If investors aren’t satisfied with a company’s growth rate, they might try to replace the CEO. The incoming replacement typically has about eight weeks to figure out what’s wrong at the venture and how to fix it.
A quick turn onto a new path is desirable so that the company can grow faster and investors see the new executive as part of the solution. But that’s not always easy because the new chief inherits the people who were responsible for the old strategy. Those staffers may feel threatened by a new strategy and try to undermine it.
The new leader could replace them but at the risk of losing valuable talent. Instead, a CEO might be better off managing a process to help employees see the company’s future as he or she does. Then all the company’s oars are rowing in the same direction.
John M. Collard, chairman of Annapolis, Md.-based Strategic Management Partners, conceived of turning around a company company as a five-step process. His white paper that named each of steps in the title: ‘Management Change, Situation Analysis, Emergency Action, Business Restructuring, and Return to Normality‘.
Shane Buckley put his own spin on enacting dramatic change, by using seven steps, after becoming the CEO of Xirrus in the summer of 2012. As he explained in an interview last week, he saw that Xirrus, a commercial Wi-Fi firm, had a presence in schools and universities but needed to expand its markets and selectively outsource activities previously done in-house to lower costs.
“I changed our business and a key part of that was outsourcing many of the activities that Xirrus had done internally, such as manufacturing,” he said. “I knew that implementing this … would require a big cultural change.”
Buckley could have fired the employees, replacing them all with people who saw things his way. But he decided to bring in an outside management consultant, Judy Issokson of Issokson & Associates, to help him lead the process of changing Xirrus’s culture.
The following seven steps that Buckley took to change Xirrus’ strategy without replacing all its people could be of help to other firms.
1. Meeting with all employees
Buckley started off as CEO by meeting with people both inside and outside the company. “During the first six to eight weeks, I had a chance to figure out what was working and what needed to be fixed,” he says. “I met with all customers and partners. I also spent about 30 to 45 minutes with groups of six to eight employees to ask them what is happening.”
Listen to customers, employees, suppliers and industry experts to figure out the markets to target and capabilities the company needs to win.
2. Creating a safe zone to talk about the truth
People are naturally afraid when a new CEO arrives. Buckley hired Issokson to help dispel that fear. She created ground rules to help employees feel confident that they would be safe if they told her their true feelings about Xirrus.
Explained Buckley: “I was working with Judy to help us identify the barriers to getting Xirrus where we wanted to be. I realized that since [the company was] going to outsource activities like engineering that Xirrus had always done internally that the engineering staff might have different skill sets than what would be needed. But I wanted people to feel free to express their concerns” in a safe environment.
When a CEO’s vision depends on radical change in the company’s strategy, it’s a judgment call whether to keep most of the employees. If the decision is to work with current employees, the leader needs a way for them to replace their fear of change with enthusiastic buy-in to the CEO’s vision. A CEO who’s great at managing change can accomplish that. Otherwise, hire an experienced consultant (after checking references) who has done this for similar companies.
3. Getting ideas for future goals
Buckley wanted people in the company to articulate what they believed needed to be done. He met with his executive staff and the whole company, he said. Over four to six weeks people were asked, What do we need to do? What are our key objectives? He was not given the answers directly, though.
Hiring a consultant who’s good at managing a process leads staff to feel like they came up with the same goals for the company as you did. The key thing to remember is that if your people believe that the company is implementing their ideas, they will embrace those ideas much more enthusiastically than if the ideas are forced upon them.
4. Asking questions about key objectives
Issokson analysed the responses and presented her analysis of the top five priorities.
CEOs should react carefully to ideas proposed by their staff. If people feel that the CEO is taking pot shots at their ideas, they’ll turn into resentful sheep rather than enthusiastic problem solvers. So ask questions about the ideas proposed in a way that’s respectful and seeking greater understanding.
5. Allocating resources to the priorities
And after listening to the responses, Buckley decided which resources would be assigned to meet the key objectives and in which sequence. One priority was to make Xirrus a company that was easier for customers to do business with. “We decided how we would change the way we would bring in customers and how we would respond to their questions,” Buckley says.
Determine the urgent priorities and be sure they get the capital, people, technology and other resources needed to make them happen first. If the most important priorities are realised, the company will survive long enough to get additional resources for less mission-critical ones.
6. Sustaining momentum
When priorities are set and resources allocated accordingly, people wonder whether the company will follow through. To that end, leaders must model the behavior they want to elicit from employees. Said Buckley: “You have to be authentic. Leaders have to do more. People want to see that you are working harder than they are. And they ought to feel free to give the leader feedback and keep the momentum going.”
Remember, people are always watching the CEO. The ones who want to get ahead will do the things accordingly. If the CEO is working harder than they are, they will try to keep up or even exceed his or her efforts.
7. Linking measurement systems to priorities
Lastly, the way people are measured must be consistent with those priorities. Buckley decided that if customer requests were to be truly valued, “we can’t keep measuring them just on whether they met their sales target. ” He added,
“We need to start tracking how satisfied customers are as well.”
Communicate clearly how the new strategy will affect staff recognition. Then change the measurement systems to line up. That will go a long way to getting staffers to make the company’s top priorities happen.
And Xirrus is planning an initial public offering next year, according to a March story in the Pacific Coast Business Times. Buckley claimed last week that Xirrus is thriving, growing 40 percent year over year, it added 70 people and seeking new markets with a new footprint.
“On a human capital level,” he says: “People are more engaged, they work together across functions, and the company is moving faster because trust has replaced fear.”
“Xirrus has executed a masterful expansion of the business since Shane Buckley joined,” wrote Steve Krausz, general partner for US Venture Partners, whose firm invested in Xirrus. “In my 29 years of venture investing, I have seen few companies go through such a successful transformation as Xirrus,” he says.
“Xirrus now has a complete product offering that has anticipated the explosive growth of mobility, video and cloud management of Wi-Fi services. The customers have responded with great enthusiasm as enhanced video and mobile services are being demanded by both consumers and enterprises at an ever accelerating pace.”
Editor’s Note: This story was updated to include Steve Krausz’s comments. His title was later corrected to reflect his role solely as a venture capitalist whose firm invested in Xirrus. Also, Xirrus CEO Shane Buckley’s comments have been updated to indicate that only one area was outsourced: manufacturing.
This article was originally posted here on Entrepreneur.com.
Put On Your Wellies: It’s Time To Wade Into Risk
Entrepreneurs aren’t all leaping into the unknown like lemmings off a cliff, but they do need to consider it…
You’ve had a great idea. You’ve looked into its development. You’ve recognised that it has potential beyond just what Auntie Mabel and Mike From The Grocer think. And you’ve clearly nailed a pain point that can make money. Now it is time to take the risk of running with it.
Every big idea comes with risk. You can’t step out into the world of entrepreneurial thinking and business development without it. Your idea may fail. It will also be time consuming, demanding, hungry for money, and hard work. It is unrealistic to expect that your project will leap out into the world and be an unmitigated success.
It is also unrealistic to assume that it isn’t worth taking this risk.
There are steps that you can follow to ensure that your risk is managed so you aren’t blindly leaping off that cliff…
Step 01: Do your research
No, canvassing your neighbours, friends and family is not doing research. You need to know that your idea will appeal to a broad market and that it will have significant legs. This may sound like daft advice, but you would be surprised how many people think an idea will take off just because Susan in Accounting said so.
Step 02: Understand the costs
Projects are hungry for money and investment. Realistically work out your budgets and how much it will cost to take your project off the ground and then stick to it.
A calculated risk is a far better bet than one that shoots from the hip and hopes for the best. You can also use this as an opportunity to draw a clear line under where you will stop investing and end the project. If it keeps eating money and isn’t getting anywhere with results you need to be able to walk away.
Step 03: Know when to walk away
As mentioned before, this can be defined by a line you’ve drawn in the proverbial sand (and budget) but no matter where you draw this line, you have to stick to it. Often, when time, money and energy have been poured into a project it can be incredibly hard to walk away.
You think ‘but I have put so much into this, just one more’ and then it gets to a point where the ‘just one more’ has taken you so far down the line that walking away feels impossible. Leave. Learn the lessons. Apply them to your next project.
Mind The Gap
The entrepreneur’s guide to finding the gaps and building the right solutions.
Innovation may very well be the key to business success but finding the gap into which your innovative thinking can fit is often a lot harder than people realise. Some may be struck by inspiration in the shower, others by that moment of blinding insight in a meeting, however, for most people finding that big idea isn’t that simple. They want to be an entrepreneur and start their own high-growth business, but they need some ideas on how to find that big idea.
Here are five…
It sounds trite but networking is actually an excellent way of picking up on patterns and trends in conversation and business problems. The trick is to note them down and pay attention. Soon, you will find patterns emerging and ideas forming.
2. Look for pain
Just as networking can reveal trends in the market, so can spending time reading. The latter will also help you find common business pain points. These are the touchpoints that frustrate people, annoy business owners, affect productivity, or impact employee engagement.
Be the Panado that fixes these pains.
This is probably the most annoying of the ideas, but it is unfortunately (or fortunately) very true. Luck does play a role in helping you capture that big idea. However, luck isn’t just standing around and random people offering you opportunities. Luck is found at networking events, it is found in research and it is found in conversations with other entrepreneurs.
4. Luck needs courage
You may have found the big idea through your network, a pain point or pure blind luck, but if you don’t have the courage to take it and run with it, you will lose it to someone else.
Being bold in business is highly underrated because most people assume that everyone is bold and prepared to take big leaps into the unknown. However, not all brilliant entrepreneurs were ready to throw their family funds to the wind and leap into an idea – they were courageous enough to figure out a way of harnessing their ideas realistically.
5. Pay attention
This is probably one of the most vital ways of finding a gap in the market. Often, people are so busy that they don’t really pay attention to that niggling issue that always bothers them on a commute, or in a mall, or at a meeting. This niggling issue could very well be the next big business opportunity. Pay attention to it and find out if that issue can be solved with your innovative thinking.
5 Things To Know About Your “Toddler” Business
As you navigate this new toddler phase of your business, here are five things to bear in mind.
Ah, toddlers. Those irresistible bundles of joy bring a huge amount of energy, curiosity and fun to any family – but there’s also frustration and worry that comes with their unpredictability, as they grow and start to become more independent. If you own a business and it’s successfully past its “infancy” of the first year or so, it’s likely it will also go through a toddler stage of its lifecycle.
Pete Hammond, founder of luxury safari company SafariScapes, agrees with this. “Our business is now three and a half years old, and we’ve found that we’re not yet big enough to justify employing a large team of people to handle the day-to-day admin tasks, yet we still need to grow the business as well,” he says. “As a result, our main challenge is finding the time to step back and see the bigger picture. Kind of like when you are raising a busy toddler and you spend most of your time running after them!”
As you navigate this new toddler phase of your business, here are five things to bear in mind:
1. This too shall pass
Everything in life is temporary – and that goes for both the good and the bad. It’s as helpful to remember this when you’re facing the might of a toddler temper tantrum, as it is when you’re facing throws of uncertainty in your business. If your new(ish) venture is going through a rough patch in its first few years, it can be easy to think about giving up – but don’t. As long as you have an overall big idea that you believe can add value to your customers, keep pushing through the rough parts until you come out the other side.
2. Appreciate what this phase brings
The toddler years mean that the initial newborn joy is officially behind you. But these small humans also bring their own kinds of joy, as you watch them learn new skills, say funny things, and give affection back to you. While your two-year-old business may not hold the same exhilaration for you as it did during those first few months, there are now different things to appreciate about it: Maybe you’re expanding your product range, or employing new people who can take the workload off you.
3. Establish boundaries
Toddlers thrive on boundary and routine – and your toddler business will too. As it grows into a new phase, try and establish limits in terms of the type of clients you want to work with and the type of work you’ll do. It’s also a good idea to make a decision about the hours you’ll work and when you’ll switch off, which will help you establish a good work-life balance.
4. Take a break
Every parent with a toddler needs a break every now and then, even if that means a walk around the block (on your own!), a dinner out with friends, or even a few days away. The same is true for a demanding small business: every so often, remember to take time out to rest properly, where you switch off your laptop and completely unplug. You’ll return much more inspired and resilient to deal with the everyday uncertainty that it brings.
5. Give it space to make mistakes
While the unpredictability of a young business can be stressful and tiring, it’s also a time for trying new things without the risk of huge consequences if they don’t quite work. After all, it’s much simpler to change your USP if you’re a small business employing a few people, rather than a big company where 50 people are relying on you for their salary, or where you’ve received a huge amount of investment capital. While you may fail in some of the things you try with your business (in fact, this is almost guaranteed), see it as a toddler that’s resilient enough to pick itself up, dust its knees and keep moving forward.
During this phase of business growth it’s also essential to have the right type of medical aid cover. There are medical schemes such as Fedhealth which has a number of medical aid options and value-added benefits to ensure that your health and wellness is taken care of too. After all, the healthier you and your staff are, the more productive your business will be – during the toddler (business) stage and beyond.
While this phase can be frustrating, it’s a sign that your business is growing and adapting, rather than remaining in its infancy, and that can only be a good thing! So embrace the difficulties, learn from them, and watch as your business strides forward confidently into the next exciting phase.