Employees, Leadership, Personal Growth, Small Business Growth

7 simple rules of business that will help you succeed

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What are the real fundamentals of success? What are simple, small things everyone can do that will set the stage for larger success? In our technology drenched and dependent lives here are 7 non-technical, simple things that can help pave the way for true success.

1. Show up

If your job requires you to be in the office you should be in the office when you are supposed to. If you are required to be at a remote office, or call on a client or prospect then SHOW UP.   If you have an online webinar or conference call, SHOW UP.  Be there, on time, prepared and ready. As the old saying goes, “You can’t win if you don’t play”. And you can’t play if you don’t show up.

This also means being mentally engaged with your team, customers and company.  Checked out, isolated team members are worth little. They waste everyone’s time and don’t help row the boat. Show up fully engaged and ready to contribute, physically and mentally.

2. Be Nice 

Everyone in the company has work together. Make it a better experience by being nice to others. You need to  treat other employees, customers and vendors with courtesy, respect and decency. Treat others with the same courtesy and respect you want from them. It helps communication and improves the working environment and enhances collaboration. Some companies have a “no jerks” rule. Some companies use stronger language to say the same thing. Don’t be a jerk.

Being nice doesn’t mean you won’t have debate and disagreement. It doesn’t mean that issues are not confronted. It means you need to resolve those situations in a  civil, calm, mature and professional manner and move along. Anger, frustration, name calling, back stabbing, gossip, outbursts, tantrums, passive aggressive behaviors  and the like create more problems to solve, slow down communication and create resentment if they continue over time. Show caring and concern for your team, fellow employees and customers.

3. Follow the Rules

Rules are there to protect the individual and the organization. They help maintain order and define interactions, boundaries and expectations.

Image if everyone driving cars in a large metro area suddenly went anarchist with respect to the rules of the road. Can you image the mess? The wrecks, injuries, property damage and time lost? It just wouldn’t work. But with proper rules, traffic flows (usually) and people get to and from their destinations safely.

Every business needs rules. I know, sometimes the dress code or attendance policies may not be what you would design. If you want to be a rebellious cowboy, go work on a ranch. If there are serious problems with rules talk to your leader. Otherwise man (or woman) up and respect the rules. It will make the entire workplace flow better.

4. Do Your Job

We are all professionals.  We get paid to do a job. Do your job like a professional. Don’t leave problems for others to clean up later. Don’t do your job half way. Don’t finish late. Don’t deliver half the results. Your work products should demonstrate competence, excellence, and be professional in quality and implementation.  This includes your personal and professional growth and continued learning. Ultimately only you can control that.

5. Communicate

No one can read your mind. What you don’t say or communicate, your other teammates and employees can’t know. Talk. Write. Inform. Repeat. Ask clarifying questions. Over communicate. Effective organizations communicate well, clearly and continuously. When you have clear, consistent communication the team can move faster and provide better results.

6. Serve the customer

Serve the customer as if your business depends on it, because it does. Customers fund the operation of the business. Customers pay your salary.   Customers can help you sell and market. It doesn’t matter if they are Internal or external customers, you are there for them, and not the other way around. Always remember that. Customers can quickly tell if they are really cared for and are being served properly. They will move to businesses that show genuine care for them in a heartbeat.

7. Support your team

Always carry your share of the load. Slackers can move along. You should always promote an “I have your back” culture. Support your team with your help, assistance, learning, sharing and collaboration. Be a consistent example re-inforcing the behavior you want your team to replicate.

 

These are 7 simple actions that, if you implement as habits, will yield results and build the foundations for your success.

Employees, Leadership, Personal Growth

7 ways for remaining employees to move on after a layoff

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If your company has had a layoff, you know that can be a real drain on morale and motivation for those still working at the company.   Layoffs result in questioning the viability of the company and diminish hope for the future for those still at the firm. Layoffs alter the workload, add uncertainty, cause upheaval in working arrangements and can contribute to lessened commitment. In my previous post, I wrote about what leaders can do to help a company move on after a layoff.

But what about  those that are still at the business after a layoff?  What can you do?

Here are 7 ways for you to move on.

1. Be realistic

Usually many things conspire to create a situation where layoffs are necessary. There is typically no single thing or person to blame. It’s usually a combination of decisions, circumstances and market forces that combine to force the issue. So don’t waste a lot of time worrying about things in the past you can’t control. It happened. It’s over. Now the real issue is what you will do.

Layoffs most likely result from difficult business situations. These may situations not be rectified quickly. There may be additional pain before the business or market improves.

Remember the Stockade paradox and be willing to face the reality of where the company is but also express your faith that the company will prevail.  Part of facing the reality is figuring out what needs to be done to stabilize, recover, grow and improve.  Knowing the true reality but choosing to approach the task ahead with a positive mindset can help your attitude and commitment and improve your work atmosphere.

2. Assess your situation

After a layoff has occurred at your firm, it is a time to reflect on where you are in your engagement with the company and how that aligns with your larger career plans.

Assess the layoff in terms of your plans and goals. If the company is slowly shutting down the function you do then you need to plan appropriately. If you still see growth and upward advancement opportunity in future products and plans then it may be worth it to stay put and forge ahead. A layoff can narrow our focus to the company and our direct ability to get a pay check. However, a more thoughtful assessment of your overall career goals and how the current company helps you meet those is advisable.

3. Learn from what happened

Examine what caused the action to be necessary. Evaluate what your leaders say about the causes, mitigations and the future plans and strategies.

Ask key questions about the situation. What can you learn about the market or your product from what happened? What can you learn about your company from what happened? What can you learn from your skill set or your position or career from what happened? What can you learn about future potential and direction of the company and your function?

Learn all you can about the situation. Talk to your leaders and listen carefully to what they say. That helps you make more informed decisions in the future. Although painful, the situations surrounding a layoff should be viewed as a learning event for the whole company.  Learn, and act to avoid the situation in the future.

4. Realize where true job security comes from

Your true security does not come from a job or a company or a title or a boss or leader. All of those will let you down at some point, guaranteed.

Your job security is in YOU!! It is in your own talents and abilities. Your true job security comes from using your capabilities to learn, adapt, grow, solve problems, create solutions and bring value to a company or business. If you concentrate on that, and are always learning and investing in your development, you will rarely be in need of a job because you will always have one.

5. Evaluate the opportunity

Every layoff also brings opportunities for employees to step up, take on new roles and responsibilities and handle new job functions. Watch for opportunities that present themselves and be ready to step up if the opening aligns with your goals and objectives. Taking a new opportunity can be a time to stretch yourself, learn new capabilities and enhance your experience base.

6. Focus on what you can control

It is good to remember those things you actually have direct control of. Focus on those. Your job, your tasks, your effort, your attitude, your responsibilities, your behavior, your quality. Redouble your efforts to do your responsibilities with excellence. Worrying about what you can’t control just wastes time, makes you angry and increases the feeling of helplessness about the situation. Resist the temptation to mope around and discuss what you can’t control with other mopers.

The best antidote to the malaise of the after-layoff time, is to focus on actions you can do and get busy. By doing this you help maximize your chances of success.  To have hope for your future you have to amp it up. If your company has been losing the battle but you don’t amp up the fight you have no hope for victory. And if you do this, you will help influence others to do it as well.

7. Choose: renew your commitment or revise your resume

As an employees left at the company after a layoff you face a choice with three options:

  1. Stay and re-commit to work hard and do your part to improve the business
  2. Get out as quickly as possible
  3. Continue on in a zombie like state waiting for the next round

From my experience there are really only the first 2. At least those are the proactive choices.

If you decide that the circumstances warrant you to continue with the business then be all in. Re-commit to do as much as you can to move the business forward. Be an agent of change and improvement and influence others to do the same.

If you decide that you can’t continue there then don’t hang around and further stink up the place. Update your resume, find another job and move on. If you stay with a bad attitude, you will just pollute the rest of the folks with your bad karma, and slow down the whole recovery process for everyone.

 

Any way you slice it layoffs are tough.If you are an employee still at a firm after a layoff,  apply these 7 principles and it can help you get back to moving the business forward sooner.

 

 

Employees, Leadership, Small Business Growth

9 ways leaders can regroup the company after a layoff

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Layoffs are incredibly difficult on companies and the employees left behind. They sap corporate momentum and drain employee morale. They result in questioning the viability of the company and diminish hope for the future.

Layoffs usually happen in difficult business situations. Letting go of good people simply adds insult to injury during an already tough time. It is hard to say goodbye to friends and valued colleagues, especially when it was no fault of their own. Layoffs alter the workload, add uncertainty, cause upheaval in working arrangements and can contribute to lessened commitment.

So what can a company leader do to regroup and move on? Here are 9 things a leader can do to help regroup after a layoff.

Get the group/company together

Compounding the pain of  layoffs are the feelings of uncertainty, isolation and being alone. Silence from leadership now is deafening. As an employee, when you are isolated and alone you tend to worry more and make the situation worse, losing objectivity. And, in the absence of clear, proactive communications from leadership, employees will invent the reality that fits what they can see and feel. Leadership silence and isolation fuels the rumor mill.

It is important to counteract these feelings  in the remaining employees. It is important to communicate openly and clearly to keep the morale situation from getting worse.

Get them together. Have a state of the company lunch or a morning coffee together. Getting together and sharing food or drink can help sooth raw emotion, provide a venue for dialog, re-establish shared connections and begin the process of moving on.

Acknowledge the difficulty

Losing good friends and valued employees is sad and emotionally tough. As an owner or manager, acknowledge the pain. Its tough on everyone. The loss, the uncertainty, the anger and frustration, and the reality of more work for everyone left all make for a raw situation. Unless you are a leader with no feelings it is tough for you too. Let the employees know that. Oh and you can’t be a phony. Employees can see insincerity in a leader a mile away and it stinks, especially during a tough time like post layoffs. Not much can cause employees to write you off as a leader faster than insincerity during such a time.

Make an emotional connection

Don’t hide. Don’t be a emotional robot. Don’t read a prepared statement. Don’t pass the buck to some HR person. Don’t joke around and don’t ignore the issue. Stand up and be a leader. Your employees work for you. They need to see you as a real person connected to them in a real way. They need to see you working through this with them. Speak from your heart. By being real you can gain trust and begin to restore credibility with those employees who may internally blame you directly.

Express thanks and appreciation

According to Dan Pink in his book Drive, appreciation, acknowledgement of contribution and purpose are important motivators, in some situations more important than compensation. Thanks, acknowledgement and appreciation is like a spoonful of sugar that helps the medicine go down. Express genuine thanks for the efforts of the group. Appreciate them individually, publicly and sincerely. Acknowledge the hard work and sacrifice that has occurred and how important that will be to move forward.

Explain why

As the owner or manager you should be able to explain, in straight forward language, why this action was necessary. Avoid jargon, and veiled terms. No buzzword bingo here. Use simple language like “sales were off 2x our projections” or “we lost the Jetson contract” (or whatever is appropriate for your situation). This will help employees understand the bigger picture they may not be fully aware of. Discuss the other actions that leadership took to help mitigate the necessity of layoffs. Unless you just like whacking folks, there should a decent list of other actions the company did to try to prevent having to lay off employees.

Discuss the plans to move forward

A layoff is tough but can be more bearable when there is reason for hope. Explain the reasons the employees should hope in the company. Don’t rely on generic platitudes like “We have a good pipeline” or “the fourth quarter always picks up”. Give the specifics of the strategy to improve revenue, profit or expenses. Discuss upcoming product plans, launches, campaigns, key contracts or joint ventures. If you can’t spell out a reason for hope with the plans you have (or you don’t have any plans at all), then this will surely be a direct invitation for your employees to update their  linked in profile. Their attitude will be “why stay if there is no hope?” You must show tangible reason for hope.

Be positive but realistic

Don’t promise the moon or paint unrealistic possibilities for the future to manipulate emotions. That will come back to bite you. Employees have good memories. Be positive but acknowledge the work needed. Remember the Stockade paradox, be realistic, facing the brutal facts, but also express your faith that the company will prevail. You also have to believe your message. If you come across as shaky, doubtful, uncertain or absurdly optimistic you will send the rest of the folks running for the exits.

Make yourself available

While the group meetings are good, many employees may want to have individual conversations with the owner or manager. Support that. Sit down and take the time to look people in the eye, answer questions, explain, reassure where you can and connect. This will pay dividends in re-committment and hope if you do it in an honest and authentic way.

Get Busy

Direct action is one of the best antidotes to fear. So make sure that the whole company is involved in the implementation phase of recovery. Discuss the strategy for improvement. Review the tactics. Make sure everyone is clear and working toward moving the boat forward. They need to see the leadership doing the same thing. This is the time to roll up your sleeves and push forward as a team. If the employees see you energetically working toward the new objectives they will get on board.

 

Conclusion

The actions, attitudes and interactions of the leader will make or break the turn-around effort of the company after a layoff. As a leader you set the tone. Employees will key off of your attitude and demeanor. They will make renewed commitments (or not) based on what they see and hear from you. So be authentic. Use this time as a rallying point for the future. These 9 ways can help move the process forward. If you do these things as a leader you have the potential to get everyone on board to go solve the real issues that still need to be dealt with in the business. Without this, well, you may get to do it all over again.

Employees, Personal Growth, Teams

B.A.K.E. your employees for better annual review results

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In the previous post I talked about the need I had for a more consistent form of employee evaluation and feedback.

What I needed was something quick, direct, clear and actionable.

The B.A.K.E. Method

What I came up with was a simple table, on a single piece of paper called the B.A.K.E. Sheet, that captures short written elements for each of 4 areas:

  • Behaviors
  • Attitudes
  • Knowledge
  • Execution

Behavior

This is what I (or other employees) observe you doing. These are the actions and interactions of your work. Your words, actions, gestures, and the overall way you conduct yourself in the workplace (or outside it – thank you social media).

Attitudes

These are the mental patterns, thinking, bias’s and mindset that drive behavior, speech and motivation.

Knowledge

This is the expertise of the employee, what they know. It is the skills and training they have or need to get the job done.

Execution

This is how they apply all of the Behaviors, Attitudes and Knowledge coupled with processes and procedures/tools to get the assigned task or job done.

The B.A.K.E. table has 2 columns, one is “Observations” and one is “Desired/Comments”.

How to B.A.K.E. an employee

Every few weeks you sit down with the employee and summarize what you have observed and what needs to be changed improved or doubled down on using the B.A.K.E. sheet. By doing this you have the feedback loop as part of a regular interaction with employees. Necessary changes are discussed more. Incremental improvements can be recognized and rewarded where appropriate. Other circumstances can be responded to as required.

The point is that the discussion occurs on a regular basis. What you end up with is a more engaged workforce and one that has more regular improvements. Regular touch-points also foster a more continual dialog about culture and values that drive the desired outcomes in the 4 B.A.K.E. areas. Its like AGILE for feedback management.

After doing the B.A.K.E. method for a year, the annual review becomes more of a formality. But one that has fewer surprises and more concrete milestones to review, and like a good cake will taste better after its thoroughly baked.

 

Employees, Personal Growth, Teams

What does an oven have to do with better employee reviews?

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It seems its a continual struggle to consistently get and give good actionable feedback to employees.

Annual Review Surprise?

I hate annual reviews where the employee seems surprised by the revelation of some undesirable behavior or action that hasn’t been as clearly discussed as needed along the way. Especially if that employee is me.

Effective employee feedback in 2 forms

Effective managers give feedback at the point of need, whether good or bad, in One Minute Manager style. While this is good, and immediate, there needs to be a more concrete long term environment where change and improvement can be discussed, planned, encouraged and agreed to, regularly. This promotes  change in smaller increments. The discussion gets easier when it’s regular and part of the culture. It builds relationship. Feedback, in the absence of relationship, especially critical feedback, usually yields defensiveness. However, feedback in the presence of relationship, while still difficult sometimes, is more trusted and more likely to be acted upon. So the question is how do you do that type of feedback?

But do you have the right tools?

The times I have worked for large corporations they always had what I called “Performance Review DeJour” where online tools or documents were available to help the feedback process. And these were changed very regularly. However, being at a small company, or being a small business owner, can mean you don’t have access to these formal tools or methods.

So what is needed is a simple form that allows for the easy and regular capture of simple elements of feedback to the employee. Something that could be done on one sheet of paper (or screen). Something that would only take a few minutes but provide clarity and actionable discussion points.

In the next post I will share what I came up with, that is how you can B.A.K.E an employee to better results.

Employees, Leadership, Teams

How emotional immaturity is like a clogged toilet and what you can do about it

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There are few thing more unpleasant to deal with than unclogging a toilet. Over the years I have heard those famous and dreaded words several times, “Dad, the toilet is clogged, again”. I am not sure who decided it was Dad’s problem when the toilet clogged but I would like a re-count.

Thankfully, most of the time the remedy is quick and the problem is literally flushed away in a few moments. Sometimes, however, the problem is more serious, messy and in need of professional assistance.

The last time this happened, while I was correcting the clog, it occurred to me that this is exactly what happens in teams of people where emotional maturity is lacking in one or more of the team members.

Emotional immaturity creates situations where things that should be flushed away quickly hang around and clog up other normal interactions and operations. And, like a clogged toilet, if they hang around too long things get ugly and very unpleasant fast. And everyone notices.

I have found that in order to best deal with these situations you have to act quickly as a manager or leader. The longer the situations are left hanging in the air the more team chemistry can be damaged.

So what can you do about an emotionally immature situation?

I have found that a quick, low key dialog as close to the point of the issue or incident is best. Think Ken Blanchard’s One Minute Manager. Try to be calm and focused, directly pointing out the observed issue, and desired action. Before you engage with the person, mentally rehearse what and how you need to say and try to anticipate their responses. If I am calm and low key in my approach I have found that the employee or colleague is more receptive. In most cases employees respond well and the issue is ‘flushed away’ and things are better. Most employees want to improve and when presented with actionable opportunities they will work to improve.

But what do you do when emotional issues  don’t change?

Some people lack the emotional maturity to handle basic relational situations like clear, open or honest communication, confrontation, conflict, compromise, or forgiveness. In other words, they missed the day in Kindergarten when getting along with others was taught. Others  remain emotionally opaque and can’t have meaningful relationships while some are just plain mean, devious and vengeful. These are the kind of people that can really ‘clog up’ your team and company.

In cases where someone is in that situation they have to learn and choose to make different choices, let go of anger, forgive, adapt, grow and become more open. It’s not easy. That person has to have a recognition that there is a problem and a willingness to make changes. Some folks can do that, others choose not to. And here, sometimes a professional is needed.

It’s not me it’s YOU

At one point in my career, there was a team member who basically operated with the attitude that if you ever did them wrong (actual or perceived) you were written off and nothing would change that. That person chose to remain full of anger and resentment toward their perceived injustices which led to deep seated bitterness. Their actions and attitudes created a negative atmosphere and affected team productivity and cohesion. Coaching, closed door meetings or pleadings could not change their anger or resentment toward the situation or the other team members.  And, in that case, it only got better when that person was no longer with the company. In this case, I was a victim of the sunk cost fallacy. I had already invested a lot of time and effort in trying to improve the situation so I didn’t take the necessary action when I should have. The delay hurt the team, the individual involved and me.

Necessary Changes

As a manager or leader in this situation you have to decide how critical the issue is, how disruptive it is to the team and how that on-going situation affects the department or company. You have to decide if the contribution of that employee is worth the disruption. Most of the time it is not. When your threshold is crossed and other forms of redress with the employee have not worked, you have to act in removing that troubling employee, either by re-assignment, moving to another department or division or firing them altogether. Dr. Henry Cloud, in his book “Necessary Endings” lays out clear guidelines and methods for these situations. I highly recommend it.

On a team that is operating at a high level, one bad apple can affect the whole lot. It is better to deal with issues while they are still small than to wait until the mess is really bad and stinky later.

Now, where is that plunger????

Small Business Purchase

3 lessons M&A teams can learn from Target Canada

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In his poignant article for Canadian Business entitled “The Last Days of Target Canada“,  author Joe Cataldo, describes the birth, short difficult life and painful death of Target Inc’s expansion into Canada.

The story is instructive for any business person to read and reflect on. However, there are three specific takeaways that apply to M&A deal and integration teams.

Know Your Systems

One of the fateful decisions the Target Canada team made was to forgo the use of the existing world class, US based, retail IT system and instead go with a new off the shelf ERP system and vendor. The US system did not support foreign currency and had some other short comings related to business in a new country.  In creating the new system to manage purchases, ordering, distribution and inventory control, enormous amounts of data regarding thousands of products had to be ported. Assumptions about the data led to gross inaccuracies which resulted in huge inventory problems and impacted stock available at new stores.

From an IT perspective, extending a known is sometimes more doable and more predictable than starting over, even with a reputable off the shelf vendor.

When an M&A transaction involves integration of data heavy systems detailed analysis is needed to uncover potential incompatibilities, assumptions and requirements. In the Target Canada case, simple issues such as the use of metric vs. english units and the order of package dimensions (length, width and height) caused considerable problems with data impacting factory orders, store inventory and distribution to stores.  By knowing some of the fundamental requirements up front in the deal planning process a more realistic schedule, and manpower framework can be established.

Bound your Scope

Due in part to the pressure of a $1.8 billion investment in lease purchases for Canadian real estate, the Target Canada team was tasked with the goal of opening 100+ retail locations in just over 2 years. This work not only included the retail locations but three distribution warehouses as well. This was a ‘from the ground up’ attempt to be fully functional at scale and profitable within three years.  In hindsight, this scope proved extremely difficult to manage.

In a small or medium size business transaction, scope of the deal is an important factor in setting expectations and forming the final integration team. Even when the scope of the deal seems well bounded, there needs to be allowance for surprises. The Target Canada schedule had no room for that. There is nothing wrong with setting stretch goals. However, they should be rooted in a realistic assessment of probability of success.

In an M&A deal time line, a layered planning approach for complex system integrations may help form more achievable milestones.

Schedule some reality

Scope and schedule are dependent variables. In the Target Canada situation an expansive scope met with an un-realistic implementation schedule, ultimately leading to bankruptcy declaration for Target Canada. Overly aggressive (and un-realistic) schedules can doom a deal from the start.

An M&A deal that is a large investment for the acquirer can place high pressure on the implementation teams to deliver promised financial results.

Prudent M&A deal teams will fully consider all aspects of a acquisition or merger and form schedules to match the complexity they are dealing with. M&A deal teams need to push back on investors and executives where scope and dictated timelines don’t mesh.

 

 

Personal Growth, Small Business Growth, Small Business Purchase, Uncategorized

10 signs a company may be heading for a dead end

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As an investor, you want the companies you buy to be vibrant and heading toward a shared better future.

As an employee, you want to know that the company aspires to something more and has plans to get there.

In either case there are signs you can observe in the corporate environment to help discern whether things are looking up and there is hope or whether things are in a spiral and it may be a dead end.

If the company has these signs it could spell trouble:

  1. Stopped investing in personal development and growth

Learning, adapting and growing is the only antidote to a rapidly changing workplace landscape. It is a crucial way to retain the ability to be competitive in the future. Corporate training, personal development and the encouragement to pursue growth are signs a company is looking to the future and has hope.  Without training and development your skills will slowly become irrelevant. Without a corporate growth culture, the company will stagnate, and be ripe for disruption  from more forward-thinking and engaged competitors.

2. Stopped vision casting, strategic planning and setting goals

Vision and strategy to get there are also forward looking. A clear and well communicated vision of the future is a unifying force in a company, getting everyone on the same page. Strategy and goals allow you to focus the energy of hope in the areas that best achieve the vision. Goals and strategies allow you to say “no” to the other, potentially good activities, that don’t most fully help the company realize the vision. If the company has no vision casting, or strategy discussion, it is a tacit admission that the future looks dim. For no company can continue to exist by simply repeating what they have done in the past. Jim Collins covers this and other corporate killing behaviors in “How the mighty fall“.

3. Stopped analyzing failures and learning from them

Every failure is an opportunity to learn. If your company is not taking the time to ask the why questions surrounding any company ‘failure’ it is neglecting one of the most direct sources of learning and growth available. As the folks over at isixsigma.com state:

“By repeatedly asking the question “Why” (five is a good rule of thumb), you can peel away the layers of symptoms which can lead to the root cause of a problem. “

By understanding root causes, we can make changes to correct, improve and grow. When this process stops, improvement, and growth stop as well.

4. Stopped experimenting

Experimenting, and the the learning that takes place from it, are paths to future products, services and improved customer experiences. Experimentation is the path to discovery. Experimenting is planting seeds for future ideas. Without experimentation you eliminate a key source of corporate learning. Without corporate learning is will be impossible for your company to keep up and competitive in a fast changing market. The market you serve will evolve and change leaving you behind with your antiquated products and services and no one wants to buy.

5. Stopped listening to customers

With today’s search capability, social sharing and ubiquitous smart phone presence consumers can instantly access real time information about your product or service. This can include reviews, comments, social shares and other information. It is easy for a consumer to find out more about your product than you know. The users of products and services are willing to share feedback as well. This feedback is extremely valuable in product development and service adaptation. Customers will reveal what they need and will pay for if you ask the right questions. Companies that stop this process (or ignore it) are refusing to set themselves up for future success with their customer base. Opening the door wide for competitors who will.

6. Stopped working at employee retention

The real asset most companies have, that doesn’t show up on the balance sheet, is the employee base that shows up and do their job in a competent, efficient manner. The consistent commitment to show up and do their job is what moves a company forward. If all the employees stopped doing that, any business would fold like a garage sale lawn chair. Recognition of this fact, and the commensurate application of retention programs for key positions is important to the future continuity and growth of any company. Companies who don’t value the employee base are not valuing their own future prospects.

7. Stopped focusing on workplace culture

As Peter Druker is famously remembered as saying “Culture eats strategy for breakfast”. A great workplace culture is the lubricant of employee commitment and engagement. If the culture is poisonous or corrosive, or just simply ignored, it will impact engagement, commitment, and implicitly, business results. Culture has to be nurtured and maintained. Stopping the care-taking of the culture is akin to not cleaning the fish tank. Pretty soon it gets unbearable (and kills the fish).

8. Stopped showing thanks and appreciation to employees

Sincere thanks and appreciation from company leadership can be more motivating than monetary reward. We all want to be appreciated and recognized for the contributions we make. In companies where this is not the practice it makes the grass look a lot greener elsewhere.

9. Stopped watching for disruption

Disruption can happen at astounding scale and speed. I talked about my take-aways from Big Bang Disruption where whole industries can be disrupted with breath-taking speed. A company must be always on the lookout for up and coming technologies and companies that would potentially pose a threat. This examination must be part of their planning cycle and strategy discussions.  If you stop the vigilant examination of your industry and its periphery you invite the surprise of your industry changing underneath you and your company having no response.

10. Stopped communicating and serving

If your company leadership is not engaging in communication and re-iterating the vision and culture and discussing openly the challenges and opportunities of the business, that is a clear sign that something is amiss. Either it means they have nothing to communicate, or what they have to communicate is bad and they can’t bring themselves to deliver the message. Both are huge red flag indicators.

 

Most of these are easy to spot and all of them are correctable with diligent, committed and wise leadership. Without that, you may be on the way to another dead end.

General IT, Small Business Purchase, Teams

Why You Need an IT Professional on Your M&A Deal Team

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This article first published at the Axial Forum here: Why you need an IT professional on your M&A deal team and is reposted here with permission.

Traditional M&A deal teams run the risk of missing substantive issues that could impact deal structure, terms, and integration success.

Where does this risk come from?

Often the answer is simple: a lack of informational technology (IT) visibility.

Most M&A deal teams comprise accountants, lawyers, M&A professionals, and executives. These are the small teams that engage and form the deal framework with a target firm.

This small team approach can work well and move quickly. But business today is increasingly IT dependent, and these teams may overlook crucial items that could make or break a deal.

How can M&A deal teams mitigate this risk? Involve IT professionals as part of the deal team to help assess a broad overview of the IT landscape of the target firm and identify any substantive issues that may exist early in the deal making process.

This may seem crazy to some. Traditionally, IT is viewed a functional unit of a business — far down the food chain when it comes to M&A deal making. Information technology is not considered at the beginning of the process unless the acquisition is IT-related.

However, here are six reasons that an IT representative should be involved in your next deal team.

1. Pervasiveness

Even small market firms have a significant IT footprint these days. Every department in a typical business has dedicated information technology systems to handle their day to day business functions. There is marketing automation, accounting, resource planning, point of sale systems, human resource systems, production management systems, customer relationship management software, database management systems and big data analytics software, to name just a few examples.

These are the simple cases. Entire departments can be completely dependent on IT systems to fulfill their duty to both internal and external customers. We are almost numb to the pervasiveness of IT. Like electricity, as long as it works, we don’t take much notice.

This out-of-sight out-of-mind attitude can blind an acquirer to potential deal trouble spots. Since IT impacts each business area, it’s important to identify major obstacles and issues early in the deal process.

2. Complexity 

As the pervasiveness of IT systems increases, so does their complexity. Servers, databases, networks, cloud storage, security firewalls, authentication and security systems, third party APIs, and open source software stacks are the hidden components of visible business technologies. It is here, in the maze of hidden components, that potential problems lurk during deal formation.

As a business scales, the number and interconnectedness of these systems increases. It is easy to conceptualize a corporate web server. However, that simple concept can have a complex implementation. For example, it could be that the corporate web server is really several cloud virtual machines behind a load balancer using shared common storage and front end proxy caches for static element distribution and a content delivery network for serving corporate media. (And this is just a small piece of the potential IT complexity in a small to mid-size corporate acquisition.)

Getting a bird’s eye view of the complexity of the IT situation can help deal makers better understand the impact on price, terms, and deal structure as well as improve integration planning.

3. Business Impact 

If a target firm is desirable to an acquirer from a financial or operational perspective, chances are its IT systems will have a direct impact on the business. Effective IT systems can bring significant competitive advantage to a company through automation, proprietary function, scale, and features. The acquirer needs to make sure that they can realize and potential improve upon these advantages after the acquisition. Having a high-level view of the business impacts of the existing IT systems can give the deal team unique insight into ways to further leverage those capabilities post transaction, thus improving potential ROI of the acquisition.

4. Cost

According to Bain Capital’s Will Poindexter and Vishy Padmanabhan, the single biggest impact on general and administrative costs for many companies is IT. Deal teams should consider early on the condition and strategy necessary for the target business’s IT functions. The current condition of IT will have a big impact on future cost trajectory. Poindexter and Padmanabhan use three archetypes — “Neglected,” “Indebted,” or “Gold Plated” — to describe, at a broad level, the conditions they have found in their engagements.

Each archetype will have its own impact on future costs and investments needed post transaction. Much like a high level financial assessment is done to justify pursuing a deal, a high level IT assessment should be done up front as part of the early engagements. Hidden costs, true condition and implicit assumptions regarding the financial needs of the target firm’s IT structure should be revealed and known to the deal team.

5. Security Liability  

Not a day goes by that there is not some news story about a hacked company website or stolen corporate database of customer information. The impact of a data breach can be expensive at least and debilitating at worst. According to the IBM’s 2015 Cost of Data Breach Study, the average consolidated total cost of a data breach is $3.8 million.

Because of this potential liability, an acquiring firm absolutely needs to fully evaluate the security capabilities and practices of a target business during due diligence. However, certain key elements of a business’s security architecture, policies, and practices should be discussed and reviewed during early deal discussion. Having this information early will give the deal team an indication of how the firm approaches security. Knowing this will facilitate a more accurate assessment of potential risk and immediate mitigating actions needed post-transaction.

6. Expectation Management

Integrating IT systems can be the largest part of a merger or acquisition. Differing systems, tools, protocols, and implementation architectures or tools can complicate integrations significantly, impacting timelines and ROI. If some of the thornier issues of a potential IT integration are known at a broad level during deal formation, it’s easier to create more realistic timelines for closing and merging. This knowledge can also help the deal team more appropriately staff the integration teams needed to complete the merger or acquisition.

Summary

An engagement with IT during the deal phase can help identify red flag areas that will need extra due diligence or that can impact deal structure and negotiations. Knowledge of the IT situation by the acquiring firm can also provide leverage points during negotiations and enable the acquirer to factor in early impacts from IT risks, costs, or additional investments that may be needed. Ultimately, knowing, considering, and planning to mitigate IT related factors and issues early will contribute to a more successful M&A outcome.

General IT, Security, Small Business Purchase

5 ways BYOD could impact a small business purchase

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BYOD, or “Bring Your Own Device” is a phenomenon that is currently the rage in many companies. But it could completely derail a business purchase.

BYOD is where an employee uses their own mobile phone, tablet or laptop to access company email, data, networks or applications. It it perceived to allow the employees to be more productive and responsive by accessing job related information and applications on their own device, which they have with the all the time. Companies perceive BYOD to be a way to spend less on hardware for employees.  Everybody wins? Right?

BYOD can be a necessity for small businesses that need to deploy scarce capital for product development. They simply can’t afford spending those resources on phones, and other devices even though they are needed to run the business. BYOD can be a positive for larger companies in terms of impact to budget, improved customer response time and better data for real-time decisions.

What about BYOD when it comes to a business purchase?

When it comes time to purchase  a business, what should an acquirer be looking for reading BYOD that could create problems in the deal?

Here are 5 areas that an acquiring company should consider when it comes to BYOD concerns.

1. Access to company systems

BYOD means that employees are able to login to corporate systems easily. Systems such the payroll or accounting system, maybe your sales or customer applications like salesforce. This includes access to corporate websites for monitoring and publishing content or social media posts. Many employees setup their devices to remember login id’s and passwords so that they don’t have to login to a service overtime they check it. This means that if there phone is stolen and unlocked, the thieves could potentially access those corporate accounts in the same way the employee does.

2. Confidential data

BYOD offers access to corporate systems. This means that for some applications you can download data that may be confidential to the company. Email attachments such as sales reports or contracts, files that are accessed from corporate data servers and documents and spreadsheets can all be stored locally on employee devices. Companies that have intellectual property records and documents would need to pay special attention to this.

3. Customer records

BYOD brings a big advantage to employees for dealing with clients and prospects. By having access to up-to-date, real time customer data and records the employee is able to have more relevant conversations with the client or prospect. This access can help close deals and increase revenue. However, if the device were lost or stolen this same customer data could be available to perpetrators. Corporate data breaches are now commonplace and very expensive.  Acceding to the 2015 IBM Cost of Data Breach Study the average consolidated total cost of a data breach is $3.8 million.

4. Departing employees

Acquiring a business sometimes means existing employees are re-assigned or let go, and some may choose not to stay with the new owners. Acquirers needs to carefully analyze the BYOD impacts of a departing employee. Make sure their access is removed and any locally stored data, or copies of data are deleted. Otherwise they could be walking out the door with the keys to the kingdom, or at least part of it. This is a particularly crucial step for departing IT system administrators. They usually have capability in their access to have full control over systems, data or servers. It is imperative that these aspects be clearly walked through for any departing IT or software development employees.

5. BYOD policy mismatch

Prudent companies use BYOD where it makes sense and helps the company objectives. Part of this prudence is spelled out in the BYOD policy the company should have. These policies should try to balance  employee access and convenience with liability and privacy concerns. The acquiring company needs to investigate the policies in place and determine if they are compatible with their own current practice. If not changes will need to be made, communicated, trained and enforced as part of the transition.

Conclusions

These are some of the basic impacts. Certain businesses may have additional concerns when it comes to HIPPA, manufacturing controls and other specialty applications. It is important to consider these aspects in the deal making phase and investigate them thoroughly during due diligence so that deal risks and impacts are known. An acquirer may need to enlist the services of an IT professional to fully investigate the risks and sues. Knowing before the deal is signed helps make the best decision possible.