Are you a better driver because you can easily determine how fast you’re traveling, how much fuel remains, and what time it is? Are you more likely to safely reach your destination because you can readily see the compass direction of travel and because you’re immediately alerted to a loss of oil pressure or tire pressure? Does the dashboard improve your overall ability to travel efficiently and effectively? Would you be upset if the auto manufacturers decided to reduce the cost of their vehicles by eliminating all the instrumentation and alarm lights?
Now consider your business dashboard. Have you identified and do you regularly review your key business performance indicators (KPIs)? Here’s why every CEO should:
- Identifying your KPIs forces prioritization of data. The total data available can be overwhelming and you have to keep your eyes on the road.
- The correct KPIs provide a regular monitor of business historical performance, as well as the outlook for the short-term future. They enable you to stay on track.
- The habit of routinely reviewing your dashboard (KPIs) creates a powerful sense of having your “arms around your business”, regardless of how well or how poorly the business is currently doing.
- Your dashboard provides a jump start for when you need to:
- Create a long range business plan
- Create a marketing plan
- Apply for a bank loan
- Discuss the business with a potential investor
- Interview a candidate for a key position
- As a habit, your review of your KPIs is an excellent accountability tool for you personally as well as for your entire business.
You wouldn’t drive your car without a dashboard. Is it any less dangerous to drive your company without one?
Posted in Financial, Leadership, Planning, Strategy
Tagged Business Owner, Business Planning, CEO Development, Company Vision, Financial Planning, Goals, Leadership, Strategic Planning
Riding a Dead Horse (not really)
There are some subjects that are difficult to approach positively. This seems to be one of them.
Every CEO occasionally finds himself or herself riding a dead horse. It could be that new product program that is consistently delayed and where the projected cost to manufacture is much higher than the original estimate. Or that new employee whose performance is so far below what you anticipated three months ago during the final interview. Or it might even be your entire company. Maybe you’re worn out, ready to move on, and have never really created the entity that you envisioned when you founded it.
Regardless of the situation, you feel the right decision in your gut. Your gut understands that you are riding a dead horse and that the only appropriate next step is to dismount.
Contrary to my opening statement, this negative post really does have a silver lining. Dismounting creates a better situation. Killing the new product program frees up resources that can be more profitably applied elsewhere. Terminating or reassigning the failing employee eliminates drag on the organization and allows the individual to find their true niche – either within or outside your organization. Selling your company to a strategic buyer who has the resources or market position to make it a success is good for you, your employees, and probably the overall economy.
The timely dismount can be every bit as potent for your company as any new initiative might be. So, how are your feet stuck in the stirrups?
It’s not just lonely, but also unique at the top. You must hold yourself accountable for certain responsibilities that cannot be delegated to others. The challenge is that, if you’re like most CEOs, you also hold yourself accountable for many items that could indeed be delegated.
If you are buried in the weeds of your business 24/7, your business will eventually bury you. Yes, most CEOs must devote significant time to working within their business. But if you haven’t already developed the discipline of spending at least 2% of your time each month (about a half day) stepping back and working on your business, your business is likely to continue to run you rather than the other way around.
What are those unique accountabilities that only you can assume?
- Establish your vision of where the company needs to go, and communicate it clearly and frequently.
- Find and retain employees who can help get you there.
- Lead the creation and routine updating of company goals, strategies, and action plans that will help get you there.
- Protect the corporate assets (physical and financial) while making sure you are using them to help get you there.
- Assure that the various parts of the company are coordinated and working together to deliver customer value at a profit, and to help get you there.
In a sense, being CEO has a lot to do with attitude and perspective. Consciously accepting this higher level of accountability is a way of your ultimately exiting your business on your terms.
Why not keep score for a few months? Copy the list of accountabilities and keep them close by. Make a daily or weekly note of your estimated time spent in each of the five areas. Hold yourself accountable – or get somebody else to do so – for tracking how much time you actually spend on these important areas. Then make appropriate adjustments.
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’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
Have you ever thought about how important your understanding of motivation is to your success as a CEO? Consider…
Effective selling requires understanding why a particular customer is “shopping”.
Effective marketing demands effectively communicating why your company does what it does.
Effective leadership requires your understanding why your partners and employees get out of bed to come to work in the morning.
Most important of all, why do you put so much energy into your company? And how clearly have you communicated this purpose to your audiences?
The better grip you can get on why, the better CEO you will be. Suggested reading: Start with Why by Simon Sinek.