In September each year we meet up with Patrick Lencioni and our partners, The Table Group in the beautiful city of San Francisco.
It’s a wide gathering of consultants from around the world and our purpose is to learn from each other and our clients. We are an international community dedicated to helping organisations become healthier.
This year one of our guests was Guy Warren. He is a CEO, based in London. Guy has a Private Equity background and gets brought into a company when it’s in trouble.
His job is to bring these companies back to life.
His philosophy on business rescue is that he wants the new owners, those who ultimately buy the business, to know that the business is healthy, alive and well. He wants them to know that their investment will last long into the future … that the profit is sustainable and they have acquired something of real value.
This makes sense. It means you ultimately get more for the business. It’s also a very different approach to purely maximising profits in the short term.
Guy likes to take a longer-term view. He speaks about leading with personal courage … about culture and values as more valuable than money or title. This is unusual.
Guy’s speciality is technology businesses. A few years ago he took on a business where profit was all that mattered. It was everything for that company. But it was in rescue. Their Net Promoter Score, a measure of customer loyalty, was -44%. “My customers hate me” was a discovery he made early on.
He also discovered that the top team was toxic.
They could not make decisions, so windows of opportunity opened and then closed. People on the team were guarded and did not trust each other. People only worked on what was important to them individually. There was no overarching clarity around common purpose and goals and they struggled to keep really talented people.
His main maxim with a business rescue is “not to focus on the financials to fix the financials.”
Focus instead he says on making the organisation healthy – “it’s the most powerful way to drive a business forward.” It sounds simple but it’s hard to do and this is what takes personal courage as the leader.
His starting point with this business was; “what will it take for all of us to work together as a team?”
He did not allow his five key executives to have individual goals.
There is a tendency with CEO’s to divide and conquer, hoping to stimulate internal competition and rivalry as a source of creative energy. Unless this is kept lighthearted, with mature executives at the helm, the approach almost always backfires into silos and turf wars.
For a team to kick into high performance it’s vital to have only one set of goals you are trying to achieve and to which everyone is accountable.
Choosing these goals and building a simple scorecard to measure outcomes is one of the executive team’s most important jobs and it’s useful to have a model for doing so. In Guy’s case it’s a simple 4-box matrix.
Financials and stakeholders are in the top right hand corner. This is the outcome, but it’s the non-financials that drive the company forward. So they put all their effort into the other 3 boxes. Customers and markets (top left), people (bottom left) and products and services (bottom right)
Guy and his team chose only a few goals in each area – like predictability and quality for products, service and diversification for customers and skillsets and relationships for people.
As a metric they chose improving the Net Promoter Score as the most important thing.
Then they got to work.
They also went back to their values.
But not immediately and not in the token, lip service way, that is so common. Values are dangerous to do if you think your top team won’t live them.
He waited. Over time the innate values of the business emerged and they wrote them down so they got protected. Then they made sure they were lived and in the process he had to ask one executive to leave.
This person was good at results but just could not live the values. He had to leave; because when executives don’t live the values, employees stop believing and start disengaging.
These were my key lessons from Guy’s approach to bringing organisations back to life again:
- Get your executives engaged and the right people in at the top and the business flies.
- Focus everyone on only a few really important things and put all your effort behind these.
- Build a good scorecard and get into a rhythm and discipline of sticking at it.
- Only publish values if you plan to live them.
- Look for leaders with courage and integrity. Don’t ever settle for less.
Have a great rest and holiday coming up.
In 2017 we will keep writing about Organisational Health – in the uncertain and volatile world we live in – we believe it’s a company’s ultimate source of competitive advantage.
Guy Warren is presently the CEO of the ITRS Group, based in London, UK.