I’m all about jumping on the next technology bandwagon, but I just couldn’t imagine licking two fingers and slapping my knee in the middle of a presentation.  And because I assumed Google probably paid $150 million for this toy, I finally decided to approach them with my concept for a word processor that only responds to yodels.

Big Boys like Google are smart enough to realize that almost all innovation in this country comes from entrepreneurs of lower middle market companies.   Innovation is MIA in most of the Fortune 5000; their decision process on new ideas is often like a barge trying to do a 180  in a retention pond.   Not so with Entrepreneurs.  An Economy Hero risks it all to design, develop and prove a product so that the Googles of the world will buy and invest the required resources to scale it.

Innovation is one of the reasons why we love our Entrepreneurs; that along with the fact they generate over 85% of jobs.  And even though I swallowed Google’s April Fools ruse, I’m relieved to know thousands of offices won’t (temporarily) be full of employees miming in front of their laptops.

Tim talked most, however, about combat and mission; specifically related to the art and science of battlefield decision making.  He described that his trusted decision process for combat was based on 4, continuously circulating factors – Observe, Orient, Decide and Act.  This process, used by all Special Forces on the battlefield around the world, is known as The OODA Loop:

The OODA Loop responds to what Tim described as “Combat Tempo”, the degree to which battle conditions accelerate and decelerate.  He stated that decisions must occur in tandem with combat tempo – which often peaks at a moment’s notice.  Tim said that when a team is aligned on strategy and mission and has the ability to accurately assess their condition, respond quickly to Combat Tempo, and utilize pertinent, updated information so that informed decisions can be made quick and continually, then the team will defeat the adversary and survive.

My adrenal gland pumped a quart of electricity into my veins as I listened.  Tim’s trusted decision process fulfilled the need of every Entrepreneur across the country.  The process for battlefield decisions applies directly to business.   Most businesses need a simple, trusted and effective decision process that equips the leadership team to respond quickly to changes in the market, on the management team, with the economic model, and the ROI of the business.  By “paraphrasing” the OODA Loop in a business context, the process might look like this:

Decide: make a decision

Align: make sure the team is in sync on the mission and the right priorities

Track: assess performance on individual contribution to priorities and the status of the 5-10 most important company metrics

Adapt: Make the next aligned and timely strategic decision based on updated, real time information.

Decide again!

DECIDE – ALIGN – TRACK- ADAPT (DATA)

The ‘DATA Loop” increases corporate decision tempo so that the company can respond quickly and remain maneuverable.   My question is, is your tempo fast enough?  I know it’s hard to fathom, but strategy can be simple.  It’s not easy, but it can be simple.  And hey, if it’s good enough for Jack Bauer, I’m talking the real Jack Bauer, it’s good enough for us.

I asked these creative warriors to tell me their company story – how they got started, their uniqueness, vision for the future and mission in the present.  Even though I agree with Tom Brokaw that my father, a soldier and entrepreneur,  was part of our country’s Greatest Generation, my eyes start to swell when I hear stories about this generation’s “starters” who step out and take such risk to change our lives.  I puff with national pride when I hear accounts of of boot strapping, maxing credit cards (24 in one case),  personal sacrifice to keep employees, and passionate pursuit of  ideas.  Entrepreneurs are indeed our country’s competitive advantage in the world economy.

For many of the companies I requested that the CEO, and at least two of his/her leadership team, take a short assessment to determine their alignment on critical issues.  I wasn’t surprised that almost all teams were significantly out of sync in categories such as priorities, value proposition, economic model, management team and capital structure.

I’ve learned from hundreds of second stage companies over the past 18 months that team misalignment is not a trend, it’s a universal epidemic that continues to produce significant consequences to our economy.

Despite the herculean effort of our Economy Heroes, history indicates that over 90% of their ventures will fail; and misalignment will be one of the greatest  factors in their demise.  The process to get a team in sync is simple, but it can also be difficult.  We can surface the right information and provide radical objectivity for the team to examine the brutal facts; the tough part is the tough decisions that follow.

The less than 10% of second stage ventures that succeed generate over 85% of new jobs in this country.  What would happen in our economy if the success needle moved to 20%?

It’s time for Entrepreneurs to roll up their sleeves and receive the vaccine that will sync their team and dramatically increase their company’s chance of survival.

www.incnav.com

Sonny asks, “What’s this?”  Right hand hit-man Clemenza responds, “It means Luca Brasi (their rock star assassin) swims with the fishes.”  Paraphrase:  Luca ain’t around no more.

It reminds me of the young rock star CEO from Atlanta I met a few months ago.  A few minutes into our discussion I threw out the stat that over 90% of emerging businesses fail.  He shot back that, “I can’t get my arms around that figure, and besides… I don’t scare that easy.”

You’ve got to admire the guy’s chutzpa; which, by the way, is the reason those few entrepreneurs that make it generate over 85% of jobs.  But even though this talented young man is fortunate enough to boast about his company’s growth, the odds are (overwhelmingly) high that his dream child will share the sandy bottom with Luca Brasi in just a few years.

What are we missing?  How can a growing company with a unique product and a brilliant founder fail?  Why do these companies sink?  For many, they sink because they don’t SYNC.

So let’s brainstorm…

What happens when a CEO and the team are out of sync on one or more of the following items:

• The company’s top 3 priorities
• The company’s value proposition (unique competitive advantage)
• The company’s leadership team (are the right people in the right positions?)
• The company’s economic model (will the company make money at higher volumes? Can we scale our value proposition?)
• The company’s capital (do we have enough money to fund future growth?)

Here’s what happens:

“It’s a crisis” translates into … it’s a crisis.  We spoke this week at the B.I.G. Summit in Orlando to over 400 Entrepreneurs:

In our breakout session my partner asked the audience, “How many of you think your team is in sync on your company’s top priorities?”  Not one hand. We’ve seen the same response over the past few years with hundreds of CEOs around the country.  A team out of sync is a team that lacks focus and accountability on the right priorities.  Without alignment on critical issues like those I detailed above the company cannot prepare for the inevitable growth transitions that will occur when it’s too big to be small and too small to be big – which we call No Man’s Land.

But here’s the good news: syncing a team is easier than you think.  You just need a quick and efficient way to find out where the team is out of sync so that you can get on the same page and track performance.  Next time I’ll describe how you can accomplish that feat in less than 10 minutes.  If you want a sneak preview, visit www.IncNav.com.

Until then, don’t open any unmarked packages that smell funny.  Let someone else do the swimming.

Some people say we should sell to the Fortune 500.  Screw that, we want to sell to the Fortune 5,000,000.  Jason Fried, Founder 37 Signals, from his book Rework

I read the Jim Collins classic Good to Great three times and discussed it with a group of talented business people once per week for over a year.  I was baptized in the gospel of the Hedgehog, the Level 5 Leader and the 3 Circles.  I know the statistics of what the heralded 15oo did right in order to sustain growth and market leadership for so many years.

Since then I’ve learned another stat.  Each of those card carrying G2G behemoths employ over 5000 people; which sounds immensely impressive until you consider that companies that employ over 5k employ over 2.9% of our workforce.  It’s fascinating to consider how Walgreen improved themselves with a new competitive advantage via their online experience, but Walgreen didn’t invent their innovation.  It’s compelling to learn how Wells Fargo forged its way through economic swings, but Fargo didn’t GoFar when it came to creating enough jobs to move the needle on our country’s unemployment rate.

Collins focused on the successful Fortune 500 size institutions to surface the diamonds of insight of what they did right. But what of the real innovators in our economy?  What of the companies that generate millions upon millions of our jobs, even though over 9 out of 10 of them fail?   What can we do to prevent these courageous Founders and their fledgling ventures from being Good 2 Late?

For example, a large percentage of emerging business fail because they literally die on the vine of their own growth.  Economy Heroes of these essential ventures need a plausible path to answer an essential question:  Will my company make money at higher volumes? This company found out it couldn’t:

The Inc. Investment Indicator enables a company to measure the return it generates on capital – both physical and personnel. Most emerging companies don’t consider the financial impact of an executive hire on their risk level.  Employees impact ROI on capital as much as a lease or hardware purchase.  This company is already moving dangerously close to capital collapse; and even though they have the opportunity to scale their business, capital constraints will prevent them from doing so.

I love this scene from The Natural where Robert Redford describes a huge mistake he could have avoided:

Entrepreneurs rarely see IT coming; and that IT is No Man’s Land.  It’s the chasm of the inevitable transitions that a company must hurdle in order to scale the business.  If CEOs and their leadership teams can sync on the right priorities and prepare for No Man’s Land, they are less likely to step on the same landmines of those who were Good 2 Late.

Is your company crippled by its own strategy?   If so you’re in good company and, if so, there’s hope for recovery and the freedom to enable your company to maneuver in this economy.  Over 90% of emerging companies fold, often due to the fact that they allow themselves to become straplegic.

You might think our Special Forces are the ninjas of strategic planning.  Most of us would surmise that these superbly trained warriors agonize over charts and maps to devise the next 25 steps of their next initiative.  Not so, especially in the battlefield.

Special forces use a simple but powerful decision process called the OODA Loop.  The “Loop” by definition is circular not linear, in other words it’s a fluid and flexible methodology that requires a continuous flow of essential information combined with the ability to analyze and synthesize that information into quick decisions.  OODA stands for Observe, Orient, Decide, and Act.  According to my close friend and former Special Forces member, Mickey Pittman, the OODA Loop is designed to accomplish two objectives – defeat the enemy and survive.  Without the Loop, field warriors fall prey to attack and often are crippled in the line of fire.

Entrepreneurs can also become crippled by cumbersome, multi-teir strategic plans generated either by a Fortune 100 consultant or at 3 day workshops taught by a self proclaimed “thought leader”.    These plans weigh as much as the Obamacare document and rely on a linear series of events that are more difficult to follow than a map to the Lost Ark.  They traumatize Entrepreneurs and their leadership teams into a state of confusion and low moral; in other words the company becomes Straplegic.

Here’s a thought.   Instead of spending the next 12 months Six Sigma-ing your company into efficiency Nirvana, why not embrace the brutal facts of our New Normal economy and focus on remaining flexible in the battle to beat your competition and survive.  I suggest a 3 step process for business in lieu of the magnificent 4 step OODA Loop:

• Decide – Choose your company’s top 3-5 priorities
• Align – sync (continuously) your team on those priorities (look at previous “Sync’Em” posts)
• Track – hold team members accountable to actions that support priorities and update performance on company metrics

The DAT Loop requires continually updated information on team alignment, company investments, customer acquisition, management positions, and economic modeling.  If that information is available then the company can remain maneuverable to make the right decisions, maintain team alignment and a use a concise scoreboard to track performance.

Do DAT! You’ll be on your feet in no time.

We recently compared a client’s financial performance to over 400 competitors in their industry.   Here is what we found:

Our client’s company was at the bottom of the trough, poised to throttle up the wall of growth pains.  EBITDA dropped dramatically in the next revenue zone industry wide due to infrastructure and management requirements.  Once they peaked over the crest at $20 million the ride would be easier, but they had to pump in capital to fuel them through the transition.

Ironically, growth can be one of the greatest illusions of corporate health.  The sooner CEOs identify the wave before it crests and acquire the capital horsepower required to carry them through that dangerous transition – that my partner Doug Tatum identifies as No Man’s Land – the higher the probability that the company will survive and scale.

“When you think about a business plan, think about the distinction between a snapshot and a moving picture,” says William Sahlman, the Dimitri V. D’Arbeloff – Class of 1955 Professor of Business Administration at Harvard Business School and author of How to Write a Great Business Plan.

Writing a plan makes you feel in control of things you can’t actually control.  Why don’t we just call plans what they really are: guesses… When you turn guesses into plans, you enter a danger zone.  Plans let the past drive the future.  They put blinders on you.  “This is where we’re going because, well, that’s where we said we were going.”  And that’s the problem:  Plans are inconsistent with improvisation…  You have the most information when you’re doing something, not before you’ve done it.  Sometimes you need to say, “We’re going in a new direction because that’s what makes sense – today.  Give up on the guesswork.  Decide what you’re going to do this week, not this year.   Jason Fried, author of Rework, Founder of 37signals

“This downturn has changed the way we will think about our business for many years to come,” says Steve Odland, Office Depot’s chairman and chief executive.Walt Shill, head of the North American management consulting practice for Accenture Ltd., is even more blunt: “Strategy, as we knew it, is dead,” he contends. “Corporate clients decided that increased flexibility and accelerated decision making are much more important than simply predicting the future.”   Strategic Plans Lose Favor, the Wall Street Journal January 25, 2010

I spent several hours this week with the founders of a $12 million company who literally papered the circumference of their board room with a linear 5 year business plan – believing they’ve anticipated every decision and investment required to scale 10x current revenues by 2016.   I’ve encountered similar CEOs over the past year who have driven their strategic stake into the ground without considering the necessity of maintaining tandem action with their inner circle so that they can remain maneuverable by focusing on the right priorities that are relevant – today!

Entrepreneurs fight a daily battle for survival.  They’re immersed in a war that bombards them with a poor economy, increasing regulations and crippling taxation.  Without alignment between CEO and inner circle on the right priorities they are swimming upstream against the Class 6 Niagara rapids to meet objectives.   Instead of suffering through the perils of misalignment the team can DAT (Decide, Align and Track) in tandem, working with seamless synchronization on critical issues in the battle.  I love this final scene from The Last of the Mohicans when Hawkeye and Chingachgook pursue their enemy Magua not as individuals, but as a single fighting unit in tandem with each others movement and strategy.

Our company has observed that tandem action requires continual assessment of internal alignment as well as a trusted decision process that forms the backbone of an effective corporate culture.  When CEO and inner circle are aligned and in sync on the 3-5 top priorities for corporate growth, they can engage in the business equivalent of the “Mohican” tandem action that Hawkeye and his father achieved to defeat Magua and survive.

When tandem action occurs on a leadership team it’s an amazing and beautiful thing to behold.

Let me rephrase that statement in several different contexts with similar, but no less severe, outcomes.

This is what happens when an inebriated college student beta tests his idea for a new sport which requires the nuanced skills of a figure skater, a rancher, and a matador:

This is what happens when a cool family has far too much money to spend at Walt Disney World:

And this is what happens when the leadership team of a regional insurance company is out of Sync (alignment) on allocating resources to develop a new product:

The CEO and Inner Circle disagreed on investing in a new product.   Often when a company enters the fringes of No Man’s Land the team is confused and the CEO becomes bored; he/she “escapes” to a new idea that siphons energy and resources from the company’s core value proposition.   At this point the company can become distracted enough to fail in it’s inability to fund future growth.

… when alignment is lacking, new programs run a high risk of external failure and typically fall into disuse overtime.  Also, without management’s support and consistency, employees’ commitment to quality will usually deteriorate, their individual objectives will take precedence, and their morale and productivity will diminish overtime.

Bob Frost, Director of Measurement International

Misalignment is a superb example of the age-old physics rule: error increases with distance.  I will miss the target completely if I’m shooting at 100 yards and my site is off less than a millimeter.   CEOs and inner circles can easily migrate out of sync on critical issues, imperceptibly at first – ultimately off the “same page” altogether.   Companies fail when leadership is out of sync and lack a trusted decision making process.

This (failure) is what happens when companies are misaligned; but it’s not difficult, or time consuming, for a CEO and Inner Circle to get on the same page when they decide to do so.  Sync’Em – it’s the most important action to align and execute on the right priorities.

Just think what might have happened if the Skaterranchador would have Synched with his inner circle and stayed focused on his successful iPhone app?

Cragg arrived in Chile in late August, less than a week after the miner entrapment.  In less than two months, assisted by engineers in the Chilean Navy, Cragg’s Star Trek worthy, torpedo shaped vehicle was ready for miner retrieval.

How does this kind of innovation happen in less than two months?!   Ask your friendly neighborhood entrepreneur.  Our Economy Heroes provide almost all innovation in our economy because they have the creativity to invest and the maneuverability to respond to problems that demand attention and solution.  Listen to my partner, Doug Tatum, describe this phenomenon:

Hail our Economy Heroes who step up and step in with the same fervor and outer envelope “ideation” as Clinton Cragg invested for the Chilean miners.  The big boys can’t respond like this; initiating immediate innovation in a Fortune 500 company is like trying to turn a barge around in a retention pond.  Those behemoths don’t innovate – they BUY innovation – and then invest the millions required to scale the idea.

Thank you, Dr. Cragg for stepping over the cliff’s edge and diving down into the 2400 ft. solid stone rabbit hole with your invention.  Our entrepreneurs are ready to do the same, every day every where.  That’s why they are our Economy Heroes and America’s competitive advantage in the world economy.