The Coach's Corner

Archive for the ‘Nuggets and Encouragement Regarding Strategy and Focus’ Category

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!

“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.

Alive at Work

January 7th, 2019 // Tom Doescher //

Tom Doescher - Doescher Advisors

Really, is that possible? To be alive at work? I know lots of business owners who wish their associates would share more ideas and be more creative. In fact, I’ve probably felt that way over the years myself. In his book, Alive at Work, author Daniel Cable offers some suggestions for those of us who want to love what we do.

Before I get to the main subject, I’d like to offer an observation. Let me start with a story. Probably 20 years ago, I had the privilege of hearing the famous MIT economist, Lester Thurow, speak at an executive forum. He said something that day that I’ve never forgotten. He stated that he’s often asked how he predicts the future. To answer those questions, he said he merely looks at what’s already happening, and then extrapolates into the future.

I’ve noticed in the past year or two that many of the “business” books I read make reference to the brain and how it functions. Cable, for example, quotes Gallup research that I’ve mentioned before, indicating that 80 percent of workers don’t feel they can be their best at work and 70 percent say they aren’t engaged at work. According to Cable, the reason for those numbers is the fact that many organizations are deactivating the part of the employee’s brain called the “seeking system,” which controls an employee’s drive and motivation. He suggests that the opposite of the seeking system is the “fear system,” which was created by the Industrial Revolution and is a result of the Command & Control approach to management. Cable goes on to say that when the seeking system is triggered, rather than the fear system, the chemical dopamine is released and employees experience an urge to explore, understand and contribute.

I’m going to stop there, but suffice it to say that treating your associates one way shuts them down and treating them another way causes greater engagement and excitement. Once again, I’m stepping outside of my area of expertise, but I personally experienced what Cable refers to as the “seeking system” and the related dopamine for most of my 40-year career at Plante Moran.

Cable also offers some great examples of companies that have embraced the seeking system approach. I’ve talked about many of these types of behaviors before, but I had no idea that doing the right thing can cause a positive reaction in the brain.

If you’re interested in this subject, I would recommend Cable’s book.

To close, I’m going to provide this quote from the book: “To prompt employees’ curiosity and learning through experimentation, a leader can start with the humble purpose of serving others and being open to learning from employees. When leaders express feelings of uncertainty and humility, and share their own developmental journeys, they end up encouraging a learning mindset in others.”

As I’ve mentioned before, my mentor, Ken Kunkel, has modeled this for the almost 50 years that I’ve known him, and he continues to have a positive impact on the world today.

 

The Stack 9 Hard Questions

December 3rd, 2018 // Tom Doescher //

Tom Doescher - Doescher Advisors

In my last post, I summarized highlights from The Great Game of Business, written by business owner Jack Stack. In this post, I’ve listed nine tough rhetorical questions that remind me of Marcus Buckingham’s 12 (now 8) Questions. Here goes:

  1. What are you personally giving to the people you manage?
  2. Do you spend as much time thinking about your team as you spend thinking about customers?
  3. Do you share your problems, or do you keep them to yourself?
  4. Do you, yourself, operate with an open book? Do you let your people know everything that you know?
  5. Are you getting the benefit of your team’s intelligence, or do you still think you’re responsible for coming up with the answers on your own?
  6. Do your people know what to do without being told, or do they wait to get a list from you? Is everybody working toward the same goal? Does everybody know what it is? Do you let people figure out the best way to get there?
  7. Do you know what gets your people angriest? Have you ever asked them about their frustrations and their fears? What keeps them awake at night?
  8. Have you talked to your team about your own fears and frustrations? Can you let down your guard enough to do that? Are you willing to make yourself vulnerable? Do you have enough self-confidence to take the risk to be transparent with them?
  9. Most important, if the answer to any of these questions is no, do you really want to change?

I’m guessing Marcus Buckingham would love this list.

Consider doing a self-assessment first. Then, have your leadership team members complete a self-assessment, followed by a company assessment.

For those of you who are nervous, I’ll quote my dad once again: “It is what it is.” Take the risk and, if you’re not where you could be, do something about it.

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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