Category Archives: Strategy

Competition

Competition within business organizations

Milo Competes at Lacrosse

Competition. Where does it fit in your company culture?

It might be helpful to step back a couple paces and consider where competition exists within organizations in a healthy, thriving American culture? How about on a sports team? Within the military? In school? Within a family? In a government organization?  A hospital? A medical research team?

Most reasonable people seem to conclude that competition is a good thing under certain circumstances and a bad thing under others. But the general concept is contentious, more so than in the past. And I have witnessed the swing of the pendulum over my lifetime, with an increasing number of people finding an increasing number of circumstances under which they believe competition is not good.

I began my business career with GE, and I was reminded of the competitiveness of that environment recently when I listened to a Freakonomics podcast in which Michael Dubner interviewed Jack Welch, retired CEO of GE. The following is a verbatim, unedited, transcript of one of the points that Welch made during that interview.

Look, differentiation is part of my whole belief in management. And treating everybody the same is ludicrous. And I don’t buy it. I don’t buy what people write about it. It’s not cruel and Darwinian and things like that, that people like to call it. A baseball team publishes every day the batting averages. And you don’t see the .180 hitter getting all the money, or all the raises. Now that’s the purest form. Athletics is the purest form of differentiation, because it’s public. Everybody understands it, the fans understand it, the people understand it. Big business is more subtle and it’s more qualitative. So the precision isn’t there to differentiate. So judgment’s important. But you don’t win with a gang of mediocre players in business or in baseball.

Welch believed and clearly still believes in “radical candor” when it comes to evaluating individual performance, and in rewarding the best performers while helping the worst performers find a different career.

Where do you stand on competition within a business organization? Is your position significantly different when it comes to non-business organizations or communities? Why not bring this up for discussion the next time you socialize with some of your business peers? Better yet, share your thoughts below.

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Learn from Giants

 

JacksonR1-180210

Future Thoughtful Entrepreneur

Right out of college I went to work for GE and spent the next seventeen years there, learning what life in the world of business/industrial marketing/strategic business planning was all about. It was an exciting time for me, and a somewhat different business world than exists today. I grew a lot during those GE years, and learned a great deal about the world of big business and a little bit about myself. When I opted to leave GE for an opportunity to become a part-owner of a small manufacturing company, I doubted whether I would ever again be surrounded by so many capable people. Twelve years later we sold that company, and I became a full-time coach for owners of small businesses, a profession in which I remain involved.

As a small business coach, I preach the value of peer advice, having learned that a small business owner values the advice of another business owner above all other sources of business information or advice.

Back to GE. Those of us paying attention have witnessed this business icon stumble. As a result, the company’s stock has been the worst-performing in the Dow Jones Industrial average for more than a year. Many are asking, “What in the world went wrong at GE?” I won’t take your time here to repeat the details of this saga since they can easily be found in various business media. Rather, I believe there are powerful lessons here for any CEO of any size company, and I want to share them.

First, you need to be brutally honest with yourself regarding your numbers. The financial performance of any company, as portrayed by periodic numbers reporting, contains both positive and negative messages. As the owner, you know what’s really going on behind your numbers, and you need to face the negatives, the warnings, the hidden truths, as well as the confidence-building interpretation designed to cause majestic music to swell in your mind, or your employees’ minds, or your lenders’ minds.

Second, while continuously on the lookout for new opportunities, maintain an objective decision framework to guide you – and stick with it! Avoid becoming emotionally involved when deciding whether to commit company assets in pursuit of a new adventure.

Finally, discipline yourself to do contingency thinking, if not full-scale contingency planning, to prepare your mind for abrupt changes in the business, changes such as the loss of a major account, the resignation of a key manager, or the unexpected interruption of your operations due to a natural disaster.

There are significant differences between leading a giant organization and leading a small business. However, the successes and failures experienced by huge companies sometimes offer universal reminders of key basics of private enterprise.

Watch the Super Bowl and think about the other S-Word

CoachChalkboardYou’re a competitor, so there’s a good chance you’ll be watching the Super Bowl on Sunday. Can I get you to think “Strategy” while you’re watching? It will actually enhance your enjoyment of the game, and you can watch guilt-free because your CEO gray matter will be working on your business at the same time.

The yet-to-be-determined winner of the game has built a season based on effective strategies. I can guarantee you that they both had the same BHAG (Big Hairy Audacious Goal) in mind at the start of the season – to win the Super Bowl. Each team had a set of values and an effective team culture that they stuck with throughout the season. They studied and understood their opponents, and they had short-term goals (weekly) of defeating that week’s opponent. They established game plans for each game that included appropriate contingency plans. If we fall behind early, here’s what we’ll do. If we aren’t able to establish our running game in the first quarter, here’s what we’ll do in the second quarter. If our quarterback gets hurt, etc. In short, they built strategies for each aspect of the competitive environment, with detailed action plans that were subject to change as conditions warranted. And they’ve repeated that strategic planning process in preparation for this week’s big game.

So, as you watch the game Sunday, draw parallels with your business and its environment and the competition you face each week. Challenge yourself. Is your BHAG clear? Are your short term goals understood by your “players”? Have you taken the time to outline, in writing, the goals and action plans and individual responsibilities for the next quarter or for the entire year?

Enjoy the game. Allow it to provide motivation to define and communicate your business strategy.

Unwinding and Reloading

CEO Relaxation

Unwinding

Another Christmas, a New Year looming, much year-end wrap-up to be done. And it’s the best time to take stock.

But first, make sure you have allowed yourself to unwind. Everybody unwinds differently, and many CEOs don’t unwind the way normal people do. You know you, so allow yourself to unwind in your most effective way sometime before hitting full throttle again in January.

Now, about taking stock…

Separately from the unwinding, allow yourself a couple hours to review your business year. Although you may want to outline or create a detailed plan for the first quarter or even the entire year, delay that until you have answered the following questions to your own satisfaction:

What were our most significant accomplishments this year?
Did we make money? If yes, was it a fair return on our investment?
Are we generally headed in the right direction, toward my vision for the business?
Am I becoming more skillful? In what ways?
Am I having any fun?

Unwind, reload, launch into 2018.

Have a joyous holiday. May you be well and prosperous in the New Year.

Fresh Eyes

FreshEyesRichard Nixon was early in his first term, the Detroit Tigers had won the World Series for their first time since 1945, and Fred Borch was CEO of the General Electric Company, when I came out of college and began a 17-year career with GE, a historically strong company, often emulated by other enterprises around the world. The company continued to build on that reputation well into the twenty-first century.

Few manmade constructs last forever. GE’s CEO for the past 16 years has just retired, and the new CEO is wasting no time making changes. Investors have been disappointed with GE earnings and strategies and performance for some time. They now have fresh eyes at the top and new directions and predictions of performance are being established.

My emotional ties to GE (even though I left prior to the turn of the century (how depressing does that sound?) have drawn my attention to their current circumstances. Having spent the final 15 years of my working life as a business coach, and having worked with a number of outstanding entrepreneurs, and having witnessed the making of numerous business decisions of consequence, GE’s current situation reminds me of the power of Fresh Eyes.

If you have operated your own business for a few years, you may or may not realize the upside potential of Fresh Eyes. Ingrained leadership can be very bright, very competent, very hardworking, but locked into a particular view of the business, its employees, its customers, and all its other stakeholders. Fresh Eyes can provide a path to improved performance, particularly when nothing the current leadership is doing appears to be working.

My suggestion is not that you look for a CEO to take your place (unless you are ready to exit your business), not that you get an eye exam and new prescription glasses, but that you seek the advice of trusted outsiders. One of the most effective approaches – in my experience – is to become part of a peer advisory board, a group of non-competing business owners, a collection of openminded leaders, an assemblage of generous entrepreneurs. Once you’ve become a board member, use the board effectively: do your homework; keep your board members advised of your business progress; seek their counsel prior to making key decisions.

You’re still the decider. But your decisions can benefit from the clarity of vision and variety of alternatives identified by Fresh Eyes.

As always, your thoughts are welcome and you may share them below.

A Big Fish in a Small Pond?

small business hiring corporate manager

Salmon Coming Home

Not long ago I read John Dini’s excellent blog post on importing a manager from a large organization into a small company. When I recently heard a tour guide comment on sockeye salmon migration, it brought to mind John’s exposition. Let me explain.

The tour guide had declared that as the salmon return from the vast ocean to the stream where they were hatched, they must make the transition from salt water to fresh water. He highlighted the fact that, as they entered the brackish waters near the mouth of the river or stream, they lingered – maybe days, maybe weeks – allowing their body to make some important adjustments to their new environment. [Although I have no empirical evidence to offer, I suspect the percentage of salmon making it all the way home has increased since the advent of those navigational apps for their cell phones. I mean, really, how do they find their way back? But I digress.]

It’s been my experience that a significant percentage of the Corporate Migrants decide to return to the sea, or are asked to find another body of water in which to swim.

As a business owner, you may have several good reasons for wanting to bring an experienced large-company person into your fold. Their background in systems, in planning, in structuring, and in thinking broadly about crucial decisions can be invaluable to a small business management team. If you are positioning the business for your own eventual exit, they bring an outside perspective and professional expertise that can be very attractive to a potential buyer. However, in the words of Paul Simon, “…a man hears what he wants to hear and disregards the rest.” True of business owners, be they men or women. So don’t disregard the risk that the imported large catch can also be ineffective or even disruptive.

Like salmon, some who leave Corporate America are indeed returning home. They see small business as a better fit for them, for whatever their reasons, and they are correct. Others, however, are simply looking for a resting spot prior to returning to the sea. Your recruiting, hiring, and onboarding processes need to take this into account. Here again, you will likely be tempted to hear what you want to hear and disregard the rest because you consider the candidate such a valuable find. In truth, you may be flattered that they would even consider coming to work for you. Get past that. Dig deep to try to determine all the motivations for the candidate’s interest in your company.

Then, if you both agree to move forward, bring them aboard in a manner that allows them to acclimate. Both the migrant and the organization need time to make adjustments. They will probably see many areas where changes would strengthen your organization. But they also have the potential to damage a healthy culture in the process of pushing for change. You are the filter through which their initiatives must pass. It’s your job to help orient the new hire to a significantly different environment. If, after a fair amount of time in your brackish waters, they are not meshing, it becomes your job to return them to the sea. By that time, they have probabl come to the same conclusion, even if they haven’t yet admitted it to themselves.

I’m not saying you should never bring a Corporate manager into the fold. I’m saying be diligent if you do.

The Long and Winding Road

business planning

Indian Creek Trail – Hood River, OR

How does that Beatles song title grab you as a description of your business journey?

Earlier this year, my wife and I moved to a new state and a new home. The house itself is situated adjacent to the Indian Creek Trailhead. The first time we hiked this segment of the trail, I knew generally where it ended, but of course I had never actually made the journey. As we began our short expedition, certain attributes of the trail became evident. The path itself was dirt in some places, gravel in others, with various amounts of pine needles and leaves covering it (as well as an occasional bit of dog poop). It was a winding trail since it was following a creek, and our trek was compounded by many ups and downs. Seldom could we see more than a hundred feet of trail ahead.

I have had countless discussions with business owners regarding the relative merits of business planning. The winding road metaphor is a good one for arguing how much business planning is optimal. Any business journey is filled with twists and turns, hills and valleys, good footing and poor footing. The important thing is to determine the general direction you want to head. The planning process is paramount in establishing this destination or waypoint. It’s key to deciding major strategies for how you will move in the direction of your goals. But the unpredictable nature of the path itself renders detailed planning useless.

We’re just over  halfway through the calendar year. Summer is always a good time to review how you’ve handled the surprises of your snaking trail thus far, and to recalibrate your compass.