Chapter 10 Unique Situations—Small Local Companies, Franchises, Nonprofits, Startups – The Human Being’s Guide to Business Growth

CHAPTER 10

Unique Situations— Small Local Companies, Franchises, Nonprofits, Startups

In this last chapter, I am going to give some examples of how the FIT framework will help nonhierarchical, nontraditional, not top-down management companies. One of our first clients is a small, personal injury law firm. Their firm was founded over 60 years ago and its two partners have lived through the up and down cash flow challenges that come from working for contingent fees. In case you’re not familiar with contingent fees, it’s like full commission, if they win, they get paid, but if they lose, no one gets paid. Their expenses remain constant.

They came to me about breaking into a lucrative new market by increasing search engine traffic to their website, a technology question like Chapter 9 discusses. As we talk, they share the challenges of the ups and downs of their case settlements and its effect on cash flow. The problem with unpredictable cash flow is that investment in marketing fluctuates, magnifying their slow times. We all agree that if traffic is steady, case flow will be steady, and cash flow may level out. Their firm is a small standalone professional service business. It isn’t a traditional CEO/Manager/Front Line organization. How did The Human Being’s Guide to Business Growth work in their business?

The first thing we did was get clear on why we’re doing the work in the first place, what their Focus is. We talked about the mix of cases, the desire of one partner to retire, and the need for another partner to take his place. Once we were clear on focus, we met with the team to uncover their self-identified individual strengths that applied to business development. Their firm has 12 employees. After we outline the Focus, I throw out a list of tactics to consider and lock in staff commitments to what can only be described as minor efforts to help with marketing. A paralegal offered to help with blogging, a few others promised to update their social media profiles, one promised to get more active in his Rotary club, and so on. Like I said, minor efforts to help. We put measurements in place, set a follow-up time, and after a few months of activity, found some simple technology tools to help increase the frequency of the efforts. Each month at the staff meeting, the previous month’s marketing activities and results are discussed and plans are made for the coming month. From the partner’s point of view, the pace of change is almost glacial, but it’s consistent. Within six months, our lead-flow measurements begin to inch up.

At a staff meeting 10 months into the program, not only do they note a sizable increase in case-flow, but the partners tell the group that in addition to cases in their old sweet spots, they are discussing and uncovering cases in lucrative class action and mass torts, one of their strategic focuses. One year after we start, the ups and downs of cases are gone. “Greg, this is the most consistent our case flow has ever been.” Two years in, the comment is, “Greg, we’ve signed more cases year-to-date than we ever have.” Their financials are notably better, a new partner is brought in, and the firm’s namesake happily goes “of counsel,” lawyer-speak for retired. Faster than the five-year target, but just in time for everyone involved.

There is not one tactic or technique that made this happen, but a complex combination of activities tied to Focus, Individual Strengths, and Technology. In this chapter, we’ll go into some other examples of how this framework can be adopted to your unique business.

The Established Local Business

Let’s start by defining what I mean by an established local business. If your business has more than 80 percent of its customers and 80 percent of its revenue from consumers or businesses within a 30-mile radius and you have been in business for more than five years, you are an established local business. We talk to a lot of businesses just like yours when we speak on FIT topics across the country. The burning question, the one that business owners and investors are dying to ask but they never lead with is, will this work with our business because our prospects and customers already know who we are and what we do, our revenues are flat.

One of my first clients was an investor that manages a group of these established local businesses. As often happens, he was referred to me about building a new website, but the discussion turned to whether or not his business in question was at its peak revenue or did it have more growth possible. Basically, he was asking if he should invest more in growth or if it was best to manage the business at the revenue it was proven to generate. It’s a complex question and one without an easy answer. He had been investing in various sales and marketing tactics for years and nothing moved the needle.

The path we took with him, and the path I recommend if this is your situation, is to check on Focus with your team. His team included five full-time employees and dozens of contractors and in interviews I asked two questions, “What will the competitive landscape look like in the next three to five years and where will your company fit in?” In asking these questions, I am not listening for an insight or a clever answer, I listen for how close the answers are to one another. Years ago, I went to my first professional golf event, the US Senior Open, and sat along one of the fairways on the front nine holes, right where most of the first shots, the player’s drives, were landing. Our spot was 250 or so yards from the tee box and out of the 50 or so golfers who we saw, their shots landed in roughly the same spot on the course. My companion marveled at their skill and said “Greg, I bet if I took a large picnic blanket and laid it across where the shots landed, it will cover eighty percent of their shots.” That visual sticks with me. Fifty or so shots from over 200 yards away that all landed in roughly the same area. That’s what I listen for in your people. They should be able to describe the company’s competitive landscape and where your company will fit in it with the same general accuracy as those US Senior Open golfers. I should be able to throw my friend’s hypothetical blanket on their descriptions and it should cover 80 percent of what they say.

When we did this exercise with my client’s company, the results were far from that ideal. The most interesting part of our findings was that the furthest distance between descriptions of the future and the company’s place in it were between the investor/owners and the general manager/partner. Right at the top. It wasn’t clear at the time, but until that issue could be resolved, nothing we worked on was going to work. It sounds minor, but to go back to that golf course analogy, they weren’t playing the same hole. In this case, they weren’t even playing the same course.

For your established local business, nothing is more important than the F in FIT. Is your Focus, your strategic vision, being communicated clearly to your entire team? Without that in place, every attempt at growth will be a struggle. For my client, his attempts at getting his general manager on the same page were met with a passive/aggressive resistance. She would agree to the vision in meetings, but acted as a deflector with the rest of the staff. The more pressure we put on implementing the process, the more obvious it became.

In hindsight, my client would have been better off with a change at the top at the first signs of her disconnect. After a year and a half, the change was made and she was replaced. Unfortunately, the damage had been done and the company’s brand name had taken on a poisonous taste, not with their clients, but with their contractors. When we tried to re-engage with the independent contractors, they were unwilling to listen. We rebranded the company at great expense, but stuck to the process and like magic, growth shows up. The employees started applying their individual strengths to implement the vision, their contractors re-engaged, their customers continued to receive excellent service and we are answering the investor’s initial question, “Should I invest more?” with a resounding “yes.”

Focus is important for all companies implementing The Human Being’s Guide to Business Growth, but for established, local businesses, it’s the most critical piece of the puzzle. In some of the following examples, it’s important, but for different reasons.

The Franchise Owner

Franchises are different than local established businesses in that for the most part, the Focus is put in place for you. The franchise owners set their own financial targets and establish their own business culture, but the five-year vision of the competitive landscape and where the franchise will fit into that vision is managed by the corporate office, the franchisor.

Knowing that, the franchise owners we work with need to double check that they can “throw a blanket” on their team’s descriptions of who you are and where you fit in the world, but they don’t need to spend as much time focusing on Focus. Instead, and in contrast to the local established business, we find they need to shift their attention to the job descriptions. One of the wonderful features of a franchise is that jobs and roles are spelled out in the system that you’re investing in. Job descriptions, management check lists, daily duties, and other management tools are spelled out in detail. What’s missing is the maximizing power of your people applying their self-identified strengths to the tasks at hand. Part of investing in this franchise is that you don’t need to design or develop the business; you have to execute it to its potential.

That’s a management issue.

I had the opportunity to run a couple of franchise training centers for an investment group out of Memphis, TN. This group is impressive. They operate as a master franchisor, buying up the rights to franchise ideas for entire geographic areas. The strategic vision of the company was handed down based on the size of our market, the mix of business sizes, and the established competition. We could see how other franchises our size were performing, the challenges they faced, and where the growth opportunities were. The Focus simply needed to be communicated clearly to every employee.

The issue that our franchise and others experienced is that even with all of the proof that doing what the franchisor said we should do resulted in success, we struggled to stick to the script. In some cases that meant literally sticking to the telephone script that our sales team used, in others, it was having an instructor stick to the confines of the class outline. It was here where I experienced the power of applying self-identified Individual Strengths to a task. At the time, we didn’t have a VIA Test of Character Strengths, so we relied on teaching the managers how to make sure the spirit of the job description was being adhered to, but they needed to let the employee put their own spin—apply their own strengths—to how it got done. It was effective because it forced the leadership to establish the nonnegotiable parts of the process, but gave the employees room to personalize the work in order to avoid feeling like a robot.

This experience is what I teach to clients who have invested in franchise systems because it surprises me when a franchise owner sinks $250,000 into a business and then insists on “doing it my own way.” The exercise in Chapter 2—where your employee remembers a story where they had success and were rewarded at work, then takes the VIA Test of Character Strengths, and describes how their top three strengths created the successful event—is the easiest way for your managers to start the conversation about “this is what I need you to do, but it works best when you apply your unique strengths. Let’s talk about how to do that.”

Franchises benefit from the Focus being in place, but want to put their stamp on their own business. Individual Strengths allow franchise owners to maximize their results within the confines of their franchisor’s system.

The Nonprofit

Nonprofits have growth aspirations just like their for-profit brethren, and tend to have board members and volunteers from the for-profit sector, so it only makes sense that they find a way to grow by unleashing the power of their people. The challenge I see with most nonprofit organizations is in the Focus section. Their mission is clear, but the description of the organization and its place in the future is not. After attending half a dozen strategic planning meetings, I see two main reasons for the challenges with Focus.

First, the leadership groups are too big. I watched a facilitator work her rear off trying to wrestle 200 executives through a strategy retreat. Two hundred executives. Let that sink in. Using the law of large numbers, the best she can hope for is a bland consensus, and to her credit, that’s what she was after. The reason everyone is invited is what we covered in Chapter 3, because you’re after that consensus. “I want everyone to be bought into the vision,” says the CEO, and if you remember, I disagree with that. I want everyone bought into finding a way to achieve the vision, not designing the vision. The way to make that happen is to use a small team to establish the vision, and then involve everyone in the planning. Split the strategy and planning into separate events during strategic planning.

A small group I volunteer for illustrates what happens when strategy and planning aren’t split. I participated on a board that engaged in a strategy session and two of the members of this group of 15 were advocating for a new addition to the nonprofit’s vision. The other members were not bought into that vision, so these two reluctantly agreed to go with the group. I know compliance when I see it, and their agreeing to move on with the group was classic peer-pressure compliance. Over the next year I watched these two put their own strategic vision in place in addition to working on the big vision. I know that you’re thinking it’s a management issue, but these are volunteers. Like most nonprofits, the group was happy to have hands on deck, even if they were doing their own thing. This can be avoided, just limit the number of leaders participating in the initial strategic vision session.

Second, keep board role term limits short. Most small nonprofits are in a constant search for new board members, so this advice may seem counterintuitive, but if your board experiences very little change, the board members will not engage. This is a lot like funding for nonprofits in that most gifts made to support a nonprofit aren’t made in perpetuity, they have an end date that may or may not be stated publicly. A benefit of a board that changes, coupled with a small strategic vision group, is that you’ll reap the benefits of different approaches to reaching the goal. Each board member will bring their own contacts, their own approach to fund raising, and their own approach to operational excellence. The constant retooling of approaches creates enthusiasm, but only if the strategic vision is constant. If the strategic vision has to be reformulated every time there is change in the board or leadership team, things go nowhere.

Use a small team to formulate strategic vision, and take advantage of regular board member turnover to update the planning. It’s what I recommend my clients look for when considering a board membership— What’s the board turnover like? How long will you serve?—and I recommend that your managers take the same approach to their team members that want to use board membership as a business development vehicle. There’s nothing worse than joining a board with no turnover, it’s a recipe for being bored. Yes, I just did that.

The Smallest of Startups

The final group I want to address is startup businesses. We serve as mentors for a couple of local startups and their biggest challenge in implementing FIT is that the focus, the strategic vision, changes frequently. A business goes through a predictable set of growth stages as noted by Alan Weiss, PhD. The first is survive, the second is alive, the third is arrive, the last is thrive. Startups are in survival mode. FIT isn’t built for survival, but there are elements that will help any startup.

Fast strategy is the key. We help our mentees get good at setting clear strategic visions, fast. For most SMBs, we recommend a day to set the strategic vision. Five hours is the perfect time period—start at 8 a.m. and end at 1 p.m., after lunch. For startups, it shouldn’t take more than two hours, the reason is because you’re only focused on one area, which is product-service/market fit. Each pivot that you make on your strategic vision is right at that junction, otherwise it’s not a change in strategic vision, it’s a change in planning. I used to tell my field reps, “I don’t care if you change your direction, just do it on purpose.” Over time I’ve taken that as the definition of a pivot—a change in direction made without crisis. In other words, as a startup we learn more about what the market wants or needs, we change our product or service to fit those wants and needs, but we do it on purpose, not because we’re dying or being forced at gunpoint.

To help our startups set fast strategy, we spend a lot of time on this graphic (Figure 10.1).

Our founders speed up the process of setting strategic vision by checking their business’ driving force, seeing the future, putting themselves in that future, and then describing in colorful terms what it will look like when they get there. When pivots are made, the idealized future is changed because of direct feedback from clients and prospects. Having a quick process for describing the new strategic vision speeds up results. It speeds results because we separate planning sessions from strategy sessions. Another way to say it is, get good at navigating the black box of ambiguity by clearly defining the outcome you’re after.

Figure 10.1 Identifying the distance from the future to today

Once your company grows to the point where you need managers, FIT helps the first managers by teaching them how to use their employees’ self-identified strengths. And when it comes to Technology, the company isn’t bogged down in legacy systems so FIT doesn’t help as much there, but those elements of FIT are minor compared to the ability to quickly determine if a startup needs a strategic pivot or a simply a change in plans on how to get there. Plans change, they aren’t pivots. Teaching your team the difference helps with the inevitable changes every startup goes through. Changes to strategic vision, on the other hand, are pivots that should only come from interacting with customers and hearing new ways to add value to the relationship.

If you’re a startup, get good at separating strategy from planning, and setting a new strategic visions fast. If you listen carefully, you can hear me say, “describe how you’re doing it on purpose, amigo, make sure whatever you’re doing, you doing it on purpose.”

Remember

Organizations without traditional hierarchy need a strong Focus, a clear strategic vision for the team to work toward.

Franchise companies get the most from encouraging their team to use self-identified strengths to implement the franchisor’s process.

Nonprofits should concentrate on Focus and do it with small strategy teams, large planning teams, and ever-changing board membership.

Startups make regular changes to their plans but when it comes time to pivot their strategic vision, learning how to set it quickly and get on with planning is best.