A Series: Learning From My Epic Failures (Part 3)

Be Respectful Respect

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Key Point: Timing is everything. And sometimes things happen that can best be explained as plain, bad luck. Epic Failures No. 1 and No. 2 outlined in my last couple blogs, ironically played into No. 3. When I was with the Fortune 50 Company, (US WEST), I met lots of brilliant Telcom engineers and business people. A few of them I really respected started a voice over the internet startup, and they asked me to join the team. This was essentially Skype (before Skype), circa late 90’s, and the “dot.com” world was on fire. I was being recruited by all kinds of startups, and company valuations were crazy high. Stock options/payouts and buyouts/IPOs, were the news of the day. It was a modern day gold rush, and many of the so called .coms were proven to be .cons. They were being hyped with little or no profit performance. Still, the bubble seemed unstoppable, and we believed our new company (AuraServ) was better and different than a lot of the other hype out there.

AuraServ seemed like a no lose deal. Great technology, an excellent value proposition, superb management team, funded by one of Silicon Valley’s premiere VCs, etc. I then was the COO of a technology company (epic No. 2), and had earned a ton of stock options. However, I was in my early 50’s, our girls both in private U.S. universities, Garrett still in high school. Probably not the best personal time to take a big risk. On the other hand, my due diligence determined (along with the assessment of many others I got advice from) that this was a sure bet. And, if I was going to be part of a tech startup, it seemed like now or never? The plan:  I would sell my options upon leaving my current company (a little back up nest egg). Then, with this new voice internet powerhouse, I would experience building a super company with great purpose and potentially make a financial home run, too.

Then it happened: The .com market bubble burst almost overnight and severely discounted and penalized most technology stocks, including the company I left. My stock options were now ALL under water and I had to exercise them within a time frame that was unfavorable (no nest egg and a BIG ouch). And, if you are old enough to remember that time, almost all investment capital immediately dried up. Even though AuraServ was getting customers and meeting revenue commitments, we could not get our next round of funding. Uh oh! We ran out of cash, and out of business. Over 100 employees now without work. Disappointed people I deeply cared for who believed in me. Our family investment, gone! Holy %#!*!  It took me two months without a pay check to ensure every person working for me that wanted to have a job, found one. Now, I had to recover personally. It was a miserable time for me. 

The good news with a supportive wife and family, a little good luck, personal perseverance, and hard work, I bounced back and became the CEO of another company. While the AuraServ outcome was disappointing, I was proud of the results we achieved and learned a lot about myself. I recognize how much I am a blessed and fortunate man with way more than anyone could ask for.

Personal Leadership Moves:

  1. Sometimes all the due diligence and analysis are impacted by events totally out of one’s control. Be mentally prepared that this could happen at any time. Know your risk tolerance. How much are you willing to lose? How resilient are you if the worst happens? Well run organizations intentionally manage risk. We need our personal risk plan too. Do you have yours? By the way, the flip side of risk is opportunity.
  2. The essence of purposeful living involves progressing on things that the market or other commercial endeavors cannot take away from us. Love, purpose, family, adventure, learning… Everything material goes away in time. While we all know that, sometimes we get to practice experiencing it before we die. And I believe we become better for it.
  3. Please read Dan Pink’s new book, “When,”which puts more science behind the issue of timing. 

Grateful and Resilient in Personal Leadership,

Lorne

One Millennial View: In Tony Robbins’ new book “Unshakable,” (which is primarily about financial wealth), he emphasizes the importance of “real wealth” extending to being emotionally, psychologically and spiritually sound, too. Other wise words I’ve heard recently pertaining to when things get tough: “Tend your garden. No one can take that away from you.” Certainly something to keep in mind when you’re in the grind. 

– Garrett

Edited and published by Garrett Rubis

A Series: Learning From My Epic Failures (Part 2)

Be Respectful Respect

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Key Point: See the intro from Part 1 in this series for an explanation as to why I’m sharing these stories. I hope you find an insight or two.

It was 1996, and I had recently become the COO of a publicly traded (NASDAQ) computer reseller. I was promoted from the VP of Sales position. To my surprise, the Chairman and CEO who hired me was abruptly removed, and the company was now being led by the principal shareholder, who I had no real history with. (He is an exceptional businessman, and I came to admire him). He had never run a company in this market before. What we both realized, was that the organization had to be completely transformed. We had to urgently reinvent ourselves from a catalogue company, selling computers primarily to consumers, to a direct sales company selling computers and IT infrastructure to businesses. This market was being defined by IBM, Dell and Microsoft. The internet e-commerce world was just beginning. Apple under John Scully was struggling. CDW and Insight were leading the business reseller channel. Catalogue selling computers to anyone was rapidly disappearing. Everything was uphill for us.

My natural strength as a leader was to enrich the culture and increase the engagement of our team of 600+ folks. I threw everything I knew into recognizing, informing, developing and including employees. I leveraged every ounce of my leadership team’s energy to muster productivity improvements so we might compete more effectively. So, here’s what I learned in retrospect: Focusing on getting people to work more productively within a flawed business model is the wrong thing to do. While we were vigorously changing the entire business framework, I would have doubled down on that effort. This work has to be done at the top of the house. I was unwittingly asking too much of people before the strategic foundation was dramatically improved. (I recognize that this is very tough, kinda like changing the engine on a plane mid-flight). There is a difference between hard work and things being too hard. When the customer value and business model is right, hard work and productivity improvement builds momentum. When things are just too difficult, extraordinary effort results in survival more than progress.

(P.S.  Based on the work started by the Chairman and our leadership, the company did reinvent itself and thrives today, some 20+ years later).

Personal Leadership Moves:

  1. When you leave for what looks like a great opportunity and promotion, really look under the rocks and do your due diligence before saying yes. You may get a title and pay raise only to find that the strategic model makes it really hard to win. The reverse is also true.
  2. Make sure the trifecta of company purpose, business model, and values are right for you. If not, you might end up asking way too much of yourself and teammates. Hard work does not mean everything needs to be like walking in mud.

A great business model in Personal Leadership,

Lorne

One Millennial View: I wonder how many Millennials really consider the company’s purpose, business model and values while they attempt to work their way up the ladder. This is a great reminder that no matter what position you hold at the organization you work for, it’s better to keep turning over stones to see what you’re really standing on.

– Garrett

Edited and published by Garrett Rubis

Culture Cast: Analyzing Communication Systems

Abundance Accountability Be Abundant Be Accountable Be Respectful Personal leadership Podcast

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Hey Culture Cast Fans! In Season 2, Episode 5, Lorne and Lynette discuss communication systems, and much more. 

Please listen on Soundcloud and iTunes, and don’t forget to rate and review.

If listeners have any questions or thoughts, feel free to email the podcast at CultureCastPodcast@gmail.com.

Also, please follow the podcast @CultureCastPod1 on Twitter, and advance the conversation.

What Competition Really Looks Like 

Be Respectful Culture Innovation Respect

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Key Point: People that lose their way “turtle,” and like to pretend and/or protect. They become fear-driven folks with a scarcity mentality. They pretend that things will eventually go back to the way things were in the “good old days,” and are dupes for every snake oil huckster that promises the “turn back the clock” lie. They also look for ways to try and protect their turf by most often crying out to the government to do something; create a regulatory fence to preserve their dwindling resources. In the meantime, what is happening around them is disruptive and rapidly advancing competition. At the macro-level, let’s take a look at what China’s market is like now, particularly in the entrepreneur sector. The following is borrowed from co-founder of Singularity University, Peter Diamandis’ blog

“9-9-6: Work Ethic

While I love the Silicon Valley work ethic, what I found in China was unparalleled.

The mantra is 9-9-6… Or 9-12-6…

Meaning, entrepreneurs are working 9 a.m. to 9 p.m. (or midnight), six days per week.

Seriously, no joke.

Another important difference I found was the more militaristic, “all-powerful CEO” in China’s startups. 

While in the U.S., a CEO may “guide” or “influence” his team, in China, what the CEO says is gospel. No discussion.

And when a CEO makes a decision, the company takes it and runs.

Chinese Innovation on the Rise:

While a decade ago, it might have been true that China was a copycat ecosystem, today that assumption is 100 percent wrong.

Chinese companies are innovating at a faster pace than I could have imagined, and it’s this innovation that has maintained a 9.71percent GDP annual growth rate.

One factor that is driving a vibrant entrepreneurial engine is the massive availability of capital. 

Because the Chinese government has imposed very strict restrictions on the outflow of capital, the wealthy in China are investing more and more cash into Chinese entrepreneurs, driving a frenzied ecosystem and driving up valuations.

‘The typical Series A there ranges from $15 million to $100 million. 

China has also committed to becoming a world leader in Artificial Intelligence. Just this past week, it laid out its development plan to achieve this by 2030, aiming to surpass its rivals technologically and build a domestic industry worth almost $150 billion.

Amazing Startups:

My host (and friend) for my recent visit to Beijing, Dr. Kai-Fu Lee, the head of SInnovation (a $1.2B venture fund). Kai-Fu, a former Apple and Microsoft exec, was also the founding president of Google China.

Kai-Fu has an amazing record in investing in, and creating, a new generation of Chinese Unicorns (and pre-corns). He was kind enough to introduce me to three of these amazing companies: UISEE, VIPKid, and Face++.

UISEE takes a different approach on the self-driving car. Instead of aiming for public roads, UISEE has built autonomous driving vehicles for campuses, communities, parking structures, and more. This isn’t just a concept — their vehicles are operating and generating revenue.

VIPKid is massive and experiencing exponential growth… This startup has achieved $500 million in annual revenues in just two years! What do they do? They pair up, talented, underpaid American schoolteachers with foreign (mostly Chinese) students who want to learn English. But they do it with an amazing, easy interface. Last month they received over 80,000 applications to become teachers.

Face++ has built a revolutionary machine learning facial recognition system. Their software can recognize your face from live video better than any other software in the world. They have ranked No. 1 in almost every metric and competition. Already working with companies and the government, their ultimate goal is not just facial recognition, but to model the entire human brain.

These are just a few of the companies I came across that represent the radical innovation coming out of China.

My message to American entrepreneurs is don’t underestimate China as competition, or as an important future marketplace.

While most American entrepreneurs focus on the United States and ignore China, the opposite is not true… Chinese entrepreneurs are focused on China in the near term and America in the mid term.”

Character Moves:

  1. Be aware of what’s happening at the edges of your personal and business boundaries. If you become too introspective or local, erosion may cause you to become weakened and defensive. Be a curious pioneer, relentlessly seeking abundant opportunity. As Diamandis points out regarding China; “an opportunity to ‘co-Innovate’ is important. Either develop a joint-product for China with a Chinese partner, or to partner with a local giant to bring your product/service to this massive and growing market.”
  2. “China is going from ‘deceptive’ to ‘disruptive.’” Who at a micro or macro level is doing this to you personally and in business? If you do not actively use your mental and literal passport, you’re going to be replaced. It’s just a matter of when. Why? You are blind; so “pretend and protect” rapidly becomes like buying a lottery ticket to get rich; a hopeless strategy of hope. 

China-like in the Triangle,

Lorne 

One Millennial View: Oh great, we thought so-and-so over in accounting had a target on us, and turns out it’s a whole country of more than one billion people. Really though, I guess as Millennials, it’s just a great reminder to stay sharp, refrain from being complacent, and try to remain on the frontline of trendsetting.

– Garrett

Edited and published by Garrett Rubis

Why Can’t Organizations Believe This?

Be Respectful Culture Organizational leadership Respect

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Key Point: The very first point in the eight “cultural ingredients” or “recipe” I follow to drive a great culture is: People First. Most organizations pretend to believe this, but do not really act that way. They genuinely don’t know what being “People First” really looks like. Too often, it’s about the quarterly share price first (and exec bonuses, of course). These days, customer obsession is competing a little more for first amongst equals. However, very few top leadership teams look at everything through the eyes of what’s best for People First. And I’m not talking about mush headed thinking where People First becomes interpreted as an absence of high performance and great results. It’s quite the opposite actually. One consistent example: Southwest Airlines. 

Note the following from Forbes: “Earlier this year, Southwest Airlines announced it would be sharing $586 million in profits with its 54,000 employees – which equates to about a 13.2% average bonus for each employee, or roughly the equivalent of six weeks’ pay. And that doesn’t even count the extra $351 million the company contributed to its employees’ 401(k) plans.

In an era marked by squabbles over the minimum wage and the gap in pay between executives and front-line employees, those numbers stand out. (The company paid out a record $620 million the year before). Is it any wonder that Southwest employees always seem so happy when you’re checking into your flight?

As Gary Kelly, Southwest’s CEO said: ‘Our people-first approach, which has guided our company since it was founded, means when our company does well, our people do really, really well. Our people work incredibly hard and deserve to share in Southwest’s success. Remarkably, it’s the 43rd year in a row that Southwest has shared profits with its people, who also reportedly own about 10% of the company’s shares as well. The airline has also never laid anyone off or cut pay.

The company has long been lauded for its strong workplace culture and engaged workforce – which might also have something to do with getting employees to think and act like owners by sharing the profits of their shared success. (It’s worth noting that Southwest also has a union workforce, which sometimes leads to conflict from time to time.)

Herb Kelleher, the airline’s founder, is quoted in the book, Nuts by Kevin and Jackie Freiberg, about the fact that in 1973 Southwest became the first major airline to introduce profit-sharing to its employees, as saying: Profit-sharing is an expense we want to be as big as possible so our people get a greater reward.’

(If you’re a fan of Podcasts, I’d also recommend listening to Kelleher’s interview with NPR where he talks about the early days of starting his groundbreaking airline).

It really shouldn’t come as a surprise, then, to hear stories about flight attendants picking up trash, gate agents tracking down borrowed staplers, or pilots cutting back on fuel usage precisely because they know that will impact their company’s profits.” 

In Canada, WestJet Airlines followed the Southwest cultural and business model to the letter and had similar results for most of its history. Some recent critics suggest that the current leadership has abandoned this People First ethos and the company has clearly become “shareholder first.” Those arguing that there has been a cultural deterioration point out that the pilots of WestJet recently unionized because they no longer trusted the executive team to look at the world through their eyes. Apparently, one example was the implementation of a pilot scheduling software system where pilot efficiency was optimized at the expense to pilots’ well being. I love flying WestJet, and time will tell. You can’t fake “People First” though.

Character Moves: 

  1. Do not pretend you can really create or live in a great culture without a People First strategy. Challenge yourself to learn what the attributes/behaviors of a People First organization looks like. How would you measure that? What companies fits these criteria? 
  2. To be People First, you have to personally lead yourself and others that way. What’s something you’ve done in the last week to prove it? 

It’s always People First in The Triangle,

Lorne 

One Millennial View: Asking why all organizations don’t commit to a People First culture is a great question. Happier employees should equal better work, right? I too love flying Southwest, and you can definitely tell that they’re sitting at the “cool kids table” at the airport, and well, some other airlines are likely envious of their People First skies.

– Garrett

Edited and published by Garrett Rubis