20/20 Outlook’s Third Anniversary

It’s been three years since the launch of 20/20 Outlook as an advisory service for CEOs, and I’ve been blessed with wonderfully rewarding and interesting experiences along the way. By acting as a sounding board for creative business leaders and helping them get clarity about their purpose, value, and relationships, each one has accelerated the quest to achieve his/her business vision.

Recently, Brad Young came into the 20/20 fold as another trusted CEO advisor, bringing with him a whole new set of gifts and talents. His major focus is on initiatives that complete strategies with flawless execution.

Our client discussions cover every aspect of each business, and we often discuss areas of personal challenge and growth. Similar to traditional executive coaching, building trusted CEO relationships has enabled discussions of their strengths and weaknesses, passions, and even the personal search for meaning and purpose. A side benefit that clients have cited is more effective communication with board members, leading to more productive relationships.

Along the way, a wonderful network of people has evolved around us. Each one has generously supported 20/20’s steady growth with introductions and recommendations, suggestions for new offerings, adoption of 20/20 processes, and partnering to help clients. Because of this network, LinkedIn recently recognized my profile as among the top 1%  frequently viewed profiles in 2012.

To our friends and colleagues, thank you for your continuing support!

 

 

Breakout Strategies in Tough Times

Entering 2013, we have larger challenges than ever.  Economic slowdowns in Europe and projected softening demand in Asia and elsewhere are forcing CEOs to pursue more challenging growth opportunities.  This is not an option: we grow or we die.

For many firms, growth has historically come from new products or innovative extensions to existing products.  The simple growth strategy where R&D generates a new widget, Marketing promotes it, and Sales introduces it to customers isn’t working that well any more.  And even if revenue is growing, profits are often generated at the expense of ever deepening cuts in personnel, core capabilities, and reduced investment in capital and equipment.  CEOs are worried that soon they will have to pay the proverbial piper.

M&A alone won’t do it either.  While firms can and often should acquire or merge to become more competitive, most M&A data shows that the combined enterprise delivers little increased profitability.  At best, results are additive, not multiplicative or geometric.  So what’s next?  Where can we find that elusive growth?

Leading companies are broadening their definition of growth beyond traditional product-based categories to include more novel growth strategies.  For CEOs to take advantage of any of them, they must consider the real impacts on their businesses and determine the capabilities they will need to succeed.

First, creative CEOs need to generate a complete portfolio of growth initiatives that include: geographic expansion and M&A; product-based extensions and positioning; integration or bundling of products and services; marketing-driven initiatives like segmentation and value-pricing; localized delivery through outsourced capabilities; value-driven arrangements like performance guarantees; and IT-based strategies like remote services.

Second, CEOs need to determine how best to apply scarce resources to these initiatives, being especially careful to avoid the trap of over-investing in existing businesses – through both capital and key resource allocation – at the expense of novel and potentially much more profitable strategies.  Communicating the necessity of and how best to implement novel strategies to their boards is a critical challenge.  Key questions include: “Do I have the right leaders in the current businesses?  Can my current team succeed in these new lines of business?  Is the plan aggressive enough?  Have we achieved the right balance of risk and projected return?”

Finally, only careful analysis will determine whether any of these breakout strategies are appropriate for your firm.  Can you get buy-in from all stakeholder groups?  Will employees get excited about the new opportunities?  Will the board support the initiatives?  Can you communicate the new direction effectively to analysts and investors?

In these especially demanding times, CEOs must gain a broader perspective and challenge their internal teams’ assumptions.  Make sure that you incorporate external research and insights into your thinking before making the hard calls.

Mutual Accountability Magic

While the latest formula or insight sells business books, most business leaders tend to find their own way, then apply and reapply principles that emerge through their experience.

James Weaver is a serial CEO who’s led multiple companies out of deep holes back to relevance and profitability. He’s one of those gifted CEO’s who quickly finds the right course of action for a failing company and leads the organization to a new and better way to operate.

When I invited him to participate in a book of CEO principles I’m assembling called Shoot the Runt, he suggested a topic immediately. In turning around companies like Gold’s Gym, James developed a mindset and process that encourages everyone in the organization to achieve their highest potential, and he was generous in sharing that process to help the book.

James found repeated success by generating a sense of accountability that drives organizations to new heights of success. Check out the latest CEO/mentor dialog called Mutual Accountability Magic that’s based on the process he’s used successfully multiple times.

Happy Thanksgiving!

Messaging – the Holy Grail of Marketing

[Guest post contributed by Cathy Martin]

Have you ever read a company’s website or marketing collateral, or had a conversation with one of its execs, and come away from the encounter with absolutely no idea what the company does – or why you should care? Me too, all the time.

Obviously, the company in question has major issues with messaging. 

What troubles me most when I encounter ineffective messaging is that it’s usually an indication that the company lacks a solid positioning foundation. A well-defined positioning strategy is mission-critical for any business. For entrepreneurial companies, it’s pretty much a make or break deal.

Let’s talk about positioning for a moment. 

Positioning can be defined in many different ways. I often explain it to clients like this…

Okay, imagine the ideal impact you could have on your ideal target customer. Now, imagine marketing that conveys this impact in a way that creates the ideal perception in the mind of that target customer. The process of defining this perception, the “mental position” you want to occupy (in the mind of the customer), is the fine art of positioning.

Al Ries and Jack Trout said it best in the classic, The 22 Immutable Laws of Marketing: “Marketing is not a battle of products, it’s a battle of perceptions.”

Positioning is key because it shifts your focus from the internal issues of building your company/product, and aims it squarely on your real “reason for being” – the unique customer value that you offer (your secret sauce and greatest competitive advantage) Once your positioning approach is defined, then it’s a matter of crystallizing this positioning into clear, concise, consistent messaging that inspires and engages the target customer.

How’s your messaging working? 

Here’s a litmus test, in case you’re wondering… the most common messaging mistakes I see:

Kitchen sink messaging: When your messaging tries too hard to cover all the bases (be everything to everyone), the end result is that it speaks to no one. If your target customers can’t identify, quickly and easily, how your product offering relates to them, they’re off to the next contender (over and out).

Head scratch messaging: If your messaging is overly complex, vague or confusing – if it contains acronyms, “tech speak” or language that doesn’t readily resonate with the target customer – then you’ve lost a precious opportunity to create a connection with them. They quickly throw in the towel and move on.

Kool-Aid messaging: It’s all too easy to get caught up in your own world, aka “drink the Kool-Aid”, where the center of the universe is the product you’re delivering. After all, those bells and whistles are very cool, right? Unfortunately, folks aren’t going to care about all that, unless your marketing makes them care – by clearly conveying the unique value that you offer and precisely what it means to them.

Yeah, right messaging: Sure, your messaging should absolutely put your best foot forward in a way that’s bold and compelling. However, if it makes claims that seem too grandiose or unbelievable, then target customers are left to wonder about the reality of what you’re offering and the truth of your promises. Obviously, that’s deadly.

Me too messaging: I know, sometimes your competitors say things that you believe are “more true” about your company or product than theirs. But, if your messaging mimics theirs, or generally sounds like everyone else, your target customers are going to see you as just another sheep in the herd (or is that the flock?).

Messaging du jour: Here it is, the  #1 Hall of Fame messaging pitfall… messaging that changes as fast, or as often, as central Texas weather. When your messaging is constantly shifting – without a validated reason or managed approach – nothing sticks, nobody gets it, you stake no clear ground in the marketplace. Game over, time to pack up your toys and go home.

Any way you slice it, creating messaging that captures and conveys your unique customer value, with precision and impact, can be a challenging endeavor. If you suspect that your messaging isn’t working quite right, don’t take it lightly. Find a way to remedy that situation – and fast.

This post was provided by Cathy Martin, owner of Cathy Martin Consults, an entrepreneurial marketing consulting firm based in Austin, Texas. Over the last two decades, Cathy has worked with dozens of companies – all shapes, sizes, stages and flavors – to define positioning strategies, messaging platforms, practical marketing plans and programs. For more entrepreneurial marketing insights, see: www.cathymartin.com.

 

 

 

 

Three Steps Will Recharge Your Business

Washington Post, July 2, 2012: “Outlook for U.S. economy dims as manufacturing shrinks for the first time in nearly 3 years… ‘Our forecast that the U.S. will grow by around 2 percent this year is now looking a bit optimistic,’  said Paul Dales, an economist at Capital Economics.”

Being the CEO requires committing to a “no excuses” life. Others may offer plausible reasons for non-performance, but if your company plateaus, CEO excuses aren’t an option – you must take action:

  • Softening economy? Find a way to take advantage of a changing business landscape.
  • Lengthening sales cycles? Determine how to identify highly motivated prospects.
  • Shrinking margins? Examine whether your company is leveraging its strengths.

Changing your business to address these and similar challenges incurs risk, but the risk of doing nothing is greater. How can you adopt an effective breakout strategy that will recharge you and your executive team?

Here’s a rational, three-step process guaranteed to provide direction: (1) reexamine your company’s true value and what sets it apart; (2) in light of market conditions and competition, determine an altered direction that will maximize value; and (3) identify new business relationships that will open doors to new business. In other words, you need to clarify, comprehend, and connect:

Clarify – Who are you as a company and what sets you apart? What truly separates companies like Apple, Southwest, Berkshire Hathaway, and the NE Patriots from the rest, year after year, is a sense of purpose. Clarifying the organization’s purpose and unique assets beyond a simple mission statement actually increases efficiency. It’s imperative to get this right.

Highly successful companies perform at a high level because they focus on a clearly identifiable market with a differentiated solution. Even successful companies eventually let pressure to increase revenue force acceptance of business outside their primary focus. Since profitability grows by exploiting core competencies, losing focus erodes margins. Having a crystal-clear shared vision of who your company targets and what customer problems it uniquely addresses enables employees to make decisions more rapidly (fewer meetings and emails needed) so more gets accomplished faster and margins increase.

Comprehend – Once you understand your company better, update your understanding of your immediate market. What change in direction will maximize value? Finding the right direction in a complex and competitive market accelerates growth. How do you define who’s in it and who isn’t? What is your relationship to other companies in your space?

One proven method is to pretend you’re selling your company and identify a number of companies that could acquire you and another set that you might acquire or partner with.  By comprehending the needs of potential acquirers, acquisition targets, and partners, you will develop a value framework that identifies high value opportunities.

Connect – Which relationships will increase business the most? Whether your company is B2B or B2C, strong relationships with other companies can help it grow faster. That said, many CEOs have been burned by partnerships that failed due to poor planning, unrealistic expectations, and unmonitored execution.

The solution? Design self-fueling partnerships that continually reinforce each partner’s objectives. Partnering with potential acquirers and industry leaders will drive new revenue by providing access to new markets, extended geographies, enhanced product and service offerings, better branding, and staff augmentation.

By following this three-step process, breaking out of flat growth may be easier than you think.

The Molecule Behind Effective Teamwork

If you’re a CEO, you may have days when you’d be ecstatic to learn that instant teamwork would happen by simply asking each employee to take a pill. That day may be imminent, but recent research points to ways you can get more cooperation without prescription meds.

Paul Zak organized and leads the first doctoral program in neuroeconomics at Claremont Graduate University. In 2004, his lab discovered the role that the brain chemical oxytocin plays in enabling us to determine who to trust – the higher the level of the hormone, the greater the degree of trust. He’s worked for years to understand the connection between brain chemistry and decision-making, and how that ultimately affects our economic system.

The research around the hormone oxytocin provides a neurochemical understanding of important management principles that have evolved over the years. For example, keeping employees engaged in the outcome of the project they’re working on yields more success. Dr. Zak suggests that team leaders identify goals, establish how those goals will be reached, and put stress on each individual by explaining his/her role in achieving the group’s success. “Clear outcome measures build trust.”

Even more interesting is the work his lab has done in determining the effect that social media has on oxytocin levels in the brain. The findings show that oxytocin goes up during the use of social media, and furthermore, the precise level correlates with the subject’s perceived closeness to the person he/she is engaged with.

A video interview conducted by Harvard Business Review gives more detail. To oversimplify his conclusions, be nice to those around you. It’ll make you and your employees feel better and you’ll both produce more.

In this video interview, researcher Paul Zak describes recent findings about how oxytocin encourages cooperation in the workplace and how its level is affected by the use of social media.

 

Breakout Strategies

The best time to evaluate the direction of your business is while it is thriving. I’m currently rethinking 20/20 Outlook’s strategic positioning, and it’s focused on creating breakout strategies.

What are breakout strategies?

The work “breakout” implies constraints. Most companies fail early, a precious few like Amazon, Google, and Facebook rise meteorically, and the remainder become “established” businesses. These established companies often hit a plateau in their growth, resulting in flattened revenue and profit. At that point, it’s common to find a CEO frustrated by a period of constrained growth and experiencing the “CEO dilemma.”

Breaking out of a growth plateau implies change. Most CEOs are visionary, so it’s their business vision that defines targeted outcomes for the company. The CEO’s vision may point the company toward an inspiring destination, yet without clear strategies, employees may be clueless about how to get there, or even worse, may waste resources by taking conflicting routes.

Maybe the CEO’s vision is unrealistic given a changing market environment that he/she fails to recognize. Maybe good strategies are hampered by bad or non-existent external communication. Maybe the company hasn’t learned to properly leverage relationships with other companies in order to expand their offerings, open new markets, or gain access to a broader prospect base.

In every instance, breakout thinking is needed to create breakout strategies that:

  • provide a deep understanding of the market situation,
  • develop a clear picture of the competitive landscape, and
  • provide credible data on which to base plans
  • give a clear rationale for action from which detailed department plans will flow,
  • lead the company to an optimal return on investment of its finite resources
  • last but not least, create energy and enthusiasm.

Truly visionary CEOs sense when an outside catalyst can challenge the status quo and illuminate new possibilities, then they act decisively to introduce change that leads to breakout strategies.

Too Broad, Too Narrow, or Just Right

Driving down a major boulevard in a city where we lived at the time, my wife spied a new restaurant in a place where many others had failed. In the window, it advertised food from multiple ethnicities, including both Mexican and Chinese! I’d be surprised if “Bueno Wok” lasted long.

There’s a truism about how a lack of focus can kill an enterprise. Being “a mile wide and a quarter inch deep” is widely recognized as a cause of failure.  Typically, a desire to increase revenue leads to pursuit of business that doesn’t leverage the company’s strengths and results in lower margins and muddled branding. But, are there instances where too narrow a focus can be just as harmful?

The diagram below categorizes organizations according to two attributes, focus and potential. The Focus axis ranges from single domain to multiple domains through all domains, while Potential ranges from restrictive to growing through saturated. Companies focused on several verticals are distinguished from those whose offerings are truly horizontal (i.e. domain-independent). Of course, each axis represents a continuum so that an infinite set of combinations is possible, allowing for the unique positioning of any specific company.

Back to the original question: is it possible to be too focused? Consider the example of a company providing a niche offering to several vertical markets. In the diagram it would be classified as “saturated domain-specific.”

Suppose you’re advising a new CEO hired to grow this “plateauing” company, Your first inclination may be to assess each of the company’s currently targeted vertical markets in hopes of focusing on the one with greatest growth potential. However, if the frequency of opportunities within each vertical domain is found to be sporadic and sensitive to changing business cycles, it may make more sense to remain diversified. Finding additional verticals that the company can target may represent a more fruitful direction.

So a key factor in opting to narrow or broaden our focus ia available market opportunities. Other factors include strength of brand, plus the company’s ability to execute (e.g. capitalization), integrate, partner, and acquire. These affect companies in each of the diagram’s nine categories in different ways. (NOTE: future posts will consider how, so if one of the nine categories is of particular interest, let me know when you sign up on this page to be notified by email when the next post is available.)

Translating the CEO’s vision for growth into breakout strategies requires careful thought to determine the best way to target and deploy finite corporate resources. Too often a new direction is based on an unrealistic view of the company’s position and capabilities. While it takes an optimist to run a company, it takes a realist to lead one toward its highest value.

 

Thanks for Two

Today is the second anniversary of 20/20 Outlook LLC. Helping visionary CEOs create breakout strategies is enjoyable beyond all expectation. Before the launch in February 2010, experienced consulting friends advised that it would take a year for people to remember what 20/20 Outlook is, then another year for the business to hit full stride. They were spot on.

Nine months into it in December, 2010, opportunities started arriving on their own. I remember getting a call from a California friend asking for help in opening up U.S. operations for a European company, then days later came a request to write an article for TexasCEO magazine. The juxtaposition of two unanticipated invitations was encouraging.

My goal remains to provide cycles to busy CEOs immersed in urgent issues so they can accomplish their important but non-urgent ones. While the original 20/20 Outlook process remains an essential weapon, the scope has evolved into the role of trusted advisor to CEOs, bringing clarity and direction to the dreams those CEOs have for their enterprises.

This post is written to thank the numerous friends who have given continual guidance over the past two years, including CEO clients and other long-time friends across multiple disciplines. You make it fun to learn new ways to think about and address the challenges CEO face. From an A- guy blessed with a multitude of A+ friends, thank you!

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.

« Previous PageNext Page »