I’m not all-in anymore. That was the latest expression from a business owner who is pondering his changing role in his business. Other lips have delivered the same message in different code: I’m not sure what my job is anymore or I seem to be focused more on my personal vision than on my business vision.
Business owners almost invariably reach a point where they are confounded about their own role in the business and not sure what to do about it. Occasionally this is an indication that it’s time to sell or give away the business. More often, however, the owner is not interested in retiring just yet – only in finding his or her appropriate role in a business that has evolved over time.
In the great American pastime of baseball, there is a parallel. As an example, Andres Blanco currently plays for the Philadelphia Phillies and is all of 31 years old. In baseball years, he’s getting a little long in the tooth. The Phillies are in a rebuilding year, and Andres is a utility infielder. The future of the team consists of younger infielders who are destined to eventually become starters at second base, shortstop or third base, if they aren’t already playing that role. Blanco plays all three positions well, but in this rebuilding season is playing an even more important role. He’s become a model for the younger players on how to conduct oneself as a major leaguer. He models and advises the younger players on everything from the hard work required for game preparation to handling post-game interviews.
That’s the parallel to the “I’m not all-in anymore” business owner. At some point, the greatest contribution you can make to your own business is to develop the younger talent. It’s to model appropriate behaviors, coach the younger employees who lack experience, and encourage those who are still learning and making mistakes. That often is a full time job for the long-in-the-tooth business owner. But even if it’s only half a job, that’s fine. Do it well, and spend the other 50% on the golf course or fly fishing or drag racing or traveling.
Andres Blanco, the mentor, will likely become a coach when he retires from playing. Coaching baseball, or coaching your younger employees…neither is a bad life.
I’m a Philadelphia Phillies fan, which means I’m following the team with the worst record in Major League baseball right now (July, 2015). It’s a “rebuilding year” for the Phillies, a pretty rough period.
In baseball, a rebuilding year generally causes more than a poor win-loss record. Management changes are inevitable. Fewer fans attend the games. High-priced players are traded for younger, cheaper, potential-laden minor leaguers. In the case of the Phillies, all of this is happening, and more. The manager they brought on to see the team through this difficult transition grew weary of losing, and resigned. (That’s right. He wasn’t fired, he resigned.)
For the past six years, I’ve been coaching a CEO (we’ll call him Tom) who decided to take on a “rebuilding year”. Sales were flat, profits were meager and cyclical, and the competition was intensifying. Tom’s tendency was to try to do everything himself, and he longed to discover effective marketing and sales processes, areas that he considered to be personal weaknesses. His relationship with his business was unhealthy – his description: “I feel like a slave”.
Tom’s rebuilding year actually took about four. It included the following:
- Developed a new product that addressed a shift in customer preferences – earlier than was recognized by his competition.
- Pushed his VP Marketing & Sales hard to identify and grow new opportunities. When he didn’t, he was replaced.
- Took a personal interest in an area of marketing that was integral to their future success, and brought others in to do the work after he understood what was required.
- Through some trial-and-error, figured out how to recruit, hire, and mostly keep talented people needed to stimulate and sustain ongoing corporate growth.
It was a bumpy ride. The new product development effort sucked up resources that the company did not initially have (both human and financial). The development of a larger organization included the usual complement of bad hires and redirection. Boot-strapping the financing of the growth, rather than borrowing a bunch of money, caused serious frustration in the early going. But Tom persevered, knowing that neither resignation nor termination were options.
While the “rebuilding year” (four) is now in the rearview mirror, it’s not over. The vision that Tom developed for his enterprise has the entire team working towards “the next big thing” for the business. His bank account is healthy, his workforce is high caliber, and the team has a sense of direction. The need for rebuilding has been replaced by a drive to stay on top.
The Phillies should be so lucky.
I’m going to go out on a limb. I know what talent is lacking in more of your employees than any other. It’s an ability to understand and work with numbers. Expense budgeting, price analyses, sales forecasting, reviewing a profit and loss statement or a product line margin analysis, understanding cash flow or a balance sheet, comprehending both the value and the burden of debt.
Whatever your business, I’m sure you have some really good employees,who do their jobs really well, whether they are dealing with operations or marketing or whatever. You’re able to get away with financial incompetence in most positions in your company. But if your management team lack facility with the numbers, we probably have a problem, Houston.
If your succession plan or exit strategy relies on managers who are not able to read a balance sheet; who do not understand the long term impact of pricing to achieve volume; who do not appreciate the value of debt as a tool, or the suffocating crush of too much debt – if the keys to your successful retirement are in the hands of such staff, then both you and your business are in a bit of trouble.
If you are guilty of tolerating financial ineptitude, you owe it to yourself, your business, and your employees to turn it around. You may not have the capacity to personally teach a key employee how to deal with the numbers, but it really is your job to find some thing or some body that can.
I recently facilitated a meeting of five business owners, all of whom lead a business with other family members involved. They were gathered to share best (and worst) practices based on their own experiences. The discussion focused on bringing the next generation into the business, and preparing them to take the helm. Here are the most significant truths that emerged:
- The next-generation family member should start out “mopping the floors”. They need to earn the respect of other employees.
- Establish the discipline from Day One of differentiating between “talking business” as employer-employee, and “talking personal” as mother-son.
- A young family member in their teens entering the business, even on a part time basis, creates special challenges. Their lack of real-world work experience makes it harder for them to understand the necessary separation between family and business relationships.
- They need exposure, over time, to all areas of the business. Ascertain whether the organization can compensate for their weaknesses and allow them to play to their strengths if and when they assume the leadership position. Be willing to accept the fact that they may not be cut out to eventually run the business.
- You must manage your expectations, which may be distorted because you are personally close to the family member. Allow them to surprise or disappoint you, and make necessary adjustments to your expectations and plans as they do.
- Differentiate between compensation and business ownership. Compensate based on contribution to business results. Allocate ownership based on any family considerations you deem to be fair.
Running a business is challenging. Leading a family business adds another layer of complexity which only family business owners can fully appreciate.
It may look easy, but it’s not.
“I shouldn’t have to manage managers, and this really honks me off!”
That comment, from a business owner, was an expression of utter frustration upon discovering a major oversight by the manager in question – one that was quite damaging to business performance the past year.
When your business reaches the stage where you manage managers, how does your job as CEO change? In one sense, it does not change. You are still responsible for setting the company vision, for recruiting and onboarding the best managers possible, for establishing corporate strategies, for protecting corporate assets, and for integrating operational activities across department lines where necessary. Although your key accountabilities have not changed, how you achieve those accountabilities has changed.
It’s been my experience that many CEO’s either omit or give short shrift to three major parts of their annual business plan. The first is how they wrestle through Critical Success Factors. These links between the upfront analytical sections of your plan and the downstream implementation sections provide a solid reality check against your objectives. They also force you to consider all reasonable alternative strategies for achieving your major objectives. Continue reading
In the holiday season just past, I often heard one of my favorite Christmas songs. The lyrics incorporate three questions:
- Do you see what I see?
- Do you hear what I hear?
- Do you know what I know?
While the poetry and melody surrounding the three questions are lovely, my mind occasionally drifts to the application of these questions to the life of the CEO. With regard to your employees, be aware that they do not see what you see; they do not hear what you hear; they do not know what you know.
This is an especially relevant point at the beginning of a new year. Continue reading