On Business Growth & Chaos

It’s funny – most businesses feel like they are operating in an environment where chaos reigns.

The sad thing is, most businesses do not understand that, until you get to about 20 employees, chaos is actually a natural state of being.

Source: brucemctague.com
Source: brucemctague.com

The good news about this fact is that when you’re aware of it, you can plan for it.

James Fischer wrote “Navigating the Growth Curve” (Growth Curve Press, 2006) following his research of (then) 600 businesses that had grown and developed.  He found that there were some very common issues that those businesses faced and that, armed with this knowledge, other businesses could predict and plan for the issues that would accompany their growth.

As a consequence of his research and writing, Fischer and Laurie Taylor from FlashPoint! developed the Growth Curve program and this has been picked up and tailored for ease of use by Targeted Training International in the US.

We first came across the concept some three years ago and have now adopted the program as part of our offering to our clients.  We’ve rolled the program out to a number of our customers in the past 18 months  and the results have been sensational.

So, the chaos bit?  Well, the table below shows the findings of the five top challenges for businesses at the various stages of growth.  Some businesses will face some different challenges, however, based on the research, the following are the most common issues businesses face as they grow:

Stage 1

Stage 2 Stage 3 Stage 4

Stage 5

1-10 staff 11-19 staff 20-34 staff 35-57 staff

58-95 staff

Cashflow challenges

Cashflow challenges Improved profit design Employee turnover Improved profit design

Limited capital

Limited capital Improving staff buy-in Project management and resource co-ordination

Staff training

Chaotic periods destabilising things

Hiring quality staff Unclear values Vision for future growth (Where? How?)

Lost knowledge when employees leave

Slow getting new products/services to market

Communication gap (leaders – staff) Culture resistant to change Difficulty diagnosing the real issues impacting growth

Difficulty forecasting problems in advance

Expanding sales

Expanding sales Communication gap (leaders – staff) Slow in getting systems and procedures implemented

Expanding sales

Copyright – 2013 FlashPoint!, Origin Institute & James Fischer

When you review where your business is against the issues you’re currently trying to manage, do you find any of the issues raised above resonate?  I have yet to find a business that doesn’t identify very closely!

Source: johngattorna.com
Source: johngattorna.com

The best bit about this is though that, with the identification of the issue, there are processes and approaches specifically designed that enable you and your team to address the issue for once and for all.  It “cures” the problem and allows the operation to grow in a less chaotic and more planned and deliberate way.

The approach we use not only looks at the above (as part of the “27 Challenges”) but also addresses the style of the leader, the Non-Negotiable Rules for each stage the business passes through, the right balance of confidence and caution in the business (that bit gets REALLY interesting) and the mode of operation of the teams within the business.  In short, it brings out the “elephants in the room” and cuts them to bits so that we remove the “hidden agents” that are holding the business back.

Business is complex – the more people you have on board, the more complex it gets.  By undertaking the processes such as those outlined above, we can de-clutter the business and get it on the path you originally desired when you set it up or took it over.

It’s fun, challenging and enlightening.  It’s also incredibly valuable.

On Weightlessness

Just did a session with one of our customers and all their staff about what they need to do in their business to position it for sustainable growth.  It was terrific – they were all contributing and we generated some really valuable ideas that they can implement in their business.

Source: forwallpaper.com
Source: forwallpaper.com

At the end of the day, it was absolutely fantastic when one of the senior staff said of her feelings about the outcomes and process “I feel like a weight has been lifted off my shoulders.”

How good is that?  This business is going to outperform and grow very solidly as they have their engagement and communication issues being addressed and have committed to a process to make some minor, but important, changes to their operating structure that will get them back in line with delivering on the vision of the owner.

It is a real privilege to work with people on stuff like this.

On Bureaucratic Incompetence

The common complaint about bureaucrats is that it seems they don’t really know what goes on out here “in the real world”.

Bureaucracy

Interesting meeting with one of our customers this week. They are dealing with a bureaucracy as part of their operations and they need to work with this bureaucracy to assist their clients obtain and retain registration to operate within the particular industry.

Now, I’m not sure about you, but my (probably misplaced) belief is that bureaucracies should exist to assist the section of the broader community that they were created to serve.

How can it be then, that this bureaucracy, which regulates and approves businesses to trade has not the first clue about how the sector actually runs?

Some examples?  OK, try these on for size:

  • no understanding of the form of the contract that is standard in the industry;
  • absolutely no understanding of the way that businesses in the industry account for income, expenses, assets and liabilities;
  • a demonstrated absence of clarity about how cashflows in the industry work; and
  • adopting a “slave to the process” approach rather than looking at what is really happening – if there is a box that needs to be ticked because someone(unknown) says it needs to be ticked, then, if it cannot be ticked, they will close the business down.

From our client’s perspective, the regulator’s approach is one which is great for their business.  Lots of clients approach them for assistance in dealing with the myopia that is prevalent in the organisation that registers and re-registers the operators in that industry,  BUT, as our client indicated, the approach they are forced to deal with from “big brother” is one which wastes an incredible amount of time, resources, effort and emotional energy.  All because the bureaucrats do not understand the first thing about what they are trying to regulate.

For the sake of some education and appreciation of the peculiarities of this particular industry, the whole process could run much more smoothly and the regulator might actually be able to get on with doing their real job rather than being consumed servicing an ineffective process and creating mayhem in the process.

We all have a grizzle about dealing with bureaucrats – it’s almost a national past-time.  In this case, the grizzle is warranted as the effects of the incompetence displayed is creating a reality that is adversely impacting on a large sector of industry – and it need not be the case.

Having clarity about the industry and its processes will enable systems to be designed and implemented that actually do what they are supposed to do.  Designing and implementing systems and processes that bear no resemblance to reality just wastes everyone’s time.

Happy to speak with anyone from the Victorian Government about this.  They have created an unworkable outcome for an industry that simply doesn’t need it.

On Next Year – and a special offer

OK, we have a week to go until the end of this financial year.  How has this one gone for you?  Has it delivered what you envisaged or not?  What have you done well and what have you stuffed up?

Have you been satisfied with your progress this year or have there been things crop up that derailed you/your business on the way through?

Each July, it is worthwhile going through a process of re-aligning you and your business to ensure that you start the new year in the best mindset possible.  This can be a challenging exercise – especially if you’re brutally honest with yourself.  It does present a great opportunity for you to invest some time and clear thinking in determining the direction and focus of your business.

hopeMany businesses often fall into the “same same” trap – they keep doping what they’ve done in the hope that things get better.  As I say to our guys in here and to our customers – Hope is not a strategy.

Taking the time and making the effort will pay-off.  The plan to do this, make some decisions and get things going in the direction they need to go will help “de-shackle” the business and ensure that you are making the most of the opportunities that have presented themselves.

Given the fact that hardly any businesses have any sort of plan and, when they do, it’s stuffed in the bottom drawer until your bank wants to see it, undertaking a proper planning approach and then implementing it can give you a very powerful competitive advantage over your rivals.

We have found that our customers who develop and implement a proper plan for their business – one that reflects the vision and goals of the owners, create superb results.  They are more profitable, more effective and create far better working environments than the businesses that don’t.  The secret to this is getting your team involved in the process.

By getting your team on board in the planning and implementation, you enable them to develop a real context about the “why” of the business.  They get to understand the dreams of the owners and, on all occasions where we have seen this, they own it for themselves.  In many respects, they take on the business direction personally.  This creates an incredibly powerful culture within the organisation.

So, please think very seriously about investing the time to develop a plan and then invest the time to implement it.  Hint: make your KPI’s reflect the implementation.  If you want more information about this, please let me know.

We use the Growth Curve approach (research based) with our customers.  It’s proven, effective and exceedingly powerful.  The changes it has made to the businesses who have gone through the process are profound.

Special offer – sign up for one prior to 30 June this year (to be rolled out through next financial year) and we will attend to the implementation for you at a reduced price.  Contact us to discuss.

Planning is an essential element for any successful business.  Implementation is the key component of any plan that sets the really great businesses from their competition.

Invest the time in your business this July – you will be glad you did!

On Incentives Going the Wrong Way

Every so often in a meeting, you find out information that makes you shake your head in wonder.  I had one such meeting this morning.

Our customers have been requested to provide a price for some work to a large Australian, publicly listed company.  Great.

The issue is that the price they put in was some 55% over the price the company had received from another business.

OK, but, when you receive two prices that are aboutShort term bonusthe same from different providers and another price that is significantly lower than them (over $500,000 less), you would more than likely pause to consider whether the significantly lower price was, well, realistic.  Or whether the price was submitted to get the job in the hope that other work will crop up once the contractor is entrenched on site..

The trouble is, the managers of this publicly listed company are incentivised to under-spend their capital budgets each year – the more money they save against their budget, the bigger bonus they get.

As our customer said this morning – “they will end up with a pile of crap that won’t do the job but the manager doesn’t care as he got his bonus”.

The incentive program any business uses needs to align itself to the needs of the business and the staff but also, fundamentally, to the long term goals and strategies of the business.  Where there is no alignment, you run in to significant problems on a number of fronts.

Firstly, you want the incentive to encourage the type of behaviour you want to see.  If short term profit is the focus on the business, build your incentives around that.  However, the focus on short term profit is, to my way of thinking, myopic.  Getting a longer term strategy is far better for everyone concerned.  There are some notable people who like longer term strategies.  People like Warren Buffett.

Secondly, the incentive needs to match the motivators of the person being incentivised.  Using cash bonuses is fantastic however, the bonus can take other forms which might not cost as much but which may be far more highly valued than cash.  By aligning the bonus to what actually matters to your people you are also showing that you care for them as people rather than using a blunt force (cash) for everyone.  For example, a cash bonus is terrific but if you were to pay for a family holiday for your staff member, or give them some extra time off as a bonus (especially when they have a young family), this can have far higher value to them than anything else.

Finally, think about how you might face your shareholders/financiers where you had to explain how your business was so focused on short term thinking and behaviour that the investment decision made in plant and equipment spend was solely based on price and not quality or longevity.

They might, on hearing this information (however it is packaged) cause to question your thinking and ability to act as a custodian for their interests.  I seem to recall a similar approach was adopted by some banking institutions during the 2000’s.  That really didn’t end well.

The current business environment is very challenging for a lot of businesses.  There is a lot of competitive pressure due to a lack of consistent activity – especially in commercial construction.  This causes many businesses to try and “buy” work – price it with little or no (or, occasionally, negative) margin.  All they succeed in doing is making their exit from the market more rapid and they tend to deliver incomplete jobs as they go broke before the job is finished.

If your incentive program gives your team tacit or explicit approval to seek lower and lower prices – at any price, the quality of what you purchase will decline and will end up costing you more.

rich enough
A friend put it beautifully many years ago “I am not rich enough to buy second best”.  When you are designing and implementing your incentive program, make sure it delivers what you really want – not a facsimile of what you think you might like.

 

On Age and Learning (and Adapting)

Are you developing as you get older or are you stuck in a rut that is “comfortably uncomfortable”?

Over the years, I have seen many people who age gracefully but, at some point, don’t really seem to continue learning to stretch themselves and they merely repeat the efforts of the previous year (decade?)  As I ask my guys in here – do you want 20 years’ of experience or one year’s experience repeated 20 times?

Learning is a constant and, as technology develops and continues to develop (Moore’s Law), the perspective from which you assess your business and the direction of your learning needs to change.

Perspective

I was discussing this with one of our customers the other week – he works in the trades and is an incredibly competent and highly experienced tradesman.  He does however have a fear of technology and this is starting to hold him back in his progress through his employer.  As we were discussing the issues around the use of IT by his employer, we analysed what would happen to him in the not-too-distant future if he continues to try and deny the changes that IT is imposing on his industry.  His employer is now requiring all quotes, jobs, variations and billing to be prepared on cloud-based software.  This is placing this very senior and experienced tradesman (and exceptional man manager) at a distinct disadvantage and, in discussions with his employer, is holding him back from moving further through the business.  As we continued our chat, he recognised that unless he makes the effort to embrace the changes being imposed, he will go the way of the dinosaur – incredibly well adapted to their environment – until their environment changed.

Majority

I am also seeing this in the accounting industry and have made numerous observations about this over the years.  In discussions with an advisor to the accounting industry last week, they indicated that a lot of firms are covering their ears, closing their eyes and shouting “la la la” as loudly as they can hoping against hope that the changes won’t impact them.  The advisor indicated that, based on their observations, the vast majority of firms are adopting this approach.  This form of denial is not exactly sensible or sane.  Just because the majority of the industry is not making the move  to ensure their future doesn’t mean you shouldn’t.

Commoditisation of the accounting space is happening and happening quickly.  The Economist published an article in January 2014 about this and the fact that (according to the authors) there is a distinct likelihood (94%) that accounting services will be replaced by automation by the early 2030’s.  This creates a conundrum for the owners of accounting firms – what business are they actually in?

My Verasage colleague, Ron Baker, in his seminal book “Implementing Value Pricing – A Radical Business Model for Professional Firms” (Wiley, 2011) provided a summary from Maister, Green and Galfords’s book “The Trusted Advisor” of the things that customers of accounting firms want from their advisors:

  1. Make an impact on our business, don’t just be visible;
  2. Do more things “on spec” (ie: invest your time on preliminary work in new areas);
  3. Spend more time helping us think, and helping us develop strategies;
  4. Lead out thinking.  Tell us what our business is going to look like after five or ten years from now;
  5. Jump on any new pieces of information we have, so you can stay up to date on what’s going on in our business.  Use our data to give us an extra level of analysis.  Ask for it; don’t wait for us to give it to you;
  6. Schedule some offsite meetings together.  Join us for brainstorming sessions about our business;
  7. Make an effort to understand how our business works: sit in on our meetings;
  8. Help us to see how we compare to others, both within and outside our industry;
  9. Tell me why our competitors are doing what they’re doing;
  10. Discuss with us other things we should be doing; we welcome any and all ideas!

Note how very little in this list could be expanded to include “preparation of financial statements and Income tax documentation”.

For those firms that are in “compliance lock” and not doing for themselves what their customers are wanting, how in God’s name are they going to be able to do what they are avoiding  for their customers?  They will be like my tradesman customer – really good at stuff that no longer resonates.  This is a death sentence.

So, as we age, and as the world progresses around us, we need to keep learning – to be alive to what is going on in our industry and outside it.  We need to “read the tea leaves”  to understand the impact that change is going to visit upon us.  We need to adapt.

In a rut

Because, if we aren’t doing this, we surely will go the way of the Dodo (or dinosaur).  At the end of the day, it is a matter of choice.  Get out of the rut.

 

On Getting Change to Stick

The most difficult thing to achieve is change.  This is due to many things and I had cause to experience the impacts of it over the past couple of months.

My gorgeous wife uses a website to enter information associated with her work and, over the Christmas break, they changed the format and structure of the site to “make it better”.

Unfortunately, the government department (now THERE’s a surprise!) had not let anyone know about the changes or what it would mean to them let alone how it would impact on their work.  Must have seemed like a terribly good idea to someone at the time.

We’ve been dealing with change in our business too – new technology, systems and processes are being introduced (and will continue to be introduced) to enable us to be more effective in what and how we do what we do.

This change can be embraced or it can be pushed back against or, worse still, you get the “passive aggressive” response.

I love the line by Tancredi Falconeri from “The Leopard”:

If we want things to stay as they are, things will have to change.

To embrace change, we need to ensure that the processes and planning around the change is well communicated to all concerned.  I can’t remember who stated the line, but I love it:

People don’t resent change – they resent being changed

For change to stick, we need to bring everyone who will be impacted on board early to enable them to contribute to the planning and rationale behind the changes being proposed.  Yep, this is time consuming, but it will help maximise your chances of successful implementation.

Depending on the particular personality/approach of your people, they will eagerly embrace the change, put up with it or actively (or passively) rebel against it.  This is where you need to understand their approaches and preferred styles when dealing with stuff.

It’s your responsibility as a leader to be effective in communicating the issues to your people and listening to them (not just hearing them!)

For change to stick, communicate, communicate, communicate.

On Leadership and Development

It’s about your people.  That’s it.

What is your real responsibility as a leader in an organisation (work, charity, school, family)?  Is it to be the dictator who controls and directs everything and to whom everyone “submits”?  Or is it to develop and grow the people in the group?

The other week, I came across a great meme from Entrepreneur which, to my way of thinking, summarises it perfectly:

LeaderFar too many so-called leaders that I have seen over the journey have not realised (or not made it obvious by their behaviour that they knew) the most important role they have in leadership is development of the people with whom they work.

Imagine if you will the dictatorial leader at work going home and practicing the same approach on his family (especially kids) that they did at work.  Do you think they would create decent members of society who would be supportive and contributors?  Unlikely.

Why then do numerous leaders adopt an approach at work that is different to the one they do at home with their kids?  Why don’t they approach the workplace in the same way they help their family grow, develop and mature?

It may well be that, when placed into positions of power (as opposed to influence), there is an “expectation” that they need to behave in a particular way.  I’m not sure where this comes from – is it from movies (The Wolf of Wall Street) or TV shows?  Does it come from impressions they have obtained as they have grown up and developed over the years from the likes of teachers, coaches and the like?  Or is it just because they haven’t really developed a concept of what makes a good leader?

The quote above, to my mind, summarises  leadership perfectly.  A great leader is one who can see the potential in people – often when they cannot see it themselves – and work with, encourage, challenge and engage them to push beyond their self-imposed limits to be all that they can be.

There have been some wonderful examples of leaders whom I have met and had the great fortune to work with over the years.  I’ve had some shockers too!  I am also very fortunate to work with a group of people in here and within our client base who exhibit wonderful leadership skills – a focus on seeing the potential in the people with whom they work and then working with them to develop and refine what they can see.  Seeing someone who develops far beyond their initial expectations is truly one of the most rewarding things you can do.

So, what sort of legacy do you want to leave behind as a leader?  Is it one that is autocratic and dictatorial – driven and was quite happy to stand on the throats of people on their way up as they had no intention of coming down?  Or is it a leader who people try to emulate, to model themselves on and who truly makes a difference in the lives of the people they have worked with?

 

Adoption of new Technology

What’s been your experience in your business with adoption of new technology?  Has it been an easy process or are your staff fighting you all the way?  Do you feel like you’re constantly fighting battles and no-one really seems to give a stuff?

First involvement with new technology is the most vital first step.  It needs to be a good experience to allow you and your staff to embrace the new technology.  If it’s a bad experience, nine times out of ten your staff will reject the product and will never approach its use with a positive attitude which in turns leads to non-adoption.  This is obviously exceedingly dangerous for you and your business.

Unfortunately the IT staff deploying new technology are often too busy and IT focussed to pay attention to the users’ first experience – they are usually flat out making sure they follow all the steps to make the product work and the user can double click an icon and have access to their fantastic new product – whether they understand the new product is (or seems to be) irrelevant.  Once the system is installed, they feel their job is done, pat themselves on the back and walk away happy.

The focus in any IT system implementation needs to be on the customer experience and customer relationship.  Too often, we see businesses that use IT consultants who are more interested in selling and installing a product than identifying and implementing a solution that meets the customer needs.

What is this saying to the first time user who is new to the product and may feel overwhelmed by the new “solution” and its functionality?  We hear the following from staff when they have had a new system inflicted on them:

  • They don’t understand how important my job is, and that I don’t have time to learn all this for myself;
  • Do they really understand or care what our needs are or is it just a sale?
  • They don’t care, as long as the product is installed, they can walk away and I am left to flounder;
  • Do they even know how to use it themselves? Are we their test case?
  • What have I paid all this money for if I now don’t know how to use it properly?

New technology is useless if it doesn’t get used.  Users usually don’t get to see what benefits and efficiency’s the product can provide if used correctly.  They look at this new tech as a thorn in their side that the owners of the business are making them use leading to frustration, misery and loss of staff.

If you are looking to invest in new technology, make sure you do your due diligence first.  You need to sign up with a business partner who will hold your hand through the process, identify a solution (or suite of solutions) that meet your current and identified future requirements and ensure adoption of the new product takes place from first contact.  This process actually involves your staff in the design and “wish list” development when identifying “what can be”.

You also need to choose a champion within the business who will drive the change.  This champion needs to have the time to dedicate to the project and not be stressed about all the other work they have to do.

Make sure the implementation partner or IT professional will be available for on-site support for the first couple of days after going live.  If staff don’t get answers to their questions on a timely basis or if their problems are put on the too hard list, they will have a negative experience and not want to learn more about the product.  Staff will blame the supplier, say the product was never installed properly in the first place and has never worked, when in reality they just weren’t shown how to use the product correctly.

When non-adoption of technology takes place, businesses end up paying a lot of money for a “solution” they will never use, then pay more money for a consultant to come in and recommend a new product that suits their business better and install this new product.  It’s a very costly and time-consuming experience and something no business really wants to go through twice.

If you’re considering changing your software, make sure it’s done properly and spend the time to get it done right the first time. This will lead to increased staff happiness and retention, efficiency and effectiveness improvement and a far more profitable business.