The Coach's Corner

Should You Hire a COO?

April 8th, 2019 // Tom Doescher // 0 Comments

Tom Doescher - Doescher Advisors

Probably one of the more common topics discussed with clients involves whether or not they should consider hiring a COO. Actually, just yesterday, one of my clients said, “I’ve built this company to a size where I need help managing it.”

A few years ago I read Make The Noise Go Away: The Power of An Effective Second-in-Command, by Larry G. Linne. Since then, I’ve recommended it to several clients. Just recently, I read Riding Shotgun: The Role of the COO, by Nathan Bennett and Stephen A. Miles. In their 2006 book, they observe that not much has been written about the role played by the COO.

Although I’ve been involved for years with hiring and working with COOs, I found the book to be a deep dive into the subject. Bennett and Miles appropriately point out that COOs are hired for different reasons. Unlike other positions, such as CFO or CIO, the COO’s role needs to be tailored to the situation. For example:

  1. Is the COO’s role to put an organization together around a young founder with a unique product/service who has innovative type technical skills and is a successful new-business developer and client-server?
  2. Is the COO brought in to run the organization (inside leader), while the CEO is more focused on strategy and new acquisitions?
  3. Will the COO become the next CEO?
  4. Is there a transition underway from one generation to the next, and is the COO responsible for grooming/developing the next generation so someone is prepared to lead the company as CEO?
  5. In anticipation of the sale of a company, is the team bringing in a COO who would be qualified to lead/run the company after the sale?
  6. Is a COO needed to assist a tired founder/CEO who would like to go on vacation and not have to spend a lot of time dealing with problems back home?

The authors offer some challenges faced by COOs in their jobs, and provide Q&A interviews with successful CEOs and COOs. Here are some of the topics they address:

  1. Developing a trusting relationship with the CEO. (Editorial comment: When advising clients, I have often said the CEO-COO relationship is similar to a marriage.)
  2. Developing a workable meeting and communication cadence that works for both executives. (Editorial comment: In this case, they’ll probably need more touchpoints early on.)
  3. The importance of clearly defining the COO’s authority and making it clear to the other executives. The authors offer some practical warnings for those instances where the COO position is new and the other executives, who previously reported to the CEO, now report to the COO. This poses a distinct risk of the executives going around the COO and continuing to report directly to the CEO. (Editorial comment: In my experience, this is extremely difficult, and the CEO and COO will need to work closely together to achieve the optimal situation.)
  4. Establishing boundaries to avoid micromanaging by the CEO, whose behavior needs to change.
  5. The fact that the COO will need to keep their ego in check.

This may sound self-serving, but I think getting outside help in hiring and onboarding the first COO will increase the chances for success. In my experience, it’s very emotional for the CEO, especially if that individual is also the company’s founder, and the outside advisor can help the CEO work though it. Obviously, Doescher Advisors would love to help!

Just Ask for the Business, Please

March 25th, 2019 // Tom Doescher // 0 Comments

Tom Doescher - Doescher Advisors

In writing the simple fictional narrative entitled The Asking Formula, author John Baker hit a lot of nerves. His book is all about the third phase of new business development, Closing, which follows Finding and Building a Relationship with a new prospective customer/client. See previous blog post

As a prospective customer, we’ve all had an experience where we think, Just tell me how much it costs, and then I’ll decide. In this short (99 pages in large font) book, the main character shares his simple formula for Closing. To be honest, I would be embarrassed to relate the many actual stories of instances where my colleagues and I should have used his simple formula.

I won’t ruin the book, but I will share the first two steps:

Step One — Know what you want. (Editorial comment: The best new business development professionals I know always are specific about what they want to accomplish in every meeting with the prospective client — which might even be to have the next meeting with the decision-maker.)

Step Two — Ask for it. (Editorial comment: Don’t laugh; it isn’t as easy as it sounds. I was fortunate because my mentors were so good at teaching and demonstrating this simple action.)

Baker states that “Directness is a rare thing these days.” Once again, I’ll quote my dad, who said, “Ask. What is the worst thing that can happen?” I also remember one of my successful new business development colleagues, who would say, “My goal in this meeting is to get to the ‘No.’ ” Once again, Baker and other sales gurus would say that most people spend too much time with prospects who are never going to purchase anything from them.

I have a suggestion: Consider buying multiple copies of his book and have your new business development team read it. Then, facilitate a discussion and maybe do some role-playing.

“Moneyball,” Part 2

March 11th, 2019 // Tom Doescher //

Tom Doescher - Doescher Advisors

In my last blog, I introduced the concept of “heuristics” and promised I would provide more insight from The Undoing Project, the latest book by Michael Lewis.

So, here’s a brief overview: In the 1950s, Nobel Prize-winning psychologist Herbert Simon suggested that while people strive to make rational choices, human judgment is subject to cognitive limitations, and people are limited by the amount of time they have to make choices/decisions. In the 1970s, Amos Tversky and Daniel Kahneman introduced and labeled the specific ways of thinking people rely on to simplify decision-making.

As I mentioned in my previous blog, this topic is quite technical, but it’s very important for business owners and senior executives to be aware of the practical implications present in the decisions they make every day. For that reason, I would highly recommend reading The Undoing Project.

To whet your appetite, I’ll share two basic examples of the impact of heuristic biases from the book.

Belief in the Law of Small Numbers: The power of this belief can be seen in the way people think of totally random patterns — like, say, those created by a flipped coin. People know that a flipped coin is equally likely to come up heads as it is tails, but they also think the tendency for a coin that’s flipped a great many times to land on heads half the time would also express itself if it were flipped only a few times — an error known as “the gambler’s fallacy.” If I flipped a coin a few times in a row and it landed on heads every time, what do you think it would land on on the next flip? Most people would say it will land on tails, as if the coin itself could even things out. Tversky and Kahneman would say this is a glitch in human behavior. In reality, if you were to flip a coin a thousand times, you would be more likely to end up with heads or tails roughly half the time than you would if you only flipped it 10 times.

Framing–Sensitivity to Negative Outcomes: If I gave you $1,000 and then gave you a choice between another gift of $500 and a 50/50 shot at winning $1,000, what would you pick? Most people pick $500, because it’s the sure thing. Now, how about if I gave you $2,000 and then gave you a choice between losing $500 for sure and a 50/50 risk of losing $1,000? Most people would take the bet. The bottom line is that the two questions are effectively identical. In both cases, if you decide to gamble, you’d wind up with a 50/50 shot at being worth $2,000. And in both cases, if you chose the sure thing, you’d wind up being worth $1,500. When the sure thing is framed as a loss, people choose the gamble. However, when you frame it as a gain, people choose the sure thing.

Hopefully these two examples give you a brief glimpse into heuristics. When you reflect on your business, think about those times when you’re quoting on new work or evaluating your team members. Are you basing your conclusions on objective data, or intuition? As a seasoned businessman, I realize more and more each day how many biases, rules of thumb, and gut feelings I have that are wrong.

Give the book a chance.

The Real Story Behind “Moneyball”

February 25th, 2019 // Tom Doescher //

Tom Doescher - Doescher Advisors

The other day I met with a client who shared information about recent discussions he had had with his team about bidding on new work. He believed the team was more focused on landing the project (top-line focused) than on the profitability. This is a common issue experienced by many businesses, and I was totally following him until he used the word “heuristics.” I made him repeat himself three times (he probably thinks I have a hearing problem), and then I asked him to spell it. To my knowledge, I had never seen or heard this word before. Later he sent me a September 27, 1974, article from the publication Science entitled “Judgment Under Uncertainty: Heuristics and Biases,” written by Amos Tversky and Daniel Kahneman. (Yes, this was over 40 years ago!)

I started reading the article, which my client said was a “little” heavy. Actually, it was really heavy; in fact, it caused me to relive the pain of my college statistics class. The good news is that he also recommended I read The Undoing Project by Michael Lewis, the famous author of three books that became successful movies, including Moneyball. I would be willing to bet that most of my readers are very familiar with the subject explored in Moneyball, which is a great story about the phenomenal success of Major League Baseball’s Oakland A’s that resulted after the cash-poor team changed its selection criteria for baseball players from decades-old traditional methods.

In the introduction of his new book, Lewis cites a very damning book review written by University of Chicago economist Richard Thaler and law professor Cass Sunstein about his original book, and quotes Thaler and Sunstein’s assessment: “… the author of Moneyball did not seem to realize the deeper reason for the inefficiencies in the market for baseball players: They sprang directly from the inner workings of the human mind.” Lewis goes on to explain that the ways in which some baseball experts might misjudge baseball players— the ways in which any expert’s judgments might be warped by the expert’s own mind — had been described years ago by a pair of Israeli psychologists, Daniel Kahneman and Amos Tversky. Lewis says: “My book wasn’t original. It was simply an illustration of ideas that had been floating around for decades and had yet to be fully appreciated by, among others, me.”

It reminds me of what King Solomon said in Ecclesiastes: “…  there is nothing new under the sun.”

I will stop there and, in my next blog, I’ll attempt to summarize The Undoing Project, which does a wonderful job of explaining and providing practical examples of the dangers of heuristic decision-making. As I read Lewis’s examples, my ears were ringing, recalling situations in the past where I may have made business decisions that weren’t grounded in adequate objective data.

What Is the Key to Leading a Healthy and Happy Life?

February 4th, 2019 // Tom Doescher //

Tom Doescher - Doescher Advisors

Believe it or not, for 80 years Harvard researchers have studied the question of what is key to a healthy and happy life. In 1938, scientists began tracking 268 Harvard students to try to determine the answer, and today the Harvard Study of Adult Development is still working on the project with the remaining 19 students, who are now well into their 90s. I will let the current study director, Robert Waldinger, share with you their surprising findings in this fascinating 12 minute TED talk.

The Advisor’s Corner

Tom DoescherYou’ll find stories from the trenches, business lessons, and pertinent questions to help you find inspiration, professional growth, and leadership savvy.

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