The Coach's Corner

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

Jobs, Jobs, Jobs

October 7th, 2019 // Tom Doescher // 0 Comments

Tom Doescher - Doescher Advisors

Part of our mission statement says: “Doescher Advisors was founded to help businesses increase profits and jobs …”

After enjoying a very rewarding career at Plante Moran and having the privilege of leading more than 30 global mission teams (and achieving Delta Airlines’ Diamond status by logging over 150,000 Frequent Flyer miles annually), I decided to spend my “next season” advising local business owners. As a free market advocate, I believed the best way to help the world was to help business owners create “great jobs,” especially for the less-skilled workforce. I know you’re thinking “That sounds pretty corny,” but it’s the truth — and, eight years later, I could tell you some great stories.

When I recently read The Coming Jobs War by Jim Clifton, CEO of Gallup, I was encouraged and motivated to continue in this line of work. As you probably know, Gallup is a 75-plus-year-old, highly regarded global polling organization. Clifton’s book supports my decision to combine my business and philanthropic activities into Doescher Advisors.

The following are some fascinating excerpts from his book, with a few editorial comments:

  1. “If you were to ask me, from all the world polling Gallup has done for more than 75 years, what would fix the world … I would say the immediate appearance of 1.8 billion jobs.” (Editorial comment: I know you’re reading this at a time when the U.S. unemployment rate is at a 50-year low, but think about what he didn’t suggest — like peace, democracy, or the alleviation of world hunger.)
  2. Gallup also looks at underemployment, which is at nearly 20 percent. (Editorial comment: We also know that many people have dropped out of the workforce, resulting in a labor participation rate that’s 63 percent down from its peak at 67 percent.)
  3. Very few Americans are aware that small- and medium-sized businesses are responsible for most of the jobs in America.
  4. Don’t allow your local constituencies to look to Washington for support. Free money eventually makes you more dependent. (Editorial comment: I’ve observed this phenomenon all over the world.)
  5. All prosperous cities have a self-organized, unelected group of talented people influencing and guiding them — call them local tribal leaders. These leaders are loyal, highly successful, usually wealthy, respected, well-known people. (Editorial comment: In Detroit, I think of Dan Gilbert, and in Flint, Phil Hagerman.)
  6. Innovation itself doesn’t create sales. Entrepreneurship is the driving phenomenon within the city supercollider. (Editorial comment: In other words, sometimes the innovator can successfully commercialize their idea, but other times, the inventor needs help from someone who can build a business — Clifton calls this person an entrepreneur — around the idea. It takes both.)
  7. Entrepreneurs are the most valuable people in the world, at least as far as the pursuit of economic development, GDP growth, and job-creation.
  8. Approximately 20 percent of workers in the U.S. are actively disengaged. (Editorial comment: I find this statistic very sad, and I actively work with my clients to reduce this phenomenon.)
  9. According to Gallup economic estimates, nearly one in five U.S. managers are dangerously lousy. (Editorial comment: This is another area in which Doescher Advisors spends time assisting our clients.)

Because I work with so many businesses, I’m aware that many of you are struggling to fill openings due to the lack of qualified candidates. Please don’t give up. Hang in there; it’s important that you continue to grow. There are many initiatives to work on this problem, but I’ll save that for another blog.

For those of you who have trusted Doescher Advisors to partner with you, thank you. I promise we’ll continue to do our best!

The Impact of Private Equity Groups

September 23rd, 2019 // Tom Doescher // 0 Comments

Tom Doescher - Doescher Advisors

As I reflect back on my 50 years in the workforce, I can’t think of anything that has affected and impacted businesses, especially middle market businesses, more than private equity groups (PEGs). Most of you know this, but for those who may not, in its simplest form the sponsors of a PEG raise investment monies from pension funds, insurance companies, wealthy individuals, and others. The money is pooled and then invested in the purchase of companies, many owned by their founders. If you own a business, this has created a great avenue for liquidating your investment in your business. Some PEGs will do partial purchases, and a few will even invest without gaining voting control (under 50 percent ownership). For private company owners, it provides another type of buyer in addition to individuals, companies, or going public, which has its pitfalls.

In this blog, I would like to point out one change in commerce that’s a direct result of PEGs: the concept of subscriptions (customer commitments to regular monthly payments, often automatically renewed annually). Obviously, subscriptions existed before PEGs, but if you look at different business sectors, there are many new versions of “subscriptions” that exist today. Some are obvious, others are not.

  1. Many IT product companies have transitioned from selling you their product for $1 million to effectively leasing their product for $20k per month forever.
  2. My partner’s dentist sold out to a dental roll-up group owned by a PEG, and they now offer an annual fee that includes basic cleaning, X-rays, etc., which is automatically charged to a patient’s credit card.
  3. There are a number of businesses that already had an annual, multiyear, or automatic renewal provision — so they already had a subscription. For example, I work with a security firm that provides home and business security alarms and cameras that are in this category.
  4. There are businesses that are attempting to transform what I might call a service into a product that can be sold as a subscription with a monthly fee.
  5. One of my personal favorites has to do with my lifelong passion for alpine skiing. Two companies have created a partnership through the outright purchase of multiple ski resorts or some other “arrangement.” They offer “season lift passes” that allow you to ski at many different major ski resorts throughout North America. The price point is such that with only two trips, it’s worth the investment. So, me being me, I’m trying to figure out what’s going on. They’ve taken a weather-dependent business, snow skiing, and solidified and made the revenue stream less variable and more predictable. Skiers need to purchase the season pass before Thanksgiving. (How’s that for cash management?) In addition, they’ve substantially increased the price of daily lift passes, which makes the season pass even more valuable, or they get premium prices from those who opt for daily passes. Brilliant!!!

Why are the PEGs so focused on subscriptions? The simple answer is that they’re reducing variability in revenues and increasing profit predictability for the purpose of reselling their investment as quickly as possible for as much as possible.

Maybe you should take this concept and apply it to your business. If you do, I’m confident your company will be more valuable.

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!

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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