Getting You to Point B

No One Can See Their Own Backswing

Commentary by Keith Kirkland 

The idea of having a mentor and the value of tapping into the experience and insight a mentor brings is not a unique concept.  But this may be the most uniquely descriptive way I have seen it presented. 

If you have ever played golf, you know that your backswing is the foundational component of all that happens after it.  It will determine the direction your ball travels, and at what speed.  It determines whether you end up in the intended location.  It can also be the reason you strike the ball perfectly, or miss the ball completely.  And haven’t we all whiffed at least once? 

Yes, the backswing is crucial to success, but no one can see their own backswing.  So how do you fix it when you can’t see it and you don’t know what you are doing wrong?  That is where the mentor comes in.  He is the one that has whiffed before…maybe many times.  But he learned how to fix it, and master it.  The time it takes for you to correct and master it on your own can be significantly reduced and improved by listening to the mentor.   

Recently, I was fortunate to hear a presentation by Rob Slee, Managing Director of Robertson & Foley, a middle market investment banking firm.  His presentation was intriguing and led me to purchase one of his books, Midas Managers: How Every Business They Touch Turns to Gold, which is where I first read the quote “no one can see their own backswing”. 

In this blog, we sometimes discuss books we are reading and publish a few nuggets that are worthy of passing along.  One of the underlying themes in this book by Mr. Slee is the idea of creating business wealth, which is distinctly different from running a business that provides a decent, or even above-average, source of income for the business owner.  

Take note of this following quote from the book: 

Privately owned businesses generate more than 50 percent of America’s gross domestic product and account for 80 percent of new jobs.  On their own, U.S. private capital markets would rank as perhaps the world’s largest economy.  But we should be alarmed: Currently about 75% of owners of private businesses are not increasing the value of their firms.  If the private business sector fails, America fails. ¹ 

Among the many interesting discussions in this book by Mr. Slee is the chapter entitled “The Midas Mentor”, in which he describes the differences between a consultant and a Midas Mentor.  Here are a few examples: 

            Consultants exist to solve problems.  Midas Mentors exist to create wealth.
            A consultant’s business experience is narrow.  A Midas Mentor’s is broad.
            A consultant’s expertise is tactical.  A Midas Mentor’s expertise is strategic.² 

Because of what we do at Presidential Financial, these two sections of the book stuck with me.  Our clients are privately owned businesses.  They are the ones that are creating the new jobs in America.  They are the ones that will help America to prosper and succeed.  It’s our job as their financial partner to mentor them on their backswing, because what we do is foundational to their business.   It’s our job to help them create business wealth. 

That ideal location where they want the ball to land?  We call that “Point B”, and it’s our job to get them there.  We help them to focus on speed, direction and that ultimate place of success.  And because we have thirty years of experience with all types of commercial and healthcare companies all across America, we have the broad business experience, and we have that strategic expertise.  And every day, we help our clients by “getting them to Point B”.   No whiffs allowed. 

 

¹  Midas Managers, preface, page 1 

²  Midas Managers, page 126

 

Bill Gates, The Beatles and The 10,000 Hour Rule

Commentary by Keith Kirkland

Ten thousand hours.  Have you ever done one thing for ten thousand hours?  If you did this one thing for twenty-four hours a day, it would take you more than four hundred and sixteen days, or about fourteen months.  Over an eight-hour day, it would take you five years.  However you look at it, it is a very long time.  But ten thousand hours is described as “the magic number of greatness”. ¹ 

If you’ve read Malcolm Gladwell’s book, Outliers, you are already familiar with The 10,000 Hour Rule.  (If you have not read this book, I highly recommend it.)  

It is difficult to condense even this one chapter from Gladwell’s book, but the general question discussed is this:  “Is there such a thing as innate talent?  The obvious answer is yes.”  Achievement is defined as talent plus preparation, but “the closer psychologists look at the careers of the gifted, the smaller the role innate talent seems to play and the bigger the role preparation seems to play.” ² 

A look at musicians showed that “once a musician has enough ability to get into a top music school, the thing that distinguishes one performer from another is how hard he or she works.  That’s it.  And what’s more, the people at the very top don’t just work harder, or even much harder than everyone else.  They work much, much harder.” ³  “The students who would end up best in their class began to practice more than everyone else: six hours a week by age nine, eight hours a week by age twelve, sixteen hours a week by age fourteen, and up and up, until by the age of twenty they were practicing – that is, purposefully and single-mindedly playing their instruments with the intent to get better – well over thirty hours a week.  In fact, by the age of twenty, the elite performers had each totaled ten thousand hours of practice.” ⁴ 

Consider Bill Gates, one of the founders of Microsoft and one of the world’s richest men.  We know he dropped out of college and started a computer company with his friends.  But what you don’t hear much about is that he had access to a computer terminal, through his middle school’s Mother’s Club, when he was sixteen…in 1968.  At that time, most colleges didn’t have access to computers.  Throughout his high school years and early college years, Gates would seek out access to computers and spend hours and hours learning how to program them, many times staying up all night in order to use a computer terminal that was free during the night hours.  “By the time Gates dropped out of Harvard after his sophomore year to try his hand at his own software company, he’d been programming practically nonstop for seven consecutive years.  He was way past ten thousand hours.” ⁵ 

Consider the Beatles, one of the most famous rock bands ever.  In 1964, the band came to the United States and “put out a string of hit records that transformed the face of popular music”. ⁶  But by  1964, the band had already been together for seven years, and it’s what happened when they were just a struggling high school rock band that is the really interesting thing. 

The band was invited to play in a strip club in Hamburg, Germany.  The job didn’t pay well, and the audiences weren’t great.  But over time, the band was playing on stage seven nights a week for hours at a time.  Over five trips to Hamburg between 1960 and 1962, “they performed 270 nights in just over a year and a half.  By the time they had their first burst of success in 1964, they had performed live an estimated twelve hundred times.  Do you know how extraordinary that is?  Most bands today don’t perform twelve hundred times in their entire careers.  Philip Norman, author of the Beatles biography Shout! said, “They were no good on stage when they went there…but when they came back, they sounded like no one else.  It was the making of them.” ⁷ 

The best of the best have great talent, but they also put in the time.  Days, months, and years of practice and experience define the best of the best.  

In 2011, Presidential Financial celebrates its 30^th anniversary.  I’ve been thinking about what that would be in hours.  Eight hours a day, five days a week, fifty-two weeks a year…for thirty years.  We have put in the time, and it comes to over sixty thousand hours.  Come and see what time and experience has made of us.  We feel that we are the best of the best. 

Oh…and we have great talent, too.

______________________________________________________________

All quotes are from the book Outliers, by Malcolm Gladwell

¹ page 41; ² page 38; ³ page 39; ⁴ pages 38-39; ⁵ page 55; ⁶ page 47; ⁷ page 50

 

Business Advice From Van Halen

Commentary by Keith Kirkland

I recently read a very good article by Dan Heath and Chip Heath, published at www.fastcompany.com [see the full article here].  And to give credit where credit is due, I also used the title of their article as the title for this posting.  The entire article is worth reading and I encourage you to read it.  But let me give you the highlights here.

If you grew up during the 80's, you probably heard of the notorious "Van Halen M&Ms story".  Let me quote from the article:

    --------------------------------------------------------------

"In its 1980s heyday, the band became notorious for a clause in its touring contract that demanded a bowl of M&Ms backstage, but with all the brown ones removed. The story is true - confirmed by former lead singer David Lee Roth himself - and it became the perfect, appalling symbol of rock-star-diva behavior.

Get ready to reverse your perception.  Van Halen did dozens of shows every year, and at each venue, the band would show up with nine 18-wheelers full of gear.  Because of the technical complexity, the band's standard contract with venues was thick and convoluted.  Roth, in his inimitable way, said in his autobiography that it read "like a version of the Chinese Yellow Pages."  A typical "article" in the contract might say, "There will be 15 amperage voltage sockets at 20-foot spaces, evenly, providing 19 amperes."

Van Halen buried a special clause in the middle of the contract.  It was called Article 126.  It read, "There will be no brown M&Ms in the backstage area, upon pain of forfeiture of the show, with full compensation."  So when Roth would arrive at a new venue, he'd walk backstage and glance at the M&M bowl.  If he saw a brown M&M, he'd demand a line check of the entire production.  "Guaranteed you're going to arrive at a technical error," he wrote.  "They didn't read the contract.  Sometimes it would threaten to just destroy the whole show."

In other words, Roth was no diva.  He was an operations expert.  He couldn't spend hours every night checking the amperage of each socket.  He needed a way to assess quickly whether the stagehands at each venue were paying attention -- whether they had read every word of the contract and taken it seriously.  In Roth's world, a brown M&M was the canary in the coal mine*.

Like Roth, none of us has the time and energy to dig into every aspect of our businesses.  But, if we're smart, we won't need to.  What if we could rig up a system where problems would announce themselves before they arrived?  That may sound like wishful thinking, but notice that's exactly what Roth achieved.  Surely, you won't be outwitted by the guy who sang "Hot for Teacher."

Where's the brown M&M in your business?"

    --------------------------------------------------------------

Besides learning that this story is true, I loved learning the real meaning behind the story.  And I learned a few other lessons as well:

• Good business advice can come from unlikely sources.  Keep an open mind.
• Sometimes, rumors and stories are true...but not for the reasons you think.  Look for the truth behind the story.
• Don't dismiss the indicators that warn you of potential problems.  They are usually right.
• And go back and listen to some 80's rock every once in a while.  It was good then, and a lot of it is still good now.

*And if you are wondering what it means to be a "canary in a coal mine", here is another lesson for you:

Early coal mines did not feature ventilation systems, so miners would routinely bring a caged canary into new coal seams.  Canaries are especially sensitive to methane and carbon monoxide, which made them ideal for detecting any dangerous gas build-ups.  As long as the canary in the coal mine kept singing, the miners knew their air supply was safe.  A dead canary in a coal mine signaled an immediate evacuation.  [info taken from www.wisegeek.com]

Great Book: The Ultimate Question: Driving Good Profits and True Growth

I'm reading an excellent book right now titled The Ultimate Question: Driving Good Profits and True Growth by Fred Reichheld.  The primary premise revolves around turning your customers into promoters of your business, and how to measure your ability to do that.  Here is just one quote from the book:  "Measure is another magic word: what gets measured creates accountability.  With no standard, reliable metric for customer relationships, employees can't be held accountable for them and so overlook their importance.  In contrast, the precise, rigorous, daily measures of profit and its components ensure that those same employees - at least the ones who wish to stay employed - feel personally accountable for costs, revenues, or both.  So the pursuit of profit dominates corporate and individual agendas, while accountability for building good relationships gets lost in the shadows."  [page 17]

I highly recommend this book.  Be on the lookout for more quotes.

Info from NFIB Small Business Economic Trends (Sept 2009)

The following information is taken from the NFIB Small Business Economic Trends report for September 2009, a copyright of the NFIB Research Foundation ISBS #0940791-24-2.  This report includes results from a survey of small business owners throughout the US.

Optimism Index: The Index of Small Business Optimism gained 2.1 points in August (7.6 points higher than the survey's second lowest reading reached in March).  The gain was primarily a result of improved expectations for future business conditions and real sales volumes.

Labor Markets: The 'job generating machine' is still in reverse.  Over the next 3 months, 13% plan to reduce employment (down one point from last month) and 7% plan to create new jobs (down one point).

Capital Spending: Plans to make capital expenditures over the next few months fell 2 points to 16%, revisiting the survey record low reached in 1975 and in March of this year.  But, a net 10% expect business conditions to improve over the next 6 months, up 13 points from July.

Profits and Wages: 16% reported profits were higher, but 50% reported profits were falling.  Of those owners reporting lower earnings compared to the previous three months, 62% cited weaker sales.  The fact that these negative reports persist is bad news for the small business community.  Wage pressures are falling as owners not only reduce employment, but also the compensation of remaining workers.  But the cost reductions are not enough to firm up profits.

Credit Markets: Overall, loan demand is down due to widespread postponement of investment in inventories and historically low plans for capital spending.  32% reported regular borrowing, down one point from July.  Of those borrowers, 30% reported all their borrowing needs net (up 2 points) compared to 7% who reported problems obtaining desired financing (down three points).

Commentary from the Report Writers: It looks like the 3rd quarter will turn out a bit better than we predicted last year...but the fundamentals are still weak.  "Cutting" is starting to diminish, but "adding" has not picked up in jobs, inventories or capital spending.  The small business sector has taken a real beating.  Clawing their way back requires some cooperation from consumers, the source of sales for most small firms, and they are not in a spending mood. 

Political leadership has also had a negative impact on attitudes.  For years, business owners have expressed a vote of "no confidence" in the economic policies of Congress.  From September 2008 through June 2009, leadership has been unconvincing, appeared confused, and unable to act in a way that engendered confidence from the private sector.  The Stimulus Package contained very little current stimulus and Congress has continued to pursue major legislative changes that promise to be less than business or consumer friendly.

With all that, the private sector is slowly climbing its way back.  We used credit to over-consume, and now we will repay the debt and under-consume for a spell.  The attempts by Congress to steam roll the private sector are being repelled by ordinary folk and politicians who have faith in the private sector, not government.  This is contributing to an improvement in expectations for economic performance.