W.W.W.D? (What would Warren do?)

Please read Warren Buffet's New York Times editorial (10/17/08). It's the most concise, level-headed view of our economy I've seen in months. A snippet - "So ... I’ve been buying American stocks...

Why?

A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful."

-Mike

Making Decisions - A Blink or a Process?

We're in the midst of the most serious financial crisis facing the world in our generation. Discouraging news that makes the future even more uncertain seems omnipresent. I used to love those little flat screens in elevators that broadcast Headline News - now they make me want to hold my ears and hum "Na Na Na Na Na" like my son Henry does when an ambulance screams by.

But we've got businesses to run, people to lead and tough decisions to make. For some these challenges and the decisions that will help navigate your business through them are matters of survival. For others, these times present unprecedented opportunities. Either way, making informed decisions quickly and acting decisively is critical.

I'm a big fan of Malcolm Gladwell, and his terrific book Blink gave credence to the fact that our instincts are more informed and accurate than we sometimes believe. This Video Interview (from NFIB SmartBrief and the Wall Street Journal) presents a slightly different - but not competing - view worth considering. Whatever method you choose, base decisions on facts and feelings, decide as quickly as you're able (choosing not to choose is always the worst choice), and act decisively once the decision is made.

-Paton

Happy Father's Day

Remember on this special day that the reason we all work so hard to build the best businesses we can is so that we can provide for and enjoy what really matters - our families. Peace and happiness to all, be you Dads, Moms or just Kids.

-Mike

PS - I was lucky enough to spend the day with this little guy:

Where is Your Business Taking You?

If you're not happy with where your business is today or not certain you like where it's headed, check out my second article for the Boeckermann, Grafstrom and Mayer Wealth Management newsletter. This installment deals with the importance of Vision - getting everyone in the organization to agree on where you're going and how to get there.

As an added bonus, you'll be introduced to my Grandfather - a truly great man named Art Pfeil who's still loving life in Santa Barbara. Although I follow and write about a lot of visionary thinkers, there is no person I respect or admire more than Pop.

Enjoy and stay focused,

-Mike

Win Like John Wooden

John Wooden's string of 10 NCAA men's basketball titles at UCLA during the 1960's and 1970's was remarkable. Although the "Wizard of Westwood" clearly understands the X's and O's, his success is generally attributed to possessing a near mystical ability to get the most from his players.

As Wooden has become an acclaimed leadership guru in the business community, the UCLA Anderson School of Management established a leadership award in his name. The school recently awarded the first ever John Wooden Global Leadership Award to Starbuck's CEO Howard Schultz. Wooden marked the occasion by sitting down with the Los Angeles Times to share "Ten Tips" that will make business owners better leaders. Please do yourself a favor and read the full article. I hope it inspires you to become your best today.

-Mike

The Power of Ideas

Nathan Myhrvold is the Founder and CEO of Intellectual Ventures, a fascinating organization that calls itself an "invention company." A certified boy wonder, Myhrvold began college at age 14, has 18 patents in his name, and spent 14 years at Microsoft at the tail end of the 20th Century.

Myhrvold once fondly recalled a memo he sent to Bill Gates while serving as Microsoft's Chief Technology Officer: "I think the title of the thing was 'a crazy idea.' He sent me back this piece of mail that I have always cherished since then, and it said, 'This is the most bizarre, craziest idea you've ever had; please proceed.'"

It may not seem newsworthy that Bill Gates had the courage to embrace crazy ideas in pursuit of the innovation that drove his company to become what it is today. But it's dangerous to dismiss this story as irrelevant if you don't feel your company needs innovation to thrive (or just to survive).

Innovating can be important to all businesses. While you're standing still your competitors - even those you don't yet know about - are improving. They may even be completely redefining your entire industry (think Newspapers vs. the web, Record Stores vs. ITunes, Pay Phones vs. Cell Phones).

So even if you have a comfortable advantage in your target market (any Sony Walkman users out there?), don't be afraid to stay current and embrace even the craziest ideas about how your customers will be satisfying their need for your product or service in the future.

Start by carefully defining your organization's Core Focus (the intersection of what you're passionate about and what your organization can do better than anyone else). Invest most of your time and energy being great at what you do now, and THEN innovate wisely. The crazy ideas worth pursuing fall within your Core Focus - which means they will appeal to the future needs of your current client base and be more easily understood and mastered by your current team.

Got a story about a "crazy idea" of your own that you'd like to share? Click "comments" below to tell us where it led your organization.

-Mike

Is Time On Your Side?

Ask 100 business owners if there's anything they want more of and 99 will give you the same two answers - "Time" and "Money." And who can blame them? It's hard to argue with the fact that more capital and more time for leaders to develop and implement winning strategies would positively impact any organization.

However, the lack of those two precious commodities are so frequently mentioned as the reason companies don't become their best that I am reminded of John F. Kennedy's famous line, "We must use time as a tool, not a crutch." After all, the lack of time and money are not so much causes of problems in an organizations as they are symptoms of other problems that can and should be addressed systematically and permanently.

Kennedy's comment resonates whenever a client's leadership team struggles to find time to work ON the business because they're working so frenetically IN the business. Often these teams rarely even meet as a group to review results, discuss the future of the organization, and solve problems. And for good reason - each of them is already putting in 60-80 hours per week on stuff that has to get done, and when they HAVE met in the past those meetings have been so long, unfocused and unproductive that calling them a "waste of time" is too kind.

If this sounds familiar, getting better at four things that may help you solve the "not-enough-time" problem at your company:

• Make sure important tasks are assigned to those who have the skills to do them well
• Document your core processes so that everyone in the organization can excel without having to be constantly monitored, coached or audited by key leaders
• Get better at making problems and obstacles go away forever
• Make your meetings more frequent, shorter and more productive

I'll share more about the tools you can use to get better at each of these items in future posts. For now, just remember that not working ON your business because you don't have time is like not going to the doctor because you don't feel well. That strategy may work for a while...but one of these days you and your leadership team are going to find yourselves in the emergency room.

-Mike

When the Going Gets Tough...

...do the tough avoid reading or watching the news? Who could blame them?

The gloom this week takes aim directly at independent business. As reported in Business Week (see full article here), there were more commercial bankruptices filed in April (over 5,000) than in any month since the new laws took effect in 2005. In fact the number of bankruptcy filings increased almost 50% since last April.

Still, many of my clients and colleagues believe these tough times create opportunities for well-run organizations and calm, opportunistic leaders. What are you and your team doing to overcome the intense pressure on your margins caused by rising costs and shrinking demand? Have you found some effective ways to weather the storm, or identified at least one silver lining in any these storm clouds?

Share your ideas by clicking on comments below. Thanks!

- Mike

Deliver Results...and Get Paid For It

Charles Steinmetz was an electrical engineer and inventor whose work at the start of the 20th century led to the development of the alternating current. Widely known as "The Electrical Wizard," he was in high demand as an expert. It was in that capacity that General Electric hired him to help pinpoint a problem in an intricate system of complex machines.

After testing and adjusting various parts of the system, Steinmetz eventually took out a piece of chalk and placed an "X" on a small component in one machine. Upon examining that component, GE's engineers were amazed to find that the "X" precisely marked the spot of the defect, and they were able to quickly resolve the problem.

Despite the fact that Steinmetz had delivered the desired results and allowed GE's engineers to move on to other projects and challenges, the company was reputedly shocked when they received a bill for $10,000 (about $200,000 today). They challenged Steinmetz to itemize the bill. His response?

• "Making one chalk mark: $1,"
• "Knowing where to place it: $9,999."

When pricing your goods and services, remember to factor in the value you deliver to your clients. Often the work you and your employees do is worth well more than the sum of your costs plus a standard (often narrow) gross profit margin. When you're passionate about delivering real value to your clients that they're unable to get elsewhere, you can be equally passionate about charging fair market value for what you deliver.

'07 Entrepreneurship Data from the Kauffman Foundation

According to a study published last week by the Ewing Marion Kauffman Foundation, entrepreneurial activity was up slightly in 2007, despite a sharp drop in the rate at which women participated in the business startup process. This is a fascinating, detailed study worthy of your attention. Read more and download the entire report here.

The study itself hazards no guesses as to why "men are now twice as likely as women to start a business each month" (the highest gap ever reported since the study began in 1996). I'd like your thoughts, though...please comment by clicking on "comments" below.

Smart or Healthy?

In 1790, Thomas Jefferson - an accomplished leader by any standards - said, "Health is worth more than learning." A well-educated man, he reasoned, can't put learning to good use - to benefit himself or others - unless he's healthy and functional.

More than 200 years later, the same holds true for many organizations. I've worked closely with hundreds of successful entrepreneurs - they're ALL smart. After all, building a successful business from scratch requires intelligence and a whole lot more.

However many entrepreneurial leaders focus almost exclusively on business intelligence, as leadership guru Patrick Lencioni explains. "Smart is the realm of decision science, which is where marketing, strategy, technology and business come into play. Critical stuff, but most executives spend about 95 percent of their time on that. "

Smart is easier. It's quantifiable, measurable. Organizational health, on the other hand, is intangible, behavioral and emotional. It is easy to dismiss the idea of a "healthy company" as unimportant, especially in a company's early days when everyone's sprinting just to stay on the treadmill. That remains true today despite the worldwide popularity of important works like Jim Collins' and Jerry Porras' Built to Last. That well-researched book, along with dozens of brilliant follow-ups (Collins' Good to Great, Michael Gerber's E-Myth Revisited, and several terrific Lencioni books) have proven beyond the shadow of a doubt that - however smart - unhealthy companies simply cannot become truly great.

So what is a healthy leadership team? It's open and honest. It regards the long-term greater good of the organization as more important than any one person's needs. It meets regularly in brief, productive sessions. There's plenty of disagreement and debate, but at the end of the day everyone is on the same page, committed to rowing in the same direction.

If you're part of a smart team that isn't getting the results it should, consider working harder on becoming healthy. You'll soon find that smart AND healthy is hard to beat.

Hitting the Ceiling

One of my best friends has a green thumb. Her garden is spectacular, and her house is filled with healthy, thriving plants. It's not just a gift. She's developed some real expertise over the years and also works very hard - growing plants is as hard as growing a business.

That analogy became crystal clear last weekend as I watched her transplant a begonia into a bigger pot. The root ball she removed from the old pot was a thing of wonder - the roots were so thick and tangled that it was hard to imagine there was any soil left in the pot. Above ground the plant had looked fine, but my friend knew that danger was imminent without change.

Many business owners know this feeling well. As a rule, companies don't grow steadily forever without some friction, turbulence and real pain. We call these inevitable periods "Hitting the Ceiling." If the stuff that's helped your business grow to this point doesn't seem to work any more and you feel stuck, your team has hit the ceiling.

USC Professor Larry Greiner first described this phenomenon in a timeless 1979 Harvard Business Review article entitled "Evolution and Revolution as Organizations Grow." Greiner explained that companies pass through a series of distinct developmental phases as they grow. "Each phase begins with a period of evolution, steady growth, and stability, and ends with a revolutionary period of organizational turmoil and change," says Greiner. To lead a company through these painful periods, he explains, management must adopt new practices that become the basis for the next phase of evolutionary growth.

But this is a cycle that gets played out many times in any growing organization, so it’s important not to relax once you've broken through the ceiling. In fact, Greiner explains that the new practices you adopt will "eventually outlast their usefulness and lead to another period of revolution. Managers therefore experience the irony of seeing a major solution in one period become a major problem in a later period."

The EOS process is designed to equip leadership teams with the ability to better recognize these revolutionary periods as they approach and to successfully navigate the company through the challenges and obstacles they present. If your company is stuck and nothing that's worked before seems to help - it might be time to transplant your leadership team into a new pot - a way of operating that's more likely to grow your company into the garden you imagine it can be.

Running Your Business in a Tough Economy

The Education Chair for an association of business owners recently asked me to customize one of my keynote speeches for her group. Because my remarks are generally tailored to the unique needs of each audience, the request itself wasn't unusual or inappropriate. However the specific topic she suggested - discussing what a well-run company should do differently when times are tough - troubled me.

Although I really wanted to work with this association, I shared my concerns with her before committing to the assignment. I explained that EOS is a way of operating that helps a business succeed in any economic environment. To suggest that there are two different sets of concepts, principles and practical tools that a leadership team should use depending on which way the economic winds are blowing is more likely to create problems than solve them.

"Shouldn't a business operate more efficiently when times are tough?" she asked.

"Yes," I replied, "but that doesn't mean that it should operate less efficiently when times are good!"

Luckily, this logic did the trick. The Chair suddenly realized she was thinking in the same way that keeps many successful organizations from achieving their vision - letting "good" be the enemy of "great" (a hearty thanks to Jim Collins). She realized that truly great organizations are constantly striving to be their best, even while comfortably meeting revenue-growth and profitability targets. She acknowledged that waiting until times are tough to operate in a way that produces the greatest possible results with the fewest possible resources is wasteful in a growing economy and potentially fatal during a downturn.

This breakthrough allowed us to find common ground and put together a presentation that will help her members get the most from their businesses - no matter which way the economic wind is blowing.

EOS In the News

One of my colleagues – Jon Meyer of Boeckermann, Grafstrom and Mayer Wealth Management - recently asked me to write an article for his company’s newsletter. Jon felt my practical, real-world approach to helping entrepreneurs and their leadership teams would resonate with his readers, as many of them are business owners. The article has generated enough positive feedback that I felt the rest of my network might benefit from reading it, as well.

If you’re interested in getting more from your business, click HERE to read the article. Your candid feedback (and/or adulation) is most welcome. Of course, I also hope you’ll contact me whenever your team can use some help becoming the best it can be.

Stay focused,

- Mike

Introductions

Welcome to my blog. Thanks for making EOS Mike Paton one of the few pieces of input for which you find time. I'm committed to making your investment worthwhile by using this site to collect and post insight, guidance and tools guaranteed to help leaders get more of what they want from themselves, their teams, and their businesses.

"EOS" is the Entrepreneurial Operating System, a set of timeless principles and practical tools for running a successful business (visit http://www.eosprocess.com/ to learn more). Developed by renowned business coach, speaker and author Gino Wickman, this simple system has helped hundreds of entrepreneurs and their leadership teams get better results and lead better lives in the process. I hope this blog helps you do the same.

Once again, welcome. Please read, think and respond. Your thoughts, opinions and experiences will make this a truly valuable experience for me and my readers.

Stay focused,

Mike