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Common Mistakes Leaders Make

From issues managing cash and people, and a lack of clarity on strategy and values, Advisor to CEOs and Executive Teams Kevin Lawrence talks about the most common mistakes made by leaders of quickly growing companies.

Video Transcript

The most common mistakes? Wow, that's a good one.

Very, very common mistakes are being critical of people's performance, when the people that work for you don't have the right tools - or the right clarity to perform. And the executive, the CEO, will be mad because they're not doing this, but they think they're supposed to do this.

Having no clear transparency on the expectation is very, very common in growing companies -'cause they're growing so fast, there's not enough time to have the systems in place, or they haven't put the time to have the systems in place to have really clear communication. That's why, for each employee, we believe that every employee should have a couple of key performance indicators, or numbers that they can use - so that those employees know, at the end of every day, whether or not they've had a good day - without the person that manages them telling them.

The other thing is that everyone should have what we would call rocks or goals every quarter - tangible goals - so that they can know if they made the right progress on their projects.

Now, we also talk about them having a critical number, so they know the one most important number in their world, at any level of an organization. That's one big mistake.

The second big mistake people make, I see, is not being really, really clear on strategy.

Although they may have one, because it's not clearly articulated, they muffle it or muddle it up over time - and something that was really, really sharp gets dull and then a company becomes just like their competitors.

And then they wonder why their margins slip, and why it's harder for their sales people to sell, and it’s harder to grow. But if you go back five years in time, what they offered was distinct and highly valued in the market – and, over time, it becomes almost commodity-like - and some people call it commodity hell. They get stuck in this commodity hell.

The third biggest mistake I see in organizations is managing cash.  People think that cash is something that the finance people do. "I'm gonna leave that to the finance team."

But every single person in the company makes decisions on what you buy, how you negotiate. Well, most people have a role in negotiating or buying something - and people don't understand the impact of the timing of cash flow versus the profitability of a company.

A lot of executives understand cash flow as a concept, but it's not taken into account in day-to- day decisions.

I had a company recently that negotiated a phenomenal discount on their biggest expense in their company - the biggest raw material they purchased - a phenomenal discount. The problem is that the payment terms went from 60-day payment terms to 15-day payment terms.

That doesn't seem like a big deal, but what it meant is that as soon as they made that deal - as they went through a couple of payment cycles - their bank balance dropped by a few million dollars. Now, it was more profitable, but it just killed their cash flow.

People, and executives in particular, not understanding the relationship between profitability or price, and payment terms or process timing, and how that impacts the cash. And there’ve been many, many times people make amazing decisions for a profit, kill the cash, and then the company goes into distress.

The other biggest challenge - and it fits into one of the first ones - is the leadership team not making decisions around people using core values.

And a lot of people think core values are some corporate fluff - and something your HR department does - but core values is really about having a whole bunch of people, in your company, who see the world through a similar lens as you.

They have a similar belief or operating system, so that makes it easy to trust them, because their natural instincts are similar to yours. And when you have really high performers who don't have that, it's tumultuous in the company.

It's very stressful for people, 'cause it creates a lot of havoc, and it's not 'cause they're bad: it's just that they're running a different operating system. It's like trying to make a PC and a MAC compatible.

Although it's getting better, there are still challenges. The challenge is that when people have these in companies, executives are often really slow to address it, and then it almost starts to undermine the culture of the company. They're not bad people, they're just in the wrong company.

by lawrenceandco

Leadership Secrets to Success

Kevin Lawrence, advisor to CEOs and executive teams, talks about listening to the cues that tell leaders what they need to work on to grow and to achieve success - and then finding the courage to do what scares them most, and the humility to be uncomfortable as they learn something new. The benefits, he says, spill over in unexpected ways.

Video Transcript

The biggest secret I think is, as a leader - and as a person - we're given natural cues of where we need to focus next, and where we need to improve. We're all given them.

I'm just a normal guy, who grew up in a normal suburb, who is fortunate to get to do some really exceptional things with my life. And the secret is that I've been given these little cues of things that I should do, and I should try - and over the years, I've got better and better at just doing them.

But the reason I didn't, initially - and the reason most of us don't - is that they're scary, and they're hard.

Basically, if you just look at all the things that scare you, and make you uncomfortable, and are presented in front of you, when you do them - and you focus on them - things get better.

There's always a way.

There's always a way to work through those challenges. If I look at the leaders that I work with, how do I figure out what they need to work on next?

I ask them.

And they have ideas in their head of what they know would make them better - and make them stronger. The answer is always there, but they're usually afraid, or uncomfortable, to deal with them.

What I've learned for me - for myself - and the way that I've leveraged my own growth: pay attention to the cues of what you need to work on next.

And as a coach: to listen to the CEO, or the leader, about what they know they need to tackle next - and then help them find the tools. And let them borrow a little bit of inspiration or courage from me or someone else, and then get some ideas of how to, from another place. And then just push through in doing it.

Because it seems to be that if we're committed to it - and if it's aligned with doing something good or creating more value - it'll work. But it's about that courage, or taking that leap to do it, cause it's scary doing something you're not good at.

And the best way I ever heard someone say it is - and this is a person who was an expert river rafter: "You know, when you look at people who excel in river rafting, the people who do the best, it's the men who are willing to be a mouse for a period of time - who become the best."

You come in as a man. You have to be willing to admit that you don’t know everything - that you do need help, and you do need some expert guidance.

And if you're willing to be humble enough to let that in, then you'll learn all your lessons - and you can be an amazing river rafter.

But if you come in as a man too proud to admit that you need to learn and improve and, let's say, be a mouse for that few hours, you won't be very good - and you'll get some incredibly hard lessons that will probably make you hate the sport.

That willingness to deal with those things that are uncomfortable and scary will help you to grow - and you need a fair amount of humility to do that.

I guess, in summary, my secret is that the most successful people - and in my most successful moments - go and tackle the things that scare them, and make them really, really uncomfortable.

And it stretches me. But then when you get to the other side, there's no feeling like it, in the world.

You get the confidence of knowing that you tackled another thing - and you get this amazing energy that you spill over into other areas of your life.

And if you don't keep doing that, you get stale. And a stale leader is, well, not very good for a company.

We have to stay fresh, and we have stay challenged.

by lawrenceandco