Category Archives: Leadership

Clumsy at First

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Last week, I published the following excerpt –

Those permanent adaptations will seem clumsy at first, just not the same, but permanent nonetheless. And the clumsiness will become practiced, and those among us who practice will become competent at a new way. And the new way will improve on par with the old way. And, we will wonder what took us so long to get over our resistance.

Now, a list of questions, from which I would like to get your response.

  • In your business, what have you learned over the past month, that you did not know before?
  • In your business, what changes have you made out of necessity?
  • In the changes that you have made, what might become permanent?
  • How are you practicing those new things, to become competent in those new things?
  • In your business, what is likely never to return?

Post your comments, I am curious. -Tom

This is Not Nuclear Winter

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As a business owner, three things to monitor.

  • Cash
  • Revenue vs Expense
  • Balance Sheet

Cash
Cash is king. And, only cash is cash. Accounts receivable isn’t cash, inventory is not cash, only cash is cash. You are going to need it. Preserve cash, tap your lines of credit, apply for government backed loans and grants.

Revenue vs Expense
Your monthly cash flow statement might need to be a weekly cash flow statement. Most accounting systems have embedded cash flow statements, but they don’t look forward very well. Try this simple one.

  • Cash Balance
  • Anticipated cash during the period (month, week) from revenue sources and accounts receivable.
  • Anticipated expenses during the period (month, week) including payroll, rent and any other necessary expense.
  • What’s left? If it’s positive, that’s good. If it’s negative, that is your burn rate.

Your burn rate will eat your cash, so how much do you have in cash reserves to cover? Without modification in payroll, paying your rent, paying your vendors, how long can you last?

Balance Sheet
Most businesses can get their expenses underneath their revenue. It’s painful, but has to be done. It’s not the profit/loss that kills most companies, it’s the balance sheet. It is mortgages, institutional debt (term loans) and covenants that go with. Make sure you know your banker, high quality communication early will help. Your bank will usually put you out of business before your landlord or your vendors.

Make sure you have your survival plan in place.

Trouble in River City

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In the midst of Covid 19, we had an earthquake (5.7) yesterday here in Salt Lake City. As we look forward, evidence of economic contraction is appearing, for some, aggressively attacking. This is not a time for panic, but a time for rethinking.

Lee Thayer, (Leadership 2004), speaks about necessity and its importance in the workplace. The entrepreneur, who starts a business, only puts in place that which is necessary. Only necessary equipment is purchased. Only necessary people are hired.

As time advances, and the business becomes more complex, necessity becomes more complex. And management decisions are made to bring on more infrastructure to support that complexity. Sometimes those decisions are accurate; sometimes those decisions miss the mark.

During this rethink time, look around. Re-think your work-flow. Re-think your personnel structure. Carefully examine what your customer wants, to make sure what you deliver is necessary.

Some of you are already hurting, do not give up hope, rethink. Some of you are thriving, don’t think you have dodged a bullet.

Unconscious Skip

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The problems you have with other people will largely depend on how you think about other people. If you think about people as obstacles, you will have obstacle problems. Solving an obstacle problem gives you a way-different result than solving a people problem.

It is an unconscious skip from people-as-people to people-as-obstacles. You end up there so quickly, you are unaware of the skip.

Becoming genuinely interested in other people requires conscious thought, effort. It is a subtle shift that does not happen by itself.

A Subtle Shift

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Who you are is largely shaped about the way you think. If you need to make a small shift in who you are, you have to make a small shift in the way you think.

In a leadership role, your effectiveness will largely be determined by the way you think about people. If you think about people as obstacles –

  • The guy who cut you off in traffic
  • The person with three kids whose shopping cart is blocking the aisle
  • The co-worker in the next cubicle who you have to go around to get to the coffee machine

Your behavior will follow.

It’s a subtle shift to think about people as people (and much more difficult than people as obstacles). Your team members are not direct reports, you are not a manager so people can report to you. Your effectiveness will only be as large as the people you personally invest in.

Who Did You Walk By Today?

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Most managers are unaware of the fishbowl in which they live. Years ago, I received some sage advice from one of my scoutmasters as a young patrol leader. “When you look at your own behavior in front of the other scouts, remember, you can’t go take a pee without everyone knowing about it.”

Every move a manager makes is amplified and remembered. If a manager arrives at work and walks past the receptionist without saying, “Good morning,” well, then, the business MUST be going down the tubes.

Jules Pfeiffer, a famous cartoonist, used to have a series, based on his play, Little Murders in which he depicted the little murders we each commit every day. Little Murders we commit, often without intention or even awareness. We may not be aware, but it is still a Little Murder.

Who did you walk by today, without stopping, without a cheery remark, without a smile? How many Little Murders did you commit today? Remember, amplification works in the other direction, too. A few moments, a kind word, a warm handshake, a listening nod may make all the difference in a team member’s day.

Pompous Poser, Wandering Journey

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Much ado is made connecting success to the leader. But the effectiveness of a leader is dependent on the effectiveness of the surrounding team. Without the competent execution of the team, the leader is simply a pompous poser.

The most important contribution of the leader to the organization is to build that competent team.

Much ado is made connecting success to teamwork. But the effectiveness of the team is dependent on the effectiveness of the leader. Without the competent execution of the leader, the team will churn energy in a wandering journey.

Purpose. Picture. A sequence of steps. Observation of progress. Execution. A brilliant dance.

Instinctual Action, Rhythmic Reflection

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Peter Schutz was clear about context and leadership. There was a time to floor-plan the responsibilities in the pit at Le Mans, and a time for the crew to execute in the moment. Effectiveness is determined by the deployment of appropriate leadership skills based on context. It is context that determines which must happen.

Leadership is not a simple checklist, or even a complex checklist where boxes are ticked off on completion. It is context that drives what has to happen.

And do not mistake this context for stimulus response, requiring high levels of improvisation. Context can be understood in discrete levels of time(span). There are, indeed, circumstances that require immediate, instinctual action, balanced against long-term trends that require rhythmic contemplation and reflection. Effective leaders must have a sense for both.

Flawless Execution

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This continues a dinner conversation I had with Peter Schutz several years ago.

“How is it possible, as a manager, to operate like a dictator,” he asked. “The crew in the pit, in the midst of a race at Le Mans, could operate like a dictatorship, heated in the moment, because they had spent months planning democratically.”

“Execute like a dictatorship, plan like a democracy,” he continued. “The problem in business, is that most managers get this exactly backward.”

“To execute flawlessly (like a dictator) requires a planning process to support it. And this planning process must be created under a very different form of government, a democracy.” Peter acknowledged democracy is slow, requires participation, accommodation, discussion with divergent points of view, but it is absolutely necessary.

If you get this reversed and plan like a dictator, you will experience execution like a democracy, with much discussion (grumbling), divergent points of view and resistance.

No Pleasant Conversation

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“Hey, you! They didn’t care who I was.” Peter explained. I was talking with Peter Schutz, former CEO of Porsche (1980-1988) about car racing. Peter’s stories always had a point.

Standing in the pit, as the car came in for fuel and tires, there was no pleasant conversation. All energy was focused on the flawless execution of the fundamentals. They had mere seconds to get the race-car out of the pit and back on to the track.

“Can you imagine,” Peter explained, “what would have happened, if the guy working on the left rear tire had pulled the wheel, set it on the ground and then started a conversation. -You know guys, I have been thinking about a few things that I would like to bring up to the group.-”

Peter continued to explain that winning the race depended on the dynamics of a rather stern dictatorship. “How is that possible on a management team?” Peter asked. The answer was simple.