Vardell Blog 11: My Wish For You

Mr./Ms. Senior Executive or ‘C-Suite’ Leader

By Dave Vardell

Like me, you probably learned a long time ago that you can’t conscribe goals for others.  Not your boss, spouse, your kids, friends, never relatives and not ever co-workers. We can never have “goals” for others, only “desires”.  They will only act on the goals they have elected for themselves.  Oh sure, we can use rewards like incentive plans, stock options/warrants, and other financial inducements to steer them in a direction of mutual gain.  Even that will not give maximum pay out unless the dream is real and they not only believe it but also own it as their own.

So what is it that I hope for you?  I hope you have people you can trust and that others can trust you.  I know you may be thinking, “Is that all?”  You might even say, “why didn’t you hope I would be independently wealthy, be famous in my field, have people asking me for my opinion on critical subjects, have traveled far and wide, retired early” or any number of other personal gains.  In an earlier blog, I referenced Michael Covey’s book The Speed of Trust (2006).  I would like to close this series with a few more points about the criticality of “Trust” in a truly successful life.

First, as Covey points out in the following graphic, (The Speed of Trust page 13), trust is critical to speed and cost:

<+> Trust = <+> Speed  <-> Cost

< – > Trust = < – > Speed <+> Cost

Looks intuitive right?  We all care deeply about cost and speed right?  So then why is trust at an all time low in business, government, and every other parts of our society?  Obviously, we all know it is key to everything but we feel powerless to move the needle from empty to full.  If you bought in to my premise in the first blog about the impact of crushing US Federal debt and the impending inflationary impact of the Federal Reserve to pay that debit with printed dollars (Fed buys 85% of our debt as of this writing), then you know we better figure out the trust problem at least for our spheres of influences if we are to position our firms and organizations where they need to be in very difficult times.  Do you have a sense of urgency about this?

I have also focused on the absolute need to unleash those to lead in our organizations.  So what is the connection between learning to let others lead as Belasco said in Flight of the Buffaloes (1994) and trust as Covey promotes?  We must learn to trust those who have the ability to lead and help them to do so.  This is in no way blind trust.  Of course not!  We fulfill the vision when we have properly communicated and empowered our teams.  We set metrics in place with proper systems to give the frequency of feedback needed for those leaders to measure the gains and to sustain the needed improvements.  We, as the C-Suite, serve the process to assure it is equipped and empowered to win.  We win only after all those who report to us have won or we don’t win at all.  We have the long-term view.  Oh you say, “Dave you don’t understand I am in a public company and my shareholders won’t let me have a long-term view”. Would you accept this excuse from your people?  I think not.  If you use that kind of approach it will destroy the trust of your people.  But you say, “Dave you are just not being realistic or you are naïve.”  Maybe so, but not overcoming the status quo will only welcome us to the land of mediocrity characterized by higher cost and slower results.

The sad reality is that trust and the excellent leadership that produces it have never been easy.  We have never had trust without genuine leadership.  Kotter’s 8 Steps of Change work handsomely but not without leadership that works relentlessly to build trust in everything that gets done.

What do I hope for you?

• Be sold out.
• Be bold.
• Be all in and Just Do It.

The good news is that some leaders are doing this and have been for decades.  It can be done.  Your people are waiting for you to fully commit.  The clock is relentless.  That’s my “desire” for you.  What is your “GOAL”?

Are You a Shortsighted CEO? Your Company’s Cash Position will Tell The Tale!

by Mark Lamela

Read it anywhere in the news today: “Tesla Motors, the maker of luxury electric cars, led by billionaire Elon Musk, was CASH FLOW positive last week…” and you will see that cash flow has a renewed focus.  As a CEO or C Suite leader you are the keeper of the cash, and much like a banker, you best be making loans/investments which are producing interest or returns rather than pennies on the dollar liquidations and/or defaults.

CEO’s pay for performance, after this last recession (and for many regions and companies it is not yet over), have seen a resurgence of increasing sensitivity, one might even say hypersensitivity, around cash flow.  Short sighted CEO’s or C Suite members often make decisions brimming with confidence and bravado.  Research has shown that “cocksure” executives often make bad capital project investments (including in the M&A space) or operational decisions.

So what does this mean for the CEO and the C Suite?  What does this have to do with change leadership and organizational transformation?  When was the last time an outside professional third party made an assessment in examining your governance for capital projects or Corporate Development (M&A)?  When was the last time you asked your CFO to outline impacts on your changes in financial position (specific operational influencers of positive or negative cash flow)?  When was the last time after your company finished internal review of these areas that you took the step to subject your company’s work to an outside expert for a second opinion with a focus on root causes?

In a so-called good or expanding market, a strong economic environment contributes to a company’s ability to produce cash flow.  This is a good thing right? No, particularly when it masks negative trends in several of the key business basics I mentioned previously.  Let me restate them (not necessarily in order); to be clear, the key rules of business I am referring to are:

Guard & Improve Cash Flow

• Demand Return on Investment (ROI) [Accountable Capital Investment Process]
• Cut Your Losses Now
• Go for Growth [Condition the leadership team to use BHAGS*]
• THINK & then THINK outside the box

[involve Talent to assist you if necessary to provide thought leadership]

Thus, the benefit of financially constrained or recessionary economic times is that it highlights for us (i.e. we can not afford to hide from it and MUST act upon it lest we wish to suffer at our own hand) poor capital management, or faulty or no return on investment thinking (and the ability not to hold those responsible accountable with consequences).

Unlike financially constrained times which make company process and behavior “faults” visible, times of market expansion—the so called boom times make it much more difficult to find the root causes that leave so much cash on the table or allow cash to slip through our fingers with little or no trace.

CEO’s and the C Suite have a fiduciary obligation to align company management with shareholder value.  Allowing company managers to have free reign to invest free cash flow without accountability or appropriate returns not only undermines shareholder equity and diffuses EBITDA**, but may place the company path squarely on the course of ruin.

*BHAG:  Big Hairy Audacious Goal

**EBITDA: Earnings before Interest, Tax, Depreciation & Amortization

Vardell Blog Part 10: Make It Stick – Or – Did You Cross the Finish Line?

Make It Stick – Or Did You Cross the Finish Line?

By Dave Vardell

If you told my two grown sons this phrase “ don’t stop until you cross the finish line” they would immediately ask “Do you know my Dad?”  Guilty as charged.  If we don’t create sustainable change have we really accomplished our job as leaders?  I think not.

Some would say for a leader to have a legacy they must “Make It Stick”.  I am sure that is true but for me if a leader has integrity he must “Make It Stick”.  Otherwise, those led will rightly consider him or her disingenuous.  Leadership is tough isn’t it?  We never get a break.  A colleague of mine once said he was going to write a book someday that would be entitled “Nobody Buys Me Lunch”.  Why, I said?  “Because I am surrounded by customers – even employees!”  We always must cross the finish line.  But when we do and we do it repeatedly we have a peace that surpasses all understanding.  We are truly “Leaders”.

I was just at an event this week talking with a gentleman about Change Leadership and our client’s experiences.  We discussed the essential requirement of developing trust and he said, “Too many people had BEEN lied to and cheated of trust.  In fact, he mentioned Michael Covey’s book (I mentioned in my earlier article), The Speed of Trust.  He liked the book but did not believe it could be done.  He has a lot of life experiences that comprises his deeply held belief.  I understand his pain.  But, I haven’t given up.  Have you?

Here, I have chosen to focus on the essential of “leadership follow-through”.  As you know, if you have read my prior articles, I have dedicated this series of blogs to Kotter’s “8 Steps of Change”.  In those prior blogs I have illustrated using my own early career experiences and how we applied those same principals though not perfectly.  I will leave you to search on your own, “Making It Stick”, where Kotter outlines the key principles for lasting benefit to the company, employees and others who stand to gain.  (Kotter’s The Heart of Change Chapter 8 page 159).

For now, I plea with those of you in leadership positions or aspiring to such responsibility to lead, as Jim Collins outlined in Good To Great, as

a “Level 5, Servant Leader” and nothing less.  Best wishes in these most turbulent of times.

As always, I value your comments and insights, so please send them to dave@totalvaluepartners.com