Business Concern

I advocate group decision-making, but am often asked: "what exactly is the role of the leader where there is a group involved?" Not understanding that leadership role can lead to humiliation and lack of credibility – not to mention bad results. By understanding the leadership role in group decision-making and waiting for the fork, you can elevate your practice of leadership from rote activity to an art form. It is that leadership art that can bring excellent business results.

Leadership cannot function in a vacuum. For business success optimization there needs to be an established decision-making structure embedded in the business. The resulting decisions should be documented, communicated, and understood by the executives as they are made. This is the essence of dynamic planning, the most effective planning method. To make the best decision-making process, a small group of diversely informed individuals should aggregate their judgments and provide that wisdom to the decision-maker charged with determining and setting forth the policy. This group should be formed to include the elements of diversity, independence, and decentralization. Using a group in the decision-making process does not mean the group makes the decision. Where a group makes the decision, the process is too slow for most business situations. For the effective business process, group decision-making requires that an individual have the authority and responsibility to make the decision after consolation with the appropriate group. It is not always clear how that individual, the leader, evolves in the group decision-making process.

The term "fork" is used in the development of open source code for a software project, where developed code is used as the base for a new software project. To start the new project you fork the existing code by making a copy and work on the new software from there. The fork concept is analogous to the time when leadership can make the difference in the business decision-making process. If you have watched, listened, asked questions, and learned, as well as refrained from stating your belief rather than cultivating a group concept, then when something new becomes your vision, that background can allow you to fork (use that which has been developed) and take the team with you to build the new vision upon it. Great leaders recognize when to fork, and, having built trust and credibility with the team, bring the team to a place where they would not be were it not for the leader.

The leader must also manage the risk. In a business where dynamic planning is in place, where decisions are made through a group decision-making policy and immediately communicated to all involved, risks can be handled through revisions of planning when the need becomes apparent. As with most things in life, the greatest rewards go to those willing to take reasonable risks. Reasonable risks are those where actions can be taken to revise and correct based on monitored results. It is also in the art of the leader to see the fork opportunity, to understand the risk, and manage the risk.

The leader who waits for the fork, acts on the vision of the opportunity, has the trust and reliance of the team, and manages the risk can realize exceptional business results.

Most businesses are founded on assumptions. Founders with a common purpose initiate the business, and, upon its profitability, assume that all owners share the same goals and interests. What do you know about your co-owner's plans for the business? Have you simply assumed that all of the other owners have the same interests and desires? What if this assumption is incorrect? When the assumption that all owners want the same thing proves to be wrong, there is inevitable conflict. To prevent this conflict, owners need to communicate about their values with respect to the business and develop strategic plans which honor those values. The understanding between owners should rest on conversations and not assumptions. Those conversations need to be about values with respect to the business.

A value is a normative principle that informs and shapes thoughts, desires, feelings, choices, and behavior. A value is not a preference, but an enduring and essential attribute of character. Most owners are only vaguely aware of the standards and concerns that compose their personal value systems. Most unthinkingly embrace an array of normative standards to which they assume most caring and intelligent people adhere. To bring clarity and order to the owner's personal value system, the owner should reflect on the circumstances and experiences that have informed and shaped the owner's hopes, fears, and perspectives. The product of this reflection should be memorialized in writing. The writing should be reviewed and altered from time to time to reflect changing circumstances and perspectives. In addition to not thinking about their personal values, most owners have given little thought as to how the business they own fits with those values. Few owners have consciously attempted to resolve the tension that inevitably arises when their personal values conflict with the conduct of the business.

The owners as a group provide the strategic planning for the business. Each owner should understand his or her value system and be able to bring an articulation of that value system into conversations regarding the conduct and ownership of the business. The discussion about owner values should establish the goals for the business. Owners will not all have the same values, and the goals for the business will have to respect those differences. When that is not the case, the discussion should turn to how can the owners go forward given the differences in values. While this may result in a separation of interests involving a change in the business, it will avoid a conflict or dispute involving a traumatic event and damage to the business interests of the owners.

Where there is no dialogue about values, realistic goals not set, and strategic planning not done, then when initial assumptions are found to be inaccurate, emotional responses will create an environment of conflict between the owners and traumatic disruption for the business.

To begin to have a dialogue with co-owners about value, ask all owners to reflect on the circumstances and experiences that have informed and shaped the owner's hopes, fears, and perspectives. Create opportunities for the owners to articulate their value to one another. Based on those discussions, focus on the goals for the business such that those goals fit with the values of the owners. If you need help implementing this agreement among the owners, visit https://btcllc.net/shop.

Often the primary long-term goal of business ownership is to increase personal wealth to achieve financial independence. Wealth can consist of non-financial assets valued to show a high net worth. But financial independence requires liquidity. Liquidity is achieved when readily available liquid assets are held at a low risk of loss. Non-financial assets such as home equity and business equity are non-liquid and held at risk, as are financial assets such as stock and bond portfolios. How does the business owner reach this goal of financial independence? The simple and direct answer is to sell the business interest to convert non-liquid business equity to liquid assets.

The more you prepare to sell your business, the more it will be worth when the business interest transfers. This perspective is prior diligence, a unique method for analyzing your business. Manage your business to be ready for sale at the highest value.

Governance of businesses generally consists of two structures: hierarchical (pyramid) or nonhierachical (flat). Can it be determined that one structure is more conducive to effective decision-making than the other?

The hierarchical structure is the traditional legal governance structure of the corporation. That structure creates an overall executive officer (president or chief executive officer), a vice president, secretary, and treasurer. Other officers are added to the structure for administration of other common departments such as human relations and technology. Below the officers in the structure are managers who are charged with operations and report to the officers. This structure may be multilayered and quite complicated.

Nonhierarchical structures generally use teams, where each team has a responsibility or project. Team members are encouraged to self-direct and to be innovative. There are few levels of authority. Multiple teams can make organization and coordination of teams difficult. Advocates of nonhierarchical structures believe the structure makes businesses more adaptable and able to act quickly. Examples of businesses using a nonhierarchical structure are Google, Zappos, Altassian, and Netflix.

Most would immediately doubt the wisdom of a plan to place a building on the top of an active volcano. Yet, a majority of businesses consisting of more than one owner are built on a base that will erupt like a volcano. As with the volcano, the exact time of eruption or how much lava will flow cannot be predicted, but a major disagreement among business owners is probable and can erupt to destroy a business. There are things that can be done to keep the eruption from occurring.

If you have built a business on the volcanic base of unexpressed assumptions and inadequate communication, all is not lost. Of course, if you do nothing, then the passage of time and the disruption from a major disagreement will determine your fate. But you can prevent a future disaster by starting to communicate with your fellow owners. This takes serious work from each owner, but that work will strengthen the base for the business. If after reading this you need help to start, guidance can be had for as little as $100 (https://btcllc.net/shop/).

The effectiveness of the decision-making procedure of a private business is dependent upon the ability of the owners to articulate their values. Many private businesses do not have specified decision-making procedures, and the idea of expressing values is not commonly recognized. Owners can develop the ability to articulate values, first to themselves and then to one another.

Where values are not defined or articulated, owners will still have a sense of what they are. Decisions (express or implied) that conflict with the owner's values will not seem right and not be satisfying to the owner. Most owners are only vaguely aware of the standards and concerns that compose their personal value systems. Most unthinkingly embrace an array of normative standards to which they assume most people adhere. Few have consciously attempted to resolve the tension that inevitably arises when those standards and concerns conflict with the expressed or unexpressed decisions of the business. That tension can lead to unresolved business disputes that tear the business apart.

The owner agreement – that understanding between multiple owners of a business – is the fabric of the business and is the basis of how the business may be sustained. This owner agreement fabric has many threads consisting of the communications between the owners. These communications, including oral, written, and experiential, are woven together to support the decision-making to operate and sustain the business. There are not many businesses that can sustain long-term operation where there is conflict among the owners.

The time-change continuum at once motivates a business to plan and prevents the planning from being effective. In a competitive marketplace, where change may be exploited for economic advantage, to sustain profitable performance over time a business must change. For the purposes of this discussion we simply recognize as axiomatic that as time continues, change at some variable pace will also continue. We can call this the time-change continuum.

A business can respond to the time-change continuum in two ways: it can anticipate the change or it can react to the change. Business writers have used the terms "proactive" and "reactive" to describe these actions. A business that is proactive plans for a perceived change and may therefore deal with the change when it occurs with more effectiveness. A business that reacts to change may not act quickly enough to sustain profitable operation.

It is not what you say, but what you do. Many founders of businesses who are now owner-managers of the business they founded, will tell you they want to make their businesses more valuable. But is that reflected in the actions they take? There are established actions business owners can take to make a business more valuable. What do these actions tell you about whether you really care about making your business more valuable.

Many who analyze and comment upon management leadership (myself included) praise the humility of a leader as a desirable trait. But in viewing and discussing employee behavior, the trait is less covered. We see frequently the arrogant business owner who looks in a mirror to plan and ignores the opinions of others. If arrogance is harmful to business prospects in management, can it also be harmful if prevalent in employees?

The indicators of the presence of arrogance in employees are subtle. They are often difficult for managers to perceive. One common indicator is the setting of areas of control. An employee may view an activity or an area as solely within the power of that employee and protect that territory or area of control. The employee may criticize management decisions, pointing out errors obvious to those working with the employee. The employee may characterize the employee's role as doing his skill as long as is convenient and then perhaps going to work elsewhere where that role is valued.

What the arrogant employee does not do is act as if the employee is part of a team with a vested interest in the success of the business. How can the arrogance of an employee be changed?

In the early morning hours, right after dawn, the motorist looks through the windshield to see nothing in clear focus with a gauzy, puffy whiteness allowing forms and shapes but little else until the car comes closer. The trip must be made, so the motorist sets a speed that allows room to brake for the unexpected but also is adequate for the required time of arrival. There is some tension in that calculation. The fog heightens the effort of perception. Different lighting is tested: brights-on, low beams, and fog lights. The passenger is concerned and alert – the other set of eyes on watch with the driver. Shapes and forms resolve into focus as the forward progress of the vehicle finally reveals the view of the road. Because of the fog more attention is paid to the act of driving, the view of the road is more focused, and the discussion between passenger and driver is about the road and what it is discernible. The driver thinks, "if I drove like this all the time, I would be a much safer driver. Even when it is clear, I should drive as if there is fog."

For the business owner the analogy of the driver in fog is apt. Although the business owner does not see fog, there are important things not perceived because of elements keeping the owner from seeing the reality of the business and being too late recognizing threats to the success of the business.