Wisdom from the “World's Meanest Boss”

I read somewhere recently that Harold Geneen, one of my favorite corporate executives, had made it on an all-time list of the World's Meanest Bosses. Geneen ran ITT back in the 60's and 70's, when size meant everything and conglomerates were the rage. He developed a reputation for always hitting his forecasts, and being impossible to work for.

Mean or not, he had some keen insights into the business world which I have benefited from and which I will share here, along with some Small Business applications.

Seeking the Truth

Geneen was famous for his monthly executive meetings. They were grueling, multi-day, 14- hours-a-day events , where he would grill his divisional managers about their performance and expectations. He would go through their reports line by line, looking for the facts. Or, as he called them, the “unshakable facts”. He went to great pains to sort out the opinions, and guesses, and hypothesis, and suppositions, and biases and wishful thinking, to get to the “unshakable facts”. I imagine he found them few and far between.

I bet you experience the same thing every day. People come to you with information, and want you to make a decision. Unfortunately, much of that information is false, or assumed, or only partially accurate. A long way from being “unshakable”. Obviously, if you get poor information you will be making poor decisions. If you want to make better decisions, the information, and the information source must be analyzed. (Geneen felt that was best done in-person, hence the endless monthly meetings.)

Boiling information down to unshakable facts, as presented by your employees, requires a lot of work. Lazy managers don't bother: they just accept with they are given, and blame their staff when things go wrong. A strong manager is always skeptical, until proof is provided. The stronger the facts, the better the decision-making.

The Greatest Executive Disease

Geneen came from the corporate world of the 60's where, as depicted on the Mad Men series, all serious businessmen had a bottle of booze in their desk drawer, and the senior executives drank expensive scotch. It was in this environment that he developed his famous quote about the Great Executive Disease:

“The worst disease which can afflict business executives in their work is not, as popularly

supposed, alcoholism; it's egotism.”

What a fabulous insight!!! Executive egotism has ruined more businesses than alcoholism and drug addiction combined. Not only is it more powerful, it's harder to recognize. People suffering from serious substance abuse are easy to spot in the workplace. The signs identifying an ego-driven executive are not as obvious. And too often, its the Boss: who's going to call him out???

Small businesses are run by entrepreneurial types, and a healthy ego is a prerequisite for success. Too often, however, the decision-making groups in these companies become “inbred”, and the executives end up believing their own press releases and reliving their past glories. The executive ego attitude of “my ideas worked in the past, and they'll work in the future” has caused many a business to lose its edge and its position in the marketplace.

Organizations that are successful over the long haul have mechanisms to constantly inject new blood and new ideas into their decision-making counsels. It is hard on the ego, but good for the business.

Practical Tip of the Day:

• What is the primary USP (unique selling proposition) that you are using in your marketing today? How does that compare with the message you used 5 years ago? (For more about the USP concept,  Click Here. )
  
• If it is the same, that could be an example of missed-placed ego. Just because it was your idea and it worked, doesn't mean it is still applicable.
  
• If you dig for the unshakable facts, you will find that the market has changed. So should your message.

For more information on Harold Geneen and ITT, Click Here. Or better yet, read one of his books.

Why Building a Successful Small Business is Hard.

A reader of this blog has asked my opinion about small business owners in general. I have made critical comments here about typical small business marketing strategies and advertising concepts, but I am a big fan of those entrepreneurs who create successful companies.

It is very hard for a small businessman to become a success, and I have great respect for those who create thriving organizations. The fact that it is hard to do, however, does not excuse the poor examples of marketing that one sees every day.

But why is it harder for the small organization?

Because the small company suffers from two significant drawbacks:

• lack of expertise in multiple disciplines
• lack of a regular infusion of new blood / new ideas.

If you examine the structure of a company with 100 or so employees, you will typically find 7-10 key executives involved in most major decisions, and they will often bring a large and varied experience set to the decision-making process. In the small organization (20 or less employees), you will commonly see on 2-3 decision-makers, and they often have most of their experience within the same industry.

The second phenomena found in larger companies is staff turnover in the middle and upper ranks. Each new employee brings in new ideas, and sees the industry / customers / competitors from a different perspective. It is the mixing of these new ideas with the tried-and-true that gives birth to creative solutions.

In the small, or family-owned business, operating ideas can easily become “inbred”, and can remain in force long after they have become stale. And groups that pride themselves on very low turnover (whether social, political, or business) tend to suffer from stagnation.

Isn't that why I pay outside professionals?

Yes, absolutely, and they have their place. Recognizing this disadvantage inherent in the small business environment, the entrepreneur should be constantly seeking sources for new and innovative ideas. Lawyers and accountants typically fall into this “outside professional” category. Unfortunately, they also tend to focus on specific issues that you bring to their attention.

Another source for ideas can be a board of directors or advisors. If the owner can build a network of people who will serve in this capacity, it can create a significant advantage over the competition. This strategy needs two elements to be effective:

• The advisors must represent several different experience sets and viewpoints
• They must be allowed to see the whole picture, warts and all.

Neither is easy to do. Too many small business operators prefer to stay in their comfort zone, don't go looking for new ideas that would upset the apple cart, and end up missing out on the benefits of outside viewpoints.


Practical Tip of the Day:

• Take a good look at the people involved in you major decision-making process. How many have had extensive experience outside of your company within the last 10 years?
• Take some time to review the strategies of your competition. Do they seem to be moving off in different direction? Are you still using the same basic game plan that you used 5 years ago?
• Do your customers consider your company to be “leading-edge”, or so they see you as being in the middle of the pack?
• If you are not happy with what you have found with this review, go out looking for new answers, from new sources, from people outside your industry. It could lead to some revelations.

And How Would You Define “Marketing”?

The term “marketing” has been used by so many people to mean so many different things, it's no wonder that people find it confusing. Rick Pence defines marketing as the activities that precede the sales conversation. My best description of the term is to say that the purpose of marketing is to create a qualified sales lead.

Too often, people use “marketing” when they really mean “advertising”, and sometimes it is used as a substitute for “sales”. While these concepts are all inter-connected, the important marketing activities occur before the advertising kicks in. These early-process activities are sometimes referred to as strategic marketing.

What is it?

In the world of small business, marketing is the triangulation of three things:

• The benefits that your products / services provide, as compared with
• The benefits on offer from the competition, as compared with
• The wants and needs of your target buying group.

An effective marketing plan will offer an in-depth analysis of these three components, and will produce the single most important marketing tool: The Message.

In an earlier post, I discussed how most small business advertising fails to answer the Big Question. To save you going back and looking it up, I'll remind you: Before making any significant buying decision, the customer asks, “Why should I buy from this company, instead of 6 others that do the same thing?”. If you don't answer the Big Question, you don't have much chance of getting the customer's business.

That's where The Message comes in. It gives the customer a great reason to buy from you rather than the competition, and is formulated in a way that resonates with the buyer. The Message clearly states the unique extra value that you offer.

Once The Message is formulated, everything else gets easier:

• Advertising can be created to push the message to the targeted (receptive) audience
• Leads will come in from prospects that are attracted to the message
• Sales staff can tailor the message to the needs of individual buyers

And why doesn't it get done?

Because, too often, the small business owner prefers to stay in his comfort zone. Further, practical business people often prefer the tangible (What deals did we close this week?) over the intangible (How do our customers perceive our value proposition vs the competition?).

Additionally, there is the Never Quit Credo, which condemns many businesses to endless mediocrity. More on that later.


Practical Tip of the Day: 

     Does your advertising really give your prospects a good reason to buy from you instead of the competition?  If not, try this 4-step approach:

• STOP YOUR ADVERTISING ! It isn't really working anyway.
• Bank your savings, to use when you have something better to say..
• Analyze your top 25 accounts, and determine why they buy from you instead of the competition. (Hopefully, it isn't just price.)  If you are having trouble figuring this out, ASK THEM.
• Create a message based upon these strengths, and re-build your advertising campaign according.

The Tale of the Unlucky, Lucky Entrepreneur

This is a generic tale, representative of several stories I have witnessed in the past. It is not about any one particular businessman, but I know several that can relate to the story.

It begins with a hard working small business owner who finds himself in a very desirable position. Whether due to a great product, or strong people, or a fast-growing market, or lack of competition, etc., the businessman lands in a sweet spot in the market, and becomes very successful. And in this success are the seeds of his undoing.

Lets be clear: for the businessman to create a successful company, even in this sweet spot, he must work hard and work smart. He deserves great credit for building the company and capturing the profits produced by all this work. To use a sports metaphor, once he sees the hole in the line, it still takes a great athlete to run the ball, avoid the opposition, and get to the goal-line.

Too often, however, this great entrepreneur has a weakness. Its roots lie in the fact that the business owner didn't create the sweet spot, he just found it. Sometimes, he just stumbled into it. Consequently, he never really studied the key underlying elements that contributed to his success. Maybe it was a truly unique product, or some innovative marketing, or simply getting into an evolving situation first. Whatever his initial advantage, he didn't keep a close watch on it as things shifted.

What causes a shift?

• New technology arrives on the scene,
• new players enter the market,
• customers begin to look for other options and new features,
• new advances are changing cost structures.

Virtually every key element in a business plan is constantly, and slowly shifting. The entrepreneur who falls into a sweet spot often has trouble noticing these subtle shifts.

Which brings us to the other element of bad luck: the shifts often start in subtle ways.

Why is worse, you ask, for the business elements to shift slowly rather than dramatically?

Why is the slow shift worse?

When the business owner that gets hit on the head by the two-by-four of radical market inflection, he falls down, gets back up, and immediately understands that everything has changed. He knows he can't survive by simply making small adjustments or minor tweaks to his system. He instinctively knows that continuing to do things the same old way will lead to disaster. And so he seeks radical change.

But the subtle shifts are hard to see, and much easier to rationalize. When business is down 2% one year, he can blame it on a new competitor. When business falls another 3% the next year, he wants to believe its because he lost one of his better salesmen. And when the slow, downward spiral continues, he clings to the idea that just doing the old things the old ways (maybe faster, better, harder) will put him back on top.

He was lucky, and had some great success in the past. That success, however, hurts his ability to deal with the future.

Practical Tip of the Day:

    Be pro-active!

• Identify your most profitable line of product / service
• Look for the underlying reasons for this profitability (lack of competition, unique product features, low production costs, etc.)
• Develop a system to accurately chart these metrics quarterly.
• Be prepared to adapt quickly, as shifts occur.

Have you Checked your Brand Today?

One of the biggest buzzwords from the past decade is “Branding”. The word has been used to describe every form of image, from personal to political to commercial. In spite of, or perhaps because of, all that over-use the original concept has become obscured.

In the business environment, the term “brand” is too often used to refer to a company logo, trademark, or slogan. These are the images constructed by companies in order to communicate their message. But they don't equate to the company's Brand.

Your Brand exists in only one place: within the mind of your target audience!

What kind of impression do you make on your customers? That's your Brand. How do prospective buyers perceive your company? That's your Brand. What do people think of when they see your logo? That's your Brand. How does the marketplace rate your business versus your competitors? That's your Brand.

If the buying public thinks of your company as being “middle of the pack”, then you probably have modest sales, limited growth, and mediocre profits. Many small business owners experience these problems, but don't make the connection with their weak Brand.

Surprisingly, I often meet entrepreneurs who aren't concerned about managing their Brand. They focus entirely on their operations, hope that customers will be impressed, and expect sales growth. This strategy may have worked once, but no longer.

A Strong Brand = Solid Profits

Every time a company touches a potential customer, either directly (through sales interaction or advertising) or indirectly (through some publicity, or comments from a friend), the company's Brand is impacted. Every time a customer is happy with the sales experience or unhappy with a service issue, the Brand is impacted. Every time the company's product is used, and it works well or doesn't, the Brand is impacted.

If you aren't happy with you sales growth, or how the market ranks you versus the competition, CHECK YOUR BRAND.

Check inside the head of your customers, both large and small. Check inside the head of those who don't buy from you, preferring your competition instead. Check inside the head of your vendors' sales staff. And (although this is tricky to do) check inside the head of your own sales staff.

Don't be afraid to discover the truth. Therein may lie your future success.


Practical Tip of the Day:

Add a Survey Widget to your company website (there are many available, some free). Ask your site visitors what aspects of your product / service are most important to them. Then ask them how well you deliver on those issues. If you are worried about the answers you'll get, your instincts are telling you that some problems need to be addressed.