Why Do We Make Mistakes?

by Elisa Spain Comment Closed

To close out 2018, I’ve asked Dr. Andrea Simon, Vistage Speaker and corporate anthropologist, to write the following guest blog, “Why Do We Make Mistakes?”

This blog seemed a fitting conclusion to my recent series on habits.

We’ve all been told since childhood to learn from our mistakes. In this blog, Dr. Simon offers us her perspective on the science of making mistakes. We learn why making mistakes makes us smarter and our brains bigger. And why, despite our efforts to learn from them, we continue to make them throughout our lives.

See you in the new year.

Elisa K Spain

You can read more of my blogs and leadership quotes here.

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Mistakes are a natural part of life – there is no way around that. There is no person, alive or dead, who hasn’t made any mistakes throughout their life. The most significant difference, however, is between those who can learn from their mistakes and those who can’t. We may try to even go as far as saying that the secret to success is knowing how to handle errors and failure by treating them as the foundation for future achievements. And the sooner people learn to do that, the better.

But before we can go into more detail about that, let’s take a look at why we make mistakes, in the first place. One of the primary reasons is that life is unpredictable, thus the phrase trial and error. None of us were handed a life guidebook on how to run our lives, and we need to make our way as we go along.

Hopefully, after a series of several mistakes, we begin to learn to stop repeating them. But by this logic, however, we should stop making more errors by the time we reach adulthood – which is not the case. The reason – life is unpredictable and filled with unknown variables. It is even more uncertain in the 21st century. Today’s world is nothing if not fast-paced and the many technological advancements made over the past two decades have seen to that.

It is for this reason why traditional business models are not as viable as they once were. Ironically enough, it would be more of a mistake in the conventional sense of the word, to keep doing things the same instead of employing a bit of trial and error as a means of finding better ways of doing things.

What Can Mistakes Teach Us?

At their core, mistakes teach us things. It is why mistakes are sometimes called life’s lessons. In other words, mistakes teach us how not to do things, and it is up to each of us to realize that. If we look at scientific research, the failure to prove something through an experiment is still regarded as a success since it shows how two things are not connected.

When scientific research can prove a connection, it provides us with some genuinely fascinating insight. Based on a study conducted by, Dr. Michael Kilgard and his team from the University of Texas at Dallas, it was revealed that our brain goes through some significant changes every time we err.

During the learning process, the brain starts compiling the information, and it becomes enlarged. Over time, it begins returning to its original size but keeps the new neural pathways that the mistake generated. In other words, making mistakes makes us smarter by creating more efficient synapses and fundamentally altered neurons.

Encouraging the Right Mistakes in the Workplace

Though it may seem counterintuitive at first, a business will only stand to gain if it encourages mistakes in the workplace. Do please keep in mind that we are not talking about errors that are a result of inattention to detail or sloppiness. We are, of course, talking about the kind of mistakes that are a result of calculated risks.

By embracing these mistakes, employees will gain the necessary confidence to try out new things and not feel bad when they don’t work out as planned. It’s important to remember that many marketers today are employing this strategy. They are continually trying out new ideas (trial and error), figuring out what works and what doesn’t, as a means of driving innovation and remain competitive in the market.

For better or worse, today’s technological revolution demands more mistakes to occur, otherwise risk becoming obsolete. Employ the same mentality on a business management level, not only marketing. Innovation has a sizable chance of happening, and employees are also happier as a consequence.

Nevertheless, making the transition from a company culture where mistakes were traditionally penalized to one that encourages them, does not happen overnight. So, what can be done to facilitate this change?

Leading by Example

In most cases, it’s not enough to send a company-wide memo telling employees that it’s okay to take more risks and that failure is accepted. Old habits die hard, after all, and your staff will be skeptical at first. To counteract this phenomenon, it’s advised that you lead by example.

It’s a generally accepted fact that employees will take most of their cues from their leaders, meaning that management needs to showcase the importance of trying out new solutions. This top-down shift in mentality will not only act as an example, but it will also show that it’s okay for others to do the same.

Encouraging Feedback and Transparency

Feedback and transparency will also play a crucial role in this transition. Your employees should feel comfortable to present their ideas and should not be ashamed of the mistakes that they may encounter along the way. You will quickly come to realize that when everyone feels comfortable to share their ideas and failures, efficiency also increases.

When people are not constrained by fear of shame, they will be more open with each other, which, in turn, leads to closer relationships and better overall communication. Likewise, the free exchange of ideas and mishaps also increases the chance of innovation.

Fast Failure

The concept of fast failure isn’t something new, but it is a product of the 21st century. The idea, in and of itself, is more of a state of mind than anything else. It is based on the idea that mistakes are natural and accepted. So, when they do happen, mistakes shouldn’t be taken to heart. When something doesn’t work as expected, you quickly learn from them and move on to the next idea.

The more efficient use of fast failure is by applying it on a micro level. So, instead of trying an entirely new idea, it’s better to break it up into smaller parts and brainstorm at every stage of the process. It increases the likelihood of success of the original idea while still making mistakes along the way.

Takeaway

The point is that mistakes have a lot to teach us as long as we are willing. The biggest hurdle, however, is to change the heavily entrenched idea that errors are a terrible thing and people should be reprimanded for them.

 

Making the Visible, Invisible

by Elisa Spain Comment Closed

I love dining out. I love live theatre and for me, restaurants are theaters. Like theatre, restaurants create a show for us to experience, including director, actors, staging and lighting.

A couple of weeks ago I had dinner at a local restaurant that is part of a restaurant group. It was an experience in innovation and leadership that I feel compelled to share.

I have eaten at the original restaurant a couple of times and I described the experience as “dinner & a show”.  It’s a fine dining restaurant so one expects special, and they delivered. The “show” in this case is visible, it’s in your face. The goal is to show the patron how creative they are. It is mostly about the way the food is prepared, e.g. molecular gastronomy, liquids that taste like solids, or foam that tastes like celery or the like, but it also is about the presentation (packaging) and the delivery.

This newer restaurant in the group is casual. The menu is simple, the atmosphere is lively and casual. On the surface, no different than many other restaurants. And, yet, from the moment we walked in, I sensed a difference.

What I first noticed was the atmosphere. There was loud music playing, but the room didn’t feel loud. Conversation was at a normal level, we could easily hear each other. The lighting was perfect, bright enough to read the menu, dim enough to be soft and calm. We were seated at the bar which wraps around the kitchen. Again, subtle but significant differences. The chairs had wide soft seats, in short, comfortable. When was the last time you sat on a comfortable bar stool?

Next, was the service. The server was friendly and engaging, dressed in jeans and a cowboy shirt. And yet, much like the atmosphere, it was clear, he was a professional, except for his attire, he would have easily fit at their fine dining restaurant.

Last, of course was the food. And there was the same subtle, yet profound, difference here. The menu was simple, I even questioned my husband for ordering salmon, which we make all the time. I should have known better. Like everything else, the food was anything but ordinary. And, the best part was we got to watch them make it over a roaring fire right there in front of our eyes. There were 5 cooks preparing all the plates, one was the leader, and it took us quite a while to figure out who he was, again, subtle but different.

In short, they delivered an incredible customer experience. And, unlike their fine dining partner, if I hadn’t been looking closely, except for the cooking over the roaring fire, the “show” was invisible. I wouldn’t have even noticed the parts, yet, I would have felt the wonder of the experience.

None of this was accidental, the leadership of this organization knows the business they are in and they ensure they have the talent, culture and process to consistently deliver. They start with the same ingredients as their competition, then they add their secret sauce to the food, to the atmosphere and the service, thereby creating a unique experience. So unique, that it caused someone, me, to blog about it two weeks later.

What this restaurant group teaches us is that customer experience can be delivered visibly or invisibly. It’s up to us to figure out what works in what situation and then, in the words of one of my Vistage members, Gallant Building Solutions, “deliver a WOW experience for every client, every time”.

  • Does your culture allow team members to operate both independently and as a team?
  • How is your product differentiated, even if it is a commodity like salmon?
  • What is your equivalent of atmosphere? Can your customers converse in a normal tone or do they need to shout?
  • Do your customers perceive your  “servers” as true professionals?

Elisa K Spain

You can read more of my blogs and leadership quotes here.

Another Form of Diversification, Expectation Diversity

by Elisa Spain Comment Closed

Last week I wrote about ego diversification. And it reminded me of another sort of diversification, that of diversity of expectations. Whether in a personal situation, or a business situation, expecting one person to fulfill all our needs is usually a recipe for disappointment.

Most of us long ago realized that if we spend 100% of our time with our life partner, the probability that they, or we, would get to have, do or be everything we want, is pretty close to zero.

And yet in business, we often get caught up in looking for that ideal person. The one who has the style we want, the people skills we want and can perform all the functions we want. This is especially true of entrepreneur leaders because they themselves have such a diverse set of talents and strengths.

Most entrepreneurs have a wide range of skills and abilities, and can do a wide range of things themselves. This diversity is what enabled them to start a business. And because of this, they believe that most others have this too. And like with any other genius, what comes easy to us, we tend to believe is easy for others. And yet in my experience, this genius is rare and unique to entrepreneurs. Most of us tend to have strengths in a few areas, and if allowed to focus primarily in these areas, we will excel.

Recently I was talking with one of my entrepreneur clients about this very subject. When she first started her business, she had a partner. They worked quite well together, each contributing their expertise to the business and most importantly they collaborated well. The partner left the business several years ago and since then, my client has been seeking someone to replace her.

During the time we have been working together, she has been focused on growing her team so that she can focus on the business, rather than just working in the business. During this conversation she told me “I am still looking for that person who I can trust the way I did my partner”. As we dug into this desire, we began to realize that there were 3 or 4 key functions her partner had fulfilled and it worked. The thing was, the skill set required for each was quite different and rare to find in one person.

With that in mind, she decided to identify the functions that are truly essential and see how they could be split up. She began by identifying the responsibilities that can be handled by current staff, what can be outsourced and what she needs to hire. Importantly, she is no longer looking for one person to do it all.

Once the roles and responsibilities were clearly defined, she realized, for example, that her collaboration need can be filled by her external advisors. Next, she identified a person on her team that can take on additional responsibilities, and she has begun to narrow and more clearly define the expectations of a key outside hire.

  • Who do you have on your team with whom you are frustrated because they can’t do it all?
  • Are they strong at some things that matter to your business?
  • What would be the impact on your business if you allowed them to focus on those things and moved the rest to someone else?

Elisa K Spain

You can read more of my blogs and leadership quotes here.

 

 

The Dark Side of Habit

by Elisa Spain Comment Closed

Last month, I wrote about the power of habit.  I recently had two experiences with people I know well that reminded me there is also a dark side to habit.

The closer the relationship, the more we think we “know” a person, the more we form habits or patterns in those relationships. If they do X, we respond with Y. If they say Z, we respond with A and so on.

Sometimes it isn’t even the person in front of us that triggers habitual behavior, but someone else, a former boss perhaps with whom we had a great relationship; and we pattern our behavior with our new boss based on that experience and wonder why it isn’t going as well.

Habits are shortcuts. As I shared last month, activity habits can serve us by making us both more efficient and more effective in our daily lives. Response habits on the other hand, can inadvertently damage our relationships.

A couple of weeks ago, I had two experiences that reminded me of some of my response habits and how often I use them.

The first was with a client who was in the midst of a big decision. He is the sort of person who likes to “think out loud”.  I know this about him, and what I forgot was when he says “I want to run this by you”, what that means, I want to think out loud.

Instead, in my zeal to be helpful, I forgot what I knew. And, started asking questions and offering my perspective. After all, what he said was “I want to run this by you”. When he reminded me for the third time that “he had already considered that”, I finally got it and went back to listening. And, responded based on who is in front of me. What a wonderful reminder, yet again, to pause.

The second experience was with my husband. We both love to cook and over the course of nearly 27 years, we have slipped into a pattern. He is the chef, I am the sous chef. This works. And, every now and then, I am the chef and he is the sous chef. This doesn’t work so well. The reason is our response patterns are based on the first scenario, i.e. he leads, I follow. Here’s what usually happens. I start prepping, he comes over to look at what I am doing, I feel “supervised”, I don’t like being “supervised”, so I get huffy and what started as a fun couples activity, ends up, not so fun.

After the situation with my friend, and the blow up about cooking the next day, I tried something different the next time we cooked. When my husband asked me to do something I thought was obvious, and I was already planning to, instead of saying “do you really think I wasn’t going to do that?”, I simply said “okay”. The result, we had fun cooking together. I tried it again the next time we cooked, this time working together on the same dish which historically has been a danger zone. It worked again, we were laughing and having fun. Not easy to break those response habits, and the positive reinforcement certainly is reminding me to keep trying.

Perhaps next time a friend or a family member, or an employee, starts to behave in an expected manner, what if instead of responding with habit, we looked with fresh eyes, and asked questions, just as we would do with someone we don’t know at all and for whom we have no expectations?

On November 14, my Vistage CEO group is hosting one of our semi-annual guest days. If you or someone you know would like to learn more about Vistage, this is a low-key way to meet our members and hear a great speaker, Andrea Simon, who asks “Who will be your customers in three years?” Please contact me directly for an invite: Elisa K Spain.

For more about the members of the group click here

For more about the speaker on November 14, click here

You can read more of my blogs and leadership quotes here.

Taxes, trade and tariffs translate to trouble

by Elisa Spain Comment Closed

One of the top five concerns noted in Vistage’s recent report Decision Factors H2 2018, is taxes, trade and tariffs.

The new tax law has created as much uncertainty as opportunity for SMBs. Certain changes — such as the revised Section 179 deduction and 20% pass-through income deduction — are expected to benefit many companies. However, other revisions to the tax law — such as limitations to net business loss deductions — may create new costs. At the same time, new trade policies and tariffs (e.g., steel and aluminum tariffs) are driving up material costs and heightening financial risks for businesses.

Joe Gavin, Vistage chief research officer, offers these suggestions:

• Hire a CPA you can trust – Your accountant should be willing to sit down with you and explain how they’re planning to calculate your income as a result of the tax law. For example, a great CPA will show you what your taxable income looks like under the old rules compared to the new rules and walk you through multiple options for filing. Your accountant should also ensure that your business is taking full advantage of the new tax rules while mitigating new risks.

• Take a critical eye to your supply chain – Mark Emmer, business strategist, sees the new tariffs as a “wake-up call” for many businesses. “Companies need to carefully consider what concentration risk they have in their supply chain,” says Emmer, “and perhaps think about alternatives or contingencies with suppliers in other regions.”

• Educate yourself – As a starting point, download  Top 8 things small and midsize businesses need to know about tax reform.

• Consider trade risks when making decisions – If you’re in manufacturing or do anything that involves any international partners, you have to understand what the risks are and factor them into your decisions — knowing that this could swing 100 points in either direction. It is a factor to consider for the first time in decades.

Are You a CEO or President of a Privately Held Business? If you are also a lifetime learner, and want to learn more about Vistage, click here.

You can read more of my blogs and leadership quotes here.

 

Cyberattacks are the Silent Killers of SMBs

by Elisa Spain Comment Closed

One of the top five concerns noted in Vistage’s recent report Decision Factors H2 2018, is cybersecurity.

If you have employees, customers or financial data, you are a target for a cyberattack. Cyber criminals are aggressively targeting small and midsize businesses (SMBs), and cyberattacks are increasing in complexity, frequency and severity. For many SMBs, those attacks are leading to loss of data, cash, customer records, employee information, leadership credibility, and employee and customer trust.

Yet many SMBs still haven’t taken the proper precautions to protect themselves.

Cybersecurity is a silent killer, it can shut you down like nothing else, says Joe Gavin, Vistage chief research officer. Here are his suggested actions to protect your business:

  • Assess the strength of your cybersecurity – To gauge the strength of your cybersecurity, use a reputable tool — such as the Cybersecurity Framework offered by the National Institute of Standards and Technology.
  • Create a layered defense – A comprehensive cybersecurity plan has three core components: people, process and technology.
  • Call on a cybersecurity expert – Just as you may have an outside legal counsel or CPA, consider engaging a cybersecurity professional for additional support.

With this last recommendation in mind, I called on cybersecurity expert, Michael Davis, CTO of Countertack, to share his thoughts on this important subject. The following remarks are his.

You are the target. SMBs lack the defenses of larger organizations as the Decision Factor’s H2 2018 report identified. SMBs have smaller budgets, less security talent, and usually a lack of consistent risk management which makes for an easy and unsuspecting target.

Imagine walking in to the office Friday morning and your controller running up to you saying that all the money in the payroll account just vanished and the bank doesn’t know where it went. This attack, named an account takeover, is a type of fraud perpetrated by cybercriminals using multiple pieces of malware and human social engineering to steal money. Attackers infect your computers, watch and monitor your business processes and access your bank accounts, and then pounce at the proper opportunity to get the most money in one “smash and grab” job. In many cases, your business is let holding the bag and not getting any money returned from the bank, insurance, or 3rd parties. Very rarely is any money ever recovered.

As Joe Gavin, Vistage chief research officer mentions, layered defenses are a must to protect your business, but what layers do you pick? How do you know choosing solution X vs Y is really going to help you? There are so many variables to protecting yourself from a cyber-attack and the attacks are constantly adapting, it can be difficult even for seasoned IT security experts to pick the right options. And while starting with a risk assessment from NIST or CSF is a great option, you may not have the budget or ability to perform the process without an external IT security expert.

So, what can you do now? Today? These are my straightforward must dos for protecting your business:

Use the cloud as much as you can.

An IT security expert saying to use the cloud? I thought the cloud was “insecure”? No, majority of cloud providers, especially Tier 1 and Tier 2 providers like Microsoft, Rackspace, and Amazon are doing security better than your business could ever do it even if you hired 10 people today. Leverage their investments in IT security to protect yourself.

Having data protected in Office 365 from Microsoft for example, provides lower risk while giving your business a bunch of security capabilities you would have to manually build and manage without your IT team having to do much more than “set it up”. Normally, the additional security is “baked in” to the monthly costs you are already paying to use the provider’s services, meaning there are no additional costs except the one-time setup and configuration time to receive the security value I am referring to. Little to no ongoing maintenance or monitoring is required to get the security benefits from cloud providers.

Use Multi-Factor Authentication for everything

Attackers don’t want your laptops or servers, they want your data. Your files. Your Email. Access to these is all controlled by your identity – the username and password you haven’t changed in probably years.

Multi-factor authentication is now supported by the majority of applications and cloud providers. Multi-factor authentication provides a second mechanism to validate that you are who you say you are. “Google has not had any of its 85,000+ employees successfully phished on their work-related accounts since early 2017, when it began requiring all employees to use physical Security Keys in place of passwords and one-time codes” according to Brian Krebs, from Krebs on Security, one of the most well-known security journalists. (See https://krebsonsecurity.com/2018/07/google-security-keys-neutralized-employee-phishing/)

Google’s technology to replace passwords is obtainable by any and all SMBs, for a one-time payment of less than $50 per person. You can use SMS codes, physical keys, or even simple apps on your phone to provide multiple levels of authentication that can thwart phishing attacks, malware, and ultimately attackers getting access to your data.

Multi-Factor Authentication technology is cheap, easy to use, and the most effective defense against attackers we have today. Use it everywhere you can but especially with your email and cloud providers.

Start doing Security Awareness Training

Depending on what study or survey you want to pick, phishing is either the source of 95% of all SMB attacks or at least the #1 mechanism attackers use to get malware on your computers. Security awareness training is most important for SMBs compared to larger enterprises because you simply have less layers of defense when it comes to stopping an attacker. The first layer of any defense within an organization, large or small, are your people.

More training you say? But Mike, my people hate all the compliance training they have to do now so this won’t work. Long gone are the days of “compliance training” where employees were subjected to hours of boring PowerPoints telling them to “not click bad emails”. While that approach was somewhat effective, the new approaches to Security Awareness training are exciting, amazingly impactful, and actually pretty fun! Multiple vendors now offer “sitcoms” employees can watch that also train them on proper behavior and techniques to avoid getting infected. Two of my favorites are Mulberry from The Security Awareness Company and Restricted Intelligence. See their trailers at https://vimeo.com/6580874 and https://www.youtube.com/watch?v=8_aWktl_Oy8)

Costs are low, and include a full year of content and management of who takes what training etc. All delivered online with no setup costs.

Don’t “lie” on your Cyber Security Insurance application

Ah, insurance, it is being perceived by many SMBs as the solution to the cybersecurity problem. Why invest in security technologies, people, and processes when I can pay a fee per year and be covered if we are hacked? Sounds great but the truth is, the insurance companies are not paying. Put one little exaggerated truth on the form, and that is grounds for non-payment. Insurance companies have teams of people making you prove all the processes and controls you said you had when you filled out the form were working when the hack occurred. If they didn’t work, even for just 1 day, no coverage.

Should you not have insurance than? No.  It is a great way to reduce risk if, and only if, you are 100% honest with the survey’s and applications. Your premiums will not be cheap because you are investing in reducing your risk. You might not even get approved until you do the minimum required and you better make sure that whatever you agree to do on a consistent basis you actually are doing – otherwise you will be left wit the entire burden of the costs to cleanup the hack, the stolen money, and in some cases reputational damage in the eyes of your customers.

Don’t mess around with this, do it right or tell the provider you aren’t and pay the premiums.

Michael A. Davis is the CTO of GoSecure CounterTack, an Internal Managed Security Services company that provides outsourced security services. Learn more at http://www.gosecure.net

Are You a CEO or President of a Privately Held Business? If you are also a lifetime learner, and want to learn more about Vistage, click here.

You can read more of my blogs and leadership quotes here.

Talent shortage goes critical

by Elisa Spain Comment Closed

One of the top 5 concerns noted in Vistage’s recent report Decision Factors H2 2018, is talent shortages.

The unemployment rate at 3.9% is near an 18 year low. Last week, the DOL announced the number of Americans applying for unemployment fell to a near 49 year low. By measure of most economists, we are at full employment; some say we are past that. Additionally, there is a growing mismatch between skills desired and skills available. In short, demand exceeds supply on several levels.

Joe Gavin, Vistage chief research officer, offers these suggestions gleaned from experts he interviewed:

Change how you retain talent – Quoting Fabiola Brumley, Southeast regional executive at Bank of America Merrill Lynch, “To hold on to your best people, try supplementing employee benefits with non-traditional benefits, such as financial counseling or a reward system that recognizes high performers. Additionally, Joseph Quinlan stresses that companies should be “much more flexible — not just for millennials, but for the aging cohort as well. There are a lot of folks who are ‘retiring’ who really want to keep one foot in the door, and companies should think about how they utilize that talent.”

Build a workforce within your community – If you can’t find people with the right skills, train people to develop those skills. Quinlan encourages companies to reach out to community colleges and mayor’s offices to develop vocational training programs and attract local talent. “You’ve got to be creative about creating a workforce that’s local to your environment or operation,” he says.

Rethink how you recruit – “It’s about rethinking human capital from 20,000 feet, deploying more resources to the HR function and making sure the entire management team is invested in the process,” says Marc Emmer, a business strategist and president of Optimize, Inc. Consider following what 20% of CEOs surveyed are doing and try artificial intelligence for talent management and hiring. Another consideration Emmer notes is the importance of a strong brand and strong offerings if you are going to attract millennials.

Substitute labor with technology – Explore whether technology can help you deal with a labor shortage by automating tasks or improving efficiency. Brumley offers the example of a landscaping company that might invest in equipment to reduce lawn mowing time from three hours to 45 minutes.

Develop a systematic framework for talent planning – Data from NCMM confirms that talent planning has a strong correlation with the growth and performance of a company. To that end, CEOs should use a talent-planning framework that meets four criteria:

  1. Align talent strategy with strategy.
  2. Build sufficient processes to ensure systematic talent-planning efforts.
  3. Lead by example and involve leadership in the process.
  4. Engage employees in talent-planning and ensure that they recognize the value of the process.

In addition to the suggestions offered above, I invite you to consider these innovative methods that are yielding results for CEOs:

  • Have you considered apprenticeships for professional roles?
    • Instead of competing with everyone else for talent with “5-10 years of experience”, what about offering a high energy, junior person a chance to learn? Perhaps pairing them up with grey haired talent that you are trying to retain? Many, perhaps most, experienced workers, including professionals, want to mentor junior employees. It’s their way of leaving a legacy.
  • What about non-traditional sources for finding talent?
    • Social purpose organizations, like Cara, offer job and life skill training to people convicted of non-violent crimes, thereby preparing them to re-enter the workforce. For those who want to try this carefully, Cara will even take on the risk of employment through their temporary agencies Cleanslate and Cara Connects. Vistage member, Maria Kim, CEO of Cara, shares more on the benefits of this opportunity in this book, In The Business of Change, by Elisa Birnbaum.

Are You a CEO or President of a Privately Held Business? If you are also a lifetime learner, and want to learn more about Vistage, click here.

You can read more of my blogs and leadership quotes here.

 

Cost pressures broadening and growing stronger

by Elisa Spain Comment Closed

The #1 concern noted in Vistage’s recent report Decision Factors H2 2018, is rising costs.

As we near the end of the current economic cycle, for the first time, in a long time, in addition to a typical cyclical tightening, we are also experiencing inflation. Wages are rising, the Fed is raising short term rates, and commodity prices are rising. Add to that the tariffs and businesses are under cost pressure that has not been with us for a long time.

The resulting profit declines are a double-edged sword as the impact is on both you and your customers.

What to do?

Joe Gavin, Vistage chief research officer, offers these suggestions:

  • Raise your prices – 56% of Vistage members are already saying they have, or plan to raise prices. Now is the time to get ahead of the expected continued pressure on price.
  • Talk with customers about their long-term plans – A transparent conversation can lead to a strategic discussion of how you can best serve your customer in this environment.
  • Use technology to lower costs –  Whether its cloud computing, updating your ERP or CRM or even investing in robots and AR, the cost of these technologies is going down while the cost of labor is rising and the labor market is tightening.
  • Restructure your debt. If you haven’t yet restructured your debt, this is probably your last chance to do so at a decent price, says Joseph Quinlan Managing Director and Head of Market Strategy for U.S. Trust, BofA, Quinlan.

And one note of caution. What is happening to you, is also happening to your customers and suppliers. Be sure to monitor both to ensure you don’t extend credit unintentionally. For some insight into which segments of the economy, i.e. industries, to watch most closely, check out this blog from ITR Economics: Director’s Cut: Are Your Profits Following the Crowd?

 

Are You a CEO or President of a Privately Held Business? If you are also a lifetime learner, and want to learn more about Vistage, click here.

You can read more of my blogs and leadership quotes here.

 

Why Labor Day?

by Elisa Spain Comment Closed

When the first nationally recognized Labor Day was celebrated in 1894, the day consisted of a street parade sending up a message of “the strength and esprit de corps of the trade and labor organizations” (in the words of the AFL). We have come a long way since then. Today most employers focus on offering opportunities and benefits to attract and retain talent; as a result, the need for unions has diminished and few remain.

Yet we still celebrate the day as a national holiday. Perhaps it is simply tradition, or the acknowledgment of the end of summer. Or a reminder to celebrate how far we have come as a nation of leaders and followers, where two-way communication has become much more the norm than work place “negotiations”.

So, as you enjoy your family barbecues, or however you celebrate the day, I encourage you to pause and ask yourself:

  • As a leader, what can I do tomorrow to let each member of my team know they are valued and are essential to our success?
  • As a follower, what I can do tomorrow to let my boss know what else I can do to add value to the success of our company?

Are You a CEO or President of a Privately Held Business? If you are also a lifetime learner, and want to learn more about Vistage, click here.

You can read more of my blogs and leadership quotes here.

The Power of Not Knowing

by Elisa Spain Comment Closed

Many of us as leaders, especially new leaders, feel we must have all the answers. Some even feel a sense of shame when asked a question, by a client or an employee, and they don’t have the answer.

And, despite these feelings of inadequacy most of us have felt at one time or another, I also hear stories of the magic of saying “I don’t know”.

One of my favorite stories came from one of my clients who grew up in his family business.

I met this man ten years ago and before I knew him, he had worked every job in the company and truly had all the answers. In fact, he was the answer man. Everyone came to him when they needed help figuring out what to do next. This worked fine when he was on the line and even when he was the operations manager.

By the time I met him, he was president of the company and being the answer man wasn’t working so well. He was so focused on solving everyone’s problems and making sure everything was done right in the factory, that he was not doing the job of President. He wasn’t focused on strategy, nor was he meeting with customers, nor was he innovating or coaching (answering folks questions ≠ coaching).

One day after we had talked about his frustration in one of our coaching sessions, he had an idea. He decided starting today, when folks came to his office, he would begin saying “I don’t know”. At first his team became annoyed with him. Over time, they stopped asking.

Today his company is filled with competent executives that run their operations effectively. So effectively that the company has doubled in size and he works fewer hours than he did when the company was half its size.

For some of us, we actually don’t know, others, like this man, do.

In either case, what are we giving up by wanting to, trying to, have all the answers rather than allowing others discover the answers themselves?

Why Vistage Works

Elisa K. Spain