Do you have a growth mindset?

What does it take to grow a business?

• Good operating procedures? Yes.
• Adequate working capital? Yes.
• A capable and engaged team? Absolutely.
• Effective marketing and a sales team that convert? Almost always.

We could keep going down this list. It’s a big one. But there’s one thing I like to see at the top of the list when we start working with a new client.

It is a growth mindset.

A growth mindset describes the mindset of a business leader that is all about growing and expanding the influence and reach of the company’s mission. This isn’t easy. It is pretty much the opposite of running the company by the bank balance and trying to maintain the status quo. But at the same time we aren’t talking about raising a million dollars. We aren’t talking about landing a six figure sales contract. We aren’t even talking about having a specific level of technical expertise or experience. We are talking about a mindset. And that is a place where everyone can start. What does this mean in practice.

To grow a mission you have to have one. Your company has to do what it does for a reason that goes beyond money or profits. Think I’m crazy. Look at any iconic, long standing, successful company and you will find that the mission existed long before the profits ever showed up. This isn’t a coincidence. Growth of mission guarantees growth of profits. But growing profits without a sustaining mission is usually either happenstance or a short term affair.

Assuming a mission exists, the push to grow it, the growth mindset of the leader that is driving everything forward, creates a positive level of stress in the company that does several things.

Positive stress and evaluating competency

Growth creates lots of opportunities to see whether people can rise to the occasion when challenged. It forces them to develop new skills and abilities to meet the growing responsibilities entailed in their job descriptions. Without growth sub par performance can stay below the radar and go unnoticed. During periods of growth even star performers will struggle and occasionally fail. There is no other way to develop and get better.

Positive stress and culture

Growing companies are crucibles of culture. They are intense and sometimes stressful environments where people must hammer out interpersonal and relational differences while accomplishing a common goal. A hallmark of growing companies is either self destructive, dysfunctional, acerbic cultures (e.g. Uber) or empowering, supportive and familial cultures (e.g. Zappos). If you want your culture to improve [articulate and define your values then] adopt a growth mindset focused on growing your mission. Some of the trivial interpersonal issues on your team will fade to grey as people have something more important to spend their time and energy on.

Positive stress and priorities

Parkinson’s law states that work expands to fill the time available for its completion. The same is true of priorities. Without an overriding push to grow that requires focused effort we fill our todo list with 100 meaningless tasks. But faced with expectations and goals and deadlines we suddenly find that just a few things rise to the top and become priorities.

The same is true of individual roles and responsibilities. Each person on your team has a highest and best use, but without a growth mindset there is no need to focus effort and energy on the things that are most valuable to the company’s forward progress. Growing business have more opportunities to put people into areas that use their unique gifts and skill sets. Status quo businesses have fewer areas where excellence is required.

The Growth Mindset in the Family Business

Family businesses in particular run the risk of underperforming if they don’t have a growth mindset. The stakes are higher for them than for other businesses. Why?

In a family business simply trying to maintain the status quo there are only so many opportunities for leadership, for skill development, for management opportunities, and even for ownership. We find that without a growth mindset the culture in family businesses is often apathetic and it’s not hard to understand why. You’re basically working with a group of people who have resigned themselves to sitting in second place. The presumption is that all of the good spots will go to kids or siblings or nieces and nephews. The business isn’t growing so I just have to be satisfied with where I am.

But in family businesses focused on growing the mission over generations of leadership and ownership there are untold possibilities for future advancement, leadership and personal growth. The family business owner, more than any other, has a responsibility to grow mission so that non-family members get a shot at contributing to the fullest.

Proof of a growth mindset

How do you know whether you have a growth mindset or not? Simple. Do you have a plan? A growth mindset is a commitment that you are going to grow the company. That commitment is on paper where others can see it, critique it, build it out, be held accountable to it and measure progress.

Without a plan it is a wish.

If you want to change the world grow your mission. If you want to grow your mission start building the plan today. Then tomorrow, get to work.

The Culture Handoff

“Just don’t screw it up.”

That’s the attitude of most parents when they entrust the business to their kids. But what does this say about the culture those kids are inheriting?

Or for that matter….

• What is culture?
• Does it matter?
• What does it have to do with passing the business on from one generation to the next?

Culture is the environment created by the set of values at play in your company every day. This means that you have a culture, whether you like it or not. There’s no escaping it. Your employees, customers, vendors and family members are breathing it in every day.

When cultures are toxic they sap the energy and enthusiasm of your top performers. Toxic cultures color the experience of almost every customer interaction. They affect your relationships with trade partners and even the terms they will grant you on purchases and warranty claims.

By contrast, when cultures are healthy they spotlight bad attitudes, irresponsibility and unethical behavior. They generate better reviews from customers and more word of mouth referrals. They reduce attrition among employees and help recruit A players.

So, yes, culture does matter. Culture is one of the reasons two companies in the same industry, selling the same product have widely different results.

But most important for our discussion, culture is key in determining whether the second generation moves into leadership fighting a severe headwind or whether they enjoy the benefits of a cultural breeze at their backs.

Our experience is that very few companies think intentionally about their culture. It just sort of develops over time as an unsaid, unseen force that is, at best, little better than the status quo, and at worst, a contributing factor to low morale, low competitive performance and poor financial results.

How DO you work intentionally on your culture? It’s not complicated.

Articulate and define your values

Start by sitting down and thinking of the 3 to 5 words you want employees, customers, vendors, and family members to use to describe your business. Less than three values is too few to fully describe the picture and more than five is too many for people to remember.

Once you have the words it is time to define them. A friend just recently told me he made the mistake of pulling his definitions out of Websters dictionary. Later he realized those definitions failed to capture what HE wanted his values to mean. This is your job as the leader. It’s OK for you to define a particular value differently than everyone else. In fact, the definition is way more important than the word. The word just becomes a proxy for the definition. Over time it will be your definition of the value, consistently applied and repeated that comes to describe the culture. A value without a definition is about as useful as no value at all.

By way of example here are Axiom’s values:
Care - we love those we serve
Truth - we speak the truth even when it is hard to hear or difficult to say
Diligence - we bring the right amount of work to the task
Learning - we read every day and learn to ask better questions

Care may mean one thing to you, but it’s only my definition of care that matters at Axiom. The same goes for the other values. You must give everyone your definition before they can decide to sign up to participate in your culture. Don’t be ambiguous. Name and define your values. Stand up for what you want your company to represent.

Build a plan and start executing it

If all you ever do is come up with a great set of values you will be ahead of most small business owners…on paper. But it won’t mean a thing in the real world. Creating values without working them out in a plan is kind of like buying a monster truck and parking it in your driveway. You’ll never know whether your values mean anything because they will never be tested. People will never use them to do anything meaningful. If you don’t build a plan and work it to completion you are settling for status quo. Why worry about culture in the first place if all you care about is maintaining the status quo.

When you plan you put people on notice about the opportunities that lie ahead and the skills they will need to take advantage of them. As you start executing against the plan WHAT your people do will determine whether we make any progress. But HOW they do it will be governed by your values. That combination of achievement and values is what intentionally creates the culture you want.

As you execute and as your plan starts unfolding not everything can be charted on a scorecard. Values are the tool that allow you to “objectively” measure the difference between two star performers: one who makes you proud and represents the company well and another that keeps you up at night.

Stay consistent

Once you put your values up on the wall, once you write them into the plan, and once you start pulling them out to measure performance…expect resistance. A lot of people will wish those pesky values would go away. Some of your leaders will be uncomfortable talking about them with their teams. Some old timers will scoff and cynically dismiss your values as ivory tower BS. Some will try to coopt them as their own and change the definitions. Your most toxic employees will become even more passive aggressive as they try to undermine your efforts. Expect all of this. It’s actually a sign that you are doing something right.

Also, don’t play favorites. Everyone on your leadership team needs to be held accountable to the same set of values. Let’s say you have the following value and it's up on the conference room wall:

Optimism: we strive to see the good in situations and others.

But your sales manager is constantly griping about lazy employees, crooked customers and dishonest prospects and conspiratorial competition. Everyone on your team is going to know that Optimism as a value doesn’t mean squat. Not everyone on the payroll is going to be all-in on every value. But your leadership team needs to be on the same page. If you start making exceptions about which values are not really that important at the top you will wind up doing more harm than good.

Finally, consistency means acknowledging the value champions while also dealing with their lack of performance on the job. It’s not enough to sign up for the company culture if you can’t get the job done. We need both to make a difference and to accomplish the company’s mission. Exemplary values and lackluster performance are not consistent with each-other.

Expect healthy turnover

If you do all of these things there is one guarantee I can make. You will have some turnover, and that is AWESOME! Turnover is a sign that toxic employees are leaving or are being asked to leave (usually it’s the former). It is also an opportunity to escort new A-players into the company who take your values for granted. You will never experience the push back on values or the passive aggressive behavior from new employees like you do from those with tenure.

These two factors, the elimination of toxic employees and the introduction of people who buy-in from day one will turbo charge your cultural growth. It will be hard for months. You will feel like giving up. But all of the sudden one or two toxic elements will leave, a couple of new seeds will be planted and things will take off like you never imaged. I have seen it happen over and over again.

One of the greatest gifts you can give the next generation in your business is the inheritance of a healthy culture. Start building it today and see what happens.

The Vision Handoff

Think vision statements are hokey?

I’m with you. I have seen more useless vision statements than the average bear. But that doesn’t stop us from forcing the issue with our clients. Vision statements are important if you plan to get anyone to help you grow your company. They need to be clear and they need to be worthy of everyone’s best effort. In this post we aren’t going to go into a ton of detail on how to set a vision for your company. That isn’t necessary, because honestly it isn’t that complicated. It may not be easy, but it is pretty simple.

Your vision is where you want to go. It is the destination. The clearer you can’t paint me a picture of that destination the more useful that vision is going to be for both of us. When in doubt, put a number in your vision. Numbers drive out fuzziness and ambiguity. Your vision shouldn’t be to grow. Instead try “top 100 in our industry.” Your vision shouldn’t be industry leading quality. Instead try “win 5 Malcolm Baldridge National Quality Awards.” Get clear and paint a picture your people can get excited about.

For families struggling with how and when to hand the business off to the next generation there are few matters more important than vision. I think these families have two options. They can maintain the status quo, or they can build a STRATEGIC succession plan. That plan must address vision in two very explicit ways.

STEP 1: Determine the state of your current company vision. There are four possible scenarios here.

The Doldrums

This is a situation where mom and dad had a clear vision for a long time and at some point in the recent past we were able to say “mission accomplished.” We checked the box and never really reset the vision for the next big endeavor.

We ran into one such company where the founder had spent 30 years building a very successful and large enterprise. For a long time the vision had been to build an organization that would outlive him. A masterful partnership deal had provided liquidity and capital that opened up all kinds of possibilities for the next generation. But no one had given any thought to where that next generation might want to take the business. Not surprisingly there was little urgency or excitement about the business or about the transition to a new generation of leadership.

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Continuity

This is probably the most favorable scenario. The previous generation set a worthy vision, the kids buy into it and momentum is maintained as the baton is handed from one generation to the next.

In these companies vision is talked about, it drives decisions, there are long term goals, there are usually plans to execute them. But there may have been some lapses in execution. The plans may not have always gotten the attention they deserve.

This is the time to take advantage of the honeymoon period afforded when new leadership is appointed. The transition from one generation to the next has the potential to not just maintain momentum but to greatly increase it if everyone can handle their new roles well. More on that later.

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Ambiguity

There never was a vision, and there isn’t one on the horizon. This is probably the most common situation. It is indicative of the status quo transition model where mom and dad say “just don’t screw it up.”

More than any other scenario this is the one where mom and dad really struggle to let go. And it’s not a surprise. Without any kind of strategic succession plan there is no way to gauge whether the kids are ready. There have been few situations to see them in action driving success in the plan or leading effectively. And without a vision mom and dad worry that the kids will make decisions and evaluate opportunities as well as they did. Essentially everyone is just hoping things work out.

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Betrayal

Mom and dad have a vision, they have been pursuing it, they thought they had buy-in, but now that it is time for the kids to run the show everything is changing. What we find out in these situations is that usually mom and dad weren’t that intentional in communicating their vision for the company. They just kind of assumed that everyone knew where they were going and why. You can imagine that if their own kids didn’t know the likelihood that other employees have a clue.

There is a lot of potential here for the business to suffer if the two generations cannot agree on what comes next. Alternatively the kids may charge ahead after mom and dad let go and the relationship may suffer due to the perceived betrayal.

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Having established which situation you are dealing with the next step has to deal with managing the roles of each generation.

Step 2: Get clear about who the new vision standard bearer will be

Like it or not the person who is championing the company’s vision will be perceived as the leader. If the kids don’t take up this new role as their own a crisis is looming. Sooner or later mom and dad won’t be able to continue in this role, and the resulting vacuum will cause everyone to doubt the next generation’s capacity to lead regardless of how good they are operationally.

A good strategic succession plan will put the kids front and center not just on executing the plan, but also on taking advantage of every opportunity to talk about where the plan is taking us.

It is this change in roles that ultimately determines whether the business gains momentum or hits a brick wall. It affects how many key players stick around and give the kids a chance to lead and how many look for other opportunities after mom and dad leave.

My final encouragement to you is this, there’s no such thing as maintaining the status quo. You are either growing or you are dying. The transition from one generation to the next will either be a good thing for the business or it will be bad. No one is going to say “Eh, they’re doing an OK job. Everything’s fine.”

Find out where you are and start building a strategic succession plan to put your kids in the best position possible for the future. If you need help call us.

The Money Tree

“Money doesn’t grow on trees!”

How many times did you hear that when you were growing up? It seems like all parents say this to their kids at some point. But when parents become business owners they often treat the business just like a money tree. How?

Jobs for everybody - We see businesses hiring the owners kids, nieces, nephews, brothers, sisters…all regardless of whether or not these people are actually making a meaningful contribution to the business. It seems like this is especially rampant on summer and winter break. Before long the office kitchen starts to look like the student union.

The paycheck allowance - The abuses don’t stop once the kids graduate and start families of their own. We have seen org charts and compensation schedules where everyone at a certain level is making $40k, except the owner’s son. He’s making $75,000 because he just got married and had a baby and needs that much to live.

Follow your passion - Many business owners let their kids come to work and essentially write their own job description. John likes computers? Great! He’s our new full time IT person. Nevermind the fact that no business our size has a full time IT person, and we got along just fine for years without one.

These examples sound overblown and silly, but variations on them exist everywhere in family businesses. More serious than their drag on cash flow is there impediment to culture building and developing other leaders in your company.

Their is a better way. Making kids part of the strategic planning and execution process creates several opportunities.

Planning for future needs - If your son or daughter has an interest in the business you have the opportunity to build a strategic plan that looks out 3, 5 or even 10 years. In that plan you can identify where you anticipate needing specific skills and leadership. Your kids may or may not wind up playing a star role, but you have the basis for a very meaningful and productive conversation about where they can contribute the most and experience the most fulfillment, all without the pressure of needing a paycheck today.

Go to school on someone else’s dime - I am a huge fan of kids going to work for companies in the same industry, but not the same market. Every industry has best practices. You can hire a consultant or buy a report, but it is much more effective to put someone on payroll for 40 hours a week who’s been there and done that. If they want to come work for you encourage your kids to stick around their college town and get a job for a company in your industry. The lessons and experience they eventually bring home will make the memory of those college tuition payments less painful.

Build confidence and humility - Kids need to prove themselves. Most of the interpersonal conflict we deal with in family businesses comes from situations where the kids have never held meaningful professional posts outside the family firm. Knowing they can make it somewhere else goes a long way toward building their confidence. Kids who first work outside the family business also tend to take less for granted. They are more humble and realize the grand scale of the opportunity they are being afforded to work in the family business.

Teach accountability - This one is the most important. Your kids need to watch you build and execute a strategic plan that takes into account the business’s needs, the development of other leaders, good timing and sound financial stewardship. That is how they learn that everyone must be accountable, even the owners. Owners are, in fact, most accountable. If your kids get that lesson you will have taught them something that becomes part of your legacy.

No matter where you are in your business, things can begin to improve today. Have up front, honest conversations with your kids and your key employees about where you’ve missed it and where you need to do better. Then start putting together a plan that you can work diligently on day after day, week after week. If you need help call us.

Your Family Business Needs Boundaries

Boundaries are important for parents and family members working together. Done well family business should draw families closer and enhance the personal relationships between generations. But too often a lack of intention about the direction of the business and the roles played by each family member leads to stress and strained relationships

Strategic planning can play a role in improving relationships by getting clear about boundaries in the following areas:

• What is important and what is not

• Where family members can contribute their best efforts

• When it is OK to talk about the business and when it is not

• What it looks like for EVERYONE to be accountable.

Boundaries start with being very intentional and the best way to do that is to build a plan that 

1. Articulates your values

2. Paints the picture of your vision

3. Shares why that vision is important

4. Succinctly identifies your company’s mission

5. Commits the company to one or two core strategies over the next few years

6. Establishes concrete 1-3 year goals

7. Sets 90 day priorities

8. Holds people accountable to weekly commitments

That is strategic planning and execution in a nutshell. If your family needs boundaries, start by taking a day off from working in the business and work on your strategic plan.

Letting Go of the Family Business

In our previous video on the topic of family business we answered the question, “How do I know when they’re ready to take over the family business?” In this video we move from theory to practice. Plenty of parents know the next generation is capable, but actually letting go? That’s another matter.

There are three stereotypical approaches to managing the transition:

1. You’ll get it from my cold dead hands.

2. Just take it!

3. No decision

But there is a better way, and it deals with how these two generations pass the baton when it comes to the vision for the business’s future. Vision has a huge practical part to play in how smoothly the business moves from one generation to the next.

• If there is no vision the business essentially passes from one operator to the next. Things may continue according to the status quo, but the business won’t grow in its missional reach and impact.

• If the previous generation believes they can say “mission accomplished!” the next generation needs to articulate where the business is going under new leadership. Otherwise the business will be left in a kind of limbo that generates zero momentum for the incoming leader.

• When the two generations are at odds with two distinctly different ideas about the company’s vision the business rarely lasts. In these situations of vision conflict resources are squandered and time is lost to the competition while everyone wonders whose vision of the future will eventually win out. Hint: it’s usually neither.

But when there is a shared vision it is possible to make the transition while picking up momentum at the same time. Shared vision happens either because the second generation is continuing in the direction established by their predecessors, or because the previous generation has signed onto the new direction envisioned by their children. In either case the question “who should be the leader right now?” has the same answer.

Whoever is the driver behind the current vision should be the leader.

The driver is the one who doesn’t just champion the vision, but is the steward of that vision. This entails not just responsibility, but obligation. If the second generation is not at the forefront articulating, refining and applying the vision they will struggle to move beyond the shadow of mom and dad.

Are My Kids Ready to Take Over the Family Business?

Parents are never quite sure what time is the right time. In this series we tackle the first of seven strategic questions many family businesses struggle to answer. Of all seven this is perhaps the most common.

How will I know when my kids are ready to take over the family business?

The traditional answer is based on a level of experience gained in each operational department. But that may not be the best approach.

Sound strategic planning and execution is a much better way to address succession. In this video we go into exactly how that happens.