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Pitfalls

Lessons learned from executives of major corporations adapted for Entrepreneurs and leaders of small companies.

For 30+ years I have witnessed management development from the School of Hard Knocks. Athletes understand the need for team and Coach. Business executives tend to engage consultants for a purpose and overlook the benefits of a coach, but benefit greatly from team. In the Fortune 500 experience, executive climb a ladder benefiting from graduating peer relationships, reviews, 360’s, monthly/quarterly reporting structure and management status meetings with peers and superiors. Entrepreneurs, Owners, CEO’s and leaders who run small businesses cannot easily duplicate these growth experiences. Our group provides a foundation for this type of growth. We will sharpen our skills by reviewing my list of “Potential Pitfalls” of the Fortune 500 and the insights to avoid them. NOTE: What’s good for Exxon is not always good for the independent oil producer. Scale is a consideration, but the elements we will discuss can be easily leveraged in most small companies. Each topic will be blended with real life examples from my consulting experiences of success and not so much….. Many will build with a workshop from a SME on the topic.

Note: It is my experience too many small companies measure success by cash in the bank account and lack fundamental processes to believe their Balance Sheet and really understand their financial position.

What is your companies Sales Motif? What do you provide that sets you apart? What do your competitors admit is different/better about your offering? What differentiators do your customers pull their wallet to gain? Margin pressure is always a factor in the sales cycle. Before you lower your price to get the deal, consider what value the customer is buying? What, How and Why are they buying? Aligning your solution to the Customer What, How and Why is critical to holding your price and even gaining on margin value.

It is common to preach what the Customer SHOULD value. Don’t be fooled by your own story or your sales messaging. Don’t try to sell your customer on your value equation. Don’t expect the customer will drink your version of sugar water. It is only value if your customer will open their budget and pay for it.

Consider the following tale of sales. A software company was a top performer when the industry they target was in a boom period. New companies formed and small companies grew. Industry growth created opportunity for everyone at strong margin. Then a strong downturn, aptly name the rust bowl changed the business climate. The same company went 3 years with no new clients, and annual maintenance fees steeply declining. The sales story hadn’t changed, a story about supporting the growth of the future, the prices bid were still seeking the same margins as in the boom period. They believed they were the best value, but no facts supported it. A new sales team surveyed the market, and determined a new value proposition. The sales message was changed to focus on asset management, revenue optimization and customer retention. The prices bid had similar margins, but reflected a customer risk hedge for a possible scale down model. The company went on a streak of record revenues and record margin in the midst of an industry downturn…

Does your sales engine seek to find the customer value? How can your sales effort transition from price/margin to price/value? The secret is adapting a reliable and consistent process in your sales approach and your delivery to listen to the customer. Then learn to align the What, How and Why of your customer with your solution. See “Selling Skills 101 to Strategic Deal Strategies” for more information.

Can you describe the Ideal Customer for your business? What impact does the expression, “The customer always right” play in your business? Right for whom? Does your sales effort benchmark a potential customer relationships against an ideal? How many customers are driving the relationship and also driving the margin downward. What are the characteristics of a Win – Lose relationship? How can a Win-Win transitioning to Win-Lose be identified? Can your customer relationship be structured, be trained to suit your company more effectively? Isn’t it in the customers best interest to make the relationship profitable for you and while providing value for them? What characteristics might you negotiate?

Consider the relationship with a Physician as an example. What have they pre-negotiated with us as patients? What might you pre-negotiate to make the customer relationship more effective for your business?
• Go to the Doctors office. Few make house calls
• Time specific appointment
• Expect to wait, even when on time, for the efficiency of the practice
• Allow Nurse to perform some tasks instead of the Doctor
• Agree to pay, even when insurance doesn’t, without knowledge of how much
• Expect to buy prescriptions without voice in what or how much it will cost

If accountability is important, why do so many leaders struggle with it themselves and in their company culture? It starts with you. Who are you accountable to?

As executives, we get the behaviors we tolerate. When key contributors become troublesome, how does an effective executive engage? Many avoid the issue and it festers. The organization can see the issue plainly. The executive suggests, conjoles and hopes. Unfortunately hope is not a strategy and in this example it grows the issue.

There is no technique to improve accountability. It requires business with purpose, decisions with intention. Every organization manages a triangle with competing angles; Calendar & Time, People & Priorities, and/or Assets & Money. The principled approach to managing must involve the intention and character to do what we say we will do. As leader, we must model this principal first. Building a culture of accountability is much more involved….

This style of management is prevalent in large and small organizations. In my experience at Price Waterhouse, we described the executive with all the answers, just ask him, as a small pond business. If all the answers exist within the company, how is it other companies find greater success? Best of Breed solutions from the Ocean are often never even considered in this environment because a quick solution from the pond is applied before the Ocean can even be investigated. The growth capacity is constrained to the pond. Vendors are constrained to the pond. Ocean solutions are dismissed as not good, if they even become known for consideration at all. Eventually the company becomes less effective than competitors and business is based more on tradition and relationships than value, an untenable situation for longevity.

It is a fact of life. How do you cope with conflict? Have you developed a consistent approach? If you learned a consistent meaningful approach, how might a consistent positive outcome translate to new meaning in a relationship and new opportunities for you? The approach to engaging conflict can also reliably serve as a positive approach for negotiating issues and improve selling skills. Click here for more information on conflict.

How might the management model in your business be described? Is it more like a Quarterback Manager, a Track Team, Football team or a League? One key to managing growth is visioning a model that best suits the demands of the business as growth has an impact. Can the quarterback manage 20 people effectively? What is the next best model?
Quarterback = Entrepreneur staff awaiting their direction
Quarterback Offense = Entrepreneur with key contributors with specific roles
Track Team = Entrepreneur / Partners each with specific isolated roles
Football Team = Coach with Coordinators leading key contributors / staff
League = CEO with mang. teams structured to achieve results

Have you hired that jewel from your competitor only to find they didn’t shine like you expected? Did you find they were actually your competitor’s rejects? Or have you found that situation when the culture didn’t fit over there and was perfect in your organization? So they do shine? What is your approach to hiring key employees?
• Approach
Gut Instinct vs Job Description
Personal Affinity vs Minimal Skills

    Where to Recruit

  • Local competitor
  • distant competitor from another geographic region,
  • similar industry another industry, with desirable skills and aptitude
  • current group, knowing the designee has the aptitude, not the skills

    Tactics to identify

  • Personal Network
  • Social Media
  • Employee Network
  • Friends
  • Help Wanted Ads
  • Temp to Hire
  • Paid Recruiter

What is your strategy? When and why might you change? Why does anyone take the risk with independent Contractors? Why does anyone take on the demands of managing utilization and the obligations of job security?

  • Value of Contractual obligations & protection
  • Value of Relationship (Investment vs Cost)
    • Utilization
    • Training
    • Relationships
    • Customer support
    • Procedure
    • Accountability
    • a. Cost of Replacement
      b. Executive Distraction Employee vs Contractor

a. The management style does need to fit the Executive and business. It is easy for strengths to become weaknesses when carried to the extreme. Building teams with complementary strengths is the key. The first step is understanding our individual strengths. Our personality has underlying strengths and weaknesses. Are you an Expressive, Amiable, Director or Analyst? Gaining knowledge of the tendencies of personality type will help you better understand the strengths and potential liabilities you bring to your team.
• When Consensus becomes Chaotic leads to ………….
• When Director becomes Dictator leads to ………….
• When Delegating becomes Helicopter Parent leads to ……….
• When Authoritative becomes Know-it-all leads to ………….

Do you have an Open Door policy? How is this policy effective? When does the policy overreach and transition to:

    Bottlenecks

  • Excuse to let Boss make / take risk decisions
  • Time Valuation = time of Executive + time of staff instead of just time of staff
  • Focuses energy of business on minor concerns as priority
  • Takes staff time away from their desk
  • Absorbs Executive time away from Growth high value tasks
    Executive Dive Bombing

  • Delegate team is easily usurped
  • Trades culture of accountability for Executive direction leading to confusion
  • Reinforces culture of chaos
  • Energy and Focus of both Executive and Staff are disrupted

How is your business growth changing your company? How well are you adapting to the leadership changes? How is the business adapting? – Building culture starts with the plans, words and energy of the Executive. Change from Growth can be quite challenging. Which of the following concepts resonate with you or with your team?
i. Plan with short quick visible wins
ii. Plan, Do, Act, Check
iii. Who is in charge?
iv. Vision lacks communication
v. Critical Staff, customers and vendors present unanswered obstacles
vi. Lack timely leadership decisions
vii. Inconsistent or confusing messaging
viii. Lack Urgency on Change
ix. Lack funding to finish
x. Declare victory too soon
xi. Cause and Blame
xii. Executive Puppy Dog – Why do this to me?
xiii. Convenient change of facts – “I knew this would happen”…

a. Do you have a specific plan to build the company organization? What will the pyramid of skills be? Is it top heavy or bottom heavy? What is the optimal balance of key contributors to staff for your business? Key contributors have higher compensation requirements and place an extreme on utilization and managing productivity. However they often require less time to manage and are more productive.
Productivity vs Compensation
Less Management vs Optimal Utilization
Risk of Loss vs Foundation for Growth

Too many or too few? What is the culture for planned Meetings? Do 90% of meetings have a specific purpose? Which has greater risk too few or too many meetings? Consider the following:
• Large corporate cultures complain of too many too long meetings
• Entrepreneurial organizations often find formal meetings to be too formal. Yet they also suffer costly mistakes primarily from communication gaps.
• Which is more productive? How to stay in the Covey “Not Urgent but Productive” zone?
Can your group benefit from a weekly coordination and status meeting. Would a preplanned agenda hold the staff or you more accountable? How could a weekly meeting help avoid costly mistakes? Have you considered the value of a daily 10 minute standup session? What might this session focus on? How might it improve communication, productivity and focus? The following are meeting pitfalls for your consideration.
Everyone gets a voice vs Time limits
Time to build Consensus vs High Impact High Value
Executive Decides vs Staff Empowered with Status Reviews
Whatever staff contributes vs Planned, announced agenda
Blame Game vs Challenge, Learn and Grow
Start day with meeting vs end of meeting signals end of day
Start when ready vs On-Time accountable
Phone/Email interruptions vs Announce call prior to meeting
Note: Executives must display the courage to walk out of meeting at appointed time, even when staff wants to continue. Schedule a special time to give that issue it’s due.

How does your company approach the Sales Funnel? Growth requires sales. Sales can benefit from a reliable approach like any other aspect of your business. The Funnel or Pipeline can be tracked, measured and reliably forecasted. A reliable sales funnel is a critical first step to reliably reporting current financial position and forecasting success.
Define Standards vs Excuses and Heroes
Track vs Expect to win every deal
Measure vs Blame Game
Forecast vs Who knows?

My experience indicates Exceptions can get credence which can lead to traditions and procedures that are not in sync with best practice Business Processes.
Every Issue is a Priority vs Isolated Issues get no response
Try to repeat the Unusual vs Recognizing an Exception as Unique
Success depends on vs Focus on the Repeatable
Unique Issues get a rule vs Ignore it and move on
Rules = control weapons vs Empower, trust and verify
Can’t do that vs Let’s find another path
Rules of convenience vs find optimal productivity
Story – A successful organization hired an exceptional employee who moved in from out of state to care for ailing parents in a long-term illness. The employee was overqualified and contributed to extreme success immediately but also content with a slow schedule for a decade. When the company needed to expand, the leadership held the position open, lost key staff and spent a large sum with a placement agency trying to locate another similarly qualified employee. They were unsuccessful, because they tried to repeat a Success Exception.
Story – Fast Food business models started hiring teenagers as a rule. Then teenager labor became in short supply. Today it is not common to see over 65 serving food or running the register where 20 years ago the unwritten rule was only a teenager would be desirable….
Story – Taco ____ once hired me to manage night shift because I could prepare tacos and burritos at double the speed of any other staff. However, the management team had developed rules about using specifically sized utensils to avoid past problems with inconsistent preparations specifically not enough or too much of an item on a taco or burrito. I used a single utensil and it was the catalyst for speed. Management would weigh my items and they were consistently within spec. Yet, the city manager still required the use of 10 utensils instead of my single approach. The State held a contest for who could produce Taco orders the fastest. I was sent as the city representative and won easily with the single utensil approach and all of my orders were closest to prescribed weight of any competitor. Other cities complained I cheated… The city executive was embarrassed because I didn’t follow the “rules”. The state Executive asked where the rule was documented and why. He could see the productivity loss based on an unwritten rule….

As the executive, where do you look to determine the financial success of your endeavor? How confident are you in the Balance Sheet or Income Statement available from your software of choice? Do you analyze the checking account first? What steps are necessary for the Accrued Financial statements to present an accurate picture of the business?
• When does your business document purchase information?
• When & Why is a Purchase Order helpful, required?
• Does your company pay an invoice without a PO?
• What event triggers a Sales Order to be originated?
• How closely do the Sales Orders mirror your sales funnel?
• Can you consistently forecast next quarterly financials?

The group will review “Best Practices” including approaches to

• Sales Forecast
• Cash Forecast
• Order to Cash
• Purchase to Pay
• Accounting Period End Close

What is the value of your business and your efforts in it? What keeps the business from performing at a level to compensate you competitively? What would you pay to buy your business? Would you buy it or do you dream of something else? What can drive the value higher? Do you hope for a big payday at some point in the future? Hope to sell the business? What specific tasks have you accomplished in the last week to build future value? What do you plan for this week, next week? Building value requires intention planning and diligence to accomplish the plan. You started with vision and a dream. Will your current plan take you to the dream? What is needed?

What in your business can be improved? In what aspects have you become complacent or just going with the flow? If Warren Buffet or Bill Gates took the reins of your company for 6 months, what would they change? Should you change them? What keeps you from contemplating those changes?

When and why is it time to fire the Founder, the CEO? Is that you? In what ways are you so busy working in the business that you can’t find time to work on the business? What tasks do you engage weekly that don’t merit your attention? What tasks are left undone that will contribute to growth, margin, long-term relationships and value? What impact might an optimizing the roles in your organization have on growth and value? What might you learn from documenting an inventory of tasks and assigning complexity and value? How might those tasks be delegated? Can tasks be allocated so that your share is high impact and high value? How many of your current tasks are low impact? Who might more appropriately take these tasks off your plate?
Optimizing the business starts with optimizing your activities. See the 4 quadrant grid below. Take your inventory of tasks and allocate them into the grid appropriately.

High Value/Impact, Low Frequency – High Value/Impact, High Frequency
Low Value/Impact, Low Frequency – Low Value/Impact, High Frequency

Are you the Super Hero in your business? You are the one who does this and that best? Delegating might mean a loss of control in some way? What steps are needed for you to be willing to delegate High Value tasks, to risk they may not be accomplished in your way, your style? When will you accept the price of failure on a task as a learning experience, an investment in future value?

Leaders who struggle to delegate often fear a loss of control. They are the quarterback, ready to direct all activities of the offense, call the plays, tell players where to line up, audible, even direct with hand gestures as the play progresses. Originally, the quarterback was also often the coach. But today, the quarterback seldom even selects the plays. That role changed as the game developed. Like you in your business. How will you transition to Coach and GM? It starts with delegating the easy tasks. Train for success. Empower. Trust and verify. Plan for a few small quick wins and build from there. Does it matter how great you perform on a task that does not add value to the business? What tasks might you start with? Who might you delegate them to? When?

In what ways are you investing in you? Running a small company can be similar to playing Chess. Planning several moves ahead is the key to moving from novice. In small companies, there are only a few ways to learn to grow. The advantages of the relationships with a common cause in the Fortune 500 are not available to you. How can you best leverage you in the business. Who will help you discern where and how to change? There are options available.
i. Attend Seminar and Trade Conventions
ii. Join MindShare group at the Local Chamber
iii. Join an Industry Group
iv. Read a new book monthly (but how to apply what you read)
v. Hire a coach
vi. Engage a consultant
vii. Form a group of Friends, an accountability group
viii. Join a Board of Directors
ix. Form a paid Board for your company
x. Train yourself
xi. Join a Peer Advisory Group
xii. Join the Leadership Forum

How much do you pay you? Are you at the end of the payroll cycle, receiving whatever is left over? Do you plan for making a commitment to your minimal compensation first? If you left your company, what would the market pay for your skill? What are you paying yourself? If the market would pay more than you pay yourself, how long will you justify the difference? How long have you accepted this equation? The difference is essentially in investment in the business that can only be recovered by having significantly greater margins in the future. Is this practical? How will the future be different that today? What specifically will change or improve? What is the plan to achieve that success? Your compensation should be a priority in the business. It should be competitive with the market over a span of time. It is about you.

Are you the last to know when your decisions, policies, plan do not hold water?? Can your team challenge bad ideas, policies and plans? Are you open to that challenge? Are they capable? Many new policies never even start as great idea. No one agrees with that big idea, except you. Who will tell you? It is implemented with great planning, great training, great implementation, and incredible delegation. The results? Well what was the source of information? Maybe you heard what you wanted to hear. Maybe you are told what you want to hear. The feedback on results were “great”……. Everyone knows the results are not good, except you.

Take BBQ as an example. The PitMaster, studies, practices, takes notes on successes and failures of cook methods. He determines the exact process to follow, he trains employees on the What to Do process, practices it with them and then delegates to the Store Owner.. Note the Why it done this way is skipped) A few weeks later, the Store Owner and new employees find it is more efficient to
a. Skip the step to rub the meat 12 hours before loading the pit,
b. Skip the step to start the fire 2 hours before loading the pit,
c. Skip the step to load the pit in the AM shift
Instead of the intended steps they take a do all the steps at once, start the pit, rub the meat, load the pit, then worse, they increase the temp so they can wait and perform all the tasks in the less busy afternoon shift.
They take initiative and make changes. The results are not the same. The succulent moist tasty results of the PitMaster are now dry and lack flavor.

How might you be serving up dry, tough BBQ? Do you tell your employees what to do but don’t take the time to explain why? Good BBQ requires the right equipment (assets), knowledge on how to maintain the desired temp and why (training), a cook plan, and good recipe and disciplined execution. It takes a years to master all the What, How and especially the Why of the process, and the results are enjoyable. Lots of WHY factors can influence the what to do with the pit. Each cook requires a plan because the starting point is never consistent. The weight of the meat, the temp and humidity outside, the cold holding temp are all factors. If the plan is not followed, the results are not predictable, often less than desirable and sometimes not edible.

This is not unlike running a company. Bad policies can be disruptive. The Plan can be easily derailed unless the results are checked and appropriate steps to improve are implemented prior to the next plan. Word of mouth status can often lead to information the Leader wants to hear, not the information he needs to know.

As leaders we are often confronted with issues and are expected bullied to make a snap judgment. When were you last in this position? Maybe a customer is on the phone waiting, a prospect expects an answer. Your inner voice screams to ask for more time, but the pressure of the situation demands an answer. So you give in. You make a judgment “Off the top of your head”. As a consultant I was often faced with this type situation. Tell me, we have a crisis, here are the facts we know, what should we do???…. My gut instinct was to help, to provide insight, ideas, an answer. My experience screams, that answer “Off the top of your head” is most likely to be dandruff not insight. Big decisions require thinking time, analysis, potential solutions documented, insights analyzed, input and clarity from other Thinkers outside the transaction, more thinking, then a decision and an action plan.