Executive Chairman Elon Musk announces longtime media executive Linda Yaccarino, as the new CEO of Twitter and says she would focus “primarily on business operations”. Isn’t that a Chief Operating Officer you have just hired?
In all this confusion around titles, aren’t we better focusing on what people are an expert in, not the title per se? Then, how the board dynamics and contributions are better aligned to the actual needs of the business, customers, shareholders and employees before rushing to judgement?
A good hiring decision is one that is wise both before, and after the event.
If you cannot accomplish the key business priorities within a 40 hour week, there is either something wrong with the way you are doing the role or the role is poorly designed. Which is it?
Why do seemingly highly successful small and mid-market business leaders, who lead a prosperous lifestyle (homes, well educated kids, exotic holidays), routinely run into cash liquidity squeezes in their founding or principle business, particularly later in their careers? Sometimes more than once.
My observation is 95% of these individuals (I count those in a healthy frame of mind):
Think they are in a stronger cashflow position than they actually are.
Have run out of people to turn to.
Have become increasingly insular and lonely.
Are overly dependent on their waning client book, historic investors or banking friends.
Are surrounded by loyal advisers, who are blind to the impending danger or are fearful of intervening.
Flicking a switch and generating additional cash fast is not easy in relationship-driven or transactional businesses. Encumbered with these problems, the default option for many is replenishing the pool of cash with asset sales. Yet anyone wise to the situation will spot the pressing urgency and offer “cut throat” terms. In addition, the market for and the “days to cash” for certain assets (real estate) deemed “liquid”, may well be anything but. Stress grows like a boiling kettle.
There are preventative tactics, for example, a monthly or bi-monthly assessment of their short-term business and personal liquidity position, multiple capital providers and an inquisitive mind, consistently, focused on time as a key variable in realising new and existing sources of income, in a short-term time period, to meet BOTH routine and exceptional cash needs.
There are contingent tactics, for example, deferment of non-essential capital expenditure, collateralised loans, bridging finance, revised repayment schedules and the aforementioned, asset sales and so on.
Prevention is far better than after-the-event tactics. Volatility and disruption are not passing storms, liquidity needs to be managed well, at all times.
As entrepreneurs you can choose to be either beholden to the quality, speed and practices of your advisers (legal, accounting, tax, financial, design etc.) or you can tell them how you expect them to conform to your changing preferences.
Over time I have had need to fire my travel agent, bookkeeper and financial adviser, as my business growth and lifestyle needs have changed. I don’t choose to cede control to others. You shouldn’t either.
Yet a great many entrepreneurs I meet, out of excessive loyalty or inertia put up with behaviour that is totally unacceptable from their advisers. Lawyers taking three weeks to respond to offers of critical growth capital, personal wealth managers encroaching into areas they are not an expert in (business strategy decisions), and missed tax filings due to the financial advisor’s poor discipline. This is your life, safeguard it.
The problem with short-term corporate travel edicts, is not the policy, it is the immediate skills and volition of the people required to implement it, at the operational level in businesses. Think relationship first, then money saved.
How much sympathy would you have, as a client, for a business partner, who turns up late, flustered and cuts short your meeting because they thought they were “doing the right thing”, by choosing a cheaper travel alternative that offered zero flexibility for delays? This happens daily, in cities across the globe. The biggest culprits reside at the middle manager and junior levels of large companies, who “lean” on their brand’s goodwill until they fall over.
The underlying message is obvious: you are not the priority of the person sitting in front of you, and in all probability, they lack the means and authority to improve your condition. Why would you deal with them next time?
Breeders breed racehorses with a very simple task in mind, to breed the fastest horse between the starting gate and the winning line.
“Strength” in the form of stamina to sustain the strongest galop and “speed” to outrun the field.
Nothing is certain but breeding the best sires with the best mares is the least risky option.
Would an outsider recognise your sales and marketing “system” as the superior progeny of the best people with the best technology? If not, why in the hell do you think you can outrun your competitors and build a sustainable future?
Have you ever wondered how difficult that is for some people and entire organisations?
In the search for productivity gains, reduced overhead, faster closing times, delighted clients and so on, that one little step might be the difference between a lousy and a record year, a client walking or staying, a promotion or a bonus and another disappointing year. What is holding you back?
Businesses don’t become insular, their leaders do. When leaders are so focused managing “in” their business that they overlook or are increasingly disinterested in the changes taking place around them (clients, markets, products, technology), they’ve made a deadly choice. Defending what they have is a bigger priority than embracing new ideas and new ways to evolve. No surprise then that the “inwards thinking” permeates down to middle managers, who see little or no incentive in promoting experimentation on the front line. Faced with more effective alternatives, clients walk, and the brightest employees walk. By the time, the “alarm bell” is sounded, all too often it is too late, particularly in small businesses.
Countless businesses today are being thrown miles off course in accomplishing their profitable growth goals (banks, financial services, insurance, gaming, healthcare, energy and so forth) largely because of their own inadequacies. They are like the pilot who hits turbulence at 30,000 feet, loses their bearings and temporarily or permanently is sent into a tailspin. If you are going to fly, you accept there is a high probability of turbulence. If you are providing essential products, services and relationships in society today, expect to be held to account for your standards and behaviour. Stop moaning.
Leaders have two options: embrace or resist regulation. Then adjust the speed, direction and ascent of the profitable growth plans to accommodate the proposed changes. Here is what sets apart my very best clients:
Positive Regulatory Mindset. Business leaders, who maintain a perspective that says “there are abundant opportunities in front of us, we didn’t wish the regulation but we will learn to live with it”, empirical evidence suggests dramatically outperform others. Change is a constant and our futures are about embracing change (biotech, pharma). Contrast this with those business leaders, who only see fear, limited opportunities on the horizon, vent loudly at the negative consequences and create Domesday predictions (airlines, agriculture, bookmakers). Change is a threat to their cosy status quo and they do their level best to resist it until such that they wearily accept it or fold their cards.
Impressive Regulatory Engagement. Seek to be on the front foot with regulators, actively maintain a presence in the regulatory dialogue within the industry, take positions on regulatory boards and consumer watchdogs.
Superb Regulatory Antennae. Most regulation is reactive to events, changes in consumer perception, media perception and political perceptions. Rarely can you accurately predict the timing but you can sense the shifting of opinions and the force fields (changes in critical factors ‘+’, ‘-‘ or ‘neutral’) that create the momentum for change.
Rapidly Mine Regulatory Motives. Behind every regulation lies an emotional imperative. Understand why a powerful voice(s) at the regulator or consumer body discernibly sees their self-interests best served in implementing the new policies and procedures, in the proposed time frame and manner (increased power, greater influence, greater control, greater political influence, greater credibility and so forth).
Quantify Regulatory Value. “Value” in the form of tangible, intangible and peripheral benefits that arise from regulation (although sometimes they may be hard to discern) and the investment required to enact it. Tangible benefits over a defined time period (clawing back funds over trading or market abuse scandals). Intangible benefits and the breadth of scope (bankers behavioural changes and sweeping industrywide cultural changes to treating their customers fairly). Peripheral benefits (structural market changes such as the Dodd Frank Financial Regulatory Reform Bill and the impact on proprietary trading businesses in investment banks). Lawmakers and regulators are typically prudent risk takers, smart business leaders are keenly attuned to how they weigh up the risks and rewards (personal and professional) and act.
Anticipate Regulatory Opportunity. Outstanding businesses have a regulatory radar system (Corporate Affairs) embedded into the upper and mid-level line management tiers that excels at alerting them to: Why there is a need for regulation? (public sentiment) Why now? (window of opportunity) Why on the basis proposed? (tried and failed with other legislative tools)
Acute Sense of Regulatory Timing. Can you identify the priority that is driving the need to enact the regulation (political fall out, media outcry, changes in public opinion etc)? Timing is about regulators and lawmakers priorities. Stuff gets done because they need to be seen to be doing something (seriousness, urgency and gravity behind the issue). Inevitably, it is almost overpowering, ill-conceived and often off target but that is not the point. Lawmakers and regulators can show they acted. Don’t blame us.
Large or small businesses, the dynamics are largely the same but the consequences are often dramatically different. How many of these skills, traits and expertise do you Managers possess today? What do your profitable growth plans demand that you possess in future in order arrive safely at your desired destination? How do you best upgrade your regulatory response toolkit and when?
In this Trumpian era where people are encouraged to say anything however crass or non-sensical to get noticed on social media platforms, I see so called business advisers increasingly adopting the tactic.
Today on Hotels the global hotel industry’s foremost media blog, a guest contributor and acclaimed expert, writes a two part post suggesting the industry is retarded if it doesn’t adopt a nickel and dimeing strategy! His point is that hotels need to follow car rental and airlines in better educating their customers about the hidden value they are providing, the best way to accomplish that is to charge them for every extra. I read the posts twice to check it wasn’t April 1.
What the writer fails to consider is how much more customers would pay if the product was better. It is this type of poverty mentality that kills growth businesses.
Don’t be drawn into a fool’s wisdom just because it is seemingly coming from a highly credible source. Ridiculous advice really says more about the source’s credibility than the advice itself.
