CEO Coaching International was proud to produce so much stellar content in 2018. We had another phenomenal lineup of guests on the On Your Mark, Get Set, Grow! podcast, and our library of business blogs continues to grow thanks to contributions from the coaches and clients at CEO Coaching International.
These conversations and essays covered a wide range of topics, but some important recurring themes did pop up. CEOs looking to charge into the New Year should think about how to incorporate these 11 key insights into your BIG plans for 2019.
1. Identify the specific and measurable activities that you need to keep score on in order to achieve the outcome that you want.
Mark Moses is the founding partner and CEO of CEO Coaching International and best-selling author of “Make BIG Happen!” Mark has been the president of EO and YPO Orange County, and in his spare time he’s completed 12 full-distance IRONMAN triathlons, including the Hawaii IRONMAN World Championship five times.
CEO Coaching International clients have achieved $7 billion in revenue, 40% annual CAGR after 4 years of coaching, and 210% Median Profit Growth Rate across the board. We’re proud that our clients’ sustained growth and stables of top talent have also attracted serious interest from strategic buyers and private equity firms, including six clients whose companies have achieved 9-figure exits.
Key Business Insight: “Put leading actions in place.”
“I’m going to hit $100 million in sales” is a good goal. But it’s not an action plan. In CEO Coaching International’s experience, struggling firms have trouble making this distinction. “When we ask for specific and measurable activities, they often give us an outcome like a sales number, a gross profit number, a gross margin number, a net profit number,” Mark says. “But they don’t give us the activities that will lead them to that outcome that they want.” Or, just as bad, a CEO will point to lag indicators like last month’s sales figures or last quarter’s growth as evidence that the company is moving forward.
Mark insists that his clients focus on leading activities. “I do X, I get Y,” he explains. “For example, I make 100 calls per day, I’m going to get five appointments. That’s a leading activity that we could keep score on, and we’ll make assumptions. We know that if we need to achieve X amount of customers, we need to get Y amount of appointments, so we need to make Z amount of calls. Now you can back up the truck and put those activities through your whole funnel.”
When determining your activities and the short-term targets you want to hit on your way to BIG, Mark recommends a 3-year plan. Developments in technology and the global economy are changing businesses more rapidly than ever. 3-year projections will lead you to realistic goals and actionable tasks. But 5 years? 10 years? If you try to see too far into the future, you might lose sight of an achievable vision.
2. Don’t hire for where you are now, hire for where you want to be in five years.
The path from pre-revenue start-up to a successful million-dollar business is tough. Getting from that first million to $5 million can be even tougher. And if you want to scale BIG, to $10, $50, or even $100 million or more? Well, that takes great leadership.
Jim Kenefick, the Founder and Managing partner of Working Excellence, explained how CEOs can build a team and a learning culture that will transform good companies into great ones.
Key Business Insight: “Can you scale your A, B, Cs?”
Our coaches encourage clients to rate their leadership teams – annually, at least – and replace anyone who doesn’t score high. Jim emphasizes this practice too, but he also advises that CEOs think about how those letter grades relate to their scaling goals.
“I think it’s both qualitative and quantitative, and also about the stage of the organization,” Jim says. “A company at $5 million, $10 million, $25 million, the type of leadership in management that you need is very different at all those levels. An A player at a $10 million company could be a B player at a $100 million company.”
The easiest way to keep your team in line with your ambitions is to hire people who have “been there done that” and can now do the same at your company.
3. “Nice person” is not a job. Hire the best, even when it’s hard.
“Good to Great: Why Some Companies Make the Leap … And Others Don’t” by Jim Collins is a book Mark Moses recommends to every single client, and anyone who’s interested in business. Collins has spent more than 25 years studying and teaching the habits and philosophies that separate the absolute best companies from the rest of the pack.
Key Business Insight: “When you think you need to make a hiring change, act.”
Delaying a difficult personnel change is frequently at the top of CEO regret lists.
Firing people is never easy, especially if the employee is a nice person. Unfortunately, “nice guy” is not a job title.
“But I’m close to this person … Our kids go to school together … He’s been with the company forever … The other employees love him …” Mark has heard it all before. But what he’s never heard is a top leader who said, “I fired them too soon.”
These are sentimental concerns, not business concerns. How happy are your other employees going to be if this underperformer keeps dragging down your numbers and layoffs follow?
There’s also a very good chance you’re overestimating just how much your best employees really value that nice guy who’s making life harder for everyone else. Your best employees deserve to work with the best. They deserve a chance to run with your best opportunities, not babysit your biggest problems. If you don’t give them that chance, they may head off to a company that does.
4. Know your numbers, especially your #1 most important number.
If you can’t define it, you can’t measure it. If you can’t measure it, you can’t manage it.
But what is “it”? What are the specific activities you, the CEO, should be tracking on company-wide scoreboards? And how are you going to get to the BIG outcome you want if you can’t lock these details down?
Quite simply, you’re not. So stop spinning your wheels and follow these four steps to definable, measurable, manageable metrics that will get you moving again.
Key Business Insight: “Identify your killer metrics.”
No two companies are the same. But all successful companies know that the difference between staying stuck in neutral and shifting into high gear is managing the killer metrics that are most tied to growth.
Take Grasshopper. After asking themselves some very challenging questions, they determined that growing as a SaaS company depended on their customer acquisition cost, churn rate, average revenue per user, and the lifetime value of each client.
Everything Grasshopper did to raise its valuation north of $170 million was based around measuring and improving these killer metrics. They did vigorous market testing. They scrapped initiatives that weren’t working and refocused their resources on those that were driving up the growth rate. And they brought in triple-A talent who kept driving that growth and pushed the company up to the next level.
5. Make sure you closely monitor your cash so you don’t “grow broke.”
Fast growth is great, but it also sucks cash like a power vac. Take a look at any fast growing Silicon Valley company and you’ll notice that they seem to be in perpetual money-raising mode. Why? Because supporting fast growth requires heavy cash investment and it could take many months to turn that dollar of investment into cash in the bank.
Key Business Insight: “Review your daily cash position.”
“That’s right, take a look at your cash in the bank daily,” says Mark Moses. “Look at the trend; is it growing, shrinking, or staying the same? Compare it to accounts receivable and accounts payable. If accounts receivable is growing faster than your cash, you have a problem brewing.” Think of your cash like oxygen. You don’t want to run out of it even for a short period of time.
6. Create a consistent sales pitch.
After a highly-recognized career in tech sector sales management – including working for IBM at its peak – CEO Coaching International’s Jerry Swain jumped off the corporate track and became an entrepreneur. He started, of all things, a high-end specialty chocolate company that ended up receiving four buyout offers before Jerry finally sold to a strategic buyer. Jerry discussed the lessons he learned from IBM’s world-class sales training program, and how he applied that wisdom to his own BIG entrepreneurial ventures.
Key Business Insight: “Process before product.”
Jerry remembers that on his first day of training at IBM, his classmates kept asking when they were going to learn about the products they’d be selling.
“And they told us, ‘You’re not. You’re going to learn about the process of sales. The customer-tailored sales call. You don’t need to know about the product, you need to know about the customer’s business, what’s bothering them. And if there’s a match and a solution that we have, that’s how you’re going to make your sale.’”
IBM broke its sales process down into six steps:
- Build rapport
- Understand needs
- Present solutions
- Handle objections
Each one of these steps keeps the focus on what the customer needs to improve his or her business, and how your product or service can help. The thing you’re selling only matters to the extent that it solves a problem your customer has.
7. Assembling a superstar C-suite can transform your business.
In 2018, CEO Coaching International celebrated 10 years of helping CEOs and entrepreneurs make BIG happen for their businesses. As he reflected on lessons he’s learned from working with some of the biggest and best companies and leaders in the world, Mark Moses also identified the best practices that separate the merely good from the huge performers.
Key Business Insight: “Hire the absolute best people.”
“Good is not good enough,” warns Mark. “If you want to build a company that’s going to crush your competition, hire the absolute best people. Go get them, go get the absolute best. Pay a premium for them, and it will drive your business.”
What makes a potential hire the best? Mark recommends that CEOs picture where they want the business to be five, or even 10 years down the road, and hire for that goal.
Along the way, you might lose longtime staff who were good enough to get you where you are, but not good enough to get you where you want to be. Other employees might bristle at having a new boss to report to. But your job, as CEO is not to make everyone happy: it’s to do what’s best for the business. “If the ego gets in the way and an employee can’t deal with it, they’ve got to go,” says Mark. “Hire great people, empower them, and get out of the way.”
8. Understand and improve your margins.
Midway Dental Supply hasn’t grown less than an amazing 41% annually in the last five years. President Steve Kizy credits a thorough annual planning process that dissects the company’s targets and margins with sustaining that growth in such a highly competitive industry.
Key Business Insight: “Set your targets at an annual planning session.”
Time and time again, we at CEO Coaching see that the companies that achieve BIG growth are following a clear annual plan. Midway Dental Supply is no exception.
“Every year we come out with a vision statement that shows our team where we want to end up,” Steve says, “and every quarter we adjust as necessary. What type of revenues we’re looking for. What type of margins we’re looking for. What type of fill rates we’re looking for.”
The danger for CEOs who haven’t mastered their business as thoroughly as Steve has is setting targets that are too big, too hairy, and too audacious. Midway grows over 40% every year because Steve has identified realistic daily, weekly, and monthly goals that keep his awesome momentum going.
“Pushing the team towards a goal that’s obtainable is what’s easy,” Steve says. “And putting those goals out there in the beginning of the year so they know what their KPIs are keeps everybody in line and focused on what needs to get done.”
9. Culture fit is non-negotiable when you’re considering a new hire.
Craig Coleman is a highly-experienced entrepreneur and CEO, and now a coach at CEO Coaching International. Craig co-founded ForwardLine Financial, a nationwide small business lender, and FowardLine Payment Services, a nationwide full-service payment processor. In Craig’s 15 years as CEO, ForwardLine achieved 15 years of consecutive growth, and in 2015, Craig led a successful sale. Craig was also a Vistage member from 2006-2017 and a CEO Coaching International client from 2011-2017.
Craig discussed the proven best practices that he uses throughout the interview process to narrow the field, ensure culture fit and skill alignment, spark productive background checks, and put together a team that will make BIG happen.
Key Business Insight: “Culture fit trumps skill set.”
“Cultural fit is really non-negotiable,” Craig says. No one person, no matter how talented, is worth disrupting the very heart and soul of your company – especially a senior hire who is going to wield so much day-to-day responsibility while you’re focusing on top-level CEO tasks.
Craig has a unique recommendation for testing how a candidate will gel with your company’s culture: get finalists in a room with the other members of your leadership team. “Have them talk to the candidate about the job that you need the candidate to do and how he or she is planning to get that job done,” advises Craig. “This is a way to get your team’s assessment of whether they feel like this candidate is the right fit for your culture and your company, whether they think the candidate can succeed there. You’re ultimately getting the team’s buy-in in your hiring decision.”
You wouldn’t tolerate someone you don’t like in your own home, so why would you tolerate cultural misfits in your business?
10. Find leads and customers where your competitors aren’t looking.
Once you have your fundamentals covered, how do you set yourself apart from the competition? How do you broadcast and leverage what’s unique about your company to expand your client base and start ramping up towards BIG?
Most leaders don’t know what it would take to drive twice as many leads for their business at a cost that makes sense. Podcast guest Anthony Geraci figured it out.
Geraci, the founder and managing shareholder of Geraci LLP, explained how his team started thinking outside the box to change how a law firm traditionally operates and create a radical new approach to marketing and lead generation. The result of this innovative thinking? An incredible 70% growth in one year.
Key Business Insight: “Broadcast your message where you know you’ll be heard.”
Anthony’s firm took the unusual approach of creating its own media company that concentrates on two unique marketing initiatives. The first is a print magazine, Originate Report, that has a website but is also delivered the old-fashioned way: to mailboxes. If you’re thinking, “No one sends mail anymore,” that’s exactly the point! Anthony pictured all those empty spaces in his customers’ and prospects’ daily media routines, and he filled those spaces with his branding and messaging.
Anthony’s second big initiative is a series of conferences that allow his clients and prospects to network with each other and industry professionals. Anthony does charge for admission, and while he says the conferences do turn a slight profit, the biggest benefit is increased business from existing clients. “When we do a big presentation on a new topic, the reaction is often, ‘Oh, these guys really know what they’re talking about. I didn’t know they did this,’” Anthony says. The conferences also broadcast the company name and logo across the country, attracting new business outside of Anthony’s California home base.
Hitting social media, online ad platforms, and email is just covering the bare minimum. How are you going to stand out from the crowd on Facebook and LinkedIn? Have you thought about hosting conferences or summits? Blogging? Mailers? Webinars? Maybe even your own podcast?
11. Minimize your blind spots and maximize your success.
Many struggling CEOs really don’t see problems that are right in front of their faces. Others just have their heads buried too deep in the sand to realize that their blind spots are destroying the chemistry in the C-suite and keeping their leadership teams from operating on the same page.
Key Business Insight: “Check your blind spots.”
It’s your job as CEO to set the tone for the entire company. Have you struck a wrong note recently that’s thrown off the harmony?
Do you get out of the way and let your C-Suite do their jobs, or do you have a habit of butting in to remind everyone who’s really in charge?
Do you include your C-Suite in important company-wide decisions, such as annual sales targets or expansion plans?
Is your door open to suggestions, including some outside-the-box thinking that might encourage innovation and a more committed buy-in to your overall vision?
Have you clearly delegated C-Suite tasks, or is your leadership team constantly stepping on each other’s toes?
Owning up to your mistakes will encourage your leadership team to own up to theirs. That kind of realization and honesty will be critical to completing the final step.
We’re looking forward to another great year of On Your Mark, Get Set, Grow! Thanks for listening, reading, and sharing with your friends, family, and colleagues. And don’t forget to click below to subscribe and never miss an episode.
About CEO Coaching International
CEO Coaching International is an executive coaching company that works with the world’s top entrepreneurs, CEOs and companies to dramatically grow their business, develop their people, and elevate their own performance. For more information, please visit: http://www.ceocoachinginternational.com