Situation: A company is in the midst of due diligence for sale of the company. Chances of closing the deal are 50/50. The CEO, key staff and the Board must plan for both contingencies. How have you planned for contingencies whether a sale goes through or not?
Advice from the CEOs:
You have to assume that the company will be a going concern. If there’s no hope for the future, there’s no power in the present. Without hope, you can’t establish a motivating vision around which to rally the team. Whether or not the sale goes through:
It is essential that the owners and Board make a commitment to the key employees, if not to the long term business.
Absent a long term commitment to the business, customer initiatives and alliances may prove difficult, because major customers will know that an offer is on the table. They want to be sure that they can count on you for ongoing needs.
The Board and Leadership Team must create a strategy for moving forward.
Key to success will be material and financial commitments from the Board to motivate the Leadership Team to stay on-board.
Retention plans may include:
Sizeable retention bonuses to the team.
If an employee stock-ownership program is in the works, there must be assurance that this will be put into place.
Rules of engagement in the case of future due diligences that will preserve the financial interests of the team.
For the CEO, support of the Board is crucial. It is imperative that the CEO impress on the Board how critical their support is to both the company and their own financial and fiduciary interests. If the Board fails to make commitment to the team and company moving forward, it will be difficult to create a winning strategy.
Situation: A membership association’s revenue is largely tied to its annual conference. The primary sponsor of the conference has decided to host their own annual conference. This will disrupt the association’s access to both conference attendees and vendors. The sponsor has offered terms of collaboration; however, the conditions are unfavorable to the association. What are the best alternatives available to the association and how should they pursue them?
Advice from the CEOs:
Are the association’s mission and vision are tied to or independent of the sponsor? If there is an ongoing reason for the association to continue without the sponsor then it is reasonable to pursue alternatives.
There are at least two options available to the association:
Accept the partner’s offer of collaboration, provided that this can be done under conditions that will allow the association to survive short-term. If the partner stumbles hosting its own conference this may allow the association to recover ownership of the annual conference. The danger is that this may lead to a slow death if the sponsor further cuts revenue to the association or a fast death if the sponsor decides to abandon the association.
Shift the focus of the conference and ancillary services under a new branding scheme. A survey of the membership indicates that the majority favor a mixed-platform solution, and may welcome a mixed-platform approach. You may need to rethink and rework your model but this may offer the best chance for ongoing survival.
What steps should be taken to pursue the second option?
Conduct a second survey of the membership to evaluate their preferences on platform focus, what they want to see in a multi-platform conference, and what platforms should be included.
Shift focus of the association to multi-platform as a response to members’ priorities and desires. Court the majority of the membership that favor a mixed-platform focus and de-emphasize those who favor the single platform solution.
Develop an alternate roster of sponsors including all competitive platforms. If this model succeeds, your current primary sponsor may find participation imperative.
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.
Situation: The CEO of a small company finds that whether he gives broad direction to employees or very specific instruction he gets the same result: they don’t seem to understand what he wants. He feels that they don’t have a sense of buy-in or urgency. What are best practices for effective delegation to improve results?
Advice from the CEOs:
You recently fired an employee for inconsistent performance but didn’t tell your staff. When you return to the office this afternoon, get the employees together and tell why the individual was fired. Let them know that this is part of a broader pattern that you see within the company and that if you see other cases of individuals not following through on their assigned responsibilities you will have to take additional action. Unless your employees understand that nonperformance has consequences, there will be no change.
In your operations, set subassembly goals and intermediate milestones coupled. Create and post a set of charts in the operations room so that employees have a regular visual reminder of how they are doing. Bring these charts to employee meetings and discuss how the company is doing. If deadlines aren’t being met, ask for input on how to improve performance. Celebrate successes with recognition for individuals or groups who demonstrate the ability to meet objectives.
Hire an operations manager with experience working with teams the size of yours. You want an individual who excels at motivating and getting results from people, and who has supervisory versus managerial experience. Think platoon leader – a person who excels at effectively running small teams.
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.
Situation: A tenet of the Company is that all decisions are made consistent with Company Values. However, some of my managers are asking for guidance on how to do this. How have other CEOs encouraged managers to make decisions consistent with company values?
Advice from the CEOs:
Create cross-functional teams to address initiatives, solve problems and develop new processes consistent with company values.
This builds understanding other departments’ perspectives, and awareness of the impact of decisions on the company as a whole.
It builds awareness of company values and fights unhealthy competition between functions.
One company created an employee task force to encourage living company values. Their solution includes:
Review the company’s values and consider revising how they are stated for easy learning.
Involve employees in discussions of company values and how they are applied in their departments.
Create a cross-functional employee task force to address inter-departmental conflicts and to suggest solutions in line with company values.
Expect everyone to know the company’s values, and occasionally test them.
Build a vision of what the company looks like as an expression of its values.
Make living this vision part of your role.
Include living company values as a formal responsibility of managers.
Reward initiatives that build company values into company efforts.
Regularly review with your mangers their execution of company values.
Create “SMART” objectives around implementation of company values, and hold individuals accountable for achieving their objectives.
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 CEO has developed an annual plan and wants ideas on the best way to communicate the plan to staff, secure buy-in and create accountability for execution.
Advice from the CEOs:
Communicate your vision for the company and the future as a broad outline so that employees know how they can contribute. Create a picture so that they can see and support your vision.
Ask for input on how to implement the plan. Since they will be doing the work, the best way to generate buy-in and accountability is for them to own the implementation plan.
You don’t have to share all details of the plan with everyone. If you communicate the plan in parts to those who will implement them, tailor the message to the person, and create individual objectives that will support the overall plan. Connect achievement of objectives to job evaluations.
Limit the number of objectives for each person – three key objectives plus one personal development objective. Have each employee develop activities to support achievement of their objectives.
Once objectives are in place, conduct regular meetings to review progress against plan and objectives, identify performance obstacles and solutions, and to reinforce the overall vision.
The vision must be simple and direct. Consistently repeat and reinforce the message. Publicly recognize individual contributions that support the vision.
Establish metrics to track progress toward the vision.
Stay on message with each person – focus on their goals and contributions.
Be consistent in your words and actions and use them to reinforce the vision.