Tag Archives: business

The 5 Myths of Business Strategy

By Rich Horwath

strategy myth

Consider some of the most popular myths: Lightning never strikes the same place twice—it does. There is no gravity in space—there is, just less. Humans only use 10 percent of their brains—actually, a lot more—yes, even men. Pigeons blow up if fed uncooked rice—they don’t.

Which myths or half-truths have permeated your organization and what effect have they had on your business? Running a business on myths, flawed business principles, and baseless assumptions creates needless confusion and a lack of strategic direction. A study of 10,000 senior executives showed that the most important leadership behavior critical to company success is strategic thinking at 97 percent. As a good strategy is at the core of any organization’s success, it’s important to understand the strategy myths that may be holding back your team from reaching greater levels of success.

Arm your team with the strategy myth busters and your business will soar higher. Click To Tweet

Strategy Myth 1: Strategy comes from somebody else.

“We get our strategy from the brand team/upper management.” This is a common refrain when managers in other functional areas are asked who develops a strategy. It’s also wrong. The strategy that you execute should be your own strategy. Why? Because each group’s resources are going to be different. For instance, the sales team has different resources—time, talent, and budget—than the marketing team or the IT team or the HR team. How they allocate those resources determines their real-world strategy. It’s important to understand the company, product and other functional group strategies to ensure that your strategies are in alignment. However, their strategies are not a replacement for your strategies.

Myth Buster: Identify the corporate strategies, product strategies, functional group strategies and your strategies and seek alignment.

Strategy Myth 2: Strategy is a once-a-year process.

In a recent webinar presented to more than 300 CEOs entitled, “Is Your Organization Strategic?,” the question was posed: “How often do you and your team meet to update your strategies?” The percentage of CEOs that meet with their teams to assess and calibrate strategies more frequently than four times a year is only 16.9 percent, with nearly 50 percent saying once-a-year or “we don’t meet at all to discuss strategy.”

A study of more than 200 large companies showed that the number one driver of revenue growth is the reallocation of resources throughout the year from underperforming areas to areas with greater potential. Strategy is the primary vehicle for making these vital resource reallocation decisions, but as the survey showed, most leaders aren’t putting themselves or their teams in a position to succeed. If strategy in your organization is an annual event, you will not achieve sustained success.

Myth Buster: Conduct a monthly strategy tune-up where groups at all levels meet for 1-2 hours to review and calibrate their strategies.

Strategy Myth 3: Execution of strategy is more important than the strategy itself.

A landmark twenty-five years study of 750 bankruptcies showed that the number one cause of bankruptcy was flawed strategy, not poor execution. You can have the most skilled driver and highest performance Ferrari in the world (great execution) but if you’re driving that Ferrari on a road headed over a cliff (poor strategic direction)—you’re finished.

A sure sign of a needlessly myopic view is that everything is an “either or,” rather than allowing for “and.” Strategy and execution are both important, but make no mistake that all great businesses begin with an insightful strategy. 

Myth Buster: Take time to create differentiated strategy built on insights that lead to unique customer value and then shape an execution plan that includes roles, responsibilities, communication vehicles, time frames and metrics.

Strategy Myth 4: Strategy is about being better than the competition.

Your products and services are not better than your competitors. Why? Because “better” is subjective. Is blueberry pie better than banana cream pie? It depends who you ask. “Is our product better than the competitor’s product?” is the wrong question. The real question is, “How is our product different than the competitor’s product in ways that customers value?”

Attempting to be better than the competition leads to a race of “best practices,” which results in competitive convergence. Doing the same things in the same ways as competitors, only trying to do them a little faster or better, blurs the line of value between your company and competitors. Remember that competitive advantage is defined as “providing superior value to customers”—it’s not “beating the competition by being better.”

Myth Buster: Identify your differentiated value to specific customer groups by writing out your value proposition in one sentence.

Strategy Myth 5: Strategy is the same as mission, vision, or goals.

Since strategy is an abstract concept, it is often interchanged with the terms vision, mission and goals. How many times have you seen or heard a strategy that is “to be no. 1,” “to be the market leader,” or “to become the premier provider of…?” Mission is your current purpose and vision is your future purpose, or aspirational end game. Goals are what you are trying to achieve and strategy is how you will allocate resources to achieve your goals.

Misusing business terms on a regular basis is like a physicist randomly interchanging element’s chemical structures from the Periodic Table. You can say that the chemical structure of hydrogen is the chemical structure for gold, but that doesn’t mean it’s correct. Starting with an inexact statement of strategy will derail all of the other aspects of your planning and turn your business into the equivalent of the grammar school volcano science project with red-dyed vinegar and too much baking soda.

Myth Buster: Clearly distinguish your goals, strategies, mission and vision from one another.

If left unchecked, strategy myths can cause you and your business to fail. A ten years study of 103 companies showed that the number one cause of business failure is bad strategy. Arm your team with the strategy myth busters and your business will soar higher than a pigeon with a belly full of uncooked rice.

Rich Horwath is a New York Times bestselling author on strategy, including his most recent book, StrategyMan vs. The Anti-Strategy Squad: Using Strategic Thinking to Defeat Bad Strategy and Save Your Plan. As CEO of the Strategic Thinking Institute, he has helped more than 100,000 managers develop their strategy skills through live workshops and virtual training programs. Rich is a strategy facilitator, keynote speaker, and creator of more than 200 resources on strategic thinking. To sign up for the free monthly newsletter Strategic Thinker, visit: www.StrategySkills.com.

Engaging the Power of Your Informal Networks

By Michele Wierzgac, MSEd

Michele Wierzgac-informal network

Networking is recognized as a major influence on one’s ability to achieve great success. The most successful people in the world possess the capability to influence and shape the opinions of others. However, there is a greater emphasis on the type of network one participates in.

Much has been written about successful executives and leaders and how they participate in formal networks, but very little is known about the substantial amount of time they spend within their informal networks.

What is known is that the impact is vast. It is imprudent for you to underestimate the power of informal networks by saying they are merely “nice-to-have.” These types of networks are increasingly having a major impact on organizational effectiveness.

More importantly, these types of networks provide major business advantages for the participants and thus are known to advance many careers.

Defining the Networks

The main difference between informal and formal networks is the effort of the individuals to create and maintain them. The formal network often has an organizational culture attached to it, such as a formal philosophy, mission, structure, leadership, membership, eligibility, and funding. 

These networks are easily identifiable—board of directors, economic clubs, affinity groups set up by corporations, executive talent pools, online discussion groups, management groups, professional conferences, and associations.

Informal networks are based on the objective of achieving a reciprocal exchange of information and favors—no rules—share advice freely, expand the network at will, inspire each other, achieve personal goals, and help each other obtain business and career advantages.  The “old boys network” is based on the informal network system, hence the phrase, “it’s a man’s world.”  Again, the emphasis is on a one-to-one networking effort, as opposed to an organizational system that characterizes the formal network.

People have always had the need to build and maintain a network that involves trust and respect for others. Click To Tweet

Informal Networks Are Hidden

The informal network may be a group of industry colleagues with a common interest or a shared philosophy getting together for a casual gathering away from the office.  Other networks may be created through people you meet while traveling, attending church functions, or simply completing errands.

The most effective informal network contains high-functioning people who are extremely skilled, knowledgeable, powerful, and who have strong personal networks. Research indicates that extroverts are the element that drives a successful network. People who are friendly, courteous, tolerant of differences, and respectful of cultures and different perspectives achieve the most success. The informal network without the hierarchy and bureaucracy encourages the most interaction and achieves the most positive results.

On the other hand, there are many skills one must possess before being invited to an informal network. The most important skill to acquire is not to treat everyone like a mass market, a machine, or a cold call. The success of this most prized network depends on respecting the commonality among one another and to help each other achieve their goals.

Reflecting On Your Informal Networks

Here are strategies for polishing your informal networking skills. What do you need to work on?

  • Do not treat your informal network like a mass market, machine, or cold call.  Be a genuine networker.
  • Do you have a great attitude? Are you positive?  Do you see the big picture?  The successful networker has a strong belief in themselves and in what they are pursuing.
  • Who makes up the network? What are their needs, company, and interests? Leaders listen to the needs of the network.
  • Who makes up your network? How can you connect your network with this network? Triumphant leaders are strategic—always thinking ahead.
  • Do not be a name-dropper unless you have permission. Be an honest networker.
  • How much have you given to your network?  Successful people have the ability to give back. Share information and opportunities with one another.
  • Does your informal network share the same philosophy about career, business, friendship, or family? Identify key people you can relate to otherwise move to another network.
  • Do you know your goals, strengths, and career direction backward and forwards? Educate the network on exactly what you do and what you are looking for—people cannot read your mind.
  • What is your personal brand? Are you unique? How will people remember you? Remember that generic brands encourage generic attention.  Write a 30-word brand statement of how you want to be described. A personal brand statement is a method of controlling what others are saying about you.
  • Are you believable and credible? Leaders are passionate about who they are and what they do.
  • What are your gifts? Leaders share their talents within the network without reciprocity.
  • Write and call on a regular basis each person within the network and exchange information. Successful leaders are organized.
  • Are you brave enough to ask questions? Leaders do not have all the answers—ask for directions, opinions, and ways to get around obstacles.
  • Develop the ability to ask the right questions—do not ask a lot of questions.
  • Do you have the ability to self-correct? Leaders ask for honest feedback and take criticism from those they respect as an opportunity to improve.
  • Communicate, communicate, communicate; be proactive in initiating conversation—do not give the perception of being in a clique or an exclusive group; be sure to mix and mingle.
  • Training in and respect for etiquette, protocol, and cultural awareness is mandatory—poor manners and ignorance immediately damage your personal brand and reputation.
  • Do you write handwritten notes? Thank you notes remain a critical ingredient for maintaining a genuine reputation.

Networking has always been an essential social skill founded on the interdependence of people. We all rely on the support and cooperation of others to achieve our goals. Informal networking involves bonding, sharing expertise, and investing time and effort into others.

People have always had the need to build and maintain a network that involves trust and respect for others; the informal network connects people who perhaps otherwise would not have met.

Informal networks are hidden and filled with rich resources to drive you to your next destination.

Michele Wierzgac is a leadership expert, keynote speaker, and author of the forthcoming book, Ass-Kicking Women: How They Leverage Their Informal Networks For Success. With her high energy presentations, Michele conveys sound leadership solutions and promotes audience engagement and on-your-feet participation. Michele is also a certified Business Enterprise through the LGBT Chamber of Commerce. She promises her audience that they will leave her solution-driven keynotes and workshops with at least one passionate, life-transforming leadership tool. For more information on bringing in Michele Wierzgac for your next event, please visit https://micheleandco.com .

What if Your Office HVAC System was SMART?

By Mike Bivins

Mike Heat-smart system

“Self-Monitoring Analysis and Reporting Technology,” better known as SMART Technology, monitors and analyzes computerized equipment and lets you know when a problem arises. SMART Technology now exists in Heating, Ventilation, and Air Conditioning (HVAC) systems and it’s emerging as an extremely efficient way of saving energy (and money) for business owners.

Consider the case of a 2,500-square-foot commercial business in rural Florida built in the 1980s. The owners don’t like their AC bill, but they don’t believe the HVAC system needs an upgrade, despite spending a bundle last month when the AC cut out unexpectedly and the HVAC professional has to be called to repair the system. In the meantime, employees sweltered in Florida heat and humidity for two days until the HVAC was fixed. What could convince the owners that investing in a new system—even if a little at a time—is smart?

Self-Diagnostics

As the acronym suggests, one of the key features of SMART Technology lies in the ability to quickly self-diagnose a problem and then assist you to address it. A SMART system either would have taken care of the above issue or, at the very least, would have notified the owner earlier that service was needed—possibly even placing a call to the HVAC professional for you!

SMART systems are revolutionizing the HVAC industry, controlling and monitoringequipment for maximum efficiency, as well as increased IAQ. Click To Tweet

Change the Filter

Many business owners replace their AC filter annually and then forget about it for another year. But just because a filter isn’t clogged, doesn’t mean it’s efficient. A SMART system, on the other hand, informs you that your AC system is not running optimally.  The SMART system can identify problems as complex as compressor malfunction but also alert you to simpler problems, like a dirty air filter.

In fact, air conditioning filters should be changed every month no matter how often (or how little) you run the AC. The fan causes air to move throughout your business, regardless of whether the air is on or not.  Moving air eventually becomes dirty air, so replacing it each month is always a good idea.

Does the AC Need to Turn On?

Programmable thermostats save energy and money by allowing the temperature to rise in your office while you are away and then lower the temperature to maximize comfort during the peak hours when everyone is at work.

SMART HVAC systems, though, take this concept even further. A SMART system can circulate less air to an unoccupied room than would a traditional HVAC system. This conserves energy, which saves you and your business money.

Are you at work? Are you coming in early or staying late? A SMART system can be programmed to adjust HVAC usage in conjunction with your alarm system.  For example, if your HVAC system was a SMART system, it could be set up to know when you are on your way to the office. Then, say 20 minutes before arrival, it could adjust the temperature (up or down) in the office to just the way you and your employees like it.  

SMART systems have added functionality, allowing for special programming and/or linking to occupancy sensors.  Your HVAC system can be programmed to detect your presence and keep wherever you roam in your preferred comfort zone. This type of SMART functionality also can adjust the thermostat schedule to accommodate a change in business hours, such as holidays or extended/shortened hours.  The ever-growing number and type of new sensors can adjust airflow and temperature as you and your staff work rush around the office late at night, trying to meet a deadline.

Find Better Air

The newest SMART ventilation controllers address perhaps the most overlooked aspect of HVAC—Indoor Air Quality (IAQ). Let’s say an employee is microwaving some popcorn for a late-afternoon snack but accidentally leaves it in too long and it burns. Your SMART system would draw in air from outside, and only in the amount needed, to remove the odor for you—better than opening a window!

Outdoor air quality (OAQ), though, may not be the ideal solution every day. That is why the SMART system filters the air. Balance between IAQ and OAQ is key.  Without proper ventilation—defined as the exchange of outdoor air and indoor air—contaminants such as radon, formaldehyde, volatile organic compounds (VOCs) and other pollutants can build up, leading to potentially serious health problems.

Business owners should be aware of this cause and effect between ventilation and IAQ. And with an HVAC that is SMART, you are protecting your staff and your bottom line at the same time.

In Closing

SMART systems are revolutionizing the HVAC industry, controlling and monitoring equipment for maximum efficiency, as well as increased IAQ.  And the more efficient your HVAC system is, the more energy—and money—your business will save.

Mike Bivins is an engineer with the Lake Wales, FL-based Natural Air E-Controls, LLC.  Natural Air E-Controls, LLC designs and builds HVAC control systems that enable the building’s HVAC equipment to provide fresh air and remove pollutants by taking in outdoor air in amounts needed to improve indoor air quality while saving on heating and cooling bills.

7 Reasons to Not Share Ownership with Key Employees

By Patrick Ungashick

Many business owners consider at some point sharing ownership of their company with one or more key employees. Sharing ownership can create powerful advantages—retaining employees for the long-term and incentivizing them to increase business value are usually top motives. Sharing ownership appears to elevate top employees into a true partnership with the owners in the ongoing effort to sustain company growth.

However, sharing ownership is not without downsides, some of which are immediately apparent. Obviously, sharing ownership dilutes the owner’s equity position. Consequently, sharing ownership can end up being the most expensive way to incent, reward, and retain top employees. Other potential problems and downsides create unwelcome surprises down the road.

Sharing ownership backfires more often than it succeeds. If it backfires, the business owner’s ability to successfully exit from the business one day may be jeopardized.

Sharing ownership can create powerful advantages—retaining employees for the long-term and incentivizing them to increase business value are usually top motives. Click To Tweet

Listed below are seven reasons to avoid sharing ownership with top employees, whether you are contemplating selling or gifting to them a piece of your company:

1. Top employees sometimes leave

No matter how loyal and trusted they are, it happens. Making matters worse, when top employees leave, they rarely switch industries. If they leave your company, likely they join or become the competition. Now you may have somebody competing with you who owns a piece of your business. To prevent this, you will need to have employees sign an agreement obligating them to sell their stock (or units, if an LLC) back to you should they leave. This helps avoid a competitor owning some of your company. But, you won’t like writing a check to a former employee in order to buy back your stock. That’s not fun.

2. Sharing ownership with top employees complicates legal governance

For example, sharing owners requires creating (or updating) legal documents such as a buy-sell agreement, which outlines decision-making and ownership-transfer rules among co-owners. One important issue that must be addressed is who has the authority to sell the entire company one day. You cannot allow minority owners to hold up a possible sale in the future. This buy-sell agreement therefore also needs to give the majority owner clear authority to sell the entire company, further complicating your exit planning.

3. Sharing ownership also complicates income tax planning

Certain laws regarding retirement plans—an important tax planning tool—require owner-employees to be treated differently for anti-discrimination testing. Also, if you have an S-corporation (a popular legal form) and you wish to make a profit distribution, it must be in proportion to ownership. Sharing profits proportionately with all owner-employees might not be what you had in mind. 

4. Sharing ownership changes the employer-employee relationship, potentially in an undesirable manner

For example, ownership of bestows rights. Employees who receive ownership typically gain the right to review the company’s financial information and records. You may not be crazy about employees seeing that level of financial detail. Once an employee has ownership, it’s easy for the line to blur between ownership and employment. It can become harder to manage an employee who also is an owner. Firing that person, if ever necessary, can become more difficult and expensive.

5. Sharing ownership with one or more employees creates a precedent

You intend your company to grow, and that growth in the future likely leads to additional valuable employees coming into the picture, either promoted from within or hired from outside the company. Those future top employees may want ownership too, given that their peers already have it. You will either have to give it to them, further diluting your ownership, or deny it to them, which risks alienating them perhaps to the point that they leave the organization.

6. With ownership comes potential perks and responsibilities that may complicate matters with your employees

Owners typically enjoy some personal expenses paid by the company, such as your vehicle, cell phone, meals, etc. Employees who receive ownership often expect to participate in such perks too. You will either have to include them, which increases costs, or you will have to temper their expectations, which risks alienating them. With ownership also come responsibilities, such as personally guaranteeing company debt. Top employees may be hesitant or unprepared to share in this debt and risk, further taking away some of the excitement and appeal of receiving ownership.

7. Sharing ownership expands the possibilities the company can find itself exposed to outside creditors

Occasionally, employees might do things that put themselves and their ownership in the company at risk, such as get divorced, get sued, or find themselves in financial difficulties. Sharing ownership increases the possibility that your company gets dragged into one of these situations.

Conclusion

Because of these disadvantages, business owners should attempt to retain and reward top employees without sharing actual ownership. Alternative strategies exist, such as “golden handcuffs” plans including phantom stock, stock appreciation rights (SARs), and executive compensation plans. Many of these programs can simulate business ownership, achieving the original goals without creating the inevitable potential risks and downsides. 

There are a few situations where sharing ownership with top employees may make sense. The most common would be sharing some actual ownership now as one step within a comprehensive plan to eventually sell or transfer the entire business to the employees. Otherwise, in most cases, it is advisable to pursue a different course of action.

Patrick Ungashick is the CEO of NAVIX Consultants, a celebrated speaker on executive and business owner exit planning, and the author of A Tale of Two Owners: Achieving Exit Success Between Business Co-Owners. With his wealth of knowledge on exit planning, Patrick has provided exit advice and solutions to business owners and leaders for nearly thirty years. For more information on Patrick Ungashick please visit: www.NAVIXConsultants.com.

5 Critical Steps to Better Meetings

By Rich Horwath

Rich Horwath-meetings

Are your meetings creating valuable new insights for the business or are they a series of multitasking-filled monologues? Are they productive conversations about key business issues or a rehashing of the same stuff you’ve been talking about for months? Are your meetings getting better or worse?

Answer these five sample questions from the Strategic Meetings Assessment for the meetings you typically attend:

  1. Relevant information is sent out prior to meetings to avoid one-way presentations during the meetings. Yes__ No __
  2. Meetings start at their scheduled time. Yes__ No __ People are fully attentive and not engaged in multitasking (e.g., checking phones). Yes__ No __
  3. People leave meetings with a clear understanding of who is doing what by when. Yes__ No __
  4. I decline meeting invitations when the purpose and/or agenda have not been communicated. Yes__ No __

In this brief sample, a score of three or more “No’s” indicates an opportunity to dramatically improve the efficacy and productivity of your meetings.

A meeting can be defined as a gathering of two or more people featuring collective interaction and engagement using conversations to make progress toward a purpose. Note the use of the words “interaction” and “conversations” in the definition. If you find yourself in meetings and especially teleconferences on a regular basis where the format is primarily one-way presentation, there’s ample opportunity to improve your situation.

Effective meetings can be energizing forums to help your team set direction, make decisions, and unify efforts. Click To Tweet

Research shows that meetings consume about 40 percent of working time for managers. Key data points from research to consider:

  • Up to half of the content of meetings is either not relevant to participants or could be delivered outside of a meeting. 
  • 20 percent of meeting participants should not be there.
  • 40 percent of the meeting time is spent on information that could be delivered before the meeting.
  • 50 percent of meetings executives attend are rated as “ineffective” or “very ineffective.”

There are five critical steps you can follow to help your organization take a more strategic approach to meetings and teleconferences:

1. Conduct a meetings audit

Before a doctor prescribes a medication, she first diagnoses the patient’s condition. In the same spirit, before you prescribe new meeting guidelines, it’s helpful to first baseline what’s happening today. Look at factors such as the types of meetings you attend, the frequency of meetings, and the length of meetings. Then identify the reasons these meetings exist and if there are any meetings that are not necessary. Once the audit is complete, it provides a bounty of useful information to shape the future state of meetings.

2. Identify current meeting mistakes 

Meeting mistakes occur in three phases: pre-meeting, in-meeting, and post-meeting. They can also be categorized as either leader or participant mistakes. For example, a common in-meeting mistake by the leader is failing to rein in off-track conversations. A common in-meeting mistake by participants is multitasking, which conveys a lack of interest in the topic and/or a lack of respect for the person speaking at the time. There are approximately twenty-five mistakes to look for in the three phases to ensure that the group is not sabotaging their own efforts at improvement.

3. Educate managers on what good looks like 

Begin this step by collecting the current best practices being used by managers within the organization. Then look externally to see what principles and guidelines are being used by other organizations within and outside your industry as it relates to meetings. Examples of best practice principles include things such as “identify decisions to make in the meeting” and “create a virtual table of participants for teleconferences.” Use these best practices to compile a list of new meeting standards.

4. Utilize meeting tools

One of the keys to leading effective and efficient meetings is aligning the goals of the meeting with the appropriate tools and processes to get there. For instance, if you’re leading a strategy development meeting, there are more than seventy different strategic thinking tools you can choose from to help your team think and plan strategically. The key is to select the handful of tools that make the most sense based on the context of the team, business goals, competitive landscape, etc. Be clear on your meeting goals and then choose the process and tools to get there.

5. Develop meeting checklists

Research in the social sciences on habits shows that in order to effectively change someone’s behavior, it’s helpful to provide physical or environmental triggers. One highly effective trigger is the use of meeting checklists. These physical reminders ensure that teams across the organization are aware of the basic meeting principles, techniques, and tools to optimize their meeting time. However, the checklists are only valuable if they are accompanied by the corresponding discipline to utilize them on a consistent basis.

Effective meetings can be energizing forums to help your team set direction, make decisions, and unify efforts. Ineffective meetings can be anchors that weigh people down with irrelevant information, didactic presentations, and unclear priorities. Which type do you attend today? Do you think it will be different tomorrow?

Rich Horwath is a New York Times bestselling author on strategy, including his most recent book, StrategyMan vs. The Anti-Strategy Squad: Using Strategic Thinking to Defeat Bad Strategy and Save Your Plan. As CEO of the Strategic Thinking Institute, he has helped more than 100,000 managers develop their strategy skills through live workshops and virtual training programs. Rich is a strategy facilitator, keynote speaker, and creator of more than 200 resources on strategic thinking. To sign up for the free monthly newsletter Strategic Thinker, visit www.StrategySkills.com.