How to Outthink (and Outperform) Your Competitors

(Part 1 of a 2-Part Series)

As Aretha Franklin says: “Think!”

In today’s mile-a-minute, e-connected, global, frenetic, here-today-gone-tomorrow world of commerce, it is no surprise that many of us don’t take enough time to think – and I mean really think, in a deep and focused way – about our business.  We’ve become reactionary experts, essentially sucker-punched by our clients, by our competitors, by 24×7 connectedness, and by the pundits who espouse turn-on-a-dime flexibility as the panacea for 21^st century business success.

Well, the pundits are at least partially right; flexibility is important.  But not at the expense of a well thought strategy and a logical plan of execution.  This is at once both the challenge and the opportunity with great potential to impact your performance and competitive position.

If you are thinking to yourself, “my business is too small to need a strategy” or “I’ve gotten this far without a plan,” you might want to consider whether you are thinking too small.  Acknowledging that what got you where you are today isn’t necessarily going to get you where you want to be in the future is the first step. Committing to some form of disciplined thinking and planning process is the next.  Sustained competitive advantage is linked to continually implementing change and, as both research-based and anecdotal evidence illustrate, the odds of doing that successfully plummet without a well-thought plan.

According to Theodore Levitt, professor and editor of the Harvard Business Review, the job of every manager is to “think rather than just to act, react, or administer.”  The question to consider is: How much time do you actually spend thinking versus acting and reacting?  If you are almost always acting and reacting, what are the potential risks associated with not taking the time to really think?

Although finding the time to think and plan is often posed as an obstacle by business leaders I’ve met, the time commitment for a structured process – similar to the one I will outline for you in this article – can be as little as 16-20 hours. That’s just 2 hours per week to spend working “on” your business instead of “in” your business, spread over 8-10 weeks.

There are 2 major components to understand: strategic planning and tactical planning.

Strategic planning is a thinking process that helps clarify and then merge your concept of what you want your business to achieve with the external realities of the marketplace and the internal realities of your organization.  The result is vastly improved precision regarding direction and focus, and a realistic assessment of your organization’s strengths, limitations, opportunities, and threats.  Tactical planning becomes much easier when a big picture has been defined – not just in terms of what must be accomplished, but importantly why it matters.

Business planning – the combination of strategic planning and then tactical planning -sets the stage for competitive advantage.  It also facilitates the integration of your plan, your people issues, and your processes into a single set of tasks specifically designed to get you where you want it to go.  An effective plan gathers no dust on the shelf.  Rather, it is a day-to-day communication, decision-making, monitoring, and tracking tool to hold yourself and your team accountable to accomplish your objectives.

In my next blog entry – part 2 of this 2-part series, we’ll outline the 5 steps that are required to create a comprehensive and practical plan for your business.

What are you doing to enhance your value drivers?

In a recent article entitled “Economic Downturn Gives Owners Time to Work on Value Drivers,” my good friend Eric Donner, Managing Member of Regal Wealth Advisors reviews how important value drivers are to maximize a business’ selling price.

He goes on to point out that it is the work of the owner – not employees – to create and to nurture them. Value drivers include:

• A stable and motivated management team.
• Operating systems that improve sustainability of cash flows.
• A solid, diversified customer base.
• A realistic growth strategy.
• Effective financial controls.
• Stable and improving cash flow.

Due to the freeze in credit markets and a slowdown of M&A, today’s economic environment – for the foreseeable future – gives owners time to install and/ or improve value drivers in their companies. It also gives them time to demonstrate the sustainability of the value drivers they create. Buyers want to know that success or growth charted in one year can be maintained over several years. They bank on (and pay for) a company’s potential to grow, so they look very carefully at how long a company’s value drivers have yielded positive results.

Experienced owners know that change takes time. Really experienced owners know that positive results from those changes take even longer — likely longer than even they expect.

Regardless of when you might sell, it makes good sense for owners to concentrate on those elements of their businesses that create more cash flow, more sustainability, and more future value. After all, isn’t this why you’re in business?

A great place to start is to evaluate how you’re doing currently with respect to each value driver and then put a plan in place to improve each one – steadily and continually – over time. Then, when it finally is time to sell, you’ll be assured a handsome return for having built something of lasting value.

Overcoming Resistance to Organizational Change

To understand why we resist change, it is useful to acknowledge that humans are creatures of habit, and that habits are learned behaviors with predictable outcomes. By creating change, we force those involved – including ourselves – to confront the unknown and “unlearn” things that we previously accepted as producing desirable results. Even if the current results are sub par, they are predictable and at some level comfortable for us – so we resist changing.

There are 3 types of resistance that most frequently rear their unproductive heads in an organizational setting: emotional, political, and rational (EPR). Although each has the potential to derail organizational change and all 3 operate simultaneously within us, they are unique in how and when they are most likely to impact your business.

When people first learn about impending change, most – at an emotional level – actually become intrigued and even excited about it. We are naturally curious and relatively optimistic beings, so our emotional reaction to upcoming change is initially positive as you can see on the Emotional graph line in Chart A. It isn’t until the going gets tough that emotions swing to the negative and have the potential to create a crisis point. If you had the power to listen to what other people think, at the crisis point you might hear things like “I’m not so sure this is really going to work” and “This is much harder than I thought it would be.” As a leader, it is critical for you to anticipate this moment for yourself and for your people so that you can provide the boost necessary to help your team power through to firmer emotional ground.

Click Here to View Chart A

Political resistance to change is all about self-image and the perception of power. Unlike emotional resistance, political resistance kicks in at the exact moment people learn about change. The Political graph line in Chart A begins with a swing to the negative and then slowly trends back up into positive territory, tracing initial questions about the personal impact of change. People think things like “This could cost me my job” and “Why wasn’t I asked about this before the decision was made?” Over time, and as the change process unfolds, even the most seasoned political players learn to adapt, compensate, and otherwise protect their sense of importance, moving them back to positive ground. Warning: there is risk that political resistance will derail your project if it is left unchecked at the crisis point on the graph. To minimize the impact of political resistance, be sure to involve the right people up-front as you plan change and anticipate individual reactions – both of which will help you accelerate the path to acceptance.

Rational resistance to change is the easiest to both understand and overcome. As people try to understand change, they look for facts, relevant comparisons, and logic to help justify why it is necessary and what they should expect both during and after the process. Along the way, they look for measurable evidence of success and progress to correlate how their organization is doing compared to what they expected. The result of this is a straight-line Rational graph line on Chart A that begins at neutral and slowly trends toward positive acceptance. Thorough planning and open communications before and during change initiatives minimize the impact of rational resistance. As many of my clients learned the hard way, it is much better to deliver “bad” news or information about the imperative for change in an open and up-front manner than to shield it from employees to “protect” them for as long as possible. The same rings true for communicating successes, failures, and progress during the change process. Any news – even bad news – helps to minimize rational resistance to change.

How does EPR resistance to change impact your company? What did this cost you last year, and what would the benefits be if you could reduce their effects in the future?

Plans, People, Process

When I ask business owners to tell me where they want to drive their business, in most cases I get either a blank stare or a highly tactical response like the one I recently heard – “We are going to hire 3 new salespeople in 2009 and really push our [newest and most profitable service] business.” A statement like this is usually more of a reaction to events from the prior year than a forward-looking statement of what they really want to accomplish. It also oversimplifies the tasks at hand.

Running a business in this manner is akin to trying to drive a car to an unknown destination while looking in the rearview mirror; you don’t know where you are going and you could very well get yourself and others killed along the way!

The most significant root cause of EPR resistance to change – by far – is an underinvestment in strategic planning. To be clear, strategic planning is a thought process that helps business leaders clarify and then merge their concept of what they want their business to become with the external realities of the marketplace and the internal realities of their organization. The result is vastly improved precision regarding direction and focus, and a realistic assessment of the organization’s strengths, limitations, opportunities, and risks. Tactical planning and planning for change becomes much easier when a big picture has been defined – not just in terms of what must be accomplished, but also why it matters.

If you are reading this and thinking to yourself, “but my company is too small to need a strategic plan,” you might want to reconsider if indeed you are, or if you might be thinking too small not to have one!

Business planning – the combination of strategic planning (first) and tactical planning (second) – helps set the stage for change and will provide you with multiple opportunities to anticipate and overcome EPR resistance to change, in yourself and in your staff. It also facilitates the integration of your plan, your people issues (how to further develop yourself and your people), and your processes (which ones require examination for potential improvement) into a single set of tasks specifically designed to get you where you want it to go.

Change in your company starts with you, and it is never too late to plan for your future.

Ray Noorda, technology pioneer and former president and CEO of Novell Corporation, said: “Cause change and lead; accept change and survive; resist change and die.”

As a leader, it is important to acknowledge that you are also resistant to change. How do your own emotions, ego, and sense of strategic clarity impact your ability to drive change? Are you surrounding yourself with the right people to facilitate change or do those around you take too much comfort in the status quo?

Although there may never be a truly “good” time for change, it is always far better to plan for it proactively than to find yourself reacting to events that may not be fully in your control.

A Leadership Checklist: 7 Questions to Ask Yourself (Part II)

(This is part two of a two-part post on Leadership. Please see last week’s post for part one)

Ask yourself how you’re doing and what you should be doing differently—and be sure to answer truthfully. As simple as this may sound, many people are shocked by their answers to basic management and leadership questions.

Last week’s blog covered the first three checkpoints of leadership questions to ask yourself:
1. Vision and Priorities
2. Managing Time
3. Feedback

This post will cover the last four leadership checkpoints:
4. Succession Planning
5. Evaluation and Alignment
6. Leading Under Pressure
7. Staying True to Yourself

Succession Planning

Have you picked one or more potential successors?

If you aren’t identifying potential successors and developing their leadership abilities, then you are contributing to business and personal stagnation. There won’t be enough leaders to grow the business.

When challenging and testing people, you must frequently delegate more to them. This frees you to focus on critical strategic matters facing the business. When people are not being challenged, they may leave to seek opportunities elsewhere.

Planning for succession means your people will improve their performance, you’ll be more successful through them, and you will pave the way for your own promotion. Failure to actively plan for succession means you do not delegate sufficiently and become a decision-making bottleneck.

Ask yourself:

• Have I, at least in my own mind, picked one or more potential successors?
• Am I coaching them and giving them challenging assignments?
• Am I delegating sufficiently?
• Have I become a decision-making bottleneck?

Evaluation and Alignment

Your business is constantly changing. So are your customers. Depending on your industry, this may be rapid—or extremely rapid. If you don’t change along with the business environment, you may become seriously out of alignment. What got you here today won’t necessarily get you there tomorrow. The people you hire, the way you organize them, the economic incentives you offer them and even the tasks you delegate may no longer create the culture and outcomes that are critical to success.

Have you checked to see if the design of your organization still aligns with key success factors for your business? Effective executives regularly seek advice and fresh perspectives from people who are less emotionally invested in their business. This allows them to determine whether historically relevant aspects of the business remain critical to tomorrow’s success.

Ask yourself:

• Does the design of my company still align with key success factors?
• If I had to design my business from scratch, how would I create it? How would it differ from the current design?
• Should I create a task force to answer these questions and make recommendations?

Leading Under Pressure

A leader’s actions during stressful times have a profound impact on the firm’s culture and employees’ behaviors. Successful leaders must be aware of their personal stress triggers and reactions. Behaviors should be consistent with beliefs and core values, no matter how severe the stress.

Pressure is a normal part of doing business, but it affects people differently. What may evoke anxiety for one individual may not bother someone else. As a leader, you are watched closely. Emotions are contagious—even more so when they come from the leader.

You must be sufficiently self-aware to recognize the situations that create anxiety for you and manage your behavior to avoid sending counterproductive messages to your people.

Ask yourself:

• Which events create pressure for me?
• How do I behave under pressure?
• What signals do I send to subordinates?
• Are these signals helpful, or do they undermine the success of my business?

Staying True to Yourself

Successful executives develop leadership styles that fit their business needs, as well as their personal beliefs and personality. While many leaders ask themselves about the former, few analyze the latter.

Companies require leaders who can express strongly held views, rather than mimic the party line. Do you hold back for political reasons? Do you encourage your people to express their opinions and make waves, if appropriate?

Don’t tiptoe around significant issues or foster an atmosphere that encourages employees to do so.

Ask yourself:

• Is my leadership style comfortable? Does it reflect who I truly am?
• Do I assert myself sufficiently, or have I become tentative?
• Am I too politically correct?

• Does anxiety about my next promotion or bonus cause me to hesitate when I want to express my views?

In the early stages of your career, you may have received plenty of guidance and support from superiors and mentors. As you’ve been promoted, however, you’ve probably encountered fewer sources of honest and useful feedback. By the time mistakes have come to light, it may have been too late to fix them.

Successful leaders continually ask themselves hard questions to stay on track in a world of rapid change. Remember to step back and gain fresh perspectives so you’re prepared with a new game plan when change occurs. If you’re standing too close to the blackboard, you won’t see mistakes until it’s too late.

These questions are designed to ignite serious introspection. They can be even more productive when discussed with a trusted advisor, coach or mentor.

When is the last time you had a leadership checkup?

How to Stack the Deck in Favor of Making the Right Tough Decisions

 

Leaders are remembered for their best and worst judgment calls, especially when the stakes are high, information is limited and the correct call is far from obvious. In the face of ambiguity, uncertainty and conflicting demands, the quality of a leader’s judgment and decision making determines the entire organization’s fate.

 

That’s why leadership experts Noel M. Tichy and Warren G. Bennis claim judgment is the essence of leadership. In their popular book, Judgment: How Winning Leaders Make Great Calls (Portfolio, 2007), they write: “With good judgment, little else matters.  Without it, nothing else matters.”

 

But there’s no one-size-fits-all way to make a judgment call, the authors emphasize. Every organization has distinct problems, people and solutions.

 

A Framework for Judgment

 

A judgment call should not be viewed as a single-point-in-time event.

 

The process begins when leaders recognize the need for change and for a decision. They consequently frame and name the issue, set clear goals and objectives, align people and continue through successful execution.

 

Three Critical Judgment Domains

 

People: Leaders cannot set sound direction and strategy for their enterprises or deal with crises without smart judgment calls about the people on their teams. This is definitely the most complex domain. Sound judgments about people require leaders to:

1. Anticipate the need for key personnel changes
2. Specify leadership requirements with an eye toward the future – not the rearview mirror
3. Mobilize and align the social network to support the right call
4. Make the process transparent so it can be deemed fair
5. Make it happen
6. Provide continuous support to achieve success

 

Strategy: When the current strategic road fails to lead to success, the leader must find a new path. The quality and viability of a strategic judgment call is a function of:

 

1.      The leader’s ability to look over the horizon and frame the right question

2.      The people – both internal and external to the organization – with whom he/she chooses to interact

 

Crisis: During a crisis, leaders must have clear values and know their ultimate goals. A poorly handled crisis can lead to business failure.

 

The Process of Making Judgment Calls

 

In all three domains, good decision making always involves a process that starts with recognizing the need for the call, with steps that facilitate effective execution.

 

1. The Preparation Phase: This phase includes sensing and identifying the need for a judgment call, framing and naming the judgment call, and mobilizing and aligning the right people. While these steps may seem obvious, many factors can contribute to faulty framing and naming, which can result in a bad judgment call. For example, what is your process to separate symptoms from underlying causes? It’s important to allow “redo moments” and continually adjust to get it right.
2. The Call Phase (Making the Judgment Call): There’s a moment when leaders make the call, based on their views of the time horizon and the sufficiency of people’s input and involvement.
3. The Execution/Action Phase: Once a clear call is made, execution is a critical part of the process. Resources, people, capital, information and technology must be mobilized to make it happen. During this phase, feedback loops allow for adjustments.

 

Your Storyline and Why it Matters

 

Winning leaders are teachers, and they teach by telling stories. They develop a teachable point of view: valuable knowledge and experiences that convey ideas and values to energize others.

 

This teachable point of view is most valuable when it is woven into a storyline for the organization’s future success. As a living story, it helps the leader make the judgment call and makes the story become reality because it enlists and energizes others.

 

Winning story lines address three areas:

 

1. Where are we now?
2. Where are we going? (The inspirational storyline boosts the motivation for change and defines the goal)
3. How are we going to get there?

 

If judgment calls are difficult for you, or if you have difficulty creating the storyline for your organizational vision, it’s probably time to revisit these 3 key, strategic questions.