Mentors: Because they’ve been there and done that!

Do you need a mentors? If you’re navigating tricky new territory in the marketplace, chances are that your mentor has probably had to navigate a similar situation at some point in their past. They can share their advice on how best to maneuver through a challenging situation, and lessons they’ve learned through similar experiences from their past.

A Mentor’s Role

A mentor’s primary role is to provide you with counsel in the execution of your responsibilities. A business owner or CEO’s job is all about doing the right things and doing them effectively. A mentor’s job is to ensure that you focus on the most important aspects of the job, and that you do them well.

Justin Norman CEO of JD Norman Industries started a manufacturing business without any operating experience before. To compensate for his lack of experience Justin developed relationships with mentors with either sitting CEOs or retired CEOs who are in a phase of their life where they enjoy mentoring and answering questions. Norman explains, “The stuff that I’ve seen for the first time in my life others have seen it 7 times before. So I’ve gained a lot of insight from that because it’s clearly a blind spot of mine going through the growth and the operations of the company for the first time.”

Mentors can also help you set career and personal goals, hold you accountable, expand your network of contacts and provide insights into the “little things” that can make a big difference in growing your business and in developing your leadership skills.

How to Choose a Mentors

When selecting mentors you should choose a mentor who is working or worked in a similar industry as yours. Your mentor should be someone who inspires you with the success of their career and whose professional achievements you hope to emulate. Because they’ve learned a lot and developed many skills in their career, they’ll be able to guide you towards the best ways to learn the skills you’ll need to achieve similar success.

How to Avoid Leading in the State of Denial

Leading in the state of denial is the biggest cause of business failure in the New Economy. Why!

The NewGlobal Economy

How to Avoid Leading in the State of Denial

Because the business owner never saw failure coming. They zigged when the market zagged. The warning signs were there they just didn’t see them. Are you leading in the state of denial?

In the New Economy you can’t afford to lead by looking in the rear view mirror and doing more of what you’ve always done. (How did that work for Kodak, RIM, and Hostess to name a few?) Instead stay focused on your vision and the road ahead. As a business owner you must leave the state of denial and wake up to the reality it’s not going to be business as usual…even if it may seem like it now. Shift happens and things can change in a hurry.

One of the biggest challenges many CEOs and business owners face is that there is no one to answer to. There is no boss or supervisor looking over their shoulder to make sure they have followed through. There is no one pushing them to set higher goals and take action to attain those goals. It’s lonely at the top. That’s why many successful leaders turn to outside resources to help them manage their way. Whether it’s stalled growth or translating their strategy into an operating plan, they have challenges related to their role as the company’s leader – challenges that cannot be delegated to a member of your management team.

Leaders have Blind Spots

The harsh reality all leaders have blind spots and in most small to mid-size companies the management team often doesn’t have the time or the expertise to uncover the root cause of a problem and/or to devise and implement a viable solution.

Steve Hennegan, President and CEO of San Antonio Credit Union had this to say about blind spots; “I’ve learned all my blind spots that I knew at the time. I’ve also learned that I’m always going to have new ones. I would just say this is: “I don’t know where my blind spots are, that’s why they’re called blind spots. I can tell you some of the ones that got me in the past. I can also say that, in each role that I’ve taken and the variety of roles that I’ve had getting up to this point, I uncovered blind spots at that point that I didn’t know I had and I wouldn’t have actually seen it until I got in that situation.”

The key here is admitting that you can’t do it all by yourself and that they don’t give prizes for reinventing the wheel. Find and hire outside resources that can give you the insights to move you’re your current limitations. Once you’ve made this decision, you need to decide what type of resource best compliments your leadership and your management team. The most commonly used approaches are:
• Mentors
• Coaches
• Consultants
• Advisory Board
• Peer Advisory Groups
• Mastermind Groups

Let’s examine each one.

Mentors

If you’re navigating tricky new territory in the marketplace, chances are that your mentor has probably had to navigate a similar situation at some point in their past. They can share their advice on how best to maneuver through a challenging situation, and lessons they’ve learned through similar experiences from their past.

A mentor’s primary role is to provide you with counsel in the execution of your responsibilities. A business owner or CEO’s job is all about doing the right things and doing them effectively. A mentor’s job is to ensure that you focus on the most important aspects of the job, and that you do them well.

Justin Norman CEO of JD Norman Industries started a manufacturing business without any operating experience before. To compensate for his lack of experience Justin developed relationships with mentors with either sitting CEOs or retired CEOs who are in a phase of their life where they enjoy mentoring and answering questions. Norman explains, “The stuff that I’ve seen for the first time in my life others have seen it 7 times before. So I’ve gained a lot of insight from that because it’s clearly a blind spot of mine going through the growth and the operations of the company for the first time.”

Mentors can also help you set career and personal goals, hold you accountable, expand your network of contacts and provide insights into the “little things” that can make a big difference in growing your business and in developing your leadership skills.

When selecting mentors you should choose a mentor who is working or worked in a similar industry as yours. Your mentor should be someone who inspires you with the success of their career and whose professional achievements you hope to emulate. Because they’ve learned a lot and developed many skills in their career, they’ll be able to guide you towards the best ways to learn the skills you’ll need to achieve similar success.

Coaching and Consulting

“Coaching” and “consulting” are often confused. Both coaching and consulting involve a skilled professional that assists a client in achieving his or her goals. The differences lie in how they support the client. A coach usually works one-on-one with a client to facilitate personal or professional change. The coach listens, give feedback, asks questions, and holds the client accountable. At the end of the day, it’s the client who does all the work implementing the plan of action.

Companies hire consultants to access a capability or expertise not available within the company. They are also brought in to give an outside, objective perspective on an existing problem. Consultant’s role can vary considerably. Depending on the contracted work, consultants can provide analysis on a specific problem, offer advice, make recommendations, teach new skills or develop an action plan. Sometimes, the consultant may implement the solution for the company or find and manage outside contractors to complete the work.

John Foley, CEO Grow Socially and Interlink ONE

used a consultant to help build a critical system for his business. “We’re not a very process oriented organization. When we bring a new customer or project on and we assign different employees to it, we don’t do that very well. So for us to get to the next level we need to build a system for how we run projects. We need everyone, not just management, to understand how we run projects through the company. That was my blind spot and I needed some help with getting that done. So we brought in a consultant here to help build our Knowledge Management System and to make sure we have our processes in place.” Having the system in place allowed John and his staff to, “start working on our business versus in the business.”

Which is best for your company a coach or consultant? The answer depends on what your goal is. If you have a specific business-related problem and don’t have the required skills or capacity to fix it, hiring a consultant is your best bet. If you have high-level goals such as deciding on the direction to take your company, how to lead or facilitate change, developing your leadership skills or how to maintain work-life balance, you might consider hiring a coach.

Advisory Boards

Advisory boards are different from boards of directors because they don’t have a vote, legal say or other control over your business decisions. Their role is to offer advice and recommendations. The most effective advisory boards are comprised of people who bring talent that covers the classic business spectrum of human resources, marketing, operations, administration, legal, finance and in some cases, technology.

The selection of advisory board members should be based on what your greatest needs are and to supplement the resources on your management team. For instance, if the management team is strong in sales and engineering, you might look to fill the board with people with human resources, technology and marketing backgrounds. Some business owners like having a business peer in a non-competing industry serve on their board to give “pragmatic” perspective.
Boards of this nature generally are most effective if they meet with regularly, like quarterly. They usually aren’t expected to do significant work on the business between meetings.
Because board members are professional they should be compensated for their time. Compensation for advisory board members is generally in the range of $150 to $300 per hour for meeting time.

One of the biggest benefits of having an advisory board is the impact the advisory board meeting has on a Company’s management team. The upcoming meeting often serves as a rallying point to bring the management team’s planning efforts into focus because CEO’s and business owners often have their management team make formal presentations to the board. These presentations add new perspectives and add a level of accountability.

Merissa Levin CEO of Information Experts and Successful Culture uses an Advisory Board for guidance and accountability. Levin explains, “I have an Advisory Board and the thing about an Advisory Board is that it doesn’t just stop with the CEO. Smart companies use their Advisory Board as education and mentorship and coaching for the rest of their company. Our Advisory Board is very integrated into our organization and their relationship doesn’t just stop with me.”

Peer Group Advisory Groups

A Peer Advisory Group serves as a reciprocal advisory board. It allows its members to have a team of advisers who are invested in achieving group goals without the fiduciary liability or governance authority associated with a corporate board.

Peer advisory groups are typically made up of eight to ten CEOs or business owners who are not direct competitors and don’t have a conflict of interest. Their purpose is to help group members overcome the problems and issues that most companies face. Most peer advisory groups meet quarterly or semiannually, although a few, meet monthly. Much depends on the proximity of the members and the length of the meetings. The groups that meet less frequently usually have periodic conference calls between face-to-face meetings and password protected websites for online interactions. The following are just a few of the advantages a peer group can offer:
• Management team members frequently view issues from the same vantage point, even if they don’t think alike. Plus, some issues never get discussed because of potential risk and a desire to maintain harmony. This creates blind spots and limits objectivity.

• Owners and CEOs need a sounding board for their ideas. They want to make sure that they haven’t missed anything and that their plan is sound.
• Peer advisory groups can provide feedback on plans and ideas, explore “what if” questions, and provide greater insight and objectivity.
• Within a group, people will have different talents and experiences. Peer groups can be an effective way to overcome weaknesses and complement strengths.
• Succeeding in the new economy requires both vision and candid insights. Peer advisory groups can help executives step away from the day-to-day routine long enough to focus on the big picture.
• When you are managing a growing business, your friends and family may not understand the issues you face. However, every business owner and CEO in a peer group has the same sense of isolation and can offer support and understanding in a way that no one else can.
• Peer advisory groups can provide access to the collective membership’s network of contacts, sources of information, resources, and expertise. The expanded network can also help in identifying new markets, supply sources, potential employees, and business opportunities..

The first prerequisite to a peer advisory group’s success is a commitment to openness, trust, confidentiality, and mutual respect for each other’s ideas, opinions, and suggestions, even if everyone doesn’t agree with them. The group’s real value occurs because people don’t see things the same way or think alike. Keep in mind that it’s often the things you don’t want to hear that you need to hear most.

To be successful, peer advisory groups need:
• Ground rules
• Planned agendas to keep discussions on target and for everyone’s benefit
• Members who are able to both give and take. People who can’t accept criticism or who can’t admit they are wrong are not good candidates. The same is true for people who only take and don’t contribute.
• Procedures for removing members when there isn’t the right fit or chemistry. It’s best to get everyone’s agreement up front so you can have an amicable separation.
• A confidentiality agreement, so that all members, even those who leave the group, are professional enough to respect the rights of the other members.
• A clearly defined objective or purpose.
• In almost every case, a peer advisory group is led by a professional facilitator who functions as a mediator between participants.

Like marriages, partnerships, and business mergers, a match that looks great on the surface doesn’t always work. The right chemistry and a common vision and values are critical. You won’t really know until you start working together. With anything new, there is always a learning curve. Sometimes you have to recognize that you have the right idea but the wrong people and start over or change the makeup of the group.

To gain a better understanding of and appreciation for individual differences, many groups use personality inventory tests such as Myers-Briggs, Reiss Profile or the DISC. Using instruments like these helps to improve communication and working relationships while facilitating more effective group interaction.
There are several organizations that create and manage peer advisory groups including:
CEO Focus
Vistage

Mastermind Groups

The concept of the “mastermind alliance” was formally introduced by Napoleon Hill in his timeless classic, “Think and Grow Rich,” though mastermind groups have been around since the beginning of time.
Napoleon Hill wrote about the mastermind group principle as:
“The coordination of knowledge and effort of two or more people, who work toward a definite purpose, in the spirit of harmony.”
He continues…
“No two minds ever come together without thereby creating a third, invisible intangible force, which may be likened to a third mind [the master mind].”

Mastermind groups provide business owners and CEOs a combination of brainstorming, peer accountability and support in a group setting to sharpen their business and personal skills. A mastermind group helps both you and your mastermind group members achieve success.

When you’re in a mastermind group participants challenge each other to set important goals, and more importantly, to accomplish them. The group requires commitment, confidentiality, willingness to be creative and brainstorm ideas/solutions. You also need to support each other with total honesty, respect and compassion. Mastermind group members act as catalysts for growth; they play devil’s advocates and provide emotional support for their colleagues.

In a mastermind group, the agenda belongs to the group and each person must be committed to their own success. Your mastermind partners give you feedback, help you brainstorm new possibilities, and set up accountability structures that keep you focused and on track. You create a community of supportive colleagues who brainstorm together to move the members to new heights.

A mastermind group is similar to a peer advisory group but mastermind groups tend to be less formal with the focus being more on setting and achieving goals. There are several types of mastermind groups including:
• Virtual or in person (or a combination)
• Group led or facilitated
• Paid or free
• Industry based or interest based
• Small (3 people)or large (100+)
• Ongoing or one time only (before or after an event or conference)

Mastermind groups can provide motivation, inspiration and accountability. They can also be a drain on your time and energy. The key is to make sure that the group’s purpose, values and expectations are aligned with yours. If a group isn’t the right fit for you and your business disengage quickly and professionally.

Don’t join if you’re not willing to support your group members the way you want to be supported. You’ll get what you give in most mastermind groups.

Which outside resources is best for you?

The answer to that question is: it depends. It depends on your needs, resources, time availability and personality. Many CEOs use multiple outside resources. Melissa Levin of Successful Culture and Information Experts uses advisory boards, coaches and belongs to a mastermind group.

 

The New Economy: How is it Treating Your Business?

How is the New Economy treating your business?

If you own or run a business today you know we’re experiencing an economy that is different than anyone has seen in the past. It is five years since we went through the worst economic crisis since the Great Depression.

The Great Recession brought us the New Economy

Now called the Great Recession, we saw:
• The loss of 8.7 million jobs
• More than half of adults lost a job, took a pay cut or had hours reduced
• Trillions of dollars of wealth was lost where almost everyone was touched
• Home values dropped dramatically nationwide, at one point 11 million homeowners were upside down on their mortgage and tens of thousands lost their homes
• The United States weren’t the only country impacted by the economic crisis. Financial uncertainty was repentant in Europe as nine countries saw their standard and Poor’s credit rating downgrade in 2012

We’re still in”Recovery”
In spite of numerous efforts by the government to help the battered economy get back on its feet, the “recovery” is still a work in progress. While some business sectors and regions of the country have found their footing, others are still digging themselves out of a hole.
Here is a glimpse of economic indicators that give both hope and provide continued warning signs:
• We’ve regained the 8.7 million jobs that were lost but many were replaced with jobs that pay less sometime much less. Manufacturing and construction jobs that pay around $25 an hour have been “replaced” with retail and restaurant jobs where pay is $12-16.96.
• Unemployment has dropped from nearly 10% to 6.4% in May 2014. Unfortunately the plight of the long term unemployed continues to worsen. 3.4 million Americans have been out of work for more than 6 months. This is two and a half times what is was pre-recession. Many who have found work did so with part time jobs or short term jobs. While many others have simply left the labor market and stopped seeking employment.
• College graduates are feeling the strain of the economy as unemployment among recent college graduates is still above the national average at 7.6%.
• Compounding the challenges recent graduates face looking for work is their mounting student loan debt. In the last ten years this number has grown from $260 billion to 1.1 trillion. The average student graduates with about $30,000 in debt. Many predict this to be the next “bubble” to send shock wave to our economy.
• Although the housing market is improving most metro areas find their home prices 65-80% of their peak value. The $2 trillion equity value lost may never be recovered.
• Household net worth increased to a record high of $81.7 trillion. That’s the good news. The bad news is only the very wealthy benefited. The rich got richer and everyone else got poorer.
• “Small business optimism continues its winter hibernation with the latest Index dropping 2.7 points to 91.4, a reading that historically has been associated with recessions and periods of sub-par growth. The one highlight in the January (2014) survey, a surge in hiring plans, was crushed in February by the continued onslaught of a wintry recovery now in its 5th year.” – Bill Dunkelberg, NFIB Chief Economist
• The US is still the global economic leader and is moving along better than much of the world especially debt-ridden Europe and ever- stagnant Japan. However, our growth is only moving at a 2-3% pace.
• Picking up the United States lack of growth has been China. They’ve been growing at a 9.5-10% rate over the past few years. This number is trending downward this year as economists forecast growth at 7.5%. As China’s role in the global economy continues to grow (They are now the world’s biggest trader of goods), every economic bump they experience will be felt everywhere.

Silver linings in the New Economy
In spite of these challenges many industries and companies large and small are experiencing record growth and profit. For example:
• After stumbling badly in 2011, Netflix found success as a non-network by offering original television programming. Their subscribers exceeded 40 million and quarterly earning quadrupled.
• Entertainer Beyoncé turned traditional album marketing on its ear by releasing an iTunes exclusive album in the dead of night with no promotion. Its success was unprecedented. In a social media world, free publicity is the best kind of publicity, and the combination of surprise and artificial scarcity was a great way to get people to actually open their wallets for content.
• AMP Americas is a Chicago-based company that makes compressed natural gas. While the alternative fuel market already has plenty of innovative business models,” this one truly stands out: Its fuel is converted from cow manure.
• Lexington, N.C.-based Lolly Wolly Doodle, earns more than $10 million in annual revenue. Two factors lie at the heart of their success: an innovative manufacturing approach known as “just-in-time” manufacturing and a commitment to social commerce. Lolly Wolly Doodle currently does 60 percent of its sales through Facebook and the remainder through its website.
Why are companies like RadioShack, Pennies, RIM and many others seem to be moving from one crisis to another while others find the opportunity that leads them down the path of success?

Let me know about your experience with the New Economy.

Rating Systems: Do they Improve Performance?

Rating systems have been relied upon for years to improve performance. Often times a person’s career, pay raise or job is in the balance.

How effective is your performance management rating system?

A  study published in the Journal of Applied Psychology sheds a not too flattering light on rating systems and what they really measure.

“The most comprehensive research on what ratings actually measure was conducted by professors Mount, Scullen, and Goff. In their study, 4,492 individuals were rated on a number of different performance dimensions by two bosses, two peers and two subordinates, who combined to produce almost half a million ratings. The researchers then analyzed these ratings and discovered that 54% of the variance in the ratings could be accounted for by “idiosyncratic rater effects”—namely the peculiarities of each individual rater’s perception. Only 21% of the variance in ratings could be explained by the ratee’s actual performance. All of which led the researchers to the following conclusion:

“Although it is implicitly assumed that the ratings measure the performance of the ratee, most of what is being measured by the ratings is the unique rating tendencies of the rater. Thus ratings reveal more about the rater than they do about the ratee.”

Scullen, S., Mount, M., & Goff, M. (2000). Understanding the latent structure of job performance ratings. J Appl Psychol., 85(6), 956–70.

What’s your experience been with rating systems in your organization? Do you feel they are worth the time and effort?

Are You Ready for VUCA?

TooManyChoicesVUCA best describes the business environment that has become the new global economy. The recession has given way to a slow and struggling recovery in the U.S. while Europe is facing a depression and economies around the globe are finding themselves in uncertain terrain.

V.U.C.A. (pronounced voo – ka) is an acronym developed by the military to describe an environment that is dominated by:

  • Volatility – The nature, speed, volume, magnitude and dynamics of change;
  • Uncertainty – The lack of predictability of issues and events;
  • Complexity – The confounding of issues and the chaos that surround any organization; and
  • Ambiguity – The haziness of reality and the mixed meanings of conditions. CEOs are struggling with how best to lead

Because they were designed for more predictable times, business models and business planning processes fail to perform well in this chaotic environment. This is because in a VUCA environment change happens more frequently, more unpredictably and with enough size to makes them “disruptive.” So the question for business leaders becomes, “how do you effectively grow sales, profits and customer loyalty in an unpredictable environment where literally everything changes in months rather than years?” Since you can’t avoid VUCA you must understand it and develop skills that will help your company adapt to the chaos it produces.

In a VUCA economy change is a constant. As markets and customers become less predictable businesses must vigilantly watch the landscape. Trends start quickly and can develop overnight bringing with it either great threats or tremendous opportunities. This often leads to shorter life cycles of products and services. With shorter life cycles market leadership is short-lived , as is the opportunity to mine the profit potential of the leadership position. Being the market leader in the past, meant years of market domination (think about IBM, Kodak, Nokia, Sears and Polaroid). In the New Economy market leadership is often measured in months.  The key to success is how quickly and effectively you can recognize and respond to market trends.

Leaders must dramatically modify or stop doing the following things to prepare for a VUCA environment.

  • Stop seeking permanent solutions to existing problems
  • Stop relying on the past and trends as an accurate predictor of the future
  • Stop assuming that long-term market leadership is possible without major innovations
  • Stop assuming that the strategies and people who got you here will get you to the next level
  • Stop assuming that the corporate culture and corporate values will remain the same

What are you doing to prepare your company to function in a VUCA marketplace?

Grow Your Business with the Right People

grow your businessDo you want to grow your business? If you do then you must have the right people. In Jim Collins book “Good to Great” he says you have to make sure that “the right people are on the bus”. This means that you as a leader must know the strengths and motivation of each person on your team, as well as how the individual impacts the performance of the team. Recognizing a person’s talent and then managing it creates a motivated and engaged workforce. Failure to hire the right people for the jobs and not putting people in positions where their talent can soar is a waste of a company’s resources. Southwest Airlines set itself apart from the industry by hiring and developing people who are a natural fit for the company and the jobs they were hired for. The result has been an engaged workforce, low turnover and great customer loyalty.

Let’s look at how having the wrong people in place can cost your company dearly even at entry level positions. I was with a friend waiting in line at Starbucks as he was paying for his $8.00 grand latte supreme. The young woman at the cash register said, “That”ll be $8.00 please. Boy that’s expensive!” In that moment of truth my friend looked at me and said with a chuckle, “She’s right.” He paid and left with his prized coffee. But he stopped going there deciding his coffee money was better spent at 7-11 at $2.00 a pop. Situations like this are as preventable as they are unfortunate. The right person with the right training would never have made this comment. The right people will help you grow your business while the wrong people will sink it.

Marissa Levin, CEO of Information Experts has grown her $15 million award winning business through hiring the right people. Levin explains her company secret to hiring , “When we look at employees, there are three things that we have to look at. And this is a rule of thumb pretty much for everybody, any organization. It’s called the GWC Principle. Do they get it? Do they want it? And do they have the capacity to do it? So as we look not only at new hires, but at the existing people as we shuffle them around and reorganize and grow, we have to look at people and say, “Do they get it? Do they really get what they’re supposed to be doing? Do they want it? Do they have the passion for it? And do they have the capacity? Do they have the physical capacity, the intellectual capacity, and the emotional capacity? Whatever the capacity may be, do they have the capacity to do it?” And not all employees in every position are going to have the get it, want it and have the capacity to do it factor.” Use the GWC Principle to grow your business.

To grow his cloud hosting business Matthew Porter, CEO of Contegix pays a finders fee to employees of $20,000. He puts his money where his mouth is because he understands that without the right talent his company won’t grow. How much is the right employee worth to help you grow your business?

In a competitive marketplace having the right human capital is critical to surviving and ultimately thriving. Make sure that you spend the needed time, energy and thought to hire and develop the right people to grow your business.

Cash Flow Management for Business Growth

Cash flow management will make or break your company especially in a tough economy. In fact, of the 150+ major businesses that failed in 2008 and 2009 most were due to bankruptcy. (Wikipedia) Also the biggest reason small businessecash flow managements fail is usually lack of capital and poor cash flow management.

Poor cash flow management is like going on vacation without cash or credit cards. Neither turns out to be a pleasant experience. This may sound like common sense but common sense isn’t always common practice. There are many reasons why companies fail to manage their cash flow effectively including having insufficient accounting systems in place, lack of focus and lack of discipline.

Some companies struggle because their eyes are bigger than their wallets. For example, a $5 million tech firm had enjoyed steady double-digit sales and profit growth selling non-core technology to small businesses.  In late 2011 the company jumped at the chance to bid on a large project for a mid-sized business for their core technology. They were ecstatic when they were awarded the business and high fives were given all around. However the euphoria quickly turned to angst when the CEO realized the project would consume most of their resources and cash flow for the next 6-9 months. Although the project would eventually be profitable the company had to take extreme measures to survive the implementation, including laying off personnel and putting a halt on new business development. Because they failed to anticipate the impact the project would have on their cash flow management the long-term viability of the company is still in doubt.

Spending and committing resources as if the road always be straight and narrow is inviting disaster. Cash must be managed as the precious resource that it is instead of the endless supply people thought existed before the start of the Great Recession. At that time, much growth was fueled by the desire to grow and the availability of money. In the New Economy credit and cash have tightened up and demand has fallen off in many markets. This means unless you have money to burn don’t pursue a market that doesn’t have demand or you can’t uniquely and effectively service. At least not right now.

One example of a large company who positioned themselves for growth with cash flow management was ITW. They put several initiatives in place that helped them recover rapidly from the downturn they experienced in 2009. Among the actions taken, ITW:

  • Restructured several businesses to get their cost structures in line with the marketplace.
  • Assessed their various global markets and put resources where they saw growth and put growth plans on hold where markets were stagnant.
  • Improved working capital by managing receivables and inventory.
  • Implemented programs to increase cash flow.

Managing your cash flow doesn’t mean don’t spend and don’t grow. It means having the financial resources available when growth opportunities are available.

Do you have the financial resources to support your growth initiatives without putting the company at risk? If not get your financial house in order immediately. If you wait until the “time is right” it may be too late.

 

Metrics: Are Yours Helping You Grow Your Business?

MetricsDo your business metrics keep your business focused and moving toward your vision? As a small business owner or CEO of a small business you are paid to describe the future (your business plan) and then create it. This requires vision and execution. The path to any vision is rarely as smooth in execution as it is on the drawing board. Like most flights on an airplane getting off course is expected. The key is how quickly you and the pilot can course correct.

To make mid-course corrections you need an instrument panel or dashboard.  The business dashboard as a metaphor for critical metrics to measure business performance originated years ago at General Electric.  Just as you use the speedometer, oil gauge, fuel gauge, and other instruments to monitor the status of your car as you drive, you want to keep track of key indicators of the performance of your company. Like the dashboard gauges, your metrics allow you to continually assess your progress and detect any potential problems.

An effective dashboard provides you with the information you need to make good decisions that keep your company out of harm’s way and moving in the right directions. This means that you must select reliable and predictive metrics. Armed with the information they provide, you must be able to use them to help decision making. This isn’t always easy. Consider the fact that Federal Reserve Chairman Ben Bernanke and other top central bank officials failed to see the housing crash coming as late as December 2006.

With all the resources at their disposal coupled with the years of experience identifying economic trends, how did they miss the biggest financial crisis since the Great Depression? Were they looking at the right metrics? Or did they interpret them wrong? Or did they just make poor decisions based on what they saw? We may never know. But their failure to execute on this key leadership lesson points out how important it is to have metrics that inform you well enough in advance to take corrective action. 

Your choice of business metrics and the importance you give them show what you value. If you value customer service or new product development, for example, you make them central to your business metrics. You include it in your dashboard.

By instituting key business metrics across functions and groups and at every level, you directly link individual performance to measurable outcomes. This sends a clear message that not only do you care about customers and revenue, but so should everyone else, since they are accountable for the results measured by their particular metrics. Clear accountability is essential for executing this leadership lesson.

Whether you manage a small administrative staff or a  global company, you need business metrics to keep your business on track. Having a solid business plan is essential but that’s not enough because of the dynamic nature of the marketplace. This is especially true for small- and medium-sized businesses. Juvo Products manufactures assistive living products for seniors and people with mild disabilities. Because they are a growing early-stage business they must remain extremely nimble. As Park Owens, President of Juvo Products explains, It’s a matter of how quickly you adjust and how flexible you are. How quickly you can react.  I would say 50% of our business plan was right on and 50% was off.”

When establishing metrics, beware of metrics that:

  • aren’t easy to collect data that’s accurate or complete
  • are complex and difficult to explain to others
  • complicate operations and create excessive overhead
  • cause employees to act not in the best interests of the business, just to “make their numbers”

John Menzer, CEO of Michael’s describes how he and his management team use metrics to manage their business. “We talk about what we saw in our stores and we ask,” What are the three things we need to adjust for the weekend to maximize sales and earnings for the weekend?” And we make those changes on Friday. What do we see in competition? How are the promotions doing? Do we need to make any adjustments because of that? So we’re running the business on a kind of weekly basis, but our Merchandising Team is probably running on a daily basis. Even marketing is maybe running on a daily basis now because the economy is just so tough. We are changing on the fly even based on weather. We’re now using weather service and we’ve incorporated that weather service into our modeling and pricing and promotions. So if we know a snow storm is coming, we’re going to get that promotion in earlier rather than later.”

If you are committed to accelerating your company’s speed to vision you need to ask yourself the following questions:

  • Do your metrics allow you to proactively respond to challenges and opportunities?
  • Do you have systems in place that make it easy to regularly monitor your metrics and course correct to achieve your goals?

Your honest responses should go a long way for you putting in place the metrics and systems you need to navigate in today’s tough economy.

Grow Your Business with Customer Knowledge

If you want to grow your business start by taking a close look at your customers. Not only are they the key to your growth what you don’t know about your customers is putting your business at risk. Why? Because market trends and customer needs are changing more rapidly than ever before. If you don’t know who your ideal customers are, as well as how, when and why they are motivated to buy, you can’t position your solution to uniquely satisfy their needs. 

When your customers’ needs shift how quickly can you re-align your company to serve those needs? If you don’t take care of your customer someone else will.  Just a few years ago BlackBerry was the Smartphone industry leader with 43% market share. Today they trail both Android and Apple with a market share of  less than 10% and dropping.

Borders failed to recognize the importance of selling books on line and paid the steep price of going out of business leaving 11,000 employees without jobs.

Knowing who your customer is and being close to them isn’t enough in the New Economy. Companies like ITW have emerged successfully from the Great Recession because of their understanding of their customers. As Bob Hamilton, Group President for ITW explained,” The most important thing for us regardless of what market we’re in is we need to know our customer better then he knows himself. And we need to not only be close to that customer we need to be able to predict what he’s going to do.”

To survive many businesses have resorted to discounting, coupons and promotions to attract customers. What they found the customers left as soon as the promotion ended or the coupons expired. They didn’t gain customers they merely leased them. This is not a long-term sustainable strategy. Because you can’t grow your business with leased customers.

Sometimes the best way to grow profitably is to know who you are and who you’re not. Irwin Steinberg has steadily grown his CPA firm Steinberg Advisors by focusing on what his ideal clients want and need — business advice. Steinberg explains his firm’s business model,” …a lot of CPA firms have a lot of product lines. We don’t have the same product lines that they do. We have business consulting, valuation, accounting and tax. We’re not in the IT business. We’re not in investment banking. We don’t manage money for our clients.” Instead of dissipating his firm’s resources by offering services his ideal customers don’t value and don’t want, Steinberg focuses on what they do value and his firm can deliver. What are you relying to grow your business?

If you want a road map to grow your business  identify your ideal customers, make sure you know them well enough to predict their behavior and then give them what they want better than anyone else.

 

 

 

 

Grow Your Business with a Superior Customer Experience

Grow Your BusinessDo you want to grow your business? Then deliver a  superior customer experience.

Customer experience is defined as the sum of all experiences a customer has with a supplier of goods or services, over the duration of their relationship with that supplier. This means every touch impacts that experience positively or negatively. Your ability to deliver an experience that sets you apart in the eyes of your customers serves to increase how much they spend with you and, optimally, inspire loyalty to your brand.

To create a superior customer experience requires you to first understand the customer’s point of view. Only by standing in your customer’s shoes can you appreciate the full impact of the day-to-day customer experience that your company delivers.

In the New Economy it’s becoming more challenging to grow your business. Products are becoming commoditized, price differentiation is no longer sustainable and customers are demanding more. To compete, companies are focusing on delivering superior customer experiences. A study of over 860 corporate executives revealed that companies that have increased their investment in customer experience management over the past three years report higher customer referral rates and customer satisfaction (Strativity Group, 2009). Many experts feel that the customer experience has emerged as the single most important aspect in achieving success for companies across all industries.

As evidenced by the number of business casualties over the past few years most companies talk about becoming customer focused, but few actually do it. Doing customer satisfaction surveys is one thing, changing the company’s culture based on what was learned from the surveys in something totally different. If you want to grow your business in today’s marketplace you’ll need to get serious about the customer experience you deliver.

Some companies have learned that being customer focused can give them a competitive advantage that helps them grow. Customers choose Disney World and Zappos because of their experience with them.

Here are a couple of examples of how successful CEOs are using their customer experience to grow their businesses.

Dan Hesse, CEO of Sprint Nextel uses hand written notes as a way to show customers appreciation. Hess says. ” I know it’s kind of old fashioned, but I think in today’s digital world customers notice and appreciate that we take time to write letters to them.” The idea came about when an employee and his team started writing customers thanking them based on their longevity. Since they did it every Thursday,  it’s become “thank you Thursdays” company-wide.

As companies add more technology they make doing business with them more complex. Improving the customer experience means they must help customers manage the complexity they face. Successful companies are finding ways to simplify products and services while making them easier to use. As Steve Hennigan CEO of San Antonio Credit Union explains, “Customers must have a seamless experience with our organization no matter which channel they choose.”

Hennigan uses the process of purchasing a mortgage as an example of how his organization must tame the complexity monster for his customers and deliver a seamless experience.

“In the mortgage space we’ve got to allow you the opportunity to make a loan via the phone, via the Web, via the call center, or via one of our branch interfaces. And we’ve got to do it so that it’s as if you’re in one channel. Say for example you’re doing research in one channel and you start an application process on-line, but then you get stuck and you want to talk to somebody You ought to be able to seamlessly jump into another channel without us making you do the extra work as the consumer… the technology must seem simple to the user although it may be very complex on the back to provide a simple solution, which is: I start on-line and then when I get stuck I can go get a face-to-face and I don’t have to start from the very beginning again.”

Both of these CEOs know that growth starts and ends with the customer experience and it’s up to them to constantly innovate ways to improve it.

Is the customer experience you deliver helping you grow your business?  What ways can you improve your customer experience so that you can grow your business? I suggest that business owners and CEOs take one area of customer experience each month and improve it. By the end of the year they will improve twelve ares. Plus improving one area often has a compounding effect on other areas. This is a simple and straight forward approach to grow your business one customer experience at a time.