Driving Change. Creating Value.

How to Kill a Sale

 

This should go without saying, but we can all fall into the trap of taking our frustrations out on other people.  This can happen when we’ve just had a contentious exchange with someone or maybe just the proverbial “bad day.”  However, taking it out on the next person you meet is inadvisable to say the least.

 

 

I remember the story I once heard about a salesman – but it could be you or me.  The salesman had secured a meeting with a prospect that represented huge potential sales for his company.  He flew into the city the afternoon before the meeting and with some time to kill, decided to buy his wife some perfume as a gift.  He went into a department store and was helped by a young girl who was in her first day on the job.  The girl’s experience showed through and she had difficulty helping the salesman complete his purchase.  Frustrated with the difficulty she was having, the salesman lashed out at the young lady reducing her to tears.  He angrily walked out of the store without completing his purchase. 

The next day the meeting with the CEO went very well.  The parties agreed to a follow up meeting to execute a contract between the companies.  The CEO told the salesman that he was meeting his daughter for dinner that evening to celebrate her 18th birthday.  You know where this is going don’t you? 

When the salesman arrived at the restaurant, the CEO was seated with his daughter at the reserved table.  Lo and behold, the CEO’s daughter was the same young lady the salesman had mistreated so badly in the department store the previous day.  Needless to say, the rest of the story does not go well for the salesman.  The young girl stormed out of the restaurant and after a quick dinner the two men retired for the evening. 

Back in his office the next day, the salesman received a call from the CEO.  His message was simply that the meeting was cancelled and the two companies would not be doing business together after all.  His inability to control his emotions and respect others had killed a major sale.

So what is the lesson of this story?  Everyone is somebody’s special somebody!  Or as my mother used to sermon me, “If you can’t say something nice about someone, don’t say anything at all.” 

I think what my mother was really trying to teach me is that life is much more fun for everyone when we consistently treat others with respect - whether it's our customer or someone we meet on the street.  Wouldn't you agree?

Do you have questions for us?  Contact either Mark Ellsworth or Matt Heemstra at (712) 324-4614.

 

The One Thing

 

This week we welcome back our good friend and fellow Mindshop member, Jerry Robinson of Atlanta.  You can learn more about Jerry by visiting his website at http://www.coo-oncall.com/.  Thank you Jerry for your great contribution to our blog.

If you could accomplish change in one thing or area of your life during the next twelve months, “What would it be?”  Is your goal for some change in your business, personal or family life?  Let me tell you a story I read recently that may assist you in “kicking the habit” of continuing to do the “same old thing” and “saddled” with bad habits or bad business practices. 

Many, many years ago there was a young entrepreneur who learned of his people being mistreated so badly that he became intense in help the gain back their human dignity.  The entrepreneur put together a business plan prior to going to his Board of Directors.  The Board of Directors approved the entrepreneur’s “vacation” as well as revenue for materials to complete a major construction project.  The entrepreneur set out on his mission.

 
When the project was almost completed, the neighbors wanted to have “coffee” with the entrepreneur.    A meeting that would side track the project was not in the business plan.   Even newly made friends of the entrepreneur made up delaying tactics to keep the project from being completed.  However, the entrepreneur knew his Mission Plan (Why are you in business?), his Value Statement (attitude, behaviors, and character), and his Vision (mid to long-term objectives).

The entrepreneur sent his message to the intruders:  “I am carrying a great project and cannot go down.  Why should the work stop while I leave it and go down with you?”
So, as you can expect, the entrepreneur accomplished the change he set out to complete.  The project set in motion change for a people who regained their dignity.

To accomplish “This One Thing’ you wish to change, you have to become aware that you must change.  You must change your thoughts, which produces a new emotion, and then new actions occur.

Remember the Hippocampus in the human brain?  Our thoughts “park” at the Hippocampus waiting for our memory to recall similar situations.  (See the article in my blog titled, “How important are first impressions in your life?”  If our brain identifies your current situation as already in memory, you begin reacting out of your memory – no change occurs.

In order for you to accomplish “The One Thing”, you must do the following:  If you change your thoughts, you will change your emotions, and then you will change your actions.  Change seldom occurs until the pain of staying the same exceeds the pain of change.  “I am carrying on a great project and cannot go down.  Why should the work stop while I leave it and go down with you?”

What will you do?

Do you have questions for us?  Contact either Mark Ellsworth or Matt Heemstra at (712) 324-4614.

Values Driving Change

 

In their best-selling book, Built to Last, Collins and Porras studied 18 companies which all met the following criteria:

• Premier institution in its industry
• Widely admired
• Made an indelible print on the world in which we live
• Had multiple generations of CEO’s
• Had been through multiple product/service life cycles
• Founded before 1950

In other words, each company was sustainable, consistently prospered in both up and down market cycles and went through the transitions of both products and leaders.  So they are great case studies providing lessons for us to apply to our own businesses.

It’s important to recognize that these companies were constructed in an organized way from the start with the visions being put in place at an early stage.  A key step in building a visionary company is to articulate core ideology.

Core ideology = core values + purpose

Core values are the organization’s guiding principles.  Purpose is the fundamental reason for existing beyond just making money.  Think of purpose as that perpetual guiding star on the horizon.

Visionary companies are more successful at thoroughly indoctrinating employees into the core ideology, creating strong culture around it.  The core values need no justification and they do not shift in response to changing market conditions.  If you’re not willing to adopt the company culture, then you probably shouldn’t be there.

Once the core ideology is firmly established, the visionary companies create mechanisms to .  They clearly see the need to stimulate change and improvement before it is imposed on them from external competitive forces.  In other words, the organization’s core ideology (values + purpose) drives change more than any actions of a single leader.  They build first and foremost for the long term while at the same time maintaining highly demanding standards.

Consider the following questions:

1. Have you clearly established your core ideology in a way that everyone in your organization understands it? 
2. What mechanisms of discontent could you build into your organization?
3. What are you doing to invest for the future while still working for today?
4. Does your company reject the premise that doing good is good enough and instead replace it with the never ending discipline of continuous improvement?

There is no magic formula to success, but there seems to be clear logic that establishing a core ideology, building your culture around it, and using it as a filter for decision-making greatly improves your organization’s chance for success and sustainability.  In other words, your values will drive the change in your organization.

Do you have questions for us?  Contact either Mark Ellsworth or Matt Heemstra at (712) 324-4614.

Leading by Example

Last June, my wife and I went to Omaha to celebrate my daughter’s birthday with her and her family.  My grandson, Tyler, was watching out the front window as his grandma pulled into the driveway.  At the time, Tyler was nearly 21 months old.  What happened next is a story that Tyler still retells to this day. 

Marsha had purchased some helium balloons and one of them escaped her as she got out of the car.  She quickly tried to retrieve it; she ran and jumped for the balloon as it rose higher and higher.  However, the balloon escaped beyond her reach and soared away until its image became smaller and smaller against the bright blue summer sky.  And then finally it was gone.
When Marsha entered the house, Tyler was there to greet her at the door to reenact everything he just saw.  “Up, up,” he called to her as he jumped toward the sky as if he would catch the balloon himself.  And for days and weeks afterwards, Tyler was talking about the “big one that got away.” 

One of my New Year’s resolutions is to write Tyler a letter every week.  I always try to insert some pictures or images in the letter that represent the things I know he currently enjoys (e.g., Elmo, Cookie Monster).  Last week I put an image of three balloons – yellow, red and green - in the letter and asked Tyler if he thought the balloons were the ones that got away from his grandma.  We were visiting with my daughter on Skype last night.  I asked Marisa if Tyler noticed the balloons in my letter.  She replied, “Oh yes.  He said, “No. No. Blue. Blue!”  He remembered that the balloon that got away from his grandma was blue. 

I find it amazing that Tyler still vividly remembers the event and even the color of the balloon.  Every little detail of watching his grandma try to chase down that balloon is cemented in his mind after seven months - which is like an eternity for a two-year old.
It reminded me of working with company owners who have a difficult time communicating their vision to others in their organization.  What if they could do for their employees what Marsha did for Tyler?  

Many founding leaders have a very clear vision for their company.  If they didn’t, it’s unlikely they would have achieved success in their business.  The challenge for them is discovering how they can articulate their vision across their organization so that it is shared and drives strategy, decision making and the kind of change that is required to create a successful and sustainable business.  

In his December 2008 whitepaper, Communicating a Vision, Dr. J. Thomas Whetstone wrote, “The CEO’s example provides a simple, yet effective, method for communicating a vision that any leader could emulate.”  Dr. Whetstone went on to point out that you can establish and communicate a vision as a foundation for your organization’s moral culture if:  

1. It is a good vision,

2. You, as the leader, are truly committed to plan according to the vision, and you live according to the vision, and

3. You continually stress its reality and importance.

How well is your vision shared by everyone in your organization? Do your employees vividly remember the color of your balloon?

Do you have questions for us?  Contact either Mark Ellsworth or Matt Heemstra at (712) 324-4614.

 

 

3 Ways of Funding Small Business

Guest Post:  Kavin Matthews is a financial writer from Carson City, Nevada, who has expertise in dealing with financial issues. He loves to contribute financial write ups to websites and blogs so that he can help people who are struggling with financial worries.

Starting a small business is a difficult task particularly if you find it difficult to obtain financing in this tough economy.  Here are the three most common ways to access the funding you need to make your business a success.

1. Make use of your own funds - When starting your own business, the first question that arises in your mind is how you will arrange for the required financing. You should first make use of your own savings and invest it in your small business.  While there is always a chance that you might lose your entire investment if the business does not succeed, no knowledgeable outsider is going to finance you if you don’t express confidence in the business yourself. 

2. Take out a bank loan - One of the most common ways of financing a business is to obtain a conventional bank loan. Be mindful that bank lending standards have tightened considerably in this tough economy. Make sure that you have a good credit score before you approach any bank or lending institution requesting a loan for your small business. While some lenders may agree to approve your loan request despite the bad credit score, you will be charged an exceedingly high interest rate on your loan.  Generally speaking, however, a bad credit score will likely preclude you from obtaining the requested financing.

3. Opt for a family loan – Borrowing from family is something that I recommend avoiding.  If, however, your family has confidence in your management ability and trust you to repay the loan, then you can arrange financing without a bank loan.  I suggest that the loan be evidenced by a written agreement stipulating the loan term, interest and any collateral you are offering to secure the unpaid amount. A benefit of borrowing from family members is that they may agree to a below-market interest rate for the loan.  The biggest risk in borrowing from family members is the chance that your relationship may be destroyed if you are unable to repay the loan.

By considering alternatives to bank financing, you might find the funding you need to jumpstart a successful business.

You can contact Kavin by phone at (916) 745-8155 or email him at kavin.matherws25@gmail.com.

3 Reasons To Go Outside Family For Next Leader

When family business leaders think about a successor to their position, they often think first of the next generation of family members.  This is certainly understandable, since it represents one of the primary reasons for owning a family business.  However, this line of reasoning is not always in the best interest of the business.  There are three instances where we feel hiring a non-family member to lead the company can best serve the long-term interests of the family. 

1. Lack of Sufficient Family Talent.  The most obvious instance where family businesses seek an outside leader is when there is no family member with the talent or interest to assume the job.  Non-family executives often fill key positions in successful family businesses – e.g., CEO or CFO.  There is evidence to suggest an increasing trend in the hiring of non-family members as chief executive officers in family organizations.

2. Time Needed to Prepare Next Generation.  In some instances there exists a pool of successor talent, but the family successors are too young and inexperienced to assume the rigorous demands of leading a successful and growing business. If the heir apparent is not yet ready but nonetheless assumes the position, the company’s future may be compromised.   In these situations, some families recruit non-family professionals to prepare succeeding generations to ultimately assume the leadership role.

3. Specific Skills Lacking in Business.  Every business leader – even the most successful – has their own unique strengths and weaknesses.  A family might determine that the family successor has exceptional talent in sales & marketing, information technology or human resources, but not the critical skills required of the chief executive officer.  It’s a hard decision for the family to make, but the right choice in the long run for the business, the family and the family successor. 

It might appear that these non-family professionals are nothing more than hired guns.  So what attracts them to accept positions in companies knowing that they will never ascend to ownership?  Your first answer might be, “show me the money”; but money alone is seldom enough to attract these individuals.

So what are they looking for?  They are likely looking for a family enterprise in which there is clarity about the role they are being offered and the responsibilities they are assuming.  They are probably also looking for a business environment where family members are held accountable for their own performance, and an effective governance structure for both the business and the family.  These non-family professionals also want to join an organization with a reputation for objectively assessing and valuing the contributions of all employees – not just the family members.  If satisfied that these factors are in place, then these individuals will expect compensation and benefits that are directly linked to their long-term performance.
 
Acknowledging when the time is right to retain the services of an experienced, highly talented individual from outside the family might someday be essential to the success of your family business. 

Do you have questions for us?  Contact either Mark Ellsworth or Matt Heemstra at (712) 324-4614.

  
 

3 Key Competencies For Next Generation Leaders

Succession planning is a process, not an event.  It doesn’t matter if your chosen exit strategy is a transfer within the family or an outright sale.  The process takes time, effort and planning to ensure an orderly transition of the business.  Unfortunately, appropriate succession planning is not something that most companies do well and may be the primary reason that only 30% of family businesses survive to the 2^nd generation.  

A recent study conducted with family business owners showed that the key items they focused on in retirement were health, wealth management and ownership transfer.  Last on the list was leadership succession.  While 60% of business leaders will retire in the next 10 years, only 15% of companies have any formal training program to prepare the next generation leader to assume such a challenging position.  We feel that this represents a critical omission in the succession planning process.  The bottom line is this – succession will only work if your business is passed on to someone who has the skill and confidence to run it.

We believe there are three key competencies that should part of any training program for emerging leaders:

   1.  Financial analysis and profit improvement 

• Dynamics of financial leverage.

• Causal ratios and their use in spotting potential financial problems.

• Seven common causes of waste in an organization and how to eliminate them.

• Using key performance indicators (KPIs) for measuring progress toward established goals.

   2.  Sales and marketing

• Identifying and leveraging competitive advantage.

• Understanding customer buying behavior.

• Developing pricing strategy.

• Developing strategic marketing and sales strategies.

   3.  Leadership

• Motivating and empowering employees.

• Delivering effective performance feedback.

• Building high performing teams.

• Resolving conflict.

Succession planning should not overlook the training needs of the successor.  Craft a plan to integrate leadership development into your business strategy.  After all, the ultimate goal of succession planning is to position the company for future prosperity.

For more information about our Emerging Leaders Program call (712) 324-4614 and ask for one of the following individuals:

Mark Ellsworth:  mje@cainellsworth.com

Matt Heemstra:  mrh@cainellsworth.com

Stacie Dykstra:  srd@cainellsworth.com 

3 Reasons Why Successors Don’t Join The Family Business

 

When a qualified son or daughter decides not to join the family business it can cause confusion, resentment and emotional distress for the entire family.  So why would an individual turn down what others perceive to be the “perfect job?”
 

  

1. The long shadow.  It is sometimes difficult for even the most qualified family successor to follow in the footsteps of a father or mother who has become a business “legend.”  Trying to measure up to what is sometimes perceived as perfection can simply be too overwhelming for a young adult to handle.  Why would a successor subject themselves to such comparisons?  In such circumstances, this young person may develop a strong desire to strike out on their own, set their own goals and explore alternatives to the family business.
2. A lack of real authority.  When a current leader approaches retirement it is not uncommon for them to struggle with their decision.   While they may look forward to more time away from the business, they get caught up in satisfying their need for both control and influence.  As this tendency manifests itself, it has the potential to become a real “turn off” for a young successor.  Why would they assume such a responsibility if the authority they need is being withheld?  We discussed in our previous blog how this potential “deal killer” might be remedied. 
3. Lack of a decision-making structure.  This refers to both “who” and “how” decisions about the family business will be made.  Many family businesses are comprised of two types of owners: those that are active in the management of the business and passive owners who may show little interest in the business.  If there is no clearly defined decision-making process there likely could be concern about the potential for meddling by uninformed passive owners in key management decisions.   Why would a successor voluntarily subject themselves to such family conflict and stress?  

To construct a business transition that best serves the needs of the entire family, it is important that (1) very early on the “post-retirement” issues of the current leader are dealt with and satisfied, (2) a family governance structure is put in place with mutually agreed upon guidelines that serve as a road map for business decision making,  and (3) a formal training process exists that adequately prepares high-potential successors for leadership and provides them the opportunity to gain the self-confidence needed to fully discharge the responsibilities of such and important position in the family.

3 Reasons Why Letting Go Is So Hard

A 2011 survey of family businesses conducted by Family Business Magazine revealed that over 35% of business leaders will retire in the next five years and nearly 60% will retire in the next ten years.  With the runway for business transition growing shorter and shorter, it’s troubling to note that only 15% of respondents had any formal education program for next-generation members interested in assuming a leadership role.
 
It appears likely that this contradiction may be the doing of the leaders themselves.  Even if, for example, their failure to pave the way for a successor means that the business, the employees, and the family all end in personal chaos and possibly financial ruin.  The situation is certainly not the result of anything done intentionally by the business leader, but rather an indication that the leader has not adequately prepared for the transition.
 
There are three basic needs that have to be addressed and filled before the leader can let go:
 

1. Control and influence.  This is particularly apparent when the current leader has been the original entrepreneur who started the business and whose whole life and passion has been devoted to the business.  The current leader must devote time, possibly with the help of an outside advisor, to identify other opportunities for satisfying their need to be influential.  Not for profit fundraising, running for a local government office, or assuming a leadership position in a charitable organization are examples where influence can be exercised.
2. Financial security.  It is common for individuals facing retirement to worry about whether they have accumulated enough wealth to support their desired standard of living.  Nothing is scarier than thinking that you may outlive your financial resources.  A professional financial planner can assist by analyzing your financial resources, recommending an appropriate asset allocation, projecting post-retirement living expenses and estimating the retirement income you can expect based upon your assets, risk tolerance and mortality.  The resulting retirement plan can reduce uncertainty and pave the way for the leader to more comfortably focus on business succession.
3. Fulfillment.  This, for some leaders, is the most difficult “need” to replace.  Although the current leader’s future fulfillment is often overlooked during the succession planning process, in some cases it can be the primary reason, consciously or subconsciously, preventing them from addressing the succession issue at all.  Many business owners will tell you that their business has been their hobby and they’ve never felt the need to develop other avenues for personal fulfillment.   It is important that they spend time whatever time it takes, well in advance of the retirement date, to explore and reflect about what comes after retirement.  It is important that they have something to retire to as opposed to something to retire from.   Whatever the role or activity, it should meet at least one of the following criteria:

• It uses the skills and knowledge the leader has accumulated over a long and successful business career – e.g., starting a small business or mentoring young CEO/owners.
• It is real and not just “window dressing.”  A token role will only deepen the sense of loss in power, influence and personal identity – e.g., a continued role with the company as Chairman if the board is properly constituted and has a strategic as well as operational agenda.
• It allows the retiree to maintain some of his/her business networks and key relationships.

If the discussion addresses these three basic needs early on, it is less likely that the current leader will resist succession planning. 
 
 
 

4 Ways to Increase Your Sense of Urgency

In our previous post, we introduced John Kotter’s bestselling book, A Sense of Urgency.  Now we will continue with some of Kotter’s advice for dealing with complacency. 
Kotter suggests four tactics for increasing urgency:

1. Bring the outside in.  Organizations of any size tend to be too internally focused. When your people do not see the potential opportunities and hazards facing the organization, their complacency grows.  And with more success, a “we know best” culture easily develops.  Helping your people see problems that threaten jobs or career opportunities can decrease complacency and increase urgency.  Likewise, helping them see new possibilities and opportunities that might increase job security, career advancement, bonuses and customer satisfaction can help leaders and managers more successfully create positive energy and a call to action.
2. Behave with urgency every day.  The constantly changing environment in organizations requires leaders to be always alert and agile.  This means that leaders have to model a sense of urgency all the time.  The most common excuse I hear for why things don’t get done is, “I just don’t have the time.”  We all tend to be busy, but doing what?  In order to model the urgency that is so desperately needed in your organization, you have to be relentless about eliminating low-priority items from your daily tasks.  The Pareto Principle – better known as the 80/20 Rule – suggests that 20 percent of the tasks you do generate 80 percent of your value to the organization.  What does that say about the other 80 percent of the tasks you are performing?  Don’t be trapped in a set of habits that were important earlier in your career but are now low-value items for your current position.  Purge and delegate.  Be consistent and do what you say you are going to do.  Go out of your way to be visible with your people – help them to understand the need for urgency with your words and your actions.
3. Find opportunity in crises.  Kotter used the metaphor of a “burning platform” to describe his view of crises.  Within his burning platform logic, he suggests that, “Complacent organizations are the real danger.  But even people who are most solidly content with the status quo will begin to act differently if a fire starts on the floor beneath their feet.”  What he is suggesting is that when a crisis occurs, see it as an opportunity to create urgency and mobilize the action needed to better prepare the organization for the future. 
4. Deal with the ‘NoNos’.  Kotter describes ‘NoNos’ as highly skilled urgency killers.  Every organization has at least one, but some organizations may have many.  NoNos will do nearly anything to discredit the people who are trying to create a sense of urgency. The book suggests three solutions for dealing with NoNos.  First, keep them actively distracted with challenging assignments – preferably outside the office.  The second is to get them out of the organization. The third is to expose their behavior in ways which will allow social peer pressures to stop it.  But whatever you do, don’t ignore the NoNos.

It stands to reason that if an organization can create a sense of urgency and then maintain it over time, it has the potential for very high performance.  In such organizations, innovation flourishes, there is pride and excitement, and the economic rewards increase across the organization. 
Urgency or Dissatisfaction, call it what you want.  How would you describe your organization?  Do you have a true sense of urgency?  Or is status quo good enough?