A Goal Without A Plan Is Just a Wish

One of my favorite quotes is, “A Goal Without A Plan Is Just a Wish.” In my experience, most goal setting leaders fail to recognize this basic premise, that a goal is just a goal unless you have a plan to follow through towards accomplishing that goal.

Here is an example. Your bank CEO wants to increase earnings. There is no plan. The CEO communicates the goal, and states that he wants earnings to increase by 10% next quarter, and double by the end of the year. When asked “how” by a member of the middle management team, the CEO answers, “make more loans and bring in more deposits.”

At the end of the next quarter, earnings remained flat. At the end of the year, there was a nominal increase in earnings, no more than what you would expect from continuing status quo operations.

After both the quarter and year end numbers were released, the CEO angrily declared that “something needs to be done!” When asked what he suggests they do, he said, “do what I told you to do last year…make more loans.”

The bank had the right goal, but no plan to achieve that goal. Goal setting is a wonderful thing, and something even my young son does every day at school, but you need a plan. It needs to be conceived smartly and aimed at the specific goal, then fully vetted and analyzed prior to implementation to ensure it can succeed as desired.

Once the plan is ready, an organization must execute the plan as designed, and they must fully commit to the plan. The commitment starts at the top with the CEO, and all of the senior executives must be on board. The CEO must effectively communicate the plan and be willing to take questions so the employee base is on board and ready to roll. (They are the ultimate executors of any plan, after all). Finally, everyone needs to be focused on proper execution of the plan until the goal is achieved, and again, that starts with the CEO. Otherwise, a goal without a plan is just a wish.

The Chris Christie Press Conference

New Jersey Governor Chris Christie held an amazing press conference today to address the bridge to Fort Lee affair. A guest on CNBC, Mary Uhl-Bien, a University of Nebraska professor, commented on Gov. Christie giving his folks one hour to come clean about their knowledge of the affair. She said this was a form of intimidation and not proper for an effective leader.

The use of intimidation is inappropriate for any leader as it creates an environment of fear among the workers. However, we must distinguish the use of intimidation to quash conversation or to purposely instill fear, against the use of an ultimatum to come clean and openly communicate.

The U of N professor’s point would be a fair point if Christie was telling his folks to stay quiet, to lie, or to suppress emails or the truth. In this case, Gov. Christie was asking his people to come clean; to reveal what they know; to acknowledge their guilt in a very damaging political situation. There is nothing wrong with what he did. In fact, it was exactly the right way to handle it, because it forces everyone to be honest and open, which is one of the most important themes of any well-run company.

The professor sounds an alarm that is too often sounded in Corporate America, in which leaders must be nice, coddle their employees, never raise their voice or show emotion, or push for results. In my opinion, this is exactly the problem in America today, and why we are not as competitive in the world as we should be. We have fallen behind in education, math, and science; we have put tenure ahead of ability; we get our “best and brightest” from other countries because we can’t produce them ourselves. We need to stop coddling our employees and stop retaining people just because they have been here longer.

Leaders must be more focused on excellence to achieve goals and to develop better talent. They need to push for better results. They need to push for behaviors that foster competition, achievement, and excellence. It’s great when everyone gets along. Who wouldn’t want to be part of a corporate culture like that, but not one where everyone gets along at the expense of success. In my experience, corporate failure, like consistently missing expectations, creates more acrimony then how a company treats its employees.

Coddling employees and accepting poor performance and poor behavior doesn’t further any other goals of the business, like growing the company, selling better widgets, or providing better service to the client base.

In the case at hand, Christie’s approach was perfect. He assembled his team and gave them a time limit to come clean and share their knowledge, admit their guilt (if any), and get on with running the State of New Jersey in an honest, open, and ethical manner. If you lie, your out. If you tell the truth and show remorse, you stay, and together the group will be stronger, more cohesive, and more focused on the right behaviors.

Excellence and success in any business doesn’t happen by accident. It takes a lot of work, and a lot of focus, and leaders must be focused towards winning every battle, every day. Vince Lombardi once said, “Winning isn’t everything, it’s the only thing.”

An Ineffective Leader

When discussing leadership, “experts” too often focus on esoteric concepts without real world examples. There is no one definition of leadership because leadership appears in many forms, and is often perceived differently by the beholder. That is exactly why real world examples can create a better picture of leadership, focusing not only on the effective, but the ineffective.

Here is a great example of an ineffective leader. Company A has a division head “John” managing 15 people in a dynamic office environment. The group has an employee, “Sam”, who is the top producer across the company’s footprint; essentially outperforming 900 other employees by a wide margin. Sam is underpaid, and has been underpaid for 6 years, all of which under the supervision and “leadership” of John.

John is highly regarded at the company and is considered by many to be one of the strongest managers and producers in the industry. John has direct access to all company executives, and regularly speaks to many of them, including quarterly Board presentations. The company considers him a Leader.

Upon the arrival of John’s new boss, Diane, John complained about Sam’s low pay and lack of respect he receives at the company. Diane asked John what he has done about it. To her surprise, the answer was “nothing.” John then asked Diane to see what she could do to get Sam a raise.

Sam was not just underpaid. He made half of that of his peers while out producing all of them. John had 6 years to work on this, but now, due to his lack of leadership, it may take years to get Sam up to the required pay grade.

Over the next 3 years, Diane worked hard to get Sam pay increases in excess of the company’s policy for raises, even for exceptional producers. Diane effectively was able to double Sam’s total compensation in 2 years. During the process, John continued to complain about Sam’s pay, without ever taking any personal responsibility for Sam’s pay staying as low as it was for the prior 6 years.

John is typical of many managers and “leaders” in companies from coast to coast. He fails to recognize the difference between management and leadership, and fails to take a leadership role. In this case, as a leader, John should have made a business case and continued to push for it, supporting his employee, and showing the company why Sam is their most valuable asset. Instead, John did nothing but complain to peers and new managers, failing to act like a leader and lead. Diane had no trouble getting Sam’s pay increased methodically over 2 years. It only took an effective leader to get it done.

Get in front of the issue and stay in front. Show the will and desire to make change happen in a positive way. Push in a professional and proactive manner until the mission is complete. Lead. Win. Don’t follow the herd, and most importantly, don’t expect others to lead. Expect it out of yourself.

Why Can’t I Get a Small Business Loan?

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Today’s banks are struggling with more restricting regulations and greater oversight from regulatory agencies after the 2008-2009 debacle.

New regulations require banks to maintain higher capital ratios than ever before, meaning they must retain more of their cash instead of lending it to businesses.  New regulations have also forced banks to tighten lending standards, so what used to be considered an acceptable credit risk is now considered a bad credit risk.  As the risk profile moves in a more conservative direction, it moves business borrowers across a spectrum from acceptable to marginally acceptable to not acceptable.

In normal times, most small businesses fall within the “acceptable” part of the spectrum.  When regulations tighten, and bank capital gets restrained, they artificially move formerly acceptable borrowers towards the less acceptable parts of the spectrum.  A bank would like to still make the loan, and some do, but they risk the heavy hand of the regulator so they pass on the deal and send a decline letter.

So what happens inside the bank when a small business owner applies for a loan?  First, a financial analysis is completed to determine the financial viability of the business and its financial capacity to repay the loan in a time frame acceptable to the bank.  Then the Lender or Credit Analyst completes a thorough write-up, which can be as short as 3 pages, but often exceeds 10 pages.

The reason for the length is because regulators require banks to analyze the borrower, the guarantors, the industry, the market, the past, the present, the future, several downside scenarios, the collateral, the character of the borrower, the CFO, and other key members of the borrower’s management team.  If any of this is missed, the bank’s auditors and regulators could downgrade the credit, or criticize the bank in such a way that restrains capital and makes lending more difficult.

If you are a business owner today looking for a loan, my advice is to plan ahead, be patient, and talk to several local banks about their process and their current risk appetite.  It is a new world with new rules, and we all need to adjust to make it work.

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