• My Goals Can Beat Up Your Goals

    Making Better Goals with a Strong Annual Planning Process

    Although it seems like just yesterday that the days were hot and we were at the local swimming hole, this is the time to start thinking about annual planning.  Some of my clients have small, simple businesses and handle their planning in an afternoon.  Others are larger and more complex, and we spend 4 days over the course of 3 months.

    No matter the extent of the process, they all have the same underlying process:

    –          Assess the environment and identify areas that have potential to improve the performance of the business

    –          Select the areas that have the best potential impact, and create initiatives to address those areas

    –          Define and justify the investments needed for the initiatives

    –          Develop action plans

    –          Launch the initiatives with managers and staff

    There’s a rich set of best practices and tools for each of those steps.  For example, many people like to use the SWOT framework to assess their situation.  But I’ve found that reviewing hits and misses often provides better insight into areas of improvement.

    On my Monthly Strategy Slice webinar, we’ll be looking at a small slice of the annual planning process – how to make sure you have a strong set of initiatives to focus on.  On the webinar, we’ll talk about tools to evaluate your initiatives along 4 dimensions:

    –          Are you focusing externally (e.g., developing new markets), internally (e.g., reorganizing), or a combination of both?

    –          Are you focusing on initiatives with short-term payoff (e.g., a marketing campaign to existing customers), medium-term payoff (e.g., hiring an important new position), or long-term payoff (e.g., launching a new product)?

    –          Do you have a mix of initiatives that will have a big (transformative) payoff and smaller (incremental) payoffs?

    –          Do you have a mix of initiatives that have different investment profiles – some requiring relatively little investment, and others needing heavy investment?

    We’ll talk about how to evaluate annual priorities, and how to apply the evaluation tools to your business on my webinar – please join us if you want to see these in action.

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  • The Sales Process Mash-Up Your Small Business Needs

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    I’m going to be talking about sales process on my webinar this month, and I want to focus in on the most interesting part of the sales process for this article – creating a “mash-up” of assertiveness and empathy to engage a prospect about the needs they have.

    But before I do that, I first have to talk about an important part of the sales process.  If you want to get paid the value you deserve for the expertise you have, you have to make sure that your discussions with prospects start with a collaborative dialogue about their needs.  If they’ve already defined their needs, and they’re just talking to you about a solution, then you will not get the value you deserve.

    The problem is, though, that most prospects think that they’ve already defined their need.

    So, how do your salespeople provoke prospects enough to change their thinking – to throw them off the path they’re already on for a solution, and get them to think more about their needs?  To do that, your salespeople need to be assertive – they need to prove that they know as much about the prospect’s situation as the prospect does, and it will pay off for the prospect to listen to the salesperson.  But your salespeople need to do that carefully – if they’re too assertive, then they’ll probably be dismissed.  So they also need to be empathetic.

    And that’s the hardest challenge your salespeople have today – how do you be assertive enough to get people to talk with you, and empathetic enough that they want to talk with you?  That’s the sales process mash-up that every growth business needs to figure out.

    We find the answer to this challenge in the playbook of a Trusted Advisor.  Trusted Advisors have independent perspective that the person values (that’s the Advisor part) and the connection and understanding that reassures the person (that’s the Trusted part).

    I’ve worked with several clients recently to create “Trusted Advisor Tools” for their people to use in sales discussions to build trust and provoke prospects to question how they’re thinking.  I think every business needs these tools.

    The salespeople usually see immediately how valuable these tools are and are enthusiastic to start using them.  And many are actually relieved because they haven’t known how to push back against prospects in a supportive way.

    We’ll develop some sample Trusted Advisor Tools on my webinar – please join us if you want to see these in action.

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  • Developing Your High-Potentials – The No-Brainer You’re Missing

    If there’s one thing in Stage 2 companies that does not take a lot of thinking, it’s identifying who your “High Potential” staff are.  They come to mind immediately whenever I ask leaders who they are.

    But, as much as it’s a no-brainer to get the most out of the people who offer the most, Stage 2 companies do a consistently horrible job of actively developing their High Potentials.  Why?  Because the Well-Oiled-and-Balanced Wheel is easy to ignore (and besides, it has a lot of weight to carry and can’t afford much “down time”.)

    The first step I’d recommend in developing your High Potentials is to come up with a model that you can use to identify your High Potentials.  Since it’s always obvious who they are, why would you need a model?  Two reasons.

    First, you need a program to develop your High Potentials, both to get the benefit of the full value that they can give you, and to keep them engaged and hopeful about their future at your company.  And in order to have a program, you need to explain to people who is part of the program and who is not.

    Second, you also have people who are Good Potentials.  Most of them will never make the jump to High Potential – but some of them will.  And to do that, they need a model of what they’re aiming for – what a High Potential is.

    I have a 1-page model for talking about High Potentials.  It’s a graphic that you can put in front of High Potentials to talk about why you value them so much and how you want to continue to develop them.  And you can show it to Everyone Else to explain in simple terms what it takes to be (and be treated like) a High Potential.

    If you want to see my model and learn some tips for using it, sign up for my upcoming August Strategy Hour webinar (even if you can’t make it you’ll get a copy), or go to the Contact Us page and reach out to me to request it.

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  • The Simple Formula of Value Propositions

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    Stage 2 companies must already have a clear and compelling value proposition if they’re successful enough to have grown out of start-up, right?

    Well, yes and no.  They do have enough traction in the marketplace to show that they have a value proposition that works.  But it’s actually unlikely that the company has a systematic way to communicate the value proposition.  And if that is the case, it will find that revenue growth is harder and harder to achieve – and in a competitive market, the company may start to lose ground to other companies who are communicating their message better.

    What should a value proposition look like?  When I started out in marketing, I worked with an excellent marketing agency, who explained that the “brand positioning statement” should follow a classic formula of, “For [market segment], Our Brand is the [product category] that [customer benefits] by [points of differentiation].”

    So, for a clear and compelling value proposition, you need:

    –          A clearly defined target market segment or customer profile – is it marketing directors who work with global brands, or owners small businesses in cities, or…

    –          A definition of the product category – the marketing agency I worked with explained that orange juice could be defined as a breakfast drink or as a health drink, so picking the product category has a big impact on how the product itself is perceived

    –          A description of the customer benefits – what are the pains you alleviate (lost revenue, production downtime, etc.) and gains you enable (new revenue sources, talent retention, etc.)

    –          The points of differentiation – choosing from all the ways that your product works or the ways you deliver your service, what are the ways that set it apart from the competition?

    Once you have your value proposition, make sure you reinforce it with everyone in your company, and you use it to focus your marketing and sales messages.

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  • Designing Powerful Dashboards

    Sometimes I’m asked to help companies find the right path for their next 3-5 years – which qualifies as “long-term” strategy for a Stage 2 company.  Other times, my strategy work focuses on short-term performance.  In either case, it’s useful to have some way to measure progress and check to make sure we’re on the right track – to have a dashboard or scoreboard.

    In designing a dashboard, there are 2 main factors:  (1) what you will measure, and (2) how you will measure it.  I would rather have a precise description of the business driver and an imprecise metric than an imprecise description of the business driver and a precise metric.  In other words, it’s more important to understand what to measure than to have a top-quality measure itself – it’s not much help to have an accurate measure of something that doesn’t matter.  Or, said even another way, you should not pick your metrics by what is easy to measure – you should focus on what will drive your business, and then do the best you can to approximate a metric if there isn’t one easily available.

    As for the business drivers, when you’re measuring short-term performance, the first job is to decide what’s important to track – what’s going to move the needle.  In general, the items to track to improve short-term performance are going to be either revenue or costs/productivity.  However, I recommend you come up with more specific metrics that zero in on exactly how you’re going to drive those areas.  Examples would be:

    •          Revenues from our top 20 customers
    •          Revenues from new customers
    •          Revenues from a particular product line or market sector
    •          Costs or productivity of non-customer-related activities
    •          Costs or productivity in the areas of your largest expense areas

    For a situation where the short-term performance is OK and the focus needs to be on medium- and long-term initiatives, there are a broader range of areas that are usually represented in a dashboard.  Examples of long-term programs include:

    •           Development of new products
    •           Diversification into new markets
    •           Building a new way to acquire customers
    •           Changing the sales process
    •           Training and developing your people in general, or the skills in a particular part of the business
    •           Developing partnerships

    So, what do you do if you don’t have a precise metric available?  I’ve found that Green/Yellow/Red works fine as long as (a) there is a clear owner of the area that is being tracked, and (b) there is discussion about the status.  The benefit of having an actual metric is that good data leaves little open to interpretation.  (“Data ends discussions.”)  If you’re not working with good data, but instead using something like a color scheme, then you’ll have to make sure you spend time understanding and interpreting what’s going on.

    I’ll have some more specific recommendations for designing dashboards during my upcoming Monthly Strategy Hour – register to hear more and ask any questions you have.

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  • Bigger, better decisions

    Man playing chess

    Not all strategic decisions need the same amount of analysis.  This is something that many founders understand intuitively.  But it’s also something that becomes more complicated as a company grows.

    Why?  Because the decisions get bigger and more complicated, what worked for a Big Decision in the past often doesn’t work for the Big Decisions of a bigger company.  In addition, the “decision environment” gets more complicated, with more potential participants and more dynamics among them.  Who do you include?  When?  How?  Who provides input and who participates in the decision?  How is the decision actually made?

    What qualifies as a Big Decision?  Something where the payoffs are extraordinary – say, it could have an impact of 20% or more of a company’s revenue, or it could impact more than a third of the employees – and/or where the risks are extraordinary – say, it could take 20% or more of a company’s discretionary resources to implement.

    Decisions fall on a continuum – as the stakes rise, so does the need to treat the decision more seriously.

    And how do you do that?  As the decision gets bigger, you should add more information, more structure and process, and more focus and energy on the decision before its made.  If you don’t, you can be pretty sure you’ll be spending more time than you’d like or expect after the decision.

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  • 10% – The Good, The Bad, and The Ugly

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    Many of you reading this post are 10%ers.  And there’s something in the back of your mind eating away at your conscience.  You know there’s something not quite right about it, but you tell yourself that 10% has always served you well.

    And you might be right.  You’ve probably gotten along well enough with your 10%.  Then again, you may feel like it no longer has the same effect that it used to.  So let’s take a look at your 10% and see if it’s still serving you.

    I’m inspired to write about 10% because I met with a guy last week who said, “It’s just what I’ve always done.  I don’t really have a reason for it, and sometimes I wonder if it’s what I should be doing.  But I’ve never known how else to do it.”

    Later on, after our discussion, he said, “Yes, that’s what I want – that would help me, and it would help my team.  They’ve always been a bit confused and defensive about the 10%.”

    What am I talking about?  Let me use his words, “We did a strategic plan back in 2008, but we’ve never updated it.  It was helpful and we did some things because of it.  But for the last 5 years, I’ve just said that we should grow by 10% next year.  And that’s what I say at the start of each year.  I kind of know that I could or should have more to my goal, but we’ve been OK just trying for that 10%.”

    It’s something I’ve heard many times before.  So, let’s look at the good, the bad, and the ugly of the “Let’s grow 10% next year” approach to strategic planning.

    The good is that it’s an easy way to communicate that you want to grow, but not too much.  It says, “Let’s get better at what we’re doing.”  It’s also quick – most leaders who use 10% as a goal (I just can’t bring myself to call it a strategy!) need about 1 second to access their intuition and come up with that number.  And it’s also good that most leaders who use 10% don’t enforce it – some years they’ll decline 1%, and others they’ll grow 20%, and both are received equally.

    The bad is that 10% doesn’t tell anyone how to achieve 10% growth, and, since the person who used it likes a planning process that only takes 1 second, they usually won’t commit the time to strategy and planning to figure out how to get the 10%.  And so, they just react to whatever the marketplace offers.  That’s not good, but often times 10%ers are bailed out by a strong market, and so reacting is bad but OK.

    Which brings us to the ugly, which arrives when a 10%er is managing a business in a market that is seeing substantial change.  If that’s the situation, 10% is of no use, and in fact may be counter-productive.  Because at the heart of 10% is “let’s change, but not more than we’re comfortable with.”  And that can breed complacency that appears to be fine…until it’s too late for any small adjustments to work.  And if the only goal you’ve ever had is 10% growth, you and your team are not going to be prepared when you need to lead your company outside your comfort zone.

    So, if you’re a 10%er, you have a choice – to be passive or active.  Either keep enjoying that comfortable feeling until you’re forced to do more…or lead your team to have a new set of discussions that develop your company’s ability to identify opportunities a little outside your comfort zone, go after them in smart ways, and stay ahead of the market.

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  • 50 Shades of Grey, Small Business Edition

    How could I not take up the challenge of finding the link between the 50 Shades juggernaut and my beloved Stage 2 small business clients!?!

    Putting aside the more mundane topics of what Christian Grey’s DISC profile is, the importance of proper inventory processes, and the merits of NDAs, I’m struck by the similarity between Christian’s dominant role and how Shane Yount, owner of the Process-Based Leadership system, describes some companies:

    “(Managing by position, proximity, or persuasion) creates dependency. Employees become dependent on their leaders to make the decisions, to solve the problems, to show them what to do and when to do it. Certainly managing by position, proximity and persuasion gets short-term results. But dependency is dysfunctional.”

    It may seem extreme to draw a parallel between 50 Shades’ dominant/submissive relationship and how many small business leaders operate, but there’s probably more truth to it than many owners would like to admit.

    Recently I talked with a group of Stage 2 company CEOs, and one of their big a-ha moments was when they realized how dependent their organizations are on the leader’s opinion, intuition, and judgment.

    If you realize that your leadership is out of balance, or if your employees start to refer to you as Mr/Ms Grey…what can you do?

    The first step is creating a dialogue with your managers.  You want a process to be guiding the company, not a person, and to do that, you need to start a process that involves your leaders in key decisions – and then you need to stay committed to it.  And, if you’ve been doing a lot of the talking, start listening more.  Don’t totally hand over the reins, but start to share them.

    What should you talk about?  To start, I like to focus on today – what is working, what isn’t working?  Once you have things working OK, then you can start looking out farther on the horizon – to the next few months, and then to the next year, and then to the next 2-3 years.

    Let’s be honest about something Christian Grey knows – it’s fun and exciting to be in charge, to be The One Who Makes the Calls.  But it’s also not sustainable, and if you’re looking for your business to prosper for the long-run, you need to mature as a leader and expand how you relate to your business.

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  • What the market wants

    20 January 2015
    869 Views

    “We have to stop talking about what we want, and start doing what the market is telling us to do,” said a COO in a recent meeting I was leading to talk about changing the way the company serves customers.

    10 years ago, the company served its customers start-to-finish, and the profits that it made enabled it to take good care of those customer if anything went wrong in the project.

    Now, more customers than ever are contacting them to buy their service, but fewer want the start-to-finish service.  This was creating tension within the business, as frontline employees tried to force these new customers into the old model – a model that the new customers don’t want and don’t want to pay for.

    We’d started the meeting describing the new way that we’d be working with customers, but the ideas were meeting resistance as people tried to fit the new model into their old mindset.

    Until, after growing frustration, the COO stopped the discussion with his emphatic reminder that the answers to strategic questions start with what the market wants.

    With that clear, we then set off identifying the questions and issues that would need to be addressed to meet customers on their terms.  It involves a lot of new thinking, and it is a 2-3 year project, but the team is well aware of the tensions and problems that it has trying to stay with the old model.  So, we’ve targeted a few short-term changes we can make in the short-term so we can create momentum, and we’ve also highlighted some complicated issues that will take prolonged effort.

    The lesson for you leaders:  when you’re starting in on a strategy, or a strategic discussion, start with what your customers and your markets are telling you they need.  And if you haven’t talked with your team about what that is in the past year, include that in your next strategy meeting.

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  • Taylor Swift Teaches Market Strategy

    5 November 2014
    954 Views

    In case you were thinking that some people haven’t had to rethink their business model to the “New Normal,” Taylor Swift provided a reminder that, well, that’s true!

    While the rest of the world is gravitating toward streaming music services – which apparently don’t pay what purchased downloads do, let alone what good old fashioned CD sales used to – Taylor Swift pulled her new album from Spotify.  If Spotify’s users want to listen to Shake It Off or any other song from her, they’ll have to buy it.  (I’m a Spotify subscriber who ponies up the $10/month for the premium service, for the very reason that I want artists to be paid for their work.)

    Her leverage in this case is unusual, which gives her the flexibility to take the risk to pull her product from a major distribution channel.  Wouldn’t you like to have that leverage in your market?

    So, what has Taylor Swift done to put herself in this position:

    –          Worked hard for a decade to develop her skills, brand, awareness, and business

    –          Put out a quality product that the market wants

    –          Was authentic in her product and brand

    The various promotional strategies her team has used for each album and tour certainly made a difference – for example, I don’t think it was a fluke that she gave Spotify users access to Shake It Off for a short time, so that they could get hooked on the song.  But the core elements of hard work, wanted-product, and authenticity were the start of her success.

    What can you do to increase your market leverage by improving these core pieces?

    –          Do the hard work and tackle the hard issues

    –          Ask your customers what they want, or look at which of your offerings sell the most and do more of that

    –          Describe your company’s personality and culture and make sure those come out in your marketing (not just in what you say, but also in what you do)

    Congratulations, Ms. Swift.  I haven’t decided yet whether I’ll be buying your songs or just waiting for them to come back to Spotify (I expect they will come back), but I respect you for forcing me to make that decision.

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