Most Second Stage small businesses have a planning process, but there are often 2 problems with them: the planning cycle is incomplete, and the preparation is incomplete. Let’s look at that second problem some more.
Because leaders are so busy, there’s a natural desire to have strategic planning take as little time as possible. Unfortunately, though, you have to have preparation in order to be strategic. You will not get strategic-level thinking or discussions from your Stage 2 leadership team if you expect people to be working at their job until 9:29, step into the leadership meeting at 9:30 and be strategic, and then go back to fighting fires at 11:00.
So, how do you make your strategic planning process more strategic?
Don’t use a “spike” model for your meetings, where there’s little or no preparation structured to occur before the meeting, and little or no follow-through structured to occur after the meeting. Instead, use a “wave” model, where you build up to the meeting with preparation, and then wind down from the meeting with follow-up.
You’ll find that your conversations get considerably more productive, and there’s better follow-through, when you use the wave model for strategic planning in your Second Stage business.
We’ll talk more about planning in our free Stage 2 Secrets educational teleseminar.
Marshall Goldsmith wrote an article for The Conference Board titled, “The Success Delusion.” In it, he writes, “We all delude ourselves about our achievements, our status and our contributions…Although our self-confident delusions can help us achieve, they can make it difficult for us to change. In fact, when others suggest that we may need to change, we may view them with unadulterated bafflement.”
One of the biggest challenges for a Stage 2 leader is to overcome the success of Stage 1. The rules of success are so different in Stage 2 that it would usually be better if the business were closed down once it had proven its near-term sustainability, and then re-opened without that history of success.
I talked with a Stage 2 CEO last year. After great success in Stage 1, he was being overtaken by Stage 2, and work was harder and less rewarding. As I talked with him, I could tell he had problems with his business model, he had no vision for the company (Him: “I want to sell it in 10 years.” Me: “So your message to the company is that success is when you leave?”), and he was unclear about his value proposition –all of which were fairly predictable results of his leadership style.
After we spent about one hour of talking about his challenges, he informed me that he had come up with a new strategy that would put the company on a new path. (Did I mention that his leadership style is prone to quick decisions?) And Marshall Goldsmith’s insight about self-confident delusions played through my head as I listened to him.
Toward the end of his article, Goldsmith tells how to deal with the success delusion. “How can you achieve positive change? Get in the habit of asking the key people in your life how you can improve.” There’s more to it than that, but that’s a good start.
The workshop that is part of Phimation’s Stage 2 Insight training program is designed to ensure that your team gives you a complete, honest assessment of your business – and your leadership. It’s a good place to start if you want to get some feedback.
I described the Second Stage CEO’s Job Description in a previous post, by highlighting the CEO’s role in Framing the Issues.
Another of the CEO’s roles is to Ensure Performance. That doesn’t mean that the CEO needs to develop the metrics or compensation system.
It means that the company should have a culture that emphasizes performance, a system that gauges performance, and a program that rewards performance – at whatever level of performance you determine the company needs. In other words, your job is to ensure that the company explicitly manages performance rather than ignoring or avoiding the subject.
And that performance system…should gauge your performance, as well. How are you doing? Has anyone assessed you recently? I guarantee you’ll be a better leader, and you’ll run a better business, when you have been assessed.
Join our Stage 2 Insight program to learn more about Second Stage Leadership in our upcoming webinar.
I’ll be talking with Ted Prince in our upcoming free Stage 2 Secrets educational teleseminar on leadership.
I have used the work of Ted and his Perth Leadership Institute in my leadership coaching for Second Stage CEOs for years. Ted’s focus is on the financial impact of different leadership styles – I don’t know any other assessment and approach that makes that connection as clearly as Ted’s.
In Ted’s white paper, Coaching Leaders in a Recession, he describes that leadership has 2 very different components – interpersonal skill to motivate and direct, and the business acumen to create capital.
The following quote from the paper describes what Ted calls the “leadership cycle” that follows the economic cycle:
In the boom phase of an economic cycle, there is much less emphasis on business acumen in leaders because even people without it seem to be doing well. Companies are doing well and tend to select leaders who have the right interpersonal skills since balance sheets appear strong and profitability is high. Leaders who appear to have business acumen frequently do not actually possess it but have profited by being in a company with strong financials and appear to have been a factor in building this position.
Booms encourage demand for leaders who have relatively low business acumen and high interpersonal skills to generate support for projects that appear to have great or even spectacular payoff prospects but are really black holes in disguise. Leaders are often not aware of this because of their lack of business acumen. Leadership development focuses on improving interpersonal skills and competencies. Business acumen tends to get much less attention because it seems there is little need for it. Usually companies bask in misplaced confidence that their culture, systems and processes are such as to sustain their seemingly good financial results.
Once a correction occurs, this all changes. Suddenly the emphasis on business acumen increases significantly in comparison with interpersonal skills. Companies tend to favor someone to right their financial woes even if they lack traditional interpersonal skills, or they are not as strong in that area. The mindset changes to survival, capital creation and maintenance. This again encourages the emergence of and emphasis on leaders and managers with high business acumen.
How does this relate to Second Stage leadership? There is a significant difference between building business through the start-up phase, and navigating the growth of Stage 2. I’ve seen many Stage 2 companies who were able to use the leader’s personal connections and deep understanding of their small market niche to build a successful small business…and then continually struggled to grow beyond that because the leader did not have the more general business acumen that is needed in Stage 2.
Business acumen is more important than ever for Stage 2 leaders. Having a leader who is only strong in interpersonal skills is a luxury that Second Stage companies can no longer afford.
For more information about using this business acumen approach to improve your Second Stage business, join us on our upcoming Stage 2 Secrets call.
Most Second Stage CEOs don’t have a job description – in fact, when I ask them about it, they look a little confused at first…and then hopeful when they realize that I might have one for them.
And then appreciative when I outline the 3 areas, and 9 specific functions that the CEO, and the CEO alone, is responsible for.
I was meeting with a CEO last week, and he asked me which one of the 9 functions was the most important. “I can tell the one that’s most important for you by looking at your problems,” I said, “but if I had to pick one to start with, it would be Frame the Issues.”
Most of the company is in the trenches, all the time. The CEO has a unique role and obligation to have the company’s leaders view problems strategically, not tactically.
When you look at issues the right way, you’ll often see that
…you don’t need a new brochure, you need a clearer vision
…your compensation issues are really market strategy issues
…your productivity issues are really talent development issues
And so on.
If you’ve launched a small business that’s ready to take that next step, there are three things that are very likely.
- First, you’re working hard. Probably harder than you’ve ever worked in your life.
- Second, you’re loving it. While the work is hard, you love it so much that your business is stuck at a certain point of growth
- Third, you’re trying to grow, and you want to grow in a smart way, but you’re not sure how to do it.
For instance, as your sales have increased, you’ve probably significantly increased the workload of your bookkeeper. But as you continue to grow, will your bookkeeper provide the kind of financial oversight and business acumen your business needs?
And as the size of your team in all of its functions grows, do you have the right Human Resources structures in place to get the most from your talent?
Are putting the right people into the right roles to effectively manage your company’s growth? Do you know who your superstars are … and how you define a superstar?
It’s time you got some expert advice. Someone who can lead you down the path from entrepreneur to enterprise. This is where training can help.
It gives you another perspective. In the same way that a tennis player will look to her coach to understand how she can tweak what she’s doing to hit the ball harder, you’re going to get the benefit of someone’s expert opinion.
Our team offers exactly that kind of mentoring. We’ve seen all sorts of small businesses take that next step. We know what it takes for them to increase their sales, staff their teams, and effectively manage their costs along the way.
You wouldn’t buy a new car without knowing that an owner’s manual, or someone, could show you how it works, would you? Then why would you run your small business without help?
One example of a business that’s been helped by training is LLamasoft, an ambitious software company who needed some guidance on how to take that next step. Here’s what LLamasoft CEO Don Hicks has to say about training:
“When your company moves from startup to second stage growth, you don’t have the luxury of being an amateur manager. You’re a professional CEO and you need to learn from the best.”
At Phimation, we offer the kind of training that can help your business make that leap to the next level. Our Stage 2 Insight program is designed for small businesses with revenue from $1 to $50 million. It combines a self-guided workshop, webinars and a focused resource guide to help you focus on creating winning strategies, then developing them into effective frameworks and tools that grow your business.
Go back to that list of three likely things from the beginning of this post. If you could find a way to love what you’re doing even more, why wouldn’t you do it? If someone offered to show you how to hit the ball harder, wouldn’t you appreciate their advice?
Find out more about Stage 2 Insight now.