Category Archives: Strategy

How Do You Delegate Yet Stay Informed? Seven Suggestions

Situation: A CEO wants to push project ownership down to lower levels of the company. This is not happening unless the CEO pushes. How do you delegate yet stay informed as you push authority down the organization chart?

Advice from the CEOs:

  • The company needs systems and guidelines to clarify on what and when the CEO wants to either have input or hear back, and what can happen without the CEO’s knowledge.
    • Set levels of approval – dollar impact or decision type – and clarify what decisions can made at what level, what decisions need higher level approval and at what level, where they must inform you, and where you must sign off.
    • Similarly, establish regular reporting and meeting schedules, along with guidelines as to what is to be reported – again by budgetary impact or decision type – and assure that this reporting takes place.
  • “The Great Game of Business” by Jack Stack describes a company which has implemented these systems with astounding results. It provides a template and describes in detail how the system is implemented and what bumps they encountered along the way.
  • Invest more time in setting roles and responsibilities for your direct reports.
  • Keep reporting systems aligned across the company.
  • Expect over time to adjust levels of authority as individuals grow in responsibility and accountability.
  • Most importantly, lead by example. If a team member comes to the CEO for guidance on a project, refer them back to the proper manager for advice.
  • 2015 Top ranked software systems to manage projects and processes from selected searches:
    • Capterra: Microsoft Project, Basecamp, Atlassian, Wrike, Podio
    • Insider.com: Smartsheet, Mavenlink, Wrike, Posoda, Metier
    • PC Magazine: Zoho Projects, Teamwork Projects, LiquidPlanner, Workfront, Wrike

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When Are You Dominant and When Do You Facilitate? Three Keys

Situation: For a CEO to lead effectively, she or he needs to be able use both dominant and facilitative modalities of leadership. James Church, in Navigating the Growth Curve, ties the use of each mode to the growth stage of the company. A CEO asks whether the use of each modality is purely a question of growth stage, or whether there are situational guidelines for the use of each modality. When are you dominant and when do you facilitate?

Advice from the CEOs:

  • The Dominant Mode is appropriate when there is an immediate situation with a clear desired outcome; whereas the Facilitative Mode is appropriate when fixing a broken system that produces issues, or to increase team communication and contribution. As examples:
    • The Dominant Mode is appropriate when there is an immediate issue to be resolved, with clear legal implications and a clear response based on established policy.
    • The Facilitative Mode is appropriate when you want to develop and institute policies and procedures to handle issues ahead of time, or to establish guidelines for action. In these cases you want both input from the team as well as buy-in to institute the resulting decisions.
  • Strategic Planning shifts from Dominant to Facilitative Mode as the organization grows and becomes more complex. Early on, strategy needs to come with a single, decisive voice. In larger companies strategy becomes a group exercise because there are many moving parts and teams.
  • Another way to think about this is that Dominant is appropriate when “the buck stops here,” and will shift from CEO to managers for specific decisions when you reach a stage where the managers are now dominant. Facilitative becomes appropriate when managers and employees – those below the level of company or division leader – need to make the decision instead of the leader.

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Where Should a Company Focus – People or Cash? Four Thoughts

Situation: A small company sells consumables as its primary source of revenue and profit, and produces equipment associated with these consumables. Their challenge is that designing and producing equipment is beyond their financial capacity. They have a small, loyal staff engaged in equipment production. This is a critical trade-off that must be resolved. Where should the company focus – people or cash?

Advice from the CEOs:

  • This product/profit combination is common. HP sells printers and ink, as well as other products, but ink cartridges have long been their primary source of corporate profit. The question is how to produce the associated equipment at the lowest cost?
  • Given the shortage of financial resources, why not asks a company with expertise in equipment to build the equipment on a contract basis?
    • Offer the outsource company the designs and expertise to support the project. That company may even hire your employees who have developed expertise in this area.
    • In return for providing design and guidance, ask the contract company for a percentage of the revenue or profit on equipment that they sell. This relieves you of the payroll and cash obligations for the equipment, and provides you with a modest income stream from equipment sales.
  • There is an obvious question of how the small company retains its intellectual property position. Is it possible to look at critical sub-assemblies and retain the expertise within the smaller company to complete and install some of these?
    • If so, this will boost annual revenue. The contract partner completes all but the most critical pieces, and the small company finishes the product with its technology.
  • The small company, through its sales and marketing efforts, should maintain control of leads and sales of both equipment and consumables.

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How Do You Maintain Momentum as You Grow? Seven Factors

Interview with Ishveen Anand, CEO, OpenSponsorship.com

Situation: Emerging stage companies that get early traction must maintain momentum and strong growth. This is particularly true if the company is competing in an established industry where innovative and new solutions are not the norm. Early adopters fall back into old, comfortable habits. Filling the pipeline with new prospects takes a lot of energy. How do you maintain momentum as you grow?

Advice:

  • Find a familiar, respected example of an existing service that is similar to yours. Match.com is widely recognized. We use Match.com to describe how we connect athletes with potential sponsors. Our service is free in the early stages and focuses on introductions. It costs nothing unless the parties decide on a deal. It’s up to the parties to decide whether to go out, form a relationship, and later end up together.
  • Map the stages of a sale for your offering, and select progressive KPIs that represent these stages. For example, early on it may be users. Later it becomes messages between users. A sale is closed when messages produce deals. Once you have progressive KPIs you can focus on tipping points between the stages and facilitating movement from user to message to deal. Set metrics and timeline objectives at each stage of the transaction.
  • Closely monitor conversation rates between users, messages and deals. Watch the momentum of conversion between the stages and test interventions that positively impact this momentum.
  • Match social media channels to the personalities of each of your stages. Twitter is a great metric of sales success and LinkedIn helps us to understand the reach of OpenSponsorship. Instagram is a great tool for those selling products, so slightly less relevant to us, but still necessary. Use the appropriate channel that will best bring potential users into your sales stream. An advantage of social media channels is that these provide additional insight into your transaction stream and what users are saying about you.
  • Understand what’s right for your users. Early on you look for elements that will create buzz and feed viral growth. Target special events and opportunities which offer high visibility. For us, a big event will be the 2016 Olympics in Rio de Janeiro. For another company it may be a large convention like CES or SxSW. Plan in advance and make the most of these opportunities.
  • Know your users’ seasonality. What are their peak purchase seasons? Do they have special seasons? What are their off-seasons? How can you take advantage of this knowledge to offer them new opportunities? Populate your web site with the right pages and social media marketing efforts linking to these pages to drive usage and business year-round.
  • Important pieces of momentum are staffing and investment. Early on, these seem almost like distractions to a CEO. The CEO is more engaged in the product or service being provided. However, personnel and fundraising decisions critically impact the future of the venture and must be taken seriously. Success will depend upon the CEO’s being able to move seamlessly between conversations about product and service, staffing and fundraising.

You can contact Ms. Anand at ishveen@opensponsorship.com

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How Do You Communicate a Company Sale? Six Guidelines

Situation: A closely-held, non-public company is in negotiation for a possible sale. The CEO seeks guidance on when and how to communicate this to employees. What event would demand communication? The CEO is concerned that if the sale falls through this may significantly damage employee morale. How do you communicate a company sale?

Advice from the CEOs:

  • The trigger point for any employee communication will be due diligence. At this point, you may have a serious buyer.
    • Going into due diligence, limit updates to those who will be involved in the process.
    • Most acquisitions do not go through, so a broader communication risks disrupting the company – unless you are very confident that the sale will proceed.
    • Prior to due diligence, there is no benefit to communicating any possible sale to employees.
  • What message do you deliver to those who will be involved in due diligence?
    • We are entering a due diligence. This is an exercise that we’re doing for our own education so that we understand the value of the company. This is just a drill.
  • Keep your eye on the business and don’t be distracted by the offer.
  • Have a good idea of an acceptable sale price.
    • For a company with intellectual property or significant assets, three to five times EBITDA is a good starting point – unless the sale is a strategic buy to the buyer.
  • A possible deal is often spoiled by terms and conditions that the buyer attaches to the deal.
  • One buyer (at any one time) is the same as no buyer. When owners get serious about selling the company they will need a broker to develop multiple buyers, to advise them through the sale process and to defend their interests.

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How Do You Simplify a Firm-wide Software Roll-out? Five Ideas

Situation: A company plans to implement a new CRM system. They have a project road map and have assigned a manager for the implementation. However, the CEO has concerns because this is the most significant software roll-out that the company has ever attempted. She wants to assure that the roll-out proceeds smoothly, and that and that sales, marketing and customer service functions are not hampered. How do you simplify a firm-wide software roll-out?

Advice from the CEOs:

  • Focus on company business objectives as you plan and implement the roll-out. Optimize the system to company business objectives, not just what the team wants.
  • Scope this out as a project management exercise.
    • Identify objectives.
    • Build and test.
    • Roll the system out to preliminary production and collect feedback on functionality.
    • Rebuild and test.
    • Plan and conduct system orientation training.
    • Set a date for the roll-out.
  • Don’t immediately roll the new system out company-wide. Conduct an initial implementation with a small scale test team. Make sure that everything works as planned and that day-to-day function is not compromised. From the information that you gather during initial implementation, tweak orientation training so that everyone is comfortable with the new system.
  • During initial planning sessions to set system objectives, meet first with managers whose teams will be impacted by the roll-out. Managers may not speak freely if their support staff are present.
  • Have a roll-out celebration and be generous complimenting personnel who have been involved in planning and roll-out.

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How Does a Founder Hire His Replacement? Four Thoughts

Situation: A founder CEO, after many years building a business, has lost the passion that he had early on. He needs to hire someone to succeed him, assuring the ongoing growth and value of the company while minimizing ongoing personal involvement. How does a founder hire his (or her) replacement?

Advice from the CEOs:

  • When a founder has lost the passion to continue running a business it is time to move on. Passion is critical to meet the day-to-day demands of a business.
  • Before you start looking, decide whether you will continue to have a role in the business, and what that role will be. Will you remain Chairman of the Board and give up the CEO role? If so, are you ready to let go of the CEO role so that the right person can take it on? Typical company structures for Chairman/Top Manager roles are:
    • Chairman focuses on growth strategy, select PR and critical relationships.
    • CEO/COO/GM handles operational planning and day-to-day management.
  • The candidate that you seek will have the following profile:
    • Good energy, loves the business, but not ready for the risk of building a company.
    • When the right person has run the business for you for a few years that person may become your exit strategy.
  • Go to your next trade show with the mindset to find the right person. Many of the best candidates will be on the trade show floor – now working for someone else, but inwardly looking for their next opportunity.
    • Spread the news ahead of time that you’re looking. See who seeks you out.

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How Do You Plan an Off-Site Meeting? Several Suggestions

Situation: A CEO wants to schedule an off-site planning meeting with her top staff. She has heard about the potential efficacy of off-site meetings and is intrigued by the idea of taking her staff away from the office for a day or two to concentrate on planning. She is curious about typical agendas, time frames, objectives and who should be involved in the meetings. How do you plan an off-site meeting?

Advice from the CEOs:

  • General considerations
    • Set the objective of the meeting in advance. Tell everyone involved the objective so that they are thinking about this prior to the meeting.
    • The staff involved depends on the objective of the meeting. Select participants to fit the need.
    • Include a team building event. One purpose of off-sites is to help the team or teams get to know each other better and improve collaboration.
    • Have an agenda for the meeting and meet without interruptions. Have participants notify key customers or contacts in advance, schedule back-up contacts if necessary, and don’t allow interruptions.
    • Hold the meeting during work hours. Options: one day, local for easy travel and return home; or two days, nice setting, dinner the first day, and late afternoon return home the second day.
    • Do you need a facilitator? This depends on the goal and organizer’s comfort with the topic of focus.
  • Typical Agenda:
    • A speaker or educational component pertinent to the meeting goal.
    • Breakout and group discussions to think through important issues.
    • A team-building event.
    • Some fun – dinner or an evening activity that allows individuals to talk in a relaxed setting.
  • Examples of effective events:
    • Broad agenda – What can we do better?
    • All-hands meeting – prompts contribution by all.
    • Opportunity for CEO to communicate the company vision and involve employees in the planning process for the coming year or period.

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Who Do You Serve – The Customer or The Company? Six Thoughts

Situation: A company’s motto is that they serve the customer first. As an unintended consequence company projects get lower priority and action than customer projects. Frequently, the CEO finds that company projects are only half completed. What have you done to make company initiatives a priority? Who do you serve – the customer or the company?

Advice from the CEOs:

  • This is a great question. Clearly serving the customer has to be top priority. However, you also have to complete company projects, particularly those which are critical to company function or which will enhance your ability to serve your customers.
  • Define the company as a customer for important projects. Call this “billable hours” to the company and credit them as such on these projects. Accompany this with employee training on how to prioritize “company” versus “customer” projects when priorities conflict. It may take time to work through this, and for the message to sink in.
  • Add completion of company initiatives to the company kudos list. LInk company award eligibility to completion of company initiatives. For mission critical projects, grant double credit for completion of company projects. Adjustment of incentives will help to get the message across.
  • In employee communications, include updates on company projects along with customer projects and give equal or greater emphasis as appropriate.
  • Have you defined your “ideal customer”?
    • Include internal customers within your definition of ideal customers.
    • This will help to clarify and prioritize opportunities and shift the mindset.
  • For mission critical projects hire additional personnel or contractors.

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What are Your Key Business Metrics? Seven Suggestions

Situation: A CEO has been analyzing the metrics that she uses to track her company’s performance. Historically she has used common metrics like sales, gross and net margin, profit and net operating income, budget plan vs. actual expenses, and sales forecast vs. actual sales. She is curious what other companies use to track performance. What are your key business metrics?

Advice from the CEOs:

  • The most important financial metric for many companies is actually cash flow – how much cash you have on hand and your cash flow forecast. Two metrics that can help you to better understand and boost cash flow are:
    • Receivables – aging rate
    • DSO – Days Sales Outstanding
  • Additional financial metrics include:
    • Portfolio performance
    • Variable versus fixed cost ratios
  • To augment understanding of profitability, track “good” profit – revenue from customers who are profitable, as opposed to revenue that is either break-even or unprofitable.
  • Sales metrics to measure future revenue include:
    • Order backlog – by month for X months out
    • From this, forecast beyond visible orders
  • Marketing metrics include:
    • Net promoter score – would the customer refer us to a friend or family member?
    • Client and referral client retention rate
  • Metrics for utilization of resources for a service provider include:
    • Total hours paid versus total hours billed
    • Resource utilization
  • Business trend tracking. If business is seasonal, look for historic peak to peak times – this may be 3 months and may be 18 months. Determine this and make the rolling cycle equivalent to your business cycle.
  • Review your metrics regularly to reinforce their importance across the company

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