09/27/20

CEO Shoptalk — All Risk Is Not Created Equal

If you are an entrepreneur, founder, CEO, you swim in a sea of risk, alternating amongst the butterfly, the backstroke, the breaststroke, and the crawl. You must do it all.

In the early days, you are a minnow (or a little mullet if you are feeling salty) and the dangerous waters of startup land are populated by voracious, big-toothed sharks, vicious sharks, all of whom want to devour you.

In these early, formative days every risk can eat you (kill you, destroy your company). [Worse, you don’t yet know the nature of risk. You are in that classic posture of not knowing what you don’t know.]

As you exit the size 2 Pampers, the list of things that can kill you begins to thin, but you add to it — you begin to take risk.

You visit risk upon yourself as you sharp elbow your way upward in the food chain. [Soon, you may become a shark.]

The big question is this — Do you understand the nature of the risks you are taking?

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09/24/20

Accounting — That Bedeviling Black Art

I took a few accounting courses in grad school. I once knew my debits versus my credits. Knew all about original issue discounts, goodwill impairment, and other such trivia.

Knew GAAP and FASB. Just showing off now.

I ran businesses for 33 years. I needed to know more about accounting so I hired good accountants, retained good accounting firms, hired a good Chief Financial Officer, got second opinions, and I studied the subject on the mean streets of the business world.

CEOs and founders need to know some accounting — financial accounting, managerial accounting, tax accounting. What I knew saved me a lot of money.

One of my interests is the progression of ratios in a graphical manner — pick a financial ratio and graph it such that you can see the trend at the bat of an eye. That tells me something.

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08/21/20

Performance Appraisal As Inspiration And Motivation

Performance appraisal in small to medium companies (including startups) is one of those things that CEOs equate to going to the dentist. Not only do they not like it, they are not good at it.

There are a lot of very odd ideas at play here in the performance appraisal business — 360 degree appraisals which also fold in the guy selling flowers on the street corner — which makes the process a moving target; moving targets are notoriously hard to hit.

The message I bring you today is that a suspiciously simple, well-designed and executed performance appraisal system can be the most powerful personal tool wielded by a keen CEO for inspiration and motivation of individual team members.

It can also be clean, streamlined, and painless.

Let’s take a quick look at where performance appraisal fits within the overall schema of a company’s organizational matrix. Click on the graphic to see it at a larger scale.

Business-planning-building-blocks-graphic

What I want you to see is that performance appraisal is at the foundation level of the company’s Vision, Mission, Strategy Tactics, Objectives, Values, and Culture.

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08/16/20

Becoming Comfortable With Discomfort

I get a lot of calls from people who I can tell are uncomfortable with whatever they have called me to discuss. I can feel the vibration coming down the air waves.

A year ago, I ended a chat with a client and he said, “I constantly feel uncomfortable in my role as the CEO of my company.”

I let the dust settle for a few seconds and asked him to explain it. His explanation was perfectly reasonable and he knew exactly how he felt and why. Anybody would have felt the same.

We discussed it and then he asked me, “When does that uncomfortable feeling go away?”

I leaned into the second latte, took a sip, confronted his expectant face, and whispered, “Unfortunately, never. Part of being a leader is being comfortable with discomfort.

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12/15/19

The Feel For Running A Business

There are a great many things in life in which there is an element of earthy knowledge that I call “The Feel.” The Feel is real.

In my own life, I’ve run businesses for more than 33 years and have advised others for 8 years, ran Army units for 5 years. One of the big differences I find is the comfort with which a CEO is able to settle into the job and run the business, not solely by feel, but with a sense of feeling they know what they are doing.

I experienced this notion in a number of different undertakings:

There is a moment when you are sailing a largish sailboat when the wind, the sails, the heel of the boat, the current, the swells, the point of sail are all in perfect equilibrium. You can hear the wind wind singing in the shrouds. You are in the slot and you can feel it. If you let the wheel go, the boat stays obediently on that point of sail until one of those elements change. This is The Feel and, baby, you’ve got it.

When you are landing an airplane in a crosswind, you have to dip the upwind wing, you stand on the rudder, you control the speed, you manage the angle of attack, you tease the throttle — done well, the plane obeys and while it is wont to move about on short final because of the crosswind, it does not. The plane touches the upwind wheel, gently puts the other one down, you keep a bit of that rudder in, and you roll down the centerline of that runway. Because you have mastered The Feel of it.

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12/14/19

Team Performance — The Multiplier Effect

The board of directors and the investors in a company rarely get an opportunity to see a team function as a system, as a whole. They may become familiar with certain subsets of the team when they are in contact with the leadership and the management, but they rarely see the entire team working together and rarely without the team knowing they are watching.

When I work with a CEO, I sometimes get a chance to be a voyeur and watch the team functioning without the team being aware of my presence. This opportunity provides a keen and unique insight.

Today, I had such an opportunity. In this instance, I came away bowled over by the quality of the performance.

Here is what I observed:

 1. As a complete process, the team operated at a high level of performance. They were demonstrably better than peer organizations.

 2. The team was visibly interdependent and worked with each other. Clearly, this was neither novel nor unique to this day.

 3. Looking at the individual team members, I would not have thought them remarkable, but as I watched them several things jumped out:

 a. The team, at the individual level, was sympatico and had a native desire to work together.

 b. Whoever had hired this team had done a fabulous job. I spent some time watching individual team members and across the board they were performers.

 c. The team work was neither forced nor snarky. It was genuine and natural.

So, I spoke to the manager of the unit and we had a very nice chat. I quizzed him as to his hiring practices.

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12/6/19

Field Expedient

As the CEO/Founder of a startup, you will develop practices that you know work. Many times, these practices will not be perfectly “normal.” They will reflect your own personal style or they will be things that you just know work.

These are what I call field expedients.

Back in the day, when I was a combat engineer officer overseas, I had a damn good sergeant who worked for me. We were blowing up old fortifications in South Korea just south of the DMZ. When we demolished them, we cut all the rebar with cutting torches, removed the concrete pieces with dozers, dug a big hole, and buried the detritus (reinforced concrete). I used to recover all the steel and send it down to Seoul.

Then, we rebuilt them — often in slightly different locations and to a substantially higher structural strength — to withstand then modern artillery.

Here’s a picture of what it looks like when 100 lbs of C4 is exploded underneath a shallow bridge abutment. The bridge abutment was in the way of our river crossing site if we had to attack into North Korea. So, me and another sergeant used scuba gear and wedged 100 lbs of C4 under it and voila!

Blasting Out Old Bridge Column

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10/25/19

Ownership v Stewardship For The CEO Class

Stewardship — huh?

It is cold in the ATX this morning — 48F, but it will be 62F this afternoon and 82F on Saturday. I may lay off the sunscreen today, but back on it on Saturday.

So, about a year and a half ago, I’m speaking with a recently exited CEO who is in that special place that drives the question, “What’s next? Is there a second act?”

Luckily for him, this question of a second actship (see what I did right there, made that word up) is not really a pressing issue as the financial outcome provides breathing room for a couple of centuries — maybe a millenium — at his current burn rate.

So, we get to discussing, “What did you really learn? What do you leave with other than money?”

We get into the discussion of ownership v stewardship.

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