CEO One-on-Ones that Work

One of the best tools a CEO can use to lead and drive performance is a One-on-One meeting. This simple and important meeting is where the CEO gives undivided attention to each of their Direct Reports in a consistent and scheduled manner.  One-on-Ones focus on discussing topics that are important and not urgent.  Although One-on-Ones are simple they are NOT easy to execute and many smart CEOs struggle with One-on-Ones.  Here’s a simple approach to conducting excellent One-on-Ones:

1. Meet with each of your Direct Reports two times per month for 60 to 90 minutes.

2. Conduct a Development One-on-One on a monthly basis. The focus of the Development One-on-One is the Direct Report, their development, and their life goals.  The Development One-on-One should feel and look different than the Business One-on-One with discussion topics including:

• What are your life goals?
• What does success look like for you outside of work?
• How is your work/life balance?
• What are your professional development goals?
• How are your development plans coming along?
• How is your job satisfaction?
• Sharing “bits of brilliance” that you as the CEO have observed over the last month.

3. Conduct a Business One-on-One on a monthly basis. The Business One-on-One focuses on business information that is important and NOT urgent. The Business One-on-One is a focused update on the company, department performance, team member development, etc.    The format and agenda of the Business One-on-One is jointly designed by you and your Direct Report and involves discussions around:

• Updates on projects
• What can be expected for the next month?
• Identification and removal of barriers that hinder the company and/or the department
• Review performance metrics, quotas, or project updates
• Review and become familiar with the performance of their direct reports
• Recognize Achievements

To receive a paper on conducting excellent CEO One-on-Ones, email me.

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Kathie McBroom
Synergy Business Group LLC

www.thinking-organization.com/

Kathie.Mcbroom@thinking-organization.com

Don't Try to Replicate a Prodigy

Steve Jobs.  An icon, a prodigy, a leader, an innovator and an enigma.  You probably have several of your own adjectives to add.   I saw an interesting CBS Moneywatch article

If you click through to the article, you'll find 7 "inspirational life lessons" gleaned by that author.   Yet the title of this article adds an 8th lesson.   
 
Actually, I believe it's the only lesson most of us can learn from Steve Jobs:  

Don't try to replicate a prodigy
 
They broke the mold after they made Steve Jobs.  Others in the same league include Richard Branson, Warren Buffett, Mozart, Beethoven, et al. These people are outliers - uniquely gifted and talented people who managed to find exactly the right career for themselves (in some cases after multiple tries).
 
Sure, they do a lot of things right and a lot of things well.  Don't, however, think for a moment that if you do exactly those same things you're going to get a similar out-of-the-park home run result.  Not gonna happen.
 
Yet prodigies exist in many of our businesses.  Some are founders or owners.  Others are key technical, operations or sales contributors.  What do you do with such people?   Value them.  Recognize, first, that you have a prodigy on your hands.  Apply the principle of Highest and Best Use -- don't ask such people to spend time on, improve on or work on anything else.   That's like trying to teach a pig to sing (if you don't know that Southernism, click here for a laugh).
 
Rather, treat a prodigy as a prodigy.  Let them do what they're good at, and keep other things (and people) out of their way.  It's sometimes not a bad idea to articulate why you're doing that -- why you've assigned someone to get Mike's expense vouchers filled out for him or why he might be exempted from "rules" that apply to others.   The point is, for the good of all concerned we have Mike do what's best for the company and that might be different than the way most other employees work.   It's not that you can't impose any discipline on a prodigy - you can.  Just make sure it's discipline that makes sense in the context of what you're trying to accomplish with him.
 
If you can get your maximum benefit from a prodigy by recognizing who and what he is, your company may be all the better for it.
  
Have you managed to make the most out of a prodigy on your staff?  Click "Comments" below and share that experience with others.   

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Terry Weaver

Advisor

Chief Executive Boards International
http://www.chiefexecutiveboards.com/

TerryWeaver@ChiefExecutiveBoards.com

Turn a Stupid Question into Lunch

"If I find that on the first page of Google, you're buying lunch."

Ever get tired of answering questions that employees ought to have figured out for themselves? It's the "go-to-guy" syndrome. They find it's easier to ask you than search for an answer themselves. Sometimes it's a "general knowledge" question, like, "How far is it to Peoria?" Seemingly innocuous, and maybe you know the answer, but why is that a problem? Because it interrupts you, takes your time, and distracts you from your highest and best use (which, hopefully, you were working on at the time the question came up).   And because it costs you far more time to return to what you were doing, or perhaps don't get back to that at all. 

Is that really true? Apparently it is -- "multi-tasking" has been largely discredited. Humans don't, in fact, multi-task. Rather, they switch rapidly between tasks, and it takes awhile to spool back up after each switch. According to a New York Times article,

"a typical office worker gets only 11 minutes between each interruption, while it takes an average of 25 minutes to return to the original task after an interruption. "

One Chief Executive Boards International member, when interrupted by a "general knowledge" question, simply says, "If I find that on the first page of Google, you're buying lunch." It only takes a couple of lunches to break a chronic interrupter of the habit.

Or, here's another idea for solving the "go-to-guy" problem when the question is not stupid - when the employee is trying to delegate a decision to you that he should be making himself. It's important to note the difference, and use the right medicine for the right symptom.

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If you have ways you've been able to break employees of interrupting you with things they ought to be doing themselves, please click "Comments" below and share them with others.

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Terry Weaver

CEO

Chief Executive Boards International
http://www.chiefexecutiveboards.com/

TerryWeaver@ChiefExecutiveBoards.com

Natural Consequences of Employee Misbehavior

I've heard this question a hundred times. "What do we do about someone who's a good employee, but regularly misbehaves, like not turning in complete documentation with an order? They never fill the form out completely. What's the penalty for that?"

Of course you could try fining them - dock their pay. You might run into wage and hour problems with that, and you'd probably be surprised at how high the penalty would have to be to get their attention.

Here's a brilliant consequence that a member brought to a Chief Executive Boards International meeting.

Call him into your office. He'll quickly figure out this is not trivial. Say, "Jack, it seems you've again turned in an order without the configuration form completed." Jack will give you his traditional litany of excuses. You say, "Well, Jack, we know if we try to process an order without the configuration form completed, it causes delays, mistakes and diving catches when we find out what the customer really wanted.

"So, Jack, you and I are going to fill out the form together." Jack will be stunned. This is important enough that you'll take the time to do it with him? Jack says, "I'll get the information together and get back to you." He's hoping you'll forget about it.

"No", you say, "Jack, I'm going to be waiting here while you go get the information you need to complete the configuration form. If you can't get it together by the end of the day, I'll be here waiting for you tomorrow." Now Jack gets it. This is important.

As you can imagine, this only has to happen to Jack a couple of times -- consistency is critically important -- the same thing happens to him the next time he turns in an incomplete order. He'll either get tired of being your new best friend or he'll get his orders documented before he turns them in.

This is a form of employee "tough love". Don't let them off the hook. Set up very uncomfortable consequences, whether monetary or not, for behaviors you want to change. Their behavior will change.  

If you have an example of consequences for employee misbehavior that have worked for you, please click on "Comments" below and share them with others.      

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Terry Weaver

CEO

Chief Executive Boards International
http://www.chiefexecutiveboards.com/

TerryWeaver@ChiefExecutiveBoards.com

Measure Intentional Activities, not Outcome

I had just left a conversation with a volunteer group about attracting more members. We were talking about a more intentional, rather than accidental process of creating a prospect list.

Minutes later, I heard an NPR broadcast about how some pro basketball teams are tracking a new "non-official" statistic, "deflections". For those of you like me to whom this is a new term, a deflection is any time a player does something defensively to change the course of the basketball. It's a not-yet-official statistic that's not a turnover, not a rebound, assist or steal. It's just an indication of defensive engagement and pressure on the offense that may or may not result in an outcome.

The commentator said, "If a pro basketball team has 35 deflections in a game, they have a 95% chance of winning that game." Pretty good odds, and easy to explain to the players what you want them to do.

I was talking with a sales pro later at lunch, and related this to him. He said, "You know, I saw a sales person one time who finally stopped focusing on his sales revenue and just focused on activities that generate sales. Suddenly he found all kinds of sales opportunities beyond the core products he was trying so hard to sell.

Sometimes it's best to measure activities people can control, especially if they're known to drive the desired outcome. Number of appointment-setting calls. Number of new prospect appointments. Number of face-to-face demonstrations.

Of course, you want to make sure the activities you're measuring actually have a known connection to the outcome (in this case, orders). And you want to have some checks and balances in place to prevent padding the numbers with non-contributory activities.

Have a look at your metrics and see if you have enough focus on success-generating activities that lead to the ultimate outcome you want. Perhaps you're not getting the results you want because your team isn't doing enough of the things that eventually produce results.

 
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Terry Weaver

CEO

Chief Executive Boards International
http://www.chiefexecutiveboards.com/

TerryWeaver@ChiefExecutiveBoards.com

Routine Will Set You Free

In the recent CEBI Strategic Planning Workshop, facilitator David Rippe said, "Routine will set you free." Counterintuitive, perhaps. What he meant was that any part of your business you can turn into a routine business process that operates pretty much on auto-pilot completely frees you from supervision, followup, decision-making and intervention. Those are four of the things that keep many business owners "too busy" to work on their businesses -- they're too busy as the "go-to" guy or being the decision-making bottleneck in their day-to-day operations. If you want more time away from the business, or more time to work on improving the business, your first priority should be business process definition.

It's like Groundhog Day, where Bill Murray is "having the worst day of his life ... over, and over".  Ever feel like that in your business?  It's self-inflicted -- a spiral you've set up for yourself due to your unwillingness to step back, get a team together and create business processes that have built-in checks, balances, metrics and exception reporting for when they (hopefully seldom) go off track.  Or perhaps it's your emotional attachment to being the "go-to-guy".   "My employees won't make decisions themselves", you say?  Probably of your own making, as well. See: Want Your Employees to be Independent Thinkers?

There's a huge difference between 5 years of experience and 1 year of experience repeated 5 times. 

Business processes that are well-defined, thorough, current and disciplined make day-to-day operations routine, reliable, productive and profitable.  A "boring operation" that consistently generates cash.  Isn't that what you want?  If you're serious about that, the answer is creating a Process Culture -- a company culture where the way the business works, the way sales are generated, the way orders are handled and the way problems are handled is a routine, well-defined, well-oiled machine.  Routine (well-documented and practiced business processes) will, indeed, set you free.

If you're ready to start this journey to freedom, here are 7 Steps Toward a Process Culture....
 

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Terry Weaver

CEO

Chief Executive Boards International
http://www.chiefexecutiveboards.com/

TerryWeaver@ChiefExecutiveBoards.com

Outsourcing Self-Discipline

Accountability is essential within your business. You want people doing what they're supposed to be doing and what they said they would do. Accountability to yourself is important, too, but what if you don't have enough? Outsource that.

An important ingredient in personal accountability is self-discipline - the ability to make yourself do things you should and not do things you shouldn't. Yet, according to Chip and Dan Heath in their book Switch: How to Change Things When Change Is Hard, "self control is an exhaustible resource." Think about it. Every 12-step program is based on changing the person's environment and behaviors, rather than relying on self-control and admonitions like "don't drink too much or "don't eat too much". If self-control and self-discipline are your only strategies for improvement, your likelihood of a relapse is huge.

What to do? One Chief Executive Boards International member said he's outsourced self-discipline of his calendar and personal chores. He had regularly missed appointments, double-booked appointments, missed deadlines, missed tax filing dates, etc. He just didn't have very good systems in place to manage and discipline his time and his calendar. Of course, he could have gone and taken a seminar or adopted a system to help with that or just decided to be more self-disciplined about managing his calendar.

No, he decided, "I'm an extreme case. I don't think I can fix myself by myself." So he outsourced his self-discipline. He hired a personal assistant and handed her 100% control of his calendar. If he wants to meet with someone, he emails or texts her to set it up. If someone wants to meet with him, he refers them to her. She's scheduling his business life, his volunteer life and his personal life. Extreme, you say? How bad is the problem? What would it be worth to have it fixed? And what else could a personal assistant do to improve the business?
Another member said he'd done the same thing in health and exercise. He hired a personal trainer. He's accountable to her. If she's going to be at the gym, he'll be there, too. After all, he's polite - he wouldn't stand someone up for an appointment. He's just not very self-disciplined about going to the gym on his own. He said, "I know I'm going to get a good workout and that I'll make time for it."

Think about it. Do you perhaps need a coach, a trainer, an assistant or a teacher to help you with some part of your life? A big part of that is the self-discipline you outsource as part of that engagement.  
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Terry Weaver

CEO

Chief Executive Boards International
http://www.chiefexecutiveboards.com/

TerryWeaver@ChiefExecutiveBoards.com

5 Essentials of Prospect Qualification

What's the essential business process you have to own in order to grow your business?   A selling system.  A documented, explainable process that keeps your pipeline full of suspects, prospects, proposals and closed orders.   In my experience fewer than 25% of businesses have one. For the rest, each month's revenue is a surprise -- some ok, most below target.   

Here’s an overview of a selling system.   Last month, we explored Opportunity Development -- that discovery process where we determine whether a suspect (not yet a prospect) has a real need for what we do.

This month, we're talking about Qualification – sorting out the “best few” prospects from the many you might spend time chasing.

This eludes many cub sales people. Why? Because they’re humans. And most have a plethora of fears. Fear of rejection, fear embarrassment, fear of failure and other fears, the root cause of which is low self-esteem.

The fatal symptom of a salesperson’s low self-esteem is spending time with people who will see them, rather than people who are ready and able to place orders. The classic euphemism for this?  “We’re building a relationship”. When you hear a sales person talking that way, what they're really saying is, "I'm not asking for an order."  What’s the best way of actually building a relationship? Do some business together – just get an order, and show them what you can do!

What are the essentials of qualifying a prospect? Or, more importantly, disqualifying one?

1. Accepting that not everyone is going to buy – For many reasons beyond your control, some prospects just aren’t going to buy from you – at least not now. As soon as you realize that, move on.
      
2. Enough suspects – Implicit in disqualifying (discarding) prospects is that there are some left over. A broken selling system (not enough Lead Generation) causes poor prospects to be retained, simply because there isn’t anyone else to talk to.
    
3. A clear-cut vision of your Ideal Customer – Exactly what does that person look like, sound like or act like? Think of a “customer muse” – a visual representation of the customer you’re looking for. Not a silly idea, actually.
    
4. Assessment of "fit" -- The fit between your company and your way of doing business with the prospect's company and way of doing business. Are you a premium provider, and the prospect is all about price? Not likely to work out well.
    
5. Recognizing that a prospect is a person, not a company -- People buy from people, and despite a prospect company’s apparent need you have to find the person who has the emotional need, authority and readiness to buy. Is he the "MAN"? Does he have:
• Money -- Is there actually available budget to buy anything, any time soon?
• Authority -- Can this person really buy from you, or is he really a “recommender”?
• Need -- Does he actually have a pressing need - a want or a fear that needs a solution right away?

The answer you’re looking for? “NO”. Yes, “NO”. That’s the signal you’ve found a prospect to disqualify, so you can move on to the next one without wasting any more time. If you get a “Yes, but not now”, put that prospect into the “Farming” step of your selling system (more on that in a future article).

Does your selling system have a good disqualifying process? Do you regularly downgrade prospects and quit spending time with them? Do you get to “NO” often enough, or do you just wear out? Take a look in your CRM and see how many opportunities have been downgraded in probability. How many have been written off entirely? If that's not a sizeable number, you have either some false hopes in your opportunity list or you may have sales people spending time on deals that won't ever happen -- for you or anyone else.

Actually, I believe that's the worst kind of deal to lose -- the deal that doesn't happen at all. If they didn't buy from you or anyone else, it's a pretty fair bet that the deal should have been disqualified far earlier in the game and that time spent with a qualified prospect who will eventually buy from someone.
More next month on Proposals and Closing  
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Terry Weaver

CEO

Chief Executive Boards International
http://www.chiefexecutiveboards.com/

TerryWeaver@ChiefExecutiveBoards.com

What's Inside Matters

Maytag's new TV campaign closes with the tagline "What's inside matters". That's not a bad mantra for hiring. Most hiring decisions (and most hiring mistakes) are the result of a misplaced focus on experience. Companies who consistently hire extraordinary people pay little attention to experience -- instead, they hire the person and teach the skills.

Think about it. When was the last time someone failed because they didn't have the technical skills to do the job? Chances are they failed because they didn't have the work ethic, the self-esteem, the emotional intelligence or the drive and ambition the job required. These are rarely taught. What you want to be looking for in a candidate are things like drive, ambition, determination, focus, self-esteem and the personal discipline to succeed. Native intelligence and emotional intelligence wouldn't hurt, either. You can teach the rest.

Of course, you do want people with the educational basics -- math, science, reading, spelling, etc. needed to learn the job skills. 

Chief Executive Boards International members report that, despite high unemployment statistics, there are precious few candidates out there that meet their hiring criteria. That being the case, "Hire the Person and Teach the Skills" is more important than ever.   Many CEBI members go on to say that some their "all time best" hires are people either right out of school or with just a few years' experience. 

What's your track record with hiring for experience vs. hiring for raw talent? 

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Terry Weaver


CEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com

Incentive Compensation Not Working? Try Plan "B"

I recently had a conversation with a business owner about some troubles he was having with a sales person's incentive compensation. Not surprisingly, it wasn't working -- most don't.

In this case the problem was a "reimbursable draw". The way that scheme works is this:

• The job is designed as full commission. Most people initially can't handle that at home -- either they can't buy groceries or they can't sell it to their spouse. 
• Sales person comes to work in "training mode" at a base salary for, say, 6 months or so
• Then the salary changes into a reimbursable draw against commissions. Each month's draw is treated as an advance against commissions to be earned.  In this case, the commission plan was a "first-dollar" plan -- full commission is paid from the first dollar of sales (typical in straight commission)
• That's where the trouble starts. The draw remains in place, and any shortfall between commissions earned and draw paid begin accruing in an "advance" account. If commissions exceed the draw, they're applied first to any unpaid balance of the advance. Thus, the sales person doesn't really see her commissions in her monthly check -- until the advance is completely satisfied and commissions regularly exceed the draw floor.

The plan had become a demotivator, due the depth of the advance hole she had dug. Regardless of her success, this sales person was never seeing anything other than the draw, and it appeared it could be months, even a year, before that situation changed.

With some outside help, he redesigned the incentive plan. He changed it to a base salary plus commission plan, a variation on ideas described in "The #1 Incentive Compensation Plan Design Mistake"  The basics of the new plan:

• The base salary was reduced to a "subsistence" level -- about 2/3 of the former draw
• Rather than $0 commission for sales below a monthly "quota", sales below quota pay a small commission -- about 1/2 of the full commission rate
• At the monthly quota, commissions change to the full commission rate, and continue without any cap

There are several key success factors in this approach:

• The demotivating factor -- the "bottomless pit" of the reimbursable draw is eliminated
• There's some commission, although not a lot, paid every month, even if sales are below the monthly quota
• The commission steps up 2x for every dollar of sales north of the monthly quota

The result? Amazingly, that sales person "reignited". She began making more calls, resulting in more proposals and she's getting more orders. She's on track to succeed, whereas she had been on track to fail.

A couple of other observations. It happens that this plan is based on gross margin, rather than gross revenue. That's popular in businesses where the sales person has some pricing flexibility -- if she gives away gross margin, she contributes part of the discount in forfeited commission. That's insignificant in the overall plan design -- it only changes the commission rate (higher if gross margin based, lower if gross revenue based).

Oh, what about the pre-existing "advance" balance created by the draw scheme? He suspended that, saying it may be incrementally forgiven based on performance.

If you have examples of incentive systems that work (or don't work), please click "Comments" below and share them with others. 

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Terry Weaver


CEO
Chief Executive Boards International

http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com


 

Just Say "Yes"

 
Nancy Reagan's answer to the drug problem in the US was, "Just Say No". Not bad advice for young people thinking about experimenting with drugs, and not bad advice for parents and business owners, on occasion. 

Probably not a good idea for sales or sales support people who are answering customer questions about a product or service. Technical people have the worst time with this. A customer says, "Can your product support 10 different users simultaneously?" Chances are he's been coached to ask that question by your competitor, who knows that your base offering supports only 8. And you know the average customer actually needs only 2 or 3. This is "killer feature" marketing -- your competition hammers away at fringe "features" where he believes he can divert a prospect's attention.

Technical guys, by and large, fall right into this trap. They'll answer this question with, "No, but if you needed to do that, we recommend an expander product, available from a third party." What does the customer hear? "NO", just what your competitor hoped he would hear. The solution offered, in technical circles, is known as a "workaround", and sometimes the technical guy will even say "we have a workaround", which perhaps even reinforces "No".

In a former life running a product business, I watched this happen, even in "command performances" in a headquarters Customer Briefing Center. We'd fly prospects in on private jets and then have a technical guy fall right into a "killer feature" trap our competitor had armed the customer with. I needed a fix for that problem, and one that was easy to train and propagate.

The fix was simple. Before the next Customer Briefing, I met with the technical guys who were going to participate, and explained the problem. These were bright guys -- they weren't trying to mess up. I said, "Guys, when those kinds of questions come up, I want you to give them the same answer -- just delivered a different way. Instead of starting the answer with "No" and then following "but" with the workaround, say, "Yes -- The way you would do that is...... and then explain the workaround"". Exactly the same information, and it has the added advantage of being true. The difference is in the customer's perception. So, the answer to the multi-user question is, "Yes -- The way you'd do that is with an expander, which you can add if you ever need that many simultaneous users."

They had no clue their native response was a problem. And they had no problem with the new script. Technical people won't misrepresent a product. Nobody should. What they will do, if coached, is present it in its best possible light.

This lesson isn't specific to technical people. Scripts are important -- in almost every job in your company. Don't expect people to "make it up on their own". When it's important what people say to customers and prospects (and it always is), script it. People will say and do the right thing if you define what the right thing is.

"Script the critical moves" is a change management principle brought to us in the book Switch, by Chip and Dan Heath. They say, "Don't think big picture -- think in terms of specific behaviors."  Here's a Book Review of Switch.

If you have examples of where you have (or should have) developed and taught scripts in your company, please click "Comments" below and share them with others. 

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Terry Weaver


CEO
Chief Executive Boards International

http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com


 

A Mantra for Change -- Tell and Show

 

"A leader with no followers is just a guy out taking a walk" says Harry Loyle, Managing Director of Cybeck Capital Partners. Harry presented an Executive Briefing at a recent Chief Executive Boards International Summit. Harry's leadership and change management mantra is "Tell and Show". We learned in grade school how to "Show and Tell". This is different.   
 
A leader must first articulate what it is he wants. Exactly what it is he wants. In Harry's words, "Clearly articulate the change, and quickly follow with examples."  In the words of Chip and Dan Heath in their best-seller, Switch, you have to "script the moves". Put the dots so close together your followers can't help but connect them. So, first figure out how to clearly tell them what you want, and specifically what you want them to do.

Then show them. Sometimes a leader has to pick up a weapon and fight with the troops. This isn't the same as working in your business full time. This is working on your business by clearly demonstrating the behaviors you expect from your followers by showing them how to do what you want done. Then step away and make sure they can do it on their own without you.

So, when driving change through your organization, remember Harry's advice, "Tell and Show".

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Terry Weaver


CEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com


 

Newton Was Right -- Yet Again

 

Since commerce began, CEOs and owners of businesses have struggled to get their workforce to understand the financial side of the business -- why we need profit, why we can't distribute all of it, where the money goes, etc. In fact, some owners have trouble themselves when they get past the income statement. A P&L is pretty straightforward. In fact, I talked with a person whose business failed this past year, and he said, "I understood my P&L pretty well. What I didn't understand was my Balance Sheet -- I think that's what did me in". PS: He's right about that.  

I recently needed to explain the relationships between the P&L and the balance sheet to a group of senior and middle managers, and was looking for a metaphor that might "stick" better than just walking through the numbers. Here's what I came up with, and I'm hoping it might be useful to you in explaining the same thing some day.

There's an amazingly direct relationship between aviation and business. Flying an airplane is a whole lot like running a business, if you understand the correlations. What are some of those?

• Direction = Strategy -- We're making good time. Are we going to end up where we want to be?
   
• Airspeed = Revenue (sales) -- What keeps an airplane flying is air rushing over the wings, providing lift. In fact, lift is directly proportional to airspeed. There's also a critical airspeed at which the airplane stops flying -- the stall speed.
   
• Altitude = Available Cash -- The game-over point in flying? Premature contact with the ground, otherwise known as a crash. Altitude = 0. Same in business -- game-over occurs when cash = 0. You only get to run out of money once. You can come close to running out of money lots of times.
   
• Rate of Climb = Profit (or more accurately, cash flow) -- If you're losing altitude, recovery requires either of two things -- more airspeed (sales) or reduced weight in the airplane. Lift stays the same and you gain altitude. How do you reduce weight in the airplane? 

Throw the luggage overboard (jettison expenses). They have stores where you're going, and you can buy more clothes. 

If you're carrying mail, throw that overboard (eliminate non-essential activities). Those people will get over it -- they'll just send those letters again. 

Pick a non-essential passenger and throw him overboard. Not pleasant, but could mean the survival of the rest of the party. You can figure out that part of the metaphor.

There are a couple of other ways to solve an airspeed problem, such as more thrust. More energy applied to the business. Or more energy applied directly to Revenue generation. You could also reduce drag -- eliminate mistakes, outsource non-core activities, increase productivity or automate.
 
The most useful part of this metaphor, I believe, centers around the most critical tradeoff in flying. That's the tradeoff of altitude for airspeed. When airspeed slows, lift is reduced, rate of climb becomes negative, or if you try to maintain altitude, you'll stall. So, you point the nose down and let gravity help you maintain airspeed above stall speed. Business equivalent? You settle for less profit, or even a loss to maintain airspeed. This will work for awhile. How long? Until you run out of altitude (cash). When altitude = 0, game over.


The important lesson, well known by old pilots, is this:

If you're losing both airspeed and altitude, you've got to come up with ideas -- usually pretty quickly. The best recent aviation example of ideas overcoming loss of airspeed and altitude is the "Miracle on the Hudson" -- the story of Flight 1549.  In that story, Captain Sullenberger maintained critical airspeed, sacrificed altitude, and came up with an amazing number of ideas, just in time to become a hero.   


If you have metaphors or word pictures you've used to help your workforce understand the business, please click on "Comments" below and share them with others.


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Terry Weaver


CEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com

"You never want to run out of airspeed, altitude and ideas all at the same time"

Don't Worry About the Mule Going Blind -- Load the Wagon

Memorable, visual word pictures are stickier than ordinary words and phrases. You wouldn't generally mix mules, marketing and sales, but they have more in common than you think, when explaining the need for action vs. analysis.

Many companies make the mistake of ignoring marketing. Rather than spending some time analyzing the 4 P's (Product, Price, Promotion and Place (distribution)), they focus instead on selling. These are generally organizations led by sales-oriented owners or CEOs.

Just as many companies (or sales people) get paralyzed, obsessed with "getting the marketing right", prior to any meaningful selling effort. They meet, discuss, tune, hone, study, revise collateral, etc., in some cases letting the window of opportunity pass before someone picks up a phone or a briefcase and goes out calling on some customers.

Reminds me of a friend of mine, Joe Trotter, who was listening to a (then) young Sales Engineer recite the litany of things he needed to make sure of before asking a customer for an order. Joe looked at the guy and said, "George, I don't want you worrying about the mule going blind, I want you to load the wagon." A 20th-century rural southern variation, I think, on, "Damn the torpedoes, full speed ahead." (David Farragut, Battle of Mobile Bay, 1864).

There's a balance between analysis and action. If anything, according to Tom Peters, author of In Search of Excellence, excellent organizations have "a bias for action." If in doubt, do something and see what happens as a result. Actually, that's a reasonable part of a good marketing strategy. Run some "trial balloon" ideas out in the hands of sales people and see how they work. Listen to what comes back and adjust the P's accordingly.

This is particularly true in today's instant publishing world. The Internet marketing side of your message can, of course, be changed at the speed of light as you discover more about what works and what doesn't. You can build soft-copy web collateral as fast as you can type. And then you can measure its effectiveness with a variety of e-marketing tools.

What about printed collateral? If I were a commercial printer, I'd be shaking in my boots. Gone is the value of an 8- or 12-page 4-color, saddle-stitched brochure. There's usually one page of those that goes obsolete about 2 weeks after several thousand get delivered.

You'll be much better served with a well-designed pocket folder with a place for your business card, and pockets for "dealer's choice" inserts. Those can be single-sided, 2-sided or a 2-sided, 2 panel foldover (4 pages) for something that really requires a lot of real estate to tell the story. Much more durable than 8 or 12 pages of locked-in content.

Easily fully customizable, too. Besides the core product sheets and company overview, you can have a set of customizable "shells" (header, footer, etc.) -- templates where you can print custom content on the fly, in quantities of 2 or 2,000. Take customer references, for example. Print those on a shell that looks just like the rest of the packet, but the references include only customers similar to the prospect's business, or close by in geography. Want to try a new service offering? Design it, write the copy, print it on a shell, and go see a dozen or so customers to see how it plays.

There's a balance between study and action. Generally, though, action is what gets orders. The key to good marketing and good marketing materials is the ability to move the message with the market, and have a good feedback loop on how the message is working.

So, if in doubt, don't worry about perfecting the product or the message, go see some customers. Or if you have a hesitant sales person (who may actually be a marketer in the wrong job), try, as we say in the South, 'splaining it a different way, "I don't want you worrying about the mule going blind, I want you to load the wagon." Even if they don't get it instantly, they'll remember it. They probably already think you're nuts, anyway.

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Terry Weaver


CEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com

Turning Inside Out -- Dr. Gary Gabel at TEDxDetroit Conference

The thoughts that dominate your mind have gotten you where you are today….

They've also kept you where you are today.

This was one of the messages that Chief Executive Boards International member Gary Gabel shared with attendees at the TEDxDetroit Conference in October.

Click on the link: http://j.mp/2CuZlT to watch Gary's presentation. It is only 15 minutes long, but it packs a wallop in terms of message. Over 700 people have viewed this message since it was posted on YouTube three weeks ago, and hundreds of tweets have gone out with excerpts from his talk.

One of the interesting concepts Gary presents is the idea of "negathoughts," a term he coined that represents thoughts we have that are unproductive or disabling. These negathoughts can be about ourselves, our company or our customers. To the extent your employees hold negathoughts about your company or your customers, their actions are probably working against you.

I have talked with Gary, and he has provided CEBI a worksheet that you can copy and use with employees. There's also a Leader's Guide that will assist you in managing the discussion.

You might simply call a short staff meeting where you show the video of Gary's talk on YouTube, distribute the worksheets and discuss the types of negathoughts circulating around the company and how they impact the company. You can then explore how to come up with more productive alternatives.

Download the Leader Guide: www.chiefexecutiveboards.com/files/TurningInsideOutTrainingSession.doc
Download the Worksheet: http://www.chiefexecutiveboards.com/Files/IdentifyingYourNegathinkWorksheet1.doc

If you use this video and/or worksheet in your organization, please click "Comments" below and share your experience with others.

Note: Gary is also an author of a book with similar themes, Personal Takeover: Create a Professional Life Full of Optimism, Energy, and Impact

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Terry Weaver


CEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com

Compensation Design -- 8 Steps to Pay (Only) for the Behaviors You Want

A few critical pitfalls pervade most small businesses. Lousy and late financial information is one of them. One of the others is poorly-designed incentive compensation programs. You'd be amazed at the millions of American workers who get incentive (or "bonus") checks for doing absolutely nothing above the minimum, or things that would have otherwise happened by themselves. And in some cases, for doing things that actually hurt the business, rather than help.

A member of Chief Executive Boards International brought this issue up in a Local Board meeting. He saw that the people selling his services were "farming" existing customers and not finding new ones. They were so comfortable with what they were making, they just didn't see a need to do the harder work of finding new customers. Yet he knew his business would die over time if this behavior continued.

Another member asked, "So, why don't you make it less comfortable to do what you don't want, and more attractive to do what you do want?" Good idea. Well, the member with the problem came back to his next CEBI meeting and reported that he had this problem fixed.

The solution? A slight twist to the compensation program. He set a quota of monthly sales to new customers. Sales people who didn't make their quota had their commission on all sales (existing and new) reduced by 20%. Those who made their quota got paid for both existing and new sales, and those who exceeded their new customer quota by a given amount got a 20% kicker on all sales (existing and new).

As we say in the South, "Nobody ever 'splained it to me that way before." Amazingly, everyone is making their new-customer sales quota now. Amazing -- get the rewards and penalties aligned with the business goals, and everything starts working better.

Here are 8 steps to designing an effective incentive compensation system:

1. Decide what "big result" you want -- sales, project outcome, etc.
   
   
2. Find a measure of that outcome that's closely related to the job -- something that the employee can actually control, and can see a way to impact. This is important -- plans based on "overall company profitability" rarely work -- the employees can't find the "lever" they're supposed to pull to affect a giant measure like that. Break it down into a measure they can understand and see how they can make a difference in.
   
   
3. Pick a "par" value for what "good" looks like -- a reachable level of performance that you'd be satisfied with on average. This should be something the typical person can accomplish -- not superstar territory.
   
   
4. Above "par", determine what you can pay for higher performance -- it should favor the "house". For example, if your gross margin on an additional revenue dollar is 40%, you might be willing to pay a sales person 10% (the house keeps 3 times what it pays out).
   
   
5. Consider "modifiers" that boost the employee's calculated bonus, based on other behaviors you want to reward. For example, new business vs. existing customers. Modifiers should be meaningful -- typically 10% to 50% of the base calculation.
   
   
6. Consider "demerits" that reduce the employee's calculated bonus, based on behaviors you want to eradicate -- for example, if sales reports aren't turned in on time or order entry information is incomplete. Or whatever else just "bugs you" about employee behavior. Again, meaningful percentages.
   
   
7. After you've designed (or redesigned) the plan, then turn your hat around and ask, "If I were the employee, how would I "game" this system?" Then go back to steps 5 and 6 and put in safeguards to prevent those abuses.
   
   
8. Lather, rinse, repeat -- if they think of games you didn't, adjust the plan as needed. This "modifier" idea is really powerful -- you can play with the modifiers at least annually. The base objective may not change, but you have the prerogative to tweak the modifiers to suit yourself or the company's current (and changing) strategies.

Important Note: Step #4 above is critical -- make the plan sensitive enough by starting at "par" rather than zero on the performance metric. Plans that pay from the very first unit of measure cannot possibly be sensitive enough to get an employee's attention -- it's simply not worth the effort to go the extra mile. Here's an article that describes that important strategy in detail: http://www.chiefexecutiveblog.com/2008/02/1-incentive-compensation-plan-design.html

If you've had particular successes or failures in compensation plan design, please click "Comments" below and share them with others.

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Terry Weaver


CEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com

Don't Forget the "Why" When Initiating Change

Are you trying to redirect your company, with limited success? Perhaps you see a strategically critical change in direction that would set you apart from your competitors. Maybe it's a company culture that you've decided just can't prevail. Whatever it might be, it requires a change to the hearts and minds of a number (sometimes a lot) of people.

A Chief Executive Boards International member brought up such a challenge at a recent meeting. He said, "I'm trying to get my employees to see that we have to make a change in the way we do business, and they seem to be working harder to keep it from happening than they are to make it happen." Frustrating, to be sure, but common. And built into the human condition. People don't like change, and if they think they can resist it, they will.

One member offered an interesting perspective, asking, "How much time have you spent on helping them understand why this change is essential?" Good question. Many of us spend most of our time communicating what we want. We presume the why is obvious -- it usually is to us. Yet most employees don't have the same tune playing in their head as you do, so it's difficult for them to clap along. Their tune is on radio station WIIFM -- "What's In It for Me?" That's where the why comes in.

When you're communicating ideas that require your employees (or spouse, or kids, for that matter), to make a change, be sure you include the why along with the what, and that the why connects to their self-interest. Even if not fully convinced to go along, they'll be far less likely to be pushing back, and they'll see your wisdom over time.

If you've either been particularly successful or had a lot of trouble with change management, click "Comment" below and share your experiences with others.

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Terry Weaver


CEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com

The #1 Thing to Know About Addiction

Perhaps you have an alcoholic or drug user in your family or your company. Perhaps you've tried to help that person. If so, this article is for you.

I regularly marvel at the things I learn in meetings of Chief Executive Boards International. In a recent Board meeting, a member was looking for some help with a family situation. He had just learned from his daughter that his son-in-law had a serious drug problem, which she had discovered through some cash withdrawls from the household checking account.

He had already thought through many of the possible ramifications -- not only relative to his daughter and the survival of their relationship but also the son-in-law's employment, was he perhaps stealing on the job, and a host of other concerns. And he had formulated several ideas of how he might help with the situation. That's what he wanted to know -- what could or should he do to help this person?

One member brought up a somewhat relevant experience with a relative's addiction. Then the inevitable happened -- a second member said, "As an alcoholic who's been sober for 14 years, I can tell you there's absolutely nothing you can do to help him. In fact, almost anything you do is likely to hurt. Your only option is to get yourself, your wife and your daughter to an Al-Anon chapter."

He went on to teach the Board that the "wiring" of an addict's brain is different than that of the rest of us. We can't understand that person, his problem, or contribute at all to his recovery. It's a matter of something bad enough happening to him that he decides he has to find help for himself. Then he'll get cleaned up, and then he'll probably stumble again. And, hopefully, he'll come to realize that his only hope is total abstinence from drugs and alcohol.

The value of Al-Anon is the combined experience of millions of people spanning 5 decades learning to cope with the addiction of a loved one. People come to understand that they can become as addicted to the alcoholic or drug user as that person is to alcohol or drugs. And to understand how to find happiness for themselves whether the user quits or not.

If you have a friend, family member or loved one who is an alcoholic or drug user, consider the advice of a recovering alcoholic -- "get yourself to an Al-Anon meeting." This is similar to the advice they give you on the airplane, "Secure your own mask first before helping others."

If you have an alcoholic or drug user in your company there are a variety of resources available, including the U.S. Office of Personnel Management's Handbook for Supervisors: http://www.opm.gov/Employment_and_Benefits/WorkLife/OfficialDocuments/HandbooksGuides/Alcohol/index.asp A key sentence from that publication is, "The most effective way to get an alcoholic to deal with the problem is to make the alcoholic aware that his or her job is on the line and that he or she must get help and improve performance and conduct, or face serious consequences, including the possibility of losing his or her job." That's part of the "realization that something bad enough can happen that he'll decide to find help for himself."

If you've had an experience with alcoholism or drug abuse in your family or your company, please click "Comments" below and share it with others.

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Terry Weaver


CEO
Chief Executive Boards International
http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com