Welcome to the second issue of C-Level Beacon, the newsletter of C-Level Partners LLC (CLP). CLP is a business performance consultancy that helps executives of small to mid-sized companies create value for their customers, wealth for their owners, and meaning for their employees. CEOs who want to achieve consistent revenue and margin growth must continually balance the needs of their constituents. CLP works with executives to solve complex problems that are holding the organization back from achieving its full potential. Each edition of C-Level Beacon provides short, easy to read advice, observations, and tools on typical business issues and supplements our blogs which are available on our website at www.clevelpartners.net.
This second issue of the year focuses on corporate renewal and growth as spring is a good time of the year to reflect on renewal. It is a time to reflect on what you are doing well, step back and appreciate your successes, and, at the same, time determine what needs to be changed to ensure future revenue and margin growth. Renewal may lead to a new strategy, a new business model, revised positioning against the competition, or building new competencies within your teams or eco-system of partnerships. Even personal renewal should be considered to ensure your team is aligned and energized to move into an uncertain future. We present a few ideas on how this renewal and growth can be achieved and trust you find this information valuable.
When you look at the picture on the left, you see a beautiful well designed and manicured lawn that would make any owner proud. It’s nice to step back, admire and be proud of this accomplishment and, as they say, “stop and smell the roses?” In the corporate word, though, how many executives actually take the time to sit back, reflect, appreciate what they have and dream about what is yet to come? Is corporate renewal something that is performed only when necessary? Or is it part of a normal process that needs to take place on an ongoing basis? In my opinion, corporate renewal and growth has to become part of the corporate battle rhythm.
Often, success breeds complacence and problems for future growth. Executives can look at different levels of corporate health and attach to each of them a different process for corporate renewal. At one end of the spectrum, a company is healthy and world looks rosy (so to speak). At the other end of the spectrum, a company is in severe financial distress and is on the verge of insolvency and likely collapse. In between, companies may be moderately underperforming or severely underperforming due to a variety of reasons and those reasons may either be acute or a worsening of problems.
Corporate renewal may exist at each of these levels. For example, a healthy company will want to be proactive in its growth initiatives and business transformations. A moderately underperforming company facing emerging problems may have to take a more aggressive stance and apply remedial business transformation and possible management changes. Severe underperformers facing acute and worsening problems, but still rectifiable ones, will have to undergo a turnaround process usually with significant management changes. And finally, a company in severe distress will need to be rescued through bankruptcy proceedings, acquisition, or liquidation.
This article focuses on healthy and moderately under-performing companies. In both cases, a focused approach on renewal is warranted and can change the course of the
company. With springtime
is underway, what better time to look at your organization and think about where you are, where you want to go and how to get there? Taking time out from the
operational grind is difficult but necessary. Thinking about your company in the context of tomorrow’s growth is one of those activities we find that is important but not urgent. Achieving this
year’s sales growth is urgent as everyone has quarterly targets. What about next year? And the year after? We postulate that companies need to focus on future growth on a continual basis to ensure
when tomorrow comes, the urgent problem is not survival.
We at C-Level Partners like to say, you cannot control the wind or the sea, but you can control the trim of the sails to reach your destination. We hope this checklist of questions and suggested ideas will help you take a breather, take time to appreciate where your company is on its growth path, consider changes and potentially reset those sails.
Step 1: Vision and the End Game. The first step is to figure out where you want to be. An interesting way to start is to conduct a visioning exercise among the top leaders of your organization. See if there is alignment. What do you want your company to be? And where do you see your company in 3-5 years? Are you on the course to get there? Are all of your executives on the same page? Is your brand being consistently executed at all customer and distributor touch points? Do you need to focus on organic growth – moving ahead with a clear mandate to stay in front of your customers’ needs and competing products? Or do you want to ensure organizational stability because your key imperative is consistent cash flow and your markets are stable?
Step 2: Customer Jujitsu. It all begins with the customer – those customers you currently have, and those new customers that you would like to buy your current services, or new customers that would buy your new services. The ability to leverage customer needs is what I call Customer Jujitsu. To truly understand what your customers want, here are some thoughts. Set up a customer or distributor advisory board to provide input on your marketing, brand, products, operations, delivery, customer service or any other category. Bring a few of your customers to your strategic offsite. We did this with a company in Canada and the executives were taken aback by some of the comments. The good news is that it provided a shock to their system and caused them to change positively.
Perhaps set up time for your executives to work on the front line. Hyatt executive routinely work at the front desk or in service jobs in a hotel. When I was an executive in a large iconic telco, I went out on service calls to see how our products were used and saw problems that led to my creating new and better products. Do mystery shopping similar to what the TV show Undercover Boss demonstrates. It’s amazing what you learn by doing and listening.
Step 3: Corporate Competencies. Corporations are unique in terms of their culture and their functional competencies. I add culture as a competency because culture is hard to replicate. Google, Zappos or Nordstrom. Does your company have an innovative culture or one of fast followership? Neither one is good or bad in its own right but the right culture will help implement your vision.
What are your strategic control points, i.e. why are you unique and what moat have you created? Depending on your vision and future plans, what competencies do you need to grow internally and which ones can you outsource? What does your partner eco-system look like and do you need to expand it to provide those competencies?
Step 4: Competitive Analysis. Sun Tzu, the great Chinese Warrior, said if you know yourself and your enemies you shall fear no battle and come out the conqueror; if you don’t know one or the other you will lose 50% of the battles. In reality the battle for customers and market share is won before the battle in the market. Companies do this by understanding the environment and the competition and developing solid executable plans to take advantage of their competencies and the competitors’ weaknesses. In Step 3, we talked about understanding your company. In this Step 4, executives need to understand and walk in the shoes of their competitors. This is where paranoia comes in handy.
Company executives should keep a focus on their major competitors who are directly competing with products and services. Do you know which companies are upstarts that might be entering your market? Remember IBM did not think that much of Microsoft when it came into existence. Who would have thought Tesla would be leading the way for electric cars or that Google would be in the autonomous driving business? Or that Facebook would be the behemoth of social media?
Step 5. Assessment, direction and focus. There are several routes to revenue growth and renewal. The executive team needs to determine those routes and the ways to enable them to achieve success. How your executive team assesses the opportunities and threats are critical to long term success. Do you have a formal process to review opportunities and growth initiatives? How do you prioritize them? Are all the executives committed to the vision and goals and how does that translate to priorities? How many priorities do you have? Are you attempting to tackle 2, 5 or 10 things at the same time? Do you have an executive assigned to lead your strategic initiatives? Do you have a risk mitigation plan in place in case something goes bump in the night?
Focus. Focus. Focus. We have seen many companies try to tackle too many things at the same time. The key for most companies is to take 2 or perhaps three major initiatives and complete them first. Then go back to the list and add a new one for every one that has been completed.
Step 6: PODFU. This is a made up word but a powerful concept!!! I learned this concept when I was a young executive and it was taught to me by a highly regarded Fortune CEO. The acronym stands for Plan, Organize, Delegate and Follow-up. This is where execution takes over. I personally like to incorporate a system called RACI to define the roles of the various members on the team. Always remember the person accountable (they are the ones to deliver the results), who is on their team (the people responsible for portions of the project and responsible to the team lead), who will be consulted before decisions are made and who is informed of decisions made.
The final component of Step 6 is the follow-up. We use a metric driven and quantitative dashboard to ensure that the project, opportunity or business is on track. Do you use an executive dashboard? Do you share the results with only executives or with the entire company? And most important, do each of your employees understand their role in delivering the results and ensuring the company vision is attained? Trickle down is critical for long term success.
I read an interesting article the other day that compared the list of companies on the Fortune 500 in 1955 to the list of companies on the Fortune 500 in 1995. A little more than 10% of those companies existed in their same form only 40 years later. New entrants, new business models, new organization designs and new technology, and perhaps bad management, caused massive changes to that list. To avoid those problems, companies need to be proactive.
Company executives need to step back and think about their goals and their keys to success. While we believe that companies can do this on their own sometimes an outside perspective is needed or a facilitator of an executive offsite is required. If those needs arise, C-Level Partners might be able to help. Feel free to call me for a one hour complimentary consultation where we can discuss your business issues and this article. You may reach me at email@example.com or at 949 439-4503.
The late Stephen Covey first published The Seven Habits of Highly Effective People in 1989. Since then the book has sold more than 25 million copies in 40 languages. On a personal note, I have read this book at least two dozen times and it has had a significant impact on my life. The Seven Habits move us through the following stages:
1. Dependence: the paradigm under which we are born, relying upon others to take care of us.
2. Independence: the paradigm under which we can make our own decisions and take care of ourselves.
3. Interdependence: the paradigm under which we cooperate to achieve something that cannot be achieved independently.
Covey argues that this can be accomplished living the seven habits he describes. While this article will delve more deeply into the seventh habit of personal renewal that Covey labeled “Sharpening the Saw,” the first six habits are summarized as a refresher.
Habit 1 – Be Proactive
Being proactive means we take responsibility for ourselves. Where we are in our respective lives is due to the accumulation of all the decisions we have made up to this point. Proactive people work within their circle of influence – the people and things they can reach – and spend less energy on their much wider circle of concern.
Habit 2 – Begin With The End In Mind
Covey asks you to imagine you are at a funeral service only to discover the funeral is yours! What are people saying about you? In the end, all we leave behind is our legacy. This habit involves beginning everything you do with your ultimate goal in mind.
Habit 3 – Put First Things First
Everything in life requires balance. To be effective, you need to be clear about the various roles you play and make time for each one of them. Spend your time accomplishing the things that matter in each role that aligns with the achievement of your ultimate goals.
Habit 4 – Think “Win/Win”
Daily life is filled with negotiations large and small. Some argue that we are innately selfish beings and have a strong desire to win without regard to others. To make winning sustainable, we must allow other people to win – or at least not lose – along with us. This requires being creative and looking beyond what we think is good only for us.
Habit 5 – Seek To Understand, Then Be Understood
On the surface, Habit 5 says we simply need to learn to listen, not only to the content of what is being said but also to the emotions behind the words. We need to be empathetic and see situations through the eyes of others. This takes a lifetime of practice and few of us will have fully developed this skill by the time we leave this world.
Habit 6 – Synergize
The essence of synergy is valuing the differences – the mental, emotional and psychological differences between and among people. A win/win attitude and understanding the other persons perspective and the reasons behind that perspective, enables us to make 1 + 1 = 5 or 10 or 100! Working together on a problem creates solutions and ideas that nobody would have thought of on their own.
Habit 7 – Sharpen the Saw
By practicing the preceding six Habits, we are proactive in staying within our circle of influence, have set goals, prioritized our activities to achieve those goals, are thinking win/win and empathizing with other people to create synergistic solutions such that 1 + 1 is far greater than 2. The goal now becomes maintaining those good Habits. An old saying is that bad habits are easy to form and hard to live with and good habits are hard to form but easy to live with.
Sharpening the Saw is the process for reflecting in the various aspects of our lives. In other words, taking inventory on the status of how well we are living the first six Habits as they relate to the key roles we play. For example, how are we doing as parents, children, siblings, church member, boss or worker? In addition, Sharpening the Saw allows us to check in on how we are doing physically, mentally, spiritually and emotionally.
We need an honest feedback mechanism to know how well we are living the habits. As humans, we are good at comparing our strengths to other people’s weaknesses. It is more comfortable blaming others for difficult relationships than looking in the mirror and seeing what we are contributing to relationship problems. I believe Sharpening the Saw is the equivalent of looking in the mirror.
As a personal example, I was having difficulty getting along with my twenty-something daughter. She is married and at the beginning of what appears to be a successful career in retail. I was finding almost every time we talked she would become upset and we would leave the conversation with negative feelings toward one another. I thought I was practicing the six habits in my relationship but it was not working. I was beginning to fear the relationship was becoming terminally broken.
There were times when I blamed her for being irrational and unappreciative. I decided it was time to sharpen the saw with respect to our relationship, i.e. change and refine the way I was approaching the relationship. First, I confirmed that the only thing I could change in our relationship was me. I had to use the habit of being proactive to take matters into my own hands versus letting things continue hoping the relationship somehow gets better on its own.
Secondly, I sharpened the Habit of Begin With the End In Mind and reminded myself that my daughter is one of only three people that are sure to attend my funeral. My wife, son, and daughter are the center of my life and I had to re-envision what I wanted that to look like. I sharpened the Habit of Putting First Things First by inviting my daughter for coffee at least every other week to build the relationship.
I approached each meeting Seeking First to Understand what I was doing to aggravate her. As this was not something to negotiate the Habits of Win/Win and Synergy did not seem to apply although a good relationship between us is sure to reap mutual benefit.
In our meetings, I carefully watched for things I said that triggered her negative emotions toward me. What I found was simple. She did not like when I gave her advice she had not asked for. As a father, I was full of advice and could not help myself. However, she saw it as criticism unless she asked for it. I was able to change this behavior and the relationship has never been better. The problem was not that I was not practicing any particular habit. In fact, most of the Habits were sharpened with one change I made in our relationship.
Most of our lives are literally spent at work. The workplace is filled with weak relationships that slow down and sometimes even prevent progress toward business goals. Unfortunately, these dysfunctional relationships can also derail careers. Although the above example relates to a particular personal relationship, Sharpening the Saw is clearly applicable to the relationships we have at work and should make those relationships better. Whether it is boss/subordinate or colleague/colleague, we can each adapt and fine tune our relationships to become more productive and corporate citizens.
Sharpening the Saw applies to all aspects of our lives. A different example may relate to your physical health. Perhaps you have a goal to lower your blood pressure, reduce weight, or increase your flexibility and balance. Sharpening the Saw would entail revisiting the first six Habits as they relate to your health goal. For example, are you being proactive or making excuses, are you remaining focused on the end result, are you making your physical health a priority? Honest answers to these questions may lead to some adjustments in your life.
Living the Seven Habits will certainly increase personal effectiveness in any aspect of our lives, including work. As relatively few people practice the Seven Habits at work it may be challenging to be as personally effective as we would like. Individuals with misguided agendas and corporate bureaucracy can grind us down. This is precisely why the Seventh Habit of Sharpening the Saw is so vital. It forces us to step outside of the stress and pressure of the routine and put things in to the perspective of our ultimate goal. In other words, the kind of person we want to be remembered as being. This refreshes us to continue to focus on living the Seven Habits and maximizing our personal effectiveness.
I believe an organization’s culture is the accumulation of all its collective habits. This is why it is so difficult to change a company culture. It is sufficiently difficult for one person to change one bad habit. However, if you are a manager or business owner, think about the power of having a culture based on the Seven Habits. Of course, Covey became very wealthy selling this idea to companies. Unfortunately, unless the people at the top of a company are willing to change an organization will not change. In my experience, a common failing of executive thinking is that the company and its employees need to change but not them.
C-Level Partner’s mission is to help organizations improve their performance. If you are a CEO or responsible for a division or function of a company, good personal and organizational habits are a necessary but not sufficient condition for sustainable success. Although making a profit is critical for survival, it is not the full measure of long-term success. The full measure of success gets back to Covey’s funeral scenario. What are people saying about you or your company/division/function?
The Seventh Habit of Sharpening the Saw requires us to step back and evaluate all aspects of our life. It is essentially a periodic assessment of how well we are living the first six Habits as they relate to the important relationships and elements of our lives. Individuals and organizations need to take time out to Sharpen the Saw. It is not something you can do on the run.
If you are interested in discussing this concept further please comment on this article or contact Dennis Drent at firstname.lastname@example.org or 714-290-3892. We are interested in sharing experiences and hearing your ideas.
Renewal of businesses and brands is critical for survival. That sounds trite but true. On-going businesses have challenges to stay relevant in their markets. A recent study indicated that of the Fortune 500 companies in 1975, less than 75 were on the Fortune 500 list just 40 years later. More than 500,000 new start-ups are created every year in the US alone. Of that, 50% are likely to fail within the first year. Within the first five years, another 50-80% are expected to fail. There are many reasons for failure of all businesses including a bad economy, lack of funding and lousy business ideas or structures. Certainly these are contributing factors. Yet, regardless whether you are a startup, small business or corporate giant, we believe that another big reason is a business' inability to adapt to changes and become “fast, fluid and flexible.”
How does one meet that challenge? The marketplace demands and expects businesses and brands to evolve over time. A proactive renewal process keeps a business relevant and in tune with customers’ needs and new business models, as they too evolve. Sometimes these changes are barely noticeable beyond the normal rhythm of business news and information. On other occasions it is big, noticeable, "in-your-face" change.
Consider the following three companies: GM, GE and Kodak. During the Great Recession, GM had to be bailed out from a distressed state and eventually streamlined their car line and brought in new management to affect the turnaround. GE, a model of growth in the 80s and 90s had fallen on hard times and while the company continues to expand, it is not the Jack Welch GE of old. Kodak, one of the great brands that many of us grew up with is a pale shell of itself as its business models and strategic plans did not evolve and the company was not able to take advantage of the new digital era. I am sure that each of the readers can think of several examples in their industry of companies that were successful and unsuccessful in their attempts to renew their business model and brand.
An example of a successful company that went through business and brand renewal is Cintas. Cintas started its business in industrial rags and laundry in the early 1950's. They created a distinctive set of capabilities and its own business model called “The Cintas Way” which was a combination of products and services wrapped in excellence in process and technology. Their plant operations, a highly refined logistics capability and a customer intimate focus in its sales and marketing that combined service innovation with customer knowledge helped guarantee their success. Why? Cintas took a very proactive approach albeit somewhat evolutionary. Cintas grew its brand through continuous growth along several strategic vectors in the “Ansoff Product/Market Matrix.” They created new markets, new products and services based on their ever evolving strategic capabilities, and through distribution partnerships. Think about this. Cintas went from rags and laundry to address the security needs of companies by building a secured document destruction and document storage business. How is that for business/brand renewal?
Over and over I've seen how businesses that adapt and change are much more likely to stay in business than those who fight tooth and nail to stay the same as they have always been.
I'm here to tell you that no business is too big to fail or too small to succeed. Let's look at companies like Borders or Blockbuster. Borders failed because they relied too heavily on the brick and mortar retail business of their stores. Barnes and Noble, by comparison added technology in the form of Nook was more aggressive with e-commerce of their retail products. As a result, they built an eco-system of digital content delivery to reinvent their brand and their business. Borders went out of business in 2011 while Barnes and Noble is still in business today. At this time, it looks like Barnes and Noble needs another reinvention/renewal as it is struggling financially as of late.
In a similar fashion, Blockbuster failed because they stayed true to their brick and mortar stores and did not see the threat from a little-known upstart named Netflix. They failed because they were unable to adapt to the market disruptions in their business, mostly because digital delivery of content were disrupting their traditional retail storefront business. By the time they responded to Netflix, it was too late as this article explains.
Why did this happen and could it have been prevented? The companies that were proactive, fast in making decisions, fluid in their response, willing to pivot and flexible in adopting new businesses and business models were successful. Of course, a company is only as good as their executives so we have to give credit to the vision and execution of their top teams. They all anticipated change and adapted their businesses to the realities of the new market place. Continuous improvement requires a feedback loop that continually evaluates, assesses, designs, implements and manages the change that is derived from the process. And those companies that were successful delivered on this key requirement.
It's important to note here that this improvement process is a result of a “business system.” What do I mean by system here? A system is a repeated course of action – a way of doing things that brings about a desired result. The combination of people, time, money, tools, systems and the processes used to manage the business had a significant and critical impact on the ability of these successful businesses to adapt, evolve and improve over time.
Keep in mind that no company, large or small, gets it exactly right on the first try, which is why starting a business or building a brand is such an iterative, discovery-based process. Through each business cycle executives will learn something new and modify or evolve their business model to adapt to change. Sometimes that change is incremental. At other times, the change is much more significant. Business assumptions change and your business models will change as you will learn more about the customers and niche you serve. Changing directions, implementing a new business model or revitalizing your brand does not mean failure. In fact, that realization is the end result of a visionary and clairvoyant company. It may or may not result in a completely new vision and direction. It does, however, mean taking stock of everything and adjusting the strategy and plan accordingly.
Do you have any business renewal stories you would like to share? For additional reading on this topic, please check out our other articles on renewal in our April C-Level Beacon newsletter and on our blog available at www.clevelpartners.net/blogs. Also there have been a couple of articles written in the HBR and TIM that focus on renewal that you may find interesting.
C-Level Partners focuses on profitable growth and we would be happy to chat with you about your brand, your business, and your vision. Drop us a line at email@example.com or firstname.lastname@example.org.
Adapted from Vince Ferraro's book, 'Brand to Sell', available on Amazon.com
My colleagues have written interesting and very useful articles relating to Stephen Covey’s Seven Habits of Highly Effective People as applied to personal and corporate renewal. I’d like to add to this collection by focusing on managing a firm’s risks, with added emphasis on regulatory and competitive risks.
Every management team knows their business is exposed to risks that have to be identified and assessed as to their likelihood and potential impact. This is the first step in effective risk management and is consistent with Habit 1’s “Be Proactive” mind set. However, as this Newsletter is about renewal we’ll assume a business is formed and operating and we would expect that there is some type of risk management process in place and functioning to a reasonable degree. After all risk management, in our opinion, is a proactive approach rather than reacting to a problem when it occurs.
The environment in which every business operates is forever changing. Whether it is technology, the competitive environment, changes in regulation, supply chain challenges or staff changes, the list is long and itself changes over time. An element of being proactive is the continual monitoring of the risk environment (internal and external), evaluation of emerging risks and adoption of new approaches to manage the risks most effectively.
As the renewal process begins executives need to consider renewal in the context of continual change and the ability to plan for eventualities. What happens if the competitive environment changes? Recall Amazon went to market with a new business model and the result was Borders went bankrupt and Barnes and Noble, even with a renewal plan, continues to struggle.
Some risks we cannot eliminate through insurance or other financial mechanisms such as operational risk. For example, are we looking at demographics to determine if we will have the workforce we need in the future? Interestingly, the insurance industry is struggling with an aging workforce. The younger generation is not being attracted to the industry and as the baby boom generation retires, the industry is trying to figure out what to do. Did anybody see this coming?
What should your risk management framework include? Without a clear answer to this question one cannot begin to review and update the existing process. This checklist
and article then becomes just a reminder that we have to look at both sides of the coin and we sometimes do not think enough about what can go wrong with the things we take for granted. To that end,
here’s a checklist of items that should be considered:
B: Analysis of Risk Impact
D. Action planning
Having reviewed this checklist list to bring the risk management process up to scratch the next step requires focus and prioritization. Even if companies don’t currently have a risk management plan in place, any new initiative, project or new product opportunity should be managed in the context of risk – knowing the risk of market acceptance or rejection, the risk of resource constraints, the regulatory risk of change and the financial risk if the unexpected happens. Building these in from the beginning of each new initiative does take some time, but the benefits of a working system developed as the initiative progresses are large and the costs much lower than those caused by the disruption to a process that has to be re-tooled in order to bring risk down to an acceptable level. Also, once the firm has created the risk management framework for this new initiative, they will have a guide to use in creating a framework covering their existing products and business activities.
In smaller companies, compliance and risk management are everyone’s responsibility. This is a key for delivering for clients. As Head of Risk for a London based firm with a staff of about 40, I’ll never forget hearing one of the most junior staff members saying they understood that if we screwed up, the loser could be the beneficiary of a pension fund for which we managed currency risk. Seeing that understanding reflected in the performance of the entire team allowed me to sleep more easily at night. The team knew their responsibilities and took them seriously.
The concept of Sharpening the Saw contained in a companion article in this newsletter is particularly applicable to risk management. Risk management requires that executives be proactive in setting goals, prioritize their activities to achieve those goals, are thinking about the effects within their own circle of influence but also within the entire company, and work with others in their organizations to create synergistic solutions such that 1 + 1 is far greater than 2.
We at C-Level Partners help our clients manage through turbulent times or other difficulties in their business. Whether the issue is internal or the result of some external environmental factor, we apply our PRASE approach to identify the problem that is preventing the business from achieving its goals. And we can help map out a risk management plan to address the issues and if needed can assist with its implementation. If you’d like to discuss these ideas, please contact me at email@example.com or call me on (949) 680-8359.