December 14, 2015 by Ken Goldstein - 4 Comments

Leading Teams Toward Success Using People, Products and Profits

I’ve written the words People, Products, Profits (In That Order!) so many times over the years it would be easy to think of them as simply a slogan I use, a catchphrase meant to pique your interest. I assure you this is no more the case than Apple using the words Think Different as a clever tagline. Like the words Think Different, People-Products-Profits is part management philosophy, part rallying cry, and in an aspirational context, part religion. When I invoke these words to set the table for embarking on the outrageous, it is with the full knowledge that I could sound silly, fail miserably, fall on my face, or possibly convince you that relentless pursuit of the extraordinary is within your grasp. That’s a lot to bite off in a very few words. It’s meant to be.

In my new book, Endless Encores, a veteran CEO named Daphne spends an evening talking with an up-and-coming executive named Paul, helping him come to terms with the potential first failure he could be facing following a huge initial success. They are stuck in an airport, passing the hours. She is a leader and he is leader, only at the moment he is too obsessed with his own personal exposure to realize that he is failing to be a leader by trying to duck out of the way of his own mishap. By worrying more about what he has done than what he has learned, he has shifted the weight of his problem from marginal to endemic. In truth, the failure he might be facing is not so much a setback as it is an opportunity. By the end of the story, he has embraced that and reset his sights on the long game.

Save for the guidance from Daphne, Paul might have missed the boat. And the plane. And all that might have been ahead of him in the form of material reward, passionate accomplishment, intellectual richness, and emotional fulfillment. It’s a close call, but he makes it over the coals. You can, too, if either you have a Daphne in your corner and you’re willing to listen, or if you otherwise come to acknowledge your role as a leader is more about the long-term example you set than the specific offering you at the moment champion. One is permanent and tangible, the other fleeting and beyond your control. Where would you prefer to focus?

Leading through People, Products, and Profits means committing to the idea that talent is a priori to all success. This has much less to do with your own talent than the talent you assemble, empower, and inspire. World class products and services don’t create themselves. They are created by human beings, most often high performance teams, and the time you devote to building and bolstering those teams is a direct reflection of your values.

When your team identifies a product concept that is worth pursuing, leadership becomes the championing of execution over the touting of an idea. We can all dream up big ideas, but few of us can bring them to market. Those who can almost invariably need some form of stewardship to hold the team together through unending punch lists of details. If that’s not challenge enough, you can have the best team in the world and the best product in the world, but if your business model is not sensible and doesn’t sustain the enterprise, it really doesn’t matter what you set out to accomplish. A business has to create value, usually measured in the form of profit, and if you can’t lead a team to do that more often than not, you’re not likely to get many chances to stand in the center ring.

The point of the rallying cry is to set a tone of priority, balance, and perspective. Everyone likely wants a business that is profitable, but leaping straight to the outcome ignores the most valuable element in the mix: your customers. An exceptional team that has been well-directed puts the customer in first position, in essence their supreme boss, with the primary hope that if a customer’s expectations are exceeded, that customer can become a customer for life. When we talk about the notion of lifetime value, we are talking about just that: Have we surprised and delighted a customer in such a way that they ascribe emotion to the brand we represent? Will they come back for more with cost-effective prompting, and will they tell their influence circles about the breadth and depth of their fine experience? That’s why a business leader is accountable first to customers, because they hold all the cards, and that’s why when they pursue a business opportunity, they place investment in talent first, product innovation second, and business model third. You need all three, but put them in the wrong order and you are left extracting value from a customer rather than bonding a customer who becomes a partner in creating value.

Yes, you have to juggle three balls at once in sequence if you want to repeat success, and you have to do it over and over. It’s not easy and it’s not supposed to be easy, because if it were, you wouldn’t be worthy of praise or wealth because anyone could do it. Likewise, leadership is a choice. It’s not for everyone. The rewards are far often more intrinsic than measurable, and falling on your face in a public forum is never going to be fun. You will fail. We all fail. If you learn when you fail you will also win. You have to decide if leadership is really something you’re ready to shoulder. If you are, choose your words and the order of those words carefully. The talent around you will only become cynical if you’re insincere and don’t stand for something more than winning right now.

Repeating success is about the journey. Leading is about tone and substance. Projects are always short. Careers can be short or long. The choice is always yours. Your values always matter. If you’re deliberate in determining how you build a culture of shared values, the best around you will always be listening. Stay authentic and their results will surprise you. Those are likely to be extremely pleasant surprises.

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This article originally appeared on Leadership Now.

Photo courtesy of Free Range Stock

September 22, 2015 by Ken Goldstein - 0 comments

Endless Encores: A Brief Excerpt on Profits

With the September 22, 2015 publication of my second book, Endless Encores, I wanted to share a few excerpts to catch your interest. Published by The Story Plant, this is a business parable about People, Products, Profits—in that order. This excerpt is from the chapter about Profits.

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There was a modest rumble in the room. A flight had been called. It was not Daphne and Paul’s flight to Los Angeles, but both were heartened by the rustling of computer bags and rollaboards around them as fellow passengers-in-waiting began ambling to the door. It had been a long night, but now it appeared the delay would not go on forever, nor the conversation.

“We have hope,” proclaimed Paul. “We’re going to get out of here.”

“Hope is the strength that keeps us going,” said Daphne, watching people around her happily begin to leave the airport lounge. Since their flight wasn’t leaving, she had no reason to follow them, but she knew her remaining time with Paul would be limited.

“When you set out to determine strategy, how do you think about building the business so it keeps growing?” continued Paul. “No sane executive wants to lead a company into the Dead Brand Graveyard, yet so many end up there. Suppose they have the best people and the best products. How do they get their head around a business model that is going to both work now and expand into the future?”

“That’s the greatest enigma of all,” answered Daphne. “You have to think about recurring revenue alongside new revenue. Some transactions have to be there without your prodding, so you can add new transactions on top of them. If you’re going to spend money to acquire new customers, you have to balance that with what you’re spending to retain the ones you have. If all you do is spend to acquire new business, your margins will be perpetually squeezed. No fun, I assure you.”

“My boss says that all the time,” agreed Paul. “If every year you start the P&L from zero, it’s virtually impossible to grow. You have to know there is some business already on its way from your catalogue of products, and on top of that you add new product introductions.”

“Smart guy, your boss,” said Daphne. “He gets the mix a lot of us miss. Maybe he was at the same Paul McCartney concert I attended.”

“The same boss who isn’t going to can me for this lackluster sequel?”

“Yes, that clever fellow. Let me ask you something about that catalogue of products, the base of recurring revenue. Do you cannibalize your own markets before the competition does it for you?”

“Well, we don’t put out the same videogames, so it’s not exactly possible,” said Paul. “But if you’re asking do we sometimes leave one out there longer than we should to extract the last bit of profit from it, yeah, we do that sometimes.”

“How does it make you feel?”

“Queasy”

“Me, too,” winced Daphne. “I think we all do it to some extent, but the key to all of this is balance. Yes, you need a base of recurring revenue, but if you don’t give your customers something new and exciting before your competitors do, they will sweep your customers into their camp. You have to study and manage the ratios of evergreen and introductory endeavors at work in all your sales channels. Remember, constraints on distribution are low, choices are high.”

“It’s staggeringly hard to find the stamina to pull a product from the shelf when it’s still selling,” said Paul. “R&D costs are ridiculously high. We need all the sales we can muster for contribution margin to make sense.”

“One of the hardest choices in business is to pull a product while it’s still moving. Again, what we are talking about is strategy. Of course you don’t want to leave more money on the table than you should, but you’ll often find you need to leave some. If you don’t do it, your competitors will happily obviate your offerings. That can be the end of one brand and the birth of a new one that is no longer yours.”

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Endless Encores: Repeating Success Through People, Products, and Profits by Ken Goldstein is available in hardcover and as an e-book from Amazon, Barnes and Noble, iBooks, Kobo, IndieBound, Indigo, and at independent bookstores near you.

September 15, 2015 by Ken Goldstein - 0 comments

Endless Encores: A Brief Excerpt on Products

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Paul’s phone dinged. It was the text alarm. He was afraid to look, but he knew the Band-Aid had to be ripped off in one pull. He turned over the handset so they could both see it at the same time. The text read: “We’ll talk when you get back.”

“I’m not off the hook,” grumbled Paul. “Not even a little.”

“Did you expect you would be with a simple text?” asked Daphne. “He’s your boss, not your father. How much did your company invest in the sequel?”

“Millions. We’re not going to lose all of it. We may not lose any of it. We just aren’t going to make the kind of money we made on the original. Sequels in my business are supposed to do better than the originals as the brand and market expand. Everything we do can’t be a winner.”

“Would you let Randy or Helen off the hot seat for mediocre performance with just a text?”

“No, of course not,” said Paul. “I would remind them that there is no growth without risk, that we have to be willing to try things and fail, but when we fail we have to learn. It’s not failure if it’s learning, but there has to be learning. You have to capture that learning and harness it.”

“I suppose he’ll say something to the same effect,” said Daphne. “Of course, I’ve never met him, so you never know. He could mop the floor with you to make him feel better.”

“Thanks, I feel so much more chipper,” grimaced Paul.

“You should,” said Daphne. “Think about the opposite spectrum. Suppose you weren’t willing to risk failure and learn. Suppose you devoted all your energy to protecting the status quo. Think of a company that isn’t around anymore that tried that trick.”

“Kodak comes to mind,” said Paul. “I read somewhere that they developed the first digital camera in 1975, but kept it off the market because they were afraid of what it might do to their traditional film processing business.”

“Polaroid missed the shift to digital as well,” replied Daphne. “They didn’t have to stick with mechanical, self-developing prints. That was a choice.”

“It’s amazing how bad the blunders can be,” continued Paul. “Borders Books, Circuit City, Tower Records—they’re gone forever. With all the customers they had, the vast resources, all that talent and cash in the bank, these days they’re just names, empty shells. Businesses become nostalgia.”

“Tombstones, actually, all in the Dead Brand Graveyard,” said Daphne. “No Endless Encores there. The list goes on and on: Palm, Zenith, Blockbuster, CompUSA, Wang Laboratories—all once beloved brands, all now decaying tales of yesteryear. Now think of the once great brands about to fail, the ones you know will soon evaporate. What is their idea of risk?”

“Way too conservative,” answered Paul. “They’re afraid to take risks because they’re afraid of failing, when in fact they’re already failing by refusing to dance a little closer to the edge.”

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September 8, 2015 by Ken Goldstein - 1 Comment

Endless Encores: A Brief Excerpt on People

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It was getting late in the evening, and as yet there was no additional update on the flight departures. At this point Paul was sort of hoping it would go that way. To leave this conversation unfinished was not something that held much appeal.

“What don’t I know that I wish I knew?” asked Paul, knowing that didn’t exactly come out right. “We put everything into this new game, everything we had to give, but the end result isn’t flourishing.”

“Seems like we’re making quick progress with that wall,” prodded Daphne. “The truth is, you already know everything you need to know. All I can do is perhaps get you to rethink it in a different context. Take me through the project from the beginning.”

“The good one or the follow-up?” asked Paul.

“Why would I want to retrace the path of mediocrity?” replied Daphne. “The good one, the big winner—where did you begin with the original Ethereal Gaze?”

“We started with a pitch. We’d been kicking around this concept for a few years, the idea of an enormous war game, galactic in scope, but without a lot of weapons—without any bullets, or tactical bombs, or spleens exploding, any of the normal shooter stuff that was leaping off the shelf. We said we’d try to do it with clever ideas of strategy, mind-blowing graphics, a full symphonic soundtrack, and characters that made you believe they were real.”

“Sounds visionary, heck of an agenda for a library of program code,” lauded Daphne. “You even went against the grain and tried to build something that wasn’t a proven big seller. But tell me, and I sort of asked you this before but it is worth repeating, who is we?”

“We, the team,” answered Paul. “The core design group, the people I see every day who completely know this stuff, who come up with the ideas that make it happen.”

“Cool, got it, then let me ask you, which came first, the concept, or the talent to create it?”

“Why do I think this is another trick question?” asked Paul.

“The last time you thought I asked you a trick question it wasn’t, so go with your instinct. Which comes first, the idea, or those who offer the idea? This is a key starting point, kind of like the chicken and egg thing, only we’re going to solve it.”

“You can’t have an idea without someone expressing it,” said Paul, hoping he hadn’t said something too obvious.

“There you have it, bulls-eye,” declared Daphne. “Not just someone expressing it, someone with the ability and training to express it, and then be able to deliver on it. A team or an individual, it doesn’t matter, the foundation is the same. Let’s talk a little about talent.”

“I’ll try to keep up with you,” remarked Paul. “You have a lot of big ideas.”

“Too many people I’ve encountered over the years in business think it’s solely the big idea that matters,” continued Daphne. “Don’t get me wrong, big ideas are critical to success. You need spectacular concepts when you envision new products and services you want to bring to market. We’ll talk about that shortly. But before you can even think about creating, marketing, distributing, and selling anything of value, you have to have the right people in place to get the job done. Desperate leaders spend too much time worrying first about output. Long-term leaders spend the majority of their time thinking about talent.”

“I don’t know about that,” replied Paul. “I live in a world where customers need to be hugely excited, almost frothing at the mouth, standing in line overnight outside the store, waiting for the product to release before it’s even on the shelf.”

“Don’t flatter yourself, in one way or another, we all do,” countered Daphne. “Great ideas can be thrilling, but they don’t make payroll. Ideas get the ball rolling, but they are overrated. We worry too much about those who would steal them. Getting a product to market that embodies a great idea is what matters, and that is extraordinarily difficult. Products don’t build themselves.”

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