Category Archives: Business

5 by 5 Business System

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Right up front let me advise you, if you are one of the many who don’t do much religion: don’t be thrown off by the subtitle of Christian principles. You can translate that to any value set you like, because the point is that the business has to do more than just make money to satisfy your actual desires, whether they are philanthropic, social or lifestyle. So the method opens up by asking you to confirm to yourself what those ultimate goals are. Without those, the money isn’t enough to get you up every morning, year in and year out, to tend to your creation in the way it needs to survive and thrive.

In addition, the whole 5×5 method depends on backward planning (the author calls it “reverse engineering”) from that vision to ensure that all the company’s activities and people are aligned towards objectives that achieve those value-based goals. The method is called 5×5 because it has 5 basic components (vision, sales, products, team, and operations), and each component has 5 key activities of increasing complexity and impact. These work backward from the vision: first you need operations that deliver effectively, then a team that can operate that way, then products that meet customer needs now and into the future, and last (but by no means least) an effective way of selling those products to customers.

For small businesses, this may be a dramatic shift from the advice given by many internet gurus who advocate selling first and then “faking it until you make it”, i.e., kluging together a barely acceptable product to generate the funds to continue refining the offerings. But it is not an advocation of the paralysis by analysis (or complete chaos) that always follows when attempting to introduce highly-complex changes. Instead, the method calls for having the end goal in mind but taking one next step at a time towards to those goals.

Once you get past the value discussion, the remainder of the book contains action steps and tips that you have probably heard before in various training events, but – well, you wouldn’t be reading the book if you had already applied them! The combination of clear common-sense explanations, searingly honest case examples, and the organization of the widely-known truths into a simple, achievable structure may well inspire the reader to do something about it at last. For those few owners actively thinking about when to exit their businesses, if you don’t have these systems in place, you’re not likely to realize much of a sales price, if you are able to sell at all (over 80 percent of owners cannot). Take it in combination with the advice given in “The Business Value Booster System” also reviewed on this site (and published by Caltrop Press).  It’s worth giving this approach a shot for the 18-36 months that it will take to get your business system off the ground and eventually get more profits into your pocket.

Here’s a link to the Amazon version: https://www.amazon.com/dp/B0DMWTBYXW

Strategy OS

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Strategy OS: Implement an Advanced Business Operating System in Six Simple Steps (Entrepreneur Tools Book 3) by [Steve Preda]

Many managers who haven’t had access to the top layers of an organization imagine that strategic planning is either the product of a superior intellect and insight or, at the other extreme, some random musings and voodoo-assisted “visioning”. It’s true that a very small number of leaders have far more finely attuned antennae than the rest of us and are able to pick up on vibrations if not in the cosmos then at least in their industry that are not apparent to others until much later. Their success may look like magic at the time, although it can and will be explained long after the fact by dozens of consultants and academics. The vast majority of organizations are able to craft effective strategies with a structured process that applies known practices to the environmental signals that its leaders are able to identify.

This book provides the guide map to the generally-accepted practices that make up a useful strategic planning capability, and brings in several tools that aren’t seen as often. It would serve as a useful handbook for any executive or member of a planning team, and for the consultants seeking to advise them.

It’s not for every organization; many of the concepts require a relatively free rein in terms of markets and products, whereas many businesses, particularly the smaller ones (under, say, $20M annual revenue) wouldn’t be credible trying to reinvent their industry. Others, particularly in the public sector, may see themselves as too constrained by law and habit to make such shifts, but there is room to adopt the ideas behind the practices and find ways to make changes and improvements even within their sandboxes.  In addition, it’s not really an “Operating System”; it stops at the point that most organizational strategies fail: the designation of strategic initiatives and allocation of specific responsibilities, resources and milestones to make sure that what shows up on paper in the strategic plan will eventually occur in real life.

Link to this book on Amazon

Corkscrew Solutions: Problem Solving with a Twist

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This short CorkScrew Solutions: How Great Leaders Solve Impossible Problems (Theory of Constraints Simplified) by [Clarke Ching]easy-to-read book is still somewhat esoteric. It is the first one I have found that explains how to use the “thinking clouds” method first presented by Eli Goldratt in his Critical Chain Thinking series. It provides an approach to clarifying the real issues when you are faced with choices to achieve two different, desirable but mutually-exclusive goals. In following Clarke Ching’s advice, you may be able to see alternative formulations of the problem, the pros and cons, or the objectives as you seek to reconcile your dilemma.

You don’t have to be an Eli Goldratt fan to gain value from the book, and the examples range from the strategic (UK national defense policy) to the personal (what to do about having to choose between two girlfriends). I doubt that this would be the only decision-making tool you would use in such situations, which could have critical and long-lasting consequences, but it does help to clarify what decision you are making.

You can find it on Amazon at https://www.amazon.com/CorkScrew-Solutions-Impossible-Constraints-Simplified-ebook/dp/B08LKH5M3V

Here’s The Deal

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Here's The Deal: Everything You Wish a Lawyer Would Tell You About Buying a Small Business by [Joel Ankney]

Subtitle: Everything you wish a lawyer would tell you about buying a small business.

The subtitle pretty much nails it. Whether you are a business buyer, seller or broker, you owe it to yourself to gain the perspective an experienced business lawyer can bring to the process. The book is chock-full of examples of what can go wrong if you decide to save a few dollars and wing it on your own. At the same time, Joel Ankney is very pragmatic, pointing out many issues that simply aren’t worth haggling over if your objective is to buy the business instead of torpedoing every deal you’re in. (It can also be a bit scary for a seller in realizing all the ways a buyer can create havoc if they feel like it and their own business lawyer isn’t up to it.)

It’s a sizable book, about 270 Kindle pages. The bulk of it is devoted to walking through a typical Purchase Agreement, first explaining the clauses and then pointing out the pitfalls and opportunities in each one.

One of the key points to understand is the difference between an equity sale (buying the business outright by taking over the ownership share) and an asset sale, which is not just a bankruptcy liquidation as many expect but rather a mans of transferring all the assets, including intangibles such as  “goodwill” and customer lists, to a company you own.  The point here is liability for past events and future discovered latent issues, and here I wish the book had gone into even more depth.

The author is so opposed to a buyer doing this that he gives it pretty short shrift, but there are several situations in which that’s not possible or preferable. Examples include when you’re buying a company with desirable government contracts (very common in Virginia) or with licenses that are not transferable, such as medical and elder-care facilities (also very popular right now). He does not say this, but (while conceding that I am not an lawyer and highly likely to be wrong since common sense and the law are not always aligned) it stands to reason that but I believe, that any sort of employee deals (e.g. key people, education retention, non-competes, etc.) would also be off the table if the prior company with which they signed their agreement disappeared in an asset sale; they would have no obligation to the new company and its owner.

Another key point is the non-viability of “agree to agree later”  clauses, at least in Virginia.

One area that deserves comment is the strong preference Ankney gives to using a Letter of Intent (LOI) instead of a Purchase Agreement. Of course the buyer would like that, as they are committed to nothing at all, while requiring the seller to do a lot of work and expose a lot of proprietary or competition-sensitive information. In Transworld’s experience, this approach may be more appropriate for larger purchases in the $3 million+ range, but is unreasonable to expect for a smaller deal.

Ankney has also had some bad experiences with business brokers. As with every profession, there are some snake-oil salesmen out there. That is a superficial basis for critiquing the entire role. I would agree that if a seller and a willing buyer have already found one another, then the broker’s basic task is complete.  Assuming they are competent as a “business intermediary”, the broker can still play a critical role in keeping everything at arms’ length to avoid the inevitable spats that occur over 6 months and often spiral out of control if there is no intervening party, and to keep the ball rolling so that inertia does not set in while the principals are both busy conducting their daily businesses.

Again, a book that all parties to a business deal should read.

Amazon link: https://www.amazon.com/Heres-Deal-Everything-Lawyer-Business-ebook/dp/B01N810N0T

Tuned In: Eight Lessons to Sales Success

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This short (83 pages) novella walks you through the basic steps of getting your name out there and the rewards of doing so. The approach allows you to compare the downside of refusing to do it through the character of the industry veteran who has become cynical about the whole process but is assigned as a mentor to a new and enthusiastic recruit. The book puts a human face onto the spammy side of sales and reminds us that people can only sell to other people, so establishing and maintaining relationships is critical. Naturally to make the points some of the storyline has to be a bit contrived but not to the extent that you often find in “business novels”. An easy read tat has enough depth that you will be back to refresh yourself from time to time.

Amazon link: https://www.amazon.com/gp/product/1456731513

Boundary Spanning in Practice

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This book is an introduction to Kitty Wooley’s “Senior Fellows” initiative to develop and maintain an ongoing network of public servants (loosely defined) who are willing and able to work across organizational and functional lines to improve both public services and the conditions under which they are provided.

If you’re really interested in developing cross-functional working groups or styles, go to the source: https://seniorfellowsandfriends.org/unfettered-boundary-spanning/. If that doesn’t work, visit Decision Integration LLC at https://decisionintegration.com/resources-2/addl-resources/. (The book is published under a Creative Commons license, so it’s not for sale anywhere and we can give it to you).

Kitty’s LinkedIn handle is just her first name: truly a world-class networker! But she would be the first to say that this is not all about her. She does provide an introduction to the need for, and the concept of, setting up a wide informal network, with several thought-provoking scenarios, and I can certainly attest to the fact that these difficulties are by no means confined to government organizations.  She also provides a summary and call to action at the end of the book.

The bulk of the book is a framework provided by Adam Wolfberg, based on initial observations of an employee engagement program at the Defense Intelligence Agency (DIA) and his subsequent analysis of what worked there and in other situations. It is well formulated, and an over-summarization here would not do it justice, but many insights are powerful enough to stand on their own even for those who choose not to dive into it further.

  • Organizational boundaries may be physical (tangible) or entirely based on a mindset, but those latter ones are real boundaries nonetheless, and you’re not likely to breach them by running at them head-first. It’s not magic, but you do have to know how to use the tools and find the gaps. Boundaries aren’t all bad, as they serve to focus competencies and efforts, but they also lend themselves to over-control by insecure managers or to sharp political practices by manipulative managers.
  • Breaking through a boundary to achieve new behaviors simply results in establishing new boundaries around that behavior.
  • The tools for achieving and managing collaboration are much the same as those for managing change:  accepting it as a major initiative to be resourced and managed; personal involvement of top leadership; empowering and providing cover fro those who are doing the boundary-crossing; employing integrated teams from all sides (vs. sending out missionaries to promote your point of view in “their” territory); and finding motivational tools to encourage the organization to seek out collaboration rather than the usual reaction of trying to stamp it out.
  • It’a not a “one size fits all” solution. Each boundary issue needs to be detected and characterized, then an appropriate boundary spanner agent needs to be selected who can create an entry point, build a team approach, and chisel out a workable “new boundary”.
  • While these are all “people” activities, the traditional managers in the rest of the organization need feedback in the form of physical artifacts, such as plans, charters and status reports to convey the message that something useful is happening.

Without a framework, people jus thave to fumble through. That seldom works well. Diane Blumenthal reviews an engagement effort in a rightfully unnamed Department. It began with good intentions and set out in a promising way, but turned into an inventory of staff complaints with untenable solutions. Even if some of these issues were legitimate, over-participation at the grassroots level led to over-distribution of unfinished product and setting of unrealistic expectations, and when they were largely dismissed at the executive level, the effort left employees more disillusioned and angry than before. One lesson learned for me was that any effort that attempts to re-litigate what is already done and largely irreversible is simply stirring the pot to no good purpose; energy is much better spent deciding where we really can go from where we are. Oddly, however, the committee that spearheaded the effort did retain cohesiveness and continued their efforts to spread networking across the agency long after the dust had settled and the Obama appointees had moved on.

Kriste Jordan Smith’s contribution is to volunteer to lead the administration of a community to develop a formal guide on Boundary Spanning and, of course, to serve in a network of such people. You can participate, too. Read the book to see if it is for you.

The Phoenix Project

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The Phoenix Project: A Novel about IT, DevOps, and Helping Your Business Win by [Kim, Gene, Behr, Kevin, Spafford, George]

This is possibly the peak of the “business/technical book wrapped in a novel” genre, notably those by Eli Goldratt to whom this book pays appropriate tribute. It covers the essentials of portfolio management, IT Service management (ITIL, if you prefer), Theory of Constraints (Critical Chain), and DevOps. A lot to cover in a couple of hours of reading! I doubt that an organization could change its culture as quickly as written here, but I suppose you can focus a lot better if you really think the company’s going bankrupt. This is a must-read for anyone thinking of implementing new frameworks, and a great improvement over 100-slide decks laying out detailed implementation plans that will never come to pass.

Amazon link: https://amzn.to/36gXP27

 

Pink Goldfish: Defy Normal Expectation, Exploit Imperfection and Captivate Your Customers

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Pink Goldfish: Defy Normal, Exploit Imperfection and Captivate Your Customers by [Phelps, Stan, Rendall, David]A very easy reading book, packed with real-company examples to prove the points around the idea that you do much better by being very good at what you’re good at than by trying to copy what the most venerated institution is able to afford to do (but usually doesn’t). For a small entity there are plenty enough potential customers to thrive by being great at your core offering and by turning less-effective elements into points of differentiation.

This book is descriptive, not a recipe. The businesses are categorized by what they have become successful doing. Except were revealed in the anecdotes, you don’t know how or whether they decided on this specialization,  and if it was intentional, how they came up with the idea and validated it before launching out on it. I suspect that in many cases it was accidental and the sheer authenticity of the approach is what sold a certain segment of the market on it. If that is correct, you can’t just pick something out of the book and do it, hoping to succeed; the authors are really telling you that it is OK to be who you are and go all in on it, attracting a certain set of raving fans, rather than trying to go vanilla in hopes of not annoying anyone. Not-annoyed people don’t spend a lot of money to get a bit more not-annoyed.

You can get it at Amazon via this link.

The First 90 Days in Government

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This book is a partial rewrite of the earlier “90 Days” book that applies to commercial ventures. While the initial scenario on page 1 and 2 are right on the mark, the rest of the book basically says: define the role and mission, gather the support and resources, and then go off and achieve. Or, as the initial scenario suggests, you may find yourself marginalized and drifting. That’s a good theory, but I never saw it work in 7 years on the inside as a senior Federal manager, nor in over 20 years as a management consultant working with hundreds of managers in dozens of agencies. If you’re in an agency that isn’t aligned to this book (and few of them are), its advice is more likely to hurt you than help you, and you will in fact end up marginalized and drifting if you move out too quickly on what you think (or are told) the mission is. In such agencies you will never get the candid conversations and extended discussions of values and priorities that the book depends on, and such words as you do hear may be misleading because those aren’t really the priorities after all.

To be really useful, this book ought to be entitled “The 90 Days Before Getting Into a Public Sector Job”. Find out as much as you can about the agency, its mission, its organizational politics and its pain points, during the job interview period. You may never get as much face time or candor again, even if you do get hired.

See a much longer version of the review, which was somewhat controversial, on Amazon.