Making Lofty Goals Realistic

Many organizations set goals that are not realistic and are in the habit of not meeting their objectives. Others achieve some of their goals by accident, and some could achieve a lot more. The first questions is, “Are your goals mandatory, or are they something you set out to try?” If they are mandatory, then I suggest you make sure that you are planning for success instead of failure. Many organizations set their goals without considering the obvious reasons they may not be achievable. By addressing these reasons up front, an organization can dramatically increase the likelihood of success or know that they must adjust them to something more realistic.

Here is a common list of possible circumstances that cause organizations not to achieve their goals:

  • Has consideration been given to the capacity of the target market (growing-shrinking) and what a realistic share of the market can be?
  • If revenue levels were achieved, considering seasonality effects, what is the ability of the organization to deliver the products and services at the optimum level while keeping its brand promises?
  • Can the company finance growth; should it grow faster than its ability to self-fund?
  • What advertising or marketing support will be needed to support the goals, and are there finances in place to support it?
  • How will competition respond to your strategic moves, and are your marketing and sales forces well prepared to properly differentiate the company?
  • What is the performance track record of the people that need to deliver, and will your new goals require a significant increase in performance?
  • Are there enough sales and sales support people based on: the amount of time to make the appropriate amount of sales calls; the number of meetings it will take to close a deal; how many proposals one has to write; the time it takes to process a deal, given the normal sales cycle, based on the average close ratio, the average size of deals closed, and travel time?
  • Will you need to introduce new products, by when, and how much of your sales volume depends on it?

Lofty goals require a regular regimen of adjusting your resources (time, people and money). As an organization answers the above questions, inevitably they should be considering upgrading some people, increasing some resources, moving some around, refocusing time, etc. Significant goals, those that require growth rates and increases in profit margins that are large improvements over prior years, need refinement on a monthly and quarterly basis. As we are trying things, we will make mistakes and/or see more opportunities for growth. The great leaders are the ones that are making these adjustments.

Howard Shore is a business growth expert that works with companies that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about him or his firm please contact Howard Shore at [phone link=”true”] or shoreh@activategroupinc.com.

Think Before You Communicate

So often verbal communications do not work out the way people want. They cause a completely different outcome from their intended purpose. The challenge is not just the words one uses. It is the tone and body language of the delivery. Research tells us that words make up only 7% of the communication we receive. Body language accounts for 55%, and tone 38%. Meanwhile, people spend the majority of their time thinking about the words they want to use. I would suggest that not enough thought is given to timing and method of delivery.

The more prominent a person’s role in an organization and community, the more important it is for them to be a master communicator. Their prominence results in their communications touching and impacting larger audiences of people. For example, let’s look at Dan Gilbert, owner of the Cleveland Cavaliers. His comments after LeBron James announced his decision to go to the Miami Heat will have a profound impact on his organization and his community. In case you missed it, he denounced the player who won MVP in the league for the last 2 seasons and carried his team to the playoffs for the last few seasons, making statements publicly that included the following:

  • Heartless and callous
  • Shocking disloyal
  • Shameful display of selfishness
  • Cowardly betrayal

Mr. Gilbert then went on “to personally guarantee that the Cleveland Cavaliers will win an NBA championship before the self-titled former “King” wins one. You can take it to the bank.”

The consequences of these remarks served little purpose other than to embarrass Dan Gilbert and his organization and to hurt his community. It put the team in a position where LeBron might never consider returning to play in his home town, Cleveland, regardless of what trades they made. Gilbert violated the rule of “never burning bridges.” Had the Miami Heat or Alonzo Mourning done something so foolish back when he had health issues, Alonzo might not have returned to play a critical role in helping the Heat win the NBA title. There are many cases where players have returned to a former team later in their careers and played crucial roles.

In addition, the people in the city also should have thought before they burned their LeBron jerseys. All of these people acted in a shockingly disloyal and selfish manner toward a player who brought them incredible baskeball for the last 6 years and donated a lot of time and money in their community. Many stars continue to support their home towns after leaving for another team. Now these shortsighted people are alienating him. What are the chances that he will want to continue to give back to this community? What purpose is their communication serving?

The lesson here is that one must think before communicating. I would bet that many communications would never happen because they serve no useful purpose. They are often just an outlet for some to free their anger; as above. In the process they hurt themselves and others. There are only two proper purposes for communication: 1) to transfer information, and 2) to encourage others to behave or act a certain way. You know you achieve that goal when the information has been transferred properly or the other people are behaving or acting the way you desired. If this is not the case, you failed in your communications. If your purpose with communication is to hurt someone or to cause anger, it usually acts as a boomerang.

Howard Shore is a business growth expert that works with companies that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about him or his firm please contact Howard Shore at [phone link=”true”] or shoreh@activategroupinc.com.

Customer Retention Speaks Volumes About Your Business

Too many companies are under the misguided notion that replacing large percentages of their customers every year is a norm that they must expect. In fact, substantial client turnover is one leading indicator that there are hidden problems in your business.

One of the strongest signs of a good business model is customer loyalty. The true test of how well you run your company is the percentage of customers who continually come back for more of your products or services. In today’s Internet-savvy economy, the complexity of competition has made customer retention infinitely more challenging.

In many businesses, you can see patterns. One company I worked for was great at getting new clients. They had a lot of hype in their marketing about how they were different and would add more value to their products and services than their competitors. Thus, they were able to charge premium prices. But you could see that every 2 to 3 years, their big clients would start slipping away to the competition. The message was clear: they were not delivering on their promises, so their existing customers were not willing to pay the premium prices based on hype.

A company I am working with right now was seeing a constant churn in their client base. As quickly as they brought in new clients, the old ones would start slipping away. Then they would have to go back to the old customers to reacquire them.  What we learned was that they had the wrong type of employees and processes in their customer support department. The department was set up to take and process orders. What was needed was people that knew how to farm and build accounts as inside salespeople. The customer base was under constant siege from competitors, and if someone from my client’s firm was not calling them regularly to tuck them in, the competition was taking them away. In addition, processes needed to be built so that customers could feel and see the difference between doing business with my client versus the other company. By making some minor tweaks and one personnel change to set the example, customer retention is way up, and each account is growing steadily.

Howard Shore is a business growth expert that works with companies that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about him or his firm please contact Howard Shore at [phone link=”true”] or shoreh@activategroupinc.com.

Decisions By Consensus Can Kill Your Growth

I recently met with the CEO of a multi-divisional business to discuss an issue that was critical to the firm’s future. The company’s number one strategic goal is to drive its growth rate to a never-before-achieved level over the next 3 years. I presented a solution that would almost ensure that he would achieve that goal. CEOs of smaller companies would have asked me where to sign on the spot. He decided that he wanted to get consensus from his division heads before making the commitment. This is exactly the type of “decision-making” that has been killing growth potential in his company all along.

To add a little more background to this, the company’s human resource department conducted an extensive search that took almost 9 months before selecting our firm. We did some pilot work to determine whether our assessments would help improve the talent they bring to the company. While going through the process they learned that it could also be use to analyze the existing talent so they asked us to analyze a small sample of their sales force. Based on this analysis we learned there appears to be a number of hidden weaknesses among their sales managers and sales representatives. These weaknesses were probably costing them a lot of growth because of lost opportunities and slower sales cycles. However, since the sample was not representative of the whole organization it was our recommendation that they do a complete analysis before drawing a final conclusion. Common sense would say, “Let’s take a closer look at this, and quickly, to know for sure.” The price tag to do it was insignificant to the company, and we had over 20 years of research to validate the success rate of our process. Yet here we were, not moving ahead.

The real issue here is when and how to use consensus decision-making. An effective leader knows when and how to engage the others on the leadership team in making a decision. You engage other leaders when they are the appropriate people to give you input to make a proper decision. However, there are times when a leader has to decide alone and rally the troops around the decision after it has been made. Let’s take the situation I’ve described. This is not an appropriate matter for a consensus decision. The company has already decided it needs to grow in a way that it has never done before. It knows it will require tools, strategies and methods that are new if it wants new outcomes.

Furthermore, the division heads have not been engaged throughout the discovery process. The CEO might be able to use 15 minutes at the management meeting to present the proposal. He himself needed 2 hours with me for us to discuss and go over it, and we probably needed more time than that to talk about it. Prior to our meeting, there was a year of research that yielded insight already proven to be useful and profound. However, without the rest of the data they will never know if there is truly a gaping hole in their sales organization. Why would one allow one’s subordinates to say no?

Imagine you are a division president and someone presents this new idea for which they want you to spend your money. You already have vendors and assessments you prefer. You are a strong leader and think you know how to achieve your sales plan without spending that money. Worse, what is being suggested might require significant change in “your” company! It would require you to agree to having your people assessed by someone not of your choosing. You might learn some things about those people that were hidden blind spots. It could mean that you might be encouraged to fire some people that have not been performing but are well-liked and have been trying hard. Some of these people have been with the company for a long time.

The new proposal means that management will have to change the way in which they manage people because they really have not been doing their jobs as well as they should. It means that culture will have to be more accountable; that is not comfortable. It means that employees will have to do things differently, and they will complain. That is not comfortable.  It also means that the company will have to invest money on assessments, recruiting, processes, systems, and training and will have to wait a while to see results.

Or, you could just say no and keep doing what you’ve been doing. What do you think most division presidents would choose?

I said at the beginning of this article that the consensus decision process in this company is killing growth. My firm was selected after extensive research to help this company achieve its goal. We have been working with them for over a year. So far, everything I have brought to the table has had a decision process that looks like the above. We have lost a year of implementation to trying to gain consensus.

For example, we established that their bar for hiring salespeople should be higher. They were going to use our assessments to help hire top-performing salespeople. So far, in filling 5 positions, our assessments have recommended against 4 of the people they hired anyways. Just think of the growth opportunities that lurk in this company if they moved away from consensus.

Howard Shore is a business growth expert that works with companies and people that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about him or his firm please contact Howard Shore at [phone link=”true”] or shoreh@activategroupinc.com.

Business Model in Danger?

We just posted an article on our website that may help you challenge your growth assumptions. Too often companies are not recognizing they have a business model problem before it is too late. The signs are there but they fail to recognize them. They assume because everyone is not growing they do not have to worry. They accept excuses from their key people and fail to face the brutal facts. By doing so, they often misdiagnosed their strategy challenges as problems with sales staff or some other operational issue.  It is critical to know what the real issue is. Strategy issues are serious, and the longer it takes to recognize them, the more money you burn on taking the wrong initiatives.  Go to check out the full Article.

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Top 5 Keys to Success

The difference between success and failure in business can really be broken down into five key factors. Some business owners are lucky to have the right product at the right time, however, most find that if they do not do these five things they will either fail, or worse yet, discover that they would have earned a better living by getting a job. According to the Small Business Association, 1/3 of all businesses will close their doors after 2 years, and 60% will do so after 5 years. If you have passed the 5 year mark and you are not concerned about those statistics, you might find it interesting to note that according to the National Federation of Independent Business, only 39% of all businesses are profitable, 30% break even, and the rest lose money over their LIFETIME.  Don’t be discouraged! The good news (yes, there’s good news!) is that turning a profit and staying in business is much simpler than these statistics would indicate. If you want your business to succeed, then make sure you have these top five keys to success in place:

  • Have, Communicate and Drive Your Vision/Purpose
  • Strategy
  • Financial Planning and Review at Least Monthly
  • Establish and Communicate All Company Goals
  • Commit to Goals

Are these part of your business habits?

Howard Shore is a business growth expert who works with companies that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about him or his firm please contact Howard Shore at [phone link=”true”] or shoreh@activategroupinc.com.

The Journey of Business Planning

Planning is the journey that you take your management team through to balance near-term performances with long- term goals. Your goal is to maximize your long-term returns on investment in your business while meeting short-term financial needs. In our experience, we see many leaders focusing their planning process on creating numbers (budgeting) that will yield the profits they want to see at the end of the year. Amazingly they will go through phenomenal amounts of detail to get precisely to the wrong numbers. They are wrong numbers because the reality is they have no idea how they will achieve these numbers, which is the point of planning in the first place. In these companies, it is not uncommon to hear one of two things at the end of the year: 1) They achieve profits in some unexpected way, such as the pricing was extraordinarily good (not sustainable), or 2) They missed their numbers and offer lots of excuses that have nothing to do with poor leadership. There are many companies that go through the annual rituals of strategic planning, business planning, and budgeting, and completely miss the value of these very important business processes.

Many small organizations mistakenly think that answering the following questions apply only to large companies and that they can wait to become larger to take these very important steps.  The companies that wait to implement these steps are among the 50% that fail in the first 5 years. If you don’t answer with a strong yes to any of the following questions, your organization is probably under-performing in the areas of sales growth, customer service, employee satisfaction, innovation, and profitability:

  • Does your management team look forward to participating in your annual planning processes?
  • Does your organization regularly achieve all or most of the financial and non-financial goals set forth in your plans?
  • Does everyone in your organization know specifically what the goals are in your plans and how they will contribute to achieve them?
  • Do the actions in your organization regularly resemble the plans?
  • Do you get regular input from all levels of your organization and use that information to develop your plans?
  • Do you know what trends are going on in your industry, who your competitors are, what your competitors are doing, and what your opportunity and threats are?
  • Do you get regular input from your customers (not just complaints) and use that information to develop your plans?
  • Do you have specific market segments you are focusing on?
  • Do you know what capabilities, management systems, people, and other resources you must have in place now, for the future, and by when?

Make sure your answers to these questions are a definitive “yes” if your business plan is to succeed. Contact us to learn more on how we can help your business grow.

Howard Shore is a business growth expert that works with companies that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about him or his firm please contact Howard Shore at [phone link=”true”] or shoreh@activategroupinc.com.

Is It the Economy or Your Business Model?

The economy is a topic on a lot of people’s minds these days, and if the average citizen is concerned, of course you as a business owner and leader would be concerned too. You may be downright nervous, but if you have a solid business model and have not compromised in the areas of creativity and innovation, then there is light at the end of the tunnel.

Large companies are confident in making executive transitions in these shaky economic times because they haven’t lost sight of their original ideas. These companies are confident in the business model that was the inspiration for starting a business in the first place, and regardless of what’s happening in the news, they stick with the plan. According to a Bloomberg.com article by Thomas Black, U.S. companies are hiring new chief executive officers this year at the quickest pace since 2005. Mr. Black also mentions a study by the search firm Crist/Kolder Associates that shows turnover is running at a 13% rate this year (according to a study of 669 large companies). Leadership transitions are not usually done while the economy is in such a slump. Does this show confidence in the future of economic growth or in their business model and strategy?

What these changes do show is that you can’t believe everything you read, hear, or see. Stop blaming the economy for your lack of growth. Unrealized growth is not the result of a bad economy, more than likely it’s the result of a bad or outdated business model. It doesn’t matter how good or bad the economy is, all companies want and need growth. Most new companies start as an innovative new idea for a product or service-and your company is no different. Your company’s original creativity is what put you in business, so I find it ironic that lack of innovation and creativity may be the very thing preventing it from growing. Innovation keeps you relevant. If your company’s strategic planning is not focused on innovation, it cannot grow in a sustainable way-in this economy or any other. Companies like Apple and Google have grown into veritable empires by creating a corporate culture of creativity and innovation and translating their internal wellspring of ideas into successful growth strategies.

Stop focusing on the woeful tales of the economy and start focusing on your business model. If you have a solid business model and continue with the creativity and innovation that launched your business in the first place, you should be able to weather any economic storm.

Howard Shore is a business growth expert who works with companies that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about him or his firm please contact Howard Shore at [phone link=”true”] or shoreh@activategroupinc.com.

Paying Too Much Attention on Price Competition?

People often spend more time figuring out how to build their fantasy football teams, plan their vacations, and handle other various unimportant matters than they spend on building their business strategy. While strategic planning is more difficult and is likely to result in some mistakes, not putting the proper time into strategy is inexcusable. Business strategy should be revisited at least quarterly in every business. Most companies do not make the time and it costs them millions in future revenue and profits they’ll never see.

Too many companies make a lot of changes to the business only to find that those changes had little impact on its ability to increase market share, or worse yet, caused market share to decline. It is also common to go into companies and find only a small percentage of their clients/consumers showing loyalty. The predominant discussions among their salespeople revolve around price. Many business owners mistakenly believe there is nothing that can be done to change client/consumer focus on price.

A big part of building a strategy that helps avoid price competition is having the ability to segment the potential client/consumer base and target ownership of specific segments. The more segments you want to own, the higher your cost structure. The key to segmentation is not looking at market segments by customer size, geography, industry group, or other traditional demographics, but to look at them by need or want that your company best serves. Here are some examples:

  • Are they the type of customer that only looks for the lowest price no matter what?
  • Are you in the hospitality business and are they looking to be pampered?
  • Are you in the fitness business? Are your target customers the ones whose doctors have told them that they will die before 40 if they do not trim 40 pounds?
  • Are you in transportation, freight forwarding, and logistics industry and your clients are always squeezing you for the lowest price? Could you charge them more and still save them a lot of money if you helped them solve the inefficiencies in their logistics functions?

When developing your strategy, you must understand the potential marketplace at least 3 years out and project how you think your industry is changing in terms of products, customers, technology, delivering products and services, sophistication of employees, and other pertinent matters. Once you’ve considered these factors, you need to segment the different types of clients you have and which segments you want to own. Then build your strategy to own them. Just take the time to build a winning strategy. The results will be considerably more rewarding then winning in fantasy football.

Howard Shore is a business growth expert who works with companies that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about him or his firm please contact Howard Shore at [phone link=”true”] or shoreh@activategroupinc.com.