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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Is 80% Good Enough?


 

This weekend, I read The 80% Solution – a great e-book by famed business coach Dan Sullivan in which he makes the case that “perfectionism” is a misunderstood and under-reported “enemy” of successful entrepreneurship.

Per the title of his book, Sullivan's suggestion to combat this is simple yet profound - just work to get a task / a project / an idea to “80% done and out” and far more often than not that will be more than good enough.

Now, of course, the author makes the necessary disclaimers.

Like an “80% done right” heart surgery or an “80% safe” airplane, or products with 20% defect rates are obviously recipes for disaster.

But for the vast majority of us, cultivating this 80% mindset will do us a world of entrepreneurial good.

Because…

1. Most Stuff Doesn't Work. The sad reality is that most business initiatives - no matter how good our intentions or how brilliant we might think they are, and whether they be new products, new marketing strategies, new hires, process improvements - don't work.

The market greets new products with apathy (big yawns).

Process improvements don’t move the bottom line. The most likely return on a new hire…is exactly what you pay him or her.

For sure, some ideas are revolutionary and transformative, but everyone has to cycle through a lot of duds.

So the more we are able to increase our throughput - to throw spaghetti against the wall as fast and furiously as possible - far more often than not, we are the better for it.

2. Energy. Modern knowledge work, with its infinite distractions and always-on nature, is exhausting.

Maybe not so obviously as exhausting as hard physical labor, but exhausting nonetheless.

And, given that so much of it involves a series of virtual interactions with other knowledge workers facing similarly exhausting electronic loads, accelerating our “personal supply chain” via an “80% and out” mindset reduces insidious energy drains like long e-mail back-and-forths, projects extending beyond timelines and conference calls that just drone on and on.

Taking the “80% is Enough” mindset to all of it can free our energy and re-create a lightness and fluidity to our work like when it was fresh and new.

3. 80% is Fun. A great read in this same vein is Happy Brain Chemicals by Lorreta Breuning. Among its eye-opening findings as to the nature of our “mammalian brains,” Breuning talks about the power of the neurochemical dopamine and its influence on our wants and decision-making.

Dopamine can best be described as the neurochemical of anticipation and excitement.

It is that feeling one has right before one takes a bite of a chocolate cake, or the moment right before the kickoff of the Super Bowl (or for those Patriots fans of ours, the moment right when Malcolm Butler makes that interception!).

We all crave dopamine, and as such, we all crave excitement.

And excitement, because of dopamine, is dependent on “new stuff” - new projects, tasks, relationships, and the like.

“80% is Good Enough” frees up bandwidth for more new stuff to be anticipated and experienced.

And thus more fun.

So think “80% is Good Enough” and be more productive, and have more energy and more fun each and every day.

What beats that?

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What CEOs Want


 

This week, Axial came out with a great report on the challenges and opportunities facing small and middle market businesses in 2015.

Compiled from interviews with over 100 CEOs, it is chalk full of great nuggets like:

The #1 Thing keeping CEOs up at night is "finding capital to grow their businesses." This challenge has many dimensions - from receivables and cash flow, to commercial banks (in spite of the strong economy) still mostly on the sidelines, to the availability of private equity and other forms of risk capital to fund growth initiatives.

Also ranked high on the list was properly "training, educating, and rewarding" employees.

A great white paper by AGC Partners sheds modern light on this challenge, specifically how technology innovations are “incentivizing and enabling individuals to monetize their skills, time, and possessions like never before.”

Companies like Odesk, 99Designs, and Guru are empowering skilled designers, coders, consultants, and marketers to offer their services to buyers directly, on an as needed, per project basis.

How does this relate to the talent challenges of small businesses?

First, by the simple fact that a lot of talented people - who 10 to 15 years ago would have been available for / interested in traditional W-2 employment - are now effectively out of the traditional work force.

Second, the ease with which buyers (business & consumer) can contract for services with providers and cut out “middlemen” companies that "hire and mark up" creates a whole other level of pricing and other competitive pressures.

Luckily, far outweighing these two challenges is the massive opportunity created by this “collaborative economy” for smaller businesses to access types and qualities of talent like never before.

As I have talked about previously, entrepreneurs and executives that master the art of finding and utilizing outsourced, "shared talent" from around the world - and that let go of fixed ideas of what a company is / should be - will have business model and market opportunities open to them like never before.

Finally, the Axial report shares the startling fact, even though the overall economic prognosis for 2015 is about as good as it can get, that 66% of the CEO’s surveyed rank "market forces” and the overall buoyancies of the US and abroad economies as a top worry.

To this, I would suggest a reading of Nobel Laureate psychologist Daniel Kahneman’s seminal work on negativity bias, where he found “that people regret mistakes twice as keenly as they relish successes.”

When it comes to growth planning, Phil Libin, CEO of Evernote, summed it up best when he noted that "When you point out what can go wrong, you sound smart and sophisticated, and when you emphasize what might go right, you sound naive."

It all kind of fits together: exude and embody optimism (and fight the natural propensity we all have to the opposite), conceptualize and take chances on new business models, and the money will follow.

And this is what CEOs really want, isn't it?

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Doing Financial Projections Right (A Five Step Process)


 

Especially this time of year - when so many of us are assembling and committing to our professional resolutions and goals, questions arise as how to best develop financial (growth, revenues, and profits) projections for our businesses.

Questions including:

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

…should they be “aspirational,” not hot air by any means but also representative of goals that make us feel more than a little anxious as to our ability to attain them?

What is the actual “projections-making” process? Is Microsoft Excel my only “tool” option? How much research into customers and competitors should I do?

And perhaps most poignantly, if there is not a regulatory or shareholder requirement, why even put them together in the first place?

A great way to think about the process and purpose of financial projections is via what I call the “HMCBW” approach, i.e. examining the Historical data, then the Market conditions, then the Competition, then the “Bottoms-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 good economic conditions like we have currently (see here and here), where the more relevant historical period might be say - the 2006/2007 period – i.e. one of similarly “frothy” macro-economic conditions.

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 yes 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, IBIS World, 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. Bottoms-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 Bottoms-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 bottoms-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 massively important in assembling projections that serve the objectives of managers and owners, and not the other way around.

Historicals. Market size. Comparables. Bottoms Up. Want.

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

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’15 is Gonna Be a Good One


 

With a little luck, 2015 could go down as one of the best years ever for American business.

Here are seven reasons why:

7. Low Oil Prices. For both businesses and consumers, $50 per barrel oil and $3 per gallon gas have both strong real and psychological benefits.

Real, as in lower input costs for businesses and more disposable income for consumers, and psychological in removing that sense of scarcity and dread that high prices at the pump bring.

6. And It’s U.S. Oil. And, oh yes, as opposed to that oil coming mostly from a collection of unsavory, overseas actors (see Putin, Vladimir), now for the first time in decades the U.S. is poised to be a net oil exporter. These dollars staying home naturally multiply themselves - perking up manufacturing, construction, real estate, travel, tourism, etc.

5. Low Interest Rates. Predicting the direction of interest rates is one of the great fool’s errands, but it does certainly feel like we have made a long-term transition to permanently low rates.

A key factor driving this is Federal Reserve's Chair Janet Yellen’s political philosophy - well-documented over decades - that employment is the most important matter of monetary policy and any “tightening” that might lead to rising unemployment is to be avoided at all costs.

And then there is simple supply and demand -- all the “safe” world currencies (Euro, Yen, Pound) sport extraordinarily low rates too so there is no “currency flight” pressure to drive tightening.

4. U.S. Technology Leads the World. In so many of the growth industries of the 21st century - Mobile, BioTech, HealthcareIT, Robotics, Social Media, Internet of Things - U.S. companies continue to lead the way.

In addition to the massive flows of capital and wealth created and distributed by the top tech. companies (to employees, vendors, shareholders et al.), this leadership also attracts the best and the brightest scientists, engineers, and developers from around to the world to our shores.

And from this human capital new technologies and new companies are born. And new wealth created.

3. Record Exports. U.S. Exports reached $2.3 trillion in 2013, both a new record and up more than $700 billion since 2009. And the soon to be in 2014 numbers will show another record year.

Why? Well for one, U.S. companies, aided greatly by an English language and America-dominated Internet, every year become more and more effective in marketing and selling to global customers (while global customers in turn become far more comfortable in purchasing across the wires).

This powerful trend will only continue to accelerate in the years to come – opening new markets and profit opportunities for U.S companies big and small.

2. Cash Piles on Sidelines. With $1 trillion in cash sitting in the coffers of U.S. private equity firms and $515 billion on the balance sheets of leading tech. companies (try Microsoft with $88 billion, Google with $60 billion, and Cisco with $52 billion), and with this cash in our low interest rate environment earning only fractions of pennies of return, there is a high probability we will see a lot of it pour into growth opportunities this year.

And there are no better growth investments than U.S. entrepreneurial companies, especially the smaller, private ones, that over decades have consistently yielded double digit returns for those brave and foresighted enough to invest in them.

1. Momentum. Good times beget more good times. The solid, economic, political, and social news and results we have had for a few years running now are building themselves into a powerful crescendo for the new year.

Yes, more than a little luck is always needed - mostly in the form of no large, negative political or environmental shocks.

Barring that, on balance for entrepreneurs and executives out there seeking to make their mark, 2015 is looking nice and juicy.

Here's hoping we all make the most of it!

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2015 Words To Live By


 

The ending of one year and the beginning of another is a natural time to take stock of all that was accomplished in the past 12 months, and more excitedly, to dream and plan on the great promise of the New Year.

In this spirit, below are a few of my favorite quotes regarding dreaming, planning, goal-setting, and "Going for It!”

"You see things; and you say, 'Why?' But I dream things that never were; and I say, 'Why not?'"

- George Bernard Shaw

(My comment: reflects the essence of the entrepreneurial spirit)

"What is not started today is never finished tomorrow."

- Johann Wolfgang von Goethe

(My comment: the "fierce urgency of now" must always inform and drive us. We live in too fast-moving a world, too merciless a marketplace, to in any way dawdle or delay.)

"Success is not final, failure is not fatal: it is the courage to continue that counts."

- Winston Churchill

(My comment: The most accomplished executives and entrepreneurs that I have worked with have impressed me as much with their fortitude and resiliency as they have with their “glamorous” attributes - brilliance, connections, salesmanship, etc.

"Really great people make you feel that you, too, can become great."

- Mark Twain

(My comment: This is the essence of leadership in modern, collaboration-driven organizations. The best managers build alignment and focused energy around shared goals and objectives.

"Goals are dreams with deadlines."

- Diana Scharf Hunt

(Our comment: The great ones dream it and do it NOW!)

Happy New Year, and may 2015 be the best year of all of our lives!

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The Three Year Plan


 

December is a natural time to reflect upon the accomplishments of the past 12 months, and to set goals and objectives for the New Year.

In doing so however, most of us think too much about next year, and too little about our longer term and multi-year business horizons.

There are some benefits to this, I mean who can really forecast market and competitive conditions and customer wants and needs beyond just a few months these days?

And, given high rates of personnel turnover endemic to our ever-increasing “low switching cost” workplace, it can feel even more difficult to do so from a “bottoms-up” resource and organizational chart basis.

But forecast we must.

Because it is only through thinking and planning long-term that we access the reflective cores of our minds and spirits to “come up with” breakthrough business ideas simply inaccessible from the “reactive” present.

Ideas like:

•    How to better leverage our company’s intellectual and brand assets to develop new products and services
•    How to lay the ground work for new marketing campaigns, targeting new customers in new markets (with more favorable competitive conditions)
•    How to expand globally
•    Rethinking our companies’ organizational charts (and rewriting job descriptions)
•    How to access outsourced and virtual pools of human talent to scale quicker and more cost-effectively
•   Re-languaging our organizations’ value propositions (More pithily describing the features and benefits of our product and service offerings)
•    Redrafting our mission and vision statements (and by so doing re-motivating and re-focusing ourselves and our organizations)
•   And perhaps most importantly, defining with a laser like precision The Exit Plan for our organizations and for everyone in it (and getting out of No Man’s Land!)

Figuring out how to pursue opportunities and how to overcome challenges like these is almost always best done with a Start at the End approach: visioning out to the future and working backward from there.

How far to look out? I think Three Years is best.

It is long enough to get to that space of the “unbounded future” (reflect on being three years older than you are right now), while being short enough that the projects and action items arrived at very much need to be “gotten after” right away.

So, let’s all use this special time of year to reflect longer term on our more idealistic and on our bigger opportunities…

…the pursuit of which will transform our sometimes humble and prosaic day-to-day work into something far more profound.

A legacy.

Happy Holidays to You and Yours!

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Happy Thanksgiving!


 

Thanksgiving is the quintessential American holiday.

It acknowledges the best qualities of our blessed land - hard work, diversity as strength, and a focus on solutions not problems.

Whenever I am feeling down about America’s prospects in this brave new world of ours, I reflect on Thanksgiving’s timeless lessons.

As every schoolboy and girl knows, Thanksgiving traces its origin from a 1621 Pilgrim harvest feast to celebrate surviving an extremely difficult first winter in the New World.

The Pilgrims owed their survival to the goodwill of the Wampanoag Indians - the original inhabitants of the area - who taught them how to grow corn and how to fish in the very unfamiliar New England soil and seas.

As a gesture of thanks and goodwill, the Pilgrims invited the Wampanoags to sit down and break bread in a spirit of friendship and camaraderie.

What a story! First, let's reflect on the guts, tenacity, sense of adventure, and just “never say die” hard work and perseverance of the Pilgrims.

Think about it - if they can make it then with their oh-so limited 17th Century resources, what can we do / where can we go with our virtually limitless 21st Century ones?

And let's reflect on that happy day of brotherhood and be justifiably proud of the powerful diversity of modern America.

Doubt me? Then spend a Saturday with me and my 7 year-old son’s AYSO soccer team. 

With its Hawaiian coach.

Its son of Ethiopian refugees star player.

And its African - American, Mexican - American and suburban white kid players all happily frolicking in a melting pot scene not to be duplicated anywhere in the world.

Soccer with my sons is a welcome break from what I am sad to say has become a bad, gossipy vice – keeping up with the “news.”

Between the dire talk of tepid economic recovery, government gridlock, perpetual Mideast crisis, disease scares, and impending environmental doom, if you don't catch yourself you can't help but feel sorry for yourself, the country, and the planet.

It is 99% bunk.

Both the world and America have NEVER offered more opportunities for a larger percentage of
us to live affluent lives, to do self-expressive, remunerative work, and to be amazed daily by the wonders of modern technology than it does right now.

On Thursday, let’s give thanks for all that and more.

Happy Thanksgiving to you and yours!

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The Power of NON Disclosure


 

Every day I see entrepreneurs trying to find that right balance between keeping their intellectual property and business models confidential while sharing and promoting themselves to the investors, partners, and customers whose interest they so very much need to pique.

My bias generally falls strongly on the side of transparency - both because it is a virtue unto itself - and because it takes a lot of effort in our “everything end up on the Internet for all to see” age to truly maintain confidentiality.

However, I have a more fundamental reason why I generally advise entrepreneurs and investors not to worry all that much about confidentiality.

Supply and demand.

Quite simply, there very few entrepreneurs out there with the “right stuff” to actually build profitable businesses.

And those that have it are on balance, either too busy, too rich, and/or my favorite just too ethical and decent that 999 times out of 1,000 as opposed to the problem being someone of substance stealing a business idea, that the far more likely reality is a vast and unrelenting sea of apathy toward it.

Now, this does not mean that there is no place for confidentiality in modern business.

But the reason why it is important is usually more subtle than the fear of idea theft.

You see, for the vast majority of companies without eight figure+ R & D budgets, the reason why confidentiality is important has to do with the under-appreciated context of mystique.

Oxford defines mystique as "a fascinating aura of mystery, awe, and power surrounding someone or something."

I would combine this definition with one of my favorite lessons from my long ago MBA marketing class - namely that in a modern marketplace there is zero difference between "actual" and "perceived" value.

So, in these contexts, the value of non-disclosure derives not so much from the threat of a nefarious competitor stealing an idea as it does from how the aura of confidentiality bestows on an idea that “fascinating aura” that draws people and resources to it.

And from this aura flow many wonderful things: brand equity, pricing power, and marketing effectiveness being chief among them.

Now for those who say that this is quite the cynical view of things, I would encourage them for the next seven days to not take in any entertainment media - no movies nor television nor Internet - nor to appreciate the lovely design of an iPhone, and certainly to not gaze fondly on an elegantly dressed and coiffed woman or man.

In other words, to suffer for just one week like the terribly poor, extraordinarily unfortunate and very mystique - deprived people of North Korea must unconscionably suffer through every day of their lives.

And then come back and tell me that mystique doesn’t matter.

So let’s appreciate mystique - that beautiful elixir of the modern marketplace – for its own sake as the incredible gift and blessing it is.

And as marketers, as salespeople, as product designers, as entrepreneurs let’s gracefully use confidentiality and discretion to help create it.

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Does Anybody Read Business Plans Anymore?


 

It is hard not to laugh when I hear tired old refrains like "Nobody reads business plans anymore" or "In a world of lean startups, there is no time for strategic planning."

Why do otherwise intelligent and well-meaning businesspeople say and think things like this?

Well, for starters as human beings we all struggle to emotionally grasp the impact of the history not made, of the things that don't happen.

You see, poor strategy does not manifest itself as much in high profile flame-outs as perhaps it did in days of yore (see Pets.com, eToys, etc.) as it does in nothing of note ever being accomplished.

As in companies that grow slowly, if at all.

And make no profits.

And are led by entrepreneurs whose talent and work ethic doesn’t translate into the kind of pay and lifestyle they seemingly deserve.

Missed opportunities, lost years, unrewarded work.

These are the real but hidden costs of poor strategy.

Now, the other big misconception around strategic plans is confusing the “form of deliverable” with the process itself.

Again, this is a case where otherwise smart and well-meaning businesspeople make an obvious, but critical error: They equate the plan with a physical document.

And when done poorly, more often than not a document that is only tangentially connected to the “real business” it supposedly represents.

Now, the good news is that the literature is filled with great best practices - tested over thousands of businesses - as to how to lead strategic planning processes that are connected to the actual marketing, sales, operations, and finances of a company.

Even better news: Inexpensive, effective, and everywhere accessible business software-as-services are connecting the dots between “big” strategy and the “small” to do’s, tactics and action items at the living, breathing heart of a business.

Tools like CapitalIQ, Simplycast, The Resumator, Box, Grasshopper, Wufoo, Smarsh, IfByPhone, SnapEngage, Docusign, Hootsuite, Infusionsoft, and Interspire that automate traditionally laborious and repetitive business functions.

This is where 21st Century Strategy lives.

Now, as for those who prefer to cling to their tired clichés, well I guess they can always reminisce about how things were back in the 20th Century.

But for those who need more than nostalgia to sustain them, there has never been a better time to win by doing strategy right.

P.S. Like to demo our dashboard offering? Then Click Here to learn more.

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