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Get Off Your High Horse: 15 Ideas to Develop a Merit-Based, Results-Oriented Company Culture

“Executives and owners are simply employees of the company and therefore subject to the same policy and procedure endured by any associate.”
Sometimes the Bull Wins

The Lead Up to the First All-Hands Meeting
Once my eyes adjusted to the change from a Fortune 50 firm to a small regional business, I quickly recognized there was a solid list of apparent and overlooked positives. The company had many strong client relationships. The team was deep with talent; the top tier of associates could have played at any level of the industry. It was a lot of fun being around the employees; there was a natural camaraderie and a rich jocular style that comes with a young demographic mix. And beyond their doubts and concerns, I sensed the associates were ready to commit.

The real central question was the one on their minds: Was their employer viable, well-led, and worth a career commitment? The associates were right to have been harboring concerns about the company’s future. Cash had not been generated for two-plus years. The last audited financial for FY1988 indicated the losses had exceeded $1.2M. There had been a number of layoffs. Job security and the company’s survival was on every associate’s mind.

The root cause of most business failure is found somewhere in the mix of strategy, structure, and business process. The final symptom of failure is a working capital collapse. However, for employees the impression is less academic. Serious financial stress in a company is experienced by the rank and file associates as a values crisis. Commitments that had been made are not met; which calls into question the credibility of key executives. While budgets are slashed, and jobs are disappearing all around, employees are no longer sure what the organization stands for or believes in. Long-term office alliances and relationships are strained while associates compete for job security. In an organization in decline, it is easy to personify problems that find real root in business fundamentals. This is especially the case for young people who have not experienced the ups and downs of a business cycle.

To reverse the decline, an organization needs (1) a transfusion of working capital, (2) an effective strategy and viable model, and (3) reestablishment of a merit-based, results-oriented culture. A week into my new role, Jon and I were starting to wade into that sequence. That is when I scheduled my first all-hands meeting.

The objective of the meeting was not to make my introduction — we instead wanted to organize my comments around their interest — “security”, “career” and “opportunity”. With this group I knew my tone needed to be both light and serious. One objective for that meeting was to shift focus from the past. I wanted to legitimize how they were feeling, while challenging the team to move forward. Unfortunately, a sequence of former executives had made a practice of disparaging predecessors. I had never seen the value in judging predecessors. Beyond poor taste, there are at least three reasons why this is a bad idea: The criticism is usually inaccurate and out of context; there is no gain – in fact predecessor blame is counterproductive; and it is bad karma — since we will all eventually be part of the emeriti. It was important for me to get the associates’ energy out of the past — and I thought I may be able to have fun expressing that view.

The First All-Hands Meeting
At the beginning of my comments, I made a few lead-in points:
• It is a privilege to be part of the team. I know good talent. It is obvious to me the culture is rich with tradition, and the team is deep in ability. I have worked in award-winning Fortune 50 branch offices my entire career and this organization could compete with any of them.
• Their sacrifice has been crucial to our survival, and hasn’t gone unnoticed. All should be proud indeed of the collective efforts.
• Our firm has made it nearly to the end of the recession because of those efforts. There is tremendous opportunity for the firms that will make it through. If we push to the other side, with this talent we have a chance to go on a run that this team, our competitors, and the market would not soon forget.

I knew the audience was curious about my management style, so I let the group know I had a cautionary tale to share about my viewpoints on management. With a smile, I leapt right into the tale:

“An executive had been recruited to be the new president of a regional high tech product and service company. As he walked into his new office, his predecessor was just leaving holding a box of personal possessions. Startled, they exchanged strained cordialities. The outgoing exec broke the ice and said, “Listen, I wish you the best of luck. I know you probably don’t need any advice from me, but just in case it helps, I have left three envelopes marked “#1”, “#2” and “#3”. I placed these out of the way in a hanging Pendaflex folder in the credenza drawer. If you want — open these one at a time when you confront a crisis.” He quickly ducked around the corner and exited the business.

The honeymoon went along smoothly for the new president, but four months into his role, revenue plummeted unexpectedly. Working late that evening, with a slight bead of sweat pouring off his brow, the president came across those numbered envelopes. He took out the envelope marked “#1” and opened it. The message read, “Blame it on your predecessor.”

The president acted. He called his managers together, and with nuanced cleverness, he laid the entire blame on the previous president. From this point forward, things were going to change. The old style was out — things were going to be different. Old meetings were cancelled and new meetings defined. Team building, rope courses and performance coaches were introduced. People learned about each other’s communication preferences. Favorite business books were distributed. Revenue cycled up, and the crisis passed.

All went along well. However, about a year later, the company was again experiencing a revenue decline. Yet the crisis was compounded with a serious expense control problem. Late one night in his office, in a deep state of panic, the president recalled those envelopes. He hurriedly ripped open envelope “#2”. The message simply read, “Reorganize.”

The president jumped into the task. He brought the team together, announced he was moving the managers around to new roles. He renamed all the departments, changed all management titles, and “sales representatives” became “territory managers”. Fast-trackers were identified, and company mentors were assigned to them. The president then developed a presentation with the new org charts and visited every team to tell the story. The chairman and the board congratulated the president for his insightful efforts. Revenue cycled up, expenses fell back into line, and the crisis passed.

After several consecutive profitable quarters, the company faced a third crisis. Revenue declined, expense increased out of control, clients were concerned with delivery and quality, fast-trackers — fed up with “being mentored” — resigned, and projects were neither on-time nor at budget. The president went to his office late that evening in a cold sweat, closed the door and opened envelope “#3”. The note said, “Prepare three envelopes.”

The crowd burst out in laughter. The story was good therapy. The team appreciated the self-deprecating message about my station, and by synching up with their doubts, I was developing credibility. Most importantly, my message inferred we were going on an altogether different journey.

It was time to introduce the ownership structure of the soon to be carved-out entity. I started by asking if any in the group knew the difference between the words “committed” and “involved”. A number of hands went up, and someone spoke out, “The hen was involved in the ham and egg breakfast, but the pig was committed!” Then I announced, “The revolving door of leadership has stopped. Jon and I signed over everything we own, and executed agreements to buy 50% of the firm each. We are all the way in – we bet the farms on your success.” I emphasized that Jon Peacock was not just the other 50% shareholder, but an individual I admired more than any I had met in my career. I was proud to call him my friend and partner. His reputation across the community was stellar and it was his leadership that kept the creditors and vendors positioned to support our new business. “We are committed to your security and careers and this firm’s future.”

In the interest of drawing their attention to the future, two far-fetched goals were identified. I said, “As you walk to your cars after our meeting, look down Old Seward Highway and spot the top of British Petroleum’s building through the trees. BP and the others like it are the type of accounts we are going to pursue and capture. We are definitely heading up-market.” In addition to an “up-market” focus, I followed with the point that our top line mix was going to emphasize higher levels of service revenue content. We were going to chase large-scale, long term service projects in corporate and institutional accounts. A five sentence version of our new business positioning was handed out to make it easy for all to understand and explain.

To begin the wrap-up, I emphasized to the group that their expressed concerns were appreciated and understandable. We would be making critical changes in the next 90 days that they could count on, including: Leasing a new upscale office within three months, and securing substantial financial commitments from the largest bank and the fastest growing telecom company in the state. I asked that they write those promises down and hold us accountable to the commitment.

I finished my first meeting by saying, “We will need a little more of your indulgence — we won’t fix all the problems tomorrow. You will see profound change in the coming weeks and months. But don’t take long to buy in — as much as you have already given, I have to ask more from each of you. Your support, confidence, and attention to the little things are needed in extraordinary measure. Your collective commitment will create the critical momentum. You can trust that it will pay off in better job security for all, interesting career paths in the future, and a professional journey you won’t forget.”

We got a great response from the associates. Now it was time to meet our list of promises. We were not taking a chance on our credibility. Jon had been architecting the credit relationships, the stock purchase agreements, leases and floor plans. We had a high confidence we would get all of these objectives accomplished.

15 Ideas for Small and Mid-Sized Businesses to Impact Culture
Jon and I collected a number of values, recommended acts, and insights from our conversations and readings that we intended to embrace in the new “corporate culture”. Listed below are 15 of those ideas.

1. Owners and executives are simply employees of the company and therefore subject to the same policy and procedure endured by any associate.
2. Principal’s intent on building shareholder value should take conservative salaries, and reinvest earnings in the company.
3. Avoid the appearance of privilege. Principals of emerging enterprises should look conservative. New cars, fancy offices, Rolex watches, and Armani suits produce unintended consequences.
4. People notice hypocrisy. Principals should set the standard for work ethic; at least collectively, principals should be at work the earliest and stay the latest.
5. Executives don’t really need a big office. The manager with the most direct reports should get the largest office, along with a table and chairs. Conference room usage will be more efficient that way. And get rid of the stuffed blue marlin on your office wall. It sends the wrong message.
6. Vendor benefits, gifts, and prizes are not for the ownership team or salesperson. These SPIFs (i.e. special product incentive fund) are best applied to the company and/or for the employee reward and recognition programs and distributed based on merit. SPIFs should not be distributed to the principals for their personal use.
7. Culture is the collective of what the organization stands for and what it believes in; the central beliefs and attitudes. A practical definition of company culture is how employees act when management is not around.
8. Cultural health can be gauged in part by each employee’s understanding of their purpose in the context of the plan; their self-confidence to act to achieve that purpose; and belief that good performance will be recognized.
9. Eliminate bottlenecks and increase the degree of freedom. Performance happens if associates who know their jobs – and have the freedom to do the job – are matched with an intelligent plan that has room for innovation. In this environment, the business will grow, job security will improve, careers will advance, and associate confidence in leadership will be earned.
10. A motto, business principles, and mission statement will produce widespread cynicism if there are significant differences from common perceptions. What may work better is to lay out the strategic positioning and the tenants of the business plan in five or less simple sentences. Once everyone buys in — delegate.
11. Organize the company around recognition events. Hold regular meetings for the employee workforce. Reward and recognize associates publicly and often. Create ritual around reward and recognition. Also reward employees for telling you what is broken; then think of ways to have fun with the discoveries. Fix the processes causing issues.
12. “Egalitarian” and “more” recognition will work well. “Inner-circle” and “less” recognition will not work at all. If you are a principle or key executive, tell your direct reports that unfortunately their positions will have to be public recognition enough.
13. Take a sincere interest in the employees. Be approachable. It is more enjoyable to be involved at this level.
14. Get the organization involved in the community and in charitable organizations. It brings meaning to work, creates opportunity for camaraderie, and good community association.
15. Have informal non-business gatherings including picnics, potlucks, and holiday parties. Dispense with speeches about the business at these events – and make sure you thank the spouses and their loved ones for their indulgence and understanding.

Please add your own ideas to the list and share your comments.

Tags: Business, Entrepreneur, Marketing, MBA, Motivation, MSP, Sales, Technology, Uncategorized, VAR

This entry was posted on Friday, June 3rd, 2011 at 10:09 pm and is filed under Entrepreneur, Innovators and Entrepreneurs, IT Professional Services, MBA, Start-ups, Technology, Uncategorized, VAR. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Back from the Brink: 7 Steps to Business Recovery

“For Heaven’s sake heave out the ballast!” “There! the last sack is empty!” “Does the balloon rise?” “No!” “I hear a noise like the dashing of waves! …”
Jules Verne, Mysterious Island

For the first decade of my career, I had worked in branch offices of a growing, “Fortune 50” information technology company. I was not prepared for the transition I was about to experience. The moment I decided to take on the new entrepreneurial opportunity, the exhilaration of being recruited was suddenly over. On the appointed morning, I resigned and left a multi-storied, concrete, steel and glass office building, and drove out of my heated underground parking garage for the last time. Five minutes later I arrived at a lot next to the Fireweed Theater. My new business was located in what only could be described as a run-down strip mall.

Well before I met an employee, I knew that there was little enthusiasm left in the workforce. As I walked across the parking area to enter the store, I picked up a crushed coke cup and popcorn tub discarded by a theater patron. Then I noticed the retail stores’ 20 foot high outdoor changeable-letter sign; there was no message on the sign for the passing traffic. I opened the door and could see computers on display that were obviously not demonstrable. I didn’t know much about the retail computer business, but I knew that these were not indications of esprit de corp.

My partner introduced me to the sales team leader as simply “our new president” — we skipped the ownership description for later. Jon quickly headed back to our corporate office, and the sales manager took care of the rest of the introductions. I spent most of the first day in one-on-one meetings with our associates. I could tell that energy had to be mustered by most associates for a conversation with the “new guy”. Eye contact was hard to come by; employee attitudes seemed to range from deeply pessimistic to cynical. This was no surprise; those remaining on the payroll had endured a multi-quarter cash crisis, a sequence of layoffs, pay freezes and reductions, and a number of executive transitions. The more imaginative staff members were working on theories to explain why I had left such a fine career to join this organization, and whispering about how long I might last. The same thought may have crossed my mind.

Jon Peacock and I met late that afternoon at the TransAlaska Data Systems corporate offices – which I had learned that day was nicknamed the “Death Star” by our employees. Jon greeted me and asked, “How did the day go?” I smiled and let Jon know that my impression was some of the employee attitudes seemed like they “would have to get better to be bad.” After a good laugh, we sat down for the next few hours with a stack of interview notes, and a well-worn Scott McMurren article from Alaska Business Monthly on survival. We exchanged views gathered from our ten years of experience and opinions on the current state. We then outlined the seven steps we would follow to get the business back on track.

Step 1 – Establish familiarity with the turnaround process by defining a plan.
We were going to make sure everyone knew that we were unusually committed to the organization – we had literally bet everything we owned on the companies’ success. Most importantly we wanted to communicate that Jon and I, and our new board of directors, were experienced with business cycles, turnaround efforts, and confident in the future.

Step 2 – Recognize reality.
Just like many organization that had missed multiple quarterly performance expectations, we needed to do our laundry and fully disclose to stakeholders the true status of the books. We knew the first sign of an impending turnaround was recognition or write-down of all:
• Under-performing initiatives,
• Over-valued assets, and
• Hidden unreported expenses.

Our borrowing base formulas with the bank posed a logical barrier to an overzealous effort at marking our assets to value. Notwithstanding borrowing base management concerns, a very large asset write-down and full disclosure to all concerned was the right start at establishing credibility with our new board, financial stake-holders, and employees. And an accelerated depreciation schedule would take care of the rest. One additional benefit would be that our true performance would be reflected in each new financial report going forward.

Step 3 – Most importantly, get control of cash.
We had to stop the hemorrhaging of cash. Bold action was needed immediately. Jon and I decided on three principles to our cash control program.
• The reduction of our salaries and the elimination our management bonuses would precede any further reductions in staff.
• Any reductions in staff would be deep and one-time, and when possible the changes would focus on performance and those with unsalvageable attitudes.
• A comprehensive expense reduction plan would be put into place.

To establish the reduction objective, all programs and locations, including “sacred cows”, were to be reviewed carefully. Expense reductions were going to require:
• Combining accounting and administration into one department for all locations,
• Consolidating warehouse locations,
• Renegotiating all leases,
• Review of all contracts and discussions with all vendors,
• Restructuring the benefits programs,
• Collapsing management levels,
• Merging, centralizing, or eliminating some practices, and
• Once we were fully engaged up-market, getting out of the retail business altogether.

We knew that unless the hemorrhaging of cash was stopped, the firm was still heading to the brink.

Step 4 – Raise cash.
We were making every effort to quickly put the 1.1M bank line of credit in place and execute the GCI loan for 400K. Together these loans would improve the borrowing base and cash on hand, and support our sales objectives.

Moreover, we were going to work our internal sources and uses equations by:
• Improved billing and A/R disciplines to correct the 75 day DSO condition (i.e. Collect early),
• Increase trade credit (i.e. Gain terms to pay vendors late and put more on trade credit),
• Explore sale-lease backs to produce a capital infusion on internally deployed assets, and
• Outsource sales process to consume less working capital (for example – PC manufacturer and reseller programs would soon emerge that would reduce working capital requirements in Higher Ed and K-12, and other institutional accounts).

We further planned, if necessary, to approach a list of investors on a secondary offering. We knew our firm would remain on the edge of failure unless adequate cash was raised and solid creditor agreements produced an effective level of working capital.

Step 5 – Recover credibility with associates, investors and creditors.
We were intent on accomplishing everything we said we would when we said we would. This started with the discipline to make only commitments we could keep. One objective was to deliver on time the aging reports, financial reports, ratio stats and payments to creditors. Another was to drive A/R and inventory down. We also knew of two slam-dunk initiatives we could promote to establish a pattern of promises made and met: loan agreements and a new office location.
• Loan Agreements
Since we were within a few months of executing new credit agreements, we would state to our associates we were making every effort to close these loan agreements. Once these were closed, we knew there was value in the announcements of our success to the workforce. The dourest of our business partners, the banker, and a savvy telecom company were expressing confidence in our business plan with these loans. That would make a powerful statement to even our most skeptical associates.
• New Office Location
We were 120 days from relocating to new office facilities. We would announce our intent to find and execute a new 10,000 square foot office lease in a highly desirable section of the city. Leases of this nature would only be provided to a creditable firm. An impressive new office would be a tangible statement to clients and competitors that we were committed for the long term and planning to grow. An upscale lease would significantly impact employee esprit de corp. All of our Anchorage associates would soon be under one roof. An outdoor changeable-letter sign would not be part of the new image.

And we identified two far-fetched goals that would motivate our associates and disclose our primary strategic objectives. We were moving our focus up-market, and we intended to emphasize IT service revenue.
• Our target market was going to shift to corporate and institutional accounts —
We intended to pursue and capture the largest and most prestigious client relationships in Alaska, including British Petroleum, Arco, the State of Alaska, the Department of Transportation, and the University of Alaska. Our first step would be to put every bit of our effort into the State of Alaska and University of Alaska bids. And we would express confidence we were going to be highly competitive in enterprise and institutional accounts, and would win our share.
• Our emphasis was going to change to IT service delivery —
We were going to get organized around selling and delivering IT services to large accounts. We were confident we could show progress on both of these objectives.

Step 6 – Work to show a profit.
We began to identify the overlooked positives in our organization. We looked for programs that competitors and peers had successfully implemented. And we immediately began to take these steps:
• Recruit back key associates we had lost that would drive revenue,
• Retain the key associates who were considering departure,
• Add new practice opportunities,
• Create more effective business process, and
• Focus management’s attention on closing the largest accounts.

Step 7 – Execute. Execute. Execute.
Jon and I knew we needed to produce action and measurable results on a short set of priorities. It was our job to communicate, allocate limited resources, deliver our attention to these high profile objectives, and close the gap between early and late adapters of announced change with personal promotion. On achievement of measurable results, we were committed to rewarding those that made the difference. We wanted to make execution an organizational habit, ensuring implementation predictably followed announced change.

These seven steps were not invented by the two of us. We were following a process that corporate managers are trained to apply to underperforming entities, and any number of business authors had described. This sequence of action is so predictably employed that it is the basis for investor models that are used to pick value investments such as the “Dogs of the Dow” or “Dow-Dividend” approach. The “value opportunities” in the Dow 30 are obvious; as the share price declines, the dividend will grow as a percentage of the share price. Calculate the five or six highest dividend yields in the Dow 30 to identify the value stock picks. Investors know these under-performing firms will face unrelenting pressure for management action from shareholders and directors, and follow a very similar sequence to improve the firm’s performance. If not, the directors will eventually replace the leadership, or the shareholders the directors, or the market the firm.

The obligation is the same for the principals and executives of smaller enterprises. Instead of public shareholders and bondholders, the requirement to act emanates from the stake-holders of the small enterprise:
• The principals, investors, and board members,
• The vendors,
• The bank and other lenders, and
• Career minded employees.

Jon and I understood that if we did not take action, less familiar business professionals would do so on a “post-petition” basis. However, then it would be accomplished with less understanding of the circumstances, less experience with the firm, and less empathy for the employees. We had to step up, get the job done, and by doing so earn the confidence of the team.

We stepped back from the brink by: (1) Assembling an experienced team, (2) Disclosing to stakeholders the true status of the books and getting the accounting corrected, (3) Gaining control of cash, (4) Raising cash, (5) Recovering credibility with associates, investors and creditors, (6) Working to show a profit, and (7) Executing our plan. The economy soon recovered, and the key employees regained confidence in the organization and each other. This core group of associates was instrumental in building the company from a firm on the brink into the regional leader. Their efforts produced the critical funding source and business model used to develop a profitable, fast growth national enterprise.

Tags: Business, Entrepreneur, Marketing, Motivation, MSP, Sales, Start-ups, Technology, Uncategorized, VAR

This entry was posted on Friday, May 13th, 2011 at 12:35 pm and is filed under Entrepreneur, Innovators and Entrepreneurs, IT Professional Services, MBA, Start-ups, Technology, Uncategorized, VAR. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

The Beginning of the End-Game

“Even the violent end, the matador on his toes, sighting along his blade, the drop of the cape, the sword buried in the bull’s shoulder to the hilt, the blood on the sand…had a strange, primordial attraction…”
Sometimes the Bull Wins

In late May 1997, our board held a meeting at the Willard Hotel in Washington DC. Board member Bob Hatfield, the former president of the Alaska Railroad, had traveled more than 20 hours to DC from Belo Horizonte, Brazil. The logistics of attending our board meetings were challenging from his new home in Brazil. For years a disciplined attendee and valued contributor, he had missed the prior two board meetings. As the president of a Brazilian railroad, Hatfield was wrestling with a new role, a new culture, and Brazilian Portuguese. As we gabbed away prior to the board meeting’s start, a usually expressive Hatfield stared in silence at his talkative associates with an uncharacteristically blank expression. When I finally asked, “Robert, are you all right?” he deadpanned, “I hadn’t heard this much of a familiar language spoken in months…I’m just adjusting to my ability to comprehend!” Then out came Hatfield’s hearty laugh, and the reunion was on.

It was an exceptional moment in the history of our firm. The information contained in the preliminary board packet was all up beat. Led by one of our best executives, our host branch delivered an outstanding presentation. The rest of the agenda was full of good news. We had paid off a convertible subordinated debenture early. The launch of our sixth and newest branch had begun in earnest, and our seventh branch was on the drawing board. Our quarterly results were strong, and our financial position excellent and getting better.

Moreover, I had a big announcement to make. Our franchisor’s newly emplaced president had approached me with a serious entreaty to immediately begin negotiations to buy our firm. This was fabulous news for the board. Although we had long been interested in being acquired, we sensed it was important that they approach us first. Historically we had been one of their most award winning and most closely allied franchisees. Yet, our franchisor had now clearly prioritized the acquisition of firms less affiliated. For over a year they had been forward integrating into our channel, and had not expressed a recent interest in our firm. We began to believe that in our franchisor’s view, our effective relationship had made our firm a low acquisition priority. Why should they buy an alliance that they already controlled?

In the months preceding this meeting, we had worked out a set of steps to change the status quo and unsettle the relationship. First, in a low key but obvious fashion, we developed a plan to go public and began to execute systematically on the plan. Then we opened our two newest branch offices in markets where our franchisor had major initiatives: the first adjacent to one of the franchisor’s owned-branches, and the second near one of the franchisor’s financially sponsored locations. After that, we leaked that we had engaged our franchisor’s competitors in a bid process to determine our primary source of supply. Our last step was to dramatically eliminate their conversion options by paying off our subordinated debentures early; thereby limiting them to a 19.9% minority stake in our firm. With each step, we reaffirmed our relationship, but acted increasingly disaffected. However, the bravado aside, our stratagem of visiting this sequence on the relationship seemed as if it was having little to no effect. Worse yet, we were running out of ideas to give them cause to initiate the acquisition conversation.

Just at the point we had become concerned, our franchisor made their move. We now had our Letter of Intent and would soon be deep in negotiations. To further unsettle our franchisor, after they announced their interest to buy our firm, we recommended that their board seat be temporarily vacated. We argued that there were potential conflict of interest liabilities if that seat remained filled during acquisition negotiations; and they agreed.

As we walked through the discussion and decisions at the Willard Hotel, our board was visibly delighted with the news. With negotiations now ready to move forward, it was clear our firm was on the brink of its greatest opportunity. We knew also that we had our most difficult challenge ahead — fighting through an exit game with a Fortune 500 firm’s executive team. Nevertheless, that would all wait for later. We could not help but savor the moment.

After a rigorous strategy session with the board, that night at Sam and Harry’s Restaurant, all spouses and board members settled into a private room. Sam and Harry’s signature service took over. The meal was spectacular and the conversation a raconteur’s delight. Frank Danner was delivering one witty tale after another, and Bob Hatfield was not far behind. Susan Hatfield joined in with her humorous stories. The tears of laughter were flowing as well the wine.

Sam and Harry’s assigned a maitre’d to orchestrate the service for our private dinner. He was excellent, and his wonderfully thick French accent added a distinctive charm to the service. In the midst of all the fun, I noticed our maitre’d’s behavior. During an anecdote by any dinner guest, he seemed to drag a leg to stay in the room. He would find a fork to move, napkin to pick up, or wine glass to fill — until a punch line was delivered — then he would dash out quickly and return before the next story began. I finally caught his timing, and asked if he “enjoyed a good humorous story?” His eyes lit up, and he impishly said, “May I” as he pointed to the front and center of the private room. Then our maitre’d, with the encouragement of the entire room, took the “center stage” and told this wonderful tale…

“An American, who enjoyed exploring cultures and custom, was visiting his Spanish business client in Pamplona. He was invited to join his friend on a balcony at the Plaza de Toros, the bullring, for an evening of the “National Sport of Spain.” At the bullfight, the American was caught up in the pulse of evening; the enthusiasm of the crowd, the choreographed tradition of the battle between man and beast, where the grace and courage of the matador was juxtaposed against the raw power and animal instincts of the bull. Even the violent end, the matador on his toes, sighting along his blade, the drop of the cape, the sword buried in the bull’s shoulder to the hilt, the blood on the sand…had a strange, primordial attraction that the American visitor could not begin to explain.

The Spaniard recognized in his friend and client a passion for the sport that escapes most American attendees. In recognition, he invited his American guest to a very exclusive “after-fight” celebration, “Los Festejo de los Aficion,” at the famed Hotel Montoya. The dozen or so select guests, aficionados, were invited to a special banquet room. Once there, the superb preliminaries led to the grand main course.

However, when the servers arrived, the American was shocked. The main course looked awful, and over-large, and the course hung over the serving platter gracelessly. His Spanish friend explained that at this traditional meal, the cojones of the “defeated one” were served. The American braced himself. Yet, on tasting the main course he found it was most delicious. He asked for seconds…and then thirds. Relieved, the Spaniard honored his friend with a toast and an open invitation to return to Pamplona at his pleasure — to the Plaza de Toros and to Los Festejo de los Aficion.

A year later, the American returned to Pamplona accompanied by the president of his firm. He could not get the fights and the “after-fight” celebration out of his mind, and built his travel partner’s anticipation as he raved about this strange and wonderful traditions of the ring and the exotic food. Travel delays prevented their attendance at the first night of bullfights. Fortunately, the Americans still had the after-fight celebration at the Hotel Montoya to look forward to.

Upon arrival at the Montoya, they were shown into the exclusive dinner gathering, where their Spanish host was most gracious, and the aperitifs prepared them for the preliminary courses that followed.

Finally, the main course arrived. Once served to center table and the covers were removed from the platters, the American guests were taken aback. Instead of the overlarge, “hanging-off-the-platter” main course, the course was very small, smaller than a large fisted-hand, and certainly not enough to feed the dozen guests. Disappointed, the American said to his Spanish host with concern, “What is this?” And then the Spaniard, shrugging his shoulders, gently explained, “I’m so sorry, but…a veces gana el toro…sometimes the bull wins.”

On the delivery of the punch line, our room erupted in laughter. Even with all the merriment, the relevance of this story struck me. Throughout the evening, the inescapable subtext was that our most formidable business challenge – the exit process – lay ahead. We knew we would have to contend with an ominous mix of elements. While our potential acquirer waved in front of us this entreaty of acquisition, their policies and actions were increasingly aggressive and a risk to our firm’s welfare. By their forward integration, our franchisor, our market partner, was quickly becoming a direct competitor. We had been left no choice but to counter their moves and demonstrate we posed a danger. It seemed clear that we had entered a choreographed competition, the business equivalent of the Plaza de Toros. The maitre’d’s story became our metaphor. Much like the bull facing the matador, we knew if we tired, our franchisor could soon be sighting along their blade, and dropping the cape.

As the evening was ending, I stood, raised my glass, and proposed a toast, “To the bull — because at times the bull wins.” Then, all those around the table responded enthusiastically, “To the bull!” In the end, the maitre’d’s anecdote was prophetic.

©2009 Ancala Equity Partners / Timothy P. Fargo all rights reserved
Next: Back to the beginning — positioning to the current.

Tags: Business, Entrepreneur, Marketing, Motivation, Sales, Start-ups, Technology, Uncategorized

This entry was posted on Tuesday, February 8th, 2011 at 1:51 pm and is filed under Entrepreneur, Innovators and Entrepreneurs, IT Professional Services, MBA, Start-ups, Technology, VAR. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Defying the Odds

“This Highway is for gamblers, better use your sense. Take what you have gathered from coincidence.”
Bob Dylan

One of the great American dreams is to be an entrepreneurial success. In our society being a successful business owner makes a statement about an individual’s work ethic, creativity, leadership and willingness to take risk. Successful business owners make a positive contribution to their community, and a lasting impact on the lives of many.

Perhaps part of their allure is successful entrepreneurs defy the odds. The vast majority of businesses are not successful. Despite all that has been written about how to start and operate a business, business failure is much like history — it is sure to be repeated. However, entrepreneurial success is also repeatable. Many entrepreneurs move from success to success with a recognizable pattern. At the root, there are business community mentors and sponsors, and capital raised and risked. Successful enterprises are planned, and then progressively built on a repeating loop of opportunities met with effective action. Successful entrepreneurs finish well with a managed exit strategy.

“Sometimes the Bull Wins” will be a collection of short posts and essays exploring the evolution of our business sensibilities and the underpinnings of our business efforts. The blog is intended for anyone operating a small or medium-sized IT professional services business, or thinking about starting one someday. Franchisors and channel management firms may also want to read it very carefully. Our commitment is to pack it with great ideas, and inspire conversations that produce ideas — any one of which could make a material difference at critical junctures in the start-up, development, and sale of an enterprise.

Tags: Business, Entrepreneur, Marketing, Motivation, Sales, Start-ups, Technology, Uncategorized

This entry was posted on Friday, August 27th, 2010 at 4:20 pm and is filed under Innovators and Entrepreneurs, MBA, Start-ups, Technology, Uncategorized, VAR. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.