What is this thing called 9Stucks?
9Stucks is a dynamic business diagnostic tool. It identifies nine distinct yet interrelated business challenges that cause a company to underperform.

‘You’ve Become One of Them’ – Fifteen Rules for Directors

director photoNote: This was originally published in the March 2015 issue of Private Company Director Magazine. Reprinted with permission of the editors.

“You’ve become one of them.” That’s what a fellow Director (“MoneyGuy”) said to me after one of XYZ Company’s regular board meetings. MoneyGuy was from XYZ’s lead investor group and the majority shareholder. The ’them’ MoneyGuy was speaking about was XYZ’s management team. From his tone, I knew MoneyGuy wasn’t giving me a compliment; I was being admonished because I ‘sided with management’ about a particular matter that was pivotal to the future of the company.

What had I done wrong? To find the answer, you’ll need to read the following fifteen “rules” on how to work with owners.

These rules apply to different ownership structures of private companies. In general, the shareholders in private companies are either families, private equity/venture capital groups, management/founders, or a combination of these. The rules are indifferent to the stage of the company (early stage, mature, in decline, whatever). Hopefully you will see why these distinctions don’t alter how I work with owners.

Here are my fifteen rules:

1. Remember your role as a fiduciary. MoneyGuy knew I had a fiduciary responsibility to the corporation, not just to him and his private equity firm. They put me on the Board to be ‘an outside, independent voice.’ Somehow that slipped his mind! This brings me to Rule #2…

2. Don’t be a rubber stamp. You can get rubber stamps at Staples. MoneyGuy or any other majority shareholder should realize that you are not on the Board just to be another automatic vote for them. Another Director friend told me: “There is a fine line to walk as an independent director when those sitting around the table own the company and you are effectively their invited guest.” If management knows you are truly independent and not there to throw them under the bus, this will help build trust with all.

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What is this thing called 9Stucks?
9Stucks is a dynamic business diagnostic tool. It identifies nine distinct yet interrelated business challenges that cause a company to underperform.

Eeeek! Invasion of the Culture Snatchers

watch for snakes

A CEO friend recently told me that he asked three people to leave his company over the last few months.  After they were terminated, there was a marked improvement in the overall morale and attitude of the other employees.

I had met these people in the past.  Of the three, two were rats and one was a snake. Rats and snakes can wreak havoc with your culture and your strategy.

Introducing The Creatures…

Corporate rats are different from corporate snakes; however, both can be found in all levels of any organization, from significant investors to the rank and file employees.

Rats are Enablers. Even though you may see one or two at a time, there are usually multiple rats living together, many hidden from sight, gnawing and chewing on your culture day in and day out.  If your company has rats, the situation has reached a stage where extermination can be difficult, but not impossible. Rats have a direct or indirect role in maintaining the status quo. If you are a change agent and are struggling to make your changes stick, perhaps your rat(s) are the ones resisting or blocking your efforts. Maybe they perceive you to be an intruder; the ‘locals’ don’t fancy having outsiders mess around with their culture.

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What is this thing called 9Stucks?
9Stucks is a dynamic business diagnostic tool. It identifies nine distinct yet interrelated business challenges that cause a company to underperform.

Mentors and Vintage Oars

old oars three - Version 2This is a picture of my 55+ year-old wooden oars after I opened up our boat this past spring. They looked pretty beat up: chipped and peeled paint…cracks in the wood…and they were graying at the edges.

Were they past their useful life? Would I need to replace them with a brand new pair?

Before trashing them, consider this –> these oars have a rich history that you could never imagine by catching a glimpse of them lying on a dock or in the bottom of a boat.

These oars have done their job quietly and well in rowboats, dinghies, motorboats and sailboats. The type of boat didn’t matter to my oars.

They were always there when I really needed them.

Doesn’t that sum up a good mentor, senior advisor, or board member? Versatile and at the ready when you need their capabilities.

[Read more…]

What is this thing called 9Stucks?
9Stucks is a dynamic business diagnostic tool. It identifies nine distinct yet interrelated business challenges that cause a company to underperform.

Your Company’s Spring Training: Who’s On 1st? Where’s What?

RedSoxI Don’t Know (wait…he’s on third). Major League Baseball’s Spring Training kicks into high gear this week. Red Sox position players reported on February 18th and today (Feb. 20th) is the team’s first full squad workout. The players know their positions. Some players are versatile and can rotate around the lineup; however, once they are all on the field and in position, there is no confusion about their roles and what’s expected of them.  That’s the way it should be. Clear responsibilities set by management and known by their teammates.

Can you state that your senior team and all your employees are clear about their roles and responsibilities? Abbott and Costello highlighted the frustration and tension when there is a lack of clarity about ‘Who’s on First’. Here’s a contemporary take on the skit:

Role clarity has a distinct impact on your company’s overall performance.

If that sounds like Business 101 common sense, then why is it that in many of the Stuck companies where I have worked, there is a great deal of organizational fuzziness and they are Stuck in the Slow Lane?

What causes role ambiguity?

[Read more…]

What is this thing called 9Stucks?
9Stucks is a dynamic business diagnostic tool. It identifies nine distinct yet interrelated business challenges that cause a company to underperform.

Strategic Crossroads (Part 1): The Encampment

CoveredWagonImagine the scene: the CEO and a collection of company shareholders, directors and senior management team members have piled into their corporate Covered Prairie Wagon. The wagon is lumbering down the winding, bumpy, rutted path called the Shareholder Value Road.

Or…instead of a crowded, hot Prairie Wagon (did the Pioneers hang those ‘Little Trees’ air fresheners…), maybe it’s just you bouncing along in your own personal buckboard.

No matter what you’re driving, at some point on the journey all corporate wagons come to a major crossroad – a Strategic Crossroad.  Generally, more than one Strategic Crossroad is encountered on the long Shareholder Value Road. You can hit them:

  • early in the adventure
  • at a mature midpoint
  • unexpectedly
  • and/or near the end of the trail

Whatever the natural stopping point, critical choices have to be made – you (and your traveling companions) have to pick a direction and move on. Chances are you will have to ‘make camp’ for a bit while the directional choices are identified, evaluated, debated, argued, rejected and decided. In some extended encampments, the travellers may need a lot of provisions!

There could be many signs in front of you…

1258 strategic crossroads3Business press releases offer repetitious stories about strategic choices/alternatives found on the Shareholder Value Road all the time. The public company stories are generally presented in a very clinical light.   Here are a couple of examples from well known companies:

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What is this thing called 9Stucks?
9Stucks is a dynamic business diagnostic tool. It identifies nine distinct yet interrelated business challenges that cause a company to underperform.

The 7 Potholes of Business Partnerships

PotholeI’ve been contacted a number of times this year by business partners who are bickering with each other and/or struggling over the condition of their business.

It seems like there have been more of these calls than in the past…maybe my blogging is the little nudge that pushed the business owners to either phone or email me.

Do you and your business partners get along?

  • Yes? That’s great! You are in good shape. If you want to maintain that success, I suggest avoiding the potholes by reading this post.
  • No? Did you get along when you started out, but not anymore? What’s changed?

There are 7 reasons (7 Partner Potholes) why conflict creeps into ‘partner’ type businesses and causes successful companies to fray or even break up after many fruitful years of existence. Conflict among business partners can become burdensome, intrusive, even crippling to the day-to-day operations of a company. Over the course of my business career, I have seen and/or worked with companies that have had ALL of the 7 Partner Potholes.

How can these situations be fixed or avoided? Are there some partner conflicts that can’t be fixed?

For purposes of this article, I define a ‘partner’ type organization rather broadly. Some of my business partner examples include, but are not limited to:

  • a company with 2 or more shareholders
  • a company founded or acquired by one or more entrepreneurs and who subsequently allowed others to become shareholders over time (the equity mechanism is not relevant for this article)
  • a professional services firm (e.g. consulting, engineering/environmental, medical practice, accounting, financial advisory, wealth management, investment banking, law etc.)
  • a group of managing partners of a venture capital or private equity firm
  • there are obviously more examples…
  • Note: Excluded from this discussion are 1) family-owned companies and 2) companies with substantive, outside investments from venture capital/private equity groups (i.e. no institutional money to muddy the water). These two types of companies can have their own unique set of leadership issues that are different from the business partner dynamics discussed below.

In many of the situations I’ve witnessed about these seven, the stories fall into the ‘you can’t make this stuff up’, Stuck in the Ditch genre. No MBA textbook will cover this ground.

Presenting the 7 Partner Potholes: [Read more…]

What is this thing called 9Stucks?
9Stucks is a dynamic business diagnostic tool. It identifies nine distinct yet interrelated business challenges that cause a company to underperform.

Lucky or Unlucky? Winning Leadership Traits

A significant reason for writing this blog is to hopefully prevent companies from developing any of the 9Stucks conditions talked about.  When I see or read something worth sharing, I will share it here and on social media.

Author Morten Hansen is interviewed in the very brief HBR Facebook clip featured below.  He teamed up with Good to Great author and leadership expert Jim Collins to write Great by Choice. If you haven’t read the book, the 5-minute clip is a good introduction to their research findings on sustainable leadership.

What can leaders do to succeed when having good or bad ‘luck’?

They need to have what the authors term “Productive Paranoia”.   The discussion also addresses an approach to innovation – creating the future via ‘empirical trials’.  Good stuff.  ‘Good to great’ actually. Enjoy.

What is this thing called 9Stucks?
9Stucks is a dynamic business diagnostic tool. It identifies nine distinct yet interrelated business challenges that cause a company to underperform.

5 Pesky Plights Hurt a Family Business (Part 5): The Sacred Cows

cowI know you’ve run across Sacred Cows (“SCs”)…we all have in our business careers or personal life.

Dictionary.com defines a Sacred Cow to be: “an individual, organization, institution, etc., considered to be exempt from criticism or questioning”.

This is the final post in my five-part series that explains how 5 particularly disabling conditions can negatively impact the value of a family-owned company. I saved this particular subject for last. I find that the presence of ‘bad’ Sacred Cows is the most emotional and highly personal of all of the previously discussed performance inhibitors found in this series. 

Good SCs, like a popular brand or an established, competitive business practice, are legacies that should not be messed with. However, ‘bad’ SCs:

  • are difficult to change
  • are hard to eradicate
  • can’t be spoken about
  • can have a profound, severe impact on operations

A family-owned company’s bad Sacred Cows wander around these pastures:

  1. People
  2. Products (or Services)
  3. Places
  4. Past Behavior

People: unqualified family members with significant roles

[Read more…]

What is this thing called 9Stucks?
9Stucks is a dynamic business diagnostic tool. It identifies nine distinct yet interrelated business challenges that cause a company to underperform.

5 Pesky Plights Hurt a Family Business (Part 4): The Bubble

Bubble

I recently returned from my college reunion… swept back in time to the days when living in my college bubble was a secure yet liberating environment.  Those were happy personal times – times of discovery, growth, socialization, and empowerment.

Based on my experience working with ‘stuck’ companies, executives caught in a company bubble might not be having as much fun. Operating in a company bubble suggests you are isolated, cut off from outside perspectives.  Is your company operating in a bubble?

This is Part 4 in my multi-part series that explains how 5 particularly disabling conditions can exacerbate family business underperformance.

If there is a weak independent board of directors/advisors, or one doesn’t exist, then governance and decision-making at the top of a family owned company is concentrated and insulated.  Due to the historical, generational ownership structure, there is a tendency that a family business could be prone to operate in its own unique bubble. If this is the case, does the addition of weak governance to the mix cause a family company to live in a double bubble?

What’s the significance of the ‘no governance’ topic? Many privately-held companies do not have any formal board of directors/advisors.

I’ve seen first hand where the lack of solid governance makes a difference. Similar to the other issues covered in this ‘Pesky Plights’ series, the absence of good external, independent governance could have negative implications on company execution.  Weak or no governance may prevent the family shareholders from facing up to and dealing with a myriad of challenges within their company.  Carefully assembled boards bring accountability, seasoned advice, realism, objectivity, innovative ideas and often inspiration.

Consider the situation at an established – but flat and stuck – family-owned manufacturing company with no outside board (let’s call it BubbleCo).

[Read more…]

What is this thing called 9Stucks?
9Stucks is a dynamic business diagnostic tool. It identifies nine distinct yet interrelated business challenges that cause a company to underperform.

Quick! Exit! Uh…not so fast

Exit Planning is a trendy topic, especially for owners of stuck companies who often develop the itch to sell their business when raw emotions push aside rational thought.

Exit Planning means helping prepare the company and shareholders for an ‘exit event’ (aka Sale).

The idea of “It’s time to sell the business” becomes more top of the mind when the owner(s) of a stuck company grow weary of dealing with their own personal collection of stucks. Here are some points of frustration…

Since I have been asked about Exit Planning/Selling a business frequently in the last couple of months, I thought I would share an email I wrote to the CEO of a stuck company who was contemplating selling.  Here goes:

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