Category Archives: Leadership

Better Mousetraps Require Divergent Thinking!

One of the people I follow in leadership blogs is Dan Rockwell, aka Leadership Freak. His post this morning cautions against working hard versus working smart:

It doesn’t matter how hard you work if you’re working on the wrong things.

He goes on to discuss how doing business without thinking strategically can be harmful to your business and personal health. While it’s needful to get work out the door (think lawyers focusing on billable work, carpenters hammering nails), to only do so is to lose sight of the bigger, value adding activities that distinguish great businesses from ordinary ones. Your efforts are not as productive as they could be because you are displacing the benefits of your focus and inertia that could be applied to thinking about what would make you more successful and pursuing those activities that promise reward for another day–not just the current one!

Some of the activities that suffer when you are not working on your business include:

  • Planning
  • Goal-setting
  • Brainstorming
  • Delegating
  • Organizing
  • Dreaming
  • Alliance building
  • Networking

When our attention is shifted to “working on the business” (thanks Michael Gerber for the E-Myth insights), we are thinking innovatively. Our efforts are building something that will stand the test of time. Net worth/business value soars as we are refining the business model instead of just trying to work harder. Think about franchise systems. The value is in the documented processes and controls. Even if you never plan to sell through a franchise agreement, you would do well to consider the genius behind the movement. Instead of being the person who only makes money off the sweat of his or her brow, you find a way to make money off others’ labors.

Rockwell suggests the following to help you get unstuck and more productive in creating a business with greater value:

  1. Create a weekly “working on” appointment with yourself. Identify and take a next step.
  2. Make small adjustments. You’ll never shift toward working on your business in one giant leap.
  3. Find new eyes. Discuss systems, strategies, and vision with experts outside your field.
  4. Listen. Many leaders and business owners have too many answers and too few questions.
  5. Try something. Waiting for stunning success prevents progress.
  6. Delegate more even if it takes longer at first.
  7. Follow-up and follow-through. Frustrations inspire conversations regarding improvements but follow-through changes things. Perhaps some form of accountability would help?

For entrepreneurs, mentors can be extremely valuable in holding one accountable to a process like the one commended.  Going it alone, without the benefit of outside advice and counsel, makes us technicians without hope of escaping the rat race.  You can change your future today–be daring to do so!

Secret Entrepreneur Weapon

In a January 26, 2012 article for Entrepreneur magazine (Mentors: A Young Entrepreneur’s Secret Weapon) Adam Toren writes,

…to take advantage of the most powerful weapon an entrepreneur can have, find a mentor.

A good mentor helps you think through a business idea, suggests ways to generate that startup capital and provides the experience and savvy you’re missing. You’ll get praise when you deserve it and a heads-up when trouble comes — probably long before you would have noticed it yourself.

Instead of mentoring, many entrepreneurs “hang out” with peers, attend fun/trendy events for start-ups, and make presentations at conferences and forums. While there is a place for many–if not all–of these activities, they do not take the place of a relationship with someone who has knowledge or expertise in areas that are not your own strengths. Often, the mentors even know of others who can be helpful in additional disciplines so that you are able to become surrounded with wise counsel and advice. EntreDot is a mentoring organization that has seen the need for this type of service and is creating and implementing programs via innovation centers and in conjunction with strategic allies to foster entrepreneurship in the Raleigh-Durham area of North Carolina.

Entrepreneurs — especially young ones — tend to tap their friends for business advice. But that can be a mistake. The reason is, friends tell you what you want to hear. For what you need to hear, rather, a mentor is often a better bet.

A mentor could be a professional who advises entrepreneurs for a living or someone working in a related industry who is willing to help you. And unlike your friends, mentors are typically more removed from you and your business. So they tend to be more comfortable delivering bad or critical news and advice. And since many of them have either started up businesses in the past or have worked in industries that you’re trying to shake up, mentors can also fill experience gaps, as well as impart their wisdom on how to handle specific business challenges.

The above quote was taken from another article in Entrepreneur magazine, this one by Martin Zwillig last week (A Good Mentor Will Tell it Like It Is). The gist of his insight is that mentors can come from a variety of backgrounds, but their key role is to warn you of missteps rather than cheer your every decision. The good mentors can help you identify steps to success and stand by you to follow them when challenges would distract you from executing your plan.

Zwillig concludes by suggesting 5 Qualities That Are a Must in an Ideal Mentor:

  • Pragmatism.
  • Fortitude. 
  • Stamina.
  • Connections.
  • Perspective. 


Hope you are successful in putting your own secret weapon to strategic advantage!

 

Using EQ to Plan Management Succession

How to go about preparing a privately owned business for management succession… 

GDF Professional Services had been a successful company for over 10 years in the business of providing organizational development consulting. Located in the Research Triangle area of North Carolina, the firm had capitalized on the local economic growth and availability of talented human capital. Over the past few years, the platform included leadership, change management & organizational psychology services for local companies. While most clients had 30-100 employees, some were smaller, and others were considered “middle market.”

The two primary owners, “G” & “D”, had determined that they desired to cut back on their hours at work and aimed to eventually hand the business over to a strong management team. However, management group members, while strong in their individual disciplines, had not coalesced into a cohesive team and were unprepared to succeed the founders in running the company on a daily basis.

The challenge was to help the managers prepare to take over and prepare the owners to begin to step aside. To do so would require innovation in the business model, systems, processes, and offerings of the Firm. In order to introduce innovation, a baseline needed to be established and performance measured. One of the best predictors of decision-making habits among managers is a behavioral assessment that measures one’s Emotional Quotient (EQ). Scheduling mentoring sessions to discuss competencies followed the administration of the EQ assessment.

     As the management team members began to share not just facts, but heartfelt emotions, dreams, and recommendations, it was necessary to have a process to capture and assimilate all the content. Each mentee meeting, each owner meeting, each team meeting was captured in detailed notes. Additionally, consultative questions in the individual sessions regarding assigned EQ worksheet exercises yielded additional insights. The information was culled weekly for follow-up items on the individual and team level, as well as combed for items to take up within strategy sessions with the owners. A rudimentary knowledge management system was put in place for this purpose.

Nearing the six month mark, the group was becoming anxious as to what was to follow. Someone suggested that the EQ mentoring continue at the staff level so that staff members could benefit from the same body of knowledge and practice that the leadership team had. Simultaneously, the owners agreed to undergo EQ mentoring themselves in order to enhance credibility with their key reports.

The other signs of progress were:

  • The weekly management team meetings were supplemented with weekly departmental meetings that did not require the presence of the owners
  • The weekly individual mentoring sessions were replaced with monthly sessions, but weekly exercises continued
  • The weekly group educational sessions were replaced with bi-weekly ones
  • The owners agreed to hold a year-end retreat to discuss drafting a succession plan

More work needed to be done in terms of clarifying roles and responsibilities, the funding source for the succession plan, selecting a leader from within the management team or from the outside, and insisting that the owners go on record as to what they will hand off when and to whom. However, all were very encouraged at the likelihood of success based on the transformation of the culture experienced during the process.

Un-Madoff Your SMB

Even if a business has strong financials, talent is not enough – integrity is needed. Master investor Warren Buffett’s position on business performance has been: “In looking for people to hire, you should look for three qualities: integrity, intelligence, and energy. And if they don’t have the first, the other two will kill you.”  Given his track record, good corporate governance seems to be an essential part of long-term business success. Whether we go back to Michael Milken and his securities fraud, or more recently to Enron and Bernie Madoff, we have a wealth of examples of how poor checks and balances led people with intelligence and energy to behave in ways that clearly lacked integrity and cost many other people millions of dollars.

A 2003 joint Harvard and Wharton study entitled Corporate Governance and Equity Prices found that companies with good corporate governance generated superior future returns and higher profits and sales growth. The study created a “Governance Index” (G-Index) for each company based on the number of these 24 anti-shareholder provisions the company possessed. The higher the index score, the worse the company’s stock performed. Using data from 1990-1999, the study found find that companies with a low G-index score (i.e., a “democracy” portfolio) outperformed companies with a high G-index score (i.e., a “dictatorship” portfolio) by a statistically significant 8.5 percent every year. By 1999, a one-point difference in a company’s G-index score was associated with an 11.4 percent drop in a stock’s market value. Further, firms with weak shareholder rights were less profitable and suffered lower sales growth than comparable firms in the industry.

A 2009 joint Yale-Harvard study finds that the outperformance effect has waned in recent years as investors have learned about the importance of good corporate governance and adjusted the stock prices of good and bad companies accordingly.

In other words, bad corporate governance is now discounted in stock prices. Small-cap stocks and privately held businesses, where data is less available, seem to dodge the scrutiny of the large-cap stocks and purchasers of their stocks can take a “ding” on the regular.

 

 

How can we change the pattern in small to medium businesses?

  1. Better corporate governance measures in privately held businesses should include a progression towards true, independent boards.
  2. The boards should be evaluated on an annual basis (check out the Center for Board Excellence.)
  3. Matters such as compensation, family members in the business, succession plans, etc. need to be discussed in board meetings and action plans developed.
  4. Organizational development principles should lead to better talent management and the assignment of shared decision-making outside the CEO’s office.
  5. Internal controls need to be examined and improved to mimic best practices of a public company in a Sarbanes-Oxley environment.
These are a start–what would you recommend?

 

Rainmakers Outperformed By Personal Marketing Plans

Fundamentally, successful business development occurs when a professional has superior understanding of what a target client needs. To arrive at such enlightenment, the service provider has honed time-tested skills. The most successful ones have been very deliberate and intentional about the emphasis placed on the soft skills that wonderfully complement the technical acumen. In times past, such requisite skills for success were imparted through mentoring. However, the pressure to generate greater billings and profits today distracts mentors from their charge.

                Why not outsource a mentor like other business functions have been outsourced? In fact, why not become very specific and outsource a business development mentoring service that teaches your staff how to become inspirational? If succession planning is about identifying capable replacements, preparing them to assume a more executive role and helping them earn the following of others, then organizations should pay more earnest heed to it! Within the preparation of staff for leadership, it would be argued that business development is not learned through osmosis (years on the job). The skillset that makes one inspirational/capable of developing business is definable.

Inspirational employees are respected, admired, and well-known. Let’s say that respect means that one is competent, as evidenced by subject matter knowledge, a displayed ability to lead others and self-controlled. Admiration may then be construed as being expressed towards those who are consistent, fair and care about the well-being of others. One cannot be inspirational if no one knows in what context, how often, in what ways and to what constituency the inspiration is directed.

Do your employees have a plan to become respected, admired, and well-known? To refute the counterargument that some do not aspire to become well-known, I simply posit that unknown service providers do not enjoy the opportunity to serve significant clients. As for the aforementioned plan, we have heard of personal development plans (PDP). If the PDP is meant to address one’s emotional intelligence, then what plans are in place to help staff:

  • Become a subject matter expert?
  • Learn how to discern client needs?
  • Become referable?
  • Network more effectively?
  • Promote their personal specialty?

Savvy service firms empower their key staff to become inspirational leaders by helping them to produce a Personal Marketing Plan (PMP) that includes the PDP and the items listed in the bullets above. The PMP becomes the backbone of a succession plan, onto which other ligaments, tendons, and muscles familiar to HR executives can be attached. It is probably best developed by an outside third party who has no emotional ties to anyone internal to the organization and can objectively help staff develop and implement the Plan.

Organizations that are serious about the PMP have multiple Rainmakers and a system to produce more. Performance objectives and compensation systems can then be tied into succession management as all share the responsibility to grow personally and corporately.

Let’s become inspirational!!!