How Do You Expand into a New Market? Four Points

Situation: A company is interested in expanding into new market. The CEO notes that they have little experience in this market, but it is lucrative, and they believe that their technology has effective applications in this market. How do you expand into a new market?

Advice from the CEOs:

  • If the new market is technical it is important to identify the standards that govern production in that market. Examples include ISO 9000 processes and 13485 ISO Medical Standards. Start work on these now to assure that the products and services under development meet market standards.
    • While it will take effort to become ISO compliant, this investment will bring significant benefits in terms of regularizing all the company’s processes and procedures.
    • There may be some early resistance, but the long-term benefit is worth the pain.
    • Being ISO certified helps the company to sell its services. Many clients will not consider the company as a serious vendor unless it is ISO certified.
  • Pull in an outside consultant to do a quick gap analysis between where the company’s current procedures are and where they need to meet the standards.
  • Will ISO certification provide a competitive advantage?
    • It will never disadvantage the company and may provide a competitive advantage with customers.
    • Use Blue Ocean Strategy to create a new advantage for the company around ISO certification.
    • Industry will eventually require vendors to increasingly become ISO certified. If the company is already there it will be ahead of the curve and may be able to gain a premium price for its products and services by being there ahead of others.
    • European and International companies increasingly insist on ISO certification – they are ahead of the US.
    • Create a Market Road Map. Identify the markets that the company could serve. Look at the requirements for doing business in these markets. It may be possible to find additional leverage in ISO certification that will allow the company to enter additional markets with minor incremental additional cost.
  • Will ISO certification add an additional cost structure to the company’s services?
    • Under ISO, a company can have both ISO and non-ISO projects. Company standards will simply identify which projects are which and when non-ISO standards apply. Standards can be changed under ISO as new non-ISO opportunities arise. It is just a matter of updating procedures.

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How Do You Sell an Onsite Business? Five Perspectives

Situation: A company has several locations for its operations. One is onsite at one of their principal customers where they perform services for the customer. The rest of the business is pursuing a different direction, so the CEO wants to sell the onsite business and focus all efforts on the main business. How do you sell an onsite business?

Advice from the CEOs:

  • Do onsite business (OS) personnel identify themselves as part of the company or the customer’s company?
    • The older personnel themselves as part of the parent company; the new engineers see themselves as tied to the customer which is far larger and enjoys broad and positive brand recognition.
  • Now may be the time to sell from a price perspective. Companies are hungry for revenue sources and experienced personnel. The price that they would pay for the OS business is small change for them.
  • The decision comes down to price – can the company get the right price at the right terms?
  • Consider this alternative – break the OS off into an independent entity. Make it a separate company with own managers.
    • This allows the sale of the OS to be set up with its own operating rules and incentives, independent of the company’s other operations.
    • This move queues the company up for whatever is possible – ongoing operation or possible sale to a buyer. It also simplifies the sale scenario as OS would be a stand-alone unit, with its own personnel and management structure. There may be some shared infrastructure services with the company’s other locations, but these are services that would be taken on by the buyer using their own systems.
    • An option is to give stock to the managers of the OS – a piece of the pie to encourage them to stay on.
  • Given the company’s strategy and direction, investing additional funds in the OS doesn’t make sense. Selling and keeping the money makes more sense if the company is ready for this and feels that there is little or only a limited future for the OS business.

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How Do You Boost Intensity and Accountability? Five Solutions

Situation: A CEO is concerned about the intensity and accountability of her team. An employee stock ownership program is in place, and employees are rewarded with bonuses for meeting or exceeding objectives. HR reports that there is a lack of decision-making; employees just sit and talk instead of moving forward. How do you boost intensity and accountability?

Advice from the CEOs:

  • Does the current bonus structure include revenue growth? If revenue growth is not part of the incentive program, then this won’t be the focus.
  • What happens when the CEO is away?
    • Assure that the #2 who’s in charge has the same sense of urgency as the CEO and has the confidence to make decisions.
  • The company is at the point where it needs seasoned professionals to run key operations and functions.
    • Ideally this would be an internal promotion, but if there is no internal candidate look to hire from the outside. Hire two new managers – for different teams. Watch how they do with each of their teams to determine whether one can run the whole outfit.
    • This can ignite other employees – those who will catch on to what the new manager is doing and will now get the message.
  • Another CEO empowered people and explained how it worked.
    • They have had to swallow some poor decisions but have learned that they can’t come down on those who make mistakes – it discourages them from taking the risks needed to make decisions.
    • They’ve organized strategic teams to develop the empowerment program with minimal input from top staff. Teams are required have to report on their results 2x week – no exceptions.
    • The CEO hired two key hires who are hard hitting with deep resumes and experience – individuals who have shaken things up.
    • The new managers started in a sheltered situation where they could learn the organization and the people. This was done before they were put in their eventual positions.
  • What are the potential downsides to making this kind of change?:
    • Some sparks will fly.
    • Some will get upset.
    • Be patient with this process – let it happen.

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How Will Your Personal Plans Impact the Company? Six Points

Situation: A CEO, for personal reasons, is planning to move to another state. While he will remain CEO, he is concerned about the potential impact of this decision on the company, particularly the fact that he will not be present personally to handle matters that arise. What can he do to alleviate this concern? How will your personal plans impact the company?

Advice from the CEOs:

  • Put a stake in the ground. Set a date for the move and work backwards to see whether this is attainable.
  • Have a discussion with the company’s key managers.
    • Empower them to challenge the date.
    • Discuss this as a brainstorm to plan the future and what must be done to get there. Once a plan is established retest the timing.
  • Consider this as a gradual transition. Start 3 weeks here / 1 week there, and gradually transition to 1/3. This will help you to determine how the company performs absent the CEO’s daily presence.
    • Move family but keep a small place here. Start the transition now and figure out balance. Do what is necessary.
  • Have the key managers transition their roles before initiating the move.
    • This will provide confidence that they can handle this transition.
  • As part of the process, look at areas where the company can use more support. For example, is HR up to snuff? What about information services or financial management? Prior to initiating the transition take steps to fill any gaps.
  • Does the company have a formal metrics structure?
    • If not, establish one and in preparation for the transition see how the two managers manage this.

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How Do You Beef Up Talent to Drive the Company? Three Questions

Situation: There is no secret that hiring is more challenging now than it was two years ago. A CEO is finding it difficult to attract and bring in the right talent to achieve her growth objectives. What are others doing to bring in new talent, especially high performers who will help to bring in new accounts and work with key customers to develop new business. How do you beef up talent to drive the company?

Advice from the CEOs:

  • What has worked best for others?
    • Hired low and developed home grown talent. This means building the capacity to train new talent to meet the company’s needs.
    • This may not produce entrepreneurs like the company’s founders but can produce solid performers.
    • Some sectors are by nature risk averse. Individuals are not dollar driven as much as by security with an acceptable salary. Good candidates who are hungry for growth are more likely to be found outside of these sectors.
  • How do you hire to match the company’s objective?
    • The objective is rapid growth – the mold of the original founders who were risk-taking entrepreneurs atypical of the sector.
    • Look for candidates who are driven by growth. The right candidate will jump at the opportunity to take a $5M book of business and grow it to $10-15M in 3 years with appropriate corporate support and compensation.
  • What has been tried or investigated in the past?
    • Looked for successful smaller businesses similar to the company as possible acquisitions. The challenge was that the people running these companies liked their independence and didn’t want a boss.
    • Looked at individuals from corporate backgrounds in the same sector. Some worked, some didn’t. Frequently, these people were not entrepreneurs or builders.
    • Talk to private equity companies. Ask who they have bought or sold in this space. Gather names of drop-in CEOs and key staff who turned companies around and did well.

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How Do You Handle a Difficult Employee? Five Observations

Situation: A CEO is pondering how to handle a difficult employee. This individual has brought in good business but is never satisfied with his level of pay – though he is highly paid. While he is good at bringing in new accounts, he doesn’t make the effort to grow them over time. How do you handle a difficult employee?

Advice from the CEOs:

  • It is necessary to establish a mutual understanding with the employee that no matter the level of pay, the employee will think that it is too little. This reframes the discussion because it establishes that there is no win by paying the individual more. The unspoken part is “why bother?”
    • Given this reality, the maximum level of pay for the employee is $X.
    • Note that there is no negotiating power until once this is said it is acceptable to let the employee walk away.
  • The CEO feels indebted to this individual because he has brought the company many new accounts. He is a good hunter. But the task now is not to hunt but to cultivate and grow the opportunities that that the company has in hand.
    • The issue is that this individual doesn’t build relationships that will grow business in his accounts.
    • He has done well for the company. The company has rewarded him handsomely. However, now a different talent is needed.
  • What’s the best alternative for action, and how is this communicated to the staff?
    • Do not lay this individual off – terminate him for cause.
    • This individual has repeatedly been asked to act as a team member, but he has steadfastly refused to do this.
    • His attitude, while good for his own efforts, is bad for the company and is clearly counter to the desired culture.
    • He is better off in a situation that aligns with his talents and style.
  • Terminating this individual for cause sends a critical message to the rest of the company – culture is important. You are determined to establish a healthy culture even it if means eliminating your best performer.
    • To those who ask, answer that this individual was treated fairly. Clear expectations were established, and ample opportunity was given to be a part of the culture that you are establishing.
    • Ultimately, the culture that you seek to establish – one that is good for the whole team, not just for star performers – was not right for this individual.
  • Use this situation to relaunch a campaign to build a company culture of collaboration and best practice development between teams. With the elimination of this individual there may be new enthusiasm around this initiative.

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How Do You Refocus on Growth? Four Points of Emphasis

Situation: A CEO wants to refocus his company on growth following a difficult two years. Employee absences and stress due to the pandemic have had a significant effect on performance. The objective is to rally the team and excite them about future prospects. How do you refocus on growth?

Advice from the CEOs:

  • Focus on the top goals for the company: revenue, customer satisfaction, product quality and delivery, and strategic positioning.
    • These have been company strengths in the past and will form the foundation for new growth and opportunities.
    • This is the time to be the head cheerleader. The company has a strong past and will be even stronger in the future.
  • Key points of communication to the company:
    • We have a strong Good News/Good News story – the company has survived the last two years, has an aggressive plan and a strong future, and will do even better as conditions return to normal.
    • The company is focused on an important and growing sector and is positioned for strong growth as customers refocus their companies.
    • Start this aspect of the communication this week – then keep on repeating it to reinforce optimism as the company repositions itself for new opportunities.
  • Communications to customers to support the strategy:
    • Tell clients that the company is healthy and well positioned to continue to meet their needs better than any other alternatives available to them.
  • Allow a few months for employees to regroup.
    • Staff will be exhausted, physically and emotionally, following the last two years – give them time to regroup and refocus.

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How Do You Handle Open Issues from a Sale Agreement? Three Thoughts

Situation: A CEO has closed the sale of a significant company property. Due diligence was completed and was satisfactory, but the purchaser now wants to renegotiate the price. The CEO is concerned that if she yields on the price, the buyer will come up with additional changes that will further disadvantage the sale. How do you handle open issues from a sale agreement?

Advice from the CEOs:

  • One member had a similar issue following the sale of a previous company. The decision was that the price at the time of close was the price. The buyer had full opportunity to perform due diligence which would have uncovered any open issues. Condition at time of sale is “buyer beware,” which is why they were allowed a full due diligence.
  • The sale was “as is” including assumption of current debt on the property. It appears that the advantages to the buyer that are anticipated through the purchase will more than offset the impact of the existing debt. As a result, the buyer is, on balance, better off than they had anticipated. Thus, there is no need to yield on price.
  • On the timing of events that may not occur – an indirect cost audit by the company’s prime agency should this be necessary – there is a question of the financial impact to the company.
    • There is a default date on the final payment that could be held up by the negotiation, but the impact is not significant to the company.
    • Otherwise, the company’s interests are covered by the sale agreement.

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How Do You Develop an Employee to the Next Level? Four Points

Situation: A CEO has a key employee who wants a higher level of responsibility. Currently this employee is primarily focused on business development. He’s good at this but wants a higher level of experience. The CEO agrees. How do you develop an employee to the next level?

Advice from the CEOs:

  • If you ask this individual what needs to be done, what happens?
    • Revenue is number one. This is where he is focused, but he wants more than this from his role.
    • If this is also the CEO’s primary objective then the CEO needs to back off and direct him to split his time between closing high level opportunities and training his direct reports to be able to close lower-level opportunities on their own.
  • To the CEO – thinking about your own experience, how did you mature to a higher level when you had primary responsibility for business development?
    • Answer: I built and trained staff to do this and delegated these responsibilities to them.
    • Allow this individual and other key managers within the company to do the same thing, and coach them along the way.
    • Empower this individual to build his staff and enable them to take on more of the functions that he no longer wants to handle himself. Allow him to prioritize his time to focus on: hiring and training of his key staff and coaching and supervision as they grow into their new roles.
  • Consider this solution as a larger project manager role. Take a key product and empower this individual to design, build and manage the organization to deliver this product.
  • To frame this solution short-term, start with a 1-on-1. Ask about his vision – what he wants as his role and how he sees building this.
    • Follow by laying this out in terms of the company’s objectives – be specific as to what this looks like.
    • Look for a win / win reconciliation between the CEO’s and the employee’s visions that meet both of their objectives. Get on the same page with this individual, so that this fulfills both of your needs.

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What are the Options for Your Next Phase? Six Suggestions

Situation: It’s a new year, and a CEO is thinking through options for the coming year and beyond. She has decided to leave her company and establish a new role and career for herself. Immediate concerns are funding the transition and entry into a new career. What are the options for your next phase?

Advice from the CEOs:

  • The area that can be built most quickly to provide income is a consulting practice based on the experience developed as a CEO and as a specialist leveraging past experience. Building a new practice is a big commitment. Make this the initial focus and get a few gigs to get the ball rolling. The company is an early option, as well as some of their key customers. These relationships are already in place.
  • On the academic side, investigate Executive Education programs in Business Schools. Here the clientele is different from normal undergraduate and postgraduate education – actively working managers and executives. For this audience the combination of experience as a CEO and academic credentials is advantageous. For this audience, a lack of credentialed teaching experience is largely counterbalanced by the weight of professional experience.
  • The Professor / Consultant track looks best if established as a 5-year plan.
  • While getting established in a new role there will be an initial challenge managing the time demands of teaching, research and developing a consulting practice. Think of this as managing the multiple functions of a company. It will be important to establish early priorities to accomplish the desired plan.
  • A professorship does not necessarily tie financially to current goals but can be an important strategic adjunct to consulting efforts. In a certain sense, teaching will have to be its own reward.
  • To the extent possible and depending upon how the board responds to the decision to leave the company negotiate the best possible severance package. This can tie into some of the suggestions, above.

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