Building Business Value | Corporate Management Strategies

Making Hay When the Sun Shines

This was one of my father's favorite sayings and as every farmer knows, weather plays a critical role in the bounty of every harvest.  In essence, you have to get ready to be ready for every opportunity mother nature hands you. 

Getting ready means thinking about alternatives and options.  Assessing your position in the marketplace.  Evaluating your skills and competencies, your depth and resources.  Being ready means building the systems and processes that will enable you to pounce on any opening, any opportunity.

George S. Greene, an austere 62-year-old Rhode Islander, was charged with holding Culp's Hill during the Battle of Gettysburg.  When Greene arrived at Culp's Hill (the far right of the Union line), he had plenty of troops and resources to secure the flank from any Confederate charge, but by mid afternoon, he was left with only 1,350 New Yorkers to defend his position.  Fortunately for Greene, and much to the dismay of his peers and troops, they spent most of the day building walls and entrenchments.

After Maj. Gen. George G. Meade shifted almost the entire XII Corps from the Union right to strengthen the left flank, Greene had five regiments to defend the left flank.  In Greene's finest moment of the war, his preparations proved decisive and his brigade held off multiple attacks by an entire Confederate division (15,000 men) for hours. Had the breastworks not been built during a lull in the action (making hay when the sun shines), it is almost certain the line would have been breached, Baltimore Pike would have been taken, and the battle could have taken a completely different tact.

Maj. Gen. George Pickett's Charge and Colonel Joshua L. Chamberlain's 20th Maine's defense of Little Round Top are two of the most famous stories of Gettysburg courage, but as far as planning for the future, my favorite is the engineer from Rhode Island, Brigadier General George S. Greene.  He made hay when the sun was shining.

Wishlist: 5 Mid-Market CEO Must-Haves This Holiday Season

I know what you're thinking. Despite it all, you've had a decent year. You deserve a little something for all that hard work. That gorgeous Callaway FT-5-TH driver, for example, would be pretty sweet out on the links. Okay, Tiger, that's fine... if you're somehow connected to the PGA.

But how about if your business is something a little more challenging, and even more competitive, like manufacturing, IT, or telecom? What if you're a growth or mid-market company and you don't seem to be growing the way you'd like or you're not sure what the next steps are to get to that next level?

Well, here's what we think savvy, mid-market leaders should have on their holiday wish lists this holiday season:

1) Enterprise Contour Maps

No fancy electronics here but plenty of state-of-the-art cartography. Do you know what drives value in your company? Which areas of your business make your enterprise stronger, more resilient, more valuable?

There are 90 different dimensions of value. An enterprise contour map helps you find your highs, your lows, and how you and the rest of the team view the elements of your business that build value.

2) Motivation Positioning System (MPS)

You won't find these on the shelf at Best Buy and Amazon.com doesn't carry them.

One of the most important things you can do is rediscover your company again. What really motivates you about this business you bring yourself to five, six, and yes, sometimes, seven days a week?

If you and your team don't know why you do what you do, you clearly don't know what you're doing.

Reconnect with your passion. It's the fuel that drives your business and builds value like nothing else can.

3) Marketplace Assessment

This season get real about the marketplace you operate in every day. Assess where your threats coming from. Determine which threats you've overlooked. Find out what your strengths are and how you can leverage them to enter new markets or develop new products or services for your existing markets.

4) Value Builders

Don't wait for Christmas morning to open this gift. Right now, start figuring out three ways your company can build value.

Take inventory of how well you and your organization pay attention to those three key drivers. Be honest in your assessment. Be transparent. Now, focus on execution.

5) Find Your iPod

Well, not your actual iPod. Not too long ago a company CEO whose products were expensive, stylish, and commanded top-dollar from their loyal following astonished the world by deciding to place a huge bet on a complete unknown, something out of their market altogether.

He faced the usual chorus of naysayers, doomsday predictors, and other more politely couched suggestions that it was time for him to go tinker in someone else's garage on his own dime.

The CEO was Steve Jobs (recently named Fortune's CEO of the decade) and the product was, you guessed it, the iPod.

What did Jobs know that no one else knew? He knew what drove the value in his business, then, he followed those drivers straight to the top of his game.

And, he did it without that Callaway driver. You, on the other hand, can indulge. Once you've taken care of this list first, that is.

Going Green Builds Business Value

A question beginning to come up early and often in my conversations with company CEO's is "will going green build value in my company."  Let me answer that with an emphatic YES.

A great place to begin your journey when considering green initiatives for your company is a visit with Ray Anderson of Interface, Inc.  Ray is the CEO of the modular floor tile manufacturing company Interface, Inc and the author of "Confessions of a Radical Industrialist."  Now every marketplace behaves differently, but according to Anderson, his customer base started asking him "what his company was doing for the environment" in about 1994.  His answer then was ‘nothing' but his answer now is much more compelling and get this, much more profitable.

Interface defines waste as "costs incurred that don't add value to the customer."  Anderson began moving Interface toward a "sustainability" business model that has among its benefits, the elimination of waste and a dividend of lower production costs.  Anderson and his team at Interface have defined "Eight Faces of the Mountain" and they are all geared toward sustainability and building enterprise value.  My favorite is the "6^th face" which is the cultural shift or the new way of thinking which leads to furthering their sustainability objectives.

So if you are wondering if Going Green is worth the effort, remember it is just a matter of economics.  Watch this video on Ray Anderson, consider adding his book to your Christmas list, and review this list of ten suggestions to get you started.

1. Make sure your workplace air quality is terrific - poor air quality contributes to absenteeism and that costs you money
2. Buy re-manufactured or used stuff - everything from plant and equipment items to toner and paper
3. Investigate your suppliers and validate that their manufacturing practices are aligned with your company values
4. Consider a telecommuting program for you workforce - shrink you real estate footprint in any way you can
5. Reduce your energy needs by turning off technology when not in use
6. Explore energy saving programs provided by your utility provider
7. Waste nothing - Recycle and Reuse
8. Commit to going paperless throughout the company
9. If you must make copies - use both sides
10. Change the culture - get everyone in your company involved to generate innovative ideas

Curve Ball: Throwing Good Money After Bad Revenues

Major league strategies for mid-market CEOs

Love 'em or hate 'em, the New York Yankees just won their twenty-seventh World Series championship title.

That's nearly three times as many as the number two team, the St. Louis Cardinals (just 10), almost four times as many as the Yankees' Beantown rivals, the Boston Red Sox (just seven titles since 1903).

Sure, the Yankees have paid ballplayers huge salaries the last 10 years. But, they've only won World Series championships in 2000 and 2009. So, what is it that makes the Yankees such a winning team, perhaps the most valuable franchise in professional sports?

They don't chase every ball and every high-priced ballplayer, only ones that build value for the team's long-term efforts to win World Series.

Successful mid-market companies work the same way and mid-market CEOs need to pay heed.

Three strikes and you're out

Consider these minor league mistakes many mid-market companies make:

• Swinging at every pitch

Not every customer is the right customer for your business. If they're not core to your business, you'll soon find it costs more to service those "bad revenue" customers shrinking your profit margins in the process.

• Taking your eye off the ball

As a member of the Board of Advisors at the University of Maryland, Baltimore County Business Incubator, I see pitches-funding pitches-all the time. The ones that consistently get funded beyond the angel investing stage are the ones clear in their market.

• Swinging for the fences every time

It's expensive and inefficient to have a team full of cleanup batters. Mid-market companies that spend too much time and money supporting infrastructure that is outdated or unnecessary and can't be supported efficiently, increase their operational costs and miss opportunities to gain efficiencies.

It's tempting to try to hit a home run every time you come to bat. But, for mid-market CEOs focus and discipline are key. Keep your eyes on the prize - your target market - and resist the temptation to waiver under market pressure.

Sharing Your Vision

So you and your leadership team are heading back from your annual leadership retreat.  You've thought deep thoughts, built your plan for next year and are now beginning to wonder about your next steps.  How do you get everyone aligned with this great new vision. Panic and anxiety haven't set in yet, but they're lingering.

How do you create ownership in a situation like this? How do you get buy-in to be more than just a cliché?

A sense of ownership is created when executives are assigned tasks. Tom Morrison, an experienced turnaround executive formerly with Morrison Partners and now with Organic Alliance Inc., uses a leadership concept he calls "share the vision." To make this work, Morrison says your leaders need to have judgment, intuition, and experience, and you must give them the tools and direction necessary to be a part of the action.

Everyone has a specific responsibility, something he needs to do, something about which he needs to be accountable to the board and to other executives. Too often, no clear connection is made between a function that an executive performs and the actual results that action creates. It's necessary to create a "line of sight"-a term Bob Blonchek and I coined in our 1999 book, "Act Like an Owner"-between what leaders do and the value of the enterprise. When executives have responsibilities and clear lines of sight between their actions and the company's direction, you're on your way to aligning the results of your leadership offsite with the direction of the company.

Goodbye panic and anxiety ... hello offsite euphoria.

Leading the Freeman Way

This week Time Magazine named Freeman Hrabowski one of the country's Ten Best College Presidents.

In its issue on newsstands this Friday, November 13, Freeman is featured in a list that includes presidents from Ohio State University, New York University, University of Michigan Ann Arbor, Arizona State University, Tulane University, Middlebury College, Miami Dade College, University of Texas at Brownsville and University of California Oakland.

In language typical of a leader who credits his team and surroundings, Freeman said "This recognition reflects the campus's success and the high quality of the academic experience here."  Freeman, as almost everyone in the broader UMBC community refers to him, said "It's an honor for each of us to be a member of the UMBC community."  Indeed.

I've been on the periphery of UMBC for about 10 years now, both as an adjunct professor and member of UMBC's Tech Center Board of Advisors.  I had certainly heard of Freeman and his reputation before I became affiliated with the University, and I couldn't help but wonder if the person matched the legend.  After just a few encounters and listening closely to faculty members and senior members of his immediate leadership team, it became apparent that he was the real deal.  A true leader.  A larger than life figure that brought out the best in people.  A treasure for the state of Maryland and higher education.

Freeman inspires people.  You meet him once and you begin to ask yourself, "how can I contribute."  An unabashed math and techno-geek, only Freeman could make winning a chess championship sound cool.

Great leaders are found in diverse places.  Our culture tends to celebrate the success of entrepreneurs and titans of industry.  We sometimes forget about leaders in less glamorous settings.  In this case,  Gilbert Cruz and Time Magazine hit the nail on the head.

Congratulations Freeman and UMBC.

Increasing Operational Effectiveness

Incremental improvement gets you to par value, but not to premium value.

Ron Jones, while Senior Vice President of corporate development for Veridian, oversaw the company's revenue growth as it exploded past $1 billion before it was acquired by General Dynamics at a premium valuation.  Jones, now a Board Member with Global Strategies Group North America and the architect of a number of successful midmarket growth strategies, says that "improving daily operational performance is necessary to achieving superior results, but it is not sufficient."  Amen to that.

Michael E. Porter, who leads Harvard's Institute for Strategy and Competitiveness, puts it this way; "managers must clearly distinguish operational effectiveness from strategy. Both are essential, but the two agendas are different".  As you go through a value building process, you will see how your company can increase its operational effectiveness even as it looks toward the future to create explosive, exponential growth.  Leaders will certainly need to focus on filling the holes, sealing the cracks, re- pairing the foundation - whatever metaphor you choose to illustrate the idea that you've got to take care of the smallest details to foster an opportunity to create big change as well.

As you begin to tackle both the big things and the little things, consider choosing tiger teams of junior managers, your next-generation leaders, who may not be involved with the planning process, to handle the initiatives that increase operational effectiveness while the senior people continue to drive the process and look at the big picture.  The junior team members will feel they are part of the planning process and take an ownership role that will be critical to making your changes stick.

The Cure for Malaise

I've got to come clean before I start my rant.  I've never really liked going to the mall.  Even as a younger man (OK, hit the geezer alert now), trips to the mall took more out of me than they were worth.  After about ten minutes I could feel the good vibes just draining out of my body as if each kiosk or new age fashion store were some form of energy magnet.

Well I had occasion to swing by the mall this week and I began to feel like I needed a transfusion.  You see I had a mission, a real purpose, a specific reason for going into the mall.  But I also had about thirty minutes to kill before my next appointment.  As I strolled between the moccasin kiosk and the man selling smokeless cigarettes, I started to notice some bad feelings and so I consciously tried to do something about it.

I put my personal consumer hat on and looked at each store with an open mind.  I was deliberate in asking myself questions like:  Would that store have something I was really looking for?  Could there be something here that would make me want to blow the dust off my wallet?  Invariably, the answer was no.  I was getting to the point where even the Apple Store was not appealing.

As I was racing ever faster into the valley of despair and preparing for a bad case of malaise (a general feeling of discomfort brought on by too much time in the mall), I stumbled upon a Borders.  I'd rather it had been one of the "10 Coolest Bookstores in America" but it did the trick.

After a stiff cup of Joe and the purchase of two books on Italian travel, a serious case of malaise was avoided and my 3pm meeting went off without a hitch.

Thank God for coffee and bookstores.

Hyperlocalism as a Business Model

I had a great conversation with Dan and Gayle Alexander recently.  Dan is the President and Publisher of Denpubs and Gayle is the publisher of Kidsville News.  Our conversation centered around the business model that seems to be working in the news business.  Headquartered in Upstate New York, Denpubs (Denton Publications, Inc.) considers itself more than a newspaper.  Dan and Gail really feel they are a community service.  And as a community service, they are always working on ways to serve the local folks and are doing quite well.

But aren't newspapers in trouble?  According to the Silicon Alley Insider, 2009 has been a rough year for newspapers.  So far this year, 105 newspapers have been shuttered, 10,000 newspaper jobs have been lost, print ad sales fell 30% in the first quarter of 2009 and 23 of the top 25 newspapers reported circulation declines of between 7% and 20%.  By any measure, much of the newspaper business is in the tank.

So what is the difference between Denton Publication's business model and most of the newspapers featured in the above statistics?  Denton Publication and a number of other regional or niche publications have focused on hyperlocalism and it has turned out to be good news for a struggling industry.

So what is hyperlocalism?

It's the focus of news coverage of very local events, especially to the exclusion of seemingly more important world events.  But is hyperlocalism really new?  We've heard this song before.  Tip O'Neill told us that "All Politics is Local".  Environmentalists have encouraged us to "think globally, but act locally".   St. Augustine said "pray as though everything depended on God. Work as though everything depended on you".  We become all things to all people at the risk of offering nothing to everyone.

So, consider dominating your current market segment before breaking into new markets.  Think about serving your current customer base better than any of your competitors before breaking into an adjacent market.  Make sure your customers have no reason to go somewhere else.  You'll build a valuable customer base and give yourself a solid platform from which to grow.

Think local.  Think hyperlocal.

How Do You Conquer an Island?

When Alexander the Great decided that the island of Tyre was between him and the total domination of the known world, you might think the question he and his land based army would ask would be, how do you conquer an island?  But Alexander, perhaps that's why we call him Great, reshaped the problem and asked a completely different question.

In his 2004 book, "The Wisdom of Alexander the Great", Lance Kurke, Ph.D. uses the leadership lessons of this historical figure to challenge how we think about seemingly intractable problems.

You see old Alex had pretty much conquered most of the civilized world as he made his way around the Mediterranean coast, but he was frustrated by the pesky Persian navy who continually challenged his supply lines.  The Persian navy needed fresh water, however and had to return to port every few days.  Alexander figured if he could control the water supply, he could control the Persian navy.  So Alexander flexed the muscles of his powerful army and took control of all the Persian navy sources of fresh water.  All that is, except the fresh water available on the island of Tyre  (A site now occupied by the village of Şūr, located 45 miles south of Beirut).  The island was about a kilometer off shore and was beyond his reach.

The question most of us would ask would be "how do you conquer an island" beyond the reach of your armaments?  But Alexander the Great changed the perspective and asked the question:

How do you fill in the sea?

So from one intractable problem, Alexander created another challenging, but not intractable, problem. The island finally fell, in 332 BC, to the Macedonian conqueror who filled in the sea and constructed a causeway connecting the island to the shore as part of his seven-month siege.  It turns out that Alexander was in a bad mood upon arrival and reportedly slaughtered a quarter of the islands inhabitants.

So when faced with what seems like an intractable problem, try to shift your perspective and ask a different question.  It may not be any easier to solve, but it may open up an entire new world for you.