Capital and the Right BOD

Most businesses are founded without any kind of formal board of directors or board of managers. Once formed, early boards are typically made up of founders and early “angel” investors. Early-stage investors want their investment to grow, and yet many are inexperienced or unwilling to engage in securing follow-on capital. As the business proceeds and needs additional capital, the burden then falls back to the founders, who are also working tirelessly in the business. Raising capital is a full-time job, and leading an early-stage company is more than a full-time job, so by default it is not possible to do both effectively. And yet, this scenario is the norm and non-experienced founder / leaders struggle to create real success, some to the point where they are forced to stop trying.

Critical to success is securing board members that will invest personally as well as help the founders secure the needed go-forward capital. The obligation of a board member is to manage shareholder value, including their own. Shareholder value is increased when the company itself increases in value, and that happens with growth, many times fueled by additional capital. Sitting on a board of a company needing capital and forcing those leading the company to secure such capital on their own is irresponsible to the company’s shareholders, and yet this scenario is played out daily.

I have worked with hundreds of early-stage businesses that need to raise capital, and I counsel every one of them to build a board of directors that have applicable experience and a willingness to engage as needed. I also counsel them to continually update those on their boards to fit the needs at hand. If you need to raise professional / institutional capital, you need that kind of talent on your board, either prior to or as a direct result of the raise. That talent can then help with future raises, which will add new talent to the board and the process goes on. To grow from start-up to early-stage to later-stage requires different skills and experiences over that time on both your management team and your board. Failing to make the needed changes in either area as you progress inhibits your ability to succeed.

Remote Work & Life Balance

There has been a lot of conversation since the pandemic on the merits of working from home versus working remotely or working in a hybrid situation. From a leadership standpoint, it’s become even more difficult to navigate the hiring process while, at the same time, building a high performing team that ultimately drives optimal business performance. Having built multiple such teams I remain a strong advocate for in-person work environments and see the following as important aspects to consider:

  • The social component of team building is as important as the skill component
  • Remote work is not suitable for all jobs or personalities types
  • Many people need away from home time for life balance
  • Work environments that encourage interpersonal investment creates maximum reward for
    both the team and the business

The difference between highly successful businesses, and those that are not, always comes down to leadership. Creating environments where people see their work and teammates as an enjoyable part of their life, and invest in that team with the same intensity with which they engage outside the workplace, will ultimately be rewarded with the best life balance.

Virtual Selling

Over the past two years, traditional face to face sales organizations were first forced, and then lulled into the use of technology as the accepted medium for selling. No planes, no cars, no hotels, more presentations per day, and home for dinner. Why would someone ever go back to travel?

The key to successful selling is to match up a defined need with an applicable solution – from commodity to complexity. And in each case, purchases take place when the need, and related value of the solution equate. As the complexity and price rise, the ability to create matching value increases in difficulty, and that is where virtual selling comes up short.

Say you a selling a SaaS product that will require an investment of $50,000 per year for your prospective customer, and will involve multiple departments across the customers organization with each department involved in the purchase process. And due to the depth of your products capabilities, it will take on average 45 minutes to one hour to effectively demonstrate. You set up a virtual meeting, get everyone on screen, do introductions and begin your demo.

Because you have been doing this for the past couple of years, you have learned how to multi-task to a point where even during your demo, your eyes continually glance over to your email on a second monitor. And if you watch closely, you will see the eyes of each one of your prospects doing exactly the same. So now all of you are paying partial attention to a demonstration that is intended to help you determine critical needs as well as lock in solid interest from your prospect. During the demo there are random comments and questions and, in the end, you feel like it went really well, only to find out, over the coming weeks, that you are not progressing at the pace you envisioned.

Imagine any meeting where the attendees and the presenter are both multitasking and not giving 100% attention to each other – what would your expectations be regarding the outcome? If you have the opportunity to be selling in person and you are not doing so you are shorting yourself, your future customers, and your employer. It is easy to jump on “the new way of working” train and convince yourself that it’s better – but in the end, sales decisions get made by real people based upon clear knowledge transfer and related value propositions. Those that take the time to show up and engage will generally win over those that do not.

Managing Your Personal Brand

A personal brand is a mind impression someone gets when they see or hear you or your name. That impression is set by all of the input received by that person regarding you. Throughout your life, you build your personal brand by all things you do and say as well as things other say about you. In cases where people have truly grown to know you, your brand is well defined by consistent actions over time. In cases where relationships are more distant or casual, your brand is defined by perception and small points of reality. And in cases where your brand is established in people who have never actually had direct interactions with you, you brand is set by others impressions rather than by any reality. So, it is clearly possible to have multiple brands by which others see you – some strong and rooted in facts, and some weak and rooted in conjecture and perception. But in all cases, each person believes the brand impression they have is real.

The scary thing about personal brands is that they are difficult if not impossible to manage. If you were able to see a list of what everyone that hears or see your name thinks is your brand, you would probably be mortified and start a campaign to “fix” the misconceptions. In todays’ digital world the number of misconceptions that can be generated far exceeds those generated by those that truly know you, and as such it is possible for the majority to carry an improper brand impression of you on a day-to-day basis. Just think about how many times over the past two years you have developed a brand impression of people in the news – people you have never meet and yet because of what was reported, you yourself stamped a brand on them. This is not good or bad and certainly not something you can fix. It is however something you can consciously manage by taking the time to really know people and check facts before jumping to conclusions and by challenging others to support perceptions with reality. 

Looking Forward to Monday’s

As workers are seeking more and more “flexibility” from employers, while at the same time demanding greater compensation and in many cases lower overall productivity requirements, one has to wonder – how does that work? Lower productivity and higher cost? Equal productivity and higher cost? In the end, that additional cost is passed directly back to the worker in the costs of goods and services they consume and no gain is made. I would argue that businesses and workers are looking at the equation from the wrong perspective.

It is critical to understand that if one see’s themselves as a “worker,” they will automatically think about wages and flexibility. Working to live being at the core of their wants and needs. If, on the other hand, that same person was to see themselves as part of exciting team of creative people, generating value in the form of products or services in which they believe. And if they saw this activity as fun, challenging, and something to look forward to every day (like a sport), then what would their priorities be? Wage and flexibility? Or inclusion, challenge, growth and winning? Loving to work being a balanced component of their wants and needs; ultimately enjoying all 24 hours of their day.

And if employers think about new hires as “workers,” they will focus on cost and productivity rather than creating engaging life experiences. Creating the right environment, building the right culture, and focusing on the team rather than cost creates maximum engagement and generates the best outcomes for all parties.

I get that it was my generation (baby boomers) who coined the “live to work” mentality, many times creating a work/life imbalance in pursuit of status or material things. But that said, I have been part of creating high-performance teams that were truly an assembly of people that played together to win, never considering it “work” or themselves a “worker.” And based upon their passion and desire to win, these same people invested significant hours and created incredible value (productivity). They were free to come and go as flexibly as they liked, but in reality, they worked through breaks and lunch hours, came to work early and stayed late. They didn’t do it for the money, they did it for the win. They also did it while maintaining a quality work / life balance, partially because we included their families in many activities, but mostly because the job itself made them a happier person. I saw to it that the compensation attracted the right talent and provided the right reward for the win, but comp was never the ultimate goal.

Decades ago, I was interviewed regarding such teams and was quoted as saying I always looked forward to Monday morning and “getting” to go to work and I wanted others to feel the same. I have always seen business as a team sport. One that is played to win and played for enjoyment. If employers focused on creating that type of culture and environment so their team members felt the same way, the rhetoric would change. Personal satisfaction and productivity would increase without increasing overall cost. And in the end, more satisfied employees would gain a higher quality of life. Feels like this is a better solution.

Vaccine Mandate Contingency Planning

If you are a company of more than 100 employees and have a workforce that is, in any significant part, unlikely to get vaccinated, you need to start contingency planning now. Most likely to be impacted are skilled and unskilled jobs in the rural manufacturing space, where vaccination rates are the lowest. But no matter where you are, actions to consider immediately include:

  • First and foremost is communication. Every one of your employees knows about the mandate and they are certainly wondering and discussing what they think you are going to do about it. The longer you wait to communicate the more spin gets added to the dialog. You can be sure that there are already employees looking for jobs at smaller employers that will not have to comply.
  • Determine the most employee friendly process for weekly testing. Is it possible to hire a nurse practitioner to administer tests at your business? This way, employees who will not, or cannot get vaccinated do not have to drive to another facility, mitigating frustration and non-compliance.
  • Determine to what extent you are at risk with your workforce. Who and how many people are unlikely to get vaccinated that are not exempt? This goes for your senior management team all the way down the chain. Don’t assume your leadership will automatically comply, and if some leadership will not, you will need to plan around the resulting impact on the team(s) they lead.
  • Are you going to use positive incentives to get more folks vaccinated? I have seen leadership announce bonuses to incent their general workforce to get vaccinated, but how about senior leaders? Larger bonuses? And no matter the amount offered, will you pay the bonus to everyone who got vaccinated since the start of the pandemic? Figure out the dollar numbers that will work and get it budgeted and announced.
  • Pay attention to the mandate guidelines daily, watching for any change in compliance guidance to ensure that you do not get surprised.

These are indeed crazy times, but like all times, flexibility and accommodation are required to generate the best outcomes, and if you lead through this period proactively you will be one of the businesses least impacted.

Sudden Change – Temporary or Permanent

Businesses in every industry are facing this question. Have the impacts of the pandemic changed how we will do business permanently? Will we move back to the way it was – more or less?  The answer is different for each business and industry and related strategic planning has been (or should have been) in high gear since March of 2020.

The impact of the pandemic is not unlike the impacts felt by particular industries or countries in the past, it is simply much larger and happening on a global scale. In 2001 I was President of Crystal Group Inc., a business that designed and manufactured rugged computer architecture for primarily the communications / telecom industry. Ending the year 2000 at over $40 million in revenue with 78% growth, it was apparent that 2001 had a different feel. It was pretty clear that rising interest rates were starting to impact the kind of financing required by telecoms to continue that trajectory. And by March of 2001 telecom buildouts slowed dramatically, catching many by surprise. An already softening stock market started a historic drop, exacerbated later in the year by the 9/11 attack. Our business ended 2001, a year in which we predicted at least 20% additional growth, more than 50% down from 2000. We reacted faster and better than many in our industry to accommodate the immediate reduction in demand, but we did something else. We looked at alternative markets where we had developed some traction to understand the opportunities to diversify or even pivot in direction. This led to our expanded efforts with the Department of Defense (DOD), a market that had similar hardened architectural needs, had been investing in our products for multiple years, and was far less impacted by the downturn.

Compounding the situation was that during the 2001 / 2002 market crash, the technological architecture used by telecom that required our products to deliver evolved from hardware to software. With that transition, when telecom began building out after the crash, the need for our products disappeared as we were replaced by larger commodity architecture providers like IBM. The impact felt in 2021 turned out to be permanent in our primary market. If we had not diversified our efforts as quickly as we did, our business would likely have failed. Instead, with refocused marketing efforts and additional technology development, the business grew past our record year 2000 mark and with ongoing investment and diversification continued to scale in the years to come. In 2001, a stellar management team, while cutting their teams by nearly 50%, earned virtual MBA’s as the company was saved and put on a trajectory for growth. What started out looking like short-term impact turned permanent, and that was a point in time, like this point in time, where initial adjusting to remain vital coupled with the right strategic planning and execution made the business excel in the coming years. Many that simply waited for the old to come back faltered.

Every business is a living entity that must be constantly nurtured and properly guided. Every employee that makes a business successful relies heavily on leadership to make strategic decisions that allow for them to continue to learn and grow. This pandemic has offered up significant obstacles as opportunities, and every business leader owes it to their team to make sure their business is taking the strategic action necessary to allow for such growth.

Remote Working & Productivity

“Wow – who would have thought we could all work from home, think of the money we can save by getting rid of our building lease, let’s make that happen ASAP.” This is an observation I heard many times in 2020. Who would have thought it would be this easy to work virtually? Well, it’s really not that easy to do effectively and there are a few things you need to consider when making plans to go permanently virtual.

Generating optimal performance from diverse teams of individuals is, at its core, absolutely dependent on creating the right work environment and company culture for the business. Environments in which team members can excel, and a culture that causes each person to want to excel, generate optimal results for both the employee and the business. Businesses have been trying to make the virtual workforce work for over a decade, and while technology continues to improve options, technology comes up short when it comes to delivering some of the critical elements needed for top performance.

As businesses learned when the office furniture industry launched the open office / collaboration space spin on office environments, what works for some team members does not work for all. Highly focused, non-distractible workers can work productively in a jammed airport, while others need quiet environments without distractions. Open work environments ultimately reduced the quality of output for many workers, while not changing the collaboration engagement in others, and in some cases reducing the amount of meaningful interaction overall. The thought that physical things would change core human / individual behavior was flawed.

Excellence in performance comes at the hands of people who are located in optimal performance environments (surrounded by an optimal work culture). For some, quiet cubicles or offices where there is little to no interpersonal interaction day to day is optimal. For others, the lack of human interaction is depressing, causing lowered happiness and resulting performance. Some can engage in a team web meeting with optimal results, some cannot stay focused and multi-task during such meetings, and some simply cannot engage in as meaningful a way via digital mediums.

For every team of 100, there will be members who perform optimally in very different working situations. Businesses that adapt to those optimal environments are rewarded with optimal results. To generate optimal results out of a single work environment would require that each team member added was properly screened against that environment. And in this process, the ability to get the most talented people will be negatively impacted.

In 2020, many people were forced to adapt to a remote work environment in which they are not happy and not productive. Many employees accepted it as temporary and are “dealing with it” only. If made permanent, these same people may locate a more optimal employer environment either by choice or by request due to lower performance. Before any business makes a decision to “go totally virtual,” it should take stock in the long-term impact such a decision will create. As digital communication continues to reduce peoples’ need and resulting ability to interact personally, it seems logical that over time we may end up in a fully virtual world. Those who strategically guide such a transition over time based upon the optimal environments and culture for human performance at all times will outperform those that do not.

Defensive & Offensive Pandemic Recovery

As businesses reacted to the pandemic, most (and rightly so) reacted defensively at first; making sure to adjust operations and manage cash as required to get through to the new normal. The very next thing that needed to happen is that every business should have gone into the offensive strategic planning mode to identify required actions and new opportunities; both near and long-term with the understanding that the world as they knew it on March 1, was going to be forever changed. While some businesses will wait out the quarantine and reopen or ramp up with little apparent impact, the impact to their customers, employees and suppliers will be evident over time. Other businesses will be forever changed by immediate impact that ranges from closure to exponential growth. Opportunity is born from chaos and change, and 2020, for all of its idiosyncrasies, is going to be in the top 10 of historical global opportunity creators.

Actions to be taken:

Required near term (for the product or service currently provided) – take out instead of dine in, web sales instead of in-store, web meeting instead of in person, remote workforce instead of in office, i.e. how to keep the business operating as it has been, and doing so in a fiscally responsible manner.

Required long term (for the product or service currently provided) – remote workforce tools and processes, reduction in office or retail space, refinement of online presence, database of key contacts, updated insurance policies, new cleaning / sanitary guidelines, etc.

Strategic short term – new products or services in immediate need within your core competency – like distillery’s immediately producing hand sanitizer or others that started manufacturing PPE.

Strategic long term – will some of the strategic short-term decisions fit in the long term? What changes to current products and services will be required to be relevant long term? What new products or services could be added around new needs? What should be deleted as needs will diminish? What should be changed when it comes to sales and distribution channels? What can be done to increase market share while competitors remain in a defensive mode?

The lists above can certainly be expanded, but the critical takeaway is that success goes to those who seize opportunity. 2020 is likely to dwarf any previous year when it comes to opportunity and related innovation and the challenge for everyone in business is how to make sure they are taking maximum advantage.

Effective Leadership Teams

Critical driving a successful business is the leadership team itself. Throwing a quality game plan in front of a group of players that don’t understand their role in the game is reasonably sure to end in failure. Quality execution comes from having the right talent in the right place at the right time. The sports world understands this concept as do those that excel in the business world. Those that do not grasp the idea fail to reach their potential or simply fail altogether. Quality business talent comes from a combination of the necessary disciplines, capabilities, experience, and proper balance. Whether you need hundreds of people or only a few, building the right talent will make the journey to success smoother and faster.

Disciplines: There are six key disciplines needed to perform optimally. They include marketing, development, sales, operations, information technology, and finance. Marketingis the process of planning and executing the creation, pricing, promotion, and distribution of ideas, goods, and services that mutually satisfy customer and organizational objectives. In other words, marketing provides the overall vision and direction of the business as well as the market awareness of your products or services. Development provides the actual design and creation of the product or service offering based on input from marketing. It transitions the design to the operation and support teams and provides ongoing input to marketing regarding new products or enhancement opportunities.

Sales provides prospect identification and management, executes the sales transaction, transmits the customer requirements to the business, forecasts sales revenue, and provides ongoing input to marketing for product enhancement and development. Operations is responsible for the delivery of the product or service to the customer on time, on margin and with the level of quality promised. And in many organizations, operations also supplies post sale customer support as well. Information Technology (IT) is responsible for providing data and communications services that allow a business to operate effectively and efficiently both internally and for your customers. Finance provides guidance in the areas of financial planning (capital, budgets, etc.), operations (COGS, PPV, etc.), banking, investor relationships, and risk management. It manages overall business accounting, and in many organizations, HR and employee benefits as well.

Capability and Experience is a summary of applicable experience, expertise, and the ability to engage effectively with other team members. Creating the title for a particular discipline without the proper capability or needed experience will cause your business more harm than not having the position to begin with. In my experience, people who are very talented in particular professional areas tend to believe that they can be equally successful in other areas with limited training. Hiring experienced and capable talent that can’t play well with others is also equally non-productive. Each one of the six disciplines outlined requires significant dedication to master, and if you want a successful business, make sure you fill those roles with capabilities and experience you can confirm through past performance.

Balance: If you balance your disciplines, experience and capabilities, and the amount of each, you will build teams that perform smoothly, and cause your business to excel. Do not let budgets hold you back. Raise more money, get advisers or board members with the required talent, but get what you need because balanced input maximizes output.

Building a leadership team with the proper disciplines and the necessary capabilities in proper balance creates the opportunity to maximize your overall success. Think of your talent like a wheel on your car, the further it gets out of balance, the rougher the ride!