Can Your Business Survive on a Handshake?


 

Good businesses are ethical businesses. A business model that relies on trickery is doomed to fail.

-        Charlie Munger, Wesco Financial Corporation Annual Meeting, 2009

I am blessed as part of my work to regularly moderate executive team strategic planning and group sessions for companies and organizations that have been around for a long time, including:

    •    One of the oldest continuously operated hospitals in the Western United States, founded in 1887 and whose Board Chair is one of the most famous investors in the world.

    •    One of the largest commercial collections agencies in California, boasting of more than 20% of Fortune 500 companies as their clients, and now entering its 85th year.

    •    A Michigan - based, automotive tool supply company that this year will celebrate its 70th anniversary and whose founders trace collaborations back to Walter Chrysler and other giants of the car business.

    •    One of the United Kingdom's largest multi retailer voucher and prepaid gift card companies (2015 revenues US$ 420 million+), that this year will celebrate its 50th year in business.

While these organizations compete in vastly different industries and cultures there is within them all a common “longevity core” that has allowed them to navigate, pivot, and win through various and multiple storms and dramatic shifts in their markets where the vast majority of their competition have not.

And always when I moderate these kinds of sessions, and ask executives to share the “Whys” of their companies, what they stood for when founded and how that meaning has evolved over time what comes often to mind is the theme of one of the greatest and most under-rated business books of all time – Arie de Geus' The Living Company.

In it, the author shares a lifetime of research and study as to why some companies and organizations “live…through the upheaval of change and competition over the long haul.

As de Geus’ so eloquently writes:

The idea of a living company isn't just a semantic or academic issue. It has enormous practical, day-to-day implications for managers. It means that, in a world that changes massively, many times…you need to involve people in the continued development of the company. The amount that people care, trust, and engage themselves at work has not only a direct effect on the bottom line, but the most direct effect, of any factor, on your company's expected lifespan. The fact that many managers ignore this imperative is one of the great tragedies of our times.

This inspirational and almost idealistic point may seem contestable in our age so dominated by tech high-flyers (to say nothing of the tenor of the current political campaign!) that seem to have gained their prominence through such a powerful combination of IP prowess, network effect, and first-mover advantage that really any company culture and any collection of reasonably talented individuals could run them well.

For a short time, maybe yes.

But to sustain themselves over periods measured in decades, to transition leadership and management through generations require a robust, flexible, and truly “living” culture.

And that in turn requires something we don't talk enough about in business nearly enough – leadership.

The kind of leadership that once was the obvious expectation for persons granted the blessing and privilege of being at the head of an organization of any size.

The type of leadership that does not sacrifice the long-term for the sake of the short-term.

The type leadership whose goal is not “an exit,” but rather a contribution - to shareholders, to employees, to customer, to community.

Leadership that knows that a handshake and one's word is a better and more appropriate form of agreement between gentlemen and gentlewomen than a contract can ever be.

And leadership that recognizes that to survive and prosper through multiple generations is both an amazing accomplishment, and a charge to keep.
The charge to not only match the good and hard work of those that have gone before us.

But given the opportunities afforded by our technological and global age, to far exceed them.

In growth and profits, absolutely.

But, in character, principle, and doing the right thing too. 

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A Five Step Approach to a Great Financial Forecast


 

What makes up and how does one develop a great financial forecast for a smaller, privately held company?

Should the forecast be “realistic” – i.e. feel “doable” and in line with past results or…

…should it be “aspirational,” not hot air by any means but also representative of goals that makes managers feel more than a little anxious as to their ability to attain them?

What is the actual “projections-making” process? Is Microsoft Excel the only “tool” option?

How much industry, market, and competitive research should be done to benchmark our forecast against relevant comparables?

And perhaps most poignantly, if there is not a regulatory or shareholder requirement, why even do it?

Answers to these questions and great way to think about the process and purpose of financial projections can be had via what I call the “HMCBW” approach - examining the Historical data, the Market conditions, the Competition, the “Bottom-Up” assumptions, and finally and most importantly what management Wants.

It looks like this:

#5. Let History Be Our Guide. The first thing to do in assembling projections is to evaluate what was, and was not, financially accomplished by the business in the past.

While the previous period (most usually the previous year) is usually most indicative, there is also great wisdom to be had in looking back to more chronologically distant periods as well.

This is especially important in our now seemingly permanent “uneven” economic environment, driving the need to defend our assumptions in various (bullish to bearish) future market and competitive scenarios.

#4. How Big is My Market? Undertaking a formal and comprehensive study of a business’ industry, market, and competition usually leads to one of two results - either the target market is much smaller and less lucrative than surmised or…

…it is defined so imprecisely and broadly as to uncover faulty strategic thinking / an unsound business model.

Either outcome, both painful, naturally lead to the kind of hard introspection and business model re-positioning upon which solid financial projections (and ultimate business success!) depend.

#3. How is the Competition Doing? We live in this most amazing time where our competitors - as part and parcel of their sales and marketing strategies - just post to the Net their business models for all to see.

Additionally, amazing tools like CapIQ, Hoovers, IBISWorld, LexusNexis, Statista, and Follow.net give us inexpensive access to often shockingly accurate financial data (even profits!) on even the smallest and most secretive of private companies.

Utilizing this data as benchmarks for our projections is incredibly powerful. We do not need to be wed to how our competitors do it, but we would be foolhardy to not study and learn from them.

#2. Bottom-up! The business analytics revolution - as represented by the dozens of SaaS business process applications and productivity tools (with their incredible reporting functionality) - allows for the assembly of Bottom-Up financial projections with an “actual data” specificity like never before.

This might look like building revenue projections based on the conversion ratios of web traffic to inquiries (phone, e-mail, text, etc.) to proposals, to sales, to retention, to ongoing revenue.

These bottom-up models, in addition to being powerfully predictive, are also highly insightful as to the performance of various aspects of an enterprise - its marketing, its salespeople, the quality and efficacy of its products and services, etc.

#1. What Does Management Want? The fuzziest - but also by far the most important factor when developing projections is just asking what management and ownership want to see happen.

What kind of revenue and profit projections will inspire and embolden? Will force to the forefront the need for breakthrough business model thinking and doing?

Answering these “inspirational” questions is fundamentally important in assembling projections that serve the objectives of managers and owners, and not the other way around.

Historicals. Market size. Comparables. Bottom Up. Want.

Follow this five step model in building your growth, revenue, and profit projections and watch the Manna from Heaven flow!

P.S. Click Here to schedule a complimentary consultation with a Growthink Financial Forecasting Expert.

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Primary Market Research: The Pathway to Great Strategy


 

I have written often about the peaks to valleys to peaks dynamic of a typical strategic planning process, and how without a Breakdowns leading to Breakthroughs flow it is difficult to attain truly actionable projects and to-do's (i.e. turning the strategic planning work into something concrete and useful for the actual running of the business).

You see, to make strategic planning sessions and undertakings great, a critical ingredient needs to be stirred in.

That ingredient is research - into a business’ industry, market, and customers, and into and about the other businesses competing for those customers.

Research that goes beyond the "obvious” and digs in and gathers intelligence on what is important right now to customers and competitors.

And almost always, the only way to gather great intell is through a primary research undertaking.

To be clear, secondary research involves surveying information, reports, and data that has already been collected - by professional research organizations like IBISFrostIDC, and Euromonitor and as found in Trade and business publications like the Wall Street Journal, Fortune, Fast Company, TechCrunch, et al.

A lot of it, especially as done by organizations like the above, is very insightful, and given the choice between no research or secondary market research only, then of course we choose the latter.

Primary research, in contrast, involves directly surveying an industry, customer, and/or competitor contact list that we as the business principals design and determine.

This points to the first benefit of the primary approach: To do it we first need to develop the right list of questions to be answered!

This need - to distill the business problem into questions that an anonymous third-party can (and will!) understand and answer - is beneficial even if no one answers the questions!

Now we do want and expect answers to our questions, which leads to the next benefit of the primary approach: creating the right Survey Contact List requires us to think hard about whose opinion is truly important to us as an individual business.

This then forces us to confront our Conventional Wisdom - those individual and group biases, prejudices and stuck thinking that so impede entrepreneurship and innovation.

Yes, research like this takes more time and effort than just basing decisions on one's gut or on a cursory Google search.

And because it is hard, most executives don’t do it and their strategic decisions are just okay as a result.

We, however, strive for much more than okay.

The precision of thought and hard work that primary research requires is both its own reward and far more often than not it pays for itself immediately…

…in new market and customer ideas and contacts, in competitive intelligence, in strategic “aha” moments and breakthroughs that are the lifeblood of business growth.

I encourage you to try it for your best business challenges and opportunities.

And leave the “just okay” to your competitors.

P.S. Click Here to schedule a complimentary consultation with a Growthink Market Research Expert.

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Wisdoms of The Pricing Man


 

“It is not the business that earns a profit adequate to its genuine costs of capital, to the risks of tomorrow and to the needs of tomorrow’s worker and pensioner, that “rips off” society. It is the business that fails to do so.”


                                                                             - Peter Drucker, The Delusion of ‘Profits,’ Wall Street Journal, 1975


I was recently recommended a great book, Confessions of the Pricing Man How Price: Affects Everything by Hermann Simon, widely considered the leading expert on business pricing of all time.

Doubt this? Well, Mr. Simon is so renowned and respected as THE pricing guru that he has built a $300 million+, 32 offices (in 22 countries), 860 employee consulting firm focused exclusively on advising many of the biggest and most profitable companies in the world (including  American Express, BMW, Coca-Cola, Goldman Sachs,Grainger, LinkedIN, Skype, among very many others) advice on pricing strategies that maximize profitability and the customer purchase and consumption experience.

This "Win-Win" duality - that yes we can charge a profitable price for our products and services and that our clients and customers can feel good about it, is a simple but incredibly profound wisdom that the vast majority of businesses just don't get.

And not doing so costs them dearly.

Because in this Internet Age of ours - with no matter what businesses we are in or what we sell - there are thousands of competitors offering similar, comparable wares, far too often we are all seduced by the siren song that if we just lowered our prices...

...sales would increase and with greater volume “eventually” we would figure out how to reduce costs to make up for the lost margin.

Unfortunately, as Mr. Simon explains in his book, lowering prices is almost never the right strategic choice, and referencing the Peter Drucker quote above, makes the profound point that as business owners maintaining sustainable is not only a business imperative, but a moral one too,

To achieve and maintain high prices, Simon advises that as sellers we must 1) shun from our minds forever the "Engineer's Fallacy” that if we just build a good product “they will come" - i.e. that marketing and branding do not really matter and 2) to truly “get” that the buyer's pricing experience is decidedly not a one-time event at the moment of purchase, but an "experience over time."

And as that experience is a high quality one where our product / service delivers on its promises and confers emotional, psychological and social benefits that are important to buyers, then the price charged - no matter how high - will be experienced as a fair one for almost all buyers.

Let’s put this all into three quick ways to put these pricing insights to work right away:

#1. Buy and Read Simon's book.  It will change forever for the better how you think and act about pricing in your business.

#2. No time for that?  Then start thinking less about the features of your product and services (technical specs, input costs, delivery time, etc.)  and far more about its benefits (safety, prestige, sex appeal, contributing to the greater good, etc.). “Benefits Thinking” like this will immediately get us focused more on marketing and branding and less on operational costs and considerations.

(For a brilliant illustration on the power of Benefits Thinking, watch this video of arguably the greatest business strategist of all time announce and explain the launch of one of the most famous and successful marketing campaigns of all time).

#3.  No time for #1 or #2? Then just raise your prices! Reference my “Using the 20% Rule to Double Business Results” logic and challenge oneself to raise prices 20% this year, consequences be darned.

My strong bet, and Mr. Simon would most concur, that doing so will create a virtuous circle - happier customers at the moment of purchase and throughout their consumption experience, and more profits too.

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Resolving Buyer - Seller Tensions to Get Deals Done


 

For conversations around business financings and sales, there are natural tensions, of time, credibility, and trust, between entrepreneurs seeking to be financed/sold (“Sellers”) and the investors/acquirers that approached for $$ (“Buyers”).

And if these tensions are not resolved, a deal cannot get done.

Time Tension is the idea that our entrepreneur seller almost always seeks to have their business valued based on its future potential, while our investor / acquirer buyer seeks to price it based on past results.

Note that time tension is present no matter the stage or size of a business, from the startup raising its first round of capital to the multi-billion dollar public company explaining its quarterly earnings and giving guidance for the period to come.

Very importantly, it is almost always the sellers responsibility to proactively resolve time tension to move a deal forward.

First, this involves having clean, concise, and easy to access financial and company records (no matter how unimpressive they might be) available for buyer review, along with the ability to coherently explain why the results were what they were.

Secondly, it involves the Seller telling a Great Story of how results will improve in the future.

This great story must be both "Top Down" and "Bottom Up."  The Top Down story is a firm point of view on what one's industry and marketplace will look and behave like in the future (say in 3-to-5 years time), and then how our business is well-positioned to profit from this evolving reality.

A great example of this is Travis Kalanick, Founder and CEO of Uber, who communicates with amazing eloquence his view on the future of transportation and mobility, and then how Uber's growth plan is being evolved and executed upon to benefit from this evolution.

And our great story must also be Bottom Up, detailing as specifically as possible how people, technology and financial assets will be brought together in a cost-conscious and hard-to-duplicate way to execute upon our growth plan.

Yes, creating both great Top Down and Bottom Up stories is hard and doing so requires the expenditure of a LOT of brain juice by smart and dedicated people.

But doing so at a high level can be worth a LOT MORE in accretive value (like $62.5 billion more, as in the case of Uber) and as importantly is the only way to...

Bridge the Credibility Gap. As a default, Buyers believe nothing that Sellers give and tell them.

For past financial results, they ask who prepared them.

For financial projections, they ask where is the proof that its assumptions will come to pass.

For our “Top Down” opinion on where our market is heading, they ask based on what.

And for our “Bottom Up” operational plan, they ask us to show them evidence from our past that we can execute upon it.

And as we provide this evidence, they ask if we are still motivated and young enough to do so again.

Sellers must put their pride aside and really hear and empathize with these buyer doubts, and then patiently overcome via attention to detail and via extremely high quality thought and business presentation...

...and via a Pig-Headed Determination to repeat that business presentation over and over again until some buyer (and it often just takes one!) says yes.

Yes, Webster defines determination as "Willfulness infused with discipline."

Willful, determined entrepreneurs, who through their work ethic and discipline produce high quality business stories, and then repeat those stories over and over again...

...well they are the ones that the resolve the Buyer - Seller tensions of time and credibility, and build trust so deep that only a handshake is needed to get a deal done.

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Modern Selling: Challenge Yourself to be Great (4 Things to Do)


 

The stereotypes of what makes a great salesperson - a "silky charmer," a “smiler and dialer,” a “closer” etc. - are really not characteristics of top sales performers anymore.

In fact, it probably makes sense to retire the term "salesperson" altogether, as it has become too corrupted with negative connotation to be useful to describe the kinds of professionals companies need to represent their products and services and drive top line results.

A term I prefer (which I partially borrow from Brent Adamson’s excellent piece on the topic) is “Challenger Rainmaker.”

Challenger Rainmakers challenge everyone in their orbit - customers, prospects, colleagues, their managers, and above all else themselves to be their absolute best selves every day in every way by focusing on these Four Things:

#4. Relationship. Our Challenger Rainmaker comes to each and every interaction - whether it be in person, on the phone, via email / text / social media - from a profound place of empathy and respect for their prospects and clients.

While of course upbringing has the most pronounced impact on this personal characteristic (is there anything we more fundamentally learn from our parents?), company leaders and managers that model these values greatly influence the likelihood of their importance being stressed at the level of prospect and client interaction.

And with authentic relationships arrived at from a place of integrity and respect, our Challenger Rainmaker then focuses on...

#3. Process. Directing a decision-making process that moves, in the words of legendary UCLA basketball coach John Wooden, at a “quick, but unhurried speed.

This means that every communication is concluded with the “What are the Next Action Steps?” questions, along with elegantly but firmly insisting that the answers to those questions be given in a timely and complete manner.

Those answers can be as simple as agreeing to the time for the next call, and as complex as organizing multiple parties to move with velocity through the complex process of getting from a meeting of the minds to a signed agreement.

While empathy may be the guiding emotive state for the relationship mindset of our Challenger Rainmaker, when it comes to process "Tough Love" is.

Our Challenger Rainmaker is relentless, both because he or she cares, and because they believe in the value of what they are doing, which leads to their next characteristic...

2. Our Challenger Rainmaker gives Consultative Value-Add in each and every conversation.

This is a commitment made on many levels - of the genre that “There is No Tomorrow" and so with everything we do and say our goal is to be an Additive Force for all who we meet.

And it is a commitment to work and study long and hard to Know Our Stuff, and thus be able to actually add value.

Knowing our stuff, in our intensely competitive modern environment, is both a lifelong and an “after hours” commitment - i.e. we always should be learning and doing so beyond our “Nine to Five” job descriptions.

And when Our Challenger Rainmaker combines a deep commitment to relationship, with professional process, with being of the mindset to add value always and to learn and grow well beyond the 40 hour work week, what naturally follows is...

1. A Burning Desire to Win. To win for a lot of reasons, because we believe in the value of our products and services and the mission of our organization, to win because we deserve to for all of our hard work and to win because winning is a lot more fun than losing.

Winning, from a place of relationship and hard work, and accomplished through professional process that has real value-add in and of itself...

...heck is there anything in business sweeter than that?

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Business Lessons from Trump, Sanders et al


 

With the Iowa Caucuses this coming Monday and the New Hampshire Primary a week later, this is crunch time in both the Democratic and Republican Presidential Nomination Races.

And whatever your politics, as business people we can learn a lot in these next two weeks from how the leading candidates sprint and compete hard for votes and momentum.

So as you are watching the election coverage, don’t just get upset by all of the rhetoric but also learn from these winning political strategies and mindsets that can be put to great business use right away:

5. Nothing is Immutable to Hard Work. As voting days approach, watch for the vastly increased personal effort of the candidates, with “Dawn to Dusk and Beyond” full throttle campaigning the expectation and norm. Yes, whatever you think of their motivations, politicians right before elections, like coaches preparing for a big game, are excellent role models in “lengthening the day” and cranking up the energy in pursuit of victory.

4. Simple Messaging is Effective Messaging. Whether or not you agree with their styles and policies, note that the favorites to win in Iowa and New Hampshire are Bernie Sanders and Donald Trump, who in turn have by far the simplest and most emotionally visceral campaign messaging.

For Sanders, it is the always popular theme of income inequality, and for Trump the equally time tested one of cultural identity and fear of "the other." For our business purposes let’s not focus on the rightness of these positions and instead reflect on how our customer and prospect messaging can be simplified and better aimed at "the gut" versus the analytical mind.

3. Repeat, Repeat, Repeat. As responsible businesspeople, we often feel the need to "change up" what we're saying because a) We feel that if we have already told someone something, that it is rude to repeat ourselves and b) especially for the creative entrepreneurs among us, saying the same thing over and over again is boring.

Politicians feel no such constraint. Coming back to Sanders and Trump, not only do they keep their messages simple and visceral, but they repeat these messages over and over again. (Heck, Bernie Sanders has been saying pretty much the same thing for over 50 years!)

The old marketing adage that a message needs to be heard seven times before it starts to stick probably underestimates the needed touch points in our massively distracted, low attention span technological age. So when in doubt, have faith that more frequency almost always trumps less.

2. Cater to Your Niche. While in a general election, the candidates are tasked with crafting messaging that appeals to a broad and diverse electorate, in primaries the winning strategy is as often as not to cater to the more “extreme” voters, who also are usually the most animated and engaged, and thus command a disproportionate influence on the result.

Similarly, in business, the value of our most enthusiastic customers - the Harley Davidson riders that tattoo themselves with the company's name, the Apple enthusiasts who sleep in line outside of a store to be first up for a new product release - should never be overlooked.

These kinds of customers do something far more important than buy our products and services, they validate us and the value we bring with a level of authenticity and credibility that we as “conflicted agents” can’t ever match.

1. Re-Frame Everything as a Positive. Yes, it is partly an act, but no matter their poll numbers or how little money they have in the bank, between now and the voting all of the candidates will project a positive and winning air.

And if they lose, in their concession speeches they quickly “spin” the defeat into a positive - i.e. they did better than expectations, they made an important contribution to the debate, etc.

Yes, it is only natural to be discouraged by setbacks, but being effective means moving with velocity through those setbacks and quickly pivoting to that next challenge, that next race, that next sale.

So let's put the cynicism aside and no matter our politics both commend and learn from the effort, messaging, and resilience of the various candidates in this their truly “Crowded Hour.

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That Quality of Certainty


 

Perhaps the most underrated of Steve Jobs' many talents was his maniacal ability to be totally convinced that whatever business position, opinion, or strategy that he was holding at a particular moment was the 100% right and righteous one, that all who disagreed with him were fools and/or ill-intentioned, and that everyone at Apple had to right away rally around (and do so 24/7!) his suggested course of action.

And Steve Jobs could, would, and did regularly change his mind on these opinions, strategies, and suggested courses of action, often to diametrically opposed positions in just a few days time and every time he did...

...he then held that new view with the exact same if not more fervor than the point of view so recently discarded.

While some would call this lacking in solid beliefs, chameleon-like, and just all around not to be admired, This “Quality of Certainty,” when arrived at without guile and from an authentic place, is a powerful executive management and leadership trait.

Words to describe folks like this: Charismatic, Enthusiastic, Persuasive, Change Agents.

And resilient too, possessing of that inspirational knack of re-framing obstacles and rejections as the fault not of themselves but of the “other,” and thus both able to bounce back quickly from adversity and be energized and not drained by setbacks and difficulties.

So how does an executive develop more of this Certainty and put it to use in his or her business?

Well, first by accepting, as with all personal qualities, that some people are more naturally possessive of it than others, but equally so that it can be developed through practice, focus, and modeling of those with the quality in abundance.

Secondly, by repeatedly taking the time too convince and "sell oneself” as to the righteousness and value of our business proposition. And when we just can’t bring ourselves to do it for our current line of work, then to know it is time to find it for something we can.

And, finally, by being careful to not equate a general energy drain with lack of business conviction.

This is true now more than ever, as the technology of our modern life that requires us to be “always-on” inevitably dents our spirit and dampens our spark.

So take time for downtime, off the grid, and away from the maddening crowd. And be pleasantly surprised by the certainty that will naturally bubble up for what we are doing, saying, and offering right now, right here.

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Using the 20% Rule to Double Business Results


 

In last week's post, I described The 20% Rule, where by improving four key business processesby just 20% each leads to results doubling. 

What I love most about The 20% Rule is how it allows us to set big Stretch Goals, and then focus all our business energy on incremental, ongoing improvements to reach them. 

So what does process improvement at a 20% clip look like? It is even easier than it sounds, requiring a mere 2% monthly improvement over the course of a year to more than exceed it.

So why do most of us fall short? I would point to three main reasons:

1. We Don’t Know What to Fix. Thoreau once famously said that “The unexamined life is not worth living."

Likewise, the unexamined business is not worth having - and nicely, those businesses that stay unexamined won't stick around for long anyway!

So before even figuring out what to fix, let’s just make a firm commitment to connect all of our important business processes (marketing, sales, operational, financial, etc.) too easy to measure Data Points and Metrics.

My experience is that doing just this gets us more than halfway to any process improvement goal.

2. Become a Better Fixer. Business, like sports, is a highly competitive undertaking, with many talented players and teams, reaching for the same, brass ring.

And just like athletes must constantly train and practice, so do entrepreneurs and executives need always to work on maintaining and improving their “Business Games,” with skills to rigorously develop and be great at for the 20% rule including:

●    The ability to collect data (see above)
●    The ability to interpret data - i.e. understanding what data represents in “Three Dimensional” business terms
●   From these interpretations, the business “creativity” to arrive at plans and solutions to improve results
●    The Will to Act (enough said)

3. No Egos Allowed! The 20% Rule requires us to check our egos at the door and accept which of the above we aren't great at and ask for help.  Help, with an authentic desire for it coupled with an inspirational mission and persona, is easy to attract and get.

This is a well-known secret of all successful people, to understand and stay within one’s Circle of Competence.  John Paul DeJoria, billionaire co-founder of the Patrón Spirits Company explained it best:

"Do what you do best and try to find others who can fill in by doing the things you are not good at. For instance, I am terrible at details — accounting especially, so I hire accountants to help me. This frees me up to focus on the things I do excel at and I can run a more efficient operation."

So let’s set big Stretch Goals, break them into 20% Attainable Goals, and then incrementally reach and exceed them via measuring what needs fixing, becoming great fixers, and getting help when, where, and as we can.

[Click Here for a complimentary consultation on how to identify and improve your four key business processes by 20% each to double results in 2016]

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Breakdowns Leading to Breakthroughs!


 

In my work I often get to lead strategic and business planning sessions and retreats with some amazingly dynamic and thoughtful entrepreneurs and executives.

These past seven days have been particularly rich in this regard.

Last week, I led a retreat day for the executive management team of one of California's and fastest - growing construction management firms, and on Monday did so for one of the oldest receivable management agencies in the world.

These sessions follow a common pattern: A company’s leaders set growth goals, for sales, profits, company value, and/or on a company, division, product/service basis…

…and then together they grapple with both their realism and the marketing, sales, operational, and financial challenges to be overcome to achieve them.

Through this process, the original goals are revisited, adjusted up or down (or completely rethought!), and almost always brought into plain daylight is the need for profound change - organizationally and at the individual level - for there to be any reasonable probability of their achievement.

There is a common energy dynamic to these sessions that was best described at a famous (or infamous!) empowerment seminar I attended many years ago:

Breakdowns Lead to Breakthroughs.

No matter the industry, the age or level of success or sophistication of the executive group, inevitably the course of a serious strategic discussion follows a “peak to valley to peak” flow like this:

The Opening. The session starts, the group is fresh, full of enthusiasm, energized by being together and by the yet to be discovered business possibilities.

The Breakdown. The first blush recedes, the discussion turns to considerations (of time, money, talent) and of obstacles - competition, market/customer apathy, operational inefficiencies.

Energy drains from the room, creases of doubt and worry spread.

The Breakthrough. When hope is about gone, someone suggests something…

…an idea, a strategy, a new way of approaching/defining/verbalizing the opportunity, the selling proposition, the competitive advantage.

The suggestion is taken up by the group, augmented, permutated, solidified. Heads nod, eyes lock, adrenaline surges.

The group arrives, miraculously, to another place. Different from what had been anticipated for sure but usually far more actionable.

Let me say it again: this emotional “roller coaster" is common to almost all strategic gatherings, and I would venture to say that without it the ability of a group to define and commit to the business action plans that flow from the discussion is limited.

A common question asked is, "How long must we be in breakdown until we get to breakthrough?"

The answer of course, is it depends. Sometimes the breakdown is only a matter of minutes, other times it lasts months.

However, a good measurement of an executive’s effectiveness is his or her ability to get to and move through breakdowns rapidly.

Is it better to have strategic sessions led by an outside facilitator or done in-house?

Well, just like all Olympic gold medalists that have great coaches, so do great business leaders have advisors that help them move through breakdowns and to breakthroughs faster.

So do strategic retreat and planning sessions often and right, more breakthroughs will be had and your business will soar.

Getting to all this is worth a breakdown every now and then, isn't it?

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