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.

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?

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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.

5 Pesky Plights Hurt a Family Business (Part 3): The Handoff

HandoffI ran outdoor track both in college and high school. Since I was a fast runner (back in the day) I always ran one of the legs of the 4×100 and 4×200 relay teams. Our relay teams practiced daily on perfecting the handoff – passing the baton. We had the relay leg transitions down pat. Unfortunately family owned businesses may not plan for a leadership transition and may bungle, delay or simply avoid the handoff to the next generation of family leaders or to non-family executives.

This is the mid-point in my multi-part series that explains how 5 particularly disabling conditions unique to a family business can exacerbate business underperformance.

This post is about companies with non-existent succession/transition plans. When owners can’t or won’t let go, four of the 9Stucks (Ditch, Moment, Slow Lane, and Another World) get really amped up and push the stuck company into a deeper hole.

Family company leaders often stay in their roles too long.  But staying too long is not the problem; being in a zone of leadership indecision creates troublesome ripples throughout the entire company.

FamilyCo was one of my stuck manufacturing clients. I was hired by the company/family to do a ‘fresh eyes’ assessment of their business. The company wasn’t in trouble but it had hit a wall and was stagnating. It didn’t take me long to figure out there were issues with the senior team, the company’s competitive position and a number of important operational functions.

Some facts:

  • Jack (second generation) was the CEO and the son of the founder; at age 70 he worked full time at FamilyCo
  • Jack’s 2 children (son and daughter) both worked for the company. The son (Bill, age 42) ran operations (manufacturing and engineering). The daughter (Susan, age 40) was head of marketing. Bill and Susan worked well together.
  • Sales was led by a non-family member and he reported directly to Jack. In the last few years, the sales team had experienced significant turnover.
  • The CFO was also a non-family member and had worked for Jack for many years. He was nearing retirement. His duties included many administrative functions and human resources.
  • There was no Board of Directors/Advisors

The children told me: “Dad was the driving force to get the company to where it is today, but now we think he has blinders on; he doesn’t acknowledge all the changes in the industry, the shifting customer demands or the need to upgrade our facilities, systems and equipment. He is living in the past. You (me) need to talk to him about letting us run the company.”

Okay…now what?

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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.

How Scrooge and Marley Became Unstuck

Scrooge and Marley PLC was stuck.

I don’t identify my clients by name, but given the widespread publicity and overall notoriety of this particular company, I felt it would be beneficial to reveal the real ‘story behind the story’. This is a case study about how Scrooge and Marley PLC became unstuck.

Background

Scrooge and Marley was a mature, privately-held ‘counting house’. The company was founded by Jacob Marley and Ebenezer Scrooge, two aggressive, entrepreneurial clerks. There were no outside investors and no cash awards from any business accelerator programs. (Hard to imagine who might have wanted to hear their elevator pitch!)

What is a ‘counting house’? Marley called their business a ‘money-changing hole’. It was a closely held, secretive financial institution that charged high interest rates on all transactions. They were loan sharks…predatory lenders operating out of a dingy warehouse. It’s a good thing their home office was in London, otherwise they probably would have been targeted by Dodd-Frank or The Consumer Finance Protection Bureau.

Jacob Marley died while he was still employed at the company. There was no key man life insurance; they were too cheap to buy a policy. After Marley’s death, Scrooge became the sole shareholder and he decided to run Scrooge and Marley as he saw fit.

Little did Scrooge know that Jacob decided to maintain a Board observer role.

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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.

CEOs: How To Deconstruct A Stuck Company Stew

Is your company’s value ebbing or declining?

Do you know ALL the reasons why your company is underperforming, or can you only pull apart some of the reasons?

Figuring out why shareholder value is deteriorating can be easy if the issues are really obvious. It can be hard and confusing if the overall situation is a quagmire.

The 9Stucks collection identifies the most common causes of why a company isn’t meeting shareholder expectations. For those of you who have looked at the 9Stucks, each standalone Stuck is straightforward and uncomplicated. Most of the significant, contributing issues that cause a company to be stuck are not hard to uncover if you know where to look.

However, the 9Stucks are usually not limited to just one or two. A stuck company always has A COLLECTION of the 9Stucks. The breadth of the collection determines the overall organizational ‘stickyness’.

This tangled, unique mix of the 9Stucks acts as a significant impediment to figuring out the real, challenging issues in the organization because it is often difficult to extricate and isolate the individual components of the mix, let alone fix them.

I call the mix Stuck Salmagundi.

Salmagundi…?

[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.

CEO: Does Your Team Have Control of the Ball?

The team watching the ball slip away...

“The only players who survive in the pros are the ones able to manage all their responsibilities.” – Tom Brady, Quarterback of the New England Patriots

Football, rugby, or any other sport organized around a finely-tuned playbook, requires players to understand roles and execute plays in both familiar or unplanned situations. Each player has defined roles and responsibilities based on his skills; that player is fully aware of his role, the roles of others and has studied the plays. A solid playbook enables a cohesive team to maintain control of the ball and win.

Does your company’s playbook have:

This all too common, weak people/process combination creates lots of broken plays. Basic things like roles, skills, processes really should be a given in any organization.

But if that’s what’s ‘supposed to be’, then why have I regularly seen many corporate fumbles, pigpiles, tangled situations and outright conflict over ‘who does what and how’?

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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.

CEO Peer Groups: The Regular Crowd Shuffles In

As a co-owner/founder and co-facilitator of a CEO Peer Group**, I’ve learned a lot about CEOs and how a peer group can be of great help to them.  While individual differences exist as they would in any group, there are some common themes:

    1. CEOs are surrounded, but can be lonely
    2. CEOs whimper, wag and bark
    3. CEOs do a lot of things right – their instincts are good
    4. CEOs can be housebroken – obedience training works
    5. CEOs have courage

CEOs are surrounded but lonely

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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 March Hare CEO

 

Have you attended a “Mad Tea Party” Board of Directors or management meeting and listened to the CEO’s unrealistic expectations about future performance?  Did you leave the meeting scratching your head about what you heard?

Lewis Carroll introduced us to the strange Mad Hatter and the March Hare in his 1865 book Alice’s Adventures in Wonderland.  The Mad Hatter hosted the Mad Tea Party; during this raucous event there was one revealing exchange with Alice:

 ‘Have some wine,’ the March Hare said in an encouraging tone.

 Alice looked all around the table, but there was nothing on it but tea.

 ‘I don’t see any wine,’ she remarked.

 ‘There isn’t any,’ said the March Hare.

How many times has a corporate leader told you there was plenty of wine about, but in fact, there was only tea at best?  Your gut is screaming… “There is no way this company can hit those targets”.  But your hope and the March Hare CEO’s enthusiasm get the better of you.  I have seen this scenario repeated many times at stuck companies; there can be over optimism and not enough effort focused on analyzing the brutal facts and confronting reality.

What’s wrong with being optimistic and aiming high?

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