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Leadership

Fast vs Deliberate Growth - Brian Chesky Gets it
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I recently spoke with a co-founder of a computer software company who described a 7-year journey involving multiple rounds of funding that enabled the company to grow from $2M to $150M in revenue in the first 5 years.  Fantastic!   Unfortunately, 2 years later that trend of rapid growth was nearly reversed and his diluted shares were penniless.  

His message to entrepreneurs was that fast growth facilitated by large increases in investment capital is not necessarily a good thing. This co-founder realized that while the availability of investor funding is important, so is monitoring cash flow, implementing prudent hiring practices, establishing priorities for customer acquisition efforts, identifying new or expanded market opportunities and having a strategic plan for growth.  He also came to the realization that capital partners are not always adept at running a company. 

Below are some key takeaways and recommendations:


Build Your Team Wisely

This includes hiring people with the right experience in a timely manner.  The VP of Finance for your $2M company may not be the appropriate person for your fast growing, national company. Delays in hiring a strategic CFO because your cash flow positive and your current financial person is handling  “it” can lead to bad spending habits and put your business at risk.  A management team that does not have the larger financial picture, lacks the ability to foresee potential cash flow constraints. Early detection of cash flow discrepancies allows your teams to make the necessary adjustments to strategies and operations to keep growth on track.


Carefully Shape Your Board of Directors

A company’s Board of Directors should include members with a broad base of business experience as well as those with specific industry knowledge.   Board members need more than just capital to invest in a company.  They must possess sufficient operational experience to be able to ask prudent critical questions:

  • What if the distribution channel doesn’t happen?

  • Where are the risks operationally?

  • What is the ROI from research, marketing, or IT activities?

  • Are sales objectives reasonable?

Periodically Evaluate Your Strategies 

A mantra from investors to grow big fast, get market share, go overseas and to go deeply into certain verticals needs a step by step action plan that includes careful and regular evaluation. Close tabs during expansion on customer-market fit, customer experience, projected vs actual sales and revenue will help you determine when growth needs to slow down to be sustainable.
 

Realize Strengths and Weaknesses 

A Founder who is a strong sales and marketing professional may lack the experience to manage the day-to-day operations or to work within the confines of a budget.  Acknowledge your limitations and take steps to ensure they do not become blind spots that critically impact decision-making. Take the time to ask the critical questions of others whose expertise and knowledge you depend.
 

Avoid Inflating Your Valuation 

A company’s valuation is a snapshot in time. Many factors influence investor decisions, some rational, some irrational. Too high of a valuation can make your company susceptible to market changes that can negatively impact your valuation. While each funding round results in the dilution of ownership percentages for existing investors, a down round further increases the dilutive effect, potentially resulting in a disappointing return on investment.

Rapid growth can create stress and distort judgments, resulting in a refusal to face facts until it is too late. Too much money, too fast, can foster a lack of discipline in critical areas in your company, leading to financial crises even as the money pours in.


Pause and Be Deliberate 

A more deliberate approach to growth comes from Brian Chesky of Airbnb. Speculation about Airbnb having an initial public offering in 2018 has been high. However, Brian Chesky recently announced a decision not to go public in 2018. His rationale is that Airbnb needs to pause and be more deliberate and measured in its growth. He recognizes that organizations need to spend time carefully navigating the challenges of growth, which in the case of Airbnb include regulatory challenges pertaining to collecting and remitting local taxes, and legal challenges with short-term rentals in certain locations.

Brian Chesky stated  "The vast majority of people are saying that you should take your time and do whatever you need to do on your timeline. Because companies have struggled in the public markets, and it's a defining thing. So they've all said be responsible, take it slow."

While going public is generally viewed as a means for increasing a company’s capital for growth and expansion, there are often a lot of other factors that come into in play for a company to be successful. It sounds to me like Brian Chesky gets it.

Member in the News

Bright Power

Bright Power Listed as Fastest Growing Energy Company in New York, Joining the Inc. 5000 for the Third Year

Congratulations are in order for Jeff Perlman, CEO of Bright Power and member of the ArtScience Group CEO Forum, for making the list of the Inc. 5000’s most inspiring companies in 2018.  Bright Power was recognized by Inc. 5000 for a third time in a row as one of the fastest growing private companies, experiencing 266% growth in the last 3 years!

Bright Power provides energy management services to building owners and operators, with a focus on multifamily apartment buildings. Services include benchmarking software, energy audits, energy procurement, solar energy, green building and construction management.

“Bright Power is proud to again be in the Inc 5000. Thanks to all who help us make buildings more sustainable, comfortable, and profitable!” says Jeffrey Perlman, President and Founder of Bright Power.

 

Allexe LawLeader, Growth Company
Do You Have Rhythm?

When music has rhythm, people are able to follow and stay with the beat.  If you are familiar with a rhythm, you can predict the direction of it and sometimes add your own twist.  Without rhythm, you have random beats with no coherent connection that are difficult to follow.  Some of us may remember the “Seinfeld “episode where Elaine demonstrates her dance moves at a wedding.  Her moves alongside Shining Star from Earth Wind and Fire were jarring, unpredictable and comically described as “a full body dry heave.”

Significance of Rhythm

Your business can also benefit from establishing rhythms around planning and communication, as they allow greater clarity for employees on the direction of your company.  Having rhythm does not mean that there is no room to improvise. Instead, the opposite is true.  When people have clarity around direction, they are able to focus their creativity in ways that make a difference.

 The fourth quarter is when many companies evaluate how they have done over the past year, where they want to be in the future, and how they are going to get there.  There is a great deal of research that links the strong relationship between strategic planning and profit performance, yet some companies fail to prioritize annual strategic growth planning.

You may have heard the expression “those who fail to plan are planning to fail”.  Executives who are successful at developing annual roadmaps for growth and improving their profit margins make strategic planning part of their ongoing operational process versus “a project”.

Strategic Growth Planning = Strategizing + Planning

The approach to strategic growth planning differs for each business based on the type and size of a company (e.g. technology vs. product brand), but the goal is to create a common focus and framework for decision making. 

Strategizing

The strategic process focuses on your “revenue decision makers”, your customers and your operations.  It requires pushing people out of their comfort zone to think beyond what they know to find winning approaches.  

Strategy involves:

1.    Testing of Assumptions  - What are the commonly held assumptions about customers, about your industry, about competition, the capabilities of your company, of your industry?   Ask and Answer “Why or Why not?”

2.    Scenario planning – As the past is not a reliable guide to the future, asking tough questions can improve our readiness for the future. What are your top external uncertainties? Do they challenge assumptions, expose new risks, present early warning signs?

a.    What could happen?

b.    What would be the impact on our strategies, plans, and budgets?

c.    How should we respond?

Depending on one’s situation (e.g. expanding geographically, acquiring companies, investing in new technologies…), there may be more than one scenario and a wider range of futures.  Scenario planning allows you to stress test your strategic plan and see new opportunities.

3.    Conducting systematic research on your target client group to understand your target client’s perspective and priorities, anticipate their needs and learn how they view your firm’s strengths and your current brand.  What opportunities and threats does the research unveil?

4.    Reviewing information on the strengths and weaknesses of the organization and deciding what to do and what not to do.

Strategy is not perfect. It evolves with changes in the market and with your client’s priorities and involves risk-taking to seize opportunities for growth.

Planning

Planning involves taking the information and desired future direction from your strategy process and translating it into goals and objectives.  The outcome is a plan that shares:

1.    a description of your vision and mission

2.    your competitive advantage

3.    a list of strategic initiatives that are cross-functional and likely multi-year (e.g. geographic expansion, program or product launches) that focus on future development and growth

4.    SMART annual corporate goals that are clear and reachable, with each being:

•    Specific (simple, sensible, significant).

•    Measurable (meaningful, motivating).

•    Achievable (agreed, attainable).

•    Relevant (reasonable, realistic and resourced, results-based).

•    Time-bound (time-based, time-limited, time/cost limited, timely, time-sensitive).

5.     SMART Department and Team Goals with clarity around who is responsible for guiding change

6.     Budgets that align with the initiatives and goals and identify new and existing resources required

Asking for Help

As companies scale, the need to establish an agile and effective process for regularly evaluating your business and business environment becomes a necessity for keeping a competitive edge.  It also establishes priorities for which employees and other stakeholders can focus their energy and resources.

If your company could benefit from someone who has run strategic planning process and can bring an outside perspective or ask the hard questions that lead to new ways of thinking, you may want to consider bringing in a strategic facilitator.  Similar to hiring a specialist like an attorney, technology specialist or an auditor, a facilitator experienced in strategic planning brings a specialized expertise that can help you and your team work through strategy and establish a strategic growth planning rhythm that works for you.

What have you found to be helpful in developing a rhythm around strategy and planning? Please share your thoughts with us at info@ArtScienceGroup.com.

ArtScience Group is an executive coaching and facilitation company offering services both locally and globally.  For additional information about our services, please visit our website at www.ArtScienceGroup.com or email us at info@ArtScienceGroup.com.

 

United Housing Management Highlighted in the BBJ
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Kevin Bynoe, CEO of United Housing Management and ArtScience Group CEO Forum member, shares United Housing Management’s growth and expansion story with the Boston Business Journal.  United Housing Management’s commitment to both growth and servicing the community is what makes Kevin and his team stand out from the rest.

Bynoe describes one of the main (assets) of United Housing Management as their commitment to the community, for which the company has been lauded. Every year since 2003, UHM has been recognized by MassHousing for using the services of minority and women-owned businesses from the Roxbury and Dorchester area, exceeding the goals set by the state with expenditures of $4 million in 2010 alone.  Read the full story here

Allexe LawCEO, executive exchange
Power of Listening and Inquiry
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How you communicate makes all the difference when it comes to successful outcomes, whether it is sales, product development, customer retention, finance or operations. Are you interested in a meaningful exchange? What type of questions are you asking? Are you asking questions to collect information, draw a conclusion or are you looking to expand your understanding?

In addition to sharing information, a big part of our communication is listening. How much listening are you doing? In our regular communication, we spend approximately 60% of it listening, yet only retain 25% of what is heard.  Most people are not listening with the intent to understand, but instead with the intent to reply.  Our listening can be improved by becoming more engaged; by releasing the need for certainty in our conversation and being open to new perspectives.  Genuine inquiry means being present, listening and being curious. 

A CEO of a company working with large commercial real estate properties improving energy efficiency once told me that he had an affinity to sales people with music backgrounds. When asked what he meant, he said that when they enter a building, they are not just listening to what the client has to say but they are also in tune to the sounds of the building.  They have an ability to identify system and maintenance problems through listening and inquiring, often to the amazement of the prospective client.

Listening and Connecting

Great listeners are able to connect on a number of levels. They are able to make connections between what is occurring in a conversation; what is being communicated through non-verbal cues; and what they can learn from their surroundings.  They are able to make correlations between previous conversations as well as disparate threads of conversation and they are skilled at posing open-ended questions that engage others in a discussion.

An executive of a company providing a Software As a Service (SaaS) product expressed concerns about the lack of interest from potential customers following product demos. Curious to know where the problem lied, he began asking his sales team to walk him through the demo discussion.  He discovered that when a sales member learned that a potential client used a software that was not on the list of programs in which their product integrated, the sales member proceeded to end the meeting. What the sales team member was not asking was “What features of that software are critical for you? Does your entire work force use it or is it used by a certain group/department?  How else do you use the software?  What type of support do you receive on that product?  What has changed since you last purchased that software?   The sales person entered the demo with one outcome in mind and lost an opportunity to learn more about the company, their perspectives, assumptions and challenges.

Too often, people engage potential clients or colleagues with a script about their product, service or idea.  They have an internal dialogue on how they will rebut or defend their position as opposed to being present and truly listening to what the person is saying. As a result, they miss opportunities to collaboratively identify new possibilities.

Why do some people ask good questions and others don’t?

Some of the reasons include

-       lack of interest about the product or service they are providing or their work

-       poor listening skills with a tendency to do more talking than listening

-       lack of training on how to listen and to have a meaningful exchange

-       fear of asking questions that might be perceived as unknowledgeable and therefore, not seeking a deeper understanding

-       feeling rushed or pressured to close a deal

-       making assumptions about what is behind a decision or action

-       asking the wrong type of questions (e.g. either/or, or leading questions)

-       too focused on promoting and defending versus learning

-       overreacting to words or statements

Questions and listening are key to discovery. Good questions lead to aha moments that spark brilliant solutions.  They require an ability to listen, adjust and pivot in order to find the information that nobody else picked up on.

How do you ignite curiosity?  Build questioning skills?

 Developing great listening and questioning skills takes time, intention and practice. A few actions you can take to develop these skills with your teams are:

  • Role Play

  • Practice listening skills

  • Explore the difference between discovery questions vs provoking questions which lead to deeper discussion and understanding.

  • Share experiences both successes and failures

The better the guidance and training, the more eager your team members will be willing to engage.

What actions, training or strategies have you employed to create better listeners and questioners?  Please share your stories with us at info@ArtScienceGroup.com .

ArtScience Group is an executive coaching and facilitation company offering services both locally and globally.  For additional information about our services, please visit our website at www.ArtScienceGroup.com or email us at info@ArtScienceGroup.com .

No Values?
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When someone is described as having “No Values”, it typically has a negative connotation. It usually indicates that the person has no moral compass or scruples - that you don’t know what to expect from them.

The same holds true for a business or organization.  Without clear values that define a company’s operating principles, it becomes difficult to recruit top talent, to lead existing employees, or to explain the special sauce that differentiates your business from others.

Why Values?

As more people are on boarded and a company grows in size, employees want to know what to expect from the executive team, managers, and their colleagues.  Are people dedicated to providing a great product/service or are short cuts and go arounds the norm?  Are the processes in place respected or randomly ignored?  Do people own up to mistakes and learn from errors, or do they seek excuses and scapegoats?

As a customer doing business with a company, you want to understand what to expect from those delivering a product or service.  How does working with your company make a difference?  Is this difference consistent across the board no matter whom you are dealing with in the company?

Values are the foundation of a company.  They are the core of what makes the company tick.  They form its personality.  To be authentic, values should come from within.  Picking company values from another company’s website, may get you a list of values but they may not resonate and be actualized by employees.

Developing Values

To create a list of values, look within your organization.  Think of the people who have made the company to date and the characteristics and traits they possess that have made a difference.  Begin the discussion with your executive team who sets the tone for the rest of your organization. What do they respect about each other?  What values are important to them?  Often values are ingrained early on from our experiences and from the people closest to us.  Sharing what values are important to us and how they are demonstrated leads to an authentic list of values from which to build.  It also allows for stories to evolve that bring life to values.   

Once you have a core list of values, share them with others in your company. Provide actual accounts of how they are demonstrated in your organization on a regular basis.  Seek feedback on the values and input on where others have seen them in operation. Then, narrow and refine your list to a reasonable number, preferably 5, and bring them to life with a brief narrative that clarifies their importance in the way you operate.  But, don’t stop there, identify ways to recognize these values in day-to-day internal interactions and in the interactions with customers, suppliers and partners. 

By dedicating time to discuss and recognize values, you send a strong message that values are taken seriously.  Regularly recognizing the values creates a mutual understanding and alignment in the way people work, allowing more time to be spent focusing on the growth objectives of the company.

What strategies have you used to make your values come to life?  We would welcome your thoughts at info.ArtScienceGroup.com.

What is Authentic Leadership?
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I was recently asked what the term authentic leadership meant and I realized that there is no short answer to this question. It means being true to your self, but which self? As human beings we are multi-faceted. We may act and respond in our personal lives differently than in our work lives. Can we be more tempered at work when something is not going right than at home, absolutely!

Depending on different situations we can be confident or unsure; social or anti-social; assertive and demanding or modest and collaborative. What about the monitoring of our words and behavior? Is it authentic if we carefully monitor what we do and say to others? These contradictory facets of our selves make it difficult to determine how to be our authentic selves, yet these aspects are not mutually exclusive. We ebb and flow through each and at times there is a synergy that feels like our authentic selves. When we put on a leadership persona that disconnects with our true self, we deprive ourselves of the opportunity to develop honest relationships with others and to become an authentic leader.

So how do we reconcile the different ways we act and respond to become an authentic leader? Here are 6 steps you can take to develop authentic leadership:

Be Human

Someone once said that the longest journey you will ever take is the 18 inches from your head to your heart. First and foremost we are all human beings and speaking to colleagues and employees as human beings is the first step in building a leader’s legitimacy. It takes empathy to create a caring culture. Authentic leaders who are in tune with their emotions and share their feelings when expressing their thoughts create an environment that promotes openness which is critical to successful outcomes. Show your vulnerability.

Unlock Your Perception of Yourself

Having a rigid sense of self can stagnate your growth and prevent you from trying new approaches. There is an internal conflict leaders experience when navigating their role as an executive. Experimenting with new approaches can make them feel like they are imposters. If new approaches and change are resisted because they do not align with one’s image of self, you become the antithesis of an authentic leader. Feeling uncomfortable when trying something new is normal. It is not being a fake. Authentic leaders ask for help, knowing that they can’t be all things to everyone. They promote openness and develop trust through honest relationships.

Clear Values

Leaders who have a clear understanding of their values and who are consistent at communicating and upholding those values are respected because they act in accordance with those values. They are seen as working in the best interest of their customers, employees, and company.   As soon as you compromise on your values, even a little bit, the meaning is lost and a leaders authenticity is lost. Holding strong to your values helps team performance as well as strengthens the confidence others have in you as a leader.

Sense of Purpose

Leaders who are focused and passionate about their work and what they are trying to achieve attract followers. In having a clear vision with a strong understanding of their leadership purpose, they can align people around a common cause. When there is purpose, people feel motivated, respected, and connected and more likely to trust each other. When there is trust, people are more inclined to collaborate and experiment—to open themselves up to others and to novel approaches. Authentic leaders are also sensitive to the impact of their words and actions on others, and carefully select their words to engage others to create positive results.

Connect with People

Authentic leaders build relationships with others. They are willing to share their experiences and listen to others’ experiences, occasionally interweaving relevant stories of their personal life. They care about their interactions with others and improving their relationships. They are open to sharing changes occurring at work, their thought process behind them, and to listening respectfully to the ideas of others. In turn, colleagues return the respect and are more committed to decisions and actions.

Engage in Reflection

Taking time to reflect on what is important to you and seeking out real-time, candid feedback from colleagues, friends, and others on how you are coming across demonstrates self-awareness and a desire for growth and development. Leaders who openly listen to critique from others and seek to understand their flaws are seen as caring about their work, their colleagues, and the environment they are creating. They are viewed as being genuine.

 

Life is fluid, and as a leader, you are balancing many responsibilities. You are speaking to multiple audiences (e.g. colleagues, employees, board members, and investors) and adjusting your communication to motivate positive change. Self-regulating one’s words and actions to achieve better outcomes is expected of leaders. It does not mean you are disingenuous or a fake. Our feelings and actions may change in any given situation depending on circumstances, but honesty along with thoughtfulness and a touch of humility goes a long way in helping you become an authentic leader.