Our conversation with Jim Alampi continues as he examines leadership principles that are central to a company’s ability to overcome barriers.
Hopefully, you have already seen the first installment in Cleaning Business Today’s four-part series on barriers to growth. If not, you can read it here. In the article, we identified and discussed the natural and predictable barriers that every company encounters as it grows. In the next three installments of the series, we’ll explore core principles and strategies for overcoming these barriers.
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To help ascertain the most important and effective strategies, I sat down with business expert and thought leader Jim Alampi. As founder and Managing Director of Alampi & Associates LLC, Jim Alampi has devoted more than thirteen years to coaching CEOs, executive teams and Boards of Directors in the areas of strategy, leadership, execution and business improvement. He has provided advisory services to or spoken before almost 10,000 CEOs and senior executives regarding the lessons he learned as a senior executive at three publicly held companies and as the founder of three start-up companies. He is also the author of the recently released book, Great to Excellent.
TOM: You touched upon this earlier and talk about it quite a bit in your book – the whole idea of leadership and the importance of being able to lead a team. You reference “The Rockefeller Habits.” Could you tell us what these habits are and explain how they fit into your model for growth?
JIM: They actually came from J.D. Rockefeller’s biography, a book called Titan by Ron Chernow. Another fellow, Vern Harnish, has written a book called Mastering the Rockefeller Habits. They are three really simple things: Number one, setting priorities so that everyone in your company knows what’s important and can ask, “What can I do in my job to support our company’s goals?” Number two is having a meeting rhythm for communication and cascading important information throughout your organization. It’s about making sure that everyone is aligned and knows what’s going on and what the company is trying to achieve. Leadership teams don’t get good at meetings if they do them sporadically. Meetings need to become a rhythm and there’s a whole rhythm that we lay out when we work with companies. The third Rockefeller Habit is having the right metrics. This means looking at more than the standard operational or financial “look back” metrics that are already cast in concrete and don’t tell a leader anything about the future. Two other kinds of metrics that are important are, first, what we call “smart numbers.” These are really early warning indicators. They are a “look forward” metric. They don’t guarantee the future, but they at least give a team insight into what’s around the corner. The last kind of metric that businesses need is called “critical numbers.” These point to something that’s broken. If leadership puts some top-down focus on this issue for just ninety days, they could make an improvement, then move on and work on something else that’s broken in the next ninety days. Those really are the three Rockefeller Habits.
TOM: Excellent. Let’s talk about leadership. Outstanding leadership is key to the success of any company, but if you were advising the founder of a residential cleaning company, what leadership practices would you suggest to them?
JIM: Get the right people in place. That means warm bodies are not better than nobody. Too often you see entrepreneurs who start to settle because it is difficult to find the quality people you really need to succeed in business. The reality is warm bodies are not better than nobody. We strongly coach companies to wait to hire until you can get the person who truly meets the requirements that you’re looking for. Part of that is having the right core values. In my view, core values are the single most important thing in any company’s vision. It’s like hiring the right athletes. As Jim Collins said in Good to Great, you’ve got to get the right people on the bus, the wrong people off the bus and the right people in the right seats. One of the ways you decide this is by hiring people who share your company’s core values. If you do this, it makes an unbelievable difference in how the business operates and grows.
TOM: You mention in your book, Great to Excellent, that for CEOs what they don’t do is arguably just as important as what they do. My experience with a lot of business owners in the residential cleaning industry is that we get into the habit of doing what it is that we know how to do well. We spend a lot of time working IN the business rather than working ON the business, like recruiting and finding the right talent. Would it be fair to say that as an owner you have to commit a certain amount of time, energy and resources to finding the right people?
JIM: Yes. There’s a fellow by the name of Larry Bossidy who was thirty-plus years at General Electric and then went over and was CEO of Allied Signal, a multi-billion dollar public company. I’ve heard Larry speak a couple of times. One of the questions he is usually asked is, “What percent of your time as a CEO of a huge company like Allied Signal did you spend on people-related matters like recruiting, developing and retaining people?” He would tell the audience sixty to seventy percent of his time was spent on this, which is unbelievable! That’s a phenomenal amount of time, but he recognized that it was the people who were the business and so that had to be his number one focus. Your point about how do you free up the time for this crucial activity is a critical one. What we find is that when CEOs don’t learn to delegate, their companies almost never get beyond fifty to seventy-five employees. The whole leadership structure is so involved IN the business that nobody spends time ON the business. No one is thinking about the future, doing planning or considering strategic issues. You can’t be doing both the mundane and the strategic at the same time. You can certainly survive in business without learning to delegate effectively, but my guess is that it is practically impossible to grow profitably if you don’t start delegating and start spending more time on strategy, especially as your company gets larger.
TOM: I spend a good deal of time talking to business owners in the residential cleaning industry. If you ask us if we’re good at delegating, most of us will say, “Yes.” What’s the joke? Eighty percent of us think we’re better than average. Is there a way for someone to measure if they are being effective at delegating?
JIM: You know, after leading three public companies and doing three startups, I’ve come to the conclusion that there are really only four things that I can contribute to my company as a CEO. These are things that only the CEO can do. I can’t delegate these to anybody else. So what are those critical few things? Number one is set direction for the company. Number two is get the right people in place and develop them. I don’t mean the CEO has to personally do the hiring, but he needs to be in charge of making sure that the company is only hiring the right people and developing them. Number three is to make sure the employees have the resources they need to do their jobs effectively. And, number four is to get obstacles out of people’s way. To me, those are the big four. That’s the CEO’s job description. As a CEO, I can’t let people drag me down into the muck and daily detail and take me away from those four crucial tasks. If I do, that means nobody is driving those four critical elements. When something hits a CEO’s inbox, the first thing he ought to ask is, “If I do this personally is this where I contribute the most to my company?” If he can’t immediately and strongly answer “Yes,” then why is he going to do it? Instead, he should ask, “Who in the company should be doing this?” That, to me, is the real test.
TOM: You refer to these four things as the CEO’s job description. If I’m spending my time doing tasks other than these four things, than arguable I’m not delegating as well as I might think I am, correct?
JIM: Yes, I think that’s true. A CEO never wants to lose track of only those things that he or she can do because when the CEO isn’t doing them, nobody is doing them.
TOM: As a business moves from one phase to another, do the delegation challenges change?
JIM: Yes, they can. The first real challenge is to stop yourself from doing some of the things you really like to do and that you’re really good at doing. That’s hard for most entrepreneurs. They did certain things when they started the business and they loved doing them. However, as their business gets larger, they’re going to have to weigh those things against where they contribute the most to their company. Sometimes what they did when they started their business made all the sense in the world then. As their company gets larger and more complex, though, this doesn’t make sense anymore. For instance, at all three of the startups I led, I initially looked at every invoice that went out the door. That was important in the beginning because if you put a bad invoice in front of a new customer, you might never get paid. But a year later, when the error ratio is down to around one percent, I didn’t need to look at every invoice. I could just spot check the invoices every once in a while. Owners and CEOs need to continually challenge themselves and ask, “Do I still need the same depth, the same frequency with certain activities that I did a year ago?” Too often entrepreneurs get stuck in one mode and they never step back and really challenge their own thinking and actions. They need to ask, “Do I still need to do this the way I did when I started the company?” Most of the time, the answer should be no. Of course, there can be things that are so mission critical that a CEO shouldn’t delegate them. Then, the question they have to ask themselves is what should they stop doing to free up enough time to stay on top of those things that are mission critical. Otherwise CEOs just end up working 27 hour days and getting burned out. Too often, executives just keep piling on and doing more. That’s why the “stop doing” list is even more important than the “to do” list.
TOM: Is hiring someone else to be the CEO a viable option?
JIM: Absolutely. It is brilliant when an entrepreneur can look in the mirror, be totally honest with himself and say, “You know, for me to take this company to the next level is going to require me to do some things I don’t think I’m good at…and I don’t even like the thought of having to do.” If that’s how they feel, then for goodness sakes go find somebody else to run the business and you go back to doing what you love. The reality is that most entrepreneurs are marvelous at and love the chaos of the startup phase. What they hate is the process and stability required to take a company, using my barrier numbers, from that $10 million to $50 million barrier. That requires some process and stability. What I find is that a lot of entrepreneurs hit that second wall and say, “I hate that process word. I don’t want to do that stuff!” Great! Don’t do it! But put somebody in charge who can do it and take your company to the next level.
TOM: My business coach often says, “Good management is boring.”
JIM: [Laughter] Well, to some degree, yes.
TOM: You talk about employees being asked to achieve goals rather than to undertake tasks. Could you tell me a little bit more about that and how that plays into business leadership?
JIM: The whole point of delegation is learning and growth – that is, to try to have people start thinking more critically like an owner does. You want to get to a point that when an employee comes to ask a question, you don’t give them an answer. Instead, you turn around and ask them a follow-up question. That gets into my question-to-answer ratio. Every CEO, I think ought to – about once every ninety days – take a blank sheet of paper and keep a hash total for a day tracking how many times they asked their people questions divided by how many times they gave them an answer. When a CEO gives people answers, they just come back for more. There is no learning or growth that takes place when we just give people the answers. That’s the delegation up thing that seems to be almost a sport in business these days. The whole point of learning and growth is that you want people to learn how to think differently, better, more deeply and more critically. If I give somebody a task and tell them all the steps, then I haven’t delegated anything. I’ve just dumped some work on somebody that I didn’t want to do myself. The whole point of delegation is to say to your people, “Here’s where we are today and here’s where we’d like to be. Now, go figure out how to get us from A to Z and then bring it back with a recommendation.” That’s where learning and growth take place, and that’s the real point of delegation.
TOM: I’d guess that when you’re delegating, it’s important to ask the person to whom you’re delegating to feed back the goal to you. This way, you make sure that they understand the goal clearly, right?
JIM: The most important step we find in delegation is taking the time up front to pinpoint exactly what the CEO’s expectations are. Leaders often delegate by telling people what they want them to do, giving them some resources and telling them how long it’s going to take. Then, typically, they ask the person they’re delegating to, “Do you have it?” Ninety percent of the time the person will reply, “Sure, I’ve got it.” The leader needs to take one more step at that moment. They need to ask the person to repeat back exactly what they think they were asked to do. In my experience, when leaders take that step, seventy percent of the time they find that the person can’t repeat it back correctly. That’s not the employee’s fault, that’s the CEO’s fault. The CEO is the communicator here. We need to make sure we don’t send people off armed with the wrong deliverable. That’s when employees end up doing the wrong thing, right. Unfortunately, that’s what usually happens in delegation. People go off and do a great job, but it’s not exactly what the CEO asked them to do. That’s the CEO’s fault.
TOM: So the CEO has to be able to look in the mirror and own that one.
JIM: Absolutely! It’s what Patrick Lencioni talks about in his book, The Five Dysfunctions of a Team. At the bottom level of the pyramid is vulnerability-based trust. Any CEO in his or her right mind needs to be able to admit, “I’m not perfect. I wasn’t born the perfect leader. I make mistakes.”
TOM: You write about how important it is for leaders to create a strategic plan for their company. Many residential cleaning companies start with one or two people and some cleaning products and equipment. Is it ever too early to put a strategic plan in place? And at what point does it become crucial for business growth?
JIM: Start right away, even when you only have five employees. Even during the early startup phase you want to start thinking a little bit about the future. You need to think about how your company will evolve in an intelligent way, rather than just willy-nilly and gravitating toward the next bright, shiny opportunity that comes to pass. Also, in my mind, I would tackle core values right at the beginning, even if I only had one employee. It would give me the standard by which I would hire every future employee. Some of the other, longer-term things can wait until the company gets larger and more complex and really needs to start having a tighter roadmap. To start with, though, I think you’ve got to get the right values. Then, you have to get really good at execution. What are you trying to get done as a company in the next ninety days? A year from now, what might your company look like? This is called scenario planning. How many employees will you have in a year? How many could you afford to have? What does the cash flow have to be to make these hires? How does the revenue cycle tie into the cash flow cycle? It’s just taking time to think strategically. I don’t really like the phrase “strategic planning” because people always think it’s this big process with tons of Excel spreadsheets and all this stuff. What we’re really talking about is strategic thinking. In other words, stepping back to think about the business and what we are trying to accomplish, where we are trying to take the company and what we have to do to get there. Without a roadmap, every direction looks good!
TOM: You talk about time frames as being important. Once you start looking out to the future – five or ten years out – you say it’s too far because those plans never happen. You mention that it’s more important to be thinking in smaller chunks rather than spending a lot of time planning years and years out.
JIM: We think three years is a pretty good horizon for most entrepreneurial companies. And the only way I’m going to get my three-year goals done is one year at a time. The only way I’m going to get my one- year goals done is ninety days at a time. We think the most important time period of all for good, strategic execution is ninety days. That’s how great companies execute their long-term vision. They do it ninety days at a time. So every ninety days, leaders at these great companies are asking themselves, “What are the three to five most important things that we have to do in the next ninety days?” And, “Which one member of our team ‘owns’ or is accountable to drive each of those ninety-day priorities?” Next, they ask, “What’s the deliverable in ninety days and how are we going to measure it?” These are little, tactical, bite-sized pieces. A brand new entrepreneur ought to spend a little time on the core values and do some strategic thinking. Then, they have to get really good at setting goals and executing. That will prepare them. That will put the machinery in place so that as they grow, they’ve already got a process to execute their vision. That’s really important. To be really good at execution, you need two things. You need to have a vision – every entrepreneur has a vision. The hard part is execution. So the second thing you need is a process to execute that vision – to set goals, achieve them, measure them and hold yourself accountable.
TOM: In everything we’re talking about, the idea of core values comes up. Could you elaborate a bit more as to what you mean in terms of core values.
JIM: These are those three or four values that are non-negotiable – typically, one word with a one sentence definition of what that word means in your company. These values are fundamental to an owner’s reputation, a company’s reputation and a company’s conduct in the marketplace. They define what a company will do and will not do as well as what people can get fired for violating. Think of them as the ground rules for your company. Typically, companies write all this flowery stuff that seems like it should be framed and hung in the lobby for customers to see. Most of the nonsense that companies write as values, the average employee couldn’t possibly remember. That’s why I’m a firm believer that there ought to be three or four values and they ought to be one word with a one sentence definition. This way every employee can remember them off the top of their head every day of every week of every month of every quarter of every year. One of the billion-and-a-half-dollar companies that I ran didn’t have any core values when I took over. I got my team together and we came up with four values by the second week I was there. As an example, they were: integrity, safety, customer and teamwork. Pretty simple. Each one had a sentence explaining what these values meant in our company. That’s all I really wanted our people to remember – those four things. That was twenty-three years ago, and I still remember what they were!
TOM: That’s an excellent example. So if we spend too much time trying to develop core values and get too elaborate and fill up three pages, then we haven’t done it right. We should keep it tight.
JIM: Yes. There’s a neat little tool that Jim Collins, the author of Good to Great, wrote in an article for Harvard Business Review. This was before he published his first book. The article was called “Building Your Company’s Vision.” In it, he describes something he calls the Martian Exercise. This is the best core values exercise I’ve ever come across in my entire business career. For companies that already have core values, they can use the Martian Exercise to confirm that the values you talk about as an owner are really embedded in your company. There’s nothing worse than leaders preaching core values and having half the people in the company look at you like you’re crazy. The other use of the Martian Exercise is to help a company discover its core values. Both of these exercises take about a half a day. A couple of company leaders can do it, so you don’t need all the employees to participate. And, as I said, it’s the best core values exercise I’ve ever found.
Join us on here again on cleaningbusinesstoday.com Tuesday, September 17, when we’ll talk with Alampi again – this time about how to overcome systems and structure challenges in a growing business. In our final installment in our series, on Tuesday, September 24, we’ll talk with Alampi about market dynamics and the “smart metrics” your business needs to watch and analyze in order to see growth opportunities and stay ahead of the curve.
Tom Stewart and his wife, Janice Stewart, are co-owners of Castle-Keepers, the 1st company to achieve CIMS certification. Tom is a nationally-recognized leader & innovator in the house cleaning industry. He is co-founder and Publisher of Cleaning Business Today.