Janice DiPietro, CEO, Exceptional Leaders International
As CEOs we have all felt how lonely the role can be and the multiple and often conflicting demands placed upon us. This becomes amplified as our various constituencies of stakeholders begin the chant relative to the New Year.
What is our plan?
How will we ensure a successful 2016?
How do we plan for the unexpected?
There is no single or simple answer. As I look at my own business and advise middle market CEOs, this end of year chant can be heard loud and clear. So what can and should we be focusing on as 2015 comes to an end and we look ahead to 2016. Like many things in life there is no response that ideally fits us all. Let me suggest the following as guiding principles:
1. Develop a Strategic Plan for 2016 – As difficult as it is to predict these days what the next year will bring, there are indications that growth is likely to remain modest for many businesses. Our markets and competitors operate on a global stage; terrorism and geopolitical unrest somewhere in the world is our new norm; U.S. monetary policy is poised to increase interest rates for the first time since June 2006; and as if this wasn’t enough we are entering an election year.
So how does one meaningfully plan for 2016? First, ensure you understand where you are today. Be in the market. Speak to your key customers about their experiences in working with you, what they value and need the most, and their plans for 2016. Listen to your internal leaders and team members as to their perceptions of where your Company is today – what is working and what is not. Understand your market intimately, including what is changing from a competitive standpoint, what new technological advances are likely to impact the products and services you provide or will impact how you conduct business, and what new initiatives in priority order should be launched in 2016 to move ahead.
The last several years have seen many middle market companies hunker down: cost cutting wherever possible, improving efficiencies, and remaining very lean even as the economy improved. This necessary improvement in productivity must now be coupled with growth. Running lean is not enough and not planning for proactive revenue growth in 2016 is a plan to fall behind your competition. As the economy and world stage remain uncertain, we must look to embark on a minimum number of growth strategies that can be expanded as experience dictates. Consider an expansion of an existing product line, a new product launch, geographic expansion, but not necessarily simultaneously. As in any effective business endeavor success lies in the details. Link the overall business strategy to detailed action plans for each operational area, with expectations, accountability and time lines well-articulated. All of this should be mapped to a detailed financial plan and key metrics.
2. Mitigate Risk – As you plan for 2016 understand what the major risk factors are that could impact your business and what actions can be taken to eliminate or mitigate their impact. Many risk factors are outside our control, but not all. Risks that should be top on everyone’s list include: technology risk and the impact of an increasingly “digital world” on your business; data risk including security breaches – regardless of the size or nature of your business; “brain” drains as the baby boomers exit the workforce; an emerging war for talent and the impact of the millennials not only as your employees but increasingly for us all, as your customers.
3. Reassess Leadership– One of the most difficult yet critical issues facing CEOs is the question of whether the leadership team that helped you get to where you are today is the leadership team that can capitalize on the opportunities and address the challenges your organization will inevitably face going forward. How aligned is your executive team and what is the quality of decision making? Are you building organizational depth and developing successors? Even if your Company possess a great strategy, robust markets, and exceptional products, but your leadership team is not aligned or does not possess the competencies you need, you will not optimize your Company’s potential. We have all observed great leadership teams drive exceptional results with less than stellar market conditions and products. Personally I have not experienced or observed the reverse.
4. Expand your Banking Relationships – Although the Federal Reserve has indicated that a December hike in interest rates should be expected, the frequency and magnitude of future interest rates is still unknown. To prepare for interest rate increases and credit becoming tighter do three things. First, complete scenario planning so that you know the impact of rising interest rates on your business. Consider this impact as you develop your plans for growth. Second, continue to develop your relationship with your existing bankers. Keep them well informed on how your business is doing and establish trust and a truly personal relationship. This can only help when and if you hit some speed bumps in the year ahead. Lastly, expand your banking contacts. Now is the time to foster additional banking relationships so that when you need additional financing going forward you are already a client of the bank. As markets become tighter it is easier to receive financing from your existing lenders than it is attempting to establish new relationships when you most need the support. If you have a strong financial leader they can take the lead on these three initiatives. However, as CEO you need to understand the impact of interest rate increases on your business and personally get to know the lending and investment community so that when you need them the personal rapport has already been established.
Use this time of year as a period of reflection- celebrate successes, learn from mistakes and forge the path forward with your team. The journey will certainly be an exciting one.