In 100 Words: Return on Luck

June 15th, 2012 by AdvisorCatalyst

Success comes from a combination of shrewd judgment (strategy), hard work (execution), and good fortune – the last of which often plays a larger role than we would like to admit.

Every company, no matter how disciplined, is susceptible to seemingly coincidental events outside of its control.  We call it luck.  Sometimes it’s good.  Sometimes it’s bad.  It can never be predicted, and it is not obligated to “play fair.”

The critical question is (as Jim Collins writes in Great By Choice): do you get a high return on luck (both good and bad)?  Add that to your list of metrics!

“Luck is not a strategy, but getting a positive return on luck is.”  (Jim Collins)

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In 100 Words: Focus on Process

May 1st, 2012 by AdvisorCatalyst

Success derives from two components: strategy and execution.  Notice what’s missing from the list: results.

Results tell if you’ve been successful, but they don’t show how to be successful.  In fact, poor results may occur despite the best possible decision based on what was known at the time.  Similarly, great results might occur in spite of poor decision making.

The real key to understanding success is found not in the decisions, but in the decision making process.  Regardless of outcome, get in the habit of examining your process of strategic thinking and strategy execution.  Refining that will lead to success.

“Whenever someone says, ‘We have the right strategy, we just need to execute better,’ I make sure to take an extra-close look at the strategy.”  (Phil Rosenzweig)

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In 100 Words: Capitalizing on Complexity

March 14th, 2012 by AdvisorCatalyst

Business complexity continues to increase.  A challenge?  Certainly.  An opportunity?  Absolutely!  Here are four ways to capitalize on complexity:

  1. Prioritize.  Focus resources on the best few initiatives.
  2. “Procedurize.”  Simplify processes.  Create repeatable steps and/or integrate activities.
  3. Reorganize.  The structure that worked before may not fit the current reality.
  4. Monetize.  Share solutions to complexity issues with other businesses for a service fee.

Don’t shy away from complexity, and try not to just pass the costs to your customers.  With a little fortitude and creative energy, you can capitalize on complexity to benefit both you and your customers.

“The only legitimate form of discipline is self-discipline, having the inner will to do whatever it takes to create a great outcome, no matter how difficult.”  (Jim Collins)

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In 100 Words: Difference Between Purpose & Value Proposition

January 31st, 2012 by AdvisorCatalyst

Purpose and value proposition are not the same thing.  Purpose is primarily an internal message that aligns employees; value proposition is an external message that tells customers how you will meet their needs.

Customers may admire your purpose, but they buy your value proposition based on how it meets their needs.  For example, I personally admire Southwest Airlines as an organization, but I typically fly with another airline that better meets my particular business travel needs (even though I have far less admiration for their company).

Let your purpose drive you, but let your customers’ needs drive your value proposition.

“A lot of companies have chosen to downsize, and maybe that was the right thing for them.  We chose a different path.  Our belief was that if we kept putting great products in front of customers, they would continue to open their wallets.”  (Steve Jobs)

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In 100 Words: Crisis Mode

December 15th, 2011 by AdvisorCatalyst

Thus, some leaders deliberately create crises in their organizations.  This can be productive, but beware: you can only do it so often.  The intensity of a crisis demands a lot of energy.  People have physical, mental, and psychological limitations.  Too many crises can run the risk of burning out employees and quickly diminishing the benefits of this tactic.  People eventually get numb to danger.

Crisis mode can be powerful, but choose your spots.

“Leadership is the art of getting someone else to do something you want done because he wants to do it.”  (Dwight D. Eisenhower)

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Happy 90th Birthday, Dorothy Zehnder!

November 30th, 2011 by AdvisorCatalyst

How would you feel if you knew today that you would still be working at 90?  If Dorothy Zehnder is your model, it should excite you.

In 1950, Dorothy and her husband (along with her husband’s family) bought a small hotel in Frankenmuth, Michigan.  Sixty-one years later, their Bavarian Inn is the cornerstone of Michigan’s “Little Bavaria,” one of Michigan’s most popular family attractions.

Dorothy turns 90 today.  She still runs the kitchen, still uses many of her original recipes, and still works six days per week.  Her motto is: “if you don’t feel well, go to work and pretty soon you’ll feel better.”

Speaking with Paul W. Smith on Detroit’s WJR-AM this morning, Dorothy described her ten-hour days as “fun.”  She had a similar theme when we interviewed her for upcoming edition of The CEO Advantage Journal.  “I like to cook,” she told us.  “It’s satisfying to make a good product and get it on the market.  I like the fact that people enjoy my recipes.  Retirement never crossed my mind.  I love what I’m doing.  I would rather [stay] right here visiting with people and making recipes that thousands ask for.”

She’s right.  Productive work is fun!  Take a moment today to step back from the daily grind of your operations.  Look away from your financial numbers.  Lay aside your worries about future customer orders.  Just think about the purpose of your business.  Who do you serve?  How do you improve the life of your customers?  What is your role in that?  What do you enjoy most about it?

Isn’t business fun?  Why would you not want to work at 90?!

Thanks for your example, Dorothy.  Happy 90th birthday and best wishes for continued success.

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Talent by the Slice

October 31st, 2011 by AdvisorCatalyst

In our current business environment, businesses face mounting pressure to master a broad range of specialized knowledge in order to succeed.  Such knowledge is not limited to the specific technical areas in which they deliver their services; it also covers the administrative and management functions – financial, strategic, talent management, back office technology, legal, etc. 

Most small and midsize organizations cannot afford to master all of these areas of specialized knowledge with internal staff – at least not full-time.  Not only is the initial cost of training high, but the ongoing investment required to keep all those different resources up to speed in their particular area of specialized knowledge is cost-prohibitive for most organizations.  Therefore, it’s not surprising to see a proliferation in outsourced services, including payroll, benefits administration, staffing, IT, etc.  Many companies have grown quite large by providing these specialized services to other businesses. 

No less surprising is the increase in organizations buying talent by the slice – hiring consultants or advisors.  Some areas of specialized expertise do not require high volumes of repetitive activities or transactions (such as payroll or benefits processing).  Into these areas step veteran knowledge workers who prefer to work independently, spread their expertise over more than one organization, and networks with other individuals who possess similar or complementary expertise.  By hiring such an advisor on an as-needed basis, a small to midsize organization can afford a level of expertise that they could not afford full-time. 

This “talent by the slice” trend is likely to continue for three reasons:

  1. The competitive pressure on organizations continues to increase.
  2. The fragmentation and specialization of knowledge continues to increase, and the rapid advancement of this knowledge requires a great deal of continuous learning. 
  3. The number of qualified individuals who want to work independently is increasing.  This is largely fueled by the Baby Boomer demographic.  They want to remain engaged in business with greater time flexibility, they have years of expertise that can benefit others, and in many cases, their personal financial situations require them to continue generating income.  Serving clients as advisors is a way for them to fill each of these needs. 
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Two Perils of Success

October 7th, 2011 by AdvisorCatalyst

Great leaders must be constantly aware of threats to their endeavor, and this does not stop when success is achieved.  Success can lead to either overcautiousness or overconfidence, and both are dangerous.

Overcautiousness results in paranoia.  The pioneer does not want to mess anything up, so he chooses to ride the current wave of success.  Unfortunately, when the wave inevitably runs its course, he crashes with it.

Overconfidence results in blindness.  The organization overreaches, extending beyond its resources and strengths, thereby putting itself in a vulnerable position.  In trying to succeed too quickly, the organization is overcome by challenges bigger than it is equipped to handle. 

Beware each of these perils.  Those tempted to sit still must find the courage to act!  Failure is always a possibility, but the only thing that guarantees failure is fear of failure.  Mistakes due to inaction often engender regrets greater than those due to wrong actions.

Those tempted to ignore their weaknesses must open their eyes and face the reality of their situation.  It is not just action, but disciplined action that separates the best from the rest.

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Increasing Knowledge Retention

September 15th, 2011 by AdvisorCatalyst

I love to learn; thus, I love to read. But when scanning a previously read book, I’m often surprised at how little of it I remember. I forget far more than I retain.

Perhaps we would all do well to re-read our old books rather than buy new ones. Reinforcing good thinking and disciplines is important to sustaining performance. Don’t let new packaging fool you into thinking there is much new wisdom out there. Most “new” material is simply old knowledge presented with different labels and examples.  

Choose a classic, and read it again as if it’s the first time.  

“Men more frequently require to be reminded than informed.”  (Samuel Johnson)

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The Power of Persistence

September 12th, 2011 by AdvisorCatalyst

In May 2009, I had the pleasure of attending a Maximum Impact simulcast, which included an interview with former British Prime Minister Tony Blair. In my notes from that interview, I wrote the following:

3 Qualities of People at the Top Level of Any Organization:

  1. Self-belief
  2. Hard worker
  3. Able to rise from failure

That last one caught my attention. Who has not failed at something? Whatever achievement one pursues, obstacles are as sure as the sun rising. How people respond to obstacles is what sets the great ones apart.

I think the key ingredient to rising from failure is persistence – the stubborn will to keep pressing. (Click here for my previous blog on “pressing the initiative.”) Great businesses respond to failure by following the advice from the old song: “pick yourself up, brush yourself off, and start all over again.” That’s good advice whether “starting over” means starting from scratch or just making a tweak. The point is to not stand idle. If you just keep churning with the best decisions you can make, odds are that your efforts will eventually bear fruit – and it’s likely that future yields won’t be as difficult as the first.

Ironically, failure is often just as likely to come from success – or more specifically, from resting in success. Pioneers such as Wang Labs, Alta Vista, and Rio’s MP3 player are largely unknown to us today, but the products they created live on in Hewlett Packard, Google, and Apple’s iPod. These pioneers died not because their products failed, but because they failed to persist in the efforts that make them successful in the first place. Their innovative competitors quickly passed them by and took over the market.

Whether you have succeeded or failed, you must persist in your endeavor to be great. There is no silver bullet. Great achievements result from hard work over the long term.

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