August 18th, 2008
People that work with me know that I am constantly searching for benchmarks: “Who is the best in the world at this” and how do we learn from them and compare to them? So, when July started looking soft for us, I started calling other retailers and other execs.
To set the stage, our first half of 2008 was incredible. We delivered 97% of a very aggressive plan. Very impressive work from a great team! July started looking soft, but we made a good month in the end. And now August, while we are still posting solid year over year growth, it isn’t where we were, or planned to be. With other execs telling me that they are seeing the same, why am I still feeling frustrated? Am I lacking the wisdom to know the difference between what I can control and what I cannot?
I could say that, but I won’t.
Remember when Bob Nardelli “resigned” from Home Depot? Mr. Nardelli and the board disagreed over his compensation being tied more closely to stockholder gains. He complained that that share price is the one measure that he cannot control. (Read Business Week’s summary.) While I have strong views about the public markets leading to bad executive decisions regarding short-term versus long-term results, I do believe CEOs are in control of their share price. (This does not mean CEOs can always make share prices go up.) Examples are given in the article that while Mr. Nardelli was doing great in some areas, there were other areas, like employee and customer satisfaction, where there were some big questions.
So, yes, the economy impacts my business. But it is my and my team’s responsibility to respond to the economy. It is about risks and contingencies. We need to be prepared. Moving quickly means less reliance on how you did things in the past and more on how you will do them in the future. How do you prepare for that? How do you keep on top of things?
Focus. This is where I have fallen short in the last six months. As things were going well, I let too many visions expand, and didn’t prepare enough for the Summer, and possible impacts of a typically slow season combined with a slow economy. This led to things like missed hand-offs over vacations, not matching an promotional campaign from last year, not pushing some shop partner launches before vacations, etc. All small details, that have overall had a bigger impact.
We are doing too much, missing important details. We need to step back and do less, execute exceptionally well. What are our critical few? Over the next few weeks, I will be working with our team to narrow our list of priorities, so we can deliver an outstanding Fall and Holiday season.
As I think about making tough decisions on priorities, I remember another benchmark I like to keep in mind, a 2006 article from Fortune. It was a study of Fortune 500 companies, comparing founder-led companies to those led by hired executives, like me. Founder-led companies (26 of the 500) overall performed seven percentage points better than the rest of the Fortune 500 over a ten-year period from 1995 to 2005. The two theories presented for why:
- Founders care more. “Their companies are their life’s work, so they’re more likely to embrace long-term strategies.”
- Founders tend to be industry experts. “They’re less likely to make the kind of disastrous ‘diversifying’ acquisitions that give M&A a bad name. ” (Note, in smaller companies think diversifying activities versus acquisitions.)
Focus on the long-term and on fewer things. Hired executives can learn that from successful founders. I want to be the best by many measures, not just those that are convenient, or fit me or my team well. Sometimes we use our wisdom to say that there are things we cannot control, using those as an excuse to not master what we can control. I think I would add an amendment to the Serenity Prayer:
Grant me the serenity to accept the things I cannot change;
the courage to change the things I can;
the wisdom to know the difference;
and the perspective to challenge that wisdom, when needed.
What is on my shirt today? One of my favorite Susan B. Anthony quotes:
Failure is impossible
P.S. Failure is impossible is also the title of an exceptional book about Ms. Anthony by Lynn Sherr. I highly recommend it, especially during an election season in the US. Voting is a right and a privilege.