Fortunately for all the mediocre performers out there, there’s a sea of excuses coming for you to hide behind. I can see it now, all across America in the pubs and private clubs, hand wringing and “woe is me” stories. “We did our best but… (insert anything from the below list here) did us in.”
Wrong. You did yourselves in. And worst of all, that slow-moving multi-company pile-up that you are causing…you saw it coming. And you did nothing. The good news is that your family, friends, neighbors, investors, and even your golf buddies won’t know any better. When you complain about inflation, they won’t know that corporate profits are up 35% in the last 12 months (and the highest since the 1950s). They won’t know that most companies have used inflation to raise prices above the associated cost impacts. And the group of “yes men” you assembled as your Board of Advisors will be all too willing to play along with the self-medication.
But you and I know better.
We both know that you saw the signs. And you have been seeing them for years. It wasn’t turbulence that is bringing you down, it was the combination of hubris, denial, not making the difficult but correct choices, and convincing yourself that you could figure it all out yourself. This incredible widespread and closely held middle market belief that ‘reaching out for help is akin to failure’ has tanked way too many companies. And it’s about to get yours.
Thankfully, there is a silver lining to this story. The distressed private equity groups, turnaround consultants, and bankruptcy attorneys are chomping at the bit for the back half of 2022 to arrive. The newsletters, webinars, and networking coffee clutches are buzzing with anticipation for the impending corporate carnage. And they’re not an easy group to get excited!
We have all heard the adage that the Chinese symbol for “crisis”’ also means “opportunity”—well it doesn’t. But it does roughly translate to “change point.” For many of you it’s likely too late to change your course. Batten the hatches and save what you can. What you are going through—or about to go through—will test all your resolve. It’s awful. I know, I’ve been there.
For those of you not yet fully up against the rocks, will you be the “I got this” navy ship captain, or will you heed the obstinate lighthouse of truth? Will this be your “change point?”
Change starts with the premise that you need to do something differently. Perhaps the most important change a middle market business leader can make is the perception that they, themselves or in combination with their team, have all the answers required to win at this game. You don’t. Nobody does these days. The game has gotten too sophisticated, and it changes too fast. The “shocks” of COVID; imaginative start-up newcomers with their never-saw-it-coming invasion of your space; continuous supply chain disruptions and challenges; mounting inflation and financial market instability; and the current geopolitical realignments driven by partisan political nonsense at home have created what the really smart people at Bain have called “a number of vectors of disruption in the business environment.” For us in the middle market, that translates to “even the really big and really smart companies don’t know what’s about to happen.”
So, what do you do?
“Would you let a great talker perform heart surgery on you?” one of the many great quotes from one of my favorites, Stanford B-school professor Jeffrey Pfeffer. Let’s face it, many if not most consultants can talk a good game but have never really done the things they are telling you to do. They have never sat in your chair. They have never gotten the call on a Friday morning that there are not enough funds to cover payroll today (yup, I got that call years ago pulling into the parking garage at O’Hare).
Look, I get it. For the most part, Consultants deserve their bad reputation. That’s why we won’t hire them. I was one earlier in my career so I can say that. We all have our “Consulting Experience” stories to tell. Typically, they involve a consultant who came into the business, ran over the existing team, was arrogant, didn’t listen, took their cookie cutter ideas out and tried to stamp them down on your business, charged you a lot of money, and then they wouldn’t leave! Yup, that happens a lot, particularly in the middle market. Like our lawyer, Investment banking, and Private equity friends, there are a lot of bad apples in the orchard.
All that said, you need to find partners that can help you navigate in today’s sophisticated and ever-changing business environment. You don’t have to learn to love us, but you have to learn how to work with us. Just like the large corporates have learned to consume outside help and perspective as part of their process, so must the middle market leaders.
If the highly paid and highly educated business leaders in the Fortune 1000, surrounded by thousands and thousands of equally educated staff accept they need help, why would you hesitate to ask for help?
Every business problem is ultimately a people problem.
Say it three times with me… Every business problem is a people problem. Every business problem is a people problem. Every business problem is a people problem.
Invariably, all business problems are people problems. Yet few middle market businesses put any effort into understanding the behaviors, personality types, and communication styles of their most important employees. We will pour over the financial reports, sales reports, heck even the CNC machine diagnostics to find that half penny! But how is it that we will not invest the time, money, or effort to understand how to get our leaderships teams to think more productively, communicate better, and be more effective?
Because these are sensitive discussions? Because this all sounds “touchy feely?” Snap out of it! Your people are by far the most valuable asset you have. And the effectiveness of the teams they comprise will play an essential role in the success or failure of achieving your goals. So, invest the time and money to better understand them, their current perspective, and how to help them learn new perspectives that will unlock huge amounts of value for you, them, and your business.
As much as we like to believe that we are thinking animals that feel, we are not. We are feeling animals who have learned better ways to think. Our primal brain drives much more of our thinking and interactions than we want to believe. And we can gain an unsettlingly accurate (and I mean unsettling!) view of how we think and behave. Beyond that, we can now understand how our hodgepodge of individual behavior styles impacts teams. Clever companies have integrated this into their hiring and team building practices, and so should you. Times of turbulence demand that we have individuals and teams that can collaborate, properly communicate, re-think old thinking, learn, and quickly move to address changes.
If you take nothing else away from this, please let it be this. The B-School education you received and all those strategy books you read have not given you the proper perspective to address the current demands on your business.
All the nonsense about better, cheaper, and faster have taken many businesses from good to gone. They didn’t tell us that better, cheaper, faster wouldn’t make the customer love it more and was often a race to the bottom. All the indoctrination and learnings based around having an execution mindset that focused us inside the four walls of our business chasing half pennies failed to mention that all significant growth would come from companies gaining insight into the customer’s aspirations (explicit and implicit) and embracing an alignment mindset. Businesses who thrived were focused outside on their current ecosystems and helping their customers create a better version of themselves and solve problems that often times they didn’t even know they had.
Did you know there was a problem with hailing taxis or that going to the store for almost anything including buying a car was a waste of our precious time? I didn’t. It never crossed my mind when I was browsing the books and CDs at Borders, walking through the video rental store, or pumping gas into my car. I was too busy focusing on my business and trying to wring out every ounce of productivity and beating my competitors! I had not yet realized that my competitors were irrelevant. If you still think your competitors are relevant, then you too have the wrong perspective.
We see business as having Six Stages of Evolution, from Chaos to Customer Centric, covering businesses from start-up to Sustainability and Continuous Innovation. Most middle market companies of any size have fought their way out of Chaos but gotten themselves wrapped around the axle chasing Consistency and Coordination. Where does your business stand? Do you know?
We help our clients understand where they are, prioritize what is needed to get where they want to go, and execute hand-in-hand within their business to make it happen. It’s not that our clients aren’t strategic or capable, it’s that they are self-aware. They understand they can’t do or see it all. Ironically, it tends to be the most sophisticated and innovative companies that engage us. While the laggards and late adopters continue to struggle and go it alone.
Spend the money and get an outside set of eyes on your business. It doesn’t have to be us, but it should be someone who can help. You are too close to it. You are so busy trying to work on what it is that you fail to see what it can be. You need help seeing past the history and your (and your teams’) biases. There is both low-hanging fruit and significant strategic changes that need to be addressed and—not to sound like a broken record but—you’re too close to see it.
In these times of turbulence, even the best of the best will struggle. Even those that have their teams optimized, their shop floors efficient, and their sales team tuned into the market will struggle to adapt quickly in this market. If your business is not equally nimble and fine-tuned, then you face additional risks.
There is a highly sophisticated marketplace of Private Equity firms and PE Consultants who are making a killing off of purchasing distressed and or moderately performing business and making the changes you recognized but didn’t make or never saw coming. They don’t want you to step-up, nor do their brokers, luxury car dealers, and progeny. They are all too happy to step into your shoes, make a few adjustments, and claim the legacy that you envisioned and made countless sacrifices to achieve.
I’m curious. If we sought answers to our business issues and concerns the way we seek answers to our children’s health issues or other loved ones, where would our companies be? I hope that what I’m describing to you is not foreign; my guess is that many of you understand what I mean. When you have a child or loved one in need of real and significant help you:
So why do we accept our own nonsense when it comes to our most significant Business issues?
Why do we not passionately and aggressively seek out answers or solutions?
And why do we leave people in roles within our companies when we know they can’t do the job and/or who are failing?
Granted, no business is as important as our children or loved ones. No business should ignite a fire like a loved one in need. But they are important, no? They do also command much of our time and attention, right? We do spend most of our waking day at them or thinking about them, yes? So why would we not be as open and diligent in searching for answers?
Every business problem is a people problem. And maybe that ‘person’ problem is a ‘you’ problem. So, choose to act differently…
Times of turbulence are truly times of opportunity. But only for those that face reality. Those capable of making the difficult calls. Those that are self-aware, suspend bias, and challenge the status quo. Leaders who are innovators, early adopters, and long-term greedy to what their companies can accomplish. If you are one of these leaders who will catch the falling knife, then turn it around and use it as a weapon. Because your competitors are irrelevant, the only things that matters are you, your team, and your ability to win based on your customers’ aspirations.
Contributor: Craig Speed, President
At FortéOne, we’ve been on the forefront of change as thought and implementation leaders for more than 20 years. Our mission is to help Family and Privately Held Business owners as well as Private Equity and Family Office investors become performance leaders in their respective industries. We are more than consultants—we are problem solvers who work side-by-side with you to deliver a business transformation that improves performance and accelerates change in your middle market company.