In an earlier article, I discussed how strategy is not a lengthy action plan but the evolution of a central idea about how a company can be unique and valuable to its customers.
So if a strategy is about how the company needs to compete, then how does a CEO and their A player leadership team make it happen? With a best practice execution plan and process.
The Execution Challenge
In my experience over the last 16 years working with leadership teams, when CEOs and owners of mid-size companies decide to do formal planning with their leadership team, they often go through a traditional strategic planning process.
However, this often only goes so far.
Many strategic plans include a mission (or purpose), vision and values - all important - yet little, if anything, about how the company will compete in the market.
And often, these documents have vague plans for implementing whatever rough direction they’ve set out: some high level multi-year priorities, or maybe some one year initiatives. In the best case, an annual budget is built with the strategic plan in mind.
From there, leadership team members will report on their numbers quarterly, or maybe monthly.
In the meantime, the CEO assumes the leaders are working on making improvements and changes in their departments that align with the high level priorities.
After a couple of quarters, a few things can happen:
Does this pattern seem familiar?
Does it cause drama, tension and low morale? Usually so. Is it efficient? Not really. Does this hamper progress, growth and profitability? For sure it does. And is it any fun? No.
So, what’s the solution? Not a traditional strategic plan. But a strategy (which I outlined here) and an execution plan and process.
Our 3 key disciplines of low drama execution describe how it works: 1) Metrics and Targets, 2) Priorities and 3) an effective Meeting Rhythm.
Metrics and Targets
Watching the numbers may seem like the most obvious of the three disciplines. We all know that tracking financial results is an important part of monitoring whether we’re on track.
However, there are other key numbers to monitor as well.
While some metrics tell us how we’ve done, others give us an indication of how we’re going to do. This is the difference between lagging metrics and leading metrics.
For a company as a whole, lagging metrics will be things like financial results, units delivered and market share. Some leading metrics may be customer loyalty, on-time delivery, employee engagement or the percentage of employees that are A players.
We want to set long term targets for our key metrics - say for 3 to 5 years out. These targets should align with our 10 to 30 year vision, or big hairy audacious goal, as well as our best-guess estimates of what’s possible with the core customer and sandbox we chose in our strategy.
From there, we can set goals for those same metrics for the next year. For most of those metrics, we’ll also set goals for the first quarter. And finally, for some metrics, often leading metrics, we might be able to set monthly or even weekly milestones.
Setting short-term goals that align with mid-term targets that align with a longer term vision allows the leadership team to commit to biting off a certain amount of progress each quarter.
This way, we can check that we’re making enough progress over the weeks, months and quarters to achieve what we need to for the year, which will contribute to reaching our 3 to 5 year targets and our vision.
Metrics measure the results and state of our day to day operations, and how they’re progressing towards our vision.
Priorities, on the other hand, are the changes and improvements to those operations. These are what we want and need to implement to make it possible to achieve those mid to long term goals and targets.
Going back to my first article in this series on how companies need to do things differently to continue to grow and profitably, these priorities represent, in part, those very structures, systems and processes.
Priorities may also be about building or buying new facilities, equipment, or other significant capital assets to expand or replace capacity.
Priorities should also build the capabilities needed to bring to life or strengthen the unique brand promises we chose in our strategy.
Like with metrics, we chunk these down from long term to mid term to short term. This again helps us make progress every quarter that supports the progress we want to make over time.
We can start with the 3 to 5 year priorities (we sometimes call these Key Thrusts or Key Capabilities). These are the broad, multi-year categories of change and improvement that need to happen to support achieving our 3 to 5 year targets. For example, “developing leadership capability at all levels” or “automating our production processes”. Both likely take multiple years.
From our 3 to 5 year priorities, we’ll identify our 1 year priorities (we sometimes call these Initiatives). They capture the handful of large multi-quarter change projects that bite off a chunk of one or more of our 3 to 5 year priorities.
And from our annual priorities, we’ll choose quarterly priorities (we sometimes call these Rocks). These are the multi-month change projects that will help us complete one or more of our annual priorities.
An Effective Meeting Rhythm
It’s great to know what targets need to be achieved and what priorities have to be accomplished over the next quarter to make enough progress towards our long term goals.
But we know that unforeseen things will happen during the quarter. Problems will come up. Things can get forgotten. People can lose focus.
So, how do we make sure our leadership team executes on our quarterly plan in the midst of all that?
Through regular communication. An effective and efficient meeting rhythm is the key.
This meeting rhythm includes:
The purpose of weekly leadership team meetings are to check that our metrics and priorities are on track, to take corrective action, and to problem solve where needed.
Daily leadership team huddles are to keep all team members in sync throughout the week and identify problems quickly so they can be resolved as they come up.
Monthly leadership team meetings are for checking that our metrics, priorities AND monthly financial results are on track, taking corrective action, adjusting the plan as needed and tackling larger tactical or strategic issues.
Quarterly planning meetings are to check what we accomplished over the last quarter, adjust course for the year and set our quarterly goals and priorities for the next 90 days.
The annual planning meeting is for assessing overall progress, noting market trends, adjusting our strategy, long term vision and 3-5 year targets and priorities, and deciding what we’ll bite off with our goals and priorities for the coming year and for the first quarter.
With a clear purpose and a proven agenda for each type of meeting, and with the right people in the roles of facilitator, time-keeper and note-taker, these meetings can efficiently keep the leadership team and its members focused and executing throughout the year.
Pulling it all together
A clear, aligned execution plan and an effective execution process will minimize drama and maximize efficiency and goal achievement.
However, this will work best if we create the execution plan with the leadership team, so there is efficient leadership team buy-in. And this goes for the strategy as well.
Combine all this with strong accountability practices and having A players on our leadership team, and we have a powerful mixture to reliably implement the structures, systems and processes to implement our strategy, build capacity, and grow consistently and profitably...AND enjoy the ride.
That said, this all may seem daunting if you and your leadership team are too busy working in the weeds.
If that’s you - and most CEOs I meet have this challenge - keep an eye open for my next article on how to shift from working mostly “in the business” to working more “on the business”, and having more time for you and your family as well.
How can you execute with less drama in your company?
To find out how to have more efficient execution to grow more easily, quickly and profitability, AND enjoy the ride, try our complimentary Agile Growth Checklist. This self-service questionnaire takes 5 to 10 minutes to complete. You'll receive the checklist with your responses immediately. Within 24 hours, you'll receive a compiled report highlighting areas to improve. Complete section 4 to check your execution processes. Or complete all 7 sections to find out how your company is doing in each of the 7 areas needed to produce more rapid, profitable and sustainable growth. This report is complementary and involves no obligation.
Last month, I shared some tips for developing a successful strategy to compete and thrive in your market. Yet, developing a great strategy takes more than a framework. It takes a high performing leadership team. That, in turn, takes high performing leaders.
As a CEO, president, owner or entrepreneur, you’ve likely had department heads on your team that didn’t meet your expectations or were poor leaders. It can be frustrating to be repeatedly disappointed or to have to continuously push, cajole or just grin and bear it.
Yet, it’s entirely feasible to resolve these headaches and prevent them from happening in the first place.
This is about ensuring that, on the leadership team, we have the right people in the right seats doing the right things in the right way.
First, we want to ensure we have the right seats - the right roles needed on our leadership team - eg. sales, marketing, operations, finance, accounting, human resources, information technology, etc. We want to consider that each team member is likely playing more than one role. By thinking of it this way, we can identify what functional roles are being played, and whether the right roles exist on the team.
We also want to get each leader, and the whole team, on the same page about what each role means. This includes being clear about the expectations for each role in terms of results (eg. role: marketing => results: qualified leads). It’s best if these results expectations are quantified with targets (eg. X number of qualified leaders per month). The results, metrics and targets are the productivity side of each role.
We also want to be clear about the behavioural side. This includes defining the behavioural expectations needed across the leadership team and across the company.
These behaviours are captured to a large degree in our core values. These core values distill the essential behaviours for working in the company, and also across the leadership team. This is what enables great teamwork, productive conversations and problem-solving, developing a strong strategy and execution plan, and coordinating to execute.
Clarity on core values is also critical because leaders living them is one of the main ways the company’s culture is brought to life among employees.
With productivity and behaviour expectations clear, we want to ensure we have the right person in each seat. We want to ask ourselves: is each person on the leadership team meeting our expectations...in terms of both the results expected in their role AND the behaviours captured in our core values?
Furthermore, if we want to build a thriving company, we’ll need A-players. We define A-players as being among the top 10% performers for the specific role and for the pay we can afford, AND they live and breath all of our core values.
Being a top 10% leader doesn’t just mean doing a great job at one’s function: marketing, accounting or human resources, etc. It means getting great productivity from their people - both quantity and quality of work. This takes strong planning, delegation, mentoring, coaching and monitoring skills.
Often leaders tend towards one of two extremes: micro-managing or laisser-faire management. Strong leaders will stay involved enough to monitor and be supportive while at the same time letting capable employees use their skills, be self-sufficient and take initiative.
A-player leaders create an environment in their department that inspires employees to perform at their best.
When it comes to leaders who don’t live our core values, it’s usually a dead end. Because a person’s values can’t really be changed.
People behave according to what they believe. If they grew up believing that learning and adapting is valuable in its own right, they’ll learn and adapt on the job. If they believe that tradition, duty and compliance are noble, they won’t behave in adaptable ways.
And if they don’t believe in one of our core values, there’s not much we can do about it. We can coach them on that core value, and they may start behaving more in alignment with it for a while. But often, they’ll slip back into their habits.
This means that very often, a leader that isn’t living one or more of our core values never truly will. And so they’ll never be an A player leader, at least in our company.
Addressing the Gaps
As CEOs, presidents and owners, we can often be hesitant to let a leader go who doesn’t fit. Our underlying concern is often that maybe we weren’t clear on our expectations or maybe we didn’t coach the leader enough or very effectively.
So, it can be reassuring to start by establishing clear expectations and providing better coaching where needed. At the end of the day, the leader may still not meet our expectations. But at least we’ll know that we did what we could to support them.
A good practice is to, every quarter, ask ourselves how each of the members of our leadership team are performing both in terms of results AND core values. Then, for any team members that aren’t performing, ask, what will I do about it this quarter? Will I coach them or cut the chord? If we keep coaching the leader on the same issue quarter after quarter, we should not only question their leadership, we should question ours too.
A caution: sometimes a leader’s poor performance IS in fact our fault. It’s entirely possible for a CEO to create an environment where people can’t perform well. Maybe we’re the micro-manager, or the laisser-faire manager. Or we set a poor example by not being accountable or not living some of our core values. If we have just one or two leaders whose performance is in question and the majority of the leaders reporting to us are performing great, we do have a people issue. Yet, if most or all of our leaders are struggling, chances are our own leadership is what needs work.
Working Through Our Own Stuff
Usually, the decision to let a leader go isn’t hard. Once we think it through, it’s often pretty clear. It’s just that we avoid thinking it through. We avoid it because of how it feels. It’s sad. It’s disappointing. It’s nerve-racking. We can feel guilty or like a failure.
If we acknowledge, accept and process those feelings, we can then face the facts of the situation and come to a logical, firm conclusion. This can usually be tackled with some pros and cons thinking, considering all the impacts of the leader, on both the culture and performance of their department, the leadership team and the company as a whole.
Replacing a Leader
It’s one thing to come to realize and accept that a leader has to go. It’s another to feel confident we can successfully replace them with an A-player. If you’re concerned about this, you probably have a recruiting and selection problem. And you’re not alone. The average hiring process picks an A-player 25% of the time.
Implement the Top Grading or A-Method hiring process and you’ll knoch that up to an 80 or 90% success rate. Replacing a top level leader is a great reason to make that change. You’ll get two trees with one stone: an A player leader and a drastic improvement in hiring throughout the company.
As Jim Collins found in his research for Good to Great, the foundation of a thriving company is “disciplined people”. This includes being a Level 5 leader (determined AND humble) and getting the right people on the bus in the right seats on our leadership team. Only then can we create a great strategy collaboratively with our leadership team, to achieve efficient team buyin. And with buyin and a great leadership team, we can implement the right decisions and system to grow more rapidly, profitably and sustainably.
Right? Not quite.
This is where great execution comes in. In this next article, I’ll share the common challenges with executing a strategy and the three key execution disciplines to minimize drama and maximize profitability.
How can you have more A-players in your company?
To find out how to have stronger talent and leaders to grow more easily, quickly and profitability, AND enjoy the ride, try our complimentary Agile Growth Checklist. This self-service questionnaire takes 5 to 10 minutes to complete. You'll receive the checklist with your responses immediately. Within 24 hours, you'll receive a compiled report highlighting areas to improve. Complete section 2 to check your A-player processes. Or complete all 7 sections to find out how your company is doing in each of the 7 areas needed to produce more rapid, profitable and sustainable growth. This report is complementary and involves no obligation.
In my last article, I wrote about how midsize companies can make more progress at implementing the processes and systems that will enable them to grow and grow profitably. But is it really progress if you’re not going in the right direction? And how do you know if you are going in the right direction?
While various types of processes and systems are needed to grow beyond a company’s current level (see the first article in this series), some types of systems will need to be chosen (or tailored) specifically for that unique business AND to support and execute its strategy in the market.
Developing a clear strategy is not only important to making the right progress. It’s also important for ensuring a company is pursuing truly valuable growth opportunities.
This brief article will cover the basics of developing a successful strategy. From there, other tools and practices can be used to refine the strategy and make it more robust over time.
What is strategy?
First, let’s recognize what strategy is NOT. As Jack Welch once put it, “Strategy is NOT a lengthy action plan. It is the evolution of a CENTRAL IDEA through continually changing circumstances.” A list of projects, priorities or action items is not strategy. That’s an execution plan.
And what is this “central idea” Jack speaks of?
I’ve been facilitating strategy development for over 15 years. In all that time, the simplest, most accurate description of strategy I have come across is from Michael Porter, the renowned Harvard Business School professor, researcher and consultant.
In his best selling book “Competitive Advantage”, Porter describes strategy succinctly as “a unique and valuable position in the market that involves a different set of activities from competitors”.
Your “unique and valuable position in the market” is this “central idea”. And it needs to continually evolve to respond to changing circumstances. It describes the essence of the business you and your leadership team want to build. Your execution plan is how you’ll build it.
Let’s look at what Porter calls a “position in the market.”
Put simply, this is about how your offering compares to competitors who offer the same or similar products or services. In the Scaling Up system and the 7 Attributes of Agile Growth, we use the term “Brand Promise”.
For most business leaders, like myself, it’s been drilled into our heads that our business needs to be unique. Porter confirms that this is important for our positioning.
But why? To create customer loyalty. If our customers can only get our unique twist on a product or service from our company, and not from our competitors, they’ll keep coming back.
Hence the more traditional terms used for Brand Promise, including Unique Value Proposition, Unique Selling Proposition, Unique Offer, Competitive Advantage and Differentiation. They all essentially mean the same thing - a brief statement that describes how our product or service is or will be unique from our competitors.
One example is SouthWest Airlines. While they provide air travel services like so many other airlines, they have a unique brand promise: “Low Fares, Lots of Flights, Lots of Fun”. This combination of promises is unique in the American airline business.
Yet Porter’s definition means our brand promise needs to be more than unique. It also has to be valuable. Valuable to who? Customers.
This can be tricky. Because what’s valuable to one type of customer is not necessarily valuable to another. To make our brand promise valuable to a customer, we need to know WHO that customer is.
Once we’re clear on who that customer is, we can define our brand promise, and then design our “different set of activities”, as Porter puts it, to consistently deliver that unique positioning.
Note that, if we are to do things differently than competitors to fulfill a unique brand promise for a specific type of customer, the number of different types of customers we serve has to be pretty small. Doing things in a number of unique ways that are each valuable to different types of customers becomes unprofitable, if not impossible, without sufficient scale. So for many companies, especially, midsize companies, that often means focusing in on one type of customer. We call them our Core Customer.
How do we identify our core customer? We examine our best customers! The ones who are the most profitable, the most loyal, the most likely to refer, the ones who pay on time.
In addition to knowing WHO are Core Customer IS, we have to know WHAT our Core Customer NEEDS. This enables us to then define a brand promise that will be valuable to them. Without understanding our Core Customer’s needs, we’re just guessing at our brand promise.
With clarity about who our core customer is, what they need and what brand promise would be valuable to them, we also want to make sure we can fulfill that brand promise.
Maybe we aren’t fully set up right now to deliver on it. But we need to examine if we can get there. If not, we’ll be making a promise to customers that we just can’t keep. Customers will be disappointed and become less loyal, rather than more loyal, over time.
So, how do we know if we’re fulfilling our brand promise? With a brand promise metric. For example, with SouthWest’s promise of “low fares”, the company tracks all fares in the industry to make sure their fares are always the lowest.
The Sandbox defines what specific products or services we’re going to offer, where we’re going to sell them, and through who. Through direct sales? Online? Through distributors, affiliates or retail?
The Sandbox encourages us to proactively think through where our focus for growth needs to be over the next 3 to 5 years. It encourages focus also by proactively deciding to avoid products, geographies and distribution channels that will distract us. We may even choose to discontinue some we have right now.
Choosing our Sandbox involves making sure these “what?”, “where?” and “through who?” decisions align with 1) our core customer, 2) our brand promise, and 3) our understanding or estimates of what products, geographies and distribution channels will provide the greatest opportunities for growth and profitability.
SouthWest Airlines, for example, has determined that offering a first class service would not fit. It would take away from their “Lots of Fun” promise by treating some customers more lavishly than others. It would also increase complexity which would lengthen ground time, reduce the number of flights per day - “lots of flights”, and therefore increase costs and affect their “Low Fares” promise.
Making it Work
The three basic elements of a successful strategy include:
This basic strategy work will be most successful when aligned with four foundational pieces:
And let's remember, as CEOs, we’re best off developing our strategy collaboratively with our leadership team, in order to achieve “efficient leadership team buy-in” that supports “accountability for execution” (as discussed in my previous article).
From there, we can develop our one year and quarterly execution plan to bring our strategy to life. With the right leadership team members and the right culture, we can execute with efficiency and predictability. AND, with the right leadership team members and culture, we are much more likely to develop a great strategy with that team. More about that in my next article.
How can you improve your strategy?
To find out what you can improve in your strategy to grow more easily, quickly and profitability, try our complimentary Agile Growth Checklist. This self-service questionnaire takes 5 to 10 minutes to complete. You'll receive the checklist with your responses immediately. Within 24 hours, you'll receive a compiled report highlighting areas to improve. Complete section 3 and 6 to check your strategy and customer processes. Complete section 4 to check your execution. Or complete all 7 sections to find out how your company is doing in each of the 7 areas needed to produce more rapid, profitable and sustainable growth. This report is complimentary and involves no obligation.
In a previous article, I shared how companies need to implement the structures, systems and processes needed to grow. Without this, they either won’t grow beyond the limits of their current structures, or they will grow inefficiently and increasingly unprofitable.
But as a company grows to 50, 100 or 200 employees, the CEO may feel like the company is no longer making real progress with those kinds of improvements. Any changes and improvements they want to make for their company don’t seem to get done, or don’t get done right.
So, how can CEOs increase the momentum?
We know that, as a company grows, the CEO has to get results increasingly through the members of their top team. This is one of the ways companies need to operate differently in order to grow and profitably (other examples are listed in this previous article).
This tends to happen in stages.
In the first stage, the CEO will have their supervisors produce the day-to-day results, while the CEO implements most of the changes and improvements in the business.
As the company grows, the CEO will find that this also becomes too onerous for them or just doesn't work anymore. At that point, they'll look to have the members of their management team also complete improvement projects within each of their departments, and possibly even between and across departments where needed.
And the two keys to making all this happen are: 1) efficient leadership team buyin, and 2) accountability for execution.
A Power Shift
When a company is small, less than 10 or 15 employees, it’s more straightforward to get improvement projects done for the company.
Often, as the owner or CEO, we just do these projects ourselves.
If we begin to delegate these projects, we simply ask a supervisor to get it done. If they are a strong supervisor, they will usually make it happen.
When we have 25, 50 or 100 employees, it gets harder.
The reason is what’s called “power differential”: the difference between the influence of the owner or CEO and the influence of others, in this case the supervisors or managers reporting to them.
In a smaller company, there is a large power differential.
Here, the owner or CEO is a strong voice that is heard more easily among the small group of employees. There are often no other voices that are similarly strong (unless of course there is one or more partners involved).
It’s also easy to see when someone in a small group is not following through on a project. So each supervisor has a strong motivation to follow through on the owner’s direction.
As the company gets larger, this power differential decreases.
As some departments get larger (eg. a production department), the managers of those departments gain influence. They have now become critical links in the productivity and profitability of the company.
The CEO no longer has that same strong singular voice. One or more other managers have strong voices as well. Employees in their department will often listen as much to their direction as to the direction coming from the CEO.
As well, the CEO becomes more detached from the front-line and may feel less confident about what is the right thing to do. Meanwhile, the influential managers now often have a better perspective on what needs to be done in the operations. This also increases their own sense of power.
This smaller power differential between the CEO and a manager reduces the owner's influence to get the manager to simply take directives to carry out an improvement project they dream up.
While the manager may move the project forward to some degree, the owner will often find that the manager doesn't take full ownership of it.
Combine this with the fact that the manager may not see the value in the project, may not agree with the decision, and will have many demands and competing priorities within their department, and the project will often miss the mark, be late, or fizzle out entirely.
Owners will often complain that their managers don't take initiative, aren't driven, or don't accept direction well.
In reality, it's this lower power differential and the increasing demands on the manager that reduce their motivation to just "do as the boss says".
The result is that getting managers to make changes and improvements in and across a mid-size company becomes more challenging than getting supervisors to do so in a smaller company.
The trick is in the two keys: 1) efficient leadership team buy-in, and 2) team-based accountability.
Efficient Leadership Team Buy-in
Rather than a CEO figuring out on their own what needs improving and changing for the company, and simply delegating those projects to others, they need to shift to making decisions for the company together with the members of their top team. This will enable them and their top team members to make decisions for the company that they’re all committed to.
In short, "people support what they help to create". When leaders are involved in making decisions and feel that their perspective and opinion is heard, they are much more likely to be committed to those decisions and to own and drive the projects to make them happen.
This doesn’t mean the CEO doesn’t get the final say. It’s just how they get to a final decision that needs to be adjusted.
Patrick Lencioni, in his best-selling book, The Five Dysfunctions of a team, called this approach “disagree and commit”.
The top team discusses the problem or opportunity and gets all the information out on the table for consideration. Options are discussed and weighed. All members of the top team have the opportunity to share their perspectives and concerns. If an agreement is easily made, then great. If not, the CEO makes the final decision with everyone knowing their perspective has been heard and considered, and agreeing that now is the time to commit to the final decision.
This approach allows for effective leadership team participation, while keeping it efficient.
This can be a game-changer for CEOs who have already shifted to involving their top team in decision-making, but may have gone too far.
Their team's decision-making has slowed to a crawl or decisions simply don’t get made, because they and their leadership team members don’t always agree on what’s best. And the CEO isn’t willing to make a final decision for fear that their leaders won’t buy in at all.
“Disagree and commit” solves this problem.
Accountability for Execution
Once there is top team buy-in to a decision, how do we ensure accountability for its execution?
Buy-in is certainly important for accountability. But it’s not enough.
Accountability ensures that leaders assigned with taking on certain improvement projects follow through as best as humanly possible. Accountability also means being open and transparent when a project or special effort doesn’t go as planned, so all possible action can be taken to get it back on track.
Accountability, also, is more difficult as a company grows. And it’s also due to the decreasing power differentials.
Simply following up one-on-one with individual leaders no longer works as well. Again, leaders of larger departments have more power, and their performance is more hidden in a larger company. So there is less pressure to follow through.
The solution is again a team approach.
Mark Green, a colleague of mine in New York, and a colleague of mine in Gravitas Impact Premium Coaches, captured the key ingredients for accountability in his recent monograph titled “Creating a Culture of Accountability”.
There are three ingredients for accountability:
As the leader of the team, the CEO needs to lead by example, be honest with themselves to ensure they have the right people in the right seats on their leadership team, and raise their expectations of their leaders.
Role accountability is about ensuring each leader is clear about their own and each others’ accountabilities. This includes defining the specific results expected for each role and the metrics that make those expectations clear.
Note that it’s just as important for leaders to be clear on each others’ roles as their own. This ensures only one person is accountable for each function and everyone is clear on what to expect from each other.
Process accountability involves three leadership team elements and a one-one element:
- communicating with leaders about improvement projects in a way that maintains their natural motivation to execute by 1) communicating your belief in their ability to succeed, 2) reminding them why it matters and 3) paying attention to their progress;
- ensuring planning happens before action, on a consistent basis and in an open way, with all leadership team members aware of each others' plans and how they contribute to the whole;
- having a rhythm of effective and efficient leadership team meetings that ensures regular follow-up on progress and results, while creating a subtle peer pressure that motivates leaders to deliver;
- and regular one-on-one coaching between the CEO and each leadership team member to develop and support performance.
From Directing Individuals to Leading the Top Team
Efficient leadership team buy-in and team-based accountability for execution are the two keys for CEOs to enable continual improvement in their growing mid-size companies.
And we can see a common thread for the CEO: shifting from directing individuals to leading and building the top team.
This shift can be challenging for CEOs who have become comfortable with a directive style. Yet shifting to leading the top team is critical to getting their leaders bought in, executing, and making more progress.
But is it really progress if you’re not going in the right direction? And how do you know if you are going in the right direction? More on that in my next article.
What aspects of leadership team buy-in and execution accountability could you improve?
To find out how your company can make more progress to grow more easily, quickly and profitability, try our complimentary Agile Growth Checklist. This self-service questionnaire takes 5 to 10 minutes to complete. You'll receive the checklist with your responses immediately. Within 24 hours, you'll receive a compiled report highlighting areas to improve. Complete section 1 and 4 to check your leadership team and execution processes. Or complete all 7 sections to find out how your company is doing in each of the 7 areas needed to produce more rapid, profitable and sustainable growth. This report is complimentary and involves no obligation.
In my work with the CEOs and Executive Teams of mid-size companies, I’ve often met CEOs who think it’s HR’s job to build the culture.
They say “Oh that’s people stuff – so that’s HR’s job.”
And that’s a big mistake. It’s actually the CEO’s job.
Why is that?
As the first featured speaker on Innovation Place’s new Brain Bites mini-video series, I shared what my colleagues and I have seen and what we teach as executive team coaches on this topic.
Watch the 4 minute video here, or read the article below.
Let’s start with what culture really is, why it’s important, and how we build it.
When you strip it all down, a company’s culture is how people, in the company, behave.
Culture is important because the more that people behave in similar ways in a company, the faster the company moves.
The more peoples’ behaviours are different, the more unproductive conflict there is and the slower the company moves.
This is what a strong culture means. it’s one where people behave in similar ways.
How do we create a strong culture? With core values.
What are core values, really?
Core values are a handful of rules we define to help, guide, employees’ behaviour – our culture.
To get people to behave in similar ways, according to the core values – meaning to build a strong culture – the leaders have to do 3 things:
- define the core values
- repeat them often
- live by them themselves
Culture comes from leaders’ beliefs
One mistake companies often make is they come up with core values that are about who they want to be, what sounds impressive, or what would look nice on their website.
But that doesn’t work. Because the leaders won’t behave according to those core values, because they don’t believe in them. If the leaders don’t believe in them and don’t live them, employees won’t either.
Because employees don’t do what leaders say, they do what leaders do.
So if you want your company’s core values to help guide your employees to do what you do, the core values need to reflect what you really believe, and you need to behave according to those core values.
HR can support, but the CEO should lead
Putting HR in charge of culture takes this process out of the hands of those who really need to own it and lead it – the senior leadership team.
And who needs to own the core values the most and believe in them the most? the CEO. Because the CEO will need to be the top ambassador of the core values, live those values him or her self fanatically, and hold the executive team members accountable to live them too.
HR can support the CEO and leadership team’s culture building activities. And certainly, HR’s processes and policies, like employee selection and performance evaluation, need to align with the core values to help build a strong culture.
But every process and policy, in every function or department, needs to align with the core values, not just HR.
And even more important than the processes and policies is how the leadership team members behave – starting with the CEO.
If those behaviours match our core values, people in the company will behave in similar ways – that is, the culture will get stronger, and the company will move faster.
What if the CEO is too busy?
If you’re a CEO, you may be thinking “but i’m too busy to build the culture”.
Maybe so. And why are you too busy?
Are you firefighting? Are you dealing with unproductive conflict? Are you dealing with problem employees?
Chances are, a part of the reason you’re too busy is because you’re dealing with the symptoms of a weak culture.
Strengthen the culture, and your job gets easier, and everyone else’s does too.
And that’s why it’s the CEO’s job to lead culture-building.
Are you ready to grow a great top team, company and life?
Try our Growth Readiness Self-Assessment to find out where you, your top team and company shine and where you could improve in order to grow, improve profitability, consistency and your quality of life.
2020 will go down in the history books...the world’s history books, and our own business and personal history books.
We navigated a pandemic, an early lockdown, a reopening, a summer season where we made the most of being outdoors, the anxiety of kids going back to school, a partial lockdown, and now a uniquely isolated holiday season...all while readjusting every few weeks to the evolving requirements of staying safe and keeping others safe.
It’s been tough on your family, on your leaders and your staff. And, let’s face it, it’s been tough on us as owners and CEOs as well.
Prolonged, intense, invisible stress
All that stress flowing through our bodies for extended periods of time - hours, days, sometimes weeks on end - is hard on the body.
We may not realize it. We may be numb to it.
That’s by design. When we’re in a state of intense stress, our body fills us with the chemicals needed to keep going and fight the battle - adrenaline and cortisol.
This can also numb our emotions and our body sensations. So we don’t even know what toll it’s taking until we slow down.
For some of us, myself included, slowing down is hard. So we maybe haven’t yet actually felt how we’re doing.
Here’s the rub. We can’t keep it up over the long haul.
Our bodies only have a limited amount of adrenaline to draw from. As we use it up, it contributes to aging. We lose energy and our ability to respond in challenging situations.
There’s a name for this: Adrenal Fatigue...also called exhaustion.
And here’s the thing. The battle isn’t over.
2021 won’t be magically better
Obviously, we all want to continue to move our businesses forward, improve, grow, and build something great.
But this pandemic also isn’t over. Yes, a vaccine is starting to be distributed in Canada. Yet, the process and the uncertainties that go along with it means there’s still a long road ahead until we’re out of the woods.
McKinsey & Company’s latest report of their ongoing meta-study forecasts that “the United States will most likely reach an epidemiological end to the pandemic (herd immunity) in Q3 or Q4 2021”. There’s no real reason Canada should expect it any sooner.
There will be more challenges, more evolving restrictions to adjust to, and the continuing need to manage the risk of COVID-19 in our workplaces and homes.
This means demand uncertainty, supply-chain variability and internal operational risks will continue for some time.
So, while we may be happily turning the page on a tough year, the brutal facts are that 2021 is likely to be pretty challenging as well.
We have to recharge!
This holiday season is that time to slow down, feel how we’re actually doing, and give those adrenal glands a break to restore their proper function.
We may be disappointed that we won’t get to see extended family or friends over the Christmas break. But there’s a silver lining. That gives us the space to get some time to ourselves.
The best cure for fatigue...sleep! And lots of it. Naps. Quiet time. Long baths or dips in the hot tub. Leisurely walks. Or just sitting still.
This is hard for us A types. But it’s essential. Our bodies, minds, resilience, effectiveness and strategic thinking depend on it… not to mention our families, businesses and communities.
This means putting everything off that isn’t absolutely necessary, including odd jobs around the house, personal research or getting our finances in order.
And what’s really necessary over the holidays?
Certainly, we’ll have family time, give gifts and connect with loved ones via video calls. But the work at the office will still be there when we get back after New Year’s Day. It’s not going anywhere. We won’t misplace it or forget what there is to do.
Let’s take this time between Christmas and New Year’s to put ourselves first, so we can be at our best for 2021.
Happy holidays to all my clients, colleagues, friends and acquaintances.
And above all, Merry Recharging!
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In the 9 years I’ve been an independent coach and advisor, I’ve seen many companies that grow to a certain point and, despite all their best efforts, can’t seem to grow beyond that.
I’ve also seen companies that do continue to grow but become less and less profitable, and more and more stressful for the owner or CEO.
Turns out this isn’t just my experience. It’s a very common pattern.
Growth isn’t common
Out of the roughly 28 million firms in the US, only about 1.1 million (4%) have surpassed a million in revenue. Only 112,000 (0.4%) have gotten past $10 million. And only 17000 (.06%) have grown beyond $50 million.
The reason is that companies need to operate differently as they grow. Companies that don’t adapt how they operate will tend to grow to the limits of that way of operating.
Owners, presidents and CEOs who have had success getting to a certain point often tend to repeat what they know, thinking “well, it got us here.” But as the title of a book by coaching master Marshall Goldsmith goes, “what got you here won’t get you there”.
The structures, systems and processes to grow
The changes needed for a growing company are driven by the added complexity that comes with having more employees. Think simply of how going from 1 to 4 employees makes the number of relationships between individuals increase from 1 to 10. This complexity continues exponentially as the company grows from 10 to 25 to 50, 100, 200 employees or more.
To predictably achieve results within this growing complexity, a certain level of order is needed. Structures, systems, processes create that order in companies. And the systems needed to create order in the complexity of a 200 person organization are different than that of a 100, 50, 25 or 10 person organization.
Some examples of structure and systems changes needed at different stages include*:
Hitting the ceiling, valleys of death
Any company within one stage will usually hit a ceiling if they keep doing things the same way they have until now.
Companies that don’t make the right changes, or aren’t successful in making those changes, will fall into what we call a “valley of death”.
Valleys of death are where the leadership makes big investments, but they don’t work out. So the company doesn’t move beyond that stage. It can also fall backward in terms of revenue and often profitability because of the failed investments. Worst case, it can lead to company failure if its strength in the market is compromised as a result.
Some companies grow despite not making the changes needed for the next stage. With dramatic demand growth, or sheer grit, they’ll grow. However, these companies often become more and more inefficient with the increasing complexity and resulting disorder. And so the company’s profitability will decrease, sometimes significantly.
Unless exceptionally well funded, with investors willing to accept short to mid term losses for a longer term windfall, the decreasing profitability and resulting cash flow challenges will eventually prevent the company from investing in the systems to grow and grow profitability. And so growth will stall. And one can count on drama, stress and headaches being the overarching theme for the leaders in this scenario.
So what stops a company from making the right changes and improvements to grow successfully and profitably?
The leadership team is the linchpin
From these stages and examples of key changes, we can see early in a company’s life - by about 25 employees - that an owner or CEO has to learn to get results from people through other managers. That means the changes and improvements they make will depend on the managers working with the owner or CEO… the leadership team.
And, very often, leadership team members in mid-size companies are working in silos and at cross purposes. They are also often too focused on the day-to-day and the big projects to move the company forward often don’t get done or aren’t done right.
The result is the company doesn’t identify or successfully implement the right structures, systems and processes to handle the increasing complexity of a growing company.
An always-evolving leadership team
The challenge of having an effective leadership team continues through the life of the company. New leaders come and go. Markets evolve. Systems need to change. And therefore the capabilities of the leaders as well.
The CEO's crucial underlying challenge to profitable growth is therefore to build, maintain and continuously improve a great top team (management team, leadership team, executive team) that is highly capable, aligned, leading and executing effectively and efficiently, and therefore minimizing silos and strengthening execution between and across departments. Essentially working as one unit to move the company forward. Because it's too much for the owner CEO to do it alone, or at least effectively and sanely. More about that in my next article.
What structures, systems and processes do you need to work on?
To find out what structures, systems and processes you and your leadership team could improve or implement to grow more easily, quickly and profitability, try our complimentary Agile Growth Checklist. This self-service questionnaire takes 5 to 10 minutes to complete. You'll receive the checklist with your responses immediately. Within 24 hours, you'll receive a compiled report highlighting how your company is doing in each of the 7 areas needed to produce more rapid, profitable and sustainable growth - including what areas to improve. This report is complimentary and involves no obligation.
*These examples of structures, systems and processes are drawn my own experience over my last 16 years coaching, facilitating and advising, and from the 7 Stages of Growth research: a 6-year study of entrepreneurial companies in the Front Range and Silicon Valley including interviews with over 700 CEOs to understand and decipher the patterns, the behaviors and the characteristics of growth in entrepreneurial enterprises. This research was led by James Fischer, Founder of Origin Institute, a research and consulting company out of Boulder, CO.