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Learn from Giants

 

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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.

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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.

The Sweet Sonorous Sound of My Name

MyNameIsWe were on Delta Flight 1833, connecting through Salt Lake City on our way to Cincinnati. It was the usual, my hips wedged into the 12-inch wide coach seat, the lady in front of me comfortably reclined into my lap, my lower back and legs already beginning to cramp, only sixty minutes into the 3-1/2 hour flight.

“Would you like a beverage, Mr. Roof?”

Say what!? Had that soft-spoken flight attendant just called me by name? I was almost speechless, a little tongue-tied, but managed to blurt, “Fresca please, no ice.” While she was turned away pouring my drink, I smiled and searched through the gray cells that were still searchable, trying to recall the last time a flight attendant had called me by name. Ever? I think so, once, when my flights were so botched that the airline bumped me into a first class seat to try to make amends. But I have generally grazed in the cattle car over the years, silently enduring a mental fog, where even I am unable to remember my name.

My wife had mentioned that she had read somewhere that Delta was on a customer service kick of some sort when I noted that the gate agent had thanked me by name as we boarded both planes on this particular trip, but then he was looking at my boarding pass. The flight attendant had to be looking at a seating chart between filling orders. Suddenly she reappeared with my drink, looked me in the eye while handing the cup to me and said, “Thank you. We appreciate you being a Delta frequent flyer.”

Delta is a huge company, operating more than 5400 flights per day, in business since 1928, eighty thousand employees worldwide, $40 billion in total revenues. Their planes, like those of most competitors, are uncomfortable. Outside of their aircraft, their primary customer contact occurs in airports, venues that rank right up there with dental offices in terms of customer destination preferences.

So, if you’re giant Delta, how do you grow your business? It seems they have opted to make their customer interactions more friendly, a little more intimate. Probably won’t cost much, and it just might work.

What type of business will not benefit by being more friendly, more personal, more intentional in dealing with customers? Hard to think of one, isn’t it?

Maybe you’ve been in business a long time, or maybe you just started your business. Or maybe you don’t really have your own business, but you are a key cog in the organization that employs you. Have you or your business done anything different in the last year to endear yourself to your customers? Calling your customer by name may be a small deal to you, a regular part of your business operations. But it’s a big deal for a major airline. What would be a big deal for you in your industry, a big deal that wouldn’t cost a lot of money?

As always, your comments are welcome below.

D’Ya Think?

thinkingI needed to hire a technical writer, and Larry (not his real name) had solid experience and proven capabilities in that area. On top of that, he was an Army veteran. That military discipline would be a real plus in this highly self-directed position. Lanky Larry, the lettered literary lieutenant, was my logical election. This decision felt very right.

As CEO, you’re making important decisions under a cloud of uncertainty all the time. You’re probably pretty good at it; after all, you’re running a successful business.

But you could probably be better if you had a little more knowledge about how you think about choices.

A few decades ago, Amos Tversky and Danny Kahneman started a revolution about human thinking. Michael Lewis captures their story in The Undoing Project: A Friendship That Changed Our Minds. Two of the numerous conclusions of Tversky and Kahneman were:

  • Humans naturally develop cognitive biases or shortcuts – shortcuts that can sometimes lead to very poor choices.
  • Humans tend to think in stereotypes or classifications which, again, can undermine solid decision-making.

In my personal experience cited at the beginning, I did hire Larry, and four months later we agreed it was not a good fit. It turned out that Larry was attracted to computer games the way a certain US president is attracted to a good brawl with the media. My technical writer was drawing a full time paycheck while working half time. My bias toward the discipline of the military had caused me to assume that Larry would be a self-disciplined worker. Had I done my homework, I could have learned otherwise in advance.

The research described in The Undoing Project provided the seeds for what has become known as behavioral economics. According to Stephen Dubner (co-author of Freakonomics), behavioral economics “combines the economist’s point of view that people respond to incentives, with the psychologist’s point of view that people don’t always respond rationally to those incentives.” And therein lies the rub.

How can you – or how do you – use behavioral economics as CEO? Two implementations come to mind immediately. Your personal decisions under circumstances of uncertainty (i.e., most of your decisions) are hindered by natural biases of the human brain, such as the two mentioned earlier. Being aware of this allows you to consciously look for your own biases any time you are making a high stakes decision (such as hiring someone).

The second implementation of behavioral economics is one I’ll bet you already use…at least some of the time. It has to do with marketing. It’s the challenge of seeing the world through the eyes of your customer or prospective customer when developing your marketing strategies. In so doing, you must recognize the inherent irrationality of people (your customers) under conditions of uncertainty (such as deciding to buy your product or service). This is particularly important in crafting your marketing message. Offering “the best” product may not be nearly so convincing as offering “the safest choice”.

While some of this may seem obvious, that doesn’t mean it’s easy. On the one hand, you run a business based on rational thinking. On the other hand, uncertainty often brings out the irrational – in your employees and in your customers – as well as in you! Recognizing where the irrational brain is operating is paramount.

We would all benefit if you are willing to share an example of where you were either tripped up by the irrational brain, or where you took advantage of the irrational brain. Why not take a minute and reply with your story?

I Can Do Hard Things

Phil had dropped in to go through our insurance coverage in detail. Two hours later he was headed out the door when Karen asked him about his family. He explained he had six children and sixteen grandchildren. When I commented that Karen is a reading tutor for kids getting started in elementary education, Phil mentioned that he has two autistic grandchildren and one Down Syndrome child. He then told us a short story I will not soon forget.
His Down Syndrome granddaughter came home from school one day with bloody and skinned hands. After a fair amount of questioning and prying, her mom got out of her that she had been trying to prove she could do what the other kids do at school. In this case, she was trying to make it from one end of the monkey bars to the other, hand-over-hand, without dropping off. Her mangled hands were a result of many unsuccessful attempts. Through tears she told her mother, “I can do hard things!”

I’ll think of that the next time I run into a business challenge that is important but where I am shrinking from the hard work of seeing it through. I’ll think of that the next time a family member asks me for help on something that metaphorically looks like a steep mountain, at a time when I’d really rather expend my energy elsewhere. And I’ll think about that little girl the next time I set a personal goal, large or small, that suddenly reveals itself to be much more difficult than I had planned.
One more thing…I’ve asked my family to adopt with me a motto for our clan. It doesn’t have to be the only principle that states who we are, but I think it will prove to be an important one. “I can do hard things.”