Tuesday, January 10, 2017

As Business Owners and CEOs – Are we our own worst enemy?


Editor’s Note: In our work with middle market companies, we focus on identifying the barriers and obstacles to growth to the next level that that companies can build over time. In a 2016 book, The Founder’s Mentality¹, authors Chris Zook and James Allen identify that when companies “fail to achieve their growth targets, 90 percent of the time the root causes are internal, not external. These include increasing distance from the front lines, loss of accountability, and proliferating levels of processes and bureaucracy, to name only a few. What's more, companies experience a set of predictable internal crises, at predictable stages, as they grow.” As we look at 2017, perhaps we can all benefit from some self-examination. I hope you find this article helpful.         - dpm]
As Business Owners and CEOs – Are we our own worst enemy?
Many times we are our own worst enemy. This is certainly true when it comes to companies failing to grow and thrive. As referenced above, 90% of the root causes that impede company growth are internal. For many years, our consulting business has begun virtually every assignment with a scan of the company to identify barriers and impediments to growth to the next level and recommendations to overcome these barriers. As we identified in a recent article, “Are your Strategic Planning Efforts Doomed to Failure before You Start” the following are some of the typical barriers:
Barriers to Planning Success
  • History of only partially developing plans
  • History of unreasonable expectations and unachievable goals 
  • Lack of internal understanding about customers, competitors, and the market

In addition to barriers to planning, company teams have a lack of confidence and skepticism about their ability to execute plans. This could come from a company history of abandoning projects, a history of unclear objectives and metrics, too many strategies and plans, a history of poor communication, a history of poor delegation and leadership, gaps in management capability, or a lack of true accountability.

Barriers to Execution Success
  •  Gaps in management depth
  • History of abandoning projects
  • History of lack of openness and poor communications
  •  History of poor delegation and leadership development
  • Lack of true accountability

Organizations that have barriers to planning and execution have one characteristic in common: there is little or no connection between the plans they create and management behavior around execution. Most management teams quickly get swept away with the urgency of the day-to-day business and the plan is forgotten.

In the book, The Founder’s Mentality, the authors identify three crisis points experienced by companies:
1.       Overload. The first crisis, overload, refers to the internal dysfunction and loss of external momentum that management teams of young, fast-growing companies experience as they try to scale their businesses.
2.       Stall –out. The second crisis, stall-out, refers to the sudden slowdown that many successful companies suffer as their growth gives rise to layers of organizational complexity and dilutes the clear mission that once gave the company its focus and energy. Stall-out is a disorienting time for a company: the accelerator pedal of growth no longer responds as it used to, and faster competitors begin to gain ground. Most companies that stall out never fully recover. 
3.       Free Fall. The third crisis, free fall, is the most threatening. A company in free fall has completely stopped growing in its core market, and its business model, until recently the reason for its success, suddenly no longer seems viable. The management team often feels it has lost control. It can’t identify the root causes of the crisis, and it doesn’t know what levers to pull to escape it.

The authors go on to describe characteristics of Founders that need to be maintained and encouraged if companies are to continue to be successful:  
1.       Insurgent mission - Founders have the focus of waging war on behalf of under-served customers, or redefining the rules of an industry, or creating a new industry.  If that passion wanes within the company, or the mission becomes unfocused, employees will no longer be operating on the same page.
2.       Owner’s mindset – Founders have an aversion to bureaucracy, a bias for action and a strong cost focus. Their teams tend to feel and act like owners, treating expenses and investments like their own money. Analysis paralysis, multiple levels of decision-making, risk averse and slow to act companies begin to wither as they miss opportunities. Managers and employees who are just getting through the day or picking up a paycheck will slowly suck the life out of a company.
3.       Front line obsession – Founders are obsessed about their customers, always wanting to learn more about their changing needs, making certain that they are well-served. Founders are obsessed about the front-line employees, making certain that they have what they need to be successful providing the best product and serving the customer. When decisions are made at corporate levels with managers who are removed from customers and front-line employees, bad things happen.

As you begin the new year, I would suggest that every business owner or CEO could benefit from reading this book and take stock of what is going on in your company. Does your company have the characteristics of a Founder’s mentality?
If you would like to discuss how to identify and overcome the barriers to successful growth, please contact me.

¹ “The Founder’s Mentality: How to Overcome the Predictable Crises of Growth” by Chris Zook & James Allen, 2016

Tuesday, December 13, 2016

Too Many Shiny Objects and the "Not Going to Do Now" List

[Editor's Note: As we have worked with companies over the years, one characteristic we have noted about successful companies is the ability to prioritize and focus. Many companies have a seemingly endless list of opportunities; the question is "what do we focus scarce resources on first." I hope you find this article thought-provoking. - dpm]
Too Many Shiny Objects and the "Not Going to Do Now" List
On a number of occasions, we have come into new client situations to "validate" an existing strategic planning process. In many instances, we find that the company has documented strategies and initiatives too numerous to fit on an 11X14 sheet of paper - with small font size! We then proceed to ask each of the managers which is the most important strategy or initiative for the coming year. Not surprisingly each manager has a different idea of what is most important.
Too many opportunities... Too little focus
These are not companies without opportunities. To the contrary, these are typically companies with compelling products and services. The problem stems from too many opportunities without an appropriate filtering or prioritizing process. Sometimes, it stems from a creative/innovative Founder or CEO who can see potential technologies, products, services, markets, partnerships, etc. everywhere. In the race to not miss out on these possibilities, the Founder /CEO can push the organization in many different directions. This behavior is so common that it has been coined the "Shiny Object Syndrome." In these situations, the organization pursues many different opportunities, executes poorly, distracts management attention, and in many cases, abandons projects partially completed in order to pursue new ones. Resources are wasted, time is sacrificed, and most importantly, attention is diverted away from core activities.

The "Not Going to Do Now" List
In determining strategic direction for a business, it is far easier to decide what you are going to do, than what you are not going to pursue now. The most important tool is the "Not Going to Do Now" list, which outlines projects, initiatives, strategies, acquisitions, etc. that might be interesting to explore at some time in the future, but are distractions to the current strategic direction. During the planning process, items are added to this list. The management team agrees that in order for the organization to pursue an item on the "Not Going to Do Now" list, something must be come off the current strategic planning list.

Prioritize
There are a number of techniques to use in prioritizing. Some companies use the following categories to further delineate priorities. Items noted as "Critical" are the focus of the business. Once these have been completed, the "Need to Have" category items are next in priority. It is interesting to note that companies that use this approach rarely get to the "Nice to Have" items, and almost never get to the "Can Be Deferred" items.


Critical


Need to Have


Can be Deferred


Nice to Have
    
Alignment around the Critical Strategies
It is our belief that most companies should identify no more than three strategies. Companies that execute well on two of the three strategies are usually very successful. The key to success is focusing on a limited number of strategies, communicating the direction, aligning the team and incentives around those strategies, establishing solid action plans and metrics, and holding members of the team accountable for results.

Simple to identify...More difficult to do
Like most things in business, Identifying the "to do" strategies and the "Not to do" List is easy to describe and more difficult to achieve. We spend most of our time working with businesses to help them narrow strategies to ones they can execute well, focusing and aligning the team, monitoring the progress, and adjusting course as necessary.

If you would like to discuss this in more detail, please contact me.

Tuesday, November 29, 2016

Are Your Strategic Planning Efforts Doomed To Failure Before You Start?


Are Your Strategic Planning Efforts Doomed To Failure Before You Start?

It’s December. Your plans for 2017 should be in place. Some organizations are scrambling to get strategic and financial plans in place before the new year. There is still time to get it right in 2017.

Before you have that deep sigh of resignation, ask yourself a few questions:
·         Does your company’s planning process ever yield real results?
·         Do you go through a long, tedious process year after year that you and your managers dread?
·         Are there barriers in your organization that now protect the status quo and prevent you from moving forward?

Perhaps the approach is flawed!
Years of either poor planning or no planning have created unintended consequences for many organizations. These organizations unintentionally have created barriers that prevent them from developing and executing a meaningful plan. It could be because of a history of unreasonable expectations and unachievable goals, a history of abandoned projects, or a lack of internal knowledge and understanding about customers, competitors, and the market.

Barriers to Planning Success
·         History of only partially developing plan
·         History of unreasonable expectations and unachievable goals
·         Lack of internal understanding about customers , competitors, and the market

In addition to barriers to planning, company teams have a lack of confidence and skepticism about their ability to execute plans. This could come from a company history of abandoning projects, a history of unclear objectives and metrics, too many strategies and plans, a history of poor communication, a history of poor delegation and leadership, gaps in management capability, or a lack of true accountability.

Barriers to Execution Success
·         Gaps in management depth
·         History of abandoning projects
·         History of lack of openness and poor communications
·         History of poor delegation and leadership development
·         Lack of true accountability

Organizations that have barriers to planning and execution have one characteristic in common: there is little or no connection between the plans they create and management behavior around execution. Most management teams quickly get swept away with the urgency of the day-to-day business and the plan is forgotten.

So what can you do to change this counterproductive cycle? Try a better approach!

Consider the following before you start
·         Examine past strategic planning and execution efforts
·         Identify the organizational barriers to success – Develop plans to fix these barriers
·         Use a new and flexible approach to strategic planning
·         Less is more – Better to have three strategies with great focus than seven with poor focus
·         Realistic and achievable – Unachievable goals end in frustration and abandonment
·         Validate plans with the market – make certain you understand how customers and competitors will react to your plans
·         Break into small bites with near-term actions – build momentum by getting some early
Successes
·         Create 90-day action plans, recheck, and re-evaluate
·         Clear and Understandable – to everyone in the organization
·         Communicate, Communicate, Communicate
·         Metrics – develop quantifiable measurements of progress
·         Track the progress– regular monitoring and adjustment
·         Adjust and Recalibrate

Understanding the barriers to planning and execution is critical. Companies that have addressed the barriers are amazed at how much more their management teams are engaged and how the process energizes the entire organization. CEOs of companies with years of poor planning and execution history find that their organizations are far more capable than they ever imagined of achieving superior results.

Wednesday, November 9, 2016

Execution- Failure to Launch: Reasons Company Strategies Don't Succeed

[Editor's Note: Almost 2/3 of all strategies fail to reach expectations. Why do so many business strategies fail? Below are some key reasons. Knowing the barriers in your organization to successful planning and execution is the first step. Clients that follow our recommendations have significantly outperformed the competition. We like to say, "A good plan, well executed, beats a great plan, poorly executed, every time." Contact us if you would like more information.             -DPM ]

 
Execution- Failure to Launch: Reasons Company Strategies Don't Succeed  
 
1. No clear definition of success  
Fuzzy goals lead to fuzzy outcomes. While it seems obvious, many organizations simply don't articulate the specific goal of a business strategy. If the goal of your customer intimacy strategy is to form deeper customer relationships, that's fuzzy. If the goal is to increase customer retention by 10 percent and increase annual revenue per customer by $10,000 and net profit by $1,000, that's clear. Here, deeper customer relationships may be the mechanism to achieve the goal.

2. Too many goals  - Too many "shiny objects" 
When everything is a priority, nothing gets accomplished. Many so-called strategic plans have too many goals, objectives, success drivers, strategies, initiatives and so on. Worse, it's not clear how these various appendages are linked. Is it any surprise these plans sit on shelves and collect dust? Choose to do fewer things much better.

3. Metrics and Alignment - Either no metrics or vague metrics 
Many plans are simply a brainstormed list of things to get done by unspecified people at indeterminate times. A plan with specifics outlines who will do what by when. It takes into account the sequencing and timing of tasks, activities and resources. Make certain that the goals of everyone in the organization are aligned to the few key objectives.

4. Visibility - Progress isn't measured and managed 
Ever notice how plans placed in the spotlight flourish while those left in the dark shrivel? Any plan worth executing is worth tracking. A monthly meeting with a tight agenda can quickly determine what actions have been taken; what progress has been made; what will be accomplished over the next month and by whom, and what, if any, challenges have emerged. This builds commitment, accountability and confidence in the process.

5. You lack the right people 
Some of those nice people who work for you may not be the right people to get the job done. That statement makes you uncomfortable, doesn't it? Many have been loyal, are committed to the culture, and may be friends and family. However, If you are truly committed to winning, or achieving success - however you define it - then at some point you have to take a long, hard, honest look at the capabilities of your people. Point them in the right direction, support them, develop them - give them a fair chance to succeed. But if they can't get it done, then your responsibility is to get people who can.

6. Flexibility - Failure to update the plan to stay real  
Reserve the right to do what makes sense. Plans are based on assumptions that can change over time. If they do change, then the plan may need to change. A quarterly "recalibration" meeting is a good forum to test your assumptions and determine which, if any, have changed. The meeting may result in either a re-validation or redesign of the plan. It ensures the plan stays real and relevant.

7. Reaction to Failure - Failure is met with indifference or an inquisition 
Is your team serious about its definition of success? Your response to failure sends a clear message about your commitment to winning. Just as importantly, it sends a message about your credibility. Do you ignore a failed initiative and move on to the next big thing (which conveys that you really weren't that committed and you shouldn't be taken seriously)? Do you look for scapegoats (which communicates that you don't take personal responsibility and can't be trusted)? Or do you first look in the mirror, take responsibility, then publicly commit to getting it right, and effectively engage your people to make it happen? Your choice speaks volumes about who you are as a leader.

Where does your organization stand? Mead Consulting Group's process begins with the identification of the barriers and obstacles to successful planning and execution. These "barriers" develop in ALL companies over time. In fact, some of the very things that help a company succeed at early levels will prevent them from succeeding at the next level. The key is to address these barriers so that the path is uncluttered.
Let us your your thoughtsEmail me  or post your comments here.

Monday, March 28, 2016

Protecting your company from "mayhem"

[Editor's Note: The " protecting your company from mayhem" series received significant positive response when it first ran. So we decided to update it for 2016.                             -dpm]

In a popular series of television commercials that has run for several years for a property and casualty insurance company, there is a "Mayhem" character who causes unexpected disasters for auto/home owners. In one commercial, he's a satellite dish falling off a roof onto your car; in another he's your navigation system gone haywire causing a crash. The message behind these commercials is that since mayhem is unavoidable, you need insurance.
It struck me that companies generate their own versions of mayhem - things that occur that may on first blush seem to occur unexpectedly or just be unfortunate.  

Here are some examples:
  • Discovering that you don't have the rights to use the trade name you've been using for 15 years
  • Discovering that your employees have been plagiarizing content
  • The employees that are developing your blockbuster new product all leave at once
  • A new competitive product offering undercuts your price by 60%
  • Your customers discover that one of your key vendors has been substituting a hazardous or substandard material resulting in product malfunction or customer injuries
  • A new business model renders your product irrelevant
  • Discovering that new regulations no longer allow you to ship your product
  • Discovering that there is no liability insurance for all the products in the field that you've made for the last 10 years...and a latent defect has just been discovered
  • Discovery that a "trusted" accounting clerk has been methodically stolen $800,000 over the last 10 years
All of these are true. Some might say bad luck. Synonyms for mayhem are chaos, disorder, confusion, turmoil. The dictionary defines it as "needless damage." In truth, all of these examples of mayhem were identifiable ahead of time and most could have been avoided or significantly mitigated.
In tough economic times or in times of rapid growth, companies can be myopic and can ignore the need for strategic planning, competitive scanning, and can defer implementing business processes and controls.
Some thoughts as you enter calendar Q2:
Develop a strategic growth and execution plan (Please- not just another retreat but a meaningful plan of execution)
  • realistic assessment of where you are (strengths and weaknesses, opportunities and threats)
  • competitive scan looking at traditional competitors as well as possible disruptive threats
  • develop some scenarios of the future (including those at extremes) and actions to be taken as these play out
  • develop specific actions, metrics and accountability to shore up the weaknesses, fill the gaps, address the risks, and take advantage of the opportunities and strengths
The best time for strategic planning is during the May -September time frame so that the organization has adequate time to develop the business plan for next year.

Don't let another year go by. Neglecting the next steps in your company's growth and maturity can be very short-sighted. You need to protect your company from mayhem!
Please comment 



About The Mead Consulting Group
 Helping Companies Achieve the Next Level of Success 

The Mead Consulting Group, Inc. has been providing strategic planning & execution, execution coaching,  strategic marketing, business development and leadership development services to mid-size businesses since 1981. We specialize in working directly with owners and CEOs to help their companies reach the next level of success.  Our clients have achieved superior results and consistently out-performed their peers. 

 It's All About Results!

We've stood in your shoes,
worn your hats and
walked your talk

Like no one else, we can help you successfully navigate through
  •    Strategic Growth and Execution
  •    Increasing Profitability and Cash Flow
  •    Maximizing Value for Exit
But, don't just take our word for it. Ask our clients.

For more information, see our website www.meadconsultinggroup.com 
or  contact Dave Mead at (303) 660-8135 or meaddp@MeadConsultingGroup.com 

Tuesday, March 15, 2016

Attributes of a Lifestyle Business or an Equity Value Business



[Editor's Note: In the last Issues for Growth, "Which do you have - a Lifestyle Business or an Equity Value Business" we outlined the major differences between a lifestyle business and an equity value business and why it was important to be clear about the "purpose" or intent of your business because the way a business owners  approaches building a business must be very different depending on how you will define success. A number of you who have heard me speak about this issue asked me to publish the matrix of attributes comparing a lifestyle vs equity value business. So, here it is below. I hope you find it helpful.           - DPM]

 
 Lifestyle Vs Equity Value Attributes Matrix 
Attribute
Lifestyle
Equity Value
Focus
Short-term Lifestyle; Run for Owner's compensation
Long-term Equity Value; sacrifice short -term comp
Pace
Owner's pace
Dictated by desired outcome
Management style
Command & Control; Centralized
Decentralized; individual decision-making
Owner Management
Can tend to be viewed as inconsistent, capricious and changing
Consistent with overall strategy and core values
Expense Control/ Spending decisions
Tightly controlled at top
Managed through approved dept budgets and policies
Outside Capital
Debt; Investors not interested; Growth may be restricted due to availability of capital
Equity investors
Empowerment
Limited; Loyalty Rewarded; Small circle of trust
Expansive; Performance rewarded; Systems to enhance empowerment
Objectives
May change at owner whim
Clearly outlined; transparent
Employee Equity
No
Yes; equity awarded
Career Development
Limited upside
Significant upside
Employee Capability
"Steady Eddies" Thrive here
High performers thrive here
Sale of Business
Usually only to Employees or Family
To third-party Buyers (Strategic or Financial)

As we outlined in the last article, neither is necessarily better than the other. It is important to recognize and be clear about which type you have - and want- if you are to be successful. If you have questions about this, contact me at Mead Consulting to set up  a free appointment.