Situation: A CEO is faced with three strategic options that the company could pursue. He seeks guidance on how the company should evaluate the three options. What signs should they be watching for in their marketplace? Are there steps that they should take while completing their evaluation? How do you decide between strategic options?
Advice from the CEOs:
Go with what sells! Listen to the market, and your key customers. Make sure that you have ears out there that will give you early signals.
Until there is a clear indication from the market place as to which is the stronger strategy, keep your options open. A hybrid strategy – maintaining your current strategy while evaluating the strongest strategic option – will allow you to do this and continue to drive revenue from your existing base while the market determines dominance among the new platforms.
Look at the cash flow from your current strategy and each of the new options that you are considering.
What difference is there in upfront payments versus ongoing residuals?
Look closely at your cash flow needs compared to the timing of receipts from each option.
Are there ways that you can strengthen your cash flow depending upon which strategy you select? How will you bridge the gap between current and future cash flows from each strategic option?
Consider hiring a full-time manager in business development.
This will help you to learn more about your customers and what they will buy.
Select someone who has relationships with the key people in your target markets, and who knows what the insiders are doing at important existing or target customers.
Select someone who can give you access to new opportunities and help steer your strategic development.
Consider a long-term strategic partnership with a leader in your market.
Situation: A company is planning to pitch a Blue Ocean service to a major prospect. The service has a proven track record with industry leaders and is not being offered by other vendors. How do you pitch a Blue Ocean service?
Advice from the CEOs:
Start by listening to the client’s current situation. Here are some opening questions:
How did you get here? Just the 2-3 minute version. As a follow-up question, ask what their past performance has been.
What is your most important competitive strategic advantage? Follow-up: what is your future competitive advantage – the same or different?
If everything goes right, where do you see things in 2-3 years?
What obstacles, roadblocks and constraints will keep you from getting there?
Include graphics in your presentation on both the prospect’s current situation and how your proposal differentially impacts their ability to reach their future objectives.
In your presentation, highlight your ability to offer a very competitive overall cost proposal based on your ability to outsource work to lower cost subsidiaries or partners.
Emphasize your track record providing the proposed service to industry leaders.
Be sure that your overall proposal looks sound and responsive to the prospect’s need as you understand it. It will be important to understand whether the individual with whom you are meeting next has the same perspective. Try to determine this before your next meeting.
Adding an additional vendor within your proposed framework doesn’t upset the apple cart. It probably benefits everyone as long as it benefits the prospect.
Note: The term Blue Ocean Strategy comes from a book published in 2005 and written by W. Chan Kim and Renée Mauborgne, professors at INSEAD and co-directors of the INSEAD Blue Ocean Strategy Institute. The authors argue that companies can succeed not by battling competitors, but rather by creating ″blue oceans″ of uncontested market space through the simultaneous pursuit of differentiation and low cost to open up a new market space and create new demand.
Situation: The spouse of a CEO works in the business but has conflicts with other employees. This creates personal tension for the CEO. The CEO wants to explore a different role for the spouse, and also wants to create more balance at home. The CEO believes that working with the spouse to create a simple family charter with common values, vision and mission will help the two of them to find common needs and goals both at work and at home. How do you create a family charter?
Advice from the CEOs:
As you build a family charter, consider both your individual and your common views. Once you have established common ground with your spouse, you can bring children into the process to reinforce values and share creation of the vision.
In preparation for this discussion, both you and your spouse should start by thinking about what you each want. Once you have done this, compare notes and look for commonalities where you agree on what is important. These commonalities will form the core of your shared values, vision and mission.
Have lunch with your spouse once a month, just the two of you. Why? Because you are telling your spouse that they take precedence over your second spouse – your job, and you are taking time and attention from work to spend time one-on-one with your spouse. Do this monthly, but not always on the same day – make it more spontaneous and special.
Reinforce your family charter with regular family or one-on-one meetings with your spouse and children.
When having a conversation, focus on listening and don’t try to “fix” things.
Situation: A company’s client is furious at the service they received from the company, It turns out upon investigation that the source of the client’s difficulty arose from their own actions, not from anything done by the company or its employees. How do you tell a client that their assumptions are wrong?
Advice from the CEOs:
Ask open-ended questions in an attempt to “clarify your understanding” of what happened. You want the client to answer these questions so that they explain the situation to themselves. Always allow them to save face in this process. Some people are better at this technique than others.
Try to understand the client’s experience of the problem as opposed to focusing on the problem itself. This may reveal more deep-seated challenges facing the client that are just being expressed through the current situation.
Email communications often complicate these conversations. Call or visit to let the client know that you are responding personally to their concern. The best communication is person-to-person through conversation. Let them vent. Peel back the onion through questioning to reveal the core problem.
Be honest. Not negative but simply honest. Listen to gain understanding and repeat the facts, as stated by the client, to assure that you properly understand their perspective. If you need to present your own perspective, and it differs from the client’s, do this in a neutral, unemotional tone.
Sometimes you will find a win-win in these discussions, and sometimes you won’t.
Situation: A company has lost the team spirit that they had when the company formed. The CEO has struggled to revitalize this spirit but encounters resistance from some employees. What techniques have you found effective in building or rebuilding a strong team culture and improving team performance?
Advice from the CEOs:
If an individual is resistant to team meetings, work with them one-on-one. Listen to their concerns about meetings and ask questions to focus them on a higher level of concern – individual and team performance and the need to build effective teams to enhance this performance.
If an organization has divided into functional silos, form multidisciplinary teams around initiatives to build inter-team synergy.
Choice of leader is critical in team formation. The best teams have the most effective leaders.
Crisp, clean communication is important. Document verbal commitments in writing.
Select team membership with an eye to team compatibility. Avoid putting individuals with a history of conflict on the same team, particularly if this is a management team.
Engineering product teams – where individuals work independently on distinct aspects of a larger project – may be more tolerant of past conflict as long as team activities do not require collaboration among individuals with a history of conflict.
Look for common value systems and common focus when assembling teams. This helps to build the team as a strong unit.
Recommended Reading: The Five Dysfunctions of a Team – Patrick Lencioni.
Situation: A company missed production milestones and had to reduce top and line staff by 20% to keep salaries in line with expected revenue. An executive who was very angry about being let go has asked the CEO to meet him for lunch. How do you manage communications with employees post-riff?
Advice from the CEOs:
If you haven’t already, call a company meeting to explain the situation, as well as the rationale for the riff. The company has to manage itself financially in line with current and expected future revenue to assure that it can take care of employees. Explain the connection between production milestones, revenue, and the company’s ability to afford staff. Employees generally understand these connections and will accept this well.
When you have lunch with the executive, first listen to what he has to say.
Anger expressed in an exit interview is part of a natural emotional response to difficult news or change. Listen for signs of ongoing anger or progress toward acceptance of the situation.
If the individual threatens the company or tries to bargain the severance package, don’t negotiate.
However, if the individual is reasonable and asks for assistance in finding a next position – references, introductions, etc. – then offer to assist as you can.
Should the CEO make an attempt to follow-up with others who were riffed?
No. If they contact you, then respond in a similar fashion as you are to the VP, but otherwise don’t try to contact them.
In the Silicon Valley economy, people are familiar that employment situations change and know that as this happens they can be affected.
Interview with Doug Merritt, President & CEO, Baynote
Situation: A company has a proven technology and satisfied customers. To achieve their goals, they need delivery on sales and service to ramp revenue. At the same time, new opportunities arise daily. How do you keep the team focused on execution and delivery?
Advice from Doug Merritt:
The first thing to focus on is focus itself. Most of us don’t suffer from lack of opportunities, but from an inability to make hard choices and diligently pursue the few critical or high pay-off options. To tell the difference between gold nuggets and distracting bright shiny objects, you must have a clear strategy and priorities on customers and channels you want to develop. It is critical to choose the right opportunities that will optimize achievement of the strategic plan and to say not to those that don’t. This must be constantly reaffirmed through a simple set of metrics around your optimal customer set, revenue ramp, and quality of services delivered.
The second thing is attracting the right talent. A small and rapidly growing company has little time and resources to effectively train fresh talent. If scale is the issue, it’s important to identify and attract experienced individuals – those who have proven their ability to deliver and who bring along a high quality, proven, loyal following. Top talent that can open the purse strings of your target customers. This means hiring rock stars who do this better than you can! The challenge for the CEO is remembering that success almost always comes from hiring people who can do their jobs much better than you ever could. The CEO’s unique talent isn’t being the smartest person in the room – it’s your ability to build and guide an organization that will achieve more than you can alone.
Third is to keep the team focused on the most important priorities. The CEO needs to generate a crisp vision and to distribute information that maintains focus on that vision. Most “Type A” overachievers want to do lots of things well. The key is doing the right things well. You do this by measuring, and by creating transparency around the few key levers that drive the strategy. It helps your cause to say no to a visible and enticing “bright shiny object” that, in the past, the team would have reluctantly accepted. Finally, it also helps to create a few large and non-negotiable milestones that get the company to focus, as a unit, on achievement. Ultimately, the CEO needs to coach and guide their team to do the right things right.
Interview with G.K. Sally Solis-Cohen, President, CEO Intronet
Situation: An early stage company is simultaneously undergoing geographic expansion and broadening its network to include new audiences. This mandates finding the right people to run the new opportunities while staying focused on existing operations. How do you stay focused on core operations while building new opportunities?
Advice from Sally Solis-Cohen:
First and foremost, understand your own limitations. Know what you can do, what you can’t, and delegate what you can’t do. This means choosing the right people to whom you can delegate important initiatives. As a start-up you have few people to whom you can delegate. Make sure that they see the opportunity as you do and have the skill and personality sets to handle their responsibilities. The choices that you make in selecting your core team will be critical to your success.
Make sure that your team talks back to you – your need their perspective and feedback, especially when their perspective differs from your own. Listen openly to their ideas. At the same time listen to your customers; they will keep you focused on your business and marketing plans. Focus more on listening, thinking and doing than speaking.
Have a very clear set of priorities and a to-do list. Focus on your A priorities. Delegate the rest. When you’re growing it doesn’t double your work, it quadruples it with travel and extra distractions.
Stay focused on your core value proposition. Keep reminding yourself why you started the business. Observe the validation that you receive from your customers and users. Live your value proposition.
If you are talking to nay-sayers, you’re talking to the wrong people. Surround yourself with positive people who are heading in the same direction that you are and who can present alternate points of view in a positive tone.
Situation: The CEO has regular lunches with staff to foster communication and sharing of information. In recent months few employees are attending these lunches. Also, a negative tone is beginning to pervade the office, though the situation seems to improve when the CEO is present. How would you address this situation?
Advice from the CEOs:
The immediate priority is to correctly diagnose the problem. Is this a question of the CEO’s energy or the team’s awareness of plans for the company? Is there something else going on of which the CEO is unaware?
Meet with employees. Have an open and frank discussion with them about the future of the company.
Meet with the most valuable employees first. Share hopes and vision for the business. Express appreciation for their contributions and discuss plans for their continued growth. Next, ask open-ended questions about the company and seek their input on how to improve it. Listen to what they have to say.
Next are borderline employees. Again, share the vision and appreciate their past and current contributions, but be honest about expectations for performance. Then ask the same open-ended questions that you asked the first group and listen.
For underperforming employees, again appreciate past and current contributions, but be clear that unless they substantially improve performance, future employment isn’t guaranteed. Ask the same open-ended questions asked of the other groups and listen.
Be patient. Don’t try to develop all the answers immediately. Listen and learn what drives employees – particularly keepers. Involve them in developing programs to drive the future.