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Reading Notes: Traction–Get a Grip on Your Business

eos-systemAuthor:  Gino Wickman

Format: Hardback

Subject:  Business Management

Rating: 8/10

Summary:

Traction is an instructional manual that documents the Entrepreneurial Operating System or EOS.  EOS is designed to allow business leaders  maintain traction toward the company’s vision.  I actually read it the book in November 2015 as I prepared to start as CFO for Staley Inc.  I thoroughly enjoyed the book and EOS process, and have since gone on to participate in local round tables on the EOS implementation process.  I am convinced that I would be twice as successful as I am today if I had read this book ten years sooner.

The concept of Rocks would have been very beneficial to several of my colleagues in past jobs.  The ability to prioritize efforts around a long-term vision is easy to understand.  But many managers have a difficult time accepting  that it means allowing other issues to fester until a later date.

Six Parts of the EOS System.

  • Vision:  Successful business owners have compelling visions for their organizations and diligently communicate those visions to ensure that everyone one in the organization has a clear image of where the company is going and how it is going to get there.
  • People:  Successful leaders surround themselves with great people.  You can’t build a great company without great help.
  • Data:  The best leaders rely on a handful of metrics to help manage their business which frees you from the quagmire of managing personalities, egos, subjective issues, emotions.
  • Issues:  Issues are obstacles that must be faced to execute your vision. Just as an individual’s success is directly proportionate to his or her ability to solve any issues that arise, the same holds true for a company.

Issues should be documented on one of three list until they are resolved.

VTO Issues List: Issue that are not a priority for this quarter

Leadership Team Issues List:  Tactical issues that must be solved this week or quarter, and that must be solved at the highest level in the company.

Departmental Issues List.  All Tactical issues that live at the department level.

  • Process:  Processes are your way of doing business.  Successful organizations see their way and constantly refine it.  This is the most neglected of the Six Key Components.
  • Traction:  In the end, the most successful business leaders are the ones with traction.  They execute well and they know how to bring focus, accountability and discipline to their organization.

Successful companies make use of the Vision, Traction, Organizer, or VTO:

  1. What are your core values?
  2. What is your core focus (also known as Vision Statement, Mission Statement, Sweet Spot…)?
  3. What is your 10-year target (or long-term strategy)?
  4. What is your marketing strategy?
    1. 3 Uniques
    2. Your Proven Process
    3. Your Guarantee
    4. Target Market
  5. What is your 3-year focus (short-term strategy)?
  6. One is your 1-year plan? (tactics)
  7. What are your quarterly rocks?  Company Level
  8. What are your issues?   Company Level

Accountability Chart:  An organizational chart that lays out all of the positions in the company along with their Core Responsibilities

Right People in the Right Seats:

  • Right People = Core Values + People Analyzer
  • Right Seats = Unique Abilities + Accountability Chart

Rocks:  Are short time priorities that help you achieve your vision.  Establish the 3-7 most important priorities that must be done in the next 90 days.  These priorities are called rocks.  The company has rocks. The leadership team has rocks, and team members have rocks.   The primary purpose is to help focus the organization, and to break the habit of trying to focus on everything at once.

L10 Meeting (Level 10):  Meetings with a specific agenda that are held with the same people, in the same space, and at the same time each week:

L10 Agenda:

  • Check-in
  • Review Rocks
  • Review Scorecard
  • Announcements
  • Issues Solving
  • Score the Meeting
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401K Plan Sponsors Don’t Understand Fiduciary Responsibilities

David McCann’s recent article Passive Aggression cites an ongoing trend of 401K Plan Sponsors moving toward low-fee index funds.   According to a recent survey by Cerulli Associates, many plans are making theses changes to help prevent law suits as opposed to reducing costs.  And, McCann warns that these plan sponsors might be exposing themselves to additional liability by doing so.  He is correct.  And, he is missing the larger point: too many plan sponsors don’t understand their fiduciary responsibilities.

The Employee Retirement Income Security Act (ERISA) requires plan fiduciaries to act prudently and solely in the interest of the plan’s participants and beneficiaries, prohibits self-dealing, and provides judicial remedies when violations of these standards cause harm to plans.

McCann doesn’t see any problem with adding index funds to plans.  After all, they should always have significantly lower fees than an actively managed funds.  They can also be a reasonable method of managing risk.    He warns that plan sponsors get into trouble when they act for the wrong reason:  to prevent litigation.  To be fair, I agree with McCann’s point.  Plan Sponsors who use such logic are certainly not helping their case.

And this points to the bigger problem:  many Plan Sponsors don’t understand how to properly act in a fiduciary manner.  Outlining all of the nuances and best practices of being a great fiduciary is beyond the scope of the article.  But, a great start is for plan sponsors to ensure they actually act in the best interest of plan participants.  Another great step is maintain records of the decision making process and criteria for the plan.  Of course taking these actions won’t prevent a lawsuit.  They will, however, go a long way in building a strong defense.

Full Disclosure:  I am very much a Boglehead, and I encourage my friends and family to be as well.

Side Note:  About a month ago, John Oliver did a nifty piece on how much 401K fees cost plan participants.

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Reading Notes: The Catcher in the Rye

Author:  JD Salinger

Format: Hardback

Subject:  Coming of Age

Rating: 6/10

Summary:

The Catcher in the Rye is a well known American classic.  I am quite sure this book was assigned reading at some point during my high school education.  However, I never got around to reading it until now.  I found the method of storytelling to be pretty difficult to read.  The protagonist, Holden, generally rambled and skipped from topic to topic at random.  Also, the overall plot is pretty thin.  However, the book is loaded with symbolism, so I  understand why so many book lovers and academics love it.

I tolerated the novel as opposed to loving it.  And, the thin plot and ending are quite anti-climatic.  To be fair, I read this book in my late thirties as opposed to reading it in high school.  But, I doubt I would have enjoyed this book much more if I had read it when I was sixteen years old.  Having said that, I am certainly happy I have read it and have a better understanding of “what all the fuss was about.”

Favorite Quotes:

“Anyway, I keep picturing all these little kids playing some game in this big field of rye and all. Thousands of little kids, and nobody’s around – nobody big, I mean – except me. And I’m standing on the edge of some crazy cliff. What I have to do, I have to catch everybody if they start to go over the cliff – I mean if they’re running and they don’t look where they’re going I have to come out from somewhere and catch them. That’s all I do all day. I’d just be the catcher in the rye and all. I know it’s crazy, but that’s the only thing I’d really like to be.”  Holden

“If a girl looks swell when she meets you, who gives a damn if she’s late?”  Holden

“I don’t exactly know what I mean by that, but I mean it.”  Holden

“If you had a million years to do it in, you couldn’t rub out even half the ‘Fuck You’ signs in the world. It’s impossible.”  Holden

“The mark of the immature man is that he wants to die nobly for a cause, while the mark of the mature man is that he wants to live humbly for one.”  Mr. Antolini

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Travel Notes: North Dakota

The Keith family recently made  our first trip to Bismarck, North Dakota to visit one of my sisters and her family.  I have a strong dislike of cold weather, so we were sure to time our trip accordingly.  It is a beautiful city with a “Big Sky.”  The economy is doing quite well.  But, I certainly missed the many beautiful trees we have here in the Natural State.  We had a very relaxing and enjoyable trip, and everybody we encountered was very friendly.

Here is a list of random facts, firsts, and enjoyable moments that came up during the trip:

Favorite Actor:  Josh Duhamel –  I know him most from the movie transformers.  I had no idea he was from North Dakota.  Also he is married to Fergie which is news to me.

Favorite Attraction:  Dakota Zoo.  It is much larger than I expected.

Favorite Athlete:  Carson Wentz

Favorite Bar:  Luft Rooftop Beer Garden.  This might be my favorite rooftop bar anywhere.  It sports a retractable rooftop and a very impressive view of the area.

Favorite Football Team:  NDSU Bison

Favorite Restaurant: J60.  We had a splendid time and even better food.

Favorite Exhibit: Dakota Zoo’s prairie dog exhibit.    We had a splendid time and even better food.

First Taste:  Duck Bacon courtesy of Avery’s AM Eatery.  I ate duck bacon for the first time, and I must say that it mostly taste like pig bacon.

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Reading Notes: Rich Dad, Poor Dad

Author: Robert T Kiyosaki

Format: Audible

Narrated By: Tim Wheeler

Subject: Personal Finance

Rating: 4/10

Summary:

Rich Dad, Poor Dad is written in the form of a narrative containing life lessons of the author from both his Rich Dad and Poor Dad. I went through an entire spectrum of emotions while listening to this audio book.  The character known as the “Rich Dad” made several excellent and inspiring points during the many lessons he taught to the author.  However, an equal amount of those lessons were full of of bad advice and Ad Hominem attacks against anyone that didn’t agree with his logic.

The book makes a lot of subtle and not so subtle attacks on traditional education, and implies that most educated people are idiots and have grand senses of entitlement; It often uses the Poor Dad, who is a college educated teacher, to make this point.  To be fair, the author makes an excellent point about the lack of strong financial education in our public schools and homes. He also does an excellent job of motivating people to take responsibility and accountability in their own financial futures.

In conclusion, I found Rich Dad, Poor Dad to be way more inspirational than educational.

What I liked Most About the Book:

The average person could read this book as the only personal finance education they ever received and would have a better chance at success.

What I liked Least About the Book:

The average person can follow this book verbatim and make a lot of really terrible personal finance decisions.

Favorite Quotes:

“Rule #1: You must know the difference between an asset and a liability, and buy assets. If you want to be rich, this is all you need to know.”

“An asset is something that puts money in my pocket. A liability is something that takes money out of my pocket.”

“That is why I say that someone’s Net Worth is worth less than they think.”

“I can’t afford it shuts down the brain…  How can I afford it? opens up the brain.”

“People who avoid failure also avoid success.”

“An intelligent person hires people who are more intelligent than he is.”

“Winners are not afraid of losing. But losers are. Failure is part of the process of success. People who avoid failure also avoid success.”

“There is a difference between being poor and being broke. Broke is temporary. Poor is eternal.”

Accounting is possibly the most confusing, boring subject in the world….” 

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Reading Notes: Finally! Performance Assessment That Works: Big 5

nAuthor: Roger Ferguson

Format: Paperback

Subject: Performance Management

Rating: 7/10

Summary:
My boss recently had the chance to listen to a presentation on performance reviews by the author.  He liked what he heard.  So, he asked me to review this book and determine if the process might be useful in our organization.  The book is a very easy read; and does a good job summarizing the challenges with existing review processes.  It also does an ample job of outlining a simplified version that should produce better results with significantly less effort.  The premise is that traditional review systems are driven from top-down.  They are not done on a timely basis to have any real meaning on performance.  They take a ton of time and effort (high cost.)  And, they provide very little value for the company or its employees.

Ferguson’s proposed solution is that each employee records their 5 most important accomplishments from the prior month along with their 5 biggest priorities for the next month on a single sheet of paper that is then reviewed by their supervisor.  The supervisor should provide timely feedback on whether they agree or disagree with the priorities.  They should also provide any other necessary coaching to help ensure the employee is properly focused.  The remainder of the book covers tying these monthly check-ins to the annual review system.  It also discusses the pros and cons of using this tool as part compensation management.

Ferguson also recommends that companies simplify their compensation system.  He recommends giving all employees an x% unless the employee is on probation or some other sort of improvement plan.  He also recommends allotting a bonus compensation pool that allows managers to give their best employees an additional percentage increase.   His argument is that most managers are only allowed a certain % increase for their area anyway regardless of how great or bad their team is.  Don’t waste managers or employees time trying to justify giving employee A a 5% increase, employee B a 4.5% increase and employee C and employee D a 2% increase.

What I liked Most About the Book:  This is a very easy and quick read, and Ferguson’s system makes sense.

TLDR:

The “Dirty Dozen” Challenges of Traditional Performance Systems

  1. Tying individual goals to corporate goals is difficult if not impossible.
  2. Goals are seldom reliable for an entire year.  – The business world changes quickly and the best companies change course quickly.
  3. Metrics do not always tell the entire story.  – I am a HUGE proponent of metrics, but tying every employee to a meaningful metric is very difficult.  What metric should be used for the executive assistant?  What about the janitor?
  4. Even the best metrics can be manipulated by the employee.  –  I am aware that people often figure out a way to “game” a number, often at the cost of the company’s mission and overarching goals.
  5. Metrics are also subject to manipulation by management.  – By now it should be apparent that Ferguson is somewhat skeptical of metrics.
  6. This is not an employee driven process.  – The entire process often occurs with little involvement or value to the very employees it is designed to help.
  7. Annual Feedback is a very dated concept. – It is useless to provide feedback about activities that my have occurred months ago.  Employees need timely feedback.
  8. Managers spend too much time on the process.  –  This cost companies a lot of money and detracts from time that could be spent on issues that provide more value.
  9. Employees are skeptical of the process. –  Regardless of how hard I try, most of my employees think I don’t understand their work.  To be fair, as I have progressed from a specialized manager to more of a general manager this has become more and more true.  At least for the 80% of the things that my team does that provide 20% of their results.  I almost always have a pretty good understanding of the most important 20% of their work, but it is difficult getting employees to understand that concept.
  10. At some point in the management hierarchy, the process breaks down.  –  This has been the case more often than not as I have climbed through the ranks.  At some level in the organization, the process just doesn’t happen any more. – This causes any employee who goes through the review process to have that much distrust for the system.
  11. The process can create corporate liability. – Yes, I have personally read a lot of comments on reviews that made shake my head in bewilderment.
  12. It is difficult to tie performance to compensation.  –  This gets exponentially harder the more people you have involved.

Why the number 5?  Experience shows that it is a good number.  Some companies may find that some people/teams might make due with more or less.

The importance of 1 page:  Some employees will want to list all of their accomplishments.  It is important to teach them to list only the most important 5.  An other accomplishments section can be included last on the monthly report, but each items should be very brief.  The entire report should still fit on one page.

Big 5 Challenges:

  1. Monitoring Monthly Report Completion.  –  The program is only effective if it actually gets done.  Email seems to be the easiest way to administer the program, but that makes tracking and archiving at least somewhat difficult.
  2. Avoiding Creep.  – Unless the process is easy, people won’t do it.  Don’t let people tack anything additional to the process.
  3. HR & Legal Approval.  –  I tend to be directly responsible for these areas, so I don’t see them as being too much of a road block.
  4. Quality of the Managers Response –  This isn’t any bigger of a challenge than it is for a traditional review system, however, it can still only be effective if the managers give a meaningful review/response.

Other Notes:  Do not try to use this system for formal corrective actions.  Stick with the tried and true processes that you are already using.

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Reading Notes: How to Get Your Point Across in 30 Seconds or Less

Author: Milo O Frank

Format: Audible

Narrated By: Milo O Frank

Subject: Communication

Rating: 5/10

Summary:
This is a very basic, but useful book.  Having said that the title of the book sums up its content nicely which is how to get your point across in 30 seconds or less.  It is a very easy book to read and I believe the audible version was just over 45 minutes long.  The book breaks down the content of a good message into six distinct parts:

  • Have a Clear Objective.  What do you want to happen?
  • Talk to the right Audience.  Find out as much as you can about them. (Who)
  • Find the right Approach (face-to-face, phone call, email, brochure.)
  • Hook is used to get the audiences attention.  It can be a statement or a question.  What is the most unusual, exciting, or dramatic part of your message?
  • The Body of the message should include all the relevant details, (who, what, where,how, why.)
  • During the Close, make sure you have a Call to Action (or reaction.)  Ask for something specific and include a specific time frame.  A message without a close is a wasted opportunity.

The book also stresses the importance of painting visual pictures and appealing to the listener’s emotions.

Possible Use for this Book:  Could be very useful in writing a 30 second elevator pitch.

What I liked Most About the Book:  It made its point quickly.  The entire length takes about 45 minutes to listen to.

What I liked Least About the Book:  The 90s game show music that play throughout the audio book.  The various voice actors and voice-acting made the entire book seem like a cheesy infomercial.

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Reading Notes: The One Minute Manager

One Minute Manager Management Philosophy
One Minute Management Philosophy

Authors:  Kenneth Blanchard and Spencer Johnson

Format: Audible

Subject:  Management

Rating: 9/10

Summary:

It took me far to long to get around to reading this gem of a book.  Its written in a narrative format and does an excellent job of both telling and showing the “Minute Manager” philosophy.  The focus of the book is coaching the team to grow and perform at their best.  The philosophy consists of three key parts:  One Minute Goal Setting, One Minute Praisings, and One Minute Reprimands.

One Minute Goal Setting serves as the foundation for One Minute Management and the authors rely heavily on the Pareto Principle, that 80% of the results come from 20% of your goals.  The One Minute Goal Setting Process is outlined below:

  1.  Agree on the specifics of the goal.
  2. Define what success looks like.
  3. Write out the goals on a single sheet of paper.
  4. Re-read each goal regularly, which should only take a minute per goal.
  5. Set aside a minute several times per day to review your actions and verify they align with your goal.
  6. Tell people that you will provide feedback about how they are doing.

One Minute Praisings This is the second tool in the One Minute Manager’s toolkit.  The idea is to build positive reinforcement when somebody is caught doing something right.  When people feel good about themselves, they produce good results.  Here are the steps for a One Minute Praising:

  1. Praise people immediately, be specific about what they are doing right, how good it makes you feel about what they did right, and how its helps the organization.
  2. Pause for a moment to allow them to reflect.
  3. Encourage them to continue the behavior, and give them a pat on the back.

One Minute Reprimands  This is the final piece in the One Minute Manager’s arsenal.  The purpose of the reprimand is to keep the person and lose the behavior.  It is the counterpart of the One Minute Praising, and it consists of two parts:

Part 1

  1. Reprimand people immediately.
  2. Be specific about the behaviors they did wrong, tell them how it makes you feel.  Focus the reprimand on their behaviors, not the individual.
  3. Pause for a few seconds and let them fell how you feel.

Part 2

  1. Shake hands and re-ensure them that you are on their side.
  2. Remind them how much you value them, but not their performance in this situation.

Aha Moment:

When it comes to getting the most of their team, companies have three options:

1) Hire All-Stars (very expensive and difficult)

2) Hire somebody with potential and then train them up

3) pray.

Favorite One Minute Manager Quotes:

“I care about people and results. They go hand in hand.”

“if you can’t tell me what you’d like to be happening, you don’t have a problem yet. You’re just complaining.”

“A problem only exists if there is a difference between what is actually happening and what you desire to be happening.”

“Take A Minute: Look At Your Goals, Look At Your Performance. See If Your Behavior Matches Your Goals.”

“If you are first tough on the behavior, then then supportive of the person, it works.”

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Reading Notes: 7 Habits of Highly Effective People

Author: Stephen R Covey

Format: Audible

Narrated By: Stephen R Covey

Subject: Self-Help

Rating: 6/10

Favorite Quote:  “Admission of ignorance is often the first step in our education.”  I have consistently seen some of the best businessmen I know readily admit they didn’t understand something and ask for it to be explained, and I have seen them consistently use that behavior regardless of who else was in the audience.

Second Favorite Quote:  “Management is efficiency in climbing the ladder of success;  leadership determines whether the ladder is leaning against the right wall.”  This might be the best way I have ever heard the difference between management and leadership summarized.

Summary:  I certainly consider this book to be one of the “classics” of my non-fiction reading list.  There are definitely some  nuggets of knowledge in this book even if I don’t consider it to be in my top 10.  The title of the book does an apt job of describing its contents, which for the most part I agree with.  Having said that, I would be surprised if I ever gave this book a second read.

 Habit 1 :  Be Proactive

I cannot think of anything that has a had a bigger impact on my life then simply being proactive, so I certainly believe in this habit.  Throughout life, we will all find ourselves in a variety of challenging circumstances, and when we do we have a choice to “Wait & See” or to “Take Action!”  I have a strong bias toward taking action and actively encourage the people in my circle to do the same.

 Habit 2:  Begin with the End in Mind

Dr Covey’s take on this is rooted in a visionary and long term view of what is important in our lives as well as where we want to end up.  While that is certainly wonderful advice, I tend to find myself using this habit more when reminding myself the” importance of achieving a specific result,” and that sometimes the result can only be achieved if I am willing to sacrifice my original vision of what is required to bring the result to reality.

 Habit 3:  Put First Things First

This is all about prioritization, and making sure that we are getting the most value out of our time.  At Staley, we use the term “High Payoff Activity” or “HPA” to describe the most important activities we should be focusing our time on.  It is easy to get distracted.  It makes complete sense to apply the same logic to our personal lives.  However, it is tough to do this if we haven’t embraced Habit 2.

 Habit 4:  Think Win-Win

 I am not a big fan of this phrase, but to Covey’s defense, I don’t think it was quite the buzzword in 1989.  Having said that I am a big believer in the concept.  “Win-Win,” means that life isn’t a zero sum game.  We can each have larger pieces of the proverbial pie if we figure out how to grow the pie.  Having said that, it is easy to get trapped in the “Win-Lose” mindset, and I have to sometimes remind myself that the success of someone else is doesn’t equal a failure for me.

 Habit 5:  Seek First to Understand, Then to Be Understood

This habit really stuck out with me.  Nobody would ever accuse me of being a great listener, however, I am committed to becoming one.  Making a point of truly trying to understand what somebody is trying to communicate to me before I try to figure out how to respond is pure gold in my mind.

 Habit 6:  Synergize

Speaking of buzzwords, this one is a dandy.  I probably got the least out of this section of the book.  I am a big believer in the value of a strong team and of teamwork.  I also think it is very important to keep an open mind.  But, I also don’t immediately favor the notion that “two heads are better than one.”

 Habit 7:  Sharpen the Saw

Here is a habit that I absolutely agree with.  It is absolutely crucial to nurture and grow ourselves throughout our lifetimes.  It is equally important not to neglect any one area of oneself ( physical, social, mental, or spiritual.)  The habit of Sharpening the Saw fits right in with my goal of being an Renaissance Man.

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Reading Notes: Getting Things Done

Author: David Allen

Format: Audible / Kindle

Narrated By: David Allen

Subject: Productivity

Rating: 8/10

Summary:

Getting Things Done has transformed the way I conduct my life, which really says a lot.  The book itself describes a system for dealing with the immense variety of activities, commitments, and projects we each struggle to juggle in our daily lives.  The system is built around 5 key steps: Capturing, Clarifying, Organizing, Reflecting, and Engaging.  The purpose of the system is to get all of your obligations out of your mind and into a known centralized location in the form of lists, which should allow you to have a “mind like water,” and more capable of being in the moment.  It should also allow you to have the ability to spend your time working on the activities that you can possibly complete in any given situation.  This system is a lot like Chess in the fact that it takes a moment to learn, and a lifetime to master.

In the three or so weeks since I started reading the book I have made the following progress:

  • My Physical In Box at work is habitually empty (this doesn’t mean I have completed all of the work and don’t have any pending action items.)
  • My Email In-Box is also habitually empty (see above.)
  • I have adopted contextual list-taking as a way of life.
  • Actively adopting checklist for repetitive activities in my life.
  • I have noticed an uptick in my productivity and less loose-ends across the full spectrum that is my life.
  • My mind wanders less when I am in meetings and having conversations.

That last bullet point is a substantial benefit.  Having said that, I found my mind constantly wandering to projects, ideas, and activities as I worked my way through the book because I found it very difficult to digest the information without trying to apply it to my life.  So that was a bit of a viscous cycle.  I will definitely keep a copy of this book for reference.

What I liked Most About the Book:  Seeing my empty In-Box, and the focus on defining the “Next Action.”

What I liked Least About the Book:  The information tends to become more and more repetitive as you read through the book.  All in all, Getting Things Done book reads much like a textbook which to be fair, it pretty much is.

Illustrates the Getting Things Done process.