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Now, Build a Great Business!7 Ways to Maximize Your Profits in Any Market
By Mark Thompson Brian Tracy
AMACOMCopyright © 2011 Mark Thompson and Brian Tracy
All right reserved.
Chapter OneBecome a Great Leader
"Faith is not simply a patience that passively suffers until the storm is past. Rather, it is a spirit that bears things—with resignations, yes, but above all with blazing serene hope."
Leadership is the most important requirement for business success. In simplest terms, leadership is the willingness to be accountable for results, and then to fulfill that responsibility, no matter what the external situation or pressure.
A leader is someone who is willing to do what it takes to get great things done. It doesn't happen on the first or second try. Leaders expect to fail over and over. They don't like it, but they don't quit when things don't work out. In fact, it is during difficult economic times and major crises that your character as a leader really stands out.
Why? In tough times, your competitors run for safety and survival instead of focusing on their customers. They pay less attention to quality. They slash back service and invest less in innovation. They cut back on staff at all levels. As a result, there are more great people actually available to work with you.
It is usually in a crisis that organizations reconnect with what made them great in the first place. In a crisis, leaders must make bolder decisions that will make them great in the future. It was said that "the North wind made the Vikings." In times of crisis, you have an opportunity to reignite your spirit and find better ways to delight your customers.
Your Leadership Matters
Today, more than ever, your leadership is needed. It is now time for you to step up in a new way. It is time for you to counterattack, to move forward, to innovate, to find better, faster, easier, cheaper ways to get results.
What you choose to do today—right now, in this market—can have more of an impact on your company and career than at any other time. Epictetus wrote: "Circumstances do not make the man; they only reveal him to himself."
Your ability to take charge, make hard decisions, accept responsibility, and lead effectively can have a greater impact on the success of your team or your organization than any other single factor. Everything that you do to become a more effective leader has a multiplication effect on your entire organization.
The Best and the Worst of Times
People often complain about the economy or the competition being tough, but many of the best leaders started their organizations at the worst possible time or steered them through the most difficult circumstances.
The 1970s plunged America into an era of "stagflation," with a combination of high interest rates, inflated gas prices, and miserable stock and real estate markets. It was considered a lost decade, much like the recent one we just endured.
Yet the 1970s were a time when great entrepreneurs did the unthinkable. Amid terrorist threats, massive bankruptcies, long gas lines, deregulation, and market bubbles, entrepreneurs like Charles Schwab, Steve Jobs, and Herb Kelleher each came to an extraordinary conclusion.
They decided: This is a great time to build a company!
Timing Is Overrated
Whether you are a Nobel Laureate like Muhammad Yunus or Nelson Mandela or an entrepreneur like Richard Branson or Oprah Winfrey, you don't wait for the "right time" to start something. Alan Mulally didn't just accept a job at Ford; he leaped at a huge opportunity to take the helm and make a difference when the company and his country needed him most.
Visionaries have a surprising knack for diving in at what appear to be the least propitious times. When you actually look at the environment in which they embraced their organizations, they often chose what competitors considered to be the worst possible time. Many people, looking from the outside, think these visionaries had it easy and perfectly set. Nothing could be further from the truth.
Opportunity in a Crisis
Walt Disney, Bill Hewlett and David Packard, Tom Watson (of IBM), and Thomas Edison (when he created his vision for General Electric)—all launched their dreams in miserable markets. FedEx, Sports Illustrated, Hyatt, Wikipedia, MTV, and Trader Joe's opened their doors just in time for awful recessions that defeated many other organizations. Even Google incorporated just in time for the tech bubble to burst at the end of the last century.
Leon Charney bought his first building the night Jimmy Carter lost his reelection bid to Ronald Reagan in 1980. Interest rates were in the double digits, and real estate was a bust. He plowed his rental income into twelve surrounding buildings, investing in 1.4 million square feet at Times Square. It never occurred to him that he'd become a billionaire and, today, one of the newer members of the Forbes 400 list, despite the current epic real estate slump.
Wang Chuanfu started BYD (Build Your Dream) after the dot-com crash to make advanced battery products when no one cared about the ex-professor's fantasy of a green, emission-free, battery-powered electric car. Warren Buffett bought 10 percent of BYD in 2008, making Chuanfu a billionaire and China's richest person.
Many long-lasting organizations not only were born in bad markets, they also had unpopular products in the beginning. The list of short-lived, false starts for great companies is very, very long. It seems that business success is built on earlier failures.
There are plenty of legendary examples. Apple's Newton PDA was too bulky and expensive to succeed way back in 1993, but it paved the way for Research in Motion to bring the Blackberry to market and for Nokia to make smart phones a huge success long before Apple's iPhone.
Hewlett-Packard is at the top of its game today, growing at a feverish pace and overtaking rival Dell to become No. 1 in market share in PCs. But it didn't start out that way. Among its first electronic products was a device to make urinals flush automatically and a "shock" machine for dieters. Both were busts.
One of Fortune's most admired companies in 2010, Marriott, didn't start as a hotel; it was an A&W root beer stand. Procter & Gamble began as just one of eighteen candle makers in Cincinnati.
Finnish engineer Fredrik Idestam started a wood-pulp mill on the banks of the river Nokia and found great success making toilet paper, then expanded to manufacturing rubber boots and generating electricity. In 1981, that same company, Nokia, invented the world's first multinational cellular network, and today it is the largest mobile phone and digital camera maker.
Technology powerhouse Wipro started as a shortening business in India, which then through fits and starts entered the soap business and even made hydraulic cylinders. Azim Premji eventually converted Wipro into a $5 billion IT company, and his personal net worth today is approximately $17 billion.
Try and Try Again
Charles Schwab's first half dozen ventures didn't reach his high hopes. But finally he created a discount brokerage business that was such a hit that it was acquired in the 1980s by Bank of America, which at the time was the world's largest bank. Unfortunately, that deal didn't generate the business that everyone imagined, so Schwab stretched to buy his company back a few years later for more than four times the price for which he sold it!
To reduce his debt in the leveraged buyback, he took Schwab public on the New York Stock Exchange, but just weeks before the Great Crash of 1987. The stock fell by more than 70 percent in a day and didn't recover to its initial public offering (IPO) price for about five years.
Success Against All Odds
Chuck Schwab credits his perseverance to parents who witnessed the Great Depression. They cultivated his ambitions to help millions of people achieve their own financial independence. Despite tough times, great families launch many leaders like Schwab, but not as often as you would hope. Many of the great ones had neither the timing nor the families to give them a good start.
Major General Gale Pollock's earliest memories are of her dad threatening her with guns and knives. She was eleven when she confronted her alcoholic father. "Men don't hurt women and daddies don't hurt their daughters!" she declared, facing up to him and choking back tears. Every moment of truth for this woman has been a conscious choice to change things for the better. As a young teen, Pollock's mentor—who had encouraged her during her dangerous early days with her dad—came back from Vietnam with his legs blown off. She was devastated, but turned that anger into action. She signed up as an Army nurse who would later become the first woman to lead the Army medical system.
When controversy broke in 2007 about the quality of health care in military hospitals, she was recruited to jump on that grenade as surgeon general, with a high possibility that she would fail and her career would be destroyed. She took heavy fire, but she turned the legacy of the Army hospitals around.
Character and Competence
What do the people we've described here have in common? Leadership.
To be successful as a leader, you need a combination of two ingredients: character and competence. You need to be a person of integrity. Someone people trust and are willing to follow.
To be trusted in business, you must be trustworthy. You must believe in yourself, your company, the essential goodness of your products and services, and in your people. You need to believe that you are offering an excellent product or service in every way, one that makes a difference in the lives of your customers. You must lead by example and inspire others to join you in the exciting project of building a great company.
At the same time, you must become excellent at the key capabilities and functions of leadership and set yourself on a course of continuous improvement throughout your career.
"You need the humility to remind yourself that you've got to get better at everything you do," insisted Amazon founder, Jeff Bezos, when we spoke with him. "I don't know about you, but I'm never done growing my company or myself."
Level 5 Leadership
Management guru Jim Collins uses the phrase "level 5 leadership" to describe the characteristic of the best leaders, those who build great companies. The most fascinating and distinguishing characteristic of level 5 is an often misunderstood trait: humility.
As it happens, humility doesn't actually mean being humble. People who are crazy enough to launch businesses as the economy is falling apart and then fight Goliath-size adversaries, are not exactly humble. Humility simply means you have a "burning, driving, relentless ambition to serve and to win," Collins told me, "without the arrogance to delude yourself into believing that you are all knowing or always right."
As a level 5 leader, you don't believe you are perfect. You're just convinced that you have what it takes to succeed and that you can get better. You are always looking for new ways to take your game to the next level.
You Can Always Get Better
Bezos's belief that he could create a new type of "virtual" retail store with a mission so massive as to justify the wildly optimistic metaphor of "Amazon" as his company's name was anything but humble! Yet he had the humility to craft a business plan that focused on the fundamentals of leadership in customer service at a time when it was unpopular and at odds with his dotcom era competitors.
While other Internet companies expanded at the speed of light, Amazon's obsession with organizing its products and getting its services working better than anyone else's ironically resulted in complaints about "slower" growth and unprofitability. When the dot-com bubble burst, Amazon survived and prospered while others imploded. After five years of losses, Bezos produced his first profit. This type of humility, combined with the discipline to commit yourself to continuous personal and organizational improvement, is what gives you the "winning edge" in your position and enables your company to outperform your competition.
Would you have imagined that an online company would be among the top 25 companies in customer service, on the same list with a company like the Ritz-Carlton, which has physical places and people to meet and greet you in person? BusinessWeek and J. D. Powers once again lauded Amazon on their list of Customer Service Champs in 2010.
As we'll discuss extensively in this book, the key to winning customers and building businesses has to do with exceeding expectations in comparison with the other alternatives out there. This requires leadership at all levels. Amazon knows how to compete for consumers, and even during the Great Recession, Amazon's net sales soared 28 percent to more than $24 billion in 2009, and net profits jumped 40 percent to nearly a billion dollars.
Nobody Does It Alone
No one does anything worthwhile entirely by themselves. As the leader, your job is to get results through others. One of the best ways to get the most out of your people is to treat them like volunteers, as if they were working for you voluntarily—because they are! Just because you pay them doesn't mean that your best people have to work for you. They are free agents who could go elsewhere, and often do.
Since every person is different in some way (often in many ways), the very best leaders have the greatest flexibility in their styles of working with other people. Some people respond best to praise; others need different incentives to get things done. Your ability to get the very best out of the people who report to you is a key measure of your effectiveness as a leader.
The Three P's of Leadership
Three principles are essential to understanding yourself and each member of your team. Most important, they are the key to peak performance.
1. Purpose: Why does what you do matter to others? Why exactly do you do what you do? Why do you get up in the morning and work at this job, in this company or industry, producing this particular product or service for this particular type of customer? Your purpose defines how you want to help or improve the life or work of your customer.
2. Passion: What turns you on? This question gets to the emotional side of what you do. It is all about what matters to you. While purpose relates to how people view their role in serving others, passion arises when you are doing what you love to do. When you are working at the right job for you, you experience a continuous flow of energy. You like doing your work and learning more about it. You like to talk about your work with others and admire the people who are the best in your chosen field.
Imagine that you were financially independent and you had no limitations on what you could do, be, or have. What would you choose to do even if you weren't getting paid for it? Your answer will often point you toward your passion.
3. Performance: Goals come last. Performance is all about breaking down your dreams into actionable steps for which you hold yourself and your team accountable every day. This is where purpose and passion intersect to get things done. As we learned in our World Success Survey for Success Built to Last, the challenge is to find a balance between your perception of what you must do for the world—your purpose—and your own passions. When you've found those two things, then it is time to create goals and keep score.
Bad goals happen to good people when they set goals too early. Only after you've found something that matters to other people, and something that you love to do, can you be successful at achieving your goals over the long haul.
A Billion Dollars Blowing in the Wind
Aloys Wobben founded German windmill manufacturer Enercon twenty-five years ago, humbly building his first wind turbine in his backyard. He loved tinkering with things like that, and his inspiration came from growing up near the breezy Baltic. He hoped that someday his invention would also be useful to other people. When his passion produced a machine that worked and he found a market that loved it, he set goals and plans to build a great business.
Today, Enercon is the world's fourth-largest windmill producer, with 14 percent market share and turbines deployed in thirty countries. Wobben is now also worth $3.5 billion, but that hasn't changed his geeky interest in building turbines. There's no way he's giving up his first love—his passion for engineering. But what has made him so successful in business is that he feels that he can use that passion to change the world.
Wobben's story illustrates what we mean by the three P's of leadership. Wobben is driven by a sense of purpose: He is on a mission to power the world. In addition, he's found other people who share that sense of importance and urgency in doing this work. Wind turbines are his passion and theirs. He might be happy to do it alone in his garage, but it's even more fun working with like-minded experts who feel that way too. With both purpose and passion working in harmony, he has been able to recruit equally impassioned people who share his vision for creating a high-performance, world-class company.
Excerpted from Now, Build a Great Business! by Mark Thompson Brian Tracy Copyright © 2011 by Mark Thompson and Brian Tracy. Excerpted by permission of AMACOM. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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