Executive and Team Coaching, Leadership Coaching, Mentoring - Strategic Planning - Board Service

 

The CEO's Handbook - Volume One
Notes for a Thinking Chief Executive
Available on Amazon Kindle - Click Here

Dr. Earl R. Smith II
Managing Partner, The Federal Circle
DrSmith@Dr-Smith.com
Dr-Smith.com

In this series I have been writing about some of the major breakthroughs that my coaching clients have managed. While it is true that most of my coaching work involves slow and steady efforts towards major successes, it’s those successes that make the efforts truly worthwhile. The truth is that you cannot have one without the other. No matter what somebody tries to tell you, there are no shortcuts to epiphanies – no magic bullet that will solve all your problems. There is no such thing as a panacea. The sooner you accept that, the sooner you can start on a meaningful journey that will substantially change your life. Continue reading “Coaching Breakthrough – First Steps” »

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I am pleased to announce that The CEO’s Handbook Series is Available As Kindle Books on Amazon. Here are the links:


The first six books are available in all e-Formats. You can click on the hyperlinks and read samples. Please make sure to send me your comments and suggestions. I am always working to improve the writing. I would appreciate your forwarding the list with any endorsement that you feel inclined to add.

Contact Dr. Smith

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The CEO's Handbook - Volume One
Notes for a Thinking Chief Executive
Available on Amazon Kindle - Click Here

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The Federal Circle provides advisory services to companies working in the federal contracting space. Its core team and network of advisers has a deep understanding of the government contracting space. Together they represent a rich resource for companies trying to generate traction in these very competitive markets. Contact us for a free initial consultation.

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The CEO's Handbook - Volume One
Notes for a Thinking Chief Executive
Available on Amazon Kindle - Click Here

Dr. Earl R. Smith II
Managing Partner, The Federal Circle
DrSmith@Dr-Smith.com
Dr-Smith.com

One of the major challenges that a CEO faces comes when it becomes necessary to build a business development capability beyond that of the core operating team. The challenge reemerges when that capability needs to be expanded. In fact, it is one of the most regularly recurring challenges. More of that later. But, for now, let’s start with the first time. Continue reading “Business Development and Failure to Launch” »

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The CEO's Handbook - Volume One
Notes for a Thinking Chief Executive
Available on Amazon Kindle - Click Here

Dr. Earl R. Smith II
Managing Partner, The Federal Circle
DrSmith@Dr-Smith.com
Dr-Smith.com

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There are lots of reason why a business fails – but one is particularly insidious. Failure that results from not being held accountable for your actions and their results is an unnecessary call to a futile end.

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Read Part One

It was the mechanism that John chose to ‘fund’ these expenditures that caught my eye. He was deferring compensation to his vendors – the very people who were providing the valuable guidance and revenues that might have given the company a better chance to succeed. When I pointed this out to him, John’s response was that he was doing ‘what was necessary’. I felt pretty sure that his vendors did not see it that way. I also suspected that the departing team members were spending their ‘separation payments’ without feeling at all guilty about it. The net result was that the company had developed a reputation of living off the good guys and paying off the bad ones. This was negative branding at its very worst.

However, there was a deeper problem. In John’s case, it quickly became clear that the company was suffering because he was not delivering on his obligations. The ‘good guys’ were covering their bases – some of them were exceeding expectations – but John was not. He was the point man on the sales efforts. He also was responsible for generating the projections that ‘mapped’ the company’s journey to profitability. The projections were not being met – in fact, they were constantly recast. The sales effort was anemic – John simply could not turn opportunities into closed deals. So expectations were not met and projections were revised. This destructive cycle came to dominate the company’s reputation and results.

No Metrics – No Matter: Once I get a sense of how the CEO is approaching his role and how the company is branding itself, I turn to the question of performance metrics. My question to John was, “how do you know if you are doing a good job – how do you know if you are fulfilling your obligations to the company and the team”. As you might expect, the response was similar to the one elicited by my first question. There were the generic references to being ‘the best of the best’ – a board statement about his role as team leader – but no hard metrics at all. Without hard metrics, a team quickly becomes a gaggle and this was certainly the case with Dip Stick, LLC.

As interesting part of his response turned on his justification of his role in the company. “I am the founder and own the bulk of the stock – so I am the CEO and leader”. This legalistic interpretation is always a red flag for me. From experience, I have come to accept that it is meaningless to suggest to such a person that a leader should lead by example – by producing at levels above the other members of the team. The reason that that argument is a non-starter is that it assumes accountability and accountability was not part of John’s vision of being a leader. For John, leadership was a prerogative that came from being the lead founder.

It is hard to overestimate the corrosive effects of this assumption of prerogative. The mere presumption poisons the pool. If the CEO does not apply hard metrics to his own performance, how can he expect that other team members will? My subsequent meetings with other members proved how unreasonable this expectation can be. None of them saw the need to substantively measure their performance. None of them saw their compensation and participation in the company in terms of their actual contributions to its future. In fact, all of them simply assumed that their presence on the team was sufficient to justify that compensation and participation.

The Rich Uncle Syndrome: And now I come to the true enabler of this tragedy – the ‘rich uncle’ who was funding the company. Sometimes it is an ‘angel investor’ – other times it is an ‘venture capitalist’ – but it always comes down to a rich uncle – that soft, benevolent character who, without the toughness that any company requires, simply writes checks and attends a series of mind-numbing meetings. John’s rich uncle was a venture capitalist who ‘liked the idea behind the company’. The money flowed in without oversight or established metrics. It was like giving a two-year-old a loaded revolver and sending him out to play. The results were predictable.

My meeting with John’s investor took me back to my days in Manhattan. In those days the coops along upper Park Avenue were occupied by what we derisively called the ‘Nuevo Riche’ – the newly rich. These people took it as a badge of honor to overpay for everything – they never engaged in the classic New Yorker’s drive to buy wholesale – in fact they not only insisted in paying retail but on paying the dearest retail available. It was a badge of honor to be taken for a ride – it demonstrated that they had so much money that it didn’t matter at all how much of it they lost. I realized that I was sitting across from the very embodiment of those Park Avenue denizens.

The investor – let’s call him Fred – took a very casual approach to the company’s prospects. He was helping out the ‘kid’ – putting him in business. I got to wondering how many lives this person had ruined with this approach. It was a very frustrating session. I kept going back to a poem by the Russian poet Yevgeny Yevtushenko:

 

Lies

Lying to the young is wrong.
Proving to them that lies are true is wrong.
Telling them that God’s in his heaven and all’s well with the world is wrong.

They know what you mean. They are people too.
Tell them the difficulties can’t be counted, and let them see not only what will be but see with clarity these present times.

Say obstacles exist they must encounter, sorrow comes, hardship happens.
The hell with it. Who never knew the price of happiness will not be happy.

Forgive no error you recognize, it will repeat itself, a hundredfold and afterward our pupils will not forgive in us what we forgave.

I wanted to grab Fred by the lapels and shake him. “Can’t you see the damage you are doing to these young lives? John is living the life of Riley – he draws his salary and produces very little in return. He thinks that is his due – his entitlement. You are enabling his disintegration. How could you do such a thing?” But, I kept quiet. I realized that to do otherwise would be the equivalent of a kamikaze raid on a vacant lot. The checks would keep on coming until it was clear to everybody and his dog that the cause was lost. The road to hell is, indeed, paved with good intentions. Fred would take a tax write-off and John would wander off in search of another idea and a new rich uncle.

The Morals of the Story: Investors should be fierce in their demands for discipline, focus and metrics – fiercer than the potential customers of the business. They should brook no foolishness – tolerate no lethargy – demand accountability – insist on meaningful metrics – and hold feet of the entrepreneur and his team to the burning fire of the terrible immediacy of the present. No part of the business should be taken for granted – including the participation of the CEO.

Oversight should be unblinking – unremitting – unbending. The investor should insist on a prerogative which comes from providing the initial capital which gives the entrepreneur and his team a chance to build a business – the prerogative to set the culture – to set the rules of engagement – to define the responsibilities of the team and the manner of holding them accountable.

The role of the CEO and his team should be clearly understood – to provide the investor an abundant return on his investment – not next year or next decade – but as soon as possible – period, paragraph. Without this focus on generating a return ASAP, you don’t have a company, you have a science project.

Finally, there is the matter of morality – another kind of moral. Investors need to come to terms with the damage they are doing if they don’t follow these simple rules. Most are not sadists – most do not enjoy helping people fail. But, most do not approach their role with the fierceness required. Maybe it’s because they want, above all, to be liked or avoid confrontation. But, whatever the reason, the damage occurs on their watch. They need to hold themselves accountable. Give me a fierce, driven investor any day – I prefer winning.

© Dr. Earl R. Smith II

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Related Articles:

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The CEO’s Handbook Volume Two: Business Development
Available on Amazon Kindle - Click Here
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The CEO's Handbook - Volume One
Notes for a Thinking Chief Executive
Available on Amazon Kindle - Click Here

Dr. Earl R. Smith II
Managing Partner, The Federal Circle
DrSmith@Dr-Smith.com
Dr-Smith.com

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

There are lots of reason why a business fails – but one is particularly insidious. Failure that results from not being held accountable for your actions and their results is an unnecessary call to a futile end.

~~~~~~~~~~~~~~~~~~~~

Recently, I was recently invited by three different investors to ‘take a look’ at companies that they had invested in. The pattern that I found was so strikingly similar that I set to thinking about what I was finding. I began to think about the roots of the pattern. The more I thought about it, the more I found myself staring at one of the principal reasons that only one in ten start-up companies make it to their fifth anniversary. Continue reading “Lack of Accountability – The Core of Failure – Part One” »

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The CEO's Handbook - Volume One
Notes for a Thinking Chief Executive
Available on Amazon Kindle - Click Here

Dr. Earl R. Smith II
Managing Partner, The Federal Circle
DrSmith@Dr-Smith.com
Dr-Smith.com

Getting to the Root of Things: In the second of this series I described how the flowering of hubris had damaged a company’s prospects. The third focused on the effects of an increasingly diffuse value proposition. Both of these had combined to increase pressure on management and cause stakeholders to begin to worry about the future of the company. In the fourth part I turned to yet another problem area that had developed and was exacerbated as a result of the first two – a conflict between the traditionalists and futurists. Now, in this part, I would like to turn to one of the central causes of the range of challenges being faced by the company. Continue reading “Chasing the Tale – Part Five” »

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The CEO's Handbook - Volume One
Notes for a Thinking Chief Executive
Available on Amazon Kindle - Click Here

Dr. Earl R. Smith II
Managing Partner, The Federal Circle
DrSmith@Dr-Smith.com
www.Dr-Smith.com

During a recent conference call with a bunch of my investor friends the conversation focused on the basis for deciding. We grappled with a variation of the old question ‘how do I know that this thing is true’. We had all known each other for a very long time, so there was little posturing – and, when it did show up, it was slapped down directly. Nobody was allowed to claim either omnipotence or omniscience. Continue reading “Truth and Complexity – Part One” »

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The CEO's Handbook - Volume One
Notes for a Thinking Chief Executive
Available on Amazon Kindle - Click Here

Dr. Earl R. Smith II
Managing Partner, The Federal Circle
DrSmith@Dr-Smith.com
Dr-Smith.com

I was recently working with the senior team of a mid-sized government contractor. They had built the company nicely to just over thirty-million dollars in annual revenue. The customer base was tight and well focused. They had good client intimacy and acceptable pipeline velocity. An initiative to move into a new agency seemed to be going well. From the outside, the company looked fine. Continue reading “Chasing the Tale – Part One” »

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Dr. Earl R. Smith II
Managing Partner, The Federal Circle
DrSmith@Dr-Smith.com
Dr-Smith.com

During a recent conference call with a bunch of my investor friends the conversation focused on the basis for deciding. We grappled with a variation of the old question ‘how do I know that this thing is true’. We had all known each other for a very long time, so there was little posturing – and, when it did show up, it was slapped down directly. Nobody was allowed to claim either omnipotence or omniscience. Continue reading “Truth and Complexity” »

Share
 

Dr. Earl R. Smith II
Managing Partner, The Federal Circle
DrSmith@Dr-Smith.com
Dr-Smith.com

In the second of this series I described how the flowering of hubris had damaged a company’s prospects. The third focused on the effects of an increasingly diffuse value proposition. Both of these had combined to increase pressure on management and cause stakeholders to begin to worry about the future of the company. Now I would like to turn to yet another problem area that had developed and was exacerbated as a result of the first two. Continue reading “Chasing the Tale – Part Four” »

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