Hengsbach & Associates

Strategic Planning in Difficult Times

2009-10-28T13:25:00.000-07:00

Those of you following my articles and blog know that I place the highest value on Strategic Planning (SP). Unless we create our future through a process, considering things like our core competencies, & why our customers buy from us, corporate growth is an accident. For most of this decade, prior to the collapse a year ago, we were spoiled with constant gowth. Bad habits developed. When success comes too easily, we lose discipline.

Now, as a result of the recession, the game has changed; drastically changed. In the Print Industry, where many of us make our living, most will wait for the upturn. The back side of the economy, where we reside, will dictate that. However, it will take time, perhaps as much as another year. Meanwhile, should we limp along defensively, losing more ground, or accelerate our recovery and emerge stronger?

It is not a rhetorical question, but many seem to treat it as such. If we do nothing, that is what we will achieve. Especially in down times we should plan more than ever. We have the time to do it, and do it thoroughly. It costs little, perhaps only for the facilitator. Instead of cutting staff so deeply, or laying off the survivors, keep your best & most innovative working. Assign them the challenge to forge a better future for all.

Enough of the pontificating; let's examine two additional components of SP, that will serve us well, especially now: Benchmarking & superlatives.

Bench marking is especially effective in unusual times, as now, where we are not in a status-quo, or stable situation. Normally, I like to set my own standards, and really put some reach in them. Where we are now, though, makes it difficult to discern just how poor (or well) we're performing. Bench marking "normalizes" results, and grounds us in reality so we don't frustrate our people by reaching unrealistically, or under achieve by setting a goal too low.

Superlatives: I love this one. Someone once said that unless our product or service is truly unique, the first or last, most or least, ugliest or most beautiful, - you get the drift, we're just an also ran. Simply put, we must strive to do what we do in a one of a kind way. After identifying the particular/potential customer need, we then can FOCUS on delivering it better than anyone else. Growth & profits result.

The Kindle Achilles Heel

2009-09-15T12:56:00.000-07:00

Many of you that follow my blogs know that almost 2 years ago, I purchased one of the first Kindles sold. Since that time, I have written articles on the Kindle, and electronic books in general. Since I am on my third one already, I feel qualified to comment on what I see developing in general.

My love of the publishing & book industries has led me to believe, perhaps somewhat biased, that the printed book would survive just fine, thank you. Recent developments have convinced me otherwise.

Technology, AND THE WAY WE NOW EMBRACE IT, has developed so quickly, that the product has far surpassed anticipated improvements. Accordingly, I believe the hardbound book, as we know it, is in some difficulty. Yes, it will survive, and it will always play a role, but a diminished one. Just like the checkbook, letter writing, & movie theatres.

Reasons are: 1) It's easier than ever to comfortably read & navigate. 2) Downloads come in about 10 seconds, after 1 click. 3) At $9.99, I was among the very first to have Dan Brown's new book, The Lost Symbol, at a $20+ savings over the bookstore price. 4) Being able to adjust the font size is a key for middle-aged & up folks who buy a good share of the hard bound books. 5) It is lighter & smaller than most hard bounds, easier to take on trips, and doesn't require but a fraction of the space your expanding library might. I could go on, especially regarding the technical end, but you get it, as I do.

There is a glimmer, however, and I don't pretend Amazon isn't smart enough to fix this problem, but there is a current flaw that is slowing the process: Quality control & Customer Service, or the lack thereof.

Recently my second Kindle locked up, crashed, or whatever. Being reasonably competent on-line, I went to Amazon's website to either report the problem, or find a number to call. It took me about 20 minutes to find the phone number after my effort failed to find a way on-line. Obviously, they do not want you to know their customer service number. We who feed them are a problem for them. Not very impressive.

After my service person and I determined it was unusable, they agreed to send me another on for $99 + shipping & handling. Hmmmmmn, after spending $399 (well above what it needs to be), it did not set well to spend another $100. But, oh well, these things happen and let's move forward.

In a few days I had my new one, charged it overnight, and then could not get it unlocked & released to me even after scrolling through the tutorial again. Another call to customer service got that fixed, but where was my library of books from the old one? Oh, they have to be transferred and that takes another call. Finally, after about 10 days, I had it back and functioning after missing my entire cruise trip vacation with it lifeless in my suitcase.

Enough of my whining, but someone better wake up at Amazon or this might take a long time.

How Many Hours Should it Take?

2009-09-15T03:35:00.000-07:00

As I work with management and staff, a common question I get is, "How many hours should I expect my associates (employees) to work? Or, "How many hours should I have to work to get my job done?" As usual, this is a complex issue, and also a simple one.

First the complex part. The starting point is a job description. There has to be one, however I still find situations without them. So spend the time to put it together; it should be a positive experience for everyone.

With this in hand, then the job must be rated & then fit into a pay scale, exempt & non-exempt, that hopefully also is in place. This should also be accomplished so that all are on the same page in terms of "an honest days' wage for an honest days work". This is also an excellent exercise to determine where you stand as a company, against your competition, in paying your people.

The pay level decision is a decision that each organization has a right to make. It just needs to be realized that the decision will have consequences which you should think through. For example, if you choose to pay higher than average, you will be able to hire & retain a better calibre of people (assuming you treat them well), but will also experience a higher cost to do so. Similarly, if you pay lower than average, you will save the cost difference, but may have difficulty attracting competent associates & have higher turnover.

Now that the more complicated portions are done, it gets less complicated for the associate. If they are paid fairly, treated well, and held accountable for performing their job, as described, then the simple answer becomes, "whatever it takes."

OK, OK, it can't literally be "whatever it it takes". However, if you have a well intended employer treating a well intended associate, then there should be a spirit of give and take. Things like covering for each other to make sure the job gets done & the customer gets served should be automatic. So should arrangements be made by management to arrange for someone to see that piano recital for an hour on Thursday afternoon.

It's simple: Just do it. One hand washes the other, what goes around comes around, yadda, yadda, yadda.

SWOT Team Fundamentals

2009-09-14T15:28:00.001-07:00

One of the more progressive practices that has gained acceptance in the last few years has been that of assembling SWOT Teams in companies to improve departmental performance, Cross-functional employees are called together, for a short period of time, to evaluate a department and discover how it might be improved to better serve customers and grow the business. Hence the term SWOT.

Given this, and the fact that I am in the midst of these endeavors with a client now, I thought it might be productive for some of you to see the guidelines that have been formed to maximize results of these teams:

FUNDAMENTALS - Team environment. Although there is a facilitator & a scribe, the playing field should be level with all being equally important. This markedly increases candid & professional communication.

No dumb answers or points - Everyone's entitled.

Disagreeing is encouraged. Diversity of opinion makes us stronger.

Participation is not optional - If the meeting ends & you haven't spoken, something;s wrong.

"To Do" Assignments are Expected to be Completed on Time & in an Exemplary Fashion.

TIMING - Meetings will generally be from 6am to 8am so as to minimize operational interruption.

FORMAT & CONTENT - The department is to be evaluated first on strengths, secondly on weaknesses, thirdly on opportunities, fourthly on threats, and Lastly on up & downsides.

From this, "To Do's" will be assigned involving data gathering, measurements, and analysis.

A SECOND MEETING - Will then conclude the process for the department. Decisions will be recommended with courses of actions, goals, measurements, and documentation.

Mentoring Guidelines

2009-09-14T14:48:00.000-07:00

One of the most sought after services I find in working with family-owned companies is that of training and developing presidents who find themselves in the position without adequate training. This may be due to a unexpected retirement, a sudden death in the company leadership, or simply an immersion for a variety of reasons.

It can foster a wide range of responses in the son, daughter, or relative that encounters higher expectations than they may be ready to meet. Frustration can lead to counterproductive behavior that hurts everyone.

If an independent person, usually a consultant, who, by virtue of being seen as neutral, can gain the trust of the newly crowned executive, some pretty remarkable turnarounds are possible. Enter the mentor.

Having been fortunate enough to have been a mentor, in a wide variety of roles, I have learned a great deal, some things the hard way. Here's what I've absorbed over the years in the form of ground rules:

1. The mentor's sole purpose is to serve the mentee.

2. The success or failure of the process is contingent upon mutual trust.

3. There is tremendous value in diversity of opinion (each person might learn something) and honesty (saying what needs to be said in a caring way.

4. The mentor's responsibility is to prepare and consistently deliver needed content & perspective that facilitates the mentee's professionalism & personal growth.

5. The mentee's responsibility is to study, evaluate, & discuss the content and perspective brought forth. Growth is a journey as well as a destination.

6. Sessions should be regularly scheduled & a top priority on each person's schedule. Because of body language and innuendo, they should be done in person whenever possible.
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New Beginnings: Moving Ahead

2009-09-03T12:49:00.000-07:00

September is such a great month! Not only does it start a beautiful fall season with mild temperatures & vibrant color, it also unofficially signifies a time for new commitments. School starts in earnest; we might even take a class. Or decide to support a church or community project. It's the time when we often decide to take action.

Many of you have challenges, problems, or opportunities. You know you need to seriously consider them for your organization. Labor Day is Monday; fall unofficially starts Tuesday. What should you tackle this year? Where do you want to be going into 2010?

Let's talk. Most of you know your issues well, but somehow they haven't gotten started. I provide the spark and the passion to get the project underway. If I don't have the experience to help you, or if I don't have enough time with ongoing client activity, I'll tell you. I'll also have the courage to tell you what you may not want to hear (in a caring and professional way). I also set time and expense boundaries so they fit your needs and provide you the value you deserve.

For my part, I'll be contacting many of you this month. You have needs/wants; I have the ability to help you discover the solutions. You also will have personal references available at the President & Chairman of the Board level.

Indeed; the time is at hand.

Great Expectations, Meaningful Experiences: A Privileged Summer

2009-09-03T12:24:00.000-07:00

For those of you wondering what's happened to my postings in July & August, (there must be a few of you?!) here's the scoop: It's been an intense and remarkable time for growth.

July saw significant client activity with excellent fact gathering & decision making on multiple fronts. Sandwiched in there was a memorable fly-in fishing trip to Canada with my friend and church pastor.

August began with virtually continuous client work. Two consecutive days were interspersed involving sponsorship of the Chicago Book Clinic & Printing Industries of Wisconsin golf outings. It was an honor to support two fine organizations. The month then ended in grand fashion with Wendy's & my delayed honeymoon on a Mediterranean cruise.

OK, so what? Why do I call it "A Privileged Summer?" Although I had virtually no free time, I was doing what I love and do best - helping good clients get better. Wonderful people surrounded me - my clients, my friend, and my wife. Much was learned - diverse points of view, each with merit; humility; finding goodness in many things; and getting closer to my Christian roots through visits to Corinth, Ephesus, and Rome.

So yes, it has been a wonderful two months, but it's now September. What comes next?

What If We Don't?

2009-06-30T10:24:00.000-07:00

Today, I would like to expand upon an article I received from TEC, The Executive Council, regarding spending money on our people during the down economy. George Buckley, CEO of 3M, was asked if he really should be spending money on training & leadership development. He was specifically asked, what if these people leave the company? He answered, what if we don't & they stay?

It's no mistake he's one of the most influential leaders we have now. The good ones know that they can take advantage of their competitors' fears and make substantial gains BY INVESTING IN THE RIGHT THINGS. People are our most valuable resource, why not excel by using the additional time we have now to invest in them?

I have spoken & written on this until even I am tired of it! So here's a bit more inspiration.

We must continue to develop our bench strength, our future leadership, even when we're cutting jobs. Wow! Talk about counter intuitive, but right on. We must watch cash, & differentiate from our competitors, but our future depends on our leadership.

This develops trust, continuity, and self-confidence; these are all qualities critical to leadership in turn improving and developing our people.

It's not what if they do, it's what if we don't?

Subjective Dynamics of Family-Owned Businesses

2009-06-29T14:24:00.000-07:00

When I begin work with many companies whose owners are the family, I am often presented with a fair amount of data relating to the area(s) they want "fixed". This is very helpful, from a distance, in identifying causal factors that limit or diminish performance, or show lost opportunities.

At the same time, Family-Owned businesses are different. The family unit, regardless of whether they own a business or not, is a more emotional entity than a corporate organization. Accordingly, more subjectivity like concern for parents, siblings, or nieces & nephews might, though not always, enter into decisions.

Today, in this article, we'll look at how family-owned businesses do differ, and how some of the subjective things can influence results. As I've said many times before, HOW your employees or the ownership sees & does things can assist or hinder performance. By understanding some common challenges that often arise, steps can be easily taken to mitigate problems and restore performance to the level desired.

Typical questions to consider:

1) Do your employees understand that family-owned businesses differ from others? The ownership, whether it be mom & dad, the family collectively, or second & third generation, may have certain family goals, which is their prerogative. These might include things like, providing job opportunities, training & development of the children, grooming members for top management, or mom & dad's cash out & retirement. If this is not understood and presented in a positive way, resentment can build, taking away from performance.

2) Are Family-owned policy & procedures explained & documented ? In your corporate manual, there should be a "Family-owned" section outlining, for example, how hiring decisions will be made when a family member is involved, how the decision will be made when employees are competing with a family member for a promotion, or how family members are to be compensated.

The key here is to have it out there for everyone to see. I like this because, if it can't stand the test of being out in the open, maybe it should be re-considered. And if it is published, then the employees should support it; if not, it is their prerogative to leave the company. Lou Gentine & Sargento do a magnificent job of this.

3) Is company morale affected by the actions of the ownership within the company, or among the owners themselves? This is critical. Everyone, owners & employees alike must understand the difference between ownership & management. Oftentimes I see, especially in the second generation, a passion to perform, to excel, and even to please mom & dad. This can result in the children, with good intentions, interfering with day to day operations, and other managers by going directly to them. If the reporting structure is violated, confusion, stress, and resentment can build.

Another detrimental dynamic found in some instances is sibling rivalry. Whether it's one child wanting to get promoted first, or second guessing each other, this can be really damaging. With clear identification of rules, conduct, and structure, this can be kept to the boardroom where it belongs. And then, it must be discussed in a professional & caringly manner to avoid the inevitable notice of the employees, and the hurt that can potentially be brought to the family.

The Biggest Lesson in Worzalla's Turnaround

2009-06-23T14:12:00.000-07:00

Charlie Nason, the President of Worzalla Publishing, is a good friend of mine that I saw last week at the Lindenmeyr Paper Annual Outing. Knowing that over the past few years, Worzalla has fashioned an incredible evolution recovering from significant erosion from China, I asked Charlie to share with me how it was accomplished. He said it would be difficult to say in a few words, but that he would e-mail me, which he did the following day.

He outlined three things: 1) Willingness to Diversify 2) Right-Sizing the Operation 3) Effective Communication These in themselves should not be surprising to many of us, especially those that read the Harvard Business Review. However, I happen to know a good deal about Worzalla & Charlie, and I think there is an incredible HOW here that Charlie is too modest to tout.

First, the background: Worzalla is 100% employee owned and has been that way for some time. Charlie realizes that he only is President for as long as the employee owners choose to have him. Accordingly, and because Charlie is naturally a person who sincerely cares about his people, he has stayed close to them.

When China began to negatively impact the U.S. print industry, he went on an extended trip to learn everything he could. Upon his return, he was very vocal in his concern for American Industry, and his people. When their erosion in 4 color book printing declined drastically as a result, the first place he went was to his people. Because of his relationship with them, he chose to trust them to be part of the solution.

So yes, they rid themselves of 4 sheet fed 4 color presses & replaced them with 2 new presses and increased capacity by 23%. HOW they did this was to work together with each other to involve everybody in the solution. What this did was to achieve incredible buy-in due to the complete understanding of the situation and their response. When folks understand and are treated as equals, they will do most anything to achieve a goal.

And yes again, they did reduce staffing from as many as 625 to 360 full time ESOP employees. Even though their sales dropped from $61 million to $44 million, it then recovered to $65 million, all with just the 360 employees! You you can just imagine how much more profitable they are.

And finally, yes once more, it was the communication that did it. They not only kept everyone a part of the solution, but they updated them regularly on progress. They close their plant once every quarter to have an employee meeting where their sales activity and financials are shared. Equipment acquisitions, training, and manning issues are also reviewed. Questions can be submitted ahead, and answered in front of everyone.

To sum it all up, Charlie stated, "If your people know where you are going, (and are part of the effort) it makes it easier for them to step up and follow!"

Thanks Charlie for the information and data, but as Paul Harvey used to say, "Now you know the REST of the story"

Accountability - an All Too Rare Gem

2009-06-23T13:13:00.000-07:00

Today I had the good fortune to pick up an article written by a man I've quoted before, Ian Cook, of Vistage. He has previously had much to say about managing through our economic crisis. In today's article, he focused on accountability, and here, I will build on what he wrote, using my words.

What I liked most was that he advocates FOSTERING accountability, not FORCING it. To facilitate is not to demand, but rather expect. To lead is to place the responsibility within your people, not allowing them to shift it to you, or taking it from them when things go bad.

He advocates building clear goals with lots of latitude around HOW to achieve them; he tells them WHAT must be done, and then expects them to accomplish it their way. By letting go with the how, he allows them to learn and grow stronger.

Ian states that we must resist the temptation to jump in when they're struggling and solve the problem for them. Yes we might decide to help them, but then we should step back again and allow them to continue the attempt.

Along the way, we need to stay in touch, but only with the big picture; allow them to work on the details; remember, the devil is in them!

Also, remember to acknowledge their progress, especially when they take on more responsibility. Encourage them not to be afraid to fail; failing is only a temporary state. Failing is often the fastest way to learn. We consistently need to reinforce positive behavior.

In summary, don't tell your staff the detailed what to do, but rather the overall goal, then let them work together (teams are great with effective leadership) to get the results. Celebrate when they do; you'll be not only growing in responsibility, but growing your people and bench strength.

The bottom line is that accountability need not be an unpleasant task. Instead, make it a productive one.

How to Manage in Times of Crisis Part 3

2009-05-28T09:50:00.000-07:00

This article resumes with quotes from Ichak Adzies new book. He continues on with integration issues for the organization.

What does not kill you makes you stronger. Act. A crisis is your time to show your true colors as a leader. Look inside, because that's where the solution is. You cannot control the outside, but you can control the inside.

You believe the danger is that while you manage the long term solution, you'll go bankrupt. So what do you do? You must manage on multiple fronts - cash and systemic integration. And preserve your strengths.

Be cautious about firing people. Get rid of the non-producers, but you should have done that long ago. Why does it take a crisis to make you do the cleaning up? If you are 20lbs overweight, do you cut off a foot? Now your weight is fine, but you don't have a foot. In tough times, what do you do personally? Throw one of the kids out on the street so others can eat?

It doesn't make sense to cut critical people. Cut fat, not muscle. How much will it take to re-place, re-hire, & re-train good people later on. Conserve your assets so when the upturn occurs, you are ready to roar again. Alternatives are to have everyone work fewer hours, or challenge your folks, with their additional time available, to come up with innovations and efficiencies. In so doing, you will also preserve the culture of mutual trust & respect you have built with human resources.

Every organization needs to align 4 sub-systems: 1) Your purpose 2)Responsibilities 3) Structure of authority 4) Reinforcing behavior. Tell everyone you want to hire, this is our value system; if you don't share these values, don't work for us.

Be careful with authority. As the company grows bigger & bigger, the founder can't make every single decision, so he delegates. First he delegates the right to say "no", but keeps the right to say "yes". Layers of "no-sayers" develop, & bureaucracy results. You have to pass the problem and its solution up to where there is authority to say both yes & no.

We'll end the review here. It is my fervent hope that you have gained as much from these insights as I have. Please do yourself a favor and buy the book!

How to Manage in Times of Crisis - Part 2

2009-05-28T08:06:00.001-07:00

This is a continuation of the previous article with quotes from Ichak Adizes. He continues on with why change causes problems.

Everything, your company & even you as a person, is a system, and sub-systems comprise it. When there is change, sub-systems do not change at the same rate; therefore gaps are created. Gaps create problems, because there is misalignment. If you are age 47, but 17 years emotionally, 30 years spiritually & 70 years intellectually, these conflict. Similarly, with your company, perhaps sales changes direction very fast, but accounting is much slower, and H/R may hardly exist. Problems; disjointing/disintegration happens.

The faster the company grows, the less information top management has. With incomplete or inaccurate information, management may make flawed decisions. Meanwhile, H/R is hiring tomorrow the people needed yesterday; the company's sub-systems are operating at different speeds. Problems turn to crisis.

More innovations were made in the 20th century than cumulatively in the history of civilization.

If change causes disintegration, and disintegration causes problems, what is the solution? Integration. And the most effective way is to integrate proactively, not reactively.

THOSE WHO FREEZE, DO NOTHING, & ALLOW THE CRISIS TO TAKE OVER THE ORGANIZATION, CAUSE ITS DEMISE. Worse, they may disguise the problems with actions that make the organization look good only delay the inevitable crisis. Some organizations do nothing because they are waiting for the storm to pass. WRONG.

Success is not about how rarely you fall down, it's about how quickly you get up.

I am not smarter than anyone else; I just identify my mistakes faster and correct them faster.

In a badly managed company, people do not trust one another; it is easier to attack each other than the competition. What happens? The enemy has a better opportunity to kill us all. So, in times of crisis, more than anytime else, trust is critical.

If you're falling apart, how can you take care of others? Take care of yourself. Keep together by 1) Slow down, meditate or pray. 2) Keep your family together, give hope. 3) Call your friends; help them & ask for their help. 4) Address the fears your employees have; be honest. 5) Call your clients; help them. Remember, if your clients go bankrupt, so will you.

How to Manage in Times of Crisis

2009-05-27T08:54:00.001-07:00

I continue with my theme for May, reviewing business articles and books. Small, but power packed, is the best description of this book from Ichak Adizes, world renowned philosopher, author, and teacher. He is the father of Shoham who's article on being proactive, not adaptive, was reviewed earlier.

This is a must, not only for your library, but for your desk. So much of it is incredibly profound, you'll want to refer to it often. Accordingly, this will be a compilation of quotes you can remember and continuously apply, ESPECIALLY NOW.

He starts with Albert Einstein; "A crisis can be a real blessing to any person, to any nation, for all crises bring progress. It is in crisis that inventiveness, discoveries, and grand strategies are born."

Adizes - Crisis is a rapid change. It's all about strength, or lack thereof; if you're robust, change makes you stronger. But if you're weak, change can kill you.

Change is nothing new; what is new is that the rate of change is happening faster. And when we solve problems, change creates more: so we will always have problems. Therefore, if you have problems, relax! You are in good company.

You are as big as the problems you can handle; problems are a sign of growing. In Chinese, the word for problem and the word for opportunity is the same!

Do you want me to be a problem or an opportunity? You decide. If you don't do what you need to do, I will be a problem. If you react appropriately, I will be an opportunity. Which do you want me to be?

A problem left untreated, becomes a crisis. Our worldwide financial crisis did not happen overnight. It began with problems left untreated over time.

The crisis involves your competition, too; everybody has the same problem. Who is going to survive? Those who are most capable of change. Crisis makes the weak die faster and the strong grow faster. So the key to making a crisis an opportunity is to be strong BEFORE the crisis develops.

If there is no change, the mediocre catch up. We need to be more agile, to change faster than the competition-or at least as fast as the market is changing.

There's much more to come, so we'll continue in the next article.

What Not to Cut in Tough Times

2009-05-27T08:07:00.001-07:00

For those of you who follow my articles and business blogs regularly, you know that I have made my focus on issues surrounding how we lead and manage in these difficult economic times. In a recent publication, the Printing Industry of Wisconsin (PIW) outlined several "don'ts" to keep in mind as "you develop your business strategy for 2009 and beyond." Here they are with some discussion to shed further light:

1) Don't cut your advertising budget. Above all, your actual & potential customers need to know you're alive and well; you don't need them going elsewhere when every order is critical. This is also a way to gain on your competition who does.

2) Don't skimp on attending events. You may need to so some judicial prioritization here, but you still must be out there; you might be missed. You also want to keep abreast of new technology and ideas.

3) Don't be afraid to give something back. Share your ideas, give talks, teach a class. This establishes you as an authority and can attract new customers.

4) Don't be afraid to spend money on used equipment if you can get it at the right price. Also, if you need cash, perhaps there is something that can be sold; use PIW.org.

5) Sell your way out. Take advantage of competitors' cut backs and mistakes. This is the time to gain new customers from your competitors.

"This too will end." And you need to be healthy & in good shape when it does.

Do You Have the Fire in the Belly?

2009-05-26T17:07:00.000-07:00

My wife graduated in Nursing from the University of Wisconsin, Oshkosh. The other day I picked up her alumni magazine, Engage, to read an article touted on the cover entitled "Fire in the Belly". Although it was pretty much written to promote successful graduates, as it should be, HOW the alumni had succeeded really impressed me.

One stated that it's the willingness to take a risk that often characterizes an entrepreneur; "You're a gambler, marathoner, chameleon, and sea captain." Wow, what a combination, and very well put!

Some focused on "finding out what their customers hated", and removing that irritant. Netflix was cited as an example in eliminating late fees for movie rentals.

Another was in the reusable packaging sector, and found themselves shipping a good deal of cheese. But cleaning the pallets & containers was a chore, and one that no one wanted to do. So they decided to provide that service & found that the cheese producers regarded it "music to their ears".

Others made it their goal to run an organization without politics because life is too short. Imagine that, no agendas, or doing things just to please the wrong person. Easier said than done, but I admire the approach, and the irreverence, to challenge the same old way of doing things.

The common denominator that defined these successful entrepreneurs was the "fire in the belly" - the ability to live and breathe your business. There was also a supreme level of confidence along with a tolerance for challenges & change.

I find this very uplifting now, given what we're going through. It's very inspirational to witness this in our younger people, who sometimes can put us older folks to shame.

Do you still have the "fire in your belly?"

Ten Minutes, Ten Months, Ten Years

2009-05-18T15:12:00.000-07:00

Suzy Welch, wife of Jack, who is an accomplished business person in her own right as former editor of the Harvard Business Review, has come out with her first book called 10-10-10.

The premise of the title & book is that when making decisions, whether they be business, family, or pleasure, we should consider the upside/downside/consequences in a frame of the next 10 minutes, 10 months, and 10 years. Too often, depending on our age & personality style, we either live in the distant future, or perhaps like many teenagers, for instant gratification. Even considering only the mid-range, we could miss short run benefits, or long run successes. Her point is that we should consider all three.

This is a simplistic approach, but I've found that often times, the more obvious is often lost because we make it more complicated. Remember that it's not only in the knowing, but in the doing. This is also a balanced approach, and looking at more sides of an issue is rarely flawed.

As we lead our folks and run our companies in these challenging times, we've seen many get extremely short run oriented. Perhaps we've had to, just to survive. But living only for today will not serve us well; we risk emerging less than we could have been considering the longer range.

Another advantage of screening our decisions this way, is that we tend to moderate our thoughts by considering the different time frames. In looking forward to how we might emerge, and how different conditions will be in 10 months, and especially 10 years, we gain more of a positive light. This balancing effect improves our outlook and allows for perhaps a more complete decision.

Talk with your managers about 10-10-10; ask them to broaden each other, and you, considering a wider time frame in all of your decision making.

Is Adapting Too Little Too Late?

2009-05-18T15:10:00.000-07:00

For quite some time I have admired Ichak Adizes, his articles, philosophy regarding sound business practices, and intelligent ways to look at how we approach things. Now his son, Shoham, is writing and has produced a fine piece on how we should face our current challenging and fast paced environment. He has called it, "Don't Adapt - Pro-act".

He points out that adapting is simply not enough. Because the dinosaurs adapted too slowly, they perished. Biologists have noted that as the rate of change increases, more and more species go extinct, despite their ability to adapt. Isn't business similar? Customers are demanding change faster because the markets demand it. What results is that we try to meet needs that have come and gone; we are simply too late. We have to only look at the automobile industry; wow.

So what are we to do? Well, we need to predict the future, to forecast more effectively, before it is being felt. We cannot do this with our heads firmly in the sand or paralyzed with fear. We must risk or we will eventually perish; it's that simple. We can waste away slowly, or we can move now: be proactive not reactive.

Executive leadership must guide their people to the same page, to see the same threat, so all can meet the challenge together and head-on.

Our global market complicates this; we not only have our domestic state of affairs, but things can be very different in other cultures, in other countries. We need to understand each other and band together to understand and conquer our challenges.

To be proactive is to have the sourage to stay ahead, instead of reacting to the past. Don't be giving too little too late.

Preparing to Soar

2009-04-30T10:43:00.000-07:00

As we chart our course out of the economic crisis, we understand that courage is required in large doses. Our great American icon, the Bald Eagle, provides an interesting lesson. First a question: would you jump out of a tree, several hundred feet above the forest floor, never having flown before?

Somewhere in the 2 to 4 month period, the fledgling eagle learns to fly. Flying is not an easy task. In preparation, mom & dad feed it constantly until it weighs more than they! Then the with-holding of food begins, and weight loss follows. All along, the parents fly by the nest with food in their talons or mouth. But instead of coming into the nest, they fly by to tempt the eaglet. As the fledgling gets critically emaciated, it becomes desperate for food. Sooner or later the eaglet, as the parent passes by, dives out for the food, misses, and has to glide, flap, and flounder his way to the ground. The parent then drops the food by the eaglet as a reward. During the next several days the parents look after the fledgling, teaching it to fly and hunt. This only happens following the jump; no jump, no learning. No learning, certain death.

Aren't we like the bird, safe in its nest, knowing we need to take the plunge, wanting the food (reward, outcome), but paralyzed by fear, & not acting until things become totally desperate? What is the final motivation for the fledgling to jump? Well, it's starvation and sure death, versus jumping to an "unsure" death. The bird understands the choice, and whether by instinct or a more intelligent decision, it not only survives (90% of the fledglings who jump out of the nest survive to fly, hunt, and mature), but thrives.

We often wait so long to become more aggressive in our stance that we risk choking our people and materially damaging the organization. We then emerge weaker and less able to compete. Our competitors leave us behind and our customers seek them out rather than us. As the "intelligent life", we need to overcome the fear with logic & reasoning. We must summon the courage to "lead" taking the plunge.

The last 2 articles, Recognizing Opportunities . . ., and The Fundamentals of Courage . . . made the logical point. The data shows & confirms it. We must act, and the time to act is now.

Hopefully, the fledgling eagle has made the emotional point; just take the jump!

The Fundamentals of Courage & Taking Advantage

2009-04-29T11:50:00.001-07:00

The Kellogg/Post story (previous article) is enlightening. So often if we learn well from history, we have the opportunity to change the end of the story; we don't reside in the past & its failed actions. In addition to the studies & outcomes, I believe there are three fundamental areas of opportunity now existing that call us to action: low interest rates; low real estate/occupancy costs; and the availability of good people.

As the famous hockey player, Wayne Gretzky said, "I don't skate to the puck, I skate to where the puck will be." Similarly, with the economic recovery, we must look forward to where our market will be in 6 months/year +, and build the organization, people, and resources to serve and take advantage of it. If we do that better than our competitors, we will emerge the winners.

It's fairly easy to understand that if we do nothing, the best we can be is at the same relative level as when we started. Don't we want to be stronger, better prepared, and more responsive to our customers? That's the real reason that doing nothing should not even be close to an option.

First, let's examine cash flow and the cost of money. "Cash is king" has been the favored phrase during the economic crises, and rightfully so. However, as we hit bottom & begin recovery, the opportunity is at hand to invest in growth at an extremely low cost, building a more agile organization. This of course is due to the Economic Stimulus and the resulting low interest rates. Never again, for several years at least, will we see them this low. And as others get on the bandwagon, the rates will go up; if we delay too long, we'll miss the opportunity.

At the same time, real estate values are at 20 year lows, both in the private as well as business sectors. So there exists a window here as well, to buy land for expansion, or existing space, at an extremely attractive rate. If you have leased property, it's time to extend and renegotiate that lease, whether it is due or not. During the recovery, this opportunity will be lost as well as the glut is dissipated. Accordingly, the window for action is probably this Spring.

The most important resource is your people; take special care of them. Hire the very best, of the highly qualified and experienced talent available, resulting from short sighted competitors and companies who cut back too deeply. Give them a new home. Invest in training and development to maximize that talent and you'll have a deepening pool of loyal folks who'll serve your customers well. Geometric improvement can be achieved this year; next year will be too late.

Recognizing Opportunities, as the Economy Begins its Slow Recovery

2009-04-27T16:17:00.001-07:00

If in fact, the bottom has been hit, the question is, how do we move forward now? Are there opportunities, and if so, what might they be? Is it in fact time to get a bit more aggressive and carefully plan a stronger & better future than before?

We should move forward thoughtfully. Here's a poignant example from the Great Depression: Kellogg & Post. The New Yorker Magazine wrote of it last week. In the beginning, both were involved in the packaged cereal market with no clear leader. When the Depression hit, no one knew what would happen to consumer demand. Post did what many companies recently have done, reducing costs, cutting budgets & advertising. Kellogg, on the other hand, doubled its budget, moved aggressively into radio advertising, and introduced Rice Krispies. In the four years it took the economy to bottom out, Kellogg raised profits 30%, & became the market leader in the process.

You'd think, that with stories like this, companies now would want to do the same, but what we've seen is most behaving like Post. They hunker down in a survival mode, cut spending, & make fewer acquisitions even though the costs to do so are down. They preserve instead of grow; they just want to get it over with.

There are studies proving companies that maintain spending during down times do significantly better than those who don't. A 1927 study by Roland Vaile showed organizations that kept advertising steady or higher saw significantly better sales than those who didn't. During the 1981-82 recession, firms increasing advertising
saw a "precipitous rise" in the next 3 years following. And in a McKinsey study of the 1990-91 recession, it was found that companies who remained market leaders, or became serious challengers during the downturn, had increased their acquisition, R.& D., and ad budgets, while companies at the bottom had reduced them.

Wow! The message is clear: the future winners will be those of us who act now. Yes it takes courage, but it must be done. Please look at the data; let's not repeat the mistakes of the past.

We may think that only the strong can afford to be aggressive, but the fact of the matter is that recessions create more opportunity for challengers, not less. Note that when advertising is reduced during down times, the challengers have more opportunity to stand out, and the investment is more effective. In the 1990-91 recession, Bain & Company found that twice as many companies leaped from the bottom of their industries to the top, as did so in the years before & after. What wouldn't we all give to move from the bottom to the top?

Here's the clincher. Two gentlemen from academia, Peter Dickinson & Joseph Giglierano have stated that companies now a days are worrying about two kinds of failure: "sinking the boat" (destroying the company by making an aggressive decision) or "missing the boat" (letting a great opportunity pass). Today, most companies are far more worried about sinking the boat than missing it. That's why jumping from last to first, or becoming a Kellogg, is a possibility. That's also why it takes so much courage to do it.

Who are we?

Who will we become?

Some Great Thoughts From Our Own Craig Faust

2009-04-19T16:23:00.000-07:00

Prior to making final preparations for my talk for the International Business Association Wednesday night, I was going through the PIA (Printing Industries of America) Magazine. I came across a very fine article, "Prepare for the Upturn-Think Big, Think Small", from Milwaukee area's own Craig Faust, President & CEO of Hi-Liter Graphics, in Burlington.

I have followed Craig for some time now; first becoming acquainted with him through Jim Lacy of Inland Press, which Craig had purchased. Craig has quietly done things right, stood by his principles, and built a fine organization. The way he puts people first, even in difficult times, is especially noteworthy.

In the article, he focused on the opportunities that abound if we prepare for the inevitable upturn, stay disciplined, and increase our marketing efforts. No standing pat with Craig, or as he puts it, no paralysis.

Something which I have been emphasizing repeatedly is stating the importance of Strategic Planning, and the necessity of going through the process. Craig makes the point that, "Profit Leaders... have survived and grown by understanding their business profile and following their Strategic Plans."

On taking care of his employees: instead of just laying off people, he recognizes the need to invest in & keep his best people to be in position to reap the benefits of the upturn. Instead of cutting training expenditures, he makes the point that Profit Leaders outspend lesser performing printers.

Through their research, PIA has determined that innovative technology is most important to their members. Craig believes in involving his people in problem solving and new solutions. He shares information with them such as waste, spoilage, job costing, and even gross margin, to facilitate it. They believe that finding a less expensive way to produce a job is a better way to compete than selling it at a lower price.

We've all heard the expression, "the devil is in the details." At Hi-Liter the discipline is in the details. They are very serious about Lean Manufacturing, have budgets that track expenses compared to last month & last year, and watch their ratios.

In short, when we look positively to the future, take care of our people, plan and focus on the correct things, stay disciplined, and reduce costs rather than margins, we are simply practicing good business. It not only gets us through the downturn, it prepares us in the most effective way for the upturn.

Creativity sells, not only in troubled times, but in all times.

Have We Hit Bottom Yet?

2009-04-19T12:26:00.000-07:00

Those of you that follow my writing know that I am an eternal optimist. I have been consistent in my recommended thoughts and actions in these challenging times.

During the last 6 weeks, the dazzling bear market rally has been over 25%, so my natural tendency is to think that we have hit bottom. While we may have, I feel compelled to balance potential enthusiasm with a reality check.

A week ago Friday, there was an interesting article in the Wall Street Journal. While there is no shortage of those who think we may be poised to be led out by the recent success of the financial sector, including one of President Obama's top advisors, there are also warning signs that should get their due.

The current crisis is unprecedented in 75 years; so do we really think that we could recover so relatively quickly? Perhaps, perhaps not. Skeptics point to another possible correction before the real recovery where more jobs will be lost & consumers will "hunker down." Job loss could create another round of contracted spending & lower corporate profits. Thomas Lee of JPMorgan Chase thinks there will be another 8 to 10% drop in the market.

Another line of thought has the non-financial sector falling off through lower earnings, and since the financial segment is not out of the woods yet, we could be dragged down. All the trauma we've been through has many in a very conservative, cautious mode. Who can say they're wrong?

Finally, Howard Atkins, Wells Fargo's finance chief said that while they had adequate reserves, and he was "very comfortable" they had already taken appropriate write-offs, he would not rule out taking more in the future. It seems everyone has a disclaimer.

Accordingly, I will not be any different. I believe that we DID hit bottom, and that a slow but steady recovery is at hand. The disclaimer is that we don't experience another "911" sort of experience, and that government spending somehow gets under control.

Sales Turnaround in 30 Days

2009-04-01T08:49:00.000-07:00

My previous article addressed corporate leadership climate, and specific attitudes that may now be prevalent in our turbulent economy. Much of this appears to be a focus on protecting assets, a reluctance to take risks, and limiting expenditures to only those that generate short term income.

Over the last several months, I have intensively analyzed this topic, conducting research, interviewing executives, & writing articles, some of which have been published. Later this month, on the 22nd, I have been asked to lead a discussion on it at the Independent Business Association of Wisconsin(IBA Wisconsin)Roundtable.

My interest has been driven by a need to discover what kind of assistance my clients want in this environment. Perhaps I have been slow to "get it", or maybe, since I own a consulting firm, a part of me doesn't experience the same dynamics. At any rate, my immersion has served to forge an understanding and a clarity which is not only wanted, but needed.

Simply put, results must be improved, and they must be improved NOW. Let's not look down the road too far; most of us are hemorrhaging too badly. If we're going to act on something, especially when requiring funds, let's get a very timely return. We cannot afford to invest in the long term when we are so busy just trying to survive. It's not that I agree with all of this (I'd like to see a bigger emphasis on taking care of our people), but it's what I see most often.

Now that's been settled, how and what do we turn around? Well, sales of course. Most executives have already cut costs, eliminated non-essential spending, and streamlined the work force. The flip side of reducing costs is to increase revenue: increase sales. If we take this at face value, and in light of the above, the question becomes, how can we revitalize sales quickly without spending a lot of time & money? And how can we do so carefully monitoring results so that the time frame is reasonable, and wasting precious cash is prevented?

How about a Sales Turnaround in 30 Days? If . . . IF this could be accomplished in a structured fashion, it would meet the above criteria: short term, relatively small cash outlay, defined time frame, specific goals, and measured results. Sounds good you might say, but what can be done in that short period of time?

Here's how I am accomplishing it: I will go on site with the ckient for a total of five days in the month, not including time spent off site with phone & e-mail. During the 5 days, I will interview members of sales management, the sales force, customer service, & operations. Customers, with approval, are interviewed via phone & e-mail. The sales force and selected management, customer service, & operations folks will be asked to complete a 10 minute personality profile.

With sales management, I will need access to marketing plans, previous & current sales goals & performance, previous & current sales remuneration plans, gross profit & value added performance, turnover, training plans, and other appropriate reports as needed.

At the end of the month I meet with top management to discuss improvement opportunities. Such things will be included, but not limited to: hiring effectively, aligning sales remuneration with corporate goals, increasing time in front of the prospect/customer, reducing turnover, improving training to reduce time in developing senior sales people, increasing sales $/sales person, facilitating sales management development, increasing incoming gross profit & value added, profitably providing customers exactly what they want, & facilitating a cooperative spirit between sales, customer service, and operations.

The client's investment is limited to only my 5 billing days + expenses. With my 35 years in the business, the upside far surpasses the downside. If the choice is to do nothing with it (difficult to imagine), we all still learn much, which serves us well in the future. Much more likely, if the choice is to take action on some or many of the recommendations, the sky's the limit as to what can be accomplished.

The client can choose to facilitate implementation, or I can help them with some or all of it as they move forward. Even in this economy, there is so very much to gain, and so very little to lose.

When can WE begin?

President & CEO Confidence Levels

2009-03-31T06:51:00.000-07:00

As I observe how most corporate leadership is performing in our economy, concerns arise. Whether it's worry over the stock market, the government, or too much or too little bailout, our consumer and corporate confidence is at an all time low. Here's what I see many executives wanting to do:

1) Survive - live to fight another day; wait for stability
2) Protect cash - spend nothing unless it's direct expense or generates revenue
3) Take few risks - protect instead of create
4) Make no changes - the known is less stressful than the unknown
5) Attack expense - increase profits by cutting costs, and not growing revenue
6) Grow only the short term - if results are immediate, do it; if not, don't

Let's look at each of these with a bit of analysis:

1) Survival to me means we hold the status quo; we don't rock the boat, we wait for a less stormy sea. We pick a better time. This may be fine for the here and now, but hunkering down with a low profile is seldom the right thing to do in the longer run. We miss opportunities and we lose by wasting them.

2) Protecting cash is one of the most prudent things we can do in the short run. However, when we hit bottom and start recovering, we need to aggressively invest it. The return will be geometric because growth has been stuffed under the burden of our worry for so long. Are we at the low point now? I think we are very close.

3) Taking few or no risks does not mean we are static, but rather that we are actually back sliding. How did our organizations get to where they are now? Not by doing nothing. Again, this can work when used sparingly, but not with a steady diet. The trick is to do your homework, take well calculated risks, and reap the rewards.

4) Failing to change that which is broken is fatal. When we recognize policies, procedures, or routines that are flawed, we must take action. We cannot pretend that they don't exist. Our people see them too, and are demotivated when change doesn't happen. Fix it and learn. If it's still broken, then fix it again. Instill courage; that's what leaders do.

5) Cutting expense is another thing we must do in tough times. However, when we don't also invest in future growth, our folks may think there won't be much of a future. Morale continues to suffer. We again miss the opportunity to make money to offset our losses. We are growing, or we are contracting. Making mistakes of commission, rather than omission serves us so much better.

6) Living only for the near term can be short sighted, even if one's intentions are good. It can miss the solid, well planned things that make living worthwhile. Again, adjusting our sights higher and longer is easier as we approach the bottom, but I see some failing to act now, that will cost the company in the longer run. Continue to invest in your people and your customers. The preparation for future success starts now.

In the next article, we will look at the Sales Force and see how we might bridge the action gap on this list of leadership traits.