TexasCEO and Vistage

“Symphony…is the ability to put together the pieces. It is the capacity to synthesize rather than to analyze; to see relationships between seemingly unrelated fields; to detect broad patterns rather than to deliver specific answers; and to invent something new by combining elements nobody else thought to pair.”

— Dan Pink in A Whole New Mind

Vistage CEO Rafael Pastor spoke this morning at a breakfast organized by TexasCEO magazine. He covered a range of topics near and dear to my heart (e.g., “what makes America great? its restlessness”), then reviewed the results of the most recent Vistage member survey, a reliable leading indicator of GDP and hiring trends (good news: CEO confidence is heading back toward the 2004 level).

Finally, he shared four traits of a good leader that combine to produce character:

  1. Confidence – uplifting and inspiring all constituencies to higher performance
  2. Curiosity – looking around and asking questions to learn new ways of thinking
  3. Courage – having determination to risk and innovate
  4. Collaboration – creating and learning from external relationships

How does an organization exhibit these traits? Consider TexasCEO as an example:

  1. Confidence – Driving the creation of the magazine was a desire to distribute information that helps CEOs grow their enterprises. TexasCEO founders were confident they could draw contributing authors from multiple industries to deliver value through lessons that cross domains.
  2. Curiosity – By continually meeting with CEOs and advisors from multiple industries to understand their expertise, publisher Pat Niekamp and staff provide a continual stream of challenging articles on business development, people matters, marketing, sales, leadership, finance, governance, professional development, and other topics that CEOs must track.
  3. Courage – Does it take courage in a down economy to start a combined print and online magazine? Of course, but that courage was based on a clear analysis: no statewide business publication existed in a business-friendly state.
  4. CollaborationTexasCEO continues to build relationships with groups and individuals that share their passion for helping CEOs achieve their dreams. Like Vistage, they appreciate the power of collaboration to broaden our vision. Rafael Pastor said it best when he quoted Marshall Goldsmith: “What got you here won’t get you there.” Often we can learn what works from our peers.

Joel Trammell recently told me about becoming a CEO. “Many people think that the CEO job is just the next progression after being a senior executive in a business… the CEO job is actually a unique role that doesn’t really have much in common with the other executive roles in a business.” He then related how he quickly learned to reach out to other business leaders when he became a CEO.

Vistage and TexasCEO were founded on the common goal of sharing CEO knowledge and expertise to improve business performance. With that common focus, maybe a new partnership was born this morning.

6 Ways to Create Content That CEOs Will Read

Paul Gillin’s recent post about the purpose and value of editing inspired me to share six core principles I’ve discovered that drive creation of content that CEOs will read.

1. Keep the ROI high. 

More than other audiences, CEOs focus intently on using their time profitably. Content must provide a high return on investment. If you waste a CEO’s time, he/she stops reading. Even a minute away from the promise of ideas that promote growth will risk losing their attention.

2. Assume your audience is up to speed.

Don’t give lengthy explanations of terms you understand and are afraid your audience won’t. CEOs already have to keep up with current issues, so if they need more background, they know how to find it on their own.

3. Make every word count.

Every paragraph, even every word, must deliver value and encourage the reader to continue. To transfer a concept that helps readers become more successful may require ten or more edit passes. Emulate what Paul Gillin calls the Wall Street Journal’s “obsessive culture… with packing more information into less space.”

4. Watch your language. 

It’s imperative to be candid and use direct, active language. TexasCEO publisher Pat Niekamp points out that “pieces ghost written for a CEO by someone who’s never had the experience of having to meet a payroll or pay the rent or determine a long term strategy, or deal with killer competition may contain words like they might, could, consider… CEOs use active words like do, are, will.”

5. Get to the point.

Getting high ROI content read requires getting to the point quickly. Someone thankfully taught me early on not to make the audience wait too long for the punch line. If a CEO doesn’t get it by the second slide in a prez, for example, he/she will page ahead if they have paper copies, or they’ll get impatient and completely lose interest. Apply the same principle to your writing.

6. Get in and get out.

Similarly, keep your posts short and give some idea up front of the value and outcome, i.e. what’s in this for me if I read it. Short means blog posts that are about 500-1000 words, with the average closer to 500.

Respect is due anyone who’s willing to take on the CEO role. While I’m happy that the “open rate” for my monthly newsletter hovers at 35-40%, it’s a constant struggle to create higher ROI content for them. Hopefully these principles will help you do the same.

Please leave a comment below or drop a line to bob@2020outlook.com to share your thoughts.

[For a deeper understanding of social media, follow Paul Gillin’s blog.]

Fight, Flight, or Unite? Three Responses to Business Challenges

“…the availability of information about a threat or opportunity has little influence on who wins and who loses.            What makes the difference is what a company does with that information.”

  — Clayton M. Christensen, Scott D. Anthony, Erik A. Roth in Seeing What’s Next, 2004

Business challenges come dressed as high-impact threats and opportunities, and each demands a response. The strength of your ability to respond is the primary determinant of your next move,  whether you opt to:                                         1. compete (fight),           2.alter direction (flight), or           3. develop an alliance (unite).

The authors of Seeing What’s Next suggest that asymmetries of skills or motivation play a critical role in determining our next moves. “Asymmetries of motivation occur when one firm wants to do something that another firm specifically does not want to do. Asymmetries of skills occur when one firm’s strength is another firm’s weakness.”

In focusing businesses on growth-accelerating strategies, our consistent guidance has been to adopt a three-phase approach: “clarify, comprehend, connect.” Assuming that the CEO has aligned the company around a crisp, clear view of its own skills and weaknesses (i.e. clarify) as a foundation for effective execution, the second step is to evaluate the relative strengths and weaknesses of the competition (i.e. comprehend). When one firm demonstrates strengths in markets in which another firm’s capabilities are weaknesses, and vice versa, a self-fueling partnership (i.e. connect) may be an alternative to fight or flight.

The choices of responding to a significant threat or opportunity are:

Fight (asymmetric analysis highlights your company’s relative strength)

When your company’s processes and offerings are much stronger than competitors, leverage your unique capabilities to increase market share at the expense of competition.

Flight (asymmetric analysis highlights your company’s relative weakness)

When the cost is prohibitive of overcoming a competitor’s strengths that far outweigh your own, refocus on other markets or submarkets where your company can be a dominant player.

Unite (asymmetric analysis identifies complementary strengths and weaknesses)

If it’s clear that combining your resources with those of another company could make both stronger by compensating for weaknesses, the oft-overlooked third option is to create a symbiotic partnership.

The bottom line for any CEO? Develop an eye for asymmetries, then make a rational decision between fight, flight, or unite!

(A more detailed discussion of these alternatives are found in the excerpt “The Innovator’s Battle Plan” that is drawn from the book.)

Competing Too Hard Will Kill Your Business

Competing too hard will kill your business. If you see competition everywhere, you may be strangling your company’s growth.

Working with CEOs and management teams to create growth strategies, I watch for existing practices and attitudes that may hinder growth. It’s challenging enough to launch a new venture or a restart a faltering business without creating internal obstacles that weigh it down. An unrealistic view of competition can severely limit or slow the company’s rate of growth.

A famous CEO mentor was fond of telling me, “If you don’t have a competitor, you don’t have a business.” Competition is a great motivator. If you have a company in a market with no competitors, either the market you’re pursuing isn’t really viable, or you lack the constant competitive motivation needed to keep you at the top of your game, or both.

The diagram above illustrates how your perception of competition can affect your company’s rate of growth. Perceiving no competitors suggests that you haven’t yet identified a winnable market worth pursuing. In this situation, a company constantly chases one-off deals, is too inwardly focused, and may be in too weak a position to accelerate revenue by leveraging external assets through partnering.

The converse obstacle, defining competition too broadly and seeing it everywhere, leads to a lack of focus and an obsession with growing market share one percentage point at a time. A “quarter-inch deep, mile wide” market approach precludes finding a repeatable sales model that leads to higher margins and greater working capital. A better path is to pick one or two close competitors to focus all your competitive energy on.

The bottom line is that an unrealistic view of your company, its capabilities, and its relative strengths and weaknesses vis-a-vis other companies will impede growth. The reality deficit can come from many places, but it falls to the CEO to recognize and remove this obstacle whenever it exists, especially when the CEO is the source. Carefully consider whether you are encouraging your team to view the company through rose-colored glasses (no competition) or constantly raising the specter of competitive doom to motivate them (competition everywhere).

How then do top-performing management teams compete effectively?

  1. They realize that focusing on competing against too many others weakens their company by draining its resources, so they choose instead one or two closest competitors and focus on winning against them.
  2. They prioritize “growing the pie” over increasing the size of their slice.
  3. They stay outwardly focused to learn what the market is telling them about customer demand.
  4. “Know thyself.” They understand their company’s strengths and weaknesses so well that, when a high-impact threat or opportunity arises that can’t be addressed organically, they create self-fueling partnerships that enable them to respond quickly.

Mandela Story Offers Key Business Principle

In reading and listening to stories of Nelson Mandela’s life, one in particular jumped out at me. F. W. de Clerk told of Mandela’s focus on ensuring that Afrikaner desires were reflected in the agreement they negotiated to break up apartheid. Mandela apparently insisted that forming a successful partnership required adequately addressing the opposition’s needs, so he probed de Klerk to learn what they were.

Hearing this while driving away from consulting with a CEO and his leadership team about how to create partnerships, I found it fascinating that a political leader embraced a powerful principle that many business leaders miss. Strategic partnerships are often underutilized as a path to faster growth, and making them work requires the kind of transparency and active listening suggested by this story.

Leveraging another company’s resources (e.g., technology, branding, geographic presence) can accelerate growth (e.g., product development, market visibility, revenue), but three obstacles face any brave CEO who decides to drive a truly productive partnership:

  1. Stories of unsuccessful partnerships abound.
  2. Doing it right requires a high level of transparency.
  3. Deciding when to partner requires deliberate thought.

Stories of failed partnerships leads many CEOs to see diverting resources from organic growth to partnerships as overly risky. In fact, without adequate planning and process, they’re right. On the other hand, consider the huge payoff from a wisely crafted partnership like the one Apple consummated with AT&T to launch the iPhone. Apple got accelerated distribution into a large and growing customer base, while AT&T used the hottest product on the market to accelerate the growth of its base for several years before its competitors gained access to the iPhone. (By all accounts, Apple approached Verizon first but the two didn’t come to terms.)

The second issue of transparency is all-important in the partnership process. When do you play your cards? How many should you show? While controlling information is important in all negotiating, successfully initiating a partnership discussion requires a level of openness beyond the norm that doesn’t come naturally to many CEOs. Minimizing the risk requires investing the effort it takes to identify who best to partner with and how best to advance a compelling offer to them. That knowledge provides the confidence to move more openly toward a growth-enhancing relationship.

Timing a partnership can be tricky, but when two factors are simultaneously present, then it’s time to consider partnering: (1) a high-impact threat or opportunity has arisen, and (2) your company’s ability to respond is weak. In this dual circumstance, gaining access to the resources needed to respond faster becomes a matter of defining your organization’s needs very clearly, identifying and prioritizing a list of candidates with the right resources, and most importantly, being intentional about creating a highly compelling proposition before talking to anyone.

When you finally open the conversation, listen ala the Mandela story to confirm and refine your understanding of their needs in order to uncover where your resources can best help them in their areas of weakness.

Successful M&A Requires a Clear Vision

An astute CEO can often augment organic growth with acquisitions, but a majority of acquisitions fail to deliver expected returns. CEO Carol Koffinke of Beacon Associates says that “60 to 80 percent of all mergers and acquisitions fail to meet their merger goals.” Why do they fail?

Much has been written about acquiring companies’ failure to realize the value they envisioned for their acquisitions and the why’s: a lack of proper due diligence, cultural mismatch, lack of integration planning, unforeseen market factors, etc. However, of all the possible reasons for failure, M&A experts put the lack of a clear vision at the top of the list.

Source: “Creating and Executing a Winning M&A Strategy,” Merrill Data Site and The M&A Advisor, October 2013

While a clear vision can accelerate execution of any growth strategy, successful M&A demands a level of clarity most companies fail to achieve. Why do companies launch into an acquisition without sufficient vision and planning? Here are the most common reasons we’ve encountered in working with top executives:

  • Some CEOs don’t naturally think strategically. A CEO who’s risen through the operational ranks can end up with a “make stuff, sell stuff” philosophy and a view that strategy is merely a set of slides for board and investors, while in fact, a clear strategy drives revenue and profitability.
  • A CEO can be overwhelmed by the daily pressure of running the business. Periodically answering the question “are you working on or in your business?” can prevent the urgency of daily concerns that distract from the CEO’s paramount responsibility –  increasing shareholder value.
  • Pressure to make quarterly goals can diffuse and erode the shared view of a company’s purpose. A process called business entropy (e.g., repeatedly accepting non-core business) can eventually dilute the strength of a company’s brand and slow its ability to generate new business.

How can a CEO be more intentional about growing the company through acquisition?

  1. Find a way to set aside time to think and discuss new directions. In this new social media world, it’s easy to develop a chronic short attention span. Focused thought is required to create breakout strategies.
  2. Take an honest look to make sure you’re not hanging onto more than you should. How to cross the second chasm, i.e. growing a company from small to big, is described in Doug Tatum’s insightful book, No Man’s Land. Pick up a copy and read it this weekend. (If you think you don’t have time, you need to read it.)
  3. Discuss growth challenges with objective trusted advisors. Use CEO peers at Vistage and experienced consultants as soundingboards to call out any “elephants in the room.” They will help you establish the clear vision needed to drive your acquisition initiatives.

Backstory: What’s the Genesis of Self-Fueling Partnerships?

The word “coopetition” has been around much longer than most people think. I first encountered it when my boss Ray Noorda, Novell CEO, brought it back into use in the early 1990s to describe his insight about the then-emerging market for local area networks (LANs).

Novell was one of a number of companies competing to become the LAN market leader. Ray decided to encourage his competitors to focus on “growing the pie”, i.e. the networking market, rather than continuing to fight for a bigger slice of a small market. We created the Networld trade show (later renamed Networld/Interop) and invited every company related to the networking industry to participate, including our closest competitors. The show rapidly grew to become the largest tech gathering of its time, engulfing Las Vegas for a week every year.

Working in and leading a group of a dozen highly talented people who built partnerships with the largest companies in the industry was one of the most exhilarating experiences of my career. During that time, Novell’s partnership efforts helped it hit a billion dollars in revenue faster than any company to that point. In addition to a network of over 20,000 resellers who depended upon us for a significant share of their revenue, we grew partnerships that aligned leading companies (e.g. CA, Compaq, HP, IBM, Lotus, Oracle) behind our network operating system and encouraged them to develop new solutions for our customers.

Observations made during that time led me a few years ago to coin the term “self-fueling” to describe partnerships carefully constructed to last. Like most useful concepts, the definition of a self-fueling partnership is simple:

“a relationship structured so that positive results for the first party drives it to act in ways that increase positive results for the second party, and vice versa.”

The partnership between ATT and Apple is an excellent example. It lasted several years enabled each to them to capture significant market share. We all owe a debt to the late, great Ray Noorda for pointing the way to self-fueling partnerships by selling the idea of coopetition to the industry.

 

CEO Flow v. Multitasking

In a recent article in Small Business Trends, CEO Curt Finch of Journyx contrasts the benefits of “flow” over “multitasking” in achieving optimal employee productivity. Recent studies show that multitasking can be highly unproductive, while flow is much better:

“As defined by author and psychologist Mihaly Csikszentmihalyi, flow occurs when you enter a state of intense and effortless concentration on the task at hand. It is often referred to as ‘being in the zone,’ and employees are far more productive while in this state than at any other time.”

That made me wonder to what extent the same principle applies to CEOs and how they use their time. Most CEOs are paragons of multitasking. Each day comprises formal and informal meetings and calls that address a multitude of topics across multiple domains. A CEO friend once described it this way: “It feels like I’m walking the halls of the office and people are ripping off pieces of flesh as I walk by. At the end of the day, I’m exhausted.”

As with employees, multitasking would seem to be the natural enemy of flow for CEOs. Of course a CEO must necessarily handle more than one issue at a time, but if you continually find yourself without enough time to adequately address important but not urgent issues, multitasking may be slowing your company’s growth.

Finding uninterrupted time to consider how to grow the company is a common CEO challenge. Achieving “CEO flow” may require a level of discipline above what you’ve applied in the past. Delegating more tasks to your executive team, encouraging them to be more mutually accountable, and becoming more protective of open space in your calendar can enable you to become the chief visionary officer that your company needs.

Are you spending time in the zone that’s needed to create the right vision, or are you always multitasking?

What You Think You Know May Blind You To Growth Opportunities

TexasCEO magazine just published my latest thoughts about partnerships. In addition to correcting myths about partnerships in general, it describes major types of self-fueling partnerships and the series of steps you can employ to accelerate the growth of your business.

As always, let’s hear your feedback, either below or the TexasCEO web site.

 

CEO Hockey Night 2013

January 12, 2013

On Tuesday, February 2, 2010, 20/20 Outlook became an official limited liability corporation in the state of Texas. Last night friends who had encouraged me before, during, and after starting this CEO advisory firm gathered in a Cedar Park Center VIP suite to celebrate its third anniversary celebrations that we named “CEO Hockey Night.”

Before the game, I made notes about remarks I’d deliver during the break after the first period. When that time arrived, it didn’t feel right to interrupt the fun and conversations everyone was having. Driving home last night, though, I realized I had to share some thoughts with everyone. Here is the brief speech I had planned to give:

Welcome to 20/20 Outlook’s third anniversary celebration, cosponsored by Cedar Park and Corvalent. It’s great to be here with many old and new friends who have been encouragers in one way or another since the beginning.

A big thank you to special guest Joel Trammell, a serial entrepreneur and someone who’s become a great sounding board in the past couple of years. I’m sure many of you came because you knew he’d be here, and I appreciate his early enthusiasm and support for this event.

I could go on and on about every person in this room. Each of you is a successful leader, and I have great stories on… uh, I mean, about, almost everyone if there were time. That said, I do want to mention a few people in particular.

First, Mike Shultz of Infoglide. The 20/20 Outlook advisory processes were conceived when I worked as Mike’s CMO. They were implemented there, and he kept me on as a consultant after I left. I think of him as a cofounder for the contributions he made to forming the business, and he continues to be a mentor. Thank you, Mike, for your friendship.  And in case you were wondering, Mike, no founder’s equity is implied by those statements.

As a CEO of a medical equipment firm, Gary Cowsert hired me to advise him even before the LLC was formed. His willingness to pay me generously for my services was a significant impetus to file the LLC and get started in earnest.

Next, Ed Trevis, CEO of Corvalent Corporation. Ed hired me to advise him just two months after the LLC was formed. Since that time when he became the first official client of the LLC, Ed and I have forged a relationship that transcends business. Arriving in Silicon Valley 30 years ago with $200 in his pocket and speaking no English, Ed is the best possible example of the American dream. Thank you for sharing your friendship and your creativity, Ed.

Pat Niekamp founded TexasCEO magazine about the same time as 20/20 Outlook was born. We immediately found ways to help each other find the path to success, and that relationship continues. Some of you in this room have contributed articles to TexasCEO as a result. Thank you, Pat, for all your help.

When I started 20/20 Outlook, I vowed I would never take on a partner. Never say never. Tonight I’m announcing that Brad Young has joined 20/20 Outlook as a senior partner and trusted CEO advisor. I am blessed to be working with a close friend and confidant. Brad brings deep complementary insight and domain knowledge to the firm, and he brings his own extensive network of industry friends. Thank you for joining me, Brad, and thank you for proposing this event.

Finally, let’s thank the event’s coponsors, Corvalent and the City of Cedar Park, without whom tonight’s event would not be possible. Ed introduced us to the Honorable Matt Powell, mayor of Cedar Park, and Phil Brewer, the city’s director of Economic Development. They lead a city government that recognizes the proper role of government with respect to business: create the right environment and infrastructure, then get out of the way.  They are doing a fabulous job of making Cedar Park a thriving community, and their support and generosity are deeply appreciated.

Thanks to each of you for your friendship and for taking the time to be here tonight.

 

 

 

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