Companies in Transition

                                                                                                 July 2008

Dear Friend,

      The theme of this month’s issue of Companies in Transition is taking control of your own destiny. Uncertainty in the current economic environment is causing many owner/CEOs great anxiety. If their business is doing well, they are asking, “How do I ensure that the business continues to prosper?” If the business is struggling, the question becomes, “How can I improve my business’ prospects for the future?”

      Both challenges may require significant changes in a company’s business model or other operating characteristics. An owner/CEO can direct the necessary changes to happen, but the owner/CEO must be the first one to change.

      We hope you enjoy this issue of Companies in Transition.

Wayne Wilson

Taking Control of Your Own Destiny: Part 1 – Preparing for Success

By Wayne Wilson

      Most owner/CEOs are control freaks. They started businesses and became successful because: they were tired of working for someone else; they had a great idea; or they just wanted to do their own thing. They like being in control of what they do and when and how they do it. They like to control their own destiny.

      An instinctive grasp of some key principles of success drives many owner/CEOs’ business achievements. A more explicit understanding of these success principles and how to apply them can lead to even greater success and control of your destiny.

      I have experienced this phenomenon first hand. [1] Looking back on my business career, I have seen the tremendous positive impact of these principles at work, especially when they have been consciously applied.

      What are some of these universal success principles [2] and how do they work? For me, these principles fall into three groups or phases: preparation, process, and power.

      Here then are the five principles of preparing for success. [3]

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“Hope” is not a strategy.

      The owner/CEO of a company confided to me, “I hope to be able to sell this business for $x million when I retire.” Another owner/CEO grimly reported, “I hope we can break even this quarter.” These comments border on wishful thinking – “hope” is not a strategy.

      “Hope” becomes the mantra when you have failed to put in place the necessary plans, programs, and investments to ensure that your goals can be attained. That does not mean there will not be setbacks, reverses, and other assorted failures along the way.

      How can you avoid failing back on “hope”? Successful companies use a combination of the following techniques:

• Develop multiple scenarios – too many business plans are based on a single set of assumptions, many of which will prove to be wrong.
• Include “white space” in sales quotas and other financial goals – if the numbers do not roll up to totals well in excess of your required targets, you will miss the targets.
• Prepare flexible budgets / spending plans – spending allocations should be prioritized in advance so that overall spending can expand or contract as necessary.
• Invest aggressively while spending stingily – investing and spending are not the same thing. Activities that drive revenue growth or reduce costs must be consistently supported but spending levels and details should be constantly challenged.
• Worry a lot about what you don’t know – you can plan for things you know about. Planning for the things you don’t yet know about is a lot harder.

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“Do you believe in magic?”

      A conversation with a colleague about the essence of high-performance teams brought this old sixties song title to mind, ^[1] though in a different context. (In fact, the phrase has been used to refer to many different phenomena. [2])

      In the context of high performance teams, it truly is magical when a team comes together and executes flawlessly and seemingly without effort. For instance, think about the elegance of a well-executed basketball fast break leading to an alley-oop pass and a dunk or lay up to win the game at the buzzer. ^[3]

      In my colleague’s view, “the key word is alignment.” Teams can only achieve peak performance when the gut-level goal of every team member is in complete and total alignment. Such complete alignment is an inherently unstable state because individual team members have numerous personal and professional goals all competing for primacy at any given moment.

      The task of the team leader is to maintain the highest possible level of goal congruence on a continuous basis while preparing the team to accelerate to peak performance at critical times. And team dynamics, or the lack thereof, are central to that performance.

      Owner/CEOs of companies in transition must constantly focus their business teams on achieving similar peak performance by:

• Picking the right people
• Developing esprit de corps
• Continuously communicating the goal
• Leading by example
• Practicing for perfection

      And, yes, I believe in magic.

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[1] “Do You Believe In Magic?” by The Lovin' Spoonful, 1965.

[2] See for example Benedict Carey, “Do You Believe in Magic?” The New York Times, January 23, 2007, (about common superstitious beliefs and the behaviors that accompany them)

[3] McClure Wins It at Buzzer for Duke, The Washington Post, January 26, 2007.

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