RULES TO LIVE AND DIE BY

by: Chief Tecumseh

So live your life that the fear of death can never enter your heart.

Trouble no one about their religion; respect others in their view, and demand that they respect yours.

Love your life, perfect your life, and beautify all things in your life.

Seek to make your life long and its purpose in the service of your people.

Prepare a noble death song for the day when you go over the great divide.

Always give a word or a sign of salute when meeting or passing a friend, even a stranger, when in a lonely place.

Show respect to all people and grovel to none.

When you arise in the morning give thanks for the food and for the joy of living. If you see no reason for giving thanks, the fault lies only in yourself.

Abuse no one and no thing, for abuse turns the wise ones to fools and robs the spirit of its vision.

When it comes your time to die, be not like those whose hearts are filled with the fear of death, so that when their time comes they weep and pray for a little more time to live their lives over again in a different way.

Sing your death song and die like a hero going home.

WHY YOUR KEY EMPLOYEE JUST QUIT

If you believe all the headlines on the evening news or in the Wall Street Journal, you’d have to conclude that the US economy is continuing to struggle.  Unemployment remains stubbornly high.  Employers seem to be reluctant to hire new people to their full-time payrolls, even as corporate cash levels are at record highs.

So, you would probably be surprised to know that more Americans are quitting their jobs today than at any point in the past 4 years.  In March 2014, 2.475 million Americans quit their jobs.  This has been steadily increasing recently from a low in late 2009 (just after the financial collapse finally bottomed out) from a monthly rate of 1.7 million quits a month. Why are almost 2.5 million Americans a month these days – or about 30 million a year – willing to quit their jobs?

People Quit Bosses, Not the Company

If you want to keep the most talented members of your team, it’s time you started looking in the mirror and realize the biggest reasons why people quit have to do with You.

1.     Have you overloaded your best people with too many responsibilities?  A lot of companies in America, there have been waves of layoffs over the past 6 years.  In cut after cut, there’s a constant job staffing question: how do we get the same amount of stuff done with fewer employees to do it? The simple answer has been to get the remaining employees to do the jobs of 2 or 3 old employees, in addition to the regular job responsibilities they used to have.  And then a lot of bosses never revisited staffing responsibilities 3 or 4 years later.  It’s time to take a fresh look at who is doing what in your group and probably redistribute how work is getting done on the team.  Your best people need to be doing higher level stuff, not just getting lower level stuff done.  Your best people will quit if they’re just continuing to be asked to do the same boring stuff years later. 

2.     Are you a micro-manager?  A lot of bosses get promoted because they’re perfectionists.  They were able to get a lot of work done in their old jobs to get noticed.  Now, in their new jobs, they keep wanting to make sure that whoever’s doing their old job is doing it just as well as them.  Plus, they are into all their direct reports’ business as well.  Having your fingers on the pulse of what’s going on (or not going on) in your group is good management.  But, at some point, you cross the line into micro-managing.  Your worst people are probably happy for you to tell them what to do constantly.  But your best people will be driven up the wall by this tendency.  They want to know you give them a task and then enough rope to let them do it rather than doing it for them. 

3.     You’re never around.  The opposite of a micro-manager is a drive-by manager.  This is the boss who’s perpetually never in the office.  They’re not around.  They don’t check in.  They give you a job to do and then check back with you 3 months later on if it’s done yet.  Lots of bosses protest that they have an “open door policy” for their people to come in and talk with them whenever they need to.  But, if you’re never around or – when you are – you zip in to grab something off your desk and zip back out or get on a conference call for an hour and then take off to a meeting, that’s not going to invite a lot of your staff to come in and shoot the breeze with you. 

4.     You’re not in touch with how some of your hires or promotions are driving your best people nuts.  It’s human nature to want to be around other people we like and trust.  Why would we choose to be around – and hire – people we dislike and don’t trust?  However, we usually like people who like us.  Even though we think we’re good at spotting people sucking up to us, it’s awfully tough when you’ve got a direct report telling you how great you are.  Big problems arise when we promote based on who we like instead of on merit.  One promotion or hire like that is ok, but two or three can sabotage a team’s morale.  If you’re out of touch with who’s really talented on your team and who you’re promoting or hiring, it’s a matter of time before your best people tender their resignation. Why stick around if the bozos get promoted? 

5.     You’ve never given your people a sense of where they can go in their careers.  Nobody takes us aside out of college or even in business school and teaches us how to sit and talk with our direct reports about upward career progression.  As a boss, most of us just want to make sure all our work gets done.  But how much do you care about getting that next promotion? It turns out that your people care about it just as much. So take the time to talk to them individually. Ask them where they want to go in their careers – it turns out many won’t have a clue but will appreciate you showing an interest.  Talk to them about how they can get there, including what kinds of experiences and successes by them would make them stand out to your bosses. 

6.     You run terrible meetings.  Even one of the most successful CEOs in the world today, Google’s Larry Page, wasn’t born with a keen understanding or respect for being a good boss as this account describes.  Page - a former doctoral student at Stanford, when he started Google – thought the ideal way to run meetings was to instigate a big argument among a team.  Whoever had the best idea, he thought, would rise to the top.  Instead, he created anarchy and a lot of hurt feelings.  There are plenty of other way to run ineffective meetings including never calling them or letting them go on and on with no real action items coming out of them.  All these approaches are tremendously morale-sapping. 

7.     You communicate that you care more about yourself than the team.  As a leader, you’ve got to show your reports that you have done in the past or would be willing to do now anything that you’re going to ask them to do.  If you seem above it, you’re likely going to turn their support away from you.  You’re going to communicate to them that you care more about yourself than you do them.  It’s tough to win back their support after that.  So, show them that you care about their career progression more than your own. Show that you want the team to win more than you want you to win. 

8.     You’ve never given them the big picture vision of where your group is heading or you are constantly changing the big picture.  Some bosses are great at strategy but they’ve got their head stuck in the clouds or like to change the group’s strategy every quarter.  Some bosses are about as strategic as a banana.  Either extreme is bad and debilitating for your staff.  As a boss, you’ve got to tell the group where their North Star is, the direction they’re heading in and why.  Then, you’ve got to give them everything they need to get there.  Sometimes business conditions change and the strategy changes, but that should happen infrequently.  If you worked for yourself as a direct report, what would you think of the strategic direction you’re setting?

SEX, ETHICS AND BOSSES

An AICPA Economic Outlook Survey, which polls chief executives, chief financial officers, controllers and certified public accountants with executive roles in U.S. companies, found that businesses expect an increase in recruitment, staff training and spending in the next 12 months as economic conditions improve. Most of the executives questioned (56 percent) say their companies have the right number of employees, but 15 percent said they planned to hire immediately, up from 13 percent last year. Meanwhile the portion of those surveyed who said their companies had too many employees shrank from 10 percent to 8 percent.

Part of the problem with C level executives when dealing with employees, is that the employees don’t share nor understand the Type A+ personality of their bosses and they judge them harshly for it during tough economic times. Some mentioned that executives were thought to be ‘job slashers’ and lacked concern for their employees.  In fact, based on executives' own survey responses, they agree that they are getting worse at basic human interaction as the economy improves.

What’s the Disconnect?

A survey conducted last year by Booz Allen (BAH) found that executives largely believed the job was out of their hands and that they couldn't help their company achieve its’ goals. A full 64 percent said they had conflicting priorities, while 54 percent said they don't believe employees and customers understand their strategy.

That's bad news for companies where executives' capabilities in no way support the strategy. In that scenario, only 14 percent of such firms report above-average growth. It's particularly troubling when 64 percent of managers don't feel their company's strategy will lead to success.

Being Ethical

A study released last year by the Economist Intelligence Unit, titled "A Crisis of Culture: Valuing Ethics and Knowledge in Financial Services" found that executives in the financial services industry didn't see much to gain by conducting their business ethically. Does anyone remember the economic downturn of 2007-2008 which had a direct correlation from the securitization and purchase of ‘subprime’ mortgage loans?

Although 91 percent of those surveyed placed equal importance on ethical behavior and financial success, more than half (53 percent) think advancing their career would be difficult without being “flexible” on ethical standards. Only 37 percent believe their firm's performance would improve if employees acted in a more ethical manner.

While 97 percent of those same executives feel qualified to handle their job -- and 67 percent have raised awareness of the importance of ethics at their firms -- 62 percent of financial executives admit they care very little about what goes on in departments beyond their own. But many of those same execs think their own departments are an ethical breach waiting to happen.

Sexism

Harvard Business School professor Boris Groysberg and research associate Robin Abrahams reviewed interviews of nearly 4,000 C-suite executives conducted by the school's students between 2008 and 2013. Of those executives, 44 percent were women.

What is interesting is that 88 percent of male execs were married, compared with 70 percent of women. A full 60 percent of male execs had spouses who don't work full-time outside of the home, while only 10 percent of women did.

Most male executives saw work-life balance as women's work. Each side found it inconceivable that a man could pick up the slack, address work-life conflicts and actually contribute something other than money to the household. Meanwhile, the amount of stay-at-home dads has doubled since 1994.

What this review found is that executive’s contracts are locked-in and 16 percent said their company didn't have a succession plan in place and that it would take up to three years to find their replacement.

Conclusion

Executives have lost the trust and understanding from their employees, and therefore honest and open communication has ceased.  To engage employees, it is imperative that all executives and employees fully understand and embrace the strategic plan for the business.  It is no longer acceptable to point the finger and say it's management, and visa-versa. The real disconnect is the lack of accountablity, with shared core values and a common and shared goal.

THOUGHTS FOR DUMMIES

You likely never heard of Pat McGovern until this week, but the man behind the 'For Dummies' series of books and many other media brands left a lasting legacy.

The world lost a multibillionaire entrepreneur recently--a great leader whom most Americans have probably never heard of. Given that he was the person behind some very successful media brands, that says a lot.

Pat McGovern, 76, began his business career in the 1960s, as the founder and chairman of International Data Group. He was the man responsible for magazines such as Computerworld,  Macworld, PC World, and many other brands in the U.S. and abroad, including the "For Dummies" series of instructional and self-help books.

Think Big / Be First

McGovern wrote an article for Inc. in 2007, in which he talked about the importance of expanding your horizons to be successful. He was one of the first American CEOs to establish a joint publishing venture in China, for example, and his company was a pioneer in venture capital in Vietnam and India. With the establishment of a website operating from Antarctica, IDG became the first company in the world to have a presence on all seven continents.

"When a company ventures abroad, its point person should be its CEO, traveling frequently and acting boldly and enthusiastically," McGovern wrote. "IDG launches businesses in three to five new countries each year, and for virtually all of them I'm first on the ground, meeting with potential customers, government ministers, and management candidates."

Step Aside and Trust

McGovern was thinking globally long before most of his peers. His companies launched titles in Japan and the Soviet Union in the 1970s, and he reportedly spent four months of the year traveling overseas to drum up new business. Yet he was a hands-off leader, allowing the people he put in charge of overseas divisions to make decisions.

"His primary control is financial," Inc. reported in 1988. "His headquarters works as an investment bank, putting money into each unit's worthwhile ventures, denying or withdrawing it from ones that are not worthwhile, while McGovern cruises from office to office like a cheery potentate on a magic carpet, bringing enthusiasm and bonuses wherever he goes."

Get Out of Your Way

Inc.'s Leigh Buchanan started out at IDG as a copy editor in the late 1980s, and she described her surprise when McGovern stopped by her cubicle to hand her a year-end bonus check.

Pat thanked me for my contributions. He asked how things were going and looked vaguely disappointed when all I could muster was an unilluminating "Fine." Then he complimented me on a column I had ghostwritten for some technology honcho. The column was my most substantive accomplishment to date and the thing I was proudest of. But my name didn't appear on it anywhere, so how did he know? After three or four minutes, he handed me my bonus and proceeded to the next cubicle.

When she interviewed him years later, Buchanan said she learned that McGovern made one-on-one visits like that to every single one of the company's 1,500 employees at the time, and that the process took almost four weeks.

Be a Personality, But Be Humble

McGovern was worth an estimated $5.1 billion, but he cultivated a modest image. He lived in a same house in Hollis, New Hampshire, which he bought in 1989. He flew coach and drove used cars, reported The Wall Street Journal. He would show up at employees' 10th anniversaries to take them out for dinner.

"I don't think he did these things because he was naturally outgoing," wrote Harry McCracken, who covers technology at Time, but who spent 16 years working for McGovern at IDG. "If anything, he seemed to be on the reserved side--but...he believed that one of his responsibilities as IDG chairman was to make other staff members feel good about their work. Even when I was a low-level editor, I got occasional complimentary notes from him--always written on the same ultra-cheery letterhead, with GOOD NEWS!  and a rainbow at the top. He must have bought it by the truckload."

Earned a Lot and Give it Away

In 2000, McGovern and his wife founded an institute for the study of the brain at his alma mater, MIT, with a $350 million gift. It was one of the largest donations ever to a university in the U.S. To put it in context, the donation dwarfs the entire endowments of more than 640 American colleges.

BRAND YOUR PURPLE COW

You can have the greatest product in the world, the most superb service, but, if no one knows about it, you will have a warehouse full of excellent products, and you will be sitting around your office, waiting for the phone to ring.

Strategic Positioning

This is where companies make a big mistake with their marketing. It's important to have great products and great services. But too many companies fool themselves by thinking, "If people knew how great our products or services are, they'd buy us every time."

They try to market themselves by saying things like: "We've got the best quality, the best product, the best customer service, and the best people." I've got three words for you: WASTE OF TIME. Yes, all those things are important, but they won't help you be successful with your marketing.

It's not about the product; it's about the positioning. Strategic Positioning or Brand Positioning is a statement of who you are. It is what your target customers think about when they hear your brand name. Red Bull owns the words "Energy Drink." 1-800-GOT JUNK? owns "junk removal." What words do you want to own? What will make you stand out from the herd?

Seth Godin in his book The Purple Cow says that you should stand out from the herd of competitors the way a purple cow would stand out from a herd of cows. That's not just a little different. We're talking "dramatically different," and that takes courage.

The old rule of marketing was playing it safe. So, you created a good product or service, and then you sold it with sales people and advertising. You took out ads, you spent money, and you tried to drive customers to your business that way. That used to work, but it doesn't any more.

Today it is different, you need to create remarkable products or services that your target market customers will seek out and talk about. They will spread word‑of‑mouth about your brand.

It starts with being dramatically different. You're either a Purple Cow of a product or service, or you're a commodity (whereby you sell only on price). But that's only part of the challenge. You must also be dramatically and meaningfully different to your ideal target market customer.

Just being good is not enough. Your competitors are good. Your customers won't even start down the path to buy your product unless they think you're remarkably, distinctively, and meaningfully different. You don't win the marketing battle with the best product or service. You win the marketing battle with Strategic Positioning. So let's think about how you can position your company.

There's no one best way to position your company (or brand) so you appear uniquely different from your competition. You need to choose a position that sets you apart in a way that appeals to your ideal target market customer. There are six basic ways to achieve that:

1. Position your company based on price point.

Walmart, for example, offers "everyday low prices." Price positioning can work the other way, too, when people use a high price as an indicator of high value. Consider this story told by Dr. Robert Cialdini, the author of Influence.

The owner of a jewelry store that specializes in Indian jewelry purchased some good quality turquoise pieces and priced them reasonably, based on her experience. But, even though the store was full of tourists, those pieces didn't sell. That happens in retail.

The store owner did what store owners have probably done since the beginning of commerce. The night before she left on a buying trip, she wrote a note to her staff, directing them to display the turquoise pieces prominently and to cut the selling price in half. She imagined that customers would snap up the jewelry at the low price and she could move on to other things.

When she returned from her trip, she was pleased to note that, as she expected, the pieces had all been sold. Then she discovered that her staff had not done what she had asked. Her assistant misread the note, and, instead of cutting the prices by half, the assistant had doubled them. The jewelry sold better when the higher prices sent the message to customers that the pieces were of higher quality. There are many stories like this that marketers tell each other.

2. Position your company by creating a new category.

That's what Red Bull did. Before them, there was no "energy drink" category.

3. Position your company as something different from the category leader.

In rental cars, the classic Avis advertising campaign, "We're number two, so we try harder," is a great example.

4. Position your company as a specialist.

1-800-GOT-JUNK? is the specialist in junk removal. There are coffee shops all over the country that sell coffee and a host of other things like hamburgers and breakfast, but Starbucks positioned itself as the coffee specialist, the brand you know offers premium coffee.

5. Position your company as the master of a distribution channel.

L'eggs was the first supermarket pantyhose brand and became the largest-selling pantyhose brand in the country. Paul Mitchell became a $600-million hair and skincare brand by focusing on the professional hair salon channel. Ping did the same in golf clubs by focusing on the pro-shop channel.

6. Position your company by being explicit about Who your target market customer is.

Curves is the gym solely for women. AXE cologne positions itself as the cologne that makes young men irresistible.

How to find your Strategic Position

Here are two questions that I recommend to help you identify your Strategic Position:

1.     In what area(s) could you be perceived as the leader of a category or niche in your industry?

2.     In what area(s) could you be perceived as being dramatically and meaningfully different from your competitors?

SALES MANAGEMENT DONE RIGHT

1.  What percentage of your salespeople consistently over-achieve?

2.  Are your salespersons’ order-takers and account managers instead of proactive Hunters and Closers?

3.  Are your sales people effective selling value and trust rather than selling price?

4.  What is the percentage conversion of your pipeline to closed transactions?

5.  Are there enough qualified opportunities to close in your pipeline?

6.  How many steps in your sales process have been properly mapped?

7.  Do you have a formal sales process that everyone follows every time?

8.  Do you have a formal sales recruiting process that consistently yields the ‘right’ salespeople?

9.  Does your sales force execute your strategic plan, and keep it moving forward?

10. Is your sales team aligned with your sales strategies and core values?

11. Are your salespeople coached on a consistent basis?

12. What Key Performance Indicators (KPI’s) do you track and test that drive sales?

13. Do you hold a daily short (10 minutes) ‘huddle’ where salespeople are held accountable for their KPI’s?

14. Is everyone using your automation to track clients, sales and the sales process?

15. Have you optimized your selling demographic and geography?

16. Do you have a formal 90 day orientation and professional sale training process that prepares each salesperson for success at your company?

17. Are your salespeople selling consistently regardless of outside influences?

18. How have you optimized your sales cycle and reduced your ‘Cash Gap’?

19. Does your sales management spend too much time over-managing your sales persons accountability?

20. Have you identified and quantified all the value drivers for:  total sales call, closed sales calls, the cost of a bad hire, etc.?

21. Are your salespeople fully engaged?

22. Do your salespeople know exactly what is expected of them at work?

23. Have you supplied your salespeople the necessary materials and equipment to their work right?

24.  Do your salespeople have the opportunity to do their ‘best’ every day?

25. In the last seven days, have you given a salesperson recognition or praise for doing good work?

26. Do your sales support personnel, respect and care about your salespeople?

27. Do you have an active role of encouraging your salesperson personal and professional development?

28. Do your sales people opinions count?

29. Does the company mission/purpose of your company make your salespeople feel their job is important?

30. Are your salespeople committed to doing quality work?

31. Have you, in the last six months, talked to your salespeople about your progress?

32. In the last year, have you created opportunities for salespeople to learn and grow?

IMPROVE YOUR CUSTOMER EXPERIENCE

Gallup’s research shows that few employees are aligned with or empowered to deliver the core elements of their company’s brand identity and promise. Executives must start by engaging their employees and then taking these steps to help their workers become effective brand ambassadors.

1- ACKNOWLEDGE THAT ALL EMPLOYEES PLAY A KEY ROLE IN BRINGING THE BRAND TO LIFE.

Successful branding is not just a marketing or sales function; it is an essential activity for human resources, management, and leadership.

2- AUDIT YOUR INTERNAL COMMUNICATIONS.

Thus ensuring that all communications are consistent with your brand identity and promise. Invest in making employees aware of your brand promise, and empower them to act on it.

3- ARTICULATE WHAT YOUR BRAND REPRESENTS AND WHAT YOU PROMISE TO YOUR CUSTOMERS.

Inject the core elements of your identity into the workplace constantly and consistently across time, locations, and channels. Use these elements to define not only how you treat your customers but also how you manage, coach, and treat your employees.

4- DEPLOY SIMPLE PROCESSES

Ensure that you highlight and discuss the core elements of your company’s brand identity every day. Use minute meetings, lineups, or staff gatherings to provide specific examples of how to deliver the brand promise.

5- USE SIMPLE TOOLS

This might include such things as wallet cards as ready references to the brand, and require employees to memorize the key brand elements.

6- REGULARLY ASSESS HOW WELL YOUR EMPLOYEES KNOW AND UNDERSTAND YOUR BRAND PROMISE.

All employees — especially those in customer-facing roles — should believe in and feel they have the resources and permission to deliver your brand promise. Provide additional support in areas that fall short.

7- ENSURE THAT NEW EMPLOYEES UNDERSTAND YOUR BRAND IDENTITY AND PROMISE.

All new employees should be able to articulate what your company stands for and what makes you different within their first 30 days of employment, and your managers should reinforce this message every day.

8- MAKE SURE THAT EVERY EMPLOYEE UNDERSTANDS HOW HIS OR HER JOB AFFECTS THE CUSTOMER EXPERIENCE.

This is particularly important for roles that are not customer-facing. Constantly connect the dots between what employees are paid to do and what your organization stands for.

9- RECOGNIZE EMPLOYEES WHO DELIVER YOUR BRAND PROMISE TO YOUR CUSTOMERS.

Recognition is an important psychological need. Employees who know that they will receive recognition for acting on the brand promise will have a strong incentive to do so.

10- REGULARLY SOLICIT OPINIONS FROM YOUR EMPLOYEES ON NEW AND BETTER WAYS TO DELIVER YOUR BRAND PROMISE.

Convene town hall meetings that allow employees to share their ideas and receive feedback. Demonstrating an authentic commitment to alignment is the best way to embed it in your company’s culture.

ARE YOU A BAD BOSS?

Your staff avoids you. No one stops by your office, desk or “skypes” you to check-in. This is a probable sign that your employees are afraid of you or have simply lost confidence in your leadership.

Inability to make decisions without your input. You staff constantly asks you for advice on the smallest details. It’s likely you haven’t empowered your employees, or they’re just too afraid of potential consequences if they don’t approach you on everything. There’s definitely a balance so make sure you check out my colleague’s post (Stephen Lynch) about having an open door policy.

A high turnover. Look at how many people you’ve directly or indirectly managed and have resigned within 1-2 years. Leaving for more money is likely not the initial motivator. People typically leave their boss not the company (unless you have a terrible company culture). Quite obvious, but few fail to face this reality.

Former employees disappear, forever. Nothing says it more than anything if your ex-employees don’t keep in touch or you don’t get recommendation requests. Good bosses typically become mentors or role models for ex-employees.

Lack of feedback. You fail to communicate with your team and may not have set expectations, goals or timelines. Bad bosses often change their mind frequently leaving their team feeling off balance. You’re also not available to receive feedback about yourself. Most people like to see progress and to progress in their careers. It’s important that you provide timely feedback. Positive feedback is typically best and constructive feedback is important if something needs to be improved or corrected.

If any of the above is true, here are 4 simple tips you can use to engage your team and help you get out of that bad boss category:

1.     Create transparency. Don’t keep your team in the dark. Share your company's performance, track and communicate progress. It will help your team understand that the things they work on directly impact the company’s success and ultimately their own.

2.     Make work meaningful. Reinforce the importance of everyone’s role. Provide clarity and direction by defining both team and individual goals. Avoid ambiguity at all costs. This will help foster ownership and will help get things done.

3.     People-Focused Culture. Promote the sharing of ideas, suggestions and improvements. Recognize people for their achievements. Live your company core values and have your team nominate colleagues who meet different core values.

4.     Nurture employees and create a path for growth and opportunity. Create opportunities for career development and progression. Talk to your employees about their career plan. Does their current role make full use of their strengths and abilities? Provide feedback (both the good and constructive) sooner than later.

CONCLUSION:

Take the time to think about the points above and keep in mind that highly engaged employees are 26% more productive and on average their company’s earned 13% greater returns. Creating a more engaged workforce benefits the company, your team, and yourself.

EXCERPTS FROM WARREN BUFFET’S ANNUAL LETTER

"Investment is most intelligent when it is most businesslike." --Benjamin Graham, The Intelligent Investor

This tale begins in Nebraska. From 1973 to 1981, the Midwest experienced an explosion in farm prices, caused by a widespread belief that runaway inflation was coming and fueled by the lending policies of small rural banks. Then the bubble burst, bringing price declines of 50% or more that devastated both leveraged farmers and their lenders. Five times as many Iowa and Nebraska banks failed in that bubble's aftermath as in our recent Great Recession.

In 1986, I purchased a 400-acre farm, located 50 miles north of Omaha, from the FDIC. It cost me $280,000, considerably less than what a failed bank had lent against the farm a few years earlier. I knew nothing about operating a farm. But I have a son who loves farming, and I learned from him both how many bushels of corn and soybeans the farm would produce and what the operating expenses would be. From these estimates, I calculated the normalized return from the farm to then be about 10%. I also thought it was likely that productivity would improve over time and that crop prices would move higher as well. Both expectations proved out.

In 1993, I made another small investment. Larry Silverstein, Salomon's landlord when I was the company's CEO, told me about a New York retail property adjacent to New York University that the Resolution Trust Corp. was selling. Again, a bubble had popped -- this one involving commercial real estate -- and the RTC had been created to dispose of the assets of failed savings institutions whose optimistic lending practices had fueled the folly.

Here, too, the analysis was simple. As had been the case with the farm, the unleveraged current yield from the property was about 10%. But the property had been under-managed by the RTC, and its income would increase when several vacant stores were leased. Even more important, the largest tenant -- who occupied around 20% of the project's space -- was paying rent of about $5 per foot, whereas other tenants averaged $70. The expiration of this bargain lease in nine years was certain to provide a major boost to earnings. The property's location was also superb: NYU wasn't going anywhere.

Fundamentals of Investing:

• You don't need to be an expert in order to achieve satisfactory investment returns. But if you aren't, you must recognize your limitations and follow a course certain to work reasonably well. Keep things simple and don't swing for the fences. When promised quick profits, respond with a quick "no."
• Focus on the future productivity of the asset you are considering. If you don't feel comfortable making a rough estimate of the asset's future earnings, just forget it and move on. No one has the ability to evaluate every investment possibility. But omniscience isn't necessary; you only need to understand the actions you undertake.
• If you instead focus on the prospective price change of a contemplated purchase, you are speculating. There is nothing improper about that. I know, however, that I am unable to speculate successfully, and I am skeptical of those who claim sustained success at doing so. Half of all coin-flippers will win their first toss; none of those winners has an expectation of profit if he continues to play the game. And the fact that a given asset has appreciated in the recent past is never a reason to buy it.
• With my two small investments, I thought only of what the properties would produce and cared not at all about their daily valuations. Games are won by players who focus on the playing field -- not by those whose eyes are glued to the scoreboard. If you can enjoy Saturdays and Sundays without looking at stock prices, give it a try on weekdays.
• Forming macro opinions or listening to the macro or market predictions of others is a waste of time. Indeed, it is dangerous because it may blur your vision of the facts that are truly important. (When I hear TV commentators glibly opine on what the market will do next, I am reminded of Mickey Mantle's scathing comment: "You don't know how easy this game is until you get into that broadcasting booth.")
• During the extraordinary financial panic that occurred late in 2008, I never gave a thought to selling my farm or New York real estate, even though a severe recession was clearly brewing. And if I had owned 100% of a solid business with good long-term prospects, it would have been foolish for me to even consider dumping it. So why would I have sold my stocks that were small participations in wonderful businesses? True, any one of them might eventually disappoint, but as a group they were certain to do well. Could anyone really believe the earth was going to swallow up the incredible productive assets and unlimited human ingenuity existing in America?

Summary

When Charlie Munger and I buy stocks -- which we think of as small portions of businesses -- our analysis is very similar to that which we use in buying entire businesses. We first have to decide whether we can sensibly estimate an earnings range for five years out or more. If the answer is yes, we will buy the stock (or business) if it sells at a reasonable price in relation to the bottom boundary of our estimate. If, however, we lack the ability to estimate future earnings -- which is usually the case -- we simply move on to other prospects. In the 54 years we have worked together, we have never forgone an attractive purchase because of the macro or political environment, or the views of other people. In fact, these subjects never come up when we make decisions.

LEARNINGS FROM PRIVATE EQUITY FIRMS

Existing leadership teams can become too attached to decisions that were made in the past, particularly if the existing leaders were involved in making those decisions. If a Private Equity firm (or other external investor) were to take a financial stake in your company tomorrow, what changes do you think they would want to make?  

You don’t have to wait for someone to invest in your company to experience the benefits of seeing your business from an “outside in” perspective. Here is my take on an article from Booz & Co on the key lessons the world’s best performing Private Equity firms can teach business leaders.

Cash is King

If a Private Equity firm were to acquire your company, they often use debt financing to fund the purchase. This creates a real urgency to optimize the cash flows of your company to help repay the debt. To do this, they would aim to tightly manage your accounts receivables, streamline and optimize your inventories, and scrutinize all discretionary expenses.

Put yourself in their shoes. Imagine you have just invested in your business. Examine every expense item and categorize them into three buckets.

1. “Must have” (required to keep the lights on)

2. “Smart to have” (creates a future strategic advantage)

3. “Nice to have” (everything else).

The next step is to eliminate as many of the “Nice to Have” expenses as you can.

Core vs. Non-Core?

Optimizing cash is all very well, but building the long-term value of your company means going beyond financial engineering and cost cutting. In order for a Private Equity firm to successfully exit their investment they need to convince future buyers that they have positioned your company for long-term growth and profitability.

It seems counter intuitive, but as management thought leader Peter Drucker said, “The first step in a growth policy is not to decide where and how to grow. It is to decide what to abandon. In order to grow, a business must have a systematic policy to get rid of the outgrown, the obsolete, and the unproductive."

This usually means analyzing your product lines, service offerings, and office locations to assess their future profitability and growth potential. Some activities might be “Core” to your business right now, but they may not be the right activities for you to be investing resources in going forward.

I often say to clients, “You must continually pull the weeds to create a beautiful lawn”. It takes real courage to make these strategic decisions, but when you do, it frees up resources to focus them on the right “Core Activities” that will drive your long-term success.

Get it Done

In the first one hundred days of ownership, Private Equity firms have little appetite for socialization and consensus building. They feel a sense of urgency to implement the strategic changes they have identified.

Business leaders can learn a lot from the Private Equity firm’s need for speed. Yes, getting consensus and alignment about these changes is ideal, but you can’t please everyone, and waiting too long to implement the necessary strategic changes can profoundly impact your company’s future outcomes.

Right Management in The Right Bus, Going The Right Direction

Private Equity firms know that a strong management team is critical to business execution and the ultimately the success of their investment. Sometimes they invest in a company based on the strength of its management talent. Otherwise they will act swiftly to put the right management team in place. Research has shown that middle managers are the key to successful business execution.

As RESULTS.com CEO Ben Ridler says, “As a CEO, getting the right front line managers in place is critical to success. You have two jobs. Either you are coaching and developing these managers, or you’re looking for their replacement.”

Align Incentives

Private Equity firms pay modest base salaries, but add incentives to align everyone’s interests so that the staff share in the upside. They also share in the downside. Private Equity firms will reduce or even eliminate incentive payments if the company fails to achieve the agreed targets. Often time’s staff are given real “skin in the game” in the form of equity in the company. Because this equity is essentially locked up until the Private Equity firm sells your company, or lists it on the stock market, it aligns everyone’s long-term interests.

Make Performance Visible

Private Equity firms pay rigorous attention to a carefully chosen set of Key Performance Indicators (KPIs) that will drive the success of your business model. They make this performance visible, and to keep the managers and their teams focused on the most important metrics and projects that will move the business forward. Radical transparency drives business results.

Conclusion

Take a few minutes today to imagine yourself in the shoes of an outside investor who is performing due diligence on your company with the intention of investing in you. What would they identify that needs to change about the activities your company is currently performing, or how it is currently managed?

KEYS TO EFFECTIVE COACHING

Business coaching has gone from fad to fundamental. Leaders and organizations have come to understand how valuable it can be, and they’re adding “the ability to coach and develop others” to the ever-growing list of skills they require in all their managers. In theory, this means more employee development, more efficiently conducted. But in reality, few managers know how to make coaching work.

According to the 2010 Executive Coaching Survey, conducted by the Conference Board, 63% of organizations use some form of internal coaching, and half of the rest plan to. Yet coaching is a small part of the job description for most managers. Nearly half spend less than 10% of their time coaching others.

With such limited time devoted to coaching, organizations need to be sure their managers know how to do it right. To improve the quality and impact of your coaching efforts, start by giving your individual managers tangible information about how to coach their direct reports. Typically, managers meet their coaching obligations by giving reviews, holding occasional meetings and offering advice. For coaching to be effective, they need to understand why they are coaching and what specific actions they need to take.

Coaching focuses on helping another person learn in ways that let him or her keep growing afterward. It is based on asking rather than telling, on provoking thought rather than giving directions and on holding a person accountable for his or her goals.

Broadly speaking, the purpose is to increase effectiveness, broaden thinking, identify strengths and development needs and set and achieve challenging goals. Research has boiled down the skills managers need to coach others into five categories:

1.     Building the relationship.

It’s easier to learn from someone you trust. Coaches must effectively establish boundaries and build trust by being clear about the learning and development objectives they set, showing good judgment, being patient and following through on any promises and agreements they make.

2.     Providing assessment.

Where are you now and where do you want to go? Helping others to gain self-awareness and insight is a key job for a coach. You provide timely feedback and help clarify the behaviors that an employee would like to change. Assessment often focuses on gaps or inconsistencies, on current performance vs. desired performance, words vs. actions and intention vs. impact.

3.     Challenging thinking and assumptions.

Thinking about thinking is an important part of the coaching process. Coaches ask open-ended questions, push for alternative solutions to problems and encourage reasonable risk-taking.

4.     Supporting and encouraging.

As partners in learning, coaches listen carefully, are open to the perspectives of others and allow employees to vent emotions without judgment. They encourage employees to make progress toward their goals, and they recognize their successes.

5.     Driving results.

What can you show for it? Effective coaching is about achieving goals. The coach helps the employee set meaningful ones and identify specific behaviors or steps for meeting them. The coach helps to clarify milestones or measures of success and holds the employee accountable for them.

You should seed your organization with coaching role models. All managers need some guidance on the whys and hows of coaching, but most organizations can’t afford to train them on a large scale, so the least you can do is make an effort to create a culture of coaching. The key is to create a pool of manager-coaches who can be role models, supporters and sustainers of a coaching mindset.

When you select the right people and invest in their development and position them as coaching advocates, you plant the seeds for expanding coaching well beyond the individual manager-direct report relationship. Your role models demonstrate effective coaching both formally and informally, and they help motivate others to use and improve their own coaching capabilities.

Always link the purpose and results of coaching to the business. Managers have to know the business case for coaching and developing others if they’re to value it and use it effectively. Where is the business headed? What leadership skills are needed to get us there? How should coaches work with direct reports to provide the feedback, information and experiences they need to build those needed skills? Set strategic coaching goals, tactics and measures for the organization as well as including coaching as an individual metric.

Conclusion:

Finally, give it time. It’s not surprising that managers feel they don’t have enough time for coaching. Even if you make learning and coaching explicit priorities, time is tight for everyone. But as your coaching processes and goals become more consistent and more highly valued, in-house coaching will take root. Your managers will have a new way to develop and motivate their direct reports. Individuals and groups will strive to build new skills and achieve goals. And your business will be on track to a more efficient, comprehensive system of developing people.

NOT SUCCESSFUL AS YOU SHOULD BE

So with January behind you, how are those 2014 Goals coming along? Feeling down about your business these days? Is the broken economy hurting your sales and keeping you up at night? Need some motivation and tough love to help you stop pitying yourself? Well, here you go, here are13 reasons you might have in your head about why you're not as successful as you should be.
 

#1 Reason You Are Not As Successful As You Should Be – LAZINESS!!

I don’t think there’s an easy way to put this. I have to assume that you’re lazy. Every single successful person works their butts off to get where they are. It’s ok to be lazy. Just admit it. But don’t whine about not being rich and successful, Ok?

#2 Reason You Are Not As Successful As You Should Be – ENTITLEMENT!!

Only a few people in the world are part of the lucky ‘Reproduction Club’, neither You and me. We have to work to get what we want. Quit thinking you are owed something. You’re not. Get to work Now!

#3 Reason You Are Not As Successful As You Should Be – FEAR!!

You are afraid, plain and simple and afraid of looking silly. Afraid of what your friends and family will say. Are you afraid of everything? Look, you’re either going to stop being afraid, or you’re not. Nobody can convince you to stop. Imagine though... what awaits you when you stop with the fear excuses?

#4 Reason You Are Not As Successful As You Should Be – NEGATVITY!!

You may not realize it, but the people you associate with might be negative. They could be soul-sucking beings who don’t want anyone to be successful. Get rid of them, now! Surround yourself with successful people. People you want to be like.

#5 Reason You Are Not As Successful As You Should Be – STOP THINKING, START DOING!!

How much do you want to bet you have Analysis Paralysis? You think way too much about what you could or should do. Doers get what they want, and everyone else gets what they get. Stop Analyzing and start Doing.

#6 Reason You Are Not As Successful As You Should Be – NO GOALS!!

You plan nothing. You believe that someway, somehow, everything you always wanted will just magically happen. So you “play it by ear” and wait. You need goals to shoot for. Otherwise, you’re just treading water.

#7 Reason You Are Not As Successful As You Should Be – “THEY”!!

There’s no “They”. There’s no secret group of people that controls your success or failure. You’ve made that up to make you feel better about yourself. The truth is you, and you alone, control your success in life/business/everything. It’s easy to blame “Them” though, isn’t it? Don’t be Weak.

#8 Reason You Are Not As Successful As You Should Be – THERE IS NO “X” FACTOR!!

You can’t do it because you’re not pretty or smart enough. Or don’t have a strong personality? You don’t have the “X” factor? Wow, what an unbelievably lame excuse. The truth is that even jerks, idiots and boring people can be just as successful as anyone else. Your problem is you don’t believe it yet.

#9 Reason You Are Not As Successful As You Should Be – ARE YOU A TIME WASTER?

You’re a classic time-waster. You spend hours and hours every day working on not-working. You do things that aren’t productive. How are you ever going to get anything done, or reach any goal if you keep wasting time? You’re not. So you might as well give up now if you’re going to keep this path.

#10 Reason You Are Not As Successful As You Should Be – SOCIAL MEDIA IS B.S.!!

You spend way too much time in social media land.  You waste probably about 50% of your productive hours of the day doing this. The sad part is, you know it, but you can’t Stop. So, you can’t get anything done that matters.

#11 Reason You Are Not As Successful As You Should Be – YOU ARE THINKING TOO SMALL!!

You think way too small. You are constantly looking only a day or a week ahead instead of years ahead. Because of this, you never get anywhere, and you never lead; you always follow.

#12 Reason You Are Not As Successful As You Should Be – YOU DON’T WANT IT BAD ENOUGH!!

You don’t really want to be successful. Sure, you like to dream about it like everyone else. But in your heart you are afraid of what might happen if you really get it. That’s B.S. fear your brain is feeding you. Success is change, and it feels really, really good. Tell your brain to shut the [foolishness] up.

#13 Reason You Are Not As Successful As You Should Be – YOU DON’T BELIEVE!!

You never believed that it’s possible. Society taught you that only a few “exceptional” people get what they want. Everyone else should just settle. If you really want to believe that, go ahead. The rest of us will be at the front of the line because we believe. Believe and you will Achieve.

Jim Kukral latest book is Business Around a Lifestyle Volume 2.

PRIDE

John Maxwell writes, when you think of the word pride, does it strike you as positive or negative? There are certainly many positive types of pride. It’s good to “take pride in our work.” We like it when someone tells us, “I’m proud of you.” And nearly everyone wants to live in a neighborhood where people display “pride of ownership.” All of these expressions communicate a positive kind of pride: dignity, respect and honor, traits that we all can embrace.

But pride isn’t always positive. Pride can also mean conceit, arrogance, or superiority. This kind of pride is based on self-centeredness, and it’s destructive.

Selfish pride is especially destructive to relationships. That’s because the opposite of loving others is not hating them but rather being self-centered. The great writer and apologist C.S. Lewis had this to say about pride:

“The point is that each person’s pride is in competition with everyone else’s pride. It is because I wanted to be the big noise at the party that I am so annoyed at someone else being the big noise…. Now what you want to get clear is that Pride is essentially competitive, is competitive by its very nature, while the other vices are competitive only, so to speak, by accident.”

Pride gets no pleasure out of having something, only out of having more of it than the next man. We say that people are proud of being richer, or cleverer, or better looking than others. If everyone else became equally rich, or clever, or good looking, there would be nothing to be proud about. It is the comparison that makes you proud: the pleasure of being above the rest.

So how do we solve the problem of pride? I believe there are several steps we can take to counteract our tendency toward self-centeredness.

1. Recognize and Admit Your Pride.

C.S. Lewis said about acknowledging pride: “If anyone would like to acquire humility, I can, I think, tell him the first step. The first step is to realize that one is proud. And a biggish step, too. At least, nothing whatever can be done before it. If you think you are not conceited, you are very conceited indeed.” You will not solve a problem that you don’t know exists.

2. Express Your Gratitude.

Henry Ward Beecher said, “A proud man is seldom a grateful man, for he never thinks he gets as much as he deserves.” There is something about saying “thank you” that takes our eyes off of ourselves and puts them back on the blessings we’ve received and the people who’ve blessed us.

3. Practice Servanthood.

A person who is truly great is always willing to be little. But pride fights against servanthood, because a proud person demands to be served. Serving others requires us to focus on their needs rather than our own, and this also reminds us of how we are part of something bigger than ourselves.

4. Laugh at Yourself.

There’s an old saying, “Blessed are they that laugh at themselves, for they shall never cease to be entertained.” Once you begin to look for the humor in your behavior and situation, you find it everywhere. Prideful people take themselves way too seriously. By laughing at yourself, you begin to see how absurd we can all be sometimes.

If your pride pushes you toward performing with excellence, doing your best, and finding joy in the accomplishments of others, it’s probably helping you become a better leader. But if there’s even a hint of competition or self-promotion in it, it’s probably having a negative effect on your relationships. That can hurt both your life and your leadership. If that’s true, do what I try to do: shift my focus onto others and follow the tips above.