Archive for the ‘Succession Planning’ Category

Recommended Reading – Summer 2015

Tuesday, May 26th, 2015

After another rough winter, summer’s almost here! We’ll soon be reveling in sunshine, hot temperatures and blue skies as we enjoy water sports, barbeques, and relaxing in a lounger or hammock with a good book. Here are some of the personal favourites we’ve selected from the various “best books in 2015” lists recently published on 800ceo read’s blog:

1.  The Rise and Fall of Strategic Planning
     Henry Mintzberg, Free Press

If you follow our blog you’ll know that Henry Mintzberg is one of my favourite strategic thinkers. In this definitive history, he argues that the term is an oxymoron – that strategy cannot be planned because planning is about analysis and strategy is about synthesis. That is why, he asserts, the process has failed so often and so dramatically. He unmasks the press that has mesmerized so many organizations since 1965: strategic planning.

Mintzberg proposes new and unusual definitions of planning and strategy, and examines in novel and insightful ways the various models of strategic planning and the evidence of why they failed. Reviewing the so-called “pitfalls” of planning, he shows how the process itself can destroy commitment, narrow a company’s vision, discourage change, and breed an atmosphere of politics.

Henry Mintzberg is one of the most brilliant and original management thinkers and a great Canadian.

2.  Family Business: Practical Leadership Succession Planning: Exceed Your Expectations
     Ronald P. Smyser, Abbott Press

Less than 15% of family businesses survive to and through the second generation of leadership.

Smyser’s book provides valuable insights which demystify and simplify the process of succession; help ensure continuing financial security for the founder and his/her family; and enhance the effectiveness and balance of professional and private life.

Some of the topics he covers are:

  • How ownership transition without a clear, practical leadership succession plan can decimate your business’s chance of survival.
  • The fifteen key causes of leadership succession failure and how to avoid them.
  • What the next generation really wants but won’t tell you and what you should do.
  • The issues around choosing one of your children to succeed you, and how to avoid them.

Whether you already have a family business or are starting one, “Family Business: Practical Leadership Succession Planning” is a must read.

3.  Fewer, Bigger, Bolder: From Mindless Expansion to Focused Growth
     Sanjay Khosla and Mohanbir Sawhney, Portfolio

When it comes to growing revenues, not all dollars are equal. In company after company that the authors worked for or researched, they saw businesses taking on more products, markets, people, acquisitions – more of everything except what really mattered: sustainable and profitable growth.

In many of these companies – large or small, from America to Europe to Asia – every quarter became a mad dash to find yet another short-term revenue boost. There had to be a better way. The answer lies in “Fewer, Bigger, Bolder”, a market-proven, step-by-step program to achieve sustained growth with rising profits and lower costs.

“Fewer, Bigger, Bolder” crosses the usual boundaries of strategy, execution, people and organization. Its framework shows how you can drive growth by targeting resources against priorities, simplifying your operations, and unleashing the potential of your people.

“Fewer, Bigger, Bolder” challenges the conventional wisdom about growth.

4.  Business Strategy: A Guide to Effective Decision-Making
     Jeremy Kourdi, The Economist

A good strategy, well implemented, determines a business’ future success or failure.

Yet history is full of strategic decisions that were ill-conceived, poorly organized and consequently disastrous. This updated guide looks at the whole process of strategic decision-making, from vision, forecasting, and resource allocation, through to implementation and innovation.

Strategy is about understanding where you are now, where you are heading and how you will get there.

But getting it right involves difficult choices: which customers to target, what products to offer, and the best way to keep costs low and service high. And constantly changing business conditions inevitably bring risks. Even after business strategy has been developed, a company must remain nimble and alert to change, and view strategy as an ongoing and evolving process.

The message of this guide is simple: strategy matters, and getting it right is fundamental to business success.

5.  Business Strategy: Managing Uncertainty, Opportunity, and Enterprise
     J.-C. Spender, Oxford University Press

Emphasizing that firms face uncertainties and unknowns, Spender argues that the core of strategic thinking and processes rests on leaders developing newly imagined solutions to the opportunities that these uncertainties open up.

Drawing on a wide range of ideas, he stresses the importance of judgment in strategy, and argues that a key element of the entrepreneur and executive’s task is to engage chosen uncertainties, develop a language to express and explain the firm’s particular business model for dealing with these, and thus create innovation and value.

At the same time he shows how the language the strategist creates to do this gives the firm identity and purpose, and communicates this to its members, stakeholders, and customers.

Spender introduces these ideas, and reviews the strategy tools currently available from consultants and academics.

The book outlines a structured practice that managers and consultants might chose to follow, not a theory.

6.  Reinventors: How Extraordinary Companies Pursue Radical Continuous Change
     Jason Jennings, Portfolio

For most businesses, success is fleeting. There are only two real choices: stick with the status quo until things inevitably decline, or continuously change to stay vital. But how?

Bestselling leadership and management guru Jason Jennings and his researchers screened 22,000 companies around the world that had been cited as great examples of reinvention.

They selected the best, verified their success, interviewed their leaders, and learned how they pursue never-ending radical change. The fresh insights they discovered became Jennings’s “reinvention rules” for any business. The featured companies include Starbucks—which turned itself around by making tons of small bets on new ideas.

7.  The Moment You Can’t Ignore: When Big Trouble Leads to a Great Future: How Culture Drives Strategic Change
     Malachi O’Connor and Barry Dornfeld, Public Affairs

Culture not only affects how we think and behave, it’s the set of agreements and behaviors that drive how we act in groups and the decisions we collectively make.

Every organization now faces challenges it can’t ignore as new forms of work, communication and technology wreak havoc on the way we do things.

Malachi O’Connor and Barry Dornfeld provide powerful insights on how to confront the clash of old and new. They show how to ask the big questions that point the way to renewing a culture.

When people don’t know who’s in charge, are unsure of what their company identity is, and can’t get behind their leaders, they rarely have the ability or will to innovate.

Old ideas get rehashed. New ideas get squashed or lost. Initiatives that are designed to create an innovation culture or spur creativity go nowhere.

8.  Execution: The Discipline of Getting Things Done
    Larry Bossidy, Ram Charan, Crown Business

Finally – an old favourite – a book that shows how to get the job done and deliver results.

The leader’s most important job is selecting and appraising people. Why? With the right people in the right jobs, there’s a leadership gene pool that conceives and selects a strategy that can be executed, a strategy in sync with the realities of the marketplace, the economy, and the competition.

Once the right people and strategy are in place, they are then linked to an operating process that results in the implementation of specific programs and actions and that assigns accountability.

This kind of effective operating process goes way beyond the typical budget exercise that looks into a rearview mirror to set its goals. It puts reality behind the numbers and is where the rubber meets the road.

Putting an execution culture in place is hard, but losing it is easy.

For a full listing of best books in 2015, please visit http://800ceoread.com/

 

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Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

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From Strategy to Results – Plus Some Succession Planning

Tuesday, January 6th, 2015

In an ’80s TV series called “The A Team”, one of the main characters used to say “I love it when a plan comes together”.Good strategy executed successfully

Here’s a wonderful example of a real life plan coming together.

In 2009 a recruiting company called LEAPJob hired us to help them with their business strategy.

It was a family business founded by Donna and Marcus Miller. One of their sons, Jeremy, worked in the firm with them. Stephen, their other son, had a very successful career with a large software company.

There were 3 major issues to consider.

First, the Millers believed the recruiting industry was undergoing fundamental change. They were concerned about the future for smaller companies.

Second, LEAPJob had an extremely high level of brand recognition in its target market and a very successful on-line lead generation engine.

Finally, Donna and Marcus were thinking about retiring.

The outcome was a 2-step strategy.

The recruiting business would be sold in approximately 3 years and Donna and Marcus would retire.

While they were positioning LEAPJob for sale, Donna and Marcus would help Jeremy launch a new business. This would leverage his skills in marketing and branding – competencies Jeremy had honed by leading the rebranding effort and building the lead generation engine.

Fast forward to January 2015.

Jeremy’s first book, published by an established Canadian label, is about to be launched. It will be available in stores and on-line via Amazon, Barnes and Noble and iBooks, amongst others, in a few days’ time.

The title of the book “Sticky Branding” is also the name of his company.

Jeremy’s commented a number of times over the years that our process played a significant role in his journey.

But the idea to pinpoint and profile small and mid-sized companies with sticky brands; the analytical skills to see the factors common to them; and the creativity to combine those factors and his own experience were all Jeremy’s.

The result – lessons which can be applied by the owners of small and mid-sized companies who want their companies to “stand out, attract customers & grow an incredible brand”

He’s had to deal with some hard knocks and tough times but now Jeremy is on the brink of success. I admire his focus and willpower.

Donna and Marcus are happily retired.

I love it when a good strategy is executed successfully.

 

If you enjoyed this post you’ll also enjoy Strategies That Get Results Are Developed By Thinkers And Doers

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Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

Recommended Reading – Winter 2014

Tuesday, November 11th, 2014

Hello, winter!  Snowflakes are dancing on the air and covering the land in a wardrobe of white.  A touch of arctic air is pinching our noses and cheeks.  Time to get comfortable and pick up a good book. Here are some of the personal favourites we’ve selected from the various “best books in 2014” lists published recently on 800ceo read’s blog:

Drawing upon a six-year research project at the Stanford University Graduate School of Business, James C. Collins and Jerry I. Porras took eighteen truly exceptional and long-lasting companies and studied each in direct comparison to one of its top competitors. They examined the companies from their very beginnings to the present day — as start-ups, as mid-size companies, and as large corporations. Throughout, the authors asked: “What makes the truly exceptional companies different from the comparison companies and what were the common practices these enduringly great companies followed throughout their history?” Filled with hundreds of specific examples and organized into a coherent framework of practical concepts that can be applied by managers and entrepreneurs at all levels, Built to Last provides a master blueprint for building organizations that will prosper long into the 21st century and beyond.

Obviously, there are lots of things that matter now. But in a world of fractured certainties and battered trust, some things matter more than others. While the challenges facing organizations are limitless; leadership bandwidth isn’t. That’s why you have to be clear about what really matters now. What are the fundamental, make-or-break issues that will determine whether your organization thrives or dives in the years ahead? Hamel identifies five issues are that are paramount: values, innovation, adaptability, passion and ideology. In doing so he presents an essential agenda for leaders everywhere who are eager to…move from defense to offense, reverse the tide of commoditization, defeat bureaucracy, astonish their customers, foster extraordinary contribution, capture the moral high ground, outrun change, build a company that’s truly fit for the future. Concise and to the point, “What Matters Now” will inspire you to rethink your business, your company and how you lead.

A guide for protecting your wealth in an age of turbulent business cycles. In “Prosperity in the Age of Decline”, Brian and Alan Beaulieu offer an informed, meticulously-researched look at the future and the coming Great Depression.

Surprisingly, most companies fail not because demand is low or conditions are difficult, but simply because they don’t know how to manage, nurture, or even maintain their own growth and success. At each developmental stage, they become vulnerable to chaos, no matter how strong or expert their leaders. Most leaders feel a sense of isolation, assuming they have to know it all and end up making critical mistakes. Dando calls these critical mistakes the 12 Warning Signs of Success, and he helps leaders across industries identify, anticipate, and avoid them on the way from startup to Fortune 500. Maybe you’ve hired the wrong person, have too many direct reports, or say yes to everything; you might believe your own hype, incentivize failure, or lose track of your core values. Dando, known in leadership circles as the Company Whisperer, encountered all the same challenges as a C-level executive in a high-growth billion-dollar business, and he knows that these moments of truth determine whether the leader and the company become a strong, mature, and sustainable organization, or drift toward an uncertain future.

If you’re aiming to innovate, failure along the way is a given. But can you fail “better”? Whether you’re rolling out a new product from a city-view office or rolling up your sleeves to deliver a social service in the field, learning why and how to embrace failure can help you do better, faster. Smart leaders, entrepreneurs, and change agents design their innovation projects with a key idea in mind: “ensure that every failure is maximally useful. In “Fail Better”, Anjali Sastry and Kara Penn show how to create the conditions, culture, and habits to systematically, ruthlessly, and quickly figure out what works, in three steps:
1. Launch every innovation project with the right groundwork
2. Build and refine ideas and products through iterative action
3. Identify and embed the learning
You may be a “Fortune” 500 manager, scrappy start-up innovator, social impact visionary, or simply leading your own small project. If you aim to break through without breaking the bank–or ruining your reputation—“Fail Better” is for you.

An insider’s look at how a successful leadership pipeline can make or break a company Starting out at GE, where he headed up the company’s leadership institute and revamped the leadership pipeline under Jack Welch, Noel Tichy has served as a trusted advisor on management succession to such leading companies as Royal Dutch Shell, Nokia, Intel, Ford, Mercedes-Benz, Merck and Caterpillar. Now Tichy draws on decades of hands-on experience working with CEOs and boards to provide a framework for building a smart, effective transition pipeline, whether for a multi-billion dollar conglomerate, a family business, a small start-up, or a non-profit. Through revealing case studies like Hewlett Packard, IBM, Yahoo, P&G, Intel, and J.C. Penney, he examines why some companies fail and others succeed in training and sustaining the next generation of senior leaders. He highlights the common mistakes that can generate embarrassing headlines and may even call an organization’s survival into question, and reveals the best practices of those who got it right. Tichy also positions leadership talent development and succession where they belong: at the top of every leader’s agenda.

The market for business knowledge is booming as companies looking to improve their performance pour millions of dollars into training programmes, consultants, and executive education. Why then, are there so many gaps between what firms know they should do and what they actual do? This volume confronts the challenge of turning knowledge about how to improve performance into actions that produce measurable results. The authors identify the causes of this gap and explain how to close it.

According to a study published in “Chief Executive Magazine,” the most valued skill in leaders today is strategic thinking. However, more than half of all companies say that strategic thinking is the skill their senior leaders most need to improve. “Elevate” provides leaders with a framework and toolkit for developing “advanced” strategic thinking capabilities. Unlike the majority of books that focus on strategy from a corporate perspective, “Elevate” gives the individual executive practical tools and techniques to help them become a truly strategic leader. The new framework that will enable leaders to finally integrate both strategy and innovation into a strategic
approach that drives their profitable growth is the Three Disciplines of “Advanced” Strategic Thinking:
1. Coalesce: Fusing together insights to create an innovative business model.
2. Compete: Creating a system of strategy to achieve competitive advantage.
3. Champion: Leading others to think and act strategically to execute strategy.
Every leader desperately wants to be strategic – their career depends on it. “Elevate” provides the roadmap to reach the strategic leadership summit.

“Escape Velocity” offers a pragmatic plan to engage the most critical challenge that established enterprises face in the twenty-first-century economy: how to move beyond past success and drive next-generation growth from new lines of business.
As he worked with senior management teams, Moore repeatedly found that executives were trapped by short-term performance-based compensation schemes. The result was critical decision-makers overweighting their legacy commitments, an embarrassingly low success rate in new-product launches, and a widespread failure to sustain any kind of next-generation business at scale.
In “Escape Velocity”, Moore presents a cogent strategy for generating future growth within an established enterprise. Organized around a hierarchy of powers: category power, company power, market power, offer power, and execution power, this insightful work shows how each level of power can be orchestrated to achieve overall success.

In this work, noted consultant Erika Andersen helps the reader approach business and life strategically, explaining why it is important, what’s involved in doing it, and how to do it. 

For a full listing of best books in 2014, please visit http://800ceoread.com/

 

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Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

Successful? Your Company Still Has To Change

Tuesday, April 1st, 2014

Two statements that we often hear are:Change your attitude to the future for successful growth

• “Why change? We’re successful and what we’ve been doing has got us to here.”

• “What got us here won’t get us to where we want to go.”

Business owners who make them have two things in common. Their companies have been profitable and throwing off cash for a number of years. And they’re successful – in their own, and everyone else’s, eyes.

But their attitude to the future is completely different.

Who is right and who is wrong?

Getting an answer means either waiting for several years to see how things turn out, or trying to make an informed guess about what will happen.

Let’s start with the fact that a company doesn’t exist in a vacuum.

Are there things that affect results that a company can’t control? Yes, and a couple of easy examples are the economy and the firm’s competitors.

What are the odds – the probability – that those things will behave differently in the future than they did in the past?

Will, for example, the recession continue to ease or get worse again; or a competitor introduce a new technology, change their pricing, promotion or distribution strategies?

Does it really seem likely that these external influences will behave in exactly the same way in the next 5 years as they did in the past?

What about things the company can influence? For example:

  1. Will the people who held key positions during the growth continue to be as effective as the company gets bigger?
  2. Will the company’s existing processes and technology be able to handle increased volume? Can either be changed without disrupting operations?
  3. Does the company have the financial resources to fund continued growth? Or will it need to take on debt or find an investor?

Here’s my point.

Growth is the result of the complex interaction of many factors. Most of them are constantly changing, some at a faster pace than ever before. The timing and extent of the change is often beyond the control of owners and managers.

Is it reasonable to assume that by holding constant the factors which can be influenced – even if that’s possible – the net outcome will be the same?

I don’t think so. I’m firmly in the “what got us here won’t get us to where we want to go” camp.

 

If you enjoyed this post you’ll also enjoy 5 Tips for Fast Growth in a Slow Economy

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Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

6 Tips For Finding The Right Buyer

Tuesday, March 11th, 2014

Last week I was one of three speakers at the Toronto Star’s Small Business Club event, “Exit and Succession Planning”.Finding the right buyer or successor for your business

My talk included 6 things a business owner can do to ensure she/he finds the right buyer or successor.

1.  Money. The seller must be satisfied that the buyer has the funds to complete the transaction.

In a sale to a third party, for example, the seller must obtain evidence – from a bank or accountant – that the buyer can meet their commitments.

But having money isn’t enough – particularly if part of the purchase price is to be paid from future profits.

2.  Knowledge of the Industry. The better a buyer’s knowledge of the industry, the more likely the transition will succeed.

In a Management Buy Out (MBO) or family succession, the current owner knows the key players’ level of knowledge.

If the owner has been planning ahead, they will, for example, have given the players opportunities to build relationships in industry associations.

3.  Business Acumen. The purchaser or successor must have proven they know how to make money.

For example, a third-party buyer may have been a successful CEO or owned other businesses. A family member may have done well for a company in another industry or country.

4.  Appetite for Risk. When you’re watching someone else run a company it’s easy to underestimate the risks they are taking.

For example, as an MBO progresses, the management team begin to understand fully the risks that come with ownership.

That’s one reason why MBO’s collapse more frequently than sales to third parties or transfers to family members.

5.  People Skills. A seller must look for evidence that a third-party purchaser has successfully led people and built strong relationships with customers and suppliers.

By planning for an MBO or transfer to a family member, the owner can give the key players opportunities to prove their capability.

6.  Business/Strategic Plan. Regardless whose it is, a business plan has to pass 4 tests.

  • Don’t attempt too much too quickly.
  • Have clear Action Plans to ensure implementation.
  • Provide adequate resources to support the Action Plans.
  • Have a clear follow up and review process.

Hopefully they’re all common sense. If so, the transition will go well – and the party can begin!

 

If you enjoyed this post you’ll also enjoy Don’t Destroy the Long Term Value of Your Company……

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Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

Keeping the Business in the Family – A Cautionary Tale

Tuesday, August 13th, 2013

The stories written by the children who bought family businesses should be mandatory reading for all business owners.http://www.profitpath.com/wp-content/uploads/2013/08/iStock_000016746886XSmall.jpg

Let’s face it, the successors have a unique perspective. They’ve seen what does happen, not what might happen.

For example, a young Australian woman – let’s call her Alex – was told by her father that he had only 12 to 18 months to live. Would she buy the family business?

She, of course, said yes. Most of us would have done.

The company printed “What’s On in Sydney” and distributed it through every hotel in the city. Over the years there had been offers for the business, but they hadn’t met her father’s valuation so he hadn’t taken them.

Alex was a successful freelance writer. She’d never run a business and, until her father announced his illness, had never shown interest in the family one.

She co-opted a brother to redesigning the magazine, they built a web site and her father introduced her to all of her advertisers. And she got to spend 2 or 3 days a week with her father as he taught her the business.

But, after a few months, Alex realized that, while she loved writing, she hated selling advertising so much that she couldn’t keep on doing it.

And she had to tell her father.

So, one day a few weeks before he died, Alex called him. She felt devastated, that she had really let him down.

Soon afterwards he was admitted to palliative care.

With her father’s business partner, Alex found a business broker and put the business up for sale just before her father died.

What’s to be learned?

1.  Her father had passed up opportunities to sell the business because he was stubborn about the valuation that he wanted. He should have compromised. In these circumstances the company probably sold for less than it would have done had the sale been well planned.

2.  Alex responded with emotion rather than logic when asked to buy the business.

3.  Would things have been different if her dad had brought Alex and her brother into the business earlier? They could have complemented each other – Alex writing, her brother doing the design work and her father selling ads.

4.  With more time to prepare, they could possibly have hired someone to replace her dad.

Alex describes the experience as being “rough at the time”. That’s probably an understatement.

Losing a parent is hard. Watching one wilt under cancer has to be worse.

Moving into and learning a business is difficult in the best of times. Deciding to sell is probably one of the hardest things that anyone does in their life.

Dealing with two major life events at once cannot be easy.

And it’s all so avoidable. It’s called succession planning.

If you want to read the story in Alex’s words go here.

 

 

If you enjoyed this post you’ll also enjoy 4 Reasons Why Every Business Should Be Sold…..Eventually

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Succession Planning and Human Nature

Tuesday, July 9th, 2013

Many of the business owners we meet consider their own sudden or unexpected death to be so unlikely as to be impossible. So, they see absolutely no need to plan for it.Succession planning is so important for business owners

A few even ridicule the idea.

Life has, however, repeatedly demonstrated it won’t be influenced by what business owners think.

As a result, an event, which was deemed to be impossible, becomes all too real. Recently it happened to the founder of a company we’d worked with.

It’s tragic when these situations occur.

The business owner’s family, like any other family, has to cope with their grief – that’s unavoidable.

But they also have to deal with a company which has not been prepared for this situation – and which may be struggling financially. And this, it can be argued, is avoidable.

The need for succession planning has been widely discussed for a number of years. There are books available; accountants and lawyers have been holding workshops for a long time; and, of course, there are consultants offering succession-planning services.

So, there was a solution – it just wasn’t taken. It’s tempting to sit on the sidelines and, hindsight being the only exact science, say that.

But to do so is to deny human nature.

Most of us find dealing with our own mortality somewhere on a sliding scale that begins at difficult and ends at impossible.

Business owners are no better than the rest of us at dealing with mortality, if anything they’re worse.  They’re used to being in control of what’s happening around them. And becoming ill or dying is way outside of anyone’s control.

Some entrepreneurs find a way to rationalize succession planning so that they can at least tackle it. Or they force themselves to look at it as just another job that has to be dealt with.

But some can’t do that and so they avoid it.

The strange thing is that those who can’t deal with it love their families just as much as those who can. They often started their business as a way to provide a good way of life for their partners and children.

Yet they expose them to a very difficult situation at a time when they’re already dealing with one of the worst events in their lives.

I don’t know what is happening to the family of the founder we worked with. She loved her work and had difficulty letting go of any aspect of the company. And so she also had a hard time believing a succession plan was necessary, despite the fact she’d already had a bout of bad health.

I can only hope she had changed her way of thinking and implemented a succession plan.

 

If you enjoyed this post you’ll also enjoy 4 Things Every Business Owner Must Think About

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