I met this week with partners from the Newport Board - an organization of former CEOs and senior executives that "guides companies through No Man's LandTM" - that unfortunate place where the vast majority of businesses eventually settle…
…doing well enough to press on but not even close to being either a) a source of significant cash flow for its owners or b) an attractive acquisition candidate for a strategic or financial buyer.
Companies stuck here face a daunting array of vexing business challenges, described well by Newport Board partner Ferey Feridian as the “Four M’s” - Money, Management, Model, and Marketplace.
Breaking free of No Man’s Land requires getting all four of these right.
Money. Most small and mid-sized businesses fight an ongoing, Sisyphean battle with money - pushing the cash flow boulder up the hill month after month, only to see payrolls, rents, insurance, materials and marketing & sales expenses drag bank balances down again and again.
Losing at the money game, however, is almost always a symptom of deeper problems than a cause in itself.
So when money problems arise, usually the best thing is to not focus on them but rather to confront their root cause, which almost always can be found in one of the remaining 3 “M’s” below.
Management. As described in my The Living Company post, in the end, a business is simply a “Collection of Humans” temporarily united toward a common cause.
As such, the “productive vitality” of the relationships between these humans is the most important indicator of its ultimate success, and can be well measured by answers to the questions below:
1. Would / do the people in the company recommend it as a great place to work?
2. Would / do true leaders view it as a place where they can build their careers / make their mark?
3. Does a productive camaraderie exist in the organization such that that those within it do more and better work than without?
If the answer to any of these questions is no, then a hard and sober look at the company's management and leadership is required (And, in all likelihood, the problem starts and ends right at the top).
Model (Business). I had the great fortune recently to lead a change management assignment for a large, urban hospital here in Los Angeles where Mr. Charlie Munger - Warren Buffet's famed partner at Berkshire Hathaway – is Executive Chairman.
Mr. Munger's philosophy and credos were well steeped in the organization, of them my favorite was that for Mr. Munger all businesses – no matter the size, industry, or focus – could be evaluated as to their answer to one question, namely:
"Does the business consistently deliver high quality at low cost no matter the field of endeavor?"
Honestly measuring how one’s company ranks on this cost / quality spectrum relative to competition is a great predictor as to its long term success.
Marketplace. Following on Mr. Munger's wisdoms, try on one of Warren Buffet's most famous quotes:
“When an industry with a reputation for difficult economics meets a manager with a reputation for excellence, it is usually the industry that keeps its reputation intact."
Now, when it comes to industry and market analysis, most small and medium-sized companies undertake it anecdotally, if at all.
An investment of time and resources which almost universally yields a high ROI is to have an outside research firm undertake for the business a formal industry, competitive, market, and customer analysis.
It is almost impossible to pay too much for such work, as helping managers gain stronger focus as to what their right market positioning is (and what it is not!) is worth its weight in something far more precious than gold, opportunity cost.
Money. Management. Model. Marketplace.
Successful businesses get the last three right and the first naturally follows.
Advisory groups like the Newport Board work with CEOs to get them right faster.
And, as they do, companies break free of No Man’s Land and recapture the promise and excitement of the business' earliest days, but now with the cash flows and equity value that makes all of the hard work worthwhile.
2016 is just 30 days away.
And if you want to make 2016 your best year ever, you need to start planning now. So come January 1st, you’ll be off to the races.
To help you succeed, I’m hosting a complimentary Webinar this Thursday, December 3rd at two times:
12pm Eastern / 9am Pacific - Register Here
8pm Eastern / 5pm Pacific - Register Here
The webinar is called "How to Make 2016 Your Best Year Ever!" and I’m hosting it with Growthink's co-Founder and President, Dave Lavinsky.
On the webinar you will learn:
• How to dramatically increase your sales and profits in 2016
• The precise way to figure out the best opportunities to pursue in 2016
• How to set your 2016 goals so they are attainable and lead to your long-term success
• My #1 tactic for ensuring your breakthrough success in 2016
• And much, much more!
You can expect to hear a positive, motivating message loaded with golden nuggets to make 2016 an incredible year.
Click below to save your spot:
12pm Eastern / 9am Pacific - Register Here
8pm Eastern / 5pm Pacific - Register Here
P.S. Whenever I host a Webinar, I get a lot of emails asking if there will be a replay. Right now I don’t have any plans to do a replay -- so my advice is to be on the Webinar LIVE!
The fundamental challenge of modern business is finding that right balance between tactics and strategy, between execution and innovation, between management and entrepreneurship.
Typically, as companies grow and age, they naturally become more tactical, more execution - focused.
In contrast, the “tabula rasa” of startups has traditionally been the best milieu for out-of-the-box strategy and innovation to thrive.
Now in the old days, businesses could do ok by being very good at just one of these.
Big businesses could sustain profitable franchises for years by leveraging their resource advantages to keep smaller competitors out and margins high.
As for startups, it was easy to stay in the “idea bubble.”
Investors were more patient and it often just wasn’t that obvious if your team and technology had the right stuff. You had time on your side.
But no longer - businesses must now be either good at both or they perish.
This is extremely stressful for most entrepreneurs and business owners, and especially for investors working to determine which of them to back.
Luckily, there is an easy shorthand to separate the superstar company wheat from the chaff.
It is the simple idea that super business PEOPLE must be all of these things too.
And superstar companies are really just ones where lots and lots of superstar people work.
So, find the superstar people, and the money will follow.
In his excellent book “The Global Achievement Gap,” author Tony Wagner flags seven crucial “superstar” skills to look for:
1. Critical thinking and problem solving
2. Collaboration across networks and leading by influence
3. Agility and adaptability
4. Initiative and entrepreneurship
5. Effective oral and written communication
6. Accessing and analyzing information
7. Curiosity and imagination
To this, let me add one more: Ambition.
Now I am not talking about the garden variety get good grades, go to a nice college, start a small business, complain about taxes and regulation and how hard it all is type ambition.
In this multi-billion person, highly educated, hard-working world of ours, that just doesn’t cut it.
No, the ambition I am talking about is one that burns so deep and hot that it is deeply dysfunctional.
An ambition that usually translates for sure into an insane, other-worldly work ethic, but one that goes beyond that.
It is an ambition that is channeled daily into ongoing personal and professional improvement and learning.
An ambition that leads to goals beyond the realistically possible.
Like Steve Jobs leading Apple into the music business, or Richard Branson Virgin into airlines, or Tony Hsieh with Zappos putting his life and considerable fortune on the line, for of all things, to sell shoes online.
This kind of ambition is the unifying force. It demands that everything be done right – strategy, tactics, innovation, execution, entrepreneurship, management.
Find this kind of ambition – channeled to ethical, capitalistic ends – and back it.
And you and the world will be better for it.
Last week, in Austin I had the opportunity to participate in a 2 - day “Mastermind-type” meeting with a gathering of technology and Internet entrepreneurs and executives from around the globe.
It was an impressive group - leaders of companies with average sales of $8 million and competing and prospering in industries that run the gamut - from consumer products, to healthcare IT, to energy and entertainment, to mobile apps and wearable technologies, to real estate, and more.
To those who have never participated in a business mastermind, you don’t know what you’re missing! Originally conceived by legendary personal development guru Napoleon Hill, a Mastermind is a gathering of like-minded professionals that meet regularly and over time develop a productive, high-trust dynamic through which to attain breakthroughs of insight and accountability around and about strategic, tactical, and management challenges.
Mastermind groups, both generic ones as I attended in Austin, branded versions like Vistage and YPO, and informal versions as organized by trained facilitators, are where the hard, methodical work of entrepreneurial business - building and growth gets done.
The “table topic” for our meeting was best practices as to data-driven decision making and strategic planning.
It is obviously a very timely one - as Big Data and Business Intelligence (BI) tools and software are at the center of vast swaths of venture capital financings and strategic and managerial best practices for companies of all types and sizes.
We talked about how the companies getting the highest “BI ROI” connect the dots between their "old" and "new" school strategic planning and thinking.
They are old school (in the absolute best, non-pejorative sense of the term) in that they recognize that strategy…
…arrived at through Mastermind get-togethers, through board and advisory board meetings, through strategic planning processes led either internally or by an outside consultant - remains fundamental in attaining and maintaining long-term business success.
And they are new school in their leveraging the very many best-of-breed business application software as services to arrive at this strategy.
Tools like CapitalIQ, Sage, KISSmetrics, AWeber, SurveyMonkey, RingCentral, Campaign Monitor, Zoho, Marketo, CAKE, FuseDesk, Maropost, and Hubspot that automate and optimize traditionally laborious and repetitive business functions.
And, as they do, collect massive reams on the marketing, sales, operations, finance and managerial performance of a business.
And, as importantly, the technology has finally matured to where all of this collected data can be organized, analyzed, and benchmarked against comparable - but better performing - companies from around the globe.
This “New School” data wizardry, when combined with old school Masterminding, risk-taking, and a ton of hard work…
…is what allows companies to both run more day to day efficiently and profitably, and more in strategic alignment with their missions and long-term goals than ever before.
It is not hyperbole to define a successful organization as one that finds the balance between a) making the right changes at the right time and b) having the discipline to “keep on keeping on” and just doing more of what is working.
Note well that b) is particularly hard to maintain when the tasks and activities that ARE working become repetitive and lack in excitement and drama.
So how does an organization find this balance - between thinking laterally and creatively and just keeping their heads down and plowing forward?
Well, luckily in the past few years a large and impressive business literature has sprung up that codifies best practices of how to balance this need to incorporate change in an organization with that to maintain doing “more of the good same.”
This thinking can best be summarized by the phrase “Immersion plus Spaced Repetition” and goes like this:
1. Everything, of course, begins with ideas, and the best, business ones normally arise from a series of individually and organizationally introspective strategic planning and goal-setting sessions that clarify objectives and the obstacles standing in the way of their accomplishment.
This immersive process - done at least annually but at organizations with ambition quarterly - both defines what needs to be done and inspires all of the participants to take on the hard and often painful work of getting it done.
The latter point here cannot be underestimated – Thomas Edison famously said that “genius was 99% perspiration and 1% inspiration” but that 1% “spark” is uber-critical in propelling an organization through the first threshold of change.
2. But, as anyone that attended an exciting or invigorating conference or strategic planning session can attest (and as I am sure Mr. Edison reflected on often during long nights at the lab), inspiration fades over time.
Even worse, when the inspiration is not followed through on, cynicism can set in and actually leave an organization worse off than if the planning sessions were never done in the first place!
So how to avoid this distressing fate?
3. Well, by keeping the ideas, goals, and objectives of the planning session alive through their regular review and adjustment.
Think of it this way - if a well-run strategic planning session is the essence of good leadership, then well run, spaced and repetitive goals and objectives reviews are the essence of good management.
Great managers check in with their teams as often as daily – if only for 5 or 10 minutes – to review the day’s objectives and to keep the shorter term work flow aligned with the longer term planning and mission objectives.
The old adage that the only way to eat an elephant is one bite at a time is never more true than when it comes to these spaced and repetitive management check-ins. When done right, they measure, acknowledge, and reward incremental progress and prevent the desire for the perfect from getting in the way of the doable and the done.
Now, at least annually and preferably quarterly, the entire organization needs to reconvene to review actual progress versus stated goals, to assess what worked and what got off track, and then to refine and define updated goals and objectives.
And after this next round of strategic planning sessions, what is to be done?
Well, the spaced and repetitive management check-ins begin anew. Wood is chopped, water is carried.
Following this simple but disciplined formula, over time great ideas become great realities, businesses are built, and legacies and fortunes are made.
And for investors, far more than technology it is these “above the line” leadership and management disciplines that separate the well-run companies to back from the haphazardly ones to avoid.
It is remarkable how large the accountability gap has grown between what is considered normal and expected in the world of business and private enterprise…
…and the profound lack of accountability that sadly we have become so accustomed to and from the other major Institutions of our society - Government, Education, Healthcare, Religion, Etc.
It goes like this: Businesses must deliver daily on their product and service promises or a) Customers just stop buying and b) significant reputational damage is effected in this “Online Star Rating” world of ours.
For everybody else? Not so much.
Imagine, with its 9% approval rating, what Congress’ ’“Yelp” / “Trip Advisor” star rating would be?
Or, for that matter, what it would be for our local high school, community college, or hospital?
And, at the risk of controversy, I think most religious leaders would seriously shirk from having their institutions’ reputational scores widely shared with the general public.
Now, one could say that - because the intents of most businesses are so different from these other institutions - that this is an unfair comparison.
Or that we can’t define “accountability” for these other institutions because of the legitimate “values” disagreements within them - i.e. for education is the accountability around teaching say - hard work or creativity?
For government is it about liberty or equality? For healthcare longevity or wellness?
To this I say poppycock!
Like for $50,000 per year for average private school tuition, how much hard work and / or creativity are universities really teaching our young?
Or for the 35% of the wealth of our society that local, state, and federal governments appropriate, how much freedom and how much equality are we really getting? Or more prosaically, for what we are paying for it how high is the quality of our airports, roads, schools, and parks?
Or how much wellness are we getting for that $2,600 MRI?
Or that $30,000(!) average hospital stay cost?
The answer, of course, is that if even the most mediocre of businesses were given access to the resources that these other institutions have that the value and customer ROI delivered per dollar spent would increase dramatically.
So how can the ambitious entrepreneur and executive leverage this accountability gap to their advantage and gain?
Well, for starters, step out more and shout from the rooftops how proud you are to be In Business – both in general and specifically as to the value your business delivers.
It is good for our personal psyches, and is inspirational for all when some of the spotlight and attention is taken away by "the other guys."
And then, reflect long hard on the connection between the experiences of your customer, the accountability mindset within your organization, and your business's online reputational scores.
Improving any of them is almost always dependent on improving all of them.
Through this Kaizen - this commitment to constant improvement - will not just further widen the accountability gap between business and all of the other institutions of our society…
…but that between our tightly measured and always improving enterprises and our more “fuzzily run” competition.
It was business star-studded affair - 150 Silicon Valley technology executives and investors gathered together to network and brainstorm on IoT - described by many as fundamental a technology shift as the emergence of the Internet itself was in the 1990's.
As I wrote after the 2014 event, this premise of a world where online connectedness is no longer a computer/ tablet/smart phone thing, but is now woven into the very fabric of our cars, buildings, equipment, minds, and bodies is unnerving to many, including to the event’s panelists from companies like Chevron, Cisco, CSAA, Invensense, Schneider Electric, Splunk, Stanford Health Care, and the U.S. Navy.
But far more then balancing this threat and concern is the almost limitless variety of New Business Models, Work Process Improvements and Personal Delights an IoT world makes increasingly possible.
New Business Models. The ability to measure outputs, in real time, allows for fractionalized delivery of traditional industrial services - like as mentioned by Splunk CTO Snehal Antani - the rental and leasing forklifts not by a period of time (i.e. hour, day, year) but instead by the amount of lift of weight lifted and moved.
The result? Both a vast expansion of a potential customer base for a product/service and a delivery of it in exactly the way those new customers wish to purchase and consume.
Work Process Improvements. Panelists ranging from Chevron's CIO Alysia Green to Stanford Healthcare's CIO Dr. Pravene Nath made the powerful point that an Internet-connected sensor on “everything” allows for work process improvements ranging from the safety of a refinery technician approaching a pressurized valve to the ability to predict the exact time when a doctor will see their patient. On a case x case basis, perhaps barely noticeable incremental improvements, but transformative in their aggregate.
Personal Delights. For me, the most inspirational takeaway from the gathering was IoT’s under-stated potential to make our lives more “Personally Delightful” on a day-to-day basis.
At the event Ron shared his vision for Enjoy, where customers buy and have delivered and installed IoT devices like iPhones, Sonos Home Theater Systems, Withings Smart Body Analyzers, GoPro Cameras, and of course laptops and desktops.
His key point was that only in a “Internet-Connected Sensors Everywhere: IoT world is the Enjoy business model possible – one where Enjoy can hire, train, and deploy highly competenet and empathetic “Fellow Humans” to show and teach us how to make all of the IOT things in our life work for, empower, and not frustrate us.
So whether we like it or not, The IoT world is both here and coming.
What GTK's and Pillsbury’s IoT event taught me last week is that we can make money in it, be safe in it, and with a little help from our Internet friends, enjoy it too.
I recently shared why business intelligence dashboards are now a must have for executives seeking to better understand, leverage, and ultimately profit from the treasure troves of data surrounding their businesses.
This data includes insight from their companies’ web and social media traffic, from its e-mail send and open rates, from its lead tracking systems and sales logs, from its product fulfillment records, and from its accounting software as it records revenues, expenses, and cash flows.
Pretty basic stuff, eh?
Well, maybe when viewed one source at a time, and/or over a limited time period with just a few data points, but given that a business doing as little as $1 million in revenues now has on average more than 20 data sources – from software services like Google Analytics, Salesforce, Quickbooks, ZenDesk, to dozens of Excel files and spreadsheets of every type and purpose, figuring what to do with it all quickly gets overwhelming.
And in business, when something gets overwhelming, what happens?
Yes, all of these treasure troves of data, insight, and intelligence just gets ignored.
Reports aren’t run. Or when they are run, they aren't read.
And when they are read, they are not really mined for insight, for “aha” moments and breakthroughs, for competitive advantage.
This sad state of affairs is the unfortunate reality for most executives in this information-overloaded business world of ours.
But not for everybody.
There are a select few that as opposed to being overwhelmed, are energized by all of this precious and unprecedented data.
That use it to both inform and confirm their "gut."
And when the data and their guts disagree? Well, more often than not they let the data hold the trump card.
These executives worship at the altars of both big and little things.
Big things like strategy, mission, vision, values, and culture.
But little things too like form conversion stats, proposal close ratios, page bounce rates, call hold times, quick ratios, and net margin growth to name a few.
How do they do it?
Well, first per the above, they have a functional relationship with data. They don’t whine about it nor are they consumed with how much of it there is.
And secondly, they don’t try to sift through and make sense of it by themselves.
They let technology do a lot of work for them. Both predictive analytics technologies like Civis, Kxen, Foresee, Angoss, and Verisium.
And strategic and business intelligence dashboard technologies like Domo, Pentaho, Birst, GoodData, and my firm Guiding Metrics.
Technologies that find the signals in the noise, and that help them win both the big and little games of modern business.
So now, how about you?
To Your Success,
P.S. Like to demo our dashboard offering? Then Click Here to learn more.
I recently shared the depressing statistic on how less than 1 out of 5 companies marketed for sale are able to find a buyer and to consummate a successful sale transaction.
And how even this depressing statistic vastly under-estimates how few companies are able to attain a successful exit, as the great majority of the over 6 million U.S. business owners because of how they are structured and run can’t even contemplate commencing a “business-for-sale” process.
What did they do / do they have that your company does not?
Well, from my more than 15 years of helping companies of all types and sizes breakthrough to new plateaus of growth and value, I have discovered three universal truths:
1. Most entrepreneurs and executives make the same strategic and tactical errors over and over again.
2. These are simple errors and easy to quickly correct.
3. When they are corrected, immediately an enormous amount of latent business value is untapped and unleashed.
Webinar Invitation: The Five Steps to Maximize Your Valuation
I would like to cordially invite you to join me on Thursday, October 22nd at 1 pm ET / 10 am PT for an invitation only webinar - The 5 Steps to Maximize Your Valuation - where I'll reveal the 5 steps you can take to dramatically increase the sale price of your business, and dramatically decrease the time needed to achieve it, including:
• The 3 Mistakes that most Entrepreneurs and Executives make that effectively render their businesses unsellable
• The 5 things that all business that sell for high valuations have and do
• A simple formula to determine how much your business could be worth if you execute the right plan
I assembled this webinar presentation in conjunction with both the Growthink Research team, which over the past year has performed industry, market, and competitive analyses for hundreds of high growth companies…
…and with the predictive analytics team at Guiding Metrics, who have are currently working with dozens of companies in automating and optimizing their key marketing, sales, operational and financial metrics.
The combined statistical insights of all of this “on-the-ground” business fieldwork are the basis of the to-be presented webinar findings and insights.
Market and economic conditions will probably never be better than they are right now. I encourage all leaders of companies frustrated with their low growth rate and unclear pathways to exit to attend, listen intently, and then act on this awesome webinar content.
Sign up Here:
"Why don't my prospects buy? “Even after - especially after - I demonstrate (and they agree!) such awesome ROI from purchasing my offerings?
This palatable lament has been expressed by entrepreneurs and salespeople since time immemorial, but perhaps never so consistently and discouragingly as in this "Buyer Power" Internet Era of ours.
Yes, no matter what product or service we are selling these days, it is quite likely being received in the market by some frustrating combination of apathy, distraction, and a “commoditized” pricing pressure response.
As I have written before, statistics show that this phenomenon is accelerating and for sellers becoming even more vexing because - quite simply - buyers are just spending so much time and energy on their mobile phones to pay attention to anything else!
The result - especially for higher-priced offerings - is buyers not having the attention span to "Stay with Us" through a Problem Definition, Solution Scoping, and Work Proposal as is typical and necessary in a complex sales process.
So, in spite of the speed of communication being quicker than ever, paradoxically decision-making timelines are stretched and even more frustratingly, buyers are giving sellers “More of that Maddening Thing” than ever before: Radio Silence.
Radio Silence, or Buyer Non-Response has driven even the mentally toughest of us to a dark, philosophical place from which the only way out is by being far stronger and more committed to the value of our products and services then we are empathetic to the trials, tribulations, and competing commitments (of time and energy and everything else) of our buyers.
Yes, in the infamous words of David Mamet’s Glengarry Glen Ross’ character Ricky Roma, anyone that has “Spent a Day in their Life” can attest that only through this kind of mental toughness can we truly “Breakthrough” and get our message Heard and Bought.
Now, a bit more idealistically, this mental toughness need has another key dimension: Getting Fully Comfortable with Full Transparency.
Buyers - with quick swipes of their thumbs and clicks of their mouses - can find out just about everything about us and the value, real and perceived, that our customers have gotten/are getting from our offerings.
They can find out directly - and painfully - from the very many product and seller Rating Sites and indirectly but as powerfully via the quantity and quality of traffic and interest that our websites and social media postings receive and garner.
And when the reviews are bad and web traffic and social media non-existent?
Well, as opposed to cursing to the Internet Gods about the unfairness of it all, the Effective Executive instead takes these on as both challenges and as Charges to Keep.
A challenge to get one's happy clients to digitally share their experiences.
And a challenge to deliver and develop value-added Thought Leadership Content (No more sales schmaltz!) that shows (not tells!) our unique value-add.
And a Charge to Keep because if we can't get happy customers to talk about us or if we can’t share ideas of value to our target audience, well then it is time to roll up our sleeves and to work harder and smarter so we can and do.
And as we do this, we will develop a conviction so deep that no amount of distraction and/or apathy can shake or stand against it.
And then that palatable lament of "Why Aren't They Buying" will turn to that wonderful spirit and sense of possibility when the sale is made and the deal done.