CEO Success Report -
October 2002
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CEO Success Report
- October 2002
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Increasing the Effectiveness and Enhancing the Lives of CEOs
and business owners.
Contents of this issue...
.. Welcome - A few words from the publisher, Gary Lockwood
.. Thought-Starter - "Business Dashboard"
.. Guest article - "Put Yourself Out of Business"
.. CEO Resources
.. Quotes to use in your staff meeting this month
.. Humor to lighten up the executive suite
.. Contact the publisher
.. Subscribe and unsubscribe instructions
See past issues of the CEO Success Report at:
http://www.CEOSuccess.com/archives
===================================================
WELCOME to this issue of the CEO Success Report!
===================================================
Hello again. I'm Gary Lockwood, President of CEO Success.
Welcome back once again to the CEO Success. I know you have
no shortage of material to read and I thank you for choosing to
read our newsletter.
We work hard to provide practical ideas, thought-provoking concepts
and useful information for you.
You (and about 1000 of your CEO peers), have honored me by
being a loyal subscriber. For that, I appreciate you.
My Thought-Starter today introduces the idea of a business dashboard.
When you are driving down the road, a quick glance at your car's
dashboard gives you a lot of information. In an instant, you know
how fast you're going, how much fuel you have remaining and whether
the engine is overheating.
All this information and much more is available by a fleeting look
at the dashboard.
Why not have a business dashboard? You can drive your company
by using the information on your business dashboard. Today's
Thought-Starter tells you how.
May I ask a small favor? Please forward this issue to other CEOs
and company presidents who may be interested in receiving
these messages. Thank you.
And now for our guest article this month...
Everyday your rivals try to offer something better that will
attract more customers to their services or products. Everyday you
try to hold them off. You hope your offerings are better, but that
can only last so long. Eventually competitors can find a way to
surpass your current offerings unless you innovate and further
raise the challenges they must overcome.
Itıs a Darwinian game where the victors are allowed to continue on
to innovate again and move their industries forward. For the losers,
irrelevance, obsolescence and ultimately business failure is all
too common a fate.
Our guest article this month is from J. Peter Duncan. Peter discusses
the role of innovation in a company-eat-company world. He also
outlines a creative strategy for applying innovation.
Read more about Peter at the end of his article.
I hope you enjoy receiving these articles and ideas to
help you sharpen your thinking about being an effective CEO.
My wish is that you use the ideas in the CEO Success Report to
get the results you really want. If you want some help in putting
them into practice, or if you have questions, email or call.
As you know, our specialty is Increasing the Effectiveness
and Enhancing the Lives of CEOs and business owners.
Enjoy this issue with my compliments.
Sincerely,
Gary Lockwood
CEO Success
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This month's THOUGHT-STARTER
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Business Dashboard
When you are driving down the road, a quick glance at your car's
dashboard gives you a lot of information. In an instant, you know
how fast you're going, how much fuel you have remaining and whether
the engine is overheating.
Your dashboard tells you the total miles the car has been driven
and often, the mileage of this particular trip. Your peek at the
dashboard allows you to see the time of day, whether your lights
are on (or bright) and if the turn indicators are flashing.
All this information is available by a fleeting look at the dashboard.
Many new car dashboards offer even more useful data and indicators.
One of my clients, Bruce, is CEO of a very efficient manufacturing
company. Bruce has created a dashboard for his business.
With one quick look, Bruce can see total sales this month and
year-to-date. He gets a reading of his backlog, amount of overtime
consumed and his on-time-delivery measurements.
At a glance, Bruce's business dashboard shows him his up-to-the-
minute profitability figures, the percentage of production capacity
scheduled for the next 30 days, and a dozen other key performance
indicators.
Bruce can drive his company by using the information on his
business dashboard.
What are you looking at as you're driving your company? Do you
drive your company (or your car) blindly? How easily (and quickly)
can you get crucial information on all your key performance
indicators?
One of my clients (let's call him Mike) was telling me how important
it is to him that he sells long-term maintenance contracts, not just
ad hoc projects.
Makes sense. The long-term contracts provide some stability and
predictable cash flow. They assist in getting closer to his clients.
They also help him to borrow funds more easily.
So far, so good.
When I asked him how many of these long-term maintenance
contracts he has already, he couldn't tell me. He didn't know! He
said he's been too busy to track the number of such agreements.
Wait a minute! If this type of agreement is so important to Mike's
growth strategy, how can he not know the status?
The fact is that most owners and CEOs know what's important to
their enterprise, but can't (or don't) measure those things.
You've heard the old maxim: "You can't manage what you don't
measure."
Here's my suggestion: Identify the five to ten key measurements and
key performance indicators that are important and essential for
your business.
Set up an active system to measure and track these indicators. This
could consist of a couple of pages of printed reports or it can be
as sophisticated as a web-based, interactive, real-time display.
The important thing is that you get this data daily. It should show
only the key performance indicators (with details easily available
elsewhere). Ideally, the data would be color-coded to show which of
the indicators are in the "red zone" (needs immediate attention),
in the "yellow zone" (caution) or in the "green zone" (OK
and
as-budgeted).
Use your business dashboard each day to decide which areas of your
operation you should be concerned about and which are candidates
for longer-term strategy. Look for the indicators that suggest a
delegation of enhancement projects. Watch the trend lines.
Chances are, you'll get what you're looking for - improvements in
these areas.
With your business dashboard, you will drive your business with
confidence.
About the Author...
Gary Lockwood is Increasing the Effectiveness and Enhancing the
Lives of CEOs, business owners and professionals.
Get the Free BizSuccess newsletter -
http://www.bizsuccess.com/newsletter.htm
or send any blank email to mailto:subscribe@BizSuccess.com
==================================
Guest Article
==================================
Put Yourself out of Business
by J. Peter Duncan
It is a Company-eat-Company World
Everyday your rivals try to offer something better that will
attract more customers to their services or products. Everyday you
try to hold them off. You hope your offerings are better, but that
can only last so long. Eventually competitors can find a way to
surpass your current offerings unless you innovate and further
raise the challenges they must overcome.
Itıs a Darwinian game where the victors are allowed to continue on
to innovate again and move their industries forward. For the losers,
irrelevance, obsolescence and ultimately business failure is all
too common a fate. If you were to examine the Fortune 500 list from
1955 (the first year it was published) there would be some
companies that you would recognize, but many more (well over 25% of
the list) that went the way of the dinosaurs and became extinct-
dying of changes in their environment or being gobbled up by more
aggressive carnivores. This is frequently the fate of the largest
organizations in the business world, and the challenge for survival
is even greater for the small and mid-sized companies.
To survive, a company must be aware of its environment and alert to
change. Change - it is everywhere. It is the current of business,
sweeping over all like a flooding river. When it rages, it is
frightening: bumping, bruising and even drowning those with its
power. When it is calm, change is tolerable, and we build
structures - systems, models and policies - that try to control and
resist it. If we get a good thing going, instinct tells us to lock
in the gains - to keep doing more of the same to capitalize on our
success. But it is a fine line between capitalizing on success, and
getting stuck in a rut while clinging to a dream of a past when
business was easier.
But there are companies that get tired of clinging and embrace
change. They prefer the adventure of moving with the current of
business over clinging and dying of boredom. Letting go, they
embark on a voyage into an unknown future where they are often
tumbled and smashed into unknown obstacles. For some it is too much
and they stop and cling again. But for those who refuse to hold on,
they soar with the currents appearing to magically fly above those
who try to resist the current of change.
Which kind of company will you create? One that uses its energy and
resources to hold back the currents of change, or one that risks
the currents of change to create new value in business? This is the
challenge of innovation. The best strategies always hinge on some
form of innovation.
What is so Great about Innovation?
A dictionary defines "innovation" as the introduction of something
new or different. According to the eminent strategy professor,
James Bryan Quinn, "Innovation is the first reduction to practice
of an idea in a culture." Without innovation, all we can do is try
to optimize what we have, but in a world where competitors are
constantly upping the ante, this is not sufficient. Innovation is
the thing that gets you ahead of the pack, rather than chasing your
rivals. It is the source of mutation in the DNA of a company that
is essential to survival in a changing environment.
Innovation can take on many forms. Most often people think of
product innovation - the new idea that gives your offering an
advantage over a rival's. This is a good start, but it is a rather
narrow use of a powerful concept. What are new processes you can
use to transform the very way in which value is created in your
industry? Amazon.com latched on to the internet as a whole new
concept of retail selling. Are there services you could offer which
would be innovations in your industry? General Electric strives to
wrap services around every physical product it sells. And at the
highest level, can you invent and deploy a strategy that changes
the rules of the game for your business? Wal-Mart has redefined
customer service and relentlessly driven down costs to build a
company with "everyday low prices" that has rocketed to the top of
the Fortune 500 while rivals Sears and K-mart struggle to shore up
their strategies which brought them success in the 1970's.
Innovation is at the heart of value creation. In each case, someone
or some group of people imagined a company different from the
status quo. A new idea was translated into a product, service,
concept or strategy that could be brought into practice to create
new value for the company. Not all innovations are successful.
While any particular innovation may succeed or fail, any company
that wants to be successful must be working on some kind of
innovation to build a sustainable advantage.
If Innovation is so Great why doesn't Everyone do it?
Well, there are a small number of companies that either don't
understand the need to innovate or don't care to try. But among
those trying to get ahead, there seem to be two common reasons
companies fail to innovate.
The first reason is that they are successful. Mankind's instinct is
not to rock the boat when you have a good thing going. When a
company does innovate, they are proud of their success. They want
to capture full advantage of the good times and try to control the
environment to extend their winning streak. Rather than investing
in the next innovation, they get trapped into preserving the
advantage of their last innovation.
In the 1970's IBM developed the most successful business model for
building and selling large powerful computers to corporations.
Success made the "mainframe" division of IBM very powerful, and
they used this power to try to preserve their dominance in the
market. Rather than forging ahead with daring new products built
from the latest technology, the IBM mainframe group became
conservative, slowly adding emerging technology onto their existing
platform. Digital Equipment Corporation had no existing platform.
They were able to start from scratch and design the best possible
computer. From this innovative quest the "mini computer" emerged
and DEC rode to prominence on this product during the 1980's. But
like IBM, DEC allowed its success to slip into arrogance as they
reveled in the innovation, which brought them success and turned a
blind eye to the ongoing march of technology into the PC market.
Tasks that once needed a mini-computer migrated to the PC and HP,
Compaq, Dell and others took share from DEC. In time, DEC was so
weak that they were unable to bring their innovations to market and
Compaq acquired them.
The second reason companies don't innovate is, like DEC in the
later years, they get caught in a competitive squeeze. It often
begins with a sudden competitive attack on a market. A rival
innovates and introduces a product of greater value, but prices it
equal to the incumbent, or they bring a product of similar value,
but offer it at a much lower price point. In either case the
quickest and most common response is a price cut on existing
product to preserve market share and cash flow.
Any arbitrary price cut has to be followed with cost reduction, to
get profitability back to acceptable levels. All too often, this
means downsizing and reining in investment, both of which take
resources away from innovation efforts. Companies get fixated on
improving ROI by managing the denominator (investment) rather than
pushing the innovation driven numerator of the equation. This
leaves a company less able to innovate and more susceptible to the
next competitive squeeze. Before long they can find themselves on a
downward spiral like the American automakers or Pan Am Airlines in
the 1980's. AT&T failed to prevail against rivals in the early 1990's
and found itself squeezed and had to resort to breaking up the
company to improve its ROI when it was unable to deliver a
breakthrough innovation toward the end of the decade.
What does it take to be Innovative?
An innovator is never satisfied. There is always something better
around the corner, and he is determined to break from the pack and
find it. An innovator seeks not only to beat the competition, but
also to better his own inventions. In company terms, an innovative
company needs to try to put itself out of business (with new ideas)
before someone else does it to them.
Suppose you were in the port-a-potty business. It is not a business
that most people want to stick their nose in. I don't recall ever
meeting someone who was really satisfied with their experience
using a port-a-potty, so it would seem there is plenty of demand
for a breakthrough innovation. So far the industry leaders seem to
have made improvements that help them lower their costs-easy to
clean plastic, rugged commercial design. But other than more
powerful deodorizers, there has not been much innovation to improve
the consumer's experience.
So how would you innovate to try to put the industry leaders out of
business??
Well Potty Palooza asked and answered the question with a
determination to change the basis of competition in the industry.
Their approach, install 27 private bathrooms with modern porcelain
flush toilets, running water, air conditioning and luxury hardwood
floors in an 18-wheeler trailer. Not only do they provide the basic
facilities, but also each of their trailers has a full time
attendant to periodically clean and stock the rest rooms.
Will it work? I don't know, but it is the type of redefinition of an
industry that has the possibility of being a transformational
breakthrough. Rather than following the leaders with incremental
improvements, they have attempted to fundamentally change the rules
of the game and set a new basis for competition in their industry.
They are engaged in the imagination game, not the imitation game.
What about you? How will you change the rules of your industry?
Increase your Innovation Quotient (IQ)
Okay, so you get the idea... when we speak of innovation we are
talking about introducing significant new ideas that redefine the
basis of competition. But how does a mid-size or smaller company do
that? You can't afford a think tank like Bell Labs.
The good news is that innovation is not dependent on dollars. Sure
some money will help bring things to market, but the fundamental
building blocks of innovation are IDEAS, KNOWLEDGE and A PROCESS
for translating these into tangible services and products in the
market. Every person in your company has the ability to contribute
regardless of function, title or salary, IF you establish a culture
and an environment to encourage innovation.
Once you have a suitable environment, you need to fill it with
creative and qualified people. The most innovative companies like
3M and Microsoft often interview 100 qualified candidates to find
the one that will fit with the culture and become a contributor to
their value creation process. In addition to the people and the
environment, you need to organize for the type of innovation you
are trying to encourage. Incremental innovation has a 1-2 year time
horizon and is often driven by strong egos, bonus compensation and
a small quick acting team. Where as breakthrough innovations have a
7-20 year time horizon and are best facilitated by creating a
stable large team that is a collegial peer group who respect each
other and will stay together over the duration of the program. In
all cases, innovation comes from the coupling of a breakthrough
idea with a disciplined process to refine and improve the idea to
make it commercially viable.
To inspire innovation in your business, there are three types of
knowledge you want to encourage and capture:
Know What....cognitive knowledge
Know How.....advanced skills
Know Why.....systems understanding
These are the raw materials of innovation. By the way, they are
also the building blocks of your strategic competencies. The best
companies develop and institutionalize knowledge in the company. So
if you have been developing strategic competencies, you should be
well on your way to having the elements of an innovation.
But these are just the raw materials. The real genius of innovation
comes when someone dips into this collection of ideas with a net
and draws a select group together for a particular purpose. At
Canon they drew together their knowledge of optics,
electromechanical systems and mass production to launch the
innovative personal photocopier when Xerox and its competitors were
still thinking the market was about big, high speed, fully featured
machines.
The inspiration for innovation happens in an instant. It is
impossible to predict the exact moment or elements required for
genius to strike. There are, however, some common places to look
for inspiration. You should examine:
needs/demands of market place (customers provide some of the best
ideas)
value chain analysis (define linkages and where value is created)
figures of merit (define what it takes to win)
theoretical limits, bounds
trends (extrapolation of pacing parameters)
models (interaction of a number of factors)
attack ourselves (define how we could beat our best today)
But inspiration is just the start. Good companies have a
disciplined process to transform the genius of a moment into a
refined product or service that is ready for the market. This often
requires several rounds of development with creative inputs at each
stage. The culture of the company has to not only support the free
thinking geniuses that seed the innovation process with ideas, but
also the more linear development folks who reduce the idea into
practice. The best companies find ways to link their innovation
process with their strategy process so the two define and support a
single vision for the organization. They also find ways to measure
innovation so they can objectively monitor their progress and
strive for ever higher performance.
Keep Yourself in Business
The best way to keep yourself in business is to try to put yourself
out of business. If you are always on edge, never complacent, then
you will challenge your team for continuous improvement. Innovation
requires vision, inspiration and the patience to support a
relatively long time horizon. You can encourage it by creating a
productive environment and organizational structure that you fill
with the best people.
Change is a constant in business. We need to continually change and
evolve if we are to survive. Static barriers don't keep out the
barbarians who want our business. Winners embrace change and create
moving barriers that keep their rivals off balance. True barriers
to entry are created not by one thing, but by the RATE at which you
innovate and keep your competitors struggling to catch up.
Winners learn to play the imagination game that leads to innovation.
They learn to have their cake, and eat it before someone else does.
Winners assume that others are trying to take their customers at
every turn and that their very survival is at stake. They figure
out time and time again how to put themselves out of business
before their rivals do. That is the challenge of not just a
strategy, but a renewable and sustainable strategic basis for a
successful business.
Peter Duncan co-authored the best-selling book, "Simplified Strategic
Planning -- A No-Nonsense Guide for Busy People Who Want Results
Fast!" (http://www.cssp.com/book.asp)
and is Vice President of the
Center for Simplified Strategic Planning, Inc., a consulting firm with
a strict focus on Strategic Planning services for the small to mid-
sized company.
Copyright, Center for Simplified Strategic Planning, Inc., Southport,
CT, 2002. Reprinted with permission of Center for Simplified Strategic
Planning, Inc., http://www.cssp.com
Peter can be reached by phone
at 410-431-5480 or by e-mail at mailto:duncan@cssp.com
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RESOURCES for CEOs
=============================================
Get ALL you want from your business AND
have fun along the way!
I have openings for two new business coaching clients. If
you are ambitious, ready to tackle some big achievements,
and are willing to be accountable for the results you
produce, let's talk.
Coaching is not cheap, nor is it easy. If you are in charge
of your life, ready to move quickly, and can afford to invest
in your future, contact me at 909/984-3344 or by email at
Gary@BizSuccess.com
We can discuss your situation and how the business coaching
program could help you get the results you want.
Check out the details at
http://www.BizSuccess.com/coach.htm
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QUOTES to use in your staff meeting this month
========================================================
"We are what we think. All that we are arises with our thoughts.
With our thoughts, we make the world."
Buddha
"Any sufficiently advanced technology is indistinguishable from
magic."
Arthur C. Clarke
"Everything that can be invented, has been invented."
Charles H. Duell, 1899
"The world is very different now. For man holds in his mortal hands
the power to abolish all forms of human poverty, and all forms of human
life."
John Fitzgerald Kennedy, Inaugural Address
"Our Age of Anxiety is, in great part, the result of trying to do
today's
jobs with yesterday's tools."
Marshall McLuhan
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HUMOR to lighten up
the executive suite
==========================================================
Honor System Virus
-----------------------
This virus works on the honor system.
Please delete all the files on your hard disk, then
forward this message to everyone you know.
Thank you for your cooperation.
Buying a Turkey
---------------
A lady was picking through the frozen turkeys at the
grocery store, but couldn't find one big enough for her family.
She asked a stock boy, "Do these turkeys get any bigger?"
The stock boy replied, "No ma'am, they're dead."
Take This Job
-------------
COMPETITIVE SALARY - We remain competitive by paying less
than our competitors.
JOIN OUR FAST-PACED TEAM - We have no time to train you.
CASUAL WORK ATMOSPHERE - We don't pay enough to expect
that you'll dress up; well, a couple of the real daring guys wear
earrings.
MUST BE DEADLINE ORIENTED - You'll be six months behind schedule
on your first day.
SOME OVERTIME REQUIRED - Some time each night and some time
each weekend.
DUTIES WILL VARY - Anyone in the office can boss you around.
CAREER-MINDED - Female Applicants must be childless (and remain
that way).
NO PHONE CALLS PLEASE - We've filled the job; our call for resumes
is just a legal formality.
SEEKING CANDIDATES WITH A WIDE VARIETY OF EXPERIENCE
You'll need it to replace three people who just left.
REQUIRES TEAM LEADERSHIP SKILLS - You'll have the responsibilities
of a manager, without the pay or respect.
GOOD COMMUNICATION SKILLS - Management communicates, you
listen, figure out what they want and do it.
***excerpts from: http://www.joker.org/ ***
=================================
CONTACT CEO Success
=================================
Gary Lockwood is the publisher of the CEO Success Report.
Email: mailto:Gary@CEOSuccess.com
Office: (800) 272-1575 (USA) * (909) 739-7444
Fax: (909) 494-4314
========================================
Your Comments, please?
========================================
I appreciate feedback, corrections, and comments about the
CEO Success Report. Please send your thoughts to:
Gary@CEOSuccess.com mailto:Gary@CEOSuccess.com
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