Sunday, May 16, 2010

LEADERSHIP - A Key Fundamental Business Tenant

Situation: You have been working 14+ hour days on a very important request for proposal (RFP) for the mid-sized company for which you work. You haven’t seen much of your family, and your spouse is starting to get pretty agitated with you. While you explain to her how the extra time you put into this proposal will really benefit the company and its ability to land some key new accounts, it is increasingly falling on deaf ears. You and your team are among the highest performers in the company and have been motivated in large part because you know your efforts really make a difference. Recently, you have been wondering if being the “A-team” is really worth it.

One afternoon as you are contemplating whether or not to work late to tighten up the RFP and potentially insert additional client studies that would make the RFP stand out, you look out at the golf course view you have from your office. There is a foursome playing the hole near your building and you notice it is your boss, the CEO and two of the sales guys on the account for whom the RFP is being prepared. “Damn it!” you mumble. “Here I am killing myself and pulling in chits from my wife to stay late to make this RFP sing and those guys are out there playing golf. I know when the RFP gets submitted, the CEO and the sales guys are going to expect me to present the details that they should be explaining to the client. On top of that, the sales guys get the commission and the CEO is going to get a big pat on the back (and a bunch of stock) when we land these next accounts. You know what, the RFP is good enough – I’m going home.”

How does a leader get the best out of his/her people? Or conversely, how does a leader prevent his/her “A” players from working like “B” players?

Build a Team, Choose a Path and Motivate

While there have been countless books written on how to best lead, I believe all of it boils down to those three concepts. Trust, communication, setting an example, being decisive, taking responsibility, etc., are all critical to being a strong leader, but those characteristics have to drive (1) Building a Team, (2) Choosing a Path, and (3) Motivating people.

It is unfortunately unusual to find a leader that is truly effective and understands the importance of these three points. Often times whether due to poor mentoring, personal insecurities, fear, ego, rigid views around hierarchy, poor listening skills, or a host of other issues, many “leaders” fail to do one or all three effectively. Getting people to do what you want because they fear you (a la Kim Jong Il) is not leading. Leading is creating an environment where people come together naturally in the pursuit of a common goal and motivating them to perform at high levels of productivity.

Building a team:  One builds a maximally effective team by creating an environment where all members of a group feel their participation and perspective is valued, their input is considered and free communication fosters unfettered debate. I touched on this in the very first post – the foundation of building a team is trust. An effective team has Respect for each other, engages in open Debate, focuses on Logic not emotion, it is Business not personal, has a Clear Action Plan, and holds others in the team Accountable.

Choosing a Path:  Ultimately it is the leader who is accountable for the direction of the organization. Before choosing a path though, the effective leader should have an intimate grasp of the complexities of the organization, business, and the problem through diligence with members of the organization and its stake holders. This requires listening and thinking. The leader takes this mindful diligence and open team debate and arrives at his/her view of the right goal for the organization and the best path to take to achieve that goal. If there has been sufficient diligence and debate, whatever direction the leader arrives at (note the direction is not determined by group vote, but by the leader assessing all input), then there will be group buy-in and ownership of the goal.

Motivating People:  Motivating people is a complex endeavor. I believe the best motivators are actually those that don’t appear to be doing it. It is like the old Zen concept of mastering something without focusing on it. While there are many examples in sports of coaches motivating players before a big game to out-perform their expectations ...and then the Americans beat the Soviets... in the business world motivational pep-talks are valuable but don’t generally drive long term consistent motivation. As important as they are, corporate goals rarely generate the same kind of white-hot passion as winning Olympic gold. To motivate effectively over the long term, the business leader must build the right team, chose the right path, then by lead by example (inspire through actions). Leading by example could be as obvious as the leader going out and meeting with all the customers or staying late with the team that is cranking on the new customer RFP, or it could be something small like helping set up at a trade show or vacuuming the storage room. If the rest of the team knows that you are willing to do what it takes to reach the goal and you are not asking them to do something you wouldn’t do, then they will be right by your side, in many cases way ahead of you. Conversely, regardless of Knute Rockne-esque words, if the leader is not giving 100%, the team will lose its passion.

Obviously, a leader can also motivate using money, recognition, or other “compensation”. While compensation is certainly an important component of corporate motivation (as we all want to get paid for what we do), without the motivation resultant from building a team, choosing a path, and leading by example, the motivation will be fleeting. More often than not, companies use compensation to make up for lack of true leadership in their staff and then wonder why the improved performance didn’t last after the bonus check was cut.

So, if you want your staff to go the extra mile, add the extra zip to the customer presentation, or burn the midnight oil because “it will really make a difference”, then they need to know they are part of a team that they trust, are working for a common agreed upon goal, and see you right there with them. The great leader creates that kind of environment and in doing so turns the vast majority of the group into high performance A players that put in 14 hour days with a smile rather than 8 hour days with a frown and on speed dial.


Sunday, May 2, 2010

ADVISORS - Business Tactics

Situation: You have a small but growing web business selling bicycles you and several of your friends are buying used and fixing up. You just found out that a school district in the city did a “donate your old bike” program to raise money and they are willing to sell you 500 bikes for $20,000. You know you can turn around and sell these for $40,000 with a couple weeks of re-habbing. That said, they need to know in 48 hours or they will sell them to a salvage place. Fortunately, you have been working with a local bank to put in place a line of credit for this kind of big purchase. The bank is well respected by people in the community and has been around for a while. After providing the bank with tons of information about your business and your personal situation, they are willing to give you a line of credit. You just received the loan documents.  Knowing you should, you slog through the papers - while pretty complicated, it all sounds fine to you and you grab your pen. Just before you press the tip to the paper, you think…hmmm I could have my friend Jim who used to be a banker read this just in case, but I wouldn’t want to trouble him to get this done in the time I need. You sign. You get the money, you buy the bikes, the world is good…

Two days later, while you and a team of friends are covered in grease working the new bikes, the bank calls you and says they have had a change in strategy and, pursuant to section 6.c of the loan agreement, they are accelerating payment on the $20,000. "Please come down and pay us by the end of the day...Huh?!?!?!?” Shocked, you pull out the document and on page 12 you read section 6. entitled “Other Provisions”. 6.c says “In the sole discretion of the lender, in the event that the lender feels insecure, the lender may accelerate all outstandings under the line of credit.” You scramble, and fortunately you are able to borrow $20,000 from your friends to cover it.

You might think this is an extreme example – it is not. Two years ago, I had a friend who was running a business much larger than the bike business above that, before he pressed the pen to the paper, called me. I read the loan document and that exact language was in the agreement. The bank was using the “insecure” language to give them a broad “out”. This is a very reputable bank and they weren’t trying to screw my friend, it was just their boilerplate language that was there to protect them. Fortunately, I told him to go back to the bank and have them change that section and about 5 others. They did and he got a loan that he could live with…the world was good.

Seek Advice

Regardless of your experience, energy level and commitment, the first thing any business person understands is that you need help. Until cloning technology advances sufficiently or your dream of the 36 hour day becomes real, you will not be able to do everything yourself. While obvious, this is often a difficult thing for driven entrepreneurs and CEOs of established companies to come to grips with. It might be the “I can do it” DNA that has made them successful, the belief that a leader has to have all the answers, they don’t want to bother their business acquaintances, or they are wary of people that get paid as consultants.  That said, a truly effective leader knows that he/she doesn’t have all the answers and they strive to surround themselves with a strong engaged team (that might be smarter than the leader in many subjects) and a broad network of willing advisors.

The most obvious areas where advisors play a significant role are Legal, Finance / Banking / Raising Money, Accounting, HR, Insurance, Web, etc. Also make sure you seek input on other core topics like Strategy, Branding, Operations, Sales, Marketing, etc. Seek out experts in all these areas. Tell your story to as many people as you can, always listen and consider how what they say might improve what you are doing.

There are endless vendors that look to get paid to provide you with services, advisory or otherwise. That said, in many of these cases you should be able to get a significant amount of free advice or work if you actively seek advice from your network of friends and business acquaintances. They might not be able to provide you the advice, but they probably can point you to someone who can. When you do have to pay for advice, you will likely be buying it from a vendor / advisor that is connected to your network and cares about building a relationship with you, not just selling you a service.

I want to spend a minute on this last point. Virtually all service providers / advisors will insist that they care most about “building a relationship”. I can’t tell you how many times I have heard this. Unfortunately in the vast majority of cases, “building a relationship” in their minds means they want to get to know your business so as not to sell you just one product, but to sell you every product they have. Getting to know you and building a relationship in this sense is highly one-way.

In evaluating advisors and vendors, look for that vendor that truly helps you build the business. They are out there. For example, I have worked with an accounting firm that, before they were even hired to do accounting work, provided highly valuable advice on systems, financials, tax issues, compensation challenges, personal financial topics and connected me with several parties that helped me raise money and grow revenues. All for free.

One interesting facet of this relationship is that my main contact person there is a tax guy, probably an area one considers very narrow relative to vendor advice. What makes this person so unique, and consequently my view of the firm so different, is that he is able to call on all parts of his organization to help - for free. He is able to “make the corporate elephant dance”. This reflects incredibly well on the firm. They are going the extra mile and truly building a long term relationship that is two-way. This firm is a trusted advisor and one with whom I will do business the rest of my career.

Thoughts on getting the best advice.
- Mine your network of friends and business acquaintances for advice or connections to experts.
- Go to all those boring business networking events and get to know the respected firms / people.
- When you meet someone with an expertise, tell them what you are doing and gain insight – they may offer to help.
- In evaluating an advisor, trust your gut as much as looking at their pedigree, firm or client list.
- Ask yourself if they will truly build a long term relationship, or will they be a “drive-by” vendor.
- Are they getting to know your business to sell you more stuff or so they can best leverage their network to help you (make their elephant dance).
- Do they help you in “non-billable” aspects of your business: Provide free services, introduce you to people that help build your network or business, refer business your way, etc.
- If you are bidding out work, make sure you have several strong firms competing against each other so that in addition to getting the best service, you are getting the best price.
- With any vendor, make sure you speak with many of their past clients and compare what you hear.
- Seek more than one opinion.  The video link below is an obvious example of that.

If you consider the above points, you will likely find people that are willing to give you very sage advice, in many cases for free. In order to get the sufficient expertise or depth of advice you may need to compensate some people for their input.  If you sufficiently canvas the people you know or know in the industry, you will likely be getting the best advice when you have to pay for it.


Click here to see a pretty well known (though not necessarily respected) advisor get something very wrong

...and just to prove the above photo was not a fake.