1.

Look for diversity in membership. The membership should reflect diversity in the surrounding  business community. Make sure the members are smart team players with strong business skills and a desire to improve their performance and to help each other improve the entire group’s performance. You will need to meet them to check this out. The leader should help you connect with current members of the group and may even invite you to a portion of a regular meeting.

2.

In the most effective peer advisory groups, member companies are in the same general size range. Businesses in the same size range will deal with and be able to relate to a similar set of problems and opportunities. Group performance is enhanced with a broad mix of companies including service, distribution and manufacturing organizations. There are often both high tech and traditional businesses in the same group. Some will be start ups and some may be well established. This mix brings a variety of perspectives to bear on any situation.

3.

The best peer group organizations offer workshops at regular intervals. They should be conducted by recognized experts and gurus in the areas of leadership, organizational development, finance, marketing, communication, management succession and more. As a member you should expect workshops that really help you to cope with change.

4.

Size matters! For optimal results peer advisory groups need to have at least eight members and no more than sixteen. Smaller groups do not bring the variety of perspective and value members have a right to expect. More than sixteen members will most often result in competition for time to address issues and opportunities. With groups larger than sixteen meeting days are likely to be rushed and facilitators will be busy managing group dynamics and logistics and may miss the subtle cues necessary to provide great leadership. It is reasonable to join a group that is not yet full sized provided the members and the leader are committed to bringing the group to full membership as soon as possible.

5.

Look for a leader to whom you can personally relate. The group leader is your mentor/ coach as well as the group facilitator. Make sure the leader has sufficient experience and wisdom to help both you and the group increase performance. Be sure that the leader has the communication skill and meeting facilitation skill to keep the group on task. Finally, look for a leader who clearly cares for the members and is sincerely interested in their success and growth.

Conclusion

Find the five key factors above and you have every chance of having a successful peer advisory group experience. This prediction, of course, assumes that you apply yourself to the process and bring your own talent and perspective to the group. If you do this you will almost certainly benefit from the experience.

Please contact me if you’d like to attend a meetup with others interested in being part of a Vistage Florida CEO peer group. Good Luck!

About Les Deck

Les is a Vistage Chair and Executive Coach in South Florida. He serves as Executive in Residence for the FAU College of Business. His current work follows a diverse business career as a serial entrepreneur and corporate executive. Les is always interested in talking with people who are considering advisory group membership.

Carol used an entire coaching session to plan her strategy for getting Diane on board and headed to Philadelphia to meet with her. Diane asked a lot of questions made no commitments and asked that Carol implement the program in the Florida headquarters office first. If the changes worked as well as Carol believed they would then she would consider installing them in the Philadelphia operation as well.  Carol returned disappointed but determined. She would install the HR policies system wide since they could not treat people differently in the two offices. The new procedures and the middle management level would wait. An HR manager was hired and the new policies for paid time off, working virtually, performance reviews went into place. Monica the new HR manager added fun events, company lunches and a recognition program to the mix. The company was a better place to work.

A training program went into place to bring all hands up to speed on the new value added processes. Within six weeks the changes were complete with all Florida office people on the new platform. It was complete with improved work time data and quality checkpoints. Results improved by the end of the second month. With one quarter of experience it was clear that the new processes were going to produce additional value for clients as planned and deliver more profit. Carol appointed a new Director of Operations in the Florida office. She would soon be free to work on the company’s future.

Diane however, was still a skeptic. She dragged her feet on performance reviews and worked through company fun events. She was not enthusiastic about the recognition program and did not follow the rules. Predictably the people in the Philadelphia office felt like second class citizens. They felt the company was not serious about process changes and not serious about recognizing outstanding performance. Carol was deeply concerned at our next coaching session. Diane had become adversarial with her. Worse they were in trouble with the primary client in the Philadelphia office.  Diane threw people at the problem and demanded long hours. Much of the time was not billable and profit in Philadelphia dropped. Contrast between the Florida and Philadelphia office performance was dramatic. Carol went to Philadelphia and informed Diane that it was time to change. Diane refused indicating they needed to work through the client problem first.

It was clear that there were nearly insurmountable differences between the partners. At the next coaching session we examined core values exhibited by each partner. There was no match. The partnership had been formed originally because Carol had an effective database tool and Diane had an attractive client. Looking back they had never been on parallel tracks primarily because they did not share core values.  Carol decided in the next session that she would act on her desire to buy out her partner.  There was much to be done. The financial statements clearly defined equity value but there was no buy sell agreement an accord would need to be reached. For this Carol consulted her corporate lawyer who brought in a business valuation specialist. He estimated the business to be worth four times EBITDA if it was sold to an outside buyer. Carol calculated the price based on the four times factor and the percentage of Diane’s ownership. The attorney created a sale contract that called for the sale price to be paid in installments over three years. We rehearsed the meeting with Diane in a coaching session and Carol booked a flight to Philadelphia to present the deal.

It wasn’t an easy meeting but Carol stuck to the plan to be very matter of fact and not be pulled into an emotional exchange with Diane. She stayed centered on the objective and Diane accepted the reality that she would soon be leaving the company. Carol conceded to a bit larger initial payment but the total remained the same. The deal was done and Diane was to leave immediately. Now quick action would be required to inform clients of the Philadelphia office of the change. The staff had to be informed and stabilized now. Their help in insuring the company’s position with clients was vital.

Carol was ready with the staff reorganization plan. She called in the Project Manager she had chosen to be the new team leader. Jill was both challenged and excited about the chance to lead the Philadelphia team. She understood the plan for saving clients and agreed to make it the highest priority. Carol drew the staff together and announced the change in management and outlined the priorities. Everyone looked forward to their new status as full members of the headquarters team. Because of careful planning and immediate execution the company never missed a beat with clients and quickly escalated service performance with the installation of the now proven quality check points and the new work time database. Jill reports to the Director of Operations in the Florida office.

The company is ready for new growth and Carol has the time and energy to meet the challenge.

Business Coaching makes the hard parts of your job easier. As in Carol’s story, first we deal with the realities then we carefully plan to achieve the outcome you want, finally we execute the plan. Give me a call to discuss your situation. I am sure it has a solution. Les Deck

The Preamble

Once each year Father’s day leaves a philosophical door ajar just long enough and wide enough to push a bit of fatherly advice through.  I am taking that opportunity.  This is what I wrote this morning with the three of you in mind.  It applies to everyone in my opinion but many cannot see.  I am proud that all of you will “get it” and that you are productive, intelligent and responsible men.  You live in a time of cataclysmic change.  This reality produces both great chaos and great opportunity for those with the keen eye to see it with the discipline to pursue it.  Happy Father’s Day!  LT

Advice for Prospering in a Strange World

Discover and claim your core values. Make them the central reason for everything you do. Create a life mission based on the values you choose. Develop a vision to apply your life mission in all verticals of life that are important to you. Do this for family, work, charitable activities and friends. It will bring order where chaos is always a possibility.

The world around you will suggest an increasing flow of enticing attitudes, activities and actions. If they are not consistent with the values at your center you will find them unfulfilling.

Expect constant change in every institution that touches your life. Do not resist change as your energy will be wasted. Instead, look for patterns. There will be a place for you in any new order if you perceive what you must learn and what new paths will lead to a productive and satisfying place.

Though it may be easy, do not blame others or factions or movements for blocking your path.  Avoid that temptation robustly. Whatever they are doing it is about them not you. They will eventually and unavoidably answer for their actions. You are accountable for your own.

Develop a keen ability to analyze. Sift through the constant stream of data designed, selected and disseminated to pull you toward a single focus. The world is connected at every junction today. Clinging to a narrowly focused viewpoint, diametrically opposed to other narrowly focused points of view will not serve you. People who seek similarities rather than differences bring value. Those who promote differences waste time.

Finally, find a spiritual center that works for you. While you may resist dogma, tradition and power structure it is clear that there is an order to life and the universe that is beyond our scope of complete understanding. Seek harmony with that order.

Today, more than ever before, CEOs need to understand what is going on in the world. Key trends in politics, economics, populations and cultures have an impact on every business.  To manage effectively, chief executives must know how these trends will affect their companies.  In his presentation, Herb Meyer talked about the national security, economic and cultural issues that are so prevalent in our media today.

Herb Meyer is an engaging speaker with many interesting stories.  Herb Meyer’s experience is a wonderful frame of reference for important information on fundamental change already well underway.  Meyer does a great job of bringing reality to four major ideas.  At the outset, Meyer renounced political rhetoric with the claim that here in the USA we seem to be in the habit of loud argument before we bother to understand.  Herb Meyer stuck with his promise to focus on facts and ideas.  That said it was never difficult to read Meyer’s positions between the lines.  Meyer often says “honorable people will disagree and should do so respectfully.”  I like that.  Also, Meyer is a pleasant fellow and shares a love of classical music with me.

Herb Meyer has a couple of eBooks available, and a recently released DVD. Information pages are available for his books:  The Cure for Poverty and How to Analyze Information.  You can find additional published works, links and information about Herb Meyer as well as his DVD at http://stormkingpress.com

He had four major ideas to bring us.  Here they are:

Conflicting Systems

Conflict in the world results when operating systems are incompatible.  We currently have 1.5 billion people in the Middle East attempting to move from the 8^th century into the 21^st century.  The majority of them are currently living in an Islamic system.  In Herb Meyer’s opinion, the Islamic system of law and government is incompatible with the modern western world.  It is at odds with our social practices and with technology.  This transition is bound to be difficult and cause great strife.  The process of integration into other cultures will be gradual as they like to live in distinctively separate areas creating “multicultural societies”.  Herb Meyer sees this as a continuing problem in western societies that will be with us for a long time to come.

Playing Defense is Dangerous

While this idea has obvious military connotations, (I think Herb Meyer is a hawk at heart) it also has application in sport, business and probably, love in addition to warfare.  Meyer pointed out that those playing defense whether defending a goal, a market or a population from an offensive foe must literally win 100 percent of the time.  On the offensive all you need to do is get through the defense once to score.  At first glance this seems sound.  On the other hand, if we are always playing offense there may be no attention paid to winning at the game of integration.  I think I would choose to put reasonable safeguards in place and maintain them but spend my energy on the natural movement and integration of populations, markets and ideas.  Seems like the best way to stay relevant in the face of change.  Just my opinion.

The World Population is Aging

Herb Meyer says the necessary birthrate for populations to maintain themselves is 2.1 children on average.  At this rate the parents are replaced.  The extra .1 child compensates for those children who do not reach adulthood for some unfortunate reason.  Meyer also defines the birthrate from which societies cannot mathematically return to growth as 1.3 children on average.  Hence any country with a birthrate lower than 2.1 must mathematically lose population and when the 1.3 birthrate is reached population growth cannot recover and mathematically the country is set for extinction.  As Herb Meyer says, “just do the math”!

Here are the current birthrate figures Meyer gave us plus the most recent data from the World Bank and other sources:

For the most part my research confirmed Herb Meyer’s numbers concerning birth rates.  This is a complex number and has many factors to take into consideration.  First sheer size is important.  An 11.8 rate per thousand population with China’s population of 1.3 billion amounts to 15.3 million babies per year while with our population of 300 million give or take a few million at a rate of 14 per thousand yields 4.2 million babies per year.  Again, size matters!  Then of course wars kill off young men and women in their prime for producing children.  Dietary habits, tobacco and other substance use and the availability and cost of medical care are all factors in life expectancy and can change the survival rates.    Epidemics typically kill the old and the very young.  All of these factors and more could throw the current statistics into a cocked hat.

I could find no evidence to confirm the 1.3 “suicide rate” at which it is impossible to increase population.  In fact, there are many countries that reached 1.3 in 2005 and have risen since then according to the CIA statistics.  They include Latvia, Lithuania, Italy, Hungary, Germany and Greece.

A possible change in the number of children per woman in China could turn their statistics around rapidly.  Some of the higher birth rate nations have rates as high as 8.  Apply that to Chinese women just entering childbearing age now and calculate the result.  Can’t happen?  China is a totalitarian state so don’t bet on it!

All that said a trend is a trend for many reasons most of them deeply engrained in populations.  One continent you can bet on is Africa.  All the highest birthrates (those from 4 per woman to 8 per woman) are on that continent.  It is a good bet that the developed world will seek to emigrate  and educate Africans as their own populations age.  Count on competition between all the developed nations to attract the best educated and highest skilled emigrants from Africa and other nations.

Emerging Global Middle Class

The fourth big idea Herb Meyer brought to us is the emerging global middle class. Herb Meyer states there will be more middle class people on this planet than ever within the natural lifetimes of adults today.  This is due to advancing technology that has flattened the world and facilitated communication at the speed of light.  That allows entire populations to take new roles in the world.  Examples are the rise of India in service businesses and China in the production of consumer goods.  The rising middle class wants goods and services similar to everything we have in the US.  Herb Meyer believes US businesses are poised to take great advantage of this phenomenon.  Meyer sees the free market as a key factor.  I believe there are no guarantees that we will become the supplier to the world.  Certainly we can be a strong player.  However, the newly emerging middle classes around the world will want to participate rather than to let us own the store.  In many cases they are likely to want to buy technology and start up help from us and actually produce goods and supply services themselves.  I also expect newly spawned entrepreneurs in emerging societies will want to own equity even when American based global corporations come into their nations.  Also there is a strong probability that we will need capital investment from the world financial markets.

I believe the winners in providing supply chain to an emerging global middle class will hinge on energy and food production.  Our opportunity to benefit depends greatly on how we play as power brokers in the world.  There are many questions left unanswered.  Here are a few important ones:

How will we mitigate energy use and develop alternative sources?

How will we harness our food production facilities to help feed the world?

How will we use our massive military might in a world fraught with injustice and war?

Will we be able to solve our own difficult financial problems?

Will we be able to provide a shining example of democracy and capitalism that results in a healthy and prosperous middle class as well as strong capital investors?

I believe these are the serious questions that remain unresolved and those that will determine our opportunity to prosper as the global middle class emerges.

I welcome your comments and opinions.

The plant was operated by a manager and staff that were not very efficient but they got the job done and Dave didn’t worry about it. He chose to focus on their creativity in furniture design and construction and their ability to create finishes second to none. Scrap ran high; there were no productivity measures and little accountability. However, there was more than enough money to pay everyone so Dave focused his attention on sales and let the plant take care of itself.

Haphazard as it was this worked for more than ten years. In early 2005 Dave began to notice some changes. He got fewer calls from long term customers. Those who did call were concerned with pricing. The company had always been competitive with other similar shops in the area and when they were higher in price he could usually justify the additional cost with special finishes and impeccable customer service. It was different now. Then a client revealed the truth. They had sampled an imported product from China. The quality was good, the finishes acceptable, order to delivery time about the same as his and the wholesale price was below Dave’s cost to produce. They were taking their business elsewhere. In a very short time this became the prevailing practice for virtually all of the up-scale furniture retailers on his customer list. Game over? Not for Dave.

Dave called to see if coaching could help and we began to work together in November of 2005. Revenues had fallen by fifty percent. Backlog was dwindling fast. Dissatisfaction was growing in the staff who feared layoffs were in their future. The head of the design department was reviewing his options and talking about going freelance. The business was in trouble.

Our coaching sessions became intense as we looked critically at the market, the company’s financial resources, the abilities of the staff and Dave’s own strengths and weaknesses as an executive and marketer. The company had always done some work with interior designers and contractors serving a very top end home buyer. Their involvement was limited to stand alone furniture pieces designed specifically to the buyer’s taste. Dave felt there was additional market available in this segment but the company would have to change drastically to capture it.

Price was less of a factor in this market where owner taste, style and desire were the primary considerations. It was attractive but a very large challenge. We determined together the list of changes necessary. It included the following.

Staff His people lacked the discipline to meet contractor schedules. Their skills were aligned with furniture building and would not be easily adjusted to design and construction of built-ins and entire room trim sets to be installed by an onsite crew. The Plant Manager was not up to the task and would have to go along with several of his support people including the materials buyer.

Design was a major bottle neck and would need to be revamped to be less dependent on singularly talented but highly independent designers. Dave needed a design team he could depend upon to deliver on the client’s schedule.

Facility and Equipment The shop itself was adequate although about a third of the space would not be needed for several years requiring negotiations with the landlord. An expensive computer controlled router, already on order, would not be appropriate for the new market. More efficient material control and scrap control was required.

Sales and Marketing Dave’s own skills as a furniture salesman though valuable would need retooling if he was to continue the role of rain maker in the new business. The great feature and benefit sales guy would need to learn listening skills to understand client needs and desires. He would need training to use new database tools necessary to build relationships with contractors and designers in several geographic markets. Project bidding, follow up and closing would require an entirely new set of practices. Dave would have to deal with a much longer sales cycle. That’s a tough environment for a mid career A type CEO.

Finance Working capital had always been plentiful as furniture industry convention included a deposit of fifty percent with the order. This would not work in the construction business. In fact, the convention in home construction is progress payments only after confirmed delivery, installation and contractor sign off. It is also common for the contractor to retain ten percent of sub-contractor invoicing until the entire job is closed. Dave would have to put much more capital in the business and arrange credit lines as the business grew.

Timing Together we estimated it would take at least two years to complete the change. The home building market in general was overheated and there was talk of a bubble in mid 2006 when Dave would begin executing on the plan. Continued activity in the high value home market was far from certain. The timing was not great!

Nothing short of a complete revamping of the business would assure its survival. Long term employees would be let go. Difficult negotiations would take place with the landlord and the supplier of the machinery that would now be cancelled. He’d need to invest time and money in both training and coaching. Much of his savings would need to be invested in the company. It would take time and be a sacrifice for both Dave and his family. This is a tough call for anyone.

As an Executive Coach I am very aware that it is not all in the numbers. That would have made Dave’s decision simple. Most CEOs could construct a cost benefit analysis, determine the capital requirements, compare alternative proposals and move ahead or not. All those things need to be done, of course, but they do not deal with the fear of failure, develop the new habits necessary or deal with the inevitable changes in self image and belief system that also need to take place to achieve success. As Dave’s coach, I had no agenda other than to help him achieve his goals. My job was to move him regularly toward clarity on each issue and hold him accountable for each action step he committed to. Our rules with each other allowed me to ask any question. He could bring up any subject and revisit it as many times as necessary. We would set action steps at the end of all sessions and he would be accountable to report on his progress. He could contact me at any time via email or phone. I always took his call and he never abused the privilege. We worked together as coach and client throughout the entire transition. There was often fear and doubt and a lot of disappointment. There were also celebrations as the process worked and progress was made. We still touch base regularly. Today the change is complete. The business has turned the corner with a completely new and highly efficient staff, creating an entirely new product for a growing list of new clients. Dave is doing well and remains the owner and rain maker of the business. Coaching made a critical difference for him.

Are you facing a challenge similar to Dave’s? I live in Florida. Simple and effective technologies like Skype and Goto Meeting have eliminated the barrier of distance. I could work with you no matter where you live. If you haven’t considered contacting a business coach in the past I can help you figure out if it is right for you. Just contact me to get going. I look forward to hearing from you.

Unlike most economists, Alan Beaulieu is willing to make and live with predictions. He and his brother Brian have a 96% accuracy rate over the past 20 years. When they are off it has been by a few months or a few percentage points. Their predictions are based on several factors that are available to anyone via the internet. They have chosen factors that have a high correlation with economic growth rates for more than 100 years in the US and centuries if applied to Europe. The Factors are:

1. Rate of change in the civilian labor force. (showing growth).
2. US industrial production compared to corporate bond prices. (Industrial production lags bond prices by several quarters. Bond prices began to move up in 2006 and continue with corporate profits high. Industrial production is following and will continue to rise at least through 2013).
3. Non defense economic activity. (three month average turned up several months ago indicating a coming rise in the 12 month average).
4. US industrial production (began moving up in mid 2009 and their forecast projects a continued rise into 2013).
5. US Composite Leading indicators from the Conference Board. This is based on an algorithm containing a soup of factors. (Twelve month line in positive territory in early 2009 and continues to move up).
6. Retail sales excluding automobiles. (3 month average solidly up since early 2009, 12 month average rising since August 2010 and is expected to increase).

Near term we are experiencing slow but sustained and dependable growth. This will continue without the widely touted “double dip” though there will probably be a slight dip in late 2011 according to Alan. 2012 and 2013 into 2014 will show growth. The mid-term shows growth through 2017-2018 where a ten year cyclical recession will likely occur. Looking very long term Alan issues a warning. He believes that if government debt continues to grow the interest cost will drive our economy into deep depression around the year 2030.

While I do not currently see the political will to solve the systemic problems that are driving the deficit I do know there is nothing as certain as change. I do not think our politics here in the US will control many world outcomes. The hot beds of activity that are far more likely to create change for us are in the Middle East. Conflicts there are driven by forces much stronger than our political divides here. We are very vulnerable to energy supply disruptions. Should a disruption occur I believe we would quickly begin to develop alternative sources. To move decisively toward green energy we would also have to address problems in education and credit policy. This would be necessary to develop the talent and funding required. Supply disruption and our resulting decisive moves to develop alternative sources would quickly reduce oil revenues in the mid east with corresponding reductions in funding for terrorism. I believe an energy disruption is likely within 20 years. I think the resulting reordering of our national priorities will prevent a 2030 depression. Note that is my prediction not Alan’s. He did agree that a disruption in oil from the Mid East might have the result I described.

What do Alan’s predictions mean to American families? First, we have considered real estate a primary driver of wealth. In the past, we have experienced rising real estate values and declining interest rates allowing us to “strap” ourselves with real estate purchases secure in the knowledge that rising prices and low interest would be on our side. Clearly that no longer works despite the low interest rates. Because of the credit climate and the large inventory of unsold houses, Alan believes values will not return to 2008 levels (1.5 years after the decline began here in Florida) until 2017.

Alan predicts interest rates will rise over the next 7 to 10 years. This means those of us who own mortgaged property should refinance if necessary to secure fixed rate loans. Families that do not own homes may want to consider buying modest properties where the monthly cost will be affordable while prices are low and interest is low. Buy at fixed rates of interest. Improve the property and plan to own for a long period of time. Most mortgages are now owned by Fannie Mae or Freddie Mac. There are currently some fixed rate federal refinance programs available on first mortgages owned by these agencies.

Taxes will rise over the next ten years. There is no way out of this for anyone. Entitlements will be attacked. Look for employment where funding is not driven by state or federal appropriations. Medicare, Medicaid and Social Security will be trimmed and means limited. Plan to fund retirement with savings or equity growth as Social Security is not enough now and the gap between Social Security payments and the cost of living will only expand.

All that said the American dream is alive because we have freedom to create wealth. According to Alan growth areas in the economy will include plastics, information technology, durable goods of high quality, tourism, temporary staffing and energy efficient automobiles. Food production, medical care and products /services that cater to special markets like aging or Hispanics will be strong. There is a lot of money setting on the sidelines. Households are saving and reducing debt at the rate of 600 billion per year. Banks have plenty of money including at least one trillion beyond required reserves. Private investors have over two trillion in cash waiting for great opportunities. Go out there and start and grow businesses now. As Alan Beaulieu says “it is time to make your move.”