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Traction: Get a Grip on Your Business

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Traction: Get a Grip on Your Business

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VISION Successful business owners not only have compelling visions for their organizations, but also know how to communicate those visions to the people around them.

The best leaders rely on a handful of metrics to help manage their businesses. The Data Component frees you from the quagmire of managing personalities, egos, subjective issues, emotions, and intangibles by teaching you which metrics to focus on.

A Scorecard is a weekly report containing five to 15 high-level numbers for the organization.

Issues are the obstacles that must be faced to execute your vision. Just as an individual’s success is directly proportionate to his or her ability to solve any issues that arise, the same holds true for a company.

You will not get your company to the next level by keeping your processes in your head and winging it as you go. Ask yourself: Have you documented the way you want everything done in your organization? Do your people know what processes they are following and why? Are they all executing the required procedures uniformly? Are they skipping steps? By deciding what the process is and training everyone to follow it, you will enhance your troubleshooting abilities, reduce your errors, improve efficiency, and increase your bottom line.

In summary, successful businesses operate with a crystal clear vision that is shared by everyone. They have the right people in the right seats. They have a pulse on their operations by watching and managing a handful of numbers on a weekly basis. They identify and solve issues promptly in an open and honest environment. They document their processes and ensure that they are followed by everyone. They establish priorities for each employee and ensure that a high level of trust, communication, and accountability exists on each team.

If you’re not happy with the current state of your company, you have three choices. You can live with it, leave it, or change it. If the first two are not an option, it’s time to admit that you don’t want to live this way any longer.

To be truly ready for this change, you must be willing to embrace the following four fundamental beliefs:       1. You must build and maintain a true leadership team.       2. Hitting the ceiling is inevitable.       3. You can only run your business on one operating system.       4. You must be open-minded, growth-oriented, and vulnerable.

You must also all remain open and honest about all issues and be willing to fight for what is best for the company as a whole.

You cannot build an enduring, successful organization that lives beyond you if your organization is designed to crumble the minute you step aside.

Each of your departmental heads should be better than you in his or her respective position.

If your organization needs an internal transformation first, be honest with yourself and spend the next one or two years growing internally and honing your business model so it can support external revenue growth.

Above all else, your leaders need to be able to simplify, delegate, predict, systemize, and structure.

“Simplify, simplify.” Henry David Thoreau       “One ‘simplify’ would have sufficed.” Ralph Waldo Emerson

“No further progress and growth is possible for an organization until a new state of simplicity is created.”

When you experience that personal growth, the company will grow under you. This is exactly what is meant by letting go of the vine.

Long-term predicting is the forecast of everything 90 days and beyond. To do so, your leadership team has to know where the organization is going and how you expect to get there. You do this by starting with the far future and working your way back. What is your 10-year target? What is your three-year picture? Your one-year plan? What do you have to accomplish in the next 90 days in order to be on track?

In summary, once you understand that hitting the ceiling is inevitable, you and your leadership team must employ these five leadership abilities to reach the next level: (1) simplify the organization, (2) delegate and elevate, (3) predict both long-term and short-term, (4) systemize, and (5) structure your company the right way.

“If you cannot risk, you cannot grow. If you cannot grow, you cannot become your best. If you cannot become your best, you cannot be happy. If you cannot be happy, what else matters?”

You cannot embark on this journey if you’re not willing to be vulnerable. You have to let your guard down to see your organization for what it is. Eliminate the facade with your leadership team, and invite openness and honesty. The leader who feels he has to have all of the answers and can never be wrong is completely missing the point. Being open-minded means being open to new ideas and being ready to change for the better. When your arms are folded, the wall is up and there is no getting in. The mind is like a parachute—it has to be open to work.

  1. You must build and maintain a true leadership team.       2. Hitting the ceiling is inevitable.       3. You can only run your business on one operating system.       4. You must be open-minded, growth-oriented, and vulnerable.

Clarify your vision and you will make better decisions about people, processes, finances, strategies, and customers.

“If you could get all the people in an organization rowing in the same direction, you could dominate any industry, in any market, against any competition, at any time.”

What is vision? It’s clearly defining who and what your organization is, where it’s going and how it’s going to get there.

By answering the following eight questions and filling out the V/TO, we will clarify exactly what your vision is. Let’s get started. The eight questions are as follows:       1. What are your core values?       2. What is your core focus?       3. What is your 10-year target?       4. What is your marketing strategy?       5. What is your three-year picture?       6. What is your one-year plan?       7. What are your quarterly Rocks?       8. What are your issues?

Once they’re defined, you must hire, fire, review, reward, and recognize people based on these core values. This is how to build a thriving culture around them.

Most people are sitting on their own diamond mines. The surest ways to lose your diamond mine are to get bored, become overambitious, or start thinking that the grass is greener on the other side. Find your core focus, stick to it, and devote your time and resources to excelling at it.

While a new idea may look like a no-brainer on paper, it’s simply not worth doing if it’s not a part of your core focus.

When your core focus is clear, you’re going to come to several important realizations. You’ll realize that certain practices, people, and, sometimes, entire divisions and/or product lines don’t fit into your core focus. As a direct result of this discovery, past EOS clients have gotten rid of entire departments and excelled as a result.

Decide what business you are in, and be in that business. As the old saying goes, “He who chases two rabbits catches neither.”

I’ve yet to see a single business that is easy to run. They all take work. Success in one kind of industry doesn’t necessarily dictate success in another. You can only succeed in the kind of business that is right for you and your team. As Jim Collins puts it in his bestseller Good to Great, “You have to figure out what you’re genetically encoded to do.” That’s a vital point. The combination of your talents and passions combined with your leadership creates something unique that no other company has, and that something is your core focus. You must uncover what it is.

The task of clarifying your core focus assumes that you already have a financial model that works. If that’s the case, it’s just a matter of focusing on and executing your vision so that the profit will follow.

How do you know if you’re heading in the right direction if you don’t know which direction you’re meant to be going? As Yogi Berra said, “You’ve got to be careful if you don’t know where you are going, ’cause you might not get there.”

Identifying your target market involves defining your ideal customers. Who are they? Where are they? What are they? You need to know their demographic, geographic, and psychographic characteristics. By identifying your target market, you create a filter. Out of that comes The List of perfect prospects for your organization and sales team to target.

Eventually, we realized that it was the presidents and CEOs of real estate organizations with 200 or more agents (demographic) in North America (geographic) that saw the value and need for outside sales training (psychographic).

The geographic characteristics of your ideal customers. Where are they?      • The demographic characteristics of your ideal customers. What are they? (If you’re marketing business-to-business, consider characteristics such as job title, industry, size, and type of business. If business-to-consumer, then age, sex, income or profession.)      • The psychographic characteristics of your ideal customers. How do they think? What do they need? What do they appreciate?

The most common mistake that most organizations make involves competing in too many sectors, markets, services, or product lines, and trying to be all things to all people. It’s a game you will not win.

If you believe in your Three Uniques, and you believe they matter to your ideal customer, you should never apologize for them.

“Never tell someone something you can show them.”

In most companies, when salespeople are meeting with a prospective new customer, they normally try to win new business by using countless words and visuals in the form of pages and charts. When it’s all said and done, they end up looking just like everyone else.

Rather than giving them a sales presentation and inundating them with information, you’re saying, “Let me show you exactly how we are able to accomplish great results for our customers. We have a proven process that we follow called The (your company name) Difference.”

A guarantee is your opportunity to pinpoint an industry-wide problem and solve it. This is typically a service or quality problem. You must determine what your customers can count on from you. If you guarantee it, that will put their minds at ease and enable you to close more business.

You will not go out of business without a guarantee, but you will attain your vision faster with one. You’re actually closing less business now because you’re not entirely putting your prospective customers’ minds at ease. If you can do that, you will gain more customers.

Your guarantee has a secondary benefit. It forces all the people in your organization to deliver on it. That in turn forces you to look inward and make sure you’ve got all the right people, processes, and systems in place to do so. If not, you’ll be forced to improve upon it. Your client will never need to make good on that guarantee if you’re at your absolute best.

As Napoleon Hill said, “Whatever the mind of man can conceive and believe, it can surely achieve.”

“Attainable” means that it’s doable. Setting unrealistic goals is the biggest trap entrepreneurs fall into. The team has to believe it’s possible to hit the goal, or else you can’t hold someone accountable to it. If every goal is a “stretch goal,” how do you know what success is? Goals are set to be achieved.

The sooner you accept that you have issues, the better off you’re going to be. You will always have them; your success is in direct proportion to your ability to solve them. Your leadership team should state them openly and honestly so that you can get them out of your heads and into writing. In doing so, you’re taking the first step to solving them.

People need to hear the vision seven times before they really hear it for the first time.

The right people are the ones who share your company’s core values. They fit and thrive in your culture. They are people you enjoy being around and who make your organization a better place to be.

One of the obstacles in gaining traction and achieving your vision is that roles, responsibilities, expectations, and job descriptions are unclear due to structural issues. A hazy structure may have gotten you to where you are, but it will not take you any further. A common mistake entails creating a structure to accommodate people you like or don’t want to lose. When creating a structure to function efficiently, you must take the long view. Sometimes this means eliminating or changing seats that are no longer relevant.

Your job is to hire, fire, review, reward, and recognize all of your people around core values and Unique Abilities®. That’s the way to build an organization with all of the right people in the right seats.

First, put the names of the people you’re going to analyze in the left column. Then list your core values across the top. Then rate each person according to his or her adherence to the core values. Give one of three ratings:             +    He or she exhibits that core value most of the time.             +/− Sometimes he or she exhibits the core value and sometimes he or she doesn’t.             −    He or she doesn’t exhibit the core value most of the time.

The “bar” is the minimum standard you will accept from the People Analyzer results. The power of setting the bar is that you give all managers absolute clarity on what is acceptable and what is not. Once managers know your expectations, they will hold their people accountable accordingly. The recommended bar for a company with five core values is three pluses, two plus/minuses, and never a minus. This is strictly my recommendation based on past experience. I have clients with higher and lower bars, so you must decide for yourself. The key point is that anyone who is at or above the bar is the right person, and your goal is to get 100 percent of the right people in your organization.

What is the right structure to move your organization forward in the next six to 12 months?

For this exercise to have impact on your company, you’ll need to instill a few ground rules:       1. You must look forward. You cannot look back or get caught up in the present. It will distort your judgment.       2. You must detach yourself from the existing business, your current role, and your ego.       3. You must elevate yourself above the business, look down on it, and make decisions for the long-term greater good of the company.

In the middle box is the second: operations. In the box to the right, you have the third: finance and administration. You may call them by different names, but those are the three major functions. Sales and marketing generate business. Operations provides the service or manufactures the product, and takes care of the customer. Finance and administration manage the monies flowing in and out as well as the infrastructure.

The integrator is the glue that holds the company together.

Clear accountability will take you to the next level.

To reach the next level, you need the people that report to you to be able to take the ball and run with it.

The point is this: If you’re truly going to commit to building a great company, a strong leadership team, and getting the right people in the right seats, you must prepare for change on your leadership team.

Envision all of your direct reports’ responsibilities, problems, and issues as monkeys. When your direct report walks into your office with a problem, he or she is trying to leave his or her monkey with you. At the end of the day, after multiple people have walked into your office with their problems and left them with you, you end up with 20 monkeys jumping around your office. If someone walks in with a monkey, he or she needs to walk out with it. If he or she can’t or won’t, you’ve hired the wrong person.

At a growth rate of 20 percent, you will make a change to the Accountability Chart about every 90 days.

You must do a little pruning from time to time for the organization to flourish. Merely hoping that poorly fitting people will make it, sending them to a seminar, or giving them a pep talk is like overwatering the plant. It isn’t going to solve the problem. Once you do the necessary pruning, your organization will be revitalized.

If the People Analyzer shows you that someone is the wrong person for your organization, make the decision. And yes, there will be some pain, but only for about 36 hours.

Keep two important points in mind:       1. Be careful what you wish for because you’ll get it. If you want to grow, you have to understand that not everyone is going to be able to keep up and remain in the same seat forever.       2. Keeping people around just because you like them is destructive. You’re doing a disservice to the company, to everyone in it, and to the person. People must add value. I realize this may sound cold, but to the degree people are in the right seats, everyone is happier, especially them.

When a client completes its Accountability Chart, we ask three questions to confirm that it is at 100 percent. Please ask these three questions with your leadership team:       1. Is this the right structure to get us to the next level?       2. Are all of the right people in the right seats?       3. Does everyone have enough time to do the job well?

According to an old business maxim, anything that is measured and watched is improved.

A profit and loss statement is a trailing indicator. Its data comes after the fact, and you can’t change the past. With a Scorecard, however, you can change the future.

Numbers cut through murky subjective communication between manager and direct reports.

Numbers aren’t just for the person. They become a communication tool between manager and direct report, creating the basis of comparison, unemotional dialogue, and, ultimately, results.

Wrong people in the wrong seats usually resist measurables. Right people in the right seats love clarity.

In addition, the use of hard data cuts through all of the subjective and emotional opinions that create murkiness and lengthen the amount of time it takes to make the right decision.

With the vision clear, people in place, and data being managed through a Scorecard, you’re creating a transparent organization where there is nowhere to hide.

Your company is open and honest. Any obstacles that stand in the way of achieving your vision will be apparent. Your job is to now remove these barriers and solve the issues holding you back.

Successful companies solve their issues. They don’t let them linger for weeks, months, and years at a time. Problems are like mushrooms: When it’s dark and rainy, they multiply. Under bright light, they diminish.

As Napoleon Bonaparte said, “Nothing is more difficult and therefore more precious than to be able to decide.”

Your ability to succeed is in direct proportion to your ability to solve your problems. The better you are at solving problems, the more successful you become.

Most leadership teams spend their time discussing the heck out of everything but rarely solving anything. What is draining your energy is not having a lot of work to do; rather, it’s having unresolved issues.

“It is less important what you decide than it is that you decide.” More is lost by indecision than by wrong decisions.

Each unresolved issue is an incomplete project weighing down your organization and holding you back.

It’s normal to have issues. The sooner you can admit that you have them and not view that as negative thinking or some kind of a weakness, the faster you will move forward.

As goes the leadership team, so goes the company. If the leadership team is open and honest, issues will flow freely.

You cannot achieve this openness if people in the organization fear losing their jobs or some other terrible ramification. Therefore, trust starts with you. You set the tone by openly admitting mistakes and issues and then working together to solve them. Everyone must know that it’s okay to raise issues as long as they are corrected.

When addressing issues, leadership teams spend most of their time discussing the heck out of everything, rarely identifying anything, and hardly ever solving something. It’s truly an epidemic within the business world.

Plan on getting a little bit uncomfortable. Most causes of real issues are people. The discussion can hit close to home if either someone on the leadership team or one of his or her staff is responsible. You have to be able to talk about the elephant in the room. That is why trust is so important. You have to become more vulnerable with each other and be willing to be straight about real problems. Remember the greater good.

One helpful context when identifying is to understand that there are three types of issues. One is a true problem that has to be solved. The second is information that needs to be communicated and agreed to by the team. The third is an idea or opportunity that needs feedback, brainstorming, insight, and/or a green light from the team. As a result, in the identify step, it’s the issue owner’s responsibility to make it clear what type of issue it is and what is needed.

Everyone should say what they believe but they should say it only once, because more than once is politicking. In the discussion step, you’ll need to fight for the greater good, not what is best for you or your department. If an issue is starting to hit home and the solution causes you discomfort, you must try not to push the solution in a direction that’s more favorable to you or your team. If you do, you aren’t fighting for the greater good of the company; you’re just protecting your turf. You should have healthy conflict and let the best solution come to light, even if it causes you some pain.

The solve step is a conclusion or solution that usually becomes an action item for someone to do. The item ends up on the To-Do List, and when the action item is completed, the issue goes away forever.

You should make all of your decisions as though you are going to your own Super Bowl—as though you were achieving your vision.

Three types of resolutions will emerge from an issues-solving session. The first is when the issue is solved and requires action. For instance, “John is going to revise the accounts receivable past-due letter to include the new language.” In this case, John takes the action item and completes it, and it is solved. The second is when the issue is merely awareness, and the conclusion is that everyone concurs with that awareness. For instance, “Okay, so we all agree that meetings will start on time.” The third is when the issue needs more research or facts. In this case someone is assigned an action item to do the research and bring it to a subsequent meeting. For example, “Bill will gather the client data for the last two years, and we will make the issue a top priority in next week’s meeting.”

Consensus management does not work, period. Eventually, it will put you out of business. Not everyone will be pleased in these situations, but as long as they have been heard and if the team is healthy, they can usually live with it and will support the decision. From there, you must present a united front moving forward.

In solving an issue, you have three options: You can either live with it, end it, or change it.

Both long-term and short-term pain require suffering. Remember the “36 hours of pain” rule, and solve your problem now rather than later.

To paraphrase philosopher and logician Kurt Gödel, you can’t be in a system while at the same time understanding the system you’re in. In other words, you need to raise your head from time to time and see the system for what it is, whether it’s good or bad. We are normally so buried in the day-to-day scramble that we never take the time to do this. Yet, you’ll see something new every time you do.

To the degree you can clarify your systems and hone them, you will run your business as opposed to having your business run you. The culmination of identifying, documenting, and having everyone follow the core processes of your business is your Way. When you have a clear Way, you immediately increase the value of your business, strengthen your control over it, and give yourself options. From there, you may grow the business, let someone else run it, sell it, or simply take more time off.

In many organizations, people do their jobs however they want, resulting in tremendous inefficiencies and inconsistencies being embedded in the system.

Your core processes typically include the following:       The HR process is the way you search, find, hire, orient, manage, review, promote, retain, and fire people.       The marketing process is the way you get your message to your target audience and generate interest in what you do and prospects for your salespeople.       The sales process is the way you convert a prospect into a customer.       The operations processes are the way you make your product or provide your service to your customer. There are typically one to three core processes within operations (e.g., project management, logistics, warehouse, distribution, service technicians, account management, service delivery, production, quality control, customer service).       The accounting process is the flow and management of all monies coming in and going out.       The customer-retention process is the proactive way that you take care of your customers after your product or service has been delivered and the way you retain customers so that they continue to come back and send you referrals.

The trap many organizations fall into is wasting valuable time trying to document 100 percent of everything. If you document 100 percent of a core process, it might take 30 pages. If you document the most important 20 percent, you should need around six pages.

Your people doing things because they’ve always done them that way is not good enough. With the opportunity to build a well-oiled machine, you must now be able to show them a better way.

“FOLLOWED BY ALL” ACTION STEPS       1. Create your Circle of Life visual.       2. Schedule a company meeting to share your Way or share it at your next quarterly company meeting.       3. Retrain everyone.       4. Manage your people to follow the processes.

Your organization will be worth more as a result. This is what people that purchase businesses are looking for: a turnkey system.

Most leaders know that bringing discipline and accountability to the organization will make people a little uncomfortable. That’s an inevitable part of creating traction. What usually holds an organization back is the fear of creating this discomfort.

What are the two disciplines needed to gain traction? First, everyone must set specific, measurable priorities. Second, you must meet better as an organization. These two essentials are called: Rocks and a Meeting Pulse.

With a clear long-term vision in place, you’re ready to establish short-term priorities that contribute to achieving your vision. You will establish the three to seven most important priorities for the company, the ones that must be done in the next 90 days. Those priorities are called Rocks.

The way you move the company forward is one 90-day period at a time.

The bottom line is that you need to work on the biggest priorities—your Rocks—first. Everything else will fall into place.

A Rock is specific, measurable, and attainable. For example: “Close three core accounts” or “Hire a new controller.” A Rock is not a to-do that is open-ended or vague. “Start working on the Customer Service Process” is not specific, measurable, and attainable, and is therefore not a good Rock.

A Rock must be clear so that at the end of the quarter, there is no ambiguity whether it was done or not. Here is an example of four company Rocks that were set and defined:       Company Rocks due by March 31       1. Close $1 million in new business       2. Document delivery process and train all       3. Narrow CFO candidates to two       4. Implement new information systems software

The owner is the person who drives the Rock to completion during the quarter by putting together a timeline, calling meetings, and pushing people. At the end of the quarter, the owner is the one that everyone looks at to assure the Rock was completed.

Please note that while the company and leadership team members should have three to seven Rocks, everyone else in the company should have one to three.

One last point: If you don’t continue to align quarterly, your organization will fragment to the point that you will get far off track, you will start to lose great people, you will lose sight of your vision, and you will end up right back where you started—in chaos.

Two roles are vital in the Level 10 Meeting. One person must run the meeting. This person will move the team through the agenda and keep them on track. Second, someone must manage the agenda. This person makes sure that the agenda, Scorecard, and Rock Sheet are updated and in front of everyone in each meeting. They update the To-Do and Issues Lists in the agenda each week.

Sometimes on your journey, you’ll feel like it’s not working. When this occurs, I urge you to stay the course. Mastery requires total commitment, and gaining traction requires a complete operating system.

The message is that building a great organization isn’t for everyone. Being an integrator isn’t for everyone. You have to know what you want.

With EOS implemented, everything has its place. In other words, every issue, priority, action, or idea that is longer term than 90 days is listed on your V/TO Issues List. Anything that must be accomplished this year becomes a goal. If it needs to get done this quarter and will take weeks or months to accomplish, it becomes a Rock. Any issues that arise during the quarter and must be solved now go onto your weekly Level 10 leadership meeting Issues List. Issues that are departmental in nature get pushed down to the appropriate departmental meeting Issues List, and any that are one- to two-week action items go on the To-Do List in your Level 10 Meetings, creating a simple system for managing all goals, Rocks, issues, and to-dos.

Keeping your head clear, your confidence high, and your focus strong are vital in maintaining forward momentum.

As Henry Ford said, “Thinking is the hardest work there is, which is probably the reason why so few engage in it.”

First, find a challenge inside the business. Focus on your “acres of diamonds.” Put your energy into something that is going to perpetuate the existing vision. Dive into cultural projects that will boost the core values and the people. Experiment with some new products or services in line with the company’s core focus. Go interview your top clients and really dig into what is working and what is not working for them. Take employees to lunch and ask them the same kind of questions. Test current products and services, and make sure they are still relevant. All of these activities will keep you stimulated and further the vision of the company.

Once you have created a business that doesn’t require you to crank every single gear—an entity all its own—you’ll have more freedom for yourself. The journey should be enjoyable. If you’re racing to get to the end of the journey, you’ll be sorely disappointed.

“Society rewards results, not processes; arrivals, not journeys.”

The seven main tools are listed in the order of recommended implementation, along with the 12 secondary tools that go with them:       1. Accountability Chart (which includes People Analyzer and GWC)       2. Rocks       3. Meeting Pulse (which includes IDS, Level 10 Meeting, Quarterlies, and Annuals)       4. Scorecard       5. V/TO (which includes core values, core focus, 10-year target, marketing strategy, three-year picture, and one-year plan)       6. Three-Step Process Documenter       7. Everyone Has a Number

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