How to be the CEO of a Family Business

Mark sat across the conference table from me utterly frustrated and ready to resign. He'd had enough. Running a $20 million company was not an easy task. He was responsible for four locations, 180 employees, and over 20,000 retail customers. The industry was under assault from Chinese competitors and low unemployment was making labor hard to find. His controller and right hand person was 70 years old and struggling with health issues. But it wasn't these challenges that had Mark on the brink of resignation. It was his family.

Mark’s company is owned by three different generations of family members. Poor estate planning decades ago had resulted in the ownership being handed down haphazardly to cousins, siblings, aunts and uncles. Year's of profitability had trained these family members to expect and depend on their dividend checks. Now Mark needed to replace four aging fork lifts, one of which employees refused to use because of its age and unsafe condition. He also needed to replace the roof on one location and refurbish the showroom in another. He had the money, but on his screen there was an email, from an uncle, four states away, complaining about Mark's "frivolous" spending habits. Mark had no doubt the uncle was more concerned with his upcoming quarterly dividend check.

Mark was just weeks away from the annual family board meeting, and he told me he was done. He didn't know what he was going to do next. His wife had a good job outside the family business, and he'd figure it out in time. He was 51 years old. He had taken the company from $8 million to $20 million in sales. And now he was leaving.

The more I heard about Mark's situation, the worse it got. The fundamental problem was one of role confusion. There were few distinctions between family members. Mark was dealing with shareholders, non-shareholders working in the business, those with family meeting votes and those without, executives and entry level children of passive owners who lived thousands of miles away. It seemed like everyone had their noses in places they didn't belong, and I could see exactly why Mark was leaving. His company had failed to properly identify three distinct roles. We will call them hats, because just like hats you can take one off and put another one on. And you can't wear more than one at a time without looking like an idiot. Here are the three hats family businesses must manage.

The Shareholder Hat

Shareholders own the company. In good times they can collect dividends. In bad times they may have to invest more cash to keep the company going. Sometimes there is one shareholder who owns 100%. Sometimes there are two who own 50% each. Sometimes there are more with wildly different shares of ownership. In most cases dividends get paid out and capital gets raised in proportion to each individual’s ownership percentage.

But there is one just one critical role of shareholders. They elect the board of directors. In this role their votes are usually counted in proportion to their shares of ownership (but not always).

That's it. Shareholders don't work in the business. They don't manage the business. They don't make investment decisions or hire and fire employees. To do those things you must take off the shareholder hat and put on another hat. And that was the biggest problem in Mark's situation. People with a shareholder hat were doing things that shareholders don't do. It is a recipe for disaster and it makes more sense when you understand the other two hats.

The Board Member Hat

Board members are voted in by the shareholders. It is their responsibility to hire the CEO and hold that person accountable. The board is responsible for major decisions such as when dividends will be paid and how much will be paid. The board may also approve financing and capital raise decisions. But the main function of the board is to hold the CEO accountable while serving as a sounding board for long term strategic decisions.

Board members may or may not be shareholders. Having outside board members to provide a different perspective can be very valuable, especially when it comes to breaking tie votes between family members. Outside board members are also able to consider things from an objective perspective not clouded by potential financial gain or loss.

It is important to remember that just being a shareholder doesn't guarantee a board member seat. Shareholders with little business experience or technical skill should probably stay off the board. Unlike shareholder votes board votes are usually counted equally meaning a 1% shareholder appointed to a four person board has a 25% say in appointing the CEO and holding her accountable.

The Employee Hat

Employees are hired and can be fired. They get a paycheck. They have job descriptions, accountabilities and get evaluated for their performance. The CEO is an employee. In that capacity he or she makes a million decisions about both the long term direction of the business and the short term day-to-day operations. The CEO is responsible for the financial performance of the business as well as the culture, public perception, marketplace reputation, and overall influence the company wields. The buck stops at the CEO's desk. In short the board hires the CEO and the CEO hires everyone else.

When the board hires the CEO it should provide an employment contract that guarantees some insulation from shareholders and even the board itself so that the CEO can run the company without undue interference. When you hear about CEO's getting million dollar payouts as part of their severance package this is what you are seeing. Those CEO's were recruited under the following two conditions:

1. If I come work for your board of directors you will leave me alone to do what I do best.

2. If you don't leave me alone you'll pay me a bunch of money to leave.

There were a lot of things wrong with Mark's situation, but this was probably at the top of the list. People like Mark don't suffer fools meddling in their business, at least not without a lot of financial compensation. But Mark didn't have a contract and the board had no financial consequence for its meddling. In the end both sides lost.

The CEO often isn't the only family member in the business. In Mark's case he worked alongside cousins that were store managers and a brother who ran the vehicle fleet. His dad still did some HR work part time. All of them received paychecks. But they all felt entitled to weigh in on daily business decisions because they were shareholders.

Venues

As you can imagine in most small businesses these hats are not defined very well. It is hard to know when to take one hat off and put the other on. But the concept of VENUES can make it much easier. There are venues where you only wear the shareholder hat, other venues where you only wear the board member hat, and everywhere else you wear the employee hat (if you are indeed an employee of the company).

Think about it this way. If you go to a wedding you don't wear your gym clothes. Similarly when you show up to work on Monday morning you leave your shareholder or board member hat in the car. It's time to put on your employee hat and go to work.

The shareholder hat gets worn roughly once a year. This is true of public companies and it should be true of most small businesses. There is an annual shareholder meeting where board members are affirmed or replaced, an annual report is presented and shareholders are given access to board members and executives for Q&A. There is also an investor relations function within the company that disseminates information to shareholders regarding company performance and the status of their share holdings. But that's it. Shareholders don't weigh in on the strategic plan or day-to-day business decisions.

The board member hat gets worn quarterly and sometimes monthly in fast growing businesses. Board members receive updates from the CEO and executive team, ask questions, vote on long term strategic issues and short term decisions requiring capital. Their function is primarily accountability for the CEO and vetting long term strategic decisions. They will review financial performance against expectations and should have a decent knowledge of how the business makes and spends its money. In times of transition the board may hold special meetings as they recruit and hire a new CEO. In moments of crisis the board may be convened for emergency sessions, but those should be rare.

Board meetings are governed by the company by-laws and one or more board members should be familiar with Roberts Rules of Order. Most of the time the formality will seem like overkill, but when you need to address a contentious issue orderly motions, discussion and voting is absolutely critical. The trick is to use them all the time because when you need them most it will be too late if they are not already a part of the board's standard meeting procedure.

How it works in the real world - One Owner/Operator

The single owner/operator has to wear all three hats. Let's address each one in turn.

The CEO hat

We are big fans of Gino Wickman's Accountability Chart idea. This looks similar to an organization chart except that we focus on the 5 or 6 key accountabilities for each person on the chart, not their job title. The CEO should have accountabilities for leadership (what Wickman calls LMA or leadership, management and accountability), success of the strategic plan, financial performance and a few others. Defining these accountabilities is important, especially as the team grows.

Every day the CEO's job is to fulfill these responsibilities. And every day when he shows up for work these are the most important things on his plate.

The Board Member Hat

Most Single owner/operators don’t have a board, but they should. You can recruit some outside advisors to the board and meet with them quarterly. Often the spouse is a member of this group, but not always. Sometimes a CEO roundtable group serves as a proxy for a board of advisors. I think it is better to recruit a small group of 3 or 4 trusted advisors whose sole focus is your business and holding you accountable to your plans. For the cost of a nice meal once a quarter you can add significant horsepower to your business.

Alternatively you can hire an outside firm to act as your board-for-hire. This has the benefit of paying people whose role is to tell you things you may not want to hear. Several times a year they force you to put on the board member hat and critically examine the job you have done as the manager of the business.

The Shareholder Hat

For a single owner/operator this is usually a formality, but an important one. Almost every corporation, no matter its jurisdiction, needs to have an annual meeting to legitimize its corporate standing under state law. This can be done when the tax return is signed or at some other discrete annual event that can be documented. After all it is unlikely that the shareholder is going to appoint a new board and hire a new CEO. But documenting an annual resolution to affirm the existing board, acknowledge newly appointed members, accept the financial statements as presented in the tax return and sign off on any other state mandated compliance requirements is hugely important if anyone every attempts to pierce the corporate veil in a law suit.

Multiple Owners

Businesses with two or more owners essentially follow the same path with a few important modifications:

• The accountability chart becomes critical. Very few "Co-CEO" arrangements work. Someone has to be administratively responsible for the overall business on a day-to-day basis. The formal existence of a board makes this much easier to accomplish because the non-CEO owner knows that several times a year the CEO will be held accountable and the votes will be equal.

• The board or outside advisors should establish a tie breaker vote by creating an odd number of members. Two board members with an equal vote is a recipe for disaster. Without a board the owners try to make board decisions while relying on shareholder voting percentages. The majority owner either tries to cast the tie breaking vote or (just as often) defers to the minority owner in an abundance of unwarranted caution. With three owners this is less likely, but a separate board with outside advisors is still a good idea.

• The annual shareholder's meeting needs to be more than just a formality. In most states the assets of one spouse are joint property in the marriage meaning your partner’s spouse is just as much a partner as the person listed on the share certificate. It makes sense to get everyone in the same room, include the spouses, present the results for the last year, talk about plans that are being executed for the future and give people a chance to ask questions.

Multiple Family Members as Owners

As we move to multiple family members the stakes get higher. Everything that was important for multiple owners to address is even more so for multiple family members:

• Without an accountability chart family members are virtually guaranteed to speak out of turn. Without core accountabilities it also becomes nearly impossible to call out poor performance among family members. It is very common to see parts of the business that are struggling because family members have been given a job title with no specific accountabilities. Job titles might have their place on a business card, but it is much more important to know what the key non-negotiables are when it comes to job performance.

• Outside board members or advisors are necessary to defuse sensitive topics and make sure everyone adheres to the ground rules of decorum and civil discussion. Outsiders also help insulate the business against family factions or sibling rivalries. This is also the critical point at which CEO's can become extraordinarily ineffective if not shielded from board interference by a good employment contract. All of this costs money, but as the complexity of the ownership structure increases so do the costs of managing it all and making sure the company continues to grow and thrive.

• The annual shareholder's meeting essentially becomes an annual family business meeting. And that is a good thing. Having a safe place where family members are not only allowed to ask questions, but are in fact obligated to do so helps make sure the table talk at Thanksgiving remains civil. Establishing clear boundaries where issues are and are not open to discussion is huge for these small businesses. But you have to provide a venue and a structure for this to happen. It won’t magically appear without considerable effort.

If you would like a playbook for setting up the structures above reach out to us with "Family Playbook" in the subject line of your email.

Before You HIRE Your Next Customer, Ask These Three Questions

A few weeks ago I had lunch with the owner of a creative agency. We talked about the difficulties of work related to managing customer expectations. He shared the story of a customer who came to him wanting a complete re-brand for a community district. The project required designing unique street signs, facilities signs, park benches, trash cans, etc. All to create a distinct atmosphere for the district.

This was a huge opportunity for his company; the district received a ton of foot traffic and the community recognition alone would have been sure to bring new business to the firm. There was only one catch, the customer wanted the plan complete and ready for implementation in just two weeks. 

I love this story because I think it represents a dilemma that business owners face more often than they admit — the question of "Should I, or shouldn’t I?" Often times the knee-jerk reaction is to accept the opportunity and then struggle to meet the customer’s expectations. This is haphazard. There is a better process that incorporates strategy when deciding to work for customers and their expectations. That process involves three questions.

Question 1: Do we have the resources to execute?

This question is the logical starting point. It requires that you clarify the constraints that are rooted in the customer’s expectations. Resource constraints come in many forms. Time, personnel, materials, cash, and technology are the minimum constraints that should be considered before you decide whether or not you can serve the customer. Ask clarifying questions like:

• Do we have the personnel to deliver/perform our product/service?

• Will we have to hire to get the job done?

• Can we deliver on time?

• Will we have to move current deadlines to make the customer happy?

• Do we have the materials, inventory, or technology required to deliver?

Depending on your answer, it may be wise to consider declining the work. Even if the new agreement will provide all the cash you need to go out and buy resources you should consider that you are reacting to the situation, and that the firm that will be delivering the finished product is not the firm you have now. Being able to become the firm that can deliver is not the same as being the firm that can deliver. Which leads to our next question.

Question 2: Are we changing who we are to serve this customer?

Deciding if you can satisfy a customer depends on more than the availability of resources. This is because a company’s identity is not simply its products and services, but also why and how it delivers those products and services. Said another way, a company’s identity is in the values and culture that shape every interaction within the organization. The last thing you want to do to meet a customer’s expectation is undermine the current culture. 

This is why making the decision based upon the availability of resources alone, although prudent, is incomplete. For example, say you’re short the personnel capacity to do the work, but the customer provides and advance that pays for workers. How quickly are you going to be able to recruit and hire? Do you plan on retaining them? If you don’t plan to retain them, how likely is it that they will adopt your culture and values?

Cutting corners to satisfy a customer’s expectations could harm current customer relationships, establish new, undesirable norms, and worse, erode your company’s culture and identity. Depending on your answer to this question, it may be wise to consider referring the customer elsewhere. But if you are still thinking about saying yes there's one more question.

Question 3: Do we really want to do the work?

This question is probably the toughest, because it requires that you temper your own expectations. It requires honest reflection on your own motivation. Yes, you have the resources and you are staying true to your values, but is this job likely to get you out of bed? Are you doing it for the next dollar? There are plenty of other ways to make money.  Is the association with this customer one you will be proud of? Do they stand for the things you stand for? Is this work, all things considered, that we are going to stand behind and be proud of? Only after this last question are you ready to make the call. But rest assured you’ve carefully considered whether or not the next steps are worth taking and you are managing customer expectations strategically.

So, what did the business owner I had lunch with do? He gracefully declined. He explained it wasn’t a lack of resources, or that it was contrary to the DNA of his company. It was that he couldn’t answer the last question with a confident, yes. His desire was to lead the project, but the expectation from the customer was too idealistic. He knew that he couldn’t stand proudly behind his work under a demand that it had to be done in two-weeks. So he said "no" without any regrets.

Set Better Goals Using the Paradox

Can you believe we are already in July? It seems hard to believe half the year is in the rear view mirror. 

Since your second quarter is over let me ask: how are you doing? Did you hit your quarterly goals or are you still catching up from the first quarter? Have you even thought about your goals for Q3? Are you on track for your year? If you’re like most of us, my guess is that you’ve still got some work to do.

How do I know this? Because countless studies and opinion pieces have been written on goal setting and goal attainment theory. In Measure What Matters, John Doerr, covers Edwin Locke's theory about “specific, hard goals."  Back in 1968 Locke asserted that hard goals were more effective than easier ones. Since then we've developed acronyms for SMART goals and HARD goals, and SMARTER goals. While the acronyms abound multitudes of people, everywhere, every day, still struggle with setting goals and/or executing against them to attain their vision. What you need is a framework to set better goals.

The framework I like for setting better goals is unique because I think it accounts for the two things that are key to all goals: difficulty and simplicity. I call the framework the Goal Setting Paradox. It’s the idea that better goals must be difficult and simple. 

Goals Must be Difficult

Difficulty can be subjective. What is difficult for one team may prove easy for another. There are three ways we can define difficulty to be less subjective.

Difficult goals take more than a year to accomplish.

This means goals are mid-term achievements whose purpose is to propel your business toward the future. Difficult goals may have priorities or tasks that can be accomplished in less than a year, like checkpoints in route to the finish line, but the end result should engage your team for around a year. Difficult goals, proven by extensive study, result in high rates of engagement and execution.

Difficult goals engage more than one department/team

The implication here is that difficult goals utilize the strengths of multiple teams in your business. A perfect illustration for this is Amazon’s original series “GRAND PRIX Driver.” The series follows McLaren’s Formula One racing team as they attempt to regain their competitive standing in the sport of F1. The first season documents the inner workings of McLaren and extraordinary number of teams that must be engaged to build a Formula One car worthy of competing.

Difficult goals require learning and personal growth.

Setting difficult goals will require movement from a context of safety and normal, toward discomfort and challenge. The status quo is not engaging enough for your team to pursue. They won't engage, won't give their best, and definitely won't grow as individuals during the process. When gold is tested to determine its level of purity it is subjected to intense heat that either burns off the impurities or allows them to be skimmed off the molten metal. It's not a pleasant process. Difficult goals have the same effect on team members, but the end result is a more refined, more capable, more valuable product. the fire is hot and acts as a force on the gold.

Goals Must Also be Simple.

It is important to understand that difficulty does not presume complexity. There is a real danger in goal setting of making things more complex than they need to be. But there is also a danger in creating simplistic goals that fail to reach a meaningful level of difficulty. That is why goals must be simple but not simplistic. There are two qualities that illustrate the value of simple goals

Simple goals are well defined and explicit

This involves not only defining what the goal is but also the exact result we should be able to expect when the goal is achieved. Those charged with achieving any goal are going to naturally wonder "why?" Being able to paint a clear picture of what goal achievement looks like and what difference it will make enables the leader to answer that question from the beginning.

When we first get involved with a business we perform a Strategic Assessment that will list dozens of recommendations for improvement (i.e. what we are asking them to do). But we also list why we think the business should adopt our recommendation (and possibly turn it into a goal).  Giving our clients a clear picture of what accomplishment looks like can help them decide if the why and the what are worth their time, effort and resources. 

Simple goals put first things first.

Teams need to step back and ask if the goals they've set are address the most important priorities in the long term success of the business. That isn't to say that long term goals always trump short term goals. On the contrary, it makes little sense to set goals for long term product development when cash flow isn't capable of funding current operations, much less long term strategy. On the flip side businesses that constantly set goals around urgent priorities never develop a competitive advantage because they never consider anything other than the fire that needs to be put out now.

In spite of how you may feel now it is possible to finish the quarter with excitement and a sense of positive inertia. It may just be a process of setting better goals, goals that embrace the Paradox of being difficult and simple at the same time.

The Pure Genius Tax Planning Strategy

We are smack dab in the middle of tax season with only a couple of weeks left before the individual filing deadline. That means S corporation business owners all over the country are wringing their hands, hoping for a great March and April to pay their tax bill. This annual ritual of scrounging for cash to pay last year’s taxes is a huge distraction for businesses. And it leads to all kinds of shenanigans.

Most tax planning advice given to small business owners is based on spending money.

“Buy new equipment before year-end.”

“Prepay next year’s insurance policy.”

“Buy the heavy duty truck for your new ‘business vehicle’ so we can write it all off in year one.”

I’ve heard (and at times have said) it all. Don’t get me wrong, if you are going to spend money, do it tax efficiently. But why spend money in the first place to lower your taxes? Let’s look at the numbers and see how absurd the spending strategy really is.

If you decide to spend an extra $10,000 at year end to ramp up your deductions it might save you $2,500 in taxes. So net-net you are $7,500 OUT of pocket. Decide is the operative word. I am describing a situation where you can spend the money and use the purchase in your business OR you can choose not to spend the money and it won't kill you or have a negative impact on the business.

If you decided NOT to spend that money, your profits would be $10,000 higher and your tax bill would be $2,500 higher. So after paying your taxes you would be left with $7,500 IN your pocket.

You see how that works right? When you're 'smart' and employ the spending ’strategy’ you give up $7,500, but when you act like a fool and pay more taxes you KEEP $7,500. 

Why is it that we lose our minds when it comes to taxes? Are small business owners so loath to render unto Caesar that they’d rather spend 100% than keep 75%? I don’t think so. I think first, they are getting bad advice. And I think second, they are reacting emotionally to the very frustrating experience of having to come up with cash to pay a tax bill. So when someone says “Do this and your taxes will be lower” they just do it without thinking about the bigger picture.

Here’s the truth. Most of the truly strategic tax saving strategies require CASH. And the best way to accumulate cash is to not spend it. So we need a better strategy, one that provides the cash to pay taxes, avoids spending, and allows us to stockpile cash for use in future tax saving strategies. It might sound sexy, but it is dead simple. And those who follow it enjoy...

• Enough money on hand to result in stress free cash flow management

• The opportunity to self fund everything from life insurance to asset purchases

• The resources to take advantage of long term strategies down the road

Let's break this strategy down to four simple steps.

Step 1

Setup a separate savings account to hold nothing but money you will use to pay taxes.

Step 2

Every month close your financial statements (quickly) and multiply your YEAR-TO-DATE net income before taxes by an approximate tax rate based on your tax bracket. Your CPA can help you come up with this. A good place to start is 25%-30%.

Step 3

Compare the result of step 2 to your tax savings account balance. If step 2 is more than your balance put that much money INTO your tax savings account. If it’s less pull money OUT OF your tax savings account and redeposit it into your operating account.

If you make estimated quarterly payments just subtract the payments already made from the result in step 2 before you compare it to your tax savings account balance.

(NI) x (25%) - (E) - (B) = transfer amount

Where...

• NI = Net income

• 25% is your estimated tax rate. This may be higher or lower based on your situation

• E = estimated payments already made

• B = balance in tax savings account

• Transfer amount = amount to move into (out of) tax savings account

Step 4

When tax time comes around your final tax bill can be paid out of your savings account. If you use a conservative percentage (usually somewhere between 25%-30%) you will almost always have extra left in your account after you pay the tax bill. This can be distributed as an extra dividend for you to spend as you like or you can roll it back into the business. If the balance in your tax savings account is not enough to cover the tax bill the remainder is usually not very large and paying it causes none of the disruption to your business or hand wringing that you experienced with your previous tax bills.

If you want to see a simple example of this strategy take a look at the following spreadsheet.

If your business is larger or smaller just add or subtract zeros as appropriate. You should get the picture.

At the end of the year there is $10,750 available to pay the final tax bill. If the final return winds up being less whatever is left over can go to the owner. Also notice that in the two worst months when the business was losing money the owner was able to take money out of the tax savings account and deposit it back into the operating business where it could do some good.

Without this plan the business owner would need almost $11,000 on top of the quarterly payments at tax time. And that’s IF the quarterlies were being made. If he followed the norm and just took the 4% underpayment penalty “loan” from IRS by not making any estimated payments he would be stuck with a $40,000 tax bill. But most likely he would have spent that $40,000 back in December on a new truck to “save taxes”. And, YES, it would have lowered his tax bill down to about $30,000. But where is THAT money going to come from? 

I’ll tell you where it’s going to come from. Next year’s profits. But to pay that $30,000 to IRS the business has to make $40,000 in profits ($40,000 less 25% tax leaves $30,000). In a growing business this snowball continues to get larger year after year. There were a lot of businesses that let that snowball grow unchecked between 2000 and 2009. It never caused a problem because their January, February and March numbers were always solid and higher than last year’s. They cannibalized current year profits to pay last year’s taxes after spending down their tax bill the previous December. And then what happened?

Whether it’s a recession, a competitor who opens up across the street or just grandma’s common sense voice ringing in your head, eventually that unpaid tax bill is going to create some serious headaches. Not only are you running on borrowed time you are just spending more than you should. Remember our example earlier. If you make $10,000 of profit in a month and spend all of it on a blockbuster family vacation not only are you failing to put away the $2500 you will eventually owe Uncle Sam, you are blowing $7500 that you could use down the road to help fund one of those fancy long term tax saving strategies you can never afford because your CPA tells you “I’m sorry, you don’t have enough cash to do that.”

Pay this year’s taxes out of this year’s profits and you will never again dread that terrible, horrible, no good, very bad day called April 15th. 

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How I Found 25 Hours a Week to Think

There is a famous quote ascribed to Henry Ford.

"Thinking is the hardest work there is, which is the probable reason so few engage in it."

I was curious so I went looking for the source. The quote is from an article Ford wrote for the April 1928 issue of The Forum. I would encourage you to read it. Apart from his thoughts on "thinking" it is worth the read to see how closely the issues and debates of his day match our own. You can view page images of the original periodical here. But back to the quote.

Thinking is indeed hard work. In the article Ford draws a distinction between thinking, wondering, just having ideas and intelligence.

Intelligence comprehends the outlines of a thing. Thinking breaks it into its elements, analyzes it, and puts it together again.

The problem, as in Ford's day, is that our overcommitted schedules and multitasking habits drive out any time to just think. Last week I was listening to an interview with Sara Blakely, founder of Spanx. She lamented the loss of time to just think because one of her favorite places to be alone and think is in the car. But now her office is only 15 minutes from home. Single, childless adults cannot relate to this, but a kid free car is near and dear to every parent's heart. I can sympathize with Blakely's desire for a longer drive to work. She solved her problem with a fake commute. Every morning she drives around Atlanta for an hour on her way to work and another hour on her way home.

Blakely's story reminded me of my college years. I inherited my grandfather's Dodge Ram 50 pickup truck, and I would drive it from Central Florida to Chattanooga, Tennessee for school. It had an old AM radio that was virtually useless on the interstate. So for eight hour stretches of time I would sit behind the wheel and just think. I can remember getting ready for a trip and deciding what I would think about, what project I would work on, what problem I would try to solve for the next eight hours.

That was back in the early 90's. In that same scenario today, without a radio, I would just put on my headphones and start listening to whichever audiobook or podcast currently had my attention. I would literally consume information for eight hours straight with very little time spent digesting it or working out its application for my life.

I'm not saying that podcasts and audiobooks are bad. I listen to a lot of them, and I get great information. But I admit that my application of their ideas and concepts is pretty shallow. Without the time to seriously think, break apart the ideas and put them back together again my application is mostly just tips, tricks, and hacks that require a minimum amount of effort.

So I started to experiment. I decided to find as much thinking time as I could. I would stop consuming so much information and just try to process more. After about 10 days I calculated that I have at least 25 hours a week just to think. Here's how I did it.

Drive time

Like Blakely, drive time is by far the biggest chunk of discretionary time I get during the week. On most days I am traveling to and from one or more clients for meetings. I average about 350 miles a week. At an average speed of 35 miles an hour that's about 10 hours of drive time. On some days it's more and on some days it's less but 10 hours is about right. My normal routine during drive time is to just listen to podcasts or audiobooks. Instead I can reclaim this time and get uninterrupted quiet time to just think.

Chores

The second biggest chunk comes when I'm just doing things around the house. Washing dishes, mopping floors, doing some kind of outside project on the weekends… It all adds up. Normally I'd have headphones in listening to another podcast. This accounts for about 7 hours every week.

Walking the Dog

I spend about 3 hours every week walking the dog. Instead of listening to podcasts or music that time has been converted to thinking time.

Shower and Shave

I spend about 3 hours a week showering and shaving. Again, my custom is to multitask by listening to podcasts during this time. Simply turning off the phone gives me 15 minutes every morning and 15 minutes every evening to just think.

Solo Lunches

Two or three times a week I eat lunch alone. Rather than listening to podcasts, watching videos, or reading a book that time can be converted to thinking time. That's another 2 hours I can spend just thinking.

There are plenty of other times I could squeeze, but I like my podcasts and audio books. They give me food for thought, and also help me unwind. Thinking is work, and I'm not always up for it. Incidentally, replacing TV time is not on the list. I just don't watch enough TV to find much more than an hour a week to reclaim.

Tip #1: Deconstruct a Problem

So you've found your own 25 hours. What do you do with them? As Henry Ford said, just letting your mind wander is not the same as thinking. It is best to have an object for your thought, something you can meditate on and roll around, deconstruct and put back together. For me problems work best. Here's a sample.

• A client is struggling to make progress on a major project. How can we get them unstuck and get some momentum?

• Our outreach to clients is lacking. How do we engage with them more often and provide things they can use?

• I'm not keeping pace with my word per day count for my writing goal. What are some different ways I can approach this in my schedule or workflows?

• A company I work with is struggling to hire good people. How can we assimilate all we've ever done on hiring so our clients can use it effectively?

• We've pulled out the same report three times in a row with this client. How can we portray it in the dashboard so the people who need it don't have to ask for it anymore?

• One of my kids struggles to remember school assignments and bits of minutia that have to be signed, turned in, etc. How do you develop a task management system for a 9, 10, 11, 12 year old that is fun to use and not too cumbersome?

If you want to get serious about upping your thinking game keep a list of problems you want to work on. Don't be a slave to the last problem that crossed your mind. Disciplining yourself to spend time thinking is a valuable skill. It's best applied to the problems that are most important to solve.

Tip #2: Meditate

Your thinking time doesn't have to be all problem solving. You can also gain valuable insights by taking a thought, a concept, a quote or a piece of scripture and just meditating on it. You don't have to sit cross legged and chant mantras to meditate. Meditation is first and foremost contemplation and reflection.

You may not be sitting on a pillow, listening to serene music and overlooking a sunset, BUT the act of discovering some truth or application simply by thinking is a very calming and relaxing experience. I can be backed up in traffic, but if I'm meditating on one of the Proverbs, digesting the pieces word by word...I don't care that we're crawling along at 5 MPH.

Keep a list of cards handy that have inspiring verses or quotes or deep thoughts on them. I keep mine in the car since that is where I have the most time. This practice has the ability to change the course of your day and put you in a frame of mind to accomplish much more than you would otherwise.

A huge part of our role in business is to THINK. But you have to make the time first. Take a look at your days and weeks and I'll bet you can find a few extra hours to up your thinking game.

Let me know how you plan to do it.