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Archive for the ‘Business Growth & Entreprenurial Strategy’ Category

The Question of Management’s Necessity in Small Businesses

Friday, October 14th, 2011

Is Management Really That Important? In our work with small businesses we do get many variations of this question.

And we hear it in small businesses that:

Don’t believe an organizational structure is needed
Don’t believe in titles (and clear job roles with position descriptions to match)
When the person who runs the company believes that he/she is fully capable of running the company and making all the decisions themselves
When no one, other then themselves, truly understands the business and what is required for it to be successful
And when there is a belief all employees should act and feel the way they act and feel – have the same commitment.

While we find these beliefs are usually strongly held, they are unrealistic for today, unless you are a soloprenuer. Why? Because growing a successful company and holding beliefs such as these are incompatible. Now you may know a company who has these characteristics yet is successful in your opinion. In our experience, loosely run (and some even anti-management in philosophy) companies like this are rare, and many more are lying in the junk pile of broken companies than are positioned as a successful player in the marketplace.

In Monday’s Blog (http://www.kubicalaforestconsulting.com/blog/2011/10/small-business-growth-at-risk-addressing-the-talent-shortage-by-establishing-a-talent-gravity-organization/), we talked about the Kaufman Foundation survey that revealed 21% of the entrepreneurs interviewed said that one of their biggest impediments to growth was managing fast growth. What we don’t know, and the study didn’t reveal, is why. Is it because of the issues raised above or is it because they just can’t seem to put a management structure in place fast enough? Is it because they lack management talent, or is it because they won’t enable management talent to perform to be accountable?

If you are not planning how you will management your company through the ensuing inflection points, you are planning to fail.

You know (or should know) that as your company grows, it will need management and management support structures to deal with the growth. It should never come as a surprise and it should be planned for in advance.

Wherever you are in your business life cycle – new start-up to a fast growing company, plan on how you will manage the company through its growth phases. Plan well in advance. Planning in advance will also help you select the employees you want to help you grow – employees with skills that can evolve as your business evolves. See our article on hiring for fast growing companies. http://www.ere.net/2009/09/11/hiring-for-fast-growing-departments-or-companies/

For more information on business growth and talent management, see our blogs, free articles, white papers and videos at: www.kubicalaforestconsulting.com.

Posted in Business Growth & Entreprenurial Strategy, Management & Management Transitions | No Comments »

Small Business Growth – At Risk: Addressing the Talent Shortage by Establishing a Talent Gravity Organization

Monday, October 10th, 2011

In our recent blog, The Slow Leak in Job Creation by Small Business, http://www.kubicalaforestconsulting.com/blog/2011/09/the-slow-leak-in-job-creation-by-small-business/, we discussed the findings from a Kaufman Foundation study (published July 2011 by the Ewing Marion Kauffman Foundation). It provided a mixed report on small business job generation potential. One issue it did not address, but we mentioned in our blog, is the impact of the gap between the education of the workforce and the skills needed to do the work.

The educational gap was revealed in the latest Kaufman survey, as was the challenge of managing a fast growing business. http://www.kauffman.org/newsroom/high-growth-entrepreneurs-plan-to-continue-growing.aspx

The survey, conducted with entrepreneurs at the Inc. 500 Conference found that the biggest impediments to growth are:

Finding qualified people (40%)
Managing fast growth (21%)
Accessing capital (16%)
Sluggish economy (13%)
Taxes (4%)
Regulatory uncertainty (3%)

Finding qualified people and managing fast growth represent 61% of the impediments facing fast growing companies.

Finding qualified people will continue to plague the marketplace for the next few years.

It will take time for the educational system to catch up with the new marketplace demands. You have two choices as an entrepreneur and small business owner:

You can complain about it and about the shortcomings of the educational system – the “ain’t it awful” syndrome
You can focus on becoming what we call a “talent gravity organization” and make choosing your company the decision of choice.

It’s like musical chairs. When the music stops some chairs will be empty – your goal is be ensure that it’s not your chair that’s empty!

To help ensure this, we encourage you to become a talent gravity organization: a place that draws people to you, as people are drawn to work for Google and Apple for example.

Building a talent gravity organization requires working on:

Your brand
Your culture
Building strong strategic leadership to establish strategic growth plans
Embedding sound management practices
Being competitive in the market place with compensation and benefits
Being a learning organization so people that come will stay and grow with you
Being a business that celebrates and recognizes the greatness in your employees

Interesting, as you build a talent gravity organization, you will also be addressing the second impediment to growth – managing a fast growing company.

In the weeks ahead we will explore what’s required to become a talent gravity organization.

For more information on business growth, see our blogs, free articles, white papers and videos at: www.kubicalaforestconsulting.com

Posted in Business Growth & Entreprenurial Strategy, Culture Building: Creating a Talent Gravity Organization | No Comments »

Your Business Through the Eyes of Your Customer

Monday, October 3rd, 2011

How you see your see your business doesn’t matter. How your customer sees your business matters.

In a study conducted by Bain, they found “that while 80% of the managers (who participated in the study) believe they are highly differentiated in their core market, only 8% of customers, when asked, agreed.”

How do you describe your business differentiators?

We have outstanding customer service
We have the best customer response rate in the business
We complete our projects on time and on budget
Our executive team is second to none
Our employees are the best in the business
Our product blows away the competition
It’s hard to answer that question because we have no competition

Who says? Unless your customer says, it doesn’t matter what you say. But if you actually believe what you say in the absence of customer based feedback, you are raising a barrier to future success.

Hubris and the proverbial “head in the sand” behavior do not help grow a business. There are enough external factors and economic challenges as it is; you don’t have to add to your business challenges by being detached from reality.

Another problem you create is the dissonance between your culture and your brand. If your brand touts these superlatives, yet your customers disagree, you have clear evidence that your culture – the way work gets done around here – doesn’t support your brand.

And what makes this so problematic is that telling yourself and your employees how great the company is creates one of two problems:

Lack of credibility with your employees – simply they don’t believe you
Employees who buy into the hype and see no reason to do anything other than what they are doing

If growth is important to you – ask your customer how you’re doing. And listen carefully. The information your customer provides is your road map for improvement and growth.

For more information on business growth, see our blogs, free articles, white papers and videos at: www.kubicalaforestconsulting.com

Posted in Business Growth & Entreprenurial Strategy, Customer Service | No Comments »

Motivated, Aligned, and Satisfied Employees are Differentiators

Thursday, September 29th, 2011

Demoralized workers do not do great work. Organizations do not become remarkable with demoralized staff. Customers do not love their experience with demoralized employees. Yet we find managers catalyzing demoralizing behavior every day.

In the last couple of weeks we saw:

Bank of America announce it will layoff 30,000 employees
The Chairman of the Board of Yahoo firing the CEO over the telephone
H-P firing it’s 3^rd CEO – the latest one lasting 11 months

And what do workers do when faced with these issues?

They actively look to leave the company, and the best one’s do
They hunker down, stay out of the way, and just do what they are told to do – keeping as low a profile as possible
They become disruptive
They decide to look better than others and do whatever it takes to discredit their colleagues – and interject an “every person for themselves” mentality, which further deteriorates the culture

And the managers are greatly hindered in their ability to help, basically for two key reasons: 1- many of them are in exactly the same position as the workers, and/or 2- they tend to discount the good advice of others, meaning power can hinder willingness to listen. And regarding this point, the Wall Street Journal (9/19/11) reported that a recent study to be published in the November issue of journal Organizational Behavior and Human Decision Processes found:

“That the more power the employees (managers) had the less likely

they were to take co-workers advice. The reason: Powerful

individuals held inflated confidence in their own judgments,

which led them to discount even good advice from others.”

So we see poor leadership, demoralized workers and managers who discount good advice from others. Now the best way to look at this is – that’s your competition. Your competition has a reasonable probability of being a dysfunctional organization. And dysfunctional organizations are not – and cannot be remarkable.

So, do you know how your employees are doing; what they feel and believe about the organization and about their managers (including you)? If you don’t, you should! Don’t be one of those managers with an inflated confidence believing you have it all figured out. Motivated, aligned and satisfied employees represent a significant differentiator in the marketplace. How strong is your differentiation?

For more information on talent management, see our blogs, free articles, white papers and videos at: www.kubicalaforestconsulting.com

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Impact of Small Business Inflection Points

Monday, September 26th, 2011

In last Monday’s Blog we addressed job creation – or to be more specific, the lack of job creation in our economy. The issue we raised is the impact inflection points have on business survival and growth.

In March 2011 we dedicated a Blog to Inflection Points – http://www.kubicalaforestconsulting.com/blog/2011/03/beware-the-business-inflection-point/. In today’s Blog we expand on it and also place it in perspective as a cause of business failures.

But first, let’s review common reasons why businesses fail (the list below is adapted from an article by Jay Goltz on NYTImes.com) http://boss.blogs.nytimes.com/2011/01/05/top-10-reasons-small-businesses-fail/:

Not enough demand for the product or service
Poor management: inexperience, hubris
Growing too fast
Poor financial controls
Lack of capital
Operational inefficiencies
Dysfunctional management team
Lack of a succession plan
A changing/declining market

If you do not have a sellable product or service; if you do not have adequate capital; or if you are in a changing/declining market, you simply will not have a viable business.

The tragedy comes when you do have a sellable product or service; when you have adequate capital; and when you are in a growing market – yet still fail. This is where recognizing and managing through the inflection points become a critical issue for your business.

When you reach an inflection point, unattended issues such as, poor management poor financial controls, operational inefficiencies, a dysfunctional team, no succession plan become disproportionately large factors that contribute to business failure. Just like you cannot build a multi-story house without a solid foundation, you cannot build a successful business without the foundation (business basics) in place.

Business owners can easily get seduced into complacency in a growing market. The aphorism – a rising tide lifts all boats – is accurate. But when the rising tide is seen as operational brilliance in the mind of the business owner, it closes off all ability to receive input and to heed the warning signs.

This economy presents major challenges. Some businesses are truly in the rising tide lifts all boats phase – an example is healthcare information technology. Others are struggling to stay in business – an example is certain retail outlets. It’s becoming more of a challenge to navigate these changing waters of business growth, and good management is required. Yet this comes as a time when people who are out of work look to start a business.

If you haven’t yet, do so now: assess where you are in you business – what’s working (and why), what’s not working (and why). Be brutally honest with yourself. Are you reaching an inflection point? If so, what are you doing about it?

For more information on business growth, see our blogs, free articles, white papers and videos at: www.kubicalaforestconsulting.com

Posted in Business Growth & Entreprenurial Strategy, Leadership, Management & Management Transitions | No Comments »

The Slow Leak in Job Creation by Small Business

Monday, September 19th, 2011

A palpable drag on the economy is high unemployment – still sitting above 9%.

Historically small businesses lead the way for job recovery. But that’s changing.

A new study by the Kauffman Foundation – Starting Smaller; Staying Smaller: America’s Slow Leak in Job Creation – is revealing.

The report reveals:

The number of new business formation is decreasing since 2006
The survival rate of new business is decreasing since 2006
The number of jobs new businesses create is decreasing
Average number of employees employed by start-ups is shrinking
Businesses that do survive their early years are adding jobs at a slower pace than the historic norm in recent years

And not included in the report, but another key issue for business growth is the gap between the education of the workforce and the skills needed to do the work. And in markets where the gap is larger than other markets, unemployment is also higher.

What we don’t have a good handle on is why these decreasing trends are happening. One reason, we believe, is the predominance of web-based services resulting in the need for less people to support a new business. In the 1990s, new businesses opened their doors with about 7.5 jobs on average; the current figure is now nearly half that — around 4.9 jobs on average.

As small business owners, entrepreneurs or if you are contemplating starting a new business, it is important to be aware of the trends we are now seeing in small business formation and survival. But even more important than knowing the trends is understanding what they mean for you, your business, and your proposed business model.

Fundamentally, it is critical to develop your business model and your growth objectives. Next, we find what many miss or overlook (and is a cause of new business failure) is preparing for the inflection points you are likely you hit along the way. An inflection point is where you need to change your operating model so as to sustain growth; and all businesses we know have them, including ourselves. An inflection point could be the need for a sales staff, more professional management, clear brand identity in the marketplace, a formalized HR process or other infrastructure, etc.

We have found that the first inflection point usually appears within the later part of the first two years of a firm’s existence – unless of course the firm is experiencing hype-growth then it will occur quicker. Next blog, we’ll discuss inflection points in more detail and the impact they have on small business early growth.

For more information on customer service and business growth, see our free articles and white papers at: www.kubicalaforestconsulting.com

Posted in Business Growth & Entreprenurial Strategy, Leadership | No Comments »

How Not To Run a Company – The Case of Yahoo

Thursday, September 15th, 2011

You would think that as a company gets bigger and more sophisticated, we can learn something positive from them. Well that is not the case with Yahoo. Yahoo has been in the news for: firing its CEO (via a phone call), having a major investor, Third Point LLC, call for the ouster of the Board Chairman and some board members, trying to decide if they want to sell the company, what strategy would be best, and how they will replace the CEO.

So in summary: little to no clear strategy, no succession plan, and a poor example of how to fire an employee – to name only three issues.

Companies can delude themselves into thinking they are doing better than they are. They can flit from one strategy to another in an attempt to recover a sub-performing company. But how could Yahoo’s Board do this when the facts show they had 4 CEOs in 4 years, they lost 7 out of their top 10 display ad sales people, they failed to “jump-start its core display advertising business”, weren’t aggressive in dealing with the explosive growth of social networks, and opted out of the search advertising market.

Why do we go into this detail? Because none of it should have been a surprise to the Board. Problems like this don’t suddenly appear; they have an annoying way of meandering their way along. Perhaps a good description is the story of the frog that is placed in a pot of water. The heat is turned up slowly, but tolerated, until finally the water starts to boil and the frog dies. The water meandered its way to boiling, and the frog never noticed.

Jim Collins wrote and excellent book on How the Mighty Fall (2009) that provides insight on how a Yahoo event could happen.

As a business owner, this is an important learning moment. What you are learning, however, is what not to do. And it reinforces why it’s so important to have a strategic direction, why a succession plan makes sense, why analytics are important. It’s all about the basics – something Yahoo apparently forgot.

For more information on business growth see our articles, white papers and videos at: www.kubicalaforestconsulting.com

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Protecting Your Brand When Strategy Changes

Thursday, September 8th, 2011

In Monday’s Blog we talked about H-P’s strategy change and the impact on their brand. We also mentioned Research in Motion and their move to a new operating system for the Blackberry next year.

Changing strategy in and of itself is not a bad thing to do. In fact, it can be critical and necessary for the continued growth of the business. So the question for the business owner is not should we change our strategy, but why is change necessary and how do we protect our brand and use the change as a growth initiative?

Why would you change your strategy? Some reasons include:

The business is no longer growing
Market is changing making your product or service less relevant or irrelevant
New market opportunities are opening that could be more lucrative

Before you change your strategy, it is important to follow these five steps:

1) Understand the market, what’s changing, why it’s changing and the impact it has on you. This is the analytics part.

2) Define your approach to changing market conditions and design a response – your new strategy

Be sure to clearly define your new target customer base and how you will reach them

3) Understand the impact your new strategy will have on your current customers

Will revenue be negatively impacted? – not only in direct sales but indirect business you get from the customer being your customer
What will it do to your reputation in the market?

4) Understand how the strategy change will impact your brand

Will it reinforce your current brand?
Will you need to re-brand?

5) Explain, Explain, Explain – talk to your customers

Your brand is your promise to the market. It’s how customers (and prospects) see you and know you. If your brand is highly personalized customer service, rapid response, attentiveness, your brand will likely still apply as you change your strategy. If your brand is very specific to your current strategy (i.e. we provide computers, and we are moving away from providing computers) then you will need to re-brand along with developing your new strategy. And you need to do it at the same time.

We mentioned the importance of knowing the customer and the impact any change you make may have on your customer. We believe that customer focus and customer knowledge is critically important to your business. In next Monday’s Blog we will discuss – the voice of the customer.

For more information on business growth see our videos, articles and white papers at: www.kubicalaforestconsulting.com

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Protecting Your Brand – What Not To Do

Monday, September 5th, 2011

H-P announced recently that it was getting out of the PC, TouchPad and Smartphone business to focus on software. And their foray into the software business is a $10.2 billion deal to buy Autonomy Corp.

So what happened? The investors are getting nervous and many customers are confused. H-P, in announcing a major shift in strategy, has left the marketplace uncertain (which has been reflected on their share price). Never a good thing to do with your business and to your customers.

And it’s not only H-P leaving the market confused. Research in Motion (maker of the Blackberry), recently introduced their upgraded operating system – BB OS7. It’s faster and getting some good reviews. But wait, next year they are upgrading their operating system to QNX – the operating system they use on the PlayBook.

Two large companies leaving the market wondering – where do we go from here? Time will tell if H-P’s strategy is good or bad. But one thing we do know – their strategy was poorly communicated and created brand confusion. Who is H-P now? What does it mean to the services I am buying from them? Are they now a different company, what does this mean to me? Will we have to look elsewhere for support for the current H-P computers, smartphones and TouchPads we own?

Should we buy a Blackberry now or wait for the new operating system? Will it come out on time; will be work well?

A good brand creates clarity – it creates a promise that you the customer can count on.

As a small business, you need to work diligently not to do this in you market and to your customers. You need to think through your brand (your promise), establish it and protect it. It’s your greatest asset – your differentiator.

In this week’s Quick Tips, we will discuss how to protect your brand if you decide to change strategy.

For more information on business growth see our videos, articles and white papers at: www.kubicalaforestconsulting.com

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Insuring Business Growth

Thursday, September 1st, 2011

In Monday’s Blog we wrote about evidence-based management and the four areas every business needs to focus on to succeed (http://www.kubicalaforestconsulting.com/blog/?p=590).

Realistically, and through our experience working with businesses, far too few actually concentrate on ensuring each of these four areas are addressed. Why you may wonder, as do we, considering that the evidence on successful business start-ups is clear. The answer is embarrassingly simple: some people starting new business are unaware of the evidence or are aware of it but feel they are different. Well we have unfortunately news for you – your business will fail. It’s like when a Hurricane hits, which it did in the northeast this past weekend; if you are unprepared, bad things are likely to happen to you and/or your property. The Hurricane doesn’t care who you are or how confident you are that you will escape harm. Hurricanes do what they do.

Markets are much the same. Your market doesn’t care who you are or how confident you are of success. If you’re unprepared, harm will come to your business.

Whether you are just starting your business, or have recently started it and want to be sure it’s on the right track toward growth, we suggest you take these Four Steps:

1) Conduct an in-depth strategic vision/planning session that includes:

a. Identify the market need for your product or service

b. How you will fund your business

c. Sales strategy: Define your market and how you will sell into that market (your branding strategy is a key component of this step)

d. Understand how you will deliver on your sales promise (this is defined as fulfillment and fulfillment is driven by your culture)

e. Define a clear “ideal scene” for what your successful business will be like. Cameron Herald, in his book Double Double, explains this as painting a three year picture to help you build instinct for your successful business.

2) Focus – on a few actions initially and do them well

3) Look at the evidence – keep an open mind

4) Implement – do what you say you are going to do – take action, monitor and course correct according to evidence.

When starting or growing a business, differentiate yourself, and the best way to initially differentiate yourself is by using evidence-based management to start you strong.

For more information on business growth see our videos, articles and white papers at: www.kubicalaforestconsulting.com

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