EP20 - Forrest Gump versus John D. Rockefeller - leveraging successful business habits for your ESOP.

Hey, we are in summertime now. It is June and I am the ESOP guy and we are on a journey to an ESOP. We're deep in season 2. If I sound a little funny today, it is because I recently got COVID and I'm coming out of it. And so I, I suppose that the COVID was not gonna just leave our country without coming and knocking on my door. So, doing well, and I'm coming out of it, but it is definitely not been a lot of fun, so. With that, I wanted to say thank you so much for joining today. This is a podcast that has been created as a resource for those that are thinking about, thinking about using an employee stock ownership plan in their businesses. If you have an interest in the other episodes, please go to our website at journey to an ESOP.com. With that, I wanted to kick off this episode with this. She was my most special friend. My only friend, we was together all the time. We was like peas and carrots, Jane. Yeah. Now you wouldn't believe it if I told you, but I could run like the wind blows. Who in the hell is that? Is, coach. That's a local idiot. Right there is Forrest Gump. I could run like the wind. Me and Jenny were like peas and carrots. I love Forrest Gump and He has, in, if you haven't seen this movie, I know that you're probably what, you know, you know, I had to come and do an episode on Forrest Gump. I mean, you, you kind of have to know if you've been listening to this podcast, it is uh a classic for Americans and just an interesting movie. And one of the things about this movie is just interesting because there's this contradiction or this contrast of someone who shouldn't be successful but is successful. So with that, the title of this episode is going to be called Forrest Gump versus Rockefeller. And one could say that Forrest, when you really think about the movie, and, and his success through football and his success in the military, his his success as a business person follows certain habits or core values of things that he just does. And today we're going to explore the Rockefeller habits and talk about The similarities of those when you find businesses that really do really well historically, and then when you start thinking about converting your business to an ESOP, one of the things that we want to do is create a very sustainable business enterprise. And part of that job is to obviously keep the success of the company that they had before, but the other part is, is to build that into the future and Some of that happens as we start thinking about the forecast and the business plan and in the short horizon of doing an ESOP transaction. But I also want to be thinking as we think about, you know, building a sustainable ESOP company, about how the leadership continue to carry that on. And I believe there are certain things in the Rockefeller habits that are just very important aspects. So hopefully, if you have an interest in you're going to continue to listen, take some notes on. Some of these and really compare with how your business um adopts some of these habits and incorporates those into their business. So one of the things I wanted to, to, before we start the episode, I wanted to remind everybody, we are the 4th in the 4th ESOP Guy live webinar series coming up at the end of June. It's at June, June 30th, 20 p.m. Eastern time. And it's the title of this one is ESOP as a strategy, and we're gonna cover all kinds of ways of thinking about now, once we get the ESOP kind of feasibility put together, how do we now strategize to align the ESOP with the goals and objectives of a business owner and you really use and leverage certain tools ESOP gives us. So, so look at that, if you want to register for it, you can go on our website at journey to an ESOP.com. As always, if you like what you hear, please subscribe to this podcast, share it with a friend, and we'll continue to, to try to bring more and more uh resources to you and what you're looking for. All right. Forrest Gump, movie overview real quick, classic Tom Hanks movie, very big part of our American culture here. And it, I think one of the reasons is it touches so many themes in our lives. It touches our relationships, our, our business lives, it touches our, our family lives, it touches college and military and and politics, and, and it's just done in such a way that um just makes you wonder, and it's extremely creative and And it makes you just start thinking about life maybe more in in different levels, so. You know, Forrest grows up, he's got everything against him, you know, he's a single mom growing up in the deep South. He's not as smart as others, um, and nobody likes him and except for this one girl, her name is Jenny. And one of the things about their friendship is just, is that it just There's just a, a commitment that they have. And it's just this beautiful story of that friendship that continues to go on into their, the future life that they have and Forrest gets through every phase of his life, you know, just helping people around him and, and really just living in a, in a somewhat simple and a very straightforward life, which I think one of the, one of the themes of the movie is just that just keep it simple, stupid, right? I mean, just keep doing the things that are really, you know, that are right, and don't veer off of that. And I think that's part of, of what Forrest does. He becomes a football hero because he can run really fast, he becomes Um, he goes in the military and, you know, again, you know, going into the military and during Vietnam was not exactly the, um, the, the safest place to be, um, but becomes a Medal of Honor, um, hero, saves a bunch of people. Um, makes a commitment to somebody that one of his friends, so he becomes a shrimp boat captain because of that, doesn't make any sense, but then becomes extremely wealthy as a shrimp boat captain because of a big hurricane comes. You know, I'm telling you the entire movie. Eventually he invests in this fruit company, which is really Apple, it's just a computer company and, you know, just basically brilliant, you know, things that happen, um, and major success that continues to follow. So, again, how do you, you know, connect this ESOP guide to ESOP? So, how does this have anything to do with, you know, thinking about the future of your business and And I'm not saying, you know, there's a Forrest Gump investment strategy here. I am saying though that there are certain things that Forrest Gump, if I start thinking about some of the habits that made me think of these, these Rockefeller habits. And so what we're going to do is focus in on, on those specifically. Um, the Rockefeller habits. have um been written down by Vern Harnish and created um and written down and created by Vern Harnish. I think it came out in 2012, um, but really around the leadership and management principles used by John D. Rockefeller, who founded Standard Oil. And this was somebody obviously in American history that would be like one of the richest people in our history or are thinking about the people that have been most successful. And the 10 Rockefeller habits, I'm gonna go over those in brief, but again, I want to compare these habits with the businesses that you might be part of and really think about what that might, what, what that might look like for you. So, the first is the executive team is healthy and aligned. The second is everyone is aligned with the number one thing that needs to be accomplished each quarter to move the company forward. The third is communication rhythm is established and information moves through the organization quickly. The 4th, is that the, every facet of the organization has a person assigned with accountability for ensuring goals are met. The 5th is ongoing employee input is collected to identify obstacles and opportunities. The 6th is reporting and analysis of customer feedback data is frequent and accurate. 7th is core values and purposes are alive in the organization. 8th is the employees can articulate the key components of the company strategy accurately. 9 is that all employees can answer quantitatively whether they had a good day or week. This is also called having a scorecard, and then the 10th is the company plans, the company's plans and performance are visible to everyone. So what we're gonna do is we're going to go through each of these. I went through them, I went through them quickly just to give everybody an overview. And then we'll walk through each one of these habits and talk through some of the, the, the aspects of that and then just really, I think in your mind as you think about this is just assess where you are with those. So the, the first is the executive team is healthy and aligned. Team members really do understand in this that um what makes them successful is that they take time to work on the business and each other, everybody's differences um blend into what we would want to be as a, a uh a unity of, of everybody thinking about what's right for the, for the whole team, and what's right for the whole company. The team should meet frequently. One of the recommendations is, and this is not only from the Rockefeller habits but from other business books is that on a weekly basis, it is best to try to keep everybody fresh in what's happening. Uh, the team participates in ongoing executive education, so something that they're continually studying and thinking, so continually sharpening their their saw. The team is able to engage in constructive debate and members feel comfortable participating. And so, one of the things that I always come back to from business 101 back in college is just that there's not a groupthink, which means you've got all the, the executive team basically saying the same thing that the owner maybe wants them to say, and, and they're just saying, yep, yep, I, I agree with you. Instead, there's a healthy Um, way that people go about looking at all the different possibilities and you're building your executive team, um, and I, and I say you're building it, you're always building the executive team, whether you've got some, a very good executive team or you're still pro progress, you're always building it because you're, you're either continually training people, recruiting for people that you don't have or gaps that you don't have. So, you know, assessing how strong, and this is one of the aspects of these habits is, is I think you do have an opportunity to try to really um assess where you are, um. One book that has been written about this topic as far as teams is called The Five Dysfunctions of a Team, a Leadership Fable by Patrick Lencioni. And one of the things that he details in this book comes from this idea of of how organizations can be dysfunctional. And so he references things like absence of trust, fear of conflict, lack of commitment, avoidance of accountability, and attention to results. And so thinking about those types of things um in your leadership team are important as you go through the process of assessing where you are with this first habit that we have. And so, The second habit that we're gonna talk about is, everyone is aligned with the number one thing that needs to be accomplished in each quarter to move the company forward. And I, I think it's first off, when we think, when we think about this habit #2, 1 of the things I think it's critical is that there be an annual plan. That has been created. By the visionary of the company, by the person or persons responsible to think strategically for the organization. Now, once that's been created, then the opportunity is to break that now down into quarters and really dig in with your leadership team and assign the rocks that are going to be necessary, and we talk, talk about rocks, we're going to go right back to Stephen Covey's um habits, 5 habits um of highly effective people. Um, and look at the things that, that, you know, in terms of terminology, when we talk about rocks, these are just priorities, things that have to happen in order for uh the company to accomplish what it's, what it's set out to do. So, each quarter, then as we start thinking about it, the leadership team should know what is going to be done in those priorities. And now, the key thing to this, I believe, is that we can always do a lot of activities. We can always push forward on a lot of different initiatives. And I think one of the, one of the major grounding areas of this is that you're gonna have to connect the dots. Is this going To move the organization forward. And I've heard it said, like, if everybody's rowing the boat, the boat's moving forward, right? And so what is actually going to move the boat forward. Now, Once that's happening and everybody's is growing in the right direction, um, and, and this is where you have the connection with number one is that everybody is working completely together and, and so if you, if you visualize that metaphor, it just means that the rowing is hard, right? And it, and it takes time, but it's, and when it's done together, it does really well. But when it's not done in unison, then you do create lots of problems, um, that you should be aware of and those need to be dealt with and Dealt with, you know, quickly. So, breaking them down into a quarterly basis is really uh an important aspect of #2. In terms of the Rockefeller habit? And one of the things I think that it's challenging is, is, is to focus on a few priorities and not sometimes have this long list of things that have to get done and some people want to get everything done overnight. Um, one year goals broken down on a quarterly basis are are doable. But when you take a 1 year goal and you try to do all of it in with, within a quarter, then I think you're, you're either asking too much or you're, you're not connecting the dots between. Um, the reality of what it takes to actually get, get things done and work really as a team. And so the second habit really does um work work from the first habit, which is creating a very healthy and aligned team. Everyone is as they are aligned with the company goals to move things forward. We eventually you'll start seeing success and that success when you start having quarterly success, but I believe definitely motivates everybody to continue to work those types of things into um each quarter and so it becomes contagious in a sense, and I don't mean that from having COVID or anything. I mean, good contagious. So, so number 3, Rockefeller #3 is communication rhythm is established and information moves through the organization accurately and quickly. Now, this is a communication is always a difficult thing for everybody, especially as you get larger and larger organizations. Um, so, So one of the aspects of this is how do you communicate well in your organization? One of the things that we try to do is is look at this on a, on an ongoing basis and in an engagement survey to see where we are with our communication and um assess, you know, again, where are we communicating well, you know, do people really know what the objectives are. And so, as you start thinking about that, there's always ways to to look at it, some, some. Um, companies have a daily huddle, and that just hey lets everybody got to, you know, gather together in some way, maybe we use technology to do that. Um, I definitely think that all the teams that are really a big part of a company should definitely meet on a weekly basis. So communicating on a weekly basis really does help. The reason that is is because if you wait for longer than a week, then Then the issues that should have been discussed or communicated, get deferred or postponed and those become difficult down the road or become bigger issues sometimes. The executive and middle managers meet um really in, in terms of, of systematically, um, taking, making sure that they've, they've looked at the major critical success factors and, and number 3, and, and be able to stay on top of those. So there should be some type of connection um in this number 3 with uh understanding that how issues are, are, are. are identified quickly through key performance indicators. And so there should be a system as part as far as the communication goes to identify issues with the company's KPIs to the company's management in a way that is, is, is getting the information out as fast as, as possible. And so that there's not a delay in looking at those key numbers. So a good, a good example of that is just You know, watching, you know, receivables and seeing how many days do you want your, um, You know, your, your customers to pay you. And if, if you work backwards and say, you know, if it, if somebody hasn't paid their, their bill over 45 days, is there some issue? So there might be a KPI that says we're watching that in 45 days to see and then all of those we kind of populate a percentage of total receivables. And so then that becomes a KPI and that can be monitored, um, in this one, just kind of, simply. Um, so that, that people can stay on top of potential issues that might come. There might be other KPIs that you have that connect to the sales and business development plan, but there's, there's many other KPIs that you, you can create, um, that really help round out this number 3. Um, one, as far as the other meetings go, um, a monthly management meeting, a quarterly and, and, and an annual planning meeting, all of these, um, there are off-site meetings that need to happen on an annual basis as well. Um, so it's very important to think about when you start thinking about meetings, um, definitely be thinking about the investment that you make in the meetings as opposed to Um, the, the difficulty of going to a meeting and being interrupted with all the things that happen. Now, I'm gonna connect this to a, a program called Traction and say that one of the best meetings that, that I've been a part of is a, is a meeting called the Level 10 meeting, um, which comes out of a book called Traction written by Gino Wickham. And, and so that idea is that you can really invest 90 minutes on a weekly basis with your leadership team. And really accomplish a lot and stay ahead of things if they're, if you're facilitating and running these meetings correctly. It does take a little bit of investment of time and energy, but I think in the long run, there's definitely a, there is definitely a payoff or a reward for that. Rockefeller habit #4, every facet of the organization has a person assigned with accountability for ensuring the goals are met. So this is, this comes back to again, things like the accountability chart, um, how did the financial statements, um, look in terms of who's responsible for which line, um, what are the 4 to 9 processes on the, on the accountability chart, um, who's accountable for them? Um, every 3 to 5 year, um, key, um, area of the company in terms of what you're trying to accomplish is been documented. So if more than 1 person is accountable, then, um, no one is accountable. So really what that comes back to is that each person in the organization should have some type of target goal that they're trying to accomplish that's quantifiable and can help the organization move forward. So getting accountability, I think this is one of the most difficult things sometimes for, for many companies because it is difficult sometimes to assign a quan quantifiable metric to some people's roles and it does take a little time to work through that process, but it is definitely something that you should assess how well you're doing because it definitely will be um. It is, it is an area that will help propel the company going forward. Number 5 is ongoing employee input is collected to identify obstacles and opportunities. So how this happens is going to be up to you. All executives um and middle managers have start, stop, keep conversations with at least one employee weekly. So this, what this does is a recommendation is to ask the questions for from your employees and find out what's happening. This is a very um difficult thing to do sometimes because we're so busy doing things in the organization, but it doesn't take a lot to ask employees what's going on. Now, the insights from these employee conversations are shared and should be shared at weekly executive meetings. Um, each employee as a, as they offer input. One of the things that I would say culturally could really damage the culture is if, if you're engaging in conversation with the employees and you're not taking in, taking seriously what they're saying back to you, then you could really hurt the culture by creating a false sense of, of Sincerity with with this process. Now, most people want, when I, when I say most people, when, when you ask people questions there as employees, they're gonna want to offer some good input. Sometimes they want to complain about what's going on. Um, it's not always a perfect situation, but at the very least, if they know that you care, they're gonna know that, you know, you care about what's happening in their future as well. So. I think that's a very solid piece of advice, and the more you can get more information you can get that really is there are solid obstacles and Um, get those early into the weekly meetings. The better it is to work on those, um, before they become a bigger problem. And so getting into that practice now, one of the meeting agenda items should be just how, you know, an employee headline when especially with the level 10 meeting. So as you get to the level 10 and you're saying, hey, is there any employee headlines, you know, it should come from this um question that's being asked. So the question is, what should the company start doing, stop doing or keep doing? and then see what the employees say and, and look at that in terms of, of establishing this part of the Rockefeller habits. Rockefeller habit number 6 is reporting and analysis of customer feedback data. Um, this is very, very hard, and there's a lot of different um areas where people have looked at how do I get good customer feedback. One of the things that this recommends and again it comes back to how the executives and the middle managers work, that having a conversation with at least one customer a week would be really helpful and again similar to is just getting very um good information is similar to the idea of asking the employees what's happening, you know, asking the customers what's happening. And so, On a weekly basis, we can all sit down and say, you know, I could at least call one customer and ask them how are we doing when it comes to delivering the the service and the product or how are we doing when it comes to anticipating what's happening and, you know, as a, as a customer of ours um so I think that would be excellent information and as that comes into the weekly meeting, um, then there's all kinds of information that's being, that's, that's being shared. That provide intelligence for your company to then talk through with your key leaders and work that out um to something that can really help the company. Some other people do, um, customer surveys, um, and that there's nothing wrong with those. It's just, it's, there's, there's multiple ways and I'm not saying you should just do one thing, but I do think you need customer feedback as, as much as you possibly can get it, um, and focus on trends and what happens, what you see happening in, in the marketplace with um what your customers are telling you. Rockefeller habit #7. core values and purpose are alive in the organization. So, not gonna spend a ton of time on talking about like what, how do you get your core values, but I will tell you if we, if we think about this with, with, say, Forrest Gump or anybody that you can tell in an organization. The, the pulse of the organization by just talking to the people or the, the purpose of the organization or you can tell what they're about. Um, I've called, you know, over my career, I've called and talked to many different companies that have been clients of our firms, um, obviously clients that we're, we're working through the ESOP process with. And once you start talking to middle management or you start talking to Hold on, that is my phone and I am so sorry. You start talking to, um, you know, even the receptionist and people that you're just engaging with and there's a, there's a sense of, you know, who they are, what the, what the company is all about and the way that they come across. And I think this is a pure reflection of core values. And so, if you haven't ever gone off site, and this is one of the things I've, I've seen in our own organization, um, If you haven't gone off site and really created core values and a purpose. I'm gonna say that that's really critical. It's foundational. And if the fact that it's #7, I get it, but in my mind, it's, it's number one in the sense of if you can't build a healthy organization and a healthy team, if nobody really knows what you're about. And the core values are not just the core value of the, of the business leader. Um, it is a core value of, of all the executive leaders in the organization. So I really do. You know, I think going back and looking at those. One of the things I saw in our organization years ago is that we just, we, we had core values, but they were just, there were too many of them, and nobody really knew him. And like this, as this habit says, That they're alive in the organization, we just, we weren't experiencing that. And when you ask questions about that in a staff meeting or you can just tell, or you know, if I can tell in a staff meeting, you know that our customers can tell. So sometimes it's just going back and, and, and dusting off what we thought they were and reorganizing the company with new core values and purpose. Um, maybe that's with a change of leadership, certainly within an ESOP. Um, there's an opportunity if there's, there's a phase out of the existing selling shareholder and new leaders coming into positions, there's certainly a great opportunity to go back and, and look at the core values and restructure that in terms of timing with everything else. The um Rockefeller habit number 8 is establishing um what the strategy is. So employees can articulate the key components of the strategy accurately. So then creating the um The connection between what we're really trying to accomplish and then articulating that into key goals for the company and coming back to what the company is all about so that there can be a um a response to what does your company do, that's more, much more than um we are a CPA firm or we are a manufacturer, we are a construction company. What we do is we, uh we are a business that has been um built around the principles of helping clients go through the ESOP process and We help companies go through the process of building out the future sustainable models with key not just key individuals in their companies, but helping them align what their business does with their customers. And so thinking about how you articulate that is going to be very important for your key people. So number 8 is really just all about how you communicate that within your team. Number 9 is all employees can answer quantitatively whether they had a good day or a week. So this comes back to specific KPIs and having each person have a, a, a one or two key performance indicators that they're responsible for. Um, if they don't know what number they're responsible for, um, then how are they ever gonna really know that they've accomplished what they're really going out to do? And if those numbers, when you start thinking about those numbers, don't connect back to the overall annual plan, the strategic plan, the quarterly plan, then how do you know then that your company is going to get to where, where it's going? This is a very difficult step in the process or in a very difficult habit to establish because Many times people think that they have the number, but numbers, quantitative numbers definitely are um difficult sometimes to nail down. And What we want to do is we want to connect those to how the company is, is, is geared up to hit their overall numbers. So breaking those down among the groups are it's very important. Rockefeller habit number 10 is that companies' plans and performance are visible to everyone. Now, this could happen in a uh a virtual world or we would have like a um a goal list of um in traction, it's called the vision traction organizer. Um, what we want to do is, is maybe have that maybe in even in a physical location, but we want to boil down our scorecards and we want to have, make sure everybody can see what we're trying to accomplish and where we are in reference to it. So, clearly, as you go through a a staff meeting or you go through. an update, we want to always come back to what are we trying to accomplish and where we, where are we at with that so that it's completely visible. And it's not something that people just didn't know about. And so with all of that, I think those are just great ideas to be thinking about what again, what I would, what I recommend is you start thinking about that list of items. is really assess where your company is, and there might be seasons to do this that are more appropriate than others when you, people are getting busy at certain times. Um, but when you do, I think you can really assess the, the strength of each one of those habits, and then come back with a plan to strengthen the ones that we feel like are weaker than others. One of the things I like to do when we do offsite work with clients is, is do an assessment like this. And do an assessment where you feel like you're getting, you're getting all your key people anonymously putting what they believe is, is really accurate, and then coming back and saying, all right, these are the, these are the areas we scored the lowest if I look at these, these 10 habits. And from that, I think you can really build a uh a solid plan to work on the weaknesses of the company. Um, and then really leverage what you think the strengths are and come back to that, that idea behind the SWOT analysis and really incorporate all of that together. So, I hope that really helps you as you start thinking about the future plan of your business and how you might want to use that to go into um strengthening your plan for your ESOP if as you go through the steps of becoming an ESOP company. So thank you again. Please check us out at journey to an ESOP.com if you are interested in the, in the ESOP Guy live webinar and registering for that, um, or other podcast episodes. If you again like the podcast, please subscribe and share it with a friend. Hope you have a wonderful day and we'll look forward to our next time on this journey to an ESOP.