• The cost of change

    24 June 2019
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    I recently decided to learn how to cook.  This is a huge change for me – since I was raised on cans of Spaghetti-Os and ready-serve packets of creamed chip beef (for breakfast!), and then was married to an excellent cook for many years.

    But now that I’m in charge of nutrition and culinary delights in my household, I want more than the steady parade of pasta-with-butter, pancakes-for-dinner, veggie-dogs-and-mayo (don’t ask…), and take-out that I’ve been serving up.

    So, I signed up for Dinnerly, and have been doing it for 7 weeks.  I’d looked at the subscription-box services before, but the prices were way more than I was used to spending on food, and I wasn’t confident that I would be able to actually make the stuff, or like it.  Dinnerly’s price point was better, and that made it easier for me to take the leap.

    Let’s recap how I’ve been doing, since I think it’s a good representation of what it looks like to make a meaningful change and to build up a capability that you’ve never had before.

    Week 1:  Dinnerly arrives on Tuesday.  I cram the ingredients in my fridge and eat 2 veggie dogs. I consider cooking twice during the week but I am too tired and settle for the usual instead.

    Week 2:  Dinnerly arrives.  I cram ingredients into fridge, in addition to last week’s.  I attempt my first meal, and it takes me about an hour to make.  I have no idea what “finely chopped” means for garlic.

    Week 3:  Dinnerly arrives.  I cram ingredients into fridge, which brings the total to 8 recipes worth of ingredients stuffed in fridge.  There is little room for the other food I usually keep in there, and I decide that I will put ingredients in containers, by recipe, when they arrive…next week.  I make 2 meals.  During the first meal, I create a 3-foot high fireball on my stove when I add water to a pan of oil – turns out that when the recipe says to add ingredients to a pan of oil, and then add water…it actually matters that you do it that way.

    Week 4:  Dinnerly arrives.  I throw out some ingredients in my fridge that are looking pretty rough.  I put recipes in containers and add them to the fridge.  Busy week at work; I don’t make any Dinnerly meals.

    Week 5:  Dinnerly arrives.  I purge the fridge of more old ingredients, but all the containers are full, and I don’t have any for new items.  Cram new ingredients in fridge.  There is literally no room in my fridge.  I make 1 meal, and realize that (a) every recipe I’ve made has called for 1 teaspoon of finely chopped garlic, and that’s probably a key ingredient for cooking, and (b) I can actually do this cooking thing, though it seems like it takes forrrrr-evvvvvvv-errrrrrrrr to make a meal.

    Week 6:  Dinnerly arrives.  I have a loooong workday, and my fridge is stuffed, so I don’t even bring the box in from the porch for 24 hours.  When I do, I purge a bunch of food, but don’t feel like dealing with the containers, so I just cram all the ingredients in the fridge.  Things fall out when I open the fridge door…every time I open the fridge door.  But the recipes seem pretty good this week, and I cook 3 nights in a row – one recipe from the previous week (I can’t find 2 ingredients that are somewhere in the fridge, but the food tastes OK without them).  I make a foot-high fireball when I shake a pan and oil spills onto the burner.  I like 2 of the 3 meals I cook.

    Week 7:  I purge fridge before this week’s box arrives.  I use containers for the new meals and find it easy to grab a container and make the recipe.  I make 2 meals and enjoy them both.  I find that chopping isn’t taking as long, and I’m faster to clean up the kitchen after.  I’m starting to see some rhythms, and some things even seem familiar to me.

    That’s the journey so far.  Before I share some observations about how the “change process” is going so far, I should share that I think our schooling provides a useful framework for understanding change, learning, and growth.  Here’s what that framework looks like:

    • Pre-school and Kindergarten – very basic understanding, knowledge, and ability
    • Elementary School – learning the basics, not much higher-level thinking
    • Junior High – starting to see the bigger picture but still basic in that
    • High School – able to function independently, becoming expert at some things
    • College – higher-level understanding and functioning, fully independent and capable
    • Grad School – superior expertise, able to make expert contributions and lead others

    So, I would make the following observations about my becoming-a-cook change journey:

    • It’s been very helpful for me to imagine that I am a kindergartener as I’ve started into the process.  If I hadn’t had that attitude, I would have canceled the service by now and said, “I don’t have room in my life to be a cook.”  7 weeks in, I can say that that is wrong – I do have room to cook 1-2-3 meals a week.  I don’t have room (or interest) to cook 5-6-7 days a week.  Which leads to another point…
    • The vision I have of not wanting to be a kindergarten-level cook anymore has been important to me accepting the extra cost in money and time that I’ve had to put in to learn to cook.  If I didn’t have that vision of wanting more, I wouldn’t stick with it – it does cost more and take more time than just throwing veggie dogs in the microwave.
    • I can start to see how cooking fits into my life.  There are a few recipes that I liked and could do without Dinnerly’s help.  I’m starting to learn how to use “extra” ingredients (1 teaspoon garlic!…plus onions, tomatoes, even vinegar) to make the food taste more interesting.  I’m still very much a novice, but I understand the tools I must work within a way I didn’t before.
    • There is a whole bunch of related stuff that happens around cooking – like buying the ingredients and organizing the fridge – that I’m horrible at.  Those have their own growth curve, and I’m just a kindergartener with those.  But as the cooking gets easier, those will get better, because I won’t have to take so much energy on the cooking part.
    • My cost/meal is trending down, and in another month or two, I expect that I will be able to make all 3 recipes that Dinnerly sends me, each week.
    • I’m actually eating good food that I enjoy!  For all my look at cost and process and stuff…what’s important is that (a) I’m way less intimidated in the kitchen, and (b) I’m eating better.  I doubt I’ll ever care enough about cooking to become great at it, but at least I’m not a kindergartener anymore.

    So, let’s look at the overall cost of the change I’m making.

    I’m guessing that the cost for me to get to the “high school” level of being a cook is going to be somewhere around $1-2K. 

    And my guess is that 1/3 of that will be completely wasted (just not cooking the recipes at all and throwing the food out), 1/3 will be the “extra” burden of my learning (taking longer than needed to make things as I learn them), and 1/3 will be what I’ll call “suboptimal meal experience” when the meal either cost more or was less enjoyable than my alternative options (e.g., eating take-out or just making pasta-and-butter). 

    If we say that the cost-per-meal before I was a cook was $5/meal, then I’m saying that my change cost is equivalent to 200-400 meals!  That’s almost a year’s worth of dinners – and that’s way more than I would have guessed…which would have been more like 3-4 months of dinners.

    Should it cost less?  Yes…in theory.  I should commit to it, and focus on it, and bring my better self to it.  But that’s just in theory.  In reality, I have to run my business and parent my kids and keep myself healthy with exercise and recharge with some social and rest time.  And I just don’t have the energy I “should” for change with all of that going on – or, said a better way, I need to have realistic expectations for how hard change is when it’s not the only thing I’m working on.

    Change is not cheap, which makes it all-the-more important to make sure that (a) the change is important and desired, (b) you’re ready for what and how it costs, so you don’t change your path because it looks “wasteful” or unsuccessful (e.g., there are going to be weeks when no recipes get made), and (c) you see your way through so that the extra cost isn’t wasted.

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  • The High-Potential Talent Stack

    13 April 2018
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    I recently gave a webinar for the SPARK.grow program on high-potential employees – how companies can identify, foster, and be attractive to high-potential employees, and how high-potentials can identify, develop, and be attractive to high-potential roles. (The recording of the webinar is here.)

    I described a “High-Potential Talent Stack.”  That stack has 6 levels – the bottom 3 are the factors that enable someone to perform at any job, and the top 3 levels are the factors that enable someone to perform as a leader.  I want to describe each level…

    Performance – this is how well the person gets work done

    Results Focus – this is the ability to not just put in the effort, but to figure out a way to go around roadblocks and keep at a task until you get the result that is needed

    Learning – high-potentials are always expanding their toolkit of skills, and learning about the work they do

    Investment Thinking – this is the ability to think in terms of Return on Investment

    Maturity – high-potentials handle themselves well, in different situations and with different people

    Leadership – this is the combination of skills that are needed to get a team to perform at a level and in a direction that they wouldn’t get to on their own

    This stack is a powerful tool.  It shows what a company can look for when hiring new staff, and what they can train and develop to improve their high-potentials – and shows high-potentials what skills to develop for further growth.

    Each level of the stack has 3 more specific components.  The target is to score a total of 12 or higher when each of those components is rated on a 1-5 scale.  Scores of 4-4-4, 5-4-3, or 5-5-2 would all qualify; scores of 5-3-3, 4-4-3, 5-5-1 would not qualify.  It’s a high hurdle – but the people that meet that standard are often the “10x-ers” – the ones who have 10x the impact on your business than your typical employee.

    Almost universally, small businesses underinvest in their high potentials.  There’s too much potential ROI for you to do that.

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  • Your business model is a depreciating asset

    9 March 2018
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    Most people recognize that markets don’t stand still.  Customers, competitors, and technology are constantly changing.

    Although most people recognize that, many don’t appreciate the imperative that that dynamic places on them as leaders.  The simplest way I’ve learned to describe that imperative is this…

    Your business model is a depreciating asset.

    In other words, the way you do business – whether that’s how you find customers, how you produce what you offer, how you deliver what you sell – is losing value every day.

    Like other depreciating assets you have – your house, car, refrigerator, computer – you have to maintain it simply for it to keep working the way it’s supposed to.  And you have to more-fundamentally change or replace it on some kind of predictable cycle – 3-4 years for a computer, 5-10 for a refrigerator.

    How quickly your business model depreciates is mostly a function of the degree of change in your market.  And, since there’s more change in every market these days, we all need to put our leadership teams on notice that we’re going to have to reinvent our business model sooner than we’re used to.  Rule of thumb:  the cycle is probably half what it used to be.  (So if the model used to last 10 years, it’s best to plan for it to last 5.)

    If your leadership team is skeptical when you tell them this, offer the following true story.  I know a smart, tech-savvy teenager who has a nose for online businesses.  He found an opportunity last Fall that he liked.  Here’s how that played out:

    • Week 0 – discovered opportunity
    • Week 1 – supply chain set up
    • Week 2 – open for business
    • Week 5 – profits to date:  $200K
    • Week 11 – profits to date $500K
    • Week 13 – rejected offer to purchase business for $100K
    • Week 16 – competitors raise cost of advertising to a level that the economics no longer work, business model no longer profitable, business closed

    To summarize, that’s a business model that was able to net $500K in 4 months – I know $15MM businesses that aren’t generating that profit for the year – but whose value depreciated to $0 in that same 4 months.

    If you talk about markets changing, it seems like something “out there” that may not impact you.  If you talk about your business model depreciating around you week by week, it gets much clearer that you need to act with some urgency.

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  • It’s light if you use a forklift

    12 January 2018
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    I was in a meeting this week with a client, and they were talking about the gigantic case they take to trade shows – which is called “The Coffin” and may have cost an employee a finger (the story wasn’t clear and I didn’t want to ask).  The person who bought it, and still saw it’s utility, countered the jokes and jabs by saying, “Well, actually, it’s light if you have a forklift.”  I’m not sure if it was a joke or a legitimate argument, but it got me thinking…

    There are a number of pitfalls that will trip up people who don’t have a lot of experience with strategic planning.  One of the more regular ones – especially in retreats where people are asked to free their thinking – is not taking into account limited resources.

    All kinds of amazing things are possible to dream up if you assume you have unlimited time, effort, strength, brainpower, flexibility, etc.

    That case is light (if a forklift is available where we’re going, and we have the money to pay for it)

    That metal is flexible (if we have a sledgehammer and the strength to wield it)

    That market is accessible (if we have the VP of Sales who knows the right people and can use their trust to benefit our product)

    That new initiative is going to be easy for people to support (if we have a culture that is very adaptive and a leader who consistently pushes it)

    Options that look good with unlimited resources often look terrible when limitations come into play.  So it’s important to take resources – money, bandwidth, expertise, relationships – into account when choosing a strategy.

    Overlooking resource constraints is just one form of a broader category that undermines strategy – the hidden assumption.

    There’s no way to avoid hidden assumptions – we all have them lurking in our blindspots.  But there are things you can do in your planning to reduce the likelihood that assumptions will lead you into a bad decision:

    • Include people with different perspectives in your discussions – and listen to them all
    • Ask, “Why is this a stupid idea?” or “Why would this fail?”
    • Think of other decisions that ended badly and were driven by hidden assumptions, and assess if there are similarities
    • Clarify the criteria that you use to evaluate your options

    One of the things that separates good strategists from poor ones is the ability to see what’s missing and hidden.  It’s a hard skill to develop – it takes knowledge and experience and inquisitiveness and discipline.

    But it’s a really valuable skill.  If you reflect on the worst decisions you’ve made, they are usually built on top of a hidden assumption that turned out to be way more off base, and way more important, than you’d have imagined…if you’d known to think about it.

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  • The Bots are Coming! The Bots are Coming!

    5 December 2017
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    AI and machine learning have exploded onto the business scene in 2017.  If you haven’t gotten an email asking you if you want to learn how IBM’s Watson can help your business, you will be soon.  And we’re just getting started.

    The bots are coming, and if you’re thinking your business is immune, I don’t think you’ll feel the same way by 2020.

    What should you be doing in 2018 to prepare?

    Many small companies are not going to have the budget needed to use AI.  But if you’re in a small company, you should still learn about what it can do and how it can be used.  By hearing how AI is being used in your sector, you can make your offerings better and your operations more efficient – even if you don’t spend a dollar on AI technology itself.

    You should also figure out your company’s algorithms.  AI works through algorithms – coded logic about how to interpret data.  You may not have Big Data to work with, but you have algorithms operating in your company…like which customers are better to work with, what products help with what needs that a customer has, and ­which of your staff to assign to which types of projects.

    Back in the old days, this was called Experience, or Tribal Knowledge.  Now…we call it Algorithms.

    Your algorithms will probably start simple – like which customers are better to work with.  But that’s just the start.  The real power comes when you think about branches that you can build to make the thinking more complex.  For example, once you identify what services help with what needs, then you can identify if customers of one service are more likely to buy another service you offer.  Where are the connections and patterns in your business?

    Many of the small businesses I work with know these algorithms intuitively – they’re operating all the time in the heads of the staff who have been there more than 10 years.  Often the first reaction I get when I bring up the idea of capturing the company’s algorithms is, “Oh, we don’t need to do that.  We know that already…in our heads.”

    Which is great…but right now, someone is working on coding into a computer the algorithms that are needed to run your type of business.  It’s happening.  Right now.  Believe me.

    And the need to document your algorithms will be much clearer – and more urgent – when your staff person is competing with a machine that costs less than a month of that person’s salary and doesn’t need health care.  When that happens, you’re going to wish that you’d asked your staff to outline how they make the decisions that run your business.  And that staff person is going to wish that they’d been thinking about how to build value on top of their knowledge, rather than clinging to the knowledge itself as the differentiator.

    What do you do when knowledge and experience are no longer differentiators?  What will the differentiators be?  I have some guesses, that I’ll outline another time…

    So, I don’t know how all of this will play out.  I’m sure bots, at some point, will be able to do most of what we rely on workers to do now…and that there will be needs that bots can’t handle.  But while we’re waiting for that to play out, you can use the thinking of AI designers to make your business better and be in better control of your destiny.  And you can do that whether you can afford the actual AI technology or not.

    Pretend that you’re designing your own bots, give them fun/interesting names (Watson! Alexa! Siri!), and have some interesting discussions with your Leadership Team about the algorithms driving your business.

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  • Harry Potter & The Cursed Plan

    1 August 2016
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    My daughter is a huge Harry Potter fan, and she has been smitten by the frenzy of the release of Harry Potter & The Cursed Child.  So last week I found myself watching Harry Potter 7 Part 2 with her.  And in it, Hermione was recommending that she, Ron & Harry be more careful and plan out their return to Hogwarts, since that journey was likely to lead to a conflict with the forces of You-Know-Who.

    Ron, feeling some urgency, dismissed Hermione’s request, saying:

    “Hermione, when did any of our plans work?  We plan, we get there, and then all hell breaks loose.”

    Fortunately Harry, who is an intuitive strategist like most of the Second Stage owners I know, comes up with a short-term plan….”We’ll figure it out when we get there and we see what we’re working with.”

    Let’s highlight some of the lessons about strategic planning that are contained in that little scene:

    –          Planning doesn’t work on its own, because things won’t happen the way you expected them to

    –          A good plan starts with an assessment of the current situation – assets, needs, opportunities

    –          There are times when good execution is more important than good planning – specifically, when a lot is uncertain, or you don’t have a lot of resources that you can put toward a plan (this is why planning is less important in start-ups bootstrap start-ups)

    There are also some undercurrents to Ron’s statement – the stuff we can read “between the lines”:

    –          Planning helps get you ready for the battle, even if the plan doesn’t work

    –          People who fight the battle can use that experience to develop better plans – and do them faster

    –          When you’ve gone into enough similar experiences, you can rely on your intuition more than needing a plan – it’s likely that the situation will mostly look like something you’ve dealt with in the past, and the stuff that is new will be minor enough that it won’t overwhelm you

    You Second Stage muggles have your own version of wands and spells – the experience you have that enables you to solve problems as if you were waving a wand, the insight and service you give your customers that can (truly) be like a spell, all the assets and resources you have built up to solve some of the world’s problems in a way that (if you step back from it) can seem magical to someone new to it.  And all of those things will be made better, and more powerful, with the right amount of planning.

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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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  • 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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  • Budgeting and strategy – 2 great things that go great together!

    8 October 2012
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    Did you ever see the Reese’s Peanut Butter Cup ads that showed one person with a chocolate bar, and another with a tub of peanut butter.  They run into each other, and discover that chocolate and peanut butter are “Two great tastes that taste great together.”
     
    Click here to see one of the ads.

    Those ads remind me of budgeting and strategy – two great processes that go great together!
     
    Now, if you’re an early Stage 2 company, you may not be doing either.  If that’s the case, you have a chance to leapfrog over many later-stage companies, because many do either budgeting or strategy, but not both.
     
    Strategy is a qualitative process in which you assess your situation and draw conclusions about what parts of your business have the best opportunities to develop or worst problems to fix.  Budgeting is a quantitative process of allocating resources based on the conclusions you draw in your strategy process.
     
    If you have strategy without budgeting, then you haven’t really determined how you will handle all the commitments you want to make.  Later, when it comes time to spend money, there will be other things that also need money.  If you haven’t decided during your budgeting process what gets money and what doesn’t, then you will make a tactical decision.  If you’re lucky, it will still be a good investment.  If you’re not lucky, you’ll find you’ve spent your money on the wrong thing.
     
    If you have budgeting without planning, then you will just get more of what you’ve always had, which is usually 10-20% better…until one year you realize that it’s not 10-20% better, and you’re not sure why, and you’re not sure what to do about it.  If you haven’t decided in your strategy process what deserves investment, you’ll find yourself realizing too late that “more of the same” only works for a limited time.  If you’re lucky, you’ll find a new path without too much investment.  If you’re not lucky, the weak area of your business will become a quagmire that costs you a lot of money.
     
    Just as the Peanut Butter Cup combines chocolate and peanut butter in one convenient package, the Business Case combines strategy and budgeting.  They’re not hard, but they’re not easy either – there are a few tricks to making business cases work for a Stage 2 company.

    I’ll be talking more about this on my Stage 2 Secrets call this month – click here to register.

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  • Leadership, Succession, and the Future of Your Second Stage Company

    5 September 2012
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    So, you’re thinking about what life will be like at your company when you’re gone. Congratulations. Really. It’s a sign of maturity when a leader has the courage to imagine being out of the picture, and the foresight to care before it’s forced to happen.

    Having worked with dozens of Stage 2 leaders, what recommendations do I have for you about succession? A few thoughts come to mind immediately when thinking about my clients.

    First, those of you who are strong leaders… we love you, and it’s amazing what you have accomplished and do accomplish… but this may be the biggest challenge of your career. The strength that you have in your role means that your shoes are going to be hard to fill. And, strong personalities have a hard time handing things off, so it’s never going to feel like the right time, and your successor is probably going to seem far from ready when you start the transition.

    Second, having a healthy company is important to managing a succession. You want a healthy company to retain or attract the best talent. And, successions take resources, because transitions always put a burden on an organization. (Think about how many coaches have a “transition year” when they start even if they’re good and have good players.)

    Third, start as early as you can. Succession is best managed not as one big event (“OK, here’s the company…don’t screw it up”), but as a series of small hand-offs. Most of my work on succession is on choreographing the series of small hand-offs based on the departing CEO’s capabilities, the incoming CEO’s capabilities, the needs of the business, and the needs of the transition process itself.

    Fourth, don’t look for another you. He or she is going to be too hard to find. Use this as a chance to build up your company’s strength in a new area. (You’ll need to do some strategic planning to think about what area that should be.) I had one client hire an experienced sales and marketing exec because they realized they were weak there. I had another hire someone strong in operations because they were going to need to tighten up that area if they were going to be able to grow. Was the new exec everything that they needed in a CEO? No. But neither are you! You have a whole eco-system around you that complements and supplements your strengths. You may have forgotten about it because it’s designed around you, but no CEO can be everything – and the search for another you is based on flawed thinking that one person can lead your company.

    The good news is that, if you plan out and use a succession process, all of these issues are manageable.

    I’ll be talking more about this on my Stage 2 Secrets call this month – click here to register.

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