• 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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  • Giving Your SWOT More Swagger

    18 September 2014
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    I like SWOT assessments (you know – strengths, weaknesses, opportunities, and threats) for getting people’s thinking out of the day-to-day and into a creative, strategic “space.”  Unfortunately, I often see SWOT assessments that are just marginally useful.

    Here are some tips on how to get more value out of your SWOTs.

    If you can take a bullet and put it on someone else’s SWOT without changing it, then you’re not specific enough.  One of the favorites to put under Strengths is “Our People”…which is also a good example of a bullet that is not specific enough to be useful in the planning process.  What is it about your people?  Their experience?  Their deep knowledge?  Their ability to be generalists?  Once I know what’s special about your people, then I can create some possibilities about how to leverage that into a better advantage.

    Work hard to look at the future.  We live our lives in the day-to-day, so it’s hard to look ahead several years.  And that’s why it’s an advantage to do – because most people don’t.

    Put “the hard stuff” on the list.  Every business has issues that it doesn’t like to talk about.  The problem customer.  The problem owner.  The problem staffer.  Without knowing the details, I can tell you that those issues consume a large amount of resources.  So they need to be on your SWOT – though it will probably take some diplomatic phrasing.  (For example:  “Some customers are easier to work with than others,” “Owners are not always aligned on decisions,” and “Spotty follow-through.”)

    Make sure you have bullets that cover the whole breadth of the areas you’re involved in.  Often, leadership teams focus more on certain areas, and that bias comes through on the SWOT.  But the non-focus areas are often the places where there is the most opportunity, especially for companies that are developing from the lean-and-mean start-up to a more complete and sustainable enterprise.

    So, here’s the question to ask about your SWOT to see if you’re getting the value out of it:  “Does it give us insight into where we should commit significant resources over the next 3 years to improve our chances of success?”  If it gives you that, then you’re getting the value you should.  If it doesn’t, then you should take steps to upgrade it – which I’ll cover in my next post.

     

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  • How Job Descriptions Need to Change for Growing Small Businesses

    14 May 2012
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    Congratulations, Second Stage CEO.  You’ve gotten customers, survived cash flow crises, created a vibrant team.  And, now, at last, created job descriptions!  You put it off as long as you could, because job descriptions are so un-startup.  But you’ve realized that it’s time to get clear on what people are responsible for, so that there’s more accountability, and so that it’s clear whether that new hire is getting the job done (or not).

    If you’re a young Stage 2 company – say, 10-30 people – your job descriptions can focus on people’s responsibilities – what they do…their functional tasks.

    But if you’ve passed 30 people, you’re going to need more from your job descriptions – rather than responsibilities, you’re going to need to focus on competencies.

    What are competencies?  They are the things that people are able to do – which could mean making copies or putting a design into AutoCAD, or could also mean handling angry customers or juggling multiple priorities.  Sometimes competencies are the functional tasks, but frequently competencies are behaviors that go beyond the task.  Competencies give a much deeper view into what a person, position, or team is capable of.

    Responsibility:  process assessments

    Competency:  recognize errors and problem-solve when one is found

    Responsibility:  respond to customer inquiries

    Competency:  empathize with customers in pressure-filled situations

    You need to know the functional responsibilities of your people.  And if you look at the competencies you need in a position, you’ll paint a much richer picture of who can be successful, and what training your people might need.

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

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  • When a Small Business Outgrows its Team – Talent Management Lessons

    7 May 2012
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    I work with a relatively small Stage 2 company that recently changed over 40% of its staff – and is far better because they did.

    When I started with them, they had several employees who had been great during the start-up.  They handled the relatively focused and simple work that needed to get done, and they were flexible.

    But then the company started to leave the start-up stage – client work came more regularly, there was less experimentation…and there was more work!  The work got harder and more complicated, and it needed to be done on schedule.

    After almost a year of struggling as a company, the leaders realized that many of their struggles were tied to not getting the productivity out of the team that they needed.  The employees were still good people and good workers – but the company had different needs, and these people were no longer a fit.  And, because these employees weren’t in jobs that fit for them, they were starting to create a negative culture.

    This wasn’t an easy decision.  Some of the workers were friends.  Some had helped build the company.  And, truthfully, the decision took probably twice as long as it needed to because of the loyalty the leaders felt to these staff.

    But when it became clear that the business needed new team members, the leaders made the decision, and gave the old staff generous severances.

    Then they found the right people for the environment, taking their time and thinking about what they needed.
    The results are dramatic.  The team is happy.  The finances are strong.  The work is interesting and fun.  It really is a different company – because it’s a different team.

    In Stage 2, the team is what is most important, not the quality of the work.  I know it’s not easy to make personnel decisions, but there are huge dividends for Second Stage companies that take an active approach to Talent Management.

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  • The Surprising Fact About When Your Price Is Set

    26 March 2012
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    Chess

    As your company grows in Stage 2, you should use your sales process to drive more value – yes, for your company…but also for your customers.  The only sustainable growth comes from win-win sales, so your sales process will benefit you and your customers.

    One of the most important ways that your sales process can increase the value you bring to and get from your customers is by uncovering what the real need is.  Oftentimes, customers don’t know what they don’t know, and by managing the sales process well, you can help them realize what they really need.  In doing that, you also make sure that you’re paid for any premium value that you give them.

    Price is a function of value, and the surprising fact that you need to know is that value is established when the need is defined, not when the solution is defined.  If a customer comes to you and tells you what they need, then they have already set the price in their mind.  On the other hand, if a customer comes to you and asks you to help define what they need, then you create the value together.

    If you’re like most Second Stage companies, it’s hit or miss whether you’re talking to customers about the answer or the problem.  It takes a clearly-defined market strategy, and a disciplined sales process, to ensure your conversations consistently focus on the need.  That takes some work, but it’s also the best way to grow your small business in Stage 2.

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

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  • Does Your Small Business Have A Sales Process?

    19 March 2012
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    As a small business emerges from the start-up phase, and becomes a Second Stage company, the sales process can and should be formalized.

    It can be formalized because you now have enough experience with sales to know some standard steps that you usually follow.

    It should be formalized because you need to start building consistent expectations with your customers, you need more consistent information for your team, and you need to start to build up systems around your sales that will need some standardization.

    I’m not suggesting you go overboard on this – just some general guidelines or steps that you’ve learned help you.

    How do you create a (somewhat) standard sales process?

    As a first step, think about the customers or orders that your team handles smoothly.  What usually happens when those orders come in?

    Then, think about the customers or orders that are a hassle.  What usually happens with those orders – and what do you notice doesn’t happen with those.

    When I asked these questions of a 20-person manufacturer last year, they realized that most of their sales followed 4 basic steps – but also that complex, unclear orders (which happened to be their highest-value work) needed a different process.  They outlined the two different processes, and when I met with them 3 months later, they said, “We’re handling all of our orders much, much better.  And the customers are a lot happier.”

    If your small business has grown into a Second Stage company, your team and your customers will appreciate you starting to understand and standardize your sales process.

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

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  • Account Plans Will Drive Big Value For Your Small Business

    11 March 2012
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    Once you have segmented your customer base, the question is, “What can I do for my best customers that will drive value for them and us?”

    The answer to that question should be captured in an Account Plan, which outlines the relationship and opportunities you have with a key customer.

    Here’s what I recommend you include in the Account Plans you write for your Second Stage company:

    –          History and highlights of the relationship

    –          Background on relevant people you know at the company

    –          Description of why they work with your company and why they think you’re valuable

    –          Immediate and next-year opportunities that you’ve identified, as well as the 3-5 year potential for the relationship

    –          Likely relationship and engagement for the coming year

    –          Plan for additional activities to expand or enhance the relationship and engagement in the coming year

    You’ll be surprised at how much you learn about your customer and yourself when you write an account plan.

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

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  • A Shortcut for Your Compensation Planning?

    21 February 2012
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    I’m working with a $2MM firm right now to build in a performance-based aspect to their compensation program.

    Usually, I would follow a process of compensation strategy (guiding principles for how we make comp decisions) > compensation framework (the components that go into comp decisions) > performance framework (the specific definitions of performance).  (If you want a full description of the process, you can get it from my book, The Stage 2 Owner’s Manual.)

    But with a small firm, we’ll be able to skip the comp framework step.  That’s the step where “What does it take for you to stay in the game?” changes to “What is the right amount to pay you?”  It looks at things like market pay rates, and what the role of the person is.

    If you’re a small Second Stage Company, the most important things to address when you upgrade your compensation program is why you pay people what you do – the overarching principles that are at play, and the specific performance drivers you look at.  When you get bigger, or when compensation starts causing you problems, you can fine-tune your pay program based on some more sophisticated thinking about what makes up employee compensation.  But that’s a short-cut that, in most cases, is fine to take when you’re smaller.

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

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  • Why Getting Compensation Right is Important to Your Growing Business

    10 February 2012
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    Stage 2 management focuses on getting approximate answers, not precise ones – and then using judgment to realize when an answer can be more approximate, and when it needs to be more precise.

    Have you ever thought about the impact of over-paying, or under-paying, the staff in your Second Stage company?

    If you are over-paying, then you are taking resources away from other parts of the business that would give you a higher ROI.  Over time, you’ll under-invest in the areas of the business that make your company stronger, and the result is a company that is paying its employees relatively well while weakening the business.

    If you are under-paying, the opposite is true.  You are “mining” your employees for the value they create, and if they don’t feel rewarded, you will be faced with a triple-whammy – you’ll lose someone who was providing more value to the company than you realized, you’ll have turn-over costs, and you’ll have to spend more than you expected to replace that person.

    Compensation is about aligning the rewards that employees get with the value that they create for the business.  As your business gets more complex in Stage 2, that alignment gets harder, and more important.

    You’ll never pay someone exactly the right amount, but making sure you’re close is important for you, your business, and your employees.

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

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  • Top Compensation Mistakes Second Stage Companies Make

    8 February 2012
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    I was reading the blog post Top Compensation Planning Mistakes (And How to Avoid Them) and there were a couple that stood out as particularly important for Second Stage Companies:

    Saying one thing and doing another, which the blog says can be avoided by “avoiding secrets…and reducing exceptions.” The particular challenge for Stage 2 is that most leaders who are emerging out of the start-up phase don’t have expertise in compensation, and don’t realize how complicated it gets in Stage 2, and so they hide how they make compensation decisions in a “black box.” This usually works fine for some period and then starts to break down as they add people. In Stage 2, it’s especially important to think through a comp strategy so that you can avoid secrets and reduce exceptions.

    Not preparing managers to talk about compensation, which the blog says can be avoided through training and scripting answers to key questions like “How does the organization set salaries?” and “Why did I only get this much money?” The particular challenge is that most Stage 2 managers don’t have expertise or experience dealing with compensation – and in fact what experience they have is with the start-up phase’s “What do you need to stay in the game?” approach. One of the most important aspects of a compensation program for a Stage 2 company is the messages that it communicates about how the company creates value and how performance is measured. If those messages don’t make it to employees – or, worse, if the wrong messages are communicated – much of the power of the compensation program is lost.

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

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