Tuesday, November 18, 2008

Business Mistake #17: The “Possum” Strategy


News that home foreclosures are continuing to rise has put a wet blanket on consumer spending. The banking bailouts have not only shaken the confidence in one of America’s most conservative business institutions but it has also made precious credit for growth even more difficult to come by. And, on top of all of this, we have a new President about to take office with practically a one party Congress.

How is a business owner suppose to plan in this environment? If you are like most, you will freeze and resign yourselves and your company to whatever fate bestows upon you - hoping for hopes sake you can react quickly enough to limit the damage from the new market forces.

In psychological terms the act of “freezing” in the face of anxiety or danger is known as tonic immobility. It is a natural state of paralysis that animals enter, in most cases when presented with a threat. Though often proven beneficial in the natural environment, in the world of business, where time can be a costly enemy, this in-action can have grave consequences.

A quick calculation can show you the cost of a one month delay in reacting to a downturn in the economy. Let’s assume that market forces drove you to the difficult conclusion to reduce your workforce by ten employees. If these employees were making an average base salary of $60,000, then a one month delay in making this decision would cost you roughly $150,000. Two months, $300,000 in cash.

So, what is a business owner to do when faced with an unknown horizon. I have found from working with numerous companies that the unknown is really not that big of a mystery. The toughest task is usually finding the time for you and your leadership team to get away from the day-to-day chaos and really think about this. A facilitator may be helpful here as they are equipped with a wealth of information gathering and processing tools and can keep you focused on the task at hand. The goal is to identify the most likely scenarios you may be facing. Most, who complete this exercise, end up with a “good” scenario and then a “worst case” scenario. The rest are just variations in between.

The way to prepare for this exercise is to talk with others - your customers, suppliers, or clients and see what they think about the future. But try to be as specific as you can. Ask leading questions that will garner answers you can work with. It is one thing to hear from you customer that they are forecasting fewer sales next year. It is significantly more helpful to learn they are forecasting a 30% reduction in sales. Also, read your industry magazines and see what the editors are saying about the horizon. You’ll be amazed at what you can learn from all of these sources.

By writing these different scenarios down you will have taken the first step in establishing control over your company’s destiny by eliminating some of the mystery about the future. But writing this down is not enough. Creating a strategic plan for each scenario will provide you additional piece of mind - a script for each play. Defining the “indicators” that will help you judge which scenario is actually occurring and then watching for these signs will also further empower you.

Playing possum may work in the wild kingdom. In a good economy this in-action may result in your missing a business opportunity or two. But tonic immobility in a demanding and challenging economy, where every bad decision has exponential consequences, can be catastrophic.

About the author: Mike Gomez is the President of Allegro Consulting, an Atlanta-based business growth specialty firm. Allegro provides operating advice to businesses and organizations on a wide range of management issues that effect growth, such as strategic and organizational planning, marketing, sales and business process improvement. www.AllegroConsultant.com

Thursday, October 23, 2008

Auburn Football - A "Change" Lesson for Business Owners


“Life will teach you the lessons, it is up to you to learn them.”

A lesson about implementing transformational “change” in your organization.

Two weeks ago Auburn’s head football coach (CEO) Tommy Tuberville fired his offensive coordinator (VP)Tony Franklin in a dramatic mid-season move most will argue was done to save his own job. The firing followed what could only be described as a dismal year for Auburn football where they started the season ranked 9th in the nation and after losses to LSU, Vanderbilt and Arkansas no longer show up in the polls.

For those who don’t follow Auburn football it is important to know that historically they have run a conservative offense relying heavily on running up the middle and the use of the option. The CEO (Head Coach) felt this offense hasn’t been producing the results needed to achieve the goal his Board of Directors (Auburn Trustees) or shareholders (fans) expect - a national title. As a result, the CEO made the bold decision to adopt an entirely new offensive strategy called “the Spread”. Considered by most to be a very dynamic and complex - no huddle/shotgun - offense this style is a vast departure from anything the Auburn “company” has done before.

Like any good CEO introducing “change”, Tommy Tuberville researched and hired one of the guru’s of “the Spread” offense, Tony Franklin, and named him his new Offensive Coordinator (Vice President). He would not let Tony Franklin hire his own assistance but was told instead to use existing assistants - loyal to the CEO.

So what went wrong?

An insightful radio interview with Tony Franklin revealed classic mistakes made by the CEO in implementing change in his organization. The VP stated there was little communication between him and the CEO after he was hired. There was no social contact whatsoever. The VP also stated there was little if any attempt by the CEO’s assistant (long standing employees and managers) to befriend him let alone embrace the new guy. Though the CEO would speak publicly of his support and commitment to this new offense, even when things were not going well, the interview left one with the distinct impression he did little else in the way of actions to make this transformation successful. And on game days, the CEO would not hesitate to make public (over the headphones) critical observations of his new VP’s play calling.

Let’s explore how the CEO’s action or lack thereof undermined and in fact directly contributed towards the failure of this transformation. First, he believed that simply communicating his intention to change was all that was necessary to have his employees and leaders embrace the change. What he failed to understand is from an employees perspective, the kind of communication that impacts behavior is 10 percent “traditional” vehicles (speeches, email, etc...), 45 percent organizational structure (whatever punishes or rewards) and 45 percent management behavior. The last 45 percent includes “off the record remarks”, and daily activities. In the words of Sue Swenson, CEO of Cricket Communications, “What you do in the hallway is more powerful than any thing you say in the meeting room.”

Secondly, he mistakenly believed that you can manage a transformation strategy in the same manner as you would an incremental changes and past success will assure future success with this venture. Incremental change - continuous improvement - is linear, predictable and logical. Transformational change, on the other hand, is a redefinition of who we are and what we do. It is often unpredictable (responding to unforeseen circumstances, challenges and opportunities), and illogical (demanding people and organizations change when they are the most successful). Most importantly, past success is not a valid indicator of future success. In fact, past success may be the greatest obstacle.

In closing, organizations don’t change. People do - or they don’t. If they don’t trust leadership, don’t share the organization’s vision, don’t buy into the reason for change, and aren’t included in the planning - there will be no successful change - regardless of how brilliant the strategy.

Tony Franklin was noble for accepting responsible for the failure - however, those who know about implementing significant change in an organization recognize this failure was caused by the tone and manner in which the CEO, Tommy Tuberville, improperly introduced, embraced and supported the change.

P.S. Tommy Tuberville was fired at the end of the season after a dismal 5-7 record. The new coach, Gene Chizik, reintroduced "the Spread" offense and ended his first year with a respectable 8-5 record and a perfect 14-0 season and National Championship title in his second year.

* Italicized text taken from The Biggest Mistakes in Managing Change by Carol Kinsey Goman, Ph.D.

More information can be found at my
website: AllegroConsultant.com

Have a great day.

About the author: Mike Gomez is the President of Allegro Consulting, an Atlanta-based business growth specialty firm. Allegro provides operating advice to businesses and organizations on a wide range of management issues that effect growth, such as strategic and organizational planning, marketing, sales and business process improvement. www.AllegroConsultant.com

Thursday, October 9, 2008

Strategic Planning - Ugh! Is it REALLY Necessary?

The words Strategic Plan makes most business owners cringe. They conjure up images of hours upon hours of work and pages of writing. School all over again! But they know in their gut they should have one.

The fact is, the vast majority of small and medium businesses don’t. It’s not too surprising then that an equal number of small and medium businesses struggle to grow or flat out fail.

Ok, I’ll admit that was a cheap shot designed to get your attention. But sadly it is true too.

Here’s an interesting fact, according to bankruptcy lawyers, the top three reasons companies fail are: (3) they are undercapitalized (run out of cash), (2) they fail to adapt to a changing market (stubborn), and (1) the management team was in complete denial (out of touch with the marketplace).

Funny thing is that everyone of these issues would be addressed during the building of a comprehensive Strategic Plan.

I bet some of you are saying to yourself, “But I haven’t failed, in fact my company is growing and I don’t have a Strategic Plan.”

 But at what cost? How many different directions did you have to go before you found a path that worked? And will staying on that path continue to work?

They say not having a Strategic Plan is like being on a sailboat in the wide expanses of the ocean without a rudder. Yes, the winds of the marketplace will blow you somewhere. But is it where you wanted to be and how much capital and time did it take you to get there?

This still doesn’t apply to you?

Try this.  Where do you see your business in three years? Have your management team/employees bought into this vision? Can you answer these question in a measurable way?

Who are your competitors and what are they planning? How will this affect your future growth?

Properly done, a sound strategic plan will address these issues and provide you with a common framework for decision making in the organization. It will also prove to be an invaluable resource for making personnel decisions, allocating resources and capital, creating partner alliances, and building a strong organizational. But more importantly it will give you peace of mind - allowing you to sleep better knowing you have a documented plan in place for the most important part of your life - other than your family.

A well written Strategic Plan should fit on just one page. Yes, I said one page. Not a volume. After all, if you won’t refer to it periodically and your team can’t grasp it because it is too cumbersome then it is of no use.

Ideally, the process of building a Strategic Plan should involve a trusted adviser from outside your company (industry) to bring both a different perspective as well as challenge your perceptions of your company’s strengths and weaknesses and that of your competitors. I remind you again of the number one reason for failure - “the management team was in complete denial”. I refer to this as, "drinking your own bathwater."

Don’t have the time or are questioning the ROI of such an undertaking? Think about all of those "experiments" you tried to spur growth - the bad hires, the poor marketing decisions, the new products/services that failed.  How much time/money did that consume? A Strategic Plan keeps you from making bad business decisions and on a predictable well thought out growth path.  And if you need more incentive, the peace of mind alone, of knowing where your company is headed and how you will get there, is worth the investment.

There are folks out there that can help. Seek them out. The future of your company is too important not to.

Want to learn about what it will take to build your growth plan? Visit AllegroConsultant.com The first coffee is on us.

About the author: Mike Gomez is the President of Allegro Consulting, an Atlanta-based business growth specialty firm. Allegro provides operating advice to businesses and organizations on a wide range of management issues that effect growth, such as strategic and organizational planning, marketing, sales and business process improvement. www.AllegroConsultant.com

Tuesday, September 9, 2008

Leadership - Outsourcing Layoffs is a Cop-out!

I was told the other day that large corporations have begun to use outside firms (full of behavior scientist) to decide who specifically will get laid off in a downsizing initiative. This absolutely floored me. Leaders (supervisors, managers, directors, vice presidents) get selected and paid for ONE primary purpose. That is - to lead PEOPLE.

Apparently, the definition of what it exactly means to "lead people" is being further lost in corporate America. Mid-sized business owners be aware. Don't let this happen to your company.

As a refresher, let me share what I believe it means to "lead people".

A leader (1) inspires, and motivates their people to achieve a goal or objective they (2) have communicated. They (3) set expectations and (4) insure that proper resources are there to get the job done. They (5) influence hiring decisions based on written qualifications and performance standards. They (6) use the strength of their position as well as their influencing skills to break down barriers to success. Most importantly, they (7) evaluate their people against job standards and previously set expectations and in doing so (8) reward strong performances and coach when needed. When coaching fails, leaders (9) take action by firing the individual from that position.

To suggest it is better for a company to employ an outside firm for steps 7, 8, and 9 to me is unconscionable. It undermines the very people who are suppose to be looked up to to lead and guide the growth of a company by constantly making these tough decisions. It is also a cop-out - an expensive way of deflecting responsibility to some outside third party. I wonder if corporations who employ these outside firms considered reducing the salary and compensation of the leadership - given that they have just relieved them of one third (3 of 9) of their responsibilities?

Probably not.

More information can be found at my
website: AllegroConsultant.com

Have a great day.

About the author: Mike Gomez is the President of Allegro Consulting, an Atlanta-based business growth specialty firm. Allegro provides operating advice to businesses and organizations on a wide range of management issues that effect growth, such as strategic and organizational planning, marketing, sales and business process improvement. www.AllegroConsultant.com

Tuesday, August 26, 2008

How to Grow Your Business in a Challenging Economy

I attended a seminar with this title - curious as to what the speaker would say here that is any different than how one advises a business owner on growing a business in a "normal" economy (if there is such a thing). Well, as it turned out the seminar was more of a sales pitch for a couple of company's services, and as such, a complete waste of my time. I should have known this - by the title alone.

The fact of the matter is the economy has no bearing whatsoever on the processes used to consistently grow a company. It may affect the strength of the growth but not "how" growth is achieved. A challenging economy will also magnify the impact of not following fundamental business processes when planning for growth. Incorrectly assessing your company's strengths and weaknesses or the opportunities and threats in a good economy can hurt you - but in a tougher setting can bring you down to your knees. That is why it is always wise to have someone challenge your assumptions and make certain you don't drink your own bathwater when creating your strategy for growth.

Good economy or bad the fundamentals of achieving growth remain the same. It starts with a sound plan.

Does your company have a written strategic plan? My informal poll says the answer is most likely "no". Ugh!

More on this topic later.

More information can be found at my
website: AllegroConsultant.com

Have a great day.

Tuesday, August 12, 2008

Welcome - Straight talk

Hi all.

Welcome to my blog on issues relevant to growing your business. This is a "straight-talk" site geared towards mid-sized ($3 - $100 million in revenue) service or manufacturing business owners as well as not-for-profit leaders about growth.

As a consultant I don't get paid to tell you how wonderful you are - on the contrary, my job involves listening and observing and then providing frank advise about the changes necessary to help you achieve realistic and aggressive growth goals. My company brochure asks the question: "Are you serious about growth? Really serious?" I ask this question because it takes more than lip service, passion, and a strong work ethic to grow a business. Those companies who consistently grow year after year do so with good planning and flawless execution. I plan to share my views about the particular traits of well run and high growth businesses. As you read these articles I ask you to compare these traits with your company or organization. How do you compare?

I hope you find this material interesting, educational - but most importantly, worth your time. More information can be found at my
website: AllegroConsultant.com

Have a great day.