Strategy and Execution

There are two things a leader can influence when it comes to producing results: your strategy [plan] and your ability to execute [implement] that strategy.

Which of these do you struggle with the most? Is it creating a strategy, or executing that strategy?

Every MBA program I know of teaches strategy but few that I’ve heard of spend much time, if any, teaching how to execute that strategy.

Figuring out what you want to do is relatively easy; the challenge comes in getting people to implement or execute on that strategy at a level of excellence you want and need.

Executing a strategy that requires a lasting change in the behavior of people is one of the biggest challenges any leader faces.

In the book “The 4 Disciplines of Execution”, the authors talk about two kinds of strategy:

One is a “stroke-of-pen” strategy, things like capital investment, expansion of staff, process change, strategic acquisition, media mix or change in product mix. It’s called a stroke-of-pen strategy because you execute it simply by ordering or authorizing it to be done.

The other type of strategy is a behavioral-change strategy. This is something you can’t just order to get done because executing it requires the buy-in and cooperation of people. Examples are: improved customer service, higher quality, faster responsiveness, consistency in the delivery of your offering, or one I am very familiar with is implementing a one-best-price strategy for an auto dealership. To execute this strategy requires a change in the behavior of every employee.

Leaders tend to not recognize a behavioral-change strategy for its significance and difficulty until they attempt to execute. Typical is for leaders to assume the people are the problem. But they would be wrong. W. Edwards Deming taught that any time the majority of the people have a behavioral problem, the people are not the problem, the system is.

The very first thing to address is the clarity of the strategic desired end result through messaging. Research indicates that less than 1 of 5 employees could articulate, much less understand, the organizations wildly important goal or goals.

And of those that did know and understand the strategic objective, only about half could say they were passionate about it. Lack of commitment then is the second thing to address.

Thirdly, accountability is another major issue. A staggering 80% said they were not held accountable for achieving the strategic desired end result and finally, about 90 percent had no idea of their specific role in achieving it.

In summary, people don’t know what your goals are, why they are important so they’re not committed to achieving it, they don’t know what they are specifically supposed to do about it and they aren’t held accountable to its success.

The real enemy of getting the right things done is the whirlwind of the urgent, more commonly referred to as your day job! The distractions of the fires that assault every manager and leader on a day to day basis.

I used to call this the bucking bronco.

I used to feel like the moment I walked in the door to my dealership I jumped atop a bucking bronco and prayed I could stay on for the duration of the day without getting bucked off.

The “urgent” things act on you, whereas the wildly important strategic goals are things that are important and you have to act on them.

Problem: If you ignore the urgent, they will kill you today but when you ignore the wildly important, they will kill you tomorrow. You have to do both.

The Covey group created a plan called 4 Disciplines of Execution that is based on the principle found in the 7 Habits of Highly Effective People.

Here are the 4 Disciplines followed by a fifth that is insinuated in their book but I’m going to establish it as a MUST 5th step.

One: FOCUS on the Wildly Important – the 80/20 Principle: This is about getting more with less. As humans, we are hardwired to be able to focus on 1 or 2 goals at one time. When you narrow your focus, it is easier to distinguish between what is truly important and what is simply the whirlwind.

Two: Act on Lead Measures – whatever strategy you are attempting to implement, your success will be dependent on two types of measures: lag and lead.

Lag measures tell you if you’ve accomplished your goal. [typical lag measures are revenue, profit, market share and customer satisfaction].

Lead measures are quite different. They measure the most high-impact behaviors your team will execute that will drive the success of the lag measures.  A good lead measure has two basic characteristics: It is predictable and influenceable.

Three: Keep a Compelling Scoreboard – people play differently when they’re keeping score. This is the principle of engagement. The highest level of performance comes from those who are emotionally engaged and the best way to foster employee engagement is to keep score.

Four: Create a Cadence of Accountability – unless we hold each other accountable, the goal will slowly disintegrate into the whirlwind of the urgent. This accountability happens through regular weekly meetings of any and all teams or individuals that have a wildly important goal. The best cadence is weekly, 20-minute meetings where each person answers a simple question: “What are the one or two most important things I can do this week that will have the highest and biggest impact on the scoreboard?

This 5th step will take EXECUTION over the top: Effective Communication that is clear, simple and easy to understand. The messaging needs to help your employees understand the WHAT, WHY and HOW we can help them survive and thrive through the execution of the strategy and goals.

A strategy is relatively easy to come up with, executing on that strategy takes hard work, focus and effective communication skills and principle-centered leaders.

Right Thinking Leads to Right Results

Right thinking leads to right actions, which leads to right results.

Wrong thinking leads to wrong actions, which leads to wrong results.

No matter how successful he might appear, the wrong thinker is a slave to his wrongness.

He makes many plans that don’t ever seem to work out. He is constantly torn between duty and desire.

His life is constantly oscillating between tension and internal friction.

Rarely can he do as he pleases and ends up often doing things he would rather avoid.

The problem is that unbeknownst to him, he is being deprived of opportunities because he has proven his untrustworthiness in a myriad of small things.

When honest people get his number, they simply ignore him or frustrate him.

Honest people of integrity, no longer associate with him on free and easy terms and seldom does he even know it.

There are numerous people who go thru life never knowing what they don’t know simply because they have destroyed others confidence in them, and just never know it.

A man, woman or entity of integrity has nothing to fear and nothing to hide. They are transparent and authentic.

Conversely, the man, woman or entity that does not have integrity has everything to fear and is rarely authentic and transparent.

Make a point of being honestly authentic.

The habitually dishonest person bases much of his thinking on false assumptions by not viewing current reality honestly, thus he is constantly coming to wrong conclusions.

Honesty and integrity make you invulnerable to other people’s troubles and doesn’t cause trouble for yourself or your business.

Dishonest (wrong) thinkers are constantly seeking something for nothing and blame others for their troubles because they fail to recognize the truth of the Principle of Inside-out.

“What causes trouble for a person is less a lack of intelligence than a lack of honest thought.” – Richard Wetherill, Right is Might

 

 

 

 

 

 

 

 

 

 

 

The Goose and the Golden Egg

Almost anyone can deliver results for a quarter or two but the real challenge is to create a business that can sustain both the Goose and the Golden Egg, year after year.

Delivering superior performance while building the production capability to deliver it, again and again, is the very definition of greatness in any enterprise.

Why is this so?

Aesops Fable: The Goose and the Golden Egg

There once was a country farmer who discovered in the nest of his pet goose a glittering golden egg. At first, he thought it was some kind of trick to deceive him. But he decided to have the egg appraised and to his surprise discovered the egg was pure gold.

He becomes more excited the next day when the goose lays another golden egg. Day after day, he continues to find another golden egg. He becomes fabulously wealthy.

But with wealth comes greed and impatience. Unable to wait day after day for the golden eggs, the farmer kills his goose in order to get all the golden eggs at one time.

But when he opens the goose, he finds it empty. There are no golden eggs – and now he has no way to get more.

The farmer destroyed the very thing that produced them.

Within this fable is a key principle to sustainable success.

Sustaining success is a function of two things: What is produced [the golden egg] and the capacity to produce [the goose].

If you only focus on producing the golden eggs and neglect the goose [building production capacity for tomorrow] you will soon be without the golden egg.

The key lies in balancing of Achieving Results and Building Capability.

Operating from your 80/20 Sweet Spot is one way to achieve this balance.

We approach the goal of superior performance by helping you focus on and deliver specific results and build more sustainable production capability.

Under these two areas [Achieving Superior Results and Building Sustainable Capability] we work with you in three areas:

Achieving Results 

  1. Execution of Getting the Right things Done. Achieve specific results like increasing sales, improving quality, scalability, clarity of marketing messaging, or other specific initiatives that are in alignment with your overall goals, guiding principles and mission.

Building Sustainable Production Capabilities

  1. Developing Principle-Centered Leaders. We help build sustainable leadership capabilities based on principles, character, alignment and the ability to achieve consistent   We build principle-centered leaders.
  2. Individual effectiveness. We help small business enterprises to increase the personal performance of their staff.  We build personal greatness.

 

The principle of completed staff work.

The power behind completed staff work helps address the greatest challenge in the business world today which is not being able to get everything done with the time and resources available.

Part of the problem is not knowing what to say ‘NO’ to.

Years ago I learned about a principle Henry Kissinger instilled in those who worked with him called “completed staff work” that helped address this problem.

The concept is about developing effectiveness in yourself and others and getting it right every time.

Completed staff work requires people to give you their best thinking, their best recommendations and ultimately their best work.

When a staff member came to Kissinger with a recommendation from a delegated task, before even reading it, Kissinger asked: “Is this the very best recommendation you could come up with?”

More times then not, the staff member would answer something like, “No, I can strengthen this recommendation with additional research and detail.”

Each time they come back with an improved recommendation, Kissinger would keep challenging them “Is this your very best?  Is there room for improvement?”

When I implemented this in my car dealership, I asked 5 times before getting the final version and finally reading it.

The idea of this is to empower your staff to reach their highest potential and make better contributions.

Unfortunately, many small BIZ owners have not learned to trust the principles of delegation and empowerment. They continue to do it all themselves until ultimately, they burn out.

Five elements of effective delegation and employee empowerment for greater effectiveness:

  1. Know What You Want and Clearly State it. Establish clear desired end results. Help employees to understand that they will be expected to give their best thinking in solving problems, making decisions and formulating recommendations.
  2. Ask Questions. As the manager or co-worker ask “What is your recommendation? How would you solve this or how would you implement this policy?’ Get in the habit of soliciting ideas and buy-in for those around you.
  3. Clarify Assumptions. Different assumptions have sunk more than a few good ideas before they even had a chance. Before walking away, always ask for clarification of what the other party heard vs what you said.
  4. Give People the Tools They Need. Provide the necessary resources, time and access to information.  Make yourself accessible for providing info and feedback.
  5. Provide an Environment for Success. Give people the time to present their recommendations and time for you to ask clarifying questions.

The principle behind completed staff work is simply a means to teach people to do their own thinking and to think accurately.

When done correctly completed staff work has the benefit of saving everyone’s time and produces better results – a true 80/20 win-win for all stakeholders.

[Source: Stephen Covey]

We are created by God to be RELATIONAL – to have and enjoy relationships.

We long for relationships with others. 

We all understand what a financial bank account is. We make monetary deposits into it to build up a reserve from which we can make withdrawals when needed.  

An Emotional Bank Account (EBA) is a metaphor that describes the amount of trust we have built up in a relationship. It’s the safety net of trust we’ve built up with another human being. 

When I make deposits into the Emotional Bank Account I have with you, I build up that reserve for the time I may need to make a withdrawal. The level of trust between us becomes higher and I can call on that trust if I need to. 

My communication may not be clear but you’ll understand what I mean anyway. 

When trust is high, communication is easy, immediate and effective.  

Here are Emotional Bank Account (EBA) deposits that will go a long way to your being trusted, respected and an influencer.  Someone others want to follow.

  • Be Authentic – Be honest about current reality as it relates to what motivates, demotivates, drives you, and your Guiding Principles. No one will follow a hypocrite.
  • Be Open & Honest – Honesty is a Biblical mandate. Be trustworthy, live in integrity and display high moral character. Don’t be afraid to tell some of the bad along with the good.
  • Be Compassionate – people care when they know you care.
  • Be GentleBe caring & Patient. “a gentle answer turns away anger, but a harsh word stirs up wrath.” -Proverbs 15:1
  • Be Competent and Deliver Results
  • Be a Good Listener – listen with the intent to understand rather than simply to reply. This is probably the single most important deposit you can make.
  • Keep your Promises – if you say or even intimate that you are going to do something, do it. [an effective way to fulfill this deposit is to get in the habit of – Under-promise and Over-deliver (UPOD)]
  • Think Win-Win or No Deal – have the courage to walk away if it’s not.
  • Clarify Expectations – make sure everyone fully understands, including yourself. Unclear expectations undermine communication and trust. The cause of almost all relationship difficulties is rooted in this single issue.
  • Be Loyal to the Absent – never talk badly about anyone behind their back.
  • Apologize sincerely and quickly when you make a withdrawal from another’s Emotional Bank Account
  • Be Proactive – Accept Responsibility – don’t blame anyone else.
  • Be open to Feedback – be willing to listen to criticism; Correction does not mean rejection.
  • Be Forgiving

All of life is about relationships.

Word of mouth

Whenever I speak to a business owner about how they market themselves, the most common answer is – Word of mouth.

That answer tells me this business has very likely plateaued and become mired in the status quo because while “word of mouth” marketing is great, it’s also painfully slow and a very unreliable way to build a business.

Word of mouth is the equivalent of a free lunch.

It’s great when it comes your way, but do you really want to rely on it to feed yourself and your family?

It takes a lot of blind faith to build your business on this method and is a very dangerous path to take.

Referrals have to be proactive, orchestrated and systematized.

Once you understand the psychology behind referral marketing, you’ll never take a passive approach again.

Think back to a time you recommended a restaurant or car dealer to a friend.

Did you do it as a favor to the restaurant or car dealer or did you make the referral because it made YOU look and feel good?

You did it because you wanted your friend to have the same great experience you had.

Keep that psychology in mind when proactively orchestrating your own referral marketing system.

It has to be reliable and deliberate.

When I first got into the car business I learned my automotive marketing and selling practices from the worlds greatest salesman – Joe Girard.

His system was created because of his “Rule of 250” he learned by observing the average attendance at a funeral was 250 and for weddings, the average number of guests was 250 for the groom and 250 for the bride.

He realized that if every person he met knew an average of 250 people then every person he did business with represented a potential 250 referrals.

So systematizing your process of delivering your product or service so that it was an exceptional experience and systematizing your nurturing and referral process is critical to growing your business.

Word of mouth is nothing more than a hope and a prayer method.

The optimal strategy for referrals is to have a system of consistently asking for one.

By putting a system in place for generating referrals, you dramatically increase the reliability and constancy of word of mouth marketing.

Relying on the goodwill of others is a fools’ errand.

The best referrals come from your ideal best customers so build your referral system around two things.

  1. Target your ideal best customers – the 5% to 20% that generates 65% to 80% of your business.
  2. Focus on the specific problem this group of potential customers has that you have a unique solution to.

If you are a B2B Biz, we have a technique called “Vendor Well” that is a unique and effective word of mouth referral system.

 

Cash Is King

Remember this statement: Cash is King

Here’s an all too familiar scenario.

At the end of the quarter, your accountant calls and says “I have good news and bad news.”

The good news is you made a profit.

The bad news is you owe $50,000 in taxes and you don’t have the cash available to pay.

Now what?  You either borrow money from a bank or you can go to your investors and ask for a cash infusion.

Neither are pleasant nor long-term solutions.

How many small business owners actually understand their financial statements well enough that they can and do make intelligent meaningful decisions so they can make more money?

I would venture to say less than 20%.

Successful businesses do two things

#1 they make money and #2 they generate cash.

How many of you understand the difference?

You can make a profit and still go out of business because you have a negative cash flow.

Cash flow will keep the doors open, long after profitability will.

Making money is about your profitability and cash is about the wealth-generation of your enterprise.

You can’t spend profit; you can only spend cash.

I heard a great analogy from a man named Mike Holly.

In the financial statement story, there are three characters: Vanity, Sanity, and King.

Revenue is Vanity

Profit is Sanity and…

Cash is King

Everyone wants to grow their business but they mistakenly believe growing revenue or sales is the end-game. It is not.

Those that chase growth based on Revenue are on a fools’ errand. It causes you to make bad decisions because you are operating from the notion that everyone is your market and there is nothing further from the truth.

When Revenue is your end-game and everyone-is your-market is your mind-set, you spend money foolishly on things that don’t matter for customers that don’t matter.

Things like inventory for the 80% that are generating little to no profit.

Sanity is looking at the world in black and white. Sanity hates being in the RED.

Sanity manages costs and expenses so that margins are high – both gross and net margins are important to Sanity.

So, here is the short Story-line for the characters:

Vanity goes out and generates sales or revenue. From that revenue, we deduct the cost of the product or service which leaves us with gross profit and that’s where Sanity steps in.

Sanity’s role is to manage those costs and the overhead expenses associated with running the BIZ; things like rent, utilities, wages, employee benefits, insurance, etc, etc, etc. So, we deduct these additional expenses and that brings us to net profit.

But wait, the business then has to pay taxes, and sometimes distributions to investors. What is left is called retained earnings or for this simplified version – cash.

The King hates surprises. The King wants consistent positive cash flow.

Bottom line: You want to be operating from your 80/20 Sweet Spot so that not only are you making a healthy profit but you have a consistent and predictable cash flow month in and month out year-in and year-out.

Implementing our Profit First system will cure this.

Cash is King.

Become a marketing farmer with three simple steps:

Become a marketing farmer 👩‍🌾 with three simple steps:

Step 1 Lead Generation marketing: to generate leads with the sole intent to find people who are interested in what you have to offer. 

 

Step 2 Capture their contact information: Add them to your database. 

 

Step 3 Nurture them: Stay in constant contact with them with information that is personalized and they value, while occasionally making a sales pitch. 

 

90% of all salespeople (businesses) stop following up after 4 contacts. 

 

By the 6th to 7th follow-up nurturing message, you have earned top of mind awareness. 

 

By the 9th contact, when your prospect is ready to buy, you have a 90% chance they’ll contact you. 

 

Follow these three simple steps every day and over time you will have thousands of raving fans who only buy from you and become your outside sales force. 

 

Joe Girard was my “book-mentor” when I first started selling cars. He is the reason I became more of a marketer than a salesman.

He is listed in the Guinness World Records as the “world’s greatest salesman.”

Between 1963 and 1978, he sold over 13,000 cars at a Chevrolet dealership in Detroit, MI. and he did it retail, one at a time, no fleet sales.

Here are his stats:

  • He averaged 6 cars per day.
  • His best day was 18 vehicles.
  • Best month was 174.
  • The best year was 1,425.
  • He sold more cars than 95% of all dealerships in North America.

What was his secret, besides work ethic and a likable personality?

It’s the one thing I emulated and it brought me enough success that I eventually was able to purchase my own dealership at the age of 39 – constant follow-up with everyone he ever met.

Joe sent a “personalized” card every month to his entire list of customers and prospects.

By the time he was in the business 10 years, almost two-thirds of his sales came from repeats and the vast majority of the rest came from referrals.

Top sellers in any industry have mastered being a market farmer first and a salesperson second.

Seventy to eighty percent of all small businesses are unsaleable on either the terms or timetable the owner wants because they’re not operating from their 80/20 Sweet Spot

80/20 Sweet Spot Rule of Thumb:

If the owner IS the business, it’s worth nothing.
If the owner runs the business, it may be worth something.
If the owner cashes a check from his yacht, and the business is totally independent of him, then it is worth money.

Think back to when you first started your business.  You were driven to create something out of passion or a particular talent. The vision probably included not only providing a good life for you and your family but probably also leaving some sort of legacy for your family, employees or community.

It is unlikely you even thought about your Exit Strategy; about focusing on growing the value of your business as well as making it saleable.

But you should have.

Maybe now you are one of the 6 million-plus baby-boomers who own a business and the thought of saleability is just beginning to loom.

Here are some sobering thoughts: [source: Exit Planning Institute]

One: 70-80% of all small businesses are not saleable for the terms and/or timeline the owner wants because it won’t pass the due diligence test. One of those tests is whether the business is dependent upon a single person or small group of people – lack of systematization.

No sophisticated buyer is going to even want to purchase a business like that.

Two: 80 to 90% of an owners financial wealth is locked up in their businesses.

Three: 63% of the business owners indicated they needed the income from the business to support their lifestyle.

Four: 56% of the business owners indicated they needed to harvest the value of their business to support their lifestyle post-transition

How devastating can these scenarios be to an owner who is planning on the sale of his business to fund his retirement?

How valuable would your business be if you had the following:

  • Great customers who spend 4x’s, 16x’s and even 64x’s the average. Who are a joy to work with. Who refer others just like them. Who pay on time with no hassle. Who fit perfectly into your culture, values and Guiding Principles.
  • Employees who are motivated and engaged.
  • An offering or offerings that are unique enough to differentiate you from your competition.
  • Teachable Processes & Systems – so that the success of your business is not dependent on any single person or team, most specifically, you the owner.
  • Profitability and cash flow far above industry norms.

All of these things happen when you are operating from your 80/20 Sweet Spot and can all happen within a very short period of time.

What are your Guiding Principles?

Guiding Principles are the core values, laws and rules we each live by. They define who you are, how you make decisions and they define your business.

In business, just as in life, eventually you will come up against a lot of people and situations that challenge your principles and core values. It’s vital to your success and emotional sanity that you never lose sight of who you are.

Guiding Principles are a blend of your personal ethics, core values and the personal rules of success we have defined for ourselves, on what is right and what is wrong. What is acceptable and what is not. What makes you happy, and what doesn’t. Your Guiding Principles hardly ever change. They are the “voice” that guides your every decision for life.

Guiding Principles trigger that nagging voice in your head that punishes you when you break them and give you the reassuring pat on the back when you follow their guidance. It is the conscience that keeps you on the straight-and-narrow path to right decision and becomes the very soul of your business.

If you want to leverage their power, make them part of your daily conscious thought. Start paying attention to your emotions in different situations. Every time something triggers strong negative emotions (like anger), ignore what triggered it for a moment and think about what Guiding Principle of yours has been broken. Similarly, when you feel strong positive emotion (like giddiness) think about why that incident made you feel good. Those inner thoughts and feelings are your Guiding Principles.

Some examples of Guiding Principles are: [note how each is written out and clear to understand; no one word platitudes!]

  • Honor all Commitments – both the spoken and unspoken ones. If you say you are going to do something and 30 seconds later you realize it is going to cost you more in time, effort or money than you thought, tough! Do it anyway. There are few things more valuable than your own reputation and integrity. (Note: One of the easiest ways to Honor every commitment you make is to Under Promise/Over Deliver).
  • Compatible: Do not spend an inordinate amount of time trying to convince someone who does not want what you have to offer. Life is all about relationships – the right relationships. Surround yourself with people who support you, support what you are doing, and root for your success.
  • Be Honest and Transparent – Clarify Expectations (make sure everyone fully understands including yourself) Avoid platitudes like the plague.
  • Win-win or No Deal thinking: This is why I implemented One Best Price. Life’s too short to deal with a ding dong. I don’t mind honest negotiators but I have no time for win-lose negotiators.  That is someone who not only feels it’s okay to leave nothing on the table for the other side but thinks they have to take the table as well.
  • Under Promise/Over Deliver: Go the Extra Mile.  Always do more than is expected of you. 

    You want people like you, to like you.  So, create and nourish relationships who have your same “Speed of Trust”.

    Choose to work only with the 20%!!

    Your best customers share your same worldview and Guiding Principles

    Write down your own principles. Over time, as you get to know them better, refine them. Make them concise. Make them conscious. Your Guiding Principles will keep you on track.