Wait I Am An Entrepreneur, Not A CEO!

In my practice as a Vistage chair, I often hear entrepreneurs say, "I don't want to lose the culture as I grow this company" or "We are like a family; I want to keep this feeling as we grow". And yet as the company grows, the culture inevitably changes and the owner no longer knows the name and the family of every employee. In the early days, everyone is equal and it is all about getting the job done, getting the orders out, meeting the customer needs. Typically the owner is the chief sales officer and innovator. As a company adds more people, “management” becomes necessary and terms like "building a leadership team" come into play. Suddenly the owner is thrust into the role of CEO. Some enjoy the change, and most long for the simpler days when everyone was pulling together without any hierarchy. And, while longing for the “old days” s/he is excited about the growth and excited about having...
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Are You Willing To Wait For Transformation?

Change is hard; it taxes the soul of both leaders and followers. And, for many of us leading change, I wonder if this frustration sometimes leads to giving up or giving in too soon? Two years ago I began a transformation process with one of the peer groups I lead. The change was disruptive. Some folks stayed, some folks left and we began the hard work as described by Dr. Bruce Tuckman in his elegant model of team development and group behavior, i.e. forming, storming, norming and now performing. At the beginning, the task seemed daunting, and I often wondered if we would be adjourning, rather than transforming. And then... the process took on its own life. We stormed through to norming and today we are congratulating ourselves on how well we are performing. Looking back, the time flew. Looking back, it wasn't all that hard. Once I articulated the vision, communicated it often and asked each member to own it, the change began to happen....
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SWOT And Risk Management

  Most every business at one time or another, most often annually, spends a bit of time on a SWOT analysis (Strengths, Weaknesses, Opportunities and Threats). This is simply good governance. And, as I discussed in a recent post, Are You Prepared to Govern in a Changing World?, successful companies focus externally on the O and the T, because they know internal actions must be based on these. An often missed corollary to SWOT, is the broad topic of Risk Management. Business owners sometimes believe that by purchasing insurance they have addressed this topic. While insurance is available to mitigate some risks, there are many business risks for which insurance is neither available nor financially practical. Instead, it is management practices that are the key ingredient to managing many, if not most, risks. How are you, as a leader, managing each of these? Reputation Risk Does the behavior of your employees reflect your company values? Have you articulated these values and do your own actions consistently reflect them? What do you want to be known...
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What Happens When Steady-Growth Companies Stomp On The Gas Pedal?

When steady-growth companies decide to stomp on the gas pedal, especially with new leaders, it is convenient to assume the “old timers” are just fine and will take care of themselves while all else goes to growth. Be wary of unintended consequences... When a company is young - it is all about growth - and everyone is in the same place. It is all about hunting (in the hunter/farmer view of sales). When a company is in steady growth, there is a mix of hunters & farmers, with an emphasis on farmers.   Then when there is a shift to fast growth, frequently with a new leader and/or new ownership with a new approach to governance, the focus shifts back to hunting, as with a start-up.   Except, it isn't a start-up. There still are these established relationships between account managers and their clients. The needs of the tenured account managers and their tenured clients are different from the hunters bringing on new clients. Similarly, long...
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Are You Prepared To Govern In A Changing World?

Arguably the most important ingredient is good governance is having a vision and a strategic plan. I often notice that these plans are based primarily on what is within our control. In short, these plans often consider only internal factors, the SW of the traditional SWOT analysis, while ignoring the OT portion or external factors. And, I find these same companies are excellent at identifying their weakness and occasionally good at identifying their strengths and true competitive advantages. I have had the privilege to work with several successful companies and I find, despite their success, they enjoy telling me everything they could be doing better. It is only when I hear them talking with customers, or preparing for these customer conversations that I hear their strengths. In the category of "only the paranoid survive" (Andrew Grove), perhaps this focus on what we can do better leads to stellar results. I certainly can't argue that in these companies, it certainly has. And.. what I also notice, in...
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If You Don't Watch the Numbers, You Don't Have Governance

Publicly held  U.S. company governance dictates the requirements for financial reporting and many of these companies give "guidance" as frequently as quarterly. While this approach is sometime criticized as being short-term focused, the important upside is all stakeholders know, at any given time, how the company is performing and can respond accordingly. Privately held companies, on the other hand, have a choice. There aren't any governance mandates. They can choose to focus on the numbers, or not They can choose to report performance to all stakeholders, or not, and They can choose to forecast and adjust accordingly or not Owners sometimes question the need for forecasts and state that sales focus is primary.  After all they say, isn't it all about growth, i.e. how much we sell this year compared to last year? While most awards for privately held companies focus on top line (Inc. 500/5000, Crain's Fast Fifty, etc.),  in my experience the businesses that follow the following five tenets, are the ones that achieve sustainable...
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In Good Governance, When Does Culture Come Ahead Of Revenue?

In Good Governance, When Does Culture Come Ahead Of Revenue?

A few weeks ago in my blog about Leading Isn't Easy, I talked about the hard choices we sometimes must make as leaders. Especially those choices where neither outcome is a good one. As we continue this series on Governance Design, I am reminded of my 2014 theme for my Vistage groups, "All That Matters Is Culture". For this reason, once we define our business objective, for me the most important question is, "What are the cultural implications of our goals?". If we are intentional about our culture, and ruthless about enforcing it, everything else will follow. And it isn't easy. Sometimes we have high performing employees who don't fit the culture. So hard, to say goodbye to someone who is getting the job done, sometimes, doing it better than anyone else, brings in the big deals but just doesn't fit. She may be a bully, or he may cut corners or spread negative energy. When it is an employee, we can often rationalize to ourselves that the performance...
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Is Governance Leadership?

Is Governance Leadership?

This week begins a new series on the topic of governance in growing businesses. Governance is not a term typically used by business owners and business leaders. Rather, we hear this term most often in the context of corporate boards, both public and private. Yet, Wikipedia defines corporate governance as, "the system of structures, rights, duties, and obligations by which corporations are directed and controlled. Governance provides the structure through which corporations set and pursue their objectives, while reflecting the context of the social, regulatory and market environment. Governance is a mechanism for monitoring the actions, policies and decisions of corporations in alignment with the interests among the stakeholders." In short, governance is the DIME method that I have talked about previously. Design, Implement, Monitor and Evaluate. Beginning with "D - Design".  In my experience, businesses initially develop without much regard to design. And as Vistage speaker Jim Alampi reminds us, while bootstrapping works up to a point, as businesses reach critical milestones of growth, what...
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