Short Term Gains = Long Term Damage

Building a successful business all starts with the relationships you establish with your customers. In a sense it is a lot like building a wall. First you lay a solid foundation of trust, and then you build upon it layer after layer after layer, ever higher up toward the sky. Some companies however, keep knocking their walls down and have to rebuild them all over again.

I am astounded sometimes by the short sighted approach of some businesses to put short term profits ahead of long term growth. You may remember the 2009 – 2011 Toyota recall disaster where corners were cut on the quality of manufacturing in order to increase their bottom line. Instead, it ended up putting the safety of their customers at risk, cost the company billions of dollars in sales, fines, and compensation; and severely damaged the reputation of their brand in the process. It was a PR nightmare, and one that I hope other businesses considering the same practices take note of.

Unfortunately this is not an isolated incidence, and one that will most likely rear its ugly head from time to time. But luckily, not all businesses are so shortsighted.

I am reminded of a story about an ad executive named Jorge Heymann, whose agency had been approached by a new client that had recently built a modern seven-block riverfront shopping development on the outskirts of Buenos Aires. The trouble was that the development was well off the beaten path and difficult to access, and as a result it needed a big advertising campaign to promote it. Heymann’s agency was given a clear objective: To create awareness and drive traffic to the complex. Budget: $4 million.

Now what most agencies would have done – and what the client was expecting – was to create a lavish multi-media advertising campaign. But what was unique about Heymann was that he understood exactly what he was being hired to do – to solve a problem – not to figure out a way to spend $4 million. He had gone out to inspect the site himself and found that given the inconvenient and remote location of the complex, an ad campaign wouldn’t be effective in driving the level of traffic needed.

So what did he do?

Instead of building an advertising campaign, Heymann proposed that the client instead use the budget to build a footbridge across the river making it more easily accessible to shoppers. As you might expect the client was stunned at this unexpected proposal, but nevertheless he saw the value in the bold idea and approved of it. The stunning footbridge was built and went on to become a Buenos Aires landmark, generating more publicity than any ad campaign ever could have and brought shoppers out by the thousands.

Heymann had displayed a keen understanding of his role in helping the client, he could have just taken the money, but knowing that his efforts wouldn’t really have been effective, what good would that have done him? Most likely the client would have been unhappy with the results and gone elsewhere. Instead, Heymann chose to build a long lasting relationship of trust with the client, a decision that cemented the reputation and fortunes of his agency for years to come.

As I have said before, people want to do business with people they trust. Ask yourself, how can I ensure my customers are still my customers in 10 years? Will my relationship with them lead to referrals and help build my business and its reputation?

The next time your business is faced with a short term gain at the expense of a customer, I strongly encourage you to put their needs ahead of your own. As the saying goes, it takes years to build a reputation and only seconds to destroy it.

Check Your Ego at the Door

“If you always hire people who are smaller than you are, we shall become a company of dwarfs. If, on the other hand, you always hire people who are bigger than you are, we shall become a company of giants.” –  David Ogilvy

I have had the pleasure of working with many businesses over the years, helping entrepreneurs to build up their businesses and watching them flourish as leaders in the process. Many of them went on to become successful business leaders, others… not so much. Though many people talk about the passion and “never say die” attitude required to succeed in business, a quality that I have observed in successful leaders, and one that doesn’t get nearly as much attention as it deserves, is ego.

Successful business leaders are not afraid to admit their weaknesses, they know that there is always something more they can learn and an area that can always be improved. They understand that the growth and success of their business is not entirely a product of their own making, but is a collaborative effort of talented and dedicated individuals all working together towards a common goal – no matter how great a sports coach is, he isn’t going to win a championship with lousy players. Successful business leaders surround themselves with the best and brightest, freeing themselves to do what they as leaders do best – planning and developing the future growth of their business. They know exactly where they want to go, and put together the best team possible to help them get there – in a sense, they work on their business, not in their business.

On the other side of the coin is the mediocre business leader. They think they know everything and everyone else knows nothing. They are always right no matter what  because they view themselves as the single reason why their business is growing. Because of this attitude, they cannot foresee hiring anyone who is better at something than they are, and end up surrounding themselves with mediocrity which only tends to reinforce their ego. A harsh lesson that many of these mediocre business leaders learnt from the economic collapse of 2008 was that it was a hell of a lot easier to succeed in a booming economy. They had let their “success” blind them to the true realities of their situation. It was evident in the wake of the recession that the businesses that continued to survive — and even thrive — did so because of the planning of their leaders and the investment they had made in their people.

Are you prepared to become a successful business leader? You’ll need to ask yourself some tough questions and answer honestly about yourself and your own abilities. Maybe you won’t like what you hear. The real question is this: What will you learn from this exercise? And will your ego be able to handle it? Consider checking yours at the door, and maybe you’ll start down the path of building a company of giants.

Pruning the Tree

With the calendar now midway through November, winter is definitely in the air. One of my routines for this time of year is to prepare the gardens around my property for the coming winter by pruning the shrubs and trees. As you might know, pruning trees is helpful for a variety of reasons:

  • to remove dead or diseased branches
  • to thin the crown to permit new growth and better air circulation
  • to remove obstructing lower branches
  • to shape a tree for design purposes

Okay, so I confess that I’m not actually the one out in the backyard with snips trimming branches but I do know the critical importance to the health, safety and aesthetics of my trees and shrubs that the annual pruning exercise means.

So what is your point Frank, I’ll bet your wondering. Quite simply, I find that there is an astonishing parallel between maintaining a garden and ensuring you have a healthy and growing company. Let me break it down a bit.

Trimming the dead branches

First, I’ll describe the practice of trimming away dead branches. There are three main benefits of cutting off dead or diseased branches from trees and shrubs:  it makes way for new growth to sprout and flourish, it mitigates the spread of disease and it improves the beauty of the tree.

Every company has the same issue of “dead branches” – unproductive and poor performing employees – and reaps the same benefits by doing some “pruning” – that is, letting those employees go. No matter how successful an organization is, it is inevitable that some employees will always fall into this category and business leaders need to be vigilant with their trimming. By removing these underperforming employees, the company’s up-and-comers have a better chance to stand out and be recognized for their achievements, and grow and prosper as the rest of the company grows.

Furthermore, like a diseased branch the employees that fall into this deadwood category often have a poor attitude that can infect the rest of the company. Pruning will help prevent the spread of morale and culturing-impacting negativism and pessimism.

Pruning also serves to enhance the attraction of the company to potential high-performing candidates, what I call the rock stars… hopefully they will see that this is an organization that doesn’t countenance low or poor performance, enhancing their attraction to the company.

Culling living branches

While it is of critical importance to cut off dead branches, pruning live branches is equally important. Sometimes this mean removing branches that are lower down on the trunk, or thinning out the crown of the shrub or tree. The art and act of trimming living branches is a bit more complex and strategic than removing dead branches. The desired outcome is to selectively remove those branches that are impeding (or will impede) others from growing properly, or are growing in a different direction than you want the tree to grow.

Again, the analogy to a company is striking. Oftentimes you may have a strong and productive employee, but that person’s behaviours or mindset are such that – while maybe acceptable at one point in time – she is now impeding others in the organization from performing to the maximum of their ability. As hard as it may seem, that person needs to go. Similarly, an employee that has a set of skills and capabilities that were extremely valuable to the organization at one point in time – say, during the start-up phase – but now that the company has grown and matured the value of that employee’s capabilities has greatly diminished. He, too, must go for the greater good of the organization.

I know that some of you are thinking, “But what if I make a mistake?  What if I cut the wrong person, or too many for that matter?”.  Read on and I’ll explain my view on that.

A Living Organism

The last point I will make on this topic is perhaps stating the obvious – much like a tree or a shrub, a company is a living organism. A tree or shrub that is not properly maintained and pruned will over time grow in ways that leave it less strong, vibrant and attractive compared to ones that have been consistently and properly pruned. While a case can be made that it’s never too late to prune a tree, if you let it go too long the amount of effort to get it back into the shape you want it will be high and it in fact may take years to get it going in the direction you want it to.

And so too it goes with a company: let it go untended too long, deferring those tough decisions on cutting out those seemingly healthy and productive “branches” or making excuses for keeping the deadwood around, means some really tough work ahead.

And to address your concern about cutting the wrong employee, or maybe removing too many (perhaps because you’ve left it too long), do not fear. Companies like trees are resilient and naturally rejuvenate – if you snip off the wrong branch while unfortunate another one will grow to take its place; similarly, if you lop off a few too many undeniably it will have a short term impact, but the reality is that it won’t take too long before ample new ones sprout in their place.

My message here is quite simple:  at least once a year – and fall is one of the best times – get your organizational “trimmers” out and do your company and employees a favour by cutting back selectively and with determination. I can assure you that if you do so, your company will be stronger, healthier and more prosperous as a result. Why?  I practice what I preach and I hold up the success of my companies past and present as the proof in the pudding. Oh, and you should see the trees in my backyard.