Thursday, 13 November 2014

Billy’s Thirty-Fifth Law: Vision is important not only to the enterprise…but to the entrepreneur.

...your old men shall dream dreams; your young men shall see visions. 
Joel 2:28

The second pillar of corporate philosophy is vision.  Vision is dream with action.  It is more philosophical than goal setting and yet more specific than wishful thinking.  Vision often exceeds our grasp, until we find a way to achieve the vision.  Even when we do not achieve those lofty heights, we achieve greater things than those whose time horizon is the next day, week or quarter. 

Vision in business is nothing new, but that does not make it any less important.  As a business owner...especially as a founder... ask yourself if the vision you set when you began is the same as it is now. In planning sessions, I love to ask the planning team where they see the business in one, three or five years. How big is the enterprise in revenue, profit and staff levels?  Would it be similar or completely different? 
I am a big fan of succession planning.  This is especially true when there are key people reaching retirement age.  What would your enterprise look like if that key person retires?    What if they retired earlier than you expected?  This kind of visioning leads to the development of succession plans and even contingency plans.  We don't like this type of planning.  It is a little like estate planning, we know it is important, but do not think that it is imminent.

Most entrepreneurial coaches, educators and consultants encourage this kind of visioning as part of the planning process.  We often fail in the second phase of visioning.  We think about the enterprise, but not the entrepreneur.  I did some work in the area of 'succession planning'.  The woman I was working with, and expert in this field, pointed out that for many entrepreneurs, death was the succession plan.  My own father got sick and passed away without any kind of succession plan.  This increased the angst during a difficult time for our family.  

Have you envisioned your own life?  Here are some questions every entrepreneur over the age of 55 should ask him, or herself: 

  • Will you work forever? 
  • Do you have a succession plan? 
  • Is your business salable, or can it become salable?
  • If you plan is to 'cut back' do you know who will perform the tasks you are no longer performing? 
  • Have you built your wealth in your business, or have you used the business to build wealth in other ways?
Many entrepreneurs have a vision for the enterprise.  Fewer entrepreneurs have a vision for themselves.  In the world of business and especially business planning, five years is not a long time.  I was with a client just the other day, talking to him about the future of his enterprise.  I told him, "I can picture being at Mr. X's retirement dinner honoring the contribution he made taking this business from a $1,000,000 / year business to a $5,000,000 business. I would love to think that this event, which will happen in five years, means that the business Ms. Y  now is ready to step in and continue the work in a seamless fashion."
I remind you again of Elizabeth Lake's definition of a sustainable enterprise. It is a business which may need the founder's current role, but it does not need the founder.  Visioning can help you achieve that goal of becoming a sustainable enterprise.  

For those of you who are regulars...I am on vacation and return in December. 

Wednesday, 5 November 2014

Billy’s Thirty-Forth Law: Values Matter!

The superior man understands what is right; the inferior man understands what will sell.

When we engage companies in strategic planning exercises, we address three areas of corporate philosophy.  They are mission, vision and values.  I define mission as what you do…vision as where you are going…and values the underlying principals defining your path.  This week, I want to talk about values.

All organizations are ‘values driven’.  Strong organizations, including enterprises, have clear and agreed upon values.  Different companies have different values.  Some are conservative, others innovative.  Some companies are smart and others arrogant. Understanding the underlying yet unstated values of a company is often the most difficult part of the planning process.  Companies have difficulty acting against their core values…even when they ought to.

Consider the following scenario – which illustrates different business values.

A business has just received a report from a consultant advising them that the company could raise their prices 1% without any effect on their unit sales volume.  That one- percent would drop right to their bottom line!  Three executives of the company were discussing what strategy they should employ in order to move forward. 

The first executive said, “We can’t raise our prices – that just wouldn’t be fair to our customers.  We are only where we are because of our loyal customer base.

The second executive said, “I think that we should raise the price and pass that revenue directly to our employees.  One percent of sales would represent a 10% wage increase!   Our employees made us what we are today and they deserve this.

The third executive said, “I think that we should increase the price and then declare a dividend to the shareholders.  They took the risk to invest in the company and they are the ones who should finally benefit from their faith in this company!

Each executive is displaying different values.  They are neither good, nor bad they are just different.  That is the thing about values; they must be right for you and for your business. They tell what you should do, and what you should not do.

Wal-Mart has values.  They believe that low costs = low prices.  This value drives their behavior with their suppliers and their customers. IBM values education and they recruit and develop their highly educated workforce.  This drives their recruiting policies.  Some companies foster a ‘work hard play hard’ culture.  You may or may not agree with the morality of the values, but that's the difference between values and value judgement.

Values are hard to quantify.  They define what we do and importantly what we don’t do.  Contrary to popular belief, profit is rarely the sole business value. Many companies value revenue and market share over profit.  Profit is actually a rather weak value.  Even publicly traded firms only value profit for its influence on the ultimate share price…but that is another story.
Understanding your own values is the foundation on which you build your business.  Communicating and living those values drives cohesiveness in your internal and external messages.  Missions change…visions evolve…but true values remain an important part of your enterprise story.