Many business leaders find themselves asking: “Why can’t it be easier? Why is it so hard for us to make decisions together and get some of the simplest things done?”
Whether your company is a professional firm, family-owned business or manufacturer, people with different communication styles can get tied into knots working together. That in turn challenges productivity and everyone’s desire for a harmonious environment.
“I’ve discovered that metaphors are an easier way to explain why people are having challenges working together,” says Ricci M. Victorio, CSP, CPCC, ACC, managing partner at Mosaic Family Business. “The metaphor creates an instant picture. I like to say it’s the difference between the language of the tiger and the swan.”
Smart Business spoke with Victorio about helping individuals in a business form a cohesive team.
Why use the metaphor of tigers and swans?
You may have heard of ‘hunters and gathers’ when describing workplace dynamics. However, people may not want to be known simply as an implementer, and others might say, ‘I’m not a hunter, I love my people. I have passion.’ The tiger and swan metaphor is one where no one feels diminished.
Swans are beautiful, elegant creatures that live in harmonious flocks. They don’t like change, but if challenged, they become fierce. Tigers love the thrill of conquest, and the strategy of tracking their prey. That’s how they measure their self-worth, so there’s bravado from the adrenaline of a challenge.
Often in business teams there is miscommunication between the entrepreneurs who grow the business and those who make the business run. With the metaphor of the tiger and swan, they start to understand each other better. A swan learns that when tigers write emails in all capital letters, for example, they are not criticizing, but naturally talk big and directly. A tiger learns if he or she doesn’t listen to the warnings of a swan, things could fall apart.
What’s the first step to getting teams to work better together?
People with different personalities must learn to communicate in a more collaborative and professional way. It’s hard to work when you feel you’re walking on eggshells or waiting for the next fire drill. If you understand the language being spoken by various personalities, then you can adjust your delivery so you are understood.
To establish trust between the two, there has to be a genuine curiosity in learning about each other. You want to create positive experiences of working together, where everyone is being acknowledged for their collective and individual contributions.
If your team is struggling to understand each other, an objective coach who sees all the nuances of the personalities can help guide them when they step on each other’s toes, to reframe the interaction so everyone understands the intention of the other player’s actions. It takes someone who can see the big picture and isn’t part of the ecosystem to help bridge the gap.
How can business leaders ensure they have the right team dynamics?
Some important dynamics are called for to ensure a team works together best. The five characteristics of a team are:
- Character. Who are these people? Do they have integrity and do you trust them?
- Competence. Without skill, it won’t matter how much integrity someone has.
- Commitment. A team fails or succeeds based on its commitment to one another.
- Consistency. The team has to have the confidence they can count on each other, day-in and day-out.
- Cohesion. Even when it’s difficult, the team needs to function at a higher level and know that together it’s better than any individual.
These elements are foundational for a successful team. If team members don’t trust each other enough to have transparent, authentic conversations when facing difficulties, their differences will create a wedge, pushing them farther apart. It’s not the job of any one person to make all the accommodations. Everyone needs to step into the center and take the time to learn the differing languages being spoken within the group. Once this begins to happen, you will begin to enjoy the benefits of a ‘bilingual’ organization. ●
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“Friends and family are still the largest source of capital for companies in the early stages of development, but the current funding market presents several additional options for young companies. Be open-minded and investigate numerous sources of capital,” says Thomas C. Armstrong, corporate attorney at Berliner Cohen and a FINRA registered investment banker.
Smart Business spoke with Armstrong about the financing options available to startups and emerging enterprises.
What are the choices when it comes to raising equity capital?
- Friends and family. When starting a company, many times they are the primary source for capital. That’s true even in Silicon Valley, where you read about all of the angel investors and venture capitalists.
- Angel investors. These are wealthy individuals who provide financing, advice and connections. The investment is usually in the form of equity or possibly a convertible note that converts to equity when the company obtains a larger round of financing. There also are angel groups that will analyze the company and make a determination whether to invest. The process tends to be somewhat more formal and can take longer than what the entrepreneur may anticipate.
- Venture capitalists. Conventional wisdom is that they are looking for 10 times return on investment, so it’s for high-growth companies. Quite honestly, there are many companies that don’t fit that model. It doesn’t mean that they’re bad companies; it is just that they don’t fit the criteria for venture capital funds.
No matter what type of investor you’re making a pitch to, it’s important to present them with a credible exit plan or strategy. A lot of companies talk about how they’re going to grow and be the next big thing, but never clearly explain how the investor is going to get liquid on their investment and exit the company. If you’re taking outside financing, investors want a clear and credible exit strategy.
Why should debt financing be considered?
Often overlooked as a financing option, debt may be an option or part of an overall financing package. Banks are trying to be more creative and there’s been renewed interest in so-called revenue loans. Of course, for revenue loans the company has to have revenue — so it’s not for pure startups — but it can be a relatively modest amount of revenue. Revenue lenders will lend a certain percentage of your gross revenue, and a percentage of your monthly gross revenue goes to pay the loan. That payment amount goes up or down as your gross revenues go up or down. The good news is that they’re not asking for personal guarantees with these loans.
The downside is the interest rate is higher than for traditional bank loans. Your cost of capital, however, may ultimately be less than if you raised equity from angel or investor groups because you’re not giving up any ownership in the company. Of course, don’t forget about grant money if that is something the company may be able to apply for.
What problems can companies encounter if they don’t choose the financing route that’s best for them?
If they go to the wrong places for capital, they risk giving up too much of the company with a bad valuation or losing valuable time in their search for capital.
Another consideration is the expectations of investors. What is their time horizon? Are they patient or impatient money? Do they want to see distributions or just capital appreciation?
Entrepreneurs also need to think about whether these investors are going to be involved in the business. Some business owners may want that, while others don’t want to deal with people that are too meddlesome.
There also are legal ramifications to consider. Any time you are issuing securities in the company you have to comply with federal and state securities laws.
That’s a broad topic, but essentially you have to ensure that investors understand their investment and have been given sufficient disclosure about the company and the risks associated with investing in it. In particular, there are rules and regulations regarding who can invest and how much.
Under the recently passed Jobs Act, the government has tried to make it easier for companies to raise capital and the emergence of crowdfunding and the internet are opening up new avenues for raising capital. But again, you still need to comply with securities laws. The important thing for entrepreneurs is to look into all sorts of capital sources. ●
Insights Legal Affairs is brought to you by Berliner Cohen
Tax planning is a key component of mergers and acquisitions for both buyers and sellers. It can impact the deal price and play a role in the post-transaction integration.
Tax issues are probably more stressful for sellers, because if there are tax exposures they may need to make representations and warranties. It also can have a bigger impact on the seller’s individual taxes. However, from a buying standpoint, if you want management to stay on but there’s a tax problem, say with executive compensation plans, that can have an adverse effect on operations prospectively.
“It’s one of those things where lots of times people forget, and they bring tax in, in my mind, a little too late,” says Mark Reis, CPA, a tax partner in the Bay Area at Moss Adams LLP. “Or maybe they don’t have a clear understanding of how some of the tax considerations work because they are focused on operations or the deal, and then it can impact purchase price and the taxes of selling shareholders.
“Without the proper planning, you see a lot of things that do go wrong, versus go right,” he says.
Smart Business spoke with Reis about tax planning tips for M&A activity.
Why bring tax into a deal early?
It’s imperative to get all your advisers to the same table early, so they’re communicating throughout the process. If you’re worried about professional fees, remember with the size of these transactions, it’s a comparatively small cost to ensure everybody is on the same page. And many times you’ll end up spending more on professional fees than if you’d been proactive from the start.
Another problem with waiting is you may not get the maximum tax value or benefit. For example, on a recently closed deal, if the company had brought in experts six months earlier, it likely could have saved $1 million in California tax. It’s a matter of having the right people with the right expertise at the table together in order to plan versus react.
What’s important to know about the deal’s structure and its tax effects?
Often business leaders can be unclear on the differences between a stock transaction and an asset purchase, or a tax-free or partially tax-free transaction. Understanding available structures gives both buyers and sellers flexibility to maximize the benefits. For instance, one transaction started as a tax-free merger, but it became mutually beneficial to restructure it as an asset purchase.
Your advisers can help find the best and safest answer, looking at how to manage all the risks, including income tax. Getting a clear understanding of all issues both before and after a transaction closes helps eliminate unnecessary stress or surprises. There are a lot of traps for the unwary; take in as much as possible about the whole picture.
How should buyers attack tax exposures with the target business?
During the diligence process, look at all the exposures, including transactional taxes like sales and use tax, or income tax in other states where activities haven’t been reported. These liabilities may decrease your purchase price offer, or lead to requiring the seller to clean things up prior to doing the deal.
You want to know what you’re buying. With one transaction, the change-in-control agreements were drafted unclearly, which led to problems with the golden parachute rules and payroll taxes. Not only do you have to meet all compliance burdens, but also the last thing a buyer wants is to alienate a key employee who was part of the target.
Is there anything else to keep in mind?
When running projections, you need a solid understanding of the pro forma financial, the purchase accounting adjustments and what kind of resource strain the integration will put on your organization.
When budgeting, project out from both an EBITDA and tax standpoint. Do you have to do fair value accounting? Are you inheriting a liability or is it a true asset? If it’s an asset, what’s the value? How will you handle the transaction costs, which may or may not be deductible?
And the work isn’t done after the deal closes. Post-transaction actions can add value. Again, you need a strong relationship with your advisers, so everybody is talking as issues bubble up. Sometimes it can be a great tax answer, but it doesn’t make sense operationally — but at least you can make an informed decision. ●
Insights Accounting & Consulting is brought to you by Moss Adams LLP
Business succession is the one thing many companies fail to address for fear of relinquishing control, a lack of time, the feeling that successors aren’t ready or other reasons. But, it’s never too early to start succession planning.
“Statistically, roughly only 30 percent of family-owned businesses are effectively transferred to the second generation and just 10 percent make it to the third generation,” says Julianne Cruz, managing director of Advisory Services at CB&T Wealth Management. “There are myriad reasons for this, but one recurring issue is a lack of effective succession planning.”
Smart Business spoke with Cruz about how to effectively position your chosen successors for success.
How should business owners get started?
You need to consider the three ‘T’s of successful transition:
- Transferring management.
- Transferring ownership.
- Tax consequences.
In all cases, having a plan that is strategic and well executed is key, but that takes time. The most successful transition plans take place over a number of years, as successors develop the skill sets required to run the business.
How is management transferred?
It’s important to select an independent adviser who is highly experienced with planning issues to arrive at the best plan for you and the next generation. Some areas to consider are: If more than one child is involved in the business, how will contentious decisions be made once you exit the business? If you want certain key, loyal employees to be cared for, as they are likely necessary for a smooth transition, what assurances do you have this will happen? What happens if unexpected health issues force the transition early?
A well-developed plan ensures the business will thrive without interruptions, helps the next generation grow into their role at a reasonable pace and promotes future harmony among family members. A short-term plan ensures there’s enough liquidity and insurance to hire necessary experts and avoid a fire sale. A mid-term plan must prepare developing successors or key employees to be in decision-making roles initially.
It also would have a timeline for family members to step into their new roles with certain targets. The long-term plan is ultimately what you want to happen — the best of all circumstances. After discussing your plan with advisers and successors, involve your key employees, who may be more satisfied knowing the company’s future.
What are some factors to consider with transferring ownership?
Once the management transition plan is established, plans for transferring ownership can occur. Usually this begins with your retirement plans. How much income will be needed and what’s the timeline? If you need cash from the business, are you willing to bear the ‘investment risk’ of he business as a source of income once you’re not involved? Then, consider estate-planning issues. Are all your children involved in the business? If not, do you desire to ensure each child will ultimately receive an equal estate share?
How do tax consequences factor in?
Taxes are the tertiary consideration once decisions have been made regarding the general retirement and estate plans. As is the case with investment portfolios, taxes should never drive the decision-making process. Tax-reduction strategies should only be considered after other issues are decided. Business owners in general, and particularly family-business owners, should begin now and get an experienced, independent adviser to guide them through the process. The earlier you plan, the better the results. Sound, experienced advice will make the process that much easier, and maybe even bring family members closer.●
Wealth management services are offered through Contango Capital Advisors, Inc. (Contango), which operates as CB&T Wealth Management in California. Contango is a registered investment adviser, a nonbank affiliate of California Bank & Trust and a nonbank subsidiary of Zions Bancorporation. Some representatives of CB&T Wealth Management are also registered representatives of Zions Direct, which is a member of FINRA/SIPC and a nonbank subsidiary of Zions Bank. Employees of Contango are shared employees of Zions Trust, a subsidiary of Zions Bank and an affiliate of Contango. #CCA0813-0090
Insights Banking & Finance is brought to you by California Bank & Trust
Information and data are critical to the operation of every business. Whether running a local law firm or a multinational manufacturing operation, information technology systems are essential to your ongoing success. As data and technology become more and more entrenched in business operations, they can also represent a serious vulnerability. Data connects, facilitates and supports every part of most organizations. What happens if disaster strikes and critical information is suddenly unavailable?
For many businesses, a loss of data or system functionality would be a catastrophic event. Every second without working technology systems may lead to a significant loss in revenue. So how can businesses protect their technology systems and plan for efficient recovery when disaster strikes?
Smart Business spoke with Igor Zaika, IT and security director at Sensiba San Filippo LLP, about how companies can plan for and recover from disasters.
What are some causes of a disaster?
Threats to technology systems can come from many different directions. Hardware failures, human error, and natural disasters such as fire, floods and earthquakes can threaten hardware systems and the data they store.
Software corruption, viruses, ransomware and other unseen threats can also hit at any time, regardless of how well-secured a system may be. And for every known threat, there are many unknown threats that are hard to predict.
How should a company approach disaster recovery?
First and foremost, information security and disaster recovery should be approached strategically at the organizational level. Business owners need to take a proactive approach to protecting their businesses and their clients’ data. In today’s relatively ‘hostile’ IT environment with increasing threats, business owners can no longer hope that their IT teams have it under control. They need to plan for a disaster to occur and proactively have a recovery plan in place. Involve stakeholders throughout the organization, and identify critical processes that could be affected. Ask a lot of what-if questions, identify your most significant vulnerabilities, and develop an overall business strategy to sustain and restore your business operations in the event of a disaster.
What components should a good disaster recovery plan include?
There are several critical components that every disaster recovery plan should address. The first is a critical process assessment.
Understand how critical processes throughout the organization are affected by your technology systems. You’ll also need good back-up procedures. Good, clean data is critical to recovery.
Next, you should develop recovery procedures. Your recovery plan should lay out in detail instructions for each step that must be taken. Implementation and testing procedures will give you the peace of mind of a successful disaster recovery.
Finally, you’ll need a good maintenance plan. Swiftly changing technology, processes and threats will require your recovery plan to be frequently updated to remain effective.
Can the cloud and other technology help?
Utilizing cloud technology can be a great way to gain productivity, simplify your infrastructure and minimize potential risks of a disaster. However, before embracing the cloud, understand the impact to your business processes, compliance requirements and of course, your employees. Technology can be very useful in protecting your business from disaster, but it is important to understand that no single piece of technology constitutes a recovery plan. A great example of utilizing cloud technology as a part of your disaster recovery strategy is an all-in-one backup appliance. It allows you to protect your assets, simplify disaster recovery and replicate data to the cloud for added protection.
Disaster recovery should be a part of every organization’s strategic plan. Data and technology are too important to leave anything to chance. Find a technology partner that you trust and work with them to design, implement and troubleshoot a comprehensive disaster recovery plan. Taking a proactive approach today to disaster recover will ensure your success tomorrow. ●
Insights Accounting is brought to you by Sensiba San Filippo LLP
Finding a bank for your business is different than applying for a car loan. Instead of just needing a source of capital, you also need a partner that can help your business grow.
“You’re looking for a relationship that will allow your business to prosper,” says Andrew M. Phillips, vice president, relationship manager at Bridge Bank.
Smart Business spoke with Phillips about how to find the right bank for your business.
How does an owner find a bank that fits his or her business?
First, look for a bank that is truly dedicated to serving businesses. Long lines for tellers and heavy branch traffic may indicate that bank caters to personal accounts. A true business bank will likely have a lobby that’s much more open, with employees sitting at desks rather than behind teller windows. There’s less activity there because most business is conducted out in the field, at client offices or job sites.
Another consideration is size. If you need to borrow $500 million, your choices are going to be limited to big banks. But if you’re a small to midsize business you should look for a smaller bank that shares the same vision and spirit as you.
If a bank has the capacity to lend $500 million, it can certainly take care of your $2 million loan request, for example. But you’re going to be a small fish in a big pond, and you probably won’t get the service that you need for your company. That same $2 million loan is very important to a small to midsize bank, as will be your relationship.
What are the advantages smaller banks can provide?
Do you want to shape your company to fit lending requirements and other parameters of a big bank, or do you want a bank that shapes its requirements to fit your company? By virtue of their size, certain smaller banks can be more adaptable to the unique needs of the businesses they serve. They can be more flexible and offer solutions customized to fit individual businesses instead of broad-brush, pre-packaged solutions to fit a particular business sector, for example.
Every bank will say they have expertise in your industry. But don’t let this be a substitute for a banker taking the time to learn your particular business, which isn’t exactly the same as your competitor’s. The right bank can do a lot to help you maintain the edge that helps you thrive.
A smaller bank doesn’t have a prepackaged program that says, ‘You’re a distribution company that has $10 million in annual revenue, so you need a $2 million receivables line of credit and up to $1 million of term debt.’
They look at each client, how they do business, and determine what advantages can be provided that fit into their way of doing business. For example, can they take discounts from vendors that they aren’t taking? Do they need to finance a piece of equipment at a shorter or longer term?
Once you’ve decided the right size of bank, how do you choose one?
Talk to business colleagues about their experience and find a few banks that make sense and are a good fit for your business. Some banks do have expertise in certain industries and if you have one that’s particularly good with yours, start there.
Then, meet with a few bankers and get to know them. It’s not enough to send a package and see how your needs fit with the bank on paper. You need to discuss your company’s history — where it has been, where it is now and where it will be in the future. It’s important to provide your financial history, but it’s just as important to outline what and where your company is, its goals, and the ambitions and desires of the people running it.
That will help to ensure a good fit. People have different priorities, and a bank needs to know those priorities to put together a customized solution.
It takes a lot of time to do this process properly, but a good banking relationship is worth the effort. ●
Insights Banking & Finance is brought to you by Bridge Bank
Every day, small business owners make mistakes by failing to disclose issues when selling their businesses, risking potential legal entanglements.
“Selling a business is not unlike selling a house. In California, there is a duty to disclose. Although a broker representing the buyer or seller has fiduciary obligations, by law, the onus of disclosure falls on the seller,” says Gregory M. Gentile, a partner at Ropers Majeski Kohn & Bentley PC.
Smart Business spoke with Gentile about pitfalls owners should avoid when selling businesses.
What can a seller do to mitigate the risks of selling a business?
Finding the right broker and/or consultant to help sell or market your business is a crucial step to success. Many times, owners seeking to list their business select the first person they meet. This can cost time and money.
Within a few months, you may see no results and have to go on a search all over again. Take time to interview the broker and focus on a realistic outcome. A reputable broker can prepare a sound market analysis and aggressively list the property to attract willing buyers.
The seller can also expect a reputable broker to have a well-drafted representation agreement. It is important that the seller review the agreement carefully and understand his or her obligations.
What are the contractual responsibilities of the seller?
Using a broker to market the business does not relieve the seller from due diligence. The seller is required to disclose all material conditions that may affect the prospective buyer’s decision to purchase the business. The seller can expect the broker to set forth these obligations in the listing agreement. It is very important for the seller to carefully review the listing agreement to ensure his or her awareness of these obligations that the broker places, by contract, on the seller, and the potential downsides if the seller fails to abide by them. If any part of the agreement is questionable, it is important to ask questions; and if necessary, consult with an attorney.
What provisions in the listing agreement should a seller be most concerned about?
Many listing agreements have one or more provisions requiring that the seller affirmatively disclose. There may also be provisions that seek to relieve the broker of any liability if the seller fails to disclose. For the seller, this means to be complete and accurate with any information provided to both the broker and the prospective buyer. Any material fact that may reasonably influence a buyer’s decision to purchase the business must be disclosed.
The listing agreement may have indemnity provisions favoring the broker. For instance, if the agent or broker gets sued or is required to defend a claim brought by a buyer, the broker can seek indemnity (recovery of damages) against one or more of the parties to the transaction, and such damages include, by contract, any attorney’s fees and costs incurred by the broker’s attorney in defending any claim. This can be substantial and financially devastating.
Many agreements have arbitration provisions. Such a provision in a listing or purchase agreement will pre-empt a lawsuit in superior court, which means that the parties must go to judicial binding arbitration if there is a dispute. Arbitration has the potential of being expensive since arbitrators charge hourly for their time.
The agreement can also contain an attorney’s fee provision. If the seller fails to disclose, and the broker has been forced to hire an attorney and prevails against the seller, the seller will be required to pay the monetary damages, the broker’s attorney’s fees and costs, including expert fees (if any are incurred, and they usually are) and the arbitrator’s fees, which can be substantial.
Selling one’s business can be financially rewarding, but it is also a complex transaction with many pitfalls for the seller. It is important to do your homework and select a reputable business broker. Further, be sure to read and understand the contracts presented by the broker, ask questions and, if necessary, consult an attorney. ●
Insights Legal Affairs is brought to you by Ropers Majeski Kohn & Bentley PC
Ask 10 practitioners to explain analytics and you’ll get 10 different answers. The field is still evolving as people come at it from different backgrounds. But at its core, analytics is about replacing gut-based decisions with ones that are fact-based.
The challenge is that today’s “facts” are buried in enormous data sets. Leaders must work with all employees to pinpoint meaningful data and use the knowledge gained to provide a better product or service.
“It involves executives thinking quantitatively and asking the right questions,” says Dave Czerwinski, assistant professor in the Department of Marketing and Decision Sciences at San José State University.
“No longer is it enough to have a small group of nerds hidden away crunching numbers in a room at corporate headquarters. Analytics now touches on and can transform every functional area of a business.”
Smart Business spoke with Czerwinski about the value of the business analytics certificate and how it can help companies maximize the value analytics provides.
What is business analytics?
Analytics is characterized by three phases: descriptive, predictive and prescriptive.
Descriptive analytics means understanding your business and its environment. It has been around for a while in the form of database reports and executive dashboards.
Predictive analytics means taking that same data and combining it with statistical modeling to anticipate what will happen next. This is where a lot of the action is right now in the analytics space.
Prescriptive analytics is the final and most important piece. It answers the following question: Given what we know and what we expect to happen, what should we do? Prescriptive analytics uses heavily quantitative methods to help businesses optimize their strategy and execution. While many businesses are getting up to speed with predictive analytics, it’s a more rarefied group that’s really firing on all cylinders with prescriptive analytics.
What’s an example of success achieved through analytics?
People think that Netflix put Blockbuster out of business because of the convenience of having a movie delivered to your house or streamed to your computer. But it wasn’t convenience that beat Blockbuster — it was analytics.
People didn’t really mind going to the video store. What they minded was spending half an hour looking for a movie, often ending up with one they didn’t like. That’s the problem Netflix solved — and they did it with analytics.
By analyzing customers past rentals and ratings, and those of customers with similar tastes, they help customers find the next movie to rent. Blockbuster was sitting on all the rental histories of their customers too. But they never used it to help their customers. It just wasn’t part of their culture.
What’s the profile of a person who can benefit from a business analytics certificate?
The skills are more role specific than industry specific. Individuals who develop business analytics skills will be employed in white-collar positions at all levels of management. Certainly those in upper management positions responsible for converting data into strategy would benefit. But just as surely, entry- and mid-level managerial personnel would benefit from such skills since they are often responsible for data accumulation and architecture as well as data analysis.
Why is now the time to get people trained on analytics?
Organizations know that their success increases to the extent that they are able to tap data by developing metrics, models and processes that enable them to make data-driven decisions. A premium will be paid for individuals who can deliver, particularly since business analytics positions are expected to increase by 22 percent by 2020. McKinsey & Co. expects a shortage of between 140,000 and 190,000 professionals with deep analytical skills by 2018. ●
Insights Executive Education is brought to you by San José State University
“The most innovative ideas come from conditions that are constrained or set.”
I’ve always thought of myself as more of a task manager than an innovative, creative person, and those words from ShareThis CEO Tim Schigel, subject of this month’s cover story, resonated with me because not knowing where to start is a familiar experience.
At first glance, it seems counterintuitive to place limits on innovation.
Wouldn’t keeping all options available lead to more possibilities? That, in turn, would be expected to produce better results, since you’re able to select the best solution from among a larger pool of ideas.
As Schigel says, without rules you wind up floating around in this ambiguous space. Only with constraints does innovation occur.
That comment made sense to me. When there are no rules, there also are no boundaries or ways to keep projects on track. It sounds like a way to rack up some huge expenses with no assurance you’re on a trajectory toward success.
At ShareThis, the starting point for development was to restrict ideas to working within the Amazon Cloud. Designers also had to ensure that their solutions didn’t use up too much computer power and slow down websites.
For many companies, I’m sure budgetary constraints are a large consideration that employees must work within. That’s certainly one of the reasons ShareThis stayed within the cloud rather than invest in a data center. But they were able to find a way to make the seemingly impossible work.
Ignoring the crowd
Clearly part of Schigel’s success stems from being a contrarian: “I like to go where the puck is going.”
As a hockey player, I appreciate any analogy connected with the sport. But it does make good business sense. All that he’s really saying is that better results come from anticipating changes.
Talent can make up for a lot of shortcomings when it comes to reading and reacting to a situation. But companies, like hockey players, can certainly maximum their potential by analyzing where things are going and taking steps to arrive there ahead of the competition.
In the case of ShareThis, that meant getting away from being dependent on a Facebook platform and developing an open model approach to sharing.
Hitting home runs
Many engineers at Google and other West Coast companies are from Midwest colleges like The Ohio State University and the University of Michigan, says Schigel, who grew up in Cleveland. Schigel says they often don’t have the same belief that it’s OK to change the world that you find on the West Coast. As a result, many business plans focus too much on incrementalism, he says.
“They just want to make something 20 percent better, instead of changing the rules,” Schigel says.
He says the key is to build up confidence within your organization and encourage people to ask questions. Remember, however, to stay focused as well.
“If they are just asking, ‘What if?’ and are not accomplishing anything, that gets a little old,” he says. “You want to not only ask the interesting and penetrating questions, but then go try and do it.”
Sounds like the perfect balance of task manager and innovator to me. ●
Roger Vozar is associate editor at Smart Business Northern California. If you have an interesting story to share about a person or business making a difference in Northern California, please sent an email to firstname.lastname@example.org.
I’ve read hundreds of great quotes from amazing leaders describing “leadership.” One of the simplest comes from Fuchan Yuan, who identified three essentials: “humility, clarity and courage.” Humility seems to be a character trait that people either have or don’t. Although many people perceive CEOs to have large egos, great leaders know that leadership is NOT about them as individuals.
Clarity is highly valued by most organizations. “Why do we exist?” “Where are we going?” and “How will we get there?” are essential questions that leaders need to answer if they are to build high-performance organizations.
Courage is expected of our leaders. Few things that are worth doing in life are easy, and followers must know that their leader will stay the course even in the toughest situations.
All three traits are important. But while I believe humility is a personal trait that doesn’t disappear overnight, clarity and courage can sometimes be lost in an instant and can be difficult to regain.
When a leader has a clear and compelling vision and a well-conceived strategy, the path ahead seems to unfold effortlessly. Sometimes the right path isn’t so easy to find, and even the best leaders experience an occasional crisis of confidence or a feeling of being “stuck.”
So what do great leaders do? Based on lessons I’ve learned from great leaders, I recommend the following:
Start with “why”
Simon Sinek’s TED talk, “Start with Why: How Great Leaders Inspire Everyone to Take Action,” is one of the most popular TED talks of all time. Sinek spoke about how people act according to their beliefs. Is your mission still compelling and crystal clear? If not, think about what has changed since you began your leadership journey.
Spend time with customers
Really listen to what your customers say. Do they truly appreciate what you do? Or, are you simply a commodity to them?
Spend time with employees
Listen to what they tell you about your customers and what they do and don’t enjoy about the company. Do they have a clear sense of the mission and strategy? What would they do if they were CEO?
Get outside perspectives
I founded the Alliance of Chief Executives in 1996 to enable leaders to discuss their most sensitive and deepest challenges in confidential, private meetings with other CEOs they respect and trust. All of us get into thinking and behavior patterns, and we typically need others who think differently to identify fresh approaches.
Take time for yourself
Leaders must take the time to slow down and reflect on their lives and current activities. Are you working to your full potential? You should explore these questions in-depth until you truly feel clear and energized by your decisions.
While leaders can sometimes lose clarity and courage, these traits can be restored. Once you’ve regained clarity, you will be able to move swiftly and confidently to communicate your vision while being open to ideas that will enable your organization to achieve your goals. When your mission is absolutely clear, you will also be able to muster the necessary courage to do what is needed. ●
Paul Witkay is founder and CEO of the Alliance of Chief Executives, the most strategically valuable and innovative organization for leaders anywhere. The Alliance strives to provide creative environments where breakthrough ideas happen.
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