“Why don’t they use common sense?!” You may have said this phrase yourself, or heard it with your managers, when discussing an employee’s actions. However, the frustrated appeal to “common sense” doesn’t actually make any meaningful change in your organization. We all make decisions based on the information we have and the guides we have to use. So if the wrong decisions are being made in your organization, it’s time to examine the tools you give decision-makers.
Last week I discussed how business trends had accelerated 5 – 10 years as a result of COVID, thus whatever the critical trends in your business were in March, take them forward 5 – 10 years, and that is where you are now. This acceleration applies to all companies, but the ones we see most easily are move to online retailing and the death of malls.
If that is where your business is, then as I have also said before you need to:
Revisit your BHAG. Hopefully, you have one, and make sure it is still relevant. Your Big Hairy Audacious Goal is more than just “goals,” a true BHAG is clear and compelling and serves as a unifying focal point of effort– often creating immense team spirit. It has a clear finish line, so the organization can know when it has achieved the goal; people like to shoot for finish lines. However, if your BHAG aimed at ten years out, and we have moved 5 – 10 years in the last few months, we may have passed, or it may no longer be relevant.
Review your corporate mission and vision statements, again to ensure they are correct given where everything has moved;
Look at your “Why.” Is it relevant in a COVID/post COVID world, or does it need changing? Is it a “Why” that has relevance with your future workforce. If you are not sure about your “Why,” here is a link to Simon Sinek’s “Start with your Why” as a refresher. Millennials are here, and regardless of what you think about them, you need them. The good ones will want to work of organizations where they believe in its “Why.” Now is the time to fix it.
Take a hard look at your Corporate Culture, is what you live, or are they just pretty words? I have come across many examples over the last twelve weeks were organizations are flouting their cultural beliefs and not even realizing it. Look at your behaviors during this period and have you lived your culture. If not, you need to change one or the other.
Develop a new strategy – urgently! As I have said before, not only have we moved forward 5 – 10 years, but the game has changed. There are new rules and players. Thus you need a new strategy.
Revisit your capital investment plans. With a new strategy and market, your prior capital priorities are not necessarily correct. You need to revisit your investment plans and ensure that you are focused on investing in technology and processes to keep ahead of your competition.
Revisit “How You Make Money.” How You Make Money is a fundamental understanding of every employee in an organization. It must be something simple that everyone understands but drives the appropriate decisions making and behavior. Herb Keller at Southwest Airlines put it best with “Wheels Up.” So how do you make money, and has it changed in this new environment?
Revisit your capital allocation. Right now, interest rates are at an all-time low and should remain here for some time. With lower interest rates you need to revisit your capital structure, assets and operations to determine the most efficient capital allocation from a cost of capital and tax perspective and
Revisit your operations. Taxes are at an all-time low, but I don’t expect them to remain so as the significant increase in government debt will need financing at some point. So look at your operations and some assets, should you sell them now and reinvest the proceeds more efficiently, given where we are. One of my clients is about to sell his office building and is looking to do a 1031 exchange into a new investment property. While that is the standard consideration; however, if you expect taxes to rise and value of investment property to rise more slowly as the world adjusts to the post COVID landscape, would it be better to pay the taxes now. That is a question each person needs to determine, but one I would ask.
Revisit your decisions making process. As we move through a time of significant change and confusion, you need to move the decision making down from the top to where the information is. As I have said before, this is a time for effectively A/B testing outside of just the software world. Having everything flow up and down through the organization slows the decision-making process down too much for such times. To have effective decision making at the front lines, your employees need to know the Mission, VIsion, your Why, How You Make Money, and the Company’s Culture. If they genuinely understand those, they will make the right decisions for the organization.
The most beautiful thing about the current environment is you can change all of these things without too much of an issue. Because of COVID and the adjustments required, Scared Cows can get slaughtered. Prior commitments and beliefs that could not be touched are fair game.
Now is the time to implement John Boyd’s OODA Loop – observe–orient–decide–act.
While developed for military strategy, this is an ideal OODA loop environment. An organization that can process this cycle quickly, observing and reacting to unfolding events more rapidly than the competition, can “get inside” the opponent’s decision cycle and gain the advantage. Raw information or observations of the evolving situation are processed or filtered to drive all decisions regarding the problem.
While everyone is still figuring out what is happening, take advantage of the confusion and move quickly. Those organizations that emerge ahead for this crisis will have market leadership for the next decade.
Copyright (c) 2020, Marc A. Borrelli
You can only determine profitability when you know your costs. I’ve discussed before that you should price according to value, not hours. However, you still need to know your costs to understand the minimum pricing and how it is performing. Do you consider each jobs’ profitability when you price new jobs? Do you know what you should be charging to ensure you hit your profit targets? These discussions about a company’s profitability, and what measure drives profit, are critical for your organization.
If you were starting your business today, what would you do differently? This thought-provoking question is a valuable exercise, especially when it brings up the idea of “sunk costs” and how they limit us. A sunk cost is a payment or investment that has already been made. Since it is unrecoverable no matter what, a sunk cost shouldn’t be factored into any future decisions. However, we’re all familiar with the sunk cost fallacy: behavior driven by a past expenditure that isn’t recoupable, regardless of future actions.
Bringing clarity to your organization is a common theme on The Disruption! blog. Defining your business model is a worthwhile exercise for any leadership team. But how do you even begin to bring clarity into your operations? If you’re looking for a place to start, Josh Kaufman’s “Five Parts of Every Business” offers an excellent framework. Kaufman defines five parts of every business model that all flow into the next, breaking it down into Value Creation, Marketing, Sales, Value Delivery, and Finance.
Bringing in new ideas, thoughts, understanding, and logic is key as your organization faces the challenges of a changing environment. But when you do an ideation session in your organization… how does it go? For so many organizations, many times, after a few ideas have been thrown out and rejected, the thought process slows down very quickly, and a form of hopelessness takes over. How does your organization have better ideation? I’ve come across a new approach with a few teams lately.
An uptick in business has begun this quarter, and companies are rushing to hire to meet this surge in demand. What amazes me is how many are so unprepared to hire. Continual recruiting is key to the survival of a company. It isn’t the same thing as hiring—continuous recruiting is building a pipeline of people that you would hire if you needed to fill a position, or “A players” you would hire if they were available.
If your organization is focused on obscurity over clarity, whether intentionally or not, your “A” player employees are vulnerable. There is a looming talent crunch. As we start to emerge from COVID, demand is increasing, and many are scrambling to fill positions to meet that demand. Headhunters and recruiters are soon going to be calling your key “A” employees. Have you been giving them a reason to stay?
As Leonard Bernstein put it so well, “To achieve great things, two things are needed: a plan and not quite enough time.” Your meetings can be shorter, more fruitful, and engaging, with better outcomes for the organization, employees, and managers. It’s time to examine your meeting rhythms and how you set meeting agendas. This week, I break down daily, weekly, monthly, quarterly, annual, and individual meeting rhythms, with sample agendas for each.
Let’s start here: Why should your company be scalable at all? If your business is scalable, you have business freedom–freedom with time, money, and options. Many business leaders get stuck in the “owner’s trap”, where you need to do everything yourself. Sound familiar? If you want a scalable business that gives you freedom, you need to be intentional about what you sell, and how.
Companies are gearing up to hire. Unfortunately, many are competing within the same talent pool. Some experts are currently predicting a strong economic recovery starting in May or June. But as the economy booms, there is going to be fierce competition for talent. How will you fare in the looming talent crisis? Your organization should be creating a plan, now, so you can attract the talent you need in the year ahead.