This month you can view the following great articles:
- How to Deal with the Leadership Shift
- From the Kitchen Table to the Board Table: A Small Business Guide to Corporate Governance
- 3 Key Ideas to Help Business Leaders Succeed in 2013
Businesses are under increasing stress as markets are increasingly volatile, clients are more demanding, talent is scarcer and change occurs in faster and shorter cycles. To survive and thrive business leaders have to make faster decisions, on less information, and which have greater risk. This has led to a change in how leaders need to think, decide and execute.
A good model, that addresses the four areas of concern that business leaders need to deal with, is the VUCA model (developed in the US Army War College).
This consists of:
- Volatility - the rate, amount, and magnitude of change
Drastic, rapid shifts can bring about instability for organisations and leaders, but even the minor or innocuous shifts that occur daily, such as new and "immediate" priorities that disrupt plans, or the increasing need to "multi-task," are changes that increase volatility.
- Uncertainty - the amount of unpredictability inherent in issues and events
Leaders can't predict because they lack clarity about the challenges and their current and future outcomes. Uncertainty can result in an over-reliance on past experiences and yesterday's solutions or to analysis paralysis as we sift through more and more data.
- Complexity - the amount of dependency and interactive effect of multiple factors and drivers
Complex interactivity requires leaders to think in more creative, innovative and non-linear way; to be able to deal with shades of gray (as opposed to black and white) solutions.
- Ambiguity – the degree to which information, situations, and events can be interpreted in multiple ways
Ambiguity increases doubt, slows decision-making, and results in missed opportunities (and threats). It requires that leaders think through and diagnose things from multiple perspectives.
The Challenge for Leaders
For leaders the challenge is not just a leadership challenge (what good leadership looks like), but it is a development challenge (the process of how to grow "bigger" minds) to deal with the world of VUCA. Leaders, too often, have become experts on the "what" of leadership, but novices in the "how" of their own development.
So What Can You Do as a Leader?
- Change the Leadership Mindset - successful tactical leaders can easily get trapped by their predictive mindset when they encounter a VUCA situation. Your coach can provide a robust sounding board, challenge your assumptions and beliefs, and help develop new perspectives, options and ideas.
- Change the Leadership Approach - many leadership issues are not problems to be solved but rather dilemmas that must be continuously managed. Your coach can help you to understand this, and to manage the issues and create opportunities from this is key.
- VUCA is a neutral force in the world – leaders often look at Volatility, Uncertainty, Change and Ambiguity as a negative force that they need to react to. Your coach can help you to see the potential and to transform it proactively and find the opportunity within.
- Leaders Don't Execute, leaders execute – Leaders too often get involved in driving the efforts themselves. The key is to think more strategically and to unlock the potential of your people so you can develop leaders at lower levels who can do the work where it needs to be done.
Most small business owners recognise that governance structures are vital elements of their business, but only a few manage to embed corporate governance structure into their business. The restructuring of a business from the kitchen table to the board table to suit a corporate governance framework, is an important task to be done by the management, and in the case of small businesses, the business owners themselves.
Below is a general guide for small businesses who are thinking of creating an internal framework along the lines of a corporate model.
- Define roles and responsibilities. Well-defined responsibility, accountability and reporting lines between the management and employees are vital features in any corporate framework. These should be communicated well to ensure that expectations, priorities and business challenges are addressed accordingly.
- Create clear and efficient policies and procedures. A clear statement on management policies that covers every aspect of the business is a necessary requirement to ensure the smooth operation of your business. This may include procedures for monitoring company transactions, transparency and disclosure procedures and a code of conduct for all levels of management and employees.
- Conduct and disclose regular financial audits. External auditors benefit small businesses just as much as they do larger corporations. Auditors are able to provide an impartial account of ways in which a small business can improve its financial standing and its marketability to investors.
- Establish a formal recruitment and remuneration criteria. Do you need to hire a CEO/CFO and if so how much should you pay them? These and other decisions regarding recruitment and remuneration could be addressed if a corporate framework is in place.
- Work in a transparent manner. In order to implement corporate governance in a small business, it is essential to disclose relevant information, not just internally but also to external parties. Systems should be in place to guarantee that important information is made public in a timely manner.
- Develop an employee training and motivation program. Small business owners should not only supervise and monitor job performance, but also encourage employees to undergo continuing education. This will ensure that all staff remain up to date with relevant regulations and business developments and maintain their motivation to improve their skills and career prospects. Every business is different and the formalising practices for organisations of any size should be tailored accordingly to fit its own structure, culture and business strategy. Kitchen table meetings may work well but by adapting corporate governance, small business increases the likelihood of sustainability as well as growth.
1. When did you last complete a competitor analysis?
Almost all business owners / managers are aware of their direct competitors but when was the last time you actually completed a formal analysis by way of a 'competitor analysis'? This should be at least an annual process to help pin-point key opportunities for improvement. To complete a competitor analysis:
- List 4-5 insights / key success factors down the left hand side of your page then weight them out of 100
- List your business now in a column along the top followed by a further 3-4 competitors
- Now score your business 50% of the weighting as a benchmark and then score each competitor against the various insights / key success factors
2. Focus on your early adopters
When planning a new innovation, project or roll-out of a new strategy businesses will often announce the change to all team members or customers at the same time. This can typically lead to the 'laggards' or those not as open to change pushing back regardless of the positive impact the suggested change will achieve. This in turn reduces the potential success of the new initiative. To boost the potential of success rolling out a new project or strategy a a more effective approach would be to introduce it to the early adopters in the team or within the customer base to get their buy in first and iron out any issues (as they happen to provide constructive feedback and embrace new ideas). After this first phase is completed with early adopters and issues ironed out the entire team can then be approached and the potential for success will be much higher that before.
3. Under-promise, Over-deliver
Whether you are setting time-frames for growing into a new market segment, setting budgets for next year or just responding to a sales call its critical to 'under-promise' and 'over-deliver' in the time frames, figures or parameters being suggested. As this is far from the norm in the current high-paced business environment having this as a fundamental 'theme' will greatly assist with higher customer satisfaction and keeping stakeholders satisfied.