Archive for April, 2013

Do You Think Of The Chicken When You’re Eating An Omelette?

Tuesday, April 30th, 2013

For some people, breakfast, if they even call it that, is just a cup of coffee. For others, it’s cereal or a cooked breakfast.

But, regardless of what we reach for, we do it to provide fuel for our bodies and minds. That’s the result we want.To create an omelette, chickens are the strategy

Imagine for a moment that you’re an omelette person. You start every day eating your personal favourite – maybe it’s mushroom, or western, or jalapeño.

The result is you go to work feeling good, ready for the challenges of the day.

Fine, but what on earth do omelettes and strategy consulting have in common?

Think of it this way.

While the ingredients required for the filling vary with each person’s taste, every omelette – every single one – needs eggs. And to get eggs you need chickens.

Now I don’t know about you, but when I’m rushing around in the morning, getting dressed and so on, I’m already thinking about what I have to achieve during the day.

When – if – I spare a thought for the omelette, it’s about the result it will give me, the energy to get through the day.

If someone stopped me, in that frenetic time between getting out of bed and leaving the house, and tried to tell me that the chicken and the egg were what mattered, I’d brush them off.

Chickens are the strategy and energy is the result.

I know that to get my result a chicken is required because I must have eggs to make my omelette. But, on a day-to-day basis, it’s the result I’m interested in, not the chicken, the eggs or the omelette.

Business owners want results – growth in sales and profits – the strategies that produce them are just a means to that end.

So they don’t buy strategies; they buy what strategies, successfully executed, will do for them. I have to admit that, when I started consulting, it took me a couple of years to figure that out.

That doesn’t mean to say that business owners won’t stay abreast of developments in strategy development and execution. The ones we work with most certainly do.

But that’s like me reading up on whether free-range, grain-fed chickens are better than battery hens and whether omelettes made with egg whites are healthier than those made with yolks.

Knowing about the chickens and how to make omelettes helps me make choices about how to improve the result I want – in this case getting the energy and staying healthier.

Staying abreast of the developments in strategy and execution (e.g., Roger Martin’s 5 questions, how to build flexibility into the process) helps business owners understand how to improve their results. Strategy is still required even in today’s fast-changing business world.

But, in the final analysis, all they want are the results.


If you enjoyed this post you’ll also enjoy Strategy – Don’t Think It, Experience It.

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6 Things We Can All Learn From Family-Owned Businesses

Tuesday, April 23rd, 2013

The 6 things I’m going to talk about come from a study of 149 large, publicly-traded, family-controlled businesses.

However, stay with me because we’ve seen the same characteristics in the successful family-owned businesses we’ve dealt with – and none of them are publicly traded.

Another thing – the study looked at 1997 – 2009, covering some good and some very tough times. Guess what? The family-controlled businesses, on average, turned in better long-term financial performance than non-family businesses – in multiple countries.

So what are the 6 things we can learn?

1. Family-controlled businesses are frugal in good times and bad. How? They don’t, for example, have luxurious offices. That’s because they view the company’s money as the family’s money – and so keep a tight rein on all expenses.

2. They limit their debt. The family-controlled companies in the study had, on average, debt levels equal to 37% of their capital (compared to 47% for non-family firms). Why, because if something goes wrong, family businesses don’t want to risk giving their investors too much power.

3. They have lower staff turnover. Only 9% of the workforce (versus 11% at non-family firms) turned over annually. And family firms don’t rely on financial incentives. They focus on building a culture of commitment and purpose, avoid layoffs during downturns, promote from within, and spend far more on training than non-family firms.

4. Capital expenditures are tightly controlled. One owner-CEO said “We have a simple rule, we do not spend more than we earn.” Family businesses not only look at each project’s ROI, they compare projects – to meet their self-imposed budget. It costs them some opportunities but means they’re less exposed in bad times.

5. They diversify. 46% of family businesses in the study were highly diversified, while only 20% of publicly traded ones were. The reason – diversification has become a key way to protect family wealth as recessions have become deeper and more frequent.

6. But they do fewer, smaller, acquisitions. There are exceptions, for example if there’s structural change/disruption in their industry. But generally, family companies prefer organic growth and partnerships or joint ventures to acquisitions.

The simplicity of the 6 things makes them easy for any business owner to implement.

There were 7 things mentioned in the study but the seventh, that family-controlled companies generate more of their sales abroad, applies less to the companies we work with. So I can’t talk to it from personal experience.

By the way, the study’s conclusion is that CEOs of family-controlled firms invest with a longer time horizon in mind and manage their downside more than their upside, unlike most CEOs, who try to make their mark through outperformance.

All because their obligation to family makes them concentrate on what they can do now to benefit the next generation.

You can read the full study, which was conducted by The Boston Consulting Group, here.



If you enjoyed this post you’ll also enjoy 5 Tips To Improve Margins and the Bottom Line……

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Putting The Horse Before The Cart – That’s Strategy!

Tuesday, April 16th, 2013

According to Ken Favaro¹,  we often confuse “some version of a vision, a mission, a purpose, a plan, or a set of goals for a strategy”.Develop a strategy first, then execute it

Why is that important?

While these 5 things (he calls them the ‘corporate 5’) play a part in the execution of a strategy they “do not give you” a strategy.


To quote Favaro, “If the corporate five are the cart and strategy is the horse, leaders who put the cart first often end up with no horse at all.”

Or in my words – you’ll get better results (higher profits, a better valuation) if you first develop a strategy and then execute it – not the other way around.

In the interest of full disclosure Favaro said that corporate executives are guilty of this type of confusion.

But, guess what, in our experience the owners of family businesses and privately-owned companies are just as guilty and do exactly the same thing.

Favaro says there are 5 more fundamental questions (the ‘strategic 5’) that have to be answered before worrying about visions, plans and goals:

• What business should we be in?
• How do we add value to our business?
• Who are the target customers?
• What is our value proposition for those target customers?
• What capabilities are essential for adding value and achieving differentiation?

There’s a reason this is way more than just interesting.

Roger Martin talks about² strategy being “an integrated set of 5 choices” which are made by answering 5 questions:

• What’s our winning aspiration (or the purpose of the business)?
• Where will we play (which cities/provinces/countries, for which end users)?
• How will we win (what is our value proposition or competitive advantage)?
• What capabilities must be in place?
• What management systems are required?

See any similarities?

Martin and Lafley also talk about what strategy isn’t. They say that many leaders (thus including entrepreneurs/business owners) approach strategy in ineffective ways, for example they define strategy as a vision or as a plan.

Again, see the similarities?

Yes, I am back on the topic of the many and incredible ways in which the word strategy has been, and still is, misused. And I love it when people agree with me. Particularly when their reputation (or at least their profile) is bigger than mine.

But why should anyone who makes a living in the real world care?

Because more business owners will make better profits and add more value to their companies if they get better at executing their strategy.

And the first step is to be clear about what strategy is.


¹ “How Leaders Mistake Execution for Strategy (and Why That Damages Both)”, Strategy + Business, 11 February 2013
² “Playing To Win”, A. G. Lafley and Roger L. Martin, Harvard Business Review Press, 2013, pages 3 – 15


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Entrepreneurs Lack Empathy – Really?

Tuesday, April 9th, 2013

A new study reveals entrepreneurs, business owners lack empathy and analytical problem-solving skills.4 key skills entrepreneurs lack including empathy

Is this just telling us what we already know?

Most importantly, from my selfish point of view, how does this affect the way in which they approach strategy?

Apparently, there are 2 reasons why entrepreneurs are below the norm when it comes to analytical problem-solving. They’re motivated by, for example, potential future gains, money and new products or ideas. And they have a sense of urgency when it comes to making decisions.

So they don’t “have time” to collect and analyze data and, because people who tell them their ideas won’t work use numbers to do so, they think numbers just get in the way.

That easily translates into impatience with the strategy development process. Which may be OK in those cases where the business owner’s knowledge of an industry, or a gap in a market, gives them an almost intuitive sense of what to do to win.

However it could explain why some businesses have early successes and then begin to fail. There comes a point where figuring out what the industry, the market, the competitors are doing and the correct sales/marketing and operations/delivery response gets too complex to be done “on the fly”.

And I didn’t even touch on hiring the right skills, acquiring the necessary resources and building a healthy culture, etc. – or how to finance those activities.

Two other skills entrepreneurs lack are self-management and planning and organizing. Reading the post describing the research, the difference between the two blurred a little for me.

A couple of phrases did strike a chord though.

For example, “entrepreneurs typically have many projects underway at one time…. need assistance managing everyday tasks and should… delegate them to someone who has mastered this skill.” The Action Plans, which are developed at annual business planning sessions, play a key part in the successful execution of a strategy.

Making sure they’re completed requires consistent, regular follow up with the Champion. It also requires empathy, which is required to be understanding and supportive when things go wrong and deadlines slip. This helps get the Action Plans back on track.

Will knowing the extent to which entrepreneurs and business owners lack these 4 skills make it easier for those affected to accept solutions?

Based on my 16 years of experience working with business owners and entrepreneurs I’d have to give the typical consultants’ answer – yes and no.

Some individuals – the ones who realize they have to change in order for their companies to grow – get it. And some don’t.

But that’s human nature.

You can find the full blog post with the results of the study here.


If you enjoyed this post you’ll also enjoy Where Do The People Fit?

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Business Killer: 5 Reasons the Status Quo is Not Enough

Tuesday, April 2nd, 2013

This week’s guest is Dick Albu, the founder and president of Albu Consulting, a strategy management consulting firm focused on engaging and energizing leadership teams of middle market private and family business to formulate robust business strategies and follow through on execution of key strategic initiatives.


The Status quo is defined as the current or existing state of affairs. To maintain the status quo is to keep things the way they are. Isn’t that the easier way? Wouldn’t it be nice if we all could just keep things the way they are and not change?

Unfortunately, the world does not work that way. Competitors change tactics, customers change buyers, governments change policies, strikes stop production and occasionally natural disasters cause havoc. As a result, the status quo is not enough and organizations need to learn to adapt and change. This brings us to the opposite of status quo, or the anti-status quo. Literally it means to refuse to compromise with the status quo. To experience the anti-status quo is to make a conscious decision to reject staying the same for the good of the business.

Listed below are five reasons why businesses get stuck in the status quo. One thing is certain; these five business killers will stand in your way from making the changes you need to win in today’s business environment.

1. Lack of clear direction:
If people do not know or understand the organization’s strategy, they will not know how they can help. Make clear your strategy and goals to everyone in the organization. Show your employees how they can align their work to the strategy and they will become energized and engaged.

2. A focus only on planning and not on execution:
Many organizations spend more time and energy planning strategy and very little time translating those plans to specific action. Without investing time in strategy execution, the tendency of most organizations is to relapse to the status quo. Document strategic initiatives, and assign activities to specific employees with measurable outcomes to get the results you want.

3. Distaste for risk:
Unfortunately change often happens quickly when it becomes urgent. Don’t wait until you are in a difficult situation. Change needs to
happen well before the crisis occurs.

4. Excusing mediocre performance:
Do not excuse sub-par performance. Help people by establishing a system of open communication. Top performers will rise up when given the opportunity, while underperformers will become quite visible as well.

5. Reluctance to hold people accountable:
Without accountability, the status quo will creep in and smother any attempt at change. Explain to employees what is expected of them and establish a good reward system that is linked to expected results.

Change is often times difficult to accept. It can be frightening and threatening to some because of its uncertainty and the risks it might entail. As a result, the status quo can easily become more appealing to many. Yet it is more dangerous keeping things the way they are, because in today’s business environment the status quo is not enough.

What are your experiences dealing with the status quo and the challenges of driving change in your organization? What have you done to overcome these challenges?

Dick can be reached at 203-321-2147 or For more information on Albu Consulting visit

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