Minneapolis Vistage member Jay Coughlan offers some insights into why change and organizational transformation is so difficult.  He has led his company, XRS through 2 major transformations since 2007, and his story is summarized in a recent Minneapolis Star Tribune article.  Below is the quote from the article that provides the background story.

“In 2009 the company, then called Xata, acquired Toronto-based Turnpike Global Technologies, which provided a trucking compliance solution that ran through a handheld device. Truckers and their companies must comply with myriad regulations, from logging hours driven and duty status to tracking state fuel taxes. The XRS service also helps improve performance by keeping track of maintenance schedules, fuel economy and more.

That $20 million acquisition would be the foundation of a complete shift in the company’s approach to providing logistics for the trucking industry. Xata used to be primarily a hardware company that installed a communications dome on top of truck’s cab and then tore apart the dashboard for a four-hour installation of a fixed-panel display and keyboard.

Now, with its mobile technology, it takes about 10 minutes to connect its XRS relay device and sync it with a wide variety of Android and Windows Mobile smartphones, rugged handheld devices and tablet computers that will automatically transmit vehicle and operator data directly to a management dashboard in the cloud. “

In hindsight, this migration from hardware to mobile technology seems like a no brainer, but with discontinuous innovation, there were three powerful stakeholders that made such a transformation almost impossible.

Existing customers – XRS had a large customer base on their legacy hardware with huge sunk costs who wanted them to continue to support that system.  They are less than sympathetic to the need for XRS to shift resources from supporting their legacy systems to the development of the new technology.

Shareholders and Investors – Migrating to mobile required a change in business models from a large upfront equipment sale and installation to a subscription model with no upfront revenues.  Moving from one to the other means a huge decline in revenues and profits over a year or more, which translates to meager cash flow, and short term losses.  Even when you forecast it on paper, it is difficult to maintain the commitment of your board and investors when you are in the middle of it, especially when there is no guarantee of long term success.

Company Leaders and Employees – Migrating from a hardware solution to a software solution, to ultimately a mobile solution required totally different skillsets in engineering, software development, and sales and was only possible with a 70% turnover of employees.  Without a clear vision and a burning platform for change it is impossible to drive the changes required to support this kind of transformation.

Based on many monthly coaching sessions and CEO peer meetings with Jay, I have identified 5 Keys that enabled  XRS to overcome stakeholder resistance.

1. Communicating a compelling vision of the power of being a first mover in his industry with mobile technology.  The message needs to be simple and re-communicated over and over to remind people where we are going.
2. Creating a “burning platform” (sense of urgency) around how  iPads, tablets, and smart phones were discontinuous innovations that could render their current system obsolete – XRS needed to make the leap or be left in the dust.  Again, given the dramatic changes required, people need to understand and be reminded that there is no going back to the old technology.
3. Developing realistic quarterly forecasts showing the revenue lines of their two platforms and when the lines would cross and then producing quarterly results that are consistent with the forecast.  This is especially difficult because there is no trend data to rely on and forecasts need to be frequently updated.
4. Hiring new leaders that are equipped to drive the changes required in sales, technology, and operations.  These new leaders need to represent the new culture you are creating and also integrate well with the former leadership team members that are still on board.
5. Identifying the three critical priorities every quarter to drive the organization through the next phase of change.  These priorities can change as you encounter bumps in the road along the way, and these changes need to be clearly communicated to all stakeholders.

Jay’s leadership in overcoming stakeholder resistance during XRS period of discontinuous innovation is an excellent example of the courage and resiliency required for CEOs to lead their companies through major transformation. I really enjoy having Jay in my Vistage CEO Advisory Group and his insight is extremely valuable to other group members who may be facing a similar rocky road. Vistage provides an excellent forum for CEOs to learn from other CEOs who have been where they are going.

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A fan who understands what legacy is really all about out reached out to Manning through a letter in the Denver Post. Laurie Lattimore-Volkmann shares, why Manning’s legacy was secure well before Sunday’s game.  Click here for the one page letter written from the perspective of a mother and a life-long Broncos fan.

Shaun White won back to back half pipe snowboarding gold medals in the Torino and Vancouver Olympics and he was the favorite coming into yesterday’s finals in Sochi. White ended up finishing just off the podium in 4^th place, but he was gracious as ever in congratulating the winner. Kare11 just ran a neat story that illustrates the profound impact that Shaun White has had on a local Twin Cities boy. White’s 4^th place finish in Sochi will make him no less of a hero in Jet’s eyes.

Take a moment to reflect on your legacy as a leader in your company.  What would your people say about you?  What one thing would you like to change starting today?

The post Lessons in Leadership Legacies via Peyton Manning and Shaun White appeared first on Brian L. Davis, Ph.D | Vistage Chair.

To Target’s dismay, the news broke on Friday that the vendor in question was not a giant merchandise supplier, but a small 125 person mechanical contracting firm in Pittsburgh, PA that had done some work for several Target stores.  Hackers targeted the vendor’s system and its connection to Target’s vendor management system in order to gain access.

If you’re a C-Level decision maker, the blame for a vendor security breach will find its way to your desk as Gregg Steinhafel, the CEO of Target, is experiencing now.  I would highly recommend taking a few minutes to read a summary of the Target breach by Vistage Speaker Mike Foster who advises Vistage CEOs across the US on how to understand and manage risky information technology aspects of their businesses.  His advice may be even more critical for my Minnesota Vistage CEOs, Owner and Executive members, who have major contracts with high profile Fortune 500 companies.

In a recent blog post, Foster highlights 5 key questions that you should be asking your IT Staff to ensure that you understand how your business is protected.  Proactively asking these questions now will increase the odds that you won’t have to face angry customers asking you the same questions after it is too late.

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Several experts maintain that the CEO is on a steep learning curve during the first couple of years but will really hit his or her stride in years 3-5.  After 5 years, however, the company’s results begin to decline.  According to Michael Jarret at INSEAD, “The team’s research found that when a CEO stays over five years, customer relationships, product safety and quality, and financial returns will all decline.”

One reason for the decline is that you are more likely to settle for the status quo.  “After the initial rush of enthusiasm and energy, established routines and networks can smother the drive for innovation,” Jarrett writes. A second reason for the decline is that you stop learning. “… as CEOs accumulate knowledge and become entrenched, they rely more on their internal networks for information, growing less attuned to market conditions,” the authors say.

One way to avoid this decline is suggested in the title of the article:  CEOs: Why you should quit while you’re ahead. In certain situations a CEO choosing to step down may very well be the wise or heroic thing to do. On the other hand, installing a new CEO every 5 years is not practical for many companies, especially small and medium size businesses. And why would someone who has persevered through many challenges and worked hard to rise to the top leadership role want to quit?

Quitting your job as CEO will certainly bring about change for your company (for better or worse). Another path forward is to join a CEO Peer Advisory Board of independent CEOs who will continually challenge your thinking, push you out of your comfort zone, and keep you externally focused and learning.

The post CEOs – Quit While You Are Ahead? appeared first on Brian L. Davis, Ph.D | Vistage Chair.

1. Who chairs the meetings? 

Some executive coaching groups are run by volunteers, other groups rotate meeting facilitation duties amongst themselves, and still other groups rely on paid, highly trained, business leaders to keep the meetings on track and assure all members are receiving value.

Most business leaders find that the biggest expense in belonging to a group is not the membership fees – it is the value of the time that they spend in the meetings. A professional chair can dramatically increase the value you receive from those peer meetings.

To evaluate a chair’s credentials, ask:

• What is their education and experience – not only in running a business, but in executive coaching and group facilitation?
• What national awards or recognition have they received for their chairing?
• How do they measure their own effectiveness and the effectiveness of their group?
• What do they do to continually improve their skills as a group chair?
• To what extent are they sought out as an expert by local and national media?
• What do their members say about them on their website or on LinkedIn?’

2. Is monthly individual mentoring and executive coaching included?

World-class athletes and other professionals have a coach, why shouldn’t you?

Find out if members meet monthly with their chair to dig deeper into challenges and opportunities and to make sure they are getting the very best their peer group has to offer.

3.  Who else is in the group? 

Make sure there are several people in the group who have been where you are going and have expertise and experience that you don’t.

• In addition to assuring there are no direct competitors in the group, attend a meeting to find out:
• Are there companies of various sizes and industries?
• Are some recognized as leaders in their industry?
• How do you feel about the chemistry of the group?
• Are members helping each other with critical issues?
• Do they challenge one another and ask the tough questions?
• Do they support one another?
• Do people seem to enjoy being there?

4.  What access do you have to business expertise outside of your peer group members?

Although the interactions you have with your immediate peer group members are invaluable, CEO peer groups are more effective when additional resources enrich the experience.

Consider these questions:

• Does the group bring in great speakers?
• Is there a broader community in your city, state, country or globally that you can call on for help?
• Do they have a website to connect with other members and leading experts to get help between meetings?

5. Are there groups for their direct reports? 

A key barrier to growth is having strong people beneath you so that you can elevate and delegate.  Is there a way to help them grow their people in addition to themselves?

Brian L. Davis, PhD is the leading Vistage chair in Minnesota.  With one of the highest-rated Vistage chair practices in the country, Mr. Davis has coached some of the top executives in the Twin Cities.  Mr. Davis business leadership coaching skills have been noted by a variety of publications, including The Minneapolis Star Tribune, The Minneapolis/St. Paul Business Journal, and Entrepreneur Magazine.

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As the leading Vistage Chair in the Twin Cities, I routinely facilitate peer groups for some of the top executives in Minnesota. Over the last year, my peer groups have been noted in a variety of publications such as The Minneapolis Star Tribune, The Minneapolis/St. Paul Business Journal, and Entrepreneur Magazine.

Despite increasing amounts of media coverage, many business leaders are still unaware of the benefits that CEO peer groups have to offer. The most frequently asked questions I encounter are:

1. What is a CEO or executive peer group?
2. Why do people join CEO peer groups?
3. What topics do CEO peer groups cover?

The following post provides answers to those questions and guidance on finding the right peer group for you.

1) What is a CEO peer group?

A CEO peer group is a cohort of executives and owners of non-competing businesses who meet regularly to help each other grow their organizations, their people, and themselves.

These peer groups are intended to be a confidential “safe haven” where business leaders can work through their toughest strategy, leadership, and people challenges together.

Most importantly, CEO peer groups consist of experienced executives who share the frank feedback that is often so hard to obtain within one’s organization.

2) Why do people join CEO peer groups?

The members of my CEO peer groups join for a variety of reasons, both personal and professional.

Most entrepreneurs join CEO peer groups because they want to increase their effectiveness as leaders or enrich their lives – for entrepreneurs these aims are often intertwined.

For CEOs or heads of companies, many join CEO peer groups because they want to run their businesses instead of having their businesses run them. These individuals find that meeting monthly with a group of experienced, non-judgmental peers helps stop them from working “in the business” so they can focus on working “on the business” by being more strategic.

3) What topics are covered in CEO peer groups?

Vistage CEO peer groups tackle the most difficult challenges that executives face.

The topics covered in my CEO peer groups include business strategy shifts, assessing talent, and work-life balance. Often CEOs find that posing a challenge to a peer groups helps them clarify the real issue and frame their problem more accurately.

Here are some examples of issues we processed recently:

Merger Matchmaking

The CEO of $70M company was behind his revenue plan and wanted help analyzing a potential merger opportunity with a much smaller firm before taking it to his board of directors.

The group asked him a number of tough questions about the strategic fit of the target company to assure he had covered his bases before taking it to the board.

Strategic Focus

A $2M family firm felt that their sales had plateaued, and the CEO was trying to decide whether he had the right people in the sales role. Further probing by the group revealed that his sales people had been highly successful in the past, and that there were plenty of opportunities in the pipeline.

The group discussion led to the insight that sales people were spending a lot of time on opportunities that were outside of the company’s sweet spot. The group helped him better define his target customer so he could focus his sales effort there, rather than chasing opportunities that were outside of their core.

Finally, they suggested that he and his sales people go on a few joint calls to make sure they were executing good sales fundamentals, and had not developed bad habits.

Trust Issues

A relatively new CEO who had been brought in from the outside felt a need to either get an executive coach for a key member on her leadership team, who she didn’t trust. The group asked her a number of questions to help her diagnose whether the trust issues she was experiencing were a function of the person’s “character” or “capability.”

They shared their experiences with executive coaching, and suggested that while it can be highly effective in closing capability gaps, it doesn’t work when the trust issues are due to character or integrity gaps.  Based on their input, she decided that she and the organization would be better off if she replaced the key executive.

Joining Executive Peer Groups

Overcome your business challenges by joining a Vistage CEO peer group.

Peer advisory groups are an important staple of the Vistage experience. My peer groups are a place for Twin Cities executives can hash out their most difficult business problems in a confidential setting.

Vistage groups have leaders from small to large companies across a range of industries, including manufacturing, finance and technology. Although Vistage members are typically accepted by referral, interested individuals can familiarize themselves with my Vistage groups to determine whether they are a good fit.

The post 3 Things You Need to Know About Vistage CEO Peer Groups appeared first on Brian L. Davis, Ph.D | Vistage Chair.

Everyone has a unique set of motivators for joining a Vistage CEO Peer Group, but there are five reasons that I continually encounter:

1.  Better business results, quicker

Most entrepreneurs didn’t go to “CEO school.”

These entrepreneurs are typically great at sales, developing innovative products, putting together deals, or they may be taking the reins of a family owned business.  Regardless of how they have come to lead their businesses, most entrepreneurs are self-taught and have learned by trial-and-error.

2. Learning from failure, without failing

Failure is the best learning tool – but it doesn’t have to be your own failure.

Many entrepreneurs join Vistage peer groups because they want help making better decisions and they want to learn from the experience of others’ mistakes rather than making the same mistakes themselves.

3. Leadership Growth

Minnesota entrepreneurs that join Vistage often seek to become better leaders.

Vistage CEO peer groups have peers who will push entrepreneurs out of their comfort zones to address the business and personal challenges that are holding them back.

4. Camaraderie

Entrepreneurs often seek relief from the isolation that comes from running an organization.

It really can be lonely at the top, and entrepreneurs need a confidential sounding board with whom they can be vulnerable and discuss their failures and fears, not just their successes.

Friends and family can lend a sympathetic ear, but they usually don’t have the experience to be helpful or the perspective to help the entrepreneur see what they are doing to create a problem.  An entrepreneur’s own company executives may have their own agendas or lack the courage to tell them the kind truth, and a board of directors responsible for CEO evaluation and succession is often not the first place they want to go for help.

5.  Growth Acceleration

Vistage group members want access to business experts and resources that will help their businesses thrive and enhance their lives.

For example, at least six times a year, best-in-class speakers come to our meetings to do workshops on critical topics including:

• Creating a culture of alignment and accountability
• Increasing employee engagement
• Building a world-class sales organization

For specific issues, entrepreneurs can get referrals to local professional service firms who other members have used to get great results at a reasonable price.

Brian L. Davis, PhD is the leading Vistage chair in Minnesota.  With one of the highest-rated Vistage chair practices in the country, Mr. Davis has coached some of the top executives in the Twin Cities.  Mr. Davis business leadership coaching skills have been noted by a variety of publications, including The Minneapolis Star Tribune, The Minneapolis/St. Paul Business Journal, and Entrepreneur Magazine.

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He found himself starting work at 3:00 am to work on client projects, meeting with up to 10 customers a day, and then doing more project work in the evenings.

Like many business owners of companies with less than $5M in revenues, he was so busy selling, serving customers, and putting out fires, he felt he needed to clone himself before joining a group.

It is often said, “What got you here, won’t get you there,” and nowhere is this truism more evident than when trying to profitably grow your company.

Most entrepreneurs struggle with very predictable barriers as they grow their companies from $1M in revenues to $10M and beyond.

Predictable Business Growth Barriers

According to Vistage speaker Jim Alampi, who spent a half-day with my Minnesota Vistage members, there are three types of barriers that crop up at each stage of business growth:

1. Leadership
2. Systems and Structures
3. Market Fundamentals

Top-down leadership changes are not always easy, but Jim Alampi showed my Vistage Group members what leadership barriers to expect and what key areas to focus on.

Common Leadership Barriers to Growth

Startup Growth Barriers: Processes & Chaos

When your company has 10 Employees, the most common barrier to growth is a lack of processes and funding to hire seasoned professionals. These limitations can create a sense of chaos for an entrepreneur. This disorganization needs to be resolved to take the enterprise to the next level.

Small Business Growth Barriers: Delegation & Titles

Once a company grows to between 50 and 75 employees, micromanaging can quickly become overwhelming. In order to take a small business to the next level, it is important to hire the right talent and delegate tasks.

Midsize Business Growth Barriers: Growing Middle Management

Companies that manage to grow to around 200 to 400 employees need a strong middle management group. Finding, recruiting, and growing an entirely different level of leadership is essential to becoming a large, profitable organization.

Large Business Growth Barriers: Organizational Structure & Focus

Once a company has a strong middle management team and grows to 1,000 employees, it is important to make tactical decisions regarding profitability and organizational structure. Great companies focus on the contribution margin line instead of the gross margin line. These companies ask themselves whether they really make money selling all products to all customers.

What Great Entrepreneurs Focus On

Addressing growth barriers requires a substantial amount of delegation, but Jim Alampi says that are four fundamental things that cannot be delegated by a CEO:

1. Setting the company’s direction
2. Making sure the right people are in place and that these employees are being developed
3. Ensuring that employees have the resources that they need
4. Removing obstacles from employees

“Anything I let take me away from those four things means that nobody’s doing those four things,” Jim said.

The Value of Vistage Speakers

As the former president of a $1.5 billion company and the CEO of a $300M public corporation, Jim knows what it takes to take a successful business to the next level of growth.

Jim Alampi is just one of many influential business development experts who speak to my Vistage CEO groups. All Vistage resource speakers are leading business experts who have valuable insights on business leadership and work-life balance.

Vistage speakers offer more than just run-of-the-mill business advice that you can get from a Ted Talk – our speakers work directly with Vistage members to provide actionable insights and tools to spur business growth.

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Minnesota business leaders need to focus on accurate performance indicators to ensure long-term success.

Florida: December 29th, 1972

Eastern Airlines Flight 401 was a routine flight traveling from JFK Airport to Miami. As the pilots engaged the landing gear they noticed that one of the plane’s three indicator lights failed to turn on.

Not knowing whether the light was burned out or whether the landing gear had failed to lock in place, the two pilots and flight engineer focused on solving the problem.

They tried unsuccessfully to reengage the landing gear and then sent the flight engineer down below to see if he could do a visual check from a small window in the plane’s nose.

The three were so focused on fixing the problem that they failed to notice that one of them had nudged the plane’s control column with his knee, which disengaged the autopilot and sent the plane into an “imperceptible descent.”

The pilots had taken their eye off the plane’s dashboard, which had several indicators to show they were losing altitude and were in peril.

At 11:42 p.m. Flight 401 slammed into the everglades at 244 mph, killing 101 people.

How Minnesota business executives can avoid imperceptible descent

The crash of Flight 401 is not simply a tale of a blundering flight crew. The majority of business crises arise due to a similar misplacement of focus at the executive level that causes a company to slip into a disastrous imperceptible descent.

Business speaker Mike Richardson (Author of Wheelspin) recently led a discussion on imperceptible descent at my Vistage CEO Peer Advisory Group meetings, and impressed upon us the importance of keeping our eyes on the horizon and key business indicators.

In our next meeting, Vistage speaker Kraig Kramers made a compelling case that the monthly and year-to-date financial reports that most companies rely on do not give an accurate picture of what is truly happening in a business.

Financial reports typically do not control for varying month lengths and how weekends or holidays fall in a given year. This means that there could be 20% more business days from one February to the next, making for an inaccurate comparison.

The solution is to replace the typical monthly financial spreadsheets with trailing twelve month charts which plot the moving 12 month totals or averages for your key indicators.

These eliminate the “noise” caused by random monthly variation and give you a true picture of what is happening in your business (up is good, down is bad).

What business performance measures are important?

Key performance measures for a business will vary by industry. Kraig Kramers recommends starting with five fundamental measures that apply to all businesses:

• What causes sales (WCS)
• Sales growth
• Gross margin
• Operating expense net of WCS
• Operating profit

Chart these measures on a single page to get a true picture of whether your business is experiencing an imperceptible decline.

The task may appear daunting initially, but the good news is that business leaders do not have to reinvent the wheel – a spreadsheet version of this chart is available online.

The spreadsheet that Kraig provides also includes several tips to ensure that you get the most value out of it.

The members of my Vistage Peer Advisory Group have found these performance measures helpful in recalibrating how they evaluate the performance of their companies.

Brian L. Davis is the leading Vistage Chair in the Twin Cities. Learn more about his Vistage member companies here.

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Within a couple of days of the Yahoo announcement, Best Buy’s new CEO, Hubert Joly, made the same call by putting an end to the practice of ROWE (Results Only Work Environment) that Best Buy had popularized, and which allowed employees to work at home as long as they were achieving their objectives. The new Best Buy policy does allow for some telecommuting exceptions at management’s discretion.

During my one-to-one coaching sessions with my Vistage CEO Peer Group members, I have found a wide range of opinions on this.  Some say this totally validates their distrust of work at home policies.  Others recognize that they have scores of geographically distributed people productively working out of their homes, and that centrally locating these people is not feasible or desirable.  In either case, telecommuting is probably not going away entirely, and we need to better understand in what situations it works and how we can make it more effective.

That is where you come in. So kind readers, please reply to this post with your comments.

In your experience when has telecommuting worked well? When has it failed?  What are some best practices you have put in place to make it better? 

I am looking for your brief observations and quick stories of a paragraph or less in length. In a couple of weeks I’ll summarize your answers and add some insights of my own on how to get the most out of telecommuting.  Thank you for participating!

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