CEO Training Part10 - The Grand Finale & Changes to DNA

JWI 599, Capstone, Week10 summary, 9/2/13

It is official. The leadership DNA within me has changed significantly for the better from the intense JWMI MBA adventure.

As a leader, what will I do differently because of this Capstone experience? What are the connections between my leadership behaviors/actions and the Capstone course ?
 
The Capstone course made the business leadership principles I learned throughout the JWMI MBA program come colorfully alive. Based on a 360-degree feedback, which includes a critical self-assessment as well as constructive feedback from other members of the cohort, I have better understood my unique strengths as a leader as well as my shortcomings as a General Manager. There are several things I will do differently as a result of this Capstone experience.

(1) Understand Strategy better and balance with Execution
Firstly, the core strategy needs to be clearly defined. Defining a clear and differentiated strategy must be the GM's job. The brand identity is at stake here. As Scott says, this defines "who you are" as a company. Find the big A-ha, place right people in right places, and keep improving every day with best practices gained from around the world. Once strategy is defined, stick with it and don't try to be overly influenced by tactical comparisons with competition. In the longer run this will lead to a win. A change in strategy mid-way could confuse the market.

(2) Be a Thought Leader: Go deeper into details and achieve the T Shaped leadership Profile
Secondly, my goal is to achieve a T shaped profile that balances horizontal facilitation across silo'd functions with vertical in-depth functional views. To have a pulse on the health of the organization I find it vitally important to balance the horizontal and vertical thinking. Being an "i" DiSC type person, I naturally gravitate towards the people side of things and the time I spend on horizontal activities (eg. M/V/V/S development, administrative responsibilities such as facilitating team meetings, aiding team cohesion) ends up being far greater than the time I spend working on first-hand study in developing an independent view of functions. Having such an indepedent view will prepare me to ask intelligent questions at team meetings that can serve the team in staying on track. By not concentrating adequately on the GM responsibilities such as cash flow, I let the CTC team down in this simulation.

(3) Trust but Verify
Thirdly, one of the biggest mistakes I did early on is to accept the proposals given by my team members without any skeptical questions. As Juan pointed out from Jack Welch's "what leaders do ?" list on p 63 of the Winning book, leaders should probe with questions that border on the skeptical side. If I had done my homework with the DSS and kept my eyes firmly on the 5 goals that matter, I could have caught the CTC shortage in Q2 production capability earlier. Going forward I will dissect every idea that is put forth to me to check for supporting data.

(4) Vary the leadership styles
Fourthly, I have facilitated most of the 18 CTC team meetings held to date and I have learned a few things. In a few meetings some felt being pushed and rushed. In contentious debates, I have heard this side of the team saying their views are being swept aside and not heard adequately while the other side says decisions are not being made swiftly despite a mountain of evidence.  To not alienate either side, varying the leadership style (Goleman, 2000) with individuals ahead of the meeting might help. Giving more air-time to introverts would also help. I have learned that a GM should talk less and listen more.

(5) Achieve better Work-Life balance
This quarter I felt my band-width stretched due to multiple priorities. Through better planning I can aim to improve on this front. I will take up only those jobs where I can play to win and be able to do 100% justice to the team that relies on me to lead.

Sweat is pouring down the brow from the intensity of the paces we were put through at JWMI MBA.
Touched the finish line and lingering a bit more to recap the wisdom gained.
Exhausted and exhilarated at the same time !
The marathon is over. wow.
Dr DP

Reference
Goleman, D. (2000). "Leadership that gets results. Harvard Business School Press. Retrieved from icampus.strayer.edu

CEO Training Part9 - Winning & Losing

JWI 599, Capstone, Week9 summary, 9/1/13

CTC ended up in the second place. Not a bad way to finish but the competitive spirit inside tugs at the heart.

EPC came across as a professionally managed team that connected very well with the financial metrics that mattered - Revenue, Net Income variance, Cash Flow and ROTC.

Conspicuous in the ranking was the missing fifth parameter which is positioning for the future. I thought our team did the best job on this front and it was a bummer that this got left out of the scorecard in the end.

Our team now knows what it is to win and what it means to lose. We know what turning around an ailing company entails. I, as one whom the team gave the privilege of serving in the GM role, now know where exactly I need to improve.

This is now a new battle-tested me. I am a much better leader now.
I know life will never be the same again. wow. The magic of it all, so wondrous this MBA journey.
Dr DP

Scale up the start-up, Transition to new management & Exit

JWI 575 New Business Ventures & Entrepreneurship, week10 summary, 9/2/13


The final week of NBVE is here. The very last stretch of the JWMI MBA marathon is in view. Everyone is giving their very best to push harder than ever and dash past the finish line.

1. Growing a small business (Welch, video)
****************************
Advantages of small startups
ownership, involvement
speed
transparency - no bureaucratic non-sense

Problem in start ups:
Entitlement culture, lugs (people who may no longer contribute effectively)
Need winners, people with passion, fire in their eyes
Need greater rigor in maintaining quality of the team
Need a disciplined and organized manager with a focus on learning

2.Help from the Outside (Welch & Welch, video)
***********************************************
29 year biochemist, works in small company founded by father 32 yrs ago
worry is - company could disappear altogether
would MBA help ?

Low growth company, fast growing industry.
Only some can take a family owned company to a new development stage.
MBA is the last thing you need right now.

Get an outside hire for the CEO
Go after real talent. Steal a star.
Give authority - operating daily; strategic planning; whom to put in what job, equity.
Give equity - a real piece of the action to get him going.

Let go and give up some equity.
But you still retain majority control.
If things get crazy, and the CEO proves to be a bad choice, move on and get another one.

Remember - the new person's job is not to obey the founders but to save them.

3. Stages of start up life (Week10, Lecture1)
**********************************************
Start-ups need to eventually transition from small to big business.
The team that got you success in start-up stage may not stick around. Even some of the founders may leave.

Management styles:
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Start-ups: Scrappy, Improvising, constantly mutating
Mature giants: Corporate, Fact-based, well-understood products

Six stages of companies
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1. Idea - lone visionary; slides to pitch
2. Start-up - small founding team
3. Develop product or service - Prototype or customers identified
4. Ship to customers - Early User products, minimal quantities, small revenue
5. Ship at scale - Revenues come in
6. Large-scale operations - significant revenues; quest for new growth

4. Lots of things change
*********************
(i) ownership - structure of the company, composition of BoD evolves
*********************************************************************
Ownership evolution
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sole owner - no board
equity to hired employees & added board members - need to offer ownership stakes; stock options
investors - take positions on the board

Board membership shifts
************************
Initial Board members
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- good at uncertainty and product refinement
- can make key introductions to early customers
- they will hold you to product development milestones
- less concerned about manufacturing at scale

Board members at maturity
*************************
- offer advise and oversight (Week7 Fin Man II)
- concerned about manufacturing and scale

4. New-Product Evolution drives growth path
******************************************
Growth of organization linked to market's adoption of new product
There are critical differences between early stage and late stage companies as technology matures
Reference:Utterback, James  (1996). Mastering the dynamics of innovation. Boston: Harvard Business Press.

(i) Product Design
******************
Varied at early stage
Incremental in late stage
eg. Refrigerators

(ii) Labor requirements
***********************
Specialized in early stage. Skilled people assemble parts by hand.
Generalized in late stage. Assembly line, off the shelf components, low-skilled workers assemble them

(iii) Brand awareness & Customer loyalty
*****************************************
Important early on (only game in town; people less concerned about your size and track record)
More important during product maturity (substitute suppliers exist; brand and customer service record matters)

(iv) Competitive environment
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In a new field, the environment supports start-ups
Many small firms, companies adding their own special expressions of a new product or technology, customers experiment
As technology matures, industry settles into economic structure - oligopoly, few major players
eg. Automotive industry

5. Navigate changing culture
*****************************
Growth from scaling up will test team's skills like never before.

Culture is a big issue
***********************
- how does it feel to work at this company?
- how does work get done ?
- how do decisions get made ?
- Rituals that worked before do not scale
eg. Small company of 3 people - dinner outing with spouses and kids to celebrate a milestone builds a sense of community; close-knit culture is important
With 10,000 employees, this is not scalable
Traditions you create give away little signals and become too expensive or awkward to scale.
You will have difficulty undoing them later.

- Decision making becomes distributed
Start-up:
- people good at building products are valued more
- Everyone is in same room and can know everything about every decision
- Consensus is easier to achieve
Mature corporation:
- Consensus builders needed to manage process & complex decisions in large organizations. Such people may not always be great individual contributors
- supplement staff with people who have different skills & integrate smoothly into the organization
At some point you cannot effectively manage your direct reports and will need layers of managers.
When great engineers are asked to move from reporting to you, the CEO, to reporting to a lower level manager they could be alienated
Get key early employees to be on board with the way the management team must evolve.

6. Let Go: Transition-Moment of Truth
**************************************
There will come an emotionally charged and complicated moment for the founder.
Things will never be the same for you as the leader after this.

(i) You will decide to step aside from the business you built.
***************************************************************
- venture may have outgrown you.
- you may be an entrepreneur who likes creating new businesses
- VCs and board members may take you "out for a long walk" to explain it is in company's best interest if you move on to other pursuits.
- there may be other compelling reasons

(ii) Handle the transition, Grow Up & Make a clean break from the company.
**************************************************************************
Let others take over your vision. Give up your identity.
Make it known that new management is in charge.

Culture may be intertwined with you as the founder. Your presence may be key for success of team.
Carefully implement the transition. Move CEO to board chairman or product strategy role that fits the skills or move out of the company altogether.

Your company has reached a new level of maturity and responsibilities.
Cyanora ! Turn the page. Move on to something new and exciting.
This is also how Jack Welch handled transition from GE.

wow ! what a ride, this JWMI MBA.
DNA transforming for sure.

This is much much more than what I thought an MBA will give me.
How so lucky we are to have Jack Welch & Suzy Welch be our teachers and guiding forces.

Time to sprint faster than ever to the finish line this week
Dr DP

CEO Training Part 8 - Win with Magic of Extraordinary Team work

JWI 599 Capstone, Week9 summary, 9/1/13

OPs2 presentation went extremely well. The presentation delivery in each of our sections was excellent. I felt our team had the most "soul" and "customer focus" of all teams.

The intensity in our team is an order of magnitude above competition I truly believe. Because each of us put our heart - and yes soul - into this turn around. (Ok, I confess I did not give it all my soul. I ran at 60% of my horse power for this course since I am taking a second class, dealing with intense work- life challenges).

Together we in the CTC Inc cohort have gone through a down in Q2 and steady ups since then. We reached points where we were about to fall apart (I remember my team member Joe asking in exasperation, "where are we going with this guys? we are all over the place" back in Q2 of simulation when we suffered a major set back in sales.).

We debated endlessly about pricing (I remember my team member Roderick kicking my butt about not helping the team make a quick enough decision on pricing. I am only now getting a hang of this GM leadership thing and the team has taught me well).

We reached a point where we felt butterflies in the stomach (I remember my team member Aaron asking this week "wait a second, we don't have to change all format of the pitch in the nth hour...the ppt can remain with the same format and tweaked". What a guy ! He saved us so much trouble).

We watched in awe as our CFO Juan nailed the financials impressively (I remember him coming after us with phone calls late night each week with "hey have you thought about this..?". the guy is an amazing machine).

We gave critical 360-degree reviews that make us think deeply about what our strengths are that need to be celebrated and the weaknesses we need to address to evolve as better leaders.

It is official. My DNA has changed from this course. I have my CTC cohort to thank for the rest of my life for bringing the JWMI principles totally alive through the lively Capstone corporate turn-around simulation experience.

JWMI MBA is for me a DNA changing transformational experience. This is metamorphosis.
This is what it must feel like for a worm to turn into a butterfly and think on a whole new plane with newly-formed wings.

wow
Dr DP

It all begins with a Sale - sell, sell, sell

JWI 575, New Business Ventures & Entrepreneurship, Week9 Summary, 9/1/13

This week was all about becoming a really good salesman. As an entrepreneur I now understand I must sell myself and my ideas all the time to the stakeholders. The core principles of selling are crystal clear to me from this week's learning.

I. What does it mean to be entrepreneurial?
The essence of entrepreneurship is this: coming up with original ideas, launching a new product, entering a new market, improving operations in parent company by encouraging people to think like entrepreneurs, seeing disruption before the upstarts do and staying a step ahead of a possibly disrupting competitor (JWI 575, W9L2).

II. Ideas spark a business
When Walt Disney lost all his money to his business associate and had to start from scratch, he came up with a new idea of an adorable character - Mortimer the mouse. His wife advised him to change the name to Mickey and correctly predicted that this name would sell. And Mickey Mouse became a huge success. "It all began with a mouse", said Walt Disney and this can be seen on display on a wall at the Disney museum in Florida's Disney World.

III. Sales sustain a business
Without a sale the fanciest ideas cannot lead to a sustainable business. With strong sales, profits can be driven and sustainable businesses can be created. This week was all about how tolead with sales. "It all begins with a sale", said TJ Watson Sr, founder of IBM.

IV. Know how to sell
The basic principles of selling include persistence, prospecting, knowing not only the features of the product but also what problem the customer is trying to solve and how the features of the product can help the customer, enthusiasm, positive attitude, refusing to hear no and working around objections, creating account maps, following-up and asking for the order (JWI 575, W9L1). A combination of direct and indirect sales channels such as direct sales force, websites, social media, phone, sales representatives, distributors, trade shows and viral marketing (Kaplan & Warren, 2010) should be used to reach customers and drive up sales.

V. Drive entrepreneurship in a big company
The job of a big company is to stay agile, keep innovating, finding niches to sell in and keep growing (Welch, JWI 975, Staying Agile video). Leaders of the company should create an entrepreneurial atmosphere within the company where employees feel encouraged to pursue good ideas and take chances (Welch, JWI 975, Entrepreneurship in a Big Company video).
Leaders must never forget that they get the behavior that is rewarded. Recognizing that growing a business from ground up in a growth market could be hundred times hareder than simply keeping an existing business running, leaders should place the best and brightest people for growth market assignments and give them the resources and freedom they need to get the job done. In this process, leaders should differentiate among the options they have for investment and be willing to say no to some and yes to others.
There could be a hundred other entrepreneurs working hard to destroy the business. Getting some of them to work for the company is one way to protect and grow the business.
Entrepreneurs should find an enthusiastic champion among the leaders of the organization, get the right resources in advance and create an independent culture.

VI. Spin off a new venture
A better balance of resources, encouragement and control may be achieved in an spin-off that is independent of the parent company. This is particularly true when a disruption can be identified that the existing company cannot properly seize upon. Ventures may evolve to a point where it's successful but no longer aligned with the parent company's focus. Making the venture thrive outside the corporate nest may be a better way forward.

Another outstanding week of learning at JWMI.
Dr DP

Protect Intellectual Property - Trademark, Copyright, Patent & Trade Secrets

JWI 575 New Business Ventures & Entrepreneurship, week8 summary, 8/25/13

Intellectual Property (IP) is now the most important asset owned by a corporation as it forms the basis of sustainable competitive advantage and profitability. The way entrepreneurs handle the development, protection, enforcement, and prosecution of Intellectual Property (IP) can make or break the enterprise. 

I. Four forms of IP protection - Trademark, Copyright, Patent & Trade Secret

Original work of value can be legally protected through four forms of IP including Trademark, Copyright, Patent and Trade Secret (Kaplan & Warren, 2010). Each form of IP offers different levels of legal protection by the federal government of the United States. As protection levels for IP differ widely internationally and even from state to state within the US, specific steps should be taken to achieve the level of protection desired.    

Trademarks are used to protect the logo, symbol, short phrase, jingle and brand identity or service description (JWI 575, W8 L1). Simply by using a mark in the course of public commerce, the entrepreneur can establish a common-law right to that mark and may be considered its legal owner. The user can also file for a trademark by applying to the U.S. Patent and Trademark Office (USPTO) in Washington, D.C, by preparing an application describing the trademark and providing drawings.

Copyright protects a specific expression of an idea and is granted to words - written, spoken or performed, art, musical compositions, plays, photography, architectural designs, computer programs, titles and slogans. The author of the work owns the copyright at the moment of its creation. When work is made for hire, the copyright ownership resides with the employer. Registration can be made with the US Copyright Office (USCO) and the process can take eight to twelve months. To register, the owner must provide a declaration, apply to USCO with copies of material to deposit with Library of Congress and obtain a registration number. Copyrights need to be renewed to remain in force.

Patents grant the holder the right to exclude others from making, using, selling or offering for sale the patent invention. To qualify, the invention needs to be novel, useful and non-obvious. For the value of the patent to be realized, the patent must be exercised to yield the patent holder competitive advantages or profit. In return for disclosure and teaching the world about the invention, the entrepreneur enjoys about 20 years of exclusive rights. In addition to creating a revenue stream through royalties for licenses to use, patents help build a moat for the enterprise against new competitors.

The key steps to file a patent include idea conception, documentation of the idea, careful selection of a competent IP law firm, research about prior art and related patents, patent application with diagrams and flow charts and reception of patent approval letter. The entrepreneur should be vigilant to safeguard the rights by searching for patent infringement and prosecuting appropriately.

A Trade Secret is vital information a firm withholds from the public domain as such information is crucial for entrepreneurial success. For example, Coke's formula is a well kept trade secret.

II. How to perform searches for trademarks and copyrights

There are several ways to perform copyright searches. First, the US Copyright office maintains a searchable database (http://www.copyright.gov/records/) that can be leveraged. The Catalog of Copyright Entries is the U.S. Copyright Office’s official publication of copyright registrations and renewals, organized into categories of works. Part I includes registrations for books, pamphlets and periodicals (http://books.google.com/googlebooks/copyrightsearch.html).

For books registered before 1978, the Catalog of Copyright Entries can be manually searched. Hard copies can be found at the Copyright Office located in the Library of Congress, James Madison Memorial Building, 101 Independence Ave SE, Washington, DC 20559-6000, and at a number of different libraries throughout the U.S., including Stanford, University of Michigan and University of California.

Second, the United States Patent and Trademark Office (USPTO) offers search for patents, trademarks as well as copyrights (http://www.uspto.gov/main/profiles/acadres.htm). The trademark search database maintained by USPTO is a great resource (http://www.uspto.gov/trademarks/process/search/).

Finally, law firms that specialize in copyright and trademark searches can also be used (http://ct.wolterskluwer.com/companies-and-products/ctcorsearch/search-services). In these ways, a thorough search for copyrights and trademarks can be made.

III. Basic questions to ask in protecting IP
    What are the IPs used in the business?
    What is their value (and hence level of risk)?
    Who owns it (could I sue or could someone sue me)?
    How may it be better exploited (e.g. licensing in or out of technology)?
    At what level do I need to insure the IP risk? 

Dr DP

CEO Training Part7 - Negotiate better Payable Terms, improve Cash Flow and be a better GM

JWI 599 Capstone, Week8 summary, 8/25/13

What a surreal and awesome moment in my life ! To have an opportunity to get trained by Jack Welch, one of the greatest business leaders ever and be a small part of his enduring legacy.

I. Received blessing from Jack Welch
It was a high honor this week to discuss again with the inimitable Jack Welch and get his blessing as I prepare for graduation in two weeks. When I asked "what is the single most important thing you want us to carry forward into the future?", he replied, "Be a passionate pursuer of good ideas. Know that you have a winning formula of proven business leadership principles and you are better prepared to lead companies than many other MBAs out there. When you win, everybody wins. Be confident. As someone who finished the program in six months you are a role model. You set your mind to it and got it done". 

"To have the courage to speak my mind even if I am the only one with a point of view", said a Harvard Business School graduate I know when I asked the same question.

I ask myself and here is what I can say to myself without blinking an eye. "Win with self-confidence, authenticity, passion for business and extraordinary human relationships".

Thank you, Jack, for being such an outstanding and kind teacher.

II. Link Payment terms to boost Cash Flow

Prior to this course, I would never have thought of renegotiating payment terms with suppliers and customers as a means of improving organizational cash flow, as most people would think these terms are pretty much fixed.

While I am in general aware of the personal benefits of renegotiating payment terms (eg. mortgage re-finance, shifting to credit card with better terms and benefits), connecting this concept to protect the larger cash flow in the organization is new learning for me.

I had learned from the near-death IBM turn around experience of the 1993-1999 period that free cash flow is the single most important measure of corporate soundness and performance (Gerstner, 2002, page5). But I never appreciated it as much as I do now. This is like the difference between reading about fire and actually touching it to know its nature instantly.

IBM CEO Lou Gerstner taught us that companies like Compaq that get hooked on revenues as their main measure of performance will simply perish. Increased market share must result in a growing cash flow - that is cash flow after all expenses, not the notorious EBITDA . He also said that cash flow must be used in a wise manner, avoiding macho or bleary-eyed acquisitions, reinvesting in R&D, marketing, and other critical areas of the company. Gerstner sold off non-critical assets to shore up the balance sheet as soon as he came into IBM which was within months of running out of money for payroll.

IIb. Stretch payment terms to help cash flow

Getting favorable payment terms from suppliers as well as customers is key to protect and strengthen the cash flow in the business. Convincing suppliers to accept longer payment dates, being in a strong position to get customers to pay up earlier, and transferring inventory carrying costs to vendors outside the company  (for instance, through just in time delivery practices made famous by Toyota) are some of the ways to get favorable terms and help the CTC company.

CFO.com recommends six practices to stretch payment terms. First, the accounts payable director should be held responsible for monitoring the best terms other firms are getting in the industry and also how purchase managers are managing their payables. Second, the CFO should anchor this work and intervene if and when rogue suppliers start spreading rumors that the firm is having cash flow problems.

Third, Finance and Purchasing functions should build a close relationship and approach vendors with a common action plan. Fourth, vendors should be classified and approached differently with suitable terms.

Fifth, rigorous understanding of the financial baseline is critical to protect the overall cash flow health. Purchase terms should not only be based on pricing, but also delivery costs, vendor discounts and other allowances. Finally, executives in the firm should be paid for performance ie those whose actions contribute to cash flow health should be rewarded disproportionately.

In the short run, negotiating better payment terms can be beneficial for the company for reasons mentioned above. Particularly for firms like CTC that are in turn-around situations, getting cash flow right can make the difference between life and death of the company. The importance of cash flow is cited as paramount in the case of the fabled IBM corporate turn around that CEO Lou Gerstner engineered (Gerstner, 2002). When negotiating favorable terms, care must be taken to leave the right impression in the minds of the suppliers and customers. The actions of the company should not be interpreted as a weakness in cash flow as explained above.

In the longer run, strong cash flow enables a company to better withstand the ups and downs of the market and also give the privilege of investing in new ventures. A company that does not manage its cash flow well, and has its money tied in inventory or stuck with suppliers and customers may be unable to manage changes in the market and could perish. After all, survival is all about being the most adaptable to change.

III.Strengths & Shortcomings as a General Manager

This Capstone course to me is about connecting the dots and getting my feet wet with actually driving an organization from the top. Until I took this course, it was like learning about swimming in the business world by standing on the shore. In this course I have taken a deep dive into turbulent waters of business situations, gotten myself wet enough to appreciate the nuances, further understood my unique strengths as a leader who can bring people's best forward and more importantly gotten my butt kicked (pardon my language) with shortcomings. In the process I have learned exactly where the gaps to my skills as a general manager are. This is a giant leap in learning for me that excites me to the core. I simply cannot get this by reading countless books (which I have done) and sitting in numerous classes (been there, done that). I am very thankful to my colleagues in CTC Inc. for the wonderful opportunity to learn from their wisdom, styles and feedback.

The finish line of the MBA marathon is in sight. It has been exhausting and I have given this my very best shot. Sprinting faster than ever now.

Dr DP