SWOT And Risk Management

by Elisa SpainNo Comments

 

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 for? (your brand)
  • If you surveyed customers, vendors and others who have contact with representatives of your company, what would they say you are known for?
Operational Risk
  • Simply put, does your product and service work?
  • Do you have quality standards, and do you measure them?
  • Is it easy to do business with you?
  • In short, do you have operational excellence and if you don’t, is doing something about it a priority?
Legal Risk
  • Are you keeping current on HR and other regulations that impact your business?
  • What actions are you taking in your hiring, promotion and other business practices that may inadvertently create legal risk?
Human Capital Risk
I am fond of the saying, “Take care of your employees and they will take care of everything else.”
  • Are you focused on retaining your key employees?
  • Do you deal effectively and swiftly with behaviors that are not consistent with your culture?
Business Model Risk
  • What is happening in the marketplace (competitors, regulators and customers, etc.) that may impact your business model?
  • Is your business model sustainable? How do you know this?
  • What have you done, or need to do, to diversify this risk?
Financial Risk
Financial risk is the primary (ultimate) risk to business owners and their investors, and it could take awhile for the impact of each of these risks to show in the numbers and…. it may not happen. The question is, “how much financial risk are you taking by not focusing on risk management”?

Elisa K. Spain

 

Vistage CEO Confidence Index: Optimism At A 2-Year High in Q3 2014

by Elisa SpainNo Comments

 

q3 (3)The quarterly Vistage Confidence Index is now available.

Confidence among CEOs reached its highest level in two years, finally achieving a lift-off from its favorable holding pattern in the last three quarters. The Vistage CEO Confidence Index was 103.4 in the 3rd quarter 2014 survey, up from 101.0 in the 2nd quarter and 97.8 in last year’s 3rd quarter, and the highest level since 105.1 was recorded in the 1st quarter of 2012. There is no greater indication of confidence in future prospects than a firm’s willingness to increase their fixed investment spending and to expand their workforce. On both counts, firms reported the most expansive plans since 2006.

Below are some key highlights from the Q3 2014 Vistage CEO Confidence Index (all members surveyed):

  • 75% of CEOs anticipated revenue gains over the next 12 months. Only 4% anticipated declines in their revenues, the lowest ever recorded.
  • 52% of CEOs reported an improving economy, up from 50% one quarter ago and 46% one year ago.
  • 59% of CEOs anticipated increased profits in the next year, just above last quarter’s 56% and above last year’s 54%.
  • 58% of CEOs planned to increased their workforce, while just 4% planned reductions.

Elisa K. Spain

Leadership Quote: Finding Your Peer Group

by Elisa SpainNo Comments

This month’s leadership quote:

“Your peer group are people with similar dreams, goals and worldviews. They are people who will push you in exchange for being pushed, who will raise the bar and tell you the truth.  They’re not in your business, but they’re in your shoes.  Finding a peer group and working with them, intentionally and on a regular schedule, might be the single biggest boost your career can experience.”

-Seth Godin

 Thank you Seth for reminding us why 18,000 CEO’s and executives belong to Vistage and why these same Vistage member companies are better run and grow their revenues, on average, at more than twice the percentage growth rate after joining.

Elisa K. Spain

The Other Side Of Success

by Elisa SpainNo Comments

Opt 3 Sept 21

When does confidence become hubris?

So much is written about the importance of confidence and yet, there is a dark ugly side too. We see it every day in the press – rock stars, sports stars, politicians and others, who have so much confidence that they begin to make choices out of hubris.

Well, we say, they are stars, this doesn’t happen amongst “regular leaders”. And, while we may want this to be true, my experience is, it happens in every arena where leaders are successful.

We all know the leader that made it big and acts as though s/he has the “Midas touch”. After the one success they believe everything they try, everything they touch will be the same. Or, they feel the need to tell everyone about their accomplishments, and they don’t feel the need to listen. After all, they already know it all; they accomplished what others have not.

We also know the leader who despite success after success is humble. Who, when asked how they accomplished what they did, points to the people s/he has learned from, rather than their own brilliance. The leader who is on a lifetime journey of learning, who believes no matter what their accomplishments, they can always accomplish more by listening to others.

Which of these describes you?

Which do you want to be?

If your choice is the humble leader, what are you doing to stay curious and continue to learn?

What Happens When Steady-Growth Companies Stomp On The Gas Pedal?

by Elisa SpainNo Comments

Opt 3 Sept 14

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 tenured employees in operations, and other support areas, are particularly impacted by the refocus on growth.

 

It is convenient for leaders to assume the “old timers” are just fine and will adapt, while all else goes to growth. Not true. We all want to feel valued and important.

 

So the question for the leadership of any established company on a fast growth path is, “How do you engage, (i.e. win the hearts, not just signatures on legal documents) of high performers and key clients?”

 

And the question for a board of directors is, “What responsibility do you have to steward the growth strategy in a manner that does not result in unintended consequences to the culture?”

What Makes A Successful Business?

by Elisa Spain1 Comment

Opt 6 Sept 7

What makes a successful business? Is it vision; is it strategy, or ??

Geoff Smart and Randy Street, authors of the book Who, make a compelling case for the value of management talent as the #1 determinant of business success. In their interviews of 400 CEOs and business leaders, they found that 52% rated talent as #1, followed by 20% for execution, 17% for strategy and the good news, only 11% for external factors.

Additionally, in the research they did with the University of Chicago in 2007, they found that the CEOs who make money for investors are those that have both high EQ (Lambs) and work hard, are persistent, set high standards and hold people accountable (Cheetahs). And surprisingly to some and somewhat controversially, those that accentuate their Cheetah skills were successful 100% of the time.

So, does this mean that we, as leaders, should abandon vision and strategy altogether, hire great people, set high standards, hold them accountable and we are done?

Not so simple in my experience. What I observe is great people want to work for great companies. And, great companies not only have high standards and hold people accountable, i.e. operational excellence, they also can answer Simon Sinek’s, “Why?”.

So, yes, hire great people, and give them and your customers a reason to want to work for you and do business with you.

 

Elisa K. Spain

 

 

Leadership Quote: Success Or Significance?

by Elisa Spain2 Comments

Opt 4 Aug 31

This month’s leadership quote:

“Success is when you add value to yourself.  Significance is when you add value to others”

-John Maxwell

I have heard it said, that the time to “give back” is in the later phase of our lives. This quote is a reminder that giving back is really a lifelong habit; a habit of giving. As I think about people who have made an impact on me and on our society, they are remembered because of the value they added. It’s one thing to build a successful enterprise or career and another to achieve significance.

Which do you want?

Elisa K. Spain

The Unrecognized Value of Operational Excellence

by Elisa SpainNo Comments

Opt 9 Aug 24

Strategy and sales are the key to success, right? Well, yes, and no. Yes, they are important and without execution and operational excellence, they don’t matter. As Thomas Edison said so well, vision w/o execution is hallucination. 

So how do we get there? The DIME Method (Design, Implement, Monitor & Evaluate)  is a start. And, it’s the M & the E that get you to that operational excellence and where governance comes in.

It starts with figuring out what to monitor and keeping it simple, and then circling back and evaluating progress and measurements, making Design adjustments, Implementing those changes and starting the Monitor and Evaluate process again.

The successful CEOs I work with that have achieved operational excellence consistently follow these three key actions:

  • They identify the 3-5 key measures of success and monitor those daily, these could be sales calls, throughput, rework; what to watch depends on their business
  • They act when the the key measures indicate a variance, and they don’t wait and don’t accept excuses
  • They have a culture of co-accountability; their team holds each other accountable for the results they agree to

And,  they design compensation plans that are consistent with the results they want, e.g. if net income is the goal, the leadership team is ‘bonused’ (deferred or current) on results, and they work together to get to those results.

Elisa K. Spain

Caution… You are Entering Your Comfort Zone

by Elisa SpainNo Comments

Comfort Zone

The difference between a good leader and a great leader is the ability to improvise and gently push people out of their comfort zone, so says Vistage Speaker Michael Allosso.

In this TED talk, Charlie Todd helps us see the human connection that results from a shared experience — in this case, an absurd shared experience, one that takes us out of our comfort zone.

Vistage members also have shared experiences; in our case, these happen every month. As the chair and leadership coach, I regularly see the human connection that results.

I wonder about the following:

  • Is it incumbent upon as leaders to search for opportunities to create shared experiences in our companies?
  • What great things can we accomplish in our companies by pushing people out of their comfort zone and introducing more intentional and improvised shared experiences?
  • And by making this push, are we fulfilling a key component of our governance responsibility?

 

Elisa K. Spain

 

 

 

 

 

 

 

Are You Prepared To Govern In A Changing World?

by Elisa SpainNo Comments

Opt 1 Aug 10

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 the few consistently high performing companies, is they are equally paranoid about their external environment, not just what their competitors are doing but also regulatory changes, environmental changes, technology changes, etc. They consider all factors that present both opportunities and threats to their current strategies.

It is these companies that focus externally that truly innovate and maintain consistent results.  And effective governance requires this external focus. Without it, sustainability is a question. With this in mind, as you begin to consider your plans for 2015, I ask you to consider the following questions:

  • When was the last time I visited a customer just to understand more about their business? Is it time?
  • What changes are happening in my industry – new technology, consolidation, regulation, etc.?
  • What is happening in other industries, perhaps ones more/less mature than mine, that I can learn from?
  • How are the demographics of my customer base changing?
  • How might all of these changes present both opportunities and threats as we plan for the next 3-5 years?

Elisa K. Spain