A highly reputable construction company had to close its doors recently. They were working on two large hospital expansions and ran into trouble with some subcontractors. The details aren’t what matters. Construction is a demanding industry during strong economies and becomes close to impossible during recessions.
I may be off base here, but I am wondering about the banking relationships.
The local broadcast and print news reports included favorable comments from the business administrators of both hospitals. The construction firm provided jobs. The owner was a highly visible leader in the seven county region. The hospitals play an important role in the region’s economy.
Where were the banks?
Would Wells Fargo have benefitted from assisting in this situation? They purchased Wachovia last year and need expanded visibility in the area. Would PNC have been a good choice? Their television campaign suggests that they are looking for businesses in need of loans. Would SUN National have been interested? Their CEO, Tom Geisel, is a bright man. They have been investing heavily in a marketing campaign. Would they look good saving the two hospital projects and a solid construction company at the same time? What about the small community banks serving the towns most impacted by the hospitals?
If you find yourself in a similar position, working on a few large accounts and too dependent on vendors with shaky finances, try not to assume that banks or investors can’t or won’t help. The interest rates might be higher than you preferred, but that sure beats suddenly closing your doors.
We contribute to protracting the tight economy when we don’t give the financial community a chance or expect them to participate.
It’s great to watch old black and white movies featuring Lionel Barrymore, and then look at the little girl in E.T.™ or the talented leading lady in movies like The Wedding Singer™ and Never Been Kissed™ or spot the lovely blonde spokesmodel in television advertisements for Cover Girl™ make up. Just imagine the pressure felt by Drew Barrymore when she was growing up. She comes from a long line of very talented famous actors. Or how about Michael, the son of Kirk Douglas? Or what about Nat King Cole’s daughter, Natalie? The pressure of expectation, obligation, and legacy can be daunting.
This pressure isn’t just the purview of actors or singers. It happens in business as well. Imagine the pressure felt by Ivanka, Donald Trump’s daughter. She seems to be handling it fairly well, but “The Donald” casts a fairly large shadow. Actually that same pressure is felt by most second and third generation leaders in family businesses. And it’s also felt by promoted-from-within Presidents/CEOs who aren’t blood relatives of the owners, but were long term loyal employees.
One might think that a newly promoted CEO will have a long list of pent up ideas he/she wants to implement right away. Often, the first thing they do is implement cost savings measures. That’s good, of course, but he/she probably could have done that as a Plant Manager or COO.
The newly promoted CEO sometimes knows a bit too much about the day to day operation. He/she will know the stories behind the last computer system upgrade. Memories about mistakes made during the last new product launch can be too fresh. The newly promoted CEO may like, trust, and value his/her co- workers/colleagues but often have difficulty envisioning greatness in these same people.
It takes concerted effort on the part of most promoted-from-within CEOs to look outside their companies for guidance about what is possible, how fast change should be paced, where the market is headed, and which products and innovations will be important. The role of the CEO is not to maintain status quo. The role is one of vision, discovery, and leading the way in the process of creating a better future.
We all know companies that brag about their record of promoting from within. It’s great to retain good people and provide opportunities for upward mobility. When a customer service rep. is promoted into a field sales position, most companies recognize the need to provide some training to help that person succeed. A mentor is often assigned. When a controller is promoted to the CFO position, he/she is usually expected to participate in professional associations like Financial Executives International (FEI) and attend conferences. His/her reading list changes as his/her schedule shifts from AR/AP reports to meetings with bankers and generating scenarios and contingency plans.
But where does a newly promoted CEO go to get mentoring, training, guidance, and assistance making the transition from an operations-focused position? He/she shouldn’t rely too heavily on the Chairman of the Board. After all, much of the CEO’s compensation formula is based on being able to take care of the board, anticipate their needs, and not need too much direction.
New CEOs of midsized companies can benefit from participation in peer-to-peer groups like VISTAGE or a CEO Think Tank. Such organizations provide monthly group meetings with other CEOs from comparable non competing industries. Confidentiality is maintained within the group and CEOs take turns presenting their business plans, pending decisions, and big ideas to one another. The feedback is worth every dime of the membership dues.
And it pays to bring in a business advisor to work directly with most newly promoted CEOs. The CEO knows the company, may have a great work ethic, and wants to succeed. But if he/she doesn’t have a safe place to learn the difference between COO and CEO, a wide range of expensive mistakes can be made in a very short period of time. I’ve noticed that some newly promoted CEOs are reluctant to invest in training, consultants, books, seminars, etc. Maybe the thinking is that he/she has made it to the top and is supposed to know everything by now. Without specific preparation to become a CEO, that thinking sets an otherwise capable person up for failure.
Recently promoted-from-within CEOs are among some of the most dedicated people I have ever met. They are grateful for the promotion. Sadly, they are often afraid to fail, which interferes with their being assertive visionary leaders. They don’t want to spend too much money or seem like the arrogant outsiders who may have recently served in the CEO role.
But an investment in the CEO really knowing what to do is an investment in the company. It is not the same as money spent on corporate jets or personal perks.
Margery Krevsky, the CEO of Productions Plus headquartered in Michigan, was recently a guest on my weekly on-line peer-to-peer-to-peer radio show, THE GROWTH STRATEGIST™. There are so many cues to encourage Margery to coast, get cocky, and ride on her past successes. She’s won several awards including Michigan’s “Ernst and Young’s Entrepreneur of the Year” award for her industry. Her company is the largest production and talent firm in the state and one of the best in the country.
Margery is now living “Above the Radar” (see blog # 30 – 2010). Perhaps you are too. Other people now approach her with business proposals. She is invited to speak at conferences. She could serve on just about any non-profit board she chooses (and some for-profit boards as well). She could chair major fund raising events in a figurehead role. She might even be tempted to write a book. Margery is clearly in the top 1% of female entrepreneurs. She’s been so successful folks are now watching what she will do next. She is expected to know A LOT.
So far, Productions Plus has experienced consistent growth. She is proud of her executive team. They’ve invested in skilled managers. And they didn’t stop there. They wisely brought in Jim Alampi to help them implement “The Rockefeller Habits.” (Read Verne Harnish’s book, Mastering the Rockefeller Habits, if you don’t know what I am talking about here.) Margery has been a long time participant in a VISTAGE group and paid the very experienced facilitator, Barbara Stanbridge, to provide extra coaching for her.
When you listen to enough executives of midsized companies, you can tell which company will continue to grow and which is more likely to soon be stuck …even without looking at their financials! I’ve been interviewing Presidents/CEOs of midsized companies ($20-200 Mil/yr) for my weekly on line peer-to-peer-to-peer radio show for 6 years. Plus all of my service businesses (strategic planning, search, growth financing, etc) help midsized companies keep growing. I’ve heard hundreds of pitches for growth financing.
If you were in Margery’s shoes (and perhaps you are) would you coast? Take a break? Leave things alone for a while? Act like you know everything? Or would you raise the bar on your company’s approach to strategic planning? Look for new ways to energize managers? Update your vision? Learn about succession? Create a much larger business?
Here’s to the Margery Krevsky s of this world … who keep learning!
As the President/CEO of a $20+Mil/yr company, you now live above the radar. You’ve been successful and others are watching to see what your next move will be. You used to drive the growth of your business, identify candidates for acquisition, target key accounts, introduce new products/services, and pace your growth. Now other entities seem to be approaching you with offers to purchase, merge, or align.
In some ways that feels good because you don’t always have to come up with the ideas. Others bring them to you. You’ve become a bit of a celebrity. You are invited to serve on boards, chair fund raising events, and do media interviews. You are asked to speak to business school students or be a panelist at industry conferences. You’ve even considered authoring a book or going out on a speaking tour.
I have found that many executives aren’t ready to live above the radar. When their businesses were smaller, there was less presumption that they would know what to do. There was more room for error. It didn’t feel like every move was being watched. The limelight can actually be distracting and becomes an excuse to not address strategic issues. Some executives seem to believe all of the hype in their own press clippings and start to coast. Do you really know how to execute an initial public offering? Do you really know what’s expected of a CEO over a $ Bil/yr enterprise?
Take a moment to ask yourself if the limelight is setting you back. You or your company may have won some prestigious awards, but are your executive leaders wondering if they will continue to deserve awards that honor excellence, innovation, and profitability? You may have a strong executive team in place and annual strategic planning retreats, but somehow does it feel like a lot of hard work with too little ROI for the executives? Have you carefully selected and trained managers, but they just don’t seem to have the same sense of urgency so deadlines that had never been missed before are at risk? Even if you are not ready to retire, you know that your strategic plan should consider succession and options for an exit strategy, but you keep putting that topic off. Does your midsized company have new systems in place, like daily huddles and key metrics/dashboard, but you know that something is missing?