Are you killing innovation in your company?

First, let’s recognize the problem.

Here’s one for executives of any company with next generation products in mind.  As your business grows more complex and there are more employees to manage and more customers to care for, slowly you will notice that more and more time of your chief innovation officer or system architect or R&D department is spent focused upon enhancements in response to needs of the user base.

Don’t draw your visionary resources into the incremental fight.

The company’s most valuable technical visionary, the person tasked with staying out in front of new technologies, developing the next generation of new products, and thinking “a mile above the box” is often drawn into working on projects that are incremental to the product and to the existing business.  It is not uncommon to hear that they will approach you and state that their work has become more boring, and that there is no time left for creative thinking or next generation experimentation and development.  That’s one scenario.

Do you have a “quiet genius” staffed in the wrong place?

In many companies, there are quiet geniuses, wanting to work on projects outside of the daily focus of the department or company.  Managers sometimes view this behavior as non-strategic or wasteful, and even sometimes will isolate or reject these outside thinkers outright.

…And the most difficult: starting a new project from scratch.

[Email readers, continue here…]   Or finally, you may want to start a project using the next generation of tools to produce an entirely new product – but your development resources are all tied up with projects to enhance existing products.  Whichever of the three scenarios may apply to you, it is a red flag for your future if you condone the status quo and allow the company to devote all its resources to existing products and simple enhancements.

The danger in allowing lack of challenges for employees.

Your best creative thinkers will leave you, looking for more challenges than you can offer.  Your competitors may already be working on the next generation of product, as you remain stuck in the mud, even if focused upon serving the customer base with outstanding service and rapid feature rollout.

So, what is your strategic priority?

It is up to you to decide if research and development for advanced or next generation products is a strategic priority for you and your company.  If so, you have a duty to protect these future-focused developers or architects, removing or reducing the pressure of reactionary development work, and isolating them in a space that prevents constant interruption by others focused upon day-to-day work.

Technology companies are prime targets for this problem. 

Every six to ten years, there is an entirely new platform to focus upon for the next generation of products.  Just think of the computer and software fields.  First there were mainframes, followed by minicomputers, then client-server systems, then peer-to-peer networks, then the Internet, mobile devices, cloud computing, and now mesh networks.  Each generation requires new tools, rewrites of software, creation of new user interfaces.

Lessons from past companies that “forgot” to innovate.

And in each generation, there are dominant players from the past generation that fade as new companies not inhibited by the demands of their user base leap beyond the last generation’s leaders with new systems for the new age.  Leading companies of significant size are sometimes made irrelevant over time, or pivot into service organizations, or absorbed into other companies that are growing next generation products.

What happened to Wang, Sperry-Univac, Burroughs-Unisys, DEC, RCA, and hundreds of early generation leaders?  Their CEOs did not provide enough of a safe environment and enough resources to their creative geniuses to make the leap into that next generation.

It is a cost of doing business that you cannot ignore.  Not only providing resources for next generation development but protecting the people performing those development tasks should be one of your strategic priorities.

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Posted in Finding your ideal niche, Growth! | Leave a comment

Why would you ever “fire yourself?”

To start: “new source of energy” and “new ideas.”

When a new CEO or manager is hired into a company, for a while lots of energy flows from the top and new ideas seem to be generated daily.  It is one reason not to fear the unknown when upper-level management long in place turns over, often leaving most everyone worried about the future of the company and for their own prospects.

Even the best of us falls into a routine in our jobs. 

It is human nature to do so, but it is not a sign of our best efforts.  We recall the enthusiasm we had for the job earlier, how we couldn’t wait to get to work, or initiate a new plan, or share a new idea.  We can be that person again.  It just takes a bit of effort to change our mindset.

We may run out of fresh ideas after a time; most of us do.  But there are sources of great ideas right next to us in our own company, or available to us from fellow CEOs, or from industry consultants with a broader view of the landscape, uninhibited by our need to meet daily obligations.

A favorite story about such a CEO

[Email readers, continue here…]   One of my most respected CEO friends arrived at his monthly CEO roundtable meeting years ago and announced that he had just fired himself.  He had reconfigured the company, delegating many of his previous responsibilities, and rehired himself in a new position more strategic to the company, retaining the CEO title.  It was an attitude adjustment, self-initiated. He credits that effort as the start of his company’s real growth, resulting in a great public company, dominant in his field.

Creating a new perspective to guide the future

Another CEO described how he drove to work each Monday morning forcing himself to think of what he would do if he were a newly hired CEO, fresh on the job that day.  He surprised himself with his many fresh ideas, just with that change of perspective.

However you do it, refresh yourself.  Be that new CEO – but with all the knowledge and skills you already have as a head start.

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Posted in General | 2 Comments

Can you negotiate without emotion?

Here’s the problem.

Negotiating an agreement, especially one that involves personal gain, is tough for the person personally involved.  There is too much to lose to be objective, to be willing to walk when terms go upside down.

What if the negotiation is personally important?

It is my experience that you should have an expert negotiator with you or even in your place, whether from your board or an employee or outside professional such as an attorney – when the issue is personal.

An example you might recognize

Think of buying a car, for example. If you are looking for your spouse or offspring, it is probable that they’ve picked out the perfect car and are ready to take it off the dealer’s hands.  Assuming that you are the elected or self-assigned negotiator, the last thing you want is to have them in the room while you haggle over price.  Advantage other side.

Using an impartial negotiator:

Negotiating on behalf of business associates too personally involved in a transaction: it’s a role I’ve played tens of times over the years. There are the several that were disengagements between partners threatening to sue each other for perceived wrongs.  There’s the sale of a company, where as a board member, I asked the CEO to name his asking price and then go home and wait the result.   There’s the disengagement with an angry employee threating to sue the company.

Sometimes the issues are just too emotional.

[Email readers, continue here…]  All of the above issues are personal to a CEO, founder or entrepreneur.  And all of them draw that person emotionally into making decisions that cannot easily be objective, or into finding solutions that are mutually acceptable without the torture of constant re-explanation of opposing positions.

Some solutions to consider…

A smart lawyer, they say, should never represent himself.  And yet, lawyers are trained in the art of negotiation.  You should be careful not to miss the point of that admonition.

My oldest son learned to accompany me, but keep a deadpan look on his face as I negotiated for his ideal car, completing the purchase in minutes.  The CEO described above endorsed his company selling for twice his asking price, after his absence helped the negotiation to be completed within an hour.  The partnership described above dissolved without suit after a personal visit by the negotiator without the first partner present resulted in settlement within an hour.  The employee that I just described accepted a severance check in trade for a release, without the emotion of arguing out old issues between employee and employer.

Are you too emotionally involved in a decision?  Consider the advice lawyers give to each other and find a surrogate to argue your case.

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Posted in General, Protecting the business, Surrounding yourself with talent | Leave a comment

The shocking truth about employee loyalty

How we often handle employment issues today.

When we accept the work commitment from a person we hire, we make a pact with the new employee that often stops at agreeing to pay for service rendered and to provide a safe working environment.

There should be more than that. 

With some people you hire, you know you are just renting their services as they pass through your organization, aimed at a higher calling.  Others want to know that they are signing on to a career, not a job, and expect to move up within the ranks or on to a larger company that can accommodate their goals.

A recent statistic I saw surprised me.

The average new college graduate today will work thirteen jobs in his or her career, in an average of five different fields.  Ouch!  What happened to a job for life?  How can employers expect complete loyalty if there is no clear upward path to the top for the best new hire?

Can there be a trusted bond between employee-employer?

[Email readers, continue here…]   The answer coming from the best of breed in corporate personnel management is to form a trusted bond with each employee, helping that person to manage their career within and even preparing to follow our company experience.  If a superstar agrees to work for you for a period while learning the ropes to move to a better job elsewhere, assuming that there is candor in the communication by the employee and a level of trust in and by the employer, it is perfectly proper to offer to help that employee succeed. The pact between employee and employer is that the employee gives the best possible service to the company, in return for the company helping the employee to grow in, and perhaps beyond the position.

So, is this a one-sided negotiation?

Especially with young entrepreneurial CEOs, it feels to them like an employee stick up.  “Give me your money, and I will work only until I find a better job.”  And that attitude might be warranted if the employee just performs to the minimum required level, marking time to the next opportunity.  But if the person has skills and knowledge that the company needs, there is the basis for a fair trade of talent and time for a later organized, positive move to the next level  perhaps outside of the company.

The difficult but enlightened view

With that openly positive corporate attitude, you can celebrate the growth of the employee with a party as the person graduates, instead of either feeling anger when an employee resigns with short notice or being suspicious that the employee will leave with trade secrets in tow.  Certainly, other employees will see the supportive behavior, understand the company’s contribution to the career of this upwardly mobile employee, and celebrate not only the graduation event but the great culture of the company itself.

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Posted in Depending upon others, Surrounding yourself with talent | 1 Comment

Do you tell someone “WHY” along with “WHAT?”

How to get more performance from your directives

Empowering your direct reports with the reasons for your orders gives them incentive to act, motivation to accept authority, and purpose behind action.  I try to teach this with the simple phrase that is the headline of this insight.

Wouldn’t you want to know “why” if you thought an order illogical?

Think of the last time someone above you in your business or personal life gave you an order to do something that seemed either illogical or of low priority – to you.  If you accepted the authority of the person giving you the order, you just performed the task, probably either wondering if that person was nuts or whether you just didn’t understand the reason for the task.

How would you respond with more information?

What if that person had told you why it was important to be done, in clear terms that related to that person’s priorities?  Wouldn’t you be more prepared to perform the task knowing the context?

Here’s an example you will recognize from your life

[Email readers, continue here…]  I recently spoke with an old friend who is in sales.  He lamented the fact that his boss recently layered several more sales reports on him to complete each week, reducing his selling efficiency.  How many times have we heard this complaint, especially from sales people?  I suggested that he go back to his boss and explain that it would be more than just helpful to know why these new reports are needed, that even though the salesman has no need to know, it would certainly make doing the work less of a chore.  And by the way, I offered, if the boss could not explain why, there might be an opening to advance the argument that the trade in time between completing the new report and reduced sales call time might be worth a revisit of the order.

Would this weed out the unnecessary or ill-thought requests?

How many tasks, reports, and rules hang around the necks of people throughout a more mature organization, which remain as “what” without anyone remembering “why?”   It is probably as effective a tool for the manager as for the recipient of the order, to explain why when telling what to do.

Your employees or even your family members will appreciate the small extra effort, better understand the reason behind the request, and perform the act with more enthusiasm.  What’s not to like about that?

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Posted in Depending upon others, Surrounding yourself with talent | 3 Comments

Are you being watched at work?

Your past and present experiences

Ever had a manager above you who said one thing and did another?  At least once?  Or in a pattern of repeats?  Well, you’re not alone.  Did you think less of that person for it?  Would you follow that manager to the ends of the earth?  Well, almost everyone has had multiple such experiences with a senior manager.  And most people think less of that person than before.

On the other hand…

On the other hand, think of the professional you most admire.  Do you know of any times that person has made promises to you and missed on delivering them?  The difference comes down to trust and respect.  We lose both when we catch someone, especially someone above us, acting differently than his or her self-proclaimed rules, or even violating company rules.

Does rank really have its privileges?

It is one of the most vital elements of good management – restraining oneself when rank would ordinarily grant special privilege, and instead acting as one would expect a subordinate to act.

Examples can seem surprisingly insignificant

[Email readers, continue here…]    Black and white examples include taking supplies home, using company time to perform personal duties (if not permitted), and even traveling business class at company expense on short trips.  Larger and more important examples involve direct promises that are broken, such as review dates with implied raises, or promised follow-through on an issue of great urgency to person receiving the promise.

Just don’t take those small liberties

Everything you do as a manager is watched by one or many.  The very culture of the enterprise is shaken when someone in power gets away with bending or breaking the rules expected to be adhered to by all.  Why have rules, or a company handbook, or new employee orientation sessions if the actions don’t match the words?

And once violated, it is almost impossible to retract the action.  That should make us think twice before taking small liberties.

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Posted in Depending upon others, Surrounding yourself with talent | 1 Comment

Why your investors may not respond when you need money

When do most companies communicate?

Early stage company investors as a group have a common gripe – almost universal.  Information flows from the company irregularly, in fact most often when the company is urgently in need of more money.

How these investors try to solve the problem

Investment documents usually call for quarterly reporting by the company to the investors.  Less than a quarter of companies receiving early-stage investment voluntarily fulfill this promise.  Usually, one or more of the investors is placed on the board as a requirement of the investment documentation.  The entrepreneur often expects that person to keep fellow investors informed.  And sometimes the board member does perform the service.  But most often, the CEO or founder has a much better idea of the flow of quarterly activity than a board member meeting monthly or less often, and for a relatively short period of time.  More importantly, the investors want to hear directly from the CEO.

That sometimes-dreaded appeal

Many times, early-stage companies need another round of investment, and the first people approached are the same ones that invested the first time.  If they have not been kept informed about the progress of the company, and if they are surprised by the fact that the company has run out of money more quickly than planned, it is a much harder sell to obtain the next round than the last.

Are these investors more often willing to commit?

[Email readers, continue here…]   Several academics have followed multiple rounds of investment in a significant group of early-stage companies.  The typical finding is that second round investments are not as profitable for the investor as the first round. So, investors are more cautious as a result when approached for additional money if not kept in the loop between rounds.

How companies do gain traction for additional rounds

If a company is meeting milestones and growing as projected, and if the CEO is diligent in keeping the investors informed, a second round is much more likely to be raised from the early investors.  But the studies mentioned above include all second rounds, including those that were pulled from investors reluctantly to protect their first money in, skewing the curve away from more heavily weighting successful conclusions.

Here is the best possible advice:

Keep your investors informed. Avoid late surprises. Plan financial needs early and inform investors early of that plan.  Explain problems encountered and solutions undertaken.  You and they will benefit by this candor and communication.

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Posted in Depending upon others, Raising money | 1 Comment

Are the “FIVE WHY’S” in your arsenal?

This is a trick headline. 

There can be three “whys” or twenty, depending upon the issue and the responses.  To make the point, the word “why” has to be one of the more powerful words in your vocabulary.  Asking the question forces the other person to think beyond the usual “what” that generated your first “why.”

It sure is a way to get to the bottom of an issue. 

“I just reduced the number of ad words we’re paying for.”  “Why?” “They weren’t paying off in enough revenue.” “Why?” “Well, all we could measure is dollars of revenue against cost for clicks.” “Why?” “Well, we have no way to know which other ad words might have done a better job of conversion into revenue.” “Why?” “We have no-one on staff with enough knowledge of marketing to distinguish words from phrases, or with experience to know how to capture clicks into conversions.” “Why?”  “We’ve never thought this to be an important part of our marketing effort.” “Why?” “We just don’t know what we don’t know.  Will you stop asking ‘why’?”

How revealing!

[Email readers, continue here…]  There is no better way to get to the bottom of an issue than this.  In the case above, lack of performance was caused by lack of knowledge, and inability to find resources to help.  A good manager-questioner might conclude that a small expenditure with a consultant might pay off in great rewards, before abandoning the use of ad words entirely because of the comment from the subordinate.

Here’s a great exercise.

Practice your listening skills with one or more attempts at the five “why’s” and see if you find insights into answers to problems that might not have been obvious without your queries.

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Posted in Depending upon others, Growth!, Protecting the business, Surrounding yourself with talent | 1 Comment

Are you willing to hire slowly but fire fast?

Here’s a test of your patience and your willingness to suppress your tendency to avoid conflict or confrontation – all in the same insight.

First a reminder about why we hire:

New hires can shore up the weak areas of a business in ways existing employees cannot – if hiring is done to fill true needs.  We acknowledge that some employees lose their drive, or remain behind as the company grows, failing to gain the experience or knowledge needed to manage expanded processes or numbers of subordinates.  Sometimes, there is just too much work for one person, and a second is needed to continue growth.  And of course sometimes, a person leaves the company, creating a need to fill a hole.

There is a rule few follow. 

Slow down and take more care in the hiring process.  Vet the candidates well, even though you think that you do not have time enough to do so.  Hiring is one of your most important duties, a way to increase the quality and productivity of your company’s staff.  Every hiring opportunity is a window to improve the company.  Hire slowly, with the weight of that opportunity clearly in mind.

On the other hand…

[Email readers, continue here…]   We are all guilty of hanging on to marginal employees for too long.  It is humane; it is easier to do nothing.  It is less of a drag on your time to let marginal employees continue to plug along in their job.   We have all done this.  And yet, we have all looked back after a painful separation of a marginal employee and thought that we should have made the move to replace the person much earlier.  We almost always agree that the person would have benefited with a better fit, and the company would have surely performed better having hired the replacement earlier.

How about the bottom ten percent rule?

First, it is not a rule, just a proposition from one of the many business books dispensing advice.  Do not do it. Don’t draw a line each year to eliminate your bottom tier by firing them.  But look at it from the other side of the coin.  Some people just don’t excel or even fit into their jobs.  Even those in the mid-tier of your organization.  Coaching them to a better fit or even out the door may well be the most humane thing to do.

An opportunity to build a superior organization.

Every such move gives you that opportunity to search for (slowly) and find a superior candidate for the vacated position, improving the quality of the team.  And no doubt, most of your team members knew of that need to clear the marginal performer long before you did.

Fight that “human nature” to be expedient.

It is human nature to hire as quickly as possible, to reduce the time taken from a busy day for interviews and reference checking.  And it is human nature to hang on to marginal employees.  Both are opposite the best practices of good management.

Try to force yourself to slow down in the hiring process, and speed decisions you know will someday have to be made about your marginal employees.

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Posted in General | 1 Comment

Will you BURN the next manager you hire?

It seems to be a rule, not an exception. Many senior managers and early entrepreneurs create their own mess with this one. The first professional senior manager that an entrepreneur hires to share the growing workload does not last more than a year.   You as a longer-term senior manager may make the same mistake and suffer the same result.

What is the common problem?

Entrepreneurs start businesses with a strong vision of what and how, involved in every process from buying supplies to hiring and directly supervising early employees.  The culture of the company is built day by day by those actions, often centering on the founder’s vision and management style with little room for deviation.  Some longer-term managers remain in that habit until needing to hire an immediate subordinate.

Why is this so often a problem?

At some point, as the company grows, either the founder’s span of control is stretched to the limit, or investors enter the picture, often with a clear idea of how they would like to scale the company to grow quickly.  This happens predictably, either voluntarily in the case of the founder deciding that s/he needs help at or near the top, or involuntarily when investors insist upon the addition of professional leadership.  You may have been managing for years and need to hire that direct report to lessen your workload, setting up the same result.

The predictable result…

If this new managerial hire is the first for you or for a founder or founding partners, and if the person is expected to relieve some portion of the workload, there is a predictable and great risk that the first person hired to do so will last only a short time at the company.

…which unfortunately is a general rule. 

[Email readers, continue here…]   I’ve seen this happen so many times, it is almost a rule for me.  I warn the executive or entrepreneur to be careful in the interview process, to expose the candidate to people at all levels of the company for buy-in, to be sure that there is a culture fit.  But most important of all, I warn them that they must be ready and able to let go, to delegate clearly, and to establish metrics for measuring the performance of the newly hired manager – but not to interfere with that person’s day to day management unless absolutely necessary.  I urge them to coach, but not to expect the new manager to be a duplicate in style or perceived ability.

Then it happens.

It is an unhappy but common occurrence: the recently hired and trained professional manager is let go, and a new search started.  Luckily, in my experience, the second person hired for the job often is much more successful – usually not because the person is better at the job, but because the hiring executive or entrepreneur is more willing to delegate, expecting less a duplication of self.

Could you be guilty?

If this is so common, is it not possible to be aware of the probability, and condition yourself to be more tolerant of someone else’s different style of leadership?  It might be a learning opportunity for the executive or entrepreneur often coming from one more experienced in the position and in growing company leadership.

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Posted in Depending upon others, Growth!, Protecting the business | 2 Comments