CEO Brain Trust » Entrepreneur http://www.ceobraintrust.com Just another WordPress weblog Fri, 21 May 2010 05:42:20 +0000 en hourly 1 http://wordpress.org/?v=3.0.4 One Powerful Culture http://www.ceobraintrust.com/1228/one-powerful-culture/ http://www.ceobraintrust.com/1228/one-powerful-culture/#comments Fri, 21 May 2010 05:35:27 +0000 Daniel http://www.ceobraintrust.com/?p=1228 Twitter It!

By Verne Harnish “Growth Guy”

No company better exemplifies the power of a strong corporate culture than Zappos, the online shoe and clothing retailer acquired by Amazon last November for $1.2 billion.  Just over a decade old, its corporate culture is the critical glue that helps this rapidly growing company deliver on its promise of providing exceptional customer service – and delivering happiness!

To witness this culture firsthand, I organized a private tour of Zappos corporate headquarters in Henderson, NV for 120 CEOs and executives of growth companies.  We also invited their well known CEO, Tony Hsieh, to share his personal insights into corporate culture with a broader audience of growth company executives the following day.

FAILED CULTURE

Hsieh’s obsession with corporate culture dates back to his first company, LinkExchange, which he sold to Microsoft for $265 million when he was 24 years old.  He decided to sell the company the morning he found himself hitting the snooze button on his alarm clock multiple times, dreading the thought of having to go into work.  And he wondered how many other employees felt the same way.

He vowed if he launched another company he would focus on maintaining a strong corporate culture rather than one that haphazardly drifted and shifted as new employees were added to the firm.

CULTURE DRIFT

This cultural drift begins around 70 employees – when the senior executives no longer know everyone’s name in the company.  This drift accelerates when the company moves to a second floor in a building or opens a second location.  The physical separation makes it that much harder to keep the corporate culture tight and aligned.

The key to maintaining a cohesive culture is discovering a set of core values that accurately reflect the nuances of the organization’s personality.  Hsieh led this discovery exercise during Zappos’ fifth year in business.  This is about the right timing.  Like a child, the corporate culture or personality isn’t fully revealed until the company is five years old, being shaped through early experiences and the collective values of the people involved.

DISCOVERY PROCESS

I’ve seen firms spend tens of thousands of dollars and months going through a laborious process that often generates a generic list of core values.  And this generic list often fails to represent the uniqueness and power of the existing culture.  Alternatively, there is a way to get at your core values that’s fun and amazingly fast.  It’s an approach outlined in Jim Collins’s and Jerry Porras’s article “Building Your Company’s Vision.”  You can download the article from www.hbr.com for $6 or Collins has some

]]> http://www.ceobraintrust.com/1228/one-powerful-culture/feed/ 0 Amway of the Rich http://www.ceobraintrust.com/1222/amway-of-the-rich/ http://www.ceobraintrust.com/1222/amway-of-the-rich/#comments Tue, 06 Apr 2010 05:29:36 +0000 Daniel http://www.ceobraintrust.com/?p=1222 Twitter It!

Today I spoke with a friend that told me he just see an entrepreneur we met 5 years ago. This entrepreneur was beginning a company to custom-made dress shirts for the wealthy executives.

So the business idea was to send nice looking girls to visit wealthy individuals to their offices and sell them custom-made dress shirts, and send the shirts to be made with tailors in Hong Kong. When he told me what he was doing, I said, well cool idea and fun to hire by commission all this beautiful girls to send to my friends offices… and also I hate to shop and it would be great to have my shirts sent to my office. But on the other side, I thought, what unsexy business with little scalability and low income potential.

5 years later… very different story… today he is closing his second round of financing by a prestigious group of VC´s, has over $10 million in sales and he is on his way to create the Amway for the rich executives!!!! Wow what a different story!!!! Imagine the potential of sales of having an Amway for the rich? Amway today has sales over $8 billion dollars!!!! An sells to the base of the pyramid an mid class.

This confirms my thesis that ANY idea with a good and passionate entrepreneur perusing it can grow significantly and bring great wealth to him and the ones that trust him at the beginning. So the first thing I like to see when analyzing an investment opportunity is who is the entrepreneur behind the opportunity… I believe if you have the right entrepreneur executing and running the company, you have at least 50% chances of success in your investment.

]]> http://www.ceobraintrust.com/1222/amway-of-the-rich/feed/ 0 5 Myths That Can Kill a Startup http://www.ceobraintrust.com/1206/5-myths-that-can-kill-a-startup/ http://www.ceobraintrust.com/1206/5-myths-that-can-kill-a-startup/#comments Fri, 22 Jan 2010 05:13:29 +0000 Daniel http://www.ceobraintrust.com/?p=1206 Twitter It!

I just read this great article By Michael Fisher and Marty Abbott about the Myths that can kill a Startup… I found great insight and very concise ideas… here are the myths:

Myth #1: Hire Smart People and Let Them Do Their Magic

Truth: Hire Stars and Let Them Do Their Magic

Myth #2: It’s About Your Great Idea

Truth: It’s About Your Customer

Myth #3: Conflict Is Bad

Truth: Affective Conflict Is Bad; Cognitive Conflict Is Good

Myth #4: It’s About Hard Work; Don’t Expect to Have a Life

Truth: It’s About Results and You Need a Life

Myth #5: It’s an Uphill Battle Until One Day, When It All Comes Together

Truth: It’s a Rollercoaster Ride

if you want to read the full article go here

]]> http://www.ceobraintrust.com/1206/5-myths-that-can-kill-a-startup/feed/ 0 Raising Capital: Equity vs. Debt http://www.ceobraintrust.com/1177/raising-capital-equity-vs-debt/ http://www.ceobraintrust.com/1177/raising-capital-equity-vs-debt/#comments Thu, 17 Dec 2009 15:51:46 +0000 Daniel http://www.ceobraintrust.com/?p=1177 Twitter It!

The banks generally still aren’t playing ball, but there are creative solutions allowing small companies to win financing

By Jill Hamburg Coplan

In November 2008, Donn Flipse was forced to close one of his three flower superstores in Florida’s Broward and Palm Beach Counties. Nine months later, Flipse expanded by acquiring the business of a retiring florist in a wealthy section of South Miami. Those two events normally would have led Flipse to lean on his $500,000 line of credit. But that credit line had been personally guaranteed by a family member who, because of a decline in that person’s own finances, was unable to continue the guarantee. Flipse paid off the revolving loan with “the only thing available”—money from two of his grown children, both of whom are shareholders and sit on the company’s board. Now, for the first time in its 19-year history, Field of Flowers, which employs 46 people and expects to bring in $6 million in sales this year, doesn’t have bank financing.

Like thousands of other small business owners with good credit histories, Flipse also found his credit-card companies lowering his limits. He plans to pay back his kids in early 2010, after the Valentine’s Day and Easter rushes bail him out. “There was no choice,” he says. He recently had to lay off two of six headquarters employees, leaving the dispatcher running the computer system. “We’re not thrilled about any of it. But the company’s a part of our lives.”

It’s not news that small companies are scrambling for credit, or in some cases, for equity investors. Entrepreneurs even appear to have caught a much weaker strain of the same virus—leverage—that helped bring down Lehman Brothers and many individual homeowners. From 2003 to 2008 the liabilities of small companies ballooned from roughly equal to sales to three times sales, according to Sageworks, a financial data company that tracks 1 million small private businesses. “In the crazy times, people were like drunken sailors—they’d project that in two years they’d double their earnings, [so they would] overvalue their companies, and as owners in love with their businesses, take on debt, right or wrong,” says William Lenhart, national director of business restructuring at BDO Consulting, which advises companies with $10 million to $15 million in sales. “They got away from the historical debt-to-equity parameters of their industries.” Banks and credit-card companies did their part, too, heedlessly throwing offers of credit at entrepreneurs. Some 636 million business credit-card offers went out in 2007, according to Packaged Facts, a research group. That works out to about 27 offers mailed to each company in the U.S.

Now, morning-after realities are prompting a rethinking of the relative merits of debt vs. equity. A rising sense of conservatism says small companies should be far less leveraged than was thought prudent 18 months ago, and should have much more generous debt-service coverage ratios. This measurement is a favorite among bankers because it cuts to the chase: Will they get paid or not? “There’s a weeding process going on,” says Joseph Harpster, chief credit officer at Herald National Bank, a New York community bank. “Banks have to be more careful.” There’s also a shift in thinking about a company’s optimal debt-to-equity ratio, or its level of debt compared to shareholder equity. Instead of financing to expand, it’s now about stashing away cash and trying to stay solvent.

Some business owners say ratios are an accountant’s problem. That’s not smart, says Dileep Rao, president of Minneapolis’ InterFinance Corp, a venture-finance consulting firm, and professor at the University of Minnesota’s Carlson School of Management. “Running your business without knowing your numbers is like driving a car without being able to see your direction or speed,” says Rao. “It’s only a matter of time before you crash.”

The terms “debt” and “equity” get tossed around so casually that it’s worth reviewing their meanings. Debt financing refers to money raised through some sort of loan, usually for a single purpose over a defined period of time, and usually secured by some sort of collateral. Equity financing can be a founder’s money invested in the business or cash from angel investors, venture capital firms, or, rarely, a government-backed community development agency—all in exchange for a portion of ownership, and therefore a share in any profits. Equity typically becomes a source of long-term, general-use funds. The share of any hard assets, such as property and equipment, that you own free and clear also counts as equity.

Striking the right balance between debt and equity financing means weighing the costs and benefits of each, making sure you’re not sticking your company with debt you can’t afford to repay and minimizing the cost of capital. Choosing debt forces you to manage for cash flow, while, in a perfect world, taking on equity means you’re placing a priority on growth. But in today’s credit markets, raising equity may simply mean you can’t borrow any more.

Until recently, bank credit was a financing mainstay. But experiences like Flipse’s underlie a point made by the Federal Reserve Board’s quarterly Senior Loan Officer Opinion Survey on Bank Lending Practices, released in November. According to loan officers, small-company borrowers were tapping sources of funding other than banks. They were being driven away for many reasons. Banks “continued to tighten standards and terms…on all major types of loans to businesses,” though fewer were doing so than in late 2008, when tightening was nearly universal. Interest rates on small business loans were on the rise at 40% of the banks surveyed, even as the prime rate reached historic lows. One in five banks had reduced small companies’ revolving credit lines. One in three had tightened their loan standards, and 40% had tightened collateral requirements. Partly because of the plunging value of the real estate securing many commercial loans, pressure from bank examiners for tighter standards continued to build. Meanwhile, home equity loans, another popular source of small business cash, had evaporated. Many recession-weary business owners knew they had essentially become unbankable: Loan officers surveyed said far fewer firms were seeking to borrow. Those few who could borrow were repelled by higher rates. All of a sudden, equity financing looked better.

But equity has other costs besides giving up some control of your company. Raising equity involves legal, accounting, and investment banking fees, which eat up at least three to five percent of the amount raised. Later, investors will want a regular stream of information. And the lower your company’s valuation, the more equity you’ll give up to raise the same amount of cash, so raising this type of financing in a company’s early stages means selling more of the business.

How much debt, and how much equity, is right for your company? Benchmarks vary by industry. And stripped of context, they don’t mean much. Fast-growth fields with potential for blockbuster returns, such as software and biotech, attract equity investors more easily. Those companies also are often unable to borrow because their assets are intangible and their cash flow uncertain. The result: debt-to-equity ratios near zero. Capital-intensive industries with high costs, such as oil and gas development, construction, and mining, tend toward high debt-to-equity ratios—sometimes as high as 10 to 1. The same high ratios can hold for banks and finance companies, as well as troubled industries, such as airlines and autos. Here are some other factors that affect the optimal ratio for an individual company.

THE STAGE YOUR BUSINESS IS IN

Are you growing? That’s hard to do using internal cash flow alone. “If you don’t have some debt, you’re probably constraining your growth,” says John Terry, a business professor at the SMU Cox School of Business. “Most often, a viable business needs cash to grow, unless you choose to grow very slowly.” How much debt is too much?

If a company is stable and well-established, tipping toward debt financing makes sense, because the company has both assets to borrow against and the cash flow to service the loans. Fast-growing startups, by contrast, lack the assets and cash flow that would qualify them as borrowers; they must inevitably tilt toward equity financing, which has a downside. “The cost of equity capital, where you’re selling off a piece of your business, tends to be double” that of debt financing, says Tom Kinnear, professor of entrepreneurial studies at the University of Michigan’s Stephen M. Ross School of Business. From that average, it regularly goes far higher, says Rao. In other words, the profits you’re giving up from the portion of the company you no longer own can be expected to be much greater than the interest you would pay on a comparable loan. “That’s a reasonably sophisticated calculation that’s not widely understood,” says Kinnear. The good news about equity is that going bankrupt because of mushrooming debt is not a concern. The bad news is that peace of mind comes at the cost of ownership and control. A demanding investor’s desire for a particular exit strategy may not coincide with an entrepreneur’s best interest. A newly launched business, however, may have no better choice.

INDUSTRY NORMS FOR ASSETS, INVENTORY, AND RECEIVABLES

These vary, depending on the type of business. If you’re a manufacturer and your equipment is valuable, it’s relatively easy to secure working capital backed by those assets. Also, banks as well as asset-based lenders will make loans against accounts receivable and certain types of inventory. Typically, they’ll lend 60% to 80% of the value of receivables that are less than 90 days old, and sometimes, 30% to 50% of the value of raw or finished inventory. Fair warning: Interest rates at asset-based lenders will typically be at least two or three times the prime rate, and your credit score may play a part, too.

Industry norms also vary when it comes to solvency ratios. Again, asset-rich manufacturers with plants, equipment, and inventory that can be liquidated are well positioned for debt financing, while service or Web companies are less so, says venture investor Michael Gurau, president of Coastal Enterprises Community Ventures, which runs two regional venture funds in Portland, Me. But any company with large receivables, whatever its industry, should seek some debt financing, particularly a working capital line of credit, he believes.

COMPARING DIFFERENT FORMS OF FINANCING

Borrowing isn’t cheap right now, but it is at least accessible. The variety of vehicles include subordinated or “junior” debt (so named because it has only a secondary claim on assets in the event of a bankruptcy). These loans come at higher interest rates, but they’re available from development agencies and others. Factors and asset-based lenders may be options for distressed companies, where the owner’s personal credit rating is below 650 and the company’s net worth is negative. Higher-risk or startup borrowers that anticipate a merger or initial public offering within eight years can explore “venture debt” and similar hybrid structures that couple a loan with a “kicker” that converts to equity. But there aren’t many venture bankers around, and the most established—Silicon Valley Bank, Western Technology Investment—are in Silicon Valley. Alternative financing may also take the form of a vendor leasing program, which Flipse uses: He leases his delivery fleet from a trucking company that provides financing at 5%.

As for possibilities on the equity side, it’s sometimes feasible for companies or owners to create their own nest eggs. Pilar Peña is co-owner, with her twin sister, Ali, and her mother, Alex, of 10-year-old Forums Event Design & Production, a $2.5 million, five-person Miami company that uses a network of freelancers to put on expos, conferences, and other bilingual sales and training meetings across Latin America and the Caribbean. Recently the Peñas’ credit-card company canceled the business’ revolving credit, claiming their $150,000 balance was too close to the limit. But when the bank conducts its annual scrutiny of Forums’ $200,000 credit line, the Peñas are prepared. Besides owning residential property, they build capital by keeping half the company’s net income in the business each year. They run lean, with just two full-time employees besides the family. “If you’ve left enough equity in the business and have financial discipline in your life, you have that backup,” Pilar says. “We have our back against the wall, and it gets scary” every spring, she explains, during and after a $1 million conference for a client that takes 60 days to pay. She pushes hard on receivables and uses a factor, but the equity is the emergency fund: “It’s something that will pull you through.” The bank says the Peñas may only approach their line’s limit once a year, when they’re bankrolling that huge event.

YOUR GOALS

“The real question may not be how much you raise or borrow, but where are you putting that money? There’s good debt and bad,” says James Montgomery, a small business lawyer. “Borrowing money to generate more money—that’s good debt. Borrowing just to stay alive is not.”

One goal might be to stay ahead of rivals. If you keep expenses low and raise only a minimal amount, a better-funded rival may pass you. It’s a calculation Michael Kirban made with Vita Coco, the coconut water company he co-founded with Ira Liran in 2004 . On vacation in Brazil, they were struck by the popularity of coconut water. With $80,000 in savings and a $100,000 credit line, they began importing small quantities, which Kirban sold to Manhattan grocers and delis, making the rounds on in-line skates. Rivals were on the scene, but Kirban was ahead in sales and distribution and wanted to stay that way. In 2007, he won $7 million in equity funding, for a 20% stake, from Verlinvest, a fund created by the three founding families of European beer conglomerate Anheuser-Busch InBev. That allowed him to build a factory in Brazil that employs 30 and to raise sales to $20 million.

WHEN AN EQUITY INVESTOR OFFERS MORE THAN CASH

Some venture capital firms can help a business gain credibility by supplying advice, access to customers, and a stamp of approval. Kirban says his investor does this, too. Verlinvest “is a perfect fit,” Kirban says. “We wanted an investor-partner with in-depth knowledge of the beverage business on a global scale.” It seems to be working: Verlinvest has given guidance to Vita Coco’s marketing team, which has allowed the young company to start selling in the United Kingdom. Verlinvest also suggested a set of quantitative benchmarks that Vita Coco uses to gauge its progress.

But at the beginning, Kirban was reluctant to part with a majority of his company, which Verlinvest originally wanted. Now, although Verlinvest has a 30% stake, it also has a significant say on all employee remuneration and the ability to replace Kirban at any time. Kirban, for his part, is thrilled to have such a big player in his corner.

SIZE OF MONTHLY LOAN PAYMENTS

Just a few years ago, you may have heard this praise sung in favor of debt: You can deduct the interest payments at tax time. That’s still true. But now, burned by the downturn, bankers and entrepreneurs are turning their attention to a different issue: Can you safely project that you’ll have enough free cash flow to service that debt without spiraling downward, especially if interest rates rise? Credit analysts use a figure called the debt-service coverage ratio, which measures whether you’ve borrowed more than you can make monthly payments on. Ray Silverstein, a board member of Devon Bank in Chicago, says he’s looking for $1.50 of free cash flow to be available each month for every dollar of debt-service payments that come due. Others seek $1.20. That compares with just $1 a few years ago—and that $1 was often based on cash-flow assumptions that were, shall we say, highly optimistic. Do this calculation not only at current interest rates but at higher rates as well, in anticipation of increases. Then consider possible fluctuations in revenue and in your ability to collect on time from your customers.

Still, some people just don’t like to owe money. When Kirban was funding Vita Coco with his line of credit, he had nightmares. “Every time I’d open up our Citibank account and see how much debt we had, I’d freak out,” he says. “When we were maxed out and had very little in the bank, you believe in your business, but still—it’s scary to be personally liable for it.” He paid it down as soon as he found an equity partner.

Where does that leave us? Prevailing wisdom today holds that debt and equity should be equal (1:1)—or that equity financing should be twice that of debt (1:2). Compare that with 2007, when the acceptable level of debt, relative to equity, was twice or even four times what’s acceptable today, says Steve Romaniello, managing director of Atlanta private equity firm Roark Capital Group.

In the end, a ratio is only an analytical tool, not a magic wand. Important pieces of the puzzle, such as interest rates or sales, can move in unpredictable directions. Or as Rao says: “An optimally financed business may be obvious only in hindsight.”

To listen to a podcast interview on increasing your chances of landing a loan, go to businessweek.com/go/sb/loan

Return to the BWSmallBiz December 2009/January 2010 Table of Contents

Jill Hamburg Coplan writes about topics including finance, family, and religion, and teaches journalism at New York University. She has been a regular freelance contributor to BusinessWeek since 2000.

]]> http://www.ceobraintrust.com/1177/raising-capital-equity-vs-debt/feed/ 0 When Your Business Becomes Your Life http://www.ceobraintrust.com/1113/when-your-business-becomes-your-life/ http://www.ceobraintrust.com/1113/when-your-business-becomes-your-life/#comments Thu, 26 Nov 2009 08:13:57 +0000 Daniel http://ceobraintrust.com/?p=1113 Twitter It!

By: The New York Times/ Jennifer Walzer

I recently lost a longtime client, who was also a dear friend and valuable mentor, to prostate cancer. He was 52 years old and left behind his wife and two children. The other day I learned that another good friend was found to have skin cancer that had progressed to the point where he had to have glands removed. He was so busy running his company, he didn’t notice the moles that had started to look different. My friend is only 38 years old.

Like many entrepreneurs, I’m often too busy to breathe. I try not to put work ahead of friends or family, but I often end up with little time to take care of myself. When I started my business, I was in great shape from years of dance and regular exercise. As my business flourished, however, working out was replaced by simply working. And let’s not even think about the decline of my eating habits and sleep schedule. My business became my life.

 

After watching my close friends battle health issues and after dealing with a few of my own, I’m starting to look at things differently.

First, I realized that by not getting any exercise and not watching what I was eating, I was sapping myself of the energy I need to run my business. If you are like me (and I know I’m not alone here) you will get that energy artificially from coffee, Red Bull, sugar, candy or any other weapon of choice (my personal favorite is sugary gum and licorice along with hazelnut coffees and caramel apple ciders from Starbucks).

Next, regular checkups. There have been times when I felt I couldn’t afford two hours out of my day to see a doctor. I’ve canceled many appointments over the years because I felt I needed to go to that client meeting (and then it would take me months to get the doctor visit back on the calendar). Now I realize that I can’t afford NOT to go to those appointments.

Finally, I’m trying to listen to my body. As hard as it is, I know that when I’m feeling sick or run down, I need to try to rest for a day. If something persists, hurts, looks weird, or just doesn’t feel right, get it checked out. I know that sounds obvious, but so often we let things go. Now, I think about my friend who has skin cancer.

I turned 36 on Sept. 11, and I’ll be getting married in less than two months. I want to have the energy to continue running Backup My Info! for years to come. My fiancé, Brad, and I have started getting up together at 5:30 in the morning to go on our “workout dates.” I’ve started running and even participated in a few road races in Central Park. The difference in my energy level and the way that I feel has been incredible. Now, I’m only slightly tired from getting up early to run.

My team is in on it, too. One of my engineers has lost almost 50 pounds. Now, we try to make smart choices when we order our lunches or buy snacks to keep in the office. Not only does everyone look great, I have noticed that they are getting sick less often and are more enthusiastic and energetic.

Having my own business has some great perks but it’s also about making sacrifices. I just know that my health can’t be one of those sacrifices anymore.

Jennifer Walzer is founder and chief executive of Backup My Info!, which is based in New York. You can also follow her on Twitter: @BackupMyIn

]]> http://www.ceobraintrust.com/1113/when-your-business-becomes-your-life/feed/ 0 The Genius of not Knowing http://www.ceobraintrust.com/1111/the-genius-of-not-knowing/ http://www.ceobraintrust.com/1111/the-genius-of-not-knowing/#comments Thu, 26 Nov 2009 08:09:01 +0000 Daniel http://ceobraintrust.com/?p=1111 Twitter It!

By: Harvard Busines Publishing/Bill Taylor

The Economist owes much of its popularity to its knack for challenging conventional wisdom. In a recent column, it applied its contrarian mindset to the question of what kinds of leaders make the best CEOs, making the case that what the world needs now are more “raging egomaniacs” and “tightly wound empire-builders” rather than the “faceless” and “anonymous” bosses running so many companies today — “bland and boring men and women who can hardly get themselves noticed at cocktail parties.”

The crux of The Economist’s argument relies on what’s known as the Great Man Theory of History. After trumpeting the virtues of business geniuses such as Bill Gates, Steve Jobs, Lou Gerstner, and Jack Welch, it then generalizes from this handful of larger-than-life moguls: “The best ambassadors for business are the outsize figures who have changed the world and who feel no need to apologise for themselves or their calling.”

It’s an intriguing essay and a good read. It’s also a false choice — and a bad reading of history. For one thing, when it comes to larger-than-life CEOs, I can name as many scoundrels and failures as I can geniuses and world-changers. There’s a reason Bethany McLean and Peter Elkind titled their bestseller on the Enron disaster The Smartest Guys in the Room, and it goes beyond the criminality those deeply flawed executives displayed. That familiar phrase captures the mindset too many of us expect even our most honest leaders to display — the assumption that being “in charge” means having all the answers. In simpler times, fierce personal confidence, a sense of infallibility as a leader, might have been be a calling card of success. Today it is a warning sign of failure, whether from bad judgment, low morale among disillusioned colleagues, or sheer burnout from the pressures of always having to be right.

That’s not a case (and here’s the false choice) for aiming low or being dull. The best executives I’ve met understand that there is a vast difference between advancing big, exciting, important goals — aspiring to change the game in your field — and assuming that you know best how to achieve those goals. Sure, great leaders champion new ideas and disruptive points of view — they have vision. But that doesn’t mean they have to see the future on their own.

Just because you’re in charge doesn’t mean you have to have all the answers. Real business geniuses don’t pretend they know everything.

To be sure, it’s easier to divide leaders into either-or categories: risk-takers vs. bureaucrats, those with ambition vs. those with humility. Fortune just named Steve Jobs its CEO of the Decade — and while it’s hard to argue with the choice, it’s even harder to reproduce his talents. The problem with trumpeting the virtues of one-of-a-kind geniuses like Steve Jobs is that — duh — there is only one of them! Memo to The Economist: It’s not a good idea to urge CEOs to emulate leaders whose success is, almost by definition, impossible to copy.

Keith Sawyer, a creativity guru at Washington University in St. Louis, has literally written the book on where good ideas come from. In Group Genius, he explains how few leaders are prepared to recognize the messy and hard-to-manage truth about the real logic of business success. Many (perhaps most) executives subscribe to what Sawyer calls script-think — “the tendency to think that events are more predictable than they really are.” In fact, he says, “Innovation emerges from the bottom up, unpredictably and improvisationally, and it’s often only after the innovation has occurred that everyone realizes what’s happened. The paradox is that innovation can’t be planned, it can’t be predicted; it has to be allowed to emerge.”

Harriet Rubin, one of the great innovators in business-book publishing, and an accomplished author in her own right, uses different language to make a similar point about leadership and innovation. “Freedom is actually a bigger game than power,” she reminds executives who are eager to make their mark in the world. “Power is about what you can control. Freedom is about what you can unleash.”

The most effective leaders no longer want the job of solving their organization’s biggest problems or identifying its best opportunities on their own. Instead, they recognize that the most powerful ideas can come from the most unexpected places: the quiet genius buried deep inside the organization, the collective genius that surrounds the organization, the hidden genius of customers, suppliers, and other constituencies who would be eager to share what they know if only they were asked. For companies, and the CEOs at their helms, those are the smartest (and most sustainable) sources of greatness.

]]> http://www.ceobraintrust.com/1111/the-genius-of-not-knowing/feed/ 0 The Illusion of Brand Control http://www.ceobraintrust.com/1096/the-illusion-of-brand-control/ http://www.ceobraintrust.com/1096/the-illusion-of-brand-control/#comments Fri, 20 Nov 2009 22:23:19 +0000 Daniel http://ceobraintrust.com/?p=1096 Twitter It!

By: Andrew McAfee/ Harvard Business Review

You’ve probably heard by now that “your brand is no longer yours.” The assertion’s based on simple math. In the era of blogs, discussion boards, Facebook, Twitter, and other Web 2.0 tools, virtually everyone can get online and talk about your company and its offerings. As a result, the amount of information your marketing and PR departments can generate is only a small percentage of the total volume of content on the Internet about your firm.

What’s more, if some of the external voices become as popular, or perish the thought, more popular than your official voice, then they’re going to show up high in organic (as opposed to paid) search results. For example, I just typed “Hummer” into Google. The second result is the Wikipedia entry about the vehicle, and the fourth one is a site full of user-submitted photos that are not likely to please the brand’s owner.

Every large organization I’m aware of is highly sensitive about its brand, and few are happy about losing or even sharing control over it. They react to the reality of Web 2.0 era in many ways, but most of them amount to some form of trying to exert or reestablish control. Some move their mass media campaigns online to counteract the outside conversation. Some try to influence the influential external voices. Many companies monitor the new online conversations, and also participate in them by setting up official Facebook fan pages, Twitter accounts, and so on. More than a few try “sock puppeting” or having someone on the payroll pose as an outsider with nothing but good things to say. This rarely works; Web users are reasonably good at sniffing out inauthentic voices and ignoring or blowing the whistle on them.

A few large, brand-sensitive organizations have taken another approach; they’ve accepted their lack of brand control and have actively encouraged insiders to join the online conversation without making any attempt to censor or even guide them. They’ve said, essentially, “You know us really well. Talk about us on the Web. We want the world to hear what you have to say.”

Does that sound risky to you? Can you envision dozens of ways in which that approach can go horribly wrong? Me, too. And yet, I keep reading stories like the recent one in the New York Times about MIT’s student bloggers, and they make me appreciate the brilliance of this approach.

Five years ago Ben Jones, then the director of communications in MIT’s admissions office, added a single student blog to the office’s web page; there are now eleven of them. Student bloggers are selected after submitting writing samples, and are paid $10 per hour.

I was an undergrad at MIT (just a few years before the blog era) and I assure you that most students there would treat the administration’s suggestions about appropriate self-expression about the same way Roger Federer might treat the local club pro’s tips on improving his forehand. The admissions office understands this, and wisely doesn’t try to edit posts or comments.

And not all content reflects glowingly on the institution. One blogger complained about problems with the resident advising system, while another wrote that she’s felt several times that she didn’t fit in at MIT. She also went on to say, as the Times story reports, that “MIT is the closest you can get to living on the Internet…IT IS SO TRUE. Love. It. So. Much.”

MIT could spend lots of money on their brand and image and never come up with a better advertising tag line than “The closest you can get to living on the Internet.” Indeed, part of what makes it so effective is not just its clarity and cleverness, but the fact that it’s being shouted across the Internet by a current student who is clearly speaking in her own voice. It’s just tremendous marketing; the admissions office couldn’t ask for, or pay for better.

Putting student blogs front and center is a mark of MIT’s confidence: confidence in itself as a healthy organization where the pros outweigh the cons, confidence in the members of its community who represent it to the world, and confidence that the people who come to its website will know how to interpret the information they find there. According to the Times article, potential applicants to the university are “less interested in official messages and statistics than in first-hand narratives and direct interaction with current students.” Does that sound at all like your customers?

Is your organization as confident as MIT? Are you ready and willing to let more internal voices communicate and shape your brand over time? If not, why not? Is it that you don’t trust your people, or your customers? Is it that you don’t want any negativity at all to appear on your digital properties? Or is it that you’re afraid there might be too much negativity?

I don’t think these are unfair questions, or trivial ones. Their answers will reveal not only how your organization sees itself, but also about how it’s responding to a world of reduced control over brands, conversations, and messages. Leading organizations are embracing this trend and, like MIT, they’re giving up tight control even when and where they don’t have to.

 

Lagging organizations are holding on to the illusion that tight control is still possible. 

You’ve probably heard by now that “your brand is no longer yours.” The assertion’s based on simple math. In the era of blogs, discussion boards, Facebook, Twitter, and other Web 2.0 tools, virtually everyone can get online and talk about your company and its offerings. As a result, the amount of information your marketing and PR departments can generate is only a small percentage of the total volume of content on the Internet about your firm.

What’s more, if some of the external voices become as popular, or perish the thought, more popular than your official voice, then they’re going to show up high in organic (as opposed to paid) search results. For example, I just typed “Hummer” into Google. The second result is the Wikipedia entry about the vehicle, and the fourth one is a site full of user-submitted photos that are not likely to please the brand’s owner.

Every large organization I’m aware of is highly sensitive about its brand, and few are happy about losing or even sharing control over it. They react to the reality of Web 2.0 era in many ways, but most of them amount to some form of trying to exert or reestablish control. Some move their mass media campaigns online to counteract the outside conversation. Some try to influence the influential external voices. Many companies monitor the new online conversations, and also participate in them by setting up official Facebook fan pages, Twitter accounts, and so on. More than a few try “sock puppeting” or having someone on the payroll pose as an outsider with nothing but good things to say. This rarely works; Web users are reasonably good at sniffing out inauthentic voices and ignoring or blowing the whistle on them.

A few large, brand-sensitive organizations have taken another approach; they’ve accepted their lack of brand control and have actively encouraged insiders to join the online conversation without making any attempt to censor or even guide them. They’ve said, essentially, “You know us really well. Talk about us on the Web. We want the world to hear what you have to say.”

Does that sound risky to you? Can you envision dozens of ways in which that approach can go horribly wrong? Me, too. And yet, I keep reading stories like the recent one in the New York Times about MIT’s student bloggers, and they make me appreciate the brilliance of this approach.

Five years ago Ben Jones, then the director of communications in MIT’s admissions office, added a single student blog to the office’s web page; there are now eleven of them. Student bloggers are selected after submitting writing samples, and are paid $10 per hour.

I was an undergrad at MIT (just a few years before the blog era) and I assure you that most students there would treat the administration’s suggestions about appropriate self-expression about the same way Roger Federer might treat the local club pro’s tips on improving his forehand. The admissions office understands this, and wisely doesn’t try to edit posts or comments.

And not all content reflects glowingly on the institution. One blogger complained about problems with the resident advising system, while another wrote that she’s felt several times that she didn’t fit in at MIT. She also went on to say, as the Times story reports, that “MIT is the closest you can get to living on the Internet…IT IS SO TRUE. Love. It. So. Much.”

MIT could spend lots of money on their brand and image and never come up with a better advertising tag line than “The closest you can get to living on the Internet.” Indeed, part of what makes it so effective is not just its clarity and cleverness, but the fact that it’s being shouted across the Internet by a current student who is clearly speaking in her own voice. It’s just tremendous marketing; the admissions office couldn’t ask for, or pay for better.

Putting student blogs front and center is a mark of MIT’s confidence: confidence in itself as a healthy organization where the pros outweigh the cons, confidence in the members of its community who represent it to the world, and confidence that the people who come to its website will know how to interpret the information they find there. According to the Times article, potential applicants to the university are “less interested in official messages and statistics than in first-hand narratives and direct interaction with current students.” Does that sound at all like your customers?

Is your organization as confident as MIT? Are you ready and willing to let more internal voices communicate and shape your brand over time? If not, why not? Is it that you don’t trust your people, or your customers? Is it that you don’t want any negativity at all to appear on your digital properties? Or is it that you’re afraid there might be too much negativity?

I don’t think these are unfair questions, or trivial ones. Their answers will reveal not only how your organization sees itself, but also about how it’s responding to a world of reduced control over brands, conversations, and messages. Leading organizations are embracing this trend and, like MIT, they’re giving up tight control even when and where they don’t have to.

 

Lagging organizations are holding on to the illusion that tight control is still possible.

]]> http://www.ceobraintrust.com/1096/the-illusion-of-brand-control/feed/ 0 No Time to Read This? Read This http://www.ceobraintrust.com/1094/no-time-to-read-this-read-this/ http://www.ceobraintrust.com/1094/no-time-to-read-this-read-this/#comments Fri, 20 Nov 2009 22:17:22 +0000 Daniel http://ceobraintrust.com/?p=1094 Twitter It!

By: Sue Shellenbarger/ The Wall Street Journal

 

 

Are things you need to get done falling between the cracks? Does taking an entire day off seem impossible?

Maybe you need a time-management system.

Many readers seem to think they do, based on the email response to my recent column on the importance of taking time off. Dozens asked me to recommend a time-management method that would help them get on top of their work and home duties. In response, I asked a half-dozen executive coaches to help me pick the most widely used time-management systems—not just software tools or high-tech to-do lists, but behavioral-change techniques that help people get organized, clarify thinking and increase output. Then, I tried out for a week each of the three methods they mentioned most often—including one that involved a ticking plastic tomato.

Patrick Conlon/The Wall Street JournalFollowers of the ‘Pomodoro Technique’ tackle tasks in 25-minute increments, with the help of a kitchen timer.

Of course, a week isn’t long enough to reap the full benefits of these methods. Still, I learned a lot from this experiment. Like many people, I am often my own worst enemy in managing my time, distracting myself from the task at hand, or setting myself up for failure by starting each day with an unrealistically long to-do list. Second, the key to getting more important stuff done is often doing less of everything else. And finally, getting control of your time requires a significant up-front investment of mental effort—and, well, time.

Here, in no particular order, are the methods I tried:

• Getting Things Done: The reigning gorilla of time management, “GTD,” as its followers call it, was created in the 1980s by David Allen, an Ojai, Calif., consultant whose coaching, training materials and seminars can be found at davidco.com. Mr. Allen has since sold more than one million books about GTD and attracted 1.2 million followers on Twitter. GTD’s aim is to corral all the projects and tasks floating around in your head into an organizing system you update weekly. No matter what chaos erupts, the system in theory enables you to quickly identify the next step to take on every front to keep all your projects moving forward, while keeping your mind clear to relax, think and be creative.

I start GTD with a weekly “mind sweep,” writing down all the stuff I should be doing, want to do or dream of doing. The resulting list ranges from essentials, like meeting my next deadline, to nagging worries, like updating college-financing plans for my kids, to future hopes, like volunteering as a writing coach for needy kids. Next, I sort it all and create new files, action lists, calendar items or reminders based on what is needed next—for example, whether a project requires action (the deadline); input from someone (a talk with my accountant about college financing); or deferral (the tutoring plan). My daily calendar is reserved for only the most urgent items, such as the deadline.

How We Did It

To pick the time-management methods described in this column, I asked several experienced executive coaches and consultants which systems they see used most often. The three that were cited by at least two or more of them are featured.

  • The coaches: Marshall Goldsmith, Rancho Santa Fe, Calif., cofounder of an executive coaching network and author of a forthcoming book, “Mojo,” on happiness and meaning; Michael Goldberg, a consultant and speaker with Building Blocks Consulting, Jackson, N.J.; Rich Gee, a Stamford, Conn., executive coach; Brian Underhill, owner of a San Jose, Calif., coaching firm; Pete Walsh of Peak Performance Coaching, Phoenix, and D. Luke Iorio, an executive with the Institute for Professional Excellence in Coaching, Shrewsbury, N.J.
  • Time-management systems specific to particular fields, such as sales, weren’t considered. Also, I chose to feature only approaches that offer practical help managing a typical, mainstream workday. That eliminated such popular but unconventional philosophies as the freewheeling approach set forth by author Timothy Ferriss in “The 4- Hour Workweek.”

When all the collecting, reviewing and categorizing required by GTD is portrayed visually on a “workflow map,” the result resembles a cross between a corporate organization chart and a map of Middle-earth in “The Lord of the Rings.” GTD fans liken it to learning a new sport, such as tennis, and say mastering it can take two years.

Nevertheless, I see some benefits right away. GTD has me clump tasks together by context; phone calls, for example, are grouped so I can run through them quickly during a spare moment. And GTD ends sloppy habits, such as stashing piles under my desk, forcing me instead to decide what to do with all the stuff and either file or discard it. As I comply, I revel in the vast expanse of clear desktop that appears before me. I doubt, however, that I have the perseverance to stick to this system.

• The Pomodoro Technique: This quirky method had me working in intense spurts guided by a kitchen timer shaped like a tomato—or pomodoro, in the inventor’s native Italian. Developed by Francesco Cirillo, director of XPLabs, a software design firm based near Rome, this technique is spreading via Twitter and other social networks. It can be learned in a few hours from a free guide at pomodorotechnique.com; making it a habit takes up to 20 days.

While any timer will do, I purchased my own tomato for $14.95. I start each day by making a log of things to do, then tackle each in 25-minute intervals called Pomodoros. When a Pomodoro is over, I mark an X on the log next to the item I am working on, then take a refreshing 3- to 5-minute break. Nothing must be allowed to interrupt a Pomodoro. If co-workers barge in, Mr. Cirillo advises trying to defer the conversation.

The method is based on the idea that time-management tools and techniques should be simple; that frequent breaks can improve mental agility; and that changing the way people think about time can ease anxiety, freeing them to concentrate better.

Although I found this method laughable at first, its simplicity is deceptive. Working with my ticking tomato made me aware that I constantly interrupt myself. Users are asked to put an apostrophe over the “X” on the log each time they are tempted to break a Pomodoro. I had no less than eight apostrophes over one “X”—marking impulses ranging from reading email to ordering a toner cartridge to running outside to see if my car had a flat tire. (Seriously.)

This method offers less help than the others with organizational problems; it is narrower in scope. However, it eased my anxiety over the passing of time and also made me more efficient; refreshed by breaks, for example, I halved the total time required to fact-check a column.

Patrick Conlon/The Wall Street JournalAn example of a “Getting Things Done” workflow map

• FranklinCovey’s Focus: This method, subtitled, “Achieving Your Highest Priorities,” hits workaholics where it hurts—in their upside-down priorities. Created by FranklinCovey, Salt Lake City (franklincovey.com), Focus aims to help users jettison busywork and wasted time and devote themselves to their most valued pursuits. FranklinCovey has trained more than two million people in the method. Some of its concepts are widely known, such as “sharpening the saw,” a metaphor for setting aside time to take care of your health so you can work (and play) with more vigor.

Another well-known symbol, its four-quadrant “time matrix,” helps users distinguish among tasks based upon whether they are truly urgent and important; important but not urgent; urgent but not important; or neither. A pretest shows I squander one-third of my time on unimportant stuff. To remedy this, I settle down for a half-hour planning session, a weekly Focus requirement, to think through my values, identify the roles and goals most important to me, and block out time in advance to pursue them. I enter other tasks day-by-day on my calendar, prioritizing them based on their importance. Like GTD, Focus requires a fairly high up-front investment of mental effort to be useful.

Focus aims to break users’ “urgency addiction,” the habit of rushing around needlessly. By week’s end, I am surprised at how much calmer I feel, as I let insignificant stuff slide; in a spillover benefit, I am able to help my teenage son see that his race to finish a college research project early isn’t truly urgent. Also, in pursuit of the value I place on generosity, I start working early on a holiday gift for my extended family, a photo calendar; not only do I take more pleasure in making it, but I know it won’t be the usual slapdash, last-minute affair. In an era when values are often neglected, this system is a worthy antidote.

In the end, I expect I will embrace elements of each of these systems—the approach experts recommend for most people. The essence of good time management is sticking to rituals that make you more productive, and rituals are largely a matter of personal preference. “The only system that matters,” says Luke Iorio, president of iPEC Coach Training, Shrewsbury, N.J., “is the one that works for each individual.”

]]> http://www.ceobraintrust.com/1094/no-time-to-read-this-read-this/feed/ 0 How Not Achieving Something Is the Key to Achieving It http://www.ceobraintrust.com/1091/how-not-achieving-something-is-the-key-to-achieving-it/ http://www.ceobraintrust.com/1091/how-not-achieving-something-is-the-key-to-achieving-it/#comments Fri, 20 Nov 2009 22:02:52 +0000 Daniel http://ceobraintrust.com/?p=1091 Twitter It!

By: Peter Bregman/ Harvard Business Publishing

Many years ago, when I first started my consulting firm, a friend of mine, Jane*, who worked for a large company, suggested I speak with her colleague, a man named Fred, who might be in a position to hire Bregman Partners.

So I called Fred, mentioned Jane and asked to meet with him. I’m very busy, Fred told me, let’s just talk on the phone.

But I knew the phone wouldn’t cut it. How about lunch?, I suggested. Or a drink after work? Or maybe just fifteen minutes in person somewhere?

Fred finally agreed to a short lunch. Then he canceled. We rescheduled. He canceled again. We rescheduled again. He canceled again. It was clear he didn’t want to meet with me. I almost gave up.

Here’s what I realized though: if I could avoid reacting to my feelings of frustration or hurt, then the cost to me of rescheduling the meeting was a two minute phone call with Fred’s secretary. And the upside was potentially enormous.

So I kept rescheduling until, one day, several months later, Fred didn’t cancel and we had lunch. Which was very quick, of course, but long enough for me to ask him to let me submit a proposal. A couple of weeks after I sent it to him, he left me a short message explaining that I had missed the mark but he’d keep me in mind. Right.

I felt affronted. All that work I put in and all I got in return was a voicemail? Again, I almost walked away.

But instead I called and asked for another lunch to understand what I misunderstood. He declined but suggested I speak with his colleague, Lily, who was in a different department and might have a need for my services.

So I set up a meeting with Lily. Who canceled. As I prepared to reschedule I noticed something unexpected: I started to enjoy the process of trying to get in, the challenge of making the sale. It became a game to me and my goal was to keep playing until, at some point, I’d say the right thing to the right person and get my foot in the door. I was, surprisingly, having fun.

And I was starting to be good at it. Scheduling. Rescheduling. Finding a way to keep the conversation going. You’d think it wouldn’t be something hard or useful to become good at but you’d be wrong on both counts.

Most of our jobs hinge on repetition. That’s how we become good at anything. The problem is we give up too soon because anything we do repetitively becomes boring.

That is, unless we have a peculiar taste for the task; if it captures our interest. For some reason, maybe we don’t even understand — and we don’t have to — we enjoy it.

That’s how I learned how to do a handstand. It always seemed completely out of reach for me. But then someone told me they learned as an adult. So I figured I could learn too. It took six months but now I can, somewhat reliably, stand on my hands.

Which has led me to believe that anyone can do anything. As long as three conditions exist:

  1. You want to achieve it
  2. You believe you can achieve it
  3. You enjoy trying to achieve it

We often think we only need the first two but it’s the third condition that’s most important. The trying is the day-to-day reality. And trying to achieve something is very different than achieving it. It’s the opposite actually. It’s not achieving it.

If you want to be a great marketer, you need to spend years being a clumsy one. Want to be a great manager? Then you’d better enjoy being a poor one long enough to become a good one. Because that practice is what it’s going to take to eventually become a great one.

In his book Outliers, Malcolm Gladwell discusses research done at the Berlin Academy of Music. Researchers divided violin students into three categories: the stars, the good performers, and the ones who would become teachers but not performers. It turns out that the number one predictor of which category a violinist fell in was the number of hours of practice.

The future teachers had practiced 4,000 hours in their lifetime. The good performers, 8,000 hours. And those who were categorized as stars? Every single one of them had practiced at least 10,000 hours.

And here’s the compelling part: There wasn’t a single violinist who had practiced 10,000 hours who wasn’t a star. In other words, 10,000 hours of practice guaranteed you’d be a star violinist. According to Gladwell, 10,000 hours of practice is the magic number to become the best at anything.

Which is why you’d better enjoy trying to achieve your goals. Because you’ll never spend 10,000 hours doing anything you don’t enjoy. And if you don’t enjoy the trying part you’ll never do it long enough to reach your goal.

Eventually, after five or six cancelled meetings, Lily and I met for lunch. Which, as it turned out, was perfect timing. When we finally met, she had a real need, which hadn’t existed when we first started scheduling a meeting.

By this time, I was familiar to her and the company even though I had never done any work for them. I had been around for months and they trusted me because I followed through on every commitment I made to them.

That year I signed a large contract with Lily’s company. Twelve years later, they’re still a big client of Bregman Partners. And they still cancel lots of meetings with me.

*Some information has been changed to protect people’s privacy.

]]> http://www.ceobraintrust.com/1091/how-not-achieving-something-is-the-key-to-achieving-it/feed/ 0 Teach an Old Dog New Tricks: How to Break Bad Work Habits http://www.ceobraintrust.com/1086/teach-an-old-dog-new-tricks-how-to-break-bad-work-habits/ http://www.ceobraintrust.com/1086/teach-an-old-dog-new-tricks-how-to-break-bad-work-habits/#comments Wed, 18 Nov 2009 06:53:29 +0000 Daniel http://ceobraintrust.com/?p=1086 Twitter It!

By: Web Work Daily

Last year, I attended a professional workshop where the instructor asked us to write out our worst habit. Unfortunately, more than one answer flooded my brain, and I had to seriously consider which to choose. In the end, I decided that my most unabashed, shameless and ubiquitous bad habit is impatience.

My impatience invades every aspect of my personal and professional life. For instance, I constantly find myself wondering, “Why do these people take so long in line at the grocery store?” Counting out each precious penny, then pulling out a coupon, then deciding they don’t really want the milk after all. Instead of an express line for 12 items or less, I think grocery store lines should be divided up into only two lanes — a line for those of us who move fast, have somewhere important to go and something worthwhile to do and a line for those who don’t. See, I told you I was impatient.

In terms of how it’s affected my productivity at work, I’m embarrassed to say that my impatience has led to countless instances of emails sent in a hurry, which only needed to be retracted or clarified latter; decisions made on quick assumptions  — that turned out to be wrong — and occasional crankiness with those around me who are not moving fast enough.

Having pulled back the curtain on my own worst habit in the workshop, I decided to do something about it. I’ve spent a good deal of time over the last year working on my bad habit of impatience. And while I’ll never be “the soul of patience,” I have made progress. I’ve learned to quell my initial reaction to respond immediately, and, instead, take a deep breath and wait things out a bit. It’s helped my productivity by saving me time, money and stress.

“We all walk around on a daily basis with habits that are detrimental to our productivity,” says Larry Tobin, co-creator of Habitchanger.com.

Tobin, whose 42-day online habit-changing program deals with everything from quitting smoking to reducing stress, says that science has shown us that we can teach an old dog new tricks.

“A habit is an involuntary, unconscious action,” says Tobin. “Habits are learned, not instinctual. They are something we have taught ourselves to do, so it is possible to unlearn them,” he says.

In fact, a whole slew of recent scientific research in the field of neuroplasticity has proven that the brain has the ability to adapt to new information, if it’s consistently presented over a period of time. “It takes between 30 and 60 days of doing the same thing over and over again on a daily basis to create a new habit or break an old one,” says Tobin.

According to MedicineNet.com, Neuroplasticity is the brain’s ability to reorganize itself by forming new neural connections throughout life. Neuroplasticity allows the neurons (nerve cells) in the brain to adjust their activities in response to new situations or to changes in their environment.

Why not put the power of your flexible brain to work? Here’s a simple, two-step process I teach my consulting clients to help them break down their bad habits and build up their productivity.

Step 1: Call out the bad habit and identify its negative consequences.

“To break a habit, the first thing you need to do is step aside and become aware of what you are doing,” says Tobin. In my 25-plus years as a consultant, I’ve noticed a consistent group of productivity-killing habits including procrastination, disorganization, being ill-prepared and operating in crisis management. What are your bad business habits and what negative impact has the bad habit had in your business (and perhaps personal) life? Here are a few examples:

  • You work full-time for a company and often find that you arrive at meetings unprepared. The negative impact might include: Feeling unable to make a decision in the meeting, or the progress of the group being hindered by your lack of preparation.
  • You’re a freelancer and procrastinate to the point of lost productivity. The negative impact might include: Missing a deadline for submitting a proposal for a new piece of work or delivering late on a project to an important client — hurting your credibility and chances for future work.
  • You telecommute and have a disorganized home office. The negative impact might include: Being late to meetings at the office due to looking for needed documents at home or becoming distracted by to-dos around the house, rather than confronting cleaning up a messy home office.

Step 2: Create alternative actions.

One way to change an old, bad habit is to replace it with a new, better one. By practicing the new action, a pathway is created in your brain that, over time, can become as strong as (if not stronger than) the previous behavior. The key is to start small, with little actions you can implement easily. So get creative and think of some alternate actions you could take to counter the bad habit you identified. For example:

  • I will schedule my computer alarm to notify me 30 minutes before the start of the meeting so that I have time to look over the meeting agenda and my notes before I arrive.
  • The next time I have a proposal to write for a potential client, I will set aside a specific block of time in my calendar, on a specific date, to get it written.
  • The first thing I will do every morning when I go into my home office is spend 15 minutes clearing off my desk or cleaning out a file.

Just remember, good habits don’t suddenly appear overnight; instead, they develop slowly over time, as certain behaviors — repeated over and over — begin to overlay the way you work. The good news is that, given a mind as malleable as yours, breaking bad habits is just a few new neural pathways away.

What’s your worst bad habit?

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