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.

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.

 

Are You Walking the Walk of Accountability?

“Our deeds follow us, and what we have been makes us what we are.”  – John Dykes

Although accountability has various definitions, it is typically used to describe personal responsibility for getting something done. Accountability is an essential element of focused accomplishment and, therefore, of the business world.  Successful organizations build systems that encourage accountability in alignment with their strategic plan. Strategic planning provides guidelines to define accountability – “who” will get “what” done by “when” – and accountability drives results in the direction of the plan.

A sound plan without a process for accountability is like a brand new sports car without any fuel.  It may look great, but it’s not going to get you anywhere.

The subject of accountability evokes different responses from different people. We routinely experience both positive and negative reactions, because accountability is closely related to responsibility, ethics, and (quite often) both blame and guilt. Resistance to being held accountable is common – not necessarily because we don’t want to do a good job, but because it pushes the limits of our personal comfort zone.

What does this mean for your company? Do you struggle with holding yourself and others accountable? Although this can certainly be a challenge, you can learn how to create more accountability more often – and have better results to show for it.

To get your staff to be more accountable, begin with open, straight-forward communication.  Communicate your vision (you do have a vision for your business, right?), communicate the elements of your strategic plan (you do have a strategic plan, right?), and help you team understand how they fit and why matters.  We often assume our way out of communicating (and, for that matter, planning) because we think that things should be obvious to others.  It may be obvious to you, but you just can’t make that assumption about others.  In addition, last time I checked, it’s impossible to communicate something you haven’t yet figured out yourself, so if you don’t have a vision and a clearly focused plan, that might be a more appropriate place to start.

It sounds trite, but perennially rings true: you must lead by example. As a manager, it is virtually impossible to hold others accountable for their actions if you don’t hold yourself accountable for your own. Walk the walk, and let everyone see you do it.

Dwight Eisenhower once said: “Leadership is the art of getting someone else to do something you want done because he wants to do it.” In other words, the pattern of your own behaviors and the environment you create influences the behaviors of others.  Leadership lies in helping them become invested, generally by asking them to be accountable for some action or set of actions. When someone makes a commitment to doing something concrete they’re much more likely to do it and ultimately take pride in their accomplishment.

How do you hold yourself accountable? This is a common concern for my clients who own small and mid-sized businesses. You may have high expectations for yourself and for those around you, but how well do you really live up to your own standards? How often do you let yourself off the hook? Who is there to push you when your resolve is flagging?

One solution for this common business owner dilemma is to form an accountability partnership. Enlist the help of a close friend or business colleague, or you may even want to hire a personal coach or consultant who will help you stay focused and engaged. The most important thing is to identify someone who you can count on to support your goals, and who will take you to task when you need it.

Accountability sews the seeds of accomplishment. Accountability to your staff, accountability to your work, accountability to yourself – it all matters.  Your business and your reputation depend on it.

What if It Could Be Summer All Year Long?

(How to Get Your Organization to Run Smoothly Without You)

Ahh, Summer. Summer means barbecues, swimming, baseball games, camping, road trips, and lazy days in the sun. That’s what summer is all about, isn’t it?

Well, for some, that’s just wishful thinking. Many business owners are so tied to their companies that they can’t step away, and a truly relaxing summer vacation is nothing more than wishful thinking. Who are these people? They are the micro-managers, the “do-it-all-ers,” the “wearers-of-many-hats.” They can’t let go. They think that if they take a step back, their business will falter and all their hard work will be for nothing.

In the words of Walt Kelly’s well-known comic strip character Pogo “We have met the enemy and he is us.”

Does this describe you? Are you a business owner who can (and does) comfortably take time off, or do you function as an employee — a slave to the daily grind?

Chances are, you’re the latter, and you’re certainly not alone. As a business owner, it’s difficult to relinquish control and place your trust (and your livelihood) in someone else’s hands. Although it isn’t easy, it’s crucial – crucial to your well being, and crucial to the future of your company. And it’s not going to happen unless you make it happen. You need to change how you think and then structure your organization so it can run without you.

How? The answer is to take these 5 concrete steps toward your freedom:

• Plan – As Confucius said, “A man who does not think and plan long ahead will find trouble right at his door.” Centuries later, his wisdom still holds true. Whether you employ 3 or 300, a right-sized, well thought plan will dramatically improve your competitive positioning and performance regardless of market conditions. A solid plan drives day-to-day thinking and behaviors, which in turn lead to desired results.

• Delegate – Yes, this is hard, but if you’re still involved in every little thing that goes on over the course of a day, you’re too involved. You hired your staff to do a job. You carefully selected people based on their skills, experience, and drive. Let them do what your plan calls for them to do. They can do it!

• Take a long, hard, look at your staff – First, select one person who can be in charge in your absence. Provide the training, mentoring, and authority that they need to succeed. Then let them do their job. Second, remove marginal players from your team. If you don’t do this, you’re cheating yourself, and them. Give the remaining staff your blessing and your confidence.

• Trust – You won’t be able to let go unless you put your complete trust in your people, your plan, and your systems. If a system or process is broken, identify the problem and fix it. It may not always be easy, but it can – and must – be done.

• Test the system – When you’re ready, take two days off. Don’t call, don’t check in – disconnect completely and see what happens. Be sure that your staff knows they can reach you in case of an emergency – but chances are that they won’t need to. Sure, you’ll be tempted to call, check email, etc., but don’t do it. Step forward, don’t slide back!

You started with two days. Next time make it four, then a week, then two weeks. It will get easier. Before you know it, you’ll feel even more in control of your business and will be able to take a stress-free extended vacation, knowing that you have built a successful and competent team to execute your plan.

Just think about next summer when you’ll be able to relax and enjoy your life to the fullest!

Got Alignment? Broken Promises Won’t Pay the Rent

People build relationships and decide who to buy from based upon trust.  Patricia Aburdene, author of Megatrends 2010 said: “Transcendent values like trust and integrity literally translate into revenue, profits and prosperity.”

If you are searching for a surefire way to anger and alienate your prospects and customers, simply violate their trust and you have just found it!  Think about one of your own recent experiences as a customer where what was delivered to you didn’t live up to what was promised.  How likely you are to do business with that company again? Even worse (for the business), how many people have you spoken to about your negative experience? 

I had a fun and illuminating breakfast meeting about a week ago with Larry Bailin.  Larry is an internet marketing guru, a published author, a sought-after speaker, and (as I concluded during our breakfast) an all-around nice guy.

The initial part of our conversation focused on Larry’s primary business, Single Throw Internet Marketing.  As a speaker and a consultant myself, I have a natural curiosity to learn about businesses, their customers, the people who run them, and the obstacles and opportunities they face.  So in a conversational manner, I was running Larry through a series of questions to help me get a grip on both “the man” and his enterprise.

One of the things Larry shared with me that periodically frustrates him is that some of his clients struggle to implement the internal processes, systems, and behaviors to support their online presence.  As we dug into this issue, it became clear to me that these clients struggled to deliver on the promise of their marketing.  In my own terminology: their internal reality (what they did) wasn’t aligned with their external reality (what they promised) and they weren’t creating trust.

How does your business’ internal reality align with its external reality?  If you’re not sure, I suggest that you take steps to find out, and pronto.  Your prospects and customers will be able to tell you, as will your own staff (believe me, they know).  An organizational assessment tool I use with my clients is a handy way to get at this critical information quickly, economically, and in a manner that preserves the anonymity of individual responses (in other words, you get the truth).

Data in hand – good, bad, and even ugly – you can then more objectively evaluate your internal reality in terms of your organization’s:

• Structure – including roles, responsibilities, and lines of communication
• Processes – both formally defined processes and informal ones
• Rewards & Recognition – both formally and informally, what behaviors are you reinforcing?
• People – do you, your mangement team, and your staff each have the right knowledge, skills, and attitudes to be successful in your role?

In my experience, if you’re not actively working to align the internal and external realities of your business, they are probably moving on their own inertia in a divergent path.  This is exactly the pattern that gives my new friend Larry Bailin heartburn as he helps his clients market more effectively online; it’s also the pattern that can stagnate growth, or even worse, put a business out of business altogether.