A young company that focuses on personalized solutions needs to generate near-term
revenue to meet expenses. There are also options for debt or equity financing,
but the terms for each will equally depend on near-term revenue potential. How
do you generate near-term revenue?
from the CEOs:
in terms of the referenceability of early customers. As a new company, the first five customers
define the company to future customers.
core values of the company will help clarify how to make early choices.
just go for the easiest closes.
a chart of potential customer prospects:
potential prospects into groups.
is the deal model and key value proposition for each group?
a video and communications package to demonstrate the company’s benefit to each
are trade-offs between the different deals that the company will pursue:
fast deals are most likely to meet immediate cash flow needs.
biggest deals may involve the creation of LLCs. These will involve both more
time and additional legal fees.
sure that early deals align with the company’s core brand.
outsourcing to speed the provision of services to early clients. Build this
cost into your billings. Assure that the funds from early deals flow to or
through the company. This will improve the financial story to additional
serving special interest groups. Their potential value is that they work for
their passion more than for money. If the company chooses to work with one or
more of these groups, assure that customer selection aligns with company values.
current focus for near-term monetization is on merchandizing. As an alternative,
consider charging a separate fee for the use of company IP. This may give clients
additional incentive to utilize company technology to monetize their
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 has been approached by another company with complimentary technology concerning a partnership. The other company is young and rapidly growing, though at this time they are much smaller. The two companies are already collaborating on a project. There have been hints that this could develop into a merger. Under these circumstances, what’s the best way to develop a partnership?
Advice from the CEOs:
It’s always best to date and get to know the other party before exploring a deeper relationship. You are already collaborating with this company, so just continue on this path as you get to know them. See how the relationship and value of the partnership develops before exploring options that could result in loss of ownership and control.
Partnerships and moves beyond partnership are really about culture and values. Cultural fit is a huge question that is too often ignored when companies discuss partnerships and mergers. This requires more investigation than you’ve done to date. Wait until real challenges develop, and see how the two companies respond. Do they collaborate effectively to develop a solution or does the relationship become contentious. This will tell you whether a deeper relationship is worth exploring.
To be successful, relationships have to offer a win-win value that surpasses the cost of collaboration. There is always a cost to collaborating with another company if only in time and effort put into the relationship. Find a way to measure this cost so that you can compare it to the value received. The other company should be doing the same.
If you could buy the other company right now would you?
If you can’t tell the value of the company based on the information that you have, why would you consider a deeper relationship at this time?
Situation: A company’s Board is pressing the CEO to hire a COO to oversee operations. The Board’s concerns include succession planning for the CEO and a desire for the CEO to put more focus on the vision and strategy of the company. There are no current candidates within the company. How do you identify and bring in a COO?
Advice from the CEOs:
Think beyond roles and responsibilities and consider how you would describe the ideal candidate. This includes attitudes and behaviors, talents, experience, and essential skills. Map these attributes and use them to guide your recruitment and selection process.
Increasingly, companies are using a values-based process to evaluate personnel both for promotion and outside selection. Tony Hsieh of Zappos talks about this in his book “Delivering Happiness.” This doesn’t substitute for skills and experience, but helps to identify candidates who will help to strengthen your company’s culture.
Assure that you have a full process in place that will help you to recruit and select a good candidate. If it has been a while since you last recruited a high level executive, consider securing outside resources to assist. One of the CEOs even hires a 2nd expert to vet the recommendations of the primary expert.
Where can you look for good candidates?
Talk to your key vendors about who is really good in the industry. Look for a high potential individual in another company who doesn’t have room to grow in their current situation.
Also look at related industries where there will be cross-over knowledge and skills.
Don’t overlook the military. Talented officers are regularly rotating out of the services – people who have exceptional experience leading and motivating people.
On-boarding a new senior executive is different from a lower level employee. If you choose the right individual and they fit your culture, this will ease the process. Be aware that some of your current senior employees will likely be upset that they were passed over and may be difficult. If you haven’t done this in some time, it is worthwhile to secure counsel on the best ways to bring a new COO on-board.
Situation: As a company has grown to multiple sites around the world they have lost some of the culture that originally bound the company together. Many new hires are hired locally by regional managers and don’t have a strong bond to headquarters or the broader company culture. How do you build a unified culture in a company with many geographically diverse sites?
Advice from the CEOs:
Company culture starts with a common set of values. These values should drive everything, from hiring, through on-boarding and training, to performance measurement and evaluations. In a strong company, these values should be reinforced regularly and expressed in the day-to-day behavior and decisions of the company.
Look at how you hire new personnel. Is alignment with company values part of the selection process?
Next, look at your on-boarding and training process. Company values and culture should be thoroughly expressed and reinforced in the training process.
There is no substitute to face-to-face meetings to build shared company values and culture. At least once or twice a year you should host national meetings that bring the regions together. At these meetings company values should be reinforced, there should be business content, and there should also be recreational bonding component to help employees get to know one-another.
Consider an annual reward or recognition trip or special event, and include spouses at company expense. This creates a completely different level of bonding, and spouse involvement communicates a company commitment to the families of the employees.
If you have a large number of locations, you should also have a human resources department. Among the important responsibilities of the HR department will be developing uniform selection criteria, uniform training which includes emphasis on company culture and values, and assistance in planning national or multi-regional meetings.
Situation: Leaders who are successful in the long-term have figured out how to build high performance environments. This enables them to continually produce breakthroughs by stimulating the performance of others, and to rise above their competition. What are the factors involved in building a high performance environment?
Advice from Paul Limbrey:
Our work is based on 20 years of research into high performance in individuals and organizations. First one needs to understand the dynamics that stimulate high performance in people.
Our research indicates there are several elements that combine to form a system that stimulate improved performance in populations. These elements include concepts addressing Direction – Achievement, Failure and Strategy, providing Status of current performance, and Motivation – reason/purpose plus reward/consequence. The final unifying element is the culture or guiding philosophy in an environment.
On a company level, the first task is to understand these dynamics as you have created them today. This enables you to see where you need to tweak your environment to better stimulate high performance.
How consistent is high performance across difference fields of human endeavor?
We find that all elements that encourage high performance exist in all environments. However the potency of each element varies with the particular environment.
For example in some environments the Goals are more potent (Sales groups or athletes). In others culture is potent (the Military or companies like Southwest Airlines). In others the reward systems are most potent (Investment Banking) or the potential for failure (airline pilots or first responders).
Any of the elements can stimulate performance improvement.
How does one go about matching the right system and solution for a particular company?
Start by focusing on the potency of each subsystem – Directional, Status and Motivation – in your particular environment. How critical is each in shaping decisions and action taken?
Take the example of a CEO who has no vision for the future of the company. The result is inconsistent decisions day to day or week to week. The organization can’t focus on effective execution. The solution is to focus on Direction.
What about the CEO who is concerned with complacency. This is best addressed by looking to define what represents sub-standard more clearly for the organization.
If you have an “excuse rich” environment or desire greater accountability, look to your status or “exposure” systems to provide more accurate performance status first before looking toward your consequence systems.
Situation: A company has experienced rapid growth. This is creating stress for the staff and CEO, who finds it difficult to break away from the day to day to focus on strategy. Employees are not keeping pace with the evolving needs of the company and turnover has increased. What have you done to manage rapid growth?
Advice from the CEOs:
The first task is to improve forecasting of business growth, and the infrastructure needed to support this growth. This includes:
Regularly updating your sales and production forecasts.
Updating staff and training plans to meet growth forecasts.
Updating infrastructure and support plans.
Without these, the organization will whipsaw in response to market demands.
Take a critical look at your staff development plans and staff training.
Look at those areas that are most impacted by business growth. Determine whether you have the right managers and support in place.
Evaluate whether you have the right people and whether they have the skills to handle new demands of their positions.
Critically evaluate each now job that you take on. Assure that you have the staff and infrastructure to meet client demands.
Always assure that you deliver on your company’s integrity, reputation and core values.
In addition to addressing immediate needs, look at long-term plans strategically. Ask where you will be in 10 years. Articulate this vision in detail, and drive plans down through the organization. Make sure that everyone is on the same page, aligned with the same values, aiming at the same targets.
Also differentiate your vision from your mission:
You vision is a 10 year time frame, not one year.
Your mission is what you will be doing this year and in 5 years – the activities you will undertake to realize your longer term vision.
Fine tune your vision and mission and drive these through the organization. This will give you clarity on how you wish to do business and will help you to make hard choices as you handle rapid growth.
Interview with Jennifer Choate, President, Green Country Integrated Resources, Inc.
Situation: There are many opportunities to team with other companies, whether through partnerships, joint ventures or M&A. This is accompanied by the challenge bringing together different teams to succeed in new roles and tasks. What are best practices for bringing teams together?
People are an investment. Just like the stock market is not up every day, neither will be the performance of your people. Bringing people into new relationships, roles and responsibilities takes patience, work and nurturing to build skills and to get the best out of people.
Build the organizational chart of the new organization that you will build. Fill in all spaces with the individual who currently holds responsibility for each role. This means that some people will have several different roles. This is OK. As you add additional people, they will fill many of these roles.
Build a set of company or project values to guide individuals through the trade-off decisions that will drive future growth. Involve the full team in this exercise so that ownership of the resultant values is broad.
Develop and express in a consistent way the boundaries of the company or project. If Enron had had as one of its boundaries “we don’t embezzle” a crisis would have been averted.
Focus on systems and processes, not just on tasks. The core of any organization is people and relationships. These are best expressed through systems and processes, not tasks. Tasks express discrete roles, even if these may be sophisticated, but don’t encompass the richness or complexity of systems, processes or the people involved.
When dealing with people always ask “What is my role?” and “What is their role?” In each situation, work to understand the other’s perspective and what opportunity or concern they are bringing to the table. Trying to make someone into someone that they are not doesn’t work.
Particularly in a company or venture that focuses on high levels of customer service, act urgently, but avoid emergencies. You want your response to customer needs to be swift, but do not want to destroy operational rhythm.
Situation: The CEO questions whether he is the right person to lead the Company. The Company has solid revenues and profitability, but growth is lower than expected. How can the CEO improve his situation and solidify his leadership?
Advice from the CEOs:
The primary functions of the CEO are to assure the maintenance of company values, to provide vision, and to monitor resource allocation within the company.
Identify your strengths, and the most important areas where you need help. Create an organizational chart not of positions but of strengths that are needed within the company. Compare these positions with your own strengths, and focus your own activities on your strengths. Promote or hire talent to support you in the latter areas.
As you hire or promote and delegate, make sure that you are allowing those with new responsibility the latitude to run their areas of responsibility.
Should I consider hiring a CEO or COO?
Maybe. If you do, first identify the key leadership traits that we most want to see in a candidate.
If you hire a CEO, this individual should have skin in the game. They must be perceived as a leader, and there must be a clean hand-off.
Consider hiring a COO. This can be someone willing to take this role with the understanding that your long-term objective is to replace yourself as CEO. A person unwilling to come on as COO and to develop into the CEO may not be the right candidate.
Situation: The Company is hiring their first CFO. How do they integrate this key person into the company?
Advice from the CEOs:
The company should reflect the values, needs and desires of the CEO.
Have a clear discussion and agreement with the CFO candidate on values, role, and organizational structure before hiring or announcing anything to the company.
The talents of the CEO and CFO should complement each other.
The CEO may put the CFO in charge of areas that they want to delegate – accounting, administration, finance and contracts.
The CEO should remain involved in banking relationships.
Recommended announcements and timeline:
When the new CFO is announced, simultaneously present the new organization chart (broad responsibilities, not detailed position descriptions).
Set a timeline for realignment of roles. It is not necessary to specify exact roles at the time of the announcement – let everyone know that this is a work in progress and give a time frame within which all will be resolved.
Once the CFO is in place, the CEO and CFO should meet at least weekly, to assure that the CFO has the support and resources needed to accomplish their responsibilities.
All decisions within the CFO’s group, personnel responsibilities and any shifts in roles should come from the CFO, with the support of the CEO.
This will help the new CFO to more rapidly assimilate into the company and will give them the authority needed to manage their organization.