You Don’t Know What You Don’t Know

Is this a play on words or one of the most important questions you need to ask yourself in 2011?

Barriers to growth CEOs need to be aware of

Verne Harnish, author of Mastering the Rockefeller Habits published in 2002 a compelling book that every small to mid-sized business owner, president or CEO running a company in 2011 should read. Harnish stated there are three barriers to growth:

  1. The need for the executive team to grow as leaders in their abilities to delegate and predict
  2. The need for systems and structures to handle the complexity that comes with growth
  3. The need to navigate market dynamics that mark the arrival in a larger marketplace

Delegating requires trust, trust suggests risk and that’s the challenge for us all. We would rather do it ourselves so it gets done right. Revenue and profit growth can only come from leverage, getting others to do what you once did in order to free you up to spend your time on strategic issues. Developing a monthly, quarterly performance contract with each of your direct reports is essential in predicting revenues and profits. As the leader you need to free you time up to be the leader and visionary.

Tom Venable, SVP Sales and Marketing with Rainmaker Systems focuses on keeping things simple and shared the following over dinner last week. Venable breaks down employee into three silos:

Make it

o      HR’s role is to make human capital deliver

o      Operations role is to deliver product or service to required customer expectations

Count it

o      Accounting’s role is to see that costs are a function of reverse selling

o      Warehouse and distribution take what is counted and see that it gets delivered

Sell it

o       Marketing creates leads

o      Sales creates customers

o      Outstanding performance Is driven by aptitude multiplied by attitude

Systems and structures are like the chicken and the egg, which comes first?  Most small businesses fail because they don’t find the right tools and implement them.

Malcolm Goldsmith wrote in his book What Got You Here, Won’t Get You There that there are annual known revenue barriers at 5, 20 and 50 million that will challenge even the best managed companies. In 2010 in a down market, Vistage members Eric Stumberg, CEO of TengoInternet and Cindy Richter CEO of Vanguard Fire in Austin, Texas integrated their financial, sales and marketing with expensive software in order to streamline their companies.

Improve forecasting with a predictable pipeline

Developing a predictable pipeline enables you to improve your forecasting and manage your cash flow. You must know where you are today, this month, this quarter and are you on target for this year’s goal.

Kraig Kramer, Vistage speaker focusing on KPI’s (Key Performance Indicators) believes you need to have monthly snapshots both rearview and dashboard. His website has very meaningful formulas for your use.

If you are awake at 2am in the morning struggling with leadership, decision-making and isolation (or if you don’t know what you don’t know) search for a Vistage chair in your city and see if there is a peer group for you.

Have a prosperous 2011.

Who’s in YOUR wallet?

Is one of your 2011 business goals growing your top line revenue?

My Vistage members and clients still struggle with hiring that next sales superstar and I’ve been brought into the hiring process of hundreds of sales representatives over my career. One of the traits that separates the good ones from the pack was a positive attitude.

Last week I had dinner with Tom Venable, who I’ve known for over 30 years, and his father Larry was the Training Manager for the Visual Systems Division at 3M in 1976 and one of my mentors.

Tom was recently appointed as the Executive VP for Rainmaker System, a sales process and lead generation service provider, because of his success as the VP of Sales for Digital River where he delivered several years of solid growth and profit. He has a simplified method of talent acquisition based on the belief that aptitude multiplied by attitude equals superior results.

“The real winners in life combine great aptitude and great attitude,” said Venable, and it is represented by the Green box in the figure. Greg Smith, co-owner of Jamail Smith Construction has found that when a new hire has a “self starter” attitude success and measurable results are just around the corner. Individuals in the upper right quadrant listen to their customers, determine how the customer or clients likes to buy by asking great questions vs. focusing on features, advantages and benefits. Let’s classify this box as your “A” players.

The Blue box represents people that are really happy with themselves because even though they don’t have great aptitude, they are satisfied with their space in life because of their attitude. These loyal, dependable employees give 100% towards whatever they or you ask them to take on. These should be your “B” players. Monthly or quarterly performance contracts managed monthly with scheduled one-to-one sessions focusing on their strengths, results and self assessed improvement initiatives works best here.

The Yellow box represents good results but the person may not be very happy because of their attitude. This is where I see the talent acquisition process breaking down. When you have a $500,000 or $5 million dollar revenue objective, quota, territory or expected top line annual revenue target and that new hire only delivers 70% or 80%, the lost revenue and profit is substantial. These are your “C” players and you can’t afford to keep them. They are costing you money if you don’t believe me, email me and let’s do the math together. Over the past two years, most of you have eliminated your “C” employees or at least your should have.

And as for the Pink box, as author Jim Collins wrote in his book Good to Great, make sure you have the right people on the bus (upper boxes), then see that they are in the right seat on the bus and redirect the career path of those that need to get off the bus.

Tools such as Meyers-Briggs, Birkman or the CPQ assessment test for sales are excellent in assessing the DNA or fall back behavior of key direct reports, your sales executives or business development hires. But I would guess that most of you have made a decision within 15 minutes of conducting the interview, right?

When a ship misses the harbor it is rarely the fault of the harbor. Here’s to having a prosperous 2011!