Stephen Lynch - Strategic Planning for Small Businesses

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Welcome to the Exit Coach Radio show, the show for baby boomer business owners who are looking for cutting edge information as they plan their 3 to 10 year business succession and exit. Every week we interview top professional advisors for. Their best tips, strategies, and precautions so you can be well planned. And don't miss our one minute exit coach tip of the day on exitcoachradio.com. And now here's your host, the exit coach, Bill Black. Well, thanks for joining us. Welcome to the show. Our next guest, well, let me ask you a question first. Business owners, listeners out there, why do you run your business? What do you expect to get? You want results from your business. My next guest is the the chief operating officer of Results.com. Stephen Lynch is joining us from San Francisco. And we're going to talk about how results come to play. We're going to talk about the Stevens's book, the author, he's the author of the award winning book Business Execution for Results, A Practical Guide for Leaders of Small to mid-sized firms. It was judged winner in the management category of the USA's 2000. 14 Small business book awards. He's written articles in The Economist, personally consulted with the leadership teams of hundreds of client firms around the world. He writes a weekly email newsletter that has over 40,000 business leader subscribers around the globe, and Results.com is a growth firm with offices in the US and New Zealand. And the methodology they teach clients is the exact same methodology they use to run their own business. So Steven, welcome to the show and thanks so much for joining us today. Bill, it's a pleasure to be here. Thank you for having me. Steven, tell us a little bit about this, about how uh results.com got its start and a little bit about your background. Well, um, as you can probably gather from my accent, um, I'm not from around here. I'm originally from New Zealand and, uh, that's where Results.com was founded. We, we were founded as a, as a, as a business coaching, as a business consulting firm back in 1996. And for many years, we helped companies to create their strategic plans and we supported them, you know, uh, in the months and years to follow just to make sure that they executed those plans effectively. And along the way, we realized we wanted, we wanted a way to actually, uh, track the results, uh, of, of, of what our clients were doing in terms of how well they were executing their plans, how well they were hitting their numbers. And um, you know, we started out originally doing that with spreadsheets, tracking key numbers, tracking key projects. Eventually that evolved into software. And now Results.com has transformed from a a business consulting firm that uses software to support its consulting and we've done a complete flip. We're now a software firm that uses our business consulting, uh, pedigree to support our software. OK, so. Uh, it's so important that especially small business owners have a handle on, on their results. But did you find that most small business owners just kind of wing it when it comes into that area? Yeah, I mean, they, they, they're certainly creating financial statements and they're getting a good rear view, uh, vision of what it is that they're achieving financially, but companies we found are not very good at tracking results in real time. They're not really very good at At executing on the key projects that they decide that they're planning meetings. They're not very good at determining and tracking what are the key numbers that we need to achieve on a, on a daily, weekly or monthly basis that if we can achieve those key numbers and engage our people around those key numbers, they're the ones that, that are gonna make all the difference. And when you first start working with business owners, had, did you find that they were measuring the right things, uh, or, or were they? You know, I mean, a lot of people will look at work in progress, uh, recent sales, things like that, but a lot of companies struggle when they're trying to figure out those right key performance indicators or KPIs. So do you have any insights you can share in that area? Yeah, I think research suggests that 92% of companies don't measure KPIs very well, and our, our experience certainly bears that out. And you know, uh, you know, yes, they're good at, uh, you know, tracking the things that they, they capture in the monthly financial statements and, you know, they generate a, uh, an income statement, balance sheet every month, but most companies don't know how to track the key numbers that drive the outcomes they're looking for. And, and every, every industry's got some, some, some key metrics that are common to those industries that you can track and and use for benchmarking purposes, and we'll probably start there. But what we do is we, we sit down with each business as part Onboarding them into our, into our software product and, and look at, I guess the key drivers of their business, identify the key drivers and, and help them figure out, you know, what are the, the, the key activities that, that drive outcomes in this area. What are the key effectiveness measures that drive outcomes in this area. Generally, businesses are pretty good at figuring out the outcomes that they want. They're not always that good at figuring out what are the activities I need to measure, what are the effectiveness metrics I need to measure, and we, we help and support them in that regard. I see. OK. And so let's talk about the strategic planning for small business owners. So what are some of the biggest challenges or mistakes you see in that area? I guess, uh, most companies will come to us and they go, here's my strategic plan, and, and it's basically uh a lot of goals and, and goal setting is good, but, but, but goal setting is not strategy. And, and many companies might think they've got a strategy, but, but what they've done is an exercise in goal setting and And what we, uh, I guess have to help them to, to understand is that, you know, yes, we probably want to grow our businesses, but, but growth is not a strategy and, and maybe you want to improve the quality of your products and services, but that's not a strategy either. Maybe you want to be more efficient, but, but that's not a strategy either, or maybe you want to be more agile and Agile is good, but being agile is not a strategy either. It's like, what is strategy? Well, it's about getting really clear on what's happening in your industry, what's likely to happen in your industry in the years to come, and going through a disciplined thought process to get a thorough and understanding of how your industry is likely to play out and getting very clear on what are the key moves we need to make here to position ourselves for success this year, but also in years to come. And I guess strategy it's about balancing two Uh, contexts in mind. One of them is like, I've got a business right now, I need to make sure I'm, I'm, I'm improving it. So short-term strategy is about improving water is. Most people get that, most people understand that. But long term strategy, you need to think, what do we need to become here? And sometimes it, it, it requires forget the past and, and even reshaping your business so that it can more effectively compete in the future. And that's the real challenge, posing, uh, balancing those two opposing concepts. So you've got to run the business and improve the business that you have, but you also got to think, what do we need to be? What do we need to create here and keep both of those contexts in mind at the same time. That's great information. So, uh, it's focusing, focusing on your industry, focusing on the short term and long term. What, what's the definition of short term and long term these days? I mean, it's it's it's changed radically from before. Yeah, um, short term for me, I, I like to think in terms of quarterly sprints. Let's get clear each and every quarter. What are the, the, the top three things that if we could get them done this quarter would make the biggest difference. And I limit people to 3. Uh, and, uh, I remember Steve Jobs from Apple did something similar with, with his executives. He'd take them to an off-site, you'd say, what are the 10 things we need to get done? And everyone would fight to get their, their item on the list and, and you'd list up the top 10 eventually, and then you'd, then you'd go, OK, we can only do 3 of these, and you'd pair it right back to 3. And you need to do that with your business as well. OK, you might have a whole lot of things you want to do this quarter, but we're gonna focus on 3. What are those 3 things that are gonna make the biggest impact on our business? And for me, short-term strategy is about getting very clear on what are those 3 things that are going to make the biggest difference. Long-term strategy, I like to look 3 to 5 years out, and many people sort of struggle with that. And, uh, Yeah, it, it really does require going through a disciplined exercise and, and understanding the key forces that are impacting your industry now or are likely to impact your industry in the future and make some educated bets on what direction you need to pursue in order to set yourself up for success in the future because, as everyone's probably aware, you know, we've got an accelerating rate of technological change. We've also got a lot of societal change happening, and business is struggling to keep up with any of the changes. Yeah, I was going to say in today's technology technology world 33 years or 5 years can can be a radical difference from where you are today. There's, you really need to bring in some, some insights and experts on your industry at that point, definitely to figure that out because you need to figure out what all is going to change by then. It's amazing. The rate of change today. And I even, uh, some people say, oh, we can't plan that far out. Things are changing so quickly. And I always share a quote with, uh, by Jeff Bezos from Amazon.com and he says, I plan 7 years into the future. My competitors are planning 3 years into the future. And I figure, well, here's a, a, a guy, he's a company right at the forefront of the, the technological revolution. He's looking that far into the future. It behooves us to at least look 3 and maybe even 5 if we can. Well, for some of these guys we need to know what they're thinking 7 years in the future to plan our 3 years in the future, right? Yes, because some some of their platforms are out of this world. Now let's talk about transparency, you know, and one of the things that we talk about a lot for business owners, especially in our audience, is that you need to have these KPIs and this dashboard put together so that you can manage your business and elevate yourself to the owner position as opposed to the doer position. And your company Results.com provides management dashboard software that helps organizations be more transparent in the way they manage their business. So tell us a little bit more about the importance of transparency. Yeah, and, and in fact, I'll talk a little bit about some research from the Harvard Business School and, and they found that, you know, transparency, they call it radical transparency, it's a new term. Uh, but it's not necessarily a new concept, but it's, it's, it's the concept where everyone in the company can see which parts of the business are working well and which parts are not working so well. And they can also see which people are working well and which people are struggling. And, and what the Harvard research found is that when companies operate in that manner, when they make that sort of information visible, that those companies achieve superior returns. Now, it's not a new concept and and in my book, I wrote about the concept of navy pilots landing an aircraft on, on an aircraft carrier. And every time they land, They go below deck and they get to see how their landing scored, and every pilot gets their landing scored for safety and technique, and they get a little score plotted on a board which the navy call a greenie board and, and, and, uh, your landings are graded green, yellow, or red, green being a good safe landing, yellow, you can do better, red, no, that's an unsafe landing, and we need to work on your technique. And any navy pilot will tell you no one wants to have those red marks next to their name, and neither, no one wants to be at the bottom of. Of the greenie board. So even without their officers having to say anything, those pilots are already thinking what do I need to do to improve my performance here? They're getting together collaboratively and helping to support each other to improve their performance. So that's the concept. It's like making performance visible in real time so that people can see it, that people can discuss it. And you know that people who are performing well are getting acknowledged for their contribution, but also there's people that require our help and support. We know where we need to focus our time and attention to help and support those people. That's fascinating. So, so creating those visible dashboards that are then shared with management and the company so that everybody without speaking a word, everybody is figuring out OK, how We improve these areas that need to be improved. It's it's, it's baked into the day to day operations of the company. Yeah, that's step one, making performance visible absolutely is step one. But many, uh, I guess leaders have seen have fallen into the trap of thinking that's all I need to do. If I make if I make performance visible, then then management's going to take care of itself. I don't need to do that messy job of of speaking with people and And dealing with poor performance anymore. And I would say it's going to help you be a better manager, it's going to help you be a better leader, but no, you absolutely still need to manage your people. You absolutely need to discuss performance with them. And, and, uh, I, I guess having a, a, a cadence of, of regular meetings with your people, both on a team basis and on a one on one basis, and I really want to emphasize the importance of one on one meetings, but Uh, each and every week, you need to actually, you know, discuss performance with, with each of your direct reports and, and, you know, commend them for things that they're doing well, but also the dashboard will highlight the areas where they're perhaps not doing so well. And it's just, you know, a simple question you need to ask them, Oh, what's happening here? And get into a discussion around that performance. And if people know that each and every week, their manager, their leader is going to have a discussion with them about the performance that's displayed on their dashboard, people start to take performance seriously and managers start to be much more effective at Managing their people and engaging their people at achieving better results, that makes perfect sense. You just keep the people are, you know, if you let them go too long, they start wondering and things get away and if you, if you keep that cadence like you say of of having that report ready and uh visible, uh, things are gonna improve. Let's talk about employee engagement because it's a popular topic with our, our listeners and uh let me ask you, what have you observed in your client companies that seem to engage their employees effectively? Probably two things. One of them is, uh, people want to do meaningful work. So what is it about what your organization does that, that, that provides meaning for people. You know, we call it a core purpose. Other people have different names for it, but, you know, people want to feel like they're, they're doing something that's meaningful, uh, a reason for getting out of bed in the morning beyond simply earning a paycheck. And it's one of the hardest things very often for, for people to figure out. I mean, you've got a product, you've got a service, but that's not really the purpose of your company, the purpose of your company, what is the, what is the difference you're making in the lives of the people you touch and getting very clear on what that is and engaging your people and what That purposes. So it's beyond what your product or services, that's gonna change. You know, in years to come, your product or service could look very different, but your core purpose should be something that's a relative constant in your business. And when you can figure out what that is and when you can engage with people on what that is. Um, you know, it, it, it goes way beyond money. You know, yes, people, people do it because they want to do it, because they're aligned to what it is that you're doing. So that's the first part, getting, you know, providing, uh, meaningful work for people and, and, and articulating, you know, what is our reason for existence here? What, what's the difference we're trying to make in this world? The other key aspect to employee engagement and the research backs this up is, is the concept of progress. And, um, you know, the most powerful motivating factor for, for people is being able to see progress and what it is that they're doing, that they're progressing in their careers, that they're progressing and what it is that they're doing right now. So they want to see that, you know, that I'm making meaningful progress on the goals that I'm working on. And the way to engage with people is to make them feel like winners and, and, and the best way we've found to do that is to let them have what I call small wins every week, and these small wins are the incremental steps towards their longer term goals. And the research shows that when people can see tangible progress and experience small wins, often they become much more engaged and productive. So, yes, dashboarding software can actually be very powerful in that regard, because people can see each and every week, Hey, I, I achieved my goals this week. I got my tasks done this week. We want people to go home with their heads held high each and every week feeling like a winner. And uh I guess where I see many companies come unstuck is that, you know, when they're setting goals, they, they, they, they want, they want to, you know, they optimize performance and, and, uh, they set these challenging goals and targets and they call them stretch goals, and I think if I, you know, if, if we aim for the stars, we might reach the moon and I really want to set these lofty stretch goals for my people because, you know, that's going to, you know, spur them on to even greater heights and Uh, unfortunately, it doesn't work out that way in our experience, and, and we're in a privileged position where we get to see thousands of companies working on their goals and we, we get to see what really works and what doesn't across a, a really broad cross section of industries. And what we've found is that Rather than motivating your people, setting these big lofty stretch goals, it actually seems to have the opposite effect. It actually demotivates people. Um, people look at the goal and if they think I'm not going to be able to achieve that easily, they, they, they can actually go, well, what's the use? I'm going to turn up, I'm gonna work hard, but I don't think I'm really going to achieve this goal, and they can actually start to become a little bit apathetic, and especially if their performance on their dashboard is displaying that, hey, you're not achieving your goals, they start to feel like failures and Um, when they turn up to work each and every day, and all they see is failure on the dashboard each and every day, they start to disengage. So you've got to be very careful in terms of how high you set your goals and, and, and it's, it's a bit of art, it's a bit of science, but My, I guess my rule of thumb is if you've got a good person doing a good job, they should be able to just reach that goal most of the time and get them used to winning, get them used to achieving those goals, and then just gradually ratchet up that performance over time with their agreement and buying every step of the way. But that's great insights. Everybody feels like they want to be, they want to be associated with a winner and they want to win themselves. So give them what they need to feel. So your book is called Business Execution for Results and it's available on all major booksellers and then uh tell our listeners a little bit about uh just a brief amount about Results.com software platform and, and how they can learn more about that. Yes, um, I guess, uh, uh, uh, our website is, uh, one of the easiest ones to remember. It is results.com, and if you go to results.com, you can request a demonstration of our software. What it's gonna do is it's gonna help you track and, and, and drive your, your key projects and tasks in your business, track and drive your key numbers in your business, but most importantly, it's gonna. Enable business leaders, business managers to run more effective meetings with their people. That is the key to success we've found is being able to have meaningful discussions with your people each and every week around performance, to acknowledge and praise people for good work, make them feel like winners, but also to reach out and be able to help and support those people who are struggling right now. And being able to run effective meetings is key, where you've got the data you need to have meaningful discussions and make meaningful decisions. So it's very easy to remember Results.com listeners you can go check it out and uh and how else what's the best is that the best way for them to learn more about your company is go to the website Steven? Absolutely, yes. And you have your book out and that's, uh, again, that's called, um, tell us about what's the title of the book again. It's Business execution for results. It's a, it's a practical guide for leaders of small to mid-sized firms and it basically steps you through the journey of, OK, how do I create a strategy for my business? How do I then engage my people in effectively executing that strategy for my business? And it's based on our work with thousands of clients over the last decade in terms of what it is that we've found really works. Steven, I, I wish we had more time. Thank you so much. Everything you said was extremely valuable for our listeners. I hope they'll take heed. I hope they'll go to results.com. I'm gonna check it out myself and, and, uh, and ask you maybe to come back again and tell us some more in depth stuff about it because you've learned a lot about businesses and you're really. Uh, helping, uh, our, our business owners in the country. So thank you so much for joining us today and I look forward to the next time we speak. Thank you, Bill. It's a pleasure and I love what you do. Thank you. We're gonna take a short break after this. We're gonna be right back, so please stay tuned. Just thinking about what will happen to your business if you're gone keep you awake at night? Will you get the price you need from your business to carry you through retirement? The BEI Network of Exit Planning Professions is the world's leading advisor network with the power to help business owners transition out of business on their own timeline and terms. Ask your most trusted advisor to create a BEI plan for you, or visit us at exitlannning.com. That's exitlannning.com. You're listening to Exit Coachradio.com, the information station for age 50 plus business owners, where we're interviewing top advisors for their best tips, ideas, and precautions so you can be well planned. We upload new one minute tips every day. Exitcoachradio.com. Come listen for a minute. Thank you for listening to Exit Coach Radio. This podcast is supported by TalkSpace. When my husband came home from his military deployment, readjusting was hard for all of us. Thankfully, I found TalkSpace. TalkSpace provides professional support from licensed therapists and psychiatric providers online. Military members, veterans, and their dependents ages 13 and older can get fast access to providers, all from the privacy of their computers or smartphones. I just answered a few questions online and TalkSpace matched me with a therapist. We meet when it's convenient for me, and I can message her any time. It was so easy to set up, and they accept TriCare. Therapy was going so well, my husband and I started seeing a couples therapist through TalkSpace too. TalkSpace works with most major insurers, including TriCare. Match with a licensed therapist today at Talkspace.com/military. Go to Talkspace.com/military to get started today. That's Talkspace.com/military.