Building Business Value | Corporate Management Strategies

The Netflix Keeper Test

Jim Collins of "Good to Great" fame challenges leaders by asking if they would rehire their leadership team.

Netflix has a managers "keeper test" which asks "which of my people, if they told me they were leaving in two months for a similar job at a peer company, would I fight hard to keep at Netflix?"

Are you "settling" when making hiring decisions or building a performance culture that attracts and keeps high achievers?

Staying on Top of Things With Alltop.com

We received some good news over the weekend.  Our blog has been added to the Business Intelligence area on Alltop.com.  Why is this such a big deal?

If you're like most of us, you may find it difficult to keep up with all the terrific online content.  I subscribe to a few blogs and read their email versions on my iPhone while traveling (but never while driving!).  When I do have to time to catch up on my online reading, I find myself bouncing around in an unproductive search for something that catches my eye.

The folks at Alltop have now made our lives much easier.  Guy Kawasaki, Will Mayall and Kathryn Henkens created Alltop as an "online magazine rack" where you can get stories on your area of interest. Dan Roam, author of Back of the Napkin: Solving Problems with Pictures illustrates how it works with a few Roam-like drawings.

Basically, you customize a view of the topics you are interested in and then Alltop does the work for you.  My interests center around Leadership, Business Intelligence, Sales, Marketing and Executive Coaching and that's just on the business side.

So how does Alltop build business value?  If you are a leader of a midmarket company and are not sharpening your leadership saw on a regular basis, you are having a negative impact on your company value.  Aristotle said "an unexamined life is not worth living".  You and your leadership team must continue to examine your ability to lead and manage and staying current with the latest online content can help you do just that.

The Language of Success

Many midmarket companies get caught in the trap of relying on heroes. So many of the companies in the mid market have sort of flattened out. They've had some success in the past but they are now facing a flat top line, or worse, their top line is shrinking. Sometimes this is the result of the ‘hero paradigm'. This is where companies succeed based on the activities of a hero or a set of heroes. So they eventually flatten out because they lack process, structure and methodology (the bane of entrepreneurs) and they can't scale.

A quick litmus test for your company to see if your success is dependent on heroes is to listen carefully to your language of success. 

How do you describe success?

For example, some leaders will talk about opening up a new market with a comment like "we were successful in the Southwest because of John's contacts and his ability to push through sales during the last quarter." Now can you imagine, Eric Schmidt of Google or Larry Ellison of Oracle saying "we attribute our success in India to the ability of Mary Jane and her knowledge of corporate IT buying behavior!"

Some companies rely on heroes to be successful while others learned to scale (and although they certainly have superstars on their teams) they've learned how to repeat their successes by leveraging individual competencies, not relying on them.

Five Ways to Build Trust in the Workplace

In their August 10th blog "Trend to Watch: Trust in Business Is Running Out" on HBR Now, Eric Beinhocker & Elizabeth Stephenson discuss the strained relationship between us and the businesses we deal with every day.    They found that "the relationship between business and civil society was showing signs of strain even before the crisis. Since the recession began, there has been a precipitous decline in trust. The Edelman Trust Barometer found that 62% of adults in 20 countries trusted corporations less in December 2008 than they had a year earlier."

But how does that impact the leader of a small or midmarket company?  You are not the bank, broker or insurance company that fed this economic crisis but unfortunately, because you are in business, you're swept up in this potential death spiral of mistrust.

I could not agree more with Beinhocker and Stephenson when they ask "why should this concern strategists? Because a low-trust environment makes everything about doing business more difficult. For an individual company, loss of trust leads to higher transaction costs, lower brand value, and greater difficulty attracting, retaining, and managing talent. Ultimately, it can mean boycotts, negative publicity, and unwanted regulation".

So what can a midmarket leader do to build trust in the place that matters most, their workplace?

Take the word TRUST and create a mnemonic to remind you of just what to do to build a trusting workplace environment.

T stands for TEACH.  Teach everyone in your organization just how things work.  Make it as transparent as possible.  If you want front line leaders making decisions that will make a positive impact on the value of the company, teach them how the place works.

R stands for REWARD.  Make sure your rewards systems are aligned with your corporate values and corporate goals.  I see too many companies rewarding behavior that might have a temporary positive impact on the bottom line, but not create long term value for the company.

U stands for UNCONDITIONAL SUPPORT.  Consider your role as a leader as a position of vulnerability.  Too many midmarket execs feel they have to be perfect and this creates an environment where mistakes are hidden and new ideas are discouraged (they can't be any good if the leader didn't think of them.)  Mistakes should be like tuition.  Get them out in the open and learn from them.  Talk about them and you'll foster an environment of openness and creativity.

S stands for SHARING INFORMATION.  If it's not personal information or the secret to Coke or Pepsi, then get the information out there.  Creating a trusting environment where employees know what they have to do everyday to impact the bottom line means they need to have enough information to make good decisions.

T stands for being TRUSTWORTHY.  As a leader, you'll build trust by making and keeping commitments.  Chances are your emails are being saved and your speeches are being recorded and posted on YouTube so you might as well come clean.  Keep every commitment you've ever made and trust will become viral in your organization.

So there you have it.  Bob Blonchek and I penned these Five easy ways to build TRUST in your organization in our book "Act Like an Owner" and they are needed more now than ever.

Vulnerable Leadership

Voltaire said that "the perfect is the enemy of the good".

The best small and midmarket companies I see have a culture of trying new things - not needing to be perfect with all available information before they try something new.  I guess you can call it a culture of innovation.

Not all of your ideas are going to work.  I once ran an all-hands meeting of about one hundred engineers and instead of clapping - we gave everyone a kazoo with the idea that we'd have some fun and get these engineers out of their shells.  Well, it failed miserably!  Not one engineer made a peep!  But the upside of our attempt at fun was that the organization did get the message that it was OK to try new things.

I call this ‘vulnerable leadership'.  If you never share any of your own failures, how can you possibly think that your team will share their failures.  If you, as the leader, are perfect, then they'll think they have to be perfect.  That means they'll play it safe, not try anything new, do things the same old way, watch margins degrade and eventually you'll be boarding up the doors.  In its simplest form, it's a case of innovate or die.  We all have to try new ways of going to market but still be agile enough to recover quickly from some of our mistakes .... like the kazoo!

Johnny Cupcakes - a Recipe for Success?

On a recent business trip to Boston, I was fortunate enough to have my family tag along.  We took an extra couple of days and force marched the kids through the Freedom Trial, took a ferry to Salem and made a visit to the Harvard campus (hey, you never know!)

From my fourteen year old son's perspective, the highlight of the trip was a pilgrimage to Johnny Cupcakes.  Don't be confused.  Johnny Cupcakes is not a bakery, but rather a very cool T-shirt shop located in Boston's trendy shopping district, Newbury Street.  We bought a couple of T-shirts and were blown away by this unique store.  It had all the trappings of a bakery, but instead of cupcakes in the fridge and display cases, we found shirts and apparel that appeals to the young at heart.

So the obvious question to me was -  what drives value for Johnny Cupcakes?  Much of their success seems to be viral.  You sense an undercurrent of support.  Drawing people like my son from all over the world.  They certainly are unique but in no way pretentious and even a dad (me) was comfortable paying $24-35 for a piece of art that you just happen to wear.  Their customer service was great and they seem to revel in watching confused tourists enter the store looking for the perfect snack!  Their product is unique, comfortable and makes a fashion statement.

Time will tell if founder Johnny Earle will be the next Bert and John Jacobs of Life is Good, but he certainly seems to be off to a great start.

The Top 3X3 Things the Midmarket CEO Needs to Know

I call it the "Three Cubed" ... the top 3x3 things a midmarket CEO should do to begin the process of building enterprise value in their business.

Last night I spent a very entertaining hour speaking with Wayne Hurlbert on his "Blog Business Success" show and we finished with the Top 3x3. Consider the following 3x3 discussion points for your next leadership meeting.

1. Who are the top three companies in your market and what are three reasons they are at the top?

2. What are the three primary value drivers in your market and what three actions are you taking to move the value needle this year?

3. What are your three areas of vulnerability and what three initiatives do you have in place to mitigate those risks?

10 Questions to Envision the Future

I'm not sure about you, but I'm a big list guy. I keep a to-do list for just about every part of my life. My wife and I make short lists for the kids to help keep them focused (and occupied) during the summer months. I even keep a list of ‘strategic' projects I should be doing in my consulting practice.

One of my favorite blogs is Phil Gerbyshak's Slacker Manager. One of the reason's I'm so attracted to Phil's blog is his propensity to give me ‘lists' that I can easily use, or pass along. I guess posted for Phil last month on "10 questions" leaders can use to get your team thinking about the future. Check out other great Gerbyshak lists.