Why Your Leadership Is Overrated

Your Leadership is Overrated

By Mike Myatt, Chief Executive Officer, N2growth 

How are your leadership skills? Likely not as good as you think. There’s no shortage of independent empirical data generated over the years supporting the fact most people tend to overrate their leadership ability. The best leaders the world has ever known had room for improvement – so do you. I’ve always said leaders need to get over themselves and get on to the practice of leadership. In today’s post, I’ll offer 8 things every leader should evaluate with regard to their capabilities.

People arrive at a position of leadership in many different ways – some individuals openly and aggressively seek out positions of leadership, while leadership is thrust upon others. Whether leaders are elected, appointed, anointed, or self-proclaimed, and regardless of whether it’s by design or default, once in a position of leadership they all carry the burden and responsibilities associated with being a leader. The question is, do most leaders live up to their responsibilities?

Leader Beware – ignorant bliss, no matter how enjoyable, is still ignorant. If you’re in a position of leadership and don’t feel you have any blind spots, you’re either very naïve or very arrogant. All leaders have blind spots – the question is what are they doing about them? The reality is most leaders invest so much time assessing the cultural and functional dynamics of their organizations they often forget the importance of critically assessing themselves – big mistake.

It has consistently been my experience, leaders who are not growing are simply incapable of leading growing organizations. Moreover, leaders who fail to continue developing will always be replaced by those who do. A leader who fails to understand the value of self-awareness fails to understand their own true potential as a leader.

It’s at the C-suite level an executive must be on top of his/her game as they have the broadest sphere of influence, the largest ability to impact a business, and they also now have the most at risk. It is at this place the leader should make the heaviest investment in refining their leadership ability, because increased performance will pay the biggest dividends. Let me be as clear as I can – the more responsibility a leader has, the bigger their obligation to be on the forward edge of learning, growth and development.

Think about this – YOU are the single biggest threat to your role as a leader. This means YOU are also the single biggest risk to those whom you lead, your employees, your family, and to your friends. If you are in a position of leadership, you will lead – you will either lead people toward the right things or lead them astray, but you will lead.

The ancient Greek philosopher Socrates had a few guiding principles that today’s leaders would do well to adopt: Socrates said, “Know Thyself” and “An unexamined life is not worth living.” Those leaders who actively pursue gaining a better understanding of themselves will not only reduce their number of blind spots, but they’ll also find developing a sense of awareness is the key to increasing emotional intelligence. The better you know yourself the more effective you’ll be, and the better you’ll relate to others.

Following are 8 things I suggest you reflect upon should you desire to continue to develop as a leader:

  1. Never Stop Learning: I’ve never understood leaders who make heavy investments in personal and professional development early in their careers, who then go on to make only minimal investments in learning once they have reached the C-suite. Learning and development are lifelong endeavors. The learning journey doesn’t come to an end just because you reach a certain station in life – or at least it shouldn’t.
  2. Context Matters: Just as life is not static, neither is the environment you work in. Leadership isn’t a one-size-fits-all endeavor. The best leaders apply their craft contextually based upon the needs of those whom they serve. If you don’t know how to nuance your leadership skills you will simply miss opportunities others won’t.
  3. Be Kind: People go out of their way to help those whom they like. Likewise most people won’t lift a finger to help those they don’t care for. Smart leaders are purposed to build into those they lead. They understand leadership success is found by ensuring those they lead are better off for being led by them. Self-serving, arrogant, or belittling behavior may feed your ego, but it doesn’t serve your best interests as a leader.
  4. Surrender: A leader simply operates at their best when they understand their ability to influence is much more fruitful than their attempt to control. Here’s the thing – the purpose of leadership is not to shine the spotlight on yourself, but to unlock the potential of others so they can in turn shine the spotlight on countless more. Control is about power – not leadership. Surrender allows a leader to get out of their own way and focus on adding value to those they serve. Forget span of control and think span of influence.
  5. Begin the Process of Unlearning: Just as important as learning is shedding the emotional and intellectual baggage trapping you in the past. Human nature causes most of us to hold onto wrong, unhealthy, or outdated ideas, concepts, thoughts, feelings or practices. The fastest way to become a better leader is to challenge your own logic. If you’re really serious about finding the flaws in your thinking, ask others to help you identify gaps or faults, and then listen very carefully to what they share with you.
  6. Likeability Matters: While becoming a great leader shouldn’t be reduced to a popularity contest, the fact is most great leaders are both well liked and respected. They have the full faith and trust of their stakeholders, and possess strong positive relationships across constituencies. What do you reflect, and what do people see in you? If you are not well liked and respected then you will have consistent, self-imposed obstacles placed in your path that inhibit your ability to be an effective leader. Ask yourself this question – If an election for CEO were held today, would your stakeholders re-elect you in a landslide victory? If not, why not?
  7. Attract Don’t Repel: If people see you coming and quickly run the other way, you have a leadership problem. If people shy away from you versus clamor for your attention, you need to work on your leadership.The simple truth is people strongly desire to work with and for great leaders. Great CEOs are talent magnets…people want to be led by those who have much to offer. If you struggle with recruiting, team building, and leadership development your leadership skills are in need of improvement.
  8. Results: Great leaders produce great outcomes. If you have vision, strategy, talent, culture, or performance problems you have a leadership problem. Remember, businesses don’t fail – leaders do.

Becoming a better leader isn’t difficult, but it does take effort. It requires you to place humility above hubris, and to place a higher value on truth than you do on your ability to rationalize and justify your thinking. It means placing more emphasis on the right outcome than being right. I’d encourage you to view yourself as a lifelong student of leadership more than a master of leadership – it will serve you and those you lead well.

Thoughts?

Leadership and Resourcing

Leadership and Resourcing

Leadership and Resourcing

By Mike Myatt, Chief Executive Officer, N2growth
It’s not what you have, but what you’re able to make out of what you have that matters. Every great leader understands the importance of creating leverage via proper resource allocation. The best leaders possess an innate understanding of how to create resources where none exist – they know how to deploy and redeploy resources to maximize opportunities and to minimize risk. So my question to you is this; are you over-resourced, under-resourced, resource aligned, or do you even know? In today’s post I’ll look at the topic of resourcing as a key success metric for anyone in a leadership position.

If you think CEO means chief everything officer, your tenure in the C-suite won’t be long. Attempting to do everything yourself is nothing short of a recipe for disaster as a CEO, and in fact, is exactly the opposite of how top performing CEOs think. Furthermore, the best CEOs consistently spend time contemplating how not to do things themselves. Let me be clear that I’m not advocating an abdication of responsibility, but rather an understanding of highest and best use of financial, human, and technology resources.

The essence of Leadership is not found in doing things yourself, but in teaching others how to do things better than you ever could. Leadership is about teaching, coaching, developing, and mentoring. Leadership has nothing to do with hoarding knowledge, but everything to do with distributing knowledge. Without leveraging down it is virtually impossible for a CEO to create any real velocity or momentum in growing the enterprise.

It has been my observation that when deadlines are missed, or important initiatives don’t get off the ground, it is usually an issue of poor resource management. When I hear CEOs say things like “I didn’t have time” or “I didn’t have the necessary resources” I only have one question: Why not? When I hear a CEO complain about a lack of revenue growth while maintaining a small sales force supported by paltry marketing investments, I’m left shaking my head in wonderment at how such a huge blind spot could possibly exist. You see if the project/initiative was worth planning and implementing, it should have been worth resourcing.

As a CEO, if you couldn’t resource the project you either had a flaw in your planning process, you misunderstood or misapplied your talent, or you should have never started the project/initiative to begin with. The most successful CEOs are like the corporate version of MacGyver in that they can overcome any obstace with whatever resources they have at their immediate disposal. If you expect miracles from your under-resourced staff you are likely to be disappointed. However if you expect great things from an appropriately resourced staff, you will be consistently rewarded. If you continually stretch your resource rubber band too tightly, trust me when I tell you that it will eventually snap.

Here’s the big takeaway – As a CEO, your goal is not to see how much you can get out of your people, but rather how much leverage you can create for your people…there is a big difference.

On the flip side of the coin is being over-resourced…overspending is not the same thing as making prudent investments. Just throwing money and resources at a problem is not a solution…it simply constitutes unnecessary margin erosion. Overspending is a tactic for the lazy or the incompetent. The trick is to throw the right talent, and the appropriate investment at a challenge in a fashion that creates a certainty of execution while still generating return on investment.

The bottom line is this – apply your best talent and the lion’s share of your operating capital towards exploiting your greatest opportunities or toward solving your greatest challenges. Everything else is majoring in minors…

Thoughts?

Leadership & Loyalty

By Mike Myatt, Chief Strategy Officer, N2growth

For those of you not familiar with the two characters from Band of Brothers depicted above, they are polar opposites in terms of their approach to leadership. Captain Soble (left) represents a leader in rank only, whose efforts to intimidate his men are a classic example of fear based leadership. Shown at right is Lt. Winters, who leads by example and inspires the loyalty of his men by demonstrating he is worthy of their trust in even the most difficult of situations. In today’s post I’ll examine the value of loyalty as it relates to leadership.

Is it just me, or has loyalty become rather scarce these days? Anyone who’s been in leadership for any length of time has likely pulled more than a few knives out of their back. Bottom line – there seems to be way too much focus on “me” and not enough focus on “we” these days. There have always been those who have fostered trust and earned loyalty, as well as those who have abused both for personal gain. But in this “what have you done lately for me” society where relationships have degenerated into little more than stepping stones, loyalty seems to be elusive as best. One of a leader’s most important functions is to create an environment where trust and loyalty are the rule and not the exception.

If relationships are the currency of leadership, it is important for leaders to note that loyalty serves as the cornerstone of any healthy relationship. Leadership and loyalty go hand-in-hand. In fact, so much so that leaders who fail to understand this simply won’t endure the test of time. While successful leaders share many common traits, all great leaders have one thing in common – they are not only adept at earning the loyalty of those they lead, but they also recognize that loyalty is a two-way street. When it comes to loyalty, the simple rule is that you will not receive what you will not give.

I think it’s important for leaders to do a gut check and take note of the difference between fear based loyalty and trust based loyalty. As a leader, do you command the loyalty of those around you because of your title, or have you earned it by gaining their trust and respect? Loyalty commanded is fleeting, loyalty earned is enduring. Hint…being feared as a leader is not a badge of honor to be sought after. It’s one thing for employees to have a healthy respect for you, but quite another to be in fear of you. Remember that respect is earned, and fear is imposed. Fear based motivations don’t instill loyalty, create trust, build morale, inspire creativity, attract talent, or drive innovation. The truth is fear stiffles, and if left unchecked, eventually kills all of the aforementioned attributes.

If you’re a leader who has created a fear based culture I can guarantee you two things: 1.) your employees won’t give you their best, and; 2.) when things get tough, or other opportunities present themselves, your employees will cut-and-run at the first option that comes their way because you have failed to earn their loyalty. As a leader, if you believe that instilling fear in your employees is a good thing, you may be a tyrannical bully, but you are certainly not an effective leader.

Remember that great CEOs see themselves not as masters of the universe, but as inspirational servants, catalysts, teachers, and team builders…Again, I would strongly encourage you to think “leader” and not “dictator.” Reflect back to your time as a student…which educators brought out the best in you? My guess is that it was not the know it all professors who lived to put you in your place and show you how much they knew and you didn’t. My suspicion is your best memories are of those teachers who inspired you, encouraged you, brought out your passion, and challenged you in a positive fashion. I would also suspect you produced you best work for the latter and not the former.

So, how do you tell if your employees respect you or fear you? After reading the above comments it should already be obvious, but just in case, review the 5 items below:

  1. A Team of Yes-men: Feared leaders either surround themselves with like-minded people, or train people to share their views in a vacuum. Either way they lose…Great leaders value the opinions of their team whether or not said views happen to be in concurrence with their own beliefs. The best leaders not only subject their ideas to scrutiny – they openly encourage it.
  2. Lack of Interaction: Along the lines of number one above, if executives, management, and staff don’t proactively seek your advice and input then you have a respect problem. They either don’t value your contributions, or they know from experience that you’ll treat their inquiry in a belittling fashion. Over time, many fear-based leaders unknowingly train their team to think: “Why even try if there is no upside? The boss will never go for that.”
  3. Lack of Feedback: If as a leader you don’t subject yourself to a 360 review process, then you are not earnestly looking for personal growth and development opportunities. Here’s an ego check – if you do utilize a 360 review, and all the responses are positive, evaluate whether this has occurred because you are feared and are thus the recipient of insincere flattery, or because you have the loyaly and respect of those you lead.
  4. Revolving Door: If you either can’t attract or retain tier-one talent, you are not an effective leader who has earned the respect and loyalty of your team…In fact, upon closer examination, you’ll find that you probably don’t have a team. Sad but true…real talent won’t be attracted to, or remain engaged with leaders who operate on fear-based tactics.
  5. Poor Performance: Leaders who have the respect of their team will outperform those that don’t. Leaders who attempt to use command and control tactics without the necessary underpinnings of real leadership principles will simply not do well. If your organization is not thriving and growing, then the first thing that should occur is a long look in the mirror…Begin your triage by first evaluating your leadership qualities or the lack thereof.

Ask yourself the following question: If your employees held an election today, would you be re-elected as CEO by a landslide, or would you be voted out? Bottom line…what is rightfully earned and freely given (loyalty, trust, and respect) will always outlast what is imprudently acquired for the wrong reasons (the bully tactics of fear-based control). For me it’s an easy call – you stand by those whom you trust and respect, and you don’t abandon them because it’s popular or convenient. Loyalty matters…

What say you – Captain Soble or Lt. Winters?

Social Media for CEOs

By Mike Myatt, Chief Strategy Officer, N2growth

Nary a week passes where I don’t hear from a CEO who’s grappling with this social media conundrum: should I, or shouldn’t I? The inquiry usually goes something like this: “I’m interested in learning more about social media, but my board thinks it’s a bad idea, I don’t have any additional bandwidth, and I’m not even sure where to start…is social media really effective for CEOs?”  The discussion about whether or not CEOs should become more digitally accessible  is certainly not a new one, but in my humble opinion, it’s a tired one that should have ended long, long ago. In today’s post I’ll share my thoughts on why it’s time to put a fork in the social media debate…

Background/Disclaimer
We have a social media practice at N2growth, I use social media, and all of the CEOs I coach are participating at some level in social media. That said, my feelings are not prejudiced, just biased- there is a difference. Experience matters in this debate, and frankly, most of those who opine in dissent don’t have much experience to draw from…In an effort to be balanced, I have nonetheless attempted to represent both affirmative and dissenting opinions below:   

The Dissenting Position:
The stance of the risk adverse is there is little to be gained, but the potential for much to be lost in social media initiatives involving C-level executives. The fear of exposing executives and the corporate brand to public criticism, along with disclosure concerns with regard to forward looking statements, and other confidential information have caused concern for boards and legal departments. They are risk managers who believe in protecting what was rather than embracing what is, and what will be.    

The Affirmative Position:
Proponents of C-level social media participation believe the digital universe provides the CEO with the ultimate platform to evangelize the corporate brand, and to effectively communicate across multiple constituencies. They are opportunity managers who believe engagement to be more valuable than silence, they believe in dialog not monologue, they believe in change and innovation – not in status quo.   

The Truth (as I see it)
A main point of consideration for CEOs is that social media transforms you from an enigma (the stereotype of the uncaring corporate executive) into a human being that people can relate to…social media personalizes you in a way that few other mediums can.  Whether you Tweet, Blog, Facebook, YouTube, etc.,  these communities allow you to be known for the whole of who you are as an individual, not just as a bio on the corporate website. The following list is comprised of  a few representative examples of reasons why all CEOs should be actively engaged in social media:

  1. Leadership Benefits: As CEO, you’re not supposed to be the relic, but the visionary. This may hit a little close to home for some, but the message needs to be heard. Great leaders lead by example. How can you ask members of your team to be innovative, engaged, proactive, creative, authentic, transparent, and communicative if you are none of those things? You cannot be an effective leader if you don’t model the behavior you seek in others. Be a leader or be a disingenuous hypocrite – the choice is yours.  
  2. Learning Benefits: Social media is not just a tool for pushing out corporate propaganda – use it as such and you’ll pay a steep price. What it is, is open access to people, relationships, communities, and constituencies. Put simply, it’s a chance to observe, listen, process and learn. A CEOs needs to understand that in addition to affording them with the benefit of directly engaging consumers of their goods and services, social media also provides a window into the insights or their employees and allows them to monitor the pulse of their culture. Social media also allows you access to business, market, and competitive intelligence in real time. 
  3. Business Benefits: Yes, I know, you’re the CEO and you have to pay attention to business. Well, social media does have significant ability to drive revenue, increase personal and corporate brand equity, open markets, create relationships, drive innovation, improve morale, build partnerships, attract & retain talent, and to generate communications leverage. Not only does social media work, but it works even better when the participant has a bit of cache. The truth is the farther up the org chart one resides, the more influence one possesses, the more leverage one creates, and the more one can accomplish via social media. You can do none of these things effectively by sticking your head in the sand and pretending social media doesn’t matter.
  4. Communications Benefits: I hesitate to mention this becasue it’s been so overused, but becuase it’s true, here goes: “The conversation is already taking place, so you might as well be a part of it.” Social media gives you the ability to be proactive in your communications, or if needed, provide a rapid response to crisis. Unfortunate things happen in business, and sadly, they’ll likely happen to you at some point. Having strong relationships, supporters, and fans created through social media is invaluable – so is having a channel to quickly and credibly communicate with those who are not.
  5. Legacy Benefits: I’ve often said the best legacy is one that can be lived before you’re gone. A legacy is shaped by the sum total of your personal and professional contributions, and most significantly by those contributions which have been the most beneficial to others. Social media takes your personal interests and your professional body of work and gives them access to a larger community. Social media can enhance the value of existing relationships and create new ones, it can help you evangelize your passions, recruit people to your causes, and to help others with their causes. Social media can help you and those you care about make significant contributions.     

To those of you reading today’s post who still haven’t seen the light, and believe that social media is either insignificant, or that the window of opportunity has passed you by, I put forth the following demographics as proof of the power of the social media as a medium:

  • There are nearly 150 million social media users in the U.S. alone, which is more than 60% of the U.S. internet population.
  • According to eMarketer, the average time spent per user on social networks as of late 2010 exceeded 5 hours per month. Remember this is an average number, many users eclipse this number by a significant amount. As an example, according to clickZ, Blog readers average 23 hours online each week. 
  • Nielsen data  shows a 2x lift in brand metrics around social ads vs. non-social ads. 
  • GroupM’s research reports a significant lift in search behavior from users exposed to a brand on social networks. 
  • Over 12 million American adults currently maintain a blog.
  • I have clients who have tens of thousands of Facebook Fans, oodles and oodles of Twitter followers, popular blogs, have driven huge increases in revenue, and have quite literally changed the dynamics of their businesses, brands and cultures via social media. 

If I haven’t convinced you yet, let’s look at what some other CEOs said just in reference to Blogging in a recent issue of Inc. Magazine:

  • “More effective than any marketing budget for getting our name out there.”
  • “Within 60 days of launching our blog, it is our top referral source.”
  • “Results have been great – we had more than 100,000 visits in May alone.”
  • “Our clients love it, and lots of people in our industry pay attention to it.”
  • “The blogs are 50 percent of website traffic. Great participation.”

So, do I think CEOs should be actively engaged in social media? In a word; YES. If you’re a CEO who hasn’t taken that first step, or if you’re struggling with strategy or execution, give me a call and I’ll help. If I can’t help I’ll refer you to someone who can… 

Thoughts?

Leadership & Emotional Control

By Mike Myatt, Chief Strategy Officer, N2growth

Leadership & Emotional ControlIf the above photo resembles a typical leadership meeting at your place of work then you may want to read this post. FACT: Leaders who lack emotional control won’t remain in a position of leadership for long. There has been no shortage of information published on the topic of Emotional IQ or what’s referred to as EQ in recent years. After all, being in touch with your emotions, as well as being in tune with the emotions of others is an important trait for any leader to possess. However I believe the more important emotional trait for CEOs and entrepreneurs to gain mastery over is what I call EC or emotional control. In today’s post I’ll discuss the value of gaining control over your emotions…

Business can be tough, and the outcomes of certain events or decisions often seem far from fair…Just when you’re sailing along with the perception that all is well, you can be hit out of left field with a situation or circumstance that can bring even the most sophisticated CEO to their knees. Even if you don’t find yourself having to frequently deal with extreme situations, it is often nothing more than normal dealings in the ordinary course of business that can place you at a nexus…Do you make your decision based upon the facts at hand and sound decisioning metrics, or do you let your emotions drive your decisions?

Over the years I have observed countless examples of people who jeopardize their future to satisfy an emotional need, when what they should have done was protect their future by exhibiting control over their emotions. I have witnessed otherwise savvy executives place the need for emotional security and superiority ahead of achieving their mission (not that they always understood this at the time). Case in point…have you ever witnessed an employee throw a fit of rage and resign their position in the heat of the moment? If you have, what you really watched was a person indulging their emotions rather than protecting their future.

The message here while a basic one, is nonetheless mission critical for leaders…Keep your wits about you and never let them see you sweat. Emotional outbursts, rants, and rages will rarely do anything but cause you to make poor decisions and to lose credibility. There’s an old saying that goes: “When you lose your temper, you lose.” I believe that with a loss of your temper you can lose your credibility, your influence, and your ultimately your ability to lead. It shouldn’t go without note that perhaps more important than “what” you lose, is “who” you can lose when you don’t maintian emotional control. Regardless of what might be tugging at your emotional strings, leaders need to remain calm while assessing the situation at hand. Make decisions based upon the big picture, and never based upon heat of the moment emotions.

I have only raised my voice in the workplace twice during my career, and both times I have regretted it tremendously. The reality is, whether you’re right or wrong isn’t at issue when you lose emotional control – people won’t remember anything other than the fact you blew your top. Great CEOs lead by example…they set the tone for others in the organization by demonstrating proactive, rational, logical and balanced thinking as opposed reactionary emotional thinking. Resist the temptation to give way to emotional decisioning and you’ll see your career and company soar to new heights of success.

I welcome your thoughts, experiences & observations, and encourage you to leave a comment below…

Questions and Team Building

By Mike Myatt, Chief Strategy Officer, N2growth

Question and Team BuildingAn army of one isn’t really much of an army is it? And I can assure you that any CEO who views him/herself as an army of one will fail. Whether you like it or not, your success as a CEO will be largely tied to your team building ability. Not only do great CEOs understand how to recruit a top executive team, but they also understand how to build cohesion among team members through collaboration while addressing specific situational and contextual needs. Great CEOs realize the importance of being consistently, purposefully and intensely engaged with their CXOs. They understand how to effectively deploy these highly productive and valuable team members to create tremendous leverage and velocity across the enterprise. In today’s post I’ll share the questions that great CEOs use to align the interests and focus the efforts of their executive team…

It is not uncommon when working with new clients that I find very fractured executive teams where team members more frequently work against one another, rather than with one another (see “Managing Tough Relationships“). I often observe ego centered conflicts among senior executives, which turn into a competition for turf, budget, power, influence, control, and ultimately survival. As a CEO you can either pit your executives against one another, or have them collaboratively engage in supporting one another for the overall good of the enterprise. An executive team that actually embraces the concept of collaboration will substantially out perform a silo-centric executive team focused on empire building.

Great CEOs not only view their interactions with team members as coaching and mentoring opportunities, but also as learning opportunities for themselves. If as a leader you don’t take the time to get to know your team members on a very personal basis you simply won’t build the trust necessary to successfully weather the seasons of leadership. Because all leaders face good times and bad, it is essential that strong, caring, and loyal relationships are established so that candor and collaboration can occur irrespective of the situation at hand. 

I read a great post yesterday by Dan Rockwell (@LeadershipFreak) in which he asked: “what’s the most powerful question of all?” My belief is that there is no perfect question, just the right question for the moment. The comment I left on Dan’s post was as follows: 

“Thought provoking post to be sure…However my belief is that the most powerful question of all is the one that works within the context of the situation at hand. The question must be appropriate to the person(s) being addressed, the timing must be spot-on, but most importantly it must unlock the door to reveal the needed input/feedback/information.

Relying on any single question to serve as the omnibus catch-all question is dangerous. I’m not sure what the most powerful question in the world is, but I know that the most powerful question of the moment changes frequently…”

Therefore in the text that follows I’ll provide you with a resource that is immediately actionable, and highly productive – a list of questions that can be used across situations, constituencies and reporting lines. I have found that one of the most effective ways for CEOs to lead their senior executives is by helping them refine and justify their reasoning through the use of intelligent questions. This serves to not only align interests and areas of focus, but also to facilitate the exchange of insights, and to acquire useful knowledge and information – it also builds stronger relationships. Contrary to the beliefs of some, dialog is a healthy thing. I strongly recommend to all CEOs that they routinely ask team members the following questions: 

  • Why? (my personal favorite and the most powerful one word question on the planet)
  • How can I help you with that? What do you need from me in order to make that happen?
  • That’s an interesting thought, what process did you go through to reach that conclusion?
  • What’s our biggest risk in this, and what’s your fallback position? 
  • What if we did nothing at all, what would happen?
  • Why is this important to you?
  • What does this accomplish for us?
  • If we fail in this can we live with that?
  • How does this add value to our <<fill in the blank>>?
  • Can you give me a bit more detail on the logic used to arrive at your <<costs, timing, return estimates, etc.>>?
  • How will this impact <<individual, team, business unit, competitive advantage, brand perception, customer satisfaction, etc.>>?
  • What are the greatest challenges you face in pulling this off, and how do you plan to deal with them? 
  • Where do you see “X” account in <<insert time period>> and what can we do to (improve customer satisfaction, increase influence with key stakeholders, increase the life-cycle value,  etc.)?
  • Which markets, partners, clients, or other opportunities can add significant value to our business?
  • What specific steps can you take to increase your area’s contribution margin? 
  • Does this add value to our core business? How? Why?
  • Does this effectively and efficiently support our values, vision, and strategy? How? Why?
  • What can you offer as validation of proof of concept? 
  • What motivates <<insert person’s name>>? What’s really important to them?
  • What will be the key performance indicators for this? How will we measure them, and what hurdles do we need to hit to be successful?
  • Do you have the necessary resources (financial, technology, talent, infrastructure, etc.) to hit your objectives?
  • How can we improve the risk management, governance, control, and reporting functions for this?
  • Why should we make this investment? How does it drive revenue, profit, brand equity, competitive advantage, etc. What are the potential risks vs. possible rewards and what is the downside of not making the investment?
  • What are your biggest obstacles and barriers to success? What are your plans to deal with them and what do you need from me?
  • Are all your resources properly aligned and connected?
  • What are the weakest points in your area and how do you plan to deal with them?
  • Who are your strongest leaders and how are you developing them to handle more responsibility?
  • What are you doing to attract new talent?

While the aforementioned list of questions is clearly not exhaustive, it offers some insight into where a CEO should focus their efforts and attention…Perhaps best of all it places you in a constant position of being an active listener, learner, and mentor. If you have a favorite question(s) you use to focus and/or refine your team’s thinking that you’d like to share, please leave a comment below…

Leveraging Down for CEOs

By Mike Myatt, Chief Strategy Officer, N2growth

DelegationIf you desire to become a successful leader at any level, much less a top CEO, it will be essential for you to master the art of leveraging down. The simple truth is that all great leaders are highly skilled in matters of delegation. Think of any top performing CEO and you’ll find that to the one, they possess an uncanny ability to focus on highest and best use activities. While most executives that have reached the C-suite level understand the importance of scaling via delegation, far too many CEOs struggle with the effective implementation of the concept. To this day I’m amazed at how many CEOs still own tasks, roles, projects, and responsibilities that should be delegated to others. So, in today’s post I’ll share a few tips on deciding which tasks, and to whom, the art of delegation should apply…

As a CEO it is critical to develop a keen understanding of your value to the enterprise, and to further develop an awareness of activities that are dilutive to said value. The number of activities a CEO takes on can certainly vary based upon skill sets, stage of corporate maturation, and the talent level of the rest of the executive team. That said, it is nonetheless safe to say CEOs who find a way to focus the majority of their efforts on the business vs. in the business will be the CEOs who achieve the highest and most sustainable levels of success.

Everyone’s time is valuable, and all time should be valued. That said, one of the first things you need to understand as a CEO is what your time is worth relative to others in the organization. There is a simple short-cut which allows you to quickly extrapolate an hourly rate from a total annual compensation figure that I find useful for quick comparative purposes. The calculation works like this: if you make $750,000 per year, just eliminate the last three zeros of your annual compensation figure and divide 750 by two. This calculation will give you an hourly rate based upon a 40 hour work week and a 50 week year. In this example the hourly rate of a CEO who makes $750k is $375 dollars per hour. So, if you run the same calculation on a $100k employee you find a $325 dollar per hour delta between your hourly rate and theirs. Therefore any items that don’t constitute $375 dollar an hour work, which can be leveraged down to someone with a lower hourly rate, provides positive arbitrage both in terms of cost savings and time recovered for higher and better use activities.

Another simple rule of thumb that allows you to maximize the equation mentioned above is to leverage down to the lowest level of talent possible while still insuring an acceptable level of execution. For instance, rather than leveraging down to the $100K talent in the example above, if you drive down further to let’s say a $30k individual, you increase your organizational leverage factor by almost another 30%. The most productive, high-performance organizations have the ability to deliver fairly complex solutions, and complete difficult tasks at the lowest levels within their organization.

Now that we’ve made the economic case for what, and to whom, you should leverage down, let’s discuss what does, and does not, merit the attention of a CEO based on non-financial analysis. In Stephen Covey’s “The 7 Habits of Highly Effective People” he put forth a simple decisioning framework that helps to distinguish between those activities that are truly priorities, and those that just appear to be priorities. Basic human nature is such that each individual believes that his/her problems and challenges are truly important, and therefore should constitute an emergency on your part. Your job as the CEO is to quickly be able to distinguish between the true emergency, and the perceived emergency. In Covey’s classic illustration below, you’ll find a simple chart to use as your guide.

Decisioning Matrix

Understanding how to effectively delegate to others in a fashion that sets them up for success and not failure is another key part of the equation. It is critical to understand that improper delegation not only results in the task not getting done, but in most cases, in the task ending-up back on your desk in worse shape than when it left. You see, if you keep authority but delegate responsibility you actually disable someone from being effective. If you give away both authority and responsibility you haven’t delegated, you have abdicated. If you keep both authority and responsibility over something but delegate the task, you are tasking not delegating.  Smart leaders empower others by delegating the authority but owning the responsibility. I would suggest reading this paragraph at least 3 times and then examine your delegation style to see if you’re being effective in your efforts.

The moral of the story is this – a lack of delegation creates operational bottlenecks, delegation confused with abdication creates organization chaos, and effective delegation of authority vs. tasks creates personal and operational excellence. Focus on making the lower echelons as competent and productive as possible, driving all decisions down to the lowest level in the organization without suffering an unacceptable increase in delivery risk. The tips mentioned above will help you build a formidable organization, make better use of your time, and insure operational performance gains across the enterprise.

Thoughts?

Leadership & Employee Engagement

By Mike Myatt, Chief Strategy Officer,N2growth

Employee EngagementThe topic of “Employee Engagement” is something that many CEOs tend to struggle with. Long gone are the days where the executive leadership of a company can remain sequestered in their offices with an internal focus on hard metrics. Given the current economic climate, it takes far more than cost-cutting to survive. It is the CEO who understands the need for focus on the soft metrics of customer centricity and employee engagement that will create sustainable growth in revenue and brand equity. In today’s post I’ll examine the need to have a fully engaged work force…

Before you read any further, I want you to stop and ask yourself the following question: How many of your employees are truly passionate about your company, its values, its vision, its mission, and the role that they play within the organization? Don’t fool yourself…conduct a harsh, critical analysis and come up with a true head count of the passionate employees within your organization.

Your answer to the question above should be a very telling sign about the overall health of your business. Are people just showing-up and punching the clock to collect a paycheck, or are they personally consumed and committed to achieving the company vision? Are your employees corporate evangelists serving as a motivating force to be reckoned with, or do they gather in small groups to gripe and complain about all the things wrong with the company and its leadership?

The key to having an engaged workforce is to have a passionate workforce. And the simple truth of the matter is that no single person in the company can instill passion in the ranks like the CEO can. Despite the consensus recognition that employee engagement matters, the enormity of its impact on the company’s bottom line still appears to be misunderstood by most CEOs. I rarely talk to a CEO that doesn’t understand this principle in concept, but yet I rarely see chief executives who put theory into practice…

So it begs the question, why are CEOs listening but not taking action? The answer seems to be that CEOs continue to allocate considerable effort and resources toward engineering the corporate strategy, yet they seem to be unaware of what forces can prevent said strategy from being delivered successfully. Not surprisingly, employee engagement is often the critical missing factor.

As the CEO you must also become the chief engagement officer. Operating in a vacuum and being out of touch is never a good position to find yourself in as the CEO. I have consistently espoused the value of walking the floor, dropping in on meetings on an impromptu basis, taking employees of all ranks to lunch, and any number of other items that focus on raising your internal awareness and creating a passionate workforce.

It is your passionate employees who are the franchise talent (regardless of position) you should be building around. If you can’t get employees to see the light and become passionate about the company and their contribution, then seek to replace them as quickly as possible. Just as passion is a positive, contagious trait so are apathy and dissatisfaction. Passionate employees are productive, energized, committed and loyal assets. Apathetic employees quickly become disenfranchised liabilities that will hurt both productivity and morale. To drive home the point of how much I value passionate employees, I would take a moderately talented but passionate employee over a very talented but complacent employee eleven times out of ten…

Truly great companies are built around passionate employees. When you walk into a dynamic, thriving company you can sense the passion…you feel a certain buzz and fervor that pervades everything. Contrast this with a company that feels as if it has no pulse…If you’ve ever walked into an organization that feels like rigor-mortis has set in, you know what I’m referring to…In today’s economy, the old saying that “the only thing worse than an employee who quits and leaves is the employee who quits and stays” has never been more accurate.

As a leader you need to understand that your employees not only want to be led, but they want to be led by a passionate leader. Ultimately employees want to be passionate about what they do; in fact, they’ll go to the ends of earth and sacrifice tremendously if passionate about the endeavor. Think of the employees that started off with Gates and Allen at Microsoft, or those that worked with Phil Knight in his garage before Nike even had a name, or those employees that endured the early days with Larry Page and Sergey Brin at Google…it was their passion and commitment that helped change the landscape of business, not their starting salaries.

To build an extraordinary company, you must light the fire in the bellies of your workforce…You must get them to feel passion about your organization and to connect with your vision. You must get your employees to engage. As the CEO, your ability to transfer your passion to your employees is the essence of being a great leader…So much so that if you can’t accomplish this, you simply can’t be a great leader. Think of any great leader, and while you’ll find varying degrees of skill sets, intellect and ability, I challenge to name even one that did not have passion, as well as the ability to instill said passion in team members.

Thoughts?

Is Starbucks an Economic Bellwether?

By Mike Myatt, Chief Strategy Officer, N2growth

Starbucks has seen better days...Is Starbucks and economic bellwether, have they just been mismanaged, or are consumers simply becoming more savvy? Why do I ask, or perhaps more to the point, why do I care? Whenever an industry giant stumbles there are lessons to be learned. If you couple Starbucks recent earnings announcements, with massive store closures and other corporate re-engineering initiatives, there can be little doubt that Starbucks is in trouble. Put candidly, Starbucks has gone from an industry darling to just another turnaround. So, in today’s post I’ll share some insights that all CEOs can apply to their businesses in hopes of avoiding a Starbucks like event…

Let’s start by looking at Starbucks recent earnings announcement:

  • Quarterly Earnings: Starbucks Q4 earnings fell 97%, to $5 million, from $159 million in the year-ago period. To be fair, this figure included a $105 million charge for restructuring, and other costs associated with executing Starbucks re-engineering plan.
  • Annual Earnings: Full-year earnings also fell, 53%, to $316 million, from $673 million last year.
  • Same-Store Sales: U.S. same-store sales also cratered, down 8% from Q4 2007. The company cited decreased store traffic, as well as lower average customer check prices, thanks in part to a reduction in merchandise and in-store music sales.

In all fairness, I believe there’s an element of truth to be found in each of the scenarios posed in the opening question of today’s post. Let’s examine each one:

  • Is Starbucks an economic bellwether: Absolutely…Times are tough, consumer confidence is down, and retail spending is off. While some of us don’t see coffee and pastries as discretionary spending, the majority of Americans still do. Starbucks store traffic is down, their average ticket price is down, and many of those still frequenting Starbucks are literally pinching their pennies. Coffees are now often being purchased on credit or by rounding up change, something that wasn’t as prevalent even a few months ago…
  • Has Starbucks been mismanaged: Yes and no…on the positive side of the equation Starbucks has been an innovator on numerous fronts, and as a result built a category dominant brand. On the negative side, Starbucks grew too fast, spent too loosely, and let quality and customer service take a back seat to expansion hurdles. The reality is that even with all of Starbucks brand power, and the genius of Howard Schultz, their overall business model had intrinsic flaws, and management took too long to recognize this.
  • Are consumers simply becoming more savvy: Look, you don’t have to be a rocket scientist to figure out that you can buy a month’s worth of coffee at the grocery store for just a bit more than what you’d spend on one drink at Starbucks. When something is new and hip, or when the economy is flourishing, consumers will pay a premium. When a trend (see a previous post on trends) begins to run its course, and/or the economy wanes, pricing premiums evaporate in a New York second. Put simply, not too many consumers are interested in paying a 600% mark-up on their coffee even though the lines are shorter these days… 

Bottom line…Starbucks fell asleep at the wheel and took their good fortune for granted. If you can believe it, Starbucks ran their first TV ad this year…They should have been plowing money into advertising to expand their dominant brand equity in good times creating a competitive gap that would have been tough to overcome. Instead, they waited to launch their first TV commercial as a Hail-Mary desperation pass when the game had already been lost. Will Starbucks live to play another day? Sure they will, but it will be a long, tough climb back-up to the top of the mountain…

Are CEOs Getting a Bad Rap

By Mike Myatt, Chief Strategy Officer, N2growth

This is not how you want to be viewed...Are CEOs getting a bad rap? In a word, yes. As a top ceo coach, I can tell you that CEOs are under siege…in fact, I would go so far as to say that CEOs as an occupational class are in a state of crisis. I understand that Americans are upset about the economic debacle we find ourselves presently entangled in. I’m upset and outraged as well. What’s frustrating to most is that there are many more questions being posed than answers being given at this point in time. We’ve entered the blame zone of rash allegations and finger pointing in order to deflect responsibility. While I understand that no sane person could have watched the events of the last few weeks and not want to pin the blame on someone, simply assigning “villain” status to chief executives as a class because their compensation plans seem egregious to some is not the answer. In today’s post I’ll examine the issue of CEO Compensation and why I believe CEOs are unfairly being vilified.

So, is CEO compensation out of control? In some cases I absolutely believe it is, but not in every case as many politicians and pundits would have you believe. I take great exception to those chief executives that take advantage of the position they hold, the shareholders they represent, and the relationships they’re entrusted with. That being said, the CEOs described in the preceding sentence don’t constitute the majority of chief executives. I have called for transparency in previously addressing the issue of Rogue CEOs and Board Accountability. That being said, rogue CEOs are the exception and not the rule. Most chief executives are hard working professionals who take their fiduciary obligations very seriously. Moreover they hold the position of chief executive while incurring great personal risk and sacrifice.

At face value, I don’t care how much money a CEO does or doesn’t make. The issue is not the amount of remuneration paid out to CEOs, but rather on what basis, and when it is paid out. Simply put, CEOs that perform deserve all the compensatory benefits that accompany said performance, and to compensate them for the risk they undertake. Conversely, those CEOs who fail to perform have no business maximizing compensation to the detriment of the stakeholders they were supposed to be serving. Let me use the actual case of Dick Fuld, the former CEO of Lehman Brothers to see if I can help you clarify your thoughts on the topic of CEO compensation. I would ask that you watch the video and form an opinion from what you see:

If you were to just watch the above video of his recent testimony without knowledge of the whole picture, I think you would probably come to the conclusion that he displays a lack of sincerity, credibility, and remorse. One of the oldest and most highly regarded investment banks failed on his watch, and all you witness in observing his testimony is what appears to be Dick caught in a self-serving, sanctimonious CYA maneuver. Now, lets take a look at things with a bit more disclosure, and from a bit of a different perspective. Look at the following revenue and profit numbers (I rounded the numbers for simplicity sake) under Dick’s leadership of Lehman Brothers leading up to the failure:

  • 2004 Total Revenue: $21 Billion – Net Income: $2 Billion
  • 2005 Total Revenue: $32 Billion – Net Income: $3 Billion
  • 2006 Total Revenue: $46 Billion – Net Income: $4 Billion
  • 2007 Total Revenue: $59 Billion – Net Income: $4 Billion

During the time frame noted above, Lehman showed steady growth in both revenue and profitability under Dick’s leadership. If you look at the most aggressive estimates of the amount of his total compensation during that time period it totals nearly $480 million dollars. This number is less than 1% of the $140 Billion of gross revenue and less than 4% of the $13 Billion of net income earned over the same period.  I don’t believe this number is in and of itself a bad number, especially given the fact that most of Fuld’s compensation was incentive based. Fuld had no employment contract, received no golden parachute upon exit, and there were no last minute insider stock trades that he benefited from. Dick Fuld didn’t receive excessive compensation any more than his other executives and investment bankers did. They were highly compensated in an industry that offers lucrative pay. While not palatable to all, it is certainly not a crime.

The real issue surrounding Fuld is not his compensation, but rather his poor decisioning in failing to manage the risk associated with the complex synthetic and derivative securities they were participating in. However he was not alone in this regard, as all other financial institutions were trading in these securities as well.  

Let me shine the light squarely on those individuals whom I believe are the real culprits in this debacle. It was not the investment banking CEOs, but the corrupt CEOs of Fannie Mae, Freddie Mac, and the corrupt politicians who allowed them to function without oversight and accountability. I must also chasten the shameless politicians who use national tragedy and congressional testimony as a publicity platform to air venomous soundbites in order to transfer blame and cater to their constituencies leading up to an election. Oversight is a good thing, but where were these concerned politicians leading up to this mess. Arm chair quarterbacking and shameless self-promotion at the expense of others is not why we elect our public servants, but I digress…

Bottom line…it is not wrong to assign some blame to the rogue CEOs who deserve it, but it is terribly wrong to assign blame to those good chief executives just because CEO is printed on their business card.

Rogue CEOs & Board Accountability

By Mike Myatt, Chief Strategy Officer, N2growth

Accountability should be more than fine print...Rogue CEOs…given the recent failure of banks and financial institutions previously thought to be untouchable, there has been a tremendous amount of justifiable venom being spewed at the CEOs of these firms. Their ignorance, and in some cases their arrogance, allowed these rogue CEOs to operate outside of normal business rules, conduct self-serving agendas, and partake in self-dealing transactions all while receiving outrageous compensation. Before I go any further, let me state that I believe we should understand that the overwhelming majority of CEOs operate within the bounds of reason and ethics consistently placing stakeholder interests ahead of their own. The real question we should be asking is where were the boards of directors during this period of mismanagement? You see it is the board who is responsible for holding the chief executive accountable. Even where you have a CEO who is inclined to misbehave, an actively engaged board of directors simply won’t allow it to happen. In todays post I’ll examine the role of the board of directors in keeping CEOs accountable… 

Before I proceed further, and for contextual purposes, I believe it’s important to actually define the role of the board of directors. While there are certainly a variety of opinions as to the roles and obligations of a company’s board of directors, from my perspective they can all be boiled down into four simple responsibilities:

  1. Shareholder Accountability: A board member’s primary responsibility is to act in good faith as a fiduciary in representing the long-term best interests of shareholders. A board’s actions and decisions must be able to pass the litmus test of public scrutiny (legally, morally, and ethically), rise above personal agendas, and always place shareholder interests above all else;
  2. Corporate Governance: A board must insure that the corporation’s charter and by-laws are adhered to. Moreover a board must use its best efforts to hold executives accountable for insuring that corporate actions fall within other legal, financial, regulatory, and compliance boundaries. Ignorance and apathy are not the traits of a good board. Great board members are proactive, involved, supportive, consultative, experienced, and savvy. They know the rules, play between the lines, and do the right things. 
  3. CEO Oversight: It is the board’s job to select the CEO, provide the CEO with support and guidance, and to hold the CEO accountable. Good boards exercise great care and prudence in profiling CEO candidates, recruiting the right CEO for the job, providing the CEO with a clear job description, successfully onboarding the CEO, and holding the CEO accountable for meeting a set of clearly defined expectations. Good boards do not attempt to micro-manage a CEO, rather they understand their highest value in being a value added resource for the CEO focused on helping the CEO become successful. 
  4. External Visibility: A key responsibility of the board is to serve as an external champion of the corporate brand. Board members should have a clear understanding of the corporate vision and mission, and where prudent, evangelize the message for the benefit of the corporation. Whether this requires providing networking assistance, investor relations support, or engaging the media, a highly regarded and active board can add substantial value to the enterprise.

In the text that follows I’ll offer several points that will help a board evaluate whether or not they have the right CEO for the job:

  • Tenure: In a previous post entitled “CEO Term Limits” (a must read for board members) I stated that there is no such thing as a standard shelf-life for a CEO. No rules of thumb apply when evaluating whether a CEO has outworn his/her usefulness purely from a chronological perspective. I’ve witnessed CEO’s where the company has outgrown their skill sets, and/or abilities within a year of hire (a bad hire…), and I’ve also observed many instances of CEOs that have successfully guided companies for 20 years. The question is not how long a CEO serves, but rather what he or she does while serving. Whether age 32, or age 72, a board must ask themselves, is our CEO doing the job, and perhaps the better question is, are they the best CEO for the job?
  • Performance: The topic of performance is a multi-faceted issue. A CEO’s performance should be benchmarked against a variety of key performance indicators which are clearly spelled out in the chief executive’s employment agreement. When evaluating performance, a board must evaluate whether a lack of performance exists across all areas or in a single area, whether the lack of performance is a short-term aberration vs. the likelihood of it being a burgeoning problem, and whether the CEO can be coached through the performance gap, or whether the lack of performance is an irreconcilable issue.
  • Ethics Violations: The character of the CEO is often synonymous with the brand of the enterprise. Once a chief executive has violated the public trust, or made a gross or negligent error in judgment which could taint the corporate brand, a board should move swiftly to restore the integrity of the corporation. Many things can be spun, justified, rationalized, or managed, but a lack of ethical behavior on the part of the chief executive is not one of them. Let me also be clear that a good employment contract will make null and void any favorable severance packages where malfeasance, misfeasance, gross negligence, or fraud on the part of the CEO is present.
  • Loss of Confidence: Once the board, the employees, the capital markets, the press, or other key constituencies have lost confidence in the CEO, the board must replace the CEO. A CEO cannot lead, motivate, or inspire without the trust and confidence of those they serve.
  • Lack of Development: The corporate enterprise and the business world in general, are dynamic, fluid, and evolving environments. Therefore great chief executives cannot be static in their personal or professional development, or in their strategic and tactical approach to doing business. A CEO that does not exhibit the ability to change, innovate, and grow with the world around them is someone who will likely need to be replaced.

In the final analysis, the board’s decision as to whether a CEO should be replaced is a decision that should be made within the framework of managing risk and opportunity. The board must weigh the transitioning a CEO against the financial costs, the impact of the business disruption and lack of continuity that can come with replacing the CEO, the market reaction to a change in leadership, and whether the decision is ultimately motivated by right thinking. Lastly, and perhaps most importantly, the title of “Director” should not be synonymous with “Crony.”  Any board member not willing to uphold the aforementioned duties and responsibilities should be replaced in a New York second.

Due Diligence – Not Optional…

By Mike Myatt, Chief Strategy Officer, N2growth

It pays to do your homeworkAs much as you wish it might be so, due diligence is really not an optional consideration. Have you ever made a decision based upon what you thought was a thorough understanding of all pertinent information only to find out after the fact that you didn’t know as much as you thought you did? It’s not much fun to find yourself on the wrong side of the information gap…Incorrect data, omissions, information that is biased or skewed, misrepresentations, misunderstandings, or any number of other scenarios that lead to the creation of information gaps can be very costly in today’s business environment. In today’s post I’ll discuss the critical nature due diligence…

Quality information enables good decisioning. While at face value this would appear to be a rational statement, the problem lies in the fact that it is also a relative statement…Over the years I’ve witnessed business people that make critical decisions based on nothing more than gut feel or instinct. I’ve observed others that rely on the use of detailed internal checklists and/or processes to validate their assessments, and I’ve known others who won’t make a critical decision unless they hire third party professionals to conduct due diligence on their behalf. Regardless of your method (or lack thereof) managing information and decisioning risk has never been more important than it is today.

With the constant pressure to compress transaction timeframes in an effort to remain competitive, many firms are actually doing less due diligence on larger transactions involving more potential risk…While this may sound ridiculous, the sad truth is that it is a scenario which is all too common. Hedge funds, venture capital and private equity firms, asset managers, investment banks, or corporations involved in anything from early stage investments to real estate transactions to mergers and acquisitions have intense pressure to get deals closed quickly in a market that has never been more complex to navigate. 

While you by no means should ignore due diligence, you also cannot allow yourself to fall prey to being paralyzed by analysis paralysis. To balance the main topic of this post with the transactional realities present in today’s market you should also read a previous post entitled “Timing Is Everything.”  

Let’s put aside the obvious reason for thorough due diligence (making a good deal), firms that don’t have rock solid due diligence capabilities may find themselves in arbitration, litigation or under the scrutiny of regulators as a result of poor decisions. Public companies dealing with Sarbanes-Oxley should be terrified of not crossing every “t” and dotting every “i”…

Bottom line…No amount of due diligence can protect you against flawed decisions or a bad deal, but if a thorough due diligence effort can manage or transfer risk in the majority of situations it is well worth the time, effort and cost to do it properly. If you short cut the process you’ll likely find yourself being held accountable for that decision someday…

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