Imagine for a moment that you are on a plane flying at 30,000 feet. As you cruise along, suddenly the door to the cockpit opens and the pilot walks back into the passenger compartment and starts getting drinks ready for the passengers and then leaves to deal with an unruly person in row 23. What would you think? First, you need to fly another airline. Second, why in the world is the pilot out dealing with things that are clearly the responsibilities of others?
There are two possibilities to this exaggerated example. Either the pilot isn’t very good and can’t focus on the task at hand or the people working with the pilot can’t get the job done on their own, so he has to come out and help. Either way, the plane doesn’t have anyone at the controls and the ramifications of that are very serious for everyone on board.
The answer is, probably no one, which also means your business is probably going nowhere fast, except maybe into a nosedive. The fact of the matter is, you can’t keep your business pointed in the right direction and navigate around hazards if you are distracted and forced to deal with issues that really belong to someone else. You have to have the right team to make your business ascendant.
Much like our mythical pilot described above, either the problem is you or the people who work for you. Either case requires you to take action. If the problem is you, then your management style needs to change. The only way you are going to be successful is if you start piloting your plane and leave the details to the people below you. At some point, you have to trust that they will get it done — maybe not the same way you would have done it — but done nonetheless.
If you talk to any successful CEO about what his or her average day looks like, it typically is all about strategic planning, meeting with investors, advisers or checking in with direct reports on key initiatives. Successful CEOs will not normally mention things like going on sales calls, troubleshooting a minor project or game planning about how to improve workflow within a department.
Why don’t they mention these types of activities? Because they aren’t doing them. If they were “down in the weeds,” dealing with details, who would be piloting the company from a strategic standpoint? The moment they started getting lost in the details is the moment the company would start to drift off course, because no one was there to steer it.
If the problem is your people, then that’s another issue. If you’re trying to pilot the plane but you have no choice but to go back and remind someone for the third time that you need some key piece of information or something else that should have long since been taken care of, then you may have a people problem. If you can’t trust the people below you to get the job done and they are doing poorly enough to where it’s a distraction to you, your only choice is to make a change.
That might mean training, it might mean moving someone to a different position better suited to his or her skills, or it might mean parting ways. But you can’t jeopardize the business by wading out into the weeds while the strategy goes on autopilot.
Being CEO is never easy. It’s up to you to decide whether the problem is the pilot or the crew, but one thing is for sure, you are never going to be able to pilot a plane if you are stuck in the weeds.
In this economy, “reinvention” is an overused term.
Companies are forced to make cuts, and they are spinning it as a reinvention of what they do. Unfortunately for most, the cuts are made simply to survive and there’s no real vision for where they are going or what they want to do. It’s strictly a financial move meant to cut costs, not part of some larger plan to move the organization forward.
If you want to survive, you better figure out how to transform your company into something relevant for your customers. Eliminating a few positions and hunkering down to try to ride out the storm isn’t much of a strategy it’s just hope. You need more than hope; you need a strong plan.
Everyone is in the same economic boat, and as a result, everyone has the same basic needs. People want everything faster. They want more value out of it, and they want the best price. Stopping your strategy at eliminating positions might enable you to offer a lower price, but what are you doing about speed and value? These might be the two most important factors of the three.
There are different ways to increase your speed and value, but technology is probably one of the best methods to achieve your goals. For example, investing in enterprise resource planning software an integrated package that manages internal and external resources can help unite all of the information that’s in your business and put it within one system. It can get all of your departments working together and help break down silos that exist within your organization.
All of the extra data will allow you to make quicker decisions because it will all be at your fingertips and more informed decisions to help guide your business. Not waiting on someone to compile information or a report means you get answers to customers quicker, increasing your response times and thus increasing your speed.
With everyone having easier access to information and getting computer assistance for things like inventory management, you’ll gain efficiencies, as well. Now granted, ERP systems aren’t cheap. But if it’s part of a carefully laid out plan to transform your business, the investment makes sense. There are obviously other ways to increase speed and efficiency, but the point is that it needs to be part of a bigger plan. Simply cutting costs isn’t enough. You have to spend money in this case, investing in technology upgrades to make money.
Look at what other opportunities are out there. You want to stay focused within your core competencies, but maybe there are some things worth pursuing that play to your strengths that would help diversify your revenue streams.
Take IBM for example. At one point, it was a computer giant. Now IBM is primarily a software and consulting company. The company took its technology expertise and applied it in new ways and now it is a leader in the software and consulting business.
Regardless of what avenue you take, you need to have a plan that will set your company up to be ahead of the competition now and in the future. Cutting costs might be a necessary step, but it shouldn’t be the only step. Look at every opportunity you have and make sure you are optimizing your revenue and your chances for new business.
As the Old Testament says: In the morning sow thy seed, and in the evening withhold not thine hand: for thou knowest not whether shall prosper, either this or that, or whether they both shall be alike good.
Don’t change for the sake of change. Change to transform yourself into a leaner, more competitive company.
FRED KOURY is president and CEO of Smart Business Network Inc. Reach him with your comments at (800) 988-4726 or email@example.com.
In this economy, a good culture can be the difference between an effective company that is riding out the storm and ready to move forward again and one that is in complete disarray.
Employees are hearing about bad news everywhere they look. People they know have been laid off, companies have eliminated bonuses, hiring freezes are in place and workloads have increased. How they handle all of this negativity is really reflective of what kind of culture you have.
If employees are spending time gossiping, it’s because leadership hasn’t shared any information with them, so they are speculating as to what the little bits of information they do know actually mean. This creates an environment that is filled with rumors. When people start hearing negative rumors that might directly affect them, they start to fear for their jobs.
Even if you have assured people that their positions are safe, if the rumors are all about their responsibilities being eliminated or transferred, the only conclusion they are going to draw is that their position is not safe.
How productive do you think people are if they are living in fear each day they come to work?
Wouldn’t you be better served by having a culture that is more open and fair?
If you share information even the bad news and explain what you are basing your decisions on, people are more likely to respond in a positive manner. Not everyone will agree with your decisions, but at least they will understand why they are being made and what they are based on. Employees also appreciate being treated like adults and not children. Sharing information helps create buy-in and a team atmosphere where everyone is in it together.
Being open with information is a cultural decision within a broader human resources strategy. It takes time and effort to build trust with your employee base. Once your employees see that you are being honest with them on a regular basis, the rumors will dry up and productivity will increase. People like to know what’s going on. Nothing fuels rumors more quickly than a lack of information.
You need to overcommunicate to your work force. Key details need to be conveyed multiple times in as many ways as possible e-mail, newsletters and in person. Make sure you have a master plan that everyone is aware of. When employees understand where the business is going and what factors are affecting it, they can more easily buy in to your vision and help you get there. Goals need to be clear and broken down to the lowest level possible all the way down to the individual if you can.
With a plan in place, you can use metrics and accountability to make sure everyone is doing his or her part. Those who can’t cut it become the obvious choices to everyone to cut loose. Everyone knows that there is no room for deadweight in these economic conditions.
If your culture is open and you’ve shared information and held people accountable, it should be no surprise to anyone that the worst performer on staff is the one eliminated to save money. Without the information, the elimination of a position can seem random and arbitrary, which stokes fear and rumors.
If you aren’t sure how to go about sharing information or how to set up a system of accountability, I suggest you seek out a third-party human resources firm to help you. The third-party firm can share best practices and find a system that will fit your company.
In the end, it’s all about how you treat employees. If your culture treats them like commodities, performance will suffer, and you’ll have a hard time surviving to see the recovery. If you treat them like people and create a culture of fairness and honesty, you will most likely do well. It doesn’t mean you won’t have to make tough decisions or that positions won’t be eliminated, but it does mean that if it happens, both sides can share a mutual respect for each other and move on in a positive fashion.
Have you ever taken a moment to think through all of the possible risks your business faces each day?
What if your data center was flooded? Are you insured? How would it affect your business? Could you afford to replace the equipment and data?
What if your company headquarters burned down or some other disaster struck that destroyed all of your records? Could you continue to do business? What would you do the next day?
These are the types of questions that CEOs need to be thinking about. The problem is there are so many what-if scenarios that it can be hard to envision them all, especially when it comes to things like cash flow or taxes. How would that data loss affect your cash flow? If the headquarters building burned down, how would you make payroll?
There also may be opportunities out there that you aren’t even aware of, whether it’s a tax break or some sort of government-sponsored incentive that could save you money. The best way to work through all of these scenarios is to build a solid relationship with your accounting firm.
These days, your accounting firm is far more than some people who can help you file your taxes. Most firms now have a full range of business services and are looking to develop long-term relationships that can help you grow. You have to look beyond the hourly charge and deepen the relationship. When your firm gets to know your business better, it can help you prepare for things like a stoppage in business. It can also help you determine whether that data-loss scenario is worth the additional cost of specialty insurance or if, in the big scheme of things, it would be a relatively minor disruption to your business.
Unfortunately, too many CEOs take a reactive approach, only seeking out expertise when they need it, rather than being proactive to prevent many situations before they ever occur. It’s understandable because the day-to-day issues always seem to take priority over doing something like taking time to build a better network of experts. But if you can find the time, the payoff can be big. It won’t take but perhaps one tax credit you would have missed or one disaster that you prevent before that hourly charge suddenly looks like a bargain.
On the other hand, there’s also the risk of going too far and over-relying on your experts. While it’s important to build a relationship and listen to their counsel, it’s ultimately up to you, the CEO, to take responsibility. Only you completely understand the business. And while it’s important to listen to advice, the decision about whether to follow it or not rests with you.
Educate yourself on as many of the issues as possible so you better understand where your accounting advisers are coming from. It will also allow you to ask better questions so you can fully understand the issue and make a more informed decision. Build the relationship so that your accountant is confident he or she comprehends the issues you face and that he or she is looking at all the possibilities before recommending a course of action.
At the end of the day, it’s you who has to make the decision. But by taking the time to build a stronger relationship with your accounting firm, some of those decisions will be a lot easier.
In this economy, just about everything comes down to saving money.
So when it comes to shipping products, most businesses are looking almost exclusively at one thing and one thing only: How much is it costing me?
In a Smart Business national survey of CEOs, 76 percent of those polled indicated that they have cut back on shipping or transportation expenditures because of the economy.
While price may be the predominate factor, that doesn’t mean that relationships don’t matter, because if two companies are similar in price and service, then the one you have a better relationship with is going to win your business. In other cases, a company may be more expensive, but they may provide a high-tech solution that your customers demand or one that helps you be more efficient, giving them and you a competitive advantage.
But when no such differentiation exists, and assuming a company delivers an acceptable level of service, the only thing left is price. If your packages are arriving when they are supposed to and it’s done at a fair price, does anything else really matter?
With current business conditions like they are, you owe it to yourself and your company to make sure you are saving every penny possible, so don’t just sit behind your desk to figure out if your current shipping company is the best one for you.
In the Smart Business survey, 46 percent said their No. 1 concern about shipping was having little control over the cost. But if you take a proactive approach, you can exercise some control over what’s happening.
Go out and visit your shipping company’s facility and see how your packages are handled, have the company show you its technology so you can see how your products are moved and tracked and get prices from other shippers for comparison. If you don’t have prices from competitors, how do you know if you are getting a competitive rate?
If the services meet your standards but the price can be beat, then you should consider switching providers.
If you do so, you won’t be alone. Of the CEOs we surveyed, 57 percent said they have changed shipping methods or companies in order to save money, and 61 percent said cost was what influenced their decision the most.
But before you make a switch, go back to your existing provider and share your information. Are they willing to match the price of a competitor? If so, you might get a better deal without the hassle of making a change. Keep your vendor’s best interest in mind if you want to make it a deal that can work for both of you. Be willing to trade a longer-term commitment in exchange for a new lower price.
If you decide to make a change, start by talking to other people you know to find out who handles their shipping. Are they happy with the service? Are the rates steady? Start with the companies that have word-of-mouth recommendations from people you trust.
The survey also showed that 63 percent of you own your transportation assets, such as trucks. If this applies to you, take a close look at your operation. Could you save money by outsourcing your shipping? If it seems like you have too many trucks or are spending too much time on logistics problems rather than your core competencies, then going with a third-party provider might be a better option.
In this economy, every cost needs to be examined for areas of potential savings, and this includes shipping. By taking a proactive approach, you may find that there’s a better deal out there or you may find that your current provider is doing a great job at a great price. Either way, you’ll be able to sleep easier at night knowing that money isn’t being wasted every time you ship a package.
FRED KOURY is president and CEO of Smart Business Network Inc. Reach him with your comments at (800) 988-4726 or firstname.lastname@example.org.
Everyone has a horror story.
You go to a high-end restaurant expecting the best of everything and are completely underwhelmed by the lack of service. You are paying for a five-star experience, but you end up with a two-star entree and a server with a one-star attitude. In the end, you wonder if you wouldn’t have been better off at a local bar and grill.
And the issues with service aren’t limited to just the restaurant industry. How many times have you gone into a retail establishment and seen the employees spending more time chatting with each other than helping customers? You’re often either ignored or you get to watch employees scurry away as they sense that a customer may have a question for them. The environment in some stores is so poor that you feel bad asking employees for help even though you know it’s their job.
Unfortunately, the lack of customer service is a reflection of our society. Things that should be taught at home, like basic manners and courtesy, aren’t. This means companies have to start their service training at a much more basic level, and you can never assume that an employee will know that being nice to customers is the first rule of business.
The other challenge when it comes to customer service is that you really can’t fake it. All the training in the world can’t make someone care about taking care of customers. There has to be some inward desire on the part of the employee to be the best he or she can be, regardless of position. If that basic motivation is missing, it is very difficult to get excellent customer service from that person because, at some level, he or she just doesn’t care.
Even if an employee does have some inner motivation toward doing a good job, a national Smart Business survey of CEOs indicated that only 31 percent of companies offer formal customer service training for front-line employees meaning that 69 percent have no formal program for the people who will make the biggest impression on your customers about your company. Is a brief orientation and a pat on the back a good way to send employees out to deal with the people who will make or break your business?
In addition, 19 percent of respondents indicated that they do not measure their customer service efforts at all. If customers are leaving those businesses because of bad customer service, how would the CEO ever find out in time to react if it’s not being measured?
Customer service programs don’t have to cost a lot of money. In fact, of those CEOs surveyed, 43 percent indicated they spend a minimal amount per client annually.
In this rough economy, you might be leaning toward cutting back in the customer service department 21 percent of those surveyed indicated that was the case. This could be a costly mistake. Customer service can be a major differentiator between you and the competition.
A lot of customer service comes from the tone set by the CEO, and that doesn’t cost you anything other than some effort. Terrible customer service is a poor reflection of not just the company but the CEO, as well. So start by setting a good example. Set a no-tolerance policy for poor customer service and get rid of people who refuse to follow your guidelines and, conversely, reward those who take customer service to a high level. Create a strong service message and do everything you can to make sure everyone in the organization understands it.
You need to spend some time on service. Otherwise it won’t be employees running from customers, but it will be customers running from you.
FRED KOURY is president and CEO of Smart Business Network Inc. Reach him with your comments at (800) 988-4726 or email@example.com.
There’s an old saying that the best way to get yourself out of a hole is to stop digging.
The problem is that, too many times, you think there’s a treasure lurking just a few more shovelfuls down, so the digging continues. As the hole gets deeper, you keep at it because you’ve already put so much effort into it that it would be a waste to stop now.
There are many examples in business of these ever-deepening holes that eat up manpower, time and money. Sometimes, the elusive treasure is a product that’s sputtering along but just can’t quite get going like you had hoped. Other times, it is a person who has all the promise in the world but doesn’t have much to show for it other than a warm chair and a lot of frustration on your part. The “hole” might even be an entire division that is underperforming or a vendor that just isn’t meeting your needs.
Corporate America is littered with decisions that seemed like a good idea at the time but that just didn’t work out. Remember New Coke? It was meant to replace the Coca-Cola that everyone grew up with, but it lasted only 77 days before the classic formula was reintroduced to the market.
The Coca-Cola Co. wisely made the tough decision that its reformulation didn’t pan out the way it had hoped and brought back the old formula. The result was that while New Coke may have failed, the company retained its top spot. It realized the hole was getting too deep with no return in sight, so it got out.
If you’re going to be successful, then you will have to make tough decisions. No matter how close to the buried treasure you think you are, at some point, you have to take your shovel and climb out of the hole and move on.
It’s called cutting your losses. Coke executives could have stuck to their decision because every bit of market research showed that people liked the taste of the new formula better, but it just wasn’t showing up in the sales figures.
Maybe you’ve invested a lot of time and money into a product or a person, but there comes a point where you have to give up and focus your resources on more productive areas.
You can’t be afraid to make these tough decisions. It might be easier to justify further expense to keep going, but don’t wait any longer. Pull the plug.
Ending a project that’s bleeding money is an easy decision. The really tough choices come with the marginal performers people included. To know when enough is enough, you need to set up accountability for projects and people so you can measure how well things are going compared to the standards you’ve set.
If something isn’t measuring up, get rid of it. In today’s business world, profit margins are too thin to waste money on unproductive portions of your business.
You can’t afford to have a nonproductive anything be it a person, division or product weighing you down. Do everything you can to help the people affected move on, but make the decision and stick with it.
These types of decisions are never easy. You never know how they will affect your business. It will always be easier to keep going after that elusive return on your investment, but you have to hold yourself accountable, as well. If it’s not working, it’s time to make a change.
So stop digging now before the hole gets so deep that you are unable to climb back out of it.
As a leader, you are often forced to make decisions that aren’t necessarily popular. Some of the decisions are the “make or break the business” kind, while others are less significant or so you think until you make them.
For instance, take Walt Disney and how sticking to his conviction created a whole new segment of an industry.
Back in the early 1930s, Disney’s studio had just produced the two most successful cartoon series in the industry, but he was still dissatisfied with the returns. He began plans for a full-length animated feature, something that had never been done before.
When the rest of the film industry heard about his plans to produce “Snow White and the Seven Dwarfs,” they started referring to it as “Disney’s Folly” and were certain it would destroy the studio.
Disney didn’t find much support at home either. Both his wife and his brother tried to talk him out of the project. Instead, he pushed forward, investing in training and technology to take animation to a new level of sophistication. He started experiments with realistic human animation, distinctive character animation, special effects, and the use of specialized processes and new camera equipment.
All of this innovation came at a price. At one point during production, he ran out of money and had to show a rough cut of the film to a bank to get the money to finish it.
The film was released in 1938 and the results were impressive. The film became the most successful motion picture that year and earned more than $8 million which would be about $98 million today in its original theatrical release. The numbers are more impressive when you realize that kids were only charged a dime to see the film.
Disney ended up taking home an Oscar and enough money to build a new campus for his studio in Burbank, Calif., which went on to produce many more animated classics.
Had Disney listened to his detractors, he would have abandoned the project and kept making short cartoons, and Disney as we know it today wouldn’t exist. But he had a vision of what could be done and saw potential that no one else saw, so he pressed forward, risking it all and, ultimately, scoring big.
Not every decision you make will be as far-reaching as Disney’s, but if you stick to your convictions and press forward, you will be much closer to achieving your vision than if you listened to your detractors.
In my case, I made a decision back in the early ’90s to allow some people in my company to work on flex-time. Today, flextime is pretty common, but back then, it was a pretty radical idea and there were a lot of detractors.
Other CEOs told me I was crazy and that people wouldn’t be doing any work, and I’d be paying people to sit at home and watch television instead of being productive. But I saw it as a way a small company could keep key people who wanted more time with their young children and less time in the office, even if it meant working at night.
I focused on the results I wanted from the people instead of when they were physically in the office.
The results have been great. I kept the key people I needed to grow my company, there’s a strong sense of loyalty for trusting them to work at home some of the time, and everybody came out a winner. Had I listened to my detractors, I may have lost the very people I needed to reach my growth goals.
Change is always difficult, regardless of whether it’s changing office furniture or changing your business plan, but sometimes you have to stick to your guns, even in the face of opposition.
There are different types of leaders, but effective ones all maintain their convictions. It doesn’t mean you don’t listen to objections, but if after listening to them, you still believe your decision is right, then you stick to it. A lot of little decisions can add up to a big success, and a handful of big decisions can add up to a grand success and maybe even reinvent the way people do business.
I’m standing in line at the airport, suffering through the usual delays and hassles that accompany air travel, when a woman starts making a fuss.
“I’m a first-class passenger,” she cries, looking for the better service that’s supposed to come with the higher price.
I just laughed to myself, because I, too, was a first-class passenger and wasn’t being treated any differently than those flying coach, despite the premium ticket cost. People from the main line had already slid to the desk that was supposedly for first-class passengers only.
Once on the plane, the “exclusive” first-class bathroom was frequented by coach customers. I think I got a better meal, but who knows for sure.
Maybe I got a garnish and the people behind the curtain in coach didn’t. Drinks were served in the first-class cabin before they were served elsewhere, but that perk hardly justified the ticket price.
After exiting the plane and the disappointing experience with the airline I met up with friends and family at a top restaurant, only to be served by what must have been an airline employee on loan from the attitude desk at the airport. We ordered king crab legs but weren’t given any butter or nutcrackers to break open the legs. I flagged down the waitress.
“I need to take this other table’s order,” she said.
Meanwhile, we’re looking at a table full of crab legs that we can’t do anything with, except watch them cool.
Both the airline and the restaurant built their brands on customer service. The problem is, the customer service only exists in the companies’ marketing materials. The restaurant delivered great food but failed in the service department, making it a disappointing experience.
What I realized in both cases was that I was supposed to be a first-class VIP to these companies, but the only thing first class about the experiences was the bills.
It was all a sham. Glossy brochures, expensive television ads and glitzy decor are all nice, but where’s the actual experience?
I don’t blame the waitress, the person behind the ticket counter or even the managers. I blame the CEOs.
The CEO is the one responsible for setting the tone of the organization and for creating a culture where customers are taken care of. Nordstrom stores and Ritz-Carlton hotels are well-known for their customer service, but it didn’t happen by accident.
Those companies are built on a customer-centric model, where employees are selected based on how well they fit that model, where customer service training is an ongoing process and where people are measured and rewarded on customer-centric behaviors. They are committed to the customer and do whatever it takes to create a great experience.
For example, the average Ritz-Carlton employee receives 232 hours of training per year, about four times as much as their peers at other hotels. The company constantly measures customer and employee loyalty, and employs continuous improvement initiatives. It pays more than the competition does and spends a lot of effort recognizing employees for their customer service efforts, which combine to keep turnover low and enthusiasm high.
Nordstrom recognizes great customer service with cash awards, extra discounts and favorable work assignments. Employees and departments are singled out for praise during morning intercom announcements before the doors open. And the company monitors sales performance and encourages competition by posting every person’s and every department’s sales figures from across the chain.
These companies got where they are by putting the customer at the center of the organization, building everything around that, and doing whatever it takes to ensure the customer is always happy. When that happens, the customer becomes your best marketing tool because they tell others about the experience, driving company growth.
Don’t be a company that promises a first-class experience but delivers disappointment, the way the airline and restaurant did to me. If you are going to promise a certain standard to your customers, you’d better be doing everything you can to deliver on it.
In short, you overreacted and possibly did some real damage with an ill-advised decision.
The next time you find yourself tempted to react quickly, consider the following.
- Make sure you get all the facts. Reacting on emotion instead of basing decisions on facts can cost you your credibility with your staff. Unless you want to be their main topic of conversation, take a deep breath and step back.
- Give your people the benefit of the doubt. Sometimes we see others making decisions that may not be the ones we would make, but doing things differently leads to innovation and helps your staff take ownership of projects.
- Be even-tempered. It is your responsibility as the leader of the business to set the tone for others around you. Be the voice of reason. If you react on emotion, you set the tone for others to do the same.
Leading a business can be like being on an emotional roller coaster. No matter how much you try, eventually you will find yourself over-reacting to a situation, usually out of haste. But in the long run, haste costs you twice as much time because you often have to start over.
When you realize you’ve overreacted, the best thing to do is back up and do what you should have done in the first place: Calm down, then start gathering all the facts. Carefully listen to the opinions of your staff members and reassess your decision.
If your original decision was wrong, admit that and make it right. Even if your original decision proves to be right, take the time to explain your reasoning to your staff and assure them that their opinions are always wanted.
Doing so will help your credibility and set a solid example for everyone.
FRED KOURY is president and CEO of Smart Business Network Inc. Reach him with your comments at firstname.lastname@example.org or (800) 988-4726.