Denbrook Strategic Advisors BlogSpot - Leadership

Line of Succession

nospam@example.com (Robert H. Diefenbacher) — Fri, 14 May 2010 11:02:11 -0400

Ninety percent of U.S. businesses are family-owned, and one-third of the Fortune 500 is either family-owned or family-controlled. Only 30 percent of family-run companies today succeed into the second generation, and only fifteen percent make it into the third generation. Experts say this is primarily due to poor succession planning.

I think the same case can be made for succession within a business. Who will be the next number two if the current number two is no longer in that position? Who will head up the customer service department if the incumbent is promoted or quits? Who takes over for the sales manager when that position becomes vacant?

In smaller businesses there is no room for bench warmers and little free time to cross train. That means that when vacancies occur in key leadership roles little thought has been given to potential replacements. This poses a significant risk to the stability of the business. And if you are in a leadership job, you should do all you can to minimize this risk.

The time to make some contingency plans is when everything seems to be going well. Maybe that is right now in your organization. Now you have the luxury to test potential successors in different roles and responsibilities to see how they handle them. You can learn their strengths and weaknesses and prepare a line of succession for various jobs in your business that plays to individuals’ strengths and minimizes the impact of their weaknesses.

If you are searching for your own replacement as the CEO you need to go further than simply testing out capabilities. You need to think about the long-term stability of your business and determine the source(s) of a potential successor.

A timetable for replacing a CEO should be at least five years. This allows time to explore all the options and conduct discussions with your family, your senior managers, and key employees. Initial discussions should be informal and designed to help you select the source for your replacement. It may be that a family member is ideally suited for the job, or perhaps there is a senior manager who can step into the lonely position at the top, or you may conclude that reaching outside is a better decision.

Concurrent with exploring these options you need to develop a business transfer plan based on your current structure. Partnerships have different agreements affecting dissolution or buy out. Close corporations have other concerns regarding transfer of stock ownership. With a sole proprietorship finding a good approach to transfer ownership is important.

As important as finding the right person is finding the right price for the transfer, and determining the timing of the transfer of ownership. Determining the worth of your business is a tricky one, very subjective in many respects, and fraught with tax implications. A fair value for the transfer needs to pass IRS muster. Since businesses can be legitimately valued differently for different purposes, you should make use of a qualified outside firm to develop the price based on the goals of the transfer. The firm can also help you determine the appropriate way to finance the deal.

Whether you are transferring ownership or giving up the leadership of a division or department, you need to pay close attention to your role before, during, and after the transfer takes place. Once a successor is named the two of you jointly should develop a turnover plan that includes training the successor, a new job description, provisions for contingencies such as loss of others who wanted the job, and your personal plan for removing yourself from the “equation.” That last point may be the most difficult, especially if you are remaining in the business after a new leader takes over.

If you have taken the time for self-examination to determine why you want to move out, you will have developed the self-motivation to let go sooner rather than later. Perhaps you want to accomplish something more over the future years or you want to spend more time with your spouse. Maybe you have a set of goals that are completely outside the business and need time and freedom to pursue them.

Whatever you do, make sure you have something to look forward to once you are free from the job. A merger and acquisitions executive told me that his primary concern in helping a business owner sell the business is what the owner is planning after the deal closes. He said he wants to be sure that at the closing table the owner can actually pick up the check. If the owner does not know what he or she will do “tomorrow” and can’t say goodbye to the business it leads to disaster all around.

As the former owner of a racing sailboat I am sympathetic to the saying about boat owners: the two happiest days of owning the boat are the day you buy it and the day you sell it. While you really may not be totally happy the day you sell your business, it sure helps if you can look forward and not backward. Make up your mind to pick up the check, pack up your stuff, and go on to the next big thing in your life!

Are the Millennials Onto Something?

nospam@example.com (Robert H. Diefenbacher) — Fri, 09 Oct 2009 15:27:47 -0400

Some businesses have been frustrated with the attitude of the recent college grads they hired. It has been said these “millennial” young adults seemed to demand special treatment and expected to be made executives within the first month of being hired. More than that, they also expected that their personal time would not be impacted by work. Managers observed that they worked only to fill the time between the weekends when they could pursue their personal agendas. They simply did not view their job as anything more than a way to pay for their weekends.

That may be a little over the top for most employees today. But the principle underlying their philosophy is a principle business executives need to think about for themselves. Millennials have their priorities, and work is not at the top. Yet most of us who have been in business leadership roles for a while have more traditional priorities. Usually the business needs come out on top a high percentage of the time.

The “constantly connected” aspect of our business lives is a good example. Some of us feel we must respond to emails from business associates no matter what day or time they show up. The ubiquitous Blackberry is as much at home on the beach or ski slope as it is in the office. Texting in the midst of meetings, talking on the cell phone in restaurants and permitting other kinds of electronic intrusions are pervasive. And they are wrong!

It always incenses me to see a person shopping in a retail store loudly talking on the phone while perusing stock or filling a shopping cart. What or who is so important that they need to multi-task? In fact tests show multi-tasking doesn’t work very well. Serial task performance is much more accurate and takes less elapsed time overall.

Those of us who are not millennials need to think about how this electronic intrusion into our lives will ultimately play out. Will the next big advance in technology further tie us to the company? Or will we draw a line in the sand with our Blackberry and say “Enough is enough!”

Here’s why it’s critical to cut back. First, your family is more important. Your kids will grow up well before you expect. And then you will wonder what happened. Remember “The Cat’s In the Cradle?” Second, it has been my experience that when the CEO takes off for a few days, even in the smallest companies, things don’t fall apart. Imagine that! Fellow employees can pick up the slack, make reasonable decisions, and carry on without you present, whether you’re the CEO, a top executive, or a manager.

The Millennials have grabbed onto a principle that the rest of us should consider. More thought about the weekend and keeping business in perspective makes a lot of sense. It also may make you more efficient at your job if you really do kick back regularly.

If you are the owner of a business, or have P&L responsibility for a portion of a business so that you are free to set the goals to drive the business in the direction you want, then here’s something you should do today. Document your personal vision. What do you want the business to do for you and your family? How much do you want to work? What kind of income are you looking for? What is your longer term exit strategy? The answers to these, and other similar questions, become the basis for your personal vision—a statement of what you see the business providing for you over the next 5 years. Once that is down on paper, the goals and action plans for the business can be made to synch with your personal vision.

Why carry the burden of business ownership or executive leadership if you do not use that responsibility to shape the business to perform as you want it to? When you do this, the business is working for you; you are no longer working for the business. This is an extension of the millennial philosophy that can make all the difference in your outlook, and will “authorize” you to turn your Blackberry off between 5:00 pm on Friday and 8:00 am on Monday. Give it a try and see how it works. And find out how much happier you will be!

Could You Use An Extra Hour Today?

nospam@example.com (Robert H. Diefenbacher) — Mon, 15 Jun 2009 13:42:49 -0400

Success is determined, in large measure, by what a leader is able to get other people to do. Properly transferring responsibility and authority to subordinates is an important skill for an effective leader. If you want to pick up a couple of hours of time every week, then you need to become proficient at delegating tasks.

Why bother to delegate? It takes time to delegate a task and “no one can do it as well as you can,” right? Sure, but if someone can do your task 80% as well as you can, then making the effort to delegate can have real value to you. Here’s an example.

Let’s say your time is worth $200/hour. But a task you are about to do can be done by someone that costs you $50/hour (including benefits and overhead.) If the job takes you one hour, then the 80% effective subordinate would need one and one quarter hours. Yes, it might take you 10 minutes to transfer the task to him/her, and another 15 minutes of intermittent supervision or review while the task is being performed. But you would net a savings of about half an hour at a cost of $50 to pay the employee offset by saving $100 of your time—a net of $50 the first time. But if it is a weekly task, over a 50 week year you would gain $2,500 of your time.

Delegating gets you free time to work on your business. It can add up to many days opened up in a year. The delegated tasks protect your company if you become ill. The time frees you to create growth for the business, execute an exit strategy, etc. And free time reduces your stress level.

Why don’t leaders delegate more often since it offers such great advantages? Sometimes they lack confidence in employees, do not want to take the risk, or actually enjoy some of the tasks they should delegate (especially if not delegating avoids facing up to other more unpleasant work. And leaders who are constantly seeking perfection avoid delegating. Others won’t delegate because it means change. Or the task may not be accepted by the employee. Some fear the employee will do the job better than they do, or are paranoid about sharing company systems or methods.

While effective delegating means shifting responsibility and authority to the employee, it also means that accountability now flows from the employee back to you. There are levels of authority that you can manage when you assign responsibility. At its most restrictive you may say, “Report facts back to me and I will make a decision on what is to be done.” More freedom might be given an employee with the words, “Advise me of your plan; proceed with the plan unless I tell you directly otherwise.” At the greatest level, transferring authority may be “Activate your plan to solve the problem and don’t bother to get back to me.”

But in every case subordinates should be accountable for their performance of delegated tasks. Performance should be evaluated based upon staying within authority boundaries and on the results achieved. This may mean holding regular update meetings with the employee and carefully listening to what you are told. You may also help create “to do” lists with the subordinate after an update meeting.

Successful delegation of responsibility means giving the employee guidelines and standards of performance, timeline schedules, the proper level of authority, and an incentive for performance. Employees need to understand why they are doing what they are doing, what results are expected, and how their responsibilities fit into the long term plan.

Your delegating may be ineffective if the selected employee lacks ability or incentive, fears risk taking, or fears punitive action for failure. And if you, the leader, are unclear about job duties or the specifics of task assignment, if you constantly criticize task results and techniques, or if you fail to set achievable goals, your delegation effort may not achieve the results you want.

Be specific. Identify the tasks you want to delegate, make a plan for the delegation process, and select the employee you want to empower with the responsibility and authority. Some tasks you may consider delegating are things you do not like to do, tasks that take more time and require less business acumen, activities that you think others can do better, and work that you are not good at.

Once you understand the “formula” for correctly delegating tasks, you will be successful at it and begin to enjoy the rewards. These include increased time to devote to your strategic responsibilities. This gives you time to develop successful business growth plans. It also improves the company culture by empowering employees and giving them greater job satisfaction. Finally, freeing up your time means more flexibility and personal time to enjoy life.

Like anything new or seemingly “risky,” start simple. At first, delegate something that has a good chance of success, accept the fact that “no one can do it as well as you,” and relax and enjoy the creative approaches and results your subordinates deliver. Then exercise your new delegating skill by regular practice. Set a target of freeing up at least an hour a day every day. Can you do it?

Clear Your Vision; Focus Your Mission

nospam@example.com (Robert H. Diefenbacher) — Fri, 15 May 2009 11:31:51 -0400

When was the last time you looked at your company vision statement or thought creatively about your mission? As the country slowly comes out of a deep recession and technology continues its relentless attack on traditional ways of communicating, you need to make sure your vision and mission are tuned to the new reality ahead.

It is easy to get all twisted up in definitions of mission and vision, but for now think of mission as “what my business does to meet needs of my market,” and vision as “the way my business should look in order to fulfill my mission superbly.”

In The E-Myth Revisited, Michael Gerber says that a business must have an “Opportunity Worth Pursuing.” He asks you to determine if the business you have “alleviates a frustration experienced by a large enough group of consumers to make it worthwhile?” He makes the point that although a customer walks out of your business with a product or service, the real product you sell is how the customer feels about doing business with you.

Your mission needs to be thought of in terms of the customer. The story goes that Peter Drucker, the famous management consultant, asked a manufacturer of hand tools what his business was. The response: I sell drills, mostly quarter inch ones. Drucker immediately pointed out that he was not selling quarter inch drills; he was selling quarter inch holes.

Hold that thought! Think about your mission statement. What are you really selling? What frustration are you easing for your customers? Perhaps you should get your key team members together to re-brainstorm your mission in light of the shifting reality of the business world today and in the future.

I wonder if buggy whip manufacturers had thought outside the box more. Would they have concluded that their business was helping people move faster from point A to B by improving the performance of the horse? Would that have made them interested in making the newly developed internal combustion engine run faster or more efficiently? If they answered that question positively, would they then have had the courage to set off in that new direction? I don’t know. But the point is to really think about what you are helping your customer do, and how will you need to help him do it in the future.

Your mission statement is generally worded so it can be stated publicly. Sometimes it needs to be simplified so it becomes a “tag.”

Once you have reevaluated your mission, you need to revisit your vision as well. While a vision statement needs to be forward looking and expansive, it should have a reality check every few years. Especially now that we are struggling in a recession, the incremental steps you may have taken to sustain your cash flow to keep the business viable may have shifted your direction enough so that your vision is outdated. And if your vision statement fails to recognize the new realities of communication such as social networks, constant e-communication, personalized marketing, etc., it is time for an update.

Vision statements can be more expansive and should describe the structure of your business. This can include the resources you employ to deliver your product or service, the size and structure of your business over the next several years, and clarification of your markets and products or services. As a basic ground rule, if you have not integrated the latest generation of web design and functionality into your business you are behind the eight ball.

In structured planning, which is the way you should approach the project of clarifying your mission and vision, I am a strong advocate of the value of process over product. Thinking through everything with a group of key employees and working with flip charts to preserve even the most off-the-wall ideas is the process that ultimately produces the product: a clear, creative mission statement that helps customers understand why your business exists, and an expansive vision statement that helps all your employees understand where you want your business to go. But the process of coming to these statements is critical to getting the team buy-in that promises future success.

As the leader, your job is then to articulate the vision and the mission continually so that all your stakeholders have the “picture.” You need to sound like a broken record: stick to your guns, keep the priorities clear and lead the business ahead into the reality that will be the second decade of the 21st century.

Burn What Boats??

nospam@example.com (Robert H. Diefenbacher) — Wed, 15 Apr 2009 16:19:15 -0400

The Boston University hockey team last week won the NCAA title with a performance their coach called “the greatest championship game ever played.” Extraordinary efforts evened the score from a 2 goal deficit in the last minute of regulation play, and scored the winning goal after eleven minutes of overtime.

Beneath their uniforms, the team wore t-shirts that said “Burn the Boats.” The curious quote is attributed to Cortez who, when he landed in Mexico in the 16th century, sought the full commitment of his men to the search for Aztec gold. He gave the order to burn the boats as they started inland. He explained that “If you want to get this treasure, you have to raise the level of commitment because nobody else can do this. If we’re going back, we’re going back in their boats.”

Lots of times business leaders invoke sports analogies to inspire their employees (team). The “Burn the Boats” concept set me to thinking whether this appeal would work in today’s environment. As a strong believer in the innate persistence-against-all-odds displayed by intrepid entrepreneurs, it has a place, I believe.

Today, businesses are facing very tough times that also portend a different future with slower growth and continuing high unemployment as well as unprecedented government involvement in markets. Making strategic growth plans is an important requirement now. Plans that realistically assess the environment, play to your strengths, and recognize the certainty of marketplace changes driven by new technology are the ones that will be most successful.

Consider the case of today’s major daily newspapers. Here’s an interesting example of what happened to one of them. During its startup, Monster.com offered The Boston Globe the opportunity to partner with it in exchange for funding, etc. The Globe refused, and Monster went out on its own and shortly thereafter generated half a million dollars in annual revenue. The Globe was concerned that in becoming a Monster owner, they would begin cannibalizing their own classified employment advertising. Today the Globe is in deep financial trouble with the threat of closing. It ignored reality. It neither saw nor understood the longer term implications of the Internet, and was unwilling to “burn the boats” and go for the gold that might exist in another part of their world of information dissemination.

As a business leader, you may need to take the risk of setting out in a new direction that leaves behind some favorite part of your business. Often it is impossible to have it both ways. The old goes out when the new comes in. When high quality short run color printing first hit the market few traditional printers saw the threat to their businesses. But these machines replaced short run traditional printing and increased the market for full color printing. Adopting the new technology required heavy investments and a “burn the boats” approach for those who offered the service. The expense and technical challenge sucked up time and resources but persistence and fear of failure drove the entrepreneurs forward; there was no turning back for most. And many late adopters were left in the dust.

Whether you use the term with your team or not, a “burn the boats” approach on your part can easily make the difference between success and failure. Overcoming adversity in a new business venture is a great learning experience. It often requires a “burn the boats” attitude to get past the bumps and craters on the way to success. But it can be worth the pain.

Selecting the “gold” you want to go after is the really important task. You need to pick the right target and move forward into the right “jungle” ahead of your competition. And that brings us back to the critical need to make a strategic plan that identifies the best opportunity for you.

There are always more opportunities than resources to exploit them. But when you determine a particular opportunity is the right fit for your business, then you need to enthusiastically go for it. As the leader it is your responsibility to not only point the way forward and explain the benefits to the company and the team, but also to convince them that there is no going back to the old way because the results would not be beneficial to the team or the business.

It may seem harsh and over the top, but I think a “burn the boats” approach works in business as well as in the jungles of Mexico or on the competitive ice of the NCAA Hockey finals.

It Is What It Is

nospam@example.com (Robert H. Diefenbacher) — Wed, 11 Mar 2009 14:26:29 -0400

Business people continually need to look forward, accept reality and strategize a growth future.

Admittedly, today it’s pretty hard to look forward with anything like eager anticipation, as we did for much of the last 10 years. I have never felt as uneasy about the future. But getting out of a self-analyzing, blue funk and into a positive, action-taking mode is really the only way to move ahead, isn’t it?

Let’s face it: It Is What It Is. So now what?

Well, what does, “It Is What It Is” mean in this economic situation. Regardless of your political leanings the die is cast for a significant shift in the way we will see our country run over the next four or eight years, or even more. So given the increasing role of government in the market economy, how do you plan to position your company, and more importantly your attitude?

It is interesting to note how a pragmatic outlook has influenced the positions taken by business-related organizations such as the National Association of Manufacturers, the United States Chamber of Commerce, and the National Federation of Independent Business. They are all, to one degree or another, on board with the Obama administration in its efforts to restore the economy. And why not? There seems to be no other source of repair. (Although sometimes a patient may recover almost as fast without excessive treatment if simply allowed to rest for a period of time.)

Other than the dangerous Employee Free Choice Act, which is patently unfair to business, most of the actions built into the stimulus package are not anti-business, and thus can yield some benefits. Of course a lot of the money will go into peculiar activities that seem to have little to do with fostering economic recovery.

It is depressing to think about how much of the stimulus money will be skimmed off as it flows down the pipeline. Bureaucrats will specify all kinds of administrative requirements requiring more government employees and while this actually can add or save jobs, it also contributes towards reaching the tipping point, e.g. that time when a majority of people receive government largesse and they then can control the vote, and will extract more and more entitlement payments from the minority who are the ones creating the Gross National Product. But fortunately that time is a ways off, and may never happen.

So what about your attitude? Griping and yearning for the good old days is over. Your teenagers will grow up more frugal; they will never have it as good as you did when you were in your early earning years. And you will need to remain frugal, too, for an extended time. In fact, the standard of living may well shift down a notch or two in the USA. It can hurt and it can be humbling. But in the end we need to learn how to save for purchases, and not to buy things on credit betting that future earnings will cover the debt payments. We have seen where that attitude towards consumption has gotten the country.

Your attitude needs to be pragmatic. You cannot snipe at the Obama administration. You cannot join the party of “no” because it is not an effective way to influence government. You can, however, take the steps you believe in as a citizen of this, the greatest country and still the most successful free market in the world. Send reasoned opinions to your state and federal legislators. Too few people take time to contact their elected officials. That means that a personal message, not a form letter, will carry weight with your senator or representative. They know that if you took time to write, there are a large number of people with the same opinion who did not write.

You can pay close attention to the flow of the money and find the ways to get your share of the economic boost. Probably most businesses will see the effect of the stimulus second or third hand. You may, for instance, supply services or products to some other business that is supplying services or products to some entity that actually benefits from the stimulus money directly. You probably need to follow the business news closely to see what companies win government contracts and then figure out how your business can help that winning company succeed.

You can maintain a sense of humor and balance in your dealings with employees and customers. Regrettably, the President does not display much of a sense of humor or optimism. His approach publicly has been extremely serious, probably befitting the situation. But this has made many feel like there is nothing but gloom and doom about the land. Then that attitude feeds on itself to create more gloom and doom. The press seems to play this game well, too. This economic malaise will eventually pass. Soon there will be a light at the end of the tunnel. Except that when we come out of the tunnel the landscape will be different from what we were looking at when we went into the tunnel. It Is What It Is. Sorry.

You can educate your employees by both talking and by example. You need to make sure your business is wisely using cash and when borrowing is doing so with due care for how the money will be used to generate a return that pays the debt back promptly. For employees you can make sure they understand your cautious attitude towards debt and particularly credit cards. To the greatest extent possible, credit cards should be paid off ASAP, hopefully monthly. Encourage your employees to do this; you do this, too. And everyone should be living on a budget that they monitor regularly.

It Is What It Is. Like it or not, the world is different. It is probably not possible to stop this fast moving train leading to more government interference in the free market. While you may grimace at the thought, perhaps it is better to hop on for a while, and see where it will take you. After a time, the train will slow and you can hop off. In the meantime we might as well enjoy the scenery along the way!

Transparency and Honesty

nospam@example.com (Robert H. Diefenbacher) — Mon, 16 Feb 2009 09:48:54 -0500

The buzzword in the White House these days is “transparency.” Should it be a buzzword in business, too? Is it preferable to be transparent as a business leader? Can a small business owner be transparent to employees? Is transparency the same as honesty?

I’ve been mulling these questions over in my mind and recalling the times in business when I was too transparent and the times when I failed to be as open as I should have been. Have you been on both sides of the fence on this matter, too?

Being transparent is characterized by visibility or accessibility of information especially concerning business practices says the Merriam-Webster dictionary. The word “frank” is listed as a synonym and defined as talk that is marked by free, forthright, and sincere expression. The dictionary also defines honesty as fairness and straightforwardness of conduct and implies a refusal to lie, steal, or deceive in any way.

Whew! As a business owner I admit that it was hard to live up to those definitions, even though I considered myself to be trustworthy and respected ahead of the need to be liked. Are we in a new environment where absolute transparency is going to be expected by our employees? Is total honesty at all times a requirement? I hope not!

Let’s face it. Not everybody in a business needs to know everything about the business, nor can everyone “handle” being aware of “everything.” Of course I’m excluding from this “mulling over” anything that could be considered private information about individuals. That aside, how much do you share with employees about revenue goals, other employees, profitability, pay increase plans, year-to-date performance, etc.?

Recognize that the rumor mill exists in any business, and it’s pretty hard to hide troublesome issues or deliberations for too long. At some point employees need to be kept informed. There are, however, ways to be a bit circumspect without being misleading. And this often is necessary, especially with situations that are fluid or unsettled.

You may need to update your employees to prevent misinformation from impacting business operations. In such circumstances, it’s important accurately to convey the situation without embellishing it with unnecessary facts or aspects that are not settled. In such instances use of the words: currently, at present, at this time, etc. will fairly “hedge” your comments. Unfortunately, people often don’t hear these words and jump to premature conclusions. It’s then a “damned if you do; damned if you don’t’ situation.

Departure of a key employee can often create the need for some form of transparent, honest communication to employees and some customers. Try to deal with facts and not be insincere, especially if the employee was involuntarily separated from the business. First, you can remind the others that you have a responsibility to respect the privacy of the employee and therefore cannot say more than the fact that the employee is no longer with the business. Perhaps you will feel comfortable in saying that you appreciated the employee’s contributions to the business in the past. But don’t be hypocritical about this. Employees will know if you let someone go because of poor performance, so you cannot then say much else without getting into deep water. If the situation is touchy, it is best to contact a labor law attorney and get advice on how to handle the situation both with the departing individual and afterwards with the other employees.

Another area of transparency that can help or hurt is sharing financial goals and performance information. Goals are good to share if they can be seen as reasonable and if you can explain what everyone needs to do to make them happen. Expense goals can also be shared carefully. There is little benefit in sharing expense goals over which employees have no control; but costs they can help manage should be shared. Profitability is another matter all together. Most uninformed employees think businesses make huge amounts of money. They fail to understand all the expenses of running a business. I think it is safe to “sanitize” the expenses by lumping them together perhaps in lines that total general and administrative expenses and operating expenses.

The objective here is to present cost numbers the employees can affect and avoid exposing details that can lead to questions you would have trouble answering in a way they would accept. An example of such a question might be “Why do we have those car lease expenses?” Of course you, as the owner, may use the car yourself and the “perk” is part of your overall compensation, where your compensation is adjusted downward because of the “perk.” There are lots of other individual expense lines not relevant to most employees that are better left lumped together with a generic line item description.

With all your presentations remember that what you are telling them, even though you remind them it is confidential, may well find its way out of your business. Certainly you can remind employees of the harm that can come to their company if such information is relayed to competitors. But it may still get out. That’s a tradeoff you need to consider.

Business is a teamwork activity in 2009. There is no room for non-performers in the current economic environment. You need to treat the team members with respect and this means being transparent and, of course, honest, to the greatest extent possible. Because this can mean walking a tightrope in what you say and don’t say, the best advice is to avoid off the cuff comments and winging it. Before communicating with employees or customers about any difficult issue jot down your remarks and let them “mature” for a day. Revisit your notes with an objective view and see how they might be misunderstood. Correct any ambiguities, and then be sure you are being truthful, frank, and complete.

That’s the best you can do. Your most experienced, reliable team members will appreciate your position and support you and the others will take their cue from these “floor leaders.”

Pragmatic Leadership Will Save The Day in 2009!

nospam@example.com (Robert H. Diefenbacher) — Fri, 14 Nov 2008 10:19:25 -0500

Is pragmatic a word you use to describe your leadership style? President Elect Obama may not use the term about himself, but he will be a pragmatic leader and probably not as progressive as many of his proponents would want. The situation he inherits in 2009 will not allow it. And for most business leaders, pragmatism is essential to weathering the recessionary situation we all face next year, too.

What are the characteristics of a pragmatic leader? What can you do now to be more pragmatic about next year?

First, let’s get the definition clear. Here’s what Merriam-Webster’s Online Dictionary says: “prag•mat•ic: relating to matters of fact or practical affairs often to the exclusion of intellectual or artistic matters: practical as opposed to idealistic ”

OK let’s dispose of the artistic and intellectual side first. For most pragmatic people intellectualism, at least from the standpoint of knowledge for the sake of knowledge, is not a primary driver. Also they hold their artistic temperaments in check as they make decisions. They also may come up short on supporting the role of social responsibility for business.

A pragmatic leader deals with facts and practicality. “Well, haven’t I been doing that all along?” you ask. Perhaps, but in a recessionary period it requires something more. Where must pragmatic leadership focus this year?

1. Set objectives. Now more than ever it is vitally important to set specific business goals that you are comfortable with. Two required objectives are revenue and profit.

Setting revenue objectives this year can best be done by coming at the final number from bottom up and top down. A top down approach is simply building on your 2008 performance by picking a percentage change (hopefully upwards, and surely after due thought). The bottom up method is to evaluate the potential of each of your product segments or market niches and select goals for each. Add these up and see how close they come to your top down number. Settle on a realistic goal for the total and for each of the product segments/niches. It’s good to stretch a bit.

Now take each of the numbers and “quarterize” them. Figure out your revenue goals for each quarter. Perform a pragmatic realism check on these numbers. Can you hit them each quarter? If you fall short, can you make it up in the next quarter?

Setting a profit objective is OK, but the better method in a tight year is to set quarterly operating expense objectives based on supporting the quarterly revenue goals. Subtracting the two numbers will give you operating profit objectives by quarter.

2. Apply resources. Decide what marketing and sales actions and budget will be needed to hit the quarterly revenue objectives. Can these expenses be met within the quarterly expense budget goals you have set? If not, what is going to give? Do you need to dip into a line of credit to invest in generating revenue? Are you willing to do that? If not, then can you accept potentially missing a revenue number? What can you do in the marketplace inexpensively to set your business apart from competition?

Look at your expenses with fresh eyes. How can they be managed down? Have a task force of employees look at expense areas and invite suggestions on cutting them down. Certainly check your payroll; can positions be cut back or eliminated? Can you eliminate overtime? What about other costs, can they be reduced through changes in your operating methods? Would it make sense to go to a four day workweek with ten hour days? Employees might actually like that.

3. Track and act. Developing business objectives is only step one in pragmatic leadership. Once they are on paper, then tracking becomes essential. However, waiting until month end to check performance may be too late. Make sure you have your own list of key metrics that tell you at a glance how well you are doing. Some people track total backlog and others may look at daily sales comparisons to previous years. Maybe you can get a good feel for the level of business just by walking around.

Some leaders have a dashboard on their computer to track the key numbers. Others simply check them daily from several sources. You could also have your office manager provide you with a set of figures at 9:00 every morning. Whatever way you do it, as Nike says, “Just do it!!”

Pragmatism in 2009 means setting objectives thoughtfully, applying resources creatively, and monitoring performance repeatedly. Sharing objectives and performance (insofar as it can be done) with employees is important. If employees know the objectives then they need to know how well they are doing in achieving them. When they know what is important to you, it will be important to them.

The worst thing you can do as a leader in 2009 is become an ostrich. Sticking your head in the sand and avoiding the need to address issues quickly and decisively will doom your chances of hitting your goals. And it may even lead to something worse. In my work with business leaders almost every time they set specific objectives based on realistic thinking they achieved or exceeded them. But even when they missed by a bit, they knew exactly why it happened and were able to take steps to correct problems.

Be a pragmatic leader every day, but especially now!

It It For...What?

nospam@example.com (Robert H. Diefenbacher) — Tue, 14 Oct 2008 14:15:00 -0400

If you’re like me, you’ve asked yourself more than once, “Why am I in this business?” On a fine spring day the lawn care business looked a lot more appealing that my printing and design business. And in a snowstorm when struggling to the office seemed more than it was worth, being an author working at home sounded like a great idea.

An article by Megan Woolhouse in the Boston Globe entitled “Losses drive titans of finance to therapy” led with this: “For years, brokers and hedge fund managers suffered from a condition known among therapists as ‘sudden wealth syndrome.’ Some even called it ‘affluenza.’” Robert Frank, author of the book “Richistan” a bestseller about how, until recently, the number of rich people in the United States has been exploding says that for investment managers their “value system [has been] all about making more [money].” And he goes on to ask: “Now what’s [their] value system?”
This started me thinking about the value systems I’ve observed in the owners of privately held businesses. Why are these people in the business they are in? Here are some of my observations.

Some actually are in it for making more money. I have seen some whose good fortune, no doubt achieved through skill, industry, and good timing, has led them to make acquiring money and possessions a value system. But more frequently this value system is transitory, and when good fortune turns to something less, they begin to search deeper to answer the question. This leads them to different conclusions.

Many business leaders have “High D” behavior styles. They are dominant and decisive, preferring to be in charge. They want control. These owners may be successful financially, but that is somewhat secondary to having the power to direct an organization to successfully achieve the objectives he or she has put in place. They are seriously goal oriented and driven to succeed.

Many people leave big business for a leadership role in small business because they value flexibility and lifestyle more than money. They trade a large income for the opportunity to be with their kids at afternoon sports events. They want to participate in activities with their families and not be away on business. A flexible lifestyle can be a powerful incentive to strike out on your own.

Other owners may find it thrilling to create a business. They like to conceive of a new business, bring it into being, and get it to a level of success then move on to the next one. However, sometimes this leadership style masks their primary goal which is to make more money. This has seemed to me more prevalent in high tech where the goal is to build a business, take it public, and cash in founder’s stock ASAP. It was mostly about making money, and these leaders could be found moving around in their industry. Sometimes their actions left a lot of “broken glass” in companies they built and then left.

Creating businesses can become addictive leading to a reputation as a serial entrepreneur. Once the entrepreneur has created the company and taken it beyond the first few years, it’s time to move on. That’s not a bad idea actually. Other leaders may be more skilled at running and growing an infant company into adulthood. The serial entrepreneur needs to understand his or her behavior style and train a good replacement. Never leave the company in the lurch.

In looking back on my 40+ years in business I can see that even within larger companies I was easily bored with my work. As a result I rarely held the same job for more than a handful of years, even within the same company. (A closet serial entrepreneur perhaps or at least a Renaissance man as some called me.) It took an unfriendly takeover battle for the last company I worked in to lead me to my own small business and away from the pressures and politics of an executive role in the high tech field. And this happened when I was 50 years old. Why did it take so long?

I think it’s because my father was a small businessman. He was a dentist in a very small town and starting out in the Depression, he never had it easy with money. He was often paid “in kind” by patients in our farming community on Long Island. As a boy hearing his challenges with cash flow I resolved to stay away from owning my own business. Too bad for me! I didn’t realize that money was only the method of score keeping in small business, and not the primary reason most owners are in it. Certainly this was true of my Dad. He could have moved us to a bigger city, joined a successful practice and we would have lived in different circumstances. But he relished the flexibility and relationships within the small community that his role as the town dentist afforded him.

Now, I would never say money isn’t an important part of working. But greedily seeking the most out of every transaction can be a terrible habit to develop. It should be the other way around. Make every transaction work well for the other party as well as yourself and the financial results will work out fine. It seems to me that much of the damage to our financial infrastructure has been caused by outright greed. One therapist mentioned in the Globe article says he helps his patients focus on their relationship with money, often a relationship with lots of money. Perhaps they are reeling from the shock that a relationship they took for granted is now lost.

People in small business understand their relationship with money very clearly. It was one of the first lessons learned. Money is critical. Money is the oil that lubricates the engine of growth. But just as when my lawnmower smoked and complained when I overfilled the oil reservoir, too much money sloshing around in a business can result in smoke and complaints, too. (AIG Conferences anyone?) A proper relationship with money is no different than any other relationship: it works best when it’s properly cared for, sincerely respected, and genuinely appreciated.

Let’s face it. We’re not in business for the money; we’re in business for the satisfaction.

Strategy or Tragedy

nospam@example.com (Robert H. Diefenbacher) — Thu, 19 Jun 2008 15:42:11 -0400

Do you operate in planning mode? Or do you let events dictate your actions? Without plans that have clear objectives and strategies, you may end up with a tragedy instead of a strategy.

Planning isn’t just for long-term. In fact it’s equally effective for short or intermediate term objectives. So operating in planning mode means that you think in an organized way about key goals of your job and then you document a plan for each. Flowing from the plans you create are a series of actions which find their way into your daily to-do list.

Keeping it simple is an important element of planning. The process of planning is more important than the documented product. The process is where you become creative. It’s where you think things through and where you think outside the box. The product is the written result of your creative thinking and can be brief, but must be clear. Use complete sentences!

People commonly make mistakes in the planning process. For example, they mix a solution in with the objective. Say the objective is to find more space. The objective might be stated as: “Lease space 25% larger than the current facility by September 30, 2008.” Do you see the word that has automatically limited the range of solutions? Right, the word is “Lease.”

So when setting an objective you must be careful with the wording. You should examine each word in the objective before nailing it down. A better way to state this objective is “Contract for 25% more space by September 30, 2008.”

The next common mistake in planning is to let resource constraints foreclose a solution. Continuing with this example, in the original objective purchase is not an option. But maybe it should be. Hence the second wording opens that door. The assumption that purchase of space is not feasible because resources are lacking should not be made until that strategy has been evaluated.

Once the objective is set, then it is time to become creative by identifying the individual strategies to be evaluated. Strategies state in general terms how the objective might be satisfied or the areas to work on in achieving the objective.

Some strategies in this example might include evaluating surrounding real estate markets, estimating space needs over the long term, considering all possible ways to use current space more efficiently, looking at options for purchase or lease/purchase, considering adding the 25% in a separate facility, and you can probably identify a few more.

For each strategy you now need to state the actions that satisfy each strategy. This may include identification of obstacles to executing that strategy, and the actions to overcome the obstacles. Actions must be written as a complete sentence and include the responsible party and the completion date for the action.

Once you learn to operate in planning mode, it becomes a part of your leadership tool bag. Stating the objective in the most appropriate way is the first step to success in planning. If you write an objective that inherently knocks out one or more solutions, you may make a serious mistake that can limit your future success.

Operate in planning mode all the time and you will develop good strategies and eliminate serious tragedies. It’s the smart way to success.

It's the Interruptions, Stupid!

nospam@example.com (Robert H. Diefenbacher) — Wed, 14 May 2008 14:27:13 -0400

I hate being interrupted at work. When I sit down at the desk I’ve got a string of “to-dos” in my head or on paper, a specific amount of time in which to complete them, and I’m focused. Then in a matter of minutes I’m off course because someone steps in to ask a question or get help.

And most times the problems the team members raise are easily solved. In fact I’ve got the answer before the person completes stating the problem. Just do this and let me get back to my work.

Wait a minute! The problem gets solved, but does the person learn anything? Not often.

What is the real job of a leader? I think it is handling interruptions well. Your skill in this makes a big difference in company culture, team satisfaction, and ultimately in business success. Help people solve problems. Take care of problem customers. Relish the interruptions as opportunities to help people grow.

An interruption from a member of your team is an opportunity for a mentoring moment! That means you don’t simply bark out a series of “orders,” turn back to your “to-do” and let the person slink out of the office. Probably none of us actually do it that way, but people may perceive us in that manner.

A little time spent now to bring someone’s skills up a notch can mean fewer interruptions in the future.

When the person interrupts you, stop what you are doing, push your papers aside, put on your “listening ears” as Judge Judy says, and discern which of these six levels of problem solving you are facing.

The individual--
• Doesn’t know there is a problem
• States a problem
• States a problem and identifies several alternatives
• States a problem, identifies several alternatives, and recommends one for your approval
• Reports a problem he/she has already solved
• Takes care of the matter with bothering you

Figure out which level the person is at for this particular problem and through judicious questioning show him/her how to move up one or two levels. Clarify the assumptions and get the individual to repeat back to you what he/she is now going to do. Confirm that the person understands how to handle this situation the next time it arises. (If it requires more time than you have at the moment, first make an appointment to get back together and go over the situation when you can devote time to teaching, and then give the person some specific steps to take to solve the problem right now.)

Mentoring moments help you get your “to do” time back and reduce interruptions by empowering team members to move to the fifth or sixth option.

Customer interruptions that reach your desk are golden opportunities to build relationships and learn how your business appears to outsiders. For many small businesses, the CEO is personally responsible for 30% or more of the revenue. These clients are the CEO’s responsibility. Contacts from these clients are not interruptions, they are sales calls.

What about the clients covered by others in the business? What do you do when they contact you? This interruption can be a fire alarm! Something has gone wrong, perhaps. The challenge in handling this is to make the customer happy while not taking over as the primary contact for the customer.

When this happened in my business, I took care of the situation promptly, kept my sales person in the loop, and then dropped out of the picture. If the client contacted me subsequently for another matter, I developed an immediate case of amnesia about the details and got the sales person into the situation without going further with the client. It is important to maintain the relationship between the client and the sales person, even if the client would prefer to deal with the CEO.

If it weren’t for interruptions maybe we could simply program a computer to handle day-to-day operations. Then leaders would be out of a job. But interruptions ARE the job of the leader. Sure it can seem like you are working IN the business, not ON it. But if you use interruptions as a mentoring moment, aren’t you working ON the business, making it better by helping your team members perform better? Sure you are.

And if you must have uninterrupted time to accomplish your “to dos” schedule it into your daily calendar, tell your team when you don’t want to be bothered, and stick to your guns. Remember, though, that if someone solves a problem while you’re incommunicado you need to support his/her decision. Even if it’s not the one you would have chosen.

Leadership

nospam@example.com (Robert H. Diefenbacher) — Sat, 19 Apr 2008 13:37:31 -0400

Leadership and Today’s Employees

“The old command and control model is dead. You don't tell employees what to do anymore. Instead, you influence their choices about what they want to do, and then, you assist them to reach their goals. You don't direct; you win the team to your point of view. You don't dictate; you inspire”…That’s the introduction to a Dale Carnegie class called Leadership Training for Managers.

The introduction continues, “Leadership development has meant different things in different times. The modern leader knows that it means developing the skills needed to motivate the modern team. These necessary skills can be learned through a leadership development training program, which is less stressful than being forced to learn the skills on the job.”

Today’s millenials (young workers in the 20s) will respond to this kind of external stimulus better that the old stick and carrot, I guess. And there’s a lot to be said for the benefits of leading a team in this new manner.

For some, like me, this approach to management is almost foreign, since my college training was very much ‘command and control’ and this was later reinforced with experience as a US Naval officer. I did develop skills along the way that seem to have softened a hard edge, but I found it takes a lot of self-control and forethought. As a leader in a lot of volunteer boards and task forces I learned that persuasion and offering options which allowed people to play to their own strengths really is the way to handle volunteers, and the same seems pretty true in today’s workplace.

As parents we learned it worked better to give our kids a choice of two or three options in most cases. But I’m not sure there are always those opportunities in the working world. I suppose the choices could always be “Do this, or take a hike.” But that makes no real sense. What about when something simply has to be done, and the individual is the one to do it? Maybe we need to come up with choices about how or when it is to be done. I’m not sure how you handle the ‘must be done now!’ situation...especially if the employee really doesn’t want to do it. Any ideas?

When I skippered my racing yacht on the Chesapeake in the 80s and 90s, I used a crew of five brawny young guys in their 20s. They were the children of people who raced the same class of boat on the Chesapeake. But they preferred to crew with me rather than their parents, since I was about 20 years younger than their folks. Not only were they good crew, but also they were extremely good sailors. So there would often be an argument about some tactic we were considering. And sometimes I had to overrule them for one reason or another. The easiest way I found was to simply say, “Uncle Bob says we’re going to do it this way!” And that pretty much settled the issue for the time being. And occasionally I would make the same point when there was a disagreement with something we were doing in the business. Hopefully people were able to state their case and didn’t feel too squashed. But sometimes there just isn’t the time for long discussions…we simply need to get the job done.

If you’ve hired twenty-somethings it may be that they are used to being asked to do something rather than told what to do, and many have had parents who said that everything they did was wonderful, and that they are perfect. Maybe they played on a sports team where everyone got a trophy regardless of individual differences. It’s tough to manage someone who has that kind of expectations. But that may be what you’re stuck with. Even though everyone and everything is not perfect in the real world, some employees may expect special consideration. It requires greater care as a manager, but it is a learned skill that can become second nature with practice. Although it’s still important to remember that a business is not a democracy, but it’s not a dictatorship either.

The days of dictating are over…thankfully. Inspiring employees is a better way to lead the business. Creating an environment in which self-motivated employees can achieve is really what’s behind this concept of inspiring people to do what you want them to do. If you have a clear mission and your team knows your mission and your goals; you’re well on your way to gaining their support. If you have people in your staff that cannot put this all together in their head and get on the bus, then maybe you need to help them find a seat on a different bus…in your business or outside it.

How do you “inspire” your staff to action?