TEC – More secret tools and choices_ Your life as a CEO Entrepreneur – Walter Sutton
AN INTERNATIONAL ORGANIZATION OF CEOs
SPEAKER PRESENTATION SUMMARY
MORE SECRET TOOLS & CHOICES:
YOUR LIFE AS A CEO/ENTREPRENEUR
CEOs are the most powerful group in society. They represent today’s aristocracy. They have thousands of choices they can make and the power to make them come true, yet they rarely do. Most operate as if they don’t have the tools and choices they actually have.
The job of CEO can create a platform for doing magical things in life. Some people go to the platform and jump off it to do other things. Others ride the platform for two or three iterations of businesses and use the platform as a way to do interesting and challenging things. The key is knowing the tools available to you and using them.
The job description of the CEO consists of nine basic functions:
Survive. As CEO, you are solely responsible for the survival of your business. You cannot delegate or abdicate this responsibility to anyone else.
2. Make the deals. A business is the sum of the deals it makes, and the CEO is the business’ primary deal-maker. You can’t make every deal, but you must ensure the important deals are made properly.
3. Find and navigate the “river of cash.” The “river of cash” is a metaphor for a product or service. You must find products or services you can succeed at, and make sure you have enough of them to generate the cash needed to run the business going forward.
4. Bear debt and allocate profit. You can’t bear debt and allocate profit unless you know your company’s debt. This involves deciding where you want to be on the debt spectrum, which requires that you know the cost of the capital and the commitment cost (how much you are willing to let someone else have a stake in your business). These decisions often change over time.
5. Discover the secret of the business and use it. The secret is a set of deeply-held values and convictions about what makes the business really work. As time goes on, it grows more important. It drives you on a daily basis and causes you to coalesce everyone and everything in your business around what is important.
6. Apply the rule of entrepreneurs and managers. This is the process of saying, “I, as CEO, focus on these nine functions and the other people in my company do everything else.”
7. Build a society and define the season. This involves consciously building the culture that you want, remembering that the people who work for you watch you like a hawk. You have the power to create the culture, so you might as well use it to create the one you want. Decide what you want and then act to support that culture. pencil a few inches from your eye, everything out in the distance becomes blurred. When you focus on the distance, the tip of the pencil becomes blurred. The exercise of acquiring vision is to look at the tip, look at the distance and then look at the tip again. Project your secret out as far as you can until it lands somewhere you really want to go. That becomes the vision for your company.
9. Live a life. Let the business serve you, not vice versa.
TOOLS AND CHOICES
Tools are a device, machine or something regarded as necessary to carry out one’s occupation or profession. They are something used in performance of an operation; an instrument. Tools are not ajob description, they are things we use. Tools don’t make up for bad decisions, compensate for misreading the market, overcome financial or structural problems or rectify significant misallocations of capital. Tools are good things, but the basic situation has to work in order for them to be effective. Tools are a way of making a good situation work better, but they don’t make the situation.
The following business tools can help you run a better business:
Build a core team.
If there is any “silver bullet” in a business, it is having a solid core management team. The basis for this tool comes from the rule of entrepreneurs and managers. This is where you make the break from running a business by yourself to running it with a team. The rule of entrepreneurs and managers says that:
Entrepreneurs are the only people who can start, significantly expand or transform an enterprise.
• Every business needs management, but mangers don’t found, significantly expand or transform businesses. Managers do, however, run most parts of businesses.
• Good managers often exhibit entrepreneurial traits, but they rarely convert from being managers to entrepreneurs, especially within a single business setting.
• Entrepreneurs can do management jobs, but usually inefficiently and poorly. For each “jewel” of energy a good manager requires to get the job done, entrepreneur may have his or her business to death.
• The great unifying principle of this paradox is that a good entrepreneur must understand, accommodate and nourish good managers, not become one.
The most successful working model includes an entrepreneur and managers operating in a symbiotic relationship. The most successful entrepreneurs are world-class leaders, but virtually all the work in a world-class enterprise is done by managers and/or others. The process of building a core team is the process of getting to the point where you focus on the nine components of the CEO’s job profile and they do everything else.
To build a core team, first conduct a serious analysis of the business. Take a plain piece of paper and forgetting about the organizational chart — answer the question, “What are the key result areas in which we must have performance in order to have a business?” Make a list of these key result areas and give each one a name. Then ask, “Do I have one or more people who can put their shoulder to the wheel to move each key result area forward?” If the answer is no, you don’t have a core team and you have a training or recruiting issue.
There will always be one or two people on the team who aren’t as good as the others. That’s just a fact of life, so don’t wait until you have the “perfect” team in place to move forward. Just make sure you have someone who can put their shoulder to the wheel and move the key result areas forward for a reasonable period of time.
This team will do almost all of the management and most of the work in the enterprise. Your job changes from being the person to push every key result area forward to the person who facilitates the movement of those areas. If each key result area is like a balloon, your job is to gather all the balloons together by the strings and facilitate moving the whole bunch forward.
• Yearly strategic planning and quarterly updates.
First, find a good team-based strategic planning facilitator and explain that you are trying to put together a core team. Go off-site for two or three days, gather everyone around the table and give your stump speech, the purpose for the getaway. Tell people that you are going to focus on the nine functions of the CEO job profile and they will do everything else.
Walk around the table and empty your pockets of all the tasks you’re in the middle of, all the decisions you haven’t made, all the memos you haven’t written, all the things you’re sitting on top of that have caused your key result areas not to move forward. Drop them in front of the person whose job it will be to run that area. Then say, “We have gathered for this meeting so the facilitator can help us write a plan so you can figure out how to do it.” Then sit down, become a player in the process, and let the facilitator drive the process.
• Market analysis
• SWOT (strengths, weaknesses, opportunities, threats) analysis • Key result areas and the people who will manage them • Core competencies
• Long-term goals and short-term objectives
After identifying these areas, you must create specific action plan items. The action items must be clear and direct enough so that every manager understands what they will do over the next year to take charge of each key result area. After creating the action plans, build in some process for regular reviews. Without this component, don’t bother writing a plan.
At least once in your career, write a professional marketing plan based on formal market research. Too many entrepreneurial companies don’t have a big picture perspective on the whole market. A marketing survey can provide an excellent overview.
Management team review.
The most effective way to do a management team review involves a two-step process. First, take the team away for a day or two and use a professional facilitator to guide a mutual assessment.
Tell the team, “Let’s have the conversation we need to have about this team, about what each of us owes the team and each other, and what each of us can and can’t or won’t contribute.”
The conversation should not be, “Well, Joe, you were going to build your area by 5% and you only built it by 4%, so 1 am mentally marking you down.” The conversation should be, “This is what I tried to do, this is where I’ve had difficulty, this is where I could use some help. What do you think of this and how has it affected you? What can 1 contribute to each one of you that will make your job better? What can you contribute to me so next year I can make the 5%?”
Next, have team members prepare a list of strengths and weaknesses of each member and of the team in general. Then choose a name out of a hat and let everyone describe the strengths and weaknesses of that person. At the end, the person gets to say what they heard and how they reacted to what the others said. This is not a time for rebuttal, just to exchange viewpoints. Do this process for everyone on the team. This can be a painful process, especially the first time. Don’t try it without a facilitator or with a very young team.
To wind up the process, ask:
• What can we do to improve this team?
• What do each of you need from each other to advance things?
for the one-to-one include:
• It happens every month, without fail.
• It is the manager’s one-to-one, not yours. Listen 75% of the time.
• Tell the manager to come prepared to talk about what they want to talk about.
• It is completely confidential.
Once a year, devote the one-to-one to the “money deal,” the manager’s compensation and incentives. Sit down and talk until you have a deal for the coming year. That gets all the money issues out of the way for a full year.
The following tools can help you become more personally effective:
• Get and stay physically fit.
Being a CEO is a very demanding job. It requires a lot of energy, enthusiasm and vitality, which is the ability to conduct and do the things you want to do. Being fit adds to your self-esteem and improves your outlook on the world. It allows you to deal with the stress of the job without breaking down or getting run down.
• Engage a personal financial advisor.
CEOs are very good at earning money. They are far less talented at investing, saving or even keeping it. Be very carefiil about who you select for an advisor. Go with a proven professional. Interview carefully and check references extensively. Do all the due diligence you would in making a serious investment for your business. Even then, it may take a year or two to find out if you made a good choice. It takes a while to find out how the money performs and how you work with the advisor. If you aren’t comfortable with the advisor, if you can’t communicate clearly, if you don’t agree with their values or financial management philosophies, find someone else.
• Learn public speaking.
As CEO, you are always “selling” your company. The more effective you are as a public speaker, the better you can sell yourself and your company.
• Convene a board of advisors.
knowledge about the key result areas of your business. Meet at least once a quarter and prepare much like you would for a board of directors. Pay them a fee for each meeting. Aim high people like to sit on boards. For a board of advisors to work, you must have people who care about you and your problems. A board of advisors can be a place to take issues you can’t bring to a board of directors.
• Get a realistic valuation of your net worth.
Most entrepreneurs think their companies are worth a lot more than they actually are. Don’t delude yourself into thinking your wealth is greater than it is.
• Get simple, timely accounting reports.
With today’s technology, there’s no reason you can’t get reasonably accurate accounting reports three to five days after the end of the month. Have a clear, articulate difference between tax accounting and operations accounting. Design your own “daily news,” a one-page report that keeps you up to the minute on the key numbers you need to know to run the business. Make your daily news available to others in the company.
• “No thanks” money.
Not all clients are wonderful. In fact, some are horrible to work with. “No thanks” money allows you to turn down undesirable and unprofitable business. It gives you the ability to dramatically reduce the risk of the business environment in which you operate. It gives you enough reserves so you don’t have to take every customer that comes along. Nothing increases your risk like working with dishonest, disreputable, or intentionally difficult customers who decide to stick it to you.
• Develop and use the equity point of view.
It’s easy to get lost in your business. To get a true perspective, step back and pretend you are an investor looking at buying the company. Ask, “Is this a good investment? Would I want my money tied up in this business?” Make the same sort of judgments a tough-minded investor would make. Does your business have:
• Solid earnings?
• A strong management team?
• A predictable revenue stream?
• A succession plan?
• Good ratios?
• Strong bank credit?
You can get great ideas by reading things totally unrelated to business. Books provide a valuable source of decision making and ideas on how to conduct yourself in the world. They also provide an emotional and artistic outlet that can’t be fulfilled by running a business.
Travel, especially abroad, stimulates the mind just as much as books, if not more. It adds tremendous perspective to what is really important in the world.
Involve yourself in family and other non-business activities.
Engage yourself in church, community, leisure and civic activities anything that gets you away from the business for a while.
• Do some form of introspection.
Successful and happy CEOs do some form of introspection and use it as the basis for everything they do in life. Some do it spiritually, some do it psychologically, others do it metaphysically. It doesn’t seem to matter how you (10 it, but the people who introspect on a regular basis have a different experience than those who don’t. More than anything, this tool seems to make the difference between those who are just successful and those who are happy and successful.