Mac? The quality of your business, its products and services has to be inspected by you not just regularly, but daily. You also need to inspect it personally, not just through graphs and reports. The great CEOs I know check their quality personally and frequently. No one will have better eyes, ears, and intuitive knowledge of what quality means for the company than the founder, owner, and CEO.
- Innovation–Recently I spoke with an innovation consultant about whether innovation can be delegated. She told me that her company can provide a great deal of the process for ensuring innovation occurs regularly and effectively.
If your business is going to grow, you need employees who can think like an owner. Here are a few techniques to make that happen.
One of the great challenges in running a fast-growth company is aligning your company’s vision, mission, value, and culture with the daily activities of the business. It is vital, however, as the growth of your company is in part dictated by how quickly you can transfer these values from the mind of the owner to everyone else.
I have built four companies that grew at 10x each in less than 5 years. Here are some of the techniques I found useful in developing “owner’s eyes” in my people.
1) Pair up–As a leader, if you are operating alone, you are missing an opportunity for development. In growth companies, there are always new opportunities just around the corner, so you should always be developing people to go beyond their existing positions. Skills-training is relatively straightforward, but imparting the company’s mission, vision, and values to employees is more difficult. Spending time with your people and exposing them to your approach is a good start.
2) Repetition changes minds and habits–If you want people to see like you do, it helps to ask the same questions over and over. As you ask these questions when you are pairing up, they will subconsciously begin anticipating the questions and will seek to have the answers ready when asked. This is training that allows for the alignment of company values from one leader to another.
Ask these questions to your employees:
- How do we make money?
- What is our biggest cost that we control in our service or product?
- How do you help make us profitable?
If your employees in your company can answer these questions to your satisfaction, stop. You are doing everything you need to do and you should just keep doing it.
However, if not, then go to work.
Make it clear – You are not trying to teach an MBA level course. You are seeking clarity of what the 2-3 big levers are that make the key difference.
Connect the dots – Help every person to see what his or her contribution is to those few levers. Be specific. By getting people to see how their efforts change the numbers, you can reward behaviors that fit and correct behaviors that don’t. A trucking company I know explained to their drivers what the ratio of idling time was to fuel cost. Simple change, shut off trucks on deliveries that are two floors above the first floor, or unloading over more than one palette.
Monitor and reward – Behavior modification 101- what gets measured and reinforced gets done.
Before making the decision to downsize, you need to evaluate your sales efforts. Your real problem might just be a lackluster sales strategy.
Do you ever look around your office and ask yourself, “What are all of these people doing?” You look at your sales and revenues and they are flat or below projections. Your payroll, however, is still disproportionately robust. You start to wonder…Do we really need all of these people?
Before you grab a pencil and start plotting how to “right-size” your business, ask yourself a few questions first:
1) How does seasonality and business cycle affect your staff needs?
2) What does the backlog show the demand to be in the near future?
3) What does the pipeline show for the possible demand in the near future?
One of my great mentors once said, “All business problems are really sales problems.” An overstatement perhaps, but it is still something worth considering. Once you have looked at the fluctuations in your staffing demands based upon the questions above, you need to focus on ramping up your sales efforts.
Let me start with a confession–I have made almost all of the staffing mistakes you can make, some of them more than once. I have held onto staff when I should have trimmed. I have trimmed when I should have kept. It took me a while, but eventually I learned the lesson to hire slow and part ways fast when it is clear the relationship isn’t a good fit. Assuming you have done the same, that means you have a really strong staff who are underused.
Here are four common assumptions that CEOs make, and how you can avoid them.
Having been in the CEO role a half-dozen times, I have made a wide variety of foibles, blunders, misguided assumptions, and bonehead choices. Most of the great CEOs I have the privilege to know and work with are self-effacing people who can recognize mistakes along the way.
Employees understand what customers’ value. Often in the transactional activity of day-to-day work, the waters become murky as to why one customer has chosen to work with your company. Ask your employees why your customer’s choose your company over a competitor. This will provide you the data that is at best incomplete and at worst completely wrong. Transaction data is about accuracy, speed and reliability, which are pure service values. The next level up is about quality, product, and availability. The real value for your biggest customers comes from what problem in their business revenue, supply, and cost chains that you solve.
Customers understand what your company does for them. When a customer chooses your company for a service, it is typically to solve a particular problem or supply a service or product. Over time, you become a vendor/supplier who is favored as much out of habit. Time and again, companies tell me that they meet with long-time customers and are asked to refer another company to help their customer with a problem that the company provides now. It drives owners crazy, obviously. Make sure your customer recognizes all the solutions you have to offer.
Insurance may not be sexy, but it is becoming a bigger expense for almost every business. Here are the five common insurance mistakes and how they affect the bottom line.
Recently I had an interesting conversation with a CEO about blind spots in business leadership. In particular, she was discussing the way businesses purchase and manage insurance. She said it was one of her blind spots which she eventually recognized the hard way. With that in mind, I called Dave Dias, a friend of mine from InsuranceThoughtLeadership.com, and asked him what were the most common mistakes CEOs made regarding insurance. Below, he explains the five biggest mistakes:
If a CEO is disengaged at the time of policy placement or when a significant claim occurs, it will almost certainly cost the company money. Consider the example of one CEO who couldn’t have been more removed during a sensitive claim-settlement negotiation following a major fire loss. He wasn’t conversant on the issues and relied exclusively on his staff. By the time the CEO re-engaged and began asking pertinent questions, the most germane issues had already been negotiated and settled. The financial loss was in the tens of thousands of dollars. His absence was a big miss; the matter would have been mitigated more in his favor had the CEO been more engaged from day one.
Allowing Procedure To Trump Leadership
Overanalyzing an issue “by committee” delays critically-important decisions and costs the company money. One CEO was overly concerned about getting everyone’s buy-in for the implementation of a newly formed safety-compliance committee.
By strategically sizing up the competition, you can help take your business to the head of the pack.
“I want to take my company to the next level.”
I hear these words from CEOs all the time as they talk about their goals and dreams for their companies. When I push for the details, the conversation tends to get a little murky. It’s usually just a recap of how the company has been performing recently. The conversation always ends with a statement of aspiration, “I just know we are ready to really grow.”
Certainly, set your goals for the stars. Along the way, however, you need to pass the runner in front of you before you overtake the record-setter at the front of the pack. If you have ever raced, you know the importance of focusing on the racer right in front of you as you look for your opportunity to pass.
What to do:
1. Study the pack
Pick out the market leader. Now pick out the one-to-three competitors who are at the next level ahead of you. Take your ego out of the conversation as much as possible and put your analyst hat on. What separates the pack into their current positions? These layers in the market are often set by what the market values. The question should be, what criteria are being valued by the customers you want and the market-share you want to take? If you can determine those elements, you can plan your company’s stepping-stones for growth.
How would your company fare in a March Madness-style competition? Here are a few tips on how underdog companies can compete against even the biggest competitors.
After an exciting game last night, Louisville was crowned national champion of the NCAA men’s college basketball tournament. Kudos to the Louisville players and coaches, it was a great season. Even if you are not a basketball fan, there is still a lot you can learn from the March Madness tournament. This year’s tournament was a perfect example of how an underdog can outperform teams that, on paper at least, are rated better in just about every respect–as demonstrated by the surprising success of Florida Gulf Coast University.
Business owners may also have noticed that just like the NCAA tournament’s bracket-style, single-elimination format, a growing number of large contracts are awarded in a similar fashion. Whether they are known as RFPs, procurement-managed purchases, reverse-auctions, or competitive bids, awarding contracts have increasingly adopted this head-to-head competition format. If you are good at preparing for these one-on-one comparisons, you have a better chance of winning the final contract.
Recently I was working with a construction firm on a multi-million-dollar opportunity. We went through a competitive analysis that bracketed all the competing companies against each other in order to understand who would win each comparative analysis. Like basketball, what creates a winning strategy against one team may not be right against another. I advocate looking at all of the companies you consider to be your competitors in the final round for a large contract.