Step 2 - Develop Your Strategy

Hi again, I'm Bill Canady and I wrote the book The 80/20 CEO. I'm putting out a series of videos talking about the process that we go through, and this section is focused on the first 100 days. An earlier video was, uh, called Step 1, and that was where you go and find your goal, the money, what it's going to take to make a reasonable return off the investment. Step 2 is develop the strategy. What does it take to deliver that return? I thought I'd read a little passage out of the book and then talk about some of my own experience from it. Step 2 is to create the strategy that will position the company to earn the right to grow. The 100-day turnaround timeline goes by fast, so speed is of the essence. The sooner the course correction is implemented, the sooner the cash flow bleeding will stop. Don't expect the draft of the strategy produced in the span of step 2 to guide the company for all time. You just need to propel it to get to step 3. And that's kind of where you find yourself at when you first come in. As I said before, if you've been brought in, probably hasn't been going that well. And you need to get the business aligned on the core steps that it's going to take to deliver a reasonable return. So step 1 was pick the goal. Step 2 is what is the strategy that will deliver that goal? It typically will tie into whatever's been done so far. And it'll tie right into the core of the business. So if you're in the industrial space, you're gonna stay in the industrial space. If you're in distribution, you're most likely gonna stay in distribution or manufacturing or whatever the case may be. So as you go into that second meeting, one of the things you have to do is you have to align the team around what actually you're going. Now, if you're like a lot of companies, you have multiple avenues, multiple paths to market, multiple different products. You wanna separate the unlike businesses and make sure there's a leader on each one of those. Now, assuming this is an ongoing company, you're gonna find that this naturally exists. Now, whether the business is segmented or not, candidly, probably not. If it was doing well, as I said earlier, you wouldn't be there. So expect that when you get in, you're gonna have to realign the company and you're gonna need to put a head or a person over each one of those segments, those P&Ls we like to call it. This is where people get a chance to really step up and show that they understand it and they've got, you know, the wherewithal to go do it. There's three key pieces I look for. So the first is a sense of urgency, right? They want to be part of this. They're here. They are ready to get after it. The second one is this continuous learning—the sense that there's probably better ways to do things out there, or certainly different ways—and open to try it. The tough one is always you come in and say, "Well, have you thought about this?" And they'll say, "Well, you know, twenty years ago we did this and it didn't work, so we don't want to try it again." And that may be true, but. It's a different time we're in, and the company's in different circumstances, and we're really looking for people who are willing to put the chips on the table and let's try it. And then the third piece is this ability to go get stuff done, right? It is absolutely critical to have people on your team who will go get things done. One of the things I talk about all the time is what I call the leader's mindset. So in no particular order is no surprises. We want to make sure that, look, good things are going to happen, bad things are going to happen. We don't want anyone to be surprised by that. From my side is I need that information. And I make a commitment to the team to not kill the messenger. From their side, it's really important that as things happen, they let everyone know right away, not just me, but across the team. There's a joke that we make that relatives, bad news, and fish all stink after 3 days. It's super important to pick up the phone or grab someone and let them know what's happening. Third piece, to be data-driven. We roll out the process of 80/20 that we detail in many of these videos and in the book. As well. And that's just really looking at the data to see what's going on. We use data to make our decisions. We don't expect to have all the data, but I find if you're making decisions with less than 20% of the data, you're probably guessing. If you're waiting till you got 80% or more, your competition's probably already passed you by. So somewhere between 20 and 80% of having all the information is where you wanna be. And then the third one is by far the most important, and that is results matter. In order to win, we actually have to go out. And put points on the board or score touchdowns or whatever your favorite euphemism is. We have to go win. There's a lot of folks depending on us— mortgages and college tuitions and life bills, you name it. People want to take vacations, people want to invest in their futures. We have to go and be successful, and the company has to make money in order to take and make sure that happens for them. So that's the leader's mindset there. We conduct all our business with that. We're in the room and we're going to be talking about the goal. We're Right out of the gate. So we know what our goal is. We've said before, we just call that $100 or $100 million is what we're looking to go get. What is our strategy in order to get us there? How are we actually going to organize ourselves for it? We look for the natural leaders and we give people a chance. We look for those characteristics that we've talked about, the leader's mindset and the flexibility, continuous learners, ability to get things done with it. And then we just focus right on the core. So what does that look like? We'll pull the data. We start talking about it and we start looking right away, where are we winning and where are we not winning at? And typically, the things that we'll sell around things that we have the wherewithal to go do it. So one of the great plans may be, well, look, we're deeply into the United States and we wanna, you know, we were doing pretty well there, but wouldn't it be great to go take, tackle Europe? I typically am not a big proponent of those types of plans right away. We want to focus where we already are. We have resources. In a given area, people know who we are and what we stand for. To go outside of that, that means if we're gonna go from, say, North America to Europe, which is maybe a wonderful idea, somebody's already over in Europe winning that space. And what do we think that we have that is gonna make those customers, those potential customers, come and take our products? And that means we have to go win that business. Whereas if we stay in our core market and look at the areas where we're doing pretty well, and the cases maybe not doing so well, we have a much higher probability of winning. People already know our products. They know what it stands for. Maybe that message is muddled. Maybe it's not going very well. But if we can't win in the market we already are in, it speaks to really the depths of our issue. So I typically push the company and the team to focus in where we already are, where we already have customers, for the very sense that we have them and we can build off of a strong foundation. If you have a business that has gone something through something that is terrible, maybe products have been bad, maybe there's been a big recall, there's all sorts of issues from it, you've lost your market share, you may have to go and look outside your core. That's a different situation. It takes a different approach to it. Nonetheless valid or whatever. But if you have a strong base or even a reasonable base, you're better off to stay where you are than seeking new areas. So in our strategies, we're gonna be looking for where are we strong at? Where are we weak at? We're gonna be doubling down on the areas that we're strong are. And we're going to be expecting folks to take the resources from where we're losing or we're not winning as the case may be, and putting them over into the areas that we are. So, only about 30 days has gone by. So, the initial assessment's gonna be pretty shallow. The depth of it will speak to, have you had people in those roles? Have they been leading that, that particular business? Do they have good data or not? And regardless of where they have been or not, you'll be able to quickly get a sense of where we are and the challenges that we're facing. You know, many times I've had people tell me, and I believe this, that if you go and you ask 5 people who are experienced in the situations what their ideas and their thoughts are, that answer they give you will be better than any third-party consultant's gonna be able to come in and tell you about it. You'll understand the hill that you're facing. You may not know how to solve it, of course. But for sure you'll understand it. Once you've got that laid out and once you have understanding of where you are, who your competition is, how you're winning, how you're not winning, and how the company is running, that starts putting together your strategy. And this strategy, as we've mentioned before, it's gonna be a 3 to 5 year strategy. We're gonna talk about it in the idea of it being a 3 year, just for the simple piece. It'll allow us to get through the process. So we're gonna develop a 3 year strategy of where we are, Where we're going, the steps that we're gonna get ourselves there with it. About 60 days in from the time you take over is where you should expect to have that completed at. Again, it's very shallow. Think of it as a puddle, be an inch deep and a mile wide. Nonetheless, you'll have something for people to take and start organizing themselves around, start rallying around. And a really good strategy is no more than 1, 2, no more than 3 things that you've gotta go do to win. Underneath those 2 or 3 things, there may be hundreds of things. But if you are trying to win across every front, forget about it. It does not work. You must pick 1 or 2 key things, preferably 1 if you can do it, that if you get this right, you're gonna go win. So that's the stage 2 you gotta get to. And we'll talk about what that looks like and what those sections are in it as we go through this journey of all 4 steps. The next video we talk about How do we organize ourselves and what does that look like? With the final one being the action plans that we'll lay out on it. So thank you, and I look forward to continuing the journey with you.