Profits, Culture & Threats
Hello and welcome to the final 45 days of the 2019, we hope it has been a good year for you. The team at Banyan is thankful for the contributions we have been asked to make. Business owners and managers are constantly thinking about profits, culture and threats. This time of year can be one of reflection and projection in all these areas and we have a few thoughts for you in each category.
Are your people used to being pushed to have goals? Do you tell them what they need to hit to achieve a mythical number that most think is made to line your pocketbooks and not theirs? Do they understand how and why the goals are put together? If you would like a fresh look at goals and how they can help motivate your team, consider this post:
Can you outline how you build culture? Most cannot. It’s a gut thing for many and a “I know it when I see it” response for others.
Andressen Horowitz’s founding partner Ben Horowitz has another book out that is a worthy read for any leader. What You Do is Who You Are addresses the issue of how to build a culture. His first book The Hard Thing About Hard Things laid out that there is no recipe to building a culture or a company. His latest book takes on the root stock needed to make a culture soup and he does so with some historical reviews that will shock you.
Our biggest takeaway is that sometimes you need rules that stand out so much they show off what actions will define your culture. Like fining NFL Football players for being two minutes early like Tom Coughlin did when he was shaping the culture of the New York Giants. The reason, the rule was all meetings started five minutes early…
This book reminded us of Jack Clark’s talk a few years back about establishing values and then having questions that activate those values into actions that can be seen and felt by everyone on the team. They define who is not on the team as much as they show who is on the team.
We have two essays on this topic for you. One is about how you are using innovation and the threats you will face if you don’t understand what type you are fighting against, the other is more subtle and is tied to an internal threat you may face from your own people. If your people are always telling you what you want to hear and you don’t have an established way of getting in and out of hard conversations, then there is a really good chance they are also telling your customers what they want to hear. This is most likely hurting the company.
Essay #1: The Difference Between Early and Late Stage Innovation
Early stage innovation is what Keith Krach talks about with his concept of finding a beach head: Big enough to eat off of and small enough to defend. He should know, he has created four category-killers in his career and is now the Under Secretary of Economic Growth. Here is his point on beach heads:
When you are seeking to be an early stage innovator you need adventurous capital that will be patient while you disrupt an industry.
Late stage innovation is what Mike Maddock likes to talk about when he holds up an IPhone and asks, what can you do with this device to further surprise and delight your customers?
You need less capital and more curiosity here.
Most business owners are not in early stage innovation mode. They are in long-stage business cycles and earning a good profit margin which they control. The key in a long stage business cycle is to gain control of the profit. As a business owner it is important that you understand the game you are playing.
Some examples of late stage innovation:
• Professional Services
• Financial Services
• Insurance Services
• Telecommunication Services
• IT Services
• Software as a Service
Examples of early stage innovation
• Docusign (the world didn’t have a way to securely sign for things digitally)
• Apple's IPhone (the world didn’t have access to email, text, phone and camera that they couldn’t be without)
• Facebook (the world didn’t have access to their friends experiences that they couldn’t be without)
• UBER (the world didn’t have a way to share cars that were personally owned)
• Amazon (the world didn’t have a way buy almost anything and have it show up in less than two days)
Mike Maddock asks us, how are you using the benefits of these early stage innovators to create a more pleasing and delightful experience for your customers? When you stay curious to the new while delivering the old, you may find that what you own and control improves in its financial fundamentals through customer satisfaction and new customers acquisition through the holy grail of “word of mouth.”
Essay #2: When is the right time to have a hard conversation?
Ask anyone in the C-suite and you will get something close to: Now is as good as time as any.
Ask anyone further down the org chart and you are more likely to eventually here: Never is fine with me.
This spectrum of answers reflects a common culture issue tied to power and influence and safety. Those with low power avoid conflict and those with power don’t understand why others are afraid of it.
We always have fun with owners who have lots of power at work and ask them how it feels at home with their spouse…it usually gets the point across.
The issue this difference creates is that the people solving the problems for customers, building products and services, and acquiring new customers are the ones that really need to have the tools to have hard conversations - and win those conversations - on behalf of the company.
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