Situation: Every CEO needs an exit strategy, if only for the good of the business because the future is uncertain. In this case, the Founder CEO wants to reduce her involvement in the business over the next 3-5 years. Her company has an offering that addresses domestic and international concerns about global warming. The CEO seeks help evaluating options. What is your exit strategy?
Advice from the CEOs:
The CEO sees several strategic options. Which option is more likely to yield results in a timeline that fits a 3-5 year exit strategy – a major international push, a partnering strategy, or leveraging current business to gain additional sales and market share by tweaking the current product line?
The company needs international partners, not just a sales presence. This will require substantial time and upfront commitment from the CEO, not just a salesperson.
Where and who are the predominant businesses in the international markets under consideration?
Can an international strategy be executed and produce fruit in time to complement the exit strategy?
Partner with a hardware company to increase visibility and usage.
Partner with some of the top prospects for an exit strategy.
Focusing on the Product Line.
Employ customer shadowing to better understand how customers currently use the software and what challenges they encounter or opportunities they see – involve marketing, and R&D, not just the sales team.
Reposition the current offering to take advantage of opportunities.
Simplify installation and implementation.
Look at the product development strategy. Can revenue be bumped or upgraded from renewal customers? Are there options for “deluxe” versions with a premium price for upgrades, that become the following year’s standard upgrades?
Gather the company’s team and work through the scenarios for these options. Once this is done, prioritize them based of timeliness and potential impact on the bottom line and company valuation.
Also look at the Board structure – are there gaps in regulatory or sales and marketing expertise. What about adding someone who has connections to a key customer base?
Situation: A CEO is involved in a number of outside Boards and organizations, both because this involvement helps the company, and for personal reasons. Recent changes in family demands are now prompting reconsideration of this level of involvement. How do you prioritize demands on your time?
Advice from the CEOs:
List all of your priorities – both business and personal – and the amount of time that they require on a weekly or monthly basis. For non-family activities, rate each in terms of importance both to your organization, and to your heart.
Decide how many outside Boards or organizations you are willing to participate in and how many hours of the week or month you are willing to allocate to this.
Reduce your involvement in outside boards and organizations so that you get the time commitment down to what you are willing to allocate. Thereafter, to maintain control of your time. If you add a new commitment, drop an existing commitment.
Where you have commitments that are important to the company, but lower priority in terms of your own passion, delegate representation to good people within your company. This both maintains company presence and enhances their professional growth.
Where you want to terminate involvement let the organization know of your plans in advance, and negotiate a phase out schedule and timeline. They will appreciate your working with them.
Consider putting someone between you and your calendar to communicate with those making new requests for your time. This person can say no more easily than you can.
Situation: A company wants to develop a better planning and execution process. Historically they have been poor at meeting goals and objectives. What are the most important factors that improve planning and execution in your company?
Advice from the CEOs:
Take the advice of Jack Stack in his book The Great Game of Business. When building a plan, do it as a company-wide exercise.
Make sure that all of your departments are involved, each has direct input into the development of its own goals, and each understands that they are fully accountable for the achievement of their own goals.
Also do this in open session, and assure that each department has the input of other departments whose activities are critical to the completion of each goal.
This assures that different departments are working in alignment and not against each other.
Finally, make the process interactive and add some fun so that everyone is engaged.
Milestones and meetings are critical. Each department develops quarterly goals to support the plan, and department heads meet bi-weekly to monitor progress and prevent conflicts. Revisit the plan on a quarterly or semi-annual basis to adapt as necessary.
Focus the plan on one-year performance – with quarterly objectives – but forecast financials and broad metrics out 3 years to assure that the 1-year plan supports long-term objectives.
Situation: A company goes through an annual strategic planning process followed by an annual business planning process. At mid-year they do a review and correction. The challenge is that if the company is behind plan, the management team does not take ownership of plan revisions – it becomes “the CEO’s Plan.” How do you gain commitment to revisions in the annual plan?
Advice from the CEOs:
Throw out your current process and start over.
The challenge is to gain more buy-in and accountability. This only comes if the targets come from those responsible for delivering them – both for the original plan and if any revisions need to be made.
Look at who you involve within the organization – can you drive involvement deeper to generate additional buy-in across the organization?
Hire an outside facilitator to guide you through the process instead of chairing the meeting yourself. This prevents the resulting plan from becoming “your” plan. It also changes the culture of the meeting as well as the buy-in.
If you use a bottom-up / top-down process, moderate the plan results with an eye to two realities:
Bottom-up input from the sales team is rarely more pessimistic than the CEO’s input. If it is ask what is happening.
Make sure that your top-down numbers are empirical and based on the best market research that you can obtain.
If your plans have consistently fallen short over recent years:
You may be baking the targets too high.
Consider building the revenue plan optimistically, but build the expense plan conservatively. This helps control expenses and attain profitability targets.
So that the two plans are not misaligned, review them more frequently – perhaps quarterly on a formal basis with monthly reviews – so that if your revenue plan is meeting targets you can adjust spending to support production and delivery.
It is common to have one set of numbers for sales and a different, more conservative, number for expenses. As long as you conduct frequent review and adjustment of the expense number to sales performance, this works. Many companies also use different targets for operations than what they present to the Board – with the more conservative numbers for the Board.
Situation: Most CEOs manage multi-generational staffs. While there are differences between baby-boomers and younger generations, it remains important to give younger workers meaningful guidance. What have you done to successfully mentor younger workers? If you are one of the younger workers, how have you been effectively mentored at work?
Advice from the CEOs:
Many have noted that, compared with baby-boomers, younger workers have higher levels of self-confidence. This enables them to be more accepting of constructive criticism and guidance. One company establishes individualized performance metrics to help younger employees monitor their progress. This helps them to chart and see their progress. Along the way, managers meet with them frequently to answer their questions about company processes and the rationale behind them.
In some cases, CEOs have found some younger workers have a tendency to short from the hip. They mentored them to communicate more thoughtfully and carefully using a team approach because they found younger workers to be more team-oriented than older workers.
Many forward thinking companies involve individuals from all levels of the organization in their planning processes. This addresses the desire of younger staff members to be included in high level decisions. Younger workers prefer this to being told to wait until they have more experience.
To help younger employees grow, one company breaks down job tiers into more levels or sub-levels, and offers incentives for reaching the next level of skills more rapidly. They also reset expectations more frequently.
Particularly in Silicon Valley many younger employees are swimming in debt. Some purchased houses on adjustable-rate interest-only loans and other creative financing solutions. As interest rates rise some will encounter difficulties. In anticipation of this, one company brings in external resources to offer counseling in personal finance. Some of the local financial services companies offer this as a benefit to company’s employees at no cost to the company.
Key Words: Multi-generational, Baby-boomer, Gen X, Gen Y, Millennial, Echo-boomer, Mentor, Coach, Self-confidence, Processes, Communication, Team approach, Involvement, Listening, Financial counseling, Patience
Situation: The Company is shifting focus from project-based to relationship-based client interactions –from a short to a long-term perspective. This is a challenge. How do you adapt employee behavior to a new strategic focus?
Assume the best intentions.
Everyone wants to do a good job. The challenge is making sure everyone knows what constitutes a good job.
Be clear on objectives, and why they are important. Be clear on the new roles.
This is most difficult when the shift is counter to a well-established company culture.
You have to have the right people.
Avoid smart people with no role, or a role for which they are ill-suited.
The organization IS the people. There must be absolute commitment to assigning the right talent on any job, and the right people to the right team.
Players must fit in terms of skill set and culture. The company is who, not what!
Focus efforts and objectives on the long-term vs. the short-term.
Paint the end state – the vision. Add tangible steps to guide people to the right path.
Don’t micromanage. Set direction and initial moves, but let staff blaze the path.
Provide feedback and recognition.
Negative feedback is always difficult, but best when delivered directly and quickly.
Recognize success and contributions both 1-on-1 and in all-hands meetings.
We hired an experienced manager with a strong track record. Initially this created discomfort; however discomfort was quickly resolved as this person produced positive impact.
We cited the wins in all-hands meetings to support the shift.
Make people feel that their opinions are heard, and their solutions.
Be clear on objectives and rationale. Assure that your perspective as leader is grounded in a credible reality that you can communicate to the team.
Conduct workshops which focus on the practical steps that will produce the desired result.
Listen to feedback from team members, and include what you hear in the agenda for future discussions. Involve the team in developing the solution. Delegate and recognize!