Management Matters Blog

Business Should Be a No-Spin Zone

By Mike Myatt, Chief Strategy Officer, N2growth

--In the wake of some of the recent, and highly publicized, business, financial and political scandals that seem to dominate the media of late, I thought it might be an opportune time to assess the value of truth in business. If you peel back the layers on most of the debacles that often transform themselves into highly sensationalized headlines, you'll see that said problems often begin with rationalizations, justifications, posturing, and spin being substituted for the truth. I think sometimes we all need to revisit reality, and examine why we do the things we do. It is my hope that this week's column will be of some use in this regard.

Try this thought on for size. I believe that truly great leaders view business as a no spin zone. The most successful business leaders of our time have built their personal brand by letting right thinking, right decisioning, and right acting serve as their guide. If you have to manipulate the truth to gain an advantage, the advantage is not worth the perceived gain, for any advantage gained in deceit will surely come at a very high cost…the sacrifice of your honor and integrity. In today’s post I’ll address the often overlooked benefits of truth telling as a key success metric.

While there is not an adult breathing today that hasn’t “misspoke” err--told a lie, not everyone is pathological liar. A key difference between those that succeed and those that fail as leaders is whether they are known for their honesty or lack thereof. One of the best traits you can possess as a leader is to be known for your candor. Whether in written or oral form, communication that is clear, concise, on point, and truthful will gain the respect and admiration of peers and subordinates alike. While many wannabe leaders possess the ability to selectively self-edit on the fly as they wax eloquent for the purpose of persuading their audience, true leaders understand that all the justifications and rationalizations in the world cannot replace the value of the truth.

The truth is an interesting tool in that it is often a difficult master to serve. Telling the truth is not always easy, and may subject you to substantial opposition and controversy over the short run, but it will do nothing but help build your reputation, success, and sustainability over the long haul. While I’ve come across many executives that have been able to achieve short term success via less than honorable conduct, these successes to the one have been short lived as poor business practices will eventually be found out and in turn will unwind any ill gotten gains. However I have yet to meet a CEO or entrepreneur who has endured the test of time without having an exceptionally strong moral compass. When reflecting about how you communicate and conduct business with others consider the following thoughts:

1. Telling the truth is a habit. For those not grounded in the truth you’ll find that it requires practice. Each truth-telling event strengthens you for another, and each one gets easier, until telling the truth becomes second nature. It is never to late to start telling the truth. Regardless of whatever your past indiscretions might be, you can change your future by beginning to tell the truth today. Truth is a habit well worth forming. 

2. Telling the truth is the right thing to do. Lying is wrong. It’s just that simple, and oh by the way, omitting, editing, spinning, blurring or repurposing the truth is also wrong. Selective truth telling is synonymous with being a liar. Resist any form of deceit or manipulation if you want to achieve sustainable success.

3. The heaviest baggage you can carry is a lie. By opting not to tell the truth then you are simultaneously opting to take on the heaviness of the burden of deceit. Each time you encounter a person, circumstance, or situation that reminds you of the untruth, your conscience will weigh you down as you become a fugitive in your own mind running from the lie you told.

4. Lies will always come back to haunt you. We’ve all witnessed some fairly elaborate cover-ups over the years, and as we’ve all seen they always turn out the same way…in disasters that could have been avoided had the truth been told to begin with. You might be able to run, but you can’t hide from your lies. While you might be able to conceal your deceit for a time, your lies will always resurface at some point in the future…it may be a week, a month or a decade but they will find you out.

5. Lies create a barrier to personal and professional development. Time, energy and worry are often spent on hashing and rehashing wrong acts and untruths. Instead of wasting resources on fruitless endeavors you could be invest in transacting business, building relationships, learning, or any number of other positive things.

6. Truth strengthens your reputation and enhances your personal brand. If you consistently and effortlessly tell the truth a strange thing happens…other people will notice. You will quickly earn the respect of others by becoming known as a person of character and integrity. There is no more valuable mental association you can tie to your personal brand than that of integrity.

7. Truth deepens the quality of relationships. There is a distinct difference between the surface level acquaintances that will gravy-train your success and the deep professional relationships and true friendships that will endure the test of time regardless of circumstances. 

8. A clear conscience leads to a healthy mind. Its a nice feeling to be able to look at yourself in the mirror each morning and actually like what you see. I don’t know about you, but I have better things to do than try and remember all the different stories that I’ve told to people. The truth is a gentle, healing sponge that keeps your conscience clear, provides you with a positive outlook and a confident and formidable presence. 

9. Truth is a powerful example. As a leader you have in fact chosen to be a role model and as such it is incumbent upon you to model the truth. When friends, peers, subordinates, competitors, vendors, partners, suppliers, investors, lenders, etc. see that you actually walk the talk, you will not only have earned their confidence and respect, but you’ll find that they will also try to model that behavior.

I think the subject of truth telling can be best summarized by reflecting on the following axiom: ”The truth will set you free.” It has been said that a person is only as sick as their secrets, and I would strongly encourage you to be honest and forthright in your communications and actions as you’ll be healthier, happier and more successful. Remember that business should be a no spin zone.

 

When to Replace a CEO

 

By Mike Myatt, Chief Strategy Officer, N2growth

--It is not uncommon that I receive inquiries from board members wanting to know when it is time to consider replacing the CEO. While it is refreshing to know that at least some board members are actually paying attention to CEO performance, the decision to replace a CEO not only requires a complex analysis, but the wrong decision will have far reaching consequences. In this week’s column I'll share my thoughts on the right reasons to transition the CEO.

Before I address the question at hand, for contextual purposes, I believe it’s important to actually define the role of the board of directors. While there are certainly a variety of opinions as to the roles and obligations of a company’s board of directors, from my perspective they can all be boiled down into four simple responsibilities:

1. Shareholder Accountability: A board member’s primary responsibility is to act in good faith as a fiduciary in representing the long-term best interests of shareholders. A board’s actions and decisions must be able to pass the litmus test of public scrutiny (legally, morally, and ethically), rise above personal agendas, and always place shareholder interests above all else;

2. Corporate Governance: A board must insure that the corporation’s charter and by-laws are adhered to. Moreover a board must use its best efforts to hold executives accountable for insuring that corporate actions fall within other legal, financial, regulatory, and compliance boundaries. Ignorance and apathy are not the traits of a good board. Great board members are proactive, involved, supportive, consultative, experienced, and savvy. They know the rules, play between the lines, and do the right things. 

3. CEO Oversight: It is the board’s job to select the CEO, provide the CEO with support and guidance, and to hold the CEO accountable. Good boards exercise great care and prudence in profiling CEO candidates, recruiting the right CEO for the job, providing the CEO with a clear job description, successfully onboarding the CEO, and holding the CEO accountable for meeting a set of clearly defined expectations. Good boards do not attempt to micro-manage a CEO, rather they understand their highest value in being a value added resource for the CEO focused on helping the CEO become successful. 

4. External Visibility: A key responsibility of the board is to serve as an external champion of the corporate brand. Board members should have a clear understanding of the corporate vision and mission, and where prudent, evangelize the message for the benefit of the corporation. Whether this requires providing networking assistance, investor relations support, or engaging the media, a highly regarded and active board can add substantial value to the enterprise.

Let’s turn our attention back to the original topic…In the text that follows I’ll offer several points that will help a board evaluate whether or not they have the right CEO for the job:

* Tenure: I have taken a public and very outspoken stance against CEO term limits. I firmly believe that there is no such thing as a standard shelf-life for a CEO. No rules of thumb apply when evaluating whether a CEO has outworn his/her usefulness purely from a chronological perspective. I’ve witnessed CEO’s where the company has outgrown their skill sets, and/or abilities within a year of hire (a bad hire…), and I’ve also observed many instances of CEOs that have successfully guided companies for 20 years. The question is not how long a CEO serves, but rather what he or she does while serving. Whether age 32, or age 72, a board must ask themselves, is our CEO doing the job, and perhaps the better question is, are they the best CEO for the job?

* Performance: The topic of performance is a multi-faceted issue. A CEO’s performance should be benchmarked against a variety of key performance indicators which are clearly spelled out in the chief executive’s employment agreement. When evaluating performance, a board must evaluate whether a lack of performance exists across all areas or in a single area, whether the lack of performance is a short-term aberration vs. the likelihood of it being a burgeoning problem, and whether the CEO can be coached through the performance gap or whether the lack of performance is an irreconcilable issue.

* Ethics Violations: The character of the CEO is often synonymous with the brand of the enterprise. Once a chief executive has violated the public trust, or made a gross or negligent error in judgment which could taint the corporate brand, a board should move swiftly to restore the integrity of the corporation. Many things can be spun, justified, rationalized, or managed, but a lack of ethical behavior on the part of the chief executive is not one of them.

* Loss of Confidence: Once the board, the employees, the capital markets, the press, or other key constituencies have lost confidence in the CEO, the board must replace the CEO. A CEO cannot lead, motivate, or inspire without the trust and confidence of those they serve.

* Lack of Development: The corporate enterprise and the business world in general, are dynamic, fluid, and evolving environments. Therefore great chief executives cannot be static in their personal or professional development, or in their strategic and tactical approach to doing business. A CEO that does not exhibit the ability to change, innovate, and grow with the world around them is someone who will likely need to be replaced.

In the final analysis, the board’s decision as to whether a CEO should be replaced is a decision that should be made within the framework of managing risk and opportunity. The board must weigh the transitioning a CEO against the financial costs, the impact of the business disruption and lack of continuity that can come with replacing the CEO, the market reaction to a change in leadership, and whether the decision is ultimately motivated by right thinking.

 

Are You Creating Growth in a Down Economy?

 

By Mike Myatt, Chief Strategy Officer, N2growth

--Recession, economic slowdown, inflation, tight credit and capital markets...from my perspective it doesn't really matter what the economy is doing, as a senior executive you are still responsible for creating growth. Tough economic times are no excuse for a lack of performance, and in fact, are all the more reason to focus on catalyzing innovation, change, and growth. In this week's column I'll share my thoughts on how to successfully lead your business through an economic downtown.

Lagging economic data is not the information you should use to make strategic business decisions. Don’t wait until there is a formal acknowledgement of a recession to start planning how you’ll navigate tough times. Rather, use the many present warning signs of the slowing economy (slowing job growth, declining Dollar, constricting availability of capital and credit, slowing retail sales, lack of consumer confidence, stepped-up Fed intervention, correcting stock market, growing inflationary trends, etc.) to adjust your strategy and tactics while maneuvering is still a bit easier.

The lack of astute, decisive, and proactive thinking by your executive team in a slowing economy can make it much more difficult to survive the large challenges that likely lay ahead. I can’t even begin to tell you how often I’ve heard statements like: “I’m concerned about the stability of the market, and want to wait and see how everything shakes out over the next few months before I make any decisions”, or “I’m cutting back on marketing expenditures until I see how bad the economy is really going to get”. This type of thinking is akin to driving your car toward a brick wall and watching the brick wall get closer and closer, yet doing nothing to alter your course. My advice is simply not to hesitate…change course now while there is still time to avert disaster. 

Let me state that I realize that many CEOs and entrepreneurs have only seen growing, robust, and even frothy markets, and that for many chief executives this is the first time they’ve had to face the test of a strong economic correction. That being said, there is good news…The simple truth of the matter is that more tangible, enduring wealth and market dominant positions are created in declining markets than in advancing markets. Significant rewards exist for those smart enough to move forward and strategically leverage their business model to exploit opportunities while their competition pulls back and braces for tough times. The following business principles will help your business thrive regardless of the state of the economy: 

1. Don’t Stop Growing: Get very aggressive while your competition pulls back, starts slashing costs, and is asleep at the helm. While it is certainly necessary to reduce extraneous expenses, resist the temptation to slash expenses across the board, and especially resist the temptation to cut budgets in the areas of sales, marketing, and business development. Let it be noted that I am a strong advocate of sound financial governance and the prudent implementation of cost containment measures. However not when applied in a vacuum irrespective of the ripple effect across the enterprise. An enterprise can have all the cost containment in the world, but without revenue what does it matter? Remember that cost containment is not a business strategy. The strength of your sales funnel, and your ability to create revenue will never be as important to your business as when you face the reality of a slowing economy. Use the caution of your competitors to your advantage so that by the time the economy starts its recovery you will have created a huge gap in market share and brand equity. 

2. Improve Communications: The frequency and the quality of your communications, (both internally and externally) needs to be at an all time high. The genesis of most business mistakes can be traced to poor communication, or worse yet, no communication at all. While strong markets and bullish economies are forgiving of management errors, down economies are not. Make sure that all employees have a clear understanding of mission and vision, that all stakeholders are inside the communication loop, and that you err on the side of over communication. 

3. Leverage Technology: Use technology and business automation to provide increased leverage and a platform that embraces cost-effective scalability. Strategic investments into process improvement and business accelerators will allow you to shorten cycle times, bleed out system inefficiencies, and create needed economies of scale. If your enterprise replaces innovation with caution and extreme cost cutting, you will not only find survival more difficult, but if you’re still around when the economy starts to recover, you’ll find yourself at an operating deficit compared to more savvy competitors who did not make the same mistakes. 

4. Outsource, Outsource, Outsource: Be very strategic about head count acquisitions, only making key hires that produce immediate and significant impact. It has been proven time and again that the most chaotic and cost prohibitive implementations are conducted with organic efforts. The failure rate of internally implemented initiatives as measured against initial expectations show failure rates in excess of 75%. There is significant leverage in outsourcing implementations to competent subject matter experts (SME’s). Outsourcing frees your internal resources to focus on highest and best use activities that allow for continuity of mission critical agendas. Outsourcing to SME’s will offer the following benefits: 

• Shorter time frame to implementation.

• More cost effective implementation.

• Access to existing toolsets and solution sets that have a proven track record of success.

• Access to a more diverse base of skill sets and core competencies.

• Access to best in class human capital within the area of domain expertise required.

• Reduction of investment into infrastructure expenditures. 

Velocity to market is critical in the success of any business. In a down economy the stakes are higher, the money and resources are tighter, and the decision-making ability of your management team will be the difference between success and failure. If your management team can streamline operations, facilitate solid strategic planning, conduct flawless tactical execution of business initiatives, and recruit, motivate and retain best in class human capital, your business will gain ground while your competition is “down-sizing” or “right-sizing”.

 

Making Crisis Management Profitable

 

By Mike Myatt, Chief Strategy Officer, N2growth

--Crisis management can in fact be a profitable endeavour when handled properly. If you are in business for any length of time you will at some point in time be party--willing or unwilling--to a major crisis that can affect not only the company you work for, but your career as well. A large portion of my practice deals with advising corporations and executives during a crisis to protect the corporate brand and the personal reputations of senior executives and board members. Given that in today's business world, the likelihood of crisis is much greater than it was in times past, it never ceases to amaze me that corporations don't have a crisis management team assembled and on hand ready to deal with trouble when it rears its head. The reality is that the proper handling of a crisis, while never easy, can in fact be a very profitable endeavour. In this week's column I’ll discuss the upside of crisis management…

In previous columns I have addressed many of the basic benefits of a prudent crisis/reputation management initiative. However, this week I want to discuss the pure profit motive of a well conceived crisis management initiative. If you’ve paid any attention at all to how companies deal with bad news you’ll notice that in most cases when a company makes a public disclosure of an adverse event or unexpected news that there will be winners and losers associated with said disclosure. The are serious amounts of money to be won or lost based upon the decisions made in a moment of crisis…

Companies that either don’t react, react slowly, or react improperly to adverse events will likely see an erosion in stock price, brand equity, and in many cases, see forced resignations and unexpected firings at the C-level. Contrast this with companies that react to a crisis in a swift and proactive fashion who can often see an immediate up-tick in stock price, a favourable boost in public opinion and brand equity, and substantial promotions in the executive ranks. Given the choice, which of the aforementioned scenarios would you prefer to be a part of?

You see the bottom line is this…Wall Street analysts hate nothing more than the unknown. If the street knows of trouble, but doesn’t have visibility as to the likely outcome, your company’s stock, its corporate brand, and the personal brands of corporate executives and board members will be severely penalized. In this scenario Wall Street’s perception of your company and its leadership will begin to be shaped by the speculation and innuendo of third parties, which may differ radically from the facts of the situation.

What Wall Street, the media, politicians, and regulatory agencies love is clear, concise, and open dialogue in times of trouble. Wouldn’t you rather proactively shape the opinions of others as opposed to sticking your head in the sand and watch others determine the public’s perception of your corporate and personal brand? By being proactive in your approach to crisis management you turn breaking news, speculation and innuendo into old news by putting a face to a position. By taking a visible and open position, you will take the media’s natural desire to create a corporate villain, and offer instead a refreshing breath of fresh air…a corporation and executive team operating in the light of day by taking swift, prudent, and corrective action to the problems at hand.

When a crisis occurs you have a choice to make…you can do the things that appear right, or you can simply do the right things. Remember you can run but you cannot hide….attempting to lull public opinion, or delay the inevitable will result in increased scrutiny and eventually have substantial negative financial consequences. Get the issues out in the open, adopt a position, do the right things regardless of short-term costs, and communicate, communicate, communicate. If you subscribe to the latter as opposed to the former, you will most likely come out on the right side of whatever problems you may face.