The 1,057 Point Swing

The 2016 presidential election results surprised everyone and created much uncertainty in many quarters. Often uncertainty produces fear about what’s going to happen in the future. There’s no doubt that many people have expressed such fear in recent weeks. I watched the election results during the evening of November 8 and remember how futures for the Dow Jones Industrial average plummeted as much as 800 points on the prospects of Donald Trump being elected president. Then when the markets opened on Wednesday, November 9, the Dow marched ahead closing up 257 points. This is a swing of more than 1,000 points in less than 24 hours. What the heck happened?

It’s pretty clear to me that there was a great deal of uncertainty surrounding the direction the election results were headed. This uncertainty produced much irrational fear that drove the markets lower. When cooler heads prevailed the irrationality evaporated and the markets moved up. What is the byproduct of uncertainty and fear? It’s opportunity. It’s my opinion that the greater the level of uncertainty the greater the level of opportunity.

I attended an affordable housing industry conference a week after the election. There was a lot of hand-wringing and pessimism. A number of attendees were convinced that support for affordable housing was going to decline and the industry would blow up. No doubt there are some potential threats on the horizon, but there are an equal if not greater number of opportunities. As entrepreneurs we have a choice to make. It’s the classic “glass half-full or half-empty” choice. There’s no question that things can and will happen that are less than desirable – that’s an absolute. It’s how we prepare and deal with them that matters.

At the industry conference I sat on a panel and posed the following question to the audience. I’ll pose it to you as well. “How many of us have a strategy to deal with the effects of uncertainty?” Out of a room of 750 people maybe two or three hands were raised. Was your hand raised? It’s so easy to become lulled into a sense of complacency. We think we know where our business is positioned in the marketplace, and we generally understand the direction our industry is headed. But then something happens to completely upset the apple cart. Simulating various scenarios and their impact in advance of such occurrences can be very helpful in identifying potential courses of action. But there’s still a healthy dose of optimism that is also required.

The real test for us is how we react to uncertainty. Do we immediately begin envisioning all of the negative possibilities? Or do we lick our chops at what uncertainty could mean in positive terms? Some entrepreneurs thrive on uncertainty. They run toward the disruption caused when things don’t go as planned. Why? Because they know how to adapt. They modify their strategy to fit the current situation. They are nimble and opportunistic. They are unafraid and know how to manage risk.

We too can learn how to use uncertainty to our advantage. To do so we must constantly be looking at a multitude of “what-ifs.” What if the election goes a certain way? What if interest rates increase? What if our top salesman walks out the door? As we cycle through the various possibilities, we weigh the pros and cons. And only seeing the cons misses the entire picture. There are always silver linings in whatever happens – we just have to look and find them.

One of the biggest threats to our affordable housing development business is the prospect of corporate tax reform. Investors use a federal affordable housing tax credit to help fund our developments. If the tax rate goes down, the value of the credit is less and there are fewer funds available for development. With the election of Donald Trump and a Republican Congress, the prospects for corporate tax reform are much improved. But we’ve been hearing about corporate tax reform for the past several years. And tax reform won’t cause the demand for affordable housing to be any less. So even before the election, I’ve been mulling over other ways to deliver affordable housing should the tax credit be diminished or even eliminated. We do have a strategy to pursue an additional product set that will enable us to continue providing such housing with or without the credit.

When we develop a strategy to deal with the effects of uncertainty the sky is the limit. We are able to move forward with confidence and optimism while others may be mired in negativity and limited thinking.

You can also listen to a weekly audio podcast of my blog. What you hear will be different than what you read in this blog. Subscribe on iTunes or wherever you get your podcasts. You can also click on this link – Click here to listen to Audio Episode 23 – Misplaced.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

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Curveballs and Changeups

Major league baseball pitchers throw some amazing pitches. Their repertoire includes the breaking ball, changeup, forkball, screwball, slider, curveball, knuckleball, four-seam fastball, split-finger fastball, cutter, sinker, two-seam fastball and probably some other customized versions of all of the above. These pitches range in speed from 70+ to over 100 miles-per-hour. How a batter can even see a pitch that is screaming in at speeds above 90 and dancing all over the place is an incredible feat. And the fact that such pitches can be hit for home runs is even more stupefying. How do they do it?

Major league batters expect to adapt. They know that they are going to see a wide array of pitches that are surgically placed in different locations in the general area of home plate. Thus, every at-bat requires them to adapt to a host of variables. Top-flight big leaguers have an uncanny knack for successfully adapting their vision and their swing to hit the ball and get on base. They go to the plate knowing with absolute certainty that they must be able to adapt or they will strike out, fly out or ground out.

As entrepreneurs we would be well-served to study successful major league baseball players and observe how they adapt. Sometimes they shorten their swing. At other times they become supremely patient. They may try and push the ball to the opposite field; they may bunt, and they might also time their swing in order to pull the ball. All of this happens within a split second.

We entrepreneurs often work hard to create elaborate strategies and backfill with a host of tactics. We plan and we create extensive systems and processes. All are absolutely necessary to succeed. But sometimes we forget that we must expect to adapt. There is nothing negative about holding this expectation. The game plan provides a roadmap for us to follow, but it doesn’t account for every possible instance where we may need to be flexible. Over the years I’ve tried to muscle my way through a plan that I was convinced was the only way to go. Most of the time it led to failure or at least results that were less than stellar. I realize that I was being resistant to adaptation.

What I wish I had understood at the time is that the need to adapt can offer some incredible opportunities. And my resistance caused me to miss those opportunities. It’s easy to say, “OK, I have a plan and undoubtedly something will knock me off-course.” What goes unsaid is the thought that, “Then I’ll do whatever it takes to get back on-course.” But what if we had a mindset of expecting the need to adapt and actually turning it into a desire?” Think about all of the wonderful inventions that have occurred in the past. If you’ve ever read the story of Steve Jobs, you’ll know that he was a master of adaptation. Through his flexible nature he embraced the chance to make changes to the iPhone and the end result was, “WOW!” It’s well-documented that the initial vision for this technology would not have been nearly as phenomenally functional as what was eventually developed.

When we rejoice at the prospects of adapting our ideas, our creativity increases exponentially. Then we are positioned to achieve greatness in whatever we choose to do.

 This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

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On It or In It?

I have the good fortune to regularly mentor several amazing entrepreneurs. One question I frequently ask is, “how much time do you spend working on your business versus in your business?” A similar question is, “how much time do you spend working on strategy vs. tactics?” Usually the answer to both questions is, “not much.” The problem is easy to identify. Entrepreneurs find themselves sucked into the daily grind of firefighting and there’s no time left to do much else.

So how do we focus on strategy and vision when the bullets are flying and we’re hunkered down in our foxholes? For starters, we need to examine exactly what it is that we are doing. As part of my mentoring process I inquire on specifically what an entrepreneur is spending his or her time. It’s interesting to listen to the responses which often reflect the fact that  entrepreneurs are handling things that really shouldn’t be their responsibility. Mostly this includes performing tasks for which others should be held accountable. And it’s not just about the failure to delegate. Some entrepreneurs take the position that “if I want it done right, I need to do it myself.” Or, “I really don’t have the time to show someone else how to do it – it’s more efficient for me to bang it out.”

To solve this we need to understand what prevents us from delegating that which should be handled by others. Do we have the right people on the bus? Do we have enough people? Are the right people properly trained? Are we too high control? When I have experienced problems with delegation in the past it’s usually been the result of not having the right people to whom I can delegate. Getting to the root cause of our inability to delegate is crucial. If we don’t have the right people, what is more important than solving this problem? One of the nice things about having the right people on the team is the fact that they may not need as much training – bright, right people figure out a lot of things on their own.

How is an entrepreneur who has a very small team able to delegate effectively? In other words, he or she is a player/coach and is on the field for every single play. This is where blocking out specific amounts of time to plan and strategize can be invaluable. Perhaps this occurs every morning from 8:00 to 9:00 without fail. During that timeframe, the entrepreneur takes no phone calls or any other interruptions and refines the strategy for the enterprise, reviews key performance indicators and determines if the business is on track with respect to vision and mission. Then the entrepreneur suits up and runs out on the field with the rest of the team to face another day. I cannot emphasize enough how absolutely nothing can be allowed to disrupt this daily routine.

We can ill afford to procrastinate when it comes to working on our business because we are too busy working in our business. The more this happens the more likely it is that we’ll get caught on the hamster wheel. Around and around we go as fast as our legs will churn – but we’re not making any headway. Why exert so much energy (and money) to end up right back where we started?

Learning how to delegate and hold others accountable will allow us to strategize and envision the future for our enterprise. And sequestering ourselves for a specified period of time every single day will enable that planning and visioning to happen.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

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Master’s Degree

What would you think of an entrepreneur who says that he or she will give his strategy to his/her competition? The sporting metaphor would be the equivalent of a football coach giving away his playbook. Is this total insanity? Why would we lay out our game plan for competitors that are trying to beat our brains out? I’m not advocating that we do this but I do believe that the hype over being secretive about business strategies may be overblown. Why? Because I don’t believe that the strategy itself is as important as the execution of that strategy.

It’s completely true that most entrepreneurs need to spend more time working on their business than in their business. Translation – entrepreneurs need to be more strategic and less tactical, which is not an easy task in small organizations. But what trumps everything is the effective and successful implementation of a strategy. If we lay out our strategy for a competitor, that doesn’t necessarily mean that our competitor will beat us with it. Our strategy was developed with extensive input from a number of stakeholders in our company. It evolved through our culture and is nuanced by a wide range of variables that are specific to our enterprise. It’s highly unlikely that our competitor can implement our strategy as well as we can

So, if it’s principally about execution, how does an entrepreneur ensure that this process achieves success? Execution is a mixture of tangible and intangible factors. First, the team must have confidence in its abilities; in the strategy; in the data that is foundational to the strategy, and in the resources that must be brought to bear to implement the strategy. Hand-in-hand with this confidence is the trust factor. Team members must totally trust each other to fulfill their roles and be accountable accordingly. Without this trust, the execution of a strategy is impossible.

Sound strategies are often developed with the experience of members of the implementing team in mind. A strategy to manufacture and sell a particular type of product assumes that the engineers designing it and the equipment operators on the line have the minimum level of experience needed to turn out a flawless finished product.  In addition to experience there’s an assumption that team members have certain skills that will be married with experience to deliver the product at a cost and level of quality that results in happy customers and a financial profit to the company.

Strategy execution involves a myriad of mechanics. Translation – there’s a well-thought comprehensive process that enables a step-by-step methodology from start to finish. This process encompasses everything from market research, engineering and design, procurement of raw materials (still assuming a manufactured product for illustration purposes), production, quality control, marketing, sales, shipping, customer service, billing and collections . . . the list goes on. The point here is that the mechanics of implementation are vital to successful strategy execution.

Finally, the team must have a winning mindset. This goes beyond confidence. It’s about truly believing that without question the strategy will win. It’s about visualizing success. True believer team members celebrate their impending success on a daily basis. The culture is upbeat and positive. It is focused on honoring the team AND the customer. The winning mindset transcends confidence and envisions the strategy as already implemented in perfect order.

The ability to execute a strategy defines an entrepreneur and his or her organization. Some can and many cannot. Entrepreneurs who can consistently blend all of the right ingredients are masters of implementation.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

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Are the Restrooms Clean?

Question: I keep hearing talk about building on a strong foundation. I know this applies to a business and to life. Can you give some examples of what this means?

Answer: Building on a strong foundation has become a bit of a cliché in recent years. Business writers use it. Politicians use it. Ministers use it. The premise is sound but it needs to be called something different. I’m going to rename the concept, “Are the Restrooms Clean?”

I can tell you how well any business is being run by the condition of its restrooms. Some of the fanciest national restaurant chains spend millions in marketing and advertising trying to entice us with mouthwatering food. And yet, their restrooms are filthy. What does this say about their operation in general? To me it says that little things don’t matter – it’s all flash and glitz. Where else are they cutting corners? Do I even want to peek into their kitchen? Think about the last time you were in a dirty restroom. What overall opinion did you form about the business?

The little things do matter. As entrepreneurs and with life in general it’s easy to get caught up in the big picture and sometimes neglect the seemingly trivial. After all, what’s more important – understand the cost of goods sold or a sparkling urinal? But here’s the thing. The little things are the foundational elements on which success is built. Are we on time when attending meetings or are we tardy? Are we gracious and well-mannered or are we arrogant and a bit narcissistic? Do we always do the right thing even when no one is looking and no one will ever know?

One of the best illustrations of how a little thing can have catastrophic consequences is the story of the space shuttle Challenger. On January 28, 1986, the Challenger lifted off from Cape Canaveral, Florida with seven astronauts aboard. Just 73 seconds into the flight the shuttle broke apart and exploded resulting in the loss of the entire crew. How did this tragedy occur? An O-ring seal failed on the right solid rocket booster allowing hot gas to escape and causing the horrifying separation of various structural components. When a business fails or when we as individuals fail, it often starts with something small.

I’ve written in the past about being strategic and not getting bogged down in straightening paperclips. And that advice still holds true. But it’s just as true that we can’t ignore the small details in our businesses and our personal lives. There must be a balance between big stuff and little stuff. The key is being aware enough to regularly take stock and make sure that the little things aren’t going to bite us.

Metaphorically speaking, if our restrooms are spotless there’s a good chance that we’re tending properly to the small things upon which we build our businesses and our lives.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

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30,000 Feet

Question: Sometimes I tend to get caught up in the details and miss the big picture. What should I do to develop my abilities to have a broader focus?

Answer: Life in general and entrepreneurship specifically, is a mixture of strategy and tactics. It is very easy to fall into a routine of dealing with tactics on a daily basis and letting someone else worry about strategy. After all, this subject is a bit fuzzy anyway. The work has to get done and if the details aren’t tended to, then everything falls apart – right?

Actually the reason many people are extremely tactical is because the overall strategy has never been adequately explained to them. Let me give you an example that borders on the absurd, but will illustrate the point well. Let’s say that you are blindfolded and led into the cockpit of an airplane. The blindfold is removed and you are told that your job is to fly the plane. Let’s also assume that you actually know how to fly the plane. Great. Now what? No other instructions are given. Are you supposed to fly the plane to another destination? If so where? Will there be passengers on the plane or are you flying cargo? Maybe this is just a test flight. Are you starting to get the picture? You know how to fly the airplane – that is to say, that you understand the tactics. But you have no idea what the end result is supposed to be – that is to say, the strategy. By now it’s pretty obvious that the “What” is the strategy, and the “How” are the tactics.

Stop and think about you daily routine. Do you understand the strategies to which your tactical efforts are aimed? If you are a leader, how well do you explain the strategies to those you are expecting to implement tactics to deliver said strategies? This may sound like a very simple premise but it’s one of the biggest areas of miscommunication in our lives today. As a result, many people toil in frustration, feeling like one more cog in a wheel that is going nowhere.

Starting today, resolve to understand the strategic aspects of what you are doing. Make certain that you communicate the strategies to everyone involved if you are the leader. If the strategy is to deliver better customer service than any of your competitors, make sure that you clearly articulate this and make everyone aware of the metrics to be used for accountability. If your team understands the strategy, it can develop the tactics that will lead to success. But if the strategy is unclear and poorly communicated, don’t be surprised if you don’t have the buy-in of the team members.

Each of us wants to feel as though what we are contributing matters. Only when the strategy is clear to all do the tactics matter. And then our sense of self-worth can be fulfilled.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

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No Crystal Ball Needed

Question: I’m not sure what the future holds. How do I deal with the uncertainty?

Answer: No crystal ball is needed. Write your own obituary.

Now I know you’re wondering what this has to do with peering into the future. Stay with me and I’ll show you how. The future is only uncertain to the extent that we allow it to be. In reality we can shape the future if we have vision. I define “vision” as “what it looks like when we get there.” In other words, to what exactly do we aspire? How many years from now will it be before we accomplish our goals?

To be a successful entrepreneur and to succeed in life, we must have vision. Floating along the river of life may work for some people, but for most entrepreneurs we need more clarity. Developing a vision can provide definition and lucidity. Which brings us to the obituary. I know suggesting that you write your own obituary may feel more than just a bit awkward and maybe even a touch morbid. But if you do it correctly it will be a very eye-opening exercise. What you are doing is looking back at the life you will have lived and envision how you want it to have been.

Avoid the shallow objectives such as, “he was the best father he could be,” or “she lived life to the fullest.” While there is nothing wrong with these statements, don’t we want our lives to be deeper and more meaningful than that? Ultimately you will write a strong and powerful statement about the life you want to have lived. From your future “obituary” you will begin to see the vision of what you want your life to become.

Once we create our vision we can develop strategies that will deliver that vision. And then we are able to shape our future, eliminate the uncertainty and move forward with confidence to purposefully pursue our passions.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

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