Check Out the book, Reinventing Diversity, by Howard Ross

Rowman and Littlefield has published a great book, Reinventing Diversity. This book explains the reasons why diversity and inclusion programs are important for every business, school, government agency, athletic program, and organization in the US.  I highly recommend this book.  Herb Rubenstein

Posted in Uncategorized | Leave a comment

LEADERS WHO MAKE A DIFFERENCE: ESSENTIAL STRATEGIES FOR MEETING THE NONPROFIT CHALLENGE

by Bert Nanus and Stephen M. Dobbs
Jossey Bass, 1999

Book Review by Herb Rubenstein
CEO,Herb Rubenstein Consulting

Introduction

This book is the product of a 1997 conference of the leaders of the 30 largest nonprofit organizations in the United States. The stated goal of the book is to “improve nonprofit leadership.” The authors are experienced and well respected in the field of leadership.

Chapter One: Defining Leadership

One of the book’s major premise is that leaders exist at every level of an organization. The purpose of leadership is performance – – to improve performance to make progress and to foster change.

Leaders are:

  • constantly in motion with a can-do attitude
  • bringing people together, building team
  • finding partners and creating trust
  • developing new sources of funding, collecting resources
  • enrolling others in their cause, being persuasive and inspiring others with their passion, vision and focus.

Leaders of nonprofits are social entrepreneurs. Leaders are enablers that energize organizations. “Leadership should never be confused with the management or administration of a non-profit organization.” Managers prefer stability and certainty; leaders prefer change, complexity, innovation and uncertainty. Leavitt says leaders are pathfinders, managers are problem solvers. Generally leaders do not manage well and managers
most often do not lead successfully since their skills, interests and thinking patterns are different from those possessed by successful leaders.

Eleven major issues on which non-profit leaders focus in order of the amount of time they spend:

  1. Raising money
  2. Positioning the organization
  3. Measuring the effectiveness of the services offered
  4. Establishing/Maintaining/Inspiring the Board of Directors
  5. Forming alliances/coalitions
  6. Providing active community leadership
  7. Interviewing, Screening and Hiring Employees and enrolling volunteers
  8. Improving program quality
  9. Designing the infrastructure of organization
  10. Maintaining/developing excellent personal relations with constituencies
  11. Adapting the organization to outside changes in the environment that require the organization to go down a new path.

Leaders answer the question – “How will you accomplish this?” by answering “I will do whatever it takes.”

The main role of a leader of a non-profit is to be the “direction setter” for the organization. The leader must scan and understand the realm of current activities and future possibilities with great care.

The six roles of leadership are:

  • Visionary
  • Strategist
  • Politician
  • Campaigner
  • Coach
  • Change Agent

The great leaders excel at each role.

The relevant personality traits of great leaders as described by Yukl and Gardner are:

  • forward looking and creative
  • high energy level
  • passionate about their cause
  • ability to tolerate stress
  • flexible
  • willing to experiment
  • enthusiasm
  • self-confidence
  • confidence in who they lead
  • self-control
  • emotional maturity
  • up to challenging situations
  • integrity, honesty
  • physical vitality and stamina
  • creator of energy in others
  • intelligence
  • sound judgment in action
  • willingness to accept responsibilities
  • task competence
  • effectiveness
  • decisiveness
  • understanding of followers, constituencies and stakeholders
  • capacity to motivate and inspire, charisma
  • courage, resolution and steadfastness
  • capacity to win/earn and hold trust
  • determination, tenacity, persistence and follow-through
  • ascendance, dominance and assertiveness
  • adaptability or flexibility of approach
  • inclusiveness
  • ability to raise the bar significantly on performance for volunteers, employees, board members and vendors.

Chapter Two: The Greater Good

The primary mission of leadership in a non-profit is to focus laser-like attention throughout the organization on the greater good that the organization is capable of providing and then to marshal the energy and resources necessary to make it happen. The contribution to the social good is the single most important measure of success of a non-profit organization.

The authors define the word “Capital” as an asset with productive potential.

“Social energy” must be generated by non-profits for them to be successful. Energy powers non-profits.

Non-profit organizations have mandates and must meet a need for particular change in the social order that is either currently widely supported or capable of being supported if the issues addressed by the organization were more broadly known by the public.

Leadership effectiveness is defined by the authors as the production of a greater social good through increasing organizational capital, harnessing social energy and producing real work/real value/real change.

Chapter Three: Getting Started As A Leader

The authors state that leaders must evaluate the strengths and weaknesses of their organizations in four key areas:

  • Key stakeholders
  • Financial, physical resources
  • Organizational character and effectiveness
  • Community characteristics – customer service

A nonprofit organization that has been in existence for even as little as six months must be able to answer the following questions in a written, accurate document:

  • What have been the organization’s greatest accomplishments, how did they come about and what were the results?
  • What is the organization’s reputation in the community and how can it be improved?
  • How does the organization measure its performance?
  • What has the organization accomplished with its resources?
  • How has the organization spent its resources?
  • How many people has the organization served and how has it served them?

Basic Leadership Styles Identified By Lipman-Bluemen (1996) are:

  1. Intrinsic – leader concentrates on his/her vision and mold the organization in that vision.
  2. Competitive – leader is driven to outdo competitors
  3. Power – leader is driven by need to control
  4. Collaborative – leader favors teamwork
  5. Contributory – leader driven by need to help others achieve their goals
  6. Vicarious – leader encourages/mentors others
  7. Personal – leader uses charm, wit, prestige, charisma as primary tools to achieve his/her goals
  8. Social – leader networks extensively
  9. Entrusting – leader selects capable people and delegates

Nonprofits and their leaders must establish a strong, ever growing and broad base of support. Nonprofit leaders must create new sets of expectations for their organizations in order to keep the organization vibrant, in the public’s “eyes” and to create an expanding base of support over time.

Chapter Four: Leader As Visionary

Nonprofit organizations must have understandable and easily repeatable (easy to remember) vision statements. Vision statements must be universally known and endorsed by all key stakeholders of the organization. Every vision statement must give rise to identifying key measures of success over particular periods of time. Ten measures of success are usually not too many for some nonprofit organizations. Each nonprofit must have at least one or two measures of success that they measure on a very regular basis.

Nonprofits must measure their results and distribute/communicate their results so that people know what good the nonprofit has done in order for the nonprofit to continue to justify its existence to its donors, funders, clients, customers, constituents, key stakeholders and the general public.

Nonprofits must create a sense of urgency for achieving significant progress toward realizing the vision of the organization and must create operational procedures, workplace efficiencies and project timelines that support this basic premise.

Nonprofits must demonstrate (and therefore measure) progress towards their goals, their vision on a regular, periodic basis (monthly, quarterly, annually).

Chapter Five: Leader As Strategist

  • Strategy is the bridge between vision and action
  • Strategy coordinates the people and actions of the organization
  • Strategy makes effective use of resources
  • Strategies position the organization so that it can see new opportunities and respond quickly to opportunities
  • Strategy provides the benchmark by which to measure the performance in the organization and of the organization
  • Strategies must be driven by focus or thrust (client focus, product focus, reputation focus, facilities focus, etc.)
  • Strategies leverage talent and may actually be able to elevate talent.

The best quote of the book is “Leaders are the ones who decide a new strategy is needed.”

Leaders must initiate and champion the strategy process and insure that the resulting strategy is fully communicated to and endorsed by all key stakeholders. Leaders also must take all necessary steps in order to see that the strategy is fully implemented.

Great strategies create the possibility of great events, great results.

Chapter Six: Leaders as Change Agent

  • The leader in the nonprofit organization is the chief change maker, the chief innovator.
  • Change is almost universally resisted and O’Toole has identified thirty-three reasons why change is opposed.
  • Leaders often do not fight the resistors of change, they often avoid the fight and prevail anyway.
  • Entrepreneurial nonprofits take prudent risks, regularly launch new ventures and programs through a process of creative experimentation. They have an orientation to action.
  • Strategic Alliances represent the pooling of the strengths of two or more organizations for mutual benefit.
  • DePree states that a prime responsibility of a leader is to define reality (and foster a shared view of reality).
  • Leaders see trends and understand them.
  • Leaders position the organization in relation to the trends they see and the trend(s) they want to create in the future.
  • Leaders get everyone in the act, they are inclusive. But, if getting everyone into the act means that nothing gets done unless everyone agrees with it, then there’s little hope for timely action, progress or change.
  • Leadership is like directing an orchestra – knowing the role each person is to play, how they should play it and instructing them on how and when to play it.
  • Leaders make the key decisions that shape the future of the organization.
  • Leaders bear the ultimate responsibility for the success or failure of a decision in particular and the organization in general.
  • Leaders build community by building their own community of clients, stakeholders, vendors, constituents, donors, employees, first and then build a community in the broader world through public relations, speeches, articles and becoming a recognized thought leader or activist in the field addressed by the nonprofit organization.
  • Leaders ensure their reputation is a key asset of the organization and that reputation is communicated to a broad audience.

Chapter Seven: Leader As Coach

  • Leaders encourage top performance.
  • Leaders take organizations to new, higher levels of service.
  • Leaders ignite the passion for the possibilities of the organization by building commitment and enthusiasm for the collective effort needed to achieve the organization’s goals.
  • Leaders must have vitality and inspire people.
  • Leaders shape the challenges of the organization and lead the organization to meet the challenges.
  • Leaders make sure that their organizations respond quickly and respond properly to changes in the outside environment.
  • Non-profit organizations must strive to do at least one thing better than anyone else and gain a strong reputation for that one thing.
  • Leaders constantly learn, teach and are taught.
  • Leaders make appropriate use of the new technology that other leaders in their field use.
  • Leaders behave as role models.
  • Leaders reward those who further the work and success of the organization.
  • Leaders remove those who refuse to learn quickly and act to promote the work of the organization.
  • Leaders set high standards for performance and actively give praise and criticism as warranted.
  • Leaders use coaching to foster individual and collective growth.
  • Leaders promote multiculturism and diversity.
  • Leaders give time to people for guided self-discovery.
  • Leaders give the individuals who work within the organization a purpose and an identity, challenge them, and make sure they know how important they are to the organization and the world.

Chapter Eight: Leader As Politician

  • Leaders build great relationships with broad groups of stakeholders of the organization and stay connected to these stakeholders and other leaders.
  • Leaders forge a collective unity.
  • Leaders keep people informed and keep themselves informed of current events in the field, activities of the organization, complementary organizations and new articles in the literature concerning areas of interest to the organization.
  • Leaders reach out to those who have differences with the leader and the leader’s positions and seek ways to work with them.
  • Leaders create a sense of family, of mutual self-interest among stakeholders.
  • Leaders are advocates.
  • Leaders develop relationships with and get known by other leaders and politicians through an ever growing, ever broadening reputation.
  • Leaders must be articulate and speak on a regular basis about their organization, their field of interest and their needs of their constituents.
  • Leaders are willing to partner with others and are demanding of each partnership they create in order to secure value for the time invested in creating the partnership.
  • Leaders have a great sensitivity to timing and can act quickly when it is in the interest of the organization and its constituents to do so and can be patient when it is necessary to be patient.
  • Leaders know how, when and why to use the press and the media to the organization’s advantage.
  • Leaders create three sets of messages about their organization to communicate effectively about the organization’s mission, objectives and programs/activities. These three types of messages are:
    • Generic – a message that is specifically tailored for colleagues, professionals and policy level people – used to promote reputation and standing in the “peer” community.
    • Popular – a message that helps the general citizens understand the organization – used to promote sales, public donations.
    • Political – a message that says what an organization is doing at a particular time and why it is doing it – used to generate specific support for a cause.
  • Leaders are troubleshooters, crisis managers and prepare as far in advance for each crisis and problem that is even remotely foreseeable.
  • Leaders intelligently use information, cultivate people and ideas, build and protect resources.

Getting the word out about the organization must be the daily preoccupation of the nonprofit leader. They aggressively pursue every opportunity and even create opportunities to tell their story and garner public support and appreciation by undertaking the following activities on a regular, systematic basis:

    • They feed good reporters stories and stay in touch
    • Meet with focus groups, discuss their pitch and get feedback on how to improve the pitch
    • Ask board members with local business contacts to get Rotary, Kiwanis, Lions, Chambers of Commerce and other organizations to invite the leader for speeches monthly, if not weekly
    • Speak to high school, college groups, other non-profits, conventions
    • Host luncheons, breakfasts and other gatherings for large numbers of leaders and potential clients and speak about the issues covered by the organization
    • Prepare videotapes of their work and results and distribute these tapes
    • Use new information technologies to get the word out to key stakeholders and potential clients
    • Develop a website with great links, contact information, news relevant to their area
    • Use email extensively and snail mail to reach out to large numbers of people
    • Provide quick response to all inquiries
    • Raise public consciousness about the issues of concern to the organization and its constituents
    • Promote new programs
    • Create, promote and evaluate new programs on a regular basis
    • Create interactive forums
  • Non-profit leaders will become virtual leaders that are publicly visible.
  • Non-profit leaders publish annual reports that are clear, numerical and used to promote the organization.
  • Non-profit leaders form and nurture networks of people and networks of other organizations.

Chapter Nine: Leader As Campaigner

  • Nonprofit leaders create an army of volunteers for the organization. (Fifteen billion hours per year at a value of $182 billion are donated to nonprofit organizations).
  • Nonprofit leaders capture a piece of $144 billion donated annually to nonprofits, plus their share of the huge “in kind” items that are donated.
  • Contributions, individuals and foundations want to know what an organization has done and is doing, what the board has done and is doing, what the staff has done and is doing and want these activities to be documented in writing.
  • One of the central duties of the nonprofit leader is to seek, cultivate and protect the financial resources that fuel the organizational engine by:
    • Articulating in a short document the value the nonprofit has created, currently creates or can create in the future with financial support
    • Attracting and productively using fundraising volunteers
    • Gets the board involved in fundraising
  • Nonprofit leaders must know the motivations of their donors and their customers/clients.
  • To raise money from foundations a nonprofit must:
    • have an attractive cause
    • express passionate advocacy
    • demonstrate the ability of the organization to use the money to make a significant impact on target issues or problems addressed by the organization
    • show that the nonprofit is accountable, able to document its activity, success and failures from its inception to the present day
    • show that the nonprofit can assess outcomes of its efforts and keeps excellent documentation to show the outcomes of its efforts
    • show that it has produced excellent results (value) from the money it has spent and volunteer time it has used
    • show the ability of the nonprofit to collaborate successfully with other nonprofits
  • The principal asset the leader has for soliciting funds is a successful track record showing how the previous funds spent by the organization produced a social good consistent with the stated objectives of the organization.
  • Nonprofit leaders write books and articles and take great pains to nurture their reputation.

Chapter Ten: Making A Difference

  • Success is the measurable, observable (to oneself and others) impact of one’s effort.
  • Leaders measure progress every step of the way.
  • Nonprofits build reputation and earn trust by being accountable.
  • Leaders must constantly measure organizational performance as constituents, effective board members, donors and clients want measurable results to be reported on a regular basis.
  • A good measure of success is the documented level of satisfaction of the person receiving the services from the nonprofit.
  • Organizational success is a useful indicator of leadership effectiveness.
  • Leaders are, or should be, inherently results oriented.
  • A key measure of success for educational organizations and training/development organizations is enrollment.
  • Leaders respond in a timely fashion.
  • Leaders foster effective teamwork to make things happen.
  • Leaders conduct surveys and use other information gathering techniques and pay very close attention to results.
  • Leaders organize effectively, avoiding excessive bureauacy and red tape.
  • Leaders help develop other leaders.
  • Board members of nonprofit organizations should be leaders of other organizations as well as individual leaders themselves.
  • Nonprofit leaders must be able to assess how cost effective their organizations are and be able to perform or understand operational audits.
  • Most effective leaders are highly curious about and sensitive to external information.
  • Leaders are good listeners and voracious readers especially in the subject matters of interest to their organization and constituencies.
  • Leadership audits are used to track the record of the organization and its record of accomplishment.

Chapter Eleven: Leaving A Legacy

  • Leaders leave legacies, a view of the future and the resources to make headway toward accomplishing that future.
  • Organizations are judged most by the quality and quantity of the clients they have served and currently serve.
  • Leaders make sure that the history of the organization is captured and maintained in a reproducible format – – video, audio, photographs or in writing.
  • Donors, volunteers and others are increasingly demanding competent, cost effective performance and full accountability is demanded of grant recipients by most funding sources today.
  • Nonprofits must establish a reputation as being socially and financially responsible corporations and be able to back up that reputation with documented, verifiable evidence.

Conclusion

This book raises the bar and sets new standards for leadership of a nonprofit organization and leadership in general. Consistent with the major theme in my book, Breakthrough, Inc. – High Growth Strategies for Entrepreneurial Organizations, (Prentice Hall/Financial Times, 1999) the leadership strategies discussed in this book are very applicable to corporate CEO’s presidents and leaders at all levels of for-profit companies. This book gives non-profits and for-profits alike a ready basis for a leadership audit which can identify leadership gaps that seriously harm the potential of the organization.

Leadership in nonprofits/organizations resides not only at the Chairperson of the Board or Executive Director/President level, but also happens or should happen at every level of the organization. One key learning from this book is the people can learn to become better leaders. This book is excellent for anyone whose goal is to become a more successful leader.

Nanus and Dobbs have written a book that is timeless, and successfully weaves case studies with general principles. The book is also both descriptive and prescriptive.

 

Posted in Uncategorized | Leave a comment

Creating An Individual Platform

Article by Herb Rubenstein

Introduction

In related articles I have written about the distinction between what a “leader” does in organizations and what a “leader of leader” does.  Today, many leaders in America are primarily problem solvers.

“Leaders of leaders” have a different role.  They develop a platform upon which the organization and the organization’s “leaders” set the tone, ethic and direction of an organization as well as figure out the  best answers to systemic challenges and entire classes of problems an organization can face.  In a related article I have defined what a platform is and how to create a platform driven organization.  This article complements this analysis because it has become clear that leaders of leaders must, for themselves, as individuals who want to become “leaders of leaders”, create a platform upon which they build their own identity, their own operating principles and their own set of beliefs and rules to guide their lives.

Key Elements of an Individual Platform

The first element of creating an individual platform is to be able to understand one’s self well enough to know one’s strengths, one’s weaknesses, one’s most important and essential desires/goals and most importantly, one must determine what set of rules or principals one will use in attempting to reach his or her goals.  In order to accomplish this first element, one must write down and review and study one’s answers to these questions.  The philosopher Sam Keen takes an interesting and most unusual stance on this topic in an interview with Bill Moyers.  He states that every person must have a “myth,” a guiding, larger than life story line, with a huge purpose and huge set of goals that guides one’s life.  This myth that one creates for one’s own life becomes the perch from which one views all of life, creates a context for one’s live, and ultimately influences every decision and attitude of the individual. Basically, the “myth” becomes an essential part of the identity of that individual.  Sam Keen uses the word “myth” is a totally positive way.  That myth can be as simple as, “I am no longer just a face in the crowd. I now must make a difference in the world,” or “I shall serve as an example to others,” or “I shall be the richest or most politically powerful person in the world.”

The second element of creating an individual platform is to communicate the essence of that platform to others.  As George Herbert Mead’s work compiled in Mind, Self and Society clearly explains, the “self” (which includes one’s platform as a core element) exists only in relation to other selves.  It is the interaction with and response from other “selves” that helps guide and ultimately shape one’s “self.” Taking your newly developed platform “on the road” and sharing it with others is an essential element in the refinement of a platform upon which one can guide one’s life.

The third element of creating a strong individual platform is to begin, in the short run, to live consistently with the key elements of that platform.  This burst of activity, energy and new expression of “self-direction” may not be received well by all with whom one comes into contact.  One must realize this is a burst of activity that must over time be moderated in order to avoid burnout.  However, one must push through this initial period to find “balance” between what is needed to live consistent with the platform and what is needed to allow one’s experience to “inform the platform” where it leads to behaviors that do not work for you or others.

The fourth element of creating a platform is to incorporate the basic elements of the platform into a long term plan for one’s self, family and organizations.  When planning even for one’s self, significant others must be consulted, but not necessarily obeyed.  When planning for organizations, one must win over enough supporters to win politically to carry forth the plan consistent with the platform one has created.

The fifth element of creating a platform is to know that it is an evolving set of documents, ideas, concepts and actions.  Action will inform the ideas and concepts that form the core of your platform.  Experience will provide the wisdom necessary to carry forth one’s life consistent with the platform that one has set forth. Experience will also provide a full complement of challenges to the platform that one creates for one’s self.  It will allow “failure” to test the very core of the platform.  It may, even temporarily, “defeat the platform.”

Sustaining and Growing the Individual Platform

Eventually, one may find that experience will become more supportive of one’s platform or it will guide one through the school of hard knocks to reform, refine and redirect the platform so that the platform is a strong enabler of the individual to accomplish his or her life goals. The key to sustaining the individual platform is always communicating the platform as one lets others know more about one’s self. Over time, you will become known as the “person who [fill in the blank]…”, or “the person who would not allow that, etc.  Once one becomes known more for one’s platform, rather than one’s performance, race, looks or wealth or other common 21st century criteria that guides one’s interaction with one another, then the world will, if the platform is good, probably become more supportive.

Conclusion

The idea of a personal platform to guide one’s life is neither new nor radical, but it is not often discussed in western societies.  The process I have described in this short article is only a start to creating a sustainable, evolving platform for one’s life. But the process is not overwhelmingly complex.  It can be started today and it can be undertaken quite rapidly. Most importantly, is an act of creation, an act which will help define and orient the “self” and one’s identity, and can be used as an essential element by an individual who seeks to lead others and make a positive difference in this world. We believe it is an essential element for those who strive to be leaders of leaders.

 

Posted in Uncategorized | Leave a comment

The New Standards For Business Plans

Article by Herb Rubenstein,
President, The LEEEGH

Introduction

Today, business plans are funded at the rate of 1 in 1000.  How does a good business plan defeat these tough odds?  More importantly, how does an ongoing business write a business plan for these turbulent times?  Today, businesses are seeing their old models decimated by lack of demand for their bread and butter products.  The businesses try to change and adapt by changing services or cutting costs and benefits, all in search of new strategies and models. Success in today’s marketplace requires more planning than ever and this type of planning is the best way to clarify and test a company’s ideas. Business plans must be based on the reality of today and tomorrow, not yesterday.

This article lays out some of the basic tenets of business planning in turbulent times.  The business plan that your company has in the minds of its principals needs to withstand the business pressures of today.  Obtaining investors and loans in these dynamic times requires a solid business plans in writing, vetted by all key stakeholders.  Business planning does not guarantee success, but the lack of business planning almost certainly guarantees failure.

Research, Facts & Value

A business plan must be a well-researched, fact-based document.  Poor business plans make great leaps from assumptions to projections. Excellent business plans are based on voluminous data on the cost of every element of the service or product being offered. They identify exactly who the customers are and how much they’re expected to buy over the next several quarters or years. Good business plans include research findings on similar products and competitors in the industry.

Today, for new products and services to be successful, they must meet the 10x rule –as in ten times better than the current option. This 10x superiority must be demonstrable with facts and statistics.  A good business plan clearly details how the idea or service is proprietary and protectable through the intellectual property laws and trade secret policies, and how it will deter reverse engineering.

Competitive/Market Analysis

A good business plan must make predictions not only about its customer’s responses, but also about how competitors will respond to the company’s success.  Conclusions in your plan should be fact-based rather than assumption-based. The more citations to outside research, the better these conclusions will be. A good business plan must show the names and relative prices of competitive products and services, their size in the market, and other objective measures of their value. Include detailed and clear explanations of how your company’s offerings demonstrably meet the 10x rule.

Three Financial Scenarios

A good business plan will present three separate scenarios with potential financial results that show how the company will survive in worst-case scenarios. A good business plan will provide details of the management team’s dynamics, where it succeeds, and where there is room for improvement.  Rather than merely stating that there is a gap, a good business plan identifies who is responsible for filling the gap and how it will be done.

Sales and Marketing Costs and Revenues

On the sales side, a good business plan addresses what the projections are and why it expects to secure x amount of sales in y time.  Have other companies done this? A good business plan must take into account actual experience-based data on the sales cycle and the full cost of securing large clients.

It’s been said that selling anything to Fortune 500 companies in today’s business environment takes an estimated $100,000 in sales, marketing, and advertising.  We completely reject this idea. What it will take is a plan to develop a product or service that solves a very big challenge for the customer, Fortune 500 size or not.  Further, it will take the coordinated efforts of many individuals who need to have read a great playbook created by the company.  Otherwise, they simply will not know how they can fully contribute to creating these excellent products and services that companies, even those on the Fortune 500 list, will buy. The sales and costs projections in a business plan must reflect the reality of this new selling environment by providing realistic estimates of what it actually takes to market and close deals. The process isn’t cheap but it can be budgeted. These costs must be allocated from current revenue to insure that the money will be available when the opportunity arises to make that large sale.

Conclusion

This new reality of the business landscape may seem harsh, but getting the plan right the first time is essential.  An excellent business idea that is not backed by a solid plan with clear implementation procedures will simply waste time and other valuable resources.

These basic tenants of writing a good business plan will help your company make the critical distinctions that are needed in today’s tough business climate.

 

Posted in Uncategorized | Leave a comment

Competitive Analysis: The Basic Building Block In Business

Article by Herb Rubenstein,
President, The LEEEGH

Introduction

Everyone, including for-profit businesses, non-profit organizations, and educational institutions, has competitors. Organizations must be both intelligent (capable of learning) and knowledgeable (informed) about these competitors.

The goal of carrying out a competitive analysis is to identify your competitive advantages and disadvantages. The key is analyzing how to build on the advantages, and minimize the effects of the disadvantages.  The practice of analyzing your competition on a regular basis is a key aspect of your company’s ability to create strong sustainability strategies.

Competitive Analyses: Where Do You Begin?

To begin a competitive analysis, your company needs to answer these key questions:

  • Who are, and who have been, your competitors? Think very broadly
  • What are they doing and how are they doing it? How does it compare to what they’ve done in the past?
  • What do you think they will do in the next several years?
  • How have they changed/improved/

declined in the past several years?

  • How do you think they will change/improve/decline in the next several years?
  • How have they helped or hurt the organization in the past?
  • How do you expect them to help or hurt your organization in the next several years?

The sources of this information are everywhere including the telephone, newspapers, public libraries, your board members. You can also simply ask your competitors these questions directly. Harvey McKay’s business books stress the importance of knowing your competition intimately.

Organizations are not islands. To know where you are in relation to your competitors is important, even critical, in order to understand your organization’s environment. This means knowing your competitors. It involves being aware of the entire economic landscape. It includes predicting how future events are likely to shape your organization and the organizations of your competitors.

Competitive Advantage

The ASTD Strategic Planning Book says that competition is an opportunity. Competitive advantage is defined as “adding more value to your target customers/members/students than your competitors and at a competitive cost.”

Value is a tricky concept. First, value can be either real or perceived. An “increase in value” can be the result of increasing the quality or utility of a product or service, or by producing and delivering the same quality or utility at a lower cost, a faster rate or with greater convenience.

Second, value can never be separated completely from cost. Organizations must often undertake to keep their cost structure in line with an industry cost structure that is forever changing. For example, not only has the Internet cut costs of distributing products, but the “old line” automotive industry has also made great progress in cutting costs in manufacturing.

The result of a competitive analysis can be put in a diagram form, like an atom. At the core of the atom are the strongest, most sturdy competitive advantages that are the hardest to imitate. After identifying your organization’s strongest competitive advantages, list some of its less sturdy advantages. In the atom diagram shown below, these advantages are (and act like) electrons swirling around the core. These “advantages” could easily disappear since competitors can equal them in either a short time or without expending substantial resources. An organization’s relatively “weak” advantage could still represent an area where the company or non-profit is doing great work.

For example, one of MicroStrategy’s strongest competitive advantages is its recruiting of excellent employees (“stars”) and its employee retention ability. MicroStrategy has grown from 150 employees to 950 over a period of three years. It has developed and is successfully implementing a world-class human resource system. It includes a great hiring strategy (talent recruitment) and enormous spending allotments for training (called “boot camp”) and events like cruises and conferences. The focus is on developing a culture that makes it very comfortable for any employee to make any statement to any other employee, even the President.

MicroStrategy utilizes another tactic that we wouldn’t call a “core advantage,” but is still a great one worth noting.  The company has approximately $40 million in the bank as the result of a very successful Initial Public Offering of stock in the company in the 90’s. By the end of the decade, its stock price was regularly 2–4 times its initial offering price. Given the ability of other high tech companies to raise substantial amounts of capital and to have strong stock price showings, this advantage is more like an electron rather than a core advantage, since other companies can duplicate it. We would, on the other hand, acknowledge that having $40 million in the bank is a significant advantage for a company over less capital rich competitors.

ASTD, on the other hand, has as its core strengths a longstanding, nationwide network of local chapters, a great publishing track record, highly successful conferences, and an excellent research department. Although it serves its members well with quick response and thorough support, other competitors could match ASTD on its general customer support functions. ASTD identified 88 competitors in its strategic planning book, “The Red Book.” In the ASTD strategic planning process each competitor is listed by name, address, phone number, number of employees, name of senior executive, and a description of what the organization does. This type of complete analysis allows ASTD to determine which competitors pose the greatest competitive threat, and the ones with which strategic alliances should be sought.

Intellectual Property As A Source of Competitive Advantage

With regard to CocaCola, or any other soft drink brand, one of the core competitive advantages is the symbol and packaging for its product. While in Brownsville, Texas one of the authors observed what appeared to be a Coke can with the brand’s lettering and color scheme, but with the writing in Spanish. This can was not a “Coke” can and did not contain the Coke product. Rumor had it that sales of Coke declined significantly before these cans were taken off the market. We have heard estimates of tens of thousand of corporate logo violations annually and we are aware of strong organizational efforts to police intellectual property rights.

The entire body of intellectual property law is designed to allow trademarks, copyrights and patented information to become core strengths and major assets of an organization. Without these laws, the advantage given by “branding” would be very small and would fly away from an organization as easily as electrons fly away from the nucleus of an atom.

One new strategy of organizations is to conduct an intellectual property audit and appoint a senior officer as “V.P. for Intellectual Property.” Identifying the intellectual property assets of an organization, maximizing their value, and policing the Internet and traditional venues of commerce for violations will certainly become a more heavily used high-growth strategy in the future. Intellectual property has the distinct advantages of distinguishing your organization and its products from all others. This creates loyalty within the organization (among employees and investors) and outside it (among customers, vendors and the media). Intellectual property has a shelf life that can last hundreds of years with the value increasing over time rather than suffering from diminishing marginal returns. The best competitive analyses will discuss plans for promoting and exploiting the value of your intellectual property rights, and will compare how their value stacks up to that of the competition’s.

Significant and longstanding competitive advantage generally comes from a number of sources (better price and service, for example). Also, an organization must have some large-scale advantage related to its core strengths or competencies. This type of advantage will serve as the key launchpad for development of successful high-growth strategies.

Securing intellectual property protection for logos, inventions and other intangible assets can be expensive. However, it is often this protection that heightens value just enough to catapult that growth strategy into a high-growth, sustainable strategy. A general rule of thumb regarding intellectual property is “If you do not want your competitor to use what you have, protect it with a copyright, trademark or patent in as many markets as you plan to compete in in the future.”

Limiting The Impact of Competitive Disadvantages

It is equally important to analyze an organization’s competitive disadvantages in order to avoid strategic disasters. An entire book could be written just on the topic of competitive disadvantages because they play a pivotal role in limiting or short-circuiting efforts to create high-growth strategies. A few sources of competitive disadvantage include:

  • poor geographical location
  • lack of market share
  • high cost relative to competitors
  • less money, resources, talent, or intellectual capital than competitors
  • weaker transportation and distribution systems
  • outmoded manufacturing facilities
  • less effective, insightful, productive research and development (R&D) programs
  • weaker reputation and less publicity/brand name appeal
  • less developed organizational infrastructures
  • less skilled or trained workers
  • inferior management or board of directors
  • weaker supply chain management systems
  • weaker use of technology
  • weak CEO
  • limited access to capital

While thinking about an organization’s competitive disadvantages, it is important to get beyond standard measures and categories and analyze why these disadvantages exist, and how to craft strategies that can either improve these issues or limit their adverse impact on growth potential. For example, you may find that your organization has a number of competitive disadvantages, including that it is less willing than its competitors to:

  • take risks
  • make good, quick decisions
  • change and innovate
  • invest in training, employee development and new technology
  • modify business models
  • seek strategic alliances or enter into joint ventures
  • turn suppliers into partners
  • get to know its customers by listening
  • accept less profit per sale in order to expand total sales

All of the areas listed above may be the root causes of your organization’s competitive disadvantages. They need to be dealt with in order to achieve strength in your organization’s ability to compete effectively. One CEO we interviewed informed us that an organization cannot be strong in any of the areas of marketing, employee recruitment and retention, finance, technology, administration, product development, public relations or organizational development unless the CEO has been personally well trained in each of them. His view is that a thorough “competitive analysis” must include a careful study of the strengths and weaknesses of the competitor’s CEO. When this company identifies a competitor CEO’s weakness, the tendency is to assume that the entire organization will be fundamentally weak in that area of business. This company then develops its competitive strategy to focus on the area of weakness of the CEO of its competitor.

Prabhu Guptara, Group Director, Organisational Learning & Transformation, Union Bank of Switzerland and Chairman of Advance, Management Training, Ltd. has developed a similar theme over the past 20 years, arguing that no CEO today of any organization of any reasonable size can function properly without a clear understanding and proficiency in all related computer technology. The multi-faceted position of CEO today clearly requires a broad-based set of skills. Organizations whose CEO has a limited, specialized base of skills and knowledge often face a serious competitive disadvantage when competing with more broadly trained and skilled CEO’s.

Evidently, what one person believes is a competitive disadvantage, another person may see as an advantage. However, clarity must be sought in determining whether a particular fact is either advantageous or disadvantageous for the particular goal in mind. If after careful analysis, there is doubt, ambiguity or disagreement regarding a particular item, put it in both categories and analyze it accordingly. Of course, whether the glass is half-full or half empty often depends on whether one is pouring or drinking!

Conclusion

For those of you who think your organization or business does not have competitors, the authors strongly suggest to you that you do have competitors. The De Beers diamond company has an expansive view of its competitors. In a recent advertising campaign, diamonds are prominently displayed and the caption reads, “New Kitchen… Next Year.” However, if you still do not think your organization has even one competitor in the world, you can still use a form of a competitive analysis that will be useful.

Compare your organization against itself (its past and expected future), or against some ideal or benchmark (numerical goal) that you give your organization. Apply the same techniques in the analysis and compete against “yourself” as you constantly look for outside competitors.

 

Posted in Uncategorized | Leave a comment

Leadership in Education – Where Does Cheating Fit In?

New revelations about 178 teachers and principals participating in a massive cheating ring to change answers on standardized test scores in the Atlanta area raise grave questions about leadership in the PreK-12 education in the United States.  Some questions deal with how do we hold these principals and teachers accountable.  What laws have they violated?  Should they be decertified as teachers, or worse, prosecuted criminally?  Other questions are how widespread is organized cheating on standardized tests in our educational system and how do we find out?  Should performance audits be required?  This issue will not go away.  Teachers are leaders and they, not principals nor administrators, even if they ordered this cheating, are responsible themselves for their own actions.  What do we do as a society to stop this cheating because its harm to our educational system is huge now and will only get larger in the future.

Posted in Uncategorized | Tagged , , , , , | Leave a comment

Leadership in A Wiki-World

Rod Collins’ new book, Leadership in a Wiki-World, has won the 2011 EVVY Award for business finance.  Leadership is evolving and Rod has his finger on the pulse of how social networking, flatter organizations and smarter organizations work today.  The days of authoritarian control through “decision making” are over.  Managers need to listen to employees and working together within a company can yield the “discoveries” needed to succeed in this new world. Check out the book.

Posted in Uncategorized | Tagged , , , , , , | Leave a comment