the LA CPA Archives | Rick Norris

Business Vision and Goals: Understand the Target You are Aiming For

In the early 1970s, I watched a Stanford professor choose Jim Plunkett, (Stanford’s star quarterback) to demonstrate perception and the brain. The professor placed a pair of glasses on Jim that caused his vision to be distorted, shifting everything he sees to the right about 20 degrees. Jim missed his attended receiver throwing consistantly to the right by 20 degrees.

Drawing his share of laughter, Jim compensated and started aiming 20 degrees to the left, thus hitting his receiver about five times. The professor explained his point about perception and congratulated Jim on his adjustment. As Jim took off the glasses and proceeded to sit down, the professor asked him to throw one more pass with no impairment to show the crowd that the professor did not ruin the star quarterback’s talents. Jim laughed and passed the ball one last time. The ball soared past the receiver by 20 degrees to the left. His brain had not re-adjusted.

The Association for Strategic Planning-Los Angeles (ASP) had the honor of hearing Deepa Prahalad speak on September 13 at the beautiful Dole Corporation auditoium. Deepa spoke of her book, Predictable Magic, and its message to identify company goals. She stressed that if you have only broad goals, both your customers and employees will not understand what the company stands for. She suggested that you must become the interpretor of your message.

As in the case of Jim Plunkett, if you cannot see what you are aiming for, you will miss your target. The start of a good strategy is to have a clear vision of what you want to accomplish. Just to have a vision to be your industry leader is not good enough. Once a business establishes a viable vision, they can create a path with quantitative metrics to move towards that vision. Jim Plunkett’s vision changed, so he has to alter his tactics to get there.

Business today is always changing, so a vision you had five years ago will most likely be obsolete, or commonplace in your industry. The ASP preaches the steps of Think-Plan-Act, but if you are thinking about the wrong vision, your plans and actions will lead you towards a failing destination.

DeBabbitting the Business Strategy Process: Can Creative People Be Developed?

My grandfather left quite a legacy. He came from Italy as a boy to start a new life. He acted in and scripted silent movies, fought in WWI, tightrope walked between two eight story buildings (without a net) over a busy Chicago street, helped build navy ships as an electrician during WWII, and founded a successful restaurant with his wife and nine kids.

His success in the variety of endevours is grounded in one quality: creativity. Creativity is a right-brain function, natural to some and alien to others. Should all brain-storming teams have a business strategist who has this trait?

Coyne and Coyne’s article, Seven Steps to Better Brainstorming, tries to quantify this concept with a set of rules that can build business strategists within a group. Their article states that brain-storming sessions should proceed in seven steps:

Know your organization’s decision-making criteria
Ask the right questions
Choose the right people
Divide and conquer
On your mark, get set, and go!
Wrap it up
Follow up quickly

At first, I thought that maybe step 3 would meet the need for a creative strategist. But, to my disappointment, they only categorized the “right” person as one who knows answers to questions that are asked about the operations.

Still, any strategy that quantifies brainstorming raises an eyebrow. You cannot quantify creativity, and thus create a business strategist. However, the article intriged me because it referred to another article, Sparking creativity in teams: An executive guide. Ahh, I said, here is a place where the authors are referencing the important creative person, maybe the business strategist. Then I read the first sentence:

“Although creativity is often considered a trait of the privileged few, any individual or team can become more creative—better able to generate the breakthroughs that stimulate growth and performance.”

This opening sentence conjured up a new term in my head, Debabbitting. Debabbitting is any company process that aims to enhance creativity by forcing people into uncomfortable situations. But, in a business strategy session, people are most comfortable with what they know, and their usual approach to problems. In the classic Sinclair Lewis’s book Babbitt, George F. Babbitt, a mid-level company man, grew very uncomfortable when he tried to change his mundane outlook and style of life.

Now, don’t get me wrong, everyone has their special gifts. Most people are creative in certain circumstances. But, not anyone is creative in all circumstances. Take for example, a friend of mine who is a mechanical engineer. His forte is finding solutions to problems. He regularly uses creativity to find solutions to fix the problems. Yet, if you were to ask him to brainstorm outside of his element, he would struggle.

Les McKeown, author of Predictable Success, hit this point in his presentation at an Association for Strategic Planning–Los Angeles event. He spoke of his forth coming book, The Strategist–Leading Your Team to Predictable Success. At the meeting, Les described the different personalities in a business: The Operationalist (“O”), The Visionary (“V”), and the Processor (“P”). “O” is the person who solves problems, “P” does not solve problems, but will write a manual about it, and “V” is our creative person who doesn’t solve problems, and many times creates them. Though all of these roles are necessary, they conflict with each other. Therefore, Les introduced the “S”, the Synergist. The Synergist is the glue that brings all of the others together to arrive at solutions. I have find Les’s book more plausible then trying to conjeur people’s creativity. In fact, I would venture to rename the “S” as the Strategist, (the Business Strategist) because that person must strategize on how to bring all of the players together.

At first glance, you may argue that the business strategist is Les’s “visionary.” However, when you work in complimenting (and conflicting teams), you are creating a business strategist’s network, not individual. I believe Les said the roles are not cut and dry, but it seems to me that once you identify the gifts and each person’s own brand of creativity, the brainstorming session can evolve naturally.

So, how do you resist the temptation to Debabbit? First of all, you have to know your players, and their abilities. And second, you must use each person in such a way in which the process maximizes each person’s strengths. And finally, you must lead from the front by example to show the team how it can (and will) work towards a common goal.

Bad Strategic Plans: How Not to Build a Flying Carpet

When I was five years old my cousin Bill and I created a strategic plan to build a flying carpet. We wanted something that hovered over the ground about three feet (so not to be too dangerous). We also needed a steering wheel and a motor.

We had our passionate vision (I still get goosebumps), and all we needed were the materials to build it. Bill’s father was a carpenter and worked on cars. He had a garage full of parts that we chose from. So, we set out to collect the parts, or the tactics of our overall “strategy.”

We started with a piece of plywood. That was our “carpet.” Using manual saws, we cut a square out of another piece of plywood and mounted it on the larger piece with a 2×4. That was our steering wheel. Lastly, the motor. My cousin found a used automobile oil pump, it looked like a motor. We strapped it on.

We were finished and sat on it waiting for it to lift off the ground powered only by our imagination.

Richard Rumelt’s article, The Perils of Bad Strategy reminded me of that experience, and also so many prospects who call me to prepare a business or strategic plan.

Before, you consider a business plan, or a strategic plan, let’s look at some his points that are common to bad strategic plans.

Failure to face the problem: “A strategy is a way through a difficulty, an approach to overcoming an obstacle, a response to a challenge. If the challenge is not defined, it is difficult or impossible to assess the quality of the strategy. And, if you cannot assess that, you cannot reject a bad strategy or improve a good one.”

A common idea for a potential business plan which comes across my door, is the creation of a record company by some musician that wants to publish, record, and write for other bands, or artists. The problem that they never address is that the current record company business model is broken. So I ask them what are they planning to do that is different? They usually don’t hire me when I ask that question, and I never hear of them again.

Mistaking goals for strategy: “A leader may justly ask for ‘one last push,’ but the leader’s job is more than that. The job of the leader—the strategist—is also to create the conditions that will make the push effective, to have a strategy worthy of the effort called upon.”

This is why motivational speakers (or life coaches) are not strategists. They work up passions to get people to give it that one last push, but don’t have the business skills to set the condition, or roadmap for them to do so. What good would it have been if my cousin pushed me down a sand dune on the wooden carpet if he did not lay out the strategic plan of how he was going to get it to fly?

Bad strategic objectives: “Another sign of bad strategy is fuzzy strategic objectives. One form this problem can take is a scrambled mess of things to accomplish—a dog’s dinner of goals. A long list of things to do, often mislabeled as strategies or objectives, is not a strategy. It is just a list of things to do.”

When you are driving cross country, the mileage markers (Los Angeles 200 miles) are metrics that measure how far you have gone, and how far you have to go to reach your destination. A list of business metrics for the sake of metrics will not help you if they are not in line with your strategic plan.

Fluff: “A final hallmark of mediocrity and bad strategy is superficial abstraction—a flurry of fluff—designed to mask the absence of thought. Fluff is a restatement of the obvious, combined with a generous sprinkling of buzzwords that masquerade as expertise.”

If you don’t understand this, try moving to Los Angeles and prepare a business plan/strategic plan for an entertaiment company. This city if full of this vibe. I see part of my job is to cut into this and get to the core issues of the business. I have to ask the hard questions and ground whatever assumptions the client is making.

The most important ingredient in a strategic plan is honesty. Entrepeneurs have to be honest with themselves and their potential investors. If they are not, the carpet won’t fly.

Did You Hear About the Guy Who Tried to Swindle IRS Agents?

There is a fine line between guts and stupidity. Stupidity is much more entertaining.

Thanh Viet Jeremy Cao of Rancho Santa Margarita, Calif. pleaded guilty of filing 22 false claims against a number of harmless people. Among these harmless victims were: SEC attorneys, U.S. District Court Judges, U.S. District Court Magistrate Judges, the U.S. Attorney for the Southern District of California, Assistant U.S. Attorneys, U.S. Secret Service special agents and special agents of the IRS. Each lien alleged that the lien victims were “debtors” of Cao for hundreds of millions of dollars.

Why didn’t he just file some against professional assassins? He would have gotten more attention.

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Cat Woman Beats IRS on her Charitable Tax Deduction, look out Batman

At the time you are reading this article, the IRS is still shaking the kitty litter from their feet. Earlier this month, Jan Van Dusen made them cough up a fur ball. The IRS painted her as a wacky cat lady trying to cheat the government out of its hard-earned taxes. As a Fix Our Feral’s volunteer, whose mission was to trap stray cats, Ms. Van Dusen would trap feral cats, neuter them, and care for them until they can be adopted by owners or released…70 cats to be exact. Ms. Dusen then deducted all expenses relating to the cats as a charitable tax deduction under section 170.

A few months ago, I wrote about this type of charitable tax deduction in Serving as a Vounteer? You Don’t Have To Wait for Heaven to Collect Your Reward. In order to take the deduction, you must have support for some unreimbured expense that you used to support a charitable organization. In addition, you need a letter from the organization acknowledging your expenditure as a gift.

This doesn’t mean that you can go out and plant 200 trees and get a charitable tax deduction unless some organization acknowledges that this is a gift to the organization and in furtherance of their charitable purpose.

In the previous article, I spoke of how my wife and me use our horses for such a purpose. We use them over 90% of the time to patrol for the National and State Park Services. Not only do the Services provide a letter to us, but they train us in CPR, first aid, and we log in with a radio when we patrol. We are in effect, the eyes and ears of the rangers. The program is very precise and requires 12 hours of horse training per year. We deduct 90% of our horse expenses as a charitable tax deduction because we use our horses almost exclusively as the mounted volunteer patrol.

The time to think about your charitable tax deduction is today. Don’t wait until April 14th. If you volunteer for an organization, determine what they need to further their charitable purpose and deduct whatever expenses you require to further it. Your burden is to substantiate it with receipts and a letter acknowledging it as a gift. Alway use a tax professional when making these kinds of decisions.

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Business Plans and Strategy: Living on a Hope and a Dream

I once knew a guy who spent every last dime trying to get auto companies to buy his “hubcap” locks for expensive spoked wheels. They repeatedly turned him down. He took his idea to the insurance companies and…”poof!” He struck it big.

David Ronick’s article, 10 Steps from Idea to Business tries to lay out a path to success in 10 steps. I applaud David in trying to help all those who want to be entrepenuers, but the steps can lead one in a direction that may not bear fruit.

1. Come up with an idea-David basically says to brainstorm for a good idea. The problem with this is “what is a good idea?”

2. Think through all angles- David has the right idea, but most people are not equipped to do this. Take for example, Jim Collins in Good to Great. He preaches his three concentric circles. Or, Kim and Mauborgne’s The Blue Ocean Strategy, where they lay out the idea of a product that renders competition virtually irrelevant. A “rough business plan” will not substitute for a well thoughtout strategic plan. Most people can’t do that, and have to hire a strategist to help them with it.

3. Get feedback–This is always good advice, but from who? If you are new to the market, you will most likely not be able to get to the right people. And what about them stealing your idea? This step is hard, so you will have to do your own research. The internet is a good place to start.

4. Respond to feedback–Again, I can’t see this step, or the other steps working because you would not get past step three. This is where so many businesses fail because they live off a dream and don’t do their basic research.

5. Build a basic product–Will you have an inventory? Read Chris Anderson’s The Long Tail. You might have second thoughts about your dream.

6. Open shop–As a newbee, can you manage your shop? Read Les McKeown’s Predictable Success. The book may paint an unflattering picture of where your company is in its life cycle.

7. Test what you’ve created–Have you developed a disruptive technology in your market? The Innovator’s Dilemma by Clayton Christensen explains what this means and how companies used it to become great.

8. Make adjustments

9. Get ready to grow–Collins and Porras’s book, Built to Last can open you eyes as to what makes a susainable business.

10. Stomp on the startup accelerator

My response is not meant to kill any good idea that you may have. Instead, I have listed major strategy books written by authors who have studied hundreds of successful and unsuccessful businesses. Read them, and others before entering step two, above. The more you know about a successful business, the more you will be able to leverage their experiences to make your dream a reality.