Category Archives: Strategy

The Plan

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Business PlanIts that time of the year. For some, it is wrapped up. For others, it is still in the works. The Plan. It is the thing that consumes enormous amounts of time in many organizations, with no real return for the effort put in. In others, there is absolutely no thought at all. In too few, it is a thoughtful, efficient process that gives the organization the right level of focus on achieving key objectives in the coming year.

Over the years, my thinking on the most effective approach to planning has shifted away from the annual plan in favor of a five-quarter rolling forecast. By keeping an eye on the markets and continuing to evolve based on new information, the organization is utilizing the best forward looking information (and history) to achieve objectives. That doesn’t mean flopping around in the wind. It means executing against long range objectives based on current market conditions. How does your organization approach planning? Are you as effective as you can be?

What are you missing by not looking around?

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what are you missing?What a stunning day! The rain finally disappeared after what seemed like an eternity. The sky was bright blue and the rain left behind a stunning green landscape. How could I not take my dog out for a long walk on a day like today? We wandered through the WSU Vancouver campus. The brick buildings framed a snow capped Mt. St. Helens in the distance. Mt. Hood framed by tall trees and rolling grass was stunning from the other end. It was surprising to see how many people were missing the stunning sight by focusing on their phones. For me, it was the highlight of the day. I loved the sights and my wandering mind came up with a number of ideas for my business.

This type of situation happens frequently in business. People become so focused on the task of the moment and miss the larger picture around, or don’t have space to think and innovate. How are you creating an environment in your business where people have the time to see the larger picture and innovate?

You Said What?

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you said what?We were in a meeting discussing a critical issue. It was clearly a turning point. Or was it? After a lengthy discussion, the meeting wrapped up. It was clear to me that we were headed a new direction. Curious what my counterpart thought, I asked his perspective. His perspective was no change, things would continue on the same path. So, how could we walk away with such different take aways from the same meeting? The challenge is people filter based on their experiences and expectations, assumptions and hopes. Without a clear wrap up to a conversation, it is easy to walk away with different perspectives on what is next. As a result, actions may not align with what was expected, creating confusion down the line. How do you wrap up meetings to create clarity for the path forward?

Are Your Efforts Getting Noticed?

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make a differenceAfter a recent meeting, I was coming around the bend to visit a social/athletic club in town when I saw a large group of volunteers from the club picking up trash to keep the neighborhood clean. The group wears red vests and does volunteer work regularly in the community – its all part of being a good neighbor. I asked one of the folks who was volunteering if they thought people in the community know about this effort. He shrugged his shoulders said “not sure” and walked off.

It’s amazing how many people put effort into making the experience of others better with the efforts many times going unnoticed. Sometimes it is because it is the wrong effort and value isn’t being recognized. Other times people just don’t know it is going on. Are your efforts getting the results you expected?

 

How do your experiences shape you?

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experience shapes youToday was a fascinating day of conversations with people about significant events in their life that shaped their perspectives. The experiences caused them to develop a deep appreciation for the people and circumstances that are their reality today. In one case, a woman shared her early years living in Vietnam at the time of the conflict. She witnessed multiple helicopter evacuations, including her own. Years later, she returned and found people had so little food they looked skeletal. Out of her experience, she gained a deep appreciation for the freedoms we have and access to the basics. Another woman shared a significant health challenge that lasted years, leaving her significantly incapacitated during much of it. While she has fully recovered, her husband went over and above in helping her through a very traumatic time. Their relationship today is deep and profound.

Companies are no different than people. The experiences in their past shape how they operate today. Experiences over time form the culture and how situations are addressed. I’m always amazed at how innovative people are and the persistence that has gone into getting the business to where it is today. How have experiences shaped your company?

Never Assume Anything

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don't assumeOver the weekend, we got together for a very special event – the funeral of a family member. Everyone was under the impression there would be a chaplain, a nice but brief service, and then a get together to celebrate the life of the family member. To our great surprise, there was no chaplain, no words spoken – only a moment of silence, and then interment. The whole thing was less than five minutes. Looking around, everyone was surprised but didn’t know what to say. The discussion later indicated that everyone made the same assumptions about the service, except the person organizing it. Assumptions happen all the time. Are you making assumptions explicit so you don’t have important misses?

Perspectives – Seeing through the eyes of others

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it is all about perspectiveA conversation recently took an interesting turn when it came to a space that had just been remodeled. And by remodeled, it was really only a change in the flooring. The interesting thing about this change was the amount of discussion it generated. For some, the focus was on the floor – by going to a lighter color, the room seemed larger. For others there was discussion about the clash of colors with the existing furniture and the new flooring. Depending upon the perspective, people either really liked the change or really didn’t. It was all a matter of perspective.

Situations like this take place in business every day, only the stakes are much higher. Depending upon the perspective of the people, differences in perspective if not discussed can create conflict in an organization. Creating an environment where people can openly discuss their perspectives can lead to creative and innovative growth in the organization. Is your company culture supportive of discussions about perspectives?

You caught my attention. Now what?

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you got my attentionAs I was walking my dog through the nearby university campus, a young man crossed our path. He wore a large hat – almost a foot tall, had a beard, and was wearing a coat and tie. He had a striking resemblance to Abraham Lincoln. My mind immediately went wandering. Was he giving a talk on leadership? Did he intend to dress like Abe Lincoln or was it just a coincidence? And just then he jumped up on a short wall and then right back off. My dog let out one loud bark as if to say: “You got my attention”. And just as fast, he was gone leaving me to wonder.

How often do you grab the attention of others in your business? Are potential customers intrigued by you, but left to wonder now what? How can you translate those moments into business?

The Double Whammy

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double whammy resultsAbout once a week, if not more, I find myself in conversations that revolve around some combination of earnings and multiples of earnings to get to a valuation. The most recent conversation revolved around a dramatic increase in valuation. How did the valuation increase so quickly? Early on, the company was underperforming relative to peers. When companies underperform, they are typically valued with a lower multiple. This is what I call the double whammy because the low earnings and the low multiple results in a low valuation. In the example under discussion, the company dramatically increased its EBITDA and was able to demonstrate that it was sustainable. So, the multiple went up as well. Here’s an example of what I mean:

Let’s say EBITDA is $10 million, low by industry standards, and the EBITDA multiple is 4x reflective of low performers in the industry. For simplicity sake, no other adjustments come into play, so the valuation is $40 million.

The company undergoes a transformation and is able to get EBITDA up to $40 million and can demonstrate it is sustainable, now a top performer with more upside. The EBIDA multiple may be more like 8x, which yields a valuation of $320 million. That’s a big difference!

While EBITDA multiples aren’t the only way to value a business, it is a very common approach. You can see the double whammy in play in the example above and the dramatic difference it has on a business. How are you avoiding the double whammy in your business?

What is the real problem?

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what is the real problemIt is a common challenge in the business world and in life. Providing a solution without knowing the real problem. That was the topic of conversation yesterday with a colleague. We were discussing some recent challenges and the striking and consistent thing about the conversation was – in each point of discussion, the problem being “solved” was not the real problem.

Let me be more specific by using an example that I often run across. The solution – we need a new ERP system because we don’t understand our financials. Many times the issue isn’t that the system is a problem, the issue is that no one ever spent the time to design reporting that helps people understand what is going on in the company and provides information (not data) for decision making.

When I run across this type of situation, I typically ask a number of questions designed to get at the real problem. In the case above, it may be that the only real solution needed is a reporting tool (generally, a much less expensive and many times a faster and more flexible solution). The key is to understand what the real problem is. How are you getting to the real problems in your world?