Successful VC’s “Stay Fresh”
Bill Warner Thursday, January 28, 2010
I just read an amazingly refreshing perspective by Greg Gretsch in PE HUB. It’s all about what it takes to be a successful VC. It is counter-intuitive, but makes a lot of sense.
A Fresh View of a Successful VC
With only ten years as a venture capitalist, with some very successful investments and lucrative exits, Gretsch is worried about becoming stale and out of date. Heck, most VC’s with his record of success would be riding high, living the good life, and pontificating to the venture community about his formula for success.
But no! Gretsch doesn’t think that the longer you’re a VC, the more skilled you become in picking winners. Instead, he theorizes that if you’re a VC for more than 10 years, you’re likely to grow worse at your job over time. And, he has some data that point out that this may very well be true. Even with spotty verification, Gretsch takes this seriously. Here’s why:
- The older a VC becomes, the further out of touch with new technologies they become
- As they move up the professional pyramid, their network actually shrinks because they are working with fewer and fewer people
- They are not meeting the new people that are really bringing innovation to the market; as a result they miss trend setting ideas
- They are stuck in looking at existing market sectors for new opportunities, missing new and significant market changes
- Family demands increase as they get married and have children
How Do VC’s “Freshen Up?”
Gretsch’s simple advice is to “remain humble, keep your attitude in check, and stay hungry.” The hard part is to remember how that all feels. Here’s his formual, which might apply to many of us in lots of different lines of work:
- Increase the number of relevant technologies with which you are familiar
- Follow the leading industry analysts to learn what they are thinking
- Build relationships with the next-generation of successful investors and technologists
- Reach out to the younger entrepreneur and learn from their fresh ideas
- Always be better at what you do
I think Gretsch really believes this and will remain on top in the VC community for another decade.
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VC Investment Outstrips Fund Raising
Bill Warner Wednesday, January 27, 2010
In 2009, the venture capital industry experienced the biggest gap between investment and fund raising in the last six year. In a recent Wall Street Journal Venture Capital Dispatch blog, it was reported that investment was down nearly $10 billion, from $30 billion to $20 billion, while fund raising declined $17 billion, from $30 billion to $13 billion. This $6 billion plus difference is the amount more invested than was raised by VC’s.
Bad news for companies
The implication is that although venture firms still have a lot of money, it is still going to be increasingly hard to get funding because they are running low on available funds and it is still very difficult for them to raise further funds from their limited partners. Their limited partners are still suffering from the economic downturn and have not opened this investment class for funding.
Corporate and other private equity investment is also suffering, further reducing the number of options for equity financing.
Is IPO the answer?
Another source of funds could be successful IPO’s, which could breathe more money into the VC firms. We have recently read about an emergence of IPO filings, including Motricity, a former RTP darling. However, many analysts are quite skeptical that 2010 will bring much hope in this arena either.
What companies need to do
2010 is not going to be much different than 2009; perhaps worse, with respect to your chances of getting new VC investment. It is still a game of the “best of the best” getting due consideration. It means that you need to have a very compelling business, with meaningful and growing customer traction, having the potential for large and rapid growth, to a level that will provide a handsome return.
Due diligence will be treacherous, filled with disappointment for many, but there is still gold in “them there hills.” You will have to mine it with a focused laser.
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You Sell To More People Than You Think
Bill Warner Tuesday, January 26, 2010
“Let’s get some good sales people. We need those hungry ones that know a lot of customers. That’s all we have to do. Right?” These are famous beginning and last words. You are selling your product to almost everyone you meet as your business matures. And, everybody in the company sells in one form or another; it’s not just the sales team’s role. You certainly have to identify and sell to potential customers. But, there are many other interested parties that you have to sell to as your company evolves. The sales process begins on day one and lasts for the life of your company.
Selling in the market research phase
Even before you have a product, you have to sell your ideas to contacts you make while doing your market research. This phase is not just filled with reading and finding numbers that support your business strategy. You will have to sell your idea to industry analysts, market consultants, companies providing similar products and potential customers in your chosen markets. Seeking out the opinions of analysts and consultants makes a lot of sense. They know your markets in detail. You present your product or service idea, supported by your business rationale, looking for further insight that they can provide. In a way, you are selling by trying out what you think the value proposition is and how you will take it to market. Understanding that you may not have it quite right, they will provide you feedback that helps you to further refine your business plan.
Contacting companies that are within your market segment is also smart. If they are a potential competitor, you may have to get information from a third party, but you are essentially trying to figure out how your product fits into the market. You are prepared to sell your ideas, but also have questions like:
- Are you complementary?
- Will you need their help?
- Do you add value to their products?
- Are they a competitor?
- How will we fit?
- Why are they succeeding or failing?
Of course, the best piece of research is to approach a potential customer and get their feedback. You sell your product or service, but really want to know:
- Do they really have the need you think they have?
- Will your product solve their problem?
- Do they see the value of your product or service?
- How do they become aware of and buy products?
- Are they in a position to buy?
Getting funded
Once you have a well formed business plan, your next sales call will be on an investor or potential strategic partner from whom you need money to get your business started. This is a critical sales call which has to be successful. In this case you are selling a lot more than your product or service. You are selling the value of your company, and trying to create a long lasting partnership that will give the funds to launch your company and your vision. The business plan story has to:
- Be complete
- Represent a compelling business idea
- Be attractive in a large market of needy buyers
- Reflect a rich financial model
- Have a truly competitive and differentiated product
- Be managed by a superior management team
- Provide strong financial performance
This sales call is made by the top executives of the company, who have to be very well prepared to explain all aspects of the business and create excitement with the potential partner.
Selling to your channel partners
If you are going to use indirect channels, you will need to have a sophisticated process to sell to the channel partners through which your product will reach the ultimate buyer. The value proposition has to be specifically tailored for this audience to show them how they are going to make money in a relationship with your company. The partnerships could be with wholesalers, distributors, integrators, value added resellers and dealers. All of these partnerships have to established, and in addition to your product or service, will require you to sell some combination of:
- Training
- Product information
- Sales support
- Problem support
- Warranty management
- Inventory
- Discounts that make them profitable
Your sales efforts are to close a channel partner agreement that will result in financial success for them and an increase in revenue for your company.
What about alliance partners? If your product requires that you have to go to market jointly with another company, you have to make sales calls to them too. For example, if your product is integrated with another company’s product, then you may have to have an agreement where you are jointly marketing and selling. You may be integrating some other company’s product into your solution, so an agreement is needed for you to market and sell their product along with yours. The value proposition here has to bring a share of the overall revenue to the partner to recover the expense that they incurred plus a reasonable profit.
Sell to the influencers
When your product is ready to be taken to market, it is important to make sure all of those that influence your customer are aware of it. Industry consultants, partners and early customers need to know of your plans to launch your product. During the time when the product is first being introduced, you want potential customers to be able to call their outside consultant and get advice on your product. You also want your customers to be able to contact your early customers as a reference for your product. So, you need to make sales calls on all these influencers and make sure they have the most important facts and messages about your product or service. You will look very smart if a potential customer contacts one of them and learns the truth about your product. That is, the truth that you taught them.
Oh, the media too
Who would ever give up on some free visibility? Another important influencer is the media. They represent trade magazines, local newspapers, business press, television specials and radio news programs. When you launch your product, they too will need to know about your product or service. You want your customers to read the right messages, and from the media source that makes them aware of new products and services. The media will want to get quotes from consultants, analysts, customers and partners. They make the story come to life with the reality that it’s not just your company talking about the new product or service. Always make the media aware of positive news and use them as a way to get effective marketing information to customers.
So, selling is a process that involves much more than sending the hungry sales people after potential customers. Selling involves approaching the whole set of stakeholders in your market segments. You need to make sure that your company properly fits and that your customers know all the right things about your product or service.
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Successful Investor Presentations
Bill Warner Thursday, January 14, 2010
One of the leading angel investor organizations in the United States is the Tech Coast Angels in California. They have some great advice on how to put an investor presentation together on slideshare.
The seven P’s
They simplify this process into seven concise steps that hit at the heart of what an investor presentation needs to be about:
- Pitch – answering the question, “who are you and why should we care?” The importance of this bold introduction is to get the investor’s attention right away by telling them why they need to pay attention.
- People – convincing investors that there is a management team that can really deliver what they are committing. Having this right up front emphasizes how important the management team is to investors.
- Pain – explaining how compelling the industry problem or opportunity is to the potential customer. If the “pain” isn’t high, the investor’s interest will be low.
- Product – describing the innovative and differentiated solution to the customer pain, getting across the high barriers to entry and its demonstrable readiness for market.
- Players – showing that your product is the best in the industry while bringing to life how you will actually win against all competitors.
- Projections – illustrating how you will make money and that you have a thoughtful picture of the financial dynamics of your business.
- Proposition – introducing to investors what you are proposing be the investment deal showing that you have a specific view of who the money will be used and how the investors will be rewarded.
There are many other sources of information on the internet, but here is one on how to put together a structured business plan presentation that is often used with investors here in the Research Triangle Park.
Wrap it up
In closing, give an investor highlights summary explaining again why they should be interested, and then open up for their questions. You need to be ready to answer a wide range of questions about your business. Practice these because it is going to be your chance to show that you really understand your business and will be the clincher for gaining investor confidence.
Be sure to practice
Entrepreneurs need to be very well practiced in making these presentations and handling investor questions. Often you will only get one chance at this. If you do well, others will know. If you don’t, others will know. Go into these sessions loaded for bear having had a chance to practice on the firing range.
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Outlook for 2010
Bill Warner Sunday, January 03, 2010
Boy, I want to be optimistic, but I have too many doubts. It’s not just me either. The subject of a lot of holiday party talk has been about the economy. Much of that is centered on the subject of job growth and the state of the US dollar.
At the heart of it all
Job growth now is stagnant at best. Unemployment is actually increasing when you discount the growth in short term government jobs that produce no economic growth and count the people who are no longer on the unemployment ledger. There are a lot of moving parts that are needed to put velocity back into the small business engine.
- Banks have to start loaning money again; companies need working capital
- Government has to reduce regulation on small businesses; too much is spent on responding to new regulations and it stifles businesses
- Removing the capital gains tax will fuel investment in small businesses; bringing more private equity to entrepreneurs
- Lowering the income tax on businesses will accelerate investment in company growth; increasing profitability
- State and local government resources are needed to support entrepreneurship; creating a community in support of entrepreneurship
- Reduction of the individual income tax will put more money back into people’s pockets; firing up affordable spending
Until we get legislators in place that understand what we need, entrepreneurs will be fighting an uphill battle again in 2010.
The unknown about our dollar
I am no expert on monetary policy, but what I do see still frightens me.
- The debt is higher than ever in our history
- The growth our debt has never been higher in our history
- Other nations are visibly looking to move off of the dollar
- We are getting a lot of pushback on purchasing any further government securities
If we were to have a balance sheet for the United States Company, it would show that we are bankrupt and have negative cash flow. These are all signs that lead me to continue to worry about a coming inflation, especially if we really put the TARP money into circulation.
So what do entrepreneurs do?
The growth of our economy will come from the small business arena getting back on track. For 2010, entrepreneurs are going to have to continue to fight through the lack of effective legislative and administration support. Staying with the basics of survival is first and foremost:
- Execute well thought out marketing and sales plans; the fewest mistakes as possible
- Keep nearly a year’s worth of cash burn in place as a buffer on further economic decline
- Hire only what will be needed in the long term; outsource the rest of your personnel needs
- Invest in cost cutting measures that pay back in a few months
- Continue to establish and nurture a lasting credit line
The pros will tell you that this is the time to look for great investments at low prices. That is still true, but I suggest that you don’t go too far out on that limb with so much uncertainty and volatility in the economy.
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Managers Make Good Choices
Bill Warner Monday, August 31, 2009
We are often told that we just need to say no to a few things so that we don’t get ourselves over committed. After all, we cannot do everything our customers ask us, and we cannot go after every possible market. Some folks will ask if you are going to teach the team how to say no. Because if you don’t say no, you just keep adding more work to an already overloaded plan. Well, we just say no to that question. No, we are not going to teach people how to say no. We don’t think that is the question. Instead, we see the need to learn how to make choices.
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The Need For Seasoned Executives
Bill Warner Thursday, August 20, 2009
If there is one issue that companies deal with frequently it is poorly constituted executive teams. As a result they are suffering from the lack of business and operational know-how. Here are some examples.
Bad marketing and channel choices
The primary way this issue reveals itself is lack of sales; resulting in tremendous cash flow pressure. We recently worked with an emerging commercial hardware tool company that is being run by its founder. The product is unique and patented, and is ready for the market. It has been ready for two years, while the founder tried to sell the product through direct channels to large manufacturing companies. The company has burned over $1M in marketing programs and sales personnel. The problem has been that the founder has no sales experience, has taken the product through the wrong sales channel, and has hired sales people who do not have the knowledge or experience to sell to distributors. If the founder and the company’s board would have insured that the right marketing and sales executives were brought into the company at the time the product was ready, they would be in a very positive position today. In addition, a new CEO with successful business operations experience should have been brought into the company. Unfortunately, the company is nearly out of money, and may fail.
Marketing failure
Without effective marketing programs, there won’t be enough leads to generate the correct number of sales. One of our clients has a very effective software product for managing high inventory turnover situations and reporting quantifiable results. It is sold through direct channels by knowledgeable manufacturing process sales people. The product has been on the market for eighteen months, but only four sales have been made. We discovered that the founder doesn’t really believe in marketing, and has been cold-calling prospects and getting very poor results. Going deeper, we found that the marketing message he was delivering was not effective in convincing a buyer who is solely interested in return on investment. If the founder had brought in a seasoned marketing executive who knows how to put a comprehensive sales lead generation program, there would have been the necessary number of qualified leads to generate sales.
Disfunctional executive team
It is terribly important that the executive team of any company work well together and is on the same business agenda. We recently worked with a financial services firm whose partners were tied in knots by their lack of mutual commitment to the company’s business objectives and private personal goals. Their lack of business maturity and experience to take the company beyond where they were was causing significant sales failures and personnel disruption, as their lack of cohesiveness showed through to the entire firm. Quite frankly, nobody was in charge, and their strong personalities continue to clash and undermine their decisions making. The firm is frozen in place, and won’t progress until the partnership organization is reconstituted.
CEO failure
When a company is launching a new product and is meeting new customer prospects, potential investors, industry analysts and representatives from the media, it is very important that their story is told concisely, completely and with humble excitement. If the company’s leadership cannot do this, accomplishing their goals will be almost impossible. Recent experience with a company that supplies software to associations to manage donations, brings this issue home. The CEO and founder had a major case of arrogance and selective listening. She angered investors, talked down to analysts, overstated to the media, and bored everyone with unnecessary technical detail, never getting their value proposition across to anyone. If the board of directors had hired an experienced CEO, they would have had a chance of survival. Now, the bridges are burned.
Missed commitments
Making well thought out commitments is necessary to maintain credibility with investors and customers. It takes experience to recognize when a commitment is needed, properly establish and manage expectations, and rationally make the commitment. We discussed this with a potential client last month. The software company had a very complex product, with several enhancements to make based on customer needs. The customer demanded rapid delivery. They committed a very aggressive delivery date, and missed it by a month. This was the straw that broke their back. This was the ninth commitment made and missed over the last year, so the customer discontinued the relationship. The development leader and CEO were very junior people, and were working with a Fortune 500 company. If this company had seasoned executives who knew how to handle these tough situations, they would still have the customer.
Having seasoned executives leading your company, who have the wisdom and experience that is needed to accomplish your objectives, will maximize your chances for success.
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Entrepreneur Gets Overwhelming Support After VC Shark Attack
Bill Warner Wednesday, August 19, 2009
Kevin Flannery has had an interesting time since being bled to death by some not so real VC’s on the TV show Shark Tank. This hyped up TV show that portrays venture investing as a visit to a shark tank has tried to embarrass entrepreneurs and make venture investors look like vicious animals. None of this is real and has been put together by some mindless producers who are trampling on one of America’s most valuable assets, the entrepreneur and the business partners who finance them.
The entrepreneur gets even
Since the show was aired, Kevin has gotten hundreds of responses over his website. The vast majority are encouraging and supportive. Comments like “hang in there,” “prove them wrong,” “way to stand strong,” “keep going, the product is needed,” and many others. More importantly, many of these responses are from potential business partners who want to know more about his business. Unlike the Shark VC’s, many saw the value proposition of the WiSpots product line. Several respondents were sales and distribution companies who showed interest in marketing and selling the product. Lots of people had further product suggestions. They even got contacted by potential investors, even ones that had previously passed on the business.
So, at the end of the day, Kevin has beaten back the sharks in an amazing turnaround of fate. We all thought that Kevin now lies at the bottom of the ocean. Not at all. He is alive and energized.
WiSpots update
Long before the show was aired, Kevin had joined with fellow entrepreneur Jason Angel, and formed a new company called Wi-Ficiency. The company offers a suite of physician and patient-centric software and hardware solutions that maximize profitability by reducing costs, improving productivity and generating additional revenue from the patient waiting room, while simultaneously improving patient satisfaction through education and entertainment. This company has far reaching potential in improving the state of healthcare by providing a broad selection of relevant patient information, a targeted marketing and sales channel for healthcare products, state of the art online medical transcription services, compliant electronic medical records, and many more capabilities as they acquire additional technologies.
The winning entrepreneur
It’s a shame that the VC Sharks couldn’t listen long enough to learn of the true business model of this company and instead chose to go for the ratings and throw WiSpots to the fishes. Kevin and Jason are very much above water and riding in a speed boat to their next funding event.
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Picking The Right Executive Team
Bill Warner Monday, August 17, 2009
Picking the right executive team is critical to a company’s ongoing success, and should be done with regular discipline. To make it even harder, the requirements for the executive team changes as the company matures. The team that started the company may not be the one that raises the first institutional round of funding, or leads the company to its first million in sales, or merges the company with another in an exit event. If you hear any of the following, beware:
- “Products and services are everything, the business and management stuff is easy.”
- “I will be the CEO for the long haul.”
- “I just want people that can do the job. I don’t care about their personality.”
- “I have some close friends and associates that will help me run the company.”
- “Let’s fill out our management team right away so we have the experience we need.”
The mature executive team
What you would rather hear is a mature assessment of the needs of the business, and then determine what executive team is needed in order to accomplish the near term objectives of the company. If you hear people saying the following, you have a supportive and mature team:
- “I need people that have business and management experience.”
- “I probably will not be the CEO after our first round of funding.”
- “Personality and ethics are very important. We have to be a cohesive team.”
- “The best way to end a friendship is to hire them into a risky business.”
- “I will hire the right management when I need it.”
Assessing your management team needs
In order to determine what you need for your executive team, three assessments are needed:
- The current executive team
- The status of the company
- The company’s two year objectives
With this assessment and these needs understood, you can determine if the current management team has the experience and capability to accomplish the objectives that lay ahead. The management organization can be changed to realign roles and responsibilities. When additional management experience is needed, a job description can be easily written for the position that has to be filled. This description is then used to identify candidates through whatever recruiting channels are used.
As companies mature, new challenges are faced that the current management team may or may not be able to handle. As a company grows, so must its management team in order to deal with the demands of the business. The worst thing that can happen is to be led by a management team that is not experienced enough to manage the day to day issues it faces. Investors know that if such a condition continues too long, the company will lose momentum as too many mistakes will waste resources and time performing recovery actions.
The message here is that entrepreneurs must know what kinds of managers they need, and when they need them. Investors are looking for foresight of the upcoming business transitions and whether or not the entrepreneur knows the steps necessary to hire the right managers ahead of time. Unsaid has been that entrepreneurs need to pick people that will fit into the company’s culture and who are “A” players. Particularly in early stage companies, only the best talent should be employed to insure success. If you are rigorous about picking the right management team ahead of the crisis, you will have the right people to manage through the next transition.
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Manage Your CEO
Bill Warner Sunday, August 16, 2009
A lot has been written over the years on managing your manager. But, does it all apply to CEOs or business owners and their direct reports? The answer is, “it all depends.” It depends on how much ego is in the executive office and the competency of the CEOs direct staff. It depends on the organization’s view of accountability. It depends on the use of wisdom. It depends on whether or not your CEO is coachable.
How to manage your CEO
The CEO must make decisions that are in the best interest of the company. Members of the organization each play important roles like marketing, sales, development and manufacturing. In these roles, it is important that the CEO hears their best advice. The employee must first provide focused advice from their perspective in the organization. Secondly, the employee should also be able to appreciate and participate in discussions from the CEO’s perspective. The best CEO’s expect solid advice while allowing employees to engage in the CEO decision making process. In carrying out your employee role:
- Be the expert – don’t give in to the guesses of the CEO. The CEO must be decisive and make timely decisions. But, sometimes the CEO gets caught up in the moment and expediency takes control and advice, research, and experts are ignored. Don’t back down when you know you are right, the success of your company depends on your ability to persuade the CEO to listen and act on your expert advice. Support your advice and actions with solid research.
- Do sound research – don’t just go with your past experience. Even experts can learn new things. Times change, the market changes, the products and services change, competition changes, and the financial picture changes. Continually build your experience by doing research. Get the latest information to use to make your decisions and advise the CEO. Especially if you know the answer or the right approach, do the research. Always be talking to your clients, competition, and your sales force. Support your expertise with sound judgment and sound research.
- Use the “experts” who report to you – don’t ignore the experts you hired for their expertise. Just as the CEO should listen to you, you should listen to your staff. The person making judgments and recommendations should always be the person closest to the issue, situation or client. That’s usually your employees. Armed with the best know how and research from your staff, you are better able to help your CEO and your company make better decisions, lead the market, and grow.
- Stand your ground – don’t give in to the CEO when you know you’re right. That’s a tough one! If a CEO is worth anything, they want to hear your ideas and decisions not an affirmation echo back from you on their ideas and decisions. You will be heard if you provide value or better alternatives. You will be heard when you provide the justification and research support for your alternative. You will be heard after you have built a track record of successful advice or decisions. But, be careful, good creativity and research is not sufficient. Your advice and decisions must also be cost justified, feasible in terms of company resources required, and they must be able to show results in the time frame required by the company.
- You can differ with the CEOs direction as long as you are right – don’t get it right and you get fired. Sometimes decisions or objectives have been delegated to you by the CEO. Along with the delegation there is often direction from the CEO on how it should be accomplished. If you have a better, faster or cheaper way to get it done, go for it. You can be the hero and earn yourself some big recognition and maybe even a big bonus. But, don’t forget the consequences. If you’re not successful the CEO will probably let you off the hook once or maybe even twice, but after that you may find yourself on the street because you didn’t follow the CEOs direction. You may hear the career killing statement, “You’re not a team player.”
How CEOs Let Themselves be Guided
In order to be the most effective and make sound decisions, you want to enable and empower your employees to be strong advocates in the roles they play in the organization. At the same time, you need to draw them into conversations with you to help you talk through the pros and cons of decisions you are making. To get the best from your employees:
- Delegate – don’t think you need to do everything yourself. I have seen CEOs of large companies that believe that they need to make all the decisions. So, I see them choosing the colors on the marketing brochures, auditing travel expenses to see who is traveling too much, wanting to go on the sales call where it is planned to close the sale and the worst, wanting to go to every client meeting. These CEOs have not learned to hire good people and get out of their way. Allow yourself to be guided by hiring good people, delegating to them and getting out of their way.
- Trust your employees – don’t forget you hired them to do a job because they were the best you could find for the job. Yes, it’s true that many times the CEO makes a mistake and hires a person not quite suited to the job. Yes, it’s true that many times the CEO does not move quickly enough to correct the mistake. But, when you have the right person, after you delegate, you should trust that they can get the job done. Most times they are closer to the action than the CEO, and better positioned to make the best decision and win the best outcome. If the employee gets it wrong, it’s a great learning experience. Adults learn by making mistakes. Let your employees make little mistakes so they can learn how to make the bigger decision. Trust them to get the job done and they will not let you down.
- Get your staff to do solid research – don’t think you have all the answers. Your employees must be doing solid research to get their jobs done. Sales people need to do research on competition and client needs. Marketing people need to do research on events and now email marketing. Product people need to do research on the latest product advances in the market place. As CEO you don’t have the time nor most likely the skills to do this research. Get your staff to do it. Trust your employees to give you a good summary and the best recommendation possible based on the research. Demand that every decision is supported by sound judgment and sound research.
- Use your wisdom – don’t use your experience; use the experience of your staff. Then use your good judgment, your wisdom, to use the experience of your staff, tempered by their research. Using your wisdom is not using yesterday’s experience in today’s very different and changing business climate. Using your wisdom is first understanding the new environment you are operating in, and then choosing the right actions based on the current situation. Many times this means doing something new, and usually something different from your past actions.
- Hold your employees accountable – ask for the results you expect; don’t just give orders, they may be ignored. If you don’t follow-up after you have given out an assignment, you are telling your employee that it is not important. If you tell your employee he is going to be in a lot of trouble if he does not take a certain action and you don’t follow-up, you are telling him he is not going to get into trouble by not doing it. You hold your employees accountable by following-up on what you asked them to do. You hold your staff accountable by following-up to verify that they have in fact achieved an objective you set.
- Check your ego at the door – don’t let your ego prevent you from hearing the advice of your staff. Make it clear to all employees that you are open to hearing their advice and that it is safe for them to speak their minds, even if they are not in agreement with you. Don’t ever jeopardize their trust in your openness. When your employees tell you what to do or that they are going to take a different approach than you suggest, they are not telling you what to do. They are giving you advice. As above, this assumes you have capable employees in place. As CEO, you don’t have to take the advice, but you sure should listen to it. Some also say you have to hear the advice, which means you need to consider the advice in light of other alternatives. It’s OK if you agree to do what one of your employees says even if it is different than your decision because all that matters is that the company is making the right decision. The CEO will get the credit if the company makes the right decision.
In Summary
The bottom line for employees and the CEO or business owner is the same, communicate ideas, advice and supporting research; listen and hear each other; make the decision or take the action based on the expert in your company, whoever that may be.
