Over ambition

There’s always another
money-making opportunity out there, but the question is, should you go
for it?

Every business is looking
for more profits, especially
as the economy tightens up,
but you have to be careful
not to overextend your business into areas that are not
part of its core focus in a
vain search for return on
investment.

Take a look at the banking
industry. Most banks have
lost millions — and, in some
cases, billions — on bad
mortgages, risky investments
and poor strategy. You have
to wonder if, in some cases,
they didn’t overextend themselves on not only what they
were doing but how they
were doing it.

Citigroup is a good example. The company posted a
fourth quarter loss of nearly
$10 billion. As a result, it’s
expected to eliminate more
than 20,000 jobs and is under
pressure by shareholders to
spin off some units.

Citigroup is a financial
services conglomerate. It
was formed with the merger
of banking giant Citibank
with Travelers Group insurance in 1998, and it also
includes the brokerage firm
Smith Barney. The idea was
to create a one-stop shop for
all your financial needs,
whether it was banking,
investing or insurance.

But you have to wonder if
by trying to be good in
everything, the company
ended up being good at
nothing. Its focus may have
been too broad, leaving it
susceptible to big hits as it
overreached to try to make
every segment profitable.

To keep from losing your
focus, it’s important to set a
clear mission and goals for
your organization and to
stick to them. Drifting from
your original goals is easy
because the market is
always changing and the
profits always seem to be just beyond your reach. Here
are some reasons why companies stray from their original goals:

  • Lack of focus. Instead of
    focusing on what they originally set out to do, too many
    leaders are looking around
    them at other alternative
    opportunities and dividing
    their resources in pursuit of
    other goals created on the
    fly. Too many companies get
    lured into the promise of
    instant rewards through
    acquisitions but very few
    acquisitions work out as
    well as they first appear they
    should.

  • Change for the sake of
    change.
    New leaders often
    feel the pressure of making
    changes to differentiate
    themselves from the previous regime. There’s no stability because the goals of
    one CEO are often thrown
    out the window the moment
    the next CEO takes over.

  • Greed. Too many CEOs
    are driven by short-term
    profits. That means every
    potential money-making
    opportunity needs to be
    taken so that the company
    can maximize its short-term
    earnings potential. Unfortunately, many of these
    short-term projects are
    detrimental to long-term
    goals and can lead companies to take more risks than
    they normally would. The
    banking crisis is a good
    example.

  • Financial instability. Going
    after every opportunity also
    usually requires a lot of
    cash, and that means a lot of
    debt. When you start carrying a lot of debt, you become
    a slave to it. The more debt
    you have, the more other
    people from outside your
    company — bankers and
    investors — start to make
    demands on how things are
    run. It’s hard not to be pulled
    in multiple directions when
    this happens.

There are times when you
will need to adjust your
goals. But any time you do,
you need to ask yourself if
this is really a long-term
strategy or a short-term grab
for profits. If it’s the latter,
think again because taking
on too many fronts with
your company can lead to
poor performance in the
long term.

FRED KOURY is president and CEO of Smart Business Network Inc. Reach him with your
comments at (800) 988-4726 or [email protected].

Looking ahead

Change is what business is
all about.

Those that do it well and do it quickly reap the profits,
while those that don’t become
stagnant and, in some cases, fail.

The challenge is, how much
change is enough? Is a few
minor tweaks here and there
enough to keep you competitive, or do you need to look at
changing the way you do business or even changing what you
sell in order to survive?

General Electric is a company that has always embraced
change. It started out focused
on lighting, but now is
involved in markets including
finance, industrial automation,
medical imaging, motors, railway locomotives, jet engines,
aviation materials and abrasives. It also co-founded and is
majority owner of media company NBC Universal.

Let’s look at another example:
The American Tobacco Co. It
was founded in 1890 and was
one of the original members of
the Dow Jones Industrial
Average. While antitrust action
eventually broke up the company, American Tobacco survived.
In the 1970s and 1980s, it started acquiring a lot of nontobacco-related companies and
renamed itself American
Brands, which later was
changed to today’s name of
Fortune Brands.

Fortune Brands owns some
of the most well-known brands
in the country, including Jim
Beam, Titleist, FootJoy, Moen
and Master Lock. Ironically,
the company shed its tobacco
holdings altogether.

The successful companies
were able to stay on top
because they invested in
research and development.
When you do that, you are constantly testing new ideas.

Some of the ideas might be
new products that you can
pilot, while others might be
diversification opportunities.
Maybe you can acquire a
business that would complement what you are already
doing, or maybe you can
develop it. But the end result is a stronger enterprise that
is under the same umbrella
that you have now.

With continual reinvestment
into R&D, you may also start to
realize that maybe your core
idea is flawed or just no longer
applicable to the market.

But no matter what the
change, reinvesting in your
company is what will help show
you the way. It might be a minor
tweak to an existing product to
keep you ahead of the competition or it might be the revelation
that you are about to become
extinct, but at least you will
have time to react.

In today’s economy, you not
only have to be willing to
make a change, but you also
have to actively seek it out. If
you don’t, the market will
change without you, leaving
you either behind the times, or
worse, out on the curb.

Our new look

As you probably have
noticed already, this month
marks a significant change for
Smart Business. With this
issue we are introducing an
all-new look to our publication, from the “flag” — our
logo across the top of the
cover — right down to the
page numbers.

We continually refine our
product, adding new features
here, tweaking the appearance
there. But every few years we
like to take a major step back
and revisit the overall design
of the publication.

As part of this latest effort,
we commissioned a design critique by one of the nation’s
top design firms for business-to-business media. Using feedback from that critique as well
as from readers, advertisers
and staff, we set Design
Director Jim Mericsko to
work on updating our design
with a fresher, more engaging
look. And that is what you will
find this month — from our
updated logo, which presents
a more sophisticated, business-like image, to our use of
different column widths and
justification styles.

While most of these changes
are subtle, the result is an
overall cleaner look employing elements that have been
proven over the years to create a more engaging, readable
product. And as you know by
now, our goal is to make
Smart Business a valuable,
quick-reading resource for
busy executives like you.
Please let us know how we
are doing.

FRED KOURY is president and CEO of Smart Business Network Inc. Reach him with your
comments at (800) 988-4726 or [email protected].

Developing talent

CEOs often say that finding good people is their greatest challenge to growth.
Good people are hard to find, but maybe you should start looking for your next
leader within your own organization.

Mentoring is a great way to groom someone for more responsibility and develop his
or her hidden talents, all while filling a need at your growing company.

The first objection to this will be, “I’m too busy.” All CEOs are busy, but when it
comes to developing talent, you need to make time to mentor someone. Otherwise,
that promising young leader might take his or her talents to the competition.

Who you choose to mentor is the next challenge. There may be several candidates
worth the investment of your time, but there are four key questions you should consider when choosing.

  • Do they have potential? These people are probably the easiest to identify. These
    are your go-to people when things get rough. They always find a way to get things
    done.

  • Do they have the interest? Are they interested in being mentored? You can’t teach
    someone who doesn’t care, and the whole exercise will be futile. Ask about their
    interest in being mentored, and gauge the reaction.

  • Do they command the respect of others? Do others within your organization look
    to them as a leader? Do others come to them and ask questions?

  • Do you trust them? A large part of mentoring is developing trust between yourself
    and the people you are helping. If you don’t trust them, how are you going to share
    your secrets of success with them? Trust is key.

Mentoring takes place within a structured relationship. You should have a set
amount of time on your schedule to spend with this person, and you may want to use
an agenda for each meeting to keep it focused on a particular topic.

A successful mentoring relationship can develop a leader to whom you can hand off
key responsibilities, allowing you to focus on big-picture leadership issues as you continue to grow. Investing the time and effort into people also helps keep them with the
company, because the best people in business are those who always want to learn
more.

Helping someone be successful and learn new skills will benefit your business, but you
may also find that you get personal satisfaction out of seeing someone under your tutelage succeed.

FRED KOURY is president and CEO of Smart Business Network Inc. Reach him with your comments at [email protected]
or (800) 988-4726.

Appreciating others

All leaders have certain gifts. Some are gifted at creating a vision but not so good at executing the plan to reach it. Others are great at crunching numbers but horrible at managing people.

You probably have a pretty good idea of what you’re good at, and you’ve probably hired people with certain specialties to help you in the areas where you are weak.

The mistake we make is not recognizing those special talents because they belong to people in positions that may be far below the level of the CEO. Maybe it’s a receptionist answering your phone, or maybe it’s a driver delivering your product. While they may seem like unexciting positions, they are important pieces of the whole.

The receptionist is talking to your most important customers. The attitude conveyed during that conversation is a reflection of your culture.

Same goes for the delivery driver. Ever have to deal with an inconsiderate delivery person? Did you want to run out and do more business with that company?

Each person within your organization, even if he or she has a very narrowly defined talent, makes up a small but important aspect of your company. If you use the human body as a comparison, you need all the parts to function properly.

Maybe one person’s talent is identifying new markets to sell into and is the equivalent of your eyes. Losing this person won’t bring down your organization, but it might make you much less effective.

Another person might have a knack for getting a plan moving and be the equivalent of your feet. The brain might tell the feet which direction to go, but the feet are no less important.

Every part serves its role, as does every person in your company. It’s important to recognize those people and their contributions.

Every CEO wants to do this, but are you making the time? When was the last time you took someone who toils away in a corner of your office to lunch?

These people are more than just a line item on a spreadsheet or a rung on the hierarchical ladder. In fact, you should be looking at them as equal to yourself. You may be the brain, but a brain with no body is not of much use.

Without these specialists to implement your ideas and make up for your weaknesses, you will be at a competitive disadvantage. Make sure you are taking the time to recognize them.

FRED KOURY is president and CEO of Smart Business Network Inc. Reach him with your comments at [email protected] or (800) 988-4726.

Avoiding the blind spots

Sometimes as CEOs, we are expected to have all the answers. Pride won’t let us tell someone that we don’t. We feel like we have to know more than our employees or our peers.

You may be the CEO, but you can’t know everything, and it’s unrealistic for anyone, including yourself, to expect you to. Part of being an effective leader is acknowledging that you have blind spots and that you need others to help you avoid them.

Wisdom comes from an abundance of counselors, so it’s important that you put together a good team to help you achieve your goals. Identify a weakness and then hire someone who is strong in that area to compensate.

Assembling the right team to advise you requires effort and expense. Here are a few guidelines.

  • Invest in people.
    You have to spend the time mentoring potential leaders in your organization so they fully understand what you are trying to achieve. They can’t help you get there if they don’t know where you are going. Spend money to give them the training they need to fill in their own blind spots to make them more complete leaders.

  • Treat them the way you want them treating others.
    You set the tone in the organization. The way you treat your team members is the way they will treat others. If you seek out their advice, they will seek out the advice of others, as well, giving you an even broader source of potential solutions.

  • Bring in outside advisers.
    No matter how good your internal team is, it’s possible for everyone to share the same blind spot or simply get caught up in the excitement of growth opportunities. Get someone from the outside — your accountant or lawyer for example — to give you an unbiased opinion. They may be able to see something from the outside that you can’t see from the inside.

When your team is assembled, you have to make use of it. Let everyone express their ideas and discuss the pros and cons of each, but most important, leave room for everyone to disagree.

Ultimately, you are responsible for the final decision. You may choose to go with the majority of your advisers, or you may choose to go in your own direction. But if you have the right team, you can at least rest easy that you’ve heard all the pertinent facts and made a decision that maximizes your chances for success.

The search for wisdom

The Book of Proverbs in the Old Testament speaks mainly on two topics.

The first is wisdom. It teaches the importance of wisdom and how to use it. It also describes the benefits of wisdom when making decisions and tells us that we should cherish it. In addition, by using wisdom, we are less likely to make critical mistakes.

The second topic is foolishness, which is what happens when wisdom is not considered. We have all made poor decisions and good decisions, but at the time we make them, we don’t always realize we are making poor decisions.

The obvious course to avoiding poor decisions is twofold.

First, be knowledgeable. The more you know about something, the better your chances of making a good decision. The second part is applying the knowledge. For example, many of us know what foods we should eat to stay healthy and have a well-balanced life, but we don’t do it. That’s foolish behavior.

We know the consequences, yet we do it anyway. We think that we will be the ones who get away with it, the ones who won’t develop health problems.

So to truly be a wise leader, you have to understand your problem, then act on it.

To understand a problem better, you have to look at all sides of it by seeking the counsel of those with different perspectives. Everyone sees things in different ways, and someone else may give you an insight you hadn’t considered that saves you from making a poor decision.

Once you are armed with knowledge, act on it accordingly. Every decision can have a cascade effect. A good decision can lead to a whole host of good results, while a decision that is poorly thought out can be disastrous.

People make foolish decisions when they become arrogant and think they have had so much success that they cannot possibly fail now. The wise leader always considers failure as a possible outcome.

Seeking the advice of others and truly listening to what they are telling you will give you the knowledge you need to make good decisions, and possibly, the warning you need to avoid poor ones. But it’s what you do with that knowledge that really matters and that will ultimately determine whether you are wise or foolish.

Destination unknown

I believe more and more each day that what we think is what we will become.

If you think you will be successful in the long run, you will be — as long as you have a definition of what success means to you. Having a definition of success gives you something to aim for — a destination.

The problem with many people in leadership positions is that we are too short-sighted. We don’t know where we are going. We are all trying to grow revenue, increase market share, make more profits and build a stronger brand, but what I am talking about is the real end game. To many of us, it is “destination unknown.”

You see the same sort of thinking with the afterlife. People who believe in the afterlife will do whatever they think is best today to help get them there.

Many, if not all, of the decisions they are making today are to help position them for the life hereafter. The same should hold true in business. You have to have a clear destination and a reason for taking the actions you do.

Some leaders, whether you agree with them or not, have a clear vision of what their destination is. Bono’s focus is on world peace. President Bush’s focus is to end terrorism. Bill Gates’ is to use technology to make the world a better place.

The next time that you are in a strategic planning meeting or thinking about the goals of your company, consider what your ultimate destination is and consider these three guidelines.

1. Take the time to think through what you would like your destination to be, why you should go there and how you would get there.

2. If you’re not satisfied with your answer, rethink it. Search deep within your soul for what is going to satisfy your greatest longing.

3. Don’t avoid change. Even if your answer means changing your company’s vision, mission or goals, don’t be afraid to make the changes necessary to get you to your new destination.

Without a destination, you are just wasting time and effort. It’s like taking a car trip with no idea of where you are going. You may think you are making great progress because you are driving like mad, but in the end, you end up in the middle of nowhere and have really accomplished nothing.

So take the time to think about where you are really going. Otherwise, you may never get anywhere.

Instinct versus facts

We have all heard the expressions should’ve, could’ve, would’ve, if only and next time. These all point to wanting another chance in how we handled a particular situation.

There are two ways to make decisions — by gut instinct, or by carefully studying all of the facts.

Gut instinct is really a function of experience. The more something has worked for you in the past, the more likely you are to use the same strategy again in the future. Sometimes you can use both methods and come up with two different courses of action.

For example, before the stock market fell dramatically in 2001, something told me to sell a number of the stocks that I owned. I knew they were overinflated, but I didn’t listen to my gut.

The facts at the time told me that the chance of the market falling and losing billions of dollars of market cap was highly unlikely. I thought there would be enough time to see the signs before the market crumbled, but there wasn’t.

As a result, I suffered substantial losses and continue to ask myself why I didn’t listen to my gut instincts.

While facts and data provide the reasoning behind the majority of your decisions, sometimes you just have to follow your instincts. Here are three guidelines for doing so.

  • Don’t force it. Instincts come naturally. If you have to ponder for days whether something is really the right move, then your instincts aren’t clear.
  • Strike when the opportunity presents itself. Getting the facts to back up your instincts is prudent, but there are situations that require speed. Waiting for supporting data isn’t always an option. If your instincts say go for it, then make the move.
  • Don’t let fear of past mistakes cripple your decision-making. Even the best business leaders in the world aren’t right 100 percent of the time. Sometimes your instincts will be wrong. Learn why you were incorrect in a particular situation, then move on. Don’t let past errors scare you into missing future opportunities.

The easiest decisions in business are those in which your gut instincts and the facts point to the same course of action. The tough calls come when those two things point in opposite directions.

When that happens, take careful measure of all the factors, but sometimes, you just have to trust your gut.

Friend or foe

We all have a top performer or two in our organizations.

Unfortunately, the results they get sometimes come with the added bonus of a big ego — they’re good, and they know it.

The question then becomes how to manage these people. You want them to feel special, because they are, but they have to have boundaries and understand that you are in charge, regardless of how well they perform.

It requires a delicate balancing act. After all, they are the best at what they do and deserve extra recognition or perks. Failing to recognize top performers’ achievements will most likely cause them to leave and possibly join the competition, or worse, start their own company with their book of business and become your new competitor.

Sit down with these types of people and find out what their goals are. Are they interested in succeeding at the organization, or are they interested in proving they are better than even you, the boss?

If it’s the latter, they will be a destructive force as they try to prove their point, so the best move is to cut them loose. If it’s the former, you have to lay the groundwork for what is acceptable behavior.

Clearly outline your expectations. If you are focused on customer service, they have to achieve the goals in that area and treat customers the way you want them treated, regardless of what results they ultimately get. Emphasizing customer service to the staff, then allowing top performers to ignore the rules, is the quickest way to demoralize the rest of your employees.

Find out what motivates your top performers. Is it recognition? Compensation? Perks such as being able to work from home?

Use those motivators to drive the type of behavior you want. You can also use them as incentives for the rest of your staff — anyone who goes over their goal by a certain percentage can earn the same privileges.

Every top performer is unique, but if you lay down clear goals and use individualized rewards, you have a lot better chance of keeping these people in your company, rather than having them defect to the competition. And when dealing with them, never forget that you are the boss, because losing a top salesperson is still better than losing control.

Character matters

People use many different leadership styles to run their businesses.

Usually, our leadership style is determined based on what’s driving us to succeed. If money is the sole purpose for succeeding, then this will result in a leadership style with all decisions based on reaching that goal. If your goals are to succeed and to do so in an honest and rightful manner, then your leadership style will be different.

Integrity-based leadership is one example.

Integrity-based leadership is a choice. It comes from a series of decisions we make daily.

The choices we make today are going to lead us to the decisions we are going to make tomorrow. Every day, we hear about another prominent CEO involved in a scandal, a neighbor in trouble or a family member who’s made a bad choice.

The goal is to prevent this from happening to us.

In the Old Testament, Jacob’s sons Joseph and Judah were put through similar tests with opposite results. One would fail and one would be victorious.

How do two people from the same family encounter the same circumstances and have different results? It wasn’t what came from the testing that decided the outcome, it was their life choices prior to it.

Judah wanted instant gratification, which is similar to many in our culture today. Eat, drink and be merry because tomorrow we die. That’s what got Bill Clinton into trouble, and that same attitude can get us in trouble, too. He wasn’t thinking about his legacy, he was thinking only in the moment. Eventually, true character is always revealed.

Here are three things we can all do to prevent our character from being tarnished.

1. Always think about tomorrow, not just today. Don’t be short-sighted when making decisions.

2. Hold yourself to a standard of excellence. Do the right thing when going through a difficult circumstance. There will always be another day.

3. When you make a bad decision, own up to it. Be honest with yourself and others.

Reputation is who we are in public, but character is who we really are. It comes down to always doing the right thing. By practicing integrity-based leadership, you will create a great reputation and demonstrate character traits that everyone can be proud of.