Are You A Thought Leader?

By Mike Myatt, Chief Strategy Officer, N2growth

Thought LeadershipThought Leadership…What is a thought leader, and what does thought leadership mean in today’s business world? As much as some people wish it wasn’t so, a thought leader is not someone who simply restates someone else’s views and positions. Furthermore, beyond uniqueness of thought, a true thought leader’s positions also challenge established norms and conventions. Moreover, the true litmus test for a thought leader is when their unique ideas are implemented in the marketplace, they tend to create disruptive innovation, and often change the way we view the world. In today’s post I’ll examine the subject of thought leadership in an attempt to separate fact from fiction…

It is certainly much easier to look back in time at world leaders, Nobel laureates, religious scholars, philosophers, and captains of industry to identify historical thought leaders than it is to identify today’s visionaries. This is due to the fact that thought leadership was once a term reserved for a limited few. Regrettably the label of thought leader has evolved to become a self-bestowed title for anyone who has something to say or promote, often without regard for qualitative issues. Some would say that the term thought leader, once synonymous with futurist and innovator, is more closely aligned with snake-oil salesman today. Don’t get me wrong, true thought leaders still exist; they are just much harder to spot these days.

Let me begin by stating that authentic thought leaders, the real deals, are not created via great marketing and PR alone. While they are oft published, quite outspoken, and many times represented by marvelous publicists, they are not merely contrived, self-promoted legends in their own minds. Rather true thought leaders are born out of real-world successes, achievements, and contributions that have been recognized by their peers and competitors alike. Their work is widely regarded as being innovative, disruptive, and market altering. They are not the posers, but the players. They are not spin masters trying to make it, but are the undisputed market leaders that have already arrived.

It is also important to draw a distinction between personal or corporate branding and thought leadership. While thought leaders often become well recognized brands, there are many well crafted brands that have messaged thought leadership where none exists. Don’t allow yourself to get caught-up in the spin and hype associated with great marketers who will gladly accept compensation, but will leave you woefully disappointed when it comes to living-up to their billing. Look for real results based upon market leadership, and not just brand leadership alone.   

The best example I can give you about discerning the difference between brand leaders and thought leaders is that of large consulting companies. I would challenge the brand perception that McKinsey or Bain are the true thought leaders in their sector. I would submit that you will find the true innovation and thought leadership taking place at the smaller consultancies. In fact, I’ll go so far as to say that there is almost an inverse relationship between size and thought leadership in the consulting world in that the bigger a firm is, the less likely they are to be innovators. Rather it is those firms chasing the big brands that must innovate to survive, and that often employ today’s thought leaders. I have walked into many businesses that were branded as market leaders that hadn’t come up with a new idea for years. The fact of the matter is that the more institutional a firm becomes, the harder it is to maintain an entrepreneurial edge driven by a culture of innovation.  

While I don’t want to belabor the point and unfairly pick on large consulting firms, I think it’s important to go a bit further with this train of thought. You see, the legions of twenty and thirty-something consultants employed by Accenture, McKinsey, Bain, Booz Allen Hamilton etc., haven’t lived long enough to even form their own thoughts much less become thought leaders. One of the problems I have with large consultancies is that they often label themselves as thought leaders (strike one). They repurpose generic materials across industries and sectors and spin “old” as “innovative” (can you say best practices? strike two). They have regrettably become pimps of mass merchandised mediocrity (strike three).

As noted above, espousing “best practices” propaganda has nothing to do with thought leadership, but has everything to do with creating mediocrity (see “The Downside of Best Practices“). What I have witnessed time and again is that these purported thought leaders have in reality weakened businesses, damaged brands, and commoditized competitive advantages for many entities, which ultimately adversely impacts their profitability and sustainability. I know my perspective may appear jaded, but I’m so tired of reading the drivel of people that don’t have anything unique to say, who have been deemed as brilliant up-and-comers that I’m beginning to turn a deaf ear to all the noise.

I have nothing against the term thought leader, however it is my opinion the label should be reserved as an honor to bestow upon a select few, and not a title to be adopted by the masses. Dilution has the opposite effect of scarcity in that it diminishes value. Can you remember when the title of Vice President or Managing Director actually meant something? I can…if you’re tracking with this thinking, you might find a previous post entitled “Title Proliferation” to be an interesting read.

Bottom line…judge people on their actions and results, not their rhetoric. Don’t accept conventional wisdom as gospel unless you can validate proof of concept, and then only accept it if you can innovate with it, or around it. Challenge everything in business by looking to improve upon the status quo and differentiate yourself from your competition. I don’t advise my clients to adopt the practices of their peers, but rather to be disruptive with their innovation such that they create or widen market gaps between themselves and their peers. Lastly, when you run across a real thought leader, you’ll clearly recognize them as such for there is something truly unique in both their words and deeds.

Robert Gates on Leadership

By Mike Myatt, Chief Strategy Officer, N2growth

Robert Gates on LeadershipRobert Gates is the 22nd US Secretary of Defense. He has served 8 US Presidents, was an officer is the US Air Force, his history with the CIA ranged from an intelligence operator to the Director of the Agency, and he even served as a college president along the way. Regardless of your opinion of Mr. Gates, there is no dispute that he has spent the majority of his life in leadership positions, and is thus very qualified to put forth opinions as to what it takes to be a great leader. Rather than comment on his positions and perspectives, I’ll let Mr. Gates words speak for themselves. In the text that follows I have excerpted text from his May 23rd commencement speech at West Point:

“Though the tools and tactics of soldiering have changed, the basic principles of soldiering and leadership certainly have not. Now, this former Air Force lieutenant and CIA officer cannot pretend to offer you advice on soldiering. However, as someone who is now working for his eighth president, I can say that leadership is something that I have observed and thought about for a good long time. I’ve come to believe that few people are born great leaders. When all is said and done, the kind of leader you become is up to you, based on the choices you make. And in the time remaining, I’d like to talk about some of those choices, and how those choices will be shaped by the realities of this dangerous new century.

I would start with something I tell all the new generals and civilian executives that I meet with at the Pentagon. It is a leadership quality that is really basic and simple – but so basic and simple that too often it is forgotten: and that is the importance, as you lead, of doing so with common decency and respect towards your subordinates. Harry Truman had it right when he observed that one of the surest ways to judge someone is how well – or poorly – he treats those who “can’t talk back.”

In this country, going back to its earliest days, the American soldier has been drawn from the ranks of free citizens, which has implications for how those troops should be led and treated.

Two anecdotes from our country’s founding capture the independent thinking of the American soldier and the greatness of the Army officer who led them. During the Revolution, a man in civilian clothes rode past a redoubt being repaired. The commander was shouting orders but not helping. When the rider asked why, the supervisor of the work detail retorted, “Sir, I am a corporal!” The stranger apologized, dismounted, and helped repair the redoubt. When he was done, he turned toward the supervisor and said, “Mr. Corporal, next time you have a job like this and not enough men to do it, go to your Commander-in-Chief and I will come and help you again.” Too late, the corporal recognized George Washington. The power of example in leadership. 

On another occasion, Washington was making his rounds and came across a Private John Brantley drinking some stolen wine. Brantley invited Washington to have a drink with him. The general declined, saying, “boy, you have no time for drinking wine.” Brantley responded, “Damn your proud soul – you’re above drinking with soldiers.” Washington turned back, dismounted and said, “Come, I will [have] a drink with you.” The jug was passed around, and as the general re-mounted, Brantley said, “Now, I’ll be damned if I don’t spend the last drop of my heart’s blood for you.” A lesson in the independence of the American soldier and his loyalty, when treated with respect and decency. 

In a novel about ancient Greece, the warrior Alcibiades is asked how to lead free men, and he responds: “By being better and thus commanding their emulation.” “How to lead free men? Only by this means: the summoning of each to his nobility.” 

Treating soldiers decently also extends to making sure that they – and their families – are properly taken care of – body, mind, and soul. It is the families who often bear the harshest brunt of a soldier’s overseas combat tour, particularly when it is a second or third or fourth deployment. And as a small unit leader you must create a climate where those soldiers who may be suffering from post-traumatic stress or other mental illness are willing to step forward and get the help they deserve.

A second fundamental quality of leadership is doing the right thing when it is the hard thing – in other words, integrity. Too often we read about examples in business and government of leaders who start out with the best of intentions and somehow go astray. 

I’ve found that more often than not, what gets people into trouble is not the obvious case of malfeasance – taking the big bribe or cheating on an exam. Often it is the less direct, but no less damaging, temptation to look away or pretend something didn’t happen, or that certain things must be okay because other people are doing them; when deep down, if you look hard enough, you know that’s not true. To take that stand – to do the hard right, over the easier, more convenient, or more popular wrong – requires courage. 

Courage comes in different forms. There is the physical courage of the battlefield, which this institution and this army possess beyond measure. Consider, for example, the story of Lieutenant Nicholas Eslinger, Class of 2007. He was leading his platoon through Samarra, Iraq, when an enemy fighter threw a grenade in their midst. Eslinger jumped on the grenade to shield his men. When the grenade didn’t go off, the platoon leader threw it back across the wall. And then it exploded. At the time of this incident, then-Second Lieutenant Eslinger was only 16 months out of West Point. He would later receive the Silver Star.

But, in addition to battlefield bravery, there is also moral courage, often harder to find. In business, in universities, in the military, in any big institution, there is a heavy emphasis on teamwork. And, in fact, the higher up you go, the stronger the pressure to smooth off the rough edges, paper over problems, close the proverbial ranks and stay on message. The hardest thing you may ever be called upon to do is stand alone among your peers and superior officers. To stick your neck out after discussion becomes consensus, and consensus ossifies into groupthink. 

One of my greatest heroes is George Marshall, whose portrait hangs over my desk in the Pentagon. As I said here last April, Marshall was probably the exemplar of combining unshakeable loyalty with having the courage and integrity to tell superiors things they didn’t want to hear – from “Black Jack” Pershing to Franklin Delano Roosevelt. As it turns out, Marshall’s integrity and courage were ultimately rewarded professionally. In a perfect world, that should always happen. Sadly, it does not, and I will not pretend there is not risk. But that does not make taking that stand any less necessary for the sake of our Army and our country.

The moral principles of leadership I’ve just discussed are timeless – they apply to any military leader in any generation. So do a range of other choices you will face about the leader you aspire to become. I refer to those relating to the kind of judgment, wisdom, and mental skills – the intellectual attributes, if you will – that will be most needed to be successful as an Army leader in the 21st century.

It has always been one of the hallmarks of the U.S. military to push decision making down to the lowest possible level. In Iraq and Afghanistan, we rely on our junior- and mid-level combat leaders to make judgments – tactical, strategic, cultural, ethical – of the kind that much more senior commanders would have made a generation ago. 

The Army has always needed agile and adaptive leaders with a broad perspective and range of skills. Now, in an era where we face a full spectrum of conflict – where high-intensity combat, stability, train-and-equip, humanitarian, and high-end conventional operations may be occurring in rapid sequence or simultaneously – we cannot succeed without military leaders who are just as full spectrum in their thinking. We will not be able to train or educate you to have all the right answers – as one might find in a manual – but you should look for those experiences and pursuits in your career that will help you at least ask the right questions. 

Maxwell Taylor – who was an Asia specialist in the 1930s before becoming the famed commander of the 101st Airborne Division and later Army chief of staff and chairman of the Joint Chiefs of Staff – once observed of his fellow academy grads that, “The ‘goats’ of my acquaintance who have leapfrogged their classmates are men who continue their intellectual growth after graduation.” 

To this end, in addition to the essential troop commands and staff assignments, you should consider, and in fact embrace, opportunities that in the past were considered off the beaten path, if not a career dead end. Those might include further study at graduate school, teaching at this or another first-rate educational institution, being a fellow at a think tank, advising indigenous security forces, becoming a foreign area specialist, or service in other parts of the government – all being experiences that will make you a more successful military leader in the 21st century. 

In 1974, when I left the CIA mother ship to take a staff job at the National Security Council, I was told by my boss at Langley that there probably would not be a job there for me when I returned. My career as a CIA officer was considered over. So you never know when taking some risks in your career will pay significant future dividends. 

It is important to remember that none of what I have talked about these past few minutes is alien to the best traditions of Army leadership – particularly at times of great peril for this country: 

  • Grant and Sherman were not exactly spit and polish soldiers – and in fact left the military for a time before they returned to lead the Union Army to victory. 
  • George Marshall spent 15 years as a lieutenant and never commanded a division; and
  • Eisenhower spent years toiling in obscurity as what General MacArthur later called a “clerk” in the Philippines. 

Just over a half century ago, no less an Army institution than General Eisenhower said here at West Point: “Without the yeast of pioneers, the United States Army, or any other organization…cannot escape degeneration into a ritualistic worship of the status quo.” Keep Ike’s admonition in mind in the years ahead – be a pioneer in the assignments you take, the learning you pursue, the assumptions you question. 

Supreme Court Justice Oliver Wendell Holmes, reflecting on his service as a Union soldier in the Civil War, later said that “in our youth our hearts were touched with fire.” I hope that as a result of coming to this place, in the instruction you have received, and in the friendships you have formed, that your hearts, minds, and spirits have been touched in a way that will prepare you for the trial by fire that may await you. 

In closing, as I said last April, know that I think of each of you as I would my own son or daughter. I feel a deep, personal responsibility for each of you. I have committed myself and the department I lead to see that you have everything you need to accomplish your mission and to come home safely to your families. Know, also, that your countrymen are grateful for your service, and will be praying for your safety and your success.

A final thought. We all seek a world at peace. After each war, we always hope we fought the final war, the war to end all wars. I believe that such hopes ignore all of human history. I believe that for so long as we seek to be free men and women, for so long as the bright light of liberty shines, there will be those whose sole ambition, whose sole obsession, will be to extinguish that light. I believe that only strength, eternal vigilance, and the continuing courage and commitment of warriors like you – and your willingness to serve at all costs – will keep the sacred light of American liberty burning: A beacon to all the world.

You will shortly take an oath to protect and defend the Constitution and we, the American people. The nation stands in awe of you. And I salute you.”

Ego and the Art of the Deal

By Mike Myatt, Chief Strategy Officer, N2growth

Get Over Yourself...You're Not That SpecialWhile the art of closing a deal requires great skill, it takes almost no effort whatsoever to blow-up a transaction. One of the fastest ways to watch a deal vaporize right before your eyes is to let your ego write checks that your skill can’t cash. If you want to close the deal, be sure and check your ego at the door. Over the years I have watched over inflated egos kill more deals than virtually any other single factor. In today’s post I’ll discuss how to avoid letting your ego interfere with your success.

Consummating a transaction is not about you, your wants, needs, or desires. Rather closing the deal is all about fulfilling the other party’s expectations and requirements. If your efforts are not solely focused on satisfying the objectives of your prospect, customer, or client, then your deal will likely crash and burn right before your eyes. Selling is a service business, and not a platform to tell people how wonderful you are. Regardless of your expertise or talent level, if your stature in the transaction overshadows that of your counterpart you’re treading on thin ice.

There are numerous ways to engender confidence, establish credibility, and communicate subject matter expertise other than flexing your ego. There is a fine line yet a tremendous difference between self assuredness and arrogance (see Confidence vs. Arrogance). The following three items are signs that your ego might be interfering with your ability to get the deal closed:

  1. Talking too much: The old saying “Telling ain’t Selling” is spot on. If you are doing most of the talking you can’t be listening for the information you need to get the deal closed. Great facilitators don’t conquer their opponents, they simply articulate their key points with clarity and brevity (see “Don’t Negotiate…Facilitate“). They then quickly follow-up by asking a great question to elicit more information so that they can acquire a better understanding of what the other side is trying to accomplish. If you find yourself talking just so that you can revel in your brilliance, and dazzle the other party, then you are likely on the way out the door without deal in hand.
  2. Displaying a superior attitude: If your attire, your attitude, your demeanor, your choice of vocabulary, or any number of other items have the appearance of being contrived or pretentious it will be that much more difficult for you to close the deal. It is almost impossible to build rapport with people that you’re talking down to. Unless you place yourself on the same level as the people you’re communicating with by earnestly seeking common ground and alignment on key objectives, the conversation may never get past the ice-breaking stage. 
  3. Not paying attention to detail: Most business people won’t consummate a transaction based solely upon the privilege of interacting with you. Those with whom you interact rightly expect a complete and professional approach and presentation. If you attempt to short-cut the process, or gloss over key elements because your self impression is such that someone of your stature shouldn’t have to go through the drill then you will not close the deal.

Regardless of what your title is, or your qualifications are, subtlety and humility are much more effective tools than arrogance and ego. The professionals that I have respected most over the years are those that approach business with a quiet confidence while not feeling the need to tell you how great they are. They are more than satisfied letting their reputation precede them while letting their work product speak for itself. Remember…Pride becomes before the fall…Good luck and good selling!

Social Media 3.0

By Mike Myatt, Chief Strategy Officer, N2growth

Social Media 3.0Social Media 3.0…Okay, I said it and I’m sticking to it. It is time for Social Networking tools, applications and platforms to live up to their potential and make the iterative leap to next generation Social Networking, or “Social Media 3.0″ if you will…While I have no intention of disputing the commercial success of YouTube (Google purchased it for $1.65 Billion dollars when it was only a 9-month old company), FaceBook, MySpace, LinkedIn, or any number of other organizations that have monetized on their first mover or early adopter advantage, Social Media is still in its infancy. For Social Networking to make the next leap in maturation it will need to move beyond advertising driven consumer models, and evolve to an enterprise class business platform. In today’s post I’ll examine what needs to happen for Social Media to go 3.0…

In a nutshell, here’s my problem with the current status quo of Social Networking…I have more than 6 million contacts in my LinkedIn network alone, and that along with .50 cents won’t even get me a cup of coffee. Okay, I’m being a bit harsh here, but the reality is that if you aggregate all of my contacts, in all of my social networks, I have a very unintuitive, and very large number of data records that don’t seamlessly integrate with one another, and therefore are not very easy to leverage. At present, I’m forced to bolt on various applications and toolsets like contact managers, SFA, CRM, BI, and KM tools to do a poor job of what the next evolution of social networking should accomplish by itself if engineered properly.

As I’ve stated in previous posts, I’m not interested in disparate contacts and data records…I want cohesive relationships, built upon actionable knowledge, which can be used to add value in meaningful ways. Most of all I’m looking for aggregation…I want to be able to efficiently and effectively work between and across various networks in a seamlessly integrated fashion. Those of us in the innovation business have an old saying that states: “You can’t do today’s job with yesterday’s information and survive to be in business tomorrow.” Understanding that we are just dusting the surface with Social Networking is paramount in being able to drive forward. User generated content is well and fine, linking profiles is interesting, but this is child’s play and not where the economic value or social benefit truly lies.

Social Media 3.0 will have more complex ontology, based upon reality mining and social graphing which will be integrated with reasoning and logic engines to produce useful intelligence that will allow businesses to better manage risk and to scale with much greater velocity and precision. One example of next generation Social Networking is IBM’s Atlas solution which maps social networks in the workplace. One of the functions of Atlas is identifying user connections via e-mail, IM, workgroups, duties, responsibilities, reporting lines, etc. An Atlas map shows the importance, value, location, frequency, and relevance of their social network in order to increase productivity and spawn new innovation and collaboration. Simply put, it is more than blogging and commenting…

Bottom line: As the better business minds apply more disciplined rigor in evolving Social Networking to a higher purpose, the rewards for business and society as a whole will be vast…The good news is that it won’t take long. At the current pace of development we’ll see huge advances within the next 12 – 18 months. Buckle-up as the ride will be a fun one…

CEO Profile: Brad Smith, Intuit

By Mike Myatt, Chief Strategy Officer, N2growth

Brad Smith, CEO, IntuitBrad Smith is the President and CEO of Intuit (NASDAQ: INTU). Intuit is a leading provider of financial management, tax, and online banking solutions with more than $3 billion in annual revenue, and more than 8,000 employees.  While Brad is well known for his strong commitment to innovation, and is worthy of praise for his leadership and stellar performance alone (Intuit has consistently produced double-digit organic growth with expenses growing slower than revenue), it was my personal interaction with him that prompted me to author today’s post…In an era where CEOs seem to be column-fodder for media rants and public scorn, Brad Smith is a true breath of fresh air.

If you’re a regular reader of this blog you’ll know that I am a strong proponent of CEOs taking a personal interest in their business and its customers, and Brad Smith certainly fits this definition. My interaction with Brad started as a result of my sending an email to him in order to bring to his attention an unsatisfactory customer service interaction I experienced when dealing with his company. In less than 24 hours, I had a personal exchange with Brad, a senior member of his executive team (kudos to Anthony Marino), and a member of his management team as well. Not only was the issue in question resolved to my complete satisfaction, but what amazed me even more, was that Brad and his team used their interaction with me to gain insight into how they could improve their customer service and their business process…This is a CEO who doesn’t just throw around customer-centricity as a buzzword, Brad Smith is a CEO who actually walks the walk.  

Prior to Brad and his team responding to me in the manner in which they did, I was going to take my business elsewhere. However after my interaction with Intuit leadership and management, not only will my business remain with them, but they have earned my respect and endorsement as well.

Here’s the take-away: If the CEO of a $3 billion dollar company can make a rapid response to a customer need by taking a personal interest in doing the right thing, then so can all other CEOs. The difference between Brad Smith and other CEOs is that he actually does what others talk about, but fail to follow through on. Brad Smith is a CEO who stands behind his word, does the right thing, and brilliantly represents the Intuit brand promise.   

Direct Marketing via Twitter

By Mike Myatt, Chief Strategy Officer, N2growth

The Power of TwitterLooking for a way to enhance your direct marketing initiatives? Look no further than Twitter. Why is Twitter so hot? Why is it the fastest growing microblogging/social media platform on the planet? Because it produces real value, and it does so very quickly. Twitter is arguably the best and most powerful direct marketing tool to come along since email assuming two things: 1,) you understand how to use it, and; 2.) that you do in fact actually use it. In today’s post I’ll provide a few thoughts on how to leverage Twitter without going into the technical aspects (there is already plenty of information in circulation on that).

First off, I want to address the snobs and elitists who largely comprise the small group of Twitter naysayers still in existence…Your competition is likely already Tweeting, so why aren’t you? Each time I hear someone dismiss the use of Twitter as being a “waste of time,” or only for those that “don’t have anything better to do,” I chuckle at their naivete and/or apathetic approach. These too cool for school types are simply missing out on a tremendous opportunity, because it is easier for them to mock something they don’t understand than it is to learn how to leverage a new toolset. All I have to say is what a shame…If you fall into this camp I would suggest you do a reality check and get in the game. 

Next, I want to provide you with some validation of proof of concept. I have sold books and webcasts, have added subscribers to my blog, and have even secured new clients through the use of Twitter. Now keep in mind that I’m not an uber-user of Twitter. I don’t have a large follower base, I don’t spend all day on Twitter, I just participate in the dialogue taking place and nothing more…On a light day I probably only spend about 10 minutes on Twitter, and on a heavy day for me about 30 minutes and that’s it…

Want more validation of Twitters direct marketing capability? While Twitter is simply another channel of communication that extends my reach, and supports my other mediums, there are those who now make their entire living by leveraging the power of Twitter. Other examples of those that have monetized their Twitter followers are Dell Computer, who has traced more than $3 million in revenue directly to Twitter, United Airlines broadcasts “Twares” offering special fares on Twitter, Mariah Carey launched her new album on Twitter, in part due to his influence on Twitter Chris Brogan’s new book “Trust Agents” hit the New York Times Best Seller List,  well more than half of the Fortune 100 (and growing) are represented on Twitter, various charities and political causes raise funds on Twitter and the list could go on…While the list of what makes Twitter so special could be almost endless, I find the following 5 attributes most valuable:

  1. Twitter is fast and easy: Twitter rewards the articulate, and thrives on brevity and efficiency. Because you’re messages are limited to only 140 characters, the boring and verbose need not participate.
  2. Twitter is a real time pipeline to your followers: Twitter is instant, real-time communication. Just hit the update button and your message is instantly viewed by those who follow you on Twitter.
  3. Twitter is viral: If your message, your brand, your humor or wit, your offerings, etc., appeals to others they will spread it to their followers, and so on, and so on. I have watched a single message that was well accepted by Twitter users take someone from relative obscurity to a place of prominence overnight.   
  4. Google loves Twitter: Most people’s Twitter profile is indexed on page one of Google, and Google also indexes individual messages adding further leverage to the power of Twitter.
  5. Twitter builds your sphere of influence: You can not only find people of influence (CEOs, authors, politicians, the media, various pundits, celebrities, etc.) on Twitter, but you can easily open a dialogue with them. This is simply not possible in most other mediums, and where it is possible it is certainly not very easy.

My suggestion is this…become a Twitter user today. Don’t over analyze, and don’t wait…do it now. Once you’re live on Twitter, follow me @mikemyatt and be sure and let me know how it goes…

CEO Marketing Priorities

By Mike Myatt, Chief Strategy Officer, N2growth
CEO Marketing Priorities

The fact that CEO marketing priorities need to be extremely focused in this tough economic environment should go without saying. The days of spending just for the sake of spending are long gone. As the above graph denoting responses from an eMarketer survey of C-level executive displays, by necessity CEOs have become extremely focused on aligning marketing priorities with revenue growth. Because chief executives are more publicly accountable for performance today than ever before, and given that 87% of the eMarketer survey respondents are focusing their efforts on revenue growth, I thought I’d provide the following link which will provide direction on how to make an immediate impact on increasing sales.

The Problem with Economics

By Mike Myatt, Chief Strategy Officer, N2growth

What’s wrong with our economy? Why can’t we seem to fix it? Where do we go from here? If you listen to current administration, they’ll tell you that they have “our best economic minds” engaged in solving this crisis, and therein lies the problem…Put simply, the real problem with economics is that most economists don’t have a clue…

An economist is commonly defined as “an expert in economics, especially one who studies economic data and extracts higher-level information or proposes theories.” If you closely examine the preceding definition, you’ll quickly see one of the problems we face is that our nation is trusting a small handful of academic theorists to solve a real world problem. What we don’t need is more academic rhetoric from over-glorified analysts studying data and putting forth theories. What we do need is action from those that actually understand the real issues – business leaders and entrepreneurs.

Let’s begin with a look back in time…While the history of economic thought reaches back to the ancient Greeks, a British philosopher by the name of Adam Smith is generally considered the father of modern economics. Smith authored “The Wealth of Nations” in 1776, which served as the foundation for most of our current economic principles. However economics didn’t evolve into a formal discipline until the 19th century. In the last 200 years we’ve seen economics evolve from Adam Smith’s principles of scarcity and supply & demand, to the advocacy of increased government intervention in fiscal policy. This change in focus was spawned by the Keynesian revolution of John Maynard Keynes in the early 1900’s. Later the work of Nobel Prize winning economist Milton Friedman, which in the 1960’s and 70’s espoused a belief in a laissez-faire government policy argued for less government intervention in the economy.

I actually find Milton Friedman’s work most closely aligned with my thoughts. See if you find the following quote from Friedman to remind you of anything: “There is likely to be a lag between the need for action and government recognition of the need; a further lag between recognition of the need for action and the taking of action; and a still further lag between the action and its effects.” Friedman was a strong proponent of free market economics and a small government. In my opinion, what we’re seeing now is a move in the wrong direction. A small group of government appointed economists and advisors are ushering in a reversion to Keynesian economics and the decline of free market economics as we know it.

So when you look at the foundation of our economic theory, the majority of it was formed just a few hundred years back when social, political, and economic times were vastly different. That obvious point aside, what we need now are less of the regressive economic theories, and more action by those who understand what really drives economic growth….business people. The problem we face with this administration is that the heart and soul of the economy, the entrepreneurs and executives that create jobs, wealth, and economic stability are being systematically neutered by punitive legislation and harsh tax treatment that favors government control and intervention over free market capitalism…We need to pay more attention to the 50% of the population who work for a living vs. the 50% of the population that vote for a living.

So, where do we go from here? While only time will tell, I’m afraid that we will see darker days ahead unless this administration regains an understanding that its role is to serve the people and not dictate terms to them…

Influence and Personal Branding

By Mike Myatt, Chief Strategy Officer, N2growth

The Ripple Effect of InfluenceI’m often asked how to tangibly measure personal brand equity and my answer is quite simple…The value of a personal brand is directly proportionate to its ability to create and wield influence. When it comes to the subject of personal branding much has been written about authenticity, transparency, marketability, thought leadership, etc., but it is the ability to leverage the sum of these individual brand components for influence that determines the true strength of a personal brand. Put simply, a personal brand that cannot open doors, or influence actions and decisions, is not much of a personal brand.

When I refer to influence I’m not talking about manipulation, cheap marketing gimmicks, or other forms of skulduggery, as ill-gotten gains will always be exposed for what they are, and will never be worth the compromises that were made in order to achieve them. Not only is true influence much easier to acquire, but it is also sustainable. Put simply, true influence is nothing more than leveraging your personal brand to work with and through others to achieve a stated objective while staying true to your core values and maintaining your integrity.

The following concepts comprise the three pillars of influence, which if properly understood and implemented can help anyone become more efficient, productive, secure and successful:

1. Influence is built upon making others successful
: This is often times referred to as the law of reciprocity. The theory is that if you invest yourself in making someone else successful then they in turn will likely be predisposed to helping you become successful. While this principle will not always pan out, in my experience it has held true in well over 90% of my interactions over the years. Those who make astute investments into people and relationships will benefit tremendously by doing so. 

2. Likability
: People do business with people they like and avoid doing business with people they don’t like it’s just that simple. Are you approachable, positive, affable, trustworthy, a person of character and integrity or are you someone who is standoffish, pessimistic and generally not to be trusted? Those the fall into the camp of the former as opposed to the latter will find themselves having more influence and success.  

3. Value and scarcity drive influence
: Understanding the value of your position, brand, authority, resources, access to people or knowledge and any number of other items as it relates to fulfilling the needs and desires of others creates influence. To the extent that anything under your direct or indirect control is scarce or proprietary your ability to influence will increase significantly.  

Bottom line Don’t manipulate for personal gain, rather facilitate for mutual benefit. Take a sincere interest in the success of others, work on your likability factor, have access to things of value or scarcity, and as your influence with others increases so will the value of your personal brand. Lastly, I would ask that you consider using your influence to assist those who have little influence. If you don’t incorporate this last thought into your world, you’ll be missing one of the greatest rewards life has to offer…serving via influence.

My Philosophy on Valuations

By Mike Myatt, Chief Strategy Officer, N2growth

You better get this right...While my philosophy on valuations hasn’t changed in years, my feeling as to their importance has. Valuations are always a dicey proposition, but even more so given today’s business climate. I can’t think of a time in recent history where having third party validation for your valuation metrics has been more critical. Over the years I have particpated in the M&A process from virtually every angle possible. I have been a principal of a company being acquired, as well as a principal of a company conducting acquisitions. I have also served as an executive working on both acquisitions and dispositions teams, and as a professional advisor representing both the buy-side and the sell-side. Having sat on all sides of the acquisition table it has been my experience that regardless of approach, style, timing, culture, synergy, supply/demand drivers, or any other catalyzing factor, the transaction will eventually boil down to valuation metrics.

When I’m on the buy-side of the table I’m obviously looking to drive down valuations to make accretive purchases that provide a solid return on investment. Conversely, when I’m on the sell-side of the table I attempt to secure the highest valuation possible in order to maximize my return on equity. It is easy to see and to understand the divergent interests in play between buyer and seller. Thus when both the buy-side and sell-side parties are in alignment on valuation metrics and philosophy the transaction in play will have a certainty of execution that does not exist when there is either a philosophical gap or a large pricing delta between the bid and the ask. Regardless of which side of the table you sit on, the best way to close a gap in valuation is not by continuing to hammer on the financial metrics in a vacuum, but to rather use non-financial metrics to justify movement in valuation pricing.

While I have always placed a strong emphasis on valuation, I perhaps place an even greater emphasis on the quality of the employees, the client base, the product and service mix, the reputation of the business within the market place, the character of management and the integrity of the management process, current trends and future forecasts of the competitive landscape, brand equity, mind share, etc. Acquiring a large revenue stream that is also a poorly run organization simply results in a much “larger” headache. Simply put, building critical mass is not the same thing as building an excellent organization.

Unless you’re considering an acquisition based upon nothing more than intellectual property value or to exploit break-up value, strong consideration must be given to the recognition that there must be an excellent cultural and organizational “fit” in order for any acquisition to succeed. By “fit”, I simply mean a similar set of values and practices regarding the actual running of an ongoing business: business ethics, work styles, work ethic, a vision for the future, perpetuation objectives, leadership styles, and so on. It is the valuation of the non-financial metrics described in the last two paragraphs that should be the major influencing factors in your decisioning behind the justification of the final valuation.

Now that we’ve discussed the major influencing factors behind how to negotiate movement in valuation I want to give you an overview of what I believe is the “right” way to arrive at the “right” number to begin with. There is an abundance of available data on common industry rules of thumb concerning “multiples” that can be used to estimate the value of a business. However, while multiples may be useful in providing an immediate ballpark of a business’s value, they do not substitute for a more comprehensive valuation approach. Multiples are shortcuts to value based upon the simplification of more in-depth valuation methodologies.

The use of multiples as the primary valuation methodology is equivalent to the business plan that is written on the back of a napkin.  This is primarily true because no understanding of the data underlying the multiples has been performed, and thus neither the data integrity nor comparability with the subject business can be evaluated. Valuation multiples provide a rough guideline for the price of the average business in a particular industry, but often without due consideration given to the unique attributes of an individual business (geographic location(s), current competitive landscape, current economic environment, etc.).

I have always believed in providing open, honest, fair and full disclosure of how I value an organization. In order to insure that both buyer and seller model a transaction that is fair to all parties, and economically viable going forward, I developed a blended valuation approach that takes into account a variety of valuation methods that is weighted to the unique circumstances of a the particular business and the market timing of the transaction. I have successfully used this algorithmic valuation methodology to establish a fair price for a business. The following inputs are a representative sampling of some of the factors that we weight in our calculations:

  1. Pre-tax Cost of Debt (PD) is the Company’s marginal cost of borrowing long-term funds.
  2. After-tax Cost of Debt (AD) is the cost to the company of borrowing money after factoring in the benefits of the deductibility of interest.
  3. Risk-free Rate of Return (RF) is the return an investor would require at the present time to invest in a long-term security with essentially no risk. The closest indicator to a risk-free long-term investment is a 30-year U.S. Treasury bond.
  4. Equity Risk Premium (EP) is the historical premium that investors have required to invest in stocks over the returns that were available on risk-free treasury bonds at the time.
  5. Integration Analysis (IA) is the estimation of both hard and soft costs projected for post integration activity as well as any projected cost savings due to enhanced leverage or economies of scale attributed to operating activities.
  6. Beta (B) represents the volatility of an individual stock (as a result of the risk of the underlying business) relative to the volatility of the overall stock market. A beta of greater than 1.0 means the stock is more volatile than the market in general; less than 1.0 connotes a stock that fluctuates less than the overall market.
  7. Small-Company Premium (SCP) is the incremental return historically required by investors in small stocks over the return required to invest in the market overall, after considering the impact of beta.
  8. Company-Specific Premium (CSP) is the incremental return required on early stage companies and those with extraordinary risk characteristics over the premium required on equity securities in general.
  9. Growth (G) is the estimated growth in the cash flows that can be sustained in perpetuity. It is important to understand that this number must be small, i.e., 0% to 3%, because of the underlying assumption that this growth occurs forever. As an example, many companies claim that they can grow at a rate of 10% per year indefinitely. However, if a company with revenues of $25 million today grew at 10% annually for 40 years, it would have revenues of over $1 billion. Very few companies with current revenues of $25 million will ever become $1 billion companies.
  10. Capital Structure (CS) is the percentage of debt and equity that the company should operate with over time given the norms within its industry. This may differ from the existing capital structure of the company.
  11. The Weighted Average Cost of Capital (WACC) is a function of the capital structure in that it is the after-tax cost of debt times the percentage of equity in the capital structure.

At the end of the day it is a combination of financial and non-financial metrics that will determine the valuation (let’s not forget timing and positioning). Post valuation, and post acquisition, it is the solid operating skills and cohesiveness of management (or lack thereof) that will determine eventual success or failure of the acquisition.

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My advice: transactional motivations aside, have your business valued frequently (formally or informally) as a strategic planning tool. Few things will give you better indication as to the success of your business model than seeing how valuation is impacted.

Social Media Careers

By Mike Myatt, Chief Strategy Officer, N2growth

Social Media If you haven’t bought-off on my arguments for jumping on the social media bandwagon, and you’re still looking for validation that social media is something more than where degenerate minds go to waste time, just look at the careers available for those who possess the right qualifications. In doing a bit of research I found several hundred private and public sector jobs available for titles such as Director of Social Media, VP of New Media, Digital Media Strategist, Social Media Coordinator, etc. Before you dismiss these positions as not being “real jobs,” you should know that I found several government positions that offer a high five figure starting salary (here’s one), and many private sector positions in the $150K to $250K range. So my question is this: Who is in charge of your social media initiatives?  

The Math Doesn’t Lie

By Mike Myatt, Chief Strategy Officer, N2growth

Just another photo-oppToday’s announcement by President Obama that he will reduce federal spending by $100 million dollars is nothing short of laughable. This move insults the intelligence of all Americans, and is nothing more than a pathetic attempt at pandering and political posturing. In today’s post I’m going to begin by giving you some simple math to consider, while I offer a historical perspective on why both Obama’s strategy and tactics are fundamentally flawed and doomed to fail…

First the math…a $100 million dollar reduction in spending represents about one-fifteenth of one percent of the current federal deficit. Put another way, today’s proposed reduction in spending would barely cover one day’s interest on Obama’s $787 billion dollar stimulus plan. I think Harvard University economics professor Greg Mankiw’s may have provided the best analogy: “To put those numbers in perspective, imagine that the head of a household with annual spending of $100,000 called everyone in the family together to deal with a $34,000 budget shortfall. How much would he or she announce that spending had to be cut? By $3 over the course of the year–approximately the cost of one latte at Starbucks. The other $33,997? We can put that on the family credit card and worry about it next year.”

If the utter ridiculous nature of Obama’s fuzzy math doesn’t bother you, just take a look at some of his proposed cuts, the most egregious of which is the proposed reduction in death benefits to the families of police officers killed in the line of duty. Out of all the possible things he could have proposed to eliminate, why on earth would he choose this…Enough of the math and on to the history.

I can’t even begin to count how many times I’ve heard the current economic situation being compared to the Great Depression.  Nary a day passes where a news commentator doesn’t attempt to connect the two, and some would argue that Obama is returning to many Rooseveltian policies in handling the current economic crisis.  This sort of policy-building based on history is faulty for several reasons.  While it is important to learn from history, no situation is ever the same.  When we respond to current issues based almost solely on a historical scenario we are always one step behind. 

While one can learn from the response of the Roosevelt administration, you must take it with a grain of salt.  This is 2009, not the 1930s, and our economy has many new and complicating factors.  There are many different opinions regarding the origins of the Great Depression, but one of the main contributing factors was the overproduction in the agricultural sector with a declining demand due to the industrialization of the nation. 

Today’s economic crisis is based on something entirely different- the irresponsibility of the Clinton administration in passing legislation that allowed people who could not afford houses to buy them.  This is obviously a simplified explanation- but truly, I’m sick of people blaming Bush for a crisis that was initiated by an irresponsible and overindulgent Clinton administration. 

What makes me nervous, is the constant referencing of the Great Depression, when today’s economic landscape is very different.  If we handle this economic situation the same way Roosevelt did, we will not have the same results.  The irony of it all, is that while I respect Roosevelt as an amazing Commander in Chief, and one of the most brilliant politicians in our nation’s history, he is often credited with something that he did not achieve. 

Roosevelt did not bring America out of the Great Depression, the booming economic growth that happened when we entered World War II is what pulled us out of the Great Depression. Unfortunately, Obama is spending like a maniac; spending that puts what seemed extreme in the 30’s to shame! Spending that will stifle any hope for sustainable economic growth.

So liberals who blame Bush for spending too much in two wars, and for causing the economic crisis, look in the mirror! The problems we are currently dealing with were instituted by one of your own in response to the Great Depression. Food stamps, governmental support for the unemployed, over-regulation…these were all created specifically to deal with the Great Depression- they were not meant to be carried forward in perpetuity. Because they have been, they have caused many of our nation’s most grave financial and social problems. 

The issues described above were only compounded by the Clintons loose spending, government over-involvement, and absurd wasting of money. This trend regrettably been taken to new heights with the Obama administration.  This is a formula that does not work.  It’s commonsense.  As an already industrialized nation, a world war will not help our economy as it did in the 30’s and 40’s.  And as previously discussed, Roosevelt’s spending and government aid were not what solved the problem anyway…in actuality, his policies merely served to slow the recovery.

We are at a point in time where we must find our own present day solutions to deal with the current economic crisis.  We must learn from history, but not imitate it.  We are in a completely unique situation, and we need to treat it as such.  We cannot sustain unprecedented and reckless spending without very dire consequences. Mr. Obama, the math doesn’t lie, and neither does an accurate look at history…Your spin and rhetoric are becoming tired and worn.