Tag Archives | leadership

Intangible Assets: Protecting Your Brand And Reputation

“In an economy where 70% to 80% of market value comes from hard-to-assess intangible assets such as brand equity, intellectual capital, and goodwill, organizations are especially vulnerable to anything that damages their reputations” (Harvard Business Review). Last week, I had a conversation with one of my coaching participants, Dory. Dory’s company is trying to make a lot of changes. Changes that as a financial leader just doesn’t make sense. It involves repositioning the business. It requires new marketing, new branding, new value, new culture, new staff… It’s an entirely new brand! However, the leadership fails to see how making this large of a shift will not only change the brand, but it will also risk destroying the firm’s reputation. In this week’s blog, we are discussing about protecting your brand and reputation.

With 70-80% of value stemming from intangible assets – such as your brand and reputation – it’s important to know what your company’s strengths and weaknesses are. Start enhancing those strengths (and resolving those weaknesses) with our Internal Analysis whitepaper.

Protecting Your Brand And Reputation

In today’s world, protecting your brand and reputation should be a priority because it can be destroyed with one social media post. In a WSJ article, Keri Calagna, principal at Deloitte & Touche LLP and leader of Deloitte Advisory’s brand and reputation management services, says that, “brand and reputation are complex, difficult to measure, hard to predict—often a result of strategic and operational decisions—and influenced by factors outside of an organization’s direct control.” But there are things that you can do as an organization not to further diminish value potential.

Protecting Your Brand And Reputation, Protecting Your Intangible AssetsFor example, we have a client that recently experienced an incident near their facility. The client’s concern was reputation and responsiveness to the situation even though they were a third party to the incident. But the perception with regulators and potential customers is very important. So, our client went above and beyond to respond and assist in the situation. This was seen in a very positive manner with regulators, neighbors, and customers. As a result, they were building very positive brand equity.

Brand Definition

Business Dictionary defines brand as a “unique design, sign, symbol, words, or a combination of these, employed in creating an image that identifies a product and differentiates it from its competitors.” Over time, a brand becomes the face of the company, something that customers recognize, and conveys the value of the product/service. It is your Image.  For example, Coca-Cola is historically seen as the #1 soda producer over Pepsi. Coca-Cola’s branding efforts have created a culture and a value among consumers.

Brand equity can go either way – positively or negatively. For example, influencers, bloggers, neighbors, friends, and family have recommended Product A to you. As a result, you are most likely going to buy Product A and any other product you need from that company. Then, you come across Product B. Product B has been known for its poor quality and is generally not as effective as Product A.  Product A has positive brand equity, whereas Product B has negative brand equity. As a result, Product A has a lot more wiggle room to make mistakes than Product B.

Take inventory of your company. What does your company do well at? What weaknesses does it struggle with? Click here to access our Internal Analysis to take a complete inventory of your company. 

Reputation Definition

Cambridge defines reputation as “the opinion that people in general have about someone or something, or how much respect or admiration someone or something receives, based on past behavior or character.” In other words, the reputation is how customers perceive your company versus how they recognize your company.

Protecting Your Brand And Reputation, Protecting Your Intangible AssetsAlign Strategic Decisions With Brand

One method to protect your brand and reputation is to align it with strategic decisions and overall strategy. For example, a company makes a decision without factoring in its brand. Customers and potential customers do not agree with the decision make because it changes X, Y, and Z. We have seen companies destroy themselves because they do not consider all factors before making changes to their brand.

Know Where Breakdowns Occur

Generally speaking, any breakdowns in your company will have to do with your human capital. If there is a misalignment with the actual company culture (not just what you perceive) and the brand, then your team will not be able to successfully deliver what the brand promises. Educate your employees on the brand. Fix issues within your team before it’s vastly different than the brand you are putting out there.

Protecting Your Intangible Assets

In the end, brand and reputation are intangible assets that your company needs to care about. It impacts value potential and the bottom line. Instead of managing crises, let’s look at how to manage risks and consequently, protect your intangible assets.

How does a company protect its intangible assets? Protecting your intangible assets starts with knowing what they are. What is your company known for? Why do customers choose you over a competitor?

Then start to identify what could change those answers. Is it government regulations that will change your product? What about material changes?

Finally, package what your intangible assets are and what influences them. Manage any risk threatening those assets.

How Your Brand And Reputation Impacts the Bottom Line

Before you go about making any changes to your brand, look internally at what is reliant on that intangible asset. In my first example, Dory’s leadership was not looking at how the employees, customers, vendors, investors, etc. were tied and attached to the brand. If her company made the change they wanted to, the company would lose its employees, customers, vendors, and investors. Sometimes, the brand is the thing that has made you so successful. If you are protecting your brand and reputation from potential changes, then take a look at our free Internal Analysis whitepaper. This will help you get a high level view of what impacts what.

Protecting Your Brand And Reputation, Protecting Your Intangible Assets
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Financial Leadership in the Digital Age

There is more information available today than in another other age before. It’s overwhelming. Instead of having verbal conversations with one another, there is a room of people on their phones or laptops communicating with other people around the world. We are processing thousands (if not millions) of pieces of information a day. And that’s making the role of the financial leader more difficult. There is simply too much information. So, how do you navigate financial leadership in the digital age?

First, take a look around the office. How much of your team’s work in on a device? How does your team look visibly (tired and exhausted or alert and awake)? If you go to any news source (Wall Street Journal, New York Times, etc.), notice how many articles are about technology and anything digital. Almost every article has some tech or digital component to it. This issue impacts financial leaders all around the world.

Financial Leadership in the Digital Age

Too Much Processing of Information

News channels, Facebook, Twitter, Instagram, Youtube, TV shows, financial statements, reports, contracts… Every piece of information we take in from the moment we wake up to the moment our eyes shut is simply overwhelming. There is too much processing of information occurring, and it has the risk of destroying a company’s value. A company’s leadership needs to be on guard of how much information they are processing each day. An article Fast Company published says, “Our brains have the ability to process the information we take in, but at a cost: We can have trouble separating the trivial from the important, and all this information processing makes us tired.” Our brains can only hold so much – much like a bandwidth of Internet. Once we go over that bandwidth, then we start to lose or forget information – even the most important information.

So, what does one do? They focus on a few key metrics rather than all the metrics. Click here to start identifying those key metrics with our KPI Discovery Cheatsheet.

Financial Leadership in the Digital Age

Financial leadership in the digital age is continuing to evolve and involve more areas in business than accounting. Already, financial leaders take a role in operations (productivity, efficiency, etc.), investment decisions, strategic planning, and human resources. I tell any CEO hiring a CFO that the CFO should be good enough or better to take on the role of a CEO.

Have a Team to Process the Information

As the financial leader, you have the opportunity to defer the role of sifting through all the information and data. Have your accounting department analyze all the information and package it into the most important information that you need to make strategic decisions. The CFO sits on a lot of information to begin with. With a team’s support, the CFO can focus on the most important information.

Financial Leadership in the Digital Age

Focus on Key Performance Indicators

Financial leaders in the digital age need to identify the key performance indicators (KPIs) that really matter in the business. If they don’t identify those KPIs, then they risk being overrun by data and may miss something important – result in injury, lawsuit, fines, etc.  With current systems that are properly installed, you can have thousands of bits of information in your monthly report.  But may I ask, what do you really need to make decisions?

Today, a client asked me if I wanted to see the daily reports. I asked what is in the daily report. The client responded with, “everything”. It included man hours, throughput, downtime, what was sold, was was wasted, HR information on who clocked in late and who was on time, literally everything on a daily basis. My response was simply “no” because  I do not need to see everything every day because I am running the company as an Interim-CEO. Instead, I want to see data that is meaningful, weekly, and information that will lead me to make business decisions. If we have over time one day of the week and none the rest of the week, then that will not lead me to make any business decision in this case.

Since so much data is available real time, be sure to gather and analyze that which is relevant and will lead you to make a decision.

Hire the Right Team

CFOs need to reevaluate which positions they are adding to their accounting department. Consider positions like data scientists, data security professionals, statisticians, and IT delivery specialists to add to your team. If the digital age is creeping into every area of business (especially accounting), then you need to have people with more experience in data, security, and analysis.

Adopt and Adapt to Technology

McKinsey recently reported that “the average capital project reaching completion 20 months behind schedule and 80 percent over budget.” Why? Because the stakeholders (project managers and contractors) in these capital projects are resisting technology. This is just one example of how resisting technology is a technology driven world will have an impact on the bottom line. If your company is already utilizing technology, then think of areas that you could be using more technology to reduce costs. If your company is still operating in the proverbial Stone Age, then it’s time to bring in a consultant or a team to implement a digital component. That could be an accounting system, a customer relationship management (CRM) system, an optimized website, etc.

In another example, retailers everywhere are having to change their business models to cater to the buy-now demand that customers have taken up. Retailers are creating e-commerce sites, closing brick and mortar stores, and managing inventory entirely different all because of technology. Recently, even grocery stores have been competing with companies, like Instacart and Favor, who are doing the shopping for customers that do not want to shop by creating their own delivery services.

Automation Plus Analysis

Over the years, the automation has creeped into finance and accounting departments. While at first, many in accounting were terrified that it would make their roles obsolete, we are seeing something different. You can only automate so much. In the end, business is all about humans. You cannot automate humans. What does that mean exactly? That means that now accountants are able to do more with the data than punching the information into spreadsheets, systems, etc. They can now spend their time analyzing the data, and thus, they become more valuable to the firm.

In a Wall Street Journal article, Paul McDonald from Robert Half says that, “companies plan to move the expertise needed to modernize their finance departments in-house, even as the process brings about more automation to routine tasks.”

Stay Focused in the Digital Age

So, how does one stay focused in the digital age? It starts with knowing what information is important enough to earn your attention and what information is simply a distraction. Start measuring your company’s KPIs today with our KPI Discovery Cheatsheet.

Financial Leadership in the Digital Age
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Invest in Leadership Development

When you invest in leadership development, you are making an investment. It’s something that you pay good money for and expect a return on your investment. But what many leaders don’t realize is that leadership development should be strategic. We once had a coaching participant (CFO) who worked in a family company. Once the CEO retires, the CFO is set to become the CEO. Instead of going into the job blind or get coaching at the wrong time, this individual sought out coaching before he was set to take over the company. So, why invest in leadership development in the first place?

Invest in Leadership Development

Why Invest in Leadership Development

People will always be a good investment. Why? Because without people, you will not be able to accomplish all  of your goals for your company. There’s a phrase… The tone starts at the top or the fish rots from the head down. Whichever phrase you prefer, it hints at the same thing. Success (or failure) is a result of the leadership of a company. If you want a future for your company, then you need to focus on your leadership and management. You can accomplish this in 2 ways – 1) hire good leaders and 2) invest in leadership development for existing company leaders.

A legal entity should stand on its own no matter what changes are made at the top. There should always be a succession plan whereby management should be able to step up to executive roles. Without investing in your team, this will not happen.

The second option rides on the fact that you have already invested in a current employees with their compensation, benefits, etc. Now, it’s time to get them the coaching they need to further increase their value to your company.

 To learn more financial leadership skills, download the free 7 Habits of Highly Effective CFOs.

Reasons to Invest in Leadership Development

There are several reasons to invest in leadership development including improving profitability, retaining talent, and improving return on investment. Harvard’s research report on The State of Leadership Development discusses how leadership development addresses the “demands for change to address threats from global competition and technology-driven upstarts; the need to engage a multigenerational workforce with a range of work styles; and the imperative to cultivate a new generation of leaders who can meet these needs and thrive.” Simply put, companies need to address competition, culture, work styles, and generational differences to compete on a global scale.

Improve Profitability

If your leaders know how to improve profitability with the tools, resources, and second-hand experience from a leadership development program, then they will become evermore valuable to your firm. Leadership development will coach them how to make strategic decisions, how to lead effectively, and how to find opportunities. All of those benefits have the opportunity to improve profitability.

Day 2 of the Financial Leadership Workshop is all about improve profitability and cash flow. Click here to learn more, then contact us to register for the next series.

Retain Talent

In addition, companies cannot motivate all people by money. In fact, financial gain isn’t the only thing many employees negotiate. The next “gain” many negotiate for is mentorship, training, coaching, and further leadership development. That should tell you something. We all know the cost of turnover is high and can potentially make a dent in profitability. Your company’s goal should be to retain talent for as long as possible.

Improve Return on Investment

Many leadership development programs do not effectively communicate how they are going to improve return on investment. A good CFO or financial leader should be able to increase value 1-2% of sales in profits. For example, if a company has $1mm in sales, then a CFO should be able to increase profitability at least $10-20,000. And it goes up from there! If the investment is greater than 1-2% of sales, then I would advise you to find a different program. How much return can you expect from investing in your leaders? Financial leaders should always be looking at ways of adding value.

Financial Leadership Development

More specifically, your financial leadership needs to be further developed in their leadership skills. In our Financial Leadership Workshop, I enable my students to go beyond the role of CFO/CEO to become the central financial leader in the company. Furthermore, our curriculum empowers you to become both an influence and decision maker in your company.

Any financial leadership development program worth investing in should accomplish a couple things. It should make the shift from numbers cruncher to financial leader. It should also cover how technology changes the role. Obviously, it should address profits and cash flow. There are many other topics that I could list here, but you can read more about what you should be prepared to walk away from a coaching workshop here.

Finding the Right Financial Leadership Development Program

It all starts with who is coaching the program. For example, if a 26-year old with no financial executive experience began coaching financial leadership, then there would be no credibility or experience behind that program. In comparison, if the course is coached by a 28-year financial executive who is seasoned and experienced either in a niche market or a variety of markets, then the only thing you need to look for is the fit. Finding the right financial leadership development program begins with the curriculum. Does it coach on the topics you need to coached up on? If so, then you need to also evaluate the following:

  • Logistics (time, location, schedule, etc.)
  • Cost
  • Benefits
  • The Coach

Right now, registration is open for our Financial Leadership Workshop Gamma Series starting this October. Click here to learn more about our program and contact us to see if it’s the right fit for you.

In the meantime, I also wanted to gift you our 7 Habits of Highly Effective CFOs. This whitepaper is by far our most popular whitepaper and is just a snippet of what to expect in our Financial Leadership Workshop.

Invest in Leadership Development

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The Sacred Cow: Lack of Succession Planning

We have all heard the term, “The Sacred Cow”. Here is how I apply it to the business world… I am in my 28th year of working as a professional after graduating from college. I have been privileged to work in large private companies, small private companies, and large publicly traded companies. In addition, I have made the transition from accounting/finance to operations. I have also consulted for companies in a variety of industries, size, and complexity in the last 6 years. And I run into this one thing constantly – the lack of succession planning.

Sacred Cow

The Sacred Cow

After all these years and great experiences, I still see companies that have “Sacred Cows”. That is that employee who has been in the company 20 years and knows everything and everyone. He has outlived reductions in force, down turns in the economy, is still there after 2 new ownership changes. It’s that guy no one can touch because he is a “Sacred Cow”.

Unfortunately, these Sacred Cows are oftentimes not always that good. They come with some baggage. I have seen many of these Sacred Cows. Oftentimes, they are bullies. They are the ones that are often insubordinate. Although they are the ones that get stuff done, it is done at the cost of moral – always threatening the company that on their next temper tantrum they are “quitting”. Usually, they are overpaid.

Perpetual Life of the Business

A business is created within the confines of a legal entity mostly for continuity of perpetual life. That is one of the main characteristics of a Corporation. Therefore, the business continues no matter who is CEO, CFO, or COO or if there any changes in shareholders. But the business will continue because it “has a life of its own”.  As a matter of fact, that is also how you add value to the business. If that is the case, then how do companies allow Sacred Cows to exist? I see it over and over again. Owners of companies say something like…

“If we terminate him, then how are is going to run the operation?”

“But he is our key sales person and he knows all the clients personally.”

“No one else knows what he knows.”

If your business faces any of these situations, then it is your own fault.  No business should be built around a single or two key people. Some exceptions to this rule are small startups or pre-revenue entrepreneurial companies.

The business relies on the leadership to point out the Sacred Cows and destroy the potential of them holding your company hostage. Know what your CEO wants and needs help with with our How to be a Wingman guide. This whitepaper walks you through the relationship between CEO and CFO.

Examples of a Sacred Cow

I have an example that I lived through in my career. (More stories available upon request).

Petrochemical Company – The Lead Supervisor

There is a petrochemical company that had been around over 20 years and was very successful at different levels. The operators worked on three different shifts with each shift having their own supervisor. But the “Lead Supervisor” – the one that all operators and supervisors reported to – was a gentlemen that had been in that position many years. He had a personal relationship with the President and his wife. He was also the one that made hiring decisions out in the plant and control room. Most subordinates feared him. And management played his game because he “knew where every valve was”.

This guy was the Sacred Cow, but he was nothing more than a prima donna bully. There were many other HR issues, but you get the picture.

Since I am one that believes that no company should depend heavily on one person and the company should never be held hostage, I terminated this Sacred Cow the day I was promoted to President of the organization. I terminated him for being insubordinate and for holding the company hostage with demands of more pay or he would quit. I also terminated him for being a cancer in the organization.

Shock waves throughout the organization, rumors of failure spread, and we are going down in everyone’s mind. In reality, we did not skip a beat. It has been 10 years, and I hear the company is doing great.

As the financial leader, it was my duty to protect the health of my company, support the leadership team, and protect the shareholders. Learn more about how you can become the wingman to your CEO with our How to be a Wingman guide.

Client – Fear of Sacred Cow

I recently saw a large client with a similar issue. Now, we are dealing with a management team that fears the Sacred Cow. It is the fault of prior management for allowing this to happen. As the acting financial leader of the company, I am putting up mechanisms to prevent the development of future Sacred Cows.

Lack of Succession Planning

What the Sacred Cow comes down to is a lack of succession planning. There is no plan in place to continue operations without that person (or the position).

Avoid the sacred cow by guiding your CEO in the direction of the company. Access our How to be a Wingman guide here.

Avoid the Sacred Cow (Lack of Succession Planning)

So how do you avoid these pitfalls? There are three things to focus on as well as steps to avoid the sacred cow.

Sales Person That Has All the Key Customers

One example of a Sacred Cow in your business is the sales person that has all the key customers. First, insist that you attend some key customer meetings. You have every right to ask for detailed documentation of the key customers, relationships, meetings, and the pipeline of business. Finally, develop a relationship with those key customers. Do not let one person hold all the cards.

Key Person in Field Runs the Operation

Another example of a Sacred Cow is the key person in the field that runs the operation. Make sure you have a number 2 person that is just as good; they just don’t have the title… Yet. In addition, every key person in management should drive a succession plan. In order to have that happen, the company should have a succession plan in place for its leaders from the CEO on down. Someone can have direct reports under the Sacred Cow in operations. Furthermore, this does not mean that the Sacred Cow controls everything. Have the subordinates that run key areas document their day-to-day functions. Finally, develop a relationship with those key subordinates. Talk to them about training and potentially moving into bigger roles in the future.

The Sacred CFO Cow

The last example is the Sacred CFO Cow. Have a strong Controller that reports to the CFO. Have the CFO document key functions. In addition, the CEO should know those key contacts – legal, banker, insurance, etc. Develop a strong team underneath the CFO to prevent the CFO from becoming the Sacred CFO Cow.  It never hurts to continue networking and meet professionals that you may want to hire one day.

Do Not Allow Sacred Cows to Form

The objective is to not allow Sacred Cows to be born in the first place. We know that they take control and abuse it. But if you do have Sacred Cows in your organization, then you need to deal with it. Build out the number 2 and number 3 person. Every company should also build a succession plan for key employees. And most importantly, do not allow your company to be held hostage by anyone! Be the trusted advisor your CEO needs and access the How to be a Wingman guide.

Sacred Cow, Lack of Succession Planning

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What It Takes To Be A Successful Leader

What It Takes To Be A Successful LeaderNo matter the engagement, having leadership involved in our work is vital. Over the years, some very talented people have defined leadership. Great authors and business coaches have also defined leadership. I did a quick Google search on the definition of “leadership” and here is what I found:

the action of leading a group of people or an organization
“different styles of leadership”
Synonyms: guidance, direction, control, management, superintendence, supervision; organization, government
“firm leadership”

the state or position of being a leader
“the leadership of the party”
Synonyms: directorship, governorship, governance, administration, captaincy, control, ascendancy, supremacy, rule, command, power, dominion, influence
“the leadership of the Coalition”

Talented Leadership is critical for a company to succeed, because without it, there is chaos, mismanagement, and no direction. I have also read some good books that discuss or mention leadership. One of my favorites is “Good to Great” by Jim Collins.

Now, I have my own life experiences that have helped me define my version of leadership. I can share with you what has worked and what has not worked in the last 28 years of my career. I can also tell you about the different leaders I have dealt with in many organizations – both huge publicly traded multi-national companies and small private companies. What is interesting is that the leadership roles that worked in huge companies and small companies share the same characteristics.  This has helped me define what it takes to be a successful leader.

Failed Leadership

What is clear is that there are things that do not work and destroy leadership. Leading out of fear surely does not work. In addition, leading with threats does not work. A leader that does not communicate is sure to fail. I have seen my share of failed leadership and leaders that were failures. It is amazing how these individuals made it to the top of these organizations. They usually operated by:

  • Threatening those below
  • Operating with a big stick
  • Greed: Looking out only for personal gain
  • Horrible communicators
  • Did not trust many, or anyone at all
  • Short term thinkers
  • Created silos in the organization
  • Had favorites that they worked with
  • Felt empowered by the title they carried

The above characteristics simply do not work.  The failed leaders that I have dealt with have many of the above characteristics or behaviors.

Want to add value to your company as the financial leader? Click here to access our 7 Habits of Highly Effective CFOs.

What A True Leader Wants 

A true leader wants to know that he has a strong team behind him. A leader wants to know that there is no doubt that those that follow him will follow him over a cliff. In addition, a leader wants his team to trust their judgment, but at the same time, his team has enough confidence to respectfully challenge an idea or concept if they truly believe it is flawed. A leader also wants his team to have excellent communication both up and down the chain of command. A leader also must have a right hand person. This is someone who is talented and can step in just in case something happens to the leader. A leader wants to be successful because that is his nature, but he also knows he cannot do it alone.

What It Takes To Be A Successful Leader

Over my lifetime, I have seen several successful leaders in the business world.  Here are a couple examples that stand out.

Example 1

Paul was the owner of a large equipment distributor here in Texas. I met this business owner because we used some of his construction equipment. I got to meet several people that worked for him. The business owner and CEO grew his company from a small $2 million company to a business that was well over $100 million in revenue. He went from less than 10 employee to close to 200. His employees loved him, and he had a well run business that was very successful. I watched him, and I made a mental note of what made this leader different from other executives I encountered.

Paul’s Leadership Characteristics

These are some of Paul’s characteristics as a leader:

  • Compassionate: He had a big heart, but he knew exactly when someone was trying to take advantage of that
  • Accountable: He held his employees accountable
  • He hired very talented people, paid above market and delegated
  • He had his employees help him set the goals and got them to buy in to them
  • Caring: Different from compassionate… He truly cared about his employees, from the receptionist to the CFO and COO
  • Disciplined: Early riser, stuck to his business plan, had good social habits, never broke rules
  • Excellent communicator
  • Zero tolerance for unethical behavior
  • Humble: Although he was personally worth millions, he never forgot where he came from and he treated everyone with equal respect.
  • His goal was not to fill his own pocket with cash, but to share with others and allow the team as a whole to benefit from success
  • He knew what he did not know; this led his to have the right strategic advisors and executives; he trusted his executives
  • He never uses the words, “my” and “me;” instead, he uses “us” and “our”
  • Transparent: If it is good news or bad news, then you will hear it… No hidden agendas

Example 2

Hugo was a leader from early in his career.  After working for a travel company in his early years, his entrepreneurship led him to start his business on his own. He started in travel, then expanded and ultimately had a very successful construction company. In the later years of his life, you would never know that Hugo was worth millions. He was humble, but he knew how to build teams.  He led by example, and was often found literally getting his hands dirty in a construction business.  Hugo loved success, and he enjoyed a nice lifestyle. But he too never forgot his roots.

Hugo’s Leadership Characteristics

He had the following leadership characteristics:

  • Humility
  • Discipline: He was as straight as an arrow and all those around him were also
  • Compassionate: He literally spent much of his wealth helping needy children
  • He was an incredible communicator
  • Zero tolerance for unethical behavior
  • Accountability: He made sure his employees knew where they stood at the end of every month
  • He never uses the words, “my” and “me”… He frequently uses the words “us” and “ours”

You will note several characteristics that the two aforementioned leaders had in common.

Example 3

Now, it is my turn. I am leading a consulting firm with talented people. I know I cannot grow this firm alone, and I need great people to do it. But I also know nothing is done with short-term thinking. The work we do for our clients are always keeping in mind the best interest of the client and the long term relationship. If there is ever any doubt about billable hours, then the client is not getting those hours billed. I must never forget where I came from and where I was just a few years ago. In our firm, we are all very transparent. We speak our mind, but we have professional respect to each other. Communication is the key-stone in our firm. We are treated equally no matter what the title. Our success will be shared with all employees; this is not my firm, it is our firm.

My Definition of Leadership

So how do I define leadership? It is the action of leading a team of individuals that you relay on, that you trust and respect. The team you lead believes in you because you have always been ethical in business and socially. It is a team that you have open communication with and that you never feel you are above. The team you lead believes in you so much they will follow you off of a ledge. That is leadership. If you want to learn how to be a more effective financial leader, click here to access the free 7 Habits of Highly Effective CFOs whitepaper.

what it takes to be a successful leader

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Battling Uncertainty in Your Company

Battling Uncertainty in Your CompanyUncertainty is all around. Sometimes, it’s more apparent than not. We subconsciously disregard a good chunk of unknowns in our personal life, but in our businesses, anything uncertain tends to cause chaos. Where is my next customer? Am I going to be able to pay bills? Is the economic climate going to pick up? We ask all these questions (and much more). For example, many parts of Houston got destroyed by Hurricane Harvey and it’s 51 inches of rain. As a result, many businesses were underwater and would take months to repair their brick-and-mortar store front. Other business, such as real estate, had to navigate multiple properties being under several feet of water – and no longer sellable either at all or at the same price. Battling uncertainty in your company is a continual fight that you must endure if you want to success.

Battling Uncertainty in Your Company

When you are battling uncertainty in your company, figure out what you know and don’t know. Why? You may be surprised of what you do know and don’t know. It also allows you to see areas of strengths, weaknesses, opportunities, and threats. For example, let’s look at the Astros baseball team – also, the World Series Champions of 2017. They had great players, great coaches, and excelled in every practice and game. But there was no guarantee that they would beat the San Diego Dodgers. In fact, it could have very easily gone the other way as the Dodgers have great players, great coaches, and excelled in every practice and game. There’s a level of uncertainty that has influence over your future. If the Astros were not able to identify a huge external threat, then they could have been potentially blindsided.

Also, it is important to know what you can control and what you simply cannot control.  Many times, we spend hours worrying about those things we cannot control. If you can’t control it, move on and spend your time solving those things you can control. I saw how uncertainty affected many companies with the most recent downturn in the oil and gas industry. Many companies where either affected directly or indirectly when oil prices plunged from $100/BBL down to below $30/BBL. This industry change caused a lot of companies to go into panic mode and uncertainty.

That’s why it is so important to conduct a SWOT Analysis while battling uncertainty in your company.

battling uncertainty in your company

Conduct a SWOT Analysis

Once you have identified what you know and don’t know, conduct a SWOT Analysis. This is a snapshot of what is going on both internally and externally. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Strengths and weaknesses addresses your internal company health. What are your core competencies? Are you maximizing their potential? In comparison, opportunities and threats addresses the external factors that have influence over your company – government, policy, economy, movements, etc.

To get started on your SWOT Analysis, click here to download our External Analysis whitepaper – addressed the OT of SWOT.

Create Plans for Known Threats And Opportunities

This is a great time to create plans for known threats and opportunities. The Harvard Business Review says that, “Uncertain times, when some things are on hold, provide a good opportunity for fix-ups and clean-ups. Uncertainty makes it tempting to let things deteriorate (maybe we won’t keep this office going or live in this place any longer).” First, fix the things you know are broken and improve on the things that could be better. Create an action plan that will address these known threats and opportunities.

In addition, times of uncertainty usually harbor very creative doomsday scenarios. Rumors spread quickly, and this season of uncertainty can cause strife among your team. Use this creative energy to find an opportunity that will make one thing certain. Ask your team to research, talk about, think of, and find opportunities to take. Sometimes, it begins will brainstorming where (not what) the opportunity lies.  As a business leader/executive communication is a priority in times of uncertainty.  You would be surprised how many times I have seen business leaders go silent in times of crisis.  This is the worst thing you can do, and it only makes things worse in your company as a whole.

Battling Uncertainty in Your CompanyAddress Your Company Culture

Typically, whenever an entrepreneur or CEO loses sight on what is going to happen, they become frantic and are not able to think clearly. As a result, that panic travels down the organization chart and no one can make a smart decision. In times of battling uncertainty in your company, address your company culture.

Address your challenges upfront. There will always be things you cannot tell your employees but share what you can. Get a feel for moral in the organization. If you have to make some difficult decisions do so and assure those staying this was the best for the company as a whole and benefits them directly.

Then, harness their creative juices to generate ideas and to find opportunities. Engage every employee – from the lowliest employee to the top leader.

After your employees are feeling certain that something is being done to make the uncertainty certain, engage your customers. Thank them for their loyalty and share your genuine appreciation for them. The last thing that you want to happen is for you to lose a big customer and for your employees to follow suit because they are uncertain of their employment.

Where Uncertainty Comes From

Business Dictionary defines uncertainty as a “situation where the current state of knowledge is such that (1) the order or nature of things is unknown, (2) the consequences, extent, or magnitude of circumstances, conditions, or events is unpredictable, and (3) credible probabilities to possible outcomes cannot be assigned. Although too much uncertainty is undesirable, manageable uncertainty provides the freedom to make creative decisions.” In other words, uncertainty comes from what we don’t know. There is no way that we could ever know everything! But there’s anopportunity when looking at the certainty of uncertainty.

The Certainty of Uncertainty

The good thing about uncertainty is that we are certain it will always be in our midst. If you know that there will always be uncertainty, then you can separate what you know and don’t know. Think about science – whether it’s how the world was created or how gravity works, etc. Scientists have created these theories will all the information that they have found and researched. Those theories hold true until more information comes along that proves otherwise. If we compared theories 300-400 years ago to now, we would be shocked that they thought that way. In the spirit of science, financial leaders must make decisions knowing what they know at the time and adapting as they get more information.

Leading Through Uncertainty

Ram Charan, author of The Attacker’s Advantage: Turning Uncertainty Into Breakthrough Opportunities, says that, “risk takers are catalysts, operating in offense mode… They’re doers who take risks based partly on fact and partly on their imagination about what could happen when those forces combine in what others might later call a convergence… The catalyst, in fact, is the one who often creates the convergence” (Fast Company). When you are leading through uncertainty, make a decision and avoid delaying for more information that you know is not going to be there. Take ownership of those decisions and charge forward. Remember, a fish rots from the head down. If you as the financial leader fail to lead confidently, then the company underneath you will begin to crumble.

It is also important to be a servant leader! A Harvard Business Review article says that, “when lives are on the line, servant-leadership is the only leadership model that truly inspires a team, because servant-leadership demonstrates that you, as the leader, put your people’s welfare ahead of your own.”

To prevent chaos, it’s important that you know how to overcome obstacles and consequently, be prepared to react to external factors. Click here to access our free External Analysis Whitepaper and gear your business up to navigate uncertainty.

Battling Uncertainty in Your Company

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How Decision Making Impacts An Organization

In my 28 years of working for different types of organizations – public, private and consulting for companies from $4 million in revenue to $1.5 billion in revenue – I continue to be surprised how decision making impacts an organization. I’m even more surprised how the lack of decision making negatively impacts an organization. In order to accomplish anything in your company, there are two options: to make a decision and control the outcome OR to not make a decision and react to whatever happens. 

What It Takes To Make A Decision

The University of Massachusetts (UMass) Dartmouth publicized a paper that summarizes how to make a decision effectively and successfully.

#1 Identify the Decision

First, a leader must identify the decision. In other words, you need to identify when a decision needs to be made. Clearly define the nature of the decision. 

#2 Gather Information

Then, gather relevant information that will help you make a good decision. 

#3 Identify Alternatives

After you gather internal and external information, identify the alternatives as you are likely to have different paths or choices to make. List those alternatives. 

#4 Weigh the Evidence

Next, you need to weigh the evidence. This is an internal process. It can also be an emotional process. This is what takes the most time in the decision making process. 

#5 Choose an Alternative

After you have weighed the evidence, you need to choose among the alternatives. This is based on the first four items listed above. 

#6 Take Action

Then, you can take action. Only do this when you are ready to take a positive action based on the alternative you chose. 

#7 Review Decision

Finally, review your decision. Remember, this will take some time to accomplish. 

The above 7 steps really apply to business every day. From making a large acquisition of a competitor to hiring your CFO, these rules should be utilized. 

Your CEO needs a trusted advisor. They need you to help guide them through the decision making process. Learn how to get to the trusted advisor level by downloading the free How to be a Wingman whitepaper (and get an invitation to join our SCFO Lab)!
 

Many Business Leaders Are Not Good Decision Makers

Unfortunately, many business leaders are not very good about making decisions.  They either rush through the steps, many times skipping a step, and end up with a bad decision. Or they get stuck on number 4 – weighing the evidence – and never move to step 5, which is making a choice. 

What Happens When You Skip The Steps

But what happens when you skip the decision making steps? The steps mentioned above in the paper from UMass Dartmouth are critical and should not be taken lightly. They are there for a reason. My guess is that some bright minds with real life experience put these together. I mention this because in my 28 years of business experience, I can relate to each one. 

I have seen “decision makers” (oxymoron) skip one or more of these steps.  This can be in a routine day-to-day business matter, or in a strategic major multibillion-dollar decision. The outcome is always the same. The wrong decision was made. The cost of a wrong decision to an enterprise can be catastrophic. Or at the very least, the cost is an expensive one and sets back an entire department/business unit for months. 

How Decision Making Impacts An Organization

How Decision Making Impacts An Organization Case Studies

It is sometimes difficult to see our own faults in decision making until we hear or read about a similar situation. In my 28 years of experience, there have been hundreds or thousands of examples that I could pull from. See below for 2 case study examples. 

Real life Case Study #1 – Regulated Utility

I was once involved with a regulated utility that was installing an ERP system. The company completed Step #1 (Identify the Decision) and that’s about it! Someone with title and power in the organization decided to skip steps 2-7, and the result was a very bad system implementation that cost the company 50% of its revenue. Because of the lack of decision making and follow-though in the decision making process, they ultimately had to shut down a whole division. 

Real Life Case Study #2 – Chemical Company

In another example, a chemical company needed to fire a CFO and hire a new one. The original CFO had a bad track record of poor decision making. Technically, that CFO was good. But he was a bad people person and managed people with a hammer. As a result, a bad culture had developed. People hated working for the CFO and in turn, hated the company. Finally, the Board of Directors insisted that the CEO fire the CFO. 

The CFO was fired, but the company’s moral was terrible. The worst part is that since the CEO was snake bitten, he was gun shy on making a decision to hire the replacement CFO. The CFO position was left open for almost one year. As a result, the company suffered due to the lack of leadership. During that time, the company loosened its internal controls, and the budgeting process became a mess.  The lack of decision making by the CEO caused the Board of Directors to lose confidence in the CEO. There was a lack of leadership in the entire organization.

Analysis Paralysis

Step #4 (Weigh the Evidence) requires some analysis. We can all get lost in the weeds during this process. You may have heard the term Analysis Paralysis before. Analysis Paralysis is where someone is overthinking the analysis so much that a decision is never made. 

This is actually very real, and it can happen to any of us – especially people who tend to be more detailed-oriented and analytical.  First, you need to realize that in any decision we make, the perfect alternative does not usually exist. We wish there was, but in reality, there is not. 

Is there the perfect car? 

What about a perfect acquisition target? 

Is there a perfect CFO? 

The answer is probably no on these.  We need to work with what we have and make the most educated selection based on the alternatives before us. 

How Decision Making Impacts An OrganizationTrust the Professionals

As professionals in our respective area, we are confident in what we know, or as they say, know what you don’t know. 

If you hired a trusted advisor to assist you with your decision making and they are a reputable person, then trust your advisor’s opinion. 

When I was growing up, it seemed like my father who was a physician would change his tax CPA what seemed to be every year.  He just did not “feel good” about taxes and did not trust anyone. Not even the trusted advisor he hired!  My dad was very talented and dedicated as a physician, but he knew nothing about business or taxes.  So, his lack of knowledge in this area created a huge “monster effect”. There was no monster nor was there a person trying to screw him out of taxes. He simply did not know what he did not know.  We cannot emphasize enough: trust your advisors. 

How Decision Making Impacts An Organization

Decision making makes a huge impact on an organization. It can either propel it forward and into success. Or it can destroy the company’s value. The worst thing that a leader can do is to not make a decision. There is always a better decision than not making a decision. It reduces the uncertainty because you have already collected evidence, weighed the alternatives, and went through various scenarios of how each decision will potentially turn out. 

Poor or Lack of Decision Making

Remember, poor decision making, skipping necessary steps or simply a lack of decision making is a sign of lack of leadership.  Not only is there a perception problem, but most likely your business enterprise will suffer due to the lack of decision making.  As the business leadertrust your professional advisors and allow them to help you in the difficult decision making process Download our free How to be a Wingman guide and step up into the trusted advisor role. 

How Decision Making Impacts An Organization

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How Decision Making Impacts An Organization

 

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