The WhirlWind Stash: Where Cash Flow is the Oxygen for a Company’s Survival

“The three most dreaded words in the English language are ‘negative cash flow’.” -David Tang

The last section in the “Scaling up: How a Few Companies Make it…and the Rest Don’t” by Verne Harnish, detonates typical assumptions about the role of cash in a business. Harnish  notes that “Growth sucks cash” and he illustrates a company that was literally “growing broke.”

What was surprising about this section is that Harnish suggests that regular Key Performance Indicators (KPIs) for the financial health of a company are misleading. For example, companies often first tout   “Revenue,” which he terms “Revenue Vanity”. Another common KPI is “Profitability”, but Harnish asks “What is more important, profit or cash?” For a growing business, the resolute answer is “Cash.” A huge influx of cash allows the likes of Amazon to thrive,  even while breaking even or posting losses.

Companies are usually Profit-focused, but considering only the Revenue minus Expenses will provide a skewed view of the numbers. The saying is “Revenue is vanity, profit is sanity and cash flow is king.” The numbers can be manipulated to show “profit”, but only cash and debt balances are facts. Cash and debt balances, incidentally, are what banks look at to evaluate a company’s performance.

So how do you increase cash flow? Our plan is to implement Harnish’s suggestions:

  • Shorten cycle time – How fast does a dollar invested in the business (from finding an opportunity all the way to revenue) come back to the company? This is a KPI Harnish suggests called the “Cash Conversion Cycle.”  To this point, Every WhirlWind Techie has a direct impact on our cash flow. When a techie fails to submit his/her timesheet on time, that delays our invoicing and increases our Cash Conversion Cycle. When Project Managers don’t submit their monthly reports on time, that also delays our invoicing.
  • Eliminate mistakes – Make sure your hours are entered in the right bucket, invoices are submitted on time in the right format, and within the correct timeframe.
  • Change the business model This entails changing how we charge clients to provide services or products. The simplest recommendation Harnish gives is simply asking clients to pay earlier in the cycle. We have other plans in the works to commoditize our services. Stay tuned to hear more.

Another initiative we want to roll out to all our Techies is Financial Literacy, spanning the personal and business aspects of Finance and empowering everyone in the company to contribute to the cash flow.

Do you have any ideas on increasing our cash flow? What can we start, stop, or continue doing to increase our cash flow? Your voice is important to us!

Executing the WhirlWind Way

robertglasperexeriment

“Imagine if all members of your team could independently and confidently wing it in their roles in a way that you knew would be consistent with the company culture and objectives.” This quote on page 176 of “Scaling up: How a Few Companies Make it…and the Rest Don’t” by Verne Harnish is at the heart of the Execution section and was literally music to my ears.

In the book, the analogy Harnish uses is the synchronicity of jazz, with its mix of improvisation and rhythm. It brought to mind my favorite Jazz band, The Robert Glasper Experiment and how they defy all genre norms while bringing a fresh brilliant spin to their compositions. When we identify specific tasks and habits to  set the stage for flawless execution, we free Techies to improvise and “riff” through their workday, minimizing the need to check in for direction. My goal is to use these principles to free up 80% of our leadership team’s time, and to shift their attention from day-to-day management to pursuing new clients and markets.

Do a Reality Check: The section opened with the “Rockefeller Habits Checklist” which painstakingly covers different functional areas of an organization. The checklist gave us a taste of what the full scale Team Assessment kit will provide. We are exploring the option of assessing our Executive Team to see how healthy and aligned we are by December of this year.

Keep the main thing the main thing:” Harnish quotes the late Stephen Covey in opening the section.  The number 1 priority for us, is to literally determine what our most important and measurable priority (Critical Number) within a 90 day to one-year focus would be. This would be the main goal that will anchor all of our execution planning and activities.

Collect Solid Data: One main execution activity related to the Critical Number is Data. After all, there’s no way to ascertain any measurable achievement without solid data. We are going to start with a really quick and easy survey to our clients, employees and shareholders, asking three simple questions:

  • What should we start doing?
  • What should we stop doing?
  • What should we keep doing?

The most important part of the survey will be a feedback loop, where we will update the employee on whether we implemented their suggestion or not (and why not).


Facilitate Ongoing Communication: When meetings are centered on the key Critical Numbers and routinely scheduled with a purposeful agenda, they “bring focus, alignment, provide an opportunity to solve problems more quickly and ultimately save time.”

One of my goals is to work closely with my Executive Assistant and finalize my  2018 calendar before the next year begins.  We also plan to reassess the purpose of all our recurring meetings and  group our weekly meetings together (so that all 1:1’s are scheduled on the same day, for example). And as part of bringing our techies together, we discussed implementing a peer coaching system at WhirlWind.

The path is laid for us to take on our Big Hairy Audacious Goal (BHAG) one priority at a time, one celebration at a time, one meeting at a time, one challenge at a time, and ultimately one single step at a time. Or to put it in Jazz terms, we will perfect one musical note at a time, one composition at a time, and empower our techies to improvise and play in concerted harmony.

——————————————————————————————————————-

What excites and motivates you about our direction? Do you have any insights to share? We would love to hear your thoughts!

 

Strategy: Behind the WhirlWind Momentum

chess

“This [game] is chess, it ain’t checkers!” The classic quote from the movie Training Day came to mind when I was reading the section on Strategy in “Scaling up: How a Few Companies Make it…and the Rest Don’t” by Verne. It was by far my favorite part of the book.

Sometimes people tend to think running a business is as straightforward as checkers. You make move X, Y, and  it leads you directly to your expected outcome Z. In business this usually translates to the simplistic logic of, “If I produce more, I will increase my revenue.” This is only partially true. In my experience, running a business mirrors the complexity of chess. Sometimes, you have to step back and think three or more moves ahead. Sometimes, it’s counter intuitive, you must sacrifice a pawn for the queen down the road. Sometimes, you have to reverse engineer your moves and it may not make any sense to a lay observer. And most of the times, you have to reevaluate your strategy, as chess is a dynamic game and unexpected moves from your opponent could result in unforeseen obstacles.

The section on Strategy spoke directly to me as a leader, and I was heartened that we have intuitively adopted some of the ideas Verne introduces. The flip side of that is I am enjoying the challenge to work with the other concepts we haven’t yet  defined. I’m particularly excited for the chance to step back and reassess, redefine, and articulate our overall strategy.

As in all the sections, Verne provides specific tools and a framework for our discussions. In Strategy, he speaks to the athlete in me by discussing the importance of “core” strength. A company’s version of lower back and oblique muscles and a six pack of abs is its:

  • Core Values
  • Core Purpose
  • Core Competencies

Core Values

Although we have defined core values, I found myself looking forward to creating a space where we can explore our original core values again and test whether the same ones will stick or new ones will emerge.

One key takeaway from the book is that core values define the company’s culture, and provide a final “should/shouldn’t” test for all the behaviors and decisions by everyone in the firm. Core values also express a company’s personality. Our company is relatively young and fast growing, so this is an opportune time to step back and discern our core values.

Core Purpose

The core purpose, according to Verne, expresses the “heart” of a company and answers the “Why?” A powerful purpose tends to revolve around a single word or idea (e.g., Happiness = Disney, and  Innovation = 3M).

I have some ideas around our core purpose revolving around how we do technology differently to positively affect people’s lives, whether it is our employees, clients and shareholders, and being a remote/Distributed first culture that allows us to work in atypical and agile ways.

One thing that burns me up as a CEO, is when I find us doing something just to be typical. This process has me reflecting on how we can infuse the word different in everything we do and making it concrete. I look forward to applying the 3 “Why?” questions, to our purpose to drill down into our core purpose.

Core Competencies

According to Verne, a core competency has 3 attributes:

  • It is not easy for competitors to imitate
  • It can be reused widely for many products and markets
  • It can contribute to the benefits the end customer experiences and the value of the product or services to customers

What’s important about defining and articulating our strategy lies in understanding what we don’t do and in this way coming to a mature space where we may decide we don’t want to pursue a certain client or line of business because that’s not in line with our strategy.

Verne makes a note in the book that if defining the strategy were an easy process, every company would have a killer strategy. This process is actually harder for CEOs who think they have all the answers, since it is necessarily a messy and creative process. This really spoke to me, and I realized that much of my journey so far has been intuitive and I am willing to trust this process.  

He then goes through a specific framework, by far my favorite tool, called the 7 strata of strategy to help the strategic thinking team to create and maintain a competition-crushing, differentiated approach to a specific market.

It will be hard work to wrestle with these questions and articulate our own vision summary, as these are atypical questions for growing businesses to face. More importantly, this work can not be done behind closed doors by a handful of executives. It will require a sustained engagement with you: our frontline employees, our clients, and our managers. The payoff will be huge as we all get on the same page and create an unstoppable momentum with the WhirlWind we create. And like a good game of chess, we may not have all the answers at the beginning of the game, or even the middle. This is going to be one of those drawn out, long term games and we are “in it to win it”.

————————————————————————————–

You will be hearing more from us, and in the meantime, we want to hear your thoughts on strategy, core values, purpose and growth.

 

The WhirlWind Techies: Attracting and retaining the right people

LCFC_lift_the_Premier_League_Trophy_(26943755296)_(cropped)

Leicester city winning the 2016 season English Premier league champions despite a 5000:1 odds when they started the season. The top teams in the English Premier League all have one or two players that make more money than Leicester’s whole team combined.  This win demonstrates the synergy between clear roles, priorities and teamwork.  (Photo attribution: Wikipedia) (Youtube video link on the story)

People inspired me to found WhirlWind Technologies, including  mentors, supervisors, and clients. I wanted to do technology differently by forging long term relationships with clients and customizing technology to their needs, rather than selling them solutions for the sake of increasing revenue. I  also wanted to  provide a platform for other talented IT professionals, offering them the tools to grow and succeed. My vision was to create an environment where skills, dedication and growth are championed and a safe space where no one would be overlooked or stymied due to bias. So on that auspicious day, January 1st  2009, I founded WhirlWind Technologies, LLC  in my old childhood bedroom at my parent’s house.

We have come a long way since then, and reading “The People” section in “Scaling up: How a Few Companies Make it…and the Rest Don’t” was timely for us. Verne poses a couple of questions as a call for reflection:

  1. Are you happy?
  2. Would you enthusiastically rehire everyone knowing what you know today?

The People section of the book  was broken into three chapters:

  • The Leaders: How do you define senior leadership accountabilities, Key Performance Indicators (KPIs), and outcomes?
  • The Team: How do you attract and retain A players, and use Topgrading interviews to recruit “strange” people to fit a “strange” culture?
  • The Managers: How do you turn managers into coaches who motivate rather than dehassle their teams?

In sharing this book internally as a map, our aim is to give WhirlWind Techies the tools to grow with us as we scale, rather than prescribing what they need to do. Although it is not required reading for everyone, I recommend you check it out to gain insight into our direction.

Leaders:

One definition that popped out was how to recognize leaders in the company. Verne says, once you’ve found people that fit your culture,  leaders pass two tests :

  1. They don’t need to be managed
  2. They regularly wow the team with their insight and output

I would like to challenge every WhirlWind Techie to apply these two tests to yourself and ask: Am I a leader? And if not, what would it take for me to step up my game?

One point resonated with me personally, is when Verne notes that the CEO’s greatest strength can be the company’s greatest weakness, especially when everyone depends on the CEO for what they bring to the table. In my case, my expertise is in Network Infrastructure, and I have to make sure I am not the achilles heel for the company by recruiting and empowering other Network Infrastructure Techies to serve as Subject Matter Experts.

There’s also a fine distinction between Responsibility, Accountability and Authority. Many people can be responsible for different facets of a project, but only one will be held accountable (usually the team lead or functional area manager). But having accountability for a project (or even a task/process) does not mean you have full authority. The person with with final decision-making power is the one authorized. For instance, a CFO may be accountable for the cash, but the CEO still maintains the authority over the cash.

The Team:

We discussed Topgrading Interviews at length, since this methodology requires an upfront investment of 3-5 hours for each candidate (on interviewing alone)! Yet, we concluded that our goal is to select the best hire, and in order to do so, we have to put in the time. Beyond that, hiring the wrong person would cost the company a lot more in the long run than the initial time investment to verify the fit.

Verne provides a number of tools for managing and coaching different aspects of People, their KPI’s  and Outcomes associated with them. We have already allocated time in our next Strategy Meeting to work through the full details.

The Managers:

Verne has specific advice for managers (or coaches as he prefers to call them). Some of the pointers were more intuitive such as helping people to play to their strengths, setting clear expectations and giving recognition. Others gave us pause, for instance in preventing “dehassling” and “demotivating” he discusses firing a client who may be unreasonable and mistreat your employees. Or another example is not to demotivate “A” players by having them work with “B” and “C” players who suck their energy and slow them down. The best managers, according to Verne, are those who lead, coach, and actively remove obstacles from each of their team member’s path to ensure their success.

So, going back to the questions that Verne posed in the very beginning:

  1. Am I happy? Unequivocally yes! My business mission is an extension of my own personal purpose which is to master my own mind and body, and furthers my own personal vision to embody personal and professional success to my family and community. I feel aligned in both my professional and personal life.
  2. Would I enthusiastically rehire everyone knowing what I know today? Yes! We finally have the right people in the right seats. I challenge each of you to get your A-game on for this WhirlWind ride.

————————————————————————————————————————————————————————————————

Share your thoughts on the People Section. Any insights or comments? We’d like to hear from you.

Scaling in (a) WhirlWind

scalingup2

The Vision and Quest
Two years ago, we embarked on a WhirlWind journey to achieve our Big Hairy Audacious Goals (BHAGs). Our Painted Vision, facilitated by Dan Lionello of Painted Picture, includes reaching the 12 million dollar landmark by end of 2017 and by 2021 successfully transitioning from CEO to Chairman of Board of Directors of WhirlWind Ventures.

Our vision encompasses WhirlWind Ventures as a holdings and investment firm with ownership and investments in multiple companies within an umbrella. WhirlWind Ventures would give emerging CEOs and entrepreneurs the tools and resources to run successful companies using our best practices. Our mission is to help deserving and talented but overlooked people, providing them an opportunity to live out their lofty dreams of running their own business.

The first thing we needed to have on hand for such an arduous journey is a detailed map, and through a series of fortuitous events, we have come to choose “Scaling up: How a Few Companies Make it…and the Rest Don’t” by Verne Harnish and his team at Gazelles.

Why this map?
Harnish is the writer of the bestselling book “Mastering the Rockefeller Habits” and a consultant who helped more than 40,000 business leaders in scaling up their companies.

Harnish also founded the Entrepreneur’s Organization (EO) that I joined in 2015, and I have since been selected to become the DC Board Member chair of the forum. The EO has been instrumental in providing me with tools, numerous learning opportunities and mentoring by seasoned and like-minded entrepreneurs. I heard Harnish speak recently at the Entrepreneurial Masters Program (EMP), an EO Executive program at MIT, and I was inspired by his insights and grasp of business. In my travels and connections with other CEOs, Harnish’s work comes up again and again as a tool for growing their companies.

The Tools and Road ahead
There’s a whole industry of books and gurus with advice on how to successfully run and grow a business, but what struck me about Harnish is his work delivers actionable plans and concrete outcomes. The end goal is to create a company where the team is engaged; the clients are doing our marketing; and everyone is aligned in contributing to the growth of a firm. And the key is for the whole company to move in sync to create something significant and enjoy the ride.

Harnish focuses on the fundamentals, quoting Einstein: “Everything should be made as simple as possible, but no simpler.”

  • People: Attracting and retaining the right people
  • Strategy: Creating a truly differentiated strategy
  • Execution: Driving flawless execution
  • Cash: Having plenty of cash to weather the storm

We will be creating a series of blogs based on each of the sections, and sharing our insights as we implement the tools. This will be the first of a series of blogs that gives our take from the WhirlWind trenches, and we invite you to join us.

Have you read “Scaling Up” or a similar book? Share your thoughts on the tools, growth, the journey ahead and anything else that comes to mind.