The Coach's Corner

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

The Ultimate Shoe Dog Story (Nike)

July 15th, 2019 // Tom Doescher //

Tom Doescher - Doescher Advisors

Once again, I’m embarrassed to admit a bias I’ve had for years. I’m not sure exactly when it started, but it may have been when Nike started selling clothing with their name on it — and it wasn’t cheap clothing. My reaction was, “I’m not going to pay to advertise for those guys!” And from that and other observations, I developed a negative attitude about what I perceived as arrogance, to the point where I’ve boycotted Nike shoes and clothing for decades.

I just finished reading the Nike story as chronicled by its founder, Phil Knight, in his book, Shoe Dog. I know what you skeptics are thinking: “He fell for the story.” Well, maybe I did, but I’ve read a lot of books like this, and I would suggest most tend to eulogize the founder/CEO, and even have a tendency to rewrite history. This book surprised me. If anything, Phil Knight seems to understate his personal impact on Nike and instead praises many others for their unique contributions.

Because many of us have observed Nike from its humble beginnings to its current $134 billion market cap, we might draw the conclusion that “it just happened.” Many of you have started your own businesses or have been involved from the beginning, and I found this to be a very real, at times painful, success story. It reminded me of practice units that I was involved in creating and building. Many years later, newer team members had no idea how difficult our journey had been. So, I could relate to Knight.

Some fun facts/stories:

  1. Knight ran cross country at the University of Oregon for the famous Coach Bill Bowerman — who was Knight’s first business partner, the primary shoe innovator, and a close mentor until his death in 1999.
  2. One of Knight’s colleagues came up with the name Nike, in honor of the Greek goddess of speed, strength, and victory. Knight didn’t care for it, but had no other option to offer.
  3. The famous Nike Swoosh was designed by a young artist at Portland State University for $35.
  4. Knight is an introvert who loves his alone time.
  5. Knight is a CPA who, while teaching accounting at Portland State University, met his wife, Penny, a student. The couple recently celebrated their 50th wedding anniversary.
  6. Due to shoe endorsements, Knight has developed close, personal relationships with many of the greatest athletes of the past five decades.
  7. Unlike many other company founders, Knight avoided going public (and cashing out) for years.
  8. Knight reported: “Often the problems confronting us were grave, complex, and seemingly insurmountable; and yet we were always laughing.” (Editorial comment: This was my exact experience working with my former partners, Ken Kunkel and Bruce Berend, in the ’70s and ’80s — and those are some fond memories.)

Here’s a sampling of some of the major obstacles Knight and his team had to overcome in a span of almost 20 years:

  1.  While Nike had significant profitable growth almost every year, the bad news is that this increased growth and expansion required more inventory, so Nike was always cash poor. Sound familiar?
  2. In the early years, Nike Tigers from the Onitsuka shoe company, based in Japan, were the primary shoe sold. Nike was the exclusive distributor for the western U.S. At one point, Onitsuka informed Knight that they were going to change to one U.S. distributor, and it wasn’t going to be Nike. Knight asked, “Why not Nike?” to which Onitsuka answered, “You do not have an East Coast presence.” Knight replied, “Yes, we do.” Instead of losing their primary shoe source, Nike became the company’s exclusive distributor in the U.S. Sound familiar? Just like many of you would do in similar circumstances, Nike quickly opened an East Coast office.
  3. To avoid dependency on one source, Nike designed a new shoe and identified a new supplier in Japan. Onitsuka discovered the plan, immediately terminated their agreement with Nike, and filed a lawsuit that went to a full trial. Sound familiar? I know a number of you have spent a lot of money on lawyers defending yourself from unfair, baseless lawsuits.
  4. On occasion, athletes whom Nike had under contract would appear in a competitor’s shoes (including at the Olympics) because they were offered more money. Sound familiar?
  5. One of the greatest runners in modern history, Steve Prefontaine — who wore Nike shoes exclusively — died at age 24. Sound familiar?
  6. As Nike grew and cash continued to be tight, the company’s primary bank of over 10 years fired Nike and froze their accounts without warning. Sound familiar? It gets worse. The bank suspected fraud, so they notified the FBI. Yeah, more wasted time and money.

If you ever feel these same types of pains, you might want to grab a copy of Phil Knight’s book. I promise you’ll be encouraged.

Fearless

June 16th, 2019 // Tom Doescher //

Tom Doescher - Doescher Advisors

is a 2012 book about Adam Brown, a Navy Seal. I thought I was reading it for fun, due to my fetish about Seals over the past decade — but wow, was I wrong. Yes, it was fun and entertaining, but it was way more than that.

I believe Brown is a role model for having a clear mission (he knew his “Why”) and for staying laser-beam-focused on it.

First, a little background. Brown grew up in a loving, intact Christian family in Arkansas. He was an athlete and well liked in high school. Sadly, he lost his way after graduation and became addicted to drugs. His life got pretty ugly and, near the bottom, he attended a Teen Challenge drug treatment center. Along the way, he decided he wanted to become a Navy Seal and serve his country as a patriot warrior.

Before reading Fearless, I knew that becoming a Seal was a rigorous process, but it was more complex than I realized. Brown, however, was determined to join their ranks. Here are just a few obstacles he had to overcome:

  1. During his dark drug years, Brown was convicted of several felonies and spent time in prison. This was a huge deal-breaker that he miraculously overcame.
  2. Near the end of his Seal training, he became blind in his dominant right eye in a training accident, but he was able to train his non-dominant left eye and eventually passed the precision sniper marksmanship tests. More importantly, he convinced the Navy that being blind in one eye wouldn’t be a liability to his fellow warriors.
  3. During an early deployment in Iraq, he crushed his hand and severed all his fingers in a Humvee IUD accident. His fingers were reattached on his dominant right hand. Still, he learned how to use his left hand and, once again, passed the rigorous marksmanship training.
  4. Brown was always the one to volunteer for the toughest assignments and, as the title of the book reflects, he was, indeed, fearless.

If you’re struggling with your “Why” or staying on your “Why,” I would strongly encourage you read Fearless for motivation. I would say that focus is a common challenge for many entrepreneurs, and I think Brown is a poster child for being single-minded.

A postscript: I found Brown’s reporting of the ups and downs of his Christian faith and his lifelong struggle with his drug addiction refreshingly candid and realistic.

Should You Hire a COO?

April 8th, 2019 // Tom Doescher //

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.

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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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