Learn processes from your employees at work

Empathy comes from experience.

Over fifty years ago, I was CEO of a record manufacturing company in Hollywood.  We were the only such facility on the West coast to provide and control the entire process from studio, through finished vinyl record pressings in the same building, therefore able to promise quality control others could only dream about.

The “clean” work in the front office

As founder and CEO of the then public company, I was expert in several of the “clean” processes such as studio recording, record mastering, cover design and photo lithography.  But if I knew then what I know now, I would have spent time working with my employees in each of the subsequent and more mechanical processes such as printing press management, record press management and shipping control to better learn my own business and hear first–hand suggestions from the line.

I lost an invaluable opportunity to learn from the front line.

Later, as CEO of a fast-growing computer software company with over thirty employees in customer service alone, I did learn the lesson, as I sat in on customer service calls on occasion to get a more complete understanding of the process, pressures and opportunities for improvement.  Then, when my manager of customer service sent a request up the line asking for funds for equipment or expanded staffing, I would understand the need, sometimes offering suggestions for improvement to try before making the investment.

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My conclusion is your challenge:

It had taken years to learn that empathy comes from experience, not just perceived understanding.  And that there is such a thing as a business leader showing empathy while making good strategic decisions.  I learned that employees appreciate knowing that their executives have experienced and can understand their world.  I learned that tough decisions, such as denial of a request, are better received when all affected know that there was a deeper understanding of the issue and reasons for the response.

All because I learned to sit in and understand the position, the workflow, and the challenges at each stage in the process of customer service.

Are you too busy to learn each step along the corporate process enough to understand issues and challenges?  Start by sitting in with some of your employees in the tough jobs alien to you.  The benefits are immense.

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Careful with terminations. Don’t disparage.

It happens all the time when you’re a CEO or manager. 

Somebody important leaves or is let go, and you worry over the impact upon remaining employees and customers.  You worry that the person leaving will begin to unload all the pent–up garbage from the past, perhaps damaging the company and causing customer defections and even employee unrest.

Your worry is real. 

It is human nature for those remaining to blame the departed employee for any sort of sins from the past, real or imagined.  And it is human nature for the person now free of the company to attempt to explain why the departure – in the most flattering personal terms possible.

But in my experience, many of these ungracious outbursts lead to anger, threats and reprisals – all unhealthy for both the individual and the company.

A suggested tact for you from experience.

I was able to mute these on both sides in my past life with two simple efforts of outreach.  I’d call in the departing employee, even those with the worst violations “for cause,” and offer an unemotional exit interview asking for their thoughts about their experience – no holds barred. Then, I’d remind each that it is more than just possible that someday we’d meet again, perhaps as supplier–customer, customer–supplier, industry resource or friendly competitor.  Therefore, we should make a genuine pact:  neither of us should give in to temptations to disparage the other no matter what the personal psychic gain.  Shaking hands after such a promise sealed the deal, even with those you’d rather never see again.

[ Email readers, continue here…]    And it worked with great effect. 

Even today, many years later, former employees who departed during my tenure, find me at trade shows and other industry events, telling me that their experience with us was the best they’d ever had with any employer.

The second thing was just as important.  With the person leaving (for whatever reason) in tow, I’d show up in that person’s department, call a quick meeting, and make the same statement about non–disparagement to those present, addressing their natural inclination to later blame as part of the short talk.  When warranted, a quick celebration including the department employees sealed the deal.

Then there is the formality of codifying this. 

Every termination should be accompanied by a termination agreement or release before final payment. It should contain terms of separation, reminder of confidentiality, and a non–disparagement clause.  It’s a contractual reminder that can be used if needed.  Using the techniques above, I don’t recall ever having to do so.  May you be as lucky in your efforts.

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Finding a strategic partner, investor or buyer

Get organized.

Finding your strategic partner, investor or business buyer is not something you do haphazardly.  There are many steps to take, each closer to assuring a success.  Research is paramount, and sources are everywhere, especially for public companies and large investment firms.

Start with the “matrix method.”

You and your advisors, board or partners should start by completing what you can of the matrix shown on this page.  It will help you to focus upon the most likely candidates and save lots of time.  Here are the steps to take.

Find up to ten likely candidates that fit your business.

You can list companies you know, have contacts within, or that fit your industry segment.  Think of those who might need what you have to offer.  In fact, that leads to the most important part of this process.

Examine the four columns in the matrix.

[Email readers, continue here.]  Column one is your list of your candidates in no particular order, usually the result of a brainstorming session where you participate or lead.  For corporate boards, even those not looking for a buyer at this time, I often help to manage this exercise in board meetings once every few years. It keeps the board and CEO focused upon an ultimate exit.  That’s important when you’ve taken money from investors and have outside shareholders.  When taking their money, you made a promise to “make them liquid” someday, not to build a lifestyle business where they would be trapped forever, unable to see a return on their investment.

Column two is the golden ticket.

“What would the candidate want from your company in a transaction?”  Think carefully.  Some potential buyers or strategic partners might want your intellectual property, or revenues, or profitability, geographic advantage, or sale force, or your employee base.  Select the most likely reason you’d find if you could “get into their heads” and see what they might value most.  We’ll come back to this column in a moment.

Column three is important for you and your stakeholders.

Here you state in a few words what your company would want for the candidate – other than cash or investment which seems obvious.  Your definition of a great fit might include their distribution capability, their brand, dominance in your field, their sales force, their access to growth capital or more.

Column four is the easiest but also important.

Here, on a scale of 10 to 1, is your best guess of the likelihood of making a favorable deal with the candidate.  A 10 means that you are absolutely sure there is a need and a fit and the ability of the candidate to pay in a range you anticipate.  A 1 is tantamount to a complete waste of time.

Now return to column two.

You will surely notice that a majority of your estimates of the candidate’s interest or needs are the same, one to another.  This may surprise you and the team because this is your (sometimes hidden) core competency as others see you.  A wise board and management would take their own hint and strengthen that core, whether it is your development team, your geographic dominance or other trait.  And strengthen that at the expense of other areas of your enterprise which may easily be outsourced or reduced in scope.

The net result of this exercise.

You will have focused upon your real value, identified a list of companies with executives you need to know soon, even if long before any suggestion of a transaction.  Even a five-minute introductory call to the CEO with no agenda works for later name recognition.  And the exercise of researching through search engines, friends, financial sites or trade publications will begin to help you develop a picture of each candidate’s needs and strengths.

This exercise is time well spent and should pay back in multiple ways in your future if not immediately.


Posted in Finding your ideal niche, Positioning, Raising money, The liquidity event and beyond | 1 Comment

Is ‘servant leadership’ too soft for you?

First, what is “servant leadership?”

It’s a term rooted in ancient philosophy.  Robert Greenleaf may have been the first to resurrect the concept in his book published in 1970.  Not quite as bold as inverting the management triangle, the concept of servant leadership requires that a business manager focus upon his or her people’s highest priority needs first.  

So, what’s the question?

The question begged by the headline above is whether this form of leadership is perceived as soft, indecisive, and inappropriate for the fast–moving world of today’s business.

How do you classify this style of leadership?

A servant leader uses a participative style of management, as opposed to one that is autocratic or (at the opposite end of the spectrum) laissez–faire.  More important, a servant leader involves employees in the process of decision–making, focusing upon the performance and satisfaction of employees.

Doesn’t sound tough or forceful enough for you? 

[Email readers, continue here…]    You are not alone.  It is a very thin line between abdication of responsibility and participative leadership.  The world loves bold leadership.  Steve Jobs, who was known to be in charge of each detail in design.  Elon Musk, who obsesses with metrics and constantly asks for employees to feed him their concerns but makes bold moves on his own.

How about tech businesses or remote workforces?

In technology–based enterprises, the question of leadership vision becomes mixed with leadership style.  Can a visionary leader abdicate the execution of that vision by subordinating to those who carry out the execution of that vision?  Or must he or she be more like Jobs or Musk and stand in the center of the storm, constantly testing the execution efforts of those around?  And how about the leader working with his or her remote workforce?

There is a place for a leader as servant. 

But the perception of that leader being soft and lacking in strong leadership traits is the sure result of using this method as the leading style for a CEO.   It is fine as a secondary style used in tactical decision–making, when strategic issues are not the focus, and where threats to corporate health or resources are not evident.

But those leaders who will be remembered as having changed the world, even if the world is defined as within the walls of one enterprise, are those who were clear in their ability to communicate urgency, quality and focus upon the customer – not necessarily those who delegated the best or allowed decisions to flow from management concurrence.

Posted in Depending upon others, Surrounding yourself with talent | 4 Comments

Is “management by walking around” an outmoded fad?

Let’s set the scene.

One of the CEOs I used to coach started his day by walking the floor of his extended facility and checking in with managers and employees of the various departments, especially the call center.  He tried to feel the pulse of the company by the intensity of motion, the metrics of backlog, and the stated problems brought to him as he asked

…and ask this question:

Was he a relic of bygone times, when employees worked in a single facility, managed directly by people who could see and speak to them in person?   In this age of remote workforces, self–managed contractors and employees, outsourced call centers and development, is this a dying art?

And does the presence of a caring CEO taking the time to check in personally change anything after the waves of his or her presence pass in the calm of departure?

Well, yes.

Everyone knows when the CEO or senior manager stays in their personal office – or nowadays doesn’t come into work when others make the effort – especially when closing the door, that “something must be wrong” or “the person doesn’t care enough” or “what does he or she do all day?”   The facts seem to show that younger employees, under 30, want to be personally present to be visible to management. What if management, usually older, cares less about being regular at the office?

Let’s use the “C” word (“culture.”)

[Email readers, continue here…]   It is more than showing the flag when a manager or CEO spends time focusing upon the immediate issues of subordinates and offers resources to solve problems without the need for formal meetings or Zoom calls.  It is a mark of corporate culture when everyone knows that those above are serving them in very visible ways by taking the time to be present, and to hear and react.

But there is something more.

A good manager can feel the mood and the level of business activity, but not easily from behind a desk or on the other end of a phone or Zoom call.

It is one of the reasons that senior managers who travel to the workplace from afar and show their presence only several days each week are not as effective as companies grow and span of control increases.

Does management by walking around still work? 

Is it as valuable as it once was before our communications systems became so complex and varied and well defined?

Yes.  Yes. And yes.

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

Stop managers from gaming the system!

Does this really happen?

Business unit managers are under lots of pressure to perform, and occasionally are tempted to step over the line finding ways to look better than reality reflects.  Of course, this has never happened to you, and you have never done this in your past.  So, we are speaking of a theoretical manager here.  Of course.

Well, how to prevent it from happening?

Here’s a way to prevent such behavior and create a tool for organization – and transparency at the same time.  Create a “balanced scorecard” or single place to review a manager’s performance and / or that of the department.  Use the four most important measures of success as the basis.

Financial perspective:  financial statement showing key indicators such as revenue, expense, net income or other measures important to success.

Customer perspective: Ratings of customer satisfaction, statistics of customer retention, market share and even brand strength.

Internal process perspective: Measures of cycle time, response time, waste, purchasing effectiveness, and improvements and innovations.

Learning / growth perspective:  Measures of employee satisfaction, employee turnover, employee education and skill advancement.

The result of this effort?

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Having this information and sharing it with the manager(s) empowers everyone to come up with solutions to problems, emphasizes common focus upon strengths and weaknesses, and eliminates surprises when formally reviewing performance.

You’d probably be doing many of these processes anyway, just not aimed at assembly into a single file or report for review by all.  And this might be the prod you need to increase the quality and perhaps the quantity of customer and employee surveys.  A real win for all.

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HIRE for talent. RENT for experience.

Want the best way to create your core competency quickly and inexpensively?  

Think like a startup, with little resources, a limited window of time, and few dollars to spend on expensive experts.

Divide the hiring decision into two boxes.

This insight comes from a fellow CEO who explains that he leverages his financial resources for growth by dividing his hiring decision into these two boxes.  He interviews for adaptability, creativity, intelligence, drive, and a cultural fit.  He believes that he or his managers can teach processes, taking advantage of the new hire’s fresh look and open mind.  He believes that the core of his company is the creative process, and therefore that must be his focus.

Then he turns to contracted outsourcing for his routine processes, those that require no creativity and are repetitive in nature.

Here’s an example that should resonate.

[Email readers, continue here…]   Our CEO cites the example of computer programmers.  He hires for creative ability, people who can be the architects as opposed to the simple coders of routines.  If properly supervised and quality controlled, he finds that it is easier and cheaper to parcel out projects to programmers or programming groups to perform the actual coding of projects pre–defined by his insiders.  He divides the tasks so that no subcontractor has all the core knowledge in house as a protection against theft of intellectual property.

The punchline. Creativity.

And he concentrates on the management of creativity, the core of his business.

There are obvious advantages to this. 

Costs are variable and can be curtailed easily in tough times.  Management time is focused upon the creative aspects of the business.  On the other hand, depending upon the length of a project, an inside employee may be cheaper in the long run, and quality control easier to manage.

Business management is a series of tradeoffs. Here is one to consider carefully as you leverage resources including cash to grow the business.

Posted in General | 1 Comment

Why should you explain WHY?

Remember the five “W’s?”

In my early journalism classes, I was taught the five “W’s” of good news stories, and that most should be in the first paragraph at that.  Who, what, when, where and why are the five, with sometimes a “how” thrown in for those followers of the macabre.

Which of the five is most important for you?

But of the five, “why” is by far the most important for business leaders to consider and communicate.  Employees, contractors, even investors want to know why they are asked to make use of their valuable resource to support your effort.

So now: Why explain why?

Failure to explain why will scare away potential investors – other than closest friends and family.  The same failure will disenfranchise your workforce to a degree that most will give less effort to a project, and certainly with less enthusiasm.

What about hiding the “why” from employees or investors?

[Email readers, continue here…]   Especially if a company is in trouble, perhaps with an urgent need to make a deadline, or facing a cash crisis caused by something your employees can help control, explaining the importance of the action required empowers all to work smarter and harder to achieve the stated goal.

A personal story to illustrate

I’ve recently experienced an example of this. One of my companies where I have an investment and am on the advisory board was in the midst of a sprint to close its acquisition by a larger company before the cash ran out and enterprise value plummeted.  Do you tell the employees about the pending acquisition early in order to focus them on increased performance to increase cash flow, or just keep the secret and hope that all would turn out OK and the acquisition proceed to an orderly closing on time?

Our solution

We chose to tell the employees, with the obvious risk that some would be scared into looking for another job right in the middle of the acquisition process.  The effort worked, and all did come together to make it happen. No–one jumped, and the buyer closed the deal without a question.

When in doubt, don’t be shy.  Tell them why.  Your people will rise to the occasion.

Posted in Depending upon others, Protecting the business, Surrounding yourself with talent | 2 Comments

Are you the leader if no-one follows?

Here is a variation of the “tree falls in the forest” question. 

In past insights, we’ve looked at leadership skills, ways to enhance effectiveness, and how to develop creative ideas that motivate and propel your organization to greatness.  Here is the ultimate question for a leader…

You’ve heard the old saying that you can lead by fear or lead because people want to follow.  And you can lead by example as well.

Which style works best in the long run?

I know from observational and personal experience that in normal situations, a leader is a consensus–builder, sure that everyone understands the mission and goal, and knows which duties each must assume to make it happen.  There are times when this obviously isn’t appropriate, such as in an emergency, financial or physical.  Then your associates will expect strong, firm leadership as reassurance.

The military leadership example

Even in the military, the best leaders, no matter what the rank, lead by consensus and by example – except perhaps in battle. Those in any enterprise who lead by fear find that they may be effective in the short run and completely the opposite over time.  Yes, there have been military dictators rising on occasion who did lead by fear.  Most all lost their positions, their following, and some even their lives.

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The object is to have people follow, willingly. 

Sometimes we call this “servant leadership,” the skill of subordinating yourself to the greater good, serving those who serve your customers or constituents.

Here’s a simple test. 

Do your people come up to you as you walk among them, or lower their heads, turn away, or find a way to look extra busy?  Even if you think otherwise, if your constituents do any of these things other than look up or approach, you should identify this as an indication that you are a leader using fear.

It is never too late to change, even if it will take many interactions for your people to believe the impossible may have happened.  And if you are the charismatic leader that people follow willingly, keep on doing what you are doing.

Posted in Depending upon others, Surrounding yourself with talent | 2 Comments

Learn the power of NO!

Over the years I have counseled entrepreneurs to think of a “no” response in terms of “yes, but…”  There is always another way to say “no” that leaves the door open for creative thinking.

Well, almost always. 

Sometimes, you just have to suck it up and say “NO” with strong conviction.  It usually happens after several attempts to find a “yes, but” solution to a problem or issue that just can’t be resolved.

What about “Yes but…?”

Assuming that you have the “yes, but” tool on your belt, then an occasional “NO” will resonate through the halls and be much more effective than if used often as a leadership tool.

Capitalizing on “Yes but…”

Now that we have that out of the way, how can you capitalize on the use of “yes, but?”   There should always be an alternate solution that responds to the needs of both parties, even if not completely so.

An example

[Email readers, continue here…]  How about: “May I take five weeks of vacation this year?”  Especially for a person badly needed within the organization, this is a conundrum for management.  “Could you take them in two week increments if you have that many weeks coming?”  “Is there a way to take less this year and spread this over two years?” “Policy says ‘no,’ but if you’ll tell me some good arguments and accept unpaid time off for the extra unearned vacation, let’s see what we can do.”

“No!  You don’t have that much coming. Go back to work. Please.”

Which of these leaves the direct report more satisfied, even if the later answer is “Can’t do it because…?”  Leadership often means leading with compromise, not just by the book.  “Yes but” is almost always the best way to respond to a request.  Try it…

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