Process Improvement

Has the Family Business Become Too Much Family and Not Enough Business?

One of the many plights of a successful family-owned business is employing family members to the point that it hurts the business.

There are articles, posts, research, and everything in-between about how you should run a family-owned business. What many do not address is what to do if you are already in the situation where there’s too much family.

Let’s be honest, many times, family members are hired because they need the job and may not be the most qualified candidate. If it happens too much, the business becomes burdened to the point that it struggles to survive.

Even worse, family issues can and do spread into the daily operations.

  • A child wants to do things their way and the parent (owner) refuses. 
  • Preferential treatment is shown toward family members and their close allies.
  • Special “bonuses” or gifts are provided to family creating financial stress.
  • Cliques are formed.
  • Non-family members are afraid to speak up due to the “Sunday dinner effect”.

Eventually, something must be done.

What do you do?

This just might be one of the most difficult challenges an owner faces. Save the company and lose family members? Appease family and the company goes under (along with the family finances).

First of all, the owner MUST be committed to doing what’s right for the company.

Second, a hired gun can help execute changes, but the owner must provide 100% support and backup. Anything less and it quickly falls apart.

Third, communicate with the family what is going to happen and how they must adhere fully. Any deviation and they can find employment elsewhere.

Here are seven ways to avoid this trap.

Everyone has a job they’re accountable for.

A family member, whether intentional or not, changes the dynamics of meetings when they’re present. They cannot be allowed to come and go as they like. They must have a specific job with accountability, corresponding duties, and complementary compensation. They must be held accountable for their performance just like everyone else.

This is especially true for immediate family members like a spouse or child. I’ve seen spouses that want to “drop into a meeting” just to see what is going on. Most of the meeting is spent bringing the spouse up to speed and nothing gets accomplished. Even worse, the outcome is not what the team wants, it is what the unprepared spouse decides.

Make family members work at another company to learn before joining the family business.

Many family members may not have worked anywhere else in their adult life. Let them learn from other bosses, be held accountable, and learn how to fail. Experts say a person should work somewhere else at least 2-3 years, if not more, before joining the family business.

If they’re already in the business, have them seek employment elsewhere. This will be very tough for most as they are unlikely to want to start over and may not get as sweet a deal as they currently have. That’s part of the lesson to be learned – value hard work, earnings, and authority.

When work is discussed, Owner is boss, even at home.

Talking shop at home is inevitable. We all do it. As the owner, however, the position of authority must be respected. Whenever work is discussed, it is not father/daughter, mother/son, etc. It is Owner/CEO and Vice President or Director or Customer Service agent (whatever the title).

If you as the owner would not want an employee to speak to you directly without going through their boss at work, don’t allow it at home. I’ve seen too many owners agree to something on Friday afternoon only to change their minds to the staff Monday morning. Weekend discussions erode trust across the board.

“Open door policies” used at home is allowing someone to leverage undue influence associated with family.

No more one-off, special financial treatments provided to family members. No “spot bonuses”, new cars, new cell phones, etc. to drag down the financials. Arrangements can be made to fund family members based upon the profitability of the company. An example is to establish quarterly “dividends” to family members based upon profits. They learn to spend what they earn, not drag down the company finances when they choose.

Here’s a tragic example – I saw a company provide profit goals to the employees for their upcoming bonuses. The employees did their jobs and qualified. The family pulled profits from the company for themselves and the employees received much smaller bonuses.

I’m not saying an owner should not share success with the family. It just needs to be factored into the financials of the company and not treated as a cookie jar.

All employees are treated equally/fairly, regardless of family relationship.

This is a tough one. If a family member needs to be reprimanded, do it. If they deserve praise, do it. Letting family get away with bad behavior is at the top of the “bad things to do” list. It destroys morale and trust throughout the company. Let the family members know up front they are accountable for their actions.

I’ve seen family behavior so destructive that good employees quit and those that remained hated being there.

Family members can also be very deceptive. I’ve seen Jekyll and Hyde many times. The family member acts great in front of mom/dad and is abusive around employees. Be willing to accept constructive feedback from non-family members and be acceptable to doing something about it.

Identify training gaps for each family member and require training.

If you have family members that have rapidly advanced in rank or haven’t worked somewhere else, there can be crucial knowledge they’re missing. As the Owner, you could help but may not have time or they may not listen? What child listens to their parents anyway?

I’ve seen too many family members in leadership roles that had major gaps in their knowledge. They may know the product but not the business side. The company may have grown due to the Owner’s relationships throughout the years but now they need a more traditional approach (i.e. Marketing and Sales best practices).

Take an inventory of each family member, their knowledge, and skills, based upon their current and potentially future job function. If you want them to someday take over the company, start preparing and training them now. Make this training a priority as it will only help them in the future.

Consider a non-family executive or coach as a mentor.

It is very hard to be objective when dealing with family. I get it. I’ve been the hired gun before and provided feedback on what needed to be done with family members. Sometimes it went over well, other times not so. Objectivity is the key here. It is easy to let personal feelings or knowledge of homelife influence your thinking on the business. More times than not, it leads to compromise.

I’ve seen successful family businesses run by an outsider in the President’s role. Owner is still the majority shareholder and CEO.

I’ve seen other companies establish an “Operating Unit” and a “Family Unit”. The Operating Unit runs the business and is held accountable by the Board of Directors. Family members can be on the BoD and in the business, but leadership and decision making are empowered to the leadership.

Consider hiring an executive coach/business advisor for family leaders to help them develop and navigate the waters. It gives them someone other than the Owner to bounce problems off and receive professional feedback.

Wrapping it up!

Much of my career has been working in family-owned businesses. There is something about a true family-centric culture that is appealing to work for.

I’ve seen:

  • Owners provide a chef to employees because they wanted healthy meals rather than fast food.
  • Friday afternoon company meetings with “wine and cheese” to celebrate the week.
  • Owner call an employee and meet them at the hospital because they had a health issue that was getting worse.

I’ve also seen:

  • Business falls apart because of an unruly family member.
  • Business goes bankrupt because of unrestrained family spending.
  • Long-term employees depart because they’d had enough and wanted a well-run company.

My goal for you is to make sound business decisions to ensure the success of your company for generations to come. It starts with the employees and ends with the leadership team. Sometimes you must make tough and unpopular choices. I hope some of the recommendations I’ve made will benefit you now or in the future.

join a ceo roundtable

Why Every Business Should Have a Multiyear Business Plan

The Silver Fox Advisors are presenting a webinar to answer that question, review the elements that a good plan addresses,  and how to construct and use a multiyear Business Plan.   

The webinar will be presented by a panel consisting of two bankers with over 50 years of commercial and SBA lending experience, a CPA who specializes in appraises businesses, and a former CFO and Business Operating Executive.  All have helped their clients raise capital, as well as, assisted business owners grow their businesses. 

The webinar reminds us how our businesses are rudderless without a business plan.  It is like taking a road trip without a roadmap or GPS.  We may or may not reach the destination we intended in the most effective way.  Has your leadership team bought into the desired destination and more importantly, agreed on how to get there?  The webinar will discuss how to use the planning session as a team-building process, the only way to allocate capital, and truly define what success means for your team. 

By embracing the elements presented throughout the webinar, you will gain confidence that you can reach your business goals. 

When: Wednesday, April 28, 10:00 AM to 11:30 AM

Where: Via Zoom Webinar

Cost: FREE

Registration: Click Here

Situation Based Leadership

Leadership does not have a simple formula for every situation.

A lot of the leadership theory comes from academicians studying a formulation of their leadership model from observing the real world.  They test the model with empirical research to determine results on performance. Then, it’s the publish or perish phenomenon.

If we look at the chapter headings from a well-known college text by Northouse entitled Leadership: Theory and Practice, we find a long list of these type models as well as some more generalized topics: Trait Approach, Skills Approach, Behavioral Approach, Situational Approach, Path-Goal Theory, Leader-Member Exchange Theory, Transformational Leadership, Authentic Leadership, Servant Leadership, Adaptive Leadership, Followership, Leadership Ethics, Team Leadership, Gender and Leadership, Culture and Leadership.

Wow, how do you sort out all these concepts?  And this is just a college textbook articulating all these different perspectives.  There are lots of other relevant authors both academicians and practitioners not included in the chapters listed above such as Strength Based Leadership.

The point is there are many dimensions and factors that come into play when leading.  One facet is all about the leader.  Another dimension is the organization which includes followers, culture, and so forth.  Others are about the relationship of the leader and the follower.  Still other facets are about the broader environment. And so forth.  It is hard to mold all this into a grandiose model.

If that were not challenging enough, the overall environment is changing at a rapid pace as we discussed in my blog on leadership agility.

Ultimately, it all centers on the particular situation and how all the multiple dimensions line up. Fortunately, many situations are comparable, and the response can be repeatable.  Many others will be unique in some fashion that will require you to adjust.  Like playing a game of golf, the better you are the more natural the adjustment.

Situational Leadership

One model by Paul Hersey and Ken Blanchard has been coined “Situational Leadership.”  The model has evolved over time, but the basics are the style of the leader changes depending on the situation and readiness level of the followers.

In a situation of low readiness such as a new employee, then the style is much more directive. You have to tell them what to do. As progress is made, the mode of the leader shifts to coaching with high on direction and supportive behavior.  Further progress by the employees suggests lower direction but still highly supportive behavior from the manager.  Finally, in the fourth stage with a matured employee on performing their role, the leadership style shifts to delegating with low on direction and relatively low on support.

Of course, this model is limited in that the focus is on only the dimension of the manager and employee’s relationship.  Nevertheless, it provided a significant breakthrough that no one leadership style fits every situation.  Moreover, it makes sense and can be applied rather easily.

Adaptive Leadership first described by Heifetz in Leadership Without Easy Answers back in 1994 also gets into the relationship of the leader and the follower based on the follower’s situation.  As the name implies, this model gets into adapting to change which has become more pronounced today.

What to Do?

First, do not think you have all the answers by learning one highly touted approach to leadership.  Rather think of the dimension it is adding to your leadership portfolio of knowledge. The critical point I have been trying to make is there is no one holistic model that prescribes what you should do in every situation.

Second, if you’re in the early stages of your leadership growth, do get several books to read. Take a leadership course or seminar. But also get advice from a leadership coach/mentor. Think of learning golf, a coach goes a long way.  If you are a CEO at a small company  that is growing, you should also consider joining a CEO Roundtable.

Third, once you have some leadership experience, do an assessment of yourself.  I would suggest you look at my Leadership Personal Profile blog of February 23, 2021. It will help you identify areas for improvement.

Fourth, I advise mentees do not get yourself in a “tizzy” on what to do. In leading, be engaged.  Get whatever input you feel is important, then, behave/decide what you think is best given all the circumstances and what you know at the time. In the case where action is needed, that can range from you making the decision, to a team participation, to a delegation and so forth.  In other words, all you can do is the best you can given where you are at in your leadership journey.

Fifth, whatever the leadership situation and the action has been taken, always be open to feedback from followers particularly with significant events or direction. Simultaneously, look at the impact on the performance of the business. Think of the feedback and results not as a critique but a new learning in your portfolio whether it’s good or bad.

Sixth, as your leadership matures, be flexible to the situation and not locked into you know the answer of what to do. Situations always evolve over time, and now they are evolving rapidly. In the maturing process of living systems, we naturally structure approaches to solve problems, issues, and opportunities. Many CEOs go through a pattern of first being incredibly open and inquisitive in their early days to eventually becoming rigid in their thinking to the detriment of the organization.

Seventh, insure you maintain your character and are true to your core values.  This builds trust with your followers.  They know they can count on you to do what is best given changing circumstances.  We will talk about that more in an upcoming blog entitled Character: A Learned Behavior.

Eighth, utilize a wise coach who can act as your alter ego to help you avoid these rigidities setting into your leadership while helping you maintain your authenticity.

Ninth, be sure you are coaching your leadership team and employees to become better leaders. This will be a huge help to them but also keep you fresh.

Lastly, if you want to be a great leader, then seek first to be a wise leader. Wisdom is knowing you need to know more.  Your rigidities will set in when you quit learning. A little humbleness on what you know goes a long way in your lifelong leadership journey.

Contributed by Lane Sloan, former Shell CFO and Silver Fox Advisor.

Achieving the Take-Off Stage in Small Business

Would you like your small business to Take-off?

In 2018, 9% of small businesses made more than one million (SBA.gov).

If you are one of these 1 out of 10 small businesses and have revenues less than ten million, then you have reached a unique position that I term the Growth stage.

If you have been in business five or more years, then you ought to feel a sense of accomplishment as half the small companies do not make it that far.

In the early phase of the Growth stage, you most likely have fewer than twenty employees.  It gets down to math on how many people that you can afford.  With the average annual salary in the US of about $50,000, then twenty people would be a cost of $1 million not considering burden.  You are not likely to be paying the average salary, but you already understand the significant cost of employees.

You quickly find though that you need more people to do more things to accelerate your growth.

The larger the size of your organization the more challenges you face.  Everything needs to rise to the next level of sophistication as the complexity increases, and in particular your leadership if you really want to grow.

It is very possible that you are comfortable letting your small business naturally evolve particularly if this is a lifestyle business for you.

With growth comes change and you may prefer to have things stay pretty much the same.

I have seen many small companies in the lower end of the Growth stage with this perspective.  Sometimes they even say they want to grow significantly but that is not really a driver for them.

There are others that you can easily spot that have a real passion to build their small business into something much more significant.

This blog is geared for small business owners/CEOs that fall into this latter mindset.

Growth Stage Elements

If you want to accelerate your growth, you need to follow good planning processes to first assess where you are at today. 

My 4 Stage Growth Model outlines various elements that should give you a good picture of your current position.

You will probably find that you are ahead on some, behind on others, and several others will describe your condition. 

Take a look at the elements below and go through this simple assessment of marking them red if you are behind, yellow if it is a good description, and green if you are more progressive.

If you are mostly red, then go back to my blog of February 3rd on Breaking out of the Development Stage for Small Businesses.  

If you are a mix of colors or primarily yellow, then this blog should give you some insight into moving into the next phase termed the Take-Off stage. 

If you are all green, then a future blog on the Take-Off stage advice will be coming.

Growth Stage

  • Revenues – Owner(s) are getting excited about the organization’s success. Traction with new customers or expanding activities with current customers is generating a growing revenue base. Typical revenues run above one million and below ten million.
  • Sustainability – Organization is approaching a going concern where owner is less critical to survival and growth. Revenues are providing cash to invest in business and improve operability and compete more effectively for new business.  Loss of key customers can prove devastating.
  • Business Focus/Planning – There is a fair amount of activity on generating new ideas for products/services/customers and more sophisticated approaches to attracting customers through marketing. Still planning is heavily oriented towards current year.  Planning still may be rather ad hoc lacking strategic focus synchronized with tactical game plans.  Planning framework including mission, vision, objectives, value propositions, target markets, strategic themes, competitor analysis, goal cascading, accountability, and so forth are often lacking.  Effort does not seem to match current rewards for many with the focus still on the here and now.
  • Organization – Other key players have evolved and perform critical roles.  Often, these players interact more, and teamwork is emerging.  Organization structure is still somewhat loose with not overly formal role definition. The size of the organization varies based on the nature of the product or service provided.  Often staff exceeds ten and but generally does not exceed fifty and almost always less than one hundred.  Contractors are used to avoid adding staff in many cases.  People can perform multiples functions.
  • Processes – Processes have emerged and there is a level of documentation and sometimes training.  Processes are often changing and adapting as more effective functioning progresses and customer feedback requires modifications to be made.
  • Target Market – Local market continues to dominate customer base in most cases.  Customer loyalty has emerged and identified as key customers with a retention focus.  Expenditures for sales and marketing have expanded significantly. Often there are some dedicated people to sales beyond owner and budgets for improved websites, marketing collateral, and marketing campaigns.
  • Value Proposition – Value proposition is adapting to customer needs and customer feedback.
  • Leadership – Owner and key players are beginning to think about how to motivate and retain employees. Decision making processes are receiving some scrutiny.  Delegation has emerged where owner feels comfortable with key players carrying out more defined roles.  Level of participation in decision making varies but generally still well controlled by owner.

What is your Vision?

I find that many small businesses have difficulty in describing a picture of what they want to look like in their next stage of progression. 

That is the beauty of the 4 Stage Growth Model in that it provides an overview picture. 

There are many things you have to do to get from your Growth stage to the Take-off stage. Knowing what you want to look like invigorates finding the pathways to achieve this next level of progression.

Take-off Stage

Below is the description of the Take-off stage using the same criteria above in the Growth stage.

  1. Revenues: Customers pulling business into extended and new offerings
  2. Sustainability: Going concern sellable if owner disengaged
  3. Business Focus/Planning: Extensive multi-year planning
  4. Organization: Matured with more structured roles and responsibilities exhibiting extensive teamwork
  5. Processes: Tuned as a competitive advantage
  6. Target Market: Tied to broader strategy, potentially new geographies/offerings.
  7. Value Proposition: Rigorously adapts to beat competition or take advantage of new opportunities.
  8. Leadership: Seen as key, owner seeks leadership development for self and management team.

Advise in reaching the Take-off Stage

So how do you move into the Take-off Stage?  Let me give you some of my mentoring advice on each of the key elements.

  • Revenues – If you are really taking off, you ought to see a doubling or more of your revenues in a two-to-three-year time frame.  That means you will have to make substantial progress on your marketing plan and sales effort.  Ensure your target market is clear as are your target customers. Then focus on brand advertising with communication channels that fit your customers’ appetite. It will take more than a website. Depending on your product or service, you should consider strategic selling with profiles of your customers and tactical game plans to grow revenues. For a broader customer base, sales funneling, and a fully functioning CRM system will be key.
  • Sustainability – Cash flow has become sufficient to operate in your current mode without sufficient concern.    However, you will likely need to take some more risk on investing to really grow the business. This is a good time to strengthen your bank credit lines/relationships and depending on your situation consider investors for major investments. It may be worthwhile to investigate acquiring companies that enhance your offering or customer breadth. While acquisitions/mergers can be challenging, they can provide leverage through economies of scale.
  • Business Focus/Planning – This is where you will really have to ramp up your efforts. Redefine your vision, mission, and long-term objectives with a broader mindset.  If you do not have clear company values, do so now as they will have a real impact on the company culture as you grow.  I also strongly encourage you to develop mid-term plans of critical success factors that move you on the path of reaching your vision and longer-term objectives. Look for help.  If you are here in Houston, I would really recommend you join a Silver Fox Advisor CEO Roundtable.  This is a great vehicle for seeing how other companies are trying to grow their businesses.  Many of the members of these CEO Roundtables are in the Growth Stage.  As your company breaks through five million in revenue and heads towards ten million, you may also want to consider an Advisory Board.  The Silver Fox Advisors can help you on that, particularly if you do a deep dive on your business challenges through their Fox Den business review. Like the CEO Roundtables, the Fox Den is pro bono.
  • Organization – Your company probably lacks definition on who does what, who is accountable, and how people work together to achieve your company’s objectives. You should really take a read of TRACTION: Get a Grip on Your Business by Gino Wickman. He does a good job in describing an Entrepreneurial Operating System (EOS) that brings the essentials of running your small company to a higher level of sophistication.  It uses the concepts I taught in my Corporate Strategy course for big businesses and translates them into a practical approach for small businesses.  It is highly beneficial for companies in the Growth Stage in particular.  My clients and CEO Roundtable members find it extremely beneficial.
  • Processes – If you are in the Growth Stage, then you have conquered to some degree putting processes in place that enable the business to operate efficient and effectively.  Do not underestimate the competitive power of having even more highly effective processes that describe the flow of how work gets done to produce your product or service better than your competition.  Processes need to be tied to your customer value proposition.  It is often an advantage to start with a clean whiteboard and rethink how a process can fulfill your value proposition better than your competitor. If you are trying to be the low-cost producer, then think out of the box on how to achieve that.  You can also look at your current processes and determine ways to simplify or eliminate steps.
  • Target Market – You can’t be everything to everyone.  In the early stages of your business, if a customer has a need, then you generally try to fulfill it as revenue is king.  Somewhat ironically, as you grow, the specificity of your customer becomes more targeted.  With small companies, this is also true of the geographic market.  In moving to Take-off, you need to rethink your target market and geography.  In many cases, expanding your target market translates into widening your geographic reach.  There are many repercussions in making this kind of move, particularly the need for investment dollars and organizational building/restructuring.
  • Value Proposition – In the Growth Stage, you have articulated your value proposition most likely on your website and marketing collateral.  The value proposition is framed to attract your target customer.  To move to the Take-off Stage, you need to think more strategically in terms of differentiating your company from the competition. You will need to do much more competitive analysis on their strengths and weaknesses in providing their described value proposition. Then, think strategically. Treacy and Wiersema in their book The Discipline of Market Leaders outlined three broad strategic approaches to capturing customers. While written in 1997, the thrust of these strategic approaches is still very applicable to most small businesses.  The Operational Excellence strategy is built on delivering the best total cost that is driven by operational competence.  The Product Leadership strategy is excelling in product differentiation to deliver the best product.  Finally, the Customer Intimacy strategy provides the best total solution to the customer driven by customer responsiveness and focus. My advice to clients is lead with one of these three strategies but be strong enough in the other two to ensure you win your targeted customer. 
  • Leadership – You have recognized the importance of leadership as your company has grown in the number of employees and organizational structure. The companies I know in the Take-off stage, their CEOs have a voracious appetite to improve their leadership capability and that of their management team.  I have written a whole series of blogs on the Silver Fox Advisors website to help you improve your leadership capability.  One in particular entitled Your Leadership Personal Profile has been very insightful for clients.  The methodology can also be used by the CEO to coach other members of their leadership team.  It provides significant insight for both the CEO and the coached.

Let me conclude by adding to the suggestion for you to reach out for help. 

Think of a personal advisor to mentor and coach you in transitioning your business.

The Silver Fox Advisors have essentially two types of Advisors. 

Those who have had significant careers in larger organizations and understand the complexities and need for best practices for a company to be successful. They have the insight to bring this perspective to small businesses.

The second type are those who have run small businesses and come with a deep understanding of their inner workings. They come with significant knowledge and insight to share.

Take a look at the Silver Fox Advisor website under Engage an Advisor and see if one of our Advisors fits your needs to help you grow into the Take-off Stage.

Also, take a look at the CEO Education Series videos on the SilverFox.org website that gives advice on many of these elements.

Contributed by Lane Sloan, former Shell CFO and Silver Fox Advisor.

Rapid Chaotic Change Requires Leadership Agility

Understanding Change

It is undeniable that change is accelerating and becoming more chaotic.  Leaders need to understand this change.  What is driving the change?  What are the implications on your leadership?

Technology is driving the change. I have put together a model to help you understand this change and high-level implications on your leadership. After exploring the model, we will highlight key thoughts on leadership agility to deal with this rapid and chaotic change in today’s business world.

Industrial Revolution

We are all familiar with the industrial revolution starting back in the mid-1700s.  New technology in the form of machines changed the manufacturing process of goods.  Machines substituted for human labor.

It brought about new forms of business enterprise because this change was mass production.  Organizations had to evolve to deal with the larger volume of transactions.

It was a new world.

Management by Exception

Back in the 1960s when I was taking organizational behavior courses the buzz word was “management by exception.”  You probably heard of “If it ain’t broke, don’t fix it.”

The assembly line was key to production.  You had to keep it going.

Change was not rampant.

Therefore, the focus was on control.

To lead these massive organizations with their hierarchies, the management style was traditionally autocratic.

Information Revolution

The technology of automation from the Industrial Revolution paved the wave for a transformation change in information processes with the advent of computers.  Software programs did the work of repetitive clerical type roles and more.

I joined Shell Oil in 1970 as one of those programmers to create this new software.

The new buzz word was “Change is the Constant.”

The rigidity of large bureaucratic organizations was being significantly impacted by the delayering and restructuring brought on by this information processing revolution.

More decisions had to be made to cope with the constant change.

Knowledge became more important with these constantly changing dynamics.

It made sense to have others participate in the decision-making process. 

Thus, the management style shifted more toward Participative.

Companies needed to keep up and not get lost in the change from their competitors.

The focus turned to adaption.

Second Wave of the Information Revolution

By 1965, an M.I.T. scientist developed a way of sending information from one computer to another that he called “packet switching.”

This has continued to evolve into today’s multi-faceted internet world.

It is not just social media.

You can type anything into your browser and get a voluminous amount of information in seconds.

This has been a big driver of the acceleration of change which creates instability.

Molecular Revolution

The hybrid DNA-RNA was created around 1960 as part of the early beginnings of the Biotechnology Revolution.

At the turn of the century, the world had advanced to the sequencing of the human genome.

On a similar front, the theory of manipulating atoms was around 1960.

Some twenty years later, the scanning tunneling microscope was developed that could see individual atoms.

Nanotechnology is real.

Together this has all led to the manipulation of cells and atoms.

Chaotic Change

Today, this Molecular Revolution has come to the forefront.

It is transforming the very fundamentals of living systems and materials.

In short, the molecular revolution is another key driver underpinning the chaos.

Fundamental Reprogramming

The ability to fundamentally reprogram things is opening people’s minds not constrained by traditional boundaries.

Management styles are shifting to visionaries.

Instead of being whipsawed by accelerating and chaotic change, visionaries are creating the future.

Ramifications on your Leadership Style

There are practical ramifications of today’s changing dynamics for every leader.

Those in fast cycle industries have been in this chaos for some time.

Slow cycle industries have sped up.

Life spans for companies have shortened.

Technology and imaginative minds are driving more technology and transformations that lead to even faster change and more chaos.

Leaders must be more agile and flexible to cope and prosper, but how do you do that?

What competencies and skills are needed to be an agile leader?

There has been some very thoughtful research on this question.  In this blog, I can only give you highlights and direct you to some of the better resources (in my opinion).

Leadership Agility

In 2007, Bill Joiner & Stephen Josephs wrote the book LEADERSHIP AGILITY Five Levels of Mastery For Anticipating and Initiating Change.

It is a rather sophisticated approach based on their notion of a Leadership Agility Compass outlining four competencies: Context Setting Agility, Stakeholder Agility, Creative Agility, and Self Leadership Agility. 

Using the compass, they then take you through their five levels of agility development: Expert, Achiever, Catalyst, Co-creator, and Synergist.

It has a lot of content. If you are really trying to enhance your leadership agility, it is worth a read.

Learning Agility

Korn Ferry has also done a lot of research on leadership agility outlined in their paper on The Organizational X Factor: Learning Agility.

They describe learning agility as made up of five factors: Self Awareness, Mental Agility, People Agility, Change Agility, and Results Agility. 

You can see some similar ideas to Joiner and Josephs’ Leadership Compass.

I like their addition of Results Agility described as delivering results in first time situations.

The authors, Mary Knight and Natalie Wong, contend that Learning Agility is a top predictor of high potential people. Companies with highly agile executives have 25% higher profit margins than their peers.

Core, Edge and Agility

Agility competencies are important.

It is also important to have a perspective in thinking about the context of this change in your day-to-day world. 

What is central to how the world should work for you to what are the dramatic implications of changing technologies?

In this respect, Lee, Hecht, and Harrison, a global leader in talent development, wrote an interesting paper on Core, Edge, and Agility.

My Silver Fox Advisor colleague, Doug Thorpe, has condensed their ideas and his own in an article on his website in 2018 entitled Leaders: There’s a New Way to Understand Change | Business Advisor, Mentor and Executive Coach | Doug Thorpe

It is certainly worth your read with the idea that agility helps manage the forces of what’s core and what is on the edge.

Set Direction Not Destination

Agility has certainly become a popular topic for organizational consultants in this 21st century.

 One concept I like from McKinsey’s March 2018 article of Leading with inner agility is “set direction not destination.”

This brings us back to my model introduced at the beginning of this blog on understanding change.

You not only have to have agility competencies, and a framework of thinking about agility as we have just discussed.

You also need to be the visionary highlighted in the model.

Ultimately, the management style of significance in this world of accelerating and chaotic change is a visionary leader.

Set directions with the agility to adjust destinations.

To paraphrase Jack Welch, control your own destiny or someone else will.

Contributed by Lane Sloan, former Shell CFO and Silver Fox Advisor.

personal profile

Your Leadership Personal Profile

Your Leadership Personal Profile

4 Inner Ps of Leadership

There are plenty of articles and books on leadership.  The reason being leadership is clearly critical for an organization’s success.  Many emphasize a particular angle or perspective in how you should lead. Instead, this blog provides a comprehensive straight forward approach to know your leadership self.  As Socrates said,  “know thyself.” And with this full picture, it is much easier to identify areas for improvement that will make a difference.

 In coaching mentees on how to improve their leadership. I use my 4 Inner Ps of Leadership framework: Purpose, Persuasions, Personality, and Proficiencies. The framework was introduced in my blog of October 29, 2020 on the Silver Fox Advisors website (See here).   This blog takes that 4 Inner Ps framework and provides a step-by-step approach to develop your Leadership Personal Profile.

Personal Purpose Section

We discussed Personal Purpose in my blog of October 13, 2020 where I briefly outlined a self-development approach.  In the profile exhibit below, that is the methodology taken.

Step 1

The first step is to rank the five characteristics of your Career Development from 1 to 5.  Likewise, in the Personal Development rank the three characteristics from 1 to 3. Finally, rank the three characteristics from Social Development from 1 to 3. 

For example, you might have Financial, Type of Role, Work Environment, Type of Career, and Type of Industry ranked in that order.  You do that for the other three categories.

You should now have a good sense of your priorities in the three main development areas.  Next, we need to determine your priorities across the developmental areas.

Step 2

Then compare the top ranked item from each development area against one another and choose the highest priority in your life. For example, if your top items from the three developmental areas are Financial, Mental, and Family. Then decide on which of these three is most important.  It may be Family.

From the development area chosen, move up the next highest ranked and compare that again against the other highest-ranking development areas.  In our example, you would compare your next social developmental area which might be Friends against Mental and Family to choose the highest of those three.

 You do that five times and place the results in the allotted space in rank order.

Now, you have a fairly good idea of what are the most important priorities in your life.

Step 3

 Then, think about your passions, what excites you, what you are living for, what makes you happy, what you are always talking about.  Couple that with the five priorities above and envision your personal future. 

Write that down as your Personal Vision Statement.  This is what you would like to see your life become in the future. A personal coach can help you think through this personal vision.

Persuasions Section

As you might recall from my earlier blog on the 4 Inner Ps of Leadership, Persuasions are deep rooted beliefs, feelings, needs, perceptions, values, and morals that influence how you behave and act in the “outer” world. They persuade you in acting a certain way and create a filter or bias in dealing with the “outer” world bringing judgment in how to behave. 

The profile exhibit below captures those key elements to illuminate underlying influences on your leadership behavior.

Step 1

Start by listing your top 3 core values such as honesty, tradition, integrity, diversity, positiveness, etc.

This is not intended to be a rigorous psychological assessment.  Instead, what really gets you really angry when someone behaves in a certain manner? What are you always thinking about in making personal decisions? What do you think of most when judging people’s character?

Step 2

Next, think through your key beliefs in people.  An example from Douglas Mc Gregor would be “people are self-motivated to work” or “people only work for the paycheck.”  Another might be “most people tell the truth.”  “People are only out for themselves,” and so forth.  You can get some insight from some personality and leadership assessment tests. Write your top two or three key beliefs about people in the box on beliefs.

Step 3

Similarly, think through your current driving needs.  Maslow’s hierarchy of needs may give you some ideas.  On ego, “I need to be recognized for my talent.”  At the social level, “I need a group of close friends.”  Another need might involve “I need more money to buy a house for my expanding family.” What is driving you? Only list your top 3.

Step 4

The broad perspective on life can be more challenging.  What is your overall outlook that biases you in looking at the world in a particular way? This can be spiritual. Or it might be something like the world is full of opportunities.  We are all just passing through life in a moment in time.  The world is a treacherous place.  I am along for the ride and want to have the most fun.  Again, whatever it is that shapes your broad perspective in approaching life.  It is helpful in talking this through with others.

I have a very forward-looking perspective with an open mind on what opportunities or challenges will come forward in the future.  It is important for me to recognize that others are focused on the past and the issues they faced.

This does not need to be complicated.  Write a simple statement of your perspective in the box provided.

Step 5

In the 4 Inner Ps of Leadership blog, we discussed the concept of a Johari window.  There was a window described as Façade where there are things known only to yourself.

It can be helpful in sharing some of these with others to increase your authenticity.

You might say I act very self-confident but underneath I am quite insecure. Or I put on the aura of being in control of a situation when I am unsure of what to do. I tell people that I am happy when I am terribly sad.  I shake people’s hand warmly, even when I do not like them.

Identify a couple to start opening more of yourself to others. List those in the Façade box.

Step 6

My coaching suggestion is to develop Guiding Principles that give people a deeper understanding of how they can expect you to behave.  These principles often emanate from your values, beliefs, and perspectives.

They should be shared with your people.

Here are two of mine to give you an idea.  “Treat people as you would like to be treated.”  Another is “I will believe you until proven wrong.”

Once you feel comfortable with your Guiding Principles, write the top two in the box provided.

Step 7

This all leads to a Character Statement.  The key is what is your moral compass?  How will you respond in challenging circumstances when your behavior matters most?

An example might be, “I am a trustworthy person that people can count on me doing what I say.”  You can get much more elaborate. 

If you put it down in writing, the Character Statement becomes something for you to live up to. This is vital in improving your leadership qualities.

Personality Section

We are getting on firm ground with personality.  Most people have a reasonable idea.  It can be expanded by personality tests, and other people’s feedback. The point is to get a high-level view that accurately describes you.

Step 1

It is best in the characteristics box to simply list words as opposed to phrases that represent you.  Various personality tests are available on-line from the internet.

 If you have taken the Myers Briggs test, then the choices would be from their four categories: extraversion or introversion, sensing or intuition, thinking or feeling, judging or perceiving.

 In the Big 5 Personality test it is degrees of extraversion, agreeableness, emotional stability, and openness to experience from low to high.

 In DISC, the four quadrants are Dominance, Influence, Steadiness, and Conscientiousness.  And so forth. 

You can see some of the overlap among these tests.

 Also include specific feedback from family, friends, and work colleagues that can be quite revealing.

Write these personality words in the Characteristics box.

Step 2

The Leadership Style component is an area of significant interest in coaching you.

 Leadership style can have an incredibly significant impact on the performance of your followers.  This was discussed in my blog of December 3, 2020 on The People Side of Leadership.

Hogan Assessment

 The Hogan Assessment, although somewhat costly for a small business owner/CEO, is a very comprehensive and powerful tool addressing many areas that influence your workplace behaviors and leadership style.  In my opinion, it is the most comprehensive and best assessment on an overall leadership profile covering in a different format Persuasions, Personality, and Proficiencies.

Their personality test focuses on seven areas: Adjustment; Ambition; Sociability; Interpersonal Sensitivity; Prudence; Inquisitive and Learning Approach.  If you take their assessment, this would-be key input into the Characteristics box.

The Hogan Assessment also has a test on Motives, Values, Preference Inventory that focuses on the Persuasions section. Taking their test would provide significant input into that section.

Hogan also has a cognitive ability section which looks at judgment and reasoning.  The judgment can identify the “dark” side of your personality that in my 4 inner Ps Leadership blog can represent fatal flaws. 

This test also provides significant input on leadership strengths and weakness that is key input into the Proficiencies section coming up.

Hogan does provide detailed analysis of your leadership style.

Broader Frameworks

 As a coach, I also like some of the broader frameworks.  Our aim is to get a personal profile not a detailed personality analysis as provided in Hogan or Birkman tests.  However, their key findings are useful input.

In the Managerial Grid, you assess your concern for People and your concern for Performance from low to high.

Likert’s model outlined in my previous blog on the 4 Inner Ps of Leadership is extremely useful. His four styles are Exploitive Authoritarian, Benevolent Authoritarian, Consultative, and Participative Group.

Other leadership approaches such as Servant Leadership, Authentic Leader and so forth are good for you to understand your inner leadership self.

I also highly recommend taking an Emotional IQ test.  Include your assessment in this Leadership Style segment.

It is also critical to get others views of your style by asking people: how you get things done? how you work with people?  Feedback from work colleagues, family, friends, and your coach provide a different and important perspective.

A personal coach can be extremely helpful in providing an assessment of your leadership style.

Take all this input and summarize in several key words and statements.

Step 3

Besides knowing more about yourself, you will have opportunities for improvement. 

For example, you may want to take on the bigger strategy of restructuring your leadership style.  You will need real passion to do so.  This can be a challenging undertaking.

Also, recognize your leadership style matures over time.

In my opinion, Situational Leadership is the strongest style once you have reached a high level of leadership competency.  Here you adjust to reflect the environmental conditions you face based on the deeper understanding of various leadership approaches.

 Tactically, you may find something like you tend to be less sensitive to people’s feelings.  In this case, you would want to listen more carefully.  How are they expressing themselves?  What is driving their behavior?  

There may be fatal flaws you have to correct to be an effective leader. A fatal flaw can be as simple as you constantly snickering when people are talking.  And so forth.

There is no perfect leadership style.  Build primarily on improving yourself, not becoming someone else.

Write down what you want to do now in the last segment.  Update this segment In your profile as you progress.

Proficiencies Section

In my coaching sessions, we spend a good deal of time on Proficiencies.

 As you can see in the exhibit that follows, these proficiencies are broken down into the following:

1) Traits (using Northouse model from his eighth edition book on Leadership Northouse Theory and Practice)

2)  Knowledge of Business (in general),

3)  Industry Knowledge

4) Technical Knowledge

5)   Leadership Strengths with a focus on Strengths Based Leadership.

6.)  Leadership Brand on how you want to be known.

Step 1

In the Leadership Traits box, this is a self-assessment not a test taking exercise.

IQ

 You have a fairly good idea on your cognitive ability.  Simply assess from low to high.

 On the other hand, you may have remembered your IQ score.

If you are around 100, then medium would be the choice.

My view is above 115 could be considered high for this purpose.

Other traits

Similarly, how do you view your self-confidence, determination, integrity, and sociability?  This is your view and how others perceive you.

 Low is not typical for intelligence and integrity. The rest varies by individual. Be honest in your assessment. You will only be deceiving yourself as Traits are generally stable.

Step 2

Business knowledge not surprisingly relates to what is taught in business schools.  These are the underpinning functions in running a business. 

This self-assessment should reflect your knowledge of the current state of the art.  What is being taught today. And what are current discussion topics in business circles. 

For example, I have a business major in marketing and a master’s degree with a lot of IT.  In my career, I started as a computer programmer and was once the head of Shell Oil’s IT organization.  But today, both marketing and IT world would rank only medium in my mind.

Rank yourself from low to high on the business categories in the business knowledge box.

Step 3

Industry knowledge relates to experience as well as expertise.

What are the key drivers to success in this industry? This would include your knowledge of the competition’s offerings and value propositions.  The industry dynamics such as ease of entrance, competitiveness, progressiveness, cycle time, and so forth.

Industry knowledge is not the centerpiece of leadership; yet without sufficient knowledge it can become difficult to gain followers.

Write a couple of key statements in the Industry Knowledge box.

Step 4

Technical knowledge starts with understanding in sufficient detail your product or service. That is, how it works and what might be unique.

More broadly, technical knowledge includes science-based backgrounds such as engineering, physics, etc.  If the product or service depends on a science-based background that should be highlighted.

Similarly, specialized knowledge such as being a CPA, a lawyer, a technician, computer programmer, etc. 

To what degree do you keep up with technology trends? 

This is not a dissertation, but headliners.

Capture a few headliners in the Technical Knowledge segment.

Step 5

The next box on Leadership Strengths is key.

 As mentioned in my blog describing the 4 Inner Ps of Leadership, my approach is to start with Rath and Conchie’s Strength Finders 2.0 Strength Based Leadership test.

 It is not an expensive book and has an internet test that provides your top 5 strengths in the categories of Executing, Influencing, Relationship Building, and Strategic Thinking.

Any additional insights from your personality tests, Hogan assessment, other’s feedback should be included. 

Again, make these headliners to keep it simple.

Put them in the Leadership Strengths box.

Step 6

I have found it is extremely helpful for the leader to develop a desired brand statement.

Just like companies have a brand that influences their reputation, leaders do to whether they recognize it or not. 

Managing your leadership brand starts with developing your brand statement.  Your leadership strengths will be a key determinant.

For example, my leadership brand is “a strategic visionary who gets things done.”

 That rests on 3 of my strengths from StrengthFinders falling under Strategic Thinking. The other two fall under Execution.  Plus, all my feedback including LinkedIn point towards my strategic skills.

Think about this carefully. You may want others to review as well as your coach.

 Then formulate your Brand Statement and put in the designated box.

Step 7

Improving your leadership really comes to the forefront under Proficiencies. 

You will find some key areas that you want to improve. 

If there are clear deficiencies, identify what steps need to be taken.

Most often, it is building synergies around your strengths.

These lead into your brand.

Summary

The beauty of putting your Leadership Personal Profile together is you will know yourself better.

Knowing yourself better provides clarity on what you can work on to improve your leadership.

While there many components in the overall profile, my goal has been to make this practical and straight forward. It is not a rigorous academic model nor a complicated personality test.

 I have designed it so that you can sketch out your profile on your own.  Treat it as an evergreen document as you progress.

If you are a small business owner or CEO, this tool can be incredibly useful as your company moves through the 4 growth stages described in my blog of October 8, 2020.  In that model, leadership becomes more and more important as you move up the growth stages. 

A Silver Fox Advisor can help you on this journey.

ALL RIGHTS RESERVED BY SLOAN CONSULTING SERVICES

Contributed by Lane Sloan, former Shell CFO and Silver Fox Advisor.

Breaking Out of the Development Stage for Small Business

According to the most recent NAICS Association data, there are roughly 14 ½ million small business with annual sales of less than one million dollars in the United States. They almost all have less than ten employees.

The Chamber of Commerce indicates there are about 400,000 new businesses started each year. Of these, about 20% go under in this first year. The reason most often given was lack of funding followed by poor planning and then bad management.

In my 4 Stage Growth Model outlined in the October 8, 2020 blog, the Development Stage’s criterion was those small companies with revenues of less than one million. The stage is not built around sole proprietors but for those companies desiring to substantially grow their revenues which involves adding employees.

Using this 4 Stage Growth Model framework, this blog will share some thoughts on how to break out of this Development Stage. 

These are typical characteristics of small businesses who have recently launched to those who are struggling to break out of this early stage.

Development Stage Characteristics

  1. Revenues
    Cash inflow from revenues are not robust and less than one million.
  2. Sustainability
    Managing cash to survive is critical for sustainability. Chasing new customers and constraining expenses are dominant management features.
  3. Business Focus/Planning
    Day to day operations dominate the owner and any workers activities. Planning is generally no greater than a year and very ad hoc.
  4. Organization
    Owner controls decision making most of the time. Staff is limited often less than ten as revenues will not sustain greater numbers.
  5. Processes
    Operational sophistication is not strong with processes not well defined.
  6. Target Market
    Unless a strong business idea backed by venture capital or significant angel funding, the customer base is generally local.
  7. Value Proposition
    Owner’s business idea drives offering to customer.
  8. Leadership
    Leadership is not typically a discussion point as distracted by daily business. There are few employees.

Where do you want to take the business?

This is the first question to ask yourself in this Development Stage.

If your answer to this question is you are a sole proprietor and quite comfortable continuing down this path, then no need to read further. You are happy and fulfilling your personal career aspirations.

For the rest, one way to think about this question of where you want to take the business is to ponder your exit plan.  That helps establish the long-term vision.

Maybe this is a family business, and you want to pass it along to future generations stronger and better positioned than it is today.  That is a viable exit plan because you recognize that if you aren’t growing your dying.

 Others want to develop the business through their career to be able to sell it for their retirement funds. My only caution with this vision is you need to build a sellable business.

Some want to take the business as far as it will go with the aspirations it becomes a meaningfully sized business with significant revenue and profitability.  The exit plan may be to sell when a certain valuation is achieved, or to continue to be engaged whatever it morphs into becoming.

Then, there are those with great ambitions of building an empire which they want to control to the grave.

Obviously, there are many scenarios.  What do you want?

As soon as that exit plan is clearer in your mind, the next question becomes how do I get there?

The answer from most every business advisor is you will need to plan a path.

Take time to plan

If you have recently launched your business, then hopefully you have put together a business plan.

 Many people just jump into starting a business without thinking through the essential elements necessary for ongoing success which is why so many go under in their first year as the Chamber of Commerce points out.

Even those who have made it through the first year, often continue to float sideways without any meaningful growth. Many will die before their fifth year.

My experience is these small businesses spend all their time fighting the daily fires trying to survive with little time for planning.

If you are in this position unless you set some meaningful time to plan, then the business will just keep floating sideways.

What are elements of the plan for breaking out?

My reason for developing the 4 Stage Growth Model for small businesses is to give a roadmap of elements to aspire to in the shorter term.

Thus, the objective becomes moving into the Growth Stage.

Here is a generalized description following the same elements outlined in the Development Stage with new characteristics.

Growth Stage

  1. Revenues
    Owner(s) are getting excited about the organization’s success. Traction with new customers or expanding activities with current customers is generating a growing revenue base. Typical revenues run above one million and below ten million.
  2. Sustainability
    Organization is approaching a going concern where owner is less critical to survival and growth. Revenues are providing cash to invest in business and improve operability and compete more effectively for new business. Loss of key customers can prove devastating.
  3. Business Focus/Planning
    There is a fair amount of activity on generating new ideas for products/services/customers and more sophisticated approaches to attracting customers through marketing. Still planning is heavily oriented towards current year. Planning still may be rather ad hoc lacking strategic focus synchronized with tactical game plans. Planning framework including mission, vision, objectives, value propositions, target markets, strategic themes, competitor analysis, goal cascading, accountability, and so forth are often lacking. Effort does not seem to match current rewards for many with the focus still on the here and now.
  4. Organization
    Other key players have evolved and perform critical roles. Often, these players interact more, and teamwork is emerging. Organization structure is still somewhat loose with not overly formal role definition. The size of the organization varies based on the nature of the product or service provided. Often staff exceeds ten and but generally does not exceed fifty and almost always less than one hundred. Contractors are used to avoid adding staff in many cases. People can perform multiples functions.
  5. Processes
    Processes have emerged and there is a level of documentation and sometimes training. Processes are often changing and adapting as more effective functioning progresses and customer feedback requires modifications to be made.
  6. Target Market
    Local market continues to dominate customer base in most cases. Customer loyalty has emerged and identified as key customers with a retention focus. Expenditures for sales and marketing have expanded significantly. Often there are some dedicated people to sales beyond owner and budgets for improved web sites, marketing collateral, and marketing campaigns.
  7. Value Proposition
    Value proposition is adapting to customer needs and customer feedback.
  8. Leadership
    Owner and key players are beginning to think about how to motivate and retain employees. Decision making processes are receiving some scrutiny. Delegation has emerged where owner feels comfortable with key players carrying out more defined roles. Level of participation in decision making varies but generally still well controlled by owner.

Not sure this Growth Stage can be achieved?

If you face the dilemma of breaking out, you may be bewildered on how to move into this Growth Stage.

Here are two recommendations for you to consider if you are willing to listen to others.

First, look for a business advisor.

The association I belong to, The Silver Fox Advisors, specifically targets small businesses.

This is our mission.

“Our association of proven business leaders serves the needs of small business owners, CEOs and entrepreneurs in the Greater Houston area.  We help leaders establish, grow, and prosper their business by sharing our collective wisdom through robust service offerings.

The second recommendation is for you to consider their service offerings.

I particularly recommend their CEO Roundtables that are free of charge.

This will provide you an advisory type board of other small business owners and CEOs trying to grow their businesses too.

A Silver Fox Advisor participates in these monthly meetings.

You should also consider our CEO Education series as well as our Lunch & Learn programs.

If this interest you, go to our website Silver Fox Advisors for more details. As we like to say, Growing your business can be challenging.  You don’t have to go it alone.

Contributed by Lane Sloan, former Shell CFO and Silver Fox Advisor.

Power: The Interwoven Fabric of Leadership

Power: A Dirty Word?

Rosabeth Moss Kanter once wrote that “Power is America’s last dirty word. It is easier to talk about money, and much easier to talk about sex, than it is to talk about power.”[i]

Power and politics are often equated but they are not the same thing although deeply related.

Politics often relates to the influencing strategies and tactics within governments, which are usually quite contentious particularly at the federal level today.

In the American democratic construct, there are two opposing sides trying to gain the upper hand to impose their point of view through vehicles not always healthy for the nation. In many respects, power by its association with politics remains a very dirty word in this 21st century.

Of course, there are still lots of power plays in many organizational settings that are detrimental perpetuating this sinister view of people who use power.

Power: Interwoven Fabric of Leadership

All through my executive career, I always felt that power was this negative dark force never really grasping that it was the interwoven fabric of leadership.

This latter view did not come clear to me until my role change into an executive professor teaching strategic leadership where I had to study more in depth the role of power in leadership.

My intent in this blog is to bring forward some of those insights such that power is seen in a more objective light out in the open. Understanding power as this interwoven fabric of leadership enables you to elevate your leadership capability to a higher level of sophistication.

Now in my role as a leadership mentor, I can really see how the lack of understanding of power often reduces the overall effectiveness of a leader.

There was a fair amount written on power when organizations were more hierarchical and leaders more autocratic. But power does not go away just because today’s organizational structures are flatter. It is worth a deeper understanding.

The Flow of Organizational Energy

My view is that power controls the flow of energy in an entity whether a work group, large organization, company, government or even a society.

With this perspective, it becomes clear that power is the interwoven fabric of leadership since the essence of leadership involves influencing people to follow a direction or path that will create a flow of organizational energy.

On this positive side, the levers of power can unleash motivation, enhance productivity, and increase value generation.

Zaleznik understood that “Leadership inevitably requires using power to influence thoughts and actions of people.”[ii]

What is important for a leader is to recognize that power can expand this flow of energy or reduce the flow. It can gather momentum in a direction, or different flows of energy can run smack dab into each other diffusing and even stopping the overall flow.

Thus, power is really a neutral concept. As Gardner points out, “The significant questions are: What do they use to gain it? How do they exercise it? To what ends do they exercise it?”[iii]

The key for a leader is understanding the various controls of organizational energy. They really break down into two categories: formal and informal.

Formal Power

In a business setting, the formal controls are the legitimate authorities the organization bestows upon a position such as supervisor, manager, or executive. For a small business, the power resides primarily with the owner or CEO.

In the end of the day, these authorities provide the ability to reward or punish.

While the formal control mechanisms are much more direct, the nature of the influence tends to be extrinsic. This translates into focusing on lower-level needs such as security in the sense of keeping one’s job.

Positive rewards can reach higher level needs including social positioning and ego.

Unfortunately, often the flow of energy in formal controls stems from obedience rather than a natural flow driven by belief in the directional pathway.

The solution for positive energy is to get people are engaged and believe in the vision.

Informal Power

Informal control mechanisms derive from the compelling attributes of an advocated direction.

The literature gets into concepts like referent power where the leader is trusted and respected, or associate power based upon who you know and who knows you.

Expert power can be very compelling as it is based on highly valued knowledge and skills. A derivative of expert is the power of one’s vision and ideas.

An important point that I often argue is that a leader does not have to be a manager (i.e. the CEO for a small business).

A manager has the formal control mechanisms, but anyone can wield informal control mechanisms regardless of position in the organization.

Understanding Power

As Rosabeth Moss Kanter has pointed out there are various strategies to enhance one’s informal influence.

The leader needs to be there and have a presence which leads to the power of speaking out, putting one’s ideas into the organizational conversation.

Power comes through persistence.

Power also comes through partnering.

This last point is quite potent. Power is not isolated to an individual.

Teams, coalitions, cliques, large subgroups, etc. can exert substantial control over the flow of energy in an organization.

Leaders who do not think in terms of the organization’s energy flow tend to rely on themselves often to the organization’s detriment.

Informal power often comes from thoughtfully influencing and organizing teams, coalitions, and so forth. As mentioned previously, referent power is a source of forming these coalitions.

Dealing with Conflict

The sophisticated leader needs to understand that any organization can have conflicts relative to the flow of energy.

The leader needs to think through the different styles of addressing these conflicts. Too often the unsophisticated leader ends up avoiding the conflict seeing it as that dark force.

In such cases, those with significant formal authorities often win through domination.

Sometimes that is needed to right the ship, but often domination builds pent up negative organizational energy that has lasting impact.

Compromise has its place particularly to minimize loses. Sometimes the fight is not beneficial and that can lead to accommodation. In this case, the more powerful style is pursuing collaboration seeking a solution of mutual benefit.

Situation is Key

Many times, the opportunity is to build up the energy flow of the organization.

A leader should intelligently consider the different power control options given the situation.

All the basics of leadership come into play such as understanding people’s needs and the value proposition the leader is offering them. What are the potential outcomes and which choices will enhance the overall flow of organizational energy?

Thus, as Pfeffer points out “An important source of power is the match between style, skill, and capacities, and what is required by the situation.”[iv]

This leads us to reinforce strength-based leadership that we have discussed in prior blogs. Leadership can and should flow to where the strengths reside to enhance this energy flow.

Maxwell advocates that “People naturally follow leaders stronger than themselves.”[v]

The important point here is that those possessing leadership strengths change based on the situation. For those with formal authorities, delegation becomes an effective control tool to tap into these strengths within his/her team.

Having this deeper understanding of power can truly enhance the effectiveness of a leader.

Power Can Be Destructive

At the same time, a lack of understanding of the appropriate use of power can impede organizational effectiveness. When power is used in a narcissistic fashion it destroys organizational energy.

The leader with formal controls must address devious tactics seen under his/her purview.

Infighting can lead to very sinister behavior like taking no prisoners.

Those who try to divide and conquer also destroy organizational energy. It can be as subtle as excluding the opposition in the organizational discussions.

Certainly, any leader that is destroying organization effectiveness for their own personal gain must be dealt with quickly.

Continuous Learning

Learning is always critical for a leader. Ultimately, one can develop individual attributes that will become sources of power.

Certainly, focus is a key attribute that leads to developing potent directional pathways. Not everyone will agree with your direction, so having a sensitivity to others provides a foundation to tolerate conflict and effectively deal with it.

This will require some flexibility that in many cases may require submerging one’s ego and getting along. As previously noted, persistence can be quite effective, which requires energy and physical stamina.[vi]

Leaders are distinguished by their desire to create and build something of value with a heartfelt interest in helping others. It is a continuous process of learning and acting.

In summary, power is the interwoven fabric that enables the leader to influence and build the necessary organizational energy to create and build value for the various constituencies.

You should embrace power being fully cognizant that used unwisely it can be abusive to your organization.

[i] Kanter, “Power Failure in Management Circuits,” Harvard Business Review, (July-August 1979), p. 65.

[ii] Zaleznik, “Managers and Leaders: Are they really different?”  Harvard Business Review (March-April 1992) pp. 126

[iii] Gardner, On Leadership, New York Free Press, 1990, pp 55-57

[iv] Pfeffer, Managing with Power: Politics and Influence in Organizations, Harvard Business School Press, 1992, p. 77.

[v] Maxwell, The 21 Irrefutable Laws of Leadership:  Follow them and People will follow You, Nelson Press, 1998.

[vi] Pfeffer, Managing with Power: Politics and Influence in Organizations, Harvard Business School Press, 1992, pp. 165-185.

Contributed by Lane Sloan, former Shell CFO and Silver Fox Advisor.

Reflections on Servant Leadership

What is Missing?

Robert Greenleaf’s ideas on Servant Leadership have gained quite a group of dedicated followers since the publication of his essay in 1970. He articulated, “It begins with the natural feeling that one wants to serve, to serve first.  Then conscious choice brings one to aspire to lead.  That person is sharply different from the one who is leader first, perhaps because of the need to assuage and unusual power drive or to acquire material possessions.” While the foundation of his ideas is very sound advice on leadership, Servant Leadership has not become the pervasive mainstream theory of leadership.  Why is this so and can his foresight be leveraged with additional insights?

Here are some thoughts for you to ponder that hopefully will be fruitful in leveraging Servant Leadership into our practical day to day world of business.

Confusing Contrast

The contrast to a servant leader by Greenleaf is a leader being driven by power and material possessions.  This line of thinking would have been natural at the time as the prevailing autocratic model of management was indeed driven by power and authority. That model was under challenge particularly in the 1960s from insightful thinkers such as Douglas McGregor’s Theory X and Y, Rensis Likert’s work on the performance of different leadership styles, Blake and Mouton’s managerial grid and so forth that we discussed in my blog on The People side of Leadership.

Unfortunately, Greenleaf’s depiction of leadership becomes obfuscated without a clear distinction between managers and leaders. I addressed that in a previous blog Manager vs Leaders. In essence, a manager has a position of authority and responsibility within the organization that involves making decisions such as setting plans and budgets, organizing and staffing, controlling through accountabilities and so forth.  Leaders quite simply have followers on where they are going.

Greenleaf does not explicitly discuss managers; however, he implicitly intertwines the functioning of institutions and “the system” with leadership insights in his essay. This is not surprising as too often managers and leaders are equated with HR vernacular like “she was promoted to a leadership position.”

The idea of assigned leadership is still prevalent in modern leadership theory.  In my opinion, this misrepresents the actions of followers.  An employee may obey a manager’s direction.  That is different than followers who want to follow.

When Greenleaf talks about an unusual power drive or material possessions that too gets all intermingled with the role of a manager with little to do about leadership.  Managers because of their role in the organization make more money than the employees working for them and the position has inherent power which in many respects depicts the leadership contrast Greenleaf presents.  But unfortunately, that tells us little about the manager’s leadership ability. Greenleaf’s alternative in many respects is a false alternative to Servant Leadership because someone focused entirely on “me” being driven by power and purely self-interest will not be a leader.  Leadership requires a “we” not a “me” mindset.

We Mentality

Leadership requires more than one.  The leader must persuade someone to follow their advocated vision, goal, or simply direction. For someone to follow, their needs must be met in some meaningful way of value to them. The direction should include a common goal. There must be a form of a value proposition that motivates or better inspires them to follow that direction.  Thus, the leader’s mindset must shift from “me” to “we.”  The leader must serve the needs of followers.  As many authors suggest this leads to some form of collaboration.  If that direction and collaboration achieves meaningful results, then the followership is strengthened.    It is a natural process.  There is no need for the leader to have a position of authority in the organization or institution in Greenleaf’s vernacular.  Anyone can be a leader at any point in time.

Managers Need to be Leaders

In pursuing the leader’s advocated direction, the leader has needs that are met in some meaningful way as well.  Thus, the foundation of leadership is that mutual benefit is naturally derived for both the leader and the follower. In essence, leader and follower are serving one another.

Clearly, a manager is in a hugely attractive position to provide leadership because of their designated authority to direct.  If the advocated direction is seen to provide meaningful value to the employee, then following can occur naturally, and there is mutual benefit derived by both parties.  But for that to happen, the manager must be reaching out to employees and get them engaged and aligned with the direction. When this occurs, then indeed a manager can be a leader and, in the process, unleash inspired motivation from employees because the direction aligns with their higher-level needs.

Some may argue that leadership is not about “we” but rather about strictly serving the other person.  This is not really a discussion about leadership as leaders have followers.  Serving may or may not lead to following. There are many ways to get others to follow you.  One of the strongest is to develop them, get them engaged and guide them in the pursuit of their personal purpose.  In the case of managers, developing employees is a key responsibility.  A centerpiece of people development is serving, coaching, guiding, and mentoring others.

Think Value Propositions

What Greenleaf advocates is core to being a leader.  The leader must understand the needs of people in order to provide a direction that will meaningfully fulfill their needs through value propositions. Leaders dedicate themselves to fulfilling value propositions.

For a leader and followers plus managers and employees, mutual benefit for me is the leader serves by providing a value proposition that is meaningful to followers (employees in the case of a business owner). Likewise, the follower or one can correspondingly think of employee should provide a value proposition to the leader/manager to create mutual benefit.

Still, the manager and hopefully leader has other stakeholders.  There are many stakeholders that must be considered in a business enterprise including investors/banks, the relevant community, and so forth.    It is not simply the employees accountable to the manager even though they are crucial to success.  Practically there are tradeoffs in vision, goals, and directions for the various constituencies. Thus, the reality is more complex than simply one on one relationships of manager and employee.

In serving to fulfill other’s needs, the manager/leader’s needs will also come into play which leads to the centerpiece of achieving mutual benefit.  Mutual benefit lends itself to adaptability depending on the situation with various people shifting in and out of the leadership role (not managerial role) as appropriate depending on their relative strengths, capabilities, and foresight.

Think Teamwork

Thus, there is mutual support serving one another to achieve the greatest benefit for all.  This is the nature of teamwork and collaboration.  Leadership is very much like a team sport where everyone wins.  In Greenleaf’s essay the leader’s role is much more static with less dynamism than required in our fast paced always changing world today.

Without this concept of mutual benefit and its derivative teamwork, people in managerial roles find it challenging to pursue only a servant leader mentality.  For example, companies stay in business because they provide a meaningful value proposition to their targeted customers.  In that respect, successful companies serve the customer just as leaders serve their followers.

Servant seems Demeaning

The term servant can get in the way as well for managers even though there are interesting philosophical underpinnings in Greenleaf’s essay. No one needs to be a true “servant” to a master. The humbleness and will to serve are terrific traits of leaders. Tom Collins found this in his book Good to Great: Why some Companies Make the Leap and Others Don’t. But for many the term servant seems demeaning.

Transcending to a more comprehensive state of mutual benefit with a “we” mentality, collaboration, engaging value propositions across the board, teamwork leading to successful outcomes more readily lends itself for managers to become leaders.  The positive momentum of a company grows enormously when managers become leaders too, which is why organizations spend so much time and money on leadership development programs. When managers become leaders, they can unleash the motivational potential of their employees and correspondingly significantly increase the performance of the organization. Remember that people follow success.

Contributed by Lane Sloan, former Shell CFO and Silver Fox Advisor.

The Performance Side of Leadership

Most small business owners/CEOs have a desire to grow and become successful notwithstanding the challenges. In my recent blog of October 8, 2020 talking about the 4 Stages of Growth for Small Businesses, I set out a framework on what the path forward could look like.  Leadership plays a greater and greater role as you progress through the stages.

In the Development Stage, progress is a lot about you and perhaps a handful of people that are trying to build a sustainable business.  As the business grows, more and more people become involved. In previous blogs, we have been building a leadership model based on the 3 Ps of People, Planning, and Performance.

On the People side of Leadership blog, we advocated to be a leader not just a boss by understanding and addressing what matters to them.  This facilitates people following you and being motivated.

On the Planning side of Leadership blog, we advocated your envisioning the direction and engaging your people to form a common purpose. We described the planning process and how your leadership impacts each activity. Setting specific plans that are critical for the business’s success follows your key strategies that provide your differentiated value proposition for your targeted customers.  This too will have a major impact on Performance and the motivation of your people to achieve these plans.  Finally, the performance review and adjustment process will also have a huge impact on performance of the business.  Plans are the catalyst to bring performance from your people.

This leads to today’s blog. Without successful execution of the plans that leads to positive performance, it can all become rather futile.  Most plans that fail do so because of poor execution. Don’t be deceived by thinking when the plan is done it will magically happen.

Larry Bossidy & Ram Charan in their book Execution The Discipline of Getting Things Done, say that “Execution is a systematic process of rigorously discussing hows and whats, questioning, tenaciously following through and ensuring accountability.” (p. 22) This is one of the few books written on execution compared to strategy and leadership that are overabundant.

What does matter on the Performance side of Leadership?

Communication Matters

Many leadership authors expound on the importance of communication. That ought to tell you something about its central role in achieving performance.  Most will say it needs to be clear, concise, simple, and executable.  Almost all recommend the leader being a good listener and soliciting feedback.

You might recall in my blog on the 4 Inner Ps of Leadership that one of the strength domains under Proficiencies is Executing.  Rath and Conchie in their book on Strength Based Leadership, further delineate this domain into strengths described as the arranger, consistency, deliberative, focus, responsibility, and so forth.  Under the Influencing Domain, key subsets are activator, communication, significance, etc. Their book is worth your while to take a read and the test.

George Bernard Shaw had a profound quote that gets to a key point, “The single biggest problem in communication is the illusion that it has taken place.” You cannot overcommunicate as long as its purposeful. Beyond regularly scheduled meetings, my recommendation is that you plan for your key communication interactions every week and modify daily. That planning coupled with your listening skills ensures communication happens rather than an illusion in your mind.

Ask yourself these kinds of questions. Have I set aside time to talk with my people on how things are going? Have I reinforced our company values?  When is the last time we talked about how the company is performing? Does everyone understand our value proposition?

Systems and Processes Matter

As Vice President of Business Services for Shell Oil, I led some big process redesigns as that was the era of business process reengineering.  There are numerous books on the subject if you are at that point to redesign your processes. Often, these books are geared towards larger companies. A simpler approach if you are just starting to think about processes is to view the Silver Fox Education Series (September 21, 2020) under Process & Systems. It is a basic primer for those not familiar with systems and processes.

In the 4 Stage Growth Model, the effectiveness and efficiency of business systems and processes improves as a company moves through the stages of growth.  No surprise as they represent how things get done.

When you first start your business usually processes are rather ad hoc and rarely written down.  As one progresses to the Growth stage, processes are often charted out and specified so people know what to do.  Then, with time the processes are continuously improved.  There may even be work on the bigger system on how the processes work together utilizing software programs.  At the Take Off stage, processes become an opportunity to really differentiate from the competitors.  Rethinking, simplifying, innovating, computerization, and so forth can make a difference.  By the Expansion stage, the processes and system architecture may require a further revamp to fit the volume and various new localities.

Organizational Roles Matter

The follow up to processes is organizational roles that outline who is responsible and accountable for getting things done.  Organizational structures have gotten a bad rap with many people suggesting for small companies you don’t need one. There is no doubt that overly bureaucratic structures can become an impediment particularly in this fast-paced world.  However, without role definitions of who is responsible and accountable there will be a lot of chaos and finger pointing on why things didn’t happen as planned.  These roles can be charted within your systems and processes because interfaces among roles can be the real goblin in the works. This leads directly to the next subject on teamwork.

But before that, let us go back to the 4 inner Ps of leadership model and talk about Proficiencies that make a difference in considering organizational roles. Strength-based leadership along with technical proficiencies should play a key role in deciding who plays what roles.  In other words, leadership capabilities are important for those having responsibility and accountability.

Teamwork Matters

In my book Develop a Leadership Plan Become a Great Leader, I say that “teamwork is a state of mind. It’s a cooperative attitude…” There are lots of books and articles on teamwork for those who want to go in depth.  John C Maxwell has several.  Patrick Lencioni’s book entitled The Five Dysfunctions of a Team: A Leadership Fable is still a good read

My Silver Fox Advisor colleague Doug Thorpe has given you a roadmap with his blog of October 8, 2020 on 6 Steps to Build Better Teams.

To sum it up, I love the quote in my book from Chief of Staff General Sullivan on his rule Leadership is a Team Sport. “Effective leaders forge alliances and build teams.  They break down walls, floors, and ceilings distributing leadership throughout the extended organization. Team building empowers people with a sense of responsibility…Effective leadership …is about unleashing the power of people.”

Capability Development Matters

As one progresses through the 4 Stage Growth model, the focus on developing your people’s capability grows on multiple fronts.  Training on specific job duties and activities takes on more formality. More attention is focused on developing people’s leadership capabilities through increased responsibility, accountability, and role expansion. A high priority is placed on learning and coaching one another as the organization vitality increases.

In the Silver Fox Advisors’ CEO Education Series of August 11, 2020 on Organization Effectiveness, I used these areas below as considerations for Capability Development.  Some are values to reinforce in the organization such Self-accountability, Achievement focused, Execution excellence, Process innovation, Outward looking, Forward-facing, and Performance driven.  Others are leadership activities such as Strategic Thinking, Coaching contagion, Relationship building, Organizational flexibility, and Learning culture.  Then there are those areas requiring knowledge and skill development such as Market knowledge, Leadership skills, and proficiencies in Execution excellence.  All these builds organizational capability.

Effective Direction                                                                                        Efficient Coordination

Market knowledge                                                                                       Relationship building

Strategic thinking                                                                                          Execution excellence

Leadership skills                                                                                            Process innovation

                                                                                                                         Organizational flexibility

High Motivation                                                                                            Ongoing Results

Self-accountability                                                                                       Outward looking

Achievement focused                                                                                  Learning culture

Coaching contagion                                                                                     Forward Facing                                                                                                                                                                         Performance driven

Culture Matters

As some offer, a business culture spans your vision, values, beliefs, norms, working style, tradition, and habits. You can see from the value list in Capability development above; culture has a huge influence on the Performance of your company. Being the leader, what you say and what you do matters.  It is always amazing to me the things people pick up on watching you and your behavior.

This is a big topic and rather amorphous to describe what you need to think of in building a positive culture as there are so many dimensions and nuances.  One thing is for sure—a bad culture kills performance. Virtually everything we have discussed in my blogs has an impact.

My only two recommendations here are first, think about the elements you want in pursuing the vision and values, plus when communicating, exhibit a sense of heart and purpose for your people. Secondly, in this world of accelerating and chaotic change, try to create a learning culture.  That will be a subject of a later blog.

Summary

Success comes from high performance.  The organization must have an uncanny focus on results. In my 3 P vernacular, Performance comes from  rich communications, highly functional systems & processes, clear organizational roles, powerful teamwork, significant capability development, and a positive culture synchronized with your emphasis on those things that matter to your People and your inspiring vision with executable plans and goals to get there.

Contributed by Lane Sloan, former Shell CFO and Silver Fox Advisor.

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