Run the Race Like a Champion- a Change Champion!

As any relay runner will tell you, passing the baton is wrought with fear and anxiety:  What if I drop it? What if I misstep and trip? What if I fumble and I lose momentum?  I am certain business owners have exactly the same fears, and anxious moments, especially as their transition date draws near.

Wade, an owner of an industrial products company was quickly approaching his target departure date.  He had been planning his exit for some time now.  He had found a private equity investor to buy out most of his shares, he had his CPA organize his tax situation and he even had his attorney draw up a new will. 

But the one thing he had not done was decide who should take over the business once he left.

And really, he couldn’t explain why. He had two terrific candidates to choose between.  Bill, his right hand guy for years, who knew just about everything about the business was a good option. But then so was Kim, a bright young, eager VP of Sales who had usurped Wade as the company’s number one rainmaker.  Both were equally talented, but both had their downsides too:  Bill was an introvert and not a great communicator; Kim was a people person but avoided details like the plague.

So what was stopping him from choosing?  Fear!  Fear that one would leave if the other was chosen?  Maybe. But actually the fear was deeper than that. What Wade feared most was how to handle the situation.

Passing the baton involves change; and Wade didn’t want to face the changes he knew would arise when he made his choice known.  Wade often thought about how Bill or Kim, or other employees would react to the change. He even worried about how he would react.  Wade thought about change as something that happened to people. He didn’t realize he could be a champion of that change.

Change champions are courageous leaders because they know how to proactively lead others, and themselves through change. They know resistance to change is a powerful human trait that can be overcome by understanding why people don’t like moving out of their comfort zones.

Are you facing a change like Wade?  If so, here are a few simple ideas you could use to become a change champion:

1. Be transparent and communicate.  Uncertainty is at the core of resistance so understanding the what, why and how behind the change is critical to reducing apprehension.  Go beyond the obvious benefits to the company, stress the benefits to everyone involved. People are motivated to change if they see themselves benefiting from the new situation.

2. Assume success by planning for it.  When introducing the change, get people to envision their role in the process, and their contribution to the successful outcome. By encouraging their participation, and anticipating success, commitment to action will ensue.  People like to belong, and feel important. You can provide the opportunity for both through their support of the new initiative.

3. Be honest about what’s fair, or not.  Choosing a successor is always tricky, even beyond the individuals involved.  People have invested in alliances and relationships, and disrupting those can feel unfair.  But people will move toward acceptance if they truly trust the change leader.  We all hear things more favorably from a friend than foe.

4. Reward and encourage, even the small steps.  People like to be on a winning team, so be the coach that creates a winning environment.  Notice when your employees make positive moves, speak favorably about the change, and become helpful to the cause.  Each of these actions demonstrates they are gaining acceptance, and a good coach notices these small, but vital contributions.

If Wade had these tips, he may not have hesitated so long about choosing the best leader to succeed him.  Introducing such a change is daunting, and can cause many a sleepless night. But if you champion the change using these concepts, and perhaps a few other tactics, your leadership will be rewarded, and your future will be a step closer.

Please comment below and let  me know what questions you have about championing change for your organization.

Be a Storyteller to Maximize Value

When considering value creation options, you need to think about the story you want to tell future investors or owners. 

Will it be a story about explosive market share gains?  Rapidly rising revenue in a new product line?  Expanding profitability?  Declining SGA expense ratios?  Dizzying free cash flow?  It would be great to tell a story of all this and more. But chances are you aren’t telling the Zappos story. 

The reality for most owners is their best story hinges on a few well-conceived strategies, executed brilliantly.

But it also hinges on the target audience.  Who do you want reading your story, and why?  And when do you want them to read it? And most importantly, how do you make it more compelling than the other stories they read?

The answer: start writing your story today!  Maximizing the value you can command in today’s market is a direct function of the quality of your story.  It is what attracts a highly qualified investment banking team to represent you in the sales process. It is what will make your company stand out among all the other baby boomer business owners who want to exist. And it IS what buyers pay a premium for.

Of course, the story is not a fictitious tale of your company, or even a well written description. It is the retelling of your business attributes and accompanying performance, your track record of success, and the yet unwritten potential a new owner could capitalize upon. 

It’s a story of the past, the present and most importantly, the untapped future.  

External buyers’ greatest fears are about sustainable financial performance, and future potential.  The first proves value, and provides the fuel to realize the second.  Mis-stepping on either of these leads to the #1 fear: paying too much.  Which for the exiting owner means getting too little.

So how do you tell a great story?  Well, a great performing company is a good start.  But you also need to begin drafting your story so your business shines, and entices the ’reader’ to delve deeper, understanding the nuances, savoring the details and finally becoming part of the story themselves. 

The goal:  the reader forms a vision of the story’s end in which he is the successful protagonist.

So here is how you can start today: 

Get yourself a notepad and start by answering these questions:

1. Every story has colorful characters, who are yours?  Your key managers? Talented engineers? Rock star sales people? License bound customers?

2. What is the setting?  Describe what you see- a highly organized work environment? A highly competitive marketplace?  Well oiled operations and procedures?

3. What is the theme?  Organic growth?  Expanding profitability through new products? Exceptional expense control?

4. What about the plot line?  Burgeoning list of new customers in a down economy? Defying industry trends through innovation?  Capturing greater share of wallet through data mining and customer cross selling?

After you have drafted your thoughts, put the pad away for a few days. 

When you revisit your answers, ask yourself these questions:

1. Is this a compelling story?

2. Does it portray a positive, optimistic, ‘success is certain’ trend or a dark and stormy narrative of impending doom?

3. Do you like the characters? Would you be drawn to working with them?

4. Is the environment attractive?  Would you want to visit? Would you want to stay?

5. Does the theme make sense?  Does it dovetail to the plot line? Is it all believable?

If the story is not exactly what you had hoped for, you are not alone.  Business owners are often so buried in their business, they cannot see their business as others would.  This is why having an advisor who understands how to write the story, and even shape the story as it happens, is critical to maximizing your value. Your buyers want a story they can believe, proudly share with others and have confidence will come true.  To achieve this you need to be certain you are writing the right story, starting today.

Feel free to share your company's story in the comment area below. I would love to hear it.

3 Habits That Can Sabotage Your Exit Strategy

You’ve decided it’s time to retire, time to get out.  Good for you. But Beware:

Exiting your business is like going on a family road trip.  The destination may be set, the course mapped out, the pool bartender alerted to your ETA. But you can suddenly find you are stuck in the driveway, with a car load of bickering family members.  What seemed like a good idea can start to feel impossible.

 

The same is true for even the simplest tasks involved in exiting your business.  For example, imagine that a potential buyer is interested in your business but has questions about your customer base. To help increase your company value you decide the sales and operations teams need to change the customer relationship management system. Seems simple enough. Right?  But if you are like many business owners you might find that as soon as you suggest this all you hear is grumbling in the hallways, complaints in the break room and drama all around. 

It can leave you thinking “If I can’t get the small stuff done, how will I ever get out?”

You are not alone. Many business owners get stuck by the ‘people problems’ when starting down the road to exit.  But you don’t have to stay stuck, if you know:

The 3 misconceptions which can sabotage your exit

1. Small changes are no big deal.
2. Keeping secrets is OK.
3. The secret to success is to Just Do It!

Not paying attention to these misconceptions is like not paying attention to the basics when planning your family trip. Before you call in a mechanic to rebuild your engine you might want to check the obvious first: gas, oil, air in the tires, keys? 

The same is true for your business. Before you start diving into the perfect upgrades to your record keeping system or how to avoid taxes when you exit, it pays to start with the basics. And just like you can’t go anywhere without your keys, you can’t exit without paying attention to the number one obstacle to a smooth transition- the way most people handle change.

If you want to transition out of your business smoothly, then you must be a change savvy leader.

People hate Change

A small change may seem like low hanging fruit, but don’t underestimate its impact on your employees. A small change, even one beneficial for the entire company, can invoke fear and anxiety.  That’s because our brains are wired to approach the known, and avoid the unknown.  As humans we find comfort in routine because it is low risk, and it’s easy.  When asked to change that routine, we resist it. Often people get consumed with negative thoughts about the change, ‘what if I don’t know how to do it?’ ‘Why do I have to change? Why don’t they start first?’, ‘This seems too complicated. The old way was easier.’ The key is to remember that people are avoiding the change because it is unknown, not rejecting the change because it really is a bad idea.  Your challenge is to get them to approach the change positively.

Fear stops us in our tracks

One way to shift employees’ perception of a change is to bring them behind the curtain.  Remember how Dorothy, the Lion and Scarecrow shook from fright when the Wizard of Oz spoke?  Not knowing who the Wizard was, and why he was issuing such commands, was terrifying.  But once Toto revealed the secret of the Wizard, his requests lost their power to intimidate. So too with your exit plan. If your employees don’t understand the why behind the new process, there is little motivation to get on board.  Although revealing your complete plan may be premature, providing context and the benefits to everyone will minimize the avoid response, and engage the coveted approach response.  Obviously, it makes more sense to emphasize the carrot than to simple bellow “Bring me the witch’s broom!”

This leads me to the final misconception, which is about issuing commands. 

People don’t do what you tell them to do- they do what they want to do

‘Just do it!’ is a fine slogan for Nike, but a lousy communication approach for any leader.  As we all know, adults don’t respond well to directives (again think about the Wizard). Rather, once employees understand what needs to change and why, the next step to getting them fully on board is to ask them HOW. How would they do it?  You set the objective, but you let them weigh in on how it gets done. Providing this sense of control minimizing their avoid response, encouraging them to approach an opportunity to influence the outcome. Seek input to stir up enthusiasm.

Getting unstuck is really quite simple if you remember these tips:

1. Approach/Avoid is a natural response to change.
2. An understanding of why the change, and what’s in it for me, reduces resistance.
3. Offering control will encourage change participation.

So, whether you are just dreaming about your exit journey, or you have started down the path, take time to do a quick inventory: what needs to change, why and how. Then make a list of actions you can take to avoid the 3 Misconceptions, and approach your transition with confidence.

Please feel free to come back and post a comment with your results, and which actions were the most helpful. I would love to learn about how you thrive during times of change.