Category Archives: Operations

Planning in Proverbs

Planning is an essential part of leading a business. There are two basic concepts of planning in Proverbs: Plotting (תַּחֲרֹ֣שׁ, literally to plan secretly, usually something wicked) and Planning (מַחְשְׁב֣וֹת, literally the content of what a person is thinking about). The first word focuses more on how the evil plan their future. The second word is more instructive for us as Disciples of Jesus Christ. Proverbs has much to say about planning, so let’s get started.

Proverbs 3.29

Do not plot harm against your neighbor,
who lives trustfully near you

This is one of four verses that gives four prohibitions against malevolent behavior. Verses 27-28 command the reader not to fail to do good whereas 29-30 prohibit malicious activity. Hence, in these four verses (27-30) we find four commands:

  1. Do not withhold good from those whom it is due when it is in your power to act
  2. Do not withhold giving to your neighbor
  3. Do not plan to do harm against your neighbor
  4. Do not falsely accuse your neighbor

For our discussion here, 3.29 is best illustrated by Jezebel’s conspiracy against Naboth and Haman’s designs on Mordecai in Esther.

Note also that the concept of deceit is assumed – the contrast between plotting harm against your neighbors who trust you indicates that deceit will be employed as part of your plan to harm your neighbor. The element of surprise via deceit is in view here.

Proverbs 6.12-15

12 A troublemaker and a villain,
who goes about with a corrupt mouth,
13 who winks maliciously with his eye,
signals with his feet
and motions with his fingers,
14 who plots evil with deceit in his heart—
he always stirs up conflict.
15 Therefore disaster will overtake him in an instant;
he will suddenly be destroyed—without remedy

In this section, a troublemaker and a villain is described by a cluster of character traits:

  • Corrupt (עִקְּשׁוּת, literally the act of perverting something by turning it to a wrong use) talk
  • Sinister non-verbal’s (winking, shuffling feet, motions with fingers – remember the movie The Sting?)
  • Plots evil with deceit
  • Stirs up conflict

Consider this cluster or matrix of character traits – if you see two or more of the six, be on guard for the others and stay far away from a person like this.

Proverbs 12.5

The plans of the righteous are just,
but the advice of the wicked is deceitful

Here, the plans of a just (righteous) person is compared with that of a wicked person whose plans deceive others. Note also that the concept of a “plan” and “advice” are compared, instructing us that when we create plans, we’re advising those who charged with implementing the plan. A righteous plan does not deceive – it does not mislead or contain deceptions.

Proverbs 12.20

Deceit is in the hearts of those who plot evil,
but those who promote peace have joy

This is the third time we’re seeing the connection between evil plans and deceit. We’re also seeing that evil plans create strife and conflict because the contrast is with those who promote peace. The opposite of evil plans with deceit is the promotion of peace that results in joy. The follower of God will be aware of this command to avoid deceit and evil and will take intentional actions to ensure that is not part of his/her business.

In business, we must be careful to ensure our marketing, sales and contracts do not deceive or mislead others. We should be intentional about not overstating the quality of our products and services or the positive effects our customers will experience after engaging us. When you hear marketing that sounds too good to be true, your guard should be very high.

Proverbs 14.22

Do not those who plot evil go astray?
But those who plan what is good find love and faithfulness

One’s moral behavior is usually the result of planning. When we plan evil, we go astray. But when we plan that which is good, we find love and faithfulness. Both love and faithfulness are characteristics of God and help us understand that planning “good” will also point us to God and demonstrates these two aspects of His character to a lost and broken world.

Proverbs 15.22

Plans fail for lack of counsel,
but with many advisers they succeed

Plans that are created without proper input from those with the right experience and expertise will likely fail, but if you include the right advisors, your plans will succeed. This instructs the business owner and leader to have a team of advisors around them who are allowed to speak into the owner’s plans and business. This is often a serious short coming of most business owners: they are often too proud and too independent to seek out help and collaboration with a team of trusted advisors.

Proverbs 16.1

To humans belong the plans of the heart,
but from the LORD comes the proper answer of the tongue

Biblical righteousness is fundamentally an attitude of trusting in God. We will “feel” that a certain plan is the right way to go – our intuition may point us in a specific direction. But from God comes the answer of logic and speech. God doesn’t intuit His way through time or our lives.

Proverbs 16.3

Commit to the LORD whatever you do,
and he will establish your plans

Similar to Proverbs 16.1, we find that when we commit all of our work to God, that He will “establish” our plans. The word for establish (יִכֹּ֗נוּ, literally, to stand up, to sit erect, to set up) gives a flavor of God making one’s plans firm and strong: when God establishes our plans, the storms of life will not sway them.

Proverbs 16.9

In their hearts humans plan their course,
but the LORD establishes their steps

Again, we make our plans, but God’s sovereignty determines our steps. This verse wraps up both major lines of theology into one verse: free will and God’s sovereignty. The Doctrine of Concurrency is so helpful at this point – the notion that both are true. We make our plans, but God determines our steps. Both are true.

Proverbs 16.27

A scoundrel plots evil,
and on their lips it is like a scorching fire

Slander is in view in this verse. Scoundrels (בְּ֭לִיַּעַל אִישׁ, literally a man of no worth, especially in regards to righteous behavior – “the term describes deep depravity and wickedness” (EBC)) plot evil and they have no problem slandering others. Slander is described like a “scorching fire” which speaks of the devastating effect of his words. This person digs for scandal and then propagates it with words which are on fire. Investigative reporting borders on this activity. Finding out dirt about a competitor and then spreading it around exemplifies the actions condemned in this verse.

Proverbs 19.21

Many are the plans in a person’s heart,
but it is the LORD’s purpose that prevails

Plans represent purposes. Plans try to accomplish that which is purposeful. Let’s remember that no matter what our purposes are, God’s purposes will prevail. Ultimately, this verse teaches the same core truth as that of 16.9: we make our plans, but God’s sovereignty will win every time. When it matters, God does not lose out to man’s efforts.

Proverbs 20.18

Plans are established by seeking advice;
so if you wage war, obtain guidance

True plans incorporate the wisdom of trusted advisors. Business leaders who draw up their own plans without input of advisors do so at their own peril. This need for advice is heightened when waging war. Business is sometimes war. If you’re going to compete head-to-head, be sure to seek the advice of other leaders and owners – you’ll need it to be successful.

Proverbs 21.5

The plans of the diligent lead to profit
as surely as haste leads to poverty

Plans, by themselves, are worthless. While they represent purposes and advice, in order to bear fruit, plans must be executed. This is where so many businesses fail – they spent time and money on building great plans – but then they don’t execute well. Poorly executed plans lead to poverty. Executing a plan is an intentional activity. Just like being intentional to spend time with God, tell your spouse you love him/her or saving for retirement, executing a business plan requires intentionality.

Proverbs 21.30

There is no wisdom, no insight,
no plan that can succeed against the LORD

There no nuance in this verse: God’s plans will win every time when in conflict with man’s plans.

Summary

  1. God’s purposes will prevail when our plans are in conflict with His
  2. We should seek advice from others in order to ensure our plans will succeed
  3. We must execute our plans well
  4. We must never plan evil or allow for evil in our plans
  5. We must be intentional in planning and execution of our plans

Best Practices for Hiring an Interim CEO

Having run several businesses, I’ll say that the process to being a successful CEO in an interim situation includes attention to several key areas. But the change for the owner who is hiring the interim CEO is significant. This article outlines the foci of an interim CEO and also lays out the best practices for the ownership group.

People

There is a plethora of relationships that need attention by the CEO, whether s/he is interim or permanent. The first is his relationship with the ownership group and the Board of Directors (if the board exists in practicality). It is key that these relationships be strong and supportive from the beginning of the engagement. But it is also true that the ownership group and the Board of Directors need to “get out of the way” of the CEO and let that individual run their company. When owners in closely held businesses keep stepping on an interim CEO by making decisions outside their new role (whatever that role is), they “step on” and can, at times, cut the legs out from under their interim CEO. These engagements don’t last long, for obvious reasons.

The second relationship is with employees. Why should they follow you? Why should they trust you? Why should they follow you? What is the direction you’re taking the company? What is your plan? These are legitimate questions that only the CEO can answer and they need to be discussed with the employees in an open, honest way.

The third relationship is with vendors and supply chain influencers. If this business is large enough, a Chief Operating Officer will likely handle these relationships. If it is a smaller company, the CEO will be managing these relationships. A company needs strong supplier relationships in order to thrive. If the previous ownership group or CEO has damaged these relationships through untimely payments or interpersonal dealings that were negative, the new CEO’s presence will be a welcome breath of fresh air.

Depending on the situation, other relationships will need to be addressed, such as media, trusted advisors, partners and so forth.

In short, the CEOs job is one of building positive relationships. If they cannot be built properly, the interim engagement will not succeed.

Potentials

Every organization has potentialities that are unleveraged. The question is not whether they exist, but where they are and what opportunities to they represent? In discovering an organization’s potential, one will also uncover (perhaps systemic) problems that need to be resolved. In other words, what are the problems we must resolve in order to pursue new opportunities. These two elements – opportunities and problems – usually exist together. An interim CEO will need to discover both and then figure out A) is the pursuit of the opportunity worth the cost (financial, cultural, systems and so forth) of solving the problem? Interim CEOs are usually presented with tradeoff decisions where the value of the “trade” is often not fully understood either because the interim CEO simply doesn’t have the depth of experience in the organization that is needed or the systems and people in the organization are so dysfunctional that the information needed to fully understand the trade is not available.

For example, one organization had the opportunity to move their existing product line into a new customer vertical. But the problems to resolve in order to pursue this opportunity were twofold: A) the products would need to be redesigned to meet this vertical’s specific requirements and B) a long-standing relationship with a reseller in that vertical that represented more of a good friendship with the family that owned the business. Moving into this new vertical would mean permanently damaging that relationship and then spending resources on redesigning their product. Overall, it would take 6-9 months before any sales were realized. Was the tradeoff worth it?

In this true story, I concluded the tradeoff was worth it and authorized the sales team to move forward. We resolved the relationship issue by offering this individual’s company an opportunity to participate with us. We resolved the design issues through normal processes by gathering requirements and ensuring we had the proper specifications against which to design. Before I came on board, the family was unwilling to consider or discuss going into this vertical because the personal relationship with the reseller was long-standing. An interim CEO needs to understand the emotional dynamics of a situation before taking action. What he will discover is that most of the long-standing problems in an organization exist, in part, because of emotions within the leadership he is replacing and as a result, the potential of the organization is never fully realized.

Processes

How we get things done is a result of our processes, whether or not they are codified in writing. Healthy management has healthy processes that are both repeatable and lean. An interim CEO will find that he likely is inheriting broken processes that need to be fixed. In our technology saturated world, this usually means the computer systems are either outdated, disconnected and/or inferior. In niche markets, you’ll find that industry-specific technology platforms may be immature, regardless of which vendor is writing the code.

When computer systems don’t talk to each other, you’ll necessarily have manual processes to move information from one system to another. Those manual processes represent your Centers of Mistakes. Expecting people to get “it” right every time is nonsense. People make mistakes. Computers execute code. The two are not synonymous.

Fixing processes may mean capital outlays. An interim CEO will need to understand what costs are recovered from improving the processes. Some recoveries will be obvious – others will not. Estimates may be based on judgments that come from experience. In the end, there will be a decision and the interim CEO may need to work hard to make his decision the right one.

Cash Management

Like it or not, the first thing we do at Platinum is get our hands around cash using the Break Even and our Cash Flow Forecast. Coming into a business as an interim CEO, one must understand the company’s cash position because almost all decisions involving either spending or saving cash. Usually, it is not as good as what was first presented. Knowing how to stretch vendors, how to work with the bank and so forth is essential to the success of an interim CEO.

What the Business Owner Needs to Understand and Do: Best Practices

If you’re a business owner and you’re hiring an interim CEO to run your business, you need to understand the following:

  • You’re adding (what is likely an) unanticipated cost to your budget. Interim CEOs are not cheap. They parachute in on quick notice, are handed difficult problems to resolve and they rarely even get a “thank you” from anyone in the organization. Make sure you get a great ROI on this investment by doing what you need to do (more on this in a moment)
  • Your world is about to change – dramatically. Do not hire them if you expect him to simply do what you were doing. Only hire him if you need significant change in order to solve significant problems and achieve big opportunities. Do not expect that much will stay the same in your business. Some of it will, but more likely, most of it will not. Your culture is going to change. Processes are going to change. Cash management is going to change. Problems are going to be resolved. Key relationships are going to shift to this interim CEO. Your world will change.
  • You’re no longer in charge. I can’t stress this enough. If you’re the owner and you’re hiring an interim CEO, then understand you’re no longer in charge of your business. Your interim CEO is. If you get into a power-struggle which him, you’ll win because you’re the owner. But you’ll also lose because you’ll either leave him in place but render him ineffective or you’ll let him go and will have wasted serious dollars on his tenure. If you’re not ready to give up power in your business, then don’t hire an interim CEO. If you enjoy the power and prestige of being an owner, being in on all the decisions, telling others what to do – and you can’t let all this go – then don’t hire an interim CEO. It will end up being an exercise in futility.
  • It’s no longer about you, it’s about your business. An interim CEO will be there to improve your business, not your ego. He will make difficult decisions, some of which you were unable or unwilling to make. His focus, if properly placed, will be on improving the value of your business.

What you need to do is pretty simple but often very difficult to do:

  • Empower the interim CEO to do his job well. This means giving him clear spending authority, hiring/firing authority, contracting authority and so forth. What would a CEO normally have in terms of power and responsibility? This is what you give to your interim CEO
  • Have clearly identified, measurable goals for your interim CEO to achieve. Remember, he is interim, which means he’ll be there for a few months or even a few years. What is he to accomplish? Hold him accountable to these goals.
  • Get out of the way and don’t meddle in his affairs. Hold him accountable to achieve his goals. How he achieves his goals is up to him. Don’t micromanage and don’t meddle in his day-to-day work. You need to get out of the way. If you’re an owner and yet your position reports to the interim CEO, then understand that you cannot put on your owner hat during the day. Stay in your swim lane and don’t cross over into your CEO’s swim lane. Have the self-control and maturity to put your owner hat on only during the Board meetings.

Summary

Hiring an interim CEO can be a positive experience for you and your business. Interim CEOs can often accomplish goals that owners of closely held businesses cannot. An Interim CEO is a great idea when a family is transitioning the business but the next generation is not ready to lead or when the business needs to be turned around or when the current owner has a health event and you need someone to step in and run the business. Interim CEOs bring a wealth of experience and knowledge that an owner will never have. But hiring an interim CEO will also ask the owner to step outside his or her’s comfort zone and relate to his/her business in a fundamentally different way.

Bill English

Essential Planning: Management, Directors and Advisors

Proverbs 24.3-6 says this:

3By wisdom a house is built, and through understanding it is established;

through knowledge its rooms are filled with rare and beautiful treasures.

The wise prevail through great power, and those who have knowledge muster their strength.

Surely you need guidance to wage war, and victory is won through many advisers.

If these verses are applied to running a small, family-owned business, it is clear that a business (just like a “house” literally, a place or dwelling for one or more families) is built through wisdom, understanding, knowledge, guidance and advice. It is by knowledge that the rooms are filled with “rare and beautiful treasures”.

You might recall that when Peyton Manning was a two-time Super Bowl winner and was the MVP of the NFL several times. Peyton never lost sight of his need to be coached and to learn from those who were willing to pour into him their knowledge and wisdom. If only small business owners could grasp how important it is to be always learning, growing and improving – not just their technical skills – but their business skills as well.

This is why I recommend that small business owners realize and accept that as their business grows, they will need to develop and invest time with three different groups.

Management Team

The first group small business owners need to invest in is a management team. The management team runs the day-to-day operations of the business and the folks paid to lay awake at night and worry about the business. If you don’t have a management team, then most decisions will route through the owner and the business will only scale to a certain size, then stagnate. When your business is $250K/year, that’s not a big deal. But it will be rather difficult to run a $5M or $10M business without a management team. The largest I’ve ever seen is $23M – but they were paying the price in people leaving the company for better environments.

How you management team is comprised is up to you, but there are two basic ways: Organizational Chart and the Value Process. Most business owners will build their management team off of standard organization charts: managers for sales, operations, supply chain, finance and so forth. They departmentalize their company and then appoint people to manage parts of their company. It’s very common to see this. How well it works all depends on how well the business owner is able to build a team.

Advisors

This is usually the second group that most small business owners put together, but they do so grudgingly and really don’t like it because the cost of engaging and building a team of trusted advisors. Many take the position that advisors – consultants – are just there to take their money and not offer much of anything in the way of value. And while it is possible to waste money with trusted advisors, my experience is that most business owners end up paying more in other costs when they don’t properly build and engage their team of trusted advisors. Good trusted advisors will save you money, even though they have up-front costs.

Most small business owners are really good at what they do, but they are not good at accounting, contracts, compliance, hiring, firing, benefits, financial reports, banking and so forth, so it really is a good idea for them to have a team of trusted advisors who can help them work better “on” their business. And they will offer real expertise at a fraction of the cost of having the business owner him/herself read and learn the same information on their own.

Your trusted advisors should include:

  • Law firm – look for those who can help with contracts, policies, shareholder disputes (if you have a partner(s)) and HR/employment law.
  • Accounting firm – Have them do your quarterly and annual filings. Be sure to ask them about things you can do to lower taxes. And they should help you with your personal will, since that will be highly affected by the size and profitability of your business
  • Banking – look for a bank that can scale with your projected sales and size for the next five years
  • Financial Planner – be sure to pull out value out of your company on a regular basis and invest it personally for your retirement
  • HR/Benefits – you *will* need someone to help you with human resource elements such as payroll, policy manuals, job descriptions, benefits and so forth
  • Executive coach – believe it or not, an EC is become more and more common as small business owners look to sell or transition their business to their children. While most second or third generations know how to run the business, they often don’t know how to lead or how to think outside of what they have seen in their mom and dad. And often, the coaching has to help mitigate the family’s dysfunction so that the business can survive.

Board of Directors

As a business grows, so does the need for accountability and outside perspectives. A small business – even if completely owned by family members – will need outside perspectives both at the management and at the governance layers. While this is usually the last of the three groups to form, it is an important one for ensuring that proper governance is followed. Why is this important? Well, for family businesses, it is important for the family members to have a place where they can put their owner hat on and express themselves on matters pertaining to their role as an owner. What should not be happening is family members acting as owners during the day when their employee position doesn’t require it and, in fact, would negate that role for them during the day. For example, if one of the family members is an owner of 20% of the business but is employed as the Vice President of Sales, they s/he shouldn’t be talking or acting as an owner during the day.

Be aware the “outsiders” should be on your board – not just family and friends. You may want to include some trusted advisors on your board, but the board is there mainly to hold you – the business owner – accountable to accomplish certain things that you wouldn’t normally do yourself but you know you need to do. It’s a form of self-discipline. If your business is owned by your family, we highly recommend having non-family members on your board in order to get outside perspectives at the Board layer.

Summary

As your business grows, you will need to build and engage these three groups. And you, as a small business owner, will need to value what they bring to your business. Yes, it will cost you some money, but in the long run, these groups will save you money as they help you grow, become more profitable, streamline your operations and mitigate risk.

One caveat – as your business grows and you groups are formed, remember that your role will necessarily change and through delegation, you will need to know how to get more done through people than doing it yourself. This is where many entrepreneurs flinch and just say that they’ll stop growing the business so they can stay in control. That’s a legitimate business decision. But if you want to grow and sell for millions in the future, you’ll need to recognize that your role will change and you will be surprised as little you actually control after these three groups are formed. Your focus will be working “on” the business more than “in” the business, so reserving the things to yourself that allow you to work within your strengths will be very important.

Bill English

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