Recently I wrote an article entitled “Have The Habits of Highly Effective Leaders Changed?” in which I set forth the 6 new habits of highly effective leaders as described in the book The Elastic Enterprise. If you missed that article, you can view it online at http://main.omanobserver.om/node/85755.
The 6th new habit is called de-risking and it’s where the new leader responds to the global competitive economic changes by seizing radical adjacency opportunities; essentially taking the company into areas where they have no core competency. This strategy requires leaders to be learning on a daily basis so they can develop an overall knowledge of how the new options, alternatives and markets can be integrated into the business. Let’s get a better idea of how this could work by examining Forrest Lucas, the founder of Lucas Oil Products and how he got started.
Raised on a farm in Indiana, he left home at 15 and worked on a small cattle ranch. He married at 17. He always had a fascination with trucks and bought his first semi when he was 21. He started working for a moving and storage company making about $14,000 a year. Gasoline was just 25 cents a gallon. He drove day and night while studying the people whose furniture he was moving. They were CEOs, generals and admirals. He noted that all of them who made it to the top were nice people and incorporated that into his philosophy. To this date, all of his employees are nice.
He had planned on driving and saving money to buy a gas station so he could spend more time at home and raise a family, but he ended up divorced after 11 years. He purchased more trucks and ran his own business. In the 1980s after the trucking industry was deregulated and his move to California, he realized that he needed better lubricants for his trucks. He bought different additives and studied how to make them. With an open mind, he tried difference things, got a private blender and soon was selling an additive at truck stops. He found a secret ingredient and suddenly the business took off.
At that same time, the transportation company cut his rates for his best customer to the bone. It was fortuitous as he sold his 8 trucks and went full-time with his oil business in 1989. He was faced with new challenges because few want to be the first to try a new product. Further he had to determine what price to charge and how to sell it. His biggest fear was that the big oil companies would cut him out of the business. They too had additives, but they didn’t have his mechanical knowledge.
In the beginning they used racecars to get people to look at the product. For $500 he started marketing by painting LUCAS OIL on the side of a racecar. By 2003 they built a second plant in Indiana and had to buy a railroad (Lucas Rail) in 2006 to get the product out. It’s just 13 miles of track, but Lucas thought there must be companies with railroad cars that needed to park them somewhere. Soon he was turning a profit renting rail parking space and got his products hauled away in the bargain.
By this point the company is making truck oil for themselves, and racing, boat, motorcycle and hydraulic oils at different weights to accommodate the North American market. In 2006 he purchased the production company that had been making their commercials (Lucas Oil Studios), as he wanted to get into motor sports and lifestyle programming; and he wanted the naming rights to the shows and banners. He purchased some speedways too.
In 2008 he purchased the Indianapolis Colts for the naming rights for Lucas Oil Stadium. Last year he purchased MavTV, an independent cable station so the company will always have a programming space if other networks decide to drop motor sports. Lucas said, “Being the little old do-it-yourselfers we are, no one can take us out that way.”
When asked about the future, the 70 year old said, “We are already looking 10 to 20 years ahead. For example, we’ve been working with many race teams, including Chip Ganassi Racing, on light-oil formulas and friction-free greases. We started making synthetic diesel oil for an oil-drilling company in northern Canada and are now selling it to a mining company in the Congo. We’re made in America and sold to the world.”
Lucas’s philosophy is to empower people to go ahead and do things themselves. He believes that way they can make more good choices in a day than many corporate giants. As a result his company has grown through the recession, particularly since most people are thinking about maintenance as they are keeping their cars and trucks longer. Because of the path that Lucas grew his company, he now enjoys knowing that more than 90% of what is asked for by brand name in the auto parts industry will be something his company has produced.
Each move that Lucas made throughout his years in business has been to de-risk or to reduce the odds of the big competitors derailing his company; yet each of these adjacency opportunities catapulted his business several levels.
Whether you are a leader of a company or an individual building your career, applying this habit will strengthen your value and open up bigger, better opportunities in the future.
Susan Bagyura, a leadership coach and author, works with leaders to inspire success from the top down. The book is available at Family Bookshop in MQ. The audio to this article may be heard at http://www.susanbagyura.com/audio/lucas.html.
I frequently hear that every one of us is selling and we need to understand how to sell. Actually I think that we are all always negotiating and it’s critical to have good negotiation skills and to set negotiation boundaries when others have an impact on whatever is being negotiated.
Exploring what’s happening in a couple of businesses right now, I’ve seen one group doing a really great job of bringing in the business. However when matters are looked at more closely, valuable profit margin was left on the table. Business survival is largely dependent upon understanding and working to the profit margin that you need to stay in business, but even more importantly, to grow and serve your customers.
Sometimes the salespeople in their desire to close the business will automatically drop the price without thinking about or having a discussion on the consequences of that move. Further the customer may have only asked a question for clarification and the salesperson dropped the price.
This happened in a recent business transaction that I had with a vendor. After reviewing their invoice, I called to get a better understanding of what they were charging. Immediately the vendor knocked $1,500 off the price. I happily took the discount, but I had no intention of asking for it.
Since it’s important to keep the profit margins at a certain level, there would be other opportunities for negotiations such as the delivery time frame, the quantity, the packaging, etc. Look for how the business can be scaled up whenever a concession is made or discussed.
Recently a consultant I know had submitted a training proposal to a major company in Houston. She told me that the company asked for a discount on the training and my friend didn’t know what to do. As we discussed it, she said she had already given them the best price that she possibly could.
I gave her another viewpoint when I said that’s what they want to know. They don’t want to overpay and they also don’t want to squeeze her so she’s not profitable. It’s their duty to ask if there could be any movement on the price, but it doesn’t necessarily mean there has to be movement in order to secure the business. She successfully closed that business without having to make a concession on the price.
What happens when sales does a good job of bringing in the business, but the technical staff, customer support, warehouse, etc. make costly and unnecessary errors? Do they automatically decide to give products or services away to appease the customers? When this happens, the profit margin has just been reduced.
A few months back while waiting for my household shipment to arrive in New York, I rented some furniture for the 2-week gap. When the furniture was delivered, the table was missing. I called the company and they said “Sorry. We will deliver it the day after tomorrow.”
This was completely unacceptable to me because I was paying a month’s rent for 2 weeks and I wanted what I ordered as agreed. He then offered to take it off the bill. There goes some profit margin. I called the salesperson and she pulled out the stops and had the table delivered to me that evening and saved the deal.
Susan Bagyura, leadership coach and Author of The Visionary Leader, shows leaders how to improve their profit margins better, faster and easier than they ever dreamed possible.
I remember back to the days when I first started my selling career. When I envisioned going into sales, I had a very silly idea that I only needed to be sweet and helpful and people would buy from me. Nothing could have been further from the truth. As I had burnt my bridges, there was no going back; I was forced to figure out how to sell.
I studied other people, read a lot of books, attended seminars and went to all the training that I could. Every one of these things benefitted me in my career, but I truly believe that the training that I took on negotiations catapulted me to another level.
Four out of 5 sales leaders and professional will drop their price or give anyway something for nothing when asked. If this is happening in your business, then it is costing you valuable profit margin. If your company isn’t profitable, then it cannot give the services that customers expect or hire the caliber of people you require to grow.
Recently I agreed to try some products under a 30-day trial that would automatically be billed if I didn’t cancel. While doing some banking services, I saw that I had been billed prior to the 30 days. I called the company and the customer service person told me that they bill on 28-day cycles. When I asked how they could bill me 28 days from the date of order, not even the receipt of the products, she said she would cancel that bill and I could have another free 30 days.
It’s interesting because actually I was perfectly happy to pay for the products then and on an ongoing basis; I only wanted it to be done as it was agreed. By just questioning why I was billed early, the company lost revenue. This is an expensive, reactive approach when the company should instill a strategic, proactive approach.
Where do you start? Take a look inside your organization and look at every department that impacts sales. Each department needs to work together to establish boundaries for sales, service and support. Review the terms that you establish with customers and make sure that you operate within them. Understand what you can and cannot do in your negotiations because there are many creative ways to package an agreement that goes beyond money and quantity.
Susan Bagyura, a leadership coach, shows leaders how to improve their profit margins better, faster and easier than they ever dreamed possible. http://www.thevisionaryleader.com
All too often when I start working with a new client, I find that the actions the leader is taking are incongruent with the strategy or the results that they want to see. When you’re betting the future of your business, it’s imperative that your business practices are in harmony with your strategy. In recent years, companies have been focused on cutting costs without recognizing that they are making strategy decisions at the same time.
Two years ago, Cisco purchased the Flip video recorder from Pure Play Technologies for $590 million signaling a desire to play a bigger role in the consumer products industry which equated to 2-4% of their revenues. Soon after, when the market was moving towards multi-purpose devices like the smartphone, the Flip decision became a flop.
While in Europe recently, I was watching a piece on CNN about the university students in Tunisia. The students talked that things are much better after the uprising, but then they said that they are worried for their future because they wondered what jobs would be available for them when they completed their education.
As I thought about this news clip, I wondered why university students are worried and waiting for someone else to create something for them to do. I mean after all, they have been given a great opportunity to expand themselves through higher education and now have a greater awareness in at least one field. Why aren’t they thinking and masterminding how they can invent, create, start or at the least somehow see ways that they can impact the business world based on their new knowledge.
I just received an email from someone, who a mere two weeks before moving from one continent to another, found out that she will have to have major surgery. This will be her 4th surgery of this type and it will be in the exact same place in her body as she had it last year. In her message, she quipped “So much for thinking positive.” It got me thinking—does positive thinking really work?
As I thought about it, another person came to mind. He was awarded a huge contract last year to do his dream project. At a time when everyone should be happy, the subcontractors started causing problems. Time was slipping by arguing over unimportant matters instead of getting started on the contract. When I first heard about the problems, I gave some suggestions of what to do to turn things around. One of the main suggestions was to quit talking about the problems and the issues with the subcontractors and instead start focusing his mind and efforts on the desired outcome.
There are 6 leadership competencies that involve relationship management. By improving in one or more of these, a leader will increase their rate of success.
The inspirational leaders can be charismatic, compelling speakers and move employees along in a shared mission. They’re great examples demonstrating the behavior they want others to exercise.
The leaders who focus on developing others are genuinely interested in and good at developing other people’s skills. Natural mentors, they coach others to understanding their strengths and weaknesses.
It seems that most of us have at one time or another thought about leaving a job and starting a business. Does it sometimes sound like it would be much easier? Or when the big order comes in and you think, “I’m delivering the service/product for my employer. If I had my own business, I could have all the revenue.” Have you ever watched others in your company that don’t have your skills or knowledge, but have a higher position than you do? Or is it the independence that attracts you?
The answers to these questions may prompt you to start thinking again about starting a business; but understand this, there’s a whole lot more to consider before quitting your job, taking your savings and registering a business. In fact, many people think registering an entity is actually starting a business but that’s just the legal formality and nothing more. The shocking statistics show that as much as 85% of new businesses fail within the 1st year. How does this happen?
Dr. Heidi Grant Halvorson taught us in the reprint last week that the biggest differences in results occur when the goals are about being good rather than getting better. As she said, “Where being good is about proving how smart you already are, getting better is about developing skills and abilities — about getting even smarter.”
What would be the outcome if you, as a leader in your organization, focus and encourage your employees to try harder; to get better at their position by being open to developing new skills rather than trying to be good by not making mistakes? Encourage people to stretch and go beyond their comfort zone. Allow mistakes to happen without recrimination and together look for the learning as a way to improve for the future. People will naturally hide or cover up mistakes if the message is “don’t make any mistakes” rather than being open about an outcome when the message is “how can we improve?” or “what can we do differently next time?”
This following article written by Heidi Grant Halvorson, PhD appeared in the Huffington Post. Although it is directed towards children, it contains leadership wisdom for everyone.
“Understanding why some children dig in and work hard when faced with something new and challenging to learn, while others get anxious or give up, has been a focus of research in psychology for decades. Most people assume it has a lot to do with intelligence, but that’s surprisingly wrong. No matter how high your I.Q. is, it says nothing about how you will deal with difficulty when it happens. It says nothing about whether you will be persistent and determined, or feel overwhelmed and helpless.
