How to create the most successful businesses

Manage the Finances Reasonably

Have reasonable flexibility regarding your operation’s finances in terms of cash reserves, debt, income, expense, and profitability. Leaders should have front-line experience in the type of business that they run. In truth, in many cases, this is the only basis on which these individuals can manage the business. It can be challenging but is well worth it to adequately quantify the creativity required to succeed in developing and marketing new products. Please don’t misunderstand; there definitely is an important financial component to managing a business. In fact, many companies fail due to a lack of budgetary controls by a financially unsophisticated leader who is often from a side of the business outside of finance.

Focus on the Top 1 or 2 Current Priorities

Maintain your focus on the top 1 or 2 current priorities. Be careful not to fall into the trap of thinking that new things are good/cool, but older things are bad/boring – or worse yet, ignored. Be careful that your focus is on all the aspects of your current operation, whether that be: employees, products, technologies, markets, M&A deals, factories, etc. Don’t get overly excited about what’s coming down the pike or just around the corner. While it’s natural to get excited about new things that hold promise to impact the business positively, it can also lead to a lack of attention to the core (and often boring) existing products, technologies, and the current team. By maintaining your focus on the core current 1 or 2 top priorities, the business will be taken care of, people will be happier and more productive, and success is almost guaranteed.

Treat People the Way You Want to be Treated “The Golden Rule”

People refer to this as “the golden rule” because, like gold, it has a relatively higher value and lasts pretty much the full span of time. Implement reasonable boundaries but make it clear that all people are valued and taken care of no matter what happens to the best of your ability. Hire people when they are needed, and if the things they were originally hired to do no longer are needed, then see if there is another way they can add value and stay part of the team. The company culture will thrive, and there will be a huge morale boost when the people at the company see you do these things. When employees are treated with the respect that all humans deserve, everyone in the company is positively affected, even those who have a heavy load of clearly valuable current job responsibilities. Productivity and loyalty to the company can then go through the roof, leading to longer tenures and decreased turnover. This creates institutional knowledge reservoirs that lead to increased recruiting and better training of new top-level talent.

Create Highly Engaging Decision-Making

Even when you are the highest of performers and make the best decisions independently of anyone else, there is tremendous value in hearing different perspectives regarding a topic and a decision that needs to be made. While making unilateral decisions can “work” to a certain extent, it is not an optimal management approach. Ultimately decisions need to be driven by leaders; however, make sure you hear from the top down each stakeholder’s perspective. Many tests, both in the organizational behaviors of businesses and individual psychology, indicate that even if someone’s input does not affect the final decision (made by the leader ultimately), having been heard and listened to ties them to the effort in a personal way.

Improve Your Hearing and Listening

The best way to improve culture and performance is to listen to your team. Everyone wants to be heard even if what they have to say may not be received well by their intended audience – YOU. As their leader, especially regarding things that matter, be aware that your team has a personal vested, even emotional, interest in your decisions. It is relatively easy to say to someone who has a complaint or criticism that they need to “bring solutions, not just problems.” Still, in truth, to be an effective leader, you should listen to criticism even if you feel it personally. Human nature makes that very hard for many to actually do, but that’s why the leaders get paid the big bucks. Ignoring input or dismissing it lightly will cause important information that you need to do your job almost impossible to reach you. When this occurs, it’s easy to become isolated from reality. Once you’ve become the “emperor without clothes” due to your team being afraid to deliver you bad news, things don’t look good for your personal performance or your company’s prospects. The reward for really hearing and truly listening is that everyone gets what they really want: success, improvement, understanding, and a better environment. Doesn’t that sound worth it?

Take Reasonable Risks and Stoke the Embers of Innovation

There is actually something much better than being a great listener and a fantastic receiver of criticism. It’s when you see a leader proactively create an environment where mistakes are accepted. There is a significant difference between a person making a mistake and wrongdoing. Mistakes are honest misunderstandings or actions taken without clear direction or guidance – “an honest mistake.” Wrongdoing is something different that happens when a person intentionally and specifically does something they know is wrong or contradicts the direction and guidance they have been clearly given. In every business, no matter what it is, innovation is usually a huge key to success. So the leader who is so focused on innovation and allows their team to make mistakes (not wrongdoing) without indictment or punishment avoids “cutting off his/her nose to spite his/her face.” A great leader needs to walk a delicate balance of managing the need to create reasonable controls, limiting huge mistakes, allowing people to take acceptable risks, and making reasonable mistakes to make something positive happen for the business. Once you create an environment that not only allows this but encourages it, the innovation will jump higher than you can imagine. This is often the beginning of the next level up for the business.


Jason Donahoe
Jason Donahoe

CEO of Jason Donahoe Services

Citations

This post was inspired by an article written by PHIL MORETTINI, from PJM Consulting6 Egregious Habits of the Tech CEO