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Monday, 28 November 2011

Thought About Your Exit Route? Look At ALL The Options!

I was in discussion with a consultancy client about the longer term objectives for the business (manufacturing engineering), when he laughed and said:

I’ll look at the long term but I may not get there!”
“Rubbish”, I said, “Why do you say that?”
“Well, I’m 69 and very fit but you never know what might happen”.
I was a trifle surprised as he didn’t look it but it raised a great raft of questions.  So many owner managers just plough on, running their businesses with very little thought about the future and how they are going to release the asset in the business which they have built up over the years.
He was reluctant to get into a detailed discussion at first, but eventually he decided to look at the options open to him.
The business was well run (mostly by him, let it be said), growing and profitable but he was, as many owner managers are, something of a control freak.  He needed to know exactly what was going on and he had his little coterie of spies around the company to tell him.
In fact, although he had what could laughably be called a Board, he didn’t have a real management structure.  What he had was a group of gophers who did his every demand.  It seemed that there was no-one whom he would rate as potential succession.
In any case, after years of ruling the roost, he would have found it exceptionally difficult to let go and allow people to get on with running the business.
So what are the options for an exit route?  For example he could prepare the business for a trade sale, see if an MBO is a feasible option, stay on and run it but accept that succession is essential, and so on.
The real answer here is, of course, to prepare long before it becomes critical.   This would allow the leader to bring in and test potential succession, to build a management team which would encourage potential buyers of the business and to start the process of looking at all the options in a non-pressurised environment.
A salutary tale.  I was asked to discuss with a lady how the business which her recently deceased husband had built, could be run effectively without her input.  For the time being accountants were running it and they resolutely blocked any ideas I had for the continuation of the company.  Eventually they liquidated it and several people lost their livelihoods
A sad story – make sure that it doesn’t happen to you.

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Sunday, 20 November 2011

800 Years Old Yoda? Who He? (I’ve Never Seen Star Wars!)

One of my Vistage members recently left the group after nearly five years membership during which we went through some difficult times together.  The group undoubtedly helped him to stay afloat and successfully stay afloat he did.

At his final meeting he very kindly gave me the gift of a shirt with a picture of Yoda, who I understand is an 800 year old mentor character in Star Wars (which I have never seen).  Some resonance there.

On the front of the shirt is a quote from the aforementioned ancient which also resonated with me:

“Do or not do: there is no try”  Master Yoda

Now that is a great thought.  How many times do we hear someone say “I’ll try to....” or “I hope that......”  as examples.

It isn’t so much a matter of indecision; it is more a lack of confidence in an ability to deliver the goods.       At one level it is fear of failure and at another a genuine uncertainty as to an innate ability to deliver.

In the end it all comes down to belief in oneself.  Belief that we can achieve anything if we put our minds to it.  Belief is at the core of every successful athlete; without that belief they can only rely on their athletic talent alone to take them there.

It is not enough; the great coaches certainly do not need to have the same level of technical ability as their charges.  The coach of the great swimmer, Mark Spitz who won seven gold medals at the 1972 Munich Olympics, not only could not swim but apparently had a morbid fear of water.

What he could do (and did successfully) was to implant in Mark Spitz the unwavering belief that he was the best in the world and the results were evidence of his success.

Do or not do: there is no try.  Make the decision. Either do it or don’t do it (whatever it is) or not but just saying that you will try is of little value.  In my Vistage group we call it the JFDI Syndrome.

I will wear that shirt with gratitude.  Thanks Mike!

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Sunday, 13 November 2011

Are Your Sales People Farmers or Hunters? Both is Best!

Business Development (which is the posh modern description of sales, it seems to me) is the buzz word in many businesses and perhaps needs to be examined.

Many august consultancy companies have run surveys of the amount of effort needed to build sales through new customers as against developing the existing customer base.

Conventional wisdom has it that the usual ratio is between 7 and 9 times the effort in order to achieve the same level of activity and that means a vast amount of work both externally and internally.

That quadrant so beloved of consultants, the Ansoff Matrix (http://tutor2u.net/business/strategy/ansoff_matrix.htm) looks at the four general routes to market: existing products into existing markets, new products into existing markets, existing products into new markets and finally, new products into new markets.

My old sales mentor, Phil Copp, the Sage of Wythenshawe, used to analyse his working year on the basis a sort of reverse 80:20 rule.  For example he would plan for say 30 calls in a week of which 24 were to existing customers and 6 to potentials.  Phil was a very wise man and knew where his best efforts would bring success.
Another survey says that we only obtain, in general, around 40% of the available business from our existing customers, simply because they frequently don’t realise that they can deal with us for a range of products or services and not just one.  Law firms and accountants are classic examples of this problem.
So what can we learn from that?  It is certainly not the customer’s fault; it is up to us to use every possible method (and there are plenty available these days) to make sure that our existing customer base knows what we can offer across the board. 
It’s time to change their perceptions.
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Sunday, 6 November 2011

How Good is Your Top Team? Use the 9.5 Test to Check Them Out!!

Taking the Top Performer subject a stage further reminds me of Vistage speaker, Larry King from the USA, who has the group assessing in some detail the capacities and abilities of their top team.

The first question is: do you really know who are, or should be, on your top team?  We frequently have people there who have gravitated upwards less through their abilities but rather more by dint of their longevity.  They have simply been around and while they have shown loyalty, their contribution has perhaps been only adequate.

Furthermore people like that hold down the up and coming people who can be the future of the business.  The great leader will make it his or her duty to seek out and develop new talent.

However we have what we have and Larry suggests that we shine a light on our top team to assess their real capabilities and how they contribute to the business.

It is not a particularly objective study; rather a subjective view of each individual and how they fit in and contribute.  For example how do they relate to others on the team?  What (if anything) drives them?  What is their work ethic?  What are their ambitions?  How do they contribute to discussions?

The trick now is to make it more objective so if we then allocate an assessment number from 1 (why are they there?) to 10 (can’t run the business without them) for each of the criteria we start to get to a more objective view of each individual.

The hard, and sometimes emotional problem, is that we then can get an average number from 1 to 10 as to their overall value to the business.  The aim is to have everyone on the top team rating 9.5 at least and questions must be asked of those whose ratings are lower than that.

Larry King says that someone scoring 8 will probably be able to improve with help to a top rating but below 8 there is some doubt as to whether people can improve sufficiently to make the 9.5.

The tough question is; what do we do about the low scorers and why are they there anyway?  That is a management issue and decisions need to be taken as to how perhaps to re-allocate them into positions where their talents can be better utilised.

As Jim Collins says, we need to get the best possible people on the bus and all facing on the same direction.  Ideally the leader has to have all 9.5 people in the team and this is a useful tool to help shine the light on the team.

The tough question to ask yourself is, what action do you need to take right now?

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