Silver Fox Advisors Award Winner

On Thursday, December 9th, Silver Fox Advisors awarded its second annual A. “Butch” Madrazo Award which is given to a Silver Fox that best demonstrates the attributes Butch demonstrated every day.

Butch Madrazo was a Silver Fox Advisor from the mid-1990s until his death in August 2020.  Butch was always welcoming and counseled new members. He brought a certain light-heartedness to any room he was in.  The attitude he projected when providing support made everyone feel resilient and always put a smile on our faces.  The inscription on the award reads “Awarded in recognition of fellowship among, engagement with, and commitment to fellow members.” Butch was a true friend and outstanding colleague.

The first award was issued to Joseph Tung in December of 2020.  This year the award went to Rich Hall for his outstanding service to the Silver Fox Advisors. Rich is the founder and owner of the Rich Hall Group. He also serves as Chairman of the Membership Committee for Silver Fox Advisors.   Congratulations to Rich Hall!

Pictured: Doug Thorpe, President, Rich Hall, Award Winner, and Donnie Roberts, Chairman

Silver Fox Advisors Elect New Officers

For immediate release – Houston, TX – December 2. 2021

The Silver Fox Advisors held its annual Business and Board meeting to elect new officers and announce its slate of committee chairs for 2022.

The new Board Chairman is Donnie Roberts of the Woodlands. Previously, Mr. Roberts served as President. Joining him is Doug Thorpe, elected as the new President. Mr. Thorpe of Richmond, Tx formerly served as the organization’s Vice President and Chairman of the Marketing Committee. He will retain that committee seat.

Joseph Tung, an attorney with Grable Martin Fulton PLLC is the Vice President. Mr. Tung served as the Chairman of the Education Committee and will retain that role too. The Education Committee organizes and hosts special events, workshops, panel presentations, and the Lunch & Learn programs, bringing keynote speakers.

David Neuberger will remain as Treasurer while Jim Griffing serves as Secretary.

Other committee chairs appointed at this meeting are:

Rich Hall of Spring. Mr. Hall chairs the Membership Committee. His Vice-Chair will be Ibrahim Saleh. This committee manages the selection and on-boarding of new members wishing to join the Silver Fox Advisors.

Herb Kalman will Chair the Outreach Committee. This committee is responsible for the organization’s efforts to coordinate with other area business entities like the BBB, United Way, and Rice University Business Competition.

Lane Sloan is the new Chair for the Business Engagement Committee, the team that oversees the CEO Roundtable programming as well as other program and service offerings. His Vice-Chair will be Dr. Ken Wells.

Don Baird will be the Vice-Chair of Marketing with Mr. Thorpe. The Education Committee Vice-Chair is Henry Florsheim.

Mr. Jim Iden of Houston will fill the member-at-large seat on the Board.

The Silver Fox Advisors is Houston’s premier organization of proven business leaders serving the needs of small business owners, CEOs, and entrepreneurs in the Greater Houston area. We help leaders establish, grow, and prosper their businesses by sharing our collective wisdom through robust service offerings. Visit us on the web at SilverFox.org.

Understanding the Energy Quagmire

Every time there is a severe weather event like Hurricane Ida, it is blamed on global warming labeled climate change.  One would think we never had bad weather in the past.

Actually, Hurricane Camille in 1969 had the highest wind speed at landfall at an estimated 190 mph when it hit the Mississippi coast.

Don’t get me wrong.  The data is very clear that the earth is warming.  And an increase in carbon dioxide has been one of the major factors with our use of fossil fuels to provide us energy. 

Not surprising, there are organizations like Bad Carbon that want to keep all the “fossils” in the ground.  On a more balanced side, the Paris Accord is all about limiting the rise in temperature through limiting greenhouse emissions (GHG).

Climate Change

In 2018, the Intergovernmental Panel on Climate Change advocated global GHG needed to fall to zero within the next three decades.  A number of nations and major companies have set targets to reach net-zero by 2050; in other words, balancing any emissions by absorbing an equivalent amount from the atmosphere.

Ecology landscape – climate change concept, desert invasion

These are much more aggressive positions than when I was chairing the Greater Houston Partnership’s (GHP)Energy Collaborative Committee around 15 years ago.  At that time, the Energy Collaborative Committee was promoting a more balanced energy equation. 

There is no doubt renewable energy has some distinct advantages with their lack of carbon dioxide generation. But to be brutally honest, back then we had a hard time seeing renewables as a total substitute for fossil fuels.

We were actually quite proud of the wind electricity generation in West Texas.  The Lone Star State has for some time been the biggest wind producer of electricity in the United States.  Iowa is a distant second.

We were even successful at the GHP in getting Vestas, a wind turbine manufacturer, to set up an office in Houston.

Wind is not a cure all.

The biggest issue with wind is its intermittency as you may know.  The wind is not always blowing, and it blows stronger at night than in the day when the power is most needed.

green meadow with Wind turbines generating electricity

That raises the need for the ability to store power or to offset when the wind is not blowing with another energy source.

Natural gas combined cycle power plants have been a good solution with quick start-up capabilities and with an abundant new supply source from shale gas. And thankfully there are significant advances in energy storage, but more technological advances are needed.

The other big issue is location.  West Texas, as an example, is not a high population center.  That means you need to build transmission lines to major population centers like Houston, Dallas-Fort Worth, Austin, and San Antonio.  Texas has done that spending some $7 billion which has supported West Texas wind renewable developments.

It’s not that straight forward across the country.  The stronger wind capability goes up the middle of the United States.  That is why Iowa, Oklahoma, Kansas, Illinois, Minnesota, Colorado, and North Dakota are in the top ten list of wind power generation.  Unfortunately, many of the big population centers are on the east and west coast.

Besides building the required transmission lines as Texas has done, there is also a loss of power from the transmission.  With the networks in place from the 2015 to 2019, the EIA estimated a 5% loss in transmission for wind.

Like any source of energy, there are various specific issues. Big wind turbines are not what everyone wants to see, visual pollution. These giant blades spinning up to 180 mph are estimated to kill a half-million birds a year according to the US Fish and Wildlife Service

The case for Solar

Solar sounds very promising with the energy radiating from the sun.  Capturing that energy has always been one of the key technology challenges. The most efficient solar cells approach 30%, but solar panels are generally in the 20 % efficiency range.

Thus, a solar farm of 1 megawatt powers around 200 homes and can take 4 to 5 acres in geographical space requirements.  For solar to power the electricity needs of the United States, Vivint.solar estimates that requires roughly 14,000,000 acres or 22,000 square miles about the size of the Mojave desert.  That is a lot of land.

One of the largest utility sized solar farms in the world is in India covering 14,000 acres generating 2,245 megawatts.  In comparison, Egypt built a natural gas combined cycle power plant in 2018 with a total of 14.4 gigawatts of power generation with 12 power blocks each having 1,200 megawatts of capacity. It supplies up to 40 million people with reliable energy.

Solar panel

Like wind, intermittency is a big issue for solar. There is no generation at night which varies by the seasons depending on location.  Time of day also makes a difference. Cloud cover during the day is a real impediment as well. Thus, energy storage is again key with this intermittency.

The sunbelt makes the most sense for solar. Thus, like wind, the high potential solar locations do not always match up to population centers in the United States. Here in Texas, the best solar capability is also in West Texas away from the population centers.  Cloudy days here in Houston are not helpful for solar.

One attractive feature of solar comes from its flexibility to be installed on rooftops. Solar panels on roofs have been around for about 40 years now reaching over 2 million installations in the United States. The pace of installations has increased significantly these last several years. I’ve seen estimates that by 2024, 2.5 percent of residential homes in the United States will have solar panels.  Why not more?  There are many factors that come into play beyond location, costs, and financing, such as roof size, shading, tilt, construction, grid hook-up, local/federal incentives, rentals, and so forth.

Customer demands

The big question remains how much electricity generation can wind and solar provide that will satisfy consumer needs? 

Today, together these two renewables provide only about 5% of the energy consumed in the United States. The technical practicality seems more challenging as developers have already pursued some of the best locations for solar and wind farms.

To really address carbon dioxide emissions, then electric-powered vehicles are important of course.  That has another set of issues that need to be overcome beyond generating electricity such as charging stations across the country.

Those developing plans to achieve net-zero emissions by 2050 foresee trillions of dollars of investment.  Money that could be spent elsewhere more productively if the concerns were not so great.

Thus, the really big question is the consequences of climate change.  How catastrophic will it be for mankind?

Since the 1960s, there have been many doomsday predictions from climate change; however, none to date have materialized.  From another angle, if you look at the National Weather Service data on weather-related deaths here in the United States, there is nothing to be alarmed on trends towards doomsday. All this raises questions on how much do we really know about the consequences?

To step back for a moment, how did I decide to write this blog?

I was contacted by the IPAA’s (Independent Petroleum Association of America) leader for the Energy Workforce Energy Education Center. She wanted me to do a video presentation on Energy Economics and Geopolitics for the students in the high school petroleum academies having done similar presentations over a decade ago.

I wanted to get myself more current on the state of affairs with climate change.

Using the faithful internet, my searches found many websites that seemed rather biased and lacking detail but making large generalizations.

After searching for more detail, to my surprise some people who explored the data were debating the catastrophic consequences based on the data as opposed to any biased opinions.

I particularly found interesting Steven Koonin’s book published this year entitled Unsettled.  What climate science tells us, what it doesn’t, and why it matters.

One expert’s ideas

What got my attention was his background serving as the Undersecretary for Science in the US Department of Energy under President Obama along with numerous other impressive roles.

Initially, a strong advocate, over time Koonin has examined the data from assessment reports and studies, and now raises some serious questions.

He states in his book, “It’s clear that media, politicians, and often the assessment reports themselves blatantly misrepresent what the science says about climate and catastrophes.”

Koonin is not a denier.  He outlines our global warming and the impact of carbon dioxide.

For him, the key question centers not on whether warming is occurring but on the catastrophic impact projected. Thus, he specifically addresses my question on the consequences of climate change.

A big learning for me, Koonin points out the climate and weather are quite different. Weather bounces around from day to day.  Climate has a long horizon of 10 to 30 years and more.

He explains you should not use any one weather event to diagnose climate change and complains this is done so often in the press misguiding the public.

Koonin goes into reasonable depth on key assessment reports and in each case raises good issues about their implications.

What about the long term?

In analyzing different long term climate horizons in the data, he concludes that most types of extreme weather events don’t show significant change. Wow.

You also hear a lot about rising sea levels which is often represented as potentially catastrophic.  After his careful look at the data, he concludes that we are contributing to sea level rise, but scant evidence it is significant much less disastrous.

Nevertheless, the big concern is not just today but directed towards the future if we keep emitting high levels of CO2 emissions.

To project the future, computer climate simulation models are used with a scientific aura of validity.

Koonin is well versed in modeling and able to explain how these simulation models work.

They attempt to mimic reality based on physical laws and weather observations.

As you can imagine, they are incredibly complex using a grid structure to simulate our global climate environment.

A simulation run on the most powerful computers can take a couple of months.

The world is enormous in size with 123 billion acres, of which 37 billion acres are land. To get a finer sub grid structure which could be very helpful simply overwhelms todays computing capability and would take years to process.

As a result, these models are tuned by the researcher’s judgment because the models can be a poor description of the real world.

Obviously, Koonin forewarns over-tuning can cook the books.

His key point is that these models tend to disagree with one another, and the compromise has been to average their results. That seems a bit weak.

Moreover, newer more sophisticated models actually generate more uncertainty.

A big red flag for Koonin is the models can’t reproduce all the past.

Others raise similar points.  Now you see why I called this blog Energy Quagmire; technical practicality of mostly all renewables and questions on the consequences of global warming have got us in a bog.

The more we focus on objectivity, the quicker we can get out of this bog.

Foremost, let’s clearly address the issues that people like Koonin raise on assessing the climate data and projected consequences.

We also need more thoughtful balance of the risks and rewards of pursuing different courses. Let’s get more serious dialogue on other energy sources such as nuclear and green hydrogen.

Let’s discuss the advances in usage of fossil fuels to reduce carbon dioxide emissions. Let’s fully understand the opportunities of CO2 sequestration and similar removal technologies. Let’s consider the more complex issues and tradeoffs of economic security and national security along with environmental security. And let’s be careful in the overhyping wind and solar as our only energy sources for the future with a little pragmatism.

Learning Organization: Your Company’s Survival Depends on It

A colleague of mine at Royal/Dutch Shell, Arie de Geus wrote a book called The Living Company Habits for survival in a turbulent business environment.

He contended through his work that a central attribute of companies with long lives was a sensitivity to the environment with the ability to learn and adapt.  De Gues highlighted several other attributes that contribute to a long company life, which will be discussed later.

In my recent of blog on February 23, 2021 describing the world of accelerating and chaotic change, leadership agility was advocated as a competency every leader should learn.

The main purpose of this blog is to say that will not be enough for your company.  If you want your company to survive without a premature death, then you need to build a learning organization.

What are some of the attributes of a learning organization? 

My tutelage on learning organizations came from a consultant Shell used, Peter Senge, who wrote The Fifth Discipline The Art & Practice of The Learning Organization.

Senge delves into the notion of a learning disability.  A key point I want to make is that you will naturally develop this learning disability.

The Proverbial S Curve

In my opinion, living systems tend to follow the proverbial S shape curve because of their learning ability.

 A newborn entity has little knowledge and focuses outward through a structuring process of how things work or should work.  Once a foundation is set, the structuring process accelerates, and rapid learning growth occurs.

As time progresses, this learning growth slows as the focus shifts inward towards maintaining all this structure of perceptions, beliefs, values, processes, procedures, mental models and so forth.  As Senge aptly points out in his book, “Today’s problems come from yesterday’s ‘solutions’” (page 57)

Eventually, the growth and learning plateaus, that is, unless there are interventions.

As a “living” entity, what can a company do to become a learning organization to combat the natural inertia from the past?

Learning Structures

Your company must specifically build in learning structures. De Guess identified two more habits worth noting.

One is tolerance both within and outside the entity itself.  Another way of thinking about this habit is valuing diversity of thoughts.

It’s more than inclusion. The organization needs to seek out understanding of these diverse views. In this respect, the diverse views involve differences from the current modus operandi of the company.

Understanding does not imply immediate change. Many diverse views will not make sense for the company to pursue.  But an arbitrary discounting of such ideas becomes deadly in this rapidly changing world.

Secondly, de Guess describes the habit of building cohesion and identity. 

This may sound contradictory to diversity.  Quite the contrary, the persona must be built around this burning desire to learn from one another.

As Senge describes, your people need to be lifelong learners.

Thus, the concept of a learning organization needs to be built into the stated company values.

The organization needs to celebrate renewal efforts and achievements.

Learning must become fundamental to the culture.

Systems Thinking

Peter Senge advocates that systems thinking is a key discipline of learning organizations.  I clearly agree.

When I received my master’s degree in management science, systems thinking was a cornerstone, but you don’t hear as much about it today.

It is all about seeing the big picture in a wholistic way looking at the various relationships and factors that bring about your outcomes.

As entities build structures on how things work, there become a lot of parts and sub processes which bogs down learning as the focus is on the trees and not the forest.

This is not to say that continuous improvement programs should be scrapped.  They are one of the “structures” that should be imbedded in a learning organization.

The major shifts and transformations occur at the wholistic system level of a company.

Learning organizations need to imbed vehicles to periodically look at the big picture or when alarms are sounded from external sensing systems.

System audits should ask from the internal side, “What ground-breaking change could we do differently that would have a magnitude improvement on our outcomes?”

From an external perspective, system audits should look at competitors but also pace setting companies who have made major transformations.

Obviously, scanning for new technologies and how they could redesign the way your company operates is another part of a systems audit.

Then there are also major environmental events like COVID 19 that should trigger a systems audit.

Layering on a new S Shaped Curve

Another Shell consultant back in the 1990s was Ichak Adizes who taught us about corporate lifecycles.  He authored a book called CORPORATE LIFEcYcLES How and Why Corporations Die and What to Do About It.

Adizes described to us the growing and aging process a company goes through and outlined some characteristics of growing companies versus aging companies.

A couple of these characteristics really struck me.

In a growing company, “Personal success stems from taking risks” whereas in an aging company “Personal success stems from avoiding risk.” (page 87)

In a growing company, “Everything is permitted, unless expressly forbidden” whereas in an aging company “Everything is forbidden, unless expressly permitted.” (page 87)

Relating to this last point, he talked about the importance of culture with the two dimensions of flexibility and control.

At a company’s prime, flexibility and controllability are balanced.  As controllability becomes more dominant, the aging process eventually leads to death.

My big takeaway was a learning culture can expand the shape and timing of a company’s S curve through maintaining flexibility.  Today, that is called agility. It needs to be part of the organization’s fabric.

Beyond that, there are times in the life cycle when systems thinking can bring about a major transformation in the business model.

In essence, the company layers on a new S curve.  The key is to jump onto the next S wave before it is too late.

When this structural competency is developed in an organization, the life cycle can be extensively extended by having multiple layers of S curves.

Adding Learners to your Company

The last “learning structure” that I want to recommend is consciously adding learners to your company.

Bringing diversity of thought, perspective, and backgrounds as previously discussed is important for your hiring process and something you have likely already included.

My suggestion is that you carefully examine potential hires’ willingness to be tolerant of other points of view along with a strong learning desire.

You can’t build a learning culture with a preponderance of people who aren’t learners.

Many new hires will come from the Millennials (those born between the early 1980s and mid-1990s) plus some of Gen Z (those born between the mid-1990s and 2010).

Millennials Like to Learn

Fortunately, the Millennials are generally curious with an eagerness to develop new skills and learn.

They are also multi-taskers.

I remember one day when I heard a lot of noise from my Millennial daughter’s bedroom.  She had told me she had a lot of homework, so I wanted to check up on the commotion.  It was an incredible sight.

She was sitting with a laptop in her lap but typing on her desktop while watching TV with music blaring away.

When I asked her what she was doing, she answered my homework.

Beyond that, Millennials tend to excel with out of the box thinking and creative problem solving. This will be an important competency skill set in developing the next S shape curve for your company.

Many have high expectations of your company and not afraid to express their views which is what you want in a learning organization.

Gen Z Diversity

Generation Z also has some positive characteristics.

They are entrepreneurial and not surprising all about technology.

This generation has grown up in a rapidly changing world, so they are receptive to change.

You will need that attitude in your learning organization.

Fortunately, diversity of all forms is natural to them and generally not a divisive issue.

Don’t Forget Baby Boomers

Lastly, you may want to consider a baby boomer (those born between 1946 and 1964) as a mentor to help you build your learning organization.

They have many positive characteristics too including resourcefulness and being mentally focused.

As this generation deals with their Millennial sons and daughter and their grandchildren of the next Generation Alpha, their views of change continue to morph.

Now that they are in a mentor position in their careers, baby boomers can bring a lot of unbiased wisdom having seen it all evolve.

Summing it Up

The most basic need of a living system is to survive.  If you have not built-in structures that will foster a learning organization in your company, take some advice from a baby boomer—do so now before it’s too late.

Your company’s survival depends on it.

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

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.

March Newsletter

March is a busy month here at Silver Fox Advisors.

Education Series

We are launching our 2021 Education Series on March 16. The Education Series is a program featuring various advisors and associates of the organization, bringing you topics and information to help you as a business owner/leader.

The first session for 2021 will be titled “The Science of Selling in a COVID World”. Two of our members, Rich Hall and Mark Miller will be presenting. For more on this informative session, read the link below.

There is no fee for this series, but you must pre-register. We will begin at 10:00.


Lunch & Learn

Then, on March 25 at Noon, join us for our monthly Lunch & Learn event. This month, Mr. Brian Greene, President and CEO of the Houston Food Bank will be speaking on “Understanding How Nonprofit Organizations Are Different So You Can Be More Helpful to Them”

This is a virtual webinar. There is no fee to attend, but you must preregister.


Blog Articles

Please feel free to browse our library of articles, studies, and messages written by our members. Visit SilverFox.org

Need an Advisor?

Is your business running exactly as you hoped it would? Are you struggling with turning the corner or getting to the next level of success?

Think about contacting an advisor. We here at Silver Fox Advisors are proven business leaders with decades of practical experience, ready to come alongside you and your business. Contact us today or read more at SilverFox.org.

March 25th Lunch & Learn

On March 25th, the Silver Fox Advisors will be holding our monthly Lunch & Learn program. This month we are honored to have Mr. Brian Greene, President & CEO of the Houston Food Bank. Mr. Greene will be speaking about “Understanding How Nonprofit Organizations Are Different So You Can Be More Helpful to Them.”

Thursday, March 25th, 12:00PM CST – Seats will be limited.

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.

Remembering the Mentor’s Mentor

It is with heavy hearts we announce the passing of one of the Silver Fox Advisors founding members, Bill Spitz.

Bill was a leader’s leader, a mentor’s mentor. He led by example is all that he accomplished.

There is a chapter in Hank Moore’s “The Big Picture of Business, Book 3” that best describe’s Bill’s impact. To quote Hank’s book:

One of my most respected friends and colleagues is Bill Spitz. He embodies the concept of business mentoring. He created mentoring programs and set standards for many others who have guided successful businesses.

Bill Spitz founded and ran for more than 40 years Big State Pest Control, the largest independent pest control business in the Southwest. He merged this business with Waste Management Inc., the largest firm of its kind in the world. He served as President of the National Pest Management Association and was elected into its Hall of Fame, recognized for contributions to the professionalism of the industry.

Bill served as the first Adjunct Professor at the Hilton School for Hotel and Restaurant Management at the University of Houston. He served as president of Silver Fox Advisors, a business think tank.

He has a long track record of speaking, mentoring, and providing business consultation throughout the U.S. under the umbrella Peak Performance. Bill Spitz helped business executives reach their full potential, maximize profitability and return on their investment as an advisor, coach, mentor, and sounding board.

Bill himself was the product of mentorship. He knew full well the value of getting the best advice, applying the mentorship teachings to his own business, and then sharing the valuable ideas with others. Mr. Spitz discussed customer loyalty, the costs of building repeat business and strategies to keep customers who are happy and who refer others. He successfully practiced and championed customer focused management.

In 1990, he began coordinating a CEO roundtable for the Greater Houston Partnership, bringing in Silver Fox members and other mentors to strengthen this valuable program. In later years, the Silver Foxes expanded the roundtable program.

In training and energizing other mentors, Mr. Spitz addressed the critical elements for constructing mentoring programs that produce high-performing results. The practical use of stories and real-world examples illustrate key concepts, keeping members engaged and participating.

Thank you Bill Spitz for your dedicated service and influence that will last for generations to come.

UPCOMING EVENTS
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