Execute with Discipline
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Setting lofty long-term goals for your business only to see them fall by the wayside? Learn to create achievable goals adaptable to the changing times in today’s episode.
Practical strategies to enable you to achieve your company's long-term vision while adapting to changes in the world.
Learn about the importance of creating a three-year highly achievable goal (3HAG) and aligning annual priorities with the vision to ensure progress.
Clear communication and planning rhythms, including annual and quarterly meetings, monthly check-ins, and weekly accountability meetings, to realize your business goals. Moreover, you will discover how to create two to five differentiators that make your company unique and valuable over the next three years.
Here are the most important highlights:
Each Key Performance Indicator (KPI) needs to have a red, yellow, and green system for measuring success or failure.
KPIs should be measured frequently and should be actionable.
Your planning and communication rhythm should include annual planning meetings, quarterly planning meetings, monthly check-ins, weekly accountability meetings, and daily huddles.
Each of your planning and goal-setting meetings should have a set of objectives and an agenda.
Weekly accountability meetings should be used to hold team members accountable for their progress towards quarterly goals.
Building a long-term and mid-term vision is important.
Three types of business vision: (a) almost never-changing, (b) big highly audacious goal (B-HAG) that spans 10 to 15 years, and (c) three-year highly achievable goal (3-HAG).
It's crucial to have a link between the vision and day-to-day operations, to ensure every decision and action aligns with the vision.
The link is between the 3-HAG, one-year plan, and one-quarter plan. These create the bridge between the mid-term and short-term goals.
The three disciplines of execution for successful alignment include aligning around a small number of priorities, measuring what matters, and having consistent planning and communication rhythms.
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[00:00] Intro
Mike Goldman: During the last Mike on the mic episode of the show, episode nine, I talked about the importance of building a long-term and a mid-term vision. We talked about the almost never changing part of the vision. We talked about the 10-to-15-year big, hairy, audacious goal or BHAG, and we talked about the three-year vision or the three year highly achievable goal, the 3HAG.
All critically important of course, or I wouldn't have done a whole show on it, but where's the link between that vision and the day to day. How do we make sure that every decision that we make, every action that we take, we are getting closer and closer to our vision, in good times and bad times, anywhere in between, where is that link?
And normally it doesn't exist, normally the leadership team goes off on a retreat, creates a beautiful vision, , and then they go back to work and then three years later they say, we probably ought to create another vision. And that's why in the old days, I've been, man, coaching and consulting for over 35 years and first half of my career was working with Fortune 500s and there was a whole lot of work and money, time investment in creating these beautiful three-to-five-year strategic plans and some really good work was done.
And the binders and the PowerPoints and the colors and the graphs were beautiful, but they sat on a shelf and gathered dust. And the reason why they sat on the shelf and gathered dust is not because there wasn't good thorough work done.
It wasn't even because people didn't take ownership and accountability for it. It sat on the shelf and gathered dust because three to five months later the world changed and we'd all like to believe that change is happening faster than ever and okay, maybe it is, but I'm old enough to know change was always fast.
20 years ago, three to five months after we created a strategic plan, the world changed and therefore the team stopped holding each other accountable for executing on that plan as they should, because the plan didn't make sense anymore. So where is that link between that long term and mid-term vision and our execution day to day so we don't have to keep recreating plans that are a waste of time every three to five years.
And the important link is that link between the three-year vision or what I call the 3HAG, the three year highly achievable goal and the one-year plan, and the one quarter plan. So that's what I wanna talk about today, I wanna talk about execution, and when I say execution, I really mean that link between the one year and three year, and then what are we doing quarterly, monthly, daily to make it happen.
[03:15] The Three Disciplines of Execution
So, we're gonna talk about three disciplines of execution today, that if you get right, will allow you in good times and in bad to keep progressing towards that vision. And also realize before you go three years and have a plan gather dust. Have you realized quickly whether that vision needs to change? Is your big, hairy, audacious goal no longer consistent with something that's gonna challenge you to greatness? Is your three-year vision something that's no longer consistent. Let's find that out. Let's zig and zag as we need to and not wait for the next time we decide to do or a retreat and create a three-to-five-year strategic plan.
So, three disciplines of execution. Let me talk about them at a very high level, then we'll drill in, and I'm sure there will be many more, Mike on the mic episodes and guest episodes where we drill into this. But the three disciplines are number one, aligning around a small number of priorities. Number two, measuring what matters. And number three, having a consistent planning and communication rhythm. So, I'm gonna hit those.
[04:29] First Discipline: Priorities
One at a time. First, let's talk about aligning around a small number of priorities. Very often I will ask a CEO and their leadership team as I start working with them, or before I start working with them, what are your priorities this year? And sometimes they'll get the answer right, but way more often than not, I find two problems with their answer. Number one, the 5, 6, 7 people on the leadership team all have different views of what the annual priorities are. They each give me 2, 3, 4 most important things for the year, but they're all different, so there's no alignment.
Number two, when I ask them what the priorities are for the year, they list out 13 different priorities. If everything's a priority, nothing's a priority, so that's not right either. So, what we need to do is start off with a small number of annual priorities, two, three or four priorities that align with our three-year vision.
Part of our three-year vision, and I talked about this. Go back and listen to episode nine if you haven't listened to it, but part of the three-year vision is to come up with 2, 3, 4, 5 differentiators. What are the two to five things that are gonna make us unique and different and add value over the next three years. What are the two to five ways we're gonna own the market three years from now? When you look at annual priorities, very simply, the first place to look, maybe the only place to look is what's the next 12-month chunk of that three-year vision of those three year differentiators.
That's the perfect way to make sure you're aligned between your one year and your three year. And by the way, if you've got a revenue goal of hitting 10 million or 50 million or 500 million for the year, your annual priority is not to hit 50 million you've got your financial targets for the year, and we'll talk about that more when we get to measuring what matters, the second discipline.
You've got your financial targets, your annual priorities are what do you need to actually do? What actually are you gonna take, or who do you need to become in order to get there. So it's not, we have an annual priority of hitting 50 million in revenue. It's, we have an annual priority of, introducing this brand new product that's gonna allow us to do that.
For example, what are you gonna do to make that happen? Our annual priorities are the next 12 month chunk of your three year vision, or your three year differentiators, but the three year, the one year has a problem and that there's not a great sense of urgency to get it done. If I say I'm gonna lose 15 pounds in the next year, I'll still go for that cupcake later or order pizza with my son tomorrow cause I've got time to lose 15 pounds.
[07:46] 90-day Priorities
But if I say I need to lose four pounds in the next quarter, now I've got a fire lit under my butt to go do that. So annual priorities are great to give you direction, but what you really need is a 90-day priority, in addition to that. And I call those 90-day priorities, rocks. You need a rock, a quarterly priority that, A is gonna add a sense of urgency, a little fire under your butt to get it done.
B, it's gonna be typically more specific and measurable. And C, while the world might change within the next 12 months, covid aside, the chances of the world changing a whole lot over the next 90 days are lower. Along with your purpose, which is almost never changing, and your BHAG, which is 10 to 15 years, and your 3HAG, which is three years and your one-year priority, we need to align around a small number of quarterly rocks.
What's the next 90-day chunk of the annual priorities? And those are called your company rocks. So, if you have three annual priorities, you might have two, three, or four quarterly rocks that are aligned with those annual priorities. And although, not gonna get into the details of it here, you also may have individual rocks that each member of your leadership team are accountable for that align with those company rocks.
But let's simplify it for now and say we've got, let's say we've got three annual priorities, then we've got three company rocks that align to those annual priorities. And for the company rocks A, it's important that they're specific and measurable. B, I'm gonna challenge you to make sure that they are outcome driven, they're value driven.
At the end of those 90 days, you've got true value from the execution of that rock. I'll give you an example of something that is not outcome or value driven cause I had a conversation with a client a number of months ago, and they wanted to create a rock that they called planning our leadership development program.
That was the rock. The Rock was to plan their leadership development program. They absolutely had a need and have a need in that organization to implement better training development for their leaders to improve the percent of A players within their organization to improve employee retention, to improve productivity, to do a whole bunch of things.
Great idea. The problem is if they took the next 90 days and planned a leadership development program, there's really no value after 90 days. What they have after 90 days is an idea of what they wanna train people in, who needs to be trained, what different media are they going to use to train people?
All those things. And I get there's value in that. But when this client brought that up, I said, is it possible, if you do that at the end of 90 days? You'll get no value. And their answer was, no of course we'll get value cause we plan it, then we'll execute it, we'll get all this value.
But I challenged them because at the end of 90 days, there's really no value. The value's gonna be at some future time. Although that sounds logical, what I challenge them to do, and what I challenge you to do as you're thinking about your quarterly rocks, is to get more creative and say, how could we get value after 90 days or even during those 90 days?
I challenged them in two ways. I said, instead of spending 90 days planning and any rock that starts with the word planning is like fingernails on a freaking blackboard for me and the reason for that is very often after the plan is done, it's not executed, or it's not executed well, or they change, focus said, instead of planning, let's talk about what you're trying to achieve.
What's the most important thing you want to achieve in this leadership development program? and their answer was they wanted to improve their talent density. They wanted to increase their percent of A players, decrease their percent C players. I said, great, that's a great start.
So if that's the value you want to get, how could we get that value within the 90 days versus just planning for it and hoping to get it later? and we came up with two different alternatives. One was to narrow the scope of the training and development and say instead of trying to train our leaders, develop our leaders on all the things they need to do and be to be successful as leaders, what if we just trained everybody on how to assess talent, how to coach?
and retain A players. And develop A players and either coach or make the tough decisions on C players. That's a much narrower scope than a whole leadership development program and their thought was they would be able to do that within the next 90 days and benchmark talent density right now and then benchmark it 90 days from now.
And they thought they'd actually see a change, I’ll be it, probably a small change in talent density in 90 days, but they would actually be able to add value in 90 days and then the next 90 days, maybe they'd add something else to the mix and ultimately, they would build a great leadership development program, but getting value all along the way.
The other alternative was to not decrease the scope of training, but to decrease the scope in number of people instead of training the 45 people that they wanted to train, what if we just picked out five high potential leaders and just did everything we could to coach and mentor them? Would there be value there?
We discussed that. And the answer they came up with was the first alternative to just limit the scope. How could you create more outcome driven rocks? And when you hear, our rock is to plan something, I want you to use that as a signal to say, wait a minute, there's no value at the end of that.
[14:14] The Second Discipline: Measuring What Matters
Can we make it more value driven or outcome driven? So enough for now around the first discipline of aligning around priorities. Let's talk about the second discipline, which is measuring what matters. Now, while annual priorities in quarterly rocks are very much about working on the business, what are we doing to improve the business?
Measuring what matters is much more focused on working in the business. What are we doing to run the core business, to run the day-to-day, and your key performance indicators. Your KPIs are not only financial, but non-financial.
So as part of your annual planning process, you should not only be coming up, with annual priorities, but you should certainly be coming up with your financial targets for the year, what's your revenue target? What's your gross margin target? What's your net profit target? What’s your net cash flow target? Things like that.
So certainly, what are your financial targets? And most of you probably do that, what I find most don't do is also include their non-financial targets, number of new clients, number of new opportunities, marketing qualified leads, closing ratio, number of new products introduced
What are your widgets? What are your non-financial targets? And for each one of those financial and non-financial targets, we need one and only one person accountable. So, in your weekly, monthly, quarterly, annual meetings, and we'll talk about the meeting with them in a little bit, you need to be able to hold someone accountable for hitting those measures.
And as long as you've got the non-financial, you'll understand not just that you're not hitting your revenue targets, but you'll understand why you're not hitting your revenue targets. Do you not have enough marketing qualified leads? Are you not closing those leads that you have? Is your average revenue per new client too low?
What is it? Have you not introduced the new number of new products you thought you'd release? Is your customer retention lower than you thought it was? We need to understand how you get to those financial targets through the nonfinancial targets, and you need one person accountable, and you also need a red, yellow, green method there.
What I mean by that is it's not enough that you're tracking closing ratio or customer retention. Our customer retention is 87%. Is that good or bad? What was your target? Are you in the green, meaning you're successful? Are you in the red, meaning you're failing. Are you in the yellow, which is in between success and failure, so we're in the danger zone.
And normally what you wanna do for each KPI is have a green, which is success. Define your red, so if your customer attention success is 97%, green is 97. Red, which is the failing point. It's probably not 96. If you're at 96 and you just missed success, you'd probably say, we didn't hit our goal, but we did pretty well.
But maybe 92% is red. And then somewhere in between 92 and 96 is your yellow. So, each KPI needs to have a red, yellow, green. And the last thing I'll say about these KPIs and this idea of measuring what matters is you need to measure these KPIs frequently and they need to be actionable.
What do I mean by frequently? If you have a KPI which says, our customer retention needs to be 97% per quarter, or we need a certain number of marketing qualified leads per quarter, you have very little time to react if you're off plan. You're much better off saying with a greater frequency. We have a goal for our marketing qualified leads per week.
A closing ratio per week or per month. Now, you can't do that with everything, but the more frequent you can make your KPIs, the more you have a chance to react to them within the month or within the quarter, even within the week.
You also have to make sure they're actionable. If you find yourself reporting on KPIs every week and every month, and it's just a number, but no one's taking any action on it, it's probably the wrong number.
[18:39] Third Discipline: The Right Planning and Communication Rhythm
So, we talked about aligning around priorities. We talked about measuring what matters. Let's talk about having the right planning and communication rhythm and a consistent planning and communication rhythm. I'm sure I'll do many more podcast episodes on this, but your planning and communication rhythm should include annual planning meetings and for me and my clients or annual planning meetings.
Two-day retreat. Sometimes longer if the client wants to inject some fun into the meeting. But it's at least a two-day retreat where you're talking long-term strategy, short-term vision and execution. You've got annual planning meetings, and by the way if you want an agenda for each of these meetings, I'm outlining a shameless plug for my book Breakthrough Leadership Team in my book.
I have agendas for each of these meetings, but you've got an annual planning meeting, which typically a two-day meeting. Then you've got your quarterly planning meeting. Quarterly planning is where you are figuring out whether you were still on target with your annual planning. You're looking back as to whether how you did on your last quarterly set of rocks, quarterly financials.
What did we learn from last quarter? What new opportunities do we need to go after? What issues do we need to resolve? And let's create our next 90-day plan. And remember the 90-day rocks are where stuff really happens, an annual priority, a three-year differentiator. Those are nice, methods to know if you're at point A, where is point B? But your 90-day rocks is where stuff really gets done.
You've got your quarterly planning meeting, which is also, in my opinion, a two day session for you and the leadership team. You've got what I call your monthly check-in and education meeting. Don't wait until the end of the quarter to know that you are behind for the quarter or that you've gotta zig or zag on your quarterly plan.
Monthly check-in and education is about diving into where you have issues and obstacles on your way to your quarterly plan. It's also a way to get in and make sure that you're learning and growing as a team. That's why I call it monthly check-in and education. And that's normally, a half a day meeting, could be a full day meeting, every month.
Then you've got your weekly accountability meetings. And then your daily huddles. And I wanna dig into the weekly accountability meeting for each and every meeting. Weekly accountability included. You need a set of objectives and an agenda for that meeting.
Now I have some clients that say if they get a meeting invite and there's no objectives and agenda, they don't show up, that's a great way to change culture because when people hear about all these meetings I'm recommending, annual, quarterly, monthly, weekly, daily, and how those cascade down through the organizations.
[21:29] Bad Meetings
People say, Mike, we already have too many meetings. No, you already have too many bad meetings, you don't have too many meetings. And as a leader, if you spend a good amount of your time in meetings, that's only a bad thing if they're bad meetings. In these meetings, that's when you are working on the business.
That's where you're rolling up your sleeves with other leaders and making the hard decisions, making the critical decisions to drive your business forward and move towards your vision. And the worst meeting that I've seen consistently is the weekly meeting.
Most call it the weekly status meeting, and it's a meeting where the CEO goes around the table and says, so Joe, what do you have going on? *Vocal Mimicry* Julie, what do you have going on? *Vocal Mimicry* And everybody's looking at their watch wondering when the meeting is gonna be over cause they have real work to do.
It's a waste of time for everyone. And I find the people that talk the most in those meetings are the people that have done the least, but they talk a lot cause they wanna make it seem like they've done a lot. The reason why I don't call it a weekly status meeting, I call it a weekly accountability meeting is for the sheer purpose of everyone on the leadership team holding each other accountable for what they've committed to do.
For the company rocks that they own, every rock that you create as part of your quarterly planning should have an accountability owner, one and only one person who owns that rock. And you've got KPIs with one and only one owner. So that weekly accountability meeting should be spent going around the room and talking about four rocks and four KPIs, where you are in the red, where you are in the yellow. If you're in the green on a rock, you're successful. If you're in the green on a KPI, you shouldn't really need to talk about it, but where you're in the red, where you're in the yellow, hey, let's figure out how we can help you get back from the red to the yellow or from the yellow to the green.
The weekly accountability meeting is where accountability lives or dies. You can come up with a great vision. You can come up with great quarterly plans. If you are not holding each other accountable weekly for moving forward on that plan, you will get frustrated and accountability will die, and your quarterly and annual planning meetings will die a slow death too, as people take them less seriously because you're not holding each other accountable for moving it forward.
So, we talked about three disciplines, aligning around priorities, measuring what matters, having consistent planning and communication rhythm. Which one of those three do you need to spend the most working on today? Go to it.
00:00 Episode 11 - Execute with Discipline
03:13 Three Disciplines of Execution
04:29 First Discipline: Aligning around a small number of Priorities
07:46:0 90-day Priorities
07:57 Creating Rocks
09:22 Characteristics of Company Rocks
14:13 Second Discipline: Measuring What Matters
16:32 Green, Yellow, Red Method
17:27 Measuring KPIs
18:29 Third Discipline: Planning and Communication Rhythm
20:55 Weekly Accountability Meeting
[21:29:0] Bad Meetings