A Successful Businessperson Has to Learn to Say No

no

“The art of leadership is saying no, not yes. It’s very easy to say yes.” — Tony Blair

Tony Blair isn’t the only one who thinks that. So does Steve Jobs and Warren Buffett. Focus is everything.

One of the clearest signs of poor leadership is the inability to focus — it’s easy to say yes and it’s very hard to say no.

Seymour Schulich elaborates on this in Get Smarter: Life and Business Lessons:

This piece of wisdom was instilled in me many years ago by Joe Rotman, an entrepreneur who is the benefactor of the Rotman School of Business at the University of Toronto. Many years ago, prior to the philanthropic work that made him famous, I arranged for a meeting so that I could gather the insight of an astute businessman who’d built a fortune in the resource business, primarily through oil and gas production.

“Every successful businessperson has to learn how to say no,” he told me that day. If you spend your life in business, you will see dozens or perhaps hundreds of potential deals. A small number will be highly attractive; most will be average or below average. The path to superior results is to accept only the best ideas — indeed, no venture capitalist or merchant banker could survive for very long without saying no to 90 per cent (or more) of the pitches he sees.

You can be diplomatic, firm, or a combination of the two, but you must be comfortable with the idea of handing out rejection. Rotman’s lesson became rooted deeply in my consciousness and caused me to be much less wimpy about turning down venture capital deals, start-up companies, and charities.

It’s not so much what you do but rather what you don’t do that matters.

Follow your curiosity to eight ways to say no with grace and style.

The Last Thing We Need Right Now is a Vision Statement

elephants

In this excerpt from Who Says Elephants Can’t Dance?, Louis V. Gerstner Jr. says something I wish tech companies would heed.

I said something at the press conference that turned out to be the most quotable statement I ever made:

“What I’d like to do now is put these announcements in some sort of perspective for you. There’s been a lot of speculation as to when I’m going to deliver a vision of IBM, and what I’d like to say to all of you is that the last thing IBM needs right now is a vision.” You could almost hear the reporters blink.

I went on: “What IBM needs right now is a series of very tough-minded, market-driven, highly effective strategies for each of its businesses— strategies that deliver performance in the marketplace and shareholder value. And that’s what we’re working on.

“Now, the number-one priority is to restore the company to profitability. I mean, if you’re going to have a vision for a company, the first frame of that vision better be that you’re making money and that the company has got its economics correct.

“And so we are committed to make this company profitable, and that’s what today’s actions are about.

“The second priority for the company,” I said, “is to win the battle in the customers’ premises. And we’re going to do a lot of things in that regard, and again, they’re not visions— they’re people making things happen to serve customers.”

I said we didn’t need a vision right now because I had discovered in my first ninety days on the job that IBM had file drawers full of vision statements. We had never missed predicting correctly a major technological trend in the industry. In fact, we were still inventing most of the technology that created those changes.

However, what was also clear was that IBM was paralyzed, unable to act on any predictions, and there were no easy solutions to its problems. The IBM organization, so full of brilliant, insightful people, would have loved to receive a bold recipe for success—the more sophisticated, the more complicated the recipe, the better everyone would have liked it.

It wasn’t going to work that way. The real issue was going out and making things happen every day in the marketplace.

Fixing IBM was all about execution. We had to stop looking for people to blame, stop tweaking the internal structure and systems. I wanted no excuses. I wanted no long-term projects that people could wait for that would somehow produce a magic turnaround. I wanted— IBM needed— an enormous sense of urgency.

Seymour Schulich on Deals, Business, Decisions and Life

Seymour Schulich tyc

Seymour Schulich, one of Canada’s most successful businessmen and author of Get Smarter: Life and Business Lessons offers some indispensable business wisdom.

  1. Business is a means to an end not an end in itself. Nobody on his or her deathbed says, “I wish I had spent more time in the office.”
  2. Never quit a job unless you have another job. My father taught me this great truth. You are perceived as more valuable if you are working than if you’re unemployed. You may feel staying employed doesn’t give you the time or latitude to seek a better job. This is a dangerous delusion—don’t succumb to it.
  3. Always ask the question “If this decision is wrong, is it going to be painful or fatal?” Company builders and business leaders keep away from “bet the company” investments.
  4. Keep away from advisors/consultants. If they knew how to make money, they would. These folks are like the fellow who knows a thousand ways to make love but doesn’t know any women.
  5. The best test of a deal’s true attraction is to ask your partners, employees, directors, family, and so on, “Would you put your own money in this deal?” It’s amazing how often the answer to this question is, “No! This is good for the company, but I’ll take a pass.” These deals are invariably losers.
  6. Always have at least two people from your side present at any negotiating or deal-making sessions. This gives you time to think, plus an ally with whom to compare perceptions.
  7. Never confront or threaten people or institutions who have more power than you. Examples: police, customs agents, the sec, Ontario Securities Commission, tax agents of the government, or politicians.
  8. In dealing with the media, never forget to qualify your statements with “not for attribution” and “off the record” where appropriate. Journalists value their contacts and will usually respect a source’s desires.
  9. In negotiations, always try to get the other party to name its asking price. It may often be far lower than your maximum offer. If the other party won’t name a price, start very low. You can always go up.
  10. Almost everything in life is easier to get into than get out of.
  11. Never bid against yourself. Only raise your bid to top a real counter bid, not an imaginary one.

(Image source)

Warren Buffett: The Problem With 200 Page Manuals on Behavior

Warren Buffett

In an interview with Jeff Cunningham, Warren Buffett hits on two principles that elude most of us.

Interviewer: I was reading a Lincoln quote the other day, “With public sentiment, nothing can fail. Without it, nothing can succeed.” Of course, he was talking about what led to the Emancipation Proclamation. When I think about your world, 330,000 people who are employees of Berkshire Hathaway or its subsidiaries, how do you send the message that they are being scrutinized under the microscope by the media at all times?

Buffett: I send a message to their managers. Those 330,000 people work for maybe 70 or so CEOs and in turn work for me. My job is to have those 70 CEOs sending out the right message. Every two years, I write them a very simple letter. It’s a page-and-a-half. I don’t believe in 200-page manuals because if you put out a 200-page manual, everybody’s looking for loopholes basically.

Page-and-a-half, it’s very hard for them to argue about what I’m talking about. I tell them that my reputation, Berkshire’s reputation, is in their hands. We’ve got all the money we need. We’d like to make more money but we’ve got all the money we need. We don’t have an ounce of reputation beyond what we need. We can’t afford to lose it. We never will trade reputation away for money.

They’re the ones that are the guardians of that. I want them to not only do what’s legal obviously, but I want them to judge every action by how it would appear on the front page of their local paper written by a smart but semi-unfriendly reporter who really understood it to be read by their family, their neighbors, their friends.

It has to pass that test as well. I tell them I don’t want anything around the lines. I tell them there’s plenty of money to be made in the center of the court. I’m 84. My eyes aren’t that good anymore. I can’t quite see the lines that well. Just keep it in the center of the court. If they have any questions, call me.

As for advice on what to do when you face a problem …

Interviewer: Even the occasional dust-up at Berkshire is big news. I’ll pick on Salomon only because it’s history now. It’s got a lot of time to reflect on that. When you think about what you went through there, what advice do you have for a CEO who’s on the media hot seat because of a similar situation?

Buffett: There are a couple pieces of advice on that. The first is that when you find out a bad news, correct that and if it’s necessary to report it, then the authorities report it to the media. The big problem with Salomon was not what a fellow named Mozer did which was to defy the US government, not ever a very good idea. But that could have been handled, but he reported…He didn’t report it.

John Meriwether, his supervisor, picked up on it in late April of 1991 and went to the president, the chairman and the chief legal counsel of Salomon and said, “Here’s what this fellow Mozer has been doing.” They all agreed it was wrong. They all agreed it was reportable to the Federal Reserve promptly. Unfortunately, nobody did anything.

In the middle of May, Mozer went out and did it again. Now, you’ve got a terrible problem because you knew the guy was a bad actor a few weeks earlier and he hadn’t reported it and that compounded there. Then, you’re in a real pickle.

When you find bad news, I say get it right, get it fast, get it out, get it over. Get it right is important. When they questioned, Mozer had done it there. But the get it fast and get it out, they missed on.

You’re going to get bad news. I got 330,000 people. I will guarantee you that probably dozens of them are doing something wrong right now. I just hope I find out about it early and the person below me finds out and lets me know if it’s bad enough and that they stop it.

You can’t have a city of 330,000 without an occasional [laughs] crime of some sort. It’s going to happen. You’ve got to do something about it fast when it does happen.

Produce More by Removing More

Produce More

Aristotle talked about three kinds of work: theoretical, practical, and poetical. The first searches for truth. The second is practical with an objective around action. The third, however, is lost in our modern culture. The philosopher Martin Heidegger called this “bringing-forth.”

In his book Essentialism: The Disciplined Pursuit of Less, Greg McKeown describes this as an essentialist trait.

This is how the essentialist approaches execution: “An Essentialist produces more—brings forth more— by removing more instead of doing more.”

We rarely have the time to think through what we’re doing. And there is a lot of organizational pressure to be seen as doing something new.

The problem is that we think of execution in terms of addition rather than subtraction. The way to increase the production speed is to add more people. The way to get more sales is to add more salespeople. The way to do more, you need more — people, money, power. And there is a lot of evidence to support this type of thinking. At least, at first. Eventually you add add add until your organization seeps with bureaucracy, slows to an inevitable crawl, centralizes even the smallest decisions, and loses market share. The road to hell is paved with good intentions with curbs of ego.

Rather than focusing on what to add, the Essentialist, McKeown argues, focuses on “constraints or obstacles” that need to be removed. It isn’t about adding, it’s about subtracting. I found this interesting to think about in the context of Ben Horowitz’s distinction between good and bad organizations.

But how can we re-orient around what to remove? Essentialism: The Disciplined Pursuit of Less offers three ways:

1. Be Clear About The Essential Intent

We can’t know what obstacles to remove until we are clear on the desired outcome. When we don’t know what we’re really trying to achieve, all change is arbitrary. So ask yourself, “How will we know when we are done?”

2. Identify the “Slowest Hiker”

Instead of just jumping into the project, take a few minutes to think. Ask yourself, “What are all the obstacles standing between me and getting this done?” and “What is keeping me from completing this?” Make a list of these obstacles . They might include: not having the information you need, your energy level, your desire for perfection. Prioritize the list using the question, “What is the obstacle that, if removed, would make the majority of other obstacles disappear?”

When identifying your “slowest hiker,” one important thing to keep in mind is that even activities that are “productive”— like doing research, or e-mailing people for information, or rewriting the report in order to get it perfect the first time around— can be obstacles. Remember, the desired goal is to get a draft of the report finished. Anything slowing down the execution of that goal should be questioned.

(The slowest hiker is a reference to Herbie in the business parable The Goal by Eliyahu Goldratt. More generally it can be thought of as the question what is keeping you back from achieving what you want? “By systematically identifying and removing this constraint,” McKeown writes, “you’ll be able to significantly reduce the friction keeping you from executing what is essential.”)

3. Remove the Obstacle

… The “slowest hiker” could even be another person— whether it’s a boss who won’t give the green light on a project, the finance department who won’t approve the budget, or a client who won’t sign on the dotted line. To reduce the friction with another person, apply the “catch more flies with honey ” approach . Send him an e-mail, but instead of asking if he has done the work for you (which obviously he hasn’t), go and see him. Ask him, “What obstacles or bottlenecks are holding you back from achieving X, and how can I help remove these?” Instead of pestering him, offer sincerely to support him. You will get a warmer reply than you would by just e-mailing him another demand.

If you’re a manager or team lead, another thing starts to happen when you start removing obstacles. Not only does the output of the team increase but you’ll find that people like working with you a lot more.

Essentialism: The Disciplined Pursuit of Less will help you sift the signal from the noise and focus on what really matters.

The Tension Created By Stretch Goals

Charlie Munger

It’s one thing to set big stretch goals and it’s another to acknowledge the tension and incentives that creates within an organization.

Charlie Munger, speaking at the 2000 annual meeting for Wesco Financial, explains:

There are two lines of thought …. A whole bunch of management gurus say you need B-HAGs — bold, hairy, audacious goals. That’s a technique of management — to give the troops a goal that looks unattainable and flog them heavily. And according to that line of thought, you will do better chasing a B-HAG than you will a reasonable objective.

And there’s some logic in that — because if you tell your kid A-minuses are fine and he likes partying around the beer keg and can easily get A-minuses, you may well get a lower result than you would if you gave him a different goal.

Then there’s another group that says that if you make the goals unreasonable enough, human nature being what it is, people will cheat. And you see that in the public schools — where they say you’ve got to have the reading scores better so we’re going to pay the teachers based on the reading scores getting better. So the teachers start helping students cheat to pass the reading tests. So human nature being what it is, if the goals are unreasonable enough, you will cause some cheating in your corporation — or even within your top management.

Each organization has to find its own way.

I can’t solve that problem. There are two factors that are at war. You don’t want the cheating — which is bad long term and bad for the people who are doing the cheating. However, you do want to maximize the real performance. And the two techniques are at war.

What people generally do is give people the unreasonable goal and tell ’em, “You can’t cheat.” That’s basically the goal at General Electric. They say, “We don’t want any excuses. … But don’t cheat. … If you can’t handle those two messages, why, perhaps you’d be happier flourishing somewhere else.” That is the American system in many places.

I’ve got no answer to that tension. Low goals do cause lower performance and high goals increase the percentage of cheating. Each organization has to find its own way.