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8 Drivers to Building Value Before You Sell

I have been coaching business owners for over 20 years now with growth-oriented engagements helping to improve businesses through strategy, culture, and leadership with an acute focus on the people side.  It has been very rewarding, creating client friendships and impacting the company’s and employees. Still, as I’ve gained a few more laps around the […]

I have been coaching business owners for over 20 years now with growth-oriented engagements helping to improve businesses through strategy, culture, and leadership with an acute focus on the people side.  It has been very rewarding, creating client friendships and impacting the company’s and employees. Still, as I’ve gained a few more laps around the racetrack of life, I am becoming slightly more sensitive around helping those business owners transition well.  Did you know that 100% of businesses transition?  They transition to employees, family members, investors, or to dust, but they do transition.  Here are a few additional startling statistics before I unveil the 8 Drivers for business owners to focus on long before they get to the doorway of transition.

  • 95% of business owners have unrealistic expectations of their company’s worth
  • 95% of business owners have operational or market issues that will impact selling their company
  • Business owners leave almost 30% of their business value on the table when they transition
  • 83% of business owners need to grow their businesses before they transition to meet wealth goals
  • Only 12% of companies secure LOIs (Letter of Intent) for sale, and only 20% of LOIs survive the first pass at due diligence: that’s a 97.6% failure rate

These stats are alarming, and if you are a business owner, I hope they grab your attention.  It is wonderful to help my clients with strategy, leadership, and culture, but ultimately, they need to transition well so that life’s investment in your company properly takes care of your loved ones.  About two years ago, I incorporated CoreValue®, the #1 best-selling business consulting system for business growth (& exit).  The methodology was born out of MIT, and it identifies 18 Drivers that impact the value of a business when a transition arrives.  Maybe I will unpack all 18 in a later article, but with over 25,000 companies on their platform, they have identified 8 Drivers that have the greatest impact on the transition process.  The 8 Drives in no particular order are as follows:

  1. Growth
  2. Dominant Market Share
  3. Recurring Revenue
  4. Barriers to Entry
  5. Product Differentiation
  6. Margin Advantage
  7. Innovation
  8. Brand

Let us spend time breaking each Driver down to understand why they are critical to your transition plan and can impact your estate by as much as 30%.

1) Growth – this Driver refers to your company’s top-line revenue number.  Company’s that have a consistent track record of growth better than the competition make them very attractive.  It means there is a strategy in place that is working to grow faster than the rest of the pack and means security for the buying party.  It also means that your company has some special recipe that makes it desirable for a potential suitor.

2) Dominant Market Share – this Driver can be a double-edged sword.  Your market is the location where you sell your products and services.  Buyers of your business want to see a strong market share position to ensure company strength and resilience, but they also want to see growth opportunities.  If you own 80/90% of your market, the likelihood of losing market share is higher than the opportunity to grow and gain market share.

3) Recurring Revenue – this Driver is gold!  Who doesn’t want recurring revenue?  Buyers will pay a premium for recurring revenue that they can take to the bank and fund other business initiatives.  Many companies have a tough time building this into their business model, but if you can crack the code in your industry and market, even if it’s in smaller steps, it will be an investment well made.

4) Barriers to Entry – this Driver can potentially be the lowest hanging fruit to increasing enterprise value but takes some serious creativity.  Barriers to Entry are the obstacles facing a new entrant into your business’ market.  Most industries have low barriers to entry outside of capital and know-how. However, barriers can be added to your company by patenting products and processes, making it difficult for competition to replicate your exact delivery to the market.

5) Product Differentiation – this Driver is specific to your company’s products and services and is tied directly to the customer’s desire for your products and services.  If you think your products and services are different than the competitors, but the customer is only willing to buy from you overprice, then you do not possess a differentiation edge.  This is one area where customer surveys can flesh out your differentiators or who you learn ways to build differentiators into your products and services.

6) Margin Advantage – this Driver is challenging to prove, but if you can, buyers will be willing to pay an extra premium for your business, and it will be worth the effort to prove it.  When you can show gross and net margins above the industry norms along with the logical reason behind the numbers, you will find yourself in the catbird seat.  Who doesn’t want to be more profitable than the competition?

7) Innovation – this Driver takes serious discipline to build into the culture of a small business.  Innovation is invaluable in creating an ongoing competitive advantage.  Does your company have a proven and systematic way to drive and capture innovation at all levels and encourage innovation in every area of the business?  If you do, you are more likely to be able to stay ahead of industry changes and continue to prosper.

8) Brand – this Driver refers to how recognizable your brand and business is within your marketplace that reinforces the business’ presence, supports the company’s objectives, and helps drive customer engagement.  A strong brand name that resonates with your customers can add significant value to your company, especially if it’s a brand with a history of a positive reputation in the market.

Where are you on your company transition journey?  Have you reflected on your exit from your company and how it will impact your life?  It is never too early to pre-plan.  I would encourage you to get away for a long weekend, somewhere with solitude, a new journal, good music, and your favorite beverage.  Take some time to capture your journey and grade your company in these 8 Drivers.  Are you excelling in them, or do you need to put some focused attention on them?  If you take me up on my advice, you may be investing time in one of the most critical financial junctures of your life.  Travel well.


David Olson

David Olson is a management consultant at N2Growth with over 20 years of experience specializing in CEO Business Coaching delivering services related to Strategy, Sales & Marketing, Culture and Leadership.  He is also a CoreValue® certified growth consultant and creator of The Culture Compass®.

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How Leadership Changes Culture – Part II

A few issues ago I began unpacking how “leadership changes culture” by giving a backdrop on the creation of The Culture Compass® in 2006 designed to help CEO’s measure and manage culture.  I addressed three barriers I learned that were holding back real change; un-customizable employee engagement surveys, a lack of actionable implementation, and the […]

A few issues ago I began unpacking how “leadership changes culture” by giving a backdrop on the creation of The Culture Compass® in 2006 designed to help CEO’s measure and manage culture.  I addressed three barriers I learned that were holding back real change; un-customizable employee engagement surveys, a lack of actionable implementation, and the missing culture cog.  In this issue, we will jump right into the six leadership factors that change a culture.  For the purposes of this article, leadership is defined as the CEO and his or her executive team.

  • Leadership Cares
  • Leadership Alignment
  • Leadership Listens
  • Leadership Commitment
  • Leadership Implementation
  • Leadership Flexibility

 

Leadership Cares

There are different reasons why leaders care.  I had one client who cared because he was experiencing an employee revolt.  He was truly concerned that if he did not get his arms wrapped around his dysfunctional corporate culture that he would have a mass exodus on his hands.  Some leaders care because they understand that improved culture leads to improved profitability.  Other leaders care because they want to enrich the lives of their employees.  Bottom line, the leadership needs to care.  A friend and colleague of mine who was the President of a mid-market global firm told me flat out; he just didn’t care.  The employees to him were a means to an end.  Another human resource colleague of mine cares deeply about changing their culture, but she isn’t the CEO, and without the CEO caring, it will never get the attention it needs.

 

Leadership Alignment

When beginning a culture change endeavor, the likelihood that the CEO and all of the executive team really cares, views culture impact with the same gravity, and has the same cultural values is rare.  For successful culture change to occur, leadership needs to be aligned.  This is not an easy task, but my pill for the cure is training.  With each culture change engagement I deliver, I interview and train the leadership team together.  We review how it impacts their business, and we talk about what kind of culture they have and want.  We even design the employee engagement survey together for aligned executive level buy-in.  People own what they help to create, so in this manner, the leadership team owns their culture and shifts into alignment.

 

Leadership Listens

One of the most important messages you can send to people that follow you is that you listen.  That means you ask for opinions and give others an opportunity to influence.  When you incorporate a strong feedback mechanism in your employee engagement survey, you create a pathway for communication that fuels employees’ personal value.  The key though is to listen.  The biggest mistake to corporate culture change is to ask and not act.  Essentially communicating that you are not listening.  I encourage my clients to respond to culture change feedback even if the ideas cannot be adopted—this reinforces that you have listened.

 

Leadership Commitment

As a leader of your organization, if you are not ready to commit to the adventure of change, then don’t get off the porch.  I mean that—do not start unless you are committed to finish!  I have seen firsthand companies that have turned culture change into an organizational minefield.  The CEO will tell me it didn’t work, and unfortunately, I have to remind them that they weren’t committed to change and that the entire initiative turned into a hollow promise.  Yes, it will backfire if there is a lack of commitment.

 

Leadership Implementation

As a 20-year consultant veteran, I differentiate myself by emphasizing implementation.  When an organization begins culture change, the transformation will only occur through implementation.  I do not stop with a report and recommendations. I help my clients build actionable implementation plans.  I work with the leadership team to identify and select employees who can play a role in helping the execution of those plans.  This spreads the implementation buy-in throughout the company and ensures greater success of implementation.  Leadership’s role is to coach and facilitate implementation.

 

Leadership Flexibility

When a company embarks on transforming their corporate culture, they are embarking on a journey into the unknown.  Culture is fluid, ever-changing, impacted by the daily weather, disruptive, moody and explosive.  During culture change implementation, leaders need to be flexible, understanding that the environment will shift actions and initiative throughout the process.  Leaders need to use their corporate values as the compass, to ensure they are going in the right direction, yet be flexible to allow deviations.

 

Yes, culture change rises and falls on leadership, but a strong culture can make the difference between winning and losing, so I encourage leaders to embrace the challenge and lead their organizations toward a healthy corporate culture.

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Valley Influencers – Mike Molewski

Seven years ago, I interviewed Mike about his evolution as a business and community leader here in the Lehigh Valley for an article I was writing.  We did the interview at his home which happens to have a beautiful wine cellar.  Mike generously opened a nice bottle of red, and as we conversed, I began […]

Seven years ago, I interviewed Mike about his evolution as a business and community leader here in the Lehigh Valley for an article I was writing.  We did the interview at his home which happens to have a beautiful wine cellar.  Mike generously opened a nice bottle of red, and as we conversed, I began to discover why Mike was one of the most influential people in the Lehigh Valley.  Fast forward seven years, I thought it would be interesting to see what Mike has accomplished and what he’s thinking about for the future.  Let me start off by saying Mike is a true visionary when it comes to making a plan and then executing it.  In May of this year, Mike relocated his practice to Allentown’s latest City Center building called Tower 6 overlooking Center Square and the PPL Center.

Walking off the elevator of the 9th floor I was immediately greeted by a beautiful glass entryway opening to the CAPTRUST reception desk where I was greeted with a friendly smile by Amy Molewski, Mike’s oldest daughter, and recent CAPTRUST hire, returning to the Lehigh Valley after 13 years in New York City.  His brand-new office space with floor to ceiling windows with panoramic views of the Valley was a very fitting place to sit back down with Mike and get caught up on how his leadership has progressed and moved him and those around him forward.  The only thing missing was the red wine, so I succumbed to another cup of coffee.

I had my notes from my previous article in front of me, and there were so many topics to pick back up on, so I started with CAPTRUST.  Mike explained that the financial services industry had changed dramatically in his 30-year career.  At age 23 he started his own practice, then created MFP Strategies in 2000, a firm he and his partners grew to $5 billion of assets under advisement, and then merged with CAPTRUST in 2016.  Since MFP was clearly successful, I asked what made him decide to act on the merger?  As Mike explained, it became clear to me that CAPTRUST provided Mike, his team, and their clients a better platform for growth.  Mike thinks, eats and breathes growth.  “Business leaders must create a plan for growth, without growth there are limited opportunities for our clients and teammates,” says Mike.  To attain bigger and better, Mike led his team to join CAPTRUST.  Now Mike and his partners Jim Edwards, Wes Schantz and Chris Butz, are Principals in the #1 Independent Registered Investment Advisor in the nation with over $270 billion in assets under advisement (as of March 31, 2018).  Quite an astounding accomplishment, so I wanted to dig further to understand what drove the merger and what’s next.

Mike shared with me that it wasn’t just being a large firm that was the main motivator, but more importantly, alignment for strategic growth.  He went on to explain to me that the opportunity with CAPTRUST had many significant benefits.  CAPTRUST is employee-owned with no outside ownership to drive decisions that conflict with the firm’s mission and core values.  In fact, their mission statement boils down to “enriching the lives of others.”  This encompasses clients, employees and the communities they serve.  To live out their mission statement, CAPTRUST has created an employee shareholder program where over half the 433 employees have ownership in the company.  “Financial advisors and other team members who become shareholders” Mike expressed, “feel more appreciated when they have long-term incentives tied to their efforts.”

Another benefit associated with the merger was the strong institutional business focus CAPTRUST had, which reinforced MFP’s institutional consulting business. CAPTRUST had the infrastructure in place with its size and scalability to provide support from its headquarters in Raleigh, NC that allow unhindered growth while simultaneously increasing their client-focused client-facing experience.  This strategic model allows CAPTRUST to serve over 5,000 institutional and private clients and 2.5 million participants in retirement plans.  “CAPTRUST has made sizable investments in people and technology to not only be a dominant player with institutional clients but also private wealth clients across all income and net worth levels.  As a firm we have clients in all 50 states and financial advisors in 36 locations across the country”, added Mike.

Entering into a merger is a daunting task, so I asked Mike how he lead his firm through such a risky proposition.  “As MFP considered the merger, both sides could have walked away at any time.   Instead, we started to think about where we could take this, and we did a lot of reverse due diligence,” Mike revealed.  They spent a lot of time with the CAPTRUST partners and management team.  Like any personal relationship, the more time spent together, the better you get to know the other person, or in this case, the entire leadership team.  I asked him what flushed out of the due diligence process that cleared the way forward.  Interestingly it came down to values and client advocacy.  Mike said, “We really liked the people and their culture.  They have solid values, and as we spent time with them, we got to see their good intentions and their actions.  CAPTRUST had a strong focus on their people, to help them succeed personally in their careers and aspirations.  And we loved their decision-making mantra—”just do the right thing.”  Mike was also personally motivated because this created an opportunity for him and his team to work with some of the top financial advisors in the US and CAPTRUST’s most successful clients across the county.   “I lead a team within CAPTRUST called the Strategic Advisor Group that is responsible for working nationally with many industry leading companies, their owners and executive teams, as well as families with substantial wealth, family offices, high net worth individuals and endowments and foundations, it’s an awesome opportunity” Mike noted.

Going from among the Top 50 Registered Investment Advisory firms in the United States (Registered REP Magazine, May 2013) to the #1 Registered Investment Advisory Firm in the United States (Financial Advisor Magazine, July 2017, based upon assets under advisement) is extremely impressive, so I inquired about what’s next.  Mike shared that CAPTRUST has a 10-year plan that is committed to growing the company by 4x.  They want to attain $1 trillion in assets with half of their growth planned through mergers and acquisitions and the other half through organic growth.  In 2017, CAPTRUST completed seven mergers and acquisitions, and they are targeting four in 2018.  “We expanded our Allentown offices and have the entire 9th floor here in Tower 6, and we are actively seeking M&A opportunities here in the Lehigh Valley,” he explained.  Mike continued, “The key driver for us is attracting financial advisors who have the similar clients, a great cultural fit, and exceptional talent.”

CAPTRUST was the first signed tenant in Tower 6, showing its commitment to being part of the renaissance of Allentown.   There is a strong employee trend desiring an urban setting, especially for millennials.  The restaurant life and PPL Center in Allentown is very robust and attractive for employees and clients.  “We received a very positive response from employees when the news was shared about our intention to move to center city Allentown, and those with some reservations were won over very quickly,” says Mike.   Mike smiled and expressed, “it feels good to be part of a growing business community.  Moving here accentuates our community involvement and being a part of Allentown’s rebirth.  There is a lot of energy in the city, and I believe the best is yet to come for Allentown.”

In our last meeting, we spent some time discussing Mike’s philanthropic works, so I was eager to get an update on this part of his world where he leverages his leadership talent and impressive business and social network.  Mike is the Foundation Chairman of Northampton Area Community College and the Co-Chair and Founder of the Lehigh Valley Food and Wine Festival which over its nine-year history has raised $2 million in scholarship awards for Northampton students.  Mike has also been very involved in the United Way of the Greater Lehigh Valley, having served as Co-Chair of the Tocqueville Society for over eight years.  He has been a Board Member at King’s College for 15 years, his alma mater, and a role that is close to his hear.  King’s still has a large population of students who are first-generation college students, just like Mike.

I asked Mike about business trends within the financial services industry and how his firm was addressing them.  He informed me that they are witnessing strong interest from clients to move to larger firms who have specialized capabilities and cites cybersecurity safeguards as a current hot topic.  To meet this growing trend, they have implemented improvements in people and technology that help their clients, specifically in the area of wealth management, which gives clients better online access to their information, including portfolio performance and risk measures, strategic wealth planning, and full integration with insurance and estate planning.   “Smaller firms just don’t have the resources that clients now expect and demand,” Mike added.

As we were wrapping up, I asked him about his daughter Amy returning from New York City to join the firm.  He was very excited about having one of his children working in the business, and never thought it would happen.  What I didn’t know was that Amy isn’t the first family member in the business.   Jim Edwards is Mike’s younger brother, hired by Mike 18 years ago, and is a Principal at CAPTRUST working in the Allentown office.  We are witnessing a great family team making an impact here in the Valley and across the nation.

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How Leadership Changes Culture Part I

Twelve years after launching Walton’s culture change consulting services trademarked as the Culture Compass™, I am finally sitting down to write about six values I’ve learned that define whether an organization can improve their Culture or not. No surprise, but all six values rise and fall on leadership. Before I unpack the six values, let […]

Twelve years after launching Walton’s culture change consulting services trademarked as the Culture Compass™, I am finally sitting down to write about six values I’ve learned that define whether an organization can improve their Culture or not. No surprise, but all six values rise and fall on leadership.

Before I unpack the six values, let me paint the backdrop of how it all began. In 2006, one of my CEO clients in Sarasota, FL shared with me his annual employee engagement survey. Most Type A leaders are charming, demanding, and unlovable, but not Steve. He had a caring heart just below the surface of his Type A layer. Even in his frustration, he oozed care and concern for people. We sat in his office while he shared his most recent employee engagement survey, and because he cared so much, he was frustrated. He didn’t like the pre-formulated questions, and he didn’t know what to do with the report results. He was delivered a canned report with no clear direction. “David,” he asked, “can you build me an employee engagement survey that we can customize around the kind of culture I want to create?” Like all good consultants, I said, “probably, let me do a little research and get back to you.” After I flew home from my monthly trip to sunny Sarasota, I did as I said and began to research and evaluate his request. As I dug around the internet, three data points came to light.

The first data point revealed that most employee engagement surveys were un-customizable. Surveys were built for mass production, not carefully and strategically customized for unique cultures. Why should the 8-year old, first generation, 88-person software development company in San Diego expect to have the same desired culture as the 48-year old, 3rd generation, 268-person manufacturing company in Rochester, NY? To me, that made no sense for the client, but all the sense to the vendors who mass-produced their expertise to increase profit over quality. Their research determined that one of the most important questions that define a good corporate culture is “Do you have a best friend at work.” Really? How does that define one’s culture? I am quite blessed to have had many best friends over the years, but none of them worked with me. Whether my best friend worked in Chicago or with me in Allentown never impacted my like or dislike of corporate culture.

The second data point was that most employee engagement surveys and the firms that employed them were extremely heavy on reporting data overload, but weak on meaningful implementation. Before starting Walton Consulting, Inc. in 2001, I worked for a boutique strategy consulting firm out of Princeton, NJ that developed and delivered high-cost elaborate strategic plans. The client would outwardly applaud the mountain-sized strategic planning document full of analysis, logic, and recommendations. However, inside I am sure they were asking themselves, “what the hell do I do now, and why did I pay so much for something I don’t know what to do with…maybe I should hide it on the bookshelf and refer to it in ‘name’ whenever I want to drive a random point home to my employees.” It is the same way with employee engagement surveys. The client gets a pretty report, but without the creator of the report, the expert on the topic to help with implementation, the report becomes an article of affection or dissatisfaction (depending on the results of course). As with many consultants, the implementation phase becomes an afterthought, a monumental chore that gets swept under the carpet and ignored.

The third data point was an epiphany that corporate culture was the missing cog. At this juncture of Walton, I had been focused on delivering consulting services to CEOs and business owners to help them grow healthy organizations. I was already delivering strategic planning, sales and marketing strategy and leadership recruiting services, all of which helped grow organizations, but the culture cog was missing. As I pondered on the importance of corporate culture, I intuitively understood that the culture cog acted as a fuel valve that could either spur on growth or squelch it. I reflected on how much corporate culture was really the vineyard soil that determined the environment’s capability and capacity for growing good fruit and producing a rich yield.

Wow, I must build this tool for my client I thought. It is not only critical as a foundation for successful organizational growth, but it also fits neatly into my core service offerings focused on “healthy” growth. In 2006 I launched the Culture Compass™. Now, 12 years later, with over 3,000 employees surveyed, and a marketplace foaming at the mouth about culture with quotes like Peter Drucker’s, “Culture Eats Strategy for Breakfast,” I am ready to share six values that leadership needs to employ if they plan on truly Changing Culture. Check back next issue where I will reveal what they are and why they are so important to growing a healthy organization.

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leadership

7 Traits of Great Leaders (Part II)

In the last issue of Network Magazine (Winter 2017), I introduced the first three of seven traits that make great leaders, as identified by Caliper Corporation, a company I have worked with since 1998.  They are a renowned global leadership assessment company with over 50 years in business, working with over 28,000 companies, and assessing […]

In the last issue of Network Magazine (Winter 2017), I introduced the first three of seven traits that make great leaders, as identified by Caliper Corporation, a company I have worked with since 1998.  They are a renowned global leadership assessment company with over 50 years in business, working with over 28,000 companies, and assessing over 2 million professionals.  Leadership is truly a blend of one’s DNA and learned skills.  In this article, I want to continue to unpack the personality traits from one’s DNA that significantly determine the ability to be a great leader.  In the last article, we talked about the first three personality traits:

  1. Assertiveness
  2. Ego Drive
  3. Ego Strength [Resilience]

This issue I will unpack the remaining four:

  1. Risk-Taking
  2. Idea Orientation
  3. Urgency
  4. Empathy

4 Risk-Taking

According to Caliper, “people who are unwilling to take risks will tend to stick to the ‘tried and true’ and, as a result, may have difficulty making decisions or taking action when faced with unfamiliar circumstances.  On the other hand, individuals who are strong risk takers but do not exhibit sufficient responsibility, control, intelligence, and flexibility have the potential for making mistakes.”

Risk-Taking is an important trait for great leaders, but of the seven traits, it requires an extremely healthy balance.  Great leaders take calculated risks after having collected enough data and information to make an intelligent risk.  Often, exceptional results and success follow good Risk-Takings decisions directed by leaders.  Reckless risks, on the contrary, can end in disaster.  If you read the biography of any great leader, you will find their life stories are full of taking risks, like Apple Inc. and the great Steve Jobs, “Let’s make a dent in the universe.”, or Dallas Cowboy Coach Jimmy Johnson, “Do you want to be safe and good, or do you want to take a chance and be great?”

5 Idea Orientation [Innovative]

Caliper defines Idea Orientation as “one with a strong orientation toward creative problem solving, idea generation and concept development, less likely to rely on practical or concrete solutions.”  Without innovation of new products, services, processes and methods, a company will not survive, as reinforced by Albert Einstein, “You can’t solve a problem with the same thinking that caused the problem in the first place.”  Leaders must therefore innovate and foster a culture of innovation amongst the organization to endure, grow and beat a sea of competitors.

Great leaders have abilities to see into the future and harness the organization to help build that future.  If a leader is not gifted in this area, they will want to learn how to say “no” to the tried-and-true, and “yes” to surrounding themselves with innovators.

6 Urgency

Caliper defines Urgency as “an inner-directed and focused need to get things done.  Those overly urgent can become impatience or unrealistic with expectations, while those with little urgency tend to be patient and potentially compliant.”  The stronger version of this trait is what drives leaders to act and make things happen.

There are a variety of motives (good and bad) that drive a leader’s urgency.  Therefore, leaders who possess this trait need to be careful to make sure their motives are communicated to their team.  If not, the urgent pace of implementation can cause discord and misunderstanding, and leave a team temporarily derailed, thus frustrating the Urgent leader even more.  One of my favorite quotes is by George S. Patton, Jr., “A good plan, violently executed now, is better than a perfect plan next week.”  This attitude and discipline ring true to Urgent leaders, the great one’s turn analysis into action.

7 Empathy

Caliper defines Empathy as, “to accurately and objectively perceive another person’s feelings without necessarily agreeing with them.  The ability to obtain important feedback enables a leader to appropriately adjust his or her behavior to deal effectively with other people.”

Bill Hewlett, co-founder of Hewlett-Packard was a legendary empathetic leader, who liked to roll up his sleeves and inspire engineers by walking the floors and listening to their concerns.  This approach allowed him to build trust and confidence with his employees creating an amazing foundation for what is now 2016’s #20 on the Fortune 500.  Empathy is a form of EQ (emotional intelligence), so the good news is it’s the easiest learned attribute of the seven.

The Caliper Leadership Assessment tool is valuable for individual leadership awareness, or for developing entire leadership teams.  To learn more about Caliper, you can contact David Olson, President of Walton Consulting, Inc., CEO Coach on business strategy, corporate culture and leadership.  Learn more at www.WaltonConsulting.com.

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7 Traits of Great Leaders: Part I

Leadership is a complicated subject. Everyone admires good leadership, and most everyone wants to become a good leader, but what really makes up a great business leader? Let us begin by thinking about the two ingredients that create leadership; learned and DNA. There are different schools of thought on how much leadership is learned vs. […]

Leadership is a complicated subject. Everyone admires good leadership, and most everyone wants to become a good leader, but what really makes up a great business leader? Let us begin by thinking about the two ingredients that create leadership; learned and DNA. There are different schools of thought on how much leadership is learned vs. your God-given personality. I happen to fall into the camp that says most good leaders begin with a specific set of DNA and a cultural upbringing that makes up the largest ingredient. I certainly believe that behavior can be learned, especially leadership, but without an established set of personality traits, even great training can have little impact on creating a great leader. To unpack the seven personality traits that make great leaders, I first need to start with a little background.

It was in 1998 while working with my former consulting firm on a client engagement in NYC where I first intersected with an amazing personality tool I adopted into my consulting practice called Caliper. As a Caliper Strategic Partner, I have implemented the Caliper assessment with hundreds of executives for purposes of recruiting and coaching. The Caliper Profile is a robust assessment, measuring 30 different personality characteristics that make people successful leaders. Compare those 30 to DISC (4 personality profiles) and Myers-Briggs (16 personality profiles), and you will understand my preference to use this powerful assessment tool.

After 50 years in business, working with over 28,000 companies, and assessing over 2 million professionals, the Caliper Corporation determined that there is 7 stand out personality traits that are most crucial for making great leaders. This two-part article will unveil those seven traits and unpack key characteristics of each one. Here are the first three of the seven traits that make great leaders:

  1. Assertiveness
  2. Ego Drive
  3. Ego Strength

Assertiveness

Caliper defines Assertiveness as “the ability to express one’s thoughts forcefully and consistently, without having to rely on anger.” Leaders lacking assertiveness “are less comfortable expressing themselves forcefully and may back down or be reactive in certain situations.”

Assertiveness can often be mistaken for being aggressive, but that is not the case. When a leader is assertive, they can focus their team through direct and clear communication. They have the ability to read their audience, clarify the focus and purpose of objectives, and align the team towards successful implementation. Clarity is key, as reinforced by General Colin Powell, “great leaders are almost always great simplifiers, who can cut through argument, debate, and doubt to offer a solution everybody can understand.”

Ego Drive

Caliper defines Ego Drive as “the inner need to persuade others as a means of gaining personal gratification.”

Mike Myatt, a top advisor to Fortune 500 CEOs, says “you cannot be an effective leader without influence. Let me make this as simple as I can – if you are a leader, influence needs to be a competency.”

Ego gets a bad name because we often discuss it within the spectrum of an individual’s selfish motives. However, ego within a leader who has “Level 5 Leadership” motivations (putting others before self), will be able to wield it for good. That leader will be able to guide and direct people to achieve something that is greater than themselves.

Because Ego Drive can be misread, misunderstood, or misinterpreted by team members, it is imperative that a leader builds his or her credibility so that their Ego Drive is received properly. Credibility happens by earning trust, caring about relationships, being knowledgeable, and obtaining experience. These attributes build a leader’s credibility.

Ego Strength [Resilience]

Caliper defines Ego Strength as “the ability to handle rejection and accept criticism in a manner which is positive and growth oriented.” Leaders lacking Ego Strength “do not have this basic acceptance of themselves and have a poor or negative self-picture, and a preoccupation with their conflict or feeling of inferiority may sap their energy, so that their personality dynamics are weakened or blocked, thus reducing their effectiveness.”

This trait is so important because great leaders are always out front leading the way, driving, sharing, communicating, engaging, energizing, and encouraging those around them.  Their egos must be resilient because the very nature of being a leader is to face opposition and criticism both internally and externally. Ego Strength allows leaders not to lose focus, be hindered, slowed down, or thwarted. They will have a strong resolve to press on with unbridled optimism that fuels the team.

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CEO Best Practices Part II

In the Spring 2016 issue, I shared the first 5 of 10 best practices for CEOs that I have discovered by coaching CEOs and company leaders on business strategy, corporate culture and leadership over the last 15 years. All of the 70 small to mid-market organizations in over 40 industries that I have worked with […]

In the Spring 2016 issue, I shared the first 5 of 10 best practices for CEOs that I have discovered by coaching CEOs and company leaders on business strategy, corporate culture and leadership over the last 15 years. All of the 70 small to mid-market organizations in over 40 industries that I have worked with are either privately owned businesses or non-profits. So my learned perspective is defined by the CEO/leader that in most cases have tremendous autonomy.

As a reminder, here is the list of the first five from Part I of this series:

  1. Have a good partner
  2. Become aware
  3. Hire well
  4. Find leaders
  5. Focused execution

The second 5 are like the first in that there is no particular order. It is difficult to make a clear distinction on which is most important because the dynamics of every organization are so different and complicated depending on the leadership structure or lack thereof, company culture, size, industry, mission, ownership, family involvement, etc. Because of these factors, each client engagement is truly a customized approach to gain the most success for each organization.  So here is the second list:

6 Good communication. Organizations rarely communicate effectively and often enough. Corporate communication is more critical than leaders realize. In the world of sports, botched plays are typically a result of miscommunication. Teams win because they have an internal communication strategy. Organizations are no different – they need one as well. In the process of implementing employee engagement studies, in almost every case, this is one of the most challenged corporate culture areas. Good communication does not happen accidently but from a measured, strategic approach.

7 Marketing matters. Unfortunately, in most organizations marketing is a haphazard practice. It should be on the list of an organization’s critical strategic initiatives, but that lack of it impedes growth. Marketing defines an organization’s ideal customer and then establishes a multi-pronged strategy for connecting them to their products and services.  Marketing is the epitome of delayed gratification. If you do it well and are patient, it will pay off in the end. Marketing is a long distance race.

8 Develop executors. Organizational leaders need to surround themselves with “company-minded executors.” They are recognized by both their results and their character. These employees are the company’s greatest asset. Your best chance to win is to give them the ball as often as possible. When you recognize an executor, help them grow as fast as possible. They will be your A players, and they want to carry the ball. If they do not get enough opportunities, you may find retaining them to be difficult.

9 People before profits. Profits are the means by which you take care of people. That is not to say that people are exempt from being sacrificed for the sake of profits. However, organizations that practice an unhealthy appetite for profits will erode their culture and eventually their profits. Unfortunately, many organizations come up short on their risk tolerance and make decisions that end up impacting morale and hurting the long-term bottom line.

10 Teams win. Organizations do not win because they have good players; they win because they have good teams. It is imperative to build a corporate culture that feels like a team. Team synergy takes time, energy, and persistence but will pay real dividends. In the age where Millennials are quickly overtaking the workforce in huge numbers, investing in team-oriented culture is becoming a key factor for staying competitive and winning.

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Valley Influencers: Bill Grube

“Only in America can you start a business in your basement and grow it to $100 million a year.” It is rare to find the combination of an influential leader whom has made such a positive indelible mark, mixed with a humble recognition of their impact and influence.  Bill Grube however is one of those […]

“Only in America can you start a business in your basement and grow it to $100 million a year.”

It is rare to find the combination of an influential leader whom has made such a positive indelible mark, mixed with a humble recognition of their impact and influence.  Bill Grube however is one of those leaders.  A number of years prior to the famous NIZ legislation, he launched into a major redevelopment project in the heart of downtown Allentown to create the impressionable 6-story restaurant, now Hook Seafood & Grille.

Grube’s time-honored and selfless model in contributing to his businesses by caring for his team members and treating them like family has been the primary reason for his great success.  He feels that his main purpose in life is to help those around him, a mission he fulfilled in his initial business venture, Night Vision Equipment Company.  Grube designed products visible through night vision gear to help soldiers differentiate between the ally and the enemy.  Literally thousands of American lives have been saved as a result.  After selling his company, Grube switched gears and jumped at the opportunity to invest in creating a brighter future for center city Allentown.  He has been a unique leader, making many sacrifices as one of the earliest adopters of Allentown’s renaissance.

Walking through the front door, looking through a tranquil water display, one sees the grand Hess’s chandelier spilling into the main dining room from the open second floor, creating a sparkling effect of grandeur and warmth.  The host of the day reinforces this warmth while welcoming guests at Hook Seafood & Grille.  It’s a jewel of a restaurant that could be found in Upper East Side of the big apple, but instead graces the downtown of the little apple, Allentown, located just across the street from the historic and majestic Miller Symphony Hall.

I met with Bill Grube for our interview and I was reminded of his genuine kindness and warmth.  We nestled into one of the second floor restaurant booths, received some warm fresh bread, butter and chilled water and then were swept into our profound interview…more like a reflective conversation with a friend.

OLSON We are sitting together in this interview because somewhere along the line of your life, you evolved into a leader.  Was that an evolution that began in childhood or in business?

GRUBE That is a long evolution.  I didn’t see it when I was younger, as I was introverted for a long time.  However, over the years I became confident in my business skills and learned how to interface with employees and customers.  I don’t look at it as leadership, I look at is as being guided…and things evolve on their own.

OLSON You mentioned that your “becoming a leader” evolved sometime after you had employees.  Most people think they are a leader by the mere fact that they have employees.  Not you?

GRUBE I never really looked at it as a leadership role, more as a guidance role.  When I had my own business it changed everything.  My job was to mentor them and pull them together as a team, that kind of thing.  If you call that leadership then yes, but without them I had nothing.

OLSON Tell me about how the vision came together, your business idea crystallized, for you previous company?

GRUBE I worked for a company in their marketing department and we were sold.  One of my learned hobbies was making a few pieces of night vision surplus items.  I figured I don’t know if I can work for the company that bought us, so at that point, if I can make one of these pieces of equipment a week, I can make a living.  It started in my basement…I was literally making them in my basement.  The last year I was in business, 22 years later, we were doing $100 million a year in sales.  No place in the world that someone where I came from could accomplish that but in America!

OLSON Did you grow up in the Lehigh Valley?

GRUBE Yeah, graduated from Allentown High School before it was William Allen.  I’ve been all over the country but I liked this better than any place I’d been so I stayed.

OLSON There are many styles of leadership; can you describe how yours has been over the years?

GRUBE A lot of my style has been to truly care about employees.  Every morning I went in and said “good morning” to each employee, and I could tell what kind of day they were having…if they had a personal problem or if they were happy.  I just knew who needed guidance or help.  As time went by, they looked at me not as the president or the boss but as a family member.  That means we care about each other and then in turn, we cared about our customers.

OLSON So you just valued and cared for your employees because that’s what they wanted?

GRUBE Yes, most of all, people want to know they are appreciated and that they aren’t scared about their job, but that they’re part of the team.  That is what will build this business.

OLSON Now you don’t have that business anymore…is Hook Seafood & Grille your primary business venture, and are you using the same methodology back from Night Vision years?

GRUBE Yes this has taken more of my time.  I’m putting more of my influence here.  And definitely, I won’t change something that won for me in the past, and I enjoy the role of caring for employees and being in a mentor role.

OLSON I have trials in my life that have galvanized me into growing as a person and a leader…have there been trials in your own experiences that have shaped you?

GRUBE Yes I have had them, but I don’t remember them because I put them behind me.  That was then and this is now.  I don’t dwell, I move forward.

OLSON Who are you the biggest fan of?

GRUBE That’s pretty easy, three people.  Jesus Christ, Ronald Reagan, and my grandfather.
My grandfather because he raised me…I was raised by my grandparents.  He was an older man that tried his best to raise me.  It’s not easy when you are an older guy raising a young kid around 10.  His name was William we called him Pappy…Nana and Pappy.  He taught me to hunt and fish.

Reagan was a great American.  He didn’t lie to us.  He was truthful and firm.  He had the attributes of a leader that if I could emulate I would want to do that.  I trusted him as a leader.

Jesus would be a tremendously long conversation…but let’s leave it at he’s changed my life.

OLSON Do you have any weaknesses or areas of self awareness you think about?

GRUBE Sure, you grow in that way whether you’re a leader or not.  I mean every day we face challenges and become self aware by realizing the results of our actions.  I can see in myself if I’ve perpetuated something and then seeing the results of the situation makes me take a look at myself.  It’s hard to change who you are, you have to nibble at the edge.

Sometimes you might take a big bite.  So learning through mistakes is part of self awareness.  Sometimes it’s hard to be aware of what they are and sometimes it takes years to find out what they were, but you have to address them you can’t just sweep them under the rug.

OLSON What is the importance for coming downtown and creating such a beautiful facility that we haven’t seen here for a long time?

GRUBE In the process of building Hook, partially through a God-thing, I realized I was building it to improve the community.  I wanted to show that there are people who have faith in this town that will commit large dollars to doing great things downtown. We want this restaurant to be a shining light and beacon of hope in the community.  Remember, this was before the NIZ and we had no idea the NIZ was coming, so it was a mission.

OLSON Personally, as an entrepreneur and faith-filled man, I am thankful you have jumped into Allentown, right smack in the middle of the community to be a positive difference maker.  So what kind of legacy are you hoping to have as a leader?

GRUBE What I want to leave with my children and my family is philanthropy.   My wife and I have both served on a lot of boards.  We have put a lot of heart into children’s causes, things like children’s hospitals.  What I want to teach them, no matter what you do or what you have or don’t have, you always have got to give something.  It doesn’t have to be money, but it has to be something from you.  This is the same with Allentown.  I want people to understand that giving of themselves and giving and investing some of their treasures for others raises everyone else up.  If I can be any kind of a role model here, then I have served my purpose here!

On that note, Bill had to slip downstairs to the main dining room where his wife was waiting to have dinner with him.  What a genuine man I found Bill to be and his heart for making a positive impact was contagious.  That’s what I call leadership…getting out in front, being bold, doing things others won’t, and hopefully blazing a trail so that others can follow onto new frontiers.

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CEO Best Practices

Part I This year marks my 15th year of coaching CEO’s and company leaders on business strategy, corporate culture and leadership. I have had the privilege of working with more than 70 small to mid-market organizations in over 40 industries throughout the U.S. Like most executives, our business practices evolve over time, and experiences turn […]

Part I

This year marks my 15th year of coaching CEO’s and company leaders on business strategy, corporate culture and leadership. I have had the privilege of working with more than 70 small to mid-market organizations in over 40 industries throughout the U.S. Like most executives, our business practices evolve over time, and experiences turn into knowledge.

As a coach, my goal is always to see my client succeed. I want to high-five them when they hit a homerun or score a touchdown. I want them to have experiences that will lead them to achieve their goals: increased sales, better performance, healthy growth, stronger culture and ultimately a better organization.

In reflecting on my 15 years as a professional resource in strategy, culture and leadership, I have documented 10 Practices a CEO should follow and implement to help survive the challenges of growing a healthy, sustainable organization (listed in no particular order).

  1. Have a good partner.  It is extremely difficult for a CEO to sustain impacting change on an organization without a good no. 2 by their side.  I have witnessed CEO’s flying “leadership solo” and those with a good no. 2, and a complimenting partner most often increases effectiveness and assures victory.  Lock up a good partner who thrives on being the best no. 2 they can be and is committed to both you and the organization’s success.
  2. Become aware.  “Awareness” is one of the most important words in the English language. Every monumental change, personally and corporately, stems from a moment of awareness.  We should set our course on a constant journey of discovery.  There are some amazing leadership development assessments to help you accomplish this goal.  I personally use Caliper with my clients (50+ years in business, more than 28,000 companies, and over 2 million individual professionals and executives).
  3. Hire well.  Faulty hires have a profound negative financial and directional impact on an organization.  Be methodical, slow and purposeful when hiring your leadership team.  The same due diligence applied to a business acquisition should be considered with an executive leader acquisition.
  4. Find leaders.  Leaders are not trained, they are cultivated.  Leadership is a deep intrinsic trait that can only be partially taught, but mostly mined.  Too much time and money is expended trying to make leaders out of non-leaders.  Make sure you invest in the right people.
  5. Focused execution.  Most strategic initiatives fail not because they were not good ideas, but because they were not executed properly.  From a study conducted by The Economist Intelligence Unit, they found that 75% of U.S. organizations were batting less than 500 on successfully implementing business transformation initiatives.  Organizations reorganize too quickly when an initiative falls short instead of regrouping, adjusting their approach and re-executing well.
Look for the second half of the 10 Practices for CEO’s next issue.

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The 7 i’s to Making Great Leaders: Part II

Last issue we began unpacking the 7 “I’s” formula for Making Great Leaders.  We dove into the first three attributes; Intuition, Initiative and Influence.  Becoming a great leader comes from understanding what character traits further develop and grow into.  It will not happen overnight, it is a life journey that never ends.  As you digest […]

Last issue we began unpacking the 7 “I’s” formula for Making Great Leaders.  We dove into the first three attributes; Intuition, Initiative and Influence.  Becoming a great leader comes from understanding what character traits further develop and grow into.  It will not happen overnight, it is a life journey that never ends.  As you digest this formula and develop goals to achieve it, you will shift your insights and your ability to be successful in changing your environment.  So here we go, part II of the equation to becoming a great leader.

4 Integrity* the quality of always behaving according to the moral principles that you believe in, so that people respect and trust you

Leaders need to strive for lives worth imitating, not perfect lives, but one that is marked by humility, which means we accept and own our mistakes.  However, in this 7 “I”s formula, I am suggesting that Organizational Leaders need Organizational Integrity.  Organizational Integrity is the foundation for trust, and trust is one of the greatest motivators for team growth.  Leaders with Organizational Integrity live out the organization’s values with their words and actions.  They act in a manner they want the rest of the team to emulate.  Leaders with high EQ (Emotional Intelligence) understand that one of the most powerful motivators to inspire followers is building trust, confidence and respect through living with Organization Integrity.  Unfortunately, I have witnessed too many good organizations deteriorate and lose tremendous impact and money because the leader chose a life deficient of Organizational Integrity, and had nothing to do with personal integrity.  This is by far the biggest culture killer, and when your culture goes, the handwriting is on the wall.

5 Investment* the amount of time, energy, or emotion needed in order to make something successful

The kind of Investment that makes great leaders is not financial.  Yes, there is a financial variable related to investing in fair compensation for employees, but that is just a tactical necessity to retain good employees.  From Dr. Bob Nelson’s research with Dr. Peter Drucker, and highlighted in the The New York Times bestselling book, 1001 Ways to Reward Employees, the number one engagement category to improve job satisfaction is providing employees with Information, Involvement, and Support.  When leaders share information and include employees, when they involve employees in decision-making, and when they support employee’s activities to help them be successful and encourage them through mistakes; a leader is making an Investment in them.  This is what team members want most – to be Invested in with actions.

6 Innovation* the act of starting something for the first time; introducing something new

Great organizations Innovate.  Whether your organization is a non-profit or a technology company, Innovation is the critical attribute for sustainable long-term growth.  It means that leadership dreams, embraces, and acts as a catalyst to implement any and all business practices better.  Horst Schulze, founder of the Ritz Carlton hotel brand, shared at a conference I attended that the top three factors for their success were (1) luck, (2) process improvement, and (3) luck.  His point was that as an organization, they need to continue to identify ways to run their business better – to be Innovative in their approach to delivering world class service.  He modeled this from the top, shared this value with every new employee, and had mechanisms in place to reward Innovation.  Even if a leader is not naturally Innovative in their personality, they can and must instill this attribute into the culture around them.

Now that we’ve walked through the first six I’s of Making Great Leaders; Intuition, Initiative, Influence, Integrity, Investment, and Innovation, what is the final “I” of the formula?

7 Impact* an unreduced or unbroken completeness or totality

Ultimately great leaders are driven by a selfless motivation to impact their surroundings to improve them.  The impact cannot be solely focused on their own gain, but on the betterment of their company, the people they are surrounded by, and the community they reside in.  It requires a steadfast intention and desire to think of others first and to improve those lives.  It is not natural for any of us to rise to this level of thinking, so it requires an internal gut check and commitment to live beyond ourselves – to live for others and make a difference.  When this is your primary aim, then you are ready – finish the formula and become great!

* Macmillan Dictionary and WordNet

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