The Fundamentals of Start-Up Business Success--Part 4

Though the road to sustained success is paved by consistent execution it is lit by the leader's clear vision.  As a fundamental, vision is not some starry-eyed sound bite intended to inspire but more often than not, confuses.  

Clear vision is a necessary fundamental because it allows leaders to see things as the are so they can chart the right kind of action. 

1.  Separate Activities from Actions. 

I am always most wary of any employee with an unchallenged reputation for being a hard worker.  More often than not these employees actually create their own hard working urban legend and then propel it by "being too busy" for pretty much anything thrown at them during the business day. I've seen too many managers mishandle these extremely busy hard workers to the point they do serious damage to a business. In the most extreme cases, mismanaged hard workers become their own renegade operation within a greater company.

Hard work and staying busy are, at best, means to an end and not objectives. When properly channeled, they are activities that certainly contribute to any company's success and are also positive cultural attributes.  The only useful measurements are (a) activities that make money, and/or (b) activities that save a company money.   Unless activities can be tied to these tangible actions they are counterproductive. Activities that correlate to positive actions then must be further measured by Time + Expense/Return analysis. The lessons of confusing activities with actions tend to be the costliest and in many instances are the most difficult to undo. 

2.  Manage By The Decision-Making Tree.

At all levels, as it relates internally or externally, a disciplined approach to processing and making decisions is necessary for successfully managing to meaningful business plans.  Emerging businesses do not have an abundance of time or resources; decision-making proficiency is essential. 

I've adopted "The Decision Making Tree" as my best method for mastering the process:

• The lowest, sturdiest, and easiest to reach branch is mindshare--taking time to evaluate information.
  
• A stretch, but within reach for a fit climber who sees the potential, the next branch is priority.
  
  When presented with something that makes sense and has the potential, grab that priority branch and pull yourself up.
  
• The view from priority is usually rather spectacular, but also a bit scary so before going any further you want to make sure it's a worthwhile climb. Research, consider, take input, and just to be sure you are not setting yourself up for a great big fall as the branches get thinner and harder to grab, make proper resource allocation.
  
  This could come in the form of a pilot program, trial, or some other controlled study that will validate whether you should keep climbing or shimmy down this tree.
  
• Like any tree, the highest branch is the most perilous to reach.  Because it is also the weakest and thinnest, you must give it proper support before perching yourself on it. However, when you are there, the view is as sublime as the achievement is great!
  
  The highest branch is commitment and in this decision making tree, commitment means an absolute, unyielding come-hell-or-high-water commitment to seeing the endeavor through to success. 

This orderly process allows one to make go/no-go decisions at natural break points, while obligating participants to drive an initiative to goal once that final decision has been made. In far too many tragic instances I get called into companies that had the right ideas, but lacked the resolve to see good decisions through. Rarely does anything even happen in one natural straight line, there will always be challenges and setbacks to anything new.  

The Decision-Making Tree allows us to move forward through confidence based on each prior step so that when we get to the top we have the confidence to conquer.

Yes, I use this method to also evaluate sales funnels for the purposes of improving close ratios and sales cycle times.  Using The Decision-Making Tree criteria analyze where you stand with each of your prospects.  Chances are you will find many of the prospects you think "look good" have never progressed past mindshare. 

3.  Growth is a Leading Indicator.

Most management tools and even perspectives follow lagging indicators. We all know why historical data is important, but an over-reliance on history and obsessive reviews of last month and last quarter makes absolutely no sense unless you possess the power to change history.  Since we do not possess these superhuman qualities, let's out our mortal capabilities to best use.

What we learn from last month or last quarter is important, but how we apply it to meet our objectives is everything. Therefore, the leading indicators smart growth businesses run the business by put the greater emphasis on setting realistic yet aggressive short and longer range objectives and then recognizing/rewarding employees based on performance.  

When combined with the other easy-to-implement and highly integrated fundamentals outlined in this series your business will have a record 2013.

Happy New Year and best wishes for a successful 2013 to all!

Fundamentals Always Rule

Election week ended with a bang, bringing news very much in line with this year's vote to maintain the status quo.  JC Penney's Ron Johnson continued to reinvent retail, this time coming up with the outrageous new idea of offering coupons and discounts to get holiday shoppers in the door while David Petraeus reinvented Washington-sex-scandals-as-an-older-man-in-a-powerful-position, having an affair with a much younger woman.  But even these great stories weren't enough to turn our attention away from continued east coast hardships created by Superstorm Sandy.

Take these two NY-based companies that have both severely crippled by Sandy and the storm's aftermath: Both have suffered damage to their operations, both have had a difficult time getting gas for their vehicles, both serve customer bases equally impacted by Sandy, and both are in extremely competitive industries.  Both companies also have longstanding records of valuing employees, caring deeply about respective workforces. However, one of these companies has had a very strong 2012 ( "Company A") while the other ("Company B") has posted declining revenues and profits this year. I was very intrigued to hear how these companies made such vastly different decisions on how to handle rather substantial payroll for the days employees couldn't get to work due to the storm. Thus I believe is truly newsworthy as this difference illustrates real action that supports turning-around of the US economy.

After much discussion and deliberation, profitable Company A decided not to pay employees for days they didn't work, instead having workers take them as either vacation or personal days.  By contrast, the struggling Company B CEO made a snap decision to pay everyone for the lost days without even bothering to talk it through with his senior staff.  Seems like that CEO is a better executive to work for and his pro-employee stance is certain to better motivate the workforce, doesn't it?  Think again.

I marveled at Company A's careful examination of all the facts and possibilities before making such an enormous decision.  They fathomed that the price of raw materials, notably gas, would continue to rise and likely squeeze profit margins if even temporarily.  They also projected a spike in customer demand which would increase use of overtime hours, while further forecasting that many of their clients would pay slower than usual which might compromise cash flow.  Their conclusion was to base the decision on sound fundamentals: if their conservative views proved wrong they could then elect to distribute greater bonuses at year end and if they proved right they would not then be forced to take more drastic measures in reaction to full payroll days that weren't worked. 

Little wonder this company has been consistently profitable, weathering several recessions, post-/9/11 trauma and other challenges the business has faced in over 30 years of operation, never taking a layoff or forcing salary cuts on its workforce.  By working as a team, they also incorporated the best in managerial due process.

In his haste, Company B's CEO didn't consider any of these trailing issues.  How could he?  He didn't even bother to discuss it with staff.  Sure, all the employees getting paid for days they couldn't get to work for no fault of their own will be thrilled...at least in the moment.  But how long will that last? If they run into the same or even similar problems Company A's management team evaluated, you can bet Company B will face another round of austerity measures.  Indeed, it should not be surprising that since the broad economic downturn 4 years ago Company B has regularly eliminated jobs, imposed pay cuts and frozen hiring. 

Fundamentals aren't interesting enough to make news, especially because they are the anti-reinvention. But in the end, regardless of the endeavor, fundamentals always rule.  Perhaps this is why JC Penney has learned selling other company merchandise is not the same as selling proprietary technology in today's retail environment, why the incredibly qualified and talented head of the CIA can't stay in his job if he violated the trust of his family, and why Company A will continue to thrive as an excellent organization with a true commitment to its employees while Company B will likely join the scrap heap of businesses that failed in the not-too-distant-future.

Unfortunately, no surprises--we're all in this together.

With predictable regularity the business press can be counted on to run feature articles that "change is hard" and "most change management initiatives are very expensive and time consuming yet fail." These pieces are usually accompanied by tips for creating the right change environment so that the reader's company succeeds with its change management strategies.

In an election cycle that seemed to have started the day after John McCain conceded in 2008, after billions of dollars spent, and public opinion polls consistently showing politicians--of all stripes--are less popular than wicked storms on the east coast, the same population that doesn't successfully implement business change management programs voted to keep the governmental status quo.

The House of Representatives, Senate and Executive branches of government will look rather identical to the very group we overwhelmingly find distasteful. From my experience leading business transformation across a range of industries this, sadly, comes as no surprise.

The barrier keeping companies from realizing change management objectives is rarely a matter of sound process and subject matter expertise. Rather, it is the people and lack of purposeful determination to make an occasional sacrifice, grow, adapt and learn for the benefit of an organization (and, more importantly, an individual's career). When I initially assess a company, the vast majority of its time functional managers are certain their department runs superbly, but can point out shortcomings everywhere else in the organization. Senior executives and boards are usually right there with them, convinced they are brilliantly leading the business, only to be undermined by a lousy workforce, unfair (foreign) competition, or government.

Our public opinion polls might express strong desire to replace under performing politicians, but our votes say "my guy's great, yours is the problem." These are the same sentiments and actions I routinely see and fight through in the workplace. The same strategies and tactics I employ in business apply to voting and all other phases of life: It starts and ends with what you see in the mirror.

Shortly after Ohio was called for President Obama he tweeted, "We're all in this together." For the health of our nation and vibrancy of our economy, let's do more than hope this is more meaningful than "another Twinkie."