CEOs PREPARING FOR A SHOCK

Mon, Sep 8, 2014

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PERSONAL NOTE: immobilized and distracted for several months since March from an accident, I have returned to coaching business owners and CEOs  and resuming sharing the insights with those who aspire to be extraordinary leaders.

 

BACKGROUND

My clients are almost all doing well, ahead of last year. But there is a nagging worry that “macro” events could cause a significant downturn in business in the next 12 to 18 months. As in 2007 before the banking system crisis, we have started examining scenarios and what to do to protect each business.

This time, with the banking system relatively sound vs. last time, the worry is consumers getting frightened enough to make serious cuts in their purchases. In our consumer economy it is unusual, but it happens. And with daily news of wars everywhere, virulent terrorism, Europe’s economies still not stable and the likelihood of an end to cheap money, there is a climate of negativity. Last time, our CEOs with leading indicators (related to new employment) gave us a signal well in advance. This time there may not be such a signal. 

CEO MINDSET AND ACTION

Our Board, and I might add, my private clients are alike in their response:

“Continued profitability and cash flow are the keys to survival of downturns as in ’07 (it is the company equivalent to job security by being in the top quartile).”

This translates into these actions:

- Intense and well-staffed effort to generate data and analysis of (fully allocated) product profitability and customer profitability
- Creation of Top 20 list of areas where there is suspicion of waste and cost with little value to customers; engagement of fresh faces in the effort; weekly discussion and decisions to act
- Having the courage to develop revised offerings and pricings to selected customer categories 
with low margins and differentiated offerings to the new and growing population of customers who really do their homework*

- Continuing funding of product development with strict criteria about differentiation, impact and timing

- Pacing of technology investments with an eye on the cash

- Continued top-grading of the work force, believing that the best team on the field has an edge over the long haul

- Building up the cash reserve 



*Jim  Blasingame’s Book, “Age of the Cusomter” is an excellent source for understanding how to think about and adapt to this new population. There is an inherent conflict between traditional high touch prospects/customers and the digitally expert prospect who contacts you already knowing their acceptable ranges of offerings and prices.  His website is full of useful information:

Small Business Advocate

That’s just my view. What’s yours? If this post is valuable to you please share it. If it could be a lot better, please let me know.

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CEOs Share Experience: Initiatives to Lead Culture Change

Sun, Feb 23, 2014

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CEOs SHARE CULTURE INITIATIVES

My last blog laid out the context for leading culture change and gave a few examples of CEO initiatives to lead the way. Here is a more complete list based on both private client conversations and Vistage CEO peer advisory group discussion:

 

-       Hire a talent manager for development of high potentials

-       Make culture change a major project for the senior team with accountabilities for the cascade to lower levels

-       Make culture a specific topic in exit interviews

-       Get 360s done on senior team and next level and include culture questions (on- line and in supplemental interviews by HR or third party)

-       Town hall meetings with open Q&A

-       Put culture into goal deployment top down

-       Change physical things to encourage collaboration (take walls down, move, etc.)

-       Consolidate small groups into big groups and report out and measure as a group

-       Give recognition for sharer of best practice to others

-       Change names of things so people are one

-       Make sure there are consequences of action without consultation or collaboration (stop project, deny funding, communicate examples of the right way and the not right way)

-       Hire for culture fit at all levels (senior team participates in senior hires)

-       Lunch n learn monthly by CEO with randomly selected people

-       Use the lunch n learn (or breakfasts) to enlist a “listening system” of people who will report issues the CEO needs to hear  

-       Ask direct reports to develop their own listening systems 

-       Engage administrative department people on projects across functions and across other divides (e.g., administrative and academic)

-       Form a non-executive committee (“Associates Committee” and/or Managers’ Committee” – AC or MC)Initialize by CEO message as to purpose and freedom

        -  Observe (or ask about) emerging leaders on the AC or MCDelegate problems to AC and/or MC

         – Encourage them to bubble problems and recommended solutions or process improvements up to senior team

         -  Let the committee deal with non-strategic operational problems that affect employees

-       Broadly communicate thinking behind decisions by Sr Team

-       Identify and groom culture carriers in different parts of the organization

-       Encourage culture carriers to be close, a community

-       Put real effort into a culture campaign…

-       Communications cascade down to lower levels on mission and values

  1. Installation of culture objectives in performance reviews
  2. Recognition of people who exhibit positive culture in their actions
  3. Focus on culture, measure, publish, recognize
  4. Ask HR department to do culture assessment  (perhaps in one area, then another)
  5. Use available tools for culture assessment and engagement perhaps with questions customized for academia; Russ Reynolds tool, IBM Synexo tool?)
  6. Ask individual managers to address culture gaps that are found as part of their review

- CEO participates (sometimes) in associates committee meetings and

  1. There is always follow up on each action item at the next meeting
  2. Assign the AC problems to solve
  3. Establish separate AC’s for selected problems (Adam did with customer experience)

-       Raffle off 2 hours of CEO time to work with an associate (“above covers boss”)

-       Seminar with CEO teaching 25 employees each month on basics

 

Questions about the spirit and/or the detail of the above are invited.

 CEOs SHARE CULTURE INITIATIVES

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Old School CEO: Do you get it? A Tsunami is Coming!

Thu, Feb 20, 2014

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THE CHALLENGE

A huge transition is under way in how customers buy products and services. The customer landscape is shifting from inside-out (company to prospect) to outside-in (knowledgeable buyer seeks satisfaction). It will require major transformations of organizations, cost structures, accounting and more.

BACKDROP

Most of my clients are “old school,” regardless of age. In the sense I mean it, this is a compliment: leading by example, valuing ethics, hard work, collaboration and more.

Most of my clients are also “old school” when it comes to sales and the dependence of the enterprise on that function. That is not a compliment.

Why not? Because the customer landscape is shifting from inside-out (company to prospect) to outside-in (knowledgeable buyer seeks satisfaction).

Both Sam Bowers’ (Vistage speaker) workshop and Jim Blasingame’s new book set a great table for a crucial conversation inside any company — references provided at end of this post.

THESIS: TWO VERY DIFFERENT CUSTOMER SEGMENTS

Many companies (many industries) now have two customer segments: (1) those who buy based on value and relationships and (2) those who buy primarily on price for “good enough” alternatives. Good enough may include competing options that are highly specific and truly different. But price will determine the outcome of the final decision.

The difference between the segments? The second set has done their research and arrives at the buying moment informed about choices and prices. They are willing to pay only a small premium if any for a particular value add.

THESIS: TRAJECTORY

The new school customer wants only the product or service and little if any touch — no sales call, no layers of sales managers, no administration.  They see no reason to pay for anything else.

Until your costs do go away, you have a Hobson’s choice of which customer you charge for the SG&A. You will chase away the new customer if the price has even a little SG&A in it and you upset your most valued current and historical customers if they have to pay all the freight. There is real danger in the transition to a majority of new school  customers and retaining those who will pay for “value” as they see it. In some industries, the transition will be a tsunami once it starts. 

SOLUTIONS: UNBUNDLED PRICING, ACTIVITY BASED COSTING, MARKETING DOMINATES AND SALES GOES AWAY

 Imagine that you knew the cost of absolutely everything each customer received (product features, service features, touch, records, speed, whatever). Now imagine you could ultimately get your customers to give up what they wont pay for so each customer pays for only what they want and what they get (individualized prices). Some companies have been doing just this while treating a small base of best customers to a more gradual transition and a small premium based on trust, (customer’s) risk and cost of switching. And by shifting investment from sales to marketing (especially social media and internet marketing) to get in the “consideration set” of prospects.

That’s just my view. What’s yours?

For more on this key topic, visit:

 Small Bsiness Advocate and get a copy of Jim Blasingame’s new book The Age of the Customer: Prepare for the Moment of Relevance makes this transition accessible to those with a modest understanding of technology and social media. I read it on a flight to California and am glad I invested the time.

 Also check out the speeches, articles and such of R. Sam Bowers (r.sambowers@aol.com), a Vistage speaker and consultant.

If you are not already familiar with Vistage, the best CEO membership organization, also visit:

Vistage CEO Peer Advisory

 

 

 

 

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WHAT CEOs CAN DO TO LEAD CULTURE CHANGE

Sat, Jan 11, 2014

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WHO WANTS TO KNOW?

At the last meeting of our Vistage CEO peer advisory board, one CEO asked for ideas for both becoming more informed about the culture in his organization and action he can take to cause positive change. It is the same question I have been asked by several private client CEOs. This note is based on both sources.

DEFINITIONS

Organizational culture is defined in as many ways as there are people who think they understand it. Here is my view:

-       Culture is what associates tell people at weekend gatherings about what it’s like to work at the organization

-       Culture is the set of unwritten rules about behaviors for success (promotion, compensation, recognition) at the organization

-       Culture is how we treat under-performers and those who once were contributors, what misbehavior we tolerate and why

-       Culture is openness, sharing, engagement, collaboration, commitment, sacrifice for the common good, risk-taking, ethical behavior, protection of the firm’s reputation or lack (or opposite) of any or all of these in people’s daily choices

POINT OF VIEW OF THE COACH A FORMER MANAGEMENT CONSULTANT WHO FACILITATED SEVERAL CORPORATE TRANSFORMATIONS

Culture forms over time from both “signal acts” by the leadership and interpretations and self-protection by the grass roots.

Leaders are rarely in touch with how pervasive are the positive or negative behaviors in middle management and often at the front line.

Many leaders do less than the maximum to lead the culture.

ILLUSTRATIVE IDEAS FROM PRIVATE CLIENT WORK AND PEER ADVISORY WORK

-       Make culture a priority of the CEO and the leadership team; set accountability for assessing change needed and leading it; speak about it often

-       Recruit a talent manager whose job is every aspect of developing and retaining a bench of star players

-       Conduct monthly CEO lunch ‘n learn with people at all levels selected randomly

-       Have Town hall meetings about mission, values and culture

-       Address culture first in strategy retreats

-       Institute an employee opinion tool that probes attitude about cross-silo collaboration, beliefs about ethics, unwritten rules for success et al

LONGER LIST OF IDEAS

For a longer list of ideas, look for the attachment to my blog tomorrow. For even more, join the Vistage community at:

Vistage International — CEO Membership Organization

That’s just my view What’s yours?

If you find this helpful, please let me know and tell your friends. If you disagree, please tell me and leave a comment.

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CULTURE: FUEL FOR GROWTH OR POISON IN THE WELL? CASE HISTORIES

Thu, Dec 5, 2013

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YOU ALREADY ARE AN EXPERT IN CULTURE, RIGHT?

It is no surprise to most leaders that culture matters. Yet in the pursuit of account wins and profits it seems to get lost repeatedly. Since no business can thrive that stays exactly the same, there is always change going on. And how the leader creates and nurtures the culture dictates whether the organization will change for the better and whether the change will be sustainable. Ignore culture at your peril.

WHAT WE MEAN BY CULTURE

It is probably worthwhile to establish some minimum of definitions before diving into actual stories. Culture is these items and more:

-       The unwritten rules for success that govern people’s openness with each other, collaboration or silos and more

-       The great behaviors that are encouraged and the toxic ones that are tolerated

-       It is the spirit that motivates people to make sacrifices or not, whether aspirational or out and out fear

-       Who is celebrated, rewarded  and promoted all signal and reinforce the culture

-       What questions the boss asks first and most often is not lost on people

-       How people come and go (selection, on-boarding, dismissal)

-       Who teaches and develops people so they grow

Even a team with a great culture within a company that has a not so great culture can outperform expectations. So culture is local as well as “national (company-wide).

WARNING

And a warning: I have seen very tough bosses who demand the unreasonable establish a positive culture. It is NOT about being soft or touchy feely.

CASE HISTORIES OF TOXIC CULTURES

If every leader “gets” the importance of culture, why is it that:

-       A family owned business with a great brand and national distribution loses so many of its best people, has people who tell new recruits they fell like prisoners and work under constant fear with no reward to excel? Where enormous energy is expended on attacking each other? This produces a substandard, uncompetitive workforce and often worsening financial results after awhile.

 

-       A small company in the personnel business starves it of the capital it needs for computers and information systems, refuses to invest in new clients to get off on the right foot? Then blames the people for failing to achieve stretch goals?

-       A potentially industry changing health care company just getting its technology to work and winning the trust of new clients is so micro-managed that people wait to be told what to do rather than take initiative?

These companies are good at shrinking their own well-being and financials.

CASE HISTORIES WHERE CULTURE PAYS OFF

By contrast, how is it that:

-       A start-up with fewer than 10 employees does the work of 20 or 30 employees, works its way through crises and has at least 4 people who act as leaders at various times, depending on the situation. The founder and his almost co-founder treat the squad as a treasured team with high expectations all around and lead by example. Meetings, such as they are, accord everyone at the table respect for their input. 

 

-       A private equity firm is able to attract the best and brightest stars from bigger, more prestigious firms and win deals with ceos who could have their pick of financial sources? They are, simply stated, a better place to work and a better partner. And they are savvy and tough negotiators. 

 

-       A company doing $4mm grows to hundreds of millions in revenues and huge EBITDA and the CEO still conducts a monthly class on business himself, sometimes wearing a costume? Continually top-grades his direct reports without using fear as a motivator for performance? Recruits an outsider who is female as president and the entire senior team is enthralled and rallied rather than upset. Focuses the energy of everyone on delighting clients and beating the competition rather than on internal politics and infighting?

 

ANOTHER WARNING: TRANSPARENCY REIGNS

Your culture is visible to lots of people. What your people say about the company at the barbecue and other social occasions. What is evident from your communications of all sorts. And you have an alumni body no matter how small your company may be.

That’s just my view. What’s yours?

IF YOU WANT MORE ON THIS TOPIC, LISTEN IN TO JIM BLASINGAME’S DISCUSSION OF THIS TOPIC ON SMALL BUSINESS ADVOCATE RADIO SHOW. FIND HIM AT  Small Business Advocate

 

 

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MANAGING UPWARD WHEN YOU REPORT TO THE CEO

Sun, Nov 3, 2013

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THE IMPRESSION YOU MAKE

You make an impression on your boss every time you show up. What will she say about you afterward? What do you want her/him to say?

USEFUL REFERENCES

One of my C-suite clients asked me if there were a book to read on managing upward for direct reports of the CEO. If you know of a really good one, please let me know. There are two videos on Youtube that should stimulate your thinking. One is by Wilymanager:

MANAGING UPWARD BY WILY MANAGER

The other is by leadership professor Todd Dewett:

Dewett on Managing Upward

THOUGHTS FROM A LEADERSHIP COACH

But the question set me to thinking. What would be the table of contents for such a book or pamphlet? Here is what I asked my client (only a starter set for discussion):

  1. Do you “get” what the CEO’s top goals are? Are your communications in this context?
  2. Do you know your potential contribution to these goals in your job?
  3. Do you see other contributions you can make beyond your job?
  4. When you start a conversation with the boss, what do you say in the first 2 minutes? Are the topic and the desired outcome of the exchange clear?  What solution do you lean toward?
  5. When you submit a written document to you boss, what is your approach? Is it “boss ready:” a less than one page bullet-style summary up front? Either news headlines or an index to topics?
  6. How well do you know the Executive Assistant to the boss? What have you done to earn good rapport?
  7. How does the boss learn on a difficult or sensitive subject: Seeing? Reading? Hearing?
  8. To whom does the boss listen with a lower filter than others?
  9. What is your parting comment to the boss (thank you? Something that punctuates the meeting and sets up an expectation for next time?)

That’s just my view. What’s yours? 

A REQUEST

 If you like this post, tell a friend. If not, tell me. 

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GOOD CEOS ASK THE RIGHT QUESTIONS…DO YOU?

Mon, Sep 2, 2013

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THE BOTTOM LINE

Questions can be more important than answers. Good CEOs know this. Among the questions: “What don’t I know that could kill me?” And “Am I pushing too hard or not hard enough?”

BUILT INTO MUSCLE MEMORY

It is NOT that they do it every day, just periodically. Good CEOs challenge their own assumptions and their own knowledge and routinely do it to others. They also imagine scenarios beyond those for which they are planning. “What if….” is a frequent question not only to test assumptions, strategy and plans but also how the organization may have to adapt in the face of change. And peeling the artichoke back until the heart is revealed by a series of “Why?” and “Why you believe that” questions.

The very best CEOs and business owners work hard to develop a culture where it is safe for all to ask such questions, even expected. 

WORTH READING

In 1988,  Richard Neustadt  and Ernest May wrote: “Thinking in Time, The Use of History for Decision-Makers.” I find it is timeless (no pun intended). Do I know all I could? How could I find out what i really need to know? Is the analogy in my head a good one or flawed? Let’s decide how to think about “this” before we decide “what to do about this.”

The book is still available on Amazon.com.

 

That’s just my view. What’s yours?

 

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What Made jack welch JACK WELCH

How Ordinary People Become
Extraordinary Leaders

by Stephen H. Baum (Random House)

Most leaders of American companies started out as ordinary people. What prepared them for the top job?

Countless more ordinary people of equal talent never developed the leadership core required to run the show. Why not?

"Lessons for life about the core leadership traits of character, risk taking decisiveness and the ability to engage and inspire followers."
--Jim Clifton, CEO, The Gallup Organization

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