A new approach to getting the best from your teams

A new approach to getting the best from Teams

Putting imagination to work as a “hard edged” business tool for accountability and creating sustainable business outcomes

Imagination has long been thought of as a soft, “feel good” concept that has no place amongst the hard edged realities of the business environment. The latest developments in Neuroscience, Quantum Physics and Solution-Focused Brief approach to change make it clear that nothing could be further from the truth however.

Harnessing your and your team’s imagination, in other words, focusing on “what is possible” is proving to be one the most effective methods to achieve sustainable business outcomes.

Conventionally team building and facilitation work focus on “solving the problems” or the dis-functionalities of a team and by so doing aim to encourage the team to become more efficient and achieve ever greater things. This approach has often been found to have limited success for 2 main reasons:

  1. Energy flows where attention goes
  2. Sustaining change is hard work….

What do those statements mean, how do they impact people management and team building processes and what is the way forward?

To start with the first statement: Energy flows where attention goes:

One of the counter-intuitive but by now well established principles of Quantum Physics says that the act of observing an object affects the state of that object, in other words an object (an atom for example) does not exist in isolation from the input of the observer. So it is with the brain. The developments of new brain scanning techniques (FMRI for example) have led neuroscientists to conclude that the brain functions as a Quantum process. At a very simplified level, this means that when our brains have developed a map or circuitry around a “problem” and we decide to “work through” this problem we actually strengthen the circuitry. By focusing our attention on these “problem” connections we actually create more and more of them. In other words when we workshop a problem with someone or a team, we set ourselves up to fail in the long run, because all we are doing is making it bigger and stronger all the time.

The smallest Difference that Makes a Difference

Solution-focused and strength based work takes the opposite route. It asks you to imagine: “If this is the problem you don’t want to have anymore… what would you like to have instead?” It asks: “What is the preferred future?”, and “What is smallest difference, that makes a difference, that will move you one little step closer to the preferred future?” By doing so the brain starts to make brand new connections. The process of creating new connections releases lots of positive energy. Harnessing this energy by taking concrete steps and committing to new constructive actions starts to cement the new circuitry.

Sustaining Change

This brings me to the second statement above. It is all very well to have this rush of positive energy, but it doesn’t take long before the gravitational pull of doubt or habit drags us back to our old familiar ways and ancient problems and the beautiful new connections that we formed only a few days ago whither on the vine. Before we know it things are back to where they were and all we remember is that there was something very pleasant about that hour or that day during the coaching session. The hoped for sustainable change evaporates.

Solution-focused brief coaches and facilitators take the next step to nurture the new connections and help them grow big and robust and overgrow the old “problem” connections. We do that in a number of ways but first and foremost this is done through committing to action. What are you going to do from today, tomorrow, next week? What specific, measurable actions are you prepared to commit to, to move closer and closer to the preferred future. What are you prepared to experiment with, something small, but something different, something you haven’t tried before. We do this at every coaching session, and it is one of the crucial differences between Solution-focused Team work and other forms of team building. We write the actions and experiments down, and then we follow up. This is where accountability comes in. You and the team commit to specific measurable, achievable actions, and you know you will be held accountable to those actions at the next session, by the members of your team, by the coach, and most importantly by yourself.

It is this rigorous follow up and accountability that really sustains the change and nurtures the growth of the new circuitry in the brain. It will motivate you to keep moving forward to your and your teams preferred future, relentlessly transforming your imagined future into your day-to-day activities.

Further Reading:
  • Team Coaching with the Solution Circle by Daniel Meier
  • Quiet Leadership by David Rock
  • Brief Coaching for Lasting Solutions, by Insoo Kim Berg
  • Solution Focused Coaching by Anthony Grant

Your customers and Sabre-tooth tigers.

Your customers and Sabre-tooth tigers.

There is a small almond shaped region in our brains, called the “Amygdala”. It is one of the most primitive regions deep in the base of our brains. As business owners we need to get intimately acquainted with this lump of cells in your clients’ brains, and how it affects their decision making processes. It is your clients’ Amygdala, more than anything else that decides if they are going to become your customer.

One of the functions of the Amygdala is to scan everyone and everything it comes into contact with for threats and danger; it is constantly on the lookout for who can be trusted and who can’t. It is often referred to as part of our reptile brain and dates back to the times when survival depended on being able to assess in an instant if the figure coming towards you was about to kill you, take your food or your family.

And ever since the days of the dinosaurs, and sabre tooth tigers, when men were apes, (and just as dense as they still are), rocks were used as tools and women were dragged around by their hair, it has been performing this function for us.

The Amygdala knows that threats are constant and all around us, and so it makes instant gut level decisions, and then goes on to scan for the next threat.

How does the Amygdala connect to your business?

The Amygdala is very powerful; it has the power to override pretty much all other functions of the brain, instantaneously.

So when a potential customer has an interaction with you, his or her Amygdala does its thing, and comes back with a very quick decision: friend or foe. Once it has made this decision it sends signals out to the rest of the brain to become more or less guarded.

If the signal is positive, other parts of the brain, slightly higher up are activated to start looking for more positives. And here is the thing: this whole process takes place entirely at an unconscious level. The client has no idea that all of this turmoil is taking place deep inside his/her brain. He/She won’t even start to become conscious in some way of this process for somewhere between 15 to 30 seconds. But one thing is clear: The essential decision to buy from you or not is made in that timeframe (except that client doesn’t know it yet).

Pain and pleasure

When I say that the client has made the unconscious decision to become your customer, I am not talking about a decision in the way that we normally think of a decision. The word “decision” implies a conscious process. What it really means is that the client in his/her whole being has decided that you are safe, and a friend, and that either a pleasure will be gained from being with you or a pain will be relieved.

This is a very good feeling for the client. When he/she gets this feeling he/she starts looking for ways and reasons (or excuses) to prolong it. And the most obvious way to prolong this feeling is to do business with you. (Remember, we are still very much at the mercy of our primitive emotions, it is a scary world outside the cave, we crave this feeling of safety constantly and we are social beings, safety in numbers)

Confusion

But keep in mind that the client doesn’t actually know that this is what he/she is doing and what his/her primitive brain is leading him to, and hence it is very easy to confuse the client at this stage. As soon as he/she receives a message that doesn’t fit with his/her first primitive assessment of you, his/her brain will start to go around in circles, a bit like a computer that responds to some input with an error message “Does not compute”.

We don’t have to be neuroscientists to understand that a client in this confused state is not going to buy anything. A confused client will focus on getting “un-confused” instead. Being confused puts the Amygdala back in a heightened state of arousal, and while that goes on, buying decisions simply won’t be made.

That is the story of:
The customer,
The Amygdala and
The Sabre-tooth tiger

Awareness of this principle has many consequences for how we as business owners should approach our marketing. I believe the following 5 steps are the first ones to focus on:

Be absolutely clear in your own mind what pain it is that you relieve or what pleasure you give your customers.

Be clear in your own mind what the promise is that you make to your customers

Decide what basic emotions you want to evoke in the depths of your clients brain (safety, confidence, relief etc.)

Live and breathe the qualities that are most likely to evoke those emotions – the first 30 seconds – (what you say, what you ask, how you look, your handshake, your confidence, your passion and clarity has to shine through)

Explain your promise to the client and confirm the emotions you evoked in the first 30 seconds (this is about all the subsequent messages you send, your email, your website, your documents, the graphics, your logo, your voicemail message, every bit of information you give to the client will all be evaluated against his/her need to confirm her initial emotional assessment of you)

These steps will lead to clients becoming customers over and over.

Customers become advocates

From here of course the real work of your business starts. Now it is all about delivering on the promise you made to the client in the first place. If your business delivers on the promises you make, time after time, without fail, new customers will continue to do business with you for a very long time. Better yet, by delivering on your promise without fail, customers will become your advocates to everyone they know and meet. And when that happens, those first 30 seconds are largely taken care of before you even come in contact with clients. Your customer/advocate will already have put the clients’ Amygdalas at ease and they will be looking to confirm their decision right from the first moment they shake your hand.

Further reading:

Business Plans that work

A business without a Business Plan

achieves everything in it!

Yet, why do they have so little impact?

We all know the mantra: If you want to have a successful business, you need to have a Business Plan.

A truer word has n’er been spoken, yet does that mean that a business with a “Plan” will by default be successful?

All cows eat grass. This animal eats grass…

ergo it must be a cow!

No, obviously not. Most business plans don’t have much of an impact on the success of the business because nobody in the business feels the “Plan” has anything to do with “what gets them out of bed in the morning”. It is just one of those things that you “ought” to have, all the books say so!

You probably have a “Plan”. It might be based on a “Business Plan Template” you found. You filled in the blanks and fiddled with it a bit. It makes the bank happy. It looks great, it feels good in your hands, and when you finished it, you felt that warm and fuzzy feeling we often mistake for business achievement in the absence of more solid evidence. But when was the last time you even looked at the thing?

First things first

Let’s start at the beginning: Why is it again that we even need a “Business Plan”?

The purpose of creating and having a business plan is twofold:

  • To spell out exactly where the business is headed and how it will get there.
  • To have a fixed set of criteria to “test” every decision in the business against.

If your Business Plan meets both of those criteria, wholly, you can be sure it won’t be kept in the bottom of a drawer. It will sit on top of your desk; it will be dog-eared, and smudged; it will have coffee stains, scribbles and doodles all over it. You will look at it every day and so will everyone else who has anything to do with it.

Business Plans that live

So how do you create a “Plan” that will be so alive?

There are 6 key criteria that a Business Plan must meet for it to truly add to the success of the business:

  1. It must be a “live” document and be kept “live” by the people directly affected by it, today.
  2. It must have been created by the people directly affected by it, at the time of its creation.
  3. It must be created in ways and in terms that are meaningful to the people who have created it and who maintain it.
  4. It must be based on the “Guiding Principles” of the business.
  5. The “Guiding Principles” in turn must flow from the “Mission” or “Purpose” of the business.
  6. Finally the “Purpose” of the business must be a clear expression of the “Values” and “Aims” of the people who ARE the business.

As you can see, this means that before you even start to think about putting a “Business Plan” together, you need to focus inwardly, individually or as a team. You need to get very clear about what “gets you out of bed in the morning”, what the purpose of being in business is at all and how you decide what to occupy yourself with in this business.

Personal Values

A good way to start this process is to do an exercise to determine what your top personal values are. There are a lot of tools available to help you with that process. One of them, a personal values checklist is available on this site on the downloads page. Once you are really clear about your personal values, the values that you want your life to be about, right now, it is time to think about the “Purpose” of your business, and how that purpose or mission connects with your personal values.

Research all over the world clearly shows that a business “Purpose”, “Mission” or “Vision” that is solidly grounded on your own personal values is an absolute indicator of the success of your business. So: WHAT are you in Business for? What is THAT all about? It may be about money, but often it is about so much more than money: What will you get from having a successful business? What will that give you? How will you know that your business is successful, and what difference will that make to you? Or your family? Or your customers?

Guiding Principles

Then it is time for step 3. This is where the actual creation of a purposeful and impactful Business Plan starts. The “Guiding Principles” of your business are the principles that every decision and every action in the business is guided by. It will be the litmus test for everything you do.

If a decision you, or someone else in your business, wants to make conflicts with the “Guiding Principles” there are only two options:

  1. Don’t make the decision
  2. Amend the Guiding Principles

There is no alternative. Putting a set of Guiding principles in place will be one of the most powerful things you will ever do for your business, and once you have them in place they will form page 1 of your Business Plan.

Here are some random samples of “Guiding Principles” I helped clients design in the last year:

  • Our behaviours are: Open, Trusting, Professional and Safe
  • All our processes add value
  • We leave the environment better than we found it
  • We deliver more than expected
  • We deliver when we say we do.
  • Shareholder value is increased every year
  • All our employees will have a stake in the business
  • There is life outside the business for our people
  • We own our competitive advantages
  • We are a positive force in the communities we are a part of.

In future articles I will write about the next steps in the process to create Business Plans that make a difference.

Further reading:
  • “It is not the Big that eat the Small, it is the Fast that eat the Slow” by Jason Jennings and Laurence Haughton
  • “The E-Myth revisited” and “E-Myth mastery” by Michael Gerber
  • “The one-minute-manager series” By Ken Blanchard et al.
  • “First Break all the rules “ by Marcus Buckingham and Curt Coffman
  • “The Fish series” by Stephen C Lundin et al
  • “Maverick, the success story behind the worlds most unusual workplace” By Ricardo Semmler

Profits are a liability

Profits are a liability

 

What do you want for your birthday?

My birthday is this month and what I want is my business to grow 50% this year. Would you like one of those too?

Ok that can be organised, but what about next year?

Ah, yes, of course we actually want our businesses to continue to grow next year and the year after…

If your business is growing by more than a modest inflation-like rate or thereabouts, there are 5 key “factors” you MUST continually address:

  1. Your market focus
  2. Financial foresight and plans
  3. Your management plan and organisational structure
  4. Understanding of your own responsibilities and what you bring to the business
  5. Outside advice and support

This article is the first in a series of articles about sustainably growing a business and I want to tackle point (2), financial foresight, first.

Readies

The one factor that stifles and destroys growing businesses more than any other, is money, cash to be exact, “readies”, money you have available day to day. To be more precise… the lack of it.

There are millions of stories around the world of businesses that experienced fabulous growth, that were the darlings of the investment community. Companies that had “The Next Big Thing”, with profit levels to make every other business owner green with envy, issuing staggering forecasts…..and failed. Small and large, businesses just like yours.

If your business is going to grow, heed this warning and heed it well: If you do not plan for cash, you will not have it when you need it. Even if you somehow survive that crisis, it will cost you an arm and a leg, not to mention years of your life!

A business cannot grow unless you feed and water it with money. When you grow a pot plant, it will outgrow its pot when the plant increases in size by 25%. A business is just like that: As the business grows 25% or more, it will need a different pot of money to feed in. The ferociously growing business will soon dry up your own resources and those of your partner, and your parents etc. What you might have been able to finance through your own funds, a personally guaranteed overdraft, credit cards, and cheap money like 30-day trade accounts with suppliers, is suddenly ravenous for more.

Rule of Thumb

A “Rule of Thumb” used by jaded bankers and accountants when assessing the financial needs of a growth business is: Assume that receivables, (what you are owed) will take twice as long to collect as expected and payables, (what you owe) will need to be paid in half the time you expect.

It can be extremely tempting to look at a Profit and Loss (P&L) print from your bookkeeping programme and be lulled into a sense of security because you are showing a healthy turnover and great profit levels, talk about an aphrodisiac! But profit means very little, it is purely a number on a piece of paper, and bears virtually no relationship to your bank account or your ability to pay people and the sustainability of your business.

Bad News

In fact, net profit in your company is a liability! Let me repeat that in case you did not get it: Profit in a growing business is BAD NEWS!

Come again? How can that be? Well that is very simple: Net profit means you have to pay tax, and that means taking money out of the business and sending it to the ATO. Don’t get me wrong I am all for a healthy tax system, I like the fact that I was able to spend a week camping in a National Park over Christmas, all paid for by the tax system. However, it is your job to build a sound and healthy business, one that will pay its taxes for many years to come, not just this year. Making profits in the growth phase of a business simply means you will be drawing money out of the business that you will have to replace from somewhere else.

Musts

So, what are the recipes for financial success when leading a growing business?

At a high level, there are three “MUSTS” involved:

Delegating the bookkeeping to others, DOES NOT absolve you from the responsibility to keep control of the outcome. You simply MUST keep your finger on the pulse PRO-ACTIVELY! You are accountable for the health of the business, no one else.

You MUST put an effective financial control system in place, and monitor it.

You MUST put a cash flow forecasting system in place, and monitor it.

Let me give you the critical steps for the implementation of (1) and (2) above first:

Get the best bookkeeping system that is available, keeping in mind that the system has to be plenty big enough to cope if your business doubles triples or even quadruples in size.

Make sure that you have at least one person (with a backup) onboard, (if that isn’t you) in-house or external who knows the system inside out. They must be able to produce the answer to any question you might like to ask of the financial control system of the business.

Spend the time to become very very (that is VERY) clear what you need to know on a daily, weekly, monthly and quarterly basis. What are the critical indicators of the financial health of the business? If you do not know talk to your accountant, and make sure you understand what he or she tells you.

Write down what those critical indicators are, in unmistakable language, in a schedule.

If you have delegated the bookkeeping to others (note the word “delegate” not “abdicate”) communicate this schedule to them, make sure they understand the requirements, keep a copy of the schedule yourself, confirm that they are happy to meet ALL the requirements of the schedule and ask what they need from you or others to be able to meet them. (See also my article on effective delegating in the archive on my website)

As a matter of absolute priority, put time aside daily, weekly and monthly to ensure that you get everything you agreed with the bookkeeper. Peruse, understand and act upon the reports and information. Do not get slack with this, ask someone to push you on it if you need the extra kick up the backside, make it easy for yourself, but do it!

Cash flow, the Leaders job

The previous two points all lead up to this one. As I have said above, cash flow is the killer.

To be able to do useful cash forecasting, you cannot rely on your bookkeeping system alone, at least none of the ones I know. It requires the use of your brain, primed with the information, reports and other data you get from points (1) and (2) above. This is the work that the leader is called upon to do, that is YOU!

Cash flow forecasting is a bit of an art and by its nature can be somewhat rubbery, and that is exactly why many businesses put it in the “too hard” basket. By doing it regularly it will become more accurate, easier and take little time.

The essential principle is simple. It requires a spreadsheet to set it up. You can buy spreadsheet templates that will do the job for you and that is a reasonable option. Of course, you can also get help; your bookkeeper, your accountant or your business coach will all be able to help, assuming they know their trade.

The basic recipe is this:
  1. Take the bank balance on day 1 of month 1
  2. Deduct regular expenses for the month
  3. Deduct what you know you will have to pay during the month
  4. Deduct what you reasonably expect you will have to pay during the month
  5. Add what you know you will be paid during the month
  6. Add what you realistically expect (not “hope”) to be paid during the month
  7. Calculate the bank balance by the end of the month.
Next month:
Add closing balance of month 1, as opening balance of month 2

Repeat the process above

And so forth for every month of the year

For some businesses, it may be necessary to do this forecast on a week-by-week basis, but for most businesses monthly will give you what you need.

Simple really and of course as you get further into the future there will be a fair bit of guesswork involved but even allowing for that I promise you that you will get a nasty shock.

But wouldn’t you rather have the shock now? 6 months out from the looming crisis it will be quite feasible to do something about it, but one month or even a week out, the best case scenario is that it will be a very expensive experience, and the worst case scenario ……….

Further Reading:

For more information about to how to step out of overwhelm, get unstuck and start having Fun in Business again, click here

Books:
  • “The E-Myth revisited”, By Michael Gerber
  • “E-Myth Mastery”, By Michael Gerber
  • “The E-Myth manager”, By Michael Gerber
  • “The Essential Drucker”, By Peter F Drucker
  • “Classic Drucker”, By Peter F Drucker